Initial Public Offering (IPO): Registration Statement (General Form) — Form S-1
Filing Table of Contents
Document/Exhibit Description Pages Size
1: S-1 Form S-1 - Acme Communications, Inc. 157 718K
2: EX-10.29 Joint Sales Agmt Dated 4/23/99 - Dp Media, Inc. 9 38K
3: EX-10.30 Option Agreement 4/23/99 - Dp Media, Inc. 12 48K
4: EX-10.40 Amend No.1 to 1st Amended & Restated Credit Agmt 12 43K
5: EX-10.41 Amend No.2 to 1st Amended & Restated Credit Agmt 6 20K
6: EX-10.42 Amend No.3 to 1st Amended & Restated Credit Agmt 9 31K
7: EX-10.43 Amend No.4 to 1st Amended & Restated Credit Agmt 10 36K
8: EX-10.53 Amended & Restated Investment and Loan Agreement 66 302K
9: EX-10.54 Form of Convertible Debenture Due June 30, 2008 3 13K
10: EX-10.60 Lease Agt 1/1/97 Btwn Tom Winter & Vcy/America Inc 8 27K
11: EX-10.61 Assignment & Assumption Lease - 10/6/97 3 14K
12: EX-10.62 Assignment & Assumption of Lease 4/23/99 3 14K
13: EX-10.71 Bridge Loan Agreement Dated 4/23/99 14 57K
14: EX-21.0 Subsidiaries of the Registrant 1 8K
15: EX-23.2 Consent of Kpmg Peat Marwick-Koplar Communications 1 7K
16: EX-23.3 Consent of Kpmg Peat Marwick Re: Channel 32, Inc. 1 7K
17: EX-27.1 Financial Data Schedule 1 9K
EX-10.53 — Amended & Restated Investment and Loan Agreement
Exhibit Table of Contents
| Page | (sequential) | | | | (alphabetic) | Top |
|---|
| | |
- Alternative Formats (Word, et al.)
- Section 10. Indemnification
- Section 11. Definitions
- Section 12. General
- Section 1. Terms of Purchase; Payment Terms
- Section 2. Representations and Warranties of the Company
- Section 3. Closing Conditions of Investors
- Section 4. Financial and Principal Operating Covenants
- Section 5. Operating and Reporting Covenants
- Section 6. Sales Covenant and Fcc Cooperation
- Section 7. Events of Default; Remedies
- Section 8. Representations and Warranties of the Lenders and the Investors
- Section 9. Intercreditor Matters
- TCW Leveraged Income
- TCW Shared Opportunity
- 1.1 Purchase and Sale
- 12.10 No Event of Default
- 12.1 Amendments, Waivers and Consents
- 12.2 Survival of Covenants; Assignability of Rights
- 12.3 Governing Law; Limitation of Litigation; Dispute Resolution
- 12.4 Section Headings
- 12.5 Counterparts
- 12.6 Notices and Demands
- 12.7 Severability
- 12.8 Expenses
- 12.9 Integration
- 1.2 Terms of the Debentures
- 1.3 Terms of the Investor Units and the Class B Founder Units
- 1.4 Purchase Right on Additional Securities
- 1.5 Put Right
- 1.6 Refinancing
- 2.10 Absence of Undisclosed Liabilities
- 2.11 Absence of Certain Developments
- 2.12 Accounts Receivable
- 2.13 Title to Properties
- 2.14 Tax Matters
- 2.15 Contracts and Commitments
- 2.16 Intellectual Property
- 2.17 Litigation and Compliance with Laws
- 2.18 Investment Company
- 2.19 Employee Benefit Programs
- 2.1 Organization, Existence and Authority
- 2.20 Labor Laws
- 2.21 Solvency
- 2.22 Environmental Matters
- 2.23 Information Supplied to Lenders and Investors
- 2.24 Broker's Fee
- 2.25 Offerees
- 2.26 Anti-Israel Boycott
- 2.27 Transactions with Affiliates
- 2.28 Small Business Concern, Etc
- 2.2 Authorization
- 2.3 Non-Contravention
- 2.4 Ownership
- 2.5 Subsidiaries
- 2.6 Financial Statements; Projections
- 2.7 Acquisition Transactions
- 2.8 Licenses, Permits, etc
- 2.9 FCC Licenses
- 3.10 SBIC Deliveries
- 3.11 Representations and Warranties
- 3.1 Opinions of Company Counsel
- 3.2 Authorization
- 3.3 Delivery of Documents
- 3.4 No Violation or Injunction
- 3.5 No Litigation
- 3.6 No Adverse Change
- 3.7 Lenders and Investors Approval
- 3.8 All Proceedings Satisfactory
- 3.9 Satisfactory Due Diligence
- 4.10 No Amendments to Organizational Documents or this Agreement
- 4.11 Restrictions on Other Agreements
- 4.12 Change in Senior Management
- 4.13 Annual Updates; Number of Members; Use of Proceeds; Regulatory Violation; Economic Impact Information Amendment
- 4.1 Indebtedness
- 4.2 Liens
- 4.3 Capital Expenditures
- 4.4 Revenue and EBITDA Levels
- 4.5 Issuance of Securities
- 4.6 Equity Interest Distributions and Redemptions; Debt Payments
- 4.7 Change of Control
- 4.8 Affiliated Transactions
- 4.9 Sale of Assets and Certain Fundamental Changes
- 5.11 FCC Licenses
- 5.1 Financial Statements; Minutes
- 5.2 Existence, Foreign Qualification and Conduct of Business
- 5.3 Payment of Taxes, Compliance with Laws, Etc
- 5.4 Adverse Changes
- 5.5 Insurance
- 5.6 Maintenance of Properties
- 5.7 Employee Matters
- 5.8 Budget and Strategic Plan
- 5.9 Pending Acquisition Documents, Additional Instruments and Assurance
- 6.1 Sales Covenant
- 6.2 FCC Cooperation
- 7.1 Events of Default
- 7.2 Remedies on Default, Etc
- 8.1 Representation of the Lenders and the Investors
|
| 1 | 1st Page - Filing Submission
|
| 6 | Section 1. Terms of Purchase; Payment Terms
|
| " | 1.1 Purchase and Sale
|
| 7 | 1.2 Terms of the Debentures
|
| 8 | 1.3 Terms of the Investor Units and the Class B Founder Units
|
| " | 1.4 Purchase Right on Additional Securities
|
| 10 | 1.5 Put Right
|
| 12 | 1.6 Refinancing
|
| " | Section 2. Representations and Warranties of the Company
|
| " | 2.1 Organization, Existence and Authority
|
| 13 | 2.2 Authorization
|
| " | 2.3 Non-Contravention
|
| " | 2.4 Ownership
|
| 14 | 2.5 Subsidiaries
|
| " | 2.6 Financial Statements; Projections
|
| " | 2.7 Acquisition Transactions
|
| 15 | 2.8 Licenses, Permits, etc
|
| " | 2.9 FCC Licenses
|
| 16 | 2.10 Absence of Undisclosed Liabilities
|
| " | 2.11 Absence of Certain Developments
|
| 17 | 2.12 Accounts Receivable
|
| " | 2.13 Title to Properties
|
| " | 2.14 Tax Matters
|
| 18 | 2.15 Contracts and Commitments
|
| 19 | 2.16 Intellectual Property
|
| " | 2.17 Litigation and Compliance with Laws
|
| 20 | 2.18 Investment Company
|
| " | 2.19 Employee Benefit Programs
|
| 21 | 2.20 Labor Laws
|
| " | 2.21 Solvency
|
| " | 2.22 Environmental Matters
|
| 22 | 2.23 Information Supplied to Lenders and Investors
|
| 23 | 2.24 Broker's Fee
|
| " | 2.25 Offerees
|
| " | 2.26 Anti-Israel Boycott
|
| " | 2.27 Transactions with Affiliates
|
| " | 2.28 Small Business Concern, Etc
|
| 24 | Section 3. Closing Conditions of Investors
|
| " | 3.1 Opinions of Company Counsel
|
| " | 3.2 Authorization
|
| 25 | 3.3 Delivery of Documents
|
| 26 | 3.4 No Violation or Injunction
|
| " | 3.5 No Litigation
|
| " | 3.6 No Adverse Change
|
| 27 | 3.7 Lenders and Investors Approval
|
| " | 3.8 All Proceedings Satisfactory
|
| " | 3.9 Satisfactory Due Diligence
|
| 28 | 3.10 SBIC Deliveries
|
| " | 3.11 Representations and Warranties
|
| " | Section 4. Financial and Principal Operating Covenants
|
| 29 | 4.1 Indebtedness
|
| 30 | 4.2 Liens
|
| 31 | 4.3 Capital Expenditures
|
| " | 4.4 Revenue and EBITDA Levels
|
| 32 | 4.5 Issuance of Securities
|
| " | 4.6 Equity Interest Distributions and Redemptions; Debt Payments
|
| " | 4.7 Change of Control
|
| " | 4.8 Affiliated Transactions
|
| 33 | 4.9 Sale of Assets and Certain Fundamental Changes
|
| " | 4.10 No Amendments to Organizational Documents or this Agreement
|
| " | 4.11 Restrictions on Other Agreements
|
| " | 4.12 Change in Senior Management
|
| 34 | 4.13 Annual Updates; Number of Members; Use of Proceeds; Regulatory Violation; Economic Impact Information Amendment
|
| 35 | Section 5. Operating and Reporting Covenants
|
| " | 5.1 Financial Statements; Minutes
|
| 36 | 5.2 Existence, Foreign Qualification and Conduct of Business
|
| " | 5.3 Payment of Taxes, Compliance with Laws, Etc
|
| " | 5.4 Adverse Changes
|
| 37 | 5.5 Insurance
|
| " | 5.6 Maintenance of Properties
|
| " | 5.7 Employee Matters
|
| " | 5.8 Budget and Strategic Plan
|
| " | 5.9 Pending Acquisition Documents, Additional Instruments and Assurance
|
| 38 | 5.11 FCC Licenses
|
| " | Section 6. Sales Covenant and Fcc Cooperation
|
| " | 6.1 Sales Covenant
|
| 40 | 6.2 FCC Cooperation
|
| 41 | Section 7. Events of Default; Remedies
|
| 42 | 7.1 Events of Default
|
| 44 | 7.2 Remedies on Default, Etc
|
| " | Section 8. Representations and Warranties of the Lenders and the Investors
|
| " | 8.1 Representation of the Lenders and the Investors
|
| 46 | Section 9. Intercreditor Matters
|
| " | Section 10. Indemnification
|
| 48 | Section 11. Definitions
|
| 52 | Section 12. General
|
| " | 12.1 Amendments, Waivers and Consents
|
| 53 | 12.2 Survival of Covenants; Assignability of Rights
|
| 54 | 12.3 Governing Law; Limitation of Litigation; Dispute Resolution
|
| " | 12.4 Section Headings
|
| " | 12.5 Counterparts
|
| 55 | 12.6 Notices and Demands
|
| 57 | 12.7 Severability
|
| " | 12.8 Expenses
|
| 58 | 12.9 Integration
|
| " | 12.10 No Event of Default
|
| 65 | TCW Shared Opportunity
|
| " | TCW Leveraged Income
|
EXHIBIT 10.53
ACME TELEVISION HOLDINGS, LLC
----------------------
AMENDED AND RESTATED INVESTMENT AND LOAN AGREEMENT
----------------------
Dated June 17, 1997, as amended
and restated on
September 30, 1997
ACME Television Holdings, LLC
Investment and Loan Agreement
Dated June 17, 1997, as amended
and restated on
September __, 1997
INDEX
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Page
SECTION 1. TERMS OF PURCHASE; PAYMENT TERMS.................................................................2
1.1 Purchase and Sale................................................................................2
1.2 Terms of the Debentures..........................................................................3
1.3 Terms of the Investor Units and the Class B Founder Units........................................5
1.4 Purchase Right on Additional Securities..........................................................5
1.5 Put Right........................................................................................6
1.6 Refinancing......................................................................................8
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY....................................................8
2.1 Organization, Existence and Authority............................................................9
2.2 Authorization....................................................................................9
2.3 Non-Contravention................................................................................9
2.4 Ownership.......................................................................................10
2.5 Subsidiaries....................................................................................10
2.6 Financial Statements; Projections...............................................................11
2.7 Acquisition Transactions........................................................................11
2.8 Licenses, Permits, etc..........................................................................12
2.9 FCC Licenses....................................................................................12
2.10 Absence of Undisclosed Liabilities..............................................................13
2.11 Absence of Certain Developments.................................................................13
2.12 Accounts Receivable.............................................................................13
2.13 Title to Properties.............................................................................13
2.14 Tax Matters. ...................................................................................14
2.15 Contracts and Commitments.......................................................................15
2.16 Intellectual Property...........................................................................16
2.17 Litigation and Compliance with Laws.............................................................16
2.18 Investment Company..............................................................................17
2.19 Employee Benefit Programs.......................................................................17
2.20 Labor Laws......................................................................................18
2.21 Solvency........................................................................................18
2.22 Environmental Matters...........................................................................18
2.23 Information Supplied to Lenders and Investors...................................................19
(i)
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2.24 Broker's Fee....................................................................................20
2.25 Offerees........................................................................................20
2.26 Anti-Israel Boycott.............................................................................20
2.27 Transactions with Affiliates....................................................................20
2.28 Small Business Concern, Etc.....................................................................20
SECTION 3. CLOSING CONDITIONS OF INVESTORS.................................................................21
3.1 Opinions of Company Counsel.....................................................................21
3.2 Authorization...................................................................................22
3.3 Delivery of Documents...........................................................................22
3.4 No Violation or Injunction......................................................................24
3.5 No Litigation...................................................................................24
3.6 No Adverse Change...............................................................................24
3.7 Lenders and Investors Approval..................................................................24
3.8 All Proceedings Satisfactory....................................................................24
3.9 Satisfactory Due Diligence......................................................................25
3.10 SBIC Deliveries.................................................................................25
3.11 Representations and Warranties..................................................................25
SECTION 4. FINANCIAL AND PRINCIPAL OPERATING COVENANTS.....................................................26
4.1 Indebtedness....................................................................................26
4.2 Liens...........................................................................................27
4.3 Capital Expenditures............................................................................28
4.4 Revenue and EBITDA Levels.......................................................................29
4.5 Issuance of Securities..........................................................................29
4.6 Equity Interest Distributions and Redemptions; Debt Payments....................................29
4.7 Change of Control...............................................................................30
4.8 Affiliated Transactions.........................................................................30
4.9 Sale of Assets and Certain Fundamental Changes..................................................30
4.10 No Amendments to Organizational Documents or this Agreement.....................................31
4.11 Restrictions on Other Agreements................................................................31
4.12 Change in Senior Management.....................................................................31
4.13 Annual Updates; Number of Members; Use of Proceeds; Regulatory Violation;
Economic Impact Information Amendment...........................................................31
SECTION 5. OPERATING AND REPORTING COVENANTS...............................................................33
5.1 Financial Statements; Minutes...................................................................33
5.2 Existence, Foreign Qualification and Conduct of Business........................................34
5.3 Payment of Taxes, Compliance with Laws, Etc.....................................................34
5.4 Adverse Changes.................................................................................34
5.5 Insurance.......................................................................................34
5.6 Maintenance of Properties.......................................................................35
(ii)
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5.7 Employee Matters................................................................................35
5.8 Budget and Strategic Plan.......................................................................35
5.9 Pending Acquisition Documents, Additional Instruments and Assurance.............................35
5.10 Management Rights...............................................................................35
5.11 FCC Licenses....................................................................................36
SECTION 6. SALES COVENANT AND FCC COOPERATION..............................................................36
6.1 Sales Covenant..................................................................................36
6.2 FCC Cooperation.................................................................................38
SECTION 7. EVENTS OF DEFAULT; REMEDIES.....................................................................40
7.1 Events of Default...............................................................................40
7.2 Remedies on Default, Etc........................................................................41
SECTION 8. REPRESENTATIONS AND WARRANTIES OF THE LENDERS AND THE
INVESTORS.......................................................................................42
8.1 Representation of the Lenders and the Investors.................................................42
SECTION 9. INTERCREDITOR MATTERS...........................................................................43
SECTION 10. INDEMNIFICATION.................................................................................43
SECTION 11. DEFINITIONS.....................................................................................45
SECTION 12. GENERAL.........................................................................................50
12.1 Amendments, Waivers and Consents................................................................50
12.2 Survival of Covenants; Assignability of Rights..................................................50
12.3 Governing Law; Limitation of Litigation; Dispute Resolution.....................................51
12.4 Section Headings................................................................................52
12.5 Counterparts....................................................................................52
12.6 Notices and Demands.............................................................................52
12.7 Severability....................................................................................54
12.8 Expenses........................................................................................54
12.9 Integration.....................................................................................55
12.10 No Event of Default.............................................................................55
(iii)
AMENDED AND RESTATED
INVESTMENT AND LOAN AGREEMENT
AGREEMENT made on the 17th day of June, 1997 as amended and restated on
September __, 1997 by and among ACME TELEVISION HOLDINGS, LLC, a Delaware
limited liability company (the "Company"), Jamie Kellner, individually
("Kellner"), Douglas Gealy, individually ("Gealy"), Thomas Allen, individually
("Allen" and together with Kellner and Gealy, the "Management"), CEA CAPITAL
PARTNERS USA, L.P., a Delaware limited partnership ("CEA"), CEA ACME, INC., a
Delaware corporation ("CEA INC."), ALTA COMMUNICATIONS VI, L.P., a Delaware
limited partnership ("ALTA VI"), ALTA SUBORDINATED DEBT PARTNERS III, L.P., a
Delaware limited partnership, ("ALTA SDP"), ALTA-COMM S BY S, LLC, a Delaware
limited liability company ("ALTA S BY S"), ALTA ACME, INC., a Delaware
corporation ("ALTA INC."), BANCBOSTON VENTURES INC., a Massachusetts corporation
("BancBoston"), TCW SHARED OPPORTUNITY FUND II, L.P. ("TCW Shared Opportunity")
and LINC ACME, Corporation ("LINC", and together with CEA INC., ALTA INC.,
BancBoston and TCW Shared Opportunity, the "Investors"). CEA, ALTA VI, ALTA SDP,
ALTA S BY S and TCW LEVERAGED INCOME TRUST, L.P. ("TCW Leveraged Income"),
collectively referred to herein as the "Lenders." Unless otherwise expressly
stated herein or unless the context otherwise requires, all references to the
Company shall include all subsidiaries on a consolidated basis.
WITNESSETH
WHEREAS, subject to the terms and conditions hereof, (i) the Company has
agreed to sell and the Lenders and the Investors have agreed to purchase certain
Convertible Debentures (the "Debentures," which term shall also include any
securities delivered in exchange or replacement for any of them), (ii) the
Company has agreed to sell and the Investors have agreed to purchase certain
units of membership interests in the Company (the "Investor Units," which term
shall also include any securities delivered in exchange for any of them), and
(iii) the Company has agreed to sell and the Lenders and the Investors have
agreed to purchase Class B Founder Units of the Company;
WHEREAS, the proceeds from the sale and purchase of the Debentures, the
Investor Units and the Class B Founder Units being issued on the date hereof and
issued from time to time shall be used by the Company to fund the acquisition
(the "Station Acquisitions") of the FCC Licenses and all other assets (the
"Station Assets") used in the operation of broadcast television stations (the
"Stations") located in a number of locations, as approved from time to time by
the Lenders and the Investors as set forth in this Agreement, which such
Stations are intended to operate as affiliates of The WB Television Network
Partners, L.P., dba The WB Television Network (the "WB Network"); and
WHEREAS, the Lenders and the Investors desire to have the right to
purchase additional Debentures and Investor Units in the future to fund any
future Station Acquisitions.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
SECTION 1. TERMS OF PURCHASE; PAYMENT TERMS
1.1 Purchase and Sale.
(a) Sale and Purchase; Initial Closing. Subject to and in reliance
upon the representations, warranties, terms and conditions of this Agreement,
the Company agrees to issue and sell to CEA, ALTA VI, ALTA SDP and ALTA S BY S
(the "Initial Lenders") and CEA INC., ALTA INC. and BancBoston (the "Initial
Investors"), and the Initial Lenders and the Initial Investors, respectively,
agree to purchase, Debentures, Investor Units and the Class B Founder Units for
an aggregate purchase price of $21,000,000. Such purchase and sale shall take
place at a closing (the "Initial Closing") to be held at such place, on such
date (the "Initial Closing Date"), and at such time and in such manner as shall
be mutually agreed upon by the Company, the Initial Lenders and the Initial
Investors. At the Initial Closing, the Company will issue the Debentures, the
Investor Units and the Class B Founder Units as set forth in Schedule I hereto
against delivery to the Company of a certified or bank cashier's check or wire
transfer of the purchase price set forth opposite the name of each Initial
Lender and Initial Investor on Schedule I hereto (the "Purchase Price"). The
Investor Units and the Class B Founder Units issued hereunder or upon conversion
of the Debentures, shall be as described in and subject to the terms of the
Company's Limited Liability Company Agreement (the "LLC Agreement"), as amended
attached hereto as Exhibit A. In addition, contemporaneously with the sale of
the Debentures, the Investor Units and the Class B Founder Units hereunder, the
Company has agreed to issue and sell certain membership interests of the Company
designated as Seller Units to Channel 32 Incorporated, certain membership
interests of the Company designated as Management Capital Units and certain
membership interests of the Company designated as Management Carry Units to the
Management and certain membership interests of the Company designated as
Founders Units to certain other persons and entities, in each case as defined
in, and in accordance and subject to, the terms of the LLC Agreement.
(b) Use of Proceeds. The Company agrees to use the full net
proceeds from the sale of the Debentures, the Investor Units and the Class B
Founder Units issued at the Initial Closing solely to fund the payment of the
cash purchase price for the acquisition of Station Assets for broadcast
television station KWBP-TV located in Salem, Oregon (the "Oregon Acquisition")
and related transaction fees, expenses and working capital. The Company agrees
to use the net proceeds from the sale of Debentures, the Investor Units and the
Class B Founder Units issued at the Subsequent Closing to fund the payment of
the cash purchase price of the Pending Acquisitions and related transaction
fees, expenses and working capital.
(c) Sale and Purchase; Subsequent Closing. Subject to and in
reliance upon the representations, warranties, terms and conditions of this
Agreement, the Company agrees to issue and sell to the Lenders and the
Investors, and the Lenders and the Investors, respectively, agree to purchase,
Debentures, Investor Units and the Class B Founder Units for an aggregate
purchase price of $14,371.849. Such purchase and sale shall take place at a
closing (the "First Subsequent Closing") to be held at such place, on such date
(the "First Subsequent Closing Date"), and at such time and in such manner as
shall be mutually agreed upon by the Company, the Lenders and the Investors. At
the First Subsequent Closing, the Company will issue the
2
Debentures, the Investor Units and Class B Founder Units as set forth in
Schedule II hereto against delivery to the Company of a certified or bank
cashier's check or wire transfer of the purchase price set forth opposite the
name of each Lender and Investor on Schedule II hereto (the "Purchase Price").
The Investor Units and the Class B Founder Units issued hereunder or upon
conversion of the Debentures, shall be as described in and subject to the terms
of the Company's Limited Liability Company Agreement (the "LLC Agreement"), as
amended attached hereto as Exhibit A.
1.2 Terms of the Debentures. The Debentures shall be dated the date of
issuance, be in the form of Exhibit B hereto, and have the following terms:
(a) Interest. The Debentures shall bear interest on the unpaid
principal amount thereof from the date of issuance thereof at the rate of ten
percent (10%) per annum, which interest shall accrue daily and compound annually
on December 31st and shall be due and payable on any payment of the Debentures,
whether as a result of maturity, prepayment, acceleration or otherwise. For
purposes of this Agreement, all interest and amounts that accrue and compound
thereon shall be hereinafter referred to as the "Interest."
(b) Principal Payments. The principal balance of the Debentures,
without set-off, deduction or counterclaim, together in each case with all
accrued Interest thereon, shall be due and payable in full on June 30, 2008.
(c) Conversion. The principal amount of, including accrued
interest on, the Debentures held by each of the Lenders are convertible in whole
into membership interests of the Company designated as Investor Units at the
election of such Lender. The Capital Contribution (as such term is defined in
the LLC Agreement) attributable to the Investor Units issued upon conversion of
the Debentures shall be equal to the principal amount of the Debentures and the
holders of such Investor Units shall be entitled to receive any Preferential
Capital Distributions (as such term is defined in the LLC Agreement) or other
distributions made after the date of their conversion as if they held such
Investor Units from the date of the initial issuance of their Debentures;
provided, however, that the aggregate Preferential Capital Distributions payable
on such Investor Units for the period through the date of conversion shall not
exceed the principal amount of the Debentures plus all accrued but unpaid
interest thereon at the per annum rate of nine percent (9%), compounded
annually, less any interest actually paid on the Debentures prior to conversion.
Upon conversion of the Debentures in accordance with this subsection (c), the
Debentures shall be cancelled and the Company shall have no further obligation
in respect thereof. Upon the delivery of the Debentures to the Company, marked
cancelled, the Lenders shall be deemed to be members of the Company holding
their respective Investor Units. The Company shall take all other action that
the Lenders request to evidence and effectuate the Lenders becoming members of
the Company holding Investor Units. The Company has authorized and has reserved
and covenants to continue to reserve, a sufficient number of Investor Units for
issuance upon conversion of the Debentures.
(d) Payments on the Debentures. All payments of principal of and
accrued Interest on the Debentures shall be made by the Company in lawful money
of the United States of America in immediately available funds not later than
12:00 p.m., Boston time, on the date
3
such payment is due, or, if such date is not a Business Day, then on the next
succeeding Business Day, at the address of the Lenders stated in Schedule I
hereto or, at such other addresses of which the Company shall have received
written notice or, at the Company's or any Lender's election, by crediting such
Lender's account at a bank designated by such Lender in writing to the Company.
(e) Prepayment. The outstanding principal amount of the Debentures
may be prepaid, in whole or in part, together with all accrued and unpaid
interest thereon at the option of the Company or as provided in Section 1.6
hereof; provided, however, that in connection with any prepayment of the
Debentures and notwithstanding anything in this Agreement to the contrary, the
holders of Investor Units shall be entitled to redeem a portion of their
Investor Units which together with any Debentures held by them and being prepaid
is comparable to the portion of the Debentures being prepaid.
(f) Stay, Extension and Usury Laws. For so long as any of the
Debentures remain outstanding, the Company covenants (to the extent that it may
lawfully do so) that it will not at any time insist upon, plead, or in any
manner whatsoever claim or take the benefit or advantage of any stay, extension
or usury law wherever enacted, now or at any time hereafter in force, which may
affect the covenants or the performance of this Agreement; and the Company (to
the extent that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law and covenants that it will not, by resort to any such
law, hinder, delay or impede the execution of any power herein granted to the
Lenders, but will suffer and permit the execution of every such power as though
no such law has been enacted.
Notwithstanding anything herein or in the Debentures which may be to the
contrary, in no event, contingency, or circumstances whatsoever shall the
interest or any amount deemed to be interest payable by the Company hereunder
with respect to the Debentures exceed the maximum amount permitted by applicable
law and, to the extent that any payments in excess of such permitted amount are
finally determined to have been received by the Lenders, such excess shall be
considered payments in respect of the principal of the Debentures and, if the
principal of the Debentures has been paid in full, shall be refunded to the
Company. All sums paid or agreed to be paid to the Lenders for the use,
forbearance, or detention of the Debentures shall, to the extent permitted by
law, be amortized, prorated, allocated, and spread throughout the entire term of
the Debentures.
1.3 Terms of the Investor Units and the Class B Founder Units. The
Investor Units and the Class B Founder Units to be issued pursuant to this
Agreement shall be issued in accordance with and subject to the terms of the LLC
Agreement.
1.4 Purchase Right on Additional Securities.
(a) The Company agrees that it will not sell or issue any
membership interests in the Company ("Membership Interests"), or bonds,
certificates of indebtedness, debentures or other securities convertible into or
exchangeable for Membership Interests, or options, warrants or rights carrying
any rights to purchase Membership Interests ("Additional Securities"), other
than Senior Debt or High-Yield Debt permitted under Section 4.1 hereof,
Management Carry
4
Units, the Seller Units and the Founder Units (as those terms are defined in the
LLC Agreement) issued in accordance with the terms of this Agreement, unless the
issuance of such Additional Securities has been authorized under Section 4.5
hereof. In order to sell any Additional Securities, the Company shall first
submit a written offer (the "Sales Offer") to each of the Lenders and Investors
and the holders of Management Capital Units and Founder Units identifying the
terms of the proposed sale (including cash price, number or aggregate principal
amount of securities and all other material terms) and offers each of them the
opportunity to purchase its pro rata share of the Additional Securities, which
shall be determined based upon their relative Non-Carry Distribution Percentages
(as defined in the LLC Agreement and determined on an as converted basis, the
"Pro Rata Share") and subject to increase for over-allotment ratably among the
participating parties if any party does not fully exercise its rights hereunder.
The Sales Offer shall specify the total principal amount of capital which the
Company intends to raise, the Station Acquisition to be funded with such
capital, the capital expenditures or other matters to be financed with such
capital, the proposed closing date for such financing (each a "Subsequent
Closing"), any exceptions contemplated to a bring-down of the representations,
warranties and covenants set forth in this Agreement after giving effect to
consummation of such Station Acquisition, and five year projections for such
Pending Acquisition (as such term is defined in Section 2.2 hereof) as well as
five year projections and a balance sheet for the Company on a pro forma basis
which shall be based upon the Company's then current financial condition and the
then current projections which have been delivered to, and accepted by, the
Lenders and the Investors after giving effect to such Pending Acquisition and
any related financing ("Pending Acquisition Pro Formas"). The Lenders, the
Investors and the holders of Management Capital Units and Founder Units shall
have a period of 30 days from receipt of the Sales Offer during which the
Company's offer shall remain open and irrevocable. Any Additional Securities so
offered which are not purchased pursuant to such Sales Offer may be sold to a
third party on terms and conditions, including price, not more favorable to the
third party than those set forth in such Sales Offer at any time within 90 days
following the date of such offer, but may not be sold to any other person or
after such 90- day period without renewed compliance with this Section 1.4.
(b) Notwithstanding anything in Section 1.4(a) or elsewhere in
this Agreement, until the Lenders and the Investors shall have purchased
Debentures and/or Investor Units with an aggregate purchase price equal to
$53,333,334, (i) the Additional Securities offered to the Lenders and the
Investors shall be Debentures and Investor Units having the same terms as the
Debentures and Investor Units issued at the Initial Closing, with the Lenders
and the Investors having the right to purchase Debentures or Investor Units, at
their option, (ii) the holders of Management Capital Units and Founder Units
shall not have the right to receive a Sales Offer or to purchase any Additional
Securities hereunder, (iii) the obligation of the Lenders and the Investors to
purchase Debentures and Investor Units with respect to any Sales Offer they have
accepted shall be conditioned upon the fulfillment of the conditions set forth
in Section 1.4(c), and (iv) if the Lenders and the Investors holding a majority
in interest of the Debentures and Investor Units (determined on an as converted
basis) accept any Sales Offer and any of the other Lenders and/or Investors do
not purchase their Future Financing Percentage (as set forth in Schedule III
hereto) of the Additional Securities, the accepting Lenders and Investors have a
right of over-allotment and, to the extent such Additional Securities are not
fully subscribed for by the accepting Lenders and/or Investors, such Lenders and
Investors shall have the right to
5
designate third party institutional investors to whom such Additional Securities
may be sold. The third party designated to purchase such Additional Securities
shall be subject to the consent of a majority in Capital Contributions of the
holders of Management Capital Units and Founder Units, which consent shall not
be unreasonably withheld.
(c) The purchase of any Additional Securities by the Lenders and
by the Investors is subject to the fulfillment of the following conditions on or
before such purchase: (a) the Company shall have furnished to the Lenders and
the Investors the Sales Offer; (b) the Company shall have delivered to the
Lenders and the Investors the agreements, documents and instruments required to
be delivered pursuant to Section 3.3(b); (c) the Company shall have complied
with all of the conditions set forth in Sections 3.1, 3.2 and 3.4 through 3.9,
3.10 and 3.11; (d) the Company shall have executed and delivered to the Lenders
and the Investors any Additional Securities purchased at such Subsequent
Closing; and (e) the full net proceeds from the sale of Additional Securities
shall be used solely for the purposes set forth in the Sales Offer, including
the acquisition of Stations, and such purposes shall have been authorized in
accordance with the terms of this Agreement.
Each of the Lenders and the Investors, respectively, may assign or Transfer (as
defined in the LLC Agreement) its rights under this Section 1.4 to any Affiliate
of such Lender or Investor which thereupon shall be deemed a "Lender" or an
"Investor" hereunder, as the case may be.
1.5 Put Right.
(a) Exercise of Put. The Company irrevocably grants to the Lenders
and the Investors the right (the "Put Option") to require the Company to
purchase all of the Debentures, Class B Founder Units and/or Investor Units then
held by any such Lender or Investor. The Put Option may be exercised (i) by
holders of a majority in interest of the Class B Founder Units, Debentures and
the Investor Units (determined on an as converted basis) with respect to all of
the Debentures, Class B Founder Units and Investor Units, at any time after the
occurrence of a Sales Event (as defined in the LLC Agreement) or any other sale
of the Company or all or substantially all of the assets of the Company or (ii)
by a majority in interest of the Lenders with respect to the Debentures held by
the Lenders, within three (3) months of the maturity date for the Debentures.
The exercising parties (the "Put Parties") shall deliver a written notice of
exercise (the "Put Notice") to the Company, which shall include their proposal
as to the Put Price (as defined below).
(b) Determination of Put Price. The cash consideration to be paid
to the Put Parties upon exercise of the Put Option (the "Put Price") shall be an
amount equal to the aggregate amount the Put Parties would have received on
account of their Debentures and/or Investor Units (treating all Debentures on an
as converted basis) upon a hypothetical liquidation of the Company following a
sale of all or substantially all of the assets of the Company for an aggregate
cash sale price equal to the Net Equity Value of the Company.
"Net Equity Value" of the Company shall mean the greater of (a) the fair
market value of the Company as determined below (whether in connection with a
Sale Transaction (as defined below), by agreement of the parties or pursuant to
appraisal) and (b) if the Put Option occurs or
6
results in connection with a recapitalization, refinancing or similar
transaction with respect to the Company, the aggregate value ascribed to the
Company in such transaction. In connection with a Put Option occurring or
resulting in connection with a sale or transfer to a third party of all or
substantially all of the membership interests or assets of the Company or a
merger or consolidation of the Company with or into another Person (a "Sale
Transaction"), the Net Equity Value of the Company shall be an amount in cash
equal to the aggregate consideration paid or payable (taking into account an
appropriate discount factor for any deferred consideration) to the Company, its
senior executives and the holders of outstanding membership interests in the
Company as consideration for such membership interests or assets, regardless of
how such consideration is paid. In the event that the Put Option does not occur
or result in connection with a Sale Transaction, for a period of fifteen (15)
days following delivery of the Put Notice, the Put Parties and the Company shall
in good faith seek to reach agreement as to the fair market value of the
Company. If the Put Parties and the Company reach such agreement, such fair
market value shall be the fair market value of the Company for purposes of this
Section 1.5. If the Put Parties and the Company are unable to reach agreement
within such 15-day period, the fair market value of the Company shall be
determined by an appraisal process and the Company and the Put Parties shall,
within three (3) Business Days after the expiration of such 15-day period, each
select an independent, non-affiliated investment banking firm of recognized
national standing or a brokerage firm having not less than five (5) years of
experience in the television broadcasting industry (each an "Independent
Appraiser"). Within twenty (20) days after selection, each Independent Appraiser
shall prepare and deliver to the Company, the Lenders and the Investors an
appraisal of the fair market value of the Company in accordance with the terms
set forth below and, in the absence of manifest error or fraud and so long as
the lower appraisal is no less than 90% of the higher appraisal, the two
appraisals shall be averaged and the result shall be the fair market value of
the Company. If the lower appraisal is less than 90% of the higher appraisal,
the two Independent Appraisers shall, within three (3) Business Days thereafter,
choose a third Independent Appraiser who shall deliver its own appraisal of the
fair market value of the Company within twenty (20) days thereafter. The two
appraisals that are closest in value shall then be averaged and the result
shall, in the absence of manifest error or fraud, be the fair market value of
the Company (unless the third appraisal is equal to the average of the first two
appraisals, in which case it shall be the fair market value of the Company). All
appraisals hereunder will appraise the fair market value of the Company (i) as a
going concern and without regard to the lack of marketability or illiquidity of
the Company's securities or other considerations relating to the nonpublic
status of the Company's securities, (ii) on the basis of what a willing buyer,
with recourse to any necessary financing, would pay to a willing seller who is
under no compunction to sell, (iii) assuming a form of transaction which will
maximize such value and (iv) taking into account the current and anticipated
developments in the regulatory environment. All costs of any appraisals shall be
borne by the Company. If the Company fails to meet its obligations under this
Section 1.5 by the date of the Put Closing, the Put Parties shall continue to
have all of the rights and benefits of this Agreement until the Net Equity Value
has been determined and their Debentures and Investor Units have been
repurchased in full.
(c) Closings After Exercise of Put Option. The closing of the
purchase and sale of any Debentures and/or Investor Units following exercise of
the Put Option (the "Put Closing") shall take place at 10:00 A.M. (Boston time)
on the earlier of (i) a date mutually agreed by the Company and the Put Parties
and (ii) the 120th day (or if such date is not a Business Day,
7
on the next succeeding Business Day) following receipt by the Company of the Put
Notice, at the offices of Alta Communications, Inc., as agent for the Put
Parties.
At the Put Closing, each Put Party shall deliver to the Company its Debentures
and/or Investor Units with duly executed stock powers or other appropriate
instruments of assignment attached, and the Company shall deliver to each Put
Party in cash or by wire transfer of clearing house funds the purchase price for
the Debentures and/or Investor Units, plus interest thereon at the rate of ten
percent (10%) per annum from the date of the Put Notice.
1.6 Refinancing. In the event that by June 30, 1998, the Company has not
completed any Station Acquisitions other than the Oregon Acquisition and/or does
not have applications pending before the FCC regarding the acquisition of three
(3) or more television broadcast stations, Lenders and the Investors holding a
majority in interest of the Debentures and the Investor Units shall have the
right to require the Company to promptly secure Bank Debt or High-Yield Debt (as
such terms are defined in Section 4.1 hereof) in an amount sufficient to prepay
fifty percent (50%) of the Debentures and redeem fifty percent (50%) of the
Investor Units, the Seller Units, the Management Capital Units and the Founder
Units and to effect such prepayment and redemption.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
In order to induce the Lenders and the Investors to enter into the
Agreement, the Company hereby agrees with the Lenders and the Investors and
represents and warrants to the Lenders and the Investors, as of June 30, 1997,
after giving effect to the Oregon Acquisition and the transactions contemplated
hereby and in the LLC Agreement as effected on June 30, 1997, that:
2.1 Organization, Existence and Authority. The Company has been duly
formed and is validly existing as a limited liability company in good standing
under the laws of Delaware. The Company is qualified to do business in each
jurisdiction in which such qualification is required and the failure to so
qualify would have a material adverse effect on the financial condition or
results of operations of the Company. The Company has all requisite
organizational power and authority to conduct its business as presently
conducted and to enter into, execute, deliver and perform all of its duties and
obligations under this Agreement and all related instruments and agreements
executed in connection herewith. A true and complete copy of the Company's
Certificate of Formation (the "Certificate"), as amended to date, certified by
the Secretary of State of Delaware, and of the LLC Agreement, as amended to
date, certified by the Company's Secretary have previously been delivered to the
Lenders and the Investors, are complete and correct, and no amendments thereto
are pending. The Company is not in violation of any term of its Certificate or
the LLC Agreement, or, in any material respect, of any term of any agreement,
instrument, judgment, decree, order, statute, any rule or government regulation
applicable to the Company or to which the Company is a party, which would, in
any individual instance, or in any series of related instances, have a material
adverse effect on the Company.
8
2.2 Authorization. This Agreement and all documents and instruments
executed by the Company pursuant hereto, including the Debentures and the
Investor Units, are valid and binding obligations of the Company, enforceable in
accordance with their terms, except as the enforcement thereof may be limited by
bankruptcy and other laws of general application relating to creditor's rights
or general principles of equity. The execution, delivery and performance of this
Agreement and all documents and instruments contemplated hereby, the issuance
and delivery of the Debentures and the issuance of, the Investor Units, the
Seller Units, the Management Capital Units, the Management Carry Units, the
Founders Units and any securities issuable upon conversion thereof have been
duly authorized by all necessary corporate action of the Company. No consent,
approval or authorization of, or designation, declaration or filing with, any
Governmental Authority or other person or entity is required to be obtained by
the Company in connection with the execution, delivery and performance of this
Agreement or the issuance, delivery, payment, redemption or conversion of the
Debentures or of the Investor Units in accordance with the terms of this
Agreement, or the performance or consummation of the Oregon Acquisition, except
for such as shall be obtained or made prior to and effective as of the
applicable closing of such acquisition.
2.3 Non-Contravention. The execution, delivery and performance by the
Company of this Agreement and the other agreements executed pursuant hereto and
the consummation of the transactions contemplated hereby including without
limitation the issuance and delivery of the Debentures and the Investor Units,
do not and will not: (a) conflict with or result in any default under any
material contract, obligation or commitment of the Company or any provision of
the Certificate, the LLC Agreement, or corporate restriction applicable to it;
(b) result in the creation of any lien, charge or encumbrance of any nature upon
any of the properties or assets of the Company; or (c) violate any instrument,
agreement, judgment, decree or order, or any statute, rule or regulation of any
federal, state or local government or agency, applicable to the Company or to
which the Company is a party.
2.4 Ownership. Schedule 2.4 sets forth the capitalization of the Company,
including all equity and debt interests and warrants, options or other rights to
purchase or acquire, or which are convertible into, the same, (i) immediately
after giving effect to the contribution of the assets required pursuant to the
Oregon Acquisition, and (ii) immediately after the execution and delivery of the
LLC Agreement in the form attached hereto as Exhibit A and the execution of this
Agreement, the agreements related hereto and contemplated hereby and the
performance of the transactions contemplated hereby and thereby. To the
Company's knowledge, all such ownership interests of the respective members are
owned, of record and beneficially, by the applicable owner free and clear of any
adverse claims, liens, encumbrances or other restrictions other than as
specifically provided herein or in the documents contemplated hereby or in the
LLC Agreement. Except as set forth in the LLC Agreement, the Company has not
issued any warrants, options or other rights to purchase or acquire any of, or
any securities convertible into, or options to acquire securities convertible
into, any membership interest in the Company or any capital stock or any other
equity interest of the Company's members, and, except as provided in the LLC
Agreement and in this Agreement, the Company does not have any obligations to
repurchase or redeem any of its outstanding membership interests.
9
2.5 Subsidiaries. Except as provided in Schedule 2.5, the Company does
not own or have, nor has it previously owned or had, any direct or indirect
interest in, control over or loan or advance to, any Person, corporation,
partnership, joint venture or other entity of any kind. Each of the subsidiaries
of the Company on Schedule 2.5, is a duly organized, validly existing limited
liability company in good standing under the laws of the state in which such
subsidiary was formed and is duly qualified to do business as a foreign limited
liability company and in good standing in each jurisdiction in which the failure
to be so qualified could have a material adverse effect on the Company. Each
subsidiary on Schedule 2.5 has full organizational power and authority to own or
lease its properties and to conduct their businesses as currently conducted. All
of the ownership interests in the subsidiaries are owned beneficially and of
record by the Company and/or a wholly-owned subsidiary of the Company, free of
any Liens and said ownership interests have been duly and validly issued and are
outstanding, fully paid and non-assessable. The copies of the organizational
documents of the subsidiaries set forth on Schedule 2.5, as amended to date,
which have been furnished to counsel for the Lenders and the Investors prior to
the date hereof are complete and correct, and no amendments thereto are pending.
None of the subsidiaries are in violation of any term of their respective
organizational documents. There are no outstanding warrants, options or other
rights to purchase or acquire any ownership interests in any of the Company's
subsidiaries, or any outstanding securities convertible into such interests or
outstanding warrants, options or other rights to acquire any such convertible
securities.
2.6 Financial Statements; Projections. The Company has heretofore
furnished to the Lenders and the Investors statements of operation and the
related balance sheets for the fiscal year ended December 31, 1996, for Channel
32 Incorporated, the previous owner of the assets acquired pursuant to the
Oregon Acquisition, and Management's five year projections for the Company, a
copy of each of which is attached hereto as Schedule 2.6. Nothing has come to
the attention of the Management of the Company since such dates which would
indicate that the financial statements for Channel 32 Incorporated were not true
and correct in all material respects as of the date thereof. The projections for
Pending Acquisitions and the Pending Acquisition Pro Formas provided pursuant to
Section 5.1 shall be true and correct when delivered. The projections included
in Schedule 2.6 hereto and any Pending Acquisition Pro Formas subsequently
provided pursuant to Section 5.1 represent and/or shall represent the Company's
good faith estimates of the Company's future performance based upon assumptions
which are set forth therein and which the Company in good faith believes were
reasonable when made and continue to believe to be reasonable and the Company
makes no other representations in respect of such projections.
2.7 Acquisition Transactions.
(a) The Company represents and warrants that the Oregon
Acquisition has been consummated in accordance with the terms of the Asset
Purchase Agreement attached as Exhibit D-1. The Company represents and warrants
that the copies of the Asset Purchase Agreement and the Management Agreement in
connection with the Oregon Acquisition, as attached hereto as Exhibit D-1, are
true, complete, in full force and effect without amendment, modification or
waiver (except as previously disclosed to the Investors and the Lenders in
10
writing), have not been breached by any of the parties thereto or amended or
superseded and are valid, binding and enforceable obligations of the respective
parties thereto.
(b) Attached hereto as Exhibit D-2 are all of the letters of
intent, purchase and sale agreements, time brokerage, local marketing and
programming agreements, escrow agreements, deposit agreements and all such other
material agreements to which the Company is a party and which are currently in
effect with respect to any proposed Station Acquisitions by the Company. The
Company represents and warrants that neither the Company nor any of its
Affiliates have any other agreements, arrangements or understandings, whether
written or oral, regarding acquisitions of television stations (or any deposits,
rights of first refusal or understandings with respect thereto), other than the
acquisitions evidenced by the documents attached as Exhibit D-2, this Agreement
and the LLC Agreement.
(c) All agreements, instruments, schedules and exhibits relating
to any Station Acquisition which is scheduled to close concurrently with any
Subsequent Closing (each, a "Pending Acquisition") ("Pending Acquisition
Documents") delivered to the Lenders and the Investors pursuant to Section
5.9(a) shall be, when delivered, in full force and effect without amendment,
modification or waiver, shall be valid, binding and enforceable obligations of
the parties thereunder and shall not have been breached by any of the parties
thereto or otherwise amended or superseded.
2.8 Licenses, Permits, etc. The Company holds all authorizations,
approvals, orders, certificates, franchises, permits and licenses (including,
without limitation, all FCC Licenses) to conduct its business as presently
conducted or necessary to permit the Company to own its properties and to
conduct its business as presently conducted and which the failure to so hold
could have a material adverse effect (collectively, "Licenses") and to enter
into, execute, deliver and perform all of its duties and obligations under this
Agreement and all related instruments and agreements executed in connection
therewith. Schedule 2.8 correctly sets forth all the Licenses (including the FCC
Licenses) which are held by the Company, and correctly sets forth the issuer and
termination date of each License. To the Company's knowledge, each License was
duly and validly issued by the issuer thereof pursuant to procedures which
complied with all requirements of applicable law. The Company is in compliance
in all material respects with the terms of each License. No rights of the
Company under any License conflict with the valid rights of others, except for
such conflicts which could not reasonably be expected to have a material adverse
effect. To the Company's knowledge, no event has occurred which permits, or
after notice or lapse of time or both would permit, the revocation or
termination of any License or any applicable regulatory approvals, which
revocation or termination could have a material adverse effect.
2.9 FCC Licenses. The Company holds, free and clear of all Liens, all FCC
Licenses required for and/or used in the ownership and operation of the
television station which is the subject of the Oregon Acquisition (the
"Station") as presently operated, including, without limitation, all commercial
broadcast station and auxiliary licenses, permits, authorizations and other
certificates required by the FCC rules, regulations and policies (the "FCC
Rules") and the Communications Act of 1934, 47 U.S.C. Section 151 et. seq., as
amended (the "Communications Act") (collectively, the "FCC Licenses"). The FCC
has granted an initial order, subject to an appeal
11
period, approving the Oregon Acquisition. The FCC Licenses are and after giving
effect to the Oregon Acquisition will be valid and in full force and effect,
unimpaired by any act, omission or condition which could have a material adverse
effect (other than the fact that the FCC approval for the Oregon Acquisition is
not yet final and non-appealable). The Company has timely filed all applications
for renewal or extension of all FCC Licenses, and all such applications have
been granted without the imposition of any material adverse conditions. Except
for actions or proceedings affecting the broadcasting industry generally and
except as disclosed on Schedule 2.9, no petition, action, investigation, notice
of violation or apparent liability, notice of forfeiture, orders to show cause,
complaint or proceeding is pending or, to the Company's knowledge, threatened
before the FCC or any other Governmental Authority with respect to the Company
or the Station or seeking to revoke, cancel, suspend or modify any of the
material FCC Licenses held by the Company or any subsidiary. Except as otherwise
expressly contemplated by this Agreement, no prior FCC consent is required in
connection with the execution, delivery and performance of this Agreement and
the agreements and instruments contemplated hereby or in connection with any
Subsequent Closing. Except as set forth in Schedule 2.9 hereto, the Company does
not have any knowledge of any fact that is likely to result in the denial of an
application for renewal, or the revocation, material adverse modification,
nonrenewal or suspension of any of the FCC Licenses, or the issuance of a
cease-and-desist order, or the imposition of any administrative or judicial
sanction with respect to the Station. Each of the Company and the Station is in
compliance in all material respects with the terms of the FCC Licenses and all
applicable filing and operating requirements of 47 C.F.R. Part 73 and all other
applicable FCC Rules and the Communications Act.
2.10 Absence of Undisclosed Liabilities. Except as and to the extent
disclosed in the most recent financial statements delivered to the Lenders and
the Investors under this Agreement or any Schedule thereto, the Company does not
have any material liability or liabilities arising out of any transaction or
state of facts existing prior to the date hereof and required to be disclosed in
a balance sheet prepared in accordance with general accepted accounting
principles ("GAAP") and the Company has no other material contingent liability
or liabilities arising out of any transaction or state of facts existing prior
to the date hereof which are not specifically disclosed elsewhere in this
Agreement or the Schedules hereto.
2.11 Absence of Certain Developments. Since the date of the Company's
formation and except as disclosed in Schedule 2.11, there has been: (a) no
material adverse change in the condition or reasonably foreseeable prospects
(financial or otherwise) of the Company or in the assets, liabilities,
properties or business of the Company or to the best knowledge of the Company,
the WB Network; (b) no declaration, setting aside or payment of any dividend or
other distribution with respect to, or any direct or indirect redemption or
acquisition of, any ownership interest in the Company; (c) no waiver of any
valuable right of the Company or cancellation of any material debt or claim held
by the Company; (d) no material loan by the Company to any officer, director,
employee or shareholder of the Company, or any agreement or commitment therefor;
(e) no increase, direct or indirect, in the compensation paid or payable to any
officer, director, employee, agent or shareholder of the Company (other than
salary increases in the ordinary course of business consistent with past
practice); (f) no material loss, destruction or damage to any property of the
Company, whether or not insured; (g) no labor trouble involving the Company and
no material change in the senior management or other key personnel of the
12
Company, or the terms and conditions of their employment, and (h) except as
contemplated by this Agreement, no acquisition or disposition of any assets (or
any contract or arrangement therefor), time brokerage or local marketing
agreement or any other material transaction by the Company outside the ordinary
course of business.
2.12 Accounts Receivable. Except as disclosed elsewhere in this Agreement
or the Schedules hereto, to the best knowledge of the Company, all of the
accounts receivable of the Company represent bona fide completed sales made in
the ordinary course of business are valid and enforceable claims subject to no
set-off or counterclaim and collectible in the ordinary course and are subject
to the reserves set forth in the Financial Statements with respect thereto are
appropriate under GAAP. The Company has no accounts receivable from any of its
members of its Board of Advisors, officers, employees or members.
2.13 Title to Properties. Except as disclosed in Schedule 2.13, the
Company has good and marketable title to all of its properties and assets, free
and clear of any Liens, and such properties and assets constitute all of the
assets necessary for the conduct of the Company's business as presently
conducted. All owned and leased real estate of the Company is listed on Schedule
2.13. A true and complete copy of each real property lease to which the Company
is a party has been delivered to the Lenders and the Investors, and each such
lease is in full force and effect. No material default or event of default on
the part of the Company exists under any such lease, and the Company has not
received any written notice of default under any such lease or any indication in
writing that the owner of the leased property intends to terminate such lease.
The Company is not in violation of any zoning, land-use, building or safety law,
ordinance, regulation or requirement or other law or regulation applicable to
the operation of its owned or leased properties, except for such violations
which could not have a material adverse effect, nor has it received any written
notice of violation with which it has not complied. All real property occupied
pursuant to leases, and all tangible personal property owned or leased by the
Company and required for the purpose of carrying on its business and operations
as currently conducted are in good operating condition and repair, ordinary wear
and tear excepted, and no material portion of any such real or personal property
has suffered any damage by fire or other casualty which has not heretofore been
completely repaired and restored to its original condition.
2.14 Tax Matters. Except as set forth in Schedule 2.14 hereto:
(a) The Company has paid or caused to be paid all federal, state,
local, foreign, and other taxes, including without limitation, income taxes,
estimated taxes, alternative minimum taxes, excise taxes, sales taxes, franchise
taxes, employment and payroll-related taxes, withholding taxes, transfer taxes,
and all deficiencies, or other additions to tax, interest, fines and penalties
owed by it (collectively, "Taxes"), required to be paid by it through the date
hereof, except for Taxes being contested by the Company in good faith by
appropriate proceedings and for which an appropriate reserve has been
established under GAAP. All Taxes and other assessments and levies which the
Company is required to withhold or collect have been withheld and collected and
have been paid over to the proper Governmental Authorities. The Company has, in
accordance with applicable law, timely and properly filed all federal, state,
local and foreign tax returns required to be filed by it through the date hereof
and all such returns correctly and accurately set forth the amount of any Taxes
relating to the applicable period. The Company
13
shall take all actions which are necessary or appropriate to ensure that the
Company meets all requirements of the Internal Revenue Code of 1986, as amended
(the "Code"), the treasury regulations promulgated thereunder and currently
applicable rulings and revenue procedures of the Internal Revenue Service (the
"IRS"), as the same may be modified or amended in the future, to assure that the
Company will be classified for federal income tax purposes as a partnership and
not as an association taxable as a corporation, and the Company shall refrain
from taking any action that would cause the Company to be classified other than
as a partnership for federal income tax purposes.
(b) Neither the IRS nor any other Governmental Authority is now
asserting or, to the knowledge of the Company, has threatened to assert against
the Company any deficiency or claim for additional Taxes. No written claim has
ever been made by an authority in a jurisdiction where the Company does not file
reports and returns that the Company is or may be subject to taxation by that
jurisdiction. There are no Liens on any of the assets of the Company that arose
in connection with any failure (or alleged failure) to pay any Taxes, except
Liens for Taxes not yet due and payable. The Company has never entered into a
closing agreement pursuant to Section 7121 of the Code. The Company is not and
never has been a "personal holding company" as defined under Section 541 of the
Code. Except as set forth on Schedule 2.14, there has not been any audit of any
tax return filed by the Company, no such audit is in progress, and the Company
has not been notified in writing by any tax authority that any such audit is
contemplated or pending. No extension of time with respect to any date on which
a tax return was or is to be filed by the Company is in force, and no waiver or
agreement by the Company is in force for the extension of time for the
assessment or payment of any Taxes. The Company is not now and has never been a
member of an affiliated group filing a consolidated federal income tax return.
The Company does not have any liability for the Taxes of any person or entity.
(c) For purposes of this Agreement, all references to Sections of
the Code shall include any predecessor provisions to such Sections.
2.15 Contracts and Commitments. Except as set forth in this Agreement
(including the Schedules hereto) and the LLC Agreement, neither the Company nor
any member of Management is a party to any contract, obligation, commitment or
understanding relating to the business of the Company or the acquisition,
operation, management or disposition of Station Assets: (a) which involves a
potential commitment or payment in excess of $50,000 or which is otherwise
material and not entered into in the ordinary course of business; (b) with the
WB Network, any of its Affiliates, any of the Company's officers or key
employees or persons or organizations related to or Affiliated with any such
persons; (c) which relates to the acquisition or disposition of, or the
provision of programming or network affiliation for, any television stations;
(d) which relates to the provision of investment banking or brokerage services;
or (e) which relates to the purchase, redemption, transfer or voting of its
membership interests, and copies of all such agreements have been delivered or
made available to the Lenders, the Investors and their counsel (all such
contracts and commitments are collectively referred to as the "Material
Agreements"). Except as set forth on Schedule 2.15, the Company does not have
any outstanding Indebtedness. Other than termination or expiration in the
ordinary course of business, the Company does not know of any basis for the
termination, expiration or
14
modification of any of the Material Agreements within one year from the date
hereof nor has it received any notice thereof, which termination, expiration or
modification would not be at the Company's option, as the case may be. Neither
the Company nor any member of Management is in default in any material respect
under any Material Agreement, and to the best knowledge of the Company there is
no state of facts which upon notice or lapse of time or both would constitute
such a default. Neither the Company nor any member of Management is a party to
any contract or arrangement which under circumstances reasonably foreseeable is
reasonably likely to have a material adverse effect on, or prove to be unduly
burdensome to, the Company. The Company does not have any liability for
renegotiation of any government contracts or subcontracts.
2.16 Intellectual Property. Except with respect to syndication and
programming agreements, set forth in Schedule 2.16 hereto is a list and brief
description of all material patents, patent rights, patent applications,
trademarks, trademark applications, service marks, service mark applications,
trade names and copyrights owned by or registered in the name of the Company, or
of which the Company is a licensor or licensee or in which the Company has any
right. The Company owns free and clear of claims or rights of any other person,
or possesses licenses to use, all patents, patent applications, trademarks,
trademark applications, service marks, service mark applications, trade names,
copyrights, manufacturing processes, programming processes and software,
algorithms, formulae, trade secrets and know how (collectively, "Intellectual
Property") necessary to the conduct of its business as presently conducted. The
Company has no knowledge of any infringement by any other person of any rights
of the Company under any Intellectual Property. No claim is pending or, to the
knowledge of the Company, threatened against the Company nor has the Company
received any notice from any third parties to the effect that any Intellectual
Property owned or licensed by the Company, or which the Company otherwise has
the right to use, or the operation, products or services of the Company,
infringe upon or conflict with the asserted rights of any other person under any
Intellectual Property, and, to the knowledge of the Company, there is no basis
for any such claim (whether or not pending or threatened). All licenses or other
agreements listed in Schedule 2.16 are in full force and effect and neither the
Company nor, to the knowledge of the Company, any other party thereto is in
material default thereunder.
2.17 Litigation and Compliance with Laws.
(a) There is no investigation, action, suit or proceeding at law
or in equity or by or before any Governmental Authority now pending or, to the
best knowledge of the Company threatened against the Company or key employee of
the Company, which calls or has a possibility of calling into question the
validity, or hindering the enforceability or performance, of this Agreement or
any action taken or to be taken pursuant hereto or by any of the other
agreements and transactions contemplated hereby; nor to the best knowledge of
the Company, has there occurred any event or does there exist any condition on
the basis of which any such litigation, proceeding or investigation should
reasonably be anticipated to be instituted and have a material adverse effect on
the Company or the business prospects of the Company.
(b) The Company is and at all times during its existence has been
in material compliance with all laws and governmental rules and regulations,
domestic or foreign and all
15
export control or similar laws or regulations (including without limitation,
those relating to copyright, including the Copyright Act of 1976, 17 U.S.C.
Section 101 et seq.), except where non-compliance therewith, in any individual
instance or any series of related instances, would not have a material adverse
effect on the Company. The Company is not in default in any material respect
with respect to any judgment, order, writ, injunction, decree, demand or
assessment to which the Company or its assets are subject or by which the
Company is bound and which has been issued by any court or any federal, state,
municipal or other governmental or self-regulatory agency, organization, board,
commission, bureau, instrumentality or department, domestic or foreign, of
competent jurisdiction, relating to any aspect of the business, prospects,
affairs, properties or assets of the Company. The Company has not been charged
or threatened with, nor, to the best knowledge of the Company, has it been under
investigation with respect to, any material violation of material federal,
foreign, state, municipal or other law or any administrative rule or regulation,
domestic or foreign in any matter directly relating to or affecting the
business, prospects, affairs, properties or assets of the Company.
2.18 Investment Company. The Company is not an "investment company" as
such term is defined in the Investment Company Act of 1940, as amended (the
"1940 Act"), and will not be an "investment company" under the 1940 Act after
giving effect to the Oregon Acquisition, including the use of proceeds from the
sale of the Debentures and Investor Units on the date hereof.
2.19 Employee Benefit Programs. Except as set forth on Schedule 2.19
hereto, the Company does not maintain and has not in the past maintained any
Employee Program (as defined herein). For purposes of this Section 2.19,
"Employee Program" means (a) all employee benefit plans within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), including, but not limited to, multiple employer welfare arrangements
(within the meaning of ERISA Section 3(4)), plans to which more than one
unaffiliated employer contributes and employee benefit plans (such as foreign or
excess benefit plans) which are not subject to ERISA; and (b) all stock option
plans, bonus or incentive award plans, severance pay policies or agreements,
deferred compensation agreements, supplemental income arrangements, vacation
plans, and all other employee benefit plans, agreements, and arrangements not
described in (a) above. An entity "maintains" an Employee Program if such entity
sponsors, contributes to, or provides benefits under such Employee Program, or
has any obligation (by agreement or under applicable law) to contribute to or
provide benefits under such Employee Program, or if such Employee Program
provides benefits to or otherwise covers employees of such entity (or their
spouses, dependents, or beneficiaries). The Company has not maintained any
employee benefit plan to which more than one employer contributes pursuant to
one or more collective bargaining agreements. Schedule 2.19 sets forth a list of
every Pension Plan (as hereinafter defined) that has been maintained by the
Company at any time during the twelve-month period ending on the Initial Closing
Date and on and as of any Subsequent Closing Date. After giving effect to the
Oregon Acquisition, the Company has not incurred (a) any material accumulated
funding deficiency within the meaning of ERISA, or (b) any material liability to
the Pension Benefit Guaranty Corporation established under ERISA (or any
successor thereto under ERISA) in connection with any Pension Plan established
or maintained by it. After giving effect to the Oregon Acquisition, the Company
has not had any tax assessed against it by the IRS for any alleged violation
under Section 4975 of the Internal Revenue Code. The
16
Company does not have any unfunded liability under a Pension Plan or a
contingent liability for withdrawal from a multi-employer Pension Plan except as
disclosed in the financial statements. "Pension Plan" shall mean an employee
benefit plan or other plan maintained for the employees of the Company as
described in Section 4021(a) of ERISA.
2.20 Labor Laws. Schedule 2.20 sets forth the names of the individual
employees employed by the Company who are subject to written or oral contracts
of employment. The Company is not (i) subject to any collective bargaining
agreement or other labor agreement, or (ii) delinquent in payments to any of its
employees for any wages, salaries, commissions, bonuses or other direct
compensation for any services performed for it to the date hereof or amounts
required to be reimbursed to such employees. Except as set forth on Schedule
2.20, upon termination of the employment of any of said employees, the Company
will not be obligated to provide advance notice of termination of employment or
be liable to any of said employees for so-called "severance pay." The Company
(i) is in material compliance with all applicable laws and regulations
respecting labor, employment, fair employment practices, terms and conditions of
employment, and wages and hours, (ii) there are no charges of employment
discrimination or unfair labor practices or strikes, slowdowns, stoppages of
work, or any other concerted interference with normal operations existing,
pending or, to the knowledge of the Company, threatened against or involving the
Company, and (iii) no union has demanded or requested to represent or, to the
best knowledge of the Company, is currently attempting to represent, any of the
Company's employees.
2.21 Solvency. The Company has not to the best knowledge of the Company:
(a) made a general assignment for the benefit of creditors; (b) filed any
voluntary petition in bankruptcy or suffered the filing of any involuntary
petition by its creditors; (c) suffered the appointment of a receiver to take
possession of all, or substantially all, of its assets; (d) suffered the
attachment or other judicial seizure of all, or substantially all, of its
assets; (e) admitted in writing its inability to pay its debts as they come due;
or (f) made an offer of settlement, extension or composition to its creditors
generally. The Company believes that it (a) will be able to pay its debts as
they come due in the usual course of business and will have adequate capital to
conduct its business; and (b) will have total assets greater than its total
liabilities (total assets for this purpose being determined on the basis of the
"fair saleable value" thereof). For purposes of this Section 2.21, the "fair
saleable value" of assets means the gross amount (without deduction for costs of
sale, taxes or other payments) of money that might be expected to be realized,
as of the valuation date, from an interested purchaser in a not theoretical
market aware of all relevant information and a seller, equally informed, who is
interested in disposing of the entire operation as a going-concern, neither
party being under a compulsion to act.
2.22 Environmental Matters.
(a) Except as disclosed on Schedule 2.22, and except for
individual instances or any series of related instances which would not have a
material adverse effect on the assets, business prospects, or financial
condition of the Company: (i) to the best knowledge of the Company, the Company
has never generated, transported, used, stored, treated, disposed of, or managed
any Hazardous Waste (as defined in Section 2.22(c) below) in violation of any
Environmental Law, nor has the Company contracted with any party for the
generation,
17
transportation, use, storage, treatment, disposal or management of any Hazardous
Waste in violation of any Environmental Law; (ii) to the best knowledge of the
Company, the Company does not presently own, operate, lease, or use, nor has it
previously owned, operated, leased, or used any site on which underground
storage tanks are or were located or which contain or contained any asbestos or
asbestos-containing material, any polychlorinated byphenyls ("PCBs") or
equipment containing PCBs, or any urea formaldehyde foam insulation; and (iii)
the Company, the operations of its businesses, and any real property owned,
operated, leased, or used by the Company, and any facilities and operations of
the Company thereon, are presently in compliance in all material respects with
all applicable Environmental Laws and any and all orders or directives of any
governmental authorities having jurisdiction under such Environmental Laws,
including, without limitation, any orders or directives with respect to any
clean-up or remediation of any release or threat of release of any Hazardous
Material.
(b) With respect to the Oregon Acquisition, the Company has
provided to the Lenders and the Investors copies of all material documents,
records, and information reasonably available to the Company concerning any
environmental or health and safety matter relevant to the Station, whether
generated by the Station, or others, including, without limitation,
environmental or health and safety audits, environmental or health and safety
risk assessments, site assessments, documentation regarding off-site treatment,
storage or disposal of Hazardous Materials, spill control plans, discharge
monitoring reports, hazardous waste manifests, community right-to-know filings,
insurance policies, and reports, correspondence, permits, licenses, approvals,
consents, registrations and other authorizations related to or filed with
environmental or health and safety matters issued by or filed with any
Governmental Authority with respect to such matters.
(c) For purposes of this Section 2.22, (i) "Hazardous Material"
shall mean and include any hazardous waste, hazardous material, hazardous
substance, petroleum product, oil, asbestos, polychlorinated byphenyls, urea
formaldehyde, toxic substance, pollutant, contaminant, or other substance which
may pose a threat to the environment or to human health or safety, as defined or
regulated under any Environmental Law; (ii) "Hazardous Waste" shall mean and
include any hazardous waste as defined or regulated under any Environmental Law;
(iii) "Environmental Law" shall mean any environmental or health and
safety-related law, regulation, rule, ordinance, or by-law at the federal,
state, or local level existing as of the date hereof or previously enforced; and
(iv) the "Company" shall mean and include the Company and all other entities for
whose conduct the Company is or may be held responsible under any Environmental
Law including, but not limited to, lessees.
2.23 Information Supplied to Lenders and Investors. Neither this
Agreement, nor the Schedules referenced herein, nor any certificate or written
statement furnished to the Lenders and the Investors by or on behalf of the
Company pursuant to the terms hereof, when taken together, contain any untrue
statement of a material fact, and none of this Agreement, the Schedules or such
other documents, omits to state a material fact necessary in order to make the
statements contained therein not misleading. To the Company's knowledge, there
is no material fact directly relating to its business, operations or condition
of the Company (other than facts which relate to general economic or industry
wide conditions) that materially adversely affects or, to the best of the
Company's knowledge, in the future in the reasonable business judgment of the
18
Company (so far as it may now foresee based upon material facts of which it is
now aware) is reasonably likely to materially adversely affect the same that has
not been set forth in this Agreement or in the Schedules hereto.
2.24 Broker's Fee. Except as set forth on Schedule 2.24 hereto, the
Company has not incurred or become liable for any brokerage commission or
finder's fee relating to or in connection with the transactions contemplated by
this Agreement. The Company agrees to indemnify Lenders and the Investors
against any claims against the Lenders or the Investors for brokerage fees or
commissions payable to any broker or finder retained by or on behalf of the
Company in connection with the financing contemplated by this Agreement and to
pay all expenses incurred by the Lenders and the Investors in connection with
the defense of any action brought to collect any brokerage fees or commissions
by any such broker or finder.
2.25 Offerees. Neither of the Company nor Management or anyone acting on
their behalf has in the past sold, offered for sale or solicited offers to buy
any securities of the Company so as to bring the offer, issuance or sale of the
securities issued to the Lenders and the Investors, within the provisions of
Section 5 of the Securities Act, unless such offer, issuance or sale was within
the exemptions of Section 4 thereof. The Company has complied with all
applicable Federal and state securities laws, including blue-sky laws, in
connection with the offer, solicitation of offers and sales of its securities.
2.26 Anti-Israel Boycott. Neither of the Company nor any Affiliate
thereof has participated in, or is participating in, an anti-Israeli boycott
within the scope of Chapter 7 of Part 2 of Division 4 of Title 2 of the
California Government Code as in effect from time to time.
2.27 Transactions with Affiliates. Except as set forth in Schedule 2.27,
neither the Company nor any officer, employee, manager or director of the
Company or any of their respective spouses or family members or any of their
Affiliates, owns, directly or indirectly, on an individual or joint basis, any
material interest or serves as an officer, director, partner, or in another
similar capacity of, any competitor of the Company, any organization which has a
contract or arrangement with the Company, including the WB Network or Warner
Brothers, a division of Time Warner Entertainment Company, L.P. ("WB") or any of
the Lenders or the Investors. Except as set forth in Schedule 2.27, the Company
is not a party to any transactions with, nor has the Company made any payments
or distributions to or for the benefit of, any officer or key employee of the
Company or persons or entities controlling, controlled by, under common control
with or otherwise Affiliated with the Company or any of the Lenders or the
Investors.
2.28 Small Business Concern, Etc.
(a) The Company, together with its "affiliates" (as that term is
defined in 13 C.F.R. Section 121.103), is a "smaller business" within the
meaning of SBIC Regulations, including 13 C.F.R. Section 107.710. The
information regarding the Company and its affiliates set forth in SBA Forms 480
and 652 and Section A of SBA Form 1031 delivered prior to the Initial Closing
Date is accurate and complete. Neither the Company nor any subsidiary of the
Company presently engages in, or shall hereafter engage in, any activities, nor
shall the Company or any subsidiary
19
of the Company use the proceeds of the sale of the Class B Founder Units,
Debentures and Investor Units hereunder directly or indirectly for any purpose
for which an SBIC is prohibited from providing funds by the SBIC Regulations
(including, without limitation, 13 C.F.R. Section 107.720).
(b) As of the date hereof, the primary business activity of the
Company is (i) as set forth in the LLC Agreement and (ii) classified under
Standard Industrial Classification Code number 4833 (Television Broadcasting
Stations).
(c) For all purposes of this Agreement, the following terms shall
have the following meanings:
(i) "SBA" means the United States Small Business
Administration, and any successor agency performing the functions
thereof;
(ii) "SBIC" means a Small Business Investment Company
licensed by the SBA under the SBIC Act;
(iii) "SBIC Act" means the Small Business Investment Act of
1958, as amended; and
(iv) "SBIC Regulations" means the SBIC Act and the
regulations issued by the SBA thereunder, codified at Title 13 of the
Code of Federal Regulations ("13 C.F.R."), Parts 107 and 121.
SECTION 3. CLOSING CONDITIONS OF INVESTORS
The Lenders' and the Investor's obligation to purchase and pay for the
Debentures and the Investor Units, whether with respect to the purchase to be
consummated at the Initial Closing or at Subsequent Closings, shall be subject
to compliance by the Company with the following conditions:
3.1 Opinions of Company Counsel. The Lenders and the Investors shall have
received from counsel for the Company, Dickstein Shapiro Morin & Oshinsky L.L.P.
its favorable opinion, dated as of the date of the Initial Closing or the
Subsequent Closings, as the case may be, substantially in the form attached
hereto as Exhibit E-1 and a FCC regulatory opinion substantially in the form
attached hereto as Exhibit E-2.
3.2 Authorization. The Company shall have duly adopted resolutions in
form reasonably satisfactory to the Lenders and the Investors authorizing it to
consummate the transactions contemplated hereby in accordance with the terms
hereof, including, without limitation, the issuance of the Debentures, the
issuance of the Investor Units, and upon conversion of the Debentures and the
Investor Units, the securities resulting from such conversion, the Station
Acquisition to be consummated with the Initial Closing or the Subsequent
Closing, as the case may be, and the Lenders and the Investors shall have
received
20
duly executed certificate(s) of an authorized officer of the Company setting
forth a copy of such resolutions and such other matters as may be requested by
the Lenders and the Investors.
3.3 Delivery of Documents.
(a) Concurrently with the Initial Closing of the transactions
contemplated hereby, the Company shall have executed and delivered to the
Lenders and the Investors (or shall have caused to be executed and delivered to
the Lenders and the Investors, by the appropriate Persons), the following:
(i) The Debentures;
(ii) Certified copies of resolutions of the Company
authorizing the execution and delivery of this Agreement, the Debentures
and the other transfers, agreements, documents and instruments
contemplated hereby, including the Oregon Acquisition;
(iii) A copy of the Company's Certificate, as amended,
certified as of a recent date by the Secretary of State of Delaware and a
copy of the Company's LLC Agreement, as amended;
(iv) The Registration Rights Agreement in the form attached
hereto as Exhibit F;
(v) A copy certified by an officer of the Company of any
affiliation agreement to which the Company is a party with the WB Network
relating to the Oregon Acquisition and dated prior to or as of the date
of the Initial Closing;
(vi) Employment Agreements executed by the Company and each
of Messrs. Allen and Gealy and a Consulting Agreement executed by the
Company and Mr. Kellner, satisfactory in form and substance to the
Lenders and the Investors; and
(vii) Such other supporting documents and certificates as
the Initial Lenders and the Initial Investors may reasonably request and
as may be required pursuant to this Agreement.
(b) Concurrently with any Subsequent Closing, the Company shall
have executed and delivered to the Lenders and the Investors (or shall have
caused to be executed and delivered to the Lenders and the Investors, by the
appropriate Persons), the following:
(i) The Additional Securities to be issued in connection
therewith;
(ii) Certified copies of the Company authorizing the
issuance and sale of the Additional Securities and other transactions,
agreements, documents and instruments contemplated in connection with the
sale of Additional Securities, including any Pending Acquisitions;
21
(iii) A copy of the Company's Certificate, as amended,
certified as of no more than five (5) Business Days prior to the date of
the Subsequent Closing by the Secretary of State of Delaware and a copy
of the Company's LLC Agreement, as amended;
(iv) A copy certified by an officer of the Company of any
affiliation agreement to which the Company is a party with the WB Network
relating to the Pending Acquisition dated prior to or as of the date of
the Subsequent Closing;
(v) A Certificate in substantially the form of Exhibit C
hereto, dated as of the date of such Subsequent Closing, stating that
each of the representations and warranties, covenants and agreements of
the Company and Management made hereunder on the date hereof remain in
full force and effect after giving effect to (i) the Oregon Acquisition,
(ii) the Pending Acquisition scheduled to be consummated concurrently
with the Subsequent Closing and (iii) any other Station Acquisition
consummated after the Initial Closing but prior to the relevant
Subsequent Closing; provided that, whenever any such representation and
warranty, covenant or agreement refers to (i) the "Oregon Acquisition" it
shall be deemed to refer to the "Pending Acquisition" and give effect to
the Oregon Acquisition, the Pending Acquisition scheduled to be
consummated concurrently with the Subsequent Closing and to any other
Station Acquisition by the Company consummated after the Initial Closing
but prior to the relevant Subsequent Closing; and (ii) the stations, the
assets, property or business of the Company it shall be deemed to refer
to the television broadcast station, the assets, the property and the
business which is the subject of the Pending Acquisition scheduled to be
consummated concurrently with the Subsequent Closing and to any other
Stations acquired after the Initial Closing but prior to the relevant
Subsequent Closing; and
(vi) Such other supporting documents and certificates as
the Lenders and the Investors may reasonably request, and as may be
required pursuant to this Agreement.
3.4 No Violation or Injunction. After giving effect to the Oregon
Acquisition and to any Pending Acquisitions, the consummation of the
transactions contemplated by this Agreement shall not be in violation of any law
or regulation applicable to the Company, shall not be subject to any injunction,
stay or restraining order and shall not require any filings, approvals or
consents which shall not have previously been made or obtained.
3.5 No Litigation. After giving effect to the Oregon Acquisition and to
any Pending Acquisitions, no litigation, suit, action, claim or investigation
shall be pending, or threatened, which might impair or prevent the performance
of the Company hereunder or the transactions contemplated herein or which may
have a material adverse effect on the Company.
3.6 No Adverse Change. After giving effect to the Oregon Acquisition and
to any Pending Acquisitions, no condition or state of events shall exist which
has resulted in, or could reasonably be expected to result in, a material
adverse effect on the conditions and prospects (financial or otherwise) of the
Company or the WB Network or on the properties, assets,
22
liabilities, business or operations of the Company, whether or not in the
ordinary course of business.
3.7 Lenders and Investors Approval. The terms and conditions of any
financing obtained by the Company (including any High Yield Debt or Bank Debt
financing) or securities issued in connection with any Pending Acquisition and
the terms and conditions of such Pending Acquisition, including, without
limitation, the Pending Acquisition Pro Formas which shall reflect the most
recent projections previously delivered to and accepted by the Lenders and the
Investors as revised solely to reflect the results of operations, financial
condition and related financing of the relevant Pending Acquisition and
appropriately revised EBITDA and Revenue levels for the Company, shall have been
approved by Lenders and the Investors holding a majority in interest of the
Debentures and Investor Units (determined on an as converted basis). The
provisions of this Section 3.7 shall not be deemed to require additional
approval by the Lenders and the Investors other than approval required pursuant
to other sections of this Agreement and to the LLC Agreement for (i) issuances
of Additional Securities to the Lenders or the Investors or a party designated
by any of them, pursuant to Section 1.4 hereof or (ii) Indebtedness for money
borrowed for unaffiliated institutional lenders incurred for the purpose of
enabling the Company to satisfy its obligations pursuant to Section 1.6,
provided that the terms thereof are commercially reasonable.
3.8 All Proceedings Satisfactory. All corporate and other proceedings
taken by the Company prior to or at the Initial Closing or any Subsequent
Closings in connection with the transactions contemplated by this Agreement, and
all documents and instruments related thereto, or in connection with any Pending
Acquisition, shall be reasonably satisfactory in form and substance to the
Lenders and the Investors, and the Lenders and the Investors shall receive such
copies thereof and other materials (certified, if requested) as they may
reasonably request in connection therewith. The issuance and sale of the
Debentures and the Investor Units to the Lenders and the Investors shall be made
in conformity with all applicable state and federal securities laws. Unless
waived by the Consenting Holders, the Company shall have received all consents
from the FCC and any other appropriate Governmental Authority necessary to
consummate the Oregon Acquisition and any Pending Acquisition, without any
adverse conditions to such consents, including the transfer of all FCC Licenses
necessary to operate the broadcast television stations to be acquired by the
Company and the period for seeking reconsideration, review or appeal of such FCC
consents shall have expired and no such reconsideration, review or appeal shall
have been sought by any party, and the FCC shall have not reconsidered such FCC
consent on its own motion. After giving effect to each Pending Acquisition, all
renewal applications relating to the FCC Licenses shall have been timely and
properly filed, no renewal proceedings shall be pending or threatened which may
result in the revocation, cancellation, suspension or modification of, or the
refusal to renew, any such FCC Licenses, and no petitions to deny any pending
renewal application, informal objections, or any other protests to the grant of
any such renewal application, or any competing applications shall be pending.
3.9 Satisfactory Due Diligence. With respect to the Oregon Acquisition at
the Initial Closing and any Pending Acquisition being consummated in connection
with a Subsequent Closing, the Lenders and the Investors shall have completed
their legal and business due
23
diligence review of such Station Acquisition and shall have been satisfied with
the results of such review and such Station Acquisition shall have been
consummated on the terms approved by the Lenders and the Investors.
3.10 SBIC Deliveries. The Company shall have delivered to the Investors:
(a) Duly completed and executed SBA Forms 480 and 652 and Part A
of SBA Form 1031.
(b) If not delivered prior to the Initial Closing, a business plan
showing the Company's financial projections for a five-year period from the
Initial Closing.
(c) A written statement from the Company regarding its intended
use of the proceeds of the sale of the Class B Founder Units, Debentures and the
Investor Units.
(d) A list, after giving effect to the Initial Closing, of (a) the
name of each member of the Company's Board of Advisors, (b) the name and title
of each of the Company's Officers, and (c) the name of each of the Company's
Members (as such term is defined in the LLC Agreement), setting forth the number
and class of Membership Interests held.
3.11 Representations and Warranties. The representations and warranties
contained in this Agreement including but not limited to the representations and
warranties made in Section 2 and the representations and warranties given in the
Certificate delivered pursuant to Section 3.3(b)(v) hereof (which shall have all
the force and effect of the representations and warranties given under Section 2
hereof), shall be true and correct in all material respects with the same force
and effect as though such representation and warranties had been made on and as
of the date of the Initial Closing after giving effect to the Oregon Acquisition
and, with respect to a Subsequent Closing, after giving effect to any Pending
Acquisitions consummated after the Initial Closing and as though made on and as
of the date of such Subsequent Closing; each of the conditions hereafter
specified in this Section 3 shall have been satisfied in all material respects;
there shall be no Event of Default or any event or condition which, after notice
or lapse of time or both, would constitute an Event of Default. The Company
acknowledges that, subject to any exceptions approved by the Lenders and the
Investors at the time of any Subsequent Closing, the Company will be required to
make the representations and warranties made in Section 2 on and as of the date
of each Subsequent Closing after giving effect to (i) the Oregon Acquisition,
(ii) the Pending Acquisition scheduled to be consummated concurrently with the
Subsequent Closing and (iii) any other Station Acquisition consummated after the
Initial Closing but prior to the relevant Subsequent Closing.
SECTION 4. FINANCIAL AND PRINCIPAL OPERATING COVENANTS
The Company (which term shall be deemed to include, for purposes of this
Section 4, any majority owned subsidiary or subsidiaries controlled by the
Company) shall comply with the following covenants, from the date hereof and for
so long as the Lenders and the Investors hold Debentures and Investor Units
representing at least (i) thirty-five percent (35%) (determined on
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the basis of principal amount and/or Capital Contributions) of the Debentures
and Investor Units issued at the Initial Closing and the First Subsequent
Closing and (ii) aggregate Non-Carry Distribution Percentages (as defined in the
LLC Agreement) equal to or greater than fifty and one-tenth percent (50.1%) (all
determined on an as converted basis). Compliance with any of the following
covenants may be waived, amended or modified by the prior written consent of the
holders of 60% in interest of the Debentures and the Investor Units held by the
Investors and Lenders (determined on an as converted basis) (the "Consenting
Holders") or such higher percentage as indicated.
4.1 Indebtedness. Except as set forth below, the Company will not
directly or indirectly, incur, create, assume, become or be liable in any manner
with respect to, or permit to exist, any Indebtedness or liability, except as
follows:
(a) Indebtedness of the Company under the Debentures and any other
Indebtedness owed by the Company to the Lenders and the Investors;
(b) Indebtedness or other liabilities of the Company on account of
incidentals or services furnished to the Company (including accountants' and
attorneys' fees) in an aggregate amount which does not exceed Five Thousand
Dollars ($5,000) at any one time outstanding;
(c) Indebtedness of any Subsidiary for money borrowed not in
excess of $500,000 or in an aggregate amount in excess of $1,250,000, provided,
however, that the foregoing limitations shall be increased by $500,000 and
$1,250,000, respectively, upon the consummation of each Pending Acquisition;
(d) Indebtedness of any Subsidiary as described in Schedule 4.1(b)
("Permitted Indebtedness"); provided that the same shall not be amended or
modified without the prior written consent of the majority Lenders and the
Investors;
(e) Indebtedness of any Subsidiary with respect to trade
obligations (including trade payables) and other normal accruals, including
Taxes, assessments and other governmental charges, arising in the ordinary
course of business and not yet due and payable, or which are being contested in
good faith by appropriate proceedings, and then only to the extent the amount
thereof has been set aside on the Company's books;
(f) Indebtedness of any Subsidiary incurred for purchase money
obligations and Capital Leases, so long as: (i) the pertinent assets are
acquired for use in the ordinary course of the Company's business; (ii) the
Indebtedness secured thereby does not exceed the fair market value of such
assets or the purchase price thereof if such assets are acquired directly from
the manufacturer or an authorized dealer thereof; and (iii) such Indebtedness is
incurred in compliance with Section 4.4;
(g) Indebtedness of any Subsidiary in respect of guarantees to a
third party, to the extent that any such guarantee secures Indebtedness of a
Subsidiary which is specifically permitted to be incurred or to remain
outstanding under the provisions of this Section 4.1;
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(h) Indebtedness of any Subsidiary to such commercial lenders, in
such principal amounts and on such commercially reasonable terms and conditions
as are consented to by the Consenting Holders in their sole discretion, the
proceeds of which are used to finance a Pending Acquisition or Pending
Acquisitions or for working capital purposes relating thereto or as contemplated
by Section 1.6 (the "Bank Debt"); and
(i) Unsecured, high-yield debt of any Subsidiary placed by an
investment bank or banks in a Rule 144A private placement or public offering in
such principal amounts and on such commercially reasonable terms and conditions
as are consented to by the Consenting Holders in their sole discretion, and the
proceeds of which are used substantially to finance a Pending Acquisition or
Pending Acquisitions or as contemplated by Section 1.6 (the "High-Yield Debt").
4.2 Liens. The Company will not, directly or indirectly, create, incur,
assume or suffer to exist any Lien of any nature whatsoever on any of its assets
(including any leasehold interests in property used by the Company) or ownership
interests now or hereafter owned, other than:
(a) Liens securing the payment of taxes and other government
charges, either not yet due or the validity of which is being contested in good
faith by appropriate proceedings, and as to which the Company shall have set
aside on its books adequate reserves to the extent required by generally
accepted accounting principles and provided that, in any event, payment of any
such tax, assessment, charge, levy or claim shall be made before any of the
Company's property shall be seized and sold in satisfaction thereof;
(b) Liens securing Indebtedness permitted under Sections 4.1(c),
4.1(d), 4.1(f) and 4.1(h) above;
(c) Deposits under worker's compensation, unemployment insurance
and social security laws;
(d) Restrictions, easements, and minor irregularities in title
which do not and will not materially interfere with the occupation, use and
enjoyment of the properties of the Company in the normal course of business as
presently conducted or materially impair the value of such assets for the
purpose of such business;
(e) Liens imposed by law, such as mechanics', materialmen's,
landlords', warehousemen's, and carriers' Liens and other similar Liens,
securing obligations incurred in the ordinary course of business which are not
past due or which are being contested in good faith by appropriate proceedings
and for which appropriate reserves have been established;
(f) Liens, deposits or pledges to secure the performance of bids,
tenders, contracts (other than contracts for the payment of indebtedness),
leases (to the extent permitted under the terms of this Agreement), public or
statutory obligations, surety, stay, appeal, indemnity, performance or other
similar bonds, or other similar obligations arising in the ordinary course of
business;
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(g) Judgment and other similar Liens arising in connection with
court proceedings, provided that the execution or other enforcement of such
Liens is effectively stayed and the claims secured thereby are being actively
contested in good faith and by appropriate proceedings; and
(h) Liens against the fee interest in real property leased by the
Company which are securing obligations of the owner of such property.
4.3 Capital Expenditures. For each of the calendar years set forth below,
the Company will not make or incur any Capital Expenditures (as defined below)
in excess of the amounts indicated for such year as set forth below; provided
that any unused portion of these amounts for a given year may be carried over to
the following year so as to increase the amount of Capital Expenditures that can
be made in such later year without invoking the supermajority vote otherwise
required by this subparagraph. The term "Capital Expenditures" shall mean any
payments that are made or liabilities that are incurred by the Company for the
lease, purchase, improvement, construction or use of any Property, the value or
cost of which under GAAP is required to be capitalized and appears on the
Company's balance sheet in the category of property, plant or equipment, without
regard to the manner in which such payments or the instruments pursuant to which
they are made are characterized by the Company or any Person, and shall include,
without limitation, payments for or liabilities incurred with respect to the
installment purchase of Property and payments under Capital Leases. A Capital
Expenditure shall be deemed to be made as of the time the Property which is the
subject thereof is put in to service by the Company.
[Download Table]
Year Capital Expenditures
---- --------------------
1997 $12,000,000
1998 $ 5,000,000
1999 $ 1,250,000
2000 $ 1,250,000
2001 $ 1,250,000
4.4 Revenue and EBITDA Levels. For each of the calendar years set forth
below, the Company shall have had both Revenue and EBITDA for such year that
equals or exceeds the Revenue and EBITDA amounts indicated for such year as set
forth below, which levels shall be increased from time to time in connection
with each of the Pending Acquisitions solely to reflect the increases in Revenue
and EBITDA levels resulting from such Pending Acquisition as set forth in
Pending Acquisition Pro Formas delivered to and approved by the Consenting
Holders prior to the consummation of such Pending Acquisition:
[Download Table]
Year Revenue EBITDA
---- ------- ------
1998 $35,635,000 $ 8,745,000
1999 $45,229,000 $13,306,000
2000 $58,127,000 $25,276,000
2001 $67,343,000 $33,318,000
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4.5 Issuance of Securities. Except as set forth in the LLC Agreement, the
Company will not authorize or issue, or obligate itself to issue, any equity,
convertible or debt securities or any securities issued pursuant to an initial
public offering (or any options, warrants or other rights to purchase or acquire
any of such equity, convertible or debt securities) or take any other actions
inconsistent with the permanent capital structure contemplated by this Agreement
and the LLC Agreement without the prior written consent of the Consenting
Holders and, in the case of the issuance of any Additional Securities,
compliance with Section 1.4 hereof.
4.6 Equity Interest Distributions and Redemptions; Debt Payments. Except
as set forth in this Agreement or the LLC Agreement, the Company will not,
directly or indirectly, declare, order, pay or make any (a) payment or
declaration of any dividend (whether in cash, membership interests, capital
stock or any other property) on any Equity Interest (as defined below) of the
Company or any other distribution on account of any class of membership
interests or capital stock; (b) redemption, purchase or other acquisition for
consideration by the Company, directly or indirectly, of any Equity Interest;
(c) payments of principal or interest in respect of any indebtedness that is
subordinated to the Debentures, other than ordinary trade debts and expenses
incurred in the ordinary course of business; or (d) payments or accrue any
obligations to any member of Management or other Affiliate (including any
management fees), except employment compensation and other payments incident to
employment and payments and/or obligations to Affiliates disclosed in Schedule
4.6. Any redemption, purchase or other acquisition by the Company of any Equity
Interest shall be made in compliance with all laws, including but not limited to
Federal and state securities laws and the SBIC Act and SBIC Regulations. "Equity
Interest" shall mean capital stock or membership interests and warrants or
options to purchase stock or membership interests.
4.7 Change of Control. No event or events shall occur which either (a)
require the Company to file with the FCC a transfer application on Form 315 in
accordance with the Communications Act, and the rules and polices of the FCC, or
(b) change any of the initial members of the Board of Advisors of the Company or
the persons entitled to appoint a majority of the members of the Board of
Advisors.
4.8 Affiliated Transactions. Except as otherwise permitted under this
Agreement, the Company will not engage in any transactions with, or make any
payments or distributions to or for the benefit of, the WB Network, any officer
or key employee of the Company or the WB Network or persons or entities
controlling, controlled by, under common control with or otherwise Affiliated
with the Company or the WB Network, provided, however, that the Company may (i)
issue Membership Interests or execute an employment, consulting or
noncompetition agreement with Ted Koplar in connection with the Station KPLR,
Channel 11, St. Louis, Missouri; (ii) enter into affiliation agreements with the
WB Network so long as such transactions are conducted on an arm's-length basis,
are on terms and conditions no less favorable to the Company than could be
obtained from nonrelated persons and are approved by a majority in interest of
the Lenders and the Investors after full disclosure of the terms thereof; and
(iii) purchase programming from WB or an Affiliated entity so long as such
transactions are conducted on an arm's-length basis, are on terms and conditions
no less favorable to the Company than could be obtained from nonrelated persons
and are disclosed to the Lenders and the Investors.
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4.9 Sale of Assets and Certain Fundamental Changes. The Company will not:
(a) purchase or otherwise acquire or sell, transfer, lease or otherwise dispose
of any FCC Licenses, Stations, or any other broadcast properties or other assets
at a price in excess of $2,000,000, other than in the ordinary course of
business; (b) sell, transfer, lease or otherwise dispose of (whether in one
transaction or a series of related transactions) all or any substantial portion
of its assets or accounts receivable, whether with or without recourse; (c)
authorize or permit the bankruptcy, reorganization, liquidation, dissolution or
winding up of the Company; (d) consolidate or merge with, or otherwise acquire,
in one or a series of transactions, all or any substantial portion of the assets
or ownership interests in any Person, except for mergers among its wholly-owned
subsidiaries; (e) make any advance, loan, extension of credit or capital
contribution to, or purchase any securities of or any assets constituting a
business unit or make any other investment in, any Person, except for Capital
Expenditures as and to the extent specifically permitted hereunder; (f) engage
in any material business or transaction except those relating to the operation
and management of television stations; or (g) enter into any agreement that (i)
would substantially change the nature of the broadcasting operations of any
station acquired pursuant to any Pending Acquisition as a national network
affiliate, (ii) pursuant to which any station acquired pursuant to any Pending
Acquisition would broadcast a home shopping, foreign language or similarly
specialized audience service during substantial portions of time, or (iii) would
make available substantial portions of the broadcast time on any station
acquired pursuant to a Pending Acquisition to third parties to program pursuant
to a time brokerage, local management, joint sales or similar type of
programming agreement.
4.10 No Amendments to Organizational Documents or this Agreement. The
Company will not make any amendment or modification to, or waiver of any of the
terms of, the Certificate or the LLC Agreement or this Agreement, without the
prior written consent of each of the Lenders and the Investors.
4.11 Restrictions on Other Agreements. The Company will not enter into
any agreement with any party which: (a) restricts the payments due the holders
of the Debentures or Investor Units; or (b) otherwise conflicts with or impairs
any of the rights or privileges granted to the Lenders and the Investors
hereunder or under the agreements, documents and instruments contemplated hereby
and thereby.
4.12 Change in Senior Management. Each member of Management shall
continue to hold his same management position, shall continue to be employed by
the Company and the members of Management shall collectively continue to hold a
majority of the Management Carry Units, unless the Company shall, within sixty
(60) days following such change or departure, fill such position or replace such
employee with a qualified individual with comparable experience in the
television broadcasting industry, provided, however, that the Company shall not
offer any such qualified individual employment (i) without the prior written
consent of the holders of sixty percent (60%) in interest of the Class B Founder
Units purchased hereunder, on an as converted basis, which consent shall not be
unreasonably withheld, and (ii) until he or she has executed an agreement to be
subject to the provisions of Section 6.2 hereof. The Company also agrees to
enforce the terms of the Employment Agreements and the Consulting Agreement of
which the Lenders and the Investors are third party beneficiaries, and the
vesting and repurchase provisions in the LLC Agreement.
29
4.13 Annual Updates; Number of Members; Use of Proceeds; Regulatory
Violation; Economic Impact Information Amendment.
(a) As long as an SBIC Investor holds any Investor Units, Class B
Founder Units or Debentures, the Company shall, on an annual basis, provide to
such SBIC Investor the information required under 13 C.F.R. Section 107.620(b)
and shall provide the information and access required by 13 C.F.R.
Section 107.620(c).
(b) As long as an SBIC Investor holds any Investor Units, Class B
Founder Units or Debentures, the Company shall notify such SBIC Investor:
(i) at least fifteen (15) days prior to taking any action
after which the number of record holders of the Company's Membership
Units would be increased from fewer than 50 to 50 or more;
(ii) of any other action or occurrence after which the
number of record holders of the Company's Membership Units was increased
(or would increase) from fewer than 50 to 50 or more, as soon as
practicable after the Company becomes aware that such other action or
occurrence has occurred or is proposed to occur.
For purposes of this Agreement, an "SBIC Investor" shall mean the
BancBoston or an Affiliate of the BancBoston that has been licensed as an SBIC
and holds Investor Units, Class B Founder Units or Debentures of the Company;
(c) Regulatory Violation. Upon the occurrence of a Regulatory
Violation (as defined below) or in the event that any SBIC Investor determines
in its reasonable good faith judgment that a Regulatory Violation has occurred,
in addition to any other rights and remedies to which it may be entitled
(whether under this Agreement or any other agreement), such SBIC Investor shall
have the right, to the extent disposition is required under SBIC Regulations, to
demand the immediate repurchase of all of the Investor Units, Class B Founder
Units and/or Debentures owned by such SBIC Investor at a price equal to the
purchase price paid for such Investor Units, Class B Founder Units and/or
Debentures hereunder plus accrued interest and/or dividends by delivering
written notice of such demand to the Company; provided, however, that, in the
event of a Regulatory Violation, any SBIC Investor shall, prior to demanding the
repurchase of all of the Investor Units, Class B Founder Units and/or Debentures
owned by such SBIC Investor, use reasonable efforts to retain its investment in
the Investor Units, Class B Founder Units and/or Debentures, including, without
limitation, petitioning the SBA, pursuant to 13 C.F.R. Section 107.760(b), for
its approval of such retention. The Company shall pay the purchase price for
such Investor Units, Class B Founder Units and/or Debentures by a cashier's or
certified check or by wire transfer of immediately available funds to such SBIC
Investor within thirty (30) days after the Company's receipt of the demand
notice, and, upon such payment, such SBIC Investor shall deliver the
certificates, if any, evidencing the Investor Units, Class B Founder Units
and/or Debentures being repurchased duly endorsed for transfer or accompanied by
duly executed forms of assignment.
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For purposes of this Agreement, "Regulatory Violation" means a change in
the principal business activity of the Company and its subsidiaries to an
ineligible business activity (within the meaning of 13 C.F.R. Section 107.720),
if such change occurs within one (1) year after the Initial Closing Date.
(d) Economic Impact Information. Promptly after the end of each
calendar year (but in any event prior to February 28 of each year), the Company
shall deliver to all SBIC Investors a written assessment of the economic impact
of the total investment by all SBIC Investors in the Company, specifying the
full-time equivalent jobs created or retained in connection with the investment,
the impact of the investment on the businesses of the Company in terms of
expanded revenue and taxes, and the other economic benefits resulting from the
investment, including but not limited to, technology development or
commercialization, minority business development, urban or rural business
development and expansion of exports, together with all other information
reasonably requested by any SBIC Investor in order to provide the information
required by 13 C.F.R. Section 107.630.
SECTION 5. OPERATING AND REPORTING COVENANTS.
The Company (which term shall be deemed to include, for purposes of this
Section 5, any majority owned subsidiary or subsidiaries controlled by the
Company) shall comply with the following covenants, from the date hereof and for
so long as the Lenders and the Investors hold Debentures and Investor Units
representing at least (i) thirty-five percent (35%) (determined on the basis of
principal amount or Capital Contributions) of the Debentures and Investor Units
issued at the Initial Closing and the First Subsequent Closing (ii) aggregate
Non-Carry Distribution Percentages equal to or greater than fifty and one-tenth
percent (50.1%) (determined on an as converted basis). Compliance with any of
the following covenants may be waived, amended or modified by the prior written
consent of the Consenting Holders.
5.1 Financial Statements; Minutes. The Company shall maintain a system of
accounts from which financial statements prepared in accordance with generally
accepted accounting principles consistently applied can be derived, keep full
and complete financial records and furnish to each of the Lenders and the
Investors the following reports: (a) within 90 days after the end of each fiscal
year, a copy of the consolidated and consolidating balance sheet of the Company
and any subsidiaries as at the end of such year, together with statements of
operations and cash flow of the Company for such year, audited by independent
public accountants of recognized standing reasonably satisfactory to the Lenders
and the Investors, prepared in accordance with GAAP consistently applied, and
including in comparative form the corresponding figures for the prior fiscal
period; (b) within 30 days after the end of each month, an unaudited
consolidated and consolidating balance sheet of the Company and any subsidiaries
as at the end of such month and unaudited statements of operations for the
Company for such month and for the year to date, and including in comparative
form the corresponding figures for the prior fiscal periods; (c) promptly after
the same are available, copies of any financial statements and reports that the
Company shall send or make available generally to any of its securityholders or
any regulatory authority; (d) as soon as reasonably practicable after any
meetings of the Board of Advisors of the Company, copies of the minutes of such
meeting; (e) in
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connection with the annual financial statements delivered pursuant to clause (a)
above, a certification from the Company's independent public accountants that
there exists no default or Event of Default under this Agreement, or any set of
facts or circumstances which, with the giving of notice or the passage of time
or both, could constitute such a default or Event of Default and if there is a
default, Event of Default or such a set of facts or circumstances, a
certification from the President or Chief Financial Officer of the Company
stating the relevant facts and the related consequences and what actions the
Company proposes to remedy them; and (f) such other financial information as the
Lenders or the Investors may reasonably request. With respect to any Pending
Acquisition, prior to the closing thereof or the relevant Subsequent Closing, if
any, the Company shall have furnished five year projections for such Pending
Acquisition as well as Pending Acquisition Pro Formas. The Lenders and the
Investors or their authorized representatives shall have the right to meet with
the Company's independent auditors not less than once each year to discuss the
financial condition and results of operation of the Company, its financial
controls and the accounting principles applied in the preparation of its
financial statements.
5.2 Existence, Foreign Qualification and Conduct of Business. The Company
will maintain and preserve in full force and effect its existence as a limited
liability company. From and after June 1, 1997, the Company will qualify to do
business in each jurisdiction in which such qualification is required and the
failure to so qualify would have a material adverse effect on the financial
condition or results of operations of the Company. The Company will continue to
engage principally in the business now conducted by the Company or a business or
businesses similar thereto or reasonably compatible therewith. The Company will
use its best efforts to keep in full force and effect its existence as a limited
liability company and all intellectual property rights owned by it and useful in
its business.
5.3 Payment of Taxes, Compliance with Laws, Etc. The Company shall file
all tax returns and related forms and pay and discharge all lawful taxes,
assessments and governmental charges or levies imposed upon it or its property
before the same shall become in default, as well as all lawful claims for labor,
materials and supplies which, if not paid when due, might become a lien or
charge upon its property or any part thereof; provided, however, that the
Company shall not be required to pay and discharge any such tax, assessment,
charge, levy or claim so long as the validity thereof is being contested by it
in good faith by appropriate proceedings and an adequate reserve therefor has
been established. The Company shall treat the Debentures as indebtedness for tax
purposes, shall file all tax returns and related forms consistently with the
treatment of the Debentures as indebtedness for tax purposes and shall not give
effect to the conversion of such Debentures into Investor Units in any manner by
the Lenders except in accordance with the terms hereof. The Company shall comply
in all material respects with all laws and regulations applicable to its
Stations and business, including all FCC laws, regulations and policies.
5.4 Adverse Changes. The Company will promptly advise the Lenders and the
Investors of any event which represents a material adverse change in the
condition or prospects, financial or otherwise of the Company, or in the assets,
liabilities, properties or business of the Company, and of each suit or
proceeding commenced or threatened against the Company which, if adversely
determined, could result in such a material adverse change.
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5.5 Insurance. The Company will keep its insurable properties insured,
upon commercially reasonable terms, against liability, errors and omissions, and
the perils of casualty, fire, business interruption, and extended coverage in
amounts of coverage substantially similar to those customarily maintained by
companies in the same or similar business, and of similar size, as the Company.
The Company will also maintain with such insurers insurance against other
hazards and risks and liability to persons and property to the extent and in the
manner customary for companies engaged in the same or similar business, and of
similar size. The Company shall not limit, amend, alter, modify or waive any
director indemnification or exculpation provisions in its Certificate or in the
LLC Agreement without prior written approval by the Lenders and the Investors of
such action.
5.6 Maintenance of Properties. The Company, in its reasonable discretion,
will maintain all properties used or useful in the conduct of its business in
good repair, working order and condition, ordinary wear and tear excepted.
5.7 Employee Matters. The Company shall establish a long-term incentive
employee benefit plan for the benefit of the managers of Stations acquired
pursuant to the any acquisitions of Station Assets and intended to provide an
incentive for performance in the operation of the Stations.
5.8 Budget and Strategic Plan. The Company shall prepare and submit to
the Lenders and the Investors a budget and strategic plan for the Company for
each fiscal year of the Company at least 30 days prior to commencement of each
fiscal year thereafter, commencing with the Company's 1997 fiscal year. The
Company shall review the budget and strategic plan periodically with the Lenders
and the Investors and shall promptly advise the Lenders and the Investors of all
material changes therein and all material deviations therefrom.
5.9 Pending Acquisition Documents, Additional Instruments and Assurance.
(a) With respect to any Pending Acquisition, the Company shall
deliver to each of the Lenders and the Investors, true and complete copies of
all Pending Acquisition Documents.
(b) The Company will make, execute, endorse, acknowledge and
deliver to the Lenders and the Investors any amendments, modifications or
supplements hereto or restatements hereof and any other agreements,
instructions, financing statements, certificates or other documents, and take
any and all such other actions, as may from time to time be reasonably requested
by the Lenders and the Investors to effect, confirm or further assure or protect
and preserve the interests, rights and remedies of the Lenders and the Investors
under this Agreement or the LLC Agreement, including specifically, at the cost
and expense of the Company, the use of the Company's and Management's best
efforts to assist in obtaining approval of any governmental authority for any
action or transaction contemplated by this Agreement or the LLC Agreement then
required by law.
5.10 Management Rights.The Lenders and the Investors shall be entitled to
consult with and advise Management on significant business issues with respect
to the Company,
33
including Management's proposed annual operating plans for the Company, and
Management will meet with the Lenders and the Investors regularly during each
year at the Company's facilities at mutually agreeable times for such
consultation and advice and to review progress in achieving said plans. The
Lenders and the Investors may examine the books and records of the Company and
inspect its facilities and request information at reasonable times and intervals
concerning the general status of the financial condition and operation of the
Company, and may request full information pertinent to any covenant, provision
or condition hereof, provided that access to highly confidential proprietary
information and facilities need not be provided. The Lenders agree to keep
confidential all financial, marketing and other information with respect to the
Company as to which confidentiality is requested. If any of the Lenders or the
Investors are not represented on the Company's Board of Advisors, the Company
shall invite a representative of such Lender or Investor to attend all meetings
of its Board of Advisors and of any committees of the Board of Advisors, in a
nonvoting observer capacity, and in this respect shall give such representative
copies of all notices, minutes, consents, and other material that it provides to
the members of its Board of Advisors. Any expenses incurred by the Lenders and
the Investors in exercising their rights pursuant to this Section 5.10 shall be
paid by the Company in accordance with Section 12.8 hereof. Notwithstanding
anything in this Agreement to the contrary, the sole remedy of the Lenders and
the Investors for any breach of this Section 5.10 shall be limited to specific
performance.
5.11 FCC Licenses. The Company shall file all necessary applications for
renewal of, and shall preserve in full force and effect the FCC Licenses, and
shall obtain all necessary waivers and permits in connection therewith. In the
event that the Company learns of any petition, action, investigation, notice of
violation or apparent liability, notice of forfeiture, order to show cause,
complaint or proceeding before the FCC or the threat thereof (other than
proceedings of general applicability to members of the television broadcast
industry but excluding proceedings regarding the allocation of digital
television channels), the Company shall promptly notify the Lenders and the
Investors, of the same in writing and shall take all reasonable measures to
contest in good faith or seek removal or rescission thereof. The Company and
Management will comply in all material respects with all applicable filing and
operating FCC Rules and Regulations and policies and all applicable provisions
of the Communications Act, as amended, the Telecommunications Act of 1996 and
all currently published FCC Rules and Regulations and policies, and the Company
and Management will comply in all material respects with the terms of the FCC
Licenses. The Company shall promptly furnish or cause to be furnished to the
Lenders and the Investors copies of all applications, reports and filings filed
by the Company with the FCC, copies of all petitions and motions filed by third
parties with the FCC involving the Company, the Station or the FCC Licenses and
material correspondence between the Company and the FCC.
SECTION 6. SALES COVENANT AND FCC COOPERATION
6.1 Sales Covenant. Notwithstanding anything in this Agreement to the
contrary, following (i) the occurrence of any of the events set forth below
(each a "Sales Event") and (ii) the receipt by the Company, of written notice
from the Lenders and the Investors holding 60% or more of the Debentures and
Investor Units then outstanding (determined on an as
34
converted basis) directing that the Company is to be sold in accordance with
this Section 6.1 (the "Sale Notice"), the Company shall use its best efforts to:
(a) enter into a signed purchase and sale agreement for the sale of the Company
or its assets as soon as possible satisfactory to the Lenders and the Investors
and yielding sufficient proceeds to satisfy in full Company's obligations on the
Bank Debt, the High-Yield Debt, the Debentures, the Class B Founder Units, the
Investor Units, and any Additional Securities or any other securities or
instruments that any of the foregoing are convertible into or exchangeable for,
(b) timely file and diligently prosecute with the FCC all necessary assignment
or transfer applications in connection therewith, and (c) close on such sale and
purchase within four (4) months after execution of the applicable purchase and
sale agreement; provided that if, despite the exercise of best efforts, the
required FCC approval is not obtained within such four-month period, such period
shall be extended for an additional four months:
(i) the holders of any Indebtedness in the aggregate amount of
$5,000,000 for money borrowed by the Company or any Subsidiary takes any
action to accelerate any of its Indebtedness outstanding or to foreclose
on collateral pledged in connection therewith relating to its
Indebtedness;
(ii) the Company fails to consummate the Put Closing pursuant to
the terms of Section 1.5 within 150 days after the Put Notice is given;
(iii) the Company breaches the EBITDA and Revenue covenant set
forth in Section 4.4; or
(iv) the Company breaches one or more of the other covenants set
forth in Section 4 hereof or the LLC Agreement (including Section 3.03(c)
and Section 3.04 thereof) and such default remains uncured for forty-five
(45) days after receipt of written notice from any of the Investors and
the Lenders.
In the event the Company fails to enter into a signed purchase and sale
agreement within sixty (60) days after the Sale Notice is given, or to close on
any such purchase and sale agreement within four (4) months after the execution
thereof, the Lenders and the Investors shall have the right to seek to take
control, or appoint a receiver, trustee, transferee or other official to take
control, of the Company and to consummate such transactions, subject to any
necessary FCC approval.
Each of the Company and the members of Management (the "Interested
Parties") also acknowledge and agree that the Investors and the Lenders have the
right in connection with this Section 6.1 hereof or Section 3.03(c) or Section
6.07 of the LLC Agreement to: (i) seek appointment of a receiver, trustee or
similar official to effect the transactions contemplated by such provisions,
including, without limitation, to seek from the FCC an involuntary assignment or
transfer of control of each FCC License held by the Company or any of its
Subsidiaries for the purpose of transferring control of such FCC Licenses to the
Class B Founders, their designees or a purchaser; and (y) make a request, in any
action in law or at equity to any court of competent jurisdiction that a
representative of the Lenders and Investors or the clerk of the court or some
other person be authorized to execute and file with the FCC any application
requesting FCC
35
approval for the involuntary assignment or transfer of control of all FCC
Licenses issued to or held by the Company.
6.2 FCC Cooperation. Each of the Interested Parties agrees to take any
actions that the Lenders and the Investors may reasonably request in writing in
order to enable the Lenders and the Investors to obtain and enjoy the full
rights and benefits granted by this Agreement, the LLC Agreement and any of the
related documents, including without limitation, the use of their best efforts
(or, in the case of the Management, commercially reasonable efforts) consistent
with the rules, regulations and policies of the FCC, to obtain the approval of
the FCC for any action or transaction contemplated by this Agreement or the LLC
Agreement, including any sale, transfer of control or exercise of voting rights
under Section 6.1 hereof or Section 3.03(c) or Section 6.07 of the LLC Agreement
for which such FCC action is then required or prudent. Such obligation shall
specifically include the preparation, signing and filing, or causing to be
prepared, signed and filed, with the FCC, the assignor's, transferor's or
controlling person's application or applications for consent to the assignment
of licenses or transfer of control thereof necessary or appropriate under the
FCC's rules and regulations for approval of (i) any sale or transfer to the
Lenders and/or the Investors or their respective designees of all or part of the
membership interests in the Company or the assets and FCC Licenses of the
Company, (ii) any assumption by the Lenders and/or the Investors or any designee
thereof of voting and management rights pursuant to any pledge agreement
relating to the membership interests in the Company and (iii) the conversion of
the Debentures and the Investor Units in accordance to the terms of the LLC
Agreement. None of the Interested Parties will take any action to obstruct,
impede or infringe upon the Lenders' or the Investor's exercise and enforcement
of their rights, benefits and remedies under this Agreement and any agreement
related hereto, and each of the Interested Parties agree to cooperate fully with
any and all actions taken by the Lenders and the Investors in good faith
pursuant to this Agreement to exercise rights granted to them hereunder,
including without limitation the cooperation and assistance in all proceedings,
correspondence and other communications before or with the FCC or in connection
with obtaining the approvals referred to above.
Each of the Interested Parties acknowledge that the foregoing provisions
are, inter alia, intended to ensure that during the term of this Agreement and
upon the occurrence of any Event of Default, Sales Event or Voting Event, the
Lenders and the Investors receive, to the fullest extent permitted by applicable
law and governmental policy (including, without limitation, the rules,
regulations and policies of the FCC), all rights necessary to exercise control
over and/or sell the Station Assets (including all of the FCC Licenses); and to
exercise all remedies available to them under this Agreement and the other
agreements contemplated hereunder, the Uniform Commercial Code of Massachusetts
or other applicable law. The Company and Management agree that irreparable
damage would result if the provisions of this Section 6.2 are not specifically
enforced, and that, therefore, the rights of the Lenders and the Investors and
the obligations of the Company and Management may be enforced by a decree of
specific performance issued by a court of competent jurisdiction and appropriate
equitable relief or money damages may be applied for by the Lenders and the
Investors and granted in connection therewith. The Company and Management
further acknowledge and agree that, in the event of changes in law or
governmental policy occurring subsequent to the date hereof that affect in any
manner the Lenders' or the Investor's rights of access to, security interest in,
or use or sale of, the
36
FCC Licenses, or the procedures necessary to enable the Lender to obtain such
rights of access, use or sale, the parties hereto shall amend this Agreement and
the agreements contemplated hereunder, in such manner as the Lenders and the
Investors shall reasonably request, in order to provide such rights to the
greatest extent possible, consistent with then-applicable law and governmental
policy, provided that such modifications do not materially adversely affect the
substantive economic rights of any other party hereto.
None of the members of Management shall be deemed to be in breach of his
obligations set forth above in this Section 6.2 (a "Cooperation Breach"), unless
and until, the members of Management fail to fulfill any of their obligations
hereunder after the first to occur of: (x) the failure of the members of
Management to dispute the occurrence of a Sales Event in a written notice
delivered to each of the Lenders and the Investors within fifteen (15) days
after the date of any Sales Notice setting forth in reasonable detail the basis
for such dispute and demanding that such dispute be resolved by binding,
non-appealable arbitration in accordance with the provisions of Section 12.3
hereof and pursuant to procedures designed to render a decision within thirty
(30) days after the date of such written dispute notice (a "Sales Dispute
Notice"); or (y) the rendering of an arbitration decision to the effect that a
Sales Event has occurred. The costs of any arbitration proceeding hereunder
shall be borne by the losing parties and, except for their right to issue a
Sales Dispute Notice and arbitrate whether a Sales Event has occurred, the
members of Management hereby waive any other rights they may have to contest the
actions of the Lenders and the Investors hereunder. The Lenders and Investors
shall not have any personal recourse to the members of Management for a
Cooperation Breach, except to the extent of certain pledges of the Management's
Membership Interests in the Company and provided that the Members of Management
may be terminated without severance payments upon the occurrence of a
Cooperation Breach and may withhold severance payments during the pendency of an
arbitration proceeding hereunder. Notwithstanding anything herein to the
contrary, the Lenders and the Investors shall not be precluded in any way from
pursuing any of their rights under Section 6.1 hereof or elsewhere in this
Agreement or the LLC Agreement as a result of the fact that a Cooperation Breach
may not yet have occurred hereunder.
The Interested Parties also acknowledge and agree that the Investors and
the Lenders have the right in connection with Section 6.1 hereof or Section
3.03(c) or Section 6.07 of the LLC Agreement to seek appointment of a receiver,
trustee, transferee or similar official to effect the transactions contemplated
by this Agreement or the LLC Agreement, including, without limitation, to seek
from the FCC an involuntary transfer of control of each FCC License held by the
Company or the FCC License held by the Company or the Subsidiaries for the
purpose of seeking a bona fide purchase to whom control will ultimately be
transferred, and that the Investors and the Lenders are entitled to seek such
relief and the Interested Parties agree not to object thereto on any grounds.
SECTION 7. EVENTS OF DEFAULT; REMEDIES
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7.1 Events of Default.
In each case of the happening of the following events (each of which is
herein sometimes referred to as an "Event of Default"):
(a) if a default occurs in the payment of any premium, installment
of the principal of, interest on, or other obligation with respect to, the
Debentures, whether at the due date thereof or upon acceleration thereof, and,
solely in the case of any such default in the payment of interest, charges, fees
or expenses, such default continues for more than five (5) days after the due
date thereof;
(b) if any representation or warranty of the Company or Management
made herein or in any agreement executed in connection with, or in any schedule,
certificate, financial statement or other instrument furnished in connection
with, this Agreement shall prove to have been false or misleading when made in
any material respect;
(c) if a default occurs in the due observance or performance of
any covenant, condition or agreement on the part of the Company or Management to
be observed or performed pursuant to any of the provisions of this Agreement or
the LLC Agreement and such default remains uncured for forty-five (45) days
after written notice thereof has been delivered to the Company by the Lenders
holding a majority of the Debentures then outstanding, or for such longer period
if the default cannot reasonably be cured within such 45-day period and the
Company is diligently pursuing cure of the default, but in no event for a period
greater than 90 days after written notice thereof has been delivered by the
Lenders and the Investors to the Company, provided, however, that if such
default cannot be remedied, then such default shall be deemed to be an Event of
Default as of the date of the occurrence thereof;
(d) if the payment of any other Indebtedness of the Company for
borrowed money in an aggregate amount in excess of $1,000,000 (including any
Senior Debt or any High Yield Debt) is accelerated prior to the stated maturity
thereof;
(g) if the Company shall (i) discontinue its business, (ii) apply
for or consent to the appointment of a receiver, trustee, custodian or
liquidator of it or any of its property, (iii) admit in writing its inability to
pay its debts as they mature, (iv) make a general assignment for the benefit of
creditors, or (v) file a voluntary petition in bankruptcy, or a petition or an
answer seeking reorganization or an arrangement with creditors, or to take
advantage of any bankruptcy, reorganization, insolvency, readjustment of debt,
dissolution or liquidation laws or statutes, or an answer admitting the material
allegations of a petition filed against it in any proceeding under any such law,
or if corporate action shall be taken for the purpose of effecting any of the
foregoing;
(h) there shall be filed against the Company an involuntary
petition seeking reorganization of the Company or the appointment of a receiver,
trustee, custodian or liquidator of the Company or a substantial part of its
assets, or an involuntary petition under any bankruptcy, reorganization or
insolvency law of any jurisdiction, whether now or hereafter in effect (any of
the foregoing petitions being hereinafter referred to as an "Involuntary
Petition"), which petition shall not have been dismissed within sixty (60) days
of the date it was filed;
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(i) if final judgment(s) from a court of competent jurisdiction
for the payment of money in excess of an aggregate of $1,000,000 shall be
rendered against the Company and the same shall remain unstayed or undischarged
for a period of thirty (30) consecutive days, during which time execution shall
not be effectively stayed;
(j) if there occurs any attachment of any property of the Company
in an amount exceeding $1,000,000, which shall not be discharged or bonded
within thirty (30) days of the date of such attachment; or
(k) the Company shall lose, fail to keep in force, suffer the
termination, suspension or revocation of or terminate, forfeit or suffer an
amendment to any FCC License or other material license at any time held by it,
the loss, termination, suspension or revocation of which would have a material
adverse effect on the operations of the Company taken as a whole or the
Company's ability to perform its obligations under this Agreement;
then, upon each and every such Event of Default thereafter and during the
continuance of any such Event of Default, and, upon the consent of all of the
holders of the Debentures then outstanding, the Debentures shall immediately
become due and payable upon written notice to the Company, both as to principal
and interest, without presentment, demand, or protest, all of which are hereby
expressly waived, anything contained herein or in the Debentures to the contrary
notwithstanding (except in the case of an Event of Default under subsections (g)
or (h) of this Section 7.1, in which event such Debentures shall automatically
become due and payable).
7.2 Remedies on Default, Etc. In case any one or more Events of Default
shall occur and be continuing, each Lender and the Investors may proceed to
protect and enforce their rights by an action at law, suit in equity or other
appropriate proceeding, whether for the specific performance of any agreement
contained in this Agreement, or for an injunction against a violation of any of
the terms hereof or thereof or in and of the exercise of any power granted
hereby or thereby or by law. No right conferred upon the Lenders and the
Investors hereby or the Debentures shall be exclusive of any other right
referred to herein or therein or now or hereafter available at law, in equity,
by statute or otherwise. The consent of all of the holders of Debentures shall
be required in order for any of the Lenders to seek monetary remedies pursuant
to this Section 7.2.
SECTION 8. REPRESENTATIONS AND WARRANTIES OF THE LENDERS AND THE
INVESTORS
8.1 Representation of the Lenders and the Investors. In order to induce
the Company to enter into this Agreement, the Lenders and the Investors hereby
represent and warrant to and agree with the Company with respect to such
Lenders' and the Investor's purchase of Debentures and the Investor Units,
respectively, hereunder that as of the date hereof:
(a) The execution of the Agreement has been duly authorized by
all necessary action on the part of the Lenders and the Investors, and this
Agreement has been duly executed
39
and delivered, and constitutes a valid, legal and binding agreement of the
Lenders and the Investors enforceable in accordance with its terms, except as
the enforcement thereof may be limited by bankruptcy and other laws of general
application relating to creditor's rights or general principles of equity.
(b) Each of the Lenders and the Investors is acquiring the
Debentures and the Investor Units, respectively, for its own account, for
investment, and not with a view to "distribution" thereof within the meaning of
the Securities Act. The Lenders and the Investors have not been formed for the
specific purpose of making the investment contemplated by this Agreement, the
information concerning the state of residence of each Lender and of the
Investors supplied to counsel for the Company is true and correct as of the date
hereof and, the Lenders and the Investors are each an "accredited investor" as
defined under the Securities Act and the regulations promulgated thereunder.
(c) Each of the Lenders and the Investors understands that
because the Debenture and the Investor Units, respectively, have not been
registered under the Securities Act, it cannot dispose of any or all of them
unless such are subsequently registered under the Securities Act or exemptions
from such registration are available. Each of the Lenders and the Investors
acknowledges and understands that, except as provided in the Registration Rights
Agreement, it has no independent right to require the Company to register the
Debentures or the Investor Units, that the Company has no intention to register
the Debentures or the Investor Units, and that the Company may not accomplish a
public offering of the Debentures or the Investor Units or the securities into
which they are convertible.
(d) Each of the Lenders and the Investors is knowledgeable and
experienced in the making of investments in private enterprises, is able to bear
the economic risk of loss of its investment in the Company, has been granted the
opportunity to investigate the affairs of the Company, and has availed itself of
such opportunity either directly or through its authorized representative.
(e) Each of the Lenders and the Investors has been advised that
the Debentures and the Investor Units have not been and are not being registered
under the Securities Act or under the securities or "blue sky" laws of any
jurisdiction and that the Company in issuing the Debentures and the Investor
Units is relying upon, among other things, the representations and warranties of
contained in this Section 8 in concluding that each such issuance is a "private
offering" and does not require compliance with the registration provisions of
the Securities Act.
(f) Each of the Lenders and the Investors have had access to or
been supplied with all material information regarding the Company, its financial
condition and historical results of operations, and all questions concerning the
Company have been answered to its satisfaction.
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SECTION 9. INTERCREDITOR MATTERS
The Company, the Lenders and the Investors hereby acknowledge and agree
that the Lenders and the Investors shall execute and deliver a subordination
agreement with the holders of Bank Debt and High-Yield Debt in form and
substance reasonably satisfactory to such holders.
SECTION 10. INDEMNIFICATION
(a) The Company shall, to the full extent permitted by law, and in
addition to any such rights which any Indemnified Party (as defined herein) may
have pursuant to statute, the Company's Certificate, the LLC Agreement, or
otherwise, indemnify and hold harmless the Lenders and the Investors (including
their respective directors, officers, partners, employees and agents,
"Indemnified Purchasers") and each Person (a "Controlling Person" and
collectively with Indemnified Purchasers, the "Indemnified Parties") who
controls any of them within the meaning of Section 15 of the Securities Act, or
Section 20 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), from and against any and all losses, claims, damages, expenses and
liabilities, joint or several, including any investigation, legal and other
expenses incurred in connection with the investigation, defense, settlement or
appeal of, and any amount paid in settlement of, any action, suit or proceeding
or any claim asserted ("Losses" or "Loss"), to which they, or any of them, may
become subject solely by reason of their status as a securityholder, creditor,
director, agent, representative or controlling person of the Company,
(including, without limitation, any and all Losses under the Securities Act, the
Exchange Act, the SBIC Act, the SBIC Regulations or other federal or state
statutory law or regulation, at common law or otherwise, which relates directly
or indirectly to the registration, purchase, sale or ownership of any securities
of the Company or to any fiduciary obligation owed with respect thereto);
provided, however, that the Company will not be liable to the extent that such
Loss arises from and is based on (i) an untrue statement or omission or alleged
untrue statement or omission in a registration statement or prospectus which is
made in reliance on and in conformity with written information furnished to the
Company in an instrument duly executed by or on behalf of such Indemnified Party
specifically stating that it is for use in the preparation thereof, or (ii)
income taxes due on the Debentures or the Investor Units. The indemnification
and contribution provided for in this Section 10(a) will remain in full force
and effect regardless of any investigation made by or on behalf of the
Indemnified Parties or any officer, director, employee, agent or Controlling
Person of the Indemnified Parties.
(b) If the indemnification provided for in Section 10(a) above for
any reason is held by a court of competent jurisdiction to be unavailable to an
Indemnified Party in respect of any Losses referred to therein, then the
Company, in lieu of indemnifying such Indemnified Party thereunder, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such Losses (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company, the Lenders and the Investors, 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, the
Lenders and the Investors in connection with the action or inaction which
resulted
41
in such Losses, as well as any other relevant equitable considerations. In
connection with the registration of the Company's securities, the relative
benefits received by the Company, the Lenders and the Investors shall be deemed
to be in the same respective proportions that the net proceeds from the offering
(before deducting expenses) received by the Company, the Lenders and the
Investors, in each case as set forth in the table on the cover page of the
applicable prospectus, bear to the aggregate public offering price of the
securities so offered. The relative fault of the Company, the Lenders and the
Investors 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, the Lenders and the Investors and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company, the Lenders and the Investors agree that it would not be
just and equitable if contribution pursuant to this Section 10(b) were
determined by pro rata or per capita allocation or by any other method of
allocation which does not take account of the equitable considerations referred
to in the immediately preceding paragraph. In connection with the registration
of the Company's securities, in no event shall a Lender or the Investors be
required to contribute any amount under this Section 10(b) in excess of the
lesser of (i) that proportion of the total of such Losses indemnified against
equal to the proportion of the total securities sold under such registration
statement which is being sold by such Lender or the Investors or (ii) the
proceeds received by such Lender or the Investors from its sale of securities
under such registration statement. No person found guilty of fraudulent
misrepresentation (within the meaning of Section 10(f) of the Securities Act)
shall be entitled to contribution from any person who was not found guilty of
such fraudulent misrepresentation.
(c) Any Indemnified Party that proposes to assert the right to be
indemnified under this Section 10 will, promptly after receipt of notice of
commencement of any claim or action against such party in respect of which a
claim is to be made against the Company under this Section 10, notify the
Company of the commencement of such action, enclosing a copy of all papers
served, but the omission so to notify the Company will not relieve the Company
from any liability that the Company may have to any Indemnified Party under the
foregoing provisions of this Section 10 unless, and only to the extent that,
such omission results in the forfeiture of substantive rights or defenses by the
Company. The Indemnified Party will have the right to retain its own counsel in
any such action and all fees, disbursements and other charges incurred in the
investigation, defense and/or settlement of such action shall be advanced and
reimbursed by the Company promptly as they are incurred; provided, however, that
the Indemnified Party shall agree to repay any expenses so advanced hereunder if
it is ultimately determined by a court of competent jurisdiction that the
Indemnified Party to whom such expenses are advanced is not entitled to be
indemnified as a matter of law; and provided further that so long as the
Indemnified Party has reasonably concluded that no conflict of interest exists,
the Company may assume the defense of any action hereunder with counsel
reasonably satisfactory to the Indemnified Party. The Company shall not settle
any action or claim for which indemnification is sought under this Section 10
without the prior written consent of the Indemnified Party, unless such
settlement releases such Indemnified Party from liability without requiring any
payment or other action (except executing documents) by such Indemnified Party.
42
SECTION 11. DEFINITIONS
Unless the context specifically requires otherwise, capitalized terms
used in this Agreement shall have the meaning specified below:
"Affiliate" shall mean, with respect to a specified Person, any Person that
directly or indirectly controls, is controlled by or is under common control
with, the specified Person. The term Affiliate shall be deemed to include any
investment funds in which a Lender or the Investors and/or one or more partners,
managers, advisers or Affiliates thereof directly or indirectly serve as general
partner, manager or in like capacity. As used in this definition, the term
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether
through ownership of voting securities, by contract or otherwise.
"Business Day" means any day other than a Saturday, Sunday or Massachusetts or
Federal holiday.
"Capital Lease" means any lease of property (real, personal or mixed) which in
accordance with generally accepted accounting principles consistently applied,
would be capitalized on the lessee's balance sheet or for which the amount of
the asset and liability thereunder should be disclosed in a note to such balance
sheet as if so capitalized.
"EBITDA" means, as of the date of determination on a trailing twelve (12) month
basis, the Company's consolidated gross revenues during such period, (excluding,
to the extent included in gross revenues, (i) any revenues resulting from the
exchange of advertising time for non-cash consideration, such as merchandise or
services, (ii) any other non-cash income (including the cumulative effect of a
change in accounting principles and extraordinary items) and (iii) any gains
from sales, exchanges and other dispositions of property not in the ordinary
course of business) minus any investment income, interest income and other
non-operating income, minus any cash payments made in respect of Programing
Obligations, minus operating expenses, corporate overhead and agency commissions
for such period, plus amortization in respect of Programming Obligations for
such period, all as determined in accordance with GAAP consistently applied.
"FCC" means the Federal Communications Commission and any successor governmental
agency performing functions similar to those performed by the Federal
Communications Commission on the date hereof.
"Governmental Authority" means and includes any court and any foreign, federal,
state, municipal or other governmental or self-regulatory agency, organization,
board, commission, bureau, instrumentality or department.
"Indebtedness" means with respect to any Person, (i) any liability, contingent
or otherwise, of such Person (A) for borrowed money (whether or not recourse of
the Investors is to the whole of the assets of such Person or only to a portion
thereof), (B) evidenced by a note, debenture or similar instrument (including a
purchase money obligation) given in connection with the
43
acquisition of any property or assets, (C) for any letter of credit or
performance bond in favor of such Person, (D) for the payment of money relating
to a capitalized lease obligation, or (E) any liability, contingent or
otherwise, of such Person to any other Person for any purchase price associated
with any acquisition of assets, business or otherwise (including any deferred
purchase price, assumption of Indebtedness, noncompetition payments or other
forms of consideration); (ii) any liability of others of the kind described in
the preceding clause (i), which the Person has guaranteed or which is otherwise
its legal liability, contingent or otherwise; (iii) any obligation secured by a
Lien to which the property or assets of such Person are subject, whether or not
the obligations secured thereby shall have been assumed by or shall otherwise be
such Person's legal liability; (iv) all other items (except items of capital
stock, capital or paid-in surplus or of retaining earnings) which in accordance
with generally accepted accounting principles, would be included as a liability
on the balance sheet of such Person on the date of determination; and (v) any
and all deferrals, renewals, extensions or refinancing of, or amendments,
modifications of supplements to, any liability of the kind described in any of
the preceding clauses (i), (ii), (iii) or (iv).
"Lien" means any interest in, or claim against, property relating to an
obligation owed to, or claim by, a Person other than the owner of the property,
whether such interest is based on the common law, statute or contract, and
including but not limited to any security interest, lien arising from a
mortgage, encumbrance, pledge, conditional sale or trust receipt or a lease,
consignment or bailment for security purposes, any rights of first refusal,
charges, claims, liabilities, limitations, conditions, restrictions or other
adverse claims; provided, however, that "Lien" shall not include the interest
retained by the lessor under a lease which is not a Capital Lease. For the
purposes of this Agreement, the Company shall be deemed to be the owner of any
property which it has acquired or holds subject to a conditional sale agreement,
financing lease or other arrangement pursuant to which title to the property has
been retained by or vested in some other person or entity for security purposes
and such retention or vesting shall be deemed to be a Lien.
"Person" means any individual, corporation, association, partnership (general or
limited), joint venture, trust, unincorporated organization, limited liability
company, and other entity or organization of any kind or any government or any
agency or political subdivision thereof.
"Programming Obligations" means all direct or indirect monetary liabilities,
contingent or otherwise, with respect to contracts for television broadcast
rights relating to television series or other programs produced or distributed
for television release.
"Property" means all types of real, personal, or mixed property and all types of
tangible or intangible property.
"Registration Rights Agreement" means the Registration Rights Agreement in the
form attached hereto as Exhibit F, dated as of the date hereof, by and between
the Company and the Lenders and the Investors, as amended, supplemented or
modified from time to time.
"Revenue" means, for any fiscal period, the net revenues of the Company, on a
consolidated basis, as determined in accordance with GAAP.
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"Securities Act" means the Securities Act of 1933 and the rules and regulations
promulgated thereunder, each as amended from time to time.
"Senior Debt" means the aggregate principal amount of any indebtedness for money
borrowed and other amounts due in respect thereof in accordance with the
provisions of Sections 4.1(f) and (g).
"Tax" means any federal, state, local, or foreign income, gross receipts,
capital stock, franchise, profits, windfall profits, withholding, payroll,
social security (or similar), unemployment, disability, real property, personal
property, excise, occupation, sales, use, transfer, value added, alternative
minimum, environmental, customs, duties, estimated or other tax, including any
interest, penalty or addition thereto, whether disputed or not.
"Tax Returns" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto and including any amendment thereof.
The following terms shall have the meanings assigned to them in the
provisions of this Agreement referred to below:
1940 Act - Section 2.18
Additional Securities - Section 1.4(a)
Allen - Preamble
ALTA VI - Preamble
ALTA INC. - Preamble
ALTA S by S - Preamble
ALTA SDP - Preamble
Asset Purchase Agreement - Section 2.7
BancBoston - Preamble
Bank Debt - Section 4.1(f)
Capital Expenditures - Section 4.3
CEA - Preamble
CEA INC. - Preamble
Certificate - Section 2.1
Co-Sale Option - Section 1.8
Class B Founder Units - Section 1.1
Code - Section 2.14
Communications Act - Section 2.9
Company - Preamble
Consenting Holders - Section 4
Controlling Person - Section 10(a)
Co-Sale Option - Section 1.8(a)
Debentures - Preamble
Employee Program - Section 2.19
Environmental Law - Section 2.22
45
Equity Interest - Section 4.6
ERISA - Section 2.19
Event of Default - Section 7.1
Exchange Act - Section 10(a)
First Subsequent Closing - Section 1.1(c)
FCC Licenses - Section 2.9
GAAP - Section 2.10
Gealy - Preamble
Hazardous Material - Section 2.22
Hazardous Waste - Section 2.22
High-Yield Debt - Section 4.1(g)
Indemnified Parties - Section 10(a)
Indemnified Purchasers - Section 10(a)
Independent Appraiser - Section 1.5
Initial Closing Date - Section 1.1(a)
Initial Closing - Section 1.1(a)
Initial Investors - Section 1.1(a)
Initial Lenders - Section 1.1(a)
Intellectual Property - Section 2.16
Interest - Section 1.2(a)
Investors - Preamble
Investor Units - Preamble
Involuntary Petition - Section 7.1(h)
IRS - Section 2.14
Kellner - Preamble
Lenders - Preamble
Licenses - Section 2.8
LLC Agreement - Section 1.1(a)
Loss or Losses - Section 10(a)
Management - Preamble
Management Agreement - Section 2.7
Material Agreements - Section 2.15
Membership Interest - Section 1.4(a)
Net Equity Value - Section 1.5
Offer Notice - Section 12.2(b)
Offered Securities - Section 12.2(b)
Oregon Acquisition - Section 1.1(b)
PCBs - Section 2.22
Pending Acquisition - Section 2.2
Pending Acquisition - Section 1.4(a)
Pending Acquisition Documents - Section 2.7(c)
Pending Acquisition Pro Formas - Section 1.4(a)
Pension Plan - Section 2.19 Permitted Indebtedness - Section 4.1(b)
Proposed Transferee - Section 12.2(b)
Purchase Price - Section 1.1(a)
46
Put Closing - Section 1.5(c)
Put Notice - Section 1.5
Put Parties - Section 1.5
Put Price - Section 1.5
Put Option - Section 1.5
Regulatory Violation - Section 4.14(c)
Sale Notice - Section 6.1
Sale Transaction - Section 1.5
Sales Offer - Section 1.4(a)
Sales Event - Section 6.1
SBA - Section 2.28
SBIC Act - Section 2.28
SBIC Act - Section 4.6
SBIC Investor - Section 4.14
SBIC Regulations - Section 2.28
Selling Member - Section 1.8
Station Acquisitions - Preamble
Station Assets - Preamble
Station - Section 2.9
Stations - Preamble
Subsequent Closing - Section 1.4(a)
Taxes - Section 2.14
Transferor - Section 12.2(b)
WB - Section 2.27
WB Network - Preamble
Defined terms not otherwise defined herein shall have the meanings ascribed to
them in the LLC Agreement.
SECTION 12. GENERAL
12.1 Amendments, Waivers and Consents. For the purposes of this Agreement
and all agreements, documents and instruments executed pursuant hereto, except
as otherwise specifically set forth herein or therein, no course of dealing
between the Company and any of the Lenders or the Investors and no delay on the
part of any party hereto in exercising any rights hereunder or thereunder shall
operate as a waiver of the rights hereof and thereof. No covenant or other
provision hereof or thereof may be waived otherwise than by a written instrument
signed by the party so waiving such covenant or other provision; provided,
however, that except as otherwise provided herein or therein, changes in or
additions to, and any consents required by, or requests or demands made pursuant
to, this Agreement may be made, and compliance with any term, covenant,
condition or provision set forth herein may be omitted or waived (either
generally or in a particular instance and either retroactively or prospectively)
by a written instrument or instruments signed by the Company and a majority
interest of both the Investors and the Lenders; provided, however, that any
provisions in this Agreement which require a greater or different percentage of
the Lenders and/or the Investors for any waiver or consent may
47
be amended if such greater or different percentage of Lenders and/or Investors
also agree in writing.
12.2 Survival of Covenants; Assignability of Rights.
(a) All covenants, agreements, representations and warranties of
the Company made herein and to be performed prior to or at the Initial Closing
and Subsequent Closings, if any, and in the certificates, lists, exhibits,
schedules or other written information delivered or furnished to any Lender or
to the Investors pursuant to the terms of this Agreement shall survive the
delivery of the Debentures and the sale of the Investor Units and shall bind the
Company's successors and assigns, whether so expressed or not, and, except as
otherwise provided in this Agreement, all such covenants, agreements,
representations and warranties shall inure to the benefit of the Lenders' and
Investor's successors and assigns and to transferees of the Debentures and the
Investor Units (or any securities received upon conversion thereof), whether so
expressed or not. Upon the consummation of an initial public offering by the
Company which has been consented to by the Lenders and the Investors and in
connection with which the Debentures and the Investor Units are converted into
common stock in accordance with Section 7.01 of the LLC Agreement, all of the
provisions of this Agreement shall terminate and be of no further force and
effect, except that the provisions of Sections 5.1 and 10 shall survive after
such conversion; provided that any financial information provided to the Lenders
and the Investors after an initial public offering should be limited to the
information provided to other public shareholders, unless otherwise requested by
any of the Lenders or the Investors. Notwithstanding the foregoing or anything
to the contrary contained in this Agreement, all representations and warranties
of the Company contained or referenced in Section 2 hereof shall survive only
for a period of two (2) years from the later of (i) Initial Closing Date and
(ii) the date of each Subsequent Closing, if any, and any claim based upon any
misrepresentations or breach of warranty by the Company under Section 2 must be
made within such period.
(b) Except as provided in Section 4.13 of this Agreement and
Section 6.04 of the LLC Agreement, the Class B Founder Units and Debentures
("Offered Securities") may only be Transferred (as such term is defined in the
LLC Agreement) by the holder thereof (the "Transferor") if such Transferor first
offers to sell such Offered Securities to the other Lenders and the Investors in
a written notice stating its intent to Transfer such Offered Securities and the
terms of such Transfer (the "Offer Notice"). Any Lender and/or Investors
desiring to purchase such Offered Securities (a "Proposed Transferee") shall
give written notice, within thirty (30) calendar days from the date of the Offer
Notice. The Lenders and/or the Investors may purchase any or all of such Offered
Securities, with each of the Lenders and/or Investors having a right to purchase
its pro rata share, equal to (x) the principal amount of the Debentures plus the
total capital contribution for all Membership Units held by such Investor and/or
Lender (y) divided by the total principal amount of all outstanding Debentures
plus the total capital contribution for all Membership Units held by the
Investors and Lenders, with a right of over-allotment. The closing of the
purchase of the Offered Securities pursuant hereto shall take place on a date
not less than ten (10) days nor more than thirty (30) days after expiration of
the thirty-day period following the Offer Notice. Any Offered Securities not
purchased by the other Lenders and Investors may be sold to an unaffiliated
third party who is reasonably acceptable to a majority in interest of the other
Lenders and Investors within ninety (90) days following the expiration of the
above-
48
referenced thirty-day period on terms no more favorable to the transferee than
those set forth in the Offer Notice and subject to compliance with, Section
12.2(c) below
(c) In the event that the Lenders and the Investors right of
first offer to purchase all of any Offered Securities is not exercised in full,
then such Transfer(s) shall be subject to compliance with Section 6.06 of the
LLC Agreement and the foregoing terms of this Section 12.2(c) shall not apply to
such Transfer(s).
12.3 Governing Law; Limitation of Litigation; Dispute Resolution. THIS
AGREEMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER, AND SHALL BE CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS.
(a) The parties to this Agreement hereby agree that any dispute
relating to, or arising from, the terms or conditions of this Agreement shall,
within thirty (30) days after good faith negotiation among the parties to this
Agreement, be submitted to J.A.M.S./Endispute, Inc. ("Endispute") for final and
binding arbitration pursuant to Endispute's Arbitration Rules, and Endispute's
determination shall be made within thirty (30) days of being submitted. Any such
arbitration shall be conducted in Boston, Massachusetts. Except as provided in
Section 6, the costs of such proceedings shall be borne as determined by
Endispute.
(b) Subject to the provisions of Section 12.3 (a) above, each of
the Company, the Lenders, the Investors and Management hereby agrees that the
state and federal courts of The Commonwealth of Massachusetts shall have
jurisdiction to hear and determine any claims or disputes between the Lenders,
the Investors and the Company pertaining directly or indirectly to the
enforcement of any arbitration determinations or awards relating to this
Agreement and all documents, instruments and agreements executed pursuant
hereto, or to any matter arising therefrom (unless otherwise expressly provided
for therein). To the extent permitted by law, the Company hereby expressly
submit and consent in advance to such jurisdiction in any action or proceeding
commenced by the Lenders and/or the Investors in any of such courts, and agrees
that service of such summons and complaint or other process or papers may be
made by registered or certified mail addressed to the Company at the address to
which notices are to be sent pursuant to this Agreement. Each of the Company,
the Investors, the Lenders and Management waives any claim that Boston,
Massachusetts is an inconvenient forum or an improper forum based on lack of
venue. The choice of forum set forth in this Section 12.3 shall not be deemed to
preclude the enforcement of any judgment obtained in such forum or the taking of
any action to enforce the same in any other appropriate jurisdiction. Nothing
herein shall be deemed to limit the right of the Company to remove any
proceeding to federal court if such court has jurisdiction.
12.4 Section Headings. The descriptive headings in this Agreement have
been inserted for convenience only and shall not be deemed to limit or otherwise
affect the construction of any provision thereof or hereof.
12.5 Counterparts. This Agreement may be executed simultaneously in any
number of counterparts, each of which when so executed and delivered shall be
taken to be an original; but such counterparts shall together constitute but one
and the same document.
49
12.6 Notices and Demands. Any notice or demand which, by any provision of
this Agreement or any agreement, document or instrument executed pursuant hereto
or thereto, except as otherwise provided therein, is required or provided to be
given shall be deemed to have been sufficiently given or served and received for
all purposes when delivered in hand, by facsimile transmission with receipt
acknowledged or by express delivery providing receipt of delivery, to the
following addresses and numbers:
To the Lenders: Alta Communications VI, L.P.
Alta-Comm S by S, LLC
Alta Subordinated Debt Partners III, L.P.
Alta Acme, Inc.
c/o Alta Communications, Inc.
One Post Office Square
Boston, MA 02109
Attn: Brian W. McNeill
CEA Capital Partners USA, L.P.
CEA Acme, Inc.
17 State Street
35th Floor
New York, NY 10004
Attn: James Collis
With copies to: Goodwin, Procter & Hoar LLP
Exchange Place
Boston, MA 02109
Facsimile: (617) 570-8150
Attn: John J. Egan III, Esq.
TCW Leveraged Income Trust, L.P.
c/o Trust Company of the West
11100 Santa Monica Boulevard
Suite 2000
Los Angeles, CA 90025
With copies to: O'Melveny & Myers
400 South Hope Street
Los Angeles, CA 90071
Attn: Kathryn Sanders, Esq.
To the Investors: BancBoston Ventures Inc.
175 Federal Street
Boston, MA 02110
Attn: Lars Swanson
With copies to: Goodwin, Procter & Hoar LLP
50
Exchange Place
Boston, MA 02109
Facsimile: (617) 570-8150
Attn: John J. Egan III, Esq.
51
TCW Shared Opportunities Fund II, L.P.
LINC ACME, Corporation
c/o Trust Company of the West
11100 Santa Monica Boulevard
Suite 2000
Los Angeles, CA 90025
Attn: Darryl Schall
With copies to: O'Melveny & Myers
400 South Hope Street
Los Angeles, CA 90071
Attn: Kathryn Sanders, Esq.
To the Company: c/o ACME Television Holdings, LLC
West Oak Street
Burbank, CA 91505
Attn: Jamie Kellner
With a copy to: Dickstein Shapiro Morin & Oshinsky LLP
2101 L Street, N.W.
Washington, D.C. 20037
Attn: Lewis J. Paper, Esq.
or such other address or facsimile number as such party may hereafter specify
for the purpose of receiving notice hereunder.
12.7 Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such a manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be deemed
prohibited or invalid under such applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, and such
prohibition or invalidity shall not invalidate the remainder of such provision
or the other provisions of this Agreement.
12.8 Expenses. The Company shall pay all costs and expenses that it
incurs (including, without limitation, those of its accountants and lawyers)
with respect to the negotiation, execution, delivery, performance and
enforcement of this Agreement and the agreements, documents and instruments
contemplated hereby or executed pursuant hereto. At the Initial Closing (and any
Subsequent Closing), the Company will reimburse the Lenders and the Investors
for all out-of-pocket costs and expenses incurred with respect to the
negotiation, execution, delivery and performance of this Agreement and the
agreements, documents and instruments contemplated hereby or executed pursuant
hereto and any amendments or modifications to this Agreement or such other
agreements, documents or instruments, including the reasonable legal fees and
disbursements for the professional services of Goodwin, Procter & Hoar LLP, as
special counsel for the Lenders and the Investors, or such other counsel
reasonably acceptable to a majority in interest of the Lenders and Investors,
including in connection with any Pending Acquisitions, and, with respect to SBIC
issues only, Ropes & Gray, special counsel
52
to the SBIC Investor, and including travel, accounting and other fees incurred
in connection with their due diligence with respect to the Oregon Acquisition or
to any Pending Acquisitions. Upon and after the Initial Closing, the Company
shall reimburse the Lenders and the Investors for all out-of-pocket costs
thereafter incurred by them on account of any filing fees, transfer taxes or
documentary stamp taxes due on account of the issuance of the Debentures, the
Investor Units or any securities into which they are convertible, or in
connection with their attendance at Board of Advisors meetings or committee
meetings as provided in Section 5.10, or enforcement of this Agreement, and the
agreements, documents and instruments contemplated hereby or executed pursuant
hereto.
12.9 Integration. This Agreement, including the exhibits, documents and
instruments referred to herein or therein and any other instruments, documents
or agreements executed or delivered herewith on the date hereof, constitutes the
entire agreement, and supersedes all other prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter
hereof. In the event and to the extent that the terms of any provision of this
Agreement conflict with the terms of any provision in the LLC Agreement, the
provision in the LLC Agreement shall be deemed to supersede the provision in
this Agreement.
12.10 No Event of Default. The Company hereby represents and warrants
that there has been no Event of Default since June 30, 1997 to the date hereof.
[End of Text]
53
IN WITNESS WHEREOF, the undersigned have executed this Amended and
Restated Investment and Loan Agreement as of the day and year first above
written.
ACME TELEVISION HOLDINGS, LLC
By: /s/ Douglas E. Gealy
------------------------------------
Name: Douglas E. Gealy
Title: President and COO
ALTA COMMUNICATIONS VI, L.P.
By: Alta Communications VI
Management Partners, L.P.,
its general partner
By: /s/ Brian McNeill
------------------------------------
Name: Brian McNeill
Title: General Partner
ALTA COMM S BY S, LLC
By: /s/ Brian McNeill
------------------------------------
A member
ALTA SUBORDINATED DEBT PARTNERS III, L.P.
By: Alta Subordinated Debt Management III, L.P., its
General Partner
By: /s/ Brian McNeill
------------------------------------
Name: Brian McNeill
Title: General Partner
ALTA ACME, INC.
By: /s/ Brian McNeill
------------------------------------
Name: Brian McNeill
Title: President
54
CEA CAPITAL PARTNERS USA, L.P.
By: CEA Management Corp.,
its authorized representative
By: /s/ James J. Collis
------------------------------------
Name: James J. Collis
Title: Executive Vice President
CEA ACME, INC.
By: /s/ James J. Collis
------------------------------------
Name: James J. Collis
Title: President
BANCBOSTON VENTURES INC.
By: /s/ Lars A. Swanson
------------------------------------
Name: Lars A. Swanson
Title: Vice President
55
TCW SHARED OPPORTUNITY FUND II, L.P.
By TCW Investment Management Company, as General
Partner
By:
------------------------------------
Name:
Title:
By:
------------------------------------
Name:
Title:
TCW LEVERAGED INCOME TRUST, L.P.
By TCW Investment Management Company, its
Investment Manager
By:
------------------------------------
Name:
Title:
By:
------------------------------------
Name:
Title:
TCW Advisers (Bermuda), Ltd., as General Partner
By:
------------------------------------
Name:
Title:
56
LINC ACME, Inc.
By:
------------------------------------
Name:
Title:
57
SOLELY FOR PURPOSES OF SECTIONS 6 AND 12.3:
/s/ Jamie Kellner
------------------------------------
Jamie Kellner, individually
/s/ Douglas Gealy
------------------------------------
Douglas Gealy, individually
/s/ Thomas Allen
------------------------------------
Thomas Allen, individually
58
[Enlarge/Download Table]
Schedule I
Principal Amount Capital Contribution Capital Contribution
of Debentures for Investor Units for Founder Units Future
Purchased at the Purchased at the Purchased at the Financing
Name Initial Closing Initial Closing Initial Closing Percentage
---- --------------- --------------- --------------- ----------
Alta Communications
VI, L.P. $5,035,381.60 24.44%
Alta Subordinated Debt
Partners III, L.P. 1,716,666.67 8.33%
Alta-Comm S by S, LLC 114,618.40 0.56%
Alta Acme, Inc. $133,333.33
BancBoston 1,000,000 $5,866,666.66 133,333.34 33.33%
Ventures, Inc.
CEA Capital Partners 6,866,666.67 33.33%
USA, L.P.
CEA Acme, Inc. 133,333.33
TOTAL: $13,733,333.34 $5,866,666.66 $400,000.00 100%
59
[Enlarge/Download Table]
Schedule II
Principal Amount Capital Contribution Capital Contribution
of Debentures for Investor Units for Founder Units
Purchased at the Purchased at the Purchased at the
Name Subsequent Closing Subsequent Closing Subsequent Closing
---- ------------------ ------------------ ------------------
Alta Communications
VI, L.P. 1,924,933.50
Alta Subordinated Debt
Partners III, L.P. 656,250.00
Alta-Comm S by S, LLC 43,816.50
Alta Acme, Inc.
BancBoston $2,625,000.00
Ventures, Inc.
CEA Capital Partners $2,625,000.00
USA, L.P.
TCW Shared Opportunity
Fund II, L.P. 1,590,878.92 $ 33,333.34
TCW Leveraged Income
Trust, L.P. $4,772,636.75
LINC Acme, Corporation $100,000.00
TOTAL: $10,022,636.75 $4,215,878.92 $133,333.34
60
[Enlarge/Download Table]
Schedule III
Total Principal Amount Total Capital Contribution Total Capital Contribution
of Debentures for Investor Units for Founder Units
Purchased at the Purchased at the Purchased at the Future
Initial Closing and the Initial Closing and the Initial Closing and the Financing
Name First Subsequent Closing First Subsequent Closing First Subsequent Closing Percentage
---- ------------------------ ------------------------ ------------------------ ----------
Alta Communications
VI, L.P. $6,960,315.10 16.00%
Alta Subordinated Debt
Partners III, L.P. 2,372,916.67 5.45%
Alta-Comm S by S, LLC 158,434.90 0.36%
Alta Acme, Inc. $133,333.34 0.31%
BancBoston 1,000,000.00 $8,491,666.66 133,333.34 22.13%
Ventures, Inc.
CEA Capital Partners 9,491,666.67 21.82%
USA, L.P.
CEA Acme, Inc. 133,333.34 0.31%
TCW Shared Opportunity 1,590,878.92 33,333.34 3.37%
Fund II, L.P.
TCW Leveraged Income
Trust, L.P. 4,772,636.75 10.97%
LINC Acme, Corporation 100,000.00 0.23%
TOTAL: $24,755,970.09 $10,082,545.58 $533,333.36 81.31%
61
Dates Referenced Herein and Documents Incorporated by Reference
| Referenced-On Page |
|---|
| This ‘S-1’ Filing | | Date | | First | | Last | | | Other Filings |
|---|
| |  |
| | 6/30/08 | | 7 | | | | | 10-Q |
| | 8/2/99 |
| Filed on: | | 7/30/99 |
| | 6/30/98 | | 12 |
| | 9/30/97 | | 1 |
| | 6/30/97 | | 12 | | 58 |
| | 6/17/97 | | 1 | | 2 |
| | 6/1/97 | | 36 |
| | 12/31/96 | | 14 |
| List all Filings |
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