UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
[X] SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________.
Commission File Number : 000-26076
SINCLAIR BROADCAST GROUP, INC.
(Exact name of Registrant as specified in its charter)
---------------------------
MARYLAND 52-1494660
(State or other jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or organization)
2000 WEST 41ST STREET
BALTIMORE, MARYLAND 21211
(Address of principal executive offices)
(410) 467-5005
(Registrant's telephone number, including area code)
None
(Former name, former address and former fiscal year-if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the Registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No[ ]
As of August 11, 1997, there are 7,168,941 shares of Class A Common Stock, $.01
par value, 27,576,581 shares of Class B Common Stock, $.01 par value and
1,091,825 shares of Series B Preferred Stock, $.01 par value, convertible into
3,970,277 shares of Class A Common Stock, of the Registrant issued and
outstanding.
In addition, 2,000,000 shares of $200 million aggregate liquidation value of 11
5/8% High Yield Trust Offered Preferred Securities of Sinclair Capital, a
subsidiary trust of Sinclair Broadcast Group, Inc. are issued and outstanding.
<PAGE>
SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
Form 10-Q
For the Quarter Ended June 30, 1997
Table of Contents
Page
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets as of December 31, 1996 and
June 30, 1997................................................ 3
Consolidated Statements of Operations for the Three Months and Six
Months Ended June 30, 1996 and 1997.......................... 4
Consolidated Statements of Stockholders' Equity for the Six Months
Ended June 30, 1997.......................................... 5
Consolidated Statements of Cash Flows for the Six Months
Ended June 30, 1996 and 1997................................. 6
Notes to Unaudited Consolidated Financial Statements................ 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.......................... 13
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.............................................. 19
Item 5. Other Information.............................................. 19
Item 6. Exhibits and Reports on Form 8-K .............................. 22
Signature................................................................... 23
2
<PAGE>
SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
ASSETS 1996 1997
--------------- --------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents....................................................... $ 2,341 $ 2,740
Accounts receivable, net of allowance for doubtful accounts..................... 112,313 102,093
Current portion of program contract costs....................................... 44,526 34,768
Prepaid expenses and other current assets....................................... 3,704 4,054
Deferred barter costs........................................................... 3,641 4,267
Deferred tax asset ............................................................. 1,245 8,188
------------- ------------
Total current assets..................................................... 167,770 156,110
PROGRAM CONTRACT COSTS, less current portion........................................ 43,037 30,778
LOANS TO OFFICERS AND AFFILIATES.................................................... 11,426 11,241
PROPERTY AND EQUIPMENT, net......................................................... 154,333 156,681
NON-COMPETE AND CONSULTING AGREEMENTS, net.......................................... 10,193 2,250
OTHER ASSETS ....................................................................... 64,235 71,970
ACQUIRED INTANGIBLE BROADCASTING ASSETS, net........................................ $ 1,256,303 $ 1,333,475
------------- ------------
Total Assets.................................................................... $ 1,707,297 $ 1,762,505
============= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable................................................................ $ 11,886 $ 5,310
Income taxes payable............................................................ 730 -
Accrued liabilities............................................................. 35,030 39,023
Current portion of long-term liabilities-
Notes payable and commercial bank financing................................. 62,144 65,500
Capital leases payable...................................................... 44 11
Notes and capital leases payable to affiliates.............................. 1,774 1,370
Program contracts payable................................................... 58,461 49,766
Deferred barter revenues........................................................ 3,576 4,458
------------- ------------
Total current liabilities................................................ 173,645 165,438
LONG-TERM LIABILITIES:
Notes payable and commercial bank financing..................................... 1,212,000 1,097,000
Capital leases payable.......................................................... - 30
Notes and capital leases payable to affiliates.................................. 12,185 11,872
Program contracts payable....................................................... 56,194 46,670
Deferred tax liability.......................................................... 463 -
Other long-term liabilities.....................................................
2,739 4,960
------------- ------------
Total liabilities 1,457,226 1,325,970
------------- ------------
MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES...................................... 3,880 3,897
EQUITY PUT OPTIONS ................................................................. 8,938 -
COMPANY OBLIGATED MANDATORILY REDEEMABLE SECURITIES OF SUB-
SIDIARY TRUST HOLDING SOLELY KDSM SENIOR DEBENTURES (Note 6).................... - 200,000
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value, 10,000,000 shares authorized and 1,138,138
and 1,106,608 shares issued and outstanding, respectively................... 11 11
Class A Common stock, $.01 par value, 100,000,000 shares authorized
and 6,911,880 and 7,100,188 shares issued and outstanding, respectively..... 70 71
Class B Common stock, $.01 par value, 35,000,000 shares authorized
and 27,850,581 and 27,591,581 shares issued and outstanding................. 279 277
Additional paid-in capital...................................................... 256,954 234,812
Additional paid-in capital - deferred compensation.............................. (1,129) (896)
Additional paid-in capital - equity put options................................. - 23,117
Accumulated deficit............................................................. (18,932) (24,754)
Total stockholders' equity............................................... 237,253 232,638
Total Liabilities and Stockholders' Equity............................... $ 1,707,297 $ 1,762,505
============== =============
</TABLE>
The accompanying notes are an integral part of these unaudited consolidated
statements.
3
<PAGE>
SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1996 1997 1996 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUES:
Station broadcast revenues, net of agency commissions..........$ 73,163 $ 120,792 $ 117,339 $ 219,701
Revenues realized from station barter arrangements............. 5,978 10,555 9,571 19,870
---------- ---------- ---------- ----------
Total revenues.......................................... 79,141 131,347 126,910 239,571
OPERATING EXPENSES:
Program and production......................................... 13,051 24,253 20,699 46,760
Selling, general and administrative............................ 14,976 26,393 24,268 51,634
Expenses realized from station barter arrangements............. 4,928 8,859 7,859 16,303
Amortization of program contract costs and net
realizable value adjustments............................... 9,840 13,400 17,557 30,918
Amortization of deferred compensation.......................... 506 116 506 233
Depreciation and amortization of property and equipment........ 2,079 4,179 3,544 8,340
Amortization of acquired intangible broadcasting assets,
non-compete and consulting agreements and other assets..... 13,715 18,371 24,392 37,392
---------- ---------- ---------- ----------
Total operating expenses................................ 59,095 95,571 98,825 191,580
---------- ---------- ---------- -- -------
Broadcast operating income.............................. 20,046 35,776 28,085 47,991
---------- ---------- ---------- ----------
OTHER INCOME (EXPENSE):
Interest and amortization of debt discount expense............ (16,750) (24,928) (27,646) (51,993)
Subsidiary trust minority interest expense.................... - (5,797) - (7,007)
Interest income............................................... 798 638 2,521 1,040
Other income (expense)........................................ 398 (97) 651 47
---------- ---------- ---------- ----------
Income (loss) before income tax provision.............. 4,492 5,592 3,611 (9,922)
INCOME TAX (PROVISION) BENEFIT.................................... (2,523) (3,800) (2,100) 4,100
---------- ---------- ---------- ----------
NET INCOME (LOSS)................................................. $ 1,969 $ 1,792 $ 1,511 $ (5,822)
========== ========== ========== ==========
Net income (loss) per common share................................ $ 0.05 $ 0.05 $ 0.04 $ (0.17)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING ....................... 34,750 34,639 34,750 34,746
WEIGHTED AVERAGE COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING.. 36,325 38,790 35,546 38,913
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these unaudited consolidated
statements.
4
<PAGE>
SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADDITIONAL ADDITIONAL
PAID-IN PAID-IN
SERIES B CLASS A CLASS B ADDITIONAL CAPITAL - CAPITAL -
PREFERRED COMMON COMMON PAID-IN EQUITY PUT DEFERRED
STOCK STOCK STOCK CAPITAL OPTIONS COMPENSATION
-------------- ------------ ------------ -------------- --------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, December 31, 1996.............. $ 11 $ 70 $ 279 $ 256,954 $ - $ (1,129)
Repurchase of 186,000 shares of
Class A Common Stock............ - (2) - (4,597) - -
Class B Common Stock converted
into Class A Common Stock....... - 2 (2) - - -
Series B Preferred Stock converted
into Class A Common Stock....... - 1 - (1) - -
Equity put options.................. - - - (14,179) 23,117 -
Equity put options premium.......... - - - (3,365) - -
Amortization of deferred
compensation.................... - - - - - 233
Net loss............................ - - - - - -
============== ============ ============ ============== =============== =================
BALANCE, June 30, 1997.................. $ 11 $ 71 $ 277 $ 234,812 $ 23,117 $ (896)
============== ============ ============ ============== =============== =================
</TABLE>
TOTAL
ACCUMULATED STOCKHOLDERS'
DEFICIT EQUITY
----------------- ----------------
BALANCE, December 31, 1996.............. $ (18,932) $ 237,253
Repurchase of 186,000 shares of
Class A Common Stock............ - (4,599)
Class B Common Stock converted
into Class A Common Stock....... - -
Series B Preferred Stock converted
into Class A Common Stock....... - -
Equity put options.................. - 8,938
Equity put options premium.......... - (3,365)
Amortization of deferred
compensation.................... - 233
Net loss............................ (5,822) (5,822)
================= ================
BALANCE, June 30, 1997.................. $ (24,754) $ 232,638
================= ================
The accompanying notes are an integral part of these unaudited consolidated
statements.
5
<PAGE>
SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
CASH FLOWS FROM OPERATING ACTIVITIES: 1996 1997
--------------- ---------------
<S> <C> <C>
Net income (loss)............................................................. $ 1,511 $ (5,822)
Adjustments to reconcile net income (loss) to net cash flows from operating
activities-
Depreciation and amortization of property and equipment................... 3,544 8,340
Amortization of acquired intangible broadcasting assets,
non-compete and consulting agreements and other assets................. 24,392 37,392
Amortization of program contract costs and net realizable value 17,557 30,918
adjustments
Amortization of deferred compensation..................................... 506 233
Deferred tax provision (benefit).......................................... 488 (7,406)
Changes in assets and liabilities, net of effects of acquisitions and
dispositions-
(Increase) decrease in accounts receivable, net........................... (12,006) 9,947
Increase in prepaid expenses and other current assets..................... (68) (358)
Increase in other assets and acquired intangible broadcasting assets...... (43) -
Increase (decrease) in accounts payable and accrued liabilities........... 6,344 (3,916)
Decrease in income taxes payable.......................................... (3,944) (730)
Net effect of change in deferred barter revenues
and deferred barter costs.............................................. 328 236
Decrease in other long-term liabilities................................... (58) (109)
Increase (decrease) in minority interest................................. (33) 17
Payments on program contracts payable......................................... (12,071) (26,259)
Net cash flows from operating activities.................................. 26,447 42,483
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and equipment........................................... (2,114) (8,286)
Payments for acquisition of television and radio stations....................... (34,726) (89,382)
Payments related to the acquisition of the non-license assets of
River City Broadcasting..................................................... (811,260) -
Payment for acquisition of certain other non-license assets..................... (29,532) -
Payments to exercise options to acquire certain FCC licenses.................... - (8,524)
Payment for the purchase of outstanding stock of Superior Communications, Inc... (63,275) -
Payments for consulting and non-compete agreements.............................. (50) -
Purchase option extension payments relating to WSYX............................. - (6,499)
Loans to officers and affiliates................................................ - (650)
Repayments of loans to officers and affiliates.................................. 258 748
Distribution (investment) in joint venture...................................... (364) 381
Payments relating to future acquisitions........................................ (1,063) (217)
Net cash flows used in investing activities.............................. (942,126) (112,429)
------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable, commercial bank financing and capital leases....... 897,000 92,546
Repayments of notes payable, commercial bank financing and capital leases...... (67,915) (204,193)
Payments of costs relating to financing......................................... (20,009) (4,669)
Payments for interest rate derivative agreements................................ (851) -
Repurchases of the Company's Class A Company Stock.............................. - (4,599)
Proceeds from Subsidiary Trust Securities offering, net of $5,000 underwriters' - 195,000
discount
Payments of costs related to Subsidiary Trust Securities offering............... - (1,650)
Prepayments of excess syndicated program contract liabilities................... - (1,373)
Repayments of notes and capital leases to affiliates............................ (800) (717)
------------ -----------
Net cash flows from financing activities................................. 807,425 70,345
------------ -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS................................ (108,254) 399
CASH AND CASH EQUIVALENTS, beginning of period...................................... 112,450 2,341
------------ -----------
CASH AND CASH EQUIVALENTS, end of period............................................$ 4,196 $ 2,740
============ ===========
SUPPLEMENTAL DISCLOSURES:
Interest payments...............................................................$ 29,472 $ 55,723
============ ===========
Subsidiary trust minority interest payments.....................................$ - $ 6,006
============ ===========
Income tax payments.............................................................$ 5,586 $ 5,298
============ ===========
Issuance of 1,150,000 shares of Series A Preferred Stock........................$ 125,079 $ -
============ ===========
</TABLE>
The accompanying notes are an integral part of these unaudited consolidated
statements.
6
<PAGE>
SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
BASIS OF PRESENTATION
The accompanying consolidated financial statements include the accounts of
Sinclair Broadcast Group, Inc., Sinclair Communications, Inc. and all other
consolidated subsidiaries, which are collectively referred to hereafter as "the
Company, Companies or SBG." The Company owns and operates television and radio
stations throughout the United States. Additionally, included in the
accompanying consolidated financial statements are the results of operations of
certain television stations pursuant to local marketing agreements (LMAs) and
radio stations pursuant to joint sales agreements (JSAs).
INTERIM FINANCIAL STATEMENTS
The consolidated financial statements for the six months ended June 30, 1996 and
1997 are unaudited, but in the opinion of management, such financial statements
have been presented on the same basis as the audited consolidated financial
statements and include all adjustments, consisting only of normal recurring
adjustments necessary for a fair presentation of the financial position and
results of operations, and cash flows for these periods.
As permitted under the applicable rules and regulations of the Securities and
Exchange Commission, these financial statements do not include all disclosures
normally included with audited consolidated financial statements, and,
accordingly, should be read in conjunction with the consolidated financial
statements and notes thereto as of December 31, 1995, and 1996 and for the years
then ended. The results of operations presented in the accompanying financial
statements are not necessarily representative of operations for an entire year.
PROGRAMMING
The Companies have agreements with distributors for the rights to television
programming over contract periods which generally run from one to seven years.
Contract payments are made in installments over terms that are generally shorter
than the contract period. Each contract is recorded as an asset and a liability
when the license period begins and the program is available for its first
showing. The portion of the program contracts payable within one year is
reflected as a current liability in the accompanying consolidated balance
sheets.
The rights to program materials are reflected in the accompanying consolidated
balance sheets at the lower of unamortized cost or estimated net realizable
value. Estimated net realizable values are based upon management's expectation
of future advertising revenues net of sales commissions to be generated by the
program material. Amortization of program contract costs is generally computed
under either a four year accelerated method or based on usage, whichever yields
the greater amortization for each program. Program contract costs, estimated by
management to be amortized in the succeeding year, are classified as current
assets. Payments of program contract liabilities are typically paid on a
scheduled basis and are not affected by adjustments for amortization or
estimated net realizable value.
7
<PAGE>
2. CONTINGENCIES AND OTHER COMMITMENTS:
Lawsuits and claims are filed against the Company from time to time in the
ordinary course of business. These actions are in various preliminary stages,
and no judgments or decisions have been rendered by hearing boards or courts.
Management, after reviewing developments to date with legal counsel, is of the
opinion that the outcome of such matters will not have a material adverse effect
on the Company's financial position or results of operations.
3. FINANCIAL INFORMATION BY SEGMENT (IN THOUSANDS):
Prior to the acquisition of River City Broadcasting, L.P. in May 1996, the
Company did not own or operate radio stations. As of June 30, 1997, the Company
consisted of two principal business segments - television broadcasting and radio
broadcasting. The Company owns or provides programming services pursuant to LMAs
to 29 television stations located in 21 geographically diverse markets in the
continental United States. The Company owns or provides programming services
pursuant to JSAs to 25 radio stations in seven geographically diverse markets.
Substantially all revenues represent income from unaffiliated companies.
<TABLE>
<CAPTION>
TELEVISION TELEVISION
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1996 1997 1996 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Total revenues.................................................... $ 74,275 $ 114,377 $ 122,044 $ 210,151
Station operating expenses........................................ 29,725 48,008 49,596 92,645
Depreciation, program amortization and deferred compensation...... 12,296 17,134 21,478 38,368
Amortization of intangibles and other assets...................... 13,197 15,086 23,874 30,901
----------- ----------- ---------- -----------
Station broadcast operating income................................ $ 19,057 $ 34,149 $ 27,096 $ 48,237
=========== =========== ========== ===========
Total assets...................................................... $ 1,390,854 $ 1,456,776 $1,390,854 $ 1,456,776
=========== =========== ========== ===========
Capital expenditures.............................................. $ 1,272 $ 4,167 $ 2,092 $ 6,194
=========== =========== ========== ===========
<CAPTION>
RADIO RADIO
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1996 1997 1996 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Total revenues.................................................... $ 4,866 $ 16,970 $ 4,866 $ 29,420
Station operating expenses........................................ 3,230 11,497 3,230 22,052
Depreciation, program amortization and deferred compensation...... 129 561 129 1,123
Amortization of intangibles and other assets...................... 518 3,285 518 6,491
------------ ---------- ---------- -----------
Station broadcast operating income (loss)......................... $ 989 $ 1,627 $ 989 $ (246)
============ ========== ========== ============
Total assets...................................................... $ 236,124 $ 305,729 $ 236,124 $ 305,729
============ ========== ========== ===========
Capital expenditures.............................................. $ 22 $ 1,874 $ 22 $ 2,092
============ ========== ========== ===========
</TABLE>
8
<PAGE>
4. EARNINGS PER SHARE:
In March 1997, the Financial Accounting Standard Board released SFAS 128
"Earnings per Share." The new statement is effective December 15, 1997 and early
adoption is not permitted. When adopted, SFAS 128 will require the restatement
of prior periods and disclosure of basic and diluted earnings per share and
related computations. At the present time, management believes that the adoption
of SFAS 128 will not materially affect the Company's consolidated financial
statements.
5. EQUITY PUT AND CALL OPTIONS:
During December 1996, the Company entered into physically settled in cash put
and call option contracts related to the Company's common stock. These option
contracts were entered into for the purpose of hedging the dilution of the
Company's common stock upon the exercise of stock options granted. The Company
entered into 250,000 call options for common stock and 320,600 put options for
common stock, with a strike price of $37.75 and $27.88 per common share,
respectively. To the extent that the Company entered into put option contracts,
the additional paid-in capital amounts were adjusted accordingly and reflected
as Equity Put Options in the accompanying balance sheet as of December 31, 1996.
In March 1997, the Company amended its put option contracts from physically
settled in cash to physically or net physically settled in shares, at the
election of the Company, and reclassified amounts reflected as Equity Put
Options to "Additional paid in capital - equity put options" as reflected in the
accompanying balance sheet as of June 30, 1997.
In April 1997, the Company entered into put and call option contracts related to
its common stock for the purpose of hedging the dilution of the common stock
upon the exercise of stock options granted. The Company entered into 550,000
European style (that is, exercisable on the expiration date only) put options
for common stock with a strike price of $25.78 per share which provide for
settlement in cash or in shares, at the election of the Company. The Company
entered into 550,000 American style (that is, exercisable any time before the
expiration date) call options for common stock with a strike price of $25.78 per
share which provide for settlement in cash or in shares, at the election of the
Company. The option premium amount of $3.4 million for these contracts, which
was recorded as a reduction of additional paid in capital, is payable in
quarterly installments of 8.1% per annum through the maturity date, July 13,
2000.
6. COMPANY OBLIGATED MANDATORILY REDEEMABLE PREFERRED
SECURITIES OF SUBSIDIARY TRUST:
In March 1997, the Company completed a private placement of $200 million
aggregate liquidation value of 11 5/8% High Yield Trust Offered Preferred
Securities (the "Preferred Securities") of Sinclair Capital, a subsidiary trust
of the Company. The Preferred Securities were issued March 12, 1997, mature
March 15, 2009, and provide for quarterly distributions to be paid in arrears
beginning June 15, 1997. The Preferred Securities were sold to "qualified
institutional buyers" (as defined in Rule 144A under the Securities Act of 1933,
as amended) and a limited number of institutional "accredited investors" and the
offering was exempt from registration under the Securities Act of 1933, as
amended ("the Securities Act"), pursuant to Section 4(2) of the Securities Act
and Rule 144A thereunder. The Company utilized $135 million of the approximately
$193.4 million net proceeds of the private placement to repay outstanding debt
and retained the remainder for general corporate purposes, which may include
acquisitions and repurchases of shares of the Company's Class A Common Stock.
9
<PAGE>
Pursuant to a Registration Rights Agreement entered into in connection with the
private placement of the Preferred Securities, the Company has offered holders
of the Preferred Securities the right to exchange the Preferred Securities for
new Preferred Securities having the same terms as the existing securities,
except that the exchange of the new Preferred Securities for the existing
Preferred Securities has been registered under the Securities Act and the new
Preferred Securities will not be subject to an increase in distributions thereon
as a consequence of a failure to take certain actions in connection with their
registration under the Securities Act. The Company was required to file the
registration statement prior to May 11, 1997 and is required to complete the
exchange offer by August 9, 1997 in order to avoid being subject to increased
distributions on the securities issued in the private placement.
On May 2, 1997, the Company filed a registration statement on Form S-4 with the
Securities and Exchange Commission for the purpose of registering $200 million
aggregate liquidation value of 11 5/8% High Yield Trust Offered Preferred
Securities to be offered in exchange for the aforementioned existing Preferred
Securities issued by the Company in March 1997. On July 14, 1997, the Securities
and Exchange Commission declared the Company's Exchange Offer on Form S-4
effective. The Exchange Offer and Withdrawal Rights will expire on August 11,
1997, unless extended.
7. ACQUISITIONS:
In January 1997, the Company entered into a purchase agreement to acquire the
license and non-license assets of KUPN-TV, the UPN affiliate in Las Vegas,
Nevada, for a purchase price of $87 million. Under the terms of this agreement,
the Company made cash deposit payments of $9.0 million and in May 1997, the
Company closed on the acquisition making a cash payment of $78 million for the
remaining balance of the purchase price. The Company financed the transaction by
utilizing indebtedness under the Third Amended and Restated Credit Agreement
("the Bank Credit Agreement").
In January 1997, the Company entered into an agreement to acquire the license
and non-license assets of WGR-AM and WWWS-AM in Buffalo, New York for a purchase
price of approximately $1.5 million. In March 1997, the Company paid the
remaining balance of $959,000 and closed on the acquisition in April 1997. In
January 1997, the Company acquired the license and non-license assets of WWFH-FM
and WILP-AM in Wilkes-Barre, Pennsylvania for a purchase price of approximately
$770,000.
In April 1997, the Company received FCC approval for the transfer of the FCC
licenses of KOVR-TV in Sacramento, California and KDSM-TV in Des Moines, Iowa.
The Company exercised its options to acquire the license assets of KOVR-TV and
KDSM-TV for exercise prices of $1.5 million and $1.5 million, respectively.
In May 1997, the Company received FCC approval for the transfer of the FCC
licenses of KDNL-TV, KPNT-FM and WVRV-FM in St. Louis, Missouri. The Company
exercised its options to acquire the television and radio license assets for
exercise prices of $1.9 million and $1.2 million, respectively.
In June 1997, the Company received FCC approval for the transfer of the FCC
license of KABB-TV in San Antonio, Texas. The Company exercised its option to
acquire the license assets of KABB-TV for an exercise price of $2.3 million.
10
<PAGE>
8. INTEREST RATE DERIVATIVE AGREEMENTS:
The Company has entered into interest rate derivative agreements to reduce the
impact of changing interest rates on its floating rate debt, primarily relating
to the Bank Credit Agreement. In May 1996, the Company amended its Bank Credit
Agreement. The agreement requires the Company to enter into Interest Rate
Protection Agreements at rates not to exceed 9.5% per annum as to a notional
principal amount at least equal to 66 2/3% of the Tranche A term loans scheduled
to be outstanding from time to time and 9.75% per annum as to a notional
principal amount of 66 2/3% of the aggregate amount of Tranche B term loans
scheduled to be outstanding from time to time.
At June 30, 1997, the Company had several interest rate swap agreements relating
to the Bank Credit Agreement which expire from June 30, 1997 to June 30, 2000.
The swap agreements set rates in the range of 5.55% to 8.00%. The notional
amounts related to these agreements were $988.4 million at June 30, 1997, and
decrease to $50.0 million through the expiration dates. The Company has no
intentions of terminating these instruments prior to their expiration dates
unless it were to prepay a portion of its bank debt.
The floating interest rates are based upon the three month London Interbank
Offered Rate (LIBOR) rate, and the measurement and settlement is performed
quarterly. Settlements of these agreements are recorded as adjustments to
interest expense in the relevant periods. The Company estimates the aggregate
cost to retire these instruments at June 30, 1997 to be $351,000.
9. AMENDMENT TO BANK CREDIT AGREEMENT:
The Company amended its Bank Credit Agreement on May 20, 1997. The Bank Credit
Agreement consists of two classes: Tranche A Term Loan and a Revolving Credit
Commitment.
The Tranche A Term Loan is a term loan in a principal amount not to exceed $600
million and is scheduled to be paid in quarterly installments through December
31, 2004. The Revolving Credit Commitment is a revolving credit facility in a
principal amount not to exceed $400 million and is scheduled to have reduced
availability quarterly beginning March 31, 2000 through December 31, 2004. As of
June 30, 1997, outstanding indebtedness under the Tranche A Term Loan and the
Revolving Credit Commitment were $600 million and $16.5 million, respectively.
The Company incurred amendment acquisition costs of approximately $4.7 million
associated with this indebtedness which are being amortized over the life of the
debt.
The applicable interest rate for the Tranche A Term Loan and the Revolving
Credit Tranche is either LIBOR plus 0.5% to 1.875% or the base rate plus zero to
0.625%. The applicable interest rate for the Tranche A Term Loan and the
Revolving Credit Tranche is adjusted based on the ratio of total debt to four
quarters' trailing earnings before interest, taxes, depreciation and
amortization.
10. SUBSEQUENT EVENTS:
9% SENIOR SUBORDINATED NOTES DUE 2007
In July 1997, the Company completed an issuance of $200 million aggregate
principal amount of 9% Senior Subordinated Notes (the "1997 Notes"). The 1997
Notes were offered July 2, 1997, mature July 15, 2007, and provide for interest
payments payable semi-annually on January 15 and July 15 of each year,
commencing January 15, 1998. The 1997 Notes were sold to "qualified
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institutional buyers" (as defined in Rule 144A under the Securities Act) and a
limited number of institutional "accredited investors" and the offering was
exempt from registration under the Securities Act, pursuant to Section 4(2) of
the Securities Act and Rule 144A thereunder. The Company utilized $162.5 million
of the approximately $196 million net proceeds of the private issuance to repay
outstanding debt and retained the remainder for general corporate purposes,
which may include acquisitions and repurchases of shares of the Company's Class
A Common Stock.
Pursuant to a Registration Rights Agreement entered into in connection with the
private placement of the 1997 Notes, the Company is obligated to offer to
holders of the 1997 Notes the right to exchange the 1997 Notes with new 1997
Notes having the same terms as the existing notes, except that the exchange of
the new 1997 Notes for the existing 1997 Notes will be registered under the
Securities Act and the new 1997 Notes will not be subject to an increase in
interest payable as a consequence of a failure to take certain actions in
connection with their registration under the Securities Act. The Company is
required to file the registration statement prior to August 31, 1997 and is
required to complete the exchange offer by December 14, 1997 in order to avoid
being subject to increased interest payable on the 1997 Notes.
AGREEMENT TO ACQUIRE HERITAGE MEDIA GROUP RADIO AND TELEVISION STATIONS
In July 1997, the Company entered into a purchase agreement to acquire the
license and non-license assets of the radio and television stations of Heritage
Media Group, Inc. ("Heritage") for $630 million in cash upon the closing of
Heritage's merger agreement with The News Corporation Limited, which remains
subject to regulatory approval. The acquisition is expected to occur in the
first quarter of 1998. The Company anticipates that it will finance the Heritage
acquisition through additional bank financing, or through a combination of
additional bank financing and proceeds from an offering of securities.
EXERCISE AND ASSIGNMENT OF FCC LICENSE OPTIONS
In July 1997, the Company received FCC approval for the transfer of the FCC
license of WLOS-TV in Asheville, North Carolina. The Company exercised its
option to acquire the license assets of WLOS-TV for an exercise price of $2.1
million.
In July 1997, the Company made an option exercise payment of $.5 million to
River City Broadcasting, L.P. related to the license assets of WFBC-TV in
Greenville, South Carolina. Simultaneously, the Company assigned its option to
acquire the license assets of WFBC-TV to Glencairn, Ltd. for an option
assignment fee of $2.0 million and entered into an LMA with Glencairn, Ltd.
whereby the Company, in exchange for an hourly fee, obtained the right to
program and sell advertising on substantially all of the station's inventory of
broadcast time.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
The following information should be read in conjunction with the unaudited
consolidated financial statements and notes thereto included in this Quarterly
Report and the audited financial statements and Management's Discussion and
Analysis contained in the Company's Form 10-K, as amended, for the fiscal year
ended December 31, 1996.
The matters discussed below include forward-looking statements. Such statements
are subject to a number of risks and uncertainties, such as the impact of
changes in national and regional economies, successful integration of acquired
television and radio stations (including achievement of synergies and cost
reductions), pricing fluctuations in local and national advertising,
availability of capital and volatility in programming costs. Additional risk
factors regarding the Company are set forth in the Company's registration
statement on Form S-4 filed with the Securities and Exchange Commission on July
14, 1997.
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The following table sets forth certain operating data for comparison of the
three months and six months ended June 30, 1996 and 1997:
OPERATING DATA (dollars in thousands, except per share data):
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED JUNE 30, ENDED JUNE 30,
-------------- --------------
1996 1997 1996 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net broadcast revenues ....................... $ 73,163 $ 120,792 $ 117,339 $ 219,701
Barter revenues .............................. $ 5,978 $ 10,555 $ 9,571 $ 19,870
--------- --------- --------- ---------
Total revenues ............................... $ 79,141 $ 131,347 $ 126,910 $ 239,571
--------- --------- --------- ---------
Operating expenses, excluding depreciation,
amortization and amortization of deferred
compensation ............................... 32,955 59,505 52,826 114,697
Depreciation and amortization ................ 25,634 35,950 45,493 76,650
Amortization of deferred compensation ........ 506 116 506 233
--------- --------- --------- ---------
Broadcast operating income ................... 20,046 35,776 28,085 47,991
Interest expense ............................. (16, 750) (24,928) (27,646) (51,993)
Subsidiary trust minority interest expense ... -- (5,797) -- (7,007)
Interest and other income .................... 1,196 541 3,172 1,087
Net income (loss) before income tax benefit .. 4,492 5,592 3,611 (9,922)
Income tax (provision) benefit ............... (2,523) (3,800) (2,100) 4,100
--------- --------- --------- ---------
Net income (loss) ............................ $ 1,969 $ 1,792 $ 1,511 $ (5,822)
========= ========= ========= =========
BROADCAST CASH FLOW (BCF) DATA:
Television BCF (a) .................... $ 40,509 $ 56,832 $ 63,309 $ 98,032
Radio BCF (a) ......................... 1,770 5,984 1,770 7,568
--------- --------- --------- ---------
Consolidated BCF (a) .................. $ 42,279 $ 62,816 $ 65,079 $ 105,600
========= ========= ========= =========
Television BCF margin (b) ............. 59.3% 54.5% 56.3% 51.2%
Radio BCF margin (b) .................. 36.4% 36.3% 36.4% 26.7%
Consolidated BCF margin (b) ........... 57.8% 52.0% 55.5% 48.1%
OTHER DATA:
Adjusted EBITDA (c) ................... $ 40,548 $ 59,315 $ 62,013 $ 98,615
Adjusted EBITDA margin (b) ............ 55.4% 49.1% 52.8% 44.9%
After tax cash flow (d) ............... $ 21,916 $ 25,486 $ 30,441 $ 32,737
Program contract payments ............. $ 5,638 $ 12,527 $ 12,071 $ 26,259
Corporate expense ..................... $ 1,731 $ 3,501 $ 3,066 $ 6,985
- ---------------------------------------------- --------- --------- --------- ---------
</TABLE>
a) "Broadcast cash flow" is defined as broadcast operating income plus
corporate expenses, depreciation and amortization (including film
amortization and amortization of deferred compensation), less cash payments
for program rights. Cash program payments represent cash payments made for
current programs payable and do not necessarily correspond to program
usage. The Company has presented broadcast cash flow data, which the
Company believes is comparable to the data provided by other companies in
the industry, because such data are commonly used as a measure of
performance for broadcast companies. However, broadcast cash flow does not
purport to represent cash provided by operating activities as reflected in
the Company's consolidated statements of cash flows, 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.
b) "BCF margin" is defined as broadcast cash flow divided by net broadcast
revenues. "Adjust EBITDA margin" is defined as adjusted EBITDA divided by
net broadcast revenues.
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<PAGE>
c) "Adjusted EBITDA" is defined as broadcast cash flow less corporate expenses
and is a commonly used measure of performance for broadcast companies.
Adjusted EBITDA does not purport to represent cash provided by operating
activities as reflected in the Company's consolidated statements of cash
flows, 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) "After tax cash flow" is defined as net income (loss) plus depreciation and
amortization (excluding film amortization), non-cash deferred compensation
expense, and the deferred tax provision (or minus the deferred tax
benefit). After tax cash flow is presented here not as a measure of
operating results and does not purport to represent cash provided by
operating activities. After tax cash flow should not be considered in
isolation or as a substitute for measures of performance prepared in
accordance with generally accepted accounting principles.
Total revenues increased to $131.3 million for the three months ended June 30,
1997 from $79.1 million for the three months ended June 30, 1996, or 66.0%.
After excluding the effects of non-cash barter transactions, net broadcast
revenues for the three months ended June 30, 1997 increased by 65.3% over the
three months ended June 30, 1996. Total revenues increased to $239.6 million for
the six months ended June 30, 1997 from $126.9 million for the six months ended
June 30, 1996 or 88.8%. After excluding the effects of non-cash barter
transactions, net broadcast revenues for the six months ended June 30, 1997
increased by 87.2% over the six months ended June 30, 1997. These increases in
broadcast revenues were primarily the result of acquisitions and LMA
transactions consummated by the Company in 1996 (the "1996 Acquisitions") and to
a lesser extent, market growth in television broadcast revenue and television
broadcast revenue on a same stations basis.
Operating expenses excluding depreciation, amortization of intangible assets and
amortization of deferred compensation increased to $59.5 million for the three
months ended June 30, 1997 from $33.0 million for the three months ended June
30, 1996 or 80.3%. Operating expenses excluding depreciation, amortization of
intangible assets and amortization of deferred compensation increased to $114.7
million for the six months ended June 30, 1997 from $52.8 million for the six
months ended June 30, 1996 or 117.2%. These increases in expenses for the three
and six months ended June 30, 1997 as compared to the three and six months ended
June 30, 1996 were primarily attributable to operating costs associated with the
1996 Acquisitions (93.2% and 92.9% of increase for the three month period and
six month period, respectively) and an increase in corporate overhead expenses
(6.7% and 6.3% of increase for the three month period and six month period,
respectively) related primarily to the additional expense of managing a larger
base of operations.
Broadcast operating income increased to $35.8 million for the three months ended
June 30, 1997, from $20.0 million for the three months and six months ended June
30, 1996, or 79.0%. Broadcast operating income increased to $48.0 million for
the six months ended June 30, 1997 from $28.1 million for the six months ended
June 30, 1996 or 70.8%. The increase in broadcast operating income for the three
months and six months ended June 30, 1997 as compared to the three months and
six months ended June 30, 1996 was primarily attributable to the 1996
Acquisitions.
Interest expense increased to $24.9 million for the three months ended June 30,
1997 from $16.8 million for the three months ended June 30, 1996, or 48.2%.
Interest expense increased to $52.0 million for the six months ended June 30,
1997 from $27.6 million for the six months ended June 30, 1996 or 88.4%. The
increase in interest expense for the three months and six months ended June 30,
1997 primarily related to indebtedness incurred by the Company to finance the
acquisitions consummated in 1997 (the "1997 Acquisitions"). Subsidiary Trust
Minority Interest Expense of $5.8 million for the three months ended June 30,
1997 and $7.0 million for the six months ended June 30, 1997 are related to the
private placement of $200 million aggregate liquidation rate of 11 5/8% High
Yield Trust Offered Preferred Securities (the "Preferred Securities") completed
March 12, 1997. Subsidiary Trust Minority Interest Expense distributions will be
partially offset by reductions in interest expense because a portion of the
proceeds of the sale of the Preferred Securities was used to reduce indebtedness
under the Company's Bank Credit Agreement.
Interest and other income decreased to $541,000 for the three months ended June
30, 1997 from $1.2 million for the three months ended June 30, 1996 or 55.0%.
Interest and other income decreased to $1.1 million for the six
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<PAGE>
months ended June 30, 1997 from $3.2 million for the six months ended June 30,
1996 or 65.6%. These decreases were primarily due to lower average cash balances
and related interest income.
Income tax provision increased to $3.8 million for the three months ended June
30, 1997 from $2.5 million for the three months ended June 30, 1996. Income tax
benefit increased to $4.1 million for the six months ended June 30, 1997 from a
provision of $2.1 million for the six months ended June 30, 1996. The increase
in income tax provision for the three months ended June 30, 1997 as compared to
the three months ended June 30, 1996 primarily related to the increase in
pre-tax income. The Company's effective tax rate decreased to a benefit of 41.3%
for the six months ended June 30, 1997 from a provision of 58.2% for the six
months ended June 30, 1996.
The net deferred tax asset increased to $8.2 million as of June 30, 1997 from
$782,000 at December 31, 1996. The increase in the Company's net deferred tax
asset as of June 30, 1997 as compared to December 31, 1996 primarily results
from the anticipation that the pre-tax losses incurred in the first six months
of 1997 will be used to offset future taxable income.
Net income for the three months ended June 30, 1997 was $1.8 million or $ 0.05
per share compared to net income of $2.0 million or $0.05 per share for the
three months ended June 30, 1996. Net loss for the six months ended June 30,
1997 was $5.8 million or $(0.17) per share compared to net income of $1.5
million or $0.04 per share.
Broadcast cash flow increased to $62.8 million for the three months ended June
30, 1997 from $42.3 million for the three months ended June 30, 1996, or 48.5%.
Broadcast cash flow increased to $105.6 million for the six months ended June
30, 1997 from $65.1 million for the six months ended June 30, 1996 or 62.2%.
These increases in broadcast cash flow primarily resulted from the 1996 and 1997
Acquisitions and to a lesser extent, increases in net broadcast revenues on a
same station basis. The Company's broadcast cash flow margin decreased to 52.0%
for the three months ended June 30, 1997 from 57.8% for the three months ended
June 30, 1996. The Company's broadcast cash flow margin decreased to 48.1% for
the six months ended June 30, 1997 from 55.5% for the six months ended June 30,
1996. Excluding the effect of radio station broadcast cash flow, television
station broadcast cash flow margin decreased to 54.5% for the three months ended
June 30, 1997 as compared to 59.3% for the three months ended June 30, 1996.
Excluding the effect of radio station broadcast cash flow, television broadcast
cash flow margin decreased to 51.2% for the six months ended June 30, 1997 from
56.3% for the six months ended June 30, 1996. Decrease in broadcast cash flow
margins for the three and six months ended June 30, 1997 as compared to the
three and six months ended June 30, 1996 primarily resulted from the lower
margins of the acquired radio broadcasting assets and lower margins of certain
television stations acquired during 1996. For television stations owned,
operated or programmed for the three months ending June 30, 1996 and the three
months ending June 30, 1997, broadcast cash flow margin increased from 58.7% to
59.2%, respectively. For television stations owned, operated or programmed for
the six months ended June 30, 1996 and the six months ending June 30, 1997,
broadcast cash flow margins increased from 55.5% to 57.0%, respectively. These
increases primarily resulted from expense savings related to synergies realized
from the 1996 Acquisitions combined with increases in net broadcast revenue.
Adjusted EBITDA increased to $59.3 million for the three months ended June 30,
1997 from $40.5 million for the three months ended June 30, 1996, or 46.4%.
Adjusted EBITDA increased to $98.6 million for the six months ended June 30,
1997 from $62.0 million for the six months ended June 30, 1996, or 59.0%. These
increases in adjusted EBITDA for the three and six months ended June 30, 1997 as
compared to the three and six months ended June 30, 1996 resulted from the 1996
and 1997 Acquisitions. The Company's adjusted EBITDA margin decreased to 49.1%
for the three months ended June 30, 1997 from 55.4% for the three months ended
June 30, 1996. The Company's adjusted EBITDA margin decreased to 44.9% for the
six months ended June 30, 1997 from 52.8% for the six months ended June 30,
1996. Decreases in adjusted EBITDA margins for the three and six months ended
June 30, 1997 as compared to the three and six months ended June 30, 1996
primarily resulted from operating cost structures at certain of the acquired
stations and increases in corporate overhead expenses. Management has begun to
implement and will continue to implement operating and programming expense
savings resulting from synergies realized from the businesses acquired in and
prior to
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<PAGE>
1996 and 1997 and believes that the benefits of the implementation of these
methods will result in improvement in broadcast cash flow margin and adjusted
EBITDA margin.
After tax cash flow increased to $25.5 million for the three months ended June
30, 1997 from $21.9 million for the three months ended June 30, 1996 , or 7.3%.
After tax cash flow increased to $32.7 million for the six months ended June 30,
1997 from $30.4 million for the six months ended June 30, 1996 or 7.6%. The
increase in after tax cash flow for the three and six months ended June 30, 1997
as compared to the three and six months ended June 30, 1996 primarily resulted
from the 1996 and 1997 Acquisitions and internal growth, offset by interest
expense on the debt incurred to consummate the 1996 and 1997 Acquisitions and
trust distributions related to the private placement of the Preferred Securities
issued during March 1997.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 1997, the Company had $2.7 million in cash balances and a working
capital deficit of approximately $9.3 million. The Company's working capital
deficit primarily results from the accelerated method of amortization of program
contract costs and the even payment streams of program contract liabilities.
Excluding the effect of current program contract costs and current program
contract liabilities, the Company's working capital at June 30, 1997, would have
been $5.7 million. The Company's primary source of liquidity is cash provided by
operations and availability under the Bank Credit Agreement. As of August 11,
1997, the Company's cash balances were approximately $1.9 million with
approximately $254 million available for borrowing under the Bank Credit
Agreement. In addition, the Bank Credit Agreement provides for a Tranche C term
loan in the amount of up to $400 million which can be utilized upon approval by
the agent bank the raising of sufficient commitments from banks to fund the
additional loans. In July 1997, the Company entered into a purchase agreement to
acquire the license and non-license assets of the radio and television stations
of Heritage Media Group, Inc. ("Heritage") for $630 million. The Company has
entered into a letter of intent to sell one of the Heritage television stations
for $60 million (the sale of which is required pursuant to the acquisition
agreement relating to the remaining Heritage television and radio properties).
The Company anticipates that it will finance the Heritage acquisition through
additional bank financing (including a draw under Tranche C described above) or
through a combination of additional bank financing and proceeds from an offering
of securities.
Net cash flows from operating activities increased to $42.5 million for the six
months ended June 30, 1997 from $26.4 million for the six months ended June 30,
1996. The Company made income tax payments of $5.3 million for the six months
ended June 30, 1997 as compared to $5.6 million for the six months ended June
30, 1996 due to anticipated tax benefits generated by the 1996 Acquisitions. The
Company made interest payments on outstanding indebtedness of $55.7 million
during the six months ended June 30, 1997 as compared to $29.5 million for the
six months ended June 30, 1996. Additional interest payments for the six months
ended June 30, 1997 as compared to the six months ended June 30, 1996 primarily
related to additional interest costs on indebtedness incurred to finance the
1996 Acquisitions. The Company made subsidiary trust minority interest expense
payments of $6.0 million for the six months ended June 30, 1997 related to the
private placement of the Preferred Securities completed in March 1997. Program
rights payments increased to $26.3 million for the six months ended June 30,
1997 from $12.1 million for the six months ended June 30, 1996, primarily as a
result of the 1996 Acquisitions.
Net cash flows used in investing activities decreased to $112.4 million for the
six months ended June 30, 1997 from $942.1 million for the six months ended June
30, 1996. During January 1997, the Company purchased the license and non-license
assets of WWFH-FM and WILP-AM in Wilkes-Barre, Pennsylvania for approximately
$770,000. In January and March 1997, the Company made cash payments of $9.0
million and $1.5 million relating to the acquisition of the license and
non-license assets of KUPN-TV and WGR-AM and WWWS-AM, respectively, utilizing
indebtedness under the Bank Credit Agreement and existing cash balances. In May
1997, the Company made cash payments of $78 million to acquire the license and
non-license assets of KUPN-TV utilizing indebtedness under the Bank Credit
Agreement and existing cash balances. During the six months ended June 30, 1997,
the Company made purchase option extension payments of $6.5 million relating to
WSYX-TV. The Company made payments totaling $8.5 million during the six months
ended June 30, 1997 in order to exercise options to acquire certain FCC
licenses. The Company made payments for property and
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<PAGE>
equipment of $8.3 million for the six months ended June 30, 1997. Other than the
Heritage acquisition, the Company has no outstanding commitments for capital
expenditures. The Company anticipates that future requirements for capital
expenditures will include other acquisitions if suitable acquisitions can be
identified on acceptable terms.
Net cash flows provided by financing activities decreased to $70.3 million for
the six months ended June 30, 1997 from $807.4 million for the six months ended
June 30, 1996. In March 1997, the Company completed a private placement of the
Preferred Securities. The Company utilized $135 million of the approximately
$193.4 million net proceeds of the private offering to repay outstanding debt
and retained the remainder for general corporate purposes, which may include
acquisitions and repurchases of shares of the Company's Class A Common Stock.
The Company made payments totaling $4.6 million to repurchase 186,000 shares of
Class A Common Stock for the six months ended June 30, 1997. In May 1997, the
Company made payments of $4.7 million related to the amendment of its Bank
Credit Agreement. In the fourth quarter of 1996, the Company negotiated the
prepayment of syndicated program contract liabilities for excess syndicated
programming assets. In the first quarter of 1997, the Company made final cash
payments of $1.4 million related to these negotiations. In July 1997, the
Company issued the 1997 Notes utilizing $162.5 million of the approximately $196
million proceeds to repay outstanding indebtedness, retaining the remainder for
the general corporate purposes.
The Company anticipates that funds from operations, existing cash balances and
availability of the revolving credit facility under the Bank Credit Agreement
will be sufficient to meet its working capital, capital expenditure commitments
and debt service requirements for the foreseeable future. However, to the extent
such funds are not sufficient, or if the Company commits to additional capital
expenditures (including additional acquisitions), the Company may need to incur
additional indebtedness, refinance existing indebtedness or raise funds from the
sale of additional equity. The Bank Credit Agreement and the indentures relating
to the Company's 9% Senior Subordinated Notes due 2007, 10% Senior Subordinated
Notes due 2003 and 10% Senior Subordinated Notes due 2005 restrict the
incurrence of additional indebtedness and the use of proceeds of an equity
issuance. In 1996, the Company filed a registration statement with the
Securities and Exchange Commission with respect to the sale by the Company of
5,750,000 shares of Class A Common Stock. The Company has not yet made such an
offering but may make such an offering at such time as it believes market
conditions warrant. There can be no assurance as to the timing of such an
offering or whether such an offering will in fact occur.
18
<PAGE>
PART II
ITEM 1. LEGAL PRECEEDINGS
On July 14, 1997, Sinclair publicly announced that it had reached an agreement
for certain of its owned and/or programmed television stations which are
currently affiliated with the United Paramount Television Network Partnership
("UPN") to become affiliated with The WB Television Network ("The WB") beginning
January 16, 1997. On August 1, 1997, UPN informed Sinclair that it did not
believe Sinclair or its affiliates had provided proper notice of its intention
not to extend these affiliation agreements beyond January 15, 1998, and,
accordingly, that these agreements had been automatically renewed through
January 15, 2001.
On August 6, 1997, certain of Sinclair's subsidiaries filed an action in the
Circuit Court for Baltimore City against UPN and its general partners. This
action seeks a declaratory judgement that proper notice of non-renewal had been
provided with respect to Sinclair's owned and /or programmed stations in
Baltimore, Pittsburgh, San Antonio, Oklahoma City and Cincinnati and that the
affiliation agreements with UPN for these stations will terminate on January 15,
1998.
On August 5, 1997, UPN filed an action in the Los Angeles Superior Court
against, inter alia, Sinclair, and certain of its affiliates. This action
relates to the above referenced stations, as well as to each of the other
stations indirectly owned and/or programmed by Sinclair subsidiaries which are
affiliated with UPN. With respect to each of these stations, the UPN lawsuit
requests a declaratory judgement that the affiliation has been renewed with a
termination date of January 15, 2001 and a judgement compelling specific
performance with such affiliation. Alternatively, UPN is seeking unspecified
damages for breach of contract.
ITEM 5. OTHER INFORMATION
ACQUISTION OF LICENSE ASSETS OF RADIO AND TELEVISION STATIONS
Since March 31, 1997, the FCC has granted approval for transfer of FCC licenses
with respect to the following television stations: KDNL-TV (St. Louis,
Missouri), KOVR-TV (Sacramento, California), WLOS-TV (Asheville, North
Carolina), KABB-TV (San Antonio, Texas) and KDSM-TV (Des Moines, Iowa). The
Company exercised options to acquire the License Assets (the television and
radio assets essential for broadcasting a television or radio signal in
compliance with regulatory guidelines) of each of these stations from River City
Broadcasting, L.P. ("River City") for aggregate option exercise payments of $9.3
million. In July 1997, the Company made an option extension payment of $.5
million to River City related to the license assets of WFBC-TV (Greenville,
South Carolina) and simultaneously assigned its option to acquire the License
Assets of WFBC-TV to Glencairn, Ltd. ("Glencairn") for an option assignment fee
of $2.0 million. The Company entered into a local marketing agreement ("LMA")
with Glencairn whereby the Company, in exchange for an hourly fee, obtained the
right to program and sell advertising on substantially all of the station's
inventory of broadcast time. The Company also received FCC approval for the
transfer of the FCC licenses of KPNT-FM and WVRV-FM in St. Louis, Missouri, and
exercised its option to acquire the License Assets of these radio stations for
an exercise price of $1.2 million. As a result of these license approvals and
option exercises, the Company now owns the License Assets of (or has entered
into an LMA with Glencairn with respect to) all of the television and radio
stations with respect to which it acquired Non-License Assets (assets involved
in the operation of radio and television stations other than License Assets)
from River City, other than WTTV-TV and WTTK-TV in Indianapolis, Indiana.
ACQUISITION OF KUPN-TV
In May 1997, the Company completed the acquisition of the License and
Non-License Assets of KUPN-TV in Las Vegas, Nevada. The Company made a cash
payment of $78.0 million, which was in addition to the $9.0 million deposit
previously paid. The Company financed the acquisition by utilizing indebtedness
under its bank credit facility.
AMENDMENT OF BANK CREDIT AGREEMENT
On May 20, 1997, the Company entered into an Amended and Restated Credit
Agreement with the Chase Manhattan Bank, as Agent (as amended from time to time,
"the Bank Credit Agreement"). The terms of the Bank Credit Agreement as amended
and restated are summarized below. The summary set forth below does not purport
to be complete and is qualified in its entirety by reference to the provisions
of the Bank Credit Agreement. A copy of the Bank Credit Agreement is filed as an
exhibit to this Report on Form 10-Q.
The Company entered into the Bank Credit Agreement with The Chase Manhattan Bank
as Agent, and certain lenders (collectively, the "Banks"). The Bank Credit
Agreement is comprised of two components, consisting of (i) the $400 million
Revolving Credit Facility and (ii) the $600 million Term Loan. An additional
term loan in the amount of $400 million (the "Incremental Facility") is
available to the Company under the Bank Credit Agreement. The Company has
borrowed no funds with respect to this additional term loan. Beginning March 31,
2000, the commitment under the Revolving Credit Facility is subject to mandatory
quarterly reductions to the following percentages of the initial amount: 90% at
December 31, 2000, 69.2% at December 31, 2001, 48.4% at December 31, 2002, 27.5%
at December 31, 2003 and 0% at December 31, 2004. The Term Loan is required to
be repaid by the Company in equal quarterly installments beginning on September
30, 1997 with the quarterly payment escalating annually through the final
maturity date of December 31, 2004.
The Company is entitled to prepay the outstanding amounts under the Revolving
Credit Facility and the Term Loan subject to certain prepayment conditions and
certain notice provisions at any time and from time to time. Partial prepayments
of the Term Loan are applied in the inverse order of maturity to the outstanding
loans on a pro rata basis. Prepaid amounts of the Term Loan may not be
reborrowed. In addition, the Company is required
19
<PAGE>
to pay an amount equal to (i) 100% of the net proceeds from the sale of assets
(other than in the ordinary course of business) not used within 270 days; (ii)
insurance recoveries and condemnation proceeds not used for permitted uses
within 270 days; (iii) 80% of net Equity Issuance (as defined in the Bank Credit
Agreement), net of prior approved uses and certain other exclusions not used
within 270 days unless the Company has a contract to reinvest the proceeds
within 90 days of the 270 days; and (iv) 50% of Excess Cash Flow so long as
Total Debt/Adjusted EBITDA (each as defined in the Bank Credit Agreement) is
greater than or equal to 5.0x, to the Banks for application first to prepay the
Term Loan, pro rata in inverse order of maturity, and then to prepay outstanding
amounts under the Revolving Credit Facility with a corresponding reduction in
commitment.
In addition to the Revolving Credit Facility and the Term Loans, the Bank Credit
Agreement provides that the Banks may, but are not obligated to, loan the
Company up to an additional $400 million at any time prior to September 29, 1998
pursuant to the Incremental Facility. This additional loan, if agreed to by the
Agent Bank, would be in the form of a senior secured standby multiple draw term
loan. The Incremental Facility would be available to fund the acquisition of
WSYX and certain other acquisitions and would be repayable in equal quarterly
installments beginning September 30, 1998, with the quarterly payment escalating
annually through the final maturity date of December 30, 2004.
The Company's obligations under the Bank Credit Agreement are secured by a
pledge of substantially all of the Company's assets, including the stock of all
of the Company's subsidiaries other than KDSM, Inc., KDSM Licensee, Inc.,
Sinclair Capital and Cresap Enterprises, Inc. The subsidiaries of the Company
(other than KDSM, Inc., KDSM Licensee, Inc., Cresap Enterprises, Inc. and
Sinclair Capital) as well as Gerstell Development Corporation, Keyser Investment
Group, Inc. and Cunningham Communications (each a "Stockholder Affiliate"), have
guaranteed the obligations of the Company. In addition, all subsidiaries of the
Company (other than Cresap Enterprises, Inc., KDSM, Inc., KDSM Licensee, Inc.
and Sinclair Capital) have pledged, to the extent permitted by the law, all of
their assets to the Banks and Gerstell Development Corporation. Keyser
Investment Group, Inc., and Cunningham Communications have pledged certain real
property to the Banks.
The Company has caused the FCC license for each television station (to the
extent such license has been transferred or acquired) or the option to acquire
such licenses to be held in a single-purpose entity utilized solely for such
purpose (the "TV License Subsidiaries") with the exception of the options for
WTTV and WTTK in Indianapolis, both of which are held by a single entity. The TV
License Subsidiaries are in all instances owned by wholly-owned indirect
subsidiaries of the Company. Additionally, the Company has caused the FCC
licenses of the radio stations in each local market to be held by a single
purpose entity utilized solely for that purpose (the "Radio License
Subsidiaries"). The Radio License Subsidiaries are in all instances owned by
wholly-owned indirect subsidiaries of the Company.
Interest on amounts drawn under the Bank Credit Agreement is, at the option of
the Company, equal to (i) the London Interbank Offered Rate plus a margin of
.50% to 1.875% for the Revolving Credit Facility and 2.75% for the Term Loan, or
(ii) the Base Rate, which equals the higher of the Federal Funds Rate plus 1/2
of 1% or the Prime Rate of Chase, plus a margin of zero to .625% for the
Revolving Credit Facility and the Term Loan. The Company must maintain interest
rate hedging arrangements or instruments for at least 60% of the principal
amount of the facilities until May 20, 1999.
The Bank Credit Agreement contains a number of covenants which restrict the
operations of the Company and its subsidiaries, including the ability to: (i)
merge, consolidate, acquire or sell assets; (ii) create additional indebtedness
or liens; (iii) pay dividends on the Parent Preferred; (iv) enter into certain
arrangements with or investments in affiliates; and (v) change the business or
ownership of the Company. The Company and its subsidiaries are also prohibited
under the Bank Credit Agreement from incurring obligations relating to the
acquisition of programming if, as a result of such acquisition, the cash
payments on such programming exceed specified amounts set forth in the Bank
Credit Agreement.
20
<PAGE>
In addition, the Company must comply with certain other financial convenants in
the Bank Credit Agreement which include: (i) Fixed Charges Ratio (as defined in
the Bank Credit Agreement) of no less than 1.05 to 1 at any time; (ii) Interest
Coverage Ratio (as defined in the Bank Credit Agreement) of no less than 1.8 to
1 from the Restatement Effective Date (as defined in the Bank Credit Agreement)
to December 30, 1998 and increasing each fiscal year to 2.20 to 1 from December
31, 2000 and thereafter; and (iii) a Senior Indebtedness Ratio (as defined in
the Bank Credit Agreement) of no greater than 5.0x from the Restatement
Effective Date declining to 4.0x by December 31, 2001 and at all times
thereafter and (iv) a Total Indebtedness Ratio (as defined in the Bank Credit
Agreement) of no greater than 6.75 to 1 from the Restatement Effective Date
declining to 4.00 to 1 by December 31, 2001 and at all times thereafter.
The Events of Default under the Bank Credit Agreement include, among others: (i)
the failure to pay principal, interest or other amounts when due; (ii) the
making of untrue representations and warranties in connection with the Bank
Credit Agreement; (iii) a default by the Company or the subsidiaries in the
performance of its obligations under the Bank Credit Agreement or certain
related security documents; (iv) certain events of insolvency or bankruptcy; (v)
the rendering of certain money judgements against the Company or its
subsidiaries; (vi) the incurrence of certain liabilities to certain plans
governed by the Employee Retirement Income Security Act of 1974; (vii) a change
of control or ownership of the Company or its subsidiaries; (viii) the security
documents being terminated and ceasing to be in full force and effect; (ix) any
broadcast license (other than a non-material license) being terminated,
forfeited or revoked or failing to be renewed for any reason whatsoever or for
any reason a subsidiary shall at any time cease to be a licensee under any
broadcast license (other than a non-material broadcast license); (x) any LMA or
options to acquire License Assets being terminated for any reason whatsoever;
(xi) any amendment, modification, supplement or waiver of the provisions of the
Indenture without the prior written consent of the majority lenders; and (xii) a
payment default on any other indebtedness of the Company if the principal amount
of such indebtedness exceeds $5 million.
RESIGNATION OF MEMBER OF BOARD OF DIRECTORS
On July 30, 1997, William F. Brock resigned his position on the Company's Board
of Directors. The Company has yet to fill this vacancy on the Board of
Directors.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
10.1 Third Amended and Restated Credit Agreement dated as of May
31, 1996 by and among Sinclair Broadcast Group, Inc., Certain
Subsidiary Guarantors, Certain Lenders and The Chase
Manhattan Bank as Agent.
10.2 Indenture, dated as of July 2, 1997, among Sinclair Broadcast
Group, Inc., Certain Subsidiary Guarantors and First Union
Bank of Maryland as trustee.
10.3 Registration Rights Agreement dated as of July 2, 1997 by and
among the Company, Certain Subsidiary Guarantors and Smith
Barney, Inc., Chase Securities, Inc., Saloman Brothers, Inc.,
and Furman Selz
10.4 Asset Purchase Agreement dated as of July 16, 1997 by and
between Heritage Broadcasting Group, Inc. and the Company.
10.5 Asset Purchase Agreement dated as of July 16, 1997 by and
among WEAR-TV, Ltd., Rollins Telecasting, Inc., WNNE-TV,
Inc., KOKH, Inc., WCHS, Ltd., WVAE-FM, Inc., KCFX-FM, Inc.,
Heritage-Wisconsin Broadcasting Corp., KKSN, Inc., WBBF,
Inc., WIL Music, Inc., and KIHT-FM, Inc. and the Company
(Confidential treatment has been requested with respect to
portions of this document. The copy filed omits the
information for which confidential treatment has been
requested.)
11 Computation of Earnings per Share
21
<PAGE>
27 Financial Data Schedule
B) REPORTS ON FORM 8-K
The Company filed a Current Report on Form 8-K dated July 29, 1997 reporting on
items 5 and 7 as an update on the acquisition of the license and non-license
assets of the television and radio stations of Heritage Media Group, Inc. ("the
Heritage acquisition")
The company filed a Current Report on Form 8-K dated July 17, 1997 reporting on
items 5 and 7 with respect to the Heritage acquisition.
The Company filed a Current Report on Form 8-K dated July 14, 1997 reporting on
items 5 and 7 with respect to the change in network affiliations for certain
television stations.
The Company filed a Current Report on Form 8-K dated July 2, 1997 reporting on
items 5 and 7 in connection with its $200 million private offering of 9% Senior
Subordinated Notes due 2007.
The Company filed a current report on Form 8-K dated June 27, 1997 reporting on
items 5 and 7 to reflect an updated description of recent developments regarding
its business relating to a $200 million private offering of 9% Senior
Subordinated Notes due 2007.
22
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report on Form 10-Q to be signed on its behalf
by the undersigned thereunto duly authorized in the city of Baltimore, Maryland
on the 11th day of August, 1997.
SINCLAIR BROADCAST GROUP, INC.
by: /s/ David B. Amy
------------------------------
David B. Amy
Chief Financial Officer
Principal Accounting Officer
23
EXECUTION COUNTERPART
************************************************************
SINCLAIR BROADCAST GROUP, INC.
and
SUBSIDIARY GUARANTORS
-----------------------------
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of May 20, 1997
------------------------------
THE CHASE MANHATTAN BANK,
as Agent
------------------------------
************************************************************
<PAGE>
TABLE OF CONTENTS
This Table of Contents is not part of the Agreement to which
it is attached but is inserted for convenience only.
Page
Section 1. Definitions and Accounting Matters........................ 2
1.01 Certain Defined Terms................................. 2
1.02 Accounting Terms and Determinations................... 42
1.03 Classes and Types of Loans............................ 44
1.04 References to Date.................................... 45
Section 2. Commitments............................................... 45
2.01 Loans................................................. 45
2.02 Borrowings............................................ 46
2.03 Changes of Commitments................................ 47
2.04 Commitment Fees....................................... 48
2.05 Lending Offices....................................... 49
2.06 Several Obligations; Remedies Independent............. 49
2.07 Notes................................................. 49
2.08 Optional Prepayments and Conversions or
Continuations of Loans...................... 51
2.09 Mandatory Prepayments and Reductions of
Commitments................................. 52
2.10 Issuance of Letters of Credit......................... 55
Section 3. Payments of Principal and Interest........................ 60
3.01 Repayment of Loans.................................... 60
3.02 Interest.............................................. 62
Section 4. Payments; Pro Rata Treatment; Computations;
Etc......................................... 63
4.01 Payments.............................................. 63
4.02 Pro Rata Treatment.................................... 64
4.03 Computations.......................................... 65
4.04 Minimum Amounts, Etc.................................. 65
4.05 Certain Notices....................................... 66
4.06 Non-Receipt of Funds by the Agent..................... 67
4.07 Sharing of Payments, Etc.............................. 68
Section 5. Yield Protection, Etc..................................... 70
5.01 Additional Costs...................................... 70
5.02 Limitation on Types of Loans.......................... 72
5.03 Illegality............................................ 73
5.04 Treatment of Affected Loans........................... 73
5.05 Compensation.......................................... 74
(i)
<PAGE>
Page
5.06 Additional Costs in Respect of Letters of
Credit...................................... 75
5.07 U.S. Taxes............................................ 76
5.08 Replacement of Lenders................................ 77
Section 6. Guarantee................................................. 78
6.01 Guarantee............................................. 78
6.02 Obligations Unconditional............................. 79
6.03 Reinstatement......................................... 80
6.04 Subrogation........................................... 81
6.05 Remedies.............................................. 81
6.06 Continuing Guarantee.................................. 81
6.07 Rights of Contribution................................ 81
6.08 Limitation on Guarantee Obligations................... 82
Section 7. Conditions Precedent...................................... 82
7.01 Effectiveness of this Agreement....................... 82
7.02 Initial and Subsequent Loans.......................... 88
Section 8. Representations and Warranties............................ 89
8.01 Corporate Existence................................... 89
8.02 Financial Condition................................... 89
8.03 Litigation............................................ 90
8.04 No Breach............................................. 90
8.05 Action................................................ 90
8.06 Approvals............................................. 91
8.07 Use of Loans.......................................... 91
8.08 ERISA................................................. 91
8.09 Taxes................................................. 91
8.10 Investment Company Act................................ 92
8.11 Public Utility Holding Company Act.................... 92
8.12 Indebtedness and Interest Rate Protection
Agreements.................................. 92
8.13 Hazardous Materials................................... 92
8.14 Subsidiaries, Etc..................................... 95
8.15 Broadcast Licenses.................................... 95
8.16 Property.............................................. 96
8.17 Ancillary Documents................................... 96
8.18 Film Obligations...................................... 96
8.19 Capitalization........................................ 97
8.20 True and Complete Disclosure.......................... 97
8.21 Tax Identification Numbers............................ 98
8.22 Program Services Agreements........................... 98
8.23 Options............................................... 98
8.24 Asset Use and Operating Agreements.................... 98
(ii)
<PAGE>
Page
Section 9. Covenants of the Obligors................................. 98
9.01 Financial Statements.................................. 99
9.02 Litigation............................................103
9.03 Existence, Etc........................................103
9.04 Insurance.............................................104
9.05 Prohibition of Fundamental Changes....................105
9.06 Limitation on Liens...................................113
9.07 Indebtedness..........................................114
9.08 Investments...........................................116
9.09 Dividend Payments.....................................118
9.10 Interest Coverage Ratio...............................120
9.11 Fixed Charges Ratio...................................120
9.12 Capital Expenditures..................................121
9.13 Senior Indebtedness Ratio.............................121
9.14 Total Indebtedness Ratio..............................121
9.15 Film Cash Payments....................................122
9.16 No Guarantee of Senior Debentures.................122
9.17 Interest Rate Protection Agreements...................122
9.18 Subordinated Indebtedness.............................123
9.19 Lines of Business.....................................123
9.20 Transactions with Affiliates..........................124
9.21 Use of Proceeds.......................................124
9.22 Certain Obligations Respecting Subsidiaries...........125
9.23 Additional Subsidiary Guarantors......................125
9.24 Modifications of Certain Documents....................126
9.25 License Subsidiaries..................................126
9.26 Equity Issuance.......................................128
9.27 CRESAP................................................128
9.28 Program Services Agreements...........................129
9.29 Exercise of River City Options........................131
9.30 Limitation on Cure Rights.............................131
Section 10. Events of Default.........................................131
10.01 Events of Default; Remedies...........................131
10.02 Collateral Account....................................137
Section 11. The Agent.................................................138
11.01 Appointment, Powers and Immunities....................138
11.02 Reliance by Agent.....................................139
11.03 Defaults..............................................139
11.04 Rights as a Lender....................................140
11.05 Indemnification.......................................140
11.06 Non-Reliance on Agent and Other Lenders...............141
11.07 Failure to Act........................................141
11.08 Resignation or Removal of Agent.......................142
11.09 Consents under Certain Documents......................142
11.10 Collateral Sub-Agents.................................142
(iii)
<PAGE>
Section 12. Miscellaneous.............................................143
12.01 Waiver................................................143
12.02 Notices...............................................143
12.03 Expenses, Etc.........................................143
12.04 Amendments, Etc.......................................145
12.05 Successors and Assigns................................148
12.06 Assignments and Participations........................148
12.07 Survival..............................................151
12.08 Captions..............................................152
12.09 Counterparts..........................................152
12.10 Governing Law; Submission to Jurisdiction.............152
12.11 Waiver of Jury Trial..................................152
12.12 Treatment of Certain Information......................152
12.13 Cure of Defaults by Agent or Lenders..................152
Schedule I - Indebtedness and Interest Rate Protection
Agreements
Schedule II - Hazardous Materials
Schedule III - Subsidiaries and Investments
Schedule IV - Broadcast Licenses
Schedule V - Film Obligations
Schedule VI - Tax Identification Numbers
Schedule VII - Program Services Agreements
Schedule VIII - Option Agreements
Schedule IX - Asset Use and Operating Agreements
Schedule X - Revolving Credit Commitments
Schedule XI - Tranche A Term Loan Commitments
Exhibit A-1 - Form of Revolving Credit Note
Exhibit A-2 - Form of Tranche A Term Loan Note
Exhibit A-3 - Form of Tranche C Term Loan Note
Exhibit B - Form of Tranche C Term Loan Activation Notice
Exhibit C - Form of Amendment to Security Agreement
Exhibit D - Form of Affiliate Guarantee
Exhibit E - Form of Amendment to GDC Security Agreement
Exhibit F - Form of Asset Use and Operating Agreement
Exhibit G - Form of Consent and Agreement
Exhibit H - Form of Assignment and Acceptance
Exhibit I - Form of Amendment to Founders Subordination Agreement
(iv)
<PAGE>
THIRD AMENDED AND RESTATED CREDIT AGREEMENT dated as of May
20, 1997, between:
SINCLAIR BROADCAST GROUP, INC., a corporation duly organized
and validly existing under the laws of the State of Maryland (the
"Borrower");
each of the Persons (as defined in Section 1.01 hereof)
identified under the caption "SUBSIDIARY GUARANTORS" on the signature
pages hereof or which, pursuant to Section 9.23 hereof, shall become a
"Subsidiary Guarantor" hereunder (individually, a "Subsidiary
Guarantor" and, collectively, the "Subsidiary Guarantors"; the Borrower
and the Subsidiary Guarantors being collectively referred to herein as
the "Obligors");
each of the Persons identified under the caption "LENDERS" on
the signature pages hereof or which, pursuant to Section 12.06(b)
hereof, shall become a "Lender" hereunder (individually, a "Lender"
and, collectively, the "Lenders"); and
THE CHASE MANHATTAN BANK, as agent for the Lenders (in such
capacity, together with its successors in such capacity, the "Agent").
WHEREAS, the Borrower, certain of the Subsidiary Guarantors,
certain of the Lenders (the "Existing Lenders") and the Agent are party to a
Second Amended and Restated Credit Agreement dated as of May 31, 1996 (as
heretofore modified and supplemented and in effect on the date hereof
immediately before giving effect to the amendment and restatement contemplated
hereby, the "Existing Credit Agreement"), pursuant to which: (a) certain of the
Existing Lenders committed to make Revolving Credit Loans (as defined in the
Existing Credit Agreement) and to issue or participate in Letters of Credit (as
defined in the Existing Credit Agreement) in an aggregate principal or face
amount not exceeding $250,000,000 at any one time outstanding, (b) certain of
the Existing Lenders committed to make Tranche A Term Loans (as defined in the
Existing Credit Agreement) in an aggregate principal amount not exceeding
$550,000,000, (c) certain of the Existing Lenders committed to make Tranche B
Term Loans (as defined in the Existing Credit Agreement) in an aggregate
principal amount not exceeding $200,000,000 and (d) one or more of the Existing
Lenders, at their option, could agree with the Borrower to make Tranche C Term
Loans (as defined in the Existing Credit Agreement) in an aggregate principal
amount not exceeding $200,000,000; and
Credit Agreement
<PAGE>
- 2 -
WHEREAS, the Borrower has requested that the Existing Lenders
(which include all of the Persons that on the date hereof are Lenders under, and
as defined in, the Existing Credit Agreement) and the Agent agree to amend and
restate the Existing Credit Agreement, and the Existing Lenders and the Agent
are willing to amend and restate the Existing Credit Agreement, in order to (a)
provide for Revolving Credit Loans and Letters of Credit to be made or issued in
an aggregate principal or face amount not exceeding $400,000,000 at any one time
outstanding, provided that the aggregate face amount of the Letters of Credit
shall not exceed $100,000,000 at any one time outstanding, (b) provide for
Tranche A Term Loans to be made in an aggregate principal amount not to exceed
$600,000,000, (c) provide for the repayment in full on the Restatement Effective
Date (as defined in Section 1.01 below) of the principal of and interest on the
Tranche B Term Loans, (d) provide, at the option of the Borrower and one or more
Lenders, for Tranche C Term Loans in an aggregate principal amount not exceeding
$400,000,000 and (e) provide for the other amendments to the Existing Credit
Agreement hereinafter set forth; and
NOW, THEREFORE, the parties hereto hereby agree that the
Existing Credit Agreement shall be amended and restated as of the date hereof
(but subject to Section 7.01 hereof) to read in its entirety as follows:
Section 1. Definitions and Accounting Matters.
1.01 Certain Defined Terms. As used herein, the following
terms shall have the following meanings (all terms defined in this Section 1.01
or in other provisions of this Agreement in the singular to have the same
meanings when used in the plural and vice versa):
"Acquisitions" shall mean the River City License
Acquisitions, the Approved Acquisitions and the Other
Acquisitions.
"Additional Senior Subordinated Notes" shall have the meaning
assigned to such term in Section 9.07(c) hereof.
"Affiliate" shall mean any Person which directly or indirectly
controls, or is under common control with, or is controlled by, the Borrower
and, if such Person is an individual, any member of the immediate family
(including parents, spouse and children) of such individual and any trust whose
principal beneficiary is such individual or one or more members of such
immediate family and any Person who is controlled by any such member or trust.
As used in this definition, "control" (including, with its correlative meanings,
"controlled by" and
Credit Agreement
<PAGE>
- 3 -
"under common control with") shall mean possession, directly or indirectly, of
power to direct or cause the direction of management or policies (whether
through ownership of securities or partnership or other ownership interests, by
contract or otherwise), provided that, in any event, any Person which owns
directly or indirectly 5% or more of the securities having ordinary voting power
for the election of directors or other governing body of a corporation or 5% or
more of the partnership or other ownership interests of any other Person (other
than as a limited partner of such other Person) will be deemed to control such
corporation or other Person. Notwithstanding the foregoing, no individual shall
be deemed to be an Affiliate solely by reason of his or her being a director,
officer or employee of the Borrower or any of its Subsidiaries and the Borrower
and its Subsidiaries shall not be deemed to be Affiliates of each other.
"Affiliate Guarantee" shall mean the Affiliate Guarantee,
substantially in the form of Exhibit D hereto, between Cunningham, GDLP, KIG and
the Agent.
"Aggregate Consideration" shall mean, in connection with any
Acquisition, the aggregate consideration, in whatever form (including, without
limitation, cash payments, the principal amount of promissory notes and
Indebtedness assumed, the aggregate amounts payable to acquire, extend and
exercise any option, the aggregate amount payable under non-competition
agreements and management agreements, and the fair market value of other
Property delivered) paid, delivered or assumed by the Borrower and its
Subsidiaries for such Acquisition.
"Agreement" shall mean this Third Amended and Restated Credit
Agreement, as modified and supplemented and in effect from time to time.
"Amendment to Founders Subordination Agreement" shall mean the
amendment, substantially in the form of Exhibit I hereto, of the Founders
Subordination Agreement.
"Amendment to GDC Security Agreement" shall mean the
amendment, substantially in the form of Exhibit E hereto, to the GDC Security
Agreement.
"Amendment to Security Agreement" shall mean the amendment,
substantially in the form of Exhibit C hereto, of the Security Agreement.
"Ancillary Documents" shall mean the River City Acquisition
Documents, the Asset Use and Operating Agreements, the Julian Smith Documents,
the Carolyn Smith Documents, the
Credit Agreement
<PAGE>
- 4 -
Program Services Agreements, the Senior Subordinated Notes and the Senior
Subordinated Note Indentures.
"Applicable Commitment Fee Rate" shall mean 3/8 of 1% per
annum; provided that if the Total Indebtedness Ratio as at the last day of any
fiscal quarter of the Borrower shall fall within any of the ranges set forth
below then, subject to the delivery to the Agent of a certificate of a senior
financial officer of the Borrower demonstrating such fact prior to the end of
the next succeeding fiscal quarter, the "Applicable Commitment Fee Rate" shall
be reduced to the rate set forth below opposite such range during the period
commencing on the Quarterly Date on or immediately following the date of receipt
of such certificate to but not including the next succeeding Quarterly Date
thereafter (except that notwithstanding the foregoing, the Applicable Commitment
Fee Rate shall not as a consequence of this proviso be so reduced for any period
during which an Event of Default shall have occurred and be continuing):
Range of
Total Applicable Commitment
Indebtedness Ratio Fee Rate (% p.a.)
Greater than or
equal to 5.00 to 1 3/8 of 1%
Less than 5.00 to 1 1/4 of 1%
"Applicable Lending Office" shall mean, for each Lender and
for each Type of Loan, the "Lending Office" of such Lender (or of an affiliate
of such Lender) designated for such Type of Loan on the signature pages hereof
or such other office of such Lender (or of an affiliate of such Lender) as such
Lender may from time to time specify to the Agent and the Borrower as the office
by which its Loans of such Type are to be made and maintained.
"Applicable Margin" shall mean: (a) with respect to Base Rate
Loans, (i) 5/8% per annum for Revolving Credit Loans and Tranche A Term Loans
and (ii) the rate per annum for Tranche C Term Loans agreed to by the Borrower
and the Tranche C Lenders in the Tranche C Term Loan Activation Notice; and (b)
with respect to Eurodollar Loans, (i) 1 7/8% per annum for Revolving Credit
Loans and Tranche A Term Loans and (ii) the rate per annum for Tranche C Term
Loans agreed to by the Borrower and the Tranche C Lenders in the Tranche C Term
Loan Activation Notice; provided that if the Total Indebtedness Ratio as at the
last day of any fiscal quarter of the Borrower shall fall within any of the
ranges set forth below then, subject to the delivery to the Agent of a
certificate of a senior financial officer of the
Credit Agreement
<PAGE>
- 5 -
Borrower demonstrating such fact prior to the end of the next succeeding fiscal
quarter, the "Applicable Margin" for Revolving Credit Loans and Tranche A Term
Loans shall be reduced to the rate for the respective Type of Loan set forth
below opposite such range during the period commencing on the Quarterly Date on
or immediately following the date of receipt of such certificate to but not
including the next succeeding Quarterly Date thereafter (except that
notwithstanding the foregoing, the Applicable Margin for any such Loan shall not
as a consequence of this proviso be so reduced for any period during which an
Event of Default shall have occurred and be continuing):
Range of
Total Applicable Margin (% p.a.)
Indebtedness Ratio Base Rate Loans Eurodollar Loans
Greater than or
equal to 6.50 to 1 5/8% 1 7/8%
less than 6.50 to 1
and greater than or
equal to 6.00 to 1 1/4% 1 1/2%
less than 6.00 to 1
and greater than or
equal to 5.50 to 1 0% 1 1/4%
less than 5.50 to 1 and
greater than or equal
to 5.00 to 1 0% 1%
less than 5.00 to 1 and
greater than or equal
to 4.50 to 1 0% 3/4%
less than 4.50 to 1 and
greater than or equal
to 4.00 to 1 0% 5/8%
Less than 4.00 to 1 0% 1/2%
"Approved Acquisitions" shall mean (a) the consummation of the
acquisition of assets by the Borrower or any of its Subsidiaries pursuant to the
exercise of any or all of the WPTT Conversion Option, the Glencairn Options and
the WDBB Options, (b) the acquisition of stock or assets and assumption of
liabilities relating to WFBC-AM and WFBC-FM, Greenville, South Carolina and
WORD-AM, Spartanburg, South Carolina in accordance with the terms hereof by the
Borrower or any of its Subsidiaries pursuant to the exercise of either option
Credit Agreement
<PAGE>
- 6 -
granted to the Borrower or such Subsidiary under the Option Agreement dated as
of July 7, 1995, as amended, by and among Keymarket of South Carolina, Inc.
("Keymarket S.C.") and the Borrower (as assignee of River City), (c) the
acquisition of assets and assumption of liabilities relating to WSPA-AM and
WSPA-FM, Spartanburg, South Carolina in accordance with the terms hereof by the
Borrower or any of its Subsidiaries pursuant to the exercise of the option
granted to the Borrower or such Subsidiary under the Option Agreement dated as
of August 30, 1994, as amended, by and among The Spartan Radiocasting Company,
Inc. and the Borrower (as assignee of River City, which, in turn, is assignee of
Keymarket S.C.), (d) the acquisition of assets (or of the capital stock (or
other equity ownership interest) of the Person that owns such assets) and
assumption of liabilities relating to WPMR-AM and WKRF-FM, Tobyhanna,
Pennsylvania in accordance with the terms hereof, (e) the acquisition of assets
and assumption of liabilities relating to KUPN-TV Las Vegas, Nevada in
accordance with the terms and conditions under that Asset Purchase Agreement
dated January 31, 1997 by and between Channel 21, L.P. and KUPN, Inc. and (f)
the acquisition of assets (or of the capital stock (or other equity ownership
interest) of the Person that owns such assets) and assumption of liabilities
relating to WXWX-FM, Easley, South Carolina, and WXWZ-FM, Greer, South Carolina.
"Asset Use and Operating Agreements" shall mean (a) the
agreements listed in Schedule IX hereto and (b) with respect to each Owned
Station hereafter acquired by the Borrower, an Asset Use and Operating Agreement
entered into after the date hereof, as contemplated by Section 9.25 hereof,
between the Subsidiary of the Borrower that operates such Owned Station and a
License Subsidiary with respect to such Owned Station substantially in the form
of Exhibit F hereto, in each case as the same may be modified and supplemented
and in effect from time to time.
"Baker Employment Agreement" shall mean the Employment
Agreement dated as of April 10, 1996 between Barry Baker and the Borrower, as
the same may be modified and supplemented and in effect from time to time.
"Baker Stock Option Agreement" shall mean the Stock Option
Agreement dated as of April 10, 1996 between Barry Baker and the Borrower,
providing, among other things, for the right of Barry Baker to acquire 1,382,435
shares of the Borrower's Class A Common Stock on the terms and conditions set
forth therein, as the same may be modified and supplemented and in effect from
time to time.
"Base Rate" shall mean, for any day, the higher of (a) the
Federal Funds Rate for such day plus 1/2 of 1% per annum
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or (b) the Prime Rate for such day. Each change in any interest rate provided
for herein based upon the Base Rate resulting from a change in the Base Rate
shall take effect at the time of such change in the Base Rate.
"Base Rate Loans" shall mean Loans which bear interest at
rates based upon the Base Rate.
"Basic Documents" shall mean, collectively, this Agreement,
the Notes (if any), the Letter of Credit Documents, the Security Documents, each
Consent and Agreement and the Founders Subordination Agreement.
"BCF Percentage" shall mean, as of the date of the
consummation of any Other Acquisition, the ratio, expressed as a percentage,
obtained by dividing (a) the portion of Broadcast Cash Flow attributable to
Contract Stations for the twelve-month period ending on, or most recently ended
prior to such date by (b) Broadcast Cash Flow for such period. Solely for
purposes of this definition, the term "Contract Stations" shall be deemed not to
include any Station that is contemplated by the River City Acquisitions
Documents to be the subject of a River City License Acquisition.
"Broadcast Cash Flow" shall mean, for any period, the sum of
EBITDA plus Corporate Expense for such period.
"Broadcast Licenses" shall mean (a) the licenses, permits,
authorizations or certificates to construct, own, operate or promote the
Stations granted by the FCC, and all extensions, additions and renewals thereto
or thereof, and (b) the licenses, permits, authorizations or certificates which
are necessary or desirable to construct, own, operate or promote the Stations
granted by administrative law courts or any state, county, city, town, village
or other local government authority, and all extensions, additions and renewals
thereto or thereof.
"Business Day" shall mean (a) any day on which commercial
banks are not authorized or required to close in New York City and (b) if such
day relates to a borrowing of, a payment or prepayment of principal of or
interest on, or a Conversion of or into, or an Interest Period for, a Eurodollar
Loan or a notice by the Borrower with respect to any such borrowing, payment,
prepayment, Conversion or Interest Period, which is also a day on which dealings
in Dollar deposits are carried out in the London interbank market.
"Capital Expenditures" shall mean, for any period,
expenditures (including the aggregate amount of Capital Lease Obligations
incurred during such period) made by the Borrower or
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any of its Consolidated Subsidiaries to acquire or construct fixed assets, plant
and equipment (including renewals, improvements and replacements, but excluding
repairs) during such period computed in accordance with GAAP, but excluding any
such expenditures made as part of any Acquisition.
"Capital Lease Obligations" shall mean, for any Person, the
obligations of such Person to pay rent or other amounts under a lease of (or
other agreement conveying the right to use) real and/or personal Property to the
extent such obligations are required to be classified and accounted for as a
capital lease on a balance sheet of such Person under GAAP (including Statement
of Financial Accounting Standards No. 13 of the Financial Accounting Standards
Board) and, for purposes of this Agreement, the amount of such obligations shall
be the capitalized amount thereof, determined in accordance with GAAP (including
such Statement No. 13).
"Capital Stock" shall mean, as to any Person, any and all
shares, interests, warrants, participations or other equivalents (however
designated) of corporate stock of such Person.
"Carolyn Smith Documents" shall mean the Term Note dated
September 30, 1990 of the Borrower payable to Carolyn C. Smith in the original
face amount of $6,700,000 and all agreements, documents or other instruments
providing for any Guarantee of all or any portion of such Term Note by any
Obligor, in each case as modified and supplemented and in effect from time to
time.
"Casualty Event" shall mean, with respect to any Property of
any Person, any loss of or damage to, or any condemnation or other taking of,
such Property for which such Person or any of its Subsidiaries receives
insurance proceeds, or proceeds of a condemnation award or other compensation.
"Chase" shall mean The Chase Manhattan Bank and its
successors.
"Class" shall have the meaning assigned to such term in
Section 1.03 hereof.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
"Collateral Account" shall have the meaning assigned to such
term in Section 10.02 hereof.
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"Columbus Option Agreement" shall mean the Columbus Option
Agreement dated as of May 31, 1996 by and among the River City Sellers, as
Sellers, and the Borrower, as Option Holder, as the same shall be modified and
supplemented and in effect from time to time.
"Commitments" shall mean the Revolving Credit Commitments, the
Tranche A Term Loan Commitments and the Tranche C Term Loan Commitments.
"Common Participation Interests" shall mean the common equity
ownership interests in the Trust.
"Consent and Agreement" shall mean a Consent and Agreement
substantially in the form of Exhibit G hereto.
"Consolidated Subsidiary" shall mean, for any Person, each
Subsidiary of such Person (whether now existing or hereafter created or
acquired) the financial statements of which shall be (or should have been)
consolidated with the financial statements of such Person in accordance with
GAAP.
"Continue", "Continuation" and "Continued" shall refer to the
continuation pursuant to Section 2.08 hereof of a Eurodollar Loan from one
Interest Period to the next Interest Period.
"Contract Station" shall mean (a) each television or radio
station listed in Part B of Schedule IV hereto and (b) each television or radio
station that is the subject of an acquisition referred to in clause (b) of the
definition of "Other Acquisition" in this Section 1.01 consummated by the
Borrower or any of its Subsidiaries on or after the date hereof, in each case
referred to in the foregoing clauses (a) and (b) until such time, if any, as
such television or radio station becomes an Owned Station.
"Convert", "Conversion" and "Converted" shall refer to a
conversion pursuant to Section 2.08 or 5.04 hereof of Loans of one Type into
Loans of the other Type, which may be accompanied by the transfer by a Lender
(at its sole discretion) of a Loan from one Applicable Lending Office to
another.
"Converted Senior Subordinated Notes" shall have the meaning
assigned to such term in Section 9.07(h) hereof.
"Corporate Expense" shall mean, for any period, all general
and administrative expenses of the Borrower for such period. In the event that
any general or administrative expense of the type heretofore borne by the
Borrower is hereafter borne
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by any Subsidiary of the Borrower, such general or administrative expense borne
by such Subsidiary shall be deemed to be "Corporate Expense" for the purposes
hereof.
"Corporate Employee Stock Option Agreements" shall mean the
respective Stock Option Agreements dated as of April 10, 1996 between the
Borrower and the respective River City Corporate Employees, providing, among
other things, for the right of the River City Corporate Employees to acquire, in
the aggregate, not more than 691,218 shares of the Borrower's Class A Common
Stock on the terms and conditions set forth therein, in each case as the same
may be modified and supplemented and in effect from time to time.
"Credit Exposure" of a Lender shall mean the aggregate
outstanding principal amount of the Loans held by such Lender, the aggregate
unutilized amounts of the outstanding Commitment(s) of such Lender and the
aggregate amount of Letter of Credit Liabilities of such Lender.
"Credit Parties" shall mean the Obligors, Cunningham, KIG,
GDLP and GDC.
"CRESAP" shall mean CRESAP Enterprises, Inc, a Maryland
corporation.
"CRESAP Investment" shall mean the Investment permitted by the
proviso to Section 9.27(e) hereof.
"Cunningham" shall mean Cunningham Communications, Inc., a
Maryland corporation.
"Debt Service" shall mean, for any period, the sum, for the
Borrower and its Consolidated Subsidiaries (determined on a consolidated basis
without duplication in accordance with GAAP), of the following: (a) all payments
of principal of Indebtedness (including, without limitation, the principal
component of any payments in respect of Capital Lease Obligations) scheduled to
be made during such period plus (b) all Interest Expense for such period plus
(c) fees and other expenses payable in connection with this Agreement for such
period (excluding such fees and expenses constituting transaction costs payable
on the Restatement Effective Date, but including agency fees).
"Default" shall mean an Event of Default or an event which
with notice or lapse of time or both would become an Event of Default.
"Designated Company" shall mean (i) KDSM, but only for so long
as KDSM owns no Property other than the Common
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Participation Interests, the Existing Preferred Stock, the capital stock of KDSM
Licensee, Property directly related to the operation of KDSM-TV, Indebtedness of
the Borrower permitted by Section 9.07(i) hereof and the profits and proceeds
generated by the aforementioned Property or (ii) New PPI Sub, but only for so
long as New PPI Sub owns no Property other than the New PPI Common Participation
Interests, the New PPI Preferred Stock, the capital stock of New PPI Sub
Licensee, Property directly related to the operation of New PPI Station,
Indebtedness of the Borrower permitted by Section 9.07(i) hereof and the profits
and proceeds generated by the aforementioned Property.
"Designated Employees Stock Option Plan" shall mean the
Incentive Stock Option Plan for Designated Participants providing for the right
of certain employees of the Borrower and its Subsidiaries to acquire, in the
aggregate, not more than 68,000 shares of the Borrower's Class A Common Stock.
"Disposition" shall mean any sale, assignment, transfer or
other disposition of any Property (whether now owned or hereafter acquired) by
the Borrower or any of its Subsidiaries to any Person excluding any sale,
assignment, transfer or other disposition of any Property sold or disposed of in
the ordinary course of business and on ordinary business terms.
"Dividend Payment" shall mean dividends (in cash, Property or
obligations) on, or other payments or distributions on account of, or the
setting apart of money for a sinking or other analogous fund for, or the
purchase, redemption, retirement or other acquisition of, any shares of any
class of stock of the Borrower or of any warrants, options or other rights to
acquire the same (or to make any payments to any Person, such as "phantom stock"
payments, where the amount thereof is calculated with reference to the fair
market or equity value of the Borrower or any of its Subsidiaries), but
excluding dividends payable solely in shares of capital stock of the Borrower.
"Dollars" and "$" shall mean lawful money of the United States
of America.
"EBITDA" shall mean, for any period, the sum, for the Borrower
and its Consolidated Subsidiaries (determined on a consolidated basis without
duplication in accordance with GAAP), of the following for such period (subject
to Section 1.02(d) hereof): (a) net income for such period plus (b) taxes to the
extent deducted in determining net income for such period plus (c) depreciation
and amortization (including film amortization) for such period plus (d) Interest
Expense for such period to the extent deducted in determining net income for
such period plus (e) all other non-cash charges to the extent deducted in
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determining net income for such period minus (f) Film Cash Payments made or
scheduled to be made during such period minus (g) Corporate Expense to the
extent not deducted in determining net income for such period plus (h) the
Adjustment Amount (as defined below) for such period minus (i) non-cash revenues
to the extent included in net income for such period plus (j) Dividend Payments
made by the Borrower and its Subsidiaries as permitted by Sections 9.09(a)
hereof to the extent deducted in determining net income for such period or
included in determining Corporate Expense pursuant to the preceding clause (g)
for such period plus (k) Permitted Termination Payments (as defined in Section
9.28 hereof) to the extent deducted in determining net income for such period or
included in determining Corporate Expense pursuant to the preceding clause (g)
for such period plus (l) any WSYX Extension Payment made by the Borrower or any
of its Subsidiaries during such period to the extent deducted in determining net
income for such period minus (m) interest and other income to the extent
included in net income for such period minus (n) extraordinary gains to the
extent included in net income plus (o) extraordinary losses to the extent
deducted in determining net income for such period plus (p) dividends paid by
the Borrower on the Existing Preferred Stock and on the New PPI Preferred Stock
during such period, to the extent deducted in determining net income for such
period. For purposes of this definition, the "Adjustment Amount" for any period
shall mean: (a) if such period ends on or before June 30, 1997, $4,000,000 and
(b) if such period ends on or after June 30, 1997, $0.
"EBITDA Percentage" shall mean, as of the date of the
consummation of any sale or exchange of assets (or capital stock (or other
equity ownership interest)) contemplated by Section 9.05(d)(iv) hereof, the
ratio, expressed as a percentage, obtained by dividing (a) the portion of EBITDA
attributable to such assets for the twelve-month period ending on, or most
recently ended prior to such date by (b) EBITDA for such period.
"Environmental Affiliate" shall mean, as to any Person (the
"successor"), any other Person whose liability (contingent or otherwise) for an
Environmental Claim the successor may have retained, assumed or otherwise become
or remained liable for (contingently or otherwise), whether by contract,
operation of law or otherwise; provided that each Subsidiary of the successor,
and each former Subsidiary or division of the successor transferred to another
Person, shall in any event be an "Environmental Affiliate" of the successor.
"Environmental Claim" shall mean, with respect to any Person,
any notice, claim, demand or other communication (whether written or oral) by
any other Person alleging or asserting such Person's liability for investigatory
costs, cleanup costs,
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governmental response costs, damages to natural resources or other Property,
personal injuries, fines or penalties arising out of, based on or resulting from
(a) the presence, or Release into the environment, of any Hazardous Material at
any location, previously owned or leased by such Person and whether or not owned
or leased by such Person at the time such notice, claim, demand or other
communication is made or (b) circumstances forming the basis of any violation,
or alleged violation, of any Environmental Law.
"Environmental Laws" shall mean any and all Federal, state,
local and foreign statutes, laws, regulations, ordinances, rules, judgments,
orders, decrees, permits, concessions, grants, franchises, licenses, agreements
or other governmental restrictions relating to the environment or to emissions,
discharges, Releases or threatened Releases of pollutants, contaminants,
chemicals, or industrial, toxic or hazardous substances or wastes into the
environment including, without limitation, ambient air, surface water, ground
water, or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes.
"Equity Issuance" shall mean (a) any issuance or sale by the
Borrower or any of its Subsidiaries after the Restatement Effective Date of (i)
any capital stock, (ii) any warrants or options exercisable in respect of
capital stock (other than any warrants or options relating to capital stock of
the Borrower issued to directors, officers or employees of the Borrower or any
of its Subsidiaries pursuant to employee benefit plans established in the
ordinary course of business and any capital stock of the Borrower issued upon
the exercise of such warrants or options) or (iii) any other security or
instrument representing an equity interest (or the right to obtain any equity
interest) in the Borrower or any of its Subsidiaries or (b) the receipt by the
Borrower or any of its Subsidiaries after the Restatement Effective Date of any
capital contribution (whether or not evidenced by any equity security issued by
the recipient of such contribution); provided that Equity Issuance shall not
include (x) any such issuance or sale by any Subsidiary of the Borrower to the
Borrower or any Wholly Owned Subsidiary of the Borrower or (y) any capital
contribution by the Borrower or any Wholly Owned Subsidiary of the Borrower to
any Subsidiary of the Borrower.
"Equity Public Offering" shall mean a public Equity Issuance
by the Borrower of its common stock pursuant to a registration statement filed
under the Securities Act of 1933, as amended.
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"Equity Rights" shall mean, with respect to any Person, any
subscriptions, options, warrants, commitments, preemptive rights or agreements
of any kind (including, without limitation, any stockholders' or voting trust
agreements) for the issuance, sale, registration or voting of, or securities
convertible into, any additional shares of capital stock of any class, or
partnership or other ownership interests of any type in, such Person.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time.
"ERISA Affiliate" shall mean any corporation or trade or
business which is a member of the same controlled group of corporations (a)
described in Section 414(b) or (c) of the Code of which the Borrower is a member
and (b) solely for purposes of potential liability under Section 302(c)(11) of
ERISA and Section 412(c)(11) of the Code and the lien created under Section
302(f) of ERISA and Section 412(n) of the Code, described in Section 414(m) or
(o) of the Code of which the Borrower is a member.
"Eurodollar Base Rate" shall mean, with respect to any
Eurodollar Loan for any Interest Period therefor, the rate per annum (rounded
upwards, if necessary, to the nearest 1/16 of 1%), as quoted by the Agent at
approximately 11:00 a.m. London time (or as soon thereafter as practicable) on
the date two Business Days prior to the first day of such Interest Period for
the offering by Chase to leading banks in the London interbank market of Dollar
deposits having a term comparable to such Interest Period and in an amount
comparable to the principal amount of the Eurodollar Loan to be made by Chase
for such Interest Period. If Chase is not participating in any Eurodollar Loan
during any Interest Period therefor, the Eurodollar Base Rate for such Loan for
such Interest Period shall be determined by reference to the amount of the Loan
which Chase would have made or had outstanding had it been participating in such
Loan during such Interest Period.
"Eurodollar Loans" shall mean Loans that bear interest at
rates based on rates referred to in the definition of "Eurodollar Base Rate" in
this Section 1.01.
"Eurodollar Rate" shall mean, for any Eurodollar Loan for any
Interest Period therefor, a rate per annum (rounded upwards, if necessary, to
the nearest 1/100 of 1%) determined by the Agent to be equal to the Eurodollar
Base Rate for such Loan for such Interest Period divided by 1 minus the Reserve
Requirement for such Loan for such Interest Period.
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"Event of Default" shall have the meaning assigned to such
term in Section 10.01 hereof.
"Excess Cash Flow" shall mean, for any period, the sum
(without duplication) of (a) EBITDA for such period minus (b) the sum (without
duplication) of (i) all Debt Service during such period plus (ii) all Capital
Expenditures made by the Borrower and its Subsidiaries during such period plus
(iii) the excess, if any, of the consolidated Working Investment of the Borrower
and its Consolidated Subsidiaries at the end of such period over the
consolidated Working Investment of the Borrower and its Consolidated
Subsidiaries at the beginning of such period (or minus the excess, if any, of
such Working Investment at the beginning of such period over such Working
Investment at the end of such period) plus (c) Film Cash Payments scheduled to
have been made, but not made, during such period minus (d) the aggregate amount
of fees paid by the Borrower and its Subsidiaries to CRESAP during such period
minus (e) the aggregate amount of Federal and state income taxes paid by the
Borrower and its Consolidated Subsidiaries, net of refunds, for such period
minus (f) the aggregate amount of dividends paid in cash in respect of Preferred
Stock during such period as permitted by Section 9.09 hereof.
"Existing Credit Agreement" shall have the meaning assigned to
such term in the first "WHEREAS" clause of this Agreement.
"Existing Letters of Credit" shall mean Letters of Credit (as
defined in the Existing Credit Agreement) that are outstanding on the
Restatement Effective Date.
"Existing Preferred Stock" shall mean (a) the 12 5/8% Series C
Preferred Stock, par value $0.01 per share, issued by the Borrower in connection
with the PPI Transaction and outstanding on the date hereof, having an aggregate
liquidation preference on the date hereof equal to $206,200,000 and (b) the
Series B Convertible Preferred Stock, par value $0.01 per share, issued by the
Borrower and outstanding on the date hereof.
"Existing Revolving Credit Loans" shall mean the "Revolving
Credit Loans" as defined in the Existing Credit Agreement that are outstanding
on the Restatement Effective Date before the prepayments required by Section
2.01(d).
"Existing Tranche A Term Loans" shall mean the "Tranche A
Loans" as defined in the Existing Credit Agreement that are outstanding on the
Restatement Effective Date before the prepayments required by Section 2.01(d).
Credit Agreement
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"Existing Tranche B Term Loans" shall mean the "Tranche B
Loans" as defined in the Existing Credit Agreement that are outstanding on the
Restatement Effective Date before the prepayments required by Section 2.01(d).
"FCC" shall mean the Federal Communications Commission (or any
successor entity).
"Federal Funds Rate" shall mean, for any day, the rate per
annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day, provided that (a) if the day for which such rate is to
be determined is not a Business Day, the Federal Funds Rate for such day shall
be such rate on such transactions on the next preceding Business Day as so
published on the next succeeding Business Day, and (b) if such rate is not so
published for any Business Day, the Federal Funds Rate for such day shall be the
average rate charged to Chase on such Business Day on such transactions as
determined by the Agent.
"Film Cash Payments" shall mean, for any period, the sum
(determined on a consolidated basis and without duplication) of all payments by
the Borrower and its Subsidiaries made or scheduled to be made during such
period in respect of Film Obligations; provided that amounts applied to the
prepayment of Film Obligations owing under Prepayable Film Contracts shall not
be deemed to be Film Cash Payments. For the purposes of Section 9.15 hereof
only, (a) if the payment schedule for a Film Obligation is modified at no cost
(including, but not limited to, interest costs) to the Borrower or any of its
Subsidiaries, then the payments with respect to such Film Obligation shall be
deemed to be scheduled to be made pursuant to such modified schedule and (b) any
down payment on a Film Obligation shall be equally allocated over the term of
the payment period for such Film Obligation in amount per month during such
payment period equal to the amount of such down payment divided by the number of
months during such payment period. For the purposes of the definition of
"EBITDA" in this Section 1.01 only, Film Cash Payments for any fiscal quarter
shall be reduced by (a) $764,000, if such fiscal quarter ends on June 30, 1996,
(b) $386,000, if such fiscal quarter ends on September 30, 1996, and (c)
$668,000, if such fiscal quarter ends on December 31, 1996; provided that, if
Film Cash Payments are to be calculated for any portion of any such fiscal
quarter, the amount of the reduction specified in the foregoing clause (a), (b)
or (c), as the case may be, for such fiscal quarter shall be multiplied by a
fraction, the numerator of which shall be the number of days in the portion of
such
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fiscal quarter for which Film Cash Payments are to be calculated and the
denominator of which shall be the number of days in such fiscal quarter.
"Film Obligations" shall mean obligations in respect of the
purchase, use, license or acquisition of programs, programming materials, films,
and similar assets used in connection with the business and operations of the
Borrower and its Subsidiaries.
"Final FCC Order" shall mean an order of the FCC that is no
longer subject to reconsideration or review by the FCC or by any court or
administrative body.
"Fixed Charges Ratio" shall mean, as at any date, the ratio of
(a) EBITDA for the period of twelve consecutive full calendar months ending on
or most recently ended prior to such date to (b) the sum for such period of (i)
Debt Service plus (ii) Capital Expenditures plus (iii) the aggregate amount of
Federal and state income taxes paid by the Borrower and its Consolidated
Subsidiaries, net of refunds, during such period plus (iv) the aggregate amount
of fees paid by the Borrower and its Subsidiaries to CRESAP during such period
plus (v) Dividend Payments made as permitted by Section 9.09(b) and (c) during
such period plus (vi) the aggregate amount of WSYX Option Extension Payments
made during such period, except to the extent that such WSYX Option Extension
Payments were paid (x) out of 25% of Excess Cash Flow for each fiscal year of
the Borrower ending before the date of such payment (to the extent not otherwise
applied by the Borrower in accordance with the provisions of this Agreement),
(y) with the proceeds of the Loans or (z) by means of an Equity Issuance made
pursuant to the Columbus Option Agreement plus (vii) the WSYX Sale Price
Differential, if paid during such period, except to the extent such WSYX Sale
Price Differential was paid (x) out of 25% of Excess Cash Flow for each fiscal
year of the Borrower ending before the date of such payment (to the extent not
otherwise applied by the Borrower in accordance with the provisions of this
Agreement), (y) with the proceeds of the Loans or (z) by means of an Equity
Issuance made pursuant to the Columbus Option Agreement.
"Founders Notes" shall mean Indebtedness under the Julian
Smith Documents and Indebtedness under the Carolyn Smith Documents.
"Founders Subordination Agreement" shall mean the Second
Amended and Restated Founders Subordination Agreement dated as of May 31, 1996
between Carolyn C. Smith and the Agent, as the same shall be modified and
supplemented and in effect from time to time.
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"GAAP" shall mean generally accepted accounting principles
applied on a basis consistent with those which, in accordance with the last
sentence of Section 1.02(a) hereof, are to be used in making the calculations
for purposes of determining compliance with the terms of this Agreement.
"GDC" shall mean Gerstell Development Corporation, a Maryland
corporation.
"GDC Security Agreement" shall mean the Security Agreement
between GDC and the Agent, dated as of May 31, 1996, as the same shall be
modified and supplemented and in effect from time to time.
"GDLP" shall mean Gerstell Development Limited Partnership, a
Maryland limited partnership.
"Glencairn" shall mean Glencairn, Ltd., a Maryland
corporation.
"Glencairn Options" shall mean options for the purchase of all
of the issued and outstanding non-voting stock of Glencairn.
"Governmental Authority" shall mean any nation or government,
any state or other political subdivision thereof, and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, and any corporation or other entity owned or
controlled (through stock or capital ownership or otherwise) by any of the
foregoing.
"Guarantee" shall mean a guarantee, an endorsement, a
contingent agreement to purchase or to furnish funds for the payment or
maintenance of, or otherwise to be or become contingently liable under or with
respect to, the Indebtedness, other obligations, net worth, working capital or
earnings of any Person, or a guarantee of the payment of dividends or other
distributions upon the stock or equity interests of any Person, or an agreement
to purchase, sell or lease (as lessee or lessor) Property, products, materials,
supplies or services primarily for the purpose of enabling a debtor to make
payment of his, her or its obligations or an agreement to assure a creditor
against loss, and including, without limitation, causing a bank or other
financial institution to issue a letter of credit or other similar instrument
for the benefit of another Person, but excluding endorsements for collection or
deposit in the ordinary course of business; provided that in no event shall the
term "Guarantee" include any Program Services Agreement or any obligations under
any Program Services Agreement. The terms
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"Guarantee" and "Guaranteed" used as a verb shall have a correlative meaning.
"H and P Communications" shall mean H and P Communications,
Inc., a Nevada corporation, that on the date hereof owns 90% of the issued and
outstanding stock of WDBB.
"Hazardous Material" shall mean, collectively, (a) any
petroleum or petroleum products, flammable materials, explosives, radioactive
materials, asbestos, urea formaldehyde foam insulation, and transformers or
other equipment that contain polychlorinated biphenyls ("PCBs"), (b) any
chemicals or other materials or substances that are now or hereafter become
defined as or included in the definition of "hazardous substances," "hazardous
wastes," "hazardous materials," "extremely hazardous wastes," "restricted
hazardous wastes," "toxic substances," "toxic pollutants," "contaminants,"
"pollutants" or words of similar import under any Environmental Law and (c) any
other chemical or other material or substance, exposure to which is now or
hereafter prohibited, limited or regulated under any Environmental Law.
"Hedging Agreement" shall mean any swap agreement, cap
agreement, collar agreement, put or call, futures contract, forward contract or
similar agreement or arrangement entered into to protect against or mitigate the
effect of fluctuations in the price of the Borrower's publicly issued common
stock or in interest rates, foreign exchange rates or prices of commodities used
in the business of the Borrower and its Subsidiaries and any master agreement
relating to any of the foregoing.
"Immaterial Broadcast Licenses" shall mean Broadcast Licenses
(other than main transmitter licenses, auxiliary transmitter licenses (to the
extent in existence on the date hereof) and studio transmitter links (to the
extent necessary for the continued operation of the Stations), in each case
granted by the FCC, and extensions and renewals thereto or thereof) the absence
of which individually or together with all other such Broadcast Licenses could
not have a material adverse effect on the consolidated financial condition,
operations or prospects of the Borrower and its Consolidated Subsidiaries taken
as a whole.
"Indebtedness" shall mean, for any Person: (a) indebtedness
created, issued or incurred by such Person for borrowed money (whether by loan
or the issuance and sale of debt securities or the sale of Property to another
Person subject to an understanding or agreement, contingent or otherwise, to
repurchase such Property from such Person); (b) obligations of such Person to
pay the deferred purchase or acquisition price of Property or services, other
than trade accounts payable (other
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than for borrowed money) arising, and accrued expenses incurred, in the ordinary
course of business so long as such trade accounts payable are payable within 90
days of the date the respective goods are delivered or the respective services
are rendered; (c) Indebtedness of others secured by a Lien on the Property of
such Person, whether or not the respective Indebtedness so secured has been
assumed by such Person; (d) obligations of such Person in respect of letters of
credit or similar instruments issued or accepted by banks and other financial
institutions for account of such Person; (e) Capital Lease Obligations of such
Person; (f) Indebtedness of others Guaranteed by such Person; (g) obligations of
such Person under any non-competition agreement, consulting agreement or similar
agreement (other than the Baker Employment Agreement) entered into in connection
with any Acquisition; and (h) if the Aggregate Consideration payable by such
Person to extend and exercise any option acquired in connection with any Other
Acquisition (an "Extension and Exercise Price") exceeds 20% of the Aggregate
Consideration payable in connection with such Other Acquisition, such Extension
and Exercise Price; provided that in no event shall the term "Indebtedness"
include (i) Film Obligations of such Person, (ii) obligations of such Person
under any Program Services Agreement, (iii) the Preferred Stock (iv) obligations
of such Person to make WSYX Option Extension Payments or (v) the Guarantees by
the Borrower of the KDSM Senior Debentures and the New PPI Senior Debentures
prior to respective times that such Guarantees become effective; provided,
further, that upon the effectiveness of the Guarantee by the Borrower of the
KDSM Senior Debentures or the New PPI Senior Debentures, such Guarantee shall
constitute "Indebtedness" of the Borrower for all purposes of this Agreement.
"Initial FCC Order" shall mean an order of the FCC that is not
a Final FCC Order.
"In-Kind Preferred Stock" shall have the meaning assigned to
such term in the definition of "Other Preferred Stock" set forth in this Section
1.01.
"Interest Coverage Ratio" shall mean, as at any date, the
ratio of (a) EBITDA for the period of twelve consecutive full calendar months
ending on or most recently ended prior to such date to (b) Interest Expense for
such period.
"Interest Expense" shall mean, for any period, the sum, for
the Borrower and its Consolidated Subsidiaries (determined on a consolidated
basis without duplication in accordance with GAAP), of the following (subject to
paragraphs (d) and (e) of Section 1.02 hereof): (a) all interest in respect of
Indebtedness accrued or capitalized during such period (whether
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or not actually paid during such period) plus (b) the net amounts payable (or
minus the net amounts receivable) under Interest Rate Protection Agreements
accrued during such period (whether or not actually paid or received during such
period) minus (c) all cash interest income received during such period. Any
reference herein to calculating Interest Expense for any period on a "pro forma"
basis shall mean that, for purposes of the preceding clause (a), (i) the
Indebtedness on the basis of which Interest Expense is so calculated shall mean
Indebtedness outstanding as of the relevant date of calculation after giving
effect to any repayments and any incurrence of Indebtedness on such date and
(ii) such calculation shall be made applying the respective rates of interest in
effect for such Indebtedness on such date.
"Interest Period" shall mean, with respect to any Eurodollar
Loan, each period commencing on the date such Eurodollar Loan is made or
Converted from a Base Rate Loan or (in the event of a Continuation) the last day
of the next preceding Interest Period for such Loan and ending on the
numerically corresponding day in the first, second, third, sixth or ninth
calendar month thereafter, as the Borrower may select as provided in Section
4.05 hereof, except that each Interest Period which commences on the last
Business Day of a calendar month (or on any day for which there is no
numerically corresponding day in the appropriate subsequent calendar month)
shall end on the last Business Day of the appropriate subsequent calendar month.
Notwithstanding the foregoing:
(a) if any Interest Period for any Revolving Credit Loan would
I otherwise end after the Revolving Credit Commitment Termination
Date, such Interest Period shall end on the Revolving Credit
Commitment Termination Date;
(b) no Interest Period for any Revolving Credit Loan may
commence before and end after any Revolving Credit Commitment Reduction
Date unless, after giving effect thereto, the aggregate principal
amount of the Revolving Credit Loans having Interest Periods which end
after such Revolving Credit Commitment Reduction Date plus such
Lender's Revolving Credit Commitment Percentage of outstanding Letters
of Credit that expire after such Revolving Credit Commitment Reduction
Date, shall be equal to or less than the aggregate amount of the
Revolving Credit Commitments scheduled to be outstanding after giving
effect to the reductions thereof to occur on such Revolving Credit
Commitment Reduction Date;
(c) no Interest Period for any Tranche A Term Loan may
commence before and end after any Tranche A Principal Payment Date
unless, after giving effect thereto, the
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aggregate principal amount of the Tranche A Term Loans having Interest
Periods which end after such Tranche A Principal Payment Date shall be
equal to or less than the aggregate principal amount of Tranche A Term
Loans scheduled to be outstanding after giving effect to the payments
of principal required to be made on such Tranche A Principal Payment
Date;
(d) no Interest Period for any Tranche C Term Loan may
commence before and end after any Tranche C Principal Payment Date
unless, after giving effect thereto, the aggregate principal amount of
the Tranche C Term Loans having Interest Periods which end after such
Tranche C Principal Payment Date shall be equal to or less than the
aggregate principal amount of Tranche C Term Loans scheduled to be
outstanding after giving effect to the payments of principal required
to be made on such Tranche C Principal Payment Date;
(e) each Interest Period which would otherwise end on a day
which is not a Business Day shall end on the next succeeding Business
Day (or, if such next succeeding Business Day falls in the next
succeeding calendar month, on the next preceding Business Day); and
(f) notwithstanding clauses (a) through (d) above, no Interest
Period shall have a duration of less than one month and, if the
Interest Period for any Eurodollar Loan would otherwise be a shorter
period, such Loan shall not be available hereunder for such period.
"Interest Rate Protection Agreement" shall mean a Hedging
Agreement providing for the transfer or mitigation of interest risks either
generally or under specific contingencies.
"Investment" shall mean, for any Person: (a) the acquisition
(whether for cash, Property, services or securities or otherwise) of capital
stock, bonds, notes, debentures, partnership or other ownership interests or
other securities of any other Person or any agreement to make any such
acquisition (including, without limitation, any "short sale" or any sale of any
securities at a time when such securities are not owned by the Person entering
into such short sale); (b) the making of any deposit with, or advance, loan or
other extension of credit to, any other Person (including the purchase of
Property from another Person subject to an understanding or agreement,
contingent or otherwise, to resell such Property to such Person, but excluding
any such advance, loan or extension of credit having a term not exceeding 90
days representing the purchase price of programming, advertising, inventory or
supplies sold in the ordinary course of
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business); or (c) the entering into of any Guarantee of, or other contingent
obligation with respect to, Indebtedness or other liability of any other Person
and (without duplication) any amount committed to be advanced, lent or extended
to such Person.
"Issuing Bank" shall mean Chase.
"Julian Smith Documents" shall mean (a) the Term Note dated
September 30, 1990 of the Borrower payable to Julian S. Smith in the original
face amount of $7,515,000 and heretofore assigned to Carolyn C. Smith and (b)
all agreements, documents or other instruments providing for any Guarantee of
all or any portion of such Term Note by any Obligor.
"KDSM" shall mean KDSM, Inc., a Maryland corporation.
"KDSM Licensee" shall mean KDSM Licensee, Inc., a Delaware
corporation that owns no Property other than the Broadcasting Licenses relating
to KDSM-TV.
"KDSM Senior Debentures" shall mean the 11-5/8% Senior
Debentures due 2009 issued by KDSM in connection with the PPI Transaction and
outstanding on the date hereof, in an aggregate principal amount on the date
hereof equal to $206,200,000.
"KDSM-TV" shall mean KDSM-TV, a television broadcasting
station licensed to Des Moines, Iowa, and serving the Des Moines, Iowa area.
"KIG" shall mean Keyser Investment Group, Inc., a Maryland
corporation.
"KRRT-TV" shall mean KRRT-TV, a television broadcasting
station licensed to San Antonio, Texas and serving the San Antonio area.
"Letter of Credit" shall have the meaning assigned to such
term in Section 2.10 hereof, and shall include each Existing Letter of Credit.
"Letter of Credit Documents" shall mean, collectively, any
application for a Letter of Credit and any other agreements, instruments,
guarantees or other documents (whether general in application or applicable only
to such Letter of Credit) governing or providing for (a) the rights and
obligations of the parties concerned or at risk with respect to such Letter of
Credit or (b) any collateral security for any of such obligations, each as the
same may be modified and supplemented and in effect from time to time.
Credit Agreement
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"Letter of Credit Interest" shall mean, for each Revolving
Credit Lender, such Revolving Credit Lender's participation interest (or, in the
case of the Issuing Bank, the Issuing Bank's retained interest) in the Issuing
Bank's liability under Letters of Credit and such Revolving Credit Lender's
rights and interests in Reimbursement Obligations and fees, interest and other
amounts payable in connection with Letters of Credit and Reimbursement
Obligations.
"Letter of Credit Liability" shall mean, without duplication,
at any time, the sum of (a) the undrawn face amount of all outstanding Letters
of Credit plus (b) the aggregate unpaid principal amount of all Reimbursement
Obligations of the Borrower at such time due and payable in respect of all
drawings made under all Letters of Credit. For purposes of this Agreement, a
Revolving Credit Lender (other than the Issuing Bank) shall be deemed to hold a
Letter of Credit Liability in an amount equal to its participation interest in
all outstanding Letters of Credit and the aggregate unpaid principal amount of
all Reimbursement Obligations under Section 2.10 hereof, and the Issuing Bank
shall be deemed to hold a Letter of Credit Liability in an amount equal to its
retained interest in all outstanding Letters of Credit and the aggregate unpaid
principal amount of all Reimbursement Obligations after giving effect to the
acquisition by the Revolving Credit Lenders other than the Issuing Bank of their
participation interests under said Section 2.10.
"License Subsidiaries" shall mean, (a) with respect to each
Station that is an Owned Station on the date hereof, the Subsidiary of the
Borrower listed on Schedule IV hereto as the holder of the Broadcast Licenses
for such Owned Station and (b) with respect to any Owned Station hereafter
acquired by the Borrower or any of its Subsidiaries, the Subsidiary of the
Borrower formed, created, or acquired after the date hereof that holds the
Broadcast Licenses for such Owned Station.
"Lien" shall mean, with respect to any Property, any mortgage,
lien, pledge, charge, security interest or encumbrance of any kind in respect of
such Property. For purposes of this Agreement and the other Basic Documents, the
Borrower or any of its Subsidiaries shall be deemed to own subject to a Lien any
Property which it has acquired or holds subject to the interest of a vendor or
lessor under any conditional sale agreement, capital lease or other title
retention agreement (other than an operating lease) relating to such Property.
"Loans" shall mean Revolving Credit Loans, Tranche A Term
Loans and Tranche C Term Loans.
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"Majority Revolving Credit Lenders" shall mean, subject to the
last paragraph of Section 12.04 hereof, Revolving Credit Lenders having at least
51% of the aggregate amount of the Revolving Credit Commitments or, if the
Revolving Credit Commitments shall have terminated, Revolving Credit Lenders
holding at least 51% of the sum of (a) the aggregate unpaid principal amount of
the Revolving Credit Loans plus (b) the aggregate amount of all Letter of Credit
Liabilities.
"Majority Tranche A Lenders" shall mean, subject to the last
paragraph of Section 12.04 hereof, Tranche A Lenders having at least 51% of the
aggregate amount of the Tranche A Term Loan Commitments or, if the Tranche A
Term Loan Commitments shall have terminated, Tranche A Lenders holding at least
51% of the aggregate unpaid principal amount of the Tranche A Term Loans.
"Majority Tranche C Lenders" shall mean, subject to the last
paragraph of Section 12.04 hereof, Tranche C Lenders having at least 51% of the
aggregate amount of the Tranche C Term Loan Commitments or, if the Tranche C
Term Loan Commitments shall have terminated, Tranche C Lenders holding at least
51% of the aggregate unpaid principal amount of the Tranche C Term Loans.
"Majority Lenders" shall mean, subject to the last paragraph
of Section 12.04 hereof, Lenders holding at least 51% of the aggregate amount of
the Credit Exposures of all of the Lenders outstanding at the time of
determination. For purposes of the foregoing calculations there shall be
excluded any Credit Exposure directly or indirectly held by the Borrower or any
of its Subsidiaries or any of their Affiliates following an assignment or
participation as contemplated by Section 12.06 hereof.
"Margin Stock" shall mean margin stock within the meaning of
Regulations G, U and X.
"Material Adverse Effect" shall mean a material adverse effect
on (a) the Property, business, operations, financial condition, liabilities,
prospects or capitalization of the Borrower and its Subsidiaries, or of the
Stations, taken as a whole, (b) the ability of any Person to perform its
obligations under any of the Transaction Documents to which it is a party, (c)
the validity or enforceability of any of the Basic Documents, (d) the rights and
remedies of the Lenders and the Agent under any of the Basic Documents or (e)
the timely payment of the principal of or interest on the Loans or the
Reimbursement Obligations or other amounts payable under any Basic Document.
"Material Third-Party Licensee" shall mean (a) each River City
Seller that holds a Broadcast License for any Contract
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Station, (b) each of Glencairn and its Subsidiaries if, and for so long as,
Glencairn or such Subsidiary, as the case may be, holds a Broadcast License for
any Contract Station, (c) each Person holding a Broadcast License for WPTT-TV, a
television broadcasting station licensed to Pittsburgh, Pennsylvania and serving
the Pittsburgh area, until such time, if any, that such station ceases to be a
Contract Station, (d) each Person holding a Broadcast License for KRRT-TV, until
such time, if any, that such station ceases to be a Contract Station, and (e)
each Person holding a Broadcast License for any Contract Station acquired
pursuant to an Other Acquisition for an Aggregate Consideration exceeding
$6,000,000.
"Mortgage" shall mean each mortgage, deed of trust or similar
instrument executed and delivered to the Agent prior to the date hereof, as
modified and supplemented and in effect from time to time.
"Multiemployer Plan" shall mean a multiemployer plan defined
as such in Section 3(37) of ERISA to which contributions have been made by the
Borrower or any ERISA Affiliate and which is covered by Title IV of ERISA.
"Net Assets" shall mean, with respect to any Subsidiary
Guarantor as at any date, an amount equal to the excess of the fair saleable
value of the assets of such Subsidiary Guarantor as at such date (without taking
into account the rights of such Subsidiary Guarantor under Section 6.07 hereof),
and excluding the value of the shares of stock owned by such Subsidiary
Guarantor in any other Subsidiary Guarantor party to this Agreement on such date
over the amount that would be required to pay the probable liabilities of such
Subsidiary Guarantor determined as at such date (excluding the obligations of
such Subsidiary Guarantor under Section 6 hereof) on all of its debts.
"Net Available Proceeds" shall mean:
(a) in the case of any Disposition, an amount (not less than
zero) equal to the amount of Net Cash Payments received by the Borrower
and its Subsidiaries in connection with such Disposition;
(b) in the case of any Casualty Event, the aggregate amount of
proceeds of insurance, condemnation awards and other compensation
received by the Borrower and its Subsidiaries in respect of such
Casualty Event net of (i) reasonable expenses incurred by the Borrower
and its Subsidiaries in connection therewith and (ii) contractually
required repayments of Indebtedness to the extent secured by a Lien on
the Property to which such Casualty Event relates
Credit Agreement
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and any income and transfer taxes payable by the Borrower any of its
Subsidiaries in respect of such Casualty Event;
(c) in the case of any Equity Issuance, the aggregate amount
of all cash received by the Borrower and its Subsidiaries in respect of
such Equity Issuance net of reasonable expenses incurred by the
Borrower and its Subsidiaries in connection therewith; and
(d) in the case of any issuance of any Additional Senior
Subordinated Notes, the aggregate principal amount thereof net of
reasonable expenses incurred by the Borrower and its Subsidiaries in
connection therewith.
"Net Cash Payments" shall mean, with respect to any
Disposition, the aggregate amount of all cash payments (including, without
limitation, all cash payments received by way of deferred payment of principal
pursuant to a note or installment receivable or otherwise, but only as and when
received), and the fair market value of any non-cash consideration (excluding
non-cash consideration received in an exchange of Property permitted by either
of paragraphs (iv)(y)(B) and (v)(y)(B) of Section 9.05(d) hereof), received by
the Borrower or its Subsidiaries directly or indirectly in connection with such
Disposition; provided that (a) Net Cash Payments shall be net of (i) the amount
of any legal, title and recording tax expenses, commissions and other fees and
expenses paid by the Borrower and its Subsidiaries in connection with such
Disposition and (ii) any Federal, state and local income or other taxes
estimated to be payable by the Borrower and its Subsidiaries as a result of such
Disposition (but only to the extent that such estimated taxes are in fact paid
to the relevant Governmental Authority not later than three months (in the case
of Federal taxes) or nine months (in the case of other taxes) after the date of
such Disposition) and (b) Net Cash Payments shall be net of any repayments by
the Borrower or any of its Subsidiaries of Indebtedness to the extent that (i)
such Indebtedness is secured by a Lien on the Property that is the subject of
such Disposition and (ii) the transferee of (or holder of a Lien on) such
Property requires that such Indebtedness be repaid as a condition to the
Disposition of such Property.
"New PPI Common Participation Interests" shall mean the common
equity ownership interests in the New PPI Trust.
"New PPI Preferred Stock" shall mean Preferred Stock issued by
the Borrower in connection with the New PPI Transaction.
Credit Agreement
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"New Preferred Participation Interests" shall mean the
preferred equity ownership interests in the New PPI Trust.
"New PPI Senior Debentures" shall mean senior debentures
issued by New PPI Sub in connection with the New PPI Transaction.
"New PPI Station" shall mean a television or radio
broadcasting station that may be proposed by the Borrower and approved by the
Majority Lenders in their sole discretion after the Restatement Effective Date.
"New PPI Sub" shall mean a Wholly Owned Subsidiary of the
Borrower.
"New PPI Sub Licensee" shall mean a direct, Wholly Owned
Subsidiary of New PPI Sub that owns no Property other than the Broadcast
Licenses relating to the New PPI Station.
"New PPI Transaction" shall mean a transaction entered into by
the Borrower, New PPI Sub, the New PPI Sub Licensee and the New PPI Trust that
is structurally identical to the PPI Transaction in all material respects.
"New PPI Trust" shall mean a special purpose statutory
business trust formed after the Restatement Effective Date under the laws of
Delaware in connection with the New PPI Transaction, but only for as long as
such trust owns no Property other than the New PPI Senior Debentures and the
proceeds thereof.
"1995 Senior Subordinated Note Indenture" shall mean the
Indenture dated as of August 28, 1995 among the Borrower, certain of its
Subsidiaries and United States Trust Company of New York, as trustee, as the
same shall, subject to Section 9.24 hereof, be modified and supplemented and in
effect from time to time.
"1995 Senior Subordinated Notes" shall mean the 10% Senior
Subordinated Notes due 2005 issued by the Borrower under the 1995 Senior
Subordinated Note Indenture, as the same shall, subject to Section 9.24 hereof,
be modified and supplemented and in effect from time to time.
"1993 Senior Subordinated Note Indenture" shall mean the
Indenture dated as of December 9, 1993 among the Borrower, certain of its
Subsidiaries and First Union National Bank of North Carolina, as trustee, as the
same shall, subject to Section 9.24 hereof, be modified and supplemented and in
effect from time to time.
Credit Agreement
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"1993 Senior Subordinated Notes" shall mean the 10% Senior
Subordinated Notes due 2003 issued by the Borrower under the 1993 Senior
Subordinated Note Indenture, as the same shall, subject to Section 9.24 hereof,
be modified and supplemented and in effect from time to time.
"Notes" shall mean the Revolving Credit Notes, the Tranche A
Term Loan Notes and the Tranche C Term Loan Notes (in each case, if any).
"Other Acquisition" shall mean (a) the acquisition by the
Borrower or any of its Subsidiaries in accordance with the terms hereof of
substantially all of the assets (including, without limitation, Broadcast
Licenses) of a television or radio station in the United States in a single
transaction (i.e., not by means of the acquisition of an option for such assets
and the subsequent exercise of such option), (b) (i) the acquisition by the
Borrower or any of its Subsidiaries in accordance with the terms hereof of (x)
substantially all of the assets (other than Broadcast Licenses and other
Property required pursuant to the rules and regulations of the FCC to be sold in
connection with the transfer of such Broadcast Licenses) of a television or
radio station in the United States and (y) an option to acquire the Broadcast
Licenses and such other assets of such television or radio station and (ii) the
entering into by the Borrower or any of its Subsidiaries of an agreement
contemplated by clause (b) of the definition of "Program Services Agreement" in
this Section 1.01 with respect to such station, (c) the consummation of the
acquisition of assets by the Borrower or any of its Subsidiaries pursuant to the
exercise of an option referred to in the preceding clause (b)(y), together with
the termination of the related Program Services Agreement referred to in the
preceding clause (b)(ii) and (d) the acquisition of assets or capital stock (or
other equity ownership interest) of any Person pursuant to an exchange permitted
by Section 9.05(d)(iv)(y) hereof; provided that the term "Other Acquisition"
shall not include any Subject Acquisition. As used in this definition, the
acquisition of assets shall be deemed to include reference to the acquisition of
the voting capital stock (or other equity ownership interest) of the Person that
owns such assets and references to the acquisition and exercise of an option to
acquire assets shall be deemed to include the acquisition and exercise of the
option to acquire voting capital stock (or other equity ownership interest) of
the Person that owns such assets.
"Other Preferred Stock" shall mean the following Preferred
Stock issued by the Borrower, but if and only to the extent that the aggregate
liquidation preference of all such Preferred Stock shall not exceed $200,000,000
(excluding the aggregate liquidation preference of the In-Kind Preferred Stock)
Credit Agreement
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and the dividend for each share thereof shall not exceed 15% per annum of the
liquidation preference of such share: (a) Preferred Stock issued by the Borrower
after the date hereof (i) allowing the Borrower, at its option, with respect to
dividends accruing, accreting or accumulating on or before the fifth anniversary
of the date of initial issuance of such Preferred Stock, to pay such dividends
in lieu of cash by issuing additional shares thereof having an aggregate
liquidation preference equal to the amount of such dividends that are payable at
the time of issuance of such additional shares (such additional shares being
referred to herein as "In-Kind Preferred Stock"), (ii) which neither the
Borrower nor any of its Subsidiaries may be required to repurchase or redeem or
make sinking fund payments with respect to at any time or under any
circumstances before June 30, 2008, (iii) which are convertible into Converted
Senior Subordinated Notes as provided in Section 9.07(h) hereof or into the
Borrower's Class A Common Stock and (iv) the other terms and conditions of which
are satisfactory to the Majority Lenders, (b) any Preferred Stock (the
"Replacement Preferred Stock") issued in exchange for the Preferred Stock
referred to in the preceding clause (a) or the In-Kind Preferred Stock, provided
that such Replacement Preferred Stock shall have the same aggregate liquidation
preference as the Preferred Stock for which it is exchanged and satisfy clauses
(i) through (iv) of the preceding clause (a) and (c) New PPI Preferred Stock.
"Owned Station" shall mean (a) each television or radio
station listed in Part A of Schedule IV hereto and (b) any television or radio
station the Broadcast Licenses of which become owned by the Borrower or any of
its Subsidiaries on or after the date hereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or
any entity succeeding to any or all of its functions under ERISA.
"Permitted Investments" shall mean, for any Person: (a) direct
obligations of the United States of America, or of any agency thereof, or
obligations guaranteed as to principal and interest by the United States of
America, or of any agency thereof, in either case maturing not more than 90 days
from the date of acquisition thereof by such Person; (b) certificates of deposit
issued by any bank or trust company organized under the laws of the United
States of America or any state thereof and having capital, surplus and undivided
profits of at least $500,000,000, maturing not more than 90 days from the date
of acquisition thereof by such Person; and (c) commercial paper rated A-2 or
better or P-2 or better by Standard & Poor's Ratings Services or Moody's
Investors Service, Inc., respectively,
Credit Agreement
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maturing not more than 90 days from the date of acquisition thereof by such
Person.
"Person" shall mean any individual, corporation, company,
voluntary association, partnership, joint venture, trust, unincorporated
organization or government (or any agency, instrumentality or political
subdivision thereof).
"Plan" shall mean an employee benefit or other plan
established or maintained by the Borrower or any ERISA Affiliate and which is
covered by Title IV of ERISA, other than a Multiemployer Plan.
"Post-Default Interest Condition" shall mean (a) the failure
by the Borrower to pay when due (whether at stated maturity, by acceleration, by
mandatory prepayment or otherwise) any principal amount of any Loan, any Note or
any Reimbursement Obligation, (b) the failure by the Borrower to pay when due
(whether at stated maturity, by acceleration, by mandatory prepayment or
otherwise) any other amount payable by the Borrower hereunder or under any Note
for more than three Business Days or (c) the existence of any other Event of
Default.
"Post-Default Rate" shall mean a rate per annum equal to the
Post-Default Margin (as defined below) plus the Base Rate as in effect from time
to time plus the Applicable Margin, provided that, as applied to principal of a
Eurodollar Loan, the "Post-Default Rate" shall be the Post-Default Margin plus
the interest rate for such Loan as provided in Section 3.02(b) hereof. For
purposes of this definition, the "Post-Default Margin" shall mean 2% per annum
or, if at the time of determination the Borrower has failed to pay when due
(whether at stated maturity, by acceleration, by mandatory prepayment or
otherwise) any amount payable by the Borrower hereunder or under any Note and
such failure shall be continuing, 5% per annum.
"PPI Guaranties" shall mean (i) the Parent Guarantee Agreement
dated as of March 12, 1997 between the Borrower and First Union National Bank of
Maryland, (ii) that certain Parent Debenture Guarantee to be provided by the
Borrower upon the occurrence of certain conditions as more fully set forth in
the Offering Memorandum dated March 12, 1997 for the issuance by the Trust of
its 11 5/8% Preferred Participation Interests, (iii) a Guarantee issued by the
Borrower in connection with the New PPI Transaction that is substantially
identical, mutatis mutandis, to the Guarantee referred to in the foregoing
clause (i) and (iv) a Guarantee issued by the Borrower in connection with the
New PPI Transaction that is substantially identical, mutatis mutandis, to the
Guarantee referred to in the foregoing clause (ii), in each case as the same
shall, subject to
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Section 9.24 hereof, be modified and supplemented and in effect from time to
time.
"PPI Transaction" shall mean the consummation on March 12,
1997 of the transactions described in Offering Memorandum dated March 5, 1997
for the issuance by the Trust of its 11 5/8% Preferred Participation Interests.
"Preferred Participation Interests" shall mean the preferred
equity ownership interests in the Trust.
"Preferred Stock" shall mean Existing Preferred Stock and
Other Preferred Stock.
"Prepayable Film Contract" shall mean a contract evidencing a
Film Obligation in which the amount owed by the Borrower or any of its
Subsidiaries under such contract exceeds the remaining value of such contract to
the Borrower or such Subsidiary, as reasonably determined by the Borrower.
"Prime Rate" shall mean the rate of interest from time to time
announced by Chase at its principal office as its prime commercial lending rate.
"Program Services Agreements" shall mean (a) the agreements
listed in Schedule VII hereto and (b) any agreement having a term of not less
than ten years entered into by the Borrower or any of its Subsidiaries (other
than License Subsidiaries) in accordance with Section 9.29 hereof as part of an
Other Acquisition relating to a Contract Station or in connection with a
disposition of property in accordance with Section 9.05(d)(iii) hereof, pursuant
to which agreement the Borrower or any of its Subsidiaries (other than License
Subsidiaries) will obtain the right to program and sell advertising on a
substantial portion of such Contract Station's inventory of broadcast time.
"Property" shall mean any right or interest in or to property
of any kind whatsoever, whether real, personal or mixed and whether tangible or
intangible, and including all Broadcast Licenses.
"Quarterly Dates" shall mean the last Business Day of March,
June, September and December in each year, the first of which shall be the first
such day after the date of this Agreement.
"Registered Holder" shall have the meaning assigned to such
term in Section 5.07(a)(ii) hereof.
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"Registered Loan" shall have the meaning assigned to such term
in Section 2.07(f) hereof.
"Registered Note" shall have the meaning assigned to such term
in Section 2.07(f) hereof.
"Regulations A, D, G, U and X" shall mean, respectively,
Regulations A, D, G, U and X of the Board of Governors of the Federal Reserve
System (or any successor), as the same may be amended or supplemented from time
to time.
"Regulatory Change" shall mean, with respect to any Lender,
any change after the date of this Agreement in United States Federal, state or
foreign law or regulations (including, without limitation, Regulation D) or the
adoption or making after such date of any interpretation, directive or request
applying to a class of banks including such Lender of or under any United States
Federal, state or foreign law or regulations (whether or not having the force of
law and whether or not failure to comply therewith would be unlawful) by any
court or governmental or monetary authority charged with the interpretation or
administration thereof.
"Reimbursement Obligations" shall mean, at any time, the
obligations of the Borrower then outstanding, or which may thereafter arise in
respect of Letters of Credit, to reimburse amounts paid by the Issuing Bank in
respect of any drawings thereunder.
"Release" shall mean any release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching or
migration into the indoor or outdoor environment, including, without limitation,
the movement of Hazardous Materials through ambient air, soil, surface water,
ground water, wetlands, land or subsurface strata.
"Relevant Corporation" shall have the meaning assigned to such
term in Section 7.01(a)(i) hereof.
"Reserve Requirement" shall mean, for any Interest Period for
any Eurodollar Loan, the average maximum rate at which reserves (including any
marginal, supplemental or emergency reserves) are required to be maintained
during such Interest Period under Regulation D by member banks of the Federal
Reserve System in New York City with deposits exceeding one billion Dollars
against "Eurocurrency liabilities" (as such term is used in Regulation D).
Without limiting the effect of the foregoing, the Reserve Requirement shall
include any other reserves required to be maintained by such member banks by
reason of any Regulatory Change against (a) any category of liabilities which
includes
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deposits by reference to which the Eurodollar Base Rate is to be determined as
provided in the definition of "Eurodollar Base Rate" in this Section 1.01 or (b)
any category of extensions of credit or other assets which includes Eurodollar
Loans.
"Restatement Effective Date" shall mean the date on which the
Agent notifies the parties hereto that the conditions to effectiveness set forth
in Section 7.01 hereof shall have been satisfied or waived.
"Revolving Credit Commitment" shall mean, as to each Revolving
Credit Lender, the obligation of such Lender to make Revolving Credit Loans, and
to issue or participate in Letters of Credit pursuant to Section 2.10 hereof, in
an aggregate principal or face amount at any one time outstanding up to but not
exceeding the amount set opposite such Lender's name on Schedule X hereto or, in
the case of a Person that becomes a Revolving Credit Lender pursuant to an
assignment permitted by Section 12.06 hereof, as specified in the respective
instrument of assignment pursuant to which such assignment is effected (in each
case as the same may be reduced at any time or from time to time pursuant to
Section 2.03 hereof). The aggregate amount of Revolving Credit Commitments on
the date hereof is $400,000,000.
"Revolving Credit Commitment Percentage" shall mean, with
respect to any Revolving Credit Lender, the ratio of (a) the amount of the
Revolving Credit Commitment of such Revolving Credit Lender to (b) the aggregate
amount of the Revolving Credit Commitments of all of the Revolving Credit
Lenders. If, at the time of determination of the Revolving Credit Commitment
Percentage of any Revolving Credit Lender or Revolving Credit Lenders, the
Revolving Credit Commitments have terminated, such determination shall be made
upon the basis of the Revolving Credit Commitments as in effect immediately
prior to such termination.
"Revolving Credit Commitment Reduction Dates" shall mean (a)
the nineteen consecutive Quarterly Dates beginning on the Quarterly Date falling
on or nearest to March 31, 2000 and ending on the Revolving Credit Commitment
Termination Date.
"Revolving Credit Commitment Termination Date" shall mean the
last Business Day of December, 2004.
"Revolving Credit Lenders" shall mean (a) on the date hereof,
the Lenders having Revolving Credit Commitments on the signature pages hereof
and (b) thereafter, the Lenders from time to time holding Revolving Credit
Commitments, Revolving Credit Loans and/or Letter of Credit Liabilities after
giving effect to any assignments thereof permitted by Section 12.06 hereof.
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"Revolving Credit Loans" shall mean the loans provided for by
Section 2.01(a) hereof, which may be Base Rate Loans and/or Eurodollar Loans.
"Revolving Credit Notes" shall mean the promissory notes
provided for by Section 2.07(a) hereof (if any), and all promissory notes
delivered in substitution or exchange therefor, in each case as the same shall
be modified and supplemented and in effect from time to time. The term
"Revolving Credit Notes" shall include any Registered Notes evidencing Revolving
Credit Loans executed and delivered pursuant to Section 2.07(f) hereof.
"River City" shall mean River City Broadcasting, L.P., a
Delaware limited partnership.
"River City Acquisition Documents" shall mean the River City
Asset Purchase Agreement, the River City Option Agreements, the Baker Employment
Agreement, the Baker Stock Option Agreement, the Corporate Employee Stock Option
Agreement, the Station Employee Stock Option Agreement and all other agreements
and instruments (together with any and all exhibits, annexes and schedules
thereto) executed and delivered in connection with the River City Non-License
Acquisition.
"River City Asset Purchase Agreement" shall mean the Amended
and Restated Asset Purchase Agreement dated as of April 10, 1996, as amended and
restated as of a date prior to the date hereof, by and between River City, as
Seller, and the Borrower, as Buyer, as the same shall be modified and
supplemented and in effect from time to time.
"River City Group I License Acquisition" shall mean the
acquisition by the Borrower or any of its subsidiaries, upon its exercise of any
option granted under the River City Group I Option Agreement, of the "License
Assets" referred to in the River City Group I Option Agreement used or held for
use by the River City Sellers with respect to a "Station" referred to in the
River City Group I Option Agreement and the assumption by the Borrower or such
Subsidiary of the "Assumed Liabilities" referred to in the River City Group I
Option Agreement with respect to such "Station".
"River City License Acquisitions" shall mean each River City
Group I License Acquisition and the WSYX Acquisition.
"River City Non-License Acquisition" shall mean the following
(a) (i) the transfer by River City to Borrower under the River City Asset
Purchase Agreement of the "Station Assets" referred to therein and (ii) the
assumption by the Borrower from River City of the "Assumed Liabilities" referred
to in the River
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City Asset Purchase Agreement, (b) the execution and delivery by the Borrower
and the River City Sellers of (i) the River City Group I Option Agreement, (ii)
the Columbus Option Agreement and (iii) a Program Services Agreement with
respect to each "Group I Station" referred to in the River City Group I Option
Agreement, (c) the execution and delivery by the Borrower and Barry Baker of the
Baker Employment Agreement and (d) the issuance by the Borrower to River City of
the Seller Stock.
"River City Group I Option Agreement" shall mean the Group I
Option Agreement dated as of May 31, 1996 by and between the River City Sellers,
as Sellers, and the Borrower, as Option Holder, as the same shall be modified
and supplemented and in effect from time to time.
"River City Option Agreements" shall mean the River City Group
I Option Agreement and the Columbus Option Agreement.
"River City Sellers" shall mean River City and River City
License Partnership, a Missouri general partnership.
"River City Corporate Employees" shall mean the Persons listed
in Schedule 2.5(d) to the River City Asset Purchase Agreement.
"Security Agreement" shall mean the Second Amended and
Restated Security Agreement between the Obligors and the Agent, dated as of May
31, 1996, as the same shall be modified and supplemented and in effect from time
to time.
"Security Documents" shall mean, collectively, the Security
Agreement, the Affiliate Guarantee, the GDC Security Agreement, the Mortgages
and all Uniform Commercial Code financing statements required by any of the
foregoing Security Documents to be filed with respect to the security interests
in personal Property and fixtures created pursuant thereto.
"Seller Stock" shall mean (a) the Borrower's Series A
Exchangeable Preferred Stock, par value $.01 per share, issued by the Borrower
to River City in connection with the River City Non-License Acquisition and (b)
the Borrower's Series B Convertible Preferred Stock, par value $.01 per share,
to be issued by the Borrower to River City in exchange for such Series A
Exchangeable Preferred Stock.
"Senior Indebtedness" shall mean Total Indebtedness other than
Subordinated Indebtedness.
"Senior Indebtedness Ratio" shall mean, as at any date, the
ratio of (a) Senior Indebtedness outstanding on such date to
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(b) EBITDA for the period of twelve consecutive full calendar months ending on
or most recently ended prior to such date.
"Senior Subordinated Note Indentures" shall mean the 1995
Senior Subordinated Note Indenture, the 1993 Senior Subordinated Note Indenture
and, after the respective issuances of the Additional Senior Subordinated Notes
and the Converted Senior Subordinated Notes, the respective indentures under
which the same are issued.
"Senior Subordinated Notes" shall mean the 1993 Senior
Subordinated Notes, the 1995 Senior Subordinated Notes and, after the respective
issuances thereof, the Additional Senior Subordinated Notes and the Converted
Senior Subordinated Notes.
"Smith Brothers" shall mean Frederick G. Smith, David D.
Smith, J. Duncan Smith and Robert E. Smith.
"Specified Number" shall mean, with respect to an Equity
Issuance, issuance of Additional Senior Subordinated Notes or Disposition, 270;
except that if the Borrower has, on or before the date falling 270 days after
the relevant Equity Issuance, issuance of Additional Senior Subordinated Notes
or Disposition, entered into a legally binding commitment (i) to use all or a
portion of the Net Available Proceeds of such Equity Issuance or Disposition as
provided in Section 9.26(c)(iii) or (ii) to use all or a portion of the Net
Available Proceeds of such issuance of Additional Senior Subordinated Notes as
provided in Section 9.07(c)(v), on or before the 90th day following such date,
the "Specified Number" shall mean 360 days with respect to all or such portion,
as the case may be, of such Net Available Proceeds.
"Station Employee Stock Option Agreements" shall mean the
respective Stock Option Agreements dated as of April 10, 1996 between the
Borrower and certain employees of the Borrower and its Subsidiaries, providing,
among other things, for the right of such employees to acquire, in the
aggregate, not more than 400,000 shares of the Borrower's Class A Common Stock
on the terms and conditions set forth therein, in each case as the same may be
modified and supplemented and in effect from time to time.
"Stations" shall mean the Owned Stations and the Contract
Stations.
"Subject Acquisition" shall have the meaning assigned to such
term in Section 9.05(d)(i) hereof.
"Subordinated Film Indebtedness" shall mean Film Obligations
of the Borrower and its Subsidiaries which are
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subordinated to the obligations of the Borrower and its Subsidiaries hereunder
on terms and conditions, and the other provisions of which are, satisfactory to
the Majority Lenders.
"Subordinated Indebtedness" shall mean (a) Founders Notes, (b)
Indebtedness under the Senior Subordinated Notes, (c) Subordinated Film
Indebtedness and (d) guarantees of the Indebtedness under the Senior
Subordinated Notes provided by any Subsidiary Guarantor under the Senior
Subordinated Note Indentures.
"Subsidiary" shall mean, for any Person, any corporation,
partnership or other entity of which at least a majority of the securities or
other ownership interests having by the terms thereof ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions of such corporation, partnership or other entity (irrespective of
whether or not at the time securities or other ownership interests of any other
class or classes of such corporation, partnership or other entity shall have or
might have voting power by reason of the happening of any contingency) is at the
time directly or indirectly owned or controlled by such Person or one or more
Subsidiaries of such Person or by such Person and one or more Subsidiaries of
such Person. "Wholly Owned Subsidiary" shall mean any such corporation,
partnership or other entity of which all of such securities or other ownership
interests (other than, in the case of a corporation, directors' qualifying
shares) are so owned or controlled. Notwithstanding anything contained herein to
the contrary, (a) CRESAP shall be deemed to be a Subsidiary of the Borrower or
of a Subsidiary of the Borrower for all purposes of this Agreement except that
CRESAP shall not be required to be a Subsidiary Guarantor or to grant a security
interest in any of its Property, (b) KUPN, Inc. shall be deemed to be a
Subsidiary of the Borrower for all purposes of this Agreement except that KUPN,
Inc. shall not be required to be a Subsidiary Guarantor or to grant a security
interest in any of its property provided that it merges into a Subsidiary
Guarantor on or before June 15, 1997 and (c) no Unrestricted Company shall be
deemed to be a Subsidiary of the Borrower or of a Subsidiary of the Borrower for
purposes of this Agreement.
"Total Indebtedness" shall mean, as at any date, all
Indebtedness on such date of the Borrower and its Consolidated Subsidiaries
(determined on a consolidated basis without duplication in accordance with
GAAP).
"Total Indebtedness Ratio" shall mean, as at any date, the
ratio of (a) Total Indebtedness outstanding on such date to
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(b) EBITDA for the period of twelve consecutive full calendar months ending on
or most recently ended prior to such date.
"Tranche A Lenders" shall mean (a) on the date hereof, the
Lenders having Tranche A Term Loan Commitments on the signature pages hereof and
(b) thereafter, the Lenders from time to time holding Tranche A Term Loans
and/or Tranche A Term Loan Commitments after giving effect to any assignments
thereof permitted by Section 12.06(b) hereof.
"Tranche A Principal Payment Dates" shall mean the 30
consecutive Quarterly Dates beginning on the Quarterly Date falling on or
nearest to September 30, 1997 and ending on the Quarterly Date falling on or
nearest to December 31, 2004.
"Tranche A Term Loan Commitment" shall mean, as to each
Tranche A Lender, the obligation of such Tranche A Lender to make a single
Tranche A Term Loan in a principal amount up to but not exceeding the amount set
opposite the name of such Tranche A Lender on Schedule XI hereto (as the same
may be reduced from time to time pursuant to Section 2.03). The aggregate
principal amount of the Tranche A Term Loan Commitments on the date hereof is
$600,000,000.
"Tranche A Term Loan Notes" shall mean the promissory notes
provided for by Section 2.07(b) hereof (if any), and all promissory notes
delivered in substitution or exchange therefor, in each case as the same shall
be modified and supplemented and in effect from time to time. The term "Tranche
A Term Loan Notes" shall include any Registered Notes evidencing Tranche A Term
Loans executed and delivered pursuant to Section 2.07(f) hereof.
"Tranche A Term Loans" shall mean the loans provided for by
Section 2.01(b) hereof, which may be Base Rate Loans and/or Eurodollar Loans.
"Tranche C Lenders" shall mean (a) on Tranche C Term Loan
Activation Date, the Lenders signatory to the Tranche C Term Loan Activation
Notice and (b) thereafter, the Lenders from time to time holding Tranche C Term
Loans and/or Tranche C Term Loan Commitments after giving effect to any
assignments thereof permitted by Section 12.06(b) hereof.
"Tranche C Principal Payment Dates" shall mean (a) the 26
consecutive Quarterly Dates beginning on the Quarterly Date falling on or
nearest to September 30, 1998 and ending on the Quarterly Date falling on or
nearest to December 31, 2004.
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"Tranche C Term Loan Activation Date" shall mean the date
designated as such in the Tranche C Term Loan Activation Notice.
"Tranche C Term Loan Activation Notice" shall mean a notice
substantially in the form of Exhibit B hereto.
"Tranche C Term Loan Commitment" shall mean, as to each
Tranche C Lender, on and after the Tranche C Term Loan Activation Date, the
obligation of such Tranche C Lender to make one or more Tranche C Term Loans in
an aggregate principal amount up to but not exceeding the amount set opposite
the name of such Tranche C Lender on the Tranche C Term Loan Activation Notice
under the caption "Tranche C Term Loan Commitment" or, in the case of a Person
that becomes a Tranche C Lender pursuant to an assignment permitted under
Section 12.06(b) hereof, as specified in the respective instrument of assignment
pursuant to which such assignment is effected (as the same may be reduced from
time to time pursuant to Section 2.03). The aggregate principal amount of the
Tranche C Term Loan Commitments on the date hereof is zero and shall not exceed
$400,000,000.
"Tranche C Term Loan Commitment Termination Date" shall mean
September 29, 1998.
"Tranche C Term Loan Notes" shall mean the promissory notes
provided for by Section 2.07(c) hereof (if any), and all promissory notes
delivered in substitution or exchange therefor, in each case as the same shall
be modified and supplemented and in effect from time to time. The term "Tranche
C Term Loan Notes" shall include any Registered Notes evidencing Tranche C Term
Loans executed and delivered pursuant to Section 2.07(f) hereof.
"Tranche C Term Loans" shall mean the loans provided for by
Section 2.01(c) hereof, which may be Base Rate Loans and/or Eurodollar Loans.
"Transaction Documents" shall mean the Ancillary Documents and
the Basic Documents.
"Trust" shall mean Sinclair Capital, a special purpose
statutory business trust formed under the laws of Delaware in connection with
the PPI Transaction, but only for as long as Sinclair Capital owns no Property
other than the KDSM Senior Debentures and the proceeds thereof.
"Type" shall have the meaning assigned that term in Section
1.03 hereof.
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"U.S. Person" shall mean a citizen or resident of the United
States of America, a corporation, partnership or other entity created or
organized in or under any laws of the United States of America or any State
thereof, or any estate or trust that is subject to Federal income taxation
regardless of the source of its income.
"Unrestricted Companies" shall mean (i) the Designated
Companies, (ii) the Trust, (iii) the New PPI Trust, (iv) if and for so long as
KDSM is a Designated Company, KDSM Licensee and (v) if and for so long as New
PPI Sub is a Designated Company, New PPI Sub Licensee.
"WDBB" shall mean WDBB-TV, Inc., an Alabama corporation.
"WDBB Options" shall mean (a) the option granted by Cecil
Heftel to the Borrower to acquire 50% of the issued and outstanding stock of H
and P Communications, (b) the option granted by Carl Parmer to the Borrower to
acquire 50% of the issued and outstanding stock of H and P Communications, and
(c) the option granted by D&C, L.L.C. to the Borrower to acquire 10% of the
issued and outstanding stock of WDBB.
"WFBC-TV" shall mean WFBC-TV, a television broadcasting
station licensed to Greenville and Spartanburg, South Carolina and Asheville,
North Carolina and serving the Greenville, Spartanburg and Asheville areas.
"Working Investment" shall mean, as at any date of
determination thereof and for any Person, the excess of (a) the unpaid face
amount of all accounts receivable of such Person as at such date over (b) the
sum (determined without duplication) of (i) the unpaid amount of all accounts
payable of such Person at such date plus (ii) all accrued expenses of such
Person at such date (but excluding from accounts payable and accrued expenses,
the current portion of long-term debt and of Film Obligations as well as all
accrued interest and taxes).
"WPTT" shall mean WPTT, Inc., a Maryland corporation.
"WPTT Conversion Option" shall mean the Option Agreement dated
as of August 30, 1991 between WPTT and the Borrower (as successor by merger to
Commercial Radio Institute, Inc.), as the same may be modified and supplemented
and in effect from time to time.
"WPTT Convertible Debenture" shall mean the WPTT, Inc. 20-Year
Eight and One-Half Percent (8.5%) Convertible Subordinate Debenture Due 2011
dated August 30, 1991, payable by WPTT to the
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Borrower (as successor by merger to Commercial Radio Institute, Inc.) in the
original principal amount of $1,000,000.
"WSYX Acquisition" shall mean, with respect to the "Columbus
Station" referred to in the Columbus Option Agreement, the acquisition by the
Borrower or any of its Subsidiaries, upon its exercise of the option granted
under the Columbus Option Agreement with respect to the Columbus Station, of the
"Columbus Station Assets" referred to in the Columbus Option Agreement used or
held for use by the River City Sellers with respect to the Columbus Station and
the assumption by the Borrower or such Subsidiary of the "Assumed Liabilities"
referred to in the Columbus Option Agreement with respect to the Columbus
Station, all in accordance with terms and conditions of the Columbus Option
Agreement and shall include, if no Default has occurred and is continuing at the
time of the making of the payment thereof, (a) the payment by the Borrower or
such Subsidiary of WSYX Option Extension Payments and (b) the payment of the
WSYX Sale Price Differential.
"WSYX Option Extension Payments" shall mean each "Option
Extension Fee" payable by the Borrower or any of its Subsidiaries under Section
2.1(b) of the Columbus Option Agreement.
"WSYX Sale Price Differential" shall mean the amount payable
by the Borrower or any of its Subsidiaries under Section 11.1.C(b) of the
Columbus Option Agreement.
"WTTE-TV" shall mean WTTE-TV, Channel 28, a television
broadcasting station, licensed to Columbus, Ohio and serving the Columbus area.
1.02 Accounting Terms and Determinations.
(a) Except as otherwise expressly provided herein, all
accounting terms used herein shall be interpreted, and all financial statements
and certificates and reports as to financial matters required to be delivered to
the Lenders hereunder shall (unless otherwise disclosed to the Lenders in
writing at the time of delivery thereof in the manner described in subsection
(b) below) be prepared, in accordance with generally accepted accounting
principles applied on a basis consistent with that used in the preparation of
the latest financial statements furnished to the Lenders hereunder (which, prior
to the first financial statements delivered under Section 9.01 hereof, shall
mean the financial statements referred to in Section 8.02 hereof). All
calculations made for the purposes of determining compliance with the terms of
this Agreement shall (except as otherwise expressly provided herein) be made by
application of
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generally accepted accounting principles applied on a basis consistent with that
used in the preparation of the annual or quarterly financial statements
furnished to the Lenders pursuant to Section 9.01 hereof (or, prior to the first
financial statements delivered under Section 9.01 hereof, used in the
preparation of the financial statements referred to in Section 8.02 hereof)
unless (i) the Borrower shall have objected to determining such compliance on
such basis at the time of delivery of such financial statements or (ii) the
Majority Lenders shall so object in writing within 30 days after delivery of
such financial statements, in either of which events such calculations shall be
made on a basis consistent with those used in the preparation of the latest
financial statements as to which such objection shall not have been made (which,
if objection is made in respect of the first financial statements delivered
under Section 9.01 hereof, shall mean the financial statements referred to in
Section 8.02 hereof).
(b) The Borrower shall deliver to the Lenders at the same time
as the delivery of any annual or quarterly financial statement under Section
9.01 hereof a description in reasonable detail of any material variation between
the application of accounting principles employed in the preparation of such
statement and the application of accounting principles employed in the
preparation of the next preceding annual or quarterly financial statements as to
which no objection has been made in accordance with the last sentence of
subsection (a) above, and reasonable estimates of the difference between such
statements arising as a consequence thereof.
(c) To enable the ready and consistent determination of
compliance with the covenants set forth in Section 9 hereof, the Borrower will
not change the last day of its fiscal year from December 31 of each year, or the
last days of the first three fiscal quarters in each of its fiscal years from
March 31, June 30 and September 30 of each year, respectively.
(d) Except as expressly provided herein, (i) all calculations
made with respect to any period during which an Acquisition is consummated shall
be calculated on a pro forma basis as if such Acquisition had been consummated
on the first day of such period and as if any Indebtedness incurred or assumed
in connection with such Acquisition were outstanding throughout such period,
using such reasonable estimates and pro forma adjustments effected in accordance
with generally accepted accounting principles as the Borrower shall propose and
the Agent or Majority Lenders shall approve and (ii) all calculations made with
respect to any period during which a Disposition is consummated shall be
calculated on a pro forma basis as if any such Disposition had been consummated
on the first day of such
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period and as if any prepayments and reductions of Commitments actually made in
connection therewith had occurred on the first day of such period using such
reasonable estimates and pro forma adjustments effected in accordance with
generally accepted accounting principles as the Borrower shall propose and the
Agent shall approve; except that if the Borrower proposes any such adjustments
referred to in the foregoing clause (i) resulting from pro forma expense savings
with respect to EBITDA or Broadcast Cash Flow as a result of an Acquisition (x)
if the Agent or Majority Lenders do not object to such proposal within 30 days
after their receipt thereof, such proposal shall be deemed accepted and (y) if
the Agent or the Majority Lenders do object to such proposal within 30 days
after their receipt thereof, EBITDA or Broadcast Cash Flow, as the case may be,
for the relevant period shall be deemed for purposes hereof to be equal to the
sum of EBITDA or Broadcast Cash Flow, as the case may be, for the Borrower and
its Subsidiaries for such period plus the corresponding accounting items for the
Person or assets that are the subject of such Acquisition. Notwithstanding the
foregoing if, prior to giving effect to any proposed pro forma adjustments
arising from pro forma expense savings, a Default would occur as a result of an
Acquisition, such adjustment shall require approval of the Majority Lenders
prior to the consummation of such Acquisition.
(e) Except as otherwise expressly provided herein, all
financial statements and certificates and reports as to financial matters
required to be delivered to the Agent or the Lenders hereunder shall be
prepared, and all calculations made for purposes of determining compliance with
the terms hereof shall be made, as if the Unrestricted Companies were carried as
equity investments by the Borrower or the relevant Subsidiary of the Borrower;
provided that (i) earnings and other increases in the value of Unrestricted
Companies shall not increase earnings of the Borrower and its Subsidiaries
whether or not received by the Borrower or one of its Subsidiaries and (ii)
losses and other decreases in the value of Unrestricted Companies shall not
decrease earnings of the Borrower and its Subsidiaries; provided further that
any amounts received by the Borrower or any of its Subsidiaries from the
Designated Companies during any period shall be deemed to reduce Interest
Expense for such period.
1.03 Classes and Types of Loans. Loans hereunder are
distinguished by "Class" and by "Type". The "Class" of a Loan (or of a
Commitment to make a Loan) refers to whether such Loan is (a) a Revolving Credit
Loan, (b) a Tranche A Term Loan or (c) a Tranche C Term Loan, each of which
constitutes a Class. The "Type" of a Loan refers to whether such Loan is a Base
Rate Loan or a Eurodollar Loan, each of which constitutes a Type. Loans may be
identified by both Class and Type.
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1.04 References to Date. All references herein to "the date
hereof" and "the date of this Agreement", and similar references, shall mean May
20, 1997.
Section 2. Commitments.
2.01 Loans.
(a) Revolving Credit Loans. Each Revolving Credit Lender
severally agrees, on the terms and conditions of this Agreement, to make loans
to the Borrower in Dollars during the period from and including the Restatement
Effective Date to but excluding the Revolving Credit Commitment Termination Date
in an aggregate principal amount at any one time outstanding up to but not
exceeding the amount of the Revolving Credit Commitment of such Revolving Credit
Lender as in effect from time to time minus the aggregate amount of such
Revolving Credit Lender's Letter of Credit Liabilities. Subject to the terms and
conditions of this Agreement, during such period the Borrower may borrow, repay
and reborrow the amount of the Revolving Credit Commitments by means of Base
Rate Loans and Eurodollar Loans and may Convert Revolving Credit Loans of one
Type into Revolving Credit Loans of another Type (as provided in Section 2.08
hereof) or Continue Revolving Credit Loans of one Type as Revolving Credit Loans
of the same Type (as provided in Section 2.08 hereof).
(b) Tranche A Term Loans.
(i) On the Restatement Effective Date each Tranche A Lender
severally agrees, on the terms and conditions of this Agreement, to
make a single term loan to the Borrower in Dollars on the Restatement
Effective Date in a principal amount equal to the amount of the Tranche
A Term Loan Commitment of such Tranche A Lender. Thereafter, subject to
the terms and conditions of this Agreement, the Borrower may Convert
Tranche A Term Loans of one Type into Tranche A Term Loans of another
Type (as provided in Section 2.08 hereof) or Continue Tranche A Term
Loans of one Type as Tranche A Term Loans of the same Type (as provided
in Section 2.08 hereof). Tranche A Term Loans that are prepaid may not
be reborrowed.
(c) Tranche C Term Loans. The Borrower and all or certain of
the Lenders may, with the consent of the Agent, at any one time during the
period from and including the Restatement Effective Date to but excluding the
Tranche C Term Loan Commitment Termination Date agree that such Lenders shall
become Tranche C Lenders by executing and delivering to the Agent a Tranche C
Term Loan Activation Notice specifying the respective Tranche C Term Loan
Commitments of the Tranche C Lenders, the
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Tranche C Term Loan Activation Date, the rate of commitment fee, if any, payable
by the Borrower in respect of the Tranche C Term Loan Commitments, the
Applicable Margin for Tranche C Term Loans and otherwise duly completed. Each
Tranche C Lender severally agrees, on the terms and conditions of this
Agreement, to make one or more term loans to the Borrower in Dollars during the
period from and including the Tranche C Term Loan Activation Date to but
excluding the Tranche C Term Loan Commitment Termination Date in an aggregate
principal amount up to but not exceeding the amount of the Tranche C Term Loan
Commitment of such Tranche C Lender as in effect from time to time, provided
that in no event shall the proceeds of the Tranche C Term Loans be used for any
purpose other than to finance the consummation of the WSYX Acquisition and Other
Acquisitions and transaction expenses in connection therewith. Thereafter,
subject to the terms and conditions of this Agreement, the Borrower may Convert
Tranche C Term Loans of one Type into Tranche C Term Loans of another Type (as
provided in Section 2.08 hereof) or Continue Tranche C Term Loans of one Type as
Tranche C Term Loans of the same Type (as provided in Section 2.08 hereof).
Tranche C Term Loans that are prepaid may not be reborrowed. Nothing in this
Section 2.01(c) shall be construed to obligate any Lender to execute a Tranche C
Term Loan Activation Notice.
(d) Payment of Existing Loans. On the Restatement Effective
Date the Borrower shall borrow, and use the proceeds of, Revolving Credit Loans
and Tranche A Term Loans in a sufficient amount to, prepay in full the principal
of and interest on the Existing Revolving Credit Loans, the Existing Tranche A
Term Loans and the Existing Tranche B Term Loans and any amounts payable under
Section 5.05 of the Existing Credit Agreement in connection with such
prepayment.
(e) Limitation on Eurodollar Loans. No more than ten separate
interest periods in respect of Eurodollar Loans of a Class may be outstanding at
any one time, provided that prior to June 30, 1997, or such earlier date agreed
to in writing by the Agent, all Eurodollar Loans of any Class must have an
Interest Period of one month's duration and be coterminous with the Interest
Periods of all other Eurodollar Loans of such Class, and, to the extent that
prior to such date a Eurodollar Loan would not satisfy such conditions, such
Loan shall be made as or Converted into a Base Rate Loan.
2.02 Borrowings. The Borrower shall give the Agent notice of
each borrowing hereunder as provided in Section 4.05 hereof. Not later than 1:00
p.m. New York time on the date specified for each borrowing hereunder, each
Lender shall make available the amount of the Loan or Loans to be made by it on
such date to the Agent, at an account designated by the Agent, in
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immediately available funds, for account of the Borrower. The amount so received
by the Agent shall, subject to the terms and conditions of this Agreement, be
made available to the Borrower by depositing the same, in immediately available
funds, in an account of the Borrower maintained with Chase at its principal
office designated by the Borrower.
2.03 Changes of Commitments.
(a) The aggregate amount of the Revolving Credit Commitments
shall be automatically reduced to zero at the close of business on the Revolving
Credit Commitment Termination Date. In addition, the aggregate amount of the
Revolving Credit Commitments shall be automatically reduced at the opening of
business on each Revolving Credit Commitment Reduction Date set forth in column
(A) below to the amount (subject to reduction pursuant to paragraph (d) below)
set forth in column (B) below opposite such Revolving Credit Commitment
Reduction Date:
(A) (B)
Revolving Credit Commitment Revolving Credit Commitment
Reduction Date Falling on or Reduced to the Following
Nearest to: Amounts ($):
March 31, 2000 $390,000,000
June 30, 2000 $380,000,000
September 30, 2000 $370,000,000
December 31, 2000 $360,000,000
March 31, 2001 $339,250,000
June 30, 2001 $318,500,000
September 30, 2001 $297,750,000
December 31, 2001 $277,000,000
March 31, 2002 $256,250,000
June 30, 2002 $235,500,000
September 30, 2002 $214,750,000
December 31, 2002 $194,000,000
March 31, 2003 $173,250,000
June 30, 2003 $152,500,000
September 30, 2003 $131,750,000
December 31, 2003 $111,000,000
March 31, 2004 $ 83,250,000
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June 30, 2004 $ 55,500,000
September 30, 2004 $ 27,750,000
December 31, 2004 $ 0
(b) The Borrower shall have the right at any time or from time
to time (i) to terminate or to reduce the aggregate unused amount of the Tranche
A Term Loan Commitments or the Tranche C Term Loan Commitments, (ii) so long as
no Revolving Credit Loans or Letter of Credit Liabilities are outstanding, to
terminate the Revolving Credit Commitments and (iii) to reduce the aggregate
unused amount of the Revolving Credit Commitments (for which purpose use of the
Revolving Credit Commitments shall be deemed to include Letter of Credit
Liabilities); provided that (i) the Borrower shall give notice of each such
termination or reduction as provided in Section 4.05 hereof and (ii) each
partial reduction shall be in an aggregate amount at least equal to $5,000,000
and in integral multiples of $1,000,000 in excess thereof.
(c) The Commitments shall automatically reduce as provided in
Section 2.09 hereof.
(d) Each reduction in the aggregate amount of the Revolving
Credit Commitments pursuant to paragraph (b) above, or pursuant to Section 2.09
hereof, on any date shall result in an automatic and simultaneous reduction (but
not below zero) in the aggregate amount of the Revolving Credit Commitments for
each Revolving Credit Commitment Reduction Date (as reflected in column (B) at
the end of paragraph (a) above) after such date in an amount equal to the amount
of such reduction.
(e) The aggregate amount of the Tranche A Term Loan
Commitments shall be automatically reduced to zero at the close of business on
the Restatement Effective Date.
(f) The aggregate amount of the Tranche C Term Loan
Commitments shall be automatically reduced to zero at the close of business on
the Tranche C Term Loan Commitment Termination Date.
(g) The Commitments once terminated or reduced may not be
reinstated.
2.04 Commitment Fees.
(a) The Borrower shall pay to the Agent for account of each
Revolving Credit Lender a commitment fee on the daily average unused amount of
such Revolving Credit Lender's Revolving
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Credit Commitment (for which purpose the aggregate amount of any Letter of
Credit Liabilities shall be deemed to be a pro rata (based on the Revolving
Credit Commitments) use of each Revolving Credit Lender's Revolving Credit
Commitment), for the period from and including the date of this Agreement to but
not including the earlier of the date such Revolving Credit Commitment is
terminated and the Revolving Credit Commitment Termination Date, at a rate per
annum equal to Applicable Commitment Fee Rate.
(b) The Borrower shall pay to the Agent for account of each
Tranche C Lender a commitment fee on the daily average unused amount of such
Tranche C Lender's Tranche C Term Loan Commitment, for the period from and
including the Tranche C Term Loan Activation Date to but not including the
earlier of the date such Tranche C Term Loan Commitment is terminated and the
Tranche C Term Loan Commitment Termination Date, at a rate per annum equal to a
rate agreed to by the Borrower and the Tranche C Lenders and specified in the
Tranche C Term Loan Activation Notice.
(c) Accrued commitment fee shall be payable on each Quarterly
Date and on the earlier of the date the relevant Commitment is terminated and
either the Revolving Credit Commitment Termination Date or the Tranche C Term
Loan Commitment Termination Date, as the case may be.
2.05 Lending Offices. The Loans of each Type made by each
Lender shall be made and maintained at such Lender's Applicable Lending Office
for Loans of such Type.
2.06 Several Obligations; Remedies Independent. The failure of
any Lender to make any Loan to be made by it on the date specified therefor
shall not relieve any other Lender of its obligation to make its Loan on such
date, but (a) neither any Lender nor the Agent shall be responsible for the
failure of any other Lender to make a Loan to be made by such other Lender and
(b) no Lender shall have an obligation to any other Lender in respect of its
obligation to make any Loan hereunder. The amounts payable by the Borrower to
each Lender at any time hereunder and under the Note(s) (if any) payable to such
Lender shall be a separate and independent debt and such Lender shall be
entitled to protect and enforce its rights arising out of this Agreement and
such Note(s), and it shall not be necessary for any other Lender or the Agent to
consent to, or be joined as an additional party in, any proceedings for such
purposes.
2.07 Notes.
(a) Any Revolving Credit Lender may request that its Revolving
Credit Loans (other than Registered Loans) be evidenced
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by a single promissory note of the Borrower substantially in the form of Exhibit
A-1 hereto, dated the date hereof, payable to such Revolving Credit Lender in a
principal amount equal to the amount of its Revolving Credit Commitment as
originally in effect and otherwise duly completed.
(b) Any Tranche A Lender may request that its Tranche A Term
Loan (other than Registered Loans) be evidenced by a single promissory note of
the Borrower substantially in the form of Exhibit A-2 hereto, dated the date
hereof, payable to such Tranche A Lender in a principal amount equal to the
original amount of its Tranche A Term Loan Commitment and otherwise duly
completed.
(c) Any Tranche C Term Lender may request that its Tranche C
Term Loans (other than Registered Loans) be evidenced by a single promissory
note of the Borrower substantially in the form of Exhibit A-3 hereto, dated the
Tranche C Term Loan Activation Date, payable to such Tranche C Lender in a
principal amount equal to the original amount of its Tranche C Term Loan
Commitment and otherwise duly completed.
(d) The date, amount, Type, interest rate, and duration of
Interest Period (if applicable) of each Loan made by each Lender to the
Borrower, and each payment made on account of the principal thereof, shall be
recorded by such Lender on its books and, prior to any transfer of the Note (if
any) evidencing such Loan, endorsed by such Lender on the schedule attached to
such Note or any continuation thereof; provided that the failure of such Lender
to make any such recordation (or any error in making any such recordation) or
endorsement shall not affect the obligations of the Borrower to make a payment
when due of any amount owing hereunder or under such Note in respect of such
Loans.
(e) No Lender shall be entitled to have its Notes substituted
or exchanged for any reason, or subdivided for promissory notes of lesser
denominations, except in connection with a permitted assignment of all or any
portion of such Lender's relevant Commitment(s), Loan(s) or Note(s) pursuant to
Section 12.06(b) hereof and except as provided in clause (f) below (and, if
requested by any Lender, the Borrower agrees to so exchange any Note).
(f) Notwithstanding the foregoing, any Lender that is not a
U.S. Person and is not a "bank" within the meaning of Section 881(c)(3)(A) of
the Code may request the Borrower (through the Agent), and the Borrower agrees
thereupon, to record on the Register referred to in Section 12.06(g) hereof any
Loans of any Class held by such Lender under this Agreement. Loans
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recorded on the Register ("Registered Loans") may not be evidenced by promissory
notes other than Registered Notes as defined below and, upon the registration of
any Loan, any promissory note (other than a Registered Note) evidencing the same
shall be null and void and shall be returned to the Borrower. The Borrower
agrees, at the request of any Lender that is the holder of Registered Loans, to
execute and deliver to such Lender a promissory note in registered form to
evidence each such Registered Loan (i.e. containing the optional registered note
language as indicated in Exhibits A-1, A-2 or A-3 hereto, as the case may be)
and registered as provided in Section 12.06(g) hereof (herein, a "Registered
Note"), dated (i) the date hereof if such promissory note evidences Loans of any
Class other than Tranche C Term Loans or (ii) the Tranche C Term Loan Activation
Date if such promissory note evidences Tranche C Term Loans, in each case
payable to such Lender and otherwise duly completed. A Loan once recorded on the
Register may not be removed from the Register so long as it remains outstanding
and a Registered Note may not be exchanged for a promissory note that is not a
Registered Note.
2.08 Optional Prepayments and Conversions or Continuations of
Loans.
(a) Subject to Section 4.04(a) hereof, the Borrower shall have
the right to prepay Loans, or to Convert Loans of one Type into Loans of another
Type or Continue Loans of one Type as Loans of the same Type, at any time or
from time to time, provided that: (i) the Borrower shall give the Agent notice
of each such prepayment, Conversion or Continuation as provided in Section 4.05
hereof (and, upon the date specified in any such notice of prepayment, the
amount to be prepaid shall become due and payable hereunder); (ii) Eurodollar
Loans may be prepaid or Converted only on the last day of an Interest Period for
such Loans; and (iii) prepayments of Tranche A Term Loans or Tranche C Term
Loans under this Section 2.08(a) shall be applied to each of such Classes of
Loans (x) as between such Classes of Loans, pro rata in accordance with the
respective aggregate principal amounts thereof outstanding on the date of
prepayment and (y) as within such Classes of Loans, to the respective
installments thereof in the inverse order of their maturities.
(b) Notwithstanding anything contained herein to the contrary,
and without limiting the rights and remedies of the Lenders under Section 10
hereof, in the event that any Event of Default shall have occurred and be
continuing, the Agent may (and at the request of the Majority Lenders shall)
suspend the right of the Borrower to Convert any Loan into a Eurodollar Loan, or
to Continue any Loan as a Eurodollar Loan, in which event all Loans shall be
Converted (on the last day(s) of the respective Interest
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Periods therefor) or Continued, as the case may be, as Base Rate Loans.
2.09 Mandatory Prepayments and Reductions of Commitments.
(a) Casualty Events. Upon the date 270 days following the
receipt by the Borrower of the proceeds of insurance, condemnation award or
other compensation in respect of any Casualty Event affecting any Property of
the Borrower or any of its Subsidiaries or any Contract Station (or upon such
earlier date as the Borrower or such Subsidiary of the Borrower shall have
determined not to repair or replace the Property affected by such Casualty
Event), the Borrower shall prepay the Loans (and/or provide cover for Letter of
Credit Liabilities as specified in clause (f) below), and the Commitments shall
be subject to automatic reduction, in an aggregate amount, if any, equal to 100%
of the Net Available Proceeds of such Casualty Event not theretofore applied to
the repair or replacement of such Property, such prepayment and reduction to be
effected in each case in the manner and to the extent specified in clause (e) of
this Section 2.09. Notwithstanding the foregoing, in the event that a Casualty
Event shall occur with respect to Property covered by the Mortgage(s), the
Borrower shall prepay the Loans (and/or provide cover for Letter of Credit
Liabilities as specified in clause (f) below), and the Commitments shall be
subject to automatic reduction, on the dates, and in the amounts of the required
prepayments, specified in the Mortgage(s), if any. Nothing in this clause (a)
shall be deemed to limit any obligation of the Borrower or any of its
Subsidiaries pursuant to any of the Security Documents to remit to a collateral
or similar account maintained by the Agent pursuant to any of the Security
Documents (including, without limitation, the Collateral Account) the proceeds
of insurance, condemnation award or other compensation received in respect of
any Casualty Event.
(b) Issuance of Equity or Debt.
(i) Within the Specified Number of days after any Equity
Issuance by the Borrower permitted hereunder (other than the issuance
by the Borrower of Other Preferred Stock, the conversion of Other
Preferred Stock into the Borrower's Class A Common Stock and any Equity
Issuance made pursuant to the Columbus Option Agreement), the Borrower
shall prepay the Loans (and/or provide cover for Letter of Credit
Liabilities as specified in clause (f) below), and the Commitments
shall be subject to automatic reduction, in an aggregate amount equal
to 80% of such portion of the Net Available Proceeds thereof not
applied as required by Section 9.26(c)(iii) hereof, such prepayment and
reduction
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to be effected in each case in the manner and to the extent specified
in clause (e) of this Section 2.09.
(ii) Upon the issuance by the Borrower of the Other Preferred
Stock, the Borrower shall prepay the Revolving Credit Loans (and/or
provide cover for Letter of Credit Liabilities as specified in clause
(f) below) (but the Revolving Credit Commitments shall not be subject
to automatic reduction) in an aggregate amount equal to the Net
Available Proceeds thereof.
(iii) Upon the issuance of any Additional Senior Subordinated
Notes, the Borrower shall, within the Specified Number of days, prepay
the Loans (and/or provide cover for Letter of Credit Liabilities as
specified in clause (f) below), and the Commitments shall be subject to
automatic reduction, in an aggregate amount equal to such portion of
100% of the Net Available Proceeds thereof not applied as permitted by
Section 9.07(c)(v)(x) hereof, such prepayment and reduction to be
effected in the manner and to the extent specified in clause (e) of
this Section 2.09.
(c) Excess Cash Flow. Not later than the date 110 days after
the end of each fiscal year of the Borrower that ends in 1997 or thereafter and
on the last day of which the Total Indebtedness Ratio is greater than 5.0 to 1,
the Borrower shall prepay the Loans (and/or provide cover for Letter of Credit
Liabilities as specified in clause (f) below), and Commitments shall be subject
to automatic reduction, in an aggregate amount equal to the excess of (i) 50% of
Excess Cash Flow (as reported upon by independent certified public accountants
of recognized national standing on or before said date) for such fiscal year
over (ii) the sum of (x) the aggregate amount of prepayments of Tranche A Term
Loans and Tranche C Term Loans made during such fiscal year pursuant to Section
2.08 hereof plus (y) (if the Tranche A Term Loans and Tranche C Term Loans shall
have been paid or prepaid in full during such fiscal year) the aggregate amount
of the reductions of the Revolving Credit Commitments made during such calendar
year pursuant to Section 2.03(b) hereof, such prepayment and reduction to be
effected in each case in the manner and to the extent specified in clause (e) of
this Section 2.09.
(d) Sale of Assets. Without limiting the obligation of the
Borrower to obtain the consent of the Majority Lenders pursuant to Section 9.05
hereof to any Disposition not otherwise permitted hereunder, in the event that
the Net Available Proceeds of any Disposition (herein, the "Current
Disposition"), and of all prior Dispositions as to which a prepayment has not
yet been made under this Section 2.09(d), but in all events excluding
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Excluded Net Available Proceeds (as defined below), shall exceed $1,000,000
then, no later than five Business Days prior to the occurrence of the Current
Disposition, the Borrower will deliver to the Lenders a statement, certified by
a senior financial officer of the Borrower, in form and detail satisfactory to
the Agent, of the amount of the Net Available Proceeds of the Current
Disposition and of all such prior Dispositions and, concurrently with the
consummation of the Current Disposition, will within the Specified Number of
days, prepay the Loans (and/or provide cover for Letter of Credit Liabilities as
specified in clause (f) below), and the Commitments shall be subject to
automatic reduction, in an aggregate amount equal to 100% of the Net Available
Proceeds of the Current Disposition, such prepayment and reduction to be
effected in each case in the manner and to the extent specified in clause (e) of
this Section 2.09. For purposes of this Section 2.09(d) "Excluded Net Available
Proceeds" shall mean the first $5,000,000 of Net Available Proceeds from
Dispositions received by the Borrower and its Subsidiaries after the date
hereof.
(e) Application. Any amount (the "Applicable Amount") required
to be applied to prepay Loans or reduce Commitments as provided in the foregoing
clauses of this Section 2.09 shall be effected (except as expressly set forth
above) as follows:
(i) first, the Borrower shall prepay the Tranche A Term Loans and
Tranche C Term Loans in an aggregate amount equal to the Applicable
Amount, such prepayment to be applied (x) as between such Classes of
Loans, pro rata in accordance with the respective aggregate principal
amounts thereof outstanding on the date of prepayment (as calculated
after giving effect to all other payments and prepayments of principal
of such Loans on such date) and (y) as within each such Class of Loans,
to the respective installments thereof in the inverse order of their
maturities;
(ii) second, the Tranche C Term Loan Commitments shall be
automatically reduced by an amount equal to any excess of the
Applicable Amount over the aggregate principal amount of Loans prepaid
pursuant to the foregoing clause (i); and
(iii) third, the Revolving Credit Commitments shall be automatically
reduced by an amount equal to any excess of the Applicable Amount over
the aggregate principal amount of Loans prepaid and Commitments reduced
pursuant to the foregoing clauses (i) and (ii), and to the extent that,
after giving effect to such reduction, the aggregate principal amount
of Revolving Credit Loans, together with the aggregate amount of all
Letter of Credit Liabilities, would exceed the Revolving Credit
Commitments, the Borrower
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shall, first, prepay Revolving Credit Loans and, second, provide cover
for Letter of Credit Liabilities as specified in clause (f) below, in
an aggregate amount equal to such excess.
(f) Cover for Letter of Credit Liabilities. In the event that
the Borrower shall be required pursuant to this Section 2.09 or Section 3.01(a)
hereof to provide cover for Letter of Credit Liabilities, the Borrower shall
effect the same by paying to the Agent immediately available funds in an amount
equal to the required amount, which funds shall be retained by the Agent in the
Collateral Account (as provided herein as collateral security for the Letter of
Credit Liabilities) until such time as the Letters of Credit shall have been
terminated and all of the Letter of Credit Liabilities paid in full.
2.10 Issuance of Letters of Credit. Subject to the terms and
conditions of this Agreement, the Revolving Credit Commitments may be utilized
prior to the Revolving Credit Commitment Termination Date, upon the request of
the Borrower, in addition to the Revolving Credit Loans provided for by Section
2.01(a) hereof, by the issuance by the Issuing Bank of letters of credit (each,
a "Letter of Credit") for account of the Borrower or any of its Subsidiaries (as
specified by the Borrower), provided that in no event shall (i) the aggregate
amount of all Letter of Credit Liabilities, together with the aggregate
principal amount of the Revolving Credit Loans, exceed the aggregate amount of
the Revolving Credit Commitments as in effect from time to time, (ii) the
outstanding aggregate amount of all Letter of Credit Liabilities exceed
$100,000,000 or (iii) the expiration date of any Letter of Credit extend beyond
the Revolving Credit Commitment Termination Date. The following additional
provisions shall apply to Letters of Credit:
(a) The Borrower shall give the Agent at least five Business
Days' (or such shorter period as the Agent and the Issuing Bank may
agree) irrevocable prior notice (effective upon receipt) specifying the
Business Day (which shall be no later than 30 days preceding the
Revolving Credit Commitment Termination Date) on which each Letter of
Credit is to be issued and the account party or parties therefor and
describing in reasonable detail the proposed terms of such Letter of
Credit (including the beneficiary thereof) and the nature of the
transactions or obligations proposed to be supported thereby (including
whether such Letter of Credit is to be a commercial letter of credit or
a standby letter of credit). Upon receipt of any such notice, the Agent
shall advise the Issuing Bank of the contents thereof.
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(b) On each day during the period commencing with the issuance
by the Issuing Bank of such Letter of Credit (or in the case of an
Existing Letter of Credit, on the Restatement Effective Date) and until
such Letter of Credit shall have expired or been terminated, the
Revolving Credit Commitment of each Revolving Credit Lender shall be
deemed to be utilized for all purposes of this Agreement in an amount
equal to such Revolving Credit Lender's Revolving Credit Commitment
Percentage of the then undrawn face amount of such Letter of Credit.
Each Revolving Credit Lender (other than the Issuing Bank) agrees that,
upon the issuance of any Letter of Credit hereunder (or in the case of
an Existing Letter of Credit, on the Restatement Effective Date), it
shall automatically acquire a participation in the Issuing Bank's
liability under such Letter of Credit in an amount equal to such
Revolving Credit Lender's Revolving Credit Commitment Percentage of
such liability, and each Revolving Credit Lender (other than the
Issuing Bank) thereby shall absolutely, unconditionally and irrevocably
assume, as primary obligor and not as surety, and shall be
unconditionally obligated to the Issuing Bank to pay and discharge when
due, its Revolving Credit Commitment Percentage of the Issuing Bank's
liability under such Letter of Credit.
(c) Upon receipt from the beneficiary of any Letter of Credit
of any demand for payment under such Letter of Credit, the Issuing Bank
shall promptly notify the Borrower (through the Agent) of the amount to
be paid by the Issuing Bank as a result of such demand and the date on
which payment is to be made by the Issuing Bank to such beneficiary in
respect of such demand. Notwithstanding the identity of the account
party of any Letter of Credit, the Borrower hereby unconditionally
agrees to pay and reimburse the Agent for account of the Issuing Bank
for the amount of each demand for payment under such Letter of Credit
at or prior to the date on which payment is to be made by the Issuing
Bank to the beneficiary thereunder, without presentment, demand,
protest or other formalities of any kind.
(d) Forthwith upon its receipt of a notice referred to in
clause (c) of this Section 2.10, the Borrower shall advise the Agent
whether or not the Borrower intends to borrow hereunder to finance its
obligation to reimburse the Issuing Bank for the amount of the related
demand for payment and, if it does, submit a notice of such borrowing
as provided in Section 4.05 hereof. In the event that the Borrower
fails to so advise the Agent, or if the Borrower fails to reimburse the
Issuing Bank for a payment under a
Credit Agreement
<PAGE>
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Letter of Credit by the date of such payment, the Agent shall give each
Revolving Credit Lender prompt notice of the amount of the demand for
payment, specifying such Revolving Credit Lender's Revolving Credit
Commitment Percentage of the amount of the related demand for payment.
(e) Each Revolving Credit Lender (other than the Issuing Bank)
shall pay to the Agent for account of the Issuing Bank at the Agent's
principal office in Dollars and in immediately available funds, the
amount of such Revolving Credit Lender's Revolving Credit Commitment
Percentage of any payment under a Letter of Credit upon notice by the
Issuing Bank (through the Agent) to such Revolving Credit Lender
requesting such payment and specifying such amount. Each such Revolving
Credit Lender's obligation to make such payment to the Agent for
account of the Issuing Bank under this clause (e), and the Issuing
Bank's right to receive the same, shall be absolute and unconditional
and shall not be affected by any circumstance whatsoever, including,
without limitation, the failure of any other Revolving Credit Lender to
make its payment under this clause (e), the financial condition of the
Borrower (or any other account party), the existence of any Default or
the termination of the Revolving Credit Commitments. Each such payment
to the Issuing Bank shall be made without any offset, abatement,
withholding or reduction whatsoever. If any Revolving Credit Lender
shall default in its obligation to make any such payment to the Agent
for account of the Issuing Bank, for so long as such default shall
continue the Agent may at the request of the Issuing Bank withhold from
any payments received by the Agent under this Agreement or any Note for
account of such Revolving Credit Lender the amount so in default and,
to the extent so withheld, pay the same to the Issuing Bank in
satisfaction of such defaulted obligation.
(f) Upon the making of each payment by a Revolving Credit
Lender to the Issuing Bank pursuant to clause (e) above in respect of
any Letter of Credit, such Revolving Credit Lender shall, automatically
and without any further action on the part of the Agent, the Issuing
Bank or such Revolving Credit Lender, acquire (i) a participation in an
amount equal to such payment in the Reimbursement Obligation owing to
the Issuing Bank by the Borrower hereunder and under the Letter of
Credit Documents relating to such Letter of Credit and (ii) a
participation in a percentage equal to such Revolving Credit Lender's
Revolving Credit Commitment Percentage in any interest or other amounts
payable by the Borrower hereunder and under such Letter of Credit
Documents in respect of such Reimbursement Obligation (other than the
commissions, charges, costs and
Credit Agreement
<PAGE>
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expenses payable to the Issuing Bank pursuant to clause (g) of this
Section 2.10). Upon receipt by the Issuing Bank from or for account of
the Borrower of any payment in respect of any Reimbursement Obligation
or any such interest or other amount (including by way of setoff or
application of proceeds of any collateral security) the Issuing Bank
shall promptly pay to the Agent for account of each Revolving Credit
Lender entitled thereto, such Revolving Credit Lender's Revolving
Credit Commitment Percentage of such payment, each such payment by the
Issuing Bank to be made in the same money and funds in which received
by the Issuing Bank. In the event any payment received by the Issuing
Bank and so paid to the Revolving Credit Lenders hereunder is rescinded
or must otherwise be returned by the Issuing Bank, each Revolving
Credit Lender shall, upon the request of the Issuing Bank (through the
Agent), repay to the Issuing Bank (through the Agent) the amount of
such payment paid to such Revolving Credit Lender, with interest from
the date the Issuing Bank so returns such payment at the rate specified
in clause (j) of this Section 2.10.
(g) The Borrower shall pay to the Agent for account of each
Revolving Credit Lender (ratably in accordance with their respective
Revolving Credit Commitment Percentages) a letter of credit fee in
respect of each Letter of Credit at the rate per annum equal to the
Applicable Margin for Eurodollar Loans on the daily average undrawn
face amount of such Letter of Credit for the period from and including
the date of issuance of such Letter of Credit (or in the case of an
Existing Letter of Credit, on the Restatement Effective Date) (i) in
the case of a Letter of Credit that expires in accordance with its
terms, to and including such expiration date and (ii) in the case of a
Letter of Credit that is drawn in full or is otherwise terminated other
than on the stated expiration date of such Letter of Credit, to but
excluding the date such Letter of Credit is drawn in full or is
terminated (such fee to be non-refundable, to be paid in arrears on
each Quarterly Date and on the Revolving Credit Commitment Termination
Date and to be calculated for any day after giving effect to any
payments made under such Letter of Credit on such day). In addition,
the Borrower shall pay to the Agent for account of the Issuing Bank a
fronting fee in respect of each Letter of Credit in an amount equal to
1/4 of 1% per annum of the daily average undrawn face amount of such
Letter of Credit for the period from and including the date of issuance
of such Letter of Credit (i) in the case of a Letter of Credit that
expires in accordance with its terms, to and including such expiration
date and (ii) in the case of a Letter of Credit that is drawn in full
or is otherwise terminated other than on the stated expiration
Credit Agreement
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date of such Letter of Credit, to but excluding the date such Letter of
Credit is drawn in full or is terminated (such fee to be
non-refundable, to be paid in arrears on each Quarterly Date and on the
Revolving Credit Commitment Termination Date and to be calculated for
any day after giving effect to any payments made under such Letter of
Credit on such day) plus all commissions, charges, costs and expenses
in the amounts customarily charged by the Issuing Bank from time to
time in like circumstances with respect to the issuance of each Letter
of Credit and drawings and other transactions relating thereto.
(h) Promptly following the end of each calendar quarter, the
Issuing Bank shall deliver (through the Agent) to each Revolving Credit
Lender and the Borrower a notice describing the aggregate amount of all
Letters of Credit outstanding at the end of such quarter. Upon the
request of any Revolving Credit Lender from time to time, the Issuing
Bank shall deliver any other information reasonably requested by such
Revolving Credit Lender with respect to each Letter of Credit then
outstanding.
(i) The issuance by the Issuing Bank of each Letter of Credit
shall, in addition to the conditions precedent set forth in Section 7
hereof, be subject to the conditions precedent that (i) such Letter of
Credit shall be in such form, contain such terms and support such
transactions as shall be satisfactory to the Issuing Bank consistent
with its then current practices and procedures with respect to letters
of credit of the same type and (ii) the Borrower shall have executed
and delivered such applications, agreements and other instruments
relating to such Letter of Credit as the Issuing Bank shall have
reasonably requested consistent with its then current practices and
procedures with respect to letters of credit of the same type, provided
that in the event of any conflict between any such application,
agreement or other instrument and the provisions of this Agreement or
any Security Document, the provisions of this Agreement and the
Security Documents shall control.
(j) To the extent that any Revolving Credit Lender shall fail
to pay any amount required to be paid pursuant to clause (e) or (f) of
this Section 2.10 on the due date therefor, such Revolving Credit
Lender shall pay interest to the Issuing Bank (through the Agent) on
such amount from and including such due date to but excluding the date
such payment is made at a rate per annum equal to the Federal Funds
Rate, provided that if such Revolving Credit Lender shall fail to make
such payment to the Issuing Bank within
Credit Agreement
<PAGE>
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three Business Days of such due date, then, retroactively to the due
date, such Revolving Credit Lender shall be obligated to pay interest
on such amount at the Post-Default Rate.
(k) The issuance by the Issuing Bank of any modification or
supplement to any Letter of Credit hereunder shall be subject to the
same conditions applicable under this Section 2.10 to the issuance of
new Letters of Credit, and no such modification or supplement shall be
issued hereunder unless either (i) the respective Letter of Credit
affected thereby would have complied with such conditions had it
originally been issued hereunder in such modified or supplemented form
or (ii) each Revolving Credit Lender shall have consented thereto.
(l) The Borrower hereby indemnifies and holds harmless each
Revolving Credit Lender and the Agent from and against any and all
claims and damages, losses, liabilities, costs or expenses that such
Revolving Credit Lender or the Agent may incur (or that may be claimed
against such Revolving Credit Lender or the Agent by any Person
whatsoever) by reason of or in connection with the execution and
delivery or transfer of or payment or refusal to pay by the Issuing
Bank under any Letter of Credit; provided that the Borrower shall not
be required to indemnify any Revolving Credit Lender or the Agent for
any claims, damages, losses, liabilities, costs or expenses to the
extent, but only to the extent, caused by (x) the willful misconduct or
gross negligence of the Issuing Bank in determining whether a request
presented under any Letter of Credit complied with the terms of such
Letter of Credit or (y) in the case of the Issuing Bank, the Issuing
Bank's failure to pay under any Letter of Credit after the presentation
to it of a request strictly complying with the terms and conditions of
such Letter of Credit unless such payment was enjoined by court order.
Nothing in this Section 2.10 is intended to limit the other obligations
of the Borrower, any Revolving Credit Lender or the Agent under this
Agreement.
Section 3. Payments of Principal and Interest.
3.01 Repayment of Loans.
(a) The Borrower hereby promises to pay to the Agent for
account of each Revolving Credit Lender the entire outstanding principal amount
of such Revolving Credit Lender's Revolving Credit Loans, and each Revolving
Credit Loan shall mature, on the Revolving Credit Commitment Termination Date.
In addition, if the aggregate principal amount of the Revolving
Credit Agreement
<PAGE>
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Credit Loans, together with the aggregate amount of all Letter of Credit
Liabilities, shall at any time exceed the Revolving Credit Commitments, the
Borrower shall, first, pay Revolving Credit Loans and, second, provide cover for
Letter of Credit Liabilities as specified in Section 2.09(f) above, in an
aggregate amount equal to such excess.
(b) The Borrower hereby promises to pay to the Agent for
account of each Tranche A Lender the principal of such Tranche A Lender's
Tranche A Term Loan in thirty installments payable on the Tranche A Principal
Payment Dates as follows:
Tranche A Principal Payment Date
falling on or nearest to: Amount of Installment ($)
------------------------ -------------------------
September 30, 1997 16,500,000
December 31, 1997 16,500,000
March 31, 1998 16,250,000
June 30, 1998 16,250,000
September 30, 1998 16,250,000
December 31, 1998 16,250,000
March 31, 1999 17,500,000
June 30, 1999 17,500,000
September 30, 1999 17,500,000
December 31, 1999 17,500,000
March 31, 2000 22,500,000
June 30, 2000 22,500,000
September 30, 2000 22,500,000
December 31, 2000 22,500,000
March 31, 2001 22,500,000
June 30, 2001 22,500,000
September 30, 2001 22,500,000
December 31, 2001 22,500,000
March 31, 2002 22,500,000
June 30, 2002 22,500,000
September 30, 2002 22,500,000
December 31, 2002 22,500,000
March 31, 2003 22,500,000
June 30, 2003 22,500,000
September 30, 2003 22,500,000
December 31, 2003 22,500,000
March 31, 2004 18,000,000
June 30, 2004 18,000,000
September 30, 2004 18,000,000
December 31, 2004 18,000,000
If the aggregate principal amount of the Tranche A Term Loans made on the
Restatement Effective Date, is less than $600,000,000, the shortfall shall be
applied to reduce the foregoing installments ratably.
Credit Agreement
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(c) The Borrower hereby promises to pay to the Agent for
account of each Tranche C Lender the principal of such Tranche C Lender's
Tranche C Term Loan in twenty-six installments payable on the Tranche C
Principal Payment Dates as follows:
Tranche C Principal Payment Date
falling on or nearest to: Amount of Installment ($)
------------------------ -------------------------
September 30, 1998 8,000,000
December 31, 1998 8,000,000
March 31, 1999 5,000,000
June 30, 1999 5,000,000
September 30, 1999 5,000,000
December 31, 1999 5,000,000
March 31, 2000 6,000,000
June 30, 2000 6,000,000
September 30, 2000 6,000,000
December 31, 2000 6,000,000
March 31, 2001 7,000,000
June 30, 2001 7,000,000
September 30, 2001 7,000,000
December 31, 2001 7,000,000
March 31, 2002 8,000,000
June 30, 2002 8,000,000
September 30, 2002 8,000,000
December 31, 2002 8,000,000
March 31, 2003 9,000,000
June 30, 2003 9,000,000
September 30, 2003 9,000,000
December 31, 2003 9,000,000
March 31, 2004 61,000,000
June 30, 2004 61,000,000
September 30, 2004 61,000,000
December 31, 2004 61,000,000
If the aggregate principal amount of the Tranche C Term Loans outstanding at the
close of business on the Tranche C Term Loan Commitment Termination Date is less
than $400,000,000, the shortfall shall be applied to reduce the foregoing
installments ratably.
3.02 Interest. The Borrower hereby promises to pay to the
Agent for account of each Lender interest on the unpaid principal amount of each
Loan made by such Lender for the period from and including the date of such Loan
to but excluding the date such Loan shall be paid in full, at the following
rates per annum:
Credit Agreement
<PAGE>
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(a) during such periods as such Loan is a Base Rate Loan, the
Base Rate (as in effect from time to time) plus the Applicable Margin
and
(b) during such periods as such Loan is a Eurodollar Loan, for
each Interest Period relating thereto, the Eurodollar Rate for such
Loan for such Interest Period plus the Applicable Margin.
Notwithstanding the foregoing, during any period that a Post- Default Interest
Condition exists (whether or not the same is thereafter cured), the Borrower
hereby promises to pay to the Agent for account of each Lender interest at the
applicable Post-Default Rate on any principal of any Loan made by such Lender
(whether or not then due), on any Reimbursement Obligation owing to such Lender
and on any other amount then due and payable by the Borrower hereunder or under
the Note(s) (if any) held by such Lender. Accrued interest on each Loan shall be
payable (i) in the case of a Base Rate Loan, quarterly on the Quarterly Dates,
(ii) in the case of a Eurodollar Loan, on the last day of each Interest Period
therefor and, if such Interest Period is longer than three months, at
three-month intervals following the first day of such Interest Period, and (iii)
in the case of any Loan, upon the payment or prepayment thereof or the
Conversion of such Loan to a Loan of another Type (but only on the principal
amount so paid, prepaid or Converted), except that interest payable at the
Post-Default Rate shall be payable from time to time on demand. Promptly after
the determination of any interest rate provided for herein or any change
therein, the Agent shall give notice thereof to the Lenders to which such
interest is payable and to the Borrower.
Section 4. Payments; Pro Rata Treatment; Computations; Etc.
4.01 Payments.
(a) Except to the extent otherwise provided herein, all
payments of principal, interest and other amounts to be made by the Borrower
under this Agreement and the Notes (if any), and, except to the extent otherwise
provided therein, all payments to be made by the Borrower under any other Basic
Document, shall be made in Dollars, in immediately available funds, without
deduction, set-off or counterclaim, to the Agent at an account designated by the
Agent, not later than 1:00 p.m. New York time on the date on which such payment
shall become due (each such payment made after such time on such due date to be
deemed to have been made on the next succeeding Business Day).
Credit Agreement
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(b) Any Lender for whose account any such payment is to be
made, may (but shall not be obligated to) debit the amount of any such payment
which is not made by such time to any ordinary deposit account of the Borrower
with such Lender (with notice to the Borrower).
(c) The Borrower shall, at the time of making each payment
under this Agreement or any Note, specify to the Agent (which shall so notify
the intended recipient(s) thereof) the Loans, Reimbursement Obligations or other
amounts payable by the Borrower hereunder to which such payment is to be applied
(and in the event that it fails to so specify, or if an Event of Default has
occurred and is continuing, the Agent may distribute such payment to the Lenders
for application in such manner as it or the Majority Lenders, subject to Section
4.02 hereof, may determine to be appropriate).
(d) Except to the extent otherwise provided in the last
sentence of Section 2.10(e) hereof, each payment received by the Agent under
this Agreement or any Note for account of any Lender shall be paid by the Agent
promptly to such Lender, in immediately available funds, for account of such
Lender's Applicable Lending Office for the Loan or other obligation in respect
of which such payment is made.
(e) If the due date of any payment under this Agreement or any
Note would otherwise fall on a day which is not a Business Day such date shall
be extended to the next succeeding Business Day and interest shall be payable
for any principal so extended for the period of such extension.
4.02 Pro Rata Treatment. Except to the extent otherwise
provided herein:
(a) each borrowing of Loans of a particular Class from the
Lenders under Section 2.01 hereof shall be made from the relevant
Lenders, each payment of commitment fee under Section 2.04 hereof in
respect of Commitments of a particular Class shall be made for account
of the relevant Lenders, and each termination or reduction of the
amount of the Commitments of a particular Class under Section 2.03
hereof shall be applied to the respective Commitments of such Class of
the relevant Lenders, pro rata according to the amounts of their
respective Commitments of such Class;
(b) except as otherwise provided in Section 5.04 hereof,
Eurodollar Loans of any Class having the same Interest Period shall be
allocated among the relevant Lenders pro rata according to amounts of
their respective Commitments of such Class (in the case of the making
of
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Loans) or their respective Loans of such Class (in the case of
Conversions and Continuations of Loans);
(c) each payment or prepayment by the Borrower of principal of
Loans of any Class shall be made for account of the relevant Lenders
pro rata in accordance with the respective unpaid principal amounts of
the Loans of such Class held by them, provided that if immediately
prior to giving effect to any such payment in respect of any Loans of
any Class the outstanding principal amount of the Loans of such Class
shall not be held by the Lenders pro rata according to the amounts of
their respective Commitments of such Class in effect at the time such
Loans were made (by reason of a failure of a Lender to make a Loan
hereunder in the circumstances described in the last paragraph of
Section 12.04 hereof), then such payment shall be applied to the Loans
of such Class in such manner as shall result, as nearly as is
practicable, in the outstanding principal amount of the Loans of such
Class being held by the relevant Lenders pro rata according to the
amounts of their respective Commitments of such Class; and
(d) each payment by the Borrower of interest on Loans of any
Class shall be made for account of the relevant Lenders pro rata
according to the amounts of interest on such Loans then due and payable
to the respective Lenders.
4.03 Computations. Interest on Eurodollar Loans and commitment
fee and letter of credit fees shall be computed on the basis of a year of 360
days and actual days elapsed (including the first day but, except as otherwise
provided in Section 2.10(g) hereof, excluding the last day) occurring in the
period for which payable and interest on Base Rate Loans and Reimbursement
Obligations shall be computed on the basis of a year of 365 or 366 days, as the
case may be, and actual days elapsed (including the first day but excluding the
last day) occurring in the period for which payable. Notwithstanding the
foregoing, for each day that the Base Rate is calculated by reference to the
Federal Funds Rate, interest on Base Rate Loans and Reimbursement Obligations
shall be computed on the basis of a year of 360 days and actual days elapsed.
4.04 Minimum Amounts, Etc.
(a) Except for mandatory prepayments made pursuant to Section
2.09 hereof and Conversions or prepayments made pursuant to Section 5.04 hereof,
each borrowing, Conversion and partial prepayment of principal of Loans shall be
in an amount at least equal to $1,000,000 and in integral multiples of $100,000
in excess thereof (borrowings, Conversions or prepayments of or into
Credit Agreement
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Loans of different Types or, in the case of Eurodollar Loans, having different
Interest Periods at the same time hereunder to be deemed separate borrowings,
Conversions and prepayments for purposes of the foregoing, one for each Type or
Interest Period).
(b) Anything in this Agreement to the contrary
notwithstanding, the aggregate principal amount of Eurodollar Loans having the
same Interest Period shall be in an amount at least equal to $10,000,000 and in
integral multiples of $500,000 in excess thereof and, if any Eurodollar Loans
would otherwise be in a lesser principal amount for any period, such Loans shall
be Base Rate Loans during such period.
4.05 Certain Notices. Notices by the Borrower to the Agent of
terminations or reductions of the Commitments, of borrowings, Conversions,
Continuations and optional prepayments of Loans, and of Classes of Loans, of
Types of Loans and of the duration of Interest Periods shall be effective only
if received by the Agent not later than 10:00 a.m. New York time on the number
of Business Days prior to the date of the relevant termination, reduction,
borrowing, Conversion, Continuation or prepayment or the first day of such
Interest Period specified below:
Number of
Business
Notice Days Prior
------ ----------
Termination or reduction
of the Commitments 2
Borrowing or prepayment of,
or Conversions into,
Base Rate Loans 1
Borrowing or prepayment of,
Conversions into, Continuations
as, or duration of Interest
Period for, Eurodollar Loans 3
Each such notice of termination or reduction shall specify the amount and Class
of the Commitments to be terminated or reduced. Each such notice of borrowing,
Conversion, Continuation or optional prepayment shall specify the Class of Loans
to be borrowed, Converted, Continued or prepaid and the amount (subject to
Section 4.04(a) hereof) and Type of each Loan to be borrowed, Converted,
Continued or prepaid and the date of borrowing, Conversion, Continuation or
optional prepayment (which shall be a Business Day). Each such notice of the
duration of an Interest Period shall specify the Loans to which such Interest
Period is to relate. The Agent shall promptly notify the Lenders of the
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contents of each such notice. In the event that the Borrower fails to select the
Type of Loan, or the duration of any Interest Period for any Eurodollar Loan
within the time period and otherwise as provided in this Section 4.05, such Loan
(if outstanding as a Eurodollar Loan) will be automatically Converted into a
Base Rate Loan on the last day of the then current Interest Period for such Loan
or (if outstanding as a Base Rate Loan) will remain as, or (if not then
outstanding) will be made as, a Base Rate Loan. All notices referred to in this
Section 4.05 shall be irrevocable, except that notices of the prepayment in full
of the Loans and the termination of Commitments furnished in anticipation of a
refinancing thereof may be revoked through and including the date specified for
such prepayment and termination if such refinancing does not occur on such date.
4.06 Non-Receipt of Funds by the Agent. Unless the Agent shall
have been notified by a Lender or the Borrower (the "Payor") prior to the date
on which the Payor is to make payment to the Agent of (in the case of a Lender)
the proceeds of a Loan to be made by it hereunder or (in the case of the
Borrower) a payment to the Agent for account of one or more of the Lenders
hereunder (such payment being herein called the "Required Payment"), which
notice shall be effective upon receipt, that the Payor does not intend to make
the Required Payment to the Agent, the Agent may assume that the Required
Payment has been made and may, in reliance upon such assumption (but shall not
be required to), make the amount thereof available to the intended recipient(s)
on such date and, if the Payor has not in fact made the Required Payment to the
Agent, the recipient(s) of such payment shall, on demand, repay to the Agent the
amount so made available together with interest thereon in respect of each day
during the period commencing on the date (the "Advance Date") such amount was so
made available by the Agent until the date the Agent recovers such amount at a
rate per annum equal to the Federal Funds Rate for such day and, if such
recipient(s) shall fail promptly to make such payment, the Agent shall be
entitled to recover such amount, on demand, from the Payor, together with
interest as aforesaid, provided that if neither the recipient(s) nor the Payor
shall return the Required Payment to the Agent within three Business Days of the
Advance Date, then, retroactively to the Advance Date, the Payor and the
recipient(s) shall each be obligated to pay interest on the Required Payment as
follows:
(i) if the Required Payment shall represent a payment to be
made by the Borrower to the Lenders, the Borrower and the recipient(s)
shall each be obligated retroactively to the Advance Date to pay
interest in respect of the Required Payment at the Post-Default Rate
(without duplication of the
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obligation of the Borrower under Section 3.02 hereof to pay interest on
the Required Payment at the Post-Default Rate), it being understood
that the return by the recipient(s) of the Required Payment to the
Agent shall not limit such obligation of the Borrower under said
Section 3.02 to pay interest at the Post-Default Rate in respect of the
Required Payment, and
(ii) if the Required Payment shall represent proceeds of a Loan to
be made by the Lenders to the Borrower, the Payor and the Borrower
shall each be obligated retroactively to the Advance Date to pay
interest in respect of the Required Payment at whichever of the rates
of interest specified in Section 3.02 hereof is applicable to the Type
of such Loan, it being understood that the return by the Borrower of
the Required Payment to the Agent shall not limit any claim the
Borrower may have against the Payor in respect of such Required
Payment.
4.07 Sharing of Payments, Etc.
(a) Each Obligor agrees that, in addition to (and without
limitation of) any right of set-off, banker's lien or counterclaim a Lender may
otherwise have, each Lender shall be entitled, at its option (to the fullest
extent permitted by law), to set off and apply any deposit (general or special,
time or demand, provisional or final), or other indebtedness, held by it or any
of its affiliates for the credit or account of such Obligor at any of its
offices, in Dollars or in any other currency, against any principal of or
interest on any of such Lender's Loans, Reimbursement Obligations or any other
amount payable to such Lender hereunder, that is not paid when due (regardless
of whether such deposit or other indebtedness is then due to such Obligor), in
which case it shall promptly notify such Obligor and the Agent thereof, provided
that such Lender's failure to give such notice shall not affect the validity
thereof.
(b) If any Lender shall obtain from any Obligor payment of any
principal of or interest on any Loan of any Class or Reimbursement Obligation
owing to it or payment of any other amount under this Agreement or any Note held
by it or any other Basic Document through the exercise of any right of set-off,
banker's lien or counterclaim or similar right or otherwise (other than from the
Agent as provided herein), and, as a result of such payment, such Lender shall
have received a greater percentage of the principal of or interest on the Loans
of such Class or Reimbursement Obligations or such other amounts then due
hereunder or thereunder by such Obligor to such Lender than the percentage
received by any other Lenders, it shall promptly
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purchase from such other Lenders participations in (or, if and to the extent
specified by such Lender, direct interests in) the Loans of such Class or
Reimbursement Obligations or such other amounts, respectively, owing to such
other Lenders (or in interest due thereon, as the case may be) in such amounts,
and make such other adjustments from time to time as shall be equitable, to the
end that all the Lenders shall share the benefit of such excess payment (net of
any expenses which may be incurred by such Lender in obtaining or preserving
such excess payment) pro rata in accordance with the unpaid principal of and/or
interest on the Loans of such Class or such other amounts, respectively, owing
to each of the Lenders, provided that if at the time of such payment the
outstanding principal amount of the Loans of any Class shall not be held by the
Lenders pro rata in accordance with their respective relevant Commitments of
such Class in effect at the time such Loans were made (by reason of a failure of
a Lender to make a Loan hereunder in the circumstances described in the last
paragraph of Section 12.04 hereof), then such purchases of participations and/or
direct interests shall be made in such manner as will result, as nearly as is
practicable, in the outstanding principal amount of the Loans being held by the
Lenders pro rata according to the amounts of such Commitments. To such end all
the Lenders shall make appropriate adjustments among themselves (by the resale
of participations sold or otherwise) if such payment is rescinded or must
otherwise be restored.
(c) The Borrower agrees that any Lender so purchasing such a
participation (or direct interest) may exercise all rights of set-off, banker's
lien, counterclaim or similar rights with respect to such participation as fully
as if such Lender were a direct holder of Loans or other amounts (as the case
may be) owing to such Lender in the amount of such participation (or direct
interest).
(d) Nothing contained herein shall require any Lender to
exercise any such right or shall affect the right of any Lender to exercise, and
retain the benefits of exercising, any such right with respect to any other
indebtedness or obligation of any Obligor. If, under any applicable bankruptcy,
insolvency or other similar law, any Lender receives a secured claim in lieu of
a set-off to which this Section 4.07 applies, such Lender shall, to the extent
practicable, exercise its rights in respect of such secured claim in a manner
consistent with the rights of the Lenders entitled under this Section 4.07 to
share in the benefits of any recovery on such secured claim.
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Section 5. Yield Protection, Etc.
5.01 Additional Costs.
(a) The Borrower shall pay directly to each Lender from time
to time such amounts as such Lender may determine to be necessary to compensate
it for any costs which such Lender determines are attributable to its making or
maintaining of any Eurodollar Loans or its obligation to make any Eurodollar
Loans hereunder, or any reduction in any amount receivable by such Lender
hereunder in respect of any of such Loans or such obligation (such increases in
costs and reductions in amounts receivable being herein called "Additional
Costs"), resulting from any Regulatory Change which:
(i) shall subject any Lender (or its Applicable Lending Office
for any of such Loans) to any tax, duty or other charge in respect of
such Loans or its Note(s) (if any) or changes the basis of taxation of
any amounts payable to such Lender under this Agreement or its Note(s)
(if any) in respect of any of such Loans (excluding changes in the rate
of tax on the overall net income of such Lender or of its Applicable
Lending Office for any of such Loans by the jurisdiction in which such
Lender has its principal office or such Applicable Lending Office); or
(ii) imposes or modifies any reserve, special deposit or similar
requirements (other than the Reserve Requirement utilized in the
determination of the Eurodollar Rate for such Loan) relating to any
extensions of credit or other assets of, or any deposits with or other
liabilities of, such Lender (including any of such Loans or any
deposits referred to in the definition of "Eurodollar Base Rate" in
Section 1.01 hereof), or any commitment of such Lender (including the
Commitment of such Lender hereunder); or
(iii) imposes any other condition affecting this Agreement or its
Note(s) (if any) (or any of such extensions of credit or liabilities)
or its Commitment.
If any Lender requests compensation from the Borrower under this Section
5.01(a), the Borrower may, by notice to such Lender (with a copy to the Agent),
suspend the obligation of such Lender to make or Continue Eurodollar Loans, or
to Convert Base Rate Loans into Eurodollar Loans, until the Regulatory Change
giving rise to such request ceases to be in effect (in which case the provisions
of Section 5.04 hereof shall be applicable), provided that such suspension shall
not affect the right of such Lender to receive the compensation so requested.
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(b) Without limiting the effect of the provisions of paragraph
(a) of this Section 5.01, in the event that, by reason of any Regulatory Change,
any Lender either (i) incurs Additional Costs based on or measured by the excess
above a specified level of the amount of a category of deposits or other
liabilities of such Lender which includes deposits by reference to which the
interest rate on Eurodollar Loans is determined as provided in this Agreement or
a category of extensions of credit or other assets of such Lender which includes
Eurodollar Loans or (ii) becomes subject to restrictions on the amount of such a
category of liabilities or assets which it may hold, then, if such Lender so
elects by notice to the Borrower (with a copy to the Agent), the obligation of
such Lender to make or Continue, or to Convert Base Rate Loans into, Eurodollar
Loans hereunder shall be suspended until such Regulatory Change ceases to be in
effect (in which case the provisions of Section 5.04 hereof shall be
applicable).
(c) Without limiting the effect of the foregoing provisions of
this Section 5.01 (but without duplication), the Borrower shall pay directly to
each Lender from time to time on request such amounts as such Lender may
determine to be necessary to compensate such Lender (or, without duplication,
the bank holding company of which such Lender is a subsidiary) for any costs
which it determines are attributable to the maintenance by such Lender (or any
Applicable Lending Office or such bank holding company), pursuant to any law or
regulation or any interpretation, directive or request (whether or not having
the force of law and whether or not failure to comply therewith would be
unlawful) of any court or governmental or monetary authority (i) following any
Regulatory Change or (ii) implementing any risk-based capital guideline or
requirement (whether or not having the force of law and whether or not the
failure to comply therewith would be unlawful) heretofore or hereafter issued by
any government or governmental or supervisory authority implementing at the
national level the Basle Accord (including, without limitation, the Final
Risk-Based Capital Guidelines of the Board of Governors of the Federal Reserve
System (12 CFR Part 208, Appendix A; 12 CFR Part 225, Appendix A) and the Final
Risk-Based Capital Guidelines of the Office of the Comptroller of the Currency
(12 CFR Part 3, Appendix A)), of capital in respect of its Commitment or Loans
(such compensation to include, without limitation, an amount equal to any
reduction of the rate of return on assets or equity of such Lender (or any
Applicable Lending Office or such bank holding company) to a level below that
which such Lender (or any Applicable Lending Office or such bank holding
company) could have achieved but for such law, regulation, interpretation,
directive or request). For purposes of this Section 5.01(c) and Section 5.06
hereof, "Basle Accord" shall mean the proposals for risk-based capital framework
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described by the Basle Committee on Banking Regulations and Supervisory
Practices in its paper entitled "International Convergence of Capital
Measurement and Capital Standards" dated July 1988, as amended, modified and
supplemented and in effect from time to time or any replacement thereof.
(d) Each Lender shall notify the Borrower of any event
occurring after the date of this Agreement that will entitle such Lender to
compensation under paragraph (a) or (c) of this Section 5.01 as promptly as
practicable, but in any event within 45 days, after such Lender obtains actual
knowledge thereof; provided, that (i) if such Lender fails to give such notice
within 45 days after it obtains actual knowledge of such an event, such Lender
shall, with respect to compensation payable pursuant to this Section 5.01 in
respect of any costs resulting from such event, only be entitled to payment
under this Section 5.01 for costs incurred from and after the date 45 days prior
to the date that such Lender does give such notice and (ii) each Lender will
designate a different Applicable Lending Office for the Loans of such Lender
affected by such event if such designation will avoid the need for, or reduce
the amount of, such compensation and will not, in the sole opinion of such
Lender, be disadvantageous to such Lender, except that such Lender shall have no
obligation to designate an Applicable Lending Office located in the United
States of America. Each Lender will furnish to the Borrower a certificate
setting forth the basis and amount of each request by such Lender for
compensation under paragraph (a) or (c) of this Section 5.01. Determinations and
allocations by any Lender for purposes of this Section 5.01 of the effect of any
Regulatory Change pursuant to paragraph (a) or (b) of this Section 5.01, or of
the effect of capital maintained pursuant to paragraph (c) of this Section 5.01,
on its costs or rate of return of maintaining Loans or its obligation to make
Loans, or on amounts receivable by it in respect of Loans, and of the amounts
required to compensate such Lender under this Section 5.01, shall be conclusive,
provided that such determinations and allocations are made on a reasonable
basis.
5.02 Limitation on Types of Loans. Anything herein to the
contrary notwithstanding, if, on or prior to the determination of any Eurodollar
Base Rate for any Interest Period:
(a) the Agent determines, which determination shall be
conclusive, that quotations of interest rates for the relevant deposits
referred to in the definition of "Eurodollar Base Rate" in Section 1.01
hereof are not being provided in the relevant amounts or for the
relevant
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maturities for purposes of determining rates of interest for
Eurodollar Loans as provided herein; or
(b) with respect to Loans of any Class, the Majority Revolving
Credit Lenders, the Majority Tranche A Lenders or the Majority Tranche
C Lenders, as the case may be, determine, which determination shall be
conclusive, and notify the Agent that the relevant rates of interest
referred to in the definition of "Eurodollar Base Rate" in Section 1.01
hereof upon the basis of which the rate of interest for Eurodollar
Loans of such Class for such Interest Period is to be determined are
not likely adequately to cover the cost to such Lenders of making or
maintaining Eurodollar Loans for such Interest Period;
then the Agent shall give the Borrower and each Lender prompt notice thereof,
and so long as such condition remains in effect, the Lenders shall be under no
obligation to make additional Eurodollar Loans, to Continue Eurodollar Loans or
to Convert Base Rate Loans into Eurodollar Loans and the Borrower shall, on the
last day(s) of the then current Interest Period(s) for the outstanding
Eurodollar Loans, either prepay such Loans or Convert such Loans into Base Rate
Loans in accordance with Section 2.08 hereof.
5.03 Illegality. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Lender or its
Applicable Lending Office to honor its obligation to make or maintain Eurodollar
Loans hereunder (and, in the sole opinion of such Lender, the designation of a
different Applicable Lending Office would either not avoid such unlawfulness or
would be disadvantageous to such Lender), then such Lender shall promptly notify
the Borrower thereof (with a copy to the Agent) and such Lender's obligation to
make or Continue, or to Convert Loans of any other Type into, Eurodollar Loans
shall be suspended until such time as such Lender may again make and maintain
Eurodollar Loans (in which case the provisions of Section 5.04 hereof shall be
applicable).
5.04 Treatment of Affected Loans. If the obligation of any
Lender to make Eurodollar Loans or to Continue, or to Convert Base Rate Loans
into, Eurodollar Loans shall be suspended pursuant to Section 5.01 or 5.03
hereof, such Lender's Eurodollar Loans shall be automatically Converted into
Base Rate Loans on the last day(s) of the then current Interest Period(s) for
Eurodollar Loans (or, in the case of a Conversion required by Section 5.01(b) or
5.03 hereof, on such earlier date as such Lender may specify to the Borrower
with a copy to the Agent) and, unless and until such Lender gives notice as
provided below that
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the circumstances specified in Section 5.01 or 5.03 hereof which gave rise to
such Conversion no longer exist:
(a) to the extent that such Lender's Eurodollar Loans have
been so Converted, all payments and prepayments of principal which
would otherwise be applied to such Lender's Eurodollar Loans shall be
applied instead to its Base Rate Loans; and
(b) all Loans which would otherwise be made or Continued by
such Lender as Eurodollar Loans shall be made or Continued instead as
Base Rate Loans and all Base Rate Loans of such Lender which would
otherwise be Converted into Eurodollar Loans shall remain as Base Rate
Loans.
If such Lender gives notice to the Borrower with a copy to the Agent that the
circumstances specified in Section 5.01 or 5.03 hereof which gave rise to the
Conversion of such Lender's Eurodollar Loans pursuant to this Section 5.04 no
longer exist (which such Lender agrees to do promptly upon such circumstances
ceasing to exist) at a time when Eurodollar Loans of the same Class made by
other Lenders are outstanding, such Lender's Base Rate Loans of such Class shall
be automatically Converted, on the first day(s) of the next succeeding Interest
Period(s) for such outstanding Eurodollar Loans, to the extent necessary so
that, after giving effect thereto, all Loans of such Class are allocated among
the Lenders pro rata (as to principal amounts, Types and Interest Periods) in
accordance with their respective Commitments.
5.05 Compensation. The Borrower shall pay to the Agent for
account of each Lender, upon the request of such Lender through the Agent, such
amount or amounts as shall be sufficient (in the reasonable opinion of such
Lender) to compensate it for any loss, cost or expense which such Lender
determines is attributable to:
(a) any payment, mandatory or optional prepayment or
Conversion of a Eurodollar Loan made by such Lender for any reason
(including, without limitation, the acceleration of the Loans pursuant
to Section 10 hereof) on a date other than the last day of the Interest
Period for such Loan; or
(b) any failure by the Borrower for any reason (including,
without limitation, the failure of any of the conditions precedent
specified in Section 7 hereof to be satisfied) to borrow a Eurodollar
Loan from such Lender on the date for such borrowing specified in the
relevant notice of borrowing given pursuant to Section 2.02 hereof.
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Without limiting the effect of the preceding sentence, such compensation shall
include an amount equal to the excess, if any, of (i) the amount of interest
which otherwise would have accrued on the principal amount so paid, prepaid or
Converted or not borrowed for the period from the date of such payment,
prepayment, Conversion or failure to borrow to the last day of the then current
Interest Period for such Loan (or, in the case of a failure to borrow, the
Interest Period for such Loan which would have commenced on the date specified
for such borrowing) at the Eurodollar Rate for such Loan for such Interest
Period over (ii) the amount of interest which otherwise would have accrued on
such principal amount at a rate per annum equal to the interest component of the
amount such Lender would have bid in the London interbank market for Dollar
deposits of leading banks in amounts comparable to such principal amount and
with maturities comparable to such period (as reasonably determined by such
Lender).
5.06 Additional Costs in Respect of Letters of Credit. Without
limiting the obligations of the Borrower under Section 5.01 hereof (but without
duplication), if as a result of any Regulatory Change or any risk-based capital
guideline or other requirement heretofore or hereafter issued by any government
or governmental or supervisory authority implementing at the national level the
Basle Accord there shall be imposed, modified or deemed applicable any tax,
reserve, special deposit, capital adequacy or similar requirement against or
with respect to or measured by reference to Letters of Credit issued or to be
issued hereunder and the result shall be to increase the cost to any Lender or
Lenders of issuing (or purchasing participations in) or maintaining its
obligation hereunder to issue (or purchase participations in) any Letter of
Credit hereunder or reduce any amount receivable by any Lender hereunder in
respect of any Letter of Credit (which increases in cost, or reductions in
amount receivable, shall be the result of such Lender's or Lenders' reasonable
allocation of the aggregate of such increases or reductions resulting from such
event), then, upon demand by such Lender or Lenders (through the Agent), the
Borrower shall pay immediately to the Agent for account of such Lender or
Lenders, from time to time as specified by such Lender or Lenders (through the
Agent), such additional amounts as shall be sufficient to compensate such Lender
or Lenders (through the Agent) for such increased costs or reductions in amount.
A statement as to such increased costs or reductions in amount incurred by any
such Lender or Lenders, submitted by such Lender or Lenders to the Borrower
shall be conclusive in the absence of manifest error as to the amount thereof.
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5.07 U.S. Taxes.
(a) The Borrower agrees to pay to each Lender that is not a
U.S. Person such additional amounts as are necessary in order that the net
payment of any amount due to such non-U.S. Person hereunder after deduction for
or withholding in respect of any U.S. Tax imposed with respect to such payment
(or in lieu thereof, payment of such U.S. Tax by such non-U.S. Person), will not
be less than the amount stated herein to be then due and payable, provided that
the foregoing obligation to pay such additional amounts shall not apply:
(i) to any payment to a Lender hereunder (other than in respect of
a Registered Loan) unless such Lender is, on the date hereof (or on the
date it becomes a Lender as provided in Section 12.06(b) hereof) and on
the date of any change in the Applicable Lending Office of such Lender,
delivers to the Borrower and the Agent a duly completed and executed
Form 1001 (relating to such Lender and entitling it to a complete
exemption from withholding on all interest to be received by it
hereunder in respect of the Loans) or Form 4224 (relating to all
interest to be received by such Lender hereunder in respect of the
Loans), or
(ii) to any payment to any Lender hereunder in respect of a
Registered Loan (a "Registered Holder"), unless such Registered Holder
(or, if such Registered Holder is not the beneficial owner of such
Registered Loan, the beneficial owner thereof), on the date hereof (or
on the date such Registered Holder becomes a Lender as provided in
Section 12.06(b) hereof) and on the date of any change in the
Applicable Lending Office of such Lender, delivers to the Borrower and
the Agent either (x) a duly completed and executed Form W-8, together
with an annual certificate stating that (A) such Registered Holder (or
beneficial owner, as the case may be) is not a "bank" within the
meaning of Section 881(c)(3)(A) of the Code, and (B) such Registered
Holder (or beneficial owner, as the case may be) shall promptly notify
the Borrower if at any time, such Registered Holder (or beneficial
owner, as the case may be) determines that it is no longer in a
position to provide such certificate to the Borrower (or any other form
of certification adopted by the relevant taxing authorities of the
United States of America for such purposes), or (y) if such Registered
Holder is not entitled to deliver a Form W-8, a duly executed and
completed Form 1001 or Form 4224, or
(iii) to any U.S. Tax imposed solely by reason of the failure by
such non-U.S. Person to comply with applicable
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certification, information, documentation or other reporting
requirements concerning the nationality, residence, identity or
connections with the United States of America of such non-U.S. Person
if such compliance is required by statute or regulation of the United
States of America as a precondition to relief or exemption from such
U.S. Tax.
For the purposes of this Section 5.07(a), (w) "Form 1001" shall mean Form 1001
(Ownership, Exemption, or Reduced Rate Certificate) of the Department of the
Treasury of the United States of America, (x) "Form 4224" shall mean Form 4224
(Exemption from Withholding of Tax on Income Effectively Connected with the
Conduct of a Trade or Business in the United States) of the Department of the
Treasury of the United States of America (or in relation to either such Form
such successor and related forms as may from time to time be adopted by the
relevant taxing authorities of the United States of America to document a such
Form relates), (y) "Form W-8" shall mean Form W-8 (Certificate of Foreign Status
of the Department of Treasury of the United States of America) and (z) "U.S.
Taxes" shall mean any present or future tax, assessment or other charge or levy
imposed by or on behalf of the United States of America or any taxing authority
thereof or therein.
(b) Within 30 days after paying any amount to the Agent or any
Lender from which it is required by law to make any deduction or withholding,
and within 30 days after it is required by law to remit such deduction or
withholding to any relevant taxing or other authority, the Borrower shall
deliver to the Agent for delivery to such non-U.S. Person evidence satisfactory
to such Person of such deduction, withholding or payment (as the case may be).
5.08 Replacement of Lenders. The Borrower may, at any time,
replace (a) any Lender that has requested compensation from the Borrower
pursuant to Section 5.01 or Section 5.07 hereof, (b) any Lender that fails to
make a Loan or to pay to the Agent for the account of the Issuing Bank the
amount of such Lender's Revolving Credit Commitment Percentage of any payment
under a Letter of Credit under the circumstances contemplated by Section 12.04
hereof or (c) any Lender that does not agree to any request by the Borrower for
a consent, approval, amendment or a waiver hereunder that requires the consent
or approval of all of the Lenders, by giving not less than ten Business Days'
prior notice to the Agent (which shall promptly notify such Lender), that it
intends to replace such Lender (a "Replaced Lender") with respect to its rights
and obligations (including, without limitation, its Loans and Letter of Credit
Interest outstanding and its Commitments) as a "Lender" under this Agreement and
such Replaced Lender's Notes (if any) (collectively, the "Transferred
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Interest") with one or more banks or other financial institutions (including,
but not limited to, any other Lender or an affiliate of any Lender) selected by
the Borrower and acceptable to the Agent and the Issuing Bank (each, a
"Replacement Lender"). Upon the effective date of any replacement under this
Section 5.08 (and as a condition thereto), (i) the Borrower shall pay or cause
to paid to the Replaced Lender an amount equal to all principal, interest, fees
and other amounts (including, without limitation, all amounts payable under
Section 5.05 hereof as if such Lender's Loans were being prepaid in full on such
effective date) then owing to such Replaced Lender hereunder and such Replaced
Lender's Notes (if any) in respect of the Transferred Interest (all or a portion
of which amount may constitute consideration for an assignment by such Replaced
Lender of all or a portion of the Transferred Interest) and (ii) such Replaced
Lender shall assign to each Replacement Lender (without representation, warranty
or recourse whatsoever) a portion of the Transferred Interest specified by the
Borrower, whereupon (x) each Replacement Lender shall become a "Lender" for all
purposes of this Agreement having the Commitments in the amount of such Replaced
Lender's Commitments assumed by it and all of the rights and obligations under
this Agreement of "Lender(s)" holding the Transferred Interest and (y) such
Replaced Lender shall cease to be responsible or liable for, and shall cease to
be entitled to the rights and benefits of, all or any portion of the Transferred
Interest (except that such Replaced Lender shall continue to benefit from the
obligations of the Borrower to such Replaced Lender under Sections 2.10(g),
2.10(l), 5.01, 5.05, 5.06, 5.07, 12.03 and 12.13 hereof and the obligations of
the Subsidiary Guarantors to such Replaced Lender under Section 6.03 hereof, and
the obligations of such Replaced Lender under Section 11.05 hereof shall survive
such replacement, in each case to the extent relating to events or circumstances
that occurred or existed on or before the date of such replacement).
Section 6. Guarantee.
6.01 Guarantee. The Subsidiary Guarantors hereby jointly and
severally guarantee to each Lender, each Affiliate of any Lender and the Agent
and their respective successors and assigns the prompt payment in full when due
(whether at stated maturity, by acceleration or otherwise) of the principal of
and interest (whether or not allowable as a claim in a bankruptcy case of which
the Borrower is the subject) on the Loans made by the Lenders to, and the
Note(s) (if any) held by each Lender of, the Borrower, all Reimbursement
Obligations and all other amounts from time to time owing to the Lenders or the
Agent by the Borrower under this Agreement and under the Notes (if any), and
under any Hedging Agreements and by any Credit Party under any of the other
Basic Documents, in each case strictly in accordance
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with the terms thereof (such obligations being herein collectively called the
"Guaranteed Obligations"). The Subsidiary Guarantors hereby further jointly and
severally agree that if the Borrower shall fail to pay in full when due (whether
at stated maturity, by acceleration or otherwise) any of the Guaranteed
Obligations, the Subsidiary Guarantors will promptly pay the same, without any
demand or notice whatsoever, and that in the case of any extension of time of
payment or renewal of any of the Guaranteed Obligations, the same will be
promptly paid in full when due (whether at extended maturity, by acceleration or
otherwise) in accordance with the terms of such extension or renewal.
6.02 Obligations Unconditional. The obligations of the
Subsidiary Guarantors under Section 6.01 hereof are absolute and unconditional,
joint and several, irrespective of the value, genuineness, validity, regularity
or enforceability of the obligations of the Borrower under this Agreement, the
Notes (if any) or any other agreement or instrument referred to herein or
therein, or any substitution, release or exchange of any other guarantee of or
security for any of the Guaranteed Obligations, and, to the fullest extent
permitted by applicable law, irrespective of any other circumstance whatsoever
which might otherwise constitute a legal or equitable discharge or defense of a
surety or guarantor, it being the intent of this Section 6.02 that the
obligations of the Subsidiary Guarantors hereunder shall be absolute and
unconditional, joint and several, under any and all circumstances. Without
limiting the generality of the foregoing, it is agreed that the occurrence of
any one or more of the following shall not affect the liability of the
Subsidiary Guarantors hereunder which shall remain absolute and unconditional as
described above:
(i) at any time or from time to time, without notice to the
Subsidiary Guarantors, the time for any performance of or compliance
with any of the Guaranteed Obligations shall be extended, or such
performance or compliance shall be waived;
(ii) any of the acts mentioned in any of the provisions of this
Agreement or the Notes (if any), or any other agreement or instrument
referred to herein or therein shall be done or omitted;
(iii) the maturity of any of the Guaranteed Obligations shall be
accelerated, or any of the Guaranteed Obligations shall be modified,
supplemented or amended in any respect, or any right under this
Agreement or the Notes (if any), or any other agreement or instrument
referred to herein or therein shall be waived or any other guarantee of
any of the
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Guaranteed Obligations or any security therefor shall be released or
exchanged in whole or in part or otherwise dealt with;
(iv) any lien or security interest granted to, or in favor of, the
Agent or any Lender or Lenders as security for any of the Guaranteed
Obligations shall fail to be perfected;
(v) any of the Guaranteed Obligations shall be determined to be
void or voidable (including, without limitation, for the benefit of
any creditor of any Credit Party) or shall be subordinated to the
claims of any Person (including, without limitation, any creditor of
any Credit Party);
(vi) the Borrower shall be insolvent on the date hereof or shall
become insolvent on the date that any Loan is made; and
(vii) the execution and delivery of a Tranche C Term Loan
Activation Notice providing for the activation of Tranche C Term Loan
Commitments in any amount.
The Subsidiary Guarantors hereby expressly waive diligence, presentment, demand
of payment, protest and all notices whatsoever, and any requirement that the
Agent or any Lender exhaust any right, power or remedy or proceed against the
Borrower under this Agreement or the Notes (if any), or any other agreement or
instrument referred to herein or therein, or against any other Person under any
other guarantee of, or security for, any of the Guaranteed Obligations.
6.03 Reinstatement. The obligations of the Subsidiary
Guarantors under this Section 6 shall be automatically reinstated if and to the
extent that for any reason any payment by or on behalf of the Borrower in
respect of the Guaranteed Obligations is rescinded or must be otherwise restored
by any holder of any of the Guaranteed Obligations, whether as a result of any
proceedings in bankruptcy or reorganization or otherwise and the Subsidiary
Guarantors jointly and severally agree that they will indemnify the Agent and
each Lender on demand for all reasonable costs and expenses (including, without
limitation, fees of counsel) incurred by the Agent or such Lender in connection
with such rescission or restoration, including any such costs and expenses
incurred in defending against any claim alleging that such payment constituted a
preference, fraudulent transfer or similar payment under any bankruptcy,
insolvency or similar law.
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6.04 Subrogation. The Subsidiary Guarantors hereby jointly and
severally agree that until the payment and satisfaction in full of all
Guaranteed Obligations and the expiration and termination of the Commitments of
the Lenders under this Agreement they shall not exercise any right or remedy
arising by reason of any performance by them of their guarantee in Section 6.01
hereof, whether by subrogation or otherwise, against the Borrower or any other
guarantor of any of the Guaranteed Obligations or any security for any of the
Guaranteed Obligations.
6.05 Remedies. The Subsidiary Guarantors jointly and severally
agree that, as between the Subsidiary Guarantors, on the one hand, and the
Lenders and the Agent, on the other hand, the obligations of the Borrower under
this Agreement and the Notes (if any), may be declared to be forthwith due and
payable as provided in Section 10 hereof (and shall be deemed to have become
automatically due and payable in the circumstances provided in said Section 10)
for purposes of Section 6.01 hereof notwithstanding any stay, injunction or
other prohibition preventing such declaration (or such obligations from becoming
automatically due and payable) as against the Borrower and that, in the event of
such declaration (or such obligations being deemed to have become automatically
due and payable), such obligations (whether or not due and payable by the
Borrower) shall forthwith become due and payable by the Subsidiary Guarantors
for purposes of said Section 6.01.
6.06 Continuing Guarantee. The guarantee in this Section 6 is
a continuing guarantee, and shall apply to all Guaranteed Obligations whenever
arising.
6.07 Rights of Contribution. The Subsidiary Guarantors hereby
agree, as between themselves, that if any Subsidiary Guarantor (an "Excess
Funding Guarantor") shall pay Guaranteed Obligations in excess of the Excess
Funding Guarantor's Pro Rata Share (as hereinafter defined) of such Guaranteed
Obligations, the other Subsidiary Guarantors shall, on demand (but subject to
the next sentence hereof), pay to the Excess Funding Guarantor an amount equal
to their respective Pro Rata Shares of such Excess Funding Guarantor's payment.
The payment obligation of any Subsidiary Guarantor to any Excess Funding
Guarantor under this Section 6.07 shall be subordinate and subject in right of
payment to the prior payment in full of the obligations of such Subsidiary
Guarantor under the other provisions of this Section 6 and such Excess Funding
Guarantor shall not exercise any right or remedy with respect to such excess
until payment and satisfaction in full of all of such obligations. For the
purposes hereof, "Pro Rata Share" shall mean, for any Subsidiary Guarantor, a
percentage equal to the
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percentage of such Subsidiary Guarantor's Net Assets as of the Valuation Date
(as defined in the next sentence) of the aggregate Net Assets of all of the
Subsidiary Guarantors as at such date. For purposes of the preceding sentence,
the "Valuation Date" shall mean the date hereof; provided that, if the Agent
requests from time to time that the Subsidiary Guarantors ratify and confirm
their respective obligations under this Section 6, they shall promptly do so
pursuant to an instrument reasonably satisfactory to the Agent and the Valuation
Date shall mean the date of the latest such ratification and confirmation to
occur at the request of the Agent after the date hereof.
6.08 Limitation on Guarantee Obligations. In any action or
proceeding involving any State corporate law, or any State or Federal
bankruptcy, insolvency, reorganization or other law affecting the rights of
creditors generally, if the obligations of any Subsidiary Guarantor under
Section 6.01 hereof would otherwise, taking into account the provisions of
Section 6.07 hereof, be held or determined to be void, invalid or unenforceable,
or subordinated to the claims of any other creditors, on account of the amount
of its liability under said Section 6.01, then, notwithstanding any other
provision hereof to the contrary, the amount of such liability shall, without
any further action by such Subsidiary Guarantor, as the case may be, any Lender,
the Agent or any other Person, be automatically limited and reduced to the
highest amount which is valid and enforceable and not subordinated to the claims
of other creditors as determined in such action or proceeding.
6.09 Instrument for the Payment of Money. Each Subsidiary
Guarantor hereby acknowledges that the guarantee in this Section 6 constitutes
an instrument for the payment of money, and consents and agrees that any Lender
or the Agent, at its sole option, in the event of a dispute by such Subsidiary
Guarantor in the payment of any moneys due hereunder, shall have the right to
bring motion-action under New York CPLR Section 3213.
Section 7. Conditions Precedent.
7.01 Effectiveness of this Agreement. The effectiveness of the
amendment and restatement of the Existing Credit Agreement provided for hereby
is subject to (i) the execution and delivery of an execution counterpart of this
Agreement by each Person stated to be a party to this Agreement and (ii) the
receipt by the Agent of the following documents and evidence, each of which
documents (and, in the case of certificates containing attachments, such
attachments) and all of which evidence shall, except as expressly specified
below, be satisfactory in form and substance to the Agent and, to the
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extent specified below, to each Lender (provided that, if such conditions
precedent shall not have been satisfied on or before June 30, 1997, this
Amendment and Restatement shall have no force or effect, regardless of whether
such conditions precedent are thereafter satisfied):
(a) Authority. The following evidence and documents, each of
which documents shall be certified as indicated below:
(i) (x) a copy of the charter, as amended, of each Credit
Party that is a corporation and each general partner of each
Credit Party that is a partnership (each such Credit Party and
general partner being referred to as a "Relevant Corporation")
certified by the Secretary of State of its jurisdiction of
incorporation, (y) a certificate as to the good standing of
and charter documents filed by such Relevant Corporation from
such Secretary of State, dated as of a recent date and (z) a
certificate as to the good standing or qualification to do
business of such Relevant Corporation from each jurisdiction
in which the nature of the business conducted by such Relevant
Corporation makes such qualification necessary and where
failure so to qualify would have a Material Adverse Effect;
(ii) a certificate of the Secretary or an Assistant
Secretary of each Relevant Corporation, dated the Restatement
Effective Date and certifying (w) that attached thereto is a
true and complete copy of the by-laws of such Relevant
Corporation as in effect on the date of such certificate, (x)
that attached thereto is a true and complete copy of
resolutions duly adopted by the board of directors of such
Relevant Corporation authorizing the execution, delivery and
performance of such of the Basic Documents to which such
Relevant Corporation and/or the partnership of which such
Relevant Corporation is a general partner, as the case may be,
is or is intended to be a party and the extensions of credit
hereunder, and that such resolutions have not been modified,
rescinded or amended and are in full force and effect, (y)
that the charter of such Relevant Corporation has not been
amended since the date of the certification thereto furnished
pursuant to clause (i) above, and (z) as to the incumbency and
specimen signature of each officer of such Relevant
Corporation executing such of the Basic Documents to which
such Relevant Corporation and/or the partnership of which such
Relevant
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Corporation is a general partner, as the case may be, is
intended to be a party and each other document to be delivered
by such Relevant Corporation and/or the partnership of which
such Relevant Corporation is a general partner, as the case
may be, from time to time in connection therewith (and the
Agent and each Lender may conclusively rely on such
certificate until it receives notice in writing from such
Relevant Corporation);
(iii) a certificate of another officer of each Relevant
Corporation as to the incumbency and specimen signature of the
Secretary or Assistant Secretary, as the case may be, of such
Relevant Corporation; and
(iv) a certificate of the Secretary or an Assistant
Secretary of each general partner of each Credit Party that is
a partnership, dated the Effective Date, and certifying (x) as
to the names of all of the Persons that are partners in such
partnership and (y) that attached thereto is a true and
complete copy of the partnership agreement forming such
partnership as in effect on the date of such certificate.
In lieu of any of the evidence or documents referred to in the
foregoing provisions of this Section 7.01(a) (other than Section
7.01(a)(ii)(x)) heretofore furnished to the Agent under the Existing
Credit Agreement, the Borrower may furnish or cause to be furnished to
the Agent a certificate of the Secretary or any Assistant Secretary of
the Relevant Corporation to the effect that such evidence or documents
have not been modified since the respective dates they were so
furnished and that they remain in full force and effect on the
Restatement Effective Date.
(b) Officer's Certificate. A certificate of a senior officer
of the Borrower to the effect set forth in clauses (a) and (b) of the
first sentence of Section 7.02 hereof (excluding references to
representations and warranties under the Founders Subordination
Agreement) and including calculations demonstrating in reasonable
detail compliance with Section 1008(a) of the 1995 Senior Subordinated
Note Indenture and Section 1008(a) of the 1993 Senior Subordinated Note
Indenture after giving effect to the borrowings and prepayments
hereunder to be made on the Restatement Effective Date.
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(c) Opinions of Counsel.
(i) Opinion of Counsel to the Obligors. An opinion of
Thomas & Libowitz, P.A., counsel to the Obligors.
(ii) Opinion of Counsel to Chase. An opinion of
Milbank, Tweed, Hadley & McCloy, special New York counsel to
Chase.
(d) Notes. Duly completed and executed Notes for each Lender
requesting such Notes pursuant to Section 2.07.
(e) Affiliate Guarantee. The Affiliate Guarantee, duly
executed and delivered by KIG, Cunningham, GDLP and the Agent.
(f) Amendment to Security Agreement. The Amendment to Security
Agreement, duly executed and delivered by each Obligor and the Agent.
(g) Amendment to GDC Security Agreement. The Amendment to GDC
Security Agreement, duly executed and delivered by GDC and the Agent.
(h) Interest, Fees and Expenses under Existing Credit
Agreement. Evidence that the Borrower shall have paid to the Agent all
accrued and unpaid interest, fees and expenses owing by the Borrower
under the Existing Credit Agreement.
(i) Program Services Agreements. A certificate of a senior
financial officer of the Borrower certifying that (i) attached thereto
are true and complete copies (including all modifications and
supplements) of each Program Services Agreement to which the Borrower
of any of its Subsidiaries is a party on the Restatement Effective Date
(other than Program Services Agreements heretofore furnished to the
Agent under the Existing Credit Agreement that have not been modified
since the respective dates that they were so furnished ("Previously
Furnished Program Services Agreements")), (ii) attached thereto is a
list of all Previously Furnished Program Services Agreements to which
the Borrower or any of its Subsidiaries is a party on the Restatement
Effective Date and (iii) each such Program Services Agreement so
attached or so listed is in full force and effect.
(j) Network Affiliations. A certificate of a senior financial
officer of the Borrower certifying that (i) for each Station that is an
Owned Station on the Restatement
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Effective Date, the Borrower or any of its Subsidiaries has entered
into a network affiliation agreement with Fox Broadcasting Company or
the United Paramount Network (or other network satisfactory to the
Agent) for the carriage of programming over the facilities of such
Station, (ii) attached thereto are true and complete copies (including
all modifications and supplements) of each such network affiliation
agreement to which the Borrower or any of its Subsidiaries is a party
on the Restatement Effective Date (other than network affiliation
agreements heretofore furnished to the Agent under the Existing Credit
Agreement that have not been modified since the respective dates that
they were so furnished ("Previously Furnished Network Affiliation
Agreements")), (iii) attached thereto is a list of all Previously
Furnished Network Affiliation Agreements to which the Borrower of any
of its Subsidiaries is a party on the Restatement Effective Date and
(iv) each such network affiliation agreement so attached or so listed
is in full force and effect.
(k) Asset Use and Operating Agreements. A certificate of a
senior financial officer of the Borrower certifying that (i) the
Borrower or Subsidiary operating each Owned Station and the respective
License Subsidiary have executed and delivered an Asset Use and
Operating Agreement with respect to such Owned Station, (ii) attached
thereto are true and complete copies (including all modifications and
supplements) of each Asset Use and Operating Agreement to which the
Borrower of any of its Subsidiaries is a party on the Restatement
Effective Date (other than Asset Use and Operating Agreements
heretofore furnished to the Agent under the Existing Credit Agreement
that have not been modified since the respective dates that they were
so furnished ("Previously Furnished Asset Use and Operating
Agreements")), (iii) attached thereto is a list of all Previously
Furnished Asset Use and Operating Agreements to which the Borrower or
any of its Subsidiaries is a party on the Restatement Effective Date
and (iv) each such Asset Use and Operating Agreement so attached or so
listed is in full force and effect.
(l) Solvency Analysis. A certificate of a senior financial
officer of the Borrower certifying that, as of the Restatement
Effective Date and after giving effect to the initial extension of
credit hereunder and to the other transactions contemplated hereby, (i)
the aggregate value of all Properties of the Borrower and its
Subsidiaries at their present fair saleable value (i.e., the amount
which may be realized within a reasonable time, considered to be six to
eighteen months, either through collection or sale at the
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regular market value, conceiving the latter as the amount which could
be obtained for the Property in question within such period by a
capable and diligent businessman from an interested buyer who is
willing to purchase under ordinary selling conditions), exceeds the
amount of all the debts and liabilities (including contingent,
subordinated, unmatured and unliquidated liabilities) of the Borrower
and its Subsidiaries, (ii) the Borrower and its Subsidiaries will not,
on a consolidated basis, have an unreasonably small capital with which
to conduct their business operations as heretofore conducted and (iii)
the Borrower and its Subsidiaries will have, on a consolidated basis,
sufficient cash flow to enable them to pay their debts as they mature.
(m) Insurance.
(i) Certificates of insurance evidencing the
existence of all insurance required to be maintained by the
Borrower and its Subsidiaries pursuant to Section 9.04 hereof
and the designation of the Agent as the loss payee, or
additional insured, as appropriate, thereunder to the extent
required by said Section 9.04 in respect of all insurance
covering tangible Property, such certificates to be in such
form and contain such information as is specified in said
Section 9.04;
(ii) A certificate of a senior financial officer of the
Borrower setting forth the insurance obtained by it in
accordance with the requirements of Section 9.04 and stating
that such insurance is in full force and effect and that all
premiums then due and payable thereon have been paid; and
(iii) a written report, dated reasonably near the
Restatement Effective Date, of Maury Donnelly & Parr, or any
other firm of independent insurance brokers of nationally
recognized standing, as to such insurance and stating that, in
their opinion, such insurance adequately protects the
interests of the Agent and the Lenders, is in compliance with
the provisions of said Section 9.04, and is comparable in all
respects with insurance carried by responsible owners and
operators of Properties similar to those covered or
contemplated to be covered by the Mortgages.
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(n) Amendment to Founders Subordination Agreement. The
Amendment to Founders Subordination Agreement, duly executed and
delivered by Carolyn C. Smith and the Agent.
(o) Other Documents. Such other documents as the Agent or any
Lender or special New York counsel to Chase may reasonably request.
The obligation of any Lender to make its initial extension of credit hereunder
is also subject to the payment by the Borrower of such fees as the Borrower
shall have agreed to pay or deliver to any Lender or the Agent in connection
herewith, including, without limitation, the reasonable fees and expenses of
Milbank, Tweed, Hadley & McCloy, special New York counsel to Chase, in
connection with the negotiation, preparation, execution and delivery of this
Agreement and the other Basic Documents and the making of the Loans hereunder
(to the extent that bills for such fees and expenses have been delivered to the
Borrower).
7.02 Initial and Subsequent Loans. The obligation of the
Lenders to make any Loan to the Borrower upon the occasion of each borrowing
hereunder (including the borrowing on the Restatement Effective Date), and the
obligation of the Issuing Bank to issue any Letter of Credit hereunder, is
subject to the conditions precedent that, both immediately prior to the making
of such Loan or issuance of such Letter of Credit and also after giving effect
thereto:
(a) no Default shall have occurred and be continuing;
(b) the representations and warranties made by the Borrower in
Section 8 hereof, and by each Credit Party and Carolyn C. Smith in each
of the other Basic Documents to which such Person is a party, shall be
true and complete on and as of the date of the making of such Loan or
issuance of such Letter of Credit with the same force and effect as if
made on and as of such date (or, if any such representation and
warranty is expressly stated to have been made as of a specific date,
as of such specific date); and
(c) the Borrower shall be in compliance with the terms and
conditions of each Senior Subordinated Note Indenture.
Each notice of borrowing by the Borrower or request for a Letter of Credit
hereunder shall constitute a certification by the Borrower to the effect set
forth in the preceding sentence (both as of the date of such notice or request
and, unless the Borrower otherwise notifies the Agent prior to the date of such
borrowing or issuance, as of the date of such borrowing or issuance) and, in the
case of any borrowing of any Revolving Credit Loan or
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request for any Letter of Credit, shall include calculations demonstrating in
reasonable detail, and, if requested by the Agent, a certificate from (i) the
trustee under the 1995 Senior Subordinated Note Indenture confirming compliance
with Section 1008(a) of the Senior Subordinated Note and (ii) the trustee under
the 1993 Senior Subordinated Note Indenture confirming compliance with Section
1008(a) of the 1993 Senior Subordinated Note Indenture, in the case of each of
the foregoing clauses (i) and (ii) after giving effect to such borrowing or the
issuance of such Letter of Credit. If the Majority Revolving Credit Lenders, the
Majority Tranche A Lenders or the Majority Tranche C Lenders, as the case may
be, notify the Agent prior to the proceeds of such borrowing being made
available to the Borrower or prior to the issuance of such Letter of Credit (as
the case may be) that there is a reasonable basis to doubt the accuracy of the
calculations referred to in the preceding sentence, such borrowing or such
issuance (as the case may be) shall not occur.
Section 8. Representations and Warranties. The Obligors
represent and warrant to the Lenders and the Agent that:
8.01 Corporate Existence. Each of the Borrower and its
Subsidiaries: (a) is a corporation, partnership or other entity duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization; (b) has all requisite corporate or other power, and has all
material governmental licenses, authorizations, consents and approvals necessary
to own its assets and carry on its business as now being or as proposed to be
conducted; and (c) is qualified to do business and is in good standing in all
jurisdictions in which the nature of the business conducted by it makes such
qualification necessary and where failure so to qualify would have a Material
Adverse Effect.
8.02 Financial Condition. The Borrower has heretofore
furnished to each of the Lenders consolidated and consolidating balance sheets
of the Borrower and its Consolidated Subsidiaries as at December 31, 1996 and
the related consolidated and consolidating statements of income, retained
earnings and changes in financial position (or of cash flow, as the case may be)
of the Borrower and its Consolidated Subsidiaries for the fiscal year ended on
said date, with the opinion thereon (in the case of said consolidated balance
sheet and statements) of Arthur Andersen & Company. All such financial
statements are complete and correct and present fairly, in all material
respects, the consolidated and consolidating financial condition of the Borrower
and its Consolidated Subsidiaries as at said date and the consolidated and
consolidating results of their operations for the fiscal year ended on said date
in accordance with generally accepted accounting principles and practices
applied on
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a consistent basis. Neither the Borrower nor any of its Subsidiaries had on said
date any material contingent liabilities, liabilities for taxes, unusual forward
or long-term commitments or unrealized or anticipated losses from any
unfavorable commitments, except as referred to or reflected or provided for in
said balance sheet as at said date. Since December 31, 1996, there has been no
material adverse change in the consolidated financial condition, operations,
business or prospects taken of the Borrower and its Consolidated Subsidiaries
taken as a whole from that set forth in said financial statements as at said
date.
8.03 Litigation. Except as disclosed to the Lenders in writing
on or prior to the date of this Agreement, there are no legal or arbitral
proceedings, or any proceedings by or before any governmental or regulatory
authority or agency, now pending or (to the knowledge of the Borrower (after due
inquiry)) threatened (a) against the Borrower, any of its Subsidiaries or any
Material Third-Party Licensee or any Person that owns the capital stock (or
other equity ownership interest) of such Material Third-Party Licensee which, if
adversely determined, could have a Material Adverse Effect or (b) relating to
any River City License Acquisition or the other transactions contemplated
hereby.
8.04 No Breach. None of the execution and delivery of this
Agreement and the other Transaction Documents, the consummation of the
transactions herein and therein contemplated and compliance with the terms and
provisions hereof and thereof will conflict with or result in a breach of, or
require any consent (other than the approvals of the FCC provided in the
Security Documents and those referred to in Section 8.06 hereof) under, the
charter or by-laws of any Obligor, or any applicable law or regulation, or any
order, writ, injunction or decree of any court or governmental authority or
agency, or any agreement or instrument to which the Borrower or any of its
Subsidiaries is a party or by which any of them is bound or to which any of them
is subject, or constitute a default under any such agreement or instrument, or
(except for the Liens created pursuant to the Security Documents) result in the
creation or imposition of any Lien upon any Property of the Borrower or any of
its Subsidiaries pursuant to the terms of any such agreement or instrument.
8.05 Action. Each Obligor has all necessary corporate power
and authority to execute, deliver and perform its obligations under each of the
Transaction Documents to which it is a party; the execution, delivery and
performance by each Obligor of each of the Transaction Documents to which it is
a party have been duly authorized by all necessary corporate action on its part
(including, without limitation, any required
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shareholder approvals); and this Agreement has been duly and validly executed
and delivered by each Obligor and constitutes, and each of the other Transaction
Documents to which such Obligor is a party when executed and delivered by such
Obligor will constitute, its legal, valid and binding obligation, enforceable in
accordance with its terms.
8.06 Approvals. No authorizations, approvals or consents of,
and no filings or registrations with, any governmental or regulatory authority
or agency are necessary for the execution, delivery or performance by any
Obligor of the Transaction Documents to which such Obligor is a party or for the
validity or enforceability thereof, except (a) for filings and recordings in
respect of the Liens created pursuant to the Security Documents, (b) filings
under 47 CFR Section 73.3613 and (c) the approvals by the FCC for the
acquisition of any Broadcast Licenses.
8.07 Use of Loans. Neither the Borrower nor any of its
Subsidiaries is engaged principally, or as one of its important activities, in
the business of extending credit for the purpose, whether immediate, incidental
or ultimate, of buying or carrying Margin Stock and no part of the proceeds of
any extension of credit hereunder will be used to buy or carry any Margin Stock.
8.08 ERISA. The Borrower and the ERISA Affiliates have
fulfilled their respective obligations under the minimum funding standards of
ERISA and the Code with respect to each Plan and are in compliance in all
material respects with the presently applicable provisions of ERISA and the
Code, and have not incurred any liability to the PBGC or any Plan or
Multiemployer Plan (other than to make contributions in the ordinary course of
business).
8.09 Taxes. United States Federal income tax returns of the
Borrower and its Subsidiaries have been examined and closed through the fiscal
year of the Borrower ended December 31, 1993. The Borrower and its Subsidiaries
have filed all United States Federal income tax returns and all other material
tax returns which are required to be filed by them and have paid all taxes due
pursuant to such returns or pursuant to any assessment received by the Borrower
or any of its Subsidiaries. The charges, accruals and reserves on the books of
the Borrower and its Subsidiaries in respect of taxes and other governmental
charges are, in the opinion of the Borrower, adequate. The Borrower has not
given or been requested to give a waiver of the statute of limitations relating
to the payment of any Federal, state, local or foreign taxes or other
impositions. If the Borrower is a member of an affiliated group of corporations
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filing consolidated returns for United States Federal income tax purposes, it is
the "common parent" of such group.
8.10 Investment Company Act. Neither the Borrower nor any of
its Subsidiaries is an "investment company", or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of 1940,
as amended.
8.11 Public Utility Holding Company Act. Neither the Borrower
nor any of its Subsidiaries is a "holding company", or an "affiliate" of a
"holding company" or a "subsidiary company" of a "holding company", within the
meaning of the Public Utility Holding Company Act of 1935, as amended.
8.12 Indebtedness and Interest Rate Protection Agreements. (a)
Part A of Schedule I hereto is a complete and correct list, as of the date of
this Agreement, of each credit agreement, loan agreement, indenture, purchase
agreement, guarantee, letter of credit or other arrangement providing for or
otherwise relating to any Indebtedness or any extension of credit (or commitment
for any extension of credit) to, or guarantee by, the Borrower or any of its
Subsidiaries, the aggregate principal or face amount of which equals or exceeds
(or may equal or exceed) $1,000,000, and the aggregate principal or face amount
outstanding or which may become outstanding under each such arrangement is
correctly described in Part A of Schedule I hereto.
(b) Part B of Schedule I hereto is a complete and correct
list, as of the date of this Agreement, of each Interest Rate Protection
Agreement in respect of a notional principal amount which equals or exceeds (or
may equal or exceed) $1,000,000.
8.13 Hazardous Materials. The Borrower and each of its
Subsidiaries have obtained all permits, licenses and other authorizations which
are required under all Environmental Laws, except to the extent failure to have
any such permit, license or authorization would not result in a liability
(individually or in the aggregate) exceeding $1,000,000. The Borrower and each
of its Subsidiaries are in compliance with the terms and conditions of all such
permits, licenses and authorizations, and are also in compliance with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in any applicable Environmental
Law or in any regulation, code, plan, order, decree, judgment, injunction,
notice or demand letter issued, entered, promulgated or approved thereunder,
except to the extent failure to comply would not result in a liability
(individually or in the aggregate) exceeding $1,000,000.
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In addition, except as set forth in Schedule II hereto:
(a) No notice, notification, demand, request for information,
citation, summons or order has been issued, no complaint has been
filed, no penalty has been assessed and no investigation or review is
pending or threatened by any governmental or other entity with respect
to any alleged failure by the Borrower or any of its Subsidiaries to
have any permit, license or authorization required in connection with
the conduct of the business of the Borrower or any of its Subsidiaries
or with respect to any generation, treatment, storage, recycling,
transportation, discharge or disposal, or any Release of any Hazardous
Materials generated by the Borrower or any of its Subsidiaries.
(b) Neither the Borrower nor any of its Subsidiaries or
Environmental Affiliates has operated a treatment, storage or disposal
facility requiring a permit under the Resource Conservation and
Recovery Act of 1976, as amended, or under any comparable state or
local statute at any Property now or previously owned or leased by the
Borrower or any of its Subsidiaries or Environmental Affiliates; and
(i) no substance containing PCBs is or has been present
at any Property now or previously owned or leased by the
Borrower or any of its Subsidiaries or Environmental
Affiliates;
(ii) no asbestos is or has been present at any Property
now or previously owned or leased by the Borrower or any of
its Subsidiaries or Environmental Affiliates;
(iii) there are no underground storage tanks active or
abandoned, at any Property now or previously owned or leased
by the Borrower or any of its Subsidiaries or Environmental
Affiliates;
(iv) no Hazardous Materials have been Released, in a
reportable quantity, where such a quantity has been
established by statute, ordinance, rule, regulation or order,
at, on or under any Property now or previously owned by the
Borrower or any of its Subsidiaries or Environmental
Affiliates; and
(v) no Hazardous Materials have been otherwise Released
at, on or under any Property now or previously owned or leased
by the Borrower or any of its Subsidiaries to an extent that
it has, or may
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reasonably be expected to have, a liability exceeding
$1,000,000.
(c) Neither the Borrower nor any of its Subsidiaries or
Environmental Affiliates has transported or arranged for the
transportation of any Hazardous Material to any location which is
listed on the National Priorities List under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as
amended ("CERCLA"), listed for possible inclusion on the National
Priorities List by the Environmental Protection Agency in CERCLIS or on
any similar state list or which is the subject of Federal, state or
local enforcement actions or other investigations which may lead to
claims against the Borrower or any of its Subsidiaries for clean-up
costs, remedial work, damages to natural resources or for personal
injury claims, including, but not limited to, claims under CERCLA.
(d) No Hazardous Material generated by the Borrower or any of
its Environmental Affiliates has been recycled, treated, stored,
disposed of or Released by the Borrower or any of its Environmental
Affiliates at any location other than those listed in Schedule II
hereto.
(e) No oral or written notification of a Release of a
Hazardous Material has been filed by or on behalf of the Borrower or
any of its Subsidiaries and no Property now or previously owned or
leased by the Borrower or any of its Subsidiaries is listed or proposed
for listing on the National Priorities list promulgated pursuant to
CERCLA, on CERCLIS or on any similar state list of sites requiring
investigation or clean-up.
(f) No Liens have arisen under or pursuant to any
Environmental Laws on any of the real Property or Properties owned or
leased by the Borrower or any of its Subsidiaries, and no government
actions have been taken or are in process which could subject any of
such Properties to such Liens and neither the Borrower nor any of its
Subsidiaries would be required to place any notice or restriction
relating to the presence of Hazardous Materials at any Property owned
by it in any deed to such Property.
(g) There have been no environmental investigations, studies,
audits, tests, reviews or other analyses conducted by or which are in
the possession of the Borrower or any of its Subsidiaries in relation
to any Property or facility now or previously owned or leased by the
Borrower or any of its Subsidiaries which have not been made available
to the Lenders.
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8.14 Subsidiaries, Etc.
(a) Set forth in Part A of Schedule III hereto is a complete
and correct list, as of the date hereof, of all of the Subsidiaries of the
Borrower, together with, for each such Subsidiary, (i) the jurisdiction of
organization of such Subsidiary, (ii) each Person holding ownership interests in
such Subsidiary and (iii) the nature of the ownership interests held by each
such Person and the percentage of ownership of such Subsidiary represented by
such ownership interests. Except as disclosed in Part A of Schedule III hereto,
(x) each of the Borrower and its Subsidiaries owns, free and clear of Liens
(other than Liens created pursuant to the Security Documents), and has the
unencumbered right to vote, all outstanding ownership interests in each Person
shown to be held by it in Part A of Schedule III hereto, (y) all of the issued
and outstanding capital stock of each such Person organized as a corporation is
validly issued, fully paid and nonassessable and (z) there are no outstanding
Equity Rights with respect to such Person.
(b) Set forth in Part B of Schedule III hereto is a complete
and correct list, as of the date of this Agreement, of each Investment (other
than Investments disclosed in Part A of said Schedule III hereto) in an amount
exceeding $25,000 held by the Borrower or any of its Subsidiaries in any Person
and, for each such Investment, (i) the identity of the Person or Persons holding
such Investment and (ii) the nature of such Investment. Except as disclosed in
Part B of Schedule III hereto, each of the Borrower and its Subsidiaries owns,
free and clear of all Liens (other than Liens created pursuant to the Security
Documents), all such Investments.
(c) None of the Subsidiaries of the Borrower is, on the date
of this Agreement, subject to any indenture, agreement, instrument or other
arrangement of the type described in the last sentence of Section 9.22 hereof.
8.15 Broadcast Licenses.
(a) Part A of Schedule IV hereto accurately and completely
lists, as of the date hereof, for each Owned Station, all Broadcast Licenses
granted or assigned to the Borrower or any of its Subsidiaries, or under which
the Borrower and its Subsidiaries have the right to operate such Owned Station.
The Broadcast Licenses listed on Part A of Schedule IV hereto with respect to
any Owned Station include all material authorizations, licenses and permits
issued by the FCC that are required or necessary for the operation of such Owned
Station, and the conduct of the business of the Borrower and its Subsidiaries
with respect to such Owned Station, as now conducted or proposed to be
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conducted. The Broadcast Licenses listed in Part A of Schedule IV hereto are
issued in the name of the respective License Subsidiary for the Owned Station
being operated under authority of such Broadcast Licenses and are on the date
hereof validly issued and in full force and effect, and the Borrower and its
Subsidiaries have fulfilled and performed in all material respects all of their
obligations with respect thereto and have full power and authority to operate
thereunder.
(b) Part B of Schedule IV hereto accurately and completely
lists, as of the date hereof, for each Contract Station, all Broadcast Licenses
granted or assigned to the Material Third-Party Licensee for such Contract
Station, or under which the Material Third-Party Licensee for such Contract
Station has the right to operate such Contract Station. The Broadcast Licenses
listed on Part B of Schedule IV hereto with respect to any Contract Station
include all material authorizations, licenses and permits issued by the FCC that
are required or necessary for the operation of such Contract Station, and the
conduct of the business of the Material Third-Party Licensee for such Contract
Station with respect to such Contract Station, as now conducted or proposed to
be conducted. The Broadcast Licenses listed in Part B of Schedule IV hereto are
issued in the name of the Material Third-Party Licensee for the Contract Station
being operated under authority of such Broadcast Licenses and are on the date
hereof validly issued and in full force and effect, and the Material Third-Party
Licensee for such Contract Station has fulfilled and performed in all material
respects all of its obligations with respect thereto and has full power and
authority to operate thereunder.
8.16 Property. The Borrower and its Subsidiaries will own or
hold all easements, rights-of-way, licenses in respect of real property and
similar rights as are necessary for the acquisition, ownership and operation of
the Stations. Each of the Borrower and its Subsidiaries has good title to its
properties and assets free and clear of all Liens, except for Liens permitted
under Section 9.06 hereof.
8.17 Ancillary Documents. The Borrower has heretofore
delivered to the Agent a true and complete copy of the Ancillary Documents, in
each case as in effect on the date hereof, and each of the same is in full force
and effect and no default of any Obligor party thereto of any of the provisions
thereof is in existence on the date hereof.
8.18 Film Obligations. Set forth in Schedule V hereto is a
complete and correct list as of March 31, 1997, setting forth for each Station,
(a) the respective Film Cash Payments to be made in each fiscal year during the
period commencing on
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January 1, 1997 through and including December 31, 1999 and (b) the respective
Film Cash Payments to be made during the period commencing on January 1, 2000
through and including December 31, 2003.
8.19 Capitalization. The authorized capital stock of the
Borrower consists, on the date hereof, of 145,000,000 shares, consisting of (a)
100,000,000 shares of Class A Common Stock, par value $.01 per share, of which
6,854,327 shares are duly and validly issued and outstanding, each of which
shares is fully paid and nonassessable; (b) 35,000,000 shares of Class B Common
Stock, par value $.01 per share, of which 27,850,581 shares are duly and validly
issued and outstanding, each of which shares is fully paid and nonassessable;
(c) 10,000,000 shares of Preferred Stock, par value $.01 per share, of which
1,500,000 shares of Series B Convertible Preferred Stock, par value $.01 per
share is divided and designated, of which 1,115,370 shares are duly and validly
issued and outstanding, each of which shares is fully paid and nonassessable and
of which 2,062,000 shares of Series C Preferred Stock, par value $.01 per share
is divided and designated, all of which are issued and outstanding, each of
which shares is fully paid and nonassessable. As of the date hereof .0000209625%
of such issued and outstanding shares of Class A Common Stock are owned
beneficially and of record by the Smith Brothers, and 100% of such issued and
outstanding shares of Class B Common Stock are beneficially owned of record,
directly or indirectly, by the Smith Brothers. As of the date hereof, (i) except
for (x) the Designated Employee Stock Option Plan, (y) the Incentive Stock
Option Plan, (z) the 1996 Long-Term Incentive Plan, (xx) Equity Rights created
pursuant to the River City Acquisition Documents, and (yy) Hedging Agreements
outstanding on the date hereof, there are no outstanding Equity Rights with
respect to the Borrower and (ii) except for (x) the right of the holders of the
Seller Stock (or of any such stock converted into the Borrower's Class A Common
Stock) to require the Borrower to repurchase such Seller Stock (or Class A
Common Stock) and (y) Hedging Agreements outstanding on the date hereof, there
are no outstanding obligations of the Borrower or any of its Subsidiaries to
repurchase, redeem, or otherwise acquire any shares of capital stock of the
Borrower nor are there any outstanding obligations of the Borrower or any of its
Subsidiaries to make payments to any Person, such as "phantom stock" payments,
where the amount thereof is calculated with reference to the fair market value
or equity value of the Borrower or any of its Subsidiaries.
8.20 True and Complete Disclosure. The information, reports,
financial statements, exhibits and schedules furnished in writing by or on
behalf of the Obligors to the Agent or any Lender in connection with the
negotiation, preparation or
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delivery of this Agreement and the other Basic Documents or included herein or
therein or delivered pursuant hereto or thereto, when taken as a whole do not
contain any untrue statement of material fact or omit to state any material fact
necessary to make the statements herein or therein, in light of the
circumstances under which they were made, not misleading. All written
information furnished after the date hereof by the Borrower and its Subsidiaries
to the Agent and the Lenders in connection with this Agreement and the other
Basic Documents and the transactions contemplated hereby and thereby will be
true, complete and accurate in every material respect, or (in the case of
projections) based on reasonable estimates, on the date as of which such
information is stated or certified. There is no fact known to the Borrower that
could have a Material Adverse Effect that has not been disclosed herein, in the
other Basic Documents or in a report, financial statement, exhibit, schedule,
disclosure letter or other writing furnished to the Lenders for use in
connection with the transactions contemplated hereby or thereby.
8.21 Tax Identification Numbers. The tax identification number
for each Obligor on the date hereof is correctly set forth opposite the name of
such Obligor on Schedule VI hereto.
8.22 Program Services Agreements. Schedule VII hereto is a
complete and correct list, as of the date of this Agreement, of each agreement
pursuant to which the Borrower or any of its Subsidiaries has the right to
program and sell advertising on a substantial portion of the inventory of
broadcast time of any Station.
8.23 Options. Schedule VIII hereto is a complete and correct
list, as of the date of this Agreement, of each option agreement pursuant to
which the Borrower or any of its Subsidiaries has the right to acquire licenses,
permits, authorizations or certificates to construct, own, operate or promote
any television or radio broadcasting station.
8.24 Asset Use and Operating Agreements. Schedule IX hereto is
a complete and correct list, as of the date of this Agreement, with respect to
each Owned Station, of the agreement between the Subsidiary of the Borrower that
operates such Owned Station and a License Subsidiary with respect to such Owned
Station.
Section 9. Covenants of the Obligors. The Obligors covenant
and agree with the Lenders and the Agent that, so long as any Commitment, Loan
or Letter of Credit Liability is
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outstanding and until payment in full of all amounts payable by the Borrower
hereunder:
9.01 Financial Statements. The Borrower shall deliver to the
Agent the following items (with, except in the case of consolidating financial
statements furnished pursuant to Section 9.01(a) below, sufficient copies for
each Lender):
(a) as soon as available and in any event within 45 days after
the end of each of the first three fiscal quarters of each fiscal year
of the Borrower, consolidated and consolidating statements of income,
retained earnings and cash flow of the Borrower and its Consolidated
Subsidiaries for such period and for the period from the beginning of
the respective fiscal year to the end of such period, and the related
consolidated and consolidating balance sheets as at the end of such
period, setting forth in each case in comparative form the
corresponding consolidated and consolidating figures for the
corresponding period in the preceding fiscal year, accompanied by a
certificate of a senior financial officer of the Borrower, which
certificate shall state that said financial statements present fairly,
in all material respects, the consolidated financial condition and
results of operations of the Borrower and its Consolidated
Subsidiaries, and the respective individual unconsolidated financial
condition and results of operations of the Borrower and of each of its
Consolidated Subsidiaries, in each case in accordance with generally
accepted accounting principles, consistently applied, as at the end of,
and for, such period (subject to normal year-end audit adjustments);
(b) as soon as available and in any event within 110 days
after the end of each fiscal year of the Borrower, consolidated and
consolidating statements of income, retained earnings and cash flow of
the Borrower and its Consolidated Subsidiaries for such year and the
related consolidated and consolidating balance sheets as at the end of
such year, setting forth in each case in comparative form the
corresponding consolidated and consolidating figures for the preceding
fiscal year, and accompanied (i) in the case of said consolidated
statements and balance sheet, by an unqualified opinion thereon of
independent certified public accountants of recognized national
standing, which opinion shall state that said consolidated financial
statements present fairly, in all material respects, the consolidated
financial condition and results of operations of the Borrower and its
Consolidated Subsidiaries as at the end of, and for, such fiscal year
in accordance with generally accepted accounting principles, and a
certificate of such
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accountants stating that, in making the examination necessary for their
opinion, they obtained no knowledge, except as specifically stated, of
any Default, and (ii) in the case of said consolidating statements and
balance sheets, by a certificate of a senior financial officer of the
Borrower, which certificate shall state that said consolidating
financial statements fairly present the respective individual
unconsolidated financial condition and results of operations of the
Borrower and of each of its Consolidated Subsidiaries, in each case in
accordance with generally accepted accounting principles, consistently
applied, as at the end of, and for, such fiscal year;
(c) promptly upon their becoming available, copies of all
registration statements and regular periodic reports, if any
(including, without limitation, reports on Forms 10-Q and 10-K), which
the Borrower or any of its Subsidiaries shall have filed with the
Securities and Exchange Commission (or any governmental agency
substituted therefor) or any national securities exchange;
(d) promptly upon the furnishing thereof generally to the
holders of any class or issue of securities of the Borrower (or to any
of their respective agents or trustees) copies of all financial
statements, reports, proxy statements, notices and other communications
so furnished; and promptly upon the receipt thereof by the Borrower,
copies of any notices, reports or other communications from any holder
of any Preferred Stock or any Senior Subordinated Notes (or any agent
or trustee therefor);
(e) as soon as possible, and in any event within ten days
after the Borrower knows or has reason to believe that any of the
events or conditions specified below with respect to any Plan or
Multiemployer Plan have occurred or exist, a statement signed by a
senior financial officer of the Borrower setting forth details
respecting such event or condition and the action, if any, which the
Borrower or its ERISA Affiliate proposes to take with respect thereto
(and a copy of any report or notice required to be filed with or given
to PBGC by the Borrower or an ERISA Affiliate with respect to such
event or condition):
(i) any reportable event, as defined in Section 4043(c)
of ERISA and the regulations issued thereunder, with respect
to a Plan, as to which PBGC has not by regulation waived the
requirement of Section 4043(a) of ERISA that it be notified
within 30 days of the occurrence of such event (provided that
a failure to meet the minimum funding standard of
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Section 412 of the Code or Section 302 of ERISA shall be a
reportable event regardless of the issuance of any waivers in
accordance with Section 412(d) of the Code);
(ii) the filing under Section 4041 of ERISA of a notice of
intent to terminate any Plan or the termination of any Plan;
(iii) the institution by PBGC of proceedings under Section
4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan, or the receipt by the
Borrower or any ERISA Affiliate of a notice from a
Multiemployer Plan that such action has been taken by PBGC
with respect to such Multiemployer Plan;
(iv) the complete or partial withdrawal by the Borrower or
any ERISA Affiliate under Section 4201 or 4204 of ERISA from a
Multiemployer Plan, or the receipt by the Borrower or any
ERISA Affiliate of notice from a Multiemployer Plan that it is
in reorganization or insolvency pursuant to Section 4241 or
4245 of ERISA or that it intends to terminate or has
terminated under Section 4041A of ERISA;
(v) the institution of a proceeding by a fiduciary of any
Multiemployer Plan against the Borrower or any ERISA Affiliate
to enforce Section 515 of ERISA, which proceeding is not
dismissed within 30 days; and
(vi) the adoption of an amendment to any Plan that,
pursuant to Section 401(a)(29) of the Code or Section 307 of
ERISA, would result in the loss of tax-exempt status of the
trust of which such Plan is a part if the Borrower or an ERISA
Affiliate fails to timely provide security to such Plan in
accordance with the provisions of said Sections;
(f) promptly after any Obligor knows or has reason to believe
that any Default has occurred, a notice of such Default describing the
same in reasonable detail and, together with such notice or as soon
thereafter as possible, a description of the action that the Borrower
has taken and proposes to take with respect thereto;
(g) promptly following delivery thereof to or by the Borrower
or any of its Subsidiaries, copies of all material notices, reports,
approvals and other material communications that are received by the
Borrower or any of
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its Subsidiaries from the FCC or filed by the Borrower or any of its
Subsidiaries with the FCC;
(h) promptly following delivery thereof to or by the Borrower
or any of its Subsidiaries, copies of all material notices (including,
without limitation, notices of default), financial statements, reports,
approvals and other material communications that are received by the
Borrower or any of its Subsidiaries from or on behalf of any Material
Third- Party Licensee or Affiliate of any Material Third-Party Licensee
or furnished by the Borrower or any of its Subsidiaries to any Material
Third-Party Licensee or Affiliate of any Material Third-Party Licensee;
(i) from time to time such other information regarding the
financial condition, operations, business or prospects of the Borrower,
any of its Subsidiaries, any Station, any Material Third-Party Licensee
or any Person that owns the capital stock (or other equity ownership
interest) of any Material Third-Party Licensee (including, without
limitation, any Plan or Multiemployer Plan and any reports or other
information required to be filed under ERISA) as any Lender or the
Agent may reasonably request; and
(j) at the time it furnishes each set of financial statements
pursuant to clause (a) or (b) above, financial statements for the
Borrower, its Consolidated Subsidiaries and the Unrestricted Companies
having the same scope, detail and information, covering the same
periods of time, and accompanied by a corresponding certificate of a
senior financial officer of the Borrower or opinion of independent
certified public accountants of recognized national standing, as the
case may be, as said financial statements delivered pursuant to said
clause (a) or (b), as though each reference in said clause (a) or (b)
to "the Borrower and its Consolidated Subsidiaries" were a reference to
"the Borrower, its Consolidated Subsidiaries and the Unrestricted
Companies".
The Borrower will furnish to the Agent (with sufficient copies for each Lender),
at the time it furnishes each set of financial statements pursuant to paragraph
(a) or (b) above, a certificate of a senior financial officer of the Borrower
(i) to the effect that no Default has occurred and is continuing (or, if any
Default has occurred and is continuing, describing the same in reasonable detail
and describing the action that the Borrower has taken and proposes to take with
respect thereto) and (ii) setting forth in reasonable detail the computations
necessary to determine whether the Borrower is in compliance with Sections
9.07(e), 9.09, 9.10, 9.11, 9.12, 9.13, 9.14, and 9.15
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hereof as of the end of the respective quarterly fiscal period or fiscal year.
In addition, the Borrower shall in each of its fiscal years (commencing with its
fiscal year ending 1997) as soon as available and in any event on or before
December 31 of each fiscal year, deliver to each Lender, a budget for the next
following fiscal year setting forth anticipated income, expense and capital
expenditure items for each quarter during such fiscal year and, on a date to be
mutually agreed upon with the Agent, arrange for its relevant officers to be
present at a meeting with the Lenders for the purpose of discussing its
business, prospects and financial affairs (including its near-term projections)
with the Lenders.
9.02 Litigation. The Borrower will promptly give to the Agent
(with sufficient copies for each Lender) notice of all legal or arbitral
proceedings, and of all proceedings by or before any governmental or regulatory
authority or agency, and any material development in respect of such legal or
other proceedings (collectively, "Proceedings"), affecting the Borrower or any
of its Subsidiaries or any of their respective assets, franchises or licenses
(including, without limitation, the Broadcast Licenses for Owned Stations)
except Proceedings which, if adversely determined, would not (either
individually or in the aggregate) have a Material Adverse Effect or result in
the loss of a franchise or license (including, without limitation, any Broadcast
License for an Owned Station other than an Immaterial Broadcast License). The
Borrower will promptly give to the Agent (with sufficient copies for each
Lender) notice of all Proceedings affecting the Material Third-Party Licensee
for a Contract Station or any Broadcast Licenses for such Contract Station
except Proceedings which, if adversely determined, would not (either
individually or in the aggregate) have a Material Adverse Effect or result in
the loss of any Broadcast License (other than an Immaterial Broadcast License)
for such Contract Station.
9.03 Existence, Etc. The Borrower will, and will cause each of
its Subsidiaries to:
(a) preserve and maintain its legal existence and all of its
material rights, privileges and franchises (including, without
limitation, the Broadcast Licenses, but excluding Immaterial Broadcast
Licenses, for Owned Stations) (provided that nothing in this Section
9.03 shall prohibit any transaction expressly permitted under Section
9.05 hereof);
(b) comply with the requirements of all applicable laws,
rules, regulations and orders of governmental or regulatory authorities
if failure to comply with such
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requirements would (either individually or in the aggregate) have a
Material Adverse Effect;
(c) pay and discharge all material taxes, assessments and
governmental charges or levies imposed on it or on its income or
profits or on any of its Property prior to the date on which penalties
attach thereto, except for any such tax, assessment, charge or levy the
payment of which is being contested in good faith and by proper
proceedings and against which adequate reserves are being maintained;
(d) maintain all of its material Properties used or useful in
its business in good working order and condition, ordinary wear and
tear excepted; and
(e) permit representatives of any Lender or the Agent, during
normal business hours, to examine, copy and make extracts from its
books and records, to inspect its Properties, and to discuss its
business and affairs with its officers, all to the extent reasonably
requested by such Lender or the Agent (as the case may be).
9.04 Insurance. The Borrower will, and will cause each of its
Subsidiaries to, maintain insurance with financially sound and reputable
insurance companies, and with respect to Property and risks of a character
usually maintained by corporations engaged in the same or similar business
similarly situated, against loss, damage or liability of the kinds and in the
amounts customarily maintained by such corporations and maintain such other
insurance as is usually carried by such corporations, provided that the Borrower
will in any event maintain (with respect to itself, each of its Subsidiaries and
each Owned Station), and will cause the Material Third-Party Licensee for each
Contract Station (or the Person that owns the capital stock (or other equity
ownership interest) of such Material Third-Party Licensee) to maintain (with
respect to itself and such Contract Station), casualty insurance and insurance
against claims and damages with respect to defamation, libel, slander, privacy
or other similar injury to person or reputation (including, without limitation,
misappropriation of personal likeness), in such amounts as are then customary
for Persons engaged in the same or similar business similarly situated. The
Borrower shall provide to the Agent at the same time it furnishes its annual
financial statements under Section 9.01(b) hereof a certificate of insurance
comparable in scope to the certificate furnished under Section 7.01(t)(i) hereof
demonstrating compliance with this Section 9.04.
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9.05 Prohibition of Fundamental Changes.
(a) The Borrower will not, nor will it permit any of its
Subsidiaries to, enter into any transaction of merger or consolidation or
amalgamation, or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution).
(b) The Borrower will not, and will not permit any of its
Subsidiaries to, acquire any business or Property from, or capital stock of, or
be a party to any acquisition of, any Person, or acquire any option to make any
such acquisition, except for purchases of inventory, programming rights and
other Property to be sold or used in the ordinary course of business,
Investments permitted under Section 9.08 hereof, Dividend Payments permitted
under Section 9.09(f) and (g) hereof and Capital Expenditures permitted under
Section 9.12 hereof.
(c) The Borrower will not, and will not permit any of its
Subsidiaries to, without the prior written consent of the Majority Lenders,
convey, sell, lease, transfer or otherwise dispose of, in one transaction or a
series of transactions, all or a substantial part of its business or Property,
whether now owned or hereafter acquired including, without limitation,
receivables and leasehold interests, but excluding (i) any inventory or other
Property sold or disposed of in the ordinary course of business and on ordinary
business terms and (ii) obsolete or worn-out Property, tools or equipment no
longer used or useful in its business so long as the amount thereof sold in any
single fiscal year by the Borrower and its Subsidiaries shall not have a fair
market value in excess of $1,000,000.
(d) Notwithstanding the foregoing provisions of this Section
9.05:
(i) the Borrower and its Subsidiaries may consummate any River
City License Acquisition or any Approved Acquisition (each, a "Subject
Acquisition") provided that:
(v) both immediately prior to such Subject
Acquisition and, after giving effect thereto, no Default shall
have occurred and be continuing;
(w) each assignment or transfer of control of
Broadcast Licenses to the Borrower or any of its Subsidiaries
shall have been approved by either:
(A) a Final FCC Order, in the case of the
consummation of the exercise of any of the WPTT
Conversion Option, the Glencairn Options or the WDBB
Option, or
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(B) an Initial FCC Order, in the case of any
Subject Acquisition other than those referred to in
the preceding clause (A) (and, if the Agent or the
Majority Lenders shall have so requested, the Agent
shall have received an opinion of Fisher Wayland
Cooper Leader and Zaragoza L.L.P. (or other counsel
satisfactory to the Agent or the Majority Lenders, as
the case may be, in its (or their) reasonable
judgment) to the effect that such transfer shall have
been so approved by a Final FCC Order or an Initial
FCC Order, as the case may be, and that such
Broadcast Licenses have been validly assigned to the
Borrower or such Subsidiary);
(x) in the case of the acquisition of assets (or of
the capital stock (or other equity ownership interest) of the
Person that owns such assets) and assumption of liabilities
relating to WXWX-FM, Easley, South Carolina and WXWX-FM,
Greer, South Carolina, or to WPMR-AM and WKRF-FM, Tobyhanna,
Pennsylvania, no later than the date falling ten Business Days
(or such shorter period as the Agent may agree) prior to the
consummation of such acquisition, the Borrower shall have
delivered to the Agent drafts or executed counterparts of such
of the respective agreements or instruments pursuant to which
such acquisition is to be consummated (together with any
related management, non-compete, employment, option or other
material agreements), any schedules or other material
ancillary documents to be executed or delivered in connection
therewith, all of which shall be satisfactory to the Agent in
form and substance and
(y) the Borrower shall promptly furnish to the Agent
copies of such information or documents relating to such
Subject Acquisition as the Agent or any Lender or Lenders
(through the Agent) shall have reasonably requested; and
(z) on the date on which the Borrower or any of its
Subsidiaries pays any WSYX Option Extension Payment or the
WSYX Sale Price Differential, the Borrower shall furnish to
the Lenders a certificate showing calculations (after giving
effect to such payment) in reasonable detail that demonstrate
that such payment will not result in a Default under Section
9.11 hereof;
(ii) the Borrower or any of its Subsidiaries may make any Other
Acquisition provided that:
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(q) at the time that the Borrower or any of its
Subsidiaries enters into a definitive purchase agreement for
such Other Acquisition, either:
(A) the Borrower has sufficient financing
committed to it to enable it or its Subsidiary, as
the case may be, to consummate such Other Acquisition
or
(B) if the maximum amount of all
termination, break-up and similar fees payable by the
Borrower or its Subsidiary, as the case may be, by
reason of such Other Acquisition failing to be
consummated were included in the calculation of Total
Indebtedness, the Borrower would be in compliance
with the Total Indebtedness Ratio on such date;
(r) after the consummation thereof, there shall
remain unused Revolving Credit Commitments in an aggregate
amount of not less than $25,000,000;
(s) both immediately prior to such Other Acquisition
and immediately, after giving effect thereto, no Default shall
have occurred and be continuing;
(t) immediately after giving effect to such Other
Acquisition, the BCF Percentage does not exceed 25%;
(u) each assignment or transfer of control of
Broadcast Licenses to the Borrower or any of its Subsidiaries
pursuant to any such Other Acquisition shall have been
approved by an order of the FCC that is no longer subject to
reconsideration or review by the FCC or by any court or
administrative body (and, if the Agent or the Majority Lenders
shall have so requested, the Agent shall have received an
opinion of Fisher Wayland Cooper Leader and Zaragoza L.L.P.
(or other counsel reasonably satisfactory to the Agent or the
Majority Lenders, as the case may be) to the effect that such
transfer shall have been so approved by a final order of the
FCC and that such Broadcast Licenses have been validly
assigned to the Borrower or such Subsidiary);
(v) the ratio of Total Indebtedness on the date that
such Other Acquisition is consummated (calculated after giving
effect to the borrowings and prepayments hereunder to be made
on such date) to EBITDA for the
Credit Agreement
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period of four fiscal quarters of the Borrower ending on or
most recently ended prior to such date (calculated on a pro
forma basis as if such Other Acquisition had been consummated
on the first day of such period) will not be greater than the
lesser of (A) 6.50 to 1 and (B) such ratio as shall be
required by Section 9.14 hereof on such date;
(w) if the Aggregate Consideration for such Other
Acquisition is equal to or greater than $10,000,000, the
Borrower shall furnish to the Lenders a certificate showing
calculations (after giving effect to borrowings and
prepayments hereunder to be made on such date and calculated
on a pro forma basis as if such Other Acquisition had been
consummated on the first day of the period of four fiscal
quarters of the Borrower ending on or most recently ended
prior to such date) in reasonable detail that demonstrate that
such Other Acquisition will not result in a Default under any
of (A) Sections 9.10, 9.11, 9.12, 9.13 or 9.15 hereof and (B)
clause (v) of this Section 9.05(d)(ii);
(x) no later than the date falling ten Business Days
(or such shorter period as the Agent may agree) prior to the
date that such Other Acquisition is consummated, the Borrower
shall have delivered to the Agent drafts or executed
counterparts of such of the respective agreements or
instruments (including, without limitation, Program Services
Agreements) pursuant to which such Other Acquisition is to be
consummated (together with any related management,
non-compete, employment, option or other material agreements),
any schedules or other material ancillary documents to be
executed or delivered in connection therewith, all of which
shall be satisfactory in form and substance to the Agent (or,
if the portion of the Aggregate Consideration for such Other
Acquisition payable to extend and exercise any option acquired
in connection with such Other Acquisition exceeds 20% of the
Aggregate Consideration payable in connection with such Other
Acquisition, the Majority Lenders) and sufficient to
demonstrate compliance by the Borrower with the requirements
of this Section 9.05(d)(ii) and
(y) promptly following request therefor, copies of
such information or documents relating to such Other
Acquisition as the Agent or any Lender or Lenders (through the
Agent) shall have reasonably requested; and
Credit Agreement
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(z) if requested by the Agent or the Majority Lenders
with respect to any agreement (A) entered into by any Obligor
and any other Person in connection with such Other Acquisition
or (B) to be transferred to any Obligor in connection with
such Other Acquisition, which agreement is determined by the
Agent or the Majority Lenders, as the case may be, to be
material (a "Material Agreement"), the Borrower shall cause
such Obligor and such other Person to execute and deliver to
the Agent a Consent and Agreement with respect to such
Material Agreement;
(iii) the Borrower or any of its Subsidiaries may sell to Glencairn
or a Subsidiary of Glencairn the Broadcast Licenses for any Owned
Station and any Property required pursuant to the rules and regulations
of the FCC to be sold in connection with the transfer of such Broadcast
Licenses, provided that:
(w) any such sale relating to WTTE-TV, WFBC-TV or
KRRT-TV (each, a "Specified Station") shall be for an amount
not less than 80% of the appraised value (as determined by an
appraiser satisfactory to the Agent and the Borrower and
experienced in the appraisal of properties similar to those
being so sold), and any such sale relating to any other Owned
Station shall be for an amount not less than 100% of the
appraised value (as determined as aforesaid), which amount in
all such cases shall be payable in cash,
(x) Glencairn or such Subsidiary of Glencairn, as the
case may be, shall enter into a Program Services Agreement
with a Subsidiary of the Borrower with respect to each Station
the Broadcast Licenses of which are so sold, which Program
Services Agreement shall be substantially in the form of a
Program Services Agreement in effect on the date hereof
between Glencairn or a Subsidiary of Glencairn and a
Subsidiary of the Borrower,
(y) after giving effect to such sale and related
Program Services Agreement, the BCF Percentage does not exceed
25%, and
(z) Glencairn or such Subsidiary of Glencairn, as the
case may be, shall enter into a Consent and Agreement with the
Agent relating to such Program Services Agreement;
Credit Agreement
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(iv) the Borrower or any of its Subsidiaries may, subject to
compliance with Section 1013 of the 1993 Senior Subordinated Note
Indenture, dispose of substantially all of the assets relating to any
Owned Station that is a radio broadcasting station (or the capital
stock of the Subsidiary of the Borrower that owns such assets if such
Subsidiary does not own any Property relating to any other Owned
Station that is a television broadcasting station), provided that:
(x) both immediately prior to such disposition and,
after giving effect thereto, no Default shall have occurred
and be continuing; and
(y) either:
(A) such disposition is a sale to any Person
for cash in an amount not less than the fair market
value of such assets, and the Borrower shall promptly
furnish to the Agent copies of such information or
documents relating to such disposition as the Agent
or any Lender or Lenders (through the Agent) shall
have reasonably requested; or
(B) such disposition is an exchange, with
any Person, of such assets for assets owned by such
Person (or the capital stock (or other equity
ownership interest) of such Person) comprising a
radio broadcasting station of equal or greater value,
as determined in good faith by the Board of Directors
of the Borrower or such Subsidiary and the
acquisition of such assets of such Person pursuant to
such exchange shall comply with the provisions of
clause (d)(ii) of this Section 9.05;
(v) the Borrower or any of its Subsidiaries may, subject to
compliance with Section 1013 of the 1993 Senior Subordinated Note
Indenture, dispose of substantially all of the assets relating to any
Owned Station that is a television broadcasting station (or the capital
stock of the Subsidiary of the Borrower that owns such assets),
provided that:
(x) both immediately prior to such disposition and,
after giving effect thereto, no Default shall have occurred
and be continuing; and
Credit Agreement
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(y) either:
(A) such disposition is a sale to any Person
for cash in an amount not less than the fair market
value of such assets and:
(1) the EBITDA Percentage
attributable to such assets together with
the EBITDA Percentage attributable to all
other assets sold pursuant to this clause
(A) or exchanged pursuant to the following
clause (B) during the immediately preceding
twelve-month period shall not exceed 20%,
(2) the EBITDA Percentage
attributable to all assets of the Borrower
and its Subsidiaries sold pursuant to this
clause (A) or exchanged pursuant to the
following clause (B) since the Restatement
Effective Date shall not exceed 50%, and
(3) the Borrower shall have
furnished to the Lenders, not later than the
date falling ten Business Days (or such
shorter period as the Agent may agree) prior
to the date of such disposition a
certificate in form and detail satisfactory
to the Agent stating (and setting forth
calculations in reasonable detail
demonstrating) the EBITDA Percentage
attributable to the assets so sold and
promptly following request therefor, copies
of such other information or documents
relating to such disposition as the Agent of
any Lender or Lenders (through the Agent)
shall have reasonably requested; or
(B) such disposition is an exchange, with
any Person, of such assets for assets owned by such
Person (or the capital stock (or other equity
ownership interest) of such Person) comprising a
television broadcasting station of equal or greater
value, as determined in good faith by the Board of
Directors of the Borrower or such Subsidiary and:
(1) the EBITDA Percentage
attributable to such assets of the Borrower
or such Subsidiary together with the EBITDA
Percentage attributable to all other assets
of the Borrower or any of its
Credit Agreement
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Subsidiaries sold pursuant to the foregoing
clause (A) or exchanged pursuant to the this
clause (B) during the immediately preceding
twelve-month period shall not exceed 20%,
(2) the EBITDA Percentage
attributable to all assets of the Borrower
and its Subsidiaries sold pursuant to the
foregoing clause (A) or exchanged pursuant
to this clause (B) since the Restatement
Effective Date shall not exceed 50%,
(3) the acquisition of such assets
of such Person pursuant to such exchange
shall comply with the provisions of clause
(d)(ii) of this Section 9.05 and
(4) the Borrower shall have
furnished to the Lenders, not later than the
date falling ten Business Days (or such
shorter period as the Agent may agree) prior
to the date of such disposition a
certificate in form and detail satisfactory
to the Agent stating (and setting forth
calculations in reasonable detail
demonstrating) the EBITDA Percentage
attributable to the assets so sold;
(vi) the Borrower or any of its Subsidiaries may dispose of
Properties for fair market value, provided that the aggregate fair
market value of Properties disposed of by the Borrower and its
Subsidiaries in any fiscal year of the Borrower may not exceed
$5,000,000;
(vii) the Borrower or any of its Subsidiaries may dispose of
Properties acquired by any of them in the River City Non-License
Acquisition that are substantially duplicative of Properties
theretofore owned by any of them, provided that:
(x) any such disposition shall be for fair market
value and
(y) the aggregate fair market value of all such
Properties disposed of the Borrower and its Subsidiaries after
the date hereof may not exceed $2,500,000;
(viii) the Borrower or any of its Subsidiaries may sell in
accordance with Section 10.4 of the Baker Employment
Credit Agreement
<PAGE>
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Agreement to Barry Baker or to any Person designated by Barry Baker
under said Section 10.4 the Property of the Borrower or such Subsidiary
required to be so sold pursuant to said Section 10.4, provided that any
such sale shall be for cash in an amount not less than the fair market
value of the Property so sold; and
(ix) any Subsidiary (other than a License Subsidiary) may be merged
or consolidated with or into any other Subsidiary (other than a License
Subsidiary); provided that:
(x) if any such transaction shall be between a
Subsidiary and a Wholly Owned Subsidiary, the Wholly Owned
Subsidiary shall be the continuing or surviving corporation
and
(y) if any such transaction shall be between a
Subsidiary Guarantor and a Subsidiary not a Subsidiary
Guarantor, and such Subsidiary Guarantor is not the continuing
or surviving corporation, then the continuing or surviving
corporation shall have assumed all of the obligations of such
Subsidiary Guarantor hereunder and under the other Basic
Documents.
9.06 Limitation on Liens. The Borrower will not, nor will it
permit any of its Subsidiaries to, create, incur, assume or suffer to exist any
Lien upon any of its Property, whether now owned or hereafter acquired, except:
(a) Liens created pursuant to the Security Documents;
(b) Liens imposed by any governmental authority for taxes,
assessments or charges not yet due or which are being contested in good
faith and by appropriate proceedings if adequate reserves with respect
thereto are maintained on the books of the Borrower or any of its
Subsidiaries, as the case may be, in accordance with GAAP;
(c) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of
business which are not overdue for a period of more than 30 days or
which are being contested in good faith and by appropriate proceedings
and Liens securing judgments but only to the extent for an amount and
for a period not resulting in an Event of Default under Section 10(h)
hereof;
(d) pledges or deposits under worker's compensation,
unemployment insurance and other social security legislation;
Credit Agreement
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(e) deposits to secure the performance of bids, trade
contracts (other than for borrowed money), leases, statutory
obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature incurred in the ordinary course of
business;
(f) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business and
encumbrances consisting of zoning restrictions, easements, licenses,
restrictions on the use of Property or minor imperfections in title
thereto which, in the aggregate, are not material in amount, and which
do not in any case materially detract from the value of the Property
subject thereto or interfere with the ordinary conduct of the business
of the Borrower or any of its Subsidiaries;
(g) rights of tenants, as tenants only, under leases of real
property acquired as part of the River City Non- License Acquisition,
which rights do not materially detract from the value of the real
property subject thereto or interfere with the ordinary conduct of the
business of the Borrower or any of its Subsidiaries performed thereon;
(h) Liens on the capital stock of Glencairn owned by Carolyn
C. Smith acquired by the Borrower or any of its Subsidiaries pursuant
to the exercise of the Glencairn Options, to the extent such Liens are
in existence on the date of such acquisition;
(i) additional Liens upon real and/or personal Property
created after the date hereof, provided that the aggregate Indebtedness
secured thereby and incurred on and after the date hereof shall not
exceed $5,000,000 in the aggregate at any one time outstanding; and
(j) any extension, renewal or replacement of the foregoing,
provided, however, that the Liens permitted hereunder shall not be
spread to cover any additional Indebtedness or Property (other than a
substitution of like Property).
9.07 Indebtedness. The Borrower will not, and will not permit
any of its Subsidiaries to, create, incur or suffer to exist any Indebtedness
except:
(a) Indebtedness to the Lenders hereunder;
(b) Indebtedness outstanding on the date hereof and listed in
Schedule I hereto;
Credit Agreement
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(c) Indebtedness of the Borrower evidenced by senior
subordinated notes in an aggregate principal amount not exceeding
$200,000,000 at any one time outstanding and subordinated guarantees
thereof by Subsidiary Guarantors (such Indebtedness and guarantees
being collectively referred to as the "Additional Senior Subordinated
Notes"), provided that (i) such notes are issued at not less than 97%
of par, (ii) such notes and guarantees shall be unsecured and such
notes shall bear interest at a fixed rate not greater than 12% per
annum on the face amount thereof, (iii) no scheduled payments,
prepayments, redemptions or sinking fund or like payments on such notes
shall be required before the tenth anniversary of the date of issuance
of such notes, (iv) the terms and conditions of such notes shall not be
less favorable to the Borrower, its Subsidiaries, the Lenders and the
Agent than the terms and conditions of the 1995 Senior Subordinated
Note Indenture and the 1995 Senior Subordinated Notes, and the terms of
subordination thereof shall also extend to cover obligations of the
Borrower and its Subsidiaries in respect of any Hedging Agreements to
which the Borrower and any Lender are parties, (v) the Net Available
Proceeds of such Indebtedness shall, within the Specified Number of
days, be used (x) to finance the consummation of any Acquisition and
transaction expenses in connection therewith and/or (y) to prepay the
Loans and reduce the Commitments pursuant to Section 2.09(b)(iii)
hereof and (vi) no Default shall have occurred and be continuing at the
time of incurrence of such Indebtedness or would result therefrom;
(d) Indebtedness of Subsidiaries of the Borrower to the
Borrower or to other Subsidiaries of the Borrower;
(e) additional Indebtedness of the Borrower in an aggregate
principal amount not exceeding $50,000,000 at any one time outstanding,
provided (i) that no Default shall have occurred and be continuing at
the time of incurrence of such Indebtedness or would result therefrom
and (ii) such Indebtedness shall be unsecured;
(f) Subordinated Film Indebtedness of the Borrower in an
aggregate principal amount not to exceed $10,000,000 at any one time
outstanding, provided that the terms and conditions of each agreement
or instrument evidencing or governing such Indebtedness shall be
satisfactory to the Majority Lenders;
(g) Guarantees of Indebtedness of GDLP incurred in connection
with Property used by the Borrower and its Subsidiaries in an aggregate
principal amount (including all
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such Indebtedness, if any, permitted by Section 9.07(b) hereof) not
exceeding $2,000,000 at any one time outstanding;
(h) Indebtedness of the Borrower evidenced by senior
subordinated notes and subordinated guarantees thereof by Subsidiary
Guarantors (such Indebtedness and guarantees being collectively
referred to as the "Converted Senior Subordinated Notes"), provided
that (i) such notes and guarantees shall be unsecured and such notes
shall bear interest at a fixed rate not greater than 15% per annum,
(ii) no scheduled payments, prepayments, redemptions or sinking fund or
like payments on such notes shall be required before the tenth
anniversary of the date of issuance of the Other Preferred Stock, (iii)
the terms and conditions of such notes shall not be less favorable to
the Borrower, its Subsidiaries, the Lenders and the Agent than the
terms and conditions of the 1995 Senior Subordinated Note Indenture and
the 1995 Senior Subordinated Notes, and the terms of subordination
thereof shall also extend to cover obligations of the Borrower and its
Subsidiaries in respect of any Hedging Agreements to which the Borrower
and any Lender are parties, (iv) the Borrower shall issue such notes
pursuant to the conversion of all, but not less than all, of the Other
Preferred Stock into such notes in an aggregate principal amount not
exceeding the aggregate liquidation preference of the Other Preferred
Stock so converted and (v) both immediately prior to such conversion of
the Other Preferred Stock and, after giving effect thereto, no Default
shall have occurred and be continuing.
(i) Indebtedness of the Borrower owing to either or both of
the Designated Companies that is subordinated on terms satisfactory to
the Majority Lenders to the obligations of the Borrower hereunder,
under the Notes (if any) and under any Hedging Agreements to which the
Borrower and any Lender are parties.
9.08 Investments. The Borrower will not, and will not permit
any of its Subsidiaries to, make or permit to remain outstanding any Investments
except:
(a) operating deposit accounts with banks;
(b) Permitted Investments;
(c) Investments by the Borrower and its Subsidiaries in
capital stock of Subsidiaries of the Borrower to the extent outstanding
on the date of the financial statements of the Borrower and its
Consolidated Subsidiaries referred
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to in Section 8.02 hereof or required by Section 9.25 hereof and
advances by the Borrower and its Subsidiaries to Subsidiary Guarantors
in the ordinary course of business permitted to be incurred by Section
9.07(d) hereof;
(d) Investments outstanding on the Restatement Effective Date
and identified in Schedule III hereto;
(e) the formation of special purpose Wholly Owned Subsidiaries
of the Borrower for the acquisition of capital stock of or partnership
interests in Persons resulting in such Persons becoming Wholly Owned
Subsidiaries of the Borrower, in each case for the purpose of enabling
the Borrower and its Subsidiaries to consummate acquisitions permitted
by Section 9.05 hereof;
(f) Guarantees by Subsidiary Guarantors of Indebtedness of the
Borrower to the extent such guarantees are expressly permitted by
Section 9.07 hereof;
(g) Guarantees permitted by Section 9.07(g) hereof;
(h) the conversion by the Borrower of the outstanding
principal amount of the WPTT Convertible Debenture into non-voting
common stock of WPTT in accordance with the terms thereof;
(i) Investments by the Borrower in Affiliates in an amount up
to but not exceeding $200,000,000 in the aggregate provided that (x) no
Default shall have occurred and be continuing at the time of the making
of such Investment or would result therefrom, (y) at the time of the
making of such Investment, the Total Indebtedness Ratio shall not be
greater than the lesser of (A) 6.50 to 1 and (B) such ratio as shall be
required by Section 9.14 hereof at the time of the making of such
Investment and (z) each such Affiliate shall be engaged solely in lines
of business activity that would be permitted by Section 9.19 hereof if
such Affiliate were an Obligor hereunder;
(j) the PPI Guaranties;
(k) loans or capital contributions made by the Borrower to the
Designated Companies after the date hereof in an amount up to but not
exceeding $3,000,000 in the aggregate at any one time outstanding;
(l) Investments by the Borrower and its Subsidiaries in
capital stock of KDSM to the extent outstanding on the date of the
consummation of the PPI Transaction (after
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giving effect thereto), including, without limitation, any such capital
stock resulting from the conversion or exchange into such capital stock
of Indebtedness owing by to the Borrower or any of its Subsidiaries;
(m) Investments by the Borrower and its Subsidiaries in
capital stock of New PPI Sub to the extent outstanding on the date of
the consummation of the New PPI Transaction (after giving effect
thereto), including, without limitation, any such capital stock
resulting from the conversion or exchange into such capital stock of
Indebtedness owing by New PPI Sub to the Borrower or any of its
Subsidiaries;
(n) a cash contribution by the Borrower to the capital of New
PPI Sub in an aggregate amount not exceeding 3% of the aggregate
liquidation preference of the New PPI Preferred Stock, which cash
contribution is made in connection with the consummation of the New PPI
Transaction and used by New PPI Sub solely to purchase New PPI Common
Participation Interests; and
(o) additional Investments in an amount up to but not
exceeding $40,000,000 in the aggregate, provided that no Default shall
have occurred and be continuing at the time of the making of such
Investment or would result therefrom.
Notwithstanding anything contained herein to the contrary, the Borrower will
not, and will not permit any of its Subsidiaries to, make any Investment in an
Unrestricted Company other than the Investments referred to in clauses (j)
through (n) of this Section 9.08.
9.09 Dividend Payments. The Borrower will not, and will not
permit any of its Subsidiaries to declare or make any Dividend Payment at any
time, except that, so long as no Default exists at the time of making such
Dividend Payment or would result therefrom:
(a) the Borrower may pay to any Person (including, without
limitation, an Affiliate) dividends in cash in any of its fiscal years
ending after December 31, 1996 provided that (i) the aggregate amount
of such dividends paid in such fiscal year does not exceed 25% of
Excess Cash Flow for its fiscal year immediately preceding the fiscal
year in which such dividends are paid (to the extent that such 25% of
Excess Cash Flow has not otherwise been applied by the Borrower in
accordance with the provisions of this Agreement), and (ii) such
dividend may not be paid earlier than three Business Days after the
prepayment of Loans
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required by Section 2.09(c) hereof in such fiscal year of payment;
(b) the Borrower may pay dividends in cash on the Existing
Preferred Stock, provided that the Fixed Charges Ratio shall not be
less than such ratio as shall be required by Section 9.11 hereof at the
time of the making of such Dividend Payment;
(c) the Borrower may pay dividends in cash on Other Preferred
Stock, provided that at the time of the making of such dividend, the
Total Indebtedness Ratio shall not be greater than the lesser of (A)
6.00 to 1 and (B) such ratio as shall be required by Section 9.14
hereof at the time of the making of such dividend;
(d) the Borrower may pay dividends in cash (other than
dividends on Preferred Stock) provided that at the time of the making
of such dividend, the Total Indebtedness Ratio shall not be greater
than 4.00 to 1;
(e) the Borrower may make Equity Issuances permitted by
Section 9.26 hereof;
(f) the Borrower may purchase, in one transaction or a series
of transactions, its Class A Common Stock and its Class B Common Stock,
provided that the aggregate purchase price (including, without
limitation, cash payments, the principal amount of promissory notes and
Indebtedness assumed, cash payments under Hedging Agreements relating
to capital stock of the Borrower, and the fair market value of Property
delivered) paid, delivered or assumed by the Borrower therefor shall
not exceed $20,000,000;
(g) the Borrower may apply the portion of the Net Available
Proceeds of any Equity Issuances not theretofore applied as required by
Section 9.26(c)(iii) hereof to redeem Existing Preferred Stock for an
aggregate redemption price (including premium) not exceeding
$100,000,000 (less any amount paid to redeem New PPI Preferred Stock
pursuant to the following paragraph (h)) in connection with an optional
redemption by KDSM (if it is then a Designated Company) of KDSM Senior
Debentures, so long as substantially simultaneously with such
redemption (i) all of the proceeds of such redemption shall be used by
KDSM to repay the KDSM Senior Debentures and (ii) all of the proceeds
of the repayment of the KDSM Senior Debentures shall be used by the
Trust to redeem Preferred Participation Interests having an aggregate
liquidation preference equal to the amount of such proceeds;
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(h) the Borrower may apply the portion of the Net Available
Proceeds of any Equity Issuances not theretofore applied as required by
Section 9.26(c)(iii) hereof to redeem New PPI Preferred Stock for an
aggregate redemption price (including premium) not exceeding
$100,000,000 (less any amount paid to redeem Existing Preferred Stock
pursuant to the preceding paragraph (g)) in connection with an optional
redemption by New PPI Sub (if it is then a Designated Company) of New
PPI Senior Debentures, so long as substantially simultaneously with
such redemption (i) all of the proceeds of such redemption shall be
used by New PPI Sub to repay the New PPI Senior Debentures and (ii) all
of the proceeds of the repayment of the New PPI Senior Debentures shall
be used by the New PPI Trust to redeem New PPI Preferred Participation
Interests having an aggregate liquidation preference equal to the
amount of such proceeds; and
(i) the Borrower may convert any Other Preferred Stock into
Converted Senior Subordinated Notes in accordance with Section 9.07(h)
hereof.
Notwithstanding anything herein to the contrary, the Borrower will not, and will
not permit any of its Subsidiaries to, purchase or redeem any of the Existing
Preferred Stock or New PPI Preferred Stock except as expressly permitted by
clauses (g) and (h) of this Section 9.09.
9.10 Interest Coverage Ratio. The Borrower will not permit the
Interest Coverage Ratio on any date to be less than the ratio set forth below
opposite the period during which such date falls:
Period Ratio
------ -----
From the Restatement Effective
Date through December 30, 1998 1.80 to 1
From December 31, 1998
through December 30, 1999 1.90 to 1
From December 31, 1999
through December 30, 2000 2.00 to 1
From December 31, 2000
and at all times thereafter 2.20 to 1
9.11 Fixed Charges Ratio. The Borrower will not permit the
Fixed Charges Ratio to be less than or equal to 1.05 to 1 at any time.
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9.12 Capital Expenditures. The Borrower will not permit the
aggregate amount of Capital Expenditures to exceed (a) for its fiscal year
ending in 1997, $31,500,000 and (b) for any of its fiscal years thereafter, 1.05
multiplied by the maximum aggregate amount of Capital Expenditures (excluding
Additional Capital Expenditures (as defined below)) permitted under this Section
9.12 for the immediately preceding fiscal year of the Borrower; provided that
the Borrower may permit additional Capital Expenditures ("Additional Capital
Expenditures") in an aggregate amount (whether in one or more fiscal years of
the Borrower) not exceeding $75,000,000, which Additional Capital Expenditures
shall be used by the Borrower and its Subsidiaries solely to finance the
conversion from an analog to a digital format of the television broadcasting
facilities and equipment owned by Borrower and its Subsidiaries.
9.13 Senior Indebtedness Ratio. The Borrower will not permit
the Senior Indebtedness Ratio on any date to be greater than the ratio set forth
below opposite the period during which such date falls:
Period Ratio
------ -----
From the Restatement Effective
Date through December 30, 2000 5.00 to 1
From December 31, 2000
through December 30, 2001 4.50 to 1
From December 31, 2001
and at all times thereafter 4.00 to 1
9.14 Total Indebtedness Ratio. The Borrower will not permit
the Total Indebtedness Ratio on any date to be greater than the ratio set forth
below opposite the period during which such date falls:
Period Ratio
------ -----
From the Restatement Effective
Date through December 30, 1997 6.75 to 1
From December 31, 1997
through June 29, 1998 6.50 to 1
From June 30, 1998
through December 30, 1998 6.25 to 1
From December 31, 1998
through June 29, 1999 6.00 to 1
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From June 30, 1999
through December 30, 1999 5.50 to 1
From December 31, 1999
through December 30, 2000 5.00 to 1
From December 31, 2000
through December 30, 2001 4.50 to 1
From December 31, 2001
and at all times thereafter 4.00 to 1
9.15 Film Cash Payments. Neither the Borrower nor any of its
Subsidiaries shall purchase, redeem, retire or otherwise acquire for value, or
set apart any money for a sinking, defeasance or other analogous fund for, the
purchase, redemption, retirement or other acquisition of, or make any voluntary
payment or prepayment of the principal of or interest on, or any other amount
owing in respect of, any Film Obligations, except for (a) regularly scheduled
payments in respect thereof required pursuant to the instruments evidencing such
Film Obligations and (b) with the consent of the Agent, prepayments of Film
Obligations not exceeding $25,000,000 after the date hereof.
9.16 No Guarantee of Senior Debentures. The Borrower will not,
nor will it permit any of its Subsidiaries to, Guarantee all or any portion of
the KDSM Senior Debentures or the New PPI Senior Debentures, except by operation
of the Guarantees referred to in clauses (ii) and (iv) of the definition of "PPI
Guaranties" in Section 1.01 hereof. Without limiting the generality of the
foregoing, the Borrower will not, nor will it permit any of its Subsidiaries or
any of the Unrestricted Companies to, take any action (including, without
limitation, causing the Trust or the New PPI Trust to be dissolved) the effect
of which would be to cause either of said referenced Guarantees to become
effective.
9.17 Interest Rate Protection Agreements.
(a) The Borrower will obtain and maintain in full force and
effect from the date not later than the 45th day after the Restatement Effective
Date until no sooner than the second anniversary of the Restatement Effective
Date one or more Interest Rate Protection Agreements with one or more of the
Lenders (and/or with a bank or other financial institution having capital,
surplus and undivided profits of at least $500,000,000), which (together with
the fixed interest rates on the Senior Subordinated Notes) effectively enables
the Borrower (in a manner satisfactory to the Agent), as at any date, to protect
itself against three-month London interbank offered rates plus the
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respective Applicable Margins for Eurodollar Loans in effect at the time such
Interest Rate Protection Agreements are obtained exceeding 10% per annum as to a
notional principal amount from time to time determined as follows: the sum of
such notional principal amount and the aggregate principal amount of the Senior
Subordinated Notes with a fixed rate of interest less than or equal to 10% per
annum scheduled to be outstanding from time to time when expressed as a
percentage of the sum of the aggregate principal or face amount of the Loans and
the Senior Subordinated Notes scheduled to be outstanding from time to time is
at least equal to 60%.
(b) The Borrower will not, and will not permit any of its
Subsidiaries to, obtain or enter into any Interest Rate Protection Agreements
except as bona fide hedges against fluctuations in interest rates.
(c) Notwithstanding the foregoing clause (a), the Borrower
shall be permitted to modify the requirements under the Interest Rate Protection
Agreement with the consent of the Agent.
9.18 Subordinated Indebtedness. Neither the Borrower nor any
of its Subsidiaries shall purchase, redeem, retire or otherwise acquire for
value, or set apart any money for a sinking, defeasance or other analogous fund
for, the purchase, redemption, retirement or other acquisition of, or make any
voluntary payment or prepayment of the principal of or interest on, or any other
amount owing in respect of, any Subordinated Indebtedness, except for (a)
prepayments on the Carolyn Smith Documents and the Julian Smith Documents in an
aggregate amount not exceeding $2,000,000 in any fiscal year of the Borrower,
(b) regularly scheduled payments of principal and interest in respect thereof
required pursuant to the instruments evidencing such Subordinated Indebtedness,
and (c) the purchase, redemption, retirement or other acquisition of
Subordinated Indebtedness, provided that (i) no Default shall have occurred and
be continuing at the time of such purchase, redemption, retirement or other
acquisition or would result therefrom and (ii) the aggregate amount of such
purchase, redemption or retirement together with the aggregate amount of
payments permitted pursuant to Section 9.08(n) does not exceed $40,000,000 in
the aggregate.
9.19 Lines of Business. The Borrower will not, nor will it
permit any of its Subsidiaries to, engage to any substantial extent in any line
or lines of business activity other than (a) the business of owning and
operating the Stations (and related retransmission facilities), (b) the
commercial utilization of frequencies licensed, granted or leased to the
Borrower or any of its Subsidiaries by the FCC, any other governmental authority
or any Person in connection with the
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television or radio broadcasting businesses and (c) the production, development,
sale, lease or other provision of equipment and/or services to Persons engaged
in the businesses relating to those referred to in the preceding clause (b);
provided that the Borrower shall not permit the portion of EBITDA for any period
derived from the business activity referred to in the foregoing clause (a) to be
less than 85% of EBITDA for such period. None of the License Subsidiaries will
engage in any line or lines of business activity other than as expressly
contemplated in its respective Asset Use and Operating Agreement. The Borrower
will cause all Broadcast Licenses for Owned Stations at all times to be held in
the name of the respective License Subsidiary for the Owned Station being
operated under authority of such Broadcast Licenses. Notwithstanding the
foregoing, CRESAP shall be permitted to engage in the business referred to in
Section 9.27(a) hereof.
9.20 Transactions with Affiliates. Except as expressly
permitted by this Agreement, the Borrower will not, nor will it permit any of
its Subsidiaries to, directly or indirectly: (a) make any Investment in an
Affiliate; (b) transfer, sell, lease, assign or otherwise dispose of any
Property to an Affiliate; (c) merge into or consolidate with or purchase or
acquire Property from an Affiliate; or (d) enter into any other transaction
directly or indirectly with or for the benefit of an Affiliate (including,
without limitation, guarantees and assumptions of obligations of an Affiliate);
provided that (i) any Affiliate who is an individual may serve as a director,
officer or employee of the Borrower or any of its Subsidiaries and receive
reasonable compensation for his or her services in such capacity, (ii) the
Borrower and its Subsidiaries may enter into transactions (other than extensions
of credit by the Borrower or any of its Subsidiaries to an Affiliate) providing
for the leasing of Property, the rendering or receipt of services or the
purchase or sale of inventory and other Property in the ordinary course of
business (it being understood and agreed that no Acquisition shall be deemed to
be in the ordinary course of business) if the monetary or business consideration
arising therefrom would be substantially as advantageous to the Borrower and its
Subsidiaries as the monetary or business consideration which would obtain in a
comparable transaction with a Person not an Affiliate and (iii) the Borrower may
enter into and perform management agreements, cost sharing agreements and tax
sharing agreements with one or both Designated Companies having terms
satisfactory to the Majority Lenders.
9.21 Use of Proceeds. The Borrower will use the proceeds of
the Loans hereunder (a) to repay loans outstanding under the Existing Credit
Agreement, (b) to finance (i) the River City License Acquisitions, (ii) the
Approved Acquisitions,
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(iii) Other Acquisitions and (iv) transaction costs in connection with all of
the foregoing and (c) for its and its Subsidiaries' general corporate purposes
(in compliance with all applicable legal and regulatory requirements); provided
that neither the Agent nor any Lender shall have any responsibility as to the
use of any of such proceeds.
9.22 Certain Obligations Respecting Subsidiaries. The Borrower
will, and will cause each of its Subsidiaries to, take such action from time to
time as shall be necessary to ensure that each of its Subsidiaries is a Wholly
Owned Subsidiary. Without limiting the generality of the foregoing, none of the
Borrower nor any of its Subsidiaries shall sell, transfer or otherwise dispose
of any shares of stock in any Subsidiary owned by them, nor permit any
Subsidiary to issue any shares of stock of any class whatsoever to any Person
(other than to the Borrower or another Obligor and except as aforesaid). In the
event that any such additional shares of stock shall be issued by any Subsidiary
(except as aforesaid), the respective Obligor agrees forthwith to deliver to the
Agent pursuant to the Security Agreement the certificates evidencing such shares
of stock, accompanied by undated stock powers executed in blank and shall take
such other action as the Agent shall request to perfect the security interest
created therein pursuant to the Security Agreement. The Borrower will not permit
any of its Subsidiaries to enter into, after the date of this Agreement, any
indenture, agreement, instrument or other arrangement that, directly or
indirectly, prohibits or restrains, or has the effect of prohibiting or
restraining, or imposes materially adverse conditions upon, the incurrence or
payment of Indebtedness, the granting of Liens, the declaration or payment of
dividends, the making of loans, advances or Investments or the sale, assignment,
transfer or other disposition of Property.
9.23 Additional Subsidiary Guarantors. The Borrower will, and
will cause each of its Subsidiaries to, take such action, from time to time as
shall be necessary to ensure that all Subsidiaries of the Borrower are
Subsidiary Guarantors (and, thereby, "Obligors") hereunder and to pledge and
grant to the Agent for the benefit of the Lenders a security interest in all of
its respective Property to secure its respective obligations under its
respective guarantees pursuant to documentation substantially to the effect of
the Security Documents, mutatis mutandis, and otherwise reasonably satisfactory
to the Lenders and the Agent. Without limiting the generality of the foregoing,
in the event that the Borrower or any of its Subsidiaries shall form or acquire
any new Subsidiary after the date hereof, the Borrower or the respective
Subsidiary will cause such new Subsidiary to become a "Subsidiary Guarantor"
(and, thereby, an "Obligor") hereunder and to pledge and grant to the Agent for
the
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benefit of the Lenders a security interest on all of its Property to secure its
respective obligations under its respective guarantees pursuant to documentation
substantially to the effect of the Security Documents, mutatis mutandis, and
otherwise reasonably satisfactory to the Lenders and the Agent and to deliver
such proof of corporate action, incumbency of officers, opinions of counsel and
other documents as is consistent with those delivered by each Obligor pursuant
to Section 7.01 hereof upon the Restatement Effective Date or as any Lender or
the Agent shall have requested.
9.24 Modifications of Certain Documents. Without the prior
written consent of the Majority Lenders, the Borrower will not, and will not
permit any of its Subsidiaries to, consent to any modification, supplement,
waiver or termination of any of the provisions of (a) any instrument evidencing
or governing any of the Film Cash Payments unless such instrument is modified,
supplemented or waived at no cost (including, but not limited to interest costs)
to the Borrower or any of its Subsidiaries, (b) the Ancillary Documents, (c) the
River City Acquisition Documents, or (d) the PPI Guaranties, except that the
Borrower or any of its Subsidiaries may (i) amend any of the Asset Use and
Operating Agreements entered into prior to the date hereof to cause the same to
be substantially in the form of Exhibit F hereto, (ii) amend any of the Program
Services Agreements to extend the stated expiration date thereof and (iii)
modify or supplement any of the provisions of the instruments or documents
referred to in the foregoing clauses (a) through (c) herein if (A) such
modifications and supplements are not and will not be, in the reasonable
judgment of the Agent, materially adverse to the interests of the Borrower, its
Subsidiaries, any Lender or the Agent, and (B) the Borrower or such Subsidiary,
as the case may be, shall have furnished to the Agent, not later than the date
falling ten Business Days (or such shorter period as the Agent may agree) prior
to the date of such modification or supplement, a notice setting forth in
reasonable detail the terms and conditions thereof. The Borrower will not, and
will not permit any of its Subsidiaries to, designate any Indebtedness as
Designated Senior Indebtedness or Designated Guarantor Senior Indebtedness, in
each case under and as defined in either Senior Subordinated Note Indenture.
9.25 License Subsidiaries.
(a) Whenever the Borrower or any of its Subsidiaries acquires
any Broadcast License after the Restatement Effective Date, the Borrower shall
(without limiting its obligations under Section 9.23 hereof) cause such
acquisition to take place as follows in accordance with all applicable laws and
regulations, including, without limitation, pursuant to approvals from the
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FCC: (i) each Broadcast License so acquired shall be transferred to and held by
a separate Wholly-Owned Subsidiary of the Borrower that is a License Subsidiary,
provided that (x) the Broadcast Licenses for one or more radio broadcasting
stations serving a single "Area of Dominant Influence" as determined by Arbitron
Company may be held by any one or more License Subsidiaries that do not hold any
Broadcast License for any one or more television broadcasting stations and (y)
the Broadcast Licenses for WTTV-TV, a television broadcasting station licensed
to Bloomington, Indiana and serving the Bloomington area, and for WTTK-TV, a
television broadcasting station licensed to Kokomo, Indiana and serving the
Kokomo area, may be held in a single License Subsidiary, (ii) the related
operating assets shall be transferred to and held by an operating company that
is a Subsidiary of the Borrower (an "Operating Subsidiary"), (iii) such License
Subsidiary and such Operating Subsidiary shall enter into a Asset Use and
Operating Agreement, (iv) the Borrower shall deliver or cause to be delivered to
the Agent in pledge under the Security Agreement all capital stock of such
License Subsidiary and such Operating Subsidiary and (v) the Borrower shall
furnish to the Agent such evidence as may be reasonably requested by the Agent
or any Lender that the foregoing transactions have been so effected.
(b) Notwithstanding anything herein to the contrary, the
Borrower shall not permit any License Subsidiary to:
(i) create, incur, assume or have outstanding any Indebtedness
or other liabilities or obligations except for obligations under the
Basic Documents and an Asset Use and Operating Agreement;
(ii) own any right, franchise or other asset except for
Broadcast Licenses transferred to it by the Borrower of which it is a
direct, Wholly Owned Subsidiary and Broadcast Licenses acquired in the
ordinary course of business and rights under a Asset Use and Operating
Agreement;
(iii) enter into any transaction of merger, consolidation or
amalgamation, or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution);
(iv) create, incur or permit to exist any Lien (other than the
Lien created by the Security Agreement) on or in respect of, or sell,
lease, assign, transfer or otherwise dispose of, any of its rights,
franchises or other assets;
(v) engage in any business other than holding Broadcasting
Licenses and entering into a Asset Use and Operating Agreement; or
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(vi) make or hold any Investment.
(c) Notwithstanding anything in this Section 9.25 to the
contrary, the Borrower and the Subsidiary Guarantors shall not be obligated to
effect any transaction contrary to law or the rules, regulations or policies of
the FCC, and shall be permitted to unwind the transactions contemplated by this
Section 9.25 to the extent necessary to comply with a ruling of the FCC;
provided that the Borrower shall and shall cause each of the Subsidiary
Guarantors to use its best efforts to carry out the provisions of this Section
9.25 consistent with all laws and all rules, regulations and policies of the
FCC, including, without limitation, pursuing any necessary approval or consents
of the FCC.
9.26 Equity Issuance. The Borrower will not effect an Equity
Issuance; provided that the Borrower may (a) (i) issue its Class A Common Stock
as contemplated by the Baker Stock Option Agreement, the Corporate Employee
Stock Option Agreement, the Station Employee Stock Option Agreement and the
Designated Employee Stock Option Plan and (ii) make an Equity Issuance pursuant
to the Columbus Option Agreement; (b) issue Other Preferred Stock (and any of
its Class A Common Stock upon the conversion of any Other Preferred Stock),
provided that the Net Available Proceeds of such Other Preferred Stock shall be
applied to the prepayment of Revolving Credit Loans as provided in Section
2.09(b)(ii) hereof; and (c) make any other Equity Issuance so long as, in the
case of this clause (c) only, (i) such Equity Issuance is an Equity Public
Offering, (ii) after giving effect thereto, no Default shall have occurred and
be continuing and (iii) the Net Available Proceeds thereof shall be applied
within the Specified Number of days after receipt by the Borrower thereof, to
finance (w) the purchase by the Borrower of the Seller Stock and transaction
expenses in connection therewith, (x) the consummation of any Acquisition and
transaction expenses in connection with such Acquisition, (y) the redemption of
the Existing Preferred Stock as permitted by Section 9.09(g) hereof or the New
PPI Preferred Stock as permitted by Section 9.09(h) hereof or (z) any
combination of the foregoing clauses (w), (x) and (y), provided that 80% of any
portion of such Net Available Proceeds not so applied shall be applied to the
prepayment of Loans as provided in Section 2.09(b)(i) hereof.
9.27 CRESAP. Notwithstanding anything contained herein to the
contrary, prior to the making of the CRESAP Investment:
(a) The Borrower shall not permit CRESAP to engage in any
business activity other than employing commercial
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airplane pilots and contracting the services of such pilots to other
Persons;
(b) subject to the proviso to Section 9.27(e) hereof, the
Borrower shall not, and shall not permit its Subsidiaries to, transfer
cash or other Property to CRESAP after the Restatement Effective Date,
howsoever such transfer may be characterized or effected; provided that
the Borrower and its Subsidiaries may pay to CRESAP, in cash, fees not
exceeding $695,500 in any calendar year;
(c) neither the Borrower nor any of its Subsidiaries shall
become obligated to CRESAP in any manner whatsoever except with respect
to the payment of fees permitted by the preceding paragraph (b);
(d) the Borrower shall not permit CRESAP to incur Indebtedness
in an aggregate principal amount exceeding $1,500,000 at any one time
outstanding; and
(e) without limiting the effect of clause (b) of this Section
9.27, neither the Borrower nor any of its Subsidiaries shall make, hold
or maintain any Investment (including, without limitation, any
Investment made before the Restatement Effective Date) in CRESAP other
than the capital stock of CRESAP held by the Borrower on the
Restatement Effective Date; provided that the Borrower or any one of
its Subsidiaries may make a single Investment in CRESAP not exceeding
$1,000,000, the proceeds of which shall be used by CRESAP immediately
upon receipt thereof to repay in full all Indebtedness of CRESAP
outstanding on the date of the such Investment.
9.28 Program Services Agreements. The Borrower will not, and
will not permit any of its Subsidiaries to, enter into any local marketing
agreement, time brokerage agreement, program services agreement or any similar
agreement providing for:
(a) the Borrower or any of its Subsidiaries to program or sell
advertising time on all or any portion of the broadcast time of any
television or radio station; or
(b) any Person other than the Borrower or any of its
Subsidiaries to program or sell advertising time on all or any portion
of the broadcast time of any Station, except for KBLA(AM), a radio
broadcasting station licensed to Santa Monica, California and serving
the Santa Monica area.
Notwithstanding the preceding sentence, the Borrower or any of its Subsidiaries
(other than License Subsidiaries) may enter into
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any Program Services Agreement with any other Person (including, without
limitation, Affiliates) provided that the aggregate amount payable by the
Borrower and its Subsidiaries under all Program Services Agreements during any
fiscal year of the Borrower (beginning with its fiscal year ending in 1997),
excluding Permitted Termination Payments (as defined in the next sentence),
shall not exceed the Maximum Amount (as defined in the next sentence) for such
fiscal year. For purposes of the preceding sentence, (i) a "Permitted
Termination Payment" shall mean a payment owing by the Borrower or any of its
Subsidiaries by reason of the early termination of a Program Services Agreement
relating to any of the television stations referred to below provided that the
amount of such payment shall not exceed the amount set forth below opposite the
name of such television station:
Station Termination Payment
------- -------------------
WVTV-TV $5,500,000
WNUV-TV $5,500,000
WRDC-TV $6,500,000
WABM-TV $7,500,000
WTTE-TV $5,000,000
WFBC-TV $5,000,000
KRRT-TV $5,000,000
Other $5,000,000; and
(ii) the "Maximum Amount" for any fiscal year of the Borrower shall mean (x) for
its fiscal year ending in 1997, $25,000,000 and (y) for any of its fiscal years
thereafter, an amount equal to the Maximum Amount for its preceding fiscal year
increased (or decreased, as the case may be) by the percentage of the increase
(or decrease, as the case may be) in the Consumer Price Index for all Urban
Consumers (as published by the U.S. Department of Labor) for the twelve-month
period ending in September of such preceding fiscal year. As used in this
Section 9.29, (v) "WABM-TV" shall mean WABM-TV, Channel 68, a television
broadcasting station licensed to Birmingham, Alabama and serving the Birmingham
area, (w) "WNUV-TV" shall mean WNUV-TV, a television broadcasting station
licensed to Baltimore, Maryland and serving the Baltimore area, (x) "WRDC-TV"
shall mean WRDC-TV, Channel 28, a television broadcasting station licensed to
Raleigh-Durham, North Carolina and serving the Raleigh-Durham area, (y)
"WVTV-TV" shall mean WVTV-TV, a broadcasting television station licensed to
Milwaukee, Wisconsin and serving the Milwaukee area, and (z) "Other" means any
other broadcasting television station sold by the Borrower or any of its
Subsidiaries as permitted by Section 9.05(d)(iii) hereof.
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9.29 Exercise of River City Options. Not later than 90 days
after the issuance by the FCC of an order approving the assignment or transfer
of control to the Borrower or any of its Subsidiaries of Broadcast Licenses for
any "Station" referred to in the River City Group I Option Agreement or the
"Columbus Station" referred to in the Columbus Option Agreement (whether or not
such order is subject to reconsideration or review by the FCC or by any court or
administrative body), the Borrower shall consummate the applicable River City
License Acquisition in accordance with Section 9.05(d)(i) hereof.
9.30 Limitation on Cure Rights. The Borrower will not, and
will not permit any of its Subsidiaries to, enter into any agreement (a "Cure
Right Agreement") with or for the benefit of any other Person that limits the
ability of the Borrower or such Subsidiary to exercise any rights or remedies
under any agreement (an "Acquisition Agreement") pursuant to which an
Acquisition is to be consummated; provided that the Borrower or any of its
Subsidiaries may enter into or suffer to exist any Cure Right Agreement for the
benefit of the lenders to Glencairn or to River City, as the case may be, to the
extent that such lenders (or an agent on behalf of such lenders) has a security
interest in the Acquisition Agreement to which such Cure Right Agreement
relates.
Section 10. Events of Default.
10.01 Events of Default; Remedies. If one or more of the
following events (herein called "Events of Default") shall occur and be
continuing:
(a) Any Obligor shall default in the payment when due (whether
at stated maturity or upon mandatory or optional prepayment) of any
principal of or interest on any Loan, or any Reimbursement Obligation,
any fee or any other amount payable by it hereunder or under any other
Basic Document; or
(b) Any of the Obligors shall default in the payment when due
of any principal of or interest on any of its other Indebtedness
aggregating $5,000,000 or more, or in the payment when due of any
amount under any Interest Rate Protection Agreement for a notional
principal amount exceeding $5,000,000; or any event specified in any
note, agreement, indenture or other document evidencing or relating to
any such Indebtedness or any event specified in any Interest Rate
Protection Agreement shall occur if the effect of such event is to
cause, or (with the giving of any notice or the lapse of time or both)
to permit the holder or holders of such Indebtedness (or a trustee or
agent on
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behalf of such holder or holders) to cause, such Indebtedness to become
due, or to be prepaid in full (whether by redemption, purchase, offer
to purchase or otherwise), prior to its stated maturity or to have the
interest rate thereon reset to a level so that securities evidencing
such Indebtedness trade at level specified in relation to the par value
thereof or, in the case of an Interest Rate Protection Agreement, to
permit the payments owing under such Interest Rate Protection Agreement
to be liquidated; or
(c) Any representation, warranty or certification made or
deemed made in any Basic Document (or in any modification or supplement
thereto) by any of the Credit Parties or any certificate furnished to
any Lender or the Agent pursuant to the provisions thereof, shall prove
to have been false or misleading as of the time made or furnished in
any material respect; or
(d) Any of the Credit Parties shall default in the performance
of any of its obligations under (i) any of Sections 9.01(f), 9.05
through 9.20, 9.25, 9.28 or 9.29 hereof, (ii) either of Section 4.02 or
5.02 of the Security Agreement, (iii) either of Section 5.02 and 7.02
of the Affiliate Guarantee or (iv) any provision of any of the
Mortgages; or any of the Credit Parties shall default in the
performance of any of its other obligations in this Agreement or any
other Basic Document and such default shall continue unremedied for a
period of ten days after notice thereof to the Borrower by the Agent or
any Lender (through the Agent); or
(e) Any of the Obligors or Material Third-Party Licensees
shall admit in writing its inability to, or be generally unable to, pay
its debts as such debts become due; or
(f) Any of the Obligors or Material Third-Party Licensees,
shall (i) apply for or consent to the appointment of, or the taking of
possession by, a receiver, custodian, trustee, examiner or liquidator
of itself or of all or a substantial part of its Property, (ii) make a
general assignment for the benefit of its creditors, (iii) commence a
voluntary case under the Bankruptcy Code, (iv) file a petition seeking
to take advantage of any other law relating to bankruptcy, insolvency,
reorganization, liquidation, dissolution, arrangement or winding-up, or
composition or readjustment of debts, (v) fail to controvert in a
timely and appropriate manner, or acquiesce in writing to, any petition
filed against it in an involuntary case under the
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Bankruptcy Code, or (vi) take any corporate action for the purpose of
effecting any of the foregoing; or
(g) A proceeding or case shall be commenced, without the
application or consent of any of the Obligors or Material Third-Party
Licensees in any court of competent jurisdiction, seeking (i) its
liquidation, reorganization, dissolution, arrangement or winding-up, or
the composition or readjustment of its debts, (ii) the appointment of a
trustee, receiver, custodian, examiner, liquidator or the like of such
Obligor, River City or such Subsidiary, as the case may be, or of all
or any substantial part of its Property, or (iii) similar relief in
respect of such Obligor under any law relating to bankruptcy,
insolvency, reorganization, winding-up, or composition or adjustment of
debts, and such proceeding or case shall continue undismissed, or an
order, judgment or decree approving or ordering any of the foregoing
shall be entered and continue unstayed and in effect, for a period of
60 or more days; or an order for relief against such Obligor, River
City or such Subsidiary, as the case may be, shall be entered in an
involuntary case under the Bankruptcy Code; or
(h) A final judgment or judgments for the payment of money in
excess of $5,000,000 in the aggregate shall be rendered by one or more
courts, administrative tribunals or other bodies having jurisdiction
against any of the Obligors and the same shall not be discharged (or
provision shall not be made for such discharge), or a stay of execution
thereof shall not be procured, within 30 days from the date of entry
thereof and the relevant Obligor shall not, within said period of 30
days, or such longer period during which execution of the same shall
have been stayed, appeal therefrom and cause the execution thereof to
be stayed during such appeal; or
(i) An event or condition specified in Section 9.01(f) hereof
shall occur or exist with respect to any Plan or Multiemployer Plan
and, as a result of such event or condition, together with all other
such events or conditions, the Borrower or any ERISA Affiliate shall
incur or in the opinion of the Majority Lenders shall be reasonably
likely to incur a liability to a Plan, a Multiemployer Plan or PBGC (or
any combination of the foregoing) which would constitute, in the
determination of the Majority Lenders, a Material Adverse Effect; or
(j) During any period of 25 consecutive calendar months,
individuals who were directors of the Borrower on
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the first day of such period shall no longer constitute a majority of
the board of directors of the Borrower; or
(k) Except for expiration in accordance with its terms, any of
the Security Documents shall be terminated or shall cease to be in full
force and effect, for whatever reason; or
(l) Any Broadcast License (other than an Immaterial Broadcast
License) shall be terminated, forfeited or revoked or shall fail to be
renewed for any reason whatsoever, or shall be modified in a manner
materially adverse to the Borrower, or for any other reason (i) any
License Subsidiary shall at any time cease to be a licensee under any
Broadcast License (other than an Immaterial Broadcast License) relating
to the Owned Station to which such Broadcast Licenses have been granted
or the Subsidiary of the Borrower that owns 100% of the capital stock
of such License Subsidiary shall otherwise fail to have all required
authorizations, licenses and permits to construct, own, operate or
promote such Owned Station, or (ii) any Material Third-Party Licensee
for any Contract Station shall fail to preserve and maintain its legal
existence or any of its material rights, privileges or franchises
(including the Broadcast Licenses (other than an Immaterial Broadcast
Licenses) for such Contract Station (other than by reason of such
Contract Station becoming an Owned Station)); or
(m) With respect to any Owned Station, the License Subsidiary
with respect to such Owned Station shall at any time cease to be a
Wholly Owned Subsidiary of the Subsidiary of the Borrower that owns the
operating assets related to the Broadcast Licenses for such Owned
Station; or the Borrower shall cease at any time to own all of the
issued shares of the Capital Stock of any such Subsidiary; or
(n) Any transfer of any common stock of the Borrower or any of
its Subsidiaries or any right to receive such common stock or any other
interest in the Borrower or any of its Subsidiaries shall be
transferred and either (i) such transfer shall fail to comply with any
applicable provision of the Federal Communications Act of 1934, as
amended from time to time, or any applicable FCC rule, regulation or
policy, or (ii) the Agent shall not have received prior to such
transfer any opinion reasonably satisfactory to the Majority Lenders of
counsel reasonably satisfactory to the Majority Lenders to the effect
that such transfer does so comply; or
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(o) the Smith Brothers shall cease at any time collectively to
own, legally or beneficially, shares of stock of the Borrower
representing at least 51% of the voting power and economic value of the
Borrower (other than, in any case referred to in this paragraph (o), by
reason of death or disability); or
(p) the Borrower shall deliver any Change of Control Purchase
Notice under and as defined in any Senior Subordinated Note Indenture,
either Designated Company shall deliver any similar notice under the
indenture pursuant to which the KDSM Senior Debentures or the New PPI
Senior Debentures are issued, or any event or circumstance shall occur
that results in a change of ownership or control over the board of
directors of the Borrower and that would permit the holders of the KDSM
Senior Debentures (or any of them) or any agent or trustee acting on
their behalf, or the holders of the New PPI Senior Debentures (or any
of them) or any agent or trustee acting on their behalf, to exercise
remedies in respect thereof; or
(q) any Program Services Agreement shall be terminated prior
to its stated expiration date and the Obligor party thereto shall not
have entered into a substantially identical agreement relating to the
Contract Station to which such Program Services Agreement relates or
any party to any Program Services Agreement shall default in any of its
obligations thereunder; or
(r) any party to any of the River City Acquisition Documents
shall default in the performance of any of its obligations thereunder;
or
(s) any party to a Consent and Agreement shall default in the
performance of any of its obligations thereunder;
(t) there shall have been asserted against any Credit Party an
Environmental Claim that, in the judgment of the Majority Lenders, is
reasonably likely to be determined adversely to the affected Credit
Parties, and the amount thereof is, singly or in the aggregate,
reasonably likely to have a Material Adverse Effect (insofar as such
amount is payable by any of the Credit Parties by after deducting any
portion thereof that is reasonably expected to be paid by other
creditworthy Persons jointly and severally liable thereof); or
(u) the Preferred Participation Interests shall not be
redeemed by the Trust on or prior to the stated maturity date thereof
or the New PPI Preferred Participation
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Interests shall not be redeemed by the New PPI Trust on or prior to
the stated maturity date thereof;
THEREUPON: (i) in the case of an Event of Default other than one referred to in
clause (f) or (g) of this Section 10.01 with respect to any Obligor, the Agent
may, by notice to the Borrower, terminate the Commitments and/or declare the
principal amount then outstanding of, and the accrued interest on, the Loans,
the Reimbursement Obligations and all other amounts payable by the Obligors
hereunder and under the Notes (if any) (including, without limitation, any
amounts payable under Section 5.05 or 5.06 hereof) to be forthwith due and
payable, whereupon such amounts shall be immediately due and payable (provided
that if so requested by the Majority Revolving Credit Lenders, the Majority
Tranche A Lenders or the Majority Tranche C Lenders, the Agent shall take such
action with respect to the Commitment and/or Loans of any Class and other
amounts in respect thereof (including, in the case of the Revolving Credit
Commitments and/or the Revolving Credit Loans, the Reimbursement Obligations) to
the extent held by or owed to the relevant Lenders) without presentment, demand,
protest or other formalities of any kind, all of which are hereby expressly
waived by each Obligor; and (ii) in the case of the occurrence of an Event of
Default referred to in clause (f) or (g) of this Section 10.01 with respect to
any Obligor, the Commitments shall automatically be terminated and the principal
amount then outstanding of, and the accrued interest on, the Loans, the
Reimbursement Obligations and all other amounts payable by the Obligors
hereunder and under the Notes (if any) (including, without limitation, any
amounts payable under Section 5.05 or 5.06 hereof) shall automatically become
immediately due and payable without presentment, demand, protest or other
formalities of any kind, all of which are hereby expressly waived by each
Obligor.
Without limiting the rights of the Lenders under the preceding paragraph of this
Section 10.01, upon the occurrence and during the continuance of any Event of
Default, the Borrower agrees that it shall, if requested by the Agent or the
Majority Revolving Credit Lenders through the Agent (and, in the case of any
Event of Default referred to in clause (f) or (g) of this Section 10.01 with
respect to the Borrower, forthwith, without any demand or the taking of any
other action by the Agent or such Majority Revolving Credit Lenders) provide
cover for the Letter of Credit Liabilities by paying to the Agent immediately
available funds in an amount equal to the then aggregate undrawn face amount of
all Letters of Credit, which funds shall be held by the Agent in the Collateral
Account as collateral security for the Letter of Credit Liabilities and be
subject to withdrawal only as therein provided.
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10.02 Collateral Account.
(a) The Borrower hereby establishes with the Agent a separate
cash collateral account (the "Collateral Account") in the name and under the
control of the Agent into which there shall be deposited from time to time such
amounts as required to be paid to the Agent under Section 2.09, 3.01 or 10.01
hereof.
(b) As collateral security for the prompt payment in full when
due (whether at stated maturity, upon mandatory or optional prepayment, pursuant
to requirements for cash collateral or otherwise) of the Reimbursement
Obligations, interest thereon, and all obligations of the Borrower under the
Letter of Credit Documents relating to Letters of Credit and under Section
2.10(g) hereof (whether or not then outstanding or due and payable) (such
obligations being herein collectively called the "Secured Letter of Credit
Obligations"), the Borrower hereby pledges and grants to the Agent, for the
benefit of the Issuing Bank, the Revolving Credit Lenders and the Agent as
provided herein, a security interest in all of its right, title and interest in
and to the Collateral Account and the balances from time to time in the
Collateral Account (including the investments and reinvestments therein provided
for below). The balances from time to time in the Collateral Account shall not
constitute payment of any Secured Letter of Credit Obligations until applied by
the Agent as provided herein. Anything in this Agreement to the contrary
notwithstanding, funds held in the Collateral Account shall be subject to
withdrawal only as provided in Section 2.09(f) hereof and in this Section 10.02.
(c) Amounts on deposit in the Collateral Account shall be
invested and reinvested by the Agent in such Permitted Investments as the
Borrower shall determine in its sole discretion, provided that (i) failing
receipt by the Agent of instructions from the Borrower, the Agent may invest and
reinvest such amounts as the Agent shall determine in its sole discretion and
(ii) the approval of the Agent shall be required for the investments and
reinvestments to be made during any period while a Default has occurred and is
continuing. All such investments and reinvestments shall be held in the name and
be under the control of the Agent.
(d) If an Event of Default shall have occurred and be
continuing, the Agent may (and, if instructed by the Majority Revolving Credit
Lenders, shall) in its (or their) discretion at any time and from time to time
elect to liquidate any such investments and reinvestments and credit the
proceeds thereof to the Collateral Account and apply or cause to be applied such
proceeds and any other balances in the Collateral Account to the
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payment of any of the Secured Letter of Credit Obligations due and payable.
(e) If (i) no Default has occurred and is continuing and (ii)
all of the Secured Letter of Credit Obligations have been paid in full, the
Agent shall, from time to time, at the request of the Borrower, deliver to the
Borrower, against receipt but without any recourse, warranty or representation
whatsoever, such of the balances in the Collateral Account as exceed the
aggregate undrawn face amount of the Letters of Credit. When all of the Secured
Letter of Credit Obligations shall have been paid in full and all Letters of
Credit have expired or been terminated, the Agent shall promptly deliver to the
Borrower, against receipt but without any recourse, warranty or representation
whatsoever, the balances remaining in the Collateral Account.
(f) The Borrower shall pay to the Agent from time to time such
fees as the Agent normally charges for similar services in connection with the
Agent's administration of the Collateral Account and investments and
reinvestments of funds therein.
Section 11. The Agent.
11.01 Appointment, Powers and Immunities. Each Lender hereby
irrevocably appoints and authorizes the Agent to act as its agent hereunder and
under the other Basic Documents with such powers as are specifically delegated
to the Agent by the terms of this Agreement and of the other Basic Documents,
together with such other powers as are reasonably incidental thereto. The Agent
(which term as used in this sentence and in Section 11.05 and the first sentence
of Section 11.06 hereof shall include reference to its affiliates and its own
and its affiliates' officers, directors, employees and agents):
(a) shall have no duties or responsibilities except those
expressly set forth in this Agreement and in the other Basic Documents,
and shall not by reason of this Agreement or any other Basic Document
be a trustee for any Lender;
(b) shall not be responsible to the Lenders for any recitals,
statements, representations or warranties contained in this Agreement
or in any other Basic Document, or in any certificate or other document
referred to or provided for in, or received by any of them under, this
Agreement or any other Basic Document, or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Basic Document or any other document referred to
or provided for herein or therein or for any failure by the Borrower or
any other
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Person to perform any of its obligations hereunder or thereunder;
(c) shall not, except to the extent expressly instructed by
the Majority Lenders with respect to collateral security under the
Security Documents, be required to initiate or conduct any litigation
or collection proceedings hereunder or under any other Basic Document;
and
(d) shall not be responsible for any action taken or omitted
to be taken by it hereunder or under any other Basic Document or under
any other document or instrument referred to or provided for herein or
therein or in connection herewith or therewith, except for its own
gross negligence or willful misconduct.
The Agent may employ agents and attorneys-in-fact and shall not be responsible
for the negligence or misconduct of any such agents or attorneys-in-fact
selected by it in good faith. The Agent may deem and treat the payee of any Note
as the holder thereof for all purposes hereof unless and until a notice of the
assignment or transfer thereof shall have been filed with the Agent, together
with the consent of the Borrower to such assignment or transfer.
11.02 Reliance by Agent. The Agent shall be entitled to rely
upon any certification, notice or other communication (including any thereof by
telephone, telegram or cable) believed by it to be genuine and correct and to
have been signed or sent by or on behalf of the proper Person or Persons, and
upon advice and statements of legal counsel, independent accountants and other
experts selected by the Agent. As to any matters not expressly provided for by
this Agreement or any other Basic Document, the Agent shall in all cases be
fully protected in acting, or in refraining from acting, hereunder or thereunder
in accordance with instructions given by the Majority Lenders or, if provided
herein, in accordance with the instructions given by all of the Lenders as is
required in such circumstance, and such instructions of such Lenders and any
action taken or failure to act pursuant thereto shall be binding on all of the
Lenders.
11.03 Defaults. The Agent shall not be deemed to have
knowledge or notice of the occurrence of a Default (other than the non-payment
of principal of or interest on Loans or of commitment fees) unless the Agent has
received notice from a Lender or the Borrower specifying such Default and
stating that such notice is a "Notice of Default". In the event that the Agent
receives such a notice of the occurrence of a Default, the Agent shall give
prompt notice thereof to the Lenders (and shall give each Lender prompt notice
of each such non-payment). The
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Agent shall (subject to Section 11.07 hereof) take such action with respect to
such Default as shall be directed by the Majority Lenders or, if provided
herein, the Majority Revolving Credit Lenders, the Majority Tranche A Lenders or
the Majority Tranche C Lenders, provided that, unless and until the Agent shall
have received such directions, the Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such
Default as it shall deem advisable in the best interest of the Lenders except to
the extent that this Agreement expressly requires that such action be taken, or
not be taken, only with the consent or upon the authorization of the Majority
Lenders, the Majority Revolving Credit Lenders, the Majority Tranche A Lenders,
the Majority Tranche C Lenders, all of the Lenders with respect to any Class of
Loans or all of the Lenders.
11.04 Rights as a Lender. With respect to its Commitment(s)
and the Loans made by it, Chase (and any successor acting as Agent) in its
capacity as a Lender hereunder shall have the same rights and powers hereunder
as any other Lender and may exercise the same, and its rights as Issuing Bank
hereunder, as though it were not acting as the Agent, and the term "Lender" or
"Lenders" shall, unless the context otherwise indicates, include the Agent in
its individual capacity. Chase (and any successor acting as Agent) and its
affiliates may (without having to account therefor to any Lender) accept
deposits from, lend money to and generally engage in any kind of banking, trust
or other business with the Obligors (and any of their Subsidiaries or
Affiliates) as if it were not acting as the Agent, and Chase (and any such
successor) and its affiliates may accept fees and other consideration from the
Obligors for services in connection with this Agreement or otherwise without
having to account for the same to the Lenders.
11.05 Indemnification. The Lenders agree to indemnify the
Agent (to the extent not reimbursed under Section 12.03 hereof, but without
limiting the obligations of the Borrower under said Section 12.03, and including
in any event any payments under any indemnity which the Agent is required to
issue to any bank referred to in Section 4.02 of the Security Agreement and
Section 5.02 of the Affiliate Guarantee Agreement to which remittances in
respect of Accounts, as defined therein, are to be made), ratably in accordance
with their respective Credit Exposures, for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind and nature whatsoever which may be imposed
on, incurred by or asserted against the Agent (including by any Lender) arising
out of or by reason of any investigation or in any way relating to or arising
out of this Agreement or any other Basic Document or any other documents
contemplated by or
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referred to herein or therein or the transactions contemplated hereby
(including, without limitation, the costs and expenses which the Borrower is
obligated to pay under Section 12.03 hereof, and including also any payments
under any indemnity which the Agent is required to issue to any bank referred to
in Section 4.02 of the Security Agreement and Section 5.02 of the Affiliate
Guarantee Agreement to which remittances in respect of Accounts, as defined
therein, are to be made, but excluding, unless a Default has occurred and is
continuing, normal administrative costs and expenses incident to the performance
of its agency duties hereunder) or the enforcement of any of the terms hereof or
thereof or of any such other documents, provided that no Lender shall be liable
for any of the foregoing to the extent they arise from the gross negligence or
willful misconduct of the party to be indemnified.
11.06 Non-Reliance on Agent and Other Lenders. Each Lender
agrees that it has, independently and without reliance on the Agent or any other
Lender, and based on such documents and information as it has deemed
appropriate, made its own credit analysis of the Borrower and its Subsidiaries
and decision to enter into this Agreement and that it will, independently and
without reliance upon the Agent or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own analysis and decisions in taking or not taking action under this Agreement
or any of the other Basic Documents. The Agent shall not be required to keep
itself informed as to the performance or observance by any Obligor of this
Agreement or any of the other Basic Documents or any other document referred to
or provided for herein or therein or to inspect the Properties or books of the
Borrower or any of its Subsidiaries. Except for notices, reports and other
documents and information expressly required to be furnished to the Lenders by
the Agent hereunder or under the Security Documents, the Agent shall not have
any duty or responsibility to provide any Lender with any credit or other
information concerning the affairs, financial condition or business of the
Borrower or any of its Subsidiaries (or any of their affiliates) which may come
into the possession of the Agent or any of its affiliates.
11.07 Failure to Act. Except for action expressly required of
the Agent hereunder and under the other Basic Documents, the Agent shall in all
cases be fully justified in failing or refusing to act hereunder and thereunder
unless it shall receive further assurances to its satisfaction from the Lenders
of their indemnification obligations under Section 11.05 hereof against any and
all liability and expense which may be incurred by it by reason of taking or
continuing to take any such action.
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11.08 Resignation or Removal of Agent. Subject to the
appointment and acceptance of a successor Agent as provided below, the Agent may
resign at any time by giving notice thereof to the Lenders and the Borrower, and
the Agent may be removed at any time with or without cause by the Majority
Lenders. Upon any such resignation or removal, the Majority Lenders shall have
the right to appoint a successor Agent. If no successor Agent shall have been so
appointed by the Majority Lenders and shall have accepted such appointment
within 30 days after the retiring Agent's giving of notice of resignation or the
Majority Lenders' removal of the retiring Agent, then the retiring Agent may, on
behalf of the Lenders, appoint a successor Agent, which shall be a bank which
has an office in New York, New York with a combined capital and surplus of at
least $500,000,000. Upon the acceptance of any appointment as Agent hereunder by
a successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations
hereunder. After any retiring Agent's resignation or removal hereunder as Agent,
the provisions of this Section 11 shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was acting as
the Agent.
11.09 Consents under Certain Documents. Except as otherwise
provided in Section 12.04 hereof with respect to this Agreement, the Agent may,
with the prior consent of the Majority Lenders (but not otherwise), consent to
any modification, supplement or waiver under any of the Basic Documents or under
either Senior Subordinated Note Indenture, provided that, without the prior
consent of each Lender, the Agent shall not (except as provided herein or in the
Security Documents) release any guarantor from its liability in respect of its
guarantee, release any collateral or otherwise terminate any Lien under any
Basic Document providing for collateral security, or agree to additional
obligations being secured by such collateral security (unless, but subject to
the prior consent of the Majority Lenders as aforesaid, the Lien for such
additional obligations shall be junior to the Lien in favor of the other
obligations secured by such Basic Document), except that no such consent shall
be required, and the Agent is hereby authorized to (i) release any Lien covering
Property which is the subject of a disposition of Property permitted hereunder
or to which the Majority Lenders have consented; and (ii) release any Mortgages
executed and delivered by Cunningham, KIG or GDLP.
11.10 Collateral Sub-Agents. Each Lender by its execution and
delivery of this Agreement agrees, as contemplated by Section 4.03 of the
Security Agreement, that, in the event it shall hold any Permitted Investments
referred to therein, such
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Permitted Investments shall be held in the name and under the control of such
Lender, and such Lender shall hold such Permitted Investments as a collateral
sub-agent for the Agent thereunder. The Borrower by its execution and delivery
of this Agreement hereby consents to the foregoing.
Section 12. Miscellaneous.
12.01 Waiver. No failure on the part of the Agent or any
Lender to exercise and no delay in exercising, and no course of dealing with
respect to, any right, power or privilege under this Agreement or any Note shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power or privilege under this Agreement or any Note preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The remedies provided herein are cumulative and not exclusive of any remedies
provided by law.
Each Obligor irrevocably waives, to the fullest extent
permitted by applicable law, any claim that any action or proceeding commenced
by the Agent or any Lender relating in any way to this Agreement should be
dismissed or stayed by reason, or pending the resolution, of any action or
proceeding commenced by any Obligor relating in any way to this Agreement
whether or not commenced earlier. To the fullest extent permitted by applicable
law, the Obligors shall take all measures necessary for any such action or
proceeding commenced by the Agent or any Lender to proceed to judgment prior to
the entry of judgment in any such action or proceeding commenced by any Obligor.
12.02 Notices. All notices and other communications provided
for herein and under the Security Documents (including, without limitation, any
modifications of, or waivers or consents under, this Agreement) shall be given
or made in writing (including, without limitation, telecopy) delivered to the
intended recipient at the "Address for Notices" specified below its name on the
signature pages hereof (or below the name of the Borrower, in the case of any
Subsidiary Guarantor); or, as to any party, at such other address as shall be
designated by such party in a notice to each other party. Except as otherwise
provided in this Agreement, all such communications shall be deemed to have been
duly given when transmitted by telecopier or personally delivered or, in the
case of a mailed notice, upon receipt, in each case given or addressed as
aforesaid.
12.03 Expenses, Etc. The Borrower agrees to pay or reimburse
each of the Lenders and the Agent for paying: (a) all reasonable out-of-pocket
costs and expenses of the Agent (including, without limitation, the reasonable
fees and expenses of Milbank, Tweed, Hadley & McCloy, special New York counsel
to
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Chase), in connection with (i) the negotiation, preparation, execution and
delivery of this Agreement and the other Basic Documents and the making of the
Loans hereunder, (ii) the negotiation or preparation of any amendment,
modification or waiver of any of the terms of this Agreement or any of the other
Basic Documents (whether or not consummated), (iii) the consummation of any
Acquisition, (iv) compliance by the Borrower with any of Sections 9.23 and 9.25
hereof; (b) all reasonable costs and expenses of the Lenders and the Agent
(including reasonable counsels' fees and expenses) in connection with (i) any
Default and any enforcement or collection proceedings resulting therefrom,
including, without limitation, all manner of participation in or other
involvement with (x) bankruptcy, insolvency, receivership, foreclosure, winding
up or liquidation proceedings, (y) judicial or regulatory proceedings and (z)
workout, restructuring or other negotiations or proceedings (whether or not the
workout, restructuring or transaction contemplated thereby is consummated) and
(ii) the enforcement of this Section 12.03; and (c) all transfer, stamp,
documentary, mortgage, mortgage recording, intangible or other similar taxes,
assessments or charges levied by any governmental or revenue authority in
respect of this Agreement or any of the other Basic Documents or any other
document referred to herein or therein and all costs, expenses, taxes,
assessments and other charges incurred in connection with any filing,
registration, recording or perfection of any security interest contemplated by
this Agreement or any other Basic Document or any other document referred to
herein or therein.
The Borrower hereby agrees to indemnify the Agent, the
Lenders, the Affiliates of the Lenders and their respective directors, officers,
employees and agents for, and hold each of them harmless against, any and all
losses, liabilities, claims, damages or expenses incurred by any of them
(including any and all losses, liabilities, claims, damages or expenses incurred
by the Agent to any Lender, whether or not the Agent or any Lender is a party
thereto) arising out of or by reason of any investigation or litigation or other
proceedings (including any threatened investigation or litigation or other
proceedings) relating to the extensions of credit hereunder or any actual or
proposed use by the Borrower or any of its Subsidiaries of the proceeds of any
of the extensions of credit hereunder, including, without limitation, the
reasonable fees and disbursements of counsel incurred in connection with any
such investigation or litigation or other proceedings (but excluding any such
losses, liabilities, claims, damages or expenses incurred by reason of the gross
negligence or willful misconduct of the Person to be indemnified). Without
limiting the generality of the foregoing, the Borrower will indemnify the Agent
for any payments which the Agent is required to make under any indemnity issued
to any bank
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referred to in Section 4.02 of the Security Agreement to which remittances in
respect to Accounts, as defined therein, are to be made and indemnify the Agent
and each Lender from, and hold the Agent and each Lender harmless against, any
losses, liabilities, claims, damages or expenses described in the preceding
sentence (including any Lien filed against any Property covered by the
Mortgage(s) in favor of any governmental entity, but excluding, as provided in
the preceding sentence, any loss, liability, claim, damage or expense incurred
by reason of the gross negligence or willful misconduct of the Person to be
indemnified) arising as a result of any representation, warranty or
certification made or deemed to be made in Section 8.13 hereof and proved to
have been false or misleading as of the time made or arising under any
Environmental Law as a result of the past, present or future operations of the
Borrower or any of its Subsidiaries (or any predecessor in interest to the
Borrower or any of its Subsidiaries), or the past, present or future condition
of any site or facility owned, operated or leased at any time by the Borrower or
any of its Subsidiaries (or any such predecessor in interest), or any Release or
threatened Release of any Hazardous Materials at or from any such site or
facility, including any such Release or threatened Release that shall occur
during any period when the Agent or any Lender shall be in possession of any
such site or facility following the exercise by the Agent or any Lender of any
of its rights and remedies hereunder or under any of the Security Documents.
12.04 Amendments, Etc. Except as otherwise expressly provided
in this Agreement, any provision of this Agreement may be amended or modified
only by an instrument in writing signed by the Borrower, the Agent and the
Majority Lenders, or by the Borrower and the Agent acting with the consent of
the Majority Lenders, and any provision of this Agreement may be waived only by
an instrument in writing signed by the Majority Lenders or by the Agent acting
with the consent of the Majority Lenders; provided that:
(a) no amendment, modification or waiver shall, unless by an
instrument signed by all of the Lenders or by the Agent acting with the
consent of all of the Lenders:
(i) increase or extend the term, or extend the time
or waive any requirement for the reduction or termination, of
any of the Commitments;
(ii) extend the date fixed for the payment of
principal of or interest on any Loan, any Reimbursement
Obligation or any fee hereunder;
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(iii) reduce the amount of any such payment of
principal;
(iv) reduce the rate at which interest is payable
thereon or any fee is payable hereunder;
(v) alter the rights or obligations of the Borrower
to prepay Loans;
(vi) alter the terms of Section 11.09 hereof or of
this Section 12.04;
(vii) amend the definition of the term "Majority
Lenders", "Majority Revolving Credit Lenders", "Majority
Tranche A Lenders" or "Majority Tranche C Lenders" or modify
in any other manner the number or percentage of the Lenders
(or Class of Lenders) required to make any determinations or
waive any rights hereunder or to modify any provision hereof;
(viii) alter the manner in which payments or
prepayments of principal, interest or other amounts hereunder
shall be applied as between the Lenders or Types or Classes
of Loans; or
(ix) waive any of the conditions precedent set forth
in Section 7.01 hereof;
(b) no amendment, modification or waiver shall, unless by an
instrument signed by all of the Revolving Credit Lenders or by the
Agent acting with the consent of all of the Revolving Credit Lenders
waive any condition precedent set forth in Section 7.02 hereof to the
making of any Revolving Credit Loan or the issuance of any Letter of
Credit;
(c) no amendment, modification or waiver shall, unless by an
instrument signed by all of the Tranche A Lenders or by the Agent
acting with the consent of all of the Tranche A Lenders waive any
condition precedent set forth in Section 7.02 hereof to the making of
any Tranche A Term Loan;
(d) no amendment, modification or waiver shall, unless by an
instrument signed by all of the Tranche C Lenders or by the Agent
acting with the consent of all of the Tranche C Lenders waive any
condition precedent set forth in Section 7.02 hereof to the making of
any Tranche C Term Loan;
Credit Agreement
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(e) any amendment modifying Section 11 hereof, or which
affects the rights or obligations of the Agent hereunder, shall require
the consent of the Agent;
(f) any modification or supplement to this Agreement that
affects the rights, remedies or obligations of the Issuing Bank in its
capacity as issuer of the Letters of Credit shall require the consent
of the Issuing Bank; and
(g) any modification or supplement of Section 6 hereof shall
require the consent of each Subsidiary Guarantor and, if such
modification or supplement expressly releases any Subsidiary Guarantor
from its liability thereunder, the consent of each Lender.
In furtherance of clauses (b), (c), and (d) of this Section
12.04, no amendment to or waiver of any representation or warranty or any
covenant contained in this Agreement or any other Basic Document, or of any
Event of Default, shall be deemed to be effective for purposes of determining
whether the conditions precedent set forth in Section 7.02 hereof to the making
of any Loan of any Class have been satisfied unless the Majority Revolving
Credit Lenders, the Majority Tranche A Lenders or the Majority Tranche C Lenders
(as the case may be) shall have consented to such amendment or waiver.
Anything in this Agreement to the contrary notwithstanding,
if:
(x) at a time when the conditions precedent set forth in
Section 7 hereof to a Loan of any Class hereunder are, in the opinion
of the Majority Revolving Credit Lenders, the Majority Tranche A
Lenders or the Majority Tranche C Lenders (as the case may be),
satisfied, any Lender shall fail to fulfill its obligations to make
such Loan; or
(y) any Revolving Credit Lender shall fail to pay to the Agent
for the account of the Issuing Bank the amount of such Revolving Credit
Lender's Revolving Credit Commitment Percentage of any payment under a
Letter of Credit pursuant to Section 2.10(e) hereof;
then, for so long as such failure shall continue, such Lender shall (unless the
Majority Lenders, the Majority Revolving Credit Lenders, the Majority Tranche A
Lenders or the Majority Tranche C Lenders (as the case may be), determined as if
such Lender were not a "Lender" hereunder, shall otherwise consent in writing)
be deemed for all purposes relating to amendments, modifications, waivers or
consents under this Agreement or any of the other Basic Documents (including,
without limitation, under this
Credit Agreement
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Section 12.04 and under Section 11.09 hereof) to have no Loans, Letter of Credit
Liabilities or Commitments, shall not be treated as a "Lender" hereunder when
performing the computation of the Majority Lenders, the Majority Revolving
Credit Lenders, the Majority Tranche A Lenders or the Majority Tranche C Lenders
(as the case may be), and shall have no rights under the preceding paragraph of
this Section 12.04; provided that any action taken by the other Lenders with
respect to the matters referred to in clause (a) of the preceding paragraph
shall not be effective as against such Lender.
12.05 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
12.06 Assignments and Participations.
(a) No Obligor may assign its rights or obligations hereunder
or under any Notes without the prior consent of all of the Lenders and the
Agent.
(b) Each Lender may assign any of its Loans, its Notes, its
Letter of Credit Interest and its Commitments without the consent of the
Borrower or the Agent; provided that:
(i) any such partial assignment shall be in an amount at least
equal to $5,000,000 and the aggregate amount of the Commitments and/or
Loans of the assigning Lender immediately after such partial assignment
shall not be less than $5,000,000;
(ii) each such assignment by a Revolving Credit Lender of its
Revolving Credit Loans, Revolving Credit Note (if any), Revolving
Credit Commitment or Letter of Credit Interest shall be made in such
manner so that the same portion of its Revolving Credit Loans,
Revolving Credit Note (if any), Revolving Credit Commitment and Letter
of Credit Interest is assigned to the respective assignee and shall
require the prior consent of the Issuing Bank;
(iii) each such assignment by a Tranche C Lender of its Tranche C
Term Loans, Tranche C Term Loan Note (if any) or Tranche C Term Loan
Commitment shall be made in such manner so that the same portion of its
Tranche C Term Loans, Tranche C Term Loan Note (if any) or Tranche C
Term Loan Commitment is assigned to the respective assignee; and
(iv) each such assignment shall be effected pursuant to an
Assignment and Acceptance in substantially the form of Exhibit H hereto
and the assignor and assignee shall deliver
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to the Borrower, the Agent and (if the assignment is of Revolving
Credit Commitments and Letter of Credit Interest) the Issuing Bank a
fully executed copy thereof.
Upon execution and delivery by the assignor and the assignee to the Borrower,
the Agent and (if applicable) the Issuing Bank of such Assignment and Acceptance
and upon consent thereto by the Issuing Bank to the extent required above, the
assignee shall have, to the extent of such assignment (unless otherwise provided
in such assignment with the consent of the Borrower and the Agent), the
obligations, rights and benefits of a Lender hereunder holding the
Commitment(s), Letter of Credit Interest and Loans (or portions thereof)
assigned to it (in addition to the Commitment(s), Letter of Credit Interest and
Loans, if any, theretofore held by such assignee) and the assigning Lender
shall, to the extent of such assignment, be released from the Commitment(s) (or
portion(s) thereof) so assigned. Upon each such assignment the assigning Lender
shall pay the Agent an assignment fee of $3,000.
(c) A Lender may sell or agree to sell to one or more other
Persons a participation in all or any part of any Loans held by it, or in its
Commitment(s) or Letter of Credit Interests in which event each purchaser of a
participation (a "Participant") shall be entitled to the rights and benefits of
the provisions of Section 9.01(k) hereof with respect to its participation in
such Loans, Commitment(s) and Letter of Credit Interests as if (and the Borrower
shall be directly obligated to such Participant under such provisions as if)
such Participant were a "Lender" for purposes of said Section, but, except as
otherwise provided in Section 4.07(c) hereof, shall not have any other rights or
benefits under this Agreement or any Note or any other Basic Document (the
Participant's rights against such Lender in respect of such participation to be
those set forth in the agreements executed by such Lender in favor of the
Participant). All amounts payable by the Borrower to any Lender under Section 5
hereof in respect of Loans held by it, its Commitment and its Letter of Credit
Interests shall be determined as if such Lender had not sold or agreed to sell
any participations in such Loans, Commitment and Letter of Credit Interests and
as if such Lender were funding each of such Loan, Commitment and Letter of
Credit Interests in the same way that it is funding the portion of such Loan,
Commitment and Letter of Credit Interests in which no participations have been
sold. In no event shall a Lender that sells a participation agree with the
Participant to take or refrain from taking any action hereunder or under any
other Basic Document except that such Lender may agree with the Participant that
it will not, without the consent of the Participant, agree to (i) increase or
extend the term, or extend the time or waive any requirement for the reduction
or
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termination, of such Lender's related Commitment, (ii) extend the date fixed for
the payment of principal of or interest on the related Loan or Loans,
Reimbursements Obligations or any portion of any fee hereunder payable to the
Participant, (iii) reduce the amount of any such payment of principal, (iv)
reduce the rate at which interest is payable thereon, or any fee hereunder
payable to the Participant, to a level below the rate at which the Participant
is entitled to receive such interest or fee, (v) alter the rights or obligations
of the Borrower to prepay the related Loans, or (vi) consent to any
modification, supplement or waiver hereof or of any of the other Basic Documents
to the extent that the same, under Section 11.10 hereof, requires the consent of
each Lender.
(d) In addition to the assignments and participations
permitted under the foregoing provisions of this Section 12.06, any Lender may
(without notice to the Borrower, the Agent or any other Lender and without
payment of any fee) (i) assign and pledge all or any portion of its Loans and
its Note(s) (if any) as Collateral Security for the obligations of such Lender
(including, without limitation, any assignment or pledge to any Federal Reserve
Bank as collateral security pursuant to Regulation A and any Operating Circular
issued by such Federal Reserve Bank) and (ii) assign all or any portion of its
rights under this Agreement and its Loans and its Note(s) (if any) to an
affiliate. No such assignment shall release the assigning Lender from its
obligations hereunder.
(e) A Lender may furnish any information concerning the
Borrower or any of its Subsidiaries in the possession of such Lender from time
to time to assignees and participants (including prospective assignees and
participants).
(f) Anything in this Section 12.06 to the contrary
notwithstanding, no Lender may assign or participate any interest in any Loan or
Reimbursement Obligation held by it hereunder to the Borrower or any of its
Affiliates or Subsidiaries without the prior consent of each Lender.
(g) At the request of any Lender that is not a U.S. Person and
is not a "bank" within the meaning of Section 881(c)(3)(A) of the Code, the
Borrower shall maintain, or cause to be maintained, a register (the "Register")
that, at the request of the Borrower, shall be kept by the Agent on behalf of
the Borrower at no charge to the Borrower at the address to which notices to the
Agent are to be sent hereunder, on which it enters the name of such Lender as
the registered owner of each Registered Loan held by such Lender. A Registered
Loan (and the Registered Note (if any) evidencing the same) may be assigned or
otherwise transferred in whole or in part only by registration of
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<PAGE>
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such assignment or transfer on the Register (and each Registered Note shall
expressly so provide). Any assignment or transfer of all or part of such Loan
(and the Registered Note (if any) evidencing the same) may be effected by
registration of such assignment or transfer on the Register, together with the
surrender of the Registered Note (if any) evidencing the same duly endorsed by
(or accompanied by a written instrument of assignment or transfer duly executed
by) the holder of such Registered Note, whereupon, at the request of the
designated assignee(s) or transferee(s), one or more new Registered Notes in the
same aggregate principal amount shall be issued to the designated assignee(s) or
transferee(s). Prior to the registration of assignment or transfer of any
Registered Loan (and the Registered Note (if any) evidencing the same), the
Borrower shall treat the Person in whose name such Loan (and the Registered Note
(if any) evidencing the same) is registered as the owner thereof for the purpose
of receiving all payments thereon and for all other purposes, notwithstanding
notice to the contrary.
(h) The Register shall be available for inspection by the
Borrower and any Lender that is a Registered Holder at any reasonable time upon
reasonable prior notice.
12.07 Survival. The obligations of the Borrower under Sections
2.10(g), 2.10(l), 5.01, 5.05, 5.06, 5.07, 12.03 and 12.13 hereof, the
obligations of each Subsidiary Guarantor under Section 6.03 hereof and the
obligations of the Lenders under Section 11.05 hereof shall survive the
repayment of the Loans and Reimbursement Obligations and the termination of the
Commitments and, in the case of any Lender that may assign any interest in its
Commitments, Loans or Letter of Credit Interest hereunder, shall survive the
making of such assignment, notwithstanding that such assigning Lender may cease
to be a "Lender" hereunder; provided that, in the event of any such assignment
by a Lender to which the Agent has consented, the assigning bank shall be
released from its obligations under Section 11.05 hereof if and to the extent
that the assignee has assumed such obligations. In addition, each representation
and warranty made, or deemed to be made by a notice of any extension of credit,
herein or pursuant hereto shall survive the making of such representation and
warranty, and no Lender shall be deemed to have waived, by reason of making any
extension of credit hereunder, any Default which may arise by reason of such
representation or warranty proving to have been false or misleading,
notwithstanding that such Lender or the Agent may have had notice or knowledge
or reason to believe that such representation or warranty was false or
misleading at the time such extension of credit was made.
Credit Agreement
<PAGE>
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12.08 Captions. The table of contents and captions and section
headings appearing herein are included solely for convenience of reference and
are not intended to affect the interpretation of any provision of this
Agreement.
12.09 Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument and any of the parties hereto may execute this Agreement by
signing any such counterpart.
12.10 Governing Law; Submission to Jurisdiction. This
Agreement and the Notes (if any) shall be governed by, and construed in
accordance with, the law of the State of New York. Each Obligor hereby submits
to the nonexclusive jurisdiction of the United States District Court for the
Southern District of New York and of any New York state court sitting in New
York City for the purposes of all legal proceedings arising out of or relating
to this Agreement or the transactions contemplated hereby. Each Obligor
irrevocably waives, to the fullest extent permitted by law, any objection which
it may now or hereafter have to the laying of the venue of any such proceeding
brought in such a court and any claim that any such proceeding brought in such a
court has been brought in an inconvenient forum.
12.11 Waiver of Jury Trial. EACH OF THE OBLIGORS, THE AGENT
AND THE LENDERS HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
12.12 Treatment of Certain Information. The Borrower
acknowledges that (a) services may be offered or provided to it (in connection
with this Agreement or otherwise) by each Lender or by one or more subsidiaries
or affiliates of such Lender and (b) information delivered to each Lender by the
Borrower and its Subsidiaries may be provided to each such subsidiary and
affiliate.
12.13 Cure of Defaults by Agent or Lenders. Notwithstanding
anything contained herein to the contrary, the Agent or any Lender may in its
sole discretion, but shall not be obligated to, (a) cure any monetary default
under any Program Services Agreement or (b) cure, by monetary payment or by
performance, any default under any lease or option agreement to which the
Borrower or any Subsidiary is a party. In each case referred to in the foregoing
clauses (a) and (b), the Borrower shall reimburse the Agent or such Lender for
any such payment, and shall indemnify the Agent or such Lender for any and all
costs and expenses (including, without limitation, the fees and
Credit Agreement
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- 153 -
expenses of counsel) incurred by the Agent or such Lender in connection with any
such performance, in each case with interest, at the Base Rate plus the
Applicable Margin, payable from the date of such payment or performance by the
Agent or such Lender to the date of reimbursement by the Borrower. Without
limiting the generality of the foregoing, the Agent or any Lender may in its
sole discretion, but shall not be obligated to, cure, by monetary payment or by
performance, any default as permitted by any Consent and Agreement and the
Borrower shall reimburse the Agent or such Lender for any such payment, and
shall indemnify the Agent or such Lender for any and all costs and expenses
(including, without limitation, the fees and expenses of counsel) incurred by
the Agent or such Lender in connection with any such performance, in each case
with interest, at the Base Rate plus the Applicable Margin, payable from the
date of such payment or performance by the Agent or such Lender to the date of
reimbursement by the Borrower.
Credit Agreement
<PAGE>
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above written.
SINCLAIR BROADCAST GROUP, INC.
By /s/ David B. Amy
---------------------------
Name: David B. Amy
Title: Chief Financial Officer
Address for Notices:
Sinclair Broadcast Group, Inc.
2000 West 41st Street
Baltimore, Maryland 21211
Telecopier No.: (410) 467-5043
Telephone No.: (410) 467-5005
Attention: David D. Smith
with a copy to:
Thomas & Libowitz, P.A.
100 Light Street
Baltimore, Maryland 21202
Telecopier No.: (410) 752-2046
Telephone No.: (410) 752-2468
Attention: Steven Thomas
Credit Agreement
----------------
<PAGE>
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SUBSIDIARY GUARANTORS
CHESAPEAKE TELEVISION, INC.
KSMO, INC.
KUPN LICENSEE, INC.
SINCLAIR RADIO OF ALBUQUERQUE, INC.
SINCLAIR RADIO OF BUFFALO, INC.
SINCLAIR RADIO OF GREENVILLE, INC.
SINCLAIR RADIO OF LOS ANGELES, INC.
SINCLAIR RADIO OF MEMPHIS, INC.
SINCLAIR RADIO OF NASHVILLE, INC.
SINCLAIR RADIO OF NEW ORLEANS, INC.
SINCLAIR RADIO OF ST. LOUIS, INC.
SINCLAIR RADIO OF WILKES-BARRE, INC.
TUSCALOOSA BROADCASTING, INC.
WCGV, INC.
WDBB, INC.
WLFL, INC.
WPGH, INC.
WPGH LICENSEE, INC.
WSMH, INC.
WSTR, INC.
WSTR LICENSEE, INC.
WSYX, INC.
WTTE, CHANNEL 28, INC.
WTTE, CHANNEL 28 LICENSEE, INC.
WTTO, INC.
WTVZ, INC.
WTVZ LICENSEE, INC.
WYZZ, INC.
SUPERIOR COMMUNICATIONS OF OKLAHOMA, INC.
CHESAPEAKE TELEVISION LICENSEE, INC.
FSF TV, INC.
KABB LICENSEE, INC.
KDNL LICENSEE, INC.
KSMO LICENSEE, INC.
SCI - INDIANA LICENSEE, INC.
SCI - SACRAMENTO LICENSEE, INC.
SINCLAIR RADIO OF ALBUQUERQUE LICENSEE, INC.
SINCLAIR RADIO OF BUFFALO LICENSEE, INC.
SINCLAIR RADIO OF GREENVILLE LICENSEE, INC.
SINCLAIR RADIO OF LOS ANGELES LICENSEE, INC.
Credit Agreement
----------------
<PAGE>
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SINCLAIR RADIO OF MEMPHIS
LICENSEE, INC.
SINCLAIR RADIO OF NASHVILLE
LICENSEE, INC.
SINCLAIR RADIO OF NEW ORLEANS
LICENSEE, INC.
SINCLAIR RADIO OF ST. LOUIS
LICENSEE, INC.
SINCLAIR RADIO OF WILKES-BARRE
LICENSEE, INC.
SUPERIOR COMMUNICATIONS OF
KENTUCKY, INC.
SUPERIOR KY LICENSE CORP.
SUPERIOR OK LICENSE CORP.
WCGV LICENSEE, INC.
WLFL LICENSEE, INC.
WLOS LICENSEE, INC.
WSMH LICENSEE, INC.
WTTO LICENSEE, INC.
WYZZ LICENSEE, INC.
By /s/ David B. Amy
--------------------------
Name: David B. Amy
Title: Secretary
SINCLAIR COMMUNICATIONS, INC.
By /s/ David B. Amy
--------------------------
Name: David B. Amy
Title: Secretary
Credit Agreement
----------------
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[INTENTIONALLY OMITTED]
Credit Agreement
<PAGE>
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THE CHASE MANHATTAN BANK,
as Agent
By /s/ Tracey A Navin
--------------------------
Name: Tracey A. Navin
Title: Vice President
Address for Notices to
Chase as Agent:
The Chase Manhattan Bank
Agent Bank Services
One Chase Manhattan Plaza
8th Floor
New York, New York 10081
Telecopier No.: (212) 552-5700
Telephone No.: (212) 552-7488
LENDERS
THE CHASE MANHATTAN BANK
By /s/ Tracey A. Navin
--------------------------
Name: Tracey A. Navin
Title: Vice President
Lending Office for All Loans:
The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017
Address for Notices:
The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017
Telecopier No.: (212) 270-4164
Telephone No.: (212) 270-8916
Attention: Tracey A. Navin
Credit Agreement
----------------
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BANKERS TRUST COMPANY
By /s/ Patricia Hogan
--------------------------
Name: Patricia Hogan
Title: Vice President
Lending Office for all Loans:
Bankers Trust Company
130 Liberty Street
New York, New York 10006
Attention: Robert Telesca
Address for Notices:
Bankers Trust Company
130 Liberty Street
New York, New York 10006
Telecopier No.: (212) 250-7351/6029
Telephone No.: (212) 250-7342
Attention: Robert Telesca
<PAGE>
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FIRST UNION NATIONAL BANK OF NORTH
CAROLINA
By /s/ Bruce W. Loftin
--------------------------
Name: Bruce W. Loftin
Title: Senior Vice President
Lending Office for all Loans:
First Union National Bank of
North Carolina
301 South College Street -- DC-5
Charlotte, North Carolina
28288-0735
Attention: Gordon Wallace
Address for Notices:
Telecopier No.:
Telephone No.:
Attention:
<PAGE>
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NATIONSBANK, N.A.
By /s/ Roselyn Reid
--------------------------
Name: Roselyn Reid
Title: Vice President
Lending Office for all Loans:
NationsBank, N.A.
901 Main Street, 64
Dallas, Texas 75202
Address for Notices:
NationsBank, N.A.
101 South Tryon
NationsBank Plaza
Charlotte, North Carolina 28255
Telecopier No.: (704) 388-1113
Telephone No.: (704) 386-8694
Attention: Blair McElhaney
<PAGE>
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ABN AMRO BANK N.V., New York Branch
By /s/ Frances O. Logan
--------------------------
Name: Frances O. Logan
Title: Group Vice President
By /s/ Ann Schwalbenberg
--------------------------
Name: Ann Schwalbenberg
Title: Vice President
Lending Office for all Loans:
ABN AMRO Bank N.V.
500 Park Avenue
New York, New York 10022
Attention: Ann Schwalbenberg
Address for Notices:
ABN AMRO Bank N.V.
500 Park Avenue
New York, New York 10022
Telecopier No.: (212) 446-4203
Telephone No.: (212) 446-4181
Attention: Ann Schwalbenberg
<PAGE>
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BANKBOSTON, N.A.
By /s/ Lenny L. Mason
--------------------------
Name: Lenny L. Mason
Title: Vice President
Lending Office for all Loans:
BankBoston, N.A.
100 Federal Street
MS 01-08-08
Boston, Massachusetts 02110
Telecopier No.: (617) 434-3401
Telephone No.: (617) 434-7156
Attention: Lenny L. Mason
Address for Notices:
BankBoston, N.A.
100 Federal Street
MS 01-08-08
Boston, Massachusetts 02110
Telecopier No.: (617) 434-9820
Telephone No.: (617) 434-9725
Attention: Angie Karayiannis
<PAGE>
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BANK OF AMERICA ILLINOIS
By /s/ Carl F. Salas
--------------------------
Name: Carl F. Salas
Title: Vice President
Lending Office for all Loans:
Bank of America Illinois
231 South LaSalle Street
Chicago, Illinois 60697
Address for Notices:
Bank of America Illinois
335 Madison Avenue
New York, New York 10017
Telecopier No.: (212) 503-7173
Telephone No.: (212) 503-8425
Attention: Carl Salas
<PAGE>
- 165-
BANQUE PARIBAS
By /s/ Philippe Vuarchex
--------------------------
Name: Philippe Vuarchex
Title: Vice President
By /s/ Nicole Cawley
--------------------------
Name: Nicole Cawley
Title: Vice President
Lending Office for all Loans:
Banque Paribas
787 Seventh Avenue
New York, New York 10019
Attention: John Andersen
Address for Notices:
Banque Paribas
787 Seventh Avenue
New York, New York 10019
Telecopier No.: (212) 841-2217/
2146/2147/
2148/2149
Telephone No.: (212) 841-2229
Attention: John Andersen
<PAGE>
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BANQUE NATIONALE DE PARIS
By /s/ Serge Desrayaud
----------------------------------
Name: Serge Desrayaud
Title: Vice President/Team Leader
By /s/ Pamela Lucash
----------------------------------
Name: Pamela Lucash
Title: Assistant Treasurer
Lending Office for all Loans:
Banque Nationale de Paris
499 Park Avenue
New York, New York 10022-1078
Attention: Julie Requena
Address for Notices:
Banque Nationale de Paris
499 Park Avenue
New York, New York 10022-1078
Telecopier No.: (212) 418-8269/
415-9805
Telephone No.: (212) 415-9655
Attention: Julie Requena
<PAGE>
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CIBC INC.
By /s/ Debra Streck
-------------------------------
Name: Debra Streck
Title: Managing Director, CIBC
Wood Gundy Securities
Corp., as Agent
Lending Office for all Loans:
CIBC Inc.
425 Lexington Avenue
New York, New York 10017
Address for Notices:
CIBC Inc.
425 Lexington Avenue
New York, New York 10017
Telecopier No.: (212) 856-3558
Telephone No.: (212) 856-3706
Attention: Michele E. Roller
<PAGE>
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COMPAGNIE FINANCIERE DE CIC ET DE
L'UNION EUROPEENNE
By /s/ Marcus Edward
--------------------------
Name: Marcus Edward
Title: Vice President
By /s/ Brian O'Leary
--------------------------
Name: Brian O'Leary
Title: Vice President
Lending Office for all Loans:
Compagnie Financiere de CIC et de
l'Union Europeenne
520 Madison Avenue
37th Floor
New York, New York 10022
Attention: Marcus Edward
Address for Notices:
Compagnie Financiere
de CIC et de
l'Union Europeenne
520 Madison Avenue
37th Floor
New York, New York 10022
Telecopier No.: (212) 715-4535
Telephone No.: (212) 715-4427
Attention: Marcus Edward
<PAGE>
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FLEET NATIONAL BANK
By /s/ Eileen M. Burke
-----------------------------
Name: Eileen M. Burke
Title: Senior Vice President
Lending Office for all Loans:
Fleet National Bank
One Federal Street
3rd Floor, MA/OF/DO3D
Boston, MA 02110
Attention: Deborah Micue
Telecopier No.: (617) 346-4363
Telephone No.: (617) 346-4340
Address for Credit Related Notices:
Fleet National Bank
56 East 42nd Street
New York, New York 10017
Telecopier No.: (212) 907-5610
Telephone No.: (212) 907-5653
Attention: Luyen Tran
Address for Loan Administration:
Fleet National Bank
One Federal Street
3rd Floor, MA/OF/DO3D
Boston, MA 02110
<PAGE>
- 170 -
LTCB TRUST COMPANY
By /s/ Shuichi Tajima
--------------------------
Name: Shuichi Tajima
Title: Senior Vice President
Lending Office for all Loans:
LTCB Trust Company
165 Broadway
49th Floor
New York, New York 10006
Attention: Winston Brown
Address for Notices:
LTCB Trust Company
165 Broadway
49th Floor
New York, New York 10006
Telecopier No.: (212) 608-3081
Telephone No.: (212) 335-4854
Attention: Winston Brown
<PAGE>
- 171 -
THE MITSUBISHI TRUST AND BANKING
CORPORATION
By /s/ Patricia Loret de Mola
------------------------------
Name: Patricia Loret de Mola
Title: Senior Vice President
Lending Office for all Loans:
The Mitsubishi Trust and Banking
Corporation
520 Madison Avenue
26th Floor
New York, New York 10022
Attention: Susan LeFevre
Address for Notices:
The Mitsubishi Trust and Banking
Corporation
520 Madison Avenue
26th Floor
New York, New York 10022
Telecopier No.: (212) 644-6825 or
593-4691
Telephone No.: (212) 891-8243
Attention: Susan LeFevre
<PAGE>
- 172 -
THE SANWA BANK LTD.
By /s/ Christian Kambour
--------------------------
Name: Christian Kambour
Title: Vice President
Lending Office for all Loans:
The Sanwa Bank Ltd.
55 East 52nd Street
New York, New York 10055
Attention: Renko Hara
Loan Administration
Credit Contract:
The Sanwa Bank Ltd.
55 East 52nd Street
New York, New York 10055
Telecopier No.: (212) 754-1304
Telephone No.: (212) 339-6232
Attention: Christian Kambour
Administrative Contact:
The Sanwa Bank Ltd.
55 East 52nd Street
New York, New York 10055
Telecopier No.: (212) 754-2368
Telephone No.: (212) 339-6390
Attention: Renko Hara
Loan Administration
<PAGE>
- 173 -
UNION BANK OF SWITZERLAND,
NEW YORK BRANCH
By /s/ Stephen A. Cayer
--------------------------------
Name: Stephen A. Cayer
Title: Assistant Vice President
By /s/ Eduardo Salazar
--------------------------------
Name: Eduardo Salazar
Title: Vice President
Lending Office for all Loans:
Union Bank of Switzerland,
New York Branch
299 Park Avenue
40th Floor
New York, New York 10171
Attention: Ed Salazar
Address for Notices:
Union Bank of Switzerland,
New York Branch
299 Park Avenue
37th Floor
New York, New York 10171
Telecopier No.: (212) 821-3259
Telephone No.: (212) 821-3230
Attention: Loan Servicing
<PAGE>
- 174 -
UNION BANK OF CALIFORNIA, N.A.
By /s/ Christine P. Ball
----------------------------------
Name: Christine P. Ball
Title: Vice President
Lending Office for all Loans:
Union Bank of California, N.A.
445 South Figueroa Street
Los Angeles, California 90071
Attention: Christine Ball
Communications
Media Division
Address for Notices:
Union Bank of California, N.A.
445 South Figueroa Street
Los Angeles, California 90071
Telecopier No.: (213) 236-5747
Telephone No.: (213) 236-6176
Attention: Christine Ball
Communications
Media Division
<PAGE>
- 175 -
COOPERATIEVE CENTRALE RAIFFEISEN
BOERENLEENBANK B.A., "RABOBANK
NEDERLAND," NEW YORK BRANCH
By /s/ W. Jeffrey Vollack
----------------------------------
Name: W. Jeffrey Vollack
Title: Vice President, Manager
By /s/ Johannes F. Breukhoven
----------------------------------
Name: Johannes F. Breukhoven
Title: Vice President
Lending Office for all Loans:
Rabobank Nederland, New York Branch
245 Park Avenue
New York, New York 10067
Address for Notices:
Rabobank Nederland, New York Branch
245 Park Avenue
New York, New York 10067
Telecopier No.: (212) 916-7830
Telephone No.: (212) 916-7845
Attention: Debra Rivers/
Madeline Ricci
Corporate Services
Department
with a copy to:
Rabobank Nederland
300 South Wacker Drive
Suite 3500
Chicago, Illinois 60606
Telecopier No.: (312) 408-8240
Telephone No.: (312) 408-8248
Attention: Douglas W. Zylstra
<PAGE>
- 176 -
DRESDNER BANK AG NEW YORK &
GRAND CAYMAN BRANCHES
By /s/ Brian Haughney
---------------------------
Name: Brian Haughney
Title: Assistant Treasurer
By /s/ Robert Grella
---------------------------
Name: Robert Grella
Title: Vice President
Lending Office for Base Rate Loans:
Dresdner Bank AG
75 Wall Street
New York, New York 10005-2889
Lending Office for Eurodollar
Loans:
Dresdner Bank AG
Grand Cayman Branch
75 Wall Street
New York, New York 10005-2889
Address for Notices:
Dresdner Bank
75 Wall Street
New York, New York 10005-2889
Telecopier No.: (212) 429-2130
Telephone No.: (212) 429-2288
Attention: Laura Lam
<PAGE>
- 177 -
THE FUJI BANK, LIMITED, NEW YORK
BRANCH
By /s/ Teiji Teramoto
--------------------------------
Name: Teiji Teramoto
Title: Vice President & Manager
Lending Office for all Loans:
The Fuji Bank, Limited
New York Branch
Two World Trade Center
79th Floor
New York, New York 10048
Telecopier No.: (212) 912-0516
Telephone No.: (212) 898-2065
Attention: Kathleen Barsotti
Address for Notices:
The Fuji Bank, Limited
New York Branch
Two World Trade Center
79th Floor
New York, New York 10048
Telecopier No.: (212) 912-0516
Telephone No.: (212) 898-2065
Attention: Kathleen Barsotti
<PAGE>
- 178 -
THE FIRST NATIONAL BANK OF MARYLAND
By /s/ W. Blake Hampson
--------------------------------
Name: W. Blake Hampson
Title: Vice President
Lending Office for all Loans:
The First National Bank of Maryland
Communications Banking Division
Mail Code 101-511
25 South Charles Street
Baltimore, Maryland 21201
Attention: Darla Holbrook
Communications Banking
Specialist
Address for Notices:
The First National Bank of Maryland
Communications Banking Division
Mail Code 101-511
25 South Charles Street
Baltimore, Maryland 21203
Telecopier No.: (410) 244-4920
Telephone No.: (410) 244-4372
Attention: W. Blake Hampson
Vice President
<PAGE>
- 179 -
THE SUMITOMO BANK, LIMITED
By /s/ Nancy Z. Reimann
--------------------------------
Name: Nancy Z. Reimann
Title: Vice President
By /s/ James L. Hogan
--------------------------------
Name: James L. Hogan
Title: Vice President & Manager
Lending Office for all Loans:
The Sumitomo Bank Limited --
Chicago Branch
233 S. Wacker Drive
Suite 5400
Chicago, Illinois 60606
Attention: Nancy Z. Reimann
Address for Notices:
The Sumitomo Bank, Limited
10 East Baltimore Street
Suite 1402
Baltimore, Maryland 21202
Telecopier No.: (410) 332-4058
Telephone No.: (410) 332-4050
Attention: Nancy Z. Reimann
<PAGE>
- 180 -
SUNTRUST BANK, CENTRAL
FLORIDA, N.A.
By /s/ Ronald K. Rueve
-----------------------------
Name: Ronald K. Rueve
Title: Vice President
Lending Office for all Loans:
SunTrust Bank, Central
Florida, N.A.
200 South Orange Avenue
P.O. Box 3833
Orlanda, Florida 32801
Attention: David Miller
Address for Notices:
SunTrust Bank, N.A.
Florida, N.A.
200 South Orange Avenue
P.O. Box 3833
Orlanda, Florida 32801
Telecopier No.: (407) 237-4253
Telephone No.: (407) 237-5209
Attention: Debbie Torres
<PAGE>
CORESTATES BANK, N.A.
By /s/ Edward L. Kittrell
------------------------------
Name: Edward L. Kittrell
Title: Vice President
Lending Office for all Loans:
Corestates Bank, N.A.
1339 Chestnut Street --
FC 1-8-11-28
Philadelphia, Pennsylvania 19101
Attention: Mary Lockhart
Address for Notices:
Corestates Bank, N.A.
1339 Chestnut Street --
FC-1-8-11-28
Philadelphia, Pennsylvania 19101
Telecopier No.: (215) 786-7721
Telephone No.: (215) 786-4313
Attention: Mary Lockhart
<PAGE>
PNC BANK, NATIONAL ASSOCIATION
By /s/ Jeffrey E. Hauser
________________________________
Name: Jeffrey E. Hauser
Title: Vice President
Lending Office for all Loans:
PNC Bank, N.A.
Communications Banking Division/
MS F2-F070-21-1
1600 Market Street
21st Floor
Philadelphia, Pennsylvania 19103
Attention: Jeffrey Hauser
Vice President
Address for Notice:
PNC Bank, N.A.
Communications Banking Division/
MS F2-F070-21-1
1600 Market Street
21st Floor
Philadelphia, Pennsylvania 19103
Telecopier No.: (215) 585-6680
Telephone No.: (215) 585-6468
Attention: Jeffrey Hauser
Vice President
<PAGE>
MELON BANK, N.A.
By /s/ John T. Kranefuss
-------------------------------
Name: John T. Kranefuss
Title: Assistant Vice President
Lending Office for all Loans:
Mellon Bank, N.A.
Room 4440, 1 Mellon Bank Center
500 Grant Street
Pittsburgh, Pennsylvania
15258-0001
Address for Notices:
Mellon Bank, N.A.
Room 2306, 3MBC
Pittsburgh, Pennsylvania 15259
Telecopier No.: (412) 236-2027/
2028
Telephone No.: (412) 234-4749
Attention: Genie McCreary
<PAGE>
THE SAKURA BANK, LTD.
By /s/ Yoshikazu Nagura
--------------------------------
Name: Yoshikazu Nagura
Title: Vice President
Lending Office for all Loans:
The Sakura Bank, Ltd.
277 Park Avenue
New York, New York 10172
Attention: Loan Administration
Department
Address for Notices:
The Sakura Bank, Ltd.
277 Park Avenue
New York, New York 10172
Telecopier No.: (212) 644-9565/
754-6690
Telephone No: (212) 756-6788
Attention: Loan Administration
Department
<PAGE>
MICHIGAN NATIONAL BANK
By /s/ Stephane Lubin
---------------------------------
Name: Stephane Lubin
Title: Relationship Manager
Lending Office for all Loans:
Michigan National Bank
Specialty Industries 10-36
27777 Inkster Road
Farmington Hills, Michigan 48334
Address for Notices:
Michigan National Bank
Specialty Industries 10-36
27777 Inkster Road
Farmington Hills, Michigan 48334
Telecopier No.: (810) 473-4345
Telephone No.: (810) 473-4380
Attention: Stephane E. Lubin
<PAGE>
CREDIT SUISSE FIRST BOSTON
By /s/ Judith E. Smith
-------------------------------
Name: Judith E. Smith
Title: Director
By /s/ Jeffrey C. Howe
-------------------------------
Name: Jeffrey C. Howe
Title: Director
Lending Office for all Loans:
Credit Suisse First Boston
11 Madison Avenue
New York, New York 10010-3629
Attention: Sloan Fleming
Address for Notices:
Same as Above
Telecopier No.: (212) 325-8314
Telephone No.: (212) 324-9160
Attention:
<PAGE>
CAISSE NATIONALE DE CREDIT AGRICOLE
By /s/ John McCloskey
-----------------------------------
Name: John McCloskey
Title: Vice President
Lending Office for all Loans:
Caisse Nationale de Credit Agricole
520 Madison Avenue
New York, New York 10022
Address for Notices:
Caisse Nationale de Credit Agricole
520 Madison Avenue
New York, New York 10022
Telecopier No.: (212) 418-2228
Telephone No.: (212) 418-2217
Attention: John McCloskey
<PAGE>
MERCANTILE BANK, NATIONAL
ASSOCIATION
By /s/ Ann Kelly
--------------------------------
Name: Ann Kelly
Title: Vice President
Lending Office for all Loans:
Mercantile Bank,
National Association
7th and Washington 12-3
St. Louis, Missouri 63101
Attention: Tonja Sadl
Eloise Engman
Address for Notices:
Mercantile Bank,
National Association
7th and Washington 12-3
St. Louis, Missouri 63101
Telecopier No.: (314) 425-8292/
2162
Telephone No.: (314) 425-2014
Attention: Tonja Sadl
Eloise Engman
<PAGE>
THE DAI-ICHI KANGYO BANK, LTD.
By /s/ Seiji Imai
---------------------------------
Name: Seiji Imai
Title: Vice President
Lending Office for all Loans:
The Dai-Ichi Kangyo Bank, Ltd.
One World Trade Center
Suite 4911
New York, New York 10048
Attention: Julie Zarenko
Address for Notices:
The Dai-Ichi Kangyo Bank, Ltd.
One World Trade Center
Suite 4911
New York, New York 10048
Telecopier No.: (212) 524-0579 and
(212) 912-1879
Telephone No: (212) 432-6632
Attention: Julie Zarenko
<PAGE>
BANK OF TOKYO - MITSUBISHI TRUST
COMPANY
By /s/ John P. Judge
--------------------------------
Name: John P. Judge
Title: VP & Co-Head
Lending Office for all Loans:
Bank of Tokyo - Mitsubishi
1251 Avenue of the Americas
12th Floor
New York, New York 10020
Attention: John Judge
Address for Notices:
Bank of Tokyo - Mitsubishi
1251 Avenue of the Americas
12th Floor
New York, New York 10020
Telecopier No.: (212) 782-4935
Telephone No.: (212) 782-4383
Attention: John Judge
<PAGE>
BANQUE FRANCAISE DU COMMERCE
EXTERIEUR
By /s/ Evan Kraus
--------------------------------
Name: Evan Kraus
Title: Associate
By /s/ Frederick K. Kammler
--------------------------------
Name: Frederick K. Kammler
Title: Vice President
Lending Office for all Loans:
Banque Francaise du Commerce
Exterieur
645 Fifth Avenue
20th Floor
New York, New York 10022
Address for Notices:
Banque Francaise du Commerce
Exterieur
645 Fifth Avenue
60th Floor
New York, New York 10022
Telecopier No.: (212) 872-5045
Telephone No.: (212) 872-5041
Attention: Frederick Kammler,
Vice President
Bill Maier,
Group Manager
<PAGE>
CRESTAR BANK
By /s/ Thomas C. Palmer
-------------------------------
Name: Thomas C. Palmer
Title: Vice President
Lending Office for all Loans:
Crestar Bank
919 East Main Street-HDQ 1022
Richmond, Virginia 23219
Attention: Thomas Palmer
Address for Notices:
Crestar Bank
919 East Main Street-HDQ 1022
Richmond, Virginia 23219
Telecopier No.: (804) 782-5413
Telephone No.: (804) 782-5833
Attention: Thomas Palmer
<PAGE>
BANK OF HAWAII
By /s/ Elizabeth O. MacLean
--------------------------------
Name: Elizabeth O. Maclean
Title: Vice President
Lending Office for all Loans:
Bank of Hawaii
130 Merchant Street
Twentieth Floor
Honolulu, Hawaii 96813
Address for Notices:
Bank of Hawaii
1850 N. Central Avenue
Suite 400
Phoenix, Arizona 85004
Telecopier No.: (602) 257-2235
Telephone No.: (602) 257-2437
Attention: Elizabeth MacLean
<PAGE>
(INTENTIONALLY OMMITED)
<PAGE>
VAN KAMPEN AMERICAN CAPITAL PRIME
RATE INCOME TRUST
By /s/ Kathleen A. Zarn
--------------------------------
Name: Kathleen A. Zarn
Title: Vice President
Lending Office for all Loans:
Van Kampen American Capital Prime
Rate Income Trust
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
Address for Notices:
Van Kampen American Capital Prime
Rate Income Trust
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
Telecopier No.: (708) 684-6740/
6741
Telephone No.: (708) 684-6479
Attention: Brian Murphy
with a copy to:
State Street Bank & Trust
Corporate Trust Department
P.O. Box 778
Boston, Massachusetts 02102
Telecopier No.: (617) 664-5367
Telephone No,: (617) 664-5481
Attention: Laura Magazu
<PAGE>
MEDICAL LIABILITY MUTUAL
INSURANCE CO.
By /s/ K. Wayne Kohle
--------------------------------
Name: K. Wayne Kohle
Title: Vice President
Lending Office for all Loans:
Chancellor LGT Asset Management
1166 Avenue of the Americas
27th Floor
New York, New York 10036
Telecopier No.: (212) 278-4916
Telephone No.: (212) 278-9404
Attention: Greg Smith
Address for Notices:
Chancellor LGT Asset Management
1166 Avenue of the Americas
27th Floor
New York, New York 10036
Telecopier No.: (212) 278-4916
Telephone No.: (212) 278-9404
Attention: Greg Smith
<PAGE>
MERRILL LYNCH SENIOR FLOATING RATE
FUND, INC.
By /s/ Anthony R. Clemente
--------------------------------
Name: Anthony R. Clemente
Title: Authorized Signatory
Lending Office for all Loans:
Merrill Lynch Senior Floating Rate
Fund, Inc.
Merrill Lynch Asset Management
800 Scudders Mill Road
Plainsboro, New Jersey 08536
Attention: Anthony Clemente
Address for Notices:
Merrill Lynch Senior Floating Rate
Fund, Inc.
Merrill Lynch Asset Management
800 Scudders Mill Road
Plainsboro, New Jersey 08536
Telecopier No.: (609) 282-2756
Telephone No.: (609) 282-2092
Attention: Anthony Clemente
<PAGE>
SENIOR HIGH INCOME PORTFOLIO, INC.
By /s/ Anthony R. Clemente
-------------------------------
Name: Anthony R. Clemente
Title: Authorized Signatory
Lending Office for all Loans:
Senior High Income Portfolio, Inc.
Merrill Lynch Asset Management
800 Scudders Mill Road
Plainsboro, New Jersey 08536
Attention: Anthony Clemente
Address for Notices:
Senior High Income Portfolio, Inc.
Merrill Lynch Asset Management
800 Scudders Mill Road
Plainsboro, New Jersey 08536
Telecopier No.: (609) 282-2756
Telephone No.: (609) 282-2092
Attention: Anthony Clemente
<PAGE>
ALLIED SIGNAL INC.
By /s/ Frank X. Whitley
--------------------------------
Name: Frank X. Whitley
Title: Senior Vice President
Shenkman Capital
Management, as
Attorney-in-Fact
Lending Office for all Loans:
Allied Signal Inc.
Shenkman Capital
461 Fifth Avenue
New York, New York 10017
Attention: Niall Rosenweig
Address for Notices:
Allied Signal Inc.
Shenkman Capital
461 Fifth Avenue
New York, New York 10017
Telecopier No.: (212) 867-9106
Telephone No.: (212) 867-9090
Attention: Niall Rosenweig
SINCLAIR BROADCAST GROUP, INC., as Issuer,
CHESAPEAKE TELEVISION, INC.,
CHESAPEAKE TELEVISION LICENSEE, INC.,
FSF-TV, INC.,
KABB LICENSEE, INC.,
KDNL LICENSEE, INC.,
KSMO, INC.,
KSMO LICENSEE, INC.,
KUPN LICENSEE, INC.,
SCI-INDIANA LICENSEE, INC.,
SCI-SACRAMENTO LICENSEE, INC.,
SINCLAIR COMMUNICATIONS, INC.,
SINCLAIR RADIO OF ALBUQUERQUE, INC.,
SINCLAIR RADIO OF ALBUQUERQUE LICENSEE, INC..
SINCLAIR RADIO OF BUFFALO, INC.,
SINCLAIR RADIO OF BUFFALO LICENSEE, INC.,
SINCLAIR RADIO OF GREENVILLE, INC.,
SINCLAIR RADIO OF GREENVILLE LICENSEE, INC.,
SINCLAIR RADIO OF LOS ANGELES, INC.,
SINCLAIR RADIO OF LOS ANGELES LICENSEE, INC.,
SINCLAIR RADIO OF MEMPHIS, INC.,
SINCLAIR RADIO OF MEMPHIS LICENSEE, INC.,
SINCLAIR RADIO OF NASHVILLE, INC.,
SINCLAIR RADIO OF NASHVILLE LICENSEE, INC.,
SINCLAIR RADIO OF NEW ORLEANS, INC.,
SINCLAIR RADIO OF NEW ORLEANS LICENSEE, INC.,
SINCLAIR RADIO OF ST. LOUIS, INC.,
SINCLAIR RADIO OF ST. LOUIS LICENSEE, INC.,
SINCLAIR RADIO OF WILKES-BARRE, INC.,
SINCLAIR RADIO OF WILKES-BARRE LICENSEE, INC.,
SUPERIOR COMMUNICATIONS OF KENTUCKY, INC.,
SUPERIOR COMMUNICATIONS OF OKLAHOMA, INC.,
SUPERIOR KY LICENSE CORP.,
SUPERIOR OK LICENSE CORP.,
TUSCALOOSA BROADCASTING INC.,
WCGV, INC.,
WCGV LICENSEE, INC.,
WDBB, INC.,
WLFL, INC.,
WLFL LICENSEE, INC.,
WLOS LICENSEE, INC.,
WPGH, INC.
<PAGE>
WPGH LICENSEE, INC.,
WSMH, INC,
WSMH LICENSEE, INC.,
WSTR, INC.,
WSTR LICENSEE, INC.,
WSYX, INC.,
WTTE, CHANNEL 28, INC,
WTTE, CHANNEL 28 LICENSEE, INC,
WTTO, INC.,
WTTO LICENSEE, INC.,
WTVZ, INC.,
WTVZ LICENSEE. INC.,
WYZZ, INC.,
and
WYZZ LICENSEE, INC.,
as Guarantors
and
FIRST UNION NATIONAL BANK OF MARYLAND, as Trustee
INDENTURE
Dated as of July 2, 1997
$200,000,000
9% Senior Subordinated Notes due 2007
<PAGE>
TABLE OF CONTENTS
PAGE
----
PARTIES................................................................... 1
RECITALS.................................................................. 2
ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION....... 3
Section 101. Definitions.................................................. 3
"Accredited Investor"................................................ 3
"Acquired Indebtedness".............................................. 3
"Affiliate".......................................................... 3
"Asset Sale"......................................................... 4
"Agent Member"....................................................... 4
"Asset Swap"......................................................... 4
"Average Life to Stated Maturity".................................... 4
"Bank Credit Agreement".............................................. 4
"Bankruptcy Law"..................................................... 5
"Board of Directors"................................................ 5
"Board Resolution"................................................... 5
"Business Day"....................................................... 5
"Capital Lease Obligation"........................................... 5
"Cash Equivalents"................................................... 5
"Change of Control".................................................. 6
"Code"............................................................... 7
"Commission"......................................................... 7
"Company"............................................................ 7
"Company Request or Company Order"................................... 7
"Consolidated Interest Expense"...................................... 7
"Consolidated Net Income (Loss)"..................................... 7
"Consolidated Net Worth"............................................. 8
"Consolidation"...................................................... 8
"Corporate Trust Office"............................................. 8
"Cumulative Consolidated Interest Expense"........................... 8
"Cumulative Operating Cash Flow"..................................... 8
"Debt to Operating Cash Flow Ratio".................................. 9
-i-
<PAGE>
"Default"............................................................ 9
"Depositary"......................................................... 9
"Designated Guarantor Senior Indebtedness"........................... 9
"Designated Senior Indebtedness"..................................... 10
"Disqualified Equity Interests"...................................... 10
"Equity Interest".................................................... 10
"Event of Default"................................................... 10
"Exchange Act"....................................................... 10
"Exchange Offer"..................................................... 10
"Exchange Offer Registration Statement".............................. 10
"Fair Market Value".................................................. 10
"Film Contract"...................................................... 11
"Founders' Notes".................................................... 11
"Generally Accepted Accounting Principles" or "GAAP"................. 11
"Global Security".................................................... 11
"Guarantee".......................................................... 11
"Guaranteed Debt".................................................... 11
"Guarantor".......................................................... 11
"Guarantor Senior Indebtedness"...................................... 12
"Holder"............................................................. 12
"Indebtedness"....................................................... 12
"Indenture Obligations".............................................. 14
"Independent Director"............................................... 14
"Initial Purchasers"................................................. 14
"Initial Securities"................................................. 14
"Interest Payment Date".............................................. 14
"Interest Rate Agreements"........................................... 14
"Investments"........................................................ 14
"Issue Date"......................................................... 14
"Lien"............................................................... 14
"Local Marketing Agreement".......................................... 15
"Maturity"........................................................... 15
"Minority Note"...................................................... 15
"Moody's"............................................................ 15
"Net Cash Proceeds".................................................. 15
"Non-payment Default"................................................ 16
"Officers' Certificate".............................................. 16
"Operating Cash Flow"................................................ 16
"Opinion of Counsel"................................................. 17
"Opinion of Independent Counsel"..................................... 17
"Outstanding"........................................................ 17
-ii-
<PAGE>
"Pari Passu Indebtedness"............................................ 18
"Paying Agent"....................................................... 18
"Payment Default".................................................... 18
"Permitted Guarantor Junior Securities".............................. 18
"Permitted Holders".................................................. 18
"Permitted Indebtedness"............................................. 18
"Permitted Investment"............................................... 18
"Permitted Junior Securities"........................................ 19
"Permitted Subsidiary Indebtedness".................................. 19
"Person"............................................................. 20
"Predecessor Security"............................................... 20
"Preferred Equity Interest".......................................... 20
"Prospectus"......................................................... 20
"Public Equity Offering"............................................. 20
"Qualified Equity Interests"......................................... 20
"Redemption Date".................................................... 20
"Redemption Price"................................................... 20
"Registration Rights Agreement"...................................... 20
"Registration Statement"............................................. 21
"Regular Record Date"................................................ 21
"Responsible Officer"................................................ 21
"Restricted Payment"................................................. 21
"Restricted Securities Legend"....................................... 21
"Restricted Securities Transfer Certificate"......................... 21
"Restricted Security"................................................ 21
"Restricted Subsidiary".............................................. 21
"Rule 144A Information".............................................. 21
"Sale and Leaseback Transaction"..................................... 21
"S&P"................................................................ 22
"Securities"......................................................... 22
"Securities Act"..................................................... 22
"Security Register" and "Security Registrar"......................... 22
"Senior Indebtedness"................................................ 22
"Series A Securities"................................................ 22
"Series B Securities"................................................ 23
"Shelf Registration Statement"....................................... 23
"Special Record Date"................................................ 23
"Stated Maturity".................................................... 23
"Subordinated Indebtedness".......................................... 23
"Subsidiary"......................................................... 23
"Successor Security"................................................. 23
-iii-
<PAGE>
"Temporary Cash Investments"......................................... 23
"Trust Indenture Act"................................................ 24
"Trustee"............................................................ 24
"Unrestricted Subsidiary"............................................ 24
"Unrestricted Subsidiary Indebtedness"............................... 24
"Voting Stock"....................................................... 25
"Wholly Owned Restricted Subsidiary"................................. 25
Section 102. Other Definitions............................................ 25
Section 103. Compliance Certificates and Opinions......................... 26
Section 104. Form of Documents Delivered to Trustee....................... 27
Section 105. Acts of Holders.............................................. 27
Section 106. Notices, etc., to Trustee, the Company and any Guarantor..... 29
Section 107. Notice to Holders; Waiver.................................... 29
Section 108. Conflict with Trust Indenture Act............................ 30
Section 109. Effect of Headings and Table of Contents..................... 30
Section 110. Successors and Assigns....................................... 30
Section 111. Separability Clause.......................................... 30
Section 112. Benefits of Indenture........................................ 30
Section 113. Governing Law................................................ 30
Section 114. Legal Holidays............................................... 31
Section 115. Schedules and Exhibits....................................... 31
Section 116. Counterparts................................................. 31
ARTICLE TWO SECURITY FORMS................................................ 31
Section 201. Forms Generally.............................................. 31
Section 202. Form of Face of Security..................................... 32
Section 203. Form of Reverse of Securities................................ 40
Section 204. Additional Provisions Required in Global Security............ 48
Section 205. Form of Trustee's Certificate of Authentication.............. 49
Section 206. Form of Guarantee of Each of the Guarantors.................. 49
ARTICLE THREE THE SECURITIES.............................................. 53
Section 301. Title and Terms.............................................. 53
Section 302. Denominations................................................ 54
Section 303. Execution, Authentication, Delivery and Dating............... 54
Section 304. Temporary Securities......................................... 55
Section 305. Global Securities............................................ 55
Section 306. Registration, Registration of Transfer and Exchange.......... 57
Section 307. Special Transfer Provisions.................................. 59
Section 308. Mutilated, Destroyed, Lost and Stolen Securities............. 61
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Section 309. Payment of Interest; Interest Rights Preserved............... 62
Section 310. Persons Deemed Owners........................................ 63
Section 311. Cancellation................................................. 64
Section 312. Computation of Interest...................................... 64
Section 313. CUSIP Numbers................................................ 64
ARTICLE FOUR DEFEASANCE AND COVENANT DEFEASANCE............................ 64
Section 401. Company's Option to Effect Defeasance or Covenant
Defeasance................................................. 64
Section 402. Defeasance and Discharge..................................... 65
Section 403. Covenant Defeasance.......................................... 65
Section 404. Conditions to Defeasance or Covenant Defeasance.............. 66
Section 405. Deposited Money and U.S. Government Obligations to Be
Held in Trust; Other Miscellaneous Provisions.............. 68
Section 406. Reinstatement................................................ 69
ARTICLE FIVE REMEDIES...................................................... 69
Section 501. Events of Default............................................ 69
Section 502. Acceleration of Maturity; Rescission and Annulment........... 72
Section 503. Collection of Indebtedness and Suits for Enforcement by
Trustee ................................................... 73
Section 504. Trustee May File Proofs of Claim............................. 74
Section 505. Trustee May Enforce Claims without Possession of
Securities................................................. 75
Section 506. Application of Money Collected............................... 75
Section 507. Limitation on Suits.......................................... 76
Section 508. Unconditional Right of Holders to Receive Principal,
Premium and Interest ...................................... 76
Section 509. Restoration of Rights and Remedies........................... 77
Section 510. Rights and Remedies Cumulative............................... 77
Section 511. Delay or Omission Not Waiver................................. 77
Section 512. Control by Holders........................................... 77
Section 513. Waiver of Past Defaults...................................... 78
Section 514. Undertaking for Costs........................................ 78
Section 515. Waiver of Stay, Extension or Usury Laws...................... 79
ARTICLE SIX THE TRUSTEE.................................................... 79
Section 601. Notice of Defaults........................................... 79
Section 602. Certain Rights of Trustee.................................... 79
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Section 603. Trustee Not Responsible for Recitals, Dispositions
of Securities or Application of Proceeds Thereof........... 81
Section 604. Trustee and Agents May Hold Securities; Collections;
etc........................................................ 81
Section 605. Money Held in Trust.......................................... 81
Section 606. Compensation and Indemnification of Trustee and Its
Prior Claim ............................................... 82
Section 607. Conflicting Interests........................................ 83
Section 608. Corporate Trustee Required; Eligibility...................... 83
Section 609. Resignation and Removal; Appointment of Successor
Trustee.................................................... 83
Section 610. Acceptance of Appointment by Successor....................... 85
Section 611. Merger, Conversion, Consolidation or Succession to
Business................................................... 85
Section 612. Preferential Collection of Claims Against Company............ 86
ARTICLE SEVEN HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY............ 86
Section 701. Company to Furnish Trustee Names and Addresses of
Holders.................................................... 86
Section 702. Disclosure of Names and Addresses of Holders................. 87
Section 703. Reports by Trustee........................................... 87
Section 704. Reports by Company and Guarantors............................ 87
ARTICLE EIGHT CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE......... 88
Section 801. Company or Any Guarantor May Consolidate, etc.; Only
on Certain Terms .......................................... 88
Section 802. Successor Substituted........................................ 90
ARTICLE NINE SUPPLEMENTAL INDENTURES....................................... 91
Section 901. Supplemental Indentures and Agreements without Consent
of Holders ................................................ 91
Section 902. Supplemental Indentures and Agreements with Consent
of Holders ................................................ 92
Section 903. Execution of Supplemental Indentures and Agreements.......... 93
Section 904. Effect of Supplemental Indentures............................ 94
Section 905. Conformity with Trust Indenture Act.......................... 94
Section 906. Reference in Securities to Supplemental Indentures........... 94
Section 907. Effect on Senior Indebtedness................................ 94
ARTICLE TEN COVENANTS...................................................... 94
Section 1001. Payment of Principal, Premium and Interest................... 94
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Section 1002. Maintenance of Office or Agency.............................. 95
Section 1003. Money for Security Payments to Be Held in Trust.............. 95
Section 1004. Corporate Existence.......................................... 97
Section 1005. Payment of Taxes and Other Claims............................ 97
Section 1006. Maintenance of Properties.................................... 98
Section 1007. Insurance.................................................... 98
Section 1008. Limitation on Indebtedness................................... 98
Section 1009. Limitation on Restricted Payments............................ 100
Section 1010. Limitation on Transactions with Affiliates................... 102
Section 1011. Limitation on Senior Subordinated Indebtedness............... 103
Section 1012. Limitation on Liens.......................................... 103
Section 1013. Limitation on Sale of Assets................................. 105
Section 1014. Limitation on Issuances of Guarantees of and Pledges
for Indebtedness .......................................... 109
Section 1015. Restriction on Transfer of Assets............................ 110
Section 1016. Purchase of Securities upon a Change of Control.............. 111
Section 1017. Limitation on Subsidiary Equity Interests.................... 114
Section 1018. Limitation on Dividends and Other Payment Restrictions
Affecting Subsidiaries .................................... 115
Section 1019. Limitation on Unrestricted Subsidiaries...................... 115
Section 1020. Provision of Financial Statements............................ 116
Section 1021. Statement by Officers as to Default.......................... 116
Section 1022. Waiver of Certain Covenants.................................. 117
ARTICLE ELEVEN REDEMPTION OF SECURITIES.................................... 117
Section 1101. Rights of Redemption......................................... 117
Section 1102. Applicability of Article..................................... 117
Section 1103. Election to Redeem; Notice to Trustee........................ 117
Section 1104. Selection by Trustee of Securities to Be Redeemed............ 118
Section 1105. Notice of Redemption......................................... 118
Section 1106. Deposit of Redemption Price.................................. 119
Section 1107. Securities Payable on Redemption Date........................ 119
Section 1108. Securities Redeemed or Purchased in Part..................... 120
ARTICLE TWELVE SUBORDINATION OF SECURITIES................................. 120
Section 1201. Securities Subordinate to Senior Indebtedness................ 120
Section 1202. Payment Over of Proceeds Upon Dissolution, etc............... 121
Section 1203. Suspension of Payment When Senior Indebtedness in
Default.................................................... 122
Section 1204. Payment Permitted if No Default.............................. 123
Section 1205. Subrogation to Rights of Holders of Senior
Indebtedness............................................... 124
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Section 1206. Provisions Solely to Define Relative Rights.................. 124
Section 1207. Trustee to Effectuate Subordination.......................... 125
Section 1208. No Waiver of Subordination Provisions........................ 125
Section 1209. Notice to Trustee............................................ 126
Section 1210. Reliance on Judicial Order or Certificate of
Liquidating Agent ......................................... 127
Section 1211. Rights of Trustee as a Holder of Senior Indebtedness;
Preservation of Trustee's Rights........................... 127
Section 1212. Article Applicable to Paying Agents.......................... 127
Section 1213. No Suspension of Remedies.................................... 127
Section 1214. Trustee's Relation to Senior Indebtedness.................... 128
ARTICLE THIRTEEN SATISFACTION AND DISCHARGE................................ 128
Section 1301. Satisfaction and Discharge of Indenture...................... 128
Section 1302. Application of Trust Money.................................. 129
ARTICLE FOURTEEN GUARANTEE................................................ 130
Section 1401. Guarantor's Guarantee....................................... 130
Section 1402. Continuing Guarantee; No Right of Set-Off; Independent
Obligation ............................................... 130
Section 1403. Guarantee Absolute.......................................... 131
Section 1404. Right to Demand Full Performance............................ 134
Section 1405. Waivers..................................................... 134
Section 1406. The Guarantors Remain Obligated in Event the Company Is
No Longer Obligated to Discharge Indenture Obligations.... 135
Section 1407. Fraudulent Conveyance; Subrogation.......................... 135
Section 1408. Guarantee Is in Addition to Other Security.................. 135
Section 1409. Release of Security Interests............................... 136
Section 1410. No Bar to Further Actions................................... 136
Section 1411. Failure to Exercise Rights Shall Not Operate as a Waiver;
No Suspension of Remedies................................. 136
Section 1412. Trustee's Duties; Notice to Trustee......................... 137
Section 1413. Successors and Assigns...................................... 137
Section 1414. Release of Guarantee........................................ 137
Section 1415. Execution of Guarantee...................................... 138
Section 1416. Guarantee Subordinate to Guarantor Senior Indebtedness...... 138
Section 1417. Payment Over of Proceeds Upon Dissolution of the
Guarantor, etc. .......................................... 138
Section 1418. Default on Guarantor Senior Indebtedness.................... 140
Section 1419. Payment Permitted by Each of the Guarantors if No
Default................................................... 140
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Section 1420. Subrogation to Rights of Holders of Guarantor
Senior Indebtedness ...................................... 141
Section 1421. Provisions Solely to Define Relative Rights................. 141
Section 1422. Trustee to Effectuate Subordination......................... 142
Section 1423. No Waiver of Subordination Provisions....................... 142
Section 1424. Notice to Trustee by Each of the Guarantors................. 143
Section 1425. Reliance on Judicial Order or Certificate of
Liquidating Agent ........................................ 144
Section 1426. Rights of Trustee as a Holder of Guarantor
Senior Indebtedness; Preservation of Trustee's Rights..... 144
Section 1427. Article Applicable to Paying Agents......................... 144
Section 1428. No Suspension of Remedies................................... 144
Section 1429. Trustee's Relation to Guarantor Senior Indebtedness......... 145
TESTIMONIUM............................................................... 147
SIGNATURES AND SEALS...................................................... 148
ACKNOWLEDGMENTS
SCHEDULE I Existing Indebtedness of Sinclair Broadcast Group,
Inc. and its Restricted Subsidiaries
SCHEDULE II Existing Liens
SCHEDULE III Existing Encumbrances and Restrictions
EXHIBIT A Form of Restricted Securities Transfer Certificate
EXHIBIT B Form of Intercompany Note
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INDENTURE, dated as of July 2, 1997, among SINCLAIR BROADCAST
GROUP, INC., a Maryland corporation (the "Company"), CHESAPEAKE TELEVISION,
INC., a Maryland corporation, CHESAPEAKE TELEVISION LICENSEE, INC., a Delaware
corporation, FSF-TV, INC., a North Carolina corporation, KABB LICENSEE, INC., a
Delaware corporation, KDNL LICENSEE, INC., a Delaware corporation, KSMO, INC., a
Maryland corporation, KSMO LICENSEE, INC., a Delaware corporation, KUPN
LICENSEE, INC., a Maryland corporation, SCI-INDIANA LICENSEE, INC., a Delaware
corporation, SCI- SACRAMENTO LICENSEE, INC., a Delaware corporation, SINCLAIR
COMMUNICATIONS, INC., a Maryland corporation, SINCLAIR RADIO OF ALBUQUERQUE,
INC., a Maryland corporation, SINCLAIR RADIO OF ALBUQUERQUE LICENSEE, INC., a
Delaware corporation, SINCLAIR RADIO OF BUFFALO, INC., a Maryland corporation,
SINCLAIR RADIO OF BUFFALO LICENSEE, INC., a Delaware corporation, SINCLAIR RADIO
OF GREENVILLE, INC., a Maryland corporation, SINCLAIR RADIO OF GREENVILLE
LICENSEE, INC., a Delaware corporation, SINCLAIR RADIO OF LOS ANGELES, INC., a
Maryland corporation, SINCLAIR RADIO OF LOS ANGELES LICENSEE, INC., a Delaware
corporation, SINCLAIR RADIO OF MEMPHIS, INC., a Maryland corporation, SINCLAIR
RADIO OF MEMPHIS LICENSEE, INC., a Delaware corporation, SINCLAIR RADIO OF
NASHVILLE, INC., a Maryland corporation, SINCLAIR RADIO OF NASHVILLE LICENSEE,
INC., a Delaware corporation, SINCLAIR RADIO OF NEW ORLEANS, INC., a Maryland
corporation, SINCLAIR RADIO OF NEW ORLEANS LICENSEE, INC., a Delaware
corporation, SINCLAIR RADIO OF ST. LOUIS, INC., a Maryland corporation, SINCLAIR
RADIO OF ST. LOUIS LICENSEE, INC., a Delaware corporation, SINCLAIR RADIO OF
WILKES-BARRE, INC., a Maryland corporation, SINCLAIR RADIO OF WILKES-BARRE
LICENSEE, INC., a Delaware corporation, SUPERIOR COMMUNICATIONS OF KENTUCKY,
INC., a Delaware corporation, SUPERIOR COMMUNICATIONS OF OKLAHOMA, INC., an
Oklahoma corporation, SUPERIOR KY LICENSE CORP., a Delaware corporation,
SUPERIOR OK LICENSE CORP., a Delaware corporation, TUSCALOOSA BROADCASTING INC.,
a Maryland corporation, WCGV, INC., a Maryland corporation, WCGV LICENSEE, INC.,
a Delaware corporation, WDBB, INC., a Maryland corporation, WLFL, INC., a
Maryland corporation, WLFL LICENSEE, INC., a Delaware corporation, WLOS
LICENSEE, INC., a Delaware corporation, WPGH, INC., a Maryland corporation, WPGH
LICENSEE, INC., a Maryland corporation, WSMH, INC., a Maryland corporation, WSMH
LICENSEE, INC., a Delaware corporation, WSTR, INC., a Maryland corporation, WSTR
LICENSEE, INC., a Maryland corporation, WSYX, INC., a Maryland corporation,
WTTE, CHANNEL 28, INC., a Maryland corporation, WTTE, CHANNEL 28 LICENSEE, INC.,
a Maryland corporation, WTTO, INC., a Maryland corporation, WTTO LICENSEE, INC.,
a Delaware corporation, WTVZ, INC., a Maryland corporation, WTVZ LICENSEE, INC.,
a Maryland corporation, WYZZ, INC., a Maryland Corporation, and WYZZ LICENSEE,
INC., a Delaware corporation (collectively, the "Guarantors"), and FIRST UNION
NATIONAL BANK OF MARYLAND, a national banking association organized under the
laws of the United States of America, as trustee (the "Trustee").
RECITALS OF THE COMPANY
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The Company has duly authorized the creation of an issue of 9%
Senior Subordinated Notes due 2007, Series A (the "Initial Securities" or the
"Series A Securities"), and an issue of 9% Senior Subordinated Notes due 2007,
Series B (the "Series B Securities" and, together with the Series A 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 and the Securities.
Each Guarantor has duly authorized the issuance of a guarantee
(the "Guarantees") of the Securities, of substantially the tenor hereinafter set
forth, and to provide therefor, each Guarantor has duly authorized the execution
and delivery of this Indenture and the Guarantee.
This Indenture is subject to, and shall be governed by, the
provisions of the Trust Indenture Act that are required to be part of and to
govern indentures qualified under the Trust Indenture Act.
All acts and things necessary have been done to make (i) the
Securities, when executed by the Company and authenticated and delivered
hereunder and duly issued by the Company, the valid obligations of the Company,
(ii) the Guarantees, when executed by each of the Guarantors and delivered
hereunder, the valid obligation of each of the Guarantors and (iii) this
Indenture a valid agreement of the Company and each of the Guarantors in
accordance with the terms of this Indenture.
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:
ARTICLE I
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:
(a) the terms defined in this Article have the meanings
assigned to them in this Article, and include the plural as well as the
singular;
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<PAGE>
(b) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(c) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP;
(d) the words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision; and
(e) all references to $, US$, dollars or United States dollars
shall refer to the lawful currency of the United States of America.
"Accredited Investor" means an institutional "accredited
investor" within the meaning of Rule 501(a)(1), (2), (3) or (7) of Regulation D
under the Securities Act.
"Acquired Indebtedness" means Indebtedness of a Person (i)
existing at the time such Person becomes a Subsidiary or (ii) assumed in
connection with the acquisition of assets from such Person, in each case, other
than Indebtedness incurred in connection with, or in contemplation of, such
Person becoming a Subsidiary or such acquisition. Acquired Indebtedness shall be
deemed to be incurred on the date of the related acquisition of assets from any
Person or the date the acquired Person becomes a Subsidiary.
"Affiliate" means, with respect to any specified Person, (i)
any other Person directly or indirectly controlling or controlled by or under
direct or indirect common control with such specified Person, (ii) any other
Person that owns, directly or indirectly, 5% or more of such Person's Equity
Interest or any officer or director of any such Person or other Person or, with
respect to any natural Person, any Person having a relationship with such Person
or other Person by blood, marriage or adoption not more remote than first cousin
or (iii) any other Person 10% or more of the voting Equity Interests of which
are beneficially owned or held directly or indirectly by such specified Person.
For the purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person directly or indirectly, whether through ownership of voting securities,
by contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Asset Sale" means any sale, issuance, conveyance, transfer,
lease or other disposition (including, without limitation, by way of merger,
consolidation or Sale and Leaseback Transaction) (collectively, a "transfer"),
directly or indirectly, in one or a series of related transactions, of (i) any
Equity Interest of any Restricted Subsidiary; (ii) all or substantially all of
the properties and assets of any division or line of business of the Company or
its Restricted Subsidiaries; or (iii) any other properties or assets of the
Company or any Restricted Subsidiary, other than in the ordinary course of
business. For the purposes of this definition, the term "Asset Sale" shall not
include any transfer of properties and assets (A) that is
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governed by Section 801(a), (B) that is by the Company to any Wholly Owned
Restricted Subsidiary, or by any Restricted Subsidiary to the Company or any
Wholly Owned Restricted Subsidiary in accordance with the terms of this
Indenture or (C) that aggregates not more than $1,000,000 in gross proceeds.
"Agent Member" means any member of, or participant in, the
Depositary.
"Asset Swap" means an Asset Sale by the Company or any
Restricted Subsidiary in exchange for properties or assets that will be used in
the business of the Company and its Restricted Subsidiaries existing on the date
of this Indenture or reasonably related thereto.
"Average Life to Stated Maturity" means, as of the date of
determination with respect to any Indebtedness, the quotient obtained by
dividing (i) the sum of the products of (a) the number of years from the date of
determination to the date or dates of each successive scheduled principal
payment of such Indebtedness multiplied by (b) the amount of each such principal
payment by (ii) the sum of all such principal payments.
"Bank Credit Agreement" means the Amended and Restated Credit
Agreement, dated as of May 20, 1997, between the Company, the subsidiaries of
the Company identified on the signature pages thereof under the caption
"SUBSIDIARY GUARANTORS," the lenders named therein and The Chase Manhattan Bank,
as agent, as such agreement may be amended, renewed, extended, substituted,
refinanced, restructured, replaced, supplemented or otherwise modified from time
to time (including, without limitation, any successive renewals, extensions,
substitutions, refinancings, restructurings, replacements, supplementations or
other modifications of the foregoing). For all purposes under this Indenture,
"Bank Credit Agreement" shall include any amendments, renewals, extensions,
substitutions, refinancings, restructurings, replacements, supplements or any
other modifications that increase the principal amount of the Indebtedness or
the commitments to lend thereunder and have been made in compliance with Section
1008; provided that, for purposes of the definition of "Permitted Indebtedness,"
no such increase may result in the principal amount of Indebtedness of the
Company under the Bank Credit Agreement exceeding the amount permitted by
Section 1008(b)(i).
"Bankruptcy Law" means Title 11, United States Bankruptcy Code
of 1978, as amended, or any similar United States federal or state law relating
to bankruptcy, insolvency, receivership, winding-up, liquidation, reorganization
or relief of debtors or any amendment to, succession to or change in any such
law.
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"Board of Directors" means the board of directors of the
Company or any Guarantor, as the case may be, or any duly authorized committee
of such board.
"Board Resolution" means a copy of a resolution certified by
the Secretary or an Assistant Secretary of the Company or any Guarantor, as the
case may be, to have been duly adopted by the Board of Directors of such entity
and to be in full force and effect on the date of such certification, and
delivered to the Trustee.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday
and Friday which is not a day on which banking institutions in The City of New
York, the State of Maryland or the city in which the Corporate Trust Office is
located are authorized or obligated by law or executive order to close.
"Capital Lease Obligation" means any obligation of the Company
and its Restricted Subsidiaries on a Consolidated basis under any capital lease
of real or personal property which, in accordance with GAAP, has been recorded
as a capitalized lease obligation.
"Cash Equivalents" means, (i) any evidence of Indebtedness
with a maturity of one year or less from the date of acquisition issued or
directly and fully guaranteed or insured by the United States of America or any
agency or instrumentality thereof (provided that the full faith and credit of
the United States of America is pledged in support thereof); (ii) certificates
of deposit or acceptances with a maturity of one year or less from the date of
acquisition of any financial institution that is a member of the Federal Reserve
System having combined capital and surplus and undivided profits of not less
than $500,000,000; (iii) commercial paper with a maturity of one year or less
from the date of acquisition issued by a corporation that is not an Affiliate of
the Company organized under the laws of any state of the United States or the
District of Columbia and rated A-1 (or higher) according to S&P or P-1 (or
higher) according to Moody's or at least an equivalent rating category of
another nationally recognized securities rating agency; (iv) any money market
deposit accounts issued or offered by a domestic commercial bank having capital
and surplus in excess of $500,000,000; and (v) repurchase agreements and reverse
repurchase agreements relating to marketable direct obligations issued or
unconditionally guaranteed by the government of the United States of America or
issued by any agency thereof and backed by the full faith and credit of the
United States of America, in each case maturing within one year from the date of
acquisition; provided that the terms of such agreements comply with the
guidelines set forth in the Federal Financial Agreements of Depository
Institutions With Securities Dealers and Others, as adopted by the Comptroller
of the Currency on October 31, 1985.
"Change of Control" means the occurrence of any of the
following events: (i) any "person" or "group" (as such terms are used in
Sections 13(d) and 14(d) of the Exchange Act), other than Permitted Holders, is
or becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act, except that a Person shall be deemed to have beneficial ownership
of all shares that such Person has the right to acquire, whether such right is
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<PAGE>
exercisable immediately or only after the passage of time), directly or
indirectly, of more than 40% of the total outstanding Voting Stock of the
Company, provided that the Permitted Holders "beneficially own" (as so defined)
a lesser percentage of such Voting Stock than such other Person and do not have
the right or ability by voting power, contract or otherwise to elect or
designate for election a majority of the Board of Directors of the Company; (ii)
during any period of two consecutive years, individuals who at the beginning of
such period constituted the Board of Directors of the Company (together with any
new directors whose election to such Board or whose nomination for election by
the shareholders of the Company, was approved by a vote of 66-2/3% of the
directors then still in office who were either directors at the beginning of
such period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of such Board of
Directors then in office; (iii) the Company consolidates with or merges with or
into any Person or conveys, transfers or leases all or substantially all of its
assets to any Person, or any corporation consolidates with or merges into or
with the Company, in any such event pursuant to a transaction in which the
outstanding Voting Stock of the Company is changed into or exchanged for cash,
securities or other property, other than any such transaction where the
outstanding Voting Stock of the Company is not changed or exchanged at all
(except to the extent necessary to reflect a change in the jurisdiction of
incorporation of the Company) or where (A) the outstanding Voting Stock of the
Company is changed into or exchanged for (x) Voting Stock of the surviving
corporation which is not Disqualified Equity Interests or (y) cash, securities
and other property (other than Equity Interests of the surviving corporation) in
an amount which could be paid by the Company as a Restricted Payment in
accordance with Section 1009 (and such amount shall be treated as a Restricted
Payment subject to the provisions described under Section 1009) and (B) no
"person" or "group" other than Permitted Holders owns immediately after such
transaction, directly or indirectly, more than the greater of (1) 40% of the
total outstanding Voting Stock of the surviving corporation and (2) the
percentage of the outstanding Voting Stock of the surviving corporation owned,
directly or indirectly, by Permitted Holders immediately after such transaction;
or (iv) the Company is liquidated or dissolved or adopts a plan of liquidation
or dissolution other than in a transaction which complies with the provisions
described under Article Eight.
"Code" means the Internal Revenue Code of 1986, as amended.
"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 Indenture 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.
"Company" means Sinclair Broadcast Group, Inc., a corporation
incorporated under the laws of Maryland, until a successor Person shall have
become such pursuant to the applicable provisions of this Indenture, and
thereafter "Company" shall mean such successor Person.
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"Company Request" or "Company Order" means a written request
or order signed in the name of the Company by any one of its Chairman of the
Board, its Vice Chairman, its President or a Vice President (regardless of vice
presidential designation), and by any one of its Treasurer, an Assistant
Treasurer, its Secretary or an Assistant Secretary, and delivered to the
Trustee.
- - "Consolidated Interest Expense" means, without duplication, for any period,
the sum of (a) the interest expense of the Company and its Consolidated
Restricted Subsidiaries for such period, on a Consolidated basis, including,
without limitation, (i) amortization of debt discount, (ii) the net cost under
interest rate contracts (including amortization of discounts), (iii) the
interest portion of any deferred payment obligation and (iv) accrued interest,
plus (b) the interest component of the Capital Lease Obligations paid, accrued
and/or scheduled to be paid or accrued by the Company during such period, and
all capitalized interest of the Company and its Consolidated Restricted
Subsidiaries, in each case as determined in accordance with GAAP consistently
applied.
"Consolidated Net Income (Loss)" means, for any period, the
Consolidated net income (or loss) of the Company and its Consolidated Restricted
Subsidiaries for such period as determined in accordance with GAAP consistently
applied, adjusted, to the extent included in calculating such net income (or
loss), by excluding, without duplication, (i) all extraordinary gains but not
losses (less all fees and expenses relating thereto), (ii) the portion of net
income (or loss) of the Company and its Consolidated Restricted Subsidiaries
allocable to interests in unconsolidated Persons or Unrestricted Subsidiaries,
except to the extent of the amount of dividends or distributions actually paid
to the Company or its Consolidated Restricted Subsidiaries by such other Person
during such period, (iii) net income (or loss) of any Person combined with the
Company or any of its Restricted Subsidiaries on a "pooling of interests" basis
attributable to any period prior to the date of combination, (iv) any gain or
loss, net of taxes, realized upon the termination of any employee pension
benefit plan, (v) net gains but not losses (less all fees and expenses relating
thereto) in respect of dispositions of assets other than in the ordinary course
of business, or (vi) the net income of any Restricted Subsidiary to the extent
that the declaration of dividends or similar distributions by that Restricted
Subsidiary of that income is not at the time permitted, directly or indirectly,
by operation of the terms of its charter or any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation applicable to that
Restricted Subsidiary or its shareholders.
"Consolidated Net Worth" means the Consolidated equity of the
holders of Equity Interests (excluding Disqualified Equity Interests) of the
Company and its Restricted Subsidiaries, as determined in accordance with GAAP
consistently applied.
"Consolidation" means, with respect to any Person, the
consolidation of the accounts of such Person and each of its subsidiaries (other
than any Unrestricted Subsidiaries) if and to the extent the accounts of such
Person and each of its subsidiaries (other than any Unrestricted Subsidiaries)
would normally be consolidated with those of such Person, all in
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accordance with GAAP consistently applied. The term "Consolidated" shall have a
similar meaning.
"Corporate Trust Office" means the office of the Trustee or an
affiliate or agent thereof at which at any particular time the corporate trust
business for the purposes of this Indenture shall be principally administered,
which office at the date of execution of this Indenture is located at First
Union National Bank of Maryland, 901 East Cary Street, 2nd Floor, Richmond,
Virginia 23219, Attention: Patricia Welling.
"Cumulative Consolidated Interest Expense" means, as of any
date of determination, Consolidated Interest Expense from September 30, 1993 to
the end of the Company's most recently ended full fiscal quarter prior to such
date, taken as a single accounting period.
"Cumulative Operating Cash Flow" means, as of any date of
determination, Operating Cash Flow from September 30, 1993 to the end of the
Company's most recently ended full fiscal quarter prior to such date, taken as a
single accounting period.
"Debt to Operating Cash Flow Ratio" means, as of any date of
determination, the ratio of (a) the aggregate principal amount of all
outstanding Indebtedness of the Company and its Restricted Subsidiaries as of
such date on a Consolidated basis plus the aggregate liquidation preference or
redemption amount of all Disqualified Equity Interests of the Company (excluding
any such Disqualified Equity Interests held by the Company or a Wholly Owned
Restricted Subsidiary of the Company), to (b) Operating Cash Flow of the Company
and its Restricted Subsidiaries on a Consolidated basis for the four most recent
full fiscal quarters ending immediately prior to such date, determined on a pro
forma basis (and after giving pro forma effect to (i) the incurrence of such
Indebtedness and (if applicable) the application of the net proceeds therefrom,
including to refinance other Indebtedness, as if such Indebtedness was incurred,
and the application of such proceeds occurred, at the beginning of such
four-quarter period; (ii) the incurrence, repayment or retirement of any other
Indebtedness by the Company and its Restricted Subsidiaries since the first day
of such four-quarter period as if such Indebtedness was incurred, repaid or
retired at the beginning of such four-quarter period (except that, in making
such computation, the amount of Indebtedness under any revolving credit facility
shall be computed based upon the average balance of such Indebtedness at the end
of each month during such four-quarter period); (iii) in the case of Acquired
Indebtedness, the related acquisition, as if such acquisition had occurred at
the beginning of such four-quarter period; and (iv) any acquisition or
disposition by the Company and its Restricted Subsidiaries of any company or any
business or any assets out of the ordinary course of business, or any related
repayment of Indebtedness, in each case since the first day of such four-quarter
period, assuming such acquisition or disposition had been consummated on the
first day of such four-quarter period).
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"Default" means any event which is, or after notice or passage
of any time or both would be, an Event of Default.
"Depositary" means, with respect to the Securities issued in
the form of Global Securities, if any, The Depository Trust Company, a New York
limited purpose corporation, its nominees and successors, or any other Person
designated as the Depositary by the Company pursuant to Section 305(b), in each
case registered as a "clearing agency" under the Exchange Act and maintaining a
book-entry system that qualifies for treatment as "registered form" under
Section 163(f) of the Code.
"Designated Guarantor Senior Indebtedness" means (i) all
Guarantor Senior Indebtedness which guarantees Indebtedness under the Bank
Credit Agreement and (ii) any other Guarantor Senior Indebtedness which is
incurred pursuant to an agreement (or series of related agreements)
simultaneously entered into providing for indebtedness, or commitments to lend,
of at least $25,000,000 at the time of determination and is specifically
designated in the instrument evidencing such Guarantor Senior Indebtedness or
the agreement under which such Senior Indebtedness arises as "Designated
Guarantor Senior Indebtedness" by the Guarantor which is the obligor under the
Guarantor Senior Indebtedness.
"Designated Senior Indebtedness" means (i) all Senior
Indebtedness outstanding under the Bank Credit Agreement and (ii) any other
Senior Indebtedness which is incurred pursuant to an agreement (or series of
related agreements) simultaneously entered into providing for indebtedness, or
commitments to lend, of at least $25,000,000 at the time of determination and is
specifically designated in the instrument evidencing such Senior Indebtedness or
the agreement under which such Senior Indebtedness arises as "Designated Senior
Indebtedness" by the Company.
"Disqualified Equity Interests" means any Equity Interests
that, either by their terms or by the terms of any security into which they are
convertible or exchangeable or otherwise, are or upon the happening of an event
or passage of time would be required to be redeemed prior to any Stated Maturity
of the principal of the Securities or are redeemable at the option of the holder
thereof at any time prior to any such Stated Maturity, or are convertible into
or exchangeable for debt securities at any time prior to any such Stated
Maturity at the option of the holder thereof.
"Equity Interest" of any Person means any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of or interests in (however designated) corporate stock or other
equity participations, including partnership interests, whether general or
limited, of such Person, including any Preferred Equity Interests.
"Event of Default" has the meaning specified in Article Five.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
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"Exchange Offer" means the exchange offer by the Company of
Series B Securities for Series A Securities to be effected pursuant to Section
2(a) of the Registration Rights Agreement.
"Exchange Offer Registration Statement" means the registration
statement under the Securities Act contemplated by Section 2(a) of the
Registration Rights Agreement.
"Fair Market Value" means, with respect to any asset or
property, the sale value that would be obtained in an arm's-length transaction
between an informed and willing seller under no compulsion to sell and an
informed and willing buyer under no compulsion to buy.
"Film Contract" means contracts with suppliers that convey the
right to broadcast specified films, videotape motion pictures, syndicated
television programs or sports or other programming.
"Founders' Notes" means the term notes, dated September 30,
1990, made by the Company to Julian S. Smith and to Carolyn C. Smith pursuant to
a stock redemption agreement, dated June 19, 1990, among the Company, certain of
its Subsidiaries, Julian S. Smith, Carolyn C. Smith, David D. Smith, Frederick
G. Smith, J. Duncan Smith and Robert E. Smith.
"Generally Accepted Accounting Principles" or "GAAP" means
generally accepted accounting principles in the United States, consistently
applied, which are in effect on the date of this Indenture.
"Global Security" means a Security in book-entry form in the
form prescribed in Sections 202 through 205 evidencing all or part of the
Securities, issued to the Depositary or its nominee and registered in the name
of the Depositary or such nominee.
"Guarantee" means the guarantee by any Guarantor of the
Company's Indenture Obligations pursuant to a guarantee given in accordance with
this Indenture, including, without limitation, the Guarantees by the Guarantors
included in Article Fourteen of this Indenture and any Guarantee delivered
pursuant to Section 1014.
"Guaranteed Debt" of any Person means, without duplication,
all Indebtedness of any other Person referred to in the definition of
Indebtedness contained in this Section guaranteed directly or indirectly in any
manner by such Person, or in effect guaranteed directly or indirectly by such
Person through an agreement (i) to pay or purchase such Indebtedness or to
advance or supply funds for the payment or purchase of such Indebtedness, (ii)
to purchase, sell or lease (as lessee or lessor) property, or to purchase or
sell services, primarily for the purpose of enabling the debtor to make payment
of such Indebtedness or to assure the holder of such Indebtedness against loss,
(iii) to supply funds to, or in any other manner invest in, the debtor
(including any agreement to pay for property or services without requiring that
such property be received or such services be rendered), (iv) to maintain
working capital or equity capital of the
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debtor, or otherwise to maintain the net worth, solvency or other financial
condition of the debtor or (v) otherwise to assure a creditor against loss;
provided that the term "guarantee" shall not include endorsements for collection
or deposit, in either case in the ordinary course of business.
"Guarantor" means the Subsidiaries listed as guarantors in
this Indenture or any other guarantor of the Indenture Obligations. On the date
hereof, the Guarantors consist of all of the Company's Subsidiaries other than
Cresap Enterprises, Inc., KDSM, Inc., KDSM Licensee, Inc. and Sinclair Capital.
"Guarantor Senior Indebtedness" is defined as the principal
of, premium, if any, and interest (including interest accruing after the filing
of a petition initiating any proceeding under any state, federal or foreign
bankruptcy laws whether or not allowable as a claim in such proceeding) on any
Indebtedness of any Guarantor (other than as otherwise provided in this
definition), whether outstanding on the date of this Indenture or thereafter
created, incurred or assumed, and whether at any time owing, actually or
contingent, unless, in the case of any particular Indebtedness, the instrument
creating or evidencing the same or pursuant to which the same is outstanding
expressly provides that such Indebtedness shall not be senior in right of
payment to any Guarantee. Without limiting the generality of the foregoing,
"Guarantor Senior Indebtedness" shall include (i) the principal of, premium, if
any, and interest (including interest accruing after the filing of a petition
initiating any proceeding under any state, federal or foreign bankruptcy law
whether or not allowable as a claim in such proceeding) and all other
obligations of every nature of any Guarantor from time to time owed to the
lenders (or their agent) under the Bank Credit Agreement; provided, however,
that any Indebtedness under any refinancing, refunding or replacement of the
Bank Credit Agreement shall not constitute Guarantor Senior Indebtedness to the
extent that the Indebtedness thereunder is by its express terms subordinate to
any other Indebtedness of any Guarantor, (ii) Indebtedness evidenced by any
guarantee of the Founders' Notes and (iii) Indebtedness under Interest Rate
Agreements. Notwithstanding the foregoing, "Guarantor Senior Indebtedness" shall
not include (i) Indebtedness evidenced by the Guarantees, (ii) Indebtedness that
is subordinate or junior in right of payment to any Indebtedness of any
Guarantor, (iii) Indebtedness which when incurred and without respect to any
election under Section 1111(b) of Title 11 of the United States Code, is without
recourse to any Guarantor, (iv) Indebtedness which is represented by
Disqualified Equity Interests, (v) any liability for foreign, federal, state,
local or other taxes owed or owing by any Guarantor to the extent such liability
constitutes Indebtedness, (vi) Indebtedness of any Guarantor to a Subsidiary or
any other Affiliate of the Company or any of such Affiliate's subsidiaries,
(vii) Indebtedness evidenced by any guarantee of any Subordinated Indebtedness
or Pari Passu Indebtedness, (viii) that portion of any Indebtedness which at the
time of issuance is issued in violation of this Indenture, (ix) Indebtedness
owed by any Guarantor for compensation to employees or for services and (x) any
guarantee of the Minority Note.
"Holder" means a Person in whose name a Security is registered
in the Security Register.
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"Indebtedness" means, with respect to any Person, without
duplication, (i) all indebtedness of such Person for borrowed money or for the
deferred purchase price of property or services, excluding any trade payables
and other accrued current liabilities arising in the ordinary course of
business, but including, without limitation, all obligations, contingent or
otherwise, of such Person in connection with any letters of credit issued under
letter of credit facilities, acceptance facilities or other similar facilities
and in connection with any agreement to purchase, redeem, exchange, convert or
otherwise acquire for value any Equity Interests of such Person, or any
warrants, rights or options to acquire such Equity Interests, now or hereafter
outstanding, (ii) all obligations of such Person evidenced by bonds, notes,
debentures or other similar instruments, (iii) all indebtedness created or
arising under any conditional sale or other title retention agreement with
respect to property acquired by such Person (even if the rights and remedies of
the seller or lender under such agreement in the event of default are limited to
repossession or sale of such property), but excluding trade payables arising in
the ordinary course of business, (iv) all obligations under Interest Rate
Agreements of such Person, (v) all Capital Lease Obligations of such Person,
(vi) all Indebtedness referred to in clauses (i) through (v) above of other
Persons and all dividends of other Persons, the payment of which is secured by
(or for which the holder of such Indebtedness has an existing right, contingent
or otherwise, to be secured by) any Lien, upon or with respect to property
(including, without limitation, accounts and contract rights) owned by such
Person, even though such Person has not assumed or become liable for the payment
of such Indebtedness, (vii) all Guaranteed Debt of such Person, (viii) all
Disqualified Equity Interests valued at the greater of their voluntary or
involuntary maximum fixed repurchase price plus accrued and unpaid dividends,
and (ix) any amendment, supplement, modification, deferral, renewal, extension,
refunding or refinancing of any liability of the types referred to in clauses
(i) through (viii) above; provided, however, that the term Indebtedness shall
not include any obligations of the Company and its Restricted Subsidiaries with
respect to Film Contracts entered into in the ordinary course of business. The
amount of Indebtedness of any Person at any date shall be, without duplication,
the principal amount that would be shown on a balance sheet of such Person
prepared as of such date in accordance with GAAP and the maximum determinable
liability of any Guaranteed Debt referred to in clause (vii) above at such date.
The Indebtedness of the Company and its Restricted Subsidiaries shall not
include any Indebtedness of Unrestricted Subsidiaries so long as such
Indebtedness is non-recourse to the Company and the Restricted Subsidiaries. For
purposes hereof, the "maximum fixed repurchase price" of any Disqualified Equity
Interests which do not have a fixed repurchase price shall be calculated in
accordance with the terms of such Disqualified Equity Interests as if such
Disqualified Equity Interests were purchased on any date on which Indebtedness
shall be required to be determined pursuant to this Indenture, and if such price
is based upon, or measured by, the Fair Market Value of such Disqualified Equity
Interests, such Fair Market Value to be determined in good faith by the Board of
Directors of the issuer of such Disqualified Equity Interests.
"Indenture Obligations" means the obligations of the Company
and any other obligor under this Indenture or under the Securities, including
any Guarantor, to pay principal, premium, if any, and interest when due and
payable, and all other amounts due or to become due
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under or in connection with this Indenture, the Securities and the performance
of all other obligations to the Trustee and the Holders under this Indenture and
the Securities, according to the terms hereof and thereof.
"Independent Director" means a director of the Company other
than a director (i) who (apart from being a director of the Company or any
Subsidiary) is an employee, insider, associate or Affiliate of the Company or a
Subsidiary or has held any such position during the previous five years or (ii)
who is a director, an employee, insider, associate or Affiliate of another party
to the transaction in question.
"Initial Purchasers" shall mean Smith Barney Inc., Chase
Securities Inc., Salomon Brothers Inc and Furman Selz as initial purchasers of
the Securities.
"Initial Securities" has the meaning specified in the Recitals.
"Interest Payment Date" means the Stated Maturity of an
installment of interest on the Securities.
"Interest Rate Agreements" means one or more of the following
agreements which shall be entered into by one or more financial institutions:
interest rate protection agreements (including, without limitation, interest
rate swaps, caps, floors, collars and similar agreements) and/or other types of
interest rate hedging agreements from time to time.
"Investments" means, with respect to any Person, directly or
indirectly, any advance, loan (including guarantees), or other extension of
credit or capital contribution to (by means of any transfer of cash or other
property to others or any payment for property or services for the account or
use of others), or any purchase, acquisition or ownership by such Person of any
Equity Interests, bonds, notes, debentures or other securities or assets issued
or owned by any other Person and all other items that would be classified as
investments on a balance sheet prepared in accordance with GAAP.
"Issue Date" means July 2, 1997.
"Lien" means any mortgage, charge, pledge, lien (statutory or
otherwise), privilege, security interest, hypothecation or other encumbrance
upon or with respect to any property of any kind (including any conditional sale
or other title retention agreement, any leases in the nature thereof, and any
agreement to give any security interest), real or personal, movable or
immovable, now owned or hereafter acquired.
"Local Marketing Agreement" means a local marketing
arrangement, sale agreement, time brokerage agreement, management agreement or
similar arrangement pursuant to which a Person (i) obtains the right to sell at
least a majority of the advertising inventory of a television station on behalf
of a third party, (ii) purchases at least a majority of the air time of a
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television station to exhibit programming and sell advertising time, (iii)
manages the selling operations of a television station with respect to at least
a majority of the advertising inventory of such station, (iv) manages the
acquisition of programming for a television station, (v) acts as a program
consultant for a television station, or (vi) manages the operation of a
television station generally.
"Maturity" when used with respect to any Security means the
date on which the principal of such Security becomes due and payable as therein
provided or as provided in this Indenture, whether at Stated Maturity, the Offer
Date, or the Redemption Date and whether by declaration of acceleration, Offer
in respect of Excess Proceeds, Change of Control, call for redemption or
otherwise.
"Minority Note" means the promissory note, dated December 26,
1986, made by the Company to Frederick M. Himes, B. Stanley Resnick and Edward
A. Johnston, as representatives, pursuant to a stock purchase agreement, dated
December 22, 1986, among the Company, Commercial Radio Institute, Inc.,
Chesapeake Television, Inc. and certain individuals.
"Moody's" means Moody's Investors Service, Inc. or any
successor rating agency.
"Net Cash Proceeds" means (a) with respect to any Asset Sale
by any Person, the proceeds thereof in the form of cash or Temporary Cash
Investments including payments in respect of deferred payment obligations when
received in the form of, or stock or other assets when disposed of for, cash or
Temporary Cash Investments (except to the extent that such obligations are
financed or sold with recourse to the Company or any Restricted Subsidiary) net
of (i) brokerage commissions and other reasonable fees and expenses (including
fees and expenses of counsel and investment bankers) related to such Asset Sale,
(ii) provisions for all taxes payable as a result of such Asset Sale, (iii)
payments made to retire Indebtedness where payment of such Indebtedness is
secured by the assets or properties the subject of such Asset Sale, (iv) amounts
required to be paid to any Person (other than the Company or any Restricted
Subsidiary) owning a beneficial interest in the assets subject to the Asset Sale
and (v) appropriate amounts to be provided by the Company or any Restricted
Subsidiary, as the case may be, as a reserve, in accordance with GAAP, against
any liabilities associated with such Asset Sale and retained by the Company or
any Restricted Subsidiary, as the case may be, after such Asset Sale, including,
without limitation, pension and other post-employment benefit liabilities,
liabilities related to environmental matters and liabilities under any
indemnification obligations associated with such Asset Sale, all as reflected in
an Officers' Certificate delivered to the Trustee and (b) with respect to any
issuance or sale of Equity Interests, or debt securities or Equity Interests
that have been converted into or exchanged for Equity Interests, as referred to
under Section 1009, the proceeds of such issuance or sale in the form of cash or
Temporary Cash Investments, including payments in respect of deferred payment
obligations when received in the form of, or stock or other assets when disposed
for, cash or Temporary Cash Investments (except to the extent that such
obligations are financed or sold with recourse to the Company or any Restricted
Subsidiary), net of attorney's fees, accountant's fees and brokerage,
consultation, underwriting
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<PAGE>
and other fees and expenses actually incurred in connection with such issuance
or sale and net of taxes paid or payable as a result thereof.
"Non-payment Default" means any event (other than a Payment
Default) the occurrence of which entitles one or more Persons to accelerate the
maturity of any Designated Senior Indebtedness.
"Officers' Certificate" means a certificate signed by the
Chairman of the Board, Vice Chairman, the President or a Vice President
(regardless of vice presidential designation), and by the Treasurer, an
Assistant Treasurer, the Secretary or an Assistant Secretary, of the Company or
any Guarantor, as the case may be, and delivered to the Trustee.
"Operating Cash Flow" means, for any period, the Consolidated
Net Income of the Company and its Restricted Subsidiaries for such period, plus
(a) extraordinary net losses and net losses on sales of assets outside the
ordinary course of business during such period, to the extent such losses were
deducted in computing Consolidated Net Income, plus (b) provision for taxes
based on income or profits, to the extent such provision for taxes was included
in computing such Consolidated Net Income, and any provision for taxes utilized
in computing the net losses under clause (a) hereof, plus (c) Consolidated
Interest Expense of the Company and its Restricted Subsidiaries for such period,
plus (d) depreciation, amortization and all other non-cash charges, to the
extent such depreciation, amortization and other non-cash charges were deducted
in computing such Consolidated Net Income (including amortization of goodwill
and other intangibles, including Film Contracts and write-downs of Film
Contracts, minus (e) any cash payments contractually required to be made with
respect to Film Contracts (to the extent not previously included in computing
such Consolidated Net Income).
"Opinion of Counsel" means a written opinion of counsel, who
may be counsel for the Company, any of the Guarantors or the Trustee, unless an
Opinion of Independent Counsel is required pursuant to the terms of this
Indenture, and who shall be acceptable to the Trustee.
"Opinion of Independent Counsel" means a written opinion of
counsel issued by someone who is not an employee or consultant of the Company or
any Guarantor and who shall be acceptable to the Trustee.
"Outstanding" when used with respect to Securities means, as
of the date of determination, all Securities theretofore authenticated and
delivered under this Indenture, except:
(a) Securities theretofore cancelled by the Trustee or
delivered to the Trustee for cancellation;
(b) Securities, or portions thereof, for whose payment or
redemption money in the necessary amount has been theretofore deposited with the
Trustee or any Paying Agent (other
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than the Company or any Affiliate thereof) in trust or set aside and segregated
in trust by the Company or such Affiliate (if the Company or such Affiliate
shall act as the Paying Agent) for the Holders; provided that if such Securities
are to be redeemed, notice of such redemption has been duly given pursuant to
this Indenture or provision therefor reasonably satisfactory to the Trustee has
been made;
(c) Securities, except to the extent provided in Sections 402
and 403, with respect to which the Company has effected defeasance or covenant
defeasance as provided in Article Four; and
(d) Securities 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 reasonably satisfactory to it that such
Securities are held by a bona fide purchaser in whose hands the Securities are
valid obligations of the Company; provided, however, that in determining whether
the Holders of the requisite principal amount of Outstanding Securities have
given any request, demand, authorization, direction, notice, consent or waiver
hereunder, Securities owned by the Company, any Guarantor, or any other obligor
upon the Securities or any Affiliate of the Company, any Guarantor, or such
other obligor shall be disregarded and deemed not to be Outstanding, except
that, in determining whether the Trustee shall be protected in relying upon any
such request, demand, authorization, direction, notice, consent or waiver, only
Securities which the Trustee 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 reasonable satisfaction of the
Trustee the pledgee's right so to act with respect to such Securities and that
the pledgee is not the Company, any Guarantor or any other obligor upon the
Securities or any Affiliate of the Company, any Guarantor or such other obligor.
"Pari Passu Indebtedness" means any Indebtedness of the
Company or any Guarantor that is pari passu in right of payment to the
Securities or any Guarantee, as the case may be.
"Paying Agent" means any Person authorized by the Company to
pay the principal of, premium, if any, or interest on any Securities on behalf
of the Company.
"Payment Default" means any default in the payment of
principal of, premium, if any, or interest, on any Designated Senior
Indebtedness.
"Permitted Guarantor Junior Securities" means (so long as the
effect of any exclusion employing this definition is not to cause the Guarantee
to be treated in any case or proceeding or similar event described in clause
(a), (b) or (c) of Section 1417 as part of the same class of claims as the
Guarantor Senior Indebtedness or any class of claims pari passu with, or senior
to, the Guarantor Senior Indebtedness) for any payment or distribution, debt or
equity securities of any Guarantor or any successor corporation provided for by
a plan of reorganization
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<PAGE>
or readjustment that are subordinated at least to the same extent that the
Guarantee is subordinated to the payment of all Guarantor Senior Indebtedness
then outstanding; provided that (1) if a new corporation results from such
reorganization or readjustment, such corporation assumes any Guarantor Senior
Indebtedness not paid in full in cash or Cash Equivalents in connection with
such reorganization or readjustment and (2) the rights of the holders of such
Guarantor Senior Indebtedness are not, without the consent of such holders,
altered by such reorganization or readjustment.
"Permitted Holders" means as of the date of determination (i)
any of David D. Smith, Frederick G. Smith, J. Duncan Smith and Robert E. Smith;
(ii) family members or the relatives of the Persons described in clause (i);
(iii) any trusts created for the benefit of the Persons described in clause (i),
(ii) or (iv) or any trust for the benefit of any such trust; or (iv) in the
event of the incompetence or death of any of the Persons described in clauses
(i) and (ii), such Person's estate, executor, administrator, committee or other
personal representative or beneficiaries, in each case who at any particular
date shall beneficially own or have the right to acquire, directly or
indirectly, Equity Interests of the Company.
"Permitted Indebtedness" has the meaning specified in Section
1008.
"Permitted Investment" means (i) Investments in any Wholly
Owned Restricted Subsidiary; (ii) Indebtedness of the Company or a Restricted
Subsidiary described under clauses (vi) and (vii) of the definition of
"Permitted Indebtedness"; (iii) Temporary Cash Investments; (iv) Investments
acquired by the Company or any Restricted Subsidiary in connection with an Asset
Sale permitted under Section 1013 to the extent such Investments are non-cash
proceeds as permitted under such covenant; (v) guarantees of Indebtedness
otherwise permitted by the Indenture; (vi) Investments in existence on the date
of this Indenture; (vii) loans up to an aggregate of $1,000,000 outstanding at
any one time to employees pursuant to benefits available to the employees of the
Company or any Restricted Subsidiary from time to time in the ordinary course of
business; (viii) any Investments in the Securities; (ix) a Guarantee by any
Guarantor and any other guarantee given by a Guarantor of any Indebtedness of
the Company in accordance with this Indenture; (x) Investments by the Company or
any Restricted Subsidiary in a Person, if as a result of such Investment (I)
such Person becomes a Restricted Subsidiary or (II) such Person is merged,
consolidated with or into, or transfers or conveys substantially all of its
assets to, or is liquidated into, the Company or a Restricted Subsidiary; and
(xi) other Investments that do not exceed $5,000,000 at any time outstanding.
"Permitted Junior Securities" means (so long as the effect of
any exclusion employing this definition is not to cause the Securities to be
treated in any case or proceeding or similar event described in clause (a), (b)
or (c) of Section 1202 as part of the same class of claims as the Senior
Indebtedness or any class of claims pari passu with, or senior to, the Senior
Indebtedness) for any payment or distribution, debt or equity securities of the
Company or any successor corporation provided for by a plan of reorganization or
readjustment that are subordinated at least to the same extent that the
Securities are subordinated to the payment of all
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Senior Indebtedness then outstanding; provided that (1) if a new corporation
results from such reorganization or readjustment, such corporation assumes any
Senior Indebtedness not paid in full in cash or Cash Equivalents in connection
with such reorganization or readjustment and (2) the rights of the holders of
such Senior Indebtedness are not, without the consent of such holders, altered
by such reorganization or readjustment.
"Permitted Subsidiary Indebtedness" means:
(i) Indebtedness of any Guarantor under Capital Lease
Obligations incurred in the ordinary course of business; and
(ii) Indebtedness of any Guarantor (a) issued to finance or
refinance the purchase or construction of any assets of such Guarantor or (b)
secured by a Lien on any assets of such Guarantor where the lender's sole
recourse is to the assets so encumbered, in either case (x) to the extent the
purchase or construction prices for such assets are or should be included in
"property and equipment" in accordance with GAAP and (y) if the purchase or
construction of such assets is not part of any acquisition of a Person or
business unit.
"Person" means any individual, corporation, limited liability
company, partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political
subdivisions 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 308 in exchange for a
mutilated Security or in lieu of a lost, destroyed or stolen Security shall be
deemed to evidence the same debt as the mutilated, lost, destroyed or stolen
Security.
"Preferred Equity Interest," as applied to the Equity Interest
of any Person, means an Equity Interest of any class or classes (however
designated) which is preferred as to the payment of dividends or distributions,
or as to the distribution of assets upon any voluntary or involuntary
liquidation or dissolution of such person, over Equity Interests of any other
class of such Person.
"Prospectus" means the prospectus included in a Registration
Statement, including any preliminary prospectus, and any such prospectus as
amended or supplemented by any prospectus supplement, including any such
prospectus supplement with respect to the terms of the offering of any portion
of the Series A Securities covered by a Shelf Registration Statement, and by all
other amendments and supplements to such prospectus, including post-effective
amendments, and in each case including all material incorporated by reference
therein.
"Public Equity Offering" means, with respect to any Person, an
underwritten public offering by such Person of some or all of its Equity
Interests (other than Disqualified
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Equity Interests), the net proceeds of which (after deducting any underwriting
discounts and commissions) exceed $10,000,000.
"Qualified Equity Interests" of any Person means any and all
Equity Interests of such Person other than Disqualified Equity Interests.
"Redemption Date" when used with respect to any Security to be
redeemed pursuant to any provision in this Indenture 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 pursuant to any provision in this Indenture means the price at which
it is to be redeemed pursuant to this Indenture.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of July 2, 1997, among the Company, the Guarantors and the
Initial Purchasers.
"Registration Statement" means any registration statement of
the Company which covers any of the Series A Securities or Series B Securities
pursuant to the provisions of the Registration Rights Agreement, and all
amendments and supplements to any such Registration Statement, including
post-effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated by reference
therein.
"Regular Record Date" for the interest payable on any Interest
Payment Date means the 15th day (whether or not a Business Day) next preceding
such Interest Payment Date.
"Responsible Officer" when used with respect to the Trustee
means any officer assigned to the Corporate Trust Office or the agent of the
Trustee appointed hereunder, including any vice president, assistant vice
president, assistant secretary, or any other officer or assistant officer of the
Trustee or the agent of the Trustee appointed hereunder to whom any corporate
trust matter is referred because of his or her knowledge of and familiarity with
the particular subject.
"Restricted Payment" has the meaning specified in Section 1009.
"Restricted Securities 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 a Restricted Security.
"Restricted Securities Transfer Certificate" means a
certificate substantially in the form set forth in Exhibit A.
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"Restricted Security" means each Security required pursuant to
Section 306 to bear a Restricted Securities Legend.
"Restricted Subsidiary" means a Subsidiary of the Company
other than an Unrestricted Subsidiary.
"Rule 144A Information" shall be such information with respect
to the Company and the Guarantors as is specified pursuant to Rule 144A(d)(4)
under the Securities Act (or any successor provision thereto).
"Sale and Leaseback Transaction" means any transaction or
series of related transactions pursuant to which the Company or a Restricted
Subsidiary sells or transfers any property or asset in connection with the
leasing, or the resale against installment payments, of such property or asset
to the seller or transferor.
"S&P" means Standard & Poor's Ratings Service, a division of
the McGraw Hill Companies, or any successor rating agency.
"Securities" has the meaning specified in the Recitals.
"Securities Act" means the Securities Act of 1933, as amended.
"Security Register" and "Security Registrar" have the
respective meanings specified in Section 306.
"Senior Indebtedness" is defined as the principal of, premium,
if any, and interest (including interest accruing after the filing of a petition
initiating any proceeding under any state, federal or foreign bankruptcy law
whether or not allowable as a claim in such proceeding) on any Indebtedness of
the Company (other than as otherwise provided in this definition), whether
outstanding on the date of this Indenture or thereafter created, incurred or
assumed, and whether at any time owing, actually or contingent, unless, in the
case of any particular Indebtedness, the instrument creating or evidencing the
same or pursuant to which the same is outstanding expressly provides that such
Indebtedness shall not be senior in right of payment to the Securities. Without
limiting the generality of the foregoing, "Senior Indebtedness" shall include
the principal of, premium, if any, and interest (including interest accruing
after the filing of a petition initiating any proceeding under any state,
federal or foreign bankruptcy law whether or not allowable as a claim in such
proceeding) and all other obligations of every nature of the Company from time
to time owed to the lenders (or their agent) under the Bank Credit Agreement;
provided, however, that any Indebtedness under any refinancing, refunding or
replacement of the Bank Credit Agreement shall not constitute Senior
Indebtedness to the extent that the Indebtedness thereunder is by its express
terms subordinate to any other Indebtedness of the Company, (ii) Indebtedness
outstanding under the Founders' Notes and (iii) Indebtedness under Interest Rate
Agreements. Notwithstanding the foregoing, "Senior Indebtedness" shall not
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include (i) Indebtedness evidenced by the Securities, (ii) Indebtedness that is
subordinate or junior in right of payment to any Indebtedness of the Company,
(iii) Indebtedness which when incurred and without respect to any election under
Section 1111(b) of Title 11 of the United States Code, is without recourse to
the Company, (iv) Indebtedness which is represented by Disqualified Equity
Interests, (v) any liability for foreign, federal, state, local or other taxes
owed or owing by the Company to the extent such liability constitutes
Indebtedness, (vi) Indebtedness of the Company to a Subsidiary or any other
Affiliate of the Company or any of such Affiliate's subsidiaries, (vii) that
portion of any Indebtedness which at the time of issuance is issued in violation
of this Indenture, (viii) Indebtedness owed by the Company for compensation to
employees or for services and (ix) Indebtedness outstanding under the Minority
Note.
"Series A Securities" has the meaning specified in the
Recitals.
"Series B Securities" has the meaning specified in the
Recitals.
"Shelf Registration Statement" means a "shelf" registration
statement of the Company pursuant to Section 2(b) of the Registration Rights
Agreement, which covers all or a portion of the Registrable Securities (as
defined in the Registration Rights Agreement) on an appropriate form under Rule
415 under the Securities Act, or any similar rule that may be adopted by the
Commission, and all amendments and supplements to such registration statement,
including post-effective amendments, in each case including the Prospectus
contained therein, all exhibits thereto and all material incorporated by
reference therein.
"Special Record Date" for the payment of any Defaulted
Interest means a date fixed by the Trustee pursuant to Section 309.
"Stated Maturity" when used with respect to any Indebtedness
or any installment of interest thereon, means the date specified in such
Indebtedness as the fixed date on which the principal of such Indebtedness or
such installment of interest is due and payable.
"Subordinated Indebtedness" means Indebtedness of the Company
or any Guarantor subordinated in right of payment to the Securities or a
Guarantee, as the case may be.
"Subsidiary" means any Person a majority of the equity
ownership or the Voting Stock of which is at the time owned, directly or
indirectly, by the Company or by one or more other Subsidiaries, or by the
Company and one or more other Subsidiaries.
"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. For the purposes of this definition, any
Security authenticated and delivered under Section 308 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.
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"Temporary Cash Investments" means (i) any evidence of
Indebtedness, maturing not more than one year after the date of acquisition,
issued by the United States of America, or an instrumentality or agency thereof
and guaranteed fully as to principal, premium, if any, and interest by the
United States of America, (ii) any certificate of deposit, maturing not more
than one year after the date of acquisition, issued by, or time deposit of, a
commercial banking institution (including the Trustee) that is a member of the
Federal Reserve System and that has combined capital and surplus and undivided
profits of not less than $500,000,000, whose debt has a rating, at the time as
of which any investment therein is made, of "P-1" (or higher) according to
Moody's or "A-1" (or higher) according to S&P, (iii) commercial paper, maturing
not more than one year after the date of acquisition, issued by a corporation
(other than an Affiliate or Subsidiary of the Company) (including the Trustee)
organized and existing under the laws of the United States of America with a
rating, at the time as of which any investment therein is made, of "P-1" (or
higher) according to Moody's or "A-1" (or higher) according to S&P and (iv) any
money market deposit accounts issued or offered by a domestic commercial bank
having capital and surplus in excess of $500,000,000.
"Trust Indenture Act" means the Trust Indenture Act of 1939,
as 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.
"Unrestricted Subsidiary" means (i) any Subsidiary of the
Company that at the time of determination shall be an Unrestricted Subsidiary
(as designated by the Board of Directors of the Company, as provided below) and
(ii) any Subsidiary of an Unrestricted Subsidiary. The Board of Directors of the
Company may designate any Subsidiary of the Company (including any newly
acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary if all of
the following conditions apply: (a) such Subsidiary is not liable, directly or
indirectly, with respect to any Indebtedness other than Unrestricted Subsidiary
Indebtedness and (b) any Investment in such Subsidiary made as a result of
designating such Subsidiary an Unrestricted Subsidiary shall not violate the
provisions of Section 1019. Any such designation by the Board of Directors of
the Company shall be evidenced to the Trustee by filing with the Trustee a Board
Resolution giving effect to such designation and an Officers' Certificate
certifying that such designation complies with the foregoing conditions. The
Board of Directors of the Company may designate any Unrestricted Subsidiary as a
Restricted Subsidiary; provided that immediately after giving effect to such
designation, the Company could incur $1.00 of additional Indebtedness (other
than Permitted Indebtedness) pursuant to the restrictions under Section 1008.
KDSM, Inc., KDSM License, Inc., Sinclair Capital and Cresap, Inc. are
Unrestricted Subsidiaries.
"Unrestricted Subsidiary Indebtedness" of any Unrestricted
Subsidiary means Indebtedness of such Unrestricted Subsidiary (i) as to which
neither the Company nor any Restricted Subsidiary is directly or indirectly
liable (by virtue of the Company or any such
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Restricted Subsidiary being the primary obligor on, guarantor of, or otherwise
liable in any respect to, such Indebtedness), except Guaranteed Debt of the
Company or any Restricted Subsidiary to any Affiliate, in which case (unless the
incurrence of such Guaranteed Debt resulted in a Restricted Payment at the time
of incurrence) the Company shall be deemed to have made a Restricted Payment
equal to the principal amount of any such Indebtedness to the extent guaranteed
at the time such Affiliate is designated an Unrestricted Subsidiary and (ii)
which, upon the occurrence of a default with respect thereto, does not result
in, or permit any holder of any Indebtedness of the Company or any Restricted
Subsidiary to declare, a default on such Indebtedness of the Company or any
Restricted Subsidiary or cause the payment thereof to be accelerated or payable
prior to its Stated Maturity.
"Voting Stock" means stock of the class or classes pursuant to
which the holders thereof have the general voting power under ordinary
circumstances to elect at least a majority of the board of directors, managers
or trustees of a corporation (irrespective of whether or not at the time stock
of any other class or classes shall have or might have voting power by reason of
the happening of any contingency).
"Wholly Owned Restricted Subsidiary" means a Restricted
Subsidiary all the Equity Interest of which is owned by the Company or another
Wholly Owned Restricted Subsidiary.
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Section 102. Other Definitions.
Defined in
Term Section
- ---- -------
"Act" 105
"Change of Control Offer" 1016
"Change of Control Purchase Date" 1016
"Change of Control Purchase Notice" 1016
"Change of Control Purchase Price" 1016
"covenant defeasance" 403
"Defaulted Interest" 309
"defeasance" 402
"Defeasance Redemption Date" 404
"Defeased Securities" 401
"Deficiency" 1013
"Excess Proceeds" 1013
"Guarantor Senior Representative" 1424
"Initial Blockage Period" 1203
"Offer" 1013
"Offer Date" 1013
"Offered Price" 1013
"Pari Passu Debt Amount" 1013
"Pari Passu Offer" 1013
"Payment Blockage Period" 1203
"Penalty Interest" 202
"Permitted Guarantor Junior Securities" 1417
"Permitted Indebtedness" 1008
"Permitted Payments" 1009
"Physical Securities" 305
"Prescribed Time Period" 202
"QIB" 203
"Required Filing Dates" 1020
"Security Amount" 1013
"Senior Representative" 1203
"Surviving Entity" 801
"U.S. Government Obligations" 404
Section 103. 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, any
Guarantor and any other obligor on the Securities shall furnish to the Trustee
an Officers' Certificate stating that all conditions precedent,
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if any, provided for in this Indenture (including any covenants compliance with
which constitutes a condition precedent) relating to the proposed action have
been complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with, except
that, in the case of any such application or request as to which the furnishing
of such documents, certificates and/or opinions is specifically required by any
provision of this Indenture relating to such particular application or request,
no additional certificate or opinion need be furnished.
Every certificate or Opinion of Counsel with respect to
compliance with a condition or covenant provided for in this Indenture shall
include:
(a) a statement that each individual signing such certificate
or opinion has read such covenant or condition and the definitions herein
relating thereto;
(b) 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;
(c) 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
(d) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 104. 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 or opinion of an officer of the Company, any
Guarantor or other obligor of the Securities may be based, insofar as it relates
to legal matters, upon a certificate or opinion of, or representations by,
counsel, unless such officer knows that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate or opinion may be based,
insofar as it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company, any Guarantor or
other obligor of the Securities stating that the information with respect to
such factual matters is in the possession of the Company, any Guarantor or other
obligor of the Securities, unless such counsel knows that the certificate or
opinion or
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representations with respect to such matters are erroneous. Opinions of Counsel
required to be delivered to the Trustee may have qualifications customary for
opinions of the type required and counsel delivering such Opinions of Counsel
may rely on certificates of the Company or government or other officials
customary for opinions of the type required, including certificates certifying
as to matters of fact, including that various financial covenants have been
complied with.
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 105. Acts of Holders.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be given or taken
by Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Indenture, 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 or the authority
of the person executing the same, may also be proved in any other manner which
the Trustee deems sufficient in accordance with such reasonable rules as the
Trustee may determine.
(b) The ownership of Securities shall be proved by the
Security Register.
(c) Any request, demand, authorization, direction, notice,
consent, waiver or other action by the Holder of any Security shall bind every
future Holder of the same Security or the Holder of every Security issued upon
the transfer thereof or in exchange therefor or in lieu thereof, in respect of
anything done, suffered or omitted to be done by the Trustee, any Paying Agent
or the Company or any Guarantor in reliance thereon, whether or not notation of
such action is made upon such Security.
(d) If the Company shall solicit from the Holders any request,
demand, authorization, direction, notice, consent, waiver or other Act, the
Company may, at its option, by or pursuant to a Board Resolution, fix in advance
a record date for the determination of such Holders entitled to give such
request, demand, authorization, direction, notice, consent, waiver or other Act,
but the Company shall have no obligation to do so. Notwithstanding Trust
Indenture Act Section 316(c), any such record date shall be the record date
specified in or pursuant to such Board Resolution, which shall be a date not
more than 30 days prior to the first solicitation of
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Holders generally in connection therewith and no later than the date such
solicitation is completed.
In the absence of any such record date fixed by the Company,
regardless as to whether a solicitation of the Holders is occurring on behalf of
the Company or any Holder, the Trustee may, at its option, fix in advance a
record date for the determination of such Holders entitled to give such request,
demand, authorization, direction, notice, consent, waiver or other Act, but the
Trustee shall have no obligation to do so. Any such record date shall be a date
not more than 30 days prior to the first solicitation of Holders generally in
connection therewith and no later than a date such solicitation is completed.
If such a record date is fixed, such request, demand,
authorization, direction, notice, consent, waiver or other Act may be given
before or after such record date, but only the Holders of record at the close of
business on such record date shall be deemed to be Holders for purposes of
determining whether Holders of the requisite proportion of Securities then
Outstanding have authorized or agreed or consented to such request, demand,
authorization, direction, notice, consent, waiver or other Act, and for this
purpose the Securities then Outstanding shall be computed as of such record
date; provided that no such request, demand, authorization, direction, notice,
consent, waiver or other Act by the Holders on such record date shall be deemed
effective unless it shall become effective pursuant to the provisions of this
Indenture not later than six months after the record date.
Section 106. Notices, etc., to Trustee, the Company and any
Guarantor.
Any request, demand, authorization, direction, notice,
consent, waiver or Act of Holders or other document provided or permitted by
this Indenture to be made upon, given or furnished to, or filed with:
(a) the Trustee by any Holder or by the Company or any
Guarantor or any other obligor of the Securities or a Senior Representative or
holder of Senior Indebtedness shall be sufficient for every purpose hereunder if
in writing and mailed, first-class postage prepaid, or delivered by recognized
overnight courier, to or with the Trustee at the Corporate Trust Office,
Attention: Corporate Trust Division, or at any other address previously
furnished in writing to the Holders, the Company, any Guarantor, any other
obligor of the Securities or a Senior Representative or holder of Senior
Indebtedness by the Trustee; or
(b) the Company or any Guarantor shall be sufficient for every
purpose (except as provided in Section 501(c)) hereunder if in writing and
mailed, first-class postage prepaid, or delivered by recognized overnight
courier, to the Company or such Guarantor addressed to it at Sinclair Broadcast
Group, Inc., 2000 West 41st Street, Baltimore, Maryland 21211, Attention:
President, or at any other address previously furnished in writing to the
Trustee by the Company;
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Section 107. 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, or
delivered by recognized overnight courier, to each Holder affected by such
event, at his address as it appears in the Security Register, not later than the
latest date, and not earlier than the earliest date, prescribed for the giving
of such notice. In any case where notice to Holders is given by mail, neither
the failure to mail such notice, nor any defect in any notice so mailed, to any
particular Holder shall affect the sufficiency of such notice with respect to
other Holders. Any notice when mailed to a Holder in the aforesaid manner shall
be conclusively deemed to have been received by such Holder whether or not
actually received by such Holder. Where this Indenture provides for notice in
any manner, such notice may be waived in writing by the Person entitled to
receive such notice, either before or after the event, and such waiver shall be
the equivalent of such notice. Waivers of notice by Holders shall be filed with
the Trustee, but such filing shall not be a condition precedent to the validity
of any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or
by reason of any other cause, it shall be impracticable to mail notice of any
event as required by any provision of this Indenture, then any method of giving
such notice as shall be reasonably satisfactory to the Trustee shall be deemed
to be a sufficient giving of such notice.
Section 108. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with
any provision of the Trust Indenture Act or another provision which is required
or deemed to be included in this Indenture by any of the provisions of the Trust
Indenture Act, the provision or requirement of the Trust Indenture Act shall
control. If any provision of this Indenture modifies or excludes any provision
of the Trust Indenture Act that may be so modified or excluded, the latter
provision shall be deemed to apply to this Indenture as so modified or to be
excluded, as the case may be.
Section 109. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of
Contents are for convenience only and shall not affect the construction hereof.
Section 110. Successors and Assigns.
All covenants and agreements in this Indenture by the Company
and the Guarantors shall bind their successors and assigns, whether so expressed
or not.
Section 111. Separability Clause.
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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 112. Benefits of Indenture.
Nothing in this Indenture or in the Securities or the
Guarantees, express or implied, shall give to any Person (other than the parties
hereto and their successors hereunder, any Paying Agent, the Holders and the
holders of Senior Indebtedness or Guarantor Senior Indebtedness) any benefit or
any legal or equitable right, remedy or claim under this Indenture.
Section 113. Governing Law.
THIS INDENTURE AND THE SECURITIES AND THE GUARANTEES SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
(WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF).
Section 114. Legal Holidays.
In any case where any Interest Payment Date, Redemption 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 or 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 or Redemption Date, or at the
Stated Maturity and no interest shall accrue with respect to such payment for
the period from and after such Interest Payment Date, Redemption Date or Stated
Maturity, as the case may be, to the next succeeding Business Day.
Section 115. Schedules and Exhibits.
All schedules and exhibits attached hereto are by this
reference made a part hereof with the same effect as if herein set forth in
full.
Section 116. Counterparts.
This Indenture may be executed in any number of counterparts,
each of which shall be an original; but such counterparts shall together
constitute but one and the same instrument.
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ARTICLE II
SECURITY FORMS
Section 201. Forms Generally.
The Securities and the Trustee's certificate of authentication
shall be in substantially the forms set forth in this Article, with such
appropriate 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, any
organizational document or governing instrument or applicable law or as may,
consistently herewith, be determined by the officers executing such Securities,
as evidenced by their execution of the Securities. Any portion of the text of
any Security may be set forth on the reverse thereof, with an appropriate
reference thereto on the face of the Security.
The definitive Securities shall be printed, lithographed or
engraved or produced by any combination of these methods or may be produced in
any other manner permitted by the rules of any securities exchange on which the
Securities may be listed, all as determined by the officers executing such
Securities, as evidenced by their execution of such Securities.
The terms and provisions contained in the form of Securities
set forth in Sections 202 through 205 shall constitute, and are expressly made,
a part of this Indenture and, to the extent applicable, the Company, the
Guarantors and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound thereby.
Section 202. Form of Face of Security.
(a) The form of the face of any Series A Security
authenticated and delivered hereunder shall be substantially as follows:
Unless and until (i) a Series A Security is sold under an
effective Registration Statement or (ii) a Series A Security is exchanged for a
Series B Security in connection with an effective Registration Statement, in
each case pursuant to the Registration Rights Agreement, then each Series A
Security shall bear the legend set forth below (the "Restricted Securities
Legend") on the face thereof:
SINCLAIR BROADCAST GROUP, INC.
------------------------------
9% SENIOR SUBORDINATED NOTE DUE 2007, SERIES A [IF THE
SECURITY IS A RESTRICTED SECURITY, INSERT -- THIS SECURITY HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
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"SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT AS SET
FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS
A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) (AN "ACCREDITED INVESTOR"),
(2) AGREES THAT IT WILL NOT WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THIS
SECURITY RESELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE ISSUER OR
ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C)
INSIDE THE UNITED STATES TO AN ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER,
FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND
AGREEMENTS (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE), (D)
PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE), OR (E) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE TO EACH
PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT
OF THIS LEGEND.
No. $ ______________
-----------------------
SINCLAIR BROADCAST GROUP, INC., a Maryland corporation (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 __________ United
States dollars ($________) on July 15, 2007, at the office or agency of the
Company referred to below, and to pay interest thereon from July 2, 1997, or
from the most recent Interest Payment Date to which interest has been paid or
duly provided for, semiannually on January 15 and July 15, in each year,
commencing January 15, 1998 at the rate of 9% per annum, plus Penalty Interest,
if any, in United States dollars, until the principal hereof is paid or duly
provided for.
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 Series A 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 January 1 or July 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, and interest on such
defaulted interest at the interest rate borne by the Series A Securities, to the
extent lawful, shall forthwith cease to be payable to the Holder on such Regular
Record Date, and may be paid to the Person in whose name this Series A Security
(or one or more 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 Series A Securities
not less than 10 days
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prior to such Special Record Date, or may be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Series A Securities may be listed, and upon such notice as may be
required by such exchange, all as more fully provided in said Indenture.
The Holder of this Series A Security is entitled to the
benefits of the Registration Rights Agreement, dated as of July 2, 1997, among
the Company, the Guarantors and the Initial Purchasers, pursuant to which,
subject to the terms and conditions thereof, the Company is obligated, among
other things, to consummate the Exchange Offer pursuant to which the Holder of
this Series A Security shall have the right to exchange this Series A Security
for 9% Senior Subordinated Notes due 2007, Series B (herein called the "Series B
Securities") in like principal amount as provided therein. The Series A
Securities and the Series B Securities are together referred to as the
"Securities." The Series A Securities rank pari passu in right of payment with
the Series B Securities.
Additional interest ("Penalty Interest") will be assessed on
the Series A Securities as follows:
(i) (A) if an Exchange Offer Registration Statement (or, in
the event of a change in applicable law or due to current interpretations by the
Commission, the Company is not permitted to effect the Exchange Offer, a Shelf
Registration Statement) is not filed within 60 days following the Closing Date,
(B) in the event that within 30 days after consummation of the Exchange Offer,
any Holder shall notify the Company that such Holder (x) is prohibited by
applicable law or Commission policy from participating in the Exchange Offer,
(y) may not resell Exchange Securities acquired by it in the Exchange Offer to
the public without delivering a prospectus and that the prospectus contained in
the Exchange Offer Registration Statement is not appropriate or available for
such resales by such Holder or (z) is a broker-dealer and holds Series A
Securities acquired directly from the Company or an "affiliate" of the Company
and a Shelf Registration Statement is not filed within 60 days after such notice
or (C) upon the request of an Initial Purchaser, a Shelf Registration Statement
is not filed within 60 days after such request, then commencing on either the
61st day after the Closing Date or the expiration of either of the 60-day time
periods set forth in clauses (B) or (C) above (either, a "Prescribed Time
Period"), as the case may be, Penalty Interest shall be accrued on the Series A
Securities over and above the stated payment rates thereon at a rate of .50% per
annum for the first 90 days immediately following either the 61st day after the
Closing Date or the expiration of the applicable Prescribed Time Period, as the
case may be, such Penalty Interest rate increasing by an additional .25% per
annum at the beginning of each subsequent 90-day period;
(ii) if an Exchange Offer Registration Statement or a Shelf
Registration Statement is filed pursuant to clause (i) of the preceding full
paragraph and is not declared effective within either 120 days following the
Closing Date or 60 days following the expiration of the applicable Prescribed
Time Period, as the case may be, then commencing on the 121st day after either
the Closing Date or the 61st day following the expiration of the applicable
Prescribed Time Period, as
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the case may be, Penalty Interest shall be accrued on the Series A Securities
over and above the accrued stated payment rates thereon at a rate of .50% per
annum for the first 90 days immediately following the 121st day after either the
Closing Date or the 61st day after the expiration of the applicable Prescribed
Time Period, as the case may be, such Penalty Interest rate increasing by an
additional .25% per annum at the beginning of each subsequent 90-day period; and
(iii) if either (A) the Company has not exchanged the Exchange
Securities (as defined in the Registration Rights Agreement) for all of the
Series A Securities validly tendered in accordance with the terms of the
Exchange Offer on or prior to 165 days after the Closing Date, or (B) if
applicable, a Shelf Registration Statement has been declared effective and such
Shelf Registration Statement ceases to be effective prior to two years from its
original effective date or such shorter period that will terminate when all of
the Series A Securities covered by the Shelf Registration Statement have been
sold pursuant to the Shelf Registration Statement, then, subject to certain
exceptions, Penalty Interest shall be accrued on the Series A Securities over
and above the stated payment rates at a rate of .50% per annum for the first 60
days immediately following the (x) 166th day after the Closing Date in the case
of (A) above or (y) the day such Shelf Registration Statement ceases to be
effective in the case of (B) above, such Penalty Interest rate increasing by an
additional .25% per annum at the beginning of each subsequent 90-day period;
provided, however, that the Penalty Interest rate on the Series A Securities may
not exceed 1.5% per annum; and provided, further, that (1) upon the filing of
the Exchange Offer Registration Statement or a Shelf Registration Statement (in
the case of (i) above), (2) upon the effectiveness of the Exchange Offer
Registration Statement or a Shelf Registration Statement (in the case of (ii)
above), or (3) upon the exchange of Exchange Securities for all Series A
Securities tendered in the Exchange Offer or upon the effectiveness of the Shelf
Registration Statement which had ceased to remain effective prior to two years
from its original effective date (in the case of (iii) above), Penalty Interest
as a result of such clause (i), (ii) or (iii) shall cease to accrue.
Any Penalty Interest due pursuant to clause (i), (ii) or (iii)
above will be payable in cash on the Interest Payment Date related to the Series
A Securities. The Penalty Interest will be determined by multiplying the
applicable Penalty Interest rate by the principal amount of the Series A
Securities, multiplied by a fraction the numerator of which is the number of
days such Penalty interest rate was applicable during such period, and the
denominator of which is 360.
Payment of the principal of, premium, if any, and interest on
this Series A Security will be made at the office or agency of the Company
maintained for that purpose, in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts; provided, however, that payment of interest may be made at the
option of the Company by check mailed to the address of the Person entitled
thereto as such address shall appear on the Security Register. If any of the
Series A Securities are held
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<PAGE>
by the Depositary, payments of interest to the Depositary may be made by wire
transfer to the Depositary. Interest shall be computed on the basis of a 360-day
year of twelve 30-day months.
Reference is hereby made to the further provisions of this
Series A 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.
This Series A Security is entitled to the benefits of
Guarantees by each of the Guarantors of the punctual payment when due of the
Indenture Obligations made in favor of the Trustee for the benefit of the
Holders. Reference is hereby made to Article Fourteen of the Indenture for a
statement of the respective rights, limitations of rights, duties and
obligations under the Guarantees of each of the Guarantors.
All references in this Series A Security or in the Indenture
to accrued and unpaid interest shall be deemed to include, to the extent
applicable, a reference to Penalty Interest.
Unless the certificate of authentication hereon has been duly
executed by the Trustee referred to on the reverse hereof or by the
authenticating agent appointed as provided in the Indenture by manual signature,
this Series A Security shall not be entitled to any benefit under the Indenture,
or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed by the manual or facsimile signature of its authorized officers
and its corporate seal to be affixed or reproduced hereon.
Dated: SINCLAIR BROADCAST GROUP, INC.
By:
---------------------------------
Attest:
[SEAL]
Secretary
(b) The form of the face of any Series B Security
authenticated and delivered hereunder shall be substantially as follows:
SINCLAIR BROADCAST GROUP, INC.
------------------------------
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<PAGE>
9% SENIOR SUBORDINATED NOTE DUE 2007, SERIES B
No. $ ____________
-----------------------
SINCLAIR BROADCAST GROUP, INC., a Maryland corporation (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 _______________
United States dollars ($_________) on July 15, 2007, at the office or agency of
the Company referred to below, and to pay interest thereon from July 2, 1997, or
from the most recent Interest Payment Date to which interest has been paid or
duly provided for, semiannually on January 15 and July 15, in each year,
commencing January 15, 1998 at the rate of 9% per annum, plus Penalty Interest,
if any, in United States dollars, until the principal hereof is paid or duly
provided for.
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 Series B 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 January 1 or July 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, and interest on such
defaulted interest at the interest rate borne by the Series B Securities, to the
extent lawful, shall forthwith cease to be payable to the Holder on such Regular
Record Date, and may be paid to the Person in whose name this Series B Security
(or one or more 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 Series B Securities
not less than 10 days prior to such Special Record Date, or may be paid at any
time in any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Series B Securities may be listed, and upon
such notice as may be required by such exchange, all as more fully provided in
said Indenture.
This Series B Security was issued pursuant to the Exchange
Offer pursuant to which the 9% Senior Subordinated Notes due 2007, Series A
(herein called the "Series A Securities") in like principal amount were
exchanged for the Series B Securities. The Series B Securities rank pari passu
in right of payment with the Series A Securities.
In addition, pursuant to the Registration Rights Agreement,
dated as of July 2, 1997, among the Company, the Guarantors and the Initial
Purchasers for any period in which the Series A Security exchanged for this
Series B Security was outstanding:
(i) (A) if an Exchange Offer Registration Statement (or, in
the event of a change in applicable law or due to current interpretations by the
Commission, the Company is not permitted to effect the Exchange Offer, a Shelf
Registration Statement) is not filed within 60 days following the Closing Date,
(B) in the event that within 30 days after consummation of the
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<PAGE>
Exchange Offer, any Holder shall notify the Company that such Holder (x) is
prohibited by applicable law or Commission policy from participating in the
Exchange Offer, (y) may not resell Exchange Securities acquired by it in the
Exchange Offer to the public without delivering a prospectus and that the
prospectus contained in the Exchange Offer Registration Statement is not
appropriate or available for such resales by such Holder or (z) is a
broker-dealer and holds Securities acquired directly from the Company or an
"affiliate" of the Company and a Shelf Registration Statement is not filed
within 60 days after such notice or (C) upon the request of an Initial
Purchaser, a Shelf Registration Statement is not filed within 60 days after such
request, then commencing on either the 61st day after the Closing Date or the
expiration of either of the 60-day time periods set forth in clauses (B) or (C)
above (either, a "Prescribed Time Period"), as the case may be, Penalty Interest
shall be accrued on the Series A Securities over and above the stated payment
rates thereon at a rate of .50% per annum for the first 90 days immediately
following either the 61st day after the Closing Date or the expiration of the
applicable Prescribed Time Period, as the case may be, such Penalty Interest
rate increasing by an additional .25% per annum at the beginning of each
subsequent 90-day period;
(ii) if an Exchange Offer Registration Statement or a Shelf
Registration Statement is filed pursuant to clause (i) of the preceding full
paragraph and is not declared effective within either 120 days following the
Closing Date or 60 days following the expiration of the applicable Prescribed
Time Period, as the case may be, then commencing on the 121st day after either
the Closing Date or the 61st day following the expiration of the applicable
Prescribed Time Period, as the case may be, Penalty Interest shall be accrued on
the Series A Securities over and above the accrued stated payment rates thereon
at a rate of .50% per annum for the first 90 days immediately following the
121st day after either the Closing Date or the 61st day after the expiration of
the applicable Prescribed Time Period, as the case may be, such Penalty Interest
rate increasing by an additional .25% per annum at the beginning of each
subsequent 90-day period; and
(iii) if either (A) the Company has not exchanged the Exchange
Securities (as defined in the Registration Rights Agreement) for all of the
Securities validly tendered in accordance with the terms of the Exchange Offer
on or prior to 165 days after the Closing Date or (B) if applicable, a Shelf
Registration Statement has been declared effective and such Shelf Registration
Statement ceases to be effective prior to two years from its original effective
date or such shorter period that will terminate when all of the Series A
Securities covered by the Shelf Registration Statement have been sold pursuant
to the Shelf Registration Statement, then, subject to certain exceptions,
Penalty Interest shall be accrued on the Series A Securities over and above the
stated payment rates at a rate of .50% per annum for the first 60 days
immediately following the (x) 166th day after the Closing Date in the case of
(A) above or (y) the day such Shelf Registration Statement ceases to be
effective in the case of (B) above, such Penalty Interest rate increasing by an
additional .25% per annum at the beginning of each subsequent 90-day period;
provided, however, that the Penalty Interest rate on the Series A Securities may
not exceed 1.5% per annum; and provided, further, that (1) upon the filing of
the Exchange Offer Registration
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<PAGE>
Statement or a Shelf Registration Statement (in the case of (i) above), (2) upon
the effectiveness of the Exchange Offer Registration Statement or a Shelf
Registration Statement (in the case of (ii) above) or (3) upon the exchange of
Exchange Securities for all Series A Securities tendered in the Exchange Offer
or upon the effectiveness of the Shelf Registration Statement which had ceased
to remain effective prior to two years from its original effective date (in the
case of (iii) above), Penalty Interest as a result of such clause (i), (ii) or
(iii) shall cease to accrue.
Any Penalty Interest due pursuant to clause (i), (ii) or (iii)
above will be payable in cash on the Interest Payment Date related to the Series
A Securities. The Penalty Interest will be determined by multiplying the
applicable Penalty Interest rate by the principal amount of the Series A
Securities, multiplied by a fraction the numerator of which is the number of
days such Penalty Interest rate was applicable during such period, and the
denominator of which is 360.
Payment of the principal of, premium, if any, and interest on
this Series B Security will be made at the office or agency of the Company
maintained for that purpose, in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts; provided, however, that payment of interest may be made at the
option of the Company by check mailed to the address of the Person entitled
thereto as such address shall appear on the Security Register. If any of the
Series B Securities are held by the Depositary, payments of interest to the
Depositary may be made by wire transfer to the Depositary. Interest shall be
computed on the basis of a 360-day year of twelve 30-day months.
Reference is hereby made to the further provisions of this
Series B 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.
This Series B Security is entitled to the benefits of
Guarantees by each of the Guarantors of the punctual payment when due of the
Indenture Obligations made in favor of the Trustee for the benefit of the
Holders. Reference is hereby made to Article Fourteen of the Indenture for a
statement of the respective rights, limitations of rights, duties and
obligations under the Guarantees of each of the Guarantors.
All references in this Series B Security or in the Indenture
to accrued and unpaid interest shall be deemed to include, to the extent
applicable, a reference to Penalty Interest.
Unless the certificate of authentication hereon has been duly
executed by the Trustee referred to on the reverse hereof or by the
authenticating agent appointed as provided in the Indenture by manual signature,
this Series B 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 by the manual or facsimile signature of its authorized officers
and its corporate seal to be affixed or reproduced hereon.
Dated: SINCLAIR BROADCAST GROUP, INC.
By:
--------------------------------
Attest:
[SEAL]
Secretary
Section 203. Form of Reverse of Securities.
(a) The form of the reverse of the Series A Securities shall
be substantially as follows:
SINCLAIR BROADCAST GROUP, INC.
------------------------------
9% SENIOR SUBORDINATED NOTE DUE 2007, SERIES A
This Security is one of a duly authorized issue of Securities
of the Company designated as its 9% Senior Subordinated Notes due 2007, Series A
(herein called the "Securities"), limited (except as otherwise provided in the
Indenture referred to below) in aggregate principal amount to $200,000,000,
which may be issued under an indenture (herein called the "Indenture"), dated as
of July 2, 1997, among the Company, the Guarantors and First Union National Bank
of Maryland, as trustee (herein called the "Trustee," which term includes any
successor trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights, limitations of rights, duties, obligations and immunities thereunder of
the Company, the Guarantors, the Trustee and the Holders of the Securities, and
of the terms upon which the Securities and the Guarantees are, and are to be,
authenticated and delivered.
The Indenture contains provisions for defeasance at any time
of (a) the entire Indebtedness on the Securities and (b) certain restrictive
covenants and related Defaults and Events of Default, in each case upon
compliance or noncompliance with certain conditions set forth therein.
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The Indebtedness evidenced by the Securities is, to the extent
and in the manner provided in the Indenture, subordinate and subject in right of
payment to the prior payment in full of all Senior Indebtedness, whether
Outstanding on the date of the Indenture or thereafter, and this Security is
issued subject to such provisions. 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 as provided in the Indenture and (c)
appoints the Trustee his attorney-in-fact for such purpose; provided, however,
that, subject to Section 406 of the Indenture, the Indebtedness evidenced by
this Security shall cease to be so subordinate and subject in right of payment
upon any defeasance of this Security referred to in clause (a) or (b) of the
preceding paragraph.
The Securities are subject to redemption at any time on or
after July 15, 2002, at the option of the Company, in whole or in part, on not
less than 30 nor more than 60 days' prior notice by first-class mail in amounts
of $1,000 or an integral multiple of $1,000 at the following redemption prices
(expressed as a percentage of the principal amount), if redeemed during the
12-month period beginning July 15 of the years indicated below:
Year Redemption
Price
2002 .............................. 104.50%
2003 .............................. 103.00
2004 .............................. 101.50
and thereafter at 100% of the principal amount, in each case together with
accrued and unpaid interest, if any, to the Redemption Date (subject to the
right of Holders of record on relevant record dates to receive interest due on
an interest payment date). If less than all of the Securities are to be
redeemed, the Trustee shall select the Securities or portions thereof to be
redeemed pro rata, by lot or by any other method the Trustee shall deem fair and
reasonable.
In addition, at any time on or prior to July 15, 2000, the
Company may redeem up to 25% of the original principal amount of Securities with
the net proceeds of a Public Equity Offering of the Company at 109% of the
aggregate principal amount, together with accrued and unpaid interest, if any,
to the Redemption Date (subject to the right of Holders of record on relevant
record dates to receive interest due on an interest payment date). The Trustee
shall select the Securities or portions thereof to be redeemed pro rata, by lot
or by any other method the Trustee shall deem fair and reasonable.
Upon the occurrence of a Change of Control, each Holder may
require the Company to repurchase all or a portion of such Holder's Securities
in an amount of $1,000 or integral multiples of $1,000, at a purchase price in
cash equal to 101% of the principal amount thereof, together with accrued and
unpaid interest, if any, to the date of repurchase.
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<PAGE>
Under certain circumstances, in the event the Net Cash
Proceeds received by the Company or a Restricted Subsidiary from any Asset Sale,
which proceeds are not used to prepay Senior Indebtedness or invested in
properties or assets used in the businesses of the Company, exceed $5,000,000
the Company will be required to apply such proceeds to the repayment of the
Securities and certain Indebtedness ranking pari passu to the Securities.
In the case of any redemption of Securities, interest
installments whose Stated Maturity is on or prior to the Redemption Date will be
payable to the Holders of such Securities of record as of the close of business
on the relevant record date referred to on the face hereof. Securities (or
portions thereof) for whose redemption and payment provision is made in
accordance with the Indenture shall cease to bear interest from and after the
date of redemption.
In the event of redemption of this Security in part only, a
new Security or Securities for the unredeemed portion hereof shall be issued in
the name of the Holder hereof upon the cancellation hereof.
If an Event of Default shall occur and be continuing, the
principal amount of all the Securities may be declared due and payable in the
manner and with the effect provided in the Indenture.
If this Security is in certificated form, then as provided in
the Indenture and subject to certain limitations therein set forth, the transfer
of this Security is registrable on the Security Register of the Company, upon
surrender of this Security for registration of transfer at the office or agency
of the Company maintained for such purpose, 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 its attorney duly
authorized in writing, and thereupon one or more new Securities, of authorized
denominations and for the same aggregate principal amount, will be issued to the
designated transferee or transferees.
If this Security is a Restricted Security in certificated
form, then as provided in the Indenture and subject to certain limitations
therein set forth, the Holder, provided it is a "qualified institutional buyer"
within the meaning of Rule 144A under the Securities Act (a "QIB"), may exchange
this Security for an interest in a Global Security by instructing the Trustee
(by completing the Restricted Securities Transfer Certificate in the form in
Exhibit A to the Indenture) to arrange for such Security to be represented by a
beneficial interest in a Global Security in accordance with the customary
procedures of the Depositary, unless the Company has elected not to issue a
Global Security.
If this Security is a Global Security, except as described
below, it is not exchangeable for a Security or Securities in certificated form.
The Securities will be delivered in certificated form if (i) the Depositary
ceases to be registered as a clearing agency under the Exchange Act or is no
longer willing or able to provide securities depository services with respect to
the Securities, (ii) the Company so determines and (iii) there shall have
occurred an
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Event of Default or an event which, with the giving of notice or lapse of time
or both, would constitute an Event of Default with respect to the Securities
represented by such Global Security and such Event of Default or event continues
for a period of 90 days. Upon any such issuance, the Trustee is required to
register such certificated Security in the name of, and cause the same to be
delivered to, such Person or Persons (or the nominee of any thereof). All such
certificated Securities would be required to include the Restricted Securities
Legend.
At any time when the Company is not subject to Sections 13 or
15(d) of the Exchange Act, upon the written request of a Holder of a Security,
the Company will promptly furnish or cause to be furnished Rule 144A Information
to such Holder or to a prospective purchaser of such Security who such Holder
informs the Company is reasonably believed to be a QIB, as the case may be, in
order to permit compliance by such Holder with Rule 144A under the Securities
Act.
The Indenture permits, with certain exceptions (including
certain amendments permitted without the consent of any Holders) as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the Guarantors and the rights of the Holders
under the Indenture and the Guarantees at any time by the Company, the
Guarantors and the Trustee with the consent of the Holders of a specified
percentage 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 and the Guarantors with certain provisions of the
Indenture and the Guarantees and certain past Defaults under the Indenture and
the Guarantees and their consequences. Any such consent or waiver by or on
behalf of 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, any Guarantor or any other obligor upon the Securities (in the event
such other obligor is obligated to make payments in respect of the Securities),
which is absolute and unconditional, to pay the principal of, premium, if any,
and interest on this Security at the times, place, and rate, and in the coin or
currency, herein prescribed, subject to the subordination provisions of the
Indenture.
The Securities if issued in certificated form 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, the Securities are exchangeable for a like
aggregate principal amount of Securities of a different authorized denomination,
as requested by the Holder surrendering the same.
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No service charge shall be made for any registration of
transfer or exchange or redemption of Securities, but the Company may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.
Prior to and at the time of 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 (subject to provisions with
respect to record dates for the payment of interest), whether or not this
Security is overdue, and neither the Company, the Trustee nor any agent shall be
affected by notice to the contrary.
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE
CONFLICTS OF LAWS PRINCIPLES THEREOF).
All terms used in this Security which are defined in the
Indenture and not otherwise defined herein shall have the meanings assigned to
them in the Indenture.
(b) The form of the reverse of the Series B Securities shall
be substantially as follows:
SINCLAIR BROADCAST GROUP, INC.
------------------------------
9% SENIOR SUBORDINATED NOTE DUE 2007, SERIES B
This Security is one of a duly authorized issue of Securities
of the Company designated as its 9% Senior Subordinated Notes due 2007, Series B
(herein called the "Securities"), limited (except as otherwise provided in the
Indenture referred to below) in aggregate principal amount to $200,000,000,
which may be issued under an indenture (herein called the "Indenture"), dated as
of July 2, 1997, among the Company, the Guarantors and First Union National Bank
of Maryland, as trustee (herein called the "Trustee," which term includes any
successor trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights, limitations of rights, duties, obligations and immunities thereunder of
the Company, the Guarantors, the Trustee and the Holders of the Securities, and
of the terms upon which the Securities and the Guarantees are, and are to be,
authenticated and delivered.
The Indenture contains provisions for defeasance at any time
of (a) the entire Indebtedness on the Securities and (b) certain restrictive
covenants and related Defaults and Events of Default, in each case upon
compliance or noncompliance with certain conditions set forth therein.
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The Indebtedness evidenced by the Securities is, to the extent
and in the manner provided in the Indenture, subordinate and subject in right of
payment to the prior payment in full of all Senior Indebtedness, whether
Outstanding on the date of the Indenture or thereafter, and this Security is
issued subject to such provisions. 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 as provided in the Indenture and (c)
appoints the Trustee his attorney-in-fact for such purpose; provided, however,
that, subject to Section 406 of the Indenture, the Indebtedness evidenced by
this Security shall cease to be so subordinate and subject in right of payment
upon any defeasance of this Security referred to in clause (a) or (b) of the
preceding paragraph.
The Securities are subject to redemption at any time on or
after July 15, 2002, at the option of the Company, in whole or in part, on not
less than 30 nor more than 60 days' prior notice by first-class mail in amounts
of $1,000 or an integral multiple of $1,000 at the following redemption prices
(expressed as a percentage of the principal amount), if redeemed during the
12-month period beginning July 15 of the years indicated below:
Year Redemption
Price
2002 .............................. 104.50%
2003 .............................. 103.00
2004 .............................. 101.50
and thereafter at 100% of the principal amount, in each case together with
accrued and unpaid interest, if any, to the Redemption Date (subject to the
right of Holders of record on relevant record dates to receive interest due on
an interest payment date). If less than all of the Securities are to be
redeemed, the Trustee shall select the Securities or portions thereof to be
redeemed pro rata, by lot or by any other method the Trustee shall deem fair and
reasonable.
In addition, at any time on or prior to July 15, 2000, the
Company may redeem up to 25% of the original principal amount of Securities with
the net proceeds of a Public Equity Offering of the Company at 109% of the
aggregate principal amount, together with accrued and unpaid interest, if any,
to the Redemption Date (subject to the right of Holders of record on relevant
record dates to receive interest due on an interest payment date). The Trustee
shall select the Securities or portions thereof to be redeemed pro rata, by lot
or by any other method the Trustee shall deem fair and reasonable.
Upon the occurrence of a Change of Control, each Holder may
require the Company to repurchase all or a portion of such Holder's Securities
in an amount of $1,000 or integral multiples of $1,000, at a purchase price in
cash equal to 101% of the principal amount thereof, together with accrued and
unpaid interest, if any, to the date of repurchase.
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Under certain circumstances, in the event the Net Cash
Proceeds received by the Company or a Restricted Subsidiary from any Asset Sale,
which proceeds are not used to prepay Senior Indebtedness or invested in
properties or assets used in the businesses of the Company, exceed $5,000,000
the Company will be required to apply such proceeds to the repayment of the
Securities and certain Indebtedness ranking pari passu to the Securities.
In the case of any redemption of Securities, interest
installments whose Stated Maturity is on or prior to the Redemption Date will be
payable to the Holders of such Securities of record as of the close of business
on the relevant record date referred to on the face hereof. Securities (or
portions thereof) for whose redemption and payment provision is made in
accordance with the Indenture shall cease to bear interest from and after the
date of redemption.
In the event of redemption of this Security in part only, a
new Security or Securities for the unredeemed portion hereof shall be issued in
the name of the Holder hereof upon the cancellation hereof.
If an Event of Default shall occur and be continuing, the
principal amount of all the Securities may be declared due and payable in the
manner and with the effect provided in the Indenture.
If this Security is in certificated form, then as provided in
the Indenture and subject to certain limitations therein set forth, the transfer
of this Security is registrable on the Security Register of the Company, upon
surrender of this Security for registration of transfer at the office or agency
of the Company maintained for such purpose, 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 its attorney duly
authorized in writing, and thereupon one or more new Securities, of authorized
denominations and for the same aggregate principal amount, will be issued to the
designated transferee or transferees.
If this Security is a Global Security, except as described
below, it is not exchangeable for a Security or Securities in certificated form.
The Securities will be delivered in certificated form if (i) the Depositary
ceases to be registered as a clearing agency under the Exchange Act or is no
longer willing or able to provide securities depository services with respect to
the Securities, (ii) the Company so determines and (iii) there shall have
occurred an Event of Default or an event which, with the giving of notice or
lapse of time or both, would constitute an Event of Default with respect to the
Securities represented by such Global Security and such Event of Default or
event continues for a period of 90 days. Upon any such issuance, the Trustee is
required to register such certificated Security in the name of, and cause the
same to be delivered to, such Person or Persons (or the nominee of any thereof).
The Indenture permits, with certain exceptions (including
certain amendments permitted without the consent of any Holders) as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the Guarantors and the rights
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<PAGE>
of the Holders under the Indenture and the Guarantees at any time by the
Company, the Guarantors and the Trustee with the consent of the Holders of a
specified percentage 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 and the Guarantors with certain provisions of the
Indenture and the Guarantees and certain past Defaults under the Indenture and
the Guarantees and their consequences. Any such consent or waiver by or on
behalf of 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, any Guarantor or any other obligor upon the Securities (in the event
such other obligor is obligated to make payments in respect of the Securities),
which is absolute and unconditional, to pay the principal of, premium, if any,
and interest on this Security at the times, place, and rate, and in the coin or
currency, herein prescribed, subject to the subordination provisions of the
Indenture.
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,
the Securities are exchangeable for a like aggregate principal amount of
Securities of a different authorized denomination, as requested by the Holder
surrendering the same.
No service charge shall be made for any registration of
transfer or exchange or redemption of Securities, but the Company may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.
Prior to and at the time of 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 (subject to provisions with
respect to record dates for the payment of interest), whether or not this
Security is overdue, and neither the Company, the Trustee nor any agent shall be
affected by notice to the contrary.
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE
CONFLICTS OF LAWS PRINCIPLES THEREOF).
All terms used in this Security which are defined in the
Indenture and not otherwise defined herein shall have the meanings assigned to
them in the Indenture.
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Section 204. Additional Provisions Required in Global
Security.
Any Global Security issued hereunder shall, in addition to the
provisions contained in Sections 202 and 203, bear a legend in substantially the
following form:
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 OF A DEPOSITARY. THIS SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED
IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE AND MAY NOT BE TRANSFERRED
EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A
NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE
DEPOSITARY, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
IF THE DEPOSITORY TRUST COMPANY IS ACTING AS THE DEPOSITARY, INSERT -- UNLESS
THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT AND ANY SUCH 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.
Section 205. Form of Trustee's Certificate of Authentication.
The Trustee's certificate of authentication shall be included
on the Securities and shall be substantially in the form as follows:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
This is one of the Securities referred to in the
within-mentioned Indenture.
FIRST UNION NATIONAL BANK OF
MARYLAND,
As Trustee
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By:
----------------------------------
Authorized Signatory
Section 206. Form of Guarantee of Each of the Guarantors.
The form of Guarantee shall be set forth on the Securities
substantially as follows:
GUARANTEES
For value received, each of the undersigned hereby
unconditionally guarantees, jointly and severally, to the holder of this
Security the payment of principal of, premium, if any, and interest on this
Security in the amounts and at the time when due and interest on the overdue
principal and interest, if any, of this Security, if lawful, and the payment or
performance of all other obligations of the Company under the Indenture or the
Securities, to the holder of this Security and the Trustee, all in accordance
with and subject to the terms and limitations of this Security and Article
Fourteen of the Indenture. These Guarantees will not become effective until the
Trustee duly executes the certificate of authentication on this Security. The
Indebtedness evidenced by these Guarantees is, to the extent and in the manner
provided in the Indenture, subordinate and subject in right of payment to the
prior payment in full of all Guarantor Senior Indebtedness (as defined in the
Indenture), whether Outstanding on the date of the Indenture or thereafter, and
these Guarantees are issued subject to such provisions.
CHESAPEAKE TELEVISION, INC.
CHESAPEAKE TELEVISION
LICENSEE, INC.
FSF-TV, INC.
KABB LICENSEE, INC.
KDNL LICENSEE, INC.
KSMO, INC.
KSMO LICENSEE, INC.
KUPN LICENSEE, INC.
SCI-INDIANA LICENSEE, INC.
SCI-SACRAMENTO LICENSEE, INC.
SINCLAIR COMMUNICATIONS, INC.
SINCLAIR RADIO OF ALBUQUERQUE, INC.
SINCLAIR RADIO OF ALBUQUERQUE
LICENSEE, INC.
SINCLAIR RADIO OF BUFFALO, INC.
SINCLAIR RADIO OF BUFFALO LICENSEE, INC.
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<PAGE>
SINCLAIR RADIO OF GREENVILLE,
INC.
SINCLAIR RADIO OF GREENVILLE
LICENSEE, INC.
SINCLAIR RADIO OF LOS ANGELES,
INC.
SINCLAIR RADIO OF LOS ANGELES
LICENSEE, INC.
SINCLAIR RADIO OF MEMPHIS, INC.
SINCLAIR RADIO OF MEMPHIS LICENSEE,
INC.
SINCLAIR RADIO OF NASHVILLE, INC.
SINCLAIR RADIO OF NASHVILLE
LICENSEE, INC.
SINCLAIR RADIO OF NEW ORLEANS,
INC.
SINCLAIR RADIO OF NEW ORLEANS
LICENSEE, INC.
SINCLAIR RADIO OF ST. LOUIS, INC.
SINCLAIR RADIO OF ST. LOUIS LICENSEE,
INC.
SINCLAIR RADIO OF WILKES-BARRE,
INC.
SINCLAIR RADIO OF WILKES-BARRE
LICENSEE, INC.
SUPERIOR COMMUNICATIONS OF
KENTUCKY, INC.
SUPERIOR COMMUNICATIONS OF
OKLAHOMA, INC.
SUPERIOR KY LICENSE CORP.
SUPERIOR OK LICENSE CORP.
TUSCALOOSA BROADCASTING INC.
WCGV, INC.
WCGV LICENSEE, INC.
WDBB, INC.
WLFL, INC.
WLFL LICENSEE, INC.
WLOS LICENSEE, INC.
WPGH, INC.
WPGH LICENSEE, INC.
WSMH, INC.
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<PAGE>
WSMH LICENSEE, INC.
WSTR, INC.
WSTR LICENSEE, INC.
WSYX, INC.
WTTE, CHANNEL 28, INC.
WTTE, CHANNEL 28 LICENSEE, INC.
WTTO, INC.
WTTO LICENSEE, INC.
WTVZ, INC.
WTVZ LICENSEE, INC.
WYZZ, INC.
WYZZ LICENSEE, INC.
Attest
-----------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
By
-----------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
ARTICLE III
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 in
principal amount of Securities, except for Securities authenticated and
delivered upon registration of transfer of, or in exchange for, or in lieu of,
other Securities pursuant to Section 303, 304, 305, 306, 307, 308, 906, 1013,
1016 or 1108.
The Securities shall be known and designated as the "9% Senior
Subordinated Notes due 2007," in the case of either Series A or Series B, of the
Company. The Stated Maturity of the Securities shall be July 15, 2007, and the
Securities shall each bear interest at the rate of 9% plus Penalty Interest, if
any, from July 2, 1997 or from the most recent Interest Payment Date to which
interest has been paid, as the case may be, payable on January 15, 1998 and
semiannually thereafter on January 15 and July 15, in each year, until the
principal thereof is paid or duly provided for.
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Unless otherwise specified herein, the Series A Securities and
the Series B Securities will be treated as one class and are together referred
to as the "Securities." The Series A Securities rank pari passu in right of
payment with the Series B Securities.
The principal of, premium, if any, and interest on the
Securities shall be payable at the office or agency of the Company maintained
for such purpose; provided, however, that at the option of the Company interest
may be paid by check mailed to addresses of the Persons entitled thereto as such
addresses shall appear on the Security Register. If any of the Securities are
held by the Depositary, payments of interest may be made by wire transfer to the
Depositary. The Trustee is hereby initially designated as the Paying Agent under
this Indenture.
The Securities shall be redeemable as provided in Article
Eleven.
At the election of the Company, the entire Indebtedness on the
Securities or certain of the Company's obligations and covenants and certain
Events of Default thereunder may be defeased as provided in Article Four.
The Securities shall be subordinated in right of payment to
Senior Indebtedness as provided in Article Twelve.
Section 302. Denominations.
The Securities shall be issuable only in registered form
without coupons and only 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
one of its Chairman of the Board, its President or one of its Vice Presidents
under its corporate seal reproduced thereon attested by its Secretary or one of
its Assistant Secretaries.
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 on 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
provided in this Indenture and not otherwise.
Each Security shall be dated the date of its authentication.
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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 duly executed by the Trustee by manual signature of an authorized
officer, and such certificate upon any Security shall be conclusive evidence,
and the only evidence, that such Security has been duly authenticated and
delivered hereunder.
In case the Company or any Guarantor, pursuant to Article
Eight, shall be consolidated, merged with or into any other Person or shall
sell, assign, convey, transfer or lease substantially all of its properties and
assets to any Person, and the successor Person resulting from such
consolidation, or surviving such merger, or into which the Company or such
Guarantor shall have been merged, or the Person which shall have received a
sale, assignment, conveyance, transfer or lease as aforesaid, shall have
executed an indenture supplemental hereto with the Trustee pursuant to Article
Eight, any of the Securities authenticated or delivered prior to such
consolidation, merger, sale, assignment, conveyance, transfer or lease may, from
time to time, at the request of the successor Person, be exchanged for other
Securities executed in the name of the successor Person with such changes in
phraseology and form as may be appropriate, but otherwise in substance of like
tenor as the Securities surrendered for such exchange and of like principal
amount; and the Trustee, upon Company Request of the successor Person, shall
authenticate and deliver Securities as specified in such request for the purpose
of such exchange. If Securities shall at any time be authenticated and delivered
in any new name of a successor Person pursuant to this Section in exchange or
substitution for or upon registration of transfer of any Securities, such
successor Person, at the option of the Holders but without expense to them,
shall provide for the exchange of all Securities at the time Outstanding for
Securities authenticated and delivered in such new name.
The Trustee may appoint an authenticating agent acceptable to
the Company to authenticate Securities on behalf of the Trustee. Unless limited
by the terms of such appointment, an authenticating agent may authenticate
Securities whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as any Security Registrar or Paying
Agent to deal with the Company and its Affiliates.
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 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 conclusively evidenced by their
execution of such Securities.
After the preparation of definitive Securities, the temporary
Securities shall be exchangeable for definitive Securities upon surrender of the
temporary Securities at the office or
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agency of the Company designated for such purpose 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 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.
With respect to transfers of QIBs, a Global Security shall, if
the Depositary permits, (i) be registered in the name of the Depositary for such
Global Security or the nominee of such Depositary, (ii) be deposited with, or on
behalf of, the Depositary and (iii) bear legends as set forth in Sections 202(a)
and 204; provided, however, the Securities are eligible to be in the form of a
Global Security.
Transfers made to Accredited Investors shall be made only in
certificated form and not as a beneficial interest in a Global Security.
Members of, or participants in, the Depositary ("Agent
Members") shall have no rights under this Indenture with respect to any Global
Security held on their behalf by the Depositary, or the Trustee as its
custodian, or under the Global Security, and the Depositary may be treated by
the Company, the Trustee and any agent of the Company or the Trustee as the
absolute owner of such Global Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Company, the
Trustee or any agent of the Company from giving effect to any written
certification, proxy or other authorization furnished by the Depositary or shall
impair, as between the Depositary and its Agent Members, the operation of
customary practices governing the exercise of the rights of a holder of any
Security.
(a) Transfers of the Global Security shall be limited to
transfers of such Global Security in whole, but not in part, to the Depositary,
its successors or their respective nominees. Interests of beneficial owners in a
Global Security may be transferred in accordance with the rules and procedures
of the Depositary and the provisions of Section 307. Under the circumstances
described in clause (a) above, and in this clause (b) below, beneficial owners
shall obtain physical securities in the form set forth in Sections 202, 203, 204
(if applicable) and 205 ("Physical Securities") in exchange for their beneficial
interests in a Global Security in accordance with the Depositary's and the
Securities Registrar's procedures. In connection with the execution,
authentication and delivery of such Physical Securities, the Security Registrar
shall reflect on its books and records a decrease in the principal amount of the
Global Security equal to the principal amount of such Physical Securities and
the Company shall execute and the Trustee shall authenticate and deliver one or
more Physical Securities having an equal aggregate principal amount. The
Securities will be delivered in certificated form if (i) the Depositary ceases
to be registered as a clearing agency under the Exchange Act or is not willing
or no longer willing or able to provide securities depository services with
respect to the Securities, (ii) the
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Company so determines or (iii) there shall have occurred an Event of Default or
an event which, with the giving of notice or lapse of time or both, would
constitute an Event of Default with respect to the Securities represented by
such Global Security and such Event of Default or event continues for a period
of 90 days.
(b) In connection with any transfer of a portion of the
beneficial interest in a Global Security pursuant to subsection (b) of this
Section to beneficial owners who are required to hold Physical Securities, the
Security Registrar shall reflect on its books and records the date and a
decrease in the principal amount of a Global Security in an amount equal to the
principal amount of the beneficial interest in the Global Security to be
transferred, and the Company shall execute, and the Trustee shall authenticate
and deliver, one or more Physical Securities of like tenor and amount.
(c) In connection with the transfer of the entire Global
Security to beneficial owners pursuant to subsection (b) of this Section, a
Global Security shall be deemed to be surrendered to the Trustee for
cancellation, and the Company shall execute, and the Trustee shall authenticate
and deliver, to each beneficial owner identified by the Depositary in exchange
for its beneficial owner identified by the Depositary in exchange for its
beneficial interest in a Global Security, an equal aggregate principal amount of
Physical Securities of authorized denominations.
(d) Any Physical Security delivered in exchange for an
interest in Global Securities pursuant to subsection (c) or subsection (d) of
this Section shall, except as otherwise provided by paragraph (a)(i)(x) and
paragraph (c) of Section 307, bear the Restricted Securities Legend.
(e) The registered holder of a Global Security may grant
proxies and otherwise authorize any person, including Agent Members and Persons
that may hold interests through Agent Members, to take any action which a Holder
is entitled to take under this Indenture or the Securities.
Section 306. Registration, Registration of Transfer and
Exchange.
The Company shall cause to be kept at the Corporate Trust
Office of the Trustee, or such other office as the Trustee may designate, a
register (the register maintained in such office and in any other office or
agency designated pursuant to Section 1002 being herein sometimes referred to as
the "Security Register") in which, subject to such reasonable regulations as the
Security Registrar may prescribe, the Company shall provide for the registration
of Securities and of transfers of Securities. The Trustee or an agent thereof or
of the Company shall initially be the "Security Registrar" for the purpose of
registering Securities and transfers of Securities as herein provided.
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Upon surrender for registration of transfer of any Security at
the office or agency of the Company designated pursuant to Section 1002, 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 denomination or denominations, of a like aggregate principal
amount.
Furthermore, any Holder of a Global Security shall, by
acceptance of such Global Security, agree that transfers of beneficial interest
in such Global Security may be effected only through a book-entry system
maintained by the Holder of such Global Security (or its agent), and that
ownership of a beneficial interest in the Securities shall be required to be
reflected in a book entry.
At the option of the Holder, Securities may be exchanged for
other Securities of any authorized denomination or denominations, of a like
aggregate principal amount, 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 of the same series which the Holder making the exchange is entitled
to receive; provided that no exchange of Series A Securities for Series B
Securities shall occur until an Exchange Offer Registration Statement shall have
been declared effective by the Commission and that the Series A Securities
exchanged for the Series B Securities shall be cancelled.
All Securities issued upon any registration of transfer or
exchange of Securities shall be the valid obligations of the Company, evidencing
the same Indebtedness, and 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 or redemption shall (if so required by the Company or
the Trustee) 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 a Holder for any
registration of transfer or exchange or redemption of Securities, but the
Company may require payment of a sum sufficient to pay all documentary, stamp or
similar issue or transfer taxes or other governmental charges that may be
imposed in connection with any registration of transfer or exchange of
Securities, other than exchanges pursuant to Section 303, 304, 305, 306, 307,
308, 906, 1013, 1016 or 1108 not involving any transfer.
The Company shall not be required (a) to issue, register the
transfer of or exchange any Security during a period beginning at the opening of
business (i) 15 days before the date of selection of Securities for redemption
under Section 1104 and ending at the close of business on the day of such
selection or (ii) 15 days before an Interest Payment Date and ending on the
close of business on the Interest Payment Date, or (b) to register the transfer
of or
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exchange any Security so selected for redemption in whole or in part, except the
unredeemed portion of Securities being redeemed in part.
Every Restricted Security shall be subject to the restrictions
on transfer provided in the legend required to be set forth on the face of each
Restricted Security pursuant to Section 202(a), and the restrictions set forth
in this Section 306, and the Holder of each Restricted Security, by such
Holder's acceptance thereof (or interest therein), agrees to be bound by such
restrictions on transfer.
The restrictions imposed by this Section 306 upon the
transferability of any particular Restricted Security shall cease and terminate
on (a) the later of two years from their date of issuance or two years after the
last date on which the Company or any Affiliate of the Company was the owner of
such Restricted Security (or any predecessor of such Restricted Security) or (b)
(if earlier) if and when such Restricted Security has been sold pursuant to an
effective registration statement under the Securities Act or transferred
pursuant to Rule 144 or under the Securities Act (or any successor provision),
unless the Holder thereof is an affiliate of the Company within the meaning of
Rule 144 (or such successor provisions). Any Restricted Security as to which
such restrictions on transfer shall have expired in accordance with their terms
or shall have terminated may, upon surrender of such Restricted Security for
exchange to the Security Registrar in accordance with the provision of this
Section 306 (accompanied, in the event that such restrictions on transfer have
terminated pursuant to Rule 144 (or any successor provision), by an Opinion of
Counsel satisfactory to the Company and the Trustee, to the effect that the
transfer of such Restricted Security has been made in compliance with Rule 144
(or any such successor provision)), be exchanged for a new Security, of like
tenor and aggregate principal amount, which shall not bear the Restricted
Securities Legend. The Company shall inform the Trustee of the effective date of
any Registration Statement registering the Securities under the Securities Act
no later than two Business Days after such effective date.
Except as provided in the preceding paragraph, any Security
authenticated and delivered upon registration of transfer of, or in exchange
for, or in lieu of, any Global Security, whether pursuant to this Section,
Section 304, 308, 906 or 1108 or otherwise, shall also be a Global Security and
bear the legend specified in Section 202(a).
Section 307. Special Transfer Provisions.
Unless and until (i) a Security is sold under an effective
Registration Statement, or (ii) a Security is exchanged for a Series B Security
in connection with the Exchange Offer, in each case pursuant to the Registration
Rights Agreement, the following provisions shall apply:
(a) Transfers to Non-QIB Institutional Accredited Investors.
The following provisions shall apply with respect to the registration of any
proposed transfer of an Initial Security to an "Accredited Investor" which is
not a QIB:
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(i) The Security Registrar shall register the
transfer of any Initial Security whether or not such Initial
Security bears the Restricted Securities Legend, if (x) the
requested transfer is at least two years after the original
issue date of the Initial Securities or (y) the proposed
transferee has delivered to the Security Registrar a
certificate substantially in the form set forth in Exhibit A.
(ii) If the proposed transferor is an Agent Member
holding a beneficial interest in the Global Security, upon
receipt by the Security Registrar of (x) the documents, if
any, required by paragraph (i) and (y) instructions given in
accordance with the Depositary's and the Security Registrar's
procedures therefor, the Security Registrar shall reflect on
its books and records the date and a decrease in the principal
amount of the Global Security in an amount equal to the
principal amount of the beneficial interest in the Global
Security transferred, and the Company shall execute, and the
Trustee shall authenticate and deliver, one or more Physical
Securities of like tenor and amount.
(b) Transfers to QIBs. The following provisions shall apply
with respect to the registration of any proposed transfer of an Initial Security
to a QIB:
(i) If the Security to be transferred consists of
Physical Securities, the Security Registrar shall register the
transfer if such transfer is being made by a proposed
transferor who has advised the Company and the Security
Registrar in writing, that the sale has been made in
compliance with the provisions of Rule 144A to the transferee
who has signed the certification provided for on the form of
Initial Security stating, or has otherwise advised the Company
and the Security Registrar in writing, that it is purchasing
the Initial Security for its own account or an account with
respect to which it exercises sole investment discretion and
that it, or the person on whose behalf it is acting with
respect to any such account, is a QIB within the meaning of
Rule 144A, and is aware that the sale to it is being made in
reliance on Rule 144A and acknowledges that it has received
such information regarding the Company as it has requested
pursuant to Rule 144A or has determined not to request such
information and that it is aware that the transferor is
relying upon its foregoing representations in order to claim
the exemption from registration provided by Rule 144A.
(ii) If the proposed transferee is an Agent Member,
and the Initial Security to be transferred consists of
Physical Securities, upon receipt by the Securities Registrar
of instructions given in accordance with the Depositary's and
the Security Registrar's procedures therefor, the Security
Registrar shall reflect on its books and records the date and
an increase in the principal amount of the Global Security in
an amount equal to the principal amount of the Physical
Securities, to be transferred, and the Trustee shall cancel
the Physical Security so transferred.
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(c) Restricted Securities Legend. Upon the registration of
transfer, exchange or replacement of Securities not bearing the Restricted
Securities Legend, the Security Registrar shall deliver Securities that do not
bear the Restricted Securities Legend. Upon the registration of transfer,
exchange or replacement of Securities bearing the Restricted Securities Legend,
the Security Registrar shall deliver only Securities that bear the Restricted
Securities Legend unless either (i) the circumstances contemplated by paragraph
(a)(i)(x) of this Section 307 exist or (ii) there is delivered to the Security
Registrar an Opinion of Counsel reasonably satisfactory to the Company and the
Trustee to the effect that neither such legend nor the related restrictions on
transfer are required in order to maintain compliance with the provisions of the
Securities Act.
(d) General. By its acceptance of any Security bearing the
Restricted Securities Legend, each Holder of such a Security acknowledges the
restrictions on transfer of such Security set forth in this Indenture and in the
Restricted Securities Legend and agrees that it will transfer such Security only
as provided in this Indenture.
The Security Registrar shall retain copies of all letters,
notices and other written communications received pursuant to Section 306 or
this Section 307. The Company shall have the right to inspect and make copies of
all such letters, notices or other written communications at any reasonable time
upon the giving of reasonable written notice to the Security Registrar.
Section 308. Mutilated, Destroyed, Lost and Stolen Securities.
If (a) any mutilated Security is surrendered to the Trustee,
or (b) the Company and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Security, and there is delivered to the
Company, each Guarantor and the Trustee, such security or indemnity, in each
case, as may be required by them to save each of them harmless, then, in the
absence of notice to the Company, any Guarantor or the Trustee that such
Security has been acquired by a bona fide purchaser, the Company shall execute
and upon its written request the Trustee shall authenticate and deliver, in
exchange for any such mutilated Security or in lieu of any such destroyed, lost
or stolen Security, a replacement Security of like tenor and principal amount,
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 replacement Security, pay such Security.
Upon the issuance of any replacement Securities under this
Section, the Company may require the payment of a sum sufficient to pay all
documentary, stamp or similar issue or transfer taxes or other governmental
charges that may be imposed in relation thereto and any other expenses
(including the fees and expenses of the Trustee) connected therewith.
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Every replacement 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 and the Guarantors, whether or
not the destroyed, lost or stolen Security shall be at any time enforceable by
anyone, and shall be entitled to all benefits of this Indenture equally and
proportionately with any and all other 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 309. 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 is registered 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 and interest
on such defaulted interest at the then applicable interest rate borne by the
Securities, to the extent lawful (such defaulted interest and interest thereon
herein collectively called "Defaulted Interest") shall forthwith cease to be
payable to the Holder on the Regular Record Date; and such Defaulted Interest
may be paid by the Company, at its election in each case, as provided in
Subsection (a) or (b) below:
(a) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names the 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 (not less than 30 days after such notice) of the
proposed payment, and at the same time the Company shall deposit with the
Trustee an amount of money equal to the aggregate amount proposed to be paid in
respect of such Defaulted Interest or shall make arrangements satisfactory to
the Trustee for such deposit prior to the date of the proposed payment, such
money when deposited to be held in trust for the benefit of the Persons entitled
to such Defaulted Interest as in this Subsection provided. Thereupon the Trustee
shall fix a Special Record Date for the payment of such Defaulted Interest which
shall be not more than 15 days and not less than 10 days prior to the date of
the proposed payment and not less than 10 days after the receipt by the Trustee
of the notice of the proposed payment. The Trustee shall promptly notify the
Company in writing of such Special Record Date. In the name and at the expense
of the Company, the Trustee shall cause notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor to be mailed,
first-class postage prepaid, to each Holder at his address as it appears in 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
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names the Securities are registered on such Special Record Date and shall no
longer be payable pursuant to the following Subsection (b).
(b) The Company may make payment of any Defaulted Interest in
any other lawful manner not inconsistent with the requirements of any securities
exchange on which the Securities may be listed, and upon such notice as may be
required by such exchange, if, after written notice given by the Company to the
Trustee of the proposed payment pursuant to this Subsection, such 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 310. Persons Deemed Owners.
The Company, any Guarantor, the Trustee and any agent of the
Company, any Guarantor or the Trustee may treat the Person in whose name any
Security is registered as the owner of such Security for the purpose of
receiving payment of principal of, premium, if any, and (subject to Section 309)
interest on such Security and for all other purposes whatsoever, whether or not
such Security is overdue, and neither the Company, any Guarantor, the Trustee
nor any agent of the Company, any Guarantor or the Trustee shall be affected by
notice to the contrary. No holder of any beneficial interest in any Global
Security held on its behalf by a Depositary shall have any rights under this
Indenture with respect to such Global Security, and such Depositary may be
treated by the Company, any Guarantor, the Trustee and any agent of the Company,
any Guarantor or the Trustee as the owner of such Global Security for all
purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent
the Company, any Guarantor, the Trustee or any agent of the Company, any
Guarantor or the Trustee from giving effect to any written certification, proxy
or other authorization furnished by the Depositary or impair, as between the
Depositary and such holders of beneficial interests, the operation of customary
practices governing the exercise of the rights of the Depositary (or its
nominee) as Holder of any Security.
Section 311. Cancellation.
All Securities surrendered for payment, purchase, redemption,
registration of transfer or exchange shall be delivered to the Trustee and, if
not already cancelled, shall be promptly cancelled by it. The Company and any
Guarantor may at any time deliver to the Trustee for cancellation any Securities
previously authenticated and delivered hereunder which the Company or such
Guarantor may have acquired in any manner whatsoever, and all Securities so
delivered shall be promptly cancelled by the Trustee. No Securities shall be
authenticated in lieu of or in exchange for any Securities cancelled as provided
in this Section, except as expressly permitted by this Indenture. All cancelled
Securities held by the Trustee shall be
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destroyed and certification of their destruction delivered to the Company unless
by a Company Order the Company shall direct that the cancelled Securities be
returned to it. The Trustee shall provide the Company a list of all Securities
that have been cancelled from time to time as requested by the Company.
Section 312. Computation of Interest.
Interest on the Securities shall be computed on the basis of a
360-day year of twelve 30-day months.
Section 313. 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.
ARTICLE IV
DEFEASANCE AND COVENANT DEFEASANCE
Section 401. Company's Option to Effect Defeasance or Covenant
Defeasance.
The Company may, at its option by Board Resolution, at any
time, with respect to the Securities, elect to have either Section 402 or
Section 403 be applied to all of the Outstanding Securities (the "Defeased
Securities"), upon compliance with the conditions set forth below in this
Article Four.
Section 402. Defeasance and Discharge.
Upon the Company's exercise under Section 401 of the option
applicable to this Section 402, the Company, each of the Guarantors and any
other obligor upon the Securities, if any, shall be deemed to have been
discharged from its obligations with respect to the Defeased 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 Defeased
Securities, which shall thereafter be deemed to be "Outstanding" only for the
purposes of Section 405 and the other Sections of this Indenture referred to in
(a) and (b) below, and to have satisfied all its other obligations under such
Securities and this Indenture insofar as such Securities are concerned (and the
Trustee, at
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the expense of the Company, and, upon written request, shall execute proper
instruments acknowledging the same), except for the following which shall
survive until otherwise terminated or discharged hereunder: (a) the rights of
Holders of Defeased Securities to receive, solely from the trust fund described
in Section 404 and as more fully set forth in such Section, payments in respect
of the principal of, premium, if any, and interest on such Securities when such
payments are due, (b) the Company's obligations with respect to such Defeased
Securities under Sections 304, 305, 306, 307, 1002 and 1003, (c) the rights,
powers, trusts, duties and immunities of the Trustee hereunder, including,
without limitation, the Trustee's rights under Section 606, and (d) this Article
Four. Subject to compliance with this Article Four, the Company may exercise its
option under this Section 402 notwithstanding the prior exercise of its option
under Section 403 with respect to the Securities.
Section 403. Covenant Defeasance.
Upon the Company's exercise under Section 401 of the option
applicable to this Section 403, the Company and each Guarantor shall be released
from its obligations under any covenant or provision contained or referred to in
Sections 1006 through 1019, inclusive, and the provisions of Article Twelve and
Sections 1416 through 1429 shall not apply, with respect to the Defeased
Securities on and after the date the conditions set forth below are satisfied
(hereinafter, "covenant defeasance"), and the Defeased Securities shall
thereafter be deemed to be not "Outstanding" for the purposes of any direction,
waiver, consent or declaration or Act of Holders (and the consequences of any
thereof) in connection with such covenants and the provisions of Article Twelve
and Sections 1416 through 1429, but shall continue to be deemed "Outstanding"
for all other purposes hereunder. For this purpose, such covenant defeasance
means that, with respect to the Defeased Securities, the Company and each
Guarantor 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 and such omission to
comply shall not constitute a Default or an Event of Default under Section
501(c), (d) or (g), but, except as specified above, the remainder of this
Indenture and such Defeased Securities shall be unaffected thereby.
Section 404. Conditions to Defeasance or Covenant Defeasance.
The following shall be the conditions to application of either
Section 402 or Section 403 to the Defeased Securities:
(a) The Company shall irrevocably have deposited or caused to
be deposited with the Trustee (or another trustee satisfying the requirements of
Section 608 who shall agree to comply with the provisions of this Article Four
applicable to it) as trust funds in trust for the purpose of making the
following payments, specifically pledged as security for, and dedicated solely
to, the benefit of the Holders of such Securities, (a) United States dollars in
an amount, or (b) U.S. Government Obligations which through the scheduled
payment of principal and interest
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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 firm
of independent public accountants or a nationally recognized investment banking
firm expressed in a written certification thereof delivered to the Trustee, to
pay and discharge and which shall be applied by the Trustee (or other qualifying
trustee) to pay and discharge the principal of, premium, if any, and interest on
the Defeased Securities on the Stated Maturity of such principal or installment
of principal or interest (or on any date after July 15, 2002 (such date being
referred to as the "Defeasance Redemption Date"), if when exercising under
Section 401 either its option applicable to Section 402 or its option applicable
to Section 403, the Company shall have delivered to the Trustee an irrevocable
notice to redeem all of the Outstanding Securities on the Defeasance Redemption
Date); provided that the Trustee shall have been irrevocably instructed to apply
such United States dollars or the proceeds of such U.S. Government Obligations
to said payments with respect to the Securities; and provided, further, that the
United States dollars or U.S. Government Obligations deposited shall not be
subject to the rights of the holders of Senior Indebtedness or Guarantor Senior
Indebtedness pursuant to the provisions of Articles Twelve and Fourteen. For
this purpose, "U.S. Government Obligations" means securities that are (i) direct
obligations of the United States of America for the timely payment of which its
full faith and credit is pledged or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the timely payment of which is unconditionally guaranteed as a full
faith and credit obligation by the United States of America, which, in either
case, are not callable or redeemable at the option of the issuer thereof, and
shall also include a depository receipt issued by a bank (as defined in Section
3(a)(2) of the Securities Act), as custodian with respect to any such U.S.
Government Obligation or a specific payment of principal of or interest on any
such U.S. Government Obligation held by such custodian for the account of the
holder of such depository receipt, provided 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.
(b) In the case of an election under Section 402, the Company
shall have delivered to the Trustee an Opinion of Independent Counsel in the
United States stating that (A) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling or (B) 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 of
Independent Counsel in the United States 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 defeasance and will be subject to
federal income tax on the same amounts, in the same manner and at the same times
as would have been the case if such defeasance had not occurred.
(c) In the case of an election under Section 403, the Company
shall have delivered to the Trustee an Opinion of Independent Counsel in the
United States to the effect that
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the holders of the Outstanding Securities will not recognize income, gain or
loss for federal income tax purposes as a result of such covenant defeasance and
will be subject to federal income tax on the same amounts, in the same manner
and at the same times as would have been the case if such covenant defeasance
had not occurred.
(d) No Default or Event of Default shall have occurred and be
continuing on the date of such deposit or insofar as subsections 501(h) and (i)
are concerned, at any time during the period ending on the 91st day after the
date of deposit.
(e) Such defeasance or covenant defeasance shall not cause the
Trustee for the Securities to have a conflicting interest with respect to any
securities of the Company or any Guarantor.
(f) Such defeasance or covenant defeasance shall not result in
a breach or violation of, or constitute a Default under, this Indenture or any
other material agreement or instrument to which the Company or any Guarantor is
a party or by which it is bound.
(g) The Company shall have delivered to the Trustee an Opinion
of Independent Counsel to the effect that (A) the trust funds will not be
subject to any rights of holders of Senior Indebtedness or Guarantor Senior
Indebtedness, including, without limitation, those arising under this Indenture
and (B) after the 91st day following the deposit, the trust funds will not be
subject to the effect of any applicable bankruptcy, insolvency, reorganization
or similar laws affecting creditors' rights generally.
(h) The Company shall have delivered to the Trustee an
Officers' Certificate stating that the deposit was not made by the Company with
the intent of preferring the holders of the Securities or any Guarantee over the
other creditors of the Company or any Guarantor with the intent of defeating,
hindering, delaying or defrauding creditors of the Company, any Guarantor or
others.
(i) No event or condition shall exist that would prevent the
Company from making payments of the principal of, premium, if any, and interest
on the Securities on the date of such deposit or at any time ending on the 91st
day after the date of such deposit.
(j) The Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Independent Counsel, each stating that
all conditions precedent provided for relating to either the defeasance under
Section 402 or the covenant defeasance under Section 403 (as the case may be)
have been complied with as contemplated by this Section 404. Opinions of Counsel
or Opinions of Independent Counsel required to be delivered under this Section
may have qualifications customary for opinions of the type required and counsel
delivering such opinions may rely on certificates of the Company or government
or other officials customary for opinions of the type required, including
certificates certifying as to matters of fact, including that various financial
covenents have been complied with.
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Section 405. 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 United States dollars and U.S. Government Obligations (including the
proceeds thereof) deposited with the Trustee or other qualifying trustee as
permitted under Section 404 (collectively, for purposes of this Section 405, the
"Trustee") pursuant to Section 404 in respect of the Defeased 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 determine, to the Holders of such Securities of all sums due
and to become due thereon in respect of principal, premium, if any, and
interest, but such money need not be segregated from other funds except to the
extent required by law.
The Company shall pay and indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against the U.S. Government
Obligations deposited pursuant to Section 404 or the principal and interest
received in respect thereof other than any such tax, fee or other charge which
by law is for the account of the Holders of the Defeased Securities.
Anything in this Article Four to the contrary notwithstanding,
the Trustee shall deliver or pay to the Company from time to time upon Company
Request any United States dollars or U.S. Government Obligations held by it as
provided in Section 404 which, in the opinion of a nationally recognized firm of
independent public accountants 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 defeasance or covenant defeasance.
Section 406. Reinstatement.
If the Trustee or Paying Agent is unable to apply any United
States dollars or U.S. Government Obligations in accordance with Section 402 or
403, as the case may be, by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's and each Guarantor's obligations under this
Indenture and the Securities and the provisions of Articles Twelve and Fourteen
hereof shall be revived and reinstated as though no deposit had occurred
pursuant to Section 402 or 403, as the case may be, until such time as the
Trustee or Paying Agent is permitted to apply all such United States dollars or
U.S. Government Obligations in accordance with Section 402 or 403, as the case
may be; provided, however, that if the Company makes any payment to the Trustee
or Paying Agent of principal of, premium, if any, or interest on any Security
following the reinstatement of its obligations, the Trustee or Paying Agent
shall promptly pay any such amount to the Holders of the Securities and the
Company shall be subrogated to the rights of the Holders of such Securities to
receive such payment from the money held by the Trustee or Paying Agent.
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ARTICLE V
REMEDIES
Section 501. Events of Default.
"Event of Default," wherever used herein, means any one of the
following events which has occurred and is continuing (whatever the reason for
such Event of Default and whether it shall be occasioned by the provisions of
Article Twelve or be voluntary or involuntary or be effected by operation of law
or pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(a) there shall be a default in the payment of any interest on
any Security (including any Penalty Interest) when it becomes due and payable,
and such default shall continue for a period of 30 days;
(b) there shall be a default in the payment of the principal
of (or premium, if any, on) any Security at its Maturity (upon acceleration,
optional or mandatory redemption, required repurchase or otherwise);
(c) (i) there shall be a default in the performance, or
breach, of any covenant or agreement of the Company or any Guarantor under this
Indenture (other than a default in the performance or breach of a covenant or
agreement which is specifically dealt with in clause (a) or (b) or in clause
(ii), (iii) or (iv) of this clause (c)) and such default or breach shall
continue for a period of 30 days after written notice has been given, by
certified mail, (1) to the Company by the Trustee or (z) to the Company and the
Trustee by the Holders of at least 25% in aggregate principal amount of the
Outstanding Securities; (ii) there shall be a default in the performance or
breach of the provisions of Article Eight; (iii) the Company shall have failed
to make or consummate an Offer in accordance with the provisions of Section
1013; or (iv) the Company shall have failed to make or consummate a Change of
Control Offer in accordance with the provisions of Section 1016;
(d) one or more defaults shall have occurred under any
agreements, indentures or instruments under which the Company, any Guarantor or
any Restricted Subsidiary then has outstanding Indebtedness in excess of
$5,000,000 in the aggregate and, if not already matured at its final maturity in
accordance with its terms, such Indebtedness shall have been accelerated;
(e) any Guarantee shall for any reason cease to be, or be
asserted in writing by any Guarantor or the Company not to be, in full force and
effect, and enforceable in accordance with its terms, except to the extent
contemplated by this Indenture and any such Guarantee;
(f) one or more judgments, orders or decrees for the payment
of money in excess of $5,000,000 either individually or in the aggregate (net of
amounts covered by
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insurance, bond, surety or similar instrument), shall be entered against the
Company, any Guarantors, or any Restricted Subsidiary or any of their respective
properties and shall not be discharged and either (a) any creditor shall have
commenced an enforcement proceeding upon such judgment, order or decree or (b)
there shall have been a period of 60 consecutive days during which a stay of
enforcement of such judgment or order, by reason of an appeal or otherwise,
shall not be in effect;
(g) any holder or holders of at least $5,000,000 in aggregate
principal amount of Indebtedness of the Company, any Guarantors, or any
Restricted Subsidiary after a default under such Indebtedness shall notify the
Trustee of the intended sale or disposition of any assets of the Company, any
Guarantors or any Restricted Subsidiary that have been pledged to or for the
benefit of such holder or holders to secure such Indebtedness or shall commence
proceedings, or take any action (including by way of set-off), to retain in
satisfaction of such Indebtedness or to collect on, seize, dispose of or apply
in satisfaction of Indebtedness, assets of the Company or any Restricted
Subsidiary (including funds on deposit or held pursuant to lock-box and other
similar arrangements);
(h) there shall have been the entry by a court of competent
jurisdiction of (i) a decree or order for relief in respect of the Company, any
Guarantor or any Restricted Subsidiary in an involuntary case or proceeding
under any applicable Bankruptcy Law or (ii) a decree or order adjudging the
Company, any Guarantor or any Restricted Subsidiary bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment or composition of or in respect
of the Company, any Guarantor or any Restricted Subsidiary under any applicable
federal or state law, or appointing a custodian, receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) of the Company, any Guarantor
or any Restricted Subsidiary or of any substantial part of their respective
properties, or ordering the winding up or liquidation of their affairs, and any
such decree or order for relief shall continue to be in effect, or any such
other decree or order shall be unstayed and in effect, for a period of 60
consecutive days; or
(i) (i) the Company, any Guarantor or any Restricted
Subsidiary commences a voluntary case or proceeding under any applicable
Bankruptcy Law or any other case or proceeding to be adjudicated bankrupt or
insolvent, (ii) the Company, any Guarantor or any Restricted Subsidiary consents
to the entry of a decree or order for relief in respect of the Company, any
Guarantor or such Restricted Subsidiary in an involuntary case or proceeding
under any applicable Bankruptcy Law or to the commencement of any bankruptcy or
insolvency case or proceeding against it, (iii) the Company, any Guarantor or
any Restricted Subsidiary files a petition or answer or consent seeking
reorganization or relief under any applicable federal or state law, (iv) the
Company, any Guarantor or any Restricted Subsidiary (1) consents to the filing
of such petition or the appointment of, or taking possession by, a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other similar official
of the Company, any Guarantor or such Restricted Subsidiary or of any
substantial part of its respective properties, (2) makes an assignment for the
benefit of creditors or (3) admits in writing its inability to pay its debts
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generally as they become due, or (v) the Company, any Guarantor or any
Restricted Subsidiary takes any corporate action authorizing any such actions in
this paragraph (i).
The Company shall deliver to the Trustee within five days
after the occurrence thereof, written notice, in the form of an Officers'
Certificate, of any Default, its status and what action the Company is taking or
proposes to take with respect thereto. Unless the Corporate Trust Office of the
Trustee has received written notice of an Event of Default of the nature
described in this Section, the Trustee shall not be deemed to have knowledge of
such Event of Default for the purposes of Article Five or for any other purpose.
Section 502. Acceleration of Maturity; Rescission and
Annulment.
If an Event of Default (other than an Event of Default
specified in Sections 501(h) and (i)), shall occur and be continuing, the
Trustee or the Holders of not less than 25% in aggregate principal amount of the
Securities Outstanding may, and the Trustee at the request of the Holders of not
less than 25% in aggregate principal amount of the Securities Outstanding shall,
declare all unpaid principal of, premium, if any, and accrued interest on all
the Securities to be due and payable immediately, by a notice in writing to the
Company (and to the Trustee if given by the Holders of the Securities); provided
that so long as the Bank Credit Agreement is in effect, such declaration shall
not become effective until the earlier of (a) five Business Days after receipt
of such notice of acceleration from the Holders or the Trustee by the agent
under the Bank Credit Agreement or (b) acceleration of the Indebtedness under
the Bank Credit Agreement. Thereupon the Trustee may, at its discretion, proceed
to protect and enforce the rights of the Holders of the Securities by
appropriate judicial proceeding. If an Event of Default specified in clause (h)
or (i) of Section 501 occurs and is continuing, then all the Securities shall
ipso facto become and be immediately due and payable, in an amount equal to the
principal amount of the Securities, together with accrued and unpaid interest,
if any, to the date the Securities become due and payable, without any
declaration or other act on the part of the Trustee or any Holder. The Trustee
or, if notice of acceleration is given by the Holders, the Holders shall give
notice to the agent under the Bank Credit Agreement of any such acceleration.
At any time after such declaration of acceleration has been
made but 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 aggregate principal amount of the Securities Outstanding, by
written notice to the Company and the Trustee, may rescind and annul such
declaration and its consequences if:
(a) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(i) all sums paid or advanced by the Trustee under this
Indenture and the reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel,
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(ii) all overdue interest on all Securities,
(iii) the principal of and premium, if any, on any Securities
which have become due otherwise than by such declaration of acceleration and
interest thereon at a rate borne by the Securities, and
(iv) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate borne by the Securities; and
(v) all Events of Default, other than the non-payment of
principal of the 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 provided in Section 513.
Section 503. Collection of Indebtedness and Suits for
Enforcement by Trustee.
The Company and each Guarantor covenant that if
(a) 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
(b) default is made in the payment of the principal of or
premium, if any, on any Security at the Stated Maturity thereof,
the Company and any such Guarantor will, upon demand of the Trustee, pay to it,
for the benefit of the Holders of such Securities, subject to Articles Twelve
and Fourteen, the whole amount then due and payable on such Securities for
principal and premium, if any, and interest, with interest upon the overdue
principal and premium, if any, and, to the extent that payment of such interest
shall be legally enforceable, upon overdue installments of interest, at the rate
borne 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 or any Guarantor, as the case may be, 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 and may prosecute such proceeding to
judgment or final decree, and may enforce the same against the Company or any
Guarantor 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 Guarantor or any other obligor upon the
Securities, wherever situated.
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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 under this Indenture or the Guarantees by such appropriate
private or judicial proceedings as the Trustee shall deem most effectual to
protect and enforce such rights, including, seeking recourse against any
Guarantor pursuant to the terms of any Guarantee, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein or therein, or to enforce any other proper
remedy, including, without limitation, seeking recourse against any Guarantor
pursuant to the terms of a Guarantee, or to enforce any other proper remedy,
subject however to Section 512.
Section 504. Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or
other judicial proceeding relative to the Company or any other obligor,
including each Guarantor, upon the Securities or the property of the Company or
of such other obligor or their creditors, the Trustee (irrespective of whether
the principal of the Securities shall then be due and payable as therein
expressed or by declaration or otherwise and irrespective of whether the Trustee
shall have made any demand on the Company for the payment of overdue principal
or interest) shall be entitled and empowered, by intervention in such proceeding
or otherwise,
(a) to file and prove a claim for the whole amount of
principal, and premium, if any, and interest owing and unpaid in respect of the
Securities and to file such other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee (including any claim for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel) and of the Holders allowed in such judicial
proceeding, and
(b) subject to Articles Twelve and Fourteen, to collect and
receive any moneys, securities or other property payable or deliverable upon any
conversion or exchange of Securities or upon any such claims and to distribute
the same;
and any custodian, in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee and, in the event that the Trustee
shall consent to the making of such payments directly to the Holders, to pay the
Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 606.
Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment or composition affecting the
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.
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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 and as trustee of an express trust, and any recovery of judgment
shall, after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Securities in respect of which such
judgment has been recovered.
Section 506. Application of Money Collected.
Any money collected by the Trustee pursuant to this Article or
otherwise on behalf of the Holders or the Trustee pursuant to this Article or
through any proceeding or any arrangement or restructuring in anticipation or in
lieu of any proceeding contemplated by this Article shall be applied, subject to
applicable law, in the following order, at the date or dates fixed by the
Trustee and, in case of the distribution of such money on account of principal,
premium, if any, or interest, upon presentation of the 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 606;
SECOND: Subject to Articles Twelve and Fourteen, to the
payment of the amounts then due and unpaid upon the Securities for principal,
premium, if any, and interest, 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,
premium, if any, and interest; and
THIRD: Subject to Articles Twelve and Fourteen, the balance,
if any, to the Person or Persons entitled thereto, including the Company,
provided that all sums due and owing to the Holders and the Trustee have been
paid in full as required by this Indenture.
Section 507. Limitation on Suits.
No Holder of any Securities shall have any right to institute
any proceeding, judicial or otherwise, with respect to this Indenture, or for
the appointment of a receiver or trustee, or for any other remedy hereunder,
unless
(a) such Holder has previously given written notice to the
Trustee of a continuing Event of Default;
(b) the Holders of not less than 25% in principal amount of
the Outstanding Securities shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name as
trustee hereunder;
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(c) such Holder or Holders have offered to the Trustee an
indemnity satisfactory to the Trustee against the costs, expenses and
liabilities to be incurred in compliance with such request;
(d) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such proceeding; and
(e) no direction inconsistent with such written request has
been given to the Trustee during such 60-day period by the Holders of a majority
in 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 or any Guarantee 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 provided in this Indenture or any Guarantee 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, but
subject to Articles Twelve and Fourteen, the Holder of any Security shall have
the right on the terms stated herein, which is absolute and unconditional, to
receive payment of the principal of, premium, if any, and (subject to Section
309) interest on such Security on the respective Stated Maturities expressed in
such Security (or, in the case of redemption or repurchase, on the Redemption
Date or repurchase 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, subject to Articles Twelve and Fourteen.
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 or the Guarantees and such
proceeding has been discontinued or abandoned for any reason, or has been
determined adversely to the Trustee or to such Holder, then and in every such
case the Company, each of the Guarantors, the Trustee and the Holders shall,
subject to any determination in such proceeding, be restored severally and
respectively to their former positions hereunder, and thereafter all rights and
remedies of the Trustee and the Holders shall continue as though no such
proceeding had been instituted.
Section 510. Rights and Remedies Cumulative.
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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.
Section 512. Control by Holders.
The Holders of not less than a majority in aggregate 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
(a) such direction shall not be in conflict with any rule of
law or with this Indenture or any Guarantee or expose the Trustee to personal
liability; and
(b) 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 aggregate principal
amount of the Outstanding Securities may on behalf of the Holders of all the
Securities waive any past Default hereunder and its consequences, except a
Default
(a) in the payment of the principal of, premium, if any, or
interest (including Penalty Interest) on any Security (unless such Default has
been cured and a sum sufficient to pay all matured installments of interest and
principal due otherwise than by acceleration and any Penalty Interest has been
deposited with the Trustee); or
(b) in respect of a covenant or a provision hereof which under
Article Nine cannot be modified or amended without the consent of a higher
percentage of the principal amount of the Outstanding Securities affected.
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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.
Section 514. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any
Security by his acceptance thereof shall be deemed to have agreed, that any
court may in its discretion require, in any suit for the enforcement of any
right or remedy under this Indenture, or in any suit against the Trustee for any
action taken, suffered or omitted by it as Trustee, the filing by any party
litigant in such suit of an undertaking to pay the costs of such suit, and that
such court may in its discretion assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in such suit, having due regard to
the merits and good faith of the claims or defenses made by such party litigant;
but the provisions of this Section shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Holder, or group of Holders, holding in
the aggregate more than 10% in principal amount of the Outstanding Securities,
or to any suit instituted by any Holder for the enforcement of the payment of
the principal of, premium, if any, or interest on any Security on or after the
respective Stated Maturities expressed in such Security (or, in the case of
redemption, on or after the Redemption Date).
Section 515. Waiver of Stay, Extension or Usury Laws.
Each of the Company and any Guarantor covenants (to the extent that it may
lawfully do so) that it will not at any time insist upon, or plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay or
extension law or any usury or other law wherever enacted, now or at any time
hereafter in force, which would prohibit or forgive the Company or any Guarantor
from paying all or any portion of the principal of, premium, if any, or interest
on the Securities contemplated herein or in the Securities or which may affect
the covenants or the performance of this Indenture; and each of the Company and
any Guarantor (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.
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ARTICLE VI
THE TRUSTEE
Section 601. Notice of Defaults.
Within 30 days after the occurrence of any Default, the
Trustee shall transmit by mail to all Holders, as their names and addresses
appear in the Security Register, notice of such Default hereunder known to the
Trustee, unless such Default shall have been cured or waived; provided, however,
that, except in the case of a Default in the payment of the principal of,
premium, if any, or interest on any Security, the Trustee shall be protected in
withholding such notice if and so long as a trust committee of Responsible
Officers of the Trustee in good faith determines that the withholding of such
notice is in the interest of the Holders.
Section 602. Certain Rights of Trustee.
Subject to the provisions of Trust Indenture Act Sections
315(a) through 315(d):
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, 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) the Trustee may consult with counsel and any written
advice of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in reliance thereon in accordance with such
advice or Opinion of Counsel;
(d) the Trustee 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 security or indemnity satisfactory to the
Trustee against the costs, expenses and liabilities which might be incurred
therein or thereby in compliance with such request or direction;
(e) the Trustee shall not be liable for any action taken or
omitted by it in good faith and believed by it to be authorized or within the
discretion, rights or powers conferred upon it by this Indenture other than any
liabilities arising out of the negligence of the Trustee;
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(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,
approval, appraisal, bond, debenture, note, coupon, security or other paper or
document; provided, that the Trustee in its discretion may make such further
inquiry or investigation into such facts or matters as it may deem fit, and, if
the Trustee shall determine to make such further inquiry or investigation, it
shall be entitled to examine the books, records and premises of the Company,
personally or by agent or attorney;
(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) 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;
(i) the Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company,
except as otherwise provided herein; and
(j) money held in trust by the Trustee need not be segregated
from other funds except to the extent required by law, except as otherwise
provided herein.
Section 603. Trustee Not Responsible for Recitals,
Dispositions of Securities or Application of Proceeds Thereof.
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, except that the Trustee represents that it is
duly authorized to execute and deliver this Indenture, authenticate the
Securities and perform its obligations hereunder and that the statements made by
it in any Statement of Eligibility and Qualification on Form T-1 supplied to the
Company are true and accurate subject to the qualifications set forth therein.
The Trustee shall not be accountable for the use or application by the Company
of Securities or the proceeds thereof.
Section 604. Trustee and Agents May Hold Securities;
Collections; etc.
The Trustee, any Paying Agent, Security Registrar or any other
agent of the Company, in its individual or any other capacity, may become the
owner or pledgee of Securities, with the same rights it would have if it were
not the Trustee, Paying Agent, Security Registrar or such other agent and,
subject to Trust Indenture Act Sections 310 and 311, may
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otherwise deal with the Company and receive, collect, hold and retain
collections from the Company with the same rights it would have if it were not
the Trustee, Paying Agent, Security Registrar or such other agent.
Section 605. Money Held in Trust.
All moneys received by the Trustee shall, until used or
applied as herein provided, be held in trust for the purposes for which they
were received, but need not be segregated from other funds except to the extent
required by mandatory provisions of law. Except for funds or securities
deposited with the Trustee pursuant to Article Four, the Trustee may invest all
moneys received by the Trustee, until used or applied as herein provided, in
Temporary Cash Investments in accordance with the written directions of the
Company. The Trustee shall not be liable for any losses incurred in connection
with any investments made in accordance with this Section 605, unless the
Trustee acted with gross negligence or in bad faith. With respect to any losses
on investments made under this Section 605, the Company is liable for the full
extent of any such loss.
Section 606. Compensation and Indemnification of Trustee and
Its Prior Claim.
The Company covenants and agrees to pay to the Trustee from
time to time, and the Trustee shall be entitled to, such compensation for all
services rendered by it hereunder (which shall not be limited by any provision
of law in regard to the compensation of a trustee of an express trust) set forth
in a letter agreement executed by the Company and the Trustee, as such agreement
may be amended or supplemented, and the Company covenants and agrees to pay or
reimburse the Trustee and each predecessor Trustee upon its request for all
reasonable expenses, disbursements and advances incurred or made by or on behalf
of it in accordance with any of the provisions of this Indenture (including the
reasonable compensation and the expenses and disbursements of its counsel and of
all agents and other persons not regularly in its employ) except any such
expense, disbursement or advance as may arise from its negligence or bad faith.
The Company also covenants to indemnify the Trustee and each predecessor Trustee
for, and to hold it harmless against, any loss, liability, tax, assessment or
other governmental charge (other than taxes applicable to the Trustee's
compensation hereunder) or expense incurred without negligence or bad faith on
such Trustee's part, arising out of or in connection with the acceptance or
administration of this Indenture or the trusts hereunder and such Trustee's
duties hereunder, including enforcement of this Indenture and also including any
liability which the Trustee may incur as a result of failure to withhold, pay or
report any tax, assessment or other governmental charge, and the costs and
expenses of defending itself against or investigating any claim of liability
(whether asserted by any Holder, the Company or any other Person) in connection
with the exercise or performance of any of its powers or duties under this
Indenture. The obligations of the Company under this Section to compensate and
indemnify the Trustee and each predecessor Trustee and to pay or reimburse the
Trustee and each predecesso Trustee for expenses, disbursements and advances
shall constitute an additional obligation hereunder and shall survive the
satisfaction and discharge of this Indenture.
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All payments and reimbursements pursuant to this Section 606
shall be made with interest at the rate borne by the Securities.
As security for the performance of the obligations of the
Company under this Section 606, 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 606 shall not be subordinate to any other
liability or indebtedness of the Company (even though the Securities may be so
subordinate), and the Securities shall be subordinate to the Trustee's right to
receive such payment.
Section 607. Conflicting Interests.
The Trustee shall comply with the provisions of Section 310(b)
of the Trust Indenture Act.
Section 608. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be
eligible to act as trustee under Trust Indenture Act Section 310(a)(1) and which
shall have a combined capital and surplus of at least $250,000,000, to the
extent there is an institution eligible and willing to serve. The Trustee shall
be a participant in the Depository Trust Company and FAST distribution systems.
If such corporation publishes reports of condition at least annually, pursuant
to law or to the requirements of federal, state, territorial or District of
Columbia supervising or examining authority, then for the purposes of this
Section, the combined capital and surplus of such corporation shall be deemed to
be its combined capital and surplus as set forth in its most recent report of
condition so published. If at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section, the Trustee shall resign
immediately in the manner and with the effect hereinafter specified in this
Article. The Corporate Trust Office shall initially be located at First Union
National Bank of Maryland, 901 East Cary Street, Richmond, Virginia 23219.
Section 609. Resignation and Removal; Appointment of Successor
Trustee.
(a) No resignation or removal of the Trustee and no
appointment of a successor trustee pursuant to this Article shall become
effective until the acceptance of appointment by the successor trustee under
Section 610.
(b) The Trustee, or any trustee or trustees hereafter
appointed, may at any time resign by giving written notice thereof to the
Company. Upon receiving such notice of resignation, the Company shall promptly
appoint a successor trustee by written instrument executed by authority of the
Board of Directors of the Company, a copy of which shall be delivered to the
resigning Trustee and a copy to the successor trustee. If an instrument of
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acceptance by a successor trustee shall not have been delivered to the Trustee
within 30 days after the giving of such notice of resignation, the resigning
Trustee may, or any Holder who has been a bona fide Holder of a 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. Such court may thereupon, after such notice, if any, as it may deem
proper, appoint a successor trustee.
(c) The Trustee may be removed at any time by an Act of the
Holders of not less than a majority in aggregate 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 the
provisions of Trust Indenture Act Section 310(b) 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 608 and shall fail to resign 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
(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 case, (i) the Company by a Board Resolution may remove the Trustee,
or (ii) subject to Section 514, the Holder of any Security 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 removal of the Trustee and the appointment of a successor trustee. Such
court may thereupon, after such notice, if any, as it may deem proper and
prescribe, remove the Trustee and appoint a successor trustee.
(e) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of Trustee for
any cause, the Company, 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 of the Securities and accepted appointment in the
manner hereinafter
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provided, the Holder of any Security who has been a bona fide Holder for at
least six months may, subject to Section 514, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
appointment of a successor trustee.
(f) The Company shall give notice of each resignation and each
removal of the Trustee and each appointment of a successor trustee by mailing
written notice of such event by first-class mail, postage prepaid, to the
Holders of Securities as their names and addresses appear in the Security
Register. Each notice shall include the name of the successor trustee and the
address of its Corporate Trust Office or agent hereunder.
Section 610. Acceptance of Appointment by Successor.
Every successor trustee appointed hereunder shall execute,
acknowledge and deliver to the Company and to the retiring Trustee an instrument
accepting such appointment, and thereupon the resignation or removal of the
retiring Trustee shall become effective and such successor trustee, without any
further act, deed or conveyance, shall become vested with all the rights,
powers, trusts and duties of the retiring Trustee as if originally named as
Trustee hereunder; but, nevertheless, on the written request of the Company or
the successor trustee, upon payment of its charges then unpaid, such retiring
Trustee shall, pay over to the successor trustee all moneys at the time held by
it hereunder and shall execute and deliver an instrument transferring to such
successor trustee all such rights, powers, duties and obligations. Upon request
of any such successor trustee, the Company shall execute any and all instruments
for more fully and certainly vesting in and confirming to such successor trustee
all such rights and powers. Any Trustee ceasing to act shall, nevertheless,
retain a prior claim upon all property or funds held or collected by such
Trustee or such successor trustee to secure any amounts then due such Trustee
pursuant to the provisions of Section 606.
No successor trustee with respect to the Securities shall
accept appointment as provided in this Section 610 unless at the time of such
acceptance such successor trustee shall be eligible to act as trustee under the
provisions of Trust Indenture Act Section 310(a) and this Article Sixth and
shall have a combined capital and surplus of at least $250,000,000 and have a
Corporate Trust Office or an agent selected in accordance with Section 608.
Upon acceptance of appointment by any successor trustee as
provided in this Section 610, the Company shall give notice thereof to the
Holders of the Securities, by mailing such notice to such Holders at their
addresses as they shall appear on the Security Register. If the acceptance of
appointment is substantially contemporaneous with the resignation, then the
notice called for by the preceding sentence may be combined with the notice
called for by Section 609. If the Company fails to give such notice within 10
days after acceptance of appointment by the successor trustee, the successor
trustee shall cause such notice to be given at the expense of the Company.
Section 611. Merger, Conversion, Consolidation or Succession
to Business.
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Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Trustee shall be a
party, or any corporation succeeding to all or substantially all of the
corporate trust business of the Trustee, shall be the successor of the Trustee
hereunder, provided such corporation shall be eligible under Trust Indenture Act
Section 310(a) and this Article Sixth and shall have a combined capital and
surplus of at least $250,000,000 and have a Corporate Trust Office or an agent
selected in accordance with Section 608 without the execution or filing of any
paper or any further act on the part of any of the parties hereto.
In case at the time such successor to the Trustee shall
succeed to the trusts created by this Indenture any of the Securities shall have
been authenticated but not delivered, any such successor to the Trustee may
adopt the certificate of authentication of any predecessor Trustee and deliver
such Securities so authenticated; and, in case at that time any of the
Securities shall not have been authenticated, any successor to the Trustee may
authenticate such Securities either in the name of any predecessor hereunder or
in the name of the successor trustee; and in all such cases such certificate
shall have the full force which it is anywhere in the Securities or in this
Indenture provided that the certificate of the Trustee shall have; provided that
the right to adopt the certificate of authentication of any predecessor Trustee
or to authenticate Securities in the name of any predecessor Trustee shall apply
only to its successor or successors by merger, conversion or consolidation.
Section 612. Preferential Collection of Claims Against
Company.
If and when the Trustee shall be or become a creditor of the
Company (or other obligor under 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). A Trustee who has resigned or
been removed shall be subject to the Trust Indenture Act Section 311(a) to the
extent indicated therein.
ARTICLE VII
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) semiannually, 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
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(b) at such other times as the Trustee may request in writing,
within 30 days after receipt by the Company of any such request, a list of
similar form and content as of a date not more than 15 days prior to the time
such list is furnished;
provided, however, that if and so long as the Trustee shall be the Security
Registrar, no such list need be furnished.
Section 702. Disclosure of Names and Addresses of Holders.
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 either of them shall be held accountable by reason of the
disclosure of any information as to the names and addresses of the Holders in
accordance with Trust Indenture Act Section 312, regardless of the source from
which such information was derived, and that the Trustee shall not be held
accountable by reason of mailing any material pursuant to a request made under
Trust Indenture Act Section 312.
Section 703. Reports by Trustee.
Within 60 days after May 15 of each year commencing with the
first May 15 after the first issuance of Securities, the Trustee shall transmit
by mail to all Holders, as their names and addresses appear in the Security
Register, as provided in Trust Indenture Act Section 313(c), a brief report
dated as of such May 15 in accordance with and to the extent required by Trust
Indenture Act Section 313(a).
Section 704. Reports by Company and Guarantors.
The Company and any Guarantor shall:
(a) file with the Trustee, within 15 days after the Company or
any Guarantor, as the case may be, is required to file the same with the
Commission, copies of the annual reports and of the information, documents and
other reports (or copies of such portions of any of the foregoing as the
Commission may from time to time by rules and regulations prescribe) which the
Company or any Guarantor may be required to file with the Commission pursuant to
Section 13 or Section 15(d) of the Exchange Act; or, if the Company or any
Guarantor, as the case may be, is not required to file information, documents or
reports pursuant to either of said Sections, then it shall file with the Trustee
and the Commission, in accordance with rules and regulations prescribed from
time to time by the Commission, such of the supplementary and periodic
information, documents and reports which may be required pursuant to Section 13
of the Exchange Act in respect of a security listed and registered on a national
securities exchange as may be prescribed from time to time in such rules and
regulations;
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(b) file with the Trustee and the Commission, in accordance
with the rules and regulations prescribed from time to time by the Commission,
such additional information, documents and reports with respect to compliance by
the Company or any Guarantor, as the case may be, with the conditions and
covenants of this Indenture as may be required from time to time by such rules
and regulations; and
(c) transmit or cause to be transmitted by mail to all
Holders, as their names and addresses appear in the Security Register, within 30
days after the filing thereof with the Trustee, in the manner and to the extent
provided in Trust Indenture Act Section 313(c), such summaries of any
information, documents and reports required to by filed by the Company or any
Guarantor, as the case may be, pursuant to Subsections (a) and (b) of this
Section as may be required by rules and regulations prescribed from time to time
by the Commission.
ARTICLE VIII
CONSOLIDATION, MERGER,
CONVEYANCE, TRANSFER OR LEASE
Section 801. Company or Any Guarantor May Consolidate, etc.,
Only on Certain Terms.
(a) The Company shall not, in a single transaction or through
a series of related transactions, consolidate with or merge with or into any
other Person or sell, assign, convey, transfer or lease or otherwise dispose of
all or substantially all of its properties and assets as an entirety to any
Person or group of affiliated Persons, or permit any of its Subsidiaries to
enter into any such transaction or transactions if such transaction or
transactions, in the aggregate, would result in a sale, assignment, conveyance,
transfer, lease or disposal of all or substantially all of the properties and
assets of the Company and its Subsidiaries on a Consolidated basis to any other
Person or group of affiliated Persons, unless at the time and after giving
effect thereto:
(i) either (1) the Company shall be the continuing
corporation, or (2) the Person (if other than the Company)
formed by such consolidation or into which the Company is
merged or the Person which acquires by sale, assignment,
conveyance, transfer, lease or disposition of all or
substantially all of the properties and assets of the Company
and its Subsidiaries on a Consolidated basis (the "Surviving
Entity") shall be a corporation duly organized and validly
existing under the laws of the United States of America, any
state thereof or the District of Columbia and such Person
assumes, by a supplemental indenture in a form reasonably
satisfactory to the Trustee, all the obligations of the
Company under the Securities and this Indenture, and this
Indenture shall remain in full force and effect;
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(ii) immediately before and immediately after giving
effect to such transaction, no Default or Event of Default
shall have occurred and be continuing;
(iii) immediately after giving effect to such
transaction on a pro forma basis, the Consolidated Net Worth
of the Company (or the Surviving Entity if the Company is not
the continuing obligor under this Indenture) is equal to or
greater than the Consolidated Net Worth of the Company
immediately prior to such transaction;
(iv) immediately before and immediately after giving
effect to such transaction on a pro forma basis (on the
assumption that the transaction occurred on the first day of
the four-quarter period immediately prior to the consummation
of such transaction with the appropriate adjustments with
respect to the transaction being included in such pro forma
calculation), the Company (or the Surviving Entity if the
Company is not the continuing obligor under this Indenture)
could incur $1.00 of additional Indebtedness under Section
1008 (other than Permitted Indebtedness);
(v) each Guarantor, if any, unless it is the other
party to the transactions described above, shall have by
supplemental indenture confirmed that its Guarantee shall
apply to such Person's obligations under this Indenture and
the Securities;
(vi) if any of the property or assets of the Company
or any of its Subsidiaries would thereupon become subject to
any Lien, the provisions of Section 1012 are complied with;
and
(vii) the Company or the Surviving Entity shall have
delivered, or caused to be delivered, to the Trustee, in form
and substance reasonably satisfactory to the Trustee, an
Officers' Certificate and an Opinion of Counsel, each to the
effect that such consolidation, merger, transfer, sale,
assignment, conveyance, lease or other transaction and the
supplemental indenture in respect thereto comply with this
Indenture and that all conditions precedent herein provided
for relating to such transaction have been complied with.
(b) Each Guarantor shall not, and the Company shall not permit
a Guarantor to, in a single transaction or through a series of related
transactions merge or consolidate with or into any other corporation (other than
the Company or any other Guarantor) or other entity, or sell, assign, convey,
transfer, lease or otherwise dispose of all or substantially all of its
properties and assets on a Consolidated basis to any entity (other than the
Company or any other Guarantor) unless at the time and after giving effect
thereto:
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(i) either (1) such Guarantor shall be the continuing
corporation or (2) the entity (if other than such Guarantor)
formed by such consolidation or into which such Guarantor is
merged or the entity which acquires by sale, assignment,
conveyance, transfer, lease or disposition the properties and
assets of such Guarantor shall be a corporation duly organized
and validly existing under the laws of the United States, any
state thereof or the District of Columbia and shall expressly
assume by an indenture supplemental hereto, executed and
delivered to the Trustee, in a form reasonably satisfactory to
the Trustee, all the obligations of such Guarantor under its
Guarantees and this Indenture;
(ii) immediately before and immediately after giving
effect to such transaction, no Default or Event of Default
shall have occurred and be continuing; and
(iii) such Guarantor shall have delivered to the
Trustee, in form and substance reasonably satisfactory to the
Trustee, an Officers' Certificate and an Opinion of Counsel,
each stating that such consolidation, merger, sale,
assignment, conveyance, transfer, lease or disposition and
such supplemental indenture comply with this Indenture, and
thereafter all obligations of the predecessor shall terminate.
The provisions of this Section 801(b) shall not apply to any transaction
(including any Asset Sale made in accordance with Section 1013) with respect to
any Guarantor if the Guarantee of such Guarantor is released in connection with
such transaction in accordance with Section 1014(c).
Section 802. Successor Substituted.
Upon any consolidation or merger, or any sale, assignment,
conveyance, transfer, lease or disposition of all or substantially all of the
properties and assets of the Company or any Guarantor in accordance with Section
801, the successor Person formed by such consolidation or into which the Company
or such Guarantor, as the case may be, is merged or the successor Person to
which such sale, assignment, conveyance, transfer, lease or disposition is made
shall succeed to, and be substituted for, and may exercise every right and power
of, the Company or such Guarantor, as the case may be, under this Indenture, the
Securities and/or such Guarantee, as the case may be, with the same effect as if
such successor had been named as the Company or such Guarantor, as the case may
be, herein, in the Securities and/or in such Guarantee, as the case may be. When
a successor assumes all the obligations of its predecessor under this Indenture,
the Securities or a Guarantee, as the case may be, the predecessor shall be
released from those obligations; provided that in the case of a transfer by
lease, the predecessor shall not be released from the payment of principal and
interest on the Securities or a Guarantee, as the case may be.
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ARTICLE IX
SUPPLEMENTAL INDENTURES
Section 901. Supplemental Indentures and Agreements without
Consent of Holders.
Without the consent of any Holders, the Company and the
Guarantors, 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
or agreements or other instruments with respect to any Guarantee, in form and
substance satisfactory to the Trustee, for any of the following purposes:
(a) to evidence the succession of another Person to the
Company, any Guarantor or any other obligor upon the Securities, and the
assumption by any such successor of the covenants of the Company or such
Guarantor or obligor herein and in the Securities and in any Guarantee, in each
case in compliance with the provisions of this Indenture;
(b) to add to the covenants of the Company, any Guarantor or
any other obligor upon the Securities for the benefit of the Holders, or to
surrender any right or power herein conferred upon the Company, any Guarantor or
any other obligor upon the Securities, as applicable, herein, in the Securities
or in any Guarantee;
(c) to cure any ambiguity, to correct or supplement any
provision herein which may be defective or inconsistent with any other provision
herein or in any Guarantee, or to make any other provisions with respect to
matters or questions arising under this Indenture, the Securities or any
Guarantee; provided that, in each case, such provisions shall not adversely
affect the interests of the Holders;
(d) to comply with the requirements of the Commission in order
to effect or maintain the qualification of this Indenture under the Trust
Indenture Act, as contemplated by Section 905 or otherwise;
(e) to add a Guarantor pursuant to the requirements of Section
1014;
(f) to evidence and provide the acceptance of the appointment
of a successor trustee hereunder;
(g) to mortgage, pledge, hypothecate or grant a security
interest in favor of the Trustee for the benefit of the Holders as additional
security for the payment and performance of the Indenture Obligations, in any
property or assets, including any which are required to be mortgaged, pledged or
hypothecated, or in which a security interest is required to be granted to the
Trustee pursuant to this Indenture or otherwise; or
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(h) to provide for uncertificated Securities in place of or in
addition to certificated Securities.
Section 902. Supplemental Indentures and Agreements with
Consent of Holders.
With the consent of the Holders of not less than a majority in
aggregate principal amount of the Outstanding Securities, by Act of said Holders
delivered to the Company, each Guarantor, and the Trustee, the Company, and each
Guarantor (if a party thereto) when authorized by a Board Resolution, and the
Trustee may enter into an indenture or indentures supplemental hereto or
agreements or other instruments with respect to any Guarantee in form and
substance satisfactory to the Trustee 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, the Securities or any Guarantee; provided, however, that no such
supplemental indenture, agreement or instrument shall, without the consent of
the Holder of each Outstanding Security affected thereby:
(a) 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 upon the redemption
thereof, or change the coin or currency in which the principal of any Security
or any premium or the interest thereon is payable, or impair the right to
institute suit for the enforcement of any such payment after the Stated Maturity
thereof (or, in the case of redemption, on or after the Redemption Date);
(b) amend, change or modify the obligation of the Company to
make and consummate an Offer with respect to any Asset Sale or Asset Sales in
accordance with Section 1013 or the obligation of the Company to make and
consummate a Change of Control Offer in the event of a Change of Control in
accordance with Section 1016, including amending, changing or modifying any
definitions with respect thereto;
(c) 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 or compliance with certain provisions of this Indenture or certain
defaults hereunder and their consequences provided for in this Indenture or with
respect to any Guarantee;
(d) modify any of the provisions of this Section or Sections
513 or 1022, except to increase the percentage in principal amount of the
Outstanding Securities, the consent of whose Holders is required for any such
actions or to provide that certain other provisions of this Indenture cannot be
modified or waived without the consent of the Holder of each Security affected
thereby;
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(e) except as otherwise permitted under Article Eight, consent
to the assignment or transfer by the Company or any Guarantor of any of its
rights and obligations under this Indenture; or
(f) amend or modify any of the provisions of this Indenture
relating to the subordination of the Securities or any Guarantee in any manner
adverse to the Holders of the Securities or any Guarantee.
the written request of the Company and each Guarantor,
accompanied by a copy of a Board Resolution authorizing the execution of any
such supplemental indenture or Guarantee, and upon the filing with the Trustee
of evidence of the consent of Holders as aforesaid, the Trustee shall, subject
to Section 903, join with the Company and each Guarantor in the execution of
such supplemental indenture or Guarantee.
It shall not be necessary for any Act of Holders under this
Section to approve the particular form of any proposed supplemental indenture or
Guarantee or agreement or instrument relating to any Guarantee, but it shall be
sufficient if such Act shall approve the substance thereof.
Section 903. Execution of Supplemental Indentures and
Agreements.
In executing, or accepting the additional trusts created by,
any supplemental indenture, agreement or instrument 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 Trust Indenture Act Section 315(a)
through 315(d) and Section 602 hereof) shall be fully protected in relying upon,
an Opinion of Counsel and an Officers' Certificate stating that the execution of
such supplemental indenture, agreement or instrument is authorized or permitted
by this Indenture. The Trustee may, but shall not be obligated to, enter into
any such supplemental indenture, agreement or instrument which affects the
Trustee's own rights, duties or immunities under this Indenture, any Guarantee
or otherwise.
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 as then in effect.
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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
Board of Directors, to any such supplemental indenture may be prepared and
executed by the Company and each Guarantor and authenticated and delivered by
the Trustee in exchange for Outstanding Securities.
Section 907. Effect on Senior Indebtedness.
No supplemental indenture shall adversely affect the rights
under Articles Twelve and Fourteen, or any definitions or provisions related
thereto, or the Guarantees of any holder of Senior Indebtedness or Guarantor
Senior Indebtedness unless the requisite holders of each issue of Senior
Indebtedness or Guarantor Senior Indebtedness affected thereby shall have
consented to such supplemental indenture.
ARTICLE X
COVENANTS
Section 1001. Payment of Principal, Premium and Interest.
Subject to the provisions of Articles Twelve and Fourteen, the
Company will duly and punctually pay the principal of, 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 an office or agency where Securities
may be presented or surrendered for payment. The Company also will maintain an
office or agency where Securities may be surrendered for registration of
transfer, redemption 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 any such offices or agencies. If at any time the
Company shall fail to maintain any such required offices or agencies or shall
fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the office of the agent
of the Trustee described above and the Company hereby appoints such agent as its
agent to receive all such presentations, surrenders, notices and demands.
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The Company may from time to time designate one or more other
offices or agencies where the Securities may be presented or surrendered for any
or all such purposes, and may from time to time rescind such designation. The
Company will give prompt written notice to the Trustee of any such designation
or rescission and any change in the location of any such office or agency.
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, premium, if any, or
interest on any of the Securities, segregate and hold in trust for the benefit
of the Holders entitled thereto a sum sufficient to pay the principal, premium,
if any, or interest so becoming due until such sums shall be paid to such
Persons or otherwise disposed of as herein provided, and will promptly notify
the Trustee of its action or failure so to act.
If the Company is not acting as Paying Agent, the Company
will, before each due date of the principal of, premium, if any, or interest on
any Securities, deposit with a Paying Agent a sum in same day funds sufficient
to pay the principal, premium, if any, or interest so becoming due, such sum to
be held in trust for the benefit of the Persons entitled to such principal,
premium or interest, and (unless such Paying Agent is the Trustee) the Company
will promptly notify the Trustee of such action or any failure so to act.
If the Company is not acting as Paying Agent, the Company will
cause each Paying Agent other than the Trustee to execute and deliver to the
Trustee an instrument in which such Paying Agent shall agree with the Trustee,
subject to the provisions of this Section, that such Paying Agent will:
(a) hold all sums held by it for the payment of the principal
of, premium, if any, or interest on 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;
(b) give the Trustee notice of any Default by the Company or
any Guarantor (or any other obligor upon the Securities) in the making of any
payment of principal, premium, if any, or interest;
(c) at any time during the continuance of any such Default,
upon the written request of the Trustee, forthwith pay to the Trustee all sums
so held in trust by such Paying Agent; and
(d) acknowledge, accept and agree to comply in all aspects
with the provisions of this Indenture relating to the duties, rights and
disabilities of such Paying Agent.
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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.
In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or
other judicial proceeding relative to the Company or any other obligor,
including each Guarantor, upon the Securities or the property of the Company or
of such other obligor or their creditors, the Trustee shall serve as the Paying
Agent.
Any money deposited with the Trustee or any Paying Agent, or
then held by the Company, in trust for the payment of the principal of, premium,
if any, or interest on any Security and remaining unclaimed for two years after
such principal and premium, if any, or interest has become due and payable shall
promptly 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 The New York Times and The
Wall Street Journal (national edition), notice that such money remains unclaimed
and that, after a date specified therein, which shall not be less than 30 days
from the date of such notification or publication, any unclaimed balance of such
money then remaining will promptly be repaid to the Company.
Section 1004. Corporate 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 the
corporate existence and related rights and franchises (charter and statutory) of
the Company and each Subsidiary; provided, however, that the Company shall not
be required to preserve any such right or franchise or the corporate existence
of any such Subsidiary if the Board of Directors of the Company shall determine
that the preservation thereof is no longer desirable in the conduct of the
business of the Company and its Subsidiaries as a whole and that the loss
thereof would not reasonably be expected to have a material adverse effect on
the ability of the Company to perform its obligations hereunder; and provided,
further, however, that the foregoing shall not prohibit a sale, transfer or
conveyance of a Subsidiary or any of its assets in compliance with the terms of
this Indenture.
Section 1005. Payment of Taxes and Other Claims.
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The Company will pay or discharge or cause to be paid or
discharged, on or before the date the same shall become due and payable, (a) all
taxes, assessments and governmental charges levied or imposed upon the Company
or any Subsidiary shown to be due on any return of the Company or any Subsidiary
or otherwise assessed or upon the income, profits or property of the Company or
any Subsidiary if failure to pay or discharge the same could reasonably be
expected to have a material adverse effect on the ability of the Company or any
Guarantor to perform its obligations hereunder and (b) all lawful claims for
labor, materials and supplies, which, if unpaid, would by law become a Lien upon
the property of the Company or any Subsidiary, except for any Lien permitted to
be incurred under Section 1012 if failure to pay or discharge the same could
reasonably be expected to have a material adverse effect on the ability of the
Company or any Guarantor to perform its obligations hereunder; provided,
however, that the Company shall not be required to pay or discharge or cause to
be paid or discharged any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings properly instituted and diligently conducted and in respect of which
appropriate reserves (in the good faith judgment of management of the Company)
are being maintained in accordance with generally accepted accounting principles
consistently applied.
Section 1006. Maintenance of Properties.
The Company will cause all material properties owned by the
Company or any Subsidiary or used or held for use in the conduct of its business
or the business of any Subsidiary to be maintained and kept in good condition,
repair and working order (ordinary wear and tear excepted) 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 consistent with sound business practice and 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 maintenance of any of
such properties if such discontinuance is, in the judgment of the Company,
desirable in the conduct of its business or the business of any Subsidiary and
not reasonably expected to have a material adverse effect on the ability of the
Company to perform its obligations hereunder.
Section 1007. Insurance.
The Company will at all times keep all of its and its
Subsidiaries' properties which are of an insurable nature insured with insurers,
believed by the Company to be responsible, against loss or damage to the extent
that property of similar character is usually so insured by corporations
similarly situated and owning like properties.
Section 1008. Limitation on Indebtedness.
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(a) The Company shall not, and shall not permit any Restricted
Subsidiary to, create, incur, assume or directly or indirectly guarantee or in
any other manner become directly or indirectly liable for ("incur") any
Indebtedness (including Acquired Indebtedness), except that the Company may
incur Indebtedness and a Guarantor may incur Permitted Subsidiary Indebtedness
if, in each case, the Debt to Operating Cash Flow Ratio of the Company and its
Restricted Subsidiaries at the time of the incurrence of such Indebtedness,
after giving pro forma effect thereto, is (x) on or prior to December 15, 1999,
7:1 or less or (y) after December 15, 1999, 6.5:1 or less.
(b) The foregoing limitation will not apply to the incurrence
of any of the following (collectively, "Permitted Indebtedness"):
(i) Indebtedness of the Company under the Bank Credit
Agreement in an aggregate principal amount at any one time
outstanding not to exceed $50,000,000 under any revolving
credit facility thereunder;
(ii) Indebtedness of the Company pursuant to the
Securities and Indebtedness of any Guarantor pursuant to a
Guarantee;
(iii) Indebtedness of any Guarantor consisting of a
guarantee of the Company's Indebtedness under the Bank Credit
Agreement;
(iv) Indebtedness of the Company or any Restricted
Subsidiary outstanding on the date of this Indenture and
listed on Schedule I hereto;
(v) Indebtedness of the Company owing to a Restricted
Subsidiary; provided that any Indebtedness of the Company
owing to a Restricted Subsidiary that is not a Guarantor is
made pursuant to an intercompany note in the form attached to
this Indenture as Exhibit B and is subordinated in right of
payment from and after such time as the Securities shall
become due and payable (whether at Stated Maturity,
acceleration or otherwise) to the payment and performance of
the Company's obligations under the Securities; provided,
further, that any disposition, pledge or transfer of any such
Indebtedness to a Person (other than a disposition, pledge or
transfer to a Wholly Owned Restricted Subsidiary or a pledge
to or for the benefit of the lenders under the Bank Credit
Agreement) shall be deemed to be an incurrence of such
Indebtedness by the obligor not permitted by this clause (v);
(vi) Indebtedness of a Wholly Owned Restricted
Subsidiary owing to the Company or another Wholly Owned
Restricted Subsidiary; provided that, with respect to
Indebtedness owing to a Wholly Owned Subsidiary that is not a
Guarantor, (1) any such Indebtedness is made pursuant to an
intercompany note in the form attached to this Indenture as
Exhibit B and (2) any such Indebtedness
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shall be subordinated in right of payment from and after such
time as the obligations under the Guarantee by such Wholly
Owned Restricted Subsidiary shall become due and payable to
the payment and performance of such Wholly Owned Restricted
Subsidiary's obligations under its Guarantee; provided,
further, that (1) any disposition, pledge or transfer of any
such Indebtedness to a Person (other than a disposition,
pledge or transfer to the Company or a Wholly Owned Restricted
Subsidiary or pledge to or for the benefit of the lenders
under the Bank Credit Agreement) shall be deemed to be an
incurrence of such Indebtedness by the obligor not permitted
by this clause (vi) and (2) any transaction pursuant to which
any Wholly Owned Restricted Subsidiary, which has Indebtedness
owing to the Company or any other Wholly Owned Restricted
Subsidiary, ceases to be a Wholly Owned Restricted Subsidiary
shall be deemed to be the incurrence of Indebtedness by such
Wholly Owned Restricted Subsidiary that is not permitted by
this clause (vi);
(vii) guarantees of any Restricted Subsidiary made in
accordance with the provisions of Section 1014;
(viii) obligations of the Company entered into in the
ordinary course of business pursuant to Interest Rate
Agreements designed to protect the Company against
fluctuations in interest rates in respect of Indebtedness of
the Company, as long as such obligations at the time incurred
do not exceed the aggregate principal amount of such
Indebtedness then outstanding or in good faith anticipated to
be outstanding within 90 days of such incurrence;
(ix) any renewals, extensions, substitutions,
refundings, refinancings or replacements (collectively, a
"refinancing") of any Indebtedness described in clauses (ii),
(iii), (iv) and (v) above, including any successive
refinancings so long as the aggregate principal amount of
Indebtedness represented thereby is not increased by such
refinancing plus the lesser of (I) the stated amount of any
premium, interest or other payment required to be paid in
connection with such a refinancing pursuant to the terms of
the Indebtedness being refinanced or (II) the amount of
premium, interest or other payment actually paid at such time
to refinance the Indebtedness, plus, in either case, the
amount of expenses of the Company incurred in connection with
such refinancing and, in the case of Pari Passu or
Subordinated Indebtedness, such refinancing does not reduce
the Average Life to Stated Maturity or the Stated Maturity of
such Indebtedness; and
(x) Indebtedness of the Company in addition to that
described in clauses (i) through (ix) above, and any renewals,
extensions, substitutions, refinancings, or replacements of
such Indebtedness, so long as the aggregate principal amount
of all such Indebtedness shall not exceed $10,000,000.
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Section 1009. Limitation on Restricted Payments.
(a) The Company shall not, and shall not permit any
Restricted Subsidiary to, directly or indirectly:
(i) declare or pay any dividend on, or make any
distribution to holders of, any of the Company's Equity
Interests (other than dividends or distributions payable
solely in its Qualified Equity Interests);
(ii) purchase, redeem or otherwise acquire or retire
for value, directly or indirectly, any Equity Interest of the
Company or any Affiliate thereof (except Equity Interests held
by the Company or a Wholly Owned Restricted Subsidiary);
(iii) make any principal payment on, or repurchase,
redeem, defease, retire or otherwise acquire for value, prior
to any scheduled principal payment, sinking fund or maturity,
any Subordinated Indebtedness;
(iv) declare or pay any dividend or distribution on
any Equity Interests of any Subsidiary to any Person (other
than the Company or any of its Wholly Owned Restricted
Subsidiaries);
(v) incur, create or assume any guarantee of
Indebtedness of any Affiliate (other than a Wholly Owned
Restricted Subsidiary of the Company); or
(vi) make any Investment in any Person (other than
any Permitted Investments)
(any of the foregoing payments described in clauses (i) through (vi), other than
any such action that is a Permitted Payment, collectively, "Restricted
Payments") unless after giving effect to the proposed Restricted Payment (the
amount of any such Restricted Payment, if other than cash, as determined by the
Board of Directors of the Company, whose determination shall be conclusive and
evidenced by a Board Resolution), (1) no Default or Event of Default shall have
occurred and be continuing and such Restricted Payment shall not be an event
which is, or after notice or lapse of time or both, would be, an "event of
default" under the terms of any Indebtedness of the Company or its Restricted
Subsidiaries; and (2) the aggregate amount of all such Restricted Payments
declared or made after the date of this Indenture does not exceed the sum of:
(A) an amount equal to the Company's Cumulative
Operating Cash Flow less 1.4 times the Company's Cumulative
Consolidated Interest Expense; and
(B) the aggregate Net Cash Proceeds received after
December 9, 1993 by the Company from capital contributions
(other than from a Subsidiary) or from the issuance or sale
(other than to any of its Subsidiaries) of its Qualified
Equity Interests (except, in each
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case, to the extent such proceeds are used to purchase, redeem or otherwise
retire Equity Interests or Subordinated Indebtedness as set forth below).
(b) Notwithstanding the foregoing, and in the case of clauses
(ii) through (v) below, so long as there is no Default or Event of Default
continuing, the foregoing provisions shall not prohibit the following actions
(clauses (i) through (v) being referred to as "Permitted Payments"):
(i) the payment of any dividend within 60 days after
the date of declaration thereof, if at such date of
declaration such payment would be permitted by the provisions
of paragraph (a) of this Section and such payment shall be
deemed to have been paid on such date of declaration for
purposes of the calculation required by paragraph (a) of this
Section;
(ii) any transaction with an officer or director of
the Company entered into in the ordinary course of business
(including compensation or employee benefit arrangements with
any officer or director of the Company);
(iii) the repurchase, redemption, or other
acquisition or retirement of any Equity Interests of the
Company in exchange for (including any such exchange pursuant
to the exercise of a conversion right or privilege in
connection therewith cash is paid in lieu of the issuance of
fractional shares or scrip), or out of the Net Cash Proceeds
of, a substantially concurrent issue and sale for cash (other
than to a Subsidiary) of other Qualified Equity Interests of
the Company; provided that the Net Cash Proceeds from the
issuance of such Qualified Equity Interests are excluded from
clause (2)(B) of paragraph (a) of this Section;
(iv) any repurchase, redemption, defeasance,
retirement, refinancing or acquisition for value or payment of
principal of any Subordinated Indebtedness in exchange for, or
out of the net proceeds of, a substantially concurrent
issuance and sale for cash (other than to any Subsidiary of
the Company) of any Qualified Equity Interests of the Company,
provided that the Net Cash Proceeds from the issuance of such
shares of Qualified Equity Interests are excluded from clause
(2)(B) of paragraph (a) of this Section; and
(v) the repurchase, redemption, defeasance,
retirement, refinancing or acquisition for value or payment of
principal of any Subordinated Indebtedness (other than
Disqualified Equity Interests) (a "refinancing") through the
issuance of new Subordinated Indebtedness of the Company, as
the case may be, provided that any such new Indebtedness (1)
shall be in a principal amount that does not exceed the
principal amount so refinanced or, if such Subordinated
Indebtedness provides for an amount less than the principal
amount thereof to be due and payable upon a declaration or
acceleration thereof, then such lesser amount as of
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the date of determination), plus the lesser of (I) the stated
amount of any premium, interest or other payment required to
be paid in connection with such a refinancing pursuant to the
terms of the Indebtedness being refinanced or (II) the amount
of premium, interest or other payment actually paid at such
time to refinance the Indebtedness, plus, in either case, the
amount of expenses of the Company incurred in connection with
such refinancing; (2) has an Average Life to Stated Maturity
greater than the remaining Average Life to Stated Maturity of
the Securities; (3) has a Stated Maturity for its final
scheduled principal payment later than the Stated Maturity for
the final scheduled principal payment of the Securities; and
(4) is expressly subordinated in right of payment to the
Securities at least to the same extent as the Indebtedness to
be refinanced.
Section 1010. Limitation on Transactions with Affiliates.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, enter into or suffer to
exist any transaction or series of related transactions (including, without
limitation, the sale, purchase, exchange or lease of assets, property or
services) with any Affiliate of the Company (other than the Company or a Wholly
Owned Restricted Subsidiary) unless (a) such transaction or series of
transactions is in writing on terms that are no less favorable to the Company or
such Restricted Subsidiary, as the case may be, than would be available in a
comparable transaction in arm's-length dealings with an unrelated third party
and (b) (i) with respect to any transaction or series of transactions involving
aggregate payments in excess of $1,000,000, the Company delivers an Officers'
Certificate to the Trustee certifying that such transaction or series of related
transactions complies with clause (a) above and such transaction or series of
related transactions has been approved by a majority of the members of the Board
of Directors of the Company (and approved by a majority of Independent Directors
or, in the event there is only one Independent Director, by such Independent
Director) and (ii) with respect to any transaction or series of transactions
involving aggregate payments in excess of $5,000,000, an opinion as to the
fairness to the Company or such Restricted Subsidiary from a financial point of
view issued by an investment banking or appraisal firm of national standing.
Notwithstanding the foregoing, this provision will not apply to (A) any
transaction with an officer or director of the Company entered into in the
ordinary course of business (including compensation or employee benefit
arrangements with any officer or director of the Company), (B) any transaction
entered into by the Company or one of its Wholly Owned Restricted Subsidiaries
with a Wholly Owned Restricted Subsidiary of the Company, and (C) transactions
in existence on the date of this Indenture.
Section 1011. Limitation on Senior Subordinated Indebtedness.
The Company shall not, and shall not permit any Guarantor to,
directly or indirectly, create, incur, issue, assume, guarantee or otherwise in
any manner become directly or indirectly liable for or with respect to or
otherwise permit to exist any Indebtedness that is subordinate in right of
payment to any Indebtedness of the Company or such Guarantor, as the
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case may be, unless such Indebtedness is also pari passu with the Securities or
the Guarantee of such Guarantor, or subordinate in right of payment to the
Securities or such Guarantee to at least the same extent as the Securities or
such Guarantee are subordinate in right of payment to Senior Indebtedness or
Guarantor Senior Indebtedness, as the case may be, as set forth in this
Indenture.
Section 1012. Limitation on Liens.
The Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, create, incur, affirm or suffer to exist
any Lien of any kind upon any of its property or assets (including any
intercompany notes), now owned or acquired after the date of this Indenture, or
any income or profits therefrom, except if the Securities are directly secured
equally and ratably with (or prior to in the case of Liens with respect to
Subordinated Indebtedness) the obligation or liability secured by such Lien,
excluding, however, from the operation of the foregoing any of the following:
(a) any Lien existing as of the date of this Indenture and
listed on Schedule II hereto;
(b) any Lien arising by reason of (i) any judgment, decree or
order of any court, so long as such Lien is adequately bonded and any
appropriate legal proceedings which may have been duly initiated for the review
of such judgment, decree or order shall not have been finally terminated or the
period within which such proceedings may be initiated shall not have expired;
(ii) taxes not yet delinquent or which are being contested in good faith; (iii)
security for payment of workers' compensation or other insurance; (iv) good
faith deposits in connection with tenders, leases, contracts (other than
contracts for the payment of money); (v) zoning restrictions, easements,
licenses, reservations, provisions, covenants, conditions, waivers, restrictions
on the use of property or minor irregularities of title (and with respect to
leasehold interests, mortgages, obligations, liens and other encumbrances
incurred, created, assumed or permitted to exist and arising by, through or
under a landlord or owner of the leased property, with or without consent of the
lessee), none of which materially impairs the use of any parcel of property
material to the operation of the business of the Company or any Subsidiary or
the value of such property for the purpose of such business; (vi) deposits to
secure public or statutory obligations, or in lieu of surety or appeal bonds;
(vii) certain surveys, exceptions, title defects, encumbrances, easements,
reservations of, or rights of others for, rights of way, sewers, electric lines,
telegraph or telephone lines and other similar purposes or zoning or other
restrictions as to the use of real property not interfering with the ordinary
conduct of the business of the Company or any of its Subsidiaries; or (viii)
operation of law in favor of mechanics, materialmen, laborers, employees or
suppliers, incurred in the ordinary course of business for sums which are not
yet delinquent or are being contested in good faith by negotiations or by
appropriate proceedings which suspend the collection thereof;
(c) any Lien now or hereafter existing on property of the
Company or any of its Restricted Subsidiaries securing Senior Indebtedness or
Guarantor Senior Indebtedness, in
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each case which Indebtedness is permitted under the provisions of Section 1008
and provided that the provisions of Section 1014 are complied with;
(d) any Lien securing Acquired Indebtedness created prior to
(and not created in connection with or in contemplation of) the incurrence of
such Indebtedness by the Company or any Subsidiary, in each case which
Indebtedness is permitted under the provisions of Section 1008; provided that
any such Lien only extends to the assets that were subject to such Lien securing
such Acquired Indebtedness prior to the related transaction by the Company or
its Subsidiaries;
(e) any Lien securing Permitted Subsidiary Indebtedness; and
(f) any extension, renewal, refinancing or replacement, in
whole or in part, of any Lien described in the foregoing clauses (a) through (e)
so long as the amount of security is not increased thereby.
Section 1013. Limitation on Sale of Assets.
(a) The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, consummate an Asset Sale
unless (i) at least 80% of the consideration from such Asset Sale is received in
cash and (ii) the Company or such Restricted Subsidiary receives consideration
at the time of such Asset Sale at least equal to the Fair Market Value of the
shares or assets sold (other than in the case of an involuntary Asset Sale, as
determined by the Board of Directors of the Company and evidenced in a Board
Resolution or in connection with an Asset Swap, the Fair Market Value as
determined in writing by a nationally recognized investment banking or appraisal
firm); provided, however that, in the event that the Company or any Restricted
Subsidiary engages in an Asset Sale with any third party and receives in
consideration therefor, or simultaneously with such Asset Sale enters into, a
Local Marketing Agreement with such third party or any affiliate thereof, the
Fair Market Value of such Local Marketing Agreement (as determined in writing by
a nationally recognized investment banking or appraisal firm) shall be deemed
cash and considered when determining whether such Asset Sale complies with the
foregoing clauses (i) and (ii). Notwithstanding the foregoing, clause (i) of the
preceding sentence shall not be applicable to any Asset Swap.
(b) If all or a portion of the Net Cash Proceeds of any Asset
Sale are not required to be applied to repay permanently any Senior Indebtedness
then outstanding as required by the terms thereof, or the Company determines not
to apply such Net Cash Proceeds to the permanent prepayment of such Senior
Indebtedness or if no such Senior Indebtedness is then outstanding, then the
Company may, within 12 months of the Asset Sale, invest the Net Cash Proceeds in
properties and assets that (as determined by the Board of Directors) replace the
properties and assets that were the subject of the Asset Sale or in properties
and assets that will be used in the businesses of the Company or its Restricted
Subsidiaries existing on the date of this Indenture or reasonably related
thereto. The amount of such Net Cash Proceeds neither used
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to permanently repay or prepay Senior Indebtedness nor used or invested as set
forth in this paragraph constitutes "Excess Proceeds."
(c) When the aggregate amount of Excess Proceeds equals
$5,000,000 or more, the Company shall apply the Excess Proceeds to the repayment
of the Securities and any Pari Passu Indebtedness required to be repurchased
under the instrument governing such Pari Passu Indebtedness as follows: (a) the
Company shall make an offer to purchase (an "Offer") from all Holders of the
Securities in accordance with the procedures set forth in this Indenture in the
maximum principal amount (expressed as a multiple of $1,000) of Securities that
may be purchased out of an amount (the "Security Amount") equal to the product
of such Excess Proceeds multiplied by a fraction, the numerator of which is the
outstanding principal amount of the Securities, and the denominator of which is
the sum of the outstanding principal amount of the Securities and such Pari
Passu Indebtedness (subject to proration in the event such amount is less than
the aggregate Offered Price of all Securities tendered) and (b) to the extent
required by such Pari Passu Indebtedness to permanently reduce the principal
amount of such Pari Passu Indebtedness, the Company shall make an offer to
purchase or otherwise repurchase or redeem Pari Passu Indebtedness (a "Pari
Passu Offer") in an amount (the "Pari Passu Debt Amount") equal to the excess of
the Excess Proceeds over the Security Amount; provided that in no event shall
the Pari Passu Debt Amount exceed the principal amount of such Pari Passu
Indebtedness plus the amount of any premium required to be paid to repurchase
such Pari Passu Indebtedness. The offer price shall be payable in cash in an
amount equal to 100% of the principal amount of the Securities plus accrued and
unpaid interest, if any, to the date (the "Offer Date") such Offer is
consummated (the "Offered Price"), in accordance with the procedures set forth
in this Indenture. To the extent that the aggregate Offered Price of the
Securities tendered pursuant to the Offer is less than the Security Amount
relating thereto or the aggregate amount of Pari Passu Indebtedness that is
purchased is less than the Pari Passu Debt Amount (the amount of such shortfall,
if any, constituting a "Deficiency"), the Company shall use such Deficiency in
the business of the Company and its Restricted Subsidiaries. Upon completion of
the purchase of all the Securities tendered pursuant to an Offer and repurchase
of the Pari Passu Indebtedness pursuant to a Pari Passu Offer, the amount of
Excess Proceeds, if any, shall be reset at zero.
(d) Whenever the Excess Proceeds received by the Company
exceed $5,000,000, such Excess Proceeds shall be set aside by the Company in a
separate account pending (i) deposit with the depositary or a Paying Agent of
the amount required to purchase the Securities or Pari Passu Indebtedness
tendered in an Offer or a Pari Passu Offer, (ii) delivery by the Company of the
Offered Price to the Holders of the Securities or Pari Passu Indebtedness
tendered in an Offer or a Pari Passu Offer and (iii) application, as set forth
above, of Excess Proceeds in the business of the Company and its Restricted
Subsidiaries. Such Excess Proceeds may be invested in Temporary Cash
Investments, provided that the maturity date of any such investment made after
the amount of Excess Proceeds exceeds $5,000,000 shall not be later than the
Offer Date. The Company shall be entitled to any interest or dividends accrued,
earned or paid on such Temporary Cash Investments, provided that the Company
shall not withdraw such interest from the separate account if an Event of
Default has occurred and is continuing.
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(e) If the Company becomes obligated to make an Offer pursuant
to clause (c) above, the Securities shall be purchased by the Company, at the
option of the Holder thereof, in whole or in part in integral multiples of
$1,000, on a date that is not earlier than 45 days and not later than 60 days
from the date the notice is given to Holders, or such later date as may be
necessary for the Company to comply with the requirements under the Exchange
Act, subject to proration in the event the Security Amount is less than the
aggregate Offered Price of all Securities tendered.
(f) The Company shall comply with the applicable tender offer
rules, including Rule 14e-1 under the Exchange Act, and any other applicable
securities laws or regulations in connection with an Offer.
(g) The Company shall not, and shall not permit any Restricted
Subsidiary to, create or permit to exist or become effective any restriction
(other than restrictions existing under (i) Indebtedness as in effect on the
date of this Indenture and listed on Schedule I hereto as such Indebtedness may
be refinanced from time to time, provided that such restrictions are no less
favorable to the Holders of Securities than those existing on the date of this
Indenture or (ii) any Senior Indebtedness and any Guarantor Senior Indebtedness)
that would materially impair the ability of the Company to make an Offer to
purchase the Securities or, if such Offer is made, to pay for the Securities
tendered for purchase.
(h) Subject to paragraph (f) above, within 30 days after the
date on which the amount of Excess Proceeds equals or exceeds $5,000,000, the
Company shall send or cause to be sent by first-class mail, postage prepaid, to
the Trustee and to each Holder of the Securities, at his address appearing in
the Security Register, a notice stating or including:
(1) that the Holder has the right to require the
Company to repurchase, subject to proration, such Holder's
Securities at the Offered Price;
(2) the Offer Date;
(3) the instructions a Holder must follow in order to
have its Securities purchased in accordance with paragraph (c)
of this Section; and
(4) (i) the most recently filed Annual Report on Form
10-K (including audited consolidated financial statements) of
the Company, the most recent subsequently filed Quarterly
Report on Form 10-Q and any Current Report on Form 8-K of the
Company filed subsequent to such Quarterly Report, other than
Current Reports describing Asset Sales otherwise described in
the offering materials (or corresponding successor reports)(or
in the event the Company is not required to prepare any of the
foregoing Forms, the comparable information required pursuant
to Section 1020), (ii) a description of material developments
in
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the Company's business subsequent to the date of the latest of
such Reports, (iii) if material, appropriate pro forma
financial information, and (iv) such other information, if
any, concerning the business of the Company which the Company
in good faith believes will enable such Holders to make an
informed investment decision.
(i) Holders electing to have Securities purchased hereunder
will be required to surrender such Securities at the address specified in the
notice at least three Business Days prior to the Offer Date. Holders will be
entitled to withdraw their election to have their Securities purchased pursuant
to this Section 1013 if the Company receives, not later than three Business Days
prior to the Offer Date, a telegram, telex, facsimile transmission or letter
setting forth (1) the name of the Holder, (2) the certificate number of the
Security in respect of which such notice of withdrawal is being submitted, (3)
the principal amount of the Security (which shall be $1,000 or an integral
multiple thereof) delivered for purchase by the Holder as to which his election
is to be withdrawn, (4) a statement that such Holder is withdrawing his election
to have such principal amount of such Security purchased, and (5) the principal
amount, if any, of such Security (which shall be $1,000 or an integral multiple
thereof) that remains subject to the original notice of the Offer and that has
been or will be delivered for purchase by the Company.
(j) The Company shall (i) not later than the Offer Date,
accept for payment Securities or portions thereof tendered pursuant to the
Offer, (ii) not later than 10:00 a.m. (New York City time) on the Offer Date,
deposit with the Trustee or with a Paying Agent (or, if the Company is acting as
its own Paying Agent, segregate and hold in trust as provided in Section 1003)
an amount of money in same day funds (or New York Clearing House funds if such
deposit is made prior to the Offer Date) sufficient to pay the aggregate Offered
Price of all the Securities or portions thereof which are to be purchased on
that date and (iii) not later than the Offer Date, deliver to the Paying Agent
(if other than the Company) an Officers' Certificate stating the Securities or
portions thereof accepted for payment by the Company.
Subject to applicable escheat laws, as provided in the
Securities, the Trustee and the Paying Agent shall return to the Company any
cash that remains unclaimed, together with interest, if any, thereon, held by
them for the payment of the Offered Price; provided, however, that (x) to the
extent that the aggregate amount of cash deposited by the Company with the
Trustee in respect of an Offer exceeds the aggregate Offered Price of the
Securities or portions thereof to be purchased, the Trustee shall hold such
excess for the Company and (y) unless otherwise directed by the Company in
writing, promptly after the Business Day following the Offer Date the Trustee
shall return any such excess to the Company together with interest or dividends,
if any, thereon.
(k) Securities to be purchased shall, on the Offer Date,
become due and payable at the Offered Price and from and after such date (unless
the Company shall default in the payment of the Offered Price) such Securities
shall cease to bear interest. Such Offered Price shall be paid to such Holder
promptly following the later of the Offer Date and the time of
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delivery of such Security to the relevant Paying Agent at the office of such
Paying Agent by the Holder thereof in the manner required. Upon surrender of any
such Security for purchase in accordance with the foregoing provisions, such
Security shall be paid by the Company at the Offered Price; provided, however,
that installments of interest whose Stated Maturity is on or prior to the Offer
Date shall be payable to the Holders of such Securities, or one or more
Predecessor Securities, registered as such on the relevant Regular Record Dates
according to the terms and the provisions of Section 309; provided, further,
that Securities to be purchased are subject to proration in the event the Excess
Proceeds are less than the aggregate Offered Price of all Securities tendered
for purchase, with such adjustments as may be appropriate by the Trustee so that
only Securities in denominations of $1,000 or integral multiples thereof, shall
be purchased. If any Security tendered for purchase shall not be so paid upon
surrender thereof by deposit of funds with the Trustee or a Paying Agent in
accordance with paragraph (j) above, the principal thereof shall, until paid,
bear interest from the Offer Date at the rate borne by such Security. Any
Security that is to be purchased only in part shall be surrendered to a Paying
Agent at the office of such Paying Agent (with, if the Company, the Security
Registrar or the Trustee so requires, due endorsement by, or a written
instrument of transfer in form satisfactory to the Company and the Security
Registrar or the Trustee duly executed by, the Holder thereof or such Holder's
attorney duly authorized in writing), and the Company shall execute and the
Trustee shall authenticate and deliver to the Holder of such Security, without
service charge, one or more new Securities of any authorized denomination as
requested by such Holder in an aggregate principal amount equal to, and in
exchange for, the portion of the principal amount of the Security so surrendered
that is not purchased.
Section 1014. Limitation on Issuances of Guarantees of and
Pledges for Indebtedness.
(a) The Company shall not permit any Restricted Subsidiary,
other than the Guarantors, directly or indirectly, to secure the payment of any
Senior Indebtedness of the Company and the Company will not, and will not permit
any Restricted Subsidiary to, pledge any intercompany notes representing
obligations of any Restricted Subsidiary (other than the Guarantors) to secure
the payment of any Senior Indebtedness unless such Restricted Subsidiary
simultaneously executes and delivers a supplemental indenture to this Indenture
providing for a guarantee of payment of the Securities by such Restricted
Subsidiary, which guarantee shall be on the same terms as the guarantee of the
Senior Indebtedness (if a guarantee of Senior Indebtedness is granted by any
such Restricted Subsidiary) except that the guarantee of the Securities need not
be secured and shall be subordinated to the claims against such Restricted
Subsidiary in respect of Senior Indebtedness to the same extent as the
Securities are subordinated to Senior Indebtedness of the Company under this
Indenture.
(b) The Company shall not permit any Restricted Subsidiary,
other than the Guarantors, directly or indirectly, to guarantee, assume or in
any other manner become liable with respect to any Indebtedness of the Company
unless such Restricted Subsidiary simultaneously executes and delivers a
supplemental indenture to this Indenture providing for a
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guarantee of the Securities on the same terms as the guarantee of such
Indebtedness except that if the Securities are subordinated in right of payment
to such Indebtedness, the guarantee under the supplemental indenture shall be
subordinated to the guarantee of such Indebtedness to the same extent as the
Securities are subordinated to such Indebtedness under this Indenture.
(c) Each guarantee created pursuant to the provisions
described in the foregoing paragraph is referred to as a "Guarantee" and the
issuer of each such Guarantee is referred to as a "Guarantor." Notwithstanding
the foregoing, any Guarantee by a Restricted Subsidiary of the Securities shall
provide by its terms that it shall be automatically and unconditionally released
and discharged upon (i) any sale, exchange or transfer, to any Person not an
Affiliate of the Company, of all of the Company's Equity Interest in, or all or
substantially all the assets of, such Restricted Subsidiary, which is in
compliance with this Indenture or (ii) (with respect to any Guarantees created
after the date of this Indenture) the release by the holders of the Indebtedness
of the Company described in clauses (a) and (b) above of their security interest
or their guarantee by such Restricted Subsidiary (including any deemed release
upon payment in full of all obligations under such Indebtedness), at a time when
(A) no other Indebtedness of the Company has been secured or guaranteed by such
Restricted Subsidiary, as the case may be, or (B) the holders of all such other
Indebtedness which is secured or guaranteed by such Restricted Subsidiary also
release their security interest in, or guarantee by, such Restricted Subsidiary
(including any deemed release upon payment in full of all obligations under such
Indebtedness).
Section 1015. Restriction on Transfer of Assets.
The Company and the Guarantors shall not sell, convey,
transfer or otherwise dispose of their respective assets or property to any of
the Company's Restricted Subsidiaries (other than any Guarantor), except for
sales, conveyances, transfers or other dispositions made in the ordinary course
of business and except for capital contributions to any Restricted Subsidiary,
the only material assets of which are broadcast licenses. For purposes of this
provision, any sale, conveyance, transfer, lease or other disposition of
property or assets, having a Fair Market Value in excess of (a) $1,000,000 for
any sale, conveyance, transfer, lease or disposition or series of related sales,
conveyances, transfers, leases and dispositions and (b) $5,000,000 in the
aggregate for all such sales, conveyances, transfers, leases or dispositions in
any fiscal year of the Company shall not be considered "in the ordinary course
of business."
Section 1016. Purchase of Securities upon a Change of Control.
(a) If a Change of Control shall occur at any time, then each
Holder of Securities shall have the right to require that the Company purchase
such Holder's Securities in whole or in part in integral multiples of $1,000, at
a purchase price (the "Change of Control Purchase Price") in cash in an amount
equal to 101% of the principal amount of such Securities, plus accrued and
unpaid interest, if any, to the date of purchase (the "Change of Control
Purchase Date"), pursuant to the offer described in subsection (c) of this
Section (the "Change of Control
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Offer") and in accordance with the procedures set forth in Subsections (b), (c),
(d) and (e) of this Section.
(b) Within 30 days following any Change of Control, the
Company shall notify the Trustee thereof and give written notice (a "Change of
Control Purchase Notice") of such Change of Control to each Holder by
first-class mail, postage prepaid, at his address appearing in the Security
Register stating or including:
(1) that a Change of Control has occurred, the date
of such event, and that such Holder has the right to require
the Company to repurchase such Holder's Securities at the
Change of Control Purchase Price;
(2) the circumstances and relevant facts regarding
such Change of Control (including but not limited to
information with respect to pro forma historical income, cash
flow and capitalization after giving effect to such Change of
Control);
(3) (i) the most recently filed Annual Report on Form
10-K (including audited consolidated financial statements) of
the Company, the most recent subsequently filed Quarterly
Report on Form 10-Q, as applicable, and any Current Report on
Form 8-K of the Company filed subsequent to such Quarterly
Report (or in the event the Company is not required to prepare
any of the foregoing Forms, the comparable information
required to be prepared by the Company and any Guarantor
pursuant to Section 1020), (ii) a description of material
developments in the Company's business subsequent to the date
of the latest of such reports and (iii) such other
information, if any, concerning the business of the Company
which the Company in good faith believes will enable such
Holders to make an informed investment decision;
(4) that the Change of Control Offer is being made
pursuant to this Section 1016(a) and that all Securities
properly tendered pursuant to the Change of Control Offer will
be accepted for payment at the Change of Control Purchase
Price;
(5) the Change of Control Purchase Date which shall
be a Business Day no earlier than 30 days nor later than 60
days from the date such notice is mailed, or such later date
as is necessary to comply with requirements under the Exchange
Act;
(6) the Change of Control Purchase Price;
(7) the names and addresses of the Paying Agent and
the offices or agencies referred to in Section 1002;
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(8) that Securities must be surrendered on or prior
to the Change of Control Purchase Date to the Paying Agent at
the office of the Paying Agent or to an office or agency
referred to in Section 1002 to collect payment;
(9) that the Change of Control Purchase Price for any
Security which has been properly tendered and not withdrawn
will be paid promptly following the Change of Control Offer
Purchase Date;
(10) the procedures for withdrawing a tender of
Securities and Change of Control Purchase Notice;
(11) that any Security not tendered will continue to
accrue interest; and
(12) that, unless the Company defaults in the payment
of the Change of Control Purchase Price, any Security accepted
for payment pursuant to the Change of Control Offer shall
cease to accrue interest after the Change of Control Purchase
Date.
(c) Upon receipt by the Company of the proper tender of
Securities, the Holder of the Security in respect of which such proper tender
was made shall (unless the tender of such Security is properly withdrawn)
thereafter be entitled to receive solely the Change of Control Purchase Price
with respect to such Security. Upon surrender of any such Security for purchase
in accordance with the foregoing provisions, such Security shall be paid by the
Company at the Change of Control Purchase Price; provided, however, that
installments of interest whose Stated Maturity is on or prior to the Change of
Control Purchase Date shall be payable to the Holders of such Securities, or one
or more Predecessor Securities, registered as such on the relevant Regular
Record Dates according to the terms and the provisions of Section 309. If any
Security tendered for purchase shall not be so paid upon surrender thereof, the
principal thereof (and premium, if any, thereon) shall, until paid, bear
interest from the Change of Control Purchase Date at the rate borne by such
Security. Holders electing to have Securities purchased will be required to
surrender such Securities to the Paying Agent at the address specified in the
Change of Control Purchase Notice at least two Business Days prior to the Change
of Control Purchase Date. Any Security that is to be purchased only in part
shall be surrendered to a Paying Agent at the office of such Paying Agent (with,
if the Company, the Security Registrar or the Trustee so requires, due
endorsement by, or a written instrument of transfer in form satisfactory to the
Company and the Security Registrar or the Trustee, as the case may be, duly
executed by, the Holder thereof or such Holder's attorney duly authorized in
writing), and the Company shall execute and the Trustee shall authenticate and
deliver to the Holder of such Security, without service charge, one or more new
Securities of any authorized denomination as requested by such Holder in an
aggregate principal amount equal to, and in exchange for, the portion of the
principal amount of the Security so surrendered that is not purchased.
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(d) The Company shall (i) not later than the Change of Control
Purchase Date, accept for payment Securities or portions thereof tendered
pursuant to the Change of Control Offer, (ii) not later than 11:00 a.m. (New
York City time) on the Change of Control Purchase Date, deposit with the Paying
Agent an amount of cash sufficient to pay the aggregate Change of Control
Purchase Price of all the Securities or portions thereof which are to be
purchased as of the Change of Control Purchase Date and (iii) not later than the
Change of Control Purchase Date, deliver to the Paying Agent 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 Change of Control
Purchase Price of the Securities purchased from each such Holder, and the
Company shall execute and the Trustee shall promptly authenticate and mail or
deliver to such Holders a new Security equal in principal amount to any
unpurchased portion of the Security surrendered. Any Securities not so accepted
shall be promptly mailed or delivered by the Paying Agent at the Company's
expense to the Holder thereof. The Company will publicly announce the results of
the Change of Control Offer on the Change of Control Purchase Date. For purposes
of this Section 1016, the Company shall choose a Paying Agent which shall not be
the Company.
(e) A Change of Control Purchase Notice may be withdrawn
before or after delivery by the Holder to the Paying Agent at the office of the
Paying Agent of the Security to which such Change of Control Purchase Notice
relates, by means of a written notice of withdrawal delivered by the Holder to
the Paying Agent at the office of the Paying Agent or to the office or agency
referred to in Section 1002 to which the related Change of Control Purchase
Notice was delivered not later than three Business Days prior to the Change of
Control Purchase Date specifying, as applicable:
(1) the name of the Holder;
(2) the certificate number of the Security in
respect of which such notice of withdrawal is being
submitted;
(3) the principal amount of the Security (which shall
be $1,000 or an integral multiple thereof) delivered for
purchase by the Holder as to which such notice of withdrawal
is being submitted; and
(4) the principal amount, if any, of such Security
(which shall be $1,000 or an integral multiple thereof) that
remains subject to the original Change of Control Purchase
Notice and that has been or will be delivered for purchase by
the Company.
(f) Subject to applicable escheat laws, as provided in the
Securities, the Trustee and the Paying Agent shall return to the Company any
cash that remains unclaimed, together with interest or dividends, if any,
thereon, held by them for the payment of the Change
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of Control Purchase Price; provided, however, that (x) to the extent that the
aggregate amount of cash deposited by the Company pursuant to clause (ii) of
paragraph (d) above exceeds the aggregate Change of Control Purchase Price of
the Securities or portions thereof to be purchased, then the Trustee shall hold
such excess for the Company and (y) unless otherwise directed by the Company in
writing, promptly after the Business Day following the Change of Control
Purchase Date the Trustee shall return any such excess to the Company together
with interest, if any, thereon.
(g) The Company shall comply with the applicable tender offer
rules, including Rule 14e-1 under the Exchange Act, and any other applicable
securities laws or regulations in connection with a Change of Control Offer.
(h) The Company shall not, and shall not permit any Subsidiary
to, create or permit to exist or become effective any restriction (other than
restrictions existing under Indebtedness as in effect on the date of this
Indenture) that would materially impair the ability of the Company to make a
Change of Control Offer to purchase the Securities or, if such Change of Control
Offer is made, to pay for the Securities tendered for purchase.
Section 1017. Limitation on Subsidiary Equity Interests.
The Company shall not permit any Restricted Subsidiary of the
Company to issue any Equity Interests, except for (a) Equity Interests issued to
and held by the Company or a Wholly Owned Restricted Subsidiary, and (b) Equity
Interests issued by a Person prior to the time (A) such Person becomes a
Restricted Subsidiary, (B) such Person merges with or into a Restricted
Subsidiary or (C) a Restricted Subsidiary merges with or into such Person;
provided that such Equity Interests were not issued or incurred by such Person
in anticipation of the type of transaction contemplated by subclause (A), (B) or
(C).
Section 1018. Limitation on Dividends and Other Payment
Restrictions Affecting Subsidiaries.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or
suffer to exist or become effective any encumbrance or restriction on the
ability of any Restricted Subsidiary of the Company to (i) pay dividends or make
any other distribution on its Equity Interests, (ii) pay any Indebtedness owed
to the Company or a Restricted Subsidiary of the Company, (iii) make any
Investment in the Company or a Restricted Subsidiary of the Company or (iv)
transfer any of its properties or assets to the Company or any Restricted
Subsidiary, except (a) any encumbrance or restriction pursuant to an agreement
in effect on the date of this Indenture and listed on Schedule III hereto; (b)
any encumbrance or restriction, with respect to a Restricted Subsidiary that is
not a Subsidiary of the Company on the date of this Indenture, in existence at
the time such Person becomes a Restricted Subsidiary of the Company and not
incurred in connection with, or in contemplation of, such Person becoming a
Restricted Subsidiary; (c) any encumbrance or
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restriction existing under any agreement that extends, renews, refinances or
replaces the agreements containing the encumbrances or restrictions in the
foregoing clauses (a) and (b), or in this clause (c), provided that the terms
and conditions of any such encumbrances or restrictions are not materially less
favorable to the Holders of the Securities than those under or pursuant to the
agreement evidencing the Indebtedness so extended, renewed, refinanced or
replaced or are not more restrictive than those set forth in this Indenture; and
(d) any encumbrance or restriction created pursuant to an asset sale agreement,
stock sale agreement or similar instrument pursuant to which an Asset Sale
permitted under Section 1013 is to be consummated, so long as such restriction
or encumbrance shall be effective only for a period from the execution and
delivery of such agreement or instrument through a termination date not later
than 270 days after such execution and delivery.
Section 1019. Limitation on Unrestricted Subsidiaries.
The Company shall not make, and shall not permit any of its
Restricted Subsidiaries to make, any Investments in Unrestricted Subsidiaries
if, at the time thereof, the aggregate amount of such Investments would exceed
the amount of Restricted Payments then permitted to be made pursuant to Section
1009. Any Investments in Unrestricted Subsidiaries permitted to be made pursuant
to this covenant (i) will be treated as the payment of a Restricted Payment in
calculating the amount of Restricted Payments made by the Company and (ii) may
be made in cash or property.
Section 1020. Provision of Financial Statements.
Whether or not the Company is subject to Section 13(a) or
15(d) of the Exchange Act, the Company shall, to the extent permitted under the
Exchange Act, file with the Commission the annual reports, quarterly reports and
other documents which the Company would have been required to file with the
Commission pursuant to such Sections 13(a) or 15(d) 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. The
Company will 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) or 15(d) of the Exchange Act if the 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 and payment of
the reasonable cost of duplication and delivery, supply copies of such documents
to any prospective Holder at the Company's cost.
Section 1021. Statement by Officers as to Default.
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(a) The Company will deliver to the Trustee, on or before a
date not more than 60 days after the end of each fiscal quarter and not more
than 120 days after the end of each fiscal year of the Company ending after the
date hereof, a written statement signed by two executive officers of the
Company, one of whom shall be the principal executive officer, principal
financial officer or principal accounting officer of the Company, stating
whether or not, after a review of the activities of the Company during such year
or such quarter and of the Company's performance under this Indenture, to the
best knowledge, based on such review, of the signers thereof, the Company has
fulfilled all its obligations and is in compliance with all conditions and
covenants under this Indenture throughout such year or quarter, as the case may
be, and, if there has been a Default specifying each Default and the nature and
status thereof.
(b) When any Default or Event of Default has occurred and is
continuing, or if the Trustee or any Holder or the trustee for or the holder of
any other evidence of Indebtedness of the Company or any Subsidiary gives any
notice or takes any other action with respect to a claimed default (other than
with respect to Indebtedness in the principal amount of less than $5,000,000),
the Company shall deliver to the Trustee by registered or certified mail or by
telegram, telex or facsimile transmission followed by hard copy an Officers'
Certificate specifying such Default, Event of Default, notice or other action
within five Business Days of its occurrence.
Section 1022. Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with
any covenant or condition set forth in Sections 1006 through 1012, 1014, 1015
and 1017 through 1020, if, before or after the time for such compliance, the
Holders of not less than a majority in aggregate principal amount of the
Securities at the time Outstanding shall, by Act of such Holders, waive such
compliance in such instance 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.
ARTICLE XI
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REDEMPTION OF SECURITIES
Section 1101. Rights of Redemption.
(a) The Securities may be redeemed at the election of the
Company, in whole or in part, at any time on or after July 15, 2002, subject to
the conditions, and at the Redemption Price, specified in the form of Security,
together with accrued and unpaid interest, if any, to the Redemption Date.
(b) At any time on or prior to July 15, 2000, the Company may
redeem up to 25% of the original principal amount of Securities with the net
proceeds of a Public Equity Offering of the Company subject to the conditions,
and at the Redemption Price, specified in the form of Security, together with
accrued and unpaid interest, if any, to the Redemption Date.
Section 1102. Applicability of Article.
Redemption of Securities at the election of the Company or
otherwise, as permitted or required by any provision of this Indenture, shall be
made in accordance with such provision and this Article.
Section 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 Company Order and an Officers'
Certificate. In case of any redemption at the election of the Company, the
Company shall, not less than 45 nor more than 60 days prior to the Redemption
Date fixed by the Company (unless a shorter notice period shall be satisfactory
to the Trustee), notify the Trustee in writing of such Redemption Date and of
the principal amount of Securities to be redeemed.
Section 1104. Selection by Trustee of Securities to Be
Redeemed.
If less than all the Securities are to be redeemed, the
particular Securities or portions thereof to be redeemed shall be selected not
more than 30 days prior to the Redemption Date by the Trustee, from the
Outstanding Securities not previously called for redemption, pro rata, by lot or
such other method as the Trustee shall deem fair and reasonable, and the amounts
to be redeemed may be equal to $1,000 or any integral multiple thereof.
The Trustee shall promptly notify the Company and the 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 redemption of Securities shall
relate, in the case of any Security redeemed
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or to be redeemed only in part, to the portion of the principal amount of such
Security 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.
All notices of redemption shall state:
(a) the Redemption Date;
(b) the Redemption Price;
(c) if less than all Outstanding Securities are to be
redeemed, the identification of the particular Securities to be redeemed;
(d) in the case of a Security to be redeemed in part, the
principal amount of such Security to be redeemed and that after the Redemption
Date upon surrender of such Security, new Security or Securities in the
aggregate principal amount equal to the unredeemed portion thereof will be
issued;
(e) that Securities called for redemption must be surrendered
to the Paying Agent to collect the Redemption Price;
(f) that on the Redemption Date the Redemption Price will
become due and payable upon each such Security or portion thereof, and that
(unless the Company shall default in payment of the Redemption Price) interest
thereon shall cease to accrue on and after said date;
(g) the place or places where such Securities are to be
surrendered for payment of the Redemption Price; and
(h) the CUSIP number, if any, relating to such Securities.
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
written request, by the Trustee in the name and at the expense of the Company.
The notice if mailed in the manner herein provided shall be
conclusively presumed to have been given, whether or not the Holder receives
such notice. In any case, failure to give such notice to any Holder of any
Security designated for redemption as a whole or
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in part, or any defect in any such notice, shall not affect the validity of the
proceedings for the redemption of any other Security.
Section 1106. Deposit of Redemption Price.
On or prior to any Redemption Date, the Company shall deposit
with the Trustee or with a Paying Agent (or, if the Company is acting as its own
Paying Agent, segregate and hold in trust as provided in Section 1003) an amount
of money in same day funds 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 or portions thereof which are to be redeemed on that date.
When the Redemption Date falls on an Interest Payment Date, payments of interest
due on such date are to be paid as provided hereunder as if no such redemption
were occurring.
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 on the relevant Regular Record Dates according to
the terms and the provisions of Section 309.
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 borne by such
Security.
Section 1108. Securities Redeemed or Purchased in Part.
Any Security which is to be redeemed or purchased only in part
shall be surrendered to the Paying Agent at the office or agency maintained for
such purpose pursuant to Section 1002 (with, if the Company, the Security
Registrar or the Trustee so requires, due endorsement by, or a written
instrument of transfer in form satisfactory to the Company, the Security
Registrar or the Trustee duly executed by, the Holder thereof or such Holder's
attorney duly authorized in writing), and the Company shall execute, and the
Trustee shall authenticate and deliver to the Holder of such Security without
service charge, a new Security or Securities, of any authorized denomination as
requested by such Holder in aggregate principal amount equal to, and in exchange
for, the unredeemed portion of the principal of the Security so surrendered that
is not redeemed or purchased.
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ARTICLE XII
SUBORDINATION OF SECURITIES
Section 1201. Securities Subordinate to Senior Indebtedness.
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 hereinafter set forth in this Article, the Indebtedness
represented by the Securities and the payment of the principal of, premium, if
any, and interest on each and all of the Securities and all other Indenture
Obligations are hereby expressly made subordinate and subject in right of
payment as provided in this Article to the prior payment in full, in cash or
Cash Equivalents or in any other form as acceptable to the holders of Senior
Indebtedness, of all Senior Indebtedness.
This Article Twelve shall constitute a continuing offer to all
Persons who, in reliance upon such provisions, become holders of, or continue to
hold Senior Indebtedness; and such provisions are made for the benefit of the
holders of Senior Indebtedness; and such holders are made obligees hereunder and
they or each of them may enforce such provisions.
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 or liabilities of the Company, then
and in any such event:
(1) the holders of Senior Indebtedness shall be
entitled to receive payment in full in cash or Cash
Equivalents or in any other form as acceptable to the holders
of Senior Indebtedness, of all amounts due on or in respect of
all Senior Indebtedness, before the Holders of the Securities
are entitled to receive any payment or distribution of any
kind or character (excluding Permitted Junior Securities) on
account of the principal of, premium, if any, or interest on
the Securities or any other Indenture Obligations; and
(2) any payment or distribution of assets of the
Company of any kind or character, whether in cash, property or
securities (excluding Permitted Junior Securities), by set-off
or otherwise, to which the Holders or the Trustee would be
entitled but for the provisions of this Article shall be paid
by the liquidating trustee or agent or other Person making
such payment or distribution, whether a trustee in bankruptcy,
a receiver or liquidating trustee or otherwise, directly to
the
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holders of Senior Indebtedness or their representative or
representatives or to the trustee or trustees under any
indenture under which any instruments evidencing any of such
Senior Indebtedness may have been issued, ratably according to
the aggregate amounts remaining unpaid on account of the
Senior Indebtedness held or represented by each, to the extent
necessary to make payment in full in cash or Cash Equivalents
or in any other form as acceptable to the Holders of Senior
Indebtedness, of all Senior Indebtedness remaining unpaid,
after giving effect to any concurrent payment or distribution
to the holders of such Senior Indebtedness; and
(3) 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, in respect of principal,
premium, if any, and interest on the Securities or any other
Indenture Obligations before all Senior Indebtedness is paid
in full, then and in such event such payment or distribution
(excluding Permitted Junior Securities) 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 Indebtedness
remaining unpaid, to the extent necessary to pay all Senior
Indebtedness in full in cash or Cash Equivalents or in any
other form as acceptable to the Holders of Senior
Indebtedness, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Indebtedness.
The consolidation of the Company with, or the merger of the
Company with or into, another Person or the liquidation or dissolution of the
Company following the sale, assignment, conveyance, transfer, lease or other
disposal of all or substantially all of the Company's properties or assets to
another Person upon the terms and conditions set forth in Article Eight shall
not be deemed a dissolution, winding up, liquidation, reorganization, assignment
for the benefit of creditors or marshaling of assets and liabilities of the
Company for the purposes of this Section if the Person formed by such
consolidation or the surviving entity of such merger or the Person which
acquires by sale, assignment, conveyance, transfer, lease or other disposal of
all or substantially all of the Company's properties or assets, as the case may
be, shall, as a part of such consolidation, merger, sale, assignment,
conveyance, transfer, lease or other disposal, comply with the conditions set
forth in Article Eight.
Section 1203. Suspension of Payment When Senior Indebtedness
in Default.
(a) Unless Section 1202 shall be applicable, upon the
occurrence of a Payment Default, no payment (other than any payments previously
made pursuant to the provisions described in Article Four) or distribution of
any assets of the Company of any kind or character (excluding Permitted Junior
Securities) shall be made by the Company on account of principal
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of, premium, if any, or interest on, the Securities or any other Indenture
Obligations or on account of the purchase, redemption, defeasance (whether under
Section 402 or 403) or other acquisition of or in respect of the Securities
unless and until such Payment Default shall have been cured or waived or shall
have ceased to exist or the Designated Senior Indebtedness with respect to which
such Payment Default shall have occurred shall have been discharged or paid in
full in cash or Cash Equivalents or in any other form as acceptable to the
Holders of Senior Indebtedness, after which the Company shall resume making any
and all required payments in respect of the Securities, including any missed
payments.
(b) Unless Section 1202 shall be applicable, upon (1) the
occurrence of a Nonpayment Default and (2) receipt by the Trustee and the
Company from the representative of the holders of Designated Senior Indebtedness
(a "Senior Representative") of written notice of such occurrence, no payment
(other than any payments previously made pursuant to the provisions described in
Article Four) or distribution of any assets of the Company of any kind or
character (excluding Permitted Junior Securities) shall be made by the Company
on account of any principal of, premium, if any, or interest on, the Securities
or any other Indenture Obligations or on account of the purchase, redemption,
defeasance or other acquisition of or in respect of Securities for a period
("Payment Blockage Period") commencing on the date of receipt by the Trustee of
such notice unless and until the earliest of (subject to any blockage of
payments that may then or thereafter be in effect under subsection (a) of this
Section 1203) (x) 179 days having elapsed since receipt of such written notice
by the Trustee (provided any Designated Senior Indebtedness as to which notice
was given shall theretofore have not been accelerated), (y) the date such
Non-payment Default and all other Non-payment Defaults as to which notice is
also given after such period is initiated shall have been cured or waived or
shall have ceased to exist or the Senior Indebtedness related thereto shall have
been discharged or paid in full in cash or Cash Equivalents or in any other form
as acceptable to the Holders of Senior Indebtedness, or (z) the date on which
such Payment Blockage Period (and all Non-payment Defaults as to which notice is
given after such Payment Blockage Period is initiated) shall have been
terminated by written notice to the Company or the Trustee from the Senior
Representative or the holders of at least a majority of the Designated Senior
Indebtedness that initiated such Payment Blockage Period, after which, in each
such case, the Company shall resume making any and all required payments in
respect of the Securities, including any missed payments. Notwithstanding any
other provision of this Indenture, in no event shall a Payment Blockage Period
extend beyond 179 days from the date of the receipt by the Company or the
Trustee of the notice referred to in clause (2) of this paragraph (b) (the
"Initial Blockage Period"). Any number of notices of Nonpayment Defaults may be
given during the Initial Blockage Period; provided that during any 365-day
consecutive period only one Payment Blockage Period during which payment of
principal of, or interest on, the Securities may not be made may commence and
the duration of the Payment Blockage Period may not exceed 179 days. No
Non-payment Default with respect to Designated Senior Indebtedness which existed
or was continuing on the date of the commencement of any Payment Blockage Period
will be, or can be, made the basis for the commencement of a second Payment
Blockage Period, whether or not within a period of 365
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consecutive days, unless such default shall have been cured or waived for a
period of not less than 90 consecutive days.
(c) In the event that, notwithstanding the foregoing, the
Company shall make any payment to the Trustee or the Holder of any Security
prohibited by the foregoing provisions of this Section, then and in such event
such payment shall be paid over and delivered forthwith to a Senior
Representative of the holders of the Designated Senior Indebtedness or as a
court of competent jurisdiction shall direct.
Section 1204. Payment Permitted if No Default.
Nothing contained in this Article, elsewhere in this Indenture
or in any of the Securities shall prevent the Company, at any time except during
the pendency of any case, proceeding, dissolution, liquidation or other winding
up, assignment for the benefit of creditors or other marshaling of assets and
liabilities of the Company referred to in Section 1202 or under the conditions
described in Section 1203, from making payments at any time of principal of,
premium, if any, or interest on the Securities.
Section 1205. Subrogation to Rights of Holders of Senior
Indebtedness.
Subject to the payment in full of all Senior Indebtedness in
cash or Cash Equivalents or in any other form as acceptable to the holders of
Senior Indebtedness, the Holders of the Securities shall be subrogated to the
rights of the holders of such Senior Indebtedness to receive payments and
distributions of cash, property and securities applicable to the Senior
Indebtedness until the principal of, 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 Senior Indebtedness of any cash, property or
securities to which the Holders 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 Indebtedness by Holders of the Securities
or the Trustee, shall, as among the Company, its creditors other than holders of
Senior Indebtedness, and the Holders of the Securities, be deemed to be a
payment or distribution by the Company to or on account of the Senior
Indebtedness.
Section 1206. Provisions Solely to Define Relative Rights.
The provisions of this Article are intended solely for the
purpose of defining the relative rights of the Holders of the Securities on the
one hand and the holders of Senior Indebtedness 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 Indebtedness and the Holders of the Securities, the obligation
of the Company, which is absolute and unconditional, to pay to the Holders of
the Securities the principal of, 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
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Company of the Holders of the Securities and creditors of the Company other than
the holders of Senior Indebtedness; or (c) prevent the Trustee or the Holder of
any Security from exercising all remedies otherwise permitted by applicable law
upon default under this Indenture, subject to the rights, if any, under this
Article of the holders of Senior Indebtedness (1) in any case, proceeding,
dissolution, liquidation or other winding up, assignment for the benefit of
creditors or other marshaling of assets and liabilities of the Company referred
to in Section 1202, to receive, pursuant to and in accordance with such Section,
cash, property and securities otherwise payable or deliverable to the Trustee or
such Holder, or (2) under the conditions specified in Section 1203, to prevent
any payment prohibited by such Section or enforce their rights pursuant to
Section 1203(c).
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,
including, in the event of any dissolution, winding-up, liquidation or
reorganization of the Company whether in bankruptcy, insolvency, receivership
proceedings, or otherwise, the timely filing of a claim for the unpaid balance
of the Indebtedness of the Company owing to such Holder in the form required in
such proceedings and the causing of such claim to be approved.
Section 1208. No Waiver of Subordination Provisions.
(a) No right of any present or future holder of any Senior
Indebtedness 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 by any such holder, or by any
non-compliance by the Company with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof any such holder may have or be
otherwise charged with.
(b) Without limiting the generality of Subsection (a) of this
Section and notwithstanding any other provision contained herein, the holders of
Senior Indebtedness 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
Indebtedness, do any one or more of the following: (1) change the manner, place
or terms of payment or extend the time of payment of, or renew or alter, Senior
Indebtedness or any instrument evidencing the same or any agreement under which
Senior Indebtedness is outstanding; (2) sell, exchange, release or otherwise
deal with any property pledged, mortgaged or otherwise securing Senior
Indebtedness; (3) release any Person liable in any manner for the collection or
payment of Senior Indebtedness; and (4) exercise or refrain from exercising any
rights against the Company and any other Person;
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provided, however, that in no event shall any such actions limit the right of
the Holders of the Securities to take any action to accelerate the maturity of
the Securities in accordance with the provisions set forth in Article Five or to
pursue any rights or remedies under this Indenture or under applicable laws if
the taking of such action does not otherwise violate the terms of this Article.
Section 1209. Notice to Trustee.
(a) 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 or other Indenture
Obligations. Notwithstanding the provisions of this Article or any 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 Indebtedness or
from a Senior Representative or any trustee, fiduciary or agent therefor; and,
prior to the receipt of any such written notice, the Trustee shall be entitled
in all respects to assume that no such facts exist; provided, however, that if
the Trustee shall not have received the notice provided for in this Section
prior to the date upon which by the terms hereof any money may become payable
for any purpose (including, without limitation, the payment of the principal of,
premium, if any, or interest on any Security or other Indenture Obligations),
then, anything herein contained to the contrary notwithstanding but without
limiting the rights and remedies of the holders of Senior Indebtedness or any
trustee, fiduciary or agent thereof, 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 after such date; nor shall the Trustee be charged
with knowledge of the curing of any such default or the elimination of the act
or condition preventing any such payment unless and until the Trustee shall have
received an Officers' Certificate to such effect.
(b) The Trustee shall be entitled to rely on the delivery to
it of a written notice to the Trustee and the Company by a Person representing
himself to be a Senior Representative or a holder of Senior Indebtedness (or a
trustee, fiduciary or agent therefor) to establish that such notice has been
given by a Senior Representative or a holder of Senior Indebtedness (or a
trustee, fiduciary or agent 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 Indebtedness 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 Indebtedness held by such Person, the extent to which such Person is
entitled to participate in such payment or distribution and any other facts
pertinent to the rights of such Person under this Article, 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.
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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 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 insolvency, bankruptcy, receivership, liquidation,
reorganization, dissolution, winding up or similar case or proceeding is
pending, 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 Senior Indebtedness
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, provided that the foregoing shall apply only if such
court has been fully apprised of the provisions of this Article.
Section 1211. Rights of Trustee as a Holder of Senior
Indebtedness; 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 Indebtedness
which may at any time be held by it, to the same extent as any other holder of
Senior Indebtedness, 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 606.
Section 1212. 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 under this
Indenture, 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 1211 shall not apply to the Company or
any Affiliate of the Company if it or such Affiliate acts as Paying Agent.
Section 1213. No Suspension of Remedies.
Nothing contained in this Article shall limit the right of the
Trustee or the Holders of Securities to take any action to accelerate the
maturity of the Securities pursuant to Article Five and as set forth in this
Indenture or to pursue any rights or remedies hereunder or under applicable law,
subject to the rights, if any, under this Article of the holders, from time to
time, of Senior Indebtedness to receive the cash, property or securities
receivable upon the exercise of such rights or remedies.
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Section 1214. Trustee's Relation to Senior Indebtedness.
With respect to the holders of Senior Indebtedness, 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 Indebtedness
shall be read into this Article against the Trustee. The Trustee shall not be
deemed to owe any fiduciary duty to the holders of Senior Indebtedness and the
Trustee shall not be liable to any holder of Senior Indebtedness if it shall
mistakenly in the absence of gross negligence or willful misconduct pay over or
deliver to Holders, the Company or any other Person moneys or assets to which
any holder of Senior Indebtedness shall be entitled by virtue of this Article or
otherwise.
ARTICLE XIII
SATISFACTION AND DISCHARGE
Section 1301. Satisfaction and Discharge of Indenture.
This Indenture shall cease to be of further effect (except as
to surviving rights of registration of transfer or exchange of Securities
herein, rights to payment, including Penalty Interest, and rights to replacement
of stolen, lost or mutilated Securities 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
(a) either
(1) all the 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 308 or (ii) all Securities for whose
payment United States dollars have 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
(2) all such Securities not theretofore delivered to
the Trustee for cancellation (x) have become due and payable,
(y) will become due and payable at their Stated Maturity
within one year, or (z) 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 or any
Guarantor, in the case of (2)(x),(y) or (z) above, has
irrevocably deposited or caused to be deposited with the
Trustee as trust funds in trust for the purpose an amount in
United States dollars sufficient to pay and
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discharge the entire Indebtedness on the Securities not
theretofore delivered to the Trustee for cancellation, for the
principal of, premium, if any, and accrued interest at such
Stated Maturity or Redemption Date;
(b) the Company or any Guarantor has paid or caused to be paid
all other sums payable hereunder by the Company or any Guarantor; and
(c) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel stating that (i) all conditions precedent
herein provided for relating to the satisfaction and discharge of this Indenture
have been complied with and (ii) such satisfaction and discharge will not result
in a breach or violation of or constitute a default under, this Indenture or any
other material agreement or instrument to which the Company or any Guarantor is
a party or by which the Company or any Guarantor is bound.
Opinions of Counsel required to be delivered under this
Section may have qualifications customary for opinions of the type required and
counsel delivering such Opinions of Counsel may rely on certificates of the
Company or government or other officials customary for opinions of the type
required, including certificates certifying as to matters of fact, including
that various financial covenants have been complied with.
Notwithstanding the satisfaction and discharge of this
Indenture, the obligations of the Company to the Trustee under Section 606 and,
if United States dollars shall have been deposited with the Trustee pursuant to
subclause (2) of Subsection (a) of this Section, the obligations of the Trustee
under Section 1302 and the last paragraph of Section 1003 shall survive.
Section 1302. Application of Trust Money.
Subject to the provisions of the last paragraph of Section
1003, all United States dollars deposited with the Trustee pursuant to Section
1301 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 Agent) as the
Trustee may determine, to the Persons entitled thereto, of the principal of,
premium, if any, and interest on the Securities for whose payment such United
States dollars have been deposited with the Trustee.
ARTICLE XIV
GUARANTEE
Section 1401. Guarantors' Guarantee.
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For value received, each of the Guarantors, in accordance with
this Article Fourteen, hereby absolutely, unconditionally and irrevocably
guarantees, jointly and severally, to the Trustee and the Holders, as if the
Guarantors were the principal debtor, the punctual payment and performance when
due of all Indenture Obligations (which for purposes of this Guarantee shall
also be deemed to include all commissions, fees, charges, costs and other
expenses (including reasonable legal fees and disbursements of one counsel in
connection with any one action or separate but similar or related actions in the
same jurisdiction arising out of the same general allegations or circumstances)
arising out of or incurred by the Trustee or the Holders in connection with the
enforcement of this Guarantee).
Section 1402. Continuing Guarantee; No Right of Set-Off;
Independent Obligation.
(a) This Guarantee shall be a continuing guarantee of the
payment and performance of all Indenture Obligations and shall remain in full
force and effect until the payment in full of all of the Indenture Obligations
and shall apply to and secure any ultimate balance due or remaining unpaid to
the Trustee or the Holders; and this Guarantee shall not be considered as wholly
or partially satisfied by the payment or liquidation at any time or from time to
time of any sum of money for the time being due or remaining unpaid to the
Trustee or the Holders. Each Guarantor, jointly and severally, covenants and
agrees to comply with all obligations, covenants, agreements and provisions
applicable to it in this Indenture including those set forth in Article Eight.
Without limiting the generality of the foregoing, each of the Guarantors'
liability shall extend to all amounts which constitute part of the Indenture
Obligations and would be owed by the Company under this Indenture and the
Securities but for the fact that they are unenforceable, reduced, limited,
impaired, suspended or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving the Company.
(b) Each Guarantor, jointly and severally, hereby guarantees
that the Indenture Obligations will be paid to the Trustee without set-off or
counterclaim or other reduction whatsoever (whether for taxes, withholding or
otherwise) in lawful currency of the United States of America.
(c) Each Guarantor, jointly and severally, guarantees that the
Indenture Obligations shall be paid strictly in accordance with their terms
regardless of any law, regulation or order now or hereafter in effect in any
jurisdiction affecting any of such terms or the rights of the holders of the
Securities.
(d) Each Guarantor's liability to pay or perform or cause the
performance of the Indenture Obligations under this Guarantee shall arise
forthwith after demand for payment or performance by the Trustee has been given
to the Guarantors in the manner prescribed in Section 106 hereof.
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(e) Except as provided herein, the provisions of this Article
Fourteen cover all agreements between the parties hereto relative to this
Guarantee and none of the parties shall be bound by any representation, warranty
or promise made by any Person relative thereto which is not embodied herein; and
it is specifically acknowledged and agreed that this Guarantee has been
delivered by each Guarantor free of any conditions whatsoever and that no
representations, warranties or promises have been made to any Guarantor
affecting its liabilities hereunder, and that the Trustee shall not be bound by
any representations, warranties or promises now or at any time hereafter made by
the Company to any Guarantor.
Section 1403. Guarantee Absolute.
The obligations of the Guarantors hereunder are independent of
the obligations of the Company under the Securities and this Indenture and a
separate action or actions may be brought and prosecuted against any Guarantor
whether or not an action or proceeding is brought against the Company and
whether or not the Company is joined in any such action or proceeding. The
liability of the Guarantors hereunder is irrevocable, absolute and unconditional
and (to the extent permitted by law) the liability and obligations of the
Guarantors hereunder shall not be released, discharged, mitigated, waived,
impaired or affected in whole or in part by:
(a) any defect or lack of validity or enforceability in
respect of any Indebtedness or other obligation of the Company or any other
Person under this Indenture or the Securities, or any agreement or instrument
relating to any of the foregoing;
(b) any grants of time, renewals, extensions, indulgences,
releases, discharges or modifications which the Trustee or the Holders may
extend to, or make with, the Company, any Guarantor or any other Person, or any
change in the time, manner or place of payment of, or in any other term of, all
or any of the Indenture Obligations, or any other amendment or waiver of, or any
consent to or departure from, this Indenture or the Securities, including any
increase or decrease in the Indenture Obligations;
(c) the taking of security from the Company, any Guarantor or
any other Person, and the release, discharge or alteration of, or other dealing
with, such security;
(d) the occurrence of any change in the laws, rules,
regulations or ordinances of any jurisdiction by any present or future action of
any governmental authority or court amending, varying, reducing or otherwise
affecting, or purporting to amend, vary, reduce or otherwise affect, any of the
Indenture Obligations and the obligations of any Guarantor hereunder;
(e) the abstention from taking security from the Company, any
Guarantor or any other Person or from perfecting, continuing to keep perfected
or taking advantage of any security;
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(f) any loss, diminution of value or lack of enforceability of
any security received from the Company, any Guarantor or any other Person, and
including any other guarantees received by the Trustee;
(g) any other dealings with the Company, any Guarantor or any
other Person, or with any security;
(h) the Trustee's or the Holders' acceptance of compositions
from the Company or any Guarantor;
(i) the application by the Holders or the Trustee of all
monies at any time and from time to time received from the Company, any
Guarantor or any other Person on account of any indebtedness and liabilities
owing by the Company or any Guarantor to the Trustee or the Holders, in such
manner as the Trustee or the Holders deems best and the changing of such
application in whole or in part and at any time or from time to time, or any
manner of application of collateral, if any, or proceeds thereof, to all or any
of the Indenture Obligations, or the manner of sale of any such collateral;
(j) the release or discharge of the Company or any Guarantor
of the Securities or of any Person liable directly as surety or otherwise by
operation of law or otherwise for the Securities, other than an express release
in writing given by the Trustee, on behalf of the Holders, of the liability and
obligations of any Guarantor hereunder;
(k) any change in the name, business, capital structure or
governing instrument of the Company or any Guarantor or any refinancing or
restructuring of any of the Indenture Obligations;
(l) the sale of the Company's or any Guarantor's business or
any part thereof;
(m) subject to Section 1414, any merger or consolidation,
arrangement or reorganization of the Company, any Guarantor, any Person
resulting from the merger or consolidation of the Company or any Guarantor with
any other Person or any other successor to such Person or merged or consolidated
Person or any other change in the corporate existence, structure or ownership of
the Company or any Guarantor;
(n) the insolvency, bankruptcy, liquidation, winding-up,
dissolution, receivership or distribution of the assets of the Company or its
assets or any resulting discharge of any obligations of the Company (whether
voluntary or involuntary) or of any Guarantor or the loss of corporate
existence;
(o) subject to Section 1414, any arrangement or plan of
reorganization affecting the Company or any Guarantor;
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(p) any other circumstance (including any statute of
limitations) that might otherwise constitute a defense available to, or
discharge of, the Company or any Guarantor; or
(q) any modification, compromise, settlement or release by the
Trustee, or by operation of law or otherwise, of the Indenture Obligations or
the liability of the Company or any other obligor under the Securities, in whole
or in part, and any refusal of payment by the Trustee, in whole or in part, from
any other obligor or other guarantor in connection with any of the Indenture
Obligations, whether or not with notice to, or further assent by, or any
reservation of rights against, each of the Guarantors.
Section 1404. Right to Demand Full Performance.
In the event of any demand for payment or performance by the
Trustee from any Guarantor hereunder, the Trustee or the Holders shall have the
right to demand its full claim and to receive all dividends or other payments in
respect thereof until the Indenture Obligations have been paid in full, and the
Guarantors shall continue to be jointly and severally liable hereunder for any
balance which may be owing to the Trustee or the Holders by the Company under
this Indenture and the Securities. The retention by the Trustee or the Holders
of any security, prior to the realization by the Trustee or the Holders of its
rights to such security upon foreclosure thereon, shall not, as between the
Trustee and any Guarantor, be considered as a purchase of such security, or as
payment, satisfaction or reduction of the Indenture Obligations due to the
Trustee or the Holders by the Company or any part thereof.
Section 1405. Waivers.
(a) Each Guarantor hereby expressly waives (to the extent
permitted by law) notice of the acceptance of this Guarantee and notice of the
existence, renewal, extension or the non-performance, non-payment, or
non-observance on the part of the Company of any of the terms, covenants,
conditions and provisions of this Indenture or the Securities or any other
notice whatsoever to or upon the Company or such Guarantor with respect to the
Indenture Obligations. Each Guarantor hereby acknowledges communication to it of
the terms of this Indenture and the Securities and all of the provisions therein
contained and consents to and approves the same. Each Guarantor hereby expressly
waives (to the extent permitted by law) diligence, presentment, protest and
demand for payment.
(b) Without prejudice to any of the rights or recourses which
the Trustee or the Holders may have against the Company, each Guarantor hereby
expressly waives (to the extent permitted by law) any right to require the
Trustee or the Holders to:
(i) initiate or exhaust any rights, remedies or recourse
against the Company, any Guarantor or any other Person;
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(ii) value, realize upon, or dispose of any security of the
Company or any other Person held by the Trustee or the Holders; or
(iii) initiate or exhaust any other remedy which the Trustee
or the Holders may have in law or equity;
before requiring or becoming entitled to demand payment from such Guarantor
under this Guarantee.
(c) With respect to this Section 1405, to the extent
applicable to any Guarantor, each Guarantor expressly waives application of
Sections 26-7 through 26-9 of the North Carolina General Statutes.
Section 1406. The Guarantors Remain Obligated in Event the
Company Is No Longer Obligated to Discharge Indenture Obligations.
It is the express intention of the Trustee and the Guarantors
that if for any reason the Company has no legal existence, is or becomes under
no legal obligation to discharge the Indenture Obligations owing to the Trustee
or the Holders by the Company or if any of the Indenture Obligations owing by
the Company to the Trustee or the Holders becomes irrecoverable from the Company
by operation of law or for any reason whatsoever, this Guarantee and the
covenants, agreements and obligations of the Guarantors contained in this
Article Fourteen shall nevertheless be binding upon the Guarantors, as principal
debtor, until such time as all such Indenture Obligations have been paid in full
to the Trustee and all Indenture Obligations owing to the Trustee or the Holders
by the Company have been discharged, or such earlier time as Section 402 shall
apply to the Securities and the Guarantors shall be responsible for the payment
thereof to the Trustee or the Holders upon demand.
Section 1407. Fraudulent Conveyance; Subrogation.
(a) Any term or provision of this Guarantee to the contrary
notwithstanding, the aggregate amount of the Indenture Obligations guaranteed
hereunder shall be reduced to the extent necessary to prevent this Guarantee
from violating or becoming voidable under applicable law relating to fraudulent
conveyance or fraudulent transfer or similar laws affecting the rights of
creditors generally.
(b) Each Guarantor hereby waives all rights of subrogation or
contribution, whether arising by contract or operation of law (including,
without limitation, any such right arising under federal bankruptcy law) or
otherwise by reason of any payment by it pursuant to the provisions of this
Article Fourteen.
Section 1408. Guarantee Is in Addition to Other Security.
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This Guarantee shall be in addition to and not in substitution
for any other guarantees or other security which the Trustee may now or
hereafter hold in respect of the Indenture Obligations owing to the Trustee or
the Holders by the Company and (except as may be required by law) the Trustee
shall be under no obligation to marshal in favor of each of the Guarantors any
other guarantees or other security or any moneys or other assets which the
Trustee may be entitled to receive or upon which the Trustee or the Holders may
have a claim.
Section 1409. Release of Security Interests.
Without limiting the generality of the foregoing and except as
otherwise provided in this Indenture, each Guarantor hereby consents and agrees,
to the fullest extent permitted by applicable law, that the rights of the
Trustee hereunder, and the liability of the Guarantors hereunder, shall not be
affected by any and all releases for any purpose of any collateral, if any, from
the Liens and security interests created by any collateral document and that
this Guarantee shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Indenture Obligations is rescinded
or must otherwise be returned by the Trustee upon the insolvency, bankruptcy or
reorganization of the Company or otherwise, all as though such payment had not
been made.
Section 1410. No Bar to Further Actions.
Except as provided by law, no action or proceeding brought or
instituted under Article Fourteen and this Guarantee and no recovery or judgment
in pursuance thereof shall be a bar or defense to any further action or
proceeding which may be brought under Article Fourteen and this Guarantee by
reason of any further default or defaults under Article Fourteen and this
Guarantee or in the payment of any of the Indenture Obligations owing by the
Company.
Section 1411. Failure to Exercise Rights Shall Not Operate as
a Waiver; No Suspension of Remedies.
(a) No failure to exercise and no delay in exercising, on the
part of the Trustee or the Holders, any right, power, privilege or remedy under
this Article Fourteen and this Guarantee shall operate as a waiver thereof, nor
shall any single or partial exercise of any rights, power, privilege or remedy
preclude any other or further exercise thereof, or the exercise of any other
rights, powers, privileges or remedies. The rights and remedies herein provided
for are cumulative and not exclusive of any rights or remedies provided in law
or equity.
(b) Nothing contained in this Article Fourteen shall limit the
right of the Trustee or the Holders to take any action to accelerate the
maturity of the Securities pursuant to Article Five or to pursue any rights or
remedies hereunder or under applicable law.
Section 1412. Trustee's Duties; Notice to Trustee.
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(a) Any provision in this Article Fourteen or elsewhere in
this Indenture allowing the Trustee to request any information or to take any
action authorized by, or on behalf of any Guarantor, shall be permissive and
shall not be obligatory on the Trustee except as the Holders may direct in
accordance with the provisions of this Indenture or where the failure of the
Trustee to request any such information or to take any such action arises from
the Trustee's negligence, bad faith or willful misconduct.
(b) The Trustee shall not be required to inquire into the
existence, powers or capacities of the Company, any Guarantor or the officers,
directors or agents acting or purporting to act on their respective behalf.
Section 1413. Successors and Assigns.
All terms, agreements and conditions of this Article Fourteen
shall extend to and be binding upon each Guarantor and its successors and
permitted assigns and shall enure to the benefit of and may be enforced by the
Trustee and its successors and assigns; provided, however, that the Guarantors
may not assign any of their rights or obligations hereunder other than in
accordance with Article Eight.
Section 1414. Release of Guarantee.
Concurrently with the payment in full of all of the Indenture
Obligations, the Guarantors shall be released from and relieved of their
obligations under this Article Fourteen. Upon the delivery by the Company to the
Trustee of an Officer's Certificate and, if requested by the Trustee, an Opinion
of Counsel to the effect that the transaction giving rise to the release of this
Guarantee was made by the Company in accordance with the provisions of this
Indenture and the Securities, the Trustee shall execute any documents reasonably
required in order to evidence the release of the Guarantors from their
obligations under this Guarantee. If any of the Indenture Obligations are
revived and reinstated after the termination of this Guarantee, then all of the
obligations of the Guarantors under this Guarantee shall be revived and
reinstated as if this Guarantee had not been terminated until such time as the
Indenture Obligations are paid in full, and each Guarantor shall enter into an
amendment to this Guarantee, reasonably satisfactory to the Trustee, evidencing
such revival and reinstatement.
This Guarantee shall terminate with respect to each Guarantor
and shall be automatically and unconditionally released and discharged as
provided in Section 1014(c).
Section 1415. Execution of Guarantee.
To evidence the Guarantee, each Guarantor hereby agrees to
execute the guarantee substantially in the form set forth in Section 206, to be
endorsed on each Security authenticated and delivered by the Trustee and that
this Indenture shall be executed on behalf of each Guarantor by its Chairman of
the Board, its President, or one of its Vice Presidents and attested
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by its Secretary or one of its Assistant Secretaries. The signature of any of
these officers on the Securities may be manual or facsimile.
Section 1416. Guarantee Subordinate to Guarantor Senior
Indebtedness.
Each Guarantor covenants and agrees, and each Holder of a
Guarantee, by his acceptance thereof, likewise covenants and agrees, that, to
the extent and in the manner hereinafter set forth in this Article, the
Indebtedness represented by the Guarantees is hereby made subordinate and
subject in right of payment as provided in this Article to the prior payment in
full in cash or Cash Equivalents or in any other form as acceptable to the
holders of Guarantor Senior Indebtedness of all Guarantor Senior Indebtedness;
provided, however, that the Indebtedness represented by this Guarantee in all
respects shall rank equally with, or prior to, all existing and future
Indebtedness of such Guarantor that is expressly subordinated to such
Guarantor's Guarantor Senior Indebtedness.
This Article Fourteen shall constitute a continuing offer to
all Persons who, in reliance upon such provisions, become holders of, or
continue to hold Guarantor Senior Indebtedness; and such provisions are made for
the benefit of the holders of Guarantor Senior Indebtedness; and such holders
are made obligees hereunder and they or each of them may enforce such
provisions.
With respect to the relative rights of Holders and holders of
Senior Indebtedness and Guarantor Senior Indebtedness and for the purpose of
Section 1407(a), each Holder of a Security by his acceptance thereof
acknowledges that all Senior Indebtedness and any guarantee by a Guarantor of
such Senior Indebtedness shall be deemed to have been incurred prior to the
incurrence by such Guarantor of its liability under its Guarantee.
Section 1417. Payment Over of Proceeds Upon Dissolution of the
Guarantor, 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 any Guarantor or to its
creditors, as such, or to its assets, or (b) any liquidation, dissolution or
other winding up of any Guarantor, 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 or liabilities of any Guarantor,
then and in any such event:
(1) the holders of Guarantor Senior Indebtedness
shall be entitled to receive payment in full in cash or Cash
Equivalents or in any other form as acceptable to the holders
of Guarantor Senior Indebtedness of all amounts due on or in
respect of all Guarantor Senior Indebtedness, before the
Holders of the Securities are entitled to receive any payment
or distribution of any kind or
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character (excluding Permitted Guarantor Junior Securities)
on account of the Guarantee of such Guarantor; and
(2) any payment or distribution of assets of any
Guarantor of any kind or character, whether in cash, property
or securities (excluding Permitted Guarantor Junior
Securities), by set-off or otherwise, to which the Holders or
the Trustee would be entitled but for the provisions of this
Article shall be paid by the liquidating trustee or agent or
other Person making such payment or distribution, whether a
trustee in bankruptcy, a receiver or liquidating trustee or
otherwise, directly to the holders of Guarantor Senior
Indebtedness or their representative or representatives or to
the trustee or trustees under any indenture under which any
instruments evidencing any of such Guarantor Senior
Indebtedness may have been issued, ratably according to the
aggregate amounts remaining unpaid on account of the Senior
Guarantor Indebtedness held or represented by each, to the
extent necessary to make payment in full in cash or Cash
Equivalents or in any other form as acceptable to the holders
of Guarantor Senior Indebtedness of all Guarantor Senior
Indebtedness remaining unpaid, after giving effect to any
concurrent payment or distribution to the holders of such
Guarantor Senior Indebtedness; and
(3) 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 any Guarantor of any kind or character, whether in
cash, property or securities, in respect of the Guarantee of
such Guarantor before all Guarantor Senior Indebtedness is
paid in full, then and in such event such payment or
distribution (excluding Permitted Guarantor Junior Securities)
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 such Guarantor for application to the payment of
all Guarantor Senior Indebtedness remaining unpaid, to the
extent necessary to pay all Guarantor Senior Indebtedness in
full in cash or Cash Equivalents or in any other form as
acceptable to the holders of Guarantor Senior Indebtedness
after giving effect to any concurrent payment or distribution
to or for the holders of Guarantor Senior Indebtedness.
The consolidation of any Guarantor with, or the merger of any
Guarantor with or into, another Person or the liquidation or dissolution of any
Guarantor following the sale, assignment, conveyance, transfer, lease or other
disposal of all or substantially all of such Guarantor's properties or assets to
another Person upon the terms and conditions set forth in Article Eight shall
not be deemed a dissolution, winding up, liquidation, reorganization, assignment
for the benefit of creditors or marshaling of assets and liabilities of such
Guarantor for the purposes of this Section if the Person formed by such
consolidation or the surviving entity of such merger or the Person which
acquires by sale, assignment, conveyance, transfer, lease or
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other disposal of all or substantially all of such Guarantor's properties and
assets, as the case may be, shall, as a part of such consolidation, merger,
sale, assignment, conveyance, transfer, lease or other disposal comply with the
conditions set forth in Article Eight.
Section 1418. Default on Guarantor Senior Indebtedness.
(a) Upon the maturity of any Guarantor Senior Indebtedness by
lapse of time, acceleration or otherwise, all principal thereof and interest
thereon and other amounts due in connection therewith shall first be paid in
full or such payment duly provided for before any payment is made by any of the
Guarantors or any Person acting on behalf of any of the Guarantors in respect of
the Guarantee of such Guarantor.
(b) No payment (excluding payments in the form of Permitted
Guarantor Junior Securities) shall be made by any Guarantor in respect of its
Guarantee during the period in which Section 1417 shall be applicable, during
any suspension of payments in effect under Section 1203(a) of this Indenture or
during any Payment Blockage Period in effect under Section 1203(b) of this
Indenture.
(c) In the event that, notwithstanding the foregoing, any
Guarantor shall make any payment to the Trustee or the Holder of its Guarantee
prohibited by the foregoing provisions of this Section, then and in such event
such payment shall be paid over and delivered forthwith to the representatives
of Guarantor Senior Indebtedness or as a court of competent jurisdiction shall
direct.
Section 1419. Payment Permitted by Each of the Guarantors if
No Default.
Nothing contained in this Article, elsewhere in this Indenture
or in any of the Securities shall prevent any Guarantor, at any time except
during the pendency of any case, proceeding, dissolution, liquidation or other
winding up, assignment for the benefit of creditors or other marshaling of
assets and liabilities of such Guarantor referred to in Section 1417 or under
the conditions described in Section 1418, from making payments at any time of
principal of, premium, if any, or interest on the Securities.
Section 1420. Subrogation to Rights of Holders of Guarantor
Senior Indebtedness.
Subject to the payment in full of all Guarantor Senior
Indebtedness in cash or Cash Equivalents or in any other form acceptable to the
holders of Guarantor Senior Indebtedness, the Holders of the Securities shall be
subrogated to the rights of the holders of such Guarantor Senior Indebtedness to
receive payments and distributions of cash, property and securities applicable
to the Guarantor Senior Indebtedness until the principal of, 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 Guarantor Senior
Indebtedness of any cash, property
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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 Guarantor Senior
Indebtedness by Holders of the Securities or the Trustee, shall, as among any
Guarantor, its creditors other than holders of Guarantor Senior Indebtedness,
and the Holders of the Securities, be deemed to be a payment or distribution by
such Guarantor to or on account of the Guarantor Senior Indebtedness.
Section 1421. Provisions Solely to Define Relative Rights.
The provisions of Sections 1416 through 1429 of this Indenture
are intended solely for the purpose of defining the relative rights of the
Holders of the Securities on the one hand and the holders of Guarantor Senior
Indebtedness 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 any Guarantor, its creditors other than holders of Guarantor Senior
Indebtedness and the Holders of the Securities, the obligation of such
Guarantor, which is absolute and unconditional, to pay to the Holders of the
Securities the principal of, 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 each of the Guarantors of the Holders
of the Securities and creditors of each of the Guarantors other than the holders
of Guarantor Senior Indebtedness; or (c) prevent the Trustee or the Holder of
any Security from exercising all remedies otherwise permitted by applicable law
upon default under this Indenture, subject to the rights, if any, under this
Article of the holders of Guarantor Senior Indebtedness (1) in any case,
proceeding, dissolution, liquidation or other winding up, assignment for the
benefit of creditors or other marshaling of assets and liabilities of the
Guarantors referred to in Section 1417, to receive, pursuant to and in
accordance with such Section, cash, property and securities otherwise payable or
deliverable to the Trustee or such Holder, or (2) under the conditions specified
in Section 1418, to prevent any payment prohibited by such Section or enforce
their rights pursuant to Section 1418(c).
Section 1422. 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,
including, in the event of any dissolution, winding-up, liquidation or
reorganization of any Guarantor whether in bankruptcy, insolvency, receivership
proceedings, or otherwise, the timely filing of a claim for the unpaid balance
of the indebtedness of any Guarantor owing to such Holder in the form required
in such proceedings and the causing of such claim to be approved.
Section 1423. No Waiver of Subordination Provisions.
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(a) No right of any present or future holder of any Guarantor
Senior Indebtedness 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 any Guarantor or by any act or failure to act by any such holder, or by
any non-compliance by any Guarantor with the terms, provisions and covenants of
this Indenture, regardless of any knowledge thereof any such holder may have or
be otherwise charged with.
(b) Without limiting the generality of Subsection (a) of this
Section and notwithstanding any other provision contained herein, the holders of
Guarantor Senior Indebtedness 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
Guarantor Senior Indebtedness, do any one or more of the following: (1) change
the manner, place or terms of payment or extend the time of payment of, or renew
or alter, Guarantor Senior Indebtedness or any instrument evidencing the same or
any agreement under which Guarantor Senior Indebtedness is outstanding; (2)
sell, exchange, release or otherwise deal with any property pledged, mortgaged
or otherwise securing Guarantor Senior Indebtedness; (3) release any Person
liable in any manner for the collection or payment of Guarantor Senior
Indebtedness; and (4) exercise or refrain from exercising any rights against any
of the Guarantors and any other Person; provided, however, that in no event
shall any such actions limit the right of the Holders of the Securities to take
any action to accelerate the maturity of the Securities in accordance with the
provisions set forth in Article 5 or to pursue any rights or remedies under this
Indenture or under applicable laws if the taking of such action does not
otherwise violate the terms of this Article.
Section 1424. Notice to Trustee by Each of the Guarantors.
(a) Each Guarantor shall give prompt written notice to the
Trustee of any fact known to such Guarantor which would prohibit the making of
any payment to or by the Trustee in respect of the Guarantee. Notwithstanding
the provisions of this Article or any 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 any Guarantor or a holder of Guarantor Senior Indebtedness or any
trustee, fiduciary or agent therefor; and, prior to the receipt of any such
written notice, the Trustee shall be entitled in all respects to assume that no
such facts exist; provided, however, that if the Trustee shall not have received
the notice provided for in this Section prior to the date upon which by the
terms hereof any money may become payable for any purpose (including, without
limitation, the payment of the principal of, premium, if any, or interest on any
Security or any other Indenture Obligations), then, anything herein contained to
the contrary notwithstanding but without limiting the rights and remedies of the
holders of Guarantor Senior Indebtedness or any trustee, fiduciary or agent
thereof, the Trustee shall have full power and authority to receive such money
and to apply the same to the
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purpose for which such money was received and shall not be affected by any
notice to the contrary which may be received by it after such date; nor shall
the Trustee be charged with knowledge of the curing of any such default or the
elimination of the act or condition preventing any such payment unless and until
the Trustee shall have received an Officers' Certificate to such effect.
(b) The Trustee shall be entitled to rely on the delivery to
it of a written notice to the Trustee and each Guarantor by a Person
representing himself to be a representative of one or more holders of Designated
Guarantor Senior Indebtedness (a "Guarantor Senior Representative") or a holder
of Guarantor Senior Indebtedness (or a trustee, fiduciary or agent therefor) to
establish that such notice has been given by a Guarantor Senior Representative
or a holder of Guarantor Senior Indebtedness (or a trustee, fiduciary or agent
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 Guarantor Senior
Indebtedness 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 Guarantor Senior
Indebtedness held by such Person, the extent to which such Person is entitled to
participate in such payment or distribution and any other facts pertinent to the
rights of such Person under this Article, 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 1425. Reliance on Judicial Order or Certificate of
Liquidating Agent.
Upon any payment or distribution of assets of any Guarantor
referred to in this Article, the Trustee 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 insolvency, bankruptcy, receivership, liquidation,
reorganization, dissolution, winding up or similar case or proceeding is
pending, 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 Guarantor Senior
Indebtedness and other indebtedness of such Guarantor, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article, provided that the foregoing shall
apply only if such court has been fully apprised of the provisions of this
Article.
Section 1426. Rights of Trustee as a Holder of Guarantor
Senior Indebtedness; 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 Guarantor Senior
Indebtedness which may at any time be held by
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it, to the same extent as any other holder of Guarantor Senior Indebtedness, 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 606.
Section 1427. 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 under this
Indenture, 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 1426 shall not apply to the Company or
any Affiliate of the Company if it or such Affiliate acts as Paying Agent.
Section 1428. No Suspension of Remedies.
Nothing contained in this Article shall limit the right of the
Trustee or the Holders of Securities to take any action to accelerate the
maturity of the Securities pursuant to the provisions described under Article
Five and as set forth in this Indenture or to pursue any rights or remedies
hereunder or under applicable law, subject to the rights, if any, under this
Article of the holders, from time to time, of Guarantor Senior Indebtedness to
receive the cash, property or securities receivable upon the exercise of such
rights or remedies.
Section 1429. Trustee's Relation to Guarantor Senior
Indebtedness.
With respect to the holders of Guarantor Senior Indebtedness,
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 Guarantor Senior
Indebtedness shall be read into this Article against the Trustee. The Trustee
shall not be deemed to owe any fiduciary duty to the holders of Guarantor Senior
Indebtedness and the Trustee shall not be liable to any holder of Guarantor
Senior Indebtedness if it shall mistakenly in the absence of gross negligence or
willful misconduct pay over or deliver to Holders, the Company or any other
Person moneys or assets to which any holder of Guarantor Senior Indebtedness
shall be entitled by virtue of this Article or otherwise.
If an officer whose signature is on this Indenture no longer
holds that office at the time the Trustee authenticates a Security on which a
Guarantee is endorsed, such Guarantee shall be valid nevertheless.
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IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, all as of the day and year first above written.
SINCLAIR BROADCAST GROUP, INC.,
as Issuer
CHESAPEAKE TELEVISION, INC.
CHESAPEAKE TELEVISION LICENSEE, INC.
FSF-TV, INC.
KABB LICENSEE, INC.
KDNL LICENSEE, INC.
KSMO, INC.
KSMO LICENSEE, INC.
KUPN LICENSEE, INC.
SCI-INDIANA LICENSEE, INC.
SCI-SACRAMENTO LICENSEE, INC.
SINCLAIR COMMUNICATIONS, INC.
SINCLAIR RADIO OF ALBUQUERQUE, INC.
SINCLAIR RADIO OF ALBUQUERQUE LICENSEE, INC.
SINCLAIR RADIO OF BUFFALO, INC.
SINCLAIR RADIO OF BUFFALO LICENSEE, INC.
SINCLAIR RADIO OF GREENVILLE, INC.
SINCLAIR RADIO OF GREENVILLE LICENSEE, INC.
SINCLAIR RADIO OF LOS ANGELES, INC.
SINCLAIR RADIO OF LOS ANGELES LICENSEE, INC.
SINCLAIR RADIO OF MEMPHIS, INC.
SINCLAIR RADIO OF MEMPHIS LICENSEE, INC.
SINCLAIR RADIO OF NASHVILLE, INC.
SINCLAIR RADIO OF NASHVILLE LICENSEE, INC.
SINCLAIR RADIO OF NEW ORLEANS, INC.
SINCLAIR RADIO OF NEW ORLEANS LICENSEE, INC.
SINCLAIR RADIO OF ST. LOUIS, INC.
SINCLAIR RADIO OF ST. LOUIS LICENSEE, INC.
SINCLAIR RADIO OF WILKES-BARRE, INC.
SINCLAIR RADIO OF WILKES-BARRE LICENSEE, INC.
SUPERIOR COMMUNICATIONS OF KENTUCKY, INC.
SUPERIOR COMMUNICATIONS OF OKLAHOMA, INC.
SUPERIOR KY LICENSE CORP.
SUPERIOR OK LICENSE CORP.
TUSCALOOSA BROADCASTING INC.
WCGV, INC.
WCGV LICENSEE, INC.
WDBB, INC.
WLFL, INC.
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<PAGE>
WLFL LICENSEE, INC.
WLOS LICENSEE, INC.
WPGH, INC.
WPGH LICENSEE, INC.
WSMH, INC.
WSMH LICENSEE, INC.
WSTR, INC.
WSTR LICENSEE, INC.
WSYX, INC.
WTTE, CHANNEL 28, INC.
WTTE, CHANNEL 28 LICENSEE, INC.
WTTO, INC.
WTTO LICENSEE, INC.
WTVZ, INC.
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<PAGE>
WTVZ LICENSEE, INC.
WYZZ, INC.
WYZZ LICENSEE, INC.,
as Guarantors
Attest David B. Amy By: /s/ David D. Smith
--------------------------------------
Name: David B. Amy Name: David D. Smith
Title: Secretary/Treasurer Title: President
FIRST UNION NATIONAL BANK OF MARYLAND, as Trustee
By: /s/ Patricia A. Welling
--------------------------------------
Name: Patricia A. Welling
Title: Vice President
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<PAGE>
STATE OF MARYLAND)
) ss.:
CITY OF BALTIMORE)
On the 2nd day of July, 1997, before me personally came , to
me known, who, being by me duly sworn, did depose and say that he resides at 802
Hillstead Drive; that he is President of each of Sinclair Broadcast Group, Inc.,
Chesapeake Television, Inc., WTTE, Channel 28, Inc., WPGH, Inc., WTTO, Inc.,
WCGV, Inc., Chesapeake Television Licensee, Inc., FSF-TV, Inc., KABB Licensee,
Inc., KDNL Licensee, Inc., KSMO, Inc., KSMO Licensee, Inc., KUPN Licensee, Inc.,
SCI-Indiana Licensee, Inc., SCI-Sacramento Licensee, Inc., Sinclair
Communications, Inc., Sinclair Radio of Albuquerque, Inc., Sinclair Radio of
Albuquerque Licensee, Inc., Sinclair Radio of Buffalo, Inc., Sinclair Radio of
Buffalo Licensee, Inc., Sinclair Radio of Greenville, Inc., Sinclair Radio of
Greenville Licensee, Inc., Sinclair Radio of Los Angeles, Inc., Sinclair Radio
of Los Angeles Licensee, Inc., Sinclair Radio of Memphis, Inc., Sinclair Radio
of Memphis Licensee, Inc., Sinclair Radio of Nashville, Inc., Sinclair Radio of
Nashville Licensee, Inc., Sinclair Radio of New Orleans, Inc., Sinclair Radio of
New Orleans Licensee, Inc., Sinclair Radio of St. Louis, Inc., Sinclair Radio of
St. Louis Licensee, Inc., Sinclair Radio of Wilkes- Barre, Inc., Sinclair Radio
of Wilkes-Barre Licensee, Inc., Superior Communications of Kentucky, Inc.,
Superior Communications of Oklahoma, Inc., Superior KY License Corp., Superior
OK License Corp., Tuscaloosa Broadcasting Inc., WCGV, Inc., WCGV Licensee, Inc.,
WDBB, Inc., WLFL, Inc., WLFL Licensee, Inc., WLOS Licensee, Inc., WPGH, Inc.,
WPGH Licensee, Inc., WSMH, Inc., WSMH Licensee, Inc., WSTR, Inc., WSTR Licensee,
Inc., WSYX, Inc., WTTE, Channel 28, Inc., WTTE, Channel 28 Licensee, Inc., WTTO,
Inc., WTTO Licensee, Inc., WTVZ, Inc., WTVZ Licensee, Inc., WYZZ, Inc. and WYZZ
Licensee, Inc., the corporations described in and which executed the foregoing
instrument; and that he signed his name thereto pursuant to authority of the
Boards of Directors of such corporations.
(NOTARIAL
SEAL)
/s/ Lonnie Reynolds
-----------------------------------
Comm. exp. 6/1/98
<PAGE>
STATE OF VIRGINIA)
) ss.:
CITY OF RICHMOND)
On the 30 day of July, 1997, before me personally came
Patricia A. Welling, to me known, who, being by me duly sworn, did depose and
say that he resides at Midlothian, Va.; that he is an authorized officer of
First Union National Bank of Maryland, one of the corporations described in and
which executed the above instrument; that he knows the corporate seal of such
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed pursuant to authority of the Board of Directors of such
corporation; and that he signed his name thereto pursuant to like authority.
(NOTARIAL
SEAL)
/s/ Nancy M. Tucker
---------------------------
My commission expires
June 30, 2001
<PAGE>
SCHEDULE I
EXISTING INDEBTEDNESS OF SINCLAIR BROADCAST GROUP, INC.
AND ITS RESTRICTED SUBSIDIARIES
1. Note, dated September 30, 1990, between Sinclair Broadcast Group, Inc.
(as borrower) and Julian S. Smith (as lender).
2. Term Note, dated September 30, 1990, between Sinclair Broadcast Group, Inc.
(as borrower) and Carolyn C. Smith (as lender).
3. Promissory Note, dated December 26, 1986, between Sinclair Broadcast Group,
Inc. (as borrower) and Frederick H. Hines, B. Stanley Resnick and Edward A.
Johnston (as representatives for the lenders).
4. Mortgage, dated April 8, 1981, between Sinclair Broadcast Group, Inc. (as
borrower) and Harry Rosen, as Trustee for Penn Montier Realty Company (as
lender), 1996, for the property located at 500 Seco Road, Monroeville,
Pennsylvania, deded to WPGH, Inc. on November 4, 1993.
5. Mortgage, dated September 30, 1981, between Sinclair Broadcast Group, Inc.
(as borrower) and Lafayette Life Insurance Company, expiring in October
1996, for the property located at 6130 Sunbury Road, Waterville, Ohio,
deeded to WPGH, Inc. and November 4, 1993.
6. Lease Agreement, dated January 1, 1991, between Chesapeake Television, Inc.
(as Lessee) and Keyser Investment Group, Inc.(as lessor), for space located
at 2000-2008 W. 41st Street, Baltimore, MA.
7. Lease Agreement, dated April 2, 1987, between Chesapeake Television, Inc.
(as lessee) and Cunningham Communications, Inc. (as lessor), for space
located on the primary Baltimore broadcasting tower at 3900 Hooper Avenue,
Baltimore, MA.
8. Lease Agreement, dated March 16, 1988, between Chesapeake Television, Inc.
(as lessee) and Cunningham Communications, Inc. (as lessor), for space
located on the back-up Baltimore broadcasting tower at 1200 N. Rolling
Road, Baltimore, MA.
9. Lease Agreement, dated September 23, 1993, between WPGH, Inc. (as lessee)
and Gerstell Development Limited Partnership (as lessor), for tower and
building space located at 750 Ivory Avenue, Pittsburgh, PA.
<PAGE>
10. Guaranty of Payment Agreement, dated October 15, 1993, by and between the
Company and Maryland National Bank, relating to Gerstell Development
Limited Partnership Loan from Maryland National Bank.
11. Indenture, dated as of December 9, 1993, as amended, among Sinclair
Broadcast Group, Inc. (as borrower), the Guarantors named therein (as
guarantors), and First Union National Bank of North Carolina (as trustee).
12. Option Agreement, dated as of December 16, 1994, between The Smith Brothers
and Chase Manhattan bank (National Association), which Option Agreement was
assigned by The Smith Brothers to the Company on June 12, 1993.
13. Indenture, dated as of August 28, 1995, as amended, among Sinclair
Broadcast Group, Inc. (as borrower), the Guarantors named therein, (as
guarantors), and United States Trust Company of New York (as trustee).
14. Amended and Restated Credit Agreement, dated as of May 20, 1997, between
Sinclair Broadcast Group, Inc. (as borrower), various subsidiaries of
Sinclair Broadcast Group, Inc. party thereto (as guarantors), various
lenders (as lenders) and The Chase Manhattan Bank (as agent).
<PAGE>
SCHEDULE II
EXISTING LIENS
1. Bank Credit Agreement.
2. Term Note dated September 30, 1990, between Sinclair Broadcast Group, Inc.
(as borrower) and Julian S. Smith (as lender).
3. Term Note dated September 30, 1990, between Sinclair Broadcast Group, Inc.
(as borrower) and Carolyn C. Smith (as lender).
<PAGE>
SCHEDULE III
EXISTING ENCUMBRANCES AND RESTRICTIONS
Notes
1. Encumbrances and restrictions under the Bank Credit Agreement, Founders'
Notes and Minority Note as in effect on August 28, 1995.
2. Restrictions under the Indenture dated as of December 9, 1993 in the
original principal amount of Two Hundred Million Dollars ($200,000,000.00)
by and among the Company and certain of its wholly-owned subsidiaries and
the First Union National Bank of North Carolina, as Trustee, as in effect
on August 28, 1995.
3. Indenture, dated as of August 28, 1995, as amended, among Sinclair
Broadcast Group, Inc. (as borrower), the Guarantors named therein, (as
guarantors), and United States Trust Company of New York (as trustee).
4. The restrictions, if any, contained in the terms of the Company's Series B
Convertible Preferred Stock.
5. The restrictions, if any, contained in the terms of the Company's Series C
Preferred Stock.
[UPDATE]
<PAGE>
EXHIBIT A
[Form of Restricted Securities Transfer Certificate]
RESTRICTED SECURITIES TRANSFER CERTIFICATE
(For transfers pursuant to Section 307(a) of
the Indenture referred to below)
First Union National Bank of Maryland,
as Securities Registrar
[ ]
[ ]
Re: 9% Senior Subordinated Notes Due 2007 (the "Securities")
Reference is made to the Indenture, dated as of July 2, 1997 (the
"Indenture"), among Sinclair Broadcast Group, Inc., a Maryland corporation, the
guarantors party thereto and First Union National Bank of Maryland, as trustee.
Terms used herein and defined in the Indenture 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 $_____________ aggregate principal amount
of Securities, which are evidenced by the following certificate(s) (the
"Specified Securities"):
CUSIP No(s). ___________________________
CERTIFICATE No(s). _____________________
CURRENTLY IN BOOK-ENTRY FORM: Yes ___ No ___ (check one)
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
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<PAGE>
the Specified Securities are represented by a Global Security, they are held
through a Depositary (except in the name of "The Depository Trust Company") 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 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 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. Accordingly, the Owner hereby further certifies
as:
(1) 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
(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
two years (computed in accordance with paragraph (d) of Rule
144) has elapsed since the date the Specified Securities were
acquired from the Company or from an affiliate (as such term
is defined in Rule 144) of the Company, whichever is later,
and is being effected in accordance with the applicable
amount, manner of sale and notice requirements of paragraphs
(e), (f) and (h) of Rule 144;
(B) the transfer is occurring after a holding period by the Owner
of at least two years has elapsed since the date the Specified
Securities were acquired from the Company or from an affiliate
(as such term is defined in Rule 144) 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; or
<PAGE>
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
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.)
<PAGE>
EXHIBIT B
INTERCOMPANY NOTE
_________ __, 1997
Evidences of all loans or advances ("Loans") hereunder shall
be reflected on the grid attached hereto. FOR VALUE RECEIVED, _____________, a
__________ corporation (the "Maker"), HEREBY PROMISES TO PAY ON DEMAND to the
order of ______________ (the "Holder") the principal sum of the aggregate unpaid
principal amount of all Loans (plus accrued interest thereon) at any time and
from time to time made hereunder to which has not been previously paid.
All capitalized terms used herein that are defined in, or by
reference in, the Indenture among Sinclair Broadcast Group, Inc., a Maryland
corporation (the "Company"), the guarantors party thereto and First Union
National Bank of Maryland, as trustee, dated as of July 2, 1997 (the
"Indenture"), have the meanings assigned to such terms therein, or by reference
therein, unless otherwise defined.
ARTICLE I
TERMS OF INTERCOMPANY NOTE
Section 1.01 Note Forgivable. Unless the Maker of the Loan
hereunder is either of the Company or any Guarantor, the Holder may not forgive
any amounts owing under this intercompany note.
Section 1.02 Interest; Prepayment. (a) The interest rate
("Interest Rate") on the Loans shall be a rate per annum reflected on the grid
attached hereto.
(b) The interest, if any, payable on each of the Loans shall
accrue from the date such Loan is made and, subject to Section 2.01, shall be
payable upon demand of the Holder.
(c) If the principal or accrued interest, if any, of the
Loans is not paid on the date demand is made, interest on the unpaid principal
and interest will accrue at a rate equal to the Interest Rate, if any, plus 100
basis points per annum from maturity until the principal and interest on such
Loans are fully paid.
(d) Subject to Section 2.01, any amounts hereunder may be
prepaid at any time by the Maker.
Section 1.03. Subordination. All loans made to either of the
Company or any Guarantor shall be subordinated in right of payment to the
payment and performance of the obligations of the Company and any Subsidiary
under the Indenture, the Securities, the Guarantees or any other Indebtedness
ranking senior to or pari passu with the Securities, or any
<PAGE>
Guarantors, including, without limitation, any Indebtedness incurred under the
Bank Credit Agreement; provided that with respect to a Subsidiary in any
specific instance, such Subsidiary is also an obligor under the Indenture, the
Securities, a Guarantee or such other senior or pari passu Indebtedness, as the
case may be, whether as a borrower, guarantor or pledgor of collateral.
ARTICLE II
EVENTS OF DEFAULT
Section 2.01. Events of Default. If after the date of issuance
of this Loan (i) an Event of Default has occurred under the Indenture, (ii) an
"Event of Default" (as defined) has occurred under the Bank Credit Agreement, or
any refinancing of the Bank Credit Agreement or (iii) an "event of default" (as
defined) on any other Indebtedness of the Company or any Guarantor then (x) in
the event of the Maker is not either one of the Company or a Guarantor, all
amounts owing under the Loans hereunder shall be immediately due and payable to
the Holder, and (y) in the event the Maker is either the Company or, the amounts
owing under the Loans hereunder shall not be due and payable, the amounts owing
under the Loans hereunder shall not be due and payable; provided, however, that
if such Event of Default or event of default has been waived, cured or
rescinded, such amounts shall no longer be due and payable in the case of clause
(x), and such amounts may be payable in the case of clause (y). If the Holder is
a Subsidiary, then the Holder hereby agrees that if it receives any payments or
distributions on any Loan from the Company or a Guarantor which is not payable
pursuant to clause (y) of the prior sentence after any Event of Default or event
or default described in clauses (i), (ii) or (iii) above has occurred, is
continuing and has not been waived, cured or rescinded, it will pay over and
deliver forthwith to the Company or such Guarantor, as the case may be, all such
payments and distributions.
ARTICLE III
MISCELLANEOUS
Section 3.01 Amendments, Etc. No amendment or waiver of any
provision of this intercompany note, or consent to depart herefrom is permitted
at any time for any reason, except with the consent of the Holders of not less
than a majority in aggregate principal amount of the Outstanding Securities.
Section 3.02 Assignment. No party to this Agreement may
assign, in whole or in part, any of its rights and obligations under this
intercompany note, except to its legal successor in interest.
Section 3.03 Third Party Beneficiaries. The holders of the
Securities or any other Indebtedness ranking pari passu with or senior to, the
Securities or any Guarantees, including without limitation, any Indebtedness
incurred under the Bank Credit Agreement, shall be third party beneficiaries to
this intercompany note and shall have the right to enforce this intercompany
note against the Company or any of their Subsidiaries.
<PAGE>
Section 3.04 Headings. Article and Section headings in this
intercompany note are included for convenience of reference only and shall not
constitute a part of this intercompany note for any other purpose.
Section 3.05 Entire Agreement. This intercompany note sets
forth the entire agreement or the parties with respect to its subject matter and
supersedes all previous understandings, written or oral, in respect thereof.
Section 3.06 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT
GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF).
Section 3.07 Waivers. The Maker hereby waives presentment,
demand for payment, notice of protest and all other demands and notices in
connection with the delivery, acceptance, performance or enforcement hereof.
By:______________________________
<PAGE>
BORROWINGS, MATURITIES, AND PAYMENTS OF PRINCIPAL
Amount of Maturity of Amount Unpaid
Borrowing/ Borrowing/ Principal Paid Principal Notation
Date Principal Principal or Prepaid Balance Made by
REGISTRATION RIGHTS AGREEMENT
Among
Sinclair Broadcast Group, Inc.,
Chesapeake Television, Inc.
Chesapeake Television Licensee, Inc.
FSF-TV, Inc.,
KABB Licensee, Inc.,
KDNL Licensee, Inc.,
KSMO, Inc.,
KSMO Licensee, Inc.,
KUPN Licensee, Inc.,
SCI-Indiana Licensee, Inc.,
SCI-Sacramento Licensee, Inc.,
Sinclair Communications, Inc.,
Sinclair Radio of Albuquerque, Inc.,
Sinclair Radio of Albuquerque Licensee, Inc.,
Sinclair Radio of Buffalo, Inc.,
Sinclair Radio of Buffalo Licensee, Inc.,
Sinclair Radio of Greenville, Inc.,
Sinclair Radio of Greenville Licensee, Inc.,
Sinclair Radio of Los Angeles, Inc.,
Sinclair Radio of Los Angeles Licensee, Inc.,
Sinclair Radio of Memphis, Inc.,
Sinclair Radio of Memphis Licensee, Inc.,
Sinclair Radio of Nashville, Inc.,
Sinclair Radio of Nashville Licensee, Inc.,
Sinclair Radio of New Orleans, Inc.,
Sinclair Radio of New Orleans Licensee, Inc.,
Sinclair Radio of St. Louis, Inc.,
Sinclair Radio of St. Louis Licensee, Inc.,
Sinclair Radio of Wilkes-Barre, Inc.,
Sinclair Radio of Wilkes-Barre Licensee, Inc.,
Superior Communications of Kentucky, Inc.,
Superior Communications of Oklahoma, Inc.,
Superior KY License Corp.,
Superior OK License Corp.,
Tuscaloosa Broadcasting Inc.,
WCGV, Inc.,
WCGV Licensee, Inc.,
WDBB, Inc.,
<PAGE>
WLFL, Inc.,
WLFL Licensee, Inc.,
WLOS Licensee, Inc.,
WPGH, Inc.,
WPGH Licensee, Inc.,
WSMH, Inc.,
WSMH Licensee, Inc.,
WSTR, Inc.,
WSTR Licensee, Inc.,
WSYX, Inc.,
WTTE, Channel 28, Inc.,
WTTE, Channel 28 Licensee, Inc.,
WTTO, Inc.,
WTTO Licensee, Inc.,
WTVZ, Inc.,
WTVZ Licensee, Inc.,
WYZZ, Inc.,
and
WYZZ Licensee, Inc.,
Smith Barney Inc.,
Chase Securities Inc.,
Salomon Brothers Inc.
and
Furman Selz
Dated as of July 2, 1997
<PAGE>
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated as of July
2, 1997, by and among Sinclair Broadcast Group, Inc., a Maryland corporation
("Sinclair" or the "Company"), the Guarantors (as defined below), and Smith
Barney Inc., Chase Securities Inc., Salomon Brothers Inc and Furman Selz, as the
initial purchasers (the "Initial Purchasers") of the Company's 9% Senior
Subordinated Notes due 2007 (the "Notes"), which are guaranteed (the
"Guarantees") by the following subsidiaries of the Company: Chesapeake
Television, Inc., a Maryland corporation, Chesapeake Television Licensee, Inc.,
a Delaware corporation, FSF-TV, Inc., a North Carolina corporation, KABB
Licensee, Inc., a Delaware corporation, KDNL Licensee, Inc., a Delaware
corporation, KSMO, Inc., a Maryland corporation, KSMO Licensee, Inc., a Delaware
corporation, KUPN Licensee, Inc., a Maryland corporation, SCI-Indiana Licensee,
Inc., a Delaware corporation, SCI-Sacramento Licensee, Inc., a Delaware
corporation, Sinclair Communications, Inc., a Maryland corporation, Sinclair
Radio of Albuquerque, Inc., a Maryland corporation, Sinclair Radio of
Albuquerque Licensee, Inc., a Delaware corporation, Sinclair Radio of Buffalo,
Inc., a Maryland corporation, Sinclair Radio of Buffalo Licensee, Inc., a
Delaware corporation, Sinclair Radio of Greenville, Inc., a Maryland
corporation, Sinclair Radio of Greenville Licensee, Inc., a Delaware
corporation, Sinclair Radio of Los Angeles, Inc., a Maryland corporation,
Sinclair Radio of Los Angeles Licensee, Inc., a Delaware corporation, Sinclair
Radio of Memphis, Inc., a Maryland corporation, Sinclair Radio of Memphis
Licensee, Inc., a Delaware corporation, Sinclair Radio of Nashville, Inc., a
Maryland corporation, Sinclair Radio of Nashville Licensee, Inc., a Delaware
corporation, Sinclair Radio of New Orleans, Inc., a Maryland corporation,
Sinclair Radio of New Orleans Licensee, Inc., a Delaware corporation, Sinclair
Radio of St. Louis, Inc., a Maryland corporation, Sinclair Radio of St. Louis
Licensee, Inc., a Delaware corporation, Sinclair Radio of Wilkes-Barre, Inc., a
Maryland corporation, Sinclair Radio of Wilkes-Barre Licensee, Inc., a Delaware
corporation, Superior Communications of Kentucky, Inc., a Delaware corporation,
Superior Communications of Oklahoma, Inc., an Oklahoma corporation, Superior KY
License Corp., a Delaware corporation, Superior OK License Corp., a Delaware
corporation, Tuscaloosa Broadcasting, Inc., a Maryland corporation, WCGV, Inc.,
a Maryland corporation, WCGV Licensee, Inc., a Delaware corporation, WDBB, Inc.,
a Maryland corporation, WLFL, Inc., a Maryland corporation, WLFL Licensee, Inc.,
a Delaware corporation, WLOS Licensee, Inc., a Delaware corporation, WPGH, Inc.,
a Maryland corporation, WPGH Licensee, Inc., a Maryland corporation, WSMH, Inc.,
a Maryland corporation, WSMH Licensee, Inc., a Delaware corporation, WSTR, Inc.,
a Maryland corporation, WSTR Licensee, Inc., a Maryland corporation, WSYX, Inc.,
a Maryland corporation, WTTE, Channel 28, Inc., a Maryland corporation, WTTE,
Channel 28 Licensee, Inc., a Maryland corporation, WTTO, Inc., a Maryland
corporation, WTTO Licensee, Inc., a Delaware corporation, WTVZ, Inc., a Maryland
corporation, WTVZ Licensee, Inc., a Maryland corporation, WYZZ, Inc., a Maryland
corporation, and WYZZ Licensee, Inc., a Delaware corporation (each a "Guarantor"
and collectively the "Guarantors").
This Agreement is made pursuant to the Purchase Agreement, dated June
24, 1997, among
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<PAGE>
the Company, the Guarantors and the Initial Purchasers (the "Purchase
Agreement"), which provides for the sale by the Company to the Initial
Purchasers of $200,000,000 aggregate principal amount of the Company's 9% Senior
Subordinated Notes due 2007 (the "Notes"), which Notes are guaranteed (the
"Guarantees") to the extent set forth in the Indenture (as defined below), the
Notes and the Guarantees.
In order to induce the Initial Purchasers to enter into the Purchase
Agreement, the Company and the Guarantors have agreed to provide to the Initial
Purchasers and their direct and indirect transferees the registration rights
with respect to the Notes and the Guarantees as set forth in this Agreement. The
execution of this Agreement is a condition to the closing under the Purchase
Agreement.
1. Definitions.
As used in this Agreement, the following capitalized defined terms shall
have the following meanings:
"Business Day" means any day other than (i) a Saturday or a Sunday, (ii)
a day on which banking institutions in Maryland or The City of New York are
authorized or obligated by law or executive order to close or (iii) a day on
which the office of the trustee or transfer agent, as the case may be, or an
affiliate or agent thereof at which at any particular time the corporate trust
business for the purposes of the Indenture shall be principally administered is
closed for business.
"Closing Date" shall mean the date on which the Notes are initially
issued by the Company and the Guarantees are initially issued by the Guarantors,
in each case, to the Initial Purchasers.
"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.
"Company" shall have the meaning set forth in the preamble.
"Effective Time", in the case of (i) an Exchange Offer, shall mean the
time and date as of which the Commission declares the Exchange Offer
Registration Statement effective or as of which the Exchange Offer Registration
Statement otherwise becomes effective and (ii) a Shelf Registration, shall mean
the time and date as of which the Commission declares the Shelf Registration
effective or as of which the Shelf Registration otherwise becomes effective.
"Exchange Act" shall mean the Securities Exchange Act of 1934, or any
successor thereto, and the rules, regulations and forms promulgated thereunder,
all as the same shall be amended from time to time.
"Exchange Date" shall have the meaning set forth in Section 2(a)(ii).
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<PAGE>
"Exchange Guarantees" shall have the meaning assigned thereto in Section
2(a) hereof.
"Exchange Notes" shall have the meaning assigned thereto in Section 2(a)
hereof.
"Exchange Offer" shall have the meaning assigned thereto in Section 2(a)
hereof.
"Exchange Offer Registration" shall mean a registration under the
Securities Act effected pursuant to Section 2(a) hereof.
"Exchange Offer Registration Statement" shall mean an exchange offer
registration statement of the Company and the Guarantors on Form S-4 (or, if
applicable, on another appropriate form) which covers all of the Exchange
Securities, and all amendments and supplements to such registration statement,
including post-effective amendments, in each case including the Prospectus
contained therein, all exhibits thereto and all material incorporated by
reference therein.
"Exchange Securities" shall have the meaning assigned thereto in Section
2(a) hereof.
"Guarantees" shall have the meaning set forth in the preamble.
"Guarantors" shall have the meaning set forth in the preamble.
"Holder" shall mean any Initial Purchaser for so long as it owns any
Registrable Securities, and each of its successors, assigns and direct and
indirect transferees who become registered owners of Registrable Securities;
provided, that for purposes of Sections 4 and 5 of this Agreement, the term
"Holder" shall include Participating Broker-Dealers (as defined in Section
4(a)).
"Holders' Information" shall have the meaning assigned thereto in
Section 5(a) hereof.
"Indenture" shall mean the Indenture, dated as of July 2, 1997, among
the Company, the Guarantors and First Union National Bank of Maryland, as
trustee, as the same shall be amended from time to time.
"Initial Purchasers" shall have the meaning set forth in the preamble.
"Majority Holders" shall mean the Holders of a majority of the aggregate
principal amount of outstanding Registrable Securities; provided that, for
purposes of Section 6(a), whenever the consent or approval of Holders of a
specified percentage of Registrable Securities is required hereunder,
Registrable Securities held by the Company, its subsidiaries or any of their
respective affiliates (as such term is defined in Rule 405 under the Securities
Act) (other than the Initial Purchasers or subsequent Holders of Registrable
Securities if such subsequent Holders are deemed to be such affiliates solely by
reason of their holding of such Registrable Securities) shall
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<PAGE>
not be counted in determining whether such consent or approval was given by the
Holders of such required percentage or amount.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"Notes" shall have the meaning set forth in the preamble.
"Offer Termination Date" shall have the meaning set forth in Section
2(a)(iii).
"Participating Broker-Dealer" shall have the meaning set forth in
Section 4(a) hereof.
"Penalty Interest" shall have the meaning assigned thereto in Section
2(d) hereof.
"Person" shall mean an individual, partnership, corporation, trust or
unincorporated organization, or a government or agency or political subdivision
thereof.
"Prescribed Time Period" shall have the meaning set forth in Section
2(d)(i).
"Prospectus" shall mean the prospectus included in a Registration
Statement, including any preliminary prospectus, and any such prospectus as
amended or supplemented by any prospectus supplement, including a prospectus
supplement with respect to the terms of the offering of any portion of the
Registrable Securities covered by a Shelf Registration Statement, and by all
other amendments and supplements to such prospectus, and in each case including
all material incorporated by reference therein.
"Purchase Agreement" shall have the meaning set forth in the preamble.
"Registrable Securities" shall mean the Securities; provided, however,
that any such Securities shall cease to be Registrable Securities (i) when a
Registration Statement with respect to such Registrable Securities shall have
been declared effective under the Securities Act and such Securities shall have
been disposed of or exchanged pursuant to such Registration Statement, (ii) upon
the expiration of the Exchange Offer period with respect to any Exchange Offer
Registration Statement if all Registrable Securities validly tendered in
connection with such Exchange Offer shall have been exchanged for Exchange
Securities, (iii) when such Securities have been sold or are eligible for sale
to the public pursuant to Rule 144(k) (or any similar provision then in force,
but not Rule 144A) under the Securities Act or (iv) when such Securities shall
have ceased to be outstanding; provided, however, that if an opinion of counsel
to the effect described in Section 2(d)(i)(B) is delivered to the Company and
the Guarantors, then such Securities held by the Initial Purchasers shall not
cease to be Registrable Securities solely by reason of clause (ii) above.
"Registration Default" shall have the meaning assigned thereto in
Section 2(d) hereof.
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"Registration Expenses" shall mean any and all expenses incident to
performance of or compliance by the Company and the Guarantors with this
Agreement, including without limitation: (i) all Commission, stock exchange or
NASD registration and filing fees, (ii) all fees and expenses incurred in
connection with compliance with state securities or blue sky laws, (iii) all
expenses of any Person in preparing or assisting in preparing, word processing,
printing and distributing, at the request of the Company and the Guarantors, any
Registration Statement, any Prospectus, any amendments or supplements thereto,
(iv) all fees and disbursements relating to the qualification of the Indenture
and the Guarantors under applicable securities laws, (v) the fees and
disbursements of the Trustee and its counsel and of any escrow agent as
custodian, (vi) the fees and disbursements of counsel for the Company and the
reasonable fees and disbursements of one counsel for the Holders in connection
with an Exchange Offer Registration Statement and a Shelf Registration
Statement, (vii) the fees and disbursements of the independent public
accountants of the Company and the Guarantors, including the expenses of any
special audits or "cold comfort" letters required by or incident to such
performance and compliance, but excluding underwriting discounts, if any, and
commissions and transfer taxes, if any, relating to the sale or disposition of
Registrable Securities by a Holder and (viii) fees, disbursements and expenses
of any "qualified independent underwriter" engaged, if any.
"Registration Statement" shall mean any registration statement of the
Company and the Guarantors that covers any of the Exchange Securities or
Registrable Securities pursuant to the provisions of this Agreement and all
amendments and supplements to any such Registration Statement, including
post-effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated by reference
therein.
"Resale Period" shall have the meaning assigned thereto in Section 2(a)
hereof.
"Restricted Holder" shall mean (i) a holder that is an affiliate of the
Company or any of the Guarantors within the meaning of Rule 405, (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.
"Rule 144," "Rule 144A," "Rule 174," "Rule 405," "Rule 415," and "Rule
424" shall mean, in each case, such rule promulgated under the Securities Act.
"Securities" shall mean collectively, the Notes and the Guarantees.
"Securities Act" shall mean the Securities Act of 1933, or any successor
thereto, and the rules, regulations and forms promulgated thereunder, all as the
same shall be amended from time to time.
"Shelf Registration" shall mean a registration under the Securities Act
effected pursuant to Section 2(b) hereof.
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<PAGE>
"Shelf Registration Statement" shall mean a "shelf" registration
statement of the Company and the Guarantors pursuant to the provisions of
Section 2(b) of this Agreement which covers all of the Registrable Securities on
an appropriate form under Rule 415 under the Securities Act, or any similar rule
that may be adopted by the Commission, and all amendments and supplements to
such registration statement, including post-effective amendments, in each case
including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.
"Trustee" means First Union National Bank of Maryland, as trustee under
the Indenture.
"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.
Unless the context otherwise requires, any reference herein to a
"Section" or "clause" refers to a Section or clause, as the case may be, of this
Agreement, and the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Section or other subdivision. Unless the context otherwise requires, any
reference to a statute, rule or regulation shall be deemed to be a statute, rule
or regulation (including any successor statute, rule or regulation thereto) as
it may be amended from time to time.
2. Registration under the Securities Act.
(a) Except as set forth in Section 2(b) below, the Company and
the Guarantors agree to use their best efforts to file under the Securities Act
as soon as practicable after the Closing Date, but in no event later than 60
days after such date, an Exchange Offer Registration Statement relating to an
offer by the Company and the Guarantors to exchange (the "Exchange Offer") (i)
any and all of the Notes for a like aggregate amount of notes issued by the
Company, which notes are identical in all material respects to the Notes (the
"Exchange Notes"), except that the Exchange Notes have been registered pursuant
to an effective registration statement under the Securities Act, do not contain
restrictions on transfers (except as they may be held by Restricted Holders) and
provide for the additional interest contemplated in Section 2(d) below for any
periods before such exchange and (ii) any and all of the Guarantees for like
guarantees by the Guarantors, which guarantees are identical to the Guarantees
(the "Exchange Guarantees," and together with the Exchange Notes, the "Exchange
Securities") except that they have been registered pursuant to an effective
registration statement under the Securities Act and do not contain restrictions
on transfers. The Company and the Guarantors agree to use their best efforts to
cause the Exchange Offer Registration Statement to become effective under the
Securities Act as soon as practicable after the filing of the Exchange Offer
Registration Statement but in no event later than 120 days after the Closing
Date. The Exchange Offer will be registered under the Securities Act on the
appropriate form and will comply with all applicable tender offer and other
rules and regulations under the Exchange Act. The Company and the Guarantors
further agree to use their best efforts to commence and consummate the Exchange
Offer promptly after the
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<PAGE>
Exchange Offer Registration Statement has become effective, hold the Exchange
Offer open for not less than 20 Business Days (or longer, if required by
applicable law) after the date notice of the Exchange Offer has been mailed to
Holders and exchange Exchange Securities for all Securities that have been
properly tendered and not withdrawn on or prior to the expiration of the
Exchange Offer and to consummate such Exchange Offer within 165 days after the
Closing Date. The Exchange Offer will be deemed to have been completed, as the
case may be, only if the Exchange Securities received by Holders other than
Restricted Holders in the Exchange Offer are, upon receipt, transferable by each
such Holdr without restriction under the Securities Act and the Exchange Act and
without material restrictions under the blue sky or securities laws of the
States of the United States of America. The Exchange Offer shall be deemed to
have been completed upon the Company and the Guarantors having exchanged,
pursuant to the Exchange Offer, the Exchange Securities for all outstanding
Securities, pursuant to the Exchange Offer, properly tendered and not withdrawn
before the expiration of the Exchange Offer, which shall be on a date that is
not less than 20 Business Days (or longer, if required by applicable law)
following the commencement of the Exchange Offer. The Company and the Guarantors
shall commence the Exchange Offer by mailing the related exchange offer
Prospectus and accompanying documents to each Holder stating, in addition to
such other disclosures as are required by applicable law:
(i) that the Exchange Offer is being made pursuant to this
Agreement and that all Registrable Securities validly tendered will be
accepted for exchange;
(ii) the dates of acceptance for exchange (which shall be a
period of at least 20 Business Days from the date such notice is
mailed) (each such date being an "Exchange Date");
(iii) that a Holder electing to have Registrable Securities
exchanged pursuant to the Exchange Offer will be required to surrender
such Registrable Securities, together with the enclosed letters of
transmittal, to the institution and at the address specified in the
notice prior to the close of business on the last Exchange Date (the
"Offer Termination Date"); and
(iv) that a Holder will be entitled to withdraw his election, not
later than the close of business on the Offer Termination Date, by
sending to the institution and at the address specified in the notice
a telegram, telex, facsimile transmission or letter setting forth the
name of such Holder, the principal amount of Registrable Securities
delivered for exchange and a statement that such Holder is withdrawing
its election to have such Registrable Securities exchanged.
As soon as practicable after the Offer Termination Date, the Company and
the Guarantors shall:
(A) accept for exchange Registrable Securities or portions
thereof tendered and not validly withdrawn pursuant to the Exchange Offer; and
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<PAGE>
(B) deliver, or cause to be delivered, to the Trustee for
cancellation all Registrable Securities or portions thereof so accepted for
exchange by the Company and the Guarantors and issue, and cause the Trustee to
promptly authenticate and mail to each Holder who has properly tendered and not
withdrawn Registrable Securities pursuant to the Exchange Offer, an Exchange
Security in aggregate principal amount equal to the aggregate principal amount
of the Registrable Securities surrendered by such Holder. The Company shall use
its best efforts to complete the Exchange Offer as provided above and shall
comply with the applicable requirements of the Securities Act, the Exchange Act
and other applicable laws and regulations in connection with the Exchange Offer.
The Exchange Offer shall not be subject to any conditions, other than that the
Exchange Offer does not violate applicable law or any applicable interpretation
of the staff of the Commission. The Company shall inform the Initial Purchasers
of the names and addresses of the Holders to whom the Exchange Offer is made,
and the Initial Purchasers shall have the right, subject to applicable law, to
contact such Holders and otherwise facilitate the tender of Registrable
Securities in the Exchange Offer.
Each Holder of Securities participating in the Exchange Offer shall be
required to represent to the Company and the Guarantors that at the time of the
consummation of the Exchange Offer (i) such Holder is not an "affiliate" of the
Company or any Guarantor within the meaning of Rule 405 under the Securities
Act, (ii) the Exchange Securities being acquired by it pursuant to the Exchange
Offer are being obtained in the ordinary course of the business of the person
receiving such Exchange Securities and (iii) such Holder has no arrangement or
understanding with any Person to participate in the distribution of the Exchange
Securities. If such Holder is a Participating Broker-Dealer that will receive
Exchange Securities for its own account in exchange for the Registrable
Securities that were acquired as a result of market-making activities or other
trading activities, it will be required to acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Securities.
(b) In the event that (i) due to a change in applicable law or
current interpretations by the Commission, the Company and the Guarantors are
not permitted to effect the Exchange Offer for all of the Securities, (ii) the
Exchange Offer for all of the Securities is not for any other reason consummated
within 165 days after the Closing Date, or (iii) any Holder shall, within 30
days after consummation of the Exchange Offer, notify the Company and the
Guarantors that such Holder (x) is prohibited by applicable law or Commission
policy from participating in the Exchange Offer, (y) may not resell Exchange
Securities acquired by it in the Exchange Offer to the public without delivering
a prospectus and that the Prospectus contained in the Exchange Offer
Registration Statement is not appropriate or available for such resales by such
Holder or (z) is a broker-dealer and holds Securities acquired directly from the
Company and Guarantors or an "affiliate" of the Company or any Guarantor, then
in addition to or in lieu of conducting the Exchange Offer contemplated by
Section 2(a), or (iv) at the request of any of the Initial Purchasers, the
Company and the Guarantors will be required to file a "shelf" registration
statement (a "Shelf Registration Statement") covering resales (a) by the Holders
of Registrable Securities in the event the Company and the Guarantors are not
permitted to effect the Exchange
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<PAGE>
Offer pursuant to the foregoing clause (i) or the Exchange Offer is not
consummated within 165 days after the Closing Date pursuant to the foregoing
clauses (i) or (ii) or (b) by the Holders of Registrable Securities with respect
to which the Company and the Guarantors receive notice pursuant to the foregoing
clauses (iii) or (iv). The Trustee will promptly deliver to the Holders written
notice that the Company and the Guarantors will be complying with the provisions
of this Section 2(b). The Company and the Guarantors agree to use their best
efforts to cause the Shelf Registration to become or be declared effective and
to keep such Shelf Registration continuously effective for a period of time
ending on the second anniversary of the Effective Time (the "Effective Period")
or such shorter period that will terminate when all of the Registrable
Securities covered by the Shelf Registration Statement have been sold pursuant
to the Shelf Registration Statement. The Company and the Guarantors shall, if
they file a Shelf Registration Statement, provide to each Holder of the
Registrable Securities copies of the Prospectus contained therein and notify
each such Holder when the Shelf Registration Statement has become effective. The
Company and the Guarantors further agree to supplement or make amendments to the
Shelf Registration Statement, as and when required by the rules, regulations or
instructions applicable to the registration form used by the Company and the
Guarantors for such Shelf Registration Statement or by the Securities Act or
rules and regulations thereunder for shelf registrations, and the Company and
the Guarantors agree 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) The Company and the Guarantors shall, jointly and
severally, pay all Registration Expenses in connection with the registration
pursuant to Section 2(a) or Section 2(b). Each Holder shall pay all underwriting
discounts, if any, and commissions and transfer taxes, if any, relating to the
sale or disposition of such Holder's Registrable Securities pursuant to the
Exchange Offer Registration Statement or a Shelf Registration Statement, as the
case may be.
(d) An Exchange Offer Registration Statement pursuant to
Section 2(a) hereof or a Shelf Registration Statement pursuant to Section 2(b)
hereof will not be deemed to have become effective unless it has been declared
effective by the Commission; provided, however, that, if, after it has been
declared effective, the offering of Registrable Securities pursuant to an
Exchange Offer Registration Statement or a Shelf Registration Statement is
interfered with by any stop order, injunction or other order or requirement of
the Commission or any other governmental agency or court, such Registration
Statement will be deemed not to have been effective during the period of such
interference until the offering of Registrable Securities pursuant to such
Registration Statement may legally resume. If the Company and the Guarantors
shall fail to comply with this Agreement or if the Exchange Offer Registration
Statement or the Shelf Registration fails to become effective (any such event, a
"Registration Default"), then, as liquidated damages, registration default
interest (the "Penalty Interest"), shall become payable in respect of the Notes
as follows:
(i) (A) if an Exchange Offer Registration Statement or, in the
event of a change in applicable law or due to current interpretations by
the Commission the Company and the Guarantors are not permitted to
effect the Exchange Offer, a Shelf Registration
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<PAGE>
Statement, is not filed within 60 days following the Closing Date, (B)
in the event that within the 30 days after consummation of the Exchange
Offer, any Holder of the Registrable Securities shall notify the Company
and the Guarantors that such Holder (x) is prohibited by applicable law
or Commission policy from participating in the Exchange Offer, (y) may
not resell Exchange Securities acquired by it in the Exchange Offer to
the public without delivering a prospectus and that the Prospectus
contained in the Exchange Offer Registration Statement is not
appropriate or available for such resales by such Holder or (z) is a
broker-dealer and holds Securities acquired directly from the Company
and the Guarantors or an "affiliate" of the Company or any Guarantor and
a Shelf Registration Statement is not filed within 60 days after such
notice or (C) upon the request of an Initial Purchaser, a Shelf
Registration Statement is not filed within 60 days after such request,
then commencing on either the 61st day after the Closing Date or the
expiration of either of the 60-day time periods set forth in clauses (B)
and (C) above (either, a "Prescribed Time Period"), as the case may be,
Penalty Interest shall be accrued on the Notes over and above the stated
payment rates thereon at a rate of .50% per annum for the first 90 days
immediately following either the 61st day after the Closing Date or the
expiration of the Prescribed Time Period, as the case may be, such
Penalty Interest rate increasing by an additional .25% per annum at the
beginning of each subsequent 90-day period;
(ii) if an Exchange Offer Registration Statement or a Shelf
Registration Statement is filed pursuant to clause (i) of the preceding
full paragraph and is not declared effective within either 120 days
following the Closing Date or 60 days following the expiration of the
Prescribed Time Period, as the case may be, then commencing on the 121st
day after either the Closing Date or the 61st day following the
expiration of the Prescribed Time Period, as the case may be, Penalty
Interest shall be accrued on the Notes over and above the accrued stated
payment rates thereon at a rate of .50% per annum for the first 90 days
immediately following the 121st day after either the Closing Date or the
61st day after the expiration of the Prescribed Time Period, as the case
may be, such Penalty Interest rate increasing by an additional .25% per
annum at the beginning of each subsequent 90-day period; and
(iii) if either (A) the Company and the Guarantors have not
exchanged Exchange Securities for all Securities validly tendered in
accordance with the terms of the Exchange Offer on or prior to 165 days
after the Closing Date, or (B) if applicable, a Shelf Registration
Statement has been declared effective and such Shelf Registration
Statement ceases to be effective prior to the end of the Effective
Period, or such shorter period that will terminate when all of the
Securities covered by the Shelf Registration Statement have been sold
pursuant to the Shelf Registration Statement, then, subject to certain
exceptions, Penalty Interest shall be accrued on the Notes over and
above the stated payment rates at a rate of .50% per annum for the first
60 days immediately following the (x) the 166th day after the Closing
Date in the case of (A) above or (y) the day such Shelf Registration
Statement ceases to be effective in the case of (B) above, such Penalty
Interest rate increasing by an additional .25% per annum at the
beginning of each subsequent 90-day period;
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<PAGE>
provided, however, that the Penalty Interest rate on any of the applicable Notes
may not exceed 1.5% per annum; and provided further, that (1) upon the filing of
the Exchange Offer Registration Statement or a Shelf Registration Statement (in
the case of (i) above), (2) upon the effectiveness of the Exchange Offer
Registration Statement or a Shelf Registration Statement (in the case of (ii)
above), or (3) upon the exchange of Exchange Securities for all Securities
tendered into the Exchange Offer or upon the effectiveness of the Shelf
Registration Statement which had ceased to remain effective prior to the end of
the Effective Period (in the case of (iii) above), Penalty Interest as a result
of such clause (i), (ii) or (iii) shall cease to accrue.
Any Penalty Interest due pursuant to clause (i), (ii) or (iii) above
will be payable in cash on the various payment dates related to the Notes. The
Penalty Interest will be determined by multiplying the applicable Penalty
Interest rate by the principal amount of the Notes multiplied by a fraction, the
numerator of which is the number of days such Penalty Interest rate was
applicable during such period, and the denominator of which is 360.
If the Company and the Guarantors effect the Exchange Offer, the Company
and the Guarantors will be entitled to close the Exchange Offer provided that it
has accepted all Registrable Securities theretofore validly tendered in
accordance with the terms of the Exchange Offer. Registrable Securities not
tendered in the Exchange Offer shall bear interest at the same rate as in effect
at the time of issuance of the Registrable Securities.
(e) Without limiting the remedies available to the Initial
Purchasers and the Holders, the Company and the Guarantors acknowledge that any
failure by the Company and the Guarantors to comply with their obligations under
Section 2(a) and Section 2(b) hereof may result in material irreparable injury
to the Holders for which there is no adequate remedy at law, that it will not be
possible to measure damage for such injuries precisely and that, in the event of
any such failure, the Initial Purchasers or any Holder may obtain such relief as
may be required to specifically enforce the Company's and the Guarantors'
obligations under Section 2(a) and Section 2(b) hereof.
3. Registration Procedures.
In connection with the obligations of the Company and the Guarantors
with respect to the Registration Statements pursuant to Section 2(a) and Section
2(b) hereof, the Company and the Guarantors shall as promptly as practicable:
(a) prepare and file with the Commission a Registration
Statement on the appropriate form under the Securities Act, which form shall (x)
be selected by the Company and the Guarantors, (y) in the case of a Shelf
Registration, be available for the sale of the Registrable Securities by the
selling Holders thereof and (z) comply as to form in all material respects with
the requirements of the applicable form and include all financial statements
required by the Commission to be filed therewith or incorporated by reference
therein, as the case may be, and use their best efforts to cause such
Registration Statement to become effective and remain
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<PAGE>
effective as promptly as practicable in accordance with Section 2 hereof;
(b) prepare and file with the Commission such amendments and
post-effective amendments to each Registration Statement as may be necessary to
keep such Registration Statement effective for the applicable period and cause
each Prospectus to be supplemented by any required prospectus supplement and, as
so supplemented, to be filed pursuant to Rule 424 under the Securities Act or,
in the case of a Shelf Registration, file, or cause to be filed, promptly all
reports required to be filed pursuant to Section 13(a), 13(c), 14 or 15(d) of
the Exchange Act required to be incorporated by reference therein; and keep each
Prospectus current during the period described under Section 4(3) and Rule 174
under the Securities Act that is applicable to transactions by brokers or
dealers with respect to the Registrable Securities or Exchange Securities;
(c) in the case of a Shelf Registration, furnish to each
Holder of Registrable Securities to which such Shelf Registration Statement
relates, to counsel for the Initial Purchasers and to counsel for the Holders,
without charge, one conformed copy of the Shelf Registration Statement (and any
post-effective amendment thereto) and exhibits thereto and as many copies of
each Prospectus, including each preliminary Prospectus and any amendment or
supplement thereto, reasonably requested to facilitate the public sale or other
disposition of the Registrable Securities; and the Company's and the Guarantors'
consent to the use of such Prospectus and any amendment or supplement thereto in
accordance with applicable law by each of the selling Holders of Registrable
Securities in connection with the offering and sale of the Registrable
Securities covered by and in the manner described in such Prospectus or any
amendment or supplement thereto in accordance with applicable law;
(d) use their best efforts (i) to register or qualify the
Registrable Securities under all applicable state securities or blue sky laws or
such jurisdictions as any Holder of Registrable Securities covered by a
Registration Statement shall reasonably request in writing by the time the
applicable Registration Statement is declared effective by the Commission, (ii)
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 Statement 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 the
Securities pursuant to such Registration Statement but in no event longer than
two years and (iii) to cooperate with such Holders in connection with any
filings required to be made with the NASD and do any and all other acts and
things which may be reasonably necessary or advisable to enable such Holder to
consummate the disposition in each such jurisdiction of such Registrable
Securities owned by such Holder; provided, however, that the Company and the
Guarantors shall not be required to (A) qualify as foreign corporations or as
dealers in securities in any jurisdiction where they would not otherwise be
required to qualify but for this Section 3(d), (B) file any general consent to
service of process or (C) subject themselves to taxation in any such
jurisdiction if they are not so subject;
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(e) in the case of a Shelf Registration, notify each Holder of
Registrable Securities, counsel for the Holders and for the Initial Purchasers
(or, if applicable, separate counsel for the Holders) and, if requested by such
Persons, confirm such advice in writing, (i) when the Shelf Registration
Statement has become effective and when any post-effective amendment thereto has
been filed and becomes effective, (ii) of any request by the Commission or any
state securities authority for amendments and supplements to the Shelf
Registration Statement and Prospectus or for additional information after the
Shelf Registration Statement has become effective, (iii) of the issuance by the
Commission or any state securities authority of any stop order suspending the
effectiveness of the Shelf Registration Statement or the initiation of any
proceedings for that purpose, (iv) if the Company or any Guarantor receives any
notification with respect to the suspension of the qualification of the
Registrable Securities for sale in any jurisdiction or the initiation of any
proceeding for such purpose, (v) of the happening of any event during the period
a Shelf Registration Statement is effective which makes any statement made in
such Shelf Registration Statement or the related Prospectus untrue in any
material respect or which requires the making of any changes in such Shelf
Registration Statement or document incorporated by reference therein in order to
make the statements therein not misleading or which requires the making of any
changes in the Prospectus or documents incorporated by reference therein in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading and (vi) of any determination by the Company and
the Guarantors that a post-effective amendment to the Shelf Registration
Statement would be appropriate;
(f) use their best efforts to obtain the withdrawal of any
order suspending the effectiveness of a Registration Statement at the earliest
possible moment and provide prompt notice to each Holder of the withdrawal of
any such order;
(g) in the case of a Shelf Registration, cooperate with the
selling Holders of Registrable Securities to facilitate the timely preparation
and delivery of certificates representing Registrable Securities to be sold and
not bearing any restrictive legends (unless required by applicable securities
laws) and enable such Registrable Securities to be in such denominations
(consistent with the provisions of the Indenture) and registered in such names
as the selling Holders may reasonably request at least two Business Days prior
to the closing of any sale of Registrable Securities;
(h) in the case of a Shelf Registration, upon the occurrence
of any event contemplated by Section 3(e)(v) hereof, use their best efforts to
prepare a supplement or post-effective amendment to the Shelf Registration
Statement or the related Prospectus or any document incorporated therein by
reference or file any other required document so that, as thereafter delivered
to the purchasers of the Registrable Securities, such Prospectus will not
contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; provided that the Company and the
Guarantors agree to notify the Holders to suspend use of the Prospectus as
promptly as practicable after the occurrence of such an event, and the Holders
hereby agree to suspend use of the Prospectus until the Company and the
Guarantors have
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<PAGE>
amended or supplemented the Prospectus or any document incorporated by reference
therein to correct such misstatement or omission;
(i) a reasonable time prior to the filing of any Registration
Statement, any Prospectus, any amendment to a Registration Statement or
amendment or supplement to a Prospectus or any document incorporated by
reference therein, provide copies of such document to the Initial Purchasers and
their counsel (and, in the case of a Shelf Registration Statement, counsel for
the Holders) and make such of the representatives of the Company and the
Guarantors as shall be reasonably requested by the Initial Purchasers or their
counsel (and, in the case of a Shelf Registration Statement, counsel for the
Holders) available for discussion of such document, and shall not at any time
file or make any amendment to the Registration Statement, any Prospectus or any
amendment of or supplement to a Registration Statement or a Prospectus, of which
the Initial Purchasers and their counsel (and, in the case of a Shelf
Registration Statement, counsel for the Holders) shall not have previously been
advised and furnished a copy or to which the Initial Purchasers or their counsel
(and, in the case of a Shelf Registration Statement, counsel for the Holders)
shall reasonably object promptly in light of the circumstances in which made;
(j) obtain a CUSIP number for all Exchange Securities or
Registrable Securities (if applicable), as the case may be, not later than the
Effective Time;
(k) cause the Indenture and the Guarantees to be qualified
under the Trust Indenture Act in connection with the registration of the
applicable Exchange Securities or applicable Registrable Securities, as the case
may be, cooperate with the Trustee and the Holders to effect such changes to the
Indenture and the Guarantees as may be required for the Indenture and the
Guarantees to be so qualified in accordance with the terms of the Trust
Indenture Act and execute, and use their best efforts to cause the Trustee to
execute, all documents as may be required to effect such changes and all other
forms and documents required to be filed with the Commission to enable the
Indenture and the Guarantees, as the case may be, to be so qualified in a timely
manner;
(l) in the case of a Shelf Registration, make reasonably
available for inspection by one representative of the Holders of the Registrable
Securities, counsel for the Holders and accountants designated by the Holders
and reasonably acceptable to the Company and the Guarantors, at reasonable times
and in a reasonable manner and subject to the execution of customary
confidentiality agreements, all financial and other records, pertinent documents
and properties of the Company and the Guarantors, and cause the respective
officers, directors and employees of the Company and the Guarantors to supply
all information reasonably requested, and as is customary for similar due
diligence examinations, by any such representative, attorney or accountant in
connection with a Shelf Registration Statement;
(m) if requested by any Holder of Registrable Securities
covered by a Registration Statement, (i) promptly include in a Prospectus
supplement or post-effective
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amendment or document incorporated by reference in such Prospectus such
information with respect to such Holder as such Holder requests to be included
therein and (ii) make all required filings of such Prospectus supplement or such
post-effective amendment as soon as the Company and the Guarantors have received
notification of the matters to be included in such filing; and
(n) in the case of a Shelf Registration or an Exchange Offer
Registration, if the Initial Purchasers on behalf of the Holders shall so
request, enter into such customary agreements and take all such other reasonable
actions in connection therewith (including, those reasonably requested by
counsel for the Holders) in order to expedite or facilitate the disposition of
such Registrable Securities and in such connection, (i) to the extent possible,
make such representations and warranties to the Holders of such Registrable
Securities with respect to the business of the Company, the Guarantors and their
respective subsidiaries, the Registration Statement, the Prospectus and
documents deemed incorporated by reference, if any, in each case, in form,
substance and scope as are customarily made by issuers to underwriters in
underwritten offerings and confirm the same if and when requested, (ii) use
their best efforts to obtain opinions of counsel to the Company and the
Guarantors (which counsel and opinions, in form, scope and substance, shall be
reasonably satisfactory to counsel to the Holders) addressed to each selling
Holder of Registrable Securities, covering the matters customarily covered in
opinions requested in underwritten offerings, (iii) use their best efforts to
obtain "cold comfort" letters from the independent certified public accountants
of the Company and the Guarantors (and, if necessary, any other certified public
accountant of any subsidiary of the Company, any Guarantor or any business
acquired by the Company or Guarantor for which financial statements and
financial data are or are required to be included or incorporated by reference
in the Registration Statement) addressed to each selling Holder of Registrable
Securities, such letters to be in customary form and covering matters of the
type customarily covered in "cold comfort" letters in connection with
underwritten offerings and (iv) deliver such documents and certificates as may
be reasonably requested by counsel for the Holders to evidence the continued
validity of the representations and warranties of the Company and the Guarantors
made pursuant to clause (i) above and to evidence compliance with any customary
conditions in an underwriting agreement.
In the case of a Shelf Registration Statement, the Company and the
Guarantors may require each Holder of Registrable Securities to promptly furnish
to the Company and the Guarantors such information regarding the Holder and the
proposed distribution by such Holder of such Registrable Securities as the
Company and the Guarantors may from time to time reasonably request in writing
and the Company and the Guarantors may exclude from such registration the
Registrable Securities of any Holder that unreasonably fails to furnish such
information within a reasonable time after receiving such request.
In the case of a Shelf Registration Statement, each Holder agrees that,
upon receipt of any notice from the Company and the Guarantors of the happening
of any event of the kind described in Section 3(e)(ii) through (v) hereof, such
Holder will forthwith discontinue disposition of Registrable Securities pursuant
to such Shelf Registration Statement until such Holder's receipt of the copies
of the supplemented or amended Prospectus contemplated by Section 3(h) hereof,
and,
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<PAGE>
if so directed by the Company and the Guarantors, such Holder will deliver to
the Company and the Guarantors (at its expense) all copies in its possession,
other than permanent file copies then in such Holder's possession, of the
Prospectus covering such Registrable Securities current at the time of receipt
of such notice. Each Holder agrees to indemnify the Company, the Guarantors, the
Initial Purchasers and the other selling Holders and each of their respective
officers and directors who sign the Shelf Registration Statement and each
Person, if any, who controls any such Person for any losses, claims, damages and
liabilities caused by the failure of such Holder to discontinue disposition of
Registrable Securities after receipt of the notice referred to in the preceding
sentence or the failure of such Holder to comply with applicable prospectus
delivery requirements with respect to any Prospectus (including, but not limited
to, any amended or supplemented Prospectus) provided by the Company and the
Guarantors for such use.
(o) comply, as to all matters within the Company's and the
Guarantors' control, 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 provided for in such Registration Statement;
(p) use their best efforts to obtain the consent or approval
of each governmental agency or authority, whether federal, state or local, which
may be required to be obtained by the Company and the Guarantors to effect the
Shelf Registration or the offering or sale of Securities in connection therewith
or to enable the selling Holder or Holders to offer, or to consummate the
disposition of, their Registrable Securities;
(q) notify in writing each Holder of Registrable Securities of
any proposal by the Company and the Guarantors to amend or waive any provision
of this Agreement pursuant to Section 7(b) 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;
(r) 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 Conduct Rules and the ByLaws of the
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 by (A) if such Conduct Rules or By-Laws shall so require, permitting a
"qualified independent underwriter" (as defined in such Conduct Rules or By-Laws
(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 5 hereof and (C) providing such information to such broker-dealer as may
be required in order for such broker-dealer to comply
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<PAGE>
with the requirements of the Conduct Rules or By-Laws of the NASD; and
(s) 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 earnings 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).
4. Participation of Broker-Dealers in Exchange Offer.
(a) Each of the Company and the Guarantors understands that
the staff of the Commission has taken the position that any broker-dealer that
receives Exchange Securities for its own account in the Exchange Offer in
exchange for Securities that were acquired by such broker-dealer as a result of
market-making or other trading activities (a "Participating Broker-Dealer"), may
be deemed to be an "underwriter" within the meaning of the Securities Act in
connection with any resale of such Exchange Securities and, therefore, must
deliver a prospectus meeting the requirements of the Securities Act in
connection with any resales of the Exchange Securities received by it in the
Exchange Offer.
Each of the Company and the Guarantors understands that it is the
staff's position that if the Prospectus contained in the Exchange Offer
Registration Statement includes a plan of distribution containing a statement to
the above effect and the means by which Participating Broker-Dealers may resell
the Exchange Securities, without naming the Participating Broker- Dealers or
specifying the amount of Exchange Securities owned by them, such Prospectus may
be delivered by Participating Broker-Dealers to satisfy their prospectus
delivery obligations under the Securities Act in connection with resales of
Exchange Securities for their own accounts, so long as the Prospectus otherwise
meets the requirements of the Securities Act.
(b) In light of the above, notwithstanding the other
provisions of this Agreement, the Company and the Guarantors agree: to cause the
Exchange Offer Registration Statement to remain effective for a period 180 days
after the Offer Termination Date (or such earlier date as each Participating
Broker-Dealer shall have notified the Company and the Guarantors in writing that
such Participating Broker-Dealer has resold all such Exchange Securities
received in the Exchange Offer) and shall amend or supplement the Prospectus or
document incorporated by reference therein, as the case may be, contained in the
Exchange Offer Registration Statement, as would otherwise be contemplated by
Section 3(h) for such a period, and Participating Broker-Dealers shall not be
authorized by the Company and the Guarantors to deliver and shall not deliver
such Prospectus after such period in connection with the resales contemplated by
this Section 4.
(c) The Initial Purchasers shall have no liability to the
Company, the Guarantors or any Holder for costs and expenses of the Exchange
Offer Registration with respect to any request that they make pursuant to
Section 4(b) above.
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5. Indemnification and Contribution.
(a) The Company and the Guarantors, jointly and severally,
agree to indemnify and hold harmless the Initial Purchasers, each Holder and
each Person, if any who controls the Initial Purchasers or any Holder within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act, from and against any and all losses, claims, damages, liabilities and
expenses (including the reasonable fees and expenses of counsel and other
expenses in connection with investigating, defending or settling such action or
claim) arising out of or based upon any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement (or any
amendment or supplement thereto) pursuant to which Exchange Securities or
Registrable Securities were registered under the Securities Act (including all
documents incorporated therein by reference) or arising out of or based upon any
omissions or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
arising out of or based upon any untrue statement or alleged untrue statement of
a material fact contained in any Prospectus (as amended or supplemented if the
Company and the Guarantors shall have furnished any amendments or supplements
thereto), or arising out of or based upon any omission or alleged omission to
state therein a material fact necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading, except insofar
as such losses, claims, damages, liabilities or expenses arise out of or are
based upon any untrue statement or omission or alleged untrue statement or
omission which has been made therein or omitted therefrom in reliance upon and
in conformity with the information furnished in writing to the Company and the
Guarantors by or on behalf of any Holder expressly for use in connection
therewith ("Holders' Information"); provided, however, that the indemnification
contained in this paragraph (a) with respect to any preliminary Prospectus shall
not inure to the benefit of the Holders (or to the benefit of any Person
controlling any Holder) on account of any such loss, claim, damage, liability or
expense arising from the sale of such Registrable Securities or Exchange
Securities by the Holders to any Person if a copy of such preliminary Prospectus
shall not have been delivered or sent to such Person at or prior to written
confirmation of such sale, and the untrue statement or alleged untrue statement
or omission or alleged omission of a material fact contained in the preliminary
Prospectus was corrected in the Prospectus, provided that the Company and the
Guarantors have delivered the Prospectus to the Holders in requisite quantity on
a timely basis to permit delivering and sending. The foregoing indemnity
agreement shall be in addition to any liability which the Company and the
Guarantors may otherwise have.
(b) If any action, suit or proceeding shall be brought against
the Holders or any Person controlling the Holders in respect of which indemnity
may be sought against the Company and the Guarantors, such Holders or such
controlling Person shall promptly notify the parties against whom
indemnification is being sought (the "indemnifying parties"), and such
indemnifying parties shall assume the defense thereof, including the employment
of counsel and payment of all fees and expenses. Such Holders or any such
controlling Person shall have the right to employ separate counsel in any such
action, suit or proceeding and to participate in the defense thereof, but the
fees and expenses of such counsel shall be at the expense of such Holders or
such
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<PAGE>
controlling Person unless (i) the indemnifying parties have agreed in writing to
pay such fees and expenses, (ii) the indemnifying parties have failed to assume
the defense and employ counsel, or (iii) the named parties to any such action,
suit or proceeding (including any impleaded parties) include both such Holders
or such controlling Person and the indemnifying parties and such Holders or such
controlling Person shall have been advised by its counsel that representation of
such indemnified party and any indemnifying party by the same counsel would be
inappropriate under applicable standards of professional conduct (whether or not
such representation by the same counsel has been proposed) due to actual or
potential differing interests between them (in which case the indemnifying party
shall not have the right to assume the defense of such action, suit or
proceeding on behalf of such Holders or such controlling Person). It is
understood, however, that the indemnifying parties shall, in connection with any
one such action, suit or proceeding or separate but substantially similar or
related actions, suits or proceedings in the same jurisdiction arising out of
the same general allegations or circumstances, be liable for the reasonable fees
and expenses of only one separate firm of atorneys (in addition to any local
counsel) at any time for such Holders and controlling Persons not having actual
or potential differing interests with such Holder or among themselves, which
firm shall be designated in writing by Smith Barney Inc., and that all such fees
and expenses shall be reimbursed as they are incurred. The indemnifying parties
shall not be liable for any settlement of any such action, suit or proceeding
effected without their written consent, but if settled with such written
consent, or if there be a final judgment for the plaintiff in any such action,
suit or proceeding, the indemnifying parties agree to indemnify and hold
harmless any Holders, to the extent provided in the preceding paragraph, and any
such controlling Person from and against any loss, claim, damage, liability or
expense by reason of such settlement or judgment.
(c) Each Holder agrees, severally and not jointly, to
indemnify and hold harmless each of the Company, the Guarantors, each of their
respective directors and officers, and any Person who controls the Company or
any of the Guarantors within the meaning of Section 15 of the Securities Act or
Section 20(a) of the Exchange Act, to the same extent as the foregoing indemnity
from the Company and the Guarantors to each Holder, but only with respect to the
Holders' Information. If any action, suit or proceeding shall be brought against
the Company, any of the Guarantors, any of their respective directors or
officers, or any such controlling Persons based on any Registration Statement
(or any amendment thereto) or any Prospectus (or any amendment or supplement
thereto), and in respect of which indemnity may be sought against any Holder
pursuant to this paragraph (c), such Holder shall have the rights and duties
given to the Company and the Guarantors by paragraph (b) above (except that if
the Company and the Guarantors shall have assumed the defense thereof such
Holder shall not be required to do so, but may employ separate counsel therein
and participate in the defense thereof, but the fees and expenses of such
counsel shall be at such Holder's expense), and the Company, the Guarantors,
their respective directors and officers, and any such controlling Persons shall
have the rights and duties given to the Holders by paragraph (b) above. The
foregoing indemnity agreement shall be in addition to any liability which any
Holders may otherwise have.
(d) If the indemnification provided for in this Section 5 is
unavailable to an
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<PAGE>
indemnified party under paragraphs (a) or (c) hereof in respect of any losses,
claims, damages, liabilities or expenses referred to therein, then an
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities or expenses (i) in such proportion
as is appropriate to reflect the relative benefits of the Company and the
Guarantors on the one hand, the Holders on another hand, and the Initial
Purchasers on another hand, from the offering of the Securities or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company and
the Guarantors on the one hand, the Holders on another hand, and the Initial
Purchasers on another hand, in connection with the statements or omissions that
resulted in such losses, claims, damages, liabilities or expenses, as well as
any other relevant equitable considerations. The relative benefits received by
the Company and the Guarantors from the offering of the Securities included in
any Registration Statement shall in each case be deemed to include the proceeds
received by the Company in connection with the offering of the Securities
pursuant to the Purchase Agreement. The parties hereto agree that any
underwriting discount or commission or reimbursement of fees paid to the Initial
Purchasers pursuant to the Purchase Agreement shall not be deemed to be a
benefit received by the Initial Purchasers in connection with the offering of
the Securities included in any Registration Statement. The relative fault of the
Company and the Guarantors on the one hand, the Holders on another hand, and the
Initial Purchasers on another hand, shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company and the Guarantors on the one hand, by the
Holders on another hand, and the Initial Purchasers on another hand, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
(e) The Company, the Guarantors and each Holder agree that it
would not be just or equitable if contribution pursuant to this Section 5 were
determined by pro rata allocation or by any other method of allocation that does
not take account of the equitable considerations referred to in paragraph (d)
above. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages, liabilities and expenses referred to in paragraph (d)
above shall be deemed to include, subject to the limitations set forth above,
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 Section 5, no Holder shall be required to
indemnify or contribute any amount in excess of the amount by which the total
price at which Registrable Securities were sold by such Holder exceeds the
amount of any damages that such Holder 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'
obligations to contribute pursuant to this Section 5 are several in proportion
to the aggregate principal amount of Securities purchased by such Holder and not
joint.
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<PAGE>
(f) No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened action, suit or proceeding in respect of which any indemnified party
is or could have been a party and indemnity could have been sought hereunder by
such indemnified party, unless such settlement (i) includes an unconditional
release of such indemnified party from all liability or claims that are the
subject matter of such action, suit or proceeding 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.
(g) Any losses, claims, damages, liabilities or expenses
(including counsel fees pursuant to paragraph (b) above) for which an
indemnified party is entitled to indemnification or contribution under this
Section 5 shall be paid by the indemnifying party to the indemnified party as
such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 5 shall remain
operative and in full force and effect, regardless of (i) any investigation made
by or on behalf of any Holder or any Person controlling any Holder, the
Company's or any Guarantor's directors or officers or any Person controlling the
Company or any Guarantor, (ii) acceptance of any Exchange Securities and (iii)
any sale of Registrable Securities pursuant to a Shelf Registration Statement.
6. Underwritten Offerings; Rule 144.
(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 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 (i) 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.
(c) Rule 144. For so long as the Company is subject to the
reporting requirements of Section 13 or 15 of the Exchange Act, the Company
covenants to the Holders of Registrable Securities that the Company shall timely
file the reports required to be filed by it under the Exchange Act or the
Securities Act (including the reports under Sections 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, that if it ceases to be so required to file such
reports, it will upon the request of any Holder of Registrable Securities (i)
make publicly available such information as is necessary to permit sales
pursuant to Rule 144 under the Securities Act, (ii) deliver such information to
a prospective purchaser as is
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necessary to permit sales pursuant to Rule 144 under the Securities Act and it
will take such further action as any Holder of Registrable Securities may
reasonably request, 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.
7. Miscellaneous.
(a) No Inconsistent Agreements. The Company and the Guarantors
have not entered into, and on or after the date of this Agreement will not enter
into, any agreement which is inconsistent with the rights granted to the Holders
of Registrable Securities in this Agreement or otherwise conflicts with the
provisions hereof. The rights granted to the Holders hereunder do not in any way
conflict with and are not inconsistent with the rights granted to the holders of
the Company's other issued and outstanding securities under any such agreements.
(b) Entire Agreement; Amendments and Waivers. This Agreement
and the other writings referred to herein or delivered pursuant hereto which
form a part hereof contain the entire understanding of the parties with respect
to its subject matter. This Agreement supersedes all prior agreements and
understandings between the parties with respect to its subject matter. The
provisions of this Agreement, including the provisions of this sentence, may not
be amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given unless the Company and the Guarantors
have obtained the written consent of the Majority Holders of whatever Securities
are publicly held; provided, however, that no departure from the provisions of
Section 5 hereof shall be effective as against any Holder of Registrable
Securities unless consented to in writing by such Holder.
(c) Notices. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telex, telecopier, or any courier guaranteeing overnight
delivery (i) if to a Holder, at the most current address given by such Holder to
the Company and the Guarantors by means of a notice given in accordance with the
provisions of this Section 7(c), which address initially is, with respect to the
Initial Purchasers, the address set forth in the Purchase Agreement; and (ii) if
to the Company or the Guarantors at the Company's address set forth in the
Purchase Agreement and thereafter at such other address, notice of which is
given in accordance with the provisions of this Section 7(c).
All such notices and communications shall be deemed to have been duly
given at the time delivered, if personally delivered; five Business Days after
being deposited in the mail, postage pre-paid, if mailed; when answered back, if
telexed; when receipt is acknowledged, if telecopied;
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and on the next Business Day if timely delivered to an air courier guaranteeing
overnight delivery.
Copies of all such notices, demands, or other communications shall be
concurrently delivered by the Person giving the same to the Trustee, at the
address specified in the Indenture.
(d) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors, assigns and transferees of each
of the parties, including, without limitation and without the need for an
express assignment or assumption, subsequent Holders; provided that nothing
herein shall be deemed to permit any assignment, transfer or other disposition
of Registrable Securities in violation of the terms of the Purchase Agreement.
If any transferees of any Holder shall acquire Registrable Securities, in any
manner, whether by operation of law or otherwise, such Registrable Securities,
shall be held subject to all of the terms of this Agreement, and by taking and
holding such Registrable Securities such Person shall be conclusively deemed to
have agreed to be bound by and to perform all of the terms and provisions of
this Agreement and such Person shall be entitled to receive the benefits hereof.
The Initial Purchasers shall have no liability or obligation to the Company or
the Guarantors with respect to any failure by a Holder (other than the Initial
Purchasers) to comply with, or any breach by any Holder of, the obligations of
such Holder under this Agreement.
(e) Third Party Beneficiary. The Holders shall be third party
beneficiaries to the agreements made hereunder between the Company, the
Guarantors and the Initial Purchasers and shall have the right to enforce such
agreements directly to the extent they deem such enforcement necessary or
advisable to protect their rights hereunder.
(f) Counterparts. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(g) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(h) Governing Law. This Agreement shall be governed by laws of
the State of New York.
(i) Severability. In the event that one or more of the
provisions contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
SINCLAIR BROADCAST GROUP, INC.
CHESAPEAKE TELEVISION, INC.
CHESAPEAKE TELEVISION LICENSEE
FSF-TV, INC.
KABB LICENSEE, INC.
KDNL LICENSEE, INC.
KDSM, INC.
KDSM LICENSEE, INC.
KSMO, INC.
KSMO LICENSEE, INC.
KUPN LICENSEE, INC.
SCI-INDIANA LICENSEE, INC.
SCI-SACRAMENTO LICENSEE, INC.
SINCLAIR COMMUNICATIONS, INC.
SINCLAIR RADIO OF ALBUQUERQUE, INC.
SINCLAIR RADIO OF ALBUQUERQUE LICENSEE, INC.
SINCLAIR RADIO OF BUFFALO, INC.
SINCLAIR RADIO OF BUFFALO LICENSEE, INC.
SINCLAIR RADIO OF GREENVILLE, INC.
SINCLAIR RADIO OF GREENVILLE LICENSEE, INC.
SINCLAIR RADIO OF LOS ANGELES, INC.
SINCLAIR RADIO OF LOS ANGELES LICENSEE, INC.
SINCLAIR RADIO OF MEMPHIS, INC.
SINCLAIR RADIO OF MEMPHIS LICENSEE, INC.
SINCLAIR RADIO OF NASHVILLE, INC.
SINCLAIR RADIO OF NASHVILLE LICENSEE, INC.
SINCLAIR RADIO OF NEW ORLEANS, INC.
SINCLAIR RADIO OF NEW ORLEANS LICENSEE, INC.
SINCLAIR RADIO OF ST. LOUIS, INC.
SINCLAIR RADIO OF ST. LOUIS LICENSEE, INC.
SINCLAIR RADIO OF WILKES-BARRE, INC.
SINCLAIR RADIO OF WILKES-BARRE LICENSEE, INC.
SUPERIOR COMMUNICATIONS OF KENTUCKY, INC.
SUPERIOR COMMUNICATIONS OF OKLAHOMA, INC.
SUPERIOR KY LICENSE CORP.
SUPERIOR OK LICENSE CORP.
TUSCALOOSA BROADCASTING, INC.
WCGV, INC.
WCGV LICENSEE, INC.
WDBB, INC.
WLFL, INC.
WLFL LICENSEE, INC.
WLOS LICENSEE, INC.
WPGH, INC.
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WPGH LICENSEE, INC.
WSMH, INC.
WSMH LICENSEE, INC.
WSTR, INC.
WSTR LICENSEE, INC.
WSYX, INC.
WTTE, CHANNEL 28, INC.
WTTE, CHANNEL 28 LICENSEE, INC.
WTTO, INC.
WTTO LICENSEE, INC.
WTVZ, INC.
WTVZ LICENSEE, INC.
WYZZ, INC.
WYZZ LICENSEE, INC.
By: /s/ David D. Smith
------------------------------------
Name: David D. Smith
Title: President
-25-
<PAGE>
Confirmed as of the date first above mentioned.
SMITH BARNEY INC.
CHASE SECURITIES INC.
SALOMON BROTHERS INC
FURMAN SELZ
By: Smith Barney Inc.
By: /s/ John P. McGrath
----------------------------------
Name: John P. McGrath
Title:
-26-
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
HERITAGE BROADCASTING GROUP, INC.
as Seller
AND
SINCLAIR BROADCAST GROUP, INC.
as Buyer
Dated as of July 16, 1997
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1. DEFINITIONS AND REFERENCES......................................2
ARTICLE 2. SALE AND PURCHASE OF ASSETS.....................................2
2.1. Asset Sale and Purchase of Assets...............................2
2.1.1. FCC Licenses........................................2
2.1.2. Real and Leased Property Interests..................3
2.1.3. Tangible Personal Property..........................3
2.1.4. Intellectual Property...............................3
2.1.5. Program Contracts...................................3
2.1.6. Trade-out Agreements................................4
2.1.7. Broadcast Time Sales Agreement......................4
2.1.8. Operating Contracts.................................4
2.1.9. Vehicles............................................4
2.1.10. Files and Records...................................4
2.1.11. Auxiliary Facilities................................5
2.1.12. Permits and Licenses................................5
2.1.13. Goodwill............................................5
2.2. Excluded Assets.................................................5
2.2.1. Cash................................................5
2.2.2. Accounts Receivable.................................5
2.2.3. Personal Property Disposed Of.......................5
2.2.4. Insurance...........................................6
2.2.5. Employee Plans and Assets...........................6
2.2.6. Right to Tax Refunds................................6
2.2.7. Certain Books and Records...........................6
2.2.8. Third-Party Claims..................................6
2.2.9. Rights Under this Agreement.........................6
2.2.10. Names...............................................6
2.2.11. Deposit and Prepaid Expenses........................7
2.2.12. Miscellaneous Excluded Assets.......................7
2.3. Escrow Deposit..................................................7
2.4. Purchase Price..................................................7
2.5. Payment of Purchase Price at Closing............................7
2.6. Preliminary Payment.............................................8
2.7. Proration Amount...............................................10
2.8. Allocation of Base Purchase Price and Deposit..................13
2.9. Assumption of Liabilities......................................13
2.10. News Corp. Guaranty...........................................14
ARTICLE 3. REPRESENTATIONS AND WARRANTIES BY SELLER.......................14
3.1. Organization and Standing......................................14
3.2. Authorization..................................................15
3.3. Compliance with Laws...........................................15
3.4. Consents and Approvals; No Conflicts...........................15
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3.5. Financial Statements; Undisclosed Liabilities.................16
3.6. Absence of Certain Changes or Events..........................16
3.7. Absence of Litigation.........................................17
3.8. Assets........................................................17
3.9. FCC Matters...................................................17
3.10. Real Property.................................................18
3.11. Intellectual Property.........................................19
3.12. Station Contracts.............................................19
3.13. Taxes.........................................................19
3.14. Employee Benefit Plans........................................20
3.15. Labor Relations...............................................22
3.16. Environmental Matters.........................................22
3.17. Insurance.....................................................23
3.18. Reports.......................................................23
ARTICLE 4. REPRESENTATIONS AND WARRANTIES BY BUYER........................24
4.1. Organization and Standing.....................................24
4.2. Authorization.................................................24
4.3. Consents and Approvals; No Conflicts..........................24
4.4. Availability of Funds.........................................25
4.5. Qualification of Buyer........................................25
4.6. WARN Act......................................................26
4.7. No Outside Reliance...........................................26
4.8. Interpretation of Certain Provisions..........................26
ARTICLE 5. PRE-CLOSING FILINGS............................................26
5.1. Applications for FCC Consent..................................26
5.2. Hart-Scott-Rodino.............................................27
5.3. Non-Required Actions..........................................27
ARTICLE 6. COVENANTS AND AGREEMENTS OF SELLER.............................27
6.1. Negative Covenants............................................27
6.1.1. Dispositions; Mergers..............................28
6.1.2. Accounting Principles and Practices................28
6.1.3. Trade-out Agreements...............................28
6.1.4. Broadcast Time Sales Agreements....................28
6.1.5. TBAs...............................................28
6.1.6. Additional Agreements..............................28
6.1.7. Breaches...........................................28
6.1.8. Employee Matters...................................29
6.1.9. Actions Affecting FCC Licenses.....................29
6.1.10. Programming........................................29
6.1.11. Encumbrances.......................................29
6.1.12. Transactions With Affiliates.......................29
<PAGE>
6.2. Affirmative Covenants.........................................29
6.2.1. Preserve Existence..................................29
6.2.2. Normal Operations...................................30
6.2.3. Maintain FCC Licenses...............................30
6.2.4. Station Contracts...................................30
6.2.5. Taxes...............................................30
6.2.6. Access..............................................30
6.2.7. Insurance...........................................31
6.2.8. Financial Statements................................31
6.2.9. Consents............................................32
6.2.10. Corporate Action...................................33
6.2.11. Environmental Audit................................33
6.3. Confidentiality................................................33
6.4. Trustee Acknowledgment.........................................33
ARTICLE 7. COVENANS AND AGREEMENTS OF BUYER...............................34
7.1. Confidentiality................................................34
7.2. Corporate Action...............................................34
7.3. Access.........................................................34
7.4. Collection of Receivables......................................35
ARTICLE 8. MUTUAL COVENANTS AND UNDERSTANDINGS OF SELLER AND BUYER.......36
8.1. Possession and Control.........................................36
8.2. Risk of Loss...................................................36
8.3. Public Announcements...........................................37
8.4. Employee Matters...............................................37
8.5. Disclosure Schedules...........................................40
8.6. Bulk Sales Laws................................................40
8.7. Tax Matters....................................................40
8.8. Preservation of Books and Records..............................40
ARTICLE 9. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE...........40
9.1. Representations and Covenants..................................41
9.2. Delivery of Documents..........................................41
9.3. FCC Order......................................................41
9.4. Hart-Scott-Rodino..............................................41
9.5. Legal Proceedings..............................................41
ARTICLE 10. CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE.........42
10.1. Consummation of the Merger....................................42
10.2. Representations and Covenants.................................42
10.3. Delivery by Buyer.............................................42
10.4. FCC Order.....................................................42
10.5. Hart-Scott-Rodino.............................................42
10.6. Legal Proceedings.............................................43
<PAGE>
ARTICLE 11. CLOSING.......................................................43
11.1. Closings.....................................................43
11.2. Delivery by Seller...........................................43
11.2.1. Agreements and Instruments.........................43
11.2.2. Consents...........................................44
11.2.3. Certified Resolutions..............................44
11.2.4. Officers' Certificates.............................44
11.2.5. Good Standing Certificates.........................44
11.2.6. Opinion of Counsel.................................44
11.3. Delivery by Buyer............................................44
11.3.1. Purchase Price Payment.............................44
11.3.2. Agreements and Instruments.........................45
11.3.3. Certified Resolutions..............................45
11.3.4. Officers' Certificate..............................45
11.3.5. Opinion of Counsel.................................45
ARTICLE 12. SURVIVAL; INDEMNIFICATION.....................................45
12.1. Survival of Representations..................................45
12.2. Indemnification by Seller....................................46
12.3. Indemnification by Buyer.....................................47
12.4. Limitations on Indemnification...............................47
12.5. Conditions of Indemnification................................48
12.6. Cure of Breach...............................................49
ARTICLE 13. TERMINATION...................................................50
13.1. Termination by the Parties....................................50
13.2. Automatic Termination.........................................50
13.3. Effect of Termination.........................................50
ARTICLE 14. REMEDIES......................................................51
14.1. Default by Buyer..............................................51
14.2. Default by Seller.............................................52
14.3. Liquidated Damages............................................52
ARTICLE 15. GENERAL PROVISIONS............................................52
15.1. Additional Actions, Documents and Information.................52
15.2. Brokers.......................................................53
15.3. Expenses and Taxes............................................53
15.4. Notices.......................................................53
15.5. Waiver........................................................55
15.6. Benefit and Assignment........................................55
15.7. Entire Agreement; Amendment...................................56
15.8. Severability..................................................57
15.9. Headings......................................................57
15.10. Governing Law................................................57
15.11. Signature in Counterparts....................................57
<PAGE>
SCHEDULES
Schedule 2.1.1 FCC Licenses
Schedule 2.1.2 Real Property Interests
Schedule 2.1.3 Tangible Personal Property
Schedule 2.1.5 Program Contracts
Schedule 2.1.6 Trade-out Agreements
Schedule 2.1.8 Operating Contracts
Schedule 2.1.9 Vehicles
Schedule 2.2.12 Excluded Assets
Schedule 3.4 Consents
Schedule 3.6 Absence of Certain Changes or Events
Schedule 3.7 Litigation
Schedule 3.8 Encumbrances on Assets
Schedule 3.9 FCC Matters
Schedule 3.14 Employee Benefit Plans
Schedule 3.15 Employee Matters
Schedule 3.16 Environmental Matters
Schedule 3.17 Insurance
Schedule 4.5.1 Buyer Stations
<PAGE>
EXHIBITS
EXHIBIT A Form of Deposit Escrow Agreement
EXHIBIT B Form of Bill of Sale and Assignment of Assets
EXHIBIT C Form of Assignment of FCC Licenses
EXHIBIT D Form of Assignment of Contracts and Leases
EXHIBIT E Form of Assumption Agreement
EXHIBIT F Form of Retention Agreement
EXHIBIT G Form of Opinion of Hogan & Hartson L.L.P.
<PAGE>
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is entered
into as of this 16th day of July, 1997, by and between HERITAGE BROADCASTING
GROUP, INC., a Delaware corporation ("Seller") and SINCLAIR BROADCAST GROUP,
INC., a Maryland corporation ("Buyer").
WHEREAS, Heritage Media Corporation, a Delaware corporation
("HMC"), The News Corporation Limited, a South Australia corporation ("News
Corp."), and HMC Acquisition Corp., a Delaware corporation and wholly-owned
subsidiary of News Corp. ("Merger Sub"), are parties to that certain Agreement
and Plan of Merger dated as of March 17, 1997 (the "Merger Agreement"), pursuant
to which, among other things, HMC will be merged with and into Merger Sub (the
"Merger"), with Merger Sub surviving as a wholly-owned subsidiary of News Corp.;
WHEREAS, in connection with the Merger, HMC and News Corp.
have agreed that certain radio stations owned, controlled or operated by certain
subsidiaries of HMC will be divested;
WHEREAS, News Corp., HMC and William G. Evans (the
"Trustee") have entered into a Transfer Agreement (the "Transfer Agreement")
dated as of May 2, 1997, pursuant to which Heritage Media Services, Inc.
("Heritage Media"), a wholly-owned subsidiary of HMC, has agreed to transfer to
the Trustee all of the stock of HMI Broadcasting Corporation, a wholly-owned
subsidiary of Heritage Media and the direct or indirect sole stockholder of
Seller, pursuant to and in accordance with the terms and conditions of the
Transfer Agreement and a Trust Agreement by and among the Trustee, HMC, News
Corp. and Heritage Media, to be entered into as of the closing of the Merger
(the "Trust Agreement");
WHEREAS, Seller is a wholly-owned indirect subsidiary of
HMC;
WHEREAS, Seller is the licensee of radio broadcast stations
WRNO(FM), New Orleans, Louisiana, WEZB(FM), New Orleans, Louisiana and WBYU(AM),
New Orleans, Louisiana (individually, a "Station" and collectively, the
"Stations") pursuant to certain authorizations issued by the FCC, and Seller
operates the Stations and owns or leases certain assets used in connection with
the operation of the Stations;
WHEREAS, the parties hereto desire to enter into this
Agreement to provide for the sale, assignment and transfer by Seller to Buyer of
the assets owned, leased or used by Seller in connection with the business and
operations of the Stations.
<PAGE>
NOW, THEREFORE, in consideration of the foregoing and of the
mutual covenants and agreements hereinafter set forth, the parties hereto hereby
agree as follows:
ARTICLE 1.
DEFINITIONS AND REFERENCES
Capitalized terms used herein without definition shall have
the respective meanings assigned thereto in Annex I attached hereto and
incorporated herein for all purposes of this Agreement (such definitions to be
equally applicable to both the singular and plural forms of the terms defined).
Unless otherwise specified, all references herein to "Articles" or "Sections"
are to Articles or Sections of this Agreement.
ARTICLE 2.
SALE AND PURCHASE OF ASSETS
2.1. Asset Sale and Purchase of Assets.
Subject to the terms and conditions hereof and in reliance
upon the representations, warranties and agreements contained herein, upon the
Closing with respect to the Stations, Seller shall sell, assign, transfer,
convey and deliver to Buyer free and clear of any Encumbrances other than
Permitted Encumbrances, and Buyer shall purchase, acquire, pay for and accept
from Seller, all of Seller's right, title and interest in, to and under all
real, personal and mixed assets, rights, benefits and privileges, both tangible
and intangible, owned, leased, used or useful by Seller in connection with the
business and operations of the Stations (collectively, the "Assets"); but
excluding the Excluded Assets described in Section 2.2.
The Assets shall include, without limitation, all of
Seller's right, title and interest in, to and under the following:
2.1.1. FCC Licenses.
All licenses, permits and other authorizations
issued by the FCC to Seller for the operation of the Stations (the "FCC
Licenses"), including without limitation those listed in Schedule 2.1.1, and all
applications therefor, together with any renewals, extensions or modifications
thereof and additions thereto.
<PAGE>
2.1.2. Real and Leased Property Interests.
(a) All the real property owned by Seller
including, without limitation, all land, fee interests, easements and other
interests of every kind and description in real property, buildings, structures,
fixtures, appurtenances, towers and antennae, and other improvements thereon
owned by Seller and used or useful in connection with the business and
operations of the Stations ("Real Property"), including, without limitation, all
of those items listed in Schedule 2.1.2.
(b) All the real property leasehold interests of
Seller including, without limitation, leases and subleases of any land,
easements and other real property leasehold interests of every kind and
description in real property, buildings, structures, fixtures, appurtenances,
towers and antennae, and other improvements thereon leased by Seller in
connection with the business and operations of the Stations ("Leased Property"),
including, without limitation, all of those items listed in Schedule 2.1.2.
2.1.3. Tangible Personal Property.
All of the furniture, fixtures, furnishings,
machinery, computers, equipment, inventory, spare parts, supplies, office
materials and other tangible property of every kind and description owned,
leased or used by Seller in connection with the business and operations of the
Stations, together with any replacements thereof and additions thereto made
before the Closing, and less any retirements or dispositions thereof made before
the Closing in the Ordinary Course of Business, including, without limitation,
those items which have a book value in excess of Five Thousand Dollars ($5,000),
all of which are set forth and identified in Schedule 2.1.3.
2.1.4. Intellectual Property.
All of the service marks, copyrights,
franchises, trademarks, trade names, jingles, slogans, logotypes and other
similar intangible assets maintained, owned, leased or used by Seller in
connection with the business and operations of the Stations (including any and
all applications, registrations, extensions and renewals relating thereto) (the
"Intellectual Property"), and all of the rights, benefits and privileges
associated therewith including, without limitation, the right to use the call
letters for the Stations.
2.1.5. Program Contracts.
The program licenses and contracts under which
Seller is authorized to broadcast programs on the Stations (collectively the
"Program Contracts") including, without limitation, (a) all program (cash and
non-cash)
<PAGE>
licenses and contracts listed on Schedule 2.1.5, and (b) any other such program
contracts that are entered into between the date of this Agreement and the
Closing Date in accordance with the terms of this Agreement.
2.1.6. Trade-out Agreements.
All contracts and agreements (excluding Program
Contracts) pursuant to which Seller has sold, traded or bartered commercial air
time on the Stations in consideration for any property or services in lieu of or
in addition to cash (collectively, the "Trade-out Agreements") including,
without limitation, those set forth and identified in Schedule 2.1.6.
2.1.7. Broadcast Time Sales Agreement.
All contracts and agreements pursuant to which
Seller has sold commercial air time on the Stations for cash (collectively the
"Time Sales Agreements").
2.1.8. Operating Contracts.
All other operating contracts and agreements
relating to the business or operations of the Stations, all material such
contracts as of the date hereof being listed on Schedule 2.1.8 (including,
without limitation, any TBA, all employment agreements and talent contracts, all
leases and subleases relating to the Leased Property, all agreements relating to
any motor vehicles, all collective bargaining agreements, all network
affiliation agreements and all national and local advertising representation
agreements for the Stations), together with all contracts and agreements that
will be entered into between the date of this Agreement and the Closing Date in
accordance with the terms of this Agreement (collectively, the "Operating
Contracts" and together with the Program Contracts, Trade-out Agreements and the
Time Sales Agreements, the "Station Contracts").
2.1.9. Vehicles.
All automotive equipment and motor vehicles
maintained, owned, leased or otherwise used by Seller in connection with the
business and operations of the Stations, including, without limitation, those
set forth and described in Schedule 2.1.9.
2.1.10. Files and Records.
All engineering, business and other books,
papers, logs, files and records pertaining to the business and operations of the
Stations, but not the organizational documents and records described in Section
2.2.7.
<PAGE>
2.1.11. Auxiliary Facilities.
All translators, earth stations, and other
auxiliary facilities, and all applications therefor owned, leased or otherwise
used or useful by Seller in connection with the business and operations of the
Stations.
2.1.12. Permits and Licenses.
All permits, approvals, orders, authorizations,
consents, licenses, certificates, franchises, exemptions of, or filings or
registrations with, any court or Governmental Authority (other than the FCC) in
any jurisdiction, which have been issued or granted to or are owned or used or
useful by Seller in connection with the business and operations of the Stations
and all pending applications therefor.
2.1.13. Goodwill.
The business of the Stations as a "going
concern", customer relationships and goodwill.
2.2. Excluded Assets.
Notwithstanding anything to the contrary in this Agreement,
there shall be excluded from the Assets and retained by Seller, to the extent in
existence as of the Closing Date for a particular Station, the following assets
(collectively, the "Excluded Assets").
2.2.1. Cash.
All cash, cash equivalents or deposits held by
Seller, all interest payable in connection with any such cash, cash equivalents
or deposits or short term investments, bank balances and rights in and to bank
accounts, marketable and other securities of Seller; provided, however, if Buyer
has made the Preliminary Payment, Buyer shall be entitled to receive the cash
flow from the business and operations of the Stations to the extent provided for
in Section 2.6.
2.2.2. Accounts Receivable.
All Accounts Receivable arising out of the
business and operations of the Stations.
2.2.3. Personal Property Disposed Of.
All tangible personal property disposed of or
consumed in the Ordinary Course of Business as permitted by this Agreement.
<PAGE>
2.2.4. Insurance.
All contracts of insurance and all insurance
plans and the assets thereof.
2.2.5. Employee Plans and Assets.
All Plans, Benefit Arrangements (except for any
Station Contracts, Proration Items or other matters which are specifically
assumed by Buyer pursuant to the terms hereof), Qualified Plans and Welfare
Plans and the assets thereof.
2.2.6. Right to Tax Refunds.
Any and all claims of Seller with respect to any Tax
refunds.
2.2.7. Certain Books and Records.
All of (a) Seller's organizational documents,
corporate books and records (including minute books and stock ledgers and
records), and originals of account books of original entry, (b) duplicated
copies of any books, records, accounts, checks, payment records, Tax records
(including payroll, unemployment, real estate and other Tax records) and other
similar books, records and information of Seller relating to Seller's operation
of the business of the Stations prior to the Closing, (c) all records prepared
by or on behalf of Seller in connection with the sale of the Stations, and (d)
all records and documents relating to any Excluded Assets.
2.2.8. Third-Party Claims.
All rights and claims of Seller whether mature,
contingent or otherwise, against third parties relating to the Assets or the
Stations, whether in tort, contract, or otherwise.
2.2.9. Rights Under this Agreement.
All of Seller's rights under or pursuant to this
Agreement or any other rights in favor of Seller pursuant to the other
agreements contemplated hereby.
2.2.10. Names.
All rights to the names "Heritage Broadcasting"
and "Heritage Media" and any logo or variation thereof and the goodwill
associated therewith.
<PAGE>
2.2.11. Deposit and Prepaid Expenses.
All of Seller's deposits and prepaid expenses,
provided, however, any deposit and prepaid expenses shall be included in the
Assets conveyed pursuant hereto to the extent that Seller receives a credit
therefor in the calculation of the Proration Amount pursuant to Section 2.7.
2.2.12. Miscellaneous Excluded Assets.
The assets listed and identified on Schedule 2.2.12.
2.3. Escrow Deposit.
For and in partial consideration of the execution and
delivery of this Agreement, simultaneously with the execution and delivery of
this Agreement and the Multi-Stations Agreement, Buyer is depositing in escrow
with the Deposit Escrow Agent an amount equal to SIXTY-THREE MILLION DOLLARS
($63,000,000) in cash, for the benefit of the Heritage Sellers, such amount to
be held as an earnest money deposit (the "Deposit"), in accordance with the
terms and conditions of the Deposit Escrow Agreement. Upon the written request
of Buyer, the parties hereto agree to negotiate in good faith an amendment to
the Deposit Escrow Agreement to provide for the replacement of the cash Deposit
with an original, irrevocable letter of credit for the benefit of Seller in the
amount of the Deposit, all on terms and conditions satisfactory to Seller in its
sole and absolute discretion.
2.4. Purchase Price.
For and in consideration of the conveyances and assignments
described herein and in addition to the assumption of Liabilities as set forth
in Section 2.9, Buyer agrees to pay to Seller, and Seller agrees to accept from
Buyer, an amount equal to TWENTY-SIX MILLION DOLLARS ($26,000,000), (the "Base
Purchase Price"), plus or minus (as the case may be) the Proration Amount
(collectively, the "Purchase Price").
2.5. Payment of Purchase Price at Closing.
The Purchase Price shall be payable to Seller at the Closing
(except to the extent that the Purchase Price shall have been paid on the
Preliminary Payment Date pursuant to Section 2.6) as follows:
2.5.1. Buyer and Seller shall cause the Deposit Escrow Agent
to deliver to Seller the amount of Two Million Six Hundred Thousand Dollars
($2,600,000) of the Deposit (the "Allocable Deposit") by wire transfer of
immediately
<PAGE>
available federal funds to an account which will be identified by Seller not
less than two (2) days prior to the Closing Date; provided, however, none of the
Allocable Deposit shall be released by the Deposit Escrow Agent at the Closing
until the Deposit Release Date.
2.5.2. Buyer shall deliver the balance of the Purchase Price
by wire transfer of immediately available federal funds to an account which will
be identified by Seller not less than two (2) days prior to the Closing Date;
provided, however, until such time as the Deposit Release Date shall have
occurred, Buyer shall deliver the entire Purchase Price.
2.6. Preliminary Payment.
2.6.1. If the Closing for the Stations shall not have occurred
prior to such date which is nine (9) months after the date of this Agreement and
Buyer shall not have paid to Seller on or prior to such date the amount of
Twenty-Six Million Dollars ($26,000,000) (the "Preliminary Payment") pursuant to
Section 2.6.3 below, then (a) if the Deposit Release Date shall have occurred,
Seller shall immediately receive the Allocable Deposit, (b) Seller shall sell
the Stations for Seller's account and benefit on terms and conditions to such
buyer or buyers as determined by Seller in its sole and absolute discretion
(such a sale is hereinafter referred to as a "Makewell Sale"), and (c) Seller's
obligations hereunder to proceed with the sale of the Stations to Buyer shall
automatically terminate without further action by the parties. Seller agrees to
use commercially reasonable efforts to consummate such Makewell Sale on arm's
length terms within four (4) years after the date hereof. If the issuance of the
FCC Orders for the Stations is delayed until after the date which is nine (9)
months after the date of this Agreement solely due to any issue raised by the
FCC or any petitioner concerning any Subject Party, then Seller's right to sell
the Stations in a Makewell Sale pursuant to Section 2.6.1 and to receive the
Allocable Deposit pursuant to this Section 2.6.1 shall be delayed until the
issuance of the FCC Orders for the Stations. In the event of such a delay, if
the FCC Application with respect to the Stations shall ultimately be denied by
the FCC and such FCC decision shall become final and non-appealable, then Buyer
shall have the right to terminate the transactions contemplated herein with
respect to the Stations and, if the Deposit Release Date shall have occurred,
then Buyer shall receive the Allocable Deposit or, if later, when the Deposit
Release Date occurs. If the Closing shall not have occurred on or prior to such
date which is nine (9) months after the date of this Agreement due solely to an
intentional breach by Seller which caused the conditions set forth in Section
9.2 not to be satisfied, then Seller's right to sell the Stations in a Makewell
Sale pursuant to Section 2.6.1 and to receive the Allocable Deposit pursuant to
Section 2.6.1 shall be delayed until such breach is cured by Seller.
<PAGE>
2.6.2. At the closing of a Makewell Sale pursuant to Section
2.6.1 (the "Makewell Closing"), Seller shall receive all proceeds from such
Makewell Sale, and Buyer shall immediately pay to Seller (the "Makewell
Payment") the amount equal to the greater of (a) the Allocable Deposit or (b)
sum of (i) the amount, if any, by which the Preliminary Payment exceeds the
proceeds received by Seller from such Makewell Sale (net of all Disposition
Expenses other than income Taxes in connection with such Makewell Sale), plus
(ii) interest on the Preliminary Payment (less the Allocable Deposit previously
released to Sellers) at the rate of six percent (6%) per annum from the date
which is nine (9) months after the date of this Agreement until the date that
Seller receives the Makewell Payment from Buyer. Such payment shall be made by
wire transfer of immediately available federal funds to an account identified by
Seller not less than two (2) days prior to the date of the Makewell Closing. If
Seller has received the Allocable Deposit in accordance with this Section 2.6.2,
upon the payment of the Makewell Payment pursuant to this Section 2.6.2, Seller
shall return the Allocable Deposit (but not in excess of the Makewell Payment)
to Buyer by wire transfer of immediately available federal funds to an account
identified by Buyer.
2.6.3. In lieu of a Makewell Sale for the Stations, Buyer
shall have the right to pay to Seller the Preliminary Payment in respect of the
Stations at any time on or prior to such date which is nine (9) months after the
date of this Agreement (the date on which Seller receives the Preliminary
Payment from Buyer pursuant to this Section 2.6.3 is referred to herein as the
"Preliminary Payment Date"). Payment of the Preliminary Payment shall be made as
follows:
(a) Buyer shall cause the Deposit Escrow Agent to deliver to
Seller the Allocable Deposit by wire transfer of immediately available federal
funds to an account which will be identified by Seller not less than two (2)
days prior to the Preliminary Payment Date; provided, however, the Allocable
Deposit shall not be released by the Deposit Escrow Agent until the Deposit
Release Date.
(b) Buyer shall deliver the balance of the Preliminary Payment
by wire transfer of immediately available federal funds to an account which will
be identified by Seller not less than two (2) days prior to the Preliminary
Payment Date; provided, however, until such time as the Deposit Release Date
shall have occurred, Buyer shall deliver the entire Preliminary Payment.
2.6.4 From and after the payment of the Preliminary Payment
and continuing until the earlier to occur of the Closing Date or the closing of
an Account Sale (the "Interim Period"), the Stations shall remain under the
ownership and complete control of Seller, and Seller shall operate the Stations
for Buyer's account and benefit; provided, however, that the proceeds from the
collection of Accounts Receivable of the Stations in existence as of the
Preliminary Payment Date shall be for the account of Seller. During the Interim
Period, all revenues from the
<PAGE>
operation of the Stations (other than the proceeds from the collection of the
Accounts Receivable of such Stations in existence as of the Preliminary Payment
Date) in excess of the Seller's Cost of Carry (the "Stations' Cash Flow") shall
be maintained by Seller for the benefit of Buyer. For tax purposes, the parties
agree that at all times during the Interim Period, Seller shall be treated as
the owner of the Stations, and all tax reports and returns will be filed
consistent therewith; provided, however, that Buyer shall have the right to
consult with Seller with respect to any tax treatment of the Stations that could
affect Buyer's ownership thereof after Closing. Notwithstanding anything else
herein to the contrary, if during the Interim Period the Stations' Cash Flow is
insufficient to permit Seller to take any action necessary to avoid a breach of
this Agreement, no breach will be deemed to have occurred if Seller gives Buyer
notice and an opportunity to provide the funds necessary to take the required
action.
2.6.5. If the Closing for the Stations shall not have occurred
prior to such date which is two (2) years after the date of this Agreement and
Seller shall have received the Preliminary Payment, then Seller shall have the
right to sell (or at any time following Seller's receipt of the Preliminary
Payment, Buyer shall have the right to cause Seller to sell) the Stations in an
Account Sale. At the closing of an Account Sale pursuant to this Section 2.6.5,
all proceeds therefrom (net of all Disposition Expenses in connection with such
Account Sale), shall be paid directly to Buyer by wire transfer of immediately
available funds to an account identified by Buyer in writing.
2.6.6. Buyer acknowledges and agrees that, notwithstanding
anything to the contrary contained in this Agreement or otherwise, Buyer's
obligation to pay the Makewell Payment pursuant to Section 2.6.2 and the rights
of Seller to receive such payment, (a) shall be absolute and unconditional and
not subject to any right of set-off, deduction or counterclaim and (b) shall not
be affected by any condition, fact or circumstance, including, without
limitation, the existence of any breach of any representations, warranties,
covenants or agreements of Seller. Payment of the Preliminary Payment or the
Makewell Payment shall be final and non-refundable and Buyer shall not seek to
recover all or any part of such payment from Seller for any reason whatsoever;
provided, however, that the foregoing shall not limit Buyer's rights to seek
indemnification in accordance with the terms and conditions of this Agreement.
2.7. Proration Amount.
2.7.1. Subject to the terms and conditions of Section 2.7.2,
at least five (5) days prior to the Closing Date for the Stations, Seller shall
make a good faith estimate of the adjustments to the Base Purchase Price
customary in radio broadcast station transactions for Proration Items (the
"Proration Amount") to reflect that all Proration Items of the Stations shall be
apportioned between Buyer
<PAGE>
and Seller in accordance with the principle that Seller shall receive the
benefit of all revenues, refunds, deposits (other than deposits for Program
Contracts which shall be prorated based on the percentage of the term that the
program was aired on the Stations before the Closing Date and the percentage
available to be aired on and after the Closing Date) and prepaid expenses, and
shall be responsible for all expenses, costs and liabilities allocable to the
conduct of the businesses or operations of the Stations for the period prior to
the Closing Date, and Buyer shall receive the benefit of all revenues, refunds,
deposits and prepaid expenses, and shall be responsible for all expenses, costs
and liabilities allocable to the conduct of the businesses or operations of the
Stations from and after the Closing Date; provided, however, that there shall be
no adjustment or proration for any negative or positive net trade balance except
to the extent that the negative trade balance (i.e., the amount by which the
value of goods or services to be received is less than the value of any
advertising time remaining to be run) for all of the Stations exceeds $50,000 as
of the Closing Date. Determinations pursuant to this Section 2.7.1 shall be made
in accordance with generally accepted accounting principles consistently applied
for the period prior to the Closing Date.
2.7.2. Notwithstanding anything to the contrary contained in
Section 2.7.1 and to the extent consistent with Section 2.6.5, if Seller shall
have received the Preliminary Payment, then the Proration Amount for the
Stations shall be determined under Section 2.7.1 on the Closing Date (or the
closing date of an Account Sale, if applicable) in accordance with the principle
that Seller shall receive the benefit of all revenues, refunds, deposits (other
than deposits for Program Contracts which shall be prorated based on the
percentage of the term that the film or program was aired on the Stations before
the Preliminary Payment Date and the percentage available to be aired on and
after the Preliminary Payment Date) and prepaid expenses, and shall be
responsible for all expenses, costs and liabilities allocable to the conduct of
the businesses or operations of the Stations for the period prior to the
Preliminary Payment Date, and Buyer shall receive the benefit of all revenues,
refunds, deposits (other than deposits for Program Contracts which shall be
prorated based on the percentage of the term that the film or program was aired
on the Stations before the Preliminary Payment Date and the percentage available
to be aired on and after the Preliminary Payment Date) and prepaid expenses, and
shall be responsible for all expenses, costs and liabilities allocable to the
conduct of the businesses or operations of the Stations for the period from and
after the Preliminary Payment Date.
2.7.3. Within ninety (90) days after the Closing Date (or the
closing date of an Account Sale, if applicable), Buyer shall deliver to Seller
in writing and in reasonable detail a good faith final determination of the
Proration Amount determined as of the Closing Date under Section 2.7.1 or as of
the Preliminary Payment Date under Section 2.7.2 ("Final Proration Amount").
Seller shall assist Buyer in making such determination, and Buyer shall provide
Seller
<PAGE>
with reasonable access to the properties, books and records relating to the
Stations for the purpose of determining the Final Proration Amount. Seller shall
have the right to review the computations and workpapers used in connection with
Buyer's preparation of the Final Proration Amount. If Seller disagrees with the
amount of the Final Proration Amount determined by Buyer, Seller shall so notify
Buyer in writing within thirty (30) days after the date of receipt of Buyer's
Final Proration Amount, specifying in detail any point of disagreement;
provided, however, that if Seller fails to notify Buyer in writing of Seller's
disagreement within such thirty (30) day period, Buyer's determination of the
Final Proration Amount shall be final, conclusive and binding on Seller and
Buyer. After the receipt of any notice of disagreement, Buyer and Seller shall
negotiate in good faith to resolve any disagreements regarding the Final
Proration Amount. If any such disagreement cannot be resolved by Seller and
Buyer within thirty (30) days after Buyer has received notice from Seller of the
existence of such disagreement, Buyer and Seller shall jointly select a
nationally recognized independent public accounting firm (which has not
performed any service for either Buyer or Seller or any of their respective
subsidiaries at anytime during the two (2) year period prior to the date such
firm is selected (the "Accounting Firm"), to review Buyer's determination of the
Final Proration Amount and to resolve as soon as possible all points of
disagreement raised by Seller. All determinations made by the Accounting Firm
with respect to the Final Proration Amount shall be final, conclusive and
binding on Buyer and Seller. The fees and expenses of the Accounting Firm
incurred in connection with any such determination shall be shared one-half by
Buyer and one-half by Seller.
If the Final Proration Amount is such that
Buyer's payment of the Proration Amount at Closing (or the closing of an Account
Sale, if applicable) was an underpayment to Seller, then Buyer shall pay such
underpayment amount to Seller in cash, within two (2) business days following
the final determination of the Final Proration Amount. If the Final Proration
Amount is such that Buyer's payment of the Proration Amount at Closing (or the
closing of an Account Sale, if applicable) was an overpayment to Seller, then
Seller shall pay such overpayment amount to Buyer in cash within two (2)
business days following the final determination of the Final Proration Amount.
Any amounts paid pursuant to this Section 2.7.3 shall be by wire transfer of
immediately available funds for credit to the recipient at a bank account
identified by such recipient in writing.
Buyer and Seller agree that prior to the date of
the final determination of the Final Proration Amount pursuant to this Section
2.7.3 (by the Accounting Firm or otherwise), neither party will destroy any
records pertaining to, or necessary for, the final determination of the Final
Proration Amount.
<PAGE>
2.8. Allocation of Base Purchase Price and Deposit.
2.8.1. Seller and Buyer agree to allocate the Deposit among
the Heritage Stations as set forth in Section 2.9 of the Multi-Stations
Agreement.
2.8.2. Seller and Buyer each represent, warrant, covenant,
and agree with each other that the Base Purchase Price shall be allocated among
the classes of Assets for each Station, as agreed by the parties within sixty
(60) days after the date hereof. Seller and Buyer agree, pursuant to Section
1060 of the Code that the Base Purchase Price shall be allocated in accordance
with this Section 2.8, and that all Tax returns and reports shall be filed
consistent with such allocation. Notwithstanding any other provision of this
Agreement, the provisions of this Section 2.8 shall survive the Closing Date
without limitation.
2.8.3. If Seller and Buyer are unable to agree on such
allocation, within sixty (60) days following execution of this Agreement, Seller
and Buyer agree to retain a nationally recognized appraisal firm experienced in
valuing broadcast properties which is mutually acceptable to Seller and Buyer
(the "Appraisal Firm") to appraise the classes of Assets of each Station in
accordance with the allocation for the Stations set forth in Section 2.8. The
Appraisal Firm shall be instructed to perform an appraisal of the classes of
Assets of each Station and to deliver a report to Seller and Buyer as soon as
reasonably practicable (the "Appraisal Report"). Buyer and Seller shall each pay
one-half of the fees, costs and expenses of the Appraisal Firm whether or not
the transactions contemplated hereby are consummated.
2.9. Assumption of Liabilities.
2.9.1. At the Closing (unless there shall have occurred the
Preliminary Payment Date, in which case the provisions of Section 2.9.3 shall
apply, Buyer shall assume, pay, perform, discharge and indemnify and hold Seller
harmless from and against (a) all Liabilities arising out of events occurring on
or after the Closing Date related to the businesses or operations of the
Stations or Buyer's ownership of the Assets, (b) all Liabilities arising out of
events occurring on or after the Closing Date with respect to the FCC Licenses,
(c) all Liabilities arising on or after the Closing Date under the Station
Contracts (including, without limitation, Trade-out Agreements) pursuant to
their terms (except for Liabilities for any breaches thereunder by Seller
occurring prior to the Closing Date), (d) all Liabilities for which there is a
downward adjustment to the Base Purchase Price in connection with the
calculation of the Proration Amount, and (e) all Liabilities of
<PAGE>
Seller to employees of the Stations to be assumed by Buyer in accordance with
Section 8.4 hereof.
2.9.2. If Seller shall have received the Preliminary
Payment, Buyer shall, at the Closing for the Stations, assume, pay, perform,
discharge and indemnify and hold Seller harmless from and against (a) all
Liabilities arising out of events occurring on or after the Preliminary Payment
Date related to the businesses or operations of the Stations or the ownership of
the Assets related to the Stations, (b) all Liabilities arising out of events
occurring on or after the Preliminary Payment Date with respect to FCC Licenses
attributable to the Stations, (c) all Liabilities arising on or after the
Preliminary Payment Date under the Station Contracts (including, without
limitation, Trade-out Agreements) pursuant to their terms (except for
Liabilities for any breaches thereunder by Sellers occurring prior to the
Preliminary Payment Date), (d) all Liabilities for which there is or would be a
downward adjustment to the Preliminary Payment in connection with the
calculation of the Proration Amount for the Stations, and (e) all Liabilities of
Seller to employees of the Stations to be assumed by Buyer in accordance with
Section 8.4 hereof (the Liabilities described in Sections 2.9.1, and 2.9.2,
collectively, the "Assumed Liabilities").
2.9.3. Except for the Assumed Liabilities, Buyer assumes
no other Liabilities of any kind or description.
2.10. News Corp. Guaranty
Contemporaneously with the execution and delivery of this
Agreement, News Corp. has executed and delivered a Guaranty, pursuant to which
News Corp. has absolutely and unconditionally guaranteed the prompt and complete
payment and performance of the obligations of Seller under this Agreement.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES BY SELLER
Seller represents and warrants to Buyer as follows:
3.1. Organization and Standing.
Seller is duly organized, validly existing and in good
standing under the laws of the state of its organization and is duly qualified
to do business and is in good standing in any jurisdiction where it owns or
operates a television or radio station and in each other jurisdiction where such
qualification is necessary, except for those jurisdictions where the failure to
be so qualified would not, individually or in the aggregate, have a Material
Adverse Effect. Seller has the corporate power
<PAGE>
and authority to own, lease and otherwise to hold and operate the Assets, to
carry on the business of the Station as now conducted, and to enter into and
perform the terms of this Agreement, the other Seller Documents to which it is a
party and the transactions contemplated hereby and thereby.
3.2. Authorization.
The execution, delivery and performance of this Agreement
and of the other Seller Documents to which it is a party, and the consummation
of the transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action (none of which actions has been
modified or rescinded and all of which actions are in full force and effect).
This Agreement and the Deposit Escrow Agreement constitute, and upon execution
and delivery each other Seller Document to which it is a party will constitute,
valid and binding agreements and obligations of Seller, enforceable against
Seller in accordance with their respective terms, except as the same may be
limited by bankruptcy, insolvency, reorganization, moratorium and other similar
laws of general applicability relating to or affecting creditors' rights
generally and by the application of general principles of equity.
3.3. Compliance with Laws.
To Seller's knowledge, Seller is in material compliance with
all Laws applicable to Seller, to the Assets and Stations and to its business
and operations. Seller has obtained and holds all material permits, licenses and
approvals (none of which has been modified or rescinded and all of which are in
full force and effect) from all Governmental Authorities necessary in order to
conduct the operations of the Stations as presently conducted.
3.4. Consents and Approvals; No Conflicts.
3.4.1. The execution and delivery of this Agreement, and the
performance of the transactions contemplated herein by Seller, will not require
any consent, approval, authorization or other action by, or filing with or
notification to, any Person or Governmental Authority, except as follows: (a)
filings required under Hart-Scott-Rodino, (b) consents to the assignment of the
FCC Licenses to Buyer by the FCC, (c) filings, if any, with respect to real
estate transfer taxes, and (d) certain of the Station Contracts may be assigned
only with the consent of third parties, as specified in Schedule 3.4.
3.4.2. Assuming all consents, approvals, authorizations and
other actions described in Section 3.4.1 have been obtained and all filings and
notifications described in Section 3.4.1 have been made, the execution, delivery
and performance of this Agreement and the other Seller Documents by Seller do
not and
<PAGE>
will not (a) conflict with or violate in any material respect any Law applicable
to Seller, the Assets or Stations or by which any of the Assets or Stations is
subject or affected, (b) conflict with or result in any breach of or constitute
a default (or an event which with notice or lapse of time or both would become a
default) of any Station Contract or other material agreement to which Seller is
a party or by which Seller is bound or to which any of the Assets or Stations is
subject or affected, (c) result in the creation of any Encumbrance upon the
Assets, and (d) conflict with or violate the organizational documents of Seller.
3.5. Financial Statements; Undisclosed Liabilities.
3.5.1. Seller has provided to Buyer an unaudited balance
sheet of the Stations as of May 31, 1997 (the "Balance Sheet"), and an unaudited
statement of income and operating cash flows for the five month period ending
May 31, 1997. The financial statements referred to in this Section 3.5.1 (a)
present fairly in all material respects the financial condition of the Stations
as of the date and the results of operations and operating cash flows for the
period indicated, and (b) have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis (except that the
financial statements referred to in this Section 3.5.1 do not contain all
footnotes and cash flow information from investing and financing activities
required under generally accepted accounting principles and are subject to
customary year-end adjustments).
3.5.2. There exist no Liabilities of any of the Stations
relating to, or arising out of, the business or operations of the Stations,
contingent or absolute, matured or unmatured, known or unknown, except (a) as
reflected on the Balance Sheet and (b) for Liabilities that (i) were incurred
after May 31, 1997 (the "Current Balance Sheet Date") in the Ordinary Course of
Business, or (ii) were not required to be reflected on the Balance Sheet in
accordance with generally accepted accounting principles applied on a consistent
basis.
3.6. Absence of Certain Changes or Events.
Except as set forth and described in Schedule 3.6, since the
Current Balance Sheet Date, there has been no Material Adverse Effect. Since the
Current Balance Sheet Date, Seller has conducted the business of the Stations in
the Ordinary Course of Business, and Seller has not (a) incurred any
extraordinary loss of, or injury to, any of the Assets as the result of any
fire, explosion, flood, windstorm, earthquake, labor trouble, riot, accident,
act of God or public enemy or armed forces, or other casualty; (b) incurred, or
become subject to, any Liability, except current Liabilities incurred in the
Ordinary Course of Business; (c) discharged or satisfied any Encumbrance or paid
any Liability other than current Liabilities shown in the Balance Sheet, current
Liabilities incurred since the Current Balance Sheet Date in the Ordinary Course
of Business, and Liabilities
<PAGE>
(including, without limitation, partial and complete prepayments) arising under
any credit or loan agreement between Seller and its lenders; (d) mortgaged,
pledged or subjected to any Encumbrance any of the Assets (except for Permitted
Encumbrances); (e) made any material change in any method of accounting or
accounting practice; (f) sold, leased, assigned or otherwise transferred any of
the material Assets other than obsolete Assets which have been replaced by
suitable replacements; (g) made any material increase in compensation or
benefits payable to any employee other than in the Ordinary Course of Business;
or (h) made any agreement to do any of the foregoing.
3.7. Absence of Litigation.
Except as set forth on Schedule 3.7 as of the date hereof,
there is no material or, to Seller's knowledge, immaterial action, suit,
investigation, claim, arbitration, litigation or similar proceeding, nor any
order, decree or judgment pending or, to Seller's knowledge, threatened against
Seller, the Assets or Stations before any Governmental Authority.
3.8. Assets.
Except for the Excluded Assets, Seller's Assets include all
of the assets or property used or useful in the businesses of the Stations as
presently operated. Except for leased or licensed Assets, Seller is the owner
of, and has good title to, the Assets free and clear of any Encumbrances, except
for Permitted Encumbrances (including, without limitation, those items set forth
on Schedule 3.8). At the Closing, Buyer shall acquire good title to, and all
right, title and interest in and to the Assets, free and clear of all
Encumbrances, except for the Permitted Encumbrances.
3.9. FCC Matters.
Seller holds the FCC Licenses listed as held by Seller on
Schedule 2.1.1. Such FCC Licenses constitute all of the licenses, permits and
authorizations from the FCC which have been issued to Seller that are required
for the business and operations of the Stations. Except as set forth on Schedule
3.9, such FCC Licenses are valid and in full force and effect through the dates
set forth on Schedule 2.1.1, unimpaired by any condition other than as set forth
in the FCC Licenses. Except as set forth on Schedule 3.9, no application, action
or proceeding is pending for the renewal or modification of any of Seller's FCC
Licenses, and, except for actions or proceedings affecting radio broadcast
stations generally, no application, complaint, action or proceeding is pending
or, to Seller's knowledge, threatened that may result in the (a) the revocation,
modification, non-renewal or suspension of any of such FCC Licenses, or (b) the
issuance of a cease-and-desist order. Except as set forth in Schedule 3.9,
Seller has no knowledge of any facts,
<PAGE>
conditions or events relating to Seller or the Stations that would reasonably be
expected to cause the FCC to revoke any FCC License or not to grant any pending
applications for renewal of the FCC Licenses or to deny the assignment of the
FCC Licenses to a qualified Buyer as provided for in this Agreement.
3.10. Real Property.
3.10.1. Seller has good and marketable fee simple title to
all fee estates included in the Real Property and good title to all other owned
Real Property, in each case free and clear of all Encumbrances, except for
Permitted Encumbrances.
3.10.2. Seller has a valid leasehold interest in all Leased
Property listed as leased by Seller in Schedule 2.1.2. Schedule 2.1.2 lists all
leases and subleases pursuant to which any of the Leased Property is leased by
Seller. Seller is the owner and holder of all the Leased Property purported to
be granted by such leases and subleases. Each such lease and sublease is valid
as to Seller and, to Seller's knowledge valid as to any other party thereto, and
is in full force and effect and, to Seller's knowledge, constitutes a legal and
binding obligation of, and is legally enforceable against Seller and each other
party thereto and grants the leasehold interest it purports to grant, including
any rights to nondisturbance and peaceful and quiet enjoyment that may be
contained therein. Seller is, and to the knowledge of Seller all other parties
are, in compliance in all material respects with the provisions of such leases
and subleases.
3.10.3. The Real Property and the Leased Property listed in
Schedule 2.1.2 constitute all of the real property owned, leased or used by
Seller in the business and operations of the Stations which is material to the
business and operations of the Stations.
3.10.4. No portion of the Real Property or any building,
structure, fixture or improvement thereon is the subject of, or affected by, any
condemnation, eminent domain or inverse condemnation proceeding currently
instituted or pending or, to the knowledge of Seller, threatened. To Seller's
knowledge and to the extent that such documents are in Seller's possession,
Seller has delivered to Buyer true, correct and complete copies of the following
documents with respect to the Real Property and Leased Property: (i) deeds, by
which Seller has received a fee interest in any of the Real Property; (ii)
leases, by which Seller is the lessee or lessor of any of the Real Property;
(iii) title insurance policies or commitments; (iv) surveys; and (v) inspection
reports or other instruments or reports, including, without limitation, any
phase I or phase II environmental reports or other similar environmental
reports, surveys or assessments (including any and all amendments and other
modifications of such instruments).
<PAGE>
3.11. Intellectual Property.
Seller possesses adequate rights, licenses and authority to
use all Intellectual Property necessary to conduct the business of the Stations
as presently conducted. Seller has good title to all Intellectual Property that
it owns, free and clear of any Encumbrances, except for Permitted Encumbrances.
Seller is not obligated to pay any royalty or other fees to anyone with respect
to the Intellectual Property. Seller has not received any written notice to the
effect that any service rendered by Seller relating to the business of the
Stations may infringe, or that Seller is otherwise infringing, on any
Intellectual Property right or other legally protectable right of another. No
director, officer or employee of Seller has any interest in any Intellectual
Property.
3.12. Station Contracts.
Complete and correct copies of the Station Contracts set
forth in Schedules 2.1.5, 2.1.6, and 2.1.8 (which schedules are true and correct
in all material respects) have been made available to Buyer and (a) each such
material Station Contract and, to Seller's knowledge, each such immaterial
Station Contract, is in full force and effect and constitutes a legal, valid and
binding obligation of Seller and, to Seller's knowledge, of each other party
thereto; (b) Seller is not in breach or default in any material respect of the
terms of any Station Contract; (c) none of the material rights of Seller under
any such Station Contract will be subject to termination, nor will a default
occur, as a result of the consummation of the transactions contemplated hereby,
except to the extent that failure to obtain the prior consent to assignment
thereof of any party thereto shall or could be interpreted to constitute a
termination or modification of or a default under any such Station Contract; and
(d) to the knowledge of Seller, no other party to any such Station Contract is
in breach or default in any material respect of the terms thereunder.
3.13. Taxes.
Seller has (or, in the case of returns becoming due after
the date hereof and on or before the Closing Date, will have prior to the
Closing Date) duly filed all material Seller Tax Returns required to be filed by
Seller on or before the Closing Date with respect to all material applicable
Taxes. In the case of Seller Tax Returns which receive an extension for their
date of filing, such Seller Tax Returns will be considered due on, and not
considered required to be filed before, the extended due date. To Seller's
knowledge, all Seller Tax Returns are (or, in the case of returns becoming due
after the date hereof and on or before the Closing Date, will be) true and
complete in all material respects. Seller: (a) has paid all Taxes due to any
Governmental Authority as indicated on the Seller Tax Returns; or (b) has
established (or, in the case of amounts becoming due after the date hereof,
prior to
<PAGE>
the Closing Date will have established) adequate reserves (in conformity with
generally accepted accounting principles consistently applied) for the payment
of such Taxes.
3.14. Employee Benefit Plans.
3.14.1. Schedule 3.14 lists all Plans and Benefit
Arrangements (exclusive of severance arrangements and retention agreements)
maintained by or contributed to by Seller or HMC for the benefit of the
employees of the Stations (collectively, the "Benefit Plans"). Each Benefit Plan
has been maintained in material compliance with its terms and with ERISA, the
Code and other applicable Laws.
3.14.2. Schedule 3.14 sets forth a list of all Qualified
Plans maintained by or contributed to by Seller or HMC for the benefit of the
employees of the Stations. All such Qualified Plans and any related trust
agreements or annuity agreements (or any other funding document) have been
maintained in material compliance with ERISA and the Code (including, without
limitation, the requirements for tax qualification described in Section 401
thereof), other than any Multiemployer Plan. To Seller's knowledge, any trusts
established under such Plans are exempt from federal income taxes under Section
501(a) of the Code.
3.14.3. Schedule 3.14 lists all funded Welfare Plans that
provide benefits to current or former employees of Seller or its beneficiaries.
To Seller's knowledge, the funding under each Welfare Plan does not exceed and
has not exceeded the limitations under Sections 419A(b) and 419A(c) of the Code.
To Seller's knowledge, neither HMC nor Seller is subject to taxation on the
income of any Welfare Plan's welfare benefit fund (as such term is defined in
Section 419(e) of the Code) under Section 419A(g) of the Code.
3.14.4. Neither HMC nor Seller has any post-retirement
medical, life insurance or other benefits promised, provided or otherwise due
now or in the future to current, former or retired employees of the Stations.
3.14.5. To Seller's knowledge, except as set forth in
Schedule 3.14, HMC has (a) filed or caused to be filed all returns and reports
on the Plans that it is required to file and (b) paid or made adequate provision
for all fees, interest, penalties, assessments or deficiencies that have become
due pursuant to those returns or reports or pursuant to any assessment or
adjustment that has been made relating to those returns or reports. All other
fees, interest, penalties and assessments that are payable by or for HMC and/or
Seller have been timely reported, fully paid and discharged. There are no unpaid
fees, penalties, interest or
<PAGE>
assessments due from HMC and/or Seller or from any other person that are or
could become an Encumbrance on any of the Assets or could otherwise adversely
affect the businesses or Assets of Seller. To Seller's knowledge, HMC has
collected or withheld all amounts that are required to be collected or withheld
by it to discharge its obligations, and all of those amounts have been paid to
the appropriate Governmental Authority or set aside in appropriate accounts for
future payment when due. HMC has furnished to Buyer true and complete copies of
all documents setting forth the terms and funding of each Plan.
3.14.6. Except as set forth in Schedule 3.14, neither Seller
nor any ERISA Affiliate has ever sponsored or maintained, had any obligation to
sponsor or maintain, or had any liability (whether actual or contingent, with
respect to any of its assets or otherwise) with respect to any Plan subject to
Section 302 of ERISA or Section 412 of the Code or Title IV of ERISA (including
any Multiemployer Plan). Neither Seller nor any ERISA Affiliate of Seller (since
January 1, 1989) has terminated or withdrawn from or sought a funding waiver
with respect to any plan subject to Title IV of ERISA, and no facts exist that
could reasonably be expected to cause such actions in the future; no accumulated
funding deficiency (as defined in Code Section 412), whether or not waived,
exists with respect to any such plan; no reportable event (as defined in ERISA
Section 4043) has occurred with respect to any such plan (other than events for
which reporting is waived); all costs of any such plans have been provided for
on the basis of consistent methods in accordance with sound actuarial
assumptions and practices, and the assets of each such plan, as of its last
valuation date, exceeded its "Benefit Liabilities" (as defined in ERISA Section
4001(a)(16)); and, since the last valuation date for each such plan, no such
plan has been amended or changed to increase the amounts of benefits thereunder
and, to the knowledge of Seller, there has been no event that would reduce the
excess of assets over benefit liabilities; and except as set forth in Schedule
3.14, neither Seller nor any ERISA Affiliate has ever made or been obligated to
make, or reimbursed or been obligated to reimburse another employer for,
contributions to any Multiemployer Plan.
3.14.7. No claims or lawsuits are pending or, to the
knowledge of Seller, threatened by, against, or relating to any Benefit Plan. To
Seller's knowledge, the Benefit Plans are not presently under audit or
examination (nor has notice been received of a potential audit or examination)
by the IRS, the Department of Labor, or any other governmental agency or entity
and no matters are pending with respect to any Qualified Plan under the IRS's
Voluntary Compliance Resolution program, its Closing Agreement Program, or other
similar programs.
3.14.8. With respect to each Plan, there has occurred no
non-exempt "prohibited transaction" (within the meaning of Section 4975 of the
Code) or transaction prohibited by Section 406 of ERISA or breach of any
fiduciary duty
<PAGE>
described in Section 404 of ERISA that would, if successful, result in any
liability for Seller.
3.14.9. Seller has no liability (whether actual, contingent,
with respect to any of the Assets or otherwise) with respect to any employee
benefit plan that is not a Benefit Plan (exclusive of severance arrangements and
retention agreements) or with respect to any employee benefit plan sponsored or
maintained (or which has been or should have been sponsored or maintained) by
any ERISA Affiliate.
3.14.10. All group health plans of Seller and its ERISA
Affiliates have been operated in material compliance with the requirements of
Sections 4980B (and its predecessor) and 5000 of the Code, and Seller has
provided, or will have provided before the Closing Date, to individuals entitled
thereto all required notices and coverage pursuant to Section 4980B with respect
to any "qualifying event" (as defined therein) occurring before or on the
Closing Date.
3.15. Labor Relations.
Seller has made available to Buyer a true and complete list
of all employees of Seller engaged in the business or operations of the Stations
as of the date set forth on the list, together with such employee's position,
salary and date of hire. Schedule 3.15 lists all written employment contracts of
Seller and all written agreements, plans, arrangements, commitments and
understandings pursuant to which HMC or Seller has severance obligations. Except
as set forth on Schedule 3.15, no labor union or other collective bargaining
unit represents or, to Seller's knowledge, claims to represent, any of the
employees of the Station. Except as set forth in Schedule 3.15, there are no
strikes, work stoppages, grievance proceedings, union organization efforts, or
other controversies pending between Seller and any union or collective
bargaining unit representing (or, to Seller's knowledge, claiming to represent)
Seller's employees. Seller is in compliance with all Laws relating to the
employment or the workplace, including, without limitation, provisions relating
to wages, hours, collective bargaining, safety and health, work authorization,
equal employment opportunity, immigration and the withholding of income taxes,
unemployment compensation, worker's compensation, employee privacy and right to
know and social security contributions, except for any noncompliance which would
not have a Material Adverse Effect. Except as set forth in Schedule 3.15 hereto,
there are no collective bargaining agreements relating to the Stations or the
business and operations thereof.
<PAGE>
3.16. Environmental Matters.
3.16.1. Except as set forth in Schedule 3.16, to Seller's
knowledge (which knowledge is based on the items set forth on Schedule 3.16),
Seller is in material compliance with, and the Real Property and all
improvements thereon are in material compliance with, all Environmental Laws.
3.16.2. Except as set forth in Schedule 3.16, there are no
pending or, to the knowledge of Seller, threatened actions, suits, claims, or
other legal proceedings based on (and Seller has not received any written notice
of any complaint, order, directive, citation, notice of responsibility, notice
of potential responsibility, or information request from any Governmental
Authority arising out of or attributable to): (a) the current or past presence
at any part of the Real Property of Hazardous Materials; (b) the current or past
release or threatened release into the environment from the Real Property
(including, without limitation, into any storm drain, sewer, septic system or
publicly owned treatment works) of any Hazardous Materials; (c) the off-site
disposal of Hazardous Materials originating on or from the Real Property or the
businesses or Assets of Seller; (d) any facility operations or procedures of
Seller which do not conform to requirements of the Environmental Laws; or (e)
any violation of Environmental Laws at any part of the Real Property arising
from Seller's activities involving Hazardous Materials. To the knowledge of
Seller, Seller has been duly issued all material permits, licenses, certificates
and approvals required under any Environmental Law.
3.17. Insurance.
Schedule 3.17 contains a true and complete list and brief
summary of all policies of title, property, fire, casualty, liability, life,
workmen's compensation, libel and slander, and other forms of insurance of any
kind relating to Seller's Assets or the business and operations of the Stations.
All such policies: (a) are in full force and effect; (b) are sufficient for
compliance in all material respects by Seller with all requirements of Law and
of all material agreements to which Seller is a party; and (c) to Seller's
knowledge, are valid, outstanding, and enforceable policies and Seller is not in
default in any material respect thereunder.
3.18. Reports.
All material returns, reports and statements that the
Station is currently required to file with the FCC or any governmental agency
have been timely filed, and all reporting requirements of the FCC and other
governmental authorities having jurisdiction thereof have been complied with by
Seller in all material respects. All of such reports, returns and statements are
complete and correct in all material respects as filed. To Seller's knowledge,
all documents
<PAGE>
required by the FCC to be deposited by Seller in Seller's public file (as
defined in the rules and regulations of the FCC) during the period of operation
of the Stations by Seller has been deposited therein.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES BY BUYER
Buyer represents, warrants and covenants to Seller as
follows:
4.1. Organization and Standing.
Buyer is a corporation duly organized, validly existing and
in good standing under the laws of the state of Maryland and by the Closing Date
will be duly qualified to do business as a foreign corporation where such
qualification is necessary. Buyer has the full corporate power and corporate
authority to enter into and perform the terms of this Agreement and the other
Buyer Documents and to carry out the transactions contemplated hereby and
thereby.
4.2. Authorization.
The execution, delivery and performance of this Agreement
and of the other Buyer Documents, and the consummation of the transactions
contemplated hereby and thereby, have been duly and validly authorized by all
necessary actions of Buyer (none of which actions has been modified or rescinded
and all of which actions are in full force and effect). This Agreement and the
Deposit Escrow Agreement constitute, and upon execution and delivery each such
other Buyer Document will constitute, a valid and binding agreement and
obligation of Buyer, enforceable against Buyer in accordance with its respective
terms, except as the same may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws of general applicability
relating to or affecting creditors' rights generally and by the application of
general principles of equity.
4.3. Consents and Approvals; No Conflicts.
4.3.1. The execution and delivery of this Agreement, and
the performance of the transactions contemplated herein by Buyer, will not
require any consent, approval, authorization or other action by, or filing with
or notification to, any Person or Governmental Authority, except as follows: (a)
filings required under
<PAGE>
Hart-Scott-Rodino, (b) approvals of the assignment of the FCC Licenses to Buyer
by the FCC and (c) filings, if any, with respect to real estate transfer taxes.
4.3.2. Assuming all consents, approvals, authorizations and
other actions described in Section 4.3.1 have been obtained and all filings and
notifications described in Section 4.3.1 have been made, the execution, delivery
and performance of this Agreement and the other Buyer Documents by Buyer do not
and will not (a) conflict with or violate any material Law applicable to Buyer,
(b) conflict with or result in any breach of or constitute a default (or an
event which with notice or lapse of time or both would become a default) of any
material contract or material agreement to which Buyer is a party or by which
Buyer is bound, or (c) conflict with or violate the organizational documents of
Buyer.
4.4. Availability of Funds.
Buyer will have available on the Closing Date, on the
Preliminary Payment Date, and on the date of the Makewell Closing sufficient
funds to enable it to consummate the transactions contemplated hereby.
4.5. Qualification of Buyer.
4.5.1. Except as disclosed in Schedule 4.5.1, Buyer is, and
pending Closing will remain legally, financially and otherwise qualified under
the Communications Act and all rules, regulations and policies of the FCC to
acquire and operate the Stations. Except as disclosed in Schedule 4.5.1, there
are no facts or proceedings which would reasonably be expected to disqualify
Buyer under the Communications Act or otherwise from acquiring or operating any
of the Stations or would cause the FCC not to approve the assignment of the FCC
Licenses to Buyer. Except as disclosed in Schedule 4.5.1, Buyer has no knowledge
of any fact or circumstance relating to Buyer or any of Buyer's Affiliates that
would reasonably be expected to (a) cause the filing of any objection to the
assignment of the FCC Licenses to Buyer, or (b) lead to a delay in the
processing by the FCC of the applications for such assignment. Except as
disclosed in Schedule 4.5.1, no waiver of any FCC rule or policy is necessary to
be obtained for the grant of the applications for the assignment of the FCC
Licenses to Buyer, nor will processing pursuant to any exception or rule of
general applicability be requested or required in connection with the
consummation of the transactions herein.
4.5.2. As of the date hereof and through the later to occur
of the HSR Filing and the filing of the FCC Applications, except as set forth on
Schedule 4.5.1, neither Buyer nor any Affiliate of Buyer (a) owns, controls or
operates any television or radio station located in the DMA; (b) has any direct
or indirect interest, including, without limitation, any equity, debt, security
or any other financial interest, whether or not "attributable" (as defined in
the rules and
<PAGE>
regulations of the FCC), or management interest, in (i) any television or radio
station located in the DMA, or (ii) any applicant seeking to construct or
acquire, by assignment of license or transfer of control, any such television or
radio station (an "Applicant"); or (c) is a party to any TBA with a television
or radio station located in the DMA, or with any Applicant. Buyer acknowledges
and agrees that the representations set forth in this Section 4.5.2 shall take
into account and include (a) the consummation of any proposed or pending
acquisition (as of the date hereof and through the later to occur of the HSR
Filing and the filing of the FCC Applications) of television or radio stations
(including the acquisition of the Stations) by Buyer or any Affiliate of Buyer
or any Applicant, and (b) any TBA or proposed or pending TBA (as of the date
hereof and through the later to occur of the HSR Filing and the filing of the
FCC Applications) to which Buyer or any Affiliate of Buyer is or may become a
party.
4.6. WARN Act.
Buyer is not planning or contemplating, and has not made or
taken, any decisions or actions concerning the employees of the Stations after
the Closing Date that would require the service of notice under the Worker
Adjustment and Retraining Act of 1988, as amended.
4.7. No Outside Reliance.
Buyer has not relied and is not relying on any statement,
representation or warranty not made in this Agreement, any Schedule hereto or
any certificate to be delivered to Buyer at the Closing pursuant to this
Agreement. Buyer is not relying on any projections or other predictions
contained or referred to in materials (other than the Schedules) that have been
or may hereafter be provided to Buyer or any of its Affiliates, agents or
representatives, and Seller makes no representations or warranties with respect
to any such projections or other predictions.
4.8. Interpretation of Certain Provisions.
Buyer has not relied and is not relying on the specification
of any dollar amount in any representation or warranty made in this Agreement or
any Schedule hereto to indicate that such amounts, or higher or lower amounts,
are or are not material, and agrees not to assert in any dispute or controversy
between the parties hereto that specification of such amounts indicates or is
evidence as to whether or not any obligation, item or matter is or is not
material for purposes of this Agreement and the transactions contemplated
hereby.
<PAGE>
ARTICLE 5.
PRE-CLOSING FILINGS
5.1. Applications for FCC Consent.
Within ten (10) days following the execution of this
Agreement, Seller and Buyer (or any direct or indirect wholly-owned subsidiary
of Buyer which is a permitted assignee of Buyer under Section 15.6.1) shall
jointly file applications for the Stations with the FCC requesting its consent
to the assignment of the FCC Licenses for the Stations from Seller to Buyer (the
"FCC Applications"). Seller and Buyer will diligently take, or fully cooperate
in the taking of, all necessary and proper steps, and provide any additional
information reasonably requested in order to obtain promptly the requested
consents and approvals of the FCC Applications by the FCC.
5.2. Hart-Scott-Rodino.
Within ten (10) days following the execution of this
Agreement, Seller and Buyer shall complete any filing that may be required
pursuant to Hart-Scott-Rodino (each an "HSR Filing"). Seller and Buyer shall
diligently take, or fully cooperate in the taking of, all necessary and proper
steps, and provide any additional information reasonably requested in order to
comply with, the requirements of Hart-Scott-Rodino.
5.3. Non-Required Actions.
None of the parties hereto shall have any obligation to take
any steps pursuant to Section 5.1 or Section 5.2 which would be reasonably
expected to result in the incurrence of a material cost or other liability or
which would require the divestiture of any business or assets of any party
hereto or any Affiliate thereof. Notwithstanding anything to the contrary in the
preceding sentence, Buyer shall have the obligation to make all payments to
Seller in accordance with the terms and conditions herein.
ARTICLE 6.
COVENANTS AND AGREEMENTS OF SELLER
Seller covenants and agrees with Buyer as follows:
<PAGE>
6.1. Negative Covenants.
Pending and prior to the earlier of the Closing or the sale
of the Stations under an Account Sale or a Makewell Sale (as applicable), Seller
will not, without the prior written consent of Buyer (which consent will not be
unreasonably withheld, delayed or conditioned, except in the case of matters
referred to in Sections 6.1.7, 6.1.9 and 6.1.11, with respect to which Buyer's
consent may be withheld in its sole and absolute discretion), do or agree to do
any of the following:
6.1.1. Dispositions; Mergers.
Sell, assign, lease or otherwise transfer or
dispose of any of the Assets other than at substantially fair market value and
in the Ordinary Course of Business; or merge or consolidate with or into any
other entity or enter into any contracts or agreements relating thereto.
6.1.2. Accounting Principles and Practices.
Change or modify any of Seller's accounting
principles or practices or any method of applying such principles or practices.
6.1.3. Trade-out Agreements.
Enter into or renew any Trade-out Agreement that
would be binding on Buyer after the Closing Date, except in the Ordinary Course
of Business and which requires the provision of broadcast time having a value of
less than (a) $25,000 individually, and (b) together with existing Trade-out
Agreements still in effect as of the Closing Date, $250,000 in the aggregate as
of the Closing Date.
6.1.4. Broadcast Time Sales Agreements.
Enter into or renew any Time Sales Agreement
except in the Ordinary Course of Business and which are for cash at prevailing
rates for a term not exceeding twelve (12) months.
6.1.5. TBAs.
Acquire or enter into or renew any TBA.
6.1.6. Additional Agreements.
Acquire or enter into any new Station Contracts
not referred to in Sections 6.1.3, 6.1.4 or 6.1.5 above, or renew, extend,
amend, alter, modify or otherwise change any existing Station Contract, except
in the Ordinary Course of Business (collectively, "Additional Agreements");
provided, however, Seller shall not
<PAGE>
enter into any Station Contract requiring payments by Seller under each Station
Contract in excess of $50,000.
6.1.7. Breaches.
Do or omit to do any act which will cause a
material breach of any Station Contract.
6.1.8. Employee Matters.
Enter into or become subject to any employment,
labor, union, or professional service contract not terminable at will, or any
bonus, pension, insurance, profit sharing, incentive, deferred compensation,
severance pay, retirement, hospitalization, employee benefit, or other similar
plan; or increase the compensation payable or to become payable to any employee,
or pay or arrange to pay any bonus payment to any employee, except in the
Ordinary Course of Business.
6.1.9. Actions Affecting FCC Licenses.
Take any action which may jeopardize the
validity or enforceability of or rights under the FCC Licenses.
6.1.10. Programming.
Program or broadcast any Program Contract or
syndicated program, except in the Ordinary Course of Business.
6.1.11. Encumbrances.
Create, assume or permit to exist any
Encumbrances upon any of the Assets except for Permitted Encumbrances and
Encumbrances that will be discharged prior to or on the Closing Date.
6.1.12. Transactions With Affiliates.
Enter into any transaction with any Affiliate of
Seller, News Corp. or any Affiliate of News Corp. that will be binding upon
Buyer, the Assets or the Stations on or after the Closing Date, except for
transactions not otherwise prohibited by this Section 6.1 and transactions
between and among the Stations operating in the Ordinary Course of Business, in
each case on arm's length terms.
<PAGE>
6.2. Affirmative Covenants.
Pending and prior to the earlier of the Closing Date or the
sale of the Stations under an Account Sale or a Makewell Sale (as applicable),
Seller will:
6.2.1. Preserve Existence.
Preserve its corporate existence and business
organization intact, maintain its existing franchises and licenses, use
commercially reasonable efforts to preserve for Buyer the relationships of the
Stations with suppliers, customers, employees and others with whom the Stations
have business relationships, and keep all of the Assets substantially in their
present condition, ordinary wear and tear excepted.
6.2.2. Normal Operations.
Subject to the terms and conditions of this
Agreement (including, without limitation, Section 6.1), (a) carry on the
businesses and activities of the Stations, including without limitation,
promotional activities, the sale of advertising time, entering into other
contracts and agreements, or purchasing and scheduling of programming, in the
Ordinary Course of Business; (b) pay or otherwise satisfy all obligations (cash
and barter) of the Stations in the Ordinary Course of Business; provided,
however, Seller shall bring current as of the Closing Date all payments that are
due and payable under Program Contracts as originally contracted; (c) maintain
its books of account, records, and files in substantially the same manner as
heretofore; and (d) maintain the Assets in customary repair, maintenance and
condition, except to the extent of normal wear and tear, and repair or replace,
consistently with the Ordinary Course of Business, any Asset that may be damaged
or destroyed; notwithstanding the foregoing, Buyer acknowledges that the Seller
shall not be obligated to spend any funds on capital expenditures after the date
hereof, except for repair or replacement of Assets that may be damaged or
destroyed.
6.2.3. Maintain FCC Licenses.
Maintain the validity of the FCC Licenses, and
comply in all material respects with all requirements of the FCC Licenses and
the rules and regulations of the FCC.
6.2.4. Station Contracts.
Pay and perform its obligations in the Ordinary
Course of Business under the Station Contracts to which it is a party and under
any Additional Agreements that shall be entered into by Seller between the date
hereof and the Closing pursuant to Section 6.1.6, in accordance with the
respective terms and conditions of such Station Contracts.
<PAGE>
6.2.5. Taxes.
Pay or discharge all Taxes when due and payable.
6.2.6. Access.
Cause to be afforded to representatives of Buyer
reasonable access during normal business hours to offices, properties, assets,
books and records, contracts and reports of the Stations, as Buyer shall from
time to time reasonably request; provided, however, that (a) such investigation
shall only be upon reasonable notice and shall not unreasonably disrupt the
personnel or operations of Seller or the Stations, and (b) under no
circumstances shall Seller be required to provide access to Buyer or any
representative of Buyer (i) any information or materials subject to
confidentiality agreements with third parties required to be kept confidential
by applicable Laws, or (ii) any privileged attorney-client communications or
attorney work product. All requests for access to the offices, properties,
assets, books and records, contracts and reports of the Stations shall be made
to such representatives as Seller shall designate in writing, who shall be
solely responsible for coordinating all such requests and all access permitted
hereunder. Buyer acknowledges and agrees that neither Buyer nor its
representatives shall contact any of the employees, customers, suppliers,
partners, or other associates or Affiliates of Seller or the Stations, in
connection with the transactions contemplated hereby, whether in person or by
telephone, mail or other means of communication, without the specific prior
written authorization of such representatives of Seller. Subject to and in
accordance with the terms of this Section 6.2.6, Seller shall cooperate in all
reasonable respects with Buyer's request to conduct an audit of the Seller'
financial information as Buyer may reasonably determine is necessary to satisfy
Buyer's public company reporting requirements pursuant to the Securities Act of
1933 or the Securities Exchange Act of 1934 including, without limitation, (a)
using commercially reasonable efforts to obtain the consent of Seller' auditors
to permit Buyer and Buyer's auditors to have access to such auditors' work
papers, and (b) consenting to such access by Buyer . Under no circumstance shall
the preparation of any financial statements pursuant to such audit: (a) require
Seller to change or modify any accounting policy, (b) cause any unreasonable
disruption in the business or operations of any Station, or (c) cause any delay
that is more than de minimis in any internal reporting requirements of Seller.
All costs and expenses incurred in connection with the preparation of (and
assimilation of relevant information for) any such financial statements shall be
paid by Buyer.
6.2.7. Insurance.
Maintain in full force and effect all of its
existing casualty, liability, and other insurance through the day following the
Closing Date in amounts not less than those in effect on the date hereof.
<PAGE>
6.2.8. Financial Statements.
Provide Buyer with unaudited monthly statements
of assets and liabilities of Seller relating to the business and operations of
the Stations, and monthly statements of revenues and expenses reflecting the
results of business and operations of the Stations for May, 1997 and for each
month thereafter, within thirty (30) days after the end of each such month.
Seller further agrees to provide Buyer with weekly sales pacing reports for the
Stations.
6.2.9. Consents.
(a) Take all reasonable action required to
obtain all consents, approvals and agreements of any third parties necessary to
authorize, approve or permit the consummation of the transactions contemplated
by this Agreement, including, without limitation, any consent of the parties to
the Station Contracts designated as necessary in Schedule 3.4 in order to
consummate the transactions contemplated hereby (collectively, the "Restricted
Contracts"). Notwithstanding anything to the contrary set forth in this
Agreement or otherwise, to the extent that the consent or approval of any third
party is required under any Restricted Contract, Seller shall only be required
to use reasonable efforts (not involving the payment by Seller of any money to
any party to any such Restricted Contract, except to the extent required by
Section 6.2.9(b)) to obtain such consents and approvals, and in the event that
Seller fails to obtain any such consent or approval, Buyer shall have no right
to terminate this Agreement.
(b) Notwithstanding anything to the contrary in
clause (a) above, Seller shall retain, until such time as any required consents
shall have been obtained by Seller, all rights to and under any Station Contract
which requires the consent of any other party thereto for assignment to Buyer if
such consent has not been obtained on the Closing Date (the "Deferred
Contract"). Until the assignment of the Deferred Contract, (i) Seller shall
continue to use all commercially reasonable efforts and Buyer shall cooperate
with Seller to obtain the consent and/or to remove any other impediments to such
assignment, and (ii) Seller and Buyer agree to cooperate in any lawful
arrangement to provide (to the extent permitted without breach of such Deferred
Contract) that Buyer shall receive the benefits of such interest after the
Closing Date to the same extent as if it were Seller; provided, however, if
Buyer shall fail to receive such benefits after the Closing Date for any Leased
Property that is a main transmitter tower site or a studio site for any Station
(the "Designated Properties"), Seller agrees to make such payments as are
necessary for Buyer to receive such benefits as long as the aggregate amount of
all such payments does not exceed Two Hundred Thousand Dollars ($200,000) under
this Agreement and the Multi-Stations Agreement for all such Designated
Properties. If, subsequent to the Closing, Seller shall obtain required consents
to assign any Deferred Contract, the Deferred Contract for which consent to
assign has been obtained shall at that time be deemed to be conveyed, granted,
bargained,
<PAGE>
sold, transferred, setover, assigned, released, delivered and confirmed to
Buyer, without need of further action by Seller or of future documentation.
6.2.10. Corporate Action.
Take all corporate action (including, without
limitation, all shareholder action), under the Law of any state having
jurisdiction over Seller necessary to effectuate the transactions contemplated
by this Agreement and the other Seller Documents.
6.2.11. Environmental Audit.
Seller shall permit Buyer and Buyer's agents, as
soon as practical after the date hereof and upon Buyer's request therefor,
access to the Real Property and the Leased Property for the purpose of
conducting, at Buyer's expense, Phase I and Phase II environmental audits. Any
such environmental audits shall be conducted by a reputable environmental
investigatory firm of Buyer's choice subject to the reasonable approval of
Seller and in a manner as will not unreasonably interfere with the normal
business and operations of any of the Stations.
6.3. Confidentiality.
Seller shall, at all times, maintain strict confidentiality
with respect to all documents and information furnished to Seller by or on
behalf of Buyer. Nothing shall be deemed to be confidential information that:
(a) is known to Seller at the time of its disclosure to Seller; (b) becomes
publicly known or available other than through disclosure by Seller; (c) is
received by Seller from a third party not actually known by Seller to be bound
by a confidentiality agreement with or obligation to Buyer; or (d) is
independently developed by Seller. Notwithstanding the foregoing provisions of
this Section 6.3, Seller may disclose such confidential information (a) to the
extent required or deemed advisable to comply with applicable Laws; (b) to its
officers, directors, employees, representatives, financial advisors, attorneys,
accountants, and agents with respect to the transactions contemplated hereby (so
long as such parties agree to maintain the confidentiality of such information);
and (c) to any Governmental Authority in connection with the transactions
contemplated hereby. In the event this Agreement is terminated, Seller will
return to Buyer all documents and other material prepared or furnished by Buyer
relating to the transactions contemplated hereunder, whether obtained before or
after the execution of this Agreement.
<PAGE>
6.4. Trustee Acknowledgment.
Contemporaneously with the execution and delivery of the
Trust Agreement, Seller shall cause the Trustee to execute a certificate or
acknowledgment for the benefit of Buyer, pursuant to which the Trustee
acknowledges and agrees to those items and obligations set forth in Section
3.1(c) of the Trust Agreement, attached as an exhibit to the Transfer Agreement.
ARTICLE 7.
COVENANTS AND AGREEMENTS OF BUYER
Buyer covenants and agrees with Seller as follows:
7.1. Confidentiality.
Buyer shall, at all times prior to the Closing, maintain
strict confidentiality with respect to all documents and information furnished
to Buyer by or on behalf of Seller. Nothing shall be deemed to be confidential
information that: (a) is known to Buyer at the time of its disclosure to Buyer;
(b) becomes publicly known or available other than through disclosure by Buyer;
(c) is received by Buyer from a third party not actually known by Buyer to be
bound by a confidentiality agreement with or obligation to Seller; or (d) is
independently developed by Buyer. Notwithstanding the foregoing provisions of
this Section 7.1, Buyer may disclose such confidential information (a) to the
extent required or deemed advisable to comply with applicable Laws; (b) to its
officers, directors, partners, employees, representatives, financial advisors,
attorneys, accountants, agents, underwriters, lenders, investors and any other
potential sources of financing with respect to the transactions contemplated
hereby (so long as such parties agree to maintain the confidentiality of such
information); and (c) to any Governmental Authority in connection with the
transactions contemplated hereby. In the event this Agreement is terminated,
Buyer will return to Seller all documents and other material prepared or
furnished by Seller relating to the transactions contemplated by this Agreement,
whether obtained before or after the execution of this Agreement.
7.2. Corporate Action.
Prior to the Closing, Buyer shall take all corporate action
(including, without limitation, all shareholder action), under the Laws of any
state having jurisdiction over Buyer necessary to effectuate the transactions
contemplated by this Agreement and the other Buyer Documents.
<PAGE>
7.3. Access.
From and after the Closing Date, Buyer shall cause to be
afforded to representatives of Seller reasonable access during normal business
hours to the offices, books and records, contracts and reports of the Stations,
as Seller shall from time to time reasonably request; provided, however, that
(a) such investigation shall only be upon reasonable notice and shall not
unreasonably disrupt the personnel or operations of Buyer or the Stations, and
(b) under no circumstances shall Buyer be required to provide access to Seller
or any representatives of Seller (i) any information or materials subject to
confidentiality agreements with third parties required to be kept confidential
by applicable Laws, or (ii) any privileged attorney-client communications or
attorney work product. All requests for access to the offices, books and
records, contracts and reports of the Stations shall be made to such
representatives as Buyer shall designate in writing, who shall be solely
responsible for coordinating all such requests and all access permitted
hereunder. Buyer agrees not to dispose of any books and records, contracts and
reports of the Stations which relate to the operations of the Stations during
the period during which the Stations were owned by Seller without consulting
with Seller prior to disposal thereof and taking any reasonable action requested
by Seller with respect to retention and transfer to Seller thereof.
7.4. Collection of Receivables.
At the Closing, Seller shall assign the Accounts Receivables
to Buyer for collection purposes only, and, within ten (10) business days after
the Closing Date, Seller shall furnish to Buyer a list of the Accounts
Receivables by accounts and the amounts then owing. Buyer agrees, for a period
of one hundred fifty (150) days following the Closing Date, without any
requirement to litigate to collect the Accounts Receivables, to use its
reasonable efforts (with at least the care and diligence Buyer uses to collect
its own accounts receivable) to collect for Seller the Accounts Receivables and
to remit to Seller on the fifth day following the last day of each month
occurring during such one hundred fifty (150) day period (or, if any such day is
a Saturday, Sunday or holiday, on the next day on which banking transactions are
resumed), collections received by Buyer with respect to the Accounts
Receivables. Buyer shall not make any referral or compromise of any Accounts
Receivable to a collection agency or attorney for collection and shall not
compromise for less than full value any Account Receivable without the prior
written consent of Seller. Any Account Receivable not collected by Buyer within
one hundred fifty (150) days following the Closing Date shall revert to Seller.
Buyer shall reassign, without recourse to the Buyer, each Account Receivable and
deliver to Seller, all records relating thereto on the same day as it remits to
Seller the collections received. All payments in respect of the Accounts
Receivables received during the one hundred fifty (150) day period shall be
first applied to the oldest balance then due on the Accounts Receivables unless
the account debtor indicates in writing that payment is to be applied otherwise
due to a dispute over an Account Receivable. Buyer agrees, upon the reasonable
request of Seller, to furnish to Seller periodic reports on the status of its
Accounts Receivables. Buyer shall have no right
<PAGE>
to set-off any amounts collected for Accounts Receivable for any amounts owed
to Buyer by Seller; provided, however, that Buyer shall have the right to seek
indemnification in accordance with the terms and conditions of this Agreement.
ARTICLE 8.
MUTUAL COVENANTS AND UNDERSTANDINGS
OF SELLER AND BUYER
8.1. Possession and Control.
Between the date hereof and the Closing Date
(notwithstanding that the Preliminary Payment Date shall have occurred or any
other provisions hereof), Buyer shall not directly or indirectly control,
supervise or direct, or attempt to control, supervise or direct, the business
and operations of the Stations, and such operation, including complete control
and supervision of all programming, shall be the sole responsibility of Seller.
On and after the Closing Date, Seller shall have no control over, or right to
intervene, supervise, direct or participate in, the business and operations of
the Stations.
8.2. Risk of Loss.
The risk of loss or damage by fire or other casualty or
cause to the Assets until the Closing Date shall be upon Seller (or in the event
of the Preliminary Payment Date, thereafter the risk of loss shall be upon the
Buyer). In the event of loss or damage prior to the Closing Date (or the
Preliminary Payment Date, if applicable) with respect to which Seller has
adequate replacement cost insurance and which has not been restored, replaced,
or repaired as of the Closing Date (or the Preliminary Payment Date, if
applicable), Buyer shall proceed with the Closing (or shall pay the Preliminary
Payment, if applicable) and receive at Closing (or immediately after the
Preliminary Payment, if applicable), the insurance proceeds or an assignment of
the right to receive such insurance proceeds, as applicable, to which Seller
otherwise would be entitled, whereupon Seller shall have no further liability to
Buyer for such loss or damage; provided, however, if the failure of such Assets
to be restored, replaced or repaired results in the regular broadcast
transmission of any Station (including its effective radiated power) to be
diminished in any material respect on what would otherwise be the Closing Date
(or the Preliminary Payment Date, if applicable), then either or both of Seller
and
<PAGE>
Buyer shall be entitled, by written notice to the other, to postpone the Closing
Date (or the Preliminary Payment Date, if applicable for such Station or, if
later, when the Deposit Release Date occurs) for a period of up to ninety (90)
days; provided, however, any delay in the Closing (or the Preliminary Payment,
if applicable) for any Station shall not result in a delay of the Closing (or
the Preliminary Payment, if applicable) for any other Stations which are to
proceed to the Closing Date hereunder. In the event that such Station's
broadcast transmission has not been resumed by such postponed Closing Date,
either party may terminate the transactions contemplated herein with respect to
such Station (and, if the Deposit Release Date shall have occurred, then Buyer
shall receive that portion of the Allocable Deposit allocable to such Station)
unless Buyer agrees to proceed with the Closing and receive at the Closing
insurance proceeds or an assignment of the right to receive such insurance
proceeds, as applicable, to which Seller otherwise would be entitled, whereupon
Seller shall have no further liability to Buyer for such loss or damage with
respect to such Station.
8.3. Public Announcements.
Seller and Buyer shall consult with each other before
issuing any press release or otherwise making any public statements with respect
to this Agreement or the transactions contemplated herein and shall not issue
any such press release or make any such public statement without the prior
written consent of the other party, which shall not be unreasonably withheld;
provided, however, that a party may, without the prior written consent of the
other party, issue such press release or make such public statement as may be
required by Law or any listing agreement with a national securities exchange to
which Seller or Buyer is a party if it has used all reasonable efforts to
consult with the other party and to obtain such party's consent but has been
unable to do so in a timely manner.
8.4. Employee Matters.
8.4.1. Upon consummation of the Closing hereunder, Buyer
shall offer employment to each of the employees of the Stations (including those
on leave of absence, whether short-term, long-term, family, maternity,
disability, paid, unpaid or other), at a comparable salary, position and place
of employment as held by each such employee immediately prior to the Closing
Date (such employees who are given such offers of employment are referred to
herein as the "Transferred Employees"). Nothing in this Section 8.4.1 is
intended to guarantee employment for any Transferred Employee for any length of
time after the Closing Date.
8.4.2. Except as provided otherwise in this Section 8.4,
Seller shall pay, discharge and be responsible for (a) all salary and wages
arising out of or relating to the employment of the employees of the Stations
prior to the Closing Date and (b) any employee benefits arising under the
Benefit Plans of Seller and its
<PAGE>
Affiliates during the period prior to the Closing Date. From and after the
Closing Date, Buyer shall pay, discharge and be responsible for all salary,
wages and benefits arising out of or relating to the employment of the
Transferred Employees by Buyer on and after the Closing Date. Buyer shall be
responsible for all severance Liabilities and all COBRA Liabilities for any
Transferred Employees of the Stations terminated on or after the Closing Date,
including, without limitation all Liabilities under the retention and severance
agreements entered into pursuant to Section 8.4.8 (subject to Sellers'
reimbursement obligations set forth in Section 8.4.8).
8.4.3. Buyer shall cause all Transferred Employees as of the
Closing Date to be eligible to participate in its "employee welfare benefit
plans" and "employee pension benefit plans" (as defined in Section 3(1) and 3(2)
of ERISA, respectively) of Buyer in which similarly situated employees of Buyer
are generally eligible to participate; provided, however, that all Transferred
Employees and their spouses and dependents shall be eligible for coverage
immediately after the Closing Date (and shall not be excluded from coverage on
account of any pre-existing condition) to the extent provided under such plans
with respect to Transferred Employees.
8.4.4. For purposes of any length of service requirements,
waiting periods, vesting periods or differential benefits based on length of
service in any such plan for which a Transferred Employee may be eligible after
the Closing, Buyer shall ensure that, to the extent permitted by law, service by
such Transferred Employee with Seller or any Affiliate of Seller shall be deemed
to have been service with the Buyer. In addition, Buyer shall ensure that each
Transferred Employee receives credit under any welfare benefit plan of Buyer for
any deductibles or co-payments paid by such Transferred Employee and his or her
dependents for the current plan year under a plan maintained by Seller or any
Affiliate of Seller. Buyer shall grant credit to each transferred Employee for
all sick leave in accordance with the policies of Buyer applicable generally to
its employees after giving effect to service for Seller as service for Buyer. To
the extent taken into account in determining the Final Proration Amount, Buyer
shall assume and discharge Seller's Liabilities for the payment of all unused
vacation leave accrued by Transferred Employees as of the Closing Date. To the
extent any claim with respect to such accrued vacation leave is lodged against
Seller, with respect to any Transferred Employee, Buyer shall indemnify, defend
and hold harmless Seller from and against any and all losses, directly or
indirectly, as a result of, or based upon or arising from the same.
8.4.5. As soon as practicable following the Closing Date,
Buyer shall establish and maintain a defined contribution plan or plans (which
may be a preexisting plan or plans (the "Buyer's Plan") intended to be qualified
under Section 401(a) and 401(k) of the Code for the benefit of the Transferred
Employees. Effective as of the Closing Date, Seller shall cause appropriate
amendments to be made to the Heritage Media Corporation Retirement Savings Plan
(the "Seller's Plan") to provide that the Transferred Employees shall be fully
vested in their
<PAGE>
accounts under the Seller's Plan (as well as under the Heritage Media
Corporation Deferred Compensation Plan for Key Employees). As soon as
practicable after the Closing Date, Buyer shall take all necessary action to
qualify Buyer's Plan under the applicable provisions of the Code (including but
not limited to Section 401), if it is not yet so qualified, and Buyer and Seller
shall make any and all filings and submissions to the appropriate governmental
agencies required to be made by them in connection with the transfer of assets
described hereafter. As soon as practicable following the earlier of the receipt
of a favorable determination letter from the Internal Revenue Service regarding
the qualified status of both the Seller's Plan and the Buyer's Plan (each as
amended to the date of transfer) or sooner, if Seller and Buyer so agree, Seller
shall cause to be transferred to Buyer's Plan, in cash and in kind, all of the
individual account balances of Transferred Employees under the Seller's Plan,
including any outstanding plan participant loan receivables allocated to such
accounts.
8.4.6. Buyer acknowledges and agrees that Buyer's
obligations pursuant to this Section 8.4 are in addition to, and not in
limitation of, Buyer's obligation to assume the employment contracts set forth
on Schedule 2.1.8.
8.4.7. Except as otherwise provided in this Section 8.4 or
in any employment, severance or retention agreements of any Transferred
Employees, all Transferred Employees shall be at-will employees, and Buyer may
terminate their employment or change their terms of employment at will. No
employee (or beneficiary of any employee) of Seller may sue to enforce the terms
of this Agreement, including specifically this Section 8.4, and no employee or
beneficiary shall be treated as a third party beneficiary of this Agreement.
Except to the extent provided for herein, Buyer may cover the Transferred
Employees under existing or new benefit plans, programs, and arrangements, and
may amend or terminate any such plans, programs, or arrangements at any time.
8.4.8. (a) Within ten (10) business days after the date
hereof, Buyer shall notify Seller in writing if Buyer desires to have the
current Station general manager enter into a retention agreement (the "Retained
General Manager"). If so notified, Seller shall use reasonable efforts to enter
into a retention agreement in the form of Exhibit F hereto with the Retained
General Manager. If within nine (9) months after the Closing Date, Buyer
terminates the employment of the Retained General Manager, Seller shall
reimburse Buyer for any severance payments made by Buyer to the Retained General
Manager pursuant to his or her retention agreement; provided, however, that such
amount shall in no event exceed the Retained General Manager's annual salary in
effect immediately prior to such Closing Date.
<PAGE>
(b) The parties hereto acknowledge and agree that prior to
Closing Date there will be only one (1) general manager in the DMA. If a vacant
position for the general manager position shall occur prior to the Closing,
Seller shall consult with Buyer prior to hiring a new general manager to fill
such position. For each such new general manager hired by Seller, upon the
written request of Buyer prior to the hiring of such general manager, Seller
shall enter into a retention agreement with any such general manager in the form
attached hereto as Exhibit F and reimburse Buyer for any severance payments as
provided for in Section 8.4.8(a).
(c) Buyer acknowledges and agrees that if Seller has
reimbursed Buyer for any severance obligations for any employee, neither Buyer
nor any Affiliate of Buyer shall hire, employ or contract with any such employee
for a period of one year from the date Seller has made the reimbursement
payment.
8.5. Disclosure Schedules.
Seller and Buyer acknowledge and agree that Seller shall
have the right from time to time after the date hereof to update or correct
solely Schedules 2.1.5, 2.1.6, 2.1.8, 2.1.9, and 3.17 attached hereto solely to
reflect actions by Seller after the date hereof which are not prohibited by
Section 6.1 hereof. The inclusion of any fact or item on a Schedule referenced
by a particular section in this Agreement shall, should the existence of the
fact or item or its contents, be relevant to any other section, be deemed to be
disclosed with respect to such other section whether or not an explicit
cross-reference appears in the Schedules.
8.6. Bulk Sales Laws.
Buyer hereby waives compliance by Seller, in connection with
the transactions contemplated hereby, with the provisions of any applicable bulk
transfer laws.
8.7. Tax Matters.
Seller and Buyer each represent, warrant, covenant and agree
with each other that for tax purposes the sale of Assets described herein is not
effective until the Closing Date. Seller and Buyer agree that all Tax returns
and reports shall be filed consistent with the sale of assets taking place on
the Closing Date.
<PAGE>
8.8. Preservation of Books and Records.
For a period of three (3) years after the Closing Date,
Seller agrees not to dispose of, and agrees to provide Buyer reasonable access
to, any material books or records in Seller's possession immediately after the
Closing Date that relate to the business or operations of the Stations prior to
the Closing Date.
ARTICLE 9.
CONDITIONS PRECEDENT TO
BUYER'S OBLIGATION TO CLOSE
The obligations of Buyer to purchase the Assets and to
proceed with the Closing are subject to the satisfaction (or waiver in writing
by Buyer) at or prior to the Closing of each of the following conditions:
9.1. Representations and Covenants.
The representations and warranties of Seller made in this
Agreement shall be true and correct on and as of the Closing Date with the same
effect as though such representations and warranties had been made on and as of
the Closing Date (except as modified by the Schedules updated after the date
hereof in accordance with Section 8.5 and except for representations and
warranties that speak as of a specific date or time other than the Closing Date
(which need only be true and correct in all material respects as of such date or
time)), and the covenants and agreements of Seller required to be performed on
or before the Closing Date in accordance with the terms of this Agreement shall
have been performed in all respects, except to the extent that the failure of
such representations and warranties to be true and correct and the failure to
perform such covenants shall not have, when considered together, had a Material
Adverse Effect.
9.2. Delivery of Documents.
Seller shall have delivered to Buyer all contracts,
agreements, instruments and documents required to be delivered by Seller to
Buyer with respect to the Stations pursuant to Section 11.2.
9.3. FCC Order.
The FCC Order shall have been issued with respect to the
Stations.
<PAGE>
9.4. Hart-Scott-Rodino.
All applicable waiting periods under Hart-Scott-Rodino shall
have expired or terminated.
9.5. Legal Proceedings.
No injunction, restraining order or decree of any nature of
any court or Governmental Authority of competent jurisdiction shall be in effect
that restrains or prohibits the transactions contemplated by this Agreement.
ARTICLE 10.
CONDITIONS PRECEDENT TO
SELLER'S OBLIGATION TO CLOSE
The obligations of Seller to sell, transfer, convey and
deliver the Assets and to proceed with the Closing are subject to the
satisfaction (or waiver in writing by Seller) at or prior to the Closing of each
of the following conditions:
10.1. Consummation of the Merger.
The Merger under the Merger Agreement shall have
been consummated in accordance with its terms.
10.2. Representations and Covenants.
The representations and warranties of Buyer made in this
Agreement shall be true and correct in all material respects on and as of the
Closing Date with the same effect as though such representations and warranties
had been made on and as of the Closing Date (except for representations and
warranties that speak as of a specific date or time other than the Closing Date
(which need only be true and correct in all material respects as of such date or
time)), and the covenants and agreements of Buyer required to be performed on or
before the Closing Date in accordance with the terms of this Agreement shall
have been performed in all material respects.
10.3. Delivery by Buyer.
Buyer shall have delivered to Seller the Purchase Price and
all contracts, agreements, instruments and documents required to be delivered by
Buyer to Seller pursuant to Section 11.3.
<PAGE>
10.4. FCC Order.
The FCC Order shall have been issued with respect to the
Stations.
10.5. Hart-Scott-Rodino.
All applicable waiting periods under Hart-Scott-Rodino shall
have expired or terminated.
10.6. Legal Proceedings.
No injunction, restraining order or decree of any nature of
any court or Governmental Authority of competent jurisdiction shall be in effect
that restrains or prohibits the transactions contemplated by this Agreement.
ARTICLE 11.
CLOSING
11.1. Closings.
11.1.1. The Closing hereunder shall be held for all of the
Stations on a date specified by Seller that is not later than ten (10) days
after the date on which all of the FCC Orders for all of the Stations shall have
been issued (the "Closing Date").
11.1.2. The Closing hereunder shall be held at 10:00 A.M.
local time on the Closing Date at the offices of Hogan & Hartson L.L.P., 8300
Greensboro Drive, Suite 1100, McLean, Virginia, or at such other time and place
as the parties may agree.
11.2. Delivery by Seller.
At or before the Closing, Seller shall deliver to Buyer the
following:
11.2.1. Agreements and Instruments
The following bills of sale, assignments and
other instruments of transfer, dated as of the Closing Date and duly executed by
Seller:
(a) the Bill of Sale;
(b) the Assignment of FCC Licenses;
(c) the Assignment of Contracts and Leases;
(d) the Assumption Agreement;
<PAGE>
(e) certificates of title with respect to the
motor vehicles listed on Schedule 2.1.9
or if any such motor vehicles are leased
by Seller, an assignment of such lease;
and
(f) special or limited warranty deeds for all
Real Property owned by Seller in the form
appropriate to the jurisdictions in which
such Real Property is located.
11.2.2. Consents.
Copies of all consents Seller has been able to
obtain to effect the assignment to Buyer of the Station Contracts listed on
Schedule 3.4.
11.2.3. Certified Resolutions.
A copy of the approval of the boards of
directors of Seller, certified as being correct and complete and then in full
force and effect, authorizing the execution, delivery and performance of this
Agreement, and of the other Seller Documents, and the consummation of the
transactions contemplated hereby and thereby.
11.2.4. Officers' Certificates.
(a) A certificate of Seller certifying the
matters set forth in Section 9.1; and
(b) A certificate of Seller as to the incumbency
of the representatives of Seller executing this Agreement or any of the other
Seller Documents on behalf of Seller.
11.2.5. Good Standing Certificates.
To the extent available from the applicable
jurisdictions, certificates as to the formation and/or good standing of Seller
issued by the appropriate governmental authorities in the states of organization
and each jurisdiction in which Seller is qualified to do business, each such
certificate (if available) to be dated a date not more than a reasonable number
of days prior to the Closing Date.
11.2.6. Opinion of Counsel.
An opinion of Hogan & Hartson L.L.P.,
substantially in the form of Exhibit G hereto.
<PAGE>
11.3. Delivery by Buyer.
At or before the Closing, Buyer shall deliver to Seller the
following:
11.3.1. Purchase Price Payment.
The Purchase Price (less any amounts previously
paid by Buyer to Seller on the Preliminary Payment Date) in the amount and
manner set forth in Section 2.
11.3.2. Agreements and Instruments.
The Assumption Agreement and other instruments
of transfer, dated as of the Closing Date and duly executed by Buyer.
11.3.3. Certified Resolutions.
Copies of the resolutions of the board of
directors of Buyer, certified as being correct and complete and then in full
force and effect, authorizing the execution, delivery and performance of this
Agreement and of the other Buyer Documents, and the consummation of the
transactions contemplated hereby and thereby.
11.3.4. Officers' Certificate.
(a) A certificate of Buyer signed by an officer
of Buyer certifying the matters set forth in Section 10.2; and
(b) A certificate signed by the Secretary of
Buyer as to the incumbency of the officers of Buyer executing this Agreement or
any of the other Buyer Documents on behalf of Seller.
11.3.5. Opinion of Counsel.
An opinion of Thomas & Libowitz, P.A., in a form
reasonably acceptable to Sellers.
ARTICLE 12.
SURVIVAL; INDEMNIFICATION
12.1. Survival of Representations.
12.1.1. Unless otherwise set forth herein
(including, without limitation, Section 12.1.2), all representations and
warranties, covenants and
<PAGE>
agreements of Seller and Buyer contained in or made pursuant to this Agreement
or in any certificate furnished pursuant hereto shall survive the Closing Date
and shall remain in full force and effect to the following extent: (a)
representations and warranties shall survive for a period of twelve (12) months
after the Closing Date, (b) the covenants and agreements which by their terms
survive the Closing shall continue in full force and effect until fully
discharged (but not beyond the expiration of twelve (12) months after the
Closing Date), and (c) any representation, warranty, covenant or agreement that
is the subject of a claim which is asserted in a reasonably detailed writing
prior to the expiration of the survival period set forth in this Section 12.1.1,
shall survive with respect to such claim or dispute until the final resolution
thereof.
12.1.2. Notwithstanding Section 12.1.1, if the Preliminary
Payment shall have been received by Seller and the Closing shall have occurred,
all representations, warranties, covenants and agreements of Seller with respect
to the Stations contained in or made pursuant to this Agreement or in any
certificate furnished pursuant hereto shall survive the Preliminary Payment Date
and shall remain in full force and effect to the following extent: (a)
representations and warranties with respect to the Stations shall survive for a
period of twelve (12) months after the Preliminary Payment Date, (b) the
covenants and agreements relating to the Stations which by their terms survive
the Preliminary Payment Date, shall continue in full force and effect until
fully discharged (but not beyond the expiration of twelve (12) months after the
Closing Date), and (c) any representation, warranty, covenant or agreement that
is the subject of a claim which is asserted in a reasonably detailed writing
prior to the expiration of the survival period set forth in this Section 12.1.1,
shall survive with respect to such claim or dispute until the final resolution
thereof.
12.1.3. No claim for indemnification may be made pursuant
to this Article 12 after the survival period set forth in this Section 12.1.
12.2. Indemnification by Seller.
Subject to the conditions and provisions of Section 12.4 and
Section 12.5, from and after the Closing Date, Seller agrees to indemnify,
defend and hold harmless Buyer from and against and in any respect of, on a net
after-tax basis, any and all Losses, asserted against, resulting to, imposed
upon or incurred by Buyer, directly or indirectly, by reason of or resulting
from: (a) any failure by Seller to pay, perform or discharge any Liabilities not
assumed by Buyer pursuant hereto; (b) the business or operations of the Stations
during the period prior to the Closing Date (except to the extent Buyer has
assumed the Liability for any such Losses pursuant hereto); provided, however,
that (i) if the Preliminary Payment shall have been received by Seller and the
Closing shall have occurred, Seller's indemnification obligations under this
clause (b) with respect to the Stations shall
<PAGE>
be limited to the period prior to the Preliminary Payment Date; (c) any
misrepresentation or breach of the representations and warranties of Seller
contained in or made pursuant to this Agreement or any other Seller Document;
(d) any breach by Seller of any covenants of Seller contained in or made
pursuant to this Agreement or any other Seller Document; or (e) the failure of
Seller to comply with the provisions of any applicable bulk transfer law.
12.3. Indemnification by Buyer.
Subject to the conditions and provisions of Section 12.4 and
Section 12.5, from and after the Closing Date, Buyer hereby agrees to indemnify,
defend and hold harmless Seller from, against and with respect of, on a net
after-tax basis, any and all Losses, asserted against, resulting to, imposed
upon or incurred by Seller, directly or indirectly, by reason of or resulting
from: (a) any failure by Buyer to pay, perform or discharge any Liabilities
assumed by Buyer pursuant hereto; (b) the business or operations of the Stations
during the period from and after the Closing Date; (c) any misrepresentation or
breach of the representations and warranties of Buyer contained in or made
pursuant to this Agreement or any other Buyer Document; or (d) any breach by
Buyer of any covenants of Buyer contained in or made pursuant to this Agreement
or any other Buyer Document. Notwithstanding the foregoing, if the Preliminary
Payment shall have been received by Seller and the Closing shall have occurred,
Buyer's indemnification obligations under this Section 12.3 with respect to the
Stations shall be from and after the Preliminary Payment Date, and, for purposes
of clause (b) of this Section 12.3, shall be for the period from and after the
Preliminary Payment Date.
12.4. Limitations on Indemnification.
12.4.1. Notwithstanding any other provision of this
Agreement to the contrary, in no event shall Losses include a party's
incidental, consequential or punitive damages, regardless of the theory of
recovery. Each party hereto agrees to use reasonable efforts to mitigate any
Losses which form the basis for any claim for indemnification hereunder.
12.4.2. Notwithstanding any other provision of this
Agreement to the contrary, the Heritage Sellers (taken as a whole) shall not be
liable to Buyer in respect of any indemnification hereunder except to the extent
that (a) the aggregate amount of Losses of Buyer under this Agreement and under
the Multi-Stations Agreement (taken as a whole) exceeds One Million Dollars
($1,000,000) (the "Basket Amount"), and then only to the extent of the excess
over the amount of Five Hundred Thousand Dollars ($500,000), and (b) the
aggregate amount of Losses of Buyer under this Agreement and under the
Multi-Stations Agreement (taken as a whole) is less than Twelve Million Six
Hundred Thousand Dollars ($12,600,000)
<PAGE>
(the "Indemnity Cap"); provided, however, the Basket Amount shall not be
applicable to any amounts owed in connection with the determination of the
Proration Amount pursuant to Section 2.7, or to Seller's reimbursement
obligations under Section 8.4.8.
12.4.3. Notwithstanding any other provision of this
Agreement to the contrary, and except for remedies that Buyer may have for
Seller's fraud, which remedies shall not be limited, Buyer acknowledges and
agrees that the maximum aggregate liability of the Heritage Sellers (taken as a
whole) pursuant to this Agreement and the Multi-Stations Agreement (taken as a
whole) to Buyer and any third parties for any and all Losses shall not exceed
the Indemnity Cap, regardless of whether Buyer seeks indemnification pursuant to
this Article 12, regardless of the form of action, whether in contract or tort,
including negligence, and regardless of whether or not the Heritage Sellers are
notified of the possibility of damages to Buyer or any other third party.
12.4.4. Each party (a "recipient party") shall notify the
other party in writing (the "representing party") reasonably promptly of any
perceived breach by the representing party of which the recipient party has
knowledge of any representations, warranties, covenants and agreements, and of
any Losses (including a brief description of the same) of the recipient party
caused thereby. In the event of any breach that is cured prior to the Closing
Date in accordance with the terms of this Agreement, the representing party
shall have no obligation under Section 12.2 or Section 12.3 or otherwise to
indemnify the recipient party with respect to such Losses.
12.5. Conditions of Indemnification.
The obligations and liabilities of Seller and of Buyer
hereunder with respect to their respective indemnities pursuant to this Section
12, resulting from any Losses, shall be subject to the following terms and
conditions:
12.5.1. The party seeking indemnification (the "Indemnified
Party") must give the other party or parties, as the case may be (the
"Indemnifying Party"), notice of any such Losses promptly after the Indemnified
Party receives notice thereof; provided that the failure to give such notice
shall not affect the rights of the Indemnified Party hereunder except to the
extent that the Indemnifying Party shall have suffered actual damage by reason
of such failure.
12.5.2. The Indemnifying Party shall have the right to
undertake, by counsel or other representatives of its own choosing, the defense
of such Losses at the Indemnifying Party's risk and expense.
12.5.3. In the event that the Indemnifying Party shall
elect not to undertake such defense, or, within a reasonable time after notice
from the
<PAGE>
Indemnified Party of any such Losses, shall fail to defend, the Indemnified
Party (upon further written notice to the Indemnifying Party) shall have the
right to undertake the defense, compromise or settlement of such Losses, by
counsel or other representatives of its own choosing, on behalf of and for the
account and risk of the Indemnifying Party (subject to the right of the
Indemnifying Party to assume defense of such Losses at any time prior to
settlement, compromise or final determination thereof). In such event, the
Indemnifying Party shall pay to the Indemnified Party, in addition to the other
sums required to be paid hereunder, the costs and expenses incurred by the
Indemnified Party in connection with such defense, compromise or settlement as
and when such costs and expenses are so incurred.
12.5.4. Anything in this Section 12.5 to the contrary
notwithstanding, (a) if there is a reasonable possibility that Losses may
materially and adversely affect the Indemnified Party other than as a result of
money damages or other money payments, the Indemnified Party shall have the
right, at its own cost and expense, to participate in the defense, compromise or
settlement of the Losses, (b) the Indemnifying Party shall not, without the
Indemnified Party's written consent, settle or compromise any Losses or consent
to entry of any judgment which does not include as an unconditional term thereof
the giving by the claimant or the plaintiff to the Indemnified Party of a
release from all liability in respect of such Losses in form and substance
satisfactory to the Indemnified Party, and (c) in the event that the
Indemnifying Party undertakes defense of any Losses, the Indemnified Party, by
counsel or other representative of its own choosing and at its sole cost and
expense, shall have the right to consult with the Indemnifying Party and its
counsel or other representatives concerning such Losses and the Indemnifying
Party and the Indemnified Party and their respective counsel or other
representatives shall cooperate with respect to such Losses and (d) in the event
that the Indemnifying Party undertakes defense of any Losses, the Indemnifying
Party shall have an obligation to keep the Indemnified Party informed of the
status of the defense of such Losses and furnish the Indemnified Party with all
documents, instruments and information that the Indemnified party shall
reasonably request in connection therewith.
12.6. Cure of Breach.
Notwithstanding any other provision of this Agreement to the
contrary, a breach by Seller of any representations and warranties or a failure
to perform any covenant or agreement hereunder may be cured by Seller prior to
the Closing Date or the Preliminary Payment Date (a) by reducing the Purchase
Price in an amount equal to the Losses to Buyer caused by such breach, (b) by
making payment to a third party or taking other action to discharge the Losses,
(c) by placing an amount equal to the Losses in an escrow account under an
escrow arrangement reasonably satisfactory to Seller and Buyer, or (d) a
combination of
<PAGE>
the foregoing. If the foregoing actions fully cure the breach, Seller shall have
no obligation under Section 12.2 or otherwise to indemnify Buyer with respect to
the Losses caused by such breach; if such actions partially cure the breach,
Seller shall continue to have an obligation under Section 12.2 to indemnify
Buyer with respect to the remaining portion of the Losses caused by such breach.
ARTICLE 13.
TERMINATION
13.1. Termination by the Parties.
This Agreement may be terminated at any time prior to the
Closing by:
13.1.1. the mutual consent of Seller and Buyer;
13.1.2. Seller in accordance with, and subject to, the
terms and conditions of Section 14.1, and Buyer in accordance with, and subject
to, the terms and conditions of Section 14.2;
13.1.3. either Buyer or Seller in accordance with, and
subject to the terms and conditions of Section 8.2; provided, that a termination
pursuant to this Section 13.1.3 shall only terminate this Agreement with respect
to the Station for which such termination applies under Section 8.2; and
13.1.4 Buyer (a) if the Merger shall not have been
consummated on or prior to December 30, 1997, (b) if the Merger shall have been
rejected by the HMC stockholders at the meeting held for the purpose of voting
on the Merger or (c) any action has been taken by any Governmental Authority
which will preclude the consummation of the Merger on or prior to December 30,
1997
13.2. Automatic Termination.
This Agreement shall automatically terminate without further
action by the parties upon the termination of the Merger Agreement in accordance
with its terms.
13.3. Effect of Termination.
13.3.1. In the event this Agreement is terminated as
provided in Sections 13.1.1, 13.1.3, 13.1.4 and 13.2, Buyer shall receive the
immediate return of the Allocable Deposit (except, in the case of a termination
pursuant to Section 13.1.3, only that portion of the Deposit allocable to the
Station with respect to which this Agreement is terminated and only to the
extent that such portion of
<PAGE>
the Deposit may be released pursuant to Section 8.2); this Agreement shall be
deemed null, void and of no further force or effect, and the parties hereto
shall be released from all future obligations hereunder; provided, however, that
the obligations of Buyer and Seller set forth in Sections 6.3 and 7.1 (which
relate to confidentiality), and Section 15.3 (which relates to payment of
certain expenses), shall survive such termination and the parties hereto shall
have any and all remedies to enforce such obligations provided at law or in
equity or otherwise (including, without limitation, specific performance).
13.3.2. In the event this Agreement is terminated as
provided in Section 13.1.2, this Agreement shall be deemed null, void and of no
further force or effect, and the parties hereto shall be released from all
future obligations hereunder; provided, however, that the obligations of Buyer
and Seller set forth in Sections 6.3 and 7.1 (which relate to confidentiality),
Article 14 (which relates to remedies and return of the Allocable Deposit) and
Section 15.3 (which relates to payment of certain expenses), shall survive such
termination and the parties hereto shall have any and all remedies to enforce
such obligations provided at law or in equity or otherwise (including, without
limitation, specific performance).
ARTICLE 14.
REMEDIES
14.1. Default by Buyer.
14.1.1. If Buyer shall default in the performance of its
obligations under this Agreement in any material respect and such default is not
cured within thirty (30) days after notice thereof, and provided that Seller
shall not then be in material default in the performance of Seller's obligations
hereunder, Seller shall be entitled, by written notice to Buyer, to terminate
this Agreement, and as Seller's sole and exclusive remedy under this Agreement,
to receive the Allocable Deposit (without set-off, deduction or counterclaim) as
liquidated damages, and upon such payment Buyer shall be discharged from all
further liability under this Agreement.
14.1.2. In addition to and notwithstanding the provisions of
Section 14.1.1, if Buyer shall default in the performance of any of its
obligations in any respect in Section 2.6 (it being understood that Buyer shall
have no right to cure any default under such section or any other payment
default hereunder), Seller shall, as Seller's sole and exclusive remedies and as
liquidated damages, be (a) entitled, by written notice to Buyer, to terminate
Seller's obligation to sell the Stations to Buyer and to immediately receive the
Allocable Deposit (without set-off, deduction or counterclaim) as provided in
Section 2.6 hereof, and (b) entitled to take all such other actions as are
provided in Section 2.6 hereof (including, without limitation, conducting the
Makewell Sale). Seller shall have the rights set forth in
<PAGE>
this Section 14.1.2 regardless of whether Seller shall then be in breach of any
representations, warranties, covenants or agreements herein.
14.2. Default by Seller.
If Seller shall default in the performance of Seller's
obligations under this Agreement, and such default is not cured within thirty
(30) days after notice thereof and such default has had or is reasonably likely
to have a Material Adverse Effect, and provided that Buyer shall not then be in
material default in the performance of Buyer's obligations hereunder, Buyer
shall be entitled, by written notice to Seller, to terminate this Agreement, to
receive the immediate return of the Allocable Deposit, and upon consummation of
the Merger, to pursue any other remedies Buyer has at law or in equity or
otherwise. In furtherance of the foregoing, Buyer shall have no recourse against
Seller until the Merger shall have been consummated.
14.3. Liquidated Damages.
Seller and Buyer have provided for the amount of the
Allocable Deposit and the Makewell Payment to be liquidated damages as a remedy
for Seller after having considered carefully the anticipated and actual harms
and losses that would be incurred if Buyer defaults and thus fails to perform
its obligations to consummate the transactions contemplated hereunder, the
difficulty of ascertaining at this time the actual amount of damages, special
and general, that Seller will suffer in such event, and the inconvenience or
nonfeasibility of otherwise obtaining an adequate remedy in such event;
provided, that the foregoing shall not be deemed to limit Buyer's obligation to
make, and Seller's right to receive, the Makewell Payment hereunder which, to
the extent obligated pursuant hereto, shall, together with the Allocable
Deposit, constitute Seller's sole and exclusive remedies hereunder and as
liquidated damages.
ARTICLE 15.
GENERAL PROVISIONS
15.1. Additional Actions, Documents and Information.
Buyer agrees that it will, at any time, prior to, at or
after the Closing Date, take or cause to be taken such further actions, and
execute, deliver and file or cause to be executed, delivered and filed such
further documents and instruments and obtain such consents, as may be reasonably
requested by Seller in connection with the consummation of the purchase and sale
contemplated by this Agreement. Seller agrees that it will, at any time, prior
to, at or after the Closing Date, take or cause to be taken such further
actions, and execute, deliver and file or cause to be
<PAGE>
executed, delivered and filed such further documents and instruments and obtain
such consents, as may be reasonably requested by Buyer in connection with the
consummation of the purchase and sale contemplated by this Agreement.
15.2. Brokers.
Seller represents to Buyer that, except for the brokerage
fees payable to Seller's Broker (which fees are solely the responsibility of
Seller), Seller has not engaged, or incurred any unpaid liability (for any
brokerage fees, finders' fees, commissions or otherwise) to, any broker, finder
or agent in connection with the transactions contemplated by this Agreement;
Buyer represents to Seller that Buyer has not engaged, or incurred any unpaid
liability (for any brokerage fees, finders' fees, commissions or otherwise) to,
any broker, finder or agent in connection with the transactions contemplated by
this Agreement; and Seller agrees to indemnify Buyer, and Buyer agrees to
indemnify Seller, against any claims asserted against the other parties for any
such fees or commissions by any person purporting to act or to have acted for or
on behalf of the indemnifying party. Notwithstanding any other provision of this
Agreement, this representation and warranty shall survive the Closing without
limitation and shall not be subject to the Basket Amount contained in Section
12.4.
15.3. Expenses and Taxes.
Each party hereto shall pay its own expenses incurred in
connection with this Agreement and in the preparation for and consummation of
the transactions provided for herein. Notwithstanding the foregoing, Buyer and
Seller shall each pay one-half of (a) all sales (including, without limitation,
bulk sales), use, documentary, stamp, gross receipts, registration, transfer,
conveyance, excise, recording, license and other similar Taxes and fees
("Transfer Taxes") applicable to, imposed upon or arising out of the sale by
Seller and the purchase by Buyer of the Stations whether now in effect or
hereinafter adopted and regardless of which party such Transfer Tax is imposed
upon, (b) any FCC filing fees incurred in connection with the assignment of the
FCC Licenses to Buyer, (c) any fees and expenses incurred in connection with any
HSR Filings, and (d) the fees and expenses of Geraghty & Miller for the
environmental site assessments performed on the Real Property as disclosed on
Schedule 3.16.
15.4. Notices.
All notices, demands, requests, or other communications
which may be or are required to be given or made by any party to any other party
pursuant to this Agreement shall be in writing and shall be hand delivered,
mailed by first-class registered or certified mail, return receipt requested,
postage prepaid, delivered by overnight air courier, or transmitted by telegram,
telex, or facsimile transmission addressed as follows:
<PAGE>
If to Buyer:
Sinclair Broadcast Group, Inc.
2000 W. 41st Street
Baltimore, Maryland 21211
Attn: David D. Smith, President
Fax: (410) 467-5043
with a copy (which shall not constitute notice) to:
Thomas & Libowitz, P.A.
100 Light Street, Suite 1100
Baltimore, Maryland 21202
Attn: Steven A. Thomas, Esq.
Fax: (410) 752-2046
If to Seller:
Heritage Media Corporation
13355 Noel Road
Suite 1500
Dallas, Texas 75240
Attn: David N. Walthall
Fax: (972) 702-7382
with a copy (which shall not constitute notice) to:
Crouch & Hallett, L.L.P.
717 North Harwood
14th Floor
Dallas, Texas 75201
Attn: Bruce H. Hallett, Esq.
Fax: (214) 453-3154
and to:
The News Corporation Limited
c/o News America Publishing Incorporated
1211 Avenue of the Americas
New York, New York 10036
Attn: Arthur M. Siskind, Esq.
Fax: (212) 768-2029
<PAGE>
with a copy (which shall not constitute notice) to:
Hogan & Hartson L.L.P.
555 Thirteenth Street, N.W.
Washington, D.C. 20004
Attn: William S. Reyner, Jr., Esq.
Fax: (202) 637-5910
or such other address as the addressee may indicate by written notice to the
other parties.
Each notice, demand, request, or communication which shall
be given or made in the manner described above shall be deemed sufficiently
given or made for all purposes at such time as it is delivered to the addressee
(with the return receipt, the delivery receipt, the affidavit of messenger or
(with respect to a telex) the answerback being deemed conclusive but not
exclusive evidence of such delivery) or at such time as delivery is refused by
the addressee upon presentation.
15.5. Waiver.
No delay or failure on the part of any party hereto in
exercising any right, power or privilege under this Agreement or under any other
instrument or document given in connection with or pursuant to this Agreement
shall impair any such right, power or privilege or be construed as a waiver of
any default or any acquiescence therein. No single or partial exercise of any
such right, power or privilege shall preclude the further exercise of such
right, power or privilege, or the exercise of any other right, power or
privilege. No waiver shall be valid against any party hereto unless made in
writing and signed by the party against whom enforcement of such waiver is
sought and then only to the extent expressly specified therein.
15.6. Benefit and Assignment.
15.6.1. No party hereto shall assign this Agreement, in
whole or in part, whether by operation of law or otherwise, without the prior
written consent of the other party hereto and any purported assignment contrary
to the terms hereof shall be null, void and of no force and effect; provided,
however, that the parties hereto acknowledge and agree that none of the
transactions contemplated under the Transfer Agreement or the Trust Agreement
shall constitute an assignment, in whole or in part, of any of the terms of this
Agreement; provided further, however, Buyer shall be entitled, without the
consent of Seller, to assign its rights and interests hereunder (in whole or in
part as to any Station) to any direct or indirect wholly-owned subsidiary;
provided, however, that Buyer gives Seller written notice thereof and such
assignee shall be responsible for all representations, covenants
<PAGE>
and agreements of Buyer hereunder as if such assignee was a party hereto, and
that any such assignment shall not relieve Buyer of any Liabilities hereunder.
15.6.2. Seller acknowledges and agrees that at the Closing,
Buyer may require that Seller transfers the Assets and Liabilities of the
Stations to a third party designated in writing by Buyer (a "Designee") at least
ten (10) days prior to the Closing; provided, however, that (a) such Designee
shall on or prior to the Closing Date assume all Assumed Liabilities; (b) an FCC
Order shall have been issued on or prior to the Closing Date authorizing such
transfer; (c) the transfer to such Designee would not violate any Laws, (d) the
transfer to such Designee would not delay in any respect the date for the
Closing as required by the terms of this Agreement; (e) the transfer to such
Designee shall not relieve Buyer from any of its obligations hereunder; (f)
there shall be no assignment or transfer (actual or implied) of this Agreement
to such Designee; (g) Seller shall have no Liabilities or obligations to any
such Designee under this Agreement, any Seller Document or otherwise; and (h)
such Designee shall deliver to Seller a written certificate, pursuant to which
the Designee acknowledges and agrees for the benefit of Seller to the terms and
conditions of the designation as described herein. The parties shall cooperate
in all reasonable respects in making any modifications to the closing documents
and deliveries that may be necessary or appropriate in connection with the
transfer of Assets and Liabilities of the Stations to any Designee pursuant to
this Section 15.6.2.
15.6.3. This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective successors and assigns
as permitted hereunder. No Person, other than the parties hereto, is or shall be
entitled to bring any action to enforce any provision of this Agreement against
any of the parties hereto, and the covenants and agreements set forth in this
Agreement shall be solely for the benefit of, and shall be enforceable only by,
the parties hereto or their respective successors and assigns as permitted
hereunder.
15.7. Entire Agreement; Amendment.
This Agreement, including the Schedules and Exhibits hereto
and the other instruments and documents referred to herein or delivered pursuant
hereto, contains the entire agreement among the parties with respect to the
subject matter hereof and supersedes all prior oral or written agreements,
commitments or understandings with respect to such matters. No amendment,
modification or discharge of this Agreement shall be valid or binding unless set
forth in writing and duly executed by each of the parties hereto and News Corp.
<PAGE>
15.8. Severability.
If any part of any provision of this Agreement or any other
contract, agreement, document or writing given pursuant to or in connection with
this Agreement shall be invalid or unenforceable under applicable law, such part
shall be ineffective to the extent of such invalidity or unenforceability only,
without in any way affecting the remaining parts of such provisions or the
remaining provisions of said contract, agreement, document or writing.
15.9. Headings.
The headings of the sections and subsections contained in
this Agreement are inserted for convenience only and do not form a part or
affect the meaning, construction or scope thereof.
15.10. Governing Law.
This Agreement, the rights and obligations of the parties
hereto, and any claims or disputes relating thereto, shall be governed by and
construed under and in accordance with the laws of the State of New York,
excluding the choice of law rules thereof.
15.11. Signature in Counterparts.
This Agreement may be executed in separate counterparts,
none of which need contain the signatures of all parties, each of which shall be
deemed to be an original, and all of which taken together constitute one and the
same instrument. It shall not be necessary in making proof of this Agreement to
produce or account for more than the number of counterparts containing the
respective signatures of, or on behalf of, all of the parties hereto.
<PAGE>
H&H Final
\\\MC - 61599/8 - 0048956.05
IN WITNESS WHEREOF, each of the parties hereto has executed
this Asset Purchase Agreement, or has caused this Asset Purchase Agreement to be
duly executed and delivered in its name on its behalf, all as of the day and
year first above written.
HERITAGE BROADCASTING GROUP, INC.
By: /s/ David N. Walthall
------------------------------------
Name: David N. Walthall
Title: President and Chief Executive
Officer
SINCLAIR BROADCAST GROUP, INC.
By: /s/ David Smith
------------------------------------
Name: David Smith
Title: President
<PAGE>
ANNEX I-11
ANNEX I
DEFINITIONS
"Account Sale" shall mean a sale of the Stations for Buyer's
account and benefit on terms and conditions and to such buyer or buyers approved
in writing by Buyer (which approval shall not be unreasonably withheld,
conditioned or delayed); provided, however, there shall be no survival of any
representations, warranties, covenants or agreements by Seller in connection
with any such sale, nor any indemnification available to any buyer in respect
thereof from and after the closing of any such sale other than such survival and
indemnification to the extent set forth in Article 12 hereof.
"Accounting Firm" shall have the meaning set forth in Section
2.7.3.
"Accounts Receivable" means all cash accounts receivable with
respect to the Stations as of the end of the broadcast day immediately preceding
the Closing Date; provided, however, that if Seller shall have received the
Preliminary Payment, the Accounts Receivable for the Stations shall mean all
cash accounts receivable with respect to the Stations as of the end of the
broadcast day immediately preceding the Preliminary Payment Date.
"Additional Agreements" shall have the meaning set forth in
Section 6.1.6.
"Affiliate" shall mean, with respect to any Person, any other
Person that, (a) directly or indirectly is in control of, is controlled by, or
is under common control with, the first Person, (b) is an officer, director,
trustee, partner (general or limited), employee or holder of five percent (5%)
or more of any class of any voting or non-voting securities or other equity in
the first Person, (c) is an officer, director, trustee, partner (general or
limited), employee or holder of five percent (5%) or more of any class of the
voting or non-voting securities or other equity in any Person which directly or
indirectly is in control of, is controlled by, or is under common control with,
the first Person, and (d) any Family of any individual included in (a), (b) or
(c). For purposes of this definition, "control" (including with correlative
meanings "controlled by" and "under common control with") shall mean possession,
directly or indirectly, of either (X) five percent (5%) or more of the voting
power of the securities having ordinary voting power for the election of
directors of the first Person, or (Y) the power to direct or cause the direction
of the management or policies of the first Person (whether through ownership of
securities, partnership interests or any other ownership or debt interests, by
contract or otherwise).
"Allocable Deposit" shall have the meaning set forth in
Section 2.5.1.
"Applicant" shall have the meaning set forth in Section 4.5.2.
<PAGE>
"Appraisal Firm" shall have the meaning set forth in Section
2.8.3.
"Appraisal Report" shall have the meaning set forth in Section
2.8.3.
"Assets" shall have the meaning set forth in Section 2.1.
"Assignment of Contracts and Leases" means that certain
Assignment of Contracts and Leases, dated as of the Closing Date and executed by
Seller, substantially in the form attached hereto as Exhibit D.
"Assignment of FCC Licenses" means that certain Assignment of
FCC Licenses, dated as of the Closing Date and executed by Seller, substantially
in the form attached hereto as Exhibit C.
"Assumed Liabilities" shall have the meaning set forth in
Section 2.9.2.
"Assumption Agreement" means that certain Assumption
Agreement, dated the Closing Date and executed by Buyer and Seller,
substantially in the form attached hereto as Exhibit E.
"Balance Sheet" shall have the meaning set forth in Section
3.5.1.
"Base Purchase Price" shall have the meaning set forth in
Section 2.4.
"Basket Amount" shall have the meaning set forth in Section
12.4.2.
"Benefit Arrangement" means any benefit arrangement,
obligation, custom, or practice, whether or not legally enforceable, to provide
benefits, other than salary, as compensation for services rendered, to present
or former directors, employees, agents, or independent contractors, other than
any obligation, arrangement, custom or practice that is a Plan, including,
without limitation, employment agreements, executive compensation arrangements,
incentive programs or arrangements, sick leave, vacation pay, plant closing
benefits, salary continuation for disability, consulting, or other compensation
arrangements, workers' compensation, retirement, deferred compensation, bonus,
stock option or purchase, hospitalization, medical insurance, life insurance,
tuition reimbursement or scholarship programs, perquisite, company cars, any
plans subject to Code Section 125, and any plans providing benefits or payments
in the event of a change of control, change in ownership, or sale of a
substantial portion (including all or substantially all) of the assets of any
business or portion thereof, in each case with respect to any present or former
employees, directors, or agents.
"Benefit Plans" shall have the meaning set forth in Section
3.14.1.
<PAGE>
"Bill of Sale" means that certain Bill of Sale and Assignment
of Assets, dated as of the Closing Date and executed by Seller, substantially in
the form attached hereto as Exhibit B.
"Buyer Documents" shall mean, collectively, this Agreement,
the Deposit Escrow Agreement and the Assumption Agreement.
"Buyer's Plan" shall have the meaning set forth in Section
8.4.5.
"Closing" means a closing of the purchase, assignment and sale
of Assets contemplated hereunder.
"Closing Date" shall have the meaning set forth in Section
11.1.1.
"Code" means the Internal Revenue Code of 1986, as amended,
and all Laws promulgated pursuant thereto or in connection therewith.
"Communications Act" means the Communications Act of 1934, as
amended.
"Cost of Carry" shall be equal to the sum of all expenses
incurred, or liabilities reasonably assumed or discharged, by Seller or any of
its Affiliates, in connection with the business or operation of the Stations,
including any Taxes, professional fees and expenses, payments to employees,
agents, customers, vendors of the Stations and capital expenditures in the
Ordinary Course of Business in respect of the Stations during any Interim
Period. For purposes of computing any Taxes relevant to the determination of
Cost of Carry, Seller and its Affiliates shall each be assumed to be a
corporation that is fully taxable on all of its income or gains at the highest
applicable marginal rates for the Taxes at issue.
"Current Balance Sheet Date" shall have the meaning set forth
in Section 3.5.2.
"Deferred Contract" shall have the meaning set forth in
Section 6.2.9.
"Deposit" shall have the meaning set forth in Section 2.3.
"Deposit Escrow Agent" means Citibank, N.A.
"Deposit Escrow Agreement" means that certain Escrow Agreement
dated as of the date hereof by and among Buyer, Heritage Sellers, News America
Publishing Incorporated and the Deposit Escrow Agent, in the form of Exhibit A
attached hereto.
<PAGE>
"Deposit Release Date" shall have the meaning set forth in the
Multi-Stations Agreement.
"Designated Properties" shall have the meaning set forth in
Section 6.2.9.
"Designee" shall have the meaning set forth in Section 15.6.2.
"Disposition Expenses" shall mean all costs, fees, expenses
and other amounts incurred or payable, directly or indirectly, by Seller, the
Trustee and/or News Corp. (or any Affiliate of Seller or News Corp.), in
connection with the disposition of the Stations pursuant to an Account Sale or a
Makewell Sale, including, without limitation, (i) all reasonable legal,
accounting, brokerage and other professional fees, costs and expenses incurred
for the benefit of any such Person, (ii) all Taxes payable by any such Person or
the Stations, including, without limitation, sales and transfer taxes applicable
to, imposed upon or arising out of such Account Sale or Makewell Sale, as the
case may be, or (iii) all filing, registration and other similar fees and
expenses paid by or on behalf of any such Person, including, without limitation,
any such fees and expenses paid pursuant to Hart-Scott-Rodino and the
Communications Act or the rules, regulations, policies of the FTC and the FCC.
For purposes of computing any Taxes relevant to the determination of Disposition
Expenses, Seller, the Trustee and/or News Corp. (or any Affiliate of Seller or
News Corp.) shall each be assumed to be a corporation that is fully taxable on
all of its income or gains at the highest applicable marginal rates for the
Taxes at issue.
"DMA" means the designated market area for the Stations as
determined by the A.C. Nielsen Co.
"Encumbrances" mean any mortgages, pledges, liens, security
interests, defects in title, easements, rights-of-way, encumbrances,
restrictions and any other matters affecting title.
"Environmental Laws" means the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, ("CERCLA") as amended by the
Superfund Amendments and Reauthorization Act of 1986 ("SARA"), 42 U.S.C. Section
9601 et seq.; the Toxic Substances Control Act ("TSCA"), 15 U.S.C. Section 2601
et seq.; the Hazardous Materials Transportation Act, 49 U.S.C. Section 1802 et
seq.; the Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. Section
9601 et seq.; the Clean Water Act ("CWA"), 33 U.S.C. Section 1251 et seq.; the
Safe Drinking Water Act, 42 U.S.C. Section 300f et seq.; the Clean Air Act
("CAA"), 42 U.S.C. Section 7401 et seq.; or any other applicable federal, state,
or local laws relating to Hazardous Materials generation, production, use,
storage, treatment, transportation or disposal, or the protection of the
environment from Hazardous Materials
<PAGE>
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and all Laws promulgated pursuant thereto or in connection
therewith.
"ERISA Affiliate" means any person that, together with Seller,
would be or was prior to March 17, 1997 treated as a single employer under
Section 414 of the Code or Section 4001 of ERISA.
"Excluded Assets" shall have the meaning set forth in Section
2.2.
"Family" shall mean of an individual includes (a) the
individual, (b) the individual's spouse and former spouses and any other natural
person who resides with such individual, (c) any other natural person who is
related to the individual or any person described in the preceding clause (b)
within the second degree.
"FCC" means the Federal Communications Commission.
"FCC Applications" shall have the meaning set forth in Section
5.1.
"FCC Licenses" shall have the meaning set forth in Section
2.1.1.
"FCC Order" means an order or orders of the FCC, or of the
Chief, Mass Media Bureau of the FCC, acting under delegated authority,
consenting to the assignment to Buyer of the FCC Licenses for the Stations.
"Final Proration Amount" shall have the meaning set forth in
Section 2.7.3.
"FTC" means the Federal Trade Commission.
"Governmental Authority" means any agency, board, bureau,
court, commission, department, instrumentality or administration of the United
States government, any state government or any local or other governmental body
in a state, territory or possession of the United States or the District of
Columbia.
"Hart-Scott-Rodino" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and all Laws promulgated pursuant thereto
or in connection therewith.
"HSR Filing" shall have the meaning set forth in Section 5.2.
"Hazardous Materials" means any wastes, substances, or
materials (whether solids, liquids or gases) that are deemed hazardous, toxic,
pollutants, or contaminants, including without limitation, substances defined as
"hazardous
<PAGE>
wastes," "hazardous substances," "toxic substances," "radioactive materials," or
other similar designations in, or otherwise subject to regulation under, any
Environmental Laws.
"Heritage Sellers" means the Seller and the Multi-Stations
Sellers.
"Heritage Stations" means the Stations and the Multi-Stations.
"Indemnified Party" and "Indemnifying Party" shall have the
respective meanings set forth in Section 12.5.1.
"Indemnity Cap" shall have the meaning set forth in Section
12.4.2.
"Intellectual Property" shall have the meaning set forth in
Section 2.1.4.
"Interim Period" shall have the meaning set forth in Section
2.6.4.
"Laws" means any federal, state or local law, statute, code,
ordinance, regulation, order, writ, injunction, judgment or decree applicable to
the specified Person and to the businesses and assets thereof.
"Leased Property" shall have the meaning set forth in Section
2.1.2(b).
"Liabilities" shall mean, as to any Person, all debts, adverse
claims, liabilities and obligations, direct, indirect, absolute or contingent of
such Person, whether accrued, vested or otherwise, whether in contract, tort,
strict liability or otherwise and whether or not actually reflected, or required
by generally accepted accounting principles to be reflected, in such Person's
balance sheets or other books and records.
"Losses" means any and all demands, claims, complaints,
actions or causes of action, suits, proceedings, investigations, arbitrations,
assessments, losses, damages, liabilities, obligations (including those arising
out of any action, such as any settlement or compromise thereof or judgment or
award therein) and any costs and expenses, including, without limitation,
reasonable attorneys' fees and disbursements.
"Makewell Closing" shall have the meaning set forth in Section
2.6.2.
"Makewell Payment" shall have the meaning set forth in Section
2.6.2.
<PAGE>
"Makewell Sale" shall have the meaning set forth in Section
2.6.1.
"Material Adverse Effect" means a material adverse effect on
the business, assets or financial condition of the Heritage Stations taken as a
whole, except for any such material adverse effect resulting from (a) general
economic conditions applicable to the television or radio broadcast industry,
(b) general conditions in the markets in which the Heritage Stations operate,
(c) circumstances that are not likely to recur and either have been
substantially remedied or can be substantially remedied without substantial cost
or delay, or (d) the refusal by Buyer to consent to any new Program Contract.
"Merger" shall have the meaning set forth in the Recitals.
"Merger Agreement" shall have the meaning set forth in the
Recitals.
"Multiemployer Plan" means any Plan described in Section 3(37)
of ERISA.
"Multi-Stations Agreement" means that certain Asset Purchase
Agreement dated as of the date hereof by and between the Multi-Stations Sellers
and the Buyer pursuant to which the Multi-Stations Sellers has agreed to sell,
and the Buyer has agreed to purchase the Multi-Stations.
"Multi-Stations Sellers" means WEAR-TV, LTD., an Iowa
corporation, ROLLINS TELECASTING, INC., a Delaware corporation, WNNE-TV, INC., a
Vermont corporation, KOKH, INC., a Delaware corporation, WCHS, LTD., an Iowa
corporation, WVAE-FM, INC., an Iowa corporation, KCFX-FM, INC., an Iowa
corporation, HERITAGE-WISCONSIN BROADCASTING CORP., a Wisconsin corporation,
KKSN, INC., a Delaware corporation, WBBF, INC., a New York corporation, WIL
MUSIC, INC., a Missouri corporation and KIHT-FM, INC., a Missouri corporation.
"Multi-Stations" means the following: (i) the television
broadcast stations WEAR-TV, Channel 3, Pensacola, Florida, WFGX-TV, Channel 35,
Pensacola, Florida, WPTZ-TV, Channel 5, North Pole, New York, WFFF-TV, Channel
44, North Pole, New York, WNNE-TV, Channel 31, Hartford, Vermont, KOKH-TV,
Channel 25, Oklahoma City, Oklahoma, and WCHS-TV, Channel 8, Charleston, West
Virginia, and (ii) the radio broadcast stations WGH(FM), Newport News, Virginia,
WGH(AM), Newport News, Virginia and WVCL(FM), Norfolk, Virginia; KXTR(FM),
Kansas City, Missouri, KCFX-FM, Harrisonville, Missouri, KCIY(FM), Liberty,
Missouri, KCAZ(AM), Mission, Kansas and KQRC(FM), Leavenworth, Kansas; WEMP(AM),
Milwaukee, Wisconsin, WMYX(FM), Milwaukee, Wisconsin and WAMG(FM), Wauwatosa,
Wisconsin; KKSN(AM),
<PAGE>
Vancouver, Washington, KKSN-FM, Salem, Oregon and KKRH-FM, Salem, Oregon;
WBBF(AM), Rochester, New York, WBEE-FM, Rochester, New York, WKLX(FM),
Rochester, New York and WQRV(FM), Avon, New York; and WRTH(AM), St. Louis,
Missouri, WIL-FM, St. Louis, Missouri; and KIHT(FM), St. Louis, Missouri.
"Operating Contracts" shall have the meaning set forth in
Section 2.1.8.
"Ordinary Course of Business" means, with respect to Seller,
the ordinary course of business consistent with past practices of Seller both
with respect to type and amount; any actions taken pursuant to the requirements
of law or contracts existing on the date hereof shall be deemed to be action in
the Ordinary Course of Business.
"Permitted Encumbrances" means (a) Encumbrances of a landlord,
or other statutory lien not yet due and payable, or a landlord's liens arising
in the Ordinary Course of Business, (b) Encumbrances arising in connection with
equipment or maintenance financing or leasing under the terms of the Station
Contracts set forth on the Schedules which have been made available to Buyer,
(c) Encumbrances arising pursuant to the terms of leases on Real Property or
Leased Property as set forth on Schedule 2.1.1 and Schedule 2.1.8 which are
subject to any lease or sublease to a third party, (d) Encumbrances for Taxes
not yet due and payable or which are being contested in good faith and by
appropriate proceedings if adequate reserves with respect thereto are maintained
on Seller's books in accordance with generally accepted accounting principles,
(e) Encumbrances that do not materially detract from the value of any of the
Assets or materially interfere with the use thereof as currently used, or (f)
those Encumbrances on Schedule 3.8.
"Person" shall mean any individual, corporation, partnership,
limited liability company, joint venture, trust, unincorporated organization,
other form of business or legal entity or Governmental Authority.
"Plan" means any plan, program or arrangement, whether or not
written, that is or was an "employee benefit plan" as such term is defined in
Section 3(3) of ERISA and (a) which was or is established or maintained by
Seller or any ERISA Affiliate of a Seller; (b) to which Seller contributed or
was obligated to contribute or to fund or provide benefits or had any liability
(whether actual or contingent) with respect to any of its assets or otherwise;
or (c) which provides or promises benefits to any person who performs or who has
performed services for Seller and because of those services is or has been (i) a
participant therein or (ii) entitled to benefits thereunder.
<PAGE>
"Preliminary Payment Date" shall have the meaning set forth in
Section 2.6.3.
"Preliminary Payment" shall have the meaning set forth in
Section 2.6.1.
"Program Contracts" shall have the meaning set forth in
Section 2.1.5.
"Proration Amount" shall have the meaning set forth in Section
2.7.1.
"Proration Items" shall mean any power and utility charges,
business and license fees (including retroactive adjustments thereof), sales and
service charges, commissions, special assessments, and rental payments and
personal and real estate Taxes and assessments with respect to the Real
Property, taxes (except for Taxes arising from the transfer of the Assets
hereunder), deposits, Trade-out Agreements, accrued vacation, unused sick leave
and other similar prepaid and deferred items and any other operating expenses
incurred in the Ordinary Course of Business (except with respect to Program
Contracts, only those payments due and payable during the month in which the
Closing occurs shall be prorated). The parties acknowledge and agree that there
shall be excluded from Proration Items the following: (a) severance pay relating
to any employee of Seller who shall have been terminated prior to the Closing
Date, and (b) any Liabilities not being assumed by Buyer in accordance with
Section 2.10.
"Purchase Price" shall have the meaning set forth in Section
2.4.
"Qualified Plan" means a Plan that satisfies, or is intended
by Seller to satisfy, the requirements for tax qualification described in
Section 401 of the Code including, without limitation, any Plan that was
terminated on or after July 1, 1989, as to which Seller may have any actual or
contingent liability.
"Real Property" shall have the meaning set forth in Section
2.1.2(a).
"Restricted Contracts" shall have the meaning set forth in
Section 6.2.9.
"Retained General Manager" shall have the meaning set forth in
Section 8.4.8.
"Schedules" shall mean the disclosure schedules delivered by
Seller to Buyer in connection herewith.
<PAGE>
"Seller Documents" shall mean, collectively, this Agreement,
the Deposit Escrow Agreement, the Assignment of Contracts and Leases, the Bill
of Sale, the Assignment of FCC Licenses, and the Assumption Agreement.
"Seller Tax Returns" means all federal, state, local, foreign
and other applicable Tax returns, declarations of estimated Tax reports required
to be filed by any of Seller (without regard to extensions of time permitted by
law or otherwise).
"Seller's Broker" means Allen & Company Incorporated and RP
Companies, Inc.
"Seller's Plan" shall have the meaning set forth in Section
8.4.5.
"Stations' Cash Flow" shall have the meaning set forth in
Section 2.6.4.
"Station Contracts" shall have the meaning set forth in
Section 2.1.8.
"Stations" shall have the meaning set forth in the Recitals.
"Subject Party" shall mean the Seller, the Trustee, News
Corp., any Affiliate of News Corp., HMI Broadcasting Corporation, Heritage Media
or the Merger Sub.
"Taxes" means all federal, state and local taxes (including,
without limitation, income, profit, franchise, sales, use, real property,
personal property, ad valorem, excise, employment, social security and wage
withholding taxes) and installments of estimated taxes, assessments,
deficiencies, levies, imports, duties, license fees, registration fees,
withholdings, or other similar charges of every kind, character or description
imposed by any Governmental Authorities.
"TBA" means any time brokerage agreement, local marketing
arrangement, joint sales agreement, joint operating agreement, limited
management agreement or other similar agreement or contract.
"Time Sales Agreements" shall have the meaning set forth in
Section 2.1.7.
"Trade-out Agreements" shall have the meaning set forth in
Section 2.1.6.
"Transfer Taxes" shall have the meaning set forth in Section
15.3.
<PAGE>
"Transferred Employees" shall have the meaning set forth in
Section 8.4.1.
"Welfare Plan" means an "employee welfare benefit plan" as
such term is defined in Section 3(1) of ERISA.
ASSET PURCHASE AGREEMENT
BY AND AMONG
WEAR-TV, LTD.
ROLLINS TELECASTING, INC.
WNNE-TV, INC.
KOKH, INC.
WCHS, LTD.
WVAE-FM, INC.
KCFX-FM, INC.
HERITAGE-WISCONSIN BROADCASTING CORP.
KKSN, INC.
WBBF, INC.
WIL MUSIC, INC.
and
KIHT-FM, INC.
as Sellers
AND
SINCLAIR BROADCAST GROUP, INC.
as Buyer
Dated as of July 16, 1997
Portions of this exhibit have been omitted pursuant to a request for
confidential treatment. The omitted portions, marked * and [ ], have been
separately filed with the Commission.
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE 1. DEFINITIONS AND REFERENCES................................... 4
ARTICLE 2. SALE AND PURCHASE OF ASSETS.................................. 4
2.1. Asset Sale and Purchase of Assets............................. 4
2.1.1. FCC Licenses.................................................. 4
2.1.2. Real and Leased Property Interests............................ 5
2.1.3. Tangible Personal Property.................................... 5
2.1.4. Intellectual Property......................................... 5
2.1.5. Program Contracts............................................. 5
2.1.6. Trade-out Agreements.......................................... 6
2.1.7. Broadcast Time Sales Agreement................................ 6
2.1.8. Operating Contracts........................................... 6
2.1.9. Vehicles...................................................... 6
2.1.10. Files and Records............................................. 6
2.1.11. Auxiliary Facilities.......................................... 7
2.1.12. Permits and Licenses.......................................... 7
2.1.13. Goodwill...................................................... 7
2.2. Excluded Assets............................................... 7
2.2.1. Cash.......................................................... 7
2.2.2. Accounts Receivable........................................... 7
2.2.3. Personal Property Disposed Of................................. 8
2.2.4. Insurance..................................................... 8
2.2.5. Employee Plans and Assets..................................... 8
2.2.6. Right to Tax Refunds.......................................... 8
2.2.7. Certain Books and Records..................................... 8
2.2.8. Third-Party Claims............................................ 8
2.2.9. Rights Under this Agreement................................... 8
2.2.10. Names......................................................... 9
2.2.11. Deposit and Prepaid Expenses.................................. 9
2.2.12. Miscellaneous Excluded Assets................................. 9
2.3. Escrow Deposit................................................ 9
2.4. Purchase Price................................................ 9
2.5. Payment of Purchase Price at Closing.......................... 9
2.6. Special Terms for Class A Stations............................ 10
2.7. Special Terms for Class B Stations............................ 14
2.8. Proration Amount.............................................. 16
2.9. Allocation of Base Purchase Price and Deposit................. 19
2.10. Assumption of Liabilities..................................... 21
2.11. News Corp. Guaranty........................................... 22
<PAGE>
ARTICLE 3. REPRESENTATIONS AND WARRANTIES BY SELLERS.................... 22
3.1. Organization and Standing....................................... 22
3.2. Authorization................................................... 23
3.3. Compliance with Laws............................................ 23
3.4. Consents and Approvals; No Conflicts............................ 23
3.5. Financial Statements; Undisclosed Liabilities................... 24
3.6. Absence of Certain Changes or Events............................ 24
3.7. Absence of Litigation........................................... 25
3.8. Assets.......................................................... 25
3.9. FCC Matters..................................................... 25
3.10. Real Property................................................... 26
3.11. Intellectual Property........................................... 26
3.12. Station Contracts............................................... 27
3.13. Taxes........................................................... 27
3.14. Employee Benefit Plans.......................................... 28
3.15. Labor Relations................................................. 30
3.16. Environmental Matters........................................... 30
3.17. Insurance....................................................... 31
3.18. Reports......................................................... 31
ARTICLE 4. REPRESENTATIONS AND WARRANTIES BY BUYER........................ 31
4.1. Organization and Standing....................................... 32
4.2. Authorization................................................... 32
4.3. Consents and Approvals; No Conflicts............................ 32
4.4. Availability of Funds........................................... 33
4.5. Qualification of Buyer.......................................... 33
4.6. WARN Act........................................................ 34
4.7. No Outside Reliance............................................. 34
4.8. Interpretation of Certain Provisions............................ 34
ARTICLE 5. PRE-CLOSING FILINGS............................................ 34
5.1. Applications for FCC Consent................. .................. 34
5.2. Hart-Scott-Rodino............................................... 35
5.3. Non-Required Actions............................................ 35
5.4. KOKH Divestiture................................................ 35
ARTICLE 6. COVENANTS AND AGREEMENTS OF SELLERS............................ 35
6.1. Negative Covenants.............................................. 36
6.1.1. Dispositions; Mergers........................................... 36
6.1.2. Accounting Principles and Practices............................. 36
6.1.3. Trade-out Agreements............................................ 36
6.1.4. Broadcast Time Sales Agreements................................. 36
6.1.5. Network Affiliation Agreements and TBAs......................... 36
6.1.6. Additional Agreements........................................... 36
6.1.7. Breaches........................................................ 37
6.1.8. Employee Matters................................................ 37
6.1.9. Actions Affecting FCC Licenses.................................. 37
6.1.10. Programming..................................................... 37
6.1.11. Encumbrances.................................................... 37
<PAGE>
6.1.12. Transactions With Affiliates.................................... 37
6.2. Affirmative Covenants........................................... 38
6.2.1. Preserve Existence.............................................. 38
6.2.2. Normal Operations............................................... 38
6.2.3. Maintain FCC Licenses........................................... 38
6.2.4. Network Affiliation............................................. 38
6.2.5. Station Contracts............................................... 39
6.2.6. Taxes........................................................... 39
6.2.7. Access.......................................................... 39
6.2.8. Insurance....................................................... 40
6.2.9. Financial Statements............................................ 40
6.2.10. Consents........................................................ 40
6.2.11. Corporate Action................................................ 41
6.2.12. Environmental Audit............................................. 41
6.3. Confidentiality................................................. 41
6.4. Trustee Acknowledgment.......................................... 42
ARTICLE 7. COVENANTS AND AGREEMENTS OF BUYER.............................. 42
7.1. Confidentiality................................................. 42
7.2. Corporate Action................................................ 42
7.3. Access.......................................................... 43
7.4. Collection of Receivables....................................... 43
ARTICLE 8. MUTUAL COVENANTS AND UNDERSTANDINGS OF SELLERS AND BUYER...... 44
8.1. Possession and Control.......................................... 44
8.2. Risk of Loss.................................................... 44
8.3. Public Announcements............................................ 45
8.4. Employee Matters................................................ 45
8.5. Disclosure Schedules............................................ 48
8.6. Bulk Sales Laws................................................. 49
8.7. Tax Matters..................................................... 49
8.8. Preservation of Books and Records............................... 49
ARTICLE 9. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE........... 49
9.1. Representations and Covenants................................... 49
9.2. Delivery of Documents........................................... 50
9.3. FCC Order....................................................... 50
9.4. Hart-Scott-Rodino............................................... 50
9.5. Legal Proceedings............................................... 50
ARTICLE 10. CONDITIONS PRECEDENT TO SELLERS' OBLIGATION TO CLOSE......... 50
10.1. Consummation of the
Merger.......................................................... 50
10.2. Representations and Covenants................................... 50
10.3. Delivery by Buyer............................................... 51
<PAGE>
10.4. FCC Order...................................................... 51
10.5. Hart-Scott-Rodino.............................................. 51
10.6. Legal Proceedings.............................................. 51
ARTICLE 11. CLOSING...................................................... 51
11.1. Closings....................................................... 51
11.2. Delivery by Sellers............................................ 52
11.2.1. Agreements and Instruments..................................... 53
11.2.2. Consents....................................................... 53
11.2.3. Certified Resolutions.......................................... 53
11.2.4. Officers' Certificates......................................... 53
11.2.5. Good Standing Certificates..................................... 53
11.2.6. Opinion of Counsel............................................. 54
11.3. Delivery by Buyer.............................................. 54
11.3.1. Purchase Price Payment......................................... 54
11.3.2. Agreements and Instruments..................................... 54
11.3.3. Certified Resolutions.......................................... 54
11.3.4. Officers' Certificate.......................................... 54
11.3.5. Opinion of Counsel............................................. 54
ARTICLE 12. SURVIVAL; INDEMNIFICATION.................................... 55
12.1. Survival of Representations.................................... 55
12.2. Indemnification by Sellers..................................... 56
12.3. Indemnification by Buyer....................................... 56
12.4. Limitations on Indemnification................................. 57
12.5. Conditions of Indemnification.................................. 58
12.6. Cure of Breach................................................. 59
ARTICLE 13. TERMINATION.................................................. 60
13.1. Termination by the Parties..................................... 60
13.2. Automatic Termination.......................................... 60
13.3. Effect of Termination.......................................... 60
ARTICLE 14. REMEDIES..................................................... 61
14.1. Default by Buyer............................................... 61
14.2. Default by Sellers............................................. 62
14.3. Liquidated Damages............................................. 62
ARTICLE 15. GENERAL PROVISIONS........................................... 62
15.1. Additional Actions, Documents and Information.................. 62
15.2. Brokers........................................................ 63
15.3. Expenses and Taxes............................................. 63
15.4. Notices........................................................ 63
15.5. Waiver......................................................... 65
15.6. Benefit and Assignment......................................... 65
15.7. Entire Agreement; Amendment.................................... 66
15.8. Severability................................................... 67
<PAGE>
15.9. Headings....................................................... 67
15.10. Governing Law.................................................. 67
15.11. Signature in Counterparts...................................... 67
<PAGE>
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is entered
into as of this 16th day of July, 1997, by and among WEAR-TV, LTD., an Iowa
corporation ("WEAR Subsidiary"), ROLLINS TELECASTING, INC., a Delaware
corporation ("WPTZ Subsidiary"), WNNE-TV, INC., a Vermont corporation ("WNNE
Subsidiary"), KOKH, INC., a Delaware corporation ("KOKH Subsidiary"), WCHS,
LTD., an Iowa corporation ("WCHS Subsidiary"), WVAE-FM, INC., an Iowa
corporation ("Norfolk Subsidiary"), KCFX-FM, INC., an Iowa corporation ("Kansas
City Subsidiary"), HERITAGE-WISCONSIN BROADCASTING CORP., a Wisconsin
corporation ("Milwaukee Subsidiary"), KKSN, INC., a Delaware corporation
("Portland Subsidiary"), WBBF, INC., a New York corporation ("Rochester
Subsidiary"), WIL MUSIC, INC., a Missouri corporation ("St. Louis Subsidiary")
and KIHT-FM, INC., a Missouri corporation ("KIHT Subsidiary") (each of the
foregoing entities shall be referred to herein individually as "Seller" and
collectively as "Sellers") and SINCLAIR BROADCAST GROUP, INC., a Maryland
corporation ("Buyer").
WHEREAS, Heritage Media Corporation, a Delaware corporation
("HMC"), The News Corporation Limited, a South Australia corporation ("News
Corp."), and HMC Acquisition Corp., a Delaware corporation and wholly-owned
subsidiary of News Corp. ("Merger Sub"), are parties to that certain Agreement
and Plan of Merger dated as of March 17, 1997 (the "Merger Agreement"), pursuant
to which, among other things, HMC will be merged with and into Merger Sub (the
"Merger"), with Merger Sub surviving as a wholly-owned subsidiary of News Corp.;
WHEREAS, in connection with the Merger, HMC and News Corp.
have agreed that the radio and television stations owned, controlled or operated
by certain subsidiaries of HMC will be divested;
<PAGE>
WHEREAS, News Corp., HMC and William G. Evans (the
"Trustee") have entered into a Transfer Agreement (the "Transfer Agreement")
dated as of May 2, 1997, pursuant to which Heritage Media Services, Inc.
("Heritage Media"), a wholly-owned subsidiary of HMC, has agreed to transfer to
the Trustee all of the stock of HMI Broadcasting Corporation, a wholly-owned
subsidiary of Heritage Media and the direct or indirect sole stockholder of the
Sellers, pursuant to and in accordance with the terms and conditions of the
Transfer Agreement and a Trust Agreement by and among the Trustee, HMC, News
Corp. and Heritage Media, to be entered into as of the closing of the Merger
(the "Trust Agreement");
WHEREAS, WEAR Subsidiary, WPTZ Subsidiary, WNNE Subsidiary,
KOKH Subsidiary, WCHS Subsidiary, Norfolk Subsidiary, Kansas City Subsidiary,
Milwaukee Subsidiary, Portland Subsidiary, Rochester Subsidiary, St. Louis
Subsidiary and KIHT Subsidiary are each wholly-owned indirect subsidiaries of
HMC;
WHEREAS, WEAR Subsidiary is the licensee of television
broadcast station WEAR-TV, Channel 3, Pensacola, Florida ("WEAR"), pursuant to
certain authorizations issued by the FCC and WEAR Subsidiary operates WEAR and
owns or leases certain assets used in connection with the operation of WEAR;
WHEREAS, WEAR Subsidiary also operates television broadcast
station WFGX-TV, Channel 35, Pensacola, Florida ("WFGX"), pursuant to a TBA, and
WEAR Subsidiary owns or leases certain assets used in connection with the
operation of WFGX;
WHEREAS, WPTZ Subsidiary is the licensee of television
broadcast station WPTZ-TV, Channel 5, North Pole, New York ("WPTZ"), pursuant to
certain authorizations issued by the FCC and WPTZ Subsidiary operates WPTZ and
owns or leases certain assets used in connection with the operation of WPTZ;
WHEREAS, WPTZ Subsidiary is also a party to a TBA for the
operation of WFFF-TV, Channel 44, North Pole, New York ("WFFF"), and WPTZ
Subsidiary owns or leases certain assets to be used in connection with the
operation of WFFF;
WHEREAS, WNNE Subsidiary is the licensee of television
broadcast station WNNE-TV, Channel 31, Hartford, Vermont ("WNNE"), pursuant to
certain authorizations issued by the FCC and WNNE Subsidiary operates WNNE and
owns or leases certain assets used in connection with the operation of WNNE;
WHEREAS, KOKH Subsidiary is the licensee of television
broadcast station KOKH-TV, Channel 25, Oklahoma City, Oklahoma ("KOKH"),
pursuant to certain authorizations issued by the FCC and KOKH Subsidiary
operates KOKH and owns or leases certain assets used in connection with the
operation of KOKH;
<PAGE>
WHEREAS, WCHS Subsidiary is the licensee of television
broadcast station WCHS-TV, Channel 8, Charleston, West Virginia ("WCHS"),
pursuant to certain authorizations issued by the FCC and WCHS Subsidiary
operates WCHS and owns or leases certain assets used in connection with the
operation of WCHS;
WHEREAS, Norfolk Subsidiary is the licensee of radio
broadcast stations WGH(FM), Newport News, Virginia, WGH(AM), Newport News,
Virginia and WVCL(FM), Norfolk, Virginia (collectively, the "Norfolk Stations")
pursuant to certain authorizations issued by the FCC, and Norfolk Subsidiary
operates the Norfolk Stations and owns or leases certain assets used in
connection with the operation of the Norfolk Stations;
WHEREAS, Kansas City Subsidiary is the licensee of radio
broadcast stations KXTR(FM), Kansas City, Missouri, KCFX-FM, Harrisonville,
Missouri, KCIY(FM), Liberty, Missouri, KCAZ(AM), Mission, Kansas and KQRC(FM),
Leavenworth, Kansas ("KQRC" and collectively, the "Kansas City Stations")
pursuant to certain authorizations issued by the FCC, and Kansas City Subsidiary
operates the Kansas City Stations, with the exception of KCAZ(AM) which is
operated by Children's Radio Group, Inc. pursuant to a TBA, and owns or leases
certain assets used in connection with the operations of the Kansas City
Stations;
WHEREAS, Milwaukee Subsidiary is the licensee of radio
broadcast stations WEMP(AM), Milwaukee, Wisconsin, WMYX(FM), Milwaukee,
Wisconsin and WAMG(FM), Wauwatosa, Wisconsin (collectively, the Milwaukee
Stations") pursuant to certain authorizations issued by the FCC, and Milwaukee
Subsidiary operates the Milwaukee Stations and owns or leases certain assets
used in connection with the operation of the Milwaukee Stations;
WHEREAS, Portland Subsidiary is the licensee of radio
broadcast stations KKSN(AM), Vancouver, Washington, KKSN-FM, Salem, Oregon and
KKRH-FM, Salem, Oregon (collectively, the "Portland Stations") pursuant to
certain authorizations issued by the FCC, and Portland Subsidiary operates the
Portland Stations and owns or leases certain assets used in connection with the
operation of the Portland Stations;
WHEREAS, Rochester Subsidiary is the licensee of radio
broadcast stations WBBF(AM), Rochester, New York, WBEE-FM, Rochester, New York,
WKLX(FM), Rochester, New York and WQRV(FM), Avon, New York (collectively, the
"Rochester Stations") pursuant to certain authorizations issued by the FCC, and
Rochester Subsidiary operates the Rochester Stations and owns or leases certain
assets used in connection with the operation of the Rochester Stations;
WHEREAS, St. Louis Subsidiary is the licensee of radio
broadcast stations WRTH(AM), St. Louis, Missouri and WIL-FM, St. Louis, Missouri
<PAGE>
(together, the "St. Louis Stations") pursuant to certain authorizations issued
by the FCC, and St. Louis Subsidiary operates the St. Louis Stations and owns or
leases certain assets used in connection with the operation of the St. Louis
Stations;
WHEREAS, KIHT Subsidiary is the licensee of radio broadcast
station KIHT(FM), St. Louis, Missouri ("KIHT") pursuant to certain
authorizations issued by the FCC, and KIHT Subsidiary operates KIHT and owns or
leases certain assets used in connection with the operation of KIHT; and
WHEREAS, the parties hereto desire to enter into this
Agreement to provide for the sale, assignment and transfer by Sellers to Buyer
of the assets owned, leased or used by Sellers in connection with the business
and operations of WEAR, WPTZ, WNNE, KOKH, WCHS, WFGX, WFFF, the Norfolk
Stations, the Kansas City Stations, the Milwaukee Stations, the Portland
Stations, the Rochester Stations, the St. Louis Stations and KIHT (individually,
a "Station" and collectively, the "Stations"), all subject to the terms
described in this Agreement.
NOW, THEREFORE, in consideration of the foregoing and of the
mutual covenants and agreements hereinafter set forth, the parties hereto hereby
agree as follows:
ARTICLE 1.
DEFINITIONS AND REFERENCES
Capitalized terms used herein without definition shall have
the respective meanings assigned thereto in Annex I attached hereto and
incorporated herein for all purposes of this Agreement (such definitions to be
equally applicable to both the singular and plural forms of the terms defined).
Unless otherwise specified, all references herein to "Articles" or "Sections"
are to Articles or Sections of this Agreement.
ARTICLE 2.
SALE AND PURCHASE OF ASSETS
2.1. Asset Sale and Purchase of Assets.
Subject to the terms and conditions hereof and in reliance
upon the representations, warranties and agreements contained herein, upon the
Closing with respect to any Stations, each Seller shall sell, assign, transfer,
convey and deliver to Buyer free and clear of any Encumbrances other than
Permitted Encumbrances, and Buyer shall purchase, acquire, pay for and accept
from each Seller, all of each Seller's right, title and interest in, to and
under all real, personal and mixed assets, rights, benefits and privileges, both
tangible and intangible,
<PAGE>
owned, leased, used or useful by each Seller in connection with the business and
operations of any such Stations (collectively, the "Assets"); but excluding the
Excluded Assets described in Section 2.2.
The Assets shall include, without limitation, all of each
Seller's right, title and interest in, to and under the following:
2.1.1. FCC Licenses.
All licenses, permits and other authorizations issued by the
FCC to any Seller for the operation of the Stations (the "FCC Licenses"),
including without limitation those listed in Schedule 2.1.1, and all
applications therefor, together with any renewals, extensions or modifications
thereof and additions thereto.
2.1.2. Real and Leased Property Interests.
(a) All the real property owned by any Seller including,
without limitation, all land, fee interests, easements and other interests of
every kind and description in real property, buildings, structures, fixtures,
appurtenances, towers and antennae, and other improvements thereon owned by any
Seller and used or useful in connection with the business and operations of the
Stations ("Real Property"), including, without limitation, all of those items
listed in Schedule 2.1.2.
(b) All the real property leasehold interests of any Seller
including, without limitation, leases and subleases of any land, easements and
other real property leasehold interests of every kind and description in real
property, buildings, structures, fixtures, appurtenances, towers and antennae,
and other improvements thereon leased by any Seller in connection with the
business and operations of the Stations ("Leased Property"), including, without
limitation, all of those items listed in Schedule 2.1.2.
2.1.3. Tangible Personal Property.
All of the furniture, fixtures, furnishings, machinery,
computers, equipment, inventory, spare parts, supplies, office materials and
other tangible property of every kind and description owned, leased or used by
any Seller in connection with the business and operations of the Stations,
together with any replacements thereof and additions thereto made before the
Closing, and less any retirements or dispositions thereof made before the
Closing in the Ordinary Course of Business, including, without limitation, those
items which have a book value in excess of Five Thousand Dollars ($5,000), all
of which are set forth and identified in Schedule 2.1.3.
<PAGE>
2.1.4. Intellectual Property.
All of the service marks, copyrights, franchises,
trademarks, trade names, jingles, slogans, logotypes and other similar
intangible assets maintained, owned, leased or used by any Seller in connection
with the business and operations of the Stations (including any and all
applications, registrations, extensions and renewals relating thereto) (the
"Intellectual Property"), and all of the rights, benefits and privileges
associated therewith including, without limitation, the right to use the call
letters for the Stations.
2.1.5. Program Contracts.
The program licenses and contracts under which any Seller is
authorized to broadcast programs on the Stations (collectively the "Program
Contracts") including, without limitation, (a) all program (cash and non-cash)
licenses and contracts listed on Schedule 2.1.5, and (b) any other such program
contracts that are entered into between the date of this Agreement and the
Closing Date in accordance with the terms of this Agreement.
2.1.6. Trade-out Agreements.
All contracts and agreements (excluding Program Contracts)
pursuant to which any Seller has sold, traded or bartered commercial air time on
the Stations in consideration for any property or services in lieu of or in
addition to cash (collectively, the "Trade-out Agreements") including, without
limitation, those set forth and identified in Schedule 2.1.6.
2.1.7. Broadcast Time Sales Agreement.
All contracts and agreements pursuant to which any Seller
has sold commercial air time on the Stations for cash (collectively the "Time
Sales Agreements").
2.1.8. Operating Contracts.
All other operating contracts and agreements relating to the
business or operations of the Stations, all material such contracts as of the
date hereof being listed on Schedule 2.1.8 (including, without limitation, any
TBA, all employment agreements and talent contracts, all leases and subleases
relating to the Leased Property, all agreements relating to any motor vehicles,
all collective bargaining agreements, all network affiliation agreements and all
national and local advertising representation agreements for the Stations),
together with all contracts and agreements that will be entered into between the
date of this Agreement and the Closing Date in accordance with the terms of this
Agreement
<PAGE>
(collectively, the "Operating Contracts" and together with the Program
Contracts, Trade-out Agreements and the Time Sales Agreements, the "Station
Contracts").
2.1.9. Vehicles.
All automotive equipment and motor vehicles maintained,
owned, leased or otherwise used by any Seller in connection with the business
and operations of the Stations, including, without limitation, those set forth
and described in Schedule 2.1.9.
2.1.10. Files and Records.
All engineering, business and other books, papers, logs,
files and records pertaining to the business and operations of the Stations, but
not the organizational documents and records described in Section 2.2.7.
2.1.11. Auxiliary Facilities.
All translators, earth stations, and other auxiliary
facilities, and all applications therefor owned, leased or otherwise used or
useful by any Seller in connection with the business and operations of the
Stations.
2.1.12. Permits and Licenses.
All permits, approvals, orders, authorizations, consents,
licenses, certificates, franchises, exemptions of, or filings or registrations
with, any court or Governmental Authority (other than the FCC) in any
jurisdiction, which have been issued or granted to or are owned or used or
useful by any Seller in connection with the business and operations of the
Stations and all pending applications therefor.
2.1.13. Goodwill.
The business of the Stations as a "going concern", customer
relationships and goodwill.
2.2. Excluded Assets.
Notwithstanding anything to the contrary in this Agreement,
there shall be excluded from the Assets and retained by Sellers, to the extent
in existence as of the Closing Date for a particular Station, the following
assets (collectively, the "Excluded Assets").
<PAGE>
2.2.1. Cash.
All cash, cash equivalents or deposits held by any Seller,
all interest payable in connection with any such cash, cash equivalents or
deposits or short term investments, bank balances and rights in and to bank
accounts, marketable and other securities of any Seller; provided, however, if
Buyer has made either a Class A 100% Payment or a Class B Payment, Buyer shall
be entitled to receive the cash flow from the business and operations of a
Station to the extent provided for in Section 2.6 and Section 2.7; provided,
further, that if the option to acquire KCAZ described on Schedule 3.8 is
executed on or prior to the Closing Date, then the cash received by Sellers upon
such exercise shall be paid to Buyer upon the Closing for all of the radio
stations in the Kansas City DMA.
2.2.2. Accounts Receivable.
All Accounts Receivable arising out of the business and
operations of the Stations.
2.2.3. Personal Property Disposed Of.
All tangible personal property disposed of or consumed in
the Ordinary Course of Business as permitted by this Agreement.
2.2.4. Insurance.
All contracts of insurance and all insurance plans and the
assets thereof.
2.2.5. Employee Plans and Assets.
All Plans, Benefit Arrangements (except for any Station
Contracts, Proration Items or other matters which are specifically assumed by
Buyer pursuant to the terms hereof), Qualified Plans and Welfare Plans and the
assets thereof.
2.2.6. Right to Tax Refunds.
Any and all claims of any Seller with respect to
any Tax refunds.
2.2.7. Certain Books and Records.
All of each (a) Seller's organizational documents, corporate
books and records (including minute books and stock ledgers and records), and
originals of account books of original entry, (b) duplicated copies of any
books, records, accounts, checks, payment records, Tax records (including
payroll,
<PAGE>
unemployment, real estate and other Tax records) and other similar books,
records and information of any Seller relating to such Seller's operation of the
business of the Stations prior to the Closing, (c) all records prepared by or on
behalf of Sellers in connection with the sale of the Stations, and (d) all
records and documents relating to any Excluded Assets.
2.2.8. Third-Party Claims.
All rights and claims of any Seller whether mature,
contingent or otherwise, against third parties relating to the Assets or the
Stations, whether in tort, contract, or otherwise.
2.2.9. Rights Under this Agreement.
All of each Seller's rights under or pursuant to this
Agreement or any other rights in favor of Sellers pursuant to the other
agreements contemplated hereby.
2.2.10. Names.
All rights to the names "Heritage Broadcasting" and
"Heritage Media" and any logo or variation thereof and the goodwill associated
therewith.
2.2.11. Deposit and Prepaid Expenses.
All of each Seller's deposits and prepaid expenses,
provided, however, any deposit and prepaid expenses shall be included in the
Assets conveyed pursuant hereto to the extent that Sellers receive a credit
therefor in the calculation of the Proration Amount pursuant to Section 2.8.
2.2.12. Miscellaneous Excluded Assets.
The assets listed and identified on Schedule 2.2.12.
2.3. Escrow Deposit.
For and in partial consideration of the execution and
delivery of this Agreement, simultaneously with the execution and delivery of
this Agreement and the New Orleans Agreement, Buyer is depositing in escrow with
the Deposit Escrow Agent an amount equal to SIXTY-THREE MILLION DOLLARS
($63,000,000) in cash, for the benefit of the Heritage Sellers, such amount to
be held as an earnest money deposit (the "Deposit"), in accordance with the
terms and conditions of the Deposit Escrow Agreement. Upon the written request
of Buyer, the parties hereto agree to negotiate in good faith an amendment to
the Deposit Escrow Agreement to
<PAGE>
The information below marked with * and [ ] has been omitted pursuant to a
request for confidential treatment. The omitted portions have been separately
filed with the Commission.
provide for the replacement of the cash Deposit with an original, irrevocable
letter of credit for the benefit of Sellers in the amount of the Deposit, all on
terms and conditions satisfactory to Sellers in their sole and absolute
discretion.
2.4. Purchase Price.
For and in consideration of the conveyances and assignments
described herein and in addition to the assumption of Liabilities as set forth
in Section 2.10, Buyer agrees to pay to Sellers, and Sellers agree to accept
from Buyer, an amount equal to SIX HUNDRED FOUR MILLION DOLLARS ($604,000,000),
(the "Base Purchase Price"), plus or minus (as the case may be) the Proration
Amount (collectively, the "Purchase Price").
2.5. Payment of Purchase Price at Closing.
The allocable portion of the Purchase Price for each Station
(as set forth in Section 2.9.1) shall be payable to Sellers at the Closing for
such Station (except to the extent that any part of the Purchase Price shall
have been paid on a Payment Date pursuant to Section 2.6 or Section 2.7) as
follows:
2.5.1. Buyer and Sellers shall cause the Deposit Escrow Agent
to deliver to Sellers the amount of the Deposit allocable to the Stations for
which a Closing is taking place by wire transfer of immediately available
federal funds to an account which will be identified by Sellers not less than
two (2) days prior to the Closing Date; provided, however, none of the Deposit
shall be released by the Deposit Escrow Agent at any Closing until the Deposit
Release Date.
2.5.2. Buyer shall deliver the balance of the allocable
portion of the Purchase Price for such Station by wire transfer of immediately
available federal funds to an account which will be identified by Sellers not
less than two (2) days prior to the Closing Date; provided, however, until such
time as the Deposit Release Date shall have occurred, Buyer shall deliver the
entire Purchase Price for such Station.
2.6. Special Terms for Class A Stations.
2.6.1. If all of the Closings for the Class A Stations shall
not have occurred prior to such date which is nine (9) months after the date of
this Agreement (the "Class A 80% Payment Date"), and if the conditions set forth
in Section 9.1 and Section 9.5 (and only such Sections) would have been
satisfied if the Class A 80% Payment Date was the Closing Date, then Buyer shall
pay to Sellers on the Class A 80% Payment Date the amount of [*] less any
portion of the Purchase Price which has been received by the Sellers pursuant to
any Closings
<PAGE>
The information below marked with * and [ ] has been omitted pursuant to a
request for confidential treatment. The omitted portions have been separately
filed with the Commission.
which occur for either Class A Stations or Class B Stations prior to the Class A
80% Payment Date (the "Class A 80% Payment") by wire transfer of immediately
available federal funds to an account which will be identified by Sellers not
less than two (2) days prior to the Class A 80% Payment Date.
If the conditions set forth in Section 9.1 and Section 9.5 are
not satisfied as of the date which would otherwise have been the Class A 80%
Payment Date, then Buyer shall pay the Class A 80% Payment in accordance with
the above within two (2) days after the first date on which such conditions are
satisfied. If the issuance of the FCC Orders for any of the Class A Stations or
any of the Class B Stations is delayed until after the Class A 80% Payment Date
solely due to any issue raised by the FCC or any petitioner concerning any
Subject Party (any such Station being a "Delayed 80% Station"), then the amount
of the Class A 80% Payment due and payable on the Class A 80% Payment Date shall
be reduced by the amount of the Base Purchase Price for such Delayed 80% Station
until the issuance of the FCC Orders for each such Delayed 80% Station. If a
Closing for a Class A Station shall not have occurred on or prior to the Class A
80% Payment Date solely due to an intentional breach by Sellers which caused the
conditions set forth in Section 9.2 not to be satisfied, then the amount of the
Class A 80% Payment due and payable on the Class A 80% Payment Date shall be
reduced by an amount of the Base Purchase Price for such Class A Station until
such breach is cured by Sellers.
2.6.2 If all of the Closings for the Class A Stations shall
not have occurred on or prior to such date which is twelve (12) months after the
date of this Agreement (the "Class A 100% Payment Date" and together with the
Class A 80% Payment Date, a "Class A Payment Date"), and if the conditions set
forth in Section 9.1 and Section 9.5 (and only such Sections) would have been
satisfied if the Class A 100% Payment Date was the Closing Date, then Buyer
shall pay to Sellers on the Class A 100% Payment Date, an amount equal to [*]
less any portion of the Purchase Price which has been received by the Sellers
pursuant to any Closings which occur for any Class A Stations on or prior to the
Class A 100% Payment Date (the "Class A 100% Payment" and together with the
Class A 80% Payment, a "Class A Payment") in respect of any of the Class A
Stations for which a Closing has not occurred as follows:
(a) Buyer and Sellers shall cause the Deposit Escrow Agent to
deliver to Sellers the amount of [*](the "Class A Deposit") by wire transfer of
immediately available federal funds to an account which will be identified by
Sellers not less than two (2) days prior to the Class A 100% Payment Date;
provided, however, if the amount of the Class A 100% Payment is less than the
amount of the Class A Deposit, Sellers
<PAGE>
shall only receive the amount of the Class A 100% Payment, and any amount of the
Class A Deposit in excess of the Class A 100% Payment shall be returned to
Buyer.
(b) Buyer shall deliver the balance of the Class A 100%
Payment by wire transfer of immediately available federal funds to an account
which will be identified by Sellers not less than two (2) days prior to the
Class A 100% Payment Date.
If the conditions set forth in Section 9.1 and Section 9.5 are
not satisfied as of the date which would otherwise have been the Class A 100%
Payment Date, then Buyer shall pay the Class A 100% Payment in accordance with
the above within two (2) days after the first date on which such conditions are
satisfied. If the issuance of the FCC Orders for any of the Class A Stations is
delayed until after the Class A 100% Payment Date solely due to any issue raised
by the FCC or any petitioner concerning any Subject Party (any such Class A
Station being a "Delayed 100% Station"), then the amount of the Class A 100%
Payment due and payable on the Class A 100% Payment Date shall be reduced by the
amount of the Base Purchase Price for such Delayed 100% Station until the
issuance of the FCC Orders for each such Delayed 100% Station. In the event that
the FCC Application with respect to any such Delayed 100% Station shall be
denied by the FCC and such FCC decision shall become final and non-appealable,
then Buyer shall have the right to terminate the transactions contemplated
herein with respect to such Station and, if the Deposit Release Date shall have
occurred, then Buyer shall receive that portion of the Deposit allocable to such
Station or, if later, when the Deposit Release Date occurs. If a Closing for a
Class A Station shall not have occurred on or prior to the Class A 100% Payment
Date due solely to an intentional breach by Sellers which caused the conditions
set forth in Section 9.2 not to be satisfied, then the amount of the Class A
100% Payment due and payable on the Class A 100% Payment Date shall be reduced
by an amount of the Base Purchase Price for such Class A Station until such
breach is cured by Sellers.
2.6.3. From and after the payment of the Class A 100% Payment
and continuing until the earlier to occur of the Closing Date or the closing of
an Account Sale (the "Class A Interim Period"), all Class A Stations for which a
Closing or an Account Sale shall not have occurred shall remain under the
ownership and complete control of Sellers, and Sellers shall operate such Class
A Stations for Buyer's account and benefit; provided, however, that the proceeds
from the collection of Accounts Receivable of such Class A Stations in existence
as of the Class A 100% Payment Date shall be for the account of Sellers. During
the Class A Interim Period, all revenues from the operation of such Class A
Stations (other than the proceeds from the collection of the Accounts Receivable
of such Class A Stations in existence as of the Class A 100% Payment Date) in
excess of the Sellers' Cost of Carry (the "Class A Stations' Cash Flow") shall
be maintained by Sellers for the benefit of Buyer. For tax purposes, the parties
agree that at all times during the
<PAGE>
Class A Interim Period, Sellers shall be treated as the owner of such Class A
Stations, and all tax reports and returns will be filed consistent therewith;
provided, however, that Buyer shall have the right to consult with Sellers with
respect to any tax treatment of such Class A Stations that could affect Buyer's
ownership thereof after Closing. Notwithstanding anything else herein to the
contrary, if during the Class A Interim Period the Class A Stations' Cash Flow
is insufficient to permit Sellers to take any action necessary to avoid a breach
of this Agreement, no breach will be deemed to have occurred if Sellers give
Buyer notice and an opportunity to provide the funds necessary to take the
required action.
2.6.4. If the Closing for any of the Class A Stations shall
not have occurred prior to such date which is two (2) years after the date of
this Agreement and Sellers shall have received the Class A 100% Payment, then
Sellers shall have the right to sell such Class A Stations (or at any time
following Sellers' receipt of the Class A 100% Payment, Buyer shall have the
right to cause Sellers to sell such Class A Stations), for Buyer's account and
benefit on terms and conditions and to such buyer or buyers approved in writing
by Buyer (which approval shall not be unreasonably withheld, conditioned or
delayed); provided, however, there shall be no survival of any representations,
warranties, covenants or agreements by Sellers in connection with any such Sale,
nor any indemnification available to any Buyer in respect thereof from and after
the closing of any such Account Sale other than such survival and
indemnification to the extent set forth in Article 12 hereof (such a sale,
whether for the Class A Stations or the Class B Stations pursuant to Section
2.7.5, is hereinafter referred to as an "Account Sale"). At the closing of an
Account Sale pursuant to this Section 2.6.4, all proceeds therefrom (net of all
Disposition Expenses in connection with such Account Sale), shall be paid
directly to Buyer by wire transfer of immediately available funds to an account
identified by Buyer in writing.
2.6.5 If Buyer fails to pay any Class A Payment when such
payment is due and payable in accordance with the terms and conditions of
Section 2.6.1 and Section 2.6.2, as applicable, then (a) Sellers shall
immediately receive the entire Deposit, (b) Sellers shall sell the Class A
Stations and/or the Class B Stations with respect to which a Closing has not
occurred, for Sellers' account and benefit on terms and conditions and to such
buyer or buyers as determined by Sellers in their sole and absolute discretion,
subject to the immediately succeeding sentence of this Section 2.6.5 (such a
sale, whether for the Class A Stations and/or the Class B Stations pursuant to
Section 2.7.1, is hereinafter referred to as a "Makewell Sale"), and (c)
Sellers' obligations hereunder to proceed with the sale of any of the Stations
to Buyer shall automatically terminate without further action by the parties.
Sellers agree to use commercially reasonable efforts to consummate any such
Makewell Sale on arm's length terms within three (3) years after the Class A
100% Payment Date. At the closing of a Makewell Sale for the Class A Stations
(the "Class A Makewell Closing"), Sellers shall receive all proceeds from such
Makewell
<PAGE>
Sale, and Buyer shall immediately pay to Sellers (the "Class A Makewell
Payment") the amount equal to the greater of (a) the Default Amount or (b) the
sum of (i) the amount, if any, by which the Class A 100% Payment exceeds the
proceeds received by Sellers from such Makewell Sale (net of all Disposition
Expenses other than income Taxes in connection with such Makewell Sale), plus
(ii) interest on the Class A 100% Payment (less any amount of the Deposit
previously released to Sellers) at the rate of six percent (6%) per annum from
the Class A 80% Payment Date until the date that Sellers receive the Class A
Makewell Payment from Buyer; provided, that if any Closings for Class A Stations
occur between the Class A 80% Payment Date and the Class A 100% Payment Date,
interest shall cease accruing with respect to that portion of the Class A 100%
Payment paid at such Closings, as of the date of such Closings. Such payment
shall be made by wire transfer of immediately available federal funds to an
account identified by Sellers not less than two (2) days prior to the date of
the Class A Makewell Closing. If Sellers have received the Deposit in accordance
with this Section 2.6.5, upon the payment of all Makewell Payments pursuant to
this Section 2.6.5 and Section 2.7.2, the Sellers shall return the Deposit (but
not in excess of any Makewell Payment) to Buyer by wire transfer of immediately
available federal funds to an account identified by Buyer.
2.6.6. Buyer acknowledges and agrees that, notwithstanding
anything to the contrary contained in this Agreement or otherwise, Buyer's
obligation to pay a Class A Payment on or prior to a Class A Payment Date
pursuant to Section 2.6.1 and Section 2.6.2, as applicable, or Buyer's
obligation to pay the Class A Makewell Payment on the date of the Class A
Makewell Closing pursuant to Section 2.6.5, and the rights of Sellers to receive
such payment(s), (a) shall be absolute and unconditional and not subject to any
right of set-off, deduction or counterclaim, and (b) shall not be affected by
any condition, fact or circumstance, including, without limitation, any breach
by any Seller of any representations, warranties, covenants or agreements set
forth herein except as set forth in Section 2.6.1 and Section 2.6.2, as
applicable. Payment of a Class A Payment or the Class A Makewell Payment shall
be final and non-refundable and Buyer shall not seek to recover all or any part
of such payment from any Seller for any reason whatsoever; provided, however,
that the foregoing shall not limit Buyer's rights to seek indemnification in
accordance with the terms and conditions of this Agreement.
2.6.7. Upon the occurrence of the Deposit Release Date, Buyer
shall be entitled to require that the Deposit Escrow Agent release to Buyer the
allocable portion of the Deposit that would have been released at each of the
Closings which have occurred on or prior to the Deposit Release Date.
<PAGE>
The information below marked with * and [ ] has been omitted pursuant to a
request for confidential treatment. The omitted portions have been separately
filed with the Commission.
2.7. Special Terms for Class B Stations.
2.7.1. If (a) Buyer shall not have paid the Class A Payments
when such payments are due and payable in accordance with Section 2.6.1 and
Section 2.6.2, as applicable, or (b) the Closing for all of the Class B Stations
shall not have occurred prior to such date which is twelve (12) months after the
date of this Agreement and Buyer shall not have paid to Sellers on or prior to
such date the amount of [*], less any portion of the Purchase Price which has
been received by Sellers pursuant to any Closings which occur for any Class B
Stations on or prior to such date (the "Class B Payment") pursuant to Section
2.7.3 below, then Sellers shall sell the Class B Stations pursuant to a Makewell
Sale, and Sellers' obligations hereunder to proceed with the sale of the Class B
Stations to Buyer shall automatically terminate without further action by the
parties. Sellers agree to use commercially reasonable efforts to consummate such
Makewell Sale on arm's length terms within four (4) years after the date hereof.
2.7.2. At the closing of a Makewell Sale pursuant to Section
2.7.1 (the "Class B Makewell Closing"), Sellers shall receive all proceeds from
such Makewell Sale, and Buyer shall immediately pay to Sellers (the "Class B
Makewell Payment") the sum of (a) the amount, if any, by which the Class B
Payment exceeds the proceeds received by Sellers from such Makewell Sale (net of
all Disposition Expenses other than income Taxes in connection with such
Makewell Sale), plus (b) interest on the Class B Payment (less any amount of the
Deposit previously released to Sellers) at the rate of six percent (6%) per
annum from the Class A 80% Payment Date until the date that Sellers receive the
Class B Makewell Payment from Buyer; provided, that if any Closings for Class B
Stations occur between the Class A 80% Payment Date and the Class A 100% Payment
Date, interest shall cease accruing with respect to that portion of the Class B
Payment paid at such Closings, as of the date of such Closings. Such payment
shall be made by wire transfer of immediately available federal funds to an
account identified by Sellers not less than two (2) days prior to the date of
the Class B Makewell Closing.
2.7.3. In lieu of a Makewell Sale for the Class B Stations, if
Buyer has paid all Class A Payments when such payments are due and payable in
accordance with the terms and conditions of Section 2.6.1 and Section 2.6.2, as
applicable, then Buyer shall have the right to pay to Sellers the Class B
Payment in respect of the Class B Stations at any time on or prior to such date
which is twelve (12) months after the date of this Agreement (the date on which
Sellers receive the Class B Payment from Buyer pursuant to this Section 2.7.3 is
referred to herein as the "Class B Payment Date" and together with the Class A
Payment Date, a "Payment Date"). Payment of the Class B Payment shall be made as
follows:
<PAGE>
The information below marked with * and [ ] has been omitted pursuant to a
request for confidential treatment. The omitted portions have been separately
filed with the Commission.
(a) Buyer shall cause the Deposit Escrow Agent to deliver to
Sellers the amount of [*], less any portion of the Deposit previously released
at any Closing which occurred for any Class B Station on or prior to the Class B
Payment Date (the "Class B Deposit") by wire transfer of immediately available
federal funds to an account which will be identified by Sellers not less than
two (2) days prior to the Class B Payment Date.
(b) Buyer shall deliver the balance of the Class B Payment by
wire transfer of immediately available federal funds to an account which will be
identified by Sellers not less than two (2) days prior to the Class B Payment
Date.
2.7.4 From and after the payment of the Class B Payment and
continuing until the earlier to occur of the Closing Date or the closing of an
Account Sale (the "Class B Interim Period"), the Class B Stations shall remain
under the ownership and complete control of Sellers, and Sellers shall operate
the Class B Stations for Buyer's account and benefit; provided, however, that
the proceeds from the collection of Accounts Receivable of the Class B Stations
in existence as of the Class B Payment Date shall be for the account of Sellers.
During the Class B Interim Period, all revenues from the operation of the Class
B Stations (other than the proceeds from the collection of the Accounts
Receivable of such Class B Stations in existence as of the Class B Payment Date)
in excess of the Sellers' Cost of Carry (the "Class B Stations' Cash Flow")
shall be maintained by Sellers for the benefit of Buyer. For tax purposes, the
parties agree that at all times during the Class B Interim Period, Sellers shall
be treated as the owner of the Class B Stations, and all tax reports and returns
will be filed consistent therewith; provided, however, that Buyer shall have the
right to consult with Sellers with respect to any tax treatment of the Class B
Stations that could affect Buyer's ownership thereof after Closing.
Notwithstanding anything else herein to the contrary, if during the Class B
Interim Period the Class B Stations' Cash Flow is insufficient to permit Sellers
to take any action necessary to avoid a breach of this Agreement, no breach will
be deemed to have occurred if Sellers give Buyer notice and an opportunity to
provide the funds necessary to take the required action.
2.7.5. If the Closing for the Class B Stations shall not have
occurred prior to such date which is two (2) years after the date of this
Agreement and the Sellers shall have received the Class B Payment, then Sellers
may sell (or at any time following Sellers' receipt of the Class B Payment,
Buyer shall have the right to cause Sellers to sell) the Class B Stations in an
Account Sale. At the closing of an Account Sale pursuant to this Section 2.7.5,
all proceeds therefrom (net of all Disposition Expenses in connection with such
Account Sale), shall be paid directly to Buyer by wire transfer of immediately
available funds to an account identified by Buyer in writing.
<PAGE>
2.7.6. Buyer acknowledges and agrees that, notwithstanding
anything to the contrary contained in this Agreement or otherwise, Buyer's
obligation to pay the Class B Makewell Payment pursuant to Section 2.7.2 and the
rights of Sellers to receive such payment, (a) shall be absolute and
unconditional and not subject to any right of set-off, deduction or counterclaim
and (b) shall not be affected by any condition, fact or circumstance, including,
without limitation, the existence of any breach of any representations,
warranties, covenants or agreements of any Seller. Payment of the Class B
Payment or the Class B Makewell Payment shall be final and non-refundable and
Buyer shall not seek to recover all or any part of such payment from any Seller
for any reason whatsoever; provided, however, that the foregoing shall not limit
Buyer's rights to seek indemnification in accordance with the terms and
conditions of this Agreement.
2.8. Proration Amount.
2.8.1. Subject to the terms and conditions of Section 2.8.2,
at least five (5) days prior to the Closing Date for any of the Stations,
Sellers shall make a good faith estimate of the adjustments to the Base Purchase
Price customary in television and radio broadcast station transactions for
Proration Items (the "Proration Amount") to reflect that all Proration Items of
such Stations shall be apportioned between Buyer and Sellers in accordance with
the principle that Sellers shall receive the benefit of all revenues, refunds,
deposits (other than deposits for Program Contracts which shall be prorated
based on the percentage of the term that the film or program was aired on such
Stations before the Closing Date and the percentage available to be aired on and
after the Closing Date) and prepaid expenses, and shall be responsible for all
expenses, costs and liabilities allocable to the conduct of the businesses or
operations of such Stations for the period prior to the Closing Date, and Buyer
shall receive the benefit of all revenues, refunds, deposits and prepaid
expenses, and shall be responsible for all expenses, costs and liabilities
allocable to the conduct of the businesses or operations of such Stations from
and after the Closing Date; provided, however, that there shall be no adjustment
or proration for any negative or positive net trade balance except to the extent
that: (a) the negative trade balance (i.e., the amount by which the value of
goods or services to be received is less than the value of any advertising time
remaining to be run) for any Television Station exceeds $50,000 as of the
Closing Date, and (b) the negative net trade balance for any Radio Group exceeds
$50,000. Determinations pursuant to this Section 2.8.1 shall be made in
accordance with generally accepted accounting principles consistently applied
for the period prior to the Closing Date.
2.8.2. Notwithstanding anything to the contrary contained in
Section 2.8.1 and to the extent consistent with Section 2.6.5 and Section 2.7.5,
(a) if Sellers shall have received the Class A 100% Payment, then the Proration
Amount for the Class A Stations for which a Closing shall not have occurred as
of the Class
<PAGE>
A 100% Payment Date, shall be determined under Section 2.8.1 on the Closing
Date (or the closing date of an Account Sale, if applicable) in accordance with
the principle that Sellers shall receive the benefit of all revenues, refunds,
deposits (other than deposits for Program Contracts which shall be prorated
based on the percentage of the term that the film or program was aired on such
Class A Stations before the Class A 100% Payment Date and the percentage
available to be aired on and after the Class A 100% Payment Date) and prepaid
expenses, and shall be responsible for all expenses, costs and liabilities
allocable to the conduct of the businesses or operations of such Class A
Stations for the period prior to the Class A 100% Payment Date, and Buyer shall
receive the benefit of all revenues, refunds, deposits (other than deposits for
Program Contracts which shall be prorated based on the percentage of the term
that the film or program was aired on such Class A Stations before the Class A
100% Payment Date and the percentage available to be aired on and after the
Class A 100% Payment Date) and prepaid expenses, and shall be responsible for
all expenses, costs and liabilities allocable to the conduct of the businesses
or operations of such Class A Stations for the period from and after the Class A
100% Payment Date; and (b) if Sellers shall have received the Class B Payment,
then the Proration Amount for the Class B Stations for which a Closing shall not
have occurred as of the Class B Payment Date, shall be determined under Section
2.8.1 on the Closing Date (or the closing date of an Account Sale, if
applicable) in accordance with the principle that Sellers shall receive the
benefit of all revenues, refunds, deposits (other than deposits for Program
Contracts which shall be prorated based on the percentage of the term that the
film or program was aired on such Class B Stations before the Class B Payment
Date and the percentage available to be aired on and after the Class B Payment
Date) and prepaid expenses, and shall be responsible for all expenses, costs and
liabilities allocable to the conduct of the businesses or operations of such
Class B Stations for the period prior to the Class B Payment Date, and Buyer
shall receive the benefit of all revenues, refunds, deposits (other than
deposits for Program Contracts which shall be prorated based on the percentage
of the term that the film or program was aired on the Stations before the Class
B Payment Date and the percentage available to be aired on and after the Class B
Payment Date) and prepaid expenses, and shall be responsible for all expenses,
costs and liabilities allocable to the conduct of the businesses or operations
of the Class B Stations for the period from and after the Class B Payment Date.
2.8.3. Within ninety (90) days after the Closing Date (or the
closing date of an Account Sale, if applicable), Buyer shall deliver to Sellers
in writing and in reasonable detail a good faith final determination of the
Proration Amount determined as of the Closing Date under Section 2.8.1 or as of
a Payment Date under Section 2.8.2 ("Final Proration Amount"). Sellers shall
assist Buyer in making such determination, and Buyer shall provide Sellers with
reasonable access to the properties, books and records relating to the Stations
for the purpose of determining the Final Proration Amount. Sellers shall have
the right to review the
<PAGE>
computations and workpapers used in connection with Buyer's preparation of the
Final Proration Amount. If Sellers disagree with the amount of the Final
Proration Amount determined by Buyer, Sellers shall so notify Buyer in writing
within thirty (30) days after the date of receipt of Buyer's Final Proration
Amount, specifying in detail any point of disagreement; provided, however, that
if Sellers fail to notify Buyer in writing of Sellers' disagreement within such
thirty (30) day period, Buyer's determination of the Final Proration Amount
shall be final, conclusive and binding on Sellers and Buyer. After the receipt
of any notice of disagreement, Buyer and Sellers shall negotiate in good faith
to resolve any disagreements regarding the Final Proration Amount. If any such
disagreement cannot be resolved by Sellers and Buyer within thirty (30) days
after Buyer has received notice from Sellers of the existence of such
disagreement, Buyer and Sellers shall jointly select a nationally recognized
independent public accounting firm (which has not performed any service for
either Buyer or Sellers or any of their respective subsidiaries at anytime
during the two (2) year period prior to the date such firm is selected (the
"Accounting Firm"), to review the Buyer's determination of the Final Proration
Amount and to resolve as soon as possible all points of disagreement raised by
Sellers. All determinations made by the Accounting Firm with respect to the
Final Proration Amount shall be final, conclusive and binding on Buyer and
Sellers. The fees and expenses of the Accounting Firm incurred in connection
with any such determination shall be shared one-half by Buyer and one-half by
Sellers.
If the Final Proration Amount is such that Buyer's payment
of the Proration Amount at Closing (or the closing of an Account Sale, if
applicable) was an underpayment to Sellers, then Buyer shall pay such
underpayment amount to Sellers in cash, within two (2) business days following
the final determination of the Final Proration Amount. If the Final Proration
Amount is such that Buyer's payment of the Proration Amount at Closing (or the
closing of an Account Sale, if applicable) was an overpayment to Sellers, then
Sellers shall pay such overpayment amount to Buyer in cash within two (2)
business days following the final determination of the Final Proration Amount.
Any amounts paid pursuant to this Section 2.8.3 shall be by wire transfer of
immediately available funds for credit to the recipient at a bank account
identified by such recipient in writing.
Buyer and Sellers agree that prior to the date of the final
determination of the Final Proration Amount pursuant to this Section 2.8.3 (by
the Accounting Firm or otherwise), neither party will destroy any records
pertaining to, or necessary for, the final determination of the Final Proration
Amount.
2.9. Allocation of Base Purchase Price and Deposit.
2.9.1. Sellers and Buyer agree to allocate the Base Purchase
Price and the Deposit among the Stations for all purposes (including financial,
accounting and Tax purposes) as follows:
<PAGE>
The information below marked with * and [ ] has been omitted pursuant to a
request for confidential treatment. The omitted portions have been separately
filed with the Commission.
Allocable
Base Purchase Price Deposit
(a) WEAR [*] [*]
(including the WFGX TBA)
(b) WPTZ and WNNE [*] [*]
(including the WFFF TBA)
(c) KOKH [*] [*]
(d) WCHS [*] [*]
(e) Norfolk Stations [*] [*]
(f) Kansas City Stations [*] [*]
(g) Milwaukee Stations [*] [*]
(h) Portland Stations [*] [*]
(i) Rochester Stations [*] [*]
(j) St. Louis Stations [*] [*]
(including KIHT)
(k) New Orleans Stations [*] [*]
2.9.2. Sellers and Buyer each represent, warrant, covenant,
and agree with each other that the Base Purchase Price shall be allocated among
the classes of Assets for each Station, as agreed by the parties within sixty
(60) days after the date hereof. Sellers and Buyer agree, pursuant to Section
1060 of the Code that the Base Purchase Price shall be allocated in accordance
with this Section 2.9, and that all Tax returns and reports shall be filed
consistent with such allocation. Notwithstanding any other provision of this
Agreement, the provisions of this Section 2.9 shall survive the Closing Date
without limitation.
2.9.3. If Sellers and Buyer are unable to agree on such
allocation, within sixty (60) days following execution of this Agreement,
Sellers and Buyer agree to retain a nationally recognized appraisal firm
experienced in valuing broadcast properties which is mutually acceptable to
Sellers and Buyer (the "Appraisal Firm") to appraise the classes of Assets of
each Station in accordance
<PAGE>
with the allocation for the Stations set forth in Section 2.9. The Appraisal
Firm shall be instructed to perform an appraisal of the classes of Assets of
each Station and to deliver a report to Sellers and Buyer as soon as reasonably
practicable (the "Appraisal Report"). Buyer and Sellers shall each pay one-half
of the fees, costs and expenses of the Appraisal Firm whether or not the
transactions contemplated hereby are consummated.
2.10. Assumption of Liabilities.
2.10.1. At the Closing (unless there shall have occurred a
Payment Date, in which case the provisions of Section 2.10.2 and/or Section
2.10.3, as the case may be, shall apply), Buyer shall assume, pay, perform,
discharge and indemnify and hold Sellers harmless from and against (a) all
Liabilities arising out of events occurring on or after the Closing Date related
to the businesses or operations of the Stations or Buyer's ownership of the
Assets, (b) all Liabilities arising out of events occurring on or after the
Closing Date with respect to the FCC Licenses, (c) all Liabilities arising on or
after the Closing Date under the Station Contracts (including, without
limitation, Trade-out Agreements) pursuant to their terms (except for
Liabilities for any breaches thereunder by Sellers occurring prior to the
Closing Date), (d) all Liabilities for which there is a downward adjustment to
the Base Purchase Price in connection with the calculation of the Proration
Amount, and (e) all Liabilities of Sellers to employees of the Stations to be
assumed by Buyer in accordance with Section 8.4 hereof.
2.10.2. If Sellers shall have received the Class A 100%
Payment, Buyer shall, at the Closing for the Class A Stations for which a
Closing shall not have occurred prior to the Class A 100% Payment Date, assume,
pay, perform, discharge and indemnify and hold Sellers harmless from and against
(a) all Liabilities arising out of events occurring on or after the Class A 100%
Payment Date related to the businesses or operations of such Class A Stations or
the ownership of the Assets related to such Class A Stations, (b) all
Liabilities arising out of events occurring on or after the Class A 100% Payment
Date with respect to FCC Licenses attributable to such Class A Stations, (c) all
Liabilities arising on or after the Class A 100% Payment Date under the Station
Contracts (including, without limitation, Trade-out Agreements) for such Class A
Stations pursuant to their terms (except for Liabilities for any breaches
thereunder by Sellers occurring prior to the Class A 100% Payment Date), (d) all
Liabilities for which there is or would be a downward adjustment to the Class A
100% Payment in connection with the calculation of the Proration Amount for such
Class A Stations, and (e) all Liabilities of Sellers to employees of such Class
A Stations to be assumed by Buyer in accordance with Section 8.4 hereof.
2.10.3. If Sellers shall have received the Class B Payment,
Buyer shall, at the Closing for the Class B Stations for which there shall not
have been a
<PAGE>
Closing prior to the Class B Payment Date, assume, pay, perform, discharge and
indemnify and hold Sellers harmless from and against (a) all Liabilities arising
out of events occurring on or after the Class B Payment Date related to the
businesses or operations of such Class B Stations or the ownership of the Assets
related to such Class B Stations, (b) all Liabilities arising out of events
occurring on or after the Class B Payment Date with respect to FCC Licenses
attributable to such Class B Stations, (c) all Liabilities arising on or after
the Class B Payment Date under the Station Contracts (including, without
limitation, Trade-out Agreement) for such Class B Stations pursuant to their
terms (except for Liabilities for any breaches thereunder by Sellers occurring
prior to the Class B Payment Date), (d) all Liabilities for which there is or
would be a downward adjustment to the Class B Payment in connection with the
calculation of the Proration Amount for such Class B Stations, and (e) all
Liabilities of Sellers to employees of such Class B Stations to be assumed by
Buyer in accordance with Section 8.4 hereof (the Liabilities described in
Sections 2.10.1, 2.10.2 and 2.10.3, collectively, the "Assumed Liabilities").
2.10.4. Except for the Assumed Liabilities, Buyer assumes no
other Liabilities of any kind or description.
2.11. News Corp. Guaranty
Contemporaneously with the execution and delivery of this
Agreement, News Corp. has executed and delivered a Guaranty, pursuant to which
News Corp. has absolutely and unconditionally guaranteed the prompt and complete
payment and performance of each of the obligations of Sellers under this
Agreement.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES BY SELLERS
Each Seller with respect to itself and the Station and Assets
owned or operated by such Seller (and not with respect to any other Seller or
any other Stations or Assets), represents and warrants to Buyer as follows:
3.1. Organization and Standing.
Seller is duly organized, validly existing and in good
standing under the laws of the state of its organization and is duly qualified
to do business and is in good standing in any jurisdiction where it owns or
operates a television or radio station and in each other jurisdiction where such
qualification is necessary, except for those jurisdictions where the failure to
be so qualified would not, individually or in the aggregate, have a Material
Adverse Effect. Seller has the corporate power
<PAGE>
and authority to own, lease and otherwise to hold and operate its Assets, to
carry on the business of the Station as now conducted, and to enter into and
perform the terms of this Agreement, the other Seller Documents to which it is a
party and the transactions contemplated hereby and thereby.
3.2. Authorization.
The execution, delivery and performance of this Agreement
and of the other Seller Documents to which it is a party, and the consummation
of the transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action (none of which actions has been
modified or rescinded and all of which actions are in full force and effect).
This Agreement and the Deposit Escrow Agreement constitute, and upon execution
and delivery each other Seller Document to which it is a party will constitute,
valid and binding agreements and obligations of Seller, enforceable against
Seller in accordance with their respective terms, except as the same may be
limited by bankruptcy, insolvency, reorganization, moratorium and other similar
laws of general applicability relating to or affecting creditors' rights
generally and by the application of general principles of equity.
3.3. Compliance with Laws.
To Seller's knowledge, Seller is in material compliance with
all Laws applicable to Seller, to its Assets and Stations and to its business
and operations. Seller has obtained and holds all material permits, licenses and
approvals (none of which has been modified or rescinded and all of which are in
full force and effect) from all Governmental Authorities necessary in order to
conduct the operations of its Stations as presently conducted.
3.4. Consents and Approvals; No Conflicts.
3.4.1. The execution and delivery of this Agreement, and the
performance of the transactions contemplated herein by Seller, will not require
any consent, approval, authorization or other action by, or filing with or
notification to, any Person or Governmental Authority, except as follows: (a)
filings required under Hart-Scott-Rodino, (b) consents to the assignment of the
FCC Licenses to Buyer by the FCC, (c) filings, if any, with respect to real
estate transfer taxes, and (d) certain of the Station Contracts may be assigned
only with the consent of third parties, as specified in Schedule 3.4.
3.4.2. Assuming all consents, approvals, authorizations and
other actions described in Section 3.4.1 have been obtained and all filings and
notifications described in Section 3.4.1 have been made, the execution, delivery
and performance of this Agreement and the other Seller Documents by Seller do
not and
<PAGE>
will not (a) conflict with or violate in any material respect any Law applicable
to Seller, its Assets or Stations or by which any of its Assets or Stations is
subject or affected, (b) conflict with or result in any breach of or constitute
a default (or an event which with notice or lapse of time or both would become a
default) of any Station Contract or other material agreement to which Seller is
a party or by which Seller is bound or to which any of its Assets or Stations is
subject or affected, (c) result in the creation of any Encumbrance upon its
Assets, and (d) conflict with or violate the organizational documents of Seller.
3.5. Financial Statements; Undisclosed Liabilities.
3.5.1. Seller has provided to Buyer an unaudited balance
sheet of its Stations as of May 31, 1997 (the "Balance Sheet"), and an unaudited
statement of income and operating cash flows for the five month period ending
May 31, 1997. The financial statements referred to in this Section 3.5.1 (a)
present fairly in all material respects the financial condition of its Stations
as of the date and the results of operations and operating cash flows for the
period indicated (except for the financial statements provided with respect to
KQRC for which Sellers make no such representation), and (b) have been prepared
in accordance with generally accepted accounting principles applied on a
consistent basis (except that the financial statements referred to in this
Section 3.5.1 do not contain all footnotes and cash flow information from
investing and financing activities required under generally accepted accounting
principles and are subject to customary year-end adjustments).
3.5.2. There exist no Liabilities of Seller's Stations
relating to, or arising out of, the business or operations of such Stations,
contingent or absolute, matured or unmatured, known or unknown, except (a) as
reflected on the Balance Sheet and (b) for Liabilities that (i) were incurred
after May 31, 1997 (the "Current Balance Sheet Date") in the Ordinary Course of
Business, or (ii) were not required to be reflected on the Balance Sheet in
accordance with generally accepted accounting principles applied on a consistent
basis.
3.6. Absence of Certain Changes or Events.
Except as set forth and described in Schedule 3.6, since the
Current Balance Sheet Date, there has been no Material Adverse Effect. Since the
Current Balance Sheet Date, Seller has conducted the business of its Stations in
the Ordinary Course of Business, and Seller has not (a) incurred any
extraordinary loss of, or injury to, any of its Assets as the result of any
fire, explosion, flood, windstorm, earthquake, labor trouble, riot, accident,
act of God or public enemy or armed forces, or other casualty; (b) incurred, or
become subject to, any Liability, except current Liabilities incurred in the
Ordinary Course of Business; (c) discharged or satisfied any Encumbrance or paid
any Liability other than
<PAGE>
current Liabilities shown in the Balance Sheet, current Liabilities incurred
since the Current Balance Sheet Date in the Ordinary Course of Business, and
Liabilities (including, without limitation, partial and complete prepayments)
arising under any credit or loan agreement between Seller and its lenders; (d)
mortgaged, pledged or subjected to any Encumbrance any of its Assets (except for
Permitted Encumbrances); (e) made any material change in any method of
accounting or accounting practice; (f) sold, leased, assigned or otherwise
transferred any of its material Assets other than obsolete Assets which have
been replaced by suitable replacements; (g) made any material increase in
compensation or benefits payable to any employee other than in the Ordinary
Course of Business; or (h) made any agreement to do any of the foregoing.
3.7. Absence of Litigation.
Except as set forth on Schedule 3.7 as of the date hereof,
there is no material or, to Seller's knowledge, immaterial action, suit,
investigation, claim, arbitration, litigation or similar proceeding, nor any
order, decree or judgment pending or, to Seller's knowledge, threatened against
Seller, its Assets or Stations before any Governmental Authority.
3.8. Assets.
Except for the Excluded Assets, Seller's Assets include all
of the assets or property used or useful in the businesses of its Stations as
presently operated. Except for leased or licensed Assets, Seller is the owner
of, and has good title to, its Assets free and clear of any Encumbrances, except
for Permitted Encumbrances (including, without limitation, those items set forth
on Schedule 3.8). At the Closing, Buyer shall acquire good title to, and all
right, title and interest in and to the Assets, free and clear of all
Encumbrances, except for the Permitted Encumbrances.
3.9. FCC Matters.
Seller holds the FCC Licenses listed as held by Seller on
Schedule 2.1.1. Such FCC Licenses constitute all of the licenses, permits and
authorizations from the FCC which have been issued to Seller that are required
for the business and operations of its Stations. Except as set forth on Schedule
3.9, such FCC Licenses are valid and in full force and effect through the dates
set forth on Schedule 2.1.1, unimpaired by any condition, other than as set
forth in the FCC Licenses. Except as set forth on Schedule 3.9, no application,
action or proceeding is pending for the renewal or modification of any of
Seller's FCC Licenses, and, except for actions or proceedings affecting
television or radio broadcast stations generally, no application, complaint,
action or proceeding is pending or, to Seller's knowledge, threatened that may
result in the (a) the revocation, modification, non-
<PAGE>
renewal or suspension of any of such FCC Licenses, or (b) the issuance of a
cease-and-desist order. Except as set forth in Schedule 3.9, Seller has no
knowledge of any facts, conditions or events relating to Seller or its Stations
that would reasonably be expected to cause the FCC to revoke any FCC License or
not to grant any pending applications for renewal of the FCC Licenses or to deny
the assignment of the FCC Licenses to a qualified Buyer as provided for in this
Agreement.
3.10. Real Property.
3.10.1. Seller has good and marketable fee simple title to
all fee estates included in the Real Property and good title to all other owned
Real Property, in each case free and clear of all Encumbrances, except for
Permitted Encumbrances.
3.10.2. Seller has a valid leasehold interest in all Leased
Property listed as leased by Seller in Schedule 2.1.2. Schedule 2.1.2 lists all
leases and subleases pursuant to which any of the Leased Property is leased by
Seller. Seller is the owner and holder of all the Leased Property purported to
be granted by such leases and subleases. Each such lease and sublease is valid
as to Seller and, to Seller's knowledge valid as to any other party thereto, and
is in full force and effect and, to Seller's knowledge, constitutes a legal and
binding obligation of, and is legally enforceable against Seller and each other
party thereto and grants the leasehold interest it purports to grant, including
any rights to nondisturbance and peaceful and quiet enjoyment that may be
contained therein. Seller is, and to the knowledge of Seller all other parties
are, in compliance in all material respects with the provisions of such leases
and subleases.
3.10.3. The Real Property and the Leased Property listed in
Schedule 2.1.2 constitute all of the real property owned, leased or used by
Seller in the business and operations of its Stations which is material to the
business and operations of the Stations.
3.10.4. No portion of the Real Property or any building,
structure, fixture or improvement thereon is the subject of, or affected by, any
condemnation, eminent domain or inverse condemnation proceeding currently
instituted or pending or, to the knowledge of Seller, threatened. To Seller's
knowledge and to the extent that such documents are in Seller's possession,
Seller has delivered to Buyer true, correct and complete copies of the following
documents with respect to the Real Property and Leased Property: (i) deeds, by
which Seller has received a fee interest in any of the Real Property; (ii)
leases, by which Seller is the lessee or lessor of any of the Real Property;
(iii) title insurance policies or commitments; (iv) surveys; and (v) inspection
reports or other instruments or reports, including, without limitation, any
phase I or phase II environmental reports or other similar
<PAGE>
environmental reports, surveys or assessments (including any and all amendments
and other modifications of such instruments).
3.11. Intellectual Property.
Seller possesses adequate rights, licenses and authority to
use all Intellectual Property necessary to conduct the business of the Stations
as presently conducted. Seller has good title to all Intellectual Property that
it owns, free and clear of any Encumbrances, except for Permitted Encumbrances.
Seller is not obligated to pay any royalty or other fees to anyone with respect
to the Intellectual Property. Seller has not received any written notice to the
effect that any service rendered by Seller relating to the business of the
Stations may infringe, or that Seller is otherwise infringing, on any
Intellectual Property right or other legally protectable right of another. No
director, officer or employee of Seller has any interest in any Intellectual
Property.
3.12. Station Contracts.
Complete and correct copies of the Station Contracts set
forth in Schedules 2.1.5, 2.1.6, and 2.1.8 (which schedules are true and correct
in all material respects) have been made available to Buyer and (a) each such
material Station Contract and, to Seller's knowledge, each such immaterial
Station Contract, is in full force and effect and constitutes a legal, valid and
binding obligation of Seller and, to Seller's knowledge, of each other party
thereto; (b) Seller is not in breach or default in any material respect of the
terms of any Station Contract; (c) none of the material rights of Seller under
any such Station Contract will be subject to termination, nor will a default
occur, as a result of the consummation of the transactions contemplated hereby,
except to the extent that failure to obtain the prior consent to assignment
thereof of any party thereto shall or could be interpreted to constitute a
termination or modification of or a default under any such Station Contract; and
(d) to the knowledge of Seller, no other party to any such Station Contract is
in breach or default in any material respect of the terms thereunder.
3.13. Taxes.
Seller has (or, in the case of returns becoming due after
the date hereof and on or before the Closing Date, will have prior to the
Closing Date) duly filed all material Seller Tax Returns required to be filed by
Seller on or before the Closing Date with respect to all material applicable
Taxes. In the case of any Seller Tax Returns which receive an extension for
their date of filing, such Seller Tax Returns will be considered due on, and not
considered required to be filed before, the extended due date. To Seller's
knowledge, all Seller Tax Returns are (or, in the case of returns becoming due
after the date hereof and on or before the Closing
<PAGE>
Date, will be) true and complete in all material respects. Seller: (a) has paid
all Taxes due to any Governmental Authority as indicated on the Seller Tax
Returns; or (b) has established (or, in the case of amounts becoming due after
the date hereof, prior to the Closing Date will have established) adequate
reserves (in conformity with generally accepted accounting principles
consistently applied) for the payment of such Taxes.
3.14. Employee Benefit Plans.
3.14.1. Schedule 3.14 lists all Plans and Benefit
Arrangements (exclusive of severance arrangements and retention agreements)
maintained by or contributed to by Seller or HMC for the benefit of the
employees of Seller's Stations (collectively, the "Benefit Plans"). Each Benefit
Plan has been maintained in material compliance with its terms and with ERISA,
the Code and other applicable Laws.
3.14.2. Schedule 3.14 sets forth a list of all Qualified
Plans maintained by or contributed to by Seller or HMC for the benefit of the
employees of Seller's Stations. All such Qualified Plans and any related trust
agreements or annuity agreements (or any other funding document) have been
maintained in material compliance with ERISA and the Code (including, without
limitation, the requirements for tax qualification described in Section 401
thereof), other than any Multiemployer Plan. To Seller's knowledge, any trusts
established under such Plans are exempt from federal income taxes under Section
501(a) of the Code.
3.14.3. Schedule 3.14 lists all funded Welfare Plans that
provide benefits to current or former employees of Seller or its beneficiaries.
To Seller's knowledge, the funding under each Welfare Plan does not exceed and
has not exceeded the limitations under Sections 419A(b) and 419A(c) of the Code.
To Seller's knowledge, neither HMC nor Seller is subject to taxation on the
income of any Welfare Plan's welfare benefit fund (as such term is defined in
Section 419(e) of the Code) under Section 419A(g) of the Code.
3.14.4. Neither HMC nor Seller has any post-retirement
medical, life insurance or other benefits promised, provided or otherwise due
now or in the future to current, former or retired employees of Seller's
Stations.
3.14.5. To Seller's knowledge, except as set forth in
Schedule 3.14, HMC has (a) filed or caused to be filed all returns and reports
on the Plans that it is required to file and (b) paid or made adequate provision
for all fees, interest, penalties, assessments or deficiencies that have become
due pursuant to those returns or reports or pursuant to any assessment or
adjustment that has been made relating to those returns or reports. All other
fees, interest, penalties and assessments that are payable by or for HMC and/or
Seller have been timely
<PAGE>
reported, fully paid and discharged. There are no unpaid fees, penalties,
interest or assessments due from HMC and/or Seller or from any other person that
are or could become an Encumbrance on any of its Assets or could otherwise
adversely affect the businesses or Assets of Seller. To Seller's knowledge, HMC
has collected or withheld all amounts that are required to be collected or
withheld by it to discharge its obligations, and all of those amounts have been
paid to the appropriate Governmental Authority or set aside in appropriate
accounts for future payment when due. HMC has furnished to Buyer true and
complete copies of all documents setting forth the terms and funding of each
Plan.
3.14.6. Except as set forth in Schedule 3.14, neither Seller
nor any ERISA Affiliate has ever sponsored or maintained, had any obligation to
sponsor or maintain, or had any liability (whether actual or contingent, with
respect to any of its assets or otherwise) with respect to any Plan subject to
Section 302 of ERISA or Section 412 of the Code or Title IV of ERISA (including
any Multiemployer Plan). Neither Seller nor any ERISA Affiliate of Seller (since
January 1, 1989) has terminated or withdrawn from or sought a funding waiver
with respect to any plan subject to Title IV of ERISA, and no facts exist that
could reasonably be expected to cause such actions in the future; no accumulated
funding deficiency (as defined in Code Section 412), whether or not waived,
exists with respect to any such plan; no reportable event (as defined in ERISA
Section 4043) has occurred with respect to any such plan (other than events for
which reporting is waived); all costs of any such plans have been provided for
on the basis of consistent methods in accordance with sound actuarial
assumptions and practices, and the assets of each such plan, as of its last
valuation date, exceeded its "Benefit Liabilities" (as defined in ERISA Section
4001(a)(16)); and, since the last valuation date for each such plan, no such
plan has been amended or changed to increase the amounts of benefits thereunder
and, to the knowledge of Seller, there has been no event that would reduce the
excess of assets over benefit liabilities; and except as set forth in Schedule
3.14, neither Seller nor any ERISA Affiliate has ever made or been obligated to
make, or reimbursed or been obligated to reimburse another employer for,
contributions to any Multiemployer Plan.
3.14.7. No claims or lawsuits are pending or, to the
knowledge of Seller, threatened by, against, or relating to any Benefit Plan. To
Seller's knowledge, the Benefit Plans are not presently under audit or
examination (nor has notice been received of a potential audit or examination)
by the IRS, the Department of Labor, or any other governmental agency or entity
and no matters are pending with respect to any Qualified Plan under the IRS's
Voluntary Compliance Resolution program, its Closing Agreement Program, or other
similar programs.
3.14.8. With respect to each Plan, there has occurred no
non-exempt "prohibited
transaction" (within the meaning of Section 4975 of the Code) or
<PAGE>
transaction prohibited by Section 406 of ERISA or breach of any fiduciary duty
described in Section 404 of ERISA that would, if successful, result in any
liability for Sellers.
3.14.9. Seller has no liability (whether actual, contingent,
with respect to any of its Assets or otherwise) with respect to any employee
benefit plan that is not a Benefit Plan (exclusive of severance arrangements and
retention agreements) or with respect to any employee benefit plan sponsored or
maintained (or which has been or should have been sponsored or maintained) by
any ERISA Affiliate.
3.14.10. All group health plans of Seller and its ERISA
Affiliates have been operated in material compliance with the requirements of
Sections 4980B (and its predecessor) and 5000 of the Code, and Seller has
provided, or will have provided before the Closing Date, to individuals entitled
thereto all required notices and coverage pursuant to Section 4980B with respect
to any "qualifying event" (as defined therein) occurring before or on the
Closing Date.
3.15. Labor Relations.
Seller has made available to Buyer a true and complete list
of all employees of Seller engaged in the business or operations of the Stations
as of the date set forth on the list, together with such employee's position,
salary and date of hire. Schedule 3.15 lists all written employment contracts of
Seller and all written agreements, plans, arrangements, commitments and
understandings pursuant to which HMC or Sellers have severance obligations.
Except as set forth on Schedule 3.15, no labor union or other collective
bargaining unit represents or, to Seller's knowledge, claims to represent, any
of the employees of the Station. Except as set forth in Schedule 3.15, there are
no strikes, work stoppages, grievance proceedings, union organization efforts,
or other controversies pending between Seller and any union or collective
bargaining unit representing (or, to Seller's knowledge, claiming to represent)
Seller's employees. Seller is in compliance with all Laws relating to the
employment or the workplace, including, without limitation, provisions relating
to wages, hours, collective bargaining, safety and health, work authorization,
equal employment opportunity, immigration and the withholding of income taxes,
unemployment compensation, worker's compensation, employee privacy and right to
know and social security contributions, except for any noncompliance which would
not have a Material Adverse Effect. Except as set forth in Schedule 3.15 hereto,
there are no collective bargaining agreements relating to Seller's Stations or
the business and operations thereof.
<PAGE>
3.16. Environmental Matters.
3.16.1. Except as set forth in Schedule 3.16, to Seller's
knowledge (which knowledge is based on the items set forth on Schedule 3.16),
Seller is in material compliance with, and the Real Property and all
improvements thereon are in material compliance with, all Environmental Laws.
3.16.2. Except as set forth in Schedule 3.16, there are no
pending or, to the knowledge of Seller, threatened actions, suits, claims, or
other legal proceedings based on (and Seller has not received any written notice
of any complaint, order, directive, citation, notice of responsibility, notice
of potential responsibility, or information request from any Governmental
Authority arising out of or attributable to): (a) the current or past presence
at any part of the Real Property of Hazardous Materials; (b) the current or past
release or threatened release into the environment from the Real Property
(including, without limitation, into any storm drain, sewer, septic system or
publicly owned treatment works) of any Hazardous Materials; (c) the off-site
disposal of Hazardous Materials originating on or from the Real Property or the
businesses or Assets of Seller; (d) any facility operations or procedures of
Seller which do not conform to requirements of the Environmental Laws; or (e)
any violation of Environmental Laws at any part of the Real Property arising
from Seller's activities involving Hazardous Materials. To the knowledge of
Seller, Seller has been duly issued all material permits, licenses, certificates
and approvals required under any Environmental Law.
3.17. Insurance.
Schedule 3.17 contains a true and complete list and brief
summary of all policies of title, property, fire, casualty, liability, life,
workmen's compensation, libel and slander, and other forms of insurance of any
kind relating to Seller's Assets or the business and operations of its Stations.
All such policies: (a) are in full force and effect; (b) are sufficient for
compliance in all material respects by Seller with all requirements of Law and
of all material agreements to which Seller is a party; and (c) to Seller's
knowledge, are valid, outstanding, and enforceable policies and Seller is not in
default in any material respect thereunder.
3.18. Reports.
All material returns, reports and statements that the
Station is currently required to file with the FCC or any governmental agency
have been timely filed, and all reporting requirements of the FCC and other
governmental authorities having jurisdiction thereof have been complied with by
Seller in all material respects. All of such reports, returns and statements are
complete and correct in all material respects as filed. To Seller's knowledge,
all documents
<PAGE>
required by the FCC to be deposited by Seller in Seller's public file (as
defined in the rules and regulations of the FCC) during the period of operation
of the Stations by Seller have been deposited therein.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES BY BUYER
Buyer represents, warrants and covenants to Sellers as
follows:
4.1. Organization and Standing.
Buyer is a corporation duly organized, validly existing and
in good standing under the laws of the state of Maryland and by the Closing Date
will be duly qualified to do business as a foreign corporation where such
qualification is necessary. Buyer has the full corporate power and corporate
authority to enter into and perform the terms of this Agreement and the other
Buyer Documents and to carry out the transactions contemplated hereby and
thereby.
4.2. Authorization.
The execution, delivery and performance of this Agreement
and of the other Buyer Documents, and the consummation of the transactions
contemplated hereby and thereby, have been duly and validly authorized by all
necessary actions of Buyer (none of which actions has been modified or rescinded
and all of which actions are in full force and effect). This Agreement and the
Deposit Escrow Agreement constitute, and upon execution and delivery each such
other Buyer Document will constitute, a valid and binding agreement and
obligation of Buyer, enforceable against Buyer in accordance with its respective
terms, except as the same may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws of general applicability
relating to or affecting creditors' rights generally and by the application of
general principles of equity.
4.3. Consents and Approvals; No Conflicts.
4.3.1. The execution and delivery of this Agreement, and the
performance of the transactions contemplated herein by Buyer, will not require
any consent, approval, authorization or other action by, or filing with or
notification to, any Person or Governmental Authority, except as follows: (a)
filings required under Hart-Scott-Rodino, (b) approvals of the assignment of the
FCC Licenses to Buyer by the FCC and (c) filings, if any, with respect to real
estate transfer taxes.
<PAGE>
4.3.2. Assuming all consents, approvals, authorizations and
other actions described in Section 4.3.1 have been obtained and all filings and
notifications described in Section 4.3.1 have been made, the execution, delivery
and performance of this Agreement and the other Buyer Documents by Buyer do not
and will not (a) conflict with or violate any material Law applicable to Buyer,
(b) conflict with or result in any breach of or constitute a default (or an
event which with notice or lapse of time or both would become a default) of any
material contract or material agreement to which Buyer is a party or by which
Buyer is bound, or (c) conflict with or violate the organizational documents of
Buyer.
4.4. Availability of Funds.
Buyer will have available on the Closing Date, on each
Payment Date, and on the date of the Class A Makewell Closing and the date of
the Class B Makewell Closing sufficient funds to enable it to consummate the
transactions contemplated hereby.
4.5. Qualification of Buyer.
4.5.1. Except as disclosed in Schedule 4.5.1, Buyer is, and
pending Closing will remain legally, financially and otherwise qualified under
the Communications Act and all rules, regulations and policies of the FCC to
acquire and operate the Stations. Except as disclosed in Schedule 4.5.1, there
are no facts or proceedings which would reasonably be expected to disqualify
Buyer under the Communications Act or otherwise from acquiring or operating any
of the Stations or would cause the FCC not to approve the assignment of the FCC
Licenses to Buyer. Except as disclosed in Schedule 4.5.1, Buyer has no knowledge
of any fact or circumstance relating to Buyer or any of Buyer's Affiliates that
would reasonably be expected to (a) cause the filing of any objection to the
assignment of the FCC Licenses to Buyer, or (b) lead to a delay in the
processing by the FCC of the applications for such assignment. Except as
disclosed in Schedule 4.5.1, no waiver of any FCC rule or policy is necessary to
be obtained for the grant of the applications for the assignment of the FCC
Licenses to Buyer, nor will processing pursuant to any exception or rule of
general applicability be requested or required in connection with the
consummation of the transactions herein.
4.5.2. As of the date hereof and through the later to occur
of the HSR Filing and the filing of the FCC Applications, except as set forth on
Schedule 4.5.1, neither Buyer nor any Affiliate of Buyer (a) owns, controls or
operates any television or radio station located in any DMA in which a Station
is located; (b) has any direct or indirect interest, including, without
limitation, any equity, debt, security or any other financial interest, whether
or not "attributable" (as defined in the rules and regulations of the FCC), or
management interest, in (i) any television or radio station located in any DMA
in which a Station is located, or (ii) any
<PAGE>
applicant seeking to construct or acquire, by assignment of license or transfer
of control, any such television or radio station (an "Applicant"); or (c) is a
party to any TBA with a television or radio station located in any DMA in which
a Station is located, or with any Applicant. Buyer acknowledges and agrees that
the representations set forth in this Section 4.5.2 shall take into account and
include (a) the consummation of any proposed or pending acquisition (as of the
date hereof and through the later to occur of the HSR Filing and the filing of
the FCC Applications) of television or radio stations (including the acquisition
of the Stations) by Buyer or any Affiliate of Buyer or any Applicant, and (b)
any TBA or proposed or pending TBA (as of the date hereof and through the later
to occur of the HSR Filing and the filing of the FCC Applications) to which
Buyer or any Affiliate of Buyer is or may become a party.
4.6. WARN Act.
Buyer is not planning or contemplating, and has not made or
taken, any decisions or actions concerning the employees of the Stations after
the Closing Date that would require the service of notice under the Worker
Adjustment and Retraining Act of 1988, as amended.
4.7. No Outside Reliance.
Buyer has not relied and is not relying on any statement,
representation or warranty not made in this Agreement, any Schedule hereto or
any certificate to be delivered to Buyer at the Closing pursuant to this
Agreement. Buyer is not relying on any projections or other predictions
contained or referred to in materials (other than the Schedules) that have been
or may hereafter be provided to Buyer or any of its Affiliates, agents or
representatives, and Sellers make no representations or warranties with respect
to any such projections or other predictions.
4.8. Interpretation of Certain Provisions.
Buyer has not relied and is not relying on the specification
of any dollar amount in any representation or warranty made in this Agreement or
any Schedule hereto to indicate that such amounts, or higher or lower amounts,
are or are not material, and agrees not to assert in any dispute or controversy
between the parties hereto that specification of such amounts indicates or is
evidence as to whether or not any obligation, item or matter is or is not
material for purposes of this Agreement and the transactions contemplated
hereby.
<PAGE>
ARTICLE 5.
PRE-CLOSING FILINGS
5.1. Applications for FCC Consent.
Within ten (10) days following the execution of this
Agreement, Sellers and Buyer (or any direct or indirect wholly-owned subsidiary
of Buyer which is a permitted assignee of Buyer under Section 15.6.1) shall
jointly file applications for the Stations with the FCC requesting its consent
to the assignment of the FCC Licenses for the Stations from Sellers to Buyer
(the "FCC Applications"). Sellers and Buyer will diligently take, or fully
cooperate in the taking of, all necessary and proper steps, and provide any
additional information reasonably requested in order to obtain promptly the
requested consents and approvals of the FCC Applications by the FCC.
5.2. Hart-Scott-Rodino.
Within ten (10) days following the execution of this
Agreement, Sellers and Buyer shall complete any filing that may be required
pursuant to Hart-Scott-Rodino (each an "HSR Filing"). Sellers and Buyer shall
diligently take, or fully cooperate in the taking of, all necessary and proper
steps, and provide any additional information reasonably requested in order to
comply with, the requirements of Hart-Scott-Rodino.
5.3. Non-Required Actions.
Except as set forth in Section 5.4, none of the parties
hereto shall have any obligation to take any steps pursuant to Section 5.1 or
Section 5.2 which would be reasonably expected to result in the incurrence of a
material cost or other liability or which would require the divestiture of any
business or assets of any party hereto or any Affiliate thereof. Notwithstanding
anything to the contrary in the preceding sentence, Buyer shall have the
obligation to make all payments to Sellers in accordance with the terms and
conditions herein.
5.4. KOKH Divestiture.
Notwithstanding anything in Section 5.1 or Section 5.2 to the
contrary, Buyer shall represent, warrant, covenant and agree in the FCC
Applications filed pursuant to Section 5.1 and in any HSR Filing pursuant to
Section 5.2, to divest any economic interests (other than an option or similar
right to acquire a future economic interest that would not be cognizable under
the FCC rules and regulations or reportable under the Antitrust Laws) to be
acquired by Buyer in KOKH pursuant to the transactions contemplated herein to a
third party who shall not be an
<PAGE>
Affiliate of Buyer (upon the consummation of such divestiture, neither Buyer nor
any Affiliate of Buyer shall have an attributable interest in KOKH). Buyer shall
use its best efforts to consummate such divestiture as promptly as practicable.
Buyer represents and warrants to Sellers that such divestiture of KOKH will
occur in a timely manner so that there will be no delay in the issuing of the
FCC Orders or the expiration or termination of all applicable Hart-Scott-Rodino
waiting periods.
ARTICLE 6.
COVENANTS AND AGREEMENTS OF SELLERS
Each Seller covenants and agrees with Buyer as follows:
6.1. Negative Covenants.
Pending and prior to the earlier of the applicable Closing
for each Station or an Account Sale or a Makewell Sale (as applicable), Seller
will not, without the prior written consent of Buyer (which consent will not be
unreasonably withheld, delayed or conditioned, except in the case of matters
referred to in Sections 6.1.7, 6.1.9 and 6.1.11, with respect to which Buyer's
consent may be withheld in its sole and absolute discretion), do or agree to do
any of the following:
6.1.1. Dispositions; Mergers.
Sell, assign, lease or otherwise transfer or dispose of any
of its Assets other than at substantially fair market value and in the Ordinary
Course of Business; or merge or consolidate with or into any other entity or
enter into any contracts or agreements relating thereto.
6.1.2. Accounting Principles and Practices.
Change or modify any of Seller's accounting principles or
practices or any method of applying such principles or practices.
6.1.3. Trade-out Agreements.
Enter into or renew any Trade-out Agreement that would be
binding on Buyer after the Closing Date, except in the Ordinary Course of
Business and which requires the provision of broadcast time having a value of
less than (a) $25,000 individually, and (b) together with existing Trade-out
Agreements still in effect as of the Closing Date, $250,000 in the aggregate as
of the Closing Date for any Television Station or any Radio Group.
<PAGE>
6.1.4. Broadcast Time Sales Agreements.
Enter into or renew any Time Sales Agreement except in the
Ordinary Course of Business and which are for cash at prevailing rates for a
term not exceeding twelve (12) months.
6.1.5. Network Affiliation Agreements and TBAs.
Acquire or enter into or renew any TBA or network
affiliation agreement.
6.1.6. Additional Agreements.
Acquire or enter into any new Station Contracts not referred
to in Sections 6.1.3, 6.1.4 or 6.1.5 above, or renew, extend, amend, alter,
modify or otherwise change any existing Station Contract, except in the Ordinary
Course of Business (collectively, "Additional Agreements"); provided, however,
Seller shall not enter into (a) any Program Contract for any Television Station
which will be binding on Buyer after the Closing Date, or (b) any other Station
Contract requiring payments by Seller under each Station Contract in excess of
$50,000. For purposes of clause (a) above, Sellers acknowledge that it shall not
be unreasonable for Buyer to withhold its consent to approve of any Program
Contract where Buyer, acting in good faith, has reason to conclude that it can
acquire such programming on better terms.
6.1.7. Breaches.
Do or omit to do any act which will cause a material breach
of any Station Contract.
6.1.8. Employee Matters.
Enter into or become subject to any employment, labor,
union, or professional service contract not terminable at will, or any bonus,
pension, insurance, profit sharing, incentive, deferred compensation, severance
pay, retirement, hospitalization, employee benefit, or other similar plan; or
increase the compensation payable or to become payable to any employee, or pay
or arrange to pay any bonus payment to any employee, except in the Ordinary
Course of Business.
6.1.9. Actions Affecting FCC Licenses.
Take any action which may jeopardize the validity or
enforceability of or rights under the FCC Licenses.
<PAGE>
6.1.10. Programming.
Program or broadcast any Program Contract or syndicated
program, except in the Ordinary Course of Business.
6.1.11. Encumbrances.
Create, assume or permit to exist any Encumbrances upon any
of the Assets except for Permitted Encumbrances and Encumbrances that will be
discharged prior to or on the Closing Date.
6.1.12. Transactions With Affiliates.
Enter into any transaction with any Affiliate of any Seller,
News Corp. or any Affiliate of News Corp. that will be binding upon Buyer, the
Assets or any Station on or after the Closing Date, except for transactions not
otherwise prohibited by this Section 6.1 and transactions between and among
Stations operating in the same DMA in the Ordinary Course of Business, in each
case on arm's length terms.
6.2. Affirmative Covenants.
Pending and prior to the earlier of the applicable Closing
for each Station or an Account Sale or a Makewell Sale (as applicable), each
Seller will:
6.2.1. Preserve Existence.
Preserve its corporate existence and business organization
intact, maintain its existing franchises and licenses, use commercially
reasonable efforts to preserve for Buyer the relationships of its Stations with
suppliers, customers, employees and others with whom such Stations have business
relationships, and keep all of its Assets substantially in their present
condition, ordinary wear and tear excepted.
6.2.2. Normal Operations.
Subject to the terms and conditions of this Agreement
(including, without limitation, Section 6.1), (a) carry on the businesses and
activities of its Stations, including without limitation, promotional
activities, the sale of advertising time, entering into other contracts and
agreements, or purchasing and scheduling of programming, in the Ordinary Course
of Business; (b) pay or otherwise satisfy all obligations (cash and barter) of
its Stations in the Ordinary Course of Business; provided, however, Seller shall
bring current as of the Closing Date all payments that are due and payable under
Program Contracts as originally contracted; (c) maintain its books of account,
records, and files in
<PAGE>
substantially the same manner as heretofore; and (d) maintain its Assets in
customary repair, maintenance and condition, except to the extent of normal wear
and tear, and repair or replace, consistently with the Ordinary Course of
Business, any Asset that may be damaged or destroyed; notwithstanding the
foregoing, Buyer acknowledges that none of the Sellers shall be obligated to
spend any funds on capital expenditures after the date hereof, except for the
repair or replacement of Assets that may be damaged or destroyed.
6.2.3. Maintain FCC Licenses.
Maintain the validity of the FCC Licenses, and comply in all
material respects with all requirements of the FCC Licenses and the rules and
regulations of the FCC.
6.2.4. Network Affiliation.
Use its best efforts to maintain in full force and effect
Seller's present network affiliation agreements for its Stations (and any and
all modifications and renewals thereof).
6.2.5. Station Contracts.
Pay and perform its obligations in the Ordinary Course of
Business under the Station Contracts to which it is a party and under any
Additional Agreements that shall be entered into by Seller between the date
hereof and the Closing pursuant to Section 6.1.6, in accordance with the
respective terms and conditions of such Station Contracts.
6.2.6. Taxes.
Pay or discharge all Taxes when due and payable.
6.2.7. Access.
Cause to be afforded to representatives of Buyer reasonable
access during normal business hours to offices, properties, assets, books and
records, contracts and reports of its Stations, as Buyer shall from time to time
reasonably request; provided, however, that (a) such investigation shall only be
upon reasonable notice and shall not unreasonably disrupt the personnel or
operations of Seller or its Stations, and (b) under no circumstances shall
Seller be required to provide access to Buyer or any representative of Buyer (i)
any information or materials subject to confidentiality agreements with third
parties required to be kept confidential by applicable Laws, or (ii) any
privileged attorney-client communications or attorney work product. All requests
for access to the offices, properties, assets, books and records, contracts and
reports of its Stations
<PAGE>
shall be made to such representatives as Seller shall designate in writing, who
shall be solely responsible for coordinating all such requests and all access
permitted hereunder. Buyer acknowledges and agrees that neither Buyer nor its
representatives shall contact any of the employees, customers, suppliers,
partners, or other associates or Affiliates of Seller or its Stations, in
connection with the transactions contemplated hereby, whether in person or by
telephone, mail or other means of communication, without the specific prior
written authorization of such representatives of Seller. Subject to and in
accordance with the terms of this Section 6.2.7, Sellers shall cooperate in all
reasonable respects with Buyer's request to conduct an audit of the Sellers'
financial information as Buyer may reasonably determine is necessary to satisfy
Buyer's public company reporting requirements pursuant to the Securities Act of
1933 or the Securities Exchange Act of 1934 including, without limitation, (a)
using commercially reasonable efforts to obtain the consent of Sellers' auditors
to permit Buyer and Buyer's auditors to have access to such auditors' work
papers, and, (b) consenting to such access by Buyer. Under no circumstance shall
the preparation of any financial statements pursuant to such audit: (a) require
any Seller to change or modify any accounting policy, (b) cause any unreasonable
disruption in the business or operations of any Station, or (c) cause any delay
that is more than de minimis in any internal reporting requirements of any
Seller. All costs and expenses incurred in connection with the preparation of
(and assimilation of relevant information for) any such financial statements
shall be paid by Buyer.
6.2.8. Insurance.
Maintain in full force and effect all of its existing
casualty, liability, and other insurance through the day following the Closing
Date in amounts not less than those in effect on the date hereof.
6.2.9. Financial Statements.
Provide Buyer with unaudited monthly statements of assets
and liabilities of Seller relating to the business and operations of its
Stations, and monthly statements of revenues and expenses reflecting the results
of business and operations of its Stations for May, 1997 and for each month
thereafter, within thirty (30) days after the end of each such month. Sellers
further agree to provide Buyer with weekly sales pacing reports for the Stations
and copies of any financial statements that Sellers received in connection with
the acquisition of KQRC.
6.2.10. Consents.
(a) Take all reasonable action required to obtain all
consents, approvals and agreements of any third parties necessary to authorize,
approve or permit the consummation of the transactions contemplated by this
Agreement, including, without limitation, any consent of the parties to the
Station
<PAGE>
Contracts designated as necessary in Schedule 3.4 in order to consummate the
transactions contemplated hereby (collectively, the "Restricted Contracts").
Notwithstanding anything to the contrary set forth in this Agreement or
otherwise, to the extent that the consent or approval of any third party is
required under any Restricted Contract, Seller shall only be required to use
reasonable efforts (not involving the payment by Seller of any money to any
party to any such Restricted Contract, except to the extent required by Section
6.2.10(b)) to obtain such consents and approvals, and in the event that Seller
fails to obtain any such consent or approval, Buyer shall have no right to
terminate this Agreement.
(b) Notwithstanding anything to the contrary in clause (a)
above, Seller shall retain, until such time as any required consents shall have
been obtained by Seller, all rights to and under any Station Contract which
requires the consent of any other party thereto for assignment to Buyer if such
consent has not been obtained on the Closing Date (the "Deferred Contract").
Until the assignment of the Deferred Contract, (i) Seller shall continue to use
all commercially reasonable efforts and Buyer shall cooperate with Seller to
obtain the consent and/or to remove any other impediments to such assignment,
and (ii) Seller and Buyer agree to cooperate in any lawful arrangement to
provide (to the extent permitted without breach of such Deferred Contract) that
Buyer shall receive the benefits of such interest after the Closing Date to the
same extent as if it were Seller; provided, however, if Buyer shall fail to
receive such benefits after the Closing Date for any Leased Property that is a
main transmitter tower site or a studio site for any Station (the "Designated
Properties"), Seller agrees to make such payments as are necessary for Buyer to
receive such benefits as long as the aggregate amount of all such payments does
not exceed Two Hundred Thousand Dollars ($200,000) for all such Designated
Properties under this Agreement and the New Orleans Agreement. If, subsequent to
the Closing, Seller shall obtain required consents to assign any Deferred
Contract, the Deferred Contract for which consent to assign has been obtained
shall at that time be deemed to be conveyed, granted, bargained, sold,
transferred, setover, assigned, released, delivered and confirmed to Buyer,
without need of further action by Seller or of future documentation.
6.2.11. Corporate Action.
Take all corporate action (including, without limitation,
all shareholder action), under the Law of any state having jurisdiction over
Sellers necessary to effectuate the transactions contemplated by this Agreement
and the other Seller Documents.
6.2.12. Environmental Audit.
Sellers shall permit Buyer and Buyer's agents, as soon as
practical after the date hereof and upon Buyer's request therefor, access to the
Real Property and the Leased Property for the purpose of conducting, at Buyer's
expense,
<PAGE>
Phase I and Phase II environmental audits. Any such environmental audits shall
be conducted by a reputable environmental investigatory firm of Buyer's choice
subject to the reasonable approval of Sellers and in a manner as will not
unreasonably interfere with the normal business and operations of any of the
Stations.
6.3. Confidentiality.
Sellers shall, at all times, maintain strict confidentiality
with respect to all documents and information furnished to Sellers by or on
behalf of Buyer. Nothing shall be deemed to be confidential information that:
(a) is known to Sellers at the time of its disclosure to Sellers; (b) becomes
publicly known or available other than through disclosure by Sellers; (c) is
received by Sellers from a third party not actually known by Sellers to be bound
by a confidentiality agreement with or obligation to Buyer; or (d) is
independently developed by Sellers. Notwithstanding the foregoing provisions of
this Section 6.3, Sellers may disclose such confidential information (a) to the
extent required or deemed advisable to comply with applicable Laws; (b) to its
officers, directors, employees, representatives, financial advisors, attorneys,
accountants, and agents with respect to the transactions contemplated hereby (so
long as such parties agree to maintain the confidentiality of such information);
and (c) to any Governmental Authority in connection with the transactions
contemplated hereby. In the event this Agreement is terminated, Sellers will
return to Buyer all documents and other material prepared or furnished by Buyer
relating to the transactions contemplated hereunder, whether obtained before or
after the execution of this Agreement.
6.4. Trustee Acknowledgment.
Contemporaneously with the execution and delivery of the
Trust Agreement, Sellers shall cause the Trustee to execute a certificate or
acknowledgment for the benefit of Buyer, pursuant to which the Trustee
acknowledges and agrees to those items and obligations set forth in Section
3.1(c) of the Trust Agreement, attached as an exhibit to the Transfer Agreement.
ARTICLE 7.
COVENANTS AND AGREEMENTS OF BUYER
Buyer covenants and agrees with Sellers as follows:
7.1. Confidentiality.
Buyer shall, at all times prior to the Closing, maintain
strict confidentiality with respect to all documents and information furnished
to Buyer by
<PAGE>
or on behalf of Sellers. Nothing shall be deemed to be confidential information
that: (a) is known to Buyer at the time of its disclosure to Buyer; (b) becomes
publicly known or available other than through disclosure by Buyer; (c) is
received by Buyer from a third party not actually known by Buyer to be bound by
a confidentiality agreement with or obligation to Sellers; or (d) is
independently developed by Buyer. Notwithstanding the foregoing provisions of
this Section 7.1, Buyer may disclose such confidential information (a) to the
extent required or deemed advisable to comply with applicable Laws; (b) to its
officers, directors, partners, employees, representatives, financial advisors,
attorneys, accountants, agents, underwriters, lenders, investors and any other
potential sources of financing with respect to the transactions contemplated
hereby (so long as such parties agree to maintain the confidentiality of such
information); and (c) to any Governmental Authority in connection with the
transactions contemplated hereby. In the event this Agreement is terminated,
Buyer will return to Sellers all documents and other material prepared or
furnished by Sellers relating to the transactions contemplated by this
Agreement, whether obtained before or after the execution of this Agreement.
7.2. Corporate Action.
Prior to the Closing, Buyer shall take all corporate action
(including, without limitation, all shareholder action), under the Laws of any
state having jurisdiction over Buyer necessary to effectuate the transactions
contemplated by this Agreement and the other Buyer Documents.
7.3. Access.
From and after the Closing Date, Buyer shall cause to be
afforded to representatives of Sellers reasonable access during normal business
hours to the offices, books and records, contracts and reports of the Stations,
as Sellers shall from time to time reasonably request; provided, however, that
(a) such investigation shall only be upon reasonable notice and shall not
unreasonably disrupt the personnel or operations of Buyer or the Stations, and
(b) under no circumstances shall Buyer be required to provide access to Sellers
or any representatives of Sellers (i) any information or materials subject to
confidentiality agreements with third parties required to be kept confidential
by applicable Laws, or (ii) any privileged attorney-client communications or
attorney work product. All requests for access to the offices, books and
records, contracts and reports of the Stations shall be made to such
representatives as Buyer shall designate in writing, who shall be solely
responsible for coordinating all such requests and all access permitted
hereunder. Buyer agrees not to dispose of any books and records, contracts and
reports of the Stations which relate to the operations of the Stations during
the period during which the Stations were owned by Sellers without consulting
with Sellers prior to disposal thereof and taking any reasonable action
requested by Sellers with respect to retention and transfer to Sellers thereof.
<PAGE>
7.4. Collection of Receivables.
At the Closing, Sellers shall assign the Accounts
Receivables to Buyer for collection purposes only, and, within ten (10) business
days after the Closing Date, Sellers shall furnish to Buyer a list of the
Accounts Receivables by accounts and the amounts then owing. Buyer agrees, for a
period of one hundred fifty (150) days following the Closing Date, without any
requirement to litigate to collect the Accounts Receivables, to use its
reasonable efforts (with at least the care and diligence Buyer uses to collect
its own accounts receivable) to collect for Sellers the Accounts Receivables and
to remit to respective Sellers on the fifth day following the last day of each
month occurring during such one hundred fifty (150) day period (or, if any such
day is a Saturday, Sunday or holiday, on the next day on which banking
transactions are resumed), collections received by Buyer with respect to the
Accounts Receivables. Buyer shall not make any referral or compromise of any
Accounts Receivable to a collection agency or attorney for collection and shall
not compromise for less than full value any Account Receivable without the prior
written consent of the Seller that owns such Account Receivable. Any Account
Receivable not collected by Buyer within one hundred fifty (150) days following
the Closing Date shall revert to the Seller that owns such Account Receivable.
Buyer shall reassign, without recourse to the Buyer, each Account Receivable and
deliver to the Seller that owns such Account Receivable, all records relating
thereto on the same day as it remits to such Seller the collections received.
All payments in respect of the Accounts Receivables received during the one
hundred fifty (150) day period shall be first applied to the oldest balance then
due on the Accounts Receivables unless the account debtor indicates in writing
that payment is to be applied otherwise due to a dispute over an Account
Receivable. Buyer agrees, upon the reasonable request of any Seller, to furnish
to such Seller periodic reports on the status of its Accounts Receivables. Buyer
shall have no right to set-off any amounts collected for Accounts Receivable for
any amounts owed to Buyer by Sellers; provided, however, that Buyer shall have
the right to seek indemnification in accordance with the terms and conditions of
this Agreement.
ARTICLE 8.
MUTUAL COVENANTS AND UNDERSTANDINGS
OF SELLERS AND BUYER
8.1. Possession and Control.
Between the date hereof and the Closing Date
(notwithstanding that a Payment Date shall have occurred or any other provisions
hereof), Buyer shall not directly or indirectly control, supervise or direct, or
attempt to control, supervise or direct, the business and operations of the
Stations, and such operation, including complete control and supervision of all
programming, shall be the sole responsibility
<PAGE>
of Sellers. On and after the Closing Date, Sellers shall have no control over,
or right to intervene, supervise, direct or participate in, the business and
operations of the Stations.
8.2. Risk of Loss.
The risk of loss or damage by fire or other casualty or
cause to the Assets until the Closing Date shall be upon Sellers (or in the
event of any Payment Date, thereafter the risk of loss shall be upon the Buyer
for those Stations to which such Payment Date relates). In the event of loss or
damage prior to the Closing Date (or a Payment Date, if applicable) with respect
to which Sellers have adequate replacement cost insurance and which has not been
restored, replaced, or repaired as of the Closing Date (or a Payment Date, if
applicable), Buyer shall proceed with the Closing (or shall pay the Payment, if
applicable) and receive at Closing (or immediately after a Payment, if
applicable), the insurance proceeds or an assignment of the right to receive
such insurance proceeds, as applicable, to which Sellers otherwise would be
entitled, whereupon Sellers shall have no further liability to Buyer for such
loss or damage; provided, however, if the failure of such Assets to be restored,
replaced or repaired results in the regular broadcast transmission of any
Station (including its effective radiated power) to be diminished in any
material respect on what would otherwise be the Closing Date (or a Payment Date,
if applicable), then either or both of Sellers and Buyer shall be entitled, by
written notice to the other, to postpone the Closing Date (or a Payment Date, if
applicable) for such Station for a period of up to ninety (90) days; provided,
however, any delay in the Closing (or Payment, if applicable) for any Station
shall not result in a delay of the Closing (or Payment, if applicable) for any
other Stations which are to proceed to the Closing Date hereunder. In the event
that such Station's broadcast transmission has not been resumed by such
postponed Closing Date, either party may terminate the transactions contemplated
herein with respect to such Station (and, if the Deposit Release Date shall have
occurred, then Buyer shall receive that portion of the Deposit allocable to such
Station or, if later, when the Deposit Release Date occurs) unless Buyer agrees
to proceed with the Closing and receive at the Closing insurance proceeds or an
assignment of the right to receive such insurance proceeds, as applicable, to
which Sellers otherwise would be entitled, whereupon Sellers shall have no
further liability to Buyer for such loss or damage with respect to such Station.
8.3. Public Announcements.
Sellers and Buyer shall consult with each other before
issuing any press release or otherwise making any public statements with respect
to this Agreement or the transactions contemplated herein and shall not issue
any such press release or make any such public statement without the prior
written consent of the other party, which shall not be unreasonably withheld;
provided, however,
<PAGE>
that a party may, without the prior written consent of the other party, issue
such press release or make such public statement as may be required by Law or
any listing agreement with a national securities exchange to which Sellers or
Buyer is a party if it has used all reasonable efforts to consult with the other
party and to obtain such party's consent but has been unable to do so in a
timely manner.
8.4. Employee Matters.
8.4.1. Upon consummation of the Closing hereunder, Buyer
shall offer employment to each of the employees of the Stations (including those
on leave of absence, whether short-term, long-term, family, maternity,
disability, paid, unpaid or other), at a comparable salary, position and place
of employment as held by each such employee immediately prior to the Closing
Date (such employees who are given such offers of employment are referred to
herein as the "Transferred Employees"). Nothing in this Section 8.4.1 is
intended to guarantee employment for any Transferred Employee for any length of
time after the Closing Date.
8.4.2. Except as provided otherwise in this Section 8.4,
Sellers shall pay, discharge and be responsible for (a) all salary and wages
arising out of or relating to the employment of the employees of the Stations
prior to the Closing Date and (b) any employee benefits arising under the
Benefit Plans of Sellers and their Affiliates during the period prior to the
Closing Date. From and after the Closing Date, Buyer shall pay, discharge and be
responsible for all salary, wages and benefits arising out of or relating to the
employment of the Transferred Employees by Buyer on and after the Closing Date.
Buyer shall be responsible for all severance Liabilities, and all COBRA
Liabilities for any Transferred Employees of the Stations terminated on or after
the Closing Date, including, without limitation all Liabilities under the
retention and severance agreements entered into pursuant to Section 8.4.9
(subject to Sellers' reimbursement obligations set forth in Section 8.4.9).
8.4.3. Buyer shall cause all Transferred Employees as of the
Closing Date to be eligible to participate in its "employee welfare benefit
plans" and "employee pension benefit plans" (as defined in Section 3(1) and 3(2)
of ERISA, respectively) of Buyer in which similarly situated employees of Buyer
are generally eligible to participate; provided, however, that all Transferred
Employees and their spouses and dependents shall be eligible for coverage
immediately after the Closing Date (and shall not be excluded from coverage on
account of any pre-existing condition) to the extent provided under such plans
with respect to Transferred Employees.
8.4.4. For purposes of any length of service requirements,
waiting periods, vesting periods or differential benefits based on length of
service in any such plan for which a Transferred Employee may be eligible after
the Closing,
<PAGE>
Buyer shall ensure that, to the extent permitted by law, service by such
Transferred Employee with Sellers or any Affiliate of Sellers shall be deemed to
have been service with the Buyer. In addition, Buyer shall ensure that each
Transferred Employee receives credit under any welfare benefit plan of Buyer for
any deductibles or co-payments paid by such Transferred Employee and his or her
dependents for the current plan year under a plan maintained by Sellers or any
Affiliate of Sellers. Buyer shall grant credit to each transferred Employee for
all sick leave in accordance with the policies of Buyer applicable generally to
its employees after giving effect to service for Seller as service for Buyer. To
the extent taken into account in determining the Final Proration Amount, Buyer
shall assume and discharge Sellers' Liabilities for the payment of all unused
vacation leave accrued by Transferred Employees as of the Closing Date. To the
extent any claim with respect to such accrued vacation leave is lodged against
Sellers, with respect to any Transferred Employee, Buyer shall indemnify, defend
and hold harmless Sellers from and against any and all losses, directly or
indirectly, as a result of, or based upon or arising from the same.
8.4.5. Notwithstanding the provisions of Section 8.4.1, upon
consummation of the Closing hereunder, Buyer shall: (a) recognize the unions and
labor organizations which are parties to the collective bargaining agreements
set forth in Schedule 3.15; and (b) employ all active employees of the Stations
represented by any such union or labor organization (collectively, "Represented
Employees"). Upon consummation of the Closing hereunder, Buyer shall further
assume and be responsible for all Liabilities of Sellers arising on or after the
Closing Date under the collective bargaining agreements listed in Schedule 3.15,
including, without limitation, liabilities or obligations with respect to
severance pay, accrued vacation and other similar liabilities or obligations.
The obligations of Buyer set forth in this Section 8.4.5 shall not be effective
if (a) the terms of the collective bargaining agreement set forth in Schedule
3.15 do not require Sellers to transfer or assign such agreements to Buyer, and
(b) the failure of either Buyer or Sellers to comply with the terms of this
Section 8.4.5 (i) shall not violate any applicable Laws, or (ii) impose or be
likely to impose any Liabilities of any nature whatsoever on any Sellers.
8.4.6. As soon as practicable following the Closing Date,
Buyer shall establish and maintain a defined contribution plan or plans (which
may be a preexisting plan or plans (the "Buyer's Plan") intended to be qualified
under Section 401(a) and 401(k) of the Code for the benefit of the Transferred
Employees. Effective as of the Closing Date, Sellers shall cause appropriate
amendments to be made to the Heritage Media Corporation Retirement Savings Plan
(the "Sellers' Plan") to provide that the Transferred Employees shall be fully
vested in their accounts under the Sellers' Plan (as well as under the Heritage
Media Corporation Deferred Compensation Plan for Key Employees). As soon as
practicable after the Closing Date, Buyer shall take all necessary action to
qualify Buyer's Plan under
<PAGE>
the applicable provisions of the Code (including but not limited to Section
401), if it is not yet so qualified, and the Buyer and the Sellers shall make
any and all filings and submissions to the appropriate governmental agencies
required to be made by them in connection with the transfer of assets described
hereafter. As soon as practicable following the earlier of the receipt of a
favorable determination letter from the Internal Revenue Service regarding the
qualified status of both the Sellers' Plan and the Buyer's Plan (each as amended
to the date of transfer) or sooner, if Sellers and Buyer so agree, Sellers shall
cause to be transferred to Buyer's Plan, in cash and in kind, all of the
individual account balances of Transferred Employees under the Sellers' Plan,
including any outstanding plan participant loan receivables allocated to such
accounts.
8.4.7. Buyer acknowledges and agrees that Buyer's
obligations pursuant to this Section 8.4 are in addition to, and not in
limitation of, Buyer's obligation to assume the employment contracts set forth
on Schedule 2.1.8.
8.4.8. Except as otherwise provided in this Section 8.4 or
in any employment, severance or retention agreements of any Transferred
Employees, all Transferred Employees shall be at-will employees, and Buyer may
terminate their employment or change their terms of employment at will. No
employee (or beneficiary of any employee) of Seller may sue to enforce the terms
of this Agreement, including specifically this Section 8.4, and no employee or
beneficiary shall be treated as a third party beneficiary of this Agreement.
Except to the extent provided for herein, Buyer may cover the Transferred
Employees under existing or new benefit plans, programs, and arrangements, and
may amend or terminate any such plans, programs, or arrangements at any time.
8.4.9. (a) Within ten (10) business days after the date
hereof, Buyer shall notify Sellers in writing of the current Station general
managers that Buyer desires to have enter into retention agreements (each a
"Retained General Manager"). Sellers shall use reasonable efforts to enter into
a retention agreement in the form of Exhibit F hereto with each Retained General
Manager. If within nine (9) months after the Closing Date for a Station, Buyer
terminates the employment of a Retained General Manager for such Station,
Sellers shall reimburse Buyer for any severance payments made by Buyer to such
Retained General Manager pursuant to his or her retention agreement; provided,
however, that such amount shall in no event exceed such Retained General
Manager's annual salary in effect immediately prior to such Closing Date.
(b) The parties hereto acknowledge and agree that prior to
Closing Date there will be only one (1) general manager in each DMA in which the
Stations are located. If a vacant position for a general manager position shall
occur prior to the Closing for any Station, Sellers shall consult with Buyer
prior to hiring a new general manager to fill such position. For each such new
general manager
<PAGE>
hired by Sellers, upon the written request of Buyer prior to the hiring of such
general manager, Sellers shall enter into a retention agreement with any such
general manager in the form attached hereto as Exhibit F and reimburse Buyer for
any severance payments as provided for in Section 8.4.9(a).
(c) Buyer acknowledges and agrees that if the Sellers have
reimbursed Buyer for any severance obligations for any employee, neither Buyer
nor any Affiliate of Buyer shall hire, employ or contract with any such employee
for a period of one year from the date Sellers have made the reimbursement
payment.
8.5. Disclosure Schedules.
Sellers and Buyer acknowledge and agree that Sellers shall
have the right from time to time after the date hereof to update or correct
solely Schedules 2.1.5, 2.1.6, 2.1.8, 2.1.9, and 3.17 attached hereto solely to
reflect actions by Sellers after the date hereof which are not prohibited by
Section 6.1 hereof. The inclusion of any fact or item on a Schedule referenced
by a particular section in this Agreement shall, should the existence of the
fact or item or its contents, be relevant to any other section, be deemed to be
disclosed with respect to such other section whether or not an explicit
cross-reference appears in the Schedules.
8.6. Bulk Sales Laws.
Buyer hereby waives compliance by Sellers, in connection
with the transactions contemplated hereby, with the provisions of any applicable
bulk transfer laws.
8.7. Tax Matters.
Sellers and Buyer each represent, warrant, covenant and
agree with each other that for tax purposes the sale of Assets described herein
is not effective until the Closing Date. Sellers and Buyer agree that all Tax
returns and reports shall be filed consistent with the sale of assets taking
place on the Closing Date.
8.8. Preservation of Books and Records.
For a period of three (3) years after the Closing Date for a
Station, the Seller of such Station agrees not to dispose of, and agrees to
provide Buyer reasonable access to, any material books or records in such
Seller's possession immediately after the Closing Date that relate to the
business or operation of such Station prior to the Closing Date.
<PAGE>
ARTICLE 9.
CONDITIONS PRECEDENT TO
BUYER'S OBLIGATION TO CLOSE
The obligations of Buyer to purchase the Assets and to
proceed with the Closing of any Station are subject to the satisfaction (or
waiver in writing by Buyer) at or prior to the Closing for such Station of each
of the following conditions:
9.1. Representations and Covenants.
The representations and warranties of Sellers made in this
Agreement shall be true and correct on and as of the Closing Date with the same
effect as though such representations and warranties had been made on and as of
the Closing Date (except as modified by the Schedules updated after the date
hereof in accordance with Section 8.5 and except for representations and
warranties that speak as of a specific date or time other than the Closing Date
(which need only be true and correct in all material respects as of such date or
time)), and the covenants and agreements of Sellers required to be performed on
or before the Closing Date in accordance with the terms of this Agreement shall
have been performed in all respects, except to the extent that the failure of
such representations and warranties to be true and correct and the failure to
perform such covenants shall not have, when considered together, had a Material
Adverse Effect.
9.2. Delivery of Documents.
Sellers shall have delivered to Buyer all contracts,
agreements, instruments and documents required to be delivered by Sellers to
Buyer with respect to such Station pursuant to Section 11.2.
9.3. FCC Order.
The FCC Order shall have been issued with respect to such
Station.
9.4. Hart-Scott-Rodino.
All applicable waiting periods with respect to such Station
under Hart-Scott-Rodino shall have expired or terminated.
9.5. Legal Proceedings.
No injunction, restraining order or decree of any nature of
any court or Governmental Authority of competent jurisdiction shall be in effect
that restrains or prohibits the transactions contemplated by this Agreement.
<PAGE>
ARTICLE 10.
CONDITIONS PRECEDENT TO
SELLERS' OBLIGATION TO CLOSE
The obligations of Sellers to sell, transfer, convey and
deliver the Assets and to proceed with the Closing of any Station are subject to
the satisfaction (or waiver in writing by Sellers) at or prior to the Closing
for such Station of each of the following conditions:
10.1. Consummation of the Merger.
The Merger under the Merger Agreement shall have been
consummated in accordance with its terms.
10.2. Representations and Covenants.
The representations and warranties of Buyer made in this
Agreement shall be true and correct in all material respects on and as of the
Closing Date with the same effect as though such representations and warranties
had been made on and as of the Closing Date (except for representations and
warranties that speak as of a specific date or time other than the Closing Date
(which need only be true and correct in all material respects as of such date or
time)), and the covenants and agreements of Buyer required to be performed on or
before the Closing Date in accordance with the terms of this Agreement shall
have been performed in all material respects.
10.3. Delivery by Buyer.
Buyer shall have delivered to Sellers the Purchase Price for
such Station and all contracts, agreements, instruments and documents required
to be delivered by Buyer to Sellers with respect to such Station pursuant to
Section 11.3.
10.4. FCC Order.
The FCC Order shall have been issued with respect to such
Station.
10.5. Hart-Scott-Rodino.
All applicable waiting periods with respect to such Station
under Hart-Scott-Rodino shall have expired or terminated.
<PAGE>
10.6. Legal Proceedings.
No injunction, restraining order or decree of any nature of
any court or Governmental Authority of competent jurisdiction shall be in effect
that restrains or prohibits the transactions contemplated by this Agreement.
ARTICLE 11.
CLOSING
11.1. Closings.
11.1.1. The Closing hereunder shall be held for all of the
Stations on a date specified by Sellers that is not later than ten (10) days
after the date on which all of the FCC Orders for all Stations shall have been
issued; provided, however, that if prior to the date specified by Sellers, Buyer
shall have filed an FCC application to transfer a Station (a "Subject Station")
to a third party, Buyer may elect to postpone the Closing for such Station (but
not the other Stations), for a period of up to thirty (30) days after the date
on which all such FCC Orders have been issued; provided, further, however, that
the parties acknowledge and agree that there may be multiple Closings hereunder
as follows:
(a) If FCC Orders are issued for all of the Class A Stations
for which a prior Closing has not occurred, and it is not reasonably likely that
the FCC Orders for all or any of the Class B Stations will be issued within five
(5) days thereafter, the Closing shall nonetheless be held for all such Class A
Stations on a date specified by Sellers that is not earlier than thirty (30)
days after the date on which the FCC Orders for all such Class A Stations are
issued;
(b) If FCC Orders for all of the Stations within the same
DMA are issued prior to the issuance of the FCC Orders for any other Stations,
upon ten (10) days prior written notice to Sellers, Buyer may elect to proceed
with the Closing for all such Stations within the same DMA provided that at
least sixty (60) days have elapsed since the most recent Closing hereunder;
(c) There shall be a Closing hereunder on such date which is
nine (9) months after the date of this Agreement for all Class A Stations for
which an FCC Order has been issued and for which a Closing has not occurred
prior to such date;
(d) There shall be a Closing hereunder on such date which is
twelve (12) months after the date of this Agreement for all Stations for which
an FCC Order has been issued and for which a Closing has not occurred prior to
such date; and
<PAGE>
(e) During the period beginning twelve (12) months after the
date of this Agreement (unless the obligation of the Sellers to sell any
Stations to the Buyer shall have terminated pursuant to Section 2.6 or Section
2.7), at any time when the FCC Orders shall be issued for any of the Stations
within the same DMA, there shall be a Closing for such Stations on a date
specified by Sellers that is not later than ten (10) days (or thirty (30) days
in the case of a Subject Station) after the date on which the FCC Orders for
such Stations have been issued (each such date on which a Closing shall occur
pursuant to this Section 11.1.1 is referred to herein as the "Closing Date").
11.1.2 All Closings hereunder shall be held at 10:00 A.M.
local time on the Closing Date(s) at the offices of Hogan & Hartson L.L.P., 8300
Greensboro Drive, Suite 1100, McLean, Virginia, or at such other time and place
as the parties may agree.
11.1.3. For purposes of this Agreement, if there shall be
multiple Closings for the Stations, then the terms "Closing" and "Closing Date"
shall only be deemed to refer to the Stations for which the sale by Sellers, and
the purchase by Buyers, shall have occurred on such date. If a Closing Date
hereunder shall fall on a date that is not a business day, then such Closing
Date shall be the next business day.
11.2. Delivery by Sellers.
At or before the Closing, Sellers shall deliver to Buyer the
following:
11.2.1. Agreements and Instruments
The following bills of sale, assignments and other
instruments of transfer, dated as of the Closing Date and duly executed by
Sellers:
(a) the Bill of Sale;
(b) the Assignment of FCC Licenses;
(c) the Assignment of Contracts and Leases;
(d) the Assumption Agreement;
(e) certificates of title with respect to the
motor vehicles listed on Schedule 2.1.9
or if any such motor vehicles are leased
by Sellers, an assignment of such lease;
and
(f) special or limited warranty deeds for all
Real Property owned by Sellers in the
form appropriate to the jurisdictions in
which such Real Property is located.
<PAGE>
11.2.2. Consents.
Copies of all consents Sellers have been able to obtain to
effect the assignment to Buyer of the Station Contracts listed on Schedule 3.4.
11.2.3. Certified Resolutions.
A copy of the approval of the boards of directors of each
Seller, certified as being correct and complete and then in full force and
effect, authorizing the execution, delivery and performance of this Agreement,
and of the other Seller Documents, and the consummation of the transactions
contemplated hereby and thereby.
11.2.4. Officers' Certificates.
(a) A certificate of Sellers certifying the matters set
forth in Section 9.1; and
(b) A certificate of Sellers as to the incumbency of the
representatives of Sellers executing this Agreement or any of the other Seller
Documents on behalf of Sellers.
11.2.5. Good Standing Certificates.
To the extent available from the applicable jurisdictions,
certificates as to the formation and/or good standing of each Seller issued by
the appropriate governmental authorities in the states of organization and each
jurisdiction in which any Seller is qualified to do business, each such
certificate (if available) to be dated a date not more than a reasonable number
of days prior to the Closing Date.
11.2.6. Opinion of Counsel.
An opinion of Hogan & Hartson L.L.P., substantially in the
form of Exhibit G hereto.
11.3. Delivery by Buyer.
At or before a Closing for a Station, Buyer shall deliver to
Sellers the following:
11.3.1. Purchase Price Payment.
The Purchase Price (less any amounts previously paid by
Buyer to Sellers on a Payment Date which are allocable to such Station) in the
amount and manner set forth in Section 2.
<PAGE>
11.3.2. Agreements and Instruments.
The Assumption Agreement and other instruments of transfer,
dated as of the Closing Date and duly executed by Buyer.
11.3.3. Certified Resolutions.
Copies of the resolutions of the board of directors of
Buyer, certified as being correct and complete and then in full force and
effect, authorizing the execution, delivery and performance of this Agreement
and of the other Buyer Documents, and the consummation of the transactions
contemplated hereby and thereby.
11.3.4. Officers' Certificate.
(a) A certificate of Buyer signed by an officer of Buyer
certifying the matters set forth in Section 10.2; and
(b) A certificate signed by the Secretary of Buyer as to the
incumbency of the officers of Buyer executing this Agreement or any of the other
Buyer Documents on behalf of Sellers.
11.3.5. Opinion of Counsel.
An opinion of Thomas & Libowitz, P.A., in a form reasonably
acceptable to Sellers.
ARTICLE 12.
SURVIVAL; INDEMNIFICATION
12.1. Survival of Representations.
12.1.1. Unless otherwise set forth herein (including,
without limitation, Sections 12.1.2 and 12.1.3), all representations and
warranties, covenants and agreements of Sellers and Buyer contained in or made
pursuant to this Agreement or in any certificate furnished pursuant hereto shall
survive the Closing Date for a particular Station and shall remain in full force
and effect to the following extent: (a) representations and warranties shall
survive for a period of twelve (12) months after the Closing Date for such
Station, (b) the covenants and agreements which by their terms survive the
Closing for such Station shall continue in full force and effect until fully
discharged (but not beyond the expiration of twelve (12) months after the
Closing Date for such Station), and (c) any representation, warranty, covenant
or agreement that is the subject of a claim which is asserted in a reasonably
detailed writing prior to the expiration of the
<PAGE>
survival period set forth in this Section 12.1.1, shall survive with respect to
such claim or dispute until the final resolution thereof.
12.1.2. Notwithstanding Section 12.1.1, if the Class A 100%
Payment shall have been received by Sellers and the Closing for the Class A
Stations shall have occurred, all representations, warranties, covenants and
agreements of Sellers with respect to the Class A Stations contained in or made
pursuant to this Agreement or in any certificate furnished pursuant hereto shall
survive the Class A 100% Payment Date and shall remain in full force and effect
to the following extent: (a) representations and warranties with respect to the
Class A Stations shall survive for a period of twelve (12) months after the
Class A 100% Payment Date, (b) the covenants and agreements relating to the
Class A Stations which by their terms survive the Class A 100% Payment Date,
shall continue in full force and effect until fully discharged (but not beyond
the expiration of twelve (12) months after the Closing Date), and (c) any
representation, warranty, covenant or agreement that is the subject of a claim
which is asserted in a reasonably detailed writing prior to the expiration of
the survival period set forth in this Section 12.1.2, shall survive with respect
to such claim or dispute until the final resolution thereof.
12.1.3. Notwithstanding Section 12.1.1, if the Class B
Payment shall have been received by Sellers and the Closing for the Class B
Stations shall have occurred, all representations, warranties, covenants and
agreements of Sellers with respect to the Class B Stations contained in or made
pursuant to this Agreement or in any certificate furnished pursuant hereto shall
survive the Class B Payment Date and shall remain in full force and effect to
the following extent: (a) representations and warranties with respect to the
Class B Stations shall survive for a period of twelve (12) months after the
Class B Payment Date, (b) the covenants and agreements relating to the Class B
Stations which by their terms survive the Class B Payment Date, shall continue
in full force and effect until fully discharged (but not beyond the expiration
of twelve (12) months after the Closing Date), and (c) any representation,
warranty, covenant or agreement that is the subject of a claim which is asserted
in a reasonably detailed writing prior to the expiration of the survival period
set forth in this Section 12.1.3, shall survive with respect to such claim or
dispute until the final resolution thereof.
12.1.4. No claim for indemnification may be made pursuant to
this Article 12 after the survival period set forth in this Section 12.1.
12.2. Indemnification by Sellers.
Subject to the conditions and provisions of Section 12.4 and
Section 12.5, from and after the Closing Date, Sellers agree to indemnify,
defend and hold harmless Buyer from and against and in any respect of, on a net
after-tax basis, any and all Losses, asserted against, resulting to, imposed
upon or incurred
<PAGE>
by Buyer, directly or indirectly, by reason of or resulting from: (a) any
failure by Sellers to pay, perform or discharge any Liabilities not assumed by
Buyer pursuant hereto; (b) the business or operations of the Stations during the
period prior to the Closing Date (except to the extent Buyer has assumed the
Liability for any such Losses pursuant hereto); provided, however, that (i) if
the Class A 100% Payment shall have been received by Sellers and the Closing for
the Class A Stations shall have occurred, Sellers' indemnification obligations
under this clause (b) with respect to the Class A Stations shall be limited to
the period prior to the Class A 100% Payment Date, and (ii) if the Class B
Payment shall have been received by Sellers and the Closing for the Class B
Stations shall have occurred, Sellers' indemnification obligations under this
clause (b) with respect to the Class B Stations shall be limited to the period
prior to the Class B Payment Date; (c) any misrepresentation or breach of the
representations and warranties of Sellers contained in or made pursuant to this
Agreement or any other Seller Document; (d) any breach by Sellers of any
covenants of Sellers contained in or made pursuant to this Agreement or any
other Seller Document; or (e) the failure of Sellers to comply with the
provisions of any applicable bulk transfer law.
12.3. Indemnification by Buyer.
Subject to the conditions and provisions of Section 12.4 and
Section 12.5, from and after the Closing Date, Buyer hereby agrees to indemnify,
defend and hold harmless each Seller from, against and with respect of, on a net
after-tax basis, any and all Losses, asserted against, resulting to, imposed
upon or incurred by any Seller, directly or indirectly, by reason of or
resulting from: (a) any failure by Buyer to pay, perform or discharge any
Liabilities assumed by Buyer pursuant hereto; (b) the business or operations of
the Stations during the period from and after the Closing Date; (c) any
misrepresentation or breach of the representations and warranties of Buyer
contained in or made pursuant to this Agreement or any other Buyer Document; or
(d) any breach by Buyer of any covenants of Buyer contained in or made pursuant
to this Agreement or any other Buyer Document. Notwithstanding the foregoing,
(i) if the Class A 100% Payment shall have been received by Sellers and the
Closing for the Class A Stations shall have occurred, Buyer's indemnification
obligations under this Section 12.3 with respect to the Class A Stations shall
be from and after the Class A 100% Payment Date, and, for purposes of clause (b)
of this Section 12.3, shall be for the period from and after the Class A 100%
Payment Date; and (ii) if the Class B Payment shall have been received by
Sellers and the Closing for the Class B Stations shall have occurred, Buyer's
indemnification obligations under this Section 12.3 with respect to the Class B
Stations shall be from and after the Class B Payment Date, and, for purposes of
clause (b) of this Section 12.3, shall be for the period from and after the
Class B Payment Date.
<PAGE>
12.4. Limitations on Indemnification.
12.4.1. Notwithstanding any other provision of this
Agreement to the contrary, in no event shall Losses include a party's
incidental, consequential or punitive damages, regardless of the theory of
recovery. Each party hereto agrees to use reasonable efforts to mitigate any
Losses which form the basis for any claim for indemnification hereunder.
12.4.2. Notwithstanding any other provision of this
Agreement to the contrary, the Heritage Sellers (taken as a whole) shall not be
liable to Buyer in respect of any indemnification hereunder except to the extent
that (a) the aggregate amount of Losses of Buyer under this Agreement and under
the New Orleans Agreement (taken as a whole) exceeds One Million Dollars
($1,000,000) (the "Basket Amount"), and then only to the extent of the excess
over the amount of Five Hundred Thousand Dollars ($500,000), and (b) the
aggregate amount of Losses of Buyer under this Agreement and under the New
Orleans Agreement (taken as a whole) is less than Twelve Million Six Hundred
Thousand Dollars ($12,600,000) (the "Indemnity Cap"); provided, however, the
Basket Amount shall not be applicable to any amounts owed in connection with the
determination of the Proration Amount pursuant to Section 2.8, or to Sellers'
reimbursement obligations under Section 8.4.9.
12.4.3. Notwithstanding any other provision of this
Agreement to the contrary, and except for remedies that Buyer may have for any
Seller's fraud, which remedies shall not be limited, Buyer acknowledges and
agrees that the maximum aggregate liability of the Heritage Sellers (taken as a
whole) pursuant to this Agreement and the New Orleans Agreement (taken as a
whole) to Buyer and any third parties for any and all Losses shall not exceed
the Indemnity Cap, regardless of whether Buyer seeks indemnification pursuant to
this Article 12, regardless of the form of action, whether in contract or tort,
including negligence, and regardless of whether or not the Heritage Sellers are
notified of the possibility of damages to Buyer or any other third party.
12.4.4. Each party (a "recipient party") shall notify the
other party in writing (the "representing party") reasonably promptly of any
perceived breach by the representing party of which the recipient party has
knowledge of any representations, warranties, covenants and agreements, and of
any Losses (including a brief description of the same) of the recipient party
caused thereby. In the event of any breach that is cured prior to the Closing
Date in accordance with the terms of this Agreement, the representing party
shall have no obligation under Section 12.2 or Section 12.3 or otherwise to
indemnify the recipient party with respect to such Losses.
<PAGE>
12.5. Conditions of Indemnification.
The obligations and liabilities of Sellers and of Buyer
hereunder with respect to their respective indemnities pursuant to this Section
12, resulting from any Losses, shall be subject to the following terms and
conditions:
12.5.1. The party seeking indemnification (the "Indemnified
Party") must give the other party or parties, as the case may be (the
"Indemnifying Party"), notice of any such Losses promptly after the Indemnified
Party receives notice thereof; provided that the failure to give such notice
shall not affect the rights of the Indemnified Party hereunder except to the
extent that the Indemnifying Party shall have suffered actual damage by reason
of such failure.
12.5.2. The Indemnifying Party shall have the right to
undertake, by counsel or other representatives of its own choosing, the defense
of such Losses at the Indemnifying Party's risk and expense.
12.5.3. In the event that the Indemnifying Party shall elect
not to undertake such defense, or, within a reasonable time after notice from
the Indemnified Party of any such Losses, shall fail to defend, the Indemnified
Party (upon further written notice to the Indemnifying Party) shall have the
right to undertake the defense, compromise or settlement of such Losses, by
counsel or other representatives of its own choosing, on behalf of and for the
account and risk of the Indemnifying Party (subject to the right of the
Indemnifying Party to assume defense of such Losses at any time prior to
settlement, compromise or final determination thereof). In such event, the
Indemnifying Party shall pay to the Indemnified Party, in addition to the other
sums required to be paid hereunder, the costs and expenses incurred by the
Indemnified Party in connection with such defense, compromise or settlement as
and when such costs and expenses are so incurred.
12.5.4. Anything in this Section 12.5 to the contrary
notwithstanding, (a) if there is a reasonable possibility that Losses may
materially and adversely affect the Indemnified Party other than as a result of
money damages or other money payments, the Indemnified Party shall have the
right, at its own cost and expense, to participate in the defense, compromise or
settlement of the Losses, (b) the Indemnifying Party shall not, without the
Indemnified Party's written consent, settle or compromise any Losses or consent
to entry of any judgment which does not include as an unconditional term thereof
the giving by the claimant or the plaintiff to the Indemnified Party of a
release from all liability in respect of such Losses in form and substance
satisfactory to the Indemnified Party, and (c) in the event that the
Indemnifying Party undertakes defense of any Losses, the Indemnified Party, by
counsel or other representative of its own choosing and at its sole cost and
expense, shall have the right to consult with the Indemnifying
<PAGE>
Party and its counsel or other representatives concerning such Losses and the
Indemnifying Party and the Indemnified Party and their respective counsel or
other representatives shall cooperate with respect to such Losses and (d) in the
event that the Indemnifying Party undertakes defense of any Losses, the
Indemnifying Party shall have an obligation to keep the Indemnified Party
informed of the status of the defense of such Losses and furnish the Indemnified
Party with all documents, instruments and information that the Indemnified party
shall reasonably request in connection therewith.
12.6. Cure of Breach.
Notwithstanding any other provision of this Agreement to the
contrary, a breach by Sellers of any representations and warranties or a failure
to perform any covenant or agreement hereunder may be cured by Sellers prior to
the Closing Date or a Payment Date (a) by reducing the Purchase Price in an
amount equal to the Losses to Buyer caused by such breach, (b) by making payment
to a third party or taking other action to discharge the Losses, (c) by placing
an amount equal to the Losses in an escrow account under an escrow arrangement
reasonably satisfactory to Sellers and Buyer, or (d) a combination of the
foregoing. If the foregoing actions fully cure the breach, Sellers shall have no
obligation under Section 12.2 or otherwise to indemnify Buyer with respect to
the Losses caused by such breach; if such actions partially cure the breach,
Sellers shall continue to have an obligation under Section 12.2 to indemnify
Buyer with respect to the remaining portion of the Losses caused by such breach.
ARTICLE 13.
TERMINATION
13.1. Termination by the Parties.
This Agreement may be terminated at any time prior to the
Closing by:
13.1.1. the mutual consent of Sellers and Buyer;
13.1.2. Sellers in accordance with, and subject to, the
terms and conditions of Section 14.1, and Buyer in accordance with, and subject
to, the terms and conditions of Section 14.2;
13.1.3. either Buyer or Sellers in accordance with, and
subject to the terms and conditions of Section 8.2; provided, that a termination
pursuant to this Section 13.1.3 shall only terminate this Agreement with respect
to the Station for which such termination applies under Section 8.2; and
<PAGE>
13.1.4 Buyer (a) if the Merger shall not have been
consummated on or prior to December 30, 1997, (b) if the Merger shall have been
rejected by the HMC stockholders at the meeting held for the purpose of voting
on the Merger or (c) any action has been taken by any Governmental Authority
which will preclude the consummation of the Merger on or prior to December 30,
1997
13.2. Automatic Termination.
This Agreement shall automatically terminate without further
action by the parties upon the termination of the Merger Agreement in accordance
with its terms.
13.3. Effect of Termination.
13.3.1. In the event this Agreement is terminated as
provided in Sections 13.1.1, 13.1.3, 13.1.4 and 13.2, Buyer shall receive the
immediate return of the Deposit (except, in the case of a termination pursuant
to Section 13.1.3, only that portion of the Deposit allocable to the Station
with respect to which this Agreement is terminated and only to the extent that
such portion of the Deposit may be released pursuant to Section 8.2); this
Agreement shall be deemed null, void and of no further force or effect, and the
parties hereto shall be released from all future obligations hereunder;
provided, however, that the obligations of Buyer and Sellers set forth in
Sections 6.3 and 7.1 (which relate to confidentiality), and Section 15.3 (which
relates to payment of certain expenses), shall survive such termination and the
parties hereto shall have any and all remedies to enforce such obligations
provided at law or in equity or otherwise (including, without limitation,
specific performance).
13.3.2. In the event this Agreement is terminated as
provided in Section 13.1.2, this Agreement shall be deemed null, void and of no
further force or effect, and the parties hereto shall be released from all
future obligations hereunder; provided, however, that the obligations of Buyer
and Sellers set forth in Sections 6.3 and 7.1 (which relate to confidentiality),
Article 14 (which relates to remedies and return of the Deposit) and Section
15.3 (which relates to payment of certain expenses), shall survive such
termination and the parties hereto shall have any and all remedies to enforce
such obligations provided at law or in equity or otherwise (including, without
limitation, specific performance).
<PAGE>
ARTICLE 14.
REMEDIES
14.1. Default by Buyer.
14.1.1. If Buyer shall default in the performance of its
obligations under this Agreement in any material respect and such default is not
cured within thirty (30) days after notice thereof, and provided that Sellers
shall not then be in material default in the performance of Sellers' obligations
hereunder, Sellers shall be entitled, by written notice to Buyer, to terminate
this Agreement, and as Sellers' sole and exclusive remedy under this Agreement,
to receive the Deposit (without set-off, deduction or counterclaim) as
liquidated damages, and upon such payment Buyer shall be discharged from all
further liability under this Agreement.
14.1.2. In addition to and notwithstanding the provisions of
Section 14.1.1, if Buyer shall default in the performance of any of its
obligations in any respect in Sections 2.6 or Section 2.7 (it being understood
that Buyer shall have no right to cure any default under such sections or any
other payment default hereunder), Sellers shall, as Sellers' sole and exclusive
remedies and as liquidated damages, be (a) entitled, by written notice to Buyer,
to terminate Sellers' obligation to sell the Stations to Buyer and to
immediately receive the Deposit (without set-off, deduction or counterclaim) as
provided in Section 2.6 and Section 2.7 hereof, and (b) entitled to take all
such other actions as are provided in Section 2.6 and Section 2.7 hereof
(including, without limitation, conducting Makewell Sales). Sellers shall have
the rights set forth in this Section 14.1.2 regardless of whether any Seller
shall then be in breach of any representations, warranties, covenants or
agreements herein.
14.2. Default by Sellers.
If Sellers shall default in the performance of Sellers'
obligations under this Agreement, and such default is not cured within thirty
(30) days after notice thereof and such default has had or is reasonably likely
to have a Material Adverse Effect, and provided that Buyer shall not then be in
material default in the performance of Buyer's obligations hereunder, Buyer
shall be entitled, by written notice to Sellers, to terminate this Agreement, to
receive the immediate return of the Deposit, and upon consummation of the
Merger, to pursue any other remedies Buyer has at law or in equity or otherwise.
In furtherance of the foregoing, Buyer shall have no recourse against Sellers
until the Merger shall have been consummated.
<PAGE>
14.3. Liquidated Damages.
Sellers and Buyer have provided for the amount of the
Deposit and any Makewell Payments to be liquidated damages as a remedy for
Sellers after having considered carefully the anticipated and actual harms and
losses that would be incurred if Buyer defaults and thus fails to perform its
obligations to consummate the transactions contemplated hereunder, the
difficulty of ascertaining at this time the actual amount of damages, special
and general, that Sellers will suffer in such event, and the inconvenience or
nonfeasibility of otherwise obtaining an adequate remedy in such event;
provided, that the foregoing shall not be deemed to limit Buyer's obligation to
make, and Seller's right to receive, the Class A Makewell Payment and the Class
B Makewell Payment hereunder which, to the extent obligated pursuant hereto,
shall, together with the Deposit, constitute Sellers' sole and exclusive
remedies hereunder and as liquidated damages.
ARTICLE 15.
GENERAL PROVISIONS
15.1. Additional Actions, Documents and Information.
Buyer agrees that it will, at any time, prior to, at or
after the Closing Date, take or cause to be taken such further actions, and
execute, deliver and file or cause to be executed, delivered and filed such
further documents and instruments and obtain such consents, as may be reasonably
requested by Sellers in connection with the consummation of the purchase and
sale contemplated by this Agreement. Sellers agree that it will, at any time,
prior to, at or after the Closing Date, take or cause to be taken such further
actions, and execute, deliver and file or cause to be executed, delivered and
filed such further documents and instruments and obtain such consents, as may be
reasonably requested by Buyer in connection with the consummation of the
purchase and sale contemplated by this Agreement.
15.2. Brokers.
Sellers represent to Buyer that, except for the brokerage
fees payable to Sellers' Broker (which fees are solely the responsibility of
Sellers), Sellers have not engaged, or incurred any unpaid liability (for any
brokerage fees, finders' fees, commissions or otherwise) to, any broker, finder
or agent in connection with the transactions contemplated by this Agreement;
Buyer represents to Sellers that Buyer has not engaged, or incurred any unpaid
liability (for any brokerage fees, finders' fees, commissions or otherwise) to,
any broker, finder or agent in connection with the transactions contemplated by
this Agreement; and Sellers agree to indemnify Buyer, and Buyer agrees to
indemnify Sellers, against any claims asserted against the other parties for any
such fees or commissions by any person
<PAGE>
purporting to act or to have acted for or on behalf of the indemnifying party.
Notwithstanding any other provision of this Agreement, this representation and
warranty shall survive the Closing without limitation and shall not be subject
to the Basket Amount contained in Section 12.4.
15.3. Expenses and Taxes.
Each party hereto shall pay its own expenses incurred in
connection with this Agreement and in the preparation for and consummation of
the transactions provided for herein. Notwithstanding the foregoing, Buyer and
Sellers shall each pay one-half of (a) all sales (including, without limitation,
bulk sales), use, documentary, stamp, gross receipts, registration, transfer,
conveyance, excise, recording, license and other similar Taxes and fees
("Transfer Taxes") applicable to, imposed upon or arising out of the sale by
Seller and the purchase by Buyer of the Stations whether now in effect or
hereinafter adopted and regardless of which party such Transfer Tax is imposed
upon, (b) any FCC filing fees incurred in connection with the assignment of the
FCC Licenses to Buyer, (c) any fees and expenses incurred in connection with any
HSR Filings, and (d) the fees and expenses of Geraghty & Miller for the
environmental site assessments performed on the Real Property as disclosed on
Schedule 3.16.
15.4. Notices.
All notices, demands, requests, or other communications
which may be or are required to be given or made by any party to any other party
pursuant to this Agreement shall be in writing and shall be hand delivered,
mailed by first-class registered or certified mail, return receipt requested,
postage prepaid, delivered by overnight air courier, or transmitted by telegram,
telex, or facsimile transmission addressed as follows:
If to Buyer:
Sinclair Broadcast Group, Inc.
2000 W. 41st Street
Baltimore, Maryland 21211
Attn: David D. Smith, President
Fax: (410) 467-5043
<PAGE>
with a copy (which shall not constitute notice) to:
Thomas & Libowitz, P.A.
100 Light Street, Suite 1100
Baltimore, Maryland 21202
Attn: Steven A. Thomas, Esq.
Fax: (410) 752-2046
If to Sellers:
Heritage Media Corporation
13355 Noel Road
Suite 1500
Dallas, Texas 75240
Attn: David N. Walthall
Fax: (972) 702-7382
with a copy (which shall not constitute notice) to:
Crouch & Hallett, L.L.P.
717 North Harwood
14th Floor
Dallas, Texas 75201
Attn: Bruce H. Hallett, Esq.
Fax: (214) 453-3154
and to:
The News Corporation Limited
c/o News America Publishing Incorporated
1211 Avenue of the Americas
New York, New York 10036
Attn: Arthur M. Siskind, Esq.
Fax: (212) 768-2029
<PAGE>
with a copy (which shall not constitute notice) to:
Hogan & Hartson L.L.P.
555 Thirteenth Street, N.W.
Washington, D.C. 20004
Attn: William S. Reyner, Jr., Esq.
Fax: (202) 637-5910
or such other address as the addressee may indicate by written notice to the
other parties.
Each notice, demand, request, or communication which shall
be given or made in the manner described above shall be deemed sufficiently
given or made for all purposes at such time as it is delivered to the addressee
(with the return receipt, the delivery receipt, the affidavit of messenger or
(with respect to a telex) the answerback being deemed conclusive but not
exclusive evidence of such delivery) or at such time as delivery is refused by
the addressee upon presentation.
15.5. Waiver.
No delay or failure on the part of any party hereto in
exercising any right, power or privilege under this Agreement or under any other
instrument or document given in connection with or pursuant to this Agreement
shall impair any such right, power or privilege or be construed as a waiver of
any default or any acquiescence therein. No single or partial exercise of any
such right, power or privilege shall preclude the further exercise of such
right, power or privilege, or the exercise of any other right, power or
privilege. No waiver shall be valid against any party hereto unless made in
writing and signed by the party against whom enforcement of such waiver is
sought and then only to the extent expressly specified therein.
15.6. Benefit and Assignment.
15.6.1. No party hereto shall assign this Agreement, in
whole or in part, whether by operation of law or otherwise, without the prior
written consent of the other party hereto and any purported assignment contrary
to the terms hereof shall be null, void and of no force and effect; provided,
however, that the parties hereto acknowledge and agree that none of the
transactions contemplated under the Transfer Agreement or the Trust Agreement
shall constitute an assignment, in whole or in part, of any of the terms of this
Agreement; provided further, however, Buyer shall be entitled, without the
consent of Sellers, to assign its rights and interests hereunder (in whole or in
part as to any Station) to any direct or indirect wholly-owned subsidiary;
provided, however, that Buyer gives Sellers written notice
<PAGE>
thereof and such assignee shall be responsible for all representations,
covenants and agreements of Buyer hereunder as if such assignee was a party
hereto, and that any such assignment shall not relieve Buyer of any of its
Liabilities hereunder.
15.6.2. Sellers acknowledge and agree that at the Closing
for any Station, Buyer may require that Sellers transfer the Assets and
Liabilities of such Station to a third party designated in writing by Buyer (a
"Designee") at least ten (10) days prior to such Closing; provided, however,
that (a) such Designee shall on or prior to the Closing Date assume all Assumed
Liabilities with respect to the particular Station so transferred; (b) an FCC
Order shall have been issued on or prior to the Closing Date authorizing such
transfer; (c) the transfer to such Designee would not violate any Laws, (d) the
transfer to such Designee would not delay in any respect the date for the
Closing as required by the terms of this Agreement; (e) such transfer to a
Designee shall not relieve Buyer from any of its obligations hereunder; (f)
there shall be no assignment or transfer (actual or implied) of this Agreement
to the Designee; (g) Sellers shall have no Liabilities to any such Designee
under this Agreement, any Seller Document or otherwise; and (h) such Designee
shall deliver to the Sellers a written certificate, pursuant to which the
Designee acknowledges and agrees for the benefit of Sellers to the terms and
conditions of the designation as described herein. The parties shall cooperate
in all reasonable respects in making any modifications to the closing documents
and deliveries that may be necessary or appropriate in connection with the
transfer of Assets and Liabilities of any Station to any Designee pursuant to
this Section 15.6.2.
15.6.3. This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective successors and assigns
as permitted hereunder. No Person, other than the parties hereto, is or shall be
entitled to bring any action to enforce any provision of this Agreement against
any of the parties hereto, and the covenants and agreements set forth in this
Agreement shall be solely for the benefit of, and shall be enforceable only by,
the parties hereto or their respective successors and assigns as permitted
hereunder.
15.7. Entire Agreement; Amendment.
This Agreement, including the Schedules and Exhibits hereto
and the other instruments and documents referred to herein or delivered pursuant
hereto, contains the entire agreement among the parties with respect to the
subject matter hereof and supersedes all prior oral or written agreements,
commitments or understandings with respect to such matters. No amendment,
modification or discharge of this Agreement shall be valid or binding unless set
forth in writing and duly executed by each of the parties hereto and News Corp.
<PAGE>
15.8. Severability.
If any part of any provision of this Agreement or any other
contract, agreement, document or writing given pursuant to or in connection with
this Agreement shall be invalid or unenforceable under applicable law, such part
shall be ineffective to the extent of such invalidity or unenforceability only,
without in any way affecting the remaining parts of such provisions or the
remaining provisions of said contract, agreement, document or writing.
15.9. Headings.
The headings of the sections and subsections contained in
this Agreement are inserted for convenience only and do not form a part or
affect the meaning, construction or scope thereof.
15.10. Governing Law.
This Agreement, the rights and obligations of the parties
hereto, and any claims or disputes relating thereto, shall be governed by and
construed under and in accordance with the laws of the State of New York,
excluding the choice of law rules thereof.
15.11. Signature in Counterparts.
This Agreement may be executed in separate counterparts,
none of which need contain the signatures of all parties, each of which shall be
deemed to be an original, and all of which taken together constitute one and the
same instrument. It shall not be necessary in making proof of this Agreement to
produce or account for more than the number of counterparts containing the
respective signatures of, or on behalf of, all of the parties hereto.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has executed
this Asset Purchase Agreement, or has caused this Asset Purchase Agreement to be
duly executed and delivered in its name on its behalf, all as of the day and
year first above written.
WEAR-TV, LTD.
By: /s/ David N. Walthall
-------------------------------------
Name: David N. Walthall
Title: President and Chief Executive Officer
ROLLINS TELECASTING, INC.
By:: /s/ David N. Walthall
-------------------------------------
Name: David N. Walthall
Title: President and Chief Executive Officer
WNNE-TV, INC.
By:: /s/ David N. Walthall
-------------------------------------
Name: David N. Walthall
Title: President and Chief Executive Officer
KOKH, INC.
By:: /s/ David N. Walthall
-------------------------------------
Name: David N. Walthall
Title: President and Chief Executive Officer
[SIGNATURES CONTINUED ON THE FOLLOWING PAGE]
<PAGE>
WCHS, LTD.
By:: /s/ David N. Walthall
-------------------------------------
Name: David N. Walthall
Title: President and Chief Executive Officer
WVAE-FM, INC.
By:: /s/ David N. Walthall
-------------------------------------
Name: David N. Walthall
Title: President and Chief Executive Officer
KCFX-FM, INC.
By:: /s/ David N. Walthall
-------------------------------------
Name: David N. Walthall
Title: President and Chief Executive Officer
[SIGNATURES CONTINUED ON THE FOLLOWING PAGE]
<PAGE>
HERITAGE-WISCONSIN BROADCASTING CORP.
By:: /s/ David N. Walthall
-------------------------------------
Name: David N. Walthall
Title: President and Chief Executive Officer
KKSN, INC.
By:: /s/ David N. Walthall
-------------------------------------
Name: David N. Walthall
Title: President and Chief Executive Officer
WBBF, INC.
By:: /s/ David N. Walthall
-------------------------------------
Name: David N. Walthall
Title: President and Chief Executive Officer
WIL MUSIC, INC.
By:: /s/ David N. Walthall
-------------------------------------
Name: David N. Walthall
Title: President and Chief Executive Officer
[SIGNATURES CONTINUED ON THE FOLLOWING PAGE]
<PAGE>
KIHT-FM, INC.
By:: /s/ David N. Walthall
-------------------------------------
Name: David N. Walthall
Title: President and Chief Executive Officer
SINCLAIR BROADCAST GROUP, INC.
By: /s/ David Smith
-------------------------------------
Name: David Smith
Title: President
<PAGE>
ANNEX I-3
ANNEX I
DEFINITIONS
"Account Sale" shall have the meaning set forth in Section
2.6.4.
"Accounting Firm" shall have the meaning set forth in
Section 2.8.3.
"Accounts Receivable" means all cash accounts receivable
with respect to the Stations as of the end of the broadcast day immediately
preceding the Closing Date; provided, however, that (i) if Sellers shall have
received a Class A 100% Payment, the Accounts Receivable for the Class A
Stations for which a Closing has not occurred shall mean all cash accounts
receivable with respect to such Class A Stations as of the end of the broadcast
day immediately preceding the Class A Payment Date, and (ii) if Sellers shall
have received a Class B Payment, the Accounts Receivable for the Class B
Stations for which a Closing has not occurred shall mean all cash accounts
receivable with respect to the Class B Stations as of the end of the broadcast
day immediately preceding the Class B Payment Date.
"Additional Agreements" shall have the meaning set forth in
Section 6.1.6.
"Affiliate" shall mean, with respect to any Person, any
other Person that, (a) directly or indirectly is in control of, is controlled
by, or is under common control with, the first Person, (b) is an officer,
director, trustee, partner (general or limited), employee or holder of five
percent (5%) or more of any class of any voting or non-voting securities or
other equity in the first Person, (c) is an officer, director, trustee, partner
(general or limited), employee or holder of five percent (5%) or more of any
class of the voting or non-voting securities or other equity in any Person which
directly or indirectly is in control of, is controlled by, or is under common
control with, the first Person, and (d) any Family of any individual included in
(a), (b) or (c). For purposes of this definition, "control" (including with
correlative meanings "controlled by" and "under common control with") shall mean
possession, directly or indirectly, of either (X) five percent (5%) or more of
the voting power of the securities having ordinary voting power for the election
of directors of the first Person, or (Y) the power to direct or cause the
direction of the management or policies of the first Person (whether through
ownership of securities, partnership interests or any other ownership or debt
interests, by contract or otherwise).
"Antitrust Laws" means the Sherman Act, as amended, the
Clayton Act, as amended, the HSR Act, the Federal Trade Commission Act, as
amended, and all other federal and state statutes, rules, regulations, orders,
decrees, administrative and judicial doctrines, and other laws that are designed
or intended to prohibit, restrict or regulate actions having the purpose or
effect of monopolization or restraint of trade.
<PAGE>
"Applicant" shall have the meaning set forth in Section
4.5.2.
"Appraisal Firm" shall have the meaning set forth in Section
2.9.3.
"Appraisal Report" shall have the meaning set forth in
Section 2.9.3.
"Assets" shall have the meaning set forth in Section 2.1.
"Assignment of Contracts and Leases" means that certain
Assignment of Contracts and Leases, dated as of the Closing Date and executed by
Sellers, substantially in the form attached hereto as Exhibit D.
"Assignment of FCC Licenses" means that certain Assignment
of FCC Licenses, dated as of the Closing Date and executed by Sellers,
substantially in the form attached hereto as Exhibit C.
"Assumed Liabilities" shall have the meaning set forth in
Section 2.10.3.
"Assumption Agreement" means that certain Assumption
Agreement, dated the Closing Date and executed by Buyer and Sellers,
substantially in the form attached hereto as Exhibit E.
"Balance Sheet" shall have the meaning set forth in Section
3.5.1.
"Base Purchase Price" shall have the meaning set forth in
Section 2.4.
"Basket Amount" shall have the meaning set forth in Section
12.4.2.
"Benefit Arrangement" means any benefit arrangement,
obligation, custom, or practice, whether or not legally enforceable, to provide
benefits, other than salary, as compensation for services rendered, to present
or former directors, employees, agents, or independent contractors, other than
any obligation, arrangement, custom or practice that is a Plan, including,
without limitation, employment agreements, executive compensation arrangements,
incentive programs or arrangements, sick leave, vacation pay, plant closing
benefits, salary continuation for disability, consulting, or other compensation
arrangements, workers' compensation, retirement, deferred compensation, bonus,
stock option or purchase, hospitalization, medical insurance, life insurance,
tuition reimbursement or scholarship programs, perquisite, company cars, any
plans subject to Code Section 125, and any plans providing benefits or payments
in the event of a change of control, change in ownership, or sale of a
substantial portion (including all or substantially all) of the assets of any
business or portion thereof, in each case with respect to any present or former
employees, directors, or agents.
<PAGE>
"Benefit Plans" shall have the meaning set forth in Section
3.14.1.
"Bill of Sale" means that certain Bill of Sale and
Assignment of Assets, dated as of the Closing Date and executed by Sellers,
substantially in the form attached hereto as Exhibit B.
"Buyer Documents" shall mean, collectively, this Agreement,
the Deposit Escrow Agreement and the Assumption Agreement.
"Buyer's Plan" shall have the meaning set forth in Section
8.4.6.
"Class A 80% Payment" shall have the meaning set forth in
Section 2.6.1.
"Class A 80% Payment Date" shall have the meaning set forth
in Section 2.6.1.
"Class A 100% Payment" shall have the meaning set forth in
Section 2.6.2.
"Class A 100% Payment Date" shall have the meaning set forth
in Section 2.6.2.
"Class A Deposit" shall have the meaning set forth in
Section 2.6.2(a).
"Class A Interim Period" shall have the meaning set forth in
Section 2.6.3.
"Class A Makewell Closing" shall have the meaning set forth
in Section 2.6.5.
"Class A Makewell Payment" shall have the meaning set forth
in Section 2.6.5.
"Class A Payment" shall have the meaning set forth in
Section 2.6.2.
"Class A Payment Date" shall have the meaning set forth in
Section 2.6.2.
"Class A Stations" shall mean WEAR, WFGX, WPTZ, WFFF, WNNE,
KOKH, WCHS, the Portland Stations and the Rochester Stations.
"Class A Stations' Cash Flow" shall have the meaning set
forth in Section 2.6.3.
<PAGE>
"Class B Deposit" shall have the meaning set forth in
Section 2.7.3.
"Class B Interim Period" shall have the meaning set forth in
Section 2.7.4.
"Class B Makewell Closing" shall have the meaning set forth
in Section 2.7.2.
"Class B Makewell Payment" shall have the meaning set forth
in Section 2.7.2.
"Class B Payment" shall have the meaning set forth in
Section 2.7.1.
"Class B Payment Date" shall have the meaning set forth in
Section 2.7.3.
"Class B Stations" shall mean the Norfolk Stations, the
Kansas City Stations, KQRC, the Milwaukee Stations, the St. Louis Stations and
KIHT.
"Class B Stations' Cash Flow" shall have the meaning set
forth in Section 2.7.4.
"Closing" means a closing of the purchase, assignment and
sale of Assets contemplated hereunder.
"Closing Date" shall have the meaning set forth in Section
11.1.1.
"Code" means the Internal Revenue Code of 1986, as amended,
and all Laws promulgated pursuant thereto or in connection therewith.
"Communications Act" means the Communications Act of 1934,
as amended.
"Cost of Carry" shall be equal to the sum of all expenses
incurred, or liabilities reasonably assumed or discharged, by Sellers or any of
their Affiliates, in connection with the business or operation of any Station,
including any Taxes, professional fees and expenses, payments to employees,
agents, customers, vendors of any Station and capital expenditures in the
Ordinary Course of Business in respect of any Station during any Interim Period.
For purposes of computing any Taxes relevant to the determination of Cost of
Carry, Sellers and their Affiliates shall each be assumed to be a corporation
that is fully taxable on all of its income or gains at the highest applicable
marginal rates for the Taxes at issue.
"Current Balance Sheet Date" shall have the meaning set
forth in Section 3.5.2.
<PAGE>
"Default Amount" shall mean, as of the date of any
determination the amount equal to (a) the Deposit less (b) ten percent (10%) of
the portion of the Purchase Price which has been received by Sellers.
"Deferred Contract" shall have the meaning set forth in
Section 6.2.10.
"Delayed 80% Station" shall have the meaning set forth in
Section 2.6.1.
"Delayed 100% Station" shall have the meaning set forth in
Section 2.6.2(b).
"Deposit" shall have the meaning set forth in Section 2.3.
"Deposit Escrow Agent" means Citibank, N.A.
"Deposit Escrow Agreement" means that certain Escrow
Agreement dated as of the date hereof by and among Buyer, Heritage Sellers, News
America Publishing Incorporated. and the Deposit Escrow Agent, in the form of
Exhibit A attached hereto.
"Deposit Release Date" shall mean the earlier to occur of
the following: (a) the date that Sellers have received the entire Class A 100%
Payment (less any amount of the Deposit allocable to any Station with respect to
which this Agreement has been terminated pursuant to Section 8.2 or Section
2.6.2), and (b) the date on which the Closings for all of the Class A Stations
(other than those Stations with respect to which this Agreement has been
terminated pursuant to Section 8.2 or Section 2.6.2) shall have occurred.
"Designated Properties" shall have the meaning set forth in
Section 6.2.10.
"Designee" shall have the meaning set forth in Section
15.6.2.
"Disposition Expenses" shall mean all costs, fees, expenses
and other amounts incurred or payable, directly or indirectly, by Sellers, the
Trustee and/or News Corp. (or any Affiliate of Sellers or News Corp.), in
connection with the disposition of any Stations pursuant to an Account Sale or a
Makewell Sale, including, without limitation, (i) all reasonable legal,
accounting, brokerage and other professional fees, costs and expenses incurred
for the benefit of any such Person, (ii) all Taxes payable by any such Person or
any such Station, including, without limitation, sales and transfer taxes
applicable to, imposed upon or arising out of such Account Sale or Makewell
Sale, as the case may be, or (iii) all filing, registration and other similar
fees and expenses paid by or on behalf of any such
<PAGE>
Person, including, without limitation, any such fees and expenses paid pursuant
to Hart-Scott-Rodino and the Communications Act or the rules, regulations,
policies of the FTC and the FCC. For purposes of computing any Taxes relevant to
the determination of Disposition Expenses, Sellers, the Trustee and/or News
Corp. (or any Affiliate of Sellers or News Corp.) shall each be assumed to be a
corporation that is fully taxable on all of its income or gains at the highest
applicable marginal rates for the Taxes at issue.
"DMA" means the designated market area for a particular
television or radio station as determined by the A.C. Nielsen Co.
"Encumbrances" mean any mortgages, pledges, liens, security
interests, defects in title, easements, rights-of-way, encumbrances,
restrictions and any other matters affecting title.
"Environmental Laws" means the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, ("CERCLA") as amended by the
Superfund Amendments and Reauthorization Act of 1986 ("SARA"), 42 U.S.C. ss.
9601 et seq.; the Toxic Substances Control Act ("TSCA"), 15 U.S.C. ss. 2601 et
seq.; the Hazardous Materials Transportation Act, 49 U.S.C. ss. 1802 et seq.;
the Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. ss. 9601 et seq.;
the Clean Water Act ("CWA"), 33 U.S.C. ss. 1251 et seq.; the Safe Drinking Water
Act, 42 U.S.C. ss. 300f et seq.; the Clean Air Act ("CAA"), 42 U.S.C. ss. 7401
et seq.; or any other applicable federal, state, or local laws relating to
Hazardous Materials generation, production, use, storage, treatment,
transportation or disposal, or the protection of the environment from Hazardous
Materials
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and all Laws promulgated pursuant thereto or in connection
therewith.
"ERISA Affiliate" means any person that, together with any
Seller, would be or was prior to March 17, 1997 treated as a single employer
under Section 414 of the Code or Section 4001 of ERISA.
"Excluded Assets" shall have the meaning set forth in
Section 2.2.
"Family" shall mean of an individual includes (a) the
individual, (b) the individual's spouse and former spouses and any other natural
person who resides with such individual, (c) any other natural person who is
related to the individual or any person described in the preceding clause (b)
within the second degree.
"FCC" means the Federal Communications Commission.
<PAGE>
"FCC Applications" shall have the meaning set forth in
Section 5.1.
"FCC Licenses" shall have the meaning set forth in Section
2.1.1.
"FCC Order" means an order or orders of the FCC, or of the
Chief, Mass Media Bureau of the FCC, acting under delegated authority,
consenting to the assignment to Buyer of the FCC Licenses for the Stations.
"Final Proration Amount" shall have the meaning set forth in
Section 2.8.3.
"FTC" means the Federal Trade Commission.
"Governmental Authority" means any agency, board, bureau,
court, commission, department, instrumentality or administration of the United
States government, any state government or any local or other governmental body
in a state, territory or possession of the United States or the District of
Columbia.
"Hart-Scott-Rodino" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and all Laws promulgated pursuant thereto
or in connection therewith.
"HSR Filing" shall have the meaning set forth in Section
5.2.
"Hazardous Materials" means any wastes, substances, or
materials (whether solids, liquids or gases) that are deemed hazardous, toxic,
pollutants, or contaminants, including without limitation, substances defined as
"hazardous wastes," "hazardous substances," "toxic substances," "radioactive
materials," or other similar designations in, or otherwise subject to regulation
under, any Environmental Laws.
"Heritage Sellers" means the Sellers and the New Orleans
Seller.
"Heritage Stations" means the Stations and the New Orleans
Stations.
"Indemnified Party" and "Indemnifying Party" shall have the
respective meanings set forth in Section 12.5.1.
"Indemnity Cap" shall have the meaning set forth in Section
12.4.2.
"Intellectual Property" shall have the meaning set forth in
Section 2.1.4.
<PAGE>
"Laws" means any federal, state or local law, statute, code,
ordinance, regulation, order, writ, injunction, judgment or decree applicable to
the specified Person and to the businesses and assets thereof.
"Leased Property" shall have the meaning set forth in
Section 2.1.2(b).
"Liabilities" shall mean, as to any Person, all debts,
adverse claims, liabilities and obligations, direct, indirect, absolute or
contingent of such Person, whether accrued, vested or otherwise, whether in
contract, tort, strict liability or otherwise and whether or not actually
reflected, or required by generally accepted accounting principles to be
reflected, in such Person's balance sheets or other books and records.
"Losses" means any and all demands, claims, complaints,
actions or causes of action, suits, proceedings, investigations, arbitrations,
assessments, losses, damages, liabilities, obligations (including those arising
out of any action, such as any settlement or compromise thereof or judgment or
award therein) and any costs and expenses, including, without limitation,
reasonable attorneys' fees and disbursements.
"Makewell Sale" shall have the meaning set forth in Section
2.6.5.
"Material Adverse Effect" means a material adverse effect on
the business, assets or financial condition of the Heritage Stations taken as a
whole, except for any such material adverse effect resulting from (a) general
economic conditions applicable to the television or radio broadcast industry,
(b) general conditions in the markets in which the Heritage Stations operate,
(c) circumstances that are not likely to recur and either have been
substantially remedied or can be substantially remedied without substantial cost
or delay, or (d) the refusal by Buyer to consent to any new Program Contract.
"Merger" shall have the meaning set forth in the Recitals.
"Merger Agreement" shall have the meaning set forth in the
Recitals.
"Multiemployer Plan" means any Plan described in Section
3(37) of ERISA.
"New Orleans Agreement" means that certain Asset Purchase
Agreement dated as of the date hereof by and between the New Orleans Seller and
the Buyer pursuant to which the New Orleans Seller has agreed to sell, and the
Buyer has agreed to purchase the New Orleans Stations.
<PAGE>
"New Orleans Seller" means Heritage Broadcasting Group,
Inc., a Delaware corporation.
"New Orleans Stations" means the radio broadcast stations
WBYU(AM), New Orleans, Louisiana, WEZB(FM), New Orleans, Louisiana, and
WRNO(FM), New Orleans, Louisiana.
"Operating Contracts" shall have the meaning set forth in
Section 2.1.8.
"Ordinary Course of Business" means, with respect to each
Seller, the ordinary course of business consistent with past practices of such
Seller both with respect to type and amount; any actions taken pursuant to the
requirements of law or contracts existing on the date hereof shall be deemed to
be action in the Ordinary Course of Business.
"Payment" shall mean either a Class A Payment or a Class B
Payment.
"Payment Date" shall have the meaning set forth in Section
2.7.3.
"Permitted Encumbrances" means (a) Encumbrances of a
landlord, or other statutory lien not yet due and payable, or a landlord's liens
arising in the Ordinary Course of Business, (b) Encumbrances arising in
connection with equipment or maintenance financing or leasing under the terms of
the Station Contracts set forth on the Schedules which have been made available
to Buyer, (c) Encumbrances arising pursuant to the terms of leases on Real
Property or Leased Property as set forth on Schedule 2.1.1 and Schedule 2.1.8
which are subject to any lease or sublease to a third party, (d) Encumbrances
for Taxes not yet due and payable or which are being contested in good faith and
by appropriate proceedings if adequate reserves with respect thereto are
maintained on Seller's books in accordance with generally accepted accounting
principles, (e) Encumbrances that do not materially detract from the value of
any of the Assets or materially interfere with the use thereof as currently
used, or (f) those Encumbrances on Schedule 3.8.
"Person" shall mean any individual, corporation,
partnership, limited liability company, joint venture, trust, unincorporated
organization, other form of business or legal entity or Governmental Authority.
"Plan" means any plan, program or arrangement, whether or
not written, that is or was an "employee benefit plan" as such term is defined
in Section 3(3) of ERISA and (a) which was or is established or maintained by
any Seller or any ERISA Affiliate of a Seller; (b) to which Seller contributed
or was
<PAGE>
obligated to contribute or to fund or provide benefits or had any liability
(whether actual or contingent) with respect to any of its assets or otherwise;
or (c) which provides or promises benefits to any person who performs or who has
performed services for Sellers and because of those services is or has been (i)
a participant therein or (ii) entitled to benefits thereunder.
"Program Contracts" shall have the meaning set forth in
Section 2.1.5.
"Proration Amount" shall have the meaning set forth in
Section 2.8.1.
"Proration Items" shall mean any power and utility charges,
business and license fees (including retroactive adjustments thereof), sales and
service charges, commissions, special assessments, and rental payments and
personal and real estate Taxes and assessments with respect to the Real
Property, taxes (except for Taxes arising from the transfer of the Assets
hereunder), deposits, Trade-out Agreements, accrued vacation, unused sick leave
and other similar prepaid and deferred items and any other operating expenses
incurred in the Ordinary Course of Business (except with respect to Program
Contracts, only those payments due and payable during the month in which the
Closing occurs shall be prorated). The parties acknowledge and agree that there
shall be excluded from Proration Items the following: (a) severance pay relating
to any employee of any Seller who shall have been terminated prior to the
Closing Date, and (b) any Liabilities not being assumed by Buyer in accordance
with Section 2.10.
"Purchase Price" shall have the meaning set forth in Section
2.4.
"Qualified Plan" means a Plan that satisfies, or is intended
by any Seller to satisfy, the requirements for tax qualification described in
Section 401 of the Code including, without limitation, any Plan that was
terminated on or after July 1, 1989, as to which any Seller may have any actual
or contingent liability.
"Radio Group" shall mean the Radio Stations in the same DMA.
"Radio Stations" shall mean the Norfolk Stations, the Kansas
City Stations, the Milwaukee Stations, the Portland Stations, the Rochester
Stations, the St. Louis Stations and KIHT.
"Real Property" shall have the meaning set forth in Section
2.1.2(a).
"Represented Employees" shall have the meaning set forth in
Section 8.4.5.
<PAGE>
"Restricted Contracts" shall have the meaning set forth in
Section 6.2.10.
"Retained General Manager" shall have the meaning set forth
in Section 8.4.9.
"Schedules" shall mean the disclosure schedules delivered by
Seller to Buyer in connection herewith.
"Seller Documents" shall mean, collectively, this Agreement,
the Deposit Escrow Agreement, the Assignment of Contracts and Leases, the Bill
of Sale, the Assignment of FCC Licenses, and the Assumption Agreement.
"Seller Tax Returns" means all federal, state, local,
foreign and other applicable Tax returns, declarations of estimated Tax reports
required to be filed by any of Seller (without regard to extensions of time
permitted by law or otherwise).
"Sellers' Broker" means Allen & Company Incorporated and RP
Companies, Inc.
"Sellers' Plan" shall have the meaning set forth in Section
8.4.6.
"Station Contracts" shall have the meaning set forth in
Section 2.1.8.
"Stations" shall mean, collectively, the Class A Stations
and the Class B Stations.
"Subject Party" shall mean any Seller, the Trustee, News
Corp., any Affiliate of News Corp., HMI Broadcasting Corporation, Heritage Media
or the Merger Sub.
"Subject Station" shall have the meaning set forth in
Section 11.1.1.
"Taxes" means all federal, state and local taxes (including,
without limitation, income, profit, franchise, sales, use, real property,
personal property, ad valorem, excise, employment, social security and wage
withholding taxes) and installments of estimated taxes, assessments,
deficiencies, levies, imports, duties, license fees, registration fees,
withholdings, or other similar charges of every kind, character or description
imposed by any Governmental Authorities.
"TBA" means any time brokerage agreement, local marketing
arrangement, joint sales agreement, joint operating agreement, limited
management agreement or other similar agreement or contract.
<PAGE>
"Television Stations" shall mean WEAR, WFGX, WPTZ, WFFF,
WNNE, KOKH, and WCHS.
"Time Sales Agreements" shall have the meaning set forth in
Section 2.1.7.
"Trade-out Agreements" shall have the meaning set forth in
Section 2.1.6.
"Transfer Taxes" shall have the meaning set forth in Section
15.3.
"Transferred Employees" shall have the meaning set forth in
Section 8.4.1.
"Welfare Plan" means an "employee welfare benefit plan" as
such term is defined in Section 3(1) of ERISA.
<PAGE>
SCHEDULES
Schedule 2.1.1 FCC Licenses
Schedule 2.1.2 Real Property Interests
Schedule 2.1.3 Tangible Personal Property
Schedule 2.1.5 Program Contracts
Schedule 2.1.6 Trade-out Agreements
Schedule 2.1.8 Other Operating Contracts
Schedule 2.1.9 Vehicles
Schedule 2.2.12 Excluded Assets
Schedule 3.4 Consents
Schedule 3.6 Absence of Certain Changes or Events
Schedule 3.7 Litigation
Schedule 3.8 Encumbrances on Assets
Schedule 3.9 FCC Matters
Schedule 3.14 Employee Benefit Plans
Schedule 3.15 Employee Matters
Schedule 3.16 Environmental Matters
Schedule 3.17 Insurance
Schedule 4.5.1 Buyer Stations
<PAGE>
EXHIBITS
EXHIBIT A Form of Deposit Escrow Agreement
EXHIBIT B Form of Bill of Sale and Assignment of Assets
EXHIBIT C Form of Assignment of FCC Licenses
EXHIBIT D Form of Assignment of Contracts and Leases
EXHIBIT E Form of Assumption Agreement
EXHIBIT F Form of Retention Agreement
EXHIBIT G Form of Opinion of Hogan & Hartson L.L.P.
EXHIBIT 11
SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
(UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS
JUNE 30, ENDED
JUNE 30,
1996 1997 1996 1997
-------------------------------------------------
<S> <C> <C> <C> <C>
Weighted-average number of common shares.... 34,750 34,639 34,750 34,746
Dilutive effect of outstanding stock options 150 12 80 12
Dilutive effect of conversion of preferred
shares.................................... 1,425 4,139 716 4,155
-------------------------------------------------
Weighted-average number of common and
common Equivalent shares outstanding...... 36,325 38,790 35,546 38,913
=================================================
Net income (loss)........................... $ 1,969 $ 1,792 1,511 (5,822)
=================================================
Net income (loss) per common share......... $ 0.05 $ 0.05 $ 0.04 $ (0.17)
=================================================
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> US DOLLAR
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<EXCHANGE-RATE> 1
<CASH> 2,740
<SECURITIES> 0
<RECEIVABLES> 102,093
<ALLOWANCES> 2,781
<INVENTORY> 0
<CURRENT-ASSETS> 156,110
<PP&E> 156,681
<DEPRECIATION> 8,340
<TOTAL-ASSETS> 1,762,505
<CURRENT-LIABILITIES> 165,438
<BONDS> 400,000
200,000
11
<COMMON> 348
<OTHER-SE> 232,279
<TOTAL-LIABILITY-AND-EQUITY> 1,762,505
<SALES> 0
<TOTAL-REVENUES> 239,571
<CGS> 0
<TOTAL-COSTS> 191,580
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 51,993
<INCOME-PRETAX> (9,922)
<INCOME-TAX> 4,100
<INCOME-CONTINUING> (5,822)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,822)
<EPS-PRIMARY> (0.17)
<EPS-DILUTED> 0
</TABLE>
