<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 8, 1997
REGISTRATION NO. 333-
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
SALEM COMMUNICATIONS CORPORATION
AND OTHER REGISTRANTS*
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
CALIFORNIA 4832,4899 77-0121400
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
4880 SANTA ROSA ROAD
SUITE 300
CAMARILLO, CALIFORNIA 93012
(805) 987-0400
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S AND CO-REGISTRANT'S PRINCIPAL EXECUTIVE
OFFICES)
JONATHAN L. BLOCK, ESQ.
SALEM COMMUNICATIONS CORPORATION
4880 SANTA ROSA ROAD
SUITE 300
CAMARILLO, CALIFORNIA 93012
(805) 987-0400
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
---------------
WITH COPIES TO:
ERIC H. HALVORSON, ESQ. THOMAS D. MAGILL, ESQ.
SALEM COMMUNICATIONS CORPORATION GIBSON, DUNN & CRUTCHER LLP
4880 SANTA ROSA ROAD, SUITE 300 4 PARK PLAZA, SUITE 1400
CAMARILLO, CALIFORNIA 93012 IRVINE, CALIFORNIA 92614
---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
---------------
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [_]
---------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
PROPOSED
PROPOSED MAXIMUM
AMOUNT MAXIMUM AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF TO BE OFFERING PRICE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER UNIT(1) PRICE(1) FEE
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
9 1/2% Series B Senior Subordinated
Notes Due 2007 (the "Notes")...... $150,000,000 100% $150,000,000 $44,250
- ------------------------------------------------------------------------------------------
Guarantees of the Notes*........... $150,000,000 (2) (2) (2)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>
(1) Estimated pursuant to Rule 457(f) solely for the purposes of computing the
registration fee.
(2) No separate consideration will be received for the Guarantees.
---------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(a) OF THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE
REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
(Continued on next page)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
(Continued from previous page)
*OTHER REGISTRANTS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PRIMARY
STATE OR OTHER STANDARD I.R.S.
JURISDICTION OF INDUSTRIAL EMPLOYER
EXACT NAME OF REGISTRANT INCORPORATION OR CLASSIFICATION IDENTIFICATION
AS SPECIFIED IN ITS CHARTER ORGANIZATION CODE NUMBERS NUMBER
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
ATEP Radio, Inc. .............. California 4832 77-0132973
Beltway Media Partners......... Virginia 4832 77-0293196
Bison Media, Inc. ............. Colorado 4832 77-0434654
Caron Broadcasting, Inc. ...... Ohio 4832 77-0439370
Common Ground Broadcasting,
Inc. ......................... Oregon 4832 93-1079989
Golden Gate Broadcasting
Company, Inc. ................ California 4832 94-3082936
Inland Radio, Inc. ............ California 4832 77-0114987
Inspiration Media, Inc. ....... Washington 4832 77-0132974
Inspiration Media of Texas,
Inc. ......................... Texas 4832 75-2615876
New England Continental Media,
Inc. ......................... Massachusetts 4832 04-2625658
New Inspiration Broadcasting
Company, Inc. ................ California 4832 95-3356921
Oasis Radio, Inc. ............. California 4832 77-0061780
Pennsylvania Media Associates,
Inc. ......................... Pennsylvania 4832 94-3134636
Radio 1210, Inc. .............. California 4832 77-0052616
Salem Communications
Corporation................... Delaware 4832, 4899 77-0363592
Salem Media Corporation........ New York 4832 95-3482072
Salem Media of California,
Inc. ......................... California 4832 95-1581210
Salem Media of Colorado, Inc. . Colorado 4832 84-1239646
Salem Media of Louisiana,
Inc. ......................... Louisiana 4832 77-0114983
Salem Media of Ohio, Inc. ..... Ohio 4832 95-3690954
Salem Media of Oregon, Inc. ... Oregon 4832 77-0114986
Salem Media of Pennsylvania,
Inc. ......................... Pennsylvania 4832 77-0237182
Salem Media of Texas, Inc. .... Texas 4832 77-0379125
Salem Music Network, Inc. ..... Texas 4899 77-0434655
Salem Radio Network
Incorporated.................. Delaware 4899 77-0305542
Salem Radio Representatives,
Inc. ......................... Texas 4899 77-0281576
South Texas Broadcasting,
Inc. ......................... Texas 4832 77-0388924
SRN News Network, Inc. ........ Texas 4899 77-0426090
Vista Broadcasting, Inc. ...... California 4832 77-0389639
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED DECEMBER 8, 1997
PROSPECTUS
[LOGO OF SALEM COMMUNICATIONS CORPORATION]
$150,000,000
SALEM COMMUNICATIONS CORPORATION
OFFER FOR OUTSTANDING 9 1/2% SERIES A SENIOR SUBORDINATED NOTES DUE 2007
IN EXCHANGE FOR 9 1/2% SERIES B SENIOR SUBORDINATED NOTES DUE 2007
--------------
Salem Communications Corporation, a California corporation (the "Company")
hereby offers (the "Exchange Offer"), upon the terms and subject to the
conditions set forth herein and in the related Letter of Transmittal, to
exchange up to $150,000,000 aggregate principal amount of its 9 1/2% Series B
Senior Subordinated Notes due 2007 (the "Notes") of the Company for a like
amount of the privately placed 9 1/2% Series A Senior Subordinated Notes Due
2007 (the "Old Notes") of the Company issued on September 25, 1997, from the
holders thereof.
The Notes are being offered hereunder in order to satisfy the obligations of
the Company under a Registration Rights Agreement dated September 17, 1997 (the
"Registration Rights Agreement") by and among the Company, the Guarantors (as
defined herein), and Furman Selz LLC, Smith Barney Inc., BancBoston Securities,
Inc., and BNY Capital Markets, Inc. (the "Initial Purchasers"). The Exchange
Offer is designed to provide to holders an opportunity to acquire the Notes
which, unlike the Old Notes, are expected to be freely transferable at all
times, subject to state "blue sky" law restrictions, provided that the holder
is not an "affiliate" of the Company within the meaning of the Securities Act
of 1933, as amended (the "Securities Act"), and represents that the Notes are
being acquired in the ordinary course of such holder's business and the holder
is not engaged in, and does not intend to engage in, a distribution of the
Notes. With the exception of the freely transferable nature of the Notes, the
Notes are substantially identical to the Old Notes. See "The Exchange Offer--
Purpose of the Exchange Offer."
The Company will accept for exchange any and all validly tendered Old Notes
on or prior to 5:00 P.M., New York time, on , 1998, unless extended (the
"Expiration Date"). Tenders of Old Notes made pursuant to the Exchange Offer
may be withdrawn at any time prior to the Expiration Date. In the event the
Company terminates the Exchange Offer and does not accept any Old Notes with
respect to the Exchange Offer, the Company will promptly return such Old Notes
to the holders thereof. The Company will not receive any proceeds from the
Exchange Offer.
Interest on the Notes will accrue from the date of issuance and will be
payable semi-annually on each April 1 and October 1, commencing April 1, 1998.
The Notes will mature on October 1, 2007. The Notes are redeemable at the
option of the Company, in whole or in part, at any time on or after October 1,
2002, at the redemption prices set forth herein, plus accrued and unpaid
interest to the redemption date. In addition, the Company, at its option, may
redeem up to $50.0 million in aggregate principal amount of the Notes at any
time on or prior to October 1, 2000 at 109.50% of the aggregate principal
amount so redeemed, plus accrued and unpaid interest thereon to the redemption
date, with the proceeds of one or more Public Equity Offerings (as defined
herein), provided that at least $100.0 million in aggregate principal amount of
the Notes remain outstanding immediately after the occurrence of any such
redemption. See "Description of the Notes--Optional Redemption." Upon a Change
of Control (as defined herein), each holder of the Notes will be entitled to
require the Company to purchase such holder's Notes at 101% of the principal
amount thereof, plus accrued and unpaid interest to the purchase date. There
can be no assurance that the Company will have sufficient funds to repurchase
the Notes upon a Change of Control. See "Description of the Notes--Certain
Covenants--Purchase of Notes Upon a Change of Control."
The Notes will be general unsecured obligations of the Company, subordinated
in right of payment to all existing and future Senior Indebtedness (as defined
herein), including the Company's obligations under the Credit Agreement (as
defined herein), and senior in right of payment to all existing and future
Subordinated Indebtedness (as defined herein) of the Company. See "Description
of Certain Indebtedness" and "Description of the Notes--Subordination." The
Notes will be guaranteed, jointly and severally (the "Guarantees"), on a senior
subordinated basis by all of the Company's current subsidiaries (the
"Guarantors"). See "Description of the Notes--Guarantees." The Guarantees will
be general unsecured obligations of the Guarantors, subordinated in right of
payment to all Guarantor Senior Indebtedness (as defined herein), including any
guarantees by Guarantors of the Company's obligations under the Credit
Agreement and senior in right of payment to any Subordinated Indebtedness of
the Guarantors. As of September 30, 1997, the Company and the Guarantors had an
aggregate of approximately $10.1 million of Senior Indebtedness outstanding
under the Credit Agreement and no other Indebtedness (as defined herein)
outstanding other than the Notes.
(Continued on following page)
--------------
SEE "RISK FACTORS" BEGINNING ON PAGE 14 HEREIN FOR A DISCUSSION OF CERTAIN
RISKS THAT HOLDERS OF OLD NOTES SHOULD CONSIDER IN CONNECTION WITH THE EXCHANGE
OFFER.
--------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is , 1998.
<PAGE>
The Old Notes were sold by the Company on September 25, 1997 to the Initial
Purchasers in a transaction not registered under the Securities Act in
reliance upon an exemption under the Securities Act (the "Offering"). The
Initial Purchasers subsequently placed the Old Notes with qualified
institutional buyers in reliance upon Rule 144A under the Securities Act. The
Old Notes may not be reoffered, resold or otherwise transferred in the United
States unless registered under the Securities Act or unless an applicable
exemption from the registration requirements of the Securities Act is
available.
Based on certain interpretive letters issued by the staff of the Securities
and Exchange Commission (the "Commission") to third parties, the Company
believes that a holder of Notes (other than (i) a broker-dealer who purchases
such Notes directly from the Company to resell pursuant to Rule 144A or any
other available exemption under the Securities Act or (ii) a person who is an
affiliate of the Company within the meaning of Rule 405 under the Securities
Act) who exchanges Old Notes for Notes in the ordinary course of business and
who is not participating, does not intend to participate, and has no
arrangement or understanding with any person to participate, in the
distribution of the Notes, will be allowed to resell the Notes to the public
without further registration under the Securities Act and without delivering
to the purchasers of the Notes a prospectus that satisfies the requirements of
the Securities Act. See "The Exchange Offer--Purpose of the Exchange Offer"
and "Resales of Notes." However, a broker-dealer who holds Old Notes that were
acquired for its own account as a result of market-making or other trading
activities may be deemed to be an "underwriter" within the meaning of the
Securities Act and must, therefore, deliver a prospectus meeting the
requirements of the Securities Act. If any other holder is deemed to be an
"underwriter" within the meaning of the Securities Act or acquires Notes in
the Exchange Offer for the purpose of distributing or participating in a
distribution of the Notes, such holder must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with a
secondary resale transaction, unless an exemption from registration is
otherwise available. For a period of 180 days from the Expiration Date, the
Company will make copies of this Prospectus, as amended or supplemented,
available to any broker-dealer for use in connection with any such resales.
See "Plan of Distribution."
If a holder of Old Notes does not exchange such Old Notes for Notes pursuant
to the Exchange Offer, such Old Notes will continue to be subject to the
restrictions on transfer contained in the legend thereon. In general, the Old
Notes may not be offered or sold, unless registered under the Securities Act,
except pursuant to an exemption from, or in a transaction not subject to, the
Securities Act and applicable state securities laws.
The Old Notes are currently eligible for trading in the Private Offerings,
Resales and Trading through Automated Linkages ("PORTAL") market. Following
commencement of the Exchange Offer but prior to its consummation, the Old
Notes may continue to be traded in the PORTAL market. Following consummation
of the Exchange Offer, the Notes will not be eligible for PORTAL trading.
It is not currently anticipated that an active public market for the Notes
will develop. The Company currently does not intend to apply for the listing
of the Notes on any securities exchange or to seek approval for quotation
through any automated quotation system. No assurance can be given as to the
liquidity of the trading market for the Notes.
The Exchange Offer is not conditioned upon any minimum principal amount of
Old Notes being tendered for exchange. However, the Exchange Offer is subject
to certain customary conditions. See "The Exchange Offer--Conditions to the
Exchange Offer." Old Notes may be tendered only in integral multiples of
$1,000.
<PAGE>
AVAILABLE INFORMATION AND INCORPORATION BY REFERENCE
The Company and the Guarantors have filed with the Securities and Exchange
Commission (the "Commission") a registration statement relating to the Notes
offered hereby (herein, together with all amendments and exhibits, referred to
as the "Registration Statement") under the Securities Act. This Prospectus,
which constitutes a part of the Registration Statement, does not contain all
of the information set forth in the Registration Statement, certain parts of
which are omitted in accordance with the rules and regulations of the
Commission. For further information, reference is hereby made to the
Registration Statement. Statements made in this Prospectus as to the contents
of any contract, agreement or other document referred to are not necessarily
complete. With respect to each such contract, agreement or other document
filed as an exhibit to the Registration Statement, reference is made to such
exhibit for a more complete description thereof, and each such statement shall
be deemed qualified in its entirety by such reference.
Upon effectiveness of the Registration Statement, the Company and the
Guarantors will be subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith must file periodic reports and other information with the
Commission, unless granted relief from such requirements. All documents filed
by the Company or any of the Guarantors pursuant to Sections 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of the Exchange Offer shall be deemed to be
incorporated by reference into this Prospectus and to be a part hereof from
the respective dates of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall
be deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which is or is deemed to be incorporated by reference herein modifies
or supersedes such statement. Any such statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Prospectus.
The Registration Statement and the exhibits and schedules thereto and any
periodic reports or other information filed pursuant to the Exchange Act may
be inspected without charge and copies at prescribed rates at the Public
Reference Section of the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Commission's regional offices at 7 World
Trade Center, Suite 1300, New York, New York 10048, and Northwestern Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. The
Commission maintains a website that contains reports, proxy and information
statements and other information filed electronically with the Commission at
http://www.sec.gov.
The Company and the Guarantors have agreed to furnish to holders of the
Notes and Old Notes and prospective purchasers and securities analysts, upon
their request, the information required to be delivered pursuant to Rule
144A(d)(4) under the Securities Act.
1
<PAGE>
NOTICE TO NEW HAMPSHIRE RESIDENTS ONLY
NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A
LICENSE HAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE REVISED
STATUTES WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS
EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE
CONSTITUTES A FINDING BY THE ATTORNEY GENERAL OR THE SECRETARY OF STATE THAT
ANY DOCUMENT FILED UNDER RSA 421-B IS TRUE, COMPLETE AND NOT MISLEADING.
NEITHER ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE
FOR A SECURITY OR A TRANSACTION MEANS THAT THE ATTORNEY GENERAL OR THE
SECRETARY OF STATE HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS OF,
OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY OR TRANSACTION. IT
IS UNLAWFUL TO MAKE OR CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER,
CUSTOMER OR CLIENT ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS
PARAGRAPH.
SPECIAL CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS
This Prospectus contains forward-looking statements, including statements
regarding, among other items, (i) the realization of the Company's business
strategy, (ii) the sufficiency of cash flow to fund the Company's debt service
requirements and working capital needs and (iii) the anticipated trends in the
radio broadcasting industry. Forward-looking statements are typically
identified by the words "believe," "expect," "anticipate," "intend,"
"estimate" and similar expressions. These forward-looking statements are
subject to a number of risks and uncertainties, many of which are beyond the
Company's control. Actual results could differ materially from those
contemplated by these forward-looking statements. There can be no assurance
that the results and events contemplated by the forward-looking information
contained in this Prospectus will in fact transpire. Readers are cautioned not
to place undue reliance on these forward-looking statements, which speak only
as of their dates. The Company does not undertake any obligation to update or
revise any forward-looking statements.
MARKET DATA SOURCES
All metropolitan statistical area ("MSA") rank information set forth in this
Prospectus has been obtained from the Spring 1997 Radio Market Survey Schedule
& Population Ranking published by The Arbitron Company. According to the
Survey, the population estimates used were based upon 1990 U.S. Bureau Census
estimates updated and projected to January 1, 1997 by Market Statistics, based
on the data from Sales & Marketing Management's 1996 Survey of Buying Power.
Information regarding the number of radio stations in the United States
featuring religious talk and music formats, including formats identified as
Religious, Gospel, Christian, Inspirational or Sacred, the growth in the
number of stations featuring religious formats from 1989 to 1996, the
religious format as the fourth largest radio format in the United States and
the size of the listening audience for religious programming have been
obtained from the 1997 Broadcasting & Cable Yearbook, The M Street Journal
(November 26, 1997) and Religion & Media Quarterly (July 1997).
2
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should be read in
conjunction with, the more detailed information and financial statements and
notes thereto appearing elsewhere in this Prospectus. As used in this
Prospectus, the term the "Company" refers to Salem Communications Corporation
and its subsidiaries, unless the context otherwise requires. Edward G. Atsinger
III and Stuart W Epperson are referred to herein as the "Principal
Shareholders" and together with Nancy A. Epperson, the wife of Mr. Epperson and
the sister of Mr. Atsinger, as the "Shareholders." The Shareholders reorganized
the Company in August 1997 such that certain entities owned by the Shareholders
became wholly owned by the Company. In addition to the historical information
contained herein, certain statements in this Prospectus constitute "forward-
looking statements" under the Private Securities Litigation Reform Act of 1995
(the "Reform Act") which involve risks and uncertainties. The Company's actual
results may differ significantly from those discussed herein. Factors that
might cause such a difference include, but are not limited to, those discussed
under the captions "Risk Factors" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" as well as those discussed
elsewhere in this Prospectus. See "Special Cautionary Notice Regarding Forward-
Looking Statements."
THE COMPANY
Salem Communications Corporation is the leading radio broadcast company in
the United States, measured by number of stations owned and audience coverage,
that focuses on serving the religious/conservative listening audience. The
Company's two primary businesses include the ownership and operation of
religious format radio stations and the development and expansion of a national
radio network (the "Network") offering talk programming, news and music to
affiliated stations. The Company owns and/or operates 43 radio stations
concentrated in 28 geographically diverse markets across the United States.
The Company offers a variety of specialized talk programming emphasizing
Bible study and Judeo-Christian values applied to family and community issues
as well as contemporary and traditional religious music. The 1997 Broadcasting
& Cable Yearbook identifies over 1,800 radio stations throughout the United
States that feature religious talk and music formats, including formats
identified as Religious, Gospel, Christian, Inspirational or Sacred. According
to statistics appearing in The M Street Journal, a broadcast industry
newsletter, the number of radio stations featuring religious formats has grown
approximately 69% between 1989 and 1997 and the religious format is the fourth
largest radio format in the United States after country, news/talk and adult
contemporary. According to Religion & Media Quarterly, religious format radio
stations have an audience of approximately 20.6 million listeners.
The Company focuses on serving the top 25 markets in terms of audience size
in the United States and has radio stations in nine of the top ten and 19 of
the top 25 of those markets. Since January 1, 1992, the Company has grown
significantly by acquiring ownership of, or operating rights to, 29 radio
stations in 20 markets, including 17 stations in 14 markets since January 1,
1996. Many of these recently acquired radio stations were previously
broadcasting in non-religious formats and have been re-formatted by the
Company. The Company's experience has been that changing the format of an
acquired station typically requires a transition period during which the
Company develops its program customer and listener base. During such transition
period, these stations typically do not generate significant cash flow from
operations. The Company's total gross revenue, broadcast cash flow and EBITDA
(as defined herein) were $65.1 million, $25.5 million and $20.9 million,
respectively, for the year ended December 31, 1996 and were $54.5 million,
$20.6 million and $16.2 million, respectively, for the nine months ended
September 30, 1997. The Company's results of operations for the year ended
December 31, 1996 and the nine months ended September 30, 1997 include the
results of many stations in transition periods, which have not generated
significant cash flow from operations in the aggregate.
3
<PAGE>
Owned and/or Operated Stations. The following table sets forth information
about the number of radio stations owned and/or operated by the Company and the
markets served in order of market size:
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
STATIONS STATIONS
--------- ------------
MARKET(1): MSA RANK(2) FM AM MARKET(1): MSA RANK(2) FM AM
---------- ----------- ---- ---- ---------- ----------- ---- ----
<C> <C> <C> <C> <S> <C> <C> <C>
New York, NY............ 1 0 2 Pittsburgh, PA.......... 20 1 1
Los Angeles, CA......... 2 2 1 Cleveland, OH........... 22 0 2
Chicago, IL............. 3 1 0 Denver-Boulder, CO...... 23 1 2
San Francisco, CA....... 4 0 1 Portland, OR............ 24 1 1
Philadelphia, PA........ 5 0 2 Cincinnati, OH.......... 25 0 1
Dallas-Ft. Worth, TX.... 7 1 0 Riverside-San
Washington, D.C. ....... 8 1 0 Bernardino, CA.......... 26 0 1(5)
Houston-Galveston, TX... 9 1 1 Sacramento, CA.......... 28 0 2
Boston, MA.............. 10 0 1 Columbus, OH............ 32 0 1
Seattle-Tacoma, WA...... 13 0 3(3) San Antonio, TX......... 34 0 1
San Diego, CA........... 14 0 1 Akron, OH............... 67 0 1
Minneapolis-St. Paul, MN Spokane, WA............. 87 1 0
........................ 16 0 1 Colorado Springs, CO.... 95 3 0
Phoenix, AZ............. 18 0 1 Oxnard, CA.............. 109 1 0
Baltimore, MD........... 19 0 1(4) Canton, OH.............. 120 1(6) 0
---- ----
TOTAL.............................. 15 28
==== ====
</TABLE>
- --------------------
(1) Actual city of license may differ from metropolitan market served.
(2) "MSA" means metropolitan statistical area.
(3) The Company operates one of the stations, which is licensed to a
corporation owned by the Principal Shareholders of the Company, under the
terms of a local marketing agreement. See "Federal Regulation of Radio
Broadcasting--Local Marketing Agreements" and "Certain Transactions."
(4) The station is simulcast with WAVA-FM, Washington, D.C.
(5) The station is simulcast with KKLA-FM, Los Angeles.
(6) The station is simulcast with WHK-AM, Cleveland.
For the year ended December 31, 1996 and the nine months ended September 30,
1997, the Company derived 57.5% and 53.4% of its gross revenue, or $37.5
million and $29.1 million, respectively, from the sale of nationally syndicated
and local block program time. The Company believes that sales of block program
time lessen its exposure to swings in general economic activity and thus make
its revenue stream less volatile. The Company derives its nationally syndicated
program revenue from a programming customer base consisting primarily of
geographically diverse, well-established non-profit religious and educational
organizations that purchase time on stations in a large number of markets in
the United States. These nationally syndicated program producers typically
purchase 13, 26 or 52 minute blocks on a Monday through Friday basis and may
offer supplemental programming for weekend release. The recognized leading
daily radio program featured on religious talk format stations is Focus on the
Family, which according to the 1997 Directory of Religious Media is syndicated
on 943 radio stations in the United States, including 35 Company stations as of
November 1997. Other leading radio programs currently include Insight for
Living (590 stations, including 26 Company stations), In Touch (490 stations,
including 27 Company stations) and Grace to You (294 stations, including 22
Company stations).
For the year ended December 31, 1996 and the nine months ended September 30,
1997, the Company derived 26.7% and 27.6% of its gross revenue, or $17.4
million and $15.0 million, respectively, from the sale of local spot
advertising and 6.3% and 9.4% of its gross revenue, or $4.1 million and $5.1
million (including $2.7 million of reclassified infomercial advertising
revenue), respectively, from the sale of national spot advertising. The Company
in recent years has begun to place greater emphasis on the development of local
spot sales in all of its markets. The Company believes that the listening
audience for its radio stations is responsive to
4
<PAGE>
affinity advertisers that promote products targeted to the
religious/conservative audience and is receptive to direct response appeals
such as those offered through infomercials. The Company's stations all have
affinity advertising customers in their respective markets. The Company also
generates spot advertising revenue from general market retailers, including
automobile dealers and grocery store chains, in many of its markets. Because
the Company does not sell advertising based on market share, it does not
subscribe to traditional audience measuring services, but instead sells
advertising based upon the proven success of its other advertising customers.
The Company's radio stations also receive revenue from national advertisers
desiring to include selected Company stations in national buys covering
multiple markets. These national advertising buys are placed through Salem
Radio Representatives ("SRR"), a wholly owned subsidiary of the Company, which
sells all national commercial advertising placed on the Network's commercial
affiliate radio stations.
The Network. In 1993, the Company established the Network in connection with
its acquisition of certain assets of the former CBN Radio Network.
Establishment of the Network was a part of the Company's overall business
strategy to develop a national network of affiliated radio stations anchored by
the Company's owned and operated radio stations in major markets. The Network,
which is headquartered in Dallas, is focused on the development, production and
syndication of a broad range of programming specifically targeted to religious
talk and music stations as well as general market news/talk stations.
Currently, the Company has rights to six full-time satellite channels and all
Network product is delivered to affiliates via satellite.
As of November 30, 1997, the Network had approximately 750 affiliate
stations, including the Company's owned and operated stations, that broadcast
one or more of the offered programming options. These programming options
feature talk shows, such as The Oliver North Show and The Alan Keyes Show, news
and music. Network operations also include commission revenue of SRR from
unaffiliated customers and an allocation of operating expenses estimated to
relate to such commission revenue. The Network's gross revenue for the year
ended December 31, 1996 and the nine months ended September 30, 1997 were $5.3
million and $4.5 million, respectively. While the Network earned net operating
income of $274,000 for the year ended December 31, 1996, it incurred a net
operating loss of $542,000 for the nine months ended September 30, 1997, due
primarily to continued costs associated with the development of a news
programming production and distribution capability and reduced advertising
revenue associated with syndicated talk programming.
The Company is a California corporation. Its principal offices are located at
4880 Santa Rosa Road, Suite 300, Camarillo, California 93012 and its telephone
number is (805) 987-0400.
OPERATING STRATEGY
Maintain and Enhance Leadership Position in Religious Talk Format. The
Company believes that an important factor in its ability to attract and retain
quality programming customers is its demonstrated long-term commitment to the
religious talk format. Program customers tend to be sophisticated purchasers of
air time that recognize that building a listener base capable of generating
revenue sufficient to cover programming costs may take several years. The
Company's experience has been that such programmers are accordingly reluctant
to make the commitment to building a new listener base unless they have a
reasonable expectation that the format will remain in place. Management of the
Company therefore intends to continue its long-term commitment to the religious
talk format. Management believes its commitment to growing the religious talk
format, increasing the number of owned and operated stations and developing
network operations and national sales activities allows for future growth
opportunities for the Company.
Identify and Develop New Program Producers. The Company recognizes that the
ongoing success of its religious talk format is largely dependent on the
continued availability of quality programs. Management of the Company is
committed to assisting promising new program producers with advice on content
and structuring of programs in addition to advice on levels of support
staffing, engineering and programming delivery options. Station managers are
encouraged to evaluate local talk programs with a view toward expansion of
promising programs into national syndication. The Company continues to
emphasize this important development area with
5
<PAGE>
the goal of maintaining a backlog of quality programs available for placement
in new markets and existing markets where the Company may add additional
stations.
Emphasize Signal Quality and Market Coverage. The Company is committed to the
ongoing evaluation and improvement of its technical facilities, including power
increases, tower/antenna relocations and investment in state of the art
equipment. The Company believes that its success is attributable in part to its
ownership of broadcast facilities that provide broad signal coverage in its
markets.
Build Station Identity Through Development of Strong Production Values. The
Company believes that an important element in retaining and increasing the
listening audience and expanding the base of potential advertisers for its
stations is the development of local station identity. The Company believes
that its emphasis on development of a station's identity during those times
when the Company is not broadcasting its customers' block programming will
allow it to compete with general format stations for listening audience and
advertising customers. Station employees with responsibility for programming
are encouraged to build identity through continual improvement of production
values and to share their ideas with other Company stations. The Company
assists local personnel and coordinates development of increased production
values through its director of programming located at the corporate
headquarters. Certain of the Company's stations have successfully adopted
techniques that have built identity through the development of local on-air
personalities associated with segments of the broadcast day, and these
techniques are being implemented at other Company stations.
Expand and Diversify National Network. The Company is committed to expanding
the Network by adding to its menu of Network product offerings and by actively
promoting these products to Network affiliates. The Company believes that by
continually increasing the quality of its Network product it will add to its
affiliate base, thereby providing more audience reach that will attract more
national advertising customers and potentially generate business from national
advertising agencies. The Company competes aggressively for talk show talent it
believes will be attractive to existing and potential affiliates, refines
existing music formats and develops political commentary and public affairs
programming that are complementary to the product offerings of the Network. The
Company will continue to explore ways to better serve its customers and the
religious/conservative listening audience by using the combined resources of
its owned and operated stations and the Network. For example, unused Network
inventory can be used as an incentive to potential or existing program
producers to purchase block program time on the Company's radio stations. The
Company has successfully implemented this strategy in the past and will
continue to devote significant time and resources to find additional
synergistic uses of its radio stations and the Network.
ACQUISITION STRATEGY
Expand Into New Markets. The Company continues to pursue an acquisition
strategy of acquiring radio stations in the top 25 markets in which it
currently does not have a presence and acquiring selected stations in mid-sized
markets. The Company believes that its presence in large markets makes it
attractive to national program syndicators and national advertisers. In
addition, the geographic diversity of the Company's markets reduces its
dependence on any single local economy. Over the past 20 years, the Company has
developed and implemented a model for evaluating the desirability of entering a
new market. Management considers the number of stations already serving the
target market with religious formats, the programming within that format (music
or talk), the quality of talk programs offered and the signal strength of the
competing stations. The signal strength of any station that becomes available
for purchase is a critical factor in the evaluation process.
Expand in Existing Markets. The Company pursues the acquisition of additional
stations in markets in which it already has a presence. The experience of the
Company with existing duopolies and triopolies has been positive. Multiple
stations making use of one general manager and sales staff and one broadcast
facility have resulted in operational efficiencies in certain markets. In
addition, the Company intends to develop more talk and music product at the
Network level that will be available for use on additional stations in a
market. The Company believes new religious music formats are gaining increased
popularity and are complementary to the Company's
6
<PAGE>
religious talk format. Three separate music formats are produced by the Network
and are available for use by Company stations. This strategy has been
implemented successfully in Colorado Springs, where the Company owns three FM
stations, two of which offer religious music formats and one of which features
a religious talk format.
Upgrades in Existing Markets. The Company is continually looking for upgrade
opportunities in existing markets to expand its audience reach. This strategy
of acquiring upgraded facilities in existing markets has been an area of
emphasis for senior management for many years and has been successfully
demonstrated in such markets as Seattle and New York in prior years. More
recently, the Company has significantly improved its position in Boston and
Dallas through the acquisition of more powerful stations that have allowed the
Company to continue its business strategy of operating stations that provide
broad signal coverage in its markets.
Acquisition Financing. In the past, the Company has principally financed
acquisitions of radio stations through borrowings, including borrowings under
credit agreements with banks and, to a lesser extent, from cash flow from
operations and selected asset dispositions. Taking into account certain
restrictions under the Credit Agreement, however, the Company is not currently
able to borrow for acquisitions. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Liquidity and Capital
Resources."
RECENT DEVELOPMENTS
The Company has completed the purchase of the following radio stations in
1997:
<TABLE>
<CAPTION>
DATE MARKET STATION MSA RANK PURCHASE PRICE
---- ------ ------- -------- --------------
<S> <C> <C> <C> <C>
January 1997................ Dallas, TX KWRD-FM 7 $40,100,000(1)
January 1997................ Cleveland, OH WHK-AM 22 6,220,000
February 1997............... Canton, OH WHK-FM 120 5,903,000
February 1997............... Akron, OH WHLO-AM 67 1,995,000
February 1997............... Boston, MA WEZE-AM 10 7,030,000
April 1997.................. Sacramento, CA KTKZ-AM 28 1,485,000
July 1997................... Baltimore, MD WITH-AM 19 1,114,000
July 1997................... Cincinnati, OH WTSJ-AM 25 1,114,000
October 1997................ Cleveland, OH WCCD-AM 22 700,000
</TABLE>
- --------------------
(1) This acquisition was consummated on December 30, 1996, but operational
control was not transferred until January 1997.
In November 1997, the Company sold substantially all of the assets of radio
station WPZE-AM, Boston, Massachusetts, for $5 million. Proceeds from the sale
are being held by a qualified intermediary under a like-kind exchange agreement
to preserve the Company's ability to effect a tax-deferred exchange. If the
Company does not identify replacement property it will use the proceeds to
reduce outstanding borrowings under the Credit Agreement.
7
<PAGE>
THE EXCHANGE OFFER
<TABLE>
<C> <S>
Securities Offered......................... Up to $150,000,000 aggregate
principal amount of 9 1/2% Series
B Senior Subordinated Notes due
2007.
The Exchange Offer......................... The Notes are being offered in
exchange for a like principal
amount of the Company's Old
Notes. Old Notes may be exchanged
only in integral multiples of
$1,000. The issuance of the Notes
is intended to satisfy the
obligations of the Company under
the terms of the Registration
Rights Agreement.
Tenders; Expiration Date; Withdrawal....... The Exchange Offer will expire at
5:00 P.M., New York City time on
, 1998, or such later date
and time to which it is extended
by the Company (the "Expiration
Date"). Tenders of Old Notes
pursuant to the Exchange Offer
may be withdrawn at any time
prior to the Expiration Date. In
the event the Company terminates
the Exchange Offer and does not
accept for exchange any Old Notes
pursuant to the Exchange Offer,
the Company will promptly return
such Old Notes to the Holders
thereof.
Accrued Interest on the Notes.............. The Notes will bear interest from
and including the date of
issuance of the Old Notes.
Accordingly, Holders who receive
Notes in exchange for Old Notes
will forego accrued but unpaid
interest on their exchanged Old
Notes for the period from and
including the date of issuance of
the Old Notes to the date of
exchange, but will be entitled to
such interest under the Notes.
Conditions of the Exchange Offer........... The Exchange Offer is subject to
certain customary conditions, any
or all of which may be waived by
the Company. The Company
currently expects that each of
the conditions will be satisfied
and that no waivers will be
necessary. See "The Exchange
Offer--Conditions to the Exchange
Offer."
Procedures for Tendering Old Notes......... Each Holder wishing to accept the
Exchange Offer must complete and
sign the Letter of Transmittal,
in accordance with the
instructions contained therein,
and submit the Letter of
Transmittal to the Exchange Agent
identified below. See "The
Exchange Offer--Procedures for
Tendering."
Guaranteed Delivery Procedures............. Holders of Old Notes who wish to
tender their Old Notes and whose
Old Notes are not immediately
available or who cannot deliver
their Old Notes and the Letter of
Transmittal and any other
documents required by the Letter
of Transmittal to the Exchange
Agent prior to the Expiration
Date, must tender their Old Notes
according to the guaranteed
delivery procedures set forth in
"The Exchange Offer--Guaranteed
Delivery Procedures."
</TABLE>
8
<PAGE>
<TABLE>
<C>
Acceptance of Old Notes and Delivery of <S>
Notes..................................... The Company will accept for
exchange any and all Old Notes
which are properly tendered in
the Exchange Offer prior to 5:00
P.M., New York City time, on the
Expiration Date. See "The
Exchange Offer--Acceptance of Old
Securities for Exchange; Delivery
of Securities."
Rights of Dissenting Holders............... Holders of Old Notes do not have
any appraisal or dissenters'
rights under the California
General Corporation Law in
connection with the Exchange
Offer.
Exchange Agent............................. The Bank of New York; telephone
(212) 815-[TBD]. See "The
Exchange Offer--Exchange Agent."
</TABLE>
9
<PAGE>
TERMS OF THE NOTES
The terms of the Notes are identical in all material respects to the terms of
the Old Notes, except that the Notes are expected to be freely transferable as
described under "The Exchange Offer--Resales of Notes."
<TABLE>
<C> <S>
Maturity Date.............................. October 1, 2007.
Interest Payment Dates..................... April 1 and October 1 of each
year, commencing April 1, 1998.
Optional Redemption........................ The Notes are redeemable at the
option of the Company, in whole
or in part, at any time on or
after October 1, 2002, at the
redemption prices set forth
herein, plus accrued and unpaid
interest to the redemption date.
In addition, the Company, at its
option, may redeem up to $50.0
million in aggregate principal
amount of the Notes at any time
on or prior to October 1, 2000 at
109.50% of the aggregate
principal amount so redeemed,
plus accrued and unpaid interest
thereon to the redemption date,
with the proceeds of one or more
Public Equity Offerings, provided
that at least $100.0 million in
aggregate principal amount of the
Notes remain outstanding
immediately after the occurrence
of any such redemption. See
"Description of the Notes--
Optional Redemption."
Change of Control.......................... Upon a Change of Control, each
holder of the Notes will be
entitled to require the Company
to purchase such holder's Notes
at 101% of the principal amount
thereof, plus accrued and unpaid
interest to the purchase date.
See "Description of the Notes--
Certain Covenants--Purchase of
Notes Upon a Change of Control."
Guarantees................................. The Notes will be guaranteed,
jointly and severally, on a
senior subordinated basis by the
Guarantors. The Guarantees will
be general unsecured obligations
of the Guarantors, subordinated
in right of payment to all
Guarantor Senior Indebtedness,
including any guarantees by
Guarantors of the Company's
obligations under the Credit
Agreement, and senior in right of
payment to any Subordinated
Indebtedness of the Guarantors.
See "Description of Notes--
Guarantees."
Subordination.............................. The Notes will be general
unsecured obligations of the
Company, subordinated in right of
payment to all existing and
future Senior Indebtedness,
including the Company's
obligations under the Credit
Agreement, and senior in right of
payment to any Subordinated
Indebtedness of the Company. See
"Description of Notes--
Subordination."
Certain Covenants.......................... The Indenture under which the Old
Notes were and the Notes will be
issued contains certain covenants
that, among other things, limits
the incurrence of additional
indebtedness by the Company and
Restricted Subsidiaries
</TABLE>
10
<PAGE>
<TABLE>
<C> <S>
(as defined herein), the payment
of dividends, the use of proceeds
of certain asset sales and
certain transactions with
affiliates and contains certain
other restrictive covenants
affecting the Company and
Restricted Subsidiaries. See
"Description of Notes--Certain
Covenants."
Absence of a Public Market for the Notes... There has been no public market
for the Old Notes and it is not
currently anticipated that an
active public market for the
Notes will develop. No assurance
can be given as to the liquidity
of the trading market for the
Notes following the Exchange
Offer.
</TABLE>
11
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL INFORMATION OF THE COMPANY
The summary consolidated financial information below should be read in
conjunction with, and is qualified by reference to, the Company's consolidated
financial statements and related notes, "Selected Consolidated Financial
Information of the Company" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" included elsewhere in this
Prospectus. The financial results of the Company are not comparable from year
to year because of the acquisition and disposition of various radio stations
and radio networks by the Company.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEAR ENDED DECEMBER 31 SEPTEMBER 30
------------------------------------------- ----------------
1992 1993 1994 1995 1996 1996 1997
------- ------- ------- ------- ------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Net revenue............. $28,532 $32,423 $38,575 $48,168 $59,010 $42,465 $49,449
Operating expenses:
Station operating
expenses.............. 14,922 17,011 22,179 27,527 33,463 23,907 28,793
Corporate expenses..... 2,647 3,193 3,292 3,799 4,663 3,413 4,998
Tax reimbursements to
S corporation
shareholders.......... 1,029 1,311 977 2,057 2,038 1,529 1,780
Depreciation and
amortization.......... 6,441 6,601 7,633 7,884 8,394 6,148 9,382
------- ------- ------- ------- ------- ------- -------
Operating expenses...... 25,039 28,116 34,081 41,267 48,558 34,997 44,953
------- ------- ------- ------- ------- ------- -------
Net operating income... 3,493 4,307 4,494 6,901 10,452 7,468 4,496
Other income (expense):
Interest
income/expense, net... (2,516) (2,349) (3,438) (6,327) (6,838) (5,198) (8,392)
Gain (loss) on disposal
of assets............. (1,044) 1,603 (482) (7) 16,064 12,659 (190)
Other income (expense). (393) 2 (135) (255) (270) (209) (288)
------- ------- ------- ------- ------- ------- -------
Total other income
(expense).............. (3,953) (744) (4,055) (6,589) 8,956 7,252 (8,870)
Income (loss) before
income taxes and
extraordinary item..... (460) 3,563 439 312 19,408 14,720 (4,374)
Provision (benefit) for
income taxes........... (415) 1,437 (247) (204) 6,655 5,046 (1,790)
------- ------- ------- ------- ------- ------- -------
Income (loss) before
extraordinary item..... (45) 2,126 686 516 12,753 9,674 (2,584)
Extraordinary gain
(loss)(1).............. 921 -- -- (394) -- -- (1,090)
------- ------- ------- ------- ------- ------- -------
Net income (loss)....... $ 876 $ 2,126 $ 686 $ 122 $12,753 $ 9,674 $(3,674)
======= ======= ======= ======= ======= ======= =======
Pro forma net income
(loss)(2).............. $ 1,262 $ 2,917 $ 848 $ 1,024 $12,838 $ 9,727 $(2,651)
======= ======= ======= ======= ======= ======= =======
OTHER DATA:
Broadcast cash flow(3).. $13,610 $15,412 $16,396 $20,641 $25,547 $18,558 $20,656
Broadcast cash flow
margin(4).............. 47.7% 47.5% 42.5% 42.9% 43.3% 43.7% 41.8%
EBITDA (excludes all
other income items)(3). $10,963 $12,219 $13,104 $16,842 $20,884 15,145 15,658
Capital expenditures.... 1,691 912 2,441 3,040 6,982 4,119 5,502
Purchase price of radio
stations............... 20,000 15,500 14,935 24,550 59,621 8,302 24,861
Earnings to fixed
charges ratio(5)....... 0.9x 2.1x 1.1x 1.0x 3.2x .5x
PRO FORMA RATIO:
Pro forma earnings to
fixed charges ratio(5). 1.7x .4x
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31
----------------------------------------- SEPTEMBER 30
1992 1993 1994 1995 1996 1997
------- ------- ------- -------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash
equivalents............ $ 2,479 $ 1,277 $ 1,780 $ 1,007 $ 1,962 $ 2,103
Working capital......... 322 5,836 1,852 1,088 8,258 17,573
Intangible assets, net.. 32,146 39,296 46,748 61,923 106,781 121,833
Total assets............ 62,106 69,656 82,041 104,817 159,185 184,133
Long-term debt
(including current
portion)............... 44,915 48,656 60,656 81,020 121,790 160,100
Shareholders' equity.... 10,348 12,474 13,160 13,282 20,354 9,386
</TABLE>
12
<PAGE>
- --------------------
(1) The extraordinary gain in 1992 represents a gain on early extinguishment of
a private annuity agreement. The extraordinary loss in 1995 and 1997
relates to the write-off of loan and related fees related to the repayment
of long-term debt. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and Note 4 of the Notes to
Consolidated Financial Statements.
(2) The Company's consolidated financial data for the periods presented include
the results of operations, assets and liabilities of New Inspiration
Broadcasting Company, Inc. ("New Inspiration") and Golden Gate Broadcasting
Company, Inc. ("Golden Gate"), which were both S corporations under common
ownership and control with the Company prior to the Reorganization (as
defined herein). Federal and state income taxes (except for a 1.5% state
franchise tax) are not provided for New Inspiration and Golden Gate in the
consolidated statements of operations of the Company for the periods
presented because the tax attributes of S corporations are passed through
to their shareholders. Prior to the Reorganization, New Inspiration and
Golden Gate reimbursed the S corporation shareholders for their individual
income tax liabilities on the earnings of the S corporations. These tax
reimbursements to S corporation shareholders are reflected as an operating
expense in the Company's consolidated financial statements.
In August 1997, the Company, New Inspiration and Golden Gate effected the
Reorganization pursuant to which the S corporations became wholly owned by
the Company. The S corporation status of New Inspiration and Golden Gate was
terminated in the Reorganization. To give effect to the Reorganization,
including the termination of the S corporation status of New Inspiration and
Golden Gate, pro forma net income excludes the tax reimbursements to S
corporation shareholders (because such amounts would not have been paid had
New Inspiration and Golden Gate been subject to income taxes) and includes a
pro forma tax provision at an estimated combined federal and state income tax
rate of approximately 40% (to reflect an estimated income tax provision
(benefit) of the Company) as if the Reorganization had occurred at the
beginning of each period presented in the Company's consolidated financial
data. See "Business--Corporate Structure and Reorganization."
The following table reflects the pro forma adjustments to historical net
income:
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEAR ENDED DECEMBER 31 SEPTEMBER 30
------------------------------------- ---------------
1992 1993 1994 1995 1996 1996 1997
------ ------ ------ ------ ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Pro Forma Information:
Income (loss) before
income taxes and
extraordinary
item as reported
above............... $ (460) $3,563 $ 439 $ 312 $19,408 $14,720 $(4,374)
Add back tax
reimbursements to
S corporation
shareholders........ 1,029 1,311 977 2,057 2,038 1,529 1,780
------ ------ ------ ------ ------- ------- -------
Pro forma income
(loss) before income
taxes and
extraordinary item . 569 4,874 1,416 2,369 21,446 16,249 (2,594)
Pro forma income tax
provision (benefit). 228 1,957 568 951 8,608 6,522 (1,033)
------ ------ ------ ------ ------- ------- -------
Pro forma income
(loss) before
extraordinary item.. 341 2,917 848 1,418 12,838 9,727 (1,561)
Extraordinary gain
(loss).............. 921 -- -- (394) -- -- (1,090)
------ ------ ------ ------ ------- ------- -------
Pro forma net income
(loss).............. $1,262 $2,917 $ 848 $1,024 $12,838 $ 9,727 $(2,651)
====== ====== ====== ====== ======= ======= =======
</TABLE>
(3) "Broadcast cash flow" consists of net operating income before tax
reimbursements to S corporation shareholders, depreciation and amortization
and corporate expenses. "EBITDA" consists of net operating income before
tax reimbursements to S corporation shareholders and depreciation and
amortization. Although broadcast cash flow and EBITDA are not measures of
performance calculated in accordance with GAAP, management believes that
they are useful to an investor in evaluating the Company because they are
measures widely used in the broadcast industry to evaluate a radio
company's operating performance. However, broadcast cash flow and EBITDA
should not be considered in isolation or as substitutes for net income,
cash flows from operating activities and other income or cash flow
statement data prepared in accordance with GAAP as a measure of liquidity
or profitability.
(4) Broadcast cash flow margin is broadcast cash flow as a percentage of net
revenue.
(5) For purposes of computing the ratio of earnings to fixed charges,
"earnings" consist of income from operations before income taxes plus fixed
charges, and "fixed charges" consist of interest expense plus an allocation
of a portion of rent expense representing interest. The pro forma earnings
to fixed charges ratio assumes the issuance of the Notes and the repayment
in full of the Company's outstanding indebtedness under the Company's prior
credit agreement which was repaid in full upon issuance of the Old Notes on
September 25, 1997 as if each occurred at the beginning of each period
presented. For the years ended December 31, 1992 and 1995, and for the nine
months ended September 30, 1997, the Company's earnings were inadequate to
cover fixed charges; the coverage deficiency for the years ended
December 31, 1992 and 1995 was $460,000 and $313,000, respectively, and for
the nine months ended September 30, 1997 was $4.4 million (actual) and $7.2
million (pro forma).
13
<PAGE>
RISK FACTORS
In addition to the other information set forth elsewhere in this Prospectus,
the following risk factors should be carefully considered before making an
investment in the Notes offered hereby.
SUBSTANTIAL LEVERAGE; SUBORDINATION; RESTRICTIONS IMPOSED BY CREDIT AGREEMENT;
ASSET ENCUMBRANCE
The Company is highly leveraged with approximately $160.1 million of total
Indebtedness outstanding and approximately $9.4 million of shareholders'
equity. The degree to which the Company is leveraged could have important
consequences to holders of the Notes, including the following: (i) the
Company's ability to obtain additional financing for working capital, capital
expenditures, acquisitions or general corporate purposes may be impaired; (ii)
the Company must pay interest on the Notes and interest and principal on its
other indebtedness, leaving less funds for other purposes, (iii) the Company
may be at a competitive disadvantage to its less leveraged competitors; and
(iv) the Company could be more vulnerable to a downturn in general economic
conditions.
The Notes are unsecured and thus, in effect, will rank junior to any secured
indebtedness of the Company and the Guarantors. The payment of any amount
owing in respect of the Notes will be subordinated to the prior payment in
full of all existing and future Senior Indebtedness of the Company, including
all amounts owing under the Credit Agreement. In addition, the Guarantees of
the Notes will be subordinated to the prior payment in full of all existing
and future Guarantor Senior Indebtedness of the Guarantors. Consequently, in
the event of the liquidation, dissolution, reorganization or similar
proceeding with respect to the Company or the Guarantors, assets of the
Company and the Guarantors will be available to pay obligations on the Notes
only after all Senior Indebtedness or Guarantor Senior Indebtedness, as
applicable, has been paid in full, and there can be no assurance that
sufficient assets to pay amounts due on all or any of the Notes will remain.
See "Description of the Notes--Subordination." As of September 30, 1997, the
Company and the Guarantors had an aggregate of $10.1 million of Senior
Indebtedness outstanding under the Company's $75.0 million senior secured
reducing revolving credit facility (the "Credit Agreement") and no other
Indebtedness outstanding other than the Notes. Subject to restrictions in the
Indenture and the Credit Agreement, the Company will be able to incur
additional Senior Indebtedness, including indebtedness under the Credit
Agreement.
The indebtedness outstanding under the Credit Agreement is secured by liens
on substantially all of the assets of the Company and the Guarantors,
constitutes Senior Indebtedness and will come due prior to the maturity of the
Notes. Indebtedness under the Credit Agreement is at variable rates of
interest, which will cause the Company to be vulnerable to increases in
interest rates (except to the extent the Company has entered into certain
Interest Rate Agreements (as defined herein) with respect thereto). The Credit
Agreement includes certain restrictive covenants that, among other things and
with certain exceptions, limit the Company's ability to incur additional
indebtedness, enter into affiliate transactions, pay dividends, consolidate,
merge or effect certain asset sales, make certain investments or loans and
change the nature of its business. The Credit Agreement also requires
satisfaction by the Company of certain financial covenants, which will require
maintenance of specified financial ratios and compliance with certain
financial tests, including ratios for maximum leverage, minimum interest
coverage, minimum debt service coverage and minimum fixed charge coverage. The
ability of the Company to comply with these and other provisions of the Credit
Agreement may be affected by events beyond the Company's control. The breach
of any of these covenants could result in a default under the Credit
Agreement, in which case, depending on the actions taken by the lenders
thereunder or their successors in interest, such lenders would be entitled to
declare all amounts borrowed under the Credit Agreement, together with accrued
interest, to be due and payable. If the Company were unable to repay such
borrowings, such lenders could proceed against their collateral. See
"Description of Certain Indebtedness--Credit Agreement." If the indebtedness
under the Credit Agreement were accelerated, there can be no assurance that
the assets of the Company would be sufficient to repay in full such
indebtedness and the other indebtedness of the Company, including the Notes.
See "Description of the Notes."
OPERATING AND GROWTH STRATEGY
Because the Company maintains a religious format at nearly all its owned and
operated radio stations and offers religious programming options through the
Network, the success of the Company is dependent upon the
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popularity of religious formats, the financial success of the organizations
purchasing block program time and spot advertising on the Company's stations
and the financial success of religious format radio stations that purchase
programming through the Network. The Company recognizes that this commitment
may result in the foregoing of certain opportunities, such as switching to
non-religious formats in certain markets that appear, or may appear in the
future, to offer better profit opportunities. The Company believes, however,
that this commitment is necessary in order to continue to obtain commitments
from those quality program producers whose presence on the Company's stations
will attract and retain the religious/conservative listening audience. While
the Company has been successful in the past with the religious formats of its
stations and Network programming, no assurance can be given that this format
will be successful in the future.
Since January 1, 1992, the Company has grown significantly by acquiring
ownership of, or operating rights to, 29 radio stations in 20 markets, nine of
which were acquired after January 1, 1997. Typically the Company has acquired
radio stations that operate under a different format than the religious/talk
format the Company employs. The Company is committed to the religious/talk
format and considers its commitment to have brought it success by allowing
quality programmers to commit their resources to development of their
programming based on the comfort that the format will exist long enough for
such programmers to succeed in building an audience on the Company's stations.
The Company intends to continue its growth and operating strategies through
continued acquisitions of radio station groups and individual radio stations
in selected markets and expects that, consistent with past practices, it will
reformat most of these radio stations. See "Business--Acquisition Strategy."
The Company's growth and operating strategy has a number of inherent risks
including: (i) the Company may be unable to generate cash flow in reformatted
stations as effectively as it has in the past, (ii) the Company's management
team may be unable to manage a larger organization or may be unable to
integrate newly acquired stations into its management structure as effectively
as when it had fewer stations to manage, (iii) the acquisitions that the
Company makes may not benefit the Company as expected, (iv) the Company may be
unable to locate attractive acquisition opportunities or may be forced to pay
higher prices due to increased competition for such radio stations and (v) to
continue its acquisition strategy, the Company may need and be unable to
obtain additional financing on terms acceptable to its management and in
compliance with the Indenture and the Credit Agreement or at all. Taking into
account certain restrictions under the Credit Agreement, the Company is not
currently able to borrow for acquisitions. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Liquidity and
Capital Resources." The Company currently is evaluating certain acquisitions
but has no binding acquisition commitments other than as described in
"Summary--Recent Developments."
DEPENDENCE ON KEY CUSTOMERS AND KEY MARKETS; MARKET GROWTH CONSTRAINTS
A substantial portion of the Company's historical revenue has been realized
from the sale of block program time to independent producers of religious
programming. While no single programming customer represented more than 7.5%
of total program revenue for the year ended December 31, 1996 or the six
months ended June 30, 1997, the top five revenue-producing program customers
accounted for 20.7% and 22.2%, respectively, of gross program revenue and
11.9% of gross revenue for such periods. These top programmers purchase block
program time on many of the Company's stations. The Company's contracts with
program providers are not exclusive and, with limited exceptions, may be
terminated by either party on 30 days' notice. The Company's operating results
and business could be materially and adversely affected should any of its
significant programmers experience financial difficulties or determine to move
their programs to other radio broadcasters or media.
A substantial portion of the Company's historical revenue has been realized
from the results of operations of several of its radio stations in certain key
markets. The Company's top four revenue-producing stations accounted for 38.3%
and 36.1%, respectively, of the Company's net revenue for the year ended
December 31, 1996 and the nine months ended September 30, 1997 and 59.5% and
59.7%, respectively, of the Company's EBITDA for the same periods. A
significant decline in net revenue from the Company's stations in these
markets could have a material adverse effect on the Company's financial
position and results of operations.
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In addition, the Company's ability to enter new markets has been dependent
to a significant degree upon the willingness of its core group of national
programming customers to purchase air time in these new markets and thus
expand the distribution of their programs. There can be no assurance that such
core group will continue to support the Company's further expansion into new
markets. Because of the substantial investment required to purchase block
program time in new markets and the significant time lag involved in creating
a listener base capable of generating revenue sufficient to cover these
programming costs, these programming customers may not be willing to make the
financial commitment associated with expanding into new markets, which may in
turn affect the Company's ability to expand into new markets. In addition, the
Company's ability to expand into new markets could be limited by programming
customers having pre-existing relationships with other stations in such
markets.
HOLDING COMPANY STRUCTURE; POSSIBLE UNENFORCEABILITY OF GUARANTEES; FRAUDULENT
CONVEYANCES AND PREFERENTIAL TRANSFERS
The Company is a holding company that derives substantially all of its
operating income from the Guarantors, including income used for the payment of
principal of and interest on the Notes. The ability of the Guarantors to make
such payments is restricted by, among other things, applicable state corporate
laws, other laws and regulations or terms of agreements to which they may
become party.
The Guarantees provided by the Guarantors may be subject to legal challenge
in the event of the bankruptcy of a Guarantor. To the extent that the
Guarantees are not enforceable, the rights of holders of the Notes to
participate in any distribution of assets of any Guarantor upon liquidation,
bankruptcy, reorganization or otherwise may, as is the case with other
unsecured creditors of the Company, be subject to prior claims of creditors of
the Guarantor.
Enforcement of the Guarantees may be limited by certain fraudulent
conveyance laws. Various fraudulent conveyance and similar laws have been
enacted for the protection of creditors and may be utilized by a court of
competent jurisdiction to avoid the Guarantees. The requirements for
establishing a fraudulent conveyance vary depending on the law of the
jurisdiction that is being applied. Generally, if in a bankruptcy,
reorganization, rehabilitation or similar proceeding in respect to the Company
or a Guarantor, or in a lawsuit by or on behalf of creditors against the
Company or a Guarantor, a court were to find that (i) the Company or a
Guarantor, as the case may be, incurred indebtedness in connection with the
Notes (including the Guarantees) with the intent of hindering, delaying or
defrauding current or future creditors of the Company or the Guarantor, as the
case may be, or (ii) the Company or a Guarantor, as the case may be, received
less than reasonably equivalent value or fair consideration for incurring such
indebtedness (including the Guarantees), as the case may be, and either
(a) was insolvent at the time of the incurrence of such indebtedness
(including the Guarantees), (b) was rendered insolvent by reason of incurring
such indebtedness (including the Guarantees), (c) was at such time engaged or
about to engage in a business or transaction for which its assets constituted
unreasonably small capital or (d) intended to incur, or believed that it would
incur, debts beyond its ability to pay such debts as they matured, such court
could, with respect to the Company or the Guarantor, as the case may be,
declare void in whole or in part the obligations of the Company or such
Guarantor in connection with the Notes (including the Guarantees). Generally,
an entity will be considered insolvent if the sum of its respective debts was
greater than the fair saleable value of all of its property at a fair
valuation or if the present fair saleable value of its assets is less than the
amount that will be required to pay its probable liability on its existing
debts, as they become absolute and mature.
Additionally, under federal bankruptcy or applicable state insolvency law,
if certain bankruptcy or insolvency proceedings were initiated by or against
the Company or any Guarantor within 90 days after any payment by the Company
or such Guarantor with respect to the Notes or a Guarantee, respectively, or
if the Company or such Guarantor anticipated becoming insolvent, all or a
portion of such payment could be avoided as a preferential transfer and the
recipient of such payment could be required to return such payment.
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DEPENDENCE ON KEY PERSONNEL; CONTROL OF COMPANY
The Company's business is dependent upon the performance of certain key
individuals, particularly Edward G. Atsinger III, the President, Chief
Executive Officer and a director, and Stuart W. Epperson, the Chairman of the
Board. The loss of the services of either Mr. Atsinger or Mr. Epperson, each
of whom has been involved in the radio broadcasting industry for more than 25
years, could have a material adverse effect upon the Company. The Company has
entered into Employment Agreements with Mr. Atsinger and Mr. Epperson which
expire July 31, 2000. See "Management--Employment Agreements." In addition,
the Company has purchased key-man life insurance covering Mr. Atsinger and Mr.
Epperson in the amount of $5.0 million each.
The Principal Shareholders hold 86.8% of the outstanding common stock of the
Company. See "Securities Ownership of Certain Beneficial Owners." As a result,
the Principal Shareholders are effectively able to elect all of the members of
the Board of Directors of the Company and therefore direct the management and
policies of the Company. The Principal Shareholders may have interests
different from those of holders of the Notes.
COMPETITION
The radio broadcasting industry, including the religious format segment of
this industry, is a highly competitive business. The financial success of each
of the Company's radio stations that features talk programming is dependent,
to a significant degree, upon its ability to generate revenue from the sale of
block program time to national and local religious and educational
organizations. The Company competes for this program revenue with a number of
different commercial and noncommercial radio station licensees. While no group
owner specializing in the religious format approaches the Company in size and
major market penetration, religious format stations exist and enjoy varying
degrees of prominence and success in all markets. While management believes
that its commitment to acquiring full market coverage facilities, its
reputation for quality programming and its relationships with key customers
position it well for continued growth and stability of program revenue, there
can be no assurance that the Company will be able to maintain or increase its
current program revenue.
The Company also competes for revenue in the spot advertising market with
other commercial religious format and general format radio station licensees.
There can be no assurance that the Company will be able to maintain or
increase its current advertising revenue. The Company competes in the spot
advertising market with other media as well, including broadcast television,
cable television, newspapers, magazines, direct mail coupons and billboard
advertising. Competition may also come from new media technologies currently
being developed or introduced, such as the delivery of audio programming by
cable television systems, by satellite and by digital audio broadcasting
("DAB"). DAB may deliver by satellite to national and regional audiences,
multi-channel, multiformat digital radio services with quality equivalent to
compact discs. The delivery of information through the Internet also could
create new competition. The Federal Communications Commission (the "FCC") has
recently authorized spectrum for the use of a new technology, satellite
digital audio radio services ("DARS"), to deliver audio programming. DARS may
provide a medium for the delivery by satellite or terrestrial means of
multiple new audio programming formats to local and national audiences. The
Company cannot predict at this time the effect, if any, that any such new
technologies may have on the radio broadcasting industry.
The Network also faces competition. The Network competes with other
commercial radio networks that offer news and talk programming to religious
format stations and two noncommercial networks that offer religious music
formats. The Network also competes with other radio networks for the services
of talk show personalities. While management believes that the variety of
products offered by the Network and its presence in major markets through
affiliation with Company owned and operated stations gives the Network a
strong competitive position, there can be no assurance that existing and new
competitors will not adversely affect the Network's growth potential and
profitability.
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REGULATORY MATTERS
Each of the Company's radio stations operates pursuant to one or more
licenses issued by the FCC that expire at different times. Although the
Company can and intends to apply to renew these licenses, third parties may
challenge the Company's renewal applications. There can be no assurance that
the Company's licenses to operate its radio stations will be renewed.
The radio broadcasting industry is subject to extensive and changing
regulation. Among other things, the Communications Act of 1934 (the
"Communications Act") and FCC rules and policies require FCC approval for
transfers of control of FCC licenses and assignments of FCC licenses. The
filing of complaints against the Company or other FCC licensees could result
in the FCC's delaying the grant of, or refusing to grant, its consent to the
assignment of licenses to or from an FCC licensee against whom a complaint is
pending. See "Business--Federal Regulation of Radio Broadcasting."
Further, in addition to the other risks associated with the acquisition of
radio stations, the Company also is aware that the FCC and the Department of
Justice (the "DOJ"), which evaluate transactions to determine whether those
transactions should be challenged under the federal antitrust laws, have
recently been increasingly active in their review of radio station
acquisitions, particularly where an operator proposes to acquire additional
stations in its existing markets. There can be no assurance that the DOJ or
the Federal Trade Commission ("FTC") will not require the restructuring of
future acquisitions. See "Business--Federal Regulation of Radio Broadcasting."
POTENTIAL INABILITY TO PURCHASE TENDERED NOTES UPON A CHANGE OF CONTROL
Each holder has the option to cause the Company to purchase its Notes, in
whole or in part, at a purchase price equal to 101% of the principal amount
thereof, plus accrued and unpaid interest thereon through the date of
repurchase, following a Change of Control (as defined herein). In addition, a
Change of Control would be an event of default under the Credit Agreement. The
Company currently does not have sufficient funds available to it to purchase
all of the outstanding Notes were they to be tendered in the event of a Change
of Control. There can be no assurance that the Company will be able to repay
all outstanding Senior Indebtedness and repurchase the Notes in the future
upon a Change of Control. See "Description of the Notes--Certain Covenants--
Purchase of Notes Upon a Change of Control."
LACK OF PUBLIC MARKET; RESTRICTIONS ON RESALE
The Notes are new securities for which there is currently no market. The Old
Notes are currently eligible for trading by qualified buyers in the PORTAL
market. Following commencement of the Exchange Offer but prior to its
consummation, the Old Notes may continue to be traded in the PORTAL market.
Following consummation of the Exchange Offer, the Notes will not be eligible
for PORTAL trading. Although the Initial Purchasers have informed the Company
that they currently intend to make a market for the Notes, they are not
obligated to do so and any such market may be discontinued at any time without
notice. There can be no assurance that an active public market for the Notes
will develop or, if developed, will continue to exist. If a public trading
market for the Notes develops, future trading prices will depend on many
factors, including, among other things, general market conditions, prevailing
interest rates, the Company's results of operations and the market for similar
securities. Depending upon such factors, the Notes may trade at a discount
from their original issue price. Further, in the case of non-tendering holders
of Old Notes, no assurance can be given as to the liquidity of the trading
market for the Old Notes following the Exchange Offer.
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USE OF PROCEEDS
The Company will receive no proceeds from the exchange of the Notes for the
Old Notes pursuant to the Exchange Offer.
THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
The Exchange Offer is designed to provide holders of the Old Notes with an
opportunity to acquire Notes which, unlike the Old Notes, will be freely
tradable at all times, subject to any restrictions on transfer imposed by
state "blue sky" laws and provided that the holder is not an affiliate of the
Company within the meaning of the Securities Act and represents that the Notes
are being acquired in the ordinary course of such holder's business and the
holder is not engaged in, and does not intend to engage in a distribution of
the Notes. The outstanding Old Notes in the aggregate principal amount at
maturity of $150.0 million were originally issued and sold on September 25,
1997 (the "Original Issue Date") in order to repay outstanding indebtedness.
The original sale to the Initial Purchasers was not registered under the
Securities Act in reliance upon the exemption provided by Section 4(2) of the
Securities Act and the concurrent resale of the Old Notes to investors was not
registered under the Securities Act in reliance upon the exemption provided by
Rule 144A promulgated under the Securities Act. The Old Notes may not be
reoffered, resold or transferred other than pursuant to a registration
statement filed pursuant to the Securities Act or unless an exemption from the
registration requirements of the Securities Act is available. Pursuant to Rule
144, Old Notes may generally be resold (a) commencing one year after the
Original Issue Date, in an amount up to, for any three-month period, the
greater of 1% of the Old Notes then outstanding or the average weekly trading
volume of the Old Notes during the four calendar weeks immediately preceding
the filing of the required notice of sale with the Commission and (b)
commencing two years after the Original Issue Date, in any amount and
otherwise without restriction by a holder who is not, and has not been for the
preceding 90 days, an affiliate of the Company. The Old Notes are eligible for
trading in the PORTAL Market, and may be resold to certain qualified
institutional buyers pursuant to Rule 144A. Certain other exemptions may also
be available under other provisions of the federal securities laws for the
resale of the Old Notes.
In connection with the original issue and sale of the Old Notes, the Company
and the Guarantors entered into a Registration Rights Agreement, pursuant to
which they agreed to use their best efforts to file with the Commission and
cause to become effective a registration statement covering the exchange of
the Notes for the Old Notes (the "Exchange Offer Registration Statement").
In the event that (i) due to a change in applicable law or current
interpretations by the Commission, the Company and the Guarantors are not
permitted to effect the Exchange Offer for all of the Old Notes, (ii) the
Exchange Offer is not for any other reason consummated within 180 days after
the Original Issuance Date of the Old Notes, (iii) any holder of the Old Notes
shall, within 30 days after commencement of the Exchange Offer, notify the
Company that such holder (x) is prohibited by applicable law or Commission
policy from participating in the Exchange Offer, (y) may not resell Notes
acquired by it in the Exchange Offer to the public without delivering a
prospectus and that the prospectus contained in the Exchange Offer
Registration Statement is not appropriate or available for such resales by
such holder or (z) is a broker-dealer and holds Old Notes acquired directly
from the Company or any Guarantor or an "affiliate" of the Company or any
Guarantor, then in addition to or in lieu of conducting the Exchange Offer, or
(iv) at the request of any of the Initial Purchasers, the Company and the
Guarantors will be required to file a registration statement (a "Shelf
Registration Statement") covering resales (a) by the holders of the Old Notes
in the event the Company and the Guarantors are not permitted to effect the
Exchange Offer pursuant to the foregoing clause (i) or the Exchange Offer is
not consummated within 180 days after the Original Issuance Date of the Old
Notes, pursuant to the foregoing clause (i) or (ii) or (b) by the holders of
Old Notes with respect to which the Company receives notice pursuant to the
foregoing clauses (iii) or (iv), and will use its best efforts to cause any
such Shelf Registration Statement to become effective and to keep such Shelf
Registration Statement continuously effective for two years from the effective
date thereof or such shorter period that will terminate when all of the Notes
covered by the Shelf Registration
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Statement have been sold pursuant to the Shelf Registration Statement. The
Company and the Guarantors shall, if they file a Shelf Registration Statement,
provide to each holder of the Old Notes copies of the related prospectus and
notify each such holder when the Shelf Registration Statement has become
effective. A holder that sells Old Notes pursuant to a Shelf Registration
Statement generally will be required to be named as a selling securityholder
in the related prospectus and to deliver a current prospectus to purchasers,
and will be subject to certain of the civil liability provisions under the
Securities Act in connection with such sales.
Under the Registration Rights Agreement, the Company and the Guarantors have
agreed to use their best efforts to: (i) file the Exchange Offer Registration
Statement or a Shelf Registration Statement with the Commission as soon as
practicable after the Original Issuance Date of the Old Notes or notice from
holders in the event of clauses (iii) or (iv) of the prior paragraph, (ii)
have such Exchange Offer Registration Statement or Shelf Registration
Statement declared effective by the Commission as soon as practicable after
the filing thereof, and (iii) commence the Exchange Offer and issue the
Exchange Notes in exchange for all Old Notes validly tendered in accordance
with the terms of the Exchange Offer prior to the close of the Exchange Offer,
or, in addition or in the alternative, cause such Shelf Registration Statement
to remain continuously effective for two years from the effective date thereof
or such shorter period that will terminate when all of the Old Notes covered
by the Shelf Registration Statement have been sold pursuant to the Shelf
Registration Statement. Each holder of the Old Notes is bound by the
provisions of the Registration Rights Agreement which may require the holder
to furnish notice or other information to the Company as a condition to
certain obligations of the Company and the Guarantors to file a Shelf
Registration Statement by a particular date or to maintain its effectiveness
for the prescribed two-year period.
If the Company or the Guarantors fail to comply with the above provisions,
the Company and the Guarantors agree to pay liquidated damages to each holder
of Old Notes or Notes as follows:
(i) (A) if an Exchange Offer Registration Statement (or, in the event of
a change in applicable law or due to current interpretations by the
Commission, the Company and the Guarantors are not permitted to effect the
Exchange Offer, a Shelf Registration Statement) is not filed within 75 days
following the Original Issuance Date of the Old Notes, (B) in the event
that within the 30 days after commencement of the Exchange Offer, any
holder of Old Notes shall notify the Company that such holder (x) is
prohibited by applicable law or Commission policy from participating in the
Exchange Offer, (y) may not resell Exchange Notes acquired by it in the
Exchange Offer to the public without delivering a prospectus and that the
prospectus contained in the Exchange Offer Registration Statement is not
appropriate or available for such resales by such holder or (z) is a
broker-dealer and holds Old Notes acquired directly from the Company or any
Guarantor or an "affiliate" of the Company or any Guarantor and a Shelf
Registration Statement is not filed within 75 days after such notice, or
(C) upon the request of an Initial Purchaser, a Shelf Registration
Statement is not filed within 75 days after such request, then commencing
on either the 76th day after the Original Issuance Date of the Old Notes or
the expiration of the 75-day time periods set forth in clauses (B) and (C)
above (either a "Prescribed Time Period"), as the case may be, penalty
amounts shall be accrued on the Old Notes over and above the stated payment
rates thereon at a rate of 0.25% per annum for the first 90 days
immediately following the 76th day after either the Closing Date or the
expiration of the Prescribed Time Period, as the case may be (the "Penalty
Amounts"), such Penalty Amount rate increasing by an additional 0.25% per
annum at the beginning of each subsequent 90-day period;
(ii) if an Exchange Offer Registration Statement or a Shelf Registration
Statement is filed pursuant to clause (i) above and is not declared
effective within either 150 days following the Original Issuance Date of
the Old Notes or 75 days following the expiration of the Prescribed Time
Period, as the case may be, then commencing on the 151st day after the
Original Issuance Date or the 76th day following the expiration of the
Prescribed Time Period, as the case may be, Penalty Amounts shall be
accrued on the Old Notes over and above the accrued stated payment rates
thereon at a rate of 0.25% per annum for the first 90 days immediately
following the 151st day after the Closing Date or the 76th day after the
expiration of the Prescribed Time Period, as the case may be, such Penalty
Amounts rate increasing by an additional 0.25% per annum at the beginning
of each subsequent 90-day period; and
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(iii) if either (A) the Company and the Guarantors have not exchanged
Exchange Notes for all Old Notes validly tendered in accordance with the
terms of the Exchange Offer on or prior to 180 days after the Original
Issuance Date or (B) if applicable, a Shelf Registration Statement has been
declared effective and such Shelf Registration Statement ceases to be
effective prior to two years from its original effective date or such
shorter period that will terminate when all of the Old Notes covered by the
Shelf Registration Statement have been sold pursuant to the Shelf
Registration Statement, then, subject to certain exceptions, Penalty
Amounts shall be accrued on the Old Notes over and above the stated payment
rates at a rate of 0.25% per annum for the first 90 days immediately
following (x) the 181st day after the Original Issuance Date in the case of
(A) above, or (y) the day such Shelf Registration Statement ceases to be
effective in the case of (B) above, such Penalty Amounts rate increasing by
an additional 0.25% per annum at the beginning of each subsequent 90-day
period; provided, however, that the Penalty Amounts rate on the applicable
Old Notes may not exceed 1.0% per annum; and provided further that (1) upon
the filing of the Exchange Offer Registration Statement or a Shelf
Registration Statement (in the case of (i) above), (2) upon the
effectiveness of the Exchange Offer Registration Statement or a Shelf
Registration Statement (in the case of (ii) above), or (3) upon the
exchange of Notes for all Old Notes tendered in the Exchange Offer or upon
the effectiveness of the Shelf Registration Statement which had ceased to
remain effective prior to two years from its original effective date (in
the case of (iii) above), Penalty Amounts as a result of such
clause (i), (ii) or (iii) shall cease to accrue.
Any Penalty Amounts due pursuant to clause (i), (ii) or (iii) above will be
payable in cash on the various payment dates related to the Old Notes. The
Penalty Amounts will be determined by multiplying the applicable Penalty
Amounts rate by the principal amount of the Old Notes, multiplied by a
fraction, the numerator of which is the number of days such Penalty Amount
rate was applicable during such period, and the denominator of which is 360.
The foregoing summary of certain provisions of the Registration Rights
Agreement does not purport to be complete and is subject to, and is qualified
in its entirety by reference to, the provisions of the Registration Rights
Agreement filed as an exhibit to the Registration Rights Agreement. Copies of
the Registration Rights Agreement are available from the Company or the
Initial Purchasers upon request.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth herein and in the
accompanying Letter of Transmittal, the Company will exchange $1,000 principal
amount of Notes for each $1,000 principal amount of its outstanding Old Notes.
Notes will be issued only in integral multiplies of $1,000 to each tendering
holder of Old Notes whose Old Notes are accepted in the Exchange Offer.
The Notes will bear interest from and including the Original Issue Date.
Accordingly, holders who receive Notes in exchange for Old Notes will forego
accrued but unpaid interest on their exchanged Old Notes for the period from
and including the Original Issue Date to the date of exchange, but will be
entitled to such interest under the Notes.
As of , 1998, $150.0 million aggregate principal amount at maturity of
Old Notes were outstanding. This Prospectus, the Letter of Transmittal and
Notice of Guaranteed Delivery are being sent to all registered holders of Old
Notes as of that date. Tendering holders will not be required to pay brokerage
commissions or fees or, subject to the instructions in the Letter of
Transmittal, transfer taxes with respect to the exchange of Old Notes pursuant
to the Exchange Offer. The Company will pay all charges and expenses, other
than certain transfer taxes which may be imposed, in connection with the
Exchange Offer. See "--Payment of Expenses."
Holders of Old Notes do not have any appraisal or dissenters' rights under
the California General Corporation Law in connection with the Exchange Offer.
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EXPIRATION DATE; EXTENSIONS; TERMINATION
The Exchange Offer will expire at 5:00 P.M., New York City time, on ,
1998, subject to extension by the Company by notice to the Exchange Agent as
herein provided. The Company reserves the right to extend the Exchange Offer
at its discretion, in which event the term "Expiration Date" shall mean the
time and date on which the Exchange Offer as so extended shall expire. The
Company shall notify the Exchange Agent of any extension by oral or written
notice and shall mail to the registered holders of Old Notes an announcement
thereof, each prior to 9:00 A.M., New York City time, on the next business day
after the previously scheduled Expiration Date.
The Company reserves the right to extend or terminate the Exchange Offer and
not accept for exchange any Old Notes if any of the events set forth below
under "--Conditions to the Exchange Offer" occur and are not waived by the
Company, by giving oral or written notice of such delay or termination to the
Exchange Agent. See "--Conditions to the Exchange Offer." The rights reserved
by the Company in this paragraph are in addition to the Company's rights set
forth below under the caption "--Conditions to the Exchange Offer."
PROCEDURES FOR TENDERING
The tender to the Company of Old Notes by a holder thereof pursuant to one
of the procedures set forth below and the acceptance thereof by the Company
will constitute an agreement between such holder and the Company in accordance
with the terms and subject to the conditions set forth herein and in the
Letter of Transmittal.
Except as set forth below, a holder who wishes to tender Old Notes for
exchange pursuant to the Exchange Offer must transmit a properly completed and
duly executed Letter of Transmittal, including all other documents required by
such Letter of Transmittal, to the Exchange Agent at the address set forth
below under "Exchange Agent" on or prior to the Expiration Date. In addition,
either (i) certificates for such Old Notes must be received by the Exchange
Agent along with the Letter of Transmittal, or (ii) a timely confirmation of a
book-entry transfer (a "Book-Entry Confirmation") of such Old Notes, if such
procedure is available, into the Exchange Agent's account at The Depository
Trust Company pursuant to the procedure of book-entry transfer described
below, must be received by the Exchange Agent prior to the Expiration Date, or
(iii) the holder must comply with the guaranteed delivery procedures described
below. LETTERS OF TRANSMITTAL AND OLD NOTES SHOULD NOT BE SENT TO THE COMPANY.
Signatures on a Letter of Transmittal must be guaranteed unless the Old
Notes tendered pursuant thereto are tendered (i) by a registered holder of Old
Notes who has not completed the box entitled "Special Issuance and Delivery
Instructions" on the Letter of Transmittal or (ii) for the account of any firm
that is a member of a registered national securities exchange or a member of
the National Association of Securities Dealers, Inc. (the "NASD") or a
commercial bank or trust company having an office in the United States (an
"Eligible Institution"). In the event that signatures on a Letter of
Transmittal are required to be guaranteed, such guarantee must be by an
Eligible Institution.
The method of delivery of Old Notes and other documents to the Exchange
Agent is at the election and risk of the holder, but if delivery is by mail it
is suggested that the mailing be made sufficiently in advance of the
Expiration Date to permit delivery to the Exchange Agent before the Expiration
Date.
If the Letter of Transmittal is signed by a person other than a registered
holder of any Old Note tendered therewith, such Old Note must be endorsed or
accompanied by appropriate bond powers, in either case signed exactly as the
name of the registered holder appears on the Old Note.
If the Letter of Transmittal or any Old Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and, unless waived by the Company,
proper evidence satisfactory to the Company of their authority to so act must
be submitted.
22
<PAGE>
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of tendered Old Notes will be resolved by the Company,
whose determination will be final and binding. The Company reserves the
absolute right to reject any or all tenders that are not in proper form or the
acceptance of which would, in the opinion of counsel for the Company, be
unlawful. The Company also reserves the right to waive any irregularities or
conditions of tender as to particular Old Notes. The Company's interpretation
of the terms and conditions of the Exchange Offer (including the instructions
in the Letter of Transmittal) will be final and binding. Unless waived, any
irregularities in connection with tenders must be cured within such time as
the Company shall determine. Neither the Company nor the Exchange Agent shall
be under any duty to give notification of defects in such tenders or shall
incur liabilities for failure to give such notification. Tenders of Old Notes
will not be deemed to have been made until such irregularities have been cured
or waived. Any Old Notes received by the Exchange Agent that are not properly
tendered and as to which the irregularities have not been cured or waived will
be returned by the Exchange Agent to the tendering holder, unless otherwise
provided in the Letter of Transmittal, as soon as practicable following the
Expiration Date.
The Company's acceptance for exchange of Old Notes tendered pursuant to the
Exchange Offer will constitute a binding agreement between the tendering
person and the Company upon the terms and subject to the conditions of the
Exchange Offer.
BOOK-ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with respect
to the Old Notes at The Depository Trust Company for purposes of the Exchange
Offer within two business days after the date of this Prospectus, and any
financial institution that is a participant in The Depository Trust Company's
systems may make book-entry delivery of Old Notes by causing The Depository
Trust Company to transfer such Old Notes into the Exchange Agent's account at
The Depository Trust Company in accordance with such Depository Trust
Company's procedures for transfer. However, although delivery of Old Notes may
be effected through book-entry transfer at The Depository Trust Company, the
Letter of Transmittal or facsimile thereof with any required signature
guarantees and any other required documents must, in any case, be transmitted
to and received by the Exchange Agent at one of the addresses set forth below
under the caption "--Exchange Agent" on or prior to the Expiration Date or the
guaranteed delivery procedures described below must be complied with.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Old Notes and (i) whose Old Notes are not
immediately available, or (ii) who cannot deliver their Old Notes, the Letter
of Transmittal or any other required documents to the Exchange Agent prior to
the Expiration Date, may effect a tender if:
(a) The tender is made through an Eligible Institution;
(b) Prior to the Expiration Date, the Exchange Agent receives from such
Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
setting forth the name and address of the holder of the Old Notes, the
certificate number or numbers of such Old Notes and the principal amount of
Old Notes tendered, stating that the tender is being made thereby and
guaranteeing that, within five New York Stock Exchange trading days after
the Expiration Date, the Letter of Transmittal (or facsimile thereof)
together with the certificate(s) representing the Old Notes, or a Book-
Entry Confirmation, as the case may be, and any other documents required by
the Letter of Transmittal will be deposited by the Eligible Institution
with the Exchange Agent; and
(c) Such properly completed and executed Letter of Transmittal (or
facsimile thereof), as well as the certificate(s) representing all tendered
Old Notes in proper form for transfer, or a Book-Entry Confirmation, as the
case may be, and all other documents required by the Letter of Transmittal
are received by the Exchange Agent within three New York Stock Exchange
trading days after the Expiration Date.
Upon request of the Exchange Agent, a Notice of Guaranteed Delivery (as well
as a copy of this Prospectus and the Letter of Transmittal) will be sent to
holders who wish to tender their Old Notes according to the guaranteed
delivery procedures set forth above.
23
<PAGE>
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provision of the Exchange Offer, the Company shall
not be required to accept for exchange, or to issue Notes in exchange for, any
Old Notes and may terminate or amend the Exchange Offer if at any time before
the acceptance of such Old Notes for exchange or the exchange of the Notes for
such Old Notes, the Company determines that the Exchange Offer violates
applicable law, and applicable interpretation of the staff of the Commission
or any order of any governmental agency or court of competent jurisdiction.
The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company regardless of the circumstances giving rise to any
such condition or may be waived by the Company in whole or in part at any time
and from time to time in its reasonable discretion. The failure by the Company
at any time to exercise any of the foregoing rights shall not be deemed a
waiver of any such right and each such right shall be deemed an ongoing right
which may be asserted at any time and from time to time.
In addition, the Company will not accept for exchange any Old Notes
tendered, and no Notes will be issued in exchange for any such Old Notes, if
at such time any stop order shall be threatened or in effect with respect to
the Registration Statement of which this Prospectus constitutes a part or the
qualification of the Indenture under the Trust Indenture Act of 1939. In any
such event, the Company is required to use its reasonable best efforts to
obtain the withdrawal of any stop order at the earliest possible time.
ACCEPTANCE OF OLD NOTES FOR EXCHANGE; DELIVERY OF NOTES
Upon the terms and subject to the conditions of the Exchange Offer, the
Company will accept all Old Notes validly tendered prior to 5:00 P.M., New
York City time, on the Expiration Date. The Company will deliver Notes in
exchange for Old Notes promptly following the Expiration Date.
For purposes of the Exchange Offer, the Company shall be deemed to have
accepted validly tendered Old Notes when, as and if the Company has given oral
or written notice thereof to the Exchange Agent. The Exchange Agent will act
as agent for the tendering holders for the purpose of receiving the Notes.
Under no circumstances will interest be paid by the Company or the Exchange
Agent by reason of any delay in making such payment or delivery.
If any tendered Old Notes are not accepted for exchange because of an
invalid tender, the occurrence of certain other events set forth herein or
otherwise, any such unaccepted Old Notes will be returned, at the Company's
expense, to the tendering holder thereof as promptly as practicable after the
expiration or termination of the Exchange Offer.
WITHDRAWAL RIGHTS
Tenders of Old Notes may be withdrawn at any time prior to the Expiration
Date.
For a withdrawal to be effective, a written notice of withdrawal must be
received by the Exchange Agent at the address set forth below under "--
Exchange Agent." Any such notice of withdrawal must specify the name of the
person having tendered the Old Notes to be withdrawn, identify the Old Notes
to be withdrawn (including the principal amount of such Old Notes), and (where
certificates for Old Notes have been transmitted) specify the name in which
such Old Notes are registered, if different from that of the withdrawing
holder. If certificates for Old Notes have been delivered or otherwise
identified to the Exchange Agent, then, prior to the release of such
certificates the withdrawing holder must also submit the serial numbers of the
particular certificates to be withdrawn and a signed notice of withdrawal with
signatures guaranteed by an Eligible Institution unless such holder is an
Eligible Institution. If Old Notes have been tendered to the procedure for
book-entry transfer described above, any notice of withdrawal must specify the
name and number of the account at The Depository Trust Company to be credited
with the withdrawn Old Notes and otherwise comply with the procedures of such
facility. All questions as to the validity, form and eligibility (including
time of receipt) of such notices will be determined by the Company, whose
determination shall be final and binding on all parties. Any Old Notes so
24
<PAGE>
withdrawn will be deemed not to have been validly tendered for exchange for
purposes of the Exchange Offer. Any Old Notes which have been tendered for
exchange but which are not exchanged for any reason will be returned to the
holder thereof without cost to such holder (or, in the case of Old Notes
tendered by book-entry transfer into the Exchange Agent's account at The
Depository Trust Company pursuant to the book-entry transfer procedures
described above, such Old Notes will be credited to an account maintained with
The Depository Trust Company for the Old Notes) as soon as practicable after
withdrawal, rejection of tender or termination of the Exchange Offer. Properly
withdrawn Old Notes may be retendered by following one of the procedures
described under "--Procedures for Tendering" above at any time on or prior to
the Expiration Date.
EXCHANGE AGENT
The Bank of New York has been appointed as Exchange Agent for the Exchange
Offer. All correspondence in connection with the Exchange Offer and the Letter
of Transmittal should be addressed to the Exchange Agent as follows:
BY REGISTERED OR CERTIFIED MAIL: BY HAND DELIVERY OR OVERNIGHT COURIER:
The Bank of New York The Bank of New York
Reorganization Section Reorganization Section
101 Barclay Street-Floor 7E 101 Barclay Street-Ground Level
New York, NY 10286 Corporate Trust Services Window
Attn: [ ] New York, NY 10286
Attn: [ ]
FACSIMILE TRANSMISSION:
(212) 815-6339
CONFIRM BY TELEPHONE:
(212) 815-[ TBD ]
Requests for additional copies of the Prospectus or the Letter of
Transmittal should be directed to the Exchange Agent.
PAYMENT OF EXPENSES
The Company has not retained any dealer-manager or similar agent in
connection with the Exchange Offer and will not make any payments to brokers,
dealers or others for soliciting acceptances of the Exchange Offer. The
Company, however, will pay reasonable and customary fees and reasonable out-
of-pocket expenses to the Exchange Agent in connection therewith. The Company
will also pay the cash expenses to be incurred in connection with the Exchange
Offer, including accounting, legal, printing, and related fees and expenses.
ACCOUNTING TREATMENT
The Notes will be recorded at the same carrying value as the Old Notes, as
reflected in the Company's accounting records on the date of the exchange.
Accordingly, no gain or loss for accounting purposes will be recognized.
25
<PAGE>
RESALES OF NOTES
The staff of the Commission has issued certain interpretive letters that
concluded, in circumstances similar to those contemplated by the Exchange
Offer, that new debt securities issued in a registered exchange for
outstanding debt securities, which new securities are intended to be
substantially identical to the securities for which they are exchanged, may be
offered for resale, resold and otherwise transferred by a holder thereof
(other than (i) a broker-dealer who purchases such securities from the issuer
to resell pursuant to Rule 144A or any other available exemption under the
Securities Act or (ii) a person who is an affiliate of the issuer within the
meaning of Rule 405 under the Securities Act) without compliance with the
registration and prospectus delivery provision of the Securities Act, provided
that the new securities are acquired in the ordinary course of such holder's
business and such holder has no arrangement with any person to participate in
the distribution of the new securities. However, a broker-dealer who holds
outstanding debt securities that were acquired for its own account as a result
of market-making or other trading activities may be deemed to be an
"underwriter" within the meaning of the Securities Act and must, therefore,
deliver a prospectus meeting the requirements of the Securities Act in
connection with any resales of the new securities received by the broker-
dealer in any such exchange. For a period of 180 days from the Expiration
Date, the Company will make a reasonable number of additional copies of this
Prospectus, as amended or supplemented, available to any broker-dealer for use
in connection with any such resale.
The Company has not requested or obtained an interpretive letter from the
Commission staff with respect to this Exchange Offer, and the Company and the
holders are not entitled to rely on interpretive advice provided by the staff
to other persons, which advice was based on the facts and conditions
represented in such letters. However, the Exchange Offer is being conducted in
a manner intended to be consistent with the facts and conditions represented
in such letters. If any holder has any arrangement or understanding with
respect to the distribution of the Notes to be acquired pursuant to the
Exchange Offer, such holder (i) could not rely on the applicable
interpretations of the staff of the Commission and (ii) must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction. In addition, each broker-dealer that
receives Notes for its own account in exchange for the Old Notes, where such
Old Notes were acquired by such broker-dealers as a result of market-making
activities or other trading activities, must acknowledge that it will deliver
a prospectus in connection with any resale of such Notes. See "Plan of
Distribution." By delivering the Letter of Transmittal, a holder tendering Old
Notes for exchange will be required to make certain representations, including
among others, (i) that such holder is not an "affiliate" of the Company or any
Guarantor within the meaning of Rule 405 under the Securities Act, (ii) that
the Notes being acquired pursuant to the Exchange Offer are being obtained in
the ordinary course of business of the person receiving such Notes and (iii)
that the holder has no arrangement or understanding with any Person to
participate in the distribution of the Notes. Any holder using the Exchange
Offer to participate in a distribution of the Notes to be acquired in the
Exchange Offer must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with a secondary resale
transaction. Holders who do not exchange their Old Notes pursuant to this
Exchange Offer will continue to hold Old Notes that are subject to
restrictions on transfer.
In addition, to comply with the securities laws of certain jurisdictions, if
applicable, the Notes may not be offered or sold unless they have been
registered or qualified for sale in such jurisdiction or an exemption from
registration or qualification is available and the conditions thereto have
been met. The Company has agreed, pursuant to the Registration Rights
Agreement and subject to certain specified limitations therein, to register or
qualify the Notes for offer or sale under the securities or blue sky laws of
such jurisdictions as any holder of the Notes or the Old Notes reasonably
requests in writing.
26
<PAGE>
SELECTED CONSOLIDATED FINANCIAL INFORMATION OF THE COMPANY
The selected consolidated financial information of the Company presented
below as of and for the years ended December 31, 1992, 1993, 1994, 1995, and
1996 is derived from the consolidated financial statements of the Company,
which consolidated financial statements have been audited by Ernst & Young
LLP, independent certified public accountants. The selected consolidated
financial information of the Company presented below as of September 30, 1997,
and for the nine months ended September 30, 1996 and 1997, is derived from
unaudited consolidated financial statements of the Company which, in the
opinion of management, contain all necessary adjustments of a normal recurring
nature to present the financial statements in conformity with generally
accepted accounting principles ("GAAP"). The consolidated financial statements
of the Company as of December 31, 1995 and 1996 and for each of the years in
the three-year period ended December 31, 1996, and the independent auditors'
report thereon, as well as the unaudited consolidated financial statements of
the Company as of September 30, 1997, and for the nine months ended September
30, 1996 and 1997, are included elsewhere in this Prospectus. The financial
results of the Company are not comparable from year to year because of the
acquisition and disposition of various radio stations and radio networks by
the Company. The selected consolidated financial information below should be
read in conjunction with, and is qualified by reference to, the Company's
consolidated financial statements and related notes, and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER
YEAR ENDED DECEMBER 31 30
------------------------------------------- ----------------
1992 1993 1994 1995 1996 1996 1997
------- ------- ------- ------- ------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Net revenue............. $28,532 $32,423 $38,575 $48,168 $59,010 $42,465 $49,449
Operating expenses:
Station operating
expenses.............. 14,922 17,011 22,179 27,527 33,463 23,907 28,793
Corporate expenses..... 2,647 3,193 3,292 3,799 4,663 3,413 4,998
Tax reimbursements to
S corporation
shareholders.......... 1,029 1,311 977 2,057 2,038 1,529 1,780
Depreciation and
amortization.......... 6,441 6,601 7,633 7,884 8,394 6,148 9,382
------- ------- ------- ------- ------- ------- -------
Operating expenses...... 25,039 28,116 34,081 41,267 48,558 34,997 44,953
------- ------- ------- ------- ------- ------- -------
Net operating income... 3,493 4,307 4,494 6,901 10,452 7,468 4,496
Other income (expense):
Interest
income/expense, net... (2,516) (2,349) (3,438) (6,327) (6,838) (5,198) (8,392)
Gain (loss) on disposal
of assets............. (1,044) 1,603 (482) (7) 16,064 12,659 (190)
Other income (expense). (393) 2 (135) (255) (270) (209) (288)
------- ------- ------- ------- ------- ------- -------
Total other income
(expense).............. (3,953) (744) (4,055) (6,589) 8,956 7,252 (8,870)
Income (loss) before
income taxes and
extraordinary item..... (460) 3,563 439 312 19,408 14,720 (4,374)
Provision (benefit) for
income taxes........... (415) 1,437 (247) (204) 6,655 5,046 (1,790)
------- ------- ------- ------- ------- ------- -------
Income (loss) before
extraordinary item..... (45) 2,126 686 516 12,753 9,674 (2,584)
Extraordinary gain
(loss)(1).............. 921 -- -- (394) -- -- (1,090)
------- ------- ------- ------- ------- ------- -------
Net income (loss)....... $ 876 $ 2,126 $ 686 $ 122 $12,753 $ 9,674 $(3,674)
======= ======= ======= ======= ======= ======= =======
Pro forma net income
(loss)(2).............. $ 1,262 $ 2,917 $ 848 $ 1,024 $12,838 $ 9,727 $(2,651)
======= ======= ======= ======= ======= ======= =======
</TABLE>
27
<PAGE>
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEAR ENDED DECEMBER 31 SEPTEMBER 30
------------------------------------------- ----------------
1992 1993 1994 1995 1996 1996 1997
------- ------- ------- ------- ------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
OTHER DATA:
Broadcast cash flow(3).. $13,610 $15,412 $16,396 $20,641 $25,547 $18,558 $20,656
Broadcast cash flow
margin(4).............. 47.7% 47.5% 42.5% 42.9% 43.3% 43.7% 41.8%
EBITDA (excludes all
other income items)(3). $10,963 $12,219 $13,104 $16,842 $20,884 $15,145 $15,658
Capital expenditures.... 1,691 912 2,441 3,040 6,982 4,119 5,502
Purchase price of radio
stations............... 20,000 15,500 14,935 24,550 59,621 8,302 24,861
Earnings to fixed
charges ratio(5)....... 0.9x 2.1x 1.1x 1.0x 3.2x 0.5x
PRO FORMA RATIO:
Pro forma earnings to
fixed charges ratio(5). 1.7x 0.4x
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31
-----------------------------------------
SEPTEMBER 30
1992 1993 1994 1995 1996 1997
------- ------- ------- -------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash
equivalents............ $ 2,479 $ 1,277 $ 1,780 $ 1,007 $ 1,962 $ 2,103
Working capital......... 322 5,836 1,852 1,088 8,258 17,573
Intangible assets, net.. 32,146 39,296 46,748 61,923 106,781 121,833
Total assets............ 62,106 69,656 82,041 104,817 159,185 184,133
Long-term debt
(including current
portion)............... 44,915 48,656 60,656 81,020 121,790 160,100
Shareholders' equity.... 10,348 12,474 13,160 13,282 20,534 9,386
</TABLE>
28
<PAGE>
- ---------------------
(1) The extraordinary gain in 1992 represents a gain on early extinguishment
of a private annuity agreement. The extraordinary loss in 1995 and 1997
relates to the write-off of loan and related fees related to the repayment
of long-term debt. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and Note 4 of the Notes to
Consolidated Financial Statements.
(2) The Company's consolidated financial data for the periods presented
include the results of operations, assets and liabilities of New
Inspiration and Golden Gate, which were both S corporations under common
ownership and control with the Company prior to the Reorganization. The S
corporation status of New Inspiration and Golden Gate was terminated in
the Reorganization. Federal and state income taxes (except for a 1.5%
state franchise tax) are not provided for New Inspiration and Golden Gate
in the consolidated statements of operations of the Company for the
periods presented because the tax attributes of S corporations are passed
through to their shareholders. Prior to the Reorganization, New
Inspiration and Golden Gate reimbursed the S corporation shareholders for
their individual income tax liabilities on the earnings of the S
corporations. These tax reimbursements to S corporation shareholders are
reflected as an operating expense in the Company's consolidated financial
statements.
In August 1997, the Company, New Inspiration and Golden Gate effected the
Reorganization pursuant to which the S corporations became wholly owned by
the Company. To give effect to the Reorganization, including the
termination of the S corporation status of New Inspiration and Golden Gate,
pro forma net income excludes the tax reimbursements to S corporation
shareholders (because such amounts would not have been paid had New
Inspiration and Golden Gate been subject to income taxes) and includes a
pro forma tax provision at an estimated combined federal and state income
tax rate of approximately 40% (to reflect an estimated income tax provision
(benefit) of the Company) as if the Reorganization had occurred at the
beginning of each period presented in the Company's consolidated financial
data. See "Business--Corporate Structure and Reorganization."
The following table reflects the pro forma adjustments to historical net
income:
<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER
YEAR ENDED DECEMBER 31 30,
------------------------------------- ---------------
1992 1993 1994 1995 1996 1996 1997
------ ------ ------ ------ ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Pro Forma Information:
Income (loss) before
income taxes and
extraordinary
item as reported
above............... $ (460) $3,563 $ 439 $ 312 $19,408 $14,720 $(4,374)
Add back tax
reimbursements to S
corporation
shareholders........ 1,029 1,311 977 2,057 2,038 1,529 1,780
------ ------ ------ ------ ------- ------- -------
Pro forma income
(loss) before income
taxes and
extraordinary item.. 569 4,874 1,416 2,369 21,446 16,249 (2,594)
Pro forma income tax
provision
(benefit)........... 228 1,957 568 951 8,608 6,522 (1,033)
------ ------ ------ ------ ------- ------- -------
Pro forma income
(loss) before
extraordinary item.. 341 2,917 848 1,418 12,838 9,727 (1,561)
Extraordinary gain
(loss).............. 921 -- -- (394) -- -- (1,090)
------ ------ ------ ------ ------- ------- -------
Pro forma net income
(loss).............. $1,262 $2,917 $ 848 $1,024 $12,838 $ 9,727 $(2,651)
====== ====== ====== ====== ======= ======= =======
</TABLE>
(3) "Broadcast cash flow" consists of net operating income before tax
reimbursements to S corporation shareholders, depreciation and
amortization and corporate expenses. "EBITDA" consists of net operating
income before tax reimbursements to S corporation shareholders and
depreciation and amortization. Although broadcast cash flow and EBITDA are
not measures of performance calculated in accordance with GAAP, management
believes that they are useful to an investor in evaluating the Company
because they are measures widely used in the broadcast industry to
evaluate a radio company's operating performance. However, broadcast cash
flow and EBITDA should not be considered in isolation or as substitutes
for net income, cash flows from operating activities and other income or
cash flow statement data prepared in accordance with GAAP as a measure of
liquidity or profitability.
(4) Broadcast cash flow margin is broadcast cash flow as a percentage of net
revenue.
(5) For purposes of computing the ratio of earnings to fixed charges,
"earnings" consist of income from operations before income taxes plus
fixed charges, and "fixed charges" consist of interest expense plus an
allocation of a portion of rent expense representing interest. The pro
forma earnings to fixed charges ratio assumes the issuance of the Notes
and the repayment in full of the Company's outstanding indebtedness under
the Company's prior credit agreement which was repaid in full upon
issuance of the Old Notes on September 25, 1997 as if each occurred at the
beginning of each period presented. For the years ended December 31, 1992
and 1995, and for the nine months ended September 30, 1997, the Company's
earnings were inadequate to cover fixed charges; the coverage deficiency
for the years ended December 31, 1992 and 1995 was $460,000 and $313,000,
respectively, and for the nine months ended September 30, 1997 was $4.4
million (actual) and $7.2 million (pro forma).
29
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
GENERAL
The following discussion and analysis of the financial condition and results
of operations of the Company should be read in conjunction with the Company's
consolidated financial statements and notes thereto included elsewhere in this
Prospectus.
The principal sources of the Company's revenue are (i) the sale of block
program time, both to national and local program producers, (ii) the sale of
broadcast time on its radio stations for advertising, both to national and
local advertisers, and (iii) the sale of broadcast time on the Network for
advertising. The following table shows gross revenue and the percentage of
gross revenue for each revenue source.
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED DECEMBER 31 ENDED
------------------------------------------- SEPTEMBER 30,
1994 1995 1996 1997
------------- ------------- ------------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Block program time:
National.............. $19,182 45.0% $23,390 43.9% $26,610 40.8% $20,557 37.8%
Local................. 5,409 12.7 8,219 15.4 10,869 16.7 8,516 15.6
------- ----- ------- ----- ------- ----- ------- -----
24,591 57.7 31,609 59.3 37,479 57.5 29,073 53.4
Advertising:
National.............. 2,460 5.8 3,165 5.9 4,088 6.3 5,128 9.4
Local................. 12,154 28.5 14,072 26.4 17,416 26.7 15,014 27.6
------- ----- ------- ----- ------- ----- ------- -----
14,614 34.3 17,237 32.3 21,504 33.0 20,142 37.0
Network................. 2,619 6.1 3,423 6.4 5,270 8.1 4,486 8.2
Other................... 767 1.9 1,034 2.0 888 1.4 770 1.4
------- ----- ------- ----- ------- ----- ------- -----
Gross revenue........... 42,591 100.0% 53,303 100.0% 65,141 100.0% 54,471 100.0%
===== ===== ===== =====
Less agency commissions. 4,016 5,135 6,131 5,022
------- ------- ------- -------
Net revenue............. $38,575 $48,168 $59,010 $49,449
======= ======= ======= =======
</TABLE>
The Company's revenue is affected primarily by the program and advertising
rates its radio stations and the Network charge. Correspondingly, the rates
for block program time are based upon the stations' ability to attract
audiences that will support the program producers through contributions and
purchases of their products. Advertising rates are based upon the demand for
on-air inventory, which in turn is based on the stations' and the Network's
ability to produce results for its advertisers. Each of the Company's stations
and the Network have a general pre-determined level of on-air inventory that
it makes available for block programs and advertising, which may vary at
different times of the day and tends to remain stable over time. Much of the
Company's selling activity is based on demand for its radio stations' and the
Network's on-air inventory.
The Company's revenue and cash flow are also affected by the transition
period experienced by stations acquired by the Company that previously
operated with formats other than religious formats. During the transition
period when the Company develops its program customer and listener base, such
stations typically do not generate significant cash flow from operations. The
Company's quarterly revenue varies throughout the year, as is typical in the
radio broadcasting industry. Quarterly revenue from the sale of block program
time does not tend to vary, however, since program rates are generally set
annually.
In the broadcasting industry, radio stations often utilize trade (or barter)
agreements to exchange advertising time for goods or services (such as other
media advertising, travel or lodging), in lieu of cash. In order to preserve
most of its on-air inventory for cash advertising, the Company generally
enters into trade agreements only if the goods or services bartered to the
Company will be used in the Company's business. The Company has minimized its
use of trade agreements and has generally sold over 90% of its advertising
time for cash. In addition, it is the Company's general policy not to preempt
advertising spots paid for in cash with advertising spots paid for in trade.
30
<PAGE>
The primary operating expenses incurred in the ownership and operation of
the Company's radio stations include employee salaries and commissions, and
facility expenses (e.g., rent and utilities). The Company also incurs and will
continue to incur significant depreciation, amortization and interest expense
as a result of completed and future acquisitions of stations, and due to
existing borrowings and future borrowings, including the Offering and
borrowings under the Credit Agreement. The Company's consolidated financial
statements tend not to be directly comparable from period to period due to the
Company's acquisition activity.
The consolidated statements of operations of the Company include an
operating expense called "tax reimbursements to S corporation shareholders."
These amounts represent the income tax liability of the Shareholders created
by the income of New Inspiration and Golden Gate, which prior to the recent
Reorganization were each S corporations. See "Business--Corporate Structure
and Reorganization." Management considers the nature of this operating expense
to be essentially equivalent to an income tax provision and has excluded this
expense from the calculation of broadcast cash flow and EBITDA. Commencing
1997, pretax income of New Inspiration and Golden Gate will be included in the
Company's consolidated income tax return and in the Company's computation of
the income tax provision included in its consolidated statement of operations.
The Company anticipates a net loss for the fourth quarter of 1997 in an
amount substantially similar to the amount of net loss experienced in the
third quarter of 1997 of $1.2 million.
RESULTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO NINE MONTHS ENDED SEPTEMBER
30, 1996
Net Revenue. Net revenue increased approximately $6.9 million or 16.2% to
$49.4 million for the nine months ended September 30, 1997 from $42.5 million
for the nine months ended September 30, 1996. The inclusion of revenue from
the acquisitions of radio stations and networks and revenue generated from the
local marketing agreements ("LMAs"), see "Business--Federal Regulation of
Radio Broadcasting--Local Marketing Agreements," entered into during 1996 and
1997 provided approximately $4.3 million of the increase. For stations and
networks owned and operated over the comparable period in 1996 and 1997, net
revenue improved approximately $2.6 million or 6.3% to $43.9 million in 1997
from $41.3 million in 1996 primarily due to program rate increases, increases
in on-air inventory and improved selling efforts.
Station Operating Expenses. Station operating expenses increased
approximately $4.9 million or 20.5% to $28.8 million for the nine months ended
September 30, 1997 from $23.9 million for the nine months ended September 30,
1996, primarily due to the inclusion of operating expenses of the station and
network acquisitions and the LMAs entered into in 1996 and 1997, and to a
lesser extent, to expenses incurred to produce the increased revenue described
above.
Broadcast Cash Flow. Broadcast cash flow increased approximately $2.0
million or 10.8% to $20.6 million for the nine months ended September 30, 1997
from $18.6 million for the nine months ended September 30, 1996. As a
percentage of net revenue, broadcast cash flow decreased to 41.8% for the nine
months ended September 30, 1997 from 43.7% for the nine months ended September
30, 1996. The decrease is primarily attributable to lower margins achieved
during the transition period of the stations and networks acquired in 1996 and
1997 that previously operated with formats other than religious formats.
Corporate Expenses. Corporate expenses increased approximately $1.6 million
or 47.1% to $5.0 million for the nine months ended September 30, 1997 from
$3.4 million for the nine months ended September 30, 1996, primarily due to
additional personnel and overhead costs associated with station and network
acquisitions in 1996 and 1997, bonuses paid to corporate officers in 1997, the
write-off of costs incurred for potential station acquisitions which were
abandoned, and expenses incurred for officers' life insurance, in 1997.
EBITDA. EBITDA increased approximately $1.0 million or 6.6% to $16.2 million
for the nine months ended September 30, 1997 from $15.2 million for the nine
months ended September 30, 1996.
31
<PAGE>
Tax Reimbursements to S Corporation Shareholders. Tax reimbursements to S
corporation shareholders increased approximately $0.3 million or 20.0% to $1.8
million for the nine months ended September 30, 1997 from $1.5 million for the
nine months ended September 30, 1996, primarily due to increased taxable
income of the S corporations.
Depreciation and Amortization. Depreciation and amortization expense
increased approximately $3.3 million or 54.1% to $9.4 million for the nine
months ended September 30, 1997 from $6.1 million for the nine months ended
September 30, 1996, primarily due to radio station and network acquisitions
consummated during 1996 and 1997.
Other Income (Expense). Interest income decreased $156,000 to $156,000 for
the nine months ended September 30, 1997 from $312,000 for the nine months
ended September 30, 1996, primarily due to interest income earned in 1996 on a
$14.0 million deposit from the sale of KDBX-FM, Portland. Gain (loss) on
disposal of assets decreased $12.8 million from $12.7 million for the nine
months ended September 30, 1996 to ($190,000) for the nine months ended
September 30, 1997. The gain in 1996 was primarily due to the sale of KDBX-FM,
Portland and WTJY-FM, Columbus. Interest expense increased approximately $3.0
million or 54.5% to $8.5 million for the nine months ended September 30, 1997
from $5.5 million for the nine months ended September 30, 1996, primarily due
to interest expense associated with additional borrowings to fund acquisitions
consummated during 1996 and 1997. Other expense was essentially unchanged for
the 1997 period compared to the 1996 period.
Provision (Benefit) for Income Taxes. Income tax provision (benefit) as a
percentage of income before income taxes (i.e., effective tax rate) was
(40.9)% for the nine months ended September 30, 1997 and 34.3% for the nine
months ended September 30, 1996. The effective tax rates may differ from the
federal statutory income tax rate of 34.0% because of the effect of state
income taxes and the exclusion of federal income taxes relating to the
S corporations. The decrease in the effective tax rate for the nine months
ended September 30, 1997 as compared to the nine months ended September 30,
1996 is due to losses generated by the non-S corporation entities.
Net Income (Loss). The Company recognized a net loss of approximately ($3.7)
million for the nine months ended September 30, 1997, compared to net income
of $9.7 million for the nine months ended September 30, 1996. Included in net
loss for 1997 is a $1.1 million extraordinary loss for the write off of
deferred financing costs and termination fees related to the repayment of the
Company's prior credit agreement (the "Old Credit Agreement") which was repaid
in full upon issuance of the Old Notes on September 25, 1997.
YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995
Net Revenue. Net revenue increased approximately $10.8 million or 22.4% to
$59.0 million in 1996 from $48.2 million in 1995. The inclusion of revenue
from the acquisitions of radio stations and networks and revenue generated
from LMAs entered into during 1996 and 1995 provided approximately $5.2
million of the increase. For stations and networks owned and operated over the
comparable period in 1995 and 1996, net revenue improved approximately $5.6
million or 12.3% to $51.1 million in 1996 from $45.5 million in 1995 primarily
due to program rate increases, increases in on-air inventory and improved
selling efforts at both the national and local level.
Station Operating Expenses. Station operating expenses increased
approximately $6.0 million or 21.8% to $33.5 million in 1996 from $27.5
million in 1995, primarily due to the inclusion of operating expenses of the
station and network acquisitions and the LMAs entered into during 1996 and
1995, and to a lesser extent, to expenses incurred to produce the increased
revenue described above.
Broadcast Cash Flow. Broadcast cash flow increased approximately $4.9
million or 23.8% to $25.5 million in 1996 from $20.6 million in 1995. As a
percentage of net revenue, broadcast cash flow increased to 43.3% in 1996 from
42.9% in 1995.
Corporate Expenses. Corporate expenses increased approximately $0.9 million
or 23.7% to $4.7 million in 1996 from $3.8 million in 1995, primarily due to
additional personnel and overhead costs associated with station and network
acquisitions in 1996.
32
<PAGE>
EBITDA. EBITDA increased approximately $4.1 million or 24.4% to $20.9
million in 1996 from $16.8 million in 1995.
Tax Reimbursements to S Corporation Shareholders. Tax reimbursements to S
corporation shareholders was essentially unchanged for the year ended December
31, 1996 compared to 1995.
Depreciation and Amortization. Depreciation and amortization expense
increased approximately $0.5 million or 6.3% to $8.4 million in 1996 from $7.9
million in 1995, primarily due to radio station and network acquisitions
consummated during 1996 and 1995.
Other Income (Expense). Interest income increased $204,000 to $523,000 in
1996 from $319,000 in 1995, primarily due to interest income earned on a $14.0
million deposit from the sale of KDBX-FM, Portland. Gain (loss) on disposal of
assets increased $16.1 million from ($7,000) in 1995 to $16.1 million in 1996.
The gain in 1996 was primarily due to the sales of KDBX-FM, Portland, KDFX-AM,
Dallas and WTJY-FM, Columbus. Interest expense increased approximately $0.8
million or 12.1% to $7.4 million in 1996 from $6.6 million in 1995, primarily
due to interest expense associated with additional borrowings to fund
acquisitions consummated during 1996 and 1995. Other expense was essentially
unchanged for the year ended December 31, 1996 compared to 1995.
Provision (Benefit) for Income Taxes. Income tax provision (benefit) as a
percentage of income before income taxes (i.e., effective tax rate) was 34.3%
for 1996 and (65.4%) for 1995. The effective tax rates may differ from the
federal statutory income tax rate of 34.0% because of the effect of state
income taxes and the exclusion of federal income taxes relating to the S
corporations. The increase in the effective tax rate for 1996 as compared to
1995 is primarily due to the increase in income of the non-S corporation
entities, including gains recognized on the sale of radio stations during
1996. In connection with the Reorganization of the Company, which resulted in
the termination of the S corporation status of New Inspiration and Golden
Gate, the Company will record a deferred tax liability and provision of
approximately $600,000.
Net Income. The Company recognized net income of approximately $12.8 million
in 1996, compared to net income of $122,000 in 1995. Included in net income
for 1995 is a $394,000 extraordinary loss for the write off of deferred
financing costs related to the repayment in March 1995 of outstanding
indebtedness under certain credit agreements with banks, including the Old
Credit Agreement, and a make-whole premium in connection with the repayment of
certain senior subordinated notes to insurance companies.
YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994
Net Revenue. Net revenue increased approximately $9.6 million or 24.9% to
$48.2 million in 1995 from $38.6 million in 1994 primarily due to the
inclusion of revenue from the acquisitions of radio stations during 1995 and
1994, and to a lesser extent, to program rate increases, and improved selling
efforts at both the national and local level.
Station Operating Expenses. Station operating expenses increased
approximately $5.3 million or 23.9% to $27.5 million in 1995 from $22.2
million in 1994, primarily due to the inclusion of operating expenses of the
station acquisitions during 1995 and 1994, and to a lesser extent, to expenses
incurred to produce the increased revenue described above.
Broadcast Cash Flow. Broadcast cash flow increased approximately $4.2
million or 25.6% to $20.6 million in 1995 from $16.4 million in 1994. As a
percentage of net revenue, broadcast cash flow increased to 42.9% in 1995 from
42.5% in 1994.
Corporate Expenses. Corporate expenses increased approximately $0.5 million
or 15.2% to $3.8 million in 1995 from $3.3 million in 1994, primarily due to
additional personnel and overhead costs associated with station acquisitions
in 1995.
EBITDA. EBITDA increased approximately $3.7 million or 28.2% to $16.8
million in 1995 from $13.1 million in 1994.
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<PAGE>
Tax Reimbursements to S Corporation Shareholders. Tax reimbursements to S
corporation shareholders increased approximately $1.1 million or 110.0% to $2.1
million in 1995 from $1.0 million in 1994, primarily due to increased taxable
income of the S corporations.
Depreciation and Amortization. Depreciation and amortization expense
increased approximately $0.3 million or 3.9% to $7.9 million in 1995 from $7.6
million in 1994, primarily due to radio station acquisitions consummated during
1995 and 1994.
Other Income (Expense). Interest income increased $89,000 to $319,000 in 1995
from $230,000 in 1994. Loss on disposal of assets decreased $475,000 from
$482,000 in 1994 to $7,000 in 1995, primarily due to the write-off of leasehold
improvements at abandoned office/studio locations in 1994. Interest expense
increased approximately $2.9 million or 78.4% to $6.6 million in 1995 from $3.7
million in 1994, primarily due to interest expense associated with additional
borrowings to fund acquisitions consummated during 1995 and 1994, and increases
in interest rates. Other expense increased $120,000 to $255,000 in 1995 from
$135,000 in 1994, primarily due to increased expenses related to bank loan fees
in 1995.
Provision (Benefit) for Income Taxes. Income tax provision (benefit) as a
percentage of income before income taxes (i.e., effective tax rate) was
(135.4%) for 1995 and (56.3%) for 1994. The effective tax rates may differ from
the federal statutory income tax rate of 34.0% because of the effect of state
income taxes and the exclusion of federal income taxes relating to the S
corporations. The decrease in the effective tax rate for 1995 as compared to
1994 is primarily due to losses of the non-S corporation entities, including an
increase in interest expense in 1995.
Net Income. The Company recognized net income of approximately $122,000 in
1995, compared to net income of $686,000 in 1994. Included in net income for
1995 is a $394,000 extraordinary loss for the write off of deferred financing
costs related to the repayment in March 1995 of outstanding indebtedness under
certain credit agreements with banks, including the Old Credit Agreement, and a
make-whole premium in connection with the repayment of certain senior
subordinated notes to insurance companies.
LIQUIDITY AND CAPITAL RESOURCES
In the past, the Company principally financed acquisitions of radio stations
through borrowings, including borrowings under credit agreements with banks,
and, to a lesser extent, from cash flow from operations and selected asset
dispositions. The Company used the net proceeds from the sale of the Notes to
repay substantially all of its outstanding indebtedness under a line of credit
agreement, at which time such facility was canceled and the Company entered
into the current Credit Agreement.
The Company anticipates funding future acquisitions from operating cash flow
and borrowings, including borrowings under the Credit Agreement. As of
September 30, 1997, $10.1 million was outstanding under the Company's Credit
Agreement. The maximum amount that the Company may borrow under the Credit
Agreement is limited by the Company's debt to cash flow ratio, adjusted for
recent radio station acquisitions as defined in the Credit Agreement (the
"Adjusted Debt to Cash Flow Ratio"). At September 30, 1997, the maximum
Adjusted Debt to Cash Flow Ratio allowed under the Credit Agreement was 7.0 to
1. The Company's ability to borrow for the purpose of acquiring a radio station
is further limited by the Credit Agreement in that the Company may not borrow
for an acquisition if the Adjusted Debt to Cash Flow Ratio is greater than 6.0
to 1. At September 30, 1997, the Adjusted Debt to Cash Flow Ratio was 6.07 to
1, resulting in total borrowing availability of approximately $19.9 million,
none of which can currently be used for radio station acquisitions. In addition
to debt service requirements under the Credit Agreement, the Company will be
required to pay $14.3 million per annum in interest on the Notes. Management
believes that cash flow from operations and borrowings under the Credit
Agreement should be sufficient to permit the Company to meet its financial
obligations and to fund its operations for at least the next twelve months.
For the nine months ended September 30, 1997, net cash provided by operations
decreased to $1.9 million, compared to $9.3 million for the 1996 period due to
the Company recording a net loss in the 1997 period primarily as a result of
higher interest expense and changes in working capital items in 1997. Net cash
provided
34
<PAGE>
by operations increased to $10.5 million for the year ended December 31, 1996,
compared to $7.7 million in 1995 due primarily to increased net operating
income in 1996. Net cash provided by operations was essentially unchanged for
the year ended December 31, 1995 compared to 1994.
For the nine months ended September 30, 1997, net cash used in investing
activities increased $13.3 million to $26.6 million from $13.3 million for the
1996 period due to radio station acquisitions (seven stations purchased for
$18.8 million in the first nine months of 1997 compared to seven stations
purchased for $8.3 million in the first nine months of 1996), and expenditures
for a tower construction project held for sale, in 1997. Net cash used in
investing activities decreased to $18.9 million for the year ended December
31, 1996, compared to $27.7 million for 1995 primarily due to the sale of
KDBX-FM, Portland and KDFX-AM, Dallas in 1996. The sale of these two radio
stations provided $15.9 million of cash, which offset the cash used by the
Company to purchase radio stations in 1996. Net cash used in investing
activities increased to $27.7 million for the year ended December 31, 1995,
compared to $18.8 million for 1994 primarily due to the acquisition of higher
priced radio stations in 1995 compared to 1994.
For the nine months ended September 30, 1997, net cash provided by financing
activities increased $21.5 million to $24.8 million from $3.3 million for the
1996 period primarily from proceeds from long-term debt incurred in 1997,
offset by the $30.5 million payment of the note payable associated with the
acquisition of KWRD-FM, Dallas. Net cash provided by financing activities was
$9.4 million for the year ended December 31, 1996, $19.2 million for 1995, and
$11.8 million for 1994, primarily due to increased long-term debt borrowings
for the higher priced radio stations acquired in 1995.
35
<PAGE>
BUSINESS
GENERAL
Salem Communications Corporation is the leading radio broadcast company in
the United States, measured by number of stations owned and audience coverage,
that focuses on serving the religious/conservative listening audience. The
Company's two primary businesses include the ownership and operation of
religious format radio stations and the development and expansion of its
national Network offering talk programming, news and music to affiliated
stations. The Company owns and/or operates 43 radio stations concentrated in
28 geographically diverse markets across the United States. The Company offers
a variety of specialized talk programming emphasizing Bible study and Judeo-
Christian values applied to family and community issues as well as
contemporary and traditional religious music.
The Company focuses on serving the top 25 markets in terms of audience size
in the United States and has stations in nine of the top ten and 19 of the top
25 of those markets. Since January 1, 1992, the Company has grown
significantly by acquiring ownership of, or operating rights to, 29 radio
stations in 20 markets, including 17 stations in 14 markets since January 1,
1996. Most of these recently acquired radio stations were previously
broadcasting in non-religious formats and have been re-formatted by the
Company. The Company's experience has been that changing the format of an
acquired station typically requires a transition period during which the
Company develops its program customer and listener base. During such
transition period, these stations typically do not generate significant cash
flow from operations. The Company's total gross revenue, broadcast cash flow
and EBITDA were $65.1 million, $25.5 million and $20.9 million, respectively,
for the year ended December 31, 1996 and were $54.5 million, $20.6 million and
$16.2 million, respectively, for the nine months ended September 30, 1997.
The following table sets forth information about each radio station owned
and/or operated by the Company in order of market size:
<TABLE>
<CAPTION>
MARKET(1) MSA RANK STATION CALL LETTERS YEAR ACQUIRED
--------- -------- -------------------- -------------
<S> <C> <C> <C>
New York, NY................... 1 WMCA-AM; WWDJ-AM 1989; 1994
Los Angeles, CA................ 2 KKLA-FM; KLTX-AM; KAVC-FM 1985; 1986; 1983
Chicago, IL.................... 3 WYLL-FM 1990
San Francisco, CA.............. 4 KFAX-AM 1984
Philadelphia, PA............... 5 WFIL-AM; WZZD-AM 1993; 1994
Dallas-Ft. Worth, TX........... 7 KWRD-FM 1996
Washington, D.C. .............. 8 WAVA-FM 1992
Houston-Galveston, TX.......... 9 KKHT-FM; KENR-AM 1995; 1995
Boston, MA..................... 10 WEZE-AM 1997
Seattle-Tacoma, WA............. 13 KGNW-AM; KLFE-AM; KKOL-AM 1985; 1994; (2)
San Diego, CA.................. 14 KPRZ-AM 1986
Minneapolis-St. Paul, MN....... 16 KKMS-AM 1996
Phoenix, AZ.................... 18 KPXQ-AM 1996
Baltimore, MD.................. 19 WITH-AM(3) 1997
Pittsburgh, PA................. 20 WORD-FM; WPIT-AM 1989; 1993
Cleveland, OH.................. 22 WHK-AM; WCCD-AM 1997
Denver-Boulder, CO............. 23 KRKS-FM; KRKS-AM; KNUS-AM 1993; 1994; 1996
Portland, OR................... 24 KPDQ-FM; KPDQ-AM 1986; 1986
Cincinnati, OH................. 25 WTSJ-AM 1997
Riverside-San Bernardino, CA... 26 KKLA-AM(4) 1986
Sacramento, CA................. 28 KFIA-AM; KTKZ-AM 1995; 1997
Columbus, OH................... 32 WRFD-AM 1982
San Antonio, TX................ 34 KSLR-AM 1994
Akron, OH...................... 67 WHLO-AM 1997
Spokane, WA.................... 87 KTSL-FM 1996
Colorado Springs, CO........... 95 KGFT-FM; KBIQ-FM; KPRZ-FM 1996; 1996; 1996
Oxnard, CA..................... 109 KDAR-FM 1974
Canton, OH..................... 120 WHK-FM(5) 1997
</TABLE>
- -------------------
(1) Actual city of license may differ from metropolitan market served.
(2) The Company operates the station, which is licensed to a corporation owned
by the Principal Shareholders of the Company, under the terms of a local
marketing agreement. The Principal Shareholders and the Company are
parties to an Option to Purchase Agreement whereunder the
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<PAGE>
Company has been granted an option to purchase KKOL-AM from the Principal
Shareholders at any time on or before December 31, 1999. See "Federal
Regulation of Radio Broadcasting--Local Marketing Agreements" and "Certain
Transactions."
(3) The station is simulcast with WAVA-FM, Washington, D.C.
(4) The station is simulcast with KKLA-FM, Los Angeles.
(5) The station is simulcast with WHK-AM, Cleveland.
CORPORATE STRUCTURE AND REORGANIZATION
The Company was incorporated in California in 1986 in connection with a
combination of most of the radio station holdings of the Principal
Shareholders. Each of the Principal Shareholders owned 50% of the Company's
outstanding common stock. New Inspiration, the licensee of KKLA-FM, Los
Angeles, and Golden Gate, the licensee of KFAX-AM, San Francisco, were owned
by the Shareholders. New Inspiration and Golden Gate were both "S
corporations," as that term is defined in the Internal Revenue Code. The
Company, New Inspiration and Golden Gate are the general partners of Beltway
Media Partners ("Beltway"), the licensee of WAVA-FM, Washington, D.C.
On August 13, 1997, the Company, New Inspiration and Golden Gate effected a
reorganization (including the Shareholder Notes as defined below, the
"Reorganization") pursuant to which New Inspiration and Golden Gate became
wholly owned subsidiaries of the Company, with Beltway remaining a partnership
owned by the Company, New Inspiration and Golden Gate. The S corporation
status of New Inspiration and Golden Gate was terminated in the
Reorganization. Prior to the Reorganization, New Inspiration and Golden Gate
made distributions of cash and promissory notes to their respective
shareholders in the aggregate amount of $8.5 million. Of such amount, $1.8
million, equal to the estimated federal and state income tax liability of the
shareholders on the earnings of New Inspiration and Golden Gate, was paid by
New Inspiration and Golden Gate in cash. The remainder, $6.7 million, the
balance of the net income of New Inspiration and Golden Gate that had
previously been taxed but not distributed to the shareholders, was distributed
in the form of promissory notes to be paid to the shareholders immediately
following the closing of the offering (the "Shareholder Notes"). The Company
borrowed $6.7 million under the Credit Agreement and applied this amount to
the payment of certain indebtedness owed to New Inspiration and Golden Gate by
the Company. The cash made available to New Inspiration and Golden Gate from
the repayment of such loans was then used by New Inspiration and Golden Gate
to pay the Shareholder Notes. See "Certain Transactions" and "Description of
Certain Indebtedness--Shareholder Notes."
Following the Reorganization, Mrs. Epperson, who had been a 50% owner of New
Inspiration, became a shareholder of the Company. All of the outstanding stock
of the Company is currently owned by the Principal Shareholders and Mrs.
Epperson. See "Securities Ownership of Certain Beneficial Owners."
RELIGIOUS FORMAT OVERVIEW
The 1997 Broadcasting & Cable Yearbook identifies over 1,800 radio stations
throughout the United States that feature religious talk and music formats,
including formats identified as Religious, Gospel, Christian, Inspirational or
Sacred. Approximately two-thirds of these stations are for-profit businesses.
The balance of these stations broadcast from the noncommercial educational
band (88.1MHz-91.9MHz) and are licensed to non-profit organizations.
Contrary to many mainstream formats which have experienced a decline in
popularity in recent years, religious formats have experienced significant
growth. According to statistics appearing in The M Street Journal, a broadcast
industry newsletter, the number of radio stations featuring religious formats
has grown approximately 69% between 1989 and 1997 and the religious format is
the fourth largest radio format in the United States after country, news/talk
and adult contemporary. According to Religion & Media Quarterly, religious
format radio stations have an audience of approximately 20.6 million
listeners.
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<PAGE>
While a variety of music formats, including Southern Gospel, Black Gospel,
Praise and Worship, and Contemporary Christian, are offered on religious
format stations, the largest single category of religious format is talk
programming emphasizing Bible preaching and teaching and other programming
addressing family and community issues. Music and talk formats can be found on
both commercial and noncommercial stations. Commercial stations that feature
religious music formats generate nearly all of their revenue from the sale of
advertising time to local and national spot advertisers and national network
advertisers. Commercial stations that specialize in talk programming,
including substantially all of the Company's stations, generate the majority
of their revenue from the sale of block program time to national and local
program producers. Noncommercial stations typically obtain revenue through
tax-deductible contributions from listeners, the sale of block program time to
national and local program producers and grants or sponsorships of specific
programming that allow the sponsor's name to be featured. Sale of spot
advertising is prohibited on noncommercial stations.
OPERATING STRATEGY
Maintain and Enhance Leadership Position in Religious Talk Format. The
Company believes that an important factor in its ability to attract and retain
quality programming customers is its demonstrated long-term commitment to
religious talk formats. Program customers tend to be sophisticated purchasers
of air time that recognize that building a listener base capable of generating
revenue sufficient to cover programming costs may take several years. The
Company's experience has been that such programmers are accordingly reluctant
to make the commitment to building a new listener base unless they have a
reasonable expectation that the format will remain in place. Management of the
Company therefore intends to continue its long-term commitment to the
religious talk format. Management believes its commitment to growing the
religious talk format, increasing the number of owned and operated stations
and developing network operations and national sales activities allows for
future growth opportunities for the Company.
Identify and Develop New Program Producers. The Company recognizes that the
ongoing success of its religious talk format is largely dependent on the
continued availability of quality programs. Management of the Company is
committed to assisting promising new program producers with advice on content
and structuring of programs in addition to advice on levels of support
staffing, engineering and programming delivery options. Station managers are
encouraged to evaluate local talk programs with a view toward expansion of
promising programs into national syndication. The Company continues to
emphasize this important development area with the goal of maintaining a
backlog of quality programs available for placement in new markets and
existing markets where the Company may add additional stations.
Emphasize Signal Quality and Market Coverage. The Company is committed to
the ongoing evaluation and improvement of its technical facilities, including
power increases, tower/antenna relocations and investment in state of the art
equipment. The Company believes that its success is attributable in part to
its ownership of broadcast facilities that provide broad signal coverage in
its markets.
Build Station Identity Through Development of Strong Production Values. The
Company believes that an important element in retaining and increasing the
listening audience and expanding the base of potential advertisers for its
stations is the development of local station identity. The Company believes
that its emphasis on development of a station's identity during those times
when the Company is not broadcasting its customers' block programming will
allow it to compete with general format stations for listening audience and
advertising customers. Station employees with responsibility for programming
are encouraged to build identity through continual improvement of production
values and to share their ideas with other Company stations. The Company
assists local personnel and coordinates development of increased production
values through its director of programming located at the corporate
headquarters. Certain of the Company's stations have successfully adopted
techniques that have built identity through the development of local on-air
personalities associated with segments of the broadcast day, and these
techniques are being implemented at other Company stations.
Expand and Diversify National Network. The Company is committed to expanding
the Network by adding to its menu of Network product offerings and by actively
promoting these products to Network affiliates. The
38
<PAGE>
Company believes that by continually increasing the quality of its Network
product it will add to its affiliate base, thereby providing more audience
reach that will attract more national advertising customers and potentially
generate business from national advertising agencies. The Company competes
aggressively for talk show talent it believes will be attractive to existing
and potential affiliates, refines existing music formats and develops
political commentary and public affairs programming that are complementary to
the product offerings of the Network. The Company will continue to explore
ways to better serve its customers and the religious/conservative listening
audience by using the combined resources of its owned and operated stations
and the Network. For example, unused Network inventory can be used as an
incentive to potential or existing program producers to purchase block program
time on the Company's radio stations. The Company has successfully implemented
this strategy in the past and will continue to devote significant time and
resources to find additional synergistic uses of its radio stations and the
Network.
ACQUISITION STRATEGY
Expand Into New Markets. The Company continues to pursue an acquisition
strategy of acquiring radio stations in the top 25 markets in which it
currently does not have a presence and acquiring selected stations in mid-
sized markets. The Company believes that its presence in large markets makes
it attractive to national program syndicators and national advertisers. In
addition, the geographic diversity of the Company's markets reduces its
dependence on any single local economy. Over the past 20 years, the Company
has developed and implemented a model for evaluating the desirability of
entering a new market. Management considers the number of stations already
serving the target market with religious formats, the programming within that
format (music or talk), the quality of talk programs offered and the signal
strength of the competing stations. The signal strength of any station that
becomes available for purchase is a critical factor in the evaluation process.
Expand in Existing Markets. The Company pursues the acquisition of
additional stations in markets in which it already has a presence. The
experience of the Company with existing duopolies and triopolies has been
positive. Multiple stations making use of one general manager and sales staff
and one broadcast facility have resulted in operational efficiencies in
certain markets. In addition, the Company intends to develop more talk and
music product at the Network level that will be available for use on
additional stations in a market. The Company believes new religious music
formats are gaining increased popularity and are complementary to the
Company's religious talk format. Three separate music formats are produced by
the Network and are available for use by Company stations. This strategy has
been implemented successfully in Colorado Springs, where the Company owns
three FM stations, two of which offer religious music formats and one of which
features a religious talk format.
Upgrades in Existing Markets. The Company is continually looking for upgrade
opportunities in existing markets to expand its audience reach. This strategy
of acquiring upgraded facilities in existing markets has been an area of
emphasis for senior management for many years and has been successfully
demonstrated in such markets as Seattle and New York in prior years. More
recently, the Company has significantly improved its position in Boston and
Dallas through the acquisition of more powerful stations that have allowed the
Company to continue its business strategy of operating stations that provide
broad signal coverage in its markets.
Acquisition Financing. In the past, the Company has principally financed
acquisitions of radio stations through borrowings, including borrowings under
credit agreements with banks and, to a lesser extent, from cash flow from
operations and selected asset dispositions. Taking into account certain
restrictions under the Credit Agreement, however, the Company is not currently
able to borrow for acquisitions. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Liquidity and Capital
Resources."
OWNED AND/OR OPERATED RADIO STATIONS
Program Revenue. For the year ended December 31, 1996 and the nine months
ended September 30, 1997, the Company derived 57.5% and 53.4% of its gross
revenue, or $37.5 million and $29.1 million, respectively, from the sale of
nationally syndicated and local block program time. The Company derives its
nationally syndicated program revenue from a programming customer base
consisting primarily of geographically diverse,
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well-established non-profit religious and educational organizations that
purchase time on stations in a large number of markets in the United States.
These nationally syndicated program producers typically purchase 13, 26 or
52 minute blocks on a Monday through Friday basis and may offer supplemental
programming for weekend release. The recognized leading daily radio program
featured on religious talk format stations is Focus on the Family, which
according to the 1997 Directory of Religious Media is syndicated on 943 radio
stations in the United States, including 35 Company stations as of November
1997. Other leading radio programs currently include Insight for Living (590
stations, including 26 Company stations), In Touch (490 stations, including 27
Company stations), and Grace to You (294 stations, including 22 Company
stations). Local program revenue is obtained from community organizations and
churches that typically purchase time primarily for weekend release and from
local speakers who purchase daily releases. The Company has been successful in
assisting quality local programs to expand into national syndication.
Purchasers of block program time derive their income from two primary
sources: (i) listener contributions, and (ii) product sales, including sales
of inspirational material such as printed literature and periodicals, audio
and video tapes and other miscellaneous items. Revenue from these sources is
used in part to pay for the air time purchased from the Company. The
nationally syndicated program producers carefully track the source of their
donations and product sales and use this information to measure the return on
their air time investment at each station. The Company's top five revenue-
producing program customers accounted for $7.8 million of gross revenue for
the year ended December 31, 1996 and $4.3 million of gross revenue for the six
months ended June 30, 1997. These amounts represented 20.7% and 22.2%,
respectively, of the Company's gross program revenue and 11.9% of the
Company's gross revenue for such periods.
The Company's stations have enjoyed long-standing relationships with key
customers. Focus on the Family and Insight for Living have been ongoing
customers of the Company since 1977. Management attributes this continuity to
the recognized commitment of the Company to concentrate its efforts in
religious talk format stations and not to change formats or exit markets where
it has acquired stations. Management believes that its key customers are
willing to make the long-term commitment to build a base of support in Company
markets largely because of the Company's commitment to build a religious talk
format for its radio stations. As is typical in the radio industry, contracts
may generally be canceled by either the station or the program producer on one
month's notice. New program producers, however, are occasionally required to
sign one-year contracts to demonstrate a commitment of resources to the
program. Rate increases are typically negotiated on an annual basis.
The Company believes that sales of block program time lessen its exposure to
swings in general economic activity and thus make its revenue stream less
volatile. Because program customers derive their income primarily from various
forms of listener support, and given the time period usually required for a
program to obtain and develop an audience, management believes that program
customers have generally found it to be in their best interest to retain a
specific time slot on a long-term basis notwithstanding short-term financial
results or economic conditions.
Advertising Revenue. For the year ended December 31, 1996, and the nine
months ended September 30, 1997, the Company derived 26.7% and 23.0% of its
gross revenue, or $17.4 million and $15.0 million, respectively, from the sale
of local spot advertising and 6.3% and 9.4% of its gross revenue, or $4.1
million and $5.1 million (including $2.7 million of reclassified infomercial
advertising revenue), respectively, from the sale of national spot
advertising. Prior to 1997, classification of revenue (i.e. national program,
national advertising, local program or local advertising) from infomercials
was determined at the discretion of local station general managers. In 1997,
the Company began including revenue from infomercials in the national
advertising category in order to establish uniformity of classification of
revenue. The Company in recent years has begun to place greater emphasis on
the development of local spot sales in all of its markets. General managers
and sales managers are encouraged to create more spot inventory for sale.
Additional spot inventory can be created in a variety of ways, such as
removing programming which generates marginal audience response and adjusting
the start time of programs to add inventory in more desirable dayparts.
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The Company believes that the listening audience for its radio stations,
which provides the financial support for program producers purchasing time on
these stations, is responsive to affinity advertisers that promote products
targeted to the religious/conservative audience and is receptive to direct
response appeals such as those offered through infomercials. The Company's
stations all have affinity advertising customers in their respective markets.
Local church groups and many community organizations such as rescue missions
and family crisis support services can often effectively reach their natural
constituencies by advertising on religious format stations. Significant
advertising is also purchased by local and nationally affiliated religious
bookstores, publishers specializing in inspirational and religious literature
and other businesses that desire to specifically target the conservative adult
religious community. The Company also generates spot advertising revenue from
general market retailers, including automobile dealers and grocery store
chains, in many of its markets. Management believes these results are
consistent with an increased openness to the use of niche radio formats by
general market retailers. Because the Company does not sell advertising based
on market share, it does not subscribe to traditional audience measuring
services, but instead sells advertising based upon the proven success of its
other advertising customers.
The Company's radio stations also receive revenue from national advertisers
desiring to include selected Company stations in national buys covering
multiple markets. These national advertising buys are placed through SRR,
which receives a commission based on the gross dollar amount of all orders
generated. Infomercials run regularly on Company stations, generally on
weekends. In reviewing proposed purchases of air time by advertisers and
infomercial producers, the Company considers the suitability of the content of
the advertising and infomercials for its audience.
Operations. Each of the radio markets in which the Company has a presence
has a general manager who is responsible for day-to-day operations, local spot
advertising sales and, where applicable, local program sales for all Company
stations in the market. General managers earn a base salary plus a percentage
of the respective station's net operating income. Each station also has a
staff of full and part-time engineering, programming and sales personnel.
Sales staffs are paid on a commission basis.
The Company has decentralized its operations in response to the rapid growth
it has experienced in recent years. Operations vice presidents of the Company,
some of whom are also station general managers, oversee several markets on a
regional basis. The operations vice presidents are experienced radio
broadcasters with expertise in sales, programming and production. The Company
will continue to rely on this strategy of decentralization and encourage
operations vice presidents to apply innovative techniques to the operations
they oversee which, if successful, can be implemented in other Company
stations.
Corporate headquarters personnel oversee the placement and rate negotiation
for all nationally syndicated programs. Centralized oversight of this most
critical component of Company revenue is necessary because the Company's key
program customers purchase time on many of the Company's markets. Corporate
headquarters personnel also are responsible for centralized reporting and
financial functions, benefits administration, engineering oversight and other
support functions designed to provide resources to local management.
NATIONAL NETWORK OPERATIONS
In 1993, the Company established the Network in connection with its
acquisition of certain assets of the former CBN Radio Network. Establishment
of the Network was a part of the Company's overall business strategy to
develop a national network of affiliated radio stations anchored by the
Company's owned and operated radio stations in major markets. The Network,
which is headquartered in Dallas, is focused on the development, production
and syndication of a broad range of programming specifically targeted to
religious talk and music stations as well as general market news/talk
stations. Currently, the Company has rights to six full-time satellite
channels and all Network product is delivered to affiliates via satellite.
As of November 30, 1997, the Network had approximately 750 affiliate
stations, including the Company's owned and operated stations, that broadcast
one or more of the offered programming options. These
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programming options feature talk shows, news and music. Network operations
also include commission revenue of SRR from unaffiliated customers and an
allocation of operating expenses estimated to relate to such commissions. SRR
is a wholly owned subsidiary of the Company, which sells all national
commercial advertising placed on the Network's commercial affiliate radio
stations. The Network's gross revenue for the year ended December 31, 1996 and
the nine months ended September 30, 1997 was $5.3 million and $4.5 million,
respectively. While the Network earned net operating income of $274,000 for
the year ended December 31, 1996, it incurred a net operating loss of $542,000
for the nine months ended September 30, 1997, due primarily to continued costs
associated with the development of a news programming production and
distribution capability, and reduced advertising revenue associated with
syndicated talk programming.
Talk Programming. The Network offers talk programming designed to attract
listeners to affiliate stations by addressing current national issues from a
religious/conservative perspective. The Network currently produces 20 daily
and weekly long-form and short-form programs including The Oliver North Show,
The Alan Keyes Show, The Dick Staub Show, Janet Parshall's America and a
sports talk program titled Sharing the Victory. As of November 30, 1997,
approximately 260 affiliate radio stations carried some form of Network talk
programming.
Station affiliations for talk programming are non-exclusive, allowing a
station to select specific Network programs it wishes to carry. Commercial
affiliates are required to clear five Network spots during each hour of
Network programming carried. The Network affiliation contract generally
provides a 90-day termination option for both parties.
News. The Network began the production and distribution of news in 1996 with
the purchase of StandardNews. The name was subsequently changed to SRN News
and the news product was repositioned to offer affiliates a family-focused
news service, delivered three times each hour, providing coverage of national
and international news. SRN News began operating from a new, fully-digital
headquarters located in the Washington, D.C. area in early 1997. SRN News has
fully-equipped broadcast facilities at the White House, United States House of
Representatives and United States Senate that are staffed by full-time
correspondents. As of November 30, 1997, the Network provided SRN News to
approximately 295 affiliate radio stations, compared with the 167 affiliates
existing at the time the news service was acquired in 1996.
Commercial radio stations that affiliate with SRN News are required to clear
12 Network spots between the hours of 6 AM and 11 PM daily. Because they are
unable to clear commercial advertisements, noncommercial radio stations that
affiliate with SRN News pay a monthly access fee. Affiliation agreements for
the news service are two years in length.
Music. The Network offers three syndicated religious music formats. The
Morningstar format, which originates from studios in Nashville, features adult
contemporary Christian music targeted to the mainstream 25-to-54 year old
audience. The Network also offers a contemporary Christian music format, The
Word in Music, targeted to a younger audience, and a more traditional praise
and worship format, The Word in Praise. Both of these formats originate from
two of the Company's owned and operated stations in Colorado Springs. All
music formats are available to affiliate stations on a 24-hour basis or in
selected dayparts. As of November 30, 1997, the Morningstar format and The
Word in Music format had 127 and 22 affiliates, respectively. As of the same
date, The Word in Praise, established in the first quarter of 1997, had eight
affiliates.
Each music network requires affiliates to clear a minimum number of minutes
per hour for network spots. In addition, fixed monthly affiliation fees are
charged to both commercial and non-commercial stations which affiliate with
the Morningstar format and non-commercial stations which affiliate with The
Word in Music and The Word in Praise. In addition to these three 24-hour music
formats, the Network provides weekly music programs, including CCM Countdown
with Gary Chapman, CCM Radio Magazine and Rock Alive, to approximately 310
affiliate stations.
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Salem Radio Representatives. The Company established SRR in 1992 as a sales
representation company specializing in placing national advertising on
religious format radio stations. The Network has an exclusive relationship
with SRR, a wholly owned subsidiary of the Company, for the sale of available
Network spot advertising. SRR receives a commission on all Network sales. SRR
also contracts with individual radio stations to sell air time to national
advertisers desiring to include selected Company stations in national buys
covering multiple markets. See "--Owned and/or Operated Radio Stations--
Advertising Revenue." SRR administrative offices are located in Dallas, and
its 12 commissioned sales personnel are located in field offices in
Washington, D.C., Chicago, Nashville, Dallas, Seattle and Los Angeles.
COMPETITION
The radio broadcasting industry, including the religious format segment of
this industry, is a highly competitive business. The financial success of each
of the Company's radio stations that features talk programming is dependent,
to a significant degree, upon its ability to generate revenue from the sale of
block program time to national and local religious and educational
organizations. The Company competes for this program revenue with a number of
different commercial and noncommercial radio station licensees. While no group
owner in the United States specializing in the religious format approaches the
Company in size and major market penetration, religious format stations exist
and enjoy varying degrees of prominence and success in all markets.
The Company also competes for revenue in the spot advertising market with
other commercial religious format and general format radio station licensees.
The Company competes in the spot advertising market with other media as well,
including broadcast television, cable television, newspapers, magazines,
direct mail coupons and billboard advertising.
Competition may also come from new media technologies currently being
developed or introduced, such as the delivery of audio programming by cable
television systems, by satellite and by DAB. DAB may deliver by satellite to
national and regional audiences, multi-channel, multiformat digital radio
services with quality equivalent to compact discs. The delivery of information
through the Internet also could create new competition. The FCC has recently
authorized spectrum for the use of a new technology, satellite DARS, to
deliver audio programming. DARS may provide a medium for the delivery by
satellite or terrestrial means of multiple new audio programming formats to
local and national audiences.
The Network competes with other commercial radio networks that offer news
and talk programming to religious format stations and two noncommercial
networks that offer religious music formats. The Network also competes with
other radio networks for the services of talk show personalities.
SERVICEMARKS
The Company owns the federally registered service marks "Salem
Communications Corporation" and "Salem Radio Network" and the related Salem
Communications Corporation and Salem Radio Network logos. The Company
considers these service marks to be important to its business.
EMPLOYEES
At November 30, 1997, the Company employed 513 full-time and 309 part-time
employees. None of the Company's employees are covered by collective
bargaining agreements, and the Company considers its relations with its
employees to be good.
In certain of its larger markets, the Company employs on-air personalities
with loyal audiences in their respective markets. The loss of one of these
personalities could result in a short-term loss of audience share, but the
Company does not believe that any such loss would have a material adverse
effect on the Company's financial condition or results of operations.
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FEDERAL REGULATION OF RADIO BROADCASTING
Introduction. The ownership, operation and sale of broadcast stations,
including those licensed to the Company, are subject to the jurisdiction of
the FCC, which acts under authority derived from the Communications Act. The
Communications Act was amended by the Telecommunications Act of 1996 (the
"Telecommunications Act") to make changes in several broadcast laws. Among
other things, the FCC assigns frequency bands for broadcasting; determines
whether to approve changes in ownership or control of station licenses;
regulates equipment used by stations; adopts and implements regulations and
policies that directly or indirectly affect the ownership, operation and
employment practices of stations; and has the power to impose penalties for
violations of its rules under the Communications Act.
The following is a brief summary of certain provisions of the Communications
Act and of specific FCC regulations and policies. Failure to observe these or
other rules and policies can result in the imposition of various sanctions,
including monetary forfeitures, the grant of "short" (less than the maximum)
license renewal terms or, for particularly egregious violations, the denial of
a license renewal application, the revocation of a license or the denial of
FCC consent to acquire additional broadcast properties. Reference should be
made to the Communications Act, FCC rules and the public notices and rulings
of the FCC for further information concerning the nature and extent of federal
regulation of broadcast stations.
License Grant and Renewal. Radio broadcast licenses are granted for maximum
terms of eight years. Licenses may be renewed through an application to the
FCC. Prior to the Telecommunications Act, during certain periods when a
renewal application was pending, competing applicants could file for the radio
frequency being used by the renewal applicant. The Telecommunications Act
prohibits the FCC from considering such competing applications if the FCC
finds that the station has served the public interest, convenience and
necessity, that there have been no serious violations by the licensee of the
Communications Act or the rules and regulations of the FCC, and that there
have been no other violations by the licensee of the Communications Act or the
rules and regulations of the FCC that, when taken together, would constitute a
pattern of abuse.
Petitions to deny license renewals can be filed by interested parties,
including members of the public. Such petitions may raise various issues
before the FCC. The FCC is required to hold hearings on renewal applications
if the FCC is unable to determine that renewal of a license would serve the
public interest, convenience and necessity, or if a petition to deny raises a
"substantial and material question of fact" as to whether the grant of the
renewal application would be prima facie inconsistent with the public
interest, convenience and necessity. Also, during certain periods when a
renewal application is pending, the transferability of the applicant's license
is restricted. The Company is not currently aware of any facts that would
prevent the timely renewal of its licenses to operate its radio stations,
although there can be no assurance that the Company's licenses will be
renewed.
The FCC classifies each AM and FM station. An AM station operates on either
a clear channel, regional channel or local channel. A clear channel is one on
which AM stations are assigned to serve wide areas. Clear channel AM stations
are classified as either: Class A stations, which operate on an unlimited time
basis and are designated to render primary and secondary service over an
extended area; Class B stations, which operate on an unlimited time basis and
are designed to render service only over a primary service area; and Class D
stations, which operate either during daytime hours only, during limited times
only or on an unlimited time basis with low nighttime power. A regional
channel is one on which Class B and Class D AM stations may operate and serve
primarily a principal center of population and the rural areas contiguous to
it. A local channel is one on which AM stations operate on an unlimited time
basis and serve primarily a community and the suburban and rural areas
immediately contiguous thereto. Class C AM stations operate on a local channel
and are designed to render service only over a primary service area that may
be reduced as a consequence of interference.
The minimum and maximum facilities requirements for an FM station are
determined by its class. FM class designations depend upon the geographic zone
in which the transmitter of the FM station is located. In general, commercial
FM stations are classified as follows, in order of increasing power and
antenna height: Class A, B1, C3, B, C2, C1 and C.
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The following table sets forth in order of market size the market, call
letters, FCC license classification, antenna height above average terrain
(HAAT), power and frequency of each of the stations owned or operated by the
Company and the date on which each station's FCC license expires.
<TABLE>
<CAPTION>
STATION EXPIRATION
CALL FCC HAAT POWER IN DATE OF
MARKET(1) LETTERS CLASS IN METERS KILOWATTS(2) FREQUENCY LICENSE
--------- ------- ----- --------- ------------ --------- ----------
<S> <C> <C> <C> <C> <C> <C>
New York, NY............ WMCA-AM B NA 5.0/5.0 570 kHz 6/1/1998
WWDJ-AM B NA 5.0/5.0 970 kHz 6/1/1998
Los Angeles, CA......... KKLA-FM B 878 10.5 99.5 MHz (3)
KAVC-FM A 94 2.9 105.5 MHz 12/1/2005
KLTX-AM B NA 5.0/3.6 1390 kHz 12/1/2005
Chicago, IL............. WYLL-FM B 91 50 106.7 MHz 12/1/2004
San Francisco, CA....... KFAX-AM B NA 50/50 1100 kHz 12/1/2005
Philadelphia, PA........ WFIL-AM B NA 5.0/5.0 560 kHz 8/1/1998
WZZD-AM B NA 50.0/10.0 990 kHz 8/1/1998
Dallas-Ft. Worth, TX.... KWRD-FM C 460 100 94.9 MHz 8/1/2005
Washington, D.C. ....... WAVA-FM B 131 50 105.1 MHz 10/1/2003
Houston-Galveston, TX... KENR-AM B NA 10.0/5.0 1070 kHz 8/1/2005
KKHT-FM C 344 100 106.9 MHz 8/1/2005
Boston, MA.............. WEZE-AM B NA 5.0/5.0 590 kHz (3)
Seattle-Tacoma, WA...... KGNW-AM B NA 50.0/5.0 820 kHz (3)
KLFE-AM B NA 5.0/5.0 1590 kHz (3)
KKOL-AM(4) B NA 5.0/5.0 1300 kHz (3)
San Diego, CA........... KPRZ-AM B NA 20.0/5.0 1210 kHz 12/1/2005
Minneapolis-St. Paul,
MN..................... KKMS-AM B NA 5.0/5.0 980 kHz 4/1/2004
Phoenix, AZ............. KPXQ-AM B NA 5.0/5.0 960 kHz 10/1/2005
Baltimore, MD........... WITH-AM C NA 1.0/1.0 1230 kHz 10/1/2003
Pittsburgh, PA.......... WORD-FM B 154 48 101.5 Mhz 8/1/1998
WPIT-AM D NA 5.0/0.024 730 kHz 8/1/1998
Cleveland, OH........... WCCD-AM D NA 0.5/0 1000 kHz 10/1/2004
WHK-AM B NA 5.0/5.0 1420 kHz 10/1/2004
Denver-Boulder, CO...... KNUS-AM B NA 5.0/5.0 710 kHz 4/1/2005
KRKS-AM B NA 5.0/0.39 990 kHz 4/1/2005
KRKS-FM C 387 100 94.7 MHz 4/1/2005
Portland, OR............ KPDQ-AM B NA 1.0/0.51 800 kHz (3)
KPDQ-FM C 387 100 93.7 MHz (3)
Cincinnati, OH.......... WTSJ-AM B NA 1.0/0.28 1050 kHz 10/1/2004
Riverside-San
Bernardino, CA......... KKLA-AM C NA 1.0/1.0 1240 kHz 12/1/2005
Sacramento, CA.......... KFIA-AM B NA 25.0/1.0 710 kHz 12/1/2005
KTKZ-AM B NA 5.0/5.0 1380 kHz 12/1/2005
Columbus, OH............ WRFD-AM D NA 5.0/0 880 kHz 10/1/2004
San Antonio, TX......... KSLR-AM B NA 5.0/4.3 630 kHz 8/1/2005
Akron/Canton, OH........ WHLO-AM B NA 5.4/0.54 640 kHz 10/1/2004
Spokane, WA............. KTSL-FM C3 145 4.6 101.9 MHz (3)
Colorado Springs, CO.... KBIQ-FM C 616 2.0 102.7 MHz 4/1/2005
KGFT-FM C1 647 13 100.7 MHz 4/1/2005
KPRZ-FM C3 614 0.51 96.1 MHz 4/1/2005
Oxnard, CA.............. KDAR-FM B1 393 1.5 98.3 MHz (3)
Canton, OH.............. WHK-FM B 175 36 98.1 MHz 10/1/2004
</TABLE>
- ---------------------
(1) Actual city of license may be different form the metropolitan market
served.
(2) Pursuant to FCC rules and regulations, many AM radio stations are licensed
to operate at a reduced power during nighttime broadcasting hours, which
results in reducing the radio station's coverage during those hours of
operation. Both power ratings are shown, where applicable.
(3) Indicates pending renewal application.
(4) The Company operates this station, which is licensed to a corporation
owned by the Principal Shareholders, under the terms of a local marketing
agreement. See "--Local Marketing Agreements" and "Certain Transactions."
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Ownership Matters. The Communications Act prohibits the assignment of a
broadcast license or the transfer of control of a broadcast license without
the prior approval of the FCC. In determining whether to assign, transfer,
grant or renew a broadcast license, the FCC considers a number of factors
pertaining to the licensee, including compliance with various rules limiting
common ownership of media properties, the "character" of the licensee and
those persons holding "attributable" interests therein, and compliance with
the Communications Act's limitation on alien ownership, as well as compliance
with other FCC policies, including equal employment opportunity requirements.
Once a station purchase agreement has been signed, an application for FCC
consent to assignment of license or transfer of control (depending upon
whether the underlying transaction is an asset purchase or stock acquisition)
is filed with the FCC. Approximately 10 to 15 days after this filing, the FCC
publishes a notice assigning a file number to the application and advising
that the application has been "accepted for filing." This begins a 30-day
statutory public notice period during which third parties have the opportunity
to file formal petitions to deny the proposed transaction. Informal objections
to the transaction may be filed at any time prior to the grant of an
application. During this 30-day period, the FCC staff generally begins its
review of the application and may request additional information from the
applicants in response to any questions the staff may have.
Assuming that no petitions are filed during the public notice period and
that the proposed transaction poses no issues requiring higher level consent,
the FCC staff often grants the application by delegated authority
approximately 10 days after the end of the public notice period. If there is a
back log of applications or the transaction proposes an issue requiring higher
level consent, the 10-day period can extend to 30 days or more. The parties to
the application are legally authorized to close on the transaction at any time
after the application is granted. At this point, however, the grant is not a
"final order."
Public notice of the FCC staff grant of an application is usually issued
within seven days of the date on which the application is granted. For a
period of 30 days following the date of this public notice interested parties
may file petitions seeking staff reconsideration or full FCC review of the
staff action. In addition, for a period of 40 days following the date of the
public notice, the FCC, on its own, can review and reconsider the grant. In
the event that review by the FCC is made, judicial review of the FCC action
may be sought in the United States Court of Appeals for the District of
Columbia within 30 days of the public notice of the FCC's action. In the event
the court affirms the FCC's action, further judicial review may be sought by
seeking rehearing en banc from the Court of Appeals or by certiorari from the
United States Supreme Court.
Assuming that no petitions are filed by third parties and no action staying
or reversing the grant is made by the FCC, then the grant will become a final
order by operation of law at the close of business on the 40th day following
the public notice of the grant. Upon a grant becoming a final order, counsel
is able to deliver an opinion that the grant is no longer subject to
administrative or judicial review, although such actions can nevertheless be
set aside in rare circumstances (e.g., fraud on the agency by a party to the
application).
The FCC will not issue an unconditional assignment or transfer grant if an
application for renewal of license for the station is pending. Thus, the
foregoing timetables will be altered in the event an application for
assignment or transfer is filed while a license renewal application is
pending.
Under the Communications Act, a broadcast license may not be granted to or
held by a corporation that has more than one-fifth of its capital stock owned
or voted by aliens or their representatives, by foreign governments or their
representatives, or by non-U.S. corporations. Under the Communications Act, a
broadcast license also may not be granted to or held by any corporation that
is controlled, directly or indirectly, by any other corporation more than one-
fourth of whose capital stock is owned or voted by aliens or their
representatives, by foreign governments or their representatives, or by non-
U.S. corporations. These restrictions apply in modified form to other forms of
business organizations, including partnerships. The Company therefore may be
restricted from having more than one-fourth of its stock owned or voted by
aliens, foreign governments or non-U.S. corporations.
46
<PAGE>
The Communications Act and FCC rules also generally restrict the common
ownership, operation or control of radio broadcast stations serving the same
local market, of a radio broadcast station and a television broadcast station
serving the same local market, and of a radio broadcast station and a daily
newspaper serving the same local market. Under these "cross-ownership" rules,
absent waivers, the Company would not be permitted to acquire any daily
newspaper or television broadcast station (other than low power television) in
a local market where it then owned any radio broadcast station. The FCC's
rules provide for the liberal grant of a waiver of the rule prohibiting common
ownership of radio and television stations in the same geographic market in
the top 25 television markets if certain conditions are satisfied. The
Telecommunications Act extends this waiver policy to stations in the top 50
television markets, although the FCC has not yet implemented this change.
In response to the Telecommunications Act, the FCC amended its multiple
ownership rules to eliminate the national limits on ownership of AM and FM
stations. The FCC's broadcast multiple ownership rules restrict the number of
radio stations one person or entity may own, operate or control on a local
level. These limits are:
(i) in a market with 45 or more commercial radio stations, an entity may
own up to eight commercial radio stations, not more than five of which are
in the same service (FM or AM);
(ii) in a market with between 30 and 44 (inclusive) commercial radio
stations, an entity may own up to seven commercial radio stations, not more
than four of which are in the same service;
(iii) in a market with between 15 and 29 (inclusive) commercial radio
stations, an entity may own up to six commercial radio stations, not more
than four of which are in the same service;
(iv) in a market with 14 or fewer commercial radio stations, an entity
may own up to five commercial radio stations, not more than three of which
are in the same service, except that an entity may not own more than 50% of
the stations in such market.
None of these multiple ownership rules requires any change in the Company's
current ownership of radio broadcast stations; however, these rules will limit
the number of additional stations that the Company may acquire in the future
in certain of its markets.
Because of these multiple and cross-ownership rules, a purchaser of voting
stock of the Company that acquires an "attributable" interest in the Company
may violate the FCC's rule if it also has an attributable interest in other
television or radio stations, or in daily newspapers, depending on the number
and location of those radio or television stations or daily newspapers. Such a
purchaser also may be restricted in the companies in which it may invest, to
the extent that these investments give rise to an attributable interest. If an
attributable shareholder of the Company violates any of these ownership rules,
the Company may be unable to obtain from the FCC one or more authorizations
needed to conduct its radio station business and may be unable to obtain FCC
consents for certain future acquisitions.
The FCC generally applies its television/radio/newspaper cross-ownership
rules and its broadcast multiple ownership rules by considering the
"attributable," or cognizable interests held by a person or entity. A person
or entity can have an interest in a radio station, television station or daily
newspaper by being an officer, director, partner or shareholder of a company
that owns that station or newspaper. Whether that interest is cognizable under
the FCC's ownership rules is determined by the FCC's attribution rules. If an
interest is attributable, the FCC treats the person or entity who holds that
interest as an "owner" of the radio station, television station or daily
newspaper in question, and therefore subject to the FCC's ownership rules.
With respect to a corporation, officers and directors and persons or
entities that directly or indirectly can vote 5% or more of the corporation's
stock (10% or more of such stock in the case of insurance companies,
investment companies, bank trust departments and certain other "passive
investors" that hold such stock for investment purposes only) generally are
attributed with an ownership interest in whatever radio stations, television
stations and daily newspapers the corporation owns.
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<PAGE>
With respect to a partnership, the interest of a general partner is
attributable, as is the interest of any limited partner who is "materially
involved" in the media-related activities of the partnership. Debt
instruments, nonvoting stock, options and warrants for voting stock that have
not yet been exercised, limited partnership interests where the limited
partner is not "materially involved" in the media-related activities of the
partnership, and minority (under 5%) voting stock, generally do not subject
their holders to attribution.
The FCC has issued a Notice of Proposed Rulemaking (the "NPRM") that
contemplates tightening attribution standards where parties have multiple
nonattributable interests in and relationships with stations that would be
prohibited by the FCC's cross-interest rules, if the interest/relationships
were attributable. The NPRM contemplates that this change in attribution will
apply only to persons holding debt or equity interests that exceed certain
benchmarks. For further information, see "--Proposed Changes" below.
In addition, the FCC has a "cross-interest" policy that under certain
circumstances could prohibit a person or entity with an attributable interest
in a broadcast station or daily newspaper from having a "meaningful"
nonattributable interest in another broadcast station or daily newspaper in
the same local market. Among other things, "meaningful" interests could
include significant equity interests (including nonvoting stock, voting stock
and limited partnership interests) and significant employment positions. This
policy may limit the permissible investments a purchaser of the Company's
voting stock may make or hold.
Programming and Operation. The Communications Act requires broadcasters to
serve the "public interest." The FCC has gradually relaxed or eliminated many
of the more formalized procedures it had developed in the past to promote the
broadcast of certain types of programming responsive to the needs of a
station's community of license. Licensees continue to be required, however, to
present programming that is responsive to community problems, needs and
interests and to maintain certain records demonstrating such responsiveness.
Complaints from listeners concerning a station's programming will be
considered by the FCC when it evaluates the licensee's renewal application,
but such complaints may be filed and considered at any time.
Stations also must pay regulatory and application fees and follow various
FCC rules that regulate, among other things, political advertising, the
broadcast of obscene or indecent programming, sponsorship identification and
technical operations (including limits on radio frequency radiation). In
addition, licensees must develop and implement programs designed to promote
equal employment opportunities and must submit reports to the FCC on these
matters annually and in connection with a renewal application. The broadcast
of contests and lotteries is regulated by FCC rules.
Failure to observe these or other rules and policies can result in the
imposition of various sanctions, including monetary forfeitures, the grant of
"short" (less than the maximum) renewal terms or, for particularly egregious
violations, the denial of a license renewal application or the revocation of a
license.
In 1985, the FCC adopted rules regarding human exposures to levels of radio
frequency ("RF") radiation. These rules require applicants for new broadcast
stations, renewals of broadcast licenses or modifications of existing licenses
to inform the FCC at the time of filing such applications whether a new or
existing broadcast facility would expose people to RF radiation in excess of
certain guidelines. In August 1996, the FCC adopted more restrictive radiation
limits. These limits will become effective on September 1, 1997 and will
govern applications filed after that date. The Company anticipates that such
regulations will not have a material effect on its business.
Local Marketing Agreements. Over the past five years, a number of radio
stations, including certain of the Company's stations, have entered into what
commonly are referred to as "local marketing agreements" ("LMAs") or "time
brokerage agreements." These agreements take various forms. Separately-owned
and licensed stations may agree to function cooperatively in terms of
programming, advertising sales and other matters, subject to compliance with
the antitrust laws and the FCC's rules and policies, including the requirement
that the licensee of each station maintains independent control over the
programming and other operations of its own station. The FCC has held that
such agreements do not violate the Communications Act as long as the
48
<PAGE>
licensee of the station that is being substantially programmed by another
entity maintains complete responsibility for, and control over, operations of
its broadcast stations and otherwise ensures compliance with applicable FCC
rules and policies.
A station that brokers substantial time on another station in its market or
engages in an LMA with a station in the same market will be considered to have
an attributable ownership interest in the brokered station for purposes of the
FCC's ownership rules. As a result, a broadcast station may not enter into an
LMA that allows it to program more than 15% of the broadcast time, on a weekly
basis, of another local station that it could not own under the FCC's local
multiple ownership rules. FCC rules also prohibit the broadcast licensee from
simulcasting more than 25% of its programming on another station in the same
broadcast service (i.e., AM-AM or FM-FM) where the two stations serve
substantially the same geographic area, whether the licensee owns the stations
or owns one and programs the other through an LMA arrangement.
Proposed Changes. In December, 1994, the FCC initiated a proceeding to
solicit comment on whether it should revise its radio and television ownership
"attribution" rules by among other proposals (i) raising the basic benchmark
for attributing ownership in a corporate licensee from 5% to 10% of the
licensee's voting stock, (ii) increasing from 10% to 20% of the licensee's
voting stock the attribution benchmark for "passive investors" in corporate
licensees, (iii) restricting the availability of the attribution exemption
when a single party controls more than 50% of the voting stock; and (iv)
considering LMAs, joint sales agreements, debt and non-voting stock interests
to be attributable under certain circumstances. No decision has been made by
the FCC in these matters. At this time, no determination can be made as to
what effect, if any, this proposed rulemaking will have on the Company.
The Congress and the FCC from time to time have under consideration, and may
in the future consider and adopt, new laws, regulations and policies regarding
a wide variety of matters that could, directly or indirectly, affect the
operation, ownership and profitability of the Company's radio stations, result
in the loss of audience share and revenue for the Company's radio stations,
and affect the ability of the Company to acquire additional radio stations or
finance such acquisitions. Such matters include: (i) proposals to impose
spectrum use or other fees on FCC licensees; (ii) the FCC's equal employment
opportunity rules and matters relating to political broadcasting; (iii)
technical and frequency allocation matters; (iv) changes in the FCC's cross
interest, multiple ownership and cross-ownership policies; (v) changes to
broadcast technical requirements; (vi) proposals to allow telephone or cable
television companies to deliver audio and video programming to the home
through existing phone lines; (vii) proposals to limit the tax deductibility
of advertising expenses by advertisers; and (viii) proposals to auction the
right to use the radio broadcast spectrum to the highest bidder, instead of
granting FCC licenses and subsequent license renewals without such bidding.
The Balanced Budget Act of 1997, enacted August 5, 1997, requires the FCC to
resolve mutually-exclusive requests for use of the commercial radio broadcast
spectrum by auction under most circumstances. On November 25, 1997, the FCC
adopted a Notice of Proposed Rulemaking (the "November 25, 1997 NPRM") seeking
to implement its statutory auction authority. The Balanced Budget Act of 1997
requires the use of auctions to resolve mutually-exclusive requests for new
stations or major changes in the facilities of existing stations filed after
June 30, 1997, where the stations propose to use the commercial radio
broadcast spectrum. The FCC may use auctions to resolve such mutually-
exclusive requests filed before July 1, 1997, which remain pending after a
mandated period ending February 1, 1998, in which the applicants may enter
into settlement agreements to resolve the mutual exclusivity of their
applications. In connection with the November 25, 1997 NPRM, the FCC has
imposed a temporary freeze on the filing of most requests for new commercial
broadcast stations or for major changes of existing commercial broadcast
facilities until it adopts auction rules.
The Company cannot predict whether any proposed changes will be adopted or
what other matters might be considered in the future, nor can it judge in
advance what impact, if any, the implementation of any of these proposals or
changes might have on its business.
The FCC, on April 2, 1997, awarded two licenses for the provision of
satellite DARS. Under rules adopted for this service, licensees must begin
construction of their space stations within one year, begin operating within
49
<PAGE>
four years, and be operating their entire system within six years. The Company
cannot predict whether the service will be subscription or advertiser
supported. Digital technology also may be used in the future by terrestrial
radio broadcast stations either on existing or alternate broadcasting
frequencies, and the FCC has stated that it will consider making changes to
its rules to permit AM and FM radio stations to offer digital sound following
industry analysis of technical standards. In addition, the FCC has authorized
an additional 100 kHz of bandwidth for the AM band and on March 17, 1997,
adopted an allotment plan for the expanded band that identified the 88 AM
radio stations selected to move into the band. At the end of a five-year
transition period, those licensees will be required to return to the FCC
either the license for their existing AM band station or the license for the
expanded AM band station.
The foregoing summary of certain provisions of the Communications Act and of
specific FCC rules and policies does not purport to be comprehensive.
Reference should be made to the Communications Act, the FCC's rules and the
public notices and rulings of the FCC for further information concerning the
nature and extent of federal regulation of radio broadcast stations.
Federal Antitrust Considerations. The FTC and the DOJ, which evaluate
transactions to determine whether those transactions should be challenged
under the federal antitrust laws, have been increasingly active recently in
their review of radio station acquisitions, particularly where an operator
proposes to acquire additional stations in its existing markets.
For an acquisition meeting certain size thresholds, the Hart-Scott-Rodino
Improvements Act ("HSR Act") and the rules promulgated thereunder require the
parties to file Notification and Report Forms with the FTC and the DOJ and to
observe specified waiting period requirements before consummating the
acquisition. At any time before or after the consummation of a proposed
acquisition, the FTC or the DOJ could take such action under the antitrust
laws as it deems necessary or desirable in the public interest, including
seeking to enjoin the acquisition or seeking divestiture of the business
acquired or other assets of the Company. Acquisitions that are not required to
be reported under the HSR Act may be investigated by the FTC or the DOJ under
the antitrust laws before or after consummation. In addition, private parties
may under certain circumstances bring legal action to challenge an acquisition
under the antitrust laws.
As part of its increased scrutiny of radio station acquisitions, the DOJ has
stated publicly that it believes that LMAs and other similar agreements
customarily entered into in connection with radio station transfers prior to
the expiration of the waiting period under the HSR Act could violate the HSR
Act.
Although the Company does not believe that its acquisition strategy as a
whole will be adversely affected in any material respect by antitrust review,
there can be no assurance that this will be the case.
PROPERTIES AND FACILITIES
The types of properties required to support the Company's radio stations
include offices, studios and tower and antenna sites. A station's studios are
generally housed with its office in a downtown or business district. The
Company's tower and antenna sites are generally selected to provide maximum
market coverage. The Network operations are supported by offices and studios
from which Network programming is originated or relayed from a remote point of
origination.
The studios and offices of the Company's stations, its Network operations
and its corporate headquarters are located in leased facilities. The Network
leases satellite transponders used for delivery of its programming. The
Company either owns or leases its radio station tower and antenna sites. The
Company does not anticipate difficulties in renewing those leases that expire
within the next several years or in obtaining other lease arrangements, if
necessary.
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The Company leases the studios and tower and antenna sites described in the
table below from the Principal Shareholders or trusts and partnerships created
for the benefit of the Principal Shareholders and their families. All such
leases have cost of living adjustments. The Company believes that the rental
rates paid pursuant to such leases are generally comparable to market rates.
<TABLE>
<CAPTION>
STATION
CALL CURRENT ANNUAL EXPIRATION
MARKET LETTERS FACILITIES LEASED RENTAL DATE(1)
------ ------- ----------------- -------------- ----------
<S> <C> <C> <C> <C>
Philadelphia, PA........ WFIL-AM/ Antenna/Tower/Studios $110,520 2004
WZZD-AM
Pittsburgh, PA.......... WORD-FM/ Antenna/Tower 26,772 2003
WPIT-AM
Columbus, OH............ WRFD-AM Antenna/Tower 44,220 2002
Chicago, IL............. WYLL-FM Antenna/Tower 41,460 2002
Denver-Boulder, CO...... KNUS-AM Antenna/Tower 18,480 2006
Houston-Galveston, TX... KKHT-FM/ Antenna/Tower 50,772 2005
KENR-AM
San Antonio, TX......... KSLR-AM Antenna/Tower 30,705 2007
Seattle-Tacoma, WA...... KGNW-AM Antenna/Tower 35,928 2002
KLFE-AM Antenna/Tower 26,112 2004
Portland, OR............ KPDQ-AM/FM Studios 60,804 2002
Antenna/Tower 13,824 2002
Sacramento, CA.......... KFIA-AM Antenna/Tower 79,764 2006
Los Angeles, CA......... KKLA-AM Studios 22,800 2002
Antenna/Tower 22,800 2002
KLTX-AM Studios 52,512 2002
Antenna/Tower 138,180 2002
KAVC-FM Antenna/Tower 12,348 2002
San Diego, CA........... KPRZ-AM Antenna/Tower 45,576 2002
San Francisco, CA....... KFAX-AM Antenna/Tower 143,604 2003
Minneapolis, MN......... KKMS-AM Studios 66,000 2006
Tower/Antenna 66,000 2006
Cleveland, OH........... WHK-AM Antenna/Tower 33,600 2008
Akron, OH............... WHLO-AM Antenna/Tower 12,000 2007
Cincinnati, OH.......... WTSJ-AM Antenna/Tower/Studios 24,000 2007
Canton, OH.............. WHK-FM Antenna/Tower 12,000 2007
</TABLE>
- ---------------------
(1) The expiration date reported for certain facilities represents the
expiration date assuming exercise of lease term extensions at the
Company's option.
No one property is material to the Company's overall operations. The Company
believes that its properties are in good condition and suitable for its
operations; however, the Company continually evaluates opportunities to
upgrade its properties. The Company owns substantially all of its equipment,
consisting principally of transmitting antennae, transmitters, studio
equipment and general office equipment.
LITIGATION
The Company currently and from time to time is involved in litigation
incidental to the conduct of its business. The Company is not a party to any
lawsuit or proceeding that, in the opinion of the Company, is likely to have a
material adverse effect on its operations or financial performance.
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MANAGEMENT
EXECUTIVE AND OTHER KEY OFFICERS AND DIRECTORS
The executive and other key officers and directors of the Company are as
follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Edward G. Atsinger III...... 58 President, Chief Executive Officer and
Director
Stuart W. Epperson.......... 60 Chairman of the Board
Eric H. Halvorson........... 48 Executive Vice President, Chief Operating
Officer, General Counsel and Director
Greg R. Anderson............ 50 President, Salem Radio Network
Dirk Gastaldo............... 42 Vice President and Chief Financial Officer
Kenneth L. Gaines........... 58 Vice President-Operations
Dave Armstrong.............. 52 Vice President-Operations and General
Manager/KKLA-FM/AM
Joe D. Davis................ 53 Vice President-Operations and General
Manager/WMCA-AM and WWDJ-AM
Kenneth W. Sasso............ 51 Vice President-Operations
Donald V. Cartmell.......... 67 Vice President-National Programming and
Ministry Relations
Richard A. Riddle........... 53 Director
Roland S. Hinz.............. 58 Director
</TABLE>
All directors hold office until the next annual meeting of shareholders
following their election, or until their successors are elected and qualified.
Officers are elected annually by the Board of Directors and serve at the
discretion of the Board.
Mr. Atsinger has been President, Chief Executive Officer and a Director of
the Company since its inception. He has been engaged in the ownership and
operation of radio stations since 1969 and is a member of the Board of
Directors of the National Religious Broadcasters.
Mr. Epperson has been Chairman of the Company since its inception. Mr.
Epperson has been engaged in the ownership and operation of radio stations
since 1961. In addition, he is a member of the Board of Directors of the
National Religious Broadcasters. Mr. Epperson is married to Nancy A. Epperson
who is Mr. Atsinger's sister.
Mr. Halvorson has been Chief Operating Officer of the Company since 1995,
Executive Vice President of the Company since 1991 and a Director of the
Company since 1988. From 1991 to the present, Mr. Halvorson has also served as
the General Counsel of the Company. Mr. Halvorson was the managing partner of
the law firm of Godfrey & Kahn, S.C.-Green Bay from 1988 until 1991. From 1985
to 1988, he was Vice President and General Counsel of the Company. From 1976
until 1985, he was an associate and then a partner of Godfrey & Kahn, S.C.-
Milwaukee. Mr. Halvorson was a Certified Public Accountant with Arthur
Andersen & Co. from 1971 to 1973.
Mr. Anderson has been President of the Network since 1994. From 1993 to
1994, Mr. Anderson was the Vice President-General Manager of the Network. Mr.
Anderson was employed by Multimedia, Inc. from 1980 to 1993. After serving as
program director and general manager at Multimedia stations in Greenville,
Shreveport and Milwaukee, he was named Vice President, Operations, of the
Multimedia radio division in 1987 and was subsequently appointed as Executive
Vice President and group head of Multimedia's radio division.
Mr. Gastaldo has been Chief Financial Officer of the Company since 1993, and
a Vice President of the Company since 1992. From 1992 to 1993, Mr. Gastaldo
was Vice President-Administration of the Company, and from 1989 to 1991 he was
Manager-Internal Audit of the Company. He was a Certified Public Accountant
with Ernst & Young from 1978 to 1989.
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<PAGE>
Mr. Gaines has been Vice President-Operations of the Company since 1994.
Prior to that time, he served as General Manager of KKLA-FM from 1992 to 1994
and General Manager of WYLL-FM from 1990 to 1992. Mr. Gaines has been involved
in the management of radio stations since 1964. He served as Executive Vice
President of Commonwealth Communications from 1988 to 1990, Vice President of
Penn Communications from 1985 to 1988, Executive Vice President of Broadstreet
Communications from 1974 to 1985 and Vice President and General Manager of
Metromedia from 1964 to 1974.
Mr. Armstrong has been Vice President-Operations of the Company since 1996
and General Manager of KKLA-FM/AM since 1994. He has also supervised
operations of KLTX-AM since January 1997. Mr. Armstrong has 28 years of radio
broadcast experience and has been general manager of stations in Santa Ana and
Orange, California.
Mr. Davis has been Vice President-Operations of the Company since 1996 and
General Manager of WMCA-AM since 1989. He has also been the General Manager of
WWDJ-AM since 1994. He has previously served as Vice President and Executive
Director of Christian Fund for the Disabled as well as President of Practice
Resources, Inc., Davis Eaton Corporation and Vintage Specialty Advertising
Company.
Mr. Sasso has been Vice President-Operations of the Company since 1996.
Prior to that time, he served as General Manager of the Company's Colorado
Springs stations from 1994 to present and General Manager of the Company's
Denver stations from 1995 to 1996. Mr. Sasso is the former owner of eight
radio stations in Florida, Mississippi and Louisiana which were sold in 1989.
From 1969 to 1979 he served in various radio management capacities for King
Broadcasting and The American Broadcasting Companies.
Mr. Cartmell has been Vice President-National Programming and Ministry
Relations of the Company since 1996. He served as Vice President-Operations of
the Company from 1988 to 1996 and as General Manager of KLTX-AM from 1987 to
1988. Prior to joining the Company, Mr. Cartmell was Vice President and
Director of Marketing of Interstate Broadcasting Company.
Mr. Riddle has been a Director of the Company since September, 1997. Mr.
Riddle is an independent businessman specializing in providing financial
assistance and consulting to manufacturing companies. He was President and
majority shareholder of I. L. Walker Company from 1988 to 1997 when the
company was sold. He also was Chief Operating Officer and majority shareholder
of Richter Manufacturing from 1970 to 1987.
Mr. Hinz has been a Director of the Company since September, 1997. Mr. Hinz
has been the owner and President of Hi-Torque Publishing Company, a publisher
of magazines covering the motorcycling and biking industries, since 1981. He
is active in a number of non-profit organizations and serves as Chairman of
the Fund Development Committee of English Language Institute China. Mr. Hinz
also serves on the Board of Directors of Gordon Conwell Seminary.
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<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth all compensation paid by the Company for the
fiscal year ended December 31, 1996 to the Company's Chief Executive Officer
and the four highest paid executive officers of the Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
1996 ANNUAL COMPENSATION
---------------------------------
OTHER ANNUAL
NAME AND PRINCIPAL POSITIONS SALARY BONUS COMPENSATION
---------------------------- -------- -------- ------------
<S> <C> <C> <C>
Edward G. Atsinger III, President, Chief
Executive Officer and Director......... $400,000 $350,000(1) $ 996,372(2)
Stuart W. Epperson, Chairman of the
Board.................................. 400,000 350,000(1) 1,012,319(2)
Eric H. Halvorson, Executive Vice
President, Chief Operating Officer and
Director............................... 255,000 85,000
Greg R. Anderson, Vice President;
President, the Network................. 157,871 10,000
Dave Armstrong, Vice President-
Operations............................. 149,019 15,000
</TABLE>
- ---------------------
(1) Distributions of net income from New Inspiration and Golden Gate (in an
amount equal to the excess over the amount necessary to satisfy individual
tax liabilities, see Footnote 2 below) that had previously been taxed, but
not distributed, to the S corporation shareholders. See the Company's
Consolidated Statements of Shareholders' Equity included elsewhere in this
Offering Memorandum.
(2) Tax reimbursement payments made to satisfy individual federal and state
income tax liabilities generated by New Inspiration and Golden Gate as a
result of their S corporation status. See "Business--Corporate Structure
and Reorganization."
EMPLOYMENT AGREEMENTS
Edward G. Atsinger III entered into an employment agreement with the Company
effective as of August 1, 1997, pursuant to which he will serve as President
and Chief Executive Officer of the Company for an annual salary of $400,000
and an annual bonus determined at the discretion of the Board of Directors,
for an initial period of three years. The employment agreement with Mr.
Atsinger provides the Company with a right of first refusal on corporate
opportunities and includes a noncompete provision for a period of two years
from the cessation of Mr. Atsinger's employment with the Company and a
nondisclosure provision which is effective for the term of the employment
agreement and indefinitely thereafter. Mr. Atsinger is also entitled to
participate in any benefit plans provided by the Company to its employees.
Stuart W. Epperson entered into an employment agreement with the Company
effective as of August 1, 1997, pursuant to which he will serve as Chairman of
the Company for an annual salary of $400,000 and an annual bonus determined at
the discretion of the Board of Directors, for an initial period of three
years. The employment agreement with Mr. Epperson provides the Company with a
right of first refusal on corporate opportunities and includes a noncompete
provision for a period of two years from the cessation of Mr. Epperson's
employment with the Company and a nondisclosure provision which is effective
for the term of the employment agreement and indefinitely thereafter. Mr.
Epperson is also entitled to participate in any benefit plans provided by the
Company to its employees.
Eric H. Halvorson entered into an employment agreement with the Company
effective as of November 1991, pursuant to which he serves as Executive Vice
President of the Company at an annual salary starting at $175,000, with annual
increases of $11,000 to $14,000, for a period of seven years. The agreement
was subsequently amended in April 1996 to extend the term for one additional
year and increase the base salary to $255,000, $270,000 and $285,000 for 1996,
1997 and 1998, respectively, and was again amended in July 1997 to extend the
term through December 2003 at a base salary of $300,000 for each year after
1998. The employment agreement provides that Mr. Halvorson may participate in
any benefit plans provided by the Company to its employees. Mr. Halvorson also
entered into a deferred compensation agreement with the Company effective as
of November 1991, pursuant to which Mr. Halvorson will receive (i) 50% of the
average of his three highest years of compensation, payable for a period of
ten consecutive years, if he remains employed
54
<PAGE>
by the Company until age 60, or (ii) a discounted amount, based upon the
compensation he would have received if he had remained employed until age 60,
if his employment terminates before he reaches age 60 by reason of death,
disability or termination by the Company without cause.
Greg R. Anderson entered into an employment agreement with SRN effective as
of October 1994, pursuant to which he serves as President of SRN for a period
of three years at an annual salary of $120,000, $126,000 and $132,300 for each
year during the term of the agreement, respectively. The agreement was
subsequently amended in December 1995 to increase Mr. Anderson's base salary
to $162,300 and was amended again in August 1997 to extend the term for three
additional years. Mr. Anderson is also entitled to participate in any benefit
plans provided by SRN to its employees.
401(K) PLAN
The Company adopted a 401(k) Savings Plan ("Retirement Plan") in 1993 for
the purpose of providing, at the option of the employee, retirement benefits
to full-time employees of the Company and its subsidiaries. Contributions to
the Retirement Plan are made by the employee and, on a voluntary basis, by the
Company. The Company currently matches 10% of the employee's contributions to
the Retirement Plan which do not exceed 10% of the employee's annual
compensation. The Company made a contribution of $48,000 to the Retirement
Plan during the year ended December 31, 1996.
CERTAIN TRANSACTIONS
In connection with the recent Reorganization, New Inspiration and Golden
Gate, which were each S corporations prior to the Reorganization, distributed
cash and promissory notes to their respective shareholders in the aggregate
amount of $8.5 million. Of such amount, $1.8 million, equal to the estimated
federal and state income tax liability of the shareholders on the earnings of
New Inspiration and Golden Gate, was paid by New Inspiration and Golden Gate
in cash. The remainder, $6.7 million, was paid in the form of promissory notes
payable to the shareholders (the "Shareholder Notes") immediately following
the closing of the Offering. After the closing of the Offering, the Company
borrowed $6.7 million under the Credit Agreement and applied this amount to
the payment of certain indebtedness owed to New Inspiration and Golden Gate by
the Company. The cash made available from the repayment of such loans was then
used by New Inspiration and Golden Gate to pay the Shareholder Notes. See
"Business--Corporate Structure and Reorganization."
In December 1996, the Principal Shareholders repaid certain promissory notes
and accrued interest owed to the Company in the approximate amount of $4.8
million. The Company had made these loans to the Principal Shareholders in
1991 to facilitate the repayment of personal indebtedness they had incurred in
connection with prior radio station acquisitions. The repayments were made
with the proceeds of a distribution to the Principal Shareholders from Golden
Gate and New Inspiration of previously taxed S corporation income.
The Company leases certain property from the Principal Shareholders or
trusts and partnerships created for the benefit of the Principal Shareholders
and their families. See "Business--Properties and Facilities." All such leases
have cost of living adjustments. The Company believes that the rental rates
paid pursuant to such leases are generally comparable to market rates.
The Company provides management services for Sonsinger, Inc. ("Sonsinger")
which is the licensee of KKOL-AM, Seattle. The Principal Shareholders are the
owners of 100% of the outstanding shares of Sonsinger. The Principal
Shareholders and the Company are parties to an Option to Purchase Agreement
whereunder the Company has been granted an option to purchase KKOL-AM from the
Principal Shareholders at any time on or before December 31, 1999 at a price
equal to the lower of the cost of the station to the Principal Shareholders,
$1.4 million, or its fair market value as determined by an independent
appraisal. Pursuant to an LMA with Sonsinger, the Company programs KKOL-AM and
sells all the airtime. The Company retains all of the revenue and incurs all
of the expenses related to the operation of KKOL-AM and pays no fees or rent
under the LMA.
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In October 1997, the Company assigned its contract with a tower construction
company to build a broadcast tower in Houston to the Principal Shareholders,
subject to the Principal Shareholders obtaining financing. The Principal
Shareholders will reimburse the Company for its costs and expenses, which
amounted to approximately $2.9 million as of September 30, 1997. The antenna
for the Company's station in Houston, KKHT-FM, will be located on the tower
and the Company will pay rent to the Principal Shareholders.
Mrs. Epperson has personally acquired a radio station in a small market in
Virginia and has applied to the FCC for authorization to acquire a second
station in that market. Additionally, Mr. Epperson has personally acquired
certain radio stations in small markets in North Carolina. These Virginia and
North Carolina markets are not currently served by stations owned and operated
by the Company. Acquisitions in such markets are not part of the Company's
current business and acquisition strategies.
In July 1997, the Company canceled certain indebtedness owed to the Company
by Eric H. Halvorson, Executive Vice President and Chief Operating Officer, in
the amount of $25,000 plus accrued interest. The Company also made a
distribution to Mr. Halvorson in an amount equal to the tax liability he
incurred as a result of the cancellation of this debt.
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information regarding the ownership
of the Company's common stock by each of the Shareholders, who currently own
all the outstanding common stock of the Company.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE OF SHARES
NAME OF INDIVIDUAL OR ENTITY(1) BENEFICIALLY OWNED OUTSTANDING
------------------------------- ------------------ --------------------
<S> <C> <C>
Edward G. Atsinger III.............. 40,836 50.00%
Stuart W. Epperson(2)............... 30,092 36.80%
Nancy A. Epperson(2)................ 10,744 13.20%
------ ------
81,672 100.00%
====== ======
</TABLE>
- ---------------------
(1) The address of each of Mr. Atsinger and Mr. and Mrs. Epperson is 4880
Santa Rosa Road, Suite 300, Camarillo, California 93012.
(2) Stuart and Nancy Epperson are husband and wife.
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<PAGE>
DESCRIPTION OF CERTAIN INDEBTEDNESS
As of September 25, 1997, the Company entered into a credit agreement with
The Bank of New York (the "Bank") as the administrative agent for the $75.0
million senior secured reducing revolving credit facility (the "Credit
Agreement"). At September 30, 1997, taking into account the leverage ratio
requirement in the Credit Agreement, the Company had approximately $19.9
million available to it under the Credit Agreement. Taking into account
certain restrictions under the Credit Agreement, the Company is not currently
able to borrow for acquisitions.
Revolving Credit Commitment. The Company is, subject to certain conditions,
able to draw upon the revolving credit available under the Credit Agreement
for Permitted Acquisitions (as defined in the Credit Agreement), working
capital and other permitted uses. The commitments under the Credit Agreement
are to be reduced by $10.0 million in each of the years 1999 through 2003 and
by $25.0 million in 2004. Any remaining principal balance will be due in
August, 2004. At the Company's election, any portion of revolving loans which
have been prepaid or repaid may be reborrowed up to the current commitment
amount, and the commitment may be permanently reduced in whole or in part.
Prepayments. Mandatory reductions in the credit facility established by the
Credit Agreement are required under certain circumstances. Commitments will be
permanently reduced by the following amounts: (i) 100% of the net cash
proceeds in excess of $1.0 million received from station sales or exchanges
which are not reinvested within 360 days, (ii) to the extent that commitments
under the Credit Agreement are at least $50.0 million, 100% of the net cash
proceeds received from the issuance of equity when the Company's Total
Leverage Ratio (as defined in the Credit Agreement) is greater than 6.0 to 1,
and 50% of the net cash proceeds received from the issuance of equity when the
Company's Total Leverage Ratio is greater than 4.5 to 1 but less than 6.0 to
1, (iii) 50% of Excess Cash Flow (as defined in the Credit Agreement)
calculated for each fiscal year of the Company when the Total Leverage Ratio
is greater than or equal to 3.5 to 1, (iv) 100% of all insurance or
condemnation recoveries in excess of amounts used to replace or restore any
properties or which are not used to replace or restore properties within one
year after any casualty, and (v) in the event a radio station ceases operation
for a period of more than 30 days by reason of FCC action, an amount equal to
the Total Leverage Ratio (up to a ratio of 6.0 to 1) multiplied by the
Operating Cash Flow (as defined in the Credit Agreement) of the station in
question, unless such station was acquired within the preceding 18-month
period in which case such amount will equal the purchase price of such
station. Mandatory reductions will be applied among the remaining scheduled
commitment reductions in inverse order. Loans shall be prepaid to the extent
necessary to assure outstanding loans do not exceed the reduced commitment.
Interest Rates. The Credit Agreement gives the Company the option to borrow
at either the Alternate Base Rate, defined as the higher of the Bank's Prime
Rate and the Federal Funds Rate plus 0.5%, or the LIBOR Rate, in each case
plus the Applicable Margin. The Applicable Margins for the Credit Agreement
will range between 0% and 1.75% for the Alternate Base Rate and 1.00% and
3.00% for the LIBOR Rate, depending on the Total Leverage Ratio from time to
time.
Fees. The Company is required to pay an annual fee, payable quarterly, on
the unused portion of the facility at the annual rate of 0.50% (if the Total
Leverage Ratio is greater than or equal to 4.5 to 1) or 0.375% (if the Total
Leverage Ratio is less than 4.5 to 1).
Guaranty and Security. The Credit Agreement is guaranteed by each of the
Company's present and future direct and indirect subsidiaries. Subject only to
certain permitted liens incurred in the ordinary course of business, the
Credit Agreement is secured by (i) a pledge of all of the capital stock of the
Company's present and future direct and indirect subsidiaries, (ii) a pledge
of all of the assets of the Company and its present and future direct and
indirect subsidiaries and (iii) all proceeds of the foregoing.
Change of Control. A change in control or ownership is an event of default
under the Credit Agreement. Under the Credit Agreement, a change in control or
ownership occurs if (i) Mr. Epperson and/or Mr. Atsinger
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<PAGE>
do not control in the aggregate at least 75% of the total voting power of all
classes of capital stock of the Company, (ii) neither Mr. Epperson nor Mr.
Atsinger is Chief Executive Officer of the Company or (iii) a Change of
Control (as defined in the Indenture for the Notes) occurs.
Covenants. The Credit Agreement contains certain restrictive covenants
customary for credit facilities of the size, type and purpose contemplated
which, among other things, and with certain exceptions, limits the Company's
ability to incur additional indebtedness, enter into affiliate transactions,
pay dividends, consolidate, merge or effect certain asset sales, make certain
investments or loans and change the nature of its business. The Credit
Agreement also requires the satisfaction by the Company of certain financial
covenants, which will require the maintenance of specified financial ratios
and compliance with certain financial tests, including ratios for maximum
leverage, minimum interest coverage, minimum debt service coverage and minimum
fixed charge coverage.
Events of Default. The Credit Agreement contains certain events of default
customary for credit facilities of the size, type and purpose contemplated,
including without limitation: (i) failure to pay, when and as required to be
paid, principal, interest or any other amount payable; (ii) failure to perform
or observe any covenant; (iii) material inaccuracy with respect to certain
representations made in or in connection with the Credit Agreement; (iv)
insolvency or bankruptcy proceedings; (v) change of control; (vi) revocation
or failure to renew any license material to the Company's business; and (vii)
defaults under other outstanding indebtedness of the Company. Upon the
occurrence of an event of default, subject to certain limitations, the
Company's obligations under the Credit Agreement which are at that time
outstanding may be automatically accelerated.
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<PAGE>
DESCRIPTION OF THE NOTES
The terms of the Notes are identical in all material respects to the Old
Notes, except for certain transfer restrictions and registration rights
relating to the Old Notes. The description of the Notes contained herein
assumes that all Old Notes are exchanged for Notes in the Exchange Offer. To
the extent that Old Notes remain outstanding after the consummation of the
Exchange Offer, Old Notes and Notes will be redeemed or repurchased pro rata
pursuant to the provisions contained herein. In addition, as the Old Notes
were, and the Notes will be, issued under the Indenture, to the extent that
Old Notes remain outstanding after consummation of the Exchange Offer, any
action described herein as permitted or required to be taken thereunder by a
specified portion of the holders of the Notes may only be taken by such
portion of the holders of the Old Notes and the Notes, counted as a single
series.
The definitions of certain terms used in the following summary are set forth
below under "--Certain Definitions." For purposes of this summary, the term
"Company" refers only to Salem Communications Corporation and not to any of
its Subsidiaries.
The Notes offered hereby will be issued under an Indenture dated as of
September 25, 1997 among the Company, the Guarantors and The Bank, as trustee
(the "Trustee"). The following summary of the material provisions of the
Indenture does not purport to be complete, and where reference is made to
particular provisions of the Indenture, such provisions, including the
definitions of certain terms, are qualified in their entirety by reference to
all of the provisions of the Indenture filed as an exhibit to the Registration
Statement and those terms made a part of the Indenture by reference to the
Trust Indenture Act. For definitions of certain capitalized terms used in the
following summary, see "--Certain Definitions." A copy of the Indenture may be
obtained from the Company or the Initial Purchasers.
GENERAL
The Notes will mature on October 1, 2007, will be limited to $150.0 million
aggregate principal amount, and will be unsecured senior subordinated
obligations of the Company. Each Note will bear interest at the rate set forth
on the cover page hereof from the issue date or from the most recent interest
payment date to which interest has been paid, payable semiannually on April 1
and October 1 each year, commencing April 1, 1998, to the Person in whose name
the Note (or any predecessor Note) is registered at the close of business on
the March 15 or September 15 next preceding such interest payment date.
Payment of the Notes is guaranteed by the Guarantors, jointly and severally,
on a senior subordinated basis. The Guarantors are comprised of all of the
Subsidiaries of the Company. See "--Guarantees."
Principal of, premium, if any, and interest on the Notes will be payable,
and the Notes will be exchangeable and transferable (subject to compliance
with transfer restrictions imposed by applicable securities laws for so long
as the Notes are not registered for resale under the Securities Act), at the
office or agency of the Company maintained for such purposes (which initially
will be the Trustee); provided, however, that payment of interest may be made
at the option of the Company by check mailed to the Person entitled thereto as
shown on the security register. The Notes will be issued only in fully
registered form without coupons, in denominations of $1,000 and any integral
multiple thereof. No service charge will be made for any registration of
transfer, exchange or redemption of Notes, except in certain circumstances for
any tax or other governmental charge that may be imposed in connection
therewith.
OPTIONAL REDEMPTION
The Notes will be subject to redemption at any time on or after October 1,
2002, at the option of the Company, in whole or in part, on not less than 30
nor more than 60 days' prior notice by first-class mail in
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<PAGE>
amounts of $1,000 or an integral multiple thereof at the following redemption
prices (expressed as percentages of the principal amount), if redeemed during
the 12-month period beginning October 1 of the years indicated below:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
---- ----------
<S> <C>
2002.......................................................... 104.75%
2003.......................................................... 103.17%
2004.......................................................... 101.59%
2005 and thereafter........................................... 100.00%
</TABLE>
in each case together with accrued and unpaid interest, if any, to the
redemption date (subject to the right of holders of record on relevant record
dates to receive interest due on an interest payment date).
In addition, at any time on or prior to October 1, 2000, the Company may
redeem up to $50.0 million aggregate principal amount of Notes with the net
proceeds of a Public Equity Offering of the Company at a redemption price
equal to 109.50% of the aggregate principal amount thereof, together with
accrued and unpaid interest, if any, to the redemption date (subject to the
right of holders of record on relevant record dates to receive interest due on
an interest payment date); provided that not less than $100.0 million
aggregate principal amount of Notes remains outstanding immediately after the
occurrence of such redemption.
If less than all of the Notes are to be redeemed, the Trustee shall select
the Notes or portions thereof to be redeemed pro rata, by lot or by any other
method the Trustee shall deem fair and reasonable.
SINKING FUND
There will be no sinking fund.
SUBORDINATION
The payment of the principal of, premium, if any, and interest on, the Notes
will be subordinated, as set forth in the Indenture, in right of payment to
the prior payment in full of all Senior Indebtedness in cash or cash
equivalents or in any other form as acceptable to the holders of Senior
Indebtedness. The Notes will be senior subordinated indebtedness of the
Company ranking pari passu with all other existing and future senior
subordinated indebtedness of the Company and senior to all existing and future
Subordinated Indebtedness of the Company.
During the continuance of any default in the payment of any Designated
Senior Indebtedness, no payment (other than payments previously made pursuant
to the provisions described under "--Defeasance or Covenant Defeasance of
Indenture") or distribution of any assets of the Company of any kind or
character (excluding certain permitted equity interests or subordinated
securities) shall be made on account of the principal of, premium, if any, or
interest on, the Notes or any other indenture obligation or on account of the
purchase, redemption, defeasance or other acquisition of, the Notes unless and
until such default has been cured, waived or has ceased to exist or such
Designated Senior Indebtedness shall have been discharged or paid in full in
cash or cash equivalents or in any other form as acceptable to the holders of
such Designated Senior Indebtedness.
During the continuance of any non-payment default with respect to any
Designated Senior Indebtedness pursuant to which the maturity thereof may be
accelerated (a "Non-payment Default") and after the receipt by the Trustee
from a representative of the holder of any Designated Senior Indebtedness of a
written notice of such default, no payment (other than payments previously
made pursuant to the provisions described under "--Defeasance or Covenant
Defeasance of Indenture") or distribution of any assets of the Company of any
kind or character (excluding certain permitted equity or subordinated
securities) may be made by the Company on account of the principal of,
premium, if any, or interest on, the Notes or any other indenture obligation
or on account of the purchase, redemption, defeasance or other acquisition of,
the Notes for the period specified below (the "Payment Blockage Period").
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<PAGE>
The Payment Blockage Period shall commence upon the receipt of notice of the
Non-payment Default by the Trustee from a representative of the holder of any
Designated Senior Indebtedness and shall end on the earliest of (i) the first
date on which more than 179 days shall have elapsed since the receipt of such
written notice (provided such Designated Senior Indebtedness as to which
notice was given shall not theretofore have been accelerated), (ii) the date
on which such Non-payment Default (and all Non-payment Defaults as to which
notice is given after such Payment Blockage Period is initiated) are cured,
waived or ceased to exist or on which such Designated Senior Indebtedness is
discharged or paid in full in cash or cash equivalents or in any other form as
acceptable to the holders of Designated Senior Indebtedness or (iii) the date
on which such Payment Blockage Period (and all Non-payment Defaults as to
which notice is given after such Payment Blockage Period is initiated) shall
have been terminated by written notice to the Trustee from the representatives
of holders of Designated Senior Indebtedness initiating such Payment Blockage
Period, after which, in the case of clauses (i), (ii) and (iii), the Company
shall promptly resume making any and all required payments in respect of the
Notes, including any missed payments. In no event will a Payment Blockage
Period extend beyond 179 days from the date of the receipt by the Trustee of
the notice initiating such Payment Blockage Period (such 179-day period
referred to as the "Initial Period"). Any number of notices of Non-payment
Defaults may be given during the Initial Period; provided that during any 365-
day consecutive period only one Payment Blockage Period during which payment
of principal of, or interest on, the Notes may not be made may commence and
the duration of the Payment Blockage Period may not exceed 179 days. No Non-
payment Default with respect to Designated Senior Indebtedness which existed
or was continuing on the date of the commencement of any Payment Blockage
Period will be, or can be, made the basis for the commencement of a second
Payment Blockage Period, whether or not within a period of 365 consecutive
days, unless such default has been cured or waived for a period of not less
than 90 consecutive days.
If the Company fails to make any payment on the Notes when due or within any
applicable grace period, whether or not on account of the payment blockage
provisions referred to above, such failure would constitute an Event of
Default under the Indenture and would enable the holders of the Notes to
accelerate the maturity thereof. See "--Events of Default."
The Indenture provides that in the event of any insolvency or bankruptcy
case or proceeding, or any receivership, liquidation, reorganization or other
similar case or proceeding in connection therewith, relative to the Company or
to its creditors, as such, or its assets, or any liquidation, dissolution or
other winding up of the Company, whether voluntary or involuntary and whether
or not involving insolvency or bankruptcy, or any assignment for the benefit
of creditors or any other marshalling of assets or liabilities of the Company,
all Senior Indebtedness must be paid in full in cash or cash equivalents or in
any other manner acceptable to the holders of Senior Indebtedness, or
provision made for such payment, before any payment or distribution (excluding
distributions of certain permitted equity or subordinated securities) is made
on account of the principal of, premium, if any, or interest on the Notes.
By reason of such subordination, in the event of liquidation or insolvency,
creditors of the Company who are holders of Senior Indebtedness may recover
more, ratably, than the holders of the Notes, and funds which would be
otherwise payable to the holders of the Notes will be paid to the holders of
the Senior Indebtedness to the extent necessary to pay the Senior Indebtedness
in full in cash or cash equivalents or in any other manner acceptable to the
holders of Senior Indebtedness, and the Company may be unable to meet its
obligations fully with respect to the Notes.
Each Guarantee of a Guarantor will be an unsecured senior subordinated
obligation of such Guarantor, ranking pari passu with, or senior in right of
payment to, all other existing and future Indebtedness of such Guarantor that
is expressly subordinated to Guarantor Senior Indebtedness. The Indebtedness
evidenced by the Guarantees will be subordinated to Guarantor Senior
Indebtedness to the same extent as the Notes are subordinated to Senior
Indebtedness and during any period when payment on the Notes is blocked by
Designated Senior Indebtedness, payment on the Guarantees is similarly
blocked.
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<PAGE>
"Senior Indebtedness" is defined as the principal of, premium, if any, and
interest (including interest accruing after the filing of a petition
initiating any proceeding under any state, federal or foreign bankruptcy law
whether or not allowable as a claim in such proceeding) on any Indebtedness of
the Company (other than as otherwise provided in this definition), whether
outstanding on the date of the Indenture or thereafter created, incurred or
assumed, and whether at any time owing, actually or on a contingent basis,
unless, in the case of any particular Indebtedness, the instrument creating or
evidencing the same or pursuant to which the same is outstanding expressly
provides that such Indebtedness shall not be senior in right of payment to the
Notes. Without limiting the generality of the foregoing, "Senior Indebtedness"
shall include (i) the principal of, premium, if any, and interest (including
interest accruing after the filing of a petition initiating any proceeding
under any state, federal or foreign bankruptcy law whether or not allowable as
a claim in such proceeding) and all other obligations of every nature of the
Company from time to time owed to the lenders (or their agent) under the Bank
Credit Agreement (provided, however, that any Indebtedness under any
refinancing, refunding or replacement of the Bank Credit Agreement shall not
constitute Senior Indebtedness to the extent that the Indebtedness thereunder
is by its express terms subordinate to any other Indebtedness of the Company)
and (ii) Indebtedness under Interest Rate Agreements. Notwithstanding the
foregoing, "Senior Indebtedness" shall not include (i) Indebtedness evidenced
by the Notes, (ii) Indebtedness that is subordinate or junior in right of
payment, by contract or otherwise, to any Indebtedness of the Company (iii)
Indebtedness which when incurred and without respect to any election under
Section 1111(b) of Title 11 United States Code, is without recourse to the
Company, (iv) Indebtedness which is represented by Disqualified Equity
Interests, (v) any liability for foreign, federal, state, local or other taxes
owed or owing by the Company, (vi) Indebtedness of the Company to a Subsidiary
or any other Affiliate of the Company or any of such Affiliate's subsidiaries,
(vii) that portion of any Indebtedness which at the time of issuance is issued
in violation of the Indenture, (viii) Indebtedness evidenced by a guarantee of
any Subordinated Indebtedness or Pari Passu Indebtedness and (ix) Indebtedness
owed by the Company for compensation to employees or for services rendered by
employees.
"Guarantor Senior Indebtedness" is defined as the principal of, premium, if
any, and interest (including interest accruing after the filing of a petition
initiating any proceeding under any state, federal or foreign bankruptcy laws
whether or not allowable as a claim in such proceeding) on any Indebtedness of
any Guarantor (other than as otherwise provided in this definition), whether
outstanding on the date of the Indenture or thereafter created, incurred or
assumed, and whether at any time owing, actually or contingent, unless, in the
case of any particular Indebtedness, the instrument creating or evidencing the
same or pursuant to which the same is outstanding expressly provides that such
Indebtedness shall not be senior in right of payment to any Guarantor. Without
limiting the generality of the foregoing, "Guarantor Senior Indebtedness"
shall include (i) the principal of, premium, if any, and interest (including
interest accruing after the filing of a petition initiating any proceeding
under any state, federal or foreign bankruptcy law whether or not allowable as
a claim in such proceeding) and all other obligations of every nature of any
Guarantor from time to time owed to the lenders (or their agent) under the
Bank Credit Agreement; provided, however, that any Indebtedness under any
refinancing, refunding, or replacement of the Bank Credit Agreement shall not
constitute Guarantor Senior Indebtedness to the extent that the Indebtedness
thereunder is by its express terms subordinate to any other Indebtedness of
any Guarantor and (ii) Indebtedness under Interest Rate Agreements.
Notwithstanding the foregoing, "Guarantor Senior Indebtedness" shall not
include (i) Indebtedness evidenced by the Guarantees, (ii) Indebtedness that
is subordinate or junior in right of payment, by contract or otherwise, to any
Indebtedness of any Guarantor, (iii) Indebtedness which when incurred and
without respect to any election under Section 1111(b) of Title 11 United
States Code, is without recourse to any Guarantor, (iv) Indebtedness which is
represented by Disqualified Equity Interests, (v) any liability for foreign,
federal, state, local or other taxes owed or owing by any Guarantor to the
extent such liability constitutes Indebtedness, (vi) Indebtedness of any
Guarantor to a Subsidiary or any other Affiliate of the Company or any of such
Affiliate's subsidiaries, (vii) Indebtedness evidenced by any guarantee of any
Subordinated Indebtedness or Pari Passu Indebtedness, (viii) that portion of
any Indebtedness which at the time of issuance is issued in violation of the
Indenture and (ix) Indebtedness owed by any Guarantor for compensation to
employees or for services rendered by employees.
"Designated Senior Indebtedness" is defined as (i) all Senior Indebtedness
outstanding under the Bank Credit Agreement and (ii) any other Senior
Indebtedness which is incurred pursuant to an agreement (or series
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<PAGE>
of related agreements) simultaneously entered into providing for indebtedness,
or commitments to lend, of at least $25.0 million at the time of determination
and is specifically designated in the instrument evidencing such Senior
Indebtedness or the agreement under which such Senior Indebtedness arises as
"Designated Senior Indebtedness" by the Company.
As of September 30, 1997, the aggregate amount of Senior Indebtedness that
ranked senior in right of payment to the Notes was $10.1 million. The
Company's and its Subsidiaries' ability to incur additional Indebtedness is
restricted as set forth under "--Certain Covenants--Limitation on
Indebtedness." Any Indebtedness which can be incurred may constitute
additional Senior Indebtedness or Guarantor Senior Indebtedness. See "Risk
Factors--Substantial Leverage; Subordination; Restrictions Imposed by Credit
Agreement; Asset Encumbrance."
GUARANTEES
The Guarantors will, jointly and severally, fully and unconditionally
guarantee the due and punctual payment of principal of, premium, if any, and
interest on, the Notes. Such guarantees will be subordinated to the Guarantor
Senior Indebtedness. See "--Subordination." As of September 30, 1997, the
aggregate amount of Guarantor Senior Indebtedness that ranked senior in right
of payment to the Guarantees was $10.1 million, all of which constitutes
outstanding indebtedness representing guarantees of Senior Indebtedness. In
addition, under certain circumstances described under "--Certain Covenants--
Limitations on Issuances of Guarantees of and Pledges for Indebtedness," the
Company is required to cause the execution and delivery of additional
Guarantees by Restricted Subsidiaries.
In addition, upon any sale, exchange or transfer, to any Person not an
Affiliate of the Company, of all of the Company's Equity Interest in, or all
or substantially all of the assets of, any Guarantor, which is in compliance
with the Indenture, such Guarantor shall be released from all its obligations
under its Guarantee.
The Guarantors consist of all of the Company's existing Subsidiaries.
CERTAIN COVENANTS
The Indenture contains, among others, the following covenants:
Limitation on Indebtedness. The Company will not, and will not permit any
Restricted Subsidiary to, create, incur, assume or directly or indirectly
guarantee or in any other manner become directly or indirectly liable for
("incur") any Indebtedness (including Acquired Indebtedness), except that the
Company may incur Indebtedness and a Guarantor may incur Permitted Subsidiary
Indebtedness if, in each case, the Debt to Operating Cash Flow Ratio of the
Company and its Restricted Subsidiaries at the time of the incurrence of such
Indebtedness, after giving pro forma effect thereto, is 7.0 to 1 or less.
The foregoing limitation will not apply to the incurrence of any of the
following (collectively, "Permitted Indebtedness"):
(i) Indebtedness of the Company under the Bank Credit Agreement in an
aggregate principal amount at any one time outstanding not to exceed $75.0
million;
(ii) Indebtedness of the Company pursuant to the Notes and Indebtedness
of any Guarantor pursuant to a Guarantee;
(iii) Indebtedness of any Guarantor consisting of a guarantee of the
Company's Indebtedness under the Bank Credit Agreement;
(iv) Indebtedness of the Company or any Restricted Subsidiary outstanding
on the date of the Indenture and listed on Schedule I thereto;
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(v) Indebtedness of the Company owing to a Restricted Subsidiary,
provided that any Indebtedness of the Company owing to a Restricted
Subsidiary that is not a Guarantor is made pursuant to an intercompany note
in the form attached to the Indenture and is subordinated in right of
payment from and after such time as the Notes shall become due and payable
(whether at Stated Maturity, by acceleration or otherwise) to the payment
and performance of the Company's obligations under the Notes; provided
further, that any disposition, pledge or transfer of any such Indebtedness
to a Person (other than a disposition, pledge or transfer to a Wholly Owned
Restricted Subsidiary or a pledge to or for the benefit of the lenders
under the Bank Credit Agreement) shall be deemed to be an incurrence of
such Indebtedness by the obligor not permitted by this clause (v);
(vi) Indebtedness of a Wholly Owned Restricted Subsidiary owing to the
Company or another Wholly Owned Restricted Subsidiary; provided that, with
respect to Indebtedness owing to a Wholly Owned Restricted Subsidiary that
is not a Guarantor, (x) any such Indebtedness is made pursuant to an
intercompany note in the form attached to the Indenture and (y) any such
Indebtedness shall be subordinated in right of payment from and after such
time as the obligations under the Guarantee, if any, by such Wholly Owned
Restricted Subsidiary shall become due and payable to the payment and
performance of such Wholly Owned Restricted Subsidiary's obligations under
its Guarantee; provided, further, that (a) any disposition, pledge or
transfer of any such Indebtedness to a Person (other than a disposition,
pledge or transfer to the Company or a Wholly Owned Restricted Subsidiary
or pledge to or for the benefit of the lenders under the Bank Credit
Agreement) shall be deemed to be an incurrence of such Indebtedness by the
obligor not permitted by this clause (vi) and (b) any transaction pursuant
to which any Wholly Owned Restricted Subsidiary, which has Indebtedness
owing to the Company or any other Wholly Owned Restricted Subsidiary,
ceases to be a Wholly Owned Restricted Subsidiary shall be deemed to be the
incurrence of Indebtedness by such Wholly Owned Restricted Subsidiary that
is not permitted by this clause (vi);
(vii) guarantees of any Restricted Subsidiary made in accordance with the
provisions of "--Limitation on Issuances of Guarantees of and Pledges for
Indebtedness;"
(viii) obligations of the Company entered into in the ordinary course of
business pursuant to Interest Rate Agreements designed to protect the
Company against fluctuations in interest rates in respect of Indebtedness
of the Company as long as such obligations at the time incurred do not
exceed the aggregate principal amount of such Indebtedness then outstanding
or in good faith anticipated to be outstanding within 90 days of such
occurrence;
(ix) any renewals, extensions, substitutions, refundings, refinancings or
replacements (collectively, a "refinancing") of any Indebtedness described
in clauses (ii), (iii), (iv) and (v) above, including any successive
refinancings so long as the aggregate principal amount of Indebtedness
represented thereby is not increased by such refinancing (except, in the
case of Guarantees under clause (iii), which Guarantees do not exceed the
aggregate principal amount of the Bank Credit Agreement) plus the lesser of
(I) the stated amount of any premium or other payment required to be paid
in connection with such a refinancing pursuant to the terms of the
Indebtedness being refinanced or (II) the amount of premium or other
payment actually paid at such time to refinance the Indebtedness, plus, in
either case, the amount of expenses of the Company incurred in connection
with such refinancing and, in the case of Pari Passu Indebtedness or
Subordinated Indebtedness, such refinancing does not reduce the Average
Life to Stated Maturity or the Stated Maturity of such Indebtedness; and
(x) Indebtedness of the Company in addition to that described in clauses
(i) through (ix) above, and any renewals, extensions, substitutions,
refinancings, or replacements of such Indebtedness, so long as the
aggregate principal amount of all such Indebtedness shall not exceed $5.0
million.
Limitation on Restricted Payments. (a) The Company will not, and will not
permit any Restricted Subsidiary to, directly or indirectly:
(i) declare or pay any dividend on, or make any distribution to holders
of, any of the Company's Equity Interests (other than dividends or
distributions payable solely in its Qualified Equity Interests);
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(ii) purchase, redeem or otherwise acquire or retire for value, directly
or indirectly, any Equity Interest of the Company or any Affiliate thereof
(except Equity Interests held by the Company or a Wholly Owned Restricted
Subsidiary);
(iii) make any principal payment on, or repurchase, redeem, defease,
retire or otherwise acquire for value, prior to any scheduled principal
payment, sinking fund or maturity, any Subordinated Indebtedness;
(iv) declare or pay any dividend or distribution on any Equity Interests
of any Subsidiary to any Person (other than the Company or any of its
Wholly Owned Restricted Subsidiaries);
(v) incur, create or assume any guarantee of Indebtedness of any
Affiliate (other than a Wholly Owned Restricted Subsidiary of the Company);
or
(vi) make any Investment in any Person (other than any Permitted
Investments) (any of the foregoing payments described in clauses (i)
through (vi), other than any such action that is a Permitted Payment,
collectively, "Restricted Payments") unless after giving effect to the
proposed Restricted Payment (the amount of any such Restricted Payment, if
other than cash, as determined by the Board of Directors of the Company,
whose determination shall be conclusive and evidenced by a board
resolution), (1) no Default or Event of Default shall have occurred and be
continuing and such Restricted Payment shall not be an event which is, or
after notice or lapse of time or both, would be, an "event of default"
under the terms of any Indebtedness of the Company or its Restricted
Subsidiaries; and (2) the aggregate amount of all such Restricted Payments
declared or made after the date of the Indenture does not exceed the sum
of:
(A) an amount equal to the Company's Cumulative Operating Cash Flow
less 1.4 times the Company's Cumulative Consolidated Interest Expense;
and
(B) the aggregate Net Cash Proceeds received after the date of the
Indenture by the Company from capital contributions (other than from a
Subsidiary) or from the issuance or sale (other than to any of its
Subsidiaries) of its Qualified Equity Interests (except, in each case,
to the extent such proceeds are used to purchase, redeem or otherwise
retire Equity Interests or Subordinated Indebtedness as set forth
below).
(b) Notwithstanding the foregoing, and in the case of clauses (ii) through
(vi) below, so long as there is no Default or Event of Default continuing, the
foregoing provisions shall not prohibit the following actions (clauses (i)
through (vi) being referred to as "Permitted Payments"):
(i) the payment of any dividend within 60 days after the date of
declaration thereof, if at such date of declaration such payment would be
permitted by the provisions of paragraph (a) of this Section and such
payment shall be deemed to have been paid on such date of declaration for
purposes of the calculation required by paragraph (a) of this Section;
(ii) any transaction with an officer or director of the Company entered
into in the ordinary course of business (including compensation or employee
benefit arrangements with any officer or director of the Company);
(iii) the repurchase, redemption, or other acquisition or retirement of
any Equity Interests of the Company in exchange for (including any such
exchange pursuant to the exercise of a conversion right or privilege
pursuant to which cash is paid in lieu of the issuance of fractional shares
or scrip), or out of the Net Cash Proceeds of, a substantially concurrent
issuance and sale for cash (other than to a Subsidiary) of other Qualified
Equity Interests of the Company; provided that the Net Cash Proceeds from
the issuance of such Qualified Equity Interests are excluded from clause
(2)(B) of paragraph (a) of this Section;
(iv) any repurchase, redemption, defeasance, retirement, refinancing or
acquisition for value or payment of principal of any Subordinated
Indebtedness in exchange for, or out of the Net Cash Proceeds of, a
substantially concurrent issuance and sale for cash (other than to any
Subsidiary of the Company) of any Qualified Equity Interests of the
Company; provided that the Net Cash Proceeds from the issuance of such
shares of Qualified Equity Interests are excluded from clause (2)(B) of
paragraph (a) of this Section;
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(v) the repurchase, redemption, defeasance, retirement, refinancing or
acquisition for value or payment of principal of any Subordinated
Indebtedness (other than Disqualified Equity Interests) (a "refinancing")
through the issuance of new Subordinated Indebtedness of the Company, as
the case may be; provided that any such new Indebtedness (1) shall be in a
principal amount that does not exceed the principal amount so refinanced
or, if such Subordinated Indebtedness provides for an amount less than the
principal amount thereof to be due and payable upon a declaration or
acceleration thereof, then such lesser amount as of the date of
determination), plus the lesser of (I) the stated amount of any premium,
interest or other payment required to be paid in connection with such a
refinancing pursuant to the terms of the Indebtedness being refinanced or
(II) the amount of premium, interest or other payment actually paid at such
time to refinance the Indebtedness, plus, in either case, the amount of
expenses of the Company incurred in connection with such refinancing; (2)
has an Average Life to Stated Maturity greater than the remaining Average
Life to Stated Maturity of the Notes; (3) has a Stated Maturity for its
final scheduled principal payment later than the Stated Maturity for the
final scheduled principal payment of the Notes; and (4) is expressly
subordinated in right of payment to the Notes at least to the same extent
as the Indebtedness to be refinanced; and
(vi) the payment prior to maturity of Indebtedness outstanding on the
date of the Indenture evidenced by those certain Promissory Notes dated
March 1, 1994 by the Company to New Inspiration and by the Company to
Golden Gate, in each case, in connection with the payment prior to maturity
(which payment shall also be permitted under this clause (vi)) of
Indebtedness outstanding on the date of the Indenture evidenced by those
certain Promissory Notes dated August 12, 1997 by Golden Gate to Mr.
Atsinger and Mr. Epperson in the principal amount, in each case, of $1.23
million and by New Inspiration to Mr. Atsinger and Mrs. Epperson in the
principal amount, in each case, of $2.12 million.
Limitation on Transactions with Affiliates. The Company will not, and will
not permit any of its Restricted Subsidiaries to, directly or indirectly,
enter into or suffer to exist any transaction or series of related
transactions (including, without limitation, the sale, purchase, exchange or
lease of assets, property or services) with any Affiliate of the Company
(other than the Company or a Wholly Owned Restricted Subsidiary) unless (a)
such transaction or series of transactions is in writing on terms that are no
less favorable to the Company or such Restricted Subsidiary, as the case may
be, than would be available in a comparable transaction in arm's-length
dealings with an unrelated third party and (b)(i) with respect to any
transaction or series of transactions involving aggregate payments in excess
of $1.0 million the Company delivers an officers' certificate to the Trustee
certifying that such transaction or series of related transactions complies
with clause (a) above and such transaction or series of related transactions
has been approved by a majority of the members of the Board of Directors of
the Company (and approved by a majority of Independent Directors or, in the
event there is only one Independent Director, by such Independent Director)
and (ii) with respect to any transaction or series of transactions involving
aggregate payments in excess of $5.0 million, an opinion as to the fairness to
the Company or such Restricted Subsidiary from a financial point of view
issued by an investment banking firm of national standing. Notwithstanding the
foregoing, this provision will not apply to (A) any transaction with an
officer or director of the Company entered into in the ordinary course of
business (including compensation or employee benefit arrangements with any
officer or director of the Company), (B) any transaction entered into by the
Company or one of its Wholly Owned Restricted Subsidiaries with a Wholly Owned
Restricted Subsidiary of the Company, and (C) transactions in existence on the
date of the Indenture and any renewal, replacement or extension thereof on
substantially similar terms.
Limitation on Senior Subordinated Indebtedness. The Company will not, and
will not permit any Guarantor to, directly or indirectly, create, incur,
issue, assume, guarantee or otherwise in any manner become directly or
indirectly liable for or with respect to or otherwise permit to exist any
Indebtedness that is subordinate in right of payment, by contract or
otherwise, to any Indebtedness of the Company or such Guarantor, as the case
may be, unless such Indebtedness is also pari passu with the Notes or the
Guarantee of such Guarantor, or subordinate in right of payment to the Notes
or such Guarantee to at least the same extent as the Notes or such Guarantee
are subordinate in right of payment to Senior Indebtedness or Guarantor Senior
Indebtedness, as the case may be, as set forth in the Indenture.
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Limitation on Liens. The Company will not, and will not permit any
Restricted Subsidiary to, directly or indirectly, create, incur, affirm or
suffer to exist any Lien of any kind upon any of its property or assets
(including any intercompany notes), now owned or acquired after the date of
the Indenture, or any income or profits therefrom, except if the Notes are
directly secured equally and ratably with (or prior to in the case of Liens
with respect to Subordinated Indebtedness) the obligation or liability secured
by such Lien, excluding, however, from the operation of the foregoing any of
the following:
(a) any Lien existing as of the date of the Indenture and listed on a
schedule thereto;
(b) any Lien arising by reason of (1) any judgment, decree or order of
any court, so long as such Lien is adequately bonded and any appropriate
legal proceedings which may have been duly initiated for the review of such
judgment, decree or order shall not have been finally terminated or the
period within which such proceedings may be initiated shall not have
expired; (2) taxes not yet delinquent or which are being contested in good
faith; (3) security for payment of workers' compensation or other
insurance; (4) good faith deposits in connection with tenders, leases,
contracts (other than contracts for the payment of money); (5) zoning
restrictions, easements, licenses, reservations, provisions, covenants,
conditions, waivers, restrictions on the use of property or minor
irregularities of title (and with respect to leasehold interests,
mortgages, obligations, liens and other encumbrances incurred, created,
assumed or permitted to exist and arising by, through or under a landlord
or owner of the leased property, with or without consent of the lessee),
none of which materially impairs the use of any parcel of property material
to the operation of the business of the Company or any Subsidiary or the
value of such property for the purpose of such business; (6) deposits to
secure public or statutory obligations, or in lieu of surety or appeal
bonds; (7) certain surveys, exceptions, title defects, encumbrances,
easements, reservations of, or rights of others for, rights of way, sewers,
electric lines, telegraph or telephone lines and other similar purposes or
zoning or other restrictions as to the use of real property not interfering
with the ordinary conduct of the business of the Company or any of its
Subsidiaries; or (8) operation of law in favor of mechanics, materialmen,
laborers, employees or suppliers, incurred in the ordinary course of
business for sums which are not yet delinquent or are being contested in
good faith by negotiations or by appropriate proceedings which suspend the
collection thereof;
(c) any Lien now or hereafter existing on property of the Company or any
of its Restricted Subsidiaries securing Senior Indebtedness or Guarantor
Senior Indebtedness, in each case which Indebtedness is permitted under the
provisions of "Limitation on Indebtedness" and provided that the provisions
described under "Limitation on Issuances of Guarantees of and Pledges for
Indebtedness" are complied with;
(d) any Lien securing Acquired Indebtedness created prior to (and not
created in connection with, or in contemplation of) the incurrence of such
Indebtedness by the Company or any Subsidiary, in each case which
Indebtedness is permitted under the provisions of "Limitation on
Indebtedness"; provided that any such Lien only extends to the assets that
were subject to such Lien securing such Acquired Indebtedness prior to the
related transaction by the Company or its Subsidiaries;
(e) any Lien securing Permitted Subsidiary Indebtedness; and
(f) any extension, renewal, refinancing or replacement, in whole or in
part, of any Lien described in the foregoing clauses (a) through (e) so
long as the amount of security is not increased thereby.
Limitation on Sale of Assets. (a) The Company will not, and will not permit
any of its Restricted Subsidiaries to, directly or indirectly, consummate an
Asset Sale unless (i) at least 80% of the consideration from such Asset Sale
is received in cash and (ii) the Company or such Restricted Subsidiary
receives consideration at the time of such Asset Sale at least equal to the
Fair Market Value of the shares or assets sold (other than in the case of an
involuntary Asset Sale, as determined by the Board of Directors of the Company
and evidenced in a board resolution).
(b) If all or a portion of the Net Cash Proceeds of any Asset Sale are not
required to be applied to repay permanently any Senior Indebtedness then
outstanding as required by the terms thereof, or the Company
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determines not to apply such Net Cash Proceeds to the permanent prepayment of
such Senior Indebtedness or if no such Senior Indebtedness is then
outstanding, then the Company may within 12 months of the Asset Sale, invest
the Net Cash Proceeds in properties and assets that (as determined by the
Board of Directors) replace the properties and assets that were the subject of
the Asset Sale or in properties and assets that will be used in the businesses
of the Company or its Restricted Subsidiaries existing on the date of the
Indenture or reasonably related thereto. The amount of such Net Cash Proceeds
neither used to permanently repay or prepay Senior Indebtedness nor used or
invested as set forth in this paragraph constitutes "Excess Proceeds."
(c) When the aggregate amount of Excess Proceeds equals $5.0 million or
more, the Company shall apply the Excess Proceeds to the repayment of the
Notes and any Pari Passu Indebtedness required to be repurchased under the
instrument governing such Pari Passu Indebtedness as follows: (a) the Company
shall make an offer to purchase (an "Offer") from all holders of the Notes in
accordance with the procedures set forth in the Indenture in the maximum
principal amount (expressed as a multiple of $1,000) of Notes that may be
purchased out of an amount (the "Note Amount") equal to the product of such
Excess Proceeds multiplied by a fraction, the numerator of which is the
outstanding principal amount of the Notes, and the denominator of which is the
sum of the outstanding principal amount of the Notes and such Pari Passu
Indebtedness (subject to proration in the event such amount is less than the
aggregate Offered Price of all Notes tendered) and (b) to the extent required
by such Pari Passu Indebtedness to permanently reduce the principal amount of
such Pari Passu Indebtedness, the Company shall make an offer to purchase or
otherwise repurchase or redeem Pari Passu Indebtedness (a "Pari Passu Offer")
in an amount (the "Pari Passu Debt Amount") equal to the excess of the Excess
Proceeds over the Note Amount, provided that in no event shall the Pari Passu
Debt Amount exceed the principal amount of such Pari Passu Indebtedness plus
the amount of any premium required to be paid to repurchase such Pari Passu
Indebtedness. The offer price shall be payable in cash in an amount equal to
100% of the principal amount of the Notes plus accrued and unpaid interest, if
any, to the date (the "Offer Date") such Offer is consummated (the "Offered
Price"), in accordance with the procedures set forth in the Indenture. To the
extent that the aggregate Offered Price of the Notes tendered pursuant to the
Offer is less than the Note Amount relating thereto or the aggregate amount of
Pari Passu Indebtedness that is purchased is less than the Pari Passu Debt
Amount (the amount of such shortfall, if any, constituting a "Deficiency"),
the Company shall use such Deficiency in the business of the Company and its
Restricted Subsidiaries. Upon completion of the purchase of all the Notes
tendered pursuant to an Offer and repurchase of the Pari Passu Indebtedness
pursuant to a Pari Passu Offer, the amount of Excess Proceeds, if any, shall
be reset at zero.
(d) Whenever the Excess Proceeds received by the Company exceed $5.0 million
such Excess Proceeds shall be set aside by the Company in a separate account
pending (i) deposit with the depositary or a paying agent of the amount
required to purchase the Notes or Pari Passu Indebtedness tendered in an Offer
or a Pari Passu Offer, (ii) delivery by the Company of the Offered Price to
the holders of the Notes or Pari Passu Indebtedness tendered in an Offer or a
Pari Passu Offer and (iii) application, as set forth above, of Excess Proceeds
in the business of the Company and its Restricted Subsidiaries. Such Excess
Proceeds may be invested in Temporary Cash Investments; provided that the
maturity date of any such investment made after the amount of Excess Proceeds
exceeds $5.0 million shall not be later than the Offer Date. The Company shall
be entitled to any interest or dividends accrued, earned or paid on such
Temporary Cash Investments; provided that the Company shall not withdraw such
interest from the separate account if an Event of Default has occurred and is
continuing.
(e) If the Company becomes obligated to make an Offer pursuant to clause (c)
above, the Notes shall be purchased by the Company, at the option of the
holder thereof, in whole or in part, in integral multiples of $1,000, on a
date that is not earlier than 45 days and not later than 60 days from the date
the notice is given to holders, or such later date as may be necessary for the
Company to comply with the requirements under the Exchange Act, subject to
proration in the event the Note Amount is less than the aggregate Offered
Price of all Notes tendered.
(f) The Company shall comply with the applicable tender offer rules,
including Rule 14e-1 under the Exchange Act, and any other applicable
securities laws or regulations in connection with an Offer.
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(g) The Company will not, and will not permit any Restricted Subsidiary to,
create or permit to exist or become effective any restriction (other than
restrictions existing under (i) Indebtedness as in effect on the date of the
Indenture listed on a schedule thereto as such Indebtedness may be refinanced
from time to time, provided that such restrictions are no less favorable to the
holders of the Notes than those existing on the date of the Indenture or (ii)
any Senior Indebtedness and any Guarantor Senior Indebtedness) that would
materially impair the ability of the Company to make an Offer to purchase the
Notes or, if such Offer is made, to pay for the Notes tendered for purchase.
Limitation on Asset Swaps. The Company will not, and will not permit any
Restricted Subsidiary to, engage in Asset Swaps, unless: (i) at the time of
entering into such Asset Swap, and immediately after giving effect to such Asset
Swap, no Default or Event of Default shall have occurred and be continuing or
would occur as a consequence thereof; and (ii) the Company or such Restricted
Subsidiary receives consideration at the time of such Asset Swap at least equal
to the Fair Market Value of the properties or assets exchanged as determined in
writing by a nationally recognized investment banking or appraisal firm.
Limitation on Issuances of Guarantees of and Pledges for Indebtedness. (a) The
Company will not permit any Restricted Subsidiary, other than the Guarantors,
directly or indirectly, to secure the payment of any Senior Indebtedness of the
Company and the Company will not, and will not permit any Restricted Subsidiary
to, pledge any intercompany notes representing obligations of any Restricted
Subsidiary (other than the Guarantors) to secure the payment of any Senior
Indebtedness unless in each case such Restricted Subsidiary simultaneously
executes and delivers a supplemental indenture to the Indenture providing for a
guarantee of payment of the Notes by such Restricted Subsidiary, which guarantee
shall be on the same terms as the guarantee of the Senior Indebtedness (if a
guarantee of Senior Indebtedness is granted by any such Restricted Subsidiary)
except that the guarantee of the Notes need not be secured and shall be
subordinated to the claims against such Restricted Subsidiary in respect of
Senior Indebtedness to the same extent as the Notes are subordinated to Senior
Indebtedness of the Company under the Indenture.
(b) The Company will not permit any Restricted Subsidiary, other than the
Guarantors, directly or indirectly, to guarantee, assume or in any other manner
become liable with respect to any Indebtedness of the Company (other than
guarantees in existence on the date of the Indenture) unless such Restricted
Subsidiary simultaneously executes and delivers a supplemental indenture to the
Indenture providing for a guarantee of the Notes on the same terms as the
guarantee of such Indebtedness except that if the Notes are subordinated in
right of payment to such Indebtedness, the guarantee under the supplemental
indenture shall be subordinated to the guarantee of such Indebtedness to the
same extent as the Notes are subordinated to such Indebtedness under the
Indenture.
(c) Each guarantee created pursuant to the provisions described in the
foregoing paragraph is referred to as a "Guarantee" and the issuer of each such
Guarantee is referred to as a "Guarantor." Notwithstanding the foregoing, any
Guarantee by a Restricted Subsidiary of the Notes shall provide by its terms
that it shall be automatically and unconditionally released and discharged upon
(i) any sale, exchange or transfer, to any Person not an Affiliate of the
Company, of all of the Company's Equity Interest in, or all or substantially all
the assets of, such Restricted Subsidiary, which is in compliance with the
Indenture or (ii) (with respect to any Guarantees created after the date of the
Indenture) the release by the holders of the Indebtedness of the Company
described in clauses (a) and (b) above of their security interest or their
guarantee by such Restricted Subsidiary (including any deemed release upon
payment in full of all obligations under such Indebtedness), at a time when (A)
no other Indebtedness of the Company has been secured or guaranteed by such
Restricted Subsidiary, as the case may be, or (B) the holders of all such other
Indebtedness which is secured or guaranteed by such Restricted Subsidiary also
release their security interest in, or guarantee by, such Restricted Subsidiary
(including any deemed release upon payment in full of all obligations under such
Indebtedness).
Restriction on Transfer of Assets. The Company and the Guarantors will not
sell, convey, transfer or otherwise dispose of their respective assets or
property to any of the Company's Restricted Subsidiaries (other than any
Guarantor), except for sales, conveyances, transfers or other dispositions made
in the ordinary course
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of business. For purposes of this provision, any sale, conveyance, transfer,
lease or other disposition of property or assets, having a Fair Market Value
in excess of (a) $1.0 million for any sale, conveyance, transfer, leases or
dispositions or series of related sales, conveyances, transfers, leases and
dispositions and (b) $5.0 million in the aggregate for all such sales,
conveyances, transfers, leases or dispositions in any fiscal year of the
Company shall not be considered "in the ordinary course of business"; provided
that sales by the Company of block program time and spot advertising time
shall not be deemed not to be "in the ordinary course of business" solely
because of the dollar volume of such sales.
Purchase of Notes Upon a Change of Control. If a Change of Control shall
occur at any time, then each holder of Notes shall have the right to require
that the Company purchase such holder's Notes in whole or in part in integral
multiples of $1,000, at a purchase price (the "Change of Control Purchase
Price") in cash in an amount equal to 101% of the principal amount of such
Notes, plus accrued and unpaid interest, if any, to the date of purchase (the
"Change of Control Purchase Date"), pursuant to the offer described below (the
"Change of Control Offer") and the other procedures set forth in the
Indenture.
Within 30 days following any Change of Control, the Company shall notify the
Trustee thereof and give written notice of such Change of Control to each
holder of Notes, by first-class mail, postage prepaid, at his address
appearing in the security register, stating, among other things, the purchase
price and that the purchase date shall be a business day no earlier than 30
days nor later than 60 days from the date such notice is mailed, or such later
date as is necessary to comply with requirements under the Exchange Act; that
any Note not tendered will continue to accrue interest; that, unless the
Company defaults in the payment of the purchase price, any Notes accepted for
payment pursuant to the Change of Control Offer shall cease to accrue interest
after the Change of Control Purchase Date; and certain other procedures that a
holder of Notes must follow to accept a Change of Control Offer or to withdraw
such acceptance.
If a Change of Control Offer is made, there can be no assurance that the
Company will have available funds sufficient to pay the Change of Control
Purchase Price for all of the Notes that might be delivered by holders of the
Notes seeking to accept the Change of Control Offer. A Change of Control will
also result in an event of default under the Bank Credit Agreement and could
result in the acceleration of all indebtedness under the Bank Credit
Agreement. See "Description of Certain Indebtedness--Credit Agreement--Change
of Control." The failure of the Company to make or consummate the Change of
Control Offer or pay the Change of Control Purchase Price when due will result
in an Event of Default under the Indenture.
The term "all or substantially all" as used in the definition of "Change of
Control" has not been interpreted under New York law (which is the governing
law of the Indenture) to represent a specific quantitative test. As a
consequence, in the event the holders of the Notes elected to exercise their
rights under the Indenture and the Company elected to contest such election,
there could be no assurance as to how a court interpreting New York law would
interpret the phrase.
The existence of a holder's right to require the Company to repurchase such
holder's Notes upon a Change of Control may deter a third party from acquiring
the Company in a transaction which constitutes a Change of Control.
"Change of Control" means the occurrence of any of the following events: (i)
any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of
the Exchange Act), other than Permitted Holders, is or becomes the "beneficial
owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except
that a Person shall be deemed to have beneficial ownership of all shares that
such Person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or indirectly, of
more than 40% of the total outstanding Voting Stock of the Company, provided
that the Permitted Holders "beneficially own" (as so defined) a lesser
percentage of such Voting Stock than such other Person and do not have the
right or ability by voting power, contract or otherwise to elect or designate
for election a majority of the Board of Directors of the Company, (ii) during
any period of two consecutive years, individuals who at the beginning of such
period constituted the Board of Directors of the Company (together with any
new directors
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whose election to such Board or whose nomination for election by the
shareholders of the Company, was approved by a vote of 66% of the directors
then still in office who were either directors at the beginning of such period
or whose election or nomination for election was previously so approved) cease
for any reason to constitute a majority of such Board of Directors then in
office; (iii) the Company consolidates with or merges with or into any Person
or conveys, transfers or leases all or substantially all of its assets to any
Person, or any corporation consolidates with or merges into or with the
Company, in any such event pursuant to a transaction in which the outstanding
Voting Stock of the Company is changed into or exchanged for cash, securities
or other property, other than any such transaction in which the outstanding
Voting Stock of the Company is not changed or exchanged at all (except to the
extent necessary to reflect a change in the jurisdiction of incorporation of
the Company) or in which (A) the outstanding Voting Stock of the Company is
changed into or exchanged for (x) Voting Stock of the surviving corporation
which is not Disqualified Equity Interests or (y) cash, securities and other
property (other than Equity Interests of the surviving corporation) in an
amount which could be paid by the Company as a Restricted Payment as described
under "--Limitation on Restricted Payments" (and such amount shall be treated
as a Restricted Payment subject to the provisions in the Indenture described
under "--Limitation on Restricted Payments") and (B) no "person" or "group"
other than Permitted Holders owns immediately after such transaction, directly
or indirectly, more than the greater of (1) 40% of the total outstanding
Voting Stock of the surviving corporation and (2) the percentage of the
outstanding Voting Stock of the surviving corporation owned, directly or
indirectly, by Permitted Holders immediately after such transaction; or (iv)
the Company is liquidated or dissolved or adopts a plan of liquidation or
dissolution other than in a transaction which complies with the provisions
described under "--Consolidation, Merger, Sale of Assets."
"Permitted Holders" means as of the date of determination (i) any of Stuart
W. Epperson and Edward G. Atsinger III; (ii) family members or the relatives
of the Persons described in clause (i); (iii) any trusts created for the
benefit of the Persons described in clauses (i), (ii) or (iv) or any trust for
the benefit of any such trust; or (iv) in the event of the incompetence or
death of any of the Persons described in clauses (i) and (ii), such Person's
estate, executor, administrator, committee or other personal representative or
beneficiaries, in each case who at any particular date shall beneficially own
or have the right to acquire, directly or indirectly, Equity Interests of the
Company.
The Company will comply with the applicable tender offer rules, including
Rule 14e-1 under the Exchange Act, and any other applicable securities laws or
regulations in connection with a Change of Control Offer.
The Company will not, and will not permit any Subsidiary to, create or
permit to exist or become effective any restriction (other than restrictions
existing under Indebtedness as in effect on the date of the Indenture) that
would materially impair the ability of the Company to make a Change of Control
Offer to purchase the Notes or, if such Change of Control Offer is made, to
pay for the Notes tendered for purchase.
Limitation on Subsidiary Equity Interests. The Company will not permit any
Restricted Subsidiary of the Company to issue any Equity Interests, except for
(i) Equity Interests issued to and held by the Company or a Wholly Owned
Restricted Subsidiary, and (ii) Equity Interests issued by a Person prior to
the time (A) such Person becomes a Restricted Subsidiary, (B) such Person
merges with or into a Restricted Subsidiary or (C) a Restricted Subsidiary
merges with or into such Person; provided that such Equity Interests were not
issued or incurred by such Person in anticipation of the type of transaction
contemplated by subclause (A), (B) or (C).
Limitation on Dividends and Other Payment Restrictions Affecting
Subsidiaries. The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer
to exist or become effective any encumbrance or restriction on the ability of
any Restricted Subsidiary of the Company to (i) pay dividends or make any
other distribution on its Equity Interests, (ii) pay any Indebtedness owed to
the Company or a Restricted Subsidiary of the Company, (iii) make any
Investment in the Company or a Restricted Subsidiary of the Company or (iv)
transfer any of its properties or assets to the Company or any Restricted
Subsidiary, except (a) any encumbrance or restriction pursuant to an agreement
in effect on the date of the Indenture and listed as a schedule thereto, (b)
any encumbrance or restriction, with respect to a Restricted Subsidiary that
is not a Subsidiary of the Company on the date of the Indenture, in existence
at the time such
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Person becomes a Restricted Subsidiary of the Company and not incurred in
connection with, or in contemplation of, such Person becoming a Restricted
Subsidiary; (c) any encumbrance or restriction existing under any agreement
that extends, renews, refinances or replaces the agreements containing the
encumbrances or restrictions in the foregoing clauses (a) and (b), or in this
clause (c), provided that the terms and conditions of any such encumbrances or
restrictions are not materially less favorable to the holders of the Notes
than those under or pursuant to the agreement evidencing the Indebtedness so
extended, renewed, refinanced or replaced or are not more restrictive than
those set forth in the Indenture; and (d) any encumbrance or restriction
created pursuant to an asset sale agreement, stock sale agreement or similar
instrument pursuant to which an Asset Sale permitted under "--Limitations on
Sale of Assets" is to be consummated, so long as such restriction or
encumbrance shall be effective only for a period from the execution and
delivery of such agreement or instrument through a termination date not later
than 270 days after such execution and delivery.
Limitation on Unrestricted Subsidiaries. The Company will not make, and will
not permit any of its Restricted Subsidiaries to make, any Investments in
Unrestricted Subsidiaries if, at the time thereof, the aggregate amount of
such Investments would exceed the amount of Restricted Payments then permitted
to be made pursuant to the "Limitation on Restricted Payments" covenant. Any
Investments in Unrestricted Subsidiaries permitted to be made pursuant to this
covenant (i) will be treated as the payment of a Restricted Payment in
calculating the amount of Restricted Payments made by the Company and (ii) may
be made in cash or property.
Provision of Financial Statements. The Indenture provides that, whether or
not the Company is subject to Section 13(a) or 15(d) of the Exchange Act, the
Company will, to the extent permitted under the Exchange Act, file with the
Commission the annual reports, quarterly reports and other documents which the
Company would have been required to file with the Commission pursuant to such
Section 13(a) or 15(d) if the Company were so subject, such documents to be
filed with the Commission on or prior to the respective dates (the "Required
Filing Dates") by which the Company would have been required so to file such
documents if the Company were so subject. The Company will also in any event
(x) within 15 days of each Required Filing Date (i) transmit by mail to all
holders, as their names and addresses appear in the Note register, without
cost to such holders and (ii) file with the Trustee copies of the annual
reports, quarterly reports and other documents which the Company would have
been required to file with the Commission pursuant to Section 13(a) or 15(d)
of the Exchange Act if the Company were subject to such Sections and (y) if
filing such documents by the Company with the Commission is not permitted
under the Exchange Act, promptly upon written request and payment of the
reasonable cost of duplication and delivery, supply copies of such documents
to any prospective holder at the Company's cost.
Additional Covenants. The Indenture also contains covenants with respect to
the following matters: (i) payment of principal, premium and interest; (ii)
maintenance of an office or agency; (iii) arrangements regarding the handling
of money held in trust; (iv) maintenance of corporate existence; (v) payment
of taxes and other claims; (vi) maintenance of properties; and (vii)
maintenance of insurance.
CONSOLIDATION, MERGER, SALE OF ASSETS
The Company shall not, in a single transaction or a series of related
transactions, consolidate with or merge with or into any other Person or sell
assign, convey, transfer, lease or otherwise dispose of all or substantially
all of its properties and assets to any Person or group of affiliated Persons,
or permit any of its Subsidiaries to enter into any such transaction or
transactions if such transaction or transactions, in the aggregate, would
result in a sale, assignment, conveyance, transfer, lease or disposition of
all or substantially all of the properties and assets of the Company and its
Subsidiaries on a Consolidated basis to any other Person or group of
affiliated Persons, unless at the time and after giving effect thereto: (i)
either (1) the Company shall be the continuing corporation or (2) the Person
(if other than the Company) formed by such consolidation or into which the
Company is merged or the Person which acquires by sale, assignment,
conveyance, transfer, lease or disposition of all or substantially all of the
properties and assets of the Company and its Subsidiaries on a Consolidated
basis (the "Surviving Entity") shall be a corporation duly organized and
validly existing under the laws of the United States of
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America, any state thereof or the District of Columbia and such Person
assumes, by a supplemental indenture in a form reasonably satisfactory to the
Trustee, all the obligations of the Company under the Notes and the Indenture,
and the Indenture shall remain in full force and effect; (ii) immediately
before and immediately after giving effect to such transaction, no Default or
Event of Default shall have occurred and be continuing; (iii) immediately
after giving effect to such transaction on a pro forma basis, the Consolidated
Net Worth of the Company (or the Surviving Entity if the Company is not the
continuing obligor under the Indenture) is equal to or greater than the
Consolidated Net Worth of the Company immediately prior to such transaction;
(iv) immediately before and immediately after giving effect to such
transaction on a pro forma basis (on the assumption that the transaction
occurred on the first day of the four-quarter period immediately prior to the
consummation of such transaction with the appropriate adjustments with respect
to the transaction being included in such pro forma calculation), the Company
(or the Surviving Entity if the Company is not the continuing obligor under
the Indenture) could incur $1.00 of additional Indebtedness under the
provisions of "--Certain Covenants--Limitation on Indebtedness" (other than
Permitted Indebtedness); (v) each Guarantor, if any, unless it is the other
party to the transactions described above, shall have by supplemental
indenture confirmed that its Guarantee shall apply to such Person's
obligations under the Indenture and the Notes; (vi) if any of the property or
assets of the Company or any of its Subsidiaries would thereupon become
subject to any Lien, the provisions of "--Certain Covenants--Limitation on
Liens" are complied with; and (vii) the Company or the Surviving Entity shall
have delivered, or caused to be delivered, to the Trustee, in form and
substance reasonably satisfactory to the Trustee, an officers' certificate and
an opinion of counsel, each to the effect that such consolidation, merger,
transfer, sale, assignment, lease or other transaction and the supplemental
indenture in respect thereto comply with the provisions of the Indenture and
that all conditions precedent provided for in the Indenture relating to such
transaction have been complied with.
Each Guarantor will not, and the Company will not permit a Guarantor to, in
a single transaction or series of related transactions merge or consolidate
with or into any other corporation (other than the Company or any other
Guarantor) or other entity, or sell, assign, convey, transfer, lease or
otherwise dispose of all or substantially all of its properties and assets on
a Consolidated basis to any entity (other than the Company or any other
Guarantor) unless at the time and after giving effect thereto: (i) either (1)
such Guarantor shall be the continuing corporation or (2) the entity (if other
than such Guarantor) formed by such consolidation or into which such Guarantor
is merged or the entity which acquires by sale, assignment, conveyance,
transfer, lease or disposition the properties and assets of such Guarantor
shall be a corporation duly organized and validly existing under the laws of
the United States, any state thereof or the District of Columbia and shall
expressly assume by a supplemental indenture, executed and delivered to the
Trustee, in a form reasonably satisfactory to the Trustee, all the obligations
of such Guarantor under its Guarantee and the Indenture; (ii) immediately
before and immediately after giving effect to such transaction, no Default or
Event of Default shall have occurred and be continuing, and (iii) such
Guarantor shall have delivered to the Trustee, in form and substance
reasonably satisfactory to the Trustee, an officers' certificate and an
opinion of counsel, each stating that such consolidation, merger, sale,
assignment, conveyance, transfer, lease or disposition and such supplemental
indenture comply with the Indenture, and thereafter all obligations of the
predecessor shall terminate. The provisions of this paragraph shall not apply
to any transaction (including an Asset Sale made in accordance with "--Certain
Covenants--Limitations on Sale of Assets" ) with respect to any Guarantor if
the Guarantee of such Guarantor is released in connection with such
transaction in accordance with paragraph (c) of "--Certain Covenants--
Limitations on Issuances of Guarantees of and Pledges for Indebtedness."
In the event of any transaction described in and complying with the
conditions listed in the immediately preceding paragraphs in which the Company
or any Guarantor is not the continuing corporation, the successor Person
formed or remaining shall succeed to, and be substituted for, and may exercise
every right and power of, the Company or such Guarantor, as the case may be,
and the Company or such Guarantor, as the case may be, would be discharged
from its obligations under the Indenture, the Notes or its Guarantee, as the
case may be.
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EVENTS OF DEFAULT
An Event of Default will occur under the Indenture if:
(i) there shall be a default in the payment of any interest on any Note
(including any Penalty Amounts) when it becomes due and payable, and such
default shall continue for a period of 30 days;
(ii) there shall be a default in the payment of the principal of (or
premium, if any, on) any Note at its Maturity (upon acceleration, optional
or mandatory redemption, required repurchase or otherwise);
(iii) (a) there shall be a default in the performance, or breach, of any
covenant or agreement of the Company or any Guarantor under the Indenture
(other than a default in the performance, or breach, of a covenant or
agreement which is specifically dealt with in clause (i) or (ii) or in
clause (b), (c) or (d) of this clause (iii)) and such default or breach
shall continue for a period of 30 days after written notice has been given,
by certified mail, (x) to the Company by the Trustee or (y) to the Company
and the Trustee by the holders of at least 25% in aggregate principal
amount of the outstanding Notes; (b) there shall be a default in the
performance or breach of the provisions described in "--Consolidation,
Merger, Sale of Assets;" (c) the Company shall have failed to make or
consummate an Offer in accordance with the provisions of "--Certain
Covenants--Limitation on Sale of Assets;" or (d) the Company shall have
failed to make or consummate a Change of Control Offer in accordance with
the provisions of "--Certain Covenants--Purchase of Notes Upon a Change of
Control;"
(iv) one or more defaults shall have occurred under any agreements,
indentures or instruments under which the Company, any Guarantor or any
Restricted Subsidiary then has outstanding Indebtedness in excess of $5.0
million in the aggregate and, if not already matured at its final maturity
in accordance with its terms, such Indebtedness shall have been
accelerated;
(v) any Guarantee shall for any reason cease to be, or be asserted in
writing by any Guarantor or the Company not to be, in full force and
effect, enforceable in accordance with its terms, except to the extent
contemplated by the Indenture and any such Guarantee;
(vi) one or more judgments, orders or decrees for the payment of money in
excess of $5.0 million, either individually or in the aggregate (net of
amounts covered by insurance, bond, surety or similar instrument) shall be
entered against the Company, any Guarantor or any Restricted Subsidiary or
any of their respective properties and shall not be discharged and either
(a) any creditor shall have commenced an enforcement proceeding upon such
judgment, order or decree or (b) there shall have been a period of 60
consecutive days during which a stay of enforcement of such judgment or
order, by reason of an appeal or otherwise, shall not be in effect;
(vii) any holder or holders of at least $5.0 million in aggregate
principal amount of Indebtedness of the Company, any Guarantor or any
Restricted Subsidiary after a default under such Indebtedness shall notify
the Trustee of the intended sale or disposition of any assets of the
Company, any Guarantor or any Restricted Subsidiary that have been pledged
to or for the benefit of such holder or holders to secure such Indebtedness
or shall commence proceedings, or take any action (including by way of set-
off), to retain in satisfaction of such Indebtedness or to collect on,
seize, dispose of or apply in satisfaction of Indebtedness, assets of the
Company or any Restricted Subsidiary (including funds on deposit or held
pursuant to lock-box and other similar arrangements);
(viii) there shall have been the entry by a court of competent
jurisdiction of (a) a decree or order for relief in respect of the Company,
any Guarantor or any Restricted Subsidiary in an involuntary case or
proceeding under any applicable Bankruptcy Law or (b) a decree or order
adjudging the Company, any Guarantor or any Restricted Subsidiary bankrupt
or insolvent, or seeking reorganization, arrangement, adjustment or
composition of or in respect of the Company, any Guarantor or any
Restricted Subsidiary under any applicable federal or state law, or
appointing a custodian, receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) of the Company, any Guarantor or
any Restricted Subsidiary or of any substantial part of their respective
properties, or ordering the winding up or liquidation of their affairs,
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and any such decree or order for relief shall continue to be in effect, or
any such other decree or order shall be unstayed and in effect, for a
period of 60 consecutive days; or
(ix) (a) the Company, any Guarantor or any Restricted Subsidiary
commences a voluntary case or proceeding under any applicable Bankruptcy
Law or any other case or proceeding to be adjudicated bankrupt or
insolvent, (b) the Company, any Guarantor or any Restricted Subsidiary
consents to the entry of a decree or order for relief in respect of the
Company, any Guarantor or such Restricted Subsidiary in an involuntary case
or proceeding under any applicable Bankruptcy Law or to the commencement of
any bankruptcy or insolvency case or proceeding against it, (c) the
Company, any Guarantor or any Restricted Subsidiary files a petition or
answer or consent seeking reorganization or relief under any applicable
federal or state law, (d) the Company, any Guarantor or any Restricted
Subsidiary (x) consents to the filing of such petition or the appointment
of, or taking possession by, a custodian, receiver, liquidator, assignee,
trustee, sequestrator or other similar official, of the Company, any
Guarantor or such Restricted Subsidiary or of any substantial part of their
respective property, (y) makes an assignment for the benefit of creditors
or (z) admits in writing its inability to pay its debts generally as they
become due or (e) the Company, any Guarantor or any Restricted Subsidiary
takes any corporate action in furtherance of any such actions in this
paragraph (ix).
If an Event of Default (other than as specified in clauses (viii) and (ix)
of the prior paragraph) shall occur and be continuing, the Trustee or the
holders of not less than 25% in aggregate principal amount of the Notes
outstanding may, and the Trustee at the request of such holders shall, declare
all unpaid principal of, premium, if any, and accrued interest on, all the
Notes to be due and payable immediately by a notice in writing to the Company
(and to the Trustee if given by the holders of the Notes), provided that so
long as the Bank Credit Agreement is in effect, such declaration shall not
become effective until the earlier of (a) five business days after receipt of
such notice of acceleration from the holders or the Trustee by the agent under
the Bank Credit Agreement or (b) acceleration of the Indebtedness under the
Bank Credit Agreement. Thereupon the Trustee may, at its discretion, proceed
to protect and enforce the rights of the holders of Notes by appropriate
judicial proceedings. If an Event of Default specified in clause (viii) or
(ix) of the prior paragraph occurs and is continuing, then all the Notes shall
ipso facto become and be immediately due and payable, in an amount equal to
the principal amount of the Notes, together with accrued and unpaid interest,
if any, to the date the Notes become due and payable, without any declaration
or other act on the part of the Trustee or any holder. The Trustee or, if
notice of acceleration is given by the holders of the Notes, the holders of
the Notes shall give notice to the agent under the Bank Credit Agreement of
such acceleration.
After a declaration of acceleration, but before a judgment or decree for
payment of the money due has been obtained by the Trustee, the holders of a
majority in aggregate principal amount of Notes outstanding, by written notice
to the Company and the Trustee, may rescind and annul such declaration if (a)
the Company has paid or deposited with the Trustee a sum sufficient to pay (i)
all sums paid or advanced by the Trustee under the Indenture and the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, (ii) all overdue interest on all Notes, (iii) the
principal of and premium, if any, on any Notes which have become due otherwise
than by such declaration of acceleration and interest thereon at a rate borne
by the Notes and (iv) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate borne by the Notes; and (b) all
Events of Default, other than the non-payment of principal of the Notes which
have become due solely by such declaration of acceleration, have been cured or
waived.
The holders of not less than a majority in aggregate principal amount of the
Notes outstanding may on behalf of the holders of all the Notes waive any past
default under the Indenture and its consequences, except a default in the
payment of the principal of, premium, if any, or interest on any Note, or in
respect of a covenant or provision which under the Indenture cannot be
modified or amended without the consent of the holder of each Note
outstanding.
The Company is also required to notify the Trustee within five business days
of the occurrence of any Default. The Company is required to deliver to the
Trustee, on or before a date not more than 60 days after the
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end of each quarter and not more than 120 days after the end of each fiscal
year, a written statement as to compliance with the Indenture, including
whether or not any default has occurred. The Trustee is under no obligation to
exercise any of the rights or powers vested in it by the Indenture at the
request or direction of any of the holders of the Notes unless such holders
offer to the Trustee security or indemnity satisfactory to the Trustee against
the costs, expenses and liabilities which might be incurred thereby.
The Trust Indenture Act contains limitations on the rights of the Trustee,
should it become a creditor of the Company or any Guarantor, to obtain payment
of claims in certain cases or to realize on certain property received by it in
respect of any such claims, as security or otherwise. The Trustee is permitted
to engage in other transactions, provided that if it acquires any conflicting
interest it must eliminate such conflict upon the occurrence of an Event of
Default or else resign.
DEFEASANCE OR COVENANT DEFEASANCE OF INDENTURE
The Company may, at its option, at any time, elect to have the obligations
of the Company, each of the Guarantors and any other obligor upon the Notes
discharged with respect to the outstanding Notes ("defeasance"). Such
defeasance means that the Company, each of the Guarantors and any other
obligor under the Indenture shall be deemed to have paid and discharged the
entire Indebtedness represented by the outstanding Notes, except for (i) the
rights of holders of outstanding Notes to receive payments in respect of the
principal of, premium, if any, and interest on such Notes when such payments
are due, (ii) the Company's obligations with respect to the Notes concerning
issuing temporary Notes, registration of Notes, mutilated, destroyed, lost or
stolen Notes, and the maintenance of an office or agency for payment and money
for security payments held in trust, (iii) the rights, powers, trusts, duties
and immunities of the Trustee, and (iv) the defeasance provisions of the
Indenture. In addition, the Company may, at its option and at any time, elect
to have the obligations of the Company and any Guarantor released with respect
to certain covenants that are described in the Indenture ("covenant
defeasance") and any omission to comply with such obligations shall not
constitute a Default or an Event of Default with respect to the Notes. In the
event covenant defeasance occurs, certain events (not including non-payment,
enforceability of any Guarantee, bankruptcy and insolvency events) described
under "--Events of Default" will no longer constitute an Event of Default with
respect to the Notes.
In order to exercise either defeasance or covenant defeasance, (i) the
Company must irrevocably deposit with the Trustee, in trust, for the benefit
of the holders of the Notes, cash in United States dollars, U.S. Government
Obligations (as defined in the Indenture), or a combination thereof, in such
amounts as will be sufficient, in the opinion of a nationally recognized firm
of independent public accountants or a nationally recognized investment
banking firm expressed in a written certification thereof delivered to the
Trustee, to pay and discharge the principal of, premium, if any, and interest
on the outstanding Notes on the Stated Maturity of such principal or
installment of principal or interest (or on any date after October 1, 2002
(such date being referred to as the "Defeasance Redemption Date"), if when
exercising either defeasance or covenant defeasance, the Company has delivered
to the Trustee an irrevocable notice to redeem all of the outstanding Notes on
the Defeasance Redemption Date); (ii) in the case of defeasance, the Company
shall have delivered to the Trustee an opinion of independent counsel in the
United States stating that (A) the Company has received from, or there has
been published by, the Internal Revenue Service a ruling or (B) since the date
of the Indenture, there has been a change in the applicable federal income tax
law, in either case to the effect that, and based thereon such opinion of
independent counsel in the United States shall confirm that, the holders of
the outstanding Notes will not recognize income, gain or loss for federal
income tax purposes as a result of such defeasance and will be subject to
federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such defeasance had not occurred; (iii)
in the case of covenant defeasance, the Company shall have delivered to the
Trustee an opinion of independent counsel in the United States to the effect
that the holders of the outstanding Notes will not recognize income, gain or
loss for federal income tax purposes as a result of such covenant defeasance
and will be subject to federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such covenant
defeasance had not occurred; (iv) no Default or Event of Default shall have
occurred and be continuing on the date of such deposit or insofar as clause
(viii) or
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(ix) under the first paragraph under "--Events of Default" are concerned, at
any time during the period ending on the 91st day after the date of deposit;
(v) such defeasance or covenant defeasance shall not cause the Trustee for the
Notes to have a conflicting interest with respect to any securities of the
Company or any Guarantor; (vi) such defeasance or covenant defeasance shall
not result in a breach or violation of, or constitute a Default under, the
Indenture or any other material agreement or instrument to which the Company
or any Guarantor is a party or by which it is bound, (vii) the Company shall
have delivered to the Trustee an opinion of independent counsel to the effect
that (A) the trust funds will not be subject to any rights of holders of
Senior Indebtedness or Guarantor Senior Indebtedness, including, without
limitation, those arising under the Indenture and (B) after the 91st day
following the deposit, the trust funds will not be subject to the effect of
any applicable bankruptcy, insolvency, reorganization or similar laws
affecting creditors' rights generally; (viii) the Company shall have delivered
to the Trustee an officers' certificate stating that the deposit was not made
by the Company with the intent of preferring the holders of the Notes or any
Guarantee over the other creditors of the Company or any Guarantor with the
intent of defeating, hindering, delaying or defrauding creditors of the
Company, any Guarantor or others; (ix) no event or condition shall exist that
would prevent the Company from making payments of the principal of, premium,
if any, and interest on the Notes on the date of such deposit or at any time
ending on the 91st day after the date of such deposit; and (x) the Company
shall have delivered to the Trustee an officers' certificate and an opinion of
independent counsel, each stating that all conditions precedent provided for
relating to either the defeasance or the covenant defeasance, as the case may
be, have been complied with.
SATISFACTION AND DISCHARGE
The Indenture will cease to be of further effect (except as to surviving
rights of registration of transfer or exchange of Notes, and certain other
rights as expressly provided for in the Indenture) as to all outstanding Notes
when (a) either (i) all the Notes theretofore authenticated and delivered
(except lost, stolen or destroyed Notes which have been replaced or paid) have
been delivered to the Trustee for cancellation or (ii) all Notes not
theretofore delivered to the Trustee for cancellation (x) have become due and
payable, or (y) will become due and payable at their Stated Maturity within
one year, or (z) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the Company and
the Company or any Guarantor has irrevocably deposited or caused to be
deposited with the Trustee funds in an amount sufficient to pay and discharge
the entire indebtedness on the Notes not theretofore delivered to the Trustee
for cancellation, including principal of, premium, if any, and accrued
interest at such Stated Maturity or redemption date, (b) the Company or any
Guarantor has paid or caused to be paid all other sums payable under the
Indenture by the Company or any Guarantor, and (c) the Company has delivered
to the Trustee an officers' certificate and an opinion of counsel stating that
(i) all conditions precedent under the Indenture relating to the satisfaction
and discharge of the Indenture have been complied with and (B) such
satisfaction and discharge will not result in a breach or violation of, or
constitute a default under, the Indenture or any other material agreement or
instrument to which the Company or any Guarantor is a party or by which the
Company or any Guarantor is bound.
MODIFICATIONS AND AMENDMENTS
Modifications and amendments of the Indenture may be made by the Company,
any Guarantor and the Trustee with the consent of the holders of not less than
a majority in aggregate principal amount of the outstanding Notes; provided,
however, that no such modification or amendment may, without the consent of
the holder of each outstanding Note affected thereby: (i) change the Stated
Maturity of the principal of, or any installment of interest on, any Note or
reduce the principal amount thereof or the rate of interest thereon or any
premium payable upon the redemption thereof, or change the coin or currency in
which the principal of any Note or any premium or the interest thereon is
payable, or impair the right to institute suit for the enforcement of any such
payment after the Stated Maturity thereof (or in the case of redemption, on or
after the redemption date); (ii) amend, change or modify the obligation of the
Company to make and consummate an Offer with respect to any Asset Sale or
Asset Sales in accordance with "--Certain Covenants--Limitation on Sale of
Assets" or the
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obligation of the Company to make and consummate a Change of Control Offer in
the event of a Change of Control in accordance with "--Certain Covenants--
Purchase of Notes Upon a Change of Control," including amending, changing or
modifying any deletions with respect thereto; (iii) reduce the percentage in
principal amount of outstanding Notes, the consent of whose holders is
required for any such supplemental indenture, or the consent of whose holders
is required for any waiver or compliance with certain provisions of the
Indenture or certain defaults or with respect to any Guarantee; (iv) modify
any of the provisions relating to supplemental indentures requiring the
consent of holders or relating to the waiver of past defaults or relating to
the waiver of certain covenants, except to increase the percentage of
outstanding Notes required for such actions or to provide that certain other
provisions of the Indenture cannot be modified or waived without the consent
of the holder of each Note affected thereby; (v) except as otherwise permitted
under "--Consolidation, Merger, Sale of Assets," consent to the assignment or
transfer by the Company or any Guarantor of any of its rights and obligations
under the Indenture; or (vi) amend or modify any of the provisions of the
Indenture relating to the subordination of the Notes or any Guarantee in any
manner adverse to the holders of the Notes or any Guarantee.
The holders of a majority in aggregate principal amount of the Notes
outstanding may waive compliance with certain restrictive covenants and
provisions of the Indenture.
GOVERNING LAW
The Indenture, the Notes and the Guarantees will be governed by, and
construed in accordance with the laws of the State of New York, without giving
effect to the conflicts of law principles thereof.
CERTAIN DEFINITIONS
"Acquired Indebtedness" means Indebtedness of a Person (i) existing at the
time such Person becomes a Subsidiary or (ii) assumed in connection with the
acquisition of assets from such Person, in each case, other than Indebtedness
incurred in connection with, or in contemplation of, such Person becoming a
Subsidiary or such acquisition. Acquired Indebtedness shall be deemed to be
incurred on the date of the related acquisition of assets from any Person or
the date the acquired Person becomes a Subsidiary.
"Affiliate" means, with respect to any specified Person, (i) any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person, (ii) any other Person that
owns, directly or indirectly, 5% or more of such Person's Equity Interests or
any officer or director of any such Person or other Person or, with respect to
any natural Person, any person having a relationship with such Person or other
Person by blood, marriage or adoption not more remote than first cousin or
(iii) any other Person 10% or more of the voting Equity Interests of which are
beneficially owned or held directly or indirectly by such specified person.
For the purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person directly or indirectly, whether through ownership of voting securities,
by contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Asset Sale" means any sale, issuance, conveyance, transfer, lease or other
disposition (including, without limitation, by way of merger, consolidation or
Sale and Leaseback Transaction) (collectively, a "transfer"), directly or
indirectly, in one or a series of related transactions, of (i) any Equity
Interest of any Restricted Subsidiary; (ii) all or substantially all of the
properties and assets of any division or line of business of the Company or
its Restricted Subsidiaries; or (iii) any other properties or assets of the
Company or any Restricted Subsidiary, other than in the ordinary course of
business. For the purposes of this definition, the term "Asset Sale" shall not
include any transfer of properties and assets (A) that is governed by the
provisions described under " --Consolidation, Merger, Sale of Assets" or
"Limitations on Asset Swaps," (B) that is by the Company to any Wholly Owned
Restricted Subsidiary, or by any Restricted Subsidiary to the Company or any
Wholly Owned Restricted Subsidiary in accordance with the terms of the
Indenture or (C) that aggregates not more than $1.0 million in gross proceeds.
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"Asset Swap" means an Asset Sale by the Company or any Restricted Subsidiary
in exchange for properties or assets that will be used in the business of the
Company and its Restricted Subsidiaries existing on the date of the Indenture
or reasonably related thereto.
"Average Life to Stated Maturity" means, as of the date of determination
with respect to any Indebtedness, the quotient obtained by dividing (i) the
sum of the products of (a) the number of years from the date of determination
to the date or dates of each successive scheduled principal payment of such
Indebtedness multiplied by (b) the amount of each such principal payment by
(ii) the sum of all such principal payments.
"Bank Credit Agreement" means the Credit Agreement dated as of September 25,
1997 among the Company, the lenders named therein and The Bank of New York as
agent, as such agreement may be amended, renewed, extended, substituted,
refinanced, restructured, replaced, supplemented or otherwise modified from
time to time (including, without limitation, any successive renewals,
extensions substitutions, refinancings, restructurings, replacements,
supplementations or other modifications of the foregoing). For all purposes
under the Indenture, "Bank Credit Agreement" shall include any amendments,
renewals, extensions, substitutions, refinancings, restructurings,
replacements, supplements or any other modifications that increase the
principal amount of the Indebtedness or the commitments to lend thereunder and
have been made in compliance with "--Certain Covenants--Limitation on
Indebtedness;" provided that, for purposes of the definition of "Permitted
Indebtedness," no such increase may result in the principal amount of
Indebtedness of the Company under the Bank Credit Agreement exceeding the
amount permitted by clause (i) of the definition of "Permitted Indebtedness."
"Bankruptcy Law" means Title 11, United States Bankruptcy Code of 1978, as
amended, or any similar United States federal or state law relating to
bankruptcy, insolvency, receivership, winding-up, liquidation, reorganization
or relief of debtors or any amendment to, succession to or change in any such
law.
"Capital Lease Obligation" means any obligation of the Company and its
Restricted Subsidiaries on a Consolidated basis under any capital lease of
real or personal property which, in accordance with GAAP, has been recorded as
a capitalized lease obligation.
"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Exchange Act, or if at any time after the
execution of the Indenture such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the body
performing such duties at such time.
"Company" means Salem Communications Corporation, a corporation incorporated
under the laws of California, until a successor Person shall have become such
pursuant to the applicable provisions of the Indenture, and thereafter
"Company" shall mean such successor Person.
"Consolidated Interest Expense" means, without duplication, for any period,
the sum of (a) the interest expense of the Company and its Consolidated
Restricted Subsidiaries for such period, on a Consolidated basis, including,
without limitation, (i) amortization of debt discount, (ii) the net cost under
Interest Rate Agreements (including amortization of discounts), (iii) the
interest portion of any deferred payment obligation and (iv) accrued interest,
plus (b) the interest component of the Capital Lease Obligations paid, accrued
and/or scheduled to be paid or accrued by the Company during such period, and
all capitalized interest of the Company and its Consolidated Restricted
Subsidiaries, in each case as determined in accordance with GAAP consistently
applied.
"Consolidated Net Income" means, for any period, the Consolidated net income
(or loss) of the Company and its Consolidated Restricted Subsidiaries for such
period as determined in accordance with GAAP consistently applied, adjusted,
to the extent included in calculating such net income (or loss), by excluding,
without duplication, (i) all extraordinary gains but not losses (less all fees
and expenses relating thereto), (ii) the portion of net income (or loss) of
the Company and its Consolidated Restricted Subsidiaries allocable to
interests in
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unconsolidated Persons or Unrestricted Subsidiaries, except to the extent of
the amount of dividends or distributions actually paid to the Company or its
Consolidated Restricted Subsidiaries by such other Person during such period,
(iii) net income (or loss) of any Person combined with the Company or any of
its Restricted Subsidiaries on a "pooling of interests" basis attributable to
any period prior to the date of combination, (iv) any gain or loss, net of
taxes, realized upon the termination of any employee pension benefit plan, (v)
net gains but not losses (less all fees and expenses relating thereto) in
respect of dispositions of assets other than in the ordinary course of
business, or (vi) the net income of any Restricted Subsidiary to the extent
that the declaration of dividends or similar distributions by that Restricted
Subsidiary of that income is not at the time permitted, directly or
indirectly, by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to that Restricted Subsidiary or its shareholders.
"Consolidated Net Worth" means the Consolidated equity of the holders of
Equity Interests (excluding Disqualified Equity Interests) of the Company and
its Restricted Subsidiaries, as determined in accordance with GAAP
consistently applied.
"Consolidation" means, with respect to any Person, the consolidation of the
accounts of such Person and each of its subsidiaries (other than any
Unrestricted Subsidiaries) if and to the extent the accounts of such Person
and each of its subsidiaries (other than any Unrestricted Subsidiaries) would
normally be consolidated with those of such Person, all in accordance with
GAAP consistently applied. The term "Consolidated" shall have a similar
meaning.
"Cumulative Consolidated Interest Expense" means, as of any date of
determination, Consolidated Interest Expense from the date of the Indenture to
the end of the Company's most recently ended full fiscal quarter prior to such
date, taken as a single accounting period.
"Cumulative Operating Cash Flow" means, as of any date of determination,
Operating Cash Flow from the date of the Indenture to the end of the Company's
most recently ended full fiscal quarter prior to such date, taken as a single
accounting period.
"Debt to Operating Cash Flow Ratio" means, as of any date of determination,
the ratio of (a) the aggregate principal amount of all outstanding
Indebtedness of the Company and its Restricted Subsidiaries as of such date on
a Consolidated basis plus the aggregate liquidation preference or redemption
amount of all Disqualified Equity Interests of the Company (excluding any such
Disqualified Equity Interests held by the Company or a Wholly Owned Restricted
Subsidiary of the Company), to (b) Operating Cash Flow of the Company and its
Restricted Subsidiaries on a Consolidated basis for the four most recent full
quarters ending immediately prior to such date, determined on a pro forma
basis (and after giving pro forma effect to (i) the incurrence of such
Indebtedness and (if applicable) the application of the net proceeds
therefrom, including to refinance other Indebtedness, as if such Indebtedness
was incurred, and the application of such proceeds occurred, at the beginning
of such four-quarter period; (ii) the incurrence, repayment or retirement of
any other Indebtedness by the Company and its Restricted Subsidiaries since
the first day of such four-quarter period as if such Indebtedness was
incurred, repaid or retired at the beginning of such four-quarter period
(except that, in making such computation, the amount of Indebtedness under any
revolving credit facility shall be computed based upon the average balance of
such Indebtedness at the end of each month during such four-quarter period);
(iii) in the case of Acquired Indebtedness, the related acquisition, as if
such acquisition had occurred at the beginning of such four-quarter period;
and (iv) any acquisition or disposition by the Company and its Restricted
Subsidiaries of any company or any business or any assets out of the ordinary
course of business, or any related repayment of Indebtedness, in each case
since the first day of such four-quarter period, assuming such acquisition or
disposition had been consummated on the first day of such four-quarter
period).
"Default" means any event which is, or after notice or passage of any time
or both would be, an Event of Default.
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"Disqualified Equity Interests" means any Equity Interests that, either by
their terms or by the terms of any security into which they are convertible or
exchangeable or otherwise, are or upon the happening of an event or passage of
time would be required to be redeemed prior to any Stated Maturity of the
principal of the Notes or are redeemable at the option of the holder thereof
at any time prior to any such Stated Maturity, or are convertible into or
exchangeable for debt securities at any time prior to any such Stated Maturity
at the option of the holder thereof.
"Equity Interest" of any Person means any and all shares, interests, rights
to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) corporate stock or other equity
participations, including partnership interests, whether general or limited,
and limited liability company interests of such Person, including any
Preferred Equity Interests.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fair Market Value" means, with respect to any asset or property, the sale
value that would be obtained in an arm's-length transaction between an
informed and willing seller under no compulsion to sell and an informed and
willing buyer under no compulsion to buy.
"Generally Accepted Accounting Principles" or "GAAP" means generally
accepted accounting principles in the United States, consistently applied,
which are in effect on the date of the Indenture.
"Guarantee" means the guarantee by any Guarantor of the Company's Indenture
Obligations pursuant to a guarantee given in accordance with the Indenture.
"Guaranteed Debt" of any Person means, without duplication, all Indebtedness
of any other Person referred to in the definition of Indebtedness guaranteed
directly or indirectly in any manner by such Person, or in effect guaranteed
directly or indirectly by such Person through an agreement (i) to pay or
purchase such Indebtedness or to advance or supply funds for the payment or
purchase of such Indebtedness, (ii) to purchase, sell or lease (as lessee or
lessor) property, or to purchase or sell services, primarily for the purpose
of enabling the debtor to make payment of such Indebtedness or to assure the
holder of such Indebtedness against loss, (iii) to supply funds to, or in any
other manner invest in, the debtor (including any agreement to pay for
property or services without requiring that such property be received or such
services be rendered), (iv) to maintain working capital or equity capital of
the debtor, or otherwise to maintain the net worth, solvency or other
financial condition of the debtor or (v) otherwise to assure a creditor
against loss; provided that the term "guarantee" shall not include
endorsements for collection or deposit, in either case in the ordinary course
of business.
"Guarantor" means the Subsidiaries listed as guarantors in the Indenture or
any other guarantor of the Indenture Obligations. The Guarantors currently
consist of all the Company's Subsidiaries.
"Indebtedness" means, with respect to any Person, without duplication, (i)
all indebtedness of such Person for borrowed money or for the deferred
purchase price of property or services, excluding any trade payables and other
accrued current liabilities arising in the ordinary course of business, but
including, without limitation, all obligations, contingent or otherwise, of
such Person in connection with any letters of credit issued under letter of
credit facilities, acceptance facilities or other similar facilities and in
connection with any agreement to purchase, redeem, exchange, convert or
otherwise acquire for value any Equity Interests of such Person, or any
warrants, rights or options to acquire such Equity Interests, now or hereafter
outstanding, (ii) all obligations of such Person evidenced by bonds, notes,
debentures or other similar instruments, (iii) all indebtedness created or
arising under any conditional sale or other title retention agreement with
respect to property acquired by such Person (even if the rights and remedies
of the seller or lender under such agreement in the event of default are
limited to repossession or sale of such property), but excluding trade
payables arising in the ordinary course of business, (iv) all obligations
under Interest Rate Agreements of such Person, (v) all Capital Lease
Obligations of such Person, (vi) all Indebtedness referred to in clauses (i)
through (v) above of other Persons and all dividends of other Persons, the
payment of which is secured by (or for which the holder of such Indebtedness
has an existing
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right, contingent or otherwise, to be secured by) any Lien, upon or with
respect to property (including, without limitation, accounts and contract
rights) owned by such Person, even though such Person has not assumed or
become liable for the payment of such Indebtedness, (vii) all Guaranteed Debt
of such Person, (viii) all Disqualified Equity Interests valued at the greater
of their voluntary or involuntary maximum fixed repurchase price plus accrued
and unpaid dividends, and (ix) any amendment, supplement, modification,
deferral, renewal, extension, refunding or refinancing of any liability of the
types referred to in clauses (i) through (viii) above. The amount of
Indebtedness of any Person at any date shall be, without duplication, the
principal amount that would be shown on a balance sheet of such Person
prepared as of such date in accordance with GAAP and the maximum determinable
liability of any Guaranteed Debt referred to in clause (vii) above at such
date. The Indebtedness of the Company and its Restricted Subsidiaries shall
not include any Indebtedness of Unrestricted Subsidiaries so long as such
Indebtedness is non-recourse to the Company and the Restricted Subsidiaries.
For purposes hereof, the "maximum fixed repurchase price" of any Disqualified
Equity Interests which do not have a fixed repurchase price shall be
calculated in accordance with the terms of such Disqualified Equity Interests
as if such Disqualified Equity Interests were purchased on any date on which
Indebtedness shall be required to be determined pursuant to the Indenture, and
if such price is based upon, or measured by, the Fair Market Value of such
Disqualified Equity Interests, such Fair Market Value to be determined in good
faith by the Board of Directors of the issuer of such Disqualified Equity
Interests.
"Indenture Obligations" means the obligations of the Company and any other
obligor under the Indenture or under the Notes, including any Guarantor, to
pay principal, premium, if any, and interest when due and payable, and all
other amounts due or to become due under or in connection with the Indenture,
the Notes and the performance of all other obligations to the Trustee and the
holders under the Indenture and the Notes, according to the terms thereof.
"Independent Director" means a director of the Company other than a director
(i) who (apart from being a director of the Company or any Subsidiary) is an
employee, insider, associate or Affiliate of the Company or a Subsidiary or
has held any such position during the previous five years or (ii) who is a
director, an employee, insider, associate or Affiliate of another party to the
transaction in question.
"Interest Rate Agreements" means one or more of the following agreements
which shall be entered into by one or more financial institutions: interest
rate protection agreements (including, without limitation, interest rate
swaps, caps, floors, collars and similar agreements) and/or other types of
interest rate hedging agreements from time to time.
"Investments" means, with respect to any Person, directly or indirectly, any
advance, loan (including guarantees), or other extension of credit or capital
contribution to (by means of any transfer of cash or other property to others
or any payment for property or services for the account or use of others), or
any purchase, acquisition or ownership by such Person of any Equity Interests,
bonds, notes, debentures or other securities or assets issued or owned by any
other Person and all other items that would be classified as investments on a
balance sheet prepared in accordance with GAAP.
"Lien" means any mortgage, charge, pledge, lien (statutory or otherwise),
privilege, security interest, hypothecation or other encumbrance upon or with
respect to any property of any kind (including any conditional sale or other
title retention agreement, any leases in the nature thereof, and any agreement
to give any security interest), real or personal, movable or immovable, now
owned or hereafter acquired.
"Maturity," when used with respect to any Note, means the date on which the
principal of such Note becomes due and payable as provided in the Note or as
provided in the Indenture, whether at Stated Maturity, the offer date, or the
redemption date and whether by declaration of acceleration, Offer in respect
of Excess Proceeds, Change of Control, call for redemption or otherwise.
"Net Cash Proceeds" means (a) with respect to any Asset Sale by any Person,
the proceeds thereof in the form of cash or Temporary Cash Investments
including payments in respect of deferred payment obligations
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when received in the form of, or stock or other assets when disposed of for,
cash or Temporary Cash Investments (except to the extent that such obligations
are financed or sold with recourse to the Company or any Restricted
Subsidiary) net of (i) brokerage commissions and other reasonable fees and
expenses (including fees and expenses of counsel and investment bankers)
related to such Asset Sale, (ii) provisions for all taxes payable as a result
of such Asset Sale, (iii) payments made to retire Indebtedness where payment
of such Indebtedness is secured by the assets or properties the subject of
such Asset Sale or would cause a required repayment under the Bank Credit
Agreement, (iv) amounts required to be paid to any Person (other than the
Company or any Restricted Subsidiary) owning a beneficial interest in the
assets subject to the Asset Sale and (v) appropriate amounts to be provided by
the Company or any Restricted Subsidiary, as the case may be, as a reserve, in
accordance with GAAP, against any liabilities associated with such Asset Sale
and retained by the Company or any Restricted Subsidiary, as the case may be,
after such Asset Sale, including, without limitation, pension and other post-
employment benefit liabilities, liabilities related to environmental matters
and liabilities under any indemnification obligations associated with such
Asset Sale, all as reflected in an officers' certificate delivered to the
Trustee and (b) with respect to any issuance or sale of Equity Interests, or
debt securities or Equity Interests that have been converted into or exchanged
for Equity Interests, as referred to under "--Certain Covenants--Limitation on
Restricted Payments," the proceeds of such issuance or sale in the form of
cash or Temporary Cash Investments, including payments in respect of deferred
payment obligations when received in the form of, or stock or other assets
when disposed for, cash or Temporary Cash Investments (except to the extent
that such obligations are financed or sold with recourse to the Company or any
Restricted Subsidiary), net of attorney's fees, accountant's fees and
brokerage, consultation, underwriting and other fees and expenses actually
incurred in connection with such issuance or sale and net of taxes paid or
payable as a result thereof.
"Operating Cash Flow" means, for any period, the Consolidated Net Income of
the Company and its Restricted Subsidiaries for such period, plus (a)
extraordinary net losses and net losses on sales of assets outside the
ordinary course of business during such period, to the extent such losses were
deducted in computing Consolidated Net Income, plus (b) provision for taxes
based on income or profits, to the extent such provision for taxes was
included in computing such Consolidated Net Income, and any provision for
taxes utilized in computing the net losses under clause (a) hereof, plus (c)
Consolidated Interest Expense of the Company and its Restricted Subsidiaries
for such period, plus (d) depreciation, amortization and all other non-cash
charges, to the extent such depreciation, amortization and other non-cash
charges were deducted in computing such Consolidated Net Income (including
amortization of goodwill and other intangibles).
"Pari Passu Indebtedness" means any Indebtedness of the Company or any
Guarantor that is pari passu in right of payment to the Notes or any
Guarantee, as the case may be.
"Permitted Investments" means any of the following:
(i) Temporary Cash Investments;
(ii) Investments by the Company or any of its Restricted Subsidiaries in
a Guarantor and Investments by any Restricted Subsidiary in the Company;
(iii) Investments by the Company or any of its Restricted Subsidiaries in
another Person, if as a result of such Investment (a) such other Person
becomes a Restricted Subsidiary that is or would be a Guarantor or (b) such
other Person is merged or consolidated with or into, or transfers or
conveys all or substantially all of its assets to, the Company or a
Restricted Subsidiary that is or would be a Guarantor;
(iv) Promissory notes received as a result of Asset Sales permitted under
the provisions of "Limitation on Sales of Assets."
(v) Investments in assets owned or used in the ordinary course of
business;
(vi) Investments in existence on the date of the Indenture;
(vii) Direct or indirect loans to employees, or to a trustee for the
benefit of such employees, of the Company or any of its Restricted
Subsidiaries in an aggregate amount outstanding at any time not exceeding
$1.0 million;
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(viii) Permitted Non-Commercial Educational Station Investments; provided
that immediately after giving effect to any such Investment, the Company
could incur $1.00 of additional Indebtedness (other than Permitted
Indebtedness) pursuant to the restrictions under the "--Certain Covenants--
Limitation on Indebtedness" covenant; and
(ix) Other Investments that do not exceed $5.0 million at any one time
outstanding.
"Permitted Non-Commercial Educational Station Investment" means a loan made
by the Company or a Restricted Subsidiary to a non-profit entity, the proceeds
of which are used to acquire assets used in the operation of a radio station;
provided that so long as any such Investment remains outstanding (i) such loan
shall be evidenced by a promissory note and shall not be subordinated to any
other Indebtedness of such non-profit entity; (ii) at least 40% of the board
seats (or other comparable governing body) of such non-profit entity shall be
held by executive officers of the Company, and (iii) a technical and
professional services agreement shall be in full force and effect between such
non-profit entity and the Company pursuant to which the Company shall be
compensated for providing engineering, accounting, legal and other assistance
in connection with the operation of the station licensed to such non-profit
entity (which agreement shall contain customary terms and conditions for
technical and professional services agreements in the radio broadcasting
industry generally).
"Permitted Subsidiary Indebtedness" means:
(i) Indebtedness of any Guarantor under Capital Lease Obligations
incurred in the ordinary course of business; and
(ii) Indebtedness of any Guarantor (a) issued to finance or refinance the
purchase or construction of any assets of such Guarantor or (b) secured by
a Lien on any assets of such Guarantor where the lender's sole recourse is
to the assets so encumbered, in either case (x) to the extent the purchase
or construction prices for such assets are or should be included in
"property and equipment" in accordance with GAAP and (y) if the purchase or
construction of such assets is not part of any acquisition of a Person or
business unit.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political
subdivisions thereof.
"Preferred Equity Interest," as applied to the Equity Interest of any
Person, means an Equity Interest of any class or classes (however designated)
which is preferred as to the payment of dividends or distributions, or as to
the distribution of assets upon any voluntary or involuntary liquidation or
dissolution of such Person, over Equity Interests of any other class of such
Person.
"Public Equity Offering" means, with respect to any Person, an underwritten
public offering by such Person of some or all of its Equity Interests (other
than Disqualified Equity Interests), the net proceeds of which (after
deducting any underwriting discounts and commissions) exceed $10.0 million.
"Qualified Equity Interests" of any Person means any and all Equity
Interests of such Person other than Disqualified Equity Interests.
"Restricted Subsidiary" means a Subsidiary of the Company other than an
Unrestricted Subsidiary.
"Sale and Leaseback Transaction" means any transaction or series of related
transactions pursuant to which the Company or a Restricted Subsidiary sells or
transfers any property or asset in connection with the leasing, or the resale
against installment payments, of such property or asset to the seller or
transferor.
"Securities Act" means the Securities Act of 1933, as amended.
"Stated Maturity," when used with respect to any Indebtedness or any
installment of interest thereon, means the date specified in such Indebtedness
as the fixed date on which the principal of such Indebtedness or such
installment of interest is due and payable.
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"Subordinated Indebtedness" means Indebtedness of the Company or any
Guarantor subordinated in right of payment to the Notes or any Guarantee, as
the case may be.
"Subsidiary" means any Person a majority of the equity ownership or the
Voting Stock of which is at the time owned, directly or indirectly, by the
Company or by one or more other Subsidiaries, or by the Company and one or
more other Subsidiaries.
"Temporary Cash Investments" means (i) any evidence of Indebtedness,
maturing not more than one year after the date of acquisition, issued by the
United States of America, or an instrumentality or agency thereof and
guaranteed fully as to principal, premium, if any, and interest by the United
States of America, (ii) any certificate of deposit, maturing not more than one
year after the date of acquisition, issued by, or time deposit of, a
commercial banking institution (including the Trustee) that is a member of the
Federal Reserve System and that has combined capital and surplus and undivided
profits of not less than $500.0 million, whose debt has a rating, at the time
as of which any investment therein is made, of "P-1" (or higher) according to
Moody's Investors Service, Inc. ("Moody's") or any successor rating agency or
"A-1" (or higher) according to Standard & Poor's Corporation ("S&P") or any
successor rating agency, (iii) commercial paper, maturing not more than one
year after the date of acquisition, issued by a corporation (other than an
Affiliate or Subsidiary of the Company, but including the Trustee) organized
and existing under the laws of the United States of America with a rating, at
the time as of which any investment therein is made, of "P-1" (or higher)
according to Moody's or "A-1" (or higher) according to S&P and (iv) any money
market deposit accounts issued or offered by a domestic commercial bank having
capital and surplus in excess of $500.0 million.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company that at
the time of determination shall be an Unrestricted Subsidiary (as designated
by the Board of Directors of the Company, as provided below) and (ii) any
Subsidiary of an Unrestricted Subsidiary. The Board of Directors of the
Company may designate any Subsidiary of the Company (including any newly
acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary if all
of the following conditions apply: (a) such Subsidiary is not liable, directly
or indirectly, with respect to any Indebtedness other than Unrestricted
Subsidiary Indebtedness and (b) any Investment in such Subsidiary made as a
result of designating such Subsidiary an Unrestricted Subsidiary shall not
violate the provisions of the "--Certain Covenants--Limitation on Unrestricted
Subsidiaries" covenant. Any such designation by the Board of Directors of the
Company shall be evidenced to the Trustee by filing with the Trustee a board
resolution giving effect to such designation and an officers' certificate
certifying that such designation complies with the foregoing conditions. The
Board of Directors of the Company may designate any Unrestricted Subsidiary as
a Restricted Subsidiary; provided that immediately after giving effect to such
designation, the Company could incur $1.00 of additional Indebtedness (other
than Permitted Indebtedness) pursuant to the restrictions under the "--Certain
Covenants--Limitation on Indebtedness" covenant.
"Unrestricted Subsidiary Indebtedness" of any Unrestricted Subsidiary means
Indebtedness of such Unrestricted Subsidiary (i) as to which neither the
Company nor any Restricted Subsidiary is directly or indirectly liable (by
virtue of the Company or any such Restricted Subsidiary being the primary
obligor on, guarantor of, or otherwise liable in any respect to, such
Indebtedness), except Guaranteed Debt of the Company or any Restricted
Subsidiary to any Affiliate, in which case (unless the incurrence of such
Guaranteed Debt resulted in a Restricted Payment at the time of incurrence)
the Company shall be deemed to have made a Restricted Payment equal to the
principal amount of any such Indebtedness to the extent guaranteed at the time
such Affiliate is designated an Unrestricted Subsidiary and (ii) which, upon
the occurrence of a default with respect thereto, does not result in, or
permit any holder of any Indebtedness of the Company or any Restricted
Subsidiary to declare, a default on such Indebtedness of the Company or any
Restricted Subsidiary or cause the payment thereof to be accelerated or
payable prior to its Stated Maturity.
"Voting Stock" means stock of the class or classes pursuant to which the
holders thereof have the general voting power under ordinary circumstances to
elect at least a majority of the board of directors, managers or
85
<PAGE>
trustees of a corporation (irrespective of whether or not at the time stock of
any other class or classes shall have or might have voting power by reason of
the happening of any contingency).
"Wholly Owned Restricted Subsidiary" means a Restricted Subsidiary all the
Equity Interests of which are owned by the Company or another Wholly Owned
Restricted Subsidiary. The Wholly Owned Restricted Subsidiaries of the Company
currently consist of all the Company's Subsidiaries.
86
<PAGE>
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following discussion of the material United States federal income tax
consequences of the Exchange Offer is for general information only. It is
based on the Internal Revenue Code of 1986, as amended to the date hereof (the
"Code"), existing and proposed Treasury regulations, and judicial and
administrative determinations, all of which are subject to change at any time,
possibly on a retroactive basis. The following relates only to Old Notes, and
Notes received therefor, that are held as "capital assets" within the meaning
of Section 1221 of the Code by persons who are citizens or residents of the
United States. It does not discuss state, local, or foreign tax consequences,
nor does it discuss tax consequences to categories of holders that are subject
to special rules, such as foreign persons, tax-exempt organizations, insurance
companies, banks, and dealers in stocks and securities. Tax consequences may
vary depending on the particular status of an investor. No rulings will be
sought from the Internal Revenue Service ("IRS") with respect to the federal
income tax consequences of the Exchange Offer.
THIS SECTION DOES NOT PURPORT TO DEAL WITH ALL ASPECTS OF FEDERAL INCOME
TAXATION THAT MAY BE RELEVANT TO A HOLDER'S DECISION TO PARTICIPATE IN THE
EXCHANGE OFFER. EACH HOLDER SHOULD CONSULT WITH ITS OWN TAX ADVISOR CONCERNING
THE APPLICATION OF THE FEDERAL INCOME TAX LAWS AND OTHER TAX LAWS TO ITS
PARTICULAR SITUATION BEFORE DETERMINING WHETHER TO PARTICIPATE IN THE EXCHANGE
OFFER.
THE EXCHANGE OFFER
The exchange of the Old Notes for the Notes pursuant to the Exchange Offer
will not constitute a material modification of the terms of the Old Notes or
the Notes and, thus, such exchange will not constitute an exchange for federal
income tax purposes. Accordingly, such exchange will have no federal income
tax consequences to the holders of the Old Notes or the Notes, regardless of
whether such holders participate in the Exchange Offer, and each holder will
continue to be required to include interest on the Notes or the Old Notes, if
not exchanged, in its gross income in accordance with its method of accounting
for federal income tax purposes. The Company intends, to the extent required,
to treat the Exchange Offer for federal income tax purposes in accordance with
the position described in this paragraph.
BACKUP WITHHOLDING
Under the Code, a holder of a Note may be subject, under certain
circumstances, to "backup withholding" at a 31% rate with respect to payments
in respect of interest thereon or the gross proceeds from the disposition
thereof. This withholding generally applies only if the holder (i) fails to
furnish his or her social security or other taxpayer identification number
("TIN") within a reasonable time after request therefor, (ii) furnishes an
incorrect TIN, (iii) is notified by the IRS that he or she has failed to
report properly payments of interest and dividends and the IRS has notified
the Company that he or she is subject to backup withholding, or (iv) fails,
under certain circumstances, to provide a certified statement, signed under
penalty of perjury, that the TIN provided is his or her correct number and
that he or she is not subject to backup withholding. Any amount withheld from
a payment to a holder under the backup withholding rules is allowable as a
credit against such holder's federal income tax liability, provide that the
required information is furnished to the IRS. Corporations and certain other
entities described in the Code and Treasury regulations are exempt from such
withholding if their exempt status is properly established.
PLAN OF DISTRIBUTION
Each broker-dealer that receives Notes for its own account pursuant to the
Exchange Offer (a "Participating Broker") must acknowledge that it will
deliver a prospectus in connection with any resale of such Notes. This
Prospectus, as it may be amended or supplemented from time to time, may be
used by a Participating Broker in connection with any resale of Notes received
in exchange for Old Notes where such Old Notes were acquired as a result of
market-making activities or other trading activities. The Company has agreed
that for a period of 180 days after the Expiration Date, it will make this
Prospectus, as amended or supplemented, available to any
87
<PAGE>
Participating Broker for use in connection with any such resale. In addition,
until , 1998 (90 days after the date of this Prospectus), all dealers
effecting transactions in the Notes may be required to deliver a prospectus.
The Company will not receive any proceeds from any sale of Notes by broker-
dealers. Notes received by any Participating Broker may be sold from time to
time in one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the Notes or a combination of
such methods of resale, at market prices prevailing at the time of resale, at
prices related to such prevailing market prices or at negotiated prices. Any
such resale may be made directly to purchasers or to or through brokers or
dealers who may receive compensation in the form of commissions or concessions
from any such broker-dealer and/or the purchasers of any such Notes. Any
Participating Broker that resells Notes that were received by it for its own
account pursuant to the Exchange Offer and any broker or dealer that
participates in a distribution of such Notes may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit on any
such resale of Notes and any commissions or concessions received by any such
persons may be deemed to be underwriting compensation under the Securities
Act. The Letter of Transmittal states that by acknowledging that it will
deliver and by delivering a prospectus as required, a Participating Broker
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act.
For a period of 90 days after the Expiration Date, the Company will send a
reasonable number of additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any Participating Broker that requests such
documents in the Letter of Transmittal. The Company has agreed to pay all
expenses incident to the Exchange Offer (which shall not include the expenses
of any holder in connection with resales of the Notes). The Company has agreed
to indemnify the holders of the Notes, including any Participating Broker,
against certain liabilities, including liabilities under the Securities Act.
LEGAL MATTERS
The validity of the Notes and Guarantees offered hereby will be passed upon
for the Company by Gibson, Dunn & Crutcher LLP, Orange County, California.
EXPERTS
The consolidated financial statements of Salem Communications Corporation at
December 31, 1995 and 1996, and for each of the three years in the period
ended December 31, 1996, appearing in this Prospectus and Registration
Statement have been audited by Ernst & Young LLP, independent auditors, as set
forth in their report thereon appearing elsewhere herein, and are included in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
88
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Auditors............................................ F-2
Audited Consolidated Financial Statements
Consolidated Balance Sheets as of December 31, 1995 and 1996 and September
30, 1997 (unaudited)..................................................... F-3
Consolidated Statements of Operations for the years ended December 31,
1994, 1995 and 1996 and the nine months ended September 30, 1996 and 1997
(unaudited).............................................................. F-4
Consolidated Statements of Shareholders' Equity for the years ended
December 31, 1994, 1995 and 1996 and the nine months ended September 30,
1996 and 1997 (unaudited)................................................ F-5
Consolidated Statements of Cash Flows for the years ended December 31,
1994, 1995 and 1996 and the nine months ended September 30, 1996 and 1997
(unaudited).............................................................. F-6
Notes to Consolidated Financial Statements................................ F-7
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Shareholders
Salem Communications Corporation
We have audited the accompanying consolidated balance sheets of Salem
Communications Corporation as of December 31, 1995 and 1996, and the related
consolidated statements of operations, shareholders' equity, and cash flows
for each of the three years in the period ended December 31, 1996. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Salem
Communications Corporation at December 31, 1995 and 1996, and the consolidated
results of their operations and their cash flows for each of the three years
in the period ended December 31, 1996 in conformity with generally accepted
accounting principles.
Ernst & Young LLP
May 9, 1997, except for basis of presentation and reorganization under Note 1
as to which the date is August 13, 1997
Woodland Hills, California
F-2
<PAGE>
SALEM COMMUNICATIONS CORPORATION
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31
----------------- SEPTEMBER 30
1995 1996 1997
-------- -------- ------------
(UNAUDITED)
ASSETS
------
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents..................... $ 1,007 $ 1,962 $ 2,103
Accounts receivable (less allowance for
doubtful accounts of $704 in 1995, $1,005 in
1996 and $1,249 in 1997)..................... 9,215 10,542 10,991
Other receivables............................. 151 194 110
Prepaid expenses.............................. 197 308 964
Prepaid income taxes.......................... 24 70 39
Tower construction project held for sale...... -- -- 2,943
Deferred income taxes......................... 1,071 537 3,170
-------- -------- --------
Total current assets............................ 11,665 13,613 20,320
Property, plant and equipment, net.............. 24,595 30,307 36,172
Intangible assets:
Broadcast licenses............................ 69,169 117,081 138,460
Noncompetition agreements..................... 14,887 14,893 14,893
Customer lists and contracts.................. 3,144 4,094 4,094
Favorable and assigned leases................. 1,798 1,800 1,800
Goodwill...................................... 5,152 5,795 6,002
Organizational costs and other intangible
assets....................................... 974 972 972
-------- -------- --------
95,124 144,635 166,221
Less accumulated amortization................. 33,201 37,854 44,388
-------- -------- --------
Intangible assets, net........................ 61,923 106,781 121,833
Notes receivable from shareholders and accrued
interest....................................... 4,642 28 --
Bond issue costs................................ -- -- 4,638
Other assets.................................... 1,992 8,456 1,170
-------- -------- --------
Total assets.................................... $104,817 $159,185 $184,133
======== ======== ========
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
<S> <C> <C> <C>
Current liabilities:
Accounts payable.............................. $ 2,786 $ 1,935 $ 884
Accrued expenses.............................. 295 485 592
Accrued compensation and related.............. 1,224 1,589 1,615
Accrued interest.............................. 252 1,157 11
Income taxes.................................. 20 189 --
Current portion of long-term debt............. 6,000 -- --
-------- -------- --------
Total current liabilities....................... 10,577 5,355 3,102
Long-term debt, less current portion ........... 75,020 121,790 160,100
Deferred income taxes........................... 5,829 11,427 11,490
Other liabilities............................... 109 79 55
Shareholders' equity:
Common stock, no par value; authorized 100,000
shares; issued and outstanding 81,672 shares. 5,832 5,832 5,832
Retained earnings............................. 7,450 14,702 3,554
-------- -------- --------
Total shareholders' equity...................... 13,282 20,534 9,386
-------- -------- --------
Total liabilities and shareholders' equity...... $104,817 $159,185 $184,133
======== ======== ========
</TABLE>
See accompanying notes.
F-3
<PAGE>
SALEM COMMUNICATIONS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER
YEAR ENDED DECEMBER 31 30
------------------------- ----------------
1994 1995 1996 1996 1997
------- ------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Gross broadcasting revenue........ $42,591 $53,303 $65,141 $46,974 $54,471
Less agency commissions........... 4,016 5,135 6,131 4,509 5,022
------- ------- ------- ------- -------
Net broadcasting revenue.......... 38,575 48,168 59,010 42,465 49,449
Operating expenses:
Station operating expenses...... 22,179 27,527 33,463 23,907 28,793
Corporate expenses (including
$800 in shareholder salaries in
1994, 1995 and 1996)........... 3,292 3,799 4,663 3,413 4,998
Tax reimbursements to S
corporation shareholders....... 977 2,057 2,038 1,529 1,780
Depreciation and amortization... 7,633 7,884 8,394 6,148 9,382
------- ------- ------- ------- -------
Operating expenses.............. 34,081 41,267 48,558 34,997 44,953
------- ------- ------- ------- -------
Net operating income.............. 4,494 6,901 10,452 7,468 4,496
Other income (expense):
Interest income................. 230 319 523 312 156
Gain (loss) on disposal of
assets......................... (482) (7) 16,064 12,659 (190)
Interest expense................ (3,668) (6,646) (7,361) (5,510) (8,548)
Other expense................... (135) (255) (270) (209) (288)
------- ------- ------- ------- -------
Income (loss) before income taxes
and extraordinary item........... 439 312 19,408 14,720 (4,374)
Provision (benefit) for income
taxes............................ (247) (204) 6,655 5,046 (1,790)
------- ------- ------- ------- -------
Income (loss) before extraordinary
item............................. 686 516 12,753 9,674 (2,584)
Extraordinary loss on early
extinguishment of debt (net of
income tax benefit of $263 in
1995 and $755 in 1997)........... -- (394) -- -- (1,090)
------- ------- ------- ------- -------
Net income (loss)................. $ 686 $ 122 $12,753 $ 9,674 $(3,674)
======= ======= ======= ======= =======
Pro forma information (unaudited):
Income (loss) before income taxes
and extraordinary item as
reported above................... $ 439 $ 312 $19,408 $14,720 $(4,374)
Add back tax reimbursements to S
Corporation shareholders......... 977 2,057 2,038 1,529 1,780
------- ------- ------- ------- -------
Pro forma income (loss) before
income taxes and extraordinary
item ............................ 1,416 2,369 21,446 16,249 (2,594)
Pro forma provision (benefit) for
income taxes..................... 568 951 8,608 6,522 (1,033)
------- ------- ------- ------- -------
Pro forma income (loss) before
extraordinary item............... 848 1,418 12,838 9,727 (1,561)
Extraordinary loss................ -- (394) -- -- (1,090)
------- ------- ------- ------- -------
Pro forma net income (loss)....... $ 848 $ 1,024 $12,838 $ 9,727 $(2,651)
======= ======= ======= ======= =======
</TABLE>
See accompanying notes.
F-4
<PAGE>
SALEM COMMUNICATIONS CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON RETAINED
STOCK EARNINGS TOTAL
------ -------- -------
<S> <C> <C> <C>
Shareholders' equity, January 1, 1994.............. $5,832 $ 6,642 $12,474
Net income......................................... -- 686 686
------ ------- -------
Shareholders' equity, December 31, 1994............ 5,832 7,328 13,160
Net income......................................... -- 122 122
------ ------- -------
Shareholders' equity, December 31, 1995............ 5,832 7,450 13,282
Net income......................................... -- 12,753 12,753
Shareholder distributions.......................... -- (5,501) (5,501)
------ ------- -------
Shareholders' equity, December 31, 1996............ 5,832 14,702 20,534
Net loss (unaudited)............................... -- (3,674) (3,674)
Shareholder distributions (unaudited).............. -- (7,474) (7,474)
------ ------- -------
Shareholders' equity, September 30, 1997
(unaudited)....................................... $5,832 $ 3,554 $ 9,386
====== ======= =======
</TABLE>
See accompanying notes.
F-5
<PAGE>
SALEM COMMUNICATIONS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31 SEPTEMBER 30
---------------------------- -------------------
1994 1995 1996 1996 1997
-------- -------- -------- -------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss)........... $ 686 $ 122 $ 12,753 $ 9,674 $ (3,674)
Adjustments to reconcile net
income (loss) to net cash
provided by operating
activities:
Depreciation and
amortization.............. 7,633 7,884 8,394 6,148 9,382
Amortization of bank loan
fees...................... 85 104 109 82 165
Deferred income taxes...... (214) (341) 6,133 4,335 (2,570)
(Gain) loss on sale of
assets.................... 482 7 (16,064) (12,659) 190
Accrued interest from
shareholders.............. (174) (213) -- (172) --
Income recognition on
noncompetition
agreements................ (80) -- -- -- --
Loss on early
extinguishment of debt.... -- 657 -- -- 1,845
Changes in operating
assets and liabilities:
Accounts receivable...... (931) (2,539) (1,370) 511 (365)
Prepaid expenses and
other current assets.... (81) 9 (111) (275) (798)
Accounts payable and
accrued expenses........ 401 1,950 558 1,639 (2,065)
Other liabilities........ (5) (30) (30) (22) (25)
Income taxes............. (320) 71 123 -- (157)
-------- -------- -------- -------- ---------
Net cash provided by
operating activities....... 7,482 7,681 10,495 9,261 1,928
INVESTING ACTIVITIES
Capital expenditures....... (2,441) (3,040) (6,982) (4,119) (5,502)
Purchases of radio
stations.................. (14,935) (24,454) (21,160) (8,329) (18,806)
Deposits on radio station
acquisitions.............. (1,050) (125) (6,314) (16,288) --
Proceeds from disposal of
property, plant and
equipment and intangible
assets.................... 47 38 15,867 15,831 133
Expenditures for tower
construction project held
for sale.................. -- -- -- -- (2,943)
Other assets............... (427) (100) (334) (345) 526
-------- -------- -------- -------- ---------
Net cash used in investing
activities................. (18,806) (27,681) (18,923) (13,250) (26,592)
FINANCING ACTIVITIES
Proceeds from issuance of
long-term debt and notes
payable to shareholders... 17,300 42,840 23,800 17,500 222,710
Payments of long-term
debt...................... (5,300) (22,220) (15,430) (10,630) (182,500)
Payments of bank loan
fees...................... (175) (856) -- -- (1,003)
Payments of costs related
to debt refinancing....... -- (228) -- -- (418)
Payments of bond issue
costs..................... -- -- -- -- (4,638)
Repayments (additions) of
shareholder notes and
repayment of accrued
interest receivable--net.. 2 (309) 4,614 (2,838) (1,872)
Proceeds from shareholder
notes payable............. -- -- 1,900 -- --
Distributions to
shareholders.............. -- -- (5,501) (700) (7,474)
-------- -------- -------- -------- ---------
Net cash provided by
financing activities...... 11,827 19,227 9,383 3,332 24,805
-------- -------- -------- -------- ---------
Net (decrease) increase in
cash and cash
equivalents............... 503 (773) 955 (657) 141
Cash and cash equivalents
at beginning of year...... 1,277 1,780 1,007 1,007 1,962
-------- -------- -------- -------- ---------
Cash and cash equivalents at
end of year................ $ 1,780 $ 1,007 $ 1,962 $ 350 $ 2,103
======== ======== ======== ======== =========
Supplemental disclosures of
cash flow information:
Cash paid during the year
for:
Interest................. $ 3,425 $ 6,816 $ 6,158 $ 4,475 $ 9,288
Income taxes............. 287 288 400 227 221
Noncash transactions:
Acquisition of radio
station (KWRD-FM)
Fair market value of
assets acquired......... $ -- $ -- $ 40,100 $ -- $ --
Debt to seller........... -- -- (30,500) -- --
Fair market value of
assets exchanged........ -- -- (8,000) -- --
-------- -------- -------- -------- ---------
Cash paid (reflected in
Deposits on radio station
acquisitions).............. $ -- $ -- $ 1,600 $ -- $ --
======== ======== ======== ======== =========
</TABLE>
See accompanying notes.
F-6
<PAGE>
SALEM COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION PERTAINING TO THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997
IS UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION AND REORGANIZATION
The accompanying consolidated financial statements of Salem Communications
Corporation (Salem or the Company) include the Company and its wholly-owned
subsidiaries. Prior to the reorganization described below (the Reorganization)
the financial statements had been presented on a combined basis and included
Salem, New Inspiration Broadcasting Company, Inc. (New Inspiration), Golden
Gate Broadcasting Company, Inc. (Golden Gate) and Beltway Media Partners
(Beltway), all of these entities were under common control. New Inspiration
and Golden Gate were S corporations for income tax purposes. Salem, New
Inspiration and Golden Gate are the partners of Beltway. The combined
financial statements were entitled Salem Broadcasting Entities. Pursuant to
the Reorganization the financial statements have been renamed and the
disclosure of common stock information has been retroactively restated for all
periods presented as if the Reorganization had been completed as of the
beginning of the earliest period presented. All significant intercompany
balances and transactions have been eliminated.
The Company is a holding company with substantially no assets, operations or
cash flows other than its investment in subsidiaries. All of the Company's
subsidiaries are Guarantors of the 9 1/2% Senior Subordinated Notes due 2007
(the Notes) discussed in Note 4. Separate financial statements of each
Guarantor have not been presented because all the subsidiaries are wholly
owned, the Notes are fully and unconditionally guaranteed on a joint and
several basis by all the direct and indirect subsidiaries of the Company, the
aggregate assets, earnings, and equity of the Guarantors is essentially
equivalent to the consolidated assets, earnings, and equity of the Company,
and management has determined that separate financial statements would not be
material to an investment decision.
In August 1997, the Company, New Inspiration and Golden Gate effected the
Reorganization pursuant to which New Inspiration and Golden Gate became
wholly-owned subsidiaries of the Company, with Beltway remaining a
partnership. The Company accounted for the Reorganization as a combination of
entities under common control, which is a method similar to a pooling of
interests.
The S corporation status of New Inspiration and Golden Gate was terminated
in the Reorganization. Prior to the Reorganization, New Inspiration and Golden
Gate distributed cash and promissory notes to their respective shareholders in
the aggregate amount of $8.5 million. Of such amount, $1.8 million, equal to
the estimated federal and state income tax liability of the S corporation
shareholders on the earnings of New Inspiration and Golden Gate, was paid by
New Inspiration and Golden Gate in cash. The balance, $6.7 million
representing the balance of the net income of New Inspiration and Golden Gate
that had previously been taxed, but not distributed to the shareholders, was
paid in the form of promissory notes. In September 1997, the Company financed
the repayment of these promissory notes by an additional borrowing.
DESCRIPTION OF BUSINESS
Salem operated 39 and 31 radio stations across the United States at December
31, 1996 and 1995, respectively. The Company also owns and operates Salem
Radio Network (SRN), SRN News Network (SNN), Salem Music Network (SMN) and
Salem Radio Representatives (SRR). SRN, SNN and SMN are radio networks which
produce and distribute talk, news and music programming to Salem's radio
stations and other affiliated independent radio stations. SRR sells commercial
air time to national advertisers for Salem's radio stations and networks, and
for affiliated independent radio stations.
The significant accounting policies of Salem are summarized below and
conform with generally accepted accounting principles and reflect practices
appropriate to the radio broadcasting industry.
F-7
<PAGE>
SALEM COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION PERTAINING TO THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997
IS UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
INTERIM FINANCIAL DATA
The unaudited financial statements of the Company for the nine months ended
September 30, 1996 and 1997 have been prepared on the same basis as the
audited financial statements and, in the opinion of management, include all
adjustments (consisting only of normal recurring adjustments) necessary to
state fairly the financial information set forth therein, in accordance with
generally accepted accounting principles.
The results of operations for the nine months ended September 30, 1997 are
not necessarily indicative of the results to be expected for the full fiscal
year.
REVENUE RECOGNITION
Revenue from radio programs and commercial advertising is recognized when
broadcast. Salem's customers principally include not-for-profit charitable
organizations and commercial advertisers.
Advertising by the radio stations exchanged for goods and services is
recorded as the advertising is broadcast and is valued at the fair market
value of goods or services received or to be received. The value of the goods
and services received in such barter transactions is charged to expense when
used. Barter revenue for the years ended December 31, 1994, 1995 and 1996, was
approximately $1,431,000, $1,467,000 and $1,498,000, respectively. Barter
expenses were approximately the same.
CASH EQUIVALENTS
Salem considers all highly liquid debt instruments with a maturity of three
months or less when purchased to be cash equivalents. The recorded amount for
cash and cash equivalents approximates the fair market value.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are recorded at cost less accumulated
depreciation. Depreciation is computed using the straight-line method over
estimated useful lives as follows:
<TABLE>
<S> <C>
Buildings..................................... 40 years
Office furnishings and equipment.............. 5-10 years
Antennae, towers and transmitting equipment... 20 years
Studio and production equipment............... 10 years
Record and tape libraries..................... 20 years
Automobiles................................... 5 years
Leasehold improvements........................ 15 years
</TABLE>
The carrying value of property, plant and equipment is evaluated
periodically in relation to the operating performance and anticipated future
cash flows of the underlying radio stations and businesses for indicators of
impairment. When indicators of impairment are present and the undiscounted
cash flows estimated to be generated from these assets are less than the
carrying value of these assets an adjustment to reduce the carrying value (if
necessary) to the fair market value of the assets is recorded. No adjustments
to the carrying amounts of property, plant and equipment have been made during
the years ended December 31, 1994, 1995 and 1996.
F-8
<PAGE>
SALEM COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION PERTAINING TO THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997
IS UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
INTANGIBLE ASSETS
Intangible assets acquired in conjunction with the acquisition of various
radio stations are being amortized over the following estimated useful lives
using the straight-line method:
<TABLE>
<S> <C>
Broadcast licenses..................... 10-25 years
Noncompetition agreements.............. 3-5 years
Customer lists and contracts........... 10 years
Favorable and assigned leases.......... Life of the lease
Goodwill............................... 15-40 years
Organizational costs and other......... 5-10 years
</TABLE>
The carrying value of intangibles is evaluated periodically in relation to
the operating performance and anticipated future cash flows of the underlying
radio stations and businesses for indicators of impairment. When indicators of
impairment are present and the undiscounted cash flows estimated to be
generated from these assets are less than the carrying amounts of these
assets, an adjustment to reduce the carrying value (if necessary) to the fair
market value of these assets is recorded. No adjustments to the carrying
amounts of intangible assets have been made during the year ended December 31,
1994, 1995 and 1996.
TAX REIMBURSEMENTS TO S CORPORATION SHAREHOLDERS
"Tax reimbursements to S Corporation shareholders" represents additional
salary payments made in the amount necessary to satisfy individual federal and
state income tax liabilities of the S Corporation shareholders on the earnings
of New Inspiration and Golden Gate.
INCOME TAXES
The Company accounts for income taxes in accordance with the Financial
Accounting Standards Board Statement of Financial Accounting Standards (SFAS)
No. 109, "Accounting for Income Taxes." SFAS No. 109 prescribes the liability
method of providing for deferred income taxes. Deferred income taxes arise
from temporary differences between the tax basis of assets and liabilities and
their reported amounts in the financial statements.
Federal and state income taxes (except for 1.5% state franchise tax) have
not been provided through August 12, 1997 for New Inspiration and Golden Gate
because they were S Corporations and income tax attributes of S Corporations
are passed through to their shareholders.
Income taxes for the nine months ended September 30, 1996 and 1997 were
provided for using the estimated annual effective tax rate. The income tax
provision for the nine months ended September 30, 1997 includes a charge of
$612,000 for the reinstatement of deferred taxes upon the reorganization and
conversion of New Inspiration and Golden Gate from S Corporation to C
Corporation status effective August 13, 1997.
CONCENTRATIONS OF BUSINESS AND CREDIT RISKS
The majority of the Company's operations are conducted in several locations
across the country. The Company's credit risk is spread across a large number
of customers, none of which accounted for a significant volume of revenue or
outstanding receivables. The Company does not normally require collateral on
credit sales; however, credit histories are reviewed before extending
substantial credit to any customer. The Company
F-9
<PAGE>
SALEM COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION PERTAINING TO THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997
IS UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
establishes an allowance for doubtful accounts based on customers' payment
history and perceived credit risks. Bad debts have been within management's
expectations.
INTEREST RATE SWAP AGREEMENTS
The Company enters into interest-rate swap agreements to modify the interest
characteristics of its outstanding debt. Each interest-rate swap agreement is
designated with all or a portion of the principal balance and term of a
specific debt obligation. These agreements involve the exchange of amounts
based on a fixed interest rate for amounts based on variable interest rates
over the life of the agreement without an exchange of the notional amount upon
which the payments are based. The differential to be paid or received as
interest rates change is accrued and recognized as an adjustment of interest
expense related to the debt. The related amount payable to or receivable from
counterparties is included in other liabilities or assets. The fair value of
the swap agreements and changes in the fair value as a result of changes in
market interest rates are not recognized in the financial statements.
Gains and losses on terminations of interest-rate swap agreements are
deferred as an adjustment to the carrying amount of the outstanding debt and
amortized as an adjustment to interest expense related to the debt over the
remaining term of the original contract life of the terminated swap agreement.
In the event of the early extinguishment of a designated debt obligation, any
realized or unrealized gain or loss from the swap would be recognized in
income coincident with the extinguishment gain or loss.
INTEREST RATE CAP AGREEMENTS
The Company purchases interest-rate cap agreements that are designed to
limit its exposure to increasing interest rates. An interest rate cap entitles
the Company to receive a payment from the counter-party equal to the excess,
if any, of the hypothetical interest expense (strike price) on a specified
notional amount at a current market interest rate over an amount specified in
the agreement. The only amount the Company is obligated to pay to the
counterparty is an initial premium. The strike price of these agreements
exceeds the current market levels at the time they are entered into. The cost
of these agreements is included in other assets and amortized to interest
expense ratably during the life of the agreement.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
RECLASSIFICATIONS
Certain reclassifications were made to the prior year financial statements
to conform to the current year presentation.
F-10
<PAGE>
SALEM COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION PERTAINING TO THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997
IS UNAUDITED)
2. ACQUISITIONS AND DISPOSITIONS OF ASSETS
Pro forma information to present operating results as if the acquisitions
discussed below had occurred at the beginning of the year acquired is not
presented because the Company, generally, changes the programming format of
the radio stations such that the source and nature of revenue and operating
expenses are significantly different than they were prior to the acquisition
and, accordingly, historical and pro forma financial information is not
considered meaningful by management. Pro forma and historical financial
information of radio stations acquired where the format was not changed is not
significant to the consolidated financial position or operating results of the
Company.
During the nine months ended September 30, 1997, the Company purchased the
assets (principally intangibles) of the following radio stations:
<TABLE>
<CAPTION>
ACQUISITION MARKET PURCHASE
DATE STATION SERVED PRICE
----------- ------- ------ --------------
(IN THOUSANDS)
<S> <C> <C> <C>
January 21, 1997............. WHK-AM Cleveland, OH $ 6,220
February 20, 1997............ WHK-FM Canton, OH 5,903
February 20, 1997............ WHLO-AM Akron, OH 1,995
February 28, 1997............ WEZE-AM Boston, MA 7,030
April 2, 1997................ KTKZ-AM Sacramento, CA 1,485
July 18, 1997................ WITH-AM Baltimore, MD 1,114
July 18, 1997................ WTSJ-AM Cincinnati, OH 1,114
-------
$24,861
=======
</TABLE>
The purchase price has been allocated to the assets acquired as follows:
<TABLE>
<CAPTION>
ASSET AMOUNT
----- ------
(IN THOUSANDS)
<S> <C>
Property and equipment...................................... $ 3,534
Broadcast licenses and other intangibles.................... 21,327
-------
$24,861
=======
</TABLE>
F-11
<PAGE>
SALEM COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION PERTAINING TO THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997
IS UNAUDITED)
2. ACQUISITIONS AND DISPOSITIONS OF ASSETS, CONTINUED
During the year ended December 31, 1996, the Company purchased the assets
(principally intangibles) (and in the case of KBIQ-FM, all of the outstanding
shares of common stock) of the following radio stations:
<TABLE>
<CAPTION>
ACQUISITION MARKET PURCHASE
DATE STATION SERVED PRICE
----------- ------- ------ --------------
(IN THOUSANDS)
<S> <C> <C> <C>
February 1, 1996........ KTSL-FM Seattle, WA $ 900
February 1, 1996........ KLTE-FM Kirksville, MO 550
February 1, 1996........ KPRZ-FM Colorado Springs, CO 1,400
March 1, 1996........... KGFT-FM Colorado Springs, CO 3,000
March 15, 1996.......... KNUS-AM Denver, CO 1,100
October 5, 1996......... KPXQ-AM Phoenix, AZ 6,500
October 25, 1996........ KBIQ-FM Colorado Springs, CO 2,825
December 6, 1996........ KKMS-AM Minneapolis, MN 1,894
December 30, 1996....... KWRD-FM Dallas, TX 40,100
April 3, 1996........... Standard News Network Washington, D.C. --
August 1, 1996.......... The Word in Music Colorado Springs, CO 120
August 23, 1996......... Morningstar Radio Network Nashville, TN 1,232
-------
$59,621
=======
</TABLE>
The purchase price has been allocated to the assets acquired as follows:
<TABLE>
<CAPTION>
ASSET AMOUNT
----- ------
(IN THOUSANDS)
<S> <C>
Property and equipment...................................... $ 3,767
Broadcast licenses.......................................... 53,116
Goodwill and other intangibles.............................. 2,738
-------
$59,621
=======
</TABLE>
In 1996, the Company sold the assets (principally intangibles) of radio
stations WTJY-FM (Johnstown, Ohio), for $1.5 million, KLTE-FM (Kirksville,
Missouri), for $550,000 and KDBX-FM (Banks, Oregon), for $14 million. In
addition, KDFX-AM (Dallas, Texas), was exchanged as part of the purchase price
of KWRD-FM. The Company received approximately $8 million of value of KDFX-AM
towards the total purchase price of KWRD-FM of $40.1 million, resulting in a
gain recognized of approximately $4.0 million.
In 1995, the Company purchased the assets (principally intangibles) (and in
the case of KDBX-FM, all of the outstanding shares of common stock) of the
following radio stations:
<TABLE>
<CAPTION>
ACQUISITION MARKET PURCHASE
DATE STATION SERVED PRICE
----------- ------- ------ --------------
(IN THOUSANDS)
<S> <C> <C> <C>
August 1, 1995................... KDBX-FM Portland, OR $ 1,850
August 9, 1995................... KDFX-AM Dallas, TX 4,500
April 14, 1995................... KFIA-AM Sacramento, CA 3,850
March 4, 1995.................... KKHT-FM Houston, TX 11,850
March 4, 1995.................... KENR-AM Houston, TX 2,500
-------
$24,550
=======
</TABLE>
F-12
<PAGE>
SALEM COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION PERTAINING TO THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997 IS
UNAUDITED)
2. ACQUISITIONS AND DISPOSITIONS OF ASSETS, CONTINUED
The purchase price has been allocated to the assets acquired as follows:
<TABLE>
<CAPTION>
ASSET AMOUNT
----- ------
(IN THOUSANDS)
<S> <C>
Property and equipment...................................... $ 5,125
Broadcast licenses.......................................... 17,572
Goodwill and other intangibles.............................. 1,853
-------
$24,550
=======
</TABLE>
In 1994, the Company purchased the assets (principally intangibles) of the
following radio stations:
<TABLE>
<CAPTION>
ACQUISITION MARKET PURCHASE
DATE STATION SERVED PRICE
----------- ------- ------ --------------
(IN THOUSANDS)
<S> <C> <C> <C>
January 3, 1994................. KRKS-AM Denver, CO $ 400
August 5, 1994.................. WWDJ-AM New York, NY 7,985
August 5, 1994.................. WZZD-AM Philadelphia, PA 4,600
August 5, 1994.................. KSLR-AM San Antonio, TX 1,000
April 24, 1994.................. WTJY-FM Columbus, OH 650
August 23, 1994................. KLFE-AM Seattle, WA 300
-------
$14,935
=======
</TABLE>
3. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of the following at December 31:
<TABLE>
<CAPTION>
DECEMBER 31 SEPTEMBER 30
--------------- 1997
1995 1996 (UNAUDITED)
------- ------- ------------
(IN THOUSANDS)
<S> <C> <C> <C>
Land............................................ $ 352 $ 356 $ 391
Buildings....................................... 1,744 2,084 1,783
Office furnishings and equipment................ 5,336 7,057 7,676
Antennae, towers and transmitting equipment..... 20,068 23,210 25,582
Studio and production equipment................. 9,127 11,545 12,694
Record and tape libraries....................... 442 442 442
Automobiles..................................... 82 81 62
Leasehold improvements.......................... 1,892 2,997 3,141
Construction-in-progress........................ 1,679 1,633 6,202
------- ------- -------
40,722 49,405 57,973
Less accumulated depreciation................... 16,127 19,098 21,801
------- ------- -------
$24,595 $30,307 $36,172
======= ======= =======
</TABLE>
F-13
<PAGE>
SALEM COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION PERTAINING TO THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997
IS UNAUDITED)
4. LONG-TERM DEBT
Long-term debt consisted of the following at:
<TABLE>
<CAPTION>
DECEMBER 31 SEPTEMBER 30
---------------- 1997
1995 1996 (UNAUDITED)
------- -------- ------------
(IN THOUSANDS)
<S> <C> <C> <C>
Note payable to banks and revolving line of
credit....................................... $81,020 $ 89,390 $ 10,100
9 1/2% Senior Subordinated Notes due 2007..... -- -- 150,000
Note payable to seller of KWRD-FM............. -- 30,500 --
Unsecured notes payable to shareholder with
interest at a bank's prime rate plus 1 1/4%.. -- 1,900 --
------- -------- --------
81,020 121,790 160,100
Less current portion.......................... 6,000 -- --
------- -------- --------
$75,020 $121,790 $160,100
======= ======== ========
</TABLE>
Since the note payable to banks and revolving line of credit carry floating
interest rates, the carrying amount approximates their fair market value. The
Notes were issued in September 1997 at par; the carrying amount approximates
their fair market value.
CREDIT AGREEMENTS WITH BANKS
In January 1997, Salem amended and restated its credit agreement with five
banks to provide for a $150 million revolving line of credit. Interest was
payable quarterly. Commencing June 30, 1999, the commitment under the credit
agreement reduced by $12.5 million semiannually through December 31, 2002, and
by $25 million semiannually through December 31, 2003, when the credit
agreement was to expire. The classification of the notes payable to banks and
revolving line of credit in the accompanying balance sheet at December 31,
1996 is based on the terms of this credit agreement. The interest rate on
amounts outstanding at December 31, 1996 under this credit agreement was
7.83%.
In September 1997, Salem entered into a new credit agreement with the five
banks (the Credit Agreement) to provide for borrowing capacity of up to $75
million under a revolving line of credit. The maximum amount that the Company
may borrow under the Credit Agreement is limited by the Company's debt to cash
flow ratio, adjusted for recent radio station acquisitions as defined in the
Credit Agreement (the Adjusted Debt to Cash Flow Ratio). At September 30,
1997, the maximum Adjusted Debt to Cash Flow Ratio allowed under the Credit
Agreement was 7.00 to 1.00. The Company's ability to borrow for the purpose of
acquiring a radio station is further limited by the Credit Agreement in that
the Company may not borrow for an acquisition if the Adjusted Debt to Cash
Flow Ratio is greater than 6.00 to 1.00. At September 30, 1997, the Adjusted
Debt to Cash Flow Ratio was 6.07 to 1.00, resulting in total borrowing
availability of approximately $19.9 million, none of which can currently be
used for radio station acquisitions. The note evidencing the indebtedness
bears interest at a fluctuating base rate plus a spread that was determined by
Salem's Adjusted Debt to Cash Flow Ratio. At Salem's option, the base rate is
either a bank's prime rate or LIBOR. For purposes of determining the interest
rate the prime rate spread ranges from 0% to 1.75%, and the LIBOR spread
ranges from 1% to 3%. Interest is payable quarterly. Commencing March 31,
1999, the commitment under the Credit Agreement reduces by $2.5 million
quarterly through December 31, 2003, and by $6.25 million quarterly through
June 30, 2004. The Credit Agreement expires August 31, 2004. The
classification of the amounts due under the revolving line of credit in the
accompanying balance sheet at September 30, 1997 is based on the terms of the
Credit Agreement.
F-14
<PAGE>
SALEM COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION PERTAINING TO THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997
IS UNAUDITED)
4. LONG-TERM DEBT, CONTINUED
The Credit Agreement with the banks (a) provides for restrictions on
additional borrowings and leases; (b) prohibits Salem, without prior approval
from the banks, from paying dividends, liquidating, merging, consolidating or
selling its assets or business, and (c) requires Salem to maintain certain
financial ratios and other covenants. Salem has pledged all of its assets as
collateral under the Credit Agreement. Additionally, all the Company's stock
holdings in its subsidiaries are pledged as collateral.
In September 1997, in connection with the issuance of the Notes and the
Credit Agreement the Company repaid all amounts due under the revolving line
of credit with the banks. The Company wrote off certain deferred financing
costs and terminated all of its interest rate swap and cap agreements
associated with the line of credit (see Note 5). The write-off and termination
fees of $1,090,000, net of a $755,000 income tax benefit, was recorded as an
extraordinary item in the accompanying statement of operations for the nine
months ended September 30, 1997.
In March 1995, Salem amended and restated its then existing credit agreement
with two banks. The number of banks which were parties to the credit agreement
was increased to five, and the credit facility was structured to provide for a
$50 million term loan and a $50 million revolving line of credit. In
connection with the refinancing the Company repaid all amounts due under the
then existing credit agreement with the two banks and senior subordinated
notes payable to insurance companies and wrote off certain deferred financing
costs as well as a make-whole premium to the insurance companies. The write-
off of $394,000, net of a $263,000 income tax benefit, was recorded as an
extraordinary item in the accompanying statement of operations for 1995.
SENIOR SUBORDINATED NOTES
The Notes bear interest at 9 1/2% per annum, with interest payment dates on
April 1 and October 1, commencing April 1, 1998. Principal is due on the
maturity date, October 1, 2007. The Notes are redeemable at the option of the
Company, in whole or in part, at any time on or after October 1, 2002, at the
redemption prices specified in the indenture. The Notes are fully and
unconditionally guaranteed, jointly and severally, on a senior subordinated
basis by the Guarantors (the Company's subsidiaries). The Notes are general
unsecured obligations of the Company, subordinated in right of payment to all
existing and future senior indebtedness, including the Company's obligations
under the Credit Agreement. The indenture limits the incurrence of additional
indebtedness by the Company, the payment of dividends, the use of proceeds of
certain asset sales, and contains certain other restrictive covenants
affecting the Company. The Company has agreed to file a registration statement
under the Securities Act of 1933, relating to an exchange offer for the Notes
(the Exchange Offer). If such registration statement is not filed, has not
become effective or the Exchange Offer is not consummated within the time
periods set forth in the registration rights agreement, the interest rate on
the Notes will be increased. The exchange notes (the Exchange Notes) will be
identical in all material respects to the Notes except that the Exchange Notes
will not contain terms with respect to transfer restrictions or provide for
penalty amounts for future periods. The Exchange Notes would in general be
freely transferable after the Exchange Offer without further registration
under the Securities Act of 1933.
OTHER DEBT
The $30,500,000 note payable to the seller of KWRD-FM represents amounts
payable at December 31, 1996, under a purchase agreement. The amount was paid
in January 1997 with the proceeds from a borrowing under the revolving line of
credit with the banks; accordingly, the amount is reflected as long-term debt
in the accompanying balance sheet at December 31, 1996, consistent with the
terms of the January 1997 credit agreement.
F-15
<PAGE>
SALEM COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION PERTAINING TO THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997
IS UNAUDITED)
4. LONG-TERM DEBT, CONTINUED
In December 1996, the Company borrowed $1.9 million from one of its
shareholders. The note was repaid, including interest at 9 1/4%, on January
10, 1997, with proceeds from a borrowing under the revolving line of credit
with the banks; accordingly, the amount is reflected as long-term debt in the
accompanying balance sheet at December 31, 1996, consistent with the terms of
the January 1997 credit agreement.
MATURITIES OF LONG-TERM DEBT
Principal repayment requirements under all long-term debt agreements
outstanding at December 31, 1996 and September 30, 1997, for each of the next
five years and thereafter are as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30
DECEMBER 31 1997
1996 (UNAUDITED)
----------- ------------
(IN THOUSANDS)
<S> <C> <C>
1997............... $ -- $ --
1998............... -- --
1999............... -- --
2000............... 21,790 --
2001............... 25,000 --
Thereafter......... 75,000 160,100
-------- --------
$121,790 $160,100
======== ========
</TABLE>
The repayment requirements as of December 31, 1996 are per the revolving line
of credit agreement with the banks that the Company entered into in January
1997. The repayment requirements as of September 30, 1997 are per the Credit
Agreement and the Notes.
5. INTEREST RATE CAP AND SWAP AGREEMENTS
Salem had entered into interest rate swap and cap agreements to reduce the
impact of changes in interest rates on its floating-rate long-term debt. At
December 31, 1996, Salem had two outstanding interest rate cap agreements with
commercial banks, having a notional principal amount of $35 million. The
agreements effectively changed Salem's interest rate exposure on $35 million
of its senior secured notes to a fixed rate of 11.75% (including the interest
rate spread of 2.25%). In addition, Salem had two interest rate swap
agreements with two other commercial banks, having an aggregate notional
principal amount of $10 million. These agreements effectively changed Salem's
interest rate exposure on $5 million of its senior secured notes to a fixed
rate of 11.36% (including the interest rate spread of 2.25%) and on $5 million
of its senior secured notes to a fixed rate of 9.035% (including the interest
rate spread of 2.25%). The interest rate cap agreements were to mature in
March 1998, and the interest rate swap agreements were to mature in March
1999. Salem is exposed to credit loss in the event of nonperformance by the
other parties to the interest rate swap and cap agreements. However, Salem
does not anticipate nonperformance by the counterparties.
The fair value of the above interest rate swap agreements which are not
recognized in the financial statements reflected a negative value of the swaps
of $400,955 at December 31, 1996. The fair market value of the interest rate
cap agreements was $2,000 at December 31, 1996.
In March 1997, Salem amended its swap agreements to an aggregate notional
amount of $21.5 million, expiring in March 2001. These agreements effectively
changed Salem's interest rate exposure on $11.5 million
F-16
<PAGE>
SALEM COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION PERTAINING TO THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997
IS UNAUDITED)
5. INTEREST RATE CAP AND SWAP AGREEMENTS, CONTINUED
of its senior secured notes to a fixed 9.405% (including the interest rate
spread of 2.25%), and on $10 million of its senior secured notes to a fixed
8.885% (including the interest rate spread of 2.25%). Also in March 1997,
Salem entered into two cap agreements having an aggregate notional amount of
$38.5 million, expiring in March 2000. The agreements effectively changed
Salem's interest rate exposure on $38.5 million of its senior secured notes to
a fixed rate of 11.75% (including the interest rate spread of 2.25%).
Salem assigned its obligation under a $5 million swap agreement to another
bank on January 8, 1996, for a fee of $426,000. This fee was being amortized
to interest expense over the term of the original agreement of three years. In
September 1997, in connection with the issuance of the Notes and the Credit
Agreement the Company terminated all of its interest rate swap and cap
agreements for aggregate fees of $417,000. The Company wrote off these costs
(unamortized swap fee of $201,000 and the swap termination fee of $417,000) in
September 1997. This write-off, net of income tax benefit, was included in the
extraordinary loss in the accompanying statement of operations for the nine
months ended September 30, 1997 (see Note 4).
6. INCOME TAXES
As discussed in Note 1, prior to the Reorganization, New Inspiration and
Golden Gate were S corporations for income tax purposes. Accordingly, any
federal and state income tax liability on net income of the S corporations has
been the liability of shareholders of the S corporations. The S corporation
status of New Inspiration and Golden Gate was terminated in the
Reorganization, which was effective August 13, 1997, and the income of New
Inspiration and Golden Gate will thereafter be subject to federal and state
income taxes. The accompanying consolidated statements of operations include
an unaudited pro forma income tax adjustment, using an estimated combined
effective tax rate of approximately 40%, to reflect the estimated income tax
expense of the Company as if New Inspiration and Golden Gate had been subject
to federal and state income taxes for the periods presented. In connection
with the Reorganization, which resulted in the termination of the
S corporation status of New Inspiration and Golden Gate, the Company recorded
a deferred tax liability and provision of approximately $612,000 in September
1997.
The consolidated provision (benefit) for income taxes for Salem consisted of
the following at December 31:
<TABLE>
<CAPTION>
1994 1995 1996
----- ----- ------
(IN THOUSANDS)
<S> <C> <C> <C>
Current:
Federal........................ $ 14 $ 45 $ 189
State.......................... (47) 314 333
----- ----- ------
(33) 359 522
Deferred:
Federal........................ (321) (775) 5,737
State.......................... 107 (51) 396
----- ----- ------
(214) (826) 6,133
Current tax benefit reflected in
net extraordinary loss.......... -- (263) --
----- ----- ------
Income tax provision (benefit)... $(247) $(204) $6,655
===== ===== ======
</TABLE>
F-17
<PAGE>
SALEM COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION PERTAINING TO THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997
IS UNAUDITED)
6. INCOME TAXES, CONTINUED
The consolidated deferred tax asset and liability consisted of the following
at December 31:
<TABLE>
<CAPTION>
1995 1996
------ -------
(IN THOUSANDS)
<S> <C> <C>
Deferred tax assets:
Financial statement accruals not currently deductible.... $ 359 $ 447
Net operating loss, AMT credit and other carryforwards... 910 280
State taxes.............................................. 95 102
------ -------
Total deferred tax assets.................................. 1,364 829
Valuation allowance for deferred tax assets................ (95) (95)
------ -------
Net deferred tax assets.................................... 1,269 734
Deferred tax liabilities:
Excess of net book value of property, plant and equipment
for financial reporting purposes over income tax
purposes................................................ 2,498 2,700
Excess of net book value of intangible assets for
financial reporting purposes over income tax purposes... 3,272 8,668
Other.................................................... 257 256
------ -------
Total deferred tax liabilities............................. 6,027 11,624
------ -------
Net deferred tax liabilities............................... $4,758 $10,890
====== =======
</TABLE>
A reconciliation of the statutory federal income tax rate to the effective
tax rate, as a percentage of income before income taxes, is as follows:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31
------------------
1994 1995 1996
---- ---- ----
<S> <C> <C> <C>
Statutory federal income tax rate........................ 34 % 34 % 34 %
State income taxes, net.................................. (13) 53 3
Exclusive of income taxes of S corporations and the
Partnership............................................. (82) (177) (7)
Change in valuation allowance............................ 21 -- --
Other, net............................................... (16) 25 4
--- ---- ---
(56)% (65)% 34 %
=== ==== ===
</TABLE>
The S corporations had book income before income taxes of $1,062,191,
$1,791,580 and $3,814,431 in 1994, 1995 and 1996, respectively. These amounts
include the S corporations' 85% ownership interest in Beltway.
In 1996 the increase in the deferred tax liabilities related to intangible
assets is primarily due to gains on the disposal of assets of approximately
$14.6 million that are deferred for tax purposes under (S)1031 of the Internal
Revenue Code.
At December 31, 1996, the Company has net operating loss carryforwards for
state income tax purposes of approximately $1,200,000 which expire in years
1997 through 2008. The Company has federal alternative minimum tax credit
carryforwards of approximately $109,000. For financial reporting purposes, a
valuation allowance of $95,000 has been provided in 1996 and 1995 to offset a
portion of the deferred tax assets related to the state net operating loss
carryforwards.
F-18
<PAGE>
SALEM COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION PERTAINING TO THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997
IS UNAUDITED)
7. COMMITMENTS AND CONTINGENCIES
Salem leases various land, offices, studios and other equipment under
operating leases that expire over the next 10 years. The majority of these
leases may be renewed for successive periods ranging from one to five years on
terms similar to current agreements except for specified increases in lease
payments. Rental expense included in operating expense under all lease
agreements was $2,485,661, $3,123,049 and $3,821,254 in 1994, 1995 and 1996,
respectively.
Future minimum rental payments required under operating leases that have
initial or remaining noncancelable lease terms in excess of one year as of
December 31, 1996, are as follows:
<TABLE>
<CAPTION>
RELATED
PARTIES OTHER TOTAL
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
1997........................... $1,046 $ 3,255 $ 4,301
1998........................... 1,045 3,259 4,304
1999........................... 1,045 3,208 4,253
2000........................... 1,045 2,724 3,769
2001........................... 1,045 2,149 3,194
Thereafter..................... 1,539 8,068 9,607
------ ------- -------
$6,765 $22,663 $29,428
====== ======= =======
</TABLE>
The Company is involved in certain legal actions and claims arising in the
normal course of business. It is the opinion of management that such
litigation and claims will be resolved without material effect on the
Company's consolidated financial position, operations and cash flows.
The Company has a deferred compensation agreement with one of its officers,
which provides for retirement payments to the officer for a period of ten
consecutive years, if he remains employed by the Company until age 60. The
retirement payments are based on a formula defined in the agreement. The
estimated obligation under the deferred compensation agreement is being
provided for over the service period. At September 30, 1997, a liability of
approximately $355,000 is included in accrued compensation in the accompanying
balance sheet for the amounts earned under this agreement.
8. RELATED PARTY TRANSACTIONS
A shareholder's trust owns real estate on which certain assets of two radio
stations are located. Salem, in the ordinary course of its business, entered
into two separate lease agreements with this trust. Rental expense included in
operating expense for 1994, 1995 and 1996 amounted to $66,501, $55,915, and
$57,003, respectively.
Land and buildings occupied by various Salem radio stations are leased from
the shareholders of Salem. Rental expense under these leases included in
operating expense for 1994, 1995 and 1996 amounted to $574,410, $690,380 and
$827,378, respectively.
At December 31, 1995, notes receivable from shareholders totaled $3,387,080.
The notes bore interest at the Applicable Federal Rate and were payable upon
demand. In December 1996, New Inspiration and Golden Gate distributed $5.5
million to the shareholders, of which $4.8 million was used by the
shareholders to repay the notes receivable and accrued interest.
In June 1997, the Company entered into a local marketing agreement (LMA)
with a corporation, Sonsinger, Inc. ("Sonsinger"), owned by two of Salem's
shareholders for radio station KKOL-AM. Under the LMA, Salem
programs KKOL-AM and sells all the airtime. Salem retains all of the revenue
and incurs all of the expenses related to the operation of KKOL-AM and pay no
fees or rent under the LMA.
F-19
<PAGE>
SALEM COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION PERTAINING TO THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997
IS UNAUDITED)
9. DEFINED CONTRIBUTION PLAN
In 1993, the Company established a 401(k) defined contribution plan (the
Plan), which covers all eligible employees (as defined in the Plan).
Participants are allowed to make nonforfeitable contributions up to 15% of
their annual salary, but may not exceed the annual maximum contribution
limitations established by the Internal Revenue Service. The Company currently
matches 10% of the amounts contributed by each participant but does not match
participants' contributions in excess of 10% of their compensation per pay
period. The Company contributed $36,000, $44,000 and $48,000 to the Plan in
1994, 1995 and 1996, respectively.
10. SUBSEQUENT EVENTS (UNAUDITED)
In October 1997, the Company assigned its contract with a tower construction
company to build a broadcast tower in Houston to two of the Company's
shareholders (the Principal Shareholders), subject to the Principal
Shareholders obtaining financing. The Principal Shareholders will reimburse
the Company for its costs and expenses, which amounted to approximately
$2.9 million as of September 30, 1997. The antenna for the Company's station
in Houston, KKHT-FM, will be located on the tower and the Company will pay
rent to the Principal Shareholders. Proceeds from the sale will be used to
reduce borrowings.
In October 1997, the Company purchased the assets of radio station WCCD-AM,
Cleveland, Ohio, for $700,000 from available cash. The Company had operated
WCCD-AM under an LMA since April 1997.
In November 1997, the Company sold substantially all of the assets of radio
station WPZE-AM, Boston, Massachusetts, for $5 million. Proceeds from the sale
are being held by a qualified intermediary under a like-kind exchange
agreement to preserve the Company's ability to effect a tax-deferred exchange.
If the Company does not identify replacement property it will use the proceeds
to reduce borrowings.
F-20
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY IN-
FORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFERING MADE BY THIS PROSPECTUS, AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE
MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION THAT THERE
HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY JURIS-
DICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE
PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE
TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
---------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information and Incorporation by Reference...................... 1
Prospectus Summary........................................................ 3
Risk Factors ............................................................. 14
Use of Proceeds .......................................................... 19
The Exchange Offer........................................................ 19
Selected Consolidated Financial Information of the Company ............... 27
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... 30
Business.................................................................. 36
Management................................................................ 52
Certain Transactions ..................................................... 55
Securities Ownership of Certain Beneficial Owners......................... 56
Description of Certain Indebtedness ...................................... 57
Description of the Notes ................................................. 59
Certain Federal Income Tax Considerations................................. 87
Plan of Distribution...................................................... 87
Legal Matters............................................................. 88
Experts................................................................... 88
Index to Financial Statements............................................. F-1
</TABLE>
UNTIL , 1998 (90 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS
EFFECTING TRANSACTIONS IN THE NOTES, WHETHER OR NOT PARTICIPATING IN THIS
EXCHANGE OFFER, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
$150,000,000
[LOGO OF SALEM COMMUNICATIONS CORPORATION]
OFFER FOR ALL OUTSTANDING
9 1/2% SERIES A SENIOR
SUBORDINATED
NOTES DUE 2007
IN EXCHANGE FOR 9 1/2%
SERIES B SENIOR SUBORDINATED NOTES
DUE 2007
--------------
PROSPECTUS
--------------
, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Salem Communications Corporation (the "Company"), is a California
corporation and, therefore, is subject to the California General Corporations
Code.
Subject to certain limitations, Section 317 of the California General
Corporations Code provides in part that a corporation shall have power to
indemnify any person who was or is a party or is threatened to be made a party
to any proceeding (other than an action by or in the right of the corporation
to procure a judgment in its favor) by reason of the fact that the person is
or was an agent (which term includes officers and directors) of the
corporation, against expenses, judgments, fines, settlements, and other
amounts actually and reasonably incurred in connection with the proceeding if
that person acted in good faith and in a manner the person reasonably believed
to be in the best interests of the corporation and, in the case of a criminal
proceeding, had no reasonable cause to believe the conduct of the person was
unlawful.
The California indemnification statute, as provided in Section 317 of the
California General Corporations Code (noted above), is nonexclusive and allows
a corporation to expand the scope of indemnification provided, whether by
provisions in its bylaws or by agreement, to the extent authorized in the
corporation's articles.
The Company's bylaws provides that the Company "shall, to the maximum extent
permitted by California General Corporation Law, indemnify each of its agents
against expenses, judgments, fines, settlements and other amounts actually and
reasonably incurred in connection with any proceeding arising by reason of the
fact that any such person is or was an agent of the corporation." The
indemnification extends to an "agent" of the Company including "any person who
is or was a director, officer, employee or other agent of the corporation, or
is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, or was a director, officer, employee or agent of a
corporation which was a predecessor corporation of the corporation or of
another enterprise at the request of such predecessor corporation."
The indemnification provisions in the Company's bylaws may permit
indemnification for liabilities arising under the Securities Act. Insofar as
indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers and controlling persons of the Company
pursuant to the foregoing provisions, or otherwise, the Company has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable.
The Guarantors are organized in various jurisdictions. Indemnification of
the Guarantors' directors, officers and agents provided by applicable law, by
each Guarantor's articles or certificates of incorporation, bylaws, by
contract or otherwise are substantially similar to that afforded the
directors, officers and agents of the Company.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(A) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------- -----------------------
<C> <S>
1.01 Placement Agreement, dated September 17, 1997, among the Company,
the Guarantors, and Furman Selz LLC, Smith Barney, Inc., BancBoston
Securities, Inc., and BNY Capital Markets, Inc. (collectively, the
"Initial Purchasers").
1.02 Registration Rights Agreement, dated September 17, 1997, between the
Company, the Guarantors and the Initial Purchasers.
1.03 Form of Letter of Transmittal.
1.04 Form of Notice of Guaranteed Delivery.
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------- -----------------------
<C> <S>
3.01 Articles of Incorporation of the Company.
3.02 Bylaws of the Company.
3.03 Partnership Agreement of Beltway Media Partners.
3.04 Articles of Incorporation of ATEP Radio, Inc.
3.05 Bylaws of ATEP Radio, Inc.
3.06 Articles of Incorporation of Bison Media, Inc.
3.07 Bylaws of Bison Media, Inc.
3.08 Articles of Incorporation of Caron Broadcasting, Inc.
3.09 Code of By-laws of Caron Broadcasting, Inc.
3.10 Articles of Incorporation of Common Ground Broadcasting, Inc.
3.11 Bylaws of Common Ground Broadcasting, Inc.
3.12 Articles of Incorporation of Golden Gate Broadcasting Company,
Inc.
3.13 Bylaws of Golden Gate Broadcasting Company, Inc.
3.14 Articles of Incorporation of Inland Radio, Inc.
3.15 Bylaws of Inland Radio, Inc., a California Corporation.
3.16 Articles of Incorporation of Inspiration Media, Inc.
3.17 Bylaws of Inspiration Media, Inc.
3.18 Articles of Incorporation of Inspiration Media of Texas, Inc.
3.19 Bylaws of Inspiration Media of Texas, Inc.
3.20 Articles of Organization of New England Continental Media Inc.
3.21 By-laws of New England Continental Media Inc.
3.22.01 Articles of Incorporation of New Inspiration Broadcasting Company,
Inc.
3.22.02 Articles of Incorporation of Inspirational Media of Southern
California, Inc. (see Exhibit 3.22.03 for name change to New
Inspiration Broadcasting Company, Inc.).
3.22.03 Certificate of Ownership of Inspirational Media of Southern
California, Inc. (evidencing merger of New Inspiration
Broadcasting Company, Inc. with and into the corporation and
revision of articles to adopt the name New Inspiration
Broadcasting Company, Inc.).
3.23 Bylaws of Inspirational Broadcasting Company, Inc. (see Exhibit
3.22.03 for name change to New Inspiration Broadcasting Company,
Inc.).
3.24 Articles of Incorporation of Oasis Radio, Inc.
3.25 Bylaws of Oasis Radio, Inc.
3.26 Articles of Incorporation of Pennsylvania Media Associates, Inc.
3.27 Pennsylvania Media Associates, Inc. By-laws
3.28 Articles of Incorporation of Radio 1210, Inc.
3.29 Bylaws of Radio 1210, Inc.
3.30 Certificate of Incorporation of Salem Communications Corporation
(a Delaware corporation).
3.31 Salem Communications Corporation Bylaws (a Delaware corporation).
3.32 Certificate of Incorporation of Salem Media Corporation.
3.33 By-laws of Salem Media Corporation.
3.34.01 Articles of Incorporation of John Brown Schools of California,
Inc. (see Exhibit 3.34.03 for name change to Salem Media of
California, Inc.).
3.34.02 Certificate of Amendment of Articles of Incorporation of John
Brown Schools of California, Inc. (see Exhibit 3.34.03 for name
change to Salem Media of California, Inc.).
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------- -----------------------
<C> <S>
3.34.03 Certificate of Amendment of Articles of Incorporation of John
Brown Schools of California, Inc. (amending the name of the
corporation to be Salem Media of California, Inc.).
3.35 By-laws of Salem Media of California, Inc.
3.36 Articles of Incorporation of Salem Media of Colorado, Inc.
3.37 Bylaws of Salem Media of Colorado, Inc.
3.38 Articles of Incorporation of Salem Media of Louisiana, Inc.
3.39 By-laws of Salem Media of Louisiana, Inc.
3.40 Articles of Incorporation of Salem Media of Ohio, Inc.
3.41 Code of By-laws For the Government of the Board of Directors of
Salem Media of Ohio, Inc.
3.42 Articles of Incorporation of Salem Media of Oregon, Inc.
3.43 Bylaws of Salem Media of Oregon, Inc.
3.44 Articles of Incorporation of Salem Media of Pennsylvania, Inc.
3.45 Salem Media of Pennsylvania, Inc. By-laws.
3.46 Articles of Incorporation of Salem Media of Texas, Inc.
3.47 Bylaws of Salem Media of Texas, Inc.
3.48 Articles of Incorporation of Salem Music Network, Inc.
3.49 Bylaws of Salem Music Network, Inc.
3.50 Certificate of Incorporation of Salem Radio Network Incorporated.
3.51 Salem Radio Network Incorporated Bylaws.
3.52 Articles of Incorporation of Salem Radio Representatives, Inc.
3.53 Bylaws of Salem Radio Representatives, Inc.
3.54 Articles of Incorporation of South Texas Broadcasting, Inc.
3.55 Bylaws of South Texas Broadcasting, Inc.
3.56 Articles of Incorporation of SRN News Network, Inc.
3.57 Bylaws of SRN News Network, Inc.
3.58 Articles of Incorporation of Vista Broadcasting, Inc.
3.59 Bylaws of Vista Broadcasting, Inc.
4.01 Indenture between the Company, the Guarantors and The Bank of New
York, as Trustee, dated as of September 25, 1997, relating to the
Old Notes and the Notes, including form of Note.
4.02 Form of Note (filed as part of Exhibit 4.01).
4.03 Form of Note Guarantee (filed as part of Exhibit 4.01).
4.04 Registration Rights Agreement, dated September 25, 1997, between
the Company, the Guarantors and the Initial Purchasers (filed as
Exhibit 1.02).
4.05 Letter of Transmittal (filed as Exhibit 1.03).
4.06 Notice of Guaranteed Delivery (filed as Exhibit 1.04).
4.07 Credit Agreement, dated as of September 25, 1997, among the
Company, the several Lenders from time to time parties thereto,
and The Bank of New York, as administrative agent for the
Lenders.
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------- -----------------------
<C> <S>
4.08 Borrower Security Agreement, dated as of September 25, 1997, by
and between the Company and The Bank of New York, as
Administrative Agent of the Lenders.
4.09 Subsidiary Guaranty and Security Agreement dated as of September
25, 1997, by and between the Company, the Guarantors, and The
Bank of New York, as Administrative Agent.
5.01 Opinion and Consent of Gibson, Dunn & Crutcher LLP, regarding
validity and enforceability of the Notes and Guarantees.*
10.01 Employment Agreement, dated as of August 1, 1997, between the
Company and Edward G. Atsinger III.
10.02 Employment Agreement, dated as of August 1, 1997, between the
Company and Stuart W. Epperson.
10.03.01 Employment Contract, dated November 7, 1991, between the Company
and Eric H. Halvorson.
10.03.02 First Amendment to Employment Contract, dated April 22, 1996,
between the Company and Eric H. Halvorson.
10.03.03 Second Amendment to Employment Contract, dated July 8, 1997,
between the Company and Eric H. Halvorson.
10.03.04 Deferred Compensation Agreement, dated November 7, 1991, between
the Company and Eric H. Halvorson.
10.04.01 Employment Agreement, dated February 9, 1995, between Salem Radio
Network Incorporated and Greg R. Anderson.
10.04.02 Letter Agreement dated December 22, 1995, by Inspiration Media of
Texas, Inc. re compensation of Greg R. Anderson under Employment
Agreement with Salem Radio Network Incorporated.
10.04.03 First Amendment to Employment Agreement, dated August 1, 1997
between Salem Radio Network Incorporated and Greg R. Anderson.
10.05.01 Antenna/tower lease between Caron Broadcasting, Inc. (WHLO-
AM/Akron, Ohio) and Messrs. Atsinger and Epperson expiring 2007.
10.05.02 Antenna/tower/studio lease between Caron Broadcasting, Inc. (WTSJ-
AM/Cincinnati, Ohio) and Messrs. Atsinger and Epperson expiring
2007.
10.05.03 Antenna/tower lease between Caron Broadcasting, Inc. (WHK-
FM/Canton, Ohio) and Messrs. Atsinger and Epperson expiring 2007.
10.05.04 Antenna/tower/studio lease between Common Ground Broadcasting,
Inc. (KKMS-AM/Eagan, Minnesota) and Messrs. Atsinger and Epperson
expiring in 2006.
10.05.05 Antenna/tower lease between Common Ground Broadcasting, Inc. (WHK-
AM/Cleveland, Ohio) and Messrs. Atsinger and Epperson expiring
2008.*
10.05.06 Antenna/tower lease (KFAX-FM/Hayward, California) and Salem
Broadcasting Company, a partnership consisting of Messrs.
Atsinger and Epperson, expiring in 2003.*
10.05.07 Antenna/tower/studio lease between Inland Radio, Inc. (KKLA-AM/San
Bernardino, California) and Messrs. Atsinger and Epperson
expiring 2002.*
10.05.08 Antenna/tower lease between Inspiration Media, Inc. (KGNW-
AM/Seattle, Washington) and Messrs. Atsinger and Epperson
expiring in 2002.*
10.05.09 Antenna/tower lease between Inspiration Media, Inc. (KLFE-
AM/Seattle, Washington) and The Atsinger Family Trust and Stuart
W. Epperson Revocable Living Trust expiring in 2004.*
</TABLE>
- ---------------------
* To be filed by amendment.
II-4
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------- -----------------------
<C> <S>
10.05.10 Antenna/tower lease between Oasis Radio, Inc (KAVC-FM/Rosamond,
California) and The Atsinger Family Trust under a lease
expiring in 2002.*
10.05.11.01 Antenna/tower/lease between Pennsylvania Media Associates, Inc.
(WZZD-AM/WFIL-AM/Philadelphia, Pennsylvania) and Messrs.
Atsinger and Epperson, as assigned from WEAZ-FM Radio, Inc.,
expiring 2004.*
10.05.11.02 Antenna/tower/studio lease between Pennsylvania Media
Associates, Inc. (WZZD-AM/ WFIL-AM/Philadelphia, Pennsylvania)
and The Atsinger Family Trust and Stuart W. Epperson Revocable
Living Trust expiring 2004.*
10.05.12 Antenna/tower lease between Radio 1210, Inc. (KPRZ-
AM/Olivenhain, California) and The Atsinger Family Trust
expiring in 2002.*
10.05.13 Antenna/tower lease between Salem Media Corporation (WYLL-
FM/Arlington Heights, Illinois) and Messrs. Atsinger and
Epperson expiring in 2002.*
10.05.14 Antenna/turner/studio leases between Salem Media Corporation
(KLTX-AM/Long Beach and Paramount, California) and Messrs.
Atsinger and Epperson expiring in 2002.*
10.05.15 Antenna/tower lease between Salem Media of Colorado, Inc.
(KNUS-AM/Denver-Bolder, Colorado) and Messrs. Atsinger and
Epperson expiring 2006.*
10.05.16 Antenna/tower lease between Salem Media of Ohio, Inc. (WRFD-
AM/Columbus, Ohio) and Messrs. Atsinger and Epperson expiring
2002.*
10.05.17.01 Studio Lease between Salem Media of Oregon, Inc. (KPDQ-
AM/FM/Portland, Oregon) and Edward G. Atsinger III, Mona J.
Atsinger, Stuart W. Epperson, and Nancy K. Epperson expiring
2002.*
10.05.17.02 Antenna/tower lease between Salem Media of Oregon, Inc. (KPDQ-
AM/FM/Raleigh Hills, Oregon and Messrs. Atsinger and Epperson
expiring 2002.*
10.05.18 Antenna/tower lease between Salem Media of Pennsylvania, Inc.
(WORD-FM/WPIT-AM/ Pittsburgh, Pennsylvania) and The Atsinger
Family Trust and Stuart W. Epperson Revocable Living Trust
expiring 2003.*
10.05.19 Antenna/tower lease between Salem Media of Texas, Inc. (KSLR-
AM/San Antonio, Texas) and Epperson-Atsinger 1983 Family Trust
expiring 2007.*
10.05.20 Antenna/tower lease between South Texas Broadcasting, Inc.
(KENR-AM/KKHT-FM/ Houston-Galveston, Texas) and Atsinger
Family Trust and Stuart W. Epperson Revocable Living Trust
expiring 2005.*
10.05.21 Antenna/tower lease between Vista Broadcasting, Inc. (KFIA-
AM/Sacramento, California) and The Atsinger Family Trust and
Stuart W. Epperson Revocable Living Trust expiring 2005.*
10.06.01 Asset Purchase Agreement dated as of June 5, 1996 by and
between Radio 94 of Phoenix Limited Partnership and Salem
Media of Arizona, Inc. (KOOL-AM, Phoenix, Arizona).*
10.06.02 Asset Purchase Agreement dated as of September 3, 1996 by and
between Caron Broadcasting, Inc. and Mortenson Broadcasting
Company of Canton, LLC and Mortensen Broadcasting Company of
Akron, LLC (WTOF-FM, Canton, Ohio and WHLO-AM, Akron, Ohio).*
10.06.03.01 Asset Purchase Agreement dated March 28, 1996 by and between
American Radio Assistance Corporation and Common Ground
Broadcasting, Inc. (KDBX-FM, Banks, Oregon).*
</TABLE>
---------------------
* To be filed by amendment.
II-5
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------- -----------------------
<C> <S>
10.06.03.02 First Amendment to Asset Purchase Agreement dated as of July
22, 1996 by and between American Radio Systems Corporation and
Common Ground Broadcasting, Inc. (KDBX-FM, Banks, Oregon).*
10.06.04.01 Asset Purchase Agreement dated as of April 23, 1996 by and
between OmniAmerica Group and WHK License Partnership and
Inspiration Media of Ohio, Inc. (WHK-AM, Cleveland, Ohio).*
10.06.04.02 First Amendment to the Asset Purchase Agreement dated as of
July 23, 1996 by and between OmniAmerica Group and WHK License
Partnership and Inspiration Media of Ohio, Inc. (WHK-AM,
Cleveland, Ohio).*
10.06.05 Asset Purchase Agreement dated as of September 30, 1996 by and
between Infinity Broadcasting Corporation of Dallas and
Inspiration Media of Texas, Inc. (KEWS, Arlington, Texas;
KDFX, Dallas, Texas).*
10.06.06.01 Asset Purchase Agreement dated as of December 4, 1996 by and
between Backbay Broadcasters, Inc. and New England Continental
Media, Inc. (WBNW-AM, Boston, Massachusetts).*
10.06.06.02 First Amendment to the Asset Purchase Agreement dated as of
February, 1997 by and between Backbay Broadcasters, Inc. and
New England Continental Media, Inc. (WBNW-AM, Boston,
Massachusetts).*
10.06.07 Asset Purchase Agreement dated June, 1997 by and between New
England Continental Media, Inc. and Hibernia Communications,
Inc. (WPZE-AM, Boston, Massachusetts).*
10.07.01 Tower Purchase Agreement dated August 22, 1997 by and between
the Company and Sonsinger Broadcasting Company of Houston,
L.P.*
10.07.02 Amendment to the Tower Purchase Agreement dated November 10,
1997 by and between the Company and Sonsinger Broadcasting
Company of Houston, L.P.
10.07.03 Promissory Note dated November 11, 1997 made by Sonsinger
Broadcasting Company of Houston, L.P. payable to the Company.
10.08.01 Local Programming and Marketing Agreement dated June 13, 1997
between Sonsinger, Inc. and Inspiration Media, Inc.
10.08.02 Local Programming and Marketing Agreement and Put/Call
Agreement dated October 23, 1997 by and between Cherokee
Broadcasting Co., Inc. and Salem Media of Georgia, Inc.
10.09.01 Evidence of Key man life insurance policy no. 2256440M insuring
Edward G. Atsinger III in the face amount of $5,000,000.
10.09.02 Evidence of Key man life insurance policy no. 2257474H insuring
Edward G. Atsinger III in the face amount of $5,000,000.
10.09.03 Evidence of Key man life insurance policy no. 2257476B insuring
Stuart W. Epperson in the face amount of $5,000,000.
12.01 Statement regarding Computation of Ratio of Earnings to Fixed
Charges.
21.01 Subsidiaries of the Company.
23.01 Consent of Ernst & Young LLP.
23.02 Consent of Gibson, Dunn & Crutcher LLP (included in Exhibit
5.01).
24.01 Powers of Attorney (included on Signature Pages of Registration
Statement).
25.01 Statement of Eligibility of Trustee.*
27.01 Financial Data Schedule.
</TABLE>
---------------------
* To be filed by amendment.
II-6
<PAGE>
(B) FINANCIAL STATEMENT SCHEDULES: SCHEDULE II--VALUATION AND QUALIFYING
ACCOUNTS
All other schedules for which provision is made in the applicable accounting
regulation of the Securities and Exchange Commission are not required under
the related instructions or are inapplicable and therefore have been omitted.
ITEM 22. UNDERTAKINGS
(a) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrants pursuant to the provisions described under Item 20 or otherwise,
each Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
a Registrant of expenses incurred or paid by a director, officer or
controlling person of such Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, such Registrant
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
(b) Each Registrant undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement (i) to include any
prospectus required by Section 10(a)(3) of the Securities Act of 1933, as
amended; (ii) to reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement; and (iii) to include any material information with
respect to the plan of distribution not previously disclosed in the
registration statement or any material change to such information in the
Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(c) Each undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11 or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the Registration Statement through
the date of responding to the request.
(d) Each undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
II-7
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE COMPANY HAS
DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN CAMARILLO, CALIFORNIA ON DECEMBER
8, 1997.
Salem Communications Corporation
/s/ Edward G. Atsinger III
By: _________________________________
EDWARD G. ATSINGER III PRESIDENT
AND CHIEF EXECUTIVE OFFICER
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS THAT EACH PERSON WHOSE SIGNATURE APPEARS
BELOW CONSTITUTES AND APPOINTS ERIC H. HALVORSON AND DIRK GASTALDO, HIS TRUE
AND LAWFUL ATTORNEYS-IN-FACT AND AGENTS, EACH ACTING ALONE, WITH FULL POWER OF
SUBSTITUTION AND RESUBSTITUTION, FOR HIM AND IN HIS NAME, PLACE AND STEAD, IN
ANY AND ALL CAPACITIES, TO SIGN ANY OR ALL AMENDMENTS TO THIS REGISTRATION
STATEMENT, INCLUDING POST-EFFECTIVE AMENDMENTS, AND TO FILE THE SAME, WITH ALL
EXHIBITS THERETO, AND ALL DOCUMENTS IN CONNECTION THEREWITH, WITH THE
SECURITIES AND EXCHANGE COMMISSION, GRANTING UNTO SAID ATTORNEYS-IN-FACT AND
AGENTS, AND EACH OF THEM, FULL POWER AND AUTHORITY TO DO AND PERFORM EACH AND
EVERY ACT AND THING REQUISITE AND NECESSARY TO BE DONE IN AND ABOUT THE
PREMISES, AS FULLY TO ALL INTENTS AND PURPOSES AS HE MIGHT OR COULD DO IN
PERSON, AND HEREBY RATIFIES AND CONFIRMS ALL THAT SAID ATTORNEYS-IN-FACT AND
AGENTS, EACH ACTING ALONE, OR THEIR SUBSTITUTE OR SUBSTITUTES, MAY LAWFULLY DO
OR CAUSE TO BE DONE.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED ON DECEMBER 8, 1997.
NAME TITLE
/s/ Edward G. Atsinger III President and Chief Executive
- ------------------------------------- Officer (Principal Executive
EDWARD G. ATSINGER III Officer)
/s/ Dirk Gastaldo Vice President and Chief
- ------------------------------------- Financial Officer (Principal
DIRK GASTALDO Financial Officer)
/s/ Eileen E. Hill Vice President--Accounting &
- ------------------------------------- Taxation (Principal
EILEEN E. HILL Accounting Officer)
/s/ Edward G. Atsinger III Director
- -------------------------------------
EDWARD G. ATSINGER III
II-8
<PAGE>
NAME TITLE
/s/ Stuart W. Epperson Director
- -------------------------------------
STUART W. EPPERSON
/s/ Eric H. Halvorson Director
- -------------------------------------
ERIC H. HALVORSON
/s/ Richard A. Riddle Director
- -------------------------------------
RICHARD A. RIDDLE
/s/ Roland S. Hinz Director
- -------------------------------------
ROLAND S. HINZ
II-9
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, ATEP RADIO, INC.
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN CAMARILLO, CALIFORNIA ON DECEMBER
8, 1997.
ATEP Radio, Inc.
/s/ Edward G. Atsinger III
By: _________________________________
EDWARD G. ATSINGER III PRESIDENT
AND CHIEF EXECUTIVE OFFICER
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS THAT EACH PERSON WHOSE SIGNATURE APPEARS
BELOW CONSTITUTES AND APPOINTS ERIC H. HALVORSON AND DIRK GASTALDO, HIS TRUE
AND LAWFUL ATTORNEYS-IN-FACT AND AGENTS, EACH ACTING ALONE, WITH FULL POWER OF
SUBSTITUTION AND RESUBSTITUTION, FOR HIM AND IN HIS NAME, PLACE AND STEAD, IN
ANY AND ALL CAPACITIES, TO SIGN ANY OR ALL AMENDMENTS TO THIS REGISTRATION
STATEMENT, INCLUDING POST-EFFECTIVE AMENDMENTS, AND TO FILE THE SAME, WITH ALL
EXHIBITS THERETO, AND ALL DOCUMENTS IN CONNECTION THEREWITH, WITH THE
SECURITIES AND EXCHANGE COMMISSION, GRANTING UNTO SAID ATTORNEYS-IN-FACT AND
AGENTS, AND EACH OF THEM, FULL POWER AND AUTHORITY TO DO AND PERFORM EACH AND
EVERY ACT AND THING REQUISITE AND NECESSARY TO BE DONE IN AND ABOUT THE
PREMISES, AS FULLY TO ALL INTENTS AND PURPOSES AS HE MIGHT OR COULD DO IN
PERSON, AND HEREBY RATIFIES AND CONFIRMS ALL THAT SAID ATTORNEYS-IN-FACT AND
AGENTS, EACH ACTING ALONE, OR THEIR SUBSTITUTE OR SUBSTITUTES, MAY LAWFULLY DO
OR CAUSE TO BE DONE.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED ON DECEMBER 8, 1997.
NAME TITLE
/s/ Edward G. Atsinger III President and Chief Executive
- ------------------------------------- Officer (Principal Executive
EDWARD G. ATSINGER III Officer)
/s/ Dirk Gastaldo Vice President (Principal
- ------------------------------------- Financial and Accounting
DIRK GASTALDO Officer)
/s/ Edward G. Atsinger III Director
- -------------------------------------
EDWARD G. ATSINGER III
/s/ Stuart W. Epperson Director
- -------------------------------------
STUART W. EPPERSON
II-10
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, BISON MEDIA,
INC. HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY
THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN CAMARILLO, CALIFORNIA ON
DECEMBER 8, 1997.
Bison Media, Inc.
/s/ Edward G. Atsinger III
By: _________________________________
EDWARD G. ATSINGER III PRESIDENT
AND CHIEF EXECUTIVE OFFICER
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS THAT EACH PERSON WHOSE SIGNATURE APPEARS
BELOW CONSTITUTES AND APPOINTS ERIC H. HALVORSON AND DIRK GASTALDO, HIS TRUE
AND LAWFUL ATTORNEYS-IN-FACT AND AGENTS, EACH ACTING ALONE, WITH FULL POWER OF
SUBSTITUTION AND RESUBSTITUTION, FOR HIM AND IN HIS NAME, PLACE AND STEAD, IN
ANY AND ALL CAPACITIES, TO SIGN ANY OR ALL AMENDMENTS TO THIS REGISTRATION
STATEMENT, INCLUDING POST-EFFECTIVE AMENDMENTS, AND TO FILE THE SAME, WITH ALL
EXHIBITS THERETO, AND ALL DOCUMENTS IN CONNECTION THEREWITH, WITH THE
SECURITIES AND EXCHANGE COMMISSION, GRANTING UNTO SAID ATTORNEYS-IN-FACT AND
AGENTS, AND EACH OF THEM, FULL POWER AND AUTHORITY TO DO AND PERFORM EACH AND
EVERY ACT AND THING REQUISITE AND NECESSARY TO BE DONE IN AND ABOUT THE
PREMISES, AS FULLY TO ALL INTENTS AND PURPOSES AS HE MIGHT OR COULD DO IN
PERSON, AND HEREBY RATIFIES AND CONFIRMS ALL THAT SAID ATTORNEYS-IN-FACT AND
AGENTS, EACH ACTING ALONE, OR THEIR SUBSTITUTE OR SUBSTITUTES, MAY LAWFULLY DO
OR CAUSE TO BE DONE.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED ON DECEMBER 8, 1997.
NAME TITLE
/s/ Edward G. Atsinger III President and Chief Executive
- ------------------------------------- Officer (Principal Executive
EDWARD G. ATSINGER III Officer)
/s/ Dirk Gastaldo Vice President (Principal
- ------------------------------------- Financial and Accounting
DIRK GASTALDO Officer)
/s/ Edward G. Atsinger III Director
- -------------------------------------
EDWARD G. ATSINGER III
/s/ Stuart W. Epperson Director
- -------------------------------------
STUART W. EPPERSON
II-11
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, CARON
BROADCASTING, INC. HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN CAMARILLO,
CALIFORNIA ON DECEMBER 8, 1997.
Caron Broadcasting, Inc.
/s/ Edward G. Atsinger III
By: _________________________________
EDWARD G. ATSINGER III PRESIDENT
AND CHIEF EXECUTIVE OFFICER
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS THAT EACH PERSON WHOSE SIGNATURE APPEARS
BELOW CONSTITUTES AND APPOINTS ERIC H. HALVORSON AND DIRK GASTALDO, HIS TRUE
AND LAWFUL ATTORNEYS-IN-FACT AND AGENTS, EACH ACTING ALONE, WITH FULL POWER OF
SUBSTITUTION AND RESUBSTITUTION, FOR HIM AND IN HIS NAME, PLACE AND STEAD, IN
ANY AND ALL CAPACITIES, TO SIGN ANY OR ALL AMENDMENTS TO THIS REGISTRATION
STATEMENT, INCLUDING POST-EFFECTIVE AMENDMENTS, AND TO FILE THE SAME, WITH ALL
EXHIBITS THERETO, AND ALL DOCUMENTS IN CONNECTION THEREWITH, WITH THE
SECURITIES AND EXCHANGE COMMISSION, GRANTING UNTO SAID ATTORNEYS-IN-FACT AND
AGENTS, AND EACH OF THEM, FULL POWER AND AUTHORITY TO DO AND PERFORM EACH AND
EVERY ACT AND THING REQUISITE AND NECESSARY TO BE DONE IN AND ABOUT THE
PREMISES, AS FULLY TO ALL INTENTS AND PURPOSES AS HE MIGHT OR COULD DO IN
PERSON, AND HEREBY RATIFIES AND CONFIRMS ALL THAT SAID ATTORNEYS-IN-FACT AND
AGENTS, EACH ACTING ALONE, OR THEIR SUBSTITUTE OR SUBSTITUTES, MAY LAWFULLY DO
OR CAUSE TO BE DONE.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED ON DECEMBER 8, 1997.
NAME TITLE
/s/ Edward G. Atsinger III President and Chief Executive
- ------------------------------------- Officer (Principal Executive
EDWARD G. ATSINGER III Officer)
/s/ Dirk Gastaldo Vice President (Principal
- ------------------------------------- Financial and Accounting
DIRK GASTALDO Officer)
/s/ Edward G. Atsinger III Director
- -------------------------------------
EDWARD G. ATSINGER III
/s/ Stuart W. Epperson Director
- -------------------------------------
STUART W. EPPERSON
II-12
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, COMMON GROUND
BROADCASTING, INC. HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN CAMARILLO,
CALIFORNIA ON DECEMBER 8, 1997.
Common Ground Broadcasting, Inc.
/s/ Edward G. Atsinger III
By: _________________________________
EDWARD G. ATSINGER III PRESIDENT
AND CHIEF EXECUTIVE OFFICER
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS THAT EACH PERSON WHOSE SIGNATURE APPEARS
BELOW CONSTITUTES AND APPOINTS ERIC H. HALVORSON AND DIRK GASTALDO, HIS TRUE
AND LAWFUL ATTORNEYS-IN-FACT AND AGENTS, EACH ACTING ALONE, WITH FULL POWER OF
SUBSTITUTION AND RESUBSTITUTION, FOR HIM AND IN HIS NAME, PLACE AND STEAD, IN
ANY AND ALL CAPACITIES, TO SIGN ANY OR ALL AMENDMENTS TO THIS REGISTRATION
STATEMENT, INCLUDING POST-EFFECTIVE AMENDMENTS, AND TO FILE THE SAME, WITH ALL
EXHIBITS THERETO, AND ALL DOCUMENTS IN CONNECTION THEREWITH, WITH THE
SECURITIES AND EXCHANGE COMMISSION, GRANTING UNTO SAID ATTORNEYS-IN-FACT AND
AGENTS, AND EACH OF THEM, FULL POWER AND AUTHORITY TO DO AND PERFORM EACH AND
EVERY ACT AND THING REQUISITE AND NECESSARY TO BE DONE IN AND ABOUT THE
PREMISES, AS FULLY TO ALL INTENTS AND PURPOSES AS HE MIGHT OR COULD DO IN
PERSON, AND HEREBY RATIFIES AND CONFIRMS ALL THAT SAID ATTORNEYS-IN-FACT AND
AGENTS, EACH ACTING ALONE, OR THEIR SUBSTITUTE OR SUBSTITUTES, MAY LAWFULLY DO
OR CAUSE TO BE DONE.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED ON DECEMBER 8, 1997.
NAME TITLE
/s/ Edward G. Atsinger III President and Chief Executive
- ------------------------------------- Officer (Principal Executive
EDWARD G. ATSINGER III Officer)
/s/ Dirk Gastaldo Vice President (Principal
- ------------------------------------- Financial and Accounting
DIRK GASTALDO Officer)
/s/ Edward G. Atsinger III Director
- -------------------------------------
EDWARD G. ATSINGER III
/s/ Stuart W. Epperson Director
- -------------------------------------
STUART W. EPPERSON
II-13
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, GOLDEN GATE
BROADCASTING COMPANY, INC. HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN
CAMARILLO, CALIFORNIA ON DECEMBER 8, 1997.
Golden Gate Broadcasting Company,
Inc.
/s/ Edward G. Atsinger III
By: _________________________________
EDWARD G. ATSINGER III PRESIDENT
AND CHIEF EXECUTIVE OFFICER
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS THAT EACH PERSON WHOSE SIGNATURE APPEARS
BELOW CONSTITUTES AND APPOINTS ERIC H. HALVORSON AND DIRK GASTALDO, HIS TRUE
AND LAWFUL ATTORNEYS-IN-FACT AND AGENTS, EACH ACTING ALONE, WITH FULL POWER OF
SUBSTITUTION AND RESUBSTITUTION, FOR HIM AND IN HIS NAME, PLACE AND STEAD, IN
ANY AND ALL CAPACITIES, TO SIGN ANY OR ALL AMENDMENTS TO THIS REGISTRATION
STATEMENT, INCLUDING POST-EFFECTIVE AMENDMENTS, AND TO FILE THE SAME, WITH ALL
EXHIBITS THERETO, AND ALL DOCUMENTS IN CONNECTION THEREWITH, WITH THE
SECURITIES AND EXCHANGE COMMISSION, GRANTING UNTO SAID ATTORNEYS-IN-FACT AND
AGENTS, AND EACH OF THEM, FULL POWER AND AUTHORITY TO DO AND PERFORM EACH AND
EVERY ACT AND THING REQUISITE AND NECESSARY TO BE DONE IN AND ABOUT THE
PREMISES, AS FULLY TO ALL INTENTS AND PURPOSES AS HE MIGHT OR COULD DO IN
PERSON, AND HEREBY RATIFIES AND CONFIRMS ALL THAT SAID ATTORNEYS-IN-FACT AND
AGENTS, EACH ACTING ALONE, OR THEIR SUBSTITUTE OR SUBSTITUTES, MAY LAWFULLY DO
OR CAUSE TO BE DONE.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED ON DECEMBER 8, 1997.
NAME TITLE
/s/ Edward G. Atsinger III President and Chief Executive
- ------------------------------------- Officer (Principal Executive
EDWARD G. ATSINGER III Officer)
/s/ Dirk Gastaldo Vice President (Principal
- ------------------------------------- Financial and Accounting
DIRK GASTALDO Officer)
/s/ Edward G. Atsinger III Director
- -------------------------------------
EDWARD G. ATSINGER III
/s/ Stuart W. Epperson Director
- -------------------------------------
STUART W. EPPERSON
II-14
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, INLAND RADIO,
INC. HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY
THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN CAMARILLO, CALIFORNIA ON
DECEMBER 8, 1997.
Inland Radio, Inc.
/s/ Edward G. Atsinger III
By: _________________________________
EDWARD G. ATSINGER III PRESIDENT
AND CHIEF EXECUTIVE OFFICER
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS THAT EACH PERSON WHOSE SIGNATURE APPEARS
BELOW CONSTITUTES AND APPOINTS ERIC H. HALVORSON AND DIRK GASTALDO, HIS TRUE
AND LAWFUL ATTORNEYS-IN-FACT AND AGENTS, EACH ACTING ALONE, WITH FULL POWER OF
SUBSTITUTION AND RESUBSTITUTION, FOR HIM AND IN HIS NAME, PLACE AND STEAD, IN
ANY AND ALL CAPACITIES, TO SIGN ANY OR ALL AMENDMENTS TO THIS REGISTRATION
STATEMENT, INCLUDING POST-EFFECTIVE AMENDMENTS, AND TO FILE THE SAME, WITH ALL
EXHIBITS THERETO, AND ALL DOCUMENTS IN CONNECTION THEREWITH, WITH THE
SECURITIES AND EXCHANGE COMMISSION, GRANTING UNTO SAID ATTORNEYS-IN-FACT AND
AGENTS, AND EACH OF THEM, FULL POWER AND AUTHORITY TO DO AND PERFORM EACH AND
EVERY ACT AND THING REQUISITE AND NECESSARY TO BE DONE IN AND ABOUT THE
PREMISES, AS FULLY TO ALL INTENTS AND PURPOSES AS HE MIGHT OR COULD DO IN
PERSON, AND HEREBY RATIFIES AND CONFIRMS ALL THAT SAID ATTORNEYS-IN-FACT AND
AGENTS, EACH ACTING ALONE, OR THEIR SUBSTITUTE OR SUBSTITUTES, MAY LAWFULLY DO
OR CAUSE TO BE DONE.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED ON DECEMBER 8, 1997.
NAME TITLE
/s/ Edward G. Atsinger III President and Chief Executive
- ------------------------------------- Officer (Principal Executive
EDWARD G. ATSINGER III Officer)
/s/ Dirk Gastaldo Vice President (Principal
- ------------------------------------- Financial and Accounting
DIRK GASTALDO Officer)
/s/ Edward G. Atsinger III Director
- -------------------------------------
EDWARD G. ATSINGER III
/s/ Stuart W. Epperson Director
- -------------------------------------
STUART W. EPPERSON
II-15
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, INSPIRATION
MEDIA, INC. HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN CAMARILLO, CALIFORNIA
ON DECEMBER 8, 1997.
Inspiration Media, Inc.
/s/ Edward G. Atsinger III
By: _________________________________
EDWARD G. ATSINGER III PRESIDENT
AND CHIEF EXECUTIVE OFFICER
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS THAT EACH PERSON WHOSE SIGNATURE APPEARS
BELOW CONSTITUTES AND APPOINTS ERIC H. HALVORSON AND DIRK GASTALDO, HIS TRUE
AND LAWFUL ATTORNEYS-IN-FACT AND AGENTS, EACH ACTING ALONE, WITH FULL POWER OF
SUBSTITUTION AND RESUBSTITUTION, FOR HIM AND IN HIS NAME, PLACE AND STEAD, IN
ANY AND ALL CAPACITIES, TO SIGN ANY OR ALL AMENDMENTS TO THIS REGISTRATION
STATEMENT, INCLUDING POST-EFFECTIVE AMENDMENTS, AND TO FILE THE SAME, WITH ALL
EXHIBITS THERETO, AND ALL DOCUMENTS IN CONNECTION THEREWITH, WITH THE
SECURITIES AND EXCHANGE COMMISSION, GRANTING UNTO SAID ATTORNEYS-IN-FACT AND
AGENTS, AND EACH OF THEM, FULL POWER AND AUTHORITY TO DO AND PERFORM EACH AND
EVERY ACT AND THING REQUISITE AND NECESSARY TO BE DONE IN AND ABOUT THE
PREMISES, AS FULLY TO ALL INTENTS AND PURPOSES AS HE MIGHT OR COULD DO IN
PERSON, AND HEREBY RATIFIES AND CONFIRMS ALL THAT SAID ATTORNEYS-IN-FACT AND
AGENTS, EACH ACTING ALONE, OR THEIR SUBSTITUTE OR SUBSTITUTES, MAY LAWFULLY DO
OR CAUSE TO BE DONE.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED ON DECEMBER 8, 1997.
NAME TITLE
/s/ Edward G. Atsinger III President and Chief Executive
- ------------------------------------- Officer (Principal Executive
EDWARD G. ATSINGER III Officer)
/s/ Dirk Gastaldo Vice President (Principal
- ------------------------------------- Financial and Accounting
DIRK GASTALDO Officer)
/s/ Edward G. Atsinger III Director
- -------------------------------------
EDWARD G. ATSINGER III
/s/ Stuart W. Epperson Director
- -------------------------------------
STUART W. EPPERSON
II-16
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, INSPIRATION
MEDIA OF TEXAS, INC. HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED
ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN CAMARILLO,
CALIFORNIA ON DECEMBER 8, 1997.
Inspiration Media of Texas, Inc.
/s/ Edward G. Atsinger III
By: _________________________________
EDWARD G. ATSINGER III PRESIDENT
AND CHIEF EXECUTIVE OFFICER
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS THAT EACH PERSON WHOSE SIGNATURE APPEARS
BELOW CONSTITUTES AND APPOINTS ERIC H. HALVORSON AND DIRK GASTALDO, HIS TRUE
AND LAWFUL ATTORNEYS-IN-FACT AND AGENTS, EACH ACTING ALONE, WITH FULL POWER OF
SUBSTITUTION AND RESUBSTITUTION, FOR HIM AND IN HIS NAME, PLACE AND STEAD, IN
ANY AND ALL CAPACITIES, TO SIGN ANY OR ALL AMENDMENTS TO THIS REGISTRATION
STATEMENT, INCLUDING POST-EFFECTIVE AMENDMENTS, AND TO FILE THE SAME, WITH ALL
EXHIBITS THERETO, AND ALL DOCUMENTS IN CONNECTION THEREWITH, WITH THE
SECURITIES AND EXCHANGE COMMISSION, GRANTING UNTO SAID ATTORNEYS-IN-FACT AND
AGENTS, AND EACH OF THEM, FULL POWER AND AUTHORITY TO DO AND PERFORM EACH AND
EVERY ACT AND THING REQUISITE AND NECESSARY TO BE DONE IN AND ABOUT THE
PREMISES, AS FULLY TO ALL INTENTS AND PURPOSES AS HE MIGHT OR COULD DO IN
PERSON, AND HEREBY RATIFIES AND CONFIRMS ALL THAT SAID ATTORNEYS-IN-FACT AND
AGENTS, EACH ACTING ALONE, OR THEIR SUBSTITUTE OR SUBSTITUTES, MAY LAWFULLY DO
OR CAUSE TO BE DONE.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED ON DECEMBER 8, 1997.
NAME TITLE
/s/ Edward G. Atsinger III President and Chief Executive
- ------------------------------------- Officer (Principal Executive
EDWARD G. ATSINGER III Officer)
/s/ Dirk Gastaldo Vice President (Principal
- ------------------------------------- Financial and Accounting
DIRK GASTALDO Officer)
/s/ Edward G. Atsinger III Director
- -------------------------------------
EDWARD G. ATSINGER III
/s/ Stuart W. Epperson Director
- -------------------------------------
STUART W. EPPERSON
II-17
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, NEW ENGLAND
CONTINENTAL MEDIA, INC. HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN
CAMARILLO, CALIFORNIA ON DECEMBER 8, 1997.
New England Continental Media, Inc.
/s/ Edward G. Atsinger III
By: _________________________________
EDWARD G. ATSINGER III PRESIDENT
AND CHIEF EXECUTIVE OFFICER
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS THAT EACH PERSON WHOSE SIGNATURE APPEARS
BELOW CONSTITUTES AND APPOINTS ERIC H. HALVORSON AND DIRK GASTALDO, HIS TRUE
AND LAWFUL ATTORNEYS-IN-FACT AND AGENTS, EACH ACTING ALONE, WITH FULL POWER OF
SUBSTITUTION AND RESUBSTITUTION, FOR HIM AND IN HIS NAME, PLACE AND STEAD, IN
ANY AND ALL CAPACITIES, TO SIGN ANY OR ALL AMENDMENTS TO THIS REGISTRATION
STATEMENT, INCLUDING POST-EFFECTIVE AMENDMENTS, AND TO FILE THE SAME, WITH ALL
EXHIBITS THERETO, AND ALL DOCUMENTS IN CONNECTION THEREWITH, WITH THE
SECURITIES AND EXCHANGE COMMISSION, GRANTING UNTO SAID ATTORNEYS-IN-FACT AND
AGENTS, AND EACH OF THEM, FULL POWER AND AUTHORITY TO DO AND PERFORM EACH AND
EVERY ACT AND THING REQUISITE AND NECESSARY TO BE DONE IN AND ABOUT THE
PREMISES, AS FULLY TO ALL INTENTS AND PURPOSES AS HE MIGHT OR COULD DO IN
PERSON, AND HEREBY RATIFIES AND CONFIRMS ALL THAT SAID ATTORNEYS-IN-FACT AND
AGENTS, EACH ACTING ALONE, OR THEIR SUBSTITUTE OR SUBSTITUTES, MAY LAWFULLY DO
OR CAUSE TO BE DONE.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED ON DECEMBER 8, 1997.
NAME TITLE
/s/ Edward G. Atsinger III President and Chief Executive
- ------------------------------------- Officer (Principal Executive
EDWARD G. ATSINGER III Officer)
/s/ Dirk Gastaldo Vice President (Principal
- ------------------------------------- Financial and Accounting
DIRK GASTALDO Officer)
/s/ Edward G. Atsinger III Director
- -------------------------------------
EDWARD G. ATSINGER III
/s/ Stuart W. Epperson Director
- -------------------------------------
STUART W. EPPERSON
II-18
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, NEW INSPIRATION
BROADCASTING COMPANY, INC. HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN
CAMARILLO, CALIFORNIA ON DECEMBER 8, 1997.
New Inspiration Broadcasting
Company, Inc.
/s/ Edward G. Atsinger III
By: _________________________________
EDWARD G. ATSINGER III PRESIDENT
AND CHIEF EXECUTIVE OFFICER
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS THAT EACH PERSON WHOSE SIGNATURE APPEARS
BELOW CONSTITUTES AND APPOINTS ERIC H. HALVORSON AND DIRK GASTALDO, HIS TRUE
AND LAWFUL ATTORNEYS-IN-FACT AND AGENTS, EACH ACTING ALONE, WITH FULL POWER OF
SUBSTITUTION AND RESUBSTITUTION, FOR HIM AND IN HIS NAME, PLACE AND STEAD, IN
ANY AND ALL CAPACITIES, TO SIGN ANY OR ALL AMENDMENTS TO THIS REGISTRATION
STATEMENT, INCLUDING POST-EFFECTIVE AMENDMENTS, AND TO FILE THE SAME, WITH ALL
EXHIBITS THERETO, AND ALL DOCUMENTS IN CONNECTION THEREWITH, WITH THE
SECURITIES AND EXCHANGE COMMISSION, GRANTING UNTO SAID ATTORNEYS-IN-FACT AND
AGENTS, AND EACH OF THEM, FULL POWER AND AUTHORITY TO DO AND PERFORM EACH AND
EVERY ACT AND THING REQUISITE AND NECESSARY TO BE DONE IN AND ABOUT THE
PREMISES, AS FULLY TO ALL INTENTS AND PURPOSES AS HE MIGHT OR COULD DO IN
PERSON, AND HEREBY RATIFIES AND CONFIRMS ALL THAT SAID ATTORNEYS-IN-FACT AND
AGENTS, EACH ACTING ALONE, OR THEIR SUBSTITUTE OR SUBSTITUTES, MAY LAWFULLY DO
OR CAUSE TO BE DONE.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED ON DECEMBER 8, 1997.
NAME TITLE
/s/ Edward G. Atsinger III President and Chief Executive
- ------------------------------------- Officer (Principal Executive
EDWARD G. ATSINGER III Officer)
/s/ Dirk Gastaldo Vice President (Principal
- ------------------------------------- Financial and Accounting
DIRK GASTALDO Officer)
/s/ Edward G. Atsinger III Director
- -------------------------------------
EDWARD G. ATSINGER III
/s/ Stuart W. Epperson Director
- -------------------------------------
STUART W. EPPERSON
II-19
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, OASIS RADIO,
INC. HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY
THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN CAMARILLO, CALIFORNIA ON
DECEMBER 8, 1997.
Oasis Radio, Inc.
/s/ Edward G. Atsinger III
By: _________________________________
EDWARD G. ATSINGER III PRESIDENT
AND CHIEF EXECUTIVE OFFICER
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS THAT EACH PERSON WHOSE SIGNATURE APPEARS
BELOW CONSTITUTES AND APPOINTS ERIC H. HALVORSON AND DIRK GASTALDO, HIS TRUE
AND LAWFUL ATTORNEYS-IN-FACT AND AGENTS, EACH ACTING ALONE, WITH FULL POWER OF
SUBSTITUTION AND RESUBSTITUTION, FOR HIM AND IN HIS NAME, PLACE AND STEAD, IN
ANY AND ALL CAPACITIES, TO SIGN ANY OR ALL AMENDMENTS TO THIS REGISTRATION
STATEMENT, INCLUDING POST-EFFECTIVE AMENDMENTS, AND TO FILE THE SAME, WITH ALL
EXHIBITS THERETO, AND ALL DOCUMENTS IN CONNECTION THEREWITH, WITH THE
SECURITIES AND EXCHANGE COMMISSION, GRANTING UNTO SAID ATTORNEYS-IN-FACT AND
AGENTS, AND EACH OF THEM, FULL POWER AND AUTHORITY TO DO AND PERFORM EACH AND
EVERY ACT AND THING REQUISITE AND NECESSARY TO BE DONE IN AND ABOUT THE
PREMISES, AS FULLY TO ALL INTENTS AND PURPOSES AS HE MIGHT OR COULD DO IN
PERSON, AND HEREBY RATIFIES AND CONFIRMS ALL THAT SAID ATTORNEYS-IN-FACT AND
AGENTS, EACH ACTING ALONE, OR THEIR SUBSTITUTE OR SUBSTITUTES, MAY LAWFULLY DO
OR CAUSE TO BE DONE.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED ON DECEMBER 8, 1997.
NAME TITLE
/s/ Edward G. Atsinger III President and Chief Executive
- ------------------------------------- Officer (Principal Executive
EDWARD G. ATSINGER III Officer)
/s/ Dirk Gastaldo Vice President (Principal
- ------------------------------------- Financial and Accounting
DIRK GASTALDO Officer)
/s/ Edward G. Atsinger III Director
- -------------------------------------
EDWARD G. ATSINGER III
/s/ Stuart W. Epperson Director
- -------------------------------------
STUART W. EPPERSON
II-20
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, PENNSYLVANIA
MEDIA ASSOCIATES, INC. HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN
CAMARILLO, CALIFORNIA ON DECEMBER 8, 1997.
Pennsylvania Media Associates, Inc.
/s/ Edward G. Atsinger III
By: _________________________________
EDWARD G. ATSINGER III PRESIDENT
AND CHIEF EXECUTIVE OFFICER
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS THAT EACH PERSON WHOSE SIGNATURE APPEARS
BELOW CONSTITUTES AND APPOINTS ERIC H. HALVORSON AND DIRK GASTALDO, HIS TRUE
AND LAWFUL ATTORNEYS-IN-FACT AND AGENTS, EACH ACTING ALONE, WITH FULL POWER OF
SUBSTITUTION AND RESUBSTITUTION, FOR HIM AND IN HIS NAME, PLACE AND STEAD, IN
ANY AND ALL CAPACITIES, TO SIGN ANY OR ALL AMENDMENTS TO THIS REGISTRATION
STATEMENT, INCLUDING POST-EFFECTIVE AMENDMENTS, AND TO FILE THE SAME, WITH ALL
EXHIBITS THERETO, AND ALL DOCUMENTS IN CONNECTION THEREWITH, WITH THE
SECURITIES AND EXCHANGE COMMISSION, GRANTING UNTO SAID ATTORNEYS-IN-FACT AND
AGENTS, AND EACH OF THEM, FULL POWER AND AUTHORITY TO DO AND PERFORM EACH AND
EVERY ACT AND THING REQUISITE AND NECESSARY TO BE DONE IN AND ABOUT THE
PREMISES, AS FULLY TO ALL INTENTS AND PURPOSES AS HE MIGHT OR COULD DO IN
PERSON, AND HEREBY RATIFIES AND CONFIRMS ALL THAT SAID ATTORNEYS-IN-FACT AND
AGENTS, EACH ACTING ALONE, OR THEIR SUBSTITUTE OR SUBSTITUTES, MAY LAWFULLY DO
OR CAUSE TO BE DONE.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED ON DECEMBER 8, 1997.
NAME TITLE
/s/ Edward G. Atsinger III President and Chief Executive
- ------------------------------------- Officer (Principal Executive
EDWARD G. ATSINGER III Officer)
/s/ Dirk Gastaldo Vice President (Principal
- ------------------------------------- Financial and Accounting
DIRK GASTALDO Officer)
/s/ Edward G. Atsinger III Director
- -------------------------------------
EDWARD G. ATSINGER III
/s/ Stuart W. Epperson Director
- -------------------------------------
STUART W. EPPERSON
II-21
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, RADIO 1210, INC.
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN CAMARILLO, CALIFORNIA ON DECEMBER
8, 1997.
Radio 1210, Inc.
/s/ Edward G. Atsinger III
By: _________________________________
EDWARD G. ATSINGER III PRESIDENT
AND CHIEF EXECUTIVE OFFICER
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS THAT EACH PERSON WHOSE SIGNATURE APPEARS
BELOW CONSTITUTES AND APPOINTS ERIC H. HALVORSON AND DIRK GASTALDO, HIS TRUE
AND LAWFUL ATTORNEYS-IN-FACT AND AGENTS, EACH ACTING ALONE, WITH FULL POWER OF
SUBSTITUTION AND RESUBSTITUTION, FOR HIM AND IN HIS NAME, PLACE AND STEAD, IN
ANY AND ALL CAPACITIES, TO SIGN ANY OR ALL AMENDMENTS TO THIS REGISTRATION
STATEMENT, INCLUDING POST-EFFECTIVE AMENDMENTS, AND TO FILE THE SAME, WITH ALL
EXHIBITS THERETO, AND ALL DOCUMENTS IN CONNECTION THEREWITH, WITH THE
SECURITIES AND EXCHANGE COMMISSION, GRANTING UNTO SAID ATTORNEYS-IN-FACT AND
AGENTS, AND EACH OF THEM, FULL POWER AND AUTHORITY TO DO AND PERFORM EACH AND
EVERY ACT AND THING REQUISITE AND NECESSARY TO BE DONE IN AND ABOUT THE
PREMISES, AS FULLY TO ALL INTENTS AND PURPOSES AS HE MIGHT OR COULD DO IN
PERSON, AND HEREBY RATIFIES AND CONFIRMS ALL THAT SAID ATTORNEYS-IN-FACT AND
AGENTS, EACH ACTING ALONE, OR THEIR SUBSTITUTE OR SUBSTITUTES, MAY LAWFULLY DO
OR CAUSE TO BE DONE.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED ON DECEMBER 8, 1997.
NAME TITLE
/s/ Edward G. Atsinger III President and Chief Executive
- ------------------------------------- Officer (Principal Executive
EDWARD G. ATSINGER III Officer)
/s/ Dirk Gastaldo Vice President (Principal
- ------------------------------------- Financial and Accounting
DIRK GASTALDO Officer)
/s/ Edward G. Atsinger III Director
- -------------------------------------
EDWARD G. ATSINGER III
/s/ Stuart W. Epperson Director
- -------------------------------------
STUART W. EPPERSON
II-22
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, SALEM
COMMUNICATIONS CORPORATION, A DELAWARE CORPORATION, HAS DULY CAUSED THIS
REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED,
THEREUNTO DULY AUTHORIZED, IN CAMARILLO, CALIFORNIA ON DECEMBER 8, 1997.
Salem Communications Corporation, a
Delaware corporation
/s/ Edward G. Atsinger III
By: _________________________________
EDWARD G. ATSINGER III PRESIDENT
AND CHIEF EXECUTIVE OFFICER
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS THAT EACH PERSON WHOSE SIGNATURE APPEARS
BELOW CONSTITUTES AND APPOINTS ERIC H. HALVORSON AND DIRK GASTALDO, HIS TRUE
AND LAWFUL ATTORNEYS-IN-FACT AND AGENTS, EACH ACTING ALONE, WITH FULL POWER OF
SUBSTITUTION AND RESUBSTITUTION, FOR HIM AND IN HIS NAME, PLACE AND STEAD, IN
ANY AND ALL CAPACITIES, TO SIGN ANY OR ALL AMENDMENTS TO THIS REGISTRATION
STATEMENT, INCLUDING POST-EFFECTIVE AMENDMENTS, AND TO FILE THE SAME, WITH ALL
EXHIBITS THERETO, AND ALL DOCUMENTS IN CONNECTION THEREWITH, WITH THE
SECURITIES AND EXCHANGE COMMISSION, GRANTING UNTO SAID ATTORNEYS-IN-FACT AND
AGENTS, AND EACH OF THEM, FULL POWER AND AUTHORITY TO DO AND PERFORM EACH AND
EVERY ACT AND THING REQUISITE AND NECESSARY TO BE DONE IN AND ABOUT THE
PREMISES, AS FULLY TO ALL INTENTS AND PURPOSES AS HE MIGHT OR COULD DO IN
PERSON, AND HEREBY RATIFIES AND CONFIRMS ALL THAT SAID ATTORNEYS-IN-FACT AND
AGENTS, EACH ACTING ALONE, OR THEIR SUBSTITUTE OR SUBSTITUTES, MAY LAWFULLY DO
OR CAUSE TO BE DONE.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED ON DECEMBER 8, 1997.
NAME TITLE
/s/ Edward G. Atsinger III President and Chief Executive
- ------------------------------------- Officer (Principal Executive
EDWARD G. ATSINGER III Officer)
/s/ Dirk Gastaldo Vice President (Principal
- ------------------------------------- Financial and Accounting
DIRK GASTALDO Officer)
/s/ Edward G. Atsinger III Director
- -------------------------------------
EDWARD G. ATSINGER III
/s/ Stuart W. Epperson Director
- -------------------------------------
STUART W. EPPERSON
II-23
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, SALEM MEDIA
CORPORATION HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN CAMARILLO, CALIFORNIA
ON DECEMBER 8, 1997.
Salem Media Corporation
/s/ Edward G. Atsinger III
By: _________________________________
EDWARD G. ATSINGER III PRESIDENT
AND CHIEF EXECUTIVE OFFICER
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS THAT EACH PERSON WHOSE SIGNATURE APPEARS
BELOW CONSTITUTES AND APPOINTS ERIC H. HALVORSON AND DIRK GASTALDO, HIS TRUE
AND LAWFUL ATTORNEYS-IN-FACT AND AGENTS, EACH ACTING ALONE, WITH FULL POWER OF
SUBSTITUTION AND RESUBSTITUTION, FOR HIM AND IN HIS NAME, PLACE AND STEAD, IN
ANY AND ALL CAPACITIES, TO SIGN ANY OR ALL AMENDMENTS TO THIS REGISTRATION
STATEMENT, INCLUDING POST-EFFECTIVE AMENDMENTS, AND TO FILE THE SAME, WITH ALL
EXHIBITS THERETO, AND ALL DOCUMENTS IN CONNECTION THEREWITH, WITH THE
SECURITIES AND EXCHANGE COMMISSION, GRANTING UNTO SAID ATTORNEYS-IN-FACT AND
AGENTS, AND EACH OF THEM, FULL POWER AND AUTHORITY TO DO AND PERFORM EACH AND
EVERY ACT AND THING REQUISITE AND NECESSARY TO BE DONE IN AND ABOUT THE
PREMISES, AS FULLY TO ALL INTENTS AND PURPOSES AS HE MIGHT OR COULD DO IN
PERSON, AND HEREBY RATIFIES AND CONFIRMS ALL THAT SAID ATTORNEYS-IN-FACT AND
AGENTS, EACH ACTING ALONE, OR THEIR SUBSTITUTE OR SUBSTITUTES, MAY LAWFULLY DO
OR CAUSE TO BE DONE.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED ON DECEMBER 8, 1997.
NAME TITLE
/s/ Edward G. Atsinger III President and Chief Executive
- ------------------------------------- Officer (Principal Executive
EDWARD G. ATSINGER III Officer)
/s/ Dirk Gastaldo Vice President (Principal
- ------------------------------------- Financial and Accounting
DIRK GASTALDO Officer)
/s/ Edward G. Atsinger III Director
- -------------------------------------
EDWARD G. ATSINGER III
/s/ Stuart W. Epperson Director
- -------------------------------------
STUART W. EPPERSON
II-24
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, SALEM MEDIA OF
CALIFORNIA, INC. HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN CAMARILLO,
CALIFORNIA ON DECEMBER 8, 1997.
Salem Media of California, Inc.
/s/ Edward G. Atsinger III
By: _________________________________
EDWARD G. ATSINGER III PRESIDENT
AND CHIEF EXECUTIVE OFFICER
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS THAT EACH PERSON WHOSE SIGNATURE APPEARS
BELOW CONSTITUTES AND APPOINTS ERIC H. HALVORSON AND DIRK GASTALDO, HIS TRUE
AND LAWFUL ATTORNEYS-IN-FACT AND AGENTS, EACH ACTING ALONE, WITH FULL POWER OF
SUBSTITUTION AND RESUBSTITUTION, FOR HIM AND IN HIS NAME, PLACE AND STEAD, IN
ANY AND ALL CAPACITIES, TO SIGN ANY OR ALL AMENDMENTS TO THIS REGISTRATION
STATEMENT, INCLUDING POST-EFFECTIVE AMENDMENTS, AND TO FILE THE SAME, WITH ALL
EXHIBITS THERETO, AND ALL DOCUMENTS IN CONNECTION THEREWITH, WITH THE
SECURITIES AND EXCHANGE COMMISSION, GRANTING UNTO SAID ATTORNEYS-IN-FACT AND
AGENTS, AND EACH OF THEM, FULL POWER AND AUTHORITY TO DO AND PERFORM EACH AND
EVERY ACT AND THING REQUISITE AND NECESSARY TO BE DONE IN AND ABOUT THE
PREMISES, AS FULLY TO ALL INTENTS AND PURPOSES AS HE MIGHT OR COULD DO IN
PERSON, AND HEREBY RATIFIES AND CONFIRMS ALL THAT SAID ATTORNEYS-IN-FACT AND
AGENTS, EACH ACTING ALONE, OR THEIR SUBSTITUTE OR SUBSTITUTES, MAY LAWFULLY DO
OR CAUSE TO BE DONE.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED ON DECEMBER 8, 1997.
NAME TITLE
/s/ Edward G. Atsinger III President and Chief Executive
- ------------------------------------- Officer (Principal Executive
EDWARD G. ATSINGER III Officer)
/s/ Dirk Gastaldo Vice President (Principal
- ------------------------------------- Financial and Accounting
DIRK GASTALDO Officer)
/s/ Edward G. Atsinger III Director
- -------------------------------------
EDWARD G. ATSINGER III
/s/ Stuart W. Epperson Director
- -------------------------------------
STUART W. EPPERSON
II-25
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, SALEM MEDIA OF
COLORADO, INC. HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN CAMARILLO, CALIFORNIA
ON DECEMBER 8, 1997.
Salem Media of Colorado, Inc.
/s/ Edward G. Atsinger III
By: _________________________________
EDWARD G. ATSINGER III PRESIDENT
AND CHIEF EXECUTIVE OFFICER
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS THAT EACH PERSON WHOSE SIGNATURE APPEARS
BELOW CONSTITUTES AND APPOINTS ERIC H. HALVORSON AND DIRK GASTALDO, HIS TRUE
AND LAWFUL ATTORNEYS-IN-FACT AND AGENTS, EACH ACTING ALONE, WITH FULL POWER OF
SUBSTITUTION AND RESUBSTITUTION, FOR HIM AND IN HIS NAME, PLACE AND STEAD, IN
ANY AND ALL CAPACITIES, TO SIGN ANY OR ALL AMENDMENTS TO THIS REGISTRATION
STATEMENT, INCLUDING POST-EFFECTIVE AMENDMENTS, AND TO FILE THE SAME, WITH ALL
EXHIBITS THERETO, AND ALL DOCUMENTS IN CONNECTION THEREWITH, WITH THE
SECURITIES AND EXCHANGE COMMISSION, GRANTING UNTO SAID ATTORNEYS-IN-FACT AND
AGENTS, AND EACH OF THEM, FULL POWER AND AUTHORITY TO DO AND PERFORM EACH AND
EVERY ACT AND THING REQUISITE AND NECESSARY TO BE DONE IN AND ABOUT THE
PREMISES, AS FULLY TO ALL INTENTS AND PURPOSES AS HE MIGHT OR COULD DO IN
PERSON, AND HEREBY RATIFIES AND CONFIRMS ALL THAT SAID ATTORNEYS-IN-FACT AND
AGENTS, EACH ACTING ALONE, OR THEIR SUBSTITUTE OR SUBSTITUTES, MAY LAWFULLY DO
OR CAUSE TO BE DONE.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED ON DECEMBER 8, 1997.
NAME TITLE
/s/ Edward G. Atsinger III President and Chief Executive
- ------------------------------------- Officer (Principal Executive
EDWARD G. ATSINGER III Officer)
/s/ Dirk Gastaldo Vice President (Principal
- ------------------------------------- Financial and Accounting
DIRK GASTALDO Officer)
/s/ Edward G. Atsinger III Director
- -------------------------------------
EDWARD G. ATSINGER III
/s/ Stuart W. Epperson Director
- -------------------------------------
STUART W. EPPERSON
II-26
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, SALEM MEDIA OF
LOUISIANA, INC. HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN CAMARILLO,
CALIFORNIA ON DECEMBER 8, 1997.
Salem Media of Louisiana, Inc.
/s/ Edward G. Atsinger III
By: _________________________________
EDWARD G. ATSINGER III PRESIDENT
AND CHIEF EXECUTIVE OFFICER
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS THAT EACH PERSON WHOSE SIGNATURE APPEARS
BELOW CONSTITUTES AND APPOINTS ERIC H. HALVORSON AND DIRK GASTALDO, HIS TRUE
AND LAWFUL ATTORNEYS-IN-FACT AND AGENTS, EACH ACTING ALONE, WITH FULL POWER OF
SUBSTITUTION AND RESUBSTITUTION, FOR HIM AND IN HIS NAME, PLACE AND STEAD, IN
ANY AND ALL CAPACITIES, TO SIGN ANY OR ALL AMENDMENTS TO THIS REGISTRATION
STATEMENT, INCLUDING POST-EFFECTIVE AMENDMENTS, AND TO FILE THE SAME, WITH ALL
EXHIBITS THERETO, AND ALL DOCUMENTS IN CONNECTION THEREWITH, WITH THE
SECURITIES AND EXCHANGE COMMISSION, GRANTING UNTO SAID ATTORNEYS-IN-FACT AND
AGENTS, AND EACH OF THEM, FULL POWER AND AUTHORITY TO DO AND PERFORM EACH AND
EVERY ACT AND THING REQUISITE AND NECESSARY TO BE DONE IN AND ABOUT THE
PREMISES, AS FULLY TO ALL INTENTS AND PURPOSES AS HE MIGHT OR COULD DO IN
PERSON, AND HEREBY RATIFIES AND CONFIRMS ALL THAT SAID ATTORNEYS-IN-FACT AND
AGENTS, EACH ACTING ALONE, OR THEIR SUBSTITUTE OR SUBSTITUTES, MAY LAWFULLY DO
OR CAUSE TO BE DONE.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED ON DECEMBER 8, 1997.
NAME TITLE
/s/ Edward G. Atsinger III President and Chief Executive
- ------------------------------------- Officer (Principal Executive
EDWARD G. ATSINGER III Officer)
/s/ Dirk Gastaldo Vice President (Principal
- ------------------------------------- Financial and Accounting
DIRK GASTALDO Officer)
/s/ Edward G. Atsinger III Director
- -------------------------------------
EDWARD G. ATSINGER III
/s/ Stuart W. Epperson Director
- -------------------------------------
STUART W. EPPERSON
II-27
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, SALEM MEDIA OF
OHIO, INC. HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN CAMARILLO, CALIFORNIA
ON DECEMBER 8, 1997.
Salem Media of Ohio, Inc.
/s/ Edward G. Atsinger III
By: _________________________________
EDWARD G. ATSINGER III PRESIDENT
AND CHIEF EXECUTIVE OFFICER
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS THAT EACH PERSON WHOSE SIGNATURE APPEARS
BELOW CONSTITUTES AND APPOINTS ERIC H. HALVORSON AND DIRK GASTALDO, HIS TRUE
AND LAWFUL ATTORNEYS-IN-FACT AND AGENTS, EACH ACTING ALONE, WITH FULL POWER OF
SUBSTITUTION AND RESUBSTITUTION, FOR HIM AND IN HIS NAME, PLACE AND STEAD, IN
ANY AND ALL CAPACITIES, TO SIGN ANY OR ALL AMENDMENTS TO THIS REGISTRATION
STATEMENT, INCLUDING POST-EFFECTIVE AMENDMENTS, AND TO FILE THE SAME, WITH ALL
EXHIBITS THERETO, AND ALL DOCUMENTS IN CONNECTION THEREWITH, WITH THE
SECURITIES AND EXCHANGE COMMISSION, GRANTING UNTO SAID ATTORNEYS-IN-FACT AND
AGENTS, AND EACH OF THEM, FULL POWER AND AUTHORITY TO DO AND PERFORM EACH AND
EVERY ACT AND THING REQUISITE AND NECESSARY TO BE DONE IN AND ABOUT THE
PREMISES, AS FULLY TO ALL INTENTS AND PURPOSES AS HE MIGHT OR COULD DO IN
PERSON, AND HEREBY RATIFIES AND CONFIRMS ALL THAT SAID ATTORNEYS-IN-FACT AND
AGENTS, EACH ACTING ALONE, OR THEIR SUBSTITUTE OR SUBSTITUTES, MAY LAWFULLY DO
OR CAUSE TO BE DONE.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED ON DECEMBER 8, 1997.
NAME TITLE
/s/ Edward G. Atsinger III President and Chief Executive
- ------------------------------------- Officer (Principal Executive
EDWARD G. ATSINGER III Officer)
/s/ Dirk Gastaldo Vice President (Principal
- ------------------------------------- Financial and Accounting
DIRK GASTALDO Officer)
/s/ Edward G. Atsinger III Director
- -------------------------------------
EDWARD G. ATSINGER III
/s/ Stuart W. Epperson Director
- -------------------------------------
STUART W. EPPERSON
II-28
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, SALEM MEDIA OF
OREGON, INC. HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN CAMARILLO, CALIFORNIA
ON DECEMBER 8, 1997.
Salem Media of Oregon, Inc.
/s/ Edward G. Atsinger III
By: _________________________________
EDWARD G. ATSINGER III PRESIDENT
AND CHIEF EXECUTIVE OFFICER
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS THAT EACH PERSON WHOSE SIGNATURE APPEARS
BELOW CONSTITUTES AND APPOINTS ERIC H. HALVORSON AND DIRK GASTALDO, HIS TRUE
AND LAWFUL ATTORNEYS-IN-FACT AND AGENTS, EACH ACTING ALONE, WITH FULL POWER OF
SUBSTITUTION AND RESUBSTITUTION, FOR HIM AND IN HIS NAME, PLACE AND STEAD, IN
ANY AND ALL CAPACITIES, TO SIGN ANY OR ALL AMENDMENTS TO THIS REGISTRATION
STATEMENT, INCLUDING POST-EFFECTIVE AMENDMENTS, AND TO FILE THE SAME, WITH ALL
EXHIBITS THERETO, AND ALL DOCUMENTS IN CONNECTION THEREWITH, WITH THE
SECURITIES AND EXCHANGE COMMISSION, GRANTING UNTO SAID ATTORNEYS-IN-FACT AND
AGENTS, AND EACH OF THEM, FULL POWER AND AUTHORITY TO DO AND PERFORM EACH AND
EVERY ACT AND THING REQUISITE AND NECESSARY TO BE DONE IN AND ABOUT THE
PREMISES, AS FULLY TO ALL INTENTS AND PURPOSES AS HE MIGHT OR COULD DO IN
PERSON, AND HEREBY RATIFIES AND CONFIRMS ALL THAT SAID ATTORNEYS-IN-FACT AND
AGENTS, EACH ACTING ALONE, OR THEIR SUBSTITUTE OR SUBSTITUTES, MAY LAWFULLY DO
OR CAUSE TO BE DONE.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED ON DECEMBER 8, 1997.
NAME TITLE
/s/ Edward G. Atsinger III President and Chief Executive
- ------------------------------------- Officer (Principal Executive
EDWARD G. ATSINGER III Officer)
/s/ Dirk Gastaldo Vice President (Principal
- ------------------------------------- Financial and Accounting
DIRK GASTALDO Officer)
/s/ Edward G. Atsinger III Director
- -------------------------------------
EDWARD G. ATSINGER III
/s/ Stuart W. Epperson Director
- -------------------------------------
STUART W. EPPERSON
II-29
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, SALEM MEDIA OF
PENNSYLVANIA, INC. HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN CAMARILLO,
CALIFORNIA ON DECEMBER 8, 1997.
Salem Media of Pennsylvania, Inc.
/s/ Edward G. Atsinger III
By: _________________________________
EDWARD G. ATSINGER III PRESIDENT
AND CHIEF EXECUTIVE OFFICER
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS THAT EACH PERSON WHOSE SIGNATURE APPEARS
BELOW CONSTITUTES AND APPOINTS ERIC H. HALVORSON AND DIRK GASTALDO, HIS TRUE
AND LAWFUL ATTORNEYS-IN-FACT AND AGENTS, EACH ACTING ALONE, WITH FULL POWER OF
SUBSTITUTION AND RESUBSTITUTION, FOR HIM AND IN HIS NAME, PLACE AND STEAD, IN
ANY AND ALL CAPACITIES, TO SIGN ANY OR ALL AMENDMENTS TO THIS REGISTRATION
STATEMENT, INCLUDING POST-EFFECTIVE AMENDMENTS, AND TO FILE THE SAME, WITH ALL
EXHIBITS THERETO, AND ALL DOCUMENTS IN CONNECTION THEREWITH, WITH THE
SECURITIES AND EXCHANGE COMMISSION, GRANTING UNTO SAID ATTORNEYS-IN-FACT AND
AGENTS, AND EACH OF THEM, FULL POWER AND AUTHORITY TO DO AND PERFORM EACH AND
EVERY ACT AND THING REQUISITE AND NECESSARY TO BE DONE IN AND ABOUT THE
PREMISES, AS FULLY TO ALL INTENTS AND PURPOSES AS HE MIGHT OR COULD DO IN
PERSON, AND HEREBY RATIFIES AND CONFIRMS ALL THAT SAID ATTORNEYS-IN-FACT AND
AGENTS, EACH ACTING ALONE, OR THEIR SUBSTITUTE OR SUBSTITUTES, MAY LAWFULLY DO
OR CAUSE TO BE DONE.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED ON DECEMBER 8, 1997.
NAME TITLE
/s/ Edward G. Atsinger III President and Chief Executive
- ------------------------------------- Officer (Principal Executive
EDWARD G. ATSINGER III Officer)
/s/ Dirk Gastaldo Vice President (Principal
- ------------------------------------- Financial and Accounting
DIRK GASTALDO Officer)
/s/ Edward G. Atsinger III Director
- -------------------------------------
EDWARD G. ATSINGER III
/s/ Stuart W. Epperson Director
- -------------------------------------
STUART W. EPPERSON
II-30
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, SALEM MEDIA OF
TEXAS, INC. HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN CAMARILLO, CALIFORNIA
ON DECEMBER 8, 1997.
Salem Media of Texas, Inc.
/s/ Edward G. Atsinger III
By: _________________________________
EDWARD G. ATSINGER III PRESIDENT
AND CHIEF EXECUTIVE OFFICER
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS THAT EACH PERSON WHOSE SIGNATURE APPEARS
BELOW CONSTITUTES AND APPOINTS ERIC H. HALVORSON AND DIRK GASTALDO, HIS TRUE
AND LAWFUL ATTORNEYS-IN-FACT AND AGENTS, EACH ACTING ALONE, WITH FULL POWER OF
SUBSTITUTION AND RESUBSTITUTION, FOR HIM AND IN HIS NAME, PLACE AND STEAD, IN
ANY AND ALL CAPACITIES, TO SIGN ANY OR ALL AMENDMENTS TO THIS REGISTRATION
STATEMENT, INCLUDING POST-EFFECTIVE AMENDMENTS, AND TO FILE THE SAME, WITH ALL
EXHIBITS THERETO, AND ALL DOCUMENTS IN CONNECTION THEREWITH, WITH THE
SECURITIES AND EXCHANGE COMMISSION, GRANTING UNTO SAID ATTORNEYS-IN-FACT AND
AGENTS, AND EACH OF THEM, FULL POWER AND AUTHORITY TO DO AND PERFORM EACH AND
EVERY ACT AND THING REQUISITE AND NECESSARY TO BE DONE IN AND ABOUT THE
PREMISES, AS FULLY TO ALL INTENTS AND PURPOSES AS HE MIGHT OR COULD DO IN
PERSON, AND HEREBY RATIFIES AND CONFIRMS ALL THAT SAID ATTORNEYS-IN-FACT AND
AGENTS, EACH ACTING ALONE, OR THEIR SUBSTITUTE OR SUBSTITUTES, MAY LAWFULLY DO
OR CAUSE TO BE DONE.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED ON DECEMBER 8, 1997.
NAME TITLE
/s/ Edward G. Atsinger III President and Chief Executive
- ------------------------------------- Officer (Principal Executive
EDWARD G. ATSINGER III Officer)
/s/ Dirk Gastaldo Vice President (Principal
- ------------------------------------- Financial and Accounting
DIRK GASTALDO Officer)
/s/ Edward G. Atsinger III Director
- -------------------------------------
EDWARD G. ATSINGER III
/s/ Stuart W. Epperson Director
- -------------------------------------
STUART W. EPPERSON
II-31
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, SALEM MUSIC
NETWORK, INC. HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN CAMARILLO, CALIFORNIA
ON DECEMBER 8, 1997.
Salem Music Network, Inc.
/s/ Edward G. Atsinger III
By: _________________________________
EDWARD G. ATSINGER III PRESIDENT
AND CHIEF EXECUTIVE OFFICER
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS THAT EACH PERSON WHOSE SIGNATURE APPEARS
BELOW CONSTITUTES AND APPOINTS ERIC H. HALVORSON AND DIRK GASTALDO, HIS TRUE
AND LAWFUL ATTORNEYS-IN-FACT AND AGENTS, EACH ACTING ALONE, WITH FULL POWER OF
SUBSTITUTION AND RESUBSTITUTION, FOR HIM AND IN HIS NAME, PLACE AND STEAD, IN
ANY AND ALL CAPACITIES, TO SIGN ANY OR ALL AMENDMENTS TO THIS REGISTRATION
STATEMENT, INCLUDING POST-EFFECTIVE AMENDMENTS, AND TO FILE THE SAME, WITH ALL
EXHIBITS THERETO, AND ALL DOCUMENTS IN CONNECTION THEREWITH, WITH THE
SECURITIES AND EXCHANGE COMMISSION, GRANTING UNTO SAID ATTORNEYS-IN-FACT AND
AGENTS, AND EACH OF THEM, FULL POWER AND AUTHORITY TO DO AND PERFORM EACH AND
EVERY ACT AND THING REQUISITE AND NECESSARY TO BE DONE IN AND ABOUT THE
PREMISES, AS FULLY TO ALL INTENTS AND PURPOSES AS HE MIGHT OR COULD DO IN
PERSON, AND HEREBY RATIFIES AND CONFIRMS ALL THAT SAID ATTORNEYS-IN-FACT AND
AGENTS, EACH ACTING ALONE, OR THEIR SUBSTITUTE OR SUBSTITUTES, MAY LAWFULLY DO
OR CAUSE TO BE DONE.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED ON DECEMBER 8, 1997.
NAME TITLE
/s/ Edward G. Atsinger III President and Chief Executive
- ------------------------------------- Officer (Principal Executive
EDWARD G. ATSINGER III Officer)
/s/ Dirk Gastaldo Vice President (Principal
- ------------------------------------- Financial and Accounting
DIRK GASTALDO Officer)
/s/ Edward G. Atsinger III Director
- -------------------------------------
EDWARD G. ATSINGER III
/s/ Stuart W. Epperson Director
- -------------------------------------
STUART W. EPPERSON
II-32
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, SALEM RADIO
REPRESENTATIVES, INC. HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED
ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN CAMARILLO,
CALIFORNIA ON DECEMBER 8, 1997.
Salem Radio Representatives, Inc.
/s/ Edward G. Atsinger III
By: _________________________________
EDWARD G. ATSINGER III PRESIDENT
AND CHIEF EXECUTIVE OFFICER
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS THAT EACH PERSON WHOSE SIGNATURE APPEARS
BELOW CONSTITUTES AND APPOINTS ERIC H. HALVORSON AND DIRK GASTALDO, HIS TRUE
AND LAWFUL ATTORNEYS-IN-FACT AND AGENTS, EACH ACTING ALONE, WITH FULL POWER OF
SUBSTITUTION AND RESUBSTITUTION, FOR HIM AND IN HIS NAME, PLACE AND STEAD, IN
ANY AND ALL CAPACITIES, TO SIGN ANY OR ALL AMENDMENTS TO THIS REGISTRATION
STATEMENT, INCLUDING POST-EFFECTIVE AMENDMENTS, AND TO FILE THE SAME, WITH ALL
EXHIBITS THERETO, AND ALL DOCUMENTS IN CONNECTION THEREWITH, WITH THE
SECURITIES AND EXCHANGE COMMISSION, GRANTING UNTO SAID ATTORNEYS-IN-FACT AND
AGENTS, AND EACH OF THEM, FULL POWER AND AUTHORITY TO DO AND PERFORM EACH AND
EVERY ACT AND THING REQUISITE AND NECESSARY TO BE DONE IN AND ABOUT THE
PREMISES, AS FULLY TO ALL INTENTS AND PURPOSES AS HE MIGHT OR COULD DO IN
PERSON, AND HEREBY RATIFIES AND CONFIRMS ALL THAT SAID ATTORNEYS-IN-FACT AND
AGENTS, EACH ACTING ALONE, OR THEIR SUBSTITUTE OR SUBSTITUTES, MAY LAWFULLY DO
OR CAUSE TO BE DONE.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED ON DECEMBER 8, 1997.
NAME TITLE
/s/ Edward G. Atsinger III President and Chief Executive
- ------------------------------------- Officer (Principal Executive
EDWARD G. ATSINGER III Officer)
/s/ Dirk Gastaldo Vice President (Principal
- ------------------------------------- Financial and Accounting
DIRK GASTALDO Officer)
/s/ Edward G. Atsinger III Director
- -------------------------------------
EDWARD G. ATSINGER III
/s/ Stuart W. Epperson Director
- -------------------------------------
STUART W. EPPERSON
II-33
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, SOUTH TEXAS
BROADCASTING, INC. HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN CAMARILLO,
CALIFORNIA ON DECEMBER 8, 1997.
South Texas Broadcasting, Inc.
/s/ Edward G. Atsinger III
By: _________________________________
EDWARD G. ATSINGER III PRESIDENT
AND CHIEF EXECUTIVE OFFICER
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS THAT EACH PERSON WHOSE SIGNATURE APPEARS
BELOW CONSTITUTES AND APPOINTS ERIC H. HALVORSON AND DIRK GASTALDO, HIS TRUE
AND LAWFUL ATTORNEYS-IN-FACT AND AGENTS, EACH ACTING ALONE, WITH FULL POWER OF
SUBSTITUTION AND RESUBSTITUTION, FOR HIM AND IN HIS NAME, PLACE AND STEAD, IN
ANY AND ALL CAPACITIES, TO SIGN ANY OR ALL AMENDMENTS TO THIS REGISTRATION
STATEMENT, INCLUDING POST-EFFECTIVE AMENDMENTS, AND TO FILE THE SAME, WITH ALL
EXHIBITS THERETO, AND ALL DOCUMENTS IN CONNECTION THEREWITH, WITH THE
SECURITIES AND EXCHANGE COMMISSION, GRANTING UNTO SAID ATTORNEYS-IN-FACT AND
AGENTS, AND EACH OF THEM, FULL POWER AND AUTHORITY TO DO AND PERFORM EACH AND
EVERY ACT AND THING REQUISITE AND NECESSARY TO BE DONE IN AND ABOUT THE
PREMISES, AS FULLY TO ALL INTENTS AND PURPOSES AS HE MIGHT OR COULD DO IN
PERSON, AND HEREBY RATIFIES AND CONFIRMS ALL THAT SAID ATTORNEYS-IN-FACT AND
AGENTS, EACH ACTING ALONE, OR THEIR SUBSTITUTE OR SUBSTITUTES, MAY LAWFULLY DO
OR CAUSE TO BE DONE.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED ON DECEMBER 8, 1997.
NAME TITLE
/s/ Edward G. Atsinger III President and Chief Executive
- ------------------------------------- Officer (Principal Executive
EDWARD G. ATSINGER III Officer)
/s/ Dirk Gastaldo Vice President (Principal
- ------------------------------------- Financial and Accounting
DIRK GASTALDO Officer)
/s/ Edward G. Atsinger III Director
- -------------------------------------
EDWARD G. ATSINGER III
/s/ Stuart W. Epperson Director
- -------------------------------------
STUART W. EPPERSON
II-34
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, SRN NEWS
NETWORK, INC. HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN CAMARILLO, CALIFORNIA
ON DECEMBER 8, 1997.
SRN News Network, Inc.
/s/ Edward G. Atsinger III
By: _________________________________
EDWARD G. ATSINGER III PRESIDENT
AND CHIEF EXECUTIVE OFFICER
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS THAT EACH PERSON WHOSE SIGNATURE APPEARS
BELOW CONSTITUTES AND APPOINTS ERIC H. HALVORSON AND DIRK GASTALDO, HIS TRUE
AND LAWFUL ATTORNEYS-IN-FACT AND AGENTS, EACH ACTING ALONE, WITH FULL POWER OF
SUBSTITUTION AND RESUBSTITUTION, FOR HIM AND IN HIS NAME, PLACE AND STEAD, IN
ANY AND ALL CAPACITIES, TO SIGN ANY OR ALL AMENDMENTS TO THIS REGISTRATION
STATEMENT, INCLUDING POST-EFFECTIVE AMENDMENTS, AND TO FILE THE SAME, WITH ALL
EXHIBITS THERETO, AND ALL DOCUMENTS IN CONNECTION THEREWITH, WITH THE
SECURITIES AND EXCHANGE COMMISSION, GRANTING UNTO SAID ATTORNEYS-IN-FACT AND
AGENTS, AND EACH OF THEM, FULL POWER AND AUTHORITY TO DO AND PERFORM EACH AND
EVERY ACT AND THING REQUISITE AND NECESSARY TO BE DONE IN AND ABOUT THE
PREMISES, AS FULLY TO ALL INTENTS AND PURPOSES AS HE MIGHT OR COULD DO IN
PERSON, AND HEREBY RATIFIES AND CONFIRMS ALL THAT SAID ATTORNEYS-IN-FACT AND
AGENTS, EACH ACTING ALONE, OR THEIR SUBSTITUTE OR SUBSTITUTES, MAY LAWFULLY DO
OR CAUSE TO BE DONE.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED ON DECEMBER 8, 1997.
NAME TITLE
/s/ Edward G. Atsinger III President and Chief Executive
- ------------------------------------- Officer (Principal Executive
EDWARD G. ATSINGER III Officer)
/s/ Dirk Gastaldo Vice President (Principal
- ------------------------------------- Financial and Accounting
DIRK GASTALDO Officer)
/s/ Edward G. Atsinger III Director
- -------------------------------------
EDWARD G. ATSINGER III
/s/ Stuart W. Epperson Director
- -------------------------------------
STUART W. EPPERSON
II-35
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, VISTA
BROADCASTING, INC. HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN CAMARILLO,
CALIFORNIA ON DECEMBER 8, 1997.
Vista Broadcasting, Inc.
/s/ Edward G. Atsinger III
By: _________________________________
EDWARD G. ATSINGER III PRESIDENT
AND CHIEF EXECUTIVE OFFICER
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS THAT EACH PERSON WHOSE SIGNATURE APPEARS
BELOW CONSTITUTES AND APPOINTS ERIC H. HALVORSON AND DIRK GASTALDO, HIS TRUE
AND LAWFUL ATTORNEYS-IN-FACT AND AGENTS, EACH ACTING ALONE, WITH FULL POWER OF
SUBSTITUTION AND RESUBSTITUTION, FOR HIM AND IN HIS NAME, PLACE AND STEAD, IN
ANY AND ALL CAPACITIES, TO SIGN ANY OR ALL AMENDMENTS TO THIS REGISTRATION
STATEMENT, INCLUDING POST-EFFECTIVE AMENDMENTS, AND TO FILE THE SAME, WITH ALL
EXHIBITS THERETO, AND ALL DOCUMENTS IN CONNECTION THEREWITH, WITH THE
SECURITIES AND EXCHANGE COMMISSION, GRANTING UNTO SAID ATTORNEYS-IN-FACT AND
AGENTS, AND EACH OF THEM, FULL POWER AND AUTHORITY TO DO AND PERFORM EACH AND
EVERY ACT AND THING REQUISITE AND NECESSARY TO BE DONE IN AND ABOUT THE
PREMISES, AS FULLY TO ALL INTENTS AND PURPOSES AS HE MIGHT OR COULD DO IN
PERSON, AND HEREBY RATIFIES AND CONFIRMS ALL THAT SAID ATTORNEYS-IN-FACT AND
AGENTS, EACH ACTING ALONE, OR THEIR SUBSTITUTE OR SUBSTITUTES, MAY LAWFULLY DO
OR CAUSE TO BE DONE.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED ON DECEMBER 8, 1997.
NAME TITLE
/s/ Edward G. Atsinger III President and Chief Executive
- ------------------------------------- Officer (Principal Executive
EDWARD G. ATSINGER III Officer)
/s/ Dirk Gastaldo Vice President (Principal
- ------------------------------------- Financial and Accounting
DIRK GASTALDO Officer)
/s/ Edward G. Atsinger III Director
- -------------------------------------
EDWARD G. ATSINGER III
/s/ Stuart W. Epperson Director
- -------------------------------------
STUART W. EPPERSON
II-36
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, SALEM RADIO
NETWORK INCORPORATED HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED
ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN CAMARILLO,
CALIFORNIA ON DECEMBER 8, 1997.
Salem Radio Network Incorporated
/s/ Edward G. Atsinger III
By: _________________________________
EDWARD G. ATSINGER III PRESIDENT
AND CHIEF EXECUTIVE OFFICER
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS THAT EACH PERSON WHOSE SIGNATURE APPEARS
BELOW CONSTITUTES AND APPOINTS ERIC H. HALVORSON AND DIRK GASTALDO, HIS TRUE
AND LAWFUL ATTORNEYS-IN-FACT AND AGENTS, EACH ACTING ALONE, WITH FULL POWER OF
SUBSTITUTION AND RESUBSTITUTION, FOR HIM AND IN HIS NAME, PLACE AND STEAD, IN
ANY AND ALL CAPACITIES, TO SIGN ANY OR ALL AMENDMENTS TO THIS REGISTRATION
STATEMENT, INCLUDING POST-EFFECTIVE AMENDMENTS, AND TO FILE THE SAME, WITH ALL
EXHIBITS THERETO, AND ALL DOCUMENTS IN CONNECTION THEREWITH, WITH THE
SECURITIES AND EXCHANGE COMMISSION, GRANTING UNTO SAID ATTORNEYS-IN-FACT AND
AGENTS, AND EACH OF THEM, FULL POWER AND AUTHORITY TO DO AND PERFORM EACH AND
EVERY ACT AND THING REQUISITE AND NECESSARY TO BE DONE IN AND ABOUT THE
PREMISES, AS FULLY TO ALL INTENTS AND PURPOSES AS HE MIGHT OR COULD DO IN
PERSON, AND HEREBY RATIFIES AND CONFIRMS ALL THAT SAID ATTORNEYS-IN-FACT AND
AGENTS, EACH ACTING ALONE, OR THEIR SUBSTITUTE OR SUBSTITUTES, MAY LAWFULLY DO
OR CAUSE TO BE DONE.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED ON DECEMBER 8, 1997.
NAME TITLE
/s/ Edward G. Atsinger III President and Chief Executive
- ------------------------------------- Officer (Principal Executive
EDWARD G. ATSINGER III Officer)
/s/ Dirk Gastaldo Vice President (Principal
- ------------------------------------- Financial and Accounting
DIRK GASTALDO Officer)
/s/ Edward G. Atsinger III Director
- -------------------------------------
EDWARD G. ATSINGER III
/s/ Stuart W. Epperson Director
- -------------------------------------
STUART W. EPPERSON
II-37
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, BELTWAY MEDIA
PARTNERS HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN CAMARILLO, CALIFORNIA
ON DECEMBER 8, 1997.
Beltway Media Partners
By: Salem Communications Corporation,
a California corporation, a
general partner
/s/ Edward G. Atsinger III
________________________________
EDWARD G. ATSINGER III PRESIDENT
AND CHIEF EXECUTIVE OFFICER
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS THAT EACH PERSON WHOSE SIGNATURE APPEARS
BELOW CONSTITUTES AND APPOINTS ERIC H. HALVORSON AND DIRK GASTALDO, HIS TRUE
AND LAWFUL ATTORNEYS-IN-FACT AND AGENTS, EACH ACTING ALONE, WITH FULL POWER OF
SUBSTITUTION AND RESUBSTITUTION, FOR HIM AND IN HIS NAME, PLACE AND STEAD, IN
ANY AND ALL CAPACITIES, TO SIGN ANY OR ALL AMENDMENTS TO THIS REGISTRATION
STATEMENT, INCLUDING POST-EFFECTIVE AMENDMENTS, AND TO FILE THE SAME, WITH ALL
EXHIBITS THERETO, AND ALL DOCUMENTS IN CONNECTION THEREWITH, WITH THE
SECURITIES AND EXCHANGE COMMISSION, GRANTING UNTO SAID ATTORNEYS-IN-FACT AND
AGENTS, AND EACH OF THEM, FULL POWER AND AUTHORITY TO DO AND PERFORM EACH AND
EVERY ACT AND THING REQUISITE AND NECESSARY TO BE DONE IN AND ABOUT THE
PREMISES, AS FULLY TO ALL INTENTS AND PURPOSES AS HE MIGHT OR COULD DO IN
PERSON, AND HEREBY RATIFIES AND CONFIRMS ALL THAT SAID ATTORNEYS-IN-FACT AND
AGENTS, EACH ACTING ALONE, OR THEIR SUBSTITUTE OR SUBSTITUTES, MAY LAWFULLY DO
OR CAUSE TO BE DONE.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED ON DECEMBER 8, 1997.
NAME TITLE
Salem Communications Corporation, a
California corporation, a general
partner
/s/ Edward G. Atsinger III Director
- -------------------------------------
EDWARD G. ATSINGER III
/s/ Stuart W. Epperson Director
- -------------------------------------
STUART W. EPPERSON
/s/ Eric H. Halvorson Director
- -------------------------------------
ERIC H. HALVORSON
/s/ Richard A. Riddle Director
- -------------------------------------
RICHARD A. RIDDLE
II-38
<PAGE>
NAME TITLE
/s/ Roland S. Hinz Director
- -------------------------------------
ROLAND S. HINZ
New Inspiration Broadcasting
Company, Inc., a general partner
/s/ Edward G. Atsinger III Director
- -------------------------------------
EDWARD G. ATSINGER III
/s/ Stuart W. Epperson Director
- -------------------------------------
STUART W. EPPERSON
Golden Gate Broadcasting Company,
Inc., a general partner
/s/ Edward G. Atsinger III Director
- -------------------------------------
EDWARD G. ATSINGER III
/s/ Stuart W. Epperson Director
- -------------------------------------
STUART W. EPPERSON
II-39
<PAGE>
SALEM COMMUNICATIONS CORPORATION
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
ADDITIONS DEDUCTIONS
--------------------- --------
BALANCE AT CHARGED TO CHARGED BAD BALANCE
BEGINNING COSTS AND TO OTHER DEBT AT END
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS WRITE-OFFS OF PERIOD
- ----------- ---------- ---------- -------- ---------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Year Ended December 31,
1994
Allowance for doubtful
accounts............. $242 $ 484 $ -- $(195) $ 531
Year Ended December 31,
1995
Allowance for doubtful
accounts............. 531 929 -- (756) 704
Year Ended December 31,
1996
Allowance for doubtful
accounts............. 704 1,067 -- (766) 1,005
</TABLE>
S-1
<PAGE>
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION OF EXHIBITS PAGE
------- ----------------------- ------------
<C> <S> <C>
1.01 Placement Agreement, dated September 17, 1997,
among the Company, the Guarantors, and Furman Selz
LLC, Smith Barney, Inc., BancBoston Securities,
Inc., and BNY Capital Markets, Inc. (collectively,
the "Initial Purchasers").
1.02 Registration Rights Agreement, dated September 17,
1997, between the Company, the Guarantors and the
Initial Purchasers.
1.03 Form of Letter of Transmittal.
1.04 Form of Notice of Guaranteed Delivery.
3.01 Articles of Incorporation of the Company.
3.02 Bylaws of the Company.
3.03 Partnership Agreement of Beltway Media Partners.
3.04 Articles of Incorporation of ATEP Radio, Inc.
3.05 Bylaws of ATEP Radio, Inc.
3.06 Articles of Incorporation of Bison Media, Inc.
3.07 Bylaws of Bison Media, Inc.
3.08 Articles of Incorporation of Caron Broadcasting,
Inc.
3.09 Code of By-laws of Caron Broadcasting, Inc.
3.10 Articles of Incorporation of Common Ground
Broadcasting, Inc.
3.11 Bylaws of Common Ground Broadcasting, Inc.
3.12 Articles of Incorporation of Golden Gate
Broadcasting Company, Inc.
3.13 Bylaws of Golden Gate Broadcasting Company, Inc.
3.14 Articles of Incorporation of Inland Radio, Inc.
3.15 Bylaws of Inland Radio, Inc., a California
Corporation.
3.16 Articles of Incorporation of Inspiration Media,
Inc.
3.17 Bylaws of Inspiration Media, Inc.
3.18 Articles of Incorporation of Inspiration Media of
Texas, Inc.
3.19 Bylaws of Inspiration Media of Texas, Inc.
3.20 Articles of Organization of New England Continental
Media Inc.
3.21 By-laws of New England Continental Media Inc.
3.22.01 Articles of Incorporation of New Inspiration
Broadcasting Company, Inc.
3.22.02 Articles of Incorporation of Inspirational Media of
Southern California, Inc. (see Exhibit 3.22.03 for
name change to New Inspiration Broadcasting
Company, Inc.).
3.22.03 Certificate of Ownership of Inspirational Media of
Southern California, Inc. (evidencing merger of
New Inspiration Broadcasting Company, Inc. with
and into the corporation and revision of articles
to adopt the name New Inspiration Broadcasting
Company, Inc.).
3.23 Bylaws of Inspirational Broadcasting Company, Inc.
(see Exhibit 3.22.03 for name change to New
Inspiration Broadcasting Company, Inc.).
3.24 Articles of Incorporation of Oasis Radio, Inc.
3.25 Bylaws of Oasis Radio, Inc.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION OF EXHIBITS PAGE
------- ----------------------- ------------
<C> <S> <C>
3.26 Articles of Incorporation of Pennsylvania Media
Associates, Inc.
3.27 Pennsylvania Media Associates, Inc. By-laws
3.28 Articles of Incorporation of Radio 1210, Inc.
3.29 Bylaws of Radio 1210, Inc.
3.30 Certificate of Incorporation of Salem
Communications Corporation (a Delaware
corporation).
3.31 Salem Communications Corporation Bylaws (a Delaware
corporation).
3.32 Certificate of Incorporation of Salem Media
Corporation.
3.33 By-laws of Salem Media Corporation.
3.34.01 Articles of Incorporation of John Brown Schools of
California, Inc. (see Exhibit 3.34.03 for name
change to Salem Media of California, Inc.).
3.34.02 Certificate of Amendment of Articles of
Incorporation of John Brown Schools of California,
Inc. (see Exhibit 3.34.03 for name change to Salem
Media of California, Inc.).
3.34.03 Certificate of Amendment of Articles of
Incorporation of John Brown Schools of California,
Inc. (amending the name of the corporation to be
Salem Media of California, Inc.).
3.35 By-laws of Salem Media of California, Inc.
3.36 Articles of Incorporation of Salem Media of
Colorado, Inc.
3.37 Bylaws of Salem Media of Colorado, Inc.
3.38 Articles of Incorporation of Salem Media of
Louisiana, Inc.
3.39 By-laws of Salem Media of Louisiana, Inc.
3.40 Articles of Incorporation of Salem Media of Ohio,
Inc.
3.41 Code of By-laws For the Government of the Board of
Directors of Salem Media of Ohio, Inc.
3.42 Articles of Incorporation of Salem Media of Oregon,
Inc.
3.43 Bylaws of Salem Media of Oregon, Inc.
3.44 Articles of Incorporation of Salem Media of
Pennsylvania, Inc.
3.45 Salem Media of Pennsylvania, Inc. By-laws.
3.46 Articles of Incorporation of Salem Media of Texas,
Inc.
3.47 Bylaws of Salem Media of Texas, Inc.
3.48 Articles of Incorporation of Salem Music Network,
Inc.
3.49 Bylaws of Salem Music Network, Inc.
3.50 Certificate of Incorporation of Salem Radio Network
Incorporated.
3.51 Salem Radio Network Incorporated Bylaws.
3.52 Articles of Incorporation of Salem Radio
Representatives, Inc.
3.53 Bylaws of Salem Radio Representatives, Inc.
3.54 Articles of Incorporation of South Texas
Broadcasting, Inc.
3.55 Bylaws of South Texas Broadcasting, Inc.
</TABLE>
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3.56 Articles of Incorporation of SRN News Network, Inc.
3.57 Bylaws of SRN News Network, Inc.
3.58 Articles of Incorporation of Vista Broadcasting,
Inc.
3.59 Bylaws of Vista Broadcasting, Inc.
4.01 Indenture between the Company, the Guarantors and
The Bank of New York, as Trustee, dated as of
September 25, 1997, relating to the Old Notes and
the Notes, including form of Note.
4.02 Form of Note (filed as part of Exhibit 4.01).
4.03 Form of Note Guarantee (filed as part of Exhibit
4.01).
4.04 Registration Rights Agreement, dated September 25,
1997, between the Company, the Guarantors and the
Initial Purchasers (filed as Exhibit 1.02).
4.05 Letter of Transmittal (filed as Exhibit 1.03).
4.06 Notice of Guaranteed Delivery (filed as Exhibit
1.04).
4.07 Credit Agreement, dated as of September 25, 1997,
among the Company, the several Lenders from time
to time parties thereto, and The Bank of New York,
as administrative agent for the Lenders.
4.08 Borrower Security Agreement, dated as of September
25, 1997, by and between the Company and The Bank
of New York, as Administrative Agent of the
Lenders.
4.09 Subsidiary Guaranty and Security Agreement dated as
of September 25, 1997, by and between the Company,
the Guarantors, and The Bank of New York, as
Administrative Agent.
5.01 Opinion and Consent of Gibson, Dunn & Crutcher LLP,
regarding validity and enforceability of the Notes
and Guarantees.*
10.01 Employment Agreement, dated as of August 1, 1997,
between the Company and Edward G. Atsinger III.
10.02 Employment Agreement, dated as of August 1, 1997,
between the Company and Stuart W. Epperson.
10.03.01 Employment Contract, dated November 7, 1991,
between the Company and Eric H. Halvorson.
10.03.02 First Amendment to Employment Contract, dated April
22, 1996, between the Company and Eric H.
Halvorson.
10.03.03 Second Amendment to Employment Contract, dated July
8, 1997, between the Company and Eric H.
Halvorson.
10.03.04 Deferred Compensation Agreement, dated November 7,
1991, between the Company and Eric H. Halvorson.
10.04.01 Employment Agreement, dated February 9, 1995,
between Salem Radio Network Incorporated and Greg
R. Anderson.
10.04.02 Letter Agreement dated December 22, 1995, by
Inspiration Media of Texas, Inc. re compensation
of Greg R. Anderson under Employment Agreement
with Salem Radio Network Incorporated.
</TABLE>
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* To be filed by amendment.
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10.04.03 First Amendment to Employment Agreement, dated
August 1, 1997 between Salem Radio Network
Incorporated and Greg R. Anderson.
10.05.01 Antenna/tower lease between Caron Broadcasting,
Inc. (WHLO-AM/Akron, Ohio) and Messrs. Atsinger
and Epperson expiring 2007.
10.05.02 Antenna/tower/studio lease between Caron
Broadcasting, Inc. (WTSJ-AM/Cincinnati, Ohio)
and Messrs. Atsinger and Epperson expiring 2007.
10.05.03 Antenna/tower lease between Caron Broadcasting,
Inc. (WHK-FM/Canton, Ohio) and Messrs. Atsinger
and Epperson expiring 2007.
10.05.04 Antenna/tower/studio lease between Common Ground
Broadcasting, Inc. (KKMS-AM/Eagan, Minnesota)
and Messrs. Atsinger and Epperson expiring in
2006.
10.05.05 Antenna/tower lease between Common Ground
Broadcasting, Inc. (WHK-AM/Cleveland, Ohio)
and Messrs. Atsinger and Epperson expiring
2008.*
10.05.06 Antenna/tower lease (KFAX-FM/Hayward,
California) and Salem Broadcasting Company, a
partnership consisting of Messrs. Atsinger and
Epperson, expiring in 2003.*
10.05.07 Antenna/tower/studio lease between Inland Radio,
Inc. (KKLA-AM/San Bernardino, California) and
Messrs. Atsinger and Epperson expiring 2002.*
10.05.08 Antenna/tower lease between Inspiration Media,
Inc. (KGNW-AM/Seattle, Washington) and Messrs.
Atsinger and Epperson expiring in 2002.*
10.05.09 Antenna/tower lease between Inspiration Media,
Inc. (KLFE-AM/Seattle, Washington) and The
Atsinger Family Trust and Stuart W. Epperson
Revocable Living Trust expiring in 2004.*
10.05.10 Antenna/tower lease between Oasis Radio, Inc
(KAVC-FM/Rosamond, California) and The Atsinger
Family Trust under a lease expiring in 2002.*
10.05.11.01 Antenna/tower/lease between Pennsylvania Media
Associates, Inc. (WZZD-AM/ WFIL-AM/Philadelphia,
Pennsylvania) and Messrs. Atsinger and Epperson,
as assigned from WEAZ-FM Radio, Inc., expiring
2004.*
10.05.11.02 Antenna/tower/studio lease between Pennsylvania
Media Associates, Inc. (WZZD-AM/ WFIL-
AM/Philadelphia, Pennsylvania) and The Atsinger
Family Trust and Stuart W. Epperson Revocable
Living Trust expiring 2004.*
10.05.12 Antenna/tower lease between Radio 1210, Inc.
(KPRZ-AM/Olivenhain, California) and The
Atsinger Family Trust expiring in 2002.*
10.05.13 Antenna/tower lease between Salem Media
Corporation (WYLL-FM/Arlington Heights,
Illinois) and Messrs. Atsinger and Epperson
expiring in 2002.*
10.05.14 Antenna/turner/studio leases between Salem Media
Corporation (KLTX-AM/Long Beach and Paramount,
California) and Messrs. Atsinger and Epperson
expiring in 2002.*
10.05.15 Antenna/tower lease between Salem Media of
Colorado, Inc. (KNUS-AM/Denver-Bolder,
Colorado) and Messrs. Atsinger and Epperson
expiring 2006.*
</TABLE>
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* To be filed by amendment.
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10.05.16 Antenna/tower lease between Salem Media of Ohio,
Inc. (WRFD-AM/Columbus, Ohio) and Messrs.
Atsinger and Epperson expiring 2002.*
10.05.17.01 Studio Lease between Salem Media of Oregon, Inc.
(KPDQ-AM/FM/Portland, Oregon) and Edward G.
Atsinger III, Mona J. Atsinger, Stuart W.
Epperson, and Nancy K. Epperson expiring 2002.*
10.05.17.02 Antenna/tower lease between Salem Media of
Oregon, Inc. (KPDQ-AM/FM/Raleigh Hills,
Oregon and Messrs. Atsinger and Epperson
expiring 2002.*
10.05.18 Antenna/tower lease between Salem Media of
Pennsylvania, Inc. (WORD-FM/WPIT-AM/
Pittsburgh, Pennsylvania) and The Atsinger
Family Trust and Stuart W. Epperson Revocable
Living Trust expiring 2003.*
10.05.19 Antenna/tower lease between Salem Media of
Texas, Inc. (KSLR-AM/San Antonio, Texas) and
Epperson-Atsinger 1983 Family Trust expiring
2007.*
10.05.20 Antenna/tower lease between South Texas
Broadcasting, Inc. (KENR-AM/KKHT-FM/Houston-
Galveston, Texas) and Atsinger Family Trust
and Stuart W. Epperson Revocable Living Trust
expiring 2005.*
10.05.21 Antenna/tower lease between Vista Broadcasting,
Inc. (KFIA-AM/Sacramento, California) and The
Atsinger Family Trust and Stuart W. Epperson
Revocable Living Trust expiring 2005.*
10.06.01 Asset Purchase Agreement dated as of June 5,
1996 by and between Radio 94 of Phoenix Limited
Partnership and Salem Media of Arizona, Inc.
(KOOL-AM, Phoenix, Arizona).*
10.06.02 Asset Purchase Agreement dated as of September
3, 1996 by and between Caron Broadcasting, Inc.
and Mortenson Broadcasting Company of Canton,
LLC and Mortensen Broadcasting Company of
Akron, LLC (WTOF-FM, Canton, Ohio and WHLO-AM,
Akron, Ohio).*
10.06.03.01 Asset Purchase Agreement dated March 28, 1996 by
and between American Radio Assistance
Corporation and Common Ground Broadcasting,
Inc. (KDBX-FM, Banks, Oregon).*
10.06.03.02 First Amendment to Asset Purchase Agreement
dated as of July 22, 1996 by and between
American Radio Systems Corporation and Common
Ground Broadcasting, Inc. (KDBX-FM, Banks,
Oregon).*
10.06.04.01 Asset Purchase Agreement dated as of April 23,
1996 by and between OmniAmerica Group and WHK
License Partnership and Inspiration Media of
Ohio, Inc. (WHK-AM, Cleveland, Ohio).*
10.06.04.02 First Amendment to the Asset Purchase Agreement
dated as of July 23, 1996 by and between
OmniAmerica Group and WHK License Partnership
and Inspiration Media of Ohio, Inc. (WHK-AM,
Cleveland, Ohio).*
10.06.05 Asset Purchase Agreement dated as of September
30, 1996 by and between Infinity Broadcasting
Corporation of Dallas and Inspiration Media of
Texas, Inc. (KEWS, Arlington, Texas; KDFX,
Dallas, Texas).*
10.06.06.01 Asset Purchase Agreement dated as of December 4,
1996 by and between Backbay Broadcasters, Inc.
and New England Continental Media, Inc. (WBNW-
AM, Boston, Massachusetts).*
</TABLE>
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* To be filed by amendment.
<PAGE>
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10.06.06.02 First Amendment to the Asset Purchase Agreement
dated as of February, 1997 by and between
Backbay Broadcasters, Inc. and New England
Continental Media, Inc. (WBNW-AM, Boston,
Massachusetts).*
10.06.07 Asset Purchase Agreement dated June, 1997 by and
between New England Continental Media, Inc. and
Hibernia Communications, Inc. (WPZE-AM, Boston,
Massachusetts).*
10.07.01 Tower Purchase Agreement dated August 22, 1997
by and between the Company and Sonsinger
Broadcasting Company of Houston, L.P.*
10.07.02 Amendment to the Tower Purchase Agreement dated
November 10, 1997 by and between the Company
and Sonsinger Broadcasting Company of Houston,
L.P.
10.07.03 Promissory Note dated November 11, 1997 made by
Sonsinger Broadcasting Company of Houston, L.P.
payable to the Company.
10.08.01 Local Programming and Marketing Agreement dated
June 13, 1997 between Sonsinger, Inc. and
Inspiration Media, Inc.
10.08.02 Local Programming and Marketing Agreement and
Put/Call Agreement dated October 23, 1997 by
and between Cherokee Broadcasting Co., Inc. and
Salem Media of Georgia, Inc.
10.09.01 Evidence of Key man life insurance policy no.
2256440M insuring Edward G. Atsinger III in the
face amount of $5,000,000.
10.09.02 Evidence of Key man life insurance policy no.
2257474H insuring Edward G. Atsinger III in the
face amount of $5,000,000.
10.09.03 Evidence of Key man life insurance policy no.
2257476B insuring Stuart W. Epperson in the
face amount of $5,000,000.
12.01 Statement regarding Computation of Ratio of
Earnings to Fixed Charges.
21.01 Subsidiaries of the Company.
23.01 Consent of Ernst & Young LLP.
23.02 Consent of Gibson, Dunn & Crutcher LLP (included
in Exhibit 5.01).
24.01 Powers of Attorney (included on Signature Pages
of Registration Statement).
25.01 Statement of Eligibility of Trustee.*
27.01 Financial Data Schedule.
</TABLE>
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* To be filed by amendment.
<PAGE>
EXHIBIT 1.01
EXECUTION ORIGINAL
$150,000,000
SALEM COMMUNICATIONS CORPORATION
9.5% SENIOR SUBORDINATED NOTES DUE 2007
PLACEMENT AGREEMENT
September 17, 1997
Furman Selz LLC
Smith Barney Inc.
BancBoston Securities Inc.
BNY Capital Markets, Inc.
c/o Furman Selz LLC
230 Park Avenue
New York, New York 10169
Dear Sirs:
Salem Communications Corporation, a corporation organized under the
laws of the State of California (the "COMPANY"), proposes to issue and sell to
the initial purchasers listed on Schedule I hereto (the "INITIAL PURCHASERS"),
an aggregate of $150,000,000 principal amount of its 9.5% Senior Subordinated
Notes Due 2007 (the "NOTES"). The Notes will be fully and unconditionally
guaranteed on a senior subordinated basis as to payment of principal, premium,
if any, and interest (the "GUARANTEES" and together with the Notes, the
"SECURITIES"), jointly and severally, by all of the Company's subsidiaries (the
"GUARANTORS"), which are listed on Schedule II hereto. The Securities are to be
issued pursuant to an Indenture (the "INDENTURE"), to be dated as of September
25, 1997 among the Company, the Guarantors and The Bank of New York, a New York
banking corporation, as trustee (the "TRUSTEE"). The Securities will be offered
and sold to the Initial Purchasers (the "OFFERING") without being registered
under the Securities Act of 1933, as amended (the "SECURITIES ACT"), in reliance
upon certain exemptions set forth therein.
In connection with the offer and sale of the Securities, the Company
has prepared a preliminary Offering Memorandum dated September 2, 1997 (the
"PRELIMINARY MEMORANDUM") and a final Offering Memorandum dated September 17,
1997 (the "FINAL MEMORANDUM" and, together with the Preliminary Memorandum, each
a "MEMORANDUM", which terms shall include, unless otherwise indicated herein,
any amendments or supplements thereto) containing, among other things, a
description of the terms of the Securities and information relating to the
Company and its business. Unless otherwise defined in this Agreement,
capitalized terms used herein have the meanings specified or referred to in the
Final Memorandum.
On the Closing Date, the Company will utilize a portion of the net
proceeds of the Offering to repay all outstanding indebtedness under its
$150,000,000 Existing Credit Agreement and
<PAGE>
will thereupon terminate such agreement and enter into the New Credit Agreement
(the "CREDIT AGREEMENT REPLACEMENT").
The Initial Purchasers and their direct and indirect transferees each
will be entitled to the benefits of a Registration Rights Agreement among the
Company, the Guarantors and the Initial Purchasers (the "REGISTRATION RIGHTS
AGREEMENTS"), to be entered into as of the Closing Date, pursuant to which the
Company and the Guarantors will agree to use their best efforts to file with the
Securities and Exchange Commission (the "COMMISSION") and have declared
effective under the Securities Act the Exchange Offer Registration Statement
registering the offer and sale of the Exchange Notes and guarantees referred to
in the Registration Rights Agreement, or, in certain circumstances, a Shelf
Registration Statement, registering the resale of the Securities, as the case
may be.
1. Representations and Warranties. The Company and the Guarantors,
------------------------------
jointly and severally, represent and warrant to, and agree with, the Initial
Purchasers that as of the date hereof and on the Closing Date (or, with respect
to representations and warranties with respect to a Memorandum, as of the date
or dates stated):
(a) The Preliminary Memorandum, as of its date contained and as of
the date hereof contains, and the Final Memorandum as of the Closing Date
will contain, all the information specified in, and meets and will meet the
requirements of, Rule 144A(d)(4) of the Act and the Preliminary Memorandum,
as of its date and as of the date hereof is, and the Final Memorandum, as
of the Closing Date will be, accurate in all material respects and does not
and will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order
to make the statements therein, in the light of the circumstances under
which they were made, not misleading; provided, however, that the Company
-------- -------
makes no representations or warranties as to the information contained in
or omitted from each Memorandum in reliance upon and in conformity with
information furnished in writing to the Company by or on behalf of the
Initial Purchasers specifically for inclusion in each Memorandum.
(b) The Company and the Guarantors had, have and will have, as the
case may be, good and marketable title to all real property and good and
marketable title to all personal property described in the Preliminary
Memorandum as of its date and as of the date hereof and the Final
Memorandum as of the Closing Date, as owned by them, in each case free and
clear of all liens, encumbrances and defects except (i) liens permitted
pursuant to Section 1012 of the Indenture or (ii) such as do not,
individually or in the aggregate, materially interfere with the use made
and proposed to be made of such property by the Company and the Guarantors;
any real property and buildings held under lease by the Company or any of
the Guarantors were, are or will be held, as the case may be, as described
in the Preliminary Memorandum as of its date and as of the date hereof and
in the Final Memorandum as of the Closing Date, by them under valid,
subsisting and enforceable leases with such exceptions as are not material,
individually or in the aggregate, and do not interfere materially with the
use made and proposed to be made of such property by the Company and the
Guarantors; all rent and other sums and charges payable by the Company and
the Guarantors as tenants thereunder are current, no termination event or
condition or uncured default on the part of the Company or any such
Guarantor or, to the Company's knowledge, the landlord, exists under any
such lease, except any such failure to pay rent, other sums or charges,
termination event or condition or uncured default that would not,
individually or in the aggregate, have a material adverse effect
-2-
<PAGE>
on the condition (financial or otherwise), results of operation, business,
prospects, net worth or assets of the Company and the Guarantors, taken as
a whole, or on the ability of the Company and the Guarantors to perform
their respective obligations under this Agreement, the Notes, the
Guarantees, the Indenture and the Registration Rights Agreement (a
"MATERIAL ADVERSE EFFECT"); each of the Company and the Guarantors has
complied with all obligations, considering applicable grace periods, under
all leases to which such person is a party and under which such person is
in occupancy, except failures to comply as would not, individually or in
the aggregate, have a Material Adverse Effect; with respect to all such
leases, to the knowledge of the Company, no person has instituted or
threatened to institute proceedings, or has taken or threatened to take any
other action, to challenge or terminate, and no event or circumstance has
occurred which reasonably could be expected to materially interfere with
(x) the lessee's right to occupy the premises leased thereunder or to
continue to use such premises in the manner in which it is currently being
used, or (y) the lessor's right to continue to lease such premises to the
lessee; none of such leases contains any provision restricting the
incurrence of indebtedness by the lessee, or any unusual or burdensome
provision which could reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect; and to the Company's
knowledge each of such leases, were it to be terminated, could be replaced
at a total annual cost to the Company and the Guarantors that,
individually, would not cause a Material Adverse Effect.
(c) The Company has no direct or indirect subsidiaries other than the
Guarantors listed on Schedule II hereto, all the capital stock or general
partnership interests, as the case may be, of each of which is owned by the
Company or a Wholly Owned Restricted Subsidiary.
(d) Each of the Company and the Guarantors has been duly organized and
was or is, or will be, as the case may be, validly existing as a
corporation or general partnership, as the case may be, in good standing
under the laws of the jurisdiction of its organization, with requisite
power and authority (corporate and other) to own or lease its properties
and conduct its business as described in the Preliminary Memorandum as of
its date and as of the date hereof and in the Final Memorandum as of the
Closing Date, and is duly qualified to do business as a foreign corporation
or general partnership, as the case may be, and is in good standing under
the laws of each jurisdiction in which the character of the business
conducted by it or the location of the properties owned or leased by it
make such qualification necessary, except to the extent that any such
failure to be so qualified or be in good standing would not, individually
or in the aggregate, have a Material Adverse Effect.
(e) The Company had, has or will have, as the case may be, an
authorized capitalization as set forth in the column headed "Actual" under
the caption "Capitalization" in the Preliminary Memorandum as of its date
and as of the date hereof and in the Final Memorandum as of the Closing
Date, and all of the issued and outstanding shares of Capital Stock of the
Company have been duly and validly authorized and issued and are fully paid
and non-assessable; and all of the issued and outstanding shares of capital
stock of each Guarantor have been duly and validly authorized and issued,
are fully paid and non-assessable, and are owned directly by the Company or
a Wholly Owned Restricted Subsidiary, free and clear of all liens,
encumbrances, equities or claims, other than the liens created by the
pledge of shares of stock of the Guarantors, as of the date hereof,
pursuant to the Existing Credit Agreement, and as of the Closing Date,
pursuant to the New Credit Agreement.
-3-
<PAGE>
(f) Each of the Company and the Guarantors has requisite corporate or
partnership power and authority, as the case may be, to execute and
deliver, and to perform its respective obligations under, this Agreement,
the Indenture, the Notes, the Guarantees and the Registration Rights
Agreement, to consummate the transactions contemplated hereby and thereby,
and to issue, sell and deliver the Securities to be sold by it to the
Initial Purchasers as provided herein and therein.
(g) The Notes have been duly and validly authorized by all necessary
corporate action (including, without limitation, required stockholder
approvals, if any) and, when executed and authenticated in accordance with
the provisions of the Indenture, and delivered to and paid for by the
Initial Purchasers in accordance with the terms of this Agreement, will be
legal, valid and binding obligations of the Company, enforceable against
the Company in accordance with their terms, except as such enforceability
(x) may be limited by bankruptcy, insolvency, reorganization or other
similar laws affecting creditors' rights generally (y) is subject to
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law) and (z) with respect to
rights to indemnity or contribution, may be limited by applicable law or by
the policies underlying such laws, and will be entitled to the benefits of
the Indenture; and the Securities, the Indenture and the Registration
Rights Agreement will conform, as of the Closing Date, to the descriptions
thereof contained in each Memorandum.
(h) The Guarantees have been duly and validly authorized by all
necessary corporate or partnership action (including, without limitation,
required stockholder, shareholder or general partner approvals, if any)
and, when executed and authenticated in accordance with the terms of the
Indenture and delivered to the Initial Purchasers in accordance with the
terms of this Agreement, will be legal, valid and binding obligations of
the Guarantors enforceable against the Guarantors in accordance with their
terms, except as such enforceability (x) may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting creditors'
rights generally, (y) is subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law) and (z) with respect to rights to indemnity or
contribution, may be limited by applicable law or by the policies
underlying such laws, and will be entitled to the benefits of the
Indenture.
(i) This Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate or partnership action (including, without limitation, required
stockholder, shareholder or general partner approvals, if any) of the
Company and each Guarantor, and this Agreement has been executed and
delivered by the Company and each Guarantor and constitutes the legal,
valid and binding agreement of the Company and each Guarantor, enforceable
against the Company and each Guarantor in accordance with its terms, except
as such enforceability (x) may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting creditors' rights generally,
(y) is subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law) and (z)
with respect to rights to indemnity or contribution, may be limited by
applicable law or by the policies underlying such laws.
(j) The Indenture and the consummation of the transactions
contemplated thereby, including the issuance of the Securities, have been
duly and validly authorized by all necessary corporate or partnership
action (including, without limitation, required stockholder, shareholder or
general partner approvals, if any) of Company and each Guarantor, and when
the Indenture
-4-
<PAGE>
is executed and delivered by the Company and each Guarantor, the Indenture
will be a legal, valid and binding agreement of the Company and each
Guarantor, enforceable against the Company and each Guarantor in accordance
with its terms, except as such enforceability (x) may be limited by
bankruptcy, insolvency, reorganization or other similar laws affecting
creditors' rights generally, (y) is subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law) and (z) with respect to rights to indemnity or
contribution, may be limited by applicable law or by the policies
underlying such laws, and will be in sufficient form for qualification
under the Trust Indenture Act of 1939, as amended (the "TRUST INDENTURE
ACT") and the rules and regulations of the Commission promulgated
thereunder.
(k) The Registration Rights Agreement and the consummation of the
transactions contemplated thereby have been duly and validly authorized by
all necessary corporate or partnership action (including, without
limitation, required stockholder, shareholder or general partner approvals,
if any) of the Company and each Guarantor, and when the Registration Rights
Agreement is executed and delivered by the Company and each Guarantor, the
Registration Rights Agreement will be a legal, valid and binding agreement
of the Company and each Guarantor, enforceable against the Company and each
Guarantor in accordance with its terms, except as such enforceability (x)
may be limited by bankruptcy, insolvency, reorganization or other similar
laws affecting creditors' rights generally, (y) is subject to general
principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law) and (z) with respect to
rights to indemnity or contribution, may be limited by applicable law or by
the policies underlying such laws.
(l) Neither the Company nor any Guarantor is, or with the giving of
notice or lapse of time or both would be, in violation of or in default
under, nor will the execution or delivery of this Agreement, the Indenture
or the Registration Rights Agreement nor the consummation of the
transactions contemplated hereby or thereby, result in a violation of, or
constitute a default under, the Certificates or Articles of Incorporation,
by-laws or other governing documents of the Company or any of the
Guarantors, or any loan agreement, indenture, mortgage, deed of trust,
lease, network affiliation agreement, programming contract or any other
agreement or instrument to which the Company or any of the Guarantors is a
party or by which any of them is bound, or to which any of their respective
properties is subject, except for such violations of or such defaults under
any such loan agreement, indenture, mortgage, deed of trust, lease, network
affiliation agreement, programming contract or other agreement or
instrument, as would not, individually or in the aggregate, have a Material
Adverse Effect; nor will the performance by the Company and the Guarantors
of their respective obligations hereunder or thereunder cause a material
violation of any law, rule, administrative regulation, license or decree of
any court, governmental agency or body having jurisdiction over the Company
or any of the Guarantors or any of their respective properties, or result
in the creation or imposition of any lien, charge, claim or encumbrance
upon any property or asset of the Company or any of the Guarantors, except,
in each case, as would not, individually or in the aggregate, have a
Material Adverse Effect. No consent, approval, authorization or order of,
or filing or registration or qualification with, any court or governmental
agency or body or financial institution, or any other party under any loan
agreement, indenture, mortgage, deed of trust, lease, network affiliation
agreement, programming contract or any other agreement or instrument to
which the Company or any of the Guarantors is a party or by which any of
them is bound or to which any of their respective properties is subject,
will be required as of the Closing Date on the part of the Company or
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<PAGE>
any Guarantor for the authorization, issuance, sale and delivery of the
Securities, or the execution, delivery and performance by the Company and
the Guarantors of their respective obligations under this Agreement, the
Indenture and the Registration Rights Agreement or the consummation of the
transactions contemplated hereby or thereby, except (1) as have been
obtained, (2) as may be required under the "Blue Sky" laws of the various
states in connection with the offer and sale of the Securities and (3) as
may be required by the Securities Act, the "Blue Sky" laws of the various
states, the Trust Indenture Act and the bylaws and rules of the National
Association of Securities Dealers, Inc. ("NASD"), in conjunction with an
exchange offer for, or registered resale of, the Securities pursuant to the
Registration Rights Agreement and the qualification of the Indenture and
the Trustee.
(m) The Company and each Guarantor held, holds or will hold, as the
case may be, all material licenses, certificates, permits, consents,
orders, authorizations and approvals (collectively, "LICENSES") from
governmental authorities which are necessary to the conduct of their
businesses in the manner and to the extent operated as described in the
Preliminary Memorandum as of its date and as of the date hereof and in the
Final Memorandum as of the Closing Date; such Licenses are in full force
and effect and no proceeding has been instituted or, to the Company's
knowledge, is threatened, pending or contemplated which in any manner
affects or draws into question the validity or effectiveness thereof; such
Licenses contain no materially burdensome restrictions not customarily
imposed by the Federal Communications Commission (the "FCC") on radio
stations of the same class and type as the Company's radio stations (the
"STATIONS"); the operation of the Stations in the manner and to the extent
operated as described in the Preliminary Memorandum as of its date and as
of the date hereof and in the Final Memorandum as of the Closing Date, was,
is or will be, as the case may be, in accordance with the Communications
Act of 1934, as amended and the Telecommunications Act of 1996, as amended,
and all orders, rules and regulations of the FCC, in each case, in all
material respects; to the knowledge of the Company, no event has occurred
that permits (nor has an event occurred that with notice or lapse of time
or both would permit) the revocation or termination of such Licenses or
that might result in any other material impairment of the rights of the
Company or the Guarantors therein other than revocations or terminations
that would not, individually or in the aggregate, have a Material Adverse
Effect; and the Company and the Guarantors are in substantial compliance
with all statutes, orders, rules or regulations of the FCC relating to or
affecting the broadcasting operations of either of the Stations.
(n) The Company and each Guarantor own, possess or currently have the
rights to use patent rights, inventions, trademarks, service marks, trade
names and copyrights (including, without limitation, the service marks
"Salem Communications Corporation" and "Salem Radio Network") necessary to
conduct the general business now operated by them, and neither the Company
nor any of the Guarantors has received any written notice or is otherwise
aware of any infringement of or conflict with asserted rights of others
with respect to, any patent, patent rights, inventions, trademarks, service
marks, trade names or copyrights which, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect.
(o) To the knowledge of the Company and the Guarantors, each of them
is in compliance in all material respects with all Environmental Laws (as
defined below), except to the extent that failure to comply with such
Environmental Laws would not have, individually or in the aggregate, a
Material Adverse Effect. None of the Company or any of the Guarantors is
the subject of any pending or, to the knowledge of the Company, threatened
Federal, state or local investigation evaluating whether any remedial
action by the Company or
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<PAGE>
the Guarantors is needed to respond to a release of any Hazardous Materials
(as defined below) into the environment, resulting from the business
operations of the Company or any of the Guarantors or ownership or
possession of any of their properties or assets or is in contravention of
any Environmental Law that the Company reasonably believes could reasonably
be expected to result, individually or in the aggregate, in a fine or
penalty in excess of $100,000 or in a Material Adverse Effect. None of the
Company or the Guarantors has received any written notice or claim, nor are
there pending or, to the knowledge of the Company, threatened lawsuits or
governmental proceedings against them, with respect to violations of or
liabilities under any Environmental Law or in connection with any release
of any Hazardous Material into the environment that could reasonably be
expected, individually or in the aggregate, to result in a Material Adverse
Effect. As used herein, "ENVIRONMENTAL LAWS" means any Federal, state or
local law, regulation, license, permit, certificate, consent, order,
approval or other authorization applicable to the business operations of
the Company or any of the Guarantors or ownership or possession of any of
their properties or assets relating to the protection of human health and
safety, the environment or hazardous or toxic substances or wastes,
pollutants and contaminants, and "HAZARDOUS MATERIALS" means those
substances, wastes, pollutants or contaminants that are regulated by or
from the basis of liability under any Environmental Laws.
(p) Each of the Company and the Guarantors has timely filed all
Federal, state and local income and other material tax returns and notices
required to be filed by applicable law; no audit, administrative
proceedings or court proceedings are presently pending with regard to any
material potential Federal, state or local tax of any nature; the Company
has no knowledge of any tax deficiencies which could reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect; each
of the Company and the Guarantors has paid (within the time and in the
manner prescribed by law) all Federal, state and local taxes of any nature
which are shown on its returns to be due, in each case except for those not
yet delinquent and those being contested in good faith by appropriate
proceedings diligently conducted for which each of the Company and the
Guarantors has established on its books and records adequate reserves to
pay all outstanding tax liabilities in accordance with GAAP; neither the
Company nor any of the Guarantors has requested any extension of time
within which to file any material tax return, which return has not since
been filed; the amounts currently set up as provisions for taxes or
otherwise by the Company and the Guarantors on their books and records are
sufficient for the payment of all their unpaid Federal, state and local
taxes accrued through the dates as of which they speak, and for which the
Company and the Guarantors may be liable in their own right, or as a
transferee of the assets of, or as successor to any other corporation,
association, partnership, joint venture or other entity;
(q) Each of the Company and the Guarantors maintains (and in the
future will maintain) a system of internal accounting controls sufficient
to provide reasonable assurances that (i) transactions are executed in
accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain accountability for
assets; (iii) access to assets is permitted only in accordance with
management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
(r) Each of the Company and the Guarantors, immediately after the
Closing Date and after giving effect to the issuance and sale of the
Securities and the application of the
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proceeds thereof will, in the opinion of the Company, be Solvent. As used
herein, the term "SOLVENT" means, with respect to any such entity on a
particular date (i) the fair valuation of the property of such entity is
greater than the total amount of known liabilities (including known
contingent liabilities) of such entity, (ii) such entity will be able to
pay its debts and liabilities as they mature and (iii) such entity will not
have unreasonably small capital for the business in which it is engaged, as
now conducted and as proposed to be conducted following the consummation of
the Offering and the application of the proceeds thereof.
(s) Except as described in the Preliminary Memorandum as of its date
and as of the date hereof and in the Final Memorandum as of the Closing
Date, there was, is or will be, as the case may be, no action, suit or
proceeding before any court or governmental agency, authority or body or
any arbitrator involving the Company or any Guarantor or any property of
the Company or any Guarantor which is pending or, to the knowledge of the
Company, contemplated against the Company or any Guarantor that,
individually or in the aggregate, could have a Material Adverse Effect.
(t) Neither the Company nor any Guarantor is in violation of any law,
ordinance, governmental rule or regulation or court decree to which it may
be subject, which violation could have, individually or in the aggregate, a
Material Adverse Effect.
(u) The Company and the Guarantors are insured by insurers of
recognized financial responsibility against such losses and risks and in
such amounts as are prudent and customary in the businesses in which they
are engaged; since 1986, the Company has not failed to obtain insurance
coverage of any nature by reason of the refusal of insurers to provide such
coverage; and the Company does not have any reason to believe that it will
not be able to renew its existing insurance coverage from similar insurers
as may be necessary to continue its business at a cost that would not have,
individually or in the aggregate, a Material Adverse Effect.
(v) Except as disclosed in the Preliminary Memorandum as of its date
and as of the date hereof and in the Final Memorandum as of the Closing
Date, neither the Company nor any of the Guarantors had, has or will have,
as the case may be, violated any Federal, state or local law relating to
discrimination in employment nor any applicable wage or hour laws, nor any
provisions of the Employee Retirement Income Security Act of 1974, as
amended, or the rules and regulations promulgated thereunder ("ERISA"), nor
has the Company or any of the Guarantors engaged in any unfair labor
practice, which in each case could reasonably be expected to result,
individually or in the aggregate, in a Material Adverse Effect. Except as
disclosed in the Preliminary Memorandum as of its date and as of the date
hereof and in the Final Memorandum as of the Closing Date, there was, is or
will be, as the case may be (i) no unfair labor practice complaint pending
against the Company or any of the Guarantors or, to the knowledge of the
Company, threatened against any of them, before the National Labor
Relations Board or any state or local labor relations board and neither the
Company nor any of the Guarantors is party to any collective bargaining
agreement, (ii) no significant strike, labor dispute, slowdown or stoppage
pending against the Company or any of the Guarantors, or, to the knowledge
of the Company, threatened against any of them and (iii) to the knowledge
of the Company, no union representation question existing, with respect to
employees of the Company or any of the Guarantors, except (with respect to
any matter specified in clause (i), (ii) or (iii) above, individually or in
the aggregate) such as would not have a Material Adverse Effect, and the
Company and the Guarantors have no reason to
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<PAGE>
believe that the relationship of the Company and the Guarantors with their
employees is likely to have, individually or in the aggregate, a Material
Adverse Effect.
(w) Subsequent to the respective dates as of which information is
given in each Memorandum (i) the Company and the Guarantors have not
incurred any material liability or obligation, direct or contingent, nor
entered into any material transaction not in the ordinary course of
business except as described in or contemplated by each Memorandum; and
(ii) there has not been any material adverse change in the condition
(financial or otherwise), results of operations, business, prospects, net
worth or assets of the Company and the Guarantors, taken as a whole, from
the date as of which information is given in each Memorandum.
(x) The statements set forth, in the Preliminary Memorandum as of its
date and as of the date hereof and in the Final Memorandum as of the
Closing Date, under the captions "Description of Certain Indebtedness"
insofar as they purport to constitute a description of the terms of the
indebtedness of the Company other than the Securities and under "Business--
Corporate Structure and Reorganization" insofar as they purport to
constitute a description of the terms of the documents pursuant to which
the Reorganization was consummated were, are or will be, as the case may
be, accurate, complete and fair in all material respects.
(y) Neither the Company nor any of the Guarantors nor any of their
respective officers, directors or employees has employed any broker or
finder or incurred any liability for any brokerage fees, commissions or
finders' fees in connection with the issuance of the Securities, other than
to the Initial Purchasers pursuant to this Agreement.
(z) Neither the Company nor any of the Guarantors nor any agent
thereof acting on behalf of any of them has taken, and none of them will
take, any action that might cause this Agreement or the issuance or sale of
the Securities and the use of the proceeds therefrom to violate Section 7
of the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT") or
any regulation promulgated thereunder, including, without limitation,
Regulation G (12 C.F.R. Part 207), Regulation T (12 C.F.R. Part 220),
Regulation U (12 C.F.R. Part 221) or Regulation X (12 C.F.R. Part 224) of
the Board of Governors of the Federal Reserve System, in each case as in
effect on the date hereof or as the same may hereafter be in effect on the
Closing Date.
(aa) Assuming that the representations, warranties and covenants of
the Initial Purchasers contained in this Agreement are true and correct and
have been and will be complied with, no registration of the Securities
under the Securities Act or qualification of an indenture under the Trust
Indenture Act is required for the offer, sale and delivery of the
Securities to the Initial Purchasers or the initial resale thereof in the
manner contemplated by this Agreement.
(ab) In connection with the offer and sale of the Securities, the
Company and the Guarantors have not taken and will not take, directly or
indirectly, any action prohibited by Regulation M under the Exchange Act.
(ac) The Securities satisfy the requirements set forth in Rule
144A(d)(3) under the Securities Act.
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<PAGE>
(ad) Ernst & Young LLP, whose report appears in each Memorandum, are
independent accountants with respect to the Company.
(ae) The consolidated financial statements of the Company and notes
thereto (including the related schedules, if any) included in the
Preliminary Memorandum as of its date and as of the date hereof presented
or present, as the case may be, and in the Final Memorandum as of the
Closing Date will present, fairly, in all material respects, the
consolidated financial position of the Company and the Guarantors and the
consolidated results of their operations and cash flows purported to be
shown thereby, at the dates and for the periods indicated, and have been
prepared in accordance with GAAP throughout the periods indicated (except
as otherwise indicated therein and subject, in the case of interim
statements, to normal year-end adjustments); the summary and selected
consolidated financial information included in the Preliminary Memorandum
as of its date and as of the date hereof presented or present, as the case
may be, and in the Final Memorandum as of the Closing Date will present,
fairly in all material respects the information shown therein in accordance
with the adjustments and assumptions described therein, have been prepared,
in all material respects, in accordance with the rules and guidelines of
the Commission with respect to the financial data presented and, in the
Company's opinion, give effect to assumptions which have been made on a
reasonable basis and the adjustments used therein are appropriate to give
effect to the transactions or circumstances referred to therein; and the
other financial, accounting and statistical information and data related to
the Company and the Guarantors set forth in the Preliminary Memorandum as
of its date and as of the date hereof presented or present, as the case may
be, and in the Final Memorandum as of the Closing Date will present fairly,
in all material respects, the information purported to be shown thereby at
the respective dates and for the respective periods to which they apply,
and except as disclosed therein, have been prepared on a basis consistent
with the financial statements and the books and records of the entities as
to which such information is shown.
(af) Neither the Company nor any of its affiliates (as defined in Rule
501 under the Securities Act, "AFFILIATE") has directly, or through any
agent, (i) sold, offered for sale, solicited offers to buy or otherwise
negotiated in respect of, any security (as defined in the Securities Act)
which is or will be integrated with the sale of the Securities in a manner
that would require the registration under the Securities Act of the
Securities as contemplated to be offered or (ii) engaged in any form of
general solicitation or general advertising in connection with the offering
of the Securities (as such terms are used in Regulation D under the
Securities Act) or in any manner involving a public offering within the
meaning of Section 4(2) of the Securities Act.
(ag) Neither the Company nor any of the Guarantors is, and after
giving effect to the offering and sale of the Securities and the
application of the proceeds therefrom as described in each Memorandum under
the caption "Use of Proceeds" will be, an "investment company" or an entity
"controlled" by an "investment company," as such terms are defined in the
Investment Company Act of 1940, as amended (the "INVESTMENT COMPANY ACT").
(ah) The Reorganization has been duly and validly consummated, and
such consummation did not and will not result in a violation of, or
constitute a default under, the Certificate or Articles of Incorporation,
by-laws or other governing documents of the Company or any of the
Guarantors, or any loan agreement, indenture, mortgage, deed of trust,
lease, network affiliation agreement, programming contract or any other
agreement or instrument to
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<PAGE>
which the Company or any of the Guarantors is a party or by which any of
them is bound or to which any of their respective properties is subject,
except for such violations of or such defaults under any such loan
agreement, indenture, mortgage, deed of trust, lease, network affiliation
agreement, programming contract or other agreement or instrument, as would
not have, individually or in the aggregate, a Material Adverse Effect; the
performance by the Company and the Guarantors of their respective
obligations with respect to such Reorganization did not and will not cause
a material violation of any law, rule, administrative regulation, license
or decree of any court, governmental agency or body having jurisdiction
over the Company or any of the Guarantors or any of their respective
properties, or result in the creation or imposition of any lien, charge,
claim or encumbrance upon any property or asset of the Company or any of
the Guarantors. Except for such consents, approvals and authorizations
which have been obtained, no consent, approval, authorization or order of,
or filing or registration or qualification with, any court, governmental
agency or body or financial institution, or any other party under any loan
agreement, indenture, mortgage, deed of trust, lease, network affiliation
agreement, programming contract or any other agreement or instrument to
which the Company or any of the Guarantors is a party or by which any of
them is bound or to which any of their respective properties is subject, is
required in connection with the consummation of the Reorganization, other
than consents or approvals the failure of which to obtain would not,
individually or in the aggregate, have a Material Adverse Effect.
(ai) The list of the Company's owned and/or operated Stations set
forth under the caption "Business--General" and the list of studios and
tower and antenna sites set forth under the caption "Business--Properties
and Facilities" each is accurate and complete in all material respects with
respect to the information it purports to present.
(aj) The Company has no knowledge that any block programming customer
of the Company and the Guarantors intends to cease to be a customer of the
Company and the Guarantors which cessation could reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect.
(ak) The failures, exclusions and other exceptions to the
representations and warranties of the Company and the Guarantors, taken as
a whole, would not have a Material Adverse Effect.
(al) Neither the Company nor any of its affiliates does business with
the government of Cuba or with any person or affiliate located in Cuba
within the meaning of Section 517.075, Florida Statutes 1996, as amended,
and all regulations promulgated thereunder.
Representations and warranties of the Company and the Guarantors made to their
"KNOWLEDGE" shall be understood for purposes of this Agreement to be made to the
knowledge after due inquiry of the executive officers and directors of the
Company or the Guarantor, as the case may be, unless otherwise stated in this
Agreement.
2. Offering; Restrictions on Transfer. The Initial Purchasers have
----------------------------------
advised the Company that the Initial Purchasers will make an offering of the
Securities purchased by the Initial Purchasers hereunder on the terms and
conditions set forth in the Memorandum, as soon as practicable after this
Agreement is entered into as in the Initial Purchasers' sole judgment is
advisable. Each
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<PAGE>
Initial Purchaser hereby, severally and not jointly, represents and warrants to,
and agrees with, the Company that:
(a) the Securities have not been registered under the Securities Act
and may not be offered or sold except pursuant to an effective registration
statement or an exemption from the registration requirements of the
Securities Act; such Initial Purchaser (i) has not and will not solicit
offers for, or offer to sell, the Securities by any form of general
solicitation or general advertising (as those terms are used in Regulation
D under the Securities Act) or in any manner involving a public offering
within the meaning of Section 4(2) of the Securities Act and (ii) has and
will solicit offers for the Securities only from, and will offer the
Securities only to, (A) persons who it reasonably believes to be "qualified
institutional buyers" within the meaning of Rule 144A under the Securities
Act in transactions meeting the requirements of Rule 144A or (B) a limited
number of other institutional investors reasonably believed by such Initial
Purchasers to be "accredited investors" as defined in Rule 501(a)(1), (2),
(3) or (7) of Regulation D under the Securities Act and, in the case of
such purchaser described in this clause (ii)(B), provide the Company a
letter in the form of Exhibit A to each Memorandum; and
(b) It is either a "qualified institutional buyer" within the meaning
of Rule 144A under the Securities Act or an "accredited investor" within
the meaning of Rule 501 under the Securities Act, and, if an accredited
investor, will provide the Company prior to the Closing Date with a letter
in the form of Exhibit A attached to each Memorandum.
The Initial Purchasers understand that the Company, and, with respect to their
opinions delivered pursuant to this Agreement, counsel to the Company and
counsel to the Initial Purchasers, will rely upon the accuracy and truth of the
foregoing representations, warranties and agreements and the Initial Purchasers
hereby consent to such reliance.
3. Purchase and Delivery; Commission. (a) The Company agrees to
---------------------------------
sell to the Initial Purchasers and the Initial Purchasers, upon the basis of the
representations and warranties herein contained, but subject to the conditions
hereinafter stated, agree to purchase from the Company the aggregate principal
amount of Notes at a purchase price of 97.25% of such aggregate principal amount
and (b) the Guarantors hereby agree to issue the Guarantees.
Payment for the Notes shall be made to the Company or its order by
wire transfer of, immediately available funds to an account specified by the
Company by written notice to the Initial Purchasers not less than two business
days prior to the Closing Date, at 10:00 a.m. New York City time on September
25, 1997 or at such other time and date as the Company may agree upon in
writing, such time and date being herein called the "CLOSING DATE," against
delivery of the Securities at the offices of Furman Selz LLC, 230 Park Avenue,
New York, New York 10169, or such other location as the Initial Purchasers
shall designate, at 10:00 a.m., New York City time on the Closing Date.
The Securities, if in certificated form, shall be made available for
inspection, checking and packaging by the Initial Purchasers at the above-
mentioned New York offices of Furman Selz LLC, at least 24 hours prior to the
time of delivery.
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<PAGE>
It is understood that each certificate evidencing Securities shall
bear a legend to the following effect, unless the Company and the Trustee
determine otherwise consistent with applicable law:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER SECTION 5 OF THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND ,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD TO, OR FOR THE ACCOUNT OR BENEFIT
OF ANY PERSONS EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE
HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS AN
INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3)
OR (7) UNDER THE SECURITIES ACT) (AN "ACCREDITED INVESTOR"), (2) AGREES
THAT IT WILL NOT WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THIS
SECURITY RESELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE
COMPANY, OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A
QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED
INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES (OR HAS FURNISHED ON ITS
BEHALF BY A U.S. BROKER-DEALER) TO THE TRUSTEE A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON
TRANSFER OF THIS SECURITY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM
THE TRUSTEE OR REGISTRAR), (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE
SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY
RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES
THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A
NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY
TRANSFER OF THIS SECURITY WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF
THE SECURITY, IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED
INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE
AND THE COMPANY SUCH CERTIFICATIONS, WRITTEN LEGAL OPINIONS OR OTHER
INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH
TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS
USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," AND "UNITED STATES" HAVE THE
MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. EACH
PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER MAY BE
RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES
ACT PROVIDED BY RULE 144A THEREUNDER.
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The Company shall pay any transfer taxes payable in connection with
the initial delivery to the Initial Purchasers of the Securities.
4. Initial Purchasers's Conditions to Closing. The obligation of
------------------------------------------
the Initial Purchasers to purchase and pay for the Securities will be subject
to the accuracy of the representations and warranties on the part of the Company
and the Guarantors herein, to the accuracy of the statements of the authorized
representatives of the Company and the Guarantors made in any certificates
pursuant to the provisions hereof, to the performance by the Company and the
Guarantors of their respective obligations hereunder and to the following
additional conditions precedent:
(a) Subsequent to the date hereof or, if earlier, the dates as of
which information is given in the Final Memorandum, there shall not have
been any change which, in the judgment of the Initial Purchasers, has or
could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect such that it is impractical or inadvisable to offer
and deliver the Securities as contemplated by each Memorandum. No stop
order or other similar decree preventing the use of either Memorandum, or
any order asserting that the transactions contemplated hereunder are
subject to the registration requirements of the Securities Act or "Blue
Sky" laws of any jurisdiction has been issued and no proceeding for that
purpose has commenced or is pending or, to the best knowledge of the
Company after due inquiry, is contemplated.
(b) The Company shall have furnished to the Initial Purchasers a
certificate of the Company and the Guarantors, signed by the President and
the Vice President - Finance of the Company and by the President and Vice
President of the Guarantors, dated the Closing Date, to the effect that the
signers of such certificate have carefully examined the Final Memorandum,
the Indenture, the Registration Rights Agreement and this Agreement and
that:
(i) the representations and warranties of the Company and the
Guarantors that are qualified as to materiality in this Agreement are
true and correct, and those not so qualified are true and correct in
all material respects, on and as of the Closing Date with the same
effect as if made on the Closing Date and the Company and the
Guarantors have complied with all the agreements and satisfied all the
conditions in this Agreement on their respective parts to be performed
or satisfied at or prior to the Closing Date;
(ii) since the date of the most recent financial statements
included in the Final Memorandum, there has been no material adverse
change in the condition (financial or other), results of operations,
business, prospects, net worth or assets of the Company and the
Guarantors, taken as a whole, whether or not arising from transactions
in the ordinary course of business, except as set forth in or
contemplated in the Final Memorandum; and
(iii) the FCC broadcast station licenses listed under the
caption "Business--Federal Regulation of Radio Broadcasting" in the
Final Memorandum as of the Closing Date, are all of such licenses
granted with respect to Stations owned or operated by the Company, the
Guarantors and, in the case of each Station operated but not owned by
the Company or a Guarantor, the licensee of such Station; the Company,
the Guarantors and such licensees hold licenses for each of their
respective Stations sufficient to operate each such Station and each
such license is validly issued in the
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<PAGE>
name of the Company, a Guarantor, or such licensee, is in full force
and effect and any assignments thereof have been approved by orders of
the FCC.
(c) The Company shall have furnished to the Initial Purchasers the
opinion of Gibson, Dunn & Crutcher LLP, counsel for the Company and the
Guarantors, or, to the extent acceptable to the Initial Purchasers, of Eric
H. Halvorson, general counsel to the Company and the Guarantors, each dated
the Closing Date, to the effect that:
(i) each of the Company and the Guarantors is validly existing,
as a corporation or general partnership in good standing under the
laws of its jurisdiction of organization with requisite corporate or
partnership power and authority to own or lease its properties and
conduct its business as described in the Final Memorandum, and is duly
qualified to do business as a foreign corporation or partnership and
is in good standing under the laws of each jurisdiction in which the
character of the business conducted by it or the location of the
properties owned or leased by it make such qualification necessary,
except to the extent that the failure to be so qualified or be in good
standing would not have, individually or in the aggregate, a Material
Adverse Effect;
(ii) all of the issued and outstanding shares of Capital Stock
of the Company have been duly and validly authorized and issued and
are fully paid and non-assessable; and all of the issued and
outstanding shares of Capital Stock of each Guarantor have been duly
and validly authorized and issued, are fully paid and non-assessable,
and are owned directly by the Company or a Wholly Owned Restricted
Subsidiary;
(iii) each of the Company and the Guarantors has the requisite
corporate or partnership power and authority to execute and deliver,
and to perform its respective obligations under, this Agreement, the
Indenture, the Notes, the Guarantees and the Registration Rights
Agreement (subject, in the case of the Registration Rights Agreement,
to approvals required under the Securities Act), to consummate the
transactions contemplated hereby and thereby, and to issue, sell and
deliver the Securities to be sold by it to the Initial Purchasers as
provided herein and therein;
(iv) each of this Agreement, the Indenture and the Registration
Rights Agreement, and the consummation of each of the transactions
contemplated hereby and thereby, has been duly and validly authorized
by all necessary corporate or partnership action (including, without
limitation, all required stockholder, shareholder and general partner
approvals, if any) of the Company and each Guarantor, to the extent
each is a party thereto; each of this Agreement, the Indenture and the
Registration Rights Agreement has been executed and delivered by each
of the Company and the Guarantors party thereto; and each of the
Indenture and the Registration Rights Agreement constitutes a legal,
valid and binding agreement of each of the Company and the Guarantors
party thereto, enforceable against each of the Company and the
Guarantors party thereto in accordance with their respective terms,
except as such enforceability (x) may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting creditors'
rights generally, (y) is subject to general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in
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<PAGE>
equity or at law) and (z) with respect to rights to indemnity or
contribution, may be limited by applicable law or by the policies
underlying such laws;
(v) the Notes have been duly and validly authorized by the
Company by all necessary corporate action (including, without
limitation, all required stockholder approvals, if any) and, when
executed and authenticated in accordance with the provisions of the
Indenture, and delivered to and paid for by the Initial Purchasers in
accordance with the terms of this Agreement, will be legal, valid and
binding obligations of the Company, enforceable against the Company in
accordance with their terms, except as such enforceability (x) may be
limited by bankruptcy, insolvency, reorganization or other similar
laws affecting creditors' rights generally, (y) is subject to general
principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law) and (z) with respect
to rights to indemnity or contribution, may be limited by applicable
law or by the policies underlying such laws, and will be entitled to
the benefits of the Indenture; and the Securities, the Indenture and
the Registration Rights Agreement conform in all material respects to
the descriptions thereof contained in the Final Memorandum on or prior
to the Closing Date;
(vi) the Guarantees have been duly and validly authorized by all
necessary corporate or partnership action (including, without
limitation, all required stockholder, shareholder and general partner
approvals, if any) and, when executed and authenticated in accordance
with the terms of the Indenture and delivered to the Initial
Purchasers in accordance with the terms of this Agreement, will be
legal, valid and binding obligations of the Guarantors enforceable
against the Guarantors in accordance with their terms, except as such
enforceability (x) may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting creditors' rights
generally, (y) is subject to general principles of equity (regardless
of whether such enforceability is considered in a proceeding in equity
or at law), and will be entitled to the benefits of the Indenture and
(z) with respect to rights to indemnity or contribution, may be
limited by applicable law or by the policies underlying such laws;
(vii) the statements set forth in the Final Memorandum under the
caption "Certain Federal Income Tax Considerations", insofar as such
statements constitute a summary of legal matters, are accurate in all
material respects; provided that no inference shall be drawn that such
--------
counsel is giving any opinion with respect to tax matters as they
apply to any particular holder of Securities.
(viii) to the knowledge of such counsel, there is no action,
suit or proceeding before any court or governmental agency, authority
or body or any arbitrator which is pending or threatened against the
Company or any Guarantor that would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect, except as
described in the Final Memorandum;
(ix) no consent, approval, authorization or order of, or filing
or registration or qualification with, any court or governmental
agency or body or financial institution, or any other party under any
loan agreement, indenture, mortgage, deed of trust, lease, network
affiliation agreement, programming contract or any other agreement or
instrument described in the Final Memorandum to which the Company or
any of the
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<PAGE>
Guarantors is a party or by which any of them is bound or to which any
of their respective properties is subject, is required on the part of
the Company or any Guarantor for the authorization, issuance, sale and
delivery of the Securities, or the execution, delivery and performance
by the Company and the Guarantors of their respective obligations
under this Agreement, the Indenture and the Registration Rights
Agreement or the consummation of the transactions contemplated hereby
or thereby, except (1) as have been obtained, (2) as may be required
under the "Blue Sky" laws of the various states in connection with the
offer and sale of the Securities and (3) as may be required by the
Securities Act, the "Blue Sky" laws of the various states, the Trust
Indenture Act and the bylaws and rules of the NASD, in conjunction
with an exchange offer for, or registered resale of, the Securities
pursuant to the Registration Rights Agreement and the qualification of
the Indenture and the Trustee;
(x) neither the Company nor any Guarantor is, or with the giving
of notice or lapse of time or both would be, in violation of or in
default under, nor does the execution and delivery of this Agreement,
the Indenture and the Registration Rights Agreement, nor will the
consummation of the transactions contemplated hereby and thereby,
result in a violation of, or constitute a default under, the
Certificates or Articles of Incorporation, by-laws or other governing
documents of the Company or any of the Guarantors, or any loan
agreement, indenture, mortgage, deed of trust, lease, network
affiliation agreement, programming contract or any other agreement or
instrument described in the Final Memorandum to which the Company or
any of the Guarantors is a party or by which any of them is bound, or
to which any of their respective properties is subject, except for
such violations of or such defaults under any such loan agreement,
indenture, mortgage, deed of trust, lease, network affiliation
agreement, programming contract or other agreement or instrument, as
would not, individually or in the aggregate, have a Material Adverse
Effect; nor will the performance by the Company and the Guarantors of
their respective obligations hereunder and thereunder violate any law,
rule or administrative regulation, to such counsel's knowledge, any
license or any decree of any court, governmental agency or body having
jurisdiction over the Company or any of the Guarantors, or any of
their respective properties, or, to such counsel's knowledge, result
in the creation or imposition of any lien, charge, claim or
encumbrance upon any property or asset of the Company or any of the
Guarantors, except such violation, lien, charge, claim or encumbrance
as would not, individually or in the aggregate, have a Material
Adverse Effect;
(xi) no registration of the Securities under the Securities Act
is required for the sale of the Securities to the Initial Purchasers
as contemplated by this Agreement or for the initial resale thereof in
the manner contemplated in this Agreement, assuming that (a) the
offering of the Securities has been conducted solely in the manner
contemplated by the Final Memorandum, this Agreement, the Indenture
and the Registration Rights Agreement, (b) the Initial Purchasers' and
the Company's representations and warranties in this Agreement are
true, (c) the representations of accredited investors in the form set
forth in Exhibit A to the Final Memorandum are true, (d) each
purchaser is a qualified institutional buyer or an accredited
investor, and (e) the Initial Purchasers deliver (or cause the
delivery) promptly to each such purchaser purchasing the Securities
from the Initial Purchasers, a copy of the Final Memorandum;
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<PAGE>
(xii) pursuant to exemptions under the Investment Company Act and
based upon no-action letters issued by the staff of the Commission,
neither the Company nor any of the Guarantors is, and after giving
effect to the offering and sale of the Securities and the application
of the proceeds therefrom as described in the Final Memorandum under
the caption "Use of Proceeds", will be, an "investment company" or an
entity "controlled" by an "investment company," as such terms are
defined in the Investment Company Act;
(xiii) when the Securities are issued and delivered pursuant to
this Agreement, the Securities will not be of the same class (within
the meaning of Rule 144A under the Securities Act) as securities of
the Company and the Guarantors, if any, which are listed on a national
securities exchange registered under Section 6 of the Exchange Act and
the rules and regulations of the Commission promulgated thereunder or
quoted in a United States automated interdealer quotation system;
accordingly, the offer and sale of the Securities in the manner
contemplated by this Agreement and the Final Memorandum will be in
compliance with paragraph (d)(3) of Rule 144A under the Securities
Act;
(xiv) the Final Memorandum appears on its face to comply as to
form in all material respects with the applicable requirements of
paragraph (d)(4) of Rule 144A under the Securities Act;
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the laws of the
State of New York or the State of California, the corporation laws of the State
of Delaware, or the laws of the United States of America, to the extent they
deem proper and specified in such opinion, upon the opinion of other counsel of
good standing whom they believe to be reliable and who are satisfactory to
counsel for the Initial Purchasers and (B) as to matters of fact, to the extent
they deem proper, on certificates of responsible officers of the Company and
public officials.
In addition such counsel shall state that such counsel assisted in the
preparation of the Final Memorandum and no facts have come to the attention of
such counsel that lead such counsel to believe that the Final Memorandum
(excluding financial statements and other financial and statistical data
contained therein, as to which such counsel need not express an opinion) as of
its date and as of the Closing Date, contained or contains any untrue statement
of a material fact or omitted or omits to state any material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(d) The Company shall have furnished to the Initial Purchasers the
opinion of Fletcher, Heald & Hildreth, P.L.C., special communications
counsel to the Company, dated the Closing Date, to the effect that:
(i) for each Station stated in the Final Memorandum as being
owned by the Company, the Company or one of the Guarantors and, for
each Station stated in the Final Memorandum as being operated but not
owned by the Company or a Guarantor, the licensee of such Station,
holds the licenses for the operation of such Station and all such
licenses are in full force and effect;
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<PAGE>
(ii) based on a review of the pertinent public files of the FCC,
appropriate files of such counsel and an inquiry of the lawyers
thereof who have had substantial responsibility for the Company's
legal matters handled by such counsel, such counsel confirms that,
other than rulemaking proceedings or similar proceedings of general
applicability to entities such as the Company or to facilities such as
the Stations, there is no action, suit, or proceeding before the FCC
pending or to such counsel's knowledge, threatened against or
affecting the Company or any of the Guarantors that could reasonably
be expected to have, individually or in the aggregate, a Material
Adverse Effect;
(iii) no authorizations, consents, approvals, licenses, filings
or registrations with the FCC are required in connection with the
execution, delivery or performance by the Company or any Guarantor of
this Agreement, the Indenture, the Registration Rights Agreement, the
Notes or the Guarantees, or the consummation of the transactions
contemplated hereby or thereby; and
(iv) such counsel assisted in the preparation of the Final
Memorandum and no facts have come to the attention of such counsel
that lead them to believe that the statements contained under the
captions "Risk Factors--Regulatory Matters" and "Business--Federal
Regulation of Radio Broadcasting" in the Final Memorandum as of its
date and as of the Closing Date, contained or contains any untrue
statement of a material fact or omitted or omits to state any material
fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading.
(e) The Initial Purchasers shall have received on the Closing Date
the opinion or opinions of Milbank, Tweed, Hadley & McCloy, dated the
Closing Date, on such matters as the Initial Purchasers may reasonably
request and such counsel shall have received such documents and information
as they may reasonably request to enable them to pass upon such matters.
(f) The Company, the Guarantors and the Trustee shall have executed
and delivered the Indenture in substantially the form of the draft dated
the date hereof with such changes as may be reasonably satisfactory to the
Initial Purchasers, and the Indenture shall be in full force and effect.
(g) The Company shall have furnished to the Initial Purchasers on the
date hereof and on the Closing Date, a letter of Ernst & Young LLP, as
independent auditors to the Company, addressed to the Initial Purchasers
and the Board of Directors of the Company and dated the date hereof or the
Closing Date as the case may be, in form and substance satisfactory to the
Initial Purchasers, containing statements and information of the type
customarily included in accountants' "comfort letters" to underwriters with
respect to the consolidated financial statements, summary and selected
consolidated financial information and certain other financial information
contained in the Final Memorandum.
(h) The Securities shall be eligible for trading on the Private
Offerings, Resales and Trading through Automated Linkages Market ("PORTAL")
system of the NASD.
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<PAGE>
(i) The Company, the Trustee and The Depository Trust Company shall
have executed and delivered the letter of representations with respect to
the Securities in substantially the form of the draft dated the date hereof
with such changes as may be reasonably satisfactory to the Initial
Purchasers.
(j) The Company and the Guarantors shall have executed and delivered
the Registration Rights Agreement in substantially the form of the draft
dated the date hereof with such changes as may be reasonably satisfactory
to the Initial Purchasers, and the Registration Rights Agreement shall be
in full force and effect.
(k) The Company and the Guarantors shall have furnished to the
Initial Purchasers an accurate certificate dated as of the Closing Date, in
form and substance satisfactory to the Initial Purchasers, signed by the
Secretary of the Company and each Guarantor, and attaching Articles or
Certificates of Incorporation, bylaws, resolutions, a specimen of the
Notes, evidence with respect to FCC licenses and such other documents and
records as the Initial Purchasers may request.
The Company and the Guarantors will furnish the Initial Purchasers
with such additional opinions, certificates, letters and documents as the
Initial Purchasers may reasonably request.
5. Covenants of the Company. In further consideration of the
------------------------
agreements of the Initial Purchasers herein obtained, each of the Company and
the Guarantors covenants and agrees with the Initial Purchasers as follows:
(a) To furnish the Initial Purchasers, without charge, during the
period mentioned in paragraph (c) below, as many copies of each Memorandum
as the Initial Purchasers may reasonably request;
(b) During the period mentioned in paragraph (c) below, before
amending or supplementing the Final Memorandum, to furnish the Initial
Purchasers a copy of each such proposed amendment or supplement, and to
make no such proposed amendment or supplement to which the Initial
Purchasers reasonably objects;
(c) If, during such period after the date hereof and prior to the
date on which all of the Securities have been sold by the Initial
Purchasers, any event shall occur as a result of which the Final Memorandum
as then amended or supplemented would, in the judgement of the Company or
counsel to the Initial Purchasers, include any untrue statement of a
material fact, or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, or if for any other reason it is necessary to amend
or supplement the Final Memorandum to comply with applicable law, promptly
to prepare and furnish, at its own expense, to the Initial Purchasers,
either an amendment or supplement to the Final Memorandum that corrects
such statement or omission or effects such compliance;
(d) During the period mentioned in paragraph (c) above, to advise the
Initial Purchasers promptly of the happening of any event as a result of
which the Final Memorandum would, in the opinion of the Company, include
any untrue statement of a material fact, or omit to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading;
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<PAGE>
(e) To endeavor to qualify the Securities for offer and sale under the
securities laws of such jurisdictions in the United States as the Initial
Purchasers may reasonably request, to file such statements and reports as
may be required by the laws of each such jurisdiction in which the
Securities have been so qualified, and to supply the Initial Purchasers
with such information as is necessary for the determination of the legality
of the Securities for investment under the laws of such jurisdictions as
the Initial Purchasers may request; except that in no event shall the
Company or any Guarantor be obligated in connection therewith to qualify as
a foreign corporation, or to execute a general consent to service of
process;
(f) Not, for a period of 180 days following the date hereof, without
the prior written consent of Furman Selz LLC, to offer, sell, contract to
sell or otherwise dispose of, directly or indirectly, any Securities;
(g) So long as any Securities are outstanding, to provide the Trustee
and holders of any of the Securities copies of its annual reports and of
the information, documents and reports that the Company or any Guarantor is
required to file with the Commission pursuant to Section 13 or 15(d) of the
Exchange Act within 15 days after it files them with the Commission and if,
during any period in which Securities are outstanding, the Company is not
obligated to file annual reports, documents or other reports with the
Commission pursuant to Section 13 or 15(d) of the Exchange Act, to furnish
to the Trustee the same such annual reports, documents or other reports as
if the Company were so subject. In addition, at all times prior to the
declaration of effectiveness of the registration statement required
pursuant to the Registration Rights Agreement, upon the request of any
holder of Securities or any prospective purchaser of the Securities
designated by such holder, the Company shall supply to such holder or such
prospective purchaser the information required under Rule 144A under the
Securities Act, unless the Company is then subject to Section 13 or 15(d)
of the Exchange Act and reports filed thereunder satisfy the information
requirements of Rule 144A(d)(4) as then in effect;
(h) If requested by the Initial Purchasers, to use all reasonable
efforts to maintain the securities as PORTAL securities in accordance with
the rules and regulations adopted by the NASD relating to trading in the
PORTAL market through such time as a registration statement covering the
Notes shall have become effective or all of the Notes shall have become
eligible for resale without the requirement that such resales comply with
the volume or manner of sale restrictions of Rule 144 of the Act;
(i) To hold the Initial Purchasers harmless against any documentary,
stamp or similar transfer or issue tax, including any interest and
penalties, on the issue, sale and delivery of the Securities in accordance
with the terms of this Agreement and on the execution and delivery of this
Agreement, the Indenture and the Registration Rights Agreement which are or
may be required to be paid under the laws of the United States or any
political subdivision or taxing authority thereof or therein;
(j) Not sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in the Securities Act)
that is or will be integrated with the sale of the Securities in a manner
that would require the registration of the Securities under the Securities
Act;
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<PAGE>
(k) Not to solicit any offer to buy, offer or sell the Securities by
means of any form of general solicitation or general advertising (as those
terms are used in Regulation D under the Securities Act) or in any manner
involving a public offering within the meaning of Section 4(2) of the
Securities Act;
(l) To comply with all of the terms and provisions of the
Registration Rights Agreement;
(m) For a period of five years following the Closing Date, to furnish
to the Initial Purchasers copies of any annual reports, quarterly reports
and current reports filed with the Commission on Forms 10-K, 10-Q and 8-K,
or such other similar forms as may be designated by the Commission, and
such other documents, reports and information as shall be furnished by the
Company to the Trustee or to the holders of the Securities pursuant to the
Indenture;
(n) During the period from the Closing Date to the date that is two
years after the Closing Date, not, and not permit any of its "affiliates"
(as defined in Rule 144 of the Act) to, resell any Securities that have
been acquired by any of them except for Securities purchased by the Company
of any such affiliate and resold in a transaction registered under the Act
or exempt from the registration requirements of the Act;
(o) To use the proceeds from the sale of the Securities in the manner
set forth in the Final Memorandum; and
(l) On the Closing Date, the Company shall repay all amounts owing
under the Existing Credit Agreement by wire transfer from the Initial
Purchasers of the proceeds of the offering of the Securities to the lenders
under the Existing Credit Agreement and shall terminate the Existing Credit
Agreement and enter into the New Credit Agreement. On or before the
Closing Date, the Company shall terminate and pay all amounts due under any
outstanding interest rate swap or other interest rate hedging agreements.
The Company promptly shall provide the Initial Purchasers evidence of each
such action.
6. Expenses. Whether or not this Agreement becomes effective or is
--------
terminated or the sale of the Securities to the Initial Purchasers is
consummated, the Company agrees to pay (i) the costs incident to the
authorization, issuance, sale and delivery of the Securities and any taxes
payable in that connection; (ii) the costs (including, without limitation, fees
and expenses of the Company's accountants and counsel) incident to the
preparation, printing and delivery and distribution to the Initial Purchasers of
each Memorandum and any amendments and exhibits thereto, as provided in this
Agreement; (iii) the costs of delivery and shipping of the Indenture, the
Registration Rights Agreement, this Agreement and related documents, including,
but not limited to any "Blue Sky" memoranda; (iv) the fees payable to rating
agencies in connection with the rating of the Securities; (v) the fees and
expenses (including reasonable fees and disbursement of counsel to the Initial
Purchasers in connection therewith) of qualifying the Securities for offering
and sale under the securities laws of the several jurisdictions; (vi) any
applicable filing fees associated with filings made with the NASD in connection
with the PORTAL application for the Securities; (vii) the costs and charges of
the Trustee and any paying agent or registrar; and (viii) all other costs and
expenses incident to the performance of its obligations hereunder for which
provision is not otherwise made in this Section 6.
7. Indemnification and Contribution. (a) Each of the Company and
--------------------------------
the Guarantors agrees to indemnify and hold harmless the Initial Purchasers, its
officers, authorized representatives
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<PAGE>
and directors and each person, if any, who controls the Initial Purchasers
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act, or is under common control with, or is controlled by, the
Initial Purchasers, from and against any and all losses, claims, damages and
liabilities (including, without limitation, any reasonable legal or other
expenses actually incurred by the Initial Purchasers or any such controlling or
affiliated person in connection with defending or investigating any such action
or claim) caused by, arising out of or based upon any untrue statement or
alleged untrue statement of a material fact contained in any Memorandum if the
Company shall have furnished any amendments or supplements thereto, or in any
"blue sky" application or other document executed by the Company or any of the
Guarantors in connection with in any such application procedure or based upon
written information furnished by the Company or any of the Guarantors
specifically to be filed in any state or other jurisdiction in order to qualify
any or all the Securities under the securities laws thereof or specifically to
be filed with the Commission or any securities association or securities
exchange (each, an "APPLICATION"), or caused by, arising out of or based upon
any omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made not misleading, except insofar as such
losses, claims, damages, liabilities or expenses are caused by any such untrue
statement or omission or alleged untrue statement or omission relating to the
Initial Purchasers made in any Memorandum, or any Application, made in reliance
upon and in conformity with information relating to the Initial Purchasers
furnished to the Company in writing by the Initial Purchasers expressly for use
therein; provided, however, that the Company and the Guarantors shall not be
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required to indemnify any such person if such untrue statement or omission or
alleged untrue statement or omission was contained or made in the Preliminary
Memorandum and corrected in the Final Memorandum and the Final Offering
Memorandum does not contain any other untrue statement or omission or alleged
untrue statement or omission of a material fact that was the subject matter of
the related proceeding and any such loss, claim, damage, liability or expense
suffered or incurred by such person resulted from any action, claim or suit by
any person who purchased Securities that are the subject thereof from the
Initial Purchasers and it is established in the related proceeding that the
Initial Purchasers failed to deliver or provide a copy of the Final Memorandum
to such person with or prior to the written confirmation of the sale of such
Securities sold to such person if required by applicable law, unless such
failure to deliver or provide a copy of the Final Memorandum was a result of
noncompliance by the Company and the Guarantors with Section 5(a) hereof.
(b) The Initial Purchasers agree to indemnify and hold harmless the
Company, the Guarantors, their respective officers and directors and each
person, if any, who controls the Company and the Guarantors within the meaning
of either Section 15 of the Securities Act or Section 20 of the Exchange Act to
the same extent as the foregoing indemnity from the Company and the Guarantors
to the Initial Purchasers, but only with reference to information relating to
the Initial Purchasers furnished to the Company in writing by or on behalf of
the Initial Purchasers expressly for use in either Memorandum.
(c) If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be instituted or asserted
against any person in respect of which indemnity may be sought pursuant to
either of paragraph (a) or (b) above, such person (hereinafter called the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (hereinafter called the "INDEMNIFYING PARTY") in
writing; provided, however, that the failure to so notify the indemnifying party
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shall not relieve it of any obligation or liability that it may have hereunder
or otherwise (unless and only to the extent that such failure directly results
in the loss or compromise of any material rights or defenses by the indemnifying
party and the indemnifying party was not otherwise aware of such action or
claim). The indemnifying party, upon request of the
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indemnified party, shall assume the defense thereof, including the employment of
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party and any others that the indemnifying party may designate in
such proceeding and shall pay the reasonable fees and disbursements of such
counsel related to such proceeding. In any such action or proceeding, any
indemnified party shall have the right to retain its own counsel, but the fees
and expenses of such counsel shall be at the expense of such indemnified party
unless (i) the indemnifying party and the indemnified party shall have mutually
agreed in writing to the contrary, (ii) the indemnifying party shall have failed
within a reasonable period of time to retain counsel reasonably satisfactory to
the indemnified party, or (iii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
indemnified party or any affiliate of either and representation of both parties
by the same counsel would be inappropriate due to actual or potential differing
interests between them. It is understood that, unless there exists a conflict
among indemnified parties, the indemnifying party shall not, in connection with
any one such proceeding or separate but substantially similar related
proceedings in the same jurisdiction, be liable for the fees and expenses of
more than one separate firm (in addition to any appropriate local counsel) for
all indemnified parties, and that all such fees and expenses shall be reimbursed
promptly after the receipt of the invoice therefor as they are incurred. Any
such separate firm shall be designated in writing by Furman Selz LLC in the case
of parties indemnified pursuant to paragraph (a) above and by the Company in the
case of parties indemnified pursuant to paragraph (b) above. The indemnifying
party shall not be liable for any settlement of any proceeding effected without
its prior written consent, but if settled with such consent or if there be a
final judgment for the plaintiff for which the indemnified party is entitled to
indemnification pursuant to this Agreement, the indemnifying party agrees to
indemnify and hold harmless each indemnified party from and against any loss or
liability by reason of such settlement or judgment. No indemnifying party
shall, without the prior written consent of the indemnified party (which consent
shall not be unreasonably withheld), effect any settlement or compromise of any
pending or threatened proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement or compromise (A) includes an
unconditional release of such indemnified party, in form and substance
reasonably satisfactory to such indemnified party from all liability on claims
that are the subject matter of such proceeding, and (B) does not include any
statement as to an admission of fault, culpability or failure to act by or on
behalf of any indemnified party.
(d) To the extent the indemnification provided in paragraph (a) or
(b) of this Section 7 is for any reason unavailable to (other than by reason of
exceptions provided therein), or insufficient to hold harmless, an indemnified
party in respect of any losses, claims, damages, liabilities or expenses (or
actions in respect thereof) referred to therein, then each indemnifying party
under such paragraphs, in lieu of indemnifying such indemnified party thereunder
and in order to provide for just and equitable contribution, shall contribute to
the amount paid or payable by such indemnified party as a result of such losses,
claims, damages or liabilities in such proportion as is appropriate to reflect
(i) the relative benefits received by the Company and the Guarantors on the one
hand and the Initial Purchasers on the other hand from the offering of the
Securities or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, not only such relative benefits but also the
relative fault of the Company and the Guarantors on the one hand and the Initial
Purchasers on the other hand in connection with the statements or omissions or
alleged statements or omissions that resulted in such losses, claims, damages or
liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the Company and the
Guarantors on the one hand and the Initial Purchasers on the other hand in
connection with the offering of the Securities shall be deemed to be in the same
proportion as the total proceeds from the offering of the Securities (net of
discounts and commissions but before deducting expenses) received by the Company
and the
-24-
<PAGE>
Guarantors bears to the total discounts and commissions received by the Initial
Purchasers in respect thereof, in each case as set forth in the Final
Memorandum. The relative fault of the Company and the Guarantors on the one
hand and the Initial Purchasers on the other hand shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company and the Guarantors on the one
hand or by the Initial Purchasers on the other hand, the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission, and any other equitable considerations appropriate
in the circumstances.
(e) The Company, the Guarantors and the Initial Purchasers agree that
it would not be just and equitable if contribution pursuant to Section 7(d)
hereof were determined by pro rata allocation or by any other method of
--------
allocation that does not take account of the equitable considerations referred
to in paragraph (d) above. The amount paid or payable by an indemnified party
as a result of the losses, claims, damages or liabilities (or actions in respect
thereof) referred to in paragraph (d) above shall be deemed to include, subject
to the limitations set forth above, any reasonable legal or other expenses
actually incurred by such indemnified party in connection with defending or
investigating any such action or claim. Notwithstanding the provisions of
Section 7(d) hereof, no Initial Purchaser shall be required to contribute any
amount in excess of the amount by which the total price at which the Securities
purchased and resold by it exceeds the amount of any damages that the Initial
Purchaser has otherwise been required to pay or has paid by reason of such
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
The indemnity and contribution provisions contained in this Section 7
and the representations and warranties of the Company and the Guarantors
contained in this Agreement shall remain operative and in full force and effect
regardless of (i) any termination of this Agreement, (ii) any investigation made
by or on behalf of the Initial Purchasers or any person controlling the Initial
Purchasers or under common control with or controlled by the Initial Purchasers
or by or on behalf of the Company, the Guarantors, their respective officers,
authorized representatives or directors or any person controlling the Company
and the Guarantors and (iii) acceptance of and payment for any of the
Securities.
The indemnity and contribution agreements contained in this Section 7
will be in addition to any liability that the indemnifying party or parties may
otherwise have to the indemnified party or parties referred to above.
8. Termination and Survival. This Agreement may be terminated for
------------------------
any reason at any time prior to the delivery and payment of the Securities on
the Closing Date, as the case may be, by the Initial Purchasers upon written
notice of such termination to the Company, if prior to such time (i) there has
been, since the respective dates as of which information is given in each
Memorandum, (A) any material adverse change in the condition, (financial or
otherwise), results of operations, business, prospects, net worth or assets of
the Company and the Guarantors, taken as a whole, whether or not arising in the
ordinary course of business or (B) except as contemplated by this Agreement, any
material transaction entered into by the Company or the Guarantors other than in
the ordinary course of business, or (ii) there has occurred any outbreak or
escalation of hostilities or other calamity or crisis or material change in
existing national or international financial, political, economic or securities
market conditions, the effect of which is such as to make it, in the judgment of
the Initial Purchasers, impracticable or inadvisable to offer and deliver the
Securities in the manner contemplated
-25-
<PAGE>
in the Final Memorandum or enforce contracts for the sale of Securities, or
(iii) trading generally on the New York Stock Exchange or quotations on the
Nasdaq National Market, either has been suspended, or minimum or maximum prices
for trading have been fixed, or maximum ranges for prices for securities have
been required by either of said organizations or by order of the Commission or
any other governmental authority or, if a banking moratorium has been declared,
by either Federal or New York authorities, or (iv) any downgrading shall have
occurred in the rating accorded the Securities by any "nationally recognized
statistical rating organization," as that term is defined by the Commission for
purposes of Rule 436(g)(2) under the Act.
In the event of any such termination, the provisions of Section 6
hereof, the indemnity agreement and contribution provisions set forth in Section
7 hereof, and the provisions of Sections 9 and 14 hereof shall remain in effect.
9. Representations, Warranties and Agreements to Survive Delivery.
--------------------------------------------------------------
All representations, warranties and agreements contained in this Agreement, or
contained in certificates of officers of the Company or the Guarantors submitted
pursuant hereto, including indemnity and contribution agreements, shall remain
operative and in full force and effect, regardless of any termination of this
Agreement, or any investigation made by or on behalf of the Initial Purchasers
or any person controlling the Initial Purchasers or by or on behalf of the
Company, the Guarantors, or their respective officers or directors, and shall
survive acceptance of and payment for the Notes hereunder.
10. Notices. All notices and other communications hereunder shall be
-------
in writing and shall be deemed to have been duly given if mailed or transmitted
by any standard form of telecommunication. Notices to the Initial Purchasers
shall be directed to 230 Park Avenue, New York, New York 10169, Attention:
Syndicate Department, with a copy to Milbank, Tweed, Hadley & McCloy, 601 South
Figueroa Street, 30th Floor, Los Angeles, California, 90017, Attention: Kenneth
J. Baronsky, Esq.; notices to the Company shall be directed to it at 4880 Santa
Rosa Road, Suite 300, Camarillo, California 93012, Attention: Chief Operating
Officer, with a copy to Gibson, Dunn & Crutcher LLP, Jamboree Center, 4 Park
Plaza, Irvine, California, 92614, Attention: Thomas D. Magill, Esq..
11. Headings. The headings of the sections of this document have
--------
been inserted for convenience of reference only and shall not be deemed a part
of this Agreement.
12. Parties. This Agreement shall inure to the benefit of and be
-------
binding upon the Company, the Guarantors, the Initial Purchasers, any
controlling persons referred to herein and their respective successors and
assigns. Nothing expressed or mentioned in this Agreement is intended or shall
be construed to give any other person, firm or corporation any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provisions herein contained. No purchaser of Securities from the Initial
Purchasers shall be deemed to be a successor by reason merely of such purchase.
13. Counterparts. This Agreement may be signed in any number of
------------
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
-26-
<PAGE>
14. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
-------------
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE LAW
OF CONFLICTS OF LAWS THEREOF.
-27-
<PAGE>
Please confirm your agreement to the foregoing by signing in the space
provided below for that purpose and returning to us a copy hereof, whereupon
this Agreement shall constitute a binding agreement between the Company and the
Guarantors, on the one hand, and the Initial Purchasers on the other hand.
Very truly yours,
SALEM COMMUNICATIONS CORPORATION
a California corporation
/s/ Edward G. Atsinger
By:_______________________________
Edward G. Atsinger, III
President and Chief Executive Officer
ATEP RADIO, INC.,
BISON MEDIA, INC.,
CARON BROADCASTING, INC.,
COMMON GROUND BROADCASTING, INC.,
GOLDEN GATE BROADCASTING
COMPANY, INC.,
INLAND RADIO, INC.,
INSPIRATION MEDIA OF TEXAS, INC.,
INSPIRATION MEDIA, INC.,
NEW ENGLAND CONTINENTAL MEDIA, INC.,
NEW INSPIRATION BROADCASTING
COMPANY, INC.,
OASIS RADIO, INC.,
PENNSYLVANIA MEDIA ASSOCIATES, INC.,
RADIO 1210, INC.,
SALEM COMMUNICATIONS CORPORATION, a
Delaware corporation
SALEM MEDIA CORPORATION,
SALEM MEDIA OF CALIFORNIA, INC.,
SALEM MEDIA OF COLORADO, INC.,
SALEM MEDIA OF LOUISIANA, INC. and
SALEM MEDIA OF OHIO, INC.,
SALEM MEDIA OF OREGON, INC.,
SALEM MEDIA OF PENNSYLVANIA, INC.,
SALEM MEDIA OF TEXAS, INC.,
SALEM MUSIC NETWORK, INC.,
SALEM RADIO NETWORK INCORPORATED,
SALEM RADIO REPRESENTATIVES, INC.,
SOUTH TEXAS BROADCASTING, INC.,
SRN NEWS NETWORK, INC.,
VISTA BROADCASTING, INC.,
/s/ Edward G. Atsinger
By:______________________________
Edward G. Atsinger, III
President and Chief Executive Officer
-28-
<PAGE>
BELTWAY MEDIA PARTNERS
By: GOLDEN GATE BROADCASTING COMPANY, INC., its
general partner
/s/ Edward G. Atsinger
By:____________________________
Edward G. Atsinger, III
President and Chief Executive Officer
By: SALEM COMMUNICATIONS CORPORATION, a
California corporation, its general partner
/s/ Edward G. Atsinger
By:_______________________
Edward G. Atsinger, III
President and Chief Executive Officer
By: NEW INSPIRATION BROADCASTING COMPANY, INC.,
its general partner
/s/ Edward G. Atsinger
By:_______________________
Edward G. Atsinger, III
President and Chief Executive Officer
Accepted:
September 17, 1997
FURMAN SELZ LLC
SMITH BARNEY INC.
BANCBOSTON SECURITIES INC.
BNY CAPITAL MARKETS, INC.
By: Furman Selz LLC
/s/ Harlan Wakoff
By:___________________________
Harlan Wakoff
Vice President
-29-
<PAGE>
<TABLE>
<CAPTION>
Schedule I
Initial Purchasers Amount of Notes to be Purchased
- ------------------ -------------------------------
<S> <C>
Furman Selz LLC $ 75,000,000
Smith Barney Inc. 45,000,000
BancBoston Securities Inc. 15,000,000
BNY Capital Markets, Inc. 15,000,000
------------
Total $150,000,000
</TABLE>
-30-
<PAGE>
<TABLE>
<CAPTION>
Schedule II
Subsidiaries of the Company
---------------------------
Jurisdiction
Name: of formation: Qualified in:
- ----- ------------- -------------
<S> <C> <C>
ATEP Radio, Inc. California
Beltway Media Partners Virginia
Bison Media, Inc. Colorado Washington
Caron Broadcasting, Inc. Ohio Maryland
Common Ground Broadcasting, Inc. Oregon Arizona, Minnesota and Ohio
Golden Gate Broadcasting Company, Inc. California
Inland Radio, Inc. California
Inspiration Media of Texas, Inc. Texas
Inspiration Media, Inc. Washington
New England Continental Media, Inc. Massachusetts
New Inspiration Broadcasting Company, Inc. California
Oasis Radio, Inc. California
Pennsylvania Media Associates, Inc. Pennsylvania
Radio 1210, Inc. California
Salem Communications Corporation Delaware
Salem Media Corporation New York Illinois
Salem Media of California, Inc. California
Salem Media of Colorado, Inc. Colorado
Salem Media of Louisiana, Inc. Louisiana
Salem Media of Ohio, Inc. Ohio
Salem Media of Oregon, Inc. Oregon
Salem Media of Pennsylvania, Inc. Pennsylvania
Salem Media of Texas, Inc. Texas
Salem Music Network, Inc. Texas Colorado and Tennessee
Salem Radio Network Incorporated Delaware Texas and Virginia
Salem Radio Representatives, Inc. Texas California, Illinois, New York,
Tennessee and Virginia
South Texas Broadcasting, Inc. Texas
SRN News Network, Inc. Texas District of Columbia and Virginia
Vista Broadcasting, Inc. California
</TABLE>
-31-
<PAGE>
EXHIBIT 1.02
Execution Original
REGISTRATION RIGHTS AGREEMENT
Among
Salem Communications Corporation, a California corporation
ATEP Radio, Inc.,
Beltway Media Partners,
Bison Media, Inc.,
Caron Broadcasting, Inc.,
Common Ground Broadcasting, Inc.,
Golden Gate Broadcasting Company, Inc.,
Inland Radio, Inc.,
Inspiration Media, Inc.,
Inspiration Media of Texas, Inc.,
New England Continental Media, Inc.,
New Inspiration Broadcasting Company, Inc.,
Oasis Radio, Inc.,
Pennsylvania Media Associates, Inc.,
Radio 1210, Inc.,
Salem Communications Corporation, a Delaware corporation
Salem Media Corporation,
Salem Media of California, Inc.,
Salem Media of Colorado, Inc.,
Salem Media of Louisiana, Inc.,
Salem Media of Ohio, Inc.,
Salem Media of Oregon, Inc.,
Salem Media of Pennsylvania, Inc.,
Salem Media of Texas, Inc.,
Salem Music Network, Inc.,
Salem Radio Network Incorporated,
Salem Radio Representatives, Inc.,
South Texas Broadcasting, Inc.,
SRN News Network, Inc.,
Vista Broadcasting, Inc.,
and
Furman Selz LLC,
Smith Barney Inc.,
BancBoston Securities Inc.,
and
BNY Capital Markets, Inc.
Dated as of September 25, 1997
<PAGE>
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "AGREEMENT"), dated as of
September 25, 1997, by and among Salem Communications Corporation, a California
corporation ("SALEM" or the "COMPANY"), the Guarantors (as defined below), and
Furman Selz LLC, Smith Barney Inc., BancBoston Securities Inc., and BNY Capital
Markets, Inc., as the initial purchasers (the "INITIAL PURCHASERS") of the
Company's 9 1/2% Senior Subordinated Notes due 2007 (the "NOTES"), which are
guaranteed (the "GUARANTEES") by the following subsidiaries of the Company:
ATEP Radio, Inc., a California corporation, Beltway Media Partners, a Virginia
partnership, Bison Media, Inc., a California corporation, Caron Broadcasting,
Inc., an Ohio corporation, Common Ground Broadcasting, Inc., an Oregon
corporation, Golden Gate Broadcasting Company, Inc., a California corporation,
Inland Radio, Inc., a California corporation, Inspiration Media of Texas, Inc.,
a Texas corporation, Inspiration Media, Inc., a Washington corporation, New
England Continental Media, Inc., a Massachusetts corporation, New Inspiration
Broadcasting Company, Inc., a California corporation, Oasis Radio, Inc., a
California corporation, Pennsylvania Media Associates, Inc., a Pennsylvania
corporation, Radio 1210, Inc., a California corporation, Salem Communications
Corporation (DE) Salem Media Corporation, a New York corporation, Salem Media of
California, Inc., a California corporation, Salem Media of Colorado, Inc., a
Colorado corporation, Salem Media of Louisiana, Inc., a Louisiana corporation,
Salem Media of Ohio, Inc., an Ohio corporation, Salem Media of Oregon, Inc., an
Oregon corporation, Salem Media of Pennsylvania, Inc., a Pennsylvania
corporation, Salem Media of Texas, Inc., a Texas corporation, Salem Music
Network, Inc., a Texas corporation, South Texas Broadcasting, Inc., a Texas
corporation, Salem Radio Network Incorporated, a Delaware corporation, Salem
Radio Representatives, Inc., a Texas corporation, SRN News Network, Inc., a
Texas corporation, and Vista Broadcasting, Inc., a California corporation, (each
a "GUARANTOR" and collectively the "GUARANTORS").
This Agreement is made pursuant to the Placement Agreement, dated
September 17, 1997, among the Company, the Guarantors and the Initial Purchasers
(the "PLACEMENT AGREEMENT"), which provides for the sale by the Company to the
Initial Purchasers of $150,000,000 aggregate principal amount of the Company's 9
1/2% Senior Subordinated Notes due 2007 (the "NOTES"), which Notes are
guaranteed (the "GUARANTEES") to the extent set forth in the Indenture (as
defined below), the Notes and the Guarantees.
In order to induce the Initial Purchasers to enter into the Placement
Agreement, the Company and the Guarantors have agreed to provide to the Initial
Purchasers and their direct and indirect transferees the registration rights
with respect to the Notes and the Guarantees as set forth in this Agreement.
The execution of this Agreement is a condition to the closing under the
Placement Agreement.
1. Definitions.
-----------
As used in this Agreement, the following capitalized defined terms
shall have the following meanings:
-2-
<PAGE>
"BUSINESS DAY" means each Monday, Tuesday, Wednesday, Thursday and
------------
Friday which is not a day on which banking institutions in The City of New York,
the State of California or the city in which the Corporate Trust Office (as
defined in the Indenture) is located are authorized or obligated by law or
executive order to close.
"CLOSING DATE" shall mean the date on which the Notes are initially
------------
issued by the Company and the Guarantees are initially issued by the Guarantors,
in each case, to the Initial Purchasers.
"COMMISSION" means the Securities and Exchange Commission, as from
----------
time to time constituted, created under the Exchange Act, or if at any time
after the execution of this Indenture such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then the
body performing such duties at such time.
"COMPANY" shall have the meaning set forth in the preamble.
-------
"EFFECTIVE TIME," in the case of (i) an Exchange Offer, shall mean the
--------------
time and date as of which the Commission declares the Exchange Offer
Registration Statement effective or as of which the Exchange Offer Registration
Statement otherwise becomes effective and (ii) a Shelf Registration, shall mean
the time and date as of which the Commission declares the Shelf Registration
effective or as of which the Shelf Registration otherwise becomes effective.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, or any
------------
successor thereto, and the rules, regulations and forms promulgated thereunder,
all as the same shall be amended from time to time.
"EXCHANGE DATE" shall have the meaning set forth in Section 2(a)(ii).
-------------
"EXCHANGE GUARANTEES" shall have the meaning assigned thereto in
-------------------
Section 2(a) hereof.
"EXCHANGE NOTES" shall have the meaning assigned thereto in Section
--------------
2(a) hereof.
"EXCHANGE OFFER" shall have the meaning assigned thereto in Section
--------------
2(a) hereof.
"EXCHANGE OFFER REGISTRATION" shall mean a registration under the
---------------------------
Securities Act effected pursuant to Section 2(a) hereof.
"EXCHANGE OFFER REGISTRATION STATEMENT" shall mean an exchange offer
-------------------------------------
registration statement of the Company and the Guarantors on Form S-4 (or, if
applicable, on another appropriate form) which covers all of the Exchange
Securities, and all amendments and supplements to such registration statement,
including post-effective amendments, in each case including the Prospectus
contained therein, all exhibits thereto and all material incorporated by
reference therein.
"EXCHANGE SECURITIES" shall have the meaning assigned thereto in
-------------------
Section 2(a) hereof.
-3-
<PAGE>
"GUARANTEES" shall have the meaning set forth in the preamble.
----------
"GUARANTORS" shall have the meaning set forth in the preamble.
----------
"HOLDER" shall mean any Initial Purchaser for so long as it owns any
------
Registrable Securities, and each of its successors, assigns and direct and
indirect transferees who become registered owners of Registrable Securities;
provided, that for purposes of Sections 3, 4 and 5 of this Agreement, the term
- --------
"HOLDER" shall include Participating Broker-Dealers (as defined in Section
4(a)).
"HOLDERS' INFORMATION" shall have the meaning assigned thereto in
--------------------
Section 5(a) hereof.
"INDENTURE" shall mean the Indenture, dated as of September 25, 1997,
---------
among the Company, the Guarantors and The Bank of New York, as trustee, as the
same shall be amended from time to time.
"INITIAL PURCHASERS" shall have the meaning set forth in the preamble.
------------------
"MAJORITY HOLDERS" shall mean the Holders of a majority of the
----------------
aggregate principal amount of outstanding Registrable Securities; provided that,
--------
for purposes of this definition, whenever the consent or approval of Holders of
a specified percentage of Registrable Securities is required hereunder,
Registrable Securities held by the Company, its subsidiaries or any of their
respective affiliates (as such term is defined in Rule 405 under the Securities
Act) (other than the Initial Purchasers or subsequent Holders of Registrable
Securities if such subsequent Holders are deemed to be such affiliates solely by
reason of their holding of such Registrable Securities) shall not be counted in
determining whether such consent or approval was given by the Holders of such
required percentage or amount.
"NASD" shall mean the National Association of Securities Dealers, Inc.
----
"NOTES" shall have the meaning set forth in the preamble.
-----
"OFFER TERMINATION DATE" shall have the meaning set forth in Section
----------------------
2(a)(iii).
"PARTICIPATING BROKER-DEALER" shall have the meaning set forth in
---------------------------
Section 4(a) hereof.
"PENALTY AMOUNTS" shall have the meaning assigned thereto in Section
---------------
2(d) hereof.
"PERSON" shall mean an individual, partnership, limited liability
------
company, corporation, trust or unincorporated organization, or a government or
agency or political subdivision thereof.
"PRESCRIBED TIME PERIOD" shall have the meaning set forth in Section
----------------------
2(d)(i).
"PROSPECTUS" shall mean the prospectus included in a Registration
----------
Statement, including any preliminary prospectus, and any such prospectus as
amended or supplemented by any prospectus
-4-
<PAGE>
supplement, including a prospectus supplement with respect to the terms of the
offering of any portion of the Registrable Securities covered by a Shelf
Registration Statement, and by all other amendments and supplements to such
prospectus, and in each case including all material incorporated by reference or
deemed to be incorporated by reference therein.
"PROSPECTUS DELIVERY REQUIREMENT SITUATION" shall have the meaning set
-----------------------------------------
forth in Section 2(e).
"PLACEMENT AGREEMENT" shall have the meaning set forth in the
-------------------
preamble.
"REGISTRABLE SECURITIES" shall mean the Securities; provided, however,
---------------------- --------- -------
that any such Securities shall cease to be Registrable Securities (i) when a
Registration Statement with respect to such Registrable Securities shall have
been declared effective under the Securities Act and such Securities shall have
been disposed of or exchanged pursuant to such Registration Statement, (ii) upon
the expiration of the Exchange Offer period with respect to any Exchange Offer
Registration Statement if all Registrable Securities validly tendered in
connection with such Exchange Offer shall have been exchanged for Exchange
Securities, (iii) when such Securities have been sold to the public pursuant to
Rule 144(k) (or any similar provision then in force, but not Rule 144A) under
the Securities Act or (iv) when such Securities shall have ceased to be
outstanding; provided, however, that if an opinion of counsel to the effect
-------- -------
described in Section 2(d)(i)(B) is delivered to the Company and the Guarantors,
then such Securities held by the Initial Purchasers shall not cease to be
Registrable Securities solely by reason of clause (ii) above.
"REGISTRATION DEFAULT" shall have the meaning assigned thereto in
--------------------
Section 2(d) hereof.
"REGISTRATION EXPENSES" shall mean any and all expenses incident to
---------------------
performance of or compliance by the Company and the Guarantors with this
Agreement, including without limitation: (i) all Commission, stock exchange or
NASD registration and filing fees, (ii) all fees and expenses incurred in
connection with compliance with state securities or blue sky laws, (iii) all
expenses of any Person in preparing or assisting in preparing, word processing,
printing and distributing any Registration Statement, any Prospectus, any
amendments or supplements thereto, underwriting agreements, securities sales
agreements, indentures and any other documents necessary in order to comply with
this Agreement, (iv) all fees and disbursements relating to the qualification of
the Indenture and the Guarantors under applicable securities laws, (v) the fees
and disbursements of the Trustee and its counsel and of any escrow agent as
custodian, (vi) the fees and disbursements of counsel for the Company and the
reasonable fees and disbursements of one counsel for the Holders in connection
with an Exchange Offer Registration Statement and a Shelf Registration
Statement, (vii) the fees and disbursements of the independent public
accountants of the Company and the Guarantors, including the expenses of any
special audits or "cold comfort" letters required by or incident to such
performance and compliance, but excluding underwriting discounts, if any, and
commissions and transfer taxes, if any, relating to the sale or disposition of
Registrable Securities by a Holder and (viii) fees, disbursements and expenses
of any "qualified independent underwriter" engaged, if any, (ix) rating agency
fees, (x) Securities Act liability insurance, if the Company desires such
insurance, (xi) fees and expenses of all other Persons retained by the Company,
(xii) internal expenses of the Company (including, without limitation, all
salaries and expenses of officers and employees of the Company performing legal
or accounting duties), (xiii) the expense of any annual
-5-
<PAGE>
audit and (xiv) the fees and expenses incurred in connection with the listing of
the securities to be registered on any securities exchange.
"REGISTRATION STATEMENT" shall mean any registration statement of the
----------------------
Company and the Guarantors that covers any of the Exchange Securities or
Registrable Securities pursuant to the provisions of this Agreement and all
amendments and supplements to any such Registration Statement, including post-
effective amendments, in each case including the Prospectus contained therein,
all exhibits thereto and all material incorporated by reference therein.
"RESALE PERIOD" shall have the meaning assigned thereto in Section
-------------
2(a) hereof.
"RESTRICTED HOLDER" shall mean (i) a holder that is an affiliate of
-----------------
the Company or any of the Guarantors within the meaning of Rule 405, (ii) a
Holder who acquires Exchange Securities outside the ordinary course of such
Holder's business or (iii) a Holder who has arrangements or understandings with
any Person to participate in the Exchange Offer for the purpose of distributing
Exchange Securities.
"RULE 144," "RULE 144A," "RULE 174," "RULE 405," "RULE 415," and "RULE
---------------------------------------------------------------------
424" shall mean, in each case, such rule promulgated under the Securities Act or
- ---
any similar rule that may be adopted by the Commission.
"SECURITIES" shall mean collectively, the Notes and the Guarantees.
----------
"SECURITIES ACT" shall mean the Securities Act of 1933, or any
--------------
successor thereto, and the rules, regulations and forms promulgated thereunder,
all as the same shall be amended from time to time.
"SHELF REGISTRATION" shall mean a registration under the Securities
------------------
Act effected pursuant to Section 2(b) hereof.
"SHELF REGISTRATION STATEMENT" shall mean a "SHELF" registration
----------------------------
statement of the Company and the Guarantors prepared pursuant to the provisions
of Section 2(b) of this Agreement which covers all of the Registrable Securities
on an appropriate form under Rule 415 under the Securities Act, or any similar
rule that may be adopted by the Commission, and all amendments and supplements
to such registration statement, including post-effective amendments, in each
case including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference or deemed incorporated by reference therein.
"TRUSTEE" means The Bank of New York, as trustee under the Indenture.
-------
"TRUST INDENTURE ACT" shall mean the Trust Indenture Act of 1939, or
-------------------
any successor thereto, and the rules, regulations and forms promulgated
thereunder, all as the same shall be amended from time to time.
Unless the context otherwise requires, any reference herein to a
"SECTION" or "CLAUSE" refers to a Section or clause, as the case may be, of this
Agreement, and the words "HEREIN," "HEREOF"
-6-
<PAGE>
and "HEREUNDER" and other words of similar import refer to this Agreement as a
whole and not to any particular Section or other subdivision. Unless the
context otherwise requires, any reference to a statute, rule or regulation shall
be deemed to be a statute, rule or regulation (including any successor statute,
rule or regulation thereto) as it may be amended from time to time.
2. Registration under the Securities Act.
-------------------------------------
(a) Except as set forth in Section 2(b) below, the Company and the
Guarantors agree to use their best efforts to file under the Securities Act as
soon as practicable after the Closing Date, but in no event later than 75 days
after such date, an Exchange Offer Registration Statement relating to an offer
by the Company and the Guarantors to exchange (the "EXCHANGE OFFER") (i) any and
all of the Notes for a like aggregate amount of notes issued by the Company,
which notes are identical in all material respects to the Notes (the "EXCHANGE
NOTES"), except that the Exchange Notes have been registered pursuant to an
effective registration statement under the Securities Act on the appropriate
form, do not contain restrictions on transfers (except as they may be held by
Restricted Holders) and provide for the additional amounts contemplated in
Section 2(d) below for any periods before such exchange and (ii) any and all of
the Guarantees for like guarantees by the Guarantors, which guarantees are
identical to the Guarantees (the "EXCHANGE GUARANTEES," and together with the
Exchange Notes, the "EXCHANGE SECURITIES") except that they have been registered
pursuant to an effective registration statement under the Securities Act on the
appropriate form and do not contain restrictions on transfers. The Company and
the Guarantors agree to use their best efforts to cause the Exchange Offer
Registration Statement to become effective under the Securities Act as soon as
prac ticable after the filing of the Exchange Offer Registration Statement but
in no event later than 150 days after the Closing Date. The Exchange Offer
shall be registered under the Securities Act on the appropriate form and shall
comply with all applicable tender offer and other rules and regulations under
the Exchange Act. The Company and the Guarantors further agree to use their
best efforts to commence and consummate the Exchange Offer promptly after the
Exchange Offer Registration Statement has become effective, hold the Exchange
Offer open for not less than 20 Business Days (or longer, if required by
applicable law) after the date notice of the Exchange Offer has been mailed to
Holders and exchange Securities for all Securities that have been properly
tendered and not withdrawn on or prior to the expiration of the Exchange Offer
and to consummate such Exchange Offer within 180 days after the Closing Date.
The Exchange Offer will be deemed to have been completed, as the case may be,
only if the Exchange Securities received by Holders other than Restricted
Holders in the Exchange Offer are, upon receipt, transferable by each such
Holder without restriction under the Securities Act and the Exchange Act and
without material restrictions under the blue sky or securities laws of the
States of the United States of America. The Exchange Offer shall be deemed to
have been completed upon the Company and the Guarantors having exchanged,
pursuant to the Exchange Offer, the Exchange Securities for all outstanding
Securities, pursuant to the Exchange Offer, properly tendered and not withdrawn
before the expiration of the Exchange Offer, which shall be on a date that is
not less than 20 Business Days (or longer, if required by applicable law)
following the commencement of the Exchange Offer. The Company and the
Guarantors shall commence the Exchange Offer by mailing the related Prospectus
and accompanying documents to each Holder stating, in addition to such other
disclosures as are required by applicable law:
(i) that the Exchange Offer is being made pursuant to this Agreement
and that all Registrable Securities validly tendered will be accepted for
exchange;
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<PAGE>
(ii) the dates of acceptance for exchange (which shall be a period of
at least 20 Business Days from the date such notice is mailed) (each such
date being an "EXCHANGE DATE");
(iii) that a Holder electing to have Registrable Securities exchanged
pursuant to the Exchange Offer will be required to surrender such
Registrable Securities, together with the enclosed letters of transmittal,
to the institution and at the address specified in the notice prior to the
close of business on the last Exchange Date (the "OFFER TERMINATION DATE");
and
(iv) that a Holder will be entitled to withdraw such Holder's
election, not later than the close of business on the Offer Termination
Date, by sending to the institution and at the address specified in the
notice a telegram, telex, facsimile transmission or letter setting forth
the name of such Holder, the principal amount of Registrable Securities
delivered for exchange and a statement that such Holder is withdrawing its
election to have such Registrable Securities exchanged.
As soon as practicable after the Offer Termination Date, the Company and
the Guarantors shall:
(A) accept for exchange Registrable Securities or portions thereof
tendered and not validly withdrawn pursuant to the Exchange Offer; and
(B) deliver, or cause to be delivered, to the Trustee for cancellation
all Registrable Securities or portions thereof so accepted for exchange by the
Company and the Guar antors and issue, and cause the Trustee to promptly
authenticate and mail to each Holder who has properly tendered and not withdrawn
Registrable Securities pursuant to the Exchange Offer, an Exchange Security in
aggregate principal amount equal to the aggregate principal amount of the
Registrable Securities surrendered by such Holder. The Company shall use its
best efforts to complete the Exchange Offer as provided above and shall comply
with the applicable requirements of the Securities Act, the Exchange Act and
other applicable laws and regulations in connection with the Exchange Offer.
The Exchange Offer shall not be subject to any conditions, other than that the
Exchange Offer does not violate applicable law or any applicable interpretation
of the staff of the Commission. The Company shall inform the Initial Purchasers
of the names and addresses of the Holders to whom the Exchange Offer is made,
and the Initial Purchasers shall have the right, subject to applicable law, to
contact such Holders and otherwise facilitate the tender of Registrable
Securities in the Exchange Offer.
Each Holder of Securities participating in the Exchange Offer shall be
required to represent to the Company and the Guarantors that at the time of the
consummation of the Exchange Offer (i) such Holder is not an "affiliate" of the
Company or any Guarantor within the meaning of Rule 405 under the Securities
Act, (ii) the Exchange Securities being acquired by it pursuant to the Exchange
Offer are being acquired in the ordinary course of the business of the Person
receiving such Exchange Securities and (iii) such Holder has no arrangement or
understanding with any Person to participate in the distribution of the Exchange
Securities. If such Holder is a Participating Broker-Dealer that will receive
Exchange Securities for its own account in exchange for the Registrable
Securities that were acquired as a result of market-making activities or other
trading activities, it will
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<PAGE>
be required to acknowledge that it will deliver a prospectus in connection with
any resale of such Exchange Securities.
(b) In the event that (i) due to a change in applicable law or current
interpretations by the Commission, the Company and the Guarantors are not
permitted to effect the Exchange Offer for all of the Securities, (ii) the
Exchange Offer for all of the Securities is not for any other reason consummated
within 180 days after the Closing Date, (iii) any Holder shall, within 30 days
after commencement of the Exchange Offer, notify the Company that such Holder
(x) is prohibited by applicable law or Commission policy from participating in
the Exchange Offer, (y) may not resell Exchange Securities acquired by it in the
Exchange Offer to the public without delivering a prospectus and that the
Prospectus contained in the Exchange Offer Registration Statement is not
appropriate or available for such resales by such Holder or (z) is a broker-
dealer and holds Securities acquired directly from the Company and Guarantors or
an "AFFILIATE" of the Company or any Guarantor, then in addition to or in lieu
of conducting the Exchange Offer contemplated by Section 2(a), or (iv) at the
request of any of the Initial Purchasers, the Company and the Guarantors will be
required to file a "SHELF" registration statement (a "SHELF REGISTRATION
STATEMENT") covering resales (a) by the Holders of Registrable Securities in the
event the Company and the Guarantors are not permitted to effect the Exchange
Offer pursuant to the foregoing clause (i) or the Exchange Offer is not
consummated within 180 days after the Closing Date pursuant to the foregoing
clauses (i) or (ii) or (b) by the Holders of Registrable Securities with respect
to which the Company and the Guarantors receive notice pursuant to the foregoing
clauses (iii) or (iv). The Trustee will promptly deliver to the Holders written
notice that the Company and the Guarantors will be complying with the provisions
of this Section 2(b). The Company and the Guarantors agree to use their best
efforts to cause the Shelf Registration Statement to become or be declared
effective and to keep such Shelf Registration Statement continuously effective
for a period of time ending on the second anniversary of the Effective Time (the
"EFFECTIVE PERIOD") or such shorter period that will terminate when all of the
Registrable Securities covered by the Shelf Registration Statement have been
sold pursuant to the Shelf Registration Statement. The Company and the
Guarantors shall, if they file a Shelf Registration Statement, provide to each
Holder of the Registrable Securities copies of the Prospectus contained therein
and notify each such Holder when the Shelf Registration Statement has become
effective. The Company and the Guarantors further agree to supplement or make
amendments to the Shelf Registration Statement, as and when required by the
rules, regulations or instructions applicable to the registration form used by
the Company and the Guarantors for such Shelf Registration Statement or by the
Securities Act or rules and regulations thereunder for shelf registrations, and
the Company and the Guarantors agree to furnish to the Holders of the
Registrable Securities copies of any such supplement or amendment prior to its
being used or promptly following its filing with the Commission.
(c) The Company and the Guarantors shall, jointly and severally, pay
all Registration Expenses in connection with any registration pursuant to
Section 2(a) or Section 2(b). Each Holder shall pay all underwriting discounts,
if any, and commissions and transfer taxes, if any, relating to the sale or
disposition of such Holder's Registrable Securities pursuant to the Exchange
Offer Registration Statement or a Shelf Registration Statement, as the case may
be.
(d) An Exchange Offer Registration Statement pursuant to Section 2(a)
hereof or a Shelf Registration Statement pursuant to Section 2(b) hereof will
not be deemed to have become effec tive unless it has been declared effective by
the Commission; provided, however, that, if, after it has
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<PAGE>
been declared effective, the offering of Registrable Securities pursuant to an
Exchange Offer Registration Statement or a Shelf Registration Statement is
interfered with by any stop order, injunction or other order or requirement of
the Commission or any other governmental agency or court, such Registration
Statement will be deemed not to have been effective during the period of such
interference until the offering of Registrable Securities pursuant to such
Registration Statement may legally resume. If the Company and the Guarantors
shall fail to comply with this Agreement or if the Exchange Offer Registration
Statement or the Shelf Registration Statement fails to become effective (any
such event, a "REGISTRATION DEFAULT"), then, as liquidated damages, registration
default amounts (the "PENALTY AMOUNTS"), shall become payable in respect of the
Notes as follows:
(i) (A) if an Exchange Offer Registration Statement (or, in the event
of a change in applicable law or due to current interpretations by the
Commission, the Company and the Guarantors are not permitted to effect the
Exchange Offer, a Shelf Registration Statement), is not filed within 75
days following the Closing Date, (B) in the event that within the 30 days
after commencement of the Exchange Offer, any Holder of the Registrable
Securities shall notify the Company that such Holder (x) is prohibited by
applicable law or Commission policy from participating in the Exchange
Offer, (y) may not resell Exchange Securities acquired by it in the
Exchange Offer to the public without delivering a prospectus and that the
Prospectus contained in the Exchange Offer Registration Statement is not
appropriate or available for such resales by such Holder or (z) is a
broker-dealer and holds Securities acquired directly from the Company or
any Guarantor or an "affiliate" of the Company or any Guarantor and a Shelf
Registration Statement is not filed within 75 days after such notice or (C)
upon the request of an Initial Purchaser, a Shelf Registration Statement is
not filed within 75 days after such request, then commencing on either the
76th day after the Closing Date or the expiration of either of the 75-day
time periods set forth in clauses (B) and (C) above (either, a "PRESCRIBED
TIME PERIOD"), as the case may be, Penalty Amounts shall be accrued on the
Notes over and above the stated payment rates thereon at a rate of 0.25%
per annum for the first 90 days immediately following either the 76th day
after the Closing Date or the expiration of the Prescribed Time Period, as
the case may be, such Penalty Amounts rate increasing by an additional
0.25% per annum at the beginning of each subsequent 90-day period;
(ii) if an Exchange Offer Registration Statement or a Shelf
Registration Statement is filed pursuant to clause (i) above and is not
declared effective within either 150 days following the Closing Date or 75
days following the expiration of the applicable Prescribed Time Period, as
the case may be, then commencing on the 151st day after the Closing Date or
the 76th day following the expiration of the Prescribed Time Period, as the
case may be, Penalty Amounts shall be accrued on the Notes over and above
the accrued stated payment rates thereon at a rate of 0.25% per annum for
the first 90 days immediately following the 151st day after the Closing
Date or the 76th day after the expiration of the Prescribed Time Period, as
the case may be, such Penalty Amounts rate increasing by an additional
0.25% per annum at the beginning of each subsequent 90-day period; and
(iii) if either (A) the Company and the Guarantors have not exchanged
Exchange Securities for all Securities validly tendered in accordance with
the terms of the Exchange Offer on or prior to 180 days after the Closing
Date, or (B) if applicable, a Shelf Registration Statement has been
declared effective and such Shelf Registration Statement ceases to be
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<PAGE>
effective prior to the end of the Effective Period, or such shorter period
that will terminate when all of the Securities covered by the Shelf
Registration Statement have been sold pursuant to the Shelf Registration
Statement, then, subject to certain exceptions, Penalty Amounts shall be
accrued on the Notes over and above the stated payment rates at a rate of
0.25% per annum for the first 90 days immediately following (x) the 181st
day after the Closing Date in the case of (A) above or (y) the day such
Shelf Registration Statement ceases to be effective in the case of (B)
above, such Penalty Amounts rate increasing by an additional 0.25% per
annum at the beginning of each subsequent 90-day period;
provided, however, that the Penalty Amounts rate on any of the applicable Notes
- -------- -------
may not exceed 1.0% per annum; and provided further, that (1) upon the filing of
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the Exchange Offer Registration Statement or a Shelf Registration Statement (in
the case of clause (i) above), (2) upon the effectiveness of the Exchange Offer
Registration Statement or a Shelf Registration Statement (in the case of clause
(ii) above), or (3) upon the exchange of Exchange Securities for all Securities
tendered in the Exchange Offer or upon the effectiveness of the Shelf
Registration Statement which had ceased to remain effective prior to the end of
the Effective Period (in the case of clause (iii) above), Penalty Amounts as a
result of such clause (i), (ii) or (iii) shall cease to accrue.
Any Penalty Amounts due pursuant to clause (i), (ii) or (iii) above will be
payable in cash on the various payment dates related to the Notes. The Penalty
Amounts will be determined by multiplying the applicable Penalty Amounts rate by
the principal amount of the Notes multiplied by a fraction, the numerator of
which is the number of days such Penalty Amounts rate was applicable during such
period, and the denominator of which is 360.
If the Company and the Guarantors effect the Exchange Offer, the Company
and the Guarantors will be entitled to close the Exchange Offer provided that
they have accepted all Registrable Securities theretofore validly tendered in
accordance with the terms of the Exchange Offer. Registrable Securities not
tendered in the Exchange Offer shall bear interest at the same rate as in effect
at the time of issuance of the Registrable Securities.
(e) Without limiting the remedies available to the Initial Purchasers
and the Holders, the Company and the Guarantors acknowledge that any failure by
the Company and the Guarantors to comply with their obligations under Section
2(a) and Section 2(b) hereof may result in material irreparable injury to the
Holders for which there is no adequate remedy at law, that it will not be
possible to measure damage for such injuries precisely and that, in the event of
any such failure, the Initial Purchasers or any Holder may seek to obtain such
relief as may be required to specifically enforce the Company's and the
Guarantors' obligations under Section 2(a) and Section 2(b) hereof.
3. Registration Procedures.
-----------------------
In connection with the obligations of the Company and the
Guarantors with respect to the Registration Statements pursuant to Section 2(a)
and Section 2(b) hereof, the Company and the Guarantors shall as promptly as
practicable:
(a) prepare and file with the Commission a Registration Statement on
the appropriate form under the Securities Act, which form shall (x) be selected
by the Company and the
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<PAGE>
Guarantors, (y) in the case of a Shelf Registration, be available for the sale
of the Registrable Securities by the selling Holders thereof and (z) comply as
to form in all material respects with the requirements of the applicable form
and include all financial statements required by the Commission to be filed
therewith or incorporated by reference therein, as the case may be, and use
their best efforts to cause such Registration Statement to become effective and
remain effective as promptly as practicable in accordance with Section 2 hereof;
(b) prepare and file with the Commission such amendments and post-
effective amendments to each Registration Statement as may be necessary to keep
such Registration Statement effective for the applicable period and cause each
Prospectus to be supplemented by any required prospectus supplement and, as so
supplemented, to be filed pursuant to Rule 424 under the Securities Act or, in
the case of a Shelf Registration, file, or cause to be filed, promptly all
reports required to be filed pursuant to Section 13(a), 13(c), 14 or 15(d) of
the Exchange Act required to be incorporated by reference therein; and keep each
Prospectus current during the period described under Section 4(3) and Rule 174
under the Securities Act that is applicable to transactions by brokers or
dealers with respect to the Registrable Securities or Exchange Securities; the
Company shall be deemed not to have used its best efforts to keep a Registration
Statement effective during the applicable period if it voluntarily takes any
action that would result in selling Holders of the Registrable Securities
covered thereby seeking to sell Exchange Securities not being able to sell such
Registrable Securities or such Exchange Securities during that period unless
such action is required by applicable law;
(c) in the case of a Shelf Registration, furnish to each Holder of
Registrable Securities to which such Shelf Registration Statement relates, to
counsel for the Initial Purchasers and to counsel for the Holders, without
charge, one conformed copy of the Shelf Registration Statement (and any post-
effective amendment thereto) and exhibits thereto and as many copies of each
Prospectus, including each preliminary Prospectus and any amendment or
supplement thereto, reasonably requested to facilitate the public sale or other
disposition of the Registrable Securities; and the Company's and the Guarantors'
consent to the use of such Prospectus and any amendment or supplement thereto in
accordance with applicable law by each of the selling Holders of Registrable
Securities and underwriters or agents, if any, and dealers, if any, in each case
in connection with the offering and sale of the Registrable Securities covered
by and in the manner described in such Prospectus or any amendment or supplement
thereto in accordance with applicable law;
(d) use their best efforts (i) to register or qualify the Registrable
Securities under all applicable state securities or blue sky laws of such
jurisdictions as any Holder of Registrable Securities covered by a Registration
Statement shall reasonably request in writing by the time the applicable
Registration Statement is declared effective by the Commission; provided that
--------
where Exchange Notes held or Registrable Notes are offered other than through an
underwritten offering, the Company agrees to cause its counsel to perform blue
sky investigations and file registrations and qualifications required to be
filed pursuant to this Section 3(d), (ii) keep such registrations or
qualifications in effect and comply with such laws so as to permit the
continuance of offers, sales and dealings therein in such jurisdictions during
the period the Shelf Registration Statement is required to remain effective
under Section 2(b) above and for so long as may be necessary to enable any such
Holder, agent or underwriter to complete its distribution of the Securities
pursuant to such Registration Statement but in no event longer than two years
and (iii) to cooperate with such Holders and each underwriter, if any, in
connection with any filings required to be made with the NASD and do any and
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<PAGE>
all other acts and things which may be reasonably necessary or advisable to
enable such Holder to consummate the disposition in each such jurisdiction of
such Registrable Securities owned by such Holder; provided, however, that the
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Company and the Guarantors shall not be required to (A) qualify to do business
as foreign corporations or as dealers in securities in any jurisdiction where
they would not otherwise be required to qualify but for this Section 3(d), (B)
file any general consent to service of process or (C) subject themselves to
taxation in excess of a nominal dollar amount in any such jurisdiction if they
are not so subject;
(e) in the case of a Shelf Registration and in case a Participating
Broker-Dealer is required to deliver a Prospectus contained in an Exchange
Registration Statement under the Securities Act ("PROSPECTUS DELIVERY
REQUIREMENT SITUATION"), notify each Holder of Registrable Securities, counsel
for the Holders and for the Initial Purchasers (or, if applicable, separate
counsel for the Holders) and, if requested by such Persons, confirm such advice
in writing, (i) when the Registration Statement has become effective and when
any post-effective amendment thereto has been filed and becomes effective, (ii)
of any request by the Commission or any state securities authority for
amendments and supplements to the Registration Statement and Prospectus or for
additional information after the Registration Statement has become effective,
(iii) of the issuance by the Commission or any state securities authority of any
stop order suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose, (iv) if the Company or any
Guarantor receives any notification with respect to the suspension of the
qualification of the Registrable Securities for sale in any jurisdiction or the
initiation of any proceeding for such purpose, (v) of the happening of any event
during the period a Registration Statement is effective which makes any
statement made in such Registration Statement or the related Prospectus untrue
in any material respect or which requires the making of any changes in such
Registration Statement or any document incorporated by reference therein in
order to make the statements therein not misleading or which requires the making
of any changes in the Prospectus or documents incorporated by reference therein
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading and (vi) of any determination by the
Company and the Guarantors that a post-effective amendment to the Registration
Statement would be appropriate;
(f) use their best efforts to obtain the withdrawal of any order
suspending the effectiveness of a Registration Statement at the earliest
possible moment and provide prompt notice to each Holder of the withdrawal of
any such order;
(g) in the case of a Shelf Registration, cooperate with the selling
Holders of Registrable Securities and managing underwriters, if any, to
facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be sold and not bearing any restrictive legends
(unless required by applicable securities laws) and enable such Registrable
Securities to be in such denominations (consistent with the provisions of the
Indenture) and registered in such names as the selling Holders or managing
underwriters, if any, may reasonably request;
(h) in the case of a Shelf Registration or a Prospectus Delivery
Requirement Situation, upon the occurrence of any event contemplated by Section
3(e)(v) or (vi) hereof, use their best efforts to prepare a supplement or post-
effective amendment to the Registration Statement or a supplement to the related
Prospectus or any document incorporated therein by reference or file any other
required document so that, as thereafter delivered to the purchasers of the
Registrable Securities,
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<PAGE>
such Prospectus will not contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading; provided that the
--------
Company and the Guarantors agree to notify the Holders to suspend use of the
Prospectus as promptly as practicable after the occurrence of such an event;
(i) a reasonable time prior to the filing of any Registration
Statement, any Prospectus, any amendment to a Registration Statement or
amendment or supplement to a Prospectus or any document incorporated by
reference therein, provide copies of such document to the Initial Purchasers and
their counsel (and, in the case of a Shelf Registration Statement, counsel for
the Holders) and make such of the representatives of the Company and the
Guarantors as shall be reasonably requested by the Initial Purchasers or their
counsel (and, in the case of a Shelf Registration Statement, counsel for the
Holders) available for discussion of such document, and shall not at any time
file or make any amendment to the Registration Statement, any Prospectus or any
amendment of or supplement to a Registration Statement or a Prospectus, of which
the Initial Purchasers and their counsel (and, in the case of a Shelf
Registration Statement, counsel for the Holders) shall not have previously been
advised and furnished a copy or to which the Initial Purchasers or their counsel
(and, in the case of a Shelf Registration Statement, counsel for the Holders)
shall reasonably object;
(j) obtain a CUSIP number for all Exchange Securities or Registrable
Securities (if applicable), as the case may be, and provide the Trustee with
printed certificates for the Registrable Notes in a form eligible for deposit
with the Depository Trust Company, in each case not later than the Effective
Time;
(k) cause the Indenture to be qualified under the Trust Indenture Act
in connection with the registration of the applicable Exchange Securities or
applicable Registrable Securities, as the case may be, cooperate with the
Trustee and the Holders to effect such changes to the Indenture as may be
required for the Indenture to be so qualified in accordance with the terms of
the Trust Indenture Act and execute, and use their best efforts to cause the
Trustee to execute, all documents as may be required to effect such changes and
all other forms and documents required to be filed with the Commission to enable
the Indenture to be so qualified in a timely manner;
(l) in the case of a Shelf Registration or Prospectus Delivery
Requirement Situation, make reasonably available for inspection by one
representative of the Holders of the Registrable Securities, counsel for the
Holders and accountants designated by the Holders and reasonably acceptable to
the Company and the Guarantors, at reasonable times and in a reasonable manner
and subject to the execution of customary confidentiality agreements, all
financial and other records, pertinent documents and properties of the Company
and the Guarantors, and cause the respective officers, directors and employees
of the Company and the Guarantors to supply all information reasonably
requested, and as is customary for similar due diligence examinations, by any
such representative, attorney or accountant in connection with a Shelf
Registration Statement;
(m) if requested by any Holder of Registrable Securities covered by a
Registration Statement, (i) promptly include in a Prospectus supplement or post-
effective amendment or document incorporated by reference in such Prospectus
such information with respect to such Holder as such Holder requests to be
included therein, (ii) make all required filings of such Prospectus supplement
or such post-effective amendment as soon as the Company and the Guarantors have
received notification
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<PAGE>
of the matters to be included in such filing and (iii) supplement or make
amendments to such Registration Statement; and
(n) in the case of a Shelf Registration or an Exchange Offer
Registration, if the Initial Purchasers on behalf of the Holders shall so
request, enter into such customary agreements and take all such other reasonable
actions in connection therewith (including, those reasonably requested by
counsel for the Holders) in order to expedite or facilitate the disposition of
such Registrable Securities and in such connection, (i) to the extent possible,
make such representations and warranties to the Holders of such Registrable
Securities and underwriters, if any, with respect to the business of the
Company, the Guarantors and their respective subsidiaries, the Registration
Statement, the Prospectus and documents deemed incorporated by reference, if
any, in each case, in form, substance and scope as are customarily made by
issuers to underwriters in underwritten offerings and confirm the same if and
when requested, (ii) obtain opinions of counsel to the Company and the
Guarantors (which counsel and opinions, in form, scope and substance, shall be
reasonably satisfactory to counsel to the Holders) and updates, in each case,
addressed to each selling Holder of Registrable Securities, or underwriters, if
any, covering the matters customarily covered in opinions requested in
underwritten offerings, and such other matters as may reasonably be requested,
(iii) obtain "cold comfort" letters from the independent certified public
accountants of the Company and the Guarantors (and, if necessary, any other
certified public accountant of any subsidiary of the Company, any Guarantor or
any business acquired by the Company or Guarantor for which financial statements
and financial data are or are required to be included or incorporated by
reference in the Registration Statement) and updates, in each case, addressed to
each selling Holder of Registrable Securities, or underwriters, if any, such
letters to be in customary form and covering matters of the type customarily
covered in "cold comfort" letters in connection with underwritten offerings,
(iv) deliver such documents and certificates as may be reasonably requested by
counsel for the Holders or underwriters, if any, to evidence the continued
validity of the representations and warranties of the Company and the Guarantors
made pursuant to clause (i) above and to evidence compliance with any customary
conditions in an underwriting agreement and (v) if an underwriting agreement is
entered into, the same shall contain indemnification provisions and procedures
no less favorable than those set forth in Section 5 hereof (or such other
provisions and procedures acceptable to Holders of a majority in aggregate
principal amount of Registrable Securities covered by such Registration
Statement and the managing underwriters or agent) with respect to all parties to
be indemnified pursuant to Section 5 hereof and the underwriters.
(o) comply, as to all matters within the Company's and the Guarantors'
control, with the provisions of the Securities Act with respect to the
disposition of all of the Registrable Securities covered by such Registration
Statement in accordance with the intended methods of disposition by the Holders
thereof provided for in such Registration Statement;
(p) use their best efforts to obtain the consent or approval of each
governmental agency or authority, whether federal, state or local, which may be
required to be obtained by the Company and the Guarantors to effect the Shelf
Registration or the offering or sale of Securities in connection therewith or to
enable the selling Holder or Holders to offer, or to consummate the disposition
of, their Registrable Securities;
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<PAGE>
(q) notify in writing each Holder of Registrable Securities of any
proposal by the Company and the Guarantors to amend or waive any provision of
this Agreement pursuant to Section 7(b) hereof and of any amendment or waiver
effected pursuant thereto, each of which notices shall contain the text of the
amendment or waiver proposed or effected, as the case may be;
(r) in the event that any broker-dealer registered under the Exchange
Act shall underwrite any Registrable Securities or participate as a member of an
underwriting syndicate or selling group or "assist in the distribution" (within
the meaning of the Conduct Rules and the By-Laws of the NASD or any successor
thereto, as amended from time to time) thereof, whether as a Holder of such
Registrable Securities or as an underwriter, a placement or sales agent or a
broker or dealer in respect thereof, or otherwise, assist such broker-dealer in
complying with the requirements of such Rules and By-Laws, including by (A) if
such Conduct Rules or By-Laws shall so require, permitting a "qualified
independent underwriter" (as defined in such Conduct Rules or By-Laws (or any
successor thereto)) to participate in the preparation of the Registration
Statement relating to such Registrable Securities, to exercise usual standards
of due diligence in respect thereto and, if any portion of the offering
contemplated by such Registration Statement is an underwritten offering or is
made through a placement or sales agent, to recommend the yield of such
Registrable Securities, (B) indemnifying any such qualified independent
underwriter to the extent of the indemnification of underwriters provided in
Section 5 hereof and (C) providing such information to such broker-dealer as may
be required in order for such broker-dealer to comply with the requirements of
the Conduct Rules or By-Laws of the NASD;
(s) make generally available to its security holders as soon as
practicable but in any event not later than eighteen months after the effective
date of such Registration Statement, an earnings statement of the Company and
its subsidiaries complying with Section 11(a) of the Securities Act (including
Rule 158 thereunder);
(t) Upon consummation of an Exchange Offer, obtain an opinion of
counsel to the Company addressed to the Trustee for the benefit of all Holders
of Registrable Securities participating in the Exchange Offer and which includes
an opinion that (i) the Company and the Guarantors have duly authorized,
executed and delivered the Exchange Securities and the related indenture, and
(ii) each of the Exchange Securities and related indenture constitutes a legal,
valid and binding obligation of the Company and the Guarantors, enforceable
against the Company and the Guarantors in accordance with its respective terms
(with customary exceptions).
(u) If an Exchange Offer is to be consummated, upon delivery of the
Registrable Securities by Holders to the Company (or to such other Person as
directed by the issuers) in exchange for the Exchange Securities the Company
shall mark, or cause to be marked, on such Registrable Securities that such
Registrable Securities are being cancelled in exchange for the Exchange Notes;
in no event shall such Registrable Securities be marked as paid or otherwise
satisfied.
4. Participation of Broker-Dealers in Exchange Offer.
-------------------------------------------------
(a) Each of the Company and the Guarantors understands that the staff
of the Commission has taken the position that any broker-dealer that receives
Exchange Securities for its own account in the Exchange Offer in exchange for
Securities that were acquired by such broker-dealer as
-16-
<PAGE>
a result of market-making or other trading activities (a "PARTICIPATING BROKER-
DEALER"), may be deemed to be an "UNDERWRITER" within the meaning of the
Securities Act in connection with any resale of such Exchange Securities and,
therefore, must deliver a prospectus meeting the requirements of the Securities
Act in connection with any resales of the Exchange Securities received by it in
the Exchange Offer.
Each of the Company and the Guarantors understands that it is the staffs
position that if the Prospectus contained in the Exchange Offer Registration
Statement includes a plan of distribution containing a statement to the above
effect and the means by which Participating Broker-Dealers may resell the
Exchange Securities, without naming the Participating Broker-Dealers or
specifying the amount of Exchange Securities owned by them, such Prospectus may
be delivered by Participating Broker-Dealers to satisfy their prospectus
delivery obligations under the Securities Act in connection with resales of
Exchange Securities for their own accounts, so long as the Prospectus otherwise
meets the requirements of the Securities Act.
(b) In light of the above, notwithstanding the other provisions of
this Agreement, the Company and the Guarantors agree: to cause the Exchange
Offer Registration Statement to remain effective for a period 180 days after the
Offer Termination Date (or such earlier date as each Participating Broker-Dealer
shall have notified the Company and the Guarantors in writing that such
Participating Broker-Dealer has resold all such Exchange Securities received in
the Exchange Offer) and shall amend or supplement the Prospectus or document
incorporated by reference therein, as the case may be, contained in the Exchange
Offer Registration Statement, as would otherwise be contemplated by Section 3(h)
for such a period, and Participating Broker-Dealers shall not be authorized by
the Company and the Guarantors to deliver and shall not deliver such Prospectus
after such period in connection with the resales contemplated by this Section 4.
(c) The Initial Purchasers shall have no liability to the Company, the
Guarantors or any Holder for costs and expenses of the Exchange Offer
Registration with respect to any request that they make pursuant to Section 4(b)
above.
5. Indemnification and Contribution.
--------------------------------
(a) The Company and the Guarantors, jointly and severally, agree to
indemnify and hold harmless the Initial Purchasers, each Holder and each Person,
if any who controls the Initial Purchasers or any Holder within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange Act, from
and against any and all losses, claims, damages, liabilities and expenses
(including the reasonable fees and expenses of counsel and other expenses in
connection with investigating, defending or settling such action or claim)
arising out of or based upon any untrue statement or alleged untrue statement of
a material fact contained in any Registration Statement (or any amendment or
supplement thereto) pursuant to which Exchange Securities or Registrable
Securities were registered under the Securities Act (including all documents
incorporated therein by reference) or arising out of or based upon any omissions
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, or arising
out of or based upon any untrue statement or alleged untrue statement of a
material fact contained in any Prospectus (as amended or supplemented if the
Company and the Guarantors shall have furnished any amendments or supplements
thereto), or arising out of or based upon any omission or alleged
-17-
<PAGE>
omission to state therein a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, EXCEPT insofar as such losses, claims, damages, liabilities or
expenses arise out of or are based upon any untrue statement or omission or
alleged untrue statement or omission which has been made therein or omitted
therefrom in reliance upon and in conformity with the information furnished in
writing to the Company and the Guarantors by or on behalf of any Holder
expressly for use in connection therewith ("HOLDERS' INFORMATION"); provided,
--------
however that the indemnification contained in this paragraph (a) with respect to
- -------
any preliminary Prospectus shall not inure to the benefit of the Holders (or to
the benefit of any Person controlling any Holder) on account of any such loss,
claim, damage, liability or expense arising from the sale of such Registrable
Securities or Exchange Securities by the Holders to any Person if a copy of the
final Prospectus shall not have been delivered or sent to such Person at or
prior to written confirmation of such sale, and the untrue statement or alleged
untrue statement or omission or alleged omission of a material fact contained in
the preliminary Prospectus was corrected in the final Prospectus, provided that
--------
the Company and the Guarantors have delivered the final Prospectus to the
Holders in requisite quantity on a timely basis to permit delivering and
sending. The foregoing indemnity agreement shall be in addition to any
liability which the Company and the Guarantors may otherwise have.
(b) If any action, suit or proceeding shall be brought against the
Holders or any Person controlling the Holders in respect of which indemnity may
be sought against the Company and the Guarantors, such Holders or such
controlling Person shall promptly notify the parties against whom
indemnification is being sought (the "INDEMNIFYING PARTIES"), and such
indemnifying parties shall assume the defense thereof, including the employment
of counsel and payment of all fees and expenses. Such Holders or any such
controlling Person shall have the right to employ separate counsel in any such
action, suit or proceeding and to participate in the defense thereof, but the
fees and expenses of such counsel shall be at the expense of such Holders or
such controlling Person unless (i) the indemnifying parties have agreed in
writing to pay such fees and expenses, (ii) the indemnifying parties have failed
to assume the defense and employ counsel, or (iii) the named parties to any such
action, suit or proceeding (including any impleaded parties) include both such
Holders or such controlling Person and the indemnifying parties and such Holders
or such controlling Person shall have been advised by its counsel that
representation of such indemnified party and any indemnifying party by the same
counsel would be inappropriate under applicable standards of professional
conduct (whether or not such representation by the same counsel has been
proposed) due to actual or potential differing interests between them (in which
case the indemnifying party shall not have the right to assume the defense of
such action, suit or proceeding on behalf of such Holders or such controlling
Person). It is understood, however, that the indemnifying parties shall, in
connection with any one such action, suit or proceeding or separate but
substantially similar or related actions, suits or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of only one separate firm of
attorneys (in addition to any local counsel) at any time for such Holders and
controlling Persons not having actual or potential differing interests with such
Holder or among themselves, which firm shall be designated in writing by Furman
Selz, and that all such fees and expenses shall be reimbursed as they are
incurred. The indemnifying parties shall not be liable for any settlement of any
such action, suit or proceeding effected without their written consent, but if
settled with such written consent, or if there be a final judgment for the
plaintiff in any such action, suit or proceeding, the indemnifying parties agree
to indemnify and hold harmless any Holders, to the extent provided in the
preceding paragraph, and any
-18-
<PAGE>
such controlling Person from and against any loss, claim, damage, liability or
expense by reason of such settlement or judgment.
(c) Each Holder agrees, severally and not jointly, to indemnify and
hold harmless each of the Company, the Guarantors, each of their respective
directors and officers, and any Person who controls the Company or any of the
Guarantors within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act, to the same extent as the foregoing indemnity from the
Company and the Guarantors to each Holder, but only with respect to the Holders'
Information. If any action, suit or proceeding shall be brought against the
Company, any of the Guarantors, any of their respective directors or officers,
or any such controlling Persons based on any Registration Statement (or any
amendment thereto) or any Prospectus (or any amendment or supplement thereto),
and in respect of which indemnity may be sought against any Holder pursuant to
this paragraph (c), such Holder shall have the rights and duties given to the
Company and the Guarantors by paragraph (b) above (except that if the Company
and the Guarantors shall have assumed the defense thereof such Holder shall not
be required to do so, but may employ separate counsel therein and participate in
the defense thereof, but the fees and expenses of such counsel shall be at such
Holder's expense), and the Company, the Guarantors, their respective directors
and officers, and any such controlling Persons shall have the rights and duties
given to the Holders by paragraph (b) above. The foregoing indemnity agreement
shall be in addition to any liability which any Holders may otherwise have.
(d) If the indemnification provided for in this Section 5 is
unavailable to an indemnified party under paragraphs (a) or (c) hereof in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then an indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or expenses (i) in such
proportion as is appropriate to reflect the relative benefits of the Company and
the Guarantors on the one hand, the Holders on another hand, and the Initial
Purchasers on another hand, from the offering of the Securities or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company and
the Guarantors on the one hand, the Holders on another hand, and the Initial
Purchasers on another hand, in connection with the statements or omissions that
resulted in such losses, claims, damages, liabilities or expenses, as well as
any other relevant equitable considerations. The relative benefits received by
the Company and the Guarantors from the offering of the Securities included in
any Registration Statement shall in each case be deemed to include the proceeds
received by the Company in connection with the offering of the Securities
pursuant to the Placement Agreement. The parties hereto agree that any
underwriting discount or commission or reimbursement of fees paid to the Initial
Purchasers pursuant to the Placement Agreement shall not be deemed to be a
benefit received by the Initial Purchasers in connection with the offering of
the Securities included in any Registration Statement. The relative fault of the
Company and the Guarantors on the one hand, the Holders on another hand, and the
Initial Purchasers on another hand, shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company and the Guarantors on the one hand, by the
Holders on another hand, and the Initial Purchasers on another hand, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
-19-
<PAGE>
(e) The Company, the Guarantors and each Holder agree that it would
not be just or equitable if contribution pursuant to this Section 5 were
determined by pro rata allocation or by any other method of allocation that does
not take account of the equitable considerations referred to in paragraph (d)
above. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages, liabilities and expenses referred to in paragraph (d)
above shall be deemed to include, subject to the limitations set forth above,
any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim. Not
withstanding the provisions of this Section 5, no Holder shall be required to
indemnify or contribute any amount in excess of the amount by which the total
price at which Registrable Securities were sold by such Holder exceeds the
amount of any damages that such Holder has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation. The Holders'
obligations to contribute pursuant to this Section 5 are several in proportion
to the aggregate principal amount of Securities purchased by such Holder and not
joint.
(f) No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
action, suit or proceeding in respect of which any indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement (i) includes an unconditional release
of such indemnified party from all liability or claims that are the subject
matter of such action, suit or proceeding and (ii) does not include a statement
as to, or an admission of, fault, culpability or a failure to act by or on
behalf of any indemnified party.
(g) Any losses, claims, damages, liabilities or expenses (including
counsel fees pursuant to paragraph (b) above) for which an indemnified party is
entitled to indemnification or contribution under this Section 5 shall be paid
by the indemnifying party to the indemnified party as such losses, claims,
damages, liabilities or expenses are incurred. The indemnity and contribution
agreements contained in this Section 5 shall remain operative and in full force
and effect, regardless of (i) any investigation made by or on behalf of any
Holder or any Person controlling any Holder, the Company's or any Guarantor's
directors or officers or any Person controlling the Company or any Guarantor,
(ii) acceptance of any Exchange Securities and (iii) any sale of Registrable
Securities pursuant to a Shelf Registration Statement.
6. Underwritten Offerings, Rule 144.
--------------------------------
(a) Selection of Underwriters. If any of the Registrable Securities
-------------------------
covered by the Shelf Registration are to be sold pursuant to an underwritten
offering, the managing underwriter or underwriters thereof shall be designated
by the Holders of at least a majority in aggregate principal amount of the
Registrable Securities to be included in such offering, provided that such
designated managing underwriter or underwriters is or are reasonably acceptable
to the Company.
(b) Participation by Holders. Each Holder of Registrable Securities
------------------------
hereby agrees with each other such Holder that no such Holder may participate in
any underwritten offering hereunder unless such Holder (i) agrees to sell such
Holder's Registrable Securities on the basis provided in any underwriting
arrangements approved by the Persons entitled hereunder to approve
-20-
<PAGE>
such arrangements and (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.
(c) Rule 144. For so long as the Company is subject to the reporting
--------
requirements of Section 13 or 15 of the Exchange Act, the Company covenants to
the Holders of Registrable Securities that the Company shall timely file the
reports required to be filed by it under the Exchange Act or the Securities Act
(including the reports under Sections 13 and 15(d) of the Exchange Act referred
to in subparagraph (c)(1) of Rule 144 adopted by the Commission under the
Securities Act) and the rules and regulations adopted by the Commission
thereunder, that if it ceases to be so required to file such reports, it will
upon the request of any Holder of Registrable Securities (i) make publicly
available such information as is necessary to permit sales pursuant to Rule 144
under the Securities Act, (ii) deliver such information to a prospective
purchaser as is necessary to permit sales pursuant to Rule 144 under the
Securities Act and it will take such further action as any Holder of Registrable
Securities may reasonably request, and shall take such further action as any
Holder of Registrable Securities may reasonably request, all to the extent
required from time to time to enable such Holder to sell Registrable Securities
without registration under the Securities Act within the limitations of the
exemption provided by Rule 144 under the Securities Act, as such Rule may be
amended from time to time, or any similar or successor rule or regulation
hereafter adopted by the Commission. Upon the request of any Holder of
Registrable Securities in connection with that Holder's sale pursuant to Rule
144, the Company shall deliver to such Holder a written statement as to whether
it has complied with such requirements.
7. Miscellaneous.
-------------
(a) No Inconsistent Agreements. The Company and the Guarantors have
--------------------------
not entered into, and on or after the date of this Agreement will not enter
into, any agreement which is inconsistent with the rights granted to the Holders
of Registrable Securities in this Agreement or otherwise conflicts with the
provisions hereof. The rights granted to the Holders hereunder do not in any way
conflict with and are not inconsistent with the rights granted to the holders of
the Company's other issued and outstanding securities under any such agreements.
(b) Entire Agreement, Amendments and Waivers. This Agreement and the
----------------------------------------
other writings referred to herein or delivered pursuant hereto which form a part
hereof contain the entire understanding of the parties with respect to its
subject matter. This Agreement supersedes all prior agreements and
understandings between the parties with respect to its subject matter. The
provisions of this Agreement, including the provisions of this sentence, may not
be amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given unless the Company and the Guarantors
have obtained the written consent of the Majority Holders; provided, however,
-------- -------
that no departure from the provisions of Section 5 hereof shall be effective as
against any Holder of Registrable Securities unless consented to in writing by
such Holder.
(c) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered first-
class mail, telex, telecopier, or any courier guaranteeing overnight delivery
(i) if to a Holder, at the most current address given by such Holder to the
Company and the Guarantors by means of a notice given in accordance with the
-21-
<PAGE>
provisions of this Section 7(c), which address initially is, with respect to the
Initial Purchasers, the address set forth in the Placement Agreement; and (ii)
if to the Company or the Guarantors at the Company's address set forth in the
Placement Agreement and thereafter at such other address, notice of which is
given in accordance with the provisions of this Section 7(c).
All such notices and communications shall be deemed to have been duly given
at the time delivered, if personally delivered; five Business Days after being
deposited in the mail, postage pre-paid, if mailed; when answered back, if
telexed; when receipt is acknowledged, if telecopied; and on the next Business
Day if timely delivered to an air courier guaranteeing overnight delivery.
Copies of all such notices, demands, or other communications shall be
concurrently delivered by the Person giving the same to the Trustee, at the
address specified in the Indenture.
(d) Successors and Assigns. This Agreement shall inure to the benefit
----------------------
of and be binding upon the successors, assigns and transferees of each of the
parties, including, without limitation and without the need for an express
assignment or assumption, subsequent Holders; provided that nothing herein shall
be deemed to permit any assignment, transfer or other disposition of Registrable
Securities in violation of the terms of the Placement Agreement. If any
transferees of any Holder shall acquire Registrable Securities, in any manner,
whether by operation of law or otherwise, such Registrable Securities, shall be
held subject to all of the terms of this Agreement, and by taking and holding
such Registrable Securities such Person shall be conclusively deemed to have
agreed to be bound by and to perform all of the terms and provisions of this
Agreement and such Person shall be entitled to receive the benefits hereof. The
Initial Purchasers shall have no liability or obligation to the Company or the
Guarantors with respect to any failure by a Holder (other than the Initial
Purchasers) to comply with, or any breach by any Holder of, the obligations of
such Holder under this Agreement.
(e) Third Party Beneficiary. The Holders shall be third party
-----------------------
beneficiaries to the agreements made hereunder between the Company, the
Guarantors and the Initial Purchasers and shall have the right to enforce such
agreements directly to the extent they deem such enforcement necessary or
advisable to protect their rights hereunder.
(f) Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(g) Headings. The headings in this Agreement are for convenience of
--------
reference only and shall not limit or otherwise affect the meaning hereof.
(h) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
-------------
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS
MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT.
-22-
<PAGE>
(i) Severability. In the event that one or more of the provisions
------------
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
-23-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
Salem Communications Corporation, a California
corporation
By: /s/ Edward G. Atsinger, III
----------------------------
Edward G. Atsinger, III
President and Chief Executive Officer
ATEP Radio, Inc.,
Bison Media, Inc.,
Caron Broadcasting, Inc.,
Common Ground Broadcasting, Inc.,
Golden Gate Broadcasting Company, Inc.,
Inland Radio, Inc.,
Inspiration Media, Inc.,
Inspiration Media of Texas, Inc.,
New England Continental Media, Inc.,
New Inspiration Broadcasting Company, Inc.,
Oasis Radio, Inc.,
Pennsylvania Media Associates, Inc.,
Radio 1210, Inc.,
Salem Communications Corporation, a Delaware
corporation
Salem Media Corporation,
Salem Media of California, Inc.,
Salem Media of Colorado, Inc.,
Salem Media of Louisiana, Inc.,
Salem Media of Ohio, Inc.,
Salem Media of Oregon, Inc.,
Salem Media of Pennsylvania, Inc.,
Salem Media of Texas, Inc.,
Salem Music Network, Inc.,
Salem Radio Network Incorporated.,
Salem Radio Representatives, Inc.,
South Texas Broadcasting, Inc.,
SRN News Network, Inc.,
and
Vista Broadcasting, Inc.,
By: /s/ Edward G. Atsinger, III
----------------------------
Edward G. Atsinger, III
President and Chief Executive Officer
-24-
<PAGE>
Beltway Media Partners
By: Salem Communications Corporation, a
California corporation, its general partner
By: /s/ Edward G. Atsinger, III
----------------------------
Edward G. Atsinger, III
President and Chief Executive Officer
By: Golden Gate Broadcasting Company, Inc., its
general partner
By: /s/ Edward G. Atsinger, III
----------------------------
Edward G. Atsinger, III
President and Chief Executive Officer
By: New Inspiration Broadcasting Company, Inc.,
its general partner
By: /s/ Edward G. Atsinger, III
----------------------------
Edward G. Atsinger, III
President and Chief Executive Officer
Confirmed as of the date first
above mentioned.
FURMAN SELZ LLC
SMITH BARNEY INC.
BANCBOSTON SECURITIES INC.
BNY CAPITAL MARKETS, INC.
By: Furman Selz LLC
By: /s/ Harlan J. Wakoff
---------------------
Harlan Wakoff
Vice President
-25-
<PAGE>
LETTER OF TRANSMITTAL
OFFER FOR ALL OUTSTANDING
PRIVATELY PLACED 9 1/2% SERIES A SENIOR SUBORDINATED NOTES DUE 2007
IN EXCHANGE FOR
9 1/2% SERIES B SENIOR SUBORDINATED NOTES DUE 2007
OF
SALEM COMMUNICATIONS CORPORATION
THIS EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON , 1998, UNLESS EXTENDED
The Exchange Agent is The Bank of New York, whose mailing address, facsimile
number and telephone number are as follows:
(INSURED OR REGISTERED RECOMMENDED):
<TABLE>
<S> <C>
By Hand Delivery: By Mail or Overnight Express:
The Bank of New York The Bank of New York
101 Barclay Street 101 Barclay Street - Floor 7E
Corporate Trust Services Window New York, New York 10286
Ground Level Attn: [ ]
New York, New York 10286 Reorganization Department
Attn: [ ]
Reorganization Department
</TABLE>
By Facsimile:
(212) 815-6339
By Telephone:
(212) 815-[TBD]
DESCRIPTION OF SECURITIES TENDERED
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
NAME AND ADDRESS OF REGISTERED HOLDER AS IT
APPEARS ON THE PRIVATELY PLACED 9 1/2% SERIES A CERTIFICATE NUMBER(S) OF PRINCIPAL AMOUNT OF
SENIOR SUBORDINATED NOTES DUE 2007 ("OLD NOTES") OLD NOTES TRANSMITTED OLD NOTES TRANSMITTED
- ------------------------------------------------------------------------------------------------------------------
---------------------------------------
---------------------------------------
---------------------------------------
---------------------------------------
---------------------------------------
</TABLE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW. PLEASE READ THE ACCOMPANYING
INSTRUCTIONS CAREFULLY.
<PAGE>
Ladies and Gentlemen:
1. The undersigned hereby agrees to exchange the aggregate principal amount
of privately placed 9 1/2% Series A Senior Subordinated Notes Due 2007 (the
"Old Notes") for a like principal amount of 9 1/2% Series B Senior
Subordinated Notes Due 2007 (the "Notes") of the Company, upon the terms and
subject to the conditions contained in the Registration Statement on Form S-4
filed by Salem Communications Corporation, a California corporation, with the
Securities and Exchange Commission (the "Registration Statement") and the
accompanying Prospectus dated , 1997 included therein (the
"Prospectus"), receipt of which is hereby acknowledged.
2. The undersigned hereby acknowledges and agrees that the Notes will bear
interest from and including September 25, 1997, the date of issuance of the
Old Notes. Accordingly, the undersigned will forgo accrued but unpaid interest
on his, her or its Old Notes that are exchanged for Notes from and including
September 25, 1997 but will receive such interest under the Notes.
3. The undersigned hereby represents and warrants that he, she or it has
full authority to tender the Old Notes described above. The undersigned will,
upon request, execute and deliver any additional documents deemed by the
Company to be necessary or desirable to complete the exchange of the Old
Notes.
4. The undersigned understands that the tender of the Old Notes pursuant to
all of the procedures set forth in the Prospectus will constitute an agreement
between the undersigned and the Company as to the terms and conditions set
forth in the Prospectus.
5. The undersigned hereby represents and warrants that the undersigned is
acquiring the Notes in the ordinary course of the business of the undersigned
and that the undersigned is not engaged in, and does not intend to engage in,
a distribution of the Notes.
6. If the undersigned is a broker-dealer, (i) it hereby represents and
warrants that it acquired the Old Notes for its own account as a result of
market-making activities or other trading activities and (ii) it hereby
acknowledges that it will deliver a prospectus meeting the requirements of the
Securities Act of 1933, as amended (the "Securities Act"), in connection with
any resale of the Notes received hereby. The acknowledgment contained in the
foregoing sentence shall not be deemed an admission that the undersigned is an
"underwriter" within the meaning of the Securities Act.
7. Any obligation of the undersigned hereunder shall be binding upon the
successors, assigns, executors, administrators, trustees in bankruptcy and
legal and personal representatives of the undersigned.
2
<PAGE>
SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS
(SEE INSTRUCTION 1)
To be completed ONLY IF the Notes are to be issued in the name of
someone other than the undersigned or are to be sent to someone other than
the undersigned or to the undersigned at an address other than that
provided above.
Issue to:
Name ______________________________________________________________________
(PLEASE PRINT)
Address ___________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
(INCLUDE ZIP CODE)
Mail to:
Name ______________________________________________________________________
(PLEASE PRINT)
Address ___________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
(INCLUDE ZIP CODE)
3
<PAGE>
SIGNATURE
___________________________________________________________________________
(NAME OF REGISTERED HOLDER)
By: _______________________________________________________________________
Name: _____________________________________________________________________
Title: ____________________________________________________________________
(Must be signed by registered holder exactly as name appears on Old
Notes. If signature is by trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation or other person acting in a
fiduciary or representative capacity, please set forth full title. See
Instruction 3.)
Address: __________________________________________________________________
Telephone No.: ____________________________________________________________
Taxpayer Identification No.: ______________________________________________
Signature Guaranteed By: __________________________________________________
(SEE INSTRUCTION 1)
Title: ____________________________________________________________________
Name of Institution: ______________________________________________________
Address: __________________________________________________________________
Date: _____________________________________________________________________
PLEASE READ THE INSTRUCTIONS BELOW, WHICH FORM A PART OF THIS LETTER OF
TRANSMITTAL.
4
<PAGE>
INSTRUCTIONS
1. GUARANTEE OF SIGNATURES. Signatures on this Letter of Transmittal must be
guaranteed by a firm that is a member of a registered national securities
exchange, a member of the National Association of Securities Dealers, Inc. or
by a commercial bank or trust company having an office in the United States
which is a member of a recognized Medallion Signature Program approved by the
Securities Transfer Association, Inc. (an "Eligible Institution") unless (i)
the "Special Issuance and Delivery Instructions" above have not been completed
or (ii) the Old Notes described above are tendered for the account of an
Eligible Institution.
2. DELIVERY OF LETTER OF TRANSMITTAL AND OLD NOTES. The Old Notes, together
with a properly completed and duly executed Letter of Transmittal (or a
facsimile thereof), should be mailed or delivered to the Exchange Agent at the
address set forth above.
THE METHOD OF DELIVERY OF OLD NOTES AND OTHER DOCUMENTS IS AT THE ELECTION
AND RISK OF THE RESPECTIVE HOLDER. IF DELIVERY IS BY MAIL, REGISTERED MAIL
(WITH RETURN RECEIPT), PROPERLY INSURED, IS SUGGESTED.
3. GUARANTEED DELIVERY PROCEDURES. Registered holders who wish to tender
their Old Notes and (i) whose Old Notes are not immediately available or (ii)
who cannot deliver their Old Notes, the Letter of Transmittal or any other
required documents to the Exchange Agent prior to the Expiration Date, may
effect a tender if:
(a) The tender is made through an Eligible Institution;
(b) Prior to the Expiration Date, the Exchange Agent receives from such
Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
setting forth the name and address of the registered holder of the Old
Notes, the certificate number or numbers of such Old Note(s) and the
principal amount of Old Notes tendered, stating that the tender is being
made thereby and guaranteeing that, within five New York Stock Exchange
trading days after the Expiration Date, the Letter of Transmittal (or
facsimile thereof) together with the certificate(s) representing the Old
Notes and any other documents required by the Letter of Transmittal will be
deposited by the Eligible Institution with the Exchange Agent; and
(c) Such properly completed and executed Letter of Transmittal (or
facsimile thereof), as well as the certificate(s) representing all tendered
Old Notes in proper form for transfer and all other documents required by
the Letter of Transmittal are received by the Exchange Agent within five
New York Stock Exchange trading days after the Expiration Date.
Upon request of the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to registered holders who wish to tender their Old Notes according to the
guaranteed delivery procedures set forth above.
4. SIGNATURES ON LETTER OF TRANSMITTAL, BOND POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by a person other than a registered
holder of any Old Notes, such Old Notes must be endorsed or accompanied by
appropriate bond powers, in either case signed exactly as the name or names of
the registered holder or holders appear on the Old Notes.
If this Letter of Transmittal or any Old Notes or bond power is signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
person should so indicate when signing, and, unless waived by the Company,
proper evidence satisfactory to the Company of their authority to so act must
be submitted.
5. EXCHANGE OF OLD NOTES ONLY. Only the above-described Old Notes may be
exchanged for Notes pursuant to the Exchange Offer.
6. MISCELLANEOUS. All questions as to the validity, form, eligibility
(including time of receipt), acceptance and withdrawal of tendered Old Notes
will be resolved by the Company, whose determination will be final and
5
<PAGE>
binding. The Company reserves the absolute right to reject any or all tenders
that are not in proper form or the acceptance of which would, in the opinion
of counsel for the Company, be unlawful. The Company also reserves the right
to waive any irregularities or conditions of tender as to particular Old
Notes. The Company's interpretation of the terms and conditions of the
Exchange Offer (including the instructions in this Letter of Transmittal) will
be final and binding. Unless waived, any irregularities in connection with
tenders or consents must be cured within such time as the Company shall
determine. Neither the Company nor the Exchange Agent shall be under any duty
to give notification of defects in such tenders or shall incur liabilities for
failure to give such notification. Tenders of Old Notes will not be deemed to
have been made until such irregularities have been cured or waived. Any Old
Notes received by the Exchange Agent that are not properly tendered and as to
which the irregularities have not been cured or waived will be returned by the
Exchange Agent to the tendering holder thereof.
IMPORTANT TAX INFORMATION
Under current Federal income tax law, an Old Noteholder whose tendered Old
Notes are accepted for payment generally is required to provide the Exchange
Agent (as agent for the payer) with his or her correct taxpayer identification
number ("TIN") on Substitute Form W-9 below. If such Old Noteholder is an
individual, the TIN is his or her social security number. If the Exchange
Agent is not provided with the correct TIN, the Old Noteholder may be subject
to a $50 penalty imposed by the Internal Revenue Service. In addition,
payments that are made to such Old Noteholders with respect to Notes exchanged
pursuant to the Offer may be subject to backup withholding.
Certain Old Noteholders (including, among others, all corporations and
certain foreign individuals) may not be subject to these backup withholding
and reporting requirements. Exempt Old Noteholders should indicate their
exempt status on Substitute Form W-9. In order for a foreign individual to
qualify as an exempt recipient, that Old Noteholder must submit a properly
completed Internal Revenue Service Form W-8, signed under penalties of
perjury, attesting to his or her exempt status. Such statements can be
obtained from the Exchange Agent. See the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional instructions.
If backup withholding applies, the Exchange Agent is required to withhold 31
percent of any such payments made to the Old Noteholder. Backup withholding is
not an additional tax. Rather, the federal income tax liability of persons
subject to backup withholding will be reduced by the amount of tax withheld.
If withholding results in an overpayment of taxes, a refund may be obtained.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to an Old Noteholder
with respect to Old Notes exchanged pursuant to the Offer, each Old Noteholder
is required to notify the Exchange Agent of his, her or its correct TIN by
completing the Substitute Form W-9 below certifying the TIN provided on such
form is correct (or that such Old Noteholder is awaiting a TIN) and that (1)
the Old Noteholder has not been notified by the Internal Revenue Service that
he, she or it is subject to backup withholding as a result of a failure to
report all interest or dividends or (2) the Internal Revenue Service has
notified the Old Noteholder that he, she or it is no longer subject to backup
withholding.
6
<PAGE>
WHAT NUMBER TO GIVE THE EXCHANGE AGENT
The Old Noteholder is required to give the Exchange Agent the social
security number or employer identification number of the record owner of the
Old Notes. If the Old Notes are in more than one name or are not in the name
of the actual owner, consult the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 for additional
guidelines on which number to report.
PAYER'S NAME: THE BANK OF NEW YORK AS AGENT
PART 1--PLEASE PROVIDE YOUR
TIN IN THE BOX AT RIGHT AND ----------------------
CERTIFY BY SIGNING AND DATING Social Security Number
BELOW. OR
SUBSTITUTE
FORM W-9
DEPARTMENT OF
THE TREASURY -----------------------
INTERNAL Employer Identification
REVENUE SERVICE Number
PART 2--Certification Under penalties of perjury, I
certify that:
----------------------------------------------------------
PAYER'S REQUEST
FOR TAXPAYER (1) The number shown on this form is my correct
IDENTIFICATION Taxpayer Identification Number (or I am waiting
NUMBER (TIN) for a number to be issued to me) and
(2) I am not subject to backup withholding because:
(a) I am exempt from backup withholding, (b) I
have not been notified by the Internal Revenue
Service (the "IRS") that I am subject to backup
withholding as a result of a failure to report
all interest or dividends or (c) the IRS has
notified me that I am no longer subject to backup
withholding.
Certification Instructions--You must cross out
Item (2) above if you have been notified by the
IRS that you are currently subject to backup
withholding because of under-reporting interest or
dividends on your tax return. However, if after
being notified by the IRS that you were subject to
backup withholding you received another
notification from the IRS that you are no longer
subject to backup withholding, do not cross out
such Item (2).
----------------------------------------------------------
SIGNATURE: _____________ DATE: _____________ PART 3
Awaiting
TIN [_]
NOTE: FAILURE TO COMPLETE THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31
PERCENT OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED "GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9" FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED
THE BOX IN PART 3 OF SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAX IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification
number has not been issued to me, and either (a) I have mailed or
delivered an application to receive a taxpayer identification number to
the appropriate Internal Revenue Service Center or Social Security
Administration Office or (b) I intend to mail or deliver an application
in the near future. I understand that if I do not provide a taxpayer
identification number within sixty (60) days, 31 percent of all
reportable payments made to me thereafter will be withheld until I
provide a number.
<TABLE>
<S> <C>
________________________________________ ________________________________________
Signature Date
</TABLE>
7
<PAGE>
NOTICE OF GUARANTEED DELIVERY
FOR
OFFER FOR ALL OUTSTANDING
PRIVATELY PLACED 9 1/2% SERIES A SENIOR SUBORDINATED NOTES DUE 2007
IN EXCHANGE FOR
9 1/2% SERIES B SENIOR SUBORDINATED NOTES DUE 2007
OF
SALEM COMMUNICATIONS CORPORATION
Registered holders of privately placed 9 1/2% Series A Senior Subordinated
Notes Due 2007 (the "Old Notes") who wish to tender their Old Notes in
exchange for a like principal amount of 9 1/2% Series B Senior Subordinated
Notes Due 2007 (the "Notes") and whose Old Notes are not immediately available
or who cannot deliver their Old Notes and Letter of Transmittal or any other
documents required by the Letter of Transmittal to The Bank of New York, (the
"Exchange Agent") prior to the Expiration Date, must use this Notice of
Guaranteed Delivery or one substantially equivalent hereto. This Notice of
Guaranteed Delivery may be delivered by hand or sent by facsimile transmission
or mail to the Exchange Agent. See "THE EXCHANGE OFFER--Procedures for
Tendering" in the Prospectus.
THE EXCHANGE AGENT FOR THE OFFER IS
THE BANK OF NEW YORK
By Mail or Overnight Express
(insured or registered recommended):
<TABLE>
<S> <C>
By Hand Delivery By Mail or Overnight Express
THE BANK OF NEW YORK THE BANK OF NEW YORK
101 BARCLAY STREET 101 BARCLAY STREET--FLOOR 7E
CORPORATE TRUST SERVICES WINDOW NEW YORK, NEW YORK 10286
GROUND LEVEL ATTN: [ ]
NEW YORK, NEW YORK 10286 REORGANIZATION DEPARTMENT
ATTN: [ ]
REORGANIZATION DEPARTMENT
By Facsimile: By Telephone:
(212) 815-6339 (212) 815-[TBD]
</TABLE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE TRANSMISSION
TO A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID
DELIVERY.
THIS NOTICE OF GUARANTEED DELIVERY IS NOT TO BE USED TO GUARANTEE
SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE
GUARANTEED BY AN ELIGIBLE INSTITUTION UNDER THE INSTRUCTIONS THERETO, SUCH
SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED ON THE LETTER
OF TRANSMITTAL FOR GUARANTEE OF SIGNATURES.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders the principal amount of Old Notes
indicated below, upon the terms and subject to the conditions contained in
the Registration Statement on Form S-4 filed by Salem Communications
Corporation, a California corporation, with the Securities and Exchange
Commission (the "Registration Statement") and the accompanying Prospectus
dated , 1997 included therein (the "Prospectus"), receipt of
which is hereby acknowledged.
DESCRIPTION OF SECURITIES TENDERED
<TABLE>
<S> <C> <C>
NAME AND ADDRESS OF
REGISTERED HOLDER AS IT CERTIFICATE NUMBER(S) PRINCIPAL AMOUNT OF
APPEARS ON THE OLD NOTES OF OLD NOTES TRANSMITTED OLD NOTES TRANSMITTED
-------------------------- -------------------------- --------------------------
__________________________ __________________________ __________________________
__________________________ __________________________ __________________________
__________________________ __________________________ __________________________
__________________________ __________________________ __________________________
__________________________ __________________________ __________________________
</TABLE>
2
<PAGE>
THE FOLLOWING GUARANTEE MUST BE COMPLETED
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm that is a member of a registered national
securities exchange or a member of the National Association of Securities
Dealers, Inc. or a commercial bank or trust company having an office,
branch, agency or correspondent in the United States, which is a member of
a recognized Medallion Signature Program approved by the Securities
Transfer Association, Inc., hereby guarantees to deliver to the Exchange
Agent at one of its addresses set forth above, the Old Notes, together
with a properly completed and duly executed Letter of Transmittal (or
facsimile thereof), with any required signature guarantees, and any other
documents required by the Letter of Transmittal within five New York Stock
Exchange, Inc. trading days after the date of execution of this Notice of
Guaranteed Delivery.
Name of Firm: _____________________________________________________________
___________________________________________________________________________
(AUTHORIZED SIGNATURE)
Address: __________________________________________________________________
(ZIP CODE)
Area Code and Telephone Number: ___________________________________________
Name: _____________________________________________________________________
(PLEASE TYPE OR PRINT)
Title: ____________________________________________________________________
Date: , 1997
NOTE:DO NOT SEND OLD NOTES WITH THIS NOTICE OF GUARANTEED DELIVERY. OLD
NOTES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
3
<PAGE>
EXHIBIT 3.01
1381287
ENDORSED
FILED
in the office of the Secretary
of State of the State of California
JUL 24 1986
MARCH FONG EU, Secretary of State
ARTICLES OF INCORPORATION OF
SALEM COMMUNICATIONS CORPORATION
--------------------------------
ONE: The name of this Corporation is Salem Communications Corporation.
TWO: The purpose of this Corporation is to engage in any lawful act
or activity for which a corporation may be organized under the General
Corporation Law of California other than the banking business, the trust company
business or the practice of a profession permitted to be incorporated by the
California Corporations Code.
THREE: The name and address in this state of the Corporation's initial
agent for service of process is Edward G. Atsinger, III, 2310 Ponderosa Drive,
Suite 29, Camarillo, California 93010.
FOUR: The total number of shares which the Corporation is authorized
to issue is one hundred thousand (100,000).
Dated: July 22, 1986
Stuart A. Comis
-----------------
STUART A. COMIS
Sole Incorporator
I declare that I am the person who executed the above Articles of
Incorporation and such instrument is my act and deed.
Stuart A. Comis
-----------------
STUART A. COMIS
Sole Incorporator
<PAGE>
EXHIBIT 3.02
BYLAWS OF
SALEM COMMUNICATIONS CORPORATION
---------------------------------
ARTICLE I
SHAREHOLDERS' MEETING
---------------------
Section 1. PLACE OF MEETINGS.
- ---------
Meetings of shareholders shall be held at any place within or
outside the State of California designated by the Board of Directors. In the
absence of any such designation, shareholders' meetings shall be held in the
principal executive office of the corporation.
Section 2. ANNUAL MEETINGS.
- ---------
The annual meeting of shareholders shall be held each year on a
date and at a time designated by the Board of Directors. The date so designated
shall be within five (5) months after the end of the fiscal year of the
corporation, and within fifteen (15) months after the last annual meeting. At
each annual meeting directors shall be elected, and any other proper business
may be transacted.
Section 3. SPECIAL MEETINGS.
- ---------
A special meeting of the shareholders may be called at any time
by the Board of Directors, or by the chairman of the Board, or by the president
or by one or more shareholders holding shares in the aggregate entitled to cast
not less than ten percent (10%) of the votes at that meeting.
If a special meeting is called by any person or persons other
than the Board of Directors, the request shall be in writing, specifying the
time of such meeting and the general nature of the business proposed to be
transacted, and shall be delivered personally or sent by registered mail or by
telegraphic or other facsimile transmission to the chairman of the Board, the
president, any vice-president or the secretary of the corporation. The officer
receiving the request shall cause notice to be promptly given to the
shareholders entitled to vote, in accordance with the provisions of Sections 4
and 5 of this Article I, that a meeting will be held at the time requested by
the person or persons calling the meeting, not less than thirty-five (35) nor
more than sixty (60) days after the receipt of the request. If the notice is not
given within twenty (20) days after receipt of the request, the person or
persons requesting the meeting may give the notice. Nothing contained in this
paragraph of this Section 3 shall be construed as limiting, fixing or affecting
the time when a meeting of shareholders called by action of the Board of
Directors may be held.
Section 4. NOTICE OF MEETINGS.
- ---------
All notices of meetings of shareholders shall be sent or
otherwise given in accordance with Section 5 of this Article I not less than ten
(10) nor more than sixty (60) days before the date of the meeting. The notice
shall specify the place, date and hour of the meeting and (a) in the case of a
special meeting, the general nature of the business to be transacted or (b)
<PAGE>
in the case of the annual meeting, those matters which the Board of Directors,
at the time of giving notice, intends to present for action by the shareholders.
The notice of any meeting at which directors are to be elected shall include the
name of any nominee or nominees whom, at the time of the notice, management
intends to present for election.
If action is proposed to be taken at any meeting for approval of
(i) a contract or transaction in which a director has a direct or indirect
financial interest, pursuant to Section 310 of the Corporations Code of
California, (ii) an amendment of the Articles of Incorporation, pursuant to
Section 902 of that Code, (iii) a reorganization of the corporation, pursuant to
Section 1201 of that Code, (iv) a voluntary dissolution of the corporation,
pursuant to Section 1900 of that Code, or (v) a distribution in dissolution
other than in accordance with the rights of outstanding preferred shares,
pursuant to Section 2007 of that Code, the notice shall also state the general
nature of that proposal.
Section 5. MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE.
- ---------
Notice of any meeting of shareholders shall be given either
personally or by first-class mail or telegraphic or other written communication,
charges prepaid, addressed to the shareholder at the address of that shareholder
appearing on the books of the corporation or given by the shareholder to the
corporation for the purpose of notice. If no such address appears on the
corporation's books or is given, notice shall be deemed to have been given if
sent to that shareholder by first-class mail or telegraphic or other written
communication to the corporation's principal executive office, or if published
at least once in a newspaper of general circulation, in the county where that
office is located. Notice shall be deemed to have been given at the time when
delivered personally or deposited in the mail or sent by telegram or other means
of written communication.
If any notice addressed to a shareholder at the address of that
shareholder appearing on the books of the corporation is returned to the
corporation by the United states Postal Service marked to indicate that the
United States Postal Service is unable to deliver the notice to the shareholder
at that address, all future notices or reports shall be deemed to have been duly
given without further mailing if these shall be available to the shareholder on
written demand of the shareholder at the principal executive office of the
corporation for a period of one (1) year from the date of the giving of the
notice.
An affidavit of the mailing or other means of giving any notice
of any shareholders' meetings shall be executed by the secretary, assistant
secretary or any transfer agent of the corporation giving the notice, and shall
be filed and maintained in the minute book of the corporation.
Section 6. QUORUM.
- ---------
The presence in person or by proxy of the holders of a majority
of the shares entitled to vote at any meeting of shareholders shall constitute a
quorum for the transaction of business. The shareholders present at a duly
called or held meeting at which a quorum is present may continue to do business
until adjournment, notwithstanding the withdrawal of enough
2
<PAGE>
shareholders to leave less than a quorum, if any action taken (other than
adjournment) is approved by at least a majority of the shares required to
constitute a quorum.
Section 7. ADJOURNED MEETING; NOTICE.
- ---------
Any shareholders' meeting, annual or special, whether or not a
quorum is present, may be adjourned from time to time by the vote of the
majority of the shares represented at that meeting, either in person or by
proxy, but in the absence of a quorum, no other business may be transacted at
that meeting, except as provided in Section 6 of this Article I.
When any meeting of shareholders, either annual or special, is
adjourned to another time or place, notice need not be given of the adjourned
meeting if the time and place are announced at a meeting at which the
adjournment is taken unless a new record date for the adjourned meeting is
fixed, or unless the adjournment is for more than forty-five (45) days from the
date set for the original meeting, in which case the Board of Directors shall
set a new record date. Notice of any such adjourned meeting shall be given to
each shareholder of record entitled to vote at the adjourned meeting in
accordance with the provisions of Sections 4 and 5 of this Article I. At any
adjourned meeting the corporation may transact any business which might have
been transacted at the original meeting.
Section 8. VOTING RIGHTS; CUMULATIVE VOTING.
- ---------
The shareholders entitled to vote at any meeting of shareholders
shall be determined in accordance with the provisions of Section 11 of this
Article I, subject to the provisions of Sections 702 through 704, inclusive, of
the Corporations Code of California (relating to voting shares held by a
fiduciary, in the name of a corporation, or in joint ownership). The
shareholders' vote may be by voice vote or by ballot; provided, however, that
any election for directors must be by ballot if demanded by any shareholder
before the voting has begun. On any matter other than elections of directors,
any shareholder may vote part of the shares in favor of the proposal and refrain
from voting the remaining shares or vote them against the proposal, but, if the
shareholder fails to specify the number of shares which the shareholder is
voting affirmatively, it will be conclusively presumed that the shareholder's
approving vote is with respect to all shares that the shareholder is entitled to
vote. If a quorum is present, the affirmative vote of the majority of the shares
represented at the meeting and entitled to vote on any matter (other than the
election of directors) shall be the act of the shareholders, unless a vote of a
greater number or voting by classes is required by the California General
Corporation Law or by the Articles of Incorporation.
At a shareholders' meeting at which directors are to be elected,
no shareholder shall be entitled to accumulate votes (i.e., to cast for any one
----
or more candidates a number of votes greater than the number of the
shareholder's shares) unless the candidates' names have been placed in
nomination prior to commencement of the voting and a shareholder has given
notice prior to commencement of the voting of the shareholder's intention to
cumulate votes. If any shareholder has given such a notice, then every
shareholder entitled to vote may cumulate votes for candidates in nomination and
give one candidate a number of votes equal to the number of directors to be
elected multiplied by the number of votes to which that shareholder's shares are
3
<PAGE>
entitled, or distribute the shareholder's votes on the same principle among any
or all of the candidates, as the shareholder thinks fit. The candidates
receiving the highest number of votes, up to the number of directors to be
elected, shall be elected.
Section 9. WAIVER OF NOTICE OR CONSENT BY ABSENT SHAREHOLDERS.
- ---------
The transactions of any meeting of shareholders, either annual
or special, however called and noticed and wherever held, shall be as valid as
though had at a meeting duly held after regular call and notice, if a quorum be
present either in person or by proxy, and if, either before or after the
meeting, each person entitled to vote, who was not present in person or by
proxy, signs a written waiver of notice or a consent to a holding of the meeting
or an approval of the minutes. The waiver of notice or consent need not specify
either the business to be transacted or the purpose of any annual or special
meeting of shareholders, except that if action is taken or proposed to be taken
for approval of any of those matters specified in the second paragraph of
Section 4 of this Article I, the waiver of notice or consent shall state the
general nature of the proposal. All such waivers, consents or approvals shall be
filed with the corporate records or made a part of the minutes of the meeting.
Attendance by a person at a meeting shall also constitute a
waiver of notice of that meeting, except when the person objects, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened and except that attendance at a meeting is
not a waiver of any right to object to the consideration of matters not included
in the notice of the meeting if that objection is expressly made at the meeting.
Section 10. SHAREHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING.
- ----------
Any action which may be taken at any annual or special meeting
of shareholders may be taken without a meeting and without prior notice, if a
consent in writing, setting forth the action so taken, is signed by the holders
of outstanding shares having not less than the minimum number of votes that
would be necessary to authorize or to take that action at a meeting at which all
shares entitled to vote on that action were present and voted. In the case of
election of directors, such consent shall be effective only if signed by the
holders of all outstanding shares entitled to vote for the election of
directors; provided, however, that a director may be elected at any time to fill
a vacancy on the Board of Directors that has not been filled by the directors,
by the written consent of the holders of a majority of the outstanding shares
entitled to vote for the election of directors. All such consents shall be filed
with the secretary of the corporation and shall be maintained in the corporate
records. Any shareholder giving a written consent, or the shareholder's proxy
holder, or a transferee of the shares or a personal representative of the
shareholder or his respective proxy holder, may revoke the consent by a writing
received by the secretary of the corporation before written consents of the
number of shares required to authorize the proposed action have been filed with
the secretary.
If the consents of all shareholders entitled to vote have not
been solicited in writing, and if the unanimous written consent of all such
shareholders shall not have been
4
<PAGE>
received, the secretary shall give prompt notice of the corporate action
approved by the shareholders without a meeting. This notice shall be given in
the manner specified in Section 5 of this Article I. In the case of approval of
(a) contracts or transactions in which a director has a direct or indirect
financial interest, pursuant to Section 310 of the Corporations Code of
California, (b) indemnification of agents of the corporation, pursuant to
Section 317 of that Code, (c) a reorganization of the corporation, pursuant to
Section 1201 of that Code, and (d) a distribution in dissolution other than in
accordance with the rights of the outstanding preferred shares, pursuant to
Section 2007 of that Code, the notice shall be given at least ten (10) days
before the consummation of any action authorized by that approval.
Section 11. RECORD DATE FOR SHAREHOLDERS NOTICE, VOTING AND GIVING
- ---------- CONSENTS.
For purposes of determining the shareholders entitled to notice
of any meeting or to vote or entitled to give consent to corporate action
without a meeting, the Board of Directors may fix, in advance, a record date,
which shall be not more than sixty (60) days nor less than ten (10) days before
the date of any such meeting nor more than sixty (60) days before any such
action without a meeting, and in this event only shareholders of record on the
date so fixed are entitled to notice and to vote or to give consents, as the
case may be, notwithstanding the transfer of any shares on the books of the
corporation after the record date, except as otherwise provided in the
California General Corporation Law.
If the Board of Directors does not so fix a record date:
(a) The record date for determining shareholders entitled to
notice of or to vote at a meeting of shareholders shall be at the close of
business on the business day next preceding the day on which notice is given or,
if notice is waived, at the close of business on the business day next preceding
the day on which the meeting is held.
(b) The record date for determining shareholders entitled to
give consent to corporate action in writing without a meeting (i) when no prior
action by the Board has been taken, shall be the day on which the first written
consent is given, or (ii) when prior action of the Board has been taken, shall
be at the close of business on the day on which the Board adopts the resolution
relating to that action or the sixtieth (60th) day before the date of such other
action, whichever is later.
Section 12. PROXIES.
- ----------
Every person entitled to vote for directors or on any other
matter shall have the right to do so either in person or by one or more agents
authorized by a written proxy signed by the person and filed with the secretary
of the corporation. A proxy shall be deemed signed if the shareholder's name is
placed on the proxy (whether by manual signature, typewriting, telegraphic
transmission or otherwise) by the shareholder or the shareholder's attorney in
fact. A validly executed proxy which does not state that it is irrevocable shall
continue in full force and effect unless (a) revoked by the person executing it,
before the vote pursuant to that proxy by a writing delivered to the corporation
stating that the proxy is revoked, or by a subsequent proxy executed
5
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by, or attendance at the meeting and voting in person by, the person executing
the proxy; or (b) written notice of the death or incapacity of the maker of that
proxy is received by the corporation before the vote pursuant to that proxy is
counted; provided, however, that no proxy shall be valid after the expiration of
eleven (11) months from the date of the proxy, unless otherwise provided in the
proxy, and, provided, further, that the proxy shall be valid only if executed in
favor of another shareholder of the corporation. The revocability of a proxy
that states on its face that it is irrevocable shall be governed by the
provisions of Sections 705(e) and 705(f) of the Corporations Code of California.
Section 13. INSPECTORS OF ELECTION.
- ----------
Before any meeting of shareholders, the Board of Directors may
appoint any persons other than nominees for office to act as inspectors of
election at the meeting or its adjournment. If no inspectors of election are so
appointed, the chairman of the meeting may, and on the request of any
shareholder or a shareholder's proxy shall, appoint inspectors of election at
the meeting. The number of inspectors shall be either one (1) or three (3). If
inspectors are appointed at the meeting on the request of one or more
shareholders or proxies, the holders of a majority of shares or their proxies
present at the meeting shall determine whether one (1) or three (3) inspectors
are to be appointed. If any person appointed as inspector fails to appear or
fails or refuses to act, the chairman of the meeting may, and upon the request
of any shareholder or a shareholder's proxy shall, appoint a person to fill that
vacancy.
These inspectors shall:
(a) Determine the number of shares outstanding and the
voting power of each, the shares represented at the meeting, the existence of a
quorum and the authenticity, validity and effect of proxies;
(b) Receive votes, ballots or consents;
(c) Hear and determine all challenges and questions in any
way arising in connection with the right to vote;
(d) Count and tabulate all votes or consents;
(e) Determine when the polls shall close;
(f) Determine the result; and
(g) Do any other acts that may be proper to conduct the
election or vote with fairness to all shareholders.
Section 14. VOTING TRUSTS.
- ----------
If a voting trust agreement is filed in the office of the
corporation, the corporation shall take notice of its terms and the limitations
this agreement places on the authority of the
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trustee. The agreement shall be valid only if voting power is vested in another
shareholder of the corporation.
ARTICLE II
DIRECTORS; MANAGEMENT
---------------------
Section 1. POWERS.
- ---------
Subject to the limitations of the Articles of Incorporation, of
the Bylaws and of the laws of the State of California as to action to be
authorized or approved by the shareholders, all corporate powers shall be
exercised by or under authority of, and the business and affairs of this
corporation shall be controlled by, a board of directors.
Section 2. NUMBER AND QUALIFICATION.
- ---------
The authorized number of directors shall be two (2) until
changed by a duly adopted amendment of the Articles of Incorporation or by an
amendment to these Bylaws adopted by the vote or written consent of holders of a
majority of the outstanding shares entitled to vote.
Section 3. ELECTION AND TENURE OF OFFICE.
- ---------
Directors shall be elected at each annual meeting of the
shareholders to hold office until the next annual meeting. Each director,
including a director elected to fill a vacancy, shall hold office until the
expiration of the term for which elected and until a successor has been elected
and qualified.
Section 4. VACANCIES.
- ---------
Vacancies in the Board of Directors may be filled by a majority
of the remaining directors, though less than a quorum or by a sole remaining
director, except that a vacancy created by the removal of a director by the vote
or written consent of the shareholders or by court order may be filled only by
the vote of a majority of the shares entitled to vote represented at a duly held
meeting at which a quorum is present, or by the written consent of holders of a
majority of the outstanding shares entitled to vote. Each director so elected
shall hold office until the next annual meeting of the shareholders and until a
successor has been elected and qualified.
A vacancy or vacancies in the Board of Directors shall be deemed
to exist in the event of the death, disqualification, resignation, or removal of
any director, or if the Board of Directors by resolution declares vacant the
office of a director who has been declared of unsound mind by an order of court
or convicted of a felony, or if the authorized number of directors is increased
or if the shareholders fail, in any meeting of shareholders at which any
director or directors are elected, to elect the number of directors to be voted
for at that meeting.
The shareholders may elect a director or directors at any time
to fill any vacancy or vacancies not filled by the directors, but any such
election by written consent shall require the consent of a majority of the
outstanding shares entitled to vote.
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Any director may resign effective on giving written notice to
the chairman of the board, the president, the secretary or the Board of
Directors, unless the notice specifies a later time for that resignation to
become effective. If the resignation of a director is effective at a future
time, the Board of Directors may elect a successor to take office when the
resignation becomes effective.
No reduction of the authorized number of directors shall have
the effect of removing any director before that director's term of office
expires.
Section 5. REMOVAL OF DIRECTORS.
- ---------
The entire Board of Directors or any individual director may be
removed from office as provided by Sections 302, 303 and 304 of the Corporations
Code of the State of California.
Section 6. PLACE OF MEETINGS AND MEETINGS BY TELEPHONE.
- ---------
Regular meetings of the Board of Directors may be held at any
place within or outside the State of California that has been designated from
time to time by resolution of the Board. In the absence of such designation,
regular meetings shall be held at the principal executive office of the
corporation. Special meetings of the board shall be held at any place within or
outside the State of California that has been designated in the notice of the
meeting or, if not stated in the notice or there is no notice, at the principal
executive office of the corporation. Any meeting, regular or special, may be
held by conference telephone or similar communication equipment, so long as all
directors participating in the meeting can hear one another, and all such
directors shall be deemed to be present in person at the meeting.
Section 7. ANNUAL MEETING.
- ---------
Immediately following each annual meeting of shareholders, the
Board of Directors shall hold a regular meeting for the purpose of organization,
any desired election of officers and the transaction of other business. Notice
of this meeting shall not be required.
Section 8. OTHER REGULAR MEETINGS.
- ---------
Other regular meetings of the Board of Directors shall be held
without call at such time as it shall from time to time be fixed by the Board of
Directors. Such regular meetings may be held without notice.
Section 9. SPECIAL MEETINGS - NOTICES.
- ---------
Special meetings of the Board of Directors for any purpose or
purposes may be called at any time by the chairman of the board or the president
or any vice-president or the secretary or any two directors.
Notice of the time and place of special meetings shall be
delivered personally or by telephone to each director, or sent by first-class
mail or telegram, charges prepaid, addressed to
8
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each director at that director's address as it is shown on the records of the
corporation. In case the notice is mailed, it shall be deposited in the United
States mail at least four (4) days before the time of the holding of the
meeting. In case the notice is delivered personally or by telephone or
telegram, it shall be delivered personally or by telephone or to the telegraph
company at least forty-eight (48) hours before the time of the holding of the
meeting. Any oral notice given personally or by telephone may be communicated
either to the director or to a person at the office of the director who the
person giving the notice has reason to believe will promptly communicate it to
the director. The notice need not specify the purpose of the meeting nor the
place if the meeting is to be held at the principal executive offices of the
corporation.
Section 10. QUORUM.
- ----------
A majority of the authorized number of directors shall
constitute a quorum for the transaction of business, except to adjourn as
provided in Section 13 of this Article II, unless the authorized number of
directors is two or less, in which case all of the duly elected and acting
directors shall constitute a quorum for the transaction of business. Every act
or decision done or made by a majority of the directors present at a meeting
duly held at which a quorum is present shall be regarded as the act of the Board
of Directors, subject to the provisions of Section 310 of the Corporations Code
of the State of California (as to approval of contracts or transactions in which
a director has a direct or indirect material financial interest), Section 311 of
that Code (as to appointment of committees), and Section 317(e) of that Code (as
to indemnification of directors). A meeting at which a quorum is initially
present may continue to transact business notwithstanding the withdrawal of
directors, if any action taken is approved by at least a majority of the
required quorum for that meeting.
Section 11. WAIVER OF NOTICE.
- ----------
The transactions of any meeting of the Board of Directors,
however called and noticed and wherever held, shall be as valid as though had at
a meeting duly held after regular call and notice if a quorum is present and if,
either before or after the meeting, each of the directors not present signs a
written waiver of notice, a consent to holding the meeting or an approval of the
minutes. The waiver of notice or consent need not specify the purpose of the
meeting. All such waivers, consents and approval shall be filed with the
corporate records or made a part of the minutes of the meeting. Notice of a
meeting shall also be deemed given to any director who attends the meeting
without protesting before or at its commencement, the lack of notice to that
director.
Section 12. DIRECTORS ACTING WITHOUT A MEETING BY UNANIMOUS WRITTEN
- ---------- CONSENT. -------
-------
Any action required or permitted to be taken by the Board of
Directors may be taken without a meeting, if all members of the Board shall
individually or collectively consent in writing to that action. Such action by
written consent shall have the same force and effect as a unanimous vote of the
Board of Directors. Such written consent or consents shall be filed with the
minutes of the proceedings of the Board.
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Section 13. ADJOURNMENT.
- ----------
A majority of the directors present, whether or not constituting
a quorum, may adjourn any meeting to another time and place.
Section 14. NOTICE OF ADJOURNMENT.
- ----------
Notice of the time and place of holding an adjourned meeting
need not be given, unless the meeting is adjourned for more than twenty-four
(24) hours, in which case notice of the time and place shall be given before the
time of the adjourned meeting, in the manner specified in Section 9 of this
Article II, to the directors who are not present at the time of the adjournment.
Section 15. COMPENSATION OF DIRECTORS.
- ----------
Directors and members of committees, as such, shall not receive
any stated salary for their services, but by resolution of the board a fixed sum
and expense of attendance, if any, may be allowed for attendance at each regular
and special meeting of the board; provided that nothing herein contained shall
be construed to preclude any director from serving the corporation in any other
capacity and receiving compensation therefor.
ARTICLE III
OFFICERS
--------
Section 1. OFFICERS.
- ---------
The officers of the corporation shall consist of a president,
vice-president, secretary, and a chief financial officer. The corporation may
also have, at the discretion of the Board of Directors, a chairman of the board,
one or more additional vice-presidents, one or more assistant secretaries, one
or more assistant treasurers and such other officers as may be appointed in
accordance with the provisions of Section 3 of this Article. One person may hold
two or more offices, except those of president and secretary.
Section 2. ELECTION.
- ---------
The officers of the corporation, except those officers as may be
appointed in accordance with the provisions of Section 3 and Section 5 of this
Article III shall be chosen annually by the Board of Directors, and each shall
hold his office until he shall resign or shall be removed or otherwise
disqualified to serve, or his successor shall be elected and qualified.
Section 3. SUBORDINATE OFFICERS, ETC.
- ---------
The Board of Directors may appoint such other officers as the
business of the corporation may require, each of whom shall hold office for such
period, have such authority and perform such duties as are provided in the
bylaws or as the Board of Directors may from time to time determine.
10
<PAGE>
Section 4. REMOVAL AND RESIGNATION.
- ---------
Any officer may be removed, either with or without cause, by the
Board of Directors at any regular or special meeting, or, except in case of an
officer chosen by the Board of Directors, by any officer upon whom such power of
removal may be conferred by the Board of Directors.
Any officer may resign at any time by giving written notice to
the Board of Directors, or to the president or to the secretary of the
corporation. Any such resignation shall take effect at the date of this notice
or at any later specified time; and, unless otherwise specified, the acceptance
of this resignation shall not be necessary to make it effective.
Section 5. VACANCIES.
- ---------
A vacancy in any office because of death, resignation, removal,
disqualification, or because of any other cause shall be filled in the manner
prescribed in the bylaws for regular appointments to the office.
Section 6. CHAIRMAN OF THE BOARD.
- ---------
The chairman of the board, if there shall be such an officer,
shall, if present, preside at all meetings of the Board of Directors and
exercise and perform such other powers and duties as may be from time to time
assigned to him by the Board of Directors or prescribed by the bylaws. If there
is no president, the chairman of the board shall in addition be the chief
executive officer of the corporation and shall have the powers and duties
prescribed in Section 7 of this Article III.
Section 7. PRESIDENT.
- ---------
Subject to such supervisory powers, if any, as may be given by
the Board of Directors to the chairman of the board, if there be such an
officer, the president shall be the chief executive officer of the corporation
and shall, subject to the control of the Board of Directors, have general
supervision, direction and control of the business and officers of the
corporation. He shall preside at all meetings of the shareholders and in the
absence of the chairman of the board, or if there be none, at all meetings of
the Board of Directors. He shall be ex officio a member of all the standing
committees, including the executive committee, if any, and shall have the
general powers and duties of a corporate management usually vested in the office
of president of a corporation and shall have such other powers and duties as may
be prescribed by the Board of Directors or the bylaws.
Section 8. VICE-PRESIDENT.
- ---------
In the absence or disability of the president, the vice-
president, if any, shall perform all the duties of the president, and when so
acting shall have all the powers of, and be subject to, all the restrictions
upon, the president. The vice-president shall have such other powers and perform
such other duties as from time to time may be prescribed by the Board of
Directors or the bylaws.
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Section 9. SECRETARY.
- ---------
The secretary shall keep, or cause to be kept, a book of minutes
at the principal office or such other place as the Board of Directors may order,
of all meetings of directors and shareholders, with the time and place of
holding, whether regular or special and, if special, how authorized, the notice
thereof given, the names of those present at directors' meetings, the number of
shares present or represented at shareholders' meetings and the proceedings
thereof.
The secretary shall keep, or cause to be kept, at the principal
office or at the office of the corporation's transfer agent, a share register,
or duplicate share register, showing the names of the shareholders and their
addresses; the number and classes of shares held by each; the number and date of
certificates issued for the same; and the number and date of cancellation of
every certificate surrendered for cancellation.
The secretary shall give or cause to be given, notice of all the
meetings of the shareholders and of the Board of Directors required by the
bylaws or by law to be given, and he shall keep the seal of the corporation in
safe custody and shall have such other powers and perform such other duties as
may be prescribed by the Board of Directors or by the bylaws.
Section 10. CHIEF FINANCIAL OFFICER.
- ----------
The chief financial officer shall keep and maintain or cause to
be kept and maintained, adequate and correct accounts of the properties and
business transactions of the corporation, including accounts of its assets,
liabilities, receipts, disbursements, gains, losses, capital, surplus and
shares. Any surplus, including earned surplus, paid-in surplus and surplus
arising from a reduction of stated capital shall be classified according to
source and shown in a separate account. The books of account shall at all
reasonable times be open to inspection by any director.
The chief financial officer shall deposit all moneys and other
valuables in the name and to the credit of the corporation with such
depositaries as may be designated by the Board of Directors. He shall disburse
the funds of the corporation as may be ordered by the Board of Directors, shall
render to the president and directors, whenever they request it, an account of
all of his transactions as chief financial officer and of the financial
condition of the corporation and shall have such other powers and perform such
other duties as may be prescribed by the Board of Directors or the bylaws.
Section 11. SALARIES.
- ----------
The salaries of the officers and other shareholders employed by
the corporation shall be fixed from time to time by the Board of Directors or
established under agreements with officers or shareholders approved by the Board
of Directors, and no officer shall be prevented from receiving such salary by
reason of the fact that he is also a director of the corporation.
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ARTICLE IV
CORPORATE RECORDS AND REPORTS-INSPECTION
----------------------------------------
Section 1. MAINTENANCE AND INSPECTION OF SHARE REGISTER.
- ---------
The corporation shall keep at its principal executive office, or
at the office of its transfer agent or registrar, if either be appointed and as
determined by resolution of the Board of Directors, a record of its shareholders
giving the names and addresses of all shareholders and the number and class of
shares held by each shareholder.
A shareholder or shareholders of the corporation holding at
least five percent (5%) in the aggregate of the outstanding voting shares of the
corporation may (a) inspect and copy the records of the shareholders' names and
addresses and shareholdings during usual business hours on five days' prior
written demand on the corporation and (b) obtain from the transfer agent of the
corporation, on written demand and on tender of such transfer agent's usual
charges for such list, a list of the shareholders' names and addresses, who are
entitled to vote for the election of directors and their shareholdings, as of
the most recent record date for which that list has been compiled or as of a
date specified by the shareholder after the date of demand. This list shall be
made available to any such shareholder by the transfer agent on or before the
later of five (5) days after the demand is received or the date specified in the
demand as the date as of which the list is to be compiled. The record of
shareholders shall also be open to inspection on the written demand of any
shareholder or holder of a voting trust certificate, at any time during usual
business hours, for a purpose reasonably related to the holder's interest as a
shareholder or as a holder of a voting trust certificate. Any inspection and
copying under this Section 1 may be made in person or by an agent or attorney of
the shareholder or holder of a voting trust certificate making the demand.
Section 2. MAINTENANCE AND INSPECTION OF BYLAWS.
- ---------
The corporation shall keep at its principal executive office, or
if its principal executive office is not in the State of California, at its
principal business office in this state, the original or a copy of the bylaws as
amended to date, which shall be open to inspection by the shareholders at all
reasonable times during office hours. If the principal executive office of the
corporation is outside the State of California and the corporation has no
principal business office in this state, the secretary shall, upon the written
request of any shareholder, furnish to that shareholder a copy of the bylaws as
amended to date.
Section 3. MAINTENANCE AND INSPECTION OF OTHER CORPORATE RECORDS.
- ---------
The accounting books and records and minutes of proceedings of
the shareholders and the Board of Directors and any committee or committees of
the Board of Directors shall be kept at such place or places designated by the
Board of Directors, or, in the absence of such designation, at the principal
executive office of the corporation. The minutes shall be kept in written form
and the accounting books and records shall be kept either in written form or in
any other form capable of being converted into written form. The minutes and
accounting books and
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<PAGE>
records shall be open to inspection upon the written demand of any shareholder
or holder of a voting trust certificate, at any reasonable time during usual
business hours, for a purpose reasonably related to the holder's interests as a
shareholder or as a holder of a voting trust certificate. The inspection may be
made in person or by an agent or attorney, and shall include the right to copy
and make extracts. These rights of inspection shall extend to the records of
each subsidiary corporation of the corporation.
Section 4. INSPECTION BY DIRECTORS.
- ---------
Every director shall have the absolute right at any reasonable
time to inspect all books, records and documents of every kind and the physical
properties of the corporation at each of its subsidiary corporations. This
inspection by a director may be made in person or by an agent or attorney and
the right of inspection includes the right to copy and make extracts of
documents.
Section 5. ANNUAL REPORT TO SHAREHOLDERS.
- ---------
The annual report to shareholders referred to in Section 1501 of
the California General Corporation Law is expressly dispensed with, but nothing
herein shall be interpreted as prohibiting the Board of Directors from issuing
annual or other periodic reports to the shareholders of the corporation as they
consider appropriate.
Section 6. FINANCIAL STATEMENTS.
- ---------
A copy of any annual financial statements and any income
statement of the corporation for each quarterly period of each fiscal year, and
any accompanying balance sheet of the corporation as of the end of such period,
that has been prepared by the corporation shall be kept on file in the principal
executive office of the corporation for twelve (12) months and each statement
shall be exhibited at all reasonable times to any shareholder demanding an
examination of such statement or a copy thereof shall be mailed to any such
shareholder.
If a shareholder or shareholders holding at least five percent
(5%) of the outstanding shares of any class of stock of the corporation makes a
written request to the corporation for an income statement of the corporation
for the three-month, six-month or nine-month period of the current fiscal year
ended more than thirty (30) days before the date of the request, and a balance
sheet of the corporation as of the end of that period, the treasurer or chief
financial officer shall cause that statement to be prepared, if not already
prepared, and shall deliver personally or mail that statement or statements to
the person making the request within thirty (30) days after the receipt of the
request. If the corporation has not sent to the shareholders its annual report
for the last fiscal year, this report shall likewise be delivered or mailed to
the shareholder or shareholders within thirty (30) days after the request.
The corporation shall also, on the written request of any
shareholder, mail to the shareholder a copy of the last annual, semi-annual or
quarterly income statement which it has prepared, and a balance sheet as of the
end of that period.
The quarterly income statements and balance sheets referred to
in this section shall be accompanied by a report, if any, of any independent
accountants engaged by the corporation or
14
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the certificate of an authorized officer of the corporation that the financial
statements were prepared without audit from the books and records of the
corporation.
Section 7. ANNUAL STATEMENT OF GENERAL INFORMATION.
- ---------
The corporation shall annually, during the period commencing
five calendar months preceding the calendar month during which the original
Articles of Incorporation were filed and ending with the end of the calendar
month during which the original Articles of Incorporation were filed with the
Secretary of State, file with the Secretary of State of the State of California,
on the prescribed form, a statement setting forth the authorized number of
directors, the names and complete business or residence addresses of all
incumbent directors, the names and complete business or residence addresses of
the chief executive officer, secretary and chief financial officer, the street
address of its principal executive office or principal business office in the
state, and the general type of business constituting the principal business
activity of the corporation, together with a designation of the agent of the
corporation for the purpose of service of process, all in compliance with
Section 1502 of the Corporations Code of California.
ARTICLE V
GENERAL CORPORATE MATTERS
-------------------------
Section 1. RECORD DATE FOR PURPOSES OTHER THAN NOTICE AND VOTING.
- ---------
For purposes of determining the shareholders entitled to receive
payment of any dividend or other distribution or allotment of any rights or
entitled to exercise any rights in respect of any other lawful election (other
than action by shareholders by written consent without a meeting) the Board of
Directors may fix, in advance, a record date, which shall not be more than sixty
(60) days before any such action and in that case only shareholders of record on
the date so fixed are entitled to receive the dividend, distribution or
allotment of rights or to exercise the rights, as the case may be,
notwithstanding any transfer of any shares on the books of the corporation after
the record date so fixed, except as otherwise provided in the California General
Corporation Law.
If the Board of Directors does not so fix a record date, the
record date for determining shareholders for any such purpose shall be at the
close of business on the day on which the board adopts the applicable resolution
or the sixtieth (60th) day before the date of that action, whichever is later.
Section 2. CHECKS, DRAFTS, EVIDENCES OF INDEBTEDNESS.
- ---------
All checks, drafts or other orders for payment of money, notes
or other evidences of indebtedness, issued in the name of or payable to the
corporation shall be signed or endorsed by such person or persons and in such
manner as, from time to time, shall be determined by the resolution of the Board
of Directors.
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Section 3. CORPORATE CONTRACTS AND INSTRUMENTS; HOW EXECUTED.
- ---------
The Board of Directors, except as otherwise provided in these
Bylaws, may authorize any officer or officers, agent or agents, to enter into
any contract or execute any instrument in the name of and on behalf of the
corporation and this authority shall be general or confined to specific
instances; and, unless so authorized or ratified by the Board of Directors or
within the agency power of an officer, no officer, agent or employee shall have
any power or authority to bind the corporation by any contract or engagement or
to pledge its credit or to render it liable for any purpose or for any amount.
Section 4. CERTIFICATES FOR SHARES.
- ---------
A certificate or certificates for shares of the capital stock of
the corporation shall be issued to each shareholder when any of these shares are
fully paid, and the Board of Directors may authorize the issuance of
certificates or shares as partly paid provided that these certificates shall
state the amount of the consideration to be paid for them and the amount paid.
All certificates shall be signed in the name of the corporation by the chairman
of the board or vice-chairman of the board or the president or vice-president
and by the chief financial officer or an assistant treasurer or the secretary or
any assistant secretary, certifying the number of shares and the class or series
of shares owned by the shareholder. Any or all of the signatures on the
certificate may be facsimile. In case any officer, transfer agent, or registrar
who has signed or whose facsimile signature has been placed on a certificate
shall have ceased to be that officer, transfer agent or registrar before that
certificate is issued, it may be issued by the corporation with the same effect
as if that person were an officer, transfer agent or registrar at the date of
issuance.
Section 5. LOST CERTIFICATES.
- ---------
Except as provided in this Section 5, no new certificates for
shares shall be issued to replace an old certificate unless the latter is
surrendered to the corporation and canceled at the same time. The Board of
Directors, in case any share certificate or certificate for any other security
is lost, stolen, or destroyed, may authorize the issuance of a replacement
certificate on such terms and conditions as the board may require, including
provision for indemnification of the corporation secured by a bond or other
adequate security sufficient to protect the corporation against any claim that
may be made against it, including any expense or liability, on account of the
alleged loss, theft or destruction of the certificate or the issuance of the
replacement certificate.
Section 6. REPRESENTATION OF SHARES OF OTHER CORPORATIONS.
- ---------
The chairman of the board, the president or any vice-
president, or any other person authorized by resolution of the Board of
Directors or by any of the foregoing designated officers, is authorized to vote
on behalf of the corporation any and all shares of any other corporation or
corporations, foreign or domestic, standing in the name of the corporation. The
authority granted to these officers to vote or represent on behalf of the
corporation any and all shares held by the corporation in any other corporation
or corporations may be exercised by any of these officers in person or by any
person authorized to do so by a proxy duly executed by these officers.
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Section 7. INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND
- --------- OTHER AGENTS.
The corporation shall, to the maximum extent permitted by
California General Corporation Law, indemnify each of its agents against
expenses, judgments, fines, settlements and other amounts actually and
reasonably incurred in connection with any proceeding arising by reason of the
fact that any such person is or was an agent of the corporation. For purposes of
this Section 7, an "agent" of the corporation includes any person who is or was
a director, officer, employee or other agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, or was a director, officer, employee or agent of a corporation which
was a predecessor corporation of the corporation or of another enterprise at the
request of such predecessor corporation.
Section 8. CONSTRUCTION AND DEFINITIONS.
- ---------
Unless the context requires otherwise, the general provisions,
rules of construction and definitions in the California General Corporation Law
shall govern the construction of these Bylaws. Without limiting the generality
of this provision, the singular in number includes the plural, the plural number
includes the singular and the term "person" includes both a corporation and a
natural person.
ARTICLE VI
OFFICES
-------
Section 1. PRINCIPAL OFFICES.
- ---------
The Board of Directors shall fix the location of the principal
executive offices of the corporation at any place within or outside the State of
California. If the principal executive offices are located outside the state,
and the corporation has one or more business offices in the state, the Board of
Directors shall fix and designate a principal business office in the State of
California.
Section 2. OTHER OFFICES.
- ---------
The Board of Directors may at any time establish branch or
subordinate offices at any place or places where the corporation is qualified to
do business.
ARTICLE VII
AMENDMENTS
----------
Section 1. AMENDMENT BY SHAREHOLDERS.
- ---------
New Bylaws may be adopted or these Bylaws may be amended or
repealed by the vote or written consent of holders of a majority of the
outstanding shares entitled to vote; provided, however, that if the Articles of
Incorporation of the corporation set forth a number of
17
<PAGE>
authorized directors of the corporation, the authorized number of directors may
be changed only by an amendment of the Articles of Incorporation.
Section 2. AMENDMENT BY DIRECTORS.
- ---------
Subject to the rights of the shareholders as provided in Section
1 of this Article VII, Bylaws, other than a bylaw or an amendment of a bylaw
changing the authorized number of directors, may be adopted, amended or repealed
by the Board of Directors.
18
<PAGE>
EXHIBIT 3.03
PARTNERSHIP AGREEMENT
---------------------
OF
--
BELTWAY MEDIA PARTNERS
----------------------
THIS AGREEMENT is made and entered into this 1st day of August, 1991, by
and among NEW INSPIRATION BROADCASTING COMPANY, INC., a California corporation,
GOLDEN GATE BROADCASTING CO., INC., a California corporation, and SALEM
COMMUNICATIONS CORPORATION, a California corporation ("Salem Communications"),
hereinafter referred to individually as a "Partner" and collectively as
"Partners."
W I T N E S S E T H
-------------------
WHEREAS, the Partners desire to form a Partnership (as hereinafter defined)
to acquire, own and operate radio station WAVA (FM) located in Arlington,
Virginia (the "Station"); and
WHEREAS, the Partners have agreed upon the terms and conditions pursuant to
which they will operate the Partnership, which terms and conditions are herein
reduced to writing.
NOW, THEREFORE, in consideration of the promises contained herein, the
Partners agree as follows:
ARTICLE I
GENERAL PROVISIONS
------------------
1.1. Name. The Partners hereby form a partnership pursuant to the
----
provisions of the Virginia Uniform Partnership Act to do business under the name
"Beltway Media Partners" (the "Partnership").
1.2. Term. The term of the Partnership shall commence on the date of this
----
Agreement and shall continue until terminated upon a vote of Partners
representing a majority of the Partnership Interests. For purposes of this
Agreement, a Partner's "Interest" is defined as that Partner's interest in the
Partnership and in the profits and losses of the Partnership as set forth
pursuant to Section 4.1, below.
1.3. Purpose and Objectives. The purpose and business of the Partnership
----------------------
shall be to acquire, own, manage and ultimately sell the Station.
1.4. Office. The Partnership may maintain one or more offices at such
------
location or locations as the Managing Partner (as hereinafter defined) shall
determine.
1.5. Definitions.
-----------
(a) "Capital Account" means, with respect to any Partner, the Capital
Account maintained for such person in accordance with the following
provisions:
<PAGE>
(i) To each person's Capital Account there shall be credited such
person's Capital Contributions, such person's distributive share of
Profits, and any items in the nature of income or gain which are
specially allocated, and the amount of any Partnership liabilities
assumed by such person or which are secured by any property
distributed to such person;
(ii) To each person's Capital Account there shall be debited the
amount of cash and the Gross Asset Value of any property distributed
to such person pursuant to any provision of this Agreement, such
person's distributive share of Losses, and any items in the nature of
expenses or losses which are specially allocated, and the amount of
any liabilities of such person assumed by the Partnership or which are
secured by any property contributed by such person to the Partnership;
(iii) In the event any interest in the Partnership is
transferred in accordance with the terms of this Agreement, the
transferee shall succeed to the Capital Account of the transferor to
the extent it relates to the transferred interest;
(iv) In determining the amount of any liability for purposes of
sections (i) and (ii) hereof, there shall be taken into account Code
Section 752(c) and any other applicable provisions of the Code and
Regulations.
The foregoing provisions and the other provisions of this Agreement
relating to the maintenance or Capital Accounts are intended to comply with
Regulations Section 1.704-1(b), and shall be interpreted and applied in a
manner consistent with such Regulations.
(b) "Capital Contributions" means, with respect to any Partner, the
amount of money and the initial Gross Asset Value of any property (other
than money) contributed to the Partnership with respect to the Partnership
Interest held by such Partner pursuant to the terms of this Agreement.
(c) "Code" means the Internal Revenue Code of 1986, as amended from
time to time (or any corresponding provisions of succeeding law).
(d) "Depreciation" means, for each fiscal year or other period, an
amount equal to the depreciation, amortization, or other cost recovery
deduction allowable with respect to an asset for such year or other period,
except that if the Gross Asset Value of an asset differs from its adjusted
basis for federal income tax purposes at the beginning of such year or
other period, Depreciation shall be an amount which bears the same ratio to
such beginning Gross Asset Value as the federal income tax depreciation,
amortization, or other cost recovery deduction for such year or other
period bears to such beginning adjusted tax basis; provided, however, that
if the federal income tax depreciation, amortization, or other cost
recovery deduction for such year is zero, Depreciation shall be determined
with references to such beginning Gross Asset Value using any reasonable
method selected by the Managing Partner.
2
<PAGE>
(e) "Gross Asset Value" means, with respect to any asset, the asset's
adjusted basis for federal income tax purposes, except as follows:
(i) The initial Gross Asset Value of any asset contributed by a
Partner to the Partnership shall be the gross fair market value of
such asset, as determined by the contributing Partner and the
Partnership;
(ii) The Gross Asset Value of all Partnership assets shall be
adjusted to equal their respective gross fair market value, as
determined by the Managing Partner, as of the following times: (a)
the acquisition of an additional interest in the Partnership by any
new or existing Partner in exchange for more than a de minimis Capital
Contribution; (b) the distribution by the Partnership to a Partner of
more than a de minimis amount of Property as consideration for an
interest in the Partnership; and (c) the liquidation of the
Partnership within the meaning of Regulations Section 1.704-
1(b)(2)(ii) (g); provided, however, that adjustments pursuant to
clauses (a) and (b) above shall be made only if the Managing Partner
reasonably determines that such adjustments are necessary or
appropriate to reflect the relative economic interests of the Partners
in the Partnership;
(iii) The Gross Asset Value of any Partnership asset distributed
to any Partner shall be the gross fair market value of such asset on
the date of distribution; and
(iv) The Gross Asset Values of Partnership assets shall be
increased (or decreased) to reflect any adjustments to the adjusted
basis of such assets pursuant to Code Section 734(b) or Code Section
743(b), but only to the extent that such adjustments are taken into
account in determining Capital Accounts pursuant to Regulations
Section 1.704-1(b)(2)(iv)(m) and Section 1.5(a) hereof; provided,
however, that Gross Asset Values shall not be adjusted pursuant to
this section (iv) to the extent the Managing Partner determines that
an adjustment pursuant to section (ii) hereof is necessary or
appropriate in connection with a transaction that would otherwise
result in an adjustment pursuant to this section (iv).
If the Gross Asset Value of an asset has been determined or adjusted
pursuant to section (i), section (ii) or section (iv) hereof, such Gross
Asset Value shall thereafter be adjusted by the Depreciation taken into
account with respect to such asset for purposes of computing Profits and
Losses.
(f) "Nonrecourse Deductions" has the meaning set forth in Section
1.704-1T(b)(4)(iv)(b) of the Regulations. The amount of Nonrecourse
Deductions for a Partnership fiscal year equals the net increase, if any,
in the amount of Partnership Minimum Gain during that fiscal year,
determined according to the provisions of Section 1.704-1T(b)(4)(iv)(b) of
the Regulations.
3
<PAGE>
(g) "Partner Loan Nonrecourse Deductions" means any Partnership
deductions that would be Nonrecourse Deductions if they were not
attributable to a loan made or guaranteed by a Partner within the meaning
of Regulations Section 1.704-1T(b)(4)(iv)(h).
(h) "Partnership Minimum Gain" has the meaning set forth in
Regulations Section 1.704-1T(b)(4)(iv)(c).
(i) "Percentage Interest" means, with respect to any Partner, the
Percentage interest set forth opposite such Partner's name on Exhibit B
attached hereto. In the event any Partnership interest is transferred in
accordance with the provisions of this Agreement, the transferee of such
interest shall succeed to the Percentage Interest of his transferor to the
extent it relates to the transferred interest.
(j) "Profits" and "Losses" means, for each fiscal year or other
period, an amount equal to the Partnership's taxable income or loss for
such year or period, determined in accordance with Code Section 703(a) (for
this purpose, all items of income, gain, loss, or deduction required to be
stated separately pursuant to Code Section 703(a)(l) shall be included in
taxable income or loss), with the following adjustments:
(i) Any income of the Partnership that is exempt from federal
income tax and not otherwise taken into account in computing Profits
or Losses pursuant to this section shall be added to such taxable
income or loss ;
(ii) Any expenditures of the Partnership described in Code
Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B)
expenditures pursuant to Regulations Section 1.704-1(b)(2)(iv)(i), and
not otherwise taken into account in computing Profits and Losses
pursuant to this section (j) shall be subtracted from such taxable
income or loss;
(iii) In the event the Gross Asset Value of any Partnership
asset is adjusted pursuant to section 1.5(e)(ii) or section
1.5(e)(iii) hereof, the amount of such adjustment shall be taken into
account as gain or loss from the disposition of such asset for
purposes of computing Profits or Losses;
(iv) Gain or loss resulting from any disposition of property with
respect to which gain or loss is recognized for federal income tax
purposes shall be computed by reference to the Gross Asset Value of
the property disposed of, notwithstanding that the adjusted tax basis
of such property differs from its Gross Asset Value;
(v) In lieu of the depreciation, amortization, and other cost
recovery deductions taken into account in computing such taxable
income or loss, there shall be taken into account Depreciation for
such fiscal year or other period, computed in accordance with section
1.5(d) hereof; and
4
<PAGE>
(vi) Notwithstanding any other provision of this section, any
items which are specially allocated shall not be taken into account in
computing Profits or Losses.
(k) "Regulations" means the Income Tax Regulations promulgated under
the Code, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
ARTICLE II
MANAGEMENT AND OPERATIONS
-------------------------
2.1. Managing Partner. The management and operation of the Partnership
----------------
shall be the responsibility of, and shall be solely vested in, a managing
partner ("Managing Partner"). The initial Managing Partner of the Partnership
is Salem Communications. The Managing Partner is authorized and empowered to
take such action as it deems necessary to carry out the purposes of the
Partnership set forth in Section 1.3, above. Upon the vote of Partners
representing a majority of the Partnership Interests, the Partners can elect or
to remove the current Managing Partner and appoint a new Managing Partner.
2.2. Authority of Managing Partner. Without limiting the general authority
-----------------------------
of the Managing Partner, the Managing Partner shall be authorized to appoint
agents, retain legal counsel and auditors, contract for professional services,
maintain bank accounts, deposit and draw checks, arrange for the taking and
holding of title to assets, make elections available to the Partnership and file
tax returns under Federal and state tax laws, take custody of investments or
appoint custodians for the same, vote the Partnership's interest in other
entities, and execute agreements and contracts.
2.3. Compensation and Reimbursement of Expenses. The Managing Partner
------------------------------------------
shall be paid an annual management fee for its services to the Partnership in
the amount set forth on Exhibit A attached hereto. The Managing Partner shall
be reimbursed for all reasonable and customary out-of-pocket expenses incurred
by the Managing Partner in connection with the Partnership's business.
ARTICLE III
CAPITAL CONTRIBUTIONS; LOANS
----------------------------
3.1. Capital Contributions. Upon the execution hereof, each Partner shall
---------------------
make a Capital Contribution to the Partnership in the amount described in the
attached Exhibit B. Further Capital Contributions shall be made by the Partners
to the Partnership (i) upon the consent of all the Partners for any reason, or
(ii) upon the call of the Managing Partner and the approval by Partners
representing a majority of Partnership Interests for additional funds to pay the
expenses of the Partnership. The additional Capital Contribution made by each
Partner shall be equal to its pro rata share of the total additional
contribution necessary, determined on the basis of its Percentage Interest.
5
<PAGE>
3.2. Failure to Make Capital Contributions. If a Partner fails, in whole
-------------------------------------
or in part, to timely make its share of a required Capital Contribution (the
"Defaulting Partner"), the nondefaulting Partners ("Nondefaulting Partners")
may, but shall not be obligated to, make any additional Capital Contribution in
an amount equal to the portions not made by the Defaulting Partner. If a
Nondefaulting Partner contributes funds to the Partnership which should have
been contributed by a Defaulting Partner, such contributions shall be treated as
a loan, hereinafter referred to as a "default loan," made by the Nondefaulting
Partner to the Defaulting Partner. The default loan shall be payable on demand
with interest equal to the lesser of (i) the maximum rate permitted by law or
(ii) two (2) points over the prime rate of interest as announced from time to
time by Security Pacific National Bank, or its successor (the "Prime Rate"). To
the extent the Defaulting Partner does not repay the default loan directly, the
default loan shall, except as provided below, be repaid by the Defaulting
Partner out of the Partnership distributions otherwise payable to the Defaulting
Partner. If a default loan is not repaid in full within ninety (90) days after
it is made, the Nondefaulting Partner shall have an option to purchase the
Defaulting Partner's Interest. The option shall be exercisable by written
notice to the Defaulting Partner given at any time after the option arose and
before the default loan is repaid in full. The option price shall be an amount
equal to the Defaulting Partner's total cash contributed including the amount
the Defaulting Partner is deemed to have contributed as a result of the default
loan, less the amount of the principal and interest still outstanding on the
default loan. If the option granted herein is exercised, the closing of the
purchase of the Defaulting Partner's Interest shall occur on the thirtieth
(30th) day following the date of exercise of the option. At closing, one-half
of the amount due to the Defaulting Partner by the Nondefaulting Partner shall
be paid in cash, and the balance shall be evidenced by a Promissory Note which
shall provide that the principal, together with interest at the Prime Rate on
the date of closing, shall be payable on the first anniversary of closing. Upon
closing of the purchase, the default loan obligation of the Defaulting Partner
to the Nondefaulting Partner shall cease. If more than one Nondefaulting
Partner desires to make the additional contribution, each such Nondefaulting
Partner shall be entitled to make an additional contribution and purchase the
Defaulting Partner's Interest on a pro rata basis based upon its Interest.
3.3. No Interest on Capital Contributions. No Partner shall be paid
------------------------------------
interest on any capital contribution.
3.4. Treatment of Capital Contributions. The Partnership shall not redeem
----------------------------------
or repurchase any Interests, except as provided in Article V, below, and no
Partner shall have the right to withdraw or receive any return of its capital
contribution, except as provided in Sections 4.2 and 4.3. No capital
contribution is required to be returned in the form of property other than cash.
3.5. Capital Accounts. A Capital Account shall be established for each
----------------
Partner on the books and records of the Partnership.
3.6. Loans by Partners to the Partnership. In the event the Partnership's
------------------------------------
funds are insufficient to meet the costs, expenses, obligations, liabilities and
charges, or to make any expenditure authorized by this Agreement, and additional
capital contributions are not made pursuant to Section 3.1, above, and
additional funds are not available from third parties on terms
6
<PAGE>
acceptable to the Managing Partner, the Partners may (but shall not be required
to) advance such funds to the Partnership. To the extent more than one of the
Partners desires to make a loan, it shall be permitted to make loans on a pro
rata basis in accordance with its Percentage Interest. All amounts so advanced
shall take the form of a loan and shall bear interest at a rate equal to the sum
of (i) the Prime Rate, plus (ii) two percent (2%) per annum. Such loans will be
repaid prior to any other distributions to the Partners.
ARTICLE IV
DISTRIBUTIONS OF CASH AND ALLOCATIONS
-------------------------------------
OF PROFIT AND LOSS
------------------
4.1. Distributions of Cash and Sale Proceeds. Subject to Section 4.4,
---------------------------------------
below, distributions of cash available to distribute to the Partners, after
paying all current expenses and reserving for other expenses and purposes, shall
be distributed to the Partners in proportion to their Percentage Interests, as
and when determined by the Managing Partner.
4.2. Distribution Upon Dissolution. Subject to Section 4.4, below, upon
-----------------------------
dissolution of the Partnership, the assets of the Partnership shall be
liquidated and the proceeds thereof shall be distributed as follows:
(a) First, to the payment of obligations of the Partnership to third
parties;
(b) Second, to the payment of obligations to any Partner; and
(c) Thereafter, to the Partners in proportion to the positive balances
in their Capital Accounts, after giving effect to all contributions,
distributions and allocations for all periods.
4.3. Compliance with Certain Requirements of Regulations. In the event the
---------------------------------------------------
Partnership is "liquidated" within the meaning of Regulations Section 1.704-
1(b)(2)(ii)(g), (a) distributions shall be made pursuant to section 4.2 to the
Partners who have positive Capital Accounts in compliance with Regulations
Section 1.704-1(b)(2)(ii)(b)(2), and (b) if any Partner's Capital Account has a
deficit balance (after giving effect to all contributions, distributions, and
allocations for all taxable years, including the year during which such
liquidation occurs), such Partner shall contribute to the capital of the
Partnership the amount necessary to restore such deficit balance to zero in
compliance with Regulations Section 1.704-1(b)(2)(ii)(b)(3).
4.4. Distributions to Repay Default Loans. In the event that a Partner
------------------------------------
made a default loan pursuant to the provisions of Section 3.2, above, then the
amounts which would otherwise have been distributed to the Defaulting Partner
pursuant to the provisions of Sections 4.1 or 4.2, above, shall be distributed
to the Partner making the default loan (pro rata based upon total amount then
due, if more than one default loan exists) until the default loan is repaid in
full. The amount so distributed shall be deemed to be payment by the Defaulting
Partner on the default loan and such payment shall be credited first to interest
and then to principal.
7
<PAGE>
4.5. Assets Available for Distribution. Except as otherwise provided in
---------------------------------
this Agreement, each holder of an Interest shall look solely to the assets of
the Partnership for all distributions from the Partnership and the return of its
capital contribution thereto and shall have no recourse (upon dissolution or
otherwise) against the other Partners or any of their affiliates.
4.6. Allocation of Profits and Losses. Except to the extent agreed
--------------------------------
otherwise by the Partners, after giving effect to the special allocations set
forth below, Profits and Losses for any fiscal year shall be allocated among the
Partners in proportion to their Percentage Interests.
4.7. Special Allocations.
-------------------
(a) Code Section 754 Adjustment. To the extent an adjustment to the
---------------------------
adjusted tax basis of any Partnership asset pursuant to Code Section 734(b)
or Code Section 743(b) is required, pursuant to Regulations Section 1.704-
1(b)(2)(iv)(m), to be taken into account in determining Capital Accounts,
the amount of such adjustment to the Capital Accounts shall be treated as
an item of gain (if the adjustment increases the basis of the asset) or
loss (if the adjustment decreases such basis) and such gain or loss shall
be specially allocated to the Partners in a manner consistent with the
manner in which their Capital Accounts are required to be adjusted pursuant
to such section of the Regulations.
(b) Nonrecourse Deductions. Nonrecourse Deductions for any fiscal
----------------------
year or other period shall be specially allocated among the Partners in
proportion to their Percentage Interests.
(c) Partner Loan Nonrecourse Deductions. Any Partner Loan Nonrecourse
-----------------------------------
Deductions for any fiscal year or other period shall be specially allocated
to the Partner who bears the risk of loss with respect to the loan to which
such Partner Loan Nonrecourse Deductions are attributable in accordance
with Regulations Section 1.704-1T(b) (4) (iv) (h).
(d) Curative Allocations. The allocations set forth in sections
--------------------
4.7(b) and 4.7(c) hereof (the "Regulatory Allocations") are intended to
comply with certain requirements of Regulations Section 1.704-1(b).
Notwithstanding an other provisions of this section 4, the Regulatory
Allocations shall be taken into account in allocating other Profits,
Losses, and items of income, gain, loss, and deduction among the Partners
so that, to the extent possible, the net amount of such allocations of
other Profits, Losses, and other items and the Regulatory Allocations to
each Partner shall be equal to the net amount that would have been
allocated to each such Partner if the Regulatory Allocations had not
occurred. Notwithstanding the preceding sentence, Regulatory Allocations
relating to (a) Nonrecourse Deductions shall not be taken into account
except to the extent that there has been a reduction in Partnership Minimum
Gain, and (b) Partner Loan Nonrecourse Deductions shall not be taken into
account except to the extent that there would have been a reduction in
Partnership Minimum Gain if the loan to which such deductions are
attributable were not made or guaranteed by a Partner within the meaning of
Regulations Section 1.704-1T(b)(4)(iv)(h).
8
<PAGE>
4.8. Tax Allocations: Code Section 704(c). In accordance with Code
-------------------------------------
Section 704(c) and the Regulations thereunder, income, gain, loss, and deduction
with respect to any property contributed to the capital of the Partnership
shall, solely for tax purposes, be allocated among the Partners so as to take
account of any variation between the adjusted basis of such property to the
Partnership for federal income tax purposes and its Initial Gross Asset Value.
In the event the Gross Asset Value of any Partnership asset is adjusted
pursuant to section 1.5(e) hereof, subsequent allocations of income, gain, loss,
and deduction with respect to such asset shall take account of any variation
between the adjusted basis of such asset for federal income tax purposes and its
Gross Asset Value in the same manner as under Code Section 704(c) and the
Regulations thereunder.
Any elections or other decisions relating to such allocations shall be made
by the Managing Partner in any manner that reasonably reflects the purpose and
intention of this Agreement. Allocations pursuant to this section 4.8 are
solely for purposes of federal, state, and local taxes and shall not affect, or
in any way be taken into account in computing, any Person's Capital Account or
share of Profits, Losses, other items, or distributions pursuant to any
provisions of this Agreement.
ARTICLE V
TRANSFER OF PARTNERSHIP INTEREST
--------------------------------
5.1. General Restrictions. No partner shall sell, assign, pledge,
--------------------
hypothecate, encumber or in any way transfer any portion of its Interest,
whether voluntarily or by operation of law, during the term of this Agreement
without the prior, express, written consent of the partner(s), including the
transferring Partner, then owning at least eighty percent (80%) of the
Interests. Any permitted transferee, as defined below, pledgee or security
holder shall hold such interest subject to the provisions of this Article V.
5.2. Sale to Third Parties; Transfer of Control. If (i) a Partner proposes
------------------------------------------
to sell, transfer or otherwise dispose of its Interest, or any portion thereof,
to a party, including another Partner, other than as permitted by Section 5.1,
above, (ii) a Partner is to be divested of its Interest, or any portion thereof,
through seizure or sale by legal process or through operation of law, or (iii)
there shall occur a proposed "transfer of control", as defined below, of a
Partner, the Interest shall first be offered simultaneously for sale to the
Partnership and the other Partners in writing (the "Offer"). The Offer shall
state the Interest, or portion thereof, to be sold, the name and address of the
prospective purchaser or transferee of control, and the proposed price and terms
of payment of the sale. The Partnership and the non-offering Partners shall
have the option to purchase the Interest, or portion thereof, described in the
Offer upon the same terms and conditions and at the same price as set forth in
the Offer, or for an amount equal to the Appraised Value of such Interest, or
portion thereof; provided, however, that if any Partner is to be divested of its
Interest, or portion thereof, through seizure or sale by legal process or any
transfer through operation of law, or in the event of a proposed transfer of
control of a Partner, the offering price shall be equal to the Appraised Value.
If the Interest, or portion thereof, is purchased at its Appraised Value, the
purchase price shall be paid in not more than five (5) equal annual principal
installments, the
9
<PAGE>
first due on the date of closing, and subsequent installments due on the
anniversary thereof, plus interest payable annually together with each principal
payment and accruing on the unpaid principal balance at the Prime Rate. The
closing for a sale hereunder shall occur not more than sixty (60) days after the
last acceptance of the Offer.
5.3. Acceptance of Offer. The Partnership may, with approval of a majority
-------------------
of the Partnership Interests, exclusive of the offering Partner's Interest,
accept the Offer as to all or any portion of the Interest being offered within
the later of (i) thirty (30) days after the date of receipt of the Offer or,
(ii) if requested by the Partnership or any Partner that could potentially
purchase the Interest within thirty (30) days after the date of receipt of the
Offer, thirty (30) days after the determination of the Appraised Value of such
Interest. If the Partnership does not accept the Offer with respect to all of
the Interest being offered within such thirty (30) day period, then the Managing
Partner shall call a meeting of all Partners, other than the Partner whose
Interest is being offered, by giving ten (10) days notice thereof to the
Partners entitled thereto (the "Offeree Partners"). Such meeting shall be held
not more than thirty (30) days after the expiration of the thirty (30) day
period during which the Offer may be accepted by the Partnership. The Managing
Partner shall make successive offers of the Interest, or portion thereof, not
accepted by the Partnership to those Offeree Partners present or legally
represented, in accordance with the procedures set forth in Section 5.4, below.
Such successive offers shall continue until either the entire Interest so
offered is accepted or until it is determined by successive offerings that the
entire Interest so offered will not be accepted.
5.4. Procedure at Meeting. At the meeting called in accordance with
--------------------
Section 5.3, above, the Managing Partner shall offer the portion of the Interest
not accepted by the Partnership to the Offeree Partners who are present or
legally represented at the meeting, in the following manner:
(a) The Managing Partner shall offer to each Offeree Partner present
or legally represented, and each may accept, only that percentage of the
Interest not accepted by the Partnership as the Interest of such Offeree
Partner bears to the Interests of all Offeree Partners present or legally
represented.
(b) If the entire Interest offered is not accepted in accordance with
the procedures set forth in Subsection (a), above, the Managing Partner
shall thereafter make successive offerings during each of which the
Managing Partner shall offer to each Offeree Partner present or legally
represented who had not previously refused to accept all of the Interest
offered to it at such meeting, that percentage of the Interest not
previously accepted by those present at the meeting as its Interest,
including any Interest accepted at the meeting, bears to the Interests,
including any Interest accepted at the meeting, of all Offeree Partners
present or legally represented who have not previously refused to accept
all of the Interest offered to them at such meeting.
5.5. Non-Acceptance. If a Partner proposes to dispose of its Interest, or
--------------
any portion thereof, or is to be divested of its Interest as provided in Section
5.2(i) or (ii), above, and if the offer of sale is not accepted by the
Partnership and the Offeree Partners with respect to the entire Interest offered
for sale, then the offering Partner shall have the right to sell or transfer
such non-
10
<PAGE>
accepted Interest to the third party designated in the Offer, on the same terms
and conditions specified in the Offer; provided that said sale or transfer is
made within ninety (90) days after the date on which the Offer was made to the
Partnership and the Offeree Partners under Section 5.2, above, and the
transferee shall take such Interest free from the restrictions of this
Agreement. The Partnership and the Offeree Partners shall provide the selling
Partner with such documents as may be necessary to permit the sale of said
Interest free from the restrictions of this Agreement. In the event that neither
the Partnership nor the Offeree Partners nor the third party purchases the
entire Interest within the period provided above, the Interest shall again be
subject to the restrictions of this Agreement.
5.6. Notice of Disposition. No assignment or other disposition of any
---------------------
Interest shall be effective until notice in writing of the assignment or other
disposition has been received by the Managing Partner and recorded in the books
of the Partnership.
5.7. Remedy for Violation. Upon any sale, transfer, pledge, bequest, or
--------------------
other disposition of any Interest in violation of any of the provisions of this
Article V or any other provisions of this Agreement, the Partnership shall have,
in addition to such other remedies and damages as may be available to it under
applicable law, the right and option at any time within two (2) years after the
discovery of such sale or other disposition in violation of this Agreement, to
purchase all or any of such Interest from the holder thereof at the price at
which such Interest was sold or transferred, or the Appraised Value as of such
date, whichever is lower.
5.8. Definition of Appraised Value. For purposes of this Article V,
-----------------------------
Appraised Value shall mean the fair market value of the assets of the
Partnership less the liabilities of the Partnership, determined by an appraiser
selected by the Partnership and an appraiser selected by the transferring
Partner, or if such appraisers are unable to agree on a value, they shall
jointly appoint a third appraiser, and the value shall be determined by a
majority of these three (3) appraisers.
5.9. Transfer of Control. For purposes of this Agreement, a transfer of
-------------------
control shall be defined as a transaction or series of transactions whereby more
than fifty percent (50%) of the voting stock of a Partner is held by a person or
persons other than Edward G. Atsinger III, Stuart W. Epperson, their spouses,
their children and trusts created for the primary benefit of their spouses and
children.
ARTICLE VI
BOOKS AND RECORDS, ACCOUNTING,
------------------------------
TAX ELECTIONS, ETC.
------------------
6.1. Books and Records. Books and records of the Partnership shall be
-----------------
maintained at the principal office of the Partnership or at any other place
determined by the Managing Partner and shall be available for examination by any
Partner or its duly authorized representative(s) at any reasonable time.
11
<PAGE>
6.2. Accounting. The books of account of the Partnership shall be kept on
----------
a calendar year basis using such method of accounting as the Managing Partner
shall determine.
6.3. Expenses of the Partnership. All expenses of organizing and operating
---------------------------
the Partnership shall be borne by the Partnership. Expenses of operating the
Partnership shall be deemed to include, without limitation, legal and accounting
fees, fees and expenses paid to other persons employed by the Partnership,
brokerage fees and commissions, and all other fees and expenses associated with
the activities of the Partnership.
6.4. Special Basis Adjustment. In connection with any transfer of a
------------------------
Partnership interest, the Managing Partner shall have the option to cause the
Partnership to make an election to adjust the basis of the Partnership's
property in the manner provided in Section 734(b) and 743(b) of the Code.
6.5. Tax Matters Partner. The Managing Partner shall be the party
-------------------
designated to receive all notices from the Internal Revenue Service which
pertain to the tax affairs of the Partnership. The Managing Partner shall be
the "Tax Matters Partner" pursuant to the Code.
ARTICLE VII
MISCELLANEOUS PROVISIONS
------------------------
7.1. Amendment. This Partnership Agreement shall not be amended except
---------
upon the written agreement of all of the Partners.
7.2. Binding Effect. The covenants and agreements contained herein shall
--------------
be binding upon, and inure to the benefit of the Partners and their successors
and assigns.
7.3. Applicable Law. This Agreement shall be governed by and construed in
--------------
accordance with the laws of the state of California.
7.4. Separability of Provisions. Each provision of this Agreement shall be
--------------------------
considered separable and if for any reason any provision or provisions hereof
are determined to be invalid and contrary to any existing or future law, such
invalidity shall not impair the operation of or affect of those portions of this
Agreement which are valid.
7.5. Headings. Section headings are for descriptive purposes only and
--------
shall not control or alter the meaning of this Agreement as set forth in the
text.
7.6. Interpretation. When the context in which words are used in this
--------------
Agreement indicates that such is the intent, words in the singular shall include
plural and vice versa.
7.7. Partition. The Partners hereby waive their rights, if any, to
---------
partition Partnership property.
12
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Partnership
Agreement as of the day, month and year first above written.
NEW INSPIRATION BROADCASTING COMPANY,
INC.
By:
-----------------------------------
GOLDEN GATE BROADCASTING CO., INC.
By:
-----------------------------------
SALEM COMMUNICATIONS CORPORATION
By:
-----------------------------------
13
<PAGE>
EXHIBIT A
---------
Annual Management Fees
----------------------
<TABLE>
<CAPTION>
NET SALES FEE BASE PLUS OF NET
FROM TO -------- ------ SALES OVER
- ---- -- ----------
<S> <C> <C> <C> <C>
$ 25,000 $ 49,999 $ 3,000 7.50% $ 25,000
$ 50,000 $ 74,999 $ 4,875 7.75% $ 50,000
$ 75,000 $ 99,999 $ 6,813 8.00% $ 75,000
$100,000 $149,999 $ 8,813 8.25% $100,000
$150,000 $199,999 $12,938 8.50% $150,000
$200,000 $249,999 $17,188 8.75% $200,000
$250,000 $299,999 $21,563 9.00% $250,000
$300,000 $349,999 $26,063 9.25% $300,000
$350,000 $399,999 $30,688 9.50% $350,000
$400,000 $449,999 $35,438 9.75% $400,000
$450,000 $499,999 $40,313 10.00% $450,000
$500,000 or more $45,313
</TABLE>
14
<PAGE>
EXHIBIT B
---------
<TABLE>
<CAPTION>
PERCENTAGE INITIAL CAPITAL
PARTNER INTEREST CONTRIBUTION
- ------- -------- ------------
<S> <C> <C>
New Inspiration Broadcasting Company, 45% 45%
Inc.
Golden Gate Broadcasting Company, Inc. 40% 40%
Salem Communications Corporation 15% 15%
</TABLE>
15
<PAGE>
EXHIBIT 3.04
1388591
ENDORSED
FILED
in the office of the Secretary
of State of the State of California
OCT 10 1986
MARCH FONG EU, Secretary of State
ARTICLES OF INCORPORATION OF
ATEP RADIO, INC.
----------------
ONE: The name of this Corporation is ATEP RADIO, INC.
TWO: The purpose of this Corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of California other than the banking business, the trust company business or
the practice of a profession permitted to be incorporated by the California
Corporations Code.
THREE: The name and address in this state of the Corporation's initial
agent for service of process is Eric H. Halvorson, 2310 Ponderosa Drive, Suite
29, Camarillo, California 93010.
FOUR: The total number of shares which the Corporation is authorized to
issue is one hundred thousand (100,000).
Dated: October 9, 1986
Eric H. Halvorson
-----------------
Eric H. Halvorson
Sole Incorporator
I declare that I am the person who executed the above Articles of
Incorporation and such instrument is my act and deed.
Eric H. Halvorson
-----------------
Eric H. Halvorson
Sole Incorporator
<PAGE>
EXHIBIT 3.05
BYLAWS OF
ATEP RADIO, INC.
A CALIFORNIA CORPORATION
--------------------------------------------
ARTICLE I
SHAREHOLDERS' MEETING
---------------------
Section 1. PLACE OF MEETINGS.
- ---------
Meetings of shareholders shall be held at any place within or outside the
State of California designated by the Board of Directors. In the absence of any
such designation, shareholders' meetings shall be held in the principal
executive office of the corporation.
Section 2. ANNUAL MEETINGS.
- ---------
The annual meeting of shareholders shall be held each year on a date and at
a time designated by the Board of Directors. The date so designated shall be
within five (5) months after the end of the fiscal year of the corporation, and
within fifteen (15) months after the last annual meeting. At each annual
meeting directors shall be elected, and any other proper business may be
transacted.
Section 3. SPECIAL MEETINGS.
- ---------
A special meeting of the shareholders may be called at any time by the
Board of Directors, or by the chairman of the Board, or by the president or by
one or more shareholders holding shares in the aggregate entitled to cast not
less than ten percent (10%) of the votes at that meeting.
If a special meeting is called by any person or persons other than the
Board of Directors, the request shall be in writing, specifying the time of such
meeting and the general nature of the business proposed to be transacted, and
shall be delivered personally or sent by registered mail or by telegraphic or
other facsimile transmission to the chairman of the Board, the president, any
vice-president or the secretary of the corporation. The officer receiving the
request shall cause notice to be promptly given to the shareholders entitled to
vote, in accordance with the provisions of Sections 4 and 5 of this Article I,
that a meeting will be held at the time requested by the person or persons
calling the meeting, not less than thirty-five (35) nor more than sixty (60)
days after the receipt of the request. If the notice is not given within twenty
(20) days after receipt of the request, the person or persons requesting the
meeting may give the notice. Nothing contained in this paragraph of this
Section 3 shall be construed as limiting, fixing or affecting the time when a
meeting of shareholders called by action of the Board of Directors may be held.
Section 4. NOTICE OF MEETINGS.
- ---------
All notices of meetings of shareholders shall be sent or otherwise given in
accordance with Section 5 of this Article I not less than ten (10) nor more than
sixty (60) days before the date of the meeting. The notice shall specify the
place, date and hour of the meeting and (a) in the case of
<PAGE>
a special meeting, the general nature of the business to be transacted or (b) in
the case of the annual meeting, those matters which the Board of Directors, at
the time of giving notice, intends to present for action by the shareholders.
The notice of any meeting at which directors are to be elected shall include the
name of any nominee or nominees whom, at the time of the notice, management
intends to present for election.
If action is proposed to be taken at any meeting for approval of (i) a
contract or transaction in which a director has a direct or indirect financial
interest, pursuant to Section 310 of the Corporations Code of California, (ii)
an amendment of the Articles of Incorporation, pursuant to Section 902 of that
Code, (iii) a reorganization of the corporation, pursuant to Section 1201 of
that Code, (iv) a voluntary dissolution of the corporation, pursuant to Section
1900 of that Code, or (v) a distribution in dissolution other than in accordance
with the rights of outstanding preferred shares, pursuant to Section 2007 of
that Code, the notice shall also state the general nature of that proposal.
Section 5. MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE.
- ---------
Notice of any meeting of shareholders shall be given either personally or
by first-class mail or telegraphic or other written communication, charges
prepaid, addressed to the shareholder at the address of that shareholder
appearing on the books of the corporation or given by the shareholder to the
corporation for the purpose of notice. If no such address appears on the
corporation's books or is given, notice shall be deemed to have been given if
sent to that shareholder by first-class mail or telegraphic or other written
communication to the corporation's principal executive office, or if published
at least once in a newspaper of general circulation, in the county where that
office is located. Notice shall be deemed to have been given at the time when
delivered personally or deposited in the mail or sent by telegram or other means
of written communication.
If any notice addressed to a shareholder at the address of that shareholder
appearing on the books of the corporation is returned to the corporation by the
United States Postal Service marked to indicate that the United States Postal
Service is unable to deliver the notice to the shareholder at that address, all
future notices or reports shall be deemed to have been duly given without
further mailing if these shall be available to the shareholder on written demand
of the shareholder at the principal executive office of the corporation for a
period of one (1) year from the date of the giving of the notice.
An affidavit of the mailing or other means of giving any notice of any
shareholders' meetings shall be executed by the secretary, assistant secretary
or any transfer agent of the corporation giving the notice, and shall be filed
and maintained in the minute book of the corporation.
Section 6. QUORUM.
- ---------
The presence in person or by proxy of the holders of a majority of the
shares entitled to vote at any meeting of shareholders shall constitute a quorum
for the transaction of business. The shareholders present at a duly called or
held meeting at which a quorum is present may continue
2
<PAGE>
to do business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum, if any action taken (other than
adjournment) is approved by at least a majority of the shares required to
constitute a quorum.
Section 7. ADJOURNED MEETING; NOTICE.
- ---------
Any shareholders' meeting, annual or special, whether or not a quorum is
present, may be adjourned from time to time by the vote of the majority of the
shares represented at that meeting, either in person or by proxy, but in the
absence of a quorum, no other business may be transacted at that meeting, except
as provided in Section 6 of this Article I.
When any meeting of shareholders, either annual or special, is adjourned to
another time or place, notice need not be given of the adjourned meeting if the
time and place are announced at a meeting at which the adjournment is taken
unless a new record date for the adjourned meeting is fixed, or unless the
adjournment is for more than forty-five (45) days from the date set for the
original meeting, in which case the Board of Directors shall set a new record
date. Notice of any such adjourned meeting shall be given to each shareholder
of record entitled to vote at the adjourned meeting in accordance with the
provisions of Sections 4 and 5 of this Article I. At any adjourned meeting the
corporation may transact any business which might have been transacted at the
original meeting.
Section 8. VOTING RIGHTS; CUMULATIVE VOTING.
- ---------
The shareholders entitled to vote at any meeting of shareholders shall be
determined in accordance with the provisions of Section 11 of this Article I,
subject to the provisions of Sections 702 through 704, inclusive, of the
Corporations Code of California (relating to voting shares held by a fiduciary,
in the name of a corporation, or in joint ownership). The shareholders' vote
may be by voice vote or by ballot; provided, however, that any election for
directors must be by ballot if demanded by any shareholder before the voting has
begun. On any matter other than elections of directors, any shareholder may
vote part of the shares in favor of the proposal and refrain from voting the
remaining shares or vote them against the proposal, but, if the shareholder
fails to specify the number of shares which the shareholder is voting
affirmatively, it will be conclusively presumed that the shareholder's approving
vote is with respect to all shares that the shareholder is entitled to vote. If
a quorum is present, the affirmative vote of the majority of the shares
represented at the meeting and entitled to vote on any matter (other than the
election of directors) shall be the act of the shareholders, unless a vote of a
greater number or voting by classes is required by the California General
Corporation Law or by the Articles of Incorporation.
At a shareholders' meeting at which directors are to be elected, no
shareholder shall be entitled to accumulate votes (i.e., to cast for any one or
----
more candidates a number of votes greater than the number of the shareholder's
shares) unless the candidates' names have been placed in nomination prior to
commencement of the voting and a shareholder has given notice prior to
commencement of the voting of the shareholder's intention to cumulate votes. If
any shareholder has given such a notice, then every shareholder entitled to vote
may cumulate votes for candidates in nomination and give one candidate a number
of votes equal to the number of directors to be elected multiplied by the number
of votes to which that shareholder's shares are entitled, or
3
<PAGE>
distribute the shareholder's votes on the same principle among any or all of the
candidates, as the shareholder thinks fit. The candidates receiving the highest
number of votes, up to the number of directors to be elected, shall be elected.
Section 9. WAIVER OF NOTICE OR CONSENT BY ABSENT SHAREHOLDERS.
- ---------
The transactions of any meeting of shareholders, either annual or special,
however called and noticed and wherever held, shall be as valid as though had at
a meeting duly held after regular call and notice, if a quorum be present either
in person or by proxy, and if, either before or after the meeting, each person
entitled to vote, who was not present in person or by proxy, signs a written
waiver of notice or a consent to a holding of the meeting or an approval of the
minutes. The waiver of notice or consent need not specify either the business
to be transacted or the purpose of any annual or special meeting of
shareholders, except that if action is taken or proposed to be taken for
approval of any of those matters specified in the second paragraph of Section 4
of this Article I, the waiver of notice or consent shall state the general
nature of the proposal. All such waivers, consents or approvals shall be filed
with the corporate records or made a part of the minutes of the meeting.
Attendance by a person at a meeting shall also constitute a waiver of
notice of that meeting, except when the person objects, at the beginning of the
meeting, to the transaction of any business because the meeting is not lawfully
called or convened and except that attendance at a meeting is not a waiver of
any right to object to the consideration of matters not included in the notice
of the meeting if that objection is expressly made at the meeting.
Section 10. SHAREHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING.
- ----------
Any action which may be taken at any annual or special meeting of
shareholders may be taken without a meeting and without prior notice, if a
consent in writing, setting forth the action so taken, is signed by the holders
of outstanding shares having not less than the minimum number of votes that
would be necessary to authorize or to take that action at a meeting at which all
shares entitled to vote on that action were present and voted. In the case of
election of directors, such consent shall be effective only if signed by the
holders of all outstanding shares entitled to vote for the election of
directors; provided, however, that a director may be elected at any time to fill
a vacancy on the Board of Directors that has not been filled by the directors,
by the written consent of the holders of a majority of the outstanding shares
entitled to vote for the election of directors. All such consents shall be
filed with the secretary of the corporation and shall be maintained in the
corporate records. Any shareholder giving a written consent, or the
shareholder's proxy holder, or a transferee of the shares or a personal
representative of the shareholder or his respective proxy holder, may revoke the
consent by a writing received by the secretary of the corporation before written
consents of the number of shares required to authorize the proposed action have
been filed with the secretary.
If the consents of all shareholders entitled to vote have not been
solicited in writing, and if the unanimous written consent of all such
shareholders shall not have been received, the secretary shall give prompt
notice of the corporate action approved by the shareholders without a meeting.
4
<PAGE>
This notice shall be given in the manner specified in Section 5 of this Article
I. In the case of approval of (a) contracts or transactions in which a director
has a direct or indirect financial interest, pursuant to Section 310 of the
Corporations Code of California, (b) indemnification of agents of the
corporation, pursuant to Section 317 of that Code, (c) a reorganization of the
corporation, pursuant to Section 1201 of that Code, and (d) a distribution in
dissolution other than in accordance with the rights of the outstanding
preferred shares, pursuant to Section 2007 of that Code, the notice shall be
given at least ten (10) days before the consummation of any action authorized by
that approval.
Section 11. RECORD DATE FOR SHAREHOLDERS NOTICE, VOTING AND GIVING CONSENTS.
- ----------
For purposes of determining the shareholders entitled to notice of any
meeting or to vote or entitled to give consent to corporate action without a
meeting, the Board of Directors may fix, in advance, a record date, which shall
be not more than sixty (60) days nor less than ten (10) days before the date of
any such meeting nor more than sixty (60) days before any such action without a
meeting, and in this event only shareholders of record on the date so fixed are
entitled to notice and to vote or to give consents, as the case may be,
notwithstanding the transfer of any shares on the books of the corporation after
the record date, except as otherwise provided in the California General
Corporation Law.
If the Board of Directors does not so fix a record date:
(a) The record date for determining shareholders entitled to notice of
or to vote at a meeting of shareholders shall be at the close of business on the
business day next preceding the day on which notice is given or, if notice is
waived, at the close of business on the business day next preceding the day on
which the meeting is held.
(b) The record date for determining shareholders entitled to give
consent to corporate action in writing without a meeting (i) when no prior
action by the Board has been taken, shall be the day on which the first written
consent is given, or (ii) when prior action of the Board has been taken, shall
be at the close of business on the day on which the Board adopts the resolution
relating to that action or the sixtieth (60th) day before the date of such other
action, whichever is later.
Section 12. PROXIES.
- ----------
Every person entitled to vote for directors or on any other matter shall
have the right to do so either in person or by one or more agents authorized by
a written proxy signed by the person and filed with the secretary of the
corporation. A proxy shall be deemed signed if the shareholder's name is placed
on the proxy (whether by manual signature, typewriting, telegraphic transmission
or otherwise) by the shareholder or the shareholder's attorney in fact. A
validly executed proxy which does not state that it is irrevocable shall
continue in full force and effect unless (a) revoked by the person executing it,
before the vote pursuant to that proxy by a writing delivered to the corporation
stating that the proxy is revoked, or by a subsequent proxy executed by, or
attendance at the meeting and voting in person by, the person executing the
proxy; or
5
<PAGE>
(b) written notice of the death or incapacity of the maker of that proxy is
received by the corporation before the vote pursuant to that proxy is counted;
provided, however, that no proxy shall be valid after the expiration of eleven
(11) months from the date of the proxy, unless otherwise provided in the proxy,
and, provided, further, that the proxy shall be valid only if executed in favor
of another shareholder of the corporation. The revocability of a proxy that
states on its face that it is irrevocable shall be governed by the provisions of
Sections 705(e) and 705(f) of the Corporations Code of California.
Section 13. INSPECTORS OF ELECTION.
- ----------
Before any meeting of shareholders, the Board of Directors may appoint any
persons other than nominees for office to act as inspectors of election at the
meeting or its adjournment. If no inspectors of election are so appointed, the
chairman of the meeting may, and on the request of any shareholder or a
shareholder's proxy shall, appoint inspectors of election at the meeting. The
number of inspectors shall be either one (1) or three (3). If inspectors are
appointed at the meeting on the request of one or more shareholders or proxies,
the holders of a majority of shares or their proxies present at the meeting
shall determine whether one (1) or three (3) inspectors are to be appointed. If
any person appointed as inspector fails to appear or fails or refuses to act,
the chairman of the meeting may, and upon the request of any shareholder or a
shareholder's proxy shall, appoint a person to fill that vacancy.
These inspectors shall:
(a) Determine the number of shares outstanding and the voting power of
each, the shares represented at the meeting, the existence of a quorum and the
authenticity, validity and effect of proxies;
(b) Receive votes, ballots or consents;
(c) Hear and determine all challenges and questions in any way arising
in connection with the right to vote;
(d) Count and tabulate all votes or consents;
(e) Determine when the polls shall close;
(f) Determine the result; and
(g) Do any other acts that may be proper to conduct the election or
vote with fairness to all shareholders.
Section 14. VOTING TRUSTS.
- ----------
If a voting trust agreement is filed in the office of the corporation, the
corporation shall take notice of its terms and the limitations this agreement
places on the authority of the trustee. The agreement shall be valid only if
voting power is vested in another shareholder of the corporation.
6
<PAGE>
ARTICLE II
DIRECTORS; MANAGEMENT
---------------------
Section 1. POWERS.
- ---------
Subject to the limitations of the Articles of Incorporation, of the Bylaws
and of the laws of the State of California as to action to be authorized or
approved by the shareholders, all corporate powers shall be exercised by or
under authority of, and the business and affairs of this corporation shall be
controlled by, a board of directors.
Section 2. NUMBER AND QUALIFICATION.
- ---------
The authorized number of directors shall be two (2) until changed by a duly
adopted amendment of the Articles of Incorporation or by an amendment to these
Bylaws adopted by the vote or written consent of holders of a majority of the
outstanding shares entitled to vote.
Section 3. ELECTION AND TENURE OF OFFICE.
- ---------
Directors shall be elected at each annual meeting of the shareholders to
hold office until the next annual meeting. Each director, including a director
elected to fill a vacancy, shall hold office until the expiration of the term
for which elected and until a successor has been elected and qualified.
Section 4. VACANCIES.
- ---------
Vacancies in the Board of Directors may be filled by a majority of the
remaining directors, though less than a quorum or by a sole remaining director,
except that a vacancy created by the removal of a director by the vote or
written consent of the shareholders or by court order may be filled only by the
vote of a majority of the shares entitled to vote represented at a duly held
meeting at which a quorum is present, or by the written consent of holders of a
majority of the outstanding shares entitled to vote. Each director so elected
shall hold office until the next annual meeting of the shareholders and until a
successor has been elected and qualified.
A vacancy or vacancies in the Board of Directors shall be deemed to exist
in the event of the death, disqualification, resignation, or removal of any
director, or if the Board of Directors by resolution declares vacant the office
of a director who has been declared of unsound mind by an order of court or
convicted of a felony, or if the authorized number of directors is increased or
if the shareholders fail, in any meeting of shareholders at which any director
or directors are elected, to elect the number of directors to be voted for at
that meeting.
The shareholders may elect a director or directors at any time to fill any
vacancy or vacancies not filled by the directors, but any such election by
written consent shall require the consent of a majority of the outstanding
shares entitled to vote.
Any director may resign effective on giving written notice to the chairman
of the board, the president, the secretary or the Board of Directors, unless the
notice specifies a later time for that resignation to become effective. If the
resignation of a director is effective at a future time,
7
<PAGE>
the Board of Directors may elect a successor to take office when the resignation
becomes effective.
No reduction of the authorized number of directors shall have the effect of
removing any director before that director's term of office expires.
Section 5. REMOVAL OF DIRECTORS.
- ---------
The entire Board of Directors or any individual director may be removed
from office as provided by Sections 302, 303 and 304 of the Corporations Code of
the State of California.
Section 6. PLACE OF MEETINGS AND MEETINGS BY TELEPHONE.
- ---------
Regular meetings of the Board of Directors may be held at any place within
or outside the State of California that has been designated from time to time by
resolution of the Board. In the absence of such designation, regular meetings
shall be held at the principal executive office of the corporation. Special
meetings of the board shall be held at any place within or outside the State of
California that has been designated in the notice of the meeting or, if not
stated in the notice or there is no notice, at the principal executive office of
the corporation. Any meeting, regular or special, may be held by conference
telephone or similar communication equipment, so long as all directors
participating in the meeting can hear one another, and all such directors shall
be deemed to be present in person at the meeting.
Section 7. ANNUAL MEETING.
- ---------
Immediately following each annual meeting of shareholders, the Board of
Directors shall hold a regular meeting for the purpose of organization, any
desired election of officers and the transaction of other business. Notice of
this meeting shall not be required.
Section 8. OTHER REGULAR MEETINGS.
- ---------
Other regular meetings of the Board of Directors shall be held without call
at such time as it shall from time to time be fixed by the Board of Directors.
Such regular meetings may be held without notice.
Section 9. SPECIAL MEETINGS - NOTICES.
- ---------
Special meetings of the Board of Directors for any purpose or purposes may
be called at any time by the chairman of the board or the president or any vice-
president or the secretary or any two directors.
Notice of the time and place of special meetings shall be delivered
personally or by telephone to each director, or sent by first-class mail or
telegram, charges prepaid, addressed to each director at that director's address
as it is shown on the records of the corporation. In case the notice is mailed,
it shall be deposited in the United States mail at least four (4) days before
the time of the holding of the meeting. In case the notice is delivered
personally or by telephone or telegram, it shall be delivered personally or by
telephone or to the telegraph company at least
8
<PAGE>
forty-eight (48) hours before the time of the holding of the meeting. Any oral
notice given personally or by telephone may be communicated either to the
director or to a person at the office of the director who the person giving the
notice has reason to believe will promptly communicate it to the director. The
notice need not specify the purpose of the meeting nor the place if the meeting
is to be held at the principal executive offices of the corporation.
Section 10. QUORUM.
- ----------
A majority of the authorized number of directors shall constitute a quorum
for the transaction of business, except to adjourn as provided in Section 13 of
this Article II, unless the authorized number of directors is two or less, in
which case all of the duly elected and acting directors shall constitute a
quorum for the transaction of business. Every act or decision done or made by a
majority of the directors present at a meeting duly held at which a quorum is
present shall be regarded as the act of the Board of Directors, subject to the
provisions of Section 310 of the Corporations Code of the State of California
(as to approval of contracts or transactions in which a director has a direct or
indirect material financial interest), Section 311 of that Code (as to
appointment of committees), and Section 317(e) of that Code (as to
indemnification of directors). A meeting at which a quorum is initially present
may continue to transact business notwithstanding the withdrawal of directors,
if any action taken is approved by at least a majority of the required quorum
for that meeting.
Section 11. WAIVER OF NOTICE.
- ----------
The transactions of any meeting of the Board of Directors, however called
and noticed and wherever held, shall be as valid as though had at a meeting duly
held after regular call and notice if a quorum is present and if, either before
or after the meeting, each of the directors not present signs a written waiver
of notice, a consent to holding the meeting or an approval of the minutes. The
waiver of notice or consent need not specify the purpose of the meeting. All
such waivers, consents and approval shall be filed with the corporate records or
made a part of the minutes of the meeting. Notice of a meeting shall also be
deemed given to any director who attends the meeting without protesting before
or at its commencement, the lack of notice to that director.
Section 12. DIRECTORS ACTING WITHOUT A MEETING BY UNANIMOUS WRITTEN CONSENT.
- ----------
Any action required or permitted to be taken by the Board of Directors may
be taken without a meeting, if all members of the Board shall individually or
collectively consent in writing to that action. Such action by written consent
shall have the same force and effect as a unanimous vote of the Board of
Directors. Such written consent or consents shall be filed with the minutes of
the proceedings of the Board.
Section 13. ADJOURNMENT.
- ----------
A majority of the directors present, whether or not constituting a quorum,
may adjourn any meeting to another time and place.
9
<PAGE>
Section 14. NOTICE OF ADJOURNMENT.
- ----------
Notice of the time and place of holding an adjourned meeting need not be
given, unless the meeting is adjourned for more than twenty-four (24) hours, in
which case notice of the time and place shall be given before the time of the
adjourned meeting, in the manner specified in Section 9 of this Article II, to
the directors who are not present at the time of the adjournment.
Section 15. COMPENSATION OF DIRECTORS.
- ----------
Directors and members of committees, as such, shall not receive any stated
salary for their services, but by resolution of the board a fixed sum and
expense of attendance, if any, may be allowed for attendance at each regular and
special meeting of the board; provided that nothing herein contained shall be
construed to preclude any director from serving the corporation in any other
capacity and receiving compensation therefor.
ARTICLE III
OFFICERS
--------
Section 1. OFFICERS.
- ---------
The officers of the corporation shall consist of a chairman of the board,
president, vice-president, secretary, and chief financial officer. The
corporation may also have, at the discretion of the Board of Directors, a
chairman of the board, one or more additional vice-presidents, one or more
assistant secretaries, one or more assistant treasurers and such other officers
as may be appointed in accordance with the provisions of Section 3 of this
Article. One person may hold two or more offices, except those of president and
secretary.
Section 2. ELECTION.
- ---------
The officers of the corporation, except those officers as may be appointed
in accordance with the provisions of Section 3 and Section 5 of this Article III
shall be chosen annually by the Board of Directors, and each shall hold his
office until he shall resign or shall be removed or otherwise disqualified to
serve, or his successor shall be elected and qualified.
Section 3. SUBORDINATE OFFICERS, ETC.
- ---------
The Board of Directors may appoint such other officers as the business of
the corporation may require, each of whom shall hold office for such period,
have such authority and perform such duties as are provided in the bylaws or as
the Board of Directors may from time to time determine.
Section 4. REMOVAL AND RESIGNATION.
- ---------
Any officer may be removed, either with or without cause, by the Board of
Directors at any regular or special meeting, or, except in case of an officer
chosen by the Board of Directors, by any officer upon whom such power of removal
may be conferred by the Board of Directors.
10
<PAGE>
Any officer may resign at any time by giving written notice to the Board of
Directors, or to the president or to the secretary of the corporation. Any such
resignation shall take effect at the date of this notice or at any later
specified time; and, unless otherwise specified, the acceptance of this
resignation shall not be necessary to make it effective.
Section 5. VACANCIES.
- ---------
A vacancy in any office because of death, resignation, removal,
disqualification, or because of any other cause shall be filled in the manner
prescribed in the bylaws for regular appointments to the office.
Section 6. CHAIRMAN OF THE BOARD.
- ---------
The chairman of the board, if there shall be such an officer, shall, if
present, preside at all meetings of the Board of Directors and exercise and
perform such other powers and duties as may be from time to time assigned to him
by the Board of Directors or prescribed by the bylaws. If there is no
president, the chairman of the board shall in addition be the chief executive
officer of the corporation and shall have the powers and duties prescribed in
Section 7 of this Article III.
Section 7. PRESIDENT.
- ---------
Subject to such supervisory powers, if any, as may be given by the Board of
Directors to the chairman of the board, if there be such an officer, the
president shall be the chief executive officer of the corporation and shall,
subject to the control of the Board of Directors, have general supervision,
direction and control of the business and officers of the corporation. He shall
preside at all meetings of the shareholders and in the absence of the chairman
of the board, or if there be none, at all meetings of the Board of Directors.
He shall be ex officio a member of all the standing committees, including the
executive committee, if any, and shall have the general powers and duties of a
corporate management usually vested in the office of president of a corporation
and shall have such other powers and duties as may be prescribed by the Board of
Directors or the bylaws.
Section 8. VICE-PRESIDENT.
- ---------
In the absence or disability of the president, the vice-president, if any,
shall perform all the duties of the president, and when so acting shall have all
the powers of, and be subject to, all the restrictions upon, the president. The
vice-president shall have such other powers and perform such other duties as
from time to time may be prescribed by the Board of Directors or the bylaws.
Section 9. SECRETARY.
- ---------
The secretary shall keep, or cause to be kept, a book of minutes at the
principal office or such other place as the Board of Directors may order, of all
meetings of directors and shareholders, with the time and place of holding,
whether regular or special and, if special, how authorized, the notice thereof
given, the names of those present at directors' meetings, the number of shares
present or represented at shareholders' meetings and the proceedings thereof.
11
<PAGE>
The secretary shall keep, or cause to be kept, at the principal office or
at the office of the corporation's transfer agent, a share register, or
duplicate share register, showing the names of the shareholders and their
addresses; the number and classes of shares held by each; the number and date of
certificates issued for the same; and the number and date of cancellation of
every certificate surrendered for cancellation.
The secretary shall give or cause to be given, notice of all the meetings
of the shareholders and of the Board of Directors required by the bylaws or by
law to be given, and he shall keep the seal of the corporation in safe custody
and shall have such other powers and perform such other duties as may be
prescribed by the Board of Directors or by the bylaws.
Section 10. CHIEF FINANCIAL OFFICER.
- ----------
The chief financial officer shall keep and maintain or cause to be kept and
maintained, adequate and correct accounts of the properties and business
transactions of the corporation, including accounts of its assets, liabilities,
receipts, disbursements, gains, losses, capital, surplus and shares. Any
surplus, including earned surplus, paid-in surplus and surplus arising from a
reduction of stated capital shall be classified according to source and shown in
a separate account. The books of account shall at all reasonable times be open
to inspection by any director.
The chief financial officer shall deposit all moneys and other valuables in
the name and to the credit of the corporation with such depositaries as may be
designated by the Board of Directors. He shall disburse the funds of the
corporation as may be ordered by the Board of Directors, shall render to the
president and directors, whenever they request it, an account of all of his
transactions as chief financial officer and of the financial condition of the
corporation and shall have such other powers and perform such other duties as
may be prescribed by the Board of Directors or the bylaws.
Section 11. SALARIES.
- ----------
The salaries of the officers and other shareholders employed by the
corporation shall be fixed from time to time by the Board of Directors or
established under agreements with officers or shareholders approved by the Board
of Directors, and no officer shall be prevented from receiving such salary by
reason of the fact that he is also a director of the corporation.
ARTICLE IV
CORPORATE RECORDS AND REPORTS--INSPECTION
-----------------------------------------
Section 1. MAINTENANCE AND INSPECTION OF SHARE REGISTER.
- ---------
The corporation shall keep at its principal executive office, or at the
office of its transfer agent or registrar, if either be appointed and as
determined by resolution of the Board of Directors, a record of its shareholders
giving the names and addresses of all shareholders and the number and class of
shares held by each shareholder.
A shareholder or shareholders of the corporation holding at least five
percent (5%) in the aggregate of the outstanding voting shares of the
corporation may (a) inspect and copy the
12
<PAGE>
records of the shareholders' names and addresses and shareholdings during usual
business hours on five days' prior written demand on the corporation and (b)
obtain from the transfer agent of the corporation, on written demand and on
tender of such transfer agent's usual charges for such list, a list of the
shareholders' names and addresses, who are entitled to vote for the election of
directors and their shareholdings, as of the most recent record date for which
that list has been compiled or as of a date specified by the shareholder after
the date of demand. This list shall be made available to any such shareholder
by the transfer agent on or before the later of five (5) days after the demand
is received or the date specified in the demand as the date as of which the list
is to be compiled. The record of shareholders shall also be open to inspection
on the written demand of any shareholder or holder of a voting trust
certificate, at any time during usual business hours, for a purpose reasonably
related to the holder's interest as a shareholder or as a holder of a voting
trust certificate. Any inspection and copying under this Section 1 may be made
in person or by an agent or attorney of the shareholder or holder of a voting
trust certificate making the demand.
Section 2. MAINTENANCE AND INSPECTION OF BYLAWS.
- ---------
The corporation shall keep at its principal executive office, or if its
principal executive office is not in the State of California, at its principal
business office in this state, the original or a copy of the bylaws as amended
to date, which shall be open to inspection by the shareholders at all reasonable
times during office hours. If the principal executive office of the corporation
is outside the State of California and the corporation has no principal business
office in this state, the secretary shall, upon the written request of any
shareholder, furnish to that shareholder a copy of the bylaws as amended to
date.
Section 3. MAINTENANCE AND INSPECTION OF OTHER CORPORATE RECORDS.
- ---------
The accounting books and records and minutes of proceedings of the
shareholders and the Board of Directors and any committee or committees of the
Board of Directors shall be kept at such place or places designated by the Board
of Directors, or, in the absence of such designation, at the principal executive
office of the corporation. The minutes shall be kept in written form and the
accounting books and records shall be kept either in written form or in any
other form capable of being converted into written form. The minutes and
accounting books and records shall be open to inspection upon the written demand
of any shareholder or holder of a voting trust certificate, at any reasonable
time during usual business hours, for a purpose reasonably related to the
holder's interests as a shareholder or as a holder of a voting trust
certificate. The inspection may be made in person or by an agent or attorney,
and shall include the right to copy and make extracts. These rights of
inspection shall extend to the records of each subsidiary corporation of the
corporation.
Section 4. INSPECTION BY DIRECTORS.
- ---------
Every director shall have the absolute right at any reasonable time to
inspect all books, records and documents of every kind and the physical
properties of the corporation at each of its subsidiary corporations. This
inspection by a director may be made in person or by an agent or attorney and
the right of inspection includes the right to copy and make extracts of
documents.
13
<PAGE>
Section 5. ANNUAL REPORT TO SHAREHOLDERS.
- ---------
The annual report to shareholders referred to in Section 1501 of the
California General Corporation Law is expressly dispensed with, but nothing
herein shall be interpreted as prohibiting the Board of Directors from issuing
annual or other periodic reports to the shareholders of the corporation as they
consider appropriate.
Section 6. FINANCIAL STATEMENTS.
- ---------
A copy of any annual financial statements and any income statement of the
corporation for each quarterly period of each fiscal year, and any accompanying
balance sheet of the corporation as of the end of such period, that has been
prepared by the corporation shall be kept on file in the principal executive
office of the corporation for twelve (12) months and each statement shall be
exhibited at all reasonable times to any shareholder demanding an examination of
such statement or a copy thereof shall be mailed to any such shareholder.
If a shareholder or shareholders holding at least five percent (5%) of the
outstanding shares of any class of stock of the corporation makes a written
request to the corporation for an income statement of the corporation for the
three-month, six-month or nine-month period of the current fiscal year ended
more than thirty (30) days before the date of the request, and a balance sheet
of the corporation as of the end of that period, the treasurer or chief
financial officer shall cause that statement to be prepared, if not already
prepared, and shall deliver personally or mail that statement or statements to
the person making the request within thirty (30) days after the receipt of the
request. If the corporation has not sent to the shareholders its annual report
for the last fiscal year, this report shall likewise be delivered or mailed to
the shareholder or shareholders within thirty (30) days after the request.
The corporation shall also, on the written request of any shareholder, mail
to the shareholder a copy of the last annual, semi-annual or quarterly income
statement which it has prepared, and a balance sheet as of the end of that
period.
The quarterly income statements and balance sheets referred to in this
section shall be accompanied by a report, if any, of any independent accountants
engaged by the corporation or the certificate of an authorized officer of the
corporation that the financial statements were prepared without audit from the
books and records of the corporation.
Section 7. ANNUAL STATEMENT OF GENERAL INFORMATION.
- ---------
The corporation shall annually, during the period commencing five calendar
months preceding the calendar month during which the original Articles of
Incorporation were filed and ending with the end of the calendar month during
which the original Articles of Incorporation were filed with the Secretary of
State, file with the Secretary of State of the State of California, on the
prescribed form, a statement setting forth the authorized number of directors,
the names and complete business or residence addresses of all incumbent
directors, the names and complete business or residence addresses of the chief
executive officer, secretary and chief financial officer, the street address of
its principal executive office or principal business office in the state,
and the
14
<PAGE>
general type of business constituting the principal business activity of
the corporation, together with a designation of the agent of the corporation for
the purpose of service of process, all in compliance with Section 1502 of the
Corporations Code of California.
ARTICLE V
GENERAL CORPORATE MATTERS
-------------------------
Section 1. RECORD DATE FOR PURPOSES OTHER THAN NOTICE AND VOTING.
- ---------
For purposes of determining the shareholders entitled to receive payment of
any dividend or other distribution or allotment of any rights or entitled to
exercise any rights in respect of any other lawful election (other than action
by shareholders by written consent without a meeting) the Board of Directors may
fix, in advance, a record date, which shall not be more than sixty (60) days
before any such action and in that case only shareholders of record on the date
so fixed are entitled to receive the dividend, distribution or allotment of
rights or to exercise the rights, as the case may be, notwithstanding any
transfer of any shares on the books of the corporation after the record date so
fixed, except as otherwise provided in the California General Corporation Law.
If the Board of Directors does not so fix a record date, the record date
for determining shareholders for any such purpose shall be at the close of
business on the day on which the board adopts the applicable resolution or the
sixtieth (60th) day before the date of that action, whichever is later.
Section 2. CHECKS, DRAFTS, EVIDENCES OF INDEBTEDNESS.
- ---------
All checks, drafts or other orders for payment of money, notes or other
evidences of indebtedness, issued in the name of or payable to the corporation
shall be signed or endorsed by such person or persons and in such manner as,
from time to time, shall be determined by the resolution of the Board of
Directors.
Section 3. CORPORATE CONTRACTS AND INSTRUMENTS; HOW EXECUTED.
- ---------
The Board of Directors, except as otherwise provided in these Bylaws, may
authorize any officer or officers, agent or agents, to enter into any contract
or execute any instrument in the name of and on behalf of the corporation and
this authority shall be general or confined to specific instances; and, unless
so authorized or ratified by the Board of Directors or within the agency power
of an officer, no officer, agent or employee shall have any power or authority
to bind the corporation by any contract or engagement or to pledge its credit or
to render it liable for any purpose or for any amount.
Section 4. CERTIFICATES FOR SHARES.
- ---------
A certificate or certificates for shares of the capital stock of the
corporation shall be issued to each shareholder when any of these shares are
fully paid, and the Board of Directors may authorize the issuance of
certificates or shares as partly paid provided that these certificates shall
state the amount of the consideration to be paid for them and the amount paid.
All certificates shall be signed in the name of the corporation by the chairman
of the board or vice-chairman of
15
<PAGE>
the board or the president or vice-president and by the chief financial officer
or an assistant treasurer or the secretary or any assistant secretary,
certifying the number of shares and the class or series of shares owned by the
shareholder. Any or all of the signatures on the certificate may be facsimile.
In case any officer, transfer agent, or registrar who has signed or whose
facsimile signature has been placed on a certificate shall have ceased to be
that officer, transfer agent or registrar before that certificate is issued, it
may be issued by the corporation with the same effect as if that person were an
officer, transfer agent or registrar at the date of issuance.
Section 5. LOST CERTIFICATES.
- ---------
Except as provided in this Section 5, no new certificates for shares shall
be issued to replace an old certificate unless the latter is surrendered to the
corporation and canceled at the same time. The Board of Directors, in case any
share certificate or certificate for any other security is lost, stolen, or
destroyed, may authorize the issuance of a replacement certificate on such terms
and conditions as the board may require, including provision for indemnification
of the corporation secured by a bond or other adequate security sufficient to
protect the corporation against any claim that may be made against it, including
any expense or liability, on account of the alleged loss, theft or destruction
of the certificate or the issuance of the replacement certificate.
Section 6. REPRESENTATION OF SHARES OF OTHER CORPORATIONS.
- ---------
The chairman of the board, the president or any vice-president, or any
other person authorized by resolution of the Board of Directors or by any of the
foregoing designated officers, is authorized to vote on behalf of the
corporation any and all shares of any other corporation or corporations, foreign
or domestic, standing in the name of the corporation. The authority granted to
these officers to vote or represent on behalf of the corporation any and all
shares held by the corporation in any other corporation or corporations may be
exercised by any of these officers in person or by any person authorized to do
so by a proxy duly executed by these officers.
Section 7. INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND OTHER AGENTS.
- ---------
The corporation shall, to the maximum extent permitted by California
General Corporation Law, indemnify each of its agents against expenses,
judgments, fines, settlements and other amounts actually and reasonably incurred
in connection with any proceeding arising by reason of the fact that any such
person is or was an agent of the corporation. For purposes of this Section 7,
an "agent" of the corporation includes any person who is or was a director,
officer, employee or other agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, or was a
director, officer, employee or agent of a corporation which was a predecessor
corporation of the corporation or of another enterprise at the request of such
predecessor corporation.
16
<PAGE>
Section 8. CONSTRUCTION AND DEFINITIONS.
- ---------
Unless the context requires otherwise, the general provisions, rules of
construction and definitions in the California General Corporation Law shall
govern the construction of these Bylaws. Without limiting the generality of
this provision, the singular in number includes the plural, the plural number
includes the singular and the term "person" includes both a corporation and a
natural person.
ARTICLE VI
OFFICES
-------
Section 1. PRINCIPAL OFFICES.
- ---------
The Board of Directors shall fix the location of the principal executive
offices of the corporation at any place within or outside the State of
California. If the principal executive offices are located outside the state,
and the corporation has one or more business offices in the state, the Board of
Directors shall fix and designate a principal business office in the State of
California.
Section 2. OTHER OFFICES.
- ---------
The Board of Directors may at any time establish branch or subordinate
offices at any place or places where the corporation is qualified to do
business.
ARTICLE VII
AMENDMENTS
----------
Section 1. AMENDMENT BY SHAREHOLDERS.
- ---------
New Bylaws may be adopted or these Bylaws may be amended or repealed by the
vote or written consent of holders of a majority of the outstanding shares
entitled to vote; provided, however, that if the Articles of Incorporation of
the corporation set forth a number of authorized directors of the corporation,
the authorized number of directors may be changed only by an amendment of the
Articles of Incorporation.
Section 2. AMENDMENT BY DIRECTORS.
- ---------
Subject to the rights of the shareholders as provided in Section 1 of this
Article VII, Bylaws, other than a bylaw or an amendment of a bylaw changing the
authorized number of directors, may be adopted, amended or repealed by the Board
of Directors.
17
<PAGE>
EXHIBIT 3.06
ARTICLES OF INCORPORATION FILED COPY
OF
BISON MEDIA, INC. 961049899 M$60.00
SECRETARY OF STATE
04-11-96 11:45
FIRST: The name of the corporation is Bison Media, Inc.
SECOND: The address of the registered office of the Corporation in the State
of Colorado is 6760 CORPORATION DR., SUITE 340, COLORADO SPRINGS,
COLORADO, 80919 and the name of its registered agent at that address
is Ken Sasso.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the laws of the
state of Colorado. In furtherance of the foregoing purposes, the
Corporation shall have and may exercise all of the rights, powers and
privileges now or hereafter conferred upon corporations organized
under the laws of the State of Colorado. In addition, it may do
everything necessary, suitable or proper for the accomplishment of any
of its corporate purposes.
FOURTH: The Corporation shall be authorized to issue one class of stock
designated "Common Stock." The total number of shares which the
Corporation shall have authority to issue is 1,000, each having no par
value.
Each shareholder of record shall have one vote for each share of stock
which is outstanding in his or her name on the books of the
Corporation and which is entitled to vote. In the election of
directors each shareholder shall be entitled to cast for any one
candidate no greater number of votes than the number of shares held by
such shareholder; no shareholder shall be entitled to cumulate votes
on behalf of any candidate.
No shareholder of the Corporation shall have any preemptive or similar
right to acquire any additional unissued or treasury shares of stock,
or other securities of any class, or any rights, warrants or options
to purchase stock, or securities of any kind convertible into stock or
bearing stock purchase warrants or privileges.
The Board of Directors of the Corporation (the "Board") may from time
to time distribute to the shareholders in partial liquidation, or out
of stated capital or capital surplus of the Corporation, a portion of
its assets; in cash or property, subject to the limitations contained
in the statutes of Colorado.
The Corporation shall have the right to impose restrictions on the
transfer of shares of the Corporation.
A quorum for shareholder meetings will consist of a majority of the
shares issued and outstanding and entitled to vote at the meeting.
<PAGE>
When a quorum is present, and notwithstanding that the applicable
statute requires a vote of two-thirds of the shares entitled to vote
to take action, the affirmative vote of a majority of the shares
issued and outstanding and entitled to vote on the subject matter
shall be the act of the shareholders.
FIFTH: The name and mailing address of the incorporator of the Corporation
is:
Jonathan L. Block, Esq.
Salem Communications Corporation
4880 Santa Rosa Road
Suite 300
Camarillo, CA 93012
SIXTH: The number of directors shall be no less than two and no greater than
five, except that there need be only as many directors as there are
shareholders if the outstanding shares are held of record by fewer
than three persons. The term of office of each director shall be
until the next annual meeting of the shareholders and thereafter until
his or her successor is elected and qualified.
The initial Board shall consist of two persons who shall serve until
their successors are elected and qualified. The beginnings of the
terms of office of the directors shall be contemporaneous. The names
and addresses of the initial directors are:
Edward G. Atsinger, III 4880 Santa Rosa Road
Suite 300
Camarillo, Ca 93012
Stuart Epperson 4880 Santa Rosa Road
Suite 300
Camarillo, Ca 93012
SEVENTH: In furtherance and not in limitation of the powers conferred by
statue, the Board is expressly authorized to make, repeal, alter,
amend and rescind the Bylaws of the Corporation.
EIGHTH: Elections of the directors may be by written ballot if the Board so
determines.
NINTH: The Corporation reserves the right to amend, alter, change or repeal
any provision contained in these Articles of Incorporation, in the
manner now or hereafter prescribed by statute, and all rights
conferred on shareholders herein are granted subject to this
reservation.
TENTH: No Contract or transaction between the Corporation and one or more of
its directors, or between the Corporation and any other corporation,
partnership, association, or other organization in which one or more
of its directors or officers are directors or officers or have a
financial interest, shall be void or voidable solely for that reason
or solely because the director or officer is present at or
participates
<PAGE>
in the meeting of the Board or committee thereof which authorizes,
approves, or ratifies the contract or transaction or solely because
his or their votes are counted for such purpose if the contract or
transaction was fair as to the Corporation.
ELEVENTH: The Corporation is authorized to eliminate or limit the personal
liability of its directors in accordance with and subject to the
limitations of the terms of Colorado Revised Statutes (S) 7-3-101(i)
(u) as follows: No director shall be personally liable to the
Corporation or its shareholders for monetary damages for any breach of
fiduciary duty by such director as a director. Notwithstanding the
foregoing, a director shall be liable to the extent provided by
applicable law (i) for breach of the director's duty of loyalty to the
Corporation or its shareholders, (ii) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing
violation of law, (iii) for acts specified in Section 7-5-114 of the
Colorado Corporation code, or (iv) for any transaction from which the
director derived an improper personal benefit. If the Colorado
Corporation Code is amended after the effective date of this Eleventh
Article to authorize corporate action further eliminating or limiting
the personal liability of directors, then the liability of a director
will be eliminated or limited to the fullest extent permitted by the
Colorado Corporation Code, as so amended. Any repeal or modification
of this Eleventh Article by the shareholders of the Corporation shall
not adversely affect any right or protection of a director of the
Corporation existing at the time of such repeal or modification.
TWELFTH: The Corporation is authorized to provide indemnification of its
directors, officers, employees and agents in accordance with and
subject to the limitations of the terms of Colorado Revised Statutes
(S) 7-3-101.5. Such indemnification may be provided pursuant to the
Corporation's Bylaws, by vote of the shareholders or of disinterested
directors, by agreement or otherwise.
THE UNDERSIGNED, being the incorporator hereinbefore named, for the
purpose of forming a corporation to do business both within and
without the State of Colorado, and pursuant to the Colorado
Corporation Code, does make and file these Articles of Incorporation
as of this 29th day of March, 1996.
Name: Jonathan L. Block
--------------------------
Jonathan L. Block, Esq.
Incorporator
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
PLEASE INCLUDE A TYPED MAIL TO: SECRETARY OF STATE FOR OFFICE USE ONLY 001
SELF-ADDRESSED ENVELOPE CORPORATIONS SECTION
MUST BE TYPED 1560 BROADWAY, SUITE 200 961049899 M $60.00
FILING FEE: $50.00 DENVER, CO 80202 SECRETARY OF STATE
MUST SUBMIT TWO COPIES (303) 894-2251 04-11-96 11:45
---
FAX (303) 894-2242
-------------------------------------
</TABLE>
ARTICLES OF INCORPORATION
<TABLE>
<CAPTION>
Corporation Name Bison Media, Inc.
-------------------------------------------------------------------------
Principal Business Address 6760 Corporate Dr., Suite 340, Colorado Springs, CO 80919
---------------------------------------------------------------
(Include City, State, Zip)
Cumulative voting shares of stock is authorized. Yes [ ] No [x]
If duration is less than perpetual enter number of years
---------------------------------
Preemptive rights are granted to shareholders. Yes [ ] No [x]
STOCK INFORMATION: (If additional space is needed, continue on a separate sheet of paper.)
<S> <C> <C> <C> <C> <C>
Stock Class Common Authorized Shares 1,000 Par Value None
-------------------------- -------------------------- ------------------
Stock Class Authorized Shares Par Value
-------------------------- -------------------------- ------------------
The name of the initial registered agent and the address of the registered office is: (If another corporation,
use last name space)
Last Name Sasso First & Middle Name Ken
----------------------------------------- --------------------------
Street Address 6760 Corporate Dr., Suite 340, Colorado Springs, CO 80919
-----------------------------------------------------------------------------------
(Include City, State, Zip)
THE UNDERSIGNED CONSENTS TO THE APPOINTMENT AS THE INITIAL REGISTERED AGENT.
Signature of Registered Agent Kenneth W. Sasso
These articles are to have a delayed effective date of:
--------------------------------------
INCORPORATORS: Names and addresses: (If more than two, continue on a separate sheet of paper.)
NAME ADDRESS
Jonathan L. Block
- ------------------------------------- --------------------------------------------
4880 Santa Rosa Rd., Ste 300
Camarillo, CA 93012
- ------------------------------------- --------------------------------------------
Incorporators who are natural persons must be 18 years or more. The undersigned, acting as incorporator(s) of a
corporation under the Colorado Business Corporation Act, adopt the above Articles of Incorporation.
Signature Jonathan L. Block Signature
------------------------------------ ------------------------------------
</TABLE>
REVISED 7/95
<PAGE>
Exhibit 3.07
BYLAWS
OF
BISON MEDIA, INC.
ARTICLE I
OFFICES
The principal office of BISON MEDIA, INC., (the "Corporation") shall be
located in Colorado Springs, Colorado. The Corporation may have such other
offices and places of business, either within or outside Colorado, as the Board
of Directors may designate or as the business of the Corporation may require
from time to time.
The registered office of the Corporation is required by the Colorado
Corporation Code to be maintained in Colorado. The registered office may be,
but need not be, identical with the principal office if in Colorado, and the
address of the registered office may be changed from time to time by the Board
of Directors (the "Board").
ARTICLE II
SHAREHOLDERS
Section 2.1. Application of Article II. So long as there is only one
-------------------------
shareholder of the Corporation, Sections 2.5, 2.9 and 2.10 shall not apply to
the Corporation and any provisions thereof need not be fulfilled except as
otherwise required by the Colorado Corporations Code or Articles of
Incorporation as amended.
Section 2.2. Annual Meetings. Annual meetings of the stockholders of the
---------------
Corporation for the purpose of electing directors and for the transaction of
such other proper business as may come before such meetings shall be held on or
before April 30 at such time and place as the Board shall determine by
resolution.
Section 2.3. Special Meetings. A special meeting of the stockholders for
----------------
the transaction of any proper business may be called at any time by the Board or
by the President or the holders of 20% or more of the common stock of the
Corporation.
Section 2.4. Place of Meeting. The Board may designate any place, either
----------------
within or outside Colorado, as the place for any annual meeting or special
meeting called by the Board. A waiver of notice signed by all shareholders
entitled to vote at a meeting may designate any place, either within or outside
Colorado, as the place for such meeting. If no designation is made, or if a
special meeting shall be called otherwise than by the Board, the place of
meeting shall be the registered office of the Corporation in Colorado.
Section 2.5. Notice of Meeting. Written notice stating the place, day and
-----------------
hour of the meeting and, in case of a special meeting, the purpose for which the
meeting is called, shall be delivered not less than ten nor more than 50 days
before the date of the meeting, either personally or by mail, by or at the
direction of the President, the Secretary, or the officer or person calling the
meeting to each shareholder of record entitled to vote at such meeting; except
that, if the
1
<PAGE>
authorized shares are to be increased, at least 30 days notice shall be given.
If mailed, such notice shall be deemed to be delivered when deposited in the
United States mail, addressed to the shareholder at his address as it appears on
the stock transfer books of the Corporation, with postage thereon prepaid.
Section 2.6. Adjournment. When a meeting is for any reason adjourned to
-----------
another time or place, notice need not be given of the adjourned meeting if the
time and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting, any business may be transacted which might
have been transacted at the original meeting.
Section 2.7. Organization. The President or any Vice President shall call
------------
meetings of shareholders to order and act as chairman of such meetings. In the
absence of said officers, any shareholder entitled to vote at that meeting, or
any proxy of any such shareholder, may call the meeting to order and a chairman
shall be elected by a majority of the shareholders entitled to vote at the
meeting. In the absence of the Secretary or any assistant Secretary of the
Corporation, any person appointed by the chairman shall act as Secretary of such
meeting.
Section 2.8. Agenda and Procedure. The Board of Directors shall have the
--------------------
responsibility for establishing an agenda for each meeting of shareholders,
subject to the rights of shareholders to raise matters for consideration which
may otherwise properly be brought before the meeting although not included
within the agenda. The Chairman shall be charged with the orderly conduct of
all meetings of shareholders; provided, however, that in the event of any
difference in opinion with respect to the proper course of action which cannot
be resolved by reference to statute, or to the Articles of Incorporation, or
these Bylaws, Robert's Rules of Order (as last revised) shall govern the
disposition of the matter.
Section 2.9. Closing of Transfer Books or Fixing of Record Date. For the
--------------------------------------------------
purpose of determining shareholders entitled to notice of or to vote at any
meeting of shareholders or any adjournment thereof, or shareholders entitled to
receive payment of any dividend, or in order to make a determination of
shareholders for any other proper purpose, the Board may provide that the stock
transfer books shall be closed for any stated period not exceeding fifty days.
If the stock transfer books shall be closed for the purpose of determining
shareholders entitled to notice of or to vote at a meeting of shareholders, such
books shall be closed for at least ten days immediately preceding such meeting.
In lieu of closing the stock transfer books, the Board may fix in advance a date
as the date for any such determination of shareholders, such date in any case to
be not more than fifty days, and, in case of a meeting of shareholders, not less
than ten days prior to the date on which the particular action, requiring such
determination of shareholders, is to be taken. If the stock transfer books are
not closed and no record date is fixed for the determination of shareholders
entitled to notice of or to vote at a meeting of shareholders, or shareholders
entitled to receive payment of a dividend, the date on which notice of the
meeting is mailed or the date on which the resolution of the Board of Directors
declaring the dividend is adopted, as the case may be, shall be the record date
for such determination of shareholders. When a determination of shareholders
entitled to vote at any meeting of shareholders has been made as provided in
this section, such determination shall apply to any adjournment thereof except
where the determination has been made through the closing of the stock transfer
books and the stated period of the closing has expired.
2
<PAGE>
Section 2.10. Voting Records. The officer or agent having charge of the
--------------
stock transfer books for shares of the Corporation shall make, at least ten days
before each meeting of shareholders, a complete record of the shareholders
entitled to vote at such meeting or any adjournment thereof, arranged in
alphabetical order, with the address of and the number of shares held by each.
For a period of ten days prior to such meeting, this record shall be kept on
file at the principal office of the Corporation, whether within or outside
Colorado, and shall be subject to inspection by any shareholder for any purpose
germane to the meeting at any time during usual business hours. Such record
shall also be produced and kept open at the time and place of the meeting and
shall be subject to the inspection of any shareholder for any purpose germane to
the meeting during the whole time of the meeting. The original stock transfer
books shall be prima facie evidence as to who are the shareholders entitled to
examine such record or transfer books or to vote at any meeting of shareholders.
Any officer or agent having charge of the stock transfer books who fails to
prepare the record of shareholders, or to keep it on file for a period of ten
days before the meeting or to produce and keep it open for inspection at the
meeting as provided in this section, is liable to any shareholder suffering
damage due to the failure to the extent of the damage.
Section 2.11. Quorum. Unless otherwise provided by the Articles of
------
Incorporation, a majority of the outstanding shares of the Corporation entitled
to vote, represented in person or by proxy, shall constitute a quorum at a
meeting of shareholders. If fewer than a majority of the outstanding shares are
represented at a meeting, a majority of the shares so represented may adjourn
the meeting without further notice for a period not to exceed 60 days at any one
adjournment. At such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been transacted at
the meeting as originally notified. The shareholders present at a duly
organized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of shareholders so that less than a quorum
remains.
If a quorum is present, the affirmative vote of a majority of the shares
represented at the meeting and entitled to vote on the subject matter shall be
the act of the shareholders, unless the vote of a greater number or voting by
classes is required by law or the Articles of Incorporation.
Section 2.12. Proxies. At all meetings of shareholders, a shareholder may
-------
vote by proxy executed in writing by the shareholder or his duly authorized
attorney-in-fact. Such proxy shall be filed with the Secretary of the
Corporation before or at the time of the meeting. No proxy shall be valid after
eleven months from the date of its execution unless otherwise provided in the
proxy.
Section 2.13. Voting of Shares. Each outstanding share, regardless of
----------------
class, shall be entitled to one vote and each fractional share shall be entitled
to a corresponding fractional vote on each matter submitted to a vote at a
meeting of shareholders, except as may be otherwise provided in the Articles of
Incorporation. If the Articles of Incorporation provide for more or less than
one vote for any share on any matter, every reference in the Colorado
Corporation Code to a majority or other proportion or number of shares shall
refer to such a majority or other proportion or number of votes entitled to be
cast with respect to such matter.
3
<PAGE>
At a shareholders' meeting involving the election of directors, each
shareholder shall be entitled to cast for any one candidate no greater number
votes than the number of shares held by such shareholder; shareholders shall be
entitled to cumulate votes on behalf of any candidate.
Section 2.14. Voting of Shares by Certain Holders.
-----------------------------------
a. Neither treasury shares, nor shares of another Corporation, if a
majority of the shares entitled to vote for the election of directors of such
other Corporation is held by this Corporation, shall be voted at any meeting or
counted in determining the total number of outstanding shares at any given
Shares standing in the name of another Corporation, domestic or foreign, may be
voted by such officer, agent or proxy as the Bylaws of such corporation may
prescribe or, in the absence of such provision, as the Board of Directors of
such corporation may determine.
Shares held by an administrator, executor, guardian or conservator may
be voted by him, either in person or by proxy, without a transfer of such shares
into his name. Shares standing in the name of a trustee may be voted by him,
either in person or by proxy, but no trustee shall be entitled to vote shares
held by him without a transfer of such shares into his name.
Shares standing in the name of a receiver may be voted by such
receiver, and shares held by or under the control of a receiver may be voted by
such receiver without the transfer thereof into his name if authority to do so
is contained in an appropriate order of the court by which such receiver was
appointed.
A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledges and
thereafter the pledgee shall be entitled to vote the shares so transferred.
Redeemable shares which have been called for redemption shall not be
entitled to vote on any matter and shall not be deemed outstanding shares on and
after the date of which written notice or redemption has been mailed to
shareholders and a sum sufficient to redeem such shares has been deposited with
a bank or trust company, with irrevocable instruction and authority to pay the
redemption price to the holders of the shares upon surrender of certificates
therefor.
b. If shares or other securities having voting power stand of record in
the names of two or more persons, whether fiduciaries, members of a partnership,
joint tenants, tenants in common, tenants by the entirety, or otherwise, or if
two or more persons have the same fiduciary relationship respecting the same
shares, voting with respect to the shares shall have the following effect:
(i) If only one person votes, his act binds all;
(ii) If two or more persons vote, the act of the majority so voting
binds all;
(iii) If two or more persons vote, but the vote is evenly split on
any particular matter, each faction may vote the securities in question
proportionately, or any person voting the
4
<PAGE>
shares of a beneficiary, if any, may apply to any court of competent
jurisdiction in the State of Colorado to appoint an additional person to act
with the persons so voting the shares. The shares shall then be voted as
determined by a majority of such persons and the person appointed by the court.
If a tenancy is held in unequal interests, a majority or even split for the
purpose of this subsection (iii) shall be a' majority or even split in interest.
The effects of voting stated in this subsection B shall not be applicable
if the Secretary of the Corporation is given written notice of alternate voting
provisions and is furnished with a copy of the instrument or order wherein the
alternate voting provisions are stated.
Section 2.15. Informal Action by Shareholders. Any action required or
-------------------------------
allowed to be taken at a meeting of the shareholders may be taken without a
meeting, provided that a consent in writing, setting forth the action so taken,
shall be signed by all of the shareholders entitled to vote with respect to the
subject matter thereof. Such consent shall have the same force and effect as a
unanimous vote of the shareholders, and may be stated as such in any articles or
document filed with the Secretary of State of Colorado under the Colorado
Corporation Code.
ARTICLE III
BOARD OF DIRECTORS
Section 3.1. General Powers. The business and affairs of the Corporation
--------------
shall be managed by its Board of Directors, except as otherwise provided in the
Colorado Corporation Code or the Articles of Incorporation.
Section 3.2. Performance of Duties. A Director of the Corporation shall
---------------------
perform his duties as a director, including his duties as a member of any
committee of the Board upon which he may serve, in good faith, in a manner he
reasonably believes to be in the best interests of the Corporation, and with
such care as an ordinarily prudent person in a like position would use under
similar circumstances. In performing his duties, a director shall be entitled
to rely on information, opinions, reports, or statements, including financial
statements and other financial data, in each case prepared or presented by
persons and groups listed in subsections a, b and c of this Section 3.2; but he
shall not be considered to be acting in good faith if he has knowledge
concerning the matter in question that would cause such reliance to be
unwarranted. A person who so performs his duties shall not have any liability
by reason of being or having been a director of the Corporation. Those persons
and groups upon whose information, opinions, reports, and statements a director
is entitled to rely are:
a. One or more officers or employees of the Corporation whom the Director
reasonably believes to be reliable and competent in the matters presented;
b. Counsel, public accountants, or other persons as to matters which the
Director reasonably believes to be within such persons' professional or expert
competence; or
c. A committee of the Board upon which he does not serve, duly designated
in accordance with the provisions of the Articles of Incorporation or the
Bylaws, as to matters
5
<PAGE>
within its designated authority, which committee the director reasonably
believes to merit confidence.
Section 3.3. Number Tenure and Qualifications. The number of directors
--------------------------------
of the Corporation shall be two; except that there need only be as many
directors as there are shareholders in the event that the outstanding shares are
held of record by fewer than three shareholders. The directors shall be elected
at each annual meeting of shareholders. Each director shall hold office until
the next annual meeting of shareholders and thereafter until his successor shall
have been elected and qualified. Directors shall be 18 years of age or older,
but need not be residents of Colorado or shareholders of the Corporation.
Directors shall be removable in the manner provided by the statutes of Colorado.
Section 3.4. Resignation. Any director of the Corporation may resign at
-----------
any time by giving written notice of his resignation to the Board of Directors,
the President, any Vice President or the Secretary of the Corporation. Such
resignation shall take effect at the date of receipt of such notice or at any
later time specified therein and unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
When one or more directors shall resign from the Board, effective at a future
date, a majority of the directors then in office, including those who have so
resigned, shall have the power to fill such vacancy or vacancies, the vote
thereon to take effect when such resignation or resignations shall become
effective.
Section 3.5. Removal. Except as otherwise provided in the Articles of
-------
Incorporation or in these Bylaws, any director may be removed, either with or
without cause, at any time, by the affirmative vote of the holders of a majority
of the issued and outstanding shares of stock entitled to vote for the election
of directors of the Corporation given at a special meeting of the shareholders
called and held for such purpose. The vacancy in the Board caused by any such
removal may be filled by the shareholders entitled to vote thereon at such
meeting. If the shareholders at such meeting shall fail to fill the vacancy,
the Board of Directors may do so as provided in Section 3.6.
Section 3.6. Vacancies. Any vacancy occurring in the Board may be filled
---------
by the affirmative vote of a majority of the remaining directors though less
than a quorum except as otherwise provided herein. A director elected to fill a
vacancy shall be elected for the unexpired term of his predecessor in office.
Any directorship to be filled by reason of an increase in the number of
directors shall be filled by the affirmative vote of a majority of the directors
then in office or by an election at any annual meeting or at a special meeting
of shareholders called for that purpose, and a director so chosen shall hold
office until the next annual meeting of shareholders and until his successor has
been elected and has qualified.
Section 3.7. Regular Meetings. A regular meeting of the Board shall be
----------------
held without other notice than this bylaw immediately after and at the same
place as the annual meeting of shareholders. The Board may provide by resolution
the time and place, either within or outside Colorado, for the holding of
additional regular meetings without other notice than such resolution.
6
<PAGE>
Section 3.8. Special Meetings. Special meetings of the Board may be
----------------
called by or at the request of the President or any two Directors. The person
or persons authorized to call Special Meetings of the Board may fix any place,
either within or outside Colorado, as the place for holding any special meeting
of the Board called by them.
Section 3.9. Notice. In the event that there is more than one director
------
of the Corporation, notice of any Special Meeting shall be given at least seven
days previously thereto by written notice delivered personally or mailed to each
director at his business address, or by notice given at least two days
previously by telegraph. Such notice shall be deemed to be delivered when
deposited in the United States mail so addressed, with postage thereon prepaid.
If notice be given by telegram, such notice shall be deemed to be delivered when
the telegram is delivered to the telegraph company. Any director may waive
notice of any meeting. The attendance of a director at a meeting shall
constitute a waiver of notice of such meeting, except where a director attends a
meeting for the express purpose of objecting to the transaction of any business
because the meeting is not lawfully called or convened. Neither the business to
be transacted at, nor the purpose of, any regular or special meeting of the
Board-need be specified in the notice or waiver of notice of such meeting.
Section 3.10. Quorum. A majority of the number of directors elected and
------
qualified at the time of the meeting shall constitute a quorum for the
transaction of business at any such meeting of the Board of Directors, but if
less than such majority is present at a meeting, a majority of the directors
present may adjourn the meeting from time to time without further notice.
Section 3.11. Manner of Acting. If a quorum is present, the affirmative
----------------
vote of a majority of the directors present at the meeting and entitled to vote
on that particular matter shall be the act of the Board, unless the vote of a
greater number is required by law or the Articles of Incorporation.
Section 3.12. Compensation. By resolution of the Board of Directors, any
------------
director may be paid any one or more of the following: his expenses, if any, of
attendance at meetings; a fixed sum for attendance at such meeting; or a stated
salary as director. No such payment shall preclude any director from serving
the Corporation in any other capacity and receiving compensation therefor.
Section 3.13. Presumption of Assent. A Director of the Corporation who is
---------------------
present at a meeting of the Board of Directors at which action on any corporate
matter is taken shall be presumed to have assented to the action taken unless
his dissent is entered in the minutes of the meeting or unless he files his
written dissent to such action with the person acting as the Secretary of the
meeting before the adjournment thereof or forwards such dissent by registered
mail to the Secretary of the Corporation immediately after the adjournment of
the meeting. Such right to dissent shall not apply to a Director who voted in
favor of such action.
Section 3.14. Executive Committee. The Board, by resolution adopted by a
-------------------
majority of the number of directors elected and qualified at the time of the
resolution, may designate two or more directors to constitute an executive
committee which shall have and may exercise all of the authority of the Board of
Directors or such lesser authority as may be set forth in said resolution.
7
<PAGE>
No such delegation of authority shall operate to relieve the Board of Directors
or any member of the Board from any responsibility imposed by law.
Section 3.15. Informal Action by Directors. Any action required or
----------------------------
permitted to be taken at a meeting of the directors, executive committee or
other committee of the directors may be taken without a meeting if a consent in
writing, setting forth the action so taken, shall be signed by all of the
directors entitled to vote with respect to the subject matter thereof. Such
consent shall have the same force and effect as a unanimous vote of the
directors, and may be stated as such in any articles or documents filed with the
Secretary of State of Colorado under the Colorado Corporation Code.
Section 3.16. Meetings by Telephone. Members of the Board or any
---------------------
committee of the directors may participate in a meeting of the Board or
committee by means of conference telephone or similar communications equipment
by which all persons participating in the meeting can hear each other at the
same time. Such participation shall constitute presence in person at the
meeting.
ARTICLE IV
OFFICERS AND AGENTS
Section 4.1. General. The officers of the Corporation shall be a
-------
President, a Secretary and a Treasurer, each of whom shall be elected by the
Board. The Board may appoint one or more Vice Presidents and such other
officers, assistant officers, committees and agents, including a chairman of the
board, Assistant Secretaries and Assistant Treasurers, as they may consider
necessary, who shall be chosen in such manner and hold their offices for such
terms and have such authority and duties as from time to time may be determined
by the Board. The salaries of all the officers of the Corporation shall be
fixed by the Board. One person may hold any two offices, except that no person
may simultaneously hold the offices of President and Secretary. The officers of
the Corporation shall be 18 years of age or older. In all cases where the
duties of any officer, agent or employee are not prescribed by the Bylaws or by
the Board, such officer, agent or employee shall follow the orders and
instructions of (a) the President, and if a Chairman of the Board has been
elected, then (b) the Chairman of the Board.
Section 4.2. Election and Term of Office. The officers of the
---------------------------
Corporation shall be elected by the Board of Directors annually at the first
meeting of the board held after each annual meeting of the shareholders. If the
election of officers shall not be held at such meeting, election of officers
shall occur by unanimous written consent of the Board as soon thereafter as may
be convenient. Each officer shall hold office until the first of the following
occurs: until his successor shall have been duly elected and shall have
qualified; or until his death; or until he shall resign; or until he shall have
been removed in the manner hereinafter provided.
Section 4.3. Removal. Any officer or agent may be removed by the Board
-------
or by the executive committee, if any, whenever in its judgment the best
interests of the Corporation will be served thereby, but such removal shall be
without prejudice to the contract rights, if any, of the person so removed.
Election or appointment of an officer or agent shall not of itself create
contract rights.
8
<PAGE>
Section 4.4. Vacancies. A vacancy in any office, however occurring, may
---------
be filled by the Board for the unexpired portion of the term.
Section 4.5. Chairman. The Chairman shall be an officer of the
--------
Corporation. The Chairman shall have the responsibility of setting the agenda
for Board meetings and such other responsibilities and duties as are assigned by
the Board.
Section 4.6. President. The President shall, subject to the direction
---------
and supervision of the Board, be the chief executive officer of the Corporation
and shall have general and active control of its affairs and business and
general supervision of its officers, agents and employees. He shall, unless
otherwise directed by the Board, attend in person or by substitute appointed by
him, or shall execute, on behalf of the Corporation, written instruments
appointing a proxy or proxies to represent the Corporation, at all meetings of
the stockholders of any other Corporation in which the Corporation shall hold
any stock. He may, on behalf of the Corporation, in person or by substitute or
by proxy, execute written waivers of notice and consents with respect to any
such meetings. At all such meetings and otherwise, the President, in person or
by substitute or proxy as aforesaid, may vote the stock so held by the
Corporation and may execute written consents and other instruments with respect
to such stock and may exercise any and all rights and powers incident to the
ownership of said stock, subject however to the instructions, if any, of the
Board. The President shall have custody of the Treasurer's bond, if any. If a
chairman of the board has been elected, the chairman of the board shall have,
subject to the direction and modification of the Board, all the same
responsibilities, rights and obligations as described in these Bylaws for the
President.
Section 4.7. Vice Presidents. The Vice Presidents, if any, shall assist
---------------
the President and shall perform such duties as may be assigned to them by the
President or by the Board. In the absence of the President, the Vice President
designated by the Board or (if there be no such designation) the Vice President
designated in writing by the President shall have the powers and perform the
duties of the President. If no such designation shall be made, all Vice
Presidents may exercise such powers and perform such duties.
Section 4.8. Secretary. The Secretary shall perform the following:
---------
a. Keep the minutes of the proceedings of the shareholders, executive
committee and the Board of Directors;
b. See that all notices are duly given in accordance with the provisions
of these Bylaws or as required by law;
c. Be custodian of the Corporate records and of the seal of the
Corporation and affix the seal to all documents when authorized by the Board of
Directors;
d. Keep, at the Corporation's registered office or principal place of
business within or outside Colorado, a record containing the names and addresses
of all shareholders and the number and class of shares held by each, unless such
a record shall be kept at the office of the Corporation's transfer agent or
registrar;
9
<PAGE>
e. Sign with the President or a Vice President, certificates for shares of
the Corporation, the issuance of which shall have been authorized by resolution
of the Board of Directors;
f. Have general charge of the stock transfer books of the Corporation,
unless the Corporation has a transfer agent; and
g. In general, perform all duties incident to the office of Secretary and
such other duties as from time to time may be assigned to him by the President
or by the Board. Assistant secretaries, if any, shall have the same duties and
powers, subject to supervision by the Secretary.
Section 4.9. Treasurer. The Treasurer shall be the principal financial
---------
officer of the Corporation and shall have the care and custody of all funds,
securities, evidences of indebtedness and other personal property of the
Corporation and shall deposit the same in accordance with the instructions of
the Board of Directors. He shall receive and give receipts and acquittances for
monies paid in on account of the Corporation, and shall pay out of the funds on
hand all bills, payrolls and other just debts of the Corporation of whatever
nature upon maturity. He shall perform all other duties incident to the office
of the Treasurer and, upon request of the board, shall make such reports to it
as may be required at any time. He shall, if required by the board, give the
Corporation a bond in such sums and with such sureties as shall be satisfactory
to the board, conditioned upon the faithful performance of his duties and for
the restoration to the Corporation of all books, papers, vouchers, money and
other property of whatever kind in his possession or under his control belonging
to the Corporation. He shall have such other powers and perform such other
duties as may be from time to time prescribed by the Board of Directors or the
President. The assistant Treasurers, if any, shall have the same powers and
duties, subject to the supervision of the Treasurer.
The Treasurer shall also be the principal accounting officer of the
Corporation. He shall prescribe and maintain the methods and systems of
accounting to be followed, keep complete books and records of account, prepare
and file all local, state and federal tax returns, prescribe and maintain an
adequate system of internal audit, and prepare and furnish to the President and
the Board of Directors statements of account showing the financial position of
the Corporation and the results of its operations.
Section 4.10. Salaries. Officers of the Corporation shall be entitled to
--------
such salaries, emoluments, compensation or reimbursement as shall be fixed or
allowed from time to time by the Board of Directors.
Section 4.11. Bonds. If the Board of Directors by resolution shall so
-----
require, any officer or agent of the Corporation shall give bond to the
Corporation in such amount and with such surety as the Board of Directors may
deem sufficient, conditioned upon the faithful performance of that officer's or
agent's duties and offices.
10
<PAGE>
ARTICLE V
STOCK
Section 5.1. Certificates. The shares of stock shall be represented by
------------
consecutively numbered certificates signed in the name of the Corporation by its
chairman or vice-chairman of the Board which for the purpose of this Section 5.1
only shall be considered officers, or by its President or a Vice President and
by the Treasurer or an assistant Treasurer or by the Secretary or an assistant
Secretary, and shall be sealed with the seal of the Corporation, or with a
facsimile thereof. The signatures of the Corporation's officers on such
certificate may also be facsimiles if the certificate is countersigned by a
transfer agent or registered by a registrar other than the Corporation itself or
an employee of the Corporation. In case any officer who has signed or whose
facsimile signature has been placed upon such certificate shall have ceased to
be such officer before such certificate is issued, it may be issued by the
Corporation with the same effect as if he were such officer at the date of its
issue. Every certificate representing shares issued by a Corporation which is
authorized to issue shares of more than one class or more than one series of any
class shall set forth upon the face or back of the certificate or shall state
that the Corporation will furnish to any shareholder upon request and without
charge a full statement of the designations, preferences, limitations, and
relative rights of the shares of each class authorized to be issued and, if the
Corporation is authorized to issue any preferred or special class in series, the
variations in the relative rights and preferences between the shares of each
such series, so far as the same have been fixed and determined, and the
authority of the Board of Directors to fix and determine the relative rights and
preferences of subsequent series.
Each certificate representing shares shall state the following upon the
face thereof: the name of the state of the Corporation's organization; the name
of the person to whom issued; the number and class of shares and the designation
of the series, if any, which such certificate represents; the par value of each
share represented by such certificate or a statement that the shares are without
par value. Certificates of stock shall be in such form consistent with law as
shall be prescribed by the Board. No certificate shall be issued until the
shares represented thereby are fully paid.
Section 5.2. Record. A record shall be kept of the name of each person
------
or other entity holding the stock represented by each certificate for shares of
the Corporation issued, the number of shares represented by each such
certificate, the date thereof and, in the case of cancellation, the date of
cancellation. The person or other entity in whose name shares of stock stand on
the books of the Corporation shall be deemed the owner thereof, and thus a
holder of record of such shares of stock, for all purposes as regards the
Corporation.
Section 5.3. Consideration for Shares. Shares shall be issued for such
------------------------
consideration, expressed in dollars as shall be fixed from time to time by the
Board. That part of the surplus of a Corporation which is transferred to stated
capital upon the issuance of shares as a share dividend shall be deemed the
consideration for the issuance of such dividend shares. Such consideration may
consist, in whole or in part, of money, other property, tangible or intangible,
or in labor or services actually performed for the Corporation, but neither
promissory notes nor future services shall constitute payment or part payment
for shares.
11
<PAGE>
Section 5.4. Cancellation of Certificates. All certificates surrendered
----------------------------
to the Corporation for transfer shall be canceled and no new certificates shall
be issued in lieu thereof until the former certificate for a like number of
shares shall have been surrendered and canceled, except as herein provided with
respect to lost, stolen or destroyed certificates.
Section 5.5. Lost Certificates. In case of the alleged loss, destruction
-----------------
or mutilation of a certificate of stock, the Board of Directors may direct the
issuance of a new certificate in lieu thereof upon such terms and conditions in
conformity with law as it may prescribe. The Board may in its discretion
require a bond in such form and amount and with such surety as it may determine,
before issuing a new certificate.
Section 5.6. Transfer of Shares. Upon surrender to the Corporation or to
------------------
a transfer agent of the Corporation of a certificate of stock duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, and such documentary stamps as may be required by law, it shall be the
duty of the Corporation to issue a new certificate to the person entitled
thereto, and cancel the old certificate. Every such transfer of stock shall be
entered on the stock book of the Corporation which shall be kept at its
principal office or by its registrar duly appointed.
The Corporation shall be entitled to treat the holder of record of any
share of stock as the holder in fact thereof; and accordingly shall not be bound
to recognize any equitable or other claim to or interest in such share on the
part of any other person whether or not it shall have express or other notice
thereof, except as may be required by the laws of Colorado.
Section 5.7. Indemnification of Directors, Officers, and Others. The
--------------------------------------------------
Corporation has the power to indemnify current or former directors, officers,
employees, and agents, to the greatest extent provided in its Articles of
Incorporation and by Colo. Rev. Stat. S 73-101(5).
ARTICLE VI
Execution of Instruments; Loans; Checks and
Endorsements; Deposits; Proxies
Section 6.1. Execution of Instruments. The President shall have the
------------------------
power to execute and deliver on behalf of and in the name of the Corporation any
instrument requiring the signature of an officer of the Corporation, except as
otherwise provided in these Bylaws or where the execution and delivery thereof
shall be expressly delegated by the Board to some other officer or agent of the
Corporation. Unless authorized to do so by these Bylaws or by the Board, no
officer, agent or employee shall have any power or authority to bind the
Corporation in any way, to pledge its credit or to render it liable pecuniarily
for any purpose or in any amount.
Section 6.2. Loans. The Corporation may lend money to, guarantee the
-----
obligations of and otherwise assist directors, officers and employees of the
Corporation, or directors of another Corporation of which the Corporation owns a
majority of the voting stock, only upon compliance with the requirements of the
Colorado Corporation Code.
12
<PAGE>
No loans shall be contracted on behalf of the Corporation and no evidence
of indebtedness shall be issued in its name unless authorized by a resolution of
the Board. Such authority may be general or confined to specific instances.
Section 6.3. Checks and Endorsements. All checks, drafts or other orders
-----------------------
for the payment of money, obligations, notes or other evidences of indebtedness,
bills of lading, warehouse receipts, trade acceptances and other such
instruments shall be signed or endorsed by such officers or agents of the
Corporation as shall from time to time be determined by resolution of the Board,
which resolution may provide for the use of facsimile signatures.
Section 6.4. Deposits. All funds of the Corporation not otherwise
--------
employed shall be deposited from time to time to the Corporation's credit in
such banks or other depositories as shall from time to time be determined by
resolution of the Board, which resolution may specify the officers or agents of
the Corporation who shall have the power, and the manner in which such power
shall be exercised, to make such deposits and to endorse, assign and deliver for
collection and deposit checks, drafts and other orders for the payment of money
payable to the Corporation or its order.
Section 6.5. Proxies. Unless otherwise provided by resolution-adopted by
-------
the Board, the President or any Vice President may from time to time appoint one
or more agents or attorneys-in-fact of the Corporation, in the name and on
behalf of the Corporation, to cast the votes which the Corporation may be
entitled to cast as the holder of stock or other securities in any other
Corporation, association or other entity any of whose stock or other securities
may be held by the Corporation, at meetings of the holders of the stock or other
securities of such other Corporation, association or other entity or to consent
in writing, in the name of the Corporation as such holder, to any action by such
other Corporation, association or other entity, and may instruct the person or
persons so appointed as to the manner of casting such votes or giving such
consent, and may execute or cause to be executed in the name and on behalf of
the Corporation and under its corporate seal, or otherwise, all such written
proxies or other instruments as he may deem necessary or proper in the premises.
Section 6.6. Contracts. The Board may authorize any officer or officers,
---------
agent or agents, to enter into any contract or execute and deliver any
instrument in the name of and on behalf of the Corporation, and such authority
may be general or confined to specific instances.
ARTICLE VII
MISCELLANEOUS
Section 7.1. Waivers of Notice. Whenever notice is required by the
-----------------
Colorado Corporation Code, by the Articles of Incorporation or by these Bylaws,
a waiver thereof in writing signed by the director, shareholder or other person
entitled to said notice, whether before, at or after the time stated therein, or
his appearance at such meeting in person or (in the case of a shareholders'
meeting) by proxy, shall be equivalent to such notice.
Section 7.2. Fiscal Year. The fiscal year of the Corporation shall be
-----------
December 31.
13
<PAGE>
Section 7.3. Amendments. The Board of Directors shall have the power to
----------
alter, amend or repeal the Bylaws or adopt new Bylaws of the Corporation at any
regular meeting of the board, or at any special meeting called for that purpose,
or by unanimous written consent of the Board, subject to repeal or change by
action of the shareholders.
Section 7.4. Emergency Bylaws. Subject to repeal or change by action of
----------------
the shareholders, the Board may adopt emergency Bylaws in accordance with and
pursuant to the provisions of the Colorado Corporation Code.
14
<PAGE>
EXHIBIT 3.08
05747-1090
<TABLE>
<S> <C> <C> <C>
#963658
--------------
The Seal Prescribed by No Receipt BT Approved BT
of the Secretary Bob Taft, Secretary of State -----
of 30 East Broad Street, 14th Floor Date 2/4/97
State of Ohio Columbus, Ohio 43266-0418 ---------
Form ARF (December 1990) Fee $100.00
---------
--------------
97020418601
</TABLE>
ARTICLES OF INCORPORATION
(Under Chapter 1701 of the Ohio Revised Code)
Profit Corporation
The undersigned, desiring to form a corporation, for profit, under Sections
1701.01 et seq. of the Ohio Revised Code, do hereby state the following:
FIRST. The name of said corporation shall be Caron Broadcasting, Inc.
------------------------
SECOND. The place in Ohio where its principal office is to be located is
2780 S. Arlington, Akron , Summit County, Ohio.
- ------------------------------------------ -------------------
(city, village or township)
THIRD. The purpose(s) for which this corporation is formed is:
Own and operate radio stations.
<PAGE>
05747-1091
FOURTH. The number of shares which the corporation is authorized to have
outstanding is: (Please state whether shares are common or preferred, and their
par value, if any. Shares will be recorded as common with no par value unless
otherwise indicated.)
1,000 No par value
IN WITNESS WHEREOF, we have hereunto subscribed our names, this 15th
--------
day of November , 19 96 .
--------------- ----
By: Jonathan L. Block , Incorporator
-----------------------------
Jonathan L. Block, Esq.
By: , Incorporator
-----------------------------
By: , Incorporator
-----------------------------
PRINT OR TYPE INCORPORATORS' NAMES BELOW THEIR SIGNATURES.
INSTRUCTIONS
1. The minimum fee for filing Articles of Incorporation for a profit
corporation is $85.00. If Article Fourth indicates more than 850 shares of stock
authorized, please see Section 111.16(A) of the Ohio Revised Code or contact the
Secretary of State's office (614-466-3910) to determine the correct fee.
2. Articles will be returned unless accompanied by an Original Appointment of
Statutory Agent. Please see Section 1701.07 of the Ohio Revised Code.
2
<PAGE>
EXHIBIT 3.09
CODE OF BY-LAWS
For the Government of the
Board of Directors
of
CARON BROADCASTING, INC.
ARTICLE I
MEETINGS OF DIRECTORS
---------------------
Sec. 1. Regular Annual Meeting. A regular annual meeting of the Board or
----------------------
Directors shall be held immediately following the termination of the regular
annual meeting of the shareholders of the corporation and at the same place of
such shareholders' meeting, unless a different time and place is fixed by
resolution of the Board of Directors. If, for any reason, the annual meeting is
not held, then the business which may be transacted thereat may be transacted at
any special meeting called as provided for in Section 3 of this Article.
Sec. 2. Other Regular Meetings. Other regular meetings of the Board of
----------------------
Directors may be held at such times and places as may be fixed by resolution of
the Board of Directors.
Sec. 3. Special Meetings. Special meetings of the Board of Directors may
----------------
be called by the President or a Vice-President, or by a majority of the Board of
Directors.
Sec. 4. Place of Meetings. Any meeting of the Board of Directors may be
-----------------
held at any place within or without the State of Ohio as may be fixed by
resolution of the Board of Directors.
Sec. 5. Notice of Meetings and Waiver of Notice. (a) A written or printed
---------------------------------------
notice of each regular or special meeting of the Board of Directors, stating the
time and place thereof shall be delivered to each director or sent to him by
mail, telegram, cablegram or radiogram at his last known post office address,
not more than twenty (20) days nor less than forty-eight (48) hours before the
time fixed for the meeting. Meetings may be held at any time or place without
notice if the meeting or if those who are absent assent in writing to the
holding of the meeting. Such assent may be given by the absent directors either
before, at or after any meeting of the Board, waiving any or all of the
provisions of law or of these By-Laws as to notices of such meeting or as to any
irregularities in such notice or in the giving thereof, and shall thereby
validate the proceedings of such meeting as fully as though all the requirements
of the provisions waived had been duly met in their respective cases.
(b) If any meeting of the Board of Directors is adjourned to another
time or place, no further notice as to such adjourned meeting need be given if
the time and place are fixed at the meeting adjourned.
<PAGE>
Sec. 6. Quorum. A majority of the entire Board of Directors shall
------
constitute a quorum at all meetings.
Sec. 7. Order of Business. The order of business of the Board of
-----------------
Directors at regular meetings, unless changed by a majority of the Directors
present, shall be as follows:
1. Reading of minutes of previous meeting and taking action thereon;
2. Reading reports and statements of officers and committees;
3. Unfinished business;
4. Election of officers (at annual meeting);
5. New or miscellaneous business;
6. Adjournment.
ARTICLE II
COMPENSATION OF OFFICERS
------------------------
The officers of the corporation shall receive such compensation as shall be
fixed by resolution of the Board of Directors.
ARTICLE III
AMENDMENTS
----------
By-Laws for the government of the Board of Directors may be adopted,
amended or repealed by a majority vote for the entire Board of Directors at any
regular meeting thereof, or at any meeting if such meeting be duly called as a
special meeting for that purpose or if each member of the Board of Directors
shall be present at the meeting or shall waive in writing the call and notice
thereof.
[End of Code of By-Laws]
<PAGE>
CODE OF REGULATIONS
OF
CARON BROADCASTING, INC.
ARTICLE I
FISCAL YEAR
-----------
Unless otherwise designated by resolution of the Board of Directors, the
first fiscal year of the corporation after the adoption of this Code of
Regulations shall end on December 31, 1981. Subsequently, the fiscal year of
the corporation shall commence on the first day of April in each year and end on
the last day of March, or be such other period as the Board of Directors may
designate by resolution.
ARTICLE II
SHAREHOLDERS
------------
Section 1. Meetings of Shareholders
------------------------
(a) Annual Meeting. The annual meeting of the shareholders of this
--------------
corporation, for the election of directors, the consideration of financial
statements and other reports, and the transaction of such other business as may
properly be brought before such meeting, shall be held at 9:30 A.M., on the
first Tuesday in the third month following the end of the fiscal year in each
year after 1981. The first annual meeting shall be held in 1982. Upon due
notice, there may also be considered and acted upon at an annual meeting any
matter which could properly be considered and acted upon at a special meeting,
in which and for which purpose the annual meeting shall also be considered as,
and shall be, a special meeting. In the event the annual
<PAGE>
meeting is not held or if directors are not elected thereat, a special meeting
may be called and held for that purpose.
(b) Special Meeting. Special meetings of the shareholders may be held on
---------------
any business day when called by any person or persons who may be authorized by
law to do so. Calls for special meetings shall specify the purpose or purposes
thereof, and no business shall be considered at any such meeting other than that
specified in the call therefor.
(c) Place of Meetings. Any meeting of shareholders may be held at such
-----------------
place within or without the State of Ohio as may be designated in the Notice of
said meeting.
(d) Notice of Meeting and Waiver of Notice.
--------------------------------------
(1) Notice. Written notice of the time, place and purposes of any meeting
------
of shareholders shall be given to each shareholder entitled thereto not less
than seven (7) days nor more than sixty (60) days before the date fixed for the
meeting and as prescribed by law. Such notice shall be given either by personal
delivery or mailed to each shareholder entitled to notice of or to vote at such
meeting. If such notice is mailed, it shall be directed, postage prepaid, to
the shareholders at their respective addresses as they appear upon the records
of the corporation, and notice shall be deemed to have been given on the day so
mailed. If any meeting is adjourned to another time or place, no notice as to
such adjourned meeting need be given other than by announcement at the meeting
at which such an adjournment is taken. No business shall be transacted at any
such adjourned meeting except as might have been lawfully transacted at the
meeting at which such adjournment was taken.
<PAGE>
(2) Notice to Joint Owners. All notices with respect to any shares to
----------------------
which persons are entitled by joint or common ownership may be given to that one
of such persons who is named first upon the books of this corporation, and
notice so given shall be sufficient notice to all the holders of such shares.
(3) Waiver. Notice of any meeting, however, may be waived in writing by
------
any shareholder either before or after any meeting of shareholders, or by
attendance at such meeting without protest prior to the commencement thereof.
(e) Shareholders Entitled to Notice and to Vote. If a record date shall
-------------------------------------------
not be fixed or he books of the corporation shall not be closed against
transfers of shares pursuant to statutory authority, the record date for the
determination of shareholders entitled to notice of or to vote at any meeting of
shareholders shall be the close of business on the twentieth day prior to the
date of the meeting, and only shareholders of record at such record date shall
be entitled to notice of and to vote at such meeting. Such record date shall
continue to be the record date for all adjournments of such meeting unless a new
record date shall be fixed and notice thereof and of the date of the adjourned
meeting be given to all shareholders entitled to notice in accordance with the
new record date so fixed.
(f) Quorum. At any meeting of shareholders, the holders of shares
------
entitling them to exercise a majority of the voting power of the corporation,
present in person or by proxy, shall constitute a quorum for such meeting;
provided however, that no action required by law, the Articles, or these
Regulations to be authorized or taken by the holders of a designated proportion
of the shares of the corporation may be authorized or taken by a lesser
proportion. The
<PAGE>
shareholders present in person or by proxy, whether or not a quorum be present,
may adjourn the meeting from time to time without notice other than by
announcement at the meeting.
(g) Organization of Meetings
------------------------
(1) Presiding Officer. The Chairman of the Board, or in his absence, the
-----------------
President, or in the absence of both of them, a Vice-President of the
corporation shall call all meetings of the shareholders to order and shall act
as Chairman thereof, if all are absent, the shareholders shall elect a Chairman.
(2) Minutes. The secretary of the corporation, or, in his absence, an
-------
Assistant Secretary, or, in the absence of both, a person appointed by the
Chairman of the meeting, shall act as Secretary of the meeting and shall keep
and make a record of the proceedings thereat.
(h) Order of Business. The order of business at all meetings of the
-----------------
shareholders, unless waived or otherwise mined by a vote of the holder or
holders of the majority of the number of shares entitled to vote present in
person or represented by proxy, shall be as follows:
1. Call meeting to order.
2. Selection of Chairman and/or Secretary, if necessary.
3. Proof of notice of meeting and presentment of affidavit thereof.
4. Roll call, including filing of proxies with Secretary.
5. Upon appropriate demand, appointment of inspectors of election.
6. Reading, correction and approval of previously unapproved minutes.
7. Reports of officers and committees.
8. If annual meeting, or meeting called for that purpose, election of
Directors.
9. Unfinished business, if adjourned meeting.
<PAGE>
10. Consideration in sequence of all other matters set forth in the call
for and written notice of the meeting.
11. Adjournment.
(i) Voting. Except as provided by statute or in the Articles, every
------
shareholder entitled to vote shall be entitled to cast one vote on each proposal
submitted to the meeting for each share held of record by him on the record date
for the determination of the shareholders entitled to vote at the meeting. At
any meeting at which a quorum is present, all questions and business which may
come before the meeting shall be determined by a majority of votes cast, except
when a greater proportion is required by law, the Articles, or these
Regulations.
(j) Proxies. A person who is entitled to attend a shareholders' meeting,
-------
to vote thereat, or to execute consents, waivers and releases, may be
represented at such meeting or vote thereat, and execute consents, waivers, and
releases, and exercise any of his rights, by proxy or proxies appointed by a
writing signed by such person, or by his duly authorized attorney, as provided
by the laws of the State of Ohio.
(k) List of Shareholders. At any meeting of shareholders, a list of
--------------------
shareholders, alphabetically arranged, showing the number and classes of shares
held by each on the record date applicable to such meeting shall be produced on
the request of any shareholder.
Section 2. Action of Shareholders Without a Meeting Any action which may
----------------------------------------
be taken at a meeting of shareholders may be taken without a meeting if
authorized by a writing or writing signed by all of the holders of shares who
would be entitled to notice of a meeting for such purpose, which writing or
writings shall be filed or entered upon the records of the corporation.
<PAGE>
ARTICLE III
DIRECTORS
---------
Section 1. General Powers
--------------
The business, power and authority of this corporation shall be exercised,
conducted and controlled by a Board of Directors, except where the law, the
Articles or these Regulations require action to be authorized or taken by the
shareholders.
Section 2. Election, Number and Qualification of Directors
-----------------------------------------------
(a) Election. The directors shall be elected at the annual meeting of
--------
shareholders, or if not so elected, at a special meeting of shareholders called
for that purpose. At any meeting of shareholders at which directors are to be
elected, only persons nominated as candidates shall be eligible for election.
(b) Number. The number of directors, which shall not be less than the
------
lesser of three (3) or the number of shareholders of record, may be fixed or
changed at a meeting of the shareholders called for the purpose of electing
directors at which a quorum is present, by the affirmative vote of the holders
of a majority of the shares represented at the meeting and entitled to vote on
such proposal. The number of directors elected shall be deemed to be the number
of directors fixed unless otherwise fixed by resolution adopted at the meeting
at which such directors are elected.
(c) Qualification. Directors need not be shareholders of the corporation.
-------------
<PAGE>
Section 3. Term of Office of Directors
---------------------------
(a) Term. Each director shall hold office until the next annual
----
meeting of the shareholders and until his successor has been elected or until
his earlier resignation, removal from office, or death. Directors shall be
subject to removal as provided by statute or by other lawful procedures and
nothing herein shall be construed to prevent the removal of any or all directors
in accordance therewith.
(b) Resignation. A resignation from the Board of Directors shall be
-----------
deemed to take effect immediately upon its being received by any incumbent
corporate officer other than an officer who is also the resigning director,
unless some other time is specified therein.
(c) Vacancy. In the event of any vacancy in the Board of Directors for
-------
any cause, the remaining directors, though less than a majority of the whole
Board, may fill any such vacancy for the unexpired term.
Section 4. Meetings of Directors
---------------------
(a) Regular Meetings. A regular meeting of the Board of Directors
----------------
shall be held immediately following the adjournment of the annual meeting of the
shareholders or a special meeting of the shareholders at which directors are
elected. The holding of such shareholders' meeting shall constitute notice of
such directors' meeting and such meeting may be held without further notice.
Other regular meetings shall be held at such other times and places as may be
fixed by the directors.
<PAGE>
(b) Special Meetings. Special meetings of the Board of Directors may be
----------------
held at any time upon call of the Chairman of the Board, the President, any
Vice-President, or any two directors.
(c) Place of Meeting. Any meeting of directors may be held at such place
----------------
within or without the State of Ohio as may be designated in the Notice of said
meeting.
(d) Notice of Meeting and Waiver of Notice. Notice of the time and place
--------------------------------------
of any regular or special meeting of the Board of Directors (other than the
regular meeting of directors following the adjournment of the annual meeting of
the shareholders or following any special meeting of the shareholders at which
directors are elected) shall be given to each director by personal delivery,
telephone, mail, telegram or cablegram at least forty-eight (48) hours before
the meeting, which notice need not specify the purpose of the meeting. Such
notice, however, may be waived in writing by any director either before or after
any such meeting, or by attendance at such meeting without protest prior to the
commencement thereof.
Section 5. Quorum and Voting
-----------------
At any meeting of directors, not less than one-half of the whole authorized
number of directors is necessary to constitute a quorum for such meeting, except
that a majority of the remaining directors in office constitutes a quorum for
filling a vacancy in the Board. At any meeting at which a quorum is present,
all acts, questions and business which may come before the meeting shall be
determined by a majority of votes cast by the directors present at such meeting,
unless the vote of a greater number is required b the Articles, Regulations or
By-Laws.
<PAGE>
Section 6. Committees
----------
(a) Appointment. The Board of Directors may from time to time appoint
-----------
certain of its members (but in no event less than three) to act as a committee
or committees in the intervals between meetings of the Board and may delegate to
such committee or committees powers to be exercised under the control and
direction of the Board. Each such committee and each member thereof shall serve
at the pleasure of the Board.
(b) Executive Committee. In particular, the Board of Directors may create
-------------------
from its membership and define the powers and duties of an Executive Committee.
During the intervals between meetings of the Board of Directors the Executive
Committee shall possess and may exercise all of the powers of the Board of
Directors in the management and control of the business of the corporation to
the extent permitted by law. All action taken by the Executive Committee shall
be reported to the Board of Directors at its first meeting thereafter.
(c) Committee Action. Unless otherwise provided by the Board of Directors,
----------------
a majority of the members of any committee appointed by the Board of Directors
pursuant to this Section shall constitute a quorum at any meeting thereof and
the act of a majority of the members present at a meeting at which a quorum is
present shall be the act of such committee. Action may be taken by any such
committee without a meeting by a writing signed by all its members. Any such
committee shall prescribe its own rules for calling and holding meetings and its
method or procedure, subject to any rules prescribed by the Board of Directors,
and shall keep a written record of all action taken by it.
<PAGE>
Section 7. Action of Directors without a Meeting
-------------------------------------
Any action which may be taken at a meeting of directors may be taken
without a meeting if authorized by a writing or writings signed by all the
directors, which writing or writings shall be filed or entered upon the records
of the corporation.
Section 8. Compensation of Directors
-------------------------
The Board of Directors may allow compensation for attendance at meetings or
for any special services, may allow compensation to members of any committee,
and may reimburse any director for his expenses in connection with attending any
Board or Committee meeting.
Section 9. Attendance at Meetings of Persons who are not Directors.
-------------------------------------------------------
Unless waived by a majority of directors in attendance, not less than
twenty-four (24) hours before any regular or special meeting of the Board of
Directors, any director who desires the presence at such meeting of not more
than one person who is not a director shall so notify all other directors,
request the presence of such person at the meeting, and state the reason in
writing. Such person will not be permitted to attend the directors' meeting
unless a majority of the directors in attendance vote to admit such person to
the meeting. Such vote shall constitute the first order of business for any
such meeting of the Board of Directors. Such right to attend, whether granted
by waiver or vote, may be revoked at any time during any such meeting by the
vote of a majority of the directors in attendance.
<PAGE>
ARTICLE IV
OFFICERS
--------
Section 1. General Provisions
------------------
The Board of Directors shall elect a President, a Secretary and a
Treasurer, and may elect a Chairman of the Board, one or more Vice-Presidents,
and such other officers and assistant officers as the Board may from time to
time deem necessary. The Chairman of the Board, if any, and the President shall
be directors, but no one of the other officers need be a director. Any two or
more offices may be held by the same person, but no officer shall execute,
acknowledge or verify any instrument in more than one capacity if such
instrument is required to be executed, acknowledged or verified by two or more
officers.
Section 2. Powers and Duties
-----------------
All officers, as between themselves and the corporation, shall respectively
have such authority and perform such duties as are customarily incident to their
respective offices, and as may be specified from time to time by the Board of
Directors, regardless of whether such authority and duties are customarily
incident to such office. In the absence of any officer of the corporation, or
for any other reason the Board of Directors may deem sufficient, the Board of
Directors may delegate for the time being, the powers or duties of such officer,
or any of them, to any other officer or to any director. The Board of Directors
may from time to time delegate to any officer authority to appoint and remove
subordinate officers and to prescribe their authority and duties. Since the
lawful purposes of this corporation include the acquisition and ownership of
real property, personal property and property in the nature of patents,
copyrights, and trademarks and the protection of the corporation's property
rights in its patents, copyrights and trademarks, each of the officers of this
corporation is empowered to execute any power of attorney necessary
<PAGE>
to protect, secure, or vest the corporation's interest in and to real property,
personal property and its property protectable by patents, trademarks and
copyrights registrations and to secure such patents, copyrights and trademark
registrations.
Section 3. Term of Office and Removal
--------------------------
(a) Term. Each officer of the corporation shall hold office during the
----
pleasure of the Board of Directors, and unless sooner removed by the Board of
Directors, until the meeting of the Board of Directors following the date of
their election and until his successor is elected and qualified.
(b) Removal. The Board of Directors may remove any officer at any time,
-------
with or without cause by the affirmative vote of a majority of directors in
office.
Section 4. Compensation of Officers
------------------------
Unless compensation is otherwise determined by a majority of the directors
at a regular or special meeting of the Board of Directors, or unless such
determination is delegated by the Board of Directors to another officer or
officers, the President of the corporation from time to time shall determine the
compensation to be paid to all officers and other employees for services
rendered to the corporation.
ARTICLE V
---------
INDEMNIFICATION OF DIRECTORS AND OFFICERS
-----------------------------------------
(a) Right of Indemnification. Each director, officer and member of a
------------------------
committee of this corporation, and any person who may have served at the request
of this corporation as a director, officer or member of a committee of any other
corporation in which this corporation is a creditor,
<PAGE>
his heirs, executors and administrators, shall be indemnified by the corporation
against all costs and expenses reasonably incurred by him concerning, or in
connection with, the defense of any claim asserted or suit or proceeding brought
against him by reason of his conduct or actions as a director, officer or member
"of a committee of this corporation, or a director, officer of member of a
committee of such other corporation, whether or not he continues to be a
director, officer or member of a committee at the time of incurring such costs
or expenses, except costs and expenses incurred in relation to matters as to
which such director, officer or member of a committee shall have been willfully
derelict in the performance of his duty as such director, officer or member of a
committee. Such costs and expenses shall include the costs of reasonable
settlements (with or without suit), judgments, attorneys' fees, costs of suit,
fines and penalties and other liabilities (other than amounts paid by any such
person to this corporation or any such other corporation).
(b) Definition of Performance. For the purposes of this Article, a
-------------------------
director, officer or member of a committee shall conclusively be deemed not to
have been willfully derelict in the performance of his duty as such director,
officer or member of a committee.
(1) Determination by Suit. In a matter which shall have been the subject
---------------------
of a suit or proceeding in which he was a party which is disposed of by
adjudication on the merits, unless he shall have been finally adjudged in such
suit or proceeding to have been willfully derelict in the performance of his
duty as such director, officer or member of a committee, or
(2) Determination by Committee. In a matter not falling within (1) next
--------------------------
preceding if either a majority of disinterested members of the Board of
Directors or a majority of a committee of disinterested shareholders of the
corporation, (excluding therefrom any director, officer or member of a
committee) selected as hereinafter provided shall determine that he was not
willfully
<PAGE>
derelict. Such determination shall be made by the disinterested members of the
Board of Directors except where such members shall determine that such matter
should be referred to said committee of disinterested shareholders.
(c) Selection of Committee. The selection of a committee of shareholders
----------------------
provided above may be made by the majority vote of the disinterested directors
or, if there be no disinterested director or directors, by the chief executive
officer of the corporation. A director or shareholder shall be deemed
disinterested in a matter if he has no interest therein other than as a director
or shareholder of the corporation as the case may be. The corporation shall pay
the fees and expenses of the shareholders or directors, as the case may be,
incurred in connection with making a determination as above provided.
(d) Non-Committee Determination. In the event that a director, officer or
---------------------------
member of a committee shall be found by some other method not to have been
willfully derelict in the performance of his duty as such director, officer or
member of a committee, then such determination as to dereliction shall not be
questioned on the ground that it was made otherwise than as provided above.
(e) Indemnification by Law. The foregoing right of indemnification shall
----------------------
be in addition to any rights to which any such person may otherwise be entitled
as a matter of law.
<PAGE>
ARTICLE VI
SECURITIES HELD BY THE CORPORATION
----------------------------------
Section 1. Transfer of Securities Owned by the Corporation
-----------------------------------------------
All endorsements, assignments, transfers, stock powers, share powers or
other instruments of transfer of securities standing in the name of the
corporation shall be executed for and in the name of the corporation by the
President, by a Vice-President, by the Secretary or by the Treasurer or by any
other person or persons as may be thereunto authorized by the Board of
directors.
Section 2. Voting Securities held by the Corporation
-----------------------------------------
The Chairman of the Board, President, any Vice-President, Secretary or
Treasurer, in person or by another person thereunto authorized by the Board of
Directors, in person or by proxy or proxies appointed by him, shall have full
power and authority on behalf of the corporation to vote, act and consent with
respect to any securities issued by other corporations which the corporation may
own.
ARTICLE VII
SHARE CERTIFICATES
------------------
Section 1. Transfer and Registration of Certificates
-----------------------------------------
The Board of Directors shall have authority to make such rules and
regulations, not inconsistent with law, the Articles or these Regulations, as it
deems expedient concerning the issuance, transfer and registration of
certificates for shares and the shares represented thereby and may appoint
transfer agents and registrars thereof.
<PAGE>
Section 2. Substituted Certificates
------------------------
Any person claiming that a certificate for shares has been lost, stolen or
destroyed, shall make an affidavit or affirmation of that fact and, if required,
shall give the corporation (and its registrar or registrars and its transfer
agent or agents, if any) a bond of indemnity, in such form and with one or more
sureties satisfactory to the Board, and, if required by the Board of Directors,
shall advertise the same in such manner as the Board of Directors may require,
whereupon a new certificate may be executed and delivered of the same tenor and
for the same number of shares as the one alleged to have been lost, stolen or
destroyed.
ARTICLE VIII
SEAL
----
The directors may adopt a seal for the corporation which shall be in such
form and of such style as is determined by the directors. Failure to affix any
such corporate seal shall not affect the validity of any instrument.
ARTICLE IX
CONSISTENCY WITH ARTICLES OF INCORPORATION
------------------------------------------
If any provision of these Regulations shall be inconsistent with the
corporation's Articles of Incorporation (and as they may be amended from time to
time), the Articles of Incorporation (as so amended at the time) shall govern.
<PAGE>
ARTICLE X
SECTION HEADINGS
----------------
The headings contained in this Code of Regulations are for reference
purposes only and shall not be construed to be part of and/or shall not affect
in any way the meaning or interpretation of this Code of Regulations.
ARTICLE XI
AMENDMENTS
----------
This Code of Regulations of the corporation (and as it may be amended from
time to time) may be amended or added to by the affirmative vote or the written
consent of the shareholders of record entitled to exercise a majority of the
voting power on such proposal; provided, however, that if an amendment or
addition is adopted by written consent without a meeting of the shareholders, it
shall be the duty of the secretary to enter the amendment or addition in the
records of the corporation, and to mail a copy of such amendment or addition to
each shareholder of record who would be entitled to vote thereon and did not
participate in the adoption thereof.
<PAGE>
EXHIBIT 3.10
-------------------------------
FILED
IN THE OFFICE OF THE SECRETARY
OF STATE OF THE STATE OF OREGON
JUL 23 1990
CORPORATION DIVISION
-------------------------------
ARTICLES OF INCORPORATION
OF
COMMON GROUND BROADCASTING, INC.
KNOW ALL MEN BY THESE PRESENTS, That ROBERT A. FOGAL hereby
--------------------------------------
incorporate(s) a corporation under and pursuant to the laws of the State of
Oregon relative to private corporations, and hereby adopt(s) and execute(s) the
following ARTICLES OF INCORPORATION thereof:
ARTICLE I.
The name of this corporation is COMMON GROUND BROADCASTING, INC.
------------------------------------------------
ARTICLE II.
The aggregate number of shares which the corporation shall have authority to
issue is 1,000 - Common
-----------------
ARTICLE III.
The address of said corporations' initial registered office is 1650 NW SUSBAUER
------------------
ROAD , CORNELIUS, Oregon, 97113
- -------------------------------------------- ------------------ ---------
(Do not use post office box number; use street address) (City) (Zip)
and the name of its initial registered agent at said address is:
ROBERT A. FOGAL
- -----------------------------------------------
ARTICLE IV.
This address where the Division may mail notices is: Attn: SHEPARD
--------------------
COMMUNICATIONS
- --------------
POST OFFICE BOX 768 HILLSBORO OREGON 97123
- -------------------------------------------------------------------------------
(Address or post office box) (City) (State) (Zip)
ARTICLE V.
The name and address of each of the incorporators of this corporation are:
NAME ADDRESS (INCLUDE CITY, STATE, ZIP)
ROBERT A. FOGAL 1650 NW SUSBAUER ROAD, CORNELIUS, OREGON 97113
--15--
<PAGE>
ARTICLE VI.
The corporation shall have the power to indemnify to the fullest extent
permitted by law any person who is made, or threatened to be made, a party to an
action, suit or proceeding, whether civil, criminal, administrative,
investigative or otherwise (including an action, suit or proceeding by or in
the right of the corporation) by reason of the fact that the person is or was a
director, officer, employee, or agent of the corporation, or a fiduciary within
the meaning of the Employee Retirement Income Security act of 1974 with respect
to any employee benefit plans of the corporation, or serves or served at the
request of the corporation as a director, officer, employee, or agent, or as a
fiduciary of an employee benefit plan, of another corporation, partnership,
joint venture, trust or other enterprise, and their respective heirs,
administrators, personal representatives, successors and assigns.
Indemnification specifically provided by the Oregon Business Corporation Act
shall not be deemed exclusive of any other rights to which such director,
officer, employee or agent may be entitled under any bylaw, agreement, vote of
shareholders or disinterested directors or otherwise. The corporation, its
officers, directors, employees or agents shall be fully protected in taking any
action or making any payment under this Article or in refusing to do so upon the
advice of counsel.
ARTICLE VII.
No director or the corporation shall be personally liable to the
corporation or its shareholders for monetary damages for conduct as a director,
except that this provision shall not apply to:
1. Any breach of the director's duty of loyalty to the corporation or
its shareholders;
2. Any acts or omissions not in good faith or which involve intentional
misconduct or knowing violation of law;
3. Any distribution which is unlawful under Oregon law;
4. Any transaction from which the director derived an improper personal
benefit; or
5. Any act or omission occurring prior to the date on which these
Articles of Incorporation are filed with the Secretary of State.
ARTICLE VIII.
This corporation shall have the purpose of engaging in any lawful business.
Provisions for managing the business and regulating the affairs of the
corporation may be found in the Bylaws.
<TABLE>
<CAPTION>
Dated: June 21, 1990
------------ --
<S> <C> <C>
/s/Robert A. Fogal ROBERT A. FOGAL , Incorporator
- --------------------------------------- ------------------------------------
(Signature) (Type or print name)
, Incorporator
- --------------------------------------- ------------------------------------
(Signature) (Type or print name)
Person to contact about this filing:
ROBERT A. FOGAL ( 503 ) 357-8810
- -------------------------------------- --------- --------------------------------
(Name) (Daytime telephone number)
NOTE:
The Oregon Business Corporation Act provides that one or more individuals of the age of eighteen years or older, a domestic or
foreign corporation, a partnership or an association may act as incorporator or incorporators of a corporation by signing and
verifying articles of incorporation and delivering one original and one true copy of the Articles of Incorporation, accompanied by
the appropriate filing fee, to the Corporation Division, 158 12th St. NE, Salem, OR 97310. One or more directors is required.
</TABLE>
-16-
<PAGE>
EXHIBIT 3.11
BYLAWS
OF
COMMON GROUND BROADCASTING, INC.
--------------------------------
ARTICLE I - OFFICES
The principal office of the corporation in the State of Oregon shall be
located in the City of Hilssboro County of Washington. The corporation may have
such other offices, either within or without the State of incorporation as the
board of directors may designate or as the business of the corporation may from
time to time require.
ARTICLE II - SHAREHOLDERS
1. ANNUAL MEETING.
The annual meeting of the shareholders shall be held on the 9th day of
September in each year, beginning with the year 1991, at the hour of 1 o'clock
P.M., for the purpose of electing directors and for the transaction of such
other business as may come before the meeting. If the day fixed for the annual
meeting shall be a legal holiday such meeting shall be held on the next
succeeding business day.
2. SPECIAL MEETINGS.
Special meetings of the shareholders, for any purpose or purposes, unless
otherwise prescribed by statute, may be called by the president or by the
directors, and shall be called by the president at the request of the holders of
not less than ten (10) per cent of all the outstanding shares of the corporation
entitled to vote at the meeting.
3. PLACE OF MEETING.
The directors may designate any place, either within or without the State
as the place of meeting for any annual meeting or for any special meeting called
by the directors. A waiver of notice signed by all shareholders entitled to
vote at a meeting may designate any place, either within or without the State
unless otherwise prescribed by statute, as the place for holding such meeting.
If no designation is made, or if a special meeting be otherwise called, the
place of meeting shall be the principal office of the corporation.
4. NOTICE OF MEETING.
Written or printed notice stating the place, day and hour of the meeting
and, in case of a special meeting, the purpose or purposes for which the meeting
is called, shall be delivered not less than ten (10) nor more than sixty (60)
days before the date of the meeting, either personally or by mail, by or at the
direction of the president, or the secretary, or the officer or persons calling
the meeting, to each shareholder of record entitled to vote at such meeting. If
mailed, such notice
-1-
<PAGE>
shall be deemed to be delivered when deposited in the United States mail,
addressed to the shareholders at the shareholder's address as it appears on the
stock transfer books of the corporation, with post age thereon prepaid.
5. FIXING OF RECORD DATE.
For purposes of determining shareholders to notice of, or vote at any
meeting of shareholders, or shareholders entitled to demand a special meeting,
or to receive payment of any dividend, or in order to make a determination of
shareholders for any other purpose, the directors may fix in advance a date as
the record date for any such determination, such date in any case to be not more
than seventy (70) days, and, in case of a meeting of shareholders, not less than
ten (10) days prior to the date on which the particular action requiring such
determination is to be taken. The date on which notice of the meeting is mailed
or the date on which the resolution of the directors declaring such dividend is
adopted, as the case may be, shall be the record date for such determination of
shareholders. When a determination of shareholders entitled to vote at any
meeting of shareholders has been made as provided in this section, such
determination shall apply to any adjournment thereof.
6. VOTING LISTS.
After filing a record date for a meeting, the officer or agent having
charge of the stock transfer books for shares of the corporation shall make a
complete list of the shareholders entitled to vote at such meeting, or any
adjournment thereof, arranged in alphabetical order, with the address of and the
number of shares held by each, which list, for a period beginning 2 business
days after notice of the meeting is given for which the list was prepared and
continuing through the meeting, shall be kept on file at the principal office of
the corporation and shall be subject to inspection by any shareholder at any
time during usual business hours. The original stock transfer book shall be
prima facie evidence as to who are the shareholders entitled to examine such
list or transfer books or to vote at the meeting of shareholders.
7. QUORUM.
At any meeting of shareholders 51% of the outstanding shares of the
corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of shareholders. If less than said number of
the outstanding shares are represented at a meeting, a majority of the shares so
represented may adjourn the meeting from time to time without further notice.
At such adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally notified. The shareholders present at a duly organized meeting may
continue to transact business until adjournment, notwithstanding the withdrawal
of enough shareholders to leave less than a quorum.
8. PROXIES:
At all meetings of shareholders, a shareholder may vote by proxy executed
in writing by the shareholder or by the shareholder's duly authorized attorney
in fact. Such proxy shall be filed with the secretary of the corporation before
or at the time of the meeting.
-2-
<PAGE>
9. VOTING.
Each shareholder entitled to vote in accordance with the terms and
provisions of the articles of incorporation and these bylaws shall be entitled
to one vote, in person or by proxy, for each share entitled to vote held by such
shareholders. Upon the demand of any shareholder, the vote for directors and
upon any question before the meeting shall be by ballot. All elections for
directors shall be decided by plurality vote; all other questions shall be
decided by majority vote except as otherwise provided by the articles of
incorporation or the laws of this State.
10. ORDER OF BUSINESS.
The order of business at all meetings of the shareholders, shall be as
follows:
1. Roll Call.
2. Proof of notice of meeting or waiver of notice.
3. Reading of minutes of preceding meeting.
4. Reports of Officers.
5. Reports of Committees.
6. Election of Directors.
7. Unfinished Business.
8. New Business.
11. INFORMAL ACTION BY SHAREHOLDERS.
Unless otherwise provided by law, any action required to be taken at a
meeting of the shareholders, or any other action which may be taken at a meeting
of the shareholders, may be taken without a meeting if a consent in writing,
setting forth the action so taken, shall be signed by all of the shareholders
entitled to vote with respect to the subject matter thereof.
ARTICLE III - BOARD OF DIRECTORS
1. GENERAL POWERS.
The business and affairs of the corporation shall be managed by its board
of directors. The directors shall in all cases act as a board, and they may
adopt such rules and regulations for the conduct of their meetings and the
management of the corporation, as they may deem proper, not inconsistent with
these bylaws and the laws of this State.
-3-
<PAGE>
2. NUMBER, TENURE AND QUALIFICATIONS.
The number of directors of the corporation shall be two. All directors
shall hold office until the next annual meeting of shareholders and until their
successors shall have been elected and qualified.
3. REGULAR MEETINGS.
A regular meeting of the directors, shall be held without other notice than
this bylaw immediately after, and at the same place as, the annual meeting of
shareholders. The directors may provide, by resolution, the time and place for
the holding of additional regular meetings without other notice than such
resolution.
4. SPECIAL MEETINGS.
Special meetings of the directors may be called by or at the request of the
president or any two directors. The person or persons authorized to call
special meetings of the directors may fix the place for holding any special
meeting of the directors called by them. All board meetings shall be held
without notice immediately after and at the same place as the annual meeting of
shareholders.
5. NOTICE.
Notice of any special meeting shall be given at least ten (10) days
previously thereto by written notice delivered personally, or by telegram or
mailed to all directors at their business address. If mailed, such notice shall
be deemed to be delivered when deposited in the United States mail so addressed,
with postage thereon prepaid. If notice be given by telegram, such notice shall
be deemed to be delivered when the telegram is delivered to the telegraph
company. The attendance of a director at a meeting shall constitute a waiver of
notice of such meeting, unless the director at the beginning of the meeting
objects to holding the meeting or transacting business at the meeting and does
not thereafter vote at the special meeting.
6. WAIVER.
Whenever any notice is required to be given to any director under this
provision of these bylaws, the articles of incorporation or the laws of this
State, a waiver in writing specifying the meeting for which notice is waived,
signed by the person or persons entitled to such notice, shall be deemed
equivalent to the giving of such notice.
7. QUORUM.
At any meeting of the directors two shall constitute a quorum for the
transaction of business, but if less than said number is present at a meeting, a
majority of the directors present may adjourn the meeting from time to time
without further notice.
-4-
<PAGE>
8. MANNER OF ACTING.
The act of the majority of the directors present at a meeting at which a
quorum is present shall be the act of the directors.
9. NEWLY CREATED DIRECTORSHIPS AND VACANCIES.
Newly created directorships resulting from an increase in the number of
directors and vacancies occurring in the board for any reason except the removal
of directors without cause may be filled by a vote of a majority of the
directors then in office, although less than a quorum exists. Vacancies
occurring by reason of the removal of directors without cause shall be filled by
vote of the shareholders. A director elected to fill a vacancy caused by
resignation, death or removal of a director shall be elected to hold office for
the unexpired term of that director.
10. REMOVAL OF DIRECTORS.
Any or all of the directors may be removed for cause by vote of the
shareholders or by action of the board. Directors may be removed without cause
only by vote of the shareholders.
11. RESIGNATION.
A director may resign at any time by giving written notice to the board,
the president or the secretary of the corporation. Unless otherwise specified
in the notice, the resignation shall take effect upon receipt thereof by the
board or such officer, and the acceptance of the resignation shall not be
necessary to make it effective.
12. COMPENSATION.
By resolution of the board, the directors may be paid their expenses, if
any, of attendance at each board meeting, or a fixed sum at each board meeting,
or a stated salary as director, or a combination of the foregoing. No such
payment shall preclude any director from serving the corporation in any other
capacity and receiving compensation therefore.
13. PRESUMPTION OF ASSENT.
A director of the corporation who is present at a meeting of the directors
at which action on any corporate matter is taken shall be presumed to have
assented to the action taken unless the director's dissent shall be entered in
the minutes of the meeting or unless the director shall file a written dissent
to such action with the person acting as the secretary of the meeting before the
adjournment thereof or shall forward such dissent by registered mail to the
secretary of the corporation immediately after the adjournment of the meeting.
Such right to dissent shall not apply to a director who voted in favor of such
action.
-5-
<PAGE>
14. EXECUTIVE AND OTHER COMMITTEES.
The board, by resolution, may designate from among its members an executive
committee and other committees, each consisting of two or more directors. Each
such committee shall serve at the pleasure of the board.
ARTICLE IV - OFFICERS
1. NUMBER.
The officers of the corporation shall be a president, and a secretary, each
of whom shall be elected by the directors. Such other officers and assistant
officers as may be deemed necessary may be elected or appointed by the
directors.
2. ELECTION AND TERM OF OFFICE.
The officers of the corporation to be appointed by the directors shall be
appointed annually at the first meeting of the directors held after each annual
meeting of the shareholders. Each officer shall hold office until the officer's
successor shall have been duly elected and shall have qualified or until the
officer's death or until the officer's resignation or removal in the manner
hereinafter provided.
3. REMOVAL.
Any officer or agent appointed by the directors may be removed by the
directors whenever in their judgment the best interests of the corporation would
be served thereby, but such removal shall be without prejudice to the contract
rights, if any, of the person so removed.
4. VACANCIES.
A vacancy in any office because of death, resignation, removal,
disqualification or otherwise, may be filled by the directors for the unexpired
portion of the term.
5. PRESIDENT.
The president shall be the principal executive officer of the corporation
and, subject to the control of the directors, shall in general supervise and
control all of the business and affairs of the corporation. The president
shall, when present, preside at all meetings of the stockholders and of the
directors. The president may sign, with the secretary or any other proper
officer of the corporation thereunto authorized by the directors, certificates
for shares of the corporation, any deeds, mortgages, bonds, contracts, or other
instruments which the directors have authorized to be executed, except in cases
where the signing and execution thereof shall be expressly delegated by the
directors or by these bylaws to some other officer or agent of the corporation,
or shall be required by law to be otherwise signed or executed; and in general
shall perform all duties incident to the office of president and such other
duties as may be prescribed by the directors from time to time.
-6-
<PAGE>
6. VICE-PRESIDENT.
In the absence of the president or in event of the president's death,
inability or refusal to act, the vice-president shall perform the duties of the
president, and when so acting, shall have all the powers of and be subject to
all the restrictions upon the president. The vice-president shall perform such
other duties as from time to time may be assigned by the president or by the
directors. Until further action by the Board of Directors, no Vice-President
shall be named.
7. SECRETARY.
The secretary shall keep the minutes of the shareholders' and of the
directors' meetings in one or more books provided for that purpose, see that all
notices are duly given in accordance with the provisions of these bylaws or as
required, be custodian of the corporate records and of the seal of the
corporation and keep a register of the post office address of each shareholder
which shall be furnished to the secretary by such shareholder, have general
charge of the stock transfer books of the corporation and in general perform all
duties incident to the office of secretary and such other duties as from time to
time may be assigned by the president or by the directors.
8. TREASURER.
If required by the directors, the treasurer shall give a bond for the
faithful discharge of the treasurer's duties in such sum and with such surety or
sureties as the directors shall determine. The treasurer shall have charge and
custody of and be responsible for all funds and securities of the corporation;
receive and give receipts for moneys due and payable to the corporation from any
source whatsoever, and deposit all moneys in the name of the corporation in such
banks, trust companies or other depositories as shall be selected in accordance
with these bylaws and in general perform all of the duties incident to the
office of treasurer and such other duties as from time to time may be assigned
by the president or by the directors.
9. SALARIES.
The salaries of the officers shall be fixed from time to time by the
directors and no officer shall be prevented from receiving such salary by reason
of the fact that the officer is also a director of the corporation.
ARTICLE V - CONTRACTS, LOANS, CHECKS AND DEPOSITS
1. CONTRACTS.
The directors may authorize any officer or officers, agent or agents, to
enter into any contract or execute and deliver any instrument in the name of and
on behalf of the corporation, and such authority may be general or confined to
specific instances.
-7-
<PAGE>
2. LOANS.
No loans shall be contracted on behalf of the corporation and no evidences
of indebtedness shall be issued in its name unless authorized by a resolution of
the directors. Such authority may be general or confined to specific instances.
3. CHECKS, DRAFTS, ETC.
All checks, drafts or other orders for the payment of money, notes or other
evidences of indebtedness issued in the name of the corporation, shall be signed
by such officer or officers, agent or agents of the corporation and in such
manner as shall from time to time be determined by resolution of the directors.
4. DEPOSITS.
All funds of the corporation not otherwise employed shall be deposited from
time to time to the credit of the corporation in such banks, trust companies or
other depositaries as the directors may select.
ARTICLE VI - CERTIFICATES FOR SHARES AND THEIR TRANSFER
1. CERTIFICATES FOR SHARES.
Certificates representing shares of the corporation shall be in such form
as shall be determined by the directors. Such certificates shall be signed by
the president and by the secretary or by such other officers authorized by law,
or by the directors. All certificates for shares shall be consecutively
numbered or otherwise identified. The name and address of the shareholders, the
number of shares and date of issue, shall be entered on the stock transfer books
of the corporation. All certificates surrendered to the corporation for
transfer shall be canceled and no new certificate shall be issued until the
former certificate for a like number of shares shall have been surrendered and
canceled, except that in case of a lost, destroyed or mutilated certificate a
new one may be issued therefor upon such terms and indemnity to the corporation
as the directors may prescribe.
2. TRANSFERS OF SHARES.
(a) Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, and cancel the old certificate; every such transfer shall be entered on
the transfer book of the corporation which shall be kept at its principal
office.
(b) The corporation shall be entitled to treat the holder of record of any
share as the holder in fact thereof, and, accordingly, shall not be bound to
recognize any equitable or other claim to or interest in such share on the part
of any other person whether or not it shall have express or other notice
thereof, except as expressly provided by the laws of this State.
-8-
<PAGE>
ARTICLE VII - FISCAL YEAR
The fiscal year of the corporation shall begin on the 1st day of January in
each year.
ARTICLE VIII - DIVIDENDS
The directors may from time to time declare, and the corporation may pay,
dividends on its outstanding shares in the manner and upon the terms and
conditions provided by law.
ARTICLE IX - SEAL
The seal of the corporation shall consist of the name of the corporation,
the year of its incorporation, if required by statute, and the State of its
incorporation.
ARTICLE X - WAIVER OF NOTICE
Unless otherwise provided by law, whenever any notice is required to be
given to any shareholder or director of the corporation under the provisions of
these bylaws or under the provisions of the articles of incorporation, a waiver
thereof in writing, signed by the person or persons entitled to such notice,
whether before or after the time stated therein, shall be deemed equivalent to
the giving of such notice.
ARTICLE XI - AMENDMENTS
These bylaws may be altered, amended or repealed and new bylaws may be
adopted by a vote of the shareholders representing a majority of all the shares
issued and outstanding, at any annual shareholders' meeting or at any special
shareholders' meeting when the proposed amendment has been set out in the notice
of such meeting.
-9-
<PAGE>
EXHIBIT 3.12
1452350
FILED
in the office of the Secretary
of State of the State of California
DEC 21 1988
MARCH FONG EU, Secretary of State
ARTICLES OF INCORPORATION OF
GOLDEN GATE BROADCASTING COMPANY, INC.
--------------------------------------
ONE: The name of this Corporation is Golden Gate Broadcasting Company,
Inc.
TWO: The purpose of this Corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of California other than the banking business, the trust company business or
the practice of a profession permitted to be incorporated by the California
Corporations Code.
THREE: The name and address in this state of the Corporation's initial
agent for service of process is Edward G. Atsinger, III, 2310 East Ponderosa
Drive, #29, Camarillo, California 93010.
FOUR: The total number of shares which the Corporation is authorized to
issue is One Hundred Thousand (100,000).
FIVE: The liability of the directors of the Corporation for monetary
damages shall be eliminated to the fullest extent permissible under California
law. This Corporation is authorized to provide indemnification of agents (as
defined in Section 317 of the Corporations Code) for breach of duty to the
Corporation and its shareholders through Bylaw provisions or through agreements
with the agents, or both, in excess of the indemnification otherwise permitted
by Section 317 of the Corporations Code, subject to the limits on such excess
indemnification set forth in Section 204 of the Corporations Code.
Dated: December 20, 1988
Stuart A. Comis
---------------------------------------------
STUART A. COMIS
Sole Incorporator
I declare that I am the person who executed the above Articles of
Incorporation and such instrument is my act and deed.
Stuart A. Comis
---------------
STUART A. COMIS
Sole Incorporator
<PAGE>
EXHIBIT 3.13
BYLAWS OF
GOLDEN GATE BROADCASTING COMPANY, INC.
-------------------------------------
ARTICLE I
SHAREHOLDERS' MEETING
---------------------
Section 1. PLACE OF MEETINGS.
- ---------
Meetings of shareholders shall be held at any place within or outside the
State of California designated by the Board of Directors. In the absence of any
such designation, shareholders' meetings shall be held in the principal
executive office of the corporation.
Section 2. ANNUAL MEETINGS.
- ---------
The annual meeting of shareholders shall be held each year on a date and at
a time designated by the Board of Directors. The date so designated shall be
within five (5) months after the end of the fiscal year of the corporation, and
within fifteen (15) months after the last annual meeting. At each annual
meeting directors shall be elected, and any other proper business may be
transacted.
Section 3. SPECIAL MEETINGS.
- ---------
A special meeting of the shareholders may be called at any time by the
Board of Directors, or by the chairman of the Board, or by the president or by
one or more shareholders holding shares in the aggregate entitled to cast not
less than ten percent (10%) of the votes at that meeting.
If a special meeting is called by any person or persons other than the
Board of Directors, the request shall be in writing, specifying the time of such
meeting and the general nature of the business proposed to be transacted, and
shall be delivered personally or sent by registered mail or by telegraphic or
other facsimile transmission to the chairman of the Board, the president, any
vice-president or the secretary of the corporation. The officer receiving the
request shall cause notice to be promptly given to the shareholders entitled to
vote, in accordance with the provisions of Sections 4 and 5 of this Article I,
that a meeting will be held at the time requested by the person or persons
calling the meeting, not less than thirty-five (35) nor more than sixty (60)
days after the receipt of the request. If the notice is not given within twenty
(20) days after receipt of the request, the person or persons requesting the
meeting may give the notice. Nothing contained in this paragraph of this
Section 3 shall be construed as limiting, fixing or affecting the time when a
meeting of shareholders called by action of the Board of Directors may be held.
Section 4. NOTICE OF MEETINGS.
- ---------
All notices of meetings of shareholders shall be sent or otherwise given in
accordance with Section 5 of this Article I not less than ten (10) nor more than
sixty (60) days before the date of the meeting. The notice shall specify the
place, date and hour of the meeting and (a) in the case of
<PAGE>
a special meeting, the general nature of the business to be transacted or (b) in
the case ofthe annual meeting, those matters which the Board of Directors, at
the time of giving notice, intends to present for action by the shareholders.
The notice of any meeting at which directors are to be elected shall include the
name of any nominee or nominees whom, at the time of the notice, management
intends to present for election.
If action is proposed to be taken at any meeting for approval of (i) a
contract or transaction in which a director has a direct or indirect financial
interest, pursuant to Section 310 of the Corporations Code of California, (ii)
an amendment of the Articles of Incorporation, pursuant to Section 902 of that
Code, (iii) a reorganization of the corporation, pursuant to Section 1201 of
that Code, (iv) a voluntary dissolution of the corporation, pursuant to Section
1900 of that Code, or (v) a distribution in dissolution other than in accordance
with the rights of outstanding preferred shares, pursuant to Section 2007 of
that Code, the notice shall also state the general nature of that proposal.
Section 5. MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE.
- ---------
Notice of any meeting of shareholders shall be given either personally or
by first-class mail or telegraphic or other written communication, charges
prepaid, addressed to the shareholder at the address of that shareholder
appearing on the books of the corporation or given by the shareholder to the
corporation for the purpose of notice. If no such address appears on the
corporation's books or is given, notice shall be deemed to have been given if
sent to that shareholder by first-class mail or telegraphic or other written
communication to the corporation's principal executive office, or if published
at least once in a newspaper of general circulation, in the county where that
office is located. Notice shall be deemed to have been given at the time when
delivered personally or deposited in the mail or sent by telegram or other means
of written communication.
If any notice addressed to a shareholder at the address of that shareholder
appearing on the books of the corporation is returned to the corporation by the
United States Postal Service marked to indicate that the United States Postal
Service is unable to deliver the notice to the shareholder at that address, all
future notices or reports shall be deemed to have been duly given without
further mailing if these shall be available to the shareholder on written demand
of the shareholder at the principal executive office of the corporation for a
period of one (1) year from the date of the giving of the notice.
An affidavit of the mailing or other means of giving any notice of any
shareholders' meetings shall be executed by the secretary, assistant secretary
or any transfer agent of the corporation giving the notice, and shall be filed
and maintained in the minute book of the corporation.
Section 6. QUORUM.
- ---------
The presence in person or by proxy of the holders of a majority of the
shares entitled to vote at any meeting of shareholders shall constitute a quorum
for the transaction of business. The shareholders present at a duly called or
held meeting at which a quorum is present may continue
2
<PAGE>
to do business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum, if any action taken (other than
adjournment) is approved by at least a majority of the shares required to
constitute a quorum.
Section 7. ADJOURNED MEETING; NOTICE.
- ---------
Any shareholders' meeting, annual or special, whether or not a quorum is
present, may be adjourned from time to time by the vote of the majority of the
shares represented at that meeting, either in person or by proxy, but in the
absence of a quorum, no other business may be transacted at that meeting, except
as provided in Section 6 of this Article I.
When any meeting of shareholders, either annual or special, is adjourned to
another time or place, notice need not be given of the adjourned meeting if the
time and place are announced at a meeting at which the adjournment is taken
unless a new record date for the adjourned meeting is fixed, or unless the
adjournment is for more than forty-five (45) days from the date set for the
original meeting, in which case the Board of Directors shall set a new record
date. Notice of any such adjourned meeting shall be given to each shareholder
of record entitled to vote at the adjourned meeting in accordance with the
provisions of Sections 4 and 5 of this Article I. At any adjourned meeting the
corporation may transact any business which might have been transacted at the
original meeting.
Section 8. VOTING RIGHTS; CUMULATIVE VOTING.
- ---------
The shareholders entitled to vote at any meeting of shareholders shall be
determined in accordance with the provisions of Section 11 of this Article I,
subject to the provisions of Sections 702 through 704, inclusive, of the
Corporations Code of California (relating to voting shares held by a fiduciary,
in the name of a corporation, or in joint ownership). The shareholders' vote
may be by voice vote or by ballot; provided, however, that any election for
directors must be by ballot if demanded by any shareholder before the voting has
begun. On any matter other than elections of directors, any shareholder may
vote part of the shares in favor of the proposal and refrain from voting the
remaining shares or vote them against the proposal, but, if the shareholder
fails to specify the number of shares which the shareholder is voting
affirmatively, it will be conclusively presumed that the shareholder's approving
vote is with respect to all shares that the shareholder is entitled to vote. If
a quorum is present, the affirmative vote of the majority of the shares
represented at the meeting and entitled to vote on any matter (other than the
election of directors) shall be the act of the shareholders, unless a vote of a
greater number or voting by classes is required by the California General
Corporation Law or by the Articles of Incorporation.
At a shareholders' meeting at which directors are to be elected, no
shareholder shall be entitled to accumulate votes (i.e., to cast for any one or
more candidates a number of votes greater than the number of the shareholder's
shares) unless the candidates' names have been placed in nomination prior to
commencement of the voting and a shareholder has given notice prior to
commencement of the voting of the shareholder's intention to cumulate votes. If
any shareholder has given such a notice, then every shareholder entitled to vote
may cumulate votes for candidates in nomination and give one candidate a number
of votes equal to the number of directors to be elected multiplied by the number
of votes to which that shareholder's shares are entitled, or
3
<PAGE>
distribute the shareholder's votes on the same principle among any or all of the
candidates, as the shareholder thinks fit. The candidates receiving the highest
number of votes, up to the number of directors to be elected, shall be elected.
Section 9. WAIVER OF NOTICE OR CONSENT BY ABSENT SHAREHOLDERS.
- ---------
The transactions of any meeting of shareholders, either annual or special,
however called and noticed and wherever held, shall be as valid as though had at
a meeting duly held after regular call and notice, if a quorum be present either
in person or by proxy, and if, either before or after the meeting, each person
entitled to vote, who was not present in person or by proxy, signs a written
waiver of notice or a consent to a holding of the meeting or an approval of the
minutes. The waiver of notice or consent need not specify either the business
to be transacted or the purpose of any annual or special meeting of
shareholders, except that if action is taken or proposed to be taken for
approval of any of those matters specified in the second paragraph of Section 4
of this Article I, the waiver of notice or consent shall state the general
nature of the proposal. All such waivers, consents or approvals shall be filed
with the corporate records or made a part of the minutes of the meeting.
Attendance by a person at a meeting shall also constitute a waiver of
notice of that meeting, except when the person objects, at the beginning of the
meeting, to the transaction of any business because the meeting is not lawfully
called or convened and except that attendance at a meeting is not a waiver of
any right to object to the consideration of matters not included in the notice
of the meeting if that objection is expressly made at the meeting.
Section 10. SHAREHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING.
- ----------
Any action which may be taken at any annual or special meeting of
shareholders may be taken without a meeting and without prior notice, if a
consent in writing, setting forth the action so taken, is signed by the holders
of outstanding shares having not less than the minimum number of votes that
would be necessary to authorize or to take that action at a meeting at which all
shares entitled to vote on that action were present and voted. In the case of
election of directors, such consent shall be effective only if signed by the
holders of all outstanding shares entitled to vote for the election of
directors; provided, however, that a director may be elected at any time to fill
a vacancy on the Board of Directors that has not been filled by the directors,
by the written consent of the holders of a majority of the outstanding shares
entitled to vote for the election of directors. All such consents shall be
filed with the secretary of the corporation and shall be maintained in the
corporate records. Any shareholder giving a written consent, or the
shareholder's proxy holder, or a transferee of the shares or a personal
representative of the shareholder or his respective proxy holder, may revoke the
consent by a writing received by the secretary of the corporation before written
consents of the number of shares required to authorize the proposed action have
been filed with the secretary.
If the consents of all shareholders entitled to vote have not been
solicited in writing, and if the unanimous written consent of all such
shareholders shall not have been received, the secretary shall give prompt
notice of the corporate action approved by the shareholders without a meeting.
4
<PAGE>
This notice shall be given in the manner specified in Section 5 of this Article
I. In the case of approval of (a) contracts or transactions in which a director
has a direct or indirect financial interest, pursuant to Section 310 of the
Corporations Code of California, (b) indemnification of agents of the
corporation, pursuant to Section 317 of that Code, (c) a reorganization of the
corporation, pursuant to Section 1201 of that Code, and (d) a distribution in
dissolution other than in accordance with the rights of the outstanding
preferred shares, pursuant to Section 2007 of that Code, the notice shall be
given at least ten (10) days before the consummation of any action authorized by
that approval.
Section 11. RECORD DATE FOR SHAREHOLDERS NOTICE, VOTING AND GIVING CONSENTS.
- ----------
For purposes of determining the shareholders entitled to notice of any
meeting or to vote or entitled to give consent to corporate action without a
meeting, the Board of Directors may fix, in advance, a record date, which shall
be not more than sixty (60) days nor less than ten (10) days before the date of
any such meeting nor more than sixty (60) days before any such action without a
meeting, and in this event only shareholders of record on the date so fixed are
entitled to notice and to vote or to give consents, as the case may be,
notwithstanding the transfer of any shares on the books of the corporation after
the record date, except as otherwise provided in the California General
Corporation Law.
If the Board of Directors does not so fix a record date:
(a) The record date for determining shareholders entitled to notice of
or to vote at a meeting of shareholders shall be at the close of business on the
business day next preceding the day on which notice is given or, if notice is
waived, at the close of business on the business day next preceding the day on
which the meeting is held.
(b) The record date for determining shareholders entitled to give
consent to corporate action in writing without a meeting (i) when no prior
action by the Board has been taken, shall be the day on which the first written
consent is given, or (ii) when prior action of the Board has been taken, shall
be at the close of business on the day on which the Board adopts the resolution
relating to that action or the sixtieth (60th) day before the date of such other
action, whichever is later.
Section 12. PROXIES.
- ----------
Every person entitled to vote for directors or on any other matter shall
have the right to do so either in person or by one or more agents authorized by
a written proxy signed by the person and filed with the secretary of the
corporation. A proxy shall be deemed signed if the shareholder's name is placed
on the proxy (whether by manual signature, typewriting, telegraphic transmission
or otherwise) by the shareholder or the shareholder's attorney in fact. A
validly executed proxy which does not state that it is irrevocable shall
continue in full force and effect unless (a) revoked by the person executing it,
before the vote pursuant to that proxy by a writing delivered to the corporation
stating that the proxy is revoked, or by a subsequent proxy executed by, or
attendance at the meeting and voting in person by, the person executing the
proxy; or
5
<PAGE>
(b) written notice of the death or incapacity of the maker of that proxy is
received by the corporation before the vote pursuant to that proxy is counted;
provided, however, that no proxy shall be valid after the expiration of eleven
(11) months from the date of the proxy, unless otherwise provided in the proxy,
and, provided, further, that the proxy shall be valid only if executed in favor
of another shareholder of the corporation. The revocability of a proxy that
states on its face that it is irrevocable shall be governed by the provisions of
Sections 705(e) and 705(f) of the Corporations Code of California.
Section 13. INSPECTORS OF ELECTION.
- ----------
Before any meeting of shareholders, the Board of Directors may appoint any
persons other than nominees for office to act as inspectors of election at the
meeting or its adjournment. If no inspectors of election are so appointed, the
chairman of the meeting may, and on the request of any shareholder or a
shareholder's proxy shall, appoint inspectors of election at the meeting. The
number of inspectors shall be either one (1) or three (3). If inspectors are
appointed at the meeting on the request of one or more shareholders or proxies,
the holders of a majority of shares or their proxies present at the meeting
shall determine whether one (1) or three (3) inspectors are to be appointed. If
any person appointed as inspector fails to appear or fails or refuses to act,
the chairman of the meeting may, and upon the request of any shareholder or a
shareholder's proxy shall, appoint a person to fill that vacancy.
These inspectors shall:
(a) Determine the number of shares outstanding and the voting power of
each, the shares represented at the meeting, the existence of a quorum and the
authenticity, validity and effect of proxies;
(b) Receive votes, ballots or consents;
(c) Hear and determine all challenges and questions in any way arising
in connection with the right to vote;
(d) Count and tabulate all votes or consents;
(e) Determine when the polls shall close;
(f) Determine the result; and
(g) Do any other acts that may be proper to conduct the election or
vote with fairness to all shareholders.
6
<PAGE>
Section 14. VOTING TRUSTS.
- ----------
If a voting trust agreement is filed in the office of the corporation, the
corporation shall take notice of its terms and the limitations this agreement
places on the authority of the trustee. The agreement shall be valid only if
voting power is vested in another shareholder of the corporation.
ARTICLE II
DIRECTORS; MANAGEMENT
---------------------
Section 1. POWERS.
- ---------
Subject to the limitations of the Articles of Incorporation, of the Bylaws
and of the laws of the State of California as to action to be authorized or
approved by the shareholders, all corporate powers shall be exercised by or
under authority of, and the business and affairs of this corporation shall be
controlled by, a board of directors.
Section 2. NUMBER AND QUALIFICATION.
- ---------
The authorized number of directors shall be two (2) until changed by a duly
adopted amendment of the Articles of Incorporation or by an amendment to these
Bylaws adopted by the vote or written consent of holders of a majority of the
outstanding shares entitled to vote.
Section 3. ELECTION AND TENURE OF OFFICE.
- ---------
Directors shall be elected at each annual meeting of the shareholders to
hold office until the next annual meeting. Each director, including a director
elected to fill a vacancy, shall hold office until the expiration of the term
for which elected and until a successor has been elected and qualified.
Section 4. VACANCIES.
- ---------
Vacancies in the Board of Directors may be filled by a majority of the
remaining directors, though less than a quorum or by a sole remaining director,
except that a vacancy created by the removal of a director by the vote or
written consent of the shareholders or by court order may be filled only by the
vote of a majority of the shares entitled to vote represented at a duly held
meeting at which a quorum is present, or by the written consent of holders of a
majority of the outstanding shares entitled to vote. Each director so elected
shall hold office until the next annual meeting of the shareholders and until a
successor has been elected and qualified.
A vacancy or vacancies in the Board of Directors shall be deemed to exist
in the event of the death, disqualification, resignation, or removal of any
director, or if the Board of Directors by resolution declares vacant the office
of a director who has been declared of unsound mind by an order of court or
convicted of a felony, or if the authorized number of directors is increased or
if the shareholders fail, in any meeting of shareholders at which any director
or directors are elected, to elect the number of directors to be voted for at
that meeting.
7
<PAGE>
The shareholders may elect a director or directors at any time to fill any
vacancy or vacancies not filled by the directors, but any such election by
written consent shall require the consent of a majority of the outstanding
shares entitled to vote.
Any director may resign effective on giving written notice to the chairman
of the board, the president, the secretary or the Board of Directors, unless the
notice specifies a later time for that resignation to become effective. If the
resignation of a director is effective at a future time, the Board of Directors
may elect a successor to take office when the resignation becomes effective.
No reduction of the authorized number of directors shall have the effect of
removing any director before that director's term of office expires.
Section 5. REMOVAL OF DIRECTORS.
- ---------
The entire Board of Directors or any individual director may be removed
from office as provided by Sections 302, 303 and 304 of the Corporations Code of
the State of California.
Section 6. PLACE OF MEETINGS AND MEETINGS BY TELEPHONE.
- ---------
Regular meetings of the Board of Directors may be held at any place within
or outside the State of California that has been designated from time to time by
resolution of the Board. In the absence of such designation, regular meetings
shall be held at the principal executive office of the corporation. Special
meetings of the board shall be held at any place within or outside the State of
California that has been designated in the notice of the meeting or, if not
stated in the notice or there is no notice, at the principal executive office of
the corporation. Any meeting, regular or special, may be held by conference
telephone or similar communication equipment, so long as all directors
participating in the meeting can hear one another, and all such directors shall
be deemed to be present in person at the meeting.
Section 7. ANNUAL MEETING.
- ---------
Immediately following each annual meeting of shareholders, the Board of
Directors shall hold a regular meeting for the purpose of organization, any
desired election of officers and the transaction of other business. Notice of
this meeting shall not be required.
Section 8. OTHER REGULAR MEETINGS.
- ---------
Other regular meetings of the Board of Directors shall be held without call
at such time as it shall from time to time be fixed by the Board of Directors.
Such regular meetings may be held without notice.
Section 9. SPECIAL MEETINGS - NOTICES.
- ---------
Special meetings of the Board of Directors for any purpose or purposes may
be called at any time by the chairman of the board or the president or any vice-
president or the secretary or any two directors.
8
<PAGE>
Notice of the time and place of special meetings shall be delivered
personally or by telephone to each director, or sent by first-class mail or
telegram, charges prepaid, addressed to each director at that director's address
as it is shown on the records of the corporation. In case the notice is mailed,
it shall be deposited in the United States mail at least four (4) days before
the time of the holding of the meeting. In case the notice is delivered
personally or by telephone or telegram, it shall be delivered personally or by
telephone or to the telegraph company at least forty-eight (48) hours before the
time of the holding of the meeting. Any oral notice given personally or by
telephone may be communicated either to the director or to a person at the
office of the director who the person giving the notice has reason to believe
will promptly communicate it to the director. The notice need not specify the
purpose of the meeting nor the place if the meeting is to be held at the
principal executive offices of the corporation.
Section 10. QUORUM.
- ----------
A majority of the authorized number of directors shall constitute a quorum
for the transaction of business, except to adjourn as provided in Section 13 of
this Article II, unless the authorized number of directors is two or less, in
which case all of the duly elected and acting directors shall constitute a
quorum for the transaction of business. Every act or decision done or made by a
majority of the directors present at a meeting duly held at which a quorum is
present shall be regarded as the act of the Board of Directors, subject to the
provisions of Section 310 of the Corporations Code of the State of California
(as to approval of contracts or transactions in which a director has a direct or
indirect material financial interest), Section 311 of that Code (as to
appointment of committees), and Section 317(e) of that Code (as to
indemnification of directors). A meeting at which a quorum is initially present
may continue to transact business notwithstanding the withdrawal of directors,
if any action taken is approved by at least a majority of the required quorum
for that meeting.
Section 11. WAIVER OF NOTICE.
- ----------
The transactions of any meeting of the Board of Directors, however called
and noticed and wherever held, shall be as valid as though had at a meeting duly
held after regular call and notice if a quorum is present and if, either before
or after the meeting, each of the directors not present signs a written waiver
of notice, a consent to holding the meeting or an approval of the minutes. The
waiver of notice or consent need not specify the purpose of the meeting. All
such waivers, consents and approval shall be filed with the corporate records or
made a part of the minutes of the meeting. Notice of a meeting shall also be
deemed given to any director who attends the meeting without protesting before
or at its commencement, the lack of notice to that director.
Section 12. DIRECTORS ACTING WITHOUT A MEETING BY UNANIMOUS WRITTEN CONSENT.
- ----------
Any action required or permitted to be taken by the Board of Directors may
be taken without a meeting, if all members of the Board shall individually or
collectively consent in writing to that action. Such action by written consent
shall have the same force and effect as a unanimous
9
<PAGE>
vote of the Board of Directors. Such written consent or consents shall be filed
with the minutes of the proceedings of the Board.
Section 13. ADJOURNMENT.
- ----------
A majority of the directors present, whether or not constituting a quorum,
may adjourn any meeting to another time and place.
Section 14. NOTICE OF ADJOURNMENT.
- ----------
Notice of the time and place of holding an adjourned meeting need not be
given, unless the meeting is adjourned for more than twenty-four (24) hours, in
which case notice of the time and place shall be given before the time of the
adjourned meeting, in the manner specified in Section 9 of this Article II, to
the directors who are not present at the time of the adjournment.
Section 15. COMPENSATION OF DIRECTORS.
- ----------
Directors and members of committees, as such, shall not receive any stated
salary for their services, but by resolution of the board a fixed sum and
expense of attendance, if any, may be allowed for attendance at each regular and
special meeting of the board; provided that nothing herein contained shall be
construed to preclude any director from serving the corporation in any other
capacity and receiving compensation therefor.
Section 16. PERSONAL LIABILITY OF DIRECTORS.
- ----------
To the maximum extent permitted by California General Corporation Law, the
personal liability of a director for monetary damages in an action brought by or
in the right of the corporation for breach of a director's duties to the
corporation and its shareholders is eliminated or limited, provided, however,
that the liability of directors shall not be eliminated or limited (i) for acts
or omissions that involve intentional misconduct or a knowing and culpable
violation of law, (ii) for acts or omissions that a director believes to be
contrary to the best interests of the corporation or its shareholders or that
involve the absence of good faith on the part of the director, (iii) for any
transaction from which a director derived an improper personal benefit, (iv) for
acts or omissions that show a reckless disregard for the director's duty to the
corporation or its shareholders in circumstances in which the director was
aware, or should have been aware, in the ordinary course of performing a
director's duties, of a risk of serious injury to the corporation or its
shareholders, (v) for acts or omissions that constitute an unexcused pattern of
inattention that amounts to an abdication of the director's duty to the
corporation or its shareholders, (vi) under Corporations Code section 310, and
(vii) under Corporations Code section 316. This provision shall not eliminate
or limit the liability of an officer for any act or omission as an officer,
notwithstanding that the officer is also a director or that his or her actions,
if negligent or improper, have been ratified by the directors.
ARTICLE III
OFFICERS
--------
Section 1. OFFICERS.
- ---------
10
<PAGE>
The officers of the corporation shall consist of a chairman of the board,
president, vice-president, secretary, and chief financial officer. The
corporation may also have, at the discretion of the Board of Directors, a
chairman of the board, one or more additional vice-presidents, one or more
assistant secretaries, one or more assistant treasurers and such other officers
as may be appointed in accordance with the provisions of Section 3 of this
Article.
Section 2. ELECTION.
- ---------
The officers of the corporation, except those officers as may be appointed
in accordance with the provisions of Section 3 and Section 5 of this Article III
shall be chosen annually by the Board of Directors, and each shall hold his
office until he shall resign or shall be removed or otherwise disqualified to
serve, or his successor shall be elected and qualified.
Section 3. SUBORDINATE OFFICERS, ETC.
- ---------
The Board of Directors may appoint such other officers as the business of
the corporation may require, each of whom shall hold office for such period,
have such authority and perform such duties as are provided in the bylaws or as
the Board of Directors may from time to time determine.
Section 4. REMOVAL AND RESIGNATION.
- ---------
Any officer may be removed, either with or without cause, by the Board of
Directors at any regular or special meeting, or, except in case of an officer
chosen by the Board of Directors, by any officer upon whom such power of removal
may be conferred by the Board of Directors.
Any officer may resign at any time by giving written notice to the Board of
Directors, or to the president or to the secretary of the corporation. Any such
resignation shall take effect at the date of this notice or at any later
specified time; and, unless otherwise specified, the acceptance of this
resignation shall not be necessary to make it effective.
Section 5. VACANCIES.
- ---------
A vacancy in any office because of death, resignation, removal,
disqualification, or because of any other cause shall be filled in the manner
prescribed in the bylaws for regular appointments to the office.
Section 6. CHAIRMAN OF THE BOARD.
- ---------
The chairman of the board, if there shall be such an officer, shall, if
present, preside at all meetings of the Board of Directors and exercise and
perform such other powers and duties as may be from time to time assigned to him
by the Board of Directors or prescribed by the bylaws. If there is no
president, the chairman of the board shall in addition be the chief executive
officer of the corporation and shall have the powers and duties prescribed in
Section 7 of this Article III.
Section 7. PRESIDENT.
- ---------
11
<PAGE>
Subject to such supervisory powers, if any, as may be given by the Board of
Directors to the chairman of the board, if there be such an officer, the
president shall be the chief executive officer of the corporation and shall,
subject to the control of the Board of Directors, have general supervision,
direction and control of the business and officers of the corporation. He shall
preside at all meetings of the shareholders and in the absence of the chairman
of the board, or if there be none, at all meetings of the Board of Directors.
He shall be ex officio a member of all the standing committees, including the
executive committee, if any, and shall have the general powers and duties of a
corporate management usually vested in the office of president of a corporation
and shall have such other powers and duties as may be prescribed by the Board of
Directors or the bylaws.
Section 8. VICE-PRESIDENT.
- ---------
In the absence or disability of the president, the vice-president, if any,
shall perform all the duties of the president, and when so acting shall have all
the powers of, and be subject to, all the restrictions upon, the president. The
vice-president shall have such other powers and perform such other duties as
from time to time may be prescribed by the Board of Directors or the bylaws.
Section 9. SECRETARY.
- ---------
The secretary shall keep, or cause to be kept, a book of minutes at the
principal office or such other place as the Board of Directors may order, of all
meetings of directors and shareholders, with the time and place of holding,
whether regular or special and, if special, how authorized, the notice thereof
given, the names of those present at directors' meetings, the number of shares
present or represented at shareholders' meetings and the proceedings thereof.
The secretary shall keep, or cause to be kept, at the principal office or
at the office of the corporation's transfer agent, a share register, or
duplicate share register, showing the names of the shareholders and their
addresses; the number and classes of shares held by each; the number and date of
certificates issued for the same; and the number and date of cancellation of
every certificate surrendered for cancellation.
The secretary shall give or cause to be given, notice of all the meetings
of the shareholders and of the Board of Directors required by the bylaws or by
law to be given, and he shall keep the seal of the corporation in safe custody
and shall have such other powers and perform such other duties as may be
prescribed by the Board of Directors or by the bylaws.
12
<PAGE>
Section 10. CHIEF FINANCIAL OFFICER.
- ----------
The chief financial officer shall keep and maintain or cause to be kept and
maintained, adequate and correct accounts of the properties and business
transactions of the corporation, including accounts of its assets, liabilities,
receipts, disbursements, gains, losses, capital, surplus and shares. Any
surplus, including earned surplus, paid-in surplus and surplus arising from a
reduction of stated capital shall be classified according to source and shown in
a separate account. The books of account shall at all reasonable times be open
to inspection by any director.
The chief financial officer shall deposit all moneys and other valuables in
the name and to the credit of the corporation with such depositaries as may be
designated by the Board of Directors. He shall disburse the funds of the
corporation as may be ordered by the Board of Directors, shall render to the
president and directors, whenever they request it, an account of all of his
transactions as chief financial officer and of the financial condition of the
corporation and shall have such other powers and perform such other duties as
may be prescribed by the Board of Directors or the bylaws.
Section 11. SALARIES.
- ----------
The salaries of the officers and other shareholders employed by the
corporation shall be fixed from time to time by the Board of Directors or
established under agreements with officers or shareholders approved by the Board
of Directors, and no officer shall be prevented from receiving such salary by
reason of the fact that he is also a director of the corporation.
ARTICLE IV
CORPORATE RECORDS AND REPORTS-INSPECTION
----------------------------------------
Section 1. MAINTENANCE AND INSPECTION OF SHARE REGISTER.
- ---------
The corporation shall keep at its principal executive office, or at the
office of its transfer agent or registrar, if either be appointed and as
determined by resolution of the Board of Directors, a record of its shareholders
giving the names and addresses of all shareholders and the number and class of
shares held by each shareholder.
A shareholder or shareholders of the corporation holding at least five
percent (5%) in the aggregate of the outstanding voting shares of the
corporation may (a) inspect and copy the records of the shareholders' names and
addresses and shareholdings during usual business hours on five days' prior
written demand on the corporation and (b) obtain from the transfer agent of the
corporation, on written demand and on tender of such transfer agent's usual
charges for such list, a list of the shareholders' names and addresses, who are
entitled to vote for the election of directors and their shareholdings, as of
the most recent record date for which that list has been compiled or as of a
date specified by the shareholder after the date of demand. This list shall be
made available to any such shareholder by the transfer agent on or before the
later of five (5) days after the demand is received or the date specified in the
demand as the date as of which the list is to be compiled. The record of
shareholders shall also be open to inspection on the written demand of any
shareholder or holder of a voting trust certificate, at any time during usual
business
13
<PAGE>
hours, for a purpose reasonably related to the holder's interest as a
shareholder or as a holder of a voting trust certificate. Any inspection and
copying under this Section 1 may be made in person or by an agent or attorney of
the shareholder or holder of a voting trust certificate making the demand.
Section 2. MAINTENANCE AND INSPECTION OF BYLAWS.
- ---------
The corporation shall keep at its principal executive office, or if its
principal executive office is not in the State of California, at its principal
business office in this state, the original or a copy of the bylaws as amended
to date, which shall be open to inspection by the shareholders at all reasonable
times during office hours. If the principal executive office of the corporation
is outside the State of California and the corporation has no principal business
office in this state, the secretary shall, upon the written request of any
shareholder, furnish to that shareholder a copy of the bylaws as amended to
date.
Section 3. MAINTENANCE AND INSPECTION OF OTHER CORPORATE RECORDS.
- ---------
The accounting books and records and minutes of proceedings of the
shareholders and the Board of Directors and any committee or committees of the
Board of Directors shall be kept at such place or places designated by the Board
of Directors, or, in the absence of such designation, at the principal executive
office of the corporation. The minutes shall be kept in written form and the
accounting books and records shall be kept either in written form or in any
other form capable of being converted into written form. The minutes and
accounting books and records shall be open to inspection upon the written demand
of any shareholder or holder of a voting trust certificate, at any reasonable
time during usual business hours, for a purpose reasonably related to the
holder's interests as a shareholder or as a holder of a voting trust
certificate. The inspection may be made in person or by an agent or attorney,
and shall include the right to copy and make extracts. These rights of
inspection shall extend to the records of each subsidiary corporation of the
corporation.
Section 4. INSPECTION BY DIRECTORS.
- ---------
Every director shall have the absolute right at any reasonable time to
inspect all books, records and documents of every kind and the physical
properties of the corporation at each of its subsidiary corporations. This
inspection by a director may be made in person or by an agent or attorney and
the right of inspection includes the right to copy and make extracts of
documents.
Section 5. ANNUAL REPORT TO SHAREHOLDERS.
- ---------
The annual report to shareholders referred to in Section 1501 of the
California General Corporation Law is expressly dispensed with, but nothing
herein shall be interpreted as prohibiting the Board of Directors from issuing
annual or other periodic reports to the shareholders of the corporation as they
consider appropriate.
14
<PAGE>
Section 6. FINANCIAL STATEMENTS.
- ---------
A copy of any annual financial statements and any income statement of the
corporation for each quarterly period of each fiscal year, and any accompanying
balance sheet of the corporation as of the end of such period, that has been
prepared by the corporation shall be kept on file in the principal executive
office of the corporation for twelve (12) months and each statement shall be
exhibited at all reasonable times to any shareholder demanding an examination of
such statement or a copy thereof shall be mailed to any such shareholder.
If a shareholder or shareholders holding at least five percent (5%) of the
outstanding shares of any class of stock of the corporation makes a written
request to the corporation for an income statement of the corporation for the
three-month, six-month or nine-month period of the current fiscal year ended
more than thirty (30) days before the date of the request, and a balance sheet
of the corporation as of the end of that period, the treasurer or chief
financial officer shall cause that statement to be prepared, if not already
prepared, and shall deliver personally or mail that statement or statements to
the person making the request within thirty (30) days after the receipt of the
request. If the corporation has not sent to the shareholders its annual report
for the last fiscal year, this report shall likewise be delivered or mailed to
the shareholder or shareholders within thirty (30) days after the request.
The corporation shall also, on the written request of any shareholder, mail
to the shareholder a copy of the last annual, semi-annual or quarterly income
statement which it has prepared, and a balance sheet as of the end of that
period.
The quarterly income statements and balance sheets referred to in this
section shall be accompanied by a report, if any, of any independent accountants
engaged by the corporation or the certificate of an authorized officer of the
corporation that the financial statements were prepared without audit from the
books and records of the corporation.
Section 7. ANNUAL STATEMENT OF GENERAL INFORMATION.
- ---------
The corporation shall annually, during the period commencing five calendar
months preceding the calendar month during which the original Articles of
Incorporation were filed and ending with the end of the calendar month during
which the original Articles of Incorporation were filed with the Secretary of
State, file with the Secretary of State of the State of California, on the
prescribed form, a statement setting forth the authorized number of directors,
the names and complete business or residence addresses of all incumbent
directors, the names and complete business or residence addresses of the chief
executive officer, secretary and chief financial officer, the street address of
its principal executive office or principal business office in the state, and
the general type of business constituting the principal business activity of the
corporation, together with a designation of the agent of the corporation for the
purpose of service of process, all in compliance with Section 1502 of the
Corporations Code of California.
15
<PAGE>
ARTICLE V
GENERAL CORPORATE MATTERS
-------------------------
Section 1. RECORD DATE FOR PURPOSES OTHER THAN NOTICE AND VOTING.
- ---------
For purposes of determining the shareholders entitled to receive payment of
any dividend or other distribution or allotment of any rights or entitled to
exercise any rights in respect of any other lawful election (other than action
by shareholders by written consent without a meeting) the Board of Directors may
fix, in advance, a record date, which shall not be more than sixty (60) days
before any such action and in that case only shareholders of record on the date
so fixed are entitled to receive the dividend, distribution or allotment of
rights or to exercise the rights, as the case may be, notwithstanding any
transfer of any shares on the books of the corporation after the record date so
fixed, except as otherwise provided in the California General Corporation Law.
If the Board of Directors does not so fix a record date, the record date
for determining shareholders for any such purpose shall be at the close of
business on the day on which the board adopts the applicable resolution or the
sixtieth (60th) day before the date of that action, whichever is later.
Section 2. CHECKS, DRAFTS, EVIDENCES OF INDEBTEDNESS.
- ---------
All checks, drafts or other orders for payment of money, notes or other
evidences of indebtedness, issued in the name of or payable to the corporation
shall be signed or endorsed by such person or persons and in such manner as,
from time to time, shall be determined by the resolution of the Board of
Directors.
Section 3. CORPORATE CONTRACTS AND INSTRUMENTS; HOW EXECUTED.
- ---------
The Board of Directors, except as otherwise provided in these Bylaws, may
authorize any officer or officers, agent or agents, to enter into any contract
or execute any instrument in the name of and on behalf of the corporation and
this authority shall be general or confined to specific instances; and, unless
so authorized or ratified by the Board of Directors or within the agency power
of an officer, no officer, agent or employee shall have any power or authority
to bind the corporation by any contract or engagement or to pledge its credit or
to render it liable for any purpose or for any amount.
Section 4. CERTIFICATES FOR SHARES.
- ---------
A certificate or certificates for shares of the capital stock of the
corporation shall be issued to each shareholder when any of these shares are
fully paid, and the Board of Directors may authorize the issuance of
certificates or shares as partly paid provided that these certificates shall
state the amount of the consideration to be paid for them and the amount paid.
All certificates shall be signed in the name of the corporation by the chairman
of the board or vice-chairman of the board or the president or vice-president
and by the chief financial officer or an assistant treasurer or the secretary or
any assistant secretary, certifying the number of shares and the class or series
of shares owned by the shareholder. Any or all of the signatures on the
certificate may be facsimile. In case any officer, transfer agent, or registrar
who has signed or whose facsimile
16
<PAGE>
signature has been placed on a certificate shall have ceased to be that officer,
transfer agent or registrar before that certificate is issued, it may be issued
by the corporation with the same effect as if that person were an officer,
transfer agent or registrar at the date of issuance.
Section 5. LOST CERTIFICATES.
- ---------
Except as provided in this Section 5, no new certificates for shares shall
be issued to replace an old certificate unless the latter is surrendered to the
corporation and canceled at the same time. The Board of Directors, in case any
share certificate or certificate for any other security is lost, stolen, or
destroyed, may authorize the issuance of a replacement certificate on such terms
and conditions as the board may require, including provision for indemnification
of the corporation secured by a bond or other adequate security sufficient to
protect the corporation against any claim that may be made against it, including
any expense or liability, on account of the alleged loss, theft or destruction
of the certificate or the issuance of the replacement certificate.
Section 6. REPRESENTATION OF SHARES OF OTHER CORPORATIONS.
- ---------
The chairman of the board, the president or any vice-president, or any
other person authorized by resolution of the Board of Directors or by any of the
foregoing designated officers, is authorized to vote on behalf of the
corporation any and all shares of any other corporation or corporations, foreign
or domestic, standing in the name of the corporation. The authority granted to
these officers to vote or represent on behalf of the corporation any and all
shares held by the corporation in any other corporation or corporations may be
exercised by any of these officers in person or by any person authorized to do
so by a proxy duly executed by these officers.
Section 7. INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND OTHER AGENTS.
- ---------
The corporation shall, to the maximum extent permitted by California
General Corporation Law, indemnify each of its agents against expenses,
judgments, fines, settlements and other amounts actually and reasonably incurred
in connection with any proceeding arising by reason of the fact that any such
person is or was an agent of the corporation. For purposes of this Section 7,
an "agent" of the corporation includes any person who is or was a director,
officer, employee or other agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, or was a
director, officer, employee or agent of a corporation which was a predecessor
corporation of the corporation or of another enterprise at the request of such
predecessor corporation.
Section 8. CONSTRUCTION AND DEFINITIONS.
- ---------
Unless the context requires otherwise, the general provisions, rules of
construction and definitions in the California General Corporation Law shall
govern the construction of these Bylaws. Without limiting the generality of this
provision, the singular in number includes the plural, the plural number
includes the singular and the term "person" includes both a corporation and a
natural person.
17
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ARTICLE VI
OFFICES
-------
Section 1. PRINCIPAL OFFICES.
- ---------
The Board of Directors shall fix the location of the principal executive
offices of the corporation at any place within or outside the State of
California. If the principal executive offices are located outside the state,
and the corporation has one or more business offices in the state, the Board of
Directors shall fix and designate a principal business office in the State of
California.
Section 2. OTHER OFFICES.
- ---------
The Board of Directors may at any time establish branch or subordinate
offices at any place or places where the corporation is qualified to do
business.
ARTICLE VII
AMENDMENTS
----------
Section 1. AMENDMENT BY SHAREHOLDERS.
- ---------
New Bylaws may be adopted or these Bylaws may be amended or repealed by the
vote or written consent of holders of a majority of the outstanding shares
entitled to vote; provided, however, that if the Articles of Incorporation of
the corporation set forth a number of authorized directors of the corporation,
the authorized number of directors may be changed only by an amendment of the
Articles of Incorporation.
Section 2. AMENDMENT BY DIRECTORS.
- ---------
Subject to the rights of the shareholders as provided in Section 1 of this
Article VII, Bylaws, other than a bylaw or an amendment of a bylaw changing the
authorized number of directors, may be adopted, amended or repealed by the Board
of Directors.
ARTICLE VIII
RESTRICTIONS ON TRANSFER OF SHARES
----------------------------------
Before there can be a valid sale or transfer of any of the shares of this
corporation by the holders thereof, the holder of the shares to be sold or
transferred shall first give notice in writing to the secretary of this
corporation of his intention to sell or transfer such shares. Said notice shall
specify the number of shares to be sold or transferred, the price per share, and
the terms upon which such holder intends to make such sale or transfer. The
secretary shall, within five (5) days thereafter, mail or deliver a copy of said
notice to each of the other shareholders of record of this corporation. Such
notice may be delivered to such shareholders personally. Any such mailing shall
be by certified mail with return receipt requested. Within fifteen (15) days
after the mailing or delivering of said notices to such shareholders, any such
shareholder or shareholders desiring to acquire any part or all of the shares
referred to in said notice shall deliver by mail (certified, return receipt
requested), or otherwise to the secretary of this corporation a written offer or
offers,
18
<PAGE>
expressed to be acceptable immediately, to purchase a specified number or
numbers of such shares at the price and upon the terms stated in said notice,
accompanied by the purchase price therefor with authorization to pay such
purchase price against delivery of such shares.
If the total number of shares specified in such offers exceeds the number
of shares referred to in said notice, each offering shareholder shall be
entitled to purchase such proportion of the shares referred to in said notice to
the secretary, as the number of shares of this corporation, which he holds,
bears to the total number of shares held by all such shareholders desiring to
purchase the shares referred to in said notice to the secretary.
If all of the shares referred to in said notice to the secretary are not
disposed of under such apportionment, each shareholder desiring to purchase
shares in a number in excess of his proportionate share, as provided above,
shall be entitled to purchase such proportion of those shares which remain thus
undisposed of, as the total number of shares which he holds bears to the total
number of shares held by all of the shareholders desiring to purchase shares in
excess of those to which they are entitled under such apportionment.
If one or more of the other shareholders offers to purchase, in the
aggregate, within said fifteen (15) day period, less than all of the shares
referred to in said notice to the secretary, the shareholder desiring to sell or
transfer shall not be obligated to accept any such offer or offers from one or
more of the other shareholders and may dispose of all of the shares of stock
referred to in said notice, to any person or persons whomsoever; provided,
however, that he shall not sell or transfer such shares at a lower price or on
terms more favorable to the purchaser or transferee than those specified in said
notice to the secretary.
Any sale or transfer, or purported sale or transfer, of the shares of said
corporation shall be null and void unless the terms, conditions and provisions
of this Article VIII are strictly observed and followed.
19
<PAGE>
EXHIBIT 3.14
13714608
ENDORSED
FILED
in the office of the Secretary
of State of the State of California
MAY 16 1986
MARCH FONG EU, Secretary of State
ARTICLES OF INCORPORATION OF
INLAND RADIO, INC.
---------------------------
ONE: The name of this Corporation is Inland Radio, Inc.
TWO: The purpose of this Corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of California other than the banking business, the trust company business or
the practice of a profession permitted to be incorporated by the California
Corporations Code.
THREE: The name and address in this state of the Corporation's initial
agent for service of process is Edward G. Atsinger, III, 2310 Ponderosa Drive,
Suite 29, Camarillo, California 93010.
FOUR: The total number of shares which the Corporation is authorized to
issue is one hundred thousand (100,000).
Dated: May 15, 1986
/s/ Stuart A. Comis
-----------------------
STUART A. COMIS
Sole Incorporator
I declare that I am the person who executed the above Articles of
Incorporation and such instrument is my act and deed.
/s/ Stuart A. Comis
-----------------------
STUART A. COMIS
Sole Incorporator
<PAGE>
EXHIBIT 3.15
BYLAWS OF
INLAND RADIO, INC.
A CALIFORNIA CORPORATION
------------------------
ARTICLE I
SHAREHOLDERS' MEETING
Section 1. PLACE OF MEETINGS.
- ---------
Meetings of shareholders shall be held at any place within or outside the
State of California designated by the Board of Directors. In the absence of any
such designation, shareholders' meetings shall be held in the principal
executive office of the corporation.
Section 2. ANNUAL MEETINGS.
- ---------
The annual meeting of shareholders shall be held each year on a date and at
a time designated by the Board of Directors. The date so designated shall be
within five (5) months after the end of the fiscal year of the corporation, and
within fifteen (15) months after the last annual meeting. At each annual
meeting directors shall be elected, and any other proper business may be
transacted.
Section 3. SPECIAL MEETINGS.
- ---------
A special meeting of the shareholders may be called at any time by the
Board of Directors, or by the chairman of the Board, or by the president or by
one or more shareholders holding shares in the aggregate entitled to cast not
less than ten percent (10%) of the votes at that meeting.
If a special meeting is called by any person or persons other than the
Board of Directors, the request shall be in writing, specifying the time of such
meeting and the general nature of the business proposed to be transacted, and
shall be delivered personally or sent by registered mail or by telegraphic or
other facsimile transmission to the chairman of the Board, the president, any
vice-president or the secretary of the corporation. The officer receiving the
request shall cause notice to be promptly given to the shareholders entitled to
vote, in accordance with the provisions of Sections 4 and 5 of this Article I,
that a meeting will be held at the time requested by the person or persons
calling the meeting, not less than thirty-five (35) nor more than sixty (60)
days after the receipt of the request. If the notice is not given within twenty
(20) days after receipt of the request, the person or persons requesting the
meeting may give the notice. Nothing contained in this paragraph of this
Section 3 shall be construed as limiting, fixing or affecting the time when a
meeting of shareholders called by action of the Board of Directors may be held.
Section 4. NOTICE OF MEETINGS.
- ---------
All notices of meetings of shareholders shall be sent or otherwise given in
accordance with Section 5 of this Article I not less than ten (10) nor more than
sixty (60) days before the date of the meeting. The notice shall specify the
place, date and hour of the meeting and (a) in the case of
<PAGE>
a special meeting, the general nature of the business to be transacted or (b) in
the case of the annual meeting, those matters which the Board of Directors, at
the time of giving notice, intends to present for action by the shareholders.
The notice of any meeting at which directors are to be elected shall include the
name of any nominee or nominees whom, at the time of the notice, management
intends to present for election.
If action is proposed to be taken at any meeting for approval of (i) a
contract or transaction in which a director has a direct or indirect financial
interest, pursuant to Section 310 of the Corporations Code of California, (ii)
an amendment of the Articles of Incorporation, pursuant to Section 902 of that
Code, (iii) a reorganization of the corporation, pursuant to Section 1201 of
that Code, (iv) a voluntary dissolution of the corporation, pursuant to Section
1900 of that Code, or (v) a distribution in dissolution other than in accordance
with the rights of outstanding preferred shares, pursuant to Section 2007 of
that Code, the notice shall also state the general nature of that proposal.
Section 5. MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE.
- ---------
Notice of any meeting of shareholders shall be given either personally or
by first-class mail or telegraphic or other written communication, charges
prepaid, addressed to the shareholder at the address of that shareholder
appearing on the books of the corporation or given by the shareholder to the
corporation for the purpose of notice. If no such address appears on the
corporation's books or is given, notice shall be deemed to have been given if
sent to that shareholder by first-class mail or telegraphic or other written
communication to the corporation's principal executive office, or if published
at least once in a newspaper of general circulation, in the county where that
office is located. Notice shall be deemed to have been given at the time when
delivered personally or deposited in the mail or sent by telegram or other means
of written communication.
If any notice addressed to a shareholder at the address of that shareholder
appearing on the books of the corporation is returned to the corporation by the
United States Postal Service marked to indicate that the United States Postal
Service is unable to deliver the notice to the shareholder at that address, all
future notices or reports shall be deemed to have been duly given without
further mailing if these shall be available to the shareholder on written demand
of the shareholder at the principal executive office of the corporation for a
period of one (1) year from the date of the giving of the notice.
An affidavit of the mailing or other means of giving any notice of any
shareholders' meetings shall be executed by the secretary, assistant secretary
or any transfer agent of the corporation giving the notice, and shall be filed
and maintained in the minute book of the corporation.
Section 6. QUORUM.
- ---------
The presence in person or by proxy of the holders of a majority of the
shares entitled to vote at any meeting of shareholders shall constitute a quorum
for the transaction of business. The shareholders present at a duly called or
held meeting at which a quorum is present may continue
2
<PAGE>
to do business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum, if any action taken (other than
adjournment) is approved by at least a majority of the shares required to
constitute a quorum.
Section 7. ADJOURNED MEETING; NOTICE.
- ---------
Any shareholders' meeting, annual or special, whether or not a quorum is
present, may be adjourned from time to time by the vote of the majority of the
shares represented at that meeting, either in person or by proxy, but in the
absence of a quorum, no other business may be transacted at that meeting, except
as provided in Section 6 of this Article I.
When any meeting of shareholders, either annual or special, is adjourned to
another time or place, notice need not be given of the adjourned meeting if the
time and place are announced at a meeting at which the adjournment is taken
unless a new record date for the adjourned meeting is fixed, or unless the
adjournment is for more than forty-five (45) days from the date set for the
original meeting, in which case the Board of Directors shall set a new record
date. Notice of any such adjourned meeting shall be given to each shareholder
of record entitled to vote at the adjourned meeting in accordance with the
provisions of Sections 4 and 5 of this Article I. At any adjourned meeting the
corporation may transact any business which might have been transacted at the
original meeting.
Section 8. VOTING RIGHTS; CUMULATIVE VOTING.
- ---------
The shareholders entitled to vote at any meeting of shareholders shall be
determined in accordance with the provisions of Section 11 of this Article I,
subject to the provisions of Sections 702 through 704, inclusive, of the
Corporations Code of California (relating to voting shares held by a fiduciary,
in the name of a corporation, or in joint ownership). The shareholders' vote
may be by voice vote or by ballot; provided, however, that any election for
directors must be by ballot if demanded by any shareholder before the voting has
begun. On any matter other than elections of directors, any shareholder may
vote part of the shares in favor of the proposal and refrain from voting the
remaining shares or vote them against the proposal, but, if the shareholder
fails to specify the number of shares which the shareholder is voting
affirmatively, it will be conclusively presumed that the shareholder's approving
vote is with respect to all shares that the shareholder is entitled to vote. If
a quorum is present, the affirmative vote of the majority of the shares
represented at the meeting and entitled to vote on any matter (other than the
election of directors) shall be the act of the shareholders, unless a vote of a
greater number or voting by classes is required by the California General
Corporation Law or by the Articles of Incorporation.
At a shareholders' meeting at which directors are to be elected, no
shareholder shall be entitled to accumulate votes (i.e., to cast for any one or
----
more candidates a number of votes greater than the number of the shareholder's
shares) unless the candidates' names have been placed in nomination prior to
commencement of the voting and a shareholder has given notice prior to
commencement of the voting of the shareholder's intention to cumulate votes. If
any shareholder has given such a notice, then every shareholder entitled to vote
may cumulate votes for candidates in nomination and give one candidate a number
of votes equal to the number of directors to be elected multiplied by the number
of votes to which that shareholder's shares are entitled, or
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distribute the shareholder's votes on the same principle among any or all of the
candidates, as the shareholder thinks fit. The candidates receiving the highest
number of votes, up to the number of directors to be elected, shall be elected.
Section 9. WAIVER OF NOTICE OR CONSENT BY ABSENT SHAREHOLDERS.
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The transactions of any meeting of shareholders, either annual or special,
however called and noticed and wherever held, shall be as valid as though had at
a meeting duly held after regular call and notice, if a quorum be present either
in person or by proxy, and if, either before or after the meeting, each person
entitled to vote, who was not present in person or by proxy, signs a written
waiver of notice or a consent to a holding of the meeting or an approval of the
minutes. The waiver of notice or consent need not specify either the business
to be transacted or the purpose of any annual or special meeting of
shareholders, except that if action is taken or proposed to be taken for
approval of any of those matters specified in the second paragraph of Section 4
of this Article I, the waiver of notice or consent shall state the general
nature of the proposal. All such waivers, consents or approvals shall be filed
with the corporate records or made a part of the minutes of the meeting.
Attendance by a person at a meeting shall also constitute a waiver of
notice of that meeting, except when the person objects, at the beginning of the
meeting, to the transaction of any business because the meeting is not lawfully
called or convened and except that attendance at a meeting is not a waiver of
any right to object to the consideration of matters not included in the notice
of the meeting if that objection is expressly made at the meeting.
Section 10. SHAREHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING.
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Any action which may be taken at any annual or special meeting of
shareholders may be taken without a meeting and without prior notice, if a
consent in writing, setting forth the action so taken, is signed by the holders
of outstanding shares having not less than the minimum number of votes that
would be necessary to authorize or to take that action at a meeting at which all
shares entitled to vote on that action were present and voted. In the case of
election of directors, such consent shall be effective only if signed by the
holders of all outstanding shares entitled to vote for the election of
directors; provided, however, that a director may be elected at any time to fill
a vacancy on the Board of Directors that has not been filled by the directors,
by the written consent of the holders of a majority of the outstanding shares
entitled to vote for the election of directors. All such consents shall be
filed with the secretary of the corporation and shall be maintained in the
corporate records. Any shareholder giving a written consent, or the
shareholder's proxy holder, or a transferee of the shares or a personal
representative of the shareholder or his respective proxy holder, may revoke the
consent by a writing received by the secretary of the corporation before written
consents of the number of shares required to authorize the proposed action have
been filed with the secretary.
If the consents of all shareholders entitled to vote have not been
solicited in writing, and if the unanimous written consent of all such
shareholders shall not have been received, the secretary shall give prompt
notice of the corporate action approved by the shareholders without a meeting.
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This notice shall be given in the manner specified in Section 5 of this Article
I. In the case of approval of (a) contracts or transactions in which a director
has a direct or indirect financial interest, pursuant to Section 310 of the
Corporations Code of California, (b) indemnification of agents of the
corporation, pursuant to Section 317 of that Code, (c) a reorganization of the
corporation, pursuant to Section 1201 of that Code, and (d) a distribution in
dissolution other than in accordance with the rights of the outstanding
preferred shares, pursuant to Section 2007 of that Code, the notice shall be
given at least ten (10) days before the consummation of any action authorized by
that approval.
Section 11. RECORD DATE FOR SHAREHOLDERS NOTICE, VOTING AND GIVING CONSENTS.
- ----------
For purposes of determining the shareholders entitled to notice of any
meeting or to vote or entitled to give consent to corporate action without a
meeting, the Board of Directors may fix, in advance, a record date, which shall
be not more than sixty (60) days nor less than ten (10) days before the date of
any such meeting nor more than sixty (60) days before any such action without a
meeting, and in this event only shareholders of record on the date so fixed are
entitled to notice and to vote or to give consents, as the case may be,
notwithstanding the transfer of any shares on the books of the corporation after
the record date, except as otherwise provided in the California General
Corporation Law.
If the Board of Directors does not so fix a record date:
(a) The record date for determining shareholders entitled to notice of
or to vote at a meeting of shareholders shall be at the close of business on the
business day next preceding the day on which notice is given or, if notice is
waived, at the close of business on the business day next preceding the day on
which the meeting is held.
(b) The record date for determining shareholders entitled to give
consent to corporate action in writing without a meeting (i) when no prior
action by the Board has been taken, shall be the day on which the first written
consent is given, or (ii) when prior action of the Board has been taken, shall
be at the close of business on the day on which the Board adopts the resolution
relating to that action or the sixtieth (60th) day before the date of such other
action, whichever is later.
Section 12. PROXIES.
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Every person entitled to vote for directors or on any other matter shall
have the right to do so either in person or by one or more agents authorized by
a written proxy signed by the person and filed with the secretary of the
corporation. A proxy shall be deemed signed if the shareholder's name is placed
on the proxy (whether by manual signature, typewriting, telegraphic transmission
or otherwise) by the shareholder or the shareholder's attorney in fact. A
validly executed proxy which does not state that it is irrevocable shall
continue in full force and effect unless (a) revoked by the person executing it,
before the vote pursuant to that proxy by a writing delivered to the corporation
stating that the proxy is revoked, or by a subsequent proxy executed by, or
attendance at the meeting and voting in person by, the person executing the
proxy; or
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(b) written notice of the death or incapacity of the maker of that proxy is
received by the corporation before the vote pursuant to that proxy is counted;
provided, however, that no proxy shall be valid after the expiration of eleven
(11) months from the date of the proxy, unless otherwise provided in the proxy,
and, provided, further, that the proxy shall be valid only if executed in favor
of another shareholder of the corporation. The revocability of a proxy that
states on its face that it is irrevocable shall be governed by the provisions of
Sections 705(e) and 705(f) of the Corporations Code of California.
Section 13. INSPECTORS OF ELECTION.
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Before any meeting of shareholders, the Board of Directors may appoint any
persons other than nominees for office to act as inspectors of election at the
meeting or its adjournment. If no inspectors of election are so appointed, the
chairman of the meeting may, and on the request of any shareholder or a
shareholder's proxy shall, appoint inspectors of election at the meeting. The
number of inspectors shall be either one (1) or three (3). If inspectors are
appointed at the meeting on the request of one or more shareholders or proxies,
the holders of a majority of shares or their proxies present at the meeting
shall determine whether one (1) or three (3) inspectors are to be appointed. If
any person appointed as inspector fails to appear or fails or refuses to act,
the chairman of the meeting may, and upon the request of any shareholder or a
shareholder's proxy shall, appoint a person to fill that vacancy.
These inspectors shall:
(a) Determine the number of shares outstanding and the voting power of
each, the shares represented at the meeting, the existence of a quorum and the
authenticity, validity and effect of proxies;
(b) Receive votes, ballots or consents;
(c) Hear and determine all challenges and questions in any way arising
in connection with the right to vote;
(d) Count and tabulate all votes or consents;
(e) Determine when the polls shall close;
(f) Determine the result; and
(g) Do any other acts that may be proper to conduct the election or
vote with fairness to all shareholders.
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Section 14. VOTING TRUSTS.
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If a voting trust agreement is filed in the office of the corporation, the
corporation shall take notice of its terms and the limitations this agreement
places on the authority of the trustee. The agreement shall be valid only if
voting power is vested in another shareholder of the corporation.
ARTICLE II
DIRECTORS; MANAGEMENT
Section 1. POWERS.
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Subject to the limitations of the Articles of Incorporation, of the Bylaws
and of the laws of the State of California as to action to be authorized or
approved by the shareholders, all corporate powers shall be exercised by or
under authority of, and the business and affairs of this corporation shall be
controlled by, a board of directors.
Section 2. NUMBER AND QUALIFICATION.
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The authorized number of directors shall be three (3) until changed by a
duly adopted amendment of the Articles of Incorporation amended 11/20/86 or by
an amendment to these Bylaws adopted by the vote or written consent of holders
of a majority of the outstanding shares entitled to vote.
Section 3. ELECTION AND TENURE OF OFFICE.
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Directors shall be elected at each annual meeting of the shareholders to
hold office until the next annual meeting. Each director, including a director
elected to fill a vacancy, shall hold office until the expiration of the term
for which elected and until a successor has been elected and qualified.
Section 4. VACANCIES.
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Vacancies in the Board of Directors may be filled by a majority of the
remaining directors, though less than a quorum or by a sole remaining director,
except that a vacancy created by the removal of a director by the vote or
written consent of the shareholders or by court order may be filled only by the
vote of a majority of the shares entitled to vote represented at a duly held
meeting at which a quorum is present, or by the written consent of holders of a
majority of the outstanding shares entitled to vote. Each director so elected
shall hold office until the next annual meeting of the shareholders and until a
successor has been elected and qualified.
A vacancy or vacancies in the Board of Directors shall be deemed to exist
in the event of the death, disqualification, resignation, or removal of any
director, or if the Board of Directors by resolution declares vacant the office
of a director who has been declared of unsound mind by an order of court or
convicted of a felony, or if the authorized number of directors is increased or
if the shareholders fail, in any meeting of shareholders at which any director
or directors are elected, to elect the number of directors to be voted for at
that meeting.
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The shareholders may elect a director or directors at any time to fill any
vacancy or vacancies not filled by the directors, but any such election by
written consent shall require the consent of a majority of the outstanding
shares entitled to vote.
Any director may resign effective on giving written notice to the chairman
of the board, the president, the secretary or the Board of Directors, unless the
notice specifies a later time for that resignation to become effective. If the
resignation of a director is effective at a future time, the Board of Directors
may elect a successor to take office when the resignation becomes effective.
No reduction of the authorized number of directors shall have the effect of
removing any director before that director's term of office expires.
Section 5. REMOVAL OF DIRECTORS.
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The entire Board of Directors or any individual director may be removed
from office as provided by Sections 302, 303 and 304 of the Corporations Code of
the State of California.
Section 6. PLACE OF MEETINGS AND MEETINGS BY TELEPHONE.
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Regular meetings of the Board of Directors may be held at any place within
or outside the State of California that has been designated from time to time by
resolution of the Board. In the absence of such designation, regular meetings
shall be held at the principal executive office of the corporation. Special
meetings of the board shall be held at any place within or outside the State of
California that has been designated in the notice of the meeting or, if not
stated in the notice or there is no notice, at the principal executive office of
the corporation. Any meeting, regular or special, may be held by conference
telephone or similar communication equipment, so long as all directors
participating in the meeting can hear one another, and all such directors shall
be deemed to be present in person at the meeting.
Section 7. ANNUAL MEETING.
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Immediately following each annual meeting of shareholders, the Board of
Directors shall hold a regular meeting for the purpose of organization, any
desired election of officers and the transaction of other business. Notice of
this meeting shall not be required.
Section 8. OTHER REGULAR MEETINGS.
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Other regular meetings of the Board of Directors shall be held without call
at such time as it shall from time to time be fixed by the Board of Directors.
Such regular meetings may be held without notice.
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Section 9. SPECIAL MEETINGS - NOTICES.
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Special meetings of the Board of Directors for any purpose or purposes may
be called at any time by the chairman of the board or the president or any vice-
president or the secretary or any two directors.
Notice of the time and place of special meetings shall be delivered
personally or by telephone to each director, or sent by first-class mail or
telegram, charges prepaid, addressed to each director at that director's address
as it is shown on the records of the corporation. In case the notice is mailed,
it shall be deposited in the United States mail at least four (4) days before
the time of the holding of the meeting. In case the notice is delivered
personally or by telephone or telegram, it shall be delivered personally or by
telephone or to the telegraph company at least forty-eight (48) hours before the
time of the holding of the meeting. Any oral notice given personally or by
telephone may be communicated either to the director or to a person at the
office of the director who the person giving the notice has reason to believe
will promptly communicate it to the director. The notice need not specify the
purpose of the meeting nor the place if the meeting is to be held at the
principal executive offices of the corporation.
Section 10. QUORUM.
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A majority of the authorized number of directors shall constitute a quorum
for the transaction of business, except to adjourn as provided in Section 13 of
this Article II, unless the authorized number of directors is two or less, in
which case all of the duly elected and acting directors shall constitute a
quorum for the transaction of business. Every act or decision done or made by a
majority of the directors present at a meeting duly held at which a quorum is
present shall be regarded as the act of the Board of Directors, subject to the
provisions of Section 310 of the Corporations Code of the State of California
(as to approval of contracts or transactions in which a director has a direct or
indirect material financial interest), Section 311 of that Code (as to
appointment of committees), and Section 317(e) of that Code (as to
indemnification of directors). A meeting at which a quorum is initially present
may continue to transact business notwithstanding the withdrawal of directors,
if any action taken is approved by at least a majority of the required quorum
for that meeting.
Section 11. WAIVER OF NOTICE.
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The transactions of any meeting of the Board of Directors, however called
and noticed and wherever held, shall be as valid as though had at a meeting duly
held after regular call and notice if a quorum is present and if, either before
or after the meeting, each of the directors not present signs a written waiver
of notice, a consent to holding the meeting or an approval of the minutes. The
waiver of notice or consent need not specify the purpose of the meeting. All
such waivers, consents and approval shall be filed with the corporate records or
made a part of the minutes of the meeting. Notice of a meeting shall also be
deemed given to any director who attends the meeting without protesting before
or at its commencement, the lack of notice to that director.
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Section 12. DIRECTORS ACTING WITHOUT A MEETING BY UNANIMOUS WRITTEN CONSENT.
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Any action required or permitted to be taken by the Board of Directors may
be taken without a meeting, if all members of the Board shall individually or
collectively consent in writing to that action. Such action by written consent
shall have the same force and effect as a unanimous vote of the Board of
Directors. Such written consent or consents shall be filed with the minutes of
the proceedings of the Board.
Section 13. ADJOURNMENT.
- ----------
A majority of the directors present, whether or not constituting a quorum,
may adjourn any meeting to another time and place.
Section 14. NOTICE OF ADJOURNMENT.
- ----------
Notice of the time and place of holding an adjourned meeting need not be
given, unless the meeting is adjourned for more than twenty-four (24) hours, in
which case notice of the time and place shall be given before the time of the
adjourned meeting, in the manner specified in Section 9 of this Article II, to
the directors who are not present at the time of the adjournment.
Section 15. COMPENSATION OF DIRECTORS.
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Directors and members of committees, as such, shall not receive any stated
salary for their services, but by resolution of the board a fixed sum and
expense of attendance, if any, may be allowed for attendance at each regular and
special meeting of the board; provided that nothing herein contained shall be
construed to preclude any director from serving the corporation in any other
capacity and receiving compensation therefor.
ARTICLE III
OFFICERS
Section 1. OFFICERS.
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The officers of the corporation shall consist of a president, vice-
president, secretary, and chief financial officer. The corporation may also
have, at the discretion of the Board of Directors, a chairman of the board, one
or more additional vice-presidents, one or more assistant secretaries, one or
more assistant treasurers and such other officers as may be appointed in
accordance with the provisions of Section 3 of this Article. One person may
hold two or more offices, except those of president and secretary.
Section 2. ELECTION.
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The officers of the corporation, except those officers as may be appointed
in accordance with the provisions of Section 3 and Section 5 of this Article III
shall be chosen annually by the Board of Directors, and each shall hold his
office until he shall resign or shall be removed or otherwise disqualified to
serve, or his successor shall be elected and qualified.
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Section 3. SUBORDINATE OFFICERS, ETC.
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The Board of Directors may appoint such other officers as the business of
the corporation may require, each of whom shall hold office for such period,
have such authority and perform such duties as are provided in the bylaws or as
the Board of Directors may from time to time determine.
Section 4. REMOVAL AND RESIGNATION.
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Any officer may be removed, either with or without cause, by the Board of
Directors at any regular or special meeting, or, except in case of an officer
chosen by the Board of Directors, by any officer upon whom such power of removal
may be conferred by the Board of Directors.
Any officer may resign at any time by giving written notice to the Board of
Directors, or to the president or to the secretary of the corporation. Any such
resignation shall take effect at the date of this notice or at any later
specified time; and, unless otherwise specified, the acceptance of this
resignation shall not be necessary to make it effective.
Section 5. VACANCIES.
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A vacancy in any office because of death, resignation, removal,
disqualification, or because of any other cause shall be filled in the manner
prescribed in the bylaws for regular appointments to the office.
Section 6. CHAIRMAN OF THE BOARD.
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The chairman of the board, if there shall be such an officer, shall, if
present, preside at all meetings of the Board of Directors and exercise and
perform such other powers and duties as may be from time to time assigned to him
by the Board of Directors or prescribed by the bylaws. If there is no
president, the chairman of the board shall in addition be the chief executive
officer of the corporation and shall have the powers and duties prescribed in
Section 7 of this Article III.
Section 7. PRESIDENT.
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Subject to such supervisory powers, if any, as may be given by the Board of
Directors to the chairman of the board, if there be such an officer, the
president shall be the chief executive officer of the corporation and shall,
subject to the control of the Board of Directors, have general supervision,
direction and control of the business and officers of the corporation. He shall
preside at all meetings of the shareholders and in the absence of the chairman
of the board, or if there be none, at all meetings of the Board of Directors.
He shall be ex officio a member of all the standing committees, including the
executive committee, if any, and shall have the general powers and duties of a
corporate management usually vested in the office of president of a corporation
and shall have such other powers and duties as may be prescribed by the Board of
Directors or the bylaws.
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Section 8. VICE-PRESIDENT.
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In the absence or disability of the president, the vice-president, if any,
shall perform all the duties of the president, and when so acting shall have all
the powers of, and be subject to, all the restrictions upon, the president. The
vice-president shall have such other powers and perform such other duties as
from time to time may be prescribed by the Board of Directors or the bylaws.
Section 9. SECRETARY.
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The secretary shall keep, or cause to be kept, a book of minutes at the
principal office or such other place as the Board of Directors may order, of all
meetings of directors and shareholders, with the time and place of holding,
whether regular or special and, if special, how authorized, the notice thereof
given, the names of those present at directors' meetings, the number of shares
present or represented at shareholders' meetings and the proceedings thereof.
The secretary shall keep, or cause to be kept, at the principal office or
at the office of the corporation's transfer agent, a share register, or
duplicate share register, showing the names of the shareholders and their
addresses; the number and classes of shares held by each; the number and date of
certificates issued for the same; and the number and date of cancellation of
every certificate surrendered for cancellation.
The secretary shall give or cause to be given, notice of all the meetings
of the shareholders and of the Board of Directors required by the bylaws or by
law to be given, and he shall keep the seal of the corporation in safe custody
and shall have such other powers and perform such other duties as may be
prescribed by the Board of Directors or by the bylaws.
Section 10. CHIEF FINANCIAL OFFICER.
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The chief financial officer shall keep and maintain or cause to be kept and
maintained, adequate and correct accounts of the properties and business
transactions of the corporation, including accounts of its assets, liabilities,
receipts, disbursements, gains, losses, capital, surplus and shares. Any
surplus, including earned surplus, paid-in surplus and surplus arising from a
reduction of stated capital shall be classified according to source and shown in
a separate account. The books of account shall at all reasonable times be open
to inspection by any director.
The chief financial officer shall deposit all moneys and other valuables in
the name and to the credit of the corporation with such depositories as may be
designated by the Board of Directors. He shall disburse the funds of the
corporation as may be ordered by the Board of Directors, shall render to the
president and directors, whenever they request it, an account of all of his
transactions as chief financial officer and of the financial condition of the
corporation and shall have such other powers and perform such other duties as
may be prescribed by the Board of Directors or the bylaws.
Section 11. SALARIES.
- ----------
The salaries of the officers and other shareholders employed by the
corporation shall be fixed from time to time by the Board of Directors or
established under agreements with officers or
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shareholders approved by the Board of Directors, and no officer shall be
prevented from receiving such salary by reason of the fact that he is also a
director of the corporation.
ARTICLE IV
CORPORATE RECORDS AND REPORTS-INSPECTION
Section 1. MAINTENANCE AND INSPECTION OF SHARE REGISTER.
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The corporation shall keep at its principal executive office, or at the
office of its transfer agent or registrar, if either be appointed and as
determined by resolution of the Board of Directors, a record of its shareholders
giving the names and addresses of all shareholders and the number and class of
shares held by each shareholder.
A shareholder or shareholders of the corporation holding at least five
percent (5%) in the aggregate of the outstanding voting shares of the
corporation may (a) inspect and copy the records of the shareholders' names and
addresses and shareholdings during usual business hours on five days' prior
written demand on the corporation and (b) obtain from the transfer agent of the
corporation, on written demand and on tender of such transfer agent's usual
charges for such list, a list of the shareholders' names and addresses, who are
entitled to vote for the election of directors and their shareholdings, as of
the most recent record date for which that list has been compiled or as of a
date specified by the shareholder after the date of demand. This list shall be
made available to any such shareholder by the transfer agent on or before the
later of five (5) days after the demand is received or the date specified in the
demand as the date as of which the list is to be compiled. The record of
shareholders shall also be open to inspection on the written demand of any
shareholder or holder of a voting trust certificate, at any time during usual
business hours, for a purpose reasonably related to the holder's interest as a
shareholder or as a holder of a voting trust certificate. Any inspection and
copying under this Section 1 may be made in person or by an agent or attorney of
the shareholder or holder of a voting trust certificate making the demand.
Section 2. MAINTENANCE AND INSPECTION OF BYLAWS.
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The corporation shall keep at its principal executive office, or if its
principal executive office is not in the State of California, at its principal
business office in this state, the original or a copy of the bylaws as amended
to date, which shall be open to inspection by the shareholders at all reasonable
times during office hours. If the principal executive office of the corporation
is outside the State of California and the corporation has no principal business
office in this state, the secretary shall, upon the written request of any
shareholder, furnish to that shareholder a copy of the bylaws as amended to
date.
Section 3. MAINTENANCE AND INSPECTION OF OTHER CORPORATE RECORDS.
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The accounting books and records and minutes of proceedings of the
shareholders and the Board of Directors and any committee or committees of the
Board of Directors shall be kept at such place or places designated by the Board
of Directors, or, in the absence of such designation, at the principal executive
office of the corporation. The minutes shall be kept in written form and
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the accounting books and records shall be kept either in written form or in
any other form capable of being converted into written form. The minutes and
accounting books and records shall be open to inspection upon the written demand
of any shareholder or holder of a voting trust certificate, at any reasonable
time during usual business hours, for a purpose reasonably related to the
holder's interests as a shareholder or as a holder of a voting trust
certificate. The inspection may be made in person or by an agent or attorney,
and shall include the right to copy and make extracts. These rights of
inspection shall extend to the records of each subsidiary corporation of the
corporation.
Section 4. INSPECTION BY DIRECTORS.
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Every director shall have the absolute right at any reasonable time to
inspect all books, records and documents of every kind and the physical
properties of the corporation at each of its subsidiary corporations. This
inspection by a director may be made in person or by an agent or attorney and
the right of inspection includes the right to copy and make extracts of
documents.
Section 5. ANNUAL REPORT TO SHAREHOLDERS.
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The annual report to shareholders referred to in Section 1501 of the
California General Corporation Law is expressly dispensed with, but nothing
herein shall be interpreted as prohibiting the Board of Directors from issuing
annual or other periodic reports to the shareholders of the corporation as they
consider appropriate.
Section 6. FINANCIAL STATEMENTS.
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A copy of any annual financial statements and any income statement of the
corporation for each quarterly period of each fiscal year, and any accompanying
balance sheet of the corporation as of the end of such period, that has been
prepared by the corporation shall be kept on file in the principal executive
office of the corporation for twelve (12) months and each statement shall be
exhibited at all reasonable times to any shareholder demanding an examination of
such statement or a copy thereof shall be mailed to any such shareholder.
If a shareholder or shareholders holding at least five percent (5%) of the
outstanding shares of any class of stock of the corporation makes a written
request to the corporation for an income statement of the corporation for the
three-month, six-month or nine-month period of the current fiscal year ended
more than thirty (30) days before the date of the request, and a balance sheet
of the corporation as of the end of that period, the treasurer or chief
financial officer shall cause that statement to be prepared, if not already
prepared, and shall deliver personally or mail that statement or statements to
the person making the request within thirty (30) days after the receipt of the
request. If the corporation has not sent to the shareholders its annual report
for the last fiscal year, this report shall likewise be delivered or mailed to
the shareholder or shareholders within thirty (30) days after the request.
The corporation shall also, on the written request of any shareholder, mail
to the shareholder a copy of the last annual, semi-annual or quarterly income
statement which it has prepared, and a balance sheet as of the end of that
period.
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The quarterly income statements and balance sheets referred to in this
section shall be accompanied by a report, if any, of any independent accounts
engaged by the corporation or the certificate of an authorized officer of the
corporation that the financial statements were prepared without audit from the
books and records of the corporation.
Section 7. ANNUAL STATEMENT OF GENERAL INFORMATION.
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The corporation shall annually, during the period commencing five calendar
months preceding the calendar month during which the original Articles of
Incorporation were filed and ending with the end of the calendar month during
which the original Articles of Incorporation were filed with the Secretary of
State, file with the Secretary of State of the State of California, on the
prescribed form, a statement setting forth the authorized number of directors,
the names and complete business or residence addresses of all incumbent
directors, the names and complete business or residence addresses of the chief
executive officer, secretary and chief financial officer, the street address of
its principal executive office or principal business office in the state, and
the general type of business constituting the principal business activity of the
corporation, together with a designation of the agent of the corporation for the
purpose of service of process, all in compliance with Section 1502 of the
Corporations Code of California.
ARTICLE V
GENERAL CORPORATE MATTERS
Section 1. RECORD DATE FOR PURPOSES OTHER THAN NOTICE AND VOTING.
- ---------
For purposes of determining the shareholders entitled to receive payment of
any dividend or other distribution or allotment of any rights or entitled to
exercise any rights in respect of any other lawful election (other than action
by shareholders by written consent without a meeting) the Board of Directors may
fix, in advance, a record date, which shall not be more than sixty (60) days
before any such action and in that case only shareholders of record on the date
so fixed are entitled to receive the dividend, distribution or allotment of
rights or to exercise the rights, as the case may be, notwithstanding any
transfer of any shares on the books of the corporation after the record date so
fixed, except as otherwise provided in the California General Corporation Law.
If the Board of Directors does not so fix a record date, the record date
for determining shareholders for any such purpose shall be at the close of
business on the day on which the board adopts the applicable resolution or the
sixtieth (60th) day before the date of that action, whichever is later.
Section 2. CHECKS, DRAFTS, EVIDENCES OF INDEBTEDNESS.
- ---------
All checks, drafts or other orders for payment of money, notes or other
evidences of indebtedness, issued in the name of or payable to the corporation
shall be signed or endorsed by such person or persons and in such manner as,
from time to time, shall be determined by the resolution of the Board of
Directors.
Section 3. CORPORATE CONTRACTS AND INSTRUMENTS; HOW EXECUTED.
- ---------
15
<PAGE>
The Board of Directors, except as otherwise provided in these Bylaws, may
authorize any officer or officers, agent or agents, to enter into any contract
or execute any instrument in the name of and on behalf of the corporation and
this authority shall be general or confined to specific instances; and, unless
so authorized or ratified by the Board of Directors or within the agency power
of an officer, no officer, agent or employee shall have any power or authority
to bind the corporation by any contract or engagement or to pledge its credit or
to render it liable for any purpose or for any amount.
Section 4. CERTIFICATES FOR SHARES.
- ---------
A certificate or certificates for shares of the capital stock of the
corporation shall be issued to each shareholder when any of these shares are
fully paid, and the Board of Directors may authorize the issuance of
certificates or shares as partly paid provided that these certificates shall
state the amount of the consideration to be paid for them and the amount paid.
All certificates shall be signed in the name of the corporation by the chairman
of the board or vice-chairman of the board or the president or vice-president
and by the chief financial officer or an assistant treasurer or the secretary or
any assistant secretary, certifying the number of shares and the class or series
of shares owned by the shareholder. Any or all of the signatures on the
certificate may be facsimile. In case any officer, transfer agent, or registrar
who has signed or whose facsimile signature has been placed on a certificate
shall have ceased to be that officer, transfer agent or registrar before that
certificate is issued, it may be issued by the corporation with the same effect
as if that person were an officer, transfer agent or registrar at the date of
issuance.
Section 5. LOST CERTIFICATES.
- ---------
Except as provided in this Section 5, no new certificates for shares shall
be issued to replace an old certificate unless the latter is surrendered to the
corporation and canceled at the same time. The Board of Directors, in case any
share certificate or certificate for any other security is lost, stolen, or
destroyed, may authorize the issuance of a replacement certificate on such terms
and conditions as the board may require, including provision for indemnification
of the corporation secured by a bond or other adequate security sufficient to
protect the corporation against any claim that may be made against it, including
any expense or liability, on account of the alleged loss, theft or destruction
of the certificate or the issuance of the replacement certificate.
Section 6. REPRESENTATION OF SHARES OF OTHER CORPORATIONS.
- ---------
The chairman of the board, the president or any vice-president, or any
other person authorized by resolution of the Board of Directors or by any of the
foregoing designated officers, is authorized to vote on behalf of the
corporation any and all shares of any other corporation or corporations, foreign
or domestic, standing in the name of the corporation. The authority granted to
these officers to vote or represent on behalf of the corporation any and all
shares held by the corporation in any other corporation or corporations may be
exercised by any of these officers in person or by any person authorized to do
so by a proxy duly executed by these officers.
Section 7. INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND OTHER AGENTS.
- ---------
16
<PAGE>
The corporation shall, to the maximum extent permitted by California
General Corporation Law, indemnify each of its agents against expenses,
judgments, fines, settlements and other amounts actually and reasonably incurred
in connection with any proceeding arising by reason of the fact that any such
person is or was an agent of the corporation. For purposes of this Section 7,
an "agent" of the corporation includes any person who is or was a director,
officer, employee or other agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, or was a
director, officer, employee or agent of a corporation which was a predecessor
corporation of the corporation or of another enterprise at the request of such
predecessor corporation.
Section 8. CONSTRUCTION AND DEFINITIONS.
- ---------
Unless the context requires otherwise, the general provisions, rules of
construction and definitions in the California General Corporation Law shall
govern the construction of these Bylaws. Without limiting the generality of
this provision, the singular in number includes the plural, the plural number
includes the singular and the term "person" includes both a corporation and a
natural person.
ARTICLE VI
OFFICES
Section 1. PRINCIPAL OFFICES.
- ---------
The Board of Directors shall fix the location of the principal executive
offices of the corporation at any place within or outside the State of
California. If the principal executive offices are located outside the state,
and the corporation has one or more business offices in the state, the Board of
Directors shall fix and designate a principal business office in the State of
California.
Section 2. OTHER OFFICES.
- ---------
The Board of Directors may at any time establish branch or subordinate
offices at any place or places where the corporation is qualified to do
business.
ARTICLE VII
AMENDMENTS
Section 1. AMENDMENT BY SHAREHOLDERS.
- ---------
New Bylaws may be adopted or these Bylaws may be amended or repealed by the
vote or written consent of holders of a majority of the outstanding shares
entitled to vote; provided, however, that if the Articles of Incorporation of
the corporation set forth a number of authorized directors of the corporation,
the authorized number of directors may be changed only by an amendment of the
Articles of Incorporation.
Section 2. AMENDMENT BY DIRECTORS.
- ---------
17
<PAGE>
Subject to the rights of the shareholders as provided in Section 1 of this
Article VII, Bylaws, other than a bylaw or an amendment of a bylaw changing the
authorized number of directors, may be adopted, amended or repealed by the Board
of Directors.
18
<PAGE>
EXHIBIT 3.16
FILED
OCT 17 1986
SECRETARY OF STATE
STATE OF WASHINGTON
ARTICLES OF INCORPORATION
OF
INSPIRATION MEDIA, INC.
KNOW ALL MEN BY THESE PRESENTS that the undersigned, being of legal age and
having resolved to form a corporation under and by virtue of the Washington
Business Corporation Act and the laws of the State of Washington, does hereby
sign the following Articles of Incorporation and states as follows:
ARTICLE I - NAME
------------------
The name of the corporation is Inspiration Media, Inc.
ARTICLE II - PURPOSES AND POWERS
----------------------------------
The general nature of the business of the corporation and the objects and
purposes proposed to be transacted, promoted, and carried on by it are:
(a) To engage in the business of radio and television broadcasting,
receiving and communications.
(b) To engage in the business of buying, leasing, renting or otherwise
acquiring and owning real, personal, or mixed property, improved or unimproved,
or any right or interest therein of any kind, nature, and description and
wheresoever situated; and to hold, possess, enjoy, manage, improve, develop, or
otherwise control the same; to change, exchange, mortgage,
<PAGE>
pledge, hypothecate, sell, lease, assign, transfer, or otherwise dispose of the
property, and any part thereof or any right or interest therein.
(c) To buy, lease, purchase, hire, or otherwise acquire and to hold, own,
possess, enjoy, manage, develop, improve and control, build, erect, construct,
reconstruct, remodel, repair, or otherwise dispose of any lands, buildings,
offices, machinery, appliances, rights, easements, permits, privileges,
franchises, patents, trademarks, licenses, and all other things, rights,
privileges, and property which may at any time or in any place be necessary,
suitable, convenient, or profitable in the judgment of the Board of Directors
for the benefit and purpose of the corporation.
(d) To manufacture goods, wares, merchandise, and products of any nature
and description found by the corporation to be useful and valuable that it may
desire to make, use, or dispose of and to engage in the merchandising, buying,
selling, trading, importing, or exporting of its own products, equipment, and
chattels or the products of another, either wholesale or retail or both, either
as agent, broker, or manufacturer.
(e) To own, lease, acquire, use, and enjoy the benefits of trade names and
to register or copyright the same; to deal in patented articles and obtain
patents for its own inventions, formulas, principles, or products and to deal in
royalties, rights, and privileges and the like that are protected by law and
prescription through invention, discovery, or otherwise.
(f) To be a promoter, partner, member, associate, or manager of any
partnership, joint venture, trust, or other enterprise.
(g) To borrow money and make and issue notes, bonds, debentures,
obligations, and evidences of indebtedness of all kinds whether secured by
mortgage, pledge, or otherwise, without limit as to amount except as may be
prohibited by statute and to secure the same by
2
<PAGE>
mortgage, pledge, or otherwise and, generally, to make and perform agreements
and contracts of ever kind and description.
(h) To make guarantees respecting the contracts, securities, or obligations
of any person, including without limitation, any shareholder, any affiliated or
unaffiliated individual, domestic or foreign corporation, partnership,
association, joint venture or trust. The decision of the Board of Directors of
the corporation to authorize any such guarantee shall be deemed to include a
finding that such a guarantee was reasonably expected to benefit, directly or
indirectly, the corporation.
(i) To subscribe for and buy, purchase, or otherwise acquire and to own,
hold, possess, or otherwise control and to sell, assign, transfer, mortgage, or
otherwise dispose of shares of capital stock, bonds or other securities of any
other corporation or corporations created and existing under the laws of the
State of Washington or of any other state, territory, district, colonial
possession, or territorial acquisition of the United States or any foreign
country and by its duly authorized officers or by proxy to vote such stock
shares at any and all stockholders' meetings of the corporation or corporations
whose shares are so held and, while the owner thereof, to exercise all rights,
powers, authorities, and privileges of any other stockholder of such corporation
or corporations ands to issue in exchange therefor and for the purpose of
acquiring the same, its own stock, bonds, debentures, or other securities or
obligations.
(j) To hold, sell, transfer, and purchase the shares of its own capital
stock to the greatest extent permissible under any present or future law of the
State of Washington.
(k) To accept as full payment or as installment payments or as installment
payments for its stock either cash, property, promissory notes, or contracts to
provide future services, or other valuable consideration as the Board of
Directors may determine.
3
<PAGE>
(l) To appoint a duly authorized attorney-in-fact with full authority to
bind this corporation in all matters and things as fully and completely as the
officers of this corporation can do.
(m) To issue its own bonds and debentures under such terms and conditions
and to secure the same in such manner, as the Board of Directors shall determine
and to provide that the interest for the payment of such bonds may be a first
lien upon the net earnings of the corporation and to further provide that a
certain percentage of the net earnings of this corporation may be placed in a
sinking fund for the retirement of the bonds, with sums so received being
deducted as a fixed charge before the payment of any interest upon its preferred
stock, if any, or the declaring of any dividends upon its common stock.
(n) To conduct and carry on its business, or any part thereof, and to
exercise all or any of its corporate powers and rights in the State of
Washington and in the various states, territories, colonies, and dependencies of
the United States, in the District of Columbia and in all or any foreign country
or countries.
(o) To adopt and enforce Bylaws for the government of its affairs,
including the election and removal of any officer or director of this
corporation.
(p) To transact any lawful business which the Board of Directors finds will
be in aid of governmental agency.
(q) To transact any or all lawful business for which corporations may be
incorporated under Title 23A of the Revised Code of Washington.
FINALLY, this corporation has all powers and privileges in the matters and
things herein mentioned and described, contemplated, or implied by any
reasonable intendment of these Articles
4
<PAGE>
to do all things in all manner and form as fully and completely as a natural
person in law can do and has and may exercise all powers necessary or convenient
to effect its purposes.
ARTICLE III - DURATION
------------------------
The existence of this corporation is perpetual.
ARTICLE IV - STOCK
--------------------
Section 1. The corporation shall have authority to issue 1,000,000 shares
---------
of no par value common stock.
Section 2. Each share of stock, when issued, shall be entitled to one
---------
vote. Cumulative voting for directors is not allowed.
Section 3. Stock may be issued by the corporation from time to time for
---------
such consideration of labor, services, contracts to provide future services,
promissory notes, money, or any other tangible or intangible property as may be
fixed by the Board of Directors and as authorized by law. If stock is issued
for consideration other than cash, the Board of Directors shall make a
determination of its value.
Section 4. Stockholders shall not have preemptive rights to acquire
---------
unissued shares of the corporation.
ARTICLE V - REGISTERED OFFICE AND AGENT
-----------------------------------------
The location and Post Office address of the registered office of this
corporation is 3000 First Interstate Center, 999 Third Ave., Seattle,
Washington. The initial registered agent of the corporation at the above address
is Steven R. Hake. Branch offices or places of business of the corporation may
be hereafter established at any other place or places in the State of Washington
or elsewhere, whenever necessary for the proper prosecution of the objects and
purposes of the corporation.
5
<PAGE>
ARTICLE VI - BOARD OF DIRECTORS
---------------------------------
Section 1. The Board of Directors who shall manage the affairs of the
---------
corporation shall consist of one (1) or more members. Matters concerning the
number, election, removal, and powers and authority of the Board of Directors
shall be as provided in the Bylaws of the corporation.
Section 2. The Board shall adopt the initial Bylaws and has the power and
---------
authority to alter, amend, or repeal the Bylaws or adopt new Bylaws. The power
and authority of the Board to alter, amend or repeal the Bylaws or adopt new
Bylaws and any Bylaws so amended or adopted by the Board shall be subject to
repeal or change by action of the stockholders.
Section 3. The Board of Directors has the power and authority to
---------
distribute assets to its stockholders, in cash or property, to the extent
permitted by law.
Section 4. The names of the directors and post office addresses of the
---------
directors who shall manage the affairs of this corporation until the first
annual meeting of the stockholders or until their successors are elected and
qualified, are as follows:
Edward G. Atsinger, III
Salem Media Management
2310 Ponderosa Drive, Suite 29
Camarillo, California 98010
Section 5. The Board of Directors may by resolution passed by a majority
---------
of the entire Board of Directors designate two or more directors to constitute
an executive committee, which shall have and exercise the authority of the Board
of Directors in the management of the business of the corporation to the extent
provided in the resolution and permitted by law.
6
<PAGE>
ARTICLE VII - INCORPORATOR
----------------------------
The name and Post Office address of the incorporator of the corporation is:
Steven R. Hake
3000 First Interstate Center
999 Third Avenue
Seattle, Washington 98104
IN WITNESS WHEREOF, the incorporator above named has hereunto set his hand
this 9th day of October, 1986.
---
Steven R. Hake
--------------------------------------------------
Steven R. Hake, Incorporator
7
<PAGE>
EXHIBIT 3.17
C-11
BYLAWS
OF
INSPIRATION MEDIA, INC.
ARTICLE I
STOCKHOLDER MEETINGS
--------------------
Section 1. Time and Place: All meetings of the stockholders shall be held
--------------------------
at 10:00 a.m. at the registered office of the corporation, unless the Board of
Directors designates another time or place.
Section 2. Annual Meeting: The annual meeting of the stockholders shall
--------------------------
be held on the 10th day of the last month of the corporation's fiscal year; but
if that date should fall on a Saturday, Sunday, or a holiday, then the meeting
shall be held on the next day which is not a Saturday, Sunday, or a holiday. At
the annual meeting of the stockholders, the officers shall report on the
condition of the company, and the stockholders shall elect directors for the
following year.
Section 3. Special Meetings: Special meetings of the stockholders may be
----------------------------
called by the president, by a director, or by a stockholder or stockholders
holding not less than ten percent of the outstanding stock of the corporation
entitled to vote at the meeting.
Section 4. Notices: Written notice of all regular and special meetings
-------------------
stating the place, day, and hour of the meeting, shall be delivered or mailed to
all stockholders entitled to vote at the meeting at least ten (10) days but not
more than fifty (50) days prior to the meeting. Notices of special meetings
shall state the purposes for which the meeting has been called. A regular or
special meeting may be held at any time and place without notice if all
stockholders are present in person or by proxy, or waive notice of the meeting.
Section 5. Telephonic Meeting: One or more stockholders may participate
------------------------------
in a stockholder meeting by means of telephone conference or similar
communications equipment by
1
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which all persons participating in the meeting can hear each other at the same
time. Participation in this manner shall constitute presence in person at the
meeting.
Section 6. Quorum: A quorum at any stockholder meeting shall be a
------------------
majority of the outstanding stock, represented in person or by proxy, entitled
to vote on the issues being considered. If less than a quorum is represented at
a meeting, the meeting may be adjourned to a future place and time without
further notice. At an adjourned meeting at which a quorum is represented, any
business may be transacted that could have been transacted at the meeting as
originally called.
Section 7. Proxies: Each stockholder entitled to vote on the issue being
-------------------
considered shall be entitled to vote, either in person or by proxy, as many
shares as stand in his or her name on the books of the corporation. Proxies
shall be executed in writing by the stockholder or the stockholder's attorney-
in-fact, and shall be filed with the secretary of the corporation before or at
the time of the meeting. Unless otherwise stated therein, a proxy shall be
invalid eleven (11) months after the date of its execution.
Section 8. Action by Unanimous Consent: Any action that may be taken at a
---------------------------------------
stockholders' meeting may be taken without a meeting if a written consent
setting forth the action so taken is signed by all stockholders entitled to vote
with respect to the subject matter thereof. Any such consent shall be inserted
in the minute book as if it were the minutes of a stockholders' meeting.
Section 9. Election of Directors: Each stockholder entitled to vote at an
---------------------------------
election of directors may vote in person or by proxy the number of shares owned
by him for as many persons as there are directors to be elected and for whose
election he or she has a right to vote, or, unless the Articles of Incorporation
provide otherwise, a stockholder may cumulate votes by distributing among one or
more candidates as many votes as are equal to the number of such directors
multiplied by the number of his or her shares.
2
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ARTICLE II
BOARD OF DIRECTORS MEETINGS
---------------------------
Section 1. Number: The Board of Directors of the corporation shall
------------------
consist of one or more members to be determined from time to time by a majority
vote of the stockholders.
Section 2. Election: The directors shall be elected each year by the
--------------------
stockholders at the annual stockholders' meeting and shall serve until their
successors have been elected and qualified, unless sooner removed pursuant to
Article II, Section 5.
Section 3. Chairman of the Board: The Board of Directors may, if it so
---------------------------------
determines, elect from among its members a Chairman of the Board, who shall
preside at meetings of the Board of Directors and of the stockholders, and who
shall have and may exercise such other powers and responsibilities as may, from
time to time, be designated by the Board of Directors.
Section 4. Vacancies: If a vacancy occurs among the directors, including
---------------------
a vacancy created by an increase in the number thereof, but excluding removal
and election of a successor as provided herein, it shall be filled by the
affirmative vote of a majority of the remaining directors (whether constituting
a quorum or not), and such appointee shall hold office for the unexpired term of
his predecessor in office and until a successor shall have been elected and
qualified.
Section 5. Removal: The stockholders, at any meeting called for that
-------------------
purpose, may remove any director or the entire Board of Directors, with or
without cause, according to the procedure set forth in RCW 23A.08.380 or any
successor statute.
Section 6. Annual Meetings: The annual meeting of the Board of Directors
---------------------------
shall be held on the same day and at the same location as the annual
stockholders' meeting.
Section 7. Regular Meetings: Regular meetings of the Board of Directors
----------------------------
may be held at such times, dates and places as shall be fixed from time to time
by the Board.
Section 8. Special Meetings: Special meetings of the Board of Directors
----------------------------
may be called by the president, by a director, or by a stockholder or
stockholders holding not less than ten percent of the outstanding voting stock
of the corporation.
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Section 9. Notice: No written notice is necessary for regular or annual
------------------
meetings. Written notice of all special meetings shall be delivered or mailed
to all directors at least five days in advance of the meeting stating the time
and place of the meeting. A special meeting may be held at any time and place
without notice if all directors are present in person or waive notice of the
meeting.
Section 10. Telephonic Meeting: One or more directors may participate in
-------------------------------
a meeting of the Board of Directors by means of telephone conference or similar
communications equipment by which all directors participating in the meeting can
hear each other at the same time. Participation in this manner shall constitute
presence in person at the meeting.
Section 11. Quorum: A majority of the directors then in office shall
-------------------
constitute a quorum. If less than a quorum is present at a meeting, the meeting
may be adjourned to a future time and place without further notice. At an
adjourned meeting at which a quorum is present, any business may be transacted
that could have been transacted at the meeting as originally called.
Section 12. Presumption of Assent: All directors present at a meeting
----------------------------------
shall be assumed to have approved the minutes of the meeting unless written
dissent is forwarded by registered or certified mail, return receipt requested,
to the secretary of the corporation within seven (7) days after receipt a copy
of the minutes of the meeting.
Section 13. Action by Unanimous Consent: Any action that may be taken at
----------------------------------------
a directors' meeting or by a committee may be taken without a meeting if a
written consent approving the action is signed by all directors or by all
members of the committee.
Section 14. Combined Meeting of Directors and Stockholders: At any
-----------------------------------------------------------
regular or special meeting of the Board of Directors, if all of the outstanding
voting stock is represented in person or by proxy, the meeting may, with
unanimous stockholder consent, be conducted as a joint meeting of the directors
and stockholders, and all business may be transacted and shall be of the same
binding force and effect as though separate meetings had been held.
4
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ARTICLE III
POWERS OF THE BOARD OF DIRECTORS
--------------------------------
Section 1. General Powers: All corporate powers shall be exercised by or
-------------------------
under the authority of, and the business and affairs of the corporation shall be
managed under the direction of, the Board of Directors except as otherwise
provided by the laws of the State of Washington or in the Articles of
Incorporation.
Section 2. Director Compensation: The directors may be paid their
---------------------------------
reasonable expenses and/or a fixed sum for attendance at each meeting and/or a
stated salary for services rendered as a director, as may be authorized by
resolution of the Board of Directors. This provision shall not preclude any
director from serving the corporation in any other capacity and receiving
compensation therefor.
ARTICLE IV
OFFICERS
--------
Section 1. Officers Designated: The officers of this corporation shall
-------------------------------
consist of a president, a secretary, and a treasurer, each of whom shall be
elected by the Board of Directors. The directors may also elect a chief
executive officer, one or more vice presidents, and such other officers as the
Board of Directors may from time to time deem desirable or appropriate, and
these officers shall perform such duties as may be assigned them by the Board of
Directors. The officers shall be elected annually by the Board of Directors,
and shall hold their offices until their successors are elected and qualified,
unless sooner removed by the Board of Directors, with or without cause, at a
special meeting duly called for that purpose. Any two or more offices may be
held by the same person, including a director, except the offices of president
and secretary; however, when all outstanding stock of the corporation is owned
by only one stockholder, one person may hold all or any combination of offices.
Section 2. Officer Compensation: The salary of all officers shall be
--------------------------------
fixed by a majority vote of the Board of Directors and may be changed from time
to time as the Board of Directors may determine.
5
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Section 3. President: The president shall be the chief executive officer
---------------------
of the corporation and, subject to the direction and control of the Board of
Directors, shall have general charge and supervision over the properties,
business, and affairs of the corporation. The President shall, unless a
Chairman of the Board is elected and is present, preside at all meetings of the
stockholders and the Board of Directors. The President shall be an ex officio
member of all committees, and shall perform such other duties as may be required
of him by the Board of Directors.
Section 4. Vice President: The vice president(s) shall perform the duties
--------------------------
of the president in the absence of the president, and shall have and perform
such other duties as may be assigned by the Board of Directors or by the
president.
Section 5. Secretary: The secretary shall record and keep minutes of
---------------------
meeting of the stockholders and directors, and shall maintain a stockholder and
stock transfer record, showing stockholder residences, the number of shares of
stock held, and the date on which they became the owners of such shares. The
secretary shall be the custodian of the corporate records and corporate seal (if
any), and shall keep such other books and perform such other duties as may be
required by law or assigned by the president or directors. In the absence of the
secretary, a duly-elected assistant secretary or other officer shall perform
such duties.
Section 6. Treasurer: Subject to the direction and control of the Board
---------------------
of Directors, the treasurer shall have the custody, control, and responsibility
for the funds and securities of the corporation and shall account for the same
and keep such books of account as the Board of Directors may require. The
treasurer shall make reports of the financial condition of the corporation to
the president or the directors whenever requested, and a report of like
character shall be submitted by the treasurer at the annual meeting of the
stockholders. The treasurer shall, if required by the Board of Directors, give
such bond as they may designate. In the absence of a treasurer, such duties
shall be performed by a duly-elected assistant treasurer, or by the secretary.
6
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Section 7. Dual Authority: When any officer holds a dual position, the
--------------------------
officer shall subscribe in accordance with the work then at hand; that is, if
then acting as vice president, he or she shall so designate.
ARTICLE V
REPAYMENT OF EXCESS COMPENSATION
--------------------------------
Any payments made to an officer or director of the corporation as salary,
commission, bonus, interest, rent, or expense reimbursements, which are
disallowed in whole or in part by the Internal Revenue Service as a deductible
expense, shall be repaid by such officer or director to the corporation to the
full extent of such disallowance. It shall be the duty of the Board of
Directors to enforce repayment of disallowed amounts. If authorized by the
Board of Directors, proportionate amounts may be deducted from the future
compensation payments due to such officer or director until the amount owed to
the corporation has been recovered.
ARTICLE VI
INDEMNIFICATION
---------------
The corporation shall indemnify directors and officers of the corporation
to the full extent permitted by RCW 23A.08.025. The corporation shall also have
the power to indemnify employees and agents of the corporation who are not
officers or directors, to such extent as may be permitted by law, and as
provided by the Articles of Incorporation, these Bylaws, general or specific
action of the Board of Directors or contracts. The corporation shall have the
power to purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee, or agent of the corporation, or who is or was
serving at the request of the corporation as an officer, employee or agent of
another corporation, partnership, joint venture, trust, other enterprise, or
employee benefit plan, against any liability asserted against and incurred by
that person in any such capacity or arising out of his or her status as such,
whether or not the corporation would have the power to indemnify under the
provisions of RCW 23A.08.025.
7
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ARTICLE VII
STOCK CERTIFICATES AND THEIR TRANSFER
-------------------------------------
Section 1. Form: Stock certificates shall be signed by the president or
----------------
vice president and by the secretary or an assistant secretary, and shall be
endorsed to set forth written notice of any restrictions imposed on the
transferability of such shares. All certificates shall be consecutively
numbered or otherwise identified. The name and address of the person to whom the
stock is issued and the number of shares and date of issue shall be entered on
the stock transfer books of the corporation.
Section 2. Issuance: No shares of the corporation shall be issued unless
--------------------
authorized by the Board of Directors. Such authorization shall include the
maximum number of shares to be issued and the consideration to be received for
each share. If shares are issued for other than cash, the Board of Directors
shall determine the value of the consideration.
Section 3. Transfer: All certificates surrendered to the corporation for
--------------------
transfer shall be canceled. No new certificate shall be issued until the former
certificates for a like number of shares have been surrendered and canceled,
except that in case of a lost, destroyed or mutilated certificate, a new one may
be issued therefor upon such terms and indemnity to the corporation as the Board
of Directors may prescribe.
Section 4. Subscriptions: Any stock subscription not paid in accordance
-------------------------
with its terms may be collected as follows:
a. A suit may be commenced to collect the unpaid balance of the
subscription, or
b. A notice shall be mailed to the subscriber at the last post
office address known to the corporation stating that, if the subscriber has not
paid the amount due by a date at least 20 days after the date the notice is
mailed, the corporation will either (1) deem the subscription to have been
forfeited and retain any sums paid as liquidated damages, or (2) will deem the
subscription to have been forfeited. In the event of a subsequent sale of any
of the shares represented by the forfeited subscription, any excess of the
proceeds realized over the amount due and unpaid on the subscription to the
subscriber shall be paid to the delinquent subscriber,and the
8
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C-11
corporation may hold the delinquent subscriber liable for any deficiency
between the amount stated in the subscription, less the amounts paid by the
subscriber and amounts realized on the subsequent sale.
ARTICLE VIII
AMENDMENT OF BYLAWS
-------------------
Section 1. By the Stockholders: The stockholders, by a majority vote at
-------------------------------
any regular meeting of the stockholders or at any special meeting called for
that purpose, may amend or repeal these Bylaws or adopt additional bylaws.
Section 2. By the Directors: The Board of Directors may amend or repeal
----------------------------
these Bylaws or adopt additional bylaws, but shall not alter or repeal any
bylaws adopted by the stockholders.
ARTICLE IX
RULES OF ORDER
--------------
The rules contained in the most recent edition of Robert's Rules of Order
shall govern all meetings of stockholders and directors where those rules are
not inconsistent with the Articles of Incorporation, Bylaws, or any special
rules of order of the corporation.
ARTICLE X
WAIVER OF NOTICE
----------------
Whenever any notice of meeting is required to be given to any stockholder
or director under the provisions of these Bylaws, the Articles of Incorporation
or the Washington Business Corporation Act, a written waiver of notice signed by
the person or persons entitled to such notice, whether executed before or after
the meeting, shall be deemed equivalent to the giving of such notice.
9
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BE IT KNOWN that the foregoing Bylaws were adopted by the Board of
Directors as the Bylaws of this corporation, effective October 20, 1986. In
witness whereof, we do hereunto subscribe our names as President and Secretary
of this corporation.
-----------------------------
Edward G. Atsinger III,
President
Eric Halvorson
-----------------------------
Eric Halvorson, Secretary
0457a
OA973080.130/3+
10
<PAGE>
EXHIBIT 3.18
ARTICLES OF INCORPORATION
OF
INSPIRATION MEDIA OF TEXAS, INC.
JULY 24 1995
The undersigned, a natural person of the age of eighteen years or more,
acting as incorporator of a corporation under the Texas Business Corporation
Act, hereby adopts the following Articles of Incorporation for Inspiration Media
of Texas, Inc. (the "Corporation"):
ARTICLE ONE
The name of this Corporation is Inspiration Media of Texas, Inc.
ARTICLE TWO
The period of the Corporation's duration is perpetual.
ARTICLE THREE
The purpose for which the Corporation is organized is the transaction of
any and all lawful business for which corporations may be incorporated under the
Texas Business Corporation Act.
ARTICLE FOUR
The aggregate number of shares which the Corporation shall have authority
to issue is one thousand (1,000) shares of Common Stock of the par value of
$0.01 per share.
ARTICLE FIVE
The Corporation will not commence business until it has received for the
issuance of its shares consideration of the value of at least One Thousand
Dollars ($1,000), consisting of money, labor done, or property actually
received.
ARTICLE SIX
The name and address of the incorporator of the Corporation is:
Name Address
---- -------
Eric H. Halvorson 4880 Santa Rosa Road
Suite 300
Camarillo, CA 93012
<PAGE>
ARTICLE SEVEN
No shareholder of the Corporation shall, by reason of such shareholder
holding shares of any class, have any preemptive or preferential right to
purchase or subscribe for any shares of any class of the Corporation, now or
hereafter to be authorized, or any notes, debentures, bonds, or other securities
convertible into or carrying options or warrants to purchase shares of any
class, now or hereafter to be authorized, whether or not the issuance or sale of
any such shares, or such notes, debentures, bonds, or other securities, would
adversely affect the dividend or voting rights of such shareholder of the
Corporation, other than such rights, if any, as the board of directors, in its
discretion, may grant to the shareholders to purchase such additional, unissued,
or treasury securities; and the Corporation may issue or sell additional
unissued or treasury shares of any class of the Corporation, or any notes,
debentures, bonds, or other securities convertible into or carrying options or
warrants to purchase shares of any class, without offering the same in whole or
in part to the existing shareholders of any class.
ARTICLE EIGHT
At each election for directors of the Corporation, every shareholder
entitled to vote at such election shall have the right to vote, in person or by
proxy, the number of shares owned by such shareholder for as many persons as
there are directors to be elected and for whose election he has a right to vote,
or to cumulate his votes by giving one candidate as many votes as the number of
such directors multiplied by his shares shall equal, or by distributing such
votes on the same principle.
ARTICLE NINE
The street address of the registered office of the Corporation is 545 E.
John Carpenter Freeway, Suite 450, Irving, Texas 75062, and the name of its
registered agent is Greg Anderson.
ARTICLE TEN
The number of directors constituting the initial Board of Directors is 2
and the names and addresses of the persons who are to serve as the initial
Directors until the first annual meeting of shareholders or until their
successors are elected and qualified are:
NAMES ADDRESSES
- ----- ---------
Edward G. Atsinger, III 4880 Santa Rosa Road
Suite 300
Camarillo, CA 93012
Stuart W. Epperson 3780 Will Scarlet Road
Winston-Salem, NC 27104
2
<PAGE>
ARTICLE ELEVEN
No director of the Corporation shall be liable to the Corporation or its
shareholders for monetary damages for any act or omission in such director's
capacity as director, except to the extent such director is found liable for (i)
a breach of such director's duty of loyalty to the Corporation or its
shareholders; (ii) an act or omission not in good faith that constitutes a
breach of duty of such director to the Corporation or an act or omission that
involves intentional misconduct or a knowing violation of the law; (iii) a
transaction form which such director received an improper benefit, whether or
not the benefit resulted from an action taken within the scope of such
director's office; or (iv) an act or omission for which the liability of a
director is expressly provided by an applicable statute. No repeal or
modification of this ARTICLE NINE shall adversely affect any right or protection
of a director of the Corporation existing by virtue of this ARTICLE NINE at the
time of such repeal or modification.
IN WITNESS WHEREOF, I have hereunto set my hand, this 19th day of July,
1995.
Eric H. Halvorson
-----------------
Eric H. Halvorson
3
<PAGE>
EXHIBIT 3.19
BYLAWS
OF
INSPIRATION MEDIA OF TEXAS, INC.
ARTICLE I
OFFICES
1.01. The registered agent and office of Inspiration Media of Texas, Inc.
(the "Corporation") shall be such registered agent and office as shall from time
to time be established pursuant to the articles of incorporation, as amended
from time to time, of the Corporation (the "Charter") or by resolution of the
Board of Directors of the Corporation (the "Board").
1.02. The Corporation may also have offices at such other places both
within and without the State of Texas as the Board may from time to time
determine or the business of the Corporation may require.
ARTICLE II
MEETINGS OF SHAREHOLDERS
2.01. Meetings of Shareholders of the Corporation (the "Shareholders") for
any purpose may be held at such place, within or without the State of Texas, as
shall be fixed from time to time by the Board, or, if the Board has not so
specified, then at such place as may be fixed by the person or persons calling
the meeting.
2.02. An annual meeting of the Shareholders, commencing with the year
1995, shall be held at such date and time as shall be fixed from time to time by
the Board, at which they shall elect a Board, and transact such other business
as may properly be brought before the meeting.
2.03. At least ten days before each meeting of Shareholders, a complete
list of the Shareholders entitled to vote at said meeting arranged in
alphabetical order, with the residence of each and the number of voting shares
held by each, shall be prepared by the officer or agent having charge of the
stock transfer books. Such list, for a period of ten days prior to such
meeting, shall be kept on file at the registered office of the Corporation and
shall be subject to inspection by any Shareholder at any time during usual
business hours. Such list shall be produced and kept open at the time and place
of the meeting during the whole time thereof, and shall be subject to the
inspection of any Shareholder who may be present.
2.04. Special meetings of the Shareholders, for any purpose or purposes,
unless otherwise prescribed by statute, the Charter, or these bylaws, may be
called by the President, a majority of the Board, or the holders of not less
than ten percent of all the shares entitled to vote
<PAGE>
at the meetings. Business transacted at all special meetings shall be confined
to the objects stated in the notice of the meeting.
2.05. Written or printed notice stating the place, day, and hour of the
meeting and, in case of a special meeting, the purpose or purposes for which the
meeting is called, shall be delivered not less than ten nor more than sixty days
before the date of the meeting, either personally or by mail, by or at the
direction of the President, the Secretary, or the officer or person calling the
meeting, to each Shareholder of record entitled to vote at the meeting.
2.06. The holders of a majority of the shares of the Corporation issued
and outstanding and entitled to vote thereat, present in person or represented
by proxy, shall be requisite and shall constitute a quorum at all meetings of
the Shareholders for the transaction of business except as otherwise provided by
statute, the Charter, or these bylaws. If, however, such quorum shall not be
present or represented at any meeting of the Shareholders, the Shareholders
entitled to vote thereat, present in person or represented by proxy, shall
nevertheless have power to adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum shall be present or
represented. At an adjourned session at which a quorum shall be present or
represented, any business may be transacted which might have been transacted at
the meeting as originally notified.
2.07. When a quorum is present at any meeting, the vote of the holders of
a majority of the shares of the Corporation having voting power present in
person or represented by proxy shall decide any question brought before such
meeting, unless the question is one upon which, by express provision of any
applicable statute, the Charter, or these bylaws, a different vote is required,
in which case such express provision shall govern and control the decision of
such question. The Shareholders present at a duly organized meeting may
continue to transact business until adjournment, notwithstanding the withdrawal
of enough Shareholders to leave less than a quorum.
2.08. Each outstanding share of the Corporation, regardless of class,
shall be entitled to one vote on each matter submitted to a vote at a meeting of
Shareholders, unless otherwise provided by statute or the Charter. At any
meeting of the Shareholders, every Shareholder having the right to vote shall be
entitled to vote in person or by proxy appointed by an instrument in writing
subscribed by such Shareholder or by his or her duly authorized attorney-in-
fact, such writing bearing a date not more than eleven months prior to said
meeting, unless said instrument provides for a longer period. Such proxy shall
be filed with the Secretary of the Corporation prior to or at the time of the
meeting. Voting need not be by written ballot unless required by the Charter or
by vote of the Shareholders present at the meeting.
2.09. The Board may fix in advance a record date for the purpose of
determining Shareholders entitled to notice of or to vote at a meeting of
Shareholders, such record date to be not less than ten nor more than sixty days
prior to such meeting, or the Board may close the stock transfer books for such
purpose for a period of not less than ten nor more than sixty days prior to such
meeting. In the absence of any action by the Board, the date upon which the
notice of the meeting is mailed shall be the record date.
2
<PAGE>
2.10. Any action required by statute to be taken at a meeting of the
Shareholders, or any action which may be taken at a meeting of the Shareholders,
may be taken without a meeting if a consent in writing, setting forth the action
so taken, shall be signed by all of the Shareholders entitled to vote with
respect to the subject matter thereof, and such consent shall have the same
force and effect as a unanimous vote of Shareholders.
2.11. Subject to the provisions required or permitted by statute or the
Charter for notice of meetings, Shareholders may participate in and hold a
meeting by means of conference telephone or similar communications equipment by
means of which all persons participating in the meeting can hear each other, and
participation in a meeting pursuant to this section shall constitute presence in
person at such meeting, except where a person participates in the meeting for
the express purpose of objecting to the transaction of any business on the
ground that the meeting is not lawfully called or convened.
ARTICLE III
DIRECTORS
3.01. The business and affairs of the Corporation shall be managed by the
Board who may exercise all such powers of the Corporation and do all such lawful
acts and things as are not by statute or by the Charter or by these bylaws
directed or required to be exercised or done by the Shareholders
3.02. The initial Board shall be as stated in the Charter. Thereafter,
the number of directors which shall constitute the full Board shall be not
greater than three (3) nor less than two (2) or as determined from time to time
by resolution of the Board or by the Shareholders at the annual meeting or a
special meeting called for that purpose, but no decrease shall have the effect
of shortening the term of an incumbent director. Directors need not be
Shareholders or residents of the State of Texas. The directors shall be elected
at the annual meeting of the Shareholders, except as hereinafter provided, and
each director elected shall hold office until his or her successor shall be
elected and shall qualify.
3.03. At any meeting of Shareholders called expressly for such purpose,
any director or the entire Board may be removed, with or without cause, by vote
of the holders of a majority of the shares of the Corporation then entitled to
vote at an election of directors. If any vacancies occur in the Board caused by
death, resignation, retirement, disqualification, or removal from office of any
director or otherwise, a majority of the directors then in office, though less
than a quorum, may choose a successor or successors or a successor or successors
may be chosen at a special meeting of Shareholders called for that purpose; and
each successor director so chosen shall be elected for the unexpired term of his
or her predecessor in office. Any directorship to be filled by reason of an
increase in the number of directors may be filled by election at an annual
meeting or special meeting of Shareholders called for that purpose or may be
filled by the Board for a term of office continuing only until the next election
of one or more directors by the Shareholders.
3
<PAGE>
3.04. Whenever the holders of any class or series of shares of the
Corporation are entitled to elect one or more directors by the provisions of the
Charter, any vacancies in such directorships and any newly created directorships
of such class or series to be filled by reason of an increase in the number of
such directors may be filled by the affirmative vote of a majority of the
directors elected by such class or series then in office or by a sole remaining
director so elected, or by the vote of the holders of the outstanding shares of
such class or series, and such directorships shall not in any case be filled by
the vote of the remaining directors or the holders of the outstanding shares as
a whole unless otherwise provided in the Charter.
3.05. At each election for directors, every Shareholder entitled to vote
at such election shall have the right to vote, in person or by proxy, the number
of shares owned by such Shareholder for as many persons as there are directors
to be elected and for whose election he has a right to vote, or to cumulate his
votes by giving one candidate as many votes as the number of such directors
multiplied by his shares shall equal, or by distributing such votes on the same
principle.
Executive and Other Committees
3.06. The Board, by resolution adopted by a majority of the Board, may
designate from among its members an executive committee and one or more other
committees, each of which shall be comprised of one or more members and, to the
extent provided in such resolution, shall have and may exercise all of the
authority of the Board, including the authority to declare dividends and to
authorize the issuance of shares of the Corporation, to the extent permitted by
law. Committees shall keep regular minutes of their proceedings and report the
same to the Board when required.
Meetings of Directors
3.07. The directors of the Corporation may hold their meetings, both
regular and special, either within or without the State of Texas.
3.08. The first meeting of each newly elected Board shall be held without
further notice immediately following the annual meeting of Shareholders, and at
the same place, unless by unanimous consent of the directors then elected and
serving such time or place shall be changed.
3.09. Regular meetings of the Board may be held without notice at such
time and place as shall from time to time be determined by the Board.
3.10. Special meetings of the Board may be called by the President on two
days' notice to each director, either personally or by mail, telecopy, or
overnight courier; special meetings shall be called by the President or
Secretary in like manner and on like notice on the written request of a majority
of the directors. Except as may be otherwise expressly provided by statute, the
Charter, or these bylaws, neither the business to be transacted at, nor the
purpose of, any special meeting needs to be specified in a notice or waiver of
notice.
3.11. At all meetings of the Board the presence of a majority of the full
Board shall be necessary and sufficient to constitute a quorum for the
transaction of business and the act of a
4
<PAGE>
majority of the directors present at any meeting at which there is a quorum
shall be the act of the Board, except as may be otherwise specifically provided
by statute or by the Charter or by these bylaws. If a quorum shall not be
present at any meeting of directors, the directors present thereat may adjourn
the meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present.
3.12. Any action required or permitted to be taken at a meeting of the
Board or any committee may be taken without a meeting if a consent in writing,
setting forth the action so taken, is signed by all the members of the Board or
committee, as the case may be. Such consent shall have the same force and
effect as a unanimous vote at a meeting.
3.13. Subject to the provisions required or permitted by statute or the
Charter for notice of meetings, members of the Board, or members of any
committee designated by the Board, may participate in and hold a meeting of the
Board or such committee by means of a conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting pursuant to this
section shall constitute presence in person at such meeting, except where a
person participates in the meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
Compensation of Directors
3.14. Directors, as such, shall not receive any stated salary for their
services, but, by resolution of the Board, a fixed sum and expenses of
attendance, if any, may be allowed for attendance at each regular or special
meeting of the Board; provided that nothing herein contained shall be construed
to preclude any director from serving the Corporation in any other capacity and
receiving compensation there for
ARTICLE IV
NOTICES
4.01. Whenever under the provisions of any applicable statute, the Charter
or these bylaws, notice is required to be given to any director or Shareholder,
and no provision is made as to how such notice shall be given, it shall not be
construed to mean personal notice, but any such notice may be given by mail,
postage prepaid, addressed to such director or Shareholder at such address as
appears on the books of the Corporation. Any notice required or permitted to be
given by mail shall be deemed to be given at the time when the same shall be
thus deposited in the United States mails as aforesaid.
4.02. Whenever any notice is required to be given to any Shareholder or
director of the Corporation under the provisions of any applicable statute, the
Charter or these bylaws, a waiver thereof in writing signed by the person or
persons entitled to such notice, whether before or after the time stated in such
notice, shall be deemed equivalent to the giving of such notice.
5
<PAGE>
ARTICLE V
OFFICERS
5.01. The officers of the Corporation shall be elected by the directors
and shall include a President and a Secretary. The Board may also, at its
discretion, elect one or more Vice Presidents and a Treasurer. Such other
officers, including assistant officers, and agents as may be deemed necessary
may be elected or appointed by the Board. Any two or more offices may be held
by the same person.
5.02. The Board at its first meeting after each annual meeting of
Shareholders shall choose a President, a Secretary, and such other officers,
including assistant officers, and agents as may be deemed necessary, none of
whom need be a member of the Board.
5.03. The Board may appoint such other officers and agents as it shall
deem necessary, who shall be appointed for such terms and shall exercise such
powers and perform such duties as shall be determined from time to time by the
Board.
5.04. The salaries of all officers and agents of the Corporation shall be
fixed by the Board. Unless so fixed by the Board each officer of the
Corporation shall serve without remuneration.
5.05. Each officer of the Corporation shall hold office until his
successor is chosen and qualified in his stead or until his death or until his
resignation or removal from office. Any officer or agent elected or appointed
by the Board may be removed at any time by the Board, but such removal shall be
without prejudice to the contract rights, if any, of the person so removed. If
the office of any officer becomes vacant for any reason, the vacancy may be
filled by the Board.
The President
5.09. The President shall be the chief executive officer of the
Corporation, shall have the general powers and duties of oversight, supervision
and management of the business and affairs of the Corporation and shall see that
all orders and resolutions of the Board are carried into effect. He shall be an
ex-officio member of all standing committees of the Board.
The Secretary and Assistant Secretaries
5.10. The Secretary shall attend all sessions of the Board and all
meetings of the Shareholders and record all votes and the minutes of all
proceedings in a book to be kept for that purpose and shall perform like duties
for any committees when required. The Secretary shall give, or cause to be
given, notice of all meetings of the Shareholders and special meetings of the
Board, and shall perform such other duties as may be prescribed by the Board or
the President, under whose supervision the Secretary shall be.
5.11. Each Assistant Secretary shall have such powers and perform such
duties as the Board may from time to time prescribe or as the President may from
time to time delegate.
6
<PAGE>
Other Offices
5.12. Any Vice President elected by the Board shall have such powers and
perform such duties as the Board may from time to time prescribe or as the
President may from time to time delegate.
5.13. Any Treasurer elected by the Board shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements of the Corporation and shall deposit all moneys and
other valuable effects in the name and to the credit of the Corporation in such
depositories as may be designated by the Board.
5.14. Any Treasurer elected by the Board shall disburse the funds of the
corporation as may be ordered by the Board, taking proper vouchers for such
disbursements, and shall render to the directors, at the regular meetings of the
Board, or whenever they may require it, an account of all his or her
transactions as Treasurer and of the financial condition of the Corporation, and
shall perform such other duties as the Board may prescribe or as the President
may from time to time delegate.
5.15. If required by the Board, any Treasurer elected by the Board shall
give the Corporation a bond in such form, in such sum, and with such surety or
sureties as shall be satisfactory to the Board for the faithful performance of
the duties of the office of Treasurer and for the restoration to the
Corporation, in case of death, resignation, retirement, or removal from office,
of all books, papers, vouchers, money, and other property of whatever kind in
the Treasurer's possession or under the Treasurer's control belonging to the
Corporation.
5.16. Each Assistant Treasurer shall have such powers and perform such
duties as the Board may from time to time prescribe or as the President may from
time to time delegate.
ARTICLE VI
CERTIFICATES REPRESENTING SHARES
6.01. Certificates in such form as may be determined by the Board shall be
delivered representing all shares to which Shareholders are entitled. Such
certificates shall be consecutively numbered and shall be entered in the books
of the Corporation as they are issued. Each certificate shall state on the face
thereof the name of the Corporation, the name to whom the certificate is issued,
the number and class of shares and the designation of the series, if any, which
such certificate represents, the par value of such shares or a statement that
such shares are without par value, and that the Corporation is organized under
the laws of Texas. Each certificate shall be signed by either the President or
any Vice President then in office and by either the Secretary, an Assistant
Secretary, or any Treasurer then in office, and may be sealed with the seal of
the Corporation or a facsimile thereof. If any certificate is countersigned by
a transfer agent, or an assistant transfer agent or registered by a registrar,
other than the Corporation or an employee of the Corporation, the signature of
any such officer of the Corporation may be a facsimile. Whenever the
Corporation shall be authorized to issue more than one class of stock, there
shall be (1) set forth conspicuously upon the face or back of each
certificate a full statement of (a) all of
7
<PAGE>
the designations, preferences, limitations, and relative rights of the shares of
each class authorized to be issued and (b) if the Corporation is authorized to
issue any preferred or special class in series, the variations in the relative
rights and preferences of the shares of each series so far as the same have been
fixed and determined and the authority of the Board to fix and determine the
relative rights and preferences of subsequent series; or (2) stated
conspicuously on the face or back of the certificate that (a) such a statement
is set forth in the Charter on file in the office of the Secretary of State of
Texas and (b) the Corporation will furnish a copy of such statement to the
record holder of the certificate without charge upon request to the Corporation
at its principal place of business or registered office. Whenever the
Corporation by the Charter has limited or denied the preemptive rights of
Shareholders to acquire unissued or treasury shares of the Corporation, each
certificate (1) shall conspicuously set forth upon the face or back of such
certificate a full statement of the limitation or denial of preemptive rights
contained in the Charter, or (2) shall conspicuously state on the face or back
of the certificate that (a) such statement is set forth in the Charter on file
in the office of the Secretary of State of Texas and (b) the Corporation will
furnish a copy of such statement to the record holder of the certificate without
charge upon request to the Corporation at its principal place of business or
registered office. If any restriction on the transfer or the registration of the
transfer of shares shall be imposed or agreed to by the Corporation, as
permitted by law, each certificate representing shares so restricted (1) shall
conspicuously set forth a full or summary statement of the restriction on the
face of the certificate, or (2) shall set forth such statement on the back of
the certificate and conspicuously refer to the same on the face of the
certificate, or (3) shall conspicuously state on the face or back of the
certificate that such a restriction exists pursuant to a specified document and
(a) that the Corporation will furnish to the record holder of the certificate
without charge upon written request to the corporation at its principal place of
business or registered office a copy of the specified document, or (b) if such
document is one required or permitted to be and has been filed under the Texas
Business Corporation Act, that such document is on file in the office of the
Secretary of State of Texas and contains a full statement of such restriction.
Lost Certificates
6.02. The Board may direct a new certificate representing shares to be
issued in place of any certificate theretofore issued by the Corporation alleged
to have been lost or destroyed, upon the making of an affidavit of that fact by
the person claiming the certificate to be lost or destroyed. When authorizing
such issue of a new certificate, the Board, in its discretion and as a condition
precedent to the issuance thereof, may require the owner of such lost or
destroyed certificate, or his legal representative, to advertise the same in
such manner as it shall require and/or give the Corporation a bond in such form,
in such sum, and with such surety or sureties as it may direct as indemnity
against any claim that may be made against the Corporation with respect to the
certificate alleged to have been lost or destroyed.
Transfer of Shares
6.03. Upon presentation to the Corporation or the transfer agent of the
Corporation with a request to register the transfer of a certificate
representing shares duly endorsed and otherwise meeting the requirements for
transfer specified in the Texas Business and Commerce Code, it shall
8
<PAGE>
be the duty of the Corporation or the transfer agent of the Corporation to
register the transfer as requested.
Registered Shareholders
6.04. Prior to due presentment for transfer, the Corporation may treat the
registered owner of any share or shares of stock as the person exclusively
entitled to vote, to receive notifications, and otherwise to exercise all rights
and powers of an owner.
ARTICLE VII
GENERAL PROVISIONS
Dividends
7.01. Dividends upon the outstanding shares of the Corporation, subject to
the provisions of the Charter, if any, may be declared by the Board at any
regular or special meeting of the Board or by any committee of the Board so
authorized. Dividends may be paid in cash, in property, or in shares of the
Corporation, subject to the provisions of any applicable statute or the Charter.
The Board may fix in advance a record date for the purpose of determining
Shareholders entitled to receive payment of any dividend, such record date to be
not more than fifty days prior to the payment date of such dividend, or the
Board may close the stock transfer books for such purpose for a period of not
more than fifty days prior to the payment date of such dividend. In the absence
of any action by the Board, the date upon which the Board adopts the resolution
declaring such dividend shall be the record date.
Reserves
7.02. There may be created by resolution of the Board out of the surplus
of the Corporation such reserve or reserves as the directors from time to time,
in their discretion, think proper to provide for contingencies, or to repair or
maintain any property of the Corporation, or for such other purpose as the
directors shall think beneficial to the Corporation, and the directors may
modify or abolish any such reserve in the manner in which it was created.
Checks
7.03. All checks or demands for money and notes of the Corporation shall
be signed by such officer or officers or such other person or persons as the
Board may from time to time designate.
Execution of Contracts, Deeds, Etc.
7.04. The Board may authorize any officer or officers, agent or agents, in
the name and on behalf of the Corporation, to enter into or execute and deliver
any and all deeds, bonds, mortgages, contracts and other obligations or
instruments, and such authority may be general or confined to specific
instances.
9
<PAGE>
Fiscal Year
7.05. The fiscal year of the Corporation shall be fixed by resolution of
the Board.
Voting of Securities
7.06. Unless otherwise directed by the Board, the President shall have
full power and authority on behalf of the Corporation to attend, vote and act,
and to execute and deliver in the name and on behalf of the Corporation a proxy
authorizing an agent or attorney-in-fact for the Corporation to attend, vote and
act, at any meeting of security holders of any corporation in which the
Corporation may hold securities and to execute and deliver in the name and on
behalf of the Corporation any written consent of security holders in lieu of any
such meeting, and at any such meeting he, or the agent or the attorney-in-fact
duly authorized by him, shall possess and may exercise any and all rights and
powers incident to the ownership of such securities which the Corporation as the
owner thereof might have possessed or exercised if present. The Board may by
resolution from time to time confer like power upon any other person or persons.
Indemnification
7.07. (a) Subject to any limitation which may be contained in the Charter,
the Corporation shall to the full extent permitted by law, including without
limitation, Texas Business Corporation Act Art. 2.02-1, as such Article now
exists or shall hereafter be amended, indemnify any person who was, is, or is
threatened to be made a named defendant or respondent to any threatened,
pending, or completed action, suit, or proceeding, whether civil, criminal,
arbitral, administrative, or investigative, any appeal in such action, suit, or
proceeding, and any inquiry or investigation that could lead to such an action,
suit, or proceeding, because such person is or was a director or officer of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, partner, venturer, proprietor, trustee, employee, agent, or
similar functionary of another corporation, partnership, joint venture, sole
proprietorship, trust, employee benefit plan, or other enterprise, against
judgments, penalties (including excise and similar taxes), fines, settlements,
and reasonable expenses (including attorneys' fees) actually incurred by such
person in connection with such action, suit, or proceeding. The termination of
any action, suit or proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that an individual did not act in good faith and in a manner which
he reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
(b) Subject to any limitation which may be contained in the Charter, the
Corporation shall, to the full extent permitted by law, including without
limitation, Art. 2.02-1 of the Texas Business corporation Act, as such Article
now exists or shall hereafter be amended, pay or reimburse on a current basis
the expenses incurred by any person described in subsection (a) of this Section
7.07 in connection with any such action, suit, or proceeding in advance of the
final disposition thereof, if the Corporation has received (i) a written
affirmation by the recipient of his good faith belief that he has met the
standard of conduct necessary for indemnification under the Texas Business
Corporation Act and (ii) a written undertaking by or on behalf of the director
to
10
<PAGE>
repay the amount paid or reimbursed if it is ultimately determined that he has
not satisfied such standard of conduct or if indemnification is prohibited by
law.
(c) If required by law at the time such payment is made, any payment of
indemnification or advance of expenses to a director shall be reported in
writing to the shareholders with or before the notice or waiver of notice of the
next Shareholder's meeting or with or before the next submission to Shareholders
of a consent to action without a meeting pursuant to Section A, Article 9.10 of
the Texas Business Corporation Act, and, in any case, within the 12-month period
immediately following the date of the indemnification or advance.
(d) The Corporation may purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee or agent of the Corporation
or who is or was serving at the request of the Corporation as a director,
officer, partner, venturer, proprietor, trustee, employee, agent, or similar
functionary of another foreign or domestic corporation, partnership, joint
venture, sole proprietorship, trust, employee benefit plan, or other enterprise,
against any liability asserted against him and incurred by him in such a
capacity or arising out of his status as such a person, whether or not the
corporation would have the power to indemnify him against that liability under
this article, subject to any restrictions imposed by law. The Corporation may
create a trust fund, establish any form of self-insurance, grant a security
interest or other lien on the assets of the Corporation, or use other means
(including, without limitation, a letter of credit, guarantee or surety
arrangement) to ensure the payment of such sums as may become necessary to
effect indemnification as provided herein.
(e) The rights provided under this Section 7.07 shall not be deemed
exclusive of any other rights permitted by law to which such person may be
entitled under any provision of the Charter, a resolution of Shareholders or
directors of the Corporation, an agreement or otherwise, and shall continue as
to a person who has ceased to be a director, officer, employee, or agent and
shall inure to the benefit of the heirs, executors, and administrators of such a
person. The rights provided in this Section 7.07 shall be deemed to be provided
by a contract between the Corporation and the individuals who serve in the
capacities described in subsection (a) hereof at any time while these bylaws are
in effect, and no repeal or modification of this Section 7.07 by the
Shareholders shall adversely affect any right of any person otherwise entitled
to indemnification by virtue of this Section 7.07 at the time of such repeal or
modification.
ARTICLE VIII
AMENDMENTS
8.01. The Board may amend or repeal these bylaws or adopt new bylaws,
unless:
(1) the Charter or statute reserves the power exclusively to the
Shareholders in whole or part; or
(2) the Shareholders in amending, repealing or adopting a particular
bylaw expressly provide that the Board may not amend or repeal such bylaw.
11
<PAGE>
8.02. Unless the Charter or a bylaw adopted by the Shareholders provides
otherwise as to all or some portion of the Corporation's bylaws, the
Shareholders may amend, repeal, or adopt bylaws of the Corporation even though
such bylaws may also be amended, repealed or adopted by the Board.
12
<PAGE>
EXHIBIT 3.20
RECEIVED THE COMMONWEALTH OF MASSACHUSETTS
AUG 31 1977 ARTICLES OF ORGANIZATION
GENERAL LAWS, CHAPTER 156B, SECTION 1__
CORPORATION DIVISION =======================================
SECRETARY'S OFFICE
A TRUE COPY ATTEST I hereby certify that, upon an examination of
the within-written articles of organization,
/s/ Paul Guzzi duly submitted to me, it appears that the
PAUL GUZZI provisions of the General Laws relative to the
SECRETARY OF THE COMMONWEALTH organization of corporations have been complied
DATE 4/13/78 CLERK J F. K with, and I hereby approve said articles and the
------- ------ filing fee in the amount of $125.00 having been
(THIS CERTIFICATION STAMP paid, said articles are deemed to have been
REPLACES filed with me this 31st day of August 1977.
OUR PREVIOUS CERTIFICATION
SYSTEM.) /s/ Paul Guzzi
--------------
Secretary of the Commonwealth
TO BE FILLED IN BY CORPORATION
PHOTO COPY OF ARTICLES OR ORGANIZATION TO BE SENT
TO:
KNEELAND KYDD & HARDY
-------------------------------------------------
ONE STATE ST.
-------------------------------------------------
BOSTON MA. 02109
-------------------------------------------------
617-523-5110
FILING FEE: 1/20 of 1% of the total amount of the authorized
capital stock with par value, and one cent a share for all
authorized shares without par value, but not less than $75.
General Laws, Chapter 156B.
Copy Mailed OCT 3 1977
<PAGE>
The Commonwealth of Massachusetts
PAUL GUZZI
Secretary of the Commonwealth
STATE HOUSE
BOSTON, MASS.
ARTICLES OF ORGANIZATION
(Under G.L. Ch. 156B)
Name
----
(including given name in full) POST OFFICE ADDRESS
David J. Van Oss One State Street
Boston, Massachusetts 02109
does hereby associate as incorporator with the intention of forming a
corporation under the provisions of General Laws, Chapter 156B.
1. The name by which the corporation shall be known is:
NEW ENGLAND CONTINENTAL MEDIA INC.
2. The purposes for which the corporation is formed are as follows:
(A) To engage in the radio or television broadcasting, communicating, and
receiving business, and in the business of communicating,
transmitting, and receiving by any other method now in use or
hereafter discovered; and to buy, sell, trade in, at wholesale and
retail, import, expert, manufacture, rent, handle, and use instruments
of precision, transmitting and receiving apparatus for broadcasting or
other purposes, recording and reproducing instruments of any kind or
nature used in conjunction therewith or incidental or necessary
thereto, and to conduct the business of rendering service in the
installation, operation, supply of parts, repair, maintenance, and
upkeep of such apparatus, instrument, or accessories.
(B) To carry on any business or other activity which may be lawfully
carried on by a corporation organized under the Business Corporation
Law of the Commonwealth of Massachusetts, whether or not related to
those referred to in the foregoing paragraph.
NOTE: If provisions for which the space provided under Articles 2, 4, 5 and 6 is
not sufficient, additions should be set out on continuation sheets to be
numbered 2A, 2B, etc. Indicate under each Article where the provision is set
out. Continuation sheets shall be on 8 1/2 x 11" paper and must have a left-
hand margin 1 inch wide for binding. Only one side should be used.
2
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
WITHOUT PAR
CLASS OF STOCK VALUE WITH PAR VALUE
-------------------------------------------------
NUMBER OF NUMBER OF PAR AMOUNT
SHARES SHARES VALUE
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Preferred None $
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
Common 12,500
- ---------------------------------------------------------------------------------
</TABLE>
*4. If more than one class is authorized, a description of each of the
different classes of stock with, if any, the preferences, voting
powers, qualifications, special or relative rights or privileges
as to each class thereof and any series now established:
None
*5. The restrictions, if any, imposed by the Articles of Organization upon
the transfer of shares of stock of any class are as follows:
None
*6. Other lawful provisions, if any, for the conduct and regulation of the
business and affairs of the corporation, for its voluntary dissolution, or
for limiting, deferring, or regulating the powers of the corporation, or
of its directors or stockholders, or of any class of stockholders:
See Page 6A attached
7. By-laws of the corporation have been duly adopted and at which the initial
directors, president, treasurer and clerk, whose names are set out below
have been duly elected.
3
<PAGE>
8. The following information shall not for any purpose be treated as a
permanent part of the Articles of Organization of the corporation.
a. The post office address of the initial principal office of the
corporation in Massachusetts is: Statler Office Building, Boston,
Massachusets
b. The name, residence, and post office address of each of the initial
directors and following officers of the corporation elected at the
first meeting are as follows:
<TABLE>
<CAPTION>
NAME RESIDENCE POST OFFICE ADDRESS
<S> <C> <C> <C>
President: David J. Van Oss Framingham, Ma. OneState Street
Boston, Ma. 02109
Treasurer: David J. Van Oss Framingham, Ma. One State Street
Boston, Ma. 02109
Clerk: David J. Van Oss Framingham, Ma. One State Street
Boston, Ma. 02109
Directors: David J. Van Oss Framingham, Ma. One State Street
Boston, Ma. 02109
</TABLE>
c. The date initially adopted on which the corporation's fiscal year
ends is:
December 31
d. The date initially fixed in the by-laws for the annual meeting of
stockholders of the corporation is:
Third Tuesday of July
e. The name and business address of the resident agent, if any, of the
corporation is:
IN WITNESS WHEREOF, and under the penalties of perjury, I, the above-named
INCORPORATOR, hereto sign my name, this 31st day of August 1977.
/s/ David J. Van Oss
-----------------------------------------
-----------------------------------------
-----------------------------------------
4
<PAGE>
Article 6
- ---------
6. Other lawful provisions for the conduct and regulation of the business
and affairs of the corporation, for its voluntary dissolution, or for limiting,
defining or regulating the powers of the corporation, or of its directors or
stockholders, of any class of stockholders:
(a) The directors may make, amend or repeal the by-laws in whole or in
part, except with respect to any provision thereof which by law or the by-laws
requires action by the stockholders.
(b) Meetings of the stockholders may be held anywhere in the United
States.
(c) The corporation may be a partner in any business enterprise it
would have power to conduct by itself.
(d) The directors shall have the power to fix from time to time their
compensation. No person shall be disqualified from holding any office by reason
of any interest. In the absence of fraud, any director, officer or stockholder
of this corporation individually, or any individual having any interest in any
concern which is a stockholder of this corporation, or any concern in which any
such directors, officers, stockholders or individuals have any interest, may be
a party to, or may be pecuniarily or otherwise interested in, any contract,
transaction or other act of this corporation, and
(1) such contract, transactions or act shall not be in any way
invalidated or otherwise affected by that fact;
(2) no such director, officer, stockholder or individual shall be
liable to account to this corporation for any profit or benefit
realized through any such contract, transaction or act; and
(3) any such director of this corporation may be counted in
determining the existence of a quorum at any meeting of the
directors or of any committee thereof which shall authorize any
such contract, transaction or act, and may vote to authorize the
same:
the term "interest" including personal interest and interest as a director,
officer, stockholder, shareholder, trustee, member or beneficiary of any
concern; and
the term "concern" meaning any corporation, association, trust, partnership,
firm, person or other entity other than this corporation.
5
<PAGE>
EXHIBIT 3.21
BY-LAWS
-------
OF
NEW ENGLAND CONTINENTAL MEDIA INC.
----------------------------------
TABLE OF CONTENTS
-----------------
ARTICLE I. Articles of Organization.
ARTICLE II. Fiscal Year.
ARTICLE III. Meetings of Stockholders.
Section 1. Annual Meetings.
Section 2. Special Meetings.
Section 3. Place of Meetings.
Section 4. Notice of Meetings.
Section 5. Quorum.
Section 6. Action by Vote.
Section 7. Voting.
Section 8. Action by Consent.
Section 9. Proxies.
ARTICLE IV. Directors.
Section 1. Powers.
Section 2. Enumeration, Election and Term of Office.
Section 3. Regular Meetings.
Section 4. Special Meetings.
Section 5. Notice.
Section 6. Quorum.
Section 7. Action by Consent.
Section 8. Committees.
Section 9. Meeting by Telecommunications.
ARTICLE V. Officers and Agents.
Section 1. Enumeration; Qualification.
Section 2. Powers.
Section 3. Election.
<PAGE>
-2-
Section 4. Tenure.
Section 5. President and Vice Presidents.
Section 6. Treasurer and Assistant Treasurers.
Section 7. Clerk and Assistant Clerks.
Section 8. Secretary.
ARTICLE VI. Resignations, Removals and Vacancies.
Section 1. Resignations.
Section 2. Removals.
Section 3. Vacancies.
ARTICLE VII. Indemnification of Directors and Others.
ARTICLE VIII. Stock.
Section 1. Stock Authorized.
Section 2. Issue of Authorized Unissued Capital Stock.
Section 3. Certificates of Stock.
Section 4. Transfers.
Section 5. Lost, Mutilated, or Destroyed Certificates.
Section 6. Transfer Agent and Registrar.
Section 7. Setting Record Date and Closing Transfer Records.
ARTICLE IX. Miscellaneous Provisions.
Section 1. Execution of Papers.
Section 2. Voting of Securities.
Section 3. Corporate Seal.
Section 4. Corporate Records.
Section 5. Evidence of Authority.
ARTICLE X. Amendments.
<PAGE>
BYLAWS
------
OF
NEW ENGLAND CONTINENTAL MEDIA INC.
----------------------------------
ARTICLE I
---------
Articles of Organization
------------------------
The name and purposes of the corporation shall be as set forth in the
Articles of Organization./1/ These By-Laws, the powers of the corporation and
its Directors and Stockholders, and all matters concerning the conduct and
regulation of the business of the corporation, shall be subject to such
provisions in regard thereto, if any, as are set forth in the Articles of
Organization./2/ All references in these By-Laws to the Articles of
Organization shall be construed to mean the Articles of Organization of the
corporation as from time to time amended or restated./3/
ARTICLE II
----------
Except as from time to time otherwise determined by the Directors, the
fiscal year of the corporation shall in each year end on December 31
- -----------------
/1/ Chapter 156B, Section 13(a) (2) and 13 (a) (3)
/2/ Chapter 156B, Section 16
/3/ Chapter 156B, Section 2(b)
<PAGE>
-2-
ARTICLE III
-----------
Meetings of Stockholders
------------------------
Section 1. Annual Meetings.
- ---------- ----------------
The annual meeting of stockholders shall be held on the third Tuesday in
July in each year (or if that be a legal holiday in the place where the meeting
is to be held, on the next succeeding full business day) at ten o'clock A.M.
unless a different hour is fixed by the Board of Directors or the President./4/
The purposes for which the annual meeting is to be held, in addition to those
prescribed by law, by the Articles of Organization or these By-Laws, may be
specified by the Board of Directors or the President. If no annual meeting has
been held on the date fixed above, a special meeting in lieu thereof may be held
and such special meeting shall have the purposes of these By-Laws or otherwise
all the force and effect of an annual meeting./5/
Section 2. Special Meetings.
- ---------- -----------------
A special meeting of the Stockholders may be called at any time by the
President, or by a majority of the Directors acting by vote or by written
instrument or instruments signed by them./6/ A special meeting of the
stockholders shall be called by the Clerk, or in case of death, absence,
incapacity or refusal of the Clerk, by any other officer, upon written
application of one or more stockholders who hold at least one-tenth part in
interest of the stock entitled to vote at the meeting./7/ Such call shall state
the time, place and purposes of the meeting.
- -----------------------------
/4/ Chapter 156B, Section 33
/5/ Chapter 156B, Section 33
/6/ Chapter 156B, Section 34
/7/ Chapter 156B, Section 34
<PAGE>
-3-
Section 3. Place of Meetings.
- ---------- ------------------
All meetings of the stockholders shall be held at the principal office of
the corporation in Massachusetts, unless a different place within Massachusetts,
or as permitted by the Articles of Organization,/8/ elsewhere within the United
States/9/ is designated by the President, or by a majority of the Directors
acting by vote or by written instrument or instruments signed by them. Any
adjourned session of any meeting of the stockholders shall be held at such place
within Massachusetts or, as permitted by the Articles of Organization, elsewhere
within the United States as is designated in the vote of adjournment.
Section 4. Notice of Meetings.
- ---------- -------------------
A written notice of the place, date and hour of all meetings of
stockholders stating the purposes of the meeting shall be given at least seven
days before the meeting to each stockholder entitled to vote thereat and to each
stockholder who is otherwise entitled by law or by the Articles of Organization
to such notice, by leaving such notice with him or at his residence or usual
place of business, or by mailing it, postage prepaid, and addressed to such
stockholder at his address as it appears in the records of the corporation./10/
Such notice shall be given by the Clerk, or in case of the death, absence,
incapacity or refusal of the Clerk, by any other officer or by a person
designated either by the Clerk, by the person or persons calling the meeting or
by the Board of Directors./11/ Whenever notice of a meeting is required to be
given a stockholder under any provision of law, of the Articles of Organization,
or of these By-Laws, a written waiver thereof, executed before or after
the meeting by
- ------------------------------
/8/ Articles of Organization, Article 6(b)
/9/ Chapter 156B, Section 35
/10/ Chapter 156B, Section 36
/11/ Chapter 156B, Section 36
<PAGE>
-4-
such stockholder or his attorney thereunto authorized, and filed with the
records of the meeting, shall be deemed equivalent to such notice./12/
Section 5. Quorum.
- ---------- -------
At any meeting of the stockholders, a quorum shall consist of a majority in
interest of all stock issued and outstanding and entitled to vote at the
meeting;/13/ except that if two or more classes or series of stock are entitled
to vote on any matter as separate classes or series, then in the case of each
such class or series a quorum for that matter shall consist of a majority in
interest of all stock of that class or series issued and outstanding; and except
when a larger quorum is required by law, by the Articles of Organization or by
these By-Laws./14/ Stock owned directly or indirectly by the corporation, if
any, shall not be deemed outstanding for this purpose. Any meeting may be
adjourned from time to time by a majority of the votes properly cast upon the
question, whether or not a quorum is present, and the meeting may be held as
adjourned without further notice.
Section 6. Action by Vote.
- ---------- ---------------
When a quorum is present at any meeting, a plurality of the votes properly
cast for election to any office shall elect to such office, and a majority of
the vote properly cast upon any question other than an election to an office
shall decide the question, except when a larger vote is required by law, by the
Articles of Organization or by these By-Laws./15/ No ballot shall be required
for any election
- ------------------------------
/12/ Chapter 156B, Section 37
/13/ Chapter 156B, Section 39
/14/ Chapter 156B, Section 39
/15/ Chapter 156B, Section 8(a)
<PAGE>
-5-
unless requested by a stockholder present or represented at the meeting and
entitled to vote in the election./16/
Section 7. Voting.
- ---------- -------
Stockholders entitled to vote shall have one vote for each share of stock
entitled to vote held by them of record according to the records of the
corporation and a proportionate vote for a fractional share, unless otherwise
provided by the Articles of Organization./17/ The corporation shall not,
directly or indirectly, vote any share of its own stock./18/
Section 8. Action by Consent./19/
- ---------- ----------------------
Any action required or permitted to be taken at any meeting of the
stockholders may be taken without a meeting if all stockholders entitled to vote
on the matter consent to the action in writing and the written consents are
filed with the records of the meetings of stockholders. Such consents shall be
treated for all purposes as a vote at a meeting.
Section 9. Proxies./20/
- ---------- ------------
Stockholders entitled to vote may vote either in person or by proxy in
writing dated not more than six months before the meeting named therein, which
proxies shall be filed with the clerk or other person responsible to record the
proceedings of the meeting before being voted. Unless otherwise specifically
limited by their terms, such proxies shall entitle the holders thereof to vote
at any adjournment of such meeting but shall not be valid after the final
adjournment of such meeting. A
- ------------------------------
/16/ Chapter 156B, Sections 47 and 48
/17/ Chapter 156B, Section 41
/18/ Chapter 156B, Section 40
/19/ Chapter 156B, Section 43
/20/ Chapter 156B, Section 41
<PAGE>
-6-
proxy with respect to stock held in the name of two or more persons shall be
valid if executed by any one of them unless at or prior to exercise of the proxy
the corporation receives a specific written notice to the contrary from any one
of them. A proxy purporting to be executed by or on behalf of a stockholder
shall be deemed valid unless challenged at or prior to its exercise and the
burden of proving invalidity shall rest on the challenger.
ARTICLE IV
----------
Directors
---------
Section 1. Powers.
- ---------- -------
The business of the corporation shall be managed by a Board of Directors
who shall have and may exercise all the powers of the corporation except as
otherwise reserved to the stockholders by law, by the Articles of Organization
or by these By-Laws./21/ In the event of a vacancy in the Board of Directors,
the remaining Directors, except as otherwise provided by law, may exercise the
powers of the full Board until the vacancy is filled.
Section 2. Enumeration, Election and Term of Office.
- ---------- -----------------------------------------
The Board of Directors shall consist of not less than three Directors,
except that whenever there shall be only two stockholders the number of
Directors shall be not less than two, and whenever there shall be only one
stockholder the number of Directors shall be not less than one./22/ The number
of the Directors shall be as determined from time to time by the stockholders
and may be enlarged by vote of a majority of the Directors then in office./23/
The Directors shall be chosen at the annual
- ------------------------------
/21/ Chapter 156B, Sections 47 and 54
/22/ Chapter 156B, Section 47
/23/ Chapter 156B, Section 47
<PAGE>
-7-
meeting of the stockholders by such stock-holders as have the right to vote
thereon,/24/ and each shall hold office until the next annual election of
Directors and until his successor is chosen and qualified/25/ or until he sooner
dies, resigns, is removed or becomes disqualified. No Director need be a
stockholder./26/
Section 3. Regular Meetings.
- ---------- -----------------
Regular meetings of the Board of Directors may be held at such times and
places within or without the Commonwealth of Massachusetts as the Board of
Directors may fix from time to time and, when so fixed, no notice thereof need
be given, provided that any Director who is absent when such times and places
are fixed shall be given notice of the fixing of such times and places./27/ The
first meeting of the Board of Directors following the annual meeting of the
stockholders may be held without notice immediately after and at the same place
as the annual meeting of the stockholders or the special meeting held in lieu
thereof./28/ If in any year a meeting of the Board of Directors is not held at
such time and place, any action to be taken may be taken at any later meeting of
the Board of Directors with the same force and effect as if held or transacted
at such meeting.
Section 4. Special Meetings.
- ---------- -----------------
Special meetings of the Directors may be held at any time and at any place
designated in the call of the meeting, when called by the President or the
Treasurer or by two or more Directors, reasonable notice thereof being given to
each Director/29/ by the Secretary or an Assistant Secretary,
- ------------------------------
/24/ Chapter 156B, Section 47
/25/ Chapter 156B, Section 50
/26/ Chapter 156B, Section 57
/27/ Chapter 156B, Section 56
/28/ Chapter 156B, Section 56
/29/ Chapter 156B, Section 56
<PAGE>
-8-
or, if there be none by the Clerk or an Assistant Clerk, or by the officer or
one of the Directors calling the meeting.
Section 5. Notice./30/
- ---------- -----------
It shall be reasonable and sufficient notice to a Director to send notice
by mail at least forty-eight hours or by telegram at least twenty-four hours
before the meeting addressed to him at his usual or last known business or
residence address or to give notice to him in person or by telephone at least
twenty-four hours before the meeting. Notice of a meeting need not be given to
any Director if a written waiver of notice, executed by him before or after the
meeting, is filed with the records of the meeting, or to any Director who
attends the meeting without protesting prior thereto or at its commencement the
lack of notice to him. Neither notice of a meeting nor a waiver of a notice
need specify the purposes of the meeting.
Section 6. Quorum./31/
- ---------- -----------
At any meeting of the Directors, a quorum for any election or for the
consideration of any question shall consist of a majority of the Directors then
in office. Whether or not a quorum is present any meeting may be adjourned from
time to time by a majority of the votes properly cast upon the question, and the
meeting may be held as adjourned without further notice. When a quorum is
present at any meeting, the votes of a majority of the Directors present shall
be requisite and sufficient for election to any office and shall decide any
question brought before such meeting, except in any case where a larger vote is
required by law, by the Articles of Organization or by these By-Laws.
- ------------------------------
/30/ Chapter 156B, Section 58
/31/ Chapter 156B, Section 57
<PAGE>
-9-
Section 7. Action by Consent./32/
- ---------- ------------------
Any action required or permitted to be taken at any meeting of the
Directors may be taken without a meeting if all the Directors consent to the
action in writing and the written consents are filed with the records of the
meetings of the Directors. Such consent shall be treated for all purposes as a
vote of the Directors at a meeting.
Section 8. Committees./33/
- ---------- -----------
The Board of Directors, by vote of a majority of the Directors then in
office, may elect from its number an Executive Committee or other committees and
may delegate thereto some or all of its powers except those which by law, by the
Articles of Organization, or by these By-Laws may not be delegated. Except as
the Board of Directors may otherwise determine, any such committee may make
rules for the conduct of its business, but unless otherwise provided by the
Board of Directors or in such rules, its business shall be conducted so far as
possible in the same manner as is provided by these By-Laws for the Board of
Directors. All members of such committees shall hold such offices at the
pleasure of the Board of Directors. The Board of Directors may abolish any such
committee at any time. Any committee to which the Board of Directors delegates
any of its powers or duties shall keep records of its meetings and shall upon
request report its action to the Board of Directors. The Board of Directors
shall have power to rescind any action of any committee, but no such rescission
shall have retroactive effect.
- ------------------------------
/32/ Chapter 156B, Section 59
/33/ Chapter 156B, Section 55
<PAGE>
-10-
Section 9. Meeting by Telecommunications./34/
- ---------- ------------------------------
Members of the board of directors or any committee elected thereby may
participate in a meeting of such board or committee by means of a conference
telephone or similar communications equipment by means of which all persons
participating in a meeting can hear each other at the same time and
participation by such means shall constitute presence in person at the meeting.
ARTICLE V
---------
Officers and Agents
-------------------
Section 1. Enumeration; Qualification.
- ---------- ---------------------------
The officers of the corporation shall be a President, a Treasurer, a Clerk,
and such other officers, if any, as the incorporators at their initial meeting,
or the Directors from time to time, may in their discretion elect or
appoint./35/ The corporation may also have such agents, if any, as the
incorporators at their initial meeting, or the Directors from time to time, may
in their discretion appoint./36/ Any officer may be but none need be a Director
or Stockholder./37/ The Clerk shall be a resident of Massachusetts unless the
corporation has a resident agent appointed for the purpose of service of
process./38/ Any two or more offices may be held by the same person. Any officer
may be required by the Directors to give bond for the faithful performance of
his duties to the corporation in such amount and with such sureties as the
Directors may determine./39/ The premiums for such bonds may be paid by the
corporation.
- ------------------------------
/34/ Chapter 156B, Section 59
/35/ Chapter 156B, Section 48
/36/ Chapter 156B, Section 49
/37/ Chapter 156B, Section 48
/38/ Chapter 156B, Section 48
/39/ Chapter 156B, Section 48
<PAGE>
-11-
Section 2. Powers.
- ----------
Subject to law, to the Articles of Organization and to the other provisions
of these By-Laws, each officer shall have, in addition to the duties and powers
herein set forth, such duties and powers as are commonly incident to his office
and such duties and powers as the Directors may from time to time designate.
Section 3. Election./40/
- ---------- --------
The President, the Treasurer and the Clerk shall be elected annually by the
Directors at their first meeting following the annual meeting of the
stockholders. Other officers, if any, may be elected or appointed by the Board
of Directors at said meeting or at any other time.
Section 4. Tenure.
- ---------- -------
Except as otherwise provided by law or by the Articles of Organization or
by these By-Laws, the President, the Treasurer and the Clerk shall hold office
until the first meeting of the Directors following the next annual meeting of
the stockholders and until their respective successors are chosen and
qualified,/41/ and each other officer shall hold office until the first meeting
of the Directors following the next annual meeting of the stockholders and until
their respective successors are chosen and qualified, unless a different period
shall have been specified by the terms of his election or appointment, or in
each case until he sooner dies, resigns, is removed or becomes disqualified.
Each agent shall retain his authority at the pleasure of the Directors.
- ------------------------------
/40/ Chapter 156B, Section 48
/41/ Chapter 156B, Section 50
<PAGE>
-12-
Section 5. President and Vice Presidents.
- ---------- ------------------------------
The President shall be the chief executive officer of the corporation and
shall, subject to the direction of the Board of Directors, have general
supervision and control of its business. Unless otherwise provided by the Board
of Directors he shall preside, when present, at all meetings of stockholders and
of the Board of Directors.
Any Vice President shall have such powers and shall perform such duties as
the Board of Directors may from time to time designate.
Section 6. Treasurer and Assistant Treasurers.
- ---------- -----------------------------------
The Treasurer shall, subject to the direction of the Board of Directors,
have general charge of the financial affairs of the corporation and shall cause
to be kept accurate books of account. He shall have custody of all funds,
securities, and valuable documents of the corporation, except as the Board of
Directors may otherwise provide.
Any Assistant Treasurer shall have such powers and perform such duties as
the Board of Directors may from time to time designate.
Section 7. Clerk and Assistant Clerks./42/
- ---------- ---------------------------
The Clerk shall keep a record of the meetings of stockholders. In the
event there is no Secretary or he is absent, the Clerk or an Assistant Clerk
shall keep a record of the meetings of the Board of Directors. In the absence
of the Clerk from any meeting of stockholders, an Assistant Clerk if one be
elected, otherwise a Temporary Clerk designated by the person presiding at the
meeting, shall perform the duties of the Clerk.
- -----------------------------
/42/ Chapter 156B, Section 48
<PAGE>
-13-
Section 8. Secretary.
- ---------- ----------
The Secretary, if one be elected or appointed, shall keep a record of the
meetings of the Board of Directors. In the absence of the Secretary, the Clerk
and any Assistant Clerk, a Temporary Secretary shall be designated by the person
presiding at such meeting to perform the duties of the Secretary.
ARTICLE VI
----------
Resignations, Removals and Vacancies
------------------------------------
Section 1. Resignations.
- ---------- -------------
Any Director or officer may resign at any time by delivering his
resignation in writing to the President or the Clerk or to a meeting of the
Directors. Such resignation shall take effect at such time as is specified
therein, or if no such time is so specified then upon delivery thereof.
Section 2. Removals./43/
- ---------- ---------
Directors, including Directors elected by the Directors to fill vacancies
in the Board, may be removed with or without assignment of cause by vote of the
holders of the majority of the shares entitled to vote in the election of
Directors, provided that the Directors of a class elected by a particular class
of stockholders may be removed only by the vote of the holders of a majority of
the shares of the particular class of stockholders entitled to vote for the
election of such Directors.
The Directors may by vote of a majority of the Directors then in office
remove any Director for cause.
- ------------------------------
/43/ Chapter 156B, Section 51
<PAGE>
-14-
The Directors may remove any officer from office with or without assignment
of cause by vote of a majority of the Directors then in office.
If cause is assigned for removal of any Director or officer, such Director
or officer may be removed only after a reasonable notice and opportunity to be
heard before the body proposing to remove him.
The Directors may terminate or modify the authority of any agent or
employee.
Except as the Directors may otherwise determine, no Director or officer who
resigns or is removed shall have any right to any compensation as such Director
or officer for any period following his resignation or removal, or any right to
damages on account of such removal whether his compensation be by the month or
by the year or otherwise, provided, however, that the foregoing provision shall
not prevent such Director or officer from obtaining damages for breach of any
contract of employment legally binding upon the corporation.
Section 3. Vacancies./44/
- ---------- ----------
Any vacancy in the Board of Directors, including a vacancy resulting from
an enlargement of the Board, may be filled by vote of a majority of the
Directors then in office or, in the absence of such election by the Directors,
by the stockholders at a meeting called for the purpose; provided, however, that
any vacancy resulting from Action by the stockholder may be filled by the
stockholders at the same meeting at which such action was taken by them.
- ------------------------------
/44/ Chapter 156B, Section 52
<PAGE>
-15-
If the office of any officer becomes vacant, the Directors may elect or
appoint a successor by vote of a majority of the Directors present at the
meeting at which such election or appointment is made.
Each such successor shall hold office for the unexpired term of his
predecessor and until his successor shall be elected or appointed and qualified,
or until he sooner dies, resigns, is removed or becomes disqualified.
ARTICLE VII
-----------
Indemnification of Directors and Others/45/
---------------------------------------
The corporation shall, to the extent legally permissible, indemnify any
person serving or who has served as a Director or officer of the corporation, or
at its request as a Director, Trustee, Officer, Employee or other Agent of any
organization in which the corporation owns shares or of which it is a creditor
against all liabilities and expenses, including amounts paid in satisfaction of
judgments, in compromise or as fines and penalties, and counsel fees, reasonably
incurred by him in connection with the defense or disposition of any action,
suit or other proceeding, whether civil or criminal, in which he may be involved
or with which he may be threatened, while serving or thereafter, by reason of
his being or having been such a Director, Officer, Trustee, Employee or Agent,
except with respect to any matter as to which he shall have been adjudicated in
any proceeding not to have acted in good faith in the reasonable belief that his
action was in the best interests of the corporation; provided, however, that as
to any matter disposed of by a compromise payment by such Director, Officer,
- ------------------------------
/45/ Chapter 156B, Sections 9(d) and 67
<PAGE>
-16-
Trustee, Employee or Agent, pursuant to a consent decree or otherwise,
no indemnification either for said payment or for any other expenses shall be
provided unless;
(a) such compromise shall be approved as in the in the best interests
of the corporation, after notice that it involves such indemnification:
(i) by a disinterested majority of the directors then in office;
or
(ii) by the holders of a majority of the outstanding stock at the
time entitled to vote for Directors, voting as a single class,
exclusive of any stock owned by any interested Director or officer; or
(b) in the absence of action by disinterested directors or
stockholders, there has been obtained at the request of a majority of the
Directors then in office an opinion in writing of independent legal counsel
to the effect that such Director or officer appears to have acted in good
faith in the reasonable belief that his action was in the best interests of
the corporation.
Expenses including counsel fees, reasonably incurred by any such Director,
Officer, Trustee, Employee or Agent in connection with the defense or
disposition of any such action, suit or other proceeding may be paid from time
to time by the corporation in advance of the final disposition thereof upon
receipt of an undertaking by such individual to repay the amounts so paid to the
corporation if it is ultimately determined that indemnification for such
expenses is not authorized under this section. The right of indemnification
hereby provided shall not be exclusive of or affect any other rights to which
any such Director, Officer, Trustee, Employee or Agent may be entitled. Nothing
contained in this Article shall affect any rights to indemnification to which
corporate personnel other than such Directors, Officers, Trustees, Employees or
Agents may be entitled by contract or otherwise under law. As used in this
Article the terms "Director", "Officer", "Trustee",
<PAGE>
-17-
"Employee" and "Agent" include their respective heirs, executors and
administrators, and an "interested" Director, Officer, Trustee, Employee or
Agent is one against whom in such capacity the proceedings in question or other
proceedings on the same or similar grounds is then pending.
ARTICLE VIII
------------
Stock
-----
Section 1. Stock Authorized./46/
- ---------- -----------------
The total number of shares and the par value, if any, of each class of
stock which the corporation is authorized to issue, and if more than one class
is authorized, a description of each class with the preferences, voting powers,
qualifications and special and relative rights and privileges as to each class
and any series thereof, shall be as stated in the Articles of Organization.
Section 2. Issue of Authorized Unissued Capital Stock./47/
- ---------- -------------------------------------------
Any unissued capital stock from time to time authorized under the Articles
of Organization may be issued by vote of the Directors. No such stock shall be
issued unless the cash, so far as due, or the property, services or expenses for
which it was authorized to be issued, has been actually received or incurred by,
or conveyed or rendered to, the corporation, or is in its possession as surplus.
Section 3. Certificates of Stock./48/
- ---------- ----------------------
Each stockholder shall be entitled to a certificate in form selected by the
Board of Directors stating the number and the class and the designation of the
series, if any, of the shares held by him.
- ------------------------------
/46/ Chapter 156B, Section 13(a)(4) and 13(a)(5)
/47/ Chapter 156B, Section 21
/48/ Chapter 156B, Section 27
<PAGE>
-18-
Such certificate shall be signed by the President or a Vice President and
the Treasurer or an Assistant Treasurer. Such signatures may be facsimiles if
the certificate is signed by a transfer agent, or by a registrar, other than a
Director, officer or employee of the corporation.
Every certificate for shares of stock subject to any restriction on
transfer pursuant to the Articles of Organization, these By-Laws, or any
agreement to which the corporation is a party shall have the restriction noted
conspicuously on the certificate and shall also set forth on the face or back
either the full text of the restriction or a statement of the existence of such
restriction and a statement that the corporation will furnish a copy to the
holder of such certificate upon written request and without charge. Every
certificate issued when the corporation is authorized to issue more than one
class or series of stock shall set forth on its face or back either the full
text or the preferences, voting powers, qualifications and special and relative
rights of the shares of each class and series authorized to be issued or a
statement of the existence of such preferences, powers, qualifications and
rights, and a statement that the corporation will furnish a copy thereof to the
holder of such certificate upon written request and without charge.
Section 4. Transfers.
- ---------- ----------
Subject to the restrictions, if any, imposed by the Articles of
Organization, these By-Laws or any agreement to which the corporation is a
party, shares of stock shall be transferred on the books of the corporation only
by the surrender to the corporation or its transfer agent of the certificate
representing such shares properly endorsed or accompanied by a written
assignment of such shares or by a written power of attorney to sell, assign, or
transfer such shares, properly executed, with necessary transfer stamps affixed,
and with such proof that the endorsement, assignment or power of attorney is
genuine and effective as the corporation or its transfer agent may reasonably
require. Except as may be otherwise required by law, the corporation shall be
entitled to treat the record
<PAGE>
-19-
holder of stock as shown on its books as the owner of such stock for all
purposes, including the payment of dividends and the right to vote with respect
thereto, regardless of any transfer, pledge or other disposition of such stock,
until the shares have been transferred on the books of the corporation in
accordance with the requirements of these By-Laws. It shall be the duty of each
stockholder to notify the corporation of his post office address.
Section 5. Lost, Mutilated, or Destroyed Certificates./49/
- ---------- -------------------------------------------
Except as otherwise provided by law, the Board of Directors may determine
the conditions upon which a new certificate of stock may be issued in place of
any certificate alleged to have been lost, mutilated or destroyed. It may, in
its discretion, require the owner of a lost, mutilated or destroyed certificate,
or his legal representative, to give a bond, sufficient in its opinion, with or
without surety, to indemnify the corporation against any loss or claim which may
arise by reason of the issue of a certificate in place of such lost, mutilated
or destroyed stock certificate.
Section 6. Transfer Agent and Registrar.
- ---------- -----------------------------
The Board of Directors may appoint a transfer agent or a registrar or both
for its capital stock or any class or series thereof and require all
certificates for such stock to bear the signature or facsimile thereof of any
such transfer agent or registrar.
Section 7. Setting Record Date and Closing Transfer Records./50/
- ---------- -------------------------------------------------
The Board of Directors may fix in advance a time not more than sixty days
before (i) the date of any meeting of the stockholders or (ii) the date for the
payment of any dividend or the making of
any distribution to stockholders or (iii) the last day on which the consent or
dissent of stockholders
- ------------------------------
/49/ Chapter 156B, Section 29
/50/ Chapter 156B, Section 42
<PAGE>
-20-
may be effectively expressed for any purpose, as the record date for determining
the stockholders having the right to notice and to vote at such meeting, or the
right to receive such dividend or distribution, or the right to give such
consent or dissent. If a record date is set, only stockholders of record on the
date shall have such right notwithstanding any transfer of stock on the records
of the corporation after the record date. Without fixing such record date, the
Board of Directors may close the transfer record of the corporation for all or
any part of such sixty-day period.
If no record date is fixed and the transfer books are not closed, then the
record date for determining stockholders having the right to notice of or to
vote at a meeting of stockholders shall be at the close of business on the day
next preceding the day on which notice is given, and the record date for
determining stockholders for any other purpose shall be at the close of business
on the day on which the Board of Directors acts with respect thereto.
ARTICLE IX
----------
Miscellaneous Provisions
------------------------
Section 1. Execution of Papers
- ---------- -------------------
All deeds, leases, transfers, contracts, bonds, notes, releases, checks,
drafts and other obligations authorized to be executed on behalf of the
corporation shall be signed by the President or the Treasurer except as the
Directors may generally or in particular cases otherwise determine.
Section 2. Voting of Securities.
- ---------- ---------------------
Except as the Directors may generally or in particular cases otherwise
specify, the President or the Treasurer may on behalf of the corporation vote or
take any other action with respect to shares of stock or beneficial interest of
any other corporation, or of any association, trust or firm, of which any
securities are held by this corporation, and may appoint any person or persons
to act as proxy or attorney-in-fact for the corporation, with or without power
of substitution, at any meeting thereof.
<PAGE>
-21-
Section 3. Corporate Seal.
- ---------- ---------------
The seal of the corporation shall be a circular die with the name of the
corporation, the word "Massachusetts" and the year of its incorporation cut or
engraved thereon, or shall be in such other form as the Board of Directors may
from time to time determine.
Section 4. Corporate Records./51/
- ---------- ------------------
The original, or attested copies, of the Articles of Organization, By-Laws
and records of all meetings of the incorporators and stockholders, and the stock
and transfer records, which shall contain the names of all stockholders and the
record address and the amount of stock held by each, shall be kept in
Massachusetts at the principal office of the corporation, or at an office of its
transfer agent or of its Clerk or of its Resident Agent. Said copies and
records need not all be kept in the same office. They shall be available at all
reasonable times to the inspection of any stockholder for any proper purpose but
not to secure a list of stockholders for the purpose of selling said list or
copies thereof or of using the same for a purpose other than in the interest of
the applicant, as a stockholder, relative to the affairs of the corporation.
Section 5. Evidence of Authority.
- ---------- ----------------------
A certificate by the Clerk or Secretary or an Assistant or Temporary Clerk
or Secretary as to any matter relative to the Articles of Organization, By-Laws,
records of the proceedings of the incorporators, stockholders, Board of
Directors, or any committee of the Board of Directors, or stock
and transfer records or as to any action taken by any person or persons as an
officer or agent of
- ------------------------------
/51/ Chapter 156B, Section 32
<PAGE>
-22-
the corporation, shall as to all persons who rely thereon in good faith be
conclusive evidence of the matters so certified.
ARTICLE X
---------
Amendments
----------
These By-Laws may be amended or repealed in whole or in part by the
affirmative vote of the holders of a majority of the shares of each class of the
capital stock at the time outstanding and entitled to vote at any annual or
special meeting of stockholders, provided that notice of the substance of the
proposed amendment is stated in the notice of such meeting./52/ If authorized by
the Articles of Organization,/53/ the Directors may make, amend or repeal the
By-Laws, in whole or in part, except with respect to any provision thereof wich
by law, the Articles of Organization or the By-Laws requires action by the
stockholders./54/ Not later than the time of giving notice of the meeting of
stockholders next following the making, amending or repealing by the Directors
of any By-Law, notice thereof stating the substance of such change shall be
given to all stockholders entitled to vote on amending the By-Laws./55/ No
change in the date fixed in these By-Laws for the annual meeting of stockholders
may be made within sixty days before the date fixed in these By-Laws, and in
case of any change in such date, notice thereof shall be given to each
stockholder in person or by letter mailed to his last known post office address
at least twenty days before the new date fixed for such meeting./56/
- ------------------------------
/52/ Chapter 156B, Section 17
/53/ Articles of Organization, Article 6(a)
/54/ Chapter 156B, Section 17
/55/ Chapter 156B, Section 17
/56/ Chapter 156B, Section 38
<PAGE>
-23-
Any By-Law adopted, amended or repealed by the Directors may be repealed,
amended or reinstated by the stockholders entitled to vote on amending the By-
Laws./57/
- ------------------------------
/57/ Chapter 156B, Section 17
<PAGE>
EXHIBIT 3.22.01
ENDORSED
FILED
In the office of the
Secretary of State
and the State of California
NOV 8 1982
MARCH FONG EU, Secretary of State
Gloria J. Carroll
ARTICLES OF INCORPORATION
OF
NEW INSPIRATION BROADCASTING COMPANY, INC.
------------------------------------------
ONE: The name of this corporation is NEW INSPIRATION BROADCASTING
COMPANY, INC.
TWO: The purpose of this corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of California other than the banking business, the trust company business or
the practice of a profession permitted to be incorporated by the California
Corporations Code.
THREE: The name and address in this state of the corporation's initial
agent for service of process is Robert W. Schroeder, Esq., 500 Esplanade Drive,
Fifth Floor, Oxnard, California 93030.
FOUR: The total number or shares which the corporation is
authorized to issue is five hundred thousand (500,000).
Dated: October 29, 1982
/s/ Robert W. Schroeder
-----------------------------
Robert W. Schroeder
Incorporator
I declare that I am the person who executed the above Articles of
Incorporation, and such instrument is my act and deed.
/s/ Robert W. Schroeder
------------------------------
Robert W. Schroeder
Incorporator
<PAGE>
EXHIBIT 3.22.02
ENDORSED
FILED
In the office of the
Secretary of State
and the State of California
OCT 25 1977
MARCH FONG EU,
Secretary of State
By IRENE SANCHEZ
Deputy
ARTICLES OF INCORPORATION
OF
INSPIRATIONAL MEDIA OF SOUTHERN CALIFORNIA, INC.
------------------------------------------------
1. The name of this Corporation is Inspirational Media of Southern
California, Inc.
2. The purpose of this Corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General
Corporation Law of California other than the banking business, the trust
company business or the practice of a profession permitted to be
incorporated by the California Corporations Code.
3. The name and address in this State of California of this
Corporation's initial agent for service of process is: Clinton Morey, 1717
Broad View Drive, Glendale, California 91208.
4. This Corporation is authorized to issue only one class of shares
of stock; and the total number of shares which this Corporation is
authorized to issue is one hundred thousand (100,000).
Dated: October 20, 1977
/s/ Nancy A. Epperson
---------------------------------
NANCY A. EPPERSON
I declare that I am the person who executed the foregoing Articles of
Incorporation, which execution is my act and deed.
/s/ Nancy A. Epperson
---------------------------------
NANCY A. EPPERSON
<PAGE>
Articles of Incorporation,
Inspirational Media of Southern
California, Inc.
Page Two
STATE OF NORTH CAROLINA )
) ss.
COUNTY OF _____________ )
On _________________________, 1977 before me, the undersigned, a Notary
Public in and for said State, personally appeared NANCY A. EPPERSON, known to me
to be the person whose name is subscribed to the within instrument and she
acknowledged that she executed the same.
WITNESS my hand and official seal.
---------------------------------
Notary Public
Notary Public Official Seal
My Commission Expires
____________________
North Carolina
2
<PAGE>
EXHIBIT 3.22.03
ENDORSED
FILED
In the office of the Secretary of State
and the State of California
MAR 10 1986
MARCH FONG EU, Secretary of State
By BILL HOLDEN
Deputy
CERTIFICATE OF OWNERSHIP
OF
INSPIRATIONAL MEDIA OF SOUTHERN CALIFORNIA, INC.
------------------------------------------------
Edward G. Atsinger III and Eric H. Halvorson certify that:
1. They are the president and secretary, respectively, of Inspirational
Media of Southern California, Inc., a California corporation.
2. Inspirational Media of Southern California, Inc., a California
corporation, is the parent corporation of New Inspiration Broadcasting Company,
Inc., a California corporation. The parent corporation owns one hundred percent
(100%) of the stock of the subsidiary corporation.
3. On December 26, 1985, the Board of Directors of this corporation
adopted the following resolutions:
RESOLVED, that New Inspiration Broadcasting Company, Inc., a
California corporation, and a wholly owned subsidiary of this
corporation be merged with and into this corporation;
RESOLVED FURTHER, that this corporation agrees to assume all the
obligations and liabilities of New Inspiration Broadcasting Company,
Inc.;
RESOLVED FURTHER, that the president and secretary of this
corporation are authorized and directed to execute, verify and file a
Certificate of Ownership, a Corporate Assumption of Tax Liability, and
to take all other actions they consider necessary and proper to
consummate the merger; and
-1-
<PAGE>
RESOLVED FURTHER, that the Articles of Incorporation shall be
amended by revising Article I to read as follows:
"1. The name of this corporation is New Inspiration
Broadcasting Company, Inc."
/s/ Edward G. Atsinger III
--------------------------------------------
EDWARD G. ATSINGER III
President
/s/ Eric H. Halvorson
--------------------------------------------
ERIC H. HALVORSON
Secretary
Each of the undersigned declares under penalty of perjury that the
statements in the above Certificate are true of his own knowledge and that this
Declaration was executed on January 20, 1986, at Camarillo, California.
/s/ Edward G. Atsinger III
--------------------------------------------
EDWARD G. ATSINGER III
President
/s/ Eric H. Halvorson
-------------------------------------------
ERIC H. HALVORSON
Secretary
-2-
<PAGE>
EXHIBIT 3.23
BYLAWS OF
INSPIRATIONAL MEDIA OF SOUTHERN CALIFORNIA, INC.
A CALIFORNIA CORPORATION
------------------------
ARTICLE I
SHAREHOLDERS' MEETING
---------------------
Section 1. PLACE OF MEETINGS.
- ---------
Meetings of shareholders shall be held at any place within or outside the
State of California designated by the Board of Directors. In the absence of any
such designation, shareholders' meetings shall be held in the principal
executive office of the corporation.
Section 2. ANNUAL MEETINGS.
- ---------
The annual meeting of shareholders shall be held each year on a date and at
a time designated by the Board of Directors. The date so designated shall be
within five (5) months after the end of the fiscal year of the corporation, and
within fifteen (15) months after the last annual meeting. At each annual
meeting directors shall be elected, and any other proper business may be
transacted.
Section 3. SPECIAL MEETINGS.
- ---------
A special meeting of the shareholders may be called at any time by the
Board of Directors, or by the chairman of the Board, or by the president or by
one or more shareholders holding shares in the aggregate entitled to cast not
less than ten percent (10%) of the votes at that meeting.
If a special meeting is called by any person or persons other than the
Board of Directors, the request shall be in writing, specifying the time of such
meeting and the general nature of the business proposed to be transacted, and
shall be delivered personally or sent by registered mail or by telegraphic or
other facsimile transmission to the chairman of the Board, the president, any
vice-president or the secretary of the corporation. The officer receiving the
request shall cause notice to be promptly given to the shareholders entitled to
vote, in accordance with the provisions of Sections 4 and 5 of this Article I,
that a meeting will be held at the time requested by the person or persons
calling the meeting, not less than thirty-five (35) nor more than sixty (60)
days after the receipt of the request. If the notice is not given within twenty
(20) days after receipt of the request, the person or persons requesting the
meeting may give the notice. Nothing contained in this paragraph of this
Section 3 shall be construed as limiting, fixing or affecting the time when a
meeting of shareholders called by action of the Board of Directors may be held.
Section 4. NOTICE OF MEETINGS.
- ---------
All notices of meetings of shareholders shall be sent or otherwise given in
accordance with Section 5 of this Article I not less than ten (10) nor more than
sixty (60) days before the date of the meeting. The notice shall specify the
place, date and hour of the meeting and (a) in the case of
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a special meeting, the general nature of the business to be transacted or (b) in
the case of the annual meeting, those matters which the Board of Directors, at
the time of giving notice, intends to present for action by the shareholders.
The notice of any meeting at which directors are to be elected shall include the
name of any nominee or nominees whom, at the time of the notice, management
intends to present for election.
If action is proposed to be taken at any meeting for approval of (i) a
contract or transaction in which a director has a direct or indirect financial
interest, pursuant to Section 310 of the Corporations Code of California, (ii)
an amendment of the Articles of Incorporation, pursuant to Section 902 of that
Code, (iii) a reorganization of the corporation, pursuant to Section 1201 of
that Code, (iv) a voluntary dissolution of the corporation, pursuant to Section
1900 of that Code, or (v) a distribution in dissolution other than in accordance
with the rights of outstanding preferred shares, pursuant to Section 2007 of
that Code, the notice shall also state the general nature of that proposal.
Section 5. MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE.
- ---------
Notice of any meeting of shareholders shall be given either personally or
by first-class mail or telegraphic or other written communication, charges
prepaid, addressed to the shareholder at the address of that shareholder
appearing on the books of the corporation or given by the shareholder to the
corporation for the purpose of notice. If no such address appears on the
corporation's books or is given, notice shall be deemed to have been given if
sent to that shareholder by first-class mail or telegraphic or other written
communication to the corporation's principal executive office, or if published
at least once in a newspaper of general circulation, in the county where that
office is located. Notice shall be deemed to have been given at the time when
delivered personally or deposited in the mail or sent by telegram or other means
of written communication.
If any notice addressed to a shareholder at the address of that shareholder
appearing on the books of the corporation is returned to the corporation by the
United States Postal Service marked to indicate that the United States Postal
Service is unable to deliver the notice to the shareholder at that address, all
future notices or reports shall be deemed to have been duly given without
further mailing if these shall be available to the shareholder on written demand
of the shareholder at the principal executive office of the corporation for a
period of one (1) year from the date of the giving of the notice.
An affidavit of the mailing or other means of giving any notice of any
shareholders' meetings shall be executed by the secretary, assistant secretary
or any transfer agent of the corporation giving the notice, and shall be filed
and maintained in the minute book of the corporation.
Section 6. QUORUM.
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The presence in person or by proxy of the holders of a majority of the
shares entitled to vote at any meeting of shareholders shall constitute a quorum
for the transaction of business. The shareholders present at a duly called or
held meeting at which a quorum is present may continue
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to do business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum, if any action taken (other than
adjournment) is approved by at least a majority of the shares required to
constitute a quorum.
Section 7. ADJOURNED MEETING; NOTICE.
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Any shareholders' meeting, annual or special, whether or not a quorum is
present, may be adjourned from time to time by the vote of the majority of the
shares represented at that meeting, either in person or by proxy, but in the
absence of a quorum, no other business may be transacted at that meeting, except
as provided in Section 6 of this Article I.
When any meeting of shareholders, either annual or special, is adjourned to
another time or place, notice need not be given of the adjourned meeting if the
time and place are announced at a meeting at which the adjournment is taken
unless a new record date for the adjourned meeting is fixed, or unless the
adjournment is for more than forty-five (45) days from the date set for the
original meeting, in which case the Board of Directors shall set a new record
date. Notice of any such adjourned meeting shall be given to each shareholder
of record entitled to vote at the adjourned meeting in accordance with the
provisions of Sections 4 and 5 of this Article I. At any adjourned meeting the
corporation may transact any business which might have been transacted at the
original meeting.
Section 8. VOTING RIGHTS; CUMULATIVE VOTING.
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The shareholders entitled to vote at any meeting of shareholders shall be
determined in accordance with the provisions of Section 11 of this Article I,
subject to the provisions of Sections 702 through 704, inclusive, of the
Corporations Code of California (relating to voting shares held by a fiduciary,
in the name of a corporation, or in joint ownership). The shareholders' vote
may be by voice vote or by ballot; provided, however, that any election for
directors must be by ballot if demanded by any shareholder before the voting has
begun. On any matter other than elections of directors, any shareholder may
vote part of the shares in favor of the proposal and refrain from voting the
remaining shares or vote them against the proposal, but, if the shareholder
fails to specify the number of shares which the shareholder is voting
affirmatively, it will be conclusively presumed that the shareholder's approving
vote is with respect to all shares that the shareholder is entitled to vote. If
a quorum is present, the affirmative vote of the majority of the shares
represented at the meeting and entitled to vote on any matter (other than the
election of directors) shall be the act of the shareholders, unless a vote of a
greater number or voting by classes is required by the California General
Corporation Law or by the Articles of Incorporation.
At a shareholders' meeting at which directors are to be elected, no
shareholder shall be entitled to accumulate votes (i.e., to cast for any one or
----
more candidates a number of votes greater than the number of the shareholder's
shares) unless the candidates' names have been placed in nomination prior to
commencement of the voting and a shareholder has given notice prior to
commencement of the voting of the shareholder's intention to cumulate votes. If
any shareholder has given such a notice, then every shareholder entitled to vote
may cumulate votes for candidates in nomination and give one candidate a number
of votes equal to the number of directors to be elected multiplied by the number
of votes to which that shareholder's shares are entitled, or
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distribute the shareholder's votes on the same principle among any or all of the
candidates, as the shareholder thinks fit. The candidates receiving the highest
number of votes, up to the number of directors to be elected, shall be elected.
Section 9. WAIVER OF NOTICE OR CONSENT BY ABSENT SHAREHOLDERS.
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The transactions of any meeting of shareholders, either annual or special,
however called and noticed and wherever held, shall be as valid as though had at
a meeting duly held after regular call and notice, if a quorum be present either
in person or by proxy, and if, either before or after the meeting, each person
entitled to vote, who was not present in person or by proxy, signs a written
waiver of notice or a consent to a holding of the meeting or an approval of the
minutes. The waiver of notice or consent need not specify either the business
to be transacted or the purpose of any annual or special meeting of
shareholders, except that if action is taken or proposed to be taken for
approval of any of those matters specified in the second paragraph of Section 4
of this Article I, the waiver of notice or consent shall state the general
nature of the proposal. All such waivers, consents or approvals shall be filed
with the corporate records or made a part of the minutes of the meeting.
Attendance by a person at a meeting shall also constitute a waiver of
notice of that meeting, except when the person objects, at the beginning of the
meeting, to the transaction of any business because the meeting is not lawfully
called or convened and except that attendance at a meeting is not a waiver of
any right to object to the consideration of matters not included in the notice
of the meeting if that objection is expressly made at the meeting.
Section 10. SHAREHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING.
- ----------
Any action which may be taken at any annual or special meeting of
shareholders may be taken without a meeting and without prior notice, if a
consent in writing, setting forth the action so taken, is signed by the holders
of outstanding shares having not less than the minimum number of votes that
would be necessary to authorize or to take that action at a meeting at which all
shares entitled to vote on that action were present and voted. In the case of
election of directors, such consent shall be effective only if signed by the
holders of all outstanding shares entitled to vote for the election of
directors; provided, however, that a director may be elected at any time to fill
a vacancy on the Board of Directors that has not been filled by the directors,
by the written consent of the holders of a majority of the outstanding shares
entitled to vote for the election of directors. All such consents shall be
filed with the secretary of the corporation and shall be maintained in the
corporate records. Any shareholder giving a written consent, or the
shareholder's proxy holder, or a transferee of the shares or a personal
representative of the shareholder or his respective proxy holder, may revoke the
consent by a writing received by the secretary of the corporation before written
consents of the number of shares required to authorize the proposed action have
been filed with the secretary.
If the consents of all shareholders entitled to vote have not been
solicited in writing, and if the unanimous written consent of all such
shareholders shall not have been received, the secretary shall give prompt
notice of the corporate action approved by the shareholders without a meeting.
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This notice shall be given in the manner specified in Section 5 of this Article
I. In the case of approval of (a) contracts or transactions in which a director
has a direct or indirect financial interest, pursuant to Section 310 of the
Corporations Code of California, (b) indemnification of agents of the
corporation, pursuant to Section 317 of that Code, (c) a reorganization of the
corporation, pursuant to Section 1201 of that Code, and (d) a distribution in
dissolution other than in accordance with the rights of the outstanding
preferred shares, pursuant to Section 2007 of that Code, the notice shall be
given at least ten (10) days before the consummation of any action authorized by
that approval.
Section 11. RECORD DATE FOR SHAREHOLDERS NOTICE, VOTING AND GIVING CONSENTS.
- ----------
For purposes of determining the shareholders entitled to notice of any
meeting or to vote or entitled to give consent to corporate action without a
meeting, the Board of Directors may fix, in advance, a record date, which shall
be not more than sixty (60) days nor less than ten (10) days before the date of
any such meeting nor more than sixty (60) days before any such action without a
meeting, and in this event only shareholders of record on the date so fixed are
entitled to notice and to vote or to give consents, as the case may be,
notwithstanding the transfer of any shares on the books of the corporation after
the record date, except as otherwise provided in the California General
Corporation Law.
If the Board of Directors does not so fix a record date:
(a) The record date for determining shareholders entitled to
notice of or to vote at a meeting of shareholders shall be at the close of
business on the business day next preceding the day on which notice is given or,
if notice is waived, at the close of business on the business day next preceding
the day on which the meeting is held.
(b) The record date for determining shareholders entitled to give
consent to corporate action in writing without a meeting (i) when no prior
action by the Board has been taken, shall be the day on which the first written
consent is given, or (ii) when prior action of the Board has been taken, shall
be at the close of business on the day on which the Board adopts the resolution
relating to that action or the sixtieth (60th) day before the date of such other
action, whichever is later.
Section 12. PROXIES.
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Every person entitled to vote for directors or on any other matter shall
have the right to do so either in person or by one or more agents authorized by
a written proxy signed by the person and filed with the secretary of the
corporation. A proxy shall be deemed signed if the shareholder's name is placed
on the proxy (whether by manual signature, typewriting, telegraphic transmission
or otherwise) by the shareholder or the shareholder's attorney in fact. A
validly executed proxy which does not state that it is irrevocable shall
continue in full force and effect unless (a) revoked by the person executing it,
before the vote pursuant to that proxy by a writing delivered to the corporation
stating that the proxy is revoked, or by a subsequent proxy executed by, or
attendance at the meeting and voting in person by, the person executing the
proxy; or
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(b) written notice of the death or incapacity of the maker of that proxy is
received by the corporation before the vote pursuant to that proxy is counted;
provided, however, that no proxy shall be valid after the expiration of eleven
(11) months from the date of the proxy, unless otherwise provided in the proxy,
and, provided, further, that the proxy shall be valid only if executed in favor
of another shareholder of the corporation. The revocability of a proxy that
states on its face that it is irrevocable shall be governed by the provisions of
Sections 705(e) and 705(f) of the Corporations Code of California.
Section 13. INSPECTORS OF ELECTION.
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Before any meeting of shareholders, the Board of Directors may appoint any
persons other than nominees for office to act as inspectors of election at the
meeting or its adjournment. If no inspectors of election are so appointed, the
chairman of the meeting may, and on the request of any shareholder or a
shareholder's proxy shall, appoint inspectors of election at the meeting. The
number of inspectors shall be either one (1) or three (3). If inspectors are
appointed at the meeting on the request of one or more shareholders or proxies,
the holders of a majority of shares or their proxies present at the meeting
shall determine whether one (1) or three (3) inspectors are to be appointed. If
any person appointed as inspector fails to appear or fails or refuses to act,
the chairman of the meeting may, and upon the request of any shareholder or a
shareholder's proxy shall, appoint a person to fill that vacancy.
These inspectors shall:
(a) Determine the number of shares outstanding and the voting power of
each, the shares represented at the meeting, the existence of a quorum and the
authenticity, validity and effect of proxies;
(b) Receive votes, ballots or consents;
(c) Hear and determine all challenges and questions in any way arising
in connection with the right to vote;
(d) Count and tabulate all votes or consents;
(e) Determine when the polls shall close;
(f) Determine the result; and
(g) Do any other acts that may be proper to conduct the election or
vote with fairness to all shareholders.
Section 14. VOTING TRUSTS.
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If a voting trust agreement is filed in the office of the corporation, the
corporation shall take notice of its terms and the limitations this agreement
places on the authority of the trustee. The agreement shall be valid only if
voting power is vested in another shareholder of the corporation.
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ARTICLE II
DIRECTORS; MANAGEMENT
---------------------
Section 1. POWERS.
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Subject to the limitations of the Articles of Incorporation, of the Bylaws
and of the laws of the State of California as to action to be authorized or
approved by the shareholders, all corporate powers shall be exercised by or
under authority of, and the business and affairs of this corporation shall be
controlled by, a board of directors.
Section 2. NUMBER AND QUALIFICATION.
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The authorized number of directors shall be six (6) until changed by a duly
adopted amendment of the Articles of Incorporation or by an amendment to these
Bylaws adopted by the vote or written consent of holders of a majority of the
outstanding shares entitled to vote.
Section 3. ELECTION AND TENURE OF OFFICE.
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Directors shall be elected at each annual meeting of the shareholders to
hold office until the next annual meeting. Each director, including a director
elected to fill a vacancy, shall hold office until the expiration of the term
for which elected and until a successor has been elected and qualified.
Section 4. VACANCIES.
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Vacancies in the Board of Directors may be filled by a majority of the
remaining directors, though less than a quorum or by a sole remaining director,
except that a vacancy created by the removal of a director by the vote or
written consent of the shareholders or by court order may be filled only by the
vote of a majority of the shares entitled to vote represented at a duly held
meeting at which a quorum is present, or by the written consent of holders of a
majority of the outstanding shares entitled to vote. Each director so elected
shall hold office until the next annual meeting of the shareholders and until a
successor has been elected and qualified.
A vacancy or vacancies in the Board of Directors shall be deemed to exist
in the event of the death, disqualification, resignation, or removal of any
director, or if the Board of Directors by resolution declares vacant the office
of a director who has been declared of unsound mind by an order of court or
convicted of a felony, or if the authorized number of directors is increased or
if the shareholders fail, in any meeting of shareholders at which any director
or directors are elected, to elect the number of directors to be voted for at
that meeting.
The shareholders may elect a director or directors at any time to fill any
vacancy or vacancies not filled by the directors, but any such election by
written consent shall require the consent of a majority of the outstanding
shares entitled to vote.
Any director may resign effective on giving written notice to the chairman
of the board, the president, the secretary or the Board of Directors, unless the
notice specifies a later time for that resignation to become effective. If the
resignation of a director is effective at a future time,
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the Board of Directors may elect a successor to take office when the resignation
becomes effective.
No reduction of the authorized number of directors shall have the effect of
removing any director before that director's term of office expires.
Section 5. REMOVAL OF DIRECTORS.
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The entire Board of Directors or any individual director may be removed
from office as provided by Sections 302, 303 and 304 of the Corporations Code of
the State of California.
Section 6. PLACE OF MEETINGS AND MEETINGS BY TELEPHONE.
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Regular meetings of the Board of Directors may be held at any place within
or outside the State of California that has been designated from time to time by
resolution of the Board. In the absence of such designation, regular meetings
shall be held at the principal executive office of the corporation. Special
meetings of the board shall be held at any place within or outside the State of
California that has been designated in the notice of the meeting or, if not
stated in the notice or there is no notice, at the principal executive office of
the corporation. Any meeting, regular or special, may be held by conference
telephone or similar communication equipment, so long as all directors
participating in the meeting can hear one another, and all such directors shall
be deemed to be present in person at the meeting.
Section 7. ANNUAL MEETING.
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Immediately following each annual meeting of shareholders, the Board of
Directors shall hold a regular meeting for the purpose of organization, any
desired election of officers and the transaction of other business. Notice of
this meeting shall not be required.
Section 8. OTHER REGULAR MEETINGS.
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Other regular meetings of the Board of Directors shall be held without call
at such time as it shall from time to time be fixed by the Board of Directors.
Such regular meetings may be held without notice.
Section 9. SPECIAL MEETINGS - NOTICES.
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Special meetings of the Board of Directors for any purpose or purposes may
be called at any time by the chairman of the board or the president or any vice-
president or the secretary or any two directors.
Notice of the time and place of special meetings shall be delivered
personally or by telephone to each director, or sent by first-class mail or
telegram, charges prepaid, addressed to each director at that director's address
as it is shown on the records of the corporation. In case the notice is mailed,
it shall be deposited in the United States mail at least four (4) days before
the time of the holding of the meeting. In case the notice is delivered
personally or by telephone or telegram, it shall be delivered personally or by
telephone or to the telegraph company at least
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forty-eight (48) hours before the time of the holding of the meeting. Any oral
notice given personally or by telephone may be communicated either to the
director or to a person at the office of the director who the person giving the
notice has reason to believe will promptly communicate it to the director. The
notice need not specify the purpose of the meeting nor the place if the meeting
is to be held at the principal executive offices of the corporation.
Section 10. QUORUM.
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A majority of the authorized number of directors shall constitute a quorum
for the transaction of business, except to adjourn as provided in Section 13 of
this Article II, unless the authorized number of directors is two or less, in
which case all of the duly elected and acting directors shall constitute a
quorum for the transaction of business. Every act or decision done or made by a
majority of the directors present at a meeting duly held at which a quorum is
present shall be regarded as the act of the Board of Directors, subject to the
provisions of Section 310 of the Corporations Code of the State of California
(as to approval of contracts or transactions in which a director has a direct or
indirect material financial interest), Section 311 of that Code (as to
appointment of committees), and Section 317(e) of that Code (as to
indemnification of directors). A meeting at which a quorum is initially present
may continue to transact business notwithstanding the withdrawal of directors,
if any action taken is approved by at least a majority of the required quorum
for that meeting.
Section 11. WAIVER OF NOTICE.
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The transactions of any meeting of the Board of Directors, however called
and noticed and wherever held, shall be as valid as though had at a meeting duly
held after regular call and notice if a quorum is present and if, either before
or after the meeting, each of the directors not present signs a written waiver
of notice, a consent to holding the meeting or an approval of the minutes. The
waiver of notice or consent need not specify the purpose of the meeting. All
such waivers, consents and approval shall be filed with the corporate records or
made a part of the minutes of the meeting. Notice of a meeting shall also be
deemed given to any director who attends the meeting without protesting before
or at its commencement, the lack of notice to that director.
Section 12. DIRECTORS ACTING WITHOUT A MEETING BY UNANIMOUS WRITTEN CONSENT.
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Any action required or permitted to be taken by the Board of Directors may
be taken without a meeting, if all members of the Board shall individually or
collectively consent in writing to that action. Such action by written consent
shall have the same force and effect as a unanimous vote of the Board of
Directors. Such written consent or consents shall be filed with the minutes of
the proceedings of the Board.
Section 13. ADJOURNMENT.
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A majority of the directors present, whether or not constituting a quorum,
may adjourn any meeting to another time and place.
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Section 14. NOTICE OF ADJOURNMENT.
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Notice of the time and place of holding an adjourned meeting need not be
given, unless the meeting is adjourned for more than twenty-four (24) hours, in
which case notice of the time and place shall be given before the time of the
adjourned meeting, in the manner specified in Section 9 of this Article II, to
the directors who are not present at the time of the adjournment.
Section 15. COMPENSATION OF DIRECTORS.
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Directors and members of committees, as such, shall not receive any stated
salary for their services, but by resolution of the board a fixed sum and
expense of attendance, if any, may be allowed for attendance at each regular and
special meeting of the board; provided that nothing herein contained shall be
construed to preclude any director from serving the corporation in any other
capacity and receiving compensation therefor.
ARTICLE III
OFFICERS
--------
Section 1. OFFICERS.
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The officers of the corporation shall consist of a president, vice-
president, secretary, and chief financial officer. The corporation may also
have, at the discretion of the Board of Directors, a chairman of the board, one
or more additional vice-presidents, one or more assistant secretaries, one or
more assistant treasurers and such other officers as may be appointed in
accordance with the provisions of Section 3 of this Article. One person may
hold two or more offices, except those of president and secretary.
Section 2. ELECTION.
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The officers of the corporation, except those officers as may be appointed
in accordance with the provisions of Section 3 and Section 5 of this Article III
shall be chosen annually by the Board of Directors, and each shall hold his
office until he shall resign or shall be removed or otherwise disqualified to
serve, or his successor shall be elected and qualified.
Section 3. SUBORDINATE OFFICERS, ETC.
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The Board of Directors may appoint such other officers as the business of
the corporation may require, each of whom shall hold office for such period,
have such authority and perform such duties as are provided in the bylaws or as
the Board of Directors may from time to time determine.
Section 4. REMOVAL AND RESIGNATION.
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Any officer may be removed, either with or without cause, by the Board of
Directors at any regular or special meeting, or, except in case of an officer
chosen by the Board of Directors, by any officer upon whom such power of removal
may be conferred by the Board of Directors.
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Any officer may resign at any time by giving written notice to the Board of
Directors, or to the president or to the secretary of the corporation. Any such
resignation shall take effect at the date of this notice or at any later
specified time; and, unless otherwise specified, the acceptance of this
resignation shall not be necessary to make it effective.
Section 5. VACANCIES.
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A vacancy in any office because of death, resignation, removal,
disqualification, or because of any other cause shall be filled in the manner
prescribed in the bylaws for regular appointments to the office.
Section 6. CHAIRMAN OF THE BOARD.
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The chairman of the board, if there shall be such an officer, shall, if
present, preside at all meetings of the Board of Directors and exercise and
perform such other powers and duties as may be from time to time assigned to him
by the Board of Directors or prescribed by the bylaws. If there is no
president, the chairman of the board shall in addition be the chief executive
officer of the corporation and shall have the powers and duties prescribed in
Section 7 of this Article III.
Section 7. PRESIDENT.
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Subject to such supervisory powers, if any, as may be given by the Board of
Directors to the chairman of the board, if there be such an officer, the
president shall be the chief executive officer of the corporation and shall,
subject to the control of the Board of Directors, have general supervision,
direction and control of the business and officers of the corporation. He shall
preside at all meetings of the shareholders and in the absence of the chairman
of the board, or if there be none, at all meetings of the Board of Directors.
He shall be ex officio a member of all the standing committees, including the
executive committee, if any, and shall have the general powers and duties of a
corporate management usually vested in the office of president of a corporation
and shall have such other powers and duties as may be prescribed by the Board of
Directors or the bylaws.
Section 8. VICE-PRESIDENT.
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In the absence or disability of the president, the vice-president, if any,
shall perform all the duties of the president, and when so acting shall have all
the powers of, and be subject to, all the restrictions upon, the president. The
vice-president shall have such other powers and perform such other duties as
from time to time may be prescribed by the Board of Directors or the bylaws.
Section 9. SECRETARY.
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The secretary shall keep, or cause to be kept, a book of minutes at the
principal office or such other place as the Board of Directors may order, of all
meetings of directors and shareholders, with the time and place of holding,
whether regular or special and, if special, how authorized, the notice thereof
given, the names of those present at directors' meetings, the number of shares
present or represented at shareholders' meetings and the proceedings thereof.
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The secretary shall keep, or cause to be kept, at the principal office or
at the office of the corporation's transfer agent, a share register, or
duplicate share register, showing the names of the shareholders and their
addresses; the number and classes of shares held by each; the number and date of
certificates issued for the same; and the number and date of cancellation of
every certificate surrendered for cancellation.
The secretary shall give or cause to be given, notice of all the meetings
of the shareholders and of the Board of Directors required by the bylaws or by
law to be given, and he shall keep the seal of the corporation in safe custody
and shall have such other powers and perform such other duties as may be
prescribed by the Board of Directors or by the bylaws.
Section 10. CHIEF FINANCIAL OFFICER.
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The chief financial officer shall keep and maintain or cause to be kept and
maintained, adequate and correct accounts of the properties and business
transactions of the corporation, including accounts of its assets, liabilities,
receipts, disbursements, gains, losses, capital, surplus and shares. Any
surplus, including earned surplus, paid-in surplus and surplus arising from a
reduction of stated capital shall be classified according to source and shown in
a separate account. The books of account shall at all reasonable times be open
to inspection by any director.
The chief financial officer shall deposit all moneys and other valuables in
the name and to the credit of the corporation with such depositaries as may be
designated by the Board of Directors. He shall disburse the funds of the
corporation as may be ordered by the Board of Directors, shall render to the
president and directors, whenever they request it, an account of all of his
transactions as chief financial officer and of the financial condition of the
corporation and shall have such other powers and perform such other duties as
may be prescribed by the Board of Directors or the bylaws.
Section 11. SALARIES.
- ----------
The salaries of the officers and other shareholders employed by the
corporation shall be fixed from time to time by the Board of Directors or
established under agreements with officers or shareholders approved by the Board
of Directors, and no officer shall be prevented from receiving such salary by
reason of the fact that he is also a director of the corporation.
ARTICLE IV
CORPORATE RECORDS AND REPORTS-INSPECTION
----------------------------------------
Section 1. MAINTENANCE AND INSPECTION OF SHARE REGISTER.
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The corporation shall keep at its principal executive office, or at the
office of its transfer agent or registrar, if either be appointed and as
determined by resolution of the Board of Directors, a record of its shareholders
giving the names and addresses of all shareholders and the number and class of
shares held by each shareholder.
A shareholder or shareholders of the corporation holding at least five
percent (5%) in the aggregate of the outstanding voting shares of the
corporation may (a) inspect and copy the
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records of the shareholders' names and addresses and shareholdings during usual
business hours on five days' prior written demand on the corporation and (b)
obtain from the transfer agent of the corporation, on written demand and on
tender of such transfer agent's usual charges for such list, a list of the
shareholders' names and addresses, who are entitled to vote for the election of
directors and their shareholdings, as of the most recent record date for which
that list has been compiled or as of a date specified by the shareholder after
the date of demand. This list shall be made available to any such shareholder
by the transfer agent on or before the later of five (5) days after the demand
is received or the date specified in the demand as the date as of which the list
is to be compiled. The record of shareholders shall also be open to inspection
on the written demand of any shareholder or holder of a voting trust
certificate, at any time during usual business hours, for a purpose reasonably
related to the holder's interest as a shareholder or as a holder of a voting
trust certificate. Any inspection and copying under this Section 1 may be made
in person or by an agent or attorney of the shareholder or holder of a voting
trust certificate making the demand.
Section 2. MAINTENANCE AND INSPECTION OF BYLAWS.
- ---------
The corporation shall keep at its principal executive office, or if its
principal executive office is not in the State of California, at its principal
business office in this state, the original or a copy of the bylaws as amended
to date, which shall be open to inspection by the shareholders at all reasonable
times during office hours. If the principal executive office of the corporation
is outside the State of California and the corporation has no principal business
office in this state, the secretary shall, upon the written request of any
shareholder, furnish to that shareholder a copy of the bylaws as amended to
date.
Section 3. MAINTENANCE AND INSPECTION OF OTHER CORPORATE RECORDS.
- ---------
The accounting books and records and minutes of proceedings of the
shareholders and the Board of Directors and any committee or committees of the
Board of Directors shall be kept at such place or places designated by the Board
of Directors, or, in the absence of such designation, at the principal executive
office of the corporation. The minutes shall be kept in written form and the
accounting books and records shall be kept either in written form or in any
other form capable of being converted into written form. The minutes and
accounting books and records shall be open to inspection upon the written demand
of any shareholder or holder of a voting trust certificate, at any reasonable
time during usual business hours, for a purpose reasonably related to the
holder's interests as a shareholder or as a holder of a voting trust
certificate. The inspection may be made in person or by an agent or attorney,
and shall include the right to copy and make extracts. These rights of
inspection shall extend to the records of each subsidiary corporation of the
corporation.
Section 4. INSPECTION BY DIRECTORS.
- ---------
Every director shall have the absolute right at any reasonable time to
inspect all books, records and documents of every kind and the physical
properties of the corporation at each of its subsidiary corporations. This
inspection by a director may be made in person or by an agent or attorney and
the right of inspection includes the right to copy and make extracts of
documents.
13
<PAGE>
Section 5. ANNUAL REPORT TO SHAREHOLDERS.
- ---------
The annual report to shareholders referred to in Section 1501 of the
California General Corporation Law is expressly dispensed with, but nothing
herein shall be interpreted as prohibiting the Board of Directors from issuing
annual or other periodic reports to the shareholders of the corporation as they
consider appropriate.
Section 6. FINANCIAL STATEMENTS.
- ---------
A copy of any annual financial statements and any income statement of the
corporation for each quarterly period of each fiscal year, and any accompanying
balance sheet of the corporation as of the end of such period, that has been
prepared by the corporation shall be kept on file in the principal executive
office of the corporation for twelve (12) months and each statement shall be
exhibited at all reasonable times to any shareholder demanding an examination of
such statement or a copy thereof shall be mailed to any such shareholder.
If a shareholder or shareholders holding at least five percent (5%) of the
outstanding shares of any class of stock of the corporation makes a written
request to the corporation for an income statement of the corporation for the
three-month, six-month or nine-month period of the current fiscal year ended
more than thirty (30) days before the date of the request, and a balance sheet
of the corporation as of the end of that period, the treasurer or chief
financial officer shall cause that statement to be prepared, if not already
prepared, and shall deliver personally or mail that statement or statements to
the person making the request within thirty (30) days after the receipt of the
request. If the corporation has not sent to the shareholders its annual report
for the last fiscal year, this report shall likewise be delivered or mailed to
the shareholder or shareholders within thirty (30) days after the request.
The corporation shall also, on the written request of any shareholder, mail
to the shareholder a copy of the last annual, semi-annual or quarterly income
statement which it has prepared, and a balance sheet as of the end of that
period.
The quarterly income statements and balance sheets referred to in this
section shall be accompanied by a report, if any, of any independent accountants
engaged by the corporation or the certificate of an authorized officer of the
corporation that the financial statements were prepared without audit from the
books and records of the corporation.
Section 7. ANNUAL STATEMENT OF GENERAL INFORMATION.
- ---------
The corporation shall, during the period commencing March 1 and ending
October 1, in each year, file with the Secretary of State of the State of
California, on the prescribed form, a statement setting forth the authorized
number of directors, the names and complete business or residence addresses of
all incumbent directors, the names and complete business or residence addresses
of the chief executive officer, secretary and chief financial officer, the
street address of its principal executive office or principal business office in
the state, and the general type of business constituting the principal business
activity of the corporation, together with a designation of the
14
<PAGE>
agent of the corporation for the purpose of service of process, all in
compliance with Section 1502 of the Corporations Code of California.
ARTICLE V
GENERAL CORPORATE MATTERS
-------------------------
Section 1. RECORD DATE FOR PURPOSES OTHER THAN NOTICE AND VOTING.
- ---------
For purposes of determining the shareholders entitled to receive payment of
any dividend or other distribution or allotment of any rights or entitled to
exercise any rights in respect of any other lawful election (other than action
by shareholders by written consent without a meeting) the Board of Directors may
fix, in advance, a record date, which shall not be more than sixty (60) days
before any such action and in that case only shareholders of record on the date
so fixed are entitled to receive the dividend, distribution or allotment of
rights or to exercise the rights, as the case may be, notwithstanding any
transfer of any shares on the books of the corporation after the record date so
fixed, except as otherwise provided in the California General Corporation Law.
If the Board of Directors does not so fix a record date, the record date
for determining shareholders for any such purpose shall be at the close of
business on the day on which the board adopts the applicable resolution or the
sixtieth (60th) day before the date of that action, whichever is later.
Section 2. CHECKS, DRAFTS, EVIDENCES OF INDEBTEDNESS.
- ---------
All checks, drafts or other orders for payment of money, notes or other
evidences of indebtedness, issued in the name of or payable to the corporation
shall be signed or endorsed by such person or persons and in such manner as,
from time to time, shall be determined by the resolution of the Board of
Directors.
Section 3. CORPORATE CONTRACTS AND INSTRUMENTS; HOW EXECUTED.
- ---------
The Board of Directors, except as otherwise provided in these Bylaws, may
authorize any officer or officers, agent or agents, to enter into any contract
or execute any instrument in the name of and on behalf of the corporation and
this authority shall be general or confined to specific instances; and, unless
so authorized or ratified by the Board of Directors or within the agency power
of an officer, no officer, agent or employee shall have any power or authority
to bind the corporation by any contract or engagement or to pledge its credit or
to render it liable for any purpose or for any amount.
Section 4. CERTIFICATES FOR SHARES.
- ---------
A certificate or certificates for shares of the capital stock of the
corporation shall be issued to each shareholder when any of these shares are
fully paid, and the Board of Directors may authorize the issuance of
certificates or shares as partly paid provided that these certificates shall
state the amount of the consideration to be paid for them and the amount paid.
All certificates shall be signed in the name of the corporation by the chairman
of the board or vice-chairman of the board or the president or vice-president
and by the chief financial officer or an assistant
15
<PAGE>
treasurer or the secretary or any assistant secretary, certifying the number of
shares and the class or series of shares owned by the shareholder. Any or all of
the signatures on the certificate may be facsimile. In case any officer,
transfer agent, or registrar who has signed or whose facsimile signature has
been placed on a certificate shall have ceased to be that officer, transfer
agent or registrar before that certificate is issued, it may be issued by the
corporation with the same effect as if that person were an officer, transfer
agent or registrar at the date of issuance.
Section 5. LOST CERTIFICATES.
- ---------
Except as provided in this Section 5, no new certificates for shares shall
be issued to replace an old certificate unless the latter is surrendered to the
corporation and cancelled at the same time. The Board of Directors, in case any
share certificate or certificate for any other security is lost, stolen, or
destroyed, may authorize the issuance of a replacement certificate on such terms
and conditions as the board may require, including provision for indemnification
of the corporation secured by a bond or other adequate security sufficient to
protect the corporation against any claim that may be made against it, including
any expense or liability, on account of the alleged loss, theft or destruction
of the certificate or the issuance of the replacement certificate.
Section 6. REPRESENTATION OF SHARES OF OTHER CORPORATIONS.
- ---------
The chairman of the board, the president or any vice-president, or any
other person authorized by resolution of the Board of Directors or by any of the
foregoing designated officers, is authorized to vote on behalf of the
corporation any and all shares of any other corporation or corporations, foreign
or domestic, standing in the name of the corporation. The authority granted to
these officers to vote or represent on behalf of the corporation any and all
shares held by the corporation in any other corporation or corporations may be
exercised by any of these officers in person or by any person authorized to do
so by a proxy duly executed by these officers.
Section 7. INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND OTHER AGENTS.
- ---------
The corporation shall, to the maximum extent permitted by California
General Corporation Law, indemnify each of its agents against expenses,
judgments, fines, settlements and other amounts actually and reasonably incurred
in connection with any proceeding arising by reason of the fact that any such
person is or was an agent of the corporation. For purposes of this Section 7,
an "agent" of the corporation includes any person who is or was a director,
officer, employee or other agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, or was a
director, officer, employee or agent of a corporation which was a predecessor
corporation of the corporation or of another enterprise at the request of such
predecessor corporation.
Section 8. CONSTRUCTION AND DEFINITIONS.
- ---------
Unless the context requires otherwise, the general provisions, rules of
construction and definitions in the California General Corporation Law shall
govern the construction of these
16
<PAGE>
Bylaws. Without limiting the generality of this provision, the singular in
number includes the plural, the plural number includes the singular and the term
"person" includes both a corporation and a natural person.
ARTICLE VI
OFFICES
-------
Section 1. PRINCIPAL OFFICES.
- ---------
The Board of Directors shall fix the location of the principal executive
offices of the corporation at any place within or outside the State of
California. If the principal executive offices are located outside the state,
and the corporation has one or more business offices in the state, the Board of
Directors shall fix and designate a principal business office in the State of
California.
Section 2. OTHER OFFICES.
- ---------
The Board of Directors may at any time establish branch or subordinate
offices at any place or places where the corporation is qualified to do
business.
ARTICLE VII
AMENDMENTS
----------
Section 1. AMENDMENT BY SHAREHOLDERS.
- ---------
New Bylaws may be adopted or these Bylaws may be amended or repealed by the
vote or written consent of holders of a majority of the outstanding shares
entitled to vote; provided, however, that if the Articles of Incorporation of
the corporation set forth a number of authorized directors of the corporation,
the authorized number of directors may be changed only by an amendment of the
Articles of Incorporation.
Section 2. AMENDMENT BY DIRECTORS.
- ---------
Subject to the rights of the shareholders as provided in Section 1 of this
Article VII, Bylaws, other than a bylaw or an amendment of a bylaw changing the
authorized number of directors, may be adopted, amended or repealed by the Board
of Directors.
17
<PAGE>
EXHIBIT 3.24
1333927
ENDORSED
FILED
in the office of the Secretary
of State of the State of California
MAR 13 1985
MARCH FONG EU, Secretary of State
Sharon K. Hawkins
Deputy
ARTICLES OF INCORPORATION OF
OASIS RADIO, INC.
----------------------------
ONE: The name of this Corporation is Oasis Radio, Inc.
TWO: The purpose of this Corporation is to engage in any lawful act
or activity for which a corporation may be organized under the General
Corporation Law of California other than the banking business, the trust company
business or the practice of a profession permitted to be incorporated by the
California Corporations Code.
THREE: The name and address in this state of the Corporation's
initial agent for service of process is Carole R. Prenter, 2020 Strand, Hermosa
Beach, California 90254.
FOUR: The total number of shares which the Corporation is authorized
to issue is one hundred thousand (100,000).
Dated: March 12, 1985.
Robert B. England
------------------
Robert B. England,
Sole Incorporator
I declare that I am the person who executed the above Articles of
Incorporation and such instrument is my act and deed.
Robert B. England
------------------
Robert B. England,
Sole Incorporator
<PAGE>
EXHIBIT 3.25
BYLAWS OF
OASIS RADIO, INC.
A CALIFORNIA CORPORATION
------------------------
ARTICLE I
SHAREHOLDERS' MEETING
Section 1. PLACE OF MEETINGS.
- ---------
Meetings of shareholders shall be held at any place within or outside the
State of California designated by the Board of Directors. In the absence of any
such designation, shareholders' meetings shall be held in the principal
executive office of the corporation.
Section 2. ANNUAL MEETINGS.
- ---------
The annual meeting of shareholders shall be held each year on a date and at
a time designated by the Board of Directors. The date so designated shall be
within five (5) months after the end of the fiscal year of the corporation, and
within fifteen (15) months after the last annual meeting. At each annual
meeting directors shall be elected, and any other proper business may be
transacted.
Section 3. SPECIAL MEETINGS.
- ---------
A special meeting of the shareholders may be called at any time by the
Board of Directors, or by the chairman of the Board, or by the president or by
one or more shareholders holding shares in the aggregate entitled to cast not
less than ten percent (10%) of the votes at that meeting.
If a special meeting is called by any person or persons other than the
Board of Directors, the request shall be in writing, specifying the time of such
meeting and the general nature of the business proposed to be transacted, and
shall be delivered personally or sent by registered mail or by telegraphic or
other facsimile transmission to the chairman of the Board, the president, any
vice-president or the secretary of the corporation. The officer receiving the
request shall cause notice to be promptly given to the shareholders entitled to
vote, in accordance with the provisions of Sections 4 and 5 of this Article I,
that a meeting will be held at the time requested by the person or persons
calling the meeting, not less than thirty-five (35) nor more than sixty (60)
days after the receipt of the request. If the notice is not given within twenty
(20) days after receipt of the request, the person or persons requesting the
meeting may give the notice. Nothing contained in this paragraph of this
Section 3 shall be construed as limiting, fixing or affecting the time when a
meeting of shareholders called by action of the Board of Directors may be held.
Section 4. NOTICE OF MEETINGS.
- ---------
All notices of meetings of shareholders shall be sent or otherwise given in
accordance with Section 5 of this Article I not less than ten (10) nor more than
sixty (60) days before the date of the meeting. The notice shall specify the
place, date and hour of the meeting and (a) in the case of a special meeting,
the general nature of the business to be transacted or (b) in the case of
<PAGE>
the annual meeting, those matters which the Board of Directors, at the time of
giving notice, intends to present for action by the shareholders. The notice of
any meeting at which directors are to be elected shall include the name of any
nominee or nominees whom, at the time of the notice, management intends to
present for election.
If action is proposed to be taken at any meeting for approval of (i) a
contract or transaction in which a director has a direct or indirect financial
interest, pursuant to Section 310 of the Corporations Code of California, (ii)
an amendment of the Articles of Incorporation, pursuant to Section 902 of that
Code, (iii) a reorganization of the corporation, pursuant to Section 1201 of
that Code, (iv) a voluntary dissolution of the corporation, pursuant to Section
1900 of that Code, or (v) a distribution in dissolution other than in accordance
with the rights of outstanding preferred shares, pursuant to Section 2007 of
that Code, the notice shall also state the general nature of that proposal.
Section 5. MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE.
- ---------
Notice of any meeting of shareholders shall be given either personally or
by first-class mail or telegraphic or other written communication, charges
prepaid, addressed to the shareholder at the address of that shareholder
appearing on the books of the corporation or given by the shareholder to the
corporation for the purpose of notice. If no such address appears on the
corporation's books or is given, notice shall be deemed to have been given if
sent to that shareholder by first-class mail or telegraphic or other written
communication to the corporation's principal executive office, or if published
at least once in a newspaper of general circulation, in the county where that
office is located. Notice shall be deemed to have been given at the time when
delivered personally or deposited in the mail or sent by telegram or other means
of written communication.
If any notice addressed to a shareholder at the address of that shareholder
appearing on the books of the corporation is returned to the corporation by the
United States Postal Service marked to indicate that the United States Postal
Service is unable to deliver the notice to the shareholder at that address, all
future notices or reports shall be deemed to have been duly given without
further mailing if these shall be available to the shareholder on written demand
of the shareholder at the principal executive office of the corporation for a
period of one (1) year from the date of the giving of the notice.
An affidavit of the mailing or other means of giving any notice of any
shareholders' meetings shall be executed by the secretary, assistant secretary
or any transfer agent of the corporation giving the notice, and shall be filed
and maintained in the minute book of the corporation.
Section 6. QUORUM.
- ---------
The presence in person or by proxy of the holders of a majority of the
shares entitled to vote at any meeting of shareholders shall constitute a quorum
for the transaction of business. The shareholders present at a duly called or
held meeting at which a quorum is present may continue
2
<PAGE>
to do business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum, if any action taken (other than
adjournment) is approved by at least a majority of the shares required to
constitute a quorum.
Section 7. ADJOURNED MEETING; NOTICE.
- ---------
Any shareholders' meeting, annual or special, whether or not a quorum is
present, may be adjourned from time to time by the vote of the majority of the
shares represented at that meeting, either in person or by proxy, but in the
absence of a quorum, no other business may be transacted at that meeting, except
as provided in Section 6 of this Article I.
When any meeting of shareholders, either annual or special, is adjourned to
another time or place, notice need not be given of the adjourned meeting if the
time and place are announced at a meeting at which the adjournment is taken
unless a new record date for the adjourned meeting is fixed, or unless the
adjournment is for more than forty-five (45) days from the date set for the
original meeting, in which case the Board of Directors shall set a new record
date. Notice of any such adjourned meeting shall be given to each shareholder
of record entitled to vote at the adjourned meeting in accordance with the
provisions of Sections 4 and 5 of this Article I. At any adjourned meeting the
corporation may transact any business which might have been transacted at the
original meeting.
Section 8. VOTING RIGHTS; CUMULATIVE VOTING.
- ---------
The shareholders entitled to vote at any meeting of shareholders shall be
determined in accordance with the provisions of Section 11 of this Article I,
subject to the provisions of Sections 702 through 704, inclusive, of the
Corporations Code of California (relating to voting shares held by a fiduciary,
in the name of a corporation, or in joint ownership). The shareholders' vote
may be by voice vote or by ballot; provided, however, that any election for
directors must be by ballot if demanded by any shareholder before the voting has
begun. On any matter other than elections of directors, any shareholder may
vote part of the shares in favor of the proposal and refrain from voting the
remaining shares or vote them against the proposal, but, if the shareholder
fails to specify the number of shares which the shareholder is voting
affirmatively, it will be conclusively presumed that the shareholder's approving
vote is with respect to all shares that the shareholder is entitled to vote. If
a quorum is present, the affirmative vote of the majority of the shares
represented at the meeting and entitled to vote on any matter (other than the
election of directors) shall be the act of the shareholders, unless a vote of a
greater number or voting by classes is required by the California General
Corporation Law or by the Articles of Incorporation.
At a shareholders' meeting at which directors are to be elected, no
shareholder shall be entitled to accumulate votes (i.e., to cast for any one or
----
more candidates a number of votes greater than the number of the shareholder's
shares) unless the candidates' names have been placed in nomination prior to
commencement of the voting and a shareholder has given notice prior to
commencement of the voting of the shareholder's intention to cumulate votes. If
any shareholder has given such a notice, then every shareholder entitled to vote
may cumulate votes for candidates in nomination and give one candidate a number
of votes equal to the number of directors to be elected multiplied by the number
of votes to which that shareholder's shares are entitled, or
3
<PAGE>
distribute the shareholder's votes on the same principle among any or all of the
candidates, as the shareholder thinks fit. The candidates receiving the highest
number of votes, up to the number of directors to be elected, shall be elected.
Section 9. WAIVER OF NOTICE OR CONSENT BY ABSENT SHAREHOLDERS.
- ---------
The transactions of any meeting of shareholders, either annual or special,
however called and noticed and wherever held, shall be as valid as though had at
a meeting duly held after regular call and notice, if a quorum be present either
in person or by proxy, and if, either before or after the meeting, each person
entitled to vote, who was not present in person or by proxy, signs a written
waiver of notice or a consent to a holding of the meeting or an approval of the
minutes. The waiver of notice or consent need not specify either the business
to be transacted or the purpose of any annual or special meeting of
shareholders, except that if action is taken or proposed to be taken for
approval of any of those matters specified in the second paragraph of Section 4
of this Article I, the waiver of notice or consent shall state the general
nature of the proposal. All such waivers, consents or approvals shall be filed
with the corporate records or made a part of the minutes of the meeting.
Attendance by a person at a meeting shall also constitute a waiver of
notice of that meeting, except when the person objects, at the beginning of the
meeting, to the transaction of any business because the meeting is not lawfully
called or convened and except that attendance at a meeting is not a waiver of
any right to object to the consideration of matters not included in the notice
of the meeting if that objection is expressly made at the meeting.
Section 10. SHAREHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING.
- ----------
Any action which may be taken at any annual or special meeting of
shareholders may be taken without a meeting and without prior notice, if a
consent in writing, setting forth the action so taken, is signed by the holders
of outstanding shares having not less than the minimum number of votes that
would be necessary to authorize or to take that action at a meeting at which all
shares entitled to vote on that action were present and voted. In the case of
election of directors, such consent shall be effective only if signed by the
holders of all outstanding shares entitled to vote for the election of
directors; provided, however, that a director may be elected at any time to fill
a vacancy on the Board of Directors that has not been filled by the directors,
by the written consent of the holders of a majority of the outstanding shares
entitled to vote for the election of directors. All such consents shall be
filed with the secretary of the corporation and shall be maintained in the
corporate records. Any shareholder giving a written consent, or the
shareholder's proxy holder, or a transferee of the shares or a personal
representative of the shareholder or his respective proxy holder, may revoke the
consent by a writing received by the secretary of the corporation before written
consents of the number of shares required to authorize the proposed action have
been filed with the secretary.
If the consents of all shareholders entitled to vote have not been
solicited in writing, and if the unanimous written consent of all such
shareholders shall not have been received, the secretary shall give prompt
notice of the corporate action approved by the shareholders without a meeting.
4
<PAGE>
This notice shall be given in the manner specified in Section 5 of this Article
I. In the case of approval of (a) contracts or transactions in which a director
has a direct or indirect financial interest, pursuant to Section 310 of the
Corporations Code of California, (b) indemnification of agents of the
corporation, pursuant to Section 317 of that Code, (c) a reorganization of the
corporation, pursuant to Section 1201 of that Code, and (d) a distribution in
dissolution other than in accordance with the rights of the outstanding
preferred shares, pursuant to Section 2007 of that Code, the notice shall be
given at least ten (10) days before the consummation of any action authorized by
that approval.
Section 11. RECORD DATE FOR SHAREHOLDERS NOTICE, VOTING AND GIVING CONSENTS.
- ----------
For purposes of determining the shareholders entitled to notice of any
meeting or to vote or entitled to give consent to corporate action without a
meeting, the Board of Directors may fix, in advance, a record date, which shall
be not more than sixty (60) days nor less than ten (10) days before the date of
any such meeting nor more than sixty (60) days before any such action without a
meeting, and in this event only shareholders of record on the date so fixed are
entitled to notice and to vote or to give consents, as the case may be,
notwithstanding the transfer of any shares on the books of the corporation after
the record date, except as otherwise provided in the California General
Corporation Law.
If the Board of Directors does not so fix a record date:
(a) The record date for determining shareholders entitled to notice of
or to vote at a meeting of shareholders shall be at the close of business on the
business day next preceding the day on which notice is given or, if notice is
waived, at the close of business on the business day next preceding the day on
which the meeting is held.
(b) The record date for determining shareholders entitled to give
consent to corporate action in writing without a meeting (i) when no prior
action by the Board has been taken, shall be the day on which the first written
consent is given, or (ii) when prior action of the Board has been taken, shall
be at the close of business on the day on which the Board adopts the resolution
relating to that action or the sixtieth (60th) day before the date of such other
action, whichever is later.
Section 12. PROXIES.
- ----------
Every person entitled to vote for directors or on any other matter shall
have the right to do so either in person or by one or more agents authorized by
a written proxy signed by the person and filed with the secretary of the
corporation. A proxy shall be deemed signed if the shareholder's name is placed
on the proxy (whether by manual signature, typewriting, telegraphic transmission
or otherwise) by the shareholder or the shareholder's attorney in fact. A
validly executed proxy which does not state that it is irrevocable shall
continue in full force and effect unless (a) revoked by the person executing it,
before the vote pursuant to that proxy by a writing delivered to the corporation
stating that the proxy is revoked, or by a subsequent proxy executed by, or
attendance at the meeting and voting in person by, the person executing the
proxy; or
5
<PAGE>
(b) written notice of the death or incapacity of the maker of that proxy is
received by the corporation before the vote pursuant to that proxy is counted;
provided, however, that no proxy shall be valid after the expiration of eleven
(11) months from the date of the proxy, unless otherwise provided in the proxy,
and, provided, further, that the proxy shall be valid only if executed in favor
of another shareholder of the corporation. The revocability of a proxy that
states on its face that it is irrevocable shall be governed by the provisions of
Sections 705(e) and 705(f) of the Corporations Code of California.
Section 13. INSPECTORS OF ELECTION.
- ----------
Before any meeting of shareholders, the Board of Directors may appoint any
persons other than nominees for office to act as inspectors of election at the
meeting or its adjournment. If no inspectors of election are so appointed, the
chairman of the meeting may, and on the request of any shareholder or a
shareholder's proxy shall, appoint inspectors of election at the meeting. The
number of inspectors shall be either one (1) or three (3). If inspectors are
appointed at the meeting on the request of one or more shareholders or proxies,
the holders of a majority of shares or their proxies present at the meeting
shall determine whether one (1) or three (3) inspectors are to be appointed. If
any person appointed as inspector fails to appear or fails or refuses to act,
the chairman of the meeting may, and upon the request of any shareholder or a
shareholder's proxy shall, appoint a person to fill that vacancy.
These inspectors shall:
(a) Determine the number of shares outstanding and the voting power of
each, the shares represented at the meeting, the existence of a quorum and the
authenticity, validity and effect of proxies;
(b) Receive votes, ballots or consents;
(c) Hear and determine all challenges and questions in any way arising
in connection with the right to vote;
(d) Count and tabulate all votes or consents;
(e) Determine when the polls shall close;
(f) Determine the result; and
(g) Do any other acts that may be proper to conduct the election or
vote with fairness to all shareholders.
Section 14. VOTING TRUSTS.
- ----------
If a voting trust agreement is filed in the office of the corporation, the
corporation shall take notice of its terms and the limitations this agreement
places on the authority of the trustee. The agreement shall be valid only if
voting power is vested in another shareholder of the corporation.
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ARTICLE II
DIRECTORS; MANAGEMENT
Section 1. POWERS.
- ---------
Subject to the limitations of the Articles of Incorporation, of the Bylaws
and of the laws of the State of California as to action to be authorized or
approved by the shareholders, all corporate powers shall be exercised by or
under authority of, and the business and affairs of this corporation shall be
controlled by, a board of directors.
Section 2. NUMBER AND QUALIFICATION.
- ---------
The authorized number of directors shall be two (2) until changed by a duly
adopted amendment of the Articles of Incorporation or by an amendment to these
Bylaws adopted by the vote or written consent of holders of a majority of the
outstanding shares entitled to vote.
Section 3. ELECTION AND TENURE OF OFFICE.
- ---------
Directors shall be elected at each annual meeting of the shareholders to
hold office until the next annual meeting. Each director, including a director
elected to fill a vacancy, shall hold office until the expiration of the term
for which elected and until a successor has been elected and qualified.
Section 4. VACANCIES.
- ---------
Vacancies in the Board of Directors may be filled by a majority of the
remaining directors, though less than a quorum or by a sole remaining director,
except that a vacancy created by the removal of a director by the vote or
written consent of the shareholders or by court order may be filled only by the
vote of a majority of the shares entitled to vote represented at a duly held
meeting at which a quorum is present, or by the written consent of holders of a
majority of the outstanding shares entitled to vote. Each director so elected
shall hold office until the next annual meeting of the shareholders and until a
successor has been elected and qualified.
A vacancy or vacancies in the Board of Directors shall be deemed to exist
in the event of the death, disqualification, resignation, or removal of any
director, or if the Board of Directors by resolution declares vacant the office
of a director who has been declared of unsound mind by an order of court or
convicted of a felony, or if the authorized number of directors is increased or
if the shareholders fail, in any meeting of shareholders at which any director
or directors are elected, to elect the number of directors to be voted for at
that meeting.
The shareholders may elect a director or directors at any time to fill any
vacancy or vacancies not filled by the directors, but any such election by
written consent shall require the consent of a majority of the outstanding
shares entitled to vote.
Any director may resign effective on giving written notice to the chairman
of the board, the president, the secretary or the Board of Directors, unless the
notice specifies a later time for that resignation to become effective. If the
resignation of a director is effective at a future time,
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the Board of Directors may elect a successor to take office when the resignation
becomes effective.
No reduction of the authorized number of directors shall have the effect of
removing any director before that director's term of office expires.
Section 5. REMOVAL OF DIRECTORS.
- ---------
The entire Board of Directors or any individual director may be removed
from office as provided by Sections 302, 303 and 304 of the Corporations Code of
the State of California.
Section 6. PLACE OF MEETINGS AND MEETINGS BY TELEPHONE.
- ---------
Regular meetings of the Board of Directors may be held at any place within
or outside the State of California that has been designated from time to time by
resolution of the Board. In the absence of such designation, regular meetings
shall be held at the principal executive office of the corporation. Special
meetings of the board shall be held at any place within or outside the State of
California that has been designated in the notice of the meeting or, if not
stated in the notice or there is no notice, at the principal executive office of
the corporation. Any meeting, regular or special, may be held by conference
telephone or similar communication equipment, so long as all directors
participating in the meeting can hear one another, and all such directors shall
be deemed to be present in person at the meeting.
Section 7. ANNUAL MEETING.
- ---------
Immediately following each annual meeting of shareholders, the Board of
Directors shall hold a regular meeting for the purpose of organization, any
desired election of officers and the transaction of other business. Notice of
this meeting shall not be required.
Section 8. OTHER REGULAR MEETINGS.
- ---------
Other regular meetings of the Board of Directors shall be held without call
at such time as it shall from time to time be fixed by the Board of Directors.
Such regular meetings may be held without notice.
Section 9. SPECIAL MEETINGS - NOTICES.
- ---------
Special meetings of the Board of Directors for any purpose or purposes may
be called at any time by the chairman of the board or the president or any vice-
president or the secretary or any two directors.
Notice of the time and place of special meetings shall be delivered
personally or by telephone to each director, or sent by first-class mail or
telegram, charges prepaid, addressed to each director at that director's address
as it is shown on the records of the corporation. In case the notice is mailed,
it shall be deposited in the United States mail at least four (4) days before
the time of the holding of the meeting. In case the notice is delivered
personally or by telephone or telegram, it shall be delivered personally or by
telephone or to the telegraph company at least
8
<PAGE>
forty-eight (48) hours before the time of the holding of the meeting. Any oral
notice given personally or by telephone may be communicated either to the
director or to a person at the office of the director who the person giving the
notice has reason to believe will promptly communicate it to the director. The
notice need not specify the purpose of the meeting nor the place if the meeting
is to be held at the principal executive offices of the corporation.
Section 10. QUORUM.
- ----------
A majority of the authorized number of directors shall constitute a quorum
for the transaction of business, except to adjourn as provided in Section 13 of
this Article II, unless the authorized number of directors is two or less, in
which case all of the duly elected and acting directors shall constitute a
quorum for the transaction of business. Every act or decision done or made by a
majority of the directors present at a meeting duly held at which a quorum is
present shall be regarded as the act of the Board of Directors, subject to the
provisions of Section 310 of the Corporations Code of the State of California
(as to approval of contracts or transactions in which a director has a direct or
indirect material financial interest), Section 311 of that Code (as to
appointment of committees), and Section 317(e) of that Code (as to
indemnification of directors). A meeting at which a quorum is initially present
may continue to transact business notwithstanding the withdrawal of directors,
if any action taken is approved by at least a majority of the required quorum
for that meeting.
Section 11. WAIVER OF NOTICE.
- ----------
The transactions of any meeting of the Board of Directors, however called
and noticed and wherever held, shall be as valid as though had at a meeting duly
held after regular call and notice if a quorum is present and if, either before
or after the meeting, each of the directors not present signs a written waiver
of notice, a consent to holding the meeting or an approval of the minutes. The
waiver of notice or consent need not specify the purpose of the meeting. All
such waivers, consents and approval shall be filed with the corporate records or
made a part of the minutes of the meeting. Notice of a meeting shall also be
deemed given to any director who attends the meeting without protesting before
or at its commencement, the lack of notice to that director.
Section 12. DIRECTORS ACTING WITHOUT A MEETING BY UNANIMOUS WRITTEN CONSENT.
- ----------
Any action required or permitted to be taken by the Board of Directors may
be taken without a meeting, if all members of the Board shall individually or
collectively consent in writing to that action. Such action by written consent
shall have the same force and effect as a unanimous vote of the Board of
Directors. Such written consent or consents shall be filed with the minutes of
the proceedings of the Board.
Section 13. ADJOURNMENT.
- ----------
A majority of the directors present, whether or not constituting a quorum,
may adjourn any meeting to another time and place.
9
<PAGE>
Section 14. NOTICE OF ADJOURNMENT.
- ----------
Notice of the time and place of holding an adjourned meeting need not be
given, unless the meeting is adjourned for more than twenty-four (24) hours, in
which case notice of the time and place shall be given before the time of the
adjourned meeting, in the manner specified in Section 9 of this Article II, to
the directors who are not present at the time of the adjournment.
Section 15. COMPENSATION OF DIRECTORS.
- ----------
Directors and members of committees, as such, shall not receive any stated
salary for their services, but by resolution of the board a fixed sum and
expense of attendance, if any, may be allowed for attendance at each regular and
special meeting of the board; provided that nothing herein contained shall be
construed to preclude any director from serving the corporation in any other
capacity and receiving compensation therefor.
ARTICLE III
OFFICERS
Section 1. OFFICERS.
- ---------
The officers of the corporation shall consist of a president, vice-
president, secretary and a chief financial officer. The corporation may also
have, at the discretion of the Board of Directors, a chairman of the board, one
or more additional vice-presidents, one or more assistant secretaries, one or
more assistant treasurers and such other officers as may be appointed in
accordance with the provisions of Section 3 of this Article. One person may
hold two or more offices, except those of president and secretary.
Section 2. ELECTION.
- ---------
The officers of the corporation, except those officers as may be appointed
in accordance with the provisions of Section 3 and Section 5 of this Article III
shall be chosen annually by the Board of Directors, and each shall hold his
office until he shall resign or shall be removed or otherwise disqualified to
serve, or his successor shall be elected and qualified.
Section 3. SUBORDINATE OFFICERS, ETC.
- ---------
The Board of Directors may appoint such other officers as the business of
the corporation may require, each of whom shall hold office for such period,
have such authority and perform such duties as are provided in the bylaws or as
the Board of Directors may from time to time determine.
Section 4. REMOVAL AND RESIGNATION.
- ---------
Any officer may be removed, either with or without cause, by the Board of
Directors at any regular or special meeting, or, except in case of an officer
chosen by the Board of Directors, by any officer upon whom such power of removal
may be conferred by the Board of Directors.
10
<PAGE>
Any officer may resign at any time by giving written notice to the Board of
Directors, or to the president or to the secretary of the corporation. Any such
resignation shall take effect at the date of this notice or at any later
specified time; and, unless otherwise specified, the acceptance of this
resignation shall not be necessary to make it effective.
Section 5. VACANCIES.
- ---------
A vacancy in any office because of death, resignation, removal,
disqualification, or because of any other cause shall be filled in the manner
prescribed in the bylaws for regular appointments to the office.
Section 6. CHAIRMAN OF THE BOARD.
- ---------
The chairman of the board, if there shall be such an officer, shall, if
present, preside at all meetings of the Board of Directors and exercise and
perform such other powers and duties as may be from time to time assigned to him
by the Board of Directors or prescribed by the bylaws. If there is no
president, the chairman of the board shall in addition be the chief executive
officer of the corporation and shall have the powers and duties prescribed in
Section 7 of this Article III.
Section 7. PRESIDENT.
- ---------
Subject to such supervisory powers, if any, as may be given by the Board of
Directors to the chairman of the board, if there be such an officer, the
president shall be the chief executive officer of the corporation and shall,
subject to the control of the Board of Directors, have general supervision,
direction and control of the business and officers of the corporation. He shall
preside at all meetings of the shareholders and in the absence of the chairman
of the board, or if there be none, at all meetings of the Board of Directors.
He shall be ex officio a member of all the standing committees, including the
executive committee, if any, and shall have the general powers and duties of a
corporate management usually vested in the office of president of a corporation
and shall have such other powers and duties as may be prescribed by the Board of
Directors or the bylaws.
Section 8. VICE-PRESIDENT.
- ---------
In the absence or disability of the president, the vice-president, if any,
shall perform all the duties of the president, and when so acting shall have all
the powers of, and be subject to, all the restrictions upon, the president. The
vice-president shall have such other powers and perform such other duties as
from time to time may be prescribed by the Board of Directors or the bylaws.
Section 9. SECRETARY.
- ---------
The secretary shall keep, or cause to be kept, a book of minutes at the
principal office or such other place as the Board of Directors may order, of all
meetings of directors and shareholders, with the time and place of holding,
whether regular or special and, if special, how authorized, the notice thereof
given, the names of those present at directors' meetings, the number of shares
present or represented at shareholders' meetings and the proceedings thereof.
11
<PAGE>
The secretary shall keep, or cause to be kept, at the principal office or
at the office of the corporation's transfer agent, a share register, or
duplicate share register, showing the names of the shareholders and their
addresses; the number and classes of shares held by each; the number and date of
certificates issued for the same; and the number and date of cancellation of
every certificate surrendered for cancellation.
The secretary shall give or cause to be given, notice of all the meetings
of the shareholders and of the Board of Directors required by the bylaws or by
law to be given, and he shall keep the seal of the corporation in safe custody
and shall have such other powers and perform such other duties as may be
prescribed by the Board of Directors or by the bylaws.
Section 10. CHIEF FINANCIAL OFFICER.
- ----------
The chief financial officer shall keep and maintain or cause to be kept and
maintained, adequate and correct accounts of the properties and business
transactions of the corporation, including accounts of its assets, liabilities,
receipts, disbursements, gains, losses, capital, surplus and shares. Any
surplus, including earned surplus, paid-in surplus and surplus arising from a
reduction of stated capital shall be classified according to source and shown in
a separate account. The books of account shall at all reasonable times be open
to inspection by any director.
The chief financial officer shall deposit all moneys and other valuables in
the name and to the credit of the corporation with such depositaries as may be
designated by the Board of Directors. He shall disburse the funds of the
corporation as may be ordered by the Board of Directors, shall render to the
president and directors, whenever they request it, an account of all of his
transactions as chief financial officer and of the financial condition of the
corporation and shall have such other powers and perform such other duties as
may be prescribed by the Board of Directors or the bylaws.
Section 11. SALARIES.
- ----------
The salaries of the officers and other shareholders employed by the
corporation shall be fixed from time to time by the Board of Directors or
established under agreements with officers or shareholders approved by the Board
of Directors, and no officer shall be prevented from receiving such salary by
reason of the fact that he is also a director of the corporation.
ARTICLE IV
CORPORATE RECORDS AND REPORTS--INSPECTION
Section 1. MAINTENANCE AND INSPECTION OF SHARE REGISTER.
- ---------
The corporation shall keep at its principal executive office, or at the
office of its transfer agent or registrar, if either be appointed and as
determined by resolution of the Board of Directors, a record of its shareholders
giving the names and addresses of all shareholders and the number and class of
shares held by each shareholder.
A shareholder or shareholders of the corporation holding at least five
percent (5%) in the aggregate of the outstanding voting shares of the
corporation may (a) inspect and copy the
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<PAGE>
records of the shareholders' names and addresses and shareholdings during usual
business hours on five days' prior written demand on the corporation and (b)
obtain from the transfer agent of the corporation, on written demand and on
tender of such transfer agent's usual charges for such list, a list of the
shareholders' names and addresses, who are entitled to vote for the election of
directors and their shareholdings, as of the most recent record date for which
that list has been compiled or as of a date specified by the shareholder after
the date of demand. This list shall be made available to any such shareholder
by the transfer agent on or before the later of five (5) days after the demand
is received or the date specified in the demand as the date as of which the list
is to be compiled. The record of shareholders shall also be open to inspection
on the written demand of any shareholder or holder of a voting trust
certificate, at any time during usual business hours, for a purpose reasonably
related to the holder's interest as a shareholder or as a holder of a voting
trust certificate. Any inspection and copying under this Section 1 may be made
in person or by an agent or attorney of the shareholder or holder of a voting
trust certificate making the demand.
Section 2. MAINTENANCE AND INSPECTION OF BYLAWS.
- ---------
The corporation shall keep at its principal executive office, or if its
principal executive office is not in the State of California, at its principal
business office in this state, the original or a copy of the bylaws as amended
to date, which shall be open to inspection by the shareholders at all reasonable
times during office hours. If the principal executive office of the corporation
is outside the State of California and the corporation has no principal business
office in this state, the secretary shall, upon the written request of any
shareholder, furnish to that shareholder a copy of the bylaws as amended to
date.
Section 3. MAINTENANCE AND INSPECTION OF OTHER CORPORATE RECORDS.
- ---------
The accounting books and records and minutes of proceedings of the
shareholders and the Board of Directors and any committee or committees of the
Board of Directors shall be kept at such place or places designated by the Board
of Directors, or, in the absence of such designation, at the principal executive
office of the corporation. The minutes shall be kept in written form and the
accounting books and records shall be kept either in written form or in any
other form capable of being converted into written form. The minutes and
accounting books and records shall be open to inspection upon the written demand
of any shareholder or holder of a voting trust certificate, at any reasonable
time during usual business hours, for a purpose reasonably related to the
holder's interests as a shareholder or as a holder of a voting trust
certificate. The inspection may be made in person or by an agent or attorney,
and shall include the right to copy and make extracts. These rights of
inspection shall extend to the records of each subsidiary corporation of the
corporation.
Section 4. INSPECTION BY DIRECTORS.
- ---------
Every director shall have the absolute right at any reasonable time to
inspect all books, records and documents of every kind and the physical
properties of the corporation at each of its subsidiary corporations. This
inspection by a director may be made in person or by an agent or attorney and
the right of inspection includes the right to copy and make extracts of
documents.
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Section 5. ANNUAL REPORT TO SHAREHOLDERS.
- ---------
The annual report to shareholders referred to in Section 1501 of the
California General Corporation Law is expressly dispensed with, but nothing
herein shall be interpreted as prohibiting the Board of Directors from issuing
annual or other periodic reports to the shareholders of the corporation as they
consider appropriate.
Section 6. FINANCIAL STATEMENTS.
- ---------
A copy of any annual financial statements and any income statement of the
corporation for each quarterly period of each fiscal year, and any accompanying
balance sheet of the corporation as of the end of such period, that has been
prepared by the corporation shall be kept on file in the principal executive
office of the corporation for twelve (12) months and each statement shall be
exhibited at all reasonable times to any shareholder demanding an examination of
such statement or a copy thereof shall be mailed to any such shareholder.
If a shareholder or shareholders holding at least five percent (5%) of the
outstanding shares of any class of stock of the corporation makes a written
request to the corporation for an income statement of the corporation for the
three-month, six-month or nine-month period of the current fiscal year ended
more than thirty (30) days before the date of the request, and a balance sheet
of the corporation as of the end of that period, the treasurer or chief
financial officer shall cause that statement to be prepared, if not already
prepared, and shall deliver personally or mail that statement or statements to
the person making the request within thirty (30) days after the receipt of the
request. If the corporation has not sent to the shareholders its annual report
for the last fiscal year, this report shall likewise be delivered or mailed to
the shareholder or shareholders within thirty (30) days after the request.
The corporation shall also, on the written request of any shareholder, mail
to the shareholder a copy of the last annual, semi-annual or quarterly income
statement which it has prepared, and a balance sheet as of the end of that
period.
The quarterly income statements and balance sheets referred to in this
section shall be accompanied by a report, if any, of any independent accountants
engaged by the corporation or the certificate of an authorized officer of the
corporation that the financial statements were prepared without audit from the
books and records of the corporation.
Section 7. ANNUAL STATEMENT OF GENERAL INFORMATION.
- ---------
The corporation shall annually, during the period commencing five calendar
months preceding the calendar month during which the original Articles of
Incorporation were filed and ending with the end of the calendar month during
which the original Articles of Incorporation were filed with the Secretary of
State, file with the Secretary of State of the State of California, on the
prescribed form, a statement setting forth the authorized number of directors,
the names and complete business or residence addresses of all incumbent
directors, the names and complete business or residence addresses of the chief
executive officer, secretary and chief financial officer, the street address of
its principal executive office or principal business office in the state, and
the
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general type of business constituting the principal business activity of the
corporation, together with a designation of the agent of the corporation for the
purpose of service of process, all in compliance with Section 1502 of the
Corporations Code of California.
ARTICLE V
GENERAL CORPORATE MATTERS
Section 1. RECORD DATE FOR PURPOSES OTHER THAN NOTICE AND VOTING.
- ---------
For purposes of determining the shareholders entitled to receive payment of
any dividend or other distribution or allotment of any rights or entitled to
exercise any rights in respect of any other lawful election (other than action
by shareholders by written consent without a meeting) the Board of Directors may
fix, in advance, a record date, which shall not be more than sixty (60) days
before any such action and in that case only shareholders of record on the date
so fixed are entitled to receive the dividend, distribution or allotment of
rights or to exercise the rights, as the case may be, notwithstanding any
transfer of any shares on the books of the corporation after the record date so
fixed, except as otherwise provided in the California General Corporation Law.
If the Board of Directors does not so fix a record date, the record date
for determining shareholders for any such purpose shall be at the close of
business on the day on which the board adopts the applicable resolution or the
sixtieth (60th) day before the date of that action, whichever is later.
Section 2. CHECKS, DRAFTS, EVIDENCES OF INDEBTEDNESS.
- ---------
All checks, drafts or other orders for payment of money, notes or other
evidences of indebtedness, issued in the name of or payable to the corporation
shall be signed or endorsed by such person or persons and in such manner as,
from time to time, shall be determined by the resolution of the Board of
Directors.
Section 3. CORPORATE CONTRACTS AND INSTRUMENTS; HOW EXECUTED.
- ---------
The Board of Directors, except as otherwise provided in these Bylaws, may
authorize any officer or officers, agent or agents, to enter into any contract
or execute any instrument in the name of and on behalf of the corporation and
this authority shall be general or confined to specific instances; and, unless
so authorized or ratified by the Board of Directors or within the agency power
of an officer, no officer, agent or employee shall have any power or authority
to bind the corporation by any contract or engagement or to pledge its credit or
to render it liable for any purpose or for any amount.
Section 4. CERTIFICATES FOR SHARES.
- ---------
A certificate or certificates for shares of the capital stock of the
corporation shall be issued to each shareholder when any of these shares are
fully paid, and the Board of Directors may authorize the issuance of
certificates or shares as partly paid provided that these certificates shall
state the amount of the consideration to be paid for them and the amount paid.
All certificates shall be signed in the name of the corporation by the chairman
of the board or vice-chairman of
15
<PAGE>
the board or the president or vice-president and by the chief financial officer
or an assistant treasurer or the secretary or any assistant secretary,
certifying the number of shares and the class or series of shares owned by the
shareholder. Any or all of the signatures on the certificate may be facsimile.
In case any officer, transfer agent, or registrar who has signed or whose
facsimile signature has been placed on a certificate shall have ceased to be
that officer, transfer agent or registrar before that certificate is issued, it
may be issued by the corporation with the same effect as if that person were an
officer, transfer agent or registrar at the date of issuance.
Section 5. LOST CERTIFICATES.
- ---------
Except as provided in this Section 5, no new certificates for shares shall
be issued to replace an old certificate unless the latter is surrendered to the
corporation and cancelled at the same time. The Board of Directors, in case any
share certificate or certificate for any other security is lost, stolen, or
destroyed, may authorize the issuance of a replacement certificate on such terms
and conditions as the board may require, including provision for indemnification
of the corporation secured by a bond or other adequate security sufficient to
protect the corporation against any claim that may be made against it, including
any expense or liability, on account of the alleged loss, theft or destruction
of the certificate or the issuance of the replacement certificate.
Section 6. REPRESENTATION OF SHARES OF OTHER CORPORATIONS.
- ---------
The chairman of the board, the president or any vice-president, or any
other person authorized by resolution of the Board of Directors or by any of the
foregoing designated officers, is authorized to vote on behalf of the
corporation any and all shares of any other corporation or corporations, foreign
or domestic, standing in the name of the corporation. The authority granted to
these officers to vote or represent on behalf of the corporation any and all
shares held by the corporation in any other corporation or corporations may be
exercised by any of these officers in person or by any person authorized to do
so by a proxy duly executed by these officers.
Section 7. INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND OTHER AGENTS.
- ---------
The corporation shall, to the maximum extent permitted by California
General Corporation Law, indemnify each of its agents against expenses,
judgments, fines, settlements and other amounts actually and reasonably incurred
in connection with any proceeding arising by reason of the fact that any such
person is or was an agent of the corporation. For purposes of this Section 7,
an "agent" of the corporation includes any person who is or was a director,
officer, employee or other agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, or was a
director, officer, employee or agent of a corporation which was a predecessor
corporation of the corporation or of another enterprise at the request of such
predecessor corporation.
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Section 8. CONSTRUCTION AND DEFINITIONS.
- ---------
Unless the context requires otherwise, the general provisions, rules of
construction and definitions in the California General Corporation Law shall
govern the construction of these Bylaws. Without limiting the generality of
this provision, the singular in number includes the plural, the plural number
includes the singular and the term "person" includes both a corporation and a
natural person.
ARTICLE VI
OFFICES
Section 1. PRINCIPAL OFFICES.
- ---------
The Board of Directors shall fix the location of the principal executive
offices of the corporation at any place within or outside the State of
California. If the principal executive offices are located outside the state,
and the corporation has one or more business offices in the state, the Board of
Directors shall fix and designate a principal business office in the State of
California.
Section 2. OTHER OFFICES.
- ---------
The Board of Directors may at any time establish branch or subordinate
offices at any place or places where the corporation is qualified to do
business.
ARTICLE VII
AMENDMENTS
Section 1. AMENDMENT BY SHAREHOLDERS.
- ---------
New Bylaws may be adopted or these Bylaws may be amended or repealed by the
vote or written consent of holders of a majority of the outstanding shares
entitled to vote; provided, however, that if the Articles of Incorporation of
the corporation set forth a number of authorized directors of the corporation,
the authorized number of directors may be changed only by an amendment of the
Articles of Incorporation.
Section 2. AMENDMENT BY DIRECTORS.
- ---------
Subject to the rights of the shareholders as provided in Section 1 of this
Article VII, Bylaws, other than a bylaw or an amendment of a bylaw changing the
authorized number of directors, may be adopted, amended or repealed by the Board
of Directors.
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EXHIBIT 3.26
ARTICLES OF INCORPORATION
(PREPARE IN TRIPLICATE)
COMMONWEALTH OF PENNSYLVANIA
DEPARTMENT OF STATE - CORPORATION BUREAU
308 NORTH OFFICE BUILDING, HARRISBURG, PA 17120
PLEASE INDICATE (CHECK ONE) TYPE
CORPORATION
[X] DOMESTIC BUSINESS CORPORATION FEE
$75.00
[_] DOMESTIC BUSINESS CORPORATION
A CLOSE CORPORATION - COMPLETE BACK
[_] DOMESTIC PROFESSIONAL CORPORATION
ENTER BOARD LICENSE NO.
---------------------------------------------------------------------------
010 NAME OF CORPORATION (MUST CONTAIN A CORPORATE INDICATOR UNLESS
EXEMPT UNDER 15 P.S. 2908 B)
Pennsylvania Media Associates, Inc.
011 ADDRESS OF REGISTERED OFFICE IN PENNSYLVANIA
(P.O. BOX NUMBER NOT ACCEPTABLE)
c/o Timothy M. Slavish, One Riverfront Center
012 CITY 033 COUNTY 013 STATE 064 ZIP CODE
Pittsburgh Allegheny Pennsylvania 15222
- --------------------------------------------------------------------------------
050 EXPLAIN THE PURPOSE OR PURPOSES OF THE CORPORATION
The corporation is formed pursuant to the Pennsylvania Business Corporation
Law of 1988 for the purpose of engaging in any and all lawful business for
which corporations may be incorporated under said law.
(ATTACH 8 1/2 x 11 SHEET IF NECESSARY)
- --------------------------------------------------------------------------------
The Aggregate Number of Shares, Classes of Shares and Par Value of Shares
Which the Corporation Shall have Authority to Issue:
040 Number and Class of Shares 041 Stated Par Value Per
1,000 shares common Share if Any None
042 Total Authorized Capital 031 Term of Existence
N/A perpetual
- --------------------------------------------------------------------------------
The Name and Address of Each Incorporator, and the Number and Class of Shares
Subscribed to by each Incorporator
061, 062
060 Name 063, 064 Address (Street, City, State, Zip Code)
Number and Class of Shares
N/A
Timothy M. Slavish One Riverfront Center, Pittsburgh, PA 15222
- --------------------------------------------------------------------------------
(ATTACH 8 1/2 x 11 SHEET IF NECESSARY)
- --------------------------------------------------------------------------------
IN TESTIMONY WHEREOF, THE INCORPORATOR(S) HAS (HAVE) SIGNED AND SEALED THE
ARTICLES OF INCORPORATION
THIS 9TH DAY OF JANUARY 19 90.
--- -------- ---
/s/ Timothy M. Slavish
- ------------------------------------
Timothy M. Slavish
<TABLE>
<CAPTION>
- FOR OFFICE USE ONLY -
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
030 FILED 002 CODE 003 REV BOX SEQUENTIAL NO. 100 MICROFILE NUMBER
JAN 11 1990 90011228
/S/ REVIEWED BY 004 SICC AMOUNT 001 CORPORATION NUMBER
Christopher A. Lewis
DATE APPROVED $ 1546025
Secretary of Commonwealth DATE REJECTED CERTIFY TO INPUT BY LOG IN LOG IN (REFILE)
[_] REV.
Department of State MAILED BY DATE [_] L & I VERIFIED BY LOG OUT LOG OUT (REFILE)
Commonwealth of Pennsylvania [_] OTHER
- --------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT 3.27
PENNSYLVANIA MEDIA ASSOCIATES, INC.
(A PENNSYLVANIA CORPORATION)
*******
BY-LAWS
*******
ARTICLE I - CORPORATE OFFICES
-----------------------------
The registered office of Pennsylvania Media Associates, Inc. (the
"Corporation") shall be at One Riverfront Center, Pittsburgh, Pennsylvania
15222. The Corporation may also have offices at such other places within or
outside the Commonwealth of Pennsylvania as the Board of Directors may from time
to time designate or the business of the Corporation may require.
ARTICLE II - SEAL
-----------------
The corporate seal shall have inscribed thereon the name of the
Corporation, the year of its incorporation and the words "Corporate Seal,
Pennsylvania".
ARTICLE III - SHAREHOLDERS' MEETINGS
------------------------------------
1. PLACE OF MEETINGS.
All meetings of the shareholders shall be held at the principal office of
the Corporation or at such other place or places, either within or without the
Commonwealth of Pennsylvania, as may from time to time be selected.
2. ANNUAL MEETING.
The annual meeting of the shareholders of the Corporation shall be held on
the third Monday of April in each year, or on such other date as the Board of
Directors may by resolution determine, at 2:00 P.M., when they shall elect a
Board of Directors, and transact such other business as may properly be brought
before the meeting. If the annual meeting shall not be called and held within
six (6) months after the designated time, any shareholder may call such meeting.
3. QUORUM.
A shareholders' meeting duly called shall not be organized for the
transaction of business unless a quorum is present. The presence in person, or
by proxy, of shareholders entitled to cast at least a majority of the votes
which all shareholders are entitled to cast shall constitute a quorum. The
shareholders present at a duly organized meeting can continue to do business
until adjournment, notwithstanding the withdrawal of enough shareholders to
leave less than a quorum. Adjournment or adjournments of any annual or special
meeting may be taken, but any meeting at
<PAGE>
which directors are to be elected shall be adjourned only from day to day, or
for such longer periods not exceeding fifteen (15) days each, as may be directed
by the shareholders who are present in person or by proxy and who are entitled
to cast at least a majority of the votes which all such shareholders would be
entitled to cast at an election of directors until such directors have been
elected. If a meeting cannot be organized because a quorum has not attended,
those present may, except as otherwise provided by statute, adjourn the meeting
to such time and place as they may determine, but in the case of any meeting
called for the election of directors, those who attend the second of such
adjourned meetings, although less than a quorum, shall nevertheless constitute a
quorum for the purpose of electing directors.
4. VOTING.
At each meeting of the shareholders every shareholder having the right to
vote shall be entitled to vote in person or by proxy executed in writing by such
shareholder or by his duly authorized attorney in fact, and filed with the
Secretary of the Corporation. No unrevoked proxy shall be valid after eleven
(11) months from the date of its execution, unless a longer time is expressly
provided therein, but in no event shall a proxy, unless coupled with an
interest, be voted on after three (3) years from the date of its execution.
Elections for directors shall be by cumulative voting. Upon demand made by a
shareholder at any election for directors before the voting begins, the election
shall be by ballot. No share shall be voted at any meeting upon which any
installment is due and unpaid. The registered list of shareholders certified by
the Transfer Agent of the Corporation or by its Secretary shall be evidence of
the right of all persons or entities named therein to vote.
5. NOTICE OF MEETING.
Written notice of the annual meeting shall be mailed to each shareholder
entitled to vote thereat, at such address as appears on the books of the
Corporation, at least ten (10) days prior to the meeting.
6. JUDGES OF ELECTION.
In advance of any meeting of shareholders, the Board of Directors, may
appoint judges of election, who need not be shareholders, to act at such meeting
or any adjournment thereof. If judges of election be not so appointed, the
Chairman of any such meeting may, and on the request of any shareholder or his
proxy shall, make such appointment at the meeting. The number of judges shall
be one (1) or three (3). If appointed at a meeting on the request of one (1) or
more shareholders or proxies, the majority of shares present and entitled to
vote shall determine whether one (1) or three (3) judges are to be appointed.
On request of the Chairman of the meeting, or of any shareholder or his proxy,
the judge(s) shall make a report in writing of any challenge or question or
matter determined by them, and execute a certificate of any fact found by them.
No person who is a candidate for office shall act as a judge.
2
<PAGE>
7. SPECIAL MEETINGS.
Special meetings of the shareholders may be called at any time by the
President, or the Board of Directors, or the holders of not less than one-fifth
(1/5) of the votes which all shareholders are entitled to cast at the particular
meeting. At any time, upon written request of any person or persons who have
duly called a special meeting, it shall be the duty of the Secretary to fix the
date of the meeting to be held, not less than ten (10) nor more than sixty (60)
days after receipt of the request, and to give due notice thereof. If the
Secretary shall neglect or refuse to fix the date of the meeting and give notice
thereof, the person or persons calling the meeting may do so.
Business transacted at all special meetings shall be confined to the
objects stated in the call and matters germane thereto, unless all shareholders
entitled to vote consent thereto.
Written notice of a special meeting of the shareholders, stating the time,
place and purpose thereof, shall be given to each shareholder entitled to vote
thereat at least five (5) days before such meeting, unless a greater period of
notice is required by statute in a particular case.
8. CERTIFIED LIST OF SHAREHOLDERS.
The Secretary or Transfer Agent of the Corporation shall make, at least
five (5) days before each meeting of shareholders, a complete list of the
shareholders entitled to vote at the meeting, arranged in alphabetical order
with the address of and the number of shares held by each. The list shall be
kept on file at the registered office of the Corporation, and shall be subject
to inspection by any shareholder at any time during usual business hours, and
shall also be produced and kept open at the time and place of the meeting, and
shall be subject to the inspection of any shareholder during the whole time of
the meeting.
ARTICLE IV - DIRECTORS
----------------------
1. BOARD OF DIRECTORS.
The business and affairs of the Corporation shall be managed by a Board of
Directors, consisting of two (2) directors, or such other number as shall be
prescribed from time to time by resolution of the Board. Directors shall be
natural persons of full age and need not be residents of this Commonwealth or
shareholders in the Corporation. They shall be elected by the shareholders, at
the annual meeting of the shareholders of the Corporation, and each director
shall be elected for the term of at least one (1) year, and until his successor
shall be elected and shall qualify.
2. POWERS.
In addition to the powers and authorities by these By-Laws expressly
conferred upon them, the Board may exercise all such powers of the Corporation
and do all such lawful acts and things as are not by statute or by the Articles
of Incorporation or by these By-Laws directed or required to be exercised or
done by the shareholders.
3
<PAGE>
3. MEETINGS OF THE BOARD.
The meetings of the Board of Directors may be held at such place within
this Commonwealth, or elsewhere, as a majority of the directors may from time to
time designate, or as may be designated in the notice calling the meeting.
Each newly elected Board of Directors may meet at such place and time as
shall be fixed by the shareholders at the meeting at which such directors are
elected and no notice shall be necessary to the newly elected directors in order
legally to constitute the meeting, or they may meet at such place and time as
may be fixed by the consent in writing of all the directors.
Regular meetings of the Board shall be held without notice at the
registered office of the Corporation, or at such other time and place as shall
be determined by the Board.
4. SPECIAL MEETINGS.
Special meetings of the Board of Directors may be called by the President
on forty-eight (48) hours notice to each director, either personally or by mail
or telegram. Special meetings shall be called by the President or Secretary in
a like manner and on like notice on the written request of two (2) or more
directors.
5. QUORUM.
A majority of the directors in office shall be necessary to constitute a
quorum for the transaction of business, and the acts of a majority of the
directors present at a meeting at which a quorum is present shall be the acts of
the Board of Directors.
6. VACANCIES.
Vacancies in the Board of Directors, including vacancies resulting from an
increase in the number of directors, shall be filled by a majority of the
remaining members of the Board though less than a quorum, and each person so
elected shall be a director until his successor is elected by the shareholders,
who may make such election at the next annual meeting of the shareholders or at
any special meeting duly called for that purpose and held prior thereto.
7. COMPENSATION OF DIRECTORS.
Directors shall be compensated either by a stated annual salary or by a
fixed sum and expenses for attendance at each regular or special meeting of the
Board. Nothing herein contained shall be construed to preclude any director
from serving the Corporation in any other capacity and receiving compensation
therefor.
8. NATIONAL CATASTROPHE.
Notwithstanding any other provisions of law, the Articles or these By-Laws,
during any emergency period following a national catastrophe, a majority of the
surviving members (or the sole survivor) of the Board of Directors who have not
been rendered incapable of acting because
4
<PAGE>
of incapacity or the difficulty of communication or transportation to the place
of meeting shall constitute a quorum for the sole purpose of electing directors
to fill such emergency vacancies; and a majority of the directors present at
such meeting may act to fill such vacancies. Directors so elected shall serve
until such absent directors are able to attend meetings or until the
shareholders act to elect directors for such purpose. During such an emergency
period, if the Board is unable to or fails to meet, any action appropriate to
the circumstances may be taken by such officers of the Corporation as may be
present and able to do so.
9. PRESUMPTION OF ASSENT.
Minutes of each meeting of the Board shall be made available to each
director at or before the next succeeding regular meeting. Every director shall
be presumed to have assented to such minutes unless his objection thereto shall
be made to the Secretary within ten (10) days after such regular meeting.
10. RESIGNATIONS.
Any director may resign by submitting to the President his resignation,
which (unless otherwise specified therein) need not be accepted to make it
effective and it shall be effective immediately upon its receipt by such
officer.
11. REMOVAL OF DIRECTORS.
The entire Board of Directors or any individual director may be removed
from office at any time without assigning any cause, by the vote of shareholders
entitled to cast at least a majority of the votes which all shareholders would
be entitled to cast at any annual election, given at a special meeting of the
shareholders called for that purpose. Unless the entire Board be removed, not
more than one (1) director at a time may be removed by any one (1) vote of
shareholders; and no individual director shall be removed in case the votes of a
sufficient number of shares are cast against the resolution for his removal
which if cumulatively voted at an annual election of the full Board would be
sufficient to elect at least one (1) director.
ARTICLE V - OFFICERS
--------------------
1. PRINCIPAL OFFICERS.
The principal officers of the Corporation shall be a Chairman of the Board
(if the Board of Directors elects one), a President, one (1) or more Vice
Presidents, a Secretary and a Treasurer, each of whom shall be elected by the
Board of Directors. Such other officers and assistant officers as may be deemed
necessary may be elected or appointed by the Board of Directors. Any two (2) or
more offices may be held by the same person, except the offices of President and
Secretary and the offices of President and Vice President.
2. ELECTION AND TERM OF OFFICE.
Any officers of the Corporation to be elected by the Board of Directors
shall be elected annually by the Board of Directors at the first meeting of the
Board of Directors held after each
5
<PAGE>
annual meeting of the Shareholders. If the election of officers shall not be
held at such meeting, such election shall be held as soon thereafter as
conveniently may be. Each officer shall hold office until his successor shall
have qualified or until his death or until he shall resign or shall have been
removed in the manner hereinafter provided.
3. REMOVAL.
Any officer or agent elected or appointed by the Board of Directors may be
removed by the Board of Directors whenever in its judgment the best interests of
the Corporation will be served thereby, but such removal shall be without
prejudice to the contract rights, if any, of the person so removed. Election or
appointment shall not of itself create contract rights.
4. VACANCIES.
A vacancy in any principal office because of death, resignation, removal,
disqualification or otherwise, shall be filled by the Board of Directors for the
unexpired portion of the term.
5. CHAIRMAN OF THE BOARD.
The Chairman of the Board (if the Board of Directors has elected one) shall
preside at all meetings of the Shareholders and of the Board of Directors and
shall have such further and other authority, responsibility and duties as may be
granted to or imposed upon him by the Board of Directors. In the absence of the
President, the Chairman of the Board shall assume all authority, power, duties
and responsibilities otherwise appointed to the President pursuant to Article V,
Section 6, and all references to the President in these By-Laws shall be
regarded as references to the Chairman of the Board, except where a contrary
meaning is clearly required.
6. PRESIDENT.
The President shall be the principal executive officer of the Corporation
and, subject to the control of the Board of Directors and the Chairman of the
Board, shall in general supervise and control all of the business and affairs of
the Corporation. He shall, in the absence of the Chairman of the Board, preside
at all meetings of the Shareholders and of the Board of Directors. He may sign,
with the Secretary or any other proper officer of the Corporation thereunto
authorized by the Board of Directors and Chairman of the Board, certificates for
shares of the Corporation, any deeds, mortgages, bonds, contracts, or other
instruments which the Board of Directors has authorized to be executed, except
in cases where the signing and execution thereof shall be expressly delegated by
the Board of Directors or by these By-Laws or some other law to be otherwise
signed or executed, and in general shall perform all duties incident to the
office of President and such other duties as may be prescribed by the Board of
Directors and the Chairman of the Board from time to time. During the absence
or disability of the Chairman of the Board the President shall exercise the
functions of the Chairman of the Board of the Corporation. He shall have
authority to sign all certificates, contracts and other instruments of the
Corporation necessary or proper to be executed in the course of the
Corporation's regular business or which shall be authorized by the Board of
Directors and shall perform all such other duties as are incident to his office
or are properly required of him by the Board of Directors or the Chairman of
6
<PAGE>
the Board. He shall have the authority, subject to such rules, directions or
orders, as may be prescribed by the Chairman of the Board or the Board of
Directors, to appoint and terminate the appointment of such agents and employees
of the Corporation as he shall deem necessary, to prescribe their power, duties
and compensation and to delegate authority to them.
7. VICE PRESIDENT.
In the absence of the President or Chairman of the Board, in the event of
their death or inability to act, the Vice President, or if there shall be more
than one, the Vice Presidents, in the order determined by the Board of
Directors, shall perform the duties of the President, and when so acting, shall
have all the powers of and be subject to all the restrictions upon the
President. The Vice President or Vice Presidents, as the case may be, shall
perform such other duties and have such other powers as the Board of Directors
may from time to time prescribe.
8. SECRETARY.
The Secretary shall: (a) keep the minutes of the Shareholders' and Board
of Directors' meetings in one (1) or more books provided for that purpose; (b)
see that all notices are duly given in accordance with the provisions of these
By-Laws or as required by law; (c) be custodian of the Corporate records and of
the seal of the Corporation and see that the seal of the Corporation is affixed
to all documents, the execution of which on behalf of the Corporation under its
seal is duly authorized; (d) keep a register of the post office address of each
Shareholder; (e) sign with the President or a Vice President certificates for
shares of the Corporation, the issuance of which shall have been authorized by
resolution of the Board of Directors; (f) have general charge of the stock
transfer books of the Corporation; and (g) in general, perform all duties
incident to the office of Secretary and such other duties as from time to time
may be assigned to him by the President or by the Board of Directors.
9. TREASURER.
If required by the Board of Directors, the Treasurer shall give a bond for
the faithful discharge of his duties in such sum and with such surety or
sureties as the Board of Directors shall determine. He shall: (a) have charge
and custody of and be responsible for all funds and securities of the
Corporation; (b) receive and give receipts for monies due and payable to the
Corporation from any source whatsoever, and deposit all such monies in the name
of the Corporation in such banks, trust companies or other depositories as shall
be selected in accordance with the provisions of these By-Laws; and (c) in
general, perform all of the duties incident to the office of Treasurer and such
other duties as from time to time may be assigned to him by the President or by
the Board of Directors.
10. SALARIES.
The salaries of the officers shall be fixed from time to time by the Board
of Directors and no officer shall be prevented from receiving such salary by
reason of the fact that he is also a Director of the Corporation.
7
<PAGE>
ARTICLE VI - ACTION BY CONSENT;
MEETING BY TELEPHONE
--------------------
1. ACTION BY CONSENT.
Any action which may be taken at a meeting of the shareholders, or at a
meeting of the directors or members of the Executive Committee, may be taken
without a meeting if a consent or consents in writing setting forth the action
so taken shall be signed by all of the shareholders who would be entitled to
vote at a meeting for such purpose, or by all of the directors or the members of
the Executive Committee, as the case may be, and shall be filed with the
Secretary of the Corporation.
2. MEETING BY TELEPHONE.
One or more directors or shareholders may participate in a meeting of the
Board of Directors or a committee of the Board of Directors or of the
shareholders by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other. Participation in such a meeting shall constitute attendance at the
meeting.
ARTICLE VII - CORPORATE RECORDS
-------------------------------
1. RECORDS REQUIRED.
There shall be kept at the registered office of the Corporation an original
or duplicate copy of the minutes of the shareholders and of the directors, and
the original or a copy of the Corporation's By-Laws, including all amendments or
alterations thereof to date, certified by the Secretary of the Corporation. An
original or duplicate share transfer book shall also be kept at the registered
office, or at the office of a transfer agent or registrar within this
Commonwealth, giving the names of the shareholders in alphabetical order, and
showing their respective addresses, the number and classes of shares held by
each, the number and date of certificates issued for the shares, and the number
and date of cancellation of every certificate surrendered for cancellation.
2. INSPECTION.
Every shareholder shall have a right to examine, in person or by his agent
or attorney, at any reasonable time or times for any reasonable purpose, the
share transfer book, books or records of account, and records of the proceedings
of the shareholders and directors, and make extracts therefrom.
ARTICLE VIII - SHARES
---------------------
1. CERTIFICATES.
The share certificates of the Corporation shall be numbered and registered
in the share transfer books of the Corporation, as they are issued. They shall
be signed by the President and
8
<PAGE>
Secretary or Treasurer (in facsimile or otherwise, as permitted by law) and
shall bear the corporate seal.
2. TRANSFERS OF SHARES.
Transfers of shares shall be made on the books of the Corporation upon
surrender of the certificates therefor, duly endorsed, with signature or
signatures guaranteed by a bank or stockbroker. No transfer shall be made
inconsistent with the provisions of Article 8 of the Uniform Code approved April
6, 1953 (Act No. 1), as amended and supplemented.
3. CLOSING SHARE TRANSFER BOOKS OR FIXING RECORD DATE.
The Board of Directors may fix a time, not more than fifty (50) days prior
to the date of any meeting of shareholders, or the date fixed for payment of any
dividend or distribution, or the date fixed for the allotment of rights, or the
date when any change or conversion or exchange of shares will be made or go into
effect, as a record date for the determination of the shareholders entitled to
notice of, and to vote at, any such meeting, or entitled to receive payment of
any such dividend or distribution or to receive any such allotment or rights, or
to exercise the rights in respect to any change, conversion, or exchange of
shares. In such cases, only such shareholders as shall be shareholders of
record on the date so fixed shall be entitled to notice of, and to vote at, such
meeting, or to receive payment of such dividend, or to receive such allotment or
rights, or to exercise such rights, as the case may be, notwithstanding any
transfer of any shares on the books of the Corporation after any record date
fixed as aforesaid. The Board of Directors may close the books of the
Corporation against transfers of shares during the whole or any part of such
period, and in such case written or printed notice thereof shall be mailed at
least ten (10) days before the closing thereof to each shareholder of record at
the address appearing on the records of the Corporation or supplied by him to
the Corporation for the purpose of notice. While the share transfer books of
the Corporation are closed, no transfer of shares shall be made thereon. If no
record date is fixed for the determination of shareholders entitled to receive
notice of and vote at a shareholders' meeting, transferees of shares which are
transferred on the books of the Corporation within ten (10) days next preceding
the date of such meeting shall not be entitled to notice of and vote at such
meeting.
4. LOST CERTIFICATES.
Any person claiming the loss, destruction or mutilation of a share
certificate may have a new certificate issued therefor upon such terms and
indemnity to the Corporation as the Board of Directors may prescribe.
ARTICLE IX - CORPORATE FINANCE
------------------------------
1. DIVIDENDS.
Subject to the provisions of the statutes and the Articles of
Incorporation, the Board of Directors may declare and pay dividends upon the
outstanding shares of the Corporation from time to time and to such extent as it
deems advisable.
9
<PAGE>
2. RESERVES.
Before payment of any dividend there may be set aside out of the net
profits of the Corporation such sum or sums as the directors, from time to time,
in their absolute discretion, think proper as a reserve fund to meet
contingencies, or for equalizing dividends, or for such other purpose as the
directors shall think conducive to the interests of the Corporation, and the
directors may abolish any such reserve in the manner in which it was created.
3. FINANCIAL REPORTS TO SHAREHOLDERS.
The Board of Directors shall have discretion to determine whether financial
reports shall be sent to shareholders, what such reports shall contain, and
whether they shall be audited or accompanied by the report of an independent or
certified public accountant.
ARTICLE X - INDEMNIFICATION OF OFFICERS,
----------------------------------------
DIRECTORS AND EMPLOYEES
-----------------------
1. INDEMNIFICATION.
The Corporation shall reimburse or indemnify each director, officer and
employee of the Corporation (and of any other corporation which he served at the
request of the Corporation) for or against all liabilities and expenses
reasonably incurred by or imposed upon him in connection with or resulting from
any claim, action, suit or proceeding (whether brought by or in the name of this
Corporation or such other corporation or otherwise), civil, criminal,
administrative or investigative (hereinafter called "action"), in which he may
become involved as a party or otherwise by reason of his being or having been
such director, officer or employee or by reason of any action taken or not taken
in such capacity, whether or not he continues to be such at the time such
liabilities or expenses are incurred and whether or not such action or omission
to act occurred before or after the adoption of this By-Law, provided that (i)
in respect of any action by or in the right of the Corporation or such other
corporation, such person was not grossly negligent or guilty of misconduct to
the Corporation or such other corporation, and (ii) in respect of all other
actions such person acted in good faith in what he reasonably believed to be in
the best interests of this Corporation or such other corporation, and in
addition in any criminal action had no reasonable cause to believe that his
conduct was unlawful.
As used in this By-Law, the term "liabilities and expenses" shall include
but not be limited to counsel fees and expenses and amounts of judgments, fines
or penalties against and amounts paid in settlement by, a director, officer or
employee.
2. NON-EXCLUSIVITY.
The foregoing right of indemnification shall not be exclusive of other
rights to which any such person may otherwise be entitled.
10
<PAGE>
3. PENNSYLVANIA INDEMNIFICATION STATUTES.
All rights of indemnification authorized by the Pennsylvania Business
Corporation Law or other applicable statutes, as from time to time amended, are
hereby granted to the foregoing persons in addition to, and not in derogation
of, the other provisions of this Article.
4. SURVIVAL.
All rights of indemnification set forth herein, in the event of the death
of the person involved, shall extend to the legal representatives of his estate
and to his heirs and beneficiaries.
ARTICLE XI - MISCELLANEOUS PROVISIONS
-------------------------------------
1. NOTICES.
Whenever written notice is required to be given to any person, it may be
given to such person, either personally or by sending a copy thereof through the
mail, or by telegram or telex, charges prepaid, to his address appearing on the
books of the Corporation, or supplied by him to the Corporation for the purpose
of notice. If the notice is sent by mail, telegram or telex, it shall be deemed
to have been given to the person entitled thereto when deposited in the United
States mail or when transmitted to such person. Such notice shall specify the
place, day and hour of the meeting and, in the case of a special meeting, the
general nature of the business to be transacted.
Any shareholder or director may waive in writing and at any time, any
notice required to be given under the By-Laws. Attendance of a person, either in
person or by proxy, at any meeting shall constitute a waiver of notice of such
meeting, except where the express purpose of such attendance is to object to the
transaction of any business because the meeting was not lawfully called or
convened.
2. CHECKS.
All checks, demands for money and notes of the Corporation shall be signed
by such officer or officers as the Board of Directors shall from time to time
designate.
ARTICLE XII - AMENDMENTS
------------------------
Except as otherwise specified in the Articles or these By-Laws, these By-
Laws may be altered, amended and repealed, and new By-Laws may be adopted, by
the vote of shareholders entitled to cast at least a majority of the votes which
all shareholders are entitled to cast, or by the vote of a majority of the full
Board of Directors of the Corporation, at any regular or special meeting. In
each case, notice of the specific change proposed to be made must be given to
the shareholders or to the directors, as the case may be, but in the case of a
unanimous vote such notice shall be deemed to be waived.
11
<PAGE>
EXHIBIT 3.28
1149300
FILED
in the office of the Secretary
of State of the State of California
AUG 18 1983
MARCH FONG EU, Secretary of State
By Leslie Glenn
------------
Deputy
ARTICLES OF INCORPORATION
OF
RADIO 1210, INC.
ONE: The name of this corporation is Radio 1210, Inc.
TWO: The purpose of this Corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of California other than the banking business, the trust company business or
the practice of a profession permitted to be incorporated by the California
Corporations Code.
THREE: The name and address in this state of the corporation's initial
agent for service of process is:
Carl J. Auel
3108 Fulton Ave.
Sacramento, CA 95821
FOUR: This corporation is authorized to issue only one class of shares of
stock which shall be designated common stock. The total number of shares it is
authorized to issue is (100) one hundred.
FIVE: This corporation is a close corporation. All of the corporation's
issued shares of all classes shall be held of record by not more than (10) ten
persons.
<PAGE>
SIX: The name and address of the person who is appointed to act as the
initial director of this corporation is:
Name Address
Carl J. Auel 3108 Fulton Ave.
Sacramento, CA 95821
IN WITNESS WHEREOF, the undersigned, being all the persons named above as
the initial director, has executed these Articles of Incorporation.
DATED: August 17, 1983 Carl J. Auel
--------------- ---------------------------------
Carl J. Auel
The undersigned, being all the persons named above as the initial
directors, declare that they are the persons who executed the foregoing Articles
of Incorporation, which execution is their act and deed.
DATED: August 17, 1983 Carl J. Auel
--------------- ---------------------------------
Carl J. Auel
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EXHIBIT 3.29
BYLAWS OF
RADIO 1210, INC.
A CALIFORNIA CORPORATION
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ARTICLE I
SHAREHOLDERS' MEETING
Section 1. PLACE OF MEETINGS.
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Meetings of shareholders shall be held at any place within or outside the
State of California designated by the Board of Directors. In the absence of any
such designation, shareholders' meetings shall be held in the principal
executive office of the corporation.
Section 2. ANNUAL MEETINGS.
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The annual meeting of shareholders shall be held each year on a date and at
a time designated by the Board of Directors. The date so designated shall be
within five (5) months after the end of the fiscal year of the corporation, and
within fifteen (15) months after the last annual meeting. At each annual
meeting directors shall be elected, and any other proper business may be
transacted.
Section 3. SPECIAL MEETINGS.
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A special meeting of the shareholders may be called at any time by the
Board of Directors, or by the chairman of the Board, or by the president or by
one or more shareholders holding shares in the aggregate entitled to cast not
less than ten percent (10%) of the votes at that meeting.
If a special meeting is called by any person or persons other than the
Board of Directors, the request shall be in writing, specifying the time of such
meeting and the general nature of the business proposed to be transacted, and
shall be delivered personally or sent by registered mail or by telegraphic or
other facsimile transmission to the chairman of the Board, the president, any
vice-president or the secretary of the corporation. The officer receiving the
request shall cause notice to be promptly given to the shareholders entitled to
vote, in accordance with the provisions of Sections 4 and 5 of this Article I,
that a meeting will be held at the time requested by the person or persons
calling the meeting, not less than thirty-five (35) nor more than sixty (60)
days after the receipt of the request. If the notice is not given within twenty
(20) days after receipt of the request, the person or persons requesting the
meeting may give the notice. Nothing contained in this paragraph of this
Section 3 shall be construed as limiting, fixing or affecting the time when a
meeting of shareholders called by action of the Board of Directors may be held.
Section 4. NOTICE OF MEETINGS.
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All notices of meetings of shareholders shall be sent or otherwise given in
accordance with Section 5 of this Article I not less than ten (10) nor more than
sixty (60) days before the date of the meeting. The notice shall specify the
place, date and hour of the meeting and (a) in the case of
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a special meeting, the general nature of the business to be transacted or (b) in
the case of the annual meeting, those matters which the Board of Directors, at
the time of giving notice, intends to present for action by the shareholders.
The notice of any meeting at which directors are to be elected shall include the
name of any nominee or nominees whom, at the time of the notice, management
intends to present for election.
If action is proposed to be taken at any meeting for approval of (i) a
contract or transaction in which a director has a direct or indirect financial
interest, pursuant to Section 310 of the Corporations Code of California, (ii)
an amendment of the Articles of Incorporation, pursuant to Section 902 of that
Code, (iii) a reorganization of the corporation, pursuant to Section 1201 of
that Code, (iv) a voluntary dissolution of the corporation, pursuant to Section
1900 of that Code, or (v) a distribution in dissolution other than in accordance
with the rights of outstanding preferred shares, pursuant to Section 2007 of
that Code, the notice shall also state the general nature of that proposal.
Section 5. MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE.
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Notice of any meeting of shareholders shall be given either personally or
by first-class mail or telegraphic or other written communication, charges
prepaid, addressed to the shareholder at the address of that shareholder
appearing on the books of the corporation or given by the shareholder to the
corporation for the purpose of notice. If no such address appears on the
corporation's books or is given, notice shall be deemed to have been given if
sent to that shareholder by first-class mail or telegraphic or other written
communication to the corporation's principal executive office, or if published
at least once in a newspaper of general circulation, in the county where that
office is located. Notice shall be deemed to have been given at the time when
delivered personally or deposited in the mail or sent by telegram or other means
of written communication.
If any notice addressed to a shareholder at the address of that shareholder
appearing on the books of the corporation is returned to the corporation by the
United States Postal Service marked to indicate that the United States Postal
Service is unable to deliver the notice to the shareholder at that address, all
future notices or reports shall be deemed to have been duly given without
further mailing if these shall be available to the shareholder on written demand
of the shareholder at the principal executive office of the corporation for a
period of one (1) year from the date of the giving of the notice.
An affidavit of the mailing or other means of giving any notice of any
shareholders' meetings shall be executed by the secretary, assistant secretary
or any transfer agent of the corporation giving the notice, and shall be filed
and maintained in the minute book of the corporation.
Section 6. QUORUM.
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The presence in person or by proxy of the holders of a majority of the
shares entitled to vote at any meeting of shareholders shall constitute a quorum
for the transaction of business. The shareholders present at a duly called or
held meeting at which a quorum is present may continue
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to do business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum, if any action taken (other than
adjournment) is approved by at least a majority of the shares required to
constitute a quorum.
Section 7. ADJOURNED MEETING; NOTICE.
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Any shareholders' meeting, annual or special, whether or not a quorum is
present, may be adjourned from time to time by the vote of the majority of the
shares represented at that meeting, either in person or by proxy, but in the
absence of a quorum, no other business may be transacted at that meeting, except
as provided in Section 6 of this Article I.
When any meeting of shareholders, either annual or special, is adjourned to
another time or place, notice need not be given of the adjourned meeting if the
time and place are announced at a meeting at which the adjournment is taken
unless a new record date for the adjourned meeting is fixed, or unless the
adjournment is for more than forty-five (45) days from the date set for the
original meeting, in which case the Board of Directors shall set a new record
date. Notice of any such adjourned meeting shall be given to each shareholder
of record entitled to vote at the adjourned meeting in accordance with the
provisions of Sections 4 and 5 of this Article I. At any adjourned meeting the
corporation may transact any business which might have been transacted at the
original meeting.
Section 8. VOTING RIGHTS; CUMULATIVE VOTING.
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The shareholders entitled to vote at any meeting of shareholders shall be
determined in accordance with the provisions of Section 11 of this Article I,
subject to the provisions of Sections 702 through 704, inclusive, of the
Corporations Code of California (relating to voting shares held by a fiduciary,
in the name of a corporation, or in joint ownership). The shareholders' vote
may be by voice vote or by ballot; provided, however, that any election for
directors must be by ballot if demanded by any shareholder before the voting has
begun. On any matter other than elections of directors, any shareholder may
vote part of the shares in favor of the proposal and refrain from voting the
remaining shares or vote them against the proposal, but, if the shareholder
fails to specify the number of shares which the shareholder is voting
affirmatively, it will be conclusively presumed that the shareholder's approving
vote is with respect to all shares that the shareholder is entitled to vote. If
a quorum is present, the affirmative vote of the majority of the shares
represented at the meeting and entitled to vote on any matter (other than the
election of directors) shall be the act of the shareholders, unless a vote of a
greater number or voting by classes is required by the California General
Corporation Law or by the Articles of Incorporation.
At a shareholders' meeting at which directors are to be elected, no
shareholder shall be entitled to accumulate votes (i.e., to cast for any one or
----
more candidates a number of votes greater than the number of the shareholder's
shares) unless the candidates' names have been placed in nomination prior to
commencement of the voting and a shareholder has given notice prior to
commencement of the voting of the shareholder's intention to cumulate votes. If
any shareholder has given such a notice, then every shareholder entitled to vote
may cumulate votes for candidates in nomination and give one candidate a number
of votes equal to the number of directors to be elected multiplied by the number
of votes to which that shareholder's shares are entitled, or
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distribute the shareholder's votes on the same principle among any or all of the
candidates, as the shareholder thinks fit. The candidates receiving the highest
number of votes, up to the number of directors to be elected, shall be elected.
Section 9. WAIVER OF NOTICE OR CONSENT BY ABSENT SHAREHOLDERS.
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The transactions of any meeting of shareholders, either annual or special,
however called and noticed and wherever held, shall be as valid as though had at
a meeting duly held after regular call and notice, if a quorum be present either
in person or by proxy, and if, either before or after the meeting, each person
entitled to vote, who was not present in person or by proxy, signs a written
waiver of notice or a consent to a holding of the meeting or an approval of the
minutes. The waiver of notice or consent need not specify either the business
to be transacted or the purpose of any annual or special meeting of
shareholders, except that if action is taken or proposed to be taken for
approval of any of those matters specified in the second paragraph of Section 4
of this Article I, the waiver of notice or consent shall state the general
nature of the proposal. All such waivers, consents or approvals shall be filed
with the corporate records or made a part of the minutes of the meeting.
Attendance by a person at a meeting shall also constitute a waiver of
notice of that meeting, except when the person objects, at the beginning of the
meeting, to the transaction of any business because the meeting is not lawfully
called or convened and except that attendance at a meeting is not a waiver of
any right to object to the consideration of matters not included in the notice
of the meeting if that objection is expressly made at the meeting.
Section 10. SHAREHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING.
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Any action which may be taken at any annual or special meeting of
shareholders may be taken without a meeting and without prior notice, if a
consent in writing, setting forth the action so taken, is signed by the holders
of outstanding shares having not less than the minimum number of votes that
would be necessary to authorize or to take that action at a meeting at which all
shares entitled to vote on that action were present and voted. In the case of
election of directors, such consent shall be effective only if signed by the
holders of all outstanding shares entitled to vote for the election of
directors; provided, however, that a director may be elected at any time to fill
a vacancy on the Board of Directors that has not been filled by the directors,
by the written consent of the holders of a majority of the outstanding shares
entitled to vote for the election of directors. All such consents shall be
filed with the secretary of the corporation and shall be maintained in the
corporate records. Any shareholder giving a written consent, or the
shareholder's proxy holder, or a transferee of the shares or a personal
representative of the shareholder or his respective proxy holder, may revoke the
consent by a writing received by the secretary of the corporation before written
consents of the number of shares required to authorize the proposed action have
been filed with the secretary.
If the consents of all shareholders entitled to vote have not been
solicited in writing, and if the unanimous written consent of all such
shareholders shall not have been received, the secretary shall give prompt
notice of the corporate action approved by the shareholders without a meeting.
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This notice shall be given in the manner specified in Section 5 of this Article
I. In the case of approval of (a) contracts or transactions in which a director
has a direct or indirect financial interest, pursuant to Section 310 of the
Corporations Code of California, (b) indemnification of agents of the
corporation, pursuant to Section 317 of that Code, (c) a reorganization of the
corporation, pursuant to Section 1201 of that Code, and (d) a distribution in
dissolution other than in accordance with the rights of the outstanding
preferred shares, pursuant to Section 2007 of that Code, the notice shall be
given at least ten (10) days before the consummation of any action authorized by
that approval.
Section 11. RECORD DATE FOR SHAREHOLDERS NOTICE, VOTING AND GIVING CONSENTS.
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For purposes of determining the shareholders entitled to notice of any
meeting or to vote or entitled to give consent to corporate action without a
meeting, the Board of Directors may fix, in advance, a record date, which shall
be not more than sixty (60) days nor less than ten (10) days before the date of
any such meeting nor more than sixty (60) days before any such action without a
meeting, and in this event only shareholders of record on the date so fixed are
entitled to notice and to vote or to give consents, as the case may be,
notwithstanding the transfer of any shares on the books of the corporation after
the record date, except as otherwise provided in the California General
Corporation Law.
If the Board of Directors does not so fix a record date:
(a) The record date for determining shareholders entitled to notice of
or to vote at a meeting of shareholders shall be at the close of business on the
business day next preceding the day on which notice is given or, if notice is
waived, at the close of business on the business day next preceding the day on
which the meeting is held.
(b) The record date for determining shareholders entitled to give
consent to corporate action in writing without a meeting (i) when no prior
action by the Board has been taken, shall be the day on which the first written
consent is given, or (ii) when prior action of the Board has been taken, shall
be at the close of business on the day on which the Board adopts the resolution
relating to that action or the sixtieth (60th) day before the date of such other
action, whichever is later.
Section 12. PROXIES.
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Every person entitled to vote for directors or on any other matter shall
have the right to do so either in person or by one or more agents authorized by
a written proxy signed by the person and filed with the secretary of the
corporation. A proxy shall be deemed signed if the shareholder's name is placed
on the proxy (whether by manual signature, typewriting, telegraphic transmission
or otherwise) by the shareholder or the shareholder's attorney in fact. A
validly executed proxy which does not state that it is irrevocable shall
continue in full force and effect unless (a) revoked by the person executing it,
before the vote pursuant to that proxy by a writing delivered to the corporation
stating that the proxy is revoked, or by a subsequent proxy executed by, or
attendance at the meeting and voting in person by, the person executing the
proxy; or
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(b) written notice of the death or incapacity of the maker of that proxy is
received by the corporation before the vote pursuant to that proxy is counted;
provided, however, that no proxy shall be valid after the expiration of eleven
(11) months from the date of the proxy, unless otherwise provided in the proxy,
and, provided, further, that the proxy shall be valid only if executed in favor
of another shareholder of the corporation. The revocability of a proxy that
states on its face that it is irrevocable shall be governed by the provisions of
Sections 705(e) and 705(f) of the Corporations Code of California.
Section 13. INSPECTORS OF ELECTION.
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Before any meeting of shareholders, the Board of Directors may appoint any
persons other than nominees for office to act as inspectors of election at the
meeting or its adjournment. If no inspectors of election are so appointed, the
chairman of the meeting may, and on the request of any shareholder or a
shareholder's proxy shall, appoint inspectors of election at the meeting. The
number of inspectors shall be either one (1) or three (3). If inspectors are
appointed at the meeting on the request of one or more shareholders or proxies,
the holders of a majority of shares or their proxies present at the meeting
shall determine whether one (1) or three (3) inspectors are to be appointed. If
any person appointed as inspector fails to appear or fails or refuses to act,
the chairman of the meeting may, and upon the request of any shareholder or a
shareholder's proxy shall, appoint a person to fill that vacancy.
These inspectors shall:
(a) Determine the number of shares outstanding and the voting power of
each, the shares represented at the meeting, the existence of a quorum and the
authenticity, validity and effect of proxies;
(b) Receive votes, ballots or consents;
(c) Hear and determine all challenges and questions in any way arising
in connection with the right to vote;
(d) Count and tabulate all votes or consents;
(e) Determine when the polls shall close;
(f) Determine the result; and
(g) Do any other acts that may be proper to conduct the election or
vote with fairness to all shareholders.
Section 14. VOTING TRUSTS.
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If a voting trust agreement is filed in the office of the corporation, the
corporation shall take notice of its terms and the limitations this agreement
places on the authority of the trustee. The agreement shall be valid only if
voting power is vested in another shareholder of the corporation.
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ARTICLE II
DIRECTORS; MANAGEMENT
Section 1. POWERS.
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Subject to the limitations of the Articles of Incorporation, of the Bylaws
and of the laws of the State of California as to action to be authorized or
approved by the shareholders, all corporate powers shall be exercised by or
under authority of, and the business and affairs of this corporation shall be
controlled by, a board of directors.
Section 2. NUMBER AND QUALIFICATION.
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The authorized number of directors shall be two (2) until changed by a duly
adopted amendment of the Articles of Incorporation or by an amendment to these
Bylaws adopted by the vote or written consent of holders of a majority of the
outstanding shares entitled to vote.
Section 3. ELECTION AND TENURE OF OFFICE.
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Directors shall be elected at each annual meeting of the shareholders to
hold office until the next annual meeting. Each director, including a director
elected to fill a vacancy, shall hold office until the expiration of the term
for which elected and until a successor has been elected and qualified.
Section 4. VACANCIES.
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Vacancies in the Board of Directors may be filled by a majority of the
remaining directors, though less than a quorum or by a sole remaining director,
except that a vacancy created by the removal of a director by the vote or
written consent of the shareholders or by court order may be filled only by the
vote of a majority of the shares entitled to vote represented at a duly held
meeting at which a quorum is present, or by the written consent of holders of a
majority of the outstanding shares entitled to vote. Each director so elected
shall hold office until the next annual meeting of the shareholders and until a
successor has been elected and qualified.
A vacancy or vacancies in the Board of Directors shall be deemed to exist
in the event of the death, disqualification, resignation, or removal of any
director, or if the Board of Directors by resolution declares vacant the office
of a director who has been declared of unsound mind by an order of court or
convicted of a felony, or if the authorized number of directors is increased or
if the shareholders fail, in any meeting of shareholders at which any director
or directors are elected, to elect the number of directors to be voted for at
that meeting.
The shareholders may elect a director or directors at any time to fill any
vacancy or vacancies not filled by the directors, but any such election by
written consent shall require the consent of a majority of the outstanding
shares entitled to vote.
Any director may resign effective on giving written notice to the chairman
of the board, the president, the secretary or the Board of Directors, unless the
notice specifies a later time for that resignation to become effective. If the
resignation of a director is effective at a future time,
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the Board of Directors may elect a successor to take office when the resignation
becomes effective.
No reduction of the authorized number of directors shall have the effect of
removing any director before that director's term of office expires.
Section 5. REMOVAL OF DIRECTORS.
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The entire Board of Directors or any individual director may be removed
from office as provided by Sections 302, 303 and 304 of the Corporations Code of
the State of California.
Section 6. PLACE OF MEETINGS AND MEETINGS BY TELEPHONE.
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Regular meetings of the Board of Directors may be held at any place within
or outside the State of California that has been designated from time to time by
resolution of the Board. In the absence of such designation, regular meetings
shall be held at the principal executive office of the corporation. Special
meetings of the board shall be held at any place within or outside the State of
California that has been designated in the notice of the meeting or, if not
stated in the notice or there is no notice, at the principal executive office of
the corporation. Any meeting, regular or special, may be held by conference
telephone or similar communication equipment, so long as all directors
participating in the meeting can hear one another, and all such directors shall
be deemed to be present in person at the meeting.
Section 7. ANNUAL MEETING.
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Immediately following each annual meeting of shareholders, the Board of
Directors shall hold a regular meeting for the purpose of organization, any
desired election of officers and the transaction of other business. Notice of
this meeting shall not be required.
Section 8. OTHER REGULAR MEETINGS.
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Other regular meetings of the Board of Directors shall be held without call
at such time as it shall from time to time be fixed by the Board of Directors.
Such regular meetings may be held without notice.
Section 9. SPECIAL MEETINGS - NOTICES.
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Special meetings of the Board of Directors for any purpose or purposes may
be called at any time by the chairman of the board or the president or any vice-
president or the secretary or any two directors.
Notice of the time and place of special meetings shall be delivered
personally or by telephone to each director, or sent by first-class mail or
telegram, charges prepaid, addressed to each director at that director's address
as it is shown on the records of the corporation. In case the notice is mailed,
it shall be deposited in the United States mail at least four (4) days before
the time of the holding of the meeting. In case the notice is delivered
personally or by telephone or telegram, it shall be delivered personally or by
telephone or to the telegraph company at least
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forty-eight (48) hours before the time of the holding of the meeting. Any oral
notice given personally or by telephone may be communicated either to the
director or to a person at the office of the director who the person giving the
notice has reason to believe will promptly communicate it to the director. The
notice need not specify the purpose of the meeting nor the place if the meeting
is to be held at the principal executive offices of the corporation.
Section 10. QUORUM.
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A majority of the authorized number of directors shall constitute a quorum
for the transaction of business, except to adjourn as provided in Section 13 of
this Article II, unless the authorized number of directors is two or less, in
which case all of the duly elected and acting directors shall constitute a
quorum for the transaction of business. Every act or decision done or made by a
majority of the directors present at a meeting duly held at which a quorum is
present shall be regarded as the act of the Board of Directors, subject to the
provisions of Section 310 of the Corporations Code of the State of California
(as to approval of contracts or transactions in which a director has a direct or
indirect material financial interest), Section 311 of that Code (as to
appointment of committees), and Section 317(e) of that Code (as to
indemnification of directors). A meeting at which a quorum is initially present
may continue to transact business notwithstanding the withdrawal of directors,
if any action taken is approved by at least a majority of the required quorum
for that meeting.
Section 11. WAIVER OF NOTICE.
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The transactions of any meeting of the Board of Directors, however called
and noticed and wherever held, shall be as valid as though had at a meeting duly
held after regular call and notice if a quorum is present and if, either before
or after the meeting, each of the directors not present signs a written waiver
of notice, a consent to holding the meeting or an approval of the minutes. The
waiver of notice or consent need not specify the purpose of the meeting. All
such waivers, consents and approval shall be filed with the corporate records or
made a part of the minutes of the meeting. Notice of a meeting shall also be
deemed given to any director who attends the meeting without protesting before
or at its commencement, the lack of notice to that director.
Section 12. DIRECTORS ACTING WITHOUT A MEETING BY UNANIMOUS WRITTEN CONSENT.
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Any action required or permitted to be taken by the Board of Directors may
be taken without a meeting, if all members of the Board shall individually or
collectively consent in writing to that action. Such action by written consent
shall have the same force and effect as a unanimous vote of the Board of
Directors. Such written consent or consents shall be filed with the minutes of
the proceedings of the Board.
Section 13. ADJOURNMENT.
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A majority of the directors present, whether or not constituting a quorum,
may adjourn any meeting to another time and place.
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Section 14. NOTICE OF ADJOURNMENT.
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Notice of the time and place of holding an adjourned meeting need not be
given, unless the meeting is adjourned for more than twenty-four (24) hours, in
which case notice of the time and place shall be given before the time of the
adjourned meeting, in the manner specified in Section 9 of this Article II, to
the directors who are not present at the time of the adjournment.
Section 15. COMPENSATION OF DIRECTORS.
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Directors and members of committees, as such, shall not receive any stated
salary for their services, but by resolution of the board a fixed sum and
expense of attendance, if any, may be allowed for attendance at each regular and
special meeting of the board; provided that nothing herein contained shall be
construed to preclude any director from serving the corporation in any other
capacity and receiving compensation therefor.
ARTICLE III
OFFICERS
Section 1. OFFICERS.
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The officers of the corporation shall consist of a president, vice-
president, secretary, and chief financial officer. The corporation may also
have, at the discretion of the Board of Directors, a chairman of the board, one
or more additional vice-presidents, one or more assistant secretaries, one or
more assistant treasurers and such other officers as may be appointed in
accordance with the provisions of Section 3 of this Article. One person may
hold two or more offices, except those of president and secretary.
Section 2. ELECTION.
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The officers of the corporation, except those officers as may be appointed
in accordance with the provisions of Section 3 and Section 5 of this Article III
shall be chosen annually by the Board of Directors, and each shall hold his
office until he shall resign or shall be removed or otherwise disqualified to
serve, or his successor shall be elected and qualified.
Section 3. SUBORDINATE OFFICERS, ETC.
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The Board of Directors may appoint such other officers as the business of
the corporation may require, each of whom shall hold office for such period,
have such authority and perform such duties as are provided in the bylaws or as
the Board of Directors may from time to time determine.
Section 4. REMOVAL AND RESIGNATION.
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Any officer may be removed, either with or without cause, by the Board of
Directors at any regular or special meeting, or, except in case of an officer
chosen by the Board of Directors, by any officer upon whom such power of removal
may be conferred by the Board of Directors.
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Any officer may resign at any time by giving written notice to the Board of
Directors, or to the president or to the secretary of the corporation. Any such
resignation shall take effect at the date of this notice or at any later
specified time; and, unless otherwise specified, the acceptance of this
resignation shall not be necessary to make it effective.
Section 5. VACANCIES.
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A vacancy in any office because of death, resignation, removal,
disqualification, or because of any other cause shall be filled in the manner
prescribed in the bylaws for regular appointments to the office.
Section 6. CHAIRMAN OF THE BOARD.
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The chairman of the board, if there shall be such an officer, shall, if
present, preside at all meetings of the Board of Directors and exercise and
perform such other powers and duties as may be from time to time assigned to him
by the Board of Directors or prescribed by the bylaws. If there is no
president, the chairman of the board shall in addition be the chief executive
officer of the corporation and shall have the powers and duties prescribed in
Section 7 of this Article III.
Section 7. PRESIDENT.
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Subject to such supervisory powers, if any, as may be given by the Board of
Directors to the chairman of the board, if there be such an officer, the
president shall be the chief executive officer of the corporation and shall,
subject to the control of the Board of Directors, have general supervision,
direction and control of the business and officers of the corporation. He shall
preside at all meetings of the shareholders and in the absence of the chairman
of the board, or if there be none, at all meetings of the Board of Directors.
He shall be ex officio a member of all the standing committees, including the
executive committee, if any, and shall have the general powers and duties of a
corporate management usually vested in the office of president of a corporation
and shall have such other powers and duties as may be prescribed by the Board of
Directors or the bylaws.
Section 8. VICE-PRESIDENT.
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In the absence or disability of the president, the vice-president, if any,
shall perform all the duties of the president, and when so acting shall have all
the powers of, and be subject to, all the restrictions upon, the president. The
vice-president shall have such other powers and perform such other duties as
from time to time may be prescribed by the Board of Directors or the bylaws.
Section 9. SECRETARY.
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The secretary shall keep, or cause to be kept, a book of minutes at the
principal office or such other place as the Board of Directors may order, of all
meetings of directors and shareholders, with the time and place of holding,
whether regular or special and, if special, how authorized, the notice thereof
given, the names of those present at directors' meetings, the number of shares
present or represented at shareholders' meetings and the proceedings thereof.
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The secretary shall keep, or cause to be kept, at the principal office or
at the office of the corporation's transfer agent, a share register, or
duplicate share register, showing the names of the shareholders and their
addresses; the number and classes of shares held by each; the number and date of
certificates issued for the same; and the number and date of cancellation of
every certificate surrendered for cancellation.
The secretary shall give or cause to be given, notice of all the meetings
of the shareholders and of the Board of Directors required by the bylaws or by
law to be given, and he shall keep the seal of the corporation in safe custody
and shall have such other powers and perform such other duties as may be
prescribed by the Board of Directors or by the bylaws.
Section 10. CHIEF FINANCIAL OFFICER.
- ----------
The chief financial officer shall keep and maintain or cause to be kept and
maintained, adequate and correct accounts of the properties and business
transactions of the corporation, including accounts of its assets, liabilities,
receipts, disbursements, gains, losses, capital, surplus and shares. Any
surplus, including earned surplus, paid-in surplus and surplus arising from a
reduction of stated capital shall be classified according to source and shown in
a separate account. The books of account shall at all reasonable times be open
to inspection by any director.
The chief financial officer shall deposit all moneys and other valuables in
the name and to the credit of the corporation with such depositaries as may be
designated by the Board of Directors. He shall disburse the funds of the
corporation as may be ordered by the Board of Directors, shall render to the
president and directors, whenever they request it, an account of all of his
transactions as chief financial officer and of the financial condition of the
corporation and shall have such other powers and perform such other duties as
may be prescribed by the Board of Directors or the bylaws.
Section 11. SALARIES.
- ----------
The salaries of the officers and other shareholders employed by the
corporation shall be fixed from time to time by the Board of Directors or
established under agreements with officers or shareholders approved by the Board
of Directors, and no officer shall be prevented from receiving such salary by
reason of the fact that he is also a director of the corporation.
ARTICLE IV
CORPORATE RECORDS AND REPORTS-INSPECTION
Section 1. MAINTENANCE AND INSPECTION OF SHARE REGISTER.
- ---------
The corporation shall keep at its principal executive office, or at the
office of its transfer agent or registrar, if either be appointed and as
determined by resolution of the Board of Directors, a record of its shareholders
giving the names and addresses of all shareholders and the number and class of
shares held by each shareholder.
A shareholder or shareholders of the corporation holding at least five
percent (5%) in the aggregate of the outstanding voting shares of the
corporation may (a) inspect and copy the
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records of the shareholders' names and addresses and shareholdings during usual
business hours on five days' prior written demand on the corporation and (b)
obtain from the transfer agent of the corporation, on written demand and on
tender of such transfer agent's usual charges for such list, a list of the
shareholders' names and addresses, who are entitled to vote for the election of
directors and their shareholdings, as of the most recent record date for which
that list has been compiled or as of a date specified by the shareholder after
the date of demand. This list shall be made available to any such shareholder
by the transfer agent on or before the later of five (5) days after the demand
is received or the date specified in the demand as the date as of which the list
is to be compiled. The record of shareholders shall also be open to inspection
on the written demand of any shareholder or holder of a voting trust
certificate, at any time during usual business hours, for a purpose reasonably
related to the holder's interest as a shareholder or as a holder of a voting
trust certificate. Any inspection and copying under this Section 1 may be made
in person or by an agent or attorney of the shareholder or holder of a voting
trust certificate making the demand.
Section 2. MAINTENANCE AND INSPECTION OF BYLAWS.
- ---------
The corporation shall keep at its principal executive office, or if its
principal executive office is not in the State of California, at its principal
business office in this state, the original or a copy of the bylaws as amended
to date, which shall be open to inspection by the shareholders at all reasonable
times during office hours. If the principal executive office of the corporation
is outside the State of California and the corporation has no principal business
office in this state, the secretary shall, upon the written request of any
shareholder, furnish to that shareholder a copy of the bylaws as amended to
date.
Section 3. MAINTENANCE AND INSPECTION OF OTHER CORPORATE RECORDS.
- ---------
The accounting books and records and minutes of proceedings of the
shareholders and the Board of Directors and any committee or committees of the
Board of Directors shall be kept at such place or places designated by the Board
of Directors, or, in the absence of such designation, at the principal executive
office of the corporation. The minutes shall be kept in written form and the
accounting books and records shall be kept either in written form or in any
other form capable of being converted into written form. The minutes and
accounting books and records shall be open to inspection upon the written demand
of any shareholder or holder of a voting trust certificate, at any reasonable
time during usual business hours, for a purpose reasonably related to the
holder's interests as a shareholder or as a holder of a voting trust
certificate. The inspection may be made in person or by an agent or attorney,
and shall include the right to copy and make extracts. These rights of
inspection shall extend to the records of each subsidiary corporation of the
corporation.
Section 4. INSPECTION BY DIRECTORS.
- ---------
Every director shall have the absolute right at any reasonable time to
inspect all books, records and documents of every kind and the physical
properties of the corporation at each of its subsidiary corporations. This
inspection by a director may be made in person or by an agent or attorney and
the right of inspection includes the right to copy and make extracts of
documents.
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Section 5. ANNUAL REPORT TO SHAREHOLDERS.
- ---------
The annual report to shareholders referred to in Section 1501 of the
California General Corporation Law is expressly dispensed with, but nothing
herein shall be interpreted as prohibiting the Board of Directors from issuing
annual or other periodic reports to the shareholders of the corporation as they
consider appropriate.
Section 6. FINANCIAL STATEMENTS.
- ---------
A copy of any annual financial statements and any income statement of the
corporation for each quarterly period of each fiscal year, and any accompanying
balance sheet of the corporation as of the end of such period, that has been
prepared by the corporation shall be kept on file in the principal executive
office of the corporation for twelve (12) months and each statement shall be
exhibited at all reasonable times to any shareholder demanding an examination of
such statement or a copy thereof shall be mailed to any such shareholder.
If a shareholder or shareholders holding at least five percent (5%) of the
outstanding shares of any class of stock of the corporation makes a written
request to the corporation for an income statement of the corporation for the
three-month, six-month or nine-month period of the current fiscal year ended
more than thirty (30) days before the date of the request, and a balance sheet
of the corporation as of the end of that period, the treasurer or chief
financial officer shall cause that statement to be prepared, if not already
prepared, and shall deliver personally or mail that statement or statements to
the person making the request within thirty (30) days after the receipt of the
request. If the corporation has not sent to the shareholders its annual report
for the last fiscal year, this report shall likewise be delivered or mailed to
the shareholder or shareholders within thirty (30) days after the request.
The corporation shall also, on the written request of any shareholder, mail
to the shareholder a copy of the last annual, semi-annual or quarterly income
statement which it has prepared, and a balance sheet as of the end of that
period.
The quarterly income statements and balance sheets referred to in this
section shall be accompanied by a report, if any, of any independent accountants
engaged by the corporation or the certificate of an authorized officer of the
corporation that the financial statements were prepared without audit from the
books and records of the corporation.
Section 7. ANNUAL STATEMENT OF GENERAL INFORMATION.
- ---------
The corporation shall annually, during the period commencing five calendar
months preceding the calendar month during which the original Articles of
Incorporation were filed and ending with the end of the calendar month during
which the original Articles of Incorporation were filed with the Secretary of
State, file with the Secretary of State of the State of California, on the
prescribed form, a statement setting forth the authorized number of directors,
the names and complete business or residence addresses of all incumbent
directors, the names and complete business or residence addresses of the chief
executive officer, secretary and chief financial officer, the street address of
its principal executive office or principal business office in the state,
and the
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general type of business constituting the principal business activity of the
corporation, together with a designation of the agent of the corporation for the
purpose of service of process, all in compliance with Section 1502 of the
Corporations Code of California.
ARTICLE V
GENERAL CORPORATE MATTERS
Section 1. RECORD DATE FOR PURPOSES OTHER THAN NOTICE AND VOTING.
- ---------
For purposes of determining the shareholders entitled to receive payment of
any dividend or other distribution or allotment of any rights or entitled to
exercise any rights in respect of any other lawful election (other than action
by shareholders by written consent without a meeting) the Board of Directors may
fix, in advance, a record date, which shall not be more than sixty (60) days
before any such action and in that case only shareholders of record on the date
so fixed are entitled to receive the dividend, distribution or allotment of
rights or to exercise the rights, as the case may be, notwithstanding any
transfer of any shares on the books of the corporation after the record date so
fixed, except as otherwise provided in the California General Corporation Law.
If the Board of Directors does not so fix a record date, the record date
for determining shareholders for any such purpose shall be at the close of
business on the day on which the board adopts the applicable resolution or the
sixtieth (60th) day before the date of that action, whichever is later.
Section 2. CHECKS, DRAFTS, EVIDENCES OF INDEBTEDNESS.
- ---------
All checks, drafts or other orders for payment of money, notes or other
evidences of indebtedness, issued in the name of or payable to the corporation
shall be signed or endorsed by such person or persons and in such manner as,
from time to time, shall be determined by the resolution of the Board of
Directors.
Section 3. CORPORATE CONTRACTS AND INSTRUMENTS; HOW EXECUTED.
- ---------
The Board of Directors, except as otherwise provided in these Bylaws, may
authorize any officer or officers, agent or agents, to enter into any contract
or execute any instrument in the name of and on behalf of the corporation and
this authority shall be general or confined to specific instances; and, unless
so authorized or ratified by the Board of Directors or within the agency power
of an officer, no officer, agent or employee shall have any power or authority
to bind the corporation by any contract or engagement or to pledge its credit or
to render it liable for any purpose or for any amount.
Section 4. CERTIFICATES FOR SHARES.
- ---------
A certificate or certificates for shares of the capital stock of the
corporation shall be issued to each shareholder when any of these shares are
fully paid, and the Board of Directors may authorize the issuance of
certificates or shares as partly paid provided that these certificates shall
state the amount of the consideration to be paid for them and the amount paid.
All certificates shall be signed in the name of the corporation by the chairman
of the board or vice-chairman of
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the board or the president or vice-president and by the chief financial officer
or an assistant treasurer or the secretary or any assistant secretary,
certifying the number of shares and the class or series of shares owned by the
shareholder. Any or all of the signatures on the certificate may be facsimile.
In case any officer, transfer agent, or registrar who has signed or whose
facsimile signature has been placed on a certificate shall have ceased to be
that officer, transfer agent or registrar before that certificate is issued, it
may be issued by the corporation with the same effect as if that person were an
officer, transfer agent or registrar at the date of issuance.
Section 5. LOST CERTIFICATES.
- ---------
Except as provided in this Section 5, no new certificates for shares shall
be issued to replace an old certificate unless the latter is surrendered to the
corporation and cancelled at the same time. The Board of Directors, in case any
share certificate or certificate for any other security is lost, stolen, or
destroyed, may authorize the issuance of a replacement certificate on such terms
and conditions as the board may require, including provision for indemnification
of the corporation secured by a bond or other adequate security sufficient to
protect the corporation against any claim that may be made against it, including
any expense or liability, on account of the alleged loss, theft or destruction
of the certificate or the issuance of the replacement certificate.
Section 6. REPRESENTATION OF SHARES OF OTHER CORPORATIONS.
- ---------
The chairman of the board, the president or any vice-president, or any
other person authorized by resolution of the Board of Directors or by any of the
foregoing designated officers, is authorized to vote on behalf of the
corporation any and all shares of any other corporation or corporations, foreign
or domestic, standing in the name of the corporation. The authority granted to
these officers to vote or represent on behalf of the corporation any and all
shares held by the corporation in any other corporation or corporations may be
exercised by any of these officers in person or by any person authorized to do
so by a proxy duly executed by these officers.
Section 7. INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND OTHER AGENTS.
- ---------
The corporation shall, to the maximum extent permitted by California
General Corporation Law, indemnify each of its agents against expenses,
judgments, fines, settlements and other amounts actually and reasonably incurred
in connection with any proceeding arising by reason of the fact that any such
person is or was an agent of the corporation. For purposes of this Section 7,
an "agent" of the corporation includes any person who is or was a director,
officer, employee or other agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, or was a
director, officer, employee or agent of a corporation which was a predecessor
corporation of the corporation or of another enterprise at the request of such
predecessor corporation.
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Section 8. CONSTRUCTION AND DEFINITIONS.
- ---------
Unless the context requires otherwise, the general provisions, rules of
construction and definitions in the California General Corporation Law shall
govern the construction of these Bylaws. Without limiting the generality of
this provision, the singular in number includes the plural, the plural number
includes the singular and the term "person" includes both a corporation and a
natural person.
ARTICLE VI
OFFICES
Section 1. PRINCIPAL OFFICES.
- ---------
The Board of Directors shall fix the location of the principal executive
offices of the corporation at any place within or outside the State of
California. If the principal executive offices are located outside the state,
and the corporation has one or more business offices in the state, the Board of
Directors shall fix and designate a principal business office in the State of
California.
Section 2. OTHER OFFICES.
- ---------
The Board of Directors may at any time establish branch or subordinate
offices at any place or places where the corporation is qualified to do
business.
ARTICLE VII
AMENDMENTS
Section 1. AMENDMENT BY SHAREHOLDERS.
- ---------
New Bylaws may be adopted or these Bylaws may be amended or repealed by the
vote or written consent of holders of a majority of the outstanding shares
entitled to vote; provided, however, that if the Articles of Incorporation of
the corporation set forth a number of authorized directors of the corporation,
the authorized number of directors may be changed only by an amendment of the
Articles of Incorporation.
Section 2. AMENDMENT BY DIRECTORS.
- ---------
Subject to the rights of the shareholders as provided in Section 1 of this
Article VII, Bylaws, other than a bylaw or an amendment of a bylaw changing the
authorized number of directors, may be adopted, amended or repealed by the Board
of Directors.
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EXHIBIT 3.30
CERTIFICATE OF INCORPORATION
OF
SALEM COMMUNICATIONS CORPORATION
ARTICLE I
NAME OF CORPORATION
The name of this corporation is:
Salem Communications Corporation
The address of the registered office of the corporation in the State of
Delaware is 32 Loockerman Square, Suite L-100, in the City of Dover, County of
Kent, and the name of its registered agent at that address is The Prentice-Hall
Corporation System, Inc.
ARTICLE II
REGISTERED OFFICE
The address of the registered office of the corporation in the State of
Delaware is 32 Loockerman Square, Suite L-100, in the City of Dover, County of
Kent, and the name of its registered agent at that address is The Prentice-Hall
Corporation System, Inc.
ARTICLE III
PURPOSE
The purpose of the corporation is to engage in any lawful act or activity
for which corporations may be organized under the General Corporation Law of
Delaware.
ARTICLE IV
AUTHORIZED CAPITAL STOCK
The corporation shall be authorized to issue one class of stock to be
designated common stock; the total number of shares which the corporation shall
have authority to issue is one thousand (1,000), $.01 par value per share.
ARTICLE V
INCORPORATOR
The name and mailing address of the incorporator of the corporation is:
<PAGE>
Eric V. Halvorson
4880 Santa Rosa Road, Suite 300
Camarillo, California 93012
ARTICLE VI
BOARD POWER REGARDING BYLAWS
In furtherance and not in limitation of the powers conferred by statute,
the board of directors is expressly authorized to make, repeal, alter, amend and
rescind the bylaws of the corporation.
ARTICLE VII
ELECTION OF DIRECTORS
Elections of directors need not be by written ballot unless the bylaws of
the corporation shall so provide.
ARTICLE VIII
LIMITATION OF DIRECTOR LIABILITY
To the fullest extent permitted by the Delaware General Corporation Law as
the same exists or may hereafter be amended, a director of the corporation shall
not be liable to the corporation or its stockholders for monetary damages for
breach of fiduciary duty as a director. If the Delaware General Corporation Law
is amended after the date of the filing of this Certificate of Incorporation to
authorize corporate action further eliminating or limiting the personal
liability of directors, then the liability of a director of the corporation
shall be eliminated or limited to the fullest extent permitted by the Delaware
General Corporation Law, as so amended from time to time. No repeal or
modification of this Article VIII by the stockholders shall adversely affect any
right or protection of a director of the corporation existing by virtue of this
Article VIII at the time of such repeal or modification.
ARTICLE IX
CORPORATE POWER
The corporation reserves the right to amend, alter, change or repeal any
provision contained in this certificate of incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred on stockholders herein
are granted subject to this reservation.
2
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ARTICLE X
CREDITOR COMPROMISE OR ARRANGEMENT
Whenever a compromise or arrangement is proposed between this corporation
and its creditors or any class of them and/or between this corporation and its
stockholders or any class of them, any court of equitable jurisdiction within
the State of Delaware may, on the application in a summary way of this
corporation or of any creditor or stockholder thereof or on the application of
any receiver or receivers appointed for this corporation under the provisions of
section 291 of Title 8 of the Delaware Code or on the application of trustees in
dissolution or of any receiver or receivers appointed for this corporation under
the provisions of Section 279 of Title 8 of the Delaware Code order a meeting of
the creditors or class of creditors, and/or of the stockholders or class of
stockholders of this corporation, as the case may be, to be summoned in such
manner as the said court directs. If a majority in number representing three-
fourths in value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of this corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization of this
corporation as a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of this corporation, as the case may be, and also on this
corporation.
THE UNDERSIGNED, being the incorporator hereinbefore named, for the purpose
of forming a corporation to do business both within and without the State of
Delaware, and in pursuance of the Delaware General Corporation Law, does hereby
make and file this Certificate.
Dated: September 14, 1997
/s/ Eric H. Halvorson
------------------------------------
ERIC H. HALVORSON
3
<PAGE>
EXHIBIT 3.31
SALEM COMMUNICATIONS CORPORATION
(a Delaware corporation)
BYLAWS
ARTICLE I
Offices
SECTION 1.01 Registered Office. The registered office of Salem
Communications Corporation (hereinafter called the Corporation) in the State of
Delaware shall be at 32 Loockerman Square, City of Dover, County of Kent, and
the name of the registered agent in charge thereof shall be The Prentice-Hall
Corporation System, Inc. until changed by resolution of the board of directors
(hereinafter called the Board).
SECTION 1.02 Other Offices. The Corporation may also have an office
or offices at such other place or places, either within or without the State of
Delaware, as the Board may from time to time determine or as the business of the
Corporation may require.
ARTICLE II
Meetings of Stockholders
SECTION 2.01 Annual Meetings. Annual meetings of the stockholders of
the Corporation for the purpose of electing directors and for the transaction of
such other proper business as may come before such meetings shall be held on the
first Wednesday in September of each year at 10:00 a.m. (or, should such day
fall on a legal holiday, then the first day thereafter which is not a legal
holiday) or at such time, date and place as shall be determined by resolution of
the Board.
SECTION 2.02 Special Meetings. A special meeting of the
stockholders for the transaction of any proper business may be called at any
time by the Board or by the President.
SECTION 2.03 Place of Meetings. All meetings of the stockholders
shall be held at such places, within or without the State of Delaware, as may
from time to time be designated by the person or persons calling the respective
meeting and specified in the respective notices or waivers of notice thereof.
SECTION 2.04 Notice of Meetings. Except as otherwise required by
law, notice of each meeting of the stockholders, whether annual or special,
shall be given not less than ten (10) nor more than sixty (60) days before the
date of the meeting to each stockholder of record entitled to vote at such
meeting by delivering a typewritten or printed notice thereof to him personally,
or by depositing such notice in the United States mail, in a postage prepaid
envelope, directed to him at his post office address furnished by him to the
Secretary of the Corporation for
<PAGE>
such purpose or, if he shall not have furnished to the Secretary his address for
such purpose, then at his post office address last known to the Secretary, or by
transmitting a notice thereof to him at such address by telegraph, cable, or
wireless. Except as otherwise expressly required by law, no publication of any
notice of a meeting of the stockholders shall be required. Every notice of a
meeting of the stockholders shall state the place, date and hour of the meeting,
and, in the case of a special meeting, shall also state the purpose or purposes
for which the meeting is called. Notice of any meeting of stockholders shall
not be required to be given to any stockholder who shall have waived such notice
and such notice shall be deemed waived by any stockholder who shall attend such
meeting in person or by proxy, except as a stockholder who shall attend such
meeting for the express purpose of objecting, at the beginning of the meeting,
to the transaction of any business because the meeting is not lawfully called or
convened. Except as otherwise expressly required by law, notice of any
adjourned meeting of the stockholders need not be given if the time and place
thereof are announced at the meeting at which the adjournment is taken.
SECTION 2.05 Quorum. Except in the case of any meeting for the
election of directors summarily ordered as provided by law, the holders of
record of a majority in voting interest of the shares of stock of the
Corporation entitled to be voted thereat, present in person or by proxy, shall
constitute a quorum for the transaction of business at any meeting of the
stockholders of the Corporation or any adjournment thereof. In the absence of a
quorum at any meeting or any adjournment thereof, a majority in voting interest
of the stockholders present in person or by proxy and entitled to vote thereat
or, in the absence therefrom of all the stockholders, any officer entitled to
preside at, or to act as secretary of, such meeting may adjourn such meeting
from time to time. At any such adjourned meeting at which a quorum is present
any business may be transacted which might have been transacted at the meeting
as originally called.
SECTION 2.06 Voting.
(a) Each stockholder shall, at each meeting of the stockholders, be
entitled to vote in person or by proxy each share or fractional share of the
stock of the Corporation having voting rights on the matter in question and
which shall have been held by him and registered in his name on the books of the
Corporation:
(i) on the date fixed pursuant to Section 6.05 of these Bylaws as
the record date for the determination of stockholders entitled to
notice of and to vote at such meeting, or
(ii) if no such record date shall have been so fixed, then (a) at
the close of business on the day next preceding the day on which
notice of the meeting shall be given or (b) if notice of the meeting
shall be waived, at the close of business on the day next preceding
the day on which the meeting shall be held.
(b) Shares of its own stock belonging to the Corporation or to another
corporation, if a majority of the shares entitled to vote in the election of
directors in such other corporation is held, directly or indirectly, by the
Corporation, shall neither be entitled to vote nor be counted for quorum
purposes. Persons holding stock of the Corporation in a fiduciary
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capacity shall be entitled to vote such stock. Persons whose stock is pledged
shall be entitled to vote, unless in the transfer by the pledgor on the books of
the Corporation he shall have expressly empowered the pledgee to vote thereon,
in which case only the pledgee, or his proxy, may represent such stock and vote
thereon. Stock having voting power standing of record in the names of two or
more persons, whether fiduciaries, members of a partnership, joint tenants in
common, tenants by entirety or otherwise, or with respect to which two or more
persons have the same fiduciary relationship, shall be voted in accordance with
the provisions of the General Corporation Law of the State of Delaware.
(c) Any such voting rights may be exercised by the stockholder
entitled thereto in person or by his proxy appointed by an instrument in
writing, subscribed by such stockholder or by his attorney thereunto authorized
and delivered to the secretary of the meeting; provided, however, that no proxy
shall be voted or acted upon after three years from its date unless said proxy
shall provide for a longer period. The attendance at any meeting of a
stockholder who may theretofore have given a proxy shall not have the effect of
revoking the same unless he shall in writing so notify the secretary of the
meeting prior to the voting of the proxy. At any meeting of the stockholders
all matters, except as otherwise provided in the Certificate of Incorporation,
in these Bylaws or by law, shall be decided by the vote of a majority in voting
interest of the stockholders present in person or by proxy and entitled to vote
thereat and thereon, a quorum being present. The vote at any meeting of the
stockholders on any question need not be by ballot, unless so directed by the
chairman of the meeting. On a vote by ballot each ballot shall be signed by the
stockholder voting, or by his proxy, if there be such proxy, and it shall state
the number of shares voted.
SECTION 2.07 List of Stockholders. The Secretary of the Corporation
shall prepare and make, at least ten (10) days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten (10) days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present.
SECTION 2.08 Judges. If at any meeting of the stockholders a vote
by written ballot shall be taken on any question, the chairman of such meeting
may appoint a judge or judges to act with respect to such vote. Each judge so
appointed shall first subscribe an oath faithfully to execute the duties of a
judge at such meeting with strict impartiality and according to the best of his
ability. Such judges shall decide upon the qualification of the voters and
shall report the number of shares represented at the meeting and entitled to
vote on such question, shall conduct and accept the votes, and, when the voting
is completed, shall ascertain and report the number of shares voted respectively
for and against the question. Reports of judges shall be in writing and
subscribed and delivered by them to the Secretary of the Corporation. The
judges need not be
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stockholders of the Corporation, and any officer of the Corporation
may be a judge on any question other than a vote for or against a proposal in
which he shall have a material interest.
SECTION 2.09 Action Without Meeting. Any action required to be taken
at any annual or special meeting of stockholders of the Corporation, or any
action which may be taken at any annual or special meeting of such stockholders,
may be taken without a meeting, without prior notice and without a vote, if a
consent in writing, setting forth the action so taken, shall be signed by the
holders of outstanding stock having not less than the minimum number of votes
that would be necessary to authorize or take such action at a meeting at which
all shares entitled to vote thereon were present and voted. Prompt notice of
the taking of the corporate action without a meeting by less than unanimous
written consent shall be given to those stockholders who have not consented in
writing.
ARTICLE III
Board of Directors
SECTION 3.01 General Powers. The property, business and affairs of
the Corporation shall be managed by the Board.
SECTION 3.02 Number and Term of Office. The number of directors
shall be not less than one (1) or more than three (3), the exact number to be
determined by resolution of the Board. Directors need not be stockholders.
Each of the directors of the Corporation shall hold office until his successor
shall have been duly elected and shall qualify or until he shall resign or shall
have been removed in the manner hereinafter provided.
SECTION 3.03 Election of Directors. The directors shall be elected
annually by the stockholders of the Corporation and the persons receiving the
greatest number of votes, up to the number of directors to be elected, shall be
the directors.
SECTION 3.04 Resignations. Any director of the Corporation may
resign at any time by giving written notice to the Board or to the Secretary of
the Corporation. Any such resignation shall take effect at the time specified
therein, or, if the time be not specified, it shall take effect immediately upon
its receipt; and unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
SECTION 3.05 Vacancies. Except as otherwise provided in the
Certificate of Incorporation, any vacancy in the Board, whether because of
death, resignation, disqualification, an increase in the number of directors, or
any other cause, may be filled by vote of the majority of the remaining
directors, although less than a quorum. Each director so chosen to fill a
vacancy shall hold office until his successor shall have been elected and shall
qualify or until he shall resign or shall have been removed in the manner
hereinafter provided.
SECTION 3.06 Place of Meeting, Etc. The Board may hold any of its
meetings at such place or places within or without the State of Delaware as the
Board may from time to time by resolution designate or as shall be designated by
the person or persons calling the meeting
4
<PAGE>
or in the notice or a waiver of notice of any such meeting. Directors may
participate in any regular or special meeting of the Board by means of
conference telephone or similar communications equipment pursuant to which all
persons participating in the meeting of the Board can hear each other, and such
participation shall constitute presence in person at such meeting.
SECTION 3.07 First Meeting. The Board shall meet as soon as
practicable after each annual election of directors and notice of such first
meeting shall not be required.
SECTION 3.08 Regular Meetings. Regular meetings of the Board nay be
held at such times as the Board shall from time to time by resolution determine.
If any day fixed for a regular meeting shall be a legal holiday at the place
where the meeting is to be held, then the meeting shall be held at the same hour
and place on the next succeeding business day not a legal holiday. Except as
provided by law, notice of regular meetings need not be given.
SECTION 3.09 Special Meetings. Special meetings of the Board shall
be held whenever called by the President or a majority of the authorized number
of directors. Except as otherwise provided by law or by these Bylaws, notice of
the time and place of each such special meeting shall be mailed to each
director, addressed to him at his residence or usual place of business, at least
five (5) days before the day on which the meeting is to be held, or shall be
sent to him at such place by telegraph or cable or be delivered personally not
less than forty-eight (48) hours before the time at which the meeting is to be
held. Except where otherwise required by law or by these Bylaws, notice of the
purpose of a special meeting need not be given. Notice of any meeting of the
Board shall not be required to be given to any director who is present at such
meeting, except a director who shall attend such meeting for the express purpose
of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened.
SECTION 3.10 Quorum and Manner of Acting. Except as otherwise
provided in these Bylaws or by law, the presence of a majority of the authorized
number of directors shall be required to constitute a quorum for the transaction
of business at any meeting of the Board, and all matters shall be decided at any
such meeting, a quorum being present, by the affirmative votes of a majority of
the directors present. In the absence of a quorum, a majority of directors
present at any meeting may adjourn the same from time to time until a quorum
shall be present. Notice of any adjourned meeting need not be given. The
directors shall act only as a Board, and the individual directors shall have no
power as such.
SECTION 3.11 Action by Consent. Any action required or permitted to
be taken at any meeting of the Board or of any committee thereof may be taken
without a meeting if a written consent thereto is signed by all members of the
Board or of such committee, as the case may be, and such written consent is
filed with the minutes of proceedings of the Board or committee.
SECTION 3.12 Removal of Directors. Subject to the provisions of the
Certificate of Incorporation, any director may be removed at any time, either
with or without
5
<PAGE>
cause, by the affirmative vote of the stockholders having a majority of the
voting power of the Corporation given at a special meeting of the stockholders
called for the purpose.
SECTION 3.13 Compensation. The directors shall receive only such
compensation for their services as directors as may be allowed by resolution of
the Board. The Board may also provide that the Corporation shall reimburse each
such director for any expense incurred by him on account of his attendance at
any meetings of the Board or Committees of the Board. Neither the payment of
such compensation nor the reimbursement of such expenses shall be construed to
preclude any director from serving the Corporation or its subsidiaries in any
other capacity and receiving compensation therefor.
SECTION 3.14 Committees. The Board may, by resolution passed by a
majority of the whole Board, designate one or more committees, each committee to
consist of one or more of the directors of the Corporation. Any such committee,
to the extent provided in the resolution of the Board and except as otherwise
limited by law, shall have and may exercise all the powers and authority of the
Board in the management of the business and affairs of the Corporation, and may
authorize the seal of the Corporation to be affixed to all papers which may
require it. Any such committee shall keep written minutes of its meetings and
report the same to the Board at the next regular meeting of the Board. In the
absence or disqualification of a member of a committee, the member or members
thereof present at any meeting and not disqualified from voting, whether or not
he or they constitute a quorum, may unanimously appoint another member of the
Board to act at the meeting in the place of any such absent or disqualified
member.
ARTICLE IV
Officers
SECTION 4.01 Number. The officers of the Corporation shall be a
President, a Secretary and a Chief Financial Officer, and such other officers,
including a chairman of the board, as may be designated by the board of
directors.
SECTION 4.02 Election, Term of Office and Qualifications. The
officers of the Corporation, except such officers as may be appointed in
accordance with Section 4.03, shall be elected annually by the Board at the
first meeting thereof held after the election thereof. Each officer shall hold
office until his successor shall have been duly chosen and shall qualify or
until his resignation or removal in the manner hereinafter provided.
SECTION 4.03 Assistants, Agents and Employees, Etc. In addition to
the officers specified in Section 4.01, the Board may appoint other assistants,
agents and employees as it may deem necessary or advisable, including one or
more Assistant Secretaries, and one or more Assistant Chief Financial Officer,
and such other officers, including a chairman of the board, as may be designated
by the board of directors, each of whom shall hold office for such period, have
such authority, and perform such duties as the Board may from time to time
determine. The Board may delegate to any officer of the Corporation or any
committee of the Board the power to appoint, remove and prescribe the duties of
any such assistants, agents or employees.
6
<PAGE>
SECTION 4.04 Removal. Any officer, assistant, agent or employee of
the Corporation may be removed, with or without cause, at any time: (i) in the
case of an officer, assistant, agent or employee appointed by the Board, only by
resolution of the Board; and (ii) in the case of an officer, assistant, agent or
employee, by any officer of the Corporation or committee of the Board upon whom
or which such power of removal may be conferred by the Board.
SECTION 4.05 Resignations. Any officer or assistant may resign at
any time by giving written notice of his resignation to the Board or the
Secretary of the Corporation. Any such resignation shall take effect at the
time specified therein; or, if the time be not specified, upon receipt thereof
by the Board or the Secretary, as the case may be; and, unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective.
SECTION 4.06 Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification, or other cause, may be filled for the
unexpired portion of the term thereof in the manner prescribed in these Bylaws
for regular appointments or elections to such office.
SECTION 4.07 The President. The President of the Corporation shall
be the chief executive officer of the Corporation and shall have, subject to the
control of the Board, general and active supervision and management over the
business of the Corporation and over its several officers, assistants, agents
and employees.
SECTION 4.08 The Chairman of the Board. The Chairman of the Board,
if there shall be such an officer, shall, if present, preside at all meetings of
the Board and exercise and perform such other powers and duties as may be from
time to time assigned by the Board or prescribed by the Bylaws.
SECTION 4.09 The Vice Presidents. Each Vice President shall have
such powers and perform such duties as the Board may from time to time
prescribe. At the request of the President, or in case of the President's
absence or inability to act upon the request of the Board, a Vice President
shall perform the duties of the President and when so acting, shall have all the
powers of, and be subject to all the restrictions upon, the President.
SECTION 4.10 The Secretary. The Secretary shall, if present, record
the proceedings of all meetings of the Board, of the stockholders, and of all
committees of which a secretary shall not have been appointed in one or more
books provided for that purpose; he shall see that all notices are duly given in
accordance with these Bylaws and as required by law; he shall be custodian of
the seal of the Corporation and shall affix and attest the seal to all documents
to be executed on behalf of the Corporation under its seal; and, in general, he
shall perform all the duties incident to the office of Secretary and such other
duties as may from time to time be assigned to him by the Board.
SECTION 4.11 The Chief Financial Officer. The Chief Financial
Officer shall have the general care and custody of the funds and securities of
the Corporation, and shall deposit
7
<PAGE>
all such funds in the name of the Corporation in such banks, trust companies or
other depositories as shall be selected by the Board. He shall receive, and give
receipts for, moneys due and payable to the Corporation from any source
whatsoever. He shall exercise general supervision over expenditures and
disbursements made by officers, agents and employees of the Corporation and the
preparation of such records and reports in connection therewith as may be
necessary or desirable. He shall, in general, perform all other duties incident
to the office of Chief Financial Officer and such other duties as from time to
time may be assigned to him by the Board.
SECTION 4.12 Compensation. The compensation of the officers of the
Corporation shall be fixed from time to time by the Board. None of such
officers shall be prevented from receiving such compensation by reason of the
fact that he is also a director of the Corporation. Nothing contained herein
shall preclude any officer from serving the Corporation, or any subsidiary
corporation, in any other capacity and receiving such compensation by reason of
the fact that he is also a director of the Corporation. Nothing contained
herein shall preclude any officer from serving the Corporation, or any
subsidiary corporation, in any other capacity and receiving proper compensation
therefor.
ARTICLE V
Contracts, Checks, Drafts, Bank Accounts, Etc.
SECTION 5.01 Execution of Contracts. The Board, except as in these
Bylaws otherwise provided, may authorize any officer or officers, agent or
agents, to enter into any contract or execute any instrument in the name of and
on behalf of the Corporation, and such authority may be general or confined to
specific instances; and unless so authorized by the Board or by these Bylaws, no
officer, agent or employee shall have any power or authority to bind the
Corporation by any contract or engagement or to pledge its credit or to render
it liable for any purpose or in any amount.
SECTION 5.02 Checks, Drafts, Etc. All checks, drafts or other
orders for payment of money, notes or other evidence of indebtedness, issued in
the name of or payable to the Corporation, shall be signed or endorsed by such
person or persons and in such manner as, from time to time, shall be determined
by resolution of the Board. Each such officer, assistant, agent or attorney
shall give such bond, if any, as the Board may require.
SECTION 5.03 Deposits. All funds of the Corporation not otherwise
employed shall be deposited from time to time to the credit of the Corporation
in such banks, trust companies or other depositories as the Board may select, or
as may be selected by any officer or officers, assistant or assistants, agent or
agents, or attorney or attorneys of the Corporation to whom such power shall
have been delegated by the Board. For the purpose of deposit and for the purpose
of collection for the account of the Corporation, the President, any Vice
President or the Treasurer (or any other officer or officers, assistant or
assistants, agent or agents, or attorney or attorneys of the Corporation who
shall from time to time be determined by the Board) may endorse, assign and
deliver checks, drafts and other orders for the payment of money which are
payable to the order of the Corporation.
8
<PAGE>
SECTION 5.04 General and Special Bank Accounts. The Board may from
time to time authorize the opening and keeping of general and special bank
accounts with such banks, trust companies or other depositories as the Board may
select or as may be selected by any officer or officers, assistant or
assistants, agent or agents, or attorney or attorneys of the Corporation to whom
such power shall have been delegated by the Board. The Board may make such
special rules and regulations with respect to such bank accounts, not
inconsistent with the provisions of these Bylaws, as it may deem expedient.
ARTICLE VI
Shares and Their Transfer
SECTION 6.01 Certificates for Stock. Every owner of stock of the
Corporation shall be entitled to have a certificate or certificates, to be in
such form as the Board shall prescribe, certifying the number and class of
shares of the stock of the Corporation owned by him. The certificates
representing shares of such stock shall be numbered in the order in which they
shall be issued and shall be signed in the name of the Corporation by the
President or a Vice President, and by the Secretary or an Assistant Secretary or
by the Treasurer or an Assistant Treasurer. Any of or all of the signatures on
the certificates may be a facsimile. In case any officer, transfer agent or
registrar who has signed, or whose facsimile signature has been placed upon, any
such certificate, shall have ceased to be such officer, transfer agent or
registrar before such certificate is issued, such certificate may nevertheless
be issued by the Corporation with the same effect as though the person who
signed such certificate, or whose facsimile signature shall have been placed
thereupon, were such officer, transfer agent or registrar at the date of issue.
A record shall be kept of the respective names of the persons, firms or
corporations owning the stock represented by such certificates, the number and
class of shares represented by such certificates, respectively, and the
respective dates thereof, and in case of cancellation, the respective dates of
cancellation. Every certificate surrendered to the Corporation for exchange or
transfer shall be cancelled, and no new certificate or certificates shall be
issued in exchange for any existing certificate until such existing certificate
shall have been so cancelled, except in cases provided for in Section 6.04.
SECTION 6.02 Transfers of Stock. Transfers of shares of stock of
the Corporation shall be made only on the books of the Corporation by the
registered holder thereof, or by his attorney thereunto authorized by power of
attorney duly executed and filed with the Secretary, or with a transfer clerk or
a transfer agent appointed as provided in Section 6.03, and upon surrender of
the certificate or certificates for such shares properly endorsed and the
payment of all taxes thereon. The person in whose name shares of stock stand on
the books of the Corporation shall be deemed the owner thereof for all purposes
as regards the Corporation. Whenever any transfer of shares shall be made for
collateral security, and not absolutely, such fact shall be so expressed in the
entry of transfer if, when the certificate or certificates shall be presented to
the Corporation for transfer, both the transferor and the transferee request the
Corporation to do so.
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<PAGE>
SECTION 6.03 Regulations. The Board may make such rules and
regulations as it may deem expedient, not inconsistent with these Bylaws,
concerning the issue, transfer and registration of certificates for shares of
the stock of the Corporation. It may appoint, or authorize any officer or
officers to appoint, one or more transfer clerks or one or more transfer agents
and one or more registrars, and may require all certificates for stock to bear
the signature or signatures of any of them.
SECTION 6.04 Lost, Stolen, Destroyed, and Mutilated Certificates.
In any case of loss, theft, destruction, or mutilation of any certificate of
stock, another may be issued in its place upon proof of such loss, theft,
destruction, or mutilation and upon the giving of a bond of indemnity to the
Corporation in such form and in such sum as the Board may direct; provided,
however, that a new certificate may be issued without requiring any bond when,
in the judgment of the Board, it is proper so to do.
SECTION 6.05 Fixing Date for Determination of Stockholders of
Record. In order that the Corporation may determine the stockholders entitled
to notice of or to vote at any meeting of stockholders or any adjournment
thereof, or to express consent to corporate action in writing without a meeting,
or entitled to receive payment of any dividend or other distribution or
Allotment of any rights, or entitled to exercise any rights in respect of any
other change, conversion or exchange of stock or for the purpose of any other
lawful action, the Board may fix, in advance, a record date, which shall not be
more than 60 nor less than 10 days before the date of such meeting, nor more
than 60 days prior to any other action. If in any case involving the
determination of stockholders for any purpose other than notice of or voting at
a meeting of stockholders or expressing consent to corporate action without a
meeting the Board shall not fix such a record date, the record date for
determining stockholders for such purpose shall be the close of business on the
day on which the Board shall adopt the resolution relating thereto. A
determination of stockholders entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of such meeting; provided, however,
that the Board may fix a new record date for the adjourned meeting.
ARTICLE VII
Indemnification
SECTION 7.01 Action, Etc. Other than by or in the Right of the
Corporation. The Corporation shall indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding if
he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Corporation, and with respect to any
criminal action or proceeding, had no reasonable cause to
10
<PAGE>
believe his conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
the person did not act in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the Corporation, and,
with respect to any criminal action or proceeding, that he had reasonable cause
to believe that his conduct was unlawful.
SECTION 7.02 Actions, Etc., by or in the Right of the Corporation.
The Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the Corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee or agent of
the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation, except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable for negligence or misconduct in the performance of his duty to the
Corporation unless and only to the extent that the Court of Chancery or the
court in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery or such other court shall deem proper.
SECTION 7.03 Determination of Right of Indemnification. Any
indemnification under Section 7.01 or 7.02 (unless ordered by a court) shall be
made by the Corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer, employee or agent
is proper in the circumstances because he has met the applicable standard of
conduct set forth in Section 7.01 and 7.02. Such determination shall be made
(i) by the Board by a majority vote of a quorum consisting of directors who were
not parties to such action, suit or proceeding, or (ii) if such a quorum is not
obtainable, or, even if obtainable a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or (iii) by the
stockholders.
SECTION 7.04 Indemnification Against Expenses of Successful Party.
Notwithstanding the other provisions of this Article, to the extent that a
director, officer, employee or Agent of the Corporation has been successful on
the merits or otherwise in defense of any action, suit or proceeding referred to
in Section 7.01 or 7.02, or in defense of any claim, issue or matter therein, he
shall be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.
SECTION 7.05 Prepaid Expenses. Expenses incurred by an officer or
director in defending a civil or criminal action, suit or proceeding may be paid
by the Corporation in advance of the final disposition of such action, suit or
proceeding as authorized by the Board in the specific case upon receipt of an
undertaking by or on behalf of the director or officer to repay such
11
<PAGE>
amount unless it shall ultimately be determined that he is entitled to be
indemnified by the Corporation as authorized in this Article. Such expenses
incurred by other employees and agents may be so paid upon such terms and
conditions, if any, as the Board deems appropriate.
SECTION 7.06 Other Rights and Remedies. The indemnification
provided by this Article shall not be deemed exclusive of any other rights to
which those seeking indemnification may be entitled under any Bylaws, agreement,
vote of stockholders or disinterested directors or otherwise, both as to action
in his official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
SECTION 7.07 Insurance. Upon resolution passed by the Board, the
Corporation may purchase and maintain insurance on behalf of any person who is
or was a director, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him and incurred by him in any
such capacity, or arising out of his status as such, whether or not the
Corporation would have the power to indemnify him against such liability under
the provisions of this Article.
SECTION 7.08 Constituent Corporations. For the purposes of this
Article, references to "the Corporation" include all constituent corporations
absorbed in a consolidation or merger as well as the resulting or surviving
corporation, so that any person who is or was a director, officer, employee or
agent of such a constituent corporation or is or was serving at the request of
such constituent corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise shall
stand in the same position under the provisions of this Article with respect to
the resulting or surviving corporation as he would if he had served the
resulting or surviving corporation in the same capacity.
SECTION 7.09 Other Enterprises, Fines, and Serving at Corporation's
Request. For purposes of this Article, references to "other enterprises" shall
include employee benefit plans; references to "fines" shall include any excise
taxes assessed on a person with respect to any employee benefit plan; and
references to "serving at the request of the Corporation" shall include any
service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee, or
agent with respect to an employee benefit plan, its participants, or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the Corporation" as referred to in this
Article.
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ARTICLE VIII
Miscellaneous
SECTION 8.01 Seal. The Board shall provide for a corporate seal,
which shall be in the form as adopted by the Board, shall bear the name of the
Corporation and words and figures showing that the Corporation was incorporated
in the State of Delaware and the year of incorporation.
SECTION 8.02 Waiver of Notices. Whenever notice is required to be
given by these Bylaws or the Certificate of Incorporation or by law, the person
entitled to said notice may waive such notice in writing, either before or after
the time stated therein, and such waiver shall be deemed equivalent to notice.
SECTION 8.03 Amendments. These Bylaws, or any of them, may be
altered, amended or repealed, and new Bylaws may be made, (i) by the Board, by
vote of a majority of the number of directors then in office as directors,
acting at any meeting of the Board, or (ii) by the stockholders, at any annual
meeting of stockholders, without previous notice, or at any special meeting of
stockholders, provided that notice of such proposed amendment, modification,
repeal or adoption is given in the notice of special meeting. Any Bylaws made
or altered by the stockholders may be altered or repealed by either the Board or
the stockholders.
13
<PAGE>
EXHIBIT 3.32
<TABLE>
<CAPTION>
A590164
==============================
<S> <C> <C>
CERTIFICATE OF
INCORPORATION
G-50
_85732
June, 1979
==============================
SALEM MEDIA CORPORATION
==============================
STATE OF __________
DEPARTMENT OF ________
FILED JUL 12 1979
AMT OF CHECK $ 103.50
--------
FILING FEE $ .50
--------
TAX $ .50
--------
COPY $___________________
CERT $___________________
REFUND $_________________
BY:______________________
/s/ P. Owens
==============================
Miller & Fields
1901 Pennsylvania Ave. NW
Washington, D.C. 20006
==============================
</TABLE>
<PAGE>
CERTIFICATE OF INCORPORATION
OF SALEM MEDIA CORPORATION
Under Section 402 of the Business Corporation Law
THIS IS TO CERTIFY
FIRST: The name of the corporation is SALEM MEDIA CORPORATION.
SECOND: The purposes for which the corporation is formed and the business
or object to be carried on and promoted by it are as follows:
(1) To engage in the business of commercial broadcasting by means of radio
and/or television broadcasting machines or any other devices, machinery, or
equipment whatsoever. To own, sell, hold, lease, equip, maintain and operate
broadcasting and receiving stations and any connections between such stations;
to transmit, send, and broadcast via radio waves and/or cables, news, talks,
speeches, lectures, music, programs, reports, signals advertising, and all
matter and things of any kind, nature and description whatsoever.
(2) To engage in any other legal trade or business in connection with or
auxiliary to broadcasting.
THIRD: The powers of the corporation are as follows:
(1) To purchase or otherwise acquire, hold, own, mortgage, sell, convey,
exchange, option, subdivide, or otherwise dispose of real and personal property
of every class and description and any estate or interest therein, including
leaseholds for any term, in any of the states, districts, territories, or
colonies of the United States, and in any and all foreign countries, subject to
the laws of such state, district, territory, colony or country.
(2) To issue both preferred and common stock, and accept payment of
subscription therefor in such installments, in such manner, on such terms, in
money or in property, real or personal, or both as shall be determined by the
managing stockholders.
(3) To borrow or raise money for any of the purposes of the corporation,
and to issue bonds, debentures, notes or other obligations of any nature and in
any manner permitted by law, for money so borrowed or, in payment for stock and
property purchased or for any other lawful consideration, and to assure the
payment thereof and the interest thereon, by mortgage upon or pledge or
conveyance or assignment in trust of the whole or any part of the property of
the corporation, real or personal, including the contract rights, whether at the
time owned or thereafter acquired; and to sell, pledge, discount or otherwise
dispose of such bonds, notes or obligations of the corporation for its corporate
purposes.
(4) To perform any and all lawful activities.
FOURTH: The office of the corporation is to be located in New York City,
Borough of Queens, New York.
FIFTH: The Secretary of State of the State of New York is designated as
the agent of the corporation upon whom process may be served. A copy of the
process may be mailed to Michael Riccardella, the corporation's registered
agent, at 144-52 25th Drive, Flushing, New York 11354.
SIXTH: The total number of shares of authorized common stock of the
corporation shall be one hundred thousand (100,000) shares of $1 par value; each
such share of stock to represent (1) vote.
SEVENTH: The duration of the corporation shall be perpetual.
<PAGE>
EIGHTH: The accounting period which the corporation _______ to establish
as its first calendar or fiscal year for reporting the franchise tax on business
corporations imposed by Article __ of the tax law shall be from January 1 to
December 31 of each year.
IN WITNESS WHEREOF, and as a natural person over the age of eighteen years,
I have signed these Articles of Incorporation as the incorporator on this 29th
day of June, 1979.
/s/ Jerrold D. Miller
---------------------------------
JERROLD D. MILLER
Washington D.C. 20114
DISTRICT OF COLUMBIA )
City of Washington ) ss.
On this 29th day of June, 1979, before me personally appeared Jerrold D.
Miller, to me known to be the person described in and who executed the foregoing
instrument and duly acknowledged to me that he executed the same.
/s/ (Signature)
---------------------------------------------
NOTARY PUBLIC
---------------------------------------------
My commission expires: MY COMMISSION EXPIRES ON SEPTEMBER 14, 1983
<PAGE>
State of New York )
) 31050
Department of State )
I hereby certify that I have compared the annexed copy with the original
document filed by the Department of State and that the same is a correct
transcript of said original.
Witness my hand and seal of the Department of State on JUL 12 1979
/s/ Basil G. Paterson
Secretary of State
G020-504(12/78)
<PAGE>
EXHIBIT 3.33
BY-LAWS OF SALEM MEDIA CORPORATION
----------------------------------
ARTICLE I
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Name and Location
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SECTION 1: The name of this corporation shall be:
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SALEM MEDIA CORPORATION
SECTION 2: Offices for the transaction of business shall be located at
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such places either within or without the State of New York as the Board of
Directors may from time to time determine.
ARTICLE II
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Capital Stock
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SECTION 1: The amount of the capital stock shall be:
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One Hundred Thousand (100,000) shares at One Dollar ($1.00) par value.
SECTION 2: All certificates of stock shall be signed by the President or
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Vice President and Secretary or an Assistant Secretary, and shall be sealed with
the corporate seal.
SECTION 3: Treasury stock shall be held by the corporation subject to the
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disposal of the Board of Directors, and shall neither vote nor participate in
dividends.
SECTION 4: The corporation shall have a first lien on all the shares of
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its capital stock and upon all dividends declared upon the same for any
indebtedness of the respective holders thereof to the corporation.
SECTION 5: Transfers of stock shall be made only on the books of the
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corporation; and the old certificate, properly endorsed, shall be surrendered
and cancelled before a new certificate is issued. The stock books of the
corporation shall be closed against transfers for a
<PAGE>
period of thirty (30) days before the date of payment of a dividend and for
fifteen (15) days before each annual meeting of the stockholders.
SECTION 6: In case of loss or destruction of a certificate of stock, no
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new certificate shall be issued in lieu thereof except upon satisfactory proof
to the Board of Directors of such loss or destruction; and upon the giving of
satisfactory security, by bond or otherwise, against loss to the corporation.
Any such new certificate shall be plainly marked "duplicate" upon its face.
ARTICLE III
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Stockholders
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SECTION 1: An annual meeting of the stockholders shall be held at 10:00
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o'clock in the forenoon on the 1st day of July, in each year at the principal
--- ----
office of the corporation or at such other place, either within or without the
State of New York, as may be prescribed in the notice of such meeting; provided,
however, that whenever such day shall fall upon Sunday or a legal holiday, that
meeting shall be held on the next succeeding business day. At such meeting,
the stockholders shall elect directors to serve until their successors shall be
elected and qualified.
SECTION 2: Any special meeting of the stockholders, to be held at the
---------
place designated in the notice thereof, may be called at any time by the
President, and in his absence, by a Vice President, or by a majority of the
Directors. It shall be the duty of the Directors, the President or a Vice
President to call such a meeting whenever so requested by stockholders holding
51% or more of the capital stock.
SECTION 3: Notice of the time and place of all annual and special meetings
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shall be mailed by the Secretary to each stockholder not less than ten (10) nor
more than sixty (60) days before the date thereof.
SECTION 4: Annual or special meetings of the stockholders may be held at
---------
any time and at any place, within or without the State of New York, when
stockholders who hold four-
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fifths (4/5ths) of the stock having the right to vote shall be present at such
meeting, however called or notified, and shall sign a written consent thereto,
on the recording of the meeting. The acts of any such meeting shall be as
valid as if legally called and notified.
SECTION 5: At every such meeting, each stockholder shall be entitled to
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cast one vote for each share of stock held in his name; which vote may be cast
by him either in person or by proxy. All proxies must be in writing, shall be
filed with the Secretary and by him entered or recorded in the minutes of the
meeting.
SECTION 6: A quorum for the transaction of business at any stockholder's
---------
meeting shall consist of a number of members representing a majority of shares
of voting stock issued and outstanding; and the stockholders present at any
meeting, though less than a quorum, may adjourn the meeting to a future time.
SECTION 7: The stockholders shall have power, by a majority vote at any
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such meeting, to transact any business of the corporation, and such majority
shall have power also to remove any directors or officers.
ARTICLE IV
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Directors
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SECTION 1: The business and property of the corporation shall be managed
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by a Board of not less than one (1) nor more than seven (7) directors, who shall
be elected by the Stockholders.
SECTION 2: An annual meeting of the Directors may be held in the principal
---------
office of the corporation immediately after the adjournment of each annual
stockholders' meeting; provided that if the annual stockholders' meeting shall
be held in any place other than the principal office of the corporation, then
the annual meeting of the directors may likewise be held at such place.
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SECTION 3: Special meetings of the Board of Directors shall be held in the
---------
principal office of the corporation or such other place or places, within or
without the State of New York, as a majority of the Directors shall, from time
to time, designate. By a consent of a majority of the Directors of the Board
of Directors, annual and special meetings of the Board may be held without
notice at any time and place.
SECTION 4: Notice of all annual and special meetings, except those
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specified in the second sentence of Section 3 of this Article, shall be mailed
to each Director, by the Secretary, at least five (5) days previous to the time
fixed for the meeting. All notices of special meetings shall state the
SECTION 5: A majority of the Board of Directors for the transaction of
---------
business at an annual or special meeting of the Directors shall be necessary to
constitute a quorum and the act of a majority of the Directors present at any
such meeting, at which a quorum is present, shall be the act of the Board of
Directors.
SECTION 6: The Directors shall elect the officers of the corporation and
---------
fix their salaries. Such election may be held at the Directors' meeting
following each annual stockholders' meeting. An officer may be removed at any
time by a majority vote of the directors.
SECTION 7: Vacancies in the Board of Directors may be filled by the
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remaining Directors at any regular or special Directors' meeting.
SECTION 8: The Board of Directors may, by resolution, designate two or
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more of their number to constitute an executive committee, who, to the extent
provided in such resolution, shall have and may exercise the power of the Board
of Directors in the management of the affairs and property of the corporation
and the exercise of its corporate powers.
SECTION 9: At each annual stockholders' meeting the directors shall submit
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a statement of the business done during the preceding year together with a
report of the general financial condition of the corporation.
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ARTICLE V
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Officers
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SECTION 1: The corporation shall have a President, a Secretary and a
---------
Treasurer. They shall be chosen by the Board of Directors and shall hold their
offices until their successors are chosen and qualified. The corporation may
also have one or more Vice Presidents, Assistant Secretaries and Assistant
Treasurers, and such other officers, agents and factors as may be deemed
necessary. Any person may hold two or more offices except the President shall
not be also the Secretary or an Assistant Secretary of the corporation. The
President must also be a Director but need not be a stockholder. It shall not
be necessary for any other officer, agent or factor to be either a stockholder
or director.
SECTION 2: The President, or in his absence, a Vice President, or a
---------
director of the corporation, shall preside at all Directors' and stockholders'
meetings. The President shall have general supervision over the affairs of the
corporation and over the other officers; shall sign all stock certificates and
written contracts of the corporation; and shall perform all such other duties as
are incident to this office. In case of the absence of the President or the
disability of the President, his duties shall be performed by a Vice President.
SECTION 3: The Secretary shall issue notices of all Directors' and
---------
stockholders' meetings, and shall attend and keep the minutes of the same. He
shall have charge of all corporate books, records and papers; shall be custodian
of the corporate seal; shall keep all stock certificates and written contracts
of the corporation, and shall perform all such other duties as are incident to
his office. In the case of the absence or disability of the Secretary, his
duties shall be performed by an Assistant Secretary.
SECTION 4: The Treasurer shall have custody of all money and securities
---------
of the corporation, and shall give bond in such sum with such security as the
Directors may require conditioned upon faithful performance of the duties of his
office. He shall keep regular books of account and shall submit them together
with all his vouchers, receipts, records and other papers to
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<PAGE>
the Directors for their examination and approval as often as they may require;
and he shall perform all such other duties as are incident to his office. In
case of the absence or disability of the Treasurer, his duties shall be
performed by an Assistant Treasurer.
ARTICLE VI
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Directors and Finance
---------------------
SECTION 1: Dividends, to be paid out of the surplus earnings of the
---------
corporation, may be declared from time to time by resolution of the Board of
Directors; but no dividends shall be paid that will impair the capital of the
corporation.
SECTION 2: The funds of the corporation shall be deposited intact in such
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banks or trust companies as the Directors shall from time to time designate and
any such funds so deposited shall be withdrawn only upon check or order signed
in the manner prescribed by resolution of the Board of Directors.
ARTICLE VII
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Enactment, Repeal or Amendment of By-Laws
-----------------------------------------
SECTION 1: By-Laws of the corporation shall be enacted, repealed or
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amended by a vote of a majority of all of the Directors at any annual or special
meeting.
6
<PAGE>
EXHIBIT 3.34.01
ARTICLES OF INCORPORATION
OF
JOHN BROWN SCHOOLS OF CALIFORNIA, INC.
ARTICLE I
The name of this corporation is John Brown Schools of California, Inc.
ARTICLE II
The purpose of this corporation is to engage in any lawful act or activity
for which a corporation may be organized under the General Corporation Law of
California other than the banking business, the trust company business or the
practice of a profession permitted to be incorporated by the California
Corporations Code.
ARTICLE III
This corporation is authorized to issue only one class of shares of stock
which shall be designated Common Stock; and the total number of shares which
this corporation is authorized to issue is one (1).
Upon the completion of the foregoing business, and upon a motion duly made,
seconded and carried, the meeting adjourned.
Dated: October 30, 1986
--
/s/ E. William George
----------------------
E. William George
Secretary
-2-
<PAGE>
EXHIBIT 3.34.02
227670 ENDORSED
FILED
in the office of the Secretary of State
of the State of California
SEP 29 1986
MARCH FONG EU, Secretary of State
CERTIFICATE OF AMENDMENT OF
ARTICLES OF INCORPORATION OF
JOHN BROWN SCHOOLS OF CALIFORNIA, INC.
John E. Brown, Jr. and E. William George, III certify that:
1. They are the president and secretary, respectively, of John Brown Schools of
California, Inc., a California nonprofit public benefit corporation.
2. Desiring to change the status of the corporation to that of a California
business corporation, the directors, by the required vote, have approved the
necessary changes to the articles of incorporation, so that the articles as
amended read in full as follows:
ARTICLES OF INCORPORATION
OF
JOHN BROWN SCHOOLS OF CALIFORNIA, INC.
ARTICLE I
The name of this corporation is John Brown Schools of California, Inc.
ARTICLE II
The purpose of this corporation is to engage in any lawful act or activity
for which a corporation may be organized under the General Corporation Law of
California other than the banking business, the trust company business or the
practice of a profession permitted to be incorporated by the California
Corporations Code.
<PAGE>
ARTICLE III
This corporation is authorized to issue only one class of shares of stock
which shall be designated Common Stock; and the total number of shares which
this corporation is authorized to issue is one (1).
3. The directors are the corporation's only members.
4. This change of status to a business corporation has been approved by the
Attorney General, and a copy of the approval is attached to this certificate.
John E. Brown, Jr.
-----------------------------
John E. Brown, Jr., President
E. William George
-----------------------------
E. William George, Secretary
Verifications
The undersigned declares under penalty of perjury under the laws of the
State of California that the statements contained in the foregoing certificate
are true and correct of his own knowledge, and that this declaration was
executed on September ___, 1986 at Siloam Springs, Arkansas.
John E. Brown, Jr.
-----------------------------
John E. Brown, Jr., President
The undersigned declares under penalty of perjury under the laws of the
State of California that the statements con-
<PAGE>
EXHIBIT 3.34.03
ENDORSED
FILED
in the office of the Secretary of State
of the State of California
JAN 15 1987
MARCH FONG EU, Secretary of State
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
JOHN BROWN SCHOOLS OF CALIFORNIA, INC.
a California corporation
Edward G. Atsinger III and Eric H. Halvorson certify that:
1. They are the duly elected and acting President and Secretary,
respectively, of said corporation.
2. The Articles of Incorporation of said corporation shall be amended by
revising Article 1 to read as follows: The name of this corporation is Salem
Media of California, Inc.
3. The foregoing amendment has been approved by the Board of Directors of
said corporation.
4. The foregoing amendment was approved by the required vote of the
shareholders of said corporation in accordance with Section 902 of the
California General Corporation Law; the total number of outstanding shares of
each class entitled to vote with respect to the foregoing amendment was one (1)
common share; and the number of shares voted in favor of the foregoing amendment
exceed the vote required, such required vote being a majority of the outstanding
shares of Common Stock.
IN WITNESS WHEREOF, the undersigned have executed this Certificate on
January 6, 1987.
Edward G. Atsinger III
----------------------------------------------
Edward G. Atsinger III, President
Eric H. Halvorson
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Eric H. Halvorson, Secretary
Each of the undersigned declares under penalty of perjury that the
statements in the above Certificate are true of his own knowledge and that this
Declaration was executed on January 6, 1987, at Camarillo, California.
Edward G. Atsinger III
----------------------------------------------
Edward G. Atsinger III
Eric H. Halvorson
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Eric H. Halvorson
<PAGE>
EXHIBIT 3.35
adopted 12/30/86
BYLAWS OF
SALEM MEDIA OF CALIFORNIA, INC.
A CALIFORNIA CORPORATION
------------------------
ARTICLE I
SHAREHOLDERS' MEETING
Section 1. PLACE OF MEETINGS.
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Meetings of shareholders shall be held at any place within or outside the
State of California designated by the Board of Directors. In the absence of any
such designation, shareholders' meetings shall be held in the principal
executive office of the corporation.
Section 2. ANNUAL MEETINGS.
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The annual meeting of shareholders shall be held each year on a date and at
a time designated by the Board of Directors. The date so designated shall be
within five (5) months after the end of the fiscal year of the corporation, and
within fifteen (15) months after the last annual meeting. At each annual
meeting directors shall be elected, and any other proper business may be
transacted.
Section 3. SPECIAL MEETINGS.
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A special meeting of the shareholders may be called at any time by the
Board of Directors, or by the chairman of the Board, or by the president or by
one or more shareholders holding shares in the aggregate entitled to cast not
less than ten percent (10%) of the votes at that meeting.
If a special meeting is called by any person or persons other than the
Board of Directors, the request shall be in writing, specifying the time of such
meeting and the general nature of the business proposed to be transacted, and
shall be delivered personally or sent by registered mail or by telegraphic or
other facsimile transmission to the chairman of the Board, the president, any
vice-president or the secretary of the corporation. The officer receiving the
request shall cause notice to be promptly given to the shareholders entitled to
vote, in accordance with the provisions of Sections 4 and 5 of this Article I,
that a meeting will be held at the time requested by the person or persons
calling the meeting, not less than thirty-five (35) nor more than sixty (60)
days after the receipt of the request. If the notice is not given within twenty
(20) days after receipt of the request, the person or persons requesting the
meeting may give the notice. Nothing contained in this paragraph of this
Section 3 shall be construed as limiting, fixing or affecting the time when a
meeting of shareholders called by action of the Board of Directors may be held.
Section 4. NOTICE OF MEETINGS.
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All notices of meetings of shareholders shall be sent or otherwise given in
accordance with Section 5 of this Article I not less than ten (10) nor more than
sixty (60) days before the date of the meeting. The notice shall specify the
place, date and hour of the meeting and (a) in the case of
<PAGE>
a special meeting, the general nature of the business to be transacted or (b) in
the case of the annual meeting, those matters which the Board of Directors, at
the time of giving notice, intends to present for action by the shareholders.
The notice of any meeting at which directors are to be elected shall include the
name of any nominee or nominees whom, at the time of the notice, management
intends to present for election.
If action is proposed to be taken at any meeting for approval of (i) a
contract or transaction in which a director has a direct or indirect financial
interest, pursuant to Section 310 of the Corporations Code of California, (ii)
an amendment of the Articles of Incorporation, pursuant to Section 902 of that
Code, (iii) a reorganization of the corporation, pursuant to Section 1201 of
that Code, (iv) a voluntary dissolution of the corporation, pursuant to Section
1900 of that Code, or (v) a distribution in dissolution other than in accordance
with the rights of outstanding preferred shares, pursuant to Section 2007 of
that Code, the notice shall also state the general nature of that proposal.
Section 5. MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE.
- ---------
Notice of any meeting of shareholders shall be given either personally or
by first-class mail or telegraphic or other written communication, charges
prepaid, addressed to the shareholder at the address of that shareholder
appearing on the books of the corporation or given by the shareholder to the
corporation for the purpose of notice. If no such address appears on the
corporation's books or is given, notice shall be deemed to have been given if
sent to that shareholder by first-class mail or telegraphic or other written
communication to the corporation's principal executive office, or if published
at least once in a newspaper of general circulation, in the county where that
office is located. Notice shall be deemed to have been given at the time when
delivered personally or deposited in the mail or sent by telegram or other means
of written communication.
If any notice addressed to a shareholder at the address of that shareholder
appearing on the books of the corporation is returned to the corporation by the
United States Postal Service marked to indicate that the United States Postal
Service is unable to deliver the notice to the shareholder at that address, all
future notices or reports shall be deemed to have been duly given without
further mailing if these shall be available to the shareholder on written demand
of the shareholder at the principal executive office of the corporation for a
period of one (1) year from the date of the giving of the notice.
An affidavit of the mailing or other means of giving any notice of any
shareholders' meetings shall be executed by the secretary, assistant secretary
or any transfer agent of the corporation giving the notice, and shall be filed
and maintained in the minute book of the corporation.
Section 6. QUORUM.
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The presence in person or by proxy of the holders of a majority of the
shares entitled to vote at any meeting of shareholders shall constitute a quorum
for the transaction of business. The shareholders present at a duly called or
held meeting at which a quorum is present may continue
2
<PAGE>
to do business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum, if any action taken (other than
adjournment) is approved by at least a majority of the shares required to
constitute a quorum.
Section 7. ADJOURNED MEETING; NOTICE.
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Any shareholders' meeting, annual or special, whether or not a quorum is
present, may be adjourned from time to time by the vote of the majority of the
shares represented at that meeting, either in person or by proxy, but in the
absence of a quorum, no other business may be transacted at that meeting, except
as provided in Section 6 of this Article I.
When any meeting of shareholders, either annual or special, is adjourned to
another time or place, notice need not be given of the adjourned meeting if the
time and place are announced at a meeting at which the adjournment is taken
unless a new record date for the adjourned meeting is fixed, or unless the
adjournment is for more than forty-five (45) days from the date set for the
original meeting, in which case the Board of Directors shall set a new record
date. Notice of any such adjourned meeting shall be given to each shareholder
of record entitled to vote at the adjourned meeting in accordance with the
provisions of Sections 4 and 5 of this Article I. At any adjourned meeting the
corporation may transact any business which might have been transacted at the
original meeting.
Section 8. VOTING RIGHTS; CUMULATIVE VOTING.
- ---------
The shareholders entitled to vote at any meeting of shareholders shall be
determined in accordance with the provisions of Section 11 of this Article I,
subject to the provisions of Sections 702 through 704, inclusive, of the
Corporations Code of California (relating to voting shares held by a fiduciary,
in the name of a corporation, or in joint ownership). The shareholders' vote
may be by voice vote or by ballot; provided, however, that any election for
directors must be by ballot if demanded by any shareholder before the voting has
begun. On any matter other than elections of directors, any shareholder may
vote part of the shares in favor of the proposal and refrain from voting the
remaining shares or vote them against the proposal, but, if the shareholder
fails to specify the number of shares which the shareholder is voting
affirmatively, it will be conclusively presumed that the shareholder's approving
vote is with respect to all shares that the shareholder is entitled to vote. If
a quorum is present, the affirmative vote of the majority of the shares
represented at the meeting and entitled to vote on any matter (other than the
election of directors) shall be the act of the shareholders, unless a vote of a
greater number or voting by classes is required by the California General
Corporation Law or by the Articles of Incorporation.
At a shareholders' meeting at which directors are to be elected, no
shareholder shall be entitled to accumulate votes (i.e., to cast for any one or
----
more candidates a number of votes greater than the number of the shareholder's
shares) unless the candidates' names have been placed in nomination prior to
commencement of the voting and a shareholder has given notice prior to
commencement of the voting of the shareholder's intention to cumulate votes. If
any shareholder has given such a notice, then every shareholder entitled to vote
may cumulate votes for candidates in nomination and give one candidate a number
of votes equal to the number of directors to be elected multiplied by the number
of votes to which that shareholder's shares are entitled, or
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<PAGE>
distribute the shareholder's votes on the same principle among any or all of the
candidates, as the shareholder thinks fit. The candidates receiving the highest
number of votes, up to the number of directors to be elected, shall be elected.
Section 9. WAIVER OF NOTICE OR CONSENT BY ABSENT SHAREHOLDERS.
- ---------
The transactions of any meeting of shareholders, either annual or special,
however called and noticed and wherever held, shall be as valid as though had at
a meeting duly held after regular call and notice, if a quorum be present either
in person or by proxy, and if, either before or after the meeting, each person
entitled to vote, who was not present in person or by proxy, signs a written
waiver of notice or a consent to a holding of the meeting or an approval of the
minutes. The waiver of notice or consent need not specify either the business
to be transacted or the purpose of any annual or special meeting of
shareholders, except that if action is taken or proposed to be taken for
approval of any of those matters specified in the second paragraph of Section 4
of this Article I, the waiver of notice or consent shall state the general
nature of the proposal. All such waivers, consents or approvals shall be filed
with the corporate records or made a part of the minutes of the meeting.
Attendance by a person at a meeting shall also constitute a waiver of
notice of that meeting, except when the person objects, at the beginning of the
meeting, to the transaction of any business because the meeting is not lawfully
called or convened and except that attendance at a meeting is not a waiver of
any right to object to the consideration of matters not included in the notice
of the meeting if that objection is expressly made at the meeting.
Section 10. SHAREHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING.
- ----------
Any action which may be taken at any annual or special meeting of
shareholders may be taken without a meeting and without prior notice, if a
consent in writing, setting forth the action so taken, is signed by the holders
of outstanding shares having not less than the minimum number of votes that
would be necessary to authorize or to take that action at a meeting at which all
shares entitled to vote on that action were present and voted. In the case of
election of directors, such consent shall be effective only if signed by the
holders of all outstanding shares entitled to vote for the election of
directors; provided, however, that a director may be elected at any time to fill
a vacancy on the Board of Directors that has not been filled by the directors,
by the written consent of the holders of a majority of the outstanding shares
entitled to vote for the election of directors. All such consents shall be
filed with the secretary of the corporation and shall be maintained in the
corporate records. Any shareholder giving a written consent, or the
shareholder's proxy holder, or a transferee of the shares or a personal
representative of the shareholder or his respective proxy holder, may revoke the
consent by a writing received by the secretary of the corporation before written
consents of the number of shares required to authorize the proposed action have
been filed with the secretary.
If the consents of all shareholders entitled to vote have not been
solicited in writing, and if the unanimous written consent of all such
shareholders shall not have been received, the secretary shall give prompt
notice of the corporate action approved by the shareholders without a meeting.
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This notice shall be given in the manner specified in Section 5 of this Article
I. In the case of approval of (a) contracts or transactions in which a director
has a direct or indirect financial interest, pursuant to Section 310 of the
Corporations Code of California, (b) indemnification of agents of the
corporation, pursuant to Section 317 of that Code, (c) a reorganization of the
corporation, pursuant to Section 1201 of that Code, and (d) a distribution in
dissolution other than in accordance with the rights of the outstanding
preferred shares, pursuant to Section 2007 of that Code, the notice shall be
given at least ten (10) days before the consummation of any action authorized by
that approval.
Section 11. RECORD DATE FOR SHAREHOLDERS NOTICE, VOTING AND GIVING CONSENTS.
- ----------
For purposes of determining the shareholders entitled to notice of any
meeting or to vote or entitled to give consent to corporate action without a
meeting, the Board of Directors may fix, in advance, a record date, which shall
be not more than sixty (60) days nor less than ten (10) days before the date of
any such meeting nor more than sixty (60) days before any such action without a
meeting, and in this event only shareholders of record on the date so fixed are
entitled to notice and to vote or to give consents, as the case may be,
notwithstanding the transfer of any shares on the books of the corporation after
the record date, except as otherwise provided in the California General
Corporation Law.
If the Board of Directors does not so fix a record date:
(a) The record date for determining shareholders entitled to notice of
or to vote at a meeting of shareholders shall be at the close of business on the
business day next preceding the day on which notice is given or, if notice is
waived, at the close of business on the business day next preceding the day on
which the meeting is held.
(b) The record date for determining shareholders entitled to give
consent to corporate action in writing without a meeting (i) when no prior
action by the Board has been taken, shall be the day on which the first written
consent is given, or (ii) when prior action of the Board has been taken, shall
be at the close of business on the day on which the Board adopts the resolution
relating to that action or the sixtieth (60th) day before the date of such other
action, whichever is later.
Section 12. PROXIES.
- ----------
Every person entitled to vote for directors or on any other matter shall
have the right to do so either in person or by one or more agents authorized by
a written proxy signed by the person and filed with the secretary of the
corporation. A proxy shall be deemed signed if the shareholder's name is placed
on the proxy (whether by manual signature, typewriting, telegraphic transmission
or otherwise) by the shareholder or the shareholder's attorney in fact. A
validly executed proxy which does not state that it is irrevocable shall
continue in full force and effect unless (a) revoked by the person executing it,
before the vote pursuant to that proxy by a writing delivered to the corporation
stating that the proxy is revoked, or by a subsequent proxy executed by, or
attendance at the meeting and voting in person by, the person executing the
proxy; or
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(b) written notice of the death or incapacity of the maker of that proxy is
received by the corporation before the vote pursuant to that proxy is counted;
provided, however, that no proxy shall be valid after the expiration of eleven
(11) months from the date of the proxy, unless otherwise provided in the proxy,
and, provided, further, that the proxy shall be valid only if executed in favor
of another shareholder of the corporation. The revocability of a proxy that
states on its face that it is irrevocable shall be governed by the provisions of
Sections 705(e) and 705(f) of the Corporations Code of California.
Section 13. INSPECTORS OF ELECTION.
- ----------
Before any meeting of shareholders, the Board of Directors may appoint any
persons other than nominees for office to act as inspectors of election at the
meeting or its adjournment. If no inspectors of election are so appointed, the
chairman of the meeting may, and on the request of any shareholder or a
shareholder's proxy shall, appoint inspectors of election at the meeting. The
number of inspectors shall be either one (1) or three (3). If inspectors are
appointed at the meeting on the request of one or more shareholders or proxies,
the holders of a majority of shares or their proxies present at the meeting
shall determine whether one (1) or three (3) inspectors are to be appointed. If
any person appointed as inspector fails to appear or fails or refuses to act,
the chairman of the meeting may, and upon the request of any shareholder or a
shareholder's proxy shall, appoint a person to fill that vacancy.
These inspectors shall:
(a) Determine the number of shares outstanding and the voting power of
each, the shares represented at the meeting, the existence of a quorum and the
authenticity, validity and effect of proxies;
(b) Receive votes, ballots or consents;
(c) Hear and determine all challenges and questions in any way arising
in connection with the right to vote;
(d) Count and tabulate all votes or consents;
(e) Determine when the polls shall close;
(f) Determine the result; and
(g) Do any other acts that may be proper to conduct the election or
vote with fairness to all shareholders.
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Section 14. VOTING TRUSTS.
- ----------
If a voting trust agreement is filed in the office of the corporation, the
corporation shall take notice of its terms and the limitations this agreement
places on the authority of the trustee. The agreement shall be valid only if
voting power is vested in another shareholder of the corporation.
ARTICLE II
DIRECTORS; MANAGEMENT
Section 1. POWERS.
- ---------
Subject to the limitations of the Articles of Incorporation, of the Bylaws
and of the laws of the State of California as to action to be authorized or
approved by the shareholders, all corporate powers shall be exercised by or
under authority of, and the business and affairs of this corporation shall be
controlled by, a board of directors.
Section 2. NUMBER AND QUALIFICATION.
- ---------
The authorized number of directors shall be two (2) until changed by a duly
adopted amendment of the Articles of Incorporation or by an amendment to these
Bylaws adopted by the vote or written consent of holders of a majority of the
outstanding shares entitled to vote.
Section 3. ELECTION AND TENURE OF OFFICE.
- ---------
Directors shall be elected at each annual meeting of the shareholders to
hold office until the next annual meeting. Each director, including a director
elected to fill a vacancy, shall hold office until the expiration of the term
for which elected and until a successor has been elected and qualified.
Section 4. VACANCIES.
- ---------
Vacancies in the Board of Directors may be filled by a majority of the
remaining directors, though less than a quorum or by a sole remaining director,
except that a vacancy created by the removal of a director by the vote or
written consent of the shareholders or by court order may be filled only by the
vote of a majority of the shares entitled to vote represented at a duly held
meeting at which a quorum is present, or by the written consent of holders of a
majority of the outstanding shares entitled to vote. Each director so elected
shall hold office until the next annual meeting of the shareholders and until a
successor has been elected and qualified.
A vacancy or vacancies in the Board of Directors shall be deemed to exist
in the event of the death, disqualification, resignation, or removal of any
director, or if the Board of Directors by resolution declares vacant the office
of a director who has been declared of unsound mind by an order of court or
convicted of a felony, or if the authorized number of directors is increased or
if the shareholders fail, in any meeting of shareholders at which any director
or directors are elected, to elect the number of directors to be voted for at
that meeting.
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The shareholders may elect a director or directors at any time to fill any
vacancy or vacancies not filled by the directors, but any such election by
written consent shall require the consent of a majority of the outstanding
shares entitled to vote.
Any director may resign effective on giving written notice to the chairman
of the board, the president, the secretary or the Board of Directors, unless the
notice specifies a later time for that resignation to become effective. If the
resignation of a director is effective at a future time, the Board of Directors
may elect a successor to take office when the resignation becomes effective.
No reduction of the authorized number of directors shall have the effect of
removing any director before that director's term of office expires.
Section 5. REMOVAL OF DIRECTORS.
- ---------
The entire Board of Directors or any individual director may be removed
from office as provided by Sections 302, 303 and 304 of the Corporations Code of
the State of California.
Section 6. PLACE OF MEETINGS AND MEETINGS BY TELEPHONE.
- ---------
Regular meetings of the Board of Directors may be held at any place within
or outside the State of California that has been designated from time to time by
resolution of the Board. In the absence of such designation, regular meetings
shall be held at the principal executive office of the corporation. Special
meetings of the board shall be held at any place within or outside the State of
California that has been designated in the notice of the meeting or, if not
stated in the notice or there is no notice, at the principal executive office of
the corporation. Any meeting, regular or special, may be held by conference
telephone or similar communication equipment, so long as all directors
participating in the meeting can hear one another, and all such directors shall
be deemed to be present in person at the meeting.
Section 7. ANNUAL MEETING.
- ---------
Immediately following each annual meeting of shareholders, the Board of
Directors shall hold a regular meeting for the purpose of organization, any
desired election of officers and the transaction of other business. Notice of
this meeting shall not be required.
Section 8. OTHER REGULAR MEETINGS.
- ---------
Other regular meetings of the Board of Directors shall be held without call
at such time as it shall from time to time be fixed by the Board of Directors.
Such regular meetings may be held without notice.
Section 9. SPECIAL MEETINGS - NOTICES.
- ---------
Special meetings of the Board of Directors for any purpose or purposes may
be called at any time by the chairman of the board or the president or any vice-
president or the secretary or any two directors.
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Notice of the time and place of special meetings shall be delivered
personally or by telephone to each director, or sent by first-class mail or
telegram, charges prepaid, addressed to each director at that director's address
as it is shown on the records of the corporation. In case the notice is mailed,
it shall be deposited in the United States mail at least four (4) days before
the time of the holding of the meeting. In case the notice is delivered
personally or by telephone or telegram, it shall be delivered personally or by
telephone or to the telegraph company at least forty-eight (48) hours before the
time of the holding of the meeting. Any oral notice given personally or by
telephone may be communicated either to the director or to a person at the
office of the director who the person giving the notice has reason to believe
will promptly communicate it to the director. The notice need not specify the
purpose of the meeting nor the place if the meeting is to be held at the
principal executive offices of the corporation.
Section 10. QUORUM.
- ----------
A majority of the authorized number of directors shall constitute a quorum
for the transaction of business, except to adjourn as provided in Section 13 of
this Article II, unless the authorized number of directors is two or less, in
which case all of the duly elected and acting directors shall constitute a
quorum for the transaction of business. Every act or decision done or made by a
majority of the directors present at a meeting duly held at which a quorum is
present shall be regarded as the act of the Board of Directors, subject to the
provisions of Section 310 of the Corporations Code of the State of California
(as to approval of contracts or transactions in which a director has a direct or
indirect material financial interest), Section 311 of that Code (as to
appointment of committees), and Section 317(e) of that Code (as to
indemnification of directors). A meeting at which a quorum is initially present
may continue to transact business notwithstanding the withdrawal of directors,
if any action taken is approved by at least a majority of the required quorum
for that meeting.
Section 11. WAIVER OF NOTICE.
- ----------
The transactions of any meeting of the Board of Directors, however called
and noticed and wherever held, shall be as valid as though had at a meeting duly
held after regular call and notice if a quorum is present and if, either before
or after the meeting, each of the directors not present signs a written waiver
of notice, a consent to holding the meeting or an approval of the minutes. The
waiver of notice or consent need not specify the purpose of the meeting. All
such waivers, consents and approval shall be filed with the corporate records or
made a part of the minutes of the meeting. Notice of a meeting shall also be
deemed given to any director who attends the meeting without protesting before
or at its commencement, the lack of notice to that director.
Section 12. DIRECTORS ACTING WITHOUT A MEETING BY UNANIMOUS WRITTEN CONSENT.
- ----------
Any action required or permitted to be taken by the Board of Directors may
be taken without a meeting, if all members of the Board shall individually or
collectively consent in writing to that action. Such action by written consent
shall have the same force and effect as a unanimous
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vote of the Board of Directors. Such written consent or consents shall be filed
with the minutes of the proceedings of the Board.
Section 13. ADJOURNMENT.
- ----------
A majority of the directors present, whether or not constituting a quorum,
may adjourn any meeting to another time and place.
Section 14. NOTICE OF ADJOURNMENT.
- ----------
Notice of the time and place of holding an adjourned meeting need not be
given, unless the meeting is adjourned for more than twenty-four (24) hours, in
which case notice of the time and place shall be given before the time of the
adjourned meeting, in the manner specified in Section 9 of this Article II, to
the directors who are not present at the time of the adjournment.
Section 15. COMPENSATION OF DIRECTORS.
- ----------
Directors and members of committees, as such, shall not receive any stated
salary for their services, but by resolution of the board a fixed sum and
expense of attendance, if any, may be allowed for attendance at each regular and
special meeting of the board; provided that nothing herein contained shall be
construed to preclude any director from serving the corporation in any other
capacity and receiving compensation therefor.
ARTICLE III
OFFICERS
Section 1. OFFICERS.
- ---------
The officers of the corporation shall consist of a president, vice-
president, secretary and a chief financial officer. The corporation may also
have, at the discretion of the Board of Directors, a chairman of the board, one
or more additional vice-presidents, one or more assistant secretaries, one or
more assistant treasurers and such other officers as may be appointed in
accordance with the provisions of Section 3 of this Article. One person may
hold two or more offices, except those of president and secretary.
Section 2. ELECTION.
- ---------
The officers of the corporation, except those officers as may be appointed
in accordance with the provisions of Section 3 and Section 5 of this Article III
shall be chosen annually by the Board of Directors, and each shall hold his
office until he shall resign or shall be removed or otherwise disqualified to
serve, or his successor shall be elected and qualified.
Section 3. SUBORDINATE OFFICERS, ETC.
- ---------
The Board of Directors may appoint such other officers as the business of
the corporation may require, each of whom shall hold office for such period,
have such authority and perform
10
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such duties as are provided in the bylaws or as the Board of Directors may from
time to time determine.
Section 4. REMOVAL AND RESIGNATION.
- ---------
Any officer may be removed, either with or without cause, by the Board of
Directors at any regular or special meeting, or, except in case of an officer
chosen by the Board of Directors, by any officer upon whom such power of removal
may be conferred by the Board of Directors.
Any officer may resign at any time by giving written notice to the Board of
Directors, or to the president or to the secretary of the corporation. Any such
resignation shall take effect at the date of this notice or at any later
specified time; and, unless otherwise specified, the acceptance of this
resignation shall not be necessary to make it effective.
Section 5. VACANCIES.
- ---------
A vacancy in any office because of death, resignation, removal,
disqualification, or because of any other cause shall be filled in the manner
prescribed in the bylaws for regular appointments to the office.
Section 6. CHAIRMAN OF THE BOARD.
- ---------
The chairman of the board, if there shall be such an officer, shall, if
present, preside at all meetings of the Board of Directors and exercise and
perform such other powers and duties as may be from time to time assigned to him
by the Board of Directors or prescribed by the bylaws. If there is no
president, the chairman of the board shall in addition be the chief executive
officer of the corporation and shall have the powers and duties prescribed in
Section 7 of this Article III.
Section 7. PRESIDENT.
- ---------
Subject to such supervisory powers, if any, as may be given by the Board of
Directors to the chairman of the board, if there be such an officer, the
president shall be the chief executive officer of the corporation and shall,
subject to the control of the Board of Directors, have general supervision,
direction and control of the business and officers of the corporation. He shall
preside at all meetings of the shareholders and in the absence of the chairman
of the board, or if there be none, at all meetings of the Board of Directors.
He shall be ex officio a member of all the standing committees, including the
executive committee, if any, and shall have the general powers and duties of a
corporate management usually vested in the office of president of a corporation
and shall have such other powers and duties as may be prescribed by the Board of
Directors or the bylaws.
Section 8. VICE-PRESIDENT.
- ---------
In the absence or disability of the president, the vice-president, if any,
shall perform all the duties of the president, and when so acting shall have all
the powers of, and be subject to, all the restrictions upon, the president. The
vice-president shall have such other powers and perform such other duties as
from time to time may be prescribed by the Board of Directors or the bylaws.
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<PAGE>
Section 9. SECRETARY.
- ---------
The secretary shall keep, or cause to be kept, a book of minutes at the
principal office or such other place as the Board of Directors may order, of all
meetings of directors and shareholders, with the time and place of holding,
whether regular or special and, if special, how authorized, the notice thereof
given, the names of those present at directors' meetings, the number of shares
present or represented at shareholders' meetings and the proceedings thereof.
The secretary shall keep, or cause to be kept, at the principal office or
at the office of the corporation's transfer agent, a share register, or
duplicate share register, showing the names of the shareholders and their
addresses; the number and classes of shares held by each; the number and date of
certificates issued for the same; and the number and date of cancellation of
every certificate surrendered for cancellation.
The secretary shall give or cause to be given, notice of all the meetings
of the shareholders and of the Board of Directors required by the bylaws or by
law to be given, and he shall keep the seal of the corporation in safe custody
and shall have such other powers and perform such other duties as may be
prescribed by the Board of Directors or by the bylaws.
Section 10. CHIEF FINANCIAL OFFICER.
- ----------
The chief financial officer shall keep and maintain or cause to be kept and
maintained, adequate and correct accounts of the properties and business
transactions of the corporation, including accounts of its assets, liabilities,
receipts, disbursements, gains, losses, capital, surplus and shares. Any
surplus, including earned surplus, paid-in surplus and surplus arising from a
reduction of stated capital shall be classified according to source and shown in
a separate account. The books of account shall at all reasonable times be open
to inspection by any director.
The chief financial officer shall deposit all moneys and other valuables in
the name and to the credit of the corporation with such depositories as may be
designated by the Board of Directors. He shall disburse the funds of the
corporation as may be ordered by the Board of Directors, shall render to the
president and directors, whenever they request it, an account of all of his
transactions as chief financial officer and of the financial condition of the
corporation and shall have such other powers and perform such other duties as
may be prescribed by the Board of Directors or the bylaws.
Section 11. SALARIES.
- ----------
The salaries of the officers and other shareholders employed by the
corporation shall be fixed from time to time by the Board of Directors or
established under agreements with officers or shareholders approved by the Board
of Directors, and no officer shall be prevented from receiving such salary by
reason of the fact that he is also a director of the corporation.
ARTICLE IV
CORPORATE RECORDS AND REPORTS-INSPECTION
Section 1. MAINTENANCE AND INSPECTION OF SHARE REGISTER.
- ---------
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The corporation shall keep at its principal executive office, or at the
office of its transfer agent or registrar, if either be appointed and as
determined by resolution of the Board of Directors, a record of its shareholders
giving the names and addresses of all shareholders and the number and class of
shares held by each shareholder.
A shareholder or shareholders of the corporation holding at least five
percent (5%) in the aggregate of the outstanding voting shares of the
corporation may (a) inspect and copy the records of the shareholders' names and
addresses and shareholdings during usual business hours on five days' prior
written demand on the corporation and (b) obtain from the transfer agent of the
corporation, on written demand and on tender of such transfer agent's usual
charges for such list, a list of the shareholders' names and addresses, who are
entitled to vote for the election of directors and their shareholdings, as of
the most recent record date for which that list has been compiled or as of a
date specified by the shareholder after the date of demand. This list shall be
made available to any such shareholder by the transfer agent on or before the
later of five (5) days after the demand is received or the date specified in the
demand as the date as of which the list is to be compiled. The record of
shareholders shall also be open to inspection on the written demand of any
shareholder or holder of a voting trust certificate, at any time during usual
business hours, for a purpose reasonably related to the holder's interest as a
shareholder or as a holder of a voting trust certificate. Any inspection and
copying under this Section 1 may be made in person or by an agent or attorney of
the shareholder or holder of a voting trust certificate making the demand.
Section 2. MAINTENANCE AND INSPECTION OF BYLAWS.
- ---------
The corporation shall keep at its principal executive office, or if its
principal executive office is not in the State of California, at its principal
business office in this state, the original or a copy of the bylaws as amended
to date, which shall be open to inspection by the shareholders at all reasonable
times during office hours. If the principal executive office of the corporation
is outside the State of California and the corporation has no principal business
office in this state, the secretary shall, upon the written request of any
shareholder, furnish to that shareholder a copy of the bylaws as amended to
date.
Section 3. MAINTENANCE AND INSPECTION OF OTHER CORPORATE RECORDS.
- ---------
The accounting books and records and minutes of proceedings of the
shareholders and the Board of Directors and any committee or committees of the
Board of Directors shall be kept at such place or places designated by the Board
of Directors, or, in the absence of such designation, at the principal executive
office of the corporation. The minutes shall be kept in written form and the
accounting books and records shall be kept either in written form or in any
other form capable of being converted into written form. The minutes and
accounting books and records shall be open to inspection upon the written demand
of any shareholder or holder of a voting trust certificate, at any reasonable
time during usual business hours, for a purpose reasonably related to the
holder's interests as a shareholder or as a holder of a voting trust
certificate. The inspection may be made in person or by an agent or attorney,
and shall include the right to copy and make extracts. These rights of
inspection shall extend to the records of each subsidiary corporation of the
corporation.
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Section 4. INSPECTION BY DIRECTORS.
- ---------
Every director shall have the absolute right at any reasonable time to
inspect all books, records and documents of every kind and the physical
properties of the corporation at each of its subsidiary corporations. This
inspection by a director may be made in person or by an agent or attorney and
the right of inspection includes the right to copy and make extracts of
documents.
Section 5. ANNUAL REPORT TO SHAREHOLDERS.
- ---------
The annual report to shareholders referred to in Section 1501 of the
California General Corporation Law is expressly dispensed with, but nothing
herein shall be interpreted as prohibiting the Board of Directors from issuing
annual or other periodic reports to the shareholders of the corporation as they
consider appropriate.
Section 6. FINANCIAL STATEMENTS.
- ---------
A copy of any annual financial statements and any income statement of the
corporation for each quarterly period of each fiscal year, and any accompanying
balance sheet of the corporation as of the end of such period, that has been
prepared by the corporation shall be kept on file in the principal executive
office of the corporation for twelve (12) months and each statement shall be
exhibited at all reasonable times to any shareholder demanding an examination of
such statement or a copy thereof shall be mailed to any such shareholder.
If a shareholder or shareholders holding at least five percent (5%) of the
outstanding shares of any class of stock of the corporation makes a written
request to the corporation for an income statement of the corporation for the
three-month, six-month or nine-month period of the current fiscal year ended
more than thirty (30) days before the date of the request, and a balance sheet
of the corporation as of the end of that period, the treasurer or chief
financial officer shall cause that statement to be prepared, if not already
prepared, and shall deliver personally or mail that statement or statements to
the person making the request within thirty (30) days after the receipt of the
request. If the corporation has not sent to the shareholders its annual report
for the last fiscal year, this report shall likewise be delivered or mailed to
the shareholder or shareholders within thirty (30) days after the request.
The corporation shall also, on the written request of any shareholder, mail
to the shareholder a copy of the last annual, semi-annual or quarterly income
statement which it has prepared, and a balance sheet as of the end of that
period.
The quarterly income statements and balance sheets referred to in this
section shall be accompanied by a report, if any, of any independent accountants
engaged by the corporation or the certificate of an authorized officer of the
corporation that the financial statements were prepared without audit from the
books and records of the corporation.
Section 7. ANNUAL STATEMENT OF GENERAL INFORMATION.
- ---------
The corporation shall annually, during the period commencing five calendar
months preceding the calendar month during which the original Articles of
Incorporation were filed and
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ending with the end of the calendar month during which the original Articles of
Incorporation were filed with the Secretary of State, file with the Secretary of
State of the State of California, on the prescribed form, a statement setting
forth the authorized number of directors, the names and complete business or
residence addresses of all incumbent directors, the names and complete business
or residence addresses of the chief executive officer, secretary and chief
financial officer, the street address of its principal executive office or
principal business office in the state, and the general type of business
constituting the principal business activity of the corporation, together with a
designation of the agent of the corporation for the purpose of service of
process, all in compliance with Section 1502 of the Corporations Code of
California.
ARTICLE V
GENERAL CORPORATE MATTERS
Section 1. RECORD DATE FOR PURPOSES OTHER THAN NOTICE AND VOTING.
- ---------
For purposes of determining the shareholders entitled to receive payment of
any dividend or other distribution or allotment of any rights or entitled to
exercise any rights in respect of any other lawful election (other than action
by shareholders by written consent without a meeting) the Board of Directors may
fix, in advance, a record date, which shall not be more than sixty (60) days
before any such action and in that case only shareholders of record on the date
so fixed are entitled to receive the dividend, distribution or allotment of
rights or to exercise the rights, as the case may be, notwithstanding any
transfer of any shares on the books of the corporation after the record date so
fixed, except as otherwise provided in the California General Corporation Law.
If the Board of Directors does not so fix a record date, the record date
for determining shareholders for any such purpose shall be at the close of
business on the day on which the board adopts the applicable resolution or the
sixtieth (60th) day before the date of that action, whichever is later.
Section 2. CHECKS, DRAFTS, EVIDENCES OF INDEBTEDNESS.
- ---------
All checks, drafts or other orders for payment of money, notes or other
evidences of indebtedness, issued in the name of or payable to the corporation
shall be signed or endorsed by such person or persons and in such manner as,
from time to time, shall be determined by the resolution of the Board of
Directors.
Section 3. CORPORATE CONTRACTS AND INSTRUMENTS; HOW EXECUTED.
- ---------
The Board of Directors, except as otherwise provided in these Bylaws, may
authorize any officer or officers, agent or agents, to enter into any contract
or execute any instrument in the name of and on behalf of the corporation and
this authority shall be general or confined to specific instances; and, unless
so authorized or ratified by the Board of Directors or within the agency power
of an officer, no officer, agent or employee shall have any power or authority
to bind the corporation by any contract or engagement or to pledge its credit or
to render it liable for any purpose or for any amount.
Section 4. CERTIFICATES FOR SHARES.
- ---------
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A certificate or certificates for shares of the capital stock of the
corporation shall be issued to each shareholder when any of these shares are
fully paid, and the Board of Directors may authorize the issuance of
certificates or shares as partly paid provided that these certificates shall
state the amount of the consideration to be paid for them and the amount paid.
All certificates shall be signed in the name of the corporation by the chairman
of the board or vice-chairman of the board or the president or vice-president
and by the chief financial officer or an assistant treasurer or the secretary or
any assistant secretary, certifying the number of shares and the class or series
of shares owned by the shareholder. Any or all of the signatures on the
certificate may be facsimile. In case any officer, transfer agent, or registrar
who has signed or whose facsimile signature has been placed on a certificate
shall have ceased to be that officer, transfer agent or registrar before that
certificate is issued, it may be issued by the corporation with the same effect
as if that person were an officer, transfer agent or registrar at the date of
issuance.
Section 5. LOST CERTIFICATES.
- ---------
Except as provided in this Section 5, no new certificates for shares shall
be issued to replace an old certificate unless the latter is surrendered to the
corporation and cancelled at the same time. The Board of Directors, in case any
share certificate or certificate for any other security is lost, stolen, or
destroyed, may authorize the issuance of a replacement certificate on such terms
and conditions as the board may require, including provision for indemnification
of the corporation secured by a bond or other adequate security sufficient to
protect the corporation against any claim that may be made against it, including
any expense or liability, on account of the alleged loss, theft or destruction
of the certificate or the issuance of the replacement certificate.
Section 6. REPRESENTATION OF SHARES OF OTHER CORPORATIONS.
- ---------
The chairman of the board, the president or any vice-president, or any
other person authorized by resolution of the Board of Directors or by any of the
foregoing designated officers, is authorized to vote on behalf of the
corporation any and all shares of any other corporation or corporations, foreign
or domestic, standing in the name of the corporation. The authority granted to
these officers to vote or represent on behalf of the corporation any and all
shares held by the corporation in any other corporation or corporations may be
exercised by any of these officers in person or by any person authorized to do
so by a proxy duly executed by these officers.
Section 7. INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND OTHER AGENTS.
- ---------
The corporation shall, to the maximum extent permitted by California
General Corporation Law, indemnify each of its agents against expenses,
judgments, fines, settlements and other amounts actually and reasonably incurred
in connection with any proceeding arising by reason of the fact that any such
person is or was an agent of the corporation. For purposes of this Section 7,
an "agent" of the corporation includes any person who is or was a director,
officer, employee or other agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, or was a
director, officer, employee or agent of a corporation which was a
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predecessor corporation of the corporation or of another enterprise at the
request of such predecessor corporation.
Section 8. CONSTRUCTION AND DEFINITIONS.
- ---------
Unless the context requires otherwise, the general provisions, rules of
construction and definitions in the California General Corporation Law shall
govern the construction of these Bylaws. Without limiting the generality of
this provision, the singular in number includes the plural, the plural number
includes the singular and the term "person" includes both a corporation and a
natural person.
ARTICLE VI
OFFICES
Section 1. PRINCIPAL OFFICES.
- ---------
The Board of Directors shall fix the location of the principal executive
offices of the corporation at any place within or outside the State of
California. If the principal executive offices are located outside the state,
and the corporation has one or more business offices in the state, the Board of
Directors shall fix and designate a principal business office in the State of
California.
Section 2. OTHER OFFICES.
- ---------
The Board of Directors may at any time establish branch or subordinate
offices at any place or places where the corporation is qualified to do
business.
ARTICLE VII
AMENDMENTS
Section 1. AMENDMENT BY SHAREHOLDERS.
- ---------
New Bylaws may be adopted or these Bylaws may be amended or repealed by the
vote or written consent of holders of a majority of the outstanding shares
entitled to vote; provided, however, that if the Articles of Incorporation of
the corporation set forth a number of authorized directors of the corporation,
the authorized number of directors may be changed only by an amendment of the
Articles of Incorporation.
Section 2. AMENDMENT BY DIRECTORS.
- ---------
Subject to the rights of the shareholders as provided in Section 1 of this
Article VII, Bylaws, other than a bylaw or an amendment of a bylaw changing the
authorized number of directors, may be adopted, amended or repealed by the Board
of Directors.
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EXHIBIT 3.36
ARTICLES OF INCORPORATION
OF
SALEM MEDIA OF COLORADO, INC.
FIRST: The name of the corporation is Salem Media of Colorado, Inc.
("Corporation").
SECOND: The address of the registered office of the Corporation in the State of
Colorado is 1535 Grant Street, Suite 140, Denver, Colorado 80203-1843
and the name of its registered agent at that address is Search Company
International.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the laws of the
state of Colorado. In furtherance of the foregoing purposes, the
Corporation shall have and may exercise all of the rights, powers and
privileges now or hereafter conferred upon corporations organized under
the laws of the State of Colorado. In addition, it may do everything
necessary, suitable or proper for the accomplishment of any of its
corporate purposes.
FOURTH: The Corporation shall be authorized to issue one class of stock
designated "Common Stock." The total number of shares which the
Corporation shall have authority to issue is 1,000, each having no par
value.
Each shareholder of record shall have one vote for each
share of stock which is outstanding in his or her name on the books of
the Corporation and which is entitled to vote. In the election of
directors each shareholder shall be entitled to cast for any one
candidate no greater number of votes than the number of shares held by
such shareholder; no shareholder shall be entitled to cumulate votes on
behalf of any candidate.
No shareholder of the Corporation shall have any preemptive
or similar right to acquire any additional unissued or treasury shares
of stock, or other securities of any class, or any rights, warrants or
options to purchase stock, or securities of any kind convertible into
stock or bearing stock purchase warrants or privileges.
The Board of Directors of the Corporation (the "Board") may
from time to time distribute to the shareholders in partial liquidation,
or out of stated capital or capital surplus of the Corporation, a
portion of its assets, in cash or property, subject to the limitations
contained in the statutes of Colorado.
The Corporation shall have the right to impose restrictions
on the transfer of shares of the Corporation.
<PAGE>
A quorum for shareholder meetings will consist of a majority
of the shares issued and outstanding and entitled to vote at the
meeting.
When a quorum is present, and notwithstanding that the
applicable statute requires a vote of two-thirds of the shares entitled
to vote to take action, the affirmative vote of a majority of the
shares issued and outstanding and entitled to vote on the subject
matter shall be the act of the shareholders.
FIFTH: The name and mailing address of the incorporator of the Corporation is:
Search Company International
1535 Grant Street, Suite 140
Denver, CO 80203-1843
SIXTH: The number of directors shall be no less than two and no greater than
five, except that there need be only as many directors as there are
shareholders if the outstanding shares are held of record by fewer than
three persons. The term of office of each director shall be until the
next annual meeting of the shareholders and thereafter until his or her
successor is elected and qualified
The initial Board shall consist of two persons who shall
serve until their successors are elected and qualified. The beginnings
of the terms of office of the directors shall be contemporaneous. The
names and addresses of the initial directors are:
Edward G. Atsinger, III 4880 Santa Rosa Road
Suite 300
Camarillo, CA 83012
Stuart Epperson 4880 Santa Rosa Road
Suite 300
Camarillo, CA 83012
SEVENTH: In furtherance and not in limitation of the powers conferred by
statute, the Board is expressly authorized to make, repeal, alter,
amend and rescind the Bylaws of the Corporation.
EIGHTH: Elections of the directors may be by written ballot if the Board so
determines.
NINTH: The Corporation reserves the right to amend, alter, change or repeal
any provision contained in these Articles of Incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred
on shareholders herein are granted subject to this reservation.
2
<PAGE>
TENTH: No contract or transaction between the Corporation and one or more of
its directors, or between the Corporation and any other corporation,
partnership, association, or other organization in which one or more
of its directors or officers are directors or officers or have a
financial interest, shall be void or voidable solely for that reason
or solely because the director or officer is present at or
participates in the meeting of the Board or committee thereof which
authorizes, approves, or ratifies the contract or transaction or
solely because his or their votes are counted for such purpose if the
contract or transaction was fair as to the Corporation.
ELEVENTH: The Corporation is authorized to eliminate or limit the personal
liability of its directors in accordance with and subject to the
limitations of the terms of Colorado Revised Statutes (S) 7-3-
101(1)(u) as follows: No director shall be personally liable to the
Corporation or its shareholders for monetary damages for any breach of
fiduciary duty by such director as a director. Notwithstanding the
foregoing, a director shall be liable to the extent provided by
applicable law (i) for breach of the director's duty of loyalty to the
Corporation or its shareholders, (ii) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing
violation of law, (iii) for acts specified in Section 7-5-114 of the
Colorado Corporation Code, or (iv) for any transaction from which the
director derived an improper personal benefit. If the Colorado
Corporation Code is amended after the effective date of this Eleventh
Article to authorize corporate action further eliminating or limiting
the personal liability of directors, then the liability of a director
will be eliminated or limited to the fullest extent permitted by the
Colorado Corporation Code, as so amended. Any repeal or modification
of this Eleventh Article by the shareholders of the Corporation shall
not adversely affect any right or protection of a director of the
Corporation existing at the time of such repeal or modification.
TWELFTH: The Corporation is authorized to provide indemnification of its
directors, officers, employees and agents in accordance with and
subject to the limitations of the terms of Colorado Revised Statutes
(S) 7-3-101.5. Such indemnification may be provided pursuant to the
Corporation's Bylaws, by vote of the shareholders or of disinterested
directors, by agreement or otherwise.
3
<PAGE>
THE UNDERSIGNED, being the incorporator hereinbefore named,
for the purpose of forming a corporation to do business both
within and without the State of Colorado, and pursuant to the
Colorado Corporation Code, does make and file these Articles of
Incorporation.
Name: Robert A. as President for Search
-------------------------------------------
Company International
---------------------
-------------------------------------------
Incorporator
Date: 8/10/93
------------------------------------------
4
<PAGE>
FILED COPY
RECEIVED
STATE OF
931082450
8/11/93
61606
001
-----------
FEE $50.00
-----------
SUBMIT ORIGINAL OCR AND
ONE COPY PROFIT CORPORATION
NAME AND PRINCIPAL ADDRESS
CORP OCR
ARTICLES OF INCORPORATION
NAME Salem Media of Colorado, Inc.
STREET 1535 Grant Street, Suite 140 CITY Denver STATE CO ZIP 80203
THIS DOCUMENT MUST BE TYPED IN BLACK
SECRETARY OF STATE - 1560 BROADWAY #200, DENVER, CO 80202
(303) 894-2200 EXT 2
CUMULATIVE VOTING SHARES OF STOCK IS AUTHORIZED. YES [ ] NO [X] IF DURATION IS
LESS THAN PERPETUAL ENTER NUMBER OF YEARS
THERE ARE PROVISIONS LIMITING OR DENYING TO SHAREHOLDERS THE PREEMPTIVE RIGHT TO
ACQUIRE ADDITIONAL OR TREASURY SHARES OF THE CORPORATION YES [ ] NO [X] IF YES:
state provisions on a separate 8 1/2x11 sheet of paper.
STOCK INFORMATION: (if additional space is needed, continue and separate 8
1/2x11 sheet of paper).
STOCK CLASS Common AUTHORIZED SHARES 1000 PAR VALUE no par
STOCK CLASS AUTHORIZED SHARES PAR VALUE
THE NAME OF THE INITIAL REGISTERED AGENT AND THE ADDRESS OF THE REGISTERED
OFFICE IS: (corporations use LAST NAME space)
LAST NAME Search Company International FIRST & MIDDLE NAME
STREET 1535 Grant Street, Suite 140 CITY Denver STATE CO ZIP 80203-1843
5
<PAGE>
DIRECTORS: HOW MANY DIRECTORS CONSTITUTE THE INITIAL BOARD OF DIRECTORS OF THE
CORPORATION?
THE NAMES AND ADDRESSES OF THE PERSONS WHO ARE TO SERVE AS DIRECTORS UNTIL THE
1ST ANNUAL MEETING OF SHAREHOLDERS OR UNTIL THEIR SUCCESSORS ARE ELECTED AND
QUALIFIED ARE: (If more than three, continue on a 8 1/2 x 11 sheet of paper)
LAST NAME Atsinger FIRST & MIDDLE NAME Edward G., III
STREET 4880 Santa Rosa Road, Suite 300 CITY Camarillo STATE CA ZIP 93012
LAST NAME Epperson FIRST & MIDDLE NAME Stuart
STREET 4880 Santa Rosa Road, Suite 300 CITY Camarillo STATE CA ZIP 93012
LAST NAME FIRST & MIDDLE NAME
STREET CITY STATE ZIP
INCORPORATORS: NAMES AND ADDRESSES: (If more than two, continue on a separate
8 1/2x11 sheet of paper).
NAME ADDRESS
x Search Company International 1535 Grant Street, Suite 140, Denver, CO 80203
- ------------------------------- -----------------------------------------------
x
- ------------------------------- -----------------------------------------------
I/WE THE UNDERSIGNED PERSON(S) OF THE AGE OF 18 YEARS OR MORE, ACTING AS
INCORPORATOR(S) OF A CORPORATION UNDER THE COLORADO CORPORATION CODE, ADOPT THE
ABOVE ARTICLES OF INCORPORATION. THE CORPORATION IS ORGANIZED FOR ANY LAWFUL
PURPOSE. A MORE SPECIFIC PURPOSE MAY BE STATED ON A SEPARATE 8 1/2x11 SHEET OF
PAPER).
x Robert A. as President x
- ------------------------------- -----------------------------------------------
SIGNATURE SIGNATURE
for SEARCH COMPANY INTERNATIONAL
- --------------------------------
PLEASE READ REVERSE SIDE BEFORE COMPLETING
No.15.Rev.12-91. ARTICLES OF INCORPORATION (Profit)(OCR) Bradford Publishing,
1743 Wazee St., Denver, CO 80202 - (303)292-2599 - 12-91
6
<PAGE>
EXHIBIT 3.37
BYLAWS OF
SALEM MEDIA OF COLORADO, INC.
ARTICLE I
Offices
The principal office of SALEM MEDIA OF COLORADO, INC. (the
"Corporation") shall be located in Denver, Colorado. The Corporation may have
such other offices and places of business, either within or outside Colorado, as
the Board of Directors may designate or as the business of the Corporation may
require from time to time.
The registered office of the Corporation is required by the Colorado
Corporation Code to be maintained in Colorado. The registered office may be,
but need not be, identical with the principal office if in Colorado, and the
address of the registered office may be changed from time to time by the Board
of Directors (the "Board").
ARTICLE II
Shareholders
Section 2.1. Application of Article II. So long as there is only
-------------------------
one shareholder of the Corporation, Sections 2.5, 2.9 and 2.10 shall not apply
to the Corporation and any provisions thereof need not be fulfilled except as
otherwise required by the Colorado Corporations Code or Articles of
Incorporation as amended.
Section 2.2. Annual Meetings. Annual meetings of the stockholders
---------------
of the Corporation for the purpose of electing directors AND for the transaction
of such other proper business as may come before such meetings shall be held on
or before April 30 at such time and place as the Board shall determine by
resolution.
Section 2.3. Special Meetings. A special meeting of the
----------------
stockholders for the transaction of any proper business may be called at any
time by the Board or by the President or the holders of 20% or more of the
common stock of the Corporation.
Section 2.4. Place of Meeting. The Board may designate any place,
----------------
either within or outside Colorado, as the place for any annual meeting or
special meeting called by the Board. A waiver of notice signed by all
shareholders entitled to vote at a meeting may designate any place, either
within or outside Colorado, as the place for such meeting. If no designation
is made, or if a special meeting shall be called otherwise than by the Board,
the place of meeting shall be the registered office of the Corporation in
Colorado.
Section 2.5. Notice of Meeting. Written notice stating the place,
-----------------
day and hour of the meeting and, in case of a special meeting, the purpose for
which the meeting is called, shall be delivered not less than ten nor more than
50 days before the date of the meeting, either
<PAGE>
personally or by mail, by or at the direction of the President, the Secretary,
or the officer or person calling the meeting to each shareholder of record
entitled to vote at such meeting; except that, if the authorized shares are to
be increased, at least 30 days notice shall be given. If mailed, such notice
shall be deemed to be delivered when deposited in the United States mail,
addressed to the shareholder at his address as it appears on the stock transfer
books of the Corporation, with postage thereon prepaid.
Section 2.6. Adjournment. When a meeting is for any reason
-----------
adjourned to another time or place, notice need not be given of the adjourned
meeting if the time and place thereof are announced at the meeting at which the
adjournment is taken. At the adjourned meeting, any business may be transacted
which might have been transacted at the original meeting.
Section 2.7. Organization. The President or any Vice President
------------
shall call meetings of shareholders to order and act as chairman of such
meetings. In the absence of said officers, any shareholder entitled to vote at
that meeting, or any proxy of any such shareholder, may call the meeting to
order and a chairman shall be elected by a majority of the shareholders entitled
to vote at the meeting. In the absence of the Secretary or any assistant
Secretary of the Corporation, any person appointed by the chairman shall act as
Secretary of such meeting.
Section 2.8. Agenda and Procedure. The Board of Directors shall
--------------------
have the responsibility for establishing an agenda for each meeting of
shareholders, subject to the rights of shareholders to raise matters for
consideration which may otherwise properly be brought before the meeting
although not included within the agenda. The Chairman shall be charged with the
orderly conduct of all meetings of shareholders; provided, however, that in the
event of any difference in opinion with respect to the proper course of action
which cannot be resolved by reference to statute, or to the Articles of
Incorporation, or these Bylaws, Robert's Rules of Order (as last revised) shall
govern the disposition of the matter.
Section 2.9. Closing of Transfer Books or Fixing of Record Date.
--------------------------------------------------
For the purpose of determining shareholders entitled to notice of or to vote at
any meeting of shareholders or any adjournment thereof, or shareholders entitled
to receive payment of any dividend, or in order to make a determination of
shareholders for any other proper purpose, the Board may provide that the stock
transfer books shall be closed for any stated period not exceeding fifty days.
If the stock transfer books shall be closed for the purpose of determining
shareholders entitled to notice of or to vote at a meeting of shareholders, such
books shall be closed for at least ten days immediately preceding such meeting.
In lieu of closing the stock transfer books, the Board may fix in advance a date
as the date for any such determination of shareholders, such date in any case to
be not more than fifty days, and, in case of a meeting of shareholders, not less
than ten days prior to the date on which the particular action, requiring such
determination of shareholders, is to be taken. If the stock transfer books are
not closed and no record date is fixed for the determination of shareholders
entitled to notice of or to vote at a meeting of shareholders, or shareholders
entitled to receive payment of a dividend, the date on which notice of the
meeting is mailed or the date on which the resolution of the Board of Directors
declaring the dividend is adopted, as the case may be, shall be the record date
for such
2
<PAGE>
determination of shareholders. When a determination of shareholders entitled to
vote at any meeting of shareholders has been made as provided in this section,
such determination shall apply to any adjournment thereof except where the
determination has been made through the closing of the stock transfer books and
the stated period of the closing has expired.
Section 2.10. Voting Records. The officer or agent having charge
--------------
of the stock transfer books for shares of the Corporation shall make, at least
ten days before each meeting of shareholders, a complete record of the
shareholders entitled to vote at such meeting or any adjournment thereof,
arranged in alphabetical order, with the address of and the number of shares
held by each. For a period of ten days prior to such meeting, this record
shall be kept on file at the principal office of the Corporation, whether within
or outside Colorado, and shall be subject to inspection by any shareholder for
any purpose germane to the meeting at any time during usual business hours.
Such record shall also be produced and kept open at the time and place of the
meeting and shall be subject to the inspection of any shareholder for any
purpose germane to the meeting during the whole time of the meeting. The
original stock transfer books shall be prima facie evidence as to who are the
shareholders entitled to examine such record or transfer books or to vote at any
meeting of shareholders. Any officer or agent having charge of the stock
transfer books who fails to prepare the record of shareholders, or to keep it on
file for a period of ten days before the meeting or to produce and keep it open
for inspection at the meeting as provided in this section, is liable to any
shareholder suffering damage due to the failure to the extent of the damage.
Section 2.11. Quorum. Unless otherwise provided by the Articles of
------
Incorporation, a majority of the outstanding shares of the Corporation entitled
to vote, represented in person or by proxy, shall constitute a quorum at a
meeting of shareholders. If fewer than a majority of the outstanding shares
are represented at a meeting, a majority of the shares so represented may
adjourn the meeting without further notice for a period not to exceed 60 days at
any one adjournment. At such adjourned meeting at which a quorum shall be
present or represented, any business may be transacted which might have been
transacted at the meeting as originally notified. The shareholders present at
a duly organized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of shareholders so that less than a quorum
remains.
If a quorum is present, the affirmative vote of a majority of the
shares represented at the meeting and entitled to vote on the subject matter
shall be the act of the shareholders, unless the vote of a greater number or
voting by classes is required by law or the Articles of Incorporation.
Section 2.12. Proxies. At all meetings of shareholders, a
-------
shareholder may vote by proxy executed in writing by the shareholder or his duly
authorized attorney-in-fact. Such proxy shall be filed with the Secretary of
the Corporation before or at the time of the meeting. No proxy shall be valid
after eleven months from the date of its execution unless otherwise provided in
the proxy.
3
<PAGE>
Section 2.13. Voting of Shares. Each outstanding share, regardless
----------------
of class, shall be entitled to one vote and each fractional share shall be
entitled to a corresponding fractional vote on each matter submitted to a vote
at a meeting of shareholders, except as may be otherwise provided in the
Articles of Incorporation. If the Articles of Incorporation provide for more
or less than one vote for any share on any matter, every reference in the
Colorado Corporation Code to a majority or other proportion or number of shares
shall refer to such a majority or other proportion or number of votes entitled
to be cast with respect to such matter.
At a shareholders' meeting involving the election of directors, each
shareholder shall be entitled to cast for any one candidate no greater number
votes than the number of shares held by such shareholder; shareholders shall be
entitled to cumulate votes on behalf of any candidate.
Section 2.14. Voting of Shares by Certain Holders.
-----------------------------------
a. Neither treasury shares, nor shares of another Corporation, if a
majority of the shares entitled to vote for the election of directors of such
other Corporation is held by this Corporation, shall be voted at any meeting or
counted in determining the total number of outstanding shares at any given
Shares standing in the name of another Corporation, domestic or foreign, may be
voted by such officer, agent or proxy as the Bylaws of such corporation may
prescribe or, in the absence of such provision, as the Board of Directors of
such corporation may determine.
Shares held by an administrator, executor, guardian or conservator may
be voted by him, either in person or by proxy, without a transfer of such shares
into his name. Shares standing in the name of a trustee may be voted by him,
either in person or by proxy, but no trustee shall be entitled to vote shares
held by him without a transfer of such shares into his name.
Shares standing in the name of a receiver may be voted by such
receiver, and shares held by or under the control of a receiver may be voted by
such receiver without the transfer thereof into his name if authority to do so
is contained in an appropriate order of the court by which such receiver was
appointed.
A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee and
thereafter the pledgee shall be entitled to vote the shares so transferred.
Redeemable shares which have been called for redemption shall not be
entitled to vote on any matter and shall not be deemed outstanding shares on and
after the date of which written notice or redemption has been mailed to
shareholders and a sum sufficient to redeem such shares has been deposited with
a bank or trust company, with irrevocable instruction and authority to pay the
redemption price to the holders of the shares upon surrender of certificates
therefor.
4
<PAGE>
b. If shares or other securities having voting power stand of record
in the names of two or more persons, whether fiduciaries, members of a
partnership, joint tenants, tenants in common, tenants by the entirety, or
otherwise, or if two or more persons have the same fiduciary relationship
respecting the same shares, voting with respect to the shares shall have the
following effect:
(i) If only one person votes, his act binds all;
(ii) If two or more persons vote, the act of the majority so
voting binds all;
(iii) If two or more persons vote, but the vote is evenly split on
any particular matter, each faction may vote the securities in question
proportionately, or any person voting the shares of a beneficiary, if any, may
apply to any court of competent jurisdiction in the State of Colorado to appoint
an additional person to act with the persons so voting the shares. The shares
shall then be voted as determined by a majority of such persons and the person
appointed by the court. If a tenancy is held in unequal interests, a majority
or even split for the purpose of this subsection (iii) shall be a majority or
even split in interest.
The effects of voting stated in this subsection B shall not be
applicable if the Secretary of the Corporation is given written notice of
alternate voting provisions and is furnished with a copy of the instrument or
order wherein the alternate voting provisions are stated.
Section 2.15. Informal Action by Shareholders. Any action required
-------------------------------
or allowed to be taken at a meeting of the shareholders may be taken without a
meeting, provided that a consent in writing, setting forth the action so taken,
shall be signed by all of the shareholders entitled to vote with respect to the
subject matter thereof. Such consent shall have the same force and effect as a
unanimous vote of the shareholders, and may be stated as such in any articles or
document filed with the Secretary of State of Colorado under the Colorado
Corporation Code.
ARTICLE III
Board of Directors
Section 3.1. General Powers. The business and affairs of the
--------------
Corporation shall be managed by its Board of Directors, except as otherwise
provided in the Colorado Corporation Code or the Articles of Incorporation.
Section 3.2. Performance of Duties. A Director of the Corporation
---------------------
shall perform his duties as a director, including his duties as a member of any
committee of the Board upon which he may serve, in good faith, in a manner he
reasonably believes to be in the best interests of the Corporation, and with
such care as an ordinarily prudent person in a like position would use under
similar circumstances. In performing his duties, a director shall be entitled
to rely on information, opinions, reports, or statements, including financial
statements and other financial data, in each case prepared or presented by
persons and groups listed in subsections a, b and c of
5
<PAGE>
this Section 3.2; but he shall not be considered to be acting in good faith if
he has knowledge concerning the matter in question that would cause such
reliance to be unwarranted. A person who so performs his duties shall not have
any liability by reason of being or having been a director of the Corporation.
Those persons and groups upon whose information, opinions, reports, and
statements a director is entitled to rely are:
a. One or more officers or employees of the Corporation whom the
Director reasonably believes to be reliable and competent in the matters
presented;
b. Counsel, public accountants, or other persons as to matters which
the Director reasonably believes to be within such persons' professional or
expert competence; or
c. A committee of the Board upon which he does not serve, duly
designated in accordance with the provisions of the Articles of Incorporation or
the Bylaws, as to matters within its designated authority, which committee the
director reasonably believes to merit confidence.
Section 3.3. Number, Tenure and Qualifications. The number of
---------------------------------
directors of the Corporation shall be two; except that there need only be as
many directors as there are shareholders in the event that the outstanding
shares are held of record by fewer than three shareholders. The directors
shall be elected at each annual meeting of shareholders. Each director shall
hold office until the next annual meeting of shareholders and thereafter until
his successor shall have been elected and qualified. Directors shall be 18
years of age or older, but need not be residents of Colorado or shareholders of
the Corporation. Directors shall be removable in the manner provided by the
statutes of Colorado.
Section 3.4. Resignation. Any director of the Corporation may
-----------
resign at any time by giving written notice of his resignation to the Board of
Directors, the President, any Vice President or the Secretary of the
Corporation. Such resignation shall take effect at the date of receipt of such
notice or at any later time specified therein and unless otherwise specified
therein, the acceptance of such resignation shall not be necessary to make it
effective. When one or more directors shall resign from the Board, effective
at a future date, a majority of the directors then in office, including those
who have so resigned, shall have the power to fill such vacancy or vacancies,
the vote thereon to take effect when such resignation or resignations shall
become effective.
Section 3.5. Removal. Except as otherwise provided in the
-------
Articles of Incorporation or in these Bylaws, any director may be removed,
either with or without cause, at any time, by the affirmative vote of the
holders of a majority of the issued and outstanding shares of stock entitled to
vote for the election of directors of the Corporation given at a special meeting
of the shareholders called and held for such purpose. The vacancy in the Board
caused by any such removal may be filled by the shareholders entitled to vote
thereon at such meeting. If the shareholders at such meeting shall fail to
fill the vacancy, the Board of Directors may do so as provided in Section 3.6.
6
<PAGE>
Section 3.6. Vacancies. Any vacancy occurring in the Board may be
---------
filled by the affirmative vote of a majority of the remaining directors though
less than a quorum except as otherwise provided herein. A director elected to
fill a vacancy shall be elected for the unexpired term of his predecessor in
office. Any directorship to be filled by reason of an increase in the number
of directors shall be filled by the affirmative vote of a majority of the
directors then in office or by an election at any annual meeting or at a special
meeting of shareholders called for that purpose, and a director so chosen shall
hold office until the next annual meeting of shareholders and until his
successor has been elected and has qualified.
Section 3.7. Regular Meetings. A regular meeting of the Board
----------------
shall be held without other notice than this bylaw immediately after and at the
same place as the annual meeting of shareholders. The Board may provide by
resolution the time and place, either within or outside Colorado, for the
holding of additional regular meetings without other notice than such
resolution.
Section 3.8. Special Meetings. Special meetings of the Board may
----------------
be called by or at the request of the President or any two Directors. The
person or persons authorized to call Special Meetings of the Board may fix any
place, either within or outside Colorado, as the place for holding any special
meeting of the Board called by them.
Section 3.9. Notice. In the event that there is more than one
------
director of the Corporation, notice of any Special Meeting shall be given at
least seven days previously thereto by written notice delivered personally or
mailed to each director at his business address, or by notice given at least two
days previously by telegraph. Such notice shall be deemed to be delivered when
deposited in the United States mail so addressed, with postage thereon prepaid.
If notice be given by telegram, such notice shall be deemed to be delivered when
the telegram is delivered to the telegraph company. Any director may waive
notice of any meeting. The attendance of a director at a meeting shall
constitute a waiver of notice of such meeting, except where a director attends a
meeting for the express purpose of objecting to the transaction of any business
because the meeting is not lawfully called or convened. Neither the business to
be transacted at, nor the purpose of, any regular or special meeting of the
Board need be specified in the notice or waiver of notice of such meeting.
Section 3.10. Quorum. A majority of the number of directors
------
elected and qualified at the time of the meeting shall constitute a quorum for
the transaction of business at any such meeting of the Board of Directors, but
if less than such majority is present at a meeting, a majority of the directors
present may adjourn the meeting from time to time without further notice.
Section 3.11. Manner of Acting. If a quorum is present, the
----------------
affirmative vote of a majority of the directors present at the meeting and
entitled to vote on that particular matter shall be the act of the Board, unless
the vote of a greater number is required by law or the Articles of
Incorporation.
7
<PAGE>
Section 3.12. Compensation. By resolution of the Board of
------------
Directors, any director may be paid any one or more of the following: his
expenses, if any, of attendance at meetings; a fixed sum for attendance at such
meeting; or a stated salary as director. No such payment shall preclude any
director from serving the Corporation in any other capacity and receiving
compensation therefor.
Section 3.13. Presumption of Assent. A Director of the Corporation
---------------------
who is present at a meeting of the Board of Directors at which action on any
corporate matter is taken shall be presumed to have assented to the action taken
unless his dissent is entered in the minutes of the meeting or unless he files
his written dissent to such action with the person acting as the Secretary of
the meeting before the adjournment thereof or forwards such dissent by
registered mail to the Secretary of the Corporation immediately after the
adjournment of the meeting. Such right to dissent shall not apply to a
Director who voted in favor of such action.
Section 3.14. Executive Committee. The Board, by resolution
-------------------
adopted by a majority of the number of directors elected and qualified at the
time of the resolution, may designate two or more directors to constitute an
executive committee which shall have and may exercise all of the authority of
the Board of Directors or such lesser authority as may be set forth in said
resolution. No such delegation of authority shall operate to relieve the Board
of Directors or any member of the Board from any responsibility imposed by law.
Section 3.15. Informal Action by Directors. Any action required or
----------------------------
permitted to be taken at a meeting of the directors, executive committee or
other committee of the directors may be taken without a meeting if a consent in
writing, setting forth the action so taken, shall be signed by all of the
directors entitled to vote with respect to the subject matter thereof. Such
consent shall have the same force and effect as a unanimous vote of the
directors, and may be stated as such in any articles or documents filed with the
Secretary of State of Colorado under the Colorado Corporation Code.
Section 3.16. Meetings by Telephone. Members of the Board or any
---------------------
committee of the directors may participate in a meeting of the Board or
committee by means of conference telephone or similar communications equipment
by which all persons participating in the meeting can hear each other at the
same time. Such participation shall constitute presence in person at the
meeting.
ARTICLE IV
Officers and Agents
Section 4.1. General. The officers of the Corporation shall be a
-------
President, a Secretary and a Treasurer, each of whom shall be elected by the
Board. The Board may appoint one or more Vice Presidents and such other
officers, assistant officers, committees and agents, including a chairman of the
board, Assistant Secretaries and Assistant Treasurers, as they may consider
necessary, who shall be chosen in such manner and hold their offices for such
terms and have such authority and duties as from time to time may be determined
by the Board. The salaries of all the officers of the Corporation shall be fixed
by the Board. One person may hold
8
<PAGE>
any two offices, except that no person may simultaneously hold the offices of
President and Secretary. The officers of the Corporation shall be 18 years of
age or older. In all cases where the duties of any officer, agent or employee
are not prescribed by the Bylaws or by the Board, such officer, agent or
employee shall follow the orders and instructions of (a) the President, and if a
Chairman of the Board has been elected, then (b) the Chairman of the Board.
Section 4.2. Election and Term of Office. The officers of the
---------------------------
Corporation shall be elected by the Board of Directors annually at the first
meeting of the board held after each annual meeting of the shareholders. If
the election of officers shall not be held at such meeting, election of officers
shall occur by unanimous written consent of the Board as soon thereafter as may
be convenient. Each officer shall hold office until the first of the following
occurs: until his successor shall have been duly elected and shall have
qualified; or until his death; or until he shall resign; or until he shall have
been removed in the manner hereinafter provided.
Section 4.3. Removal. Any officer or agent may be removed by the
-------
Board or by the executive committee, if any, whenever in its judgment the best
interests of the Corporation will be served thereby, but such removal shall be
without prejudice to the contract rights, if any, of the person so removed.
Election or appointment of an officer or agent shall not of itself create
contract rights.
Section 4.4. Vacancies. A vacancy in any office, however
---------
occurring, may be filled by the Board for the unexpired portion of the term.
Section 4.5. Chairman. The Chairman shall be an officer of the
--------
Corporation. The Chairman shall have the responsibility of setting the agenda
for Board meetings and such other responsibilities and duties as are assigned by
the Board.
Section 4.6. President. The President shall, subject to the
---------
direction and supervision of the Board, be the chief executive officer of the
Corporation and shall have general and active control of its affairs and
business and general supervision of its officers, agents and employees. He
shall, unless otherwise directed by the Board, attend in person or by substitute
appointed by him, or shall execute, on behalf of the Corporation, written
instruments appointing a proxy or proxies to represent the Corporation, at all
meetings of the stockholders of any other Corporation in which the Corporation
shall hold any stock. He may, on behalf of the Corporation, in person or by
substitute or by proxy, execute written waivers of notice and consents with
respect to any such meetings. At all such meetings and otherwise, the
President, in person or by substitute or proxy as aforesaid, may vote the stock
so held by the Corporation and may execute written consents and other
instruments with respect to such stock and may exercise any and all rights and
powers incident to the ownership of said stock, subject however to the
instructions, if any, of the Board. The President shall have custody of the
Treasurer's bond, if any. If a chairman of the board has been elected, the
chairman of the board shall have, subject to the direction and modification of
the Board, all the same responsibilities, rights and obligations as described in
these Bylaws for the President.
9
<PAGE>
Section 4.7. Vice Presidents. The Vice Presidents, if any, shall
---------------
assist the President and shall perform such duties as may be assigned to them by
the President or by the Board. In the absence of the President, the Vice
President designated by the Board or (if there be no such designation) the Vice
President designated in writing by the President shall have the powers and
perform the duties of the President. If no such designation shall be made, all
Vice Presidents may exercise such powers and perform such duties.
Section 4.8. Secretary. The Secretary shall perform the
---------
following:
a. Keep the minutes of the proceedings of the
shareholders, executive committee and the Board of Directors;
b. See that all notices are duly given in accordance
with the provisions of these Bylaws or as required by law;
c. Be custodian of the Corporate records and of the seal
of the Corporation and affix the seal to all documents when authorized by the
Board of Directors;
d. Keep, at the Corporation's registered office or
principal place of business within or outside Colorado, a record containing the
names and addresses of all shareholders and the number and class of shares held
by each, unless such a record shall be kept at the office of the Corporation's
transfer agent or registrar;
e. Sign with the President or a Vice President,
certificates for shares of the Corporation, the issuance of which shall have
been authorized by resolution of the Board of Directors;
f. Have general charge of the stock transfer books of
the Corporation, unless the Corporation has a transfer agent; and
g. In general, perform all duties incident to the office
of Secretary and such other duties as from time to time may be assigned to him
by the President or by the Board. Assistant secretaries, if any, shall have the
same duties and powers, subject to supervision by the Secretary.
Section 4.9. Treasurer. The Treasurer shall be the principal
---------
financial officer of the Corporation and shall have the care and custody of all
funds, securities, evidences of indebtedness and other personal property of the
Corporation and shall deposit the same in accordance with the instructions of
the Board of Directors. He shall receive and give receipts and acquittances for
monies paid in on account of the Corporation, and shall pay out of the funds on
hand all bills, payrolls and other just debts of the Corporation of whatever
nature upon maturity. He shall perform all other duties incident to the office
of the Treasurer and, upon request of the board, shall make such reports to it
as may be required at any time. He shall, if required by the board, give the
Corporation a bond in such sums and with such sureties as shall be satisfactory
to the board, conditioned upon the faithful performance of his duties and for
the
10
<PAGE>
restoration to the Corporation of all books, papers, vouchers, money and other
property of whatever kind in his possession or under his control belonging to
the Corporation. He shall have such other powers and perform such other duties
as may be from time to time prescribed by the Board of Directors or the
President. The assistant Treasurers, if any, shall have the same powers and
duties, subject to the supervisor of the Treasurer.
The Treasurer shall also be the principal accounting officer of the
Corporation. He shall prescribe and maintain the methods and systems of
accounting to be followed, keep complete books and records of account, prepare
and file all local, state and federal tax returns, prescribe and maintain an
adequate system of internal audit, and prepare and furnish to the President and
the Board of Directors statements of account showing the financial position of
the Corporation and the results of its operations.
Section 4.10. Salaries. Officers of the Corporation shall be
--------
entitled to such salaries, emoluments, compensation or reimbursement as shall be
fixed or allowed from time to time by the Board of Directors.
Section 4.11. Bonds. If the Board of Directors by resolution shall
-----
so require, any officer or agent of the Corporation shall give bond to the
Corporation in such amount and with such surety as the Board of Directors may
deem sufficient, conditioned upon the faithful performance of that officer's or
agent's duties and offices.
ARTICLE V
Stock
Section 5.1. Certificates. The shares of stock shall be
------------
represented by consecutively numbered certificates signed in the name of the
Corporation by its chairman or vice-chairman of the Board which for the purpose
of this Section 5.1 only shall be considered officers, or by its President or a
Vice President and by the Treasurer or an assistant Treasurer or by the
Secretary or an assistant Secretary, and shall be sealed with the seal of the
Corporation, or with a facsimile thereof. The signatures of the Corporation's
officers on such certificate may also be facsimiles if the certificate is
countersigned by a transfer agent or registered by a registrar other than the
Corporation itself or an employee of the Corporation. In case any officer who
has signed or whose facsimile signature has been placed upon such certificate
shall have ceased to be such officer before such certificate is issued, it may
be issued by the Corporation with the same effect as if he were such officer at
the date of its issue. Every certificate representing shares issued by a
Corporation which is authorized to issue shares of more than one class or more
than one series of any class shall set forth upon the face or back of the
certificate or shall state that the Corporation will furnish to any shareholder
upon request and without charge a full statement of the designations,
preferences, limitations, and relative rights of the shares of each class
authorized to be issued and, if the Corporation is authorized to issue any
preferred or special class in series, the variations in the relative rights and
preferences between the shares of each such series, so far as the same have been
fixed and determined, and the authority of the Board of Directors to fix and
determine the relative rights and preferences of subsequent series.
11
<PAGE>
Each certificate representing shares shall state the following upon
the face thereof: the name of the state of the Corporation's organization; the
name of the person to whom issued; the number and class of shares and the
designation of the series, if any, which such certificate represents; the par
value of each share represented by such certificate or a statement that the
shares are without par value. Certificates of stock shall be in such form
consistent with law as shall be prescribed by the Board. No certificate shall
be issued until the shares represented thereby are fully paid.
Section 5.2. Record. A record shall be kept of the name of each
------
person or other entity holding the stock represented by each certificate for
shares of the Corporation issued, the number of shares represented by each such
certificate, the date thereof and, in the case of cancellation, the date of
cancellation. The person or other entity in whose name shares of stock stand
on the books of the Corporation shall be deemed the owner thereof, and thus a
holder of record of such shares of stock, for all purposes as regards the
Corporation.
Section 5.3. Consideration for Shares. Shares shall be issued for
------------------------
such consideration, expressed in dollars as shall be fixed from time to time by
the Board. That part of the surplus of a Corporation which is transferred to
stated capital upon the issuance of shares as a share dividend shall be deemed
the consideration for the issuance of such dividend shares. Such consideration
may consist, in whole or in part, of money, other property, tangible or
intangible, or in labor or services actually performed for the Corporation, but
neither promissory notes nor future services shall constitute payment or part
payment for shares.
Section 5.4. Cancellation of Certificates. All certificates
----------------------------
surrendered to the Corporation for transfer shall be cancelled and no new
certificates shall be issued in lieu thereof until the former certificate for a
like number of shares shall have been surrendered and cancelled, except as
herein provided with respect to lost, stolen or destroyed certificates.
Section 5.5. Lost Certificates. In case of the alleged loss,
-----------------
destruction or mutilation of a certificate of stock, the Board of Directors may
direct the issuance of a new certificate in lieu thereof upon such terms and
conditions in conformity with law as it may prescribe. The Board may in its
discretion require a bond in such form and amount and with such surety as it may
determine, before issuing a new certificate.
Section 5.6. Transfer of Shares. Upon surrender to the
------------------
Corporation or to a transfer agent of the Corporation of a certificate of stock
duly endorsed or accompanied by proper evidence of succession, assignment or
authority to transfer, and such documentary stamps as may be required by law, it
shall be the duty of the Corporation to issue a new certificate to the person
entitled thereto, and cancel the old certificate. Every such transfer of stock
shall be entered on the stock book of the Corporation which shall be kept at its
principal office or by its registrar duly appointed.
12
<PAGE>
The Corporation shall be entitled to treat the holder of record of any
share of stock as the holder in fact thereof, and accordingly shall not be bound
to recognize any equitable or other claim to or interest in such share on the
part of any other person whether or not it shall have express or other notice
thereof, except as may be required by the laws of Colorado.
Section 5.7. Indemnification of Directors, Officers, and Others.
----------------------------------------------------
The Corporation has the power to indemnify current or former directors,
officers, employees, and agents, to the greatest extent provided in its Articles
of Incorporation and by Cob. Rev. Stat. S 7-3-101. (5).
ARTICLE VI
Execution of Instruments; Loans; Checks and
Endorsements; Deposits; Proxies
Section 6.1. Execution of Instruments. The President shall have
------------------------
the power to execute and deliver on behalf of and in the name of the Corporation
any instrument requiring the signature of an officer of the Corporation, except
as otherwise provided in these Bylaws or where the execution and delivery
thereof shall be expressly delegated by the Board to some other officer or agent
of the Corporation. Unless authorized to do so by these Bylaws or by the
Board, no officer, agent or employee shall have any power or authority to bind
the Corporation in any way, to pledge its credit or to render it liable
pecuniarily for any purpose or in any amount.
Section 6.2. Loans. The Corporation may lend money to, guarantee
-----
the obligations of and otherwise assist directors, officers and employees of the
Corporation, or directors of another Corporation of which the Corporation owns a
majority of the voting stock, only upon compliance with the requirements of the
Colorado Corporation Code.
No loans shall be contracted on behalf of the Corporation and no
evidence of indebtedness shall be issued in its name unless authorized by a
resolution of the Board. Such authority may be general or confined to specific
instances.
Section 6.3. Checks and Endorsements. All checks, drafts or other
-----------------------
orders for the payment of money, obligations, notes or other evidences of
indebtedness, bills of lading, warehouse receipts, trade acceptances and other
such instruments shall be signed or endorsed by such officers or agents of the
Corporation as shall from time to time be determined by resolution of the Board,
which resolution may provide for the use of facsimile signatures.
Section 6.4. Deposits. All funds of the Corporation not otherwise
--------
employed shall be deposited from time to time to the Corporation's credit in
such banks or other depositories as shall from time to time be determined by
resolution of the Board, which resolution may specify the officers or agents of
the Corporation who shall have the power, and the manner in which such power
shall be exercised, to make such deposits and to endorse, assign and deliver for
collection and deposit checks, drafts and other orders for the payment of money
payable to the Corporation or its order.
13
<PAGE>
Section 6.5. Proxies. Unless otherwise provided by resolution
-------
adopted by the Board, the President or any Vice President may from time to time
appoint one or more agents or attorneys-in-fact of the Corporation, in the name
and on behalf of the Corporation, to cast the votes which the Corporation may be
entitled to cast as the holder of stock or other securities in any other
Corporation, association or other entity any of whose stock or other securities
may be held by the Corporation, at meetings of the holders of the stock or other
securities of such other Corporation, association or other entity or to consent
in writing, in the name of the Corporation as such holder, to any action by such
other Corporation, association or other entity, and may instruct the person or
persons so appointed as to the manner of casting such votes or giving such
consent, and may execute or cause to be executed in the name and on behalf of
the Corporation and under its corporate seal, or otherwise, all such written
proxies or other instruments as he may deem necessary or proper in the premises.
Section 6.6. Contracts. The Board may authorize any officer or
---------
officers, agent or agents, to enter into any contract or execute and deliver any
instrument in the name of and on behalf of the Corporation, and such authority
may be general or confined to specific instances.
ARTICLE VII
Miscellaneous
Section 7.1. Waivers of Notice. Whenever notice is required by the
-----------------
Colorado Corporation Code, by the Articles of Incorporation or by these Bylaws,
a waiver thereof in writing signed by the director, shareholder or other person
entitled to said notice, whether before, at or after the time stated therein, or
his appearance at such meeting in person or (in the case of a shareholders'
meeting) by proxy, shall be equivalent to such notice.
Section 7.2. Fiscal Year. The fiscal year of the Corporation shall
-----------
be December 31.
Section 7.3. Amendments. The Board of Directors shall have the
----------
power to alter, amend or repeal the Bylaws or adopt new Bylaws of the
Corporation at any regular meeting of the Board, or at any special meeting
called for that purpose, or by unanimous written consent of the Board, subject
to repeal or change by action of the shareholders.
Section 7.4. Emergency Bylaws. Subject to repeal or change by
----------------
action of the shareholders, the Board may adopt emergency Bylaws in accordance
with and pursuant to the provisions of the Colorado Corporation Code.
14
<PAGE>
EXHIBIT 3.38
ARTICLES OF INCORPORATION
OF
SALEM MEDIA OF LOUISIANA, INC.
The undersigned, acting pursuant to the Business Corporation Law of
Louisiana, adopts the following Articles of Incorporation.
ARTICLE I
NAME
The name of the Corporation is Salem Media of Louisiana, Inc.
ARTICLE II
PURPOSE
The purposes of the Corporation are to construct, own and/or operate
broadcast facilities licensed by the Federal Communications Commission and to
engage in any lawful activity for which corporations may be formed under the
Business Corporation Law.
ARTICLE III
CAPITAL
The Corporation has authority to issue an aggregate of 10,000 shares of
stock, all of which are designated common stock having no par value per share.
ARTICLE IV
SHAREHOLDER CONSENTS
Whenever the affirmative vote of shareholders is required to authorize or
constitute corporate action, the consent in writing to such action signed only
by shareholders holding that proportion of the total voting power on the
question which is required by law or by these Articles of Incorporation,
whichever requirement is higher, shall be sufficient for the purpose, without
necessity for a meeting of shareholders.
ARTICLE V
DIRECTOR'S PROXIES
Any director absent from a meeting of the Board of Directors or any
committee thereof may be represented by any other director or shareholder, who
may cast the vote of the absent director according to the written instructions,
general or special, of the absent director.
<PAGE>
ARTICLE VI
REVERSION
Cash, property or share dividends, shares issuable to shareholders in
connection with a reclassification of stock, and the redemption price of
redeemed shares, which are not claimed by the shareholders entitled thereto
within one year after the dividend or redemption price became payable or the
shares became issuable, despite reasonable efforts by the Corporation to pay the
dividend or redemption price or deliver the certificates for the shares to such
shareholders within such time, shall, at the expiration of such time, revert in
full ownership to the Corporation, and the Corporation's obligation to pay such
dividend or redemption price or issue such shares, as the case may be, shall
thereupon cease; provided that the board of directors may, at any time, for any
reason satisfactory to it, but need not, authorize (1) payment of the amount of
any cash or property dividend or redemption price or (2) issuance of any shares,
ownership of which has reverted to the Corporation pursuant to this Article VI,
to the entity who or which would be entitled thereto had such reversion not
occurred.
ARTICLE VII
INCORPORATOR
The name and post office address of the incorporator is:
Leslie L. Simon
700 Camp Street
New Orleans, LA 70130
WITNESSES:
<TABLE>
<CAPTION>
<S> <C>
/s/ Nancy D. Vickmani /s/ Leslie L. Simon
- -------------------------------------------- --------------------------------------------
/s/ Jill Ledbetter Incorporator
- --------------------------------------------
</TABLE>
<PAGE>
ACKNOWLEDGMENT
STATE OF LOUISIANA
PARISH OF ORLEANS
BEFORE ME, the undersigned authority, personally came and appeared Leslie
L. Simon, to me known to be the person who signed the foregoing instrument as
Incorporator, and who, having been duly sworn, acknowledged and declared, in the
presence of the two witnesses whose names are subscribed above, that she signed
such instrument as her free act and deed for the purposes mentioned therein.
IN WITNESS WHEREOF, the appearer, witnesses and I have hereunto affixed our
hands on this 14th day of April , 1986, at New Orleans, Louisiana.
---- -------- --
WITNESSES:
<TABLE>
<CAPTION>
<S> <C>
/s/ Nancy D. Vickmani /s/ Leslie L. Simon
- --------------------------------------------- ---------------------------------------------
Incorporator
/s/ Jill Ledbetter
- ---------------------------------------------
</TABLE>
/s/ Michael A. Mayhall
---------------------------------------------
NOTARY PUBLIC
<PAGE>
INITIAL REPORT BY DOMESTIC CORPORATIONS
(To be filed when the Articles of Incorporation are filed)
(R.S. 1950, 12:101)
===============================================================================
State of Louisiana
Parish of Orleans
TO: The Secretary of State
Baton Rouge, Louisiana
Complying with R.S. 1950, 12:101, Salem Media of Louisiana, Inc., hereby makes
its initial report as follows:
===============================================================================
Municipal Address of Location of its Registered Office
700 Camp Street
- ---------------------------------------------------------------------------
New Orleans, Louisiana 70130
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
Name & Municipal Address or Location of Each Registered Agent
Bradford D. Carey
- ---------------------------------------------------------------------------
700 Camp Street
- ---------------------------------------------------------------------------
New Orleans, Louisiana 70130
- ---------------------------------------------------------------------------
Name & Address of the First Directors (if selected when articles are filed)
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
Dated at New Orleans, Louisiana, on the 14th day of April , 1986
----- ----- --
/s/ Leslie L. Simon
-------------------------------------
-------------------------------------
-------------------------------------
(To be signed by each incorporator)
<PAGE>
EXHIBIT 3.39
BY-LAWS
OF
SALEM MEDIA OF LOUISIANA, INC.
Section 1.
OFFICES
1.1 The principal office shall be located at 650 Poydras, New Orleans,
-------------------------
Louisiana.
- ---------
1.2 The corporation may have such offices at such other places as the
Board of Directors may from time to time determine or the business of the
corporation may require.
Section 2.
SHAREHOLDERS
2.1 Place of Meeting
--- ----------------
Unless otherwise required by law or these By-Laws, all meetings of the
shareholders shall be held at the principal office of the corporation or at such
other place, within or without the State of Louisiana, as may be designated by
the Board of Directors.
2.2 Annual Meeting
--- --------------
An annual meeting of the shareholders shall be held at 2:00 p.m. on the
--------
(second Monday of December) in each year, or if said day be a legal holiday,
- --------------------------
then on the next succeeding day not a legal holiday, or at such other time as
the Board of Directors shall designate, for the purpose of electing directors
and for the transaction of such other business as may properly be brought before
the meeting.
2.3 Special Meetings
--- ----------------
Special meetings of the shareholders, for any purpose or purposes, may be
called by the President or Board of Directors. At any time, upon the written
request of any two directors or of any shareholder or shareholders holding in
the aggregate (one-fifth) of the total voting power, the Secretary shall call a
---------
special meeting of shareholders to be held at the registered office of the
corporation at such time as the Secretary may fix, not less than fifteen nor
more than sixty days after the receipt of said request, and if the Secretary
shall neglect or refuse to fix such time or to give notice of the meeting, the
shareholder or shareholders making the request may do so.
<PAGE>
2.4 Notice of Shareholders' Meetings
--- --------------------------------
Except as otherwise provided in Section 2.3 hereof, or by law, the
authorized person or persons calling a shareholders' meeting shall cause written
notice of the time, place and purpose of the meeting to be given to all
shareholders entitled to vote at such meeting at his or her last known address,
at least ten days and not more than sixty days prior to the day fixed for the
meeting. Notice of the annual meeting need not state the purpose thereof, unless
action is to be taken at the meeting as to which notice is required by law.
2.5 Election of Directors
--- ---------------------
The election of Directors shall be held during the annual meeting of
shareholders and nomination of candidates may be made by the board of directors
or by any shareholder entitled to vote in the election of directors.
Nominations by a shareholder shall be in writing and delivered or mailed to the
secretary of the corporation at least thirty days prior to the date of the
annual meeting; however, if notice to the shareholders of the annual meeting is
less than 30 days, then notice of the nomination of directors must be delivered
or mailed to the secretary of the corporation no later than the fifth day
following the day on which notice of the annual meeting was mailed to the
shareholders.
2.6 Voting
--- ------
A. On demand of any shareholder, the vote for directors, or on any
questions, shall be by ballot. All elections shall be had by plurality, with
all questions decided by majority of votes cast except as otherwise provided by
the articles or law.
2
<PAGE>
B. At every meeting of shareholders, a list of shareholders entitled to
vote, arranged alphabetically and certified by the Secretary or by the agent of
the corporation having charge of transfers of shares, showing the number and
class of shares held by each such shareholder on the record date for the
meeting, shall be produced on the request of any shareholder.
2.7 Quorum
--- ------
A. Except as otherwise provided by law, the presence, in person or by
proxy, of the holders of a majority of the total voting power shall constitute a
quorum at all meetings of the shareholders.
B. When a quorum is present at any meeting, the vote of the holders of 4
majority of the voting power present in person or represented by proxy shall
decide any question brought before such meeting, unless the question is one upon
which, by express provision of law or the Articles of Incorporation, a different
vote is required, in which case such express provision shall govern and control
the decision of such question. Directors shall be elected by plurality vote.
C. The shareholders present or represented at a duly organized meeting
shall constitute a quorum and may continue to do business until adjournment,
notwithstanding the withdrawal of enough shareholders to leave less than a
quorum as fixed in Section 2.6 of these By-Laws, or the refusal of any
shareholders present to vote.
2.8 Proxy Vote
--- ----------
At any meeting of the shareholders, every shareholder having the right to
vote shall be entitled to vote in person, or by proxy appointed by an instrument
in writing subscribed by such shareholder and bearing a date not more than
eleven months prior to said meeting, unless said instrument provides for a
longer period. The aforesaid proxy need not be a shareholder of the
corporation. Each shareholder shall have one vote for each share of stock
having voting power, registered in his name on the books of the corporation at
the time of the said meeting or on the record date for the determination of
shareholders entitled to vote at the said meeting if the Board of Directors
shall have fixed such a record date. Except as the Board may provide otherwise,
if no record date is fixed (a) for the purpose of determining shareholders
entitled to notice of and to vote at a meeting, the close of business on the day
before the notice of the meeting is mailed, or if notice is waived, the close of
business on the day before the meeting, shall be the record date for such
purpose, or (b) for any other purpose, the close of business on the day on which
the Board of Directors adopts the resolution relating thereto shall be the
record date for such purpose.
2.9 Adjournment of Meeting
--- ----------------------
A. Adjournments of any annual or special meeting of shareholders may be
taken without new notice being given unless a new record date is fixed for the
adjourned meeting, but any meeting at which directors are to be elected shall be
adjourned only from day to day until such directors shall have been elected.
B. If a meeting cannot be organized because a quorum has not attended,
those present may adjourn the meeting to such time and place as they may
determine, subject, however, to the
3
<PAGE>
provisions of Section 2.9 A. hereof. In the case of any meeting called for the
election of directors, those who attend the second of such adjourned meetings,
although less than a quorum as fixed in Section 2.6 hereof, shall nevertheless
constitute a quorum for the purpose of electing directors.
Section 3.
DIRECTORS
3.1 Powers of Directors
--- -------------------
All of the corporate powers shall be vested in, and the business and
affairs of the corporation shall be managed by a Board of Directors. The Board
may exercise all such powers of the corporation and do all such lawful acts and
things which are not by law, the Articles of Incorporation, or these By-Laws
directed or required to be done by the shareholders. Without prejudice to such
general powers, the directors have the following specific powers:
(a) To devolve the powers and duties of any officer to any other person
for a specified period of time;
(b) To confer upon any officer the power to appoint, remove, suspend and
determine the compensation of subordinate officers or agents;
(c) To determine who shall be entitled to vote;
(d) To assign or transfer shares of stock, bonds, debentures or other
securities held by other corporate subsidiaries of the corporation;
and,
(e) To delegate any powers of the board of directors to any standing or
special committee or to any officer or agent with the power to
subdelegate upon such terms as the directors deem fit.
3.2 Number of Directors and Qualifications
--- --------------------------------------
A. The Board of Directors shall be comprised of no more than three natural
persons and shall hold office for one year or until their successors are chosen
and have qualified.
B. The Board of Directors, by majority vote, may decrease or increase the
number of directors, authorized in paragraph A at any time subsequent to the
annual meeting of shareholders. A decrease in the number of directors shall
not shorten the term of any incumbent director nor reduce the number of
directors below the minimum number as specified by the articles. The board of
directors, by a vote of a majority of directors, may immediately fill any
vacancies and the so elected directors shall serve until such time as they are
subject to re-election.
C. No director need be a shareholder.
3.3 Place of Holding Meetings
--- -------------------------
4
<PAGE>
The meetings of the Board of Directors may be held at such place within or
without the State of Louisiana as a majority of the directors may from time to
time appoint. Meetings by the Board of Directors, whether regular or special,
may be conducted by telephone conferences or other similar communications
equipment and participation in such a meeting shall constitute presence at such
meeting. All participants in such a meeting, by virtue of their participation,
shall be deemed to have consented to the recording of the meeting, by either an
electronic recording device or written transcript, in order to record the
minutes for the corporate records.
3.4 Organizational Meeting
--- ----------------------
The first meeting of each newly elected Board shall be held immediately
following the annual shareholders' meeting and at the same place as the annual
meeting, and no notice of such first meeting shall be necessary to the newly
elected directors in order legally to constitute the meeting. The purpose of
the meeting will be for organization, election of officers and the transaction
of business.
3.5 Regular Directors' Meetings
--- ---------------------------
A. Regular meetings of the Board may be held, upon five days' written
notice from the President or the Secretary at such time and place either within
or without the State of Louisiana as shall from time to time be determined by
the Board, provided that notice of such determination shall be given to all
Directors. Directors present at any regular or special meeting shall be deemed
to have received due, or to have waived, notice thereof, provided that a
director who participates in a meeting by telephone shall not be deemed to have
received or waived due notice if, at the beginning of the meeting, he objects to
the transaction of any business because the meeting is not lawfully called.
B. Any action which may be taken at a meeting of the Board or any
committee thereof, may be taken by a consent in writing signed by all of the
directors or by all members of the committee, as the case may be, and filed with
the records of proceedings of the Board or committee.
C. Members of the Board may participate in and be present at any meeting
of the Board or any committee thereof by means of conference telephone or
similar communications equipment if all persons participating in such meeting
can hear and communicate with each other.
3.6 Special Directors' Meetings
--- ---------------------------
Special meetings of the Board of Directors may be called any time by the
Board of Directors, by vote at a meeting, by the President, or in writing, with
or without a meeting by a majority of the directors. The special meetings may
be held at such time and place either within or without the State of Louisiana
as designated by the board of directors. In the absence of such designation,
the meeting place will be determined through a notice thereof.
3.7 Notice Of Special Directors Meetings
--- ------------------------------------
5
<PAGE>
Special meetings of the Board may be called by the President on two days'
notice given to each director, either personally or by telephone, mail, or
telegram. Special meetings shall be called by the President or Secretary in
like manner and on like notice on the written request of two directors and if
the President and Secretary fail or refuse, or are unable to call a meeting when
requested by any two directors, then the two directors may call the meeting on
two days' written notice given to each director.
3.8 Quorum
--- ------
A. A majority of the directors in office and qualify to act constitute a
quorum for the transaction of business, and except as otherwise provided by law,
the articles or these by-laws, the acts of a majority of the directors present
at a fleeting at which a quorum is present shall be the acts of the Board.
B. If a quorum is present when the meeting is convened, the directors
present may continue to do business, taking action by vote of a majority of a
quorum as fixed in paragraph A. hereof, until adjournment, notwithstanding the
withdrawal of enough directors to leave less than a quorum as fixed in Paragraph
A. hereof or the refusal of any director present to vote.
3.9 Compensation of Directors
--- -------------------------
Directors as such, shall receive such salary for their services as may be
fixed by resolution of the Board of Directors and shall receive their actual
expenses of attendance, if any, for each regular or special meeting of the Board
or any committee thereof; provided that nothing herein contained shall be
construed to preclude any director from serving the corporation in any other
capacity and receiving compensation therefor.
3.10 Removal Of Board Member
---- -----------------------
The shareholders, by vote of a majority of the total voting power at any
special meeting called for the purpose, may remove from office any one or more
of the directors, notwithstanding that his/her or their terms of office may not
have expired, and may forthwith at such meeting proceed to elect a successor for
the unexpired term. Whenever the holders of the shares of any class or series
or of any obligations are entitled to elect one or more directors, the
provisions of this paragraph shall apply, in respect to the removal of a
director or directors so elected, and the election of a successor or successors,
to the vote of the holders of the outstanding shares of that class or series or
of those obligations and not to the vote of the outstanding shares as a whole.
If a director has been elected by the exercise of the privilege of cumulative
voting, such director may not be removed if the votes cast against his removal
would be sufficient to elect him/her if then cumulatively voted in his/her favor
at an election of the entire Board of Directors, or, if there be classes of
directors, at an election of the class of directors of which he is a part.
3.11 Resignations
---- ------------
The resignation of a Director shall take effect upon receipt of written
notice to the president or secretary, or on any later date, not more than 30
days after such receipt specified herein.
6
<PAGE>
3.12 Vacancies
---- ---------
When any vacancy occurs among the Directors during an unexpired term, a
Director shall be elected to fill such vacancy by a majority vote of the
remaining members of the board. If the board fails to fill such vacancy for a
period of ninety days following the vacancy, the shareholders may elect a
director to fill such vacancy at a special meeting of the shareholders called
for this particular purpose.
3.13 Ineligibility
---- -------------
No member shall be permitted to vote on any question in which he or she has
a personal interest, directly or indirectly.
3.14 Board Procedure
---- ---------------
The Chairman of the Board shall preside at board meetings; after roll call
he or she shall turn the meeting over to the president to present the affairs of
the corporation and the business before the board. The Chairman of the board,
or if there is none, the president will serve as chairman, shall call for all
votes and shall be judge of all points of order. His or her decision on points
of order shall be final, unless two members of the board appeals the decision to
the board; in which event, a majority of the members present shall decide the
question. All resolutions entered in the minutes shall be considered past based
on statement of yeas and nays and will be considered an unanimous vote by all of
the directors present at the meeting. Any member has a right to request the
secretary to enter his or her name on the minutes as voting against a motion.
3.15 Committees of Directors
---- -----------------------
The Board may designate one or more committees, each committee to consist
of two or more of the directors of the corporation (and one or more directors
may be named as alternate members to replace any absent or disqualified regular
members), which, to the extent provided by resolution of the Board, shall have
and may exercise the powers of the Board in the management of the business and
affairs of the corporation, and may have power to authorize the seal of the
corporation to be affixed to documents. Such committee or committees shall have
such name or names as may be determined, from time to time, by resolution of the
Board. Any vacancy occurring in any such committee shall be filled by the
Board, but the President may designate another director to serve on the
committee pending action by the Board. Each such committee shall hold office
during the term of the Board constituting it, unless otherwise ordered by the
Board.
3.16 Executive Committee
---- -------------------
The Board of Directors may form an executive committee for the day to day
managerial functions of the corporation, delegating whatever powers to said
committee which the board in its discretion may deem fit to so delegate. If an
executive committee is appointed, the committee will be made up of at least two
other members of the Board of Directors, the president shall also be a member.
The committee shall have all the powers of the board when the board is not in
session.
7
<PAGE>
3.17 Minutes of Meetings of Committees
---- ---------------------------------
Any committees designated by the board shall keep regular minutes of their
proceedings, and shall report the same to the board when required; however, no
approval by the board of any action properly taken by a committee shall be
required.
3.18 Committee Procedure
---- -------------------
If the Board fails to designate a chairman of a committee, the president
will then assume the role of chairman. Each committee shall meet at such times
as it determines and at any time when called by the chairman. A majority of a
committee constitutes a quorum, and a committee may take action either by
majority vote of the members present which constitutes a quorum, or by written
concurrence of a majority of the members. If a member of a committee is absent
or has been disqualified, the qualified members present, whether or not they
constitute a quorum, unanimously appoint a director to act in place of the
absent or disqualified member. The board has the power to change the members
in the committee at any time, fill vacancies and to discharge any committee at
any time.
Section 4.
OFFICERS
4.1 Titles of Officers
--- ------------------
A. The officers of the corporation shall be chosen by the director(s) and
----------
shall be a President, a Secretary, and a Treasurer. The directors may elect one
---------------------------------------
or more Vice-Presidents. Any two offices may be held by one person, provided
that no person holding more than one office may sign, in more than one capacity,
any certificate or other instrument required by law to be signed by two
officers.
B. The Board of Directors may appoint such other officers as it shall deem
necessary, who shall hold their offices for such terms and shall exercise such
powers and perform such duties as shall be determined from time to time by the
Board.
C. The officers of the corporation shall hold office at the pleasure of
the Board of Directors.
4.2 President
--- ---------
The President shall preside at all meetings of the shareholders and shall
have general and active management of the business of the corporation. The
President shall act as chief executive officer, with power to execute all
authorized instruments, shall see that all orders and resolutions of the board
are carried into effect, and direct the other officers in the performance of
their duties. The President shall perform generally all acts incident to the
office of President or which are authorized or required by law, or which are
incumbent upon the office under the provision of the articles and these By-Laws.
If a Chairman of the Board of Directors has not been elected, the President,
shall act as Chairman and shall preside at all meetings of the Board.
8
<PAGE>
4.3 Vice-President
--- --------------
The Vice-Presidents (if any) in the order specified by the Board or, if not
so specified, in the order of their seniority shall, in the absence or
disability of the President, perform the duties and exercise the powers of the
President, and shall perform such other duties as the President or the Board of
Directors shall prescribe.
4.4 Secretary
--- ---------
The Secretary shall attend all meetings of the Board of Directors and all
meetings of the shareholders and record all votes and the minutes of all
proceedings in a book to be kept for that purpose. He or she shall give, or
cause to be given, notice of all meetings of the shareholders and special
meetings of the Board, and shall perform such other duties as may be prescribed
by the Board or President, under whose supervision he or she shall be. The
Secretary, except as otherwise determined by the Directors, shall be in charge
of the original stock books, transfer books, and stock ledgers and shall act as
transfer agent in respect to the stock and other securities issued by the
corporation. He or she shall keep in safe custody the seal of the corporation,
if any, and affix the same to any instrument requiring it.
4.5 Treasurer
---------
The Treasurer shall have the custody of the corporate funds and shall keep
or cause to be kept full and accurate accounts of receipts and disbursements in
books belonging to the corporation and shall deposit all monies and other
valuable effects in the name and to the credit of the corporation in such
depositories as may be designated by the Board of Directors. He or she shall
keep a proper accounting of all receipts and disbursements and shall disburse
the funds of the corporation only for proper corporate purposes or as may be
ordered by the Board and shall render to the President and the Board at the
regular meetings of the Board, or whenever they may require it, an account of
all his transactions as Treasurer and of the financial condition of the
corporation. If required by the board, the Treasurer shall give the corporation
a bond for the faithful discharge of his or her duties and for restoration to
the corporation, upon termination of his tenure, of all property of the
corporation under his or her control.
4.6 Term of Office
--- --------------
All officers elected or appointed by the Board of Directors and under its
authority shall hold office at the pleasure of the board.
Section 5.
CAPITAL STOCK
5.1 Certificates
--- ------------
The certificates for each class of stock of the corporation shall be
numbered and shall be entered in the books of the corporation as they are
issued. Every certificate of stock shall be signed by the President or a Vice-
President and the Treasurer or the Secretary. If any stock
9
<PAGE>
certificate is signed by a transfer agent or by a registrar, other than the
corporation itself or an employee of the corporation, the signature of any such
officer may be a facsimile.
5.2 Missing Certificates
--- --------------------
The officers of the corporation may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost, stolen, or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost, stolen, or destroyed. When authorizing such
issuance of a new certificate or certificates, the officers of the corporation
shall, unless dispensed with by the Board, as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or destroyed
certificate or certificates, or his legal representative, to advertise the same
in such manner as such officers shall require and/or give the corporation a bond
in such sum as they may deem appropriate as indemnity against any claim that may
be made against the corporation with respect to the certificate alleged to have
been lost, stolen or destroyed.
5.3 Transfers
--- ---------
A. Upon surrender to the corporation, or the transfer agent of the
corporation, of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignment, or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
B. When the owner or holder of any of the capital stock of the corporation
decides to sell or otherwise dispose of any part of his or her stock, he or she
shall give notice of their intention to so dispose of any part of the stock to
the Secretary of the Corporation. Notice is to be given by registered mail,
stating the number of shares to be sold and the price at which offered.
Immediately upon receipt of such communication, the Secretary shall notify the
other stockholders by registered mail in order that they may avail themselves of
their right to purchase the stock at the stated price. Any prospective
purchaser who is the owner or holder of any of the capital stock of the
corporation shall immediately contact the Secretary of the Corporation, who will
thereby contact the shareholder who has evidenced their desire to sell the
stock; should there be two or more shareholders desiring to purchase the stock
that is offered for sale, the stock shall be prorated among the stockholders
desiring to purchase the stock. If there are no stockholders desiring to
purchase the stock, then the stock may be sold to any other person at a price
not less than that offered originally to the other stockholders.
5.4 Record Date
--- -----------
For the purpose of determining shareholders entitled to notice of and to
vote at a meeting, or to receive a dividend, or to receive or exercise
subscription or other rights, or to participate in a reclassification of stock,
or in order to make a determination of shareholders for such purpose, such date
shall be not more than sixty days and, if fixed for the purpose of determining
shareholders entitled to notice of and to vote at a meeting, not less than ten
days, prior to the date on which the action requiring the determination of
shareholders is to be taken.
10
<PAGE>
5.5 Transfer Agents and Registrars
--- ------------------------------
The Board may appoint or remove transfer agents and registrars for any
class of stock. The transfer agents shall be responsible for effectuance of
original issuances of stock certificates and transfer of shares, recording and
advising corporation of such issuance and transfers, countersign and deliver
stock certificates and keep the stock transfer and other pertinent records.
The registrar shall prevent over issuance by registering and countersigning all
stock certificates issued. A transfer agent and registrar may be identical.
Transfer agents and registrars, when covered with the company as obligees by
indemnity bond issued by a surety company and approved by the corporations
general counsel and providing indemnity unlimited in a stated amount or in form
and amount signed by a surety that is approved by the board, and upon receipt of
an appropriate affidavit indemnity agreement may (a) countersign, register and
deliver in place of any stock certificate alleged to have been stolen,
destroyed, lost or mutilated and place a certificate for the same number of
shares and to make any payment, credit, transfer, issuance, conversion or
exchange to which holder may be entitled in respect of such replaced
certificate, without the surrender of said certificate for cancellation and (b)
effect transfers of shares from the names of deceased persons whose estates (not
exceeding $1000.00 in gross asset value) are not administered.
Section 6.
MISCELLANEOUS
6.1 Corporate Records
--- -----------------
The Articles of Incorporation, the By-Laws and the proeedings of all
meetings of shareholders, board of directors and any other committee or board
shall be recorded 44' appropriate minute books. The minutes of each meeting
shall be signed by the secretary or any other officer appointed to act as
Secretary of the Meeting.
6.2 Inspection of Corporate Records
--- -------------------------------
The minutes of proceedings, stock ledgers and books of accounts, shall be
open to inspection upon written demand, to the extent allowed by applicable
Louisiana Law, at any reasonable time for purposes reasonably related to the
interest of the shareholders. Such inspections may be made in person by the
shareholder, or an authorized agent, or an attorney and shall include the right
to make abstracts. The inspection of the corporate records, other than at a
shareholders meeting, shall be made in writing upon the President or Secretary.
6.3 Corporate Seal
--- --------------
The Board of Directors may adopt a corporate seal, which seal shall have
inscribed thereon the name of the corporation. Said seal may be used by causing
it or a facsimile thereof to be impressed or affixed or reproduced or otherwise.
Failure to affix the seal shall not, however, affect the validity of any
instrument.
6.4 Dividends
--- ---------
11
<PAGE>
Except as otherwise provided by law or the Articles of Incorporation,
dividends upon the stock of the corporation may be declared by the Board of
Directors at any regular or special meeting. Dividends may be paid in cash, in
property, or in shares of stock.
6.5 Checks
--- ------
All checks or demands for money and notes of the corporation shall be
signed by such officer or officers or such other person or persons as the Board
of Directors may from time to time designate.
6.6 Notices
--- -------
A. Any written notice required or permitted by law, the Articles of
Incorporation, or the By-Laws to be given to any shareholder or director shall
be deemed to have been given to such shareholder or director when such notice is
served upon such shareholder or director, or two business days after such notice
is placed in the United States mail, postage prepaid, addressed to such
shareholder or director at his last known address, whichever is earlier.
B. Whenever any notice is required to be given by law, the Articles of
Incorporation, or the By-Laws, a waiver thereof in writing signed by the person
or persons entitled to said notice, and filed with the records of the meeting,
whether before or after the time stated therein, shall be deemed equivalent
thereto.
6.7 Fiscal Year
--- -----------
The Board of Directors may adopt for and on behalf of the corporation a
fiscal or a calendar year.
6.8 Gender
--- ------
All pronouns and variations thereof used in these By-Laws shall be deemed
to refer to the masculine, feminine or neuter gender, singular or plural, as the
identity of the person, persons, entity or entities referred to require.
Section 7.
INDEMNIFICATION
The corporation shall indemnify its officers and directors, and may
indemnify its employees and agents, and may procure insurance on behalf of its
officers, directors, employees and agents to the full extent permitted by
Section 83 of the Louisiana Business Corporation Law, as amended.
12
<PAGE>
Section 8.
AMENDMENTS
These By-Laws may be amended or repealed by the Board of Directors at any
regular or special meeting or by the shareholders at any annual or special
meeting, provided notice of the proposed amendment or repeal be contained in the
notice of such annual or special meeting of shareholders.
CERTIFICATE
I, Eric H. Halvorson, Secretary of Salem Media of Louisiana, Inc., a
------------------ -------------------------------------------
Louisiana corporation (the "Corporation"), do hereby certify that the attached
is a true and correct copy of the By-Laws of the Corporation duly adopted by the
Baord of Directors of the Corporation on May 12, 1986, that they are still in
------ -
full force and effect and that they have not been amended or rescinded.
Dated: May 12 , 1986.
------------------------ -
Eric H. Halvorson
------------------
____________________, Secretary
13
<PAGE>
EXHIBIT 3.40
APPROVED
By BRF
----------------
Date 7-29-81
-------------
Amount 75.00
------------
ARTICLES OF INCORPORATION
OF
SALEM MEDIA OF OHIO, INC.
The undersigned, a citizen of the United States, desiring to form a
corporation, for profit, under Sections 1701.01 et seq. of the Revised Code of
Ohio, does hereby certify:
FIRST: Name. The name of the corporation shall be Salem Media of Ohio,
----
Inc.
SECOND: Principal Office. The place in Ohio where its principal office is
----------------
to be located is the Township of Orange, Delaware County, Ohio.
THIRD: Purpose. The purpose for which it is formed is to engage in any
-------
lawful act or activity for which corporations may be formed under Sections
1701.01 to 1701.98, inclusive, of the Ohio Revised Code.
FOURTH: Shares. The maximum number of shares which the corporation is
------
authorized to have outstanding is seven hundred fifty (750) shares, all of which
shall be common shares without par value.
FIFTH: Repurchase of Shares. The corporation, through its Board of
--------------------
Directors, shall have the right and power to repurchase any of its outstanding
shares at such price and upon such terms as may be agreed upon between the
corporation and the selling shareholder or shareholders.
SIXTH: Conflict of Interest. A director or officer of the corporation
--------------------
shall not be disqualified by his office from dealing or contracting with the
corporation as a vendor, purchaser, employee, agent or otherwise; nor shall any
transaction, contract or act of the corporation be void or voidable or in any
way affected or invalidated by reason of the fact that any director or officer
<PAGE>
or any firm of which such director or officer is a shareholder, director or
officer, is in any way interested in such transaction, contract or act, provided
the fact that such director, officer, firm or corporation is so interested shall
be disclosed or shall be known to the Board of Directors or such members thereof
as shall be present at any meeting of the Board of Directors, at which action
upon any such contract, transaction or act shall be taken; nor shall any such
director or officer be accountable or responsible to the corporation for or in
respect of any such transaction, contract or act of the corporation, or for any
gains or profits realized by him by reason of the fact that he or any firm of
which he is a member, or any corporation of which he is a shareholder, officer
or director, is interested in such transaction, contract or act and any such
director or officer, if such officer is a director, may be counted in
determining the existence of a quorum at any meeting of the Board of Directors
of the corporation which shall authorize or take action in respect of any such
contract, transaction or act and may vote thereat to authorize, ratify or
approve any such contract, transaction or act, with like force and effect as if
he or any firm of which he is a member, or any corporation of which he is a
shareholder, officer or director, were not interested in such transaction,
contract or act.
SEVENTH: Indemnification. Every person who is a director, officer, or
---------------
employee of the corporation or a former director, officer or employee of the
corporation, or a person who is serving or has served at the request of the
corporation as a director, officer or employee of another corporation is hereby
indemnified against expenses, judgments, decrees, fines, penalties or amounts
paid in settlement in connection with the defense of any pending or threatened
action, suit, or proceeding, criminal or civil, to which he is or may be made a
party by reason of being or having been such director, officer or employee,
provided he is determined by the directors of the corporation acting at a
meeting at which a quorum consisting of directors who are not parties to
2
<PAGE>
or threatened with any such action, suit or proceeding is present (a) not to
have been negligent or guilty of misconduct in the performance of his duty to
the corporation of which he is such director, officer or employee; (b) to have
acted in good faith in what he reasonably believed to be the best interest of
such corporation; and (c) in any matter the subject of a criminal act, suit, or
proceeding, to have had no reasonable cause to believe that his conduct was
unlawful; provided, however, no director who is a party to or threatened with
any such action, suit or proceeding shall be qualified to vote on such matter.
Alternatively such determinations may be made (a) by a court of competent
jurisdiction, (b) by the shareholders of the corporation at a meeting held for
such purpose by the affirmative vote of the holders of shares entitling them to
exercise a majority of voting power of the corporation on such proposal or (c)
adopted by the shareholders of the corporation without a meeting by the written
consent of the holders of shares entitling them to exercise two-thirds of the
voting power on such proposal.
Such indemnification shall not be deemed exclusive of any other rights to
which such director, officer or employee may be entitled including, without
limiting the generality of the foregoing, any insurance purchased by the
corporation.
EIGHTH: Stated Capital. The amount of stated capital with which the
--------------
corporation shall begin business is Five Hundred Dollars ($500.00).
IN WITNESS WHEREOF, I have hereunto subscribed my name this 28th day of
July, 1981.
E. James Hopple
--------------------------------------------
Incorporator
E. JAMES HOPPLE
[End of Articles of Incorporation]
3
<PAGE>
EXHIBIT 3.41
CODE OF BY-LAWS
For the Government of the
Board of Directors
of
SALEM MEDIA OF OHIO, INC.
ARTICLE I
MEETINGS OF DIRECTORS
---------------------
Sec. 1. Regular Annual Meeting. A regular annual meeting of the Board of
----------------------
Directors shall be held immediately following the termination of the
regular annual meeting of the shareholders of the corporation and at the same
place of such shareholders' meeting, unless a different time and place is
fixed by resolution of the Board of Directors. If, for any reason, the annual
meeting is not held, then the business which may be transacted thereat may be
transacted at any special meeting called as provided for in Section 3 of
this Article.
Sec. 2. Other Regular Meetings. Other regular meetings of the Board of
----------------------
Directors may be held at such times and places as may be fixed by resolution of
the Board of Directors.
Sec. 3. Special Meetings. Special meetings of the Board of Directors
-----------------
may be called by the President or a Vice-President, or by a majority of the
Board of Directors.
Sec. 4. Place of Meetings. Any meeting of the Board of Directors may be held
-----------------
at any place within or without the State of Ohio as may be fixed by resolution
of the Board of Directors.
Sec. 5. Notice of Meetings and Waiver of Notice. (a) A written or printed
---------------------------------------
notice of each regular or special meeting of the Board of Directors, stating
the time and place thereof shall be delivered to each director or sent to him by
mail, telegram, cablegram or radiogram at his last known post office address,
not more than twenty (20) days nor less than forty-eight (48) hours before the
time fixed for the meeting. Meetings may be held at any time or place without
notice if the meeting or if those who are absent assent in writing to the
holding of the meeting. Such assent may be given by the absent directors either
before, at or after any meeting of the Board, waiving any or all of the
provisions of law or of these By-Laws as to notices of such meeting or as to any
irregularities in such notice or in the giving thereof, and shall thereby
validate the proceedings of such meeting as fully as though all the requirements
of the provisions waived had been duly met in their respective cases.
(b) If any meeting of the Board of Directors is adjourned to
another time or place, no further notice as to such adjourned meeting need be
given if the time and place are fixed at the meeting adjourned.
<PAGE>
Sec. 6. Quorum. A majority of the entire Board of Directors shall
------
constitute a quorum at all meetings.
Sec. 7. Order of Business. The order of business of the Board of Directors
-----------------
at regular meetings, unless changed by a majority of the Directors present,
shall be as follows:
1. Reading of minutes of previous meeting and taking action thereon;
2. Reading reports and statements of officers and committees;
3. Unfinished business;
4. Election of officers (at annual meeting);
5. New or miscellaneous business;
6. Adjournment.
ARTICLE II
COMPENSATION OF OFFICERS
------------------------
The officers of the corporation shall receive such compensation as shall be
fixed by resolution of the Board of Directors.
ARTICLE III
AMENDMENTS
----------
By-Laws for the government of the Board of Directors may be adopted,
amended or repealed by a majority vote for the entire Board of Directors at any
regular meeting thereof, or at any meeting if such meeting be duly called as a
special meeting for that purpose or if each member of the Board of Directors
shall be present at the meeting or shall waive in writing the call and notice
thereof.
[End of Code of By-Laws]
<PAGE>
CODE OF REGULATIONS
OF
SALEM MEDIA OF OHIO, INC.
ARTICLE I
Fiscal Year
-----------
Unless otherwise designated by resolution of the Board of Directors, the
first fiscal year of the corporation after the adoption of this Code of
Regulations shall end on December 31, 1981. Subsequently, the fiscal year of
the corporation shall commence on the first day of April in each year and end on
the last day of March, or be such other period as the Board of Directors may
designate by resolution.
ARTICLE II
SHAREHOLDERS
------------
Section 1. Meetings of Shareholders
------------------------
(a) Annual Meeting. The annual meeting of the shareholders of this
--------------
corporation, for the election of directors, the consideration of financial
statements and other reports, and the transaction of such other business as may
properly be brought before such meeting, shall be held at 9:30 A.M., on the
first Tuesday in the third month following the end of the fiscal year in each
year after 1981. The first annual meeting shall be held in 1982. Upon due
notice, there may also be considered and acted upon at an annual meeting any
matter which could properly be considered and acted upon at a special meeting,
in which and for which purpose the annual meeting shall also be considered as,
and shall be, a special meeting. In the event the annual
<PAGE>
meeting is not held or if directors are not elected thereat, a special meeting
may be called and held for that purpose.
(b) Special Meeting. Special meetings of the shareholders may be
----------------
held on any business day when called by any person or persons who may be
authorized by law to do so. Calls for special meetings shall specify the
purpose or purposes thereof, and no business shall be considered at any such
meeting other than that specified in the call therefor.
(c) Place of Meetings. Any meeting of shareholders may be held at
-----------------
such place within or without the State of Ohio as may be designated in the
Notice of said meeting.
(d) Notice of Meeting and Waiver of Notice.
--------------------------------------
(1) Notice. Written notice of the time, place and purposes of
------
any meeting of shareholders shall be given to each shareholder entitled thereto
not less than seven (7) days nor more than sixty (60) days before the date fixed
for the meeting and as prescribed by law. Such notice shall be given either by
personal delivery or mailed to each shareholder entitled to notice of or
to vote at such meeting. If such notice is mailed, it shall be directed,
postage prepaid, to the shareholders at their respective addresses as they
appear upon the records of the corporation, and notice shall be deemed to have
been given on the day so mailed. If any meeting is adjourned to another time
or place, no notice as to such adjourned meeting need be given other than by
announcement at the meeting at which such an adjournment is taken. No
business shall be transacted at any such adjourned meeting except as might have
been lawfully transacted at the meeting at which such adjournment was taken.
(2) Notice to Joint Owners. All notices with respect to any shares to
----------------------
which persons are entitled by joint or common ownership may be given to that one
of such persons who
<PAGE>
is named first upon the books of this corporation, and notice so given shall be
sufficient notice to all the holders of such shares.
(3) Waiver. Notice of any meeting, however, may be waived in
------
writing by any shareholder either before or after any meeting of shareholders,
or by attendance at such meeting without protest prior to the commencement
thereof.
(e) Shareholders Entitled to Notice and to Vote. If a record date
-------------------------------------------
shall not be fixed or the books of the corporation shall not be closed against
transfers of shares pursuant to statutory authority, the record date for
the determination of shareholders entitled to notice of or to vote at any
meeting of shareholders shall be the close of business on the twentieth day
prior to the date of the meeting, and only shareholders of record at
such record date shall be entitled to notice of and to vote at such meeting.
Such record date shall continue to be the record date for all adjournments of
such meeting unless a new record date shall be fixed and notice thereof and of
the date of the adjourned meeting be given to all shareholders entitled to
notice in accordance with the new record date so fixed.
(f) Quorum. At any meeting of shareholders, the holders of shares
------
entitling them to exercise a majority of the voting power of the corporation,
present in person or by proxy, shall constitute a quorum for such meeting;
provided however, that no action required by law, the Articles, or these
Regulations to be authorized or taken by the holders of a designated proportion
of the shares of the corporation may be authorized or taken by a lesser
proportion. The shareholders present in person or by proxy, whether or not a
quorum be present, may adjourn the meeting from time to time without notice
other than by announcement at the meeting.
<PAGE>
(g) Organization of Meetings:
------------------------
(1) Presiding Officer. The Chairman of the Board, or in his absence,
-----------------
the President, or in the absence of both of them, a Vice-President of the
corporation shall call all meetings of the shareholders to order and shall
act as Chairman thereof, if all are absent, the shareholders shall elect
a Chairman.
(2) Minutes. The secretary of the corporation, or, in his absence, an
-------
Assistant Secretary, or, in the absence of both, a person appointed by the
Chairman of the meeting, shall act as Secretary of the meeting and shall keep
and make a record of the proceedings thereat.
(h) Order of Business. The order of business at all meetings of the
-----------------
shareholders, unless waived or otherwise determined by a vote of the holder or
holders of the majority of the number of shares entitled to vote present in
person or represented by proxy, shall be as follows:
1. Call meeting to order.
2. Selection of Chairman and/or Secretary, if necessary.
3. Proof of notice of meeting and presentment of affidavit
thereof.
4. Roll call, including filing of proxies with Secretary.
5. Upon appropriate demand, appointment of inspectors of election.
6. Reading, correction and approval of previously unapproved
minutes.
7. Reports of officers and committees.
8. If annual meeting, or meeting called for that purpose,
election of Directors.
9. Unfinished business, if adjourned meeting.
10. Consideration in sequence of all other matters set forth in
the call for and written notice of the meeting.
11. Adjournment.
<PAGE>
(i) Voting. Except as provided by statute or in the Articles, every
------
shareholder entitled to vote shall be entitled to cast one vote on each proposal
submitted to the meeting for each share held of record by him on the record date
for the determination of the shareholders entitled to vote at the meeting. At
any meeting at which a quorum is present, all questions and business which may
come before the meeting shall be determined by a majority of votes cast,
except when a greater proportion is required by law, the Articles, or these
Regulations.
(j) Proxies. A person who is entitled to attend a shareholders
-------
meeting, to vote thereat, or to execute consents, waivers and releases, may be
represented at such meeting or vote thereat, and execute consents, waivers, and
releases, and exercise any of his rights, by proxy or proxies appointed by a
writing signed by such person, or by his duly authorized attorney, as provided
by the laws of the State of Ohio.
(k) List of Shareholders. At any meeting of shareholders, a list
----------------------
of shareholders, alphabetically arranged, showing the number and classes of
shares held by each on the record date applicable to such meeting shall be
produced on the request of any shareholder.
Section 2. Action of Shareholders Without a Meeting
----------------------------------------
Any action which may be taken at a meeting of shareholders may be
taken without a meeting if authorized by a writing or writing signed by all of
the holders of shares who would be entitled to notice of a meeting for such
purpose, which writing or writings shall be filed or entered upon the records of
the corporation.
<PAGE>
ARTICLE III
DIRECTORS
---------
Section 1. General Powers
--------------
The business, power and authority of this corporation shall be
exercised, conducted and controlled by a Board of Directors, except where
the law, the Articles or these Regulations require action to be authorized or
taken by the shareholders.
Section 2. Election, Number and Qualification of Directors
-----------------------------------------------
(a) Election. The directors shall be elected at the annual meeting
--------
of shareholders, or if not so elected, at a special meeting of
shareholders called for that purpose. At any meeting of shareholders at which
directors are to be elected, only persons nominated as candidates shall be
eligible for election.
(b) Number. The number of directors, which shall not be less than
------
the lesser of three (3) or the number of shareholders of record, may be fixed or
changed at a meeting of the shareholders called for the purpose of electing
directors at which a quorum is present, by the affirmative vote of the
holders of a majority of the shares represented at the meeting and entitled to
vote on such proposal. The number of directors elected shall be deemed to
be the number of directors fixed unless otherwise fixed by resolution adopted
at the meeting at which such directors are elected.
(c) Qualification. Directors need not be shareholders of the
-------------
corporation.
Section 3. Term of Office of Directors
---------------------------
(a) Term. Each director shall hold office until the next annual
----
meeting of the shareholders and until his successor has been elected or until
his earlier resignation, removal from
<PAGE>
office, or death. Directors shall be subject to removal as provided by statute
or by other lawful procedures and nothing herein shall be construed to prevent
the removal of any or all directors in accordance therewith.
(b) Resignation. A resignation from the Board of Directors shall be
-----------
deemed to take effect immediately upon its being received by any incumbent
corporate officer other than an officer who is also the resigning director,
unless some other time is specified therein.
(c) Vacancy. In the event of any vacancy in the Board of Directors
-------
for any cause, the remaining directors, though less than a majority of the whole
Board, may fill any such vacancy for the unexpired term.
Section 4. Meetings of Directors
---------------------
(a) Regular Meetings. A regular meeting of the Board of Directors
----------------
shall be held immediately following the adjournment of the annual meeting of the
shareholders or a special meeting of the shareholders at which directors are
elected. The holding of such shareholders' meeting shall constitute notice of
such directors' meeting and such meeting may be held without further notice.
Other regular meetings shall be held at such other times and places as may be
fixed by the directors.
(b) Special Meetings. Special meetings of the Board of Directors may
----------------
be held at any time upon call of the Chairman of the Board, the President, any
Vice-President, or any two directors.
(c) Place of Meeting. Any meeting of directors may be held at such
----------------
place within or without the State of Ohio as may be designated in the Notice of
said meeting.
(d) Notice of Meeting and Waiver of Notice. Notice of the time and
--------------------------------------
place of any regular or special meeting of the Board of Directors (other than
the regular meeting of
<PAGE>
directors following the adjournment of the annual meeting of the shareholders or
following any special meeting of the shareholders at which directors are
elected) shall be given to each director by personal delivery, telephone, mail,
telegram or cablegram at least forty-eight (48) hours before the meeting, which
notice need not specify the purpose of the meeting. Such notice, however, may be
waived in writing by any director either before or after any such meeting, or by
attendance at such meeting without protest prior to the commencement thereof.
Section 5. Quorum and Voting
-----------------
At any meeting of directors, not less than one-half of the whole
authorized number of directors is necessary to constitute a quorum for such
meeting, except that a majority of the remaining directors in office constitutes
a quorum for filling a vacancy in the Board. At any meeting at which a
quorum is present, all acts, questions and business which may come before the
meeting shall be determined by a majority of votes cast by the directors
present at such meeting, unless the vote of a greater number is required b the
Articles, Regulations or By-Laws.
Section 6. Committees
----------
(a) Appointment. The Board of Directors may from time to time appoint
-----------
certain of its members (but in no event less than three) to act as a committee
or committees in the intervals between meetings of the Board and may delegate to
such committee or committees powers to be exercised under the control and
direction of the Board. Each such committee and each member thereof shall serve
at the pleasure of the Board.
(b) Executive Committee. In particular, the Board of Directors may
-------------------
create from its membership and define the powers and duties of an Executive
Committee. During the intervals between meetings of the Board of Directors
the Executive Committee shall possess
<PAGE>
and may exercise all of the powers of the Board of Directors in the management
and control of the business of the corporation to the extent permitted by law.
All action taken by the Executive Committee shall be reported to the Board of
Directors at its first meeting thereafter.
(c) Committee Action. Unless otherwise provided by the Board of
----------------
Directors, a majority of the members of any committee appointed by the Board
of Directors pursuant to this Section shall constitute a quorum at any meeting
thereof and the act of a majority of the members present at a meeting at which a
quorum is present shall be the act of such committee. Action may be taken by
any such committee without a meeting by a writing signed by all its members.
Any such committee shall prescribe its own rules for calling and holding
meetings and its method or procedure, subject to any rules prescribed by
the Board of Directors, and shall keep a written record of all action taken by
it.
Section 7. Action of Directors without a Meeting
-------------------------------------
Any action which may be taken at a meeting of directors may be taken
without a meeting if authorized by a writing or writings signed by all the
directors, which writing or writings shall be filed or entered upon the
records of the corporation.
Section 8. Compensation of Directors
-------------------------
The Board of Directors may allow compensation for attendance at
meetings or for any special services, may allow compensation to members of any
committee, and may reimburse any director for his expenses in connection with
attending any Board or Committee meeting.
<PAGE>
Section 9. Attendance at Meetings of Persons who are not Directors
-------------------------------------------------------
Unless waived by a majority of directors in attendance, not less
than twenty-four (24) hours before any regular or special meeting of the Board
of Directors, any director who desires the presence at such meeting of not more
than one person who is not a director shall so notify all other
directors, request the presence of such person at the meeting, and state the
reason in writing. Such person will not be permitted to attend the directors'
meeting unless a majority of the directors in attendance vote to admit such
person to the meeting. Such vote shall constitute the first order of business
for any such meeting of the Board of Directors. Such right to attend, whether
granted by waiver or vote, may be revoked at any time during any such meeting by
the vote of a majority of the directors in attendance.
ARTICLE IV
OFFICERS
--------
Section 1. General Provisions
------------------
The Board of Directors shall elect a President, a Secretary
and a Treasurer, and may elect a Chairman of the Board, one or more Vice-
Presidents, and such other officers and assistant officers as the Board may
from time to time deem necessary. The Chairman of the Board, if any, and the
President shall be directors, but no one of the other officers need be a
director. Any two or more offices may be held by the same person, but no officer
shall execute, acknowledge or verify any instrument in more than one capacity if
such instrument is required to be executed, acknowledged or verified by two or
more officers.
<PAGE>
Section 2. Powers and Duties
-----------------
All officers, as between themselves and the corporation, shall
respectively have such authority and perform such duties as are customarily
incident to their respective offices, and as may be specified from time to
time by the Board of Directors, regardless of whether such authority and
duties are customarily incident to such office. In the absence of any
officer of the corporation, or for any other reason the Board of Directors may
deem sufficient, the Board of Directors may delegate for the time being, the
powers or duties of such officer, or any of them, to any other officer or to
any director. The Board of Directors may from time to time delegate to any
officer authority to appoint and remove subordinate officers and to
prescribe their authority and duties. Since the lawful purposes of this
corporation include the acquisition and ownership of real property, personal
property and property in the nature of patents, copyrights, and trademarks and
the protection of the corporation's property rights in its patents,
copyrights and trademarks, each of the officers of this corporation is
empowered to execute any power of attorney necessary to protect, secure, or
vest the corporation's interest in and to real property, personal
property and its property protectable by patents, trademarks and
copyrights registrations and to secure such patents, copyrights and trademark
registrations.
Section 3. Term of Office and Removal
--------------------------
(a) Term. Each officer of the corporation shall hold office during
----
the pleasure of the Board of Directors, and unless sooner removed by the Board
of Directors, until the meeting of the Board of Directors following the date of
their election and until his successor is elected and qualified.
(b) Removal. The Board of Directors may remove any officer at any
-------
time, with or without cause by the affirmative vote of a majority of directors
in office.
<PAGE>
Section 4. Compensation of Officers
------------------------
Unless compensation is otherwise determined by a majority of the
directors at a regular or special meeting of the Board of Directors, or unless
such determination is delegated by the Board of Directors to another officer
or officers, the President of the corporation from time to time shall determine
the compensation to be paid to all officers and other employees for services
rendered to the corporation.
ARTICLE V
INDEMNIFICATION OF DIRECTORS AND OFFICERS
-----------------------------------------
(a) Right of Indemnification. Each director, officer and member of
------------------------
a committee of this corporation, and any person who may have served at the
request of this corporation as a director, officer or member of a committee of
any other corporation in which this corporation is a creditor, his heirs,
executors and administrators, shall be indemnified by the corporation against
all costs and expenses reasonably incurred by him concerning, or in connection
with, the defense of any claim asserted or suit or proceeding brought against
him by reason of his conduct or actions as a director, officer or member of a
committee of this corporation, or a director, officer of member of a committee
of such other corporation, whether or not he continues to be a director, officer
or member of a committee at the time of incurring such costs or expenses, except
costs and expenses incurred in relation to matters as to which such director,
officer or member of a committee shall have been willfully derelict in the
performance of his duty as such director, officer or member of a committee. Such
costs and expenses shall include the costs of reasonable settlements (with or
without suit),
<PAGE>
judgments, attorneys' fees, costs of suit, fines and penalties and other
liabilities (other than amounts paid by any such person to this corporation or
any such other corporation).
(b) Definition of Performance. For the purposes of this Article,
--------------------------
a director, officer or member of a committee shall conclusively be deemed not to
have been willfully derelict in the performance of his duty as such director,
officer or member of a committee:
(1) Determination by Suit. In a matter which shall have been the
---------------------
subject of a suit or proceeding in which he was a party which is disposed of by
adjudication on the merits, unless he shall have been finally adjudged in such
suit or proceeding to have been willfully derelict in the performance of his
duty as such director, officer or member of a committee, or
(2) Determination by Committee. In a matter not falling within (1)
--------------------------
next preceding if either a majority of disinterested members of the Board of
Directors or a majority of a committee of disinterested shareholders of the
corporation, (excluding therefrom any director, officer or member of a
committee) selected as hereinafter provided shall determine that he was not
willfully derelict. Such determination shall be made by the disinterested
members of the Board of Directors except where such members shall determine that
such matter should be referred to said committee of disinterested shareholders.
(c) Selection of Committee. The selection of a committee of
----------------------
shareholders provided above may be made by the majority vote of the
disinterested directors or, if there be no disinterested director or
directors, by the chief executive officer of the corporation. A director or
shareholder shall be deemed disinterested in a matter if he has no interest
therein other than as a director or shareholder of the corporation as the case
may be. The corporation shall pay the fees and expenses of the shareholders or
directors, as the case may be, incurred in connection with making a
determination as above provided.
<PAGE>
(d) Non-Committee Determination. In the event that a director,
---------------------------
officer or member of a committee shall be found by some other method not to have
been willfully derelict in the performance of his duty as such director, officer
or, member of a committee, then such determination as to dereliction shall not
be questioned on the ground that it was made otherwise than as provided above.
(e) Indemnification by Law. The foregoing right of
-----------------------
indemnification shall be in addition to any rights to which any such person may
otherwise be entitled as a matter of law.
ARTICLE VI
SECURITIES HELD BY THE CORPORATION
----------------------------------
Section 1. Transfer of Securities Owned by the Corporation
-----------------------------------------------
All endorsements, assignments, transfers, stock powers, share
powers or other instruments of transfer of securities standing in the name of
the corporation shall be executed for and in the name of the corporation by the
President, by a Vice-President, by the Secretary or by the Treasurer or by any
other person or persons as may be thereunto authorized by the Board of
directors.
Section 2. Voting Securities held by the Corporation
-----------------------------------------
The Chairman of the Board, President, any Vice-President, Secretary
or Treasurer, in person or by another person thereunto authorized by, the Board
of Directors, in person or by proxy or proxies appointed by him, shall have
full power and authority on behalf of the corporation to vote, act and consent
with respect to any securities issued by other corporations which the
corporation may own.
<PAGE>
ARTICLE VII
SHARE CERTIFICATES
------------------
Section 1. Transfer and Registration of Certificates
-----------------------------------------
The Board of Directors shall have authority to make such rules and
Articles or these Regulations, as it deems expedient concerning the issuance,
transfer and registration of certificates for shares and the shares
represented thereby and may appoint transfer agents and registrars thereof.
Section 2. Substituted Certificates
------------------------
Any person claiming that a certificate for shares has been lost,
stolen or destroyed, shall make an affidavit or affirmation of that fact
and, if required, shall give the corporation (and its registrar or
registrars and its transfer agent or agents, if any) a bond of indemnity, in
such form and with one or more sureties satisfactory to the Board, and, if
required by the Board of Directors, shall advertise the same in such manner as
the Board of Directors may require, whereupon a new certificate may be executed
and delivered of the same tenor and for the same number of shares as the one
alleged to have been lost, stolen or destroyed.
ARTICLE VIII
SEAL
----
The directors may adopt a seal for the corporation which shall be in such
form and of such style as is determined by the directors. Failure to affix any
such corporate seal shall not affect the validity of any instrument.
<PAGE>
ARTICLE IX
CONSISTENCY WITH ARTICLES OF INCORPORATION
------------------------------------------
If any provision of these Regulations shall be inconsistent with the
corporation's Articles of Incorporation (and as they may be amended from time to
time), the Articles of Incorporation (as so amended at the time) shall govern.
ARTICLE X
SECTION HEADINGS
----------------
The headings contained in this Code of Regulations are for reference
purposes only and shall not be construed to be part of and/or shall not
affect in any way the meaning or interpretation of this Code of Regulations.
ARTICLE XI
AMENDMENTS
----------
This Code of Regulations of the corporation (and as it may be amended
from time to time may be amended or added to by the affirmative vote or the
written consent of the shareholders of record entitled to exercise a majority of
the voting power on such proposal; provided, however, that if an amendment or
addition is adopted by written consent without a meeting of the shareholders, it
shall be the duty of the secretary to enter the amendment or addition in the
records of the corporation, and to mail a copy of such amendment or addition to
each shareholder of record who would be entitled to vote thereon and did not
participate in the adoption thereof.
<PAGE>
[End of Code of Regulations]
<PAGE>
EXHIBIT 3.42
FILED
IN THE OFFICE OF THE CORPORATION
COMMISSIONER OF THE STATE OF ORE. TRUE COPY
MAY 15, 1986
JANE EDWARDS LYNNE R. STAFFORD
CORPORATION COMMISSIONER -----------------
- ----------------------------------------
ARTICLES OF INCORPORATION
OF
SALEM MEDIA OF OREGON, INC.
The undersigned, acting as the incorporator of a corporation under the
Oregon Business Corporation Act, adopts, subscribes, and verifies the following
Articles of Incorporation for such corporation:
ARTICLE I
The name of this corporation is Salem Media of Oregon, Inc. and the
duration of this corporation shall be perpetual.
ARTICLE II
The purposes for which this corporation is organized are as follows:
1. To engage in the purchase and operation of broadcast facilities and to
engage in all lawful activities and to engage in all lawful activities which are
necessary, convenient or suitable in furtherance of such business; and
2. To engage in any other lawful activity for which corporations may be
organized under Oregon law, and to exercise any general or specific power now or
hereafter granted to corporations under Oregon law.
ARTICLE III
The total authorized capital stock of the corporation consists of 500
shares of common stock of no par value.
ARTICLE IV
The address of the initial registered office of the corporation is Greene &
Markley, P.C., The 1515 Building, Suite 840, 1515 SW Fifth Avenue, Portland,
Oregon 97201; the name of the initial registered agent is S. Ward Greene.
<PAGE>
ARTICLE V
The number of directors constituting the initial Board of Directors are
two. The names and addresses of the persons who shall serve as director until
the first annual meeting of shareholders, or until their successors are elected
and qualified are as follows:
Stewart W. Epperson
8025 North Point Blvd.
Winston Salem, North Carolina 27106
Edward G. Atsinger, III
2310 Ponderosa Drive, Ste. 29
Camarillo, California 93010
ARTICLE VI
The name and address of the incorporator is as follows:
Lynn R. Stafford
Greene & Markley, P.C.
The 1515 Building, Suite 840
1515 SW Fifth Avenue
Portland, Oregon 97201
ARTICLE VII
The corporation shall have the right to purchase its own shares directly or
indirectly to the extent of unreserved and unrestricted capital surplus
available therefor.
I, the undersigned incorporator, declare under penalty of perjury that I
have examined the foregoing and to the best of my knowledge and belief, it is
true, correct and complete.
DATED: May 7 , 1986
--------------------------------
Lynn R. Stafford
-----------------------------------------
LYNN R. STAFFORD
2
<PAGE>
EXHIBIT 3.43
BYLAWS
OF
SALEM MEDIA OF OREGON, INC.
ARTICLE I
Shareholders
------------
Section 1. Annual Meeting. The annual meeting of the shareholders of the
------ -------
corporation shall be held at 2310 Ponderosa Drive, Suite 29, Camarillo,
California on the third Friday of May of each year for the purpose of electing
directors and for the transaction of such other business as may come before the
meeting. If the election of directors shall not be held at the time designated
herein for any annual meeting of the shareholders, or at any adjournment
thereof, the board of directors shall cause the election thereafter as may be
convenient. The first annual meeting shall be held beginning with the year
1987.
Section 2. Special Meetings. Special meetings of the shareholders may be
------- --------
called for any purpose or purposes by the president or the chairman of the board
of directors.
Section 3. Notice of Meeting. Written notice stating the place, day and
------ -- -------
hour of the meeting and, in case of a special meeting, the purpose or purposes
for which the meeting is called, shall, unless otherwise prescribed by statute,
be delivered not less than ten (10) days nor more than fifty (50) days before
the date of the meeting, either personally or by mail, to each shareholder of
record entitled to vote at such meeting. If mailed, such notice shall be deemed
to be delivered when deposited in the United States mail, addressed to the
shareholder at his address as it appears on the stock transfer books of the
corporation, with postage thereon prepaid.
Section 4. Place of Meeting. The board of directors may designate any
----- -- -------
place as the place of meeting for any annual meeting or for any special meeting
called by the board of directors. If no designation is made, or if a special
meeting is otherwise called, the meeting shall be held at the location mentioned
in Section 1, above.
Section 5. Quorum. A majority of the outstanding shares of the
------
corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of shareholders. If less than a majority of
the outstanding shares are represented at a meeting, a majority of the shares so
represented may adjourn the meeting without further notice. At such adjourned
meeting at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
noticed. The shareholders present at a duly organized meeting may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum.
Section 6. Proxies. At all meetings of the shareholders, a shareholder
-------
may vote in person or by proxy executed in writing by the shareholder or by his
duly authorized attorney-in-fact. Such proxy shall be filed with the secretary
of the corporation before or at the time of the meeting. No proxy shall be
valid after eleven months from the date of its execution, unless otherwise
provided in the proxy.
Page 1 - BYLAWS
<PAGE>
Section 7. Voting of Shares. Each outstanding share entitled to vote
------ -- ------
shall be entitled to one vote upon each matter submitted to a vote at a meeting
of the shareholders.
Section 8. Election of Directors. A candidate shall be elected to the
-------- -- ---------
board of directors upon receiving the vote of a majority of the shares
represented in person or by proxy at the meeting of the shareholders. Voting
upon any contested election shall be by written ballot.
Section 9. Informal Action by Shareholders. Any action required or
-------- ------ -- ------------
permitted to be taken at a meeting of the shareholders may be taken without a
meeting if a consent in writing, setting forth the action so taken, shall be
signed by all of the shareholders entitled to vote with respect to the subject
matter thereof.
ARTICLE II
BOARD OF DIRECTORS
----- -- ---------
Section 1. Powers of Board of Directors. Subject only to any limitations
------ -- ----- -- ---------
or requirements of law, to any action validly taken by the shareholders and to
these bylaws, the board of directors shall have full power to manage and
administer the business and affairs of the corporation.
Section 2. Number, Tenure and Qualifications. The initial number of
------- ------ --- --------------
directors of the corporation shall be two (2). Each director shall hold office
until the next annual meeting of shareholders and until his successor shall have
been elected and qualified. Directors are not required to be residents of the
State of Oregon or shareholders of the corporation.
Section 3. Regular Meetings. A regular meeting of the board of directors
------- --------
shall be held without other notice than this bylaw immediately after, and at the
same place as, the annual meeting of the shareholders. The board of directors
may provide, by resolution, the time and place for the holding of additional
regular meetings without other notice than such resolution.
Section 4. Special Meetings. Special meetings of the board of directors
------- --------
may be called by or at the request of any officer or any director. The place
for holding any special meeting of the board of directors shall be at the
location mentioned in Article I unless a waiver is signed by all of the
directors.
Section 5. Notice. Notice of any special meeting shall be given at least
------
four (4) days before such meeting by written notice delivered personally or
mailed to each director at his business address or by telegram. If mailed, such
notice shall be deemed to be given when deposited in the United States mail, so
addressed, with postage thereon prepaid. If notice be given by telegram, such
notice shall be deemed to be given when the telegram is delivered to the
telegraph company. Any director may waive notice of any meeting. The
attendance of a director at a meeting shall constitute a waiver of notice of
such meeting, except where a director attends a meeting for the express purpose
of objecting to the transaction of any business because the meeting is not
lawfully called or convened. Neither the business to be transacted at, nor the
purpose of, any regular or special meeting of the board of directors need be
specified in the notice or waiver of notice of such meeting.
Page 2 - BYLAWS
<PAGE>
Section 6. Quorum. A majority of the number of directors fixed by Section
------
2 of this Article II shall constitute a quorum for the transaction of business
of any meeting of the board of directors, but if less than such majority is
present at a meeting, a majority of the directors present may adjourn the
meeting without further notice.
Section 7. Manner of Acting. The act of the majority of the directors
------ -- ------
present at a meeting at which a quorum is present shall be the act of the board
of directors.
Section 8. Action without a Meeting. Any action required or permitted to
------ ------- - -------
be taken by the board of directors at a meeting may be taken without a meeting
if a consent in writing, setting forth the action so taken, shall be signed by
all of the directors.
Section 9. Removal. The entire board of directors or any individual
-------
director, at a special meeting of the shareholders called for that purpose, may
be removed with or without cause from office by vote of shareholders holding a
majority of the shares entitled to vote at an election of directors. If the
entire board of directors or any one or more directors is so removed, new
directors may be elected at the same meeting.
Section 10. Vacancies. Any vacancy occurring in the board of directors
---------
may be filled by the affirmative vote of a majority of the remaining directors
though less than a quorum of the board of directors. A director elected to fill
a vacancy shall be elected for the unexpired term of his predecessor in office.
Any directorship to be filled by reason of an increase in the number of
directors may be filled by the affirmative vote of a majority of the board of
directors for a term of office continuing only until the next election of
directors by the shareholders.
Section 11. Compensation. By resolution of the board of directors, each
------------
director may be paid his expenses, if any, of attendance at each meeting of the
board of directors, and may be paid a stated salary as director or a fixed sum
for attendance at each meeting of the board of directors or both. No such
payment shall preclude any director from serving the corporation in any other
capacity and receiving compensation therefor.
ARTICLE III
Officers
--------
Section 1. Number. The officers of the corporation shall include a
------
chairman of the board, a president, a treasurer and a secretary, each of whom
shall be elected by the board of directors. Such other officers and assistant
officers as may be deemed necessary may be elected or appointed by the board of
directors. Any two or more offices may be held by the same person.
Section 2. Election and Term of Office. The officers of the corporation
-------- --- ---- -- ------
shall be elected annually by the board of directors at the first meeting of the
board of directors held after each annual meeting of the shareholders. If the
election of officers shall not be held at such meeting, such election shall be
held as soon thereafter as may be convenient. Each officer shall hold office
until his successor shall have been duly elected or until his death or until he
shall resign or shall have been removed in the manner hereinafter provided.
Page 3 - BYLAWS
<PAGE>
Section 3. Removal. Any officer of the corporation may be removed by the
-------
board of directors when in its judgment the best interests of the corporation
will be served thereby, but such removal shall be without prejudice to the
contract rights, if any, of the person so removed. Election or appointment of
an officer shall not of itself create contract rights.
Section 4. Vacancies. A vacancy in any office because of death,
---------
resignation, removal, disqualification or otherwise may be filled by the board
of directors for the unexpired portion of the term.
Section 5. Chairman of the Board. The chairman of the board shall be the
-------- -- --- -----
principal executive officer of the corporation and, subject to the control of
the board of directors, shall in general supervise and control all of the
business and affairs of the corporation. He shall, when present, preside at all
meetings of the shareholders and of the board of directors. He may sign, with
the secretary or any other proper officer of the corporation authorized by the
board of directors, certificates for shares of the corporation and deeds,
mortgages, bonds, contracts or other instruments which the board of directors
has authorized to be executed, except in cases where the signing and execution
thereof shall be expressly delegated by the board of directors or by these
bylaws to some other officer or agent of the corporation or shall be required by
law to be otherwise signed or executed. He shall have the power to hire and
discharge agents and employees who are not officers of the corporation. In
general, he shall perform all duties incident to the office of chairman of the
board and such other duties as may be prescribed by the board of directors from
time to time.
Section 6. President. In the absence of the chairman of the board or in
---------
the event of his death, inability or refusal to act, the president shall perform
the duties of the chairman of the board and when so acting, shall have all the
powers of and be subject to all of the restrictions upon the chairman of the
board. The president may sign, with the secretary, certificates for shares of
the corporation and shall perform such other duties as from time to time may be
assigned to him by the board of directors.
Section 7. Vice President. In the event both the chairman of the board
---- ---------
and the president are absent or unable to act, the vice president shall perform
the duties and have all the powers of the president to the extent necessary to
conduct the day to day operations of the corporation until the chairman of the
board or president are again able to perform or until successors are appointed
by the board of directors.
Section 8. Secretary. The secretary shall: (a) keep the minutes of the
---------
proceedings of the shareholders and of the board of directors in one or more
books provided for that purpose; (b) see that all notices are duly given in
accordance with the provisions of these bylaws or as required by law; (c) be
custodian of the records of the corporation; (d) keep a register of the address
of each shareholder which shall be furnished to the secretary by such
shareholder; (e) sign, with the chairman of the board or the president,
certificates for shares of the corporation, the issuance of which shall have
been authorized by resolution of the board of directors; (f) have general charge
of the stock transfer books of the corporation; and (g) in general perform all
duties incident to the office of secretary and such other duties as from time to
tine may be assigned to him by the president or by the board of directors.
Page 4 - BYLAWS
<PAGE>
Section 9. Treasurer. The treasurer shall: (a) have charge and custody
---------
of and be responsible for all funds of the corporation; (b) receive and give
receipts for monies due and payable to the corporation from any source
whatsoever and deposit all such monies in the name of the corporation in such
banks, trust companies or other depositories as shall be selected in accordance
with the provisions of Article V of these bylaws; and (c) in general perform all
of the duties incident to the office of treasurer and such other duties as from
time to time may be assigned to him by the president or by the board of
directors. If required by the board of directors, the treasurer shall give a
bond for the faithful discharge of his duties in such sum and with such surety
or sureties as the board of directors shall determine.
ARTICLE IV
Contracts, Loans, Checks and Deporits
---------- ------ ------ --- --------
Section 1. Contracts. The board of directors may authorize any officer or
---------
officers or any other agent to enter into any contract or execute and deliver
any instrument in the name of and on behalf of the corporation, and such
authority may be general or confined to specific instances.
Section 2. Loans. No loans shall be contracted on behalf of the
-----
corporation and no evidences of indebtedness shall be issued in its name unless
authorized by a resolution of the board of directors. Such authority may be
general or confined to specific instances.
Section 3. Checks. All checks, drafts or other orders for the payment of
------
money, notes or other evidences of indebtedness issued in the name of the
corporation shall be signed by such officer, officers or other agents of the
corporation and in such manner as shall be from time to time be determined by
resolution of the board of directors.
Section 4. Deposits. All funds of the corporation not otherwise employed
--------
shall be deposited from time to time to the credit of the corporation in such
banks, trust companies or other depositories as the board of directors may
select.
ARTICLE V
Certificates for Shares and their Transfer
------------ --- ------ --- ----- --------
Section 1. Certificates for Shares. Certificates representing shares of
------------ --- ------
the corporation shall be in such form as shall be determined by the board of
directors. Such certificates shall be signed by the chairman of the board or
president and by the secretary and may be sealed with the corporate seal or a
facsimile thereof. The signatures of such officers upon a certificate may be
facsimiles if the certificate is manually signed on behalf of a transfer agent
or a registrar, other than the corporation itself or one of its employees. Each
certificate for shares shall be consecutively numbered or otherwise
identified. The name and address of the person to whom the shares represented
thereby are issued, with the number of shares and date of issue, shall be
entered on the stock transfer books of the corporation. All certificates
surrendered to the corporation for transfer shall be cancelled and no new
certificate shall be issued until the former certificate for a like number of
shares shall have been surrendered and cancelled, except that in
Page 5 - BYLAWS
<PAGE>
case of a lost, destroyed or mutilated certificate a new one may be issued
therefor upon such terms and indemnity to the corporation as the board of
directors may prescribe.
Section 2. Transfer of Shares. Transfer of shares of the corporation
-------- -- ------
shall be made only on the stock transfer books of the corporation by the holder
of record thereof or by his legal representative, who shall furnish proper
evidence of authority to transfer, or by his attorney thereunto authorized by
power of attorney duly executed and filed with the secretary of the corporation,
and on surrender for cancellation of the certificate for such shares. The
person in whose name shares stand on the books of the corporation shall be
deemed by the corporation to be the owner thereof for all purposes.
ARTICLE VI
Indemnification
---------------
Section 1. Indemnification. Every person who was or is a party or is
---------------
threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative, by reason
of the fact that he or a person of whom he is the legal representative is or was
a director or officer of the corporation or is or was serving at the request of
the corporation or for its benefit as a director or officer of another
corporation, or as its representative in a partnership, joint venture, trust or
other enterprise, shall be indemnified and held harmless to the fullest extent
legally permissible under and pursuant to any procedure specified in the Oregon
Business Corporation Act, as amended from time to time, against all expenses,
liabilities and losses (including attorneys fees, judgments, fines and amounts
paid or to be paid in settlement) reasonably incurred or suffered by him in
connection therewith. Such right of indemnification shall be a contract right
that may be enforced in any manner desired by such person. Such right of
indemnification shall not be exclusive of any other right which such directors,
officers or representatives may have or hereafter acquire and, without limiting
the generality of such statement, they shall be entitled to their respective
rights of indemnification under any bylaw, agreement, vote of stockholders,
provision of law or otherwise, as well as their rights under this Article VI.
Section 2. Insurance. The board of directors may cause the corporation to
---------
purchase and maintain insurance on behalf of any person who is or was a director
or officer of the corporation, or is or was serving at the request of the
corporation as a director or officer of another corporation, or as its
representative in a partnership, joint venture, trust or other enterprise
against any liability asserted against such person and incurred in any such
capacity or arising out of such status, whether or not the corporation would
have the power to indemnify such person.
ARTICLE VII
Dividends
---------
The board of directors may, from time to time, declare and the corporation
may pay dividends on its outstanding shares in the manner and upon the terms and
conditions provided by law and its Articles of Incorporation.
Page 6 - BYLAWS
<PAGE>
ARTICLE VIII
Waiver of Notice
------ -- ------
Whenever any notice is required to be given to any shareholder or director
of the corporation under the provisions of these bylaws or under the provisions
of the Articles of Incorporation or under the provisions of the Oregon Business
Corporation Act, a waiver thereof in writing signed by the person or persons
entitled to such notice, whether before or after the time stated therein, shall
be deemed equivalent to the giving of such notice.
ARTICLE IX
Amendments
----------
These bylaws may be altered, amended or repealed and new bylaws may be
adopted by the board of directors or by the shareholders at any regular or
special meeting.
ARTICLE X
Corporate Seal
--------- ----
The board of directors may provide a corporate seal which shall be circular
in form and have inscribed on it the name of the corporation and the state of
incorporation and the words "Corporate Seal."
I hereby certify that the foregoing bylaws, consisting of 8 pages, are the
bylaws of SALEM MEDIA OF OREGON, INC., adopted by the board of directors on
______________________, 1986.
_____________________________________________
Secretary
Page 7 - BYLAWS
<PAGE>
EXHIBIT 3.44
DSCB204 (Rev. 81)
<TABLE>
<CAPTION>
ARTICLES OF INCORPORATION PLEASE INDICATE (CHECK ONE) TYPE FEE
(PREPARE IN TRIPLICATE) CORPORATION $75.00
COMMONWEALTH OF PENNSYLVANIA [X] DOMESTIC BUSINESS CORPORATION
DEPARTMENT OF STATE - CORPORATION BUREAU [ ] DOMESTIC BUSINESS CORPORATION
308 NORTH OFFICE BUILDING, HARRISBURG, PA A CLOSE CORPORATION - COMPLETE BACK
17120 [ ] DOMESTIC PROFESSIONAL CORPORATION
ENTER BOARD LICENSE NO.
<S> <C>
- ------------------------------------------------------------------------------------------------------------------------------
010 NAME OF CORPORATION (MUST CONTAIN A CORPORATE INDICATOR UNLESS EXEMPT UNDER 15 P.S. 2908 B)
Salem Media of Pennsylvania, Inc.
- ------------------------------------------------------------------------------------------------------------------------------
011 ADDRESS OF REGISTERED OFFICE IN PENNSYLVANIA (P.O. BOX NUMBER NOT ACCEPTABLE)
c/o Timothy M. Slavish, Esq., Thorp, Reed & Armstrong; One Riverfront Center
- ------------------------------------------------------------------------------------------------------------------------------
012 CITY 033 COUNTY 013 STATE 064 ZIP CODE
Pittsburgh Allegheny Pennsylvania 15222
- ------------------------------------------------------------------------------------------------------------------------------
050 EXPLAIN THE PURPOSE OR PURPOSES OF THE CORPORATION
The Corporation shall have unlimited power to engage in and to do any lawful act concerning any or all lawful business for
which corporations may be incorporated under the Pennsylvania Business Corporation Law.
(ATTACH 8 1/2 x 11 SHEET IF NECESSARY)
- ------------------------------------------------------------------------------------------------------------------------------------
The Aggregate Number of Shares, Classes of Shares and Par Value of Shares Which the Corporation Shall have Authority to Issue:
040 Number and Class of Shares
041 Stated Par Value Per 042 Total Authorized Capital 031 Term of Existence
10,000 Shares, common stock Share if Any $ 1.00 $10,000 perpetual
- ------------------------------------------------------------------------------------------------------------------------------------
The Name and Address of Each Incorporator, and the Number and Class of Shares Subscribed to by each Incorporator
061, 062
060 Name 063, 064 Address (Street, City, State, Zip Code) Number & Class of
Shares
- ------------------------------------------------------------------------------------------------------------------------------------
Timothy M. Slavish, Esq. Thorp, Reed & Armstrong 1 share, common
- ------------------------------------------------------------------------------------------------------------------------------
One Riverfront Center
- ------------------------------------------------------------------------------------------------------------------------------
Pittsburgh, PA 15222
- ------------------------------------------------------------------------------------------------------------------------------
(ATTACH 8 1/2 x 11 SHEET IF NECESSARY)
- ------------------------------------------------------------------------------------------------------------------------------
IN TESTIMONY WHEREOF, the incorporator(s) has (have) signed and sealed the articles of incorporation
this 8th April 87
------------------------- DAY OF ----------- 19 ---.
</TABLE>
<TABLE>
<CAPTION>
/s/ Timothy M. Slavish
<S> <C>
- -------------------------------------------------------------- -----------------------------------------
- -------------------------------------------------------------- -----------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- FOR OFFICE USE ONLY -
- ----------------------------------------------------------------------------------------------------------------------------------
030 FILED 002 CODE 003 REV BOX SEQUENTIAL NO. 100 MICROFILE NUMBER
<S> <C> <C> <C> <C> <C>
APR 9 1987 AID 87251712
----------------
REVIEWED BY ------------------------------------------------------------
/s/ JJH 004 SICC AMOUNT 001 CORPORATION NUMBER
----------------
JAMES J. HAGGERTY DATE APPROVED $75.00 973896
-------------------------------------------------------------------------------
DATE REJECTED CERTIFY TO INPUT BY LOG IN LOG IN (REFILE)
SECRETARY OF COMMONWEALTH [ ] REV. DP 4.31
---------------- ----------------------------------------
DEPARTMENT OF STATE MAILED BY DATE [ ] L & I VERIFIED BY LOG OUT LOG OUT (REFILE)
COMMONWEALTH OF PENNSYLVANIA [ ] OTHER JKS 4/22
-------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT 3.45
SALEM MEDIA OF PENNSYLVANIA, INC.
(A PENNSYLVANIA CORPORATION)
*******
BY-LAWS
*******
ARTICLE I - CORPORATE OFFICES
-----------------------------
The registered office of Salem Media of Pennsylvania, Inc. (the
"Corporation") shall be at One Riverfront Center, Pittsburgh, Pennsylvania
15222. The Corporation may also have offices at such other places within or
outside the Commonwealth of Pennsylvania as the Board of Directors may from time
to time designate or the business of the Corporation may require.
ARTICLE II - SEAL
-----------------
The corporate seal shall have inscribed thereon the name of the
Corporation, the year of its incorporation and the words "Corporate Seal,
Pennsylvania".
ARTICLE III - SHAREHOLDERS' MEETINGS
------------------------------------
1. PLACE OF MEETINGS.
All meetings of the shareholders shall be held at the principal office of
the Corporation or at such other place or places, either within or without the
Commonwealth of Pennsylvania, as may from time to time be selected.
2. ANNUAL MEETING.
The annual meeting of the shareholders of the Corporation shall be held on
the third Monday of April in each year, or on such other date as the Board of
Directors may by resolution determine, at 2:00 P.M., when they shall elect a
Board of Directors, and transact such other business as may properly be brought
before the meeting. If the annual meeting shall not be called and held within
six (6) months after the designated time, any shareholder may call such meeting.
3. QUORUM.
A shareholders' meeting duly called shall not be organized for the
transaction of business unless a quorum is present. The presence in person, or
by proxy, of shareholders entitled to cast at least a majority of the votes
which all shareholders are entitled to cast shall constitute a quorum. The
shareholders present at a duly organized meeting can continue to do business
until adjournment, notwithstanding the withdrawal of enough shareholders to
leave less than a quorum. Adjournment or adjournments of any annual or special
meeting may be taken, but any meeting at
<PAGE>
which directors are to be elected shall be adjourned only from day to day, or
for such longer periods not exceeding fifteen (15) days each, as may be directed
by the shareholders who are present in person or by proxy and who are entitled
to cast at least a majority of the votes which all such shareholders would be
entitled to cast at an election of directors until such directors have been
elected. If a meeting cannot be organized because a quorum has not attended,
those present may, except as otherwise provided by statute, adjourn the meeting
to such time and place as they may determine, but in the case of any meeting
called for the election of directors, those who attend the second of such
adjourned meetings, although less than a quorum, shall nevertheless constitute a
quorum for the purpose of electing directors.
4. VOTING.
At each meeting of the shareholders every shareholder having the right to
vote shall be entitled to vote in person or by proxy executed in writing by such
shareholder or by his duly authorized attorney in fact, and filed with the
Secretary of the Corporation. No unrevoked proxy shall be valid after eleven
(11) months from the date of its execution, unless a longer time is expressly
provided therein, but in no event shall a proxy, unless coupled with an
interest, be voted on after three (3) years from the date of its execution.
Elections for directors shall be by cumulative voting. Upon demand made by a
shareholder at any election for directors before the voting begins, the election
shall be by ballot. No share shall be voted at any meeting upon which any
installment is due and unpaid. The registered list of shareholders certified by
the Transfer Agent of the Corporation or by its Secretary shall be evidence of
the right of all persons or entities named therein to vote.
5. NOTICE OF MEETING.
Written notice of the annual meeting shall be mailed to each shareholder
entitled to vote thereat, at such address as appears on the books of the
Corporation, at least ten (10) days prior to the meeting.
6. JUDGES OF ELECTION.
In advance of any meeting of shareholders, the Board of Directors, may
appoint judges of election, who need not be shareholders, to act at such meeting
or any adjournment thereof. If judges of election be not so appointed, the
Chairman of any such meeting may, and on the request of any shareholder or his
proxy shall, make such appointment at the meeting. The number of judges shall
be one (1) or three (3). If appointed at a meeting on the request of one (1) or
more shareholders or proxies, the majority of shares present and entitled to
vote shall determine whether one (1) or three (3) judges are to be appointed.
On request of the Chairman of the meeting, or of any shareholder or his proxy,
the judge(s) shall make a report in writing of any challenge or question or
matter determined by them, and execute a certificate of any fact found by them.
No person who is a candidate for office shall act as a judge.
2
<PAGE>
7. SPECIAL MEETINGS.
Special meetings of the shareholders may be called at any time by the
President, or the Board of Directors, or the holders of not less than one-fifth
(1/5) of the votes which all shareholders are entitled to cast at the particular
meeting. At any time, upon written request of any person or persons who have
duly called a special meeting, it shall be the duty of the Secretary to fix the
date of the meeting to be held, not less than ten (10) nor more than sixty (60)
days after receipt of the request, and to give due notice thereof. If the
Secretary shall neglect or refuse to fix the date of the meeting and give notice
thereof, the person or persons calling the meeting may do so.
Business transacted at all special meetings shall be confined to the
objects stated in the call and matters germane thereto, unless all shareholders
entitled to vote consent thereto.
Written notice of a special meeting of the shareholders, stating the time,
place and purpose thereof, shall be given to each shareholder entitled to vote
thereat at least five (5) days before such meeting, unless a greater period of
notice is required by statute in a particular case.
8. CERTIFIED LIST OF SHAREHOLDERS.
The Secretary or Transfer Agent of the Corporation shall make, at least
five (5) days before each meeting of shareholders, a complete list of the
shareholders entitled to vote at the meeting, arranged in alphabetical order
with the address of and the number of shares held by each. The list shall be
kept on file at the registered office of the Corporation, and shall be subject
to inspection by any shareholder at any time during usual business hours, and
shall also be produced and kept open at the time and place of the meeting, and
shall be subject to the inspection of any shareholder during the whole time of
the meeting.
ARTICLE IV - DIRECTORS
----------------------
1. BOARD OF DIRECTORS.
The business and affairs of the Corporation shall be managed by a Board of
Directors, consisting of two (2) directors, or such other number as shall be
prescribed from time to time by resolution of the Board. Directors shall be
natural persons of full age and need not be residents of this Commonwealth or
shareholders in the Corporation. They shall be elected by the shareholders, at
the annual meeting of the shareholders of the Corporation, and each director
shall be elected for the term of at least one (1) year, and until his successor
shall be elected and shall qualify.
2. POWERS.
In addition to the powers and authorities by these By-Laws expressly
conferred upon them, the Board may exercise all such powers of the Corporation
and do all such lawful acts and things as are not by statute or by the Articles
of Incorporation or by these By-Laws directed or required to be exercised or
done by the shareholders.
3
<PAGE>
3. MEETINGS OF THE BOARD.
The meetings of the Board of Directors may be held at such place within
this Commonwealth, or elsewhere, as a majority of the directors may from time to
time designate, or as may be designated in the notice calling the meeting.
Each newly elected Board of Directors may meet at such place and time as
shall be fixed by the shareholders at the meeting at which such directors are
elected and no notice shall be necessary to the newly elected directors in order
legally to constitute the meeting, or they may meet at such place and time as
may be fixed by the consent in writing of all the directors.
Regular meetings of the Board shall be held without notice at the
registered office of the Corporation, or at such other time and place as shall
be determined by the Board.
4. SPECIAL MEETINGS.
Special meetings of the Board of Directors may be called by the President
on forty-eight (48) hours notice to each director, either personally or by mail
or telegram. Special meetings shall be called by the President or Secretary in
a like manner and on like notice on the written request of two (2) or more
directors.
5. QUORUM.
A majority of the directors in office shall be necessary to constitute a
quorum for the transaction of business, and the acts of a majority of the
directors present at a meeting at which a quorum is present shall be the acts of
the Board of Directors.
6. VACANCIES.
Vacancies in the Board of Directors, including vacancies resulting from an
increase in the number of directors, shall be filled by a majority of the
remaining members of the Board though less than a quorum, and each person so
elected shall be a director until his successor is elected by the shareholders,
who may make such election at the next annual meeting of the shareholders or at
any special meeting duly called for that purpose and held prior thereto.
7. COMPENSATION OF DIRECTORS.
Directors shall be compensated either by a stated annual salary or by a
fixed sum and expenses for attendance at each regular or special meeting of the
Board. Nothing herein contained shall be construed to preclude any director
from serving the Corporation in any other capacity and receiving compensation
therefor.
8. NATIONAL CATASTROPHE.
Notwithstanding any other provisions of law, the Articles or these By-Laws,
during any emergency period following a national catastrophe, a majority of the
surviving members (or the sole survivor) of the Board of Directors who have not
been rendered incapable of acting because
4
<PAGE>
of incapacity or the difficulty of communication or transportation to the place
of meeting shall constitute a quorum for the sole purpose of electing directors
to fill such emergency vacancies; and a majority of the directors present at
such meeting may act to fill such vacancies. Directors so elected shall serve
until such absent directors are able to attend meetings or until the
shareholders act to elect directors for such purpose. During such an emergency
period, if the Board is unable to or fails to meet, any action appropriate to
the circumstances may be taken by such officers of the Corporation as may be
present and able to do so.
9. PRESUMPTION OF ASSENT.
Minutes of each meeting of the Board shall be made available to each
director at or before the next succeeding regular meeting. Every director shall
be presumed to have assented to such minutes unless his objection thereto shall
be made to the Secretary within ten (10) days after such regular meeting.
10. RESIGNATIONS.
Any director may resign by submitting to the President his resignation,
which (unless otherwise specified therein) need not be accepted to make it
effective and it shall be effective immediately upon its receipt by such
officer.
11. REMOVAL OF DIRECTORS.
The entire Board of Directors or any individual director may be removed
from office at any time without assigning any cause, by the vote of shareholders
entitled to cast at least a majority of the votes which all shareholders would
be entitled to cast at any annual election, given at a special meeting of the
shareholders called for that purpose. Unless the entire Board be removed, not
more than one (1) director at a time may be removed by any one (1) vote of
shareholders; and no individual director shall be removed in case the votes of a
sufficient number of shares are cast against the resolution for his removal
which if cumulatively voted at an annual election of the full Board would be
sufficient to elect at least one (1) director.
ARTICLE V - OFFICERS
--------------------
1. PRINCIPAL OFFICERS.
The principal officers of the Corporation shall be a Chairman of the Board
(if the Board of Directors elects one), a President, one (1) or more Vice
Presidents, a Secretary and a Treasurer, each of whom shall be elected by the
Board of Directors. Such other officers and assistant officers as may be deemed
necessary may be elected or appointed by the Board of Directors. Any two (2) or
more offices may be held by the same person, except the offices of President and
Secretary and the offices of President and Vice President.
2. ELECTION AND TERM OF OFFICE.
Any officers of the Corporation to be elected by the Board of Directors
shall be elected annually by the Board of Directors at the first meeting of the
Board of Directors held after each
5
<PAGE>
annual meeting of the Shareholders. If the election of officers shall not be
held at such meeting, such election shall be held as soon thereafter as
conveniently may be. Each officer shall hold office until his successor shall
have qualified or until his death or until he shall resign or shall have been
removed in the manner hereinafter provided.
3. REMOVAL.
Any officer or agent elected or appointed by the Board of Directors may be
removed by the Board of Directors whenever in its judgment the best interests of
the Corporation will be served thereby, but such removal shall be without
prejudice to the contract rights, if any, of the person so removed. Election or
appointment shall not of itself create contract rights.
4. VACANCIES.
A vacancy in any principal office because of death, resignation, removal,
disqualification or otherwise, shall be filled by the Board of Directors for the
unexpired portion of the term.
5. CHAIRMAN OF THE BOARD.
The Chairman of the Board (if the Board of Directors has elected one) shall
preside at all meetings of the Shareholders and of the Board of Directors and
shall have such further and other authority, responsibility and duties as may be
granted to or imposed upon him by the Board of Directors. In the absence of the
President, the Chairman of the Board shall assume all authority, power, duties
and responsibilities otherwise appointed to the President pursuant to Article V,
Section 6, and all references to the President in these By-Laws shall be
regarded as references to the Chairman of the Board, except where a contrary
meaning is clearly required.
6. PRESIDENT.
The President shall be the principal executive officer of the Corporation
and, subject to the control of the Board of Directors and the Chairman of the
Board, shall in general supervise and control all of the business and affairs of
the Corporation. He shall, in the absence of the Chairman of the Board, preside
at all meetings of the Shareholders and of the Board of Directors. He may sign,
with the Secretary or any other proper officer of the Corporation thereunto
authorized by the Board of Directors and Chairman of the Board, certificates for
shares of the Corporation, any deeds, mortgages, bonds, contracts, or other
instruments which the Board of Directors has authorized to be executed, except
in cases where the signing and execution thereof shall be expressly delegated by
the Board of Directors or by these By-Laws or some other law to be otherwise
signed or executed, and in general shall perform all duties incident to the
office of President and such other duties as may be prescribed by the Board of
Directors and the Chairman of the Board from time to time. During the absence
or disability of the Chairman of the Board the President shall exercise the
functions of the Chairman of the Board of the Corporation. He shall have
authority to sign all certificates, contracts and other instruments of the
Corporation necessary or proper to be executed in the course of the
Corporation's regular business or which shall be authorized by the Board of
Directors and shall perform all such other duties as are incident to his office
or are properly required of him by the Board of Directors or the Chairman
6
<PAGE>
of the Board. He shall have the authority, subject to such rules, directions or
orders, as may be prescribed by the Chairman of the Board or the Board of
Directors, to appoint and terminate the appointment of such agents and employees
of the Corporation as he shall deem necessary, to prescribe their power, duties
and compensation and to delegate authority to them.
7. VICE PRESIDENT.
In the absence of the President or Chairman of the Board, in the event of
their death or inability to act, the Vice President, or if there shall be more
than one, the Vice Presidents, in the order determined by the Board of
Directors, shall perform the duties of the President, and when so acting, shall
have all the powers of and be subject to all the restrictions upon the
President. The Vice President or Vice Presidents, as the case may be, shall
perform such other duties and have such other powers as the Board of Directors
may from time to time prescribe.
8. SECRETARY.
The Secretary shall: (a) keep the minutes of the Shareholders' and Board
of Directors' meetings in one (1) or more books provided for that purpose; (b)
see that all notices are duly given in accordance with the provisions of these
By-Laws or as required by law; (c) be custodian of the Corporate records and of
the seal of the Corporation and see that the seal of the Corporation is affixed
to all documents, the execution of which on behalf of the Corporation under its
seal is duly authorized; (d) keep a register of the post office address of each
Shareholder; (e) sign with the President or a Vice President certificates for
shares of the Corporation, the issuance of which shall have been authorized by
resolution of the Board of Directors; (f) have general charge of the stock
transfer books of the Corporation; and (g) in general, perform all duties
incident to the office of Secretary and such other duties as from time to time
may be assigned to him by the President or by the Board of Directors.
9. TREASURER.
If required by the Board of Directors, the Treasurer shall give a bond for
the faithful discharge of his duties in such sum and with such surety or
sureties as the Board of Directors shall determine. He shall: (a) have charge
and custody of and be responsible for all funds and securities of the
Corporation; (b) receive and give receipts for monies due and payable to the
Corporation from any source whatsoever, and deposit all such monies in the name
of the Corporation in such banks, trust companies or other depositories as shall
be selected in accordance with the provisions of these By-Laws; and (c) in
general, perform all of the duties incident to the office of Treasurer and such
other duties as from time to time may be assigned to him by the President or by
the Board of Directors.
10. SALARIES.
The salaries of the officers shall be fixed from time to time by the Board
of Directors and no officer shall be prevented from receiving such salary by
reason of the fact that he is also a Director of the Corporation.
7
<PAGE>
ARTICLE VI - ACTION BY CONSENT;
MEETING BY TELEPHONE
--------------------
1. ACTION BY CONSENT.
Any action which may be taken at a meeting of the shareholders, or at a
meeting of the directors or members of the Executive Committee, may be taken
without a meeting if a consent or consents in writing setting forth the action
so taken shall be signed by all of the shareholders who would be entitled to
vote at a meeting for such purpose, or by all of the directors or the members of
the Executive Committee, as the case may be, and shall be filed with the
Secretary of the Corporation.
2. MEETING BY TELEPHONE.
One or more directors or shareholders may participate in a meeting of the
Board of Directors or a committee of the Board of Directors or of the
shareholders by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other. Participation in such a meeting shall constitute attendance at the
meeting.
ARTICLE VII - CORPORATE RECORDS
-------------------------------
1. RECORDS REQUIRED.
There shall be kept at the registered office of the Corporation an original
or duplicate copy of the minutes of the shareholders and of the directors, and
the original or a copy of the Corporation's By-Laws, including all amendments or
alterations thereof to date, certified by the Secretary of the Corporation. An
original or duplicate share transfer book shall also be kept at the registered
office, or at the office of a transfer agent or registrar within this
Commonwealth, giving the names of the shareholders in alphabetical order, and
showing their respective addresses, the number and classes of shares held by
each, the number and date of certificates issued for the shares, and the number
and date of cancellation of every certificate surrendered for cancellation.
2. INSPECTION.
Every shareholder shall have a right to examine, in person or by his agent
or attorney, at any reasonable time or times for any reasonable purpose, the
share transfer book, books or records of account, and records of the proceedings
of the shareholders and directors, and make extracts therefrom.
ARTICLE VIII - SHARES
---------------------
1. CERTIFICATES.
The share certificates of the Corporation shall be numbered and registered
in the share transfer books of the Corporation, as they are issued. They shall
be signed by the President and
8
<PAGE>
Secretary or Treasurer (in facsimile or otherwise, as permitted by law) and
shall bear the corporate seal.
2. TRANSFERS OF SHARES.
Transfers of shares shall be made on the books of the Corporation upon
surrender of the certificates therefor, duly endorsed, with signature or
signatures guaranteed by a bank or stockbroker. No transfer shall be made
inconsistent with the provisions of Article 8 of the Uniform Code approved April
6, 1953 (Act No. 1), as amended and supplemented.
3. CLOSING SHARE TRANSFER BOOKS OR FIXING RECORD DATE.
The Board of Directors may fix a time, not more than fifty (50) days prior
to the date of any meeting of shareholders, or the date fixed for payment of any
dividend or distribution, or the date fixed for the allotment of rights, or the
date when any change or conversion or exchange of shares will be made or go into
effect, as a record date for the determination of the shareholders entitled to
notice of, and to vote at, any such meeting, or entitled to receive payment of
any such dividend or distribution or to receive any such allotment or rights, or
to exercise the rights in respect to any change, conversion, or exchange of
shares. In such cases, only such shareholders as shall be shareholders of
record on the date so fixed shall be entitled to notice of, and to vote at, such
meeting, or to receive payment of such dividend, or to receive such allotment or
rights, or to exercise such rights, as the case may be, notwithstanding any
transfer of any shares on the books of the Corporation after any record date
fixed as aforesaid. The Board of Directors may close the books of the
Corporation against transfers of shares during the whole or any part of such
period, and in such case written or printed notice thereof shall be mailed at
least ten (10) days before the closing thereof to each shareholder of record at
the address appearing on the records of the Corporation or supplied by him to
the Corporation for the purpose of notice. While the share transfer books of
the Corporation are closed, no transfer of shares shall be made thereon. If no
record date is fixed for the determination of shareholders entitled to receive
notice of and vote at a shareholders' meeting, transferees of shares which are
transferred on the books of the Corporation within ten (10) days next preceding
the date of such meeting shall not be entitled to notice of and vote at such
meeting.
4. LOST CERTIFICATES.
Any person claiming the loss, destruction or mutilation of a share
certificate may have a new certificate issued therefor upon such terms and
indemnity to the Corporation as the Board of Directors may prescribe.
ARTICLE IX - CORPORATE FINANCE
------------------------------
1. DIVIDENDS.
Subject to the provisions of the statutes and the Articles of
Incorporation, the Board of Directors may declare and pay dividends upon the
outstanding shares of the Corporation from time to time and to such extent as it
deems advisable.
9
<PAGE>
2. RESERVES.
Before payment of any dividend there may be set aside out of the net
profits of the Corporation such sum or sums as the directors, from time to time,
in their absolute discretion, think proper as a reserve fund to meet
contingencies, or for equalizing dividends, or for such other purpose as the
directors shall think conducive to the interests of the Corporation, and the
directors may abolish any such reserve in the manner in which it was created.
3. FINANCIAL REPORTS TO SHAREHOLDERS.
The Board of Directors shall have discretion to determine whether financial
reports shall be sent to shareholders, what such reports shall contain, and
whether they shall be audited or accompanied by the report of an independent or
certified public accountant.
ARTICLE X - INDEMNIFICATION OF OFFICERS,
----------------------------------------
DIRECTORS AND EMPLOYEES
-----------------------
1. INDEMNIFICATION.
The Corporation shall reimburse or indemnify each director, officer and
employee of the Corporation (and of any other corporation which he served at the
request of the Corporation) for or against all liabilities and expenses
reasonably incurred by or imposed upon him in connection with or resulting from
any claim, action, suit or proceeding (whether brought by or in the name of this
Corporation or such other corporation or otherwise), civil, criminal,
administrative or investigative (hereinafter called "action"), in which he may
become involved as a party or otherwise by reason of his being or having been
such director, officer or employee or by reason of any action taken or not taken
in such capacity, whether or not he continues to be such at the time such
liabilities or expenses are incurred and whether or not such action or omission
to act occurred before or after the adoption of this By-Law, provided that (i)
in respect of any action by or in the right of the Corporation or such other
corporation, such person was not grossly negligent or guilty of misconduct to
the Corporation or such other corporation, and (ii) in respect of all other
actions such person acted in good faith in what he reasonably believed to be in
the best interests of this Corporation or such other corporation, and in
addition in any criminal action had no reasonable cause to believe that his
conduct was unlawful.
As used in this By-Law, the term "liabilities and expenses" shall include
but not be limited to counsel fees and expenses and amounts of judgments, fines
or penalties against and amounts paid in settlement by, a director, officer or
employee.
2. NON-EXCLUSIVITY.
The foregoing right of indemnification shall not be exclusive of other
rights to which any such person may otherwise be entitled.
10
<PAGE>
3. PENNSYLVANIA INDEMNIFICATION STATUTES.
All rights of indemnification authorized by the Pennsylvania Business
Corporation Law or other applicable statutes, as from time to time amended, are
hereby granted to the foregoing persons in addition to, and not in derogation
of, the other provisions of this Article.
4. SURVIVAL.
All rights of indemnification set forth herein, in the event of the death
of the person involved, shall extend to the legal representatives of his estate
and to his heirs and beneficiaries.
ARTICLE XI - MISCELLANEOUS PROVISIONS
-------------------------------------
1. NOTICES.
Whenever written notice is required to be given to any person, it may be
given to such person, either personally or by sending a copy thereof through the
mail, or by telegram or telex, charges prepaid, to his address appearing on the
books of the Corporation, or supplied by him to the Corporation for the purpose
of notice. If the notice is sent by mail, telegram or telex, it shall be deemed
to have been given to the person entitled thereto when deposited in the United
States mail or when transmitted to such person. Such notice shall specify the
place, day and hour of the meeting and, in the case of a special meeting, the
general nature of the business to be transacted.
Any shareholder or director may waive in writing and at any time, any
notice required to be given under the By-Laws. Attendance of a person, either in
person or by proxy, at any meeting shall constitute a waiver of notice of such
meeting, except where the express purpose of such attendance is to object to the
transaction of any business because the meeting was not lawfully called or
convened.
2. CHECKS.
All checks, demands for money and notes of the Corporation shall be signed
by such officer or officers as the Board of Directors shall from time to time
designate.
ARTICLE XII - AMENDMENTS
------------------------
Except as otherwise specified in the Articles or these By-Laws, these By-
Laws may be altered, amended and repealed, and new By-Laws may be adopted, by
the vote of shareholders entitled to cast at least a majority of the votes which
all shareholders are entitled to cast, or by the vote of a majority of the full
Board of Directors of the Corporation, at any regular or special meeting. In
each case, notice of the specific change proposed to be made must be given to
the shareholders or to the directors, as the case may be, but in the case of a
unanimous vote such notice shall be deemed to be waived.
11
<PAGE>
EXHIBIT 3.46
FILED
In the Office of the
Secretary of State of Texas
JUL 18 1994
Corporations Section
ARTICLES OF INCORPORATION
OF
SALEM MEDIA OF TEXAS, INC.
The undersigned, a natural person of the age of eighteen years or more,
acting as incorporator of a corporation under the Texas Business Corporation
Act, hereby adopts the following Articles of Incorporation for Salem Media of
Texas, Inc. (the "Corporation"):
ARTICLE ONE
The name of this Corporation is Salem Media of Texas, Inc.
ARTICLE TWO
The period of the Corporation's duration is perpetual.
ARTICLE THREE
The purpose for which the Corporation is organized is the transaction of
any and all lawful business for which corporations may be incorporated under the
Texas Business Corporation Act.
ARTICLE FOUR
The aggregate number of shares which the Corporation shall have authority
to issue is one thousand (1,000) shares of Common Stock of the par value of
$0.01 per share.
ARTICLE FIVE
The Corporation will not commence business until it has received for the
issuance of its shares consideration of the value of at least One Thousand
Dollars ($1,000), consisting of money, labor done, or property actually
received.
ARTICLE SIX
The name and address of the incorporator of the Corporation is:
Name Address
---- -------
Eric H. Halvorson 4880 Santa Rosa Road
Suite 300
Camarillo,CA 93012
<PAGE>
ARTICLE SEVEN
No shareholder of the Corporation shall, by reason of such shareholder
holding shares of any class, have any preemptive or preferential right to
purchase or subscribe for any shares of any class of the Corporation, now or
hereafter to be authorized, or any notes, debentures, bonds, or other securities
convertible into or carrying options or warrants to purchase shares of any
class, now or hereafter to be authorized, whether or not the issuance or sale of
any such shares, or such notes, debentures, bonds, or other securities, would
adversely affect the dividend or voting rights of such shareholder of the
Corporation, other than such rights, if any, as the board of directors, in its
discretion, may grant to the shareholders to purchase such additional, unissued,
or treasury securities; and the Corporation may issue or sell additional
unissued or treasury shares of any class of the Corporation, or any notes,
debentures, bonds, or other securities convertible into or carrying options or
warrants to purchase shares of any class, without offering the same in whole or
in part to the existing shareholders of any class.
ARTICLE EIGHT
At each election for directors of the Corporation, every shareholder
entitled to vote at such election shall have the right to vote, in person or by
proxy, the number of shares owned by such shareholder for as many persons as
there are directors to be elected and for whose election he has a right to vote,
or to cumulate his votes by giving one candidate as many votes as the number of
such directors multiplied by his shares shall equal, or by distributing such
votes on the same principle.
ARTICLE NINE
The street address of the registered office of the Corporation is 545 E.
John Carpenter Freeway, Suite 450, Irving, Texas 75062, and the name of its
registered agent is Greg Anderson.
ARTICLE TEN
The number of directors constituting the initial Board of Directors is 2
and the names and addresses of the persons who are to serve as the initial
Directors until the first annual meeting of shareholders or until their
successors are elected and qualified are:
NAMES ADDRESSES
----- ---------
Edward G. Atsinger, III 4880 Santa Rosa Road
Suite 300
Camarillo, CA 93012
Stuart W. Epperson 3780 Will Scarlet Road
Winston-Salem, NC 27104
2
<PAGE>
ARTICLE ELEVEN
No director of the Corporation shall be liable to the Corporation or its
shareholders for monetary damages for any act or omission in such director's
capacity as director, except to the extent such director is found liable for (i)
a breach of such director's duty of loyalty to the Corporation or its
shareholders; (ii) an act or omission not in good faith that constitutes a
breach of duty of such director to the Corporation or an act or omission that
involves intentional misconduct or a knowing violation of the law; (iii) a
transaction from which such director received an improper benefit, whether or
not the benefit resulted from an action taken within the scope of such
director's office; or (iv) an act or omission for which the liability of a
director is expressly provided by an applicable statute. No repeal or
modification of this ARTICLE NINE shall adversely affect any right or protection
of a director of the Corporation existing by virtue of this ARTICLE NINE at the
time of such repeal or modification.
IN WITNESS WHEREOF, I have hereunto set my hand, this 30th day of June,
1994.
Eric H. Halvorson
------------------------------
Incorporator
3
<PAGE>
EXHIBIT 3.47
BY-LAWS
OF
SALEM MEDIA OF TEXAS, INC.
ARTICLE I
OFFICES
1.01. The registered agent and office of Salem Media of Texas, Inc. (the
"Corporation") shall be such registered agent and office as shall from time to
time be established pursuant to the articles of incorporation, as amended from
time to time, of the Corporation (the "Charter") or by resolution of the Board
of Directors of the Corporation (the "Board").
1.02. The Corporation may also have offices at such other places both
within and without the State of Texas as the Board may from time to time
determine or the business of the Corporation may require.
ARTICLE II
MEETINGS OF SHAREHOLDERS
2.01. Meetings of Shareholders of the Corporation (the "Shareholders") for
any purpose may be held at such place, within or without the State of Texas, on
the 30th day of April or the first business day thereafter, or as shall be fixed
from time to time by the Board, or, if the Board has not so specified, then at
such place as may be fixed by the person or persons calling the meeting.
2.02. An annual meeting of the Shareholders, commencing with the year
1994, shall be held at such date and time as shall be fixed from time to time by
the Board, at which they shall elect a Board, and transact such other business
as may properly be brought before the meeting.
2.03. At least ten days before each meeting of Shareholders, a complete
list of the Shareholders entitled to vote at said meeting arranged in
alphabetical order, with the residence of each and the number of voting shares
held by each, shall be prepared by the officer or agent having charge of the
stock transfer books. Such list, for a period of ten days prior to such
meeting, shall be kept on file at the registered office of the Corporation and
shall be subject to inspection by any Shareholder at any time during usual
business hours. Such list shall be produced and kept open at the time and place
of the meeting during the whole time thereof, and shall be subject to the
inspection of any Shareholder who may be present.
2.04. Special meetings of the Shareholders, for any purpose or purposes,
unless otherwise prescribed by statute, the Charter, or these bylaws, may be
called by the President, a majority of the Board, or the holders of not less
than ten percent of all the shares entitled to vote
<PAGE>
at the meetings. Business transacted at all special meetings shall be confined
to the objects stated in the notice of the meeting.
2.05. Written or printed notice stating the place, day, and hour of the
meeting and, in case of a special meeting, the purpose or purposes for which the
meeting is called, shall be delivered not less than ten nor more than sixty days
before the date of the meeting, either personally or by mail, by or at the
direction of the President, the Secretary, or the officer or person calling the
meeting, to each Shareholder of record entitled to vote at the meeting.
2.06. The holders of a majority of the shares of the Corporation issued
and outstanding and entitled to vote thereat, present in person or represented
by proxy, shall be requisite and shall constitute a quorum at all meetings of
the Shareholders for the transaction of business except as otherwise provided by
statute, the Charter, or these bylaws. If, however, such quorum shall not be
present or represented at any meeting of the Shareholders, the Shareholders
entitled to vote thereat, present in person or represented by proxy, shall
nevertheless have power to adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum shall be present or
represented. At an adjourned session at which a quorum shall be present or
represented, any business may be transacted which might have been transacted at
the meeting as originally notified.
2.07. When a quorum is present at any meeting, the vote of the holders of
a majority of the shares of the Corporation having voting power present in
person or represented by proxy shall decide any question brought before such
meeting, unless the question is one upon which, by express provision of any
applicable statute, the Charter, or these bylaws, a different vote is required,
in which case such express provision shall govern and control the decision of
such question. The Shareholders present at a duly organized meeting may
continue to transact business until adjournment, notwithstanding the withdrawal
of enough Shareholders to leave less than a quorum.
2.08. Each outstanding share of the Corporation, regardless of class,
shall be entitled to one vote on each matter submitted to a vote at a meeting of
Shareholders, unless otherwise provided by statute or the Charter. At any
meeting of the Shareholders, every Shareholder having the right to vote shall be
entitled to vote in person or by proxy appointed by an instrument in writing
subscribed by such Shareholder or by his or her duly authorized attorney-in-
fact, such writing bearing a date not more than eleven months prior to said
meeting, unless said instrument provides for a longer period. Such proxy shall
be filed with the Secretary of the Corporation prior to or at the time of the
meeting. Voting need not be by written ballot unless required by the Charter or
by vote of the Shareholders present at the meeting.
2.09. The Board may fix in advance a record date for the purpose of
determining Shareholders entitled to notice of or to vote at a meeting of
Shareholders, such record date to be not less than ten nor more than sixty days
prior to such meeting, or the Board may close the stock transfer books for such
purpose for a period of not less than ten nor more than sixty days prior to such
meeting. In the absence of any action by the Board, the date upon which the
notice of the meeting is mailed shall be the record date.
<PAGE>
2.10. Any action required by statute to be taken at a meeting of the
Shareholders, or any action which may be taken at a meeting of the Shareholders,
may be taken without a meeting if a consent in writing, setting forth the action
so taken, shall be signed by all of the Shareholders entitled to vote with
respect to the subject matter thereof, and such consent shall have the same
force and effect as a unanimous vote of Shareholders.
2.11. Subject to the provisions required or permitted by statute or the
Charter for notice of meetings, Shareholders may participate in and hold a
meeting by means of conference telephone or similar communications equipment by
means of which all persons participating in the meeting can hear each other, and
participation in a meeting pursuant to this section shall constitute presence in
person at such meeting, except where a person participates in the meeting for
the express purpose of objecting to the transaction of any business on the
ground that the meeting is not lawfully called or convened.
ARTICLE III
DIRECTORS
3.01. The business and affairs of the Corporation shall be managed by the
Board who may exercise all such powers of the Corporation and do all such lawful
acts and things as are not by statute or by the Charter or by these bylaws
directed or required to be exercised or done by the Shareholders.
3.02. The initial Board shall be as stated in the Charter. Thereafter,
the number of directors which shall constitute the full Board shall be not
greater than three (3) nor less than two (2) or as determined from time to time
by resolution of the Board or by the Shareholders at the annual meeting or a
special meeting called for that purpose, but no decrease shall have the effect
of shortening the term of an incumbent director. Directors need not be
Shareholders or residents of the State of Texas. The directors shall be elected
at the annual meeting of the Shareholders, except as hereinafter provided, and
each director elected shall hold office until his or her successor shall be
elected and shall qualify.
3.03. At any meeting of Shareholders called expressly for such purpose,
any director or the entire Board may be removed, with or without cause, by vote
of the holders of a majority of the shares of the Corporation then entitled to
vote at an election of directors. If any vacancies occur in the Board caused by
death, resignation, retirement, disqualification, or removal from office of any
director or otherwise, a majority of the directors then in office, though less
than a quorum, may choose a successor or successors or a successor or successors
may be chosen at a special meeting of Shareholders called for that purpose; and
each successor director so chosen shall be elected for the unexpired term of his
or her predecessor in office. Any directorship to be filled by reason of an
increase in the number of directors may be filled by election at an annual
meeting or special meeting of Shareholders called for that purpose or may be
filled by the Board for a term of office continuing only until the next election
of one or more directors by the Shareholders.
<PAGE>
3.04. Whenever the holders of any class or series of shares of the
Corporation are entitled to elect one or more directors by the provisions of the
Charter, any vacancies in such directorships and any newly created directorships
of such class or series to be filled by reason of an increase in the number of
such directors may be filled by the affirmative vote of a majority of the
directors elected by such class or series then in office or by a sole remaining
director so elected, or by the vote of the holders of the outstanding shares of
such class or series, and such directorships shall not in any case be filled by
the vote of the remaining directors or the holders of the outstanding shares as
a whole unless otherwise provided in the Charter.
3.05. At each election for directors, every shareholder entitled to vote
at such election shall have the right to vote, in person or by proxy, the number
of shares owned by such Shareholder for as many persons as there are directors
to be elected and for whose election he has a right to vote, or to cumulate his
votes by giving one candidate as many votes as the number of such directors
multiplied by his shares shall equal, or by distributing such votes on the same
principle.
Executive and Other Committees
3.06. The Board, by resolution adopted by a majority of the Board, may
designate from among its members an executive committee and one or more other
committees, each of which shall be comprised of one or more members and, to the
extent provided in such resolution, shall have and may exercise all of the
authority of the Board, including the authority to declare dividends and to
authorize the issuance of shares of the Corporation, to the extent permitted by
law. Committees shall keep regular minutes of their proceedings and report the
same to the Board when required.
Meetings of Directors
3.07. The directors of the Corporation may hold their meetings, both
regular and special, either within or without the State of Texas.
3.08. The first meeting of each newly elected Board shall be held without
further notice immediately following the annual meeting of Shareholders, and at
the same place, unless by unanimous consent of the directors then elected and
serving such time or place shall be changed.
3.09. Regular meetings of the Board may be held without notice at such
time and place as shall from time to time be determined by the Board.
3.10. Special meetings of the Board may be called by the President on two
days' notice to each director, either personally or by mail, telecopy, or
overnight courier; special meetings shall be called by the President or
Secretary in like manner and on like notice on the written request of a majority
of the directors. Except as may be otherwise expressly provided by statute, the
Charter, or these bylaws, neither the business to be transacted at, nor the
purpose of, any special meeting needs to be specified in a notice or waiver of
notice.
3.11. At all meetings of the Board the presence of a majority of the full
Board shall be necessary and sufficient to constitute a quorum for the
transaction of business and the act of a
<PAGE>
majority of the directors present at any meeting at which there is a quorum
shall be the act of the Board, except as may be otherwise specifically provided
by statute or by the Charter or by these bylaws. If a quorum shall not be
present at any meeting of directors, the directors present thereat may adjourn
the meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present.
3.12. Any action required or permitted to be taken at a meeting of the
Board or any committee may be taken without a meeting if a consent in writing,
setting forth the action so taken, is signed by all the members of the Board or
committee, as the case may be. Such consent shall have the same force and
effect as a unanimous vote at a meeting.
3.13. Subject to the provisions required or permitted by statute or the
Charter for notice of meetings, members of the Board, or members of any
committee designated by the Board, may participate in and hold a meeting of the
Board or such committee by means of a conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting pursuant to this
section shall constitute presence in person at such meeting, except where a
person participates in the meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
Compensation of Directors
3.14. Directors, as such, shall not receive any stated salary for their
services, but, by resolution of the Board, a fixed sum and expenses of
attendance, if any, may be allowed for attendance at each regular or special
meeting of the Board; provided that nothing herein contained shall be construed
to preclude any director from serving the Corporation in any other capacity and
receiving compensation therefor.
ARTICLE IV
NOTICES
4.01. Whenever under the provisions of any applicable statute, the Charter
or these bylaws, notice is required to be given to any director or Shareholder,
and no provision is made as to how such notice shall be given, it shall not be
construed to mean personal notice, but any such notice may be given by mail,
postage prepaid, addressed to such director or Shareholder at such address as
appears on the books of the Corporation. Any notice required or permitted to be
given by mail shall be deemed to be given at the time when the same shall be
thus deposited in the United States mails as aforesaid.
4.02. Whenever any notice is required to be given to any Shareholder or
director of the Corporation under the provisions of any applicable statute, the
Charter or these bylaws, a waiver thereof in writing signed by the person or
persons entitled to such notice, whether before or after the time stated in such
notice, shall be deemed equivalent to the giving of such notice.
<PAGE>
ARTICLE V
OFFICERS
5.01. The officers of the Corporation shall be elected by the directors
and shall include a President and a Secretary. The Board may also, at its
discretion, elect one or more Vice Presidents and a Treasurer. Such other
officers, including assistant officers, and agents as may be deemed necessary
may be elected or appointed by the Board. Any two or more offices may be held
by the same person.
5.02. The Board at its first meeting after each annual meeting of
Shareholders shall choose a President, a Secretary, and such other officers,
including assistant officers, and agents as may be deemed necessary, none of
whom need be a member of the Board.
5.03. The Board may appoint such other officers and agents as it shall
deem necessary, who shall be appointed for such terms and shall exercise such
powers and perform such duties as shall be determined from time to time by the
Board.
5.04. The salaries of all officers and agents of the Corporation shall be
fixed by the Board. Unless so fixed by the Board each officer of the
Corporation shall serve without remuneration.
5.05. Each officer of the Corporation shall hold office until his
successor is chosen and qualified in his stead or until his death or until his
resignation or removal from office. Any officer or agent elected or appointed
by the Board may be removed at any time by the Board, but such removal shall be
without prejudice to the contract rights, if any, of the person so removed. If
the office of any officer becomes vacant for any reason, the vacancy may be
filled by the Board.
The President
5.09. The President shall be the chief executive officer of the
Corporation, shall have the general powers and duties of oversight, supervision
and management of the business and affairs of the Corporation and shall see that
all orders and resolutions of the Board are carried into effect. He shall be an
ex-officio member of all standing committees of the Board.
The Secretary and Assistant Secretaries
5.10. The Secretary shall attend all sessions of the Board and all
meetings of the Shareholders and record all votes and the minutes of all
proceedings in a book to be kept for that purpose and shall perform like duties
for any committees when required. The Secretary shall give, or cause to be
given, notice of all meetings of the Shareholders and special meetings of the
Board, and shall perform such other duties as may be prescribed by the Board or
the President, under whose supervision the Secretary shall be.
5.11. Each Assistant Secretary shall have such powers and perform such
duties as the Board may from time to time prescribe or as the President may from
time to time delegate.
<PAGE>
Other Offices
5.12. Any Vice President elected by the Board shall have such powers and
perform such duties as the Board may from time to time prescribe or as the
President may from time to time delegate.
5.13. Any Treasurer elected by the Board shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements of the Corporation and shall deposit all moneys and
other valuable effects in the name and to the credit of the Corporation in such
depositories as may be designated by the Board.
5.14. Any Treasurer elected by the Board shall disburse the funds of the
corporation as may be ordered by the Board, taking proper vouchers for such
disbursements, and shall render to the directors, at the regular meetings of the
Board, or whenever they may require it, an account of all his or her
transactions as Treasurer and of the financial condition of the Corporation, and
shall perform such other duties as the Board may prescribe or as the President
may from time to time delegate.
5.15. If required by the Board, any Treasurer elected by the Board shall
give the Corporation a bond in such form, in such sum, and with such surety or
sureties as shall be satisfactory to the Board for the faithful performance of
the duties of the office of Treasurer and for the restoration to the
Corporation, in case of death, resignation, retirement, or removal from office,
of all books, papers, vouchers, money, and other property of whatever kind in
the Treasurer's possession or under the Treasurer's control belonging to the
Corporation.
5.16. Each Assistant Treasurer shall have such powers and perform such
duties as the Board may from time to time prescribe or as the President may from
time to time delegate.
ARTICLE VI
CERTIFICATES REPRESENTING SHARES
6.01. Certificates in such form as may be determined by the Board shall be
delivered representing all shares to which Shareholders are entitled. Such
certificates shall be consecutively numbered and shall be entered in the books
of the Corporation as they are issued. Each certificate shall state on the face
thereof the name of the Corporation, the name to whom the certificate is issued,
the number and class of shares and the designation of the series, if any, which
such certificate represents, the par value of such shares or a statement that
such shares are without par value, and that the Corporation is organized under
the laws of Texas. Each certificate shall be signed by either the President or
any Vice President then in office and by either the Secretary, an Assistant
Secretary, or any Treasurer then in office, and may be sealed with the seal of
the Corporation or a facsimile thereof. If any certificate is countersigned by
a transfer agent, or an assistant transfer agent or registered by a registrar,
other than the Corporation or an employee of the Corporation, the signature of
any such officer of the Corporation may be a facsimile. Whenever the
Corporation shall be authorized to issue more than one class of stock, there
shall be (1) set forth conspicuously upon the face or back of each certificate a
full statement of (a) all of
<PAGE>
the designations, preferences, limitations, and relative rights of the shares of
each class authorized to be issued and (b) if the Corporation is authorized to
issue any preferred or special class in series, the variations in the relative
rights and preferences of the shares of each series so far as the same have been
fixed and determined and the authority of the Board to fix and determine the
relative rights and preferences of subsequent series; or (2) stated
conspicuously on the face or back of the certificate that (a) such a statement
is set forth in the Charter on file in the office of the Secretary of State of
Texas and (b) the Corporation will furnish a copy of such statement to the
record holder of the certificate without charge upon request to the Corporation
at its principal place of business or registered office. Whenever the
Corporation by the Charter has limited or denied the preemptive rights of
Shareholders to acquire unissued or treasury shares of the Corporation, each
certificate (1) shall conspicuously set forth upon the face or back of such
certificate a full statement of the limitation or denial of preemptive rights
contained in the Charter, or (2) shall conspicuously state on the face or back
of the certificate that (a) such statement is set forth in the Charter on file
in the office of the Secretary of State of Texas and (b) the Corporation will
furnish a copy of such statement to the record holder of the certificate without
charge upon request to the Corporation at its principal place of business or
registered office. If any restriction on the transfer or the registration of the
transfer of shares shall be imposed or agreed to by the Corporation, as
permitted by law, each certificate representing shares so restricted (1) shall
conspicuously set forth a full or summary statement of the restriction on the
face of the certificate, or (2) shall set forth such statement on the back of
the certificate and conspicuously refer to the same on the face of the
certificate, or (3) shall conspicuously state on the face or back of the
certificate that such a restriction exists pursuant to a specified document and
(a) that the Corporation will furnish to the record holder of the certificate
without charge upon written request to the corporation at its principal place of
business or registered office a copy of the specified document, or (b) if such
document is one required or permitted to be and has been filed under the Texas
Business Corporation Act, that such document is on file in the office of the
Secretary of State of Texas and contains a full statement of such restriction.
Lost Certificates
6.02. The Board may direct a new certificate representing shares to be
issued in place of any certificate theretofore issued by the Corporation alleged
to have been lost or destroyed, upon the making of an affidavit of that fact by
the person claiming the certificate to be lost or destroyed. When authorizing
such issue of a new certificate, the Board, in its discretion and as a condition
precedent to the issuance thereof, may require the owner of such lost or
destroyed certificate, or his legal representative, to advertise the same in
such manner as it shall require and/or give the Corporation a bond in such form,
in such sum, and with such surety or sureties as it may direct as indemnity
against any claim that may be made against the Corporation with respect to the
certificate alleged to have been lost or destroyed.
Transfer of Shares
6.03. Upon presentation to the Corporation or the transfer agent of the
Corporation with a request to register the transfer of a certificate
representing shares duly endorsed and otherwise meeting the requirements for
transfer specified in the Texas Business and Commerce Code, it shall
<PAGE>
be the duty of the Corporation or the transfer agent of the Corporation to
register the transfer as requested.
Registered Shareholders
6.04. Prior to due presentment for transfer, the Corporation may treat the
registered owner of any share or shares of stock as the person exclusively
entitled to vote, to receive notifications, and otherwise to exercise all rights
and powers of an owner.
ARTICLE VII
GENERAL PROVISIONS
Dividends
7.01. Dividends upon the outstanding shares of the Corporation, subject to
the provisions of the Charter, if any, may be declared by the Board at any
regular or special meeting of the Board or by any committee of the Board so
authorized. Dividends may be paid in cash, in property, or in shares of the
Corporation, subject to the provisions of any applicable statute or the Charter.
The Board may fix in advance a record date for the purpose of determining
Shareholders entitled to receive payment of any dividend, such record date to be
not more than fifty days prior to the payment date of such dividend, or the
Board may close the stock transfer books for such purpose for a period of not
more than fifty days prior to the payment date of such dividend. In the absence
of any action by the Board, the date upon which the Board adopts the resolution
declaring such dividend shall be the record date.
Reserves
7.02. There may be created by resolution of the Board out of the surplus
of the Corporation such reserve or reserves as the directors from time to time,
in their discretion, think proper to provide for contingencies, or to repair or
maintain any property of the Corporation, or for such other purpose as the
directors shall think beneficial to the Corporation, and the directors may
modify or abolish any such reserve in the manner in which it was created.
Checks
7.03. All checks or demands for money and notes of the Corporation shall
be signed by such officer or officers or such other person or persons as the
Board may from time to time designate.
Execution of Contracts, Deeds, Etc.
7.04. The Board may authorize any officer or officers, agent or agents, in
the name and on behalf of the Corporation, to enter into or execute and deliver
any and all deeds, bonds, mortgages, contracts and other obligations or
instruments, and such authority may be general or confined to specific
instances.
<PAGE>
Fiscal Year
7.05. The fiscal year of the Corporation shall be fixed by resolution of
the Board.
Voting of Securities
7.06. Unless otherwise directed by the Board, the President shall have
full power and authority on behalf of the Corporation to attend, vote and act,
and to execute and deliver in the name and on behalf of the Corporation a proxy
authorizing an agent or attorney-in-fact for the Corporation to attend, vote and
act, at any meeting of security holders of any corporation in which the
Corporation may hold securities and to execute and deliver in the name and on
behalf of the Corporation any written consent of security holders in lieu of any
such meeting, and at any such meeting he, or the agent or the attorney-in-fact
duly authorized by him, shall possess and may exercise any and all rights and
powers incident to the ownership of such securities which the Corporation as the
owner thereof might have possessed or exercised if present. The Board may by
resolution from time to time confer like power upon any other person or persons.
Indemnification
7.07. (a) Subject to any limitation which may be contained in the Charter,
the Corporation shall to the full extent permitted by law, including without
limitation, Texas Business Corporation Act Art. 2.02-1, as such Article now
exists or shall hereafter be amended, indemnify any person who was, is, or is
threatened to be made a named defendant or respondent to any threatened,
pending, or completed action, suit, or proceeding, whether civil, criminal,
arbitral, administrative, or investigative, any appeal in such action, suit, or
proceeding, and any inquiry or investigation that could lead to such an action,
suit, or proceeding, because such person is or was a director or officer of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, partner, venturer, proprietor, trustee, employee, agent, or
similar functionary of another corporation, partnership, joint venture, sole
proprietorship, trust, employee benefit plan, or other enterprise, against
judgments, penalties (including excise and similar taxes), fines, settlements,
and reasonable expenses (including attorneys' fees) actually incurred by such
person in connection with such action, suit, or proceeding. The termination of
any action, suit or proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that an individual did not act in good faith and in a manner which
he reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
(b) Subject to any limitation which may be contained in the Charter, the
Corporation shall, to the full extent permitted by law, including without
limitation, Art. 2.02-1 of the Texas Business-Corporation Act, as such Article
now exists or shall hereafter be amended, pay or reimburse on a current basis
the expenses incurred by any person described in subsection (a) of this Section
7.07 in connection with any such action, suit, or proceeding in advance of the
final disposition thereof, if the Corporation has received (i) a written
affirmation by the recipient of his good faith belief that he has met the
standard of conduct necessary for indemnification under the Texas Business
Corporation Act and (ii) a written undertaking by or on behalf of the director
to
<PAGE>
repay the amount paid or reimbursed if it is ultimately determined that he has
not satisfied such standard of conduct or if indemnification is prohibited by
law.
(c) If required by law at the time such payment is made, any payment of
indemnification or advance of expenses to a director shall be reported in
writing to the shareholders with or before the notice or waiver of notice of the
next Shareholder's meeting or with or before the next submission to Shareholders
of a consent to action without a meeting pursuant to Section A, Article 9.10 of
the Texas Business Corporation Act, and, in any case, within the 12-month period
immediately following the date of the indemnification or advance.
(d) The Corporation may purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee or agent of the Corporation
or who is or was serving at the request of the Corporation as a director,
officer, partner, venturer, proprietor, trustee, employee, agent, or similar
functionary of another foreign or domestic corporation, partnership, joint
venture, sole proprietorship, trust, employee benefit plan, or other enterprise,
against any liability asserted against him and incurred by him in such a
capacity or arising out of his status as such a person, whether or not the
corporation would have the power to indemnify him against that liability under
this article, subject to any restrictions imposed by law. The Corporation may
create a trust fund, establish any form of self-insurance, grant a security
interest or other lien on the assets of the Corporation, or use other means
(including, without limitation, a letter of credit, guarantee or surety
arrangement) to ensure the payment of such sums as may become necessary to
effect indemnification as provided herein.
(e) The rights provided under this Section 7.07 shall not be deemed
exclusive of any other rights permitted by law to which such person may be
entitled under any provision of the Charter, a resolution of Shareholders or
directors of the Corporation, an agreement or otherwise, and shall continue as
to a person who has ceased to be a director, officer, employee, or agent and
shall inure to the benefit of the heirs, executors, and administrators of such a
person. The rights provided in this Section 7.07 shall be deemed to be provided
by a contract between the Corporation and the individuals who serve in the
capacities described in subsection (a) hereof at any time while these bylaws are
in effect, and no repeal or modification of this Section 7.07 by the
Shareholders shall adversely affect any right of any person otherwise entitled
to indemnification by virtue of this Section 7.07 at the time of such repeal or
modification.
ARTICLE VIII
AMENDMENTS
8.01. The Board may amend or repeal these bylaws or adopt new bylaws,
unless:
(l) the Charter or statute reserves the power exclusively to the
Shareholders in whole or part; or
(2) the Shareholders in amending, repealing or adopting a particular
bylaw expressly provide that the Board may not amend or repeal such bylaw.
<PAGE>
8.02. Unless the Charter or a bylaw adopted by the Shareholders provides
otherwise as to all or some portion of the Corporation's bylaws, the
Shareholders may amend, repeal, or adopt bylaws of the Corporation even though
such bylaws may also be amended, repealed or adopted by the Board.
<PAGE>
EXHIBIT 3.48
FILED
In the Office of the
Secretary of State of Texas
JUL 11 1996
Corporations Section
ARTICLES OF INCORPORATION
OF
SALEM MUSIC NETWORK, INC.
The undersigned, a natural person of the age of eighteen years or more,
acting as incorporator of a corporation under the Texas Business Corporation
Act, hereby adopts the following Articles of Incorporation for South Texas
Broadcasting, Inc. (the "Corporation"):
ARTICLE ONE
The name of this Corporation is Salem Music Network, Inc.
ARTICLE TWO
The period of the Corporation's duration is perpetual.
ARTICLE THREE
The purpose for which the Corporation is organized is the transaction of
any and all lawful business for which corporations may be incorporated under the
Texas Business Corporation Act.
ARTICLE FOUR
The aggregate number of shares which the Corporation shall have authority
to issue is one thousand (1,000) shares of Common Stock of the par value of
$0.01 per share.
ARTICLE FIVE
The Corporation will not commence business until it has received for the
issuance of its shares consideration of the value of at least One Thousand
Dollars ($1,000), consisting of money, labor done, or property actually
received.
<PAGE>
ARTICLE SIX
The name and address of the incorporator of the Corporation is:
Name Address
---- -------
Christine Chernjavsky 1212 Guadalupe
Suite 102
Austin, TX 78701
ARTICLE SEVEN
No shareholder of the Corporation shall, by reason of such shareholder
holding shares of any class, have any preemptive or preferential right to
purchase or subscribe for any shares of any class of the Corporation, now or
hereafter to be authorized, or any notes, debentures, bonds, or other securities
convertible into or carrying options or warrants to purchase shares of any
class, now or hereafter to be authorized, whether or not the issuance or sale of
any such shares, or such notes, debentures, bonds, or other securities, would
adversely affect the dividend or voting rights of such shareholder of the
Corporation, other than such rights, if any, as the board of directors, in its
discretion, may grant to the shareholders to purchase such additional, unissued,
or treasury securities; and the Corporation may issue or sell additional
unissued or treasury shares of any class of the Corporation, or any notes,
debentures, bonds, or other securities convertible into or carrying options or
warrants to purchase shares of any class, without offering the same in whole or
in part to the existing shareholders of any class.
ARTICLE EIGHT
At each election for directors of the Corporation, every shareholder
entitled to vote at such election shall have the right to vote, in person or by
proxy, the number of shares owned by such shareholder for as many persons as
there are directors to be elected and for whose election he has a right to vote,
or to cumulate his votes by giving one candidate as many votes as the number of
such directors multiplied by his shares shall equal, or by distributing such
votes on the same principle.
ARTICLE NINE
The street address of the registered office of the Corporation is 545 E.
John Carpenter Freeway, Suite 450, Irving, Texas 75062, and the name of its
registered agent is Greg Anderson.
2
<PAGE>
ARTICLE TEN
The number of directors constituting the initial Board of Directors is 2
and the names and addresses of the persons who are to serve as the initial
Directors until the first annual meeting of shareholders or until their
successors are elected and qualified are:
NAMES ADDRESSES
- ----- ---------
Edward G. Atsinger, III 4880 Santa Rosa Road
Suite 300
Camarillo, CA 93012
Stuart W. Epperson 3780 Will Scarlet Road
Winston-Salem, NC 27104
ARTICLE ELEVEN
No director of the Corporation shall be liable to the Corporation or its
shareholders for monetary damages for any act or omission in such director's
capacity as director, except to the extent such director is found liable for (i)
a breach of such director's duty of loyalty to the Corporation or its
shareholders; (ii) an act or omission not in good faith that constitutes a
breach of duty of such director to the Corporation or an act or omission that
involves intentional misconduct or a knowing violation of the law; (iii) a
transaction from which such director received an improper benefit, whether or
not the benefit resulted from an action taken within the scope of such
director's office; or (iv) an act or omission for which the liability of a
director is expressly provided by an applicable statute. No repeal or
modification of this ARTICLE NINE shall adversely affect any right or protection
of a director of the Corporation existing by virtue of this ARTICLE NINE at the
time of such repeal or modification.
IN WITNESS WHEREOF, I have hereunto set my hand, this 11th day of July,
1996.
Christine Chernjavsky
---------------------
3
<PAGE>
EXHIBIT 3.49
BY-LAWS
OF
SALEM MUSIC NETWORK, INC.
ARTICLE I
OFFICES
1.01. The registered agent and office of Salem Music Network, Inc.
(the "Corporation") shall be such registered agent and office as shall from time
to time be established pursuant to the articles of incorporation, as amended
from time to time, of the Corporation (the "Charter") or by resolution of the
Board of Directors of the Corporation (the "Board").
1.02. The Corporation may also have offices at such other places both
within and without the State of Texas as the Board may from time to time
determine or the business of the Corporation may require.
ARTICLE II
MEETINGS OF SHAREHOLDERS
2.01. Meetings of Shareholders of the Corporation (the
"Shareholders") for any purpose may be held at such place, within or without the
State of Texas, on the 30/th/ day of April or the first business day thereafter,
or as shall be fixed from time to time by the Board, or, if the Board has not so
specified, then at such place as may be fixed by the person or persons calling
the meeting.
2.02. An annual meeting of the Shareholders, commencing with the year
1996, shall be held at such date and time as shall be fixed from time to time by
the Board, at which they shall elect a Board, and transact such other business
as may properly be brought before the meeting.
2.03. At least ten days before each meeting of Shareholders, a
complete list of the Shareholders entitled to vote at said meeting arranged in
alphabetical order, with the residence of each and the number of voting shares
held by each, shall be prepared by the officer or agent having charge of the
stock transfer books. Such list, for a period of ten days prior to such
meeting, shall be kept on file at the registered office of the Corporation and
shall be subject to inspection by any Shareholder at any time during usual
business hours. Such list shall be produced and kept open at the time and place
of the meeting during the whole time thereof, and shall be subject to the
inspection of any Shareholder who may be present.
2.04. Special meetings of the Shareholders, for any purpose or
purposes, unless otherwise prescribed by statute, the Charter, or these bylaws,
may be called by the President, a majority of the Board, or the holders of not
less than ten percent of all the shares entitled to vote
<PAGE>
at the meetings. Business transacted at all special meetings shall be confined
to the objects stated in the notice of the meeting.
2.05. Written or printed notice stating the place, day, and hour of
the meeting and, in case of a special meeting, the purpose or purposes for which
the meeting is called, shall be delivered not less than ten nor more than sixty
days before the date of the meeting, either personally or by mail, by or at the
direction of the President, the Secretary, or the officer or person calling the
meeting, to each Shareholder of record entitled to vote at the meeting.
2.06. The holders of a majority of the shares of the Corporation
issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall be requisite and shall constitute a quorum at all
meetings of the Shareholders for the transaction of business except as otherwise
provided by statute, the Charter, or these bylaws. If, however, such quorum
shall not be present or represented at any meeting of the Shareholders, the
Shareholders entitled to vote thereat, present in person or represented by
proxy, shall nevertheless have power to adjourn the meeting from time to time,
without notice other than announcement at the meeting, until a quorum shall be
present or represented. At an adjourned session at which a quorum shall be
present or represented, any business may be transacted which might have been
transacted at the meeting as originally notified.
2.07. When a quorum is present at any meeting, the vote of the
holders of a majority of the shares of the Corporation having voting power
present in person or represented by proxy shall decide any question brought
before such meeting, unless the question is one upon which, by express provision
of any applicable statute, the Charter, or these bylaws, a different vote is
required, in which case such express provision shall govern and control the
decision of such question. The Shareholders present at a duly organized meeting
may continue to transact business until adjournment, notwithstanding the
withdrawal of enough Shareholders to leave less than a quorum.
2.08. Each outstanding share of the Corporation, regardless of class,
shall be entitled to one vote on each matter submitted to a vote at a meeting of
Shareholders, unless otherwise provided by statute or the Charter. At any
meeting of the Shareholders, every Shareholder having the right to vote shall be
entitled to vote in person or by proxy appointed by an instrument in writing
subscribed by such Shareholder or by his or her duly authorized attorney-in-
fact, such writing bearing a date not more than eleven months prior to said
meeting, unless said instrument provides for a longer period. Such proxy shall
be filed with the Secretary of the Corporation prior to or at the time of the
meeting. Voting need not be by written ballot unless required by the Charter or
by vote of the Shareholders present at the meeting.
2.09. The Board may fix in advance a record date for the purpose of
determining Shareholders entitled to notice of or to vote at a meeting of
Shareholders, such record date to be not less than ten nor more than sixty days
prior to such meeting, or the Board may close the stock transfer books for such
purpose for a period of not less than ten nor more than sixty days prior to such
meeting. In the absence of any action by the Board, the date upon which the
notice of the meeting is mailed shall be the record date.
<PAGE>
2.10. Any action required by statute to be taken at a meeting of the
Shareholders, or any action which may be taken at a meeting of the Shareholders,
may be taken without a meeting if a consent in writing, setting forth the action
so taken, shall be signed by all of the Shareholders entitled to vote with
respect to the subject matter thereof, and such consent shall have the same
force and effect as a unanimous vote of Shareholders.
2.11. Subject to the provisions required or permitted by statute or
the Charter for notice of meetings, Shareholders may participate in and hold a
meeting by means of conference telephone or similar communications equipment by
means of which all persons participating in the meeting can hear each other, and
participation in a meeting pursuant to this section shall constitute presence in
person at such meeting, except where a person participates in the meeting for
the express purpose of objecting to the transaction of any business on the
ground that the meeting is not lawfully called or convened.
ARTICLE III
DIRECTORS
3.01. The business and affairs of the Corporation shall be managed by the
Board who may exercise all such powers of the Corporation and do all such lawful
acts and things as are not by statute or by the Charter or by these bylaws
directed or required to be exercised or done by the Shareholders.
3.02. The initial Board shall be as stated in the Charter. Thereafter,
the number of directors which shall constitute the full Board shall be not
greater than three (3) nor less than two (2) or as determined from time to time
by resolution of the Board or by the Shareholders at the annual meeting or a
special meeting called for that purpose, but no decrease shall have the effect
of shortening the term of an incumbent director. Directors need not be
Shareholders or residents of the State of Texas. The directors shall be elected
at the annual meeting of the Shareholders, except as hereinafter provided, and
each director elected shall hold office until his or her successor shall be
elected and shall qualify.
3.03. At any meeting of Shareholders called expressly for such purpose,
any director or the entire Board may be removed, with or without cause, by vote
of the holders of a majority of the shares of the Corporation then entitled to
vote at an election of directors. If any vacancies occur in the Board caused by
death, resignation, retirement, disqualification, or removal from office of any
director or otherwise, a majority of the directors then in office, though less
than a quorum, may choose a successor or successors or a successor or successors
may be chosen at a special meeting of Shareholders called for that purpose; and
each successor director so chosen shall be elected for the unexpired term of his
or her predecessor in office. Any directorship to be filled by reason of an
increase in the number of directors may be filled by election at an annual
meeting or special meeting of Shareholders called for that purpose or may be
filled by the Board for a term of office continuing only until the next election
of one or more directors by the Shareholders.
<PAGE>
3.04. Whenever the holders of any class or series of shares of the
Corporation are entitled to elect one or more directors by the provisions of the
Charter, any vacancies in such directorships and any newly created directorships
of such class or series to be filled by reason of an increase in the number of
such directors may be filled by the affirmative vote of a majority of the
directors elected by such class or series then in office or by a sole remaining
director so elected, or by the vote of the holders of the outstanding shares of
such class or series, and such directorships shall not in any case be filled by
the vote of the remaining directors or the holders of the outstanding shares as
a whole unless otherwise provided in the Charter.
3.05. At each election for directors, every shareholder entitled to vote
at such election shall have the right to vote, in person or by proxy, the number
of shares owned by such Shareholder for as many persons as there are directors
to be elected and for whose election he has a right to vote, or to cumulate his
votes by giving one candidate as many votes as the number of such directors
multiplied by his shares shall equal, or by distributing such votes on the same
principle.
EXECUTIVE AND OTHER COMMITTEES
3.06. The Board, by resolution adopted by a majority of the Board, may
designate from among its members an executive committee and one or more other
committees, each of which shall be comprised of one or more members and, to the
extent provided in such resolution, shall have and may exercise all of the
authority of the Board, including the authority to declare dividends and to
authorize the issuance of shares of the Corporation, to the extent permitted by
law. Committees shall keep regular minutes of their proceedings and report the
same to the Board when required.
MEETINGS OF DIRECTORS
3.07. The directors of the Corporation may hold their meetings, both
regular and special, either within or without the State of Texas.
3.08. The first meeting of each newly elected Board shall be held without
further notice immediately following the annual meeting of Shareholders, and at
the same place, unless by unanimous consent of the directors then elected and
serving such time or place shall be changed.
3.09. Regular meetings of the Board may be held without notice at such
time and place as shall from time to time be determined by the Board.
3.10. Special meetings of the Board may be called by the President on two
days' notice to each director, either personally or by mail, telecopy, or
overnight courier; special meetings shall be called by the President or
Secretary in like manner and on like notice on the written request of a majority
of the directors. Except as may be otherwise expressly provided by statute, the
Charter, or these bylaws, neither the business to be transacted at, nor the
purpose of, any special meeting needs to be specified in a notice or waiver of
notice.
3.11. At all meetings of the Board the presence of a majority of the full
Board shall be necessary and sufficient to constitute a quorum for the
transaction of business and the act of a
<PAGE>
majority of the directors present at any meeting at which there is a quorum
shall be the act of the Board, except as may be otherwise specifically provided
by statute or by the Charter or by these bylaws. If a quorum shall not be
present at any meeting of directors, the directors present thereat may adjourn
the meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present.
3.12. Any action required or permitted to be taken at a meeting of the
Board or any committee may be taken without a meeting if a consent in writing,
setting forth the action so taken, is signed by all the members of the Board or
committee, as the case may be. Such consent shall have the same force and
effect as a unanimous vote at a meeting.
3.13. Subject to the provisions required or permitted by statute or the
Charter for notice of meetings, members of the Board, or members of any
committee designated by the Board, may participate in and hold a meeting of the
Board or such committee by means of a conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting pursuant to this
section shall constitute presence in person at such meeting, except where a
person participates in the meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
COMPENSATION OF DIRECTORS
3.14. Directors, as such, shall not receive any stated salary for their
services, but, by resolution of the Board, a fixed sum and expenses of
attendance, if any, may be allowed for attendance at each regular or special
meeting of the Board; provided that nothing herein contained shall be construed
to preclude any director from serving the Corporation in any other capacity and
receiving compensation therefor.
ARTICLE IV
NOTICES
4.01. Whenever under the provisions of any applicable statute, the Charter
or these bylaws, notice is required to be given to any director or Shareholder,
and no provision is made as to how such notice shall be given, it shall not be
construed to mean personal notice, but any such notice may be given by mail,
postage prepaid, addressed to such director or Shareholder at such address as
appears on the books of the Corporation. Any notice required or permitted to be
given by mail shall be deemed to be given at the time when the same shall be
thus deposited in the United States mails as aforesaid.
4.02. Whenever any notice is required to be given to any Shareholder or
director of the Corporation under the provisions of any applicable statute, the
Charter or these bylaws, a waiver thereof in writing signed by the person or
persons entitled to such notice, whether before or after the time stated in such
notice, shall be deemed equivalent to the giving of such notice.
<PAGE>
ARTICLE V
OFFICERS
5.01. The officers of the Corporation shall be elected by the directors
and shall include a President and a Secretary. The Board may also, at its
discretion, elect one or more Vice Presidents and a Treasurer. Such other
officers, including assistant officers, and agents as may be deemed necessary
may be elected or appointed by the Board. Any two or more offices may be held
by the same person.
5.02. The Board at its first meeting after each annual meeting of
Shareholders shall choose a President, a Secretary, and such other officers,
including assistant officers, and agents as may be deemed necessary, none of
whom need be a member of the Board.
5.03. The Board may appoint such other officers and agents as it shall
deem necessary, who shall be appointed for such terms and shall exercise such
powers and perform such duties as shall be determined from time to time by the
Board.
5.04. The salaries of all officers and agents of the Corporation shall be
fixed by the Board. Unless so fixed by the Board each officer of the
Corporation shall serve without remuneration.
5.05. Each officer of the Corporation shall hold office until his
successor is chosen and qualified in his stead or until his death or until his
resignation or removal from office. Any officer or agent elected or appointed
by the Board may be removed at any time by the Board, but such removal shall be
without prejudice to the contract rights, if any, of the person so removed. If
the office of any officer becomes vacant for any reason, the vacancy may be
filled by the Board.
THE PRESIDENT
5.09. The President shall be the chief executive officer of the
Corporation, shall have the general powers and duties of oversight, supervision
and management of the business and affairs of the Corporation and shall see that
all orders and resolutions of the Board are carried into effect. He shall be an
ex-officio member of all standing committees of the Board.
THE SECRETARY AND ASSISTANT SECRETARIES
5.10. The Secretary shall attend all sessions of the Board and all
meetings of the Shareholders and record all votes and the minutes of all
proceedings in a book to be kept for that purpose and shall perform like duties
for any committees when required. The Secretary shall give, or cause to be
given, notice of all meetings of the Shareholders and special meetings of the
Board, and shall perform such other duties as may be prescribed by the Board or
the President, under whose supervision the Secretary shall be.
5.11. Each Assistant Secretary shall have such powers and perform such
duties as the Board may from time to time prescribe or as the President may from
time to time delegate.
<PAGE>
OTHER OFFICES
5.12. Any Vice President elected by the Board shall have such powers and
perform such duties as the Board may from time to time prescribe or as the
President may from time to time delegate.
5.13. Any Treasurer elected by the Board shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements of the Corporation and shall deposit all moneys and
other valuable effects in the name and to the credit of the Corporation in such
depositories as may be designated by the Board.
5.14. Any Treasurer elected by the Board shall disburse the funds of the
corporation as may be ordered by the Board, taking proper vouchers for such
disbursements, and shall render to the directors, at the regular meetings of the
Board, or whenever they may require it, an account of all his or her
transactions as Treasurer and of the financial condition of the Corporation, and
shall perform such other duties as the Board may prescribe or as the President
may from time to time delegate.
5.15. If required by the Board, any Treasurer elected by the Board shall
give the Corporation a bond in such form, in such sum, and with such surety or
sureties as shall be satisfactory to the Board for the faithful performance of
the duties of the office of Treasurer and for the restoration to the
Corporation, in case of death, resignation, retirement, or removal from office,
of all books, papers, vouchers, money, and other property of whatever kind in
the Treasurer's possession or under the Treasurer's control belonging to the
Corporation.
5.16. Each Assistant Treasurer shall have such powers and perform such
duties as the Board may from time to time prescribe or as the President may from
time to time delegate.
ARTICLE VI
CERTIFICATES REPRESENTING SHARES
6.01. Certificates in such form as may be determined by the Board shall be
delivered representing all shares to which Shareholders are entitled. Such
certificates shall be consecutively numbered and shall be entered in the books
of the Corporation as they are issued. Each certificate shall state on the face
thereof the name of the Corporation, the name to whom the certificate is issued,
the number and class of shares and the designation of the series, if any, which
such certificate represents, the par value of such shares or a statement that
such shares are without par value, and that the Corporation is organized under
the laws of Texas. Each certificate shall be signed by either the President or
any Vice President then in office and by either the Secretary, an Assistant
Secretary, or any Treasurer then in office, and may be sealed with the seal of
the Corporation or' a facsimile thereof. If any certificate is countersigned by
a transfer agent, or an assistant transfer agent or registered by a registrar,
other than the Corporation or an employee of the Corporation, the signature of
any such officer of the Corporation may be a facsimile. Whenever the
Corporation shall be authorized to issue more than one class of stock, there
shall be (1) set forth conspicuously upon the face or back of each certificate a
full statement of (a) all of
<PAGE>
the designations, preferences, limitations, and relative rights of the shares of
each class authorized to be issued and (b) if the Corporation is authorized to
issue any preferred or special class in series, the variations in the relative
rights and preferences of the shares of each series so far as the same have been
fixed and determined and the authority of the Board to fix and determine the
relative rights and preferences of subsequent series; or (2) stated
conspicuously on the face or back of the certificate that (a) such a statement
is set forth in the Charter on file in the office of the Secretary of State of
Texas and (b) the Corporation will furnish a copy of such statement to the
record holder of the certificate without charge upon request to the Corporation
at its principal place of business or registered office. Whenever the
Corporation by the Charter has limited or denied the preemptive rights of
Shareholders to acquire unissued or treasury shares of the Corporation, each
certificate (1) shall conspicuously set forth upon the face or back of such
certificate a full statement of the limitation or denial of preemptive rights
contained in the Charter, or (2) shall conspicuously state on the face or back
of the certificate that (a) such statement is set forth in the Charter on file
in the office of the Secretary of State of Texas and (b) the Corporation will
furnish a copy of such statement to the record holder of the certificate without
charge upon request to the Corporation at its principal place of business or
registered office. If any restriction on the transfer or the registration of the
transfer of shares shall be imposed or agreed to by the Corporation, as
permitted by law, each certificate representing shares so restricted (1) shall
conspicuously set forth a full or summary statement of the restriction on the
face of the certificate, or (2) shall set forth such statement on the back of
the certificate and conspicuously refer to the same on the face of the
certificate, or (3) shall conspicuously state on the face or back of the
certificate that such a restriction exists pursuant to a specified document and
(a) that the Corporation will furnish to the record holder of the certificate
without charge upon written request to the corporation at its principal place of
business or registered office a copy of the specified document, or (b) if such
document is one required or permitted to be and has been filed under the Texas
Business Corporation Act, that such document is on file in the office of the
Secretary of State of Texas and contains a full statement of such restriction.
LOST CERTIFICATES
6.02 The Board may direct a new certificate representing shares to be
issued in place of any certificate theretofore issued by the Corporation alleged
to have been lost or destroyed, upon the making of an affidavit of that fact by
the person claiming the certificate to be lost or destroyed. When authorizing
such issue of a new certificate, the Board, in its discretion and as a condition
precedent to the issuance thereof, may require the owner of such lost or
destroyed certificate, or his legal representative, to advertise the same in
such manner as it shall require and/or give the Corporation a bond in such form,
in such sum, and with such surety or sureties as it may direct as indemnity
against any claim that may be made against the Corporation with respect to the
certificate alleged to have been lost or destroyed.
TRANSFER OF SHARES
6.03. Upon presentation to the Corporation or the transfer agent of the
Corporation with a request to register the transfer of a certificate
representing shares duly endorsed and otherwise meeting the requirements for
transfer specified in the Texas Business and Commerce Code, it shall
<PAGE>
be the duty of the Corporation or the transfer agent of the Corporation to
register the transfer as requested.
REGISTERED SHAREHOLDERS
6.04. Prior to due presentment for transfer, the Corporation may treat the
registered owner of any share or shares of stock as the person exclusively
entitled to vote, to receive notifications, and otherwise to exercise all rights
and powers of an owner.
ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS
7.01. Dividends upon the outstanding shares of the Corporation, subject to
the provisions of the Charter, if any, may be declared by the Board at any
regular or special meeting of the Board or by any committee of the Board so
authorized. Dividends may be paid in cash, in property, or in shares of the
Corporation, subject to the provisions of any applicable statute or the Charter.
The Board may fix in advance a record date for the purpose of determining
Shareholders entitled to receive payment of any dividend, such record date to be
not more than fifty days prior to the payment date of such dividend, or the
Board may close the stock transfer books for such purpose for a period of not
more than fifty days prior to the payment date of such dividend. In the absence
of any action by the Board, the date upon which the Board adopts the resolution
declaring such dividend shall be the record date.
RESERVES
7.02. There may be created by resolution of the Board out of the surplus
of the Corporation such reserve or reserves as the directors from time to time,
in their discretion, think proper to provide for contingencies, or to repair or
maintain any property of the Corporation, or for such other purpose as the
directors shall think beneficial to the Corporation, and the directors may
modify or abolish any such reserve in the manner in which it was created.
CHECKS
7.03. All checks or demands for money and notes of the Corporation shall
be signed by such officer or officers or such other person or persons as the
Board may from time to time designate.
EXECUTION OF CONTRACTS, DEEDS, ETC.
7.04. The Board may authorize any officer or officers, agent or agents, in
the name and on behalf of the Corporation, to enter into or execute and deliver
any and all deeds, bonds, mortgages, contracts and other obligations or
instruments, and such authority may be general or confined to specific
instances.
<PAGE>
FISCAL YEAR.
7.05. The fiscal year of the Corporation shall be fixed by resolution of
the Board.
VOTING OF SECURITIES
7.06. Unless otherwise directed by the Board, the President shall have
full power and authority on behalf of the Corporation to attend, vote and act,
and to execute and deliver in the name and on behalf of the Corporation a proxy
authorizing an agent or attorney-in-fact for the Corporation to attend, vote and
act, at any meeting of security holders of any corporation in which the
Corporation may hold securities and to execute and deliver in the name and on
behalf of the Corporation any written consent of security holders in lieu of any
such meeting, and at any such meeting he, or the agent or the attorney-in-fact
duly authorized by him, shall possess and may exercise any and all rights and
powers incident to the ownership of such securities which the Corporation as the
owner thereof might have possessed or exercised if present. The Board may by
resolution from time to time confer like power upon any other person or persons.
INDEMNIFICATION
7.07 (a) Subject to any limitation which may be contained in the Charter,
the Corporation shall to the full extent permitted by law, including without
limitation, Texas Business Corporation Act Art. 2.02-1, as such Article now
exists or shall hereafter be amended, indemnify any person who was, is, or is
threatened to be made a named defendant or respondent to any threatened,
pending, or completed action, suit, or proceeding, whether civil, criminal,
arbitral, administrative, or investigative, any appeal in such action, suit, or
proceeding, and any inquiry or investigation that could lead to such an action,
suit, or proceeding, because such person is or was a director or officer of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, partner, venturer, proprietor, trustee, employee, agent, or
similar functionary of another corporation, partnership, joint venture, sole
proprietorship, trust, employee benefit plan, or other enterprise, against
judgments, penalties (including excise and similar taxes), fines, settlements,
and reasonable expenses (including attorneys' fees) actually incurred by such
person in connection with such action, suit, or proceeding. The termination of
any action, suit or proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that an individual did not act in good faith and in a manner which
he reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
(b) Subject to any limitation which may be contained in the Charter, the
Corporation shall, to the full extent permitted by law, including without
limitation, Art. 2.02-1 of the Texas Business-Corporation Act, as such Article
now exists or shall hereafter be amended, pay or reimburse on a current basis
the expenses incurred by any person described in subsection (a) of this Section
7.07 in connection with any such action, suit, or proceeding in advance of the
final disposition thereof, if the Corporation has received (i) a written
affirmation by the recipient of his good faith belief that he has met the
standard of conduct necessary for indemnification under the Texas Business
Corporation Act and (ii) a written undertaking by or on behalf of the director
to
<PAGE>
repay the amount paid or reimbursed if it is ultimately determined that he
has not satisfied such standard of conduct or if indemnification is prohibited
by law.
(c) If required by law at the time such payment is made, any payment of
indemnification or advance of expenses to a director shall be reported in
writing to the shareholders with or before the notice or waiver of notice of the
next Shareholder's meeting or with or before the next submission to Shareholders
of a consent to action without a meeting pursuant to Section A, Article 9.10 of
the Texas Business Corporation Act, and, in any case, within the 12-month period
immediately following the date of the indemnification or advance.
(d) The Corporation may purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee or agent of the Corporation
or who is or was serving at the request of the Corporation as a director,
officer, partner, venturer, proprietor, trustee, employee, agent, or similar
functionary of another foreign or domestic corporation, partnership, joint
venture, sole proprietorship, trust, employee benefit plan, or other enterprise,
against any liability asserted against him and incurred by him in such a
capacity or arising out of his status as such a person, whether or not the
corporation would have the power to indemnify him against that liability under
this article, subject to any restrictions imposed by law. The Corporation may
create a trust fund, establish any form of self-insurance, grant a security
interest or other lien on the assets of the Corporation, or use other means
(including, without limitation, a letter of credit, guarantee or surety
arrangement) to ensure the payment of such sums as may become necessary to
effect indemnification as provided herein.
(e) The rights provided under this Section 7.07 shall not be deemed
exclusive of any other rights permitted by law to which such person may be
entitled under any provision of the Charter, a resolution of Shareholders or
directors of the Corporation, an agreement or otherwise, and shall continue as
to a person who has ceased to be a director, officer, employee, or agent and
shall inure to the benefit of the heirs, executors, and administrators of such a
person. The rights provided in this Section 7.07 shall be deemed to be provided
by a contract between the Corporation and the individuals who serve in the
capacities described in subsection (a) hereof at any time while these bylaws are
in effect, and no repeal or modification of this Section 7.07 by the
Shareholders shall adversely affect any right of any person otherwise entitled
to indemnification by virtue of this Section 7.07 at the time of such repeal or
modification.
ARTICLE VIII
AMENDMENTS
8.01. The Board may amend or repeal these bylaws or adopt new bylaws,
unless:
(l) the Charter or statute reserves the power exclusively to the
Shareholders in whole or part; or
(2) the Shareholders in amending, repealing or adopting a particular
bylaw expressly provide that the Board may not amend or repeal such bylaw.
<PAGE>
8.02. Unless the Charter or a bylaw adopted by the Shareholders provides
otherwise as to all or some portion of the Corporation's bylaws, the
Shareholders may amend, repeal, or adopt bylaws of the Corporation even though
such bylaws may also be amended, repealed or adopted by the Board.
<PAGE>
EXHIBIT 3.50
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 A.M. 03/05/1992
752065002 - 2290095
CERTIFICATE OF INCORPORATION
OF
SALEM RADIO NETWORK INCORPORATED
ARTICLE I
NAME OF CORPORATION
The name of this corporation is
Salem Radio Network Incorporated
ARTICLE II
REGISTERED OFFICE
The address of the registered office of the corporation in the State of
Delaware is 32 Loockerman Square, Suite L-100, in the City of Dover, County of
Kent, and the name of its registered agent at that address is The Prentice-Hall
Corporation System, Inc.
ARTICLE III
PURPOSE
The purpose of the corporation is to engage in any lawful act or activity
for which corporations may be organized under the General Corporation Law of
Delaware.
ARTICLE IV
AUTHORIZED CAPITAL STOCK
The corporation shall be authorized to issue one class of stock to be
designated Common Stock; the total number of shares which the corporation shall
have authority to issue is one thousand (1,000) and all such shares are to be
without par value.
ARTICLE V
INCORPORATOR
The name and mailing address of the incorporator of the corporation is:
<PAGE>
Eric H. Halvorson
2310 Ponderosa Drive, Suite 29
Camarillo, California 93010
ARTICLE VI
BOARD POWER REGARDING BYLAWS
In furtherance and not in limitation of the powers conferred by statute,
the board of directors is expressly authorized to make, repeal, alter, amend and
rescind the bylaws of the corporation.
ARTICLE VII
ELECTION OF DIRECTORS
Elections of directors need not be by written ballot unless the bylaws of
the corporation shall so provide.
ARTICLE VIII
LIMITATION OF DIRECTOR LIABILITY
To the fullest extent permitted by the Delaware General Corporation Law as
the same exists or may hereafter be amended, a director of the corporation shall
not be liable to the corporation or its stockholders for monetary damages for
breach of fiduciary duty as a director. If the Delaware General Corporation law
is amended after the date of the filing of this Certificate of Incorporation to
authorize corporate action further eliminating or limiting the personal
liability of directors, then the liability of a director of the corporation
shall be eliminated or limited to the fullest extent permitted by the Delaware
General Corporation Law, as so amended from time to time. No repeal or
modification of this Article VIII by the stockholders shall adversely affect any
right or protection of a director of the corporation existing by virtue of this
Article VIII at the time of such repeal or modification.
ARTICLE IX
CORPORATE POWER
The corporation reserves the right to amend, alter, change or repeal any
provision contained in this certificate of incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred on stockholders herein
are granted subject to this reservation.
2
<PAGE>
ARTICLE X
CREDITOR COMPROMISE OR ARRANGEMENT
Whenever a compromise or arrangement is proposed between this corporation
and its creditors or any class of them and/or between this corporation and its
stockholders or any class of them, any court of equitable jurisdiction within
the State of Delaware may, on the application in a summary way of this
corporation or of any creditor or stockholder thereof or on the application of
any receiver or receivers appointed for this corporation under the provisions of
section 291 of Title 8 of the Delaware Code or on the application of trustees in
dissolution or of any receiver or receivers appointed for this corporation under
the provisions of Section 279 of Title 8 of the Delaware Code order a meeting of
the creditors or class of creditors, and/or of the stockholders or class of
stockholders of this corporation, as the case may be, to be summoned in such
manner as the said court directs. If a majority in number representing three-
fourths in value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of this corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization of this
corporation as a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of this corporation, as the case may be, and also on this
corporation.
THE UNDERSIGNED, being the incorporator hereinbefore named, for the purpose
of forming a corporation to do business both within and without the State of
Delaware, and in pursuance of the Delaware General Corporation Law, does hereby
make and file this Certificate.
Date: February 27, 1992
-----------
Eric H. Halvorson
-----------------
Eric H. Halvorson
3
<PAGE>
EXHIBIT 3.51
SALEM RADIO NETWORK INCORPORATED
(a Delaware corporation)
BYLAWS
ARTICLE I
Offices
SECTION 1.01 Registered Office. The registered office of Salem Radio
Network Incorporated (hereinafter called the Corporation) in the State of
Delaware shall be at 32 Loockerman Square, City of Dover, County of Kent, and
the name of the registered agent in charge thereof shall be The Prentice-Hall
Corporation System, Inc.
SECTION 1.02 Other Offices. The Corporation may also have an office or
offices at such other place or places, either within or without the State of
Delaware, as the Board of Directors (hereinafter called the Board) may from time
to time determine or as the business of the Corporation may require.
ARTICLE II
Meetings of Stockholders
SECTION 2.01 Annual Meetings. Annual meetings of the stockholders of the
Corporation for the purpose of electing directors and for the transaction of
such other proper business as may come before such meetings shall be held at
10:00 a.m. on the 5th day of June if not a legal holiday, and if a legal
holiday, then on the next business day following which is not a legal holiday,
or at such time, date and place as the Board shall determine by resolution.
SECTION 2.02 Special Meetings. A special meeting of the stockholders for
the transaction of any proper business may be called at any time by the Board or
by the President.
SECTION 2.03 Place of Meetings. All meetings of the stockholders shall be
held at such places, within or without the State of Delaware, as may from time
to time be designated by the person or persons calling the respective meeting
and specified in the respective notices or waivers of notice thereof.
SECTION 2.04 Notice of Meetings. Except as otherwise required by law,
notice of each meeting of the stockholders, whether annual or special, shall be
given not less than ten (10) nor more than sixty (60) days before the date of
the meeting to each stockholder of record entitled to vote at such meeting by
delivering a typewritten or printed notice thereof to him personally, or by
depositing such notice in the United States mail, in a postage prepaid envelope,
directed to him at his post office address furnished by him to the Secretary of
the Corporation for such purpose or, if he shall not have furnished to the
Secretary his address for such purpose, then at his post office address last
known to the Secretary, or by transmitting a notice thereof to him at
<PAGE>
such address by telegraph, cable, or wireless. Except as otherwise expressly
required by law, no publication of any notice of a meeting of the stockholders
shall be required. Every notice of a meeting of the stockholders shall state the
place, date and hour of the meeting, and, in the case of a special meeting,
shall also state the purpose or purposes for which the meeting is called. Notice
of any meeting of stockholders shall not be required to be given to any
stockholder who shall have waived such notice and such notice shall be deemed
waived by any stockholder who shall attend such meeting in person or by proxy,
except as a stockholder who shall attend such meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened. Except as otherwise
expressly required by law, notice of any adjourned meeting of the stockholders
need not be given if the time and place thereof are announced at the meeting at
which the adjournment is taken.
SECTION 2.05 Quorum. Except in the case of any meeting for the election
of directors summarily ordered as provided by law, the holders of record of a
majority in voting interest of the shares of stock of the Corporation entitled
to be voted thereat, present in person or by proxy, shall constitute a quorum
for the transaction of business at any meeting of the stockholders of the
Corporation or any adjournment thereof. In the absence of a quorum at any
meeting or any adjournment thereof, a majority in voting interest of the
stockholders present in person or by proxy and entitled to vote thereat or, in
the absence therefrom of all the stockholders, any officer entitled to preside
at, or to act as secretary of, such meeting may adjourn such meeting from time
to time. At any such adjourned meeting at which a quorum is present any
business may be transacted which might have been transacted at the meeting as
originally called.
SECTION 2.06 Voting.
(a) Each stockholder shall, at each meeting of the stockholders, be
entitled to vote in person or by proxy each share or fractional share of the
stock of the Corporation having voting rights on the matter in question and
which shall have been held by him and registered in his name on the books of the
Corporation:
(i) on the date fixed pursuant to Section 6.05 of these Bylaws as the
record date for the determination of stockholders entitled to notice of and
to vote at such meeting, or
(ii) if no such record date shall have been so fixed, then (a) at the
close of business on the day next preceding the day on which notice of the
meeting shall be given or (b) if notice of the meeting shall be waived, at
the close of business on the day next preceding the day on which the
meeting shall be held.
(b) Shares of its own stock belonging to the Corporation or to another
corporation, if a majority of the shares entitled to vote in the election of
directors in such other corporation is held, directly or indirectly, by the
Corporation, shall neither be entitled to vote nor be counted for quorum
purposes. Persons holding stock of the Corporation in a fiduciary capacity
shall be entitled to vote such stock. Persons whose stock is pledged shall be
entitled to vote, unless in the transfer by the pledgor on the books of the
Corporation he shall have expressly empowered the pledgee to vote thereon, in
which case only the pledgee, or his proxy, may represent such stock
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and vote thereon. Stock having voting power standing of record in the names of
two or more persons, whether fiduciaries, members of a partnership, joint
tenants in common, tenants by entirety or otherwise, or with respect to which
two or more persons have the same fiduciary relationship, shall be voted in
accordance with the provisions of the General Corporation Law of the State of
Delaware.
(c) Any such voting rights may be exercised by the stockholder entitled
thereto in person or by his proxy appointed by an instrument in writing,
subscribed by such stockholder or by his attorney thereunto authorized and
delivered to the secretary of the meeting; provided, however, that no proxy
shall be voted or acted upon after three years from its date unless said proxy
shall provide for a longer period. The attendance at any meeting of a
stockholder who may theretofore have given a proxy shall not have the effect of
revoking the same unless he shall in writing so notify the secretary of the
meeting prior to the voting of the proxy. At any meeting of the stockholders
all matters, except as otherwise provided in the Certificate of Incorporation,
in these Bylaws or by law, shall be decided by the vote of a majority in voting
interest of the stockholders present in person or by proxy and entitled to vote
thereat and thereon, a quorum being present. The vote at any meeting of the
stockholders on any question need not be by ballot, unless so directed by the
chairman of the meeting. On a vote by ballot each ballot shall be signed by the
stockholder voting, or by his proxy, if there be such proxy, and it shall state
the number of shares voted.
SECTION 2.07 List of Stockholders. The Secretary of the Corporation shall
prepare and make, at least ten (10) days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open
to the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten (10) days prior to
the meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
SECTION 2.08 Judges. If at any meeting of the stockholders a vote by
written ballot shall be taken on any question, the chairman of such meeting may
appoint a judge or judges to act with respect to such vote. Each judge so
appointed shall first subscribe an oath faithfully to execute the duties of a
judge at such meeting with strict impartiality and according to the best of his
ability. Such judges shall decide upon the qualification of the voters and
shall report the number of shares represented at the meeting and entitled to
vote on such question, shall conduct and accept the votes, and, when the voting
is completed, shall ascertain and report the number of shares voted respectively
for and against the question. Reports of judges shall be in writing and
subscribed and delivered by them to the Secretary of the Corporation. The
judges need not be stockholders of the Corporation, and any officer of the
Corporation may be a judge on any question other than a vote for or against a
proposal in which he shall have a material interest.
SECTION 2.09 Action Without Meeting. Any action required to be taken at
any annual or special meeting of stockholders of the Corporation, or any action
which may be taken at
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any annual or special meeting of such stockholders, may be taken without a
meeting, without prior notice and without a vote, if a consent in writing,
setting forth the action so taken, shall be signed by the holders of outstanding
stock having not less than the minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voted. Prompt notice of the taking of the
corporate action without a meeting by less than unanimous written consent shall
be given to those stockholders who have not consented in writing.
ARTICLE III
Board of Directors
SECTION 3.01 General Powers. The property, business and affairs of the
Corporation shall be managed by the Board.
SECTION 3.02 Number and Term of Office. The number of directors shall be
two (2). Directors need not be stockholders. Each of the directors of the
Corporation shall hold office until his successor shall have been duly elected
and shall qualify or until he shall resign or shall have been removed in the
manner hereinafter provided.
SECTION 3.03 Election of Directors. The directors shall be elected
annually by the stockholders of the Corporation and the persons receiving the
greatest number of votes, up to the number of directors to be elected, shall be
the directors.
SECTION 3.04 Resignations. Any director of the Corporation may resign at
any time by giving written notice to the Board or to the Secretary of the
Corporation. Any such resignation shall take effect at the time specified
therein, or, if the time be not specified, it shall take effect immediately upon
its receipt; and unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
SECTION 3.05 Vacancies. Except as otherwise provided in the Certificate
of Incorporation, any vacancy in the Board, whether because of death,
resignation, disqualification, an increase in the number of directors, or any
other cause, may be filled by vote of the majority of the remaining directors,
although less than a quorum. Each director so chosen to fill a vacancy shall
hold office until his successor shall have been elected and shall qualify or
until he shall resign or shall have been removed in the manner hereinafter
provided.
SECTION 3.06 Place of Meeting, Etc. The Board may hold any of its
meetings at such place or places within or without the State of Delaware as the
Board may from time to time by resolution designate or as shall be designated by
the person or persons calling the meeting or in the notice or a waiver of notice
of any such meeting. Directors may participate in any regular or special
meeting of the Board by means of conference telephone or similar communications
equipment pursuant to which all persons participating in the meeting of the
Board can hear each other, and such participation shall constitute presence in
person at such meeting.
SECTION 3.07 First Meeting. The Board shall meet as soon as practicable
after each annual election of directors and notice of such first meeting shall
not be required.
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SECTION 3.08 Regular Meetings. Regular meetings of the Board nay be held
at such times as the Board shall from time to time by resolution determine. If
any day fixed for a regular meeting shall be a legal holiday at the place where
the meeting is to be held, then the meeting shall be held at the same hour and
place on the next succeeding business day not a legal holiday. Except as
provided by law, notice of regular meetings need not be given.
SECTION 3.09 Special Meetings. Special meetings of the Board shall be
held whenever called by the President or a majority of the authorized number of
directors. Except as otherwise provided by law or by these Bylaws, notice of
the time and place of each such special meeting shall be mailed to each
director, addressed to him at his residence or usual place of business, at least
five (5) days before the day on which the meeting is to be held, or shall be
sent to him at such place by telegraph or cable or be delivered personally not
less than forty-eight (48) hours before the time at which the meeting is to be
held. Except where otherwise required by law or by these Bylaws, notice of the
purpose of a special meeting need not be given. Notice of any meeting of the
Board shall not be required to be given to any director who is present at such
meeting, except a director who shall attend such meeting for the express purpose
of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened.
SECTION 3.10 Quorum and Manner of Acting. Except as otherwise provided in
these Bylaws or by law, the presence of a majority of the authorized number of
directors shall be required to constitute a quorum for the transaction of
business at any meeting of the Board, and all matters shall be decided at any
such meeting, a quorum being present, by the affirmative votes of a majority of
the directors present. In the absence of a quorum, a majority of directors
present at any meeting may adjourn the same from time to time until a quorum
shall be present. Notice of any adjourned meeting need not be given. The
directors shall act only as a Board, and the individual directors shall have no
power as such.
SECTION 3.11 Action by Consent. Any action required or permitted to be
taken at any meeting of the Board or of any committee thereof may be taken
without a meeting if a written consent thereto is signed by all members of the
Board or of such committee, as the case may be, and such written consent is
filed with the minutes of proceedings of the Board or committee.
SECTION 3.12 Removal of Directors. Subject to the provisions of the
Certificate of Incorporation, any director may be removed at any time, either
with or without cause, by the affirmative vote of the stockholders having a
majority of the voting power of the Corporation given at a special meeting of
the stockholders called for the purpose.
SECTION 3.13 Compensation. The directors shall receive only such
compensation for their services as directors as may be allowed by resolution of
the Board. The Board may also provide that the Corporation shall reimburse each
such director for any expense incurred by him on account of his attendance at
any meetings of the Board or Committees of the Board. Neither the payment of
such compensation nor the reimbursement of such expenses shall be construed to
preclude any director from serving the Corporation or its subsidiaries in any
other capacity and receiving compensation therefor.
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SECTION 3.14 Committees. The Board may, by resolution passed by a
majority of the whole Board, designate one or more committees, each committee to
consist of one or more of the directors of the Corporation. Any such committee,
to the extent provided in the resolution of the Board and except as otherwise
limited by law, shall have and may exercise all the powers and authority of the
Board in the management of the business and affairs of the Corporation, and may
authorize the seal of the Corporation to be affixed to all papers which may
require it. Any such committee shall keep written minutes of its meetings and
report the same to the Board at the next regular meeting of the Board. In the
absence or disqualification of a member of a committee, the member or members
thereof present at any meeting and not disqualified from voting, whether or not
he or they constitute a quorum, may unanimously appoint another member of the
Board to act at the meeting in the place of any such absent or disqualified
member.
ARTICLE IV
Officers
SECTION 4.01 Number. The officers of the Corporation shall be a
President, one or more Vice Presidents (the number thereof and their respective
titles to be determined by the Board), a Secretary and a Treasurer.
SECTION 4.02 Election, Term of Office and Qualifications. The officers of
the Corporation, except such officers as may be appointed in accordance with
Section 4.03, shall be elected annually by the Board at the first meeting
thereof held after the election thereof. Each officer shall hold office until
his successor shall have been duly chosen and shall qualify or until his
resignation or removal in the manner hereinafter provided.
SECTION 4.03 Assistants, Agents and Employees, Etc. In addition to the
officers specified in Section 4.01, the Board may appoint other assistants,
agents and employees as it may deem necessary or advisable, including one or
more Assistant Secretaries, and one or more Assistant Treasurers, each of whom
shall hold office for such period, have such authority, and perform such duties
as the Board may from time to time determine. The Board may delegate to any
officer of the Corporation or any committee of the Board the power to appoint,
remove and prescribe the duties of any such assistants, agents or employees.
SECTION 4.04 Removal. Any officer, assistant, agent or employee of the
Corporation may be removed, with or without cause, at any time: (i) in the case
of an officer, assistant, agent or employee appointed by the Board, only by
resolution of the Board; and (ii) in the case of an officer, assistant, agent or
employee, by any officer of the Corporation or committee of the Board upon whom
or which such power of removal may be conferred by the Board.
SECTION 4.05 Resignations. Any officer or assistant may resign at any
time by giving written notice of his resignation to the Board or the Secretary
of the Corporation. Any such resignation shall take effect at the time
specified therein; or, if the time be not specified, upon receipt thereof by the
Board or the Secretary, as the case may be; and, unless otherwise specified
therein, the acceptance of such resignation shall not be necessary to make it
effective.
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SECTION 4.06 Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification, or other cause, may be filled for the
unexpired portion of the term thereof in the manner prescribed in these Bylaws
for regular appointments or elections to such office.
SECTION 4.07 The President. The President of the Corporation shall be the
chief executive officer of the Corporation and shall have, subject to the
control of the Board, general and active supervision and management over the
business of the Corporation and over its several officers, assistants, agents
and employees.
SECTION 4.08 The Vice Presidents. Each Vice President shall have such
powers and perform such duties as the Board may from time to time prescribe. At
the request of the President, or in case of the President's absence or inability
to act upon the request of the Board, a Vice President shall perform the duties
of the President and when so acting, shall have all the powers of, and be
subject to all the restrictions upon, the President.
SECTION 4.09 The Secretary. The Secretary shall, if present, record the
proceedings of all meetings of the Board, of the stockholders, and of all
committees of which a secretary shall not have been appointed in one or more
books provided for that purpose; he shall see that all notices are duly given in
accordance with these Bylaws and as required by law; he shall be custodian of
the seal of the Corporation and shall affix and attest the seal to all documents
to be executed on behalf of the Corporation under its seal; and, in general, he
shall perform all the duties incident to the office of Secretary and such other
duties as may from time to time be assigned to him by the Board.
SECTION 4.10 The Treasurer. The Treasurer shall have the general care and
custody of the funds and securities of the Corporation, and shall deposit all
such funds in the name of the Corporation in such banks, trust companies or
other depositories as shall be selected by the Board. He shall receive, and
give receipts for, moneys due and payable to the Corporation from any source
whatsoever. He shall exercise general supervision over expenditures and
disbursements made by officers, agents and employees of the Corporation and the
preparation of such records and reports in connection therewith as may be
necessary or desirable. He shall, in general, perform all other duties incident
to the office of Treasurer and such other duties as from time to time may be
assigned to him by the Board.
SECTION 4.11 Compensation. The compensation of the officers of the
Corporation shall be fixed from time to time by the Board. None of such
officers shall be prevented from receiving such compensation by reason of the
fact that he is also a director of the Corporation. Nothing contained herein
shall preclude any officer from serving the Corporation, or any subsidiary
corporation, in any other capacity and receiving such compensation by reason of
the fact that he is also a director of the Corporation. Nothing contained
herein shall preclude any officer from serving the Corporation, or any
subsidiary corporation, in any other capacity and receiving proper compensation
therefor.
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ARTICLE V
Contracts, Checks, Drafts, Bank Accounts, Etc.
SECTION 5.01 Execution of Contracts. The Board, except as in these Bylaws
otherwise provided, may authorize any officer or officers, agent or agents, to
enter into any contract or execute any instrument in the name of and on behalf
of the Corporation, and such authority may be general or confined to specific
instances; and unless so authorized by the Board or by these Bylaws, no officer,
agent or employee shall have any power or authority to bind the Corporation by
any contract or engagement or to pledge its credit or to render it liable for
any purpose or in any amount.
SECTION 5.02 Checks, Drafts, Etc. All checks, drafts or other orders for
payment of money, notes or other evidence of indebtedness, issued in the name of
or payable to the Corporation, shall be signed or endorsed by such person or
persons and in such manner as, from time to time, shall be determined by
resolution of the Board. Each such officer, assistant, agent or attorney shall
give such bond, if any, as the Board may require.
SECTION 5.03 Deposits. All funds of the Corporation not otherwise
employed shall be deposited from time to time to the credit of the Corporation
in such banks, trust companies or other depositories as the Board may select, or
as may be selected by any officer or officers, assistant or assistants, agent or
agents, or attorney or attorneys of the Corporation to whom such power shall
have been delegated by the Board. For the purpose of deposit and for the
purpose of collection for the account of the Corporation, the President, any
Vice President or the Treasurer (or any other officer or officers, assistant or
assistants, agent or agents, or attorney or attorneys of the Corporation who
shall from time to time be determined by the Board) may endorse, assign and
deliver checks, drafts and other orders for the payment of money which are
payable to the order of the Corporation.
SECTION 5.04 General and Special Bank Accounts. The Board may from time to
time authorize the opening and keeping of general and special bank accounts with
such banks, trust companies or other depositories as the Board may select or as
may be selected by any officer or officers, assistant or assistants, agent or
agents, or attorney or attorneys of the Corporation to whom such power shall
have been delegated by the Board. The Board may make such special rules and
regulations with respect to such bank accounts, not inconsistent with the
provisions of these Bylaws, as it may deem expedient.
ARTICLE VI
Shares and Their Transfer
SECTION 6.01 Certificates for Stock. Every owner of stock of the
Corporation shall be entitled to have a certificate or certificates, to be in
such form as the Board shall prescribe, certifying the number and class of
shares of the stock of the Corporation owned by him. The certificates
representing shares of such stock shall be numbered in the order in which they
shall be issued and shall be signed in the name of the Corporation by the
President or a Vice President,
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and by the Secretary or an Assistant Secretary or by the Treasurer or an
Assistant Treasurer. Any of or all of the signatures on the certificates may be
a facsimile. In case any officer, transfer agent or registrar who has signed,
or whose facsimile signature has been placed upon, any such certificate, shall
have ceased to be such officer, transfer agent or registrar before such
certificate is issued, such certificate may nevertheless be issued by the
Corporation with the same effect as though the person who signed such
certificate, or whose facsimile signature shall have been placed thereupon, were
such officer, transfer agent or registrar at the date of issue. A record shall
be kept of the respective names of the persons, firms or corporations owning the
stock represented by such certificates, the number and class of shares
represented by such certificates, respectively, and the respective dates
thereof, and in case of cancellation, the respective dates of cancellation.
Every certificate surrendered to the Corporation for exchange or transfer shall
be cancelled, and no new certificate or certificates shall be issued in exchange
for any existing certificate until such existing certificate shall have been so
cancelled, except in cases provided for in Section 6.04.
SECTION 6.02 Transfers of Stock. Transfers of shares of stock of the
Corporation shall be made only on the books of the Corporation by the registered
holder thereof, or by his attorney thereunto authorized by power of attorney
duly executed and filed with the Secretary, or with a transfer clerk or a
transfer agent appointed as provided in Section 6.03, and upon surrender of the
certificate or certificates for such shares properly endorsed and the payment of
all taxes thereon. The person in whose name shares of stock stand on the books
of the Corporation shall be deemed the owner thereof for all purposes as regards
the Corporation. Whenever any transfer of shares shall be made for collateral
security, and not absolutely, such fact shall be so expressed in the entry of
transfer if, when the certificate or certificates shall be presented to the
Corporation for transfer, both the transferor and the transferee request the
Corporation to do so.
SECTION 6.03 Regulations. The Board may make such rules and regulations
as it may deem expedient, not inconsistent with these Bylaws, concerning the
issue, transfer and registration of certificates for shares of the stock of the
Corporation. It may appoint, or authorize any officer or officers to appoint,
one or more transfer clerks or one or more transfer agents and one or more
registrars, and may require all certificates for stock to bear the signature or
signatures of any of them.
SECTION 6.04 Lost, Stolen, Destroyed, and Mutilated Certificates. In any
case of loss, theft, destruction, or mutilation of any certificate of stock,
another may be issued in its place upon proof of such loss, theft, destruction,
or mutilation and upon the giving of a bond of indemnity to the Corporation in
such form and in such sum as the Board may direct; provided, however, that a new
certificate may be issued without requiring any bond when, in the judgment of
the Board, it is proper so to do.
SECTION 6.05 Fixing Date for Determination of Stockholders of Record. In
order that the Corporation may determine the stockholders entitled to notice of
or to vote at any meeting of stockholders or any adjournment thereof, or to
express consent to corporate action in writing without a meeting, or entitled to
receive payment of any dividend or other distribution or allotment of any
rights, or entitled to exercise any rights in respect of any other change,
conversion or exchange of stock or for the purpose of any other lawful action,
the Board may fix,
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in advance, a record date, which shall not be more than 60 nor less than 10 days
before the date of such meeting, nor more than 60 days prior to any other
action. If in any case involving the determination of stockholders for any
purpose other than notice of or voting at a meeting of stockholders or
expressing consent to corporate action without a meeting the Board shall not fix
such a record date, the record date for determining stockholders for such
purpose shall be the close of business on the day on which the Board shall adopt
the resolution relating thereto. A determination of stockholders entitled to
notice of or to vote at a meeting of stockholders shall apply to any adjournment
of such meeting; provided, however, that the Board may fix a new record date for
the adjourned meeting.
ARTICLE VII
Indemnification
SECTION 7.01 Action, Etc. Other Than by or in the Right of the
Corporation. The Corporation shall indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Corporation, and with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, that he had reasonable cause to believe that his conduct was
unlawful.
SECTION 7.02 Actions, Etc., by or in the Right of the Corporation. The
Corporation shall indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action or suit by or in
the right of the Corporation to procure a judgment in its favor by reason of the
fact that he is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation, except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable for negligence or misconduct in the performance of his duty to the
Corporation unless and only to the extent that the Court of Chancery or the
court in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably
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entitled to indemnity for such expenses which the Court of Chancery or such
other court shall deem proper.
SECTION 7.03 Determination of Right of Indemnification. Any
indemnification under Section 7.01 or 7.02 (unless ordered by a court) shall be
made by the Corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer, employee or agent
is proper in the circumstances because he has met the applicable standard of
conduct set forth in Section 7.01 and 7.02. Such determination shall be made
(i) by the Board by a majority vote of a quorum consisting of directors who were
not parties to such action, suit or proceeding, or (ii) if such a quorum is not
obtainable, or, even if obtainable a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or (iii) by the
stockholders.
SECTION 7.04 Indemnification Against Expenses of Successful Party.
Notwithstanding the other provisions of this Article, to the extent that a
director, officer, employee or agent of the Corporation has been successful on
the merits or otherwise in defense of any action, suit or proceeding referred to
in Section 7.01 or 7.02, or in defense of any claim, issue or matter therein, he
shall be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.
SECTION 7.05 Prepaid Expenses. Expenses incurred by an officer or
director in defending a civil or criminal action, suit or proceeding may be paid
by the Corporation in advance of the final disposition of such action, suit or
proceeding as authorized by the Board in the specific case upon receipt of an
undertaking by or on behalf of the director or officer to repay such amount
unless it shall ultimately be determined that he is entitled to be indemnified
by the Corporation as authorized in this Article. Such expenses incurred by
other employees and agents may be so paid upon such terms and conditions, if
any, as the Board deems appropriate.
SECTION 7.06 Other Rights and Remedies. The indemnification provided by
this Article shall not be deemed exclusive of any other rights to which those
seeking indemnification may be entitled under any Bylaws, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
SECTION 7.07 Insurance. Upon resolution passed by the Board, the
Corporation may purchase and maintain insurance on behalf of any person who is
or was a director, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him and incurred by him in any
such capacity, or arising out of his status as such, whether or not the
Corporation would have the power to indemnify him against such liability under
the provisions of this Article.
SECTION 7.08 Constituent Corporations. For the purposes of this Article,
references to "the Corporation" include all constituent corporations absorbed in
a consolidation or merger as
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well as the resulting or surviving corporation, so that any person who is or was
a director, officer, employee or agent of such a constituent corporation or is
or was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise shall stand in the same position under the provisions
of this Article with respect to the resulting or surviving corporation as he
would if he had served the resulting or surviving corporation in the same
capacity.
SECTION 7.09 Other Enterprises, Fines, and Serving at Corporation's
Request. For purposes of this Article, references to "other enterprises" shall
include employee benefit plans; references to "fines" shall include any excise
taxes assessed on a person with respect to any employee benefit plan; and
references to "serving at the request of the Corporation" shall include any
service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee, or
agent with respect to an employee benefit plan, its participants, or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the Corporation" as referred to in this
Article.
ARTICLE VIII
Miscellaneous
SECTION 8.01 Seal. The Board shall provide for a corporate seal, which
shall be in the form of a circle and shall bear the name of the Corporation and
words and figures showing that the Corporation was incorporated in the State of
Delaware and the year of incorporation.
SECTION 8.02 Waiver of Notices. Whenever notice is required to be given
by these Bylaws or the Certificate of Incorporation or by law, the person
entitled to said notice may waive such notice in writing, either before or after
the time stated therein, and such waiver shall be deemed equivalent to notice.
SECTION 8.03 Amendments. These Bylaws, or any of them, may be altered,
amended or repealed, and new Bylaws may be made, (i) by the Board, by vote of a
majority of the number of directors then in office as directors, acting at any
meeting of the Board, or (ii) by the stockholders, at any annual meeting of
stockholders, without previous notice, or at any special meeting of
stockholders, provided that notice of such proposed amendment, modification,
repeal or adoption is given in the notice of special meeting. Any Bylaws made
or altered by the stockholders may be altered or repealed by either the Board or
the stockholders.
12
<PAGE>
EXHIBIT 3.52
FILED
In the Office of the
Secretary of State of Texas
JUN 03 1991
Corporations Section
ARTICLES OF INCORPORATION
OF
SALEM RADIO REPRESENTATIVES, INC.
I, the undersigned natural person of the age of eighteen (18) years or
more, acting as Incorporator of a corporation (hereinafter referred to as the
"Corporation") under the Texas Business Corporation Act (hereinafter referred to
as the "Act"), adopt the following Articles of Incorporation for the
Corporation:
ARTICLE ONE
NAME
----
The name of the Corporation is: Salem Radio Representatives, Inc.
ARTICLE TWO
DURATION
--------
The period of the duration of the Corporation is perpetual.
ARTICLE THREE
PURPOSES AND POWERS
-------------------
Section 1. Purposes. The purposes for which the Corporation is organized
--------- --------
are the transaction of any or all lawful business for which corporations may be
incorporated under the Act.
Section 2. Powers. Subject to any limitations or restrictions imposed by
--------- ------
the Act or other law, or by the Articles of Incorporation, the Corporation shall
have and exercise all of the powers
<PAGE>
specified in the Act or in any other applicable law of Texas, and all powers
necessary or appropriate to effect any or all of the purposes for which the
Corporation is organized.
Section 3. Direction of Purposes and Exercise of Powers by Directors.
--------- ---------------------------------------------------------
Subject to any limitation or restrictions imposed by the Act, by other law, or
by these Articles of Incorporation, the Board of Directors is hereby authorized
to direct, by resolution duly adopted, the purposes set forth in Article Three
of these Articles of Incorporation and to exercise all powers of the
Corporation, without previous authorization or subsequent approval by the
Shareholders; and all parties dealing with the Corporation shall have the right
to rely on any action taken by the Corporation pursuant to such action by the
Board of Directors.
Section 4. Limiting Clause. Nothing in this Article is to be construed as
--------- ---------------
authorizing the Corporation to transact any business in the State of Texas
expressly prohibited by any law of Texas or to engage in any activity in Texas
which cannot lawfully be engaged in without first obtaining a license under the
laws of Texas and such a license cannot be granted to a corporation.
Section 5. Indemnification. The corporation shall indemnify to the
--------- ---------------
fullest extent permitted by law any current or former director of the
corporation and his or her estate who is made, or threatened to be made, a party
to any action, suit or proceeding (whether civil, criminal, administrative or
investigative), including any suit for monetary damages by the corporation or
its shareholders by reason of the fact that he is or was a director of the
corporation.
The protection and indemnification provided hereunder and as further
described in the bylaws of the corporation shall not be deemed exclusive of any
other rights to which such director or former director may be entitled, under
any agreement, insurance policy, vote of shareholders, or otherwise.
-2-
<PAGE>
The Corporation may indemnify any person made a party to any action, suit
or proceeding, whether civil or criminal, administrative or investigative, by
reason of the fact that he or she, his or her testator, or intestate, is or was
an officer or employee of the Corporation, or is or was a director, officer or
employee of any Corporation which he or she served in such capacity at the
request of the Corporation, against the reasonable expenses, including
attorneys' fees, actually and reasonably incurred by him or her in connection
with the defense of the action, suit or proceeding or in connection with any
appeal of it. This right of indemnification shall be more fully delineated in
the Bylaws of the Corporation. The right to indemnification conferred by this
Article shall not restrict the power of the Corporation to make any other type
of indemnification permitted by law.
Section 6. Liability of Directors. A director of the corporation shall
--------- ----------------------
not be personally liable to the corporation or its shareholders for monetary
damages for an act or omission in the Director's capacity as a director, except
for liability for (i) any breach of the director's duty of loyalty to the
corporation or its shareholders; (ii) an act or omission not in good faith that
constitutes a breach of duty of the Director to the corporation or an act or
omission that involves intentional misconduct or a knowing violation of law;
(iii) a transaction from which the director received an improper benefit; (iv)
an act or omission for which the liability of a director is expressly provided
by statute; or (v) an unlawful dividend or stock repurchase.
If the applicable Texas laws are amended after the date hereof to authorize
action by corporations to further eliminate or limit personal liability of
directors, then liability of a director of the corporation shall be eliminated
or limited to the fullest extent permitted by the laws of the State of Texas, as
amended.
-3-
<PAGE>
Section 7. Insurance. The Corporation shall have power to purchase and
---------- ---------
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the Corporation, or who is or was serving at the request of
the Corporation as a director, officer, partner, venturer, proprietor, trustee,
employee, agent, or similar functionary of another foreign or domestic
corporation, partnership, joint venture, sole proprietorship, trust, employee
benefit plan, or other enterprise, against any liability asserted against him
and incurred by him in any such capacity or arising out of his status as such a
person whether or not the Corporation would have the power to indemnify him
against such liability by statute.
ARTICLE FOUR
CAPITAL STOCK
-------------
Section 1. Authorized Shares. The aggregate number of shares which the
--------- -----------------
Corporation shall have authority to issue is Five Hundred Thousand (500,000)
shares of Common Stock of the par value of ten cents ($.10) each.
Section 2. Non-cumulative Voting. Directors shall be elected by majority
--------- ---------------------
vote. Cumulative voting shall not be permitted.
ARTICLE FIVE
INITIAL CONSIDERATION FOR ISSUANCE OF SHARES
--------------------------------------------
The Corporation will not commence business until it has received for the
issuance of shares consideration of One Thousand Dollars ($1,000.00), consisting
of money, labor done or property actually received.
-4-
<PAGE>
ARTICLE SIX
INITIAL REGISTERED OFFICE AND AGENT
-----------------------------------
Section 1. Registered Office. The post office address of the initial
--------- -----------------
registered office of the Corporation is: 4600 First Interstate Bank Tower, 1445
Ross Avenue, Dallas, Texas 75202.
Section 2. Registered Agent. The name of the initial registered agent of
--------- ----------------
the Corporation, at such address is: John K. Rothpletz.
ARTICLE SEVEN
DATA RESPECTING DIRECTORS
-------------------------
Section 1. Board of Directors. The number of Directors shall from time to
--------- ------------------
time be fixed by the Bylaws of the Corporation.
Section 2. Names and Addresses. The number of Directors constituting the
--------- -------------------
initial Board of Directors is two (2) and the names and addresses of the persons
who are to serve as Directors until the first annual meeting of the
shareholders, or until their successors are elected and qualified, are:
Edward G. Atsinger, III
2310 Ponderosa Drive
Suite 29
Camarillo, CA 93010
Stuart W. Epperson
3780 Will Scarlet Road
Winston Salem, NC 27104
Section 3. Increase or Decrease of Directors. The number of directors may
--------- ---------------------------------
be increased or decreased from time to time by amendment to the Bylaws; but no
decrease shall have the effect of shortening the term of any incumbent director.
In the absence of a Bylaw fixing the number of directors, the number shall be
not less than one (1).
-5-
<PAGE>
ARTICLE EIGHT
ACTIONS WITHOUT A MEETING
-------------------------
Any action required by the Act to be taken at any annual or special meeting
of shareholders, or any action which may be taken at any annual or special
meeting of shareholders, may be taken without a meeting, without prior notice,
and without a vote, if a consent or consents in writing, setting forth the
action so taken, shall be signed by the holder or holders of shares having not
less than the minimum number of votes that would be necessary to take such
action at a meeting at which the holders of all shares entitled to vote on the
action were present and voted.
Prompt notice of the taking of any action by shareholders without a meeting
by less than unanimous written consent shall be given to those shareholders who
did not consent in writing to the action.
ARTICLE NINE
BYLAWS
------
Except to the extent such power may be modified or divested by action of
the shareholders representing a majority of the issued and outstanding shares of
the Common Stock of the Corporation taken at a regular or special meeting of the
shareholders, the power to adopt, alter, amend or repeal the Bylaws of the
Corporation shall be vested in the Board of Directors.
-6-
<PAGE>
ARTICLE TEN
DATA RESPECTING INCORPORATORS
-----------------------------
The name and address of the incorporator is:
John K. Rothpletz
4600 First Interstate Bank Tower
1445 Ross Avenue
Dallas, TX 75202
These Articles of Incorporation are executed this 31st day of May, 1991.
---- ---
/s/ John K. Rothpletz
---------------------
JOHN K. ROTHPLETZ
-7-
<PAGE>
EXHIBIT 3.53
BYLAWS
OF
SALEM RADIO REPRESENTATIVES, INC.
ARTICLE ONE
-----------
REGISTERED OFFICE
The registered office of the corporation is located at 600 East Las Colinas
Blvd., Ste. 560, Irving, TX 75039 and the name of the registered agent of the
corporation at such address is Paul Martin .
------------------------------
ARTICLE TWO
-----------
SHAREHOLDERS' MEETINGS
PLACE OF MEETINGS
All meetings of the shareholders shall be held at the registered office of
the corporation, or any other place, within or outside this State, as may be
designated for that purpose from time to time by the Board of Directors.
Time of Annual Meeting
The annual meeting of the shareholders shall be held each year at 10:00
A.M. on the last Monday of May. If this day falls on a legal holiday, the
annual meeting shall be held at the same time on the next following business day
thereafter.
Notice of Meeting
Notice of meeting, stating the place, day and hour of the meeting, and, in
case of a special meeting, the purpose or purposes for which the meeting is
called, shall be given in writing to each shareholder entitled to vote at the
meeting at least ten (10) but not more than fifty (50) days before the date of
the meeting either personally or by mail or other means of written
communication, addressed to the shareholder at his address appearing on the
books of the corporation or given by him to the corporation for the purpose of
notice. Notice of adjourned meetings is not necessary unless the meeting is
adjourned for thirty (30) days or more, in which case notice of the adjourned
meeting shall be given as in the case of any special meeting.
Special Meetings
Special meetings of the shareholders for any purposes or purposes
whatsoever may be called at any time by the President, or by the Board of
Directors, or by any two (2) or more
<PAGE>
Directors, or by one or more shareholder holding not less than one-tenth (1/10)
of all the shares entitled to vote at said meeting.
Quorum
A majority of the voting shares constitutes a quorum for the transaction of
business. Business may be continued after withdrawal of enough shareholders to
leave less than a quorum.
Voting
Only persons whose names appear on the stock records of the corporation on
the date on which notice of the meeting is mailed shall be entitled to vote at
such meeting, unless some other date is fixed by the Board of Directors for the
determination of shareholders of record. Each shareholder is entitled to a
number of votes equal to the number of Directors to be elected, multiplied by
the number of shares which he is entitled to vote. Voting for the election of
Directors shall be by voice unless any shareholder demands a ballot vote before
the voting begins.
Proxies
Every person entitled to vote may do so either in person or by written
proxy executed in writing by the shareholder or his duly authorized attorney in
fact.
Consent of Absentees
No defect in the calling or notice of a shareholders' meeting will affect
the validity of any action at the meeting if a quorum was present at the same,
and if each shareholder not present in person or by proxy signs a written waiver
of notice, a consent to the holding of the meeting, or approval of the minutes,
either before or after the meeting, and such waivers, consents or approvals are
filed with the corporate records or made a part of the minutes of the meeting.
Action Without Meeting
Action may be taken by the shareholders without a meeting as set forth
above if each shareholder entitled to vote signs a written consent to the action
and such unanimous consents are filed with the Secretary of the corporation.
ARTICLE THREE
-------------
DIRECTORS
Powers
The Directors shall act only as a board and an individual Director shall
have no power as such. All powers of the corporation shall be exercised by, or
under the authority of, and the business and affairs of the corporation shall be
controlled by the Board of Directors, subject, however, to such limitations as
are imposed by law, the articles of incorporation, or these Bylaws, as to
actions to be authorized or approved by the shareholders. The Board of Directors
may, by
2
<PAGE>
contract or otherwise, given general or limited or special power and
authority to officers and employees of the corporation to transaction the
general business, or any special business of the corporation, and may give
powers of attorney to agents of the corporation to transact any special business
requiring such authorization.
Number and Qualifications of Directors
The authorized number of Directors of this corporation shall be two (2).
The Directors need not be shareholders of this corporation or residents of Texas
or citizens of the United States. The number of Directors may be increased or
decreased from time to time by amendment of these Bylaws but no decrease shall
have the effect of shortening the term of any incumbent Director. Any
directorship to be filled by reason of an increase in the number of Directors
shall be filled by election at an annual meeting or at a special meeting of the
shareholders called for that purpose.
Election and Term of Office
The Directors shall be elected by cumulative voting of the shareholders
entitled to vote, and shall hold office for a term of three years or until their
respective successors are elected, or until their death, resignation or removal.
Vacancies
Vacancies on the Board of Directors may be filled by a majority of the
remaining Directors, though less than a quorum, or by the sole remaining
Director. The shareholders may by unanimous action without a meeting or at a
meeting held pursuant to these Bylaws elect a Director at any time to fill a
vacancy not otherwise filled by the Directors.
Removal of Directors
The entire Board of Directors or any individual Director may be removed
from office with or without cause by majority vote of the holders of the shares
entitled to vote for directors at any regular or special meeting of such
shareholders.
Place of Meetings
Meetings of the Board of Directors shall be held at the principal office of
the corporation or at such place, within or outside the State, as may be
designated from time to time by resolution of the Board or by written consent of
all of the members of the Board.
Regular Meetings
Regular meetings of the Board of Directors shall be held without call or
notice, immediately following each annual meeting of the shareholders of this
corporation; and at such other times as the Directors may determine.
Special Meetings -- Call and Notice
3
<PAGE>
Special meetings of the Board of Directors for any purpose shall be called
at any time by the President or, if he is absent or unable or refused to act, by
a Vice President or any two Directors. Written notice of said special meetings,
stating the time, and in general terms the purpose or purposes thereof, shall be
mailed or telegraphed or personally delivered to each Director not later than
the day before the day appointed for the meeting.
Quorum
Two-thirds (2/3) of the authorized number of Directors shall be necessary
to constitute a quorum for the transaction of any business, except to adjourn as
hereinafter provided. Every act or decision done or made by a majority of the
Directors present shall be regarded as the act of the Board of Directors, unless
a greater number be required by law or by the Articles of Incorporation.
Board Action Without Meeting
Any action required or permitted to be taken by the Board of Directors may
be taken with a meeting, and with the same force and effect as a unanimous vote
of Directors, if all members of the Board shall individually or collectively
consent verbally or in writing to such action.
Compensation
Directors and members of committees appointed by the Board of Directors may
receive such compensation, if any, for their services, and such reimbursement
for expenses, as may be fixed or determined by resolution of the Board.
Indemnification of Directors,
Officers and Employees
The Board of Directors is authorized to pay expenses incurred by, or to
satisfy a judgment or fine rendered or levied against present or former
Directors, officers, or employees of this corporation as provided by Article
2.02(a)(16) of the Texas Business Corporation Act.
ARTICLE FOUR
------------
OFFICERS
The officers of the corporation shall consist of a president, vice-
president, secretary and a treasurer. The corporation may also have, at the
discretion of the Board of Directors, a chairman of the board, one or more
additional vice-presidents, one or more assistant secretaries, one or more
assistant treasurers and such other officers as may be appointed in accordance
with the provisions of Section 3 of this Article. One person may hold two or
more offices, except those of president and secretary.
4
<PAGE>
Election
The officers of the corporation, except those officers who may be appointed
in accordance with the provisions of this Article, shall be chosen annually by
the Board of Directors, and each shall hold his office until he shall resign or
shall be removed or otherwise disqualified to serve, or his successor shall be
elected and qualified.
Subordinate Officers
The Board of Directors may appoint such other officers as the business of
the corporation may require, each of whom shall hold office for such period,
have such authority and perform such duties as are provided in the bylaws or as
the Board of Directors may from time to time determine.
Removal and Resignation
Any officer may be removed with or without cause, by the Board of Directors
at any regular or special meeting, or, except in case of an officer chosen by
the Board of Directors, by any officer upon whom such power of removal may be
conferred by the Board of Directors.
Any officer may resign at at time by giving written notice to the Board of
Directors, or to the president or to the secretary of the corporation. Any such
resignation shall take effect at the date of this notice or at any later
specified time; and, unless otherwise specified, the acceptance of this
resignation shall not be necessary to make it effective.
Vacancies
A vacancy in any office because of death, resignation, removal,
disqualification, or because of any other cause shall be filled in the manner
prescribed in the bylaws for regular appointments to said office.
Chairman of the Board
The chairman of the board, if there shall be such an officer, shall, if
present, preside at all meetings of the Board of Directors and exercise and
perform such other powers and duties as may be from time to time assigned to him
by the Board of Directors or prescribed by the bylaws. If there is no president
of the corporation due to death, removal or resignation, then the chairman of
the board shall in addition be the chief executive officer of the corporation
and shall have the powers and duties prescribed in Section 7 of this Article IV.
President
Subject to such supervisory powers, if any, as may be given by the Board of
Directors to the chairman of the board, if there be such an officer, the present
shall be the chief executive officer of the corporation and shall, subject to
the control of the Board of Directors, have general supervision, direction and
control of the business and officers of the corporation. He shall preside at
all meetings of the shareholders and, in the absence of the chairman of the
board, at all meetings
5
<PAGE>
of the Board of Directors. He shall be ex officio a member of all the standing
committees, if any, and shall have the general powers and duties of corporate
management usually vested in the office of president of a corporation and shall
have such other powers and duties as may be prescribed by the Board of Directors
or the bylaws.
Vice-President
In the absence or disability of the president, the vice-president shall
perform all of the duties of the president, and when so acting shall have all
the powers of, and be subject to, all the restrictions upon, the president. The
vice-president shall have such other powers and perform such other duties as
from time to time may be prescribed by the Board of Directors or by the bylaws.
Secretary
The secretary shall keep, or cause to be kept, a book of minutes at the
principal office or such other place as the Board of Directors may order, of all
meetings of directors and shareholders, with the time and place of holding,
whether regular or special and, if special, how authorized, the notice thereof
given, the names of those present at directors' meetings, the number of shares
present or represented at shareholders' meetings and the proceedings thereof.
The secretary shall keep, or cause to be kept, at the principal office or
at the office of the corporation's transfer agent, a share register, or
duplicate share register, showing the names of the shareholders and their
addresses; the number of classes of shares held by each; the number and date of
cancellation of every certificate surrendered for cancellation.
The secretary shall give or cause to be given, notice of all the meetings
of the shareholders and of the Board of Directors required by the bylaws or by
law to be given, and he shall keep the seal of the corporation in safe custody
and shall have such other powers and perform such other duties as may be
prescribed by the Board of Directors or by the bylaws.
Treasurer
The treasurer shall keep and maintain or cause to be kept and maintained,
adequate and correct accounts of the properties and business transactions of the
corporation, including accounts of its assets, liabilities, receipts,
disbursements, gains, losses, capital, surplus and shares. Any surplus,
including earned surplus, paid-in surplus and surplus arising from a reduction
of stated capital shall be classified according to source and shown in a
separate account. The books of account shall at all reasonable times be open to
inspection by any director.
The treasurer shall deposit all moneys and other valuables in the name and
to the credit of the corporation with such depositaries as may be designated by
the Board of Directors. He shall disburse the funds of the corporation as may
be ordered by the Board of Directors, shall render to the the president and
directors, whenever they request it, an account of all of his transactions as
treasurer and of the financial condition of the corporation and shall have such
other powers and perform such other duties as may be prescribed by the Board of
Directors or the bylaws.
6
<PAGE>
Salaries
The salaries of the officers and other shareholders employed by the
corporation shall be fixed from time to time by the Board of Directors or
established under agreements with officers or shareholders and approved by the
Board of Directors, and no officer shall be prevented from receiving such salary
by reason of the fact that he is also a director of the corporation.
ARTICLE FIVE
------------
EXECUTION OF INSTRUMENTS
The Board of Directors may, in its discretion, determine the method and
designate the signatory officer or officers, or other person or persons, to
execute any corporate instrument or document, or to sign the corporate name,
without limitation, except where otherwise provided by law, and such execution
or signature shall be binding upon the corporation.
ARTICLE SIX
-----------
ISSUANCE AND TRANSFER OF SHARES
Certificates for Paid and Unpaid Shares
Certificates for shares of the corporation shall be issued only when fully
paid.
Share Certificates
The corporation shall deliver certificates representing all shares to which
shareholders are entitled, which certificates shall be in such form and device
as the Board of Directors may provide. Each certificate shall bear upon its
face the statement that the corporation is organized in the State of Texas, and
the name of the shareholder to whom it is issued, the number and class of
shares, and a statement regarding any restrictions on the transferability of
said shares. The certificate shall be signed by the President or a Vice
President and the Secretary of the corporation, which signatures may be in
facsimile if the certificates are to be countersigned by a transfer agent or
registered by a registrar, and the seal of the corporation shall be affixed
thereto. The certificates shall contain on the faces or backs such recitations
or references as are required by law.
Replacement of Certificates
No new certificates shall be issued until the former certificate of the
shares represented thereby shall have been surrendered to the Secretary of the
corporation and cancelled by the same, except in the case of lost or destroyed
certificates for which the Board of Directors may order new certificates to be
issued upon such terms, conditions, and guarantees as the Board may see fit to
impose, including the filing of sufficient indemnity.
7
<PAGE>
Transfer of Shares
Any shareholder may transfer or assign, for consideration or otherwise, any
of the shares of the corporation in which he may hold any ownership interest,
provided that said shareholder shall first give sixty (60) days written notice
of said transfer to all other shareholders of the corporation; and further
provided that upon tender of said notice, that any shareholder or combination of
shareholders shall have a right of refusal to purchase said shares, in whole or
in part, at a price equal to the agreed price between the shareholder and the
good-faith third party purchaser.
Shares of the corporation may be transferred by endorsement by the
signature of the owner, his agent, attorney, or legal representative, and the
delivery of the certificate. The transferee in any transfer of shares shall be
deemed to have full notice of, and to consent to, the bylaws of the corporation
to the same extent as if he had signed a written assent thereto.
ARTICLE SEVEN
-------------
RECORDS AND REPORTS
Inspection of Books and Records
The corporation shall keep at its principal executive office, or at the
office of its transfer agent or registrar, as determined by resolution of the
Board of Directors, a record of its shareholders giving the names and addresses
of all shareholders and the number and class of shares held by each shareholder.
A shareholder or shareholders of the corporation holding at least five
percent (5%) in the aggregate of the outstanding vote shares of the corporation
may (a) inspect and copy the records of the shareholders' names and addresses
and shareholdings during usual business hours on five day's prior written demand
on the corporation and (b) obtain on written demand a list of the shareholders'
names and addresses who are entitled to vote for the election of directors and
their shareholdings, as of the most recent record date for which this list has
been compiled as of a date specified by the shareholder after the date of
demand. This list shall be made available to any such shareholder on or before
the later of five (5) days after the demand is received. The record of
shareholders shall also be open to inspection on the written demand of any
shareholders at any time during usual business hours, for a purpose reasonably
related to the holder's interest as a shareholder or as a holder of a voting
trust certificate. Any inspection and copying under this Section 1 may be made
in person or by an agent or attorney of the shareholder or holder of a voting
trust certificate making the demand.
8
<PAGE>
Maintenance and Inspection of Bylaws
The corporation shall keep at its principal business office the original or
a copy of the bylaws as amended to date, which shall be open to inspection by
the shareholders at all reasonable times during office hours.
Maintenance and Inspection of Other Corporate Records
The accounting books and records and minutes of proceedings of the
shareholders and the Board of Directors and any committee or committees of the
Board of Directors shall be kept at such place or places designated, at the
principal business office of the corporation. The minutes shall be kept either
in written form or in any other form capable of being converted into written
form. The minutes and accounting books and records shall be open to inspection
upon the written demand of any shareholder at any reasonable time during usual
business hours, for a purpose reasonably related to the holder's interests as a
shareholder or as a holder of a voting trust certificate. The inspection may be
made in person or by an agent or attorney, and shall include the right to copy
and make extracts. These rights of inspection shall extend to the records of
each subsidiary corporation of the corporation.
Inspection By Directors
Every director shall have the absolute right at any reasonable time to
inspect all books, records and documents of every kind and the physical
properties of the corporation at each of its subsidiary corporations. This
inspection by a director may be made in person or by an agent or attorney and
the right of inspection includes the right to copy and make extracts of
documents.
Annual Report to Shareholders
The annual report to shareholders is expressly dispensed with, but nothing
herein shall be interpreted as prohibiting the Board of Directors from issuing
annual or other periodic reports to the shareholders of the corporation as they
consider appropriate.
Closing Stock Transfer Books
The Board of Directors may close the transfer books in their decision for a
period not exceeding fifty (50) days preceding any meeting, annual or special,
of the shareholders, or the day appointed for the payment of a dividend.
ARTICLE EIGHT
-------------
AMENDMENT OF BYLAWS
The power to alter, amend, or repeal these bylaws is vested in the
Directors and may be accomplished by majority vote, subject to repeal or change
by action of the shareholders.
9
<PAGE>
EXHIBIT 3.54
FILED
In the Office of the
Secretary of State of Texas
SEP 28 1994
Corporations Section
ARTICLES OF INCORPORATION
OF
SOUTH TEXAS BROADCASTING, INC.
The undersigned, a natural person of the age of eighteen years or more,
acting as incorporator of a corporation under the Texas Business Corporation
Act, hereby adopts the following Articles of Incorporation for South Texas
Broadcasting, Inc. (the "Corporation"):
ARTICLE ONE
The name of this Corporation is South Texas Broadcasting, Inc.
ARTICLE TWO
The period of the Corporation's duration is perpetual.
ARTICLE THREE
The purpose for which the Corporation is organized is the transaction of
any and all lawful business for which corporations may be incorporated under the
Texas Business Corporation Act.
ARTICLE FOUR
The aggregate number of shares which the Corporation shall have authority
to issue is one thousand (1,000) shares of Common Stock of the par value of
$0.01 per share.
ARTICLE FIVE
The Corporation will not commence business until it has received for the
issuance of its shares consideration of the value of at least One Thousand
Dollars ($1,000), consisting of money, labor done, or property actually
received.
ARTICLE SIX
The name and address of the incorporator of the Corporation is:
<PAGE>
Name Address
- ---- -------
Eric H. Halvorson 4880 Santa Rosa Road
Suite 300
Camarillo, CA 93012
ARTICLE SEVEN
No shareholder of the Corporation shall, by reason of such shareholder
holding shares of any class, have any preemptive or preferential right to
purchase or subscribe for any shares of any class of the Corporation, now or
hereafter to be authorized, or any notes, debentures, bonds, or other securities
convertible into or carrying options or warrants to purchase shares of any
class, now or hereafter to be authorized, whether or not the issuance or sale of
any such shares, or such notes, debentures, bonds, or other securities, would
adversely affect the dividend or voting rights of such shareholder of the
Corporation, other than such rights, if any, as the board of directors, in its
discretion, may grant to the shareholders to purchase such additional, unissued,
or treasury securities; and the Corporation may issue or sell additional
unissued or treasury shares of any class of the Corporation, or any notes,
debentures, bonds, or other securities convertible into or carrying options or
warrants to purchase shares of any class, without offering the same in whole or
in part to the existing shareholders of any class.
ARTICLE EIGHT
At each election for directors of the Corporation, every shareholder
entitled to vote at such election shall have the right to vote, in person or by
proxy, the number of shares owned by such shareholder for as many persons as
there are directors to be elected and for whose election he has a right to vote,
or to cumulate his votes by giving one candidate as many votes as the number of
such directors multiplied by his shares shall equal, or by distributing such
votes on the same principle.
ARTICLE NINE
The street address of the registered office of the Corporation is 545 E.
John Carpenter Freeway, Suite 450, Irving, Texas 75062, and the name of its
registered agent is Greg Anderson.
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ARTICLE TEN
The number of directors constituting the initial Board of Directors is 2
and the names and addresses of the persons who are to serve as the initial
Directors until the first annual meeting of shareholders or until their
successors are elected and qualified are:
NAMES ADDRESSES
- ----- ---------
Edward G. Atsinger, III 4880 Santa Rosa Road
Suite 300
Camarillo, CA 93012
Stuart W. Epperson 3780 Will Scarlet Road
Winston-Salem, NC 27104
ARTICLE ELEVEN
No director of the Corporation shall be liable to the Corporation or its
shareholders for monetary damages for any act or omission in such director's
capacity as director, except to the extent such director is found liable for (i)
a breach of such director's duty of loyalty to the Corporation or its
shareholders; (ii) an act or omission not in good faith that constitutes a
breach of duty of such director to the Corporation or an act or omission that
involves intentional misconduct or a knowing violation of the law; (iii) a
transaction from which such director received an improper benefit, whether or
not the benefit resulted from an action taken within the scope of such
director's office; or (iv) an act or omission for which the liability of a
director is expressly provided by an applicable statute. No repeal or
modification of this ARTICLE NINE shall adversely affect any right or protection
of a director of the Corporation existing by virtue of this ARTICLE NINE at the
time of such repeal or modification.
IN WITNESS WHEREOF, I have hereunto set my hand, this 23rd day of
September, 1994.
Eric Halvorson
--------------
Incorporator
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EXHIBIT 3.55
BYLAWS
OF
SOUTH TEXAS BROADCASTING, INC.
ARTICLE I
OFFICES
1.01. The registered agent and office of South Texas Broadcasting, Inc.
(the "Corporation") shall be such registered agent and office as shall from time
to tine be established pursuant to the articles of incorporation, as amended
from time to time, of the Corporation (the "Charter") or by resolution of the
Board of Directors of the Corporation (the "Board").
1.02. The Corporation may also have offices at such other places both
within and without the State of Texas as the Board may from time to time
determine or the business of the Corporation may require.
ARTICLE II
MEETINGS OF SHAREHOLDERS
2.01. Meetings of Shareholders of the Corporation (the "Shareholders") for
any purpose may be held at such place, within or without the State of Texas, as
shall be fixed from time to time by the Board, or, if the Board has not so
specified, then at such place as may be fixed by the person or persons calling
the meeting.
2.02. An annual meeting of the Shareholders, commencing with the year
1994, shall be held at such date and time as shall be fixed from time to time by
the Board, at which they shall elect a Board, and transact such other business
as may properly be brought before the meeting.
2.03. At least ten days before each meeting of Shareholders, a complete
list of the Shareholders entitled to vote at said meeting arranged in
alphabetical order, with the residence of each and the number of voting shares
held by each, shall be prepared by the officer or agent having charge of the
stock transfer books. Such list, for a period of ten days prior to such
meeting, shall be kept on file at the registered office of the Corporation and
shall be subject to inspection by any Shareholder at any time during usual
business hours. Such list shall be produced and kept open at the time and place
of the meeting during the whole time thereof, and shall be subject to the
inspection of any Shareholder who may be present.
2.04. Special meetings of the Shareholders, for any purpose or purposes,
unless otherwise prescribed by statute, the Charter, or these bylaws, may be
called by the President, a majority of the Board, or the holders of not less
than ten percent of all the shares entitled to vote
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at the meetings. Business transacted at all special meetings shall be confined
to the objects stated in the notice of the meeting.
2.05. Written or printed notice stating the place, day, and hour of the
meeting and, in case of a special meeting, the purpose or purposes for which the
meeting is called, shall be delivered not less than ten nor more than sixty days
before the date of the meeting, either personally or by mail, by or at the
direction of the President, the Secretary, or the officer or person calling the
meeting, to each Shareholder of record entitled to vote at the meeting.
2.06. The holders of a majority of the shares of the Corporation issued
and outstanding and entitled to vote thereat, present in person or represented
by proxy, shall be requisite and shall constitute a quorum at all meetings of
the Shareholders for the transaction of business except as otherwise provided by
statute, the Charter, or these bylaws. If, however, such quorum shall not be
present or represented at any meeting of the Shareholders, the Shareholders
entitled to vote thereat, present in person or represented by proxy, shall
nevertheless have power to adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum shall be present or
represented. At an adjourned session at which a quorum shall be present or
represented, any business may be transacted which might have been transacted at
the meeting as originally notified.
2.07. When a quorum is present at any meeting, the vote of the holders of
a majority of the shares of the Corporation having voting power present in
person or represented by proxy shall decide any question brought before such
meeting, unless the question is one upon which, by express provision of any
applicable statute, the Charter, or these bylaws, a different vote is required,
in which case such express provision shall govern and control the decision of
such question. The Shareholders present at a duly organized meeting may
continue to transact business until adjournment, notwithstanding the withdrawal
of enough Shareholders to leave less than a quorum.
2.08. Each outstanding share of the Corporation, regardless of class,
shall be entitled to one vote on each matter submitted to a vote at a meeting of
Shareholders, unless otherwise provided by statute or the Charter. At any
meeting of the Shareholders, every Shareholder having the right to vote shall be
entitled to vote in person or by proxy appointed by an instrument in writing
subscribed by such Shareholder or by his or her duly authorized attorney-in-
fact, such writing bearing a date not more than eleven months prior to said
meeting, unless said instrument provides for a longer period. Such proxy shall
be filed with the Secretary of the Corporation prior to or at the time of the
meeting. Voting need not be by written ballot unless required by the Charter or
by vote of the Shareholders present at the meeting.
2.09. The Board may fix in advance a record date for the purpose of
determining Shareholders entitled to notice of or to vote at a meeting of
Shareholders, such record date to be not less than ten nor more than sixty days
prior to such meeting, or the Board may close the stock transfer books for such
purpose for a period of not less than ten nor more than sixty days prior to such
meeting. In the absence of any action by the Board, the date upon which the
notice of the meeting is mailed shall be the record date.
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2.10. Any action required by statute to be taken at a meeting of the
Shareholders, or any action which may be taken at a meeting of the Shareholders,
may be taken without a meeting if a consent in writing, setting forth the action
so taken, shall be signed by all of the Shareholders entitled to vote with
respect to the subject matter thereof, and such consent shall have the same
force and effect as a unanimous vote of Shareholders.
2.11. Subject to the provisions required or permitted by statute or the
Charter for notice of meetings, Shareholders may participate in and hold a
meeting by means of conference telephone or similar communications equipment by
means of which all persons participating in the meeting can hear each other, and
participation in a meeting pursuant to this section shall constitute presence in
person at such meeting, except where a person participates in the meeting for
the express purpose of objecting to the transaction of any business on the
ground that the meeting is not lawfully called or convened.
ARTICLE III
DIRECTORS
3.01. The business and affairs of the Corporation shall be managed by the
Board who may exercise all such powers of the Corporation and do all such lawful
acts and things as are not by statute or by the Charter or by these bylaws
directed or required to be exercised or done by the Shareholders
3.02. The initial Board shall be as stated in the Charter. Thereafter,
the number of directors which shall constitute the full Board shall be not
greater than three (3) nor less than two (2) or as determined from time to time
by resolution of the Board or by the Shareholders at the annual meeting or a
special meeting called for that purpose, but no decrease shall have the effect
of shortening the term of an incumbent director. Directors need not be
Shareholders or residents of the State of Texas. The directors shall be elected
at the annual meeting of the Shareholders, except as hereinafter provided, and
each director elected shall hold office until his or her successor shall be
elected and shall qualify.
3.03. At any meeting of Shareholders called expressly for such purpose,
any director or the entire Board may be removed, with or without cause, by vote
of the holders of a majority of the shares of the Corporation then entitled to
vote at an election of directors. If any vacancies occur in the Board caused by
death, resignation, retirement, disqualification, or removal from office of any
director or otherwise, a majority of the directors then in office, though less
than a quorum, may choose a successor or successors or a successor or successors
may be chosen at a special meeting of Shareholders called for that purpose; and
each successor director so chosen shall be elected for the unexpired term of his
or her predecessor in office. Any directorship to be filled by reason of an
increase in the number of directors may be filled by election at an annual
meeting or special meeting of Shareholders called for that purpose or may be
filled by the Board for a term of office continuing only until the next election
of one or more directors by the Shareholders.
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3.04. Whenever the holders of any class or series of shares of the
Corporation are entitled to elect one or more directors by the provisions of the
Charter, any vacancies in such directorships and any newly created directorships
of such class or series to be filled by reason of an increase in the number of
such directors may be filled by the affirmative vote of a majority of the
directors elected by such class or series then in office or by a sole remaining
director so elected, or by the vote of the holders of the outstanding shares of
such class or series, and such directorships shall not in any case be filled by
the vote of the remaining directors or the holders of the outstanding shares as
a whole unless otherwise provided in the Charter.
3.05. At each election for directors, every Shareholder entitled to vote
at such election shall have the right to vote, in person or by proxy, the number
of shares owned by such Shareholder for as many persons as there are directors
to be elected and for whose election he has a right to vote, or to cumulate his
votes by giving one candidate as many votes as the number of such directors
multiplied by his shares shall equal, or by distributing such votes on the same
principle.
Executive and Other Committees
3.06. The Board, by resolution adopted by a majority of the Board, may
designate from among its members an executive committee and one or more other
committees, each of which shall be comprised of one or more members and, to the
extent provided in such resolution, shall have and may exercise all of the
authority of the Board, including the authority to declare dividends and to
authorize the issuance of shares of the Corporation, to the extent permitted by
law. Committees shall keep regular minutes of their proceedings and report the
same to the Board when required.
Meetings of Directors
3.07. The directors of the Corporation may hold their meetings, both
regular and special, either within or without the State of Texas.
3.08. The first meeting of each newly elected Board shall be held without
further notice immediately following the annual meeting of Shareholders, and at
the same place, unless by unanimous consent of the directors then elected and
serving such time or place shall be changed.
3.09. Regular meetings of the Board may be held without notice at such
time and place as shall from time to time be determined by the Board.
3.10. Special meetings of the Board may be called by the President on two
days' notice to each director, either personally or by mail, telecopy, or
overnight courier; special meetings shall be called by the President or
Secretary in like manner and on like notice on the written request of a majority
of the directors. Except as may be otherwise expressly provided by statute, the
Charter, or these bylaws, neither the business to be transacted at, nor the
purpose of, any special meeting needs to be specified in a notice or waiver of
notice.
3.11. At all meetings of the Board the presence of a majority of the full
Board shall be necessary and sufficient to constitute a quorum for the
transaction of business and the act of a
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majority of the directors present at any meeting at which there is a quorum
shall be the act of the Board, except as may be otherwise specifically provided
by statute or by the Charter or by these bylaws. If a quorum shall not be
present at any meeting of directors, the directors present thereat may adjourn
the meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present.
3.12. Any action required or permitted to be taken at a meeting of the
Board or any committee may be taken without a meeting if a consent in writing,
setting forth the action so taken, is signed by all the members of the Board or
committee, as the case may be. Such consent shall have the same force and
effect as a unanimous vote at a meeting.
3.13. Subject to the provisions required or permitted by statute or the
Charter for notice of meetings, members of the Board, or members of any
committee designated by the Board, may participate in and hold a meeting of the
Board or such committee by means of a conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting pursuant to this
section shall constitute presence in person at such meeting, except where a
person participates in the meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
Compensation of Directors
3.14. Directors, as such, shall not receive any stated salary for their
services, but, by resolution of the Board, a fixed sum and expenses of
attendance, if any, may be allowed for attendance at each regular or special
meeting of the Board; provided that nothing herein contained shall be construed
to preclude any director from serving the Corporation in any other capacity and
receiving compensation there for
ARTICLE IV
NOTICES
4.01. Whenever under the provisions of any applicable statute, the Charter
or these bylaws, notice is required to be given to any director or Shareholder,
and no provision is made as to how such notice shall be given, it shall not be
construed to mean personal notice, but any such notice may be given by mail,
postage prepaid, addressed to such director or Shareholder at such address as
appears on the books of the Corporation. Any notice required or permitted to be
given by mail shall be deemed to be given at the time when the same shall be
thus deposited in the United States mails as aforesaid.
4.02. Whenever any notice is required to be given to any Shareholder or
director of the Corporation under the provisions of any applicable statute, the
Charter or these bylaws, a waiver thereof in writing signed by the person or
persons entitled to such notice, whether before or after the time stated in such
notice, shall be deemed equivalent to the giving of such notice.
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ARTICLE V
OFFICERS
5.01. The officers of the Corporation shall be elected by the directors
and shall include a President and a Secretary. The Board may also, at its
discretion, elect one or more Vice Presidents and a Treasurer. Such other
officers, including assistant officers, and agents as may be deemed necessary
may be elected or appointed by the Board. Any two or more offices may be held
by the same person.
5.02. The Board at its first meeting after each annual meeting of
Shareholders shall choose a President, a Secretary, and such other officers,
including assistant officers, and agents as may be deemed necessary, none of
whom need be a member of the Board.
5.03. The Board may appoint such other officers and agents as it shall
deem necessary, who shall be appointed for such terms and shall exercise such
powers and perform such duties as shall be determined from time to time by the
Board.
5.04. The salaries of all officers and agents of the Corporation shall be
fixed by the Board. Unless so fixed by the Board each officer of the
Corporation shall serve without remuneration.
5.05. Each officer of the Corporation shall hold office until his
successor is chosen and qualified in his stead or until his death or until his
resignation or removal from office. Any officer or agent elected or appointed
by the Board may be removed at any time by the Board, but such removal shall be
without prejudice to the contract rights, if any, of the person so removed. If
the office of any officer becomes vacant for any reason, the vacancy may be
filled by the Board.
The President
5.09. The President shall be the chief executive officer of the
Corporation, shall have the general powers and duties of oversight, supervision
and management of the business and affairs of the Corporation and shall see that
all orders and resolutions of the Board are carried into effect. He shall be an
ex-officio member of all standing committees of the Board.
The Secretary and Assistant Secretaries
5.10. The Secretary shall attend all sessions of the Board and all
meetings of the Shareholders and record all votes and the minutes of all
proceedings in a book to be kept for that purpose and shall perform like duties
for any committees when required. The Secretary shall give, or cause to be
given, notice of all meetings of the Shareholders and special meetings of the
Board, and shall perform such other duties as may be prescribed by the Board or
the President, under whose supervision the Secretary shall be.
5.11. Each Assistant Secretary shall have such powers and perform such
duties as the Board may from time to time prescribe or as the President may from
time to time delegate.
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Other Offices
5.12. Any Vice President elected by the Board shall have such powers and
perform such duties as the Board may from time to time prescribe or as the
President may from time to time delegate.
5.13. Any Treasurer elected by the Board shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements of the Corporation and shall deposit all moneys and
other valuable effects in the name and to the credit of the Corporation in such
depositories as may be designated by the Board.
5.14. Any Treasurer elected by the Board shall disburse the funds of the
corporation as may be ordered by the Board, taking proper vouchers for such
disbursements, and shall render to the directors, at the regular meetings of the
Board, or whenever they may require it, an account of all his or her
transactions as Treasurer and of the financial condition of the Corporation, and
shall perform such other duties as the Board may prescribe or as the President
may from time to time delegate.
5.15. If required by the Board, any Treasurer elected by the Board shall
give the Corporation a bond in such form, in such sum, and with such surety or
sureties as shall be satisfactory to the Board for the faithful performance of
the duties of the office of Treasurer and for the restoration to the
Corporation, in case of death, resignation, retirement, or removal from office,
of all books, papers, vouchers, money, and other property of whatever kind in
the Treasurer's possession or under the Treasurer's control belonging to the
Corporation.
5.16. Each Assistant Treasurer shall have such powers and perform such
duties as the Board may from time to time prescribe or as the President may from
time to time delegate.
ARTICLE VI
CERTIFICATES REPRESENTING SHARES
6.01. Certificates in such form as may be determined by the Board shall be
delivered representing all shares to which Shareholders are entitled. Such
certificates shall be consecutively numbered and shall be entered in the books
of the Corporation as they are issued. Each certificate shall state on the face
thereof the name of the Corporation, the name to whom the certificate is issued,
the number and class of shares and the designation of the series, if any, which
such certificate represents, the par value of such shares or a statement that
such shares are without par value, and that the Corporation is organized under
the laws of Texas. Each certificate shall be signed by either the President or
any Vice President then in office and by either the Secretary, an Assistant
Secretary, or any Treasurer then in office, and may be sealed with the seal of
the Corporation or a facsimile thereof. If any certificate is countersigned by
a transfer agent, or an assistant transfer agent or registered by a registrar,
other than the Corporation or an employee of the Corporation, the signature of
any such officer of the Corporation may be a facsimile. Whenever the
Corporation shall be authorized to issue more than one class of stock, there
shall be (1) set forth conspicuously upon the face or back of each
certificate a full statement of (a) all of
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the designations, preferences, limitations, and relative rights of the shares of
each class authorized to be issued and (b) if the Corporation is authorized to
issue any preferred or special class in series, the variations in the relative
rights and preferences of the shares of each series so far as the same have been
fixed and determined and the authority of the Board to fix and determine the
relative rights and preferences of subsequent series; or (2) stated
conspicuously on the face or back of the certificate that (a) such a statement
is set forth in the Charter on file in the office of the Secretary of State of
Texas and (b) the Corporation will furnish a copy of such statement to the
record holder of the certificate without charge upon request to the Corporation
at its principal place of business or registered office. Whenever the
Corporation by the Charter has limited or denied the preemptive rights of
Shareholders to acquire unissued or treasury shares of the Corporation, each
certificate (1) shall conspicuously set forth upon the face or back of such
certificate a full statement of the limitation or denial of preemptive rights
contained in the Charter, or (2) shall conspicuously state on the face or back
of the certificate that (a) such statement is set forth in the Charter on file
in the office of the Secretary of State of Texas and (b) the Corporation will
furnish a copy of such statement to the record holder of the certificate without
charge upon request to the Corporation at its principal place of business or
registered office. If any restriction on the transfer or the registration of the
transfer of shares shall be imposed or agreed to by the Corporation, as
permitted by law, each certificate representing shares so restricted (1) shall
conspicuously set forth a full or summary statement of the restriction on the
face of the certificate, or (2) shall set forth such statement on the back of
the certificate and conspicuously refer to the same on the face of the
certificate, or (3) shall conspicuously state on the face or back of the
certificate that such a restriction exists pursuant to a specified document and
(a) that the Corporation will furnish to the record holder of the certificate
without charge upon written request to the corporation at its principal place of
business or registered office a copy of the specified document, or (b) if such
document is one required or permitted to be and has been filed under the Texas
Business Corporation Act, that such document is on file in the office of the
Secretary of State of Texas and contains a full statement of such restriction.
Lost Certificates
6.02. The Board may direct a new certificate representing shares to be
issued in place of any certificate theretofore issued by the Corporation alleged
to have been lost or destroyed, upon the making of an affidavit of that fact by
the person claiming the certificate to be lost or destroyed. When authorizing
such issue of a new certificate, the Board, in its discretion and as a condition
precedent to the issuance thereof, may require the owner of such lost or
destroyed certificate, or his legal representative, to advertise the same in
such manner as it shall require and/or give the Corporation a bond in such form,
in such sum, and with such surety or sureties as it may direct as indemnity
against any claim that may be made against the Corporation with respect to the
certificate alleged to have been lost or destroyed.
Transfer of Shares
6.03. Upon presentation to the Corporation or the transfer agent of the
Corporation with a request to register the transfer of a certificate
representing shares duly endorsed and otherwise meeting the requirements for
transfer specified in the Texas Business and Commerce Code, it shall
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be the duty of the Corporation or the transfer agent of the Corporation to
register the transfer as requested.
Registered Shareholders
6.04. Prior to due presentment for transfer, the Corporation may treat the
registered owner of any share or shares of stock as the person exclusively
entitled to vote, to receive notifications, and otherwise to exercise all rights
and powers of an owner.
ARTICLE VII
GENERAL PROVISIONS
Dividends
7.01. Dividends upon the outstanding shares of the Corporation, subject to
the provisions of the Charter, if any, may be declared by the Board at any
regular or special meeting of the Board or by any committee of the Board so
authorized. Dividends may be paid in cash, in property, or in shares of the
Corporation, subject to the provisions of any applicable statute or the Charter.
The Board may fix in advance a record date for the purpose of determining
Shareholders entitled to receive payment of any dividend, such record date to be
not more than fifty days prior to the payment date of such dividend, or the
Board may close the stock transfer books for such purpose for a period of not
more than fifty days prior to the payment date of such dividend. In the absence
of any action by the Board, the date upon which the Board adopts the resolution
declaring such dividend shall be the record date.
Reserves
7.02. There may be created by resolution of the Board out of the surplus
of the Corporation such reserve or reserves as the directors from time to time,
in their discretion, think proper to provide for contingencies, or to repair or
maintain any property of the Corporation, or for such other purpose as the
directors shall think beneficial to the Corporation, and the directors may
modify or abolish any such reserve in the manner in which it was created.
Checks
7.03. All checks or demands for money and notes of the Corporation shall
be signed by such officer or officers or such other person or persons as the
Board may from time to time designate.
Execution of Contracts, Deeds, Etc.
7.04. The Board may authorize any officer or officers, agent or agents, in
the name and on behalf of the Corporation, to enter into or execute and deliver
any and all deeds, bonds, mortgages, contracts and other obligations or
instruments, and such authority may be general or confined to specific
instances.
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Fiscal Year
7.05. The fiscal year of the Corporation shall be fixed by resolution of
the Board.
Voting of Securities
7.06. Unless otherwise directed by the Board, the President shall have
full power and authority on behalf of the Corporation to attend, vote and act,
and to execute and deliver in the name and on behalf of the Corporation a proxy
authorizing an agent or attorney-in-fact for the Corporation to attend, vote and
act, at any meeting of security holders of any corporation in which the
Corporation may hold securities and to execute and deliver in the name and on
behalf of the Corporation any written consent of security holders in lieu of any
such meeting, and at any such meeting he, or the agent or the attorney-in-fact
duly authorized by him, shall possess and may exercise any and all rights and
powers incident to the ownership of such securities which the Corporation as the
owner thereof might have possessed or exercised if present. The Board may by
resolution from time to time confer like power upon any other person or persons.
Indemnification
7.07 (a) Subject to any limitation which may be contained in the Charter,
the Corporation shall to the full extent permitted by law, including without
limitation, Texas Business Corporation Act Art. 2.02-1, as such Article now
exists or shall hereafter be amended, indemnify any person who was, is, or is
threatened to be made a named defendant or respondent to any threatened,
pending, or completed action, suit, or proceeding, whether civil, criminal,
arbitral, administrative, or investigative, any appeal in such action, suit, or
proceeding, and any inquiry or investigation that could lead to such an action,
suit, or proceeding, because such person is or was a director or officer of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, partner, venturer, proprietor, trustee, employee, agent, or
similar functionary of another corporation, partnership, joint venture, sole
proprietorship, trust, employee benefit plan, or other enterprise, against
judgments, penalties (including excise and similar taxes), fines, settlements,
and reasonable expenses (including attorneys' fees) actually incurred by such
person in connection with such action, suit, or proceeding. The termination of
any action, suit or proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that an individual did not act in good faith and in a manner which
he reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
(b) Subject to any limitation which may be contained in the Charter, the
Corporation shall, to the full extent permitted by law, including without
limitation, Art. 2.02-1 of the Texas Business corporation Act, as such Article
now exists or shall hereafter be amended, pay or reimburse on a current basis
the expenses incurred by any person described in subsection (a) of this Section
7.07 in connection with any such action, suit, or proceeding in advance of the
final disposition thereof, if the Corporation has received (i) a written
affirmation by the recipient of his good faith belief that he has met the
standard of conduct necessary for indemnification under the Texas Business
Corporation Act and (ii) a written undertaking by or on behalf of the director
to
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repay the amount paid or reimbursed if it is ultimately determined that he has
not satisfied such standard of conduct or if indemnification is prohibited by
law.
(c) If required by law at the time such payment is made, any payment of
indemnification or advance of expenses to a director shall be reported in
writing to the shareholders with or before the notice or waiver of notice of the
next Shareholder's meeting or with or before the next submission to Shareholders
of a consent to action without a meeting pursuant to Section A, Article 9.10 of
the Texas Business Corporation Act, and, in any case, within the 12-month period
immediately following the date of the indemnification or advance.
(d) The Corporation may purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee or agent of the Corporation
or who is or was serving at the request of the Corporation as a director,
officer, partner, venturer, proprietor, trustee, employee, agent, or similar
functionary of another foreign or domestic corporation, partnership, joint
venture, sole proprietorship, trust, employee benefit plan, or other enterprise,
against any liability asserted against him and incurred by him in such a
capacity or arising out of his status as such a person, whether or not the
corporation would have the power to indemnify him against that liability under
this article, subject to any restrictions imposed by law. The Corporation may
create a trust fund, establish any form of self-insurance, grant a security
interest or other lien on the assets of the Corporation, or use other means
(including, without limitation, a letter of credit, guarantee or surety
arrangement) to ensure the payment of such sums as may become necessary to
effect indemnification as provided herein.
(e) The rights provided under this Section 7.07 shall not be deemed
exclusive of any other rights permitted by law to which such person may be
entitled under any provision of the Charter, a resolution of Shareholders or
directors of the Corporation, an agreement or otherwise, and shall continue as
to a person who has ceased to be a director, officer, employee, or agent and
shall inure to the benefit of the heirs, executors, and administrators of such a
person. The rights provided in this Section 7.07 shall be deemed to be provided
by a contract between the Corporation and the individuals who serve in the
capacities described in subsection (a) hereof at any time while these bylaws are
in effect, and no repeal or modification of this Section 7.07 by the
Shareholders shall adversely affect any right of any person otherwise entitled
to indemnification by virtue of this Section 7.07 at the time of such repeal or
modification.
ARTICLE VIII
AMENDMENTS
8.01. The Board may amend or repeal these bylaws or adopt new bylaws,
unless:
(1) the Charter or statute reserves the power exclusively to the
Shareholders in whole or part; or
(2) the Shareholders in amending, repealing or adopting a particular
bylaw expressly provide that the Board may not amend or repeal such bylaw.
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8.02. Unless the Charter or a bylaw adopted by the Shareholders provides
otherwise as to all or some portion of the Corporation's bylaws, the
Shareholders may amend, repeal, or adopt bylaws of the Corporation even though
such bylaws may also be amended, repealed or adopted by the Board.
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EXHIBIT 3.56
----------------------------
FILED
in the Office of the
Secretary of State of Texas
MAR 22 1996
CORPORATIONS SECTION
----------------------------
ARTICLES OF INCORPORATION
OF
SRN NEWS NETWORK, INC.
The undersigned, a natural person of the age of eighteen years or more,
acting as incorporator of a corporation under the Texas Business Corporation
Act, hereby adopts the following Articles of Incorporation for South Texas
Broadcasting, Inc. (the "Corporation"):
ARTICLE ONE
The name of this Corporation is SRN News Network, Inc.
ARTICLE TWO
The period of the Corporation's duration is perpetual.
ARTICLE THREE
The purpose for which the Corporation is organized is the transaction of
any and all lawful business for which corporations may be incorporated under the
Texas Business Corporation Act.
ARTICLE FOUR
The aggregate number of shares which the Corporation shall have authority
to issue is one thousand (1,000) shares of Common Stock of the par value of
$0.01 per share.
ARTICLE FIVE
The Corporation will not commence business until it has received for the
issuance of its shares consideration of the value of at least One Thousand
Dollars ($1,000), consisting of money, labor done, or property actually
received.
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ARTICLE SIX
The name and address of the incorporator of the Corporation is:
Name Address
---- -------
Christine Chernjavsky 1212 Guadalupe
Suite 102
Austin, TX 78701
ARTICLE SEVEN
No shareholder of the Corporation shall, by reason of such shareholder
holding shares of any class, have any preemptive or preferential right to
purchase or subscribe for any shares of any class of the Corporation, now or
hereafter to be authorized, or any notes, debentures, bonds, or other securities
convertible into or carrying options or warrants to purchase shares of any
class, now or hereafter to be authorized, whether or not the issuance or sale of
any such shares, or such notes, debentures, bonds, or other securities, would
adversely affect the dividend or voting rights of such shareholder of the
Corporation, other than such rights, if any, as the board of directors, in its
discretion, may grant to the shareholders to purchase such additional, unissued,
or treasury securities; and the Corporation may issue or sell additional
unissued or treasury shares of any class of the Corporation, or any notes,
debentures, bonds, or other securities convertible into or carrying options or
warrants to purchase shares of any class, without offering the same in whole or
in part to the existing shareholders of any class.
ARTICLE EIGHT
At each election for directors of the Corporation, every shareholder
entitled to vote at such election shall have the right to vote, in person or by
proxy, the number of shares owned by such shareholder for as many persons as
there are directors to be elected and for whose election he has a right to vote,
or to cumulate his votes by giving one candidate as many votes as the number of
such directors multiplied by his shares shall equal, or by distributing such
votes on the same principle.
ARTICLE NINE
The street address of the registered office of the Corporation is 545 E.
John Carpenter Freeway, Suite 450, Irving, Texas 75062, and the name of its
registered agent is Greg Anderson.
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ARTICLE TEN
The number of directors constituting the initial Board of Directors is 2
and the names and addresses of the persons who are to serve as the initial
Directors until the first annual meeting of shareholders or until their
successors are elected and qualified are:
NAMES ADDRESSES
----- ---------
Edward G. Atsinger, III 4880 Santa Rosa Road
Suite 300
Camarillo, CA 93012
Stuart W. Epperson 3780 Will Scarlet Road
Winston-Salem, NC 27104
ARTICLE ELEVEN
No director of the Corporation shall be liable to the Corporation or its
shareholders for monetary damages for any act or omission in such director's
capacity as director, except to the extent such director is found liable for (i)
a breach of such director's duty of loyalty to the Corporation or its
shareholder; (ii) an act or omission not in good faith that constitutes a breach
of duty of such director to the Corporation or an act or omission that involves
intentional misconduct or a knowing violation of the law; (iii) a transaction
from which such director received an improper benefit, whether or not the
benefit resulted from an action taken within the scope of such director's
office; or (iv) an act or omission for which the liability of a director is
expressly provided by an applicable statute. No repeal or modification of this
ARTICLE NINE shall adversely affect any right or protection of a director of the
Corporation existing by virtue of this ARTICLE NINE at the time of such repeal
or modification.
IN WITNESS WHEREOF, I have hereunto set my hand, this 22nd day of March,
1996.
Christina Chernjavsky
---------------------
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EXHIBIT 3.57
BYLAWS
OF
SRN NEWS NETWORK, INC.
ARTICLE I
OFFICES
1.01. The registered agent and office of SRN News Network, Inc. (the
"Corporation") shall be such registered agent and office as shall from time to
time be established pursuant to the articles of incorporation, as amended from
time to time, of the Corporation (the "Charter") or by resolution of the Board
of Directors of the Corporation (the "Board").
1.02. The Corporation may also have offices at such other places both
within and without the State of Texas as the Board may from time to time
determine or the business of the Corporation may require.
ARTICLE II
MEETINGS OF SHAREHOLDERS
2.01. Meetings of Shareholders of the Corporation (the "Shareholders") for
any purpose may be held at such place, within or without the State of Texas, on
the 30th day of April or the first business day thereafter, or as shall be fixed
from time to time by the Board, or, if the Board has not so specified, then at
such place as may be fixed by the person or persons calling the meeting.
2.02. An annual meeting of the Shareholders, commencing with the year
1996, shall be held at such date and time as shall be fixed from time to time by
the Board, at which they shall elect a Board, and transact such other business
as may properly be brought before the meeting.
2.03. At least ten days before each meeting of Shareholders, a complete
list of the Shareholders entitled to vote at said meeting arranged in
alphabetical order, with the residence of each and the number of voting shares
held by each, shall be prepared by the officer or agent having charge of the
stock transfer books. Such list, for a period of ten days prior to such
meeting, shall be kept on file at the registered office of the Corporation and
shall be subject to inspection by any Shareholder at any time during usual
business hours. Such list shall be produced and kept open at the time and place
of the meeting during the whole time thereof, and shall be subject to the
inspection of any Shareholder who may be present.
2.04. Special meetings of the Shareholders, for any purpose or purposes,
unless otherwise prescribed by statute, the Charter, or these bylaws, may be
called by the President, a
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majority of the Board, or the holders of not less than ten percent of all the
shares entitled to vote at the meetings. Business transacted at all special
meetings shall be confined to the objects stated in the notice of the meeting.
2.05. Written or printed notice stating the place, day, and hour of the
meeting and, in case of a special meeting, the purpose or purposes for which the
meeting is called, shall be delivered not less than ten nor more than sixty days
before the date of the meeting, either personally or by mail, by or at the
direction of the President, the Secretary, or the officer or person calling the
meeting, to each Shareholder of record entitled to vote at the meeting.
2.06. The holders of a majority of the shares of the Corporation issued
and outstanding and entitled to vote thereat, present in person or represented
by proxy, shall be requisite and shall constitute a quorum at all meetings of
the Shareholders for the transaction of business except as otherwise provided by
statute, the Charter, or these bylaws. If, however, such quorum shall not be
present or represented at any meeting of the Shareholders, the Shareholders
entitled to vote thereat, present in person or represented by proxy, shall
nevertheless have power to adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum shall be present or
represented. At an adjourned session at which a quorum shall be present or
represented, any business may be transacted which might have been transacted at
the meeting as originally notified.
2.07. When a quorum is present at any meeting, the vote of the holders of
a majority of the shares of the Corporation having voting power present in
person or represented by proxy shall decide any question brought before such
meeting, unless the question is one upon which, by express provision of any
applicable statute, the Charter, or these bylaws, a different vote is required,
in which case such express provision shall govern and control the decision of
such question. The Shareholders present at a duly organized meeting may
continue to transact business until adjournment, notwithstanding the withdrawal
of enough Shareholders to leave less than a quorum.
2.08. Each outstanding share of the Corporation, regardless of class,
shall be entitled to one vote on each matter submitted to a vote at a meeting of
Shareholders, unless otherwise provided by statute or the Charter. At any
meeting of the Shareholders, every Shareholder having the right to vote shall be
entitled to vote in person or by proxy appointed by an instrument in writing
subscribed by such Shareholder or by his or her duly authorized attorney-in-
fact, such writing bearing a date not more than eleven months prior to said
meeting, unless said instrument provides for a longer period. Such proxy shall
be filed with the Secretary of the Corporation prior to or at the time of the
meeting. Voting need not be by written ballot unless required by the Charter or
by vote of the Shareholders present at the meeting.
2.09. The Board may fix in advance a record date for the purpose of
determining Shareholders entitled to notice of or to vote at a meeting of
Shareholders, such record date to be not less than ten nor more than sixty days
prior to such meeting, or the Board may close the stock transfer books for such
purpose for a period of not less than ten nor more than sixty days prior to such
meeting. In the absence of any action by the Board, the date upon which the
notice of the meeting is mailed shall be the record date.
2
<PAGE>
2.10. Any action required by statute to be taken at a meeting of the
Shareholders, or any action which may be taken at a meeting of the Shareholders,
may be taken without a meeting if a consent in writing, setting forth the action
so taken, shall be signed by all of the Shareholders entitled to vote with
respect to the subject matter thereof, and such consent shall have the same
force and effect as a unanimous vote of Shareholders.
2.11. Subject to the provisions required or permitted by statute or the
Charter for notice of meetings, Shareholders may participate in and hold a
meeting by means of conference telephone or similar communications equipment by
means of which all persons participating in the meeting can hear each other, and
participation in a meeting pursuant to this section shall constitute presence in
person at such meeting, except where a person participates in the meeting for
the express purpose of objecting to the transaction of any business on the
ground that the meeting is not lawfully called or convened.
ARTICLE III
DIRECTORS
3.01. The business and affairs of the Corporation shall be managed by the
Board who may exercise all such powers of the Corporation and do all such lawful
acts and things as are not by statute or by the Charter or by these bylaws
directed or required to be exercised or done by the Shareholders
3.02. The initial Board shall be as stated in the Charter. Thereafter,
the number of directors which shall constitute the full Board shall be not
greater than three (3) nor less than two (2) or as determined from time to time
by resolution of the Board or by the Shareholders at the annual meeting or a
special meeting called for that purpose, but no decrease shall have the effect
of shortening the term of an incumbent director. Directors need not be
Shareholders or residents of the State of Texas. The directors shall be elected
at the annual meeting of the Shareholders, except as hereinafter provided, and
each director elected shall hold office until his or her successor shall be
elected and shall qualify.
3.03. At any meeting of Shareholders called expressly for such purpose,
any director or the entire Board may be removed, with or without cause, by vote
of the holders of a majority of the shares of the Corporation then entitled to
vote at an election of directors. If any vacancies occur in the Board caused by
death, resignation, retirement, disqualification, or removal from office of any
director or otherwise, a majority of the directors then in office, though less
than a quorum, may choose a successor or successors or a successor or successors
may be chosen at a special meeting of Shareholders called for that purpose; and
each successor director so chosen shall be elected for the unexpired term of his
or her predecessor in office. Any directorship to be filled by reason of an
increase in the number of directors may be filled by election at an annual
meeting or special meeting of Shareholders called for that purpose or may be
filled by the Board for a term of office continuing only until the next election
of one or more directors by the Shareholders.
3
<PAGE>
3.04. Whenever the holders of any class or series of shares of the
Corporation are entitled to elect one or more directors by the provisions of the
Charter, any vacancies in such directorships and any newly created directorships
of such class or series to be filled by reason of an increase in the number of
such directors may be filled by the affirmative vote of a majority of the
directors elected by such class or series then in office or by a sole remaining
director so elected, or by the vote of the holders of the outstanding shares of
such class or series, and such directorships shall not in any case be filled by
the vote of the remaining directors or the holders of the outstanding shares as
a whole unless otherwise provided in the Charter.
3.05. At each election for directors, every Shareholder entitled to vote
at such election shall have the right to vote, in person or by proxy, the number
of shares owned by such Shareholder for as many persons as there are directors
to be elected and for whose election he has a right to vote, or to cumulate his
votes by giving one candidate as many votes as the number of such directors
multiplied by his shares shall equal, or by distributing such votes on the same
principle.
Executive and Other Committees
3.06. The Board, by resolution adopted by a majority of the Board, may
designate from among its members an executive committee and one or more other
committees, each of which shall be comprised of one or more members and, to the
extent provided in such resolution, shall have and may exercise all of the
authority of the Board, including the authority to declare dividends and to
authorize the issuance of shares of the Corporation, to the extent permitted by
law. Committees shall keep regular minutes of their proceedings and report the
same to the Board when required.
Meetings of Directors
3.07. The directors of the Corporation may hold their meetings, both
regular and special, either within or without the State of Texas.
3.08. The first meeting of each newly elected Board shall be held without
further notice immediately following the annual meeting of Shareholders, and at
the same place, unless by unanimous consent of the directors then elected and
serving such time or place shall be changed.
3.09. Regular meetings of the Board may be held without notice at such
time and place as shall from time to time be determined by the Board.
3.10. Special meetings of the Board may be called by the President on two
days' notice to each director, either personally or by mail, telecopy, or
overnight courier; special meetings shall be called by the President or
Secretary in like manner and on like notice on the written request of a majority
of the directors. Except as may be otherwise expressly provided by statute, the
Charter, or these bylaws, neither the business to be transacted at, nor the
purpose of, any special meeting needs to be specified in a notice or waiver of
notice.
3.11. At all meetings of the Board the presence of a majority of the full
Board shall be necessary and sufficient to constitute a quorum for the
transaction of business and the act of a
4
<PAGE>
majority of the directors present at any meeting at which there is a quorum
shall be the act of the Board, except as may be otherwise specifically provided
by statute or by the Charter or by these bylaws. If a quorum shall not be
present at any meeting of directors, the directors present thereat may adjourn
the meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present.
3.12. Any action required or permitted to be taken at a meeting of the
Board or any committee may be taken without a meeting if a consent in writing,
setting forth the action so taken, is signed by all the members of the Board or
committee, as the case may be. Such consent shall have the same force and
effect as a unanimous vote at a meeting.
3.13. Subject to the provisions required or permitted by statute or the
Charter for notice of meetings, members of the Board, or members of any
committee designated by the Board, may participate in and hold a meeting of the
Board or such committee by means of a conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting pursuant to this
section shall constitute presence in person at such meeting, except where a
person participates in the meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
Compensation of Directors
3.14. Directors, as such, shall not receive any stated salary for their
services, but, by resolution of the Board, a fixed sum and expenses of
attendance, if any, may be allowed for attendance at each regular or special
meeting of the Board; provided that nothing herein contained shall be construed
to preclude any director from serving the Corporation in any other capacity and
receiving compensation therefor.
ARTICLE IV
NOTICES
4.01. Whenever under the provisions of any applicable statute, the Charter
or these bylaws, notice is required to be given to any director or Shareholder,
and no provision is made as to how such notice shall be given, it shall not be
construed to mean personal notice, but any such notice may be given by mail,
postage prepaid, addressed to such director or Shareholder at such address as
appears on the books of the Corporation. Any notice required or permitted to be
given by mail shall be deemed to be given at the time when the same shall be
thus deposited in the United States mails as aforesaid.
4.02. Whenever any notice is required to be given to any Shareholder or
director of the Corporation under the provisions of any applicable statute, the
Charter or these bylaws, a waiver thereof in writing signed by the person or
persons entitled to such notice, whether before or after the time stated in such
notice, shall be deemed equivalent to the giving of such notice.
5
<PAGE>
ARTICLE V
OFFICERS
5.01. The officers of the Corporation shall be elected by the directors
and shall include a President and a Secretary. The Board may also, at its
discretion, elect one or more Vice Presidents and a Treasurer. Such other
officers, including assistant officers, and agents as may be deemed necessary
may be elected or appointed by the Board. Any two or more offices may be held
by the same person.
5.02. The Board at its first meeting after each annual meeting of
Shareholders shall choose a President, a Secretary, and such other officers,
including assistant officers, and agents as may be deemed necessary, none of
whom need be a member of the Board.
5.03. The Board may appoint such other officers and agents as it shall
deem necessary, who shall be appointed for such terms and shall exercise such
powers and perform such duties as shall be determined from time to time by the
Board.
5.04. The salaries of all officers and agents of the Corporation shall be
fixed by the Board. Unless so fixed by the Board each officer of the
Corporation shall serve without remuneration.
5.05. Each officer of the Corporation shall hold office until his
successor is chosen and qualified in his stead or until his death or until his
resignation or removal from office. Any officer or agent elected or appointed
by the Board may be removed at any time by the Board, but such removal shall be
without prejudice to the contract rights, if any, of the person so removed. If
the office of any officer becomes vacant for any reason, the vacancy may be
filled by the Board.
The President
5.09. The President shall be the chief executive officer of the
Corporation, shall have the general powers and duties of oversight, supervision
and management of the business and affairs of the Corporation and shall see that
all orders and resolutions of the Board are carried into effect. He shall be an
ex-officio member of all standing committees of the Board.
The Secretary and Assistant Secretaries
5.10. The Secretary shall attend all sessions of the Board and all
meetings of the Shareholders and record all votes and the minutes of all
proceedings in a book to be kept for that purpose and shall perform like duties
for any committees when required. The Secretary shall give, or cause to be
given, notice of all meetings of the Shareholders and special meetings of the
Board, and shall perform such other duties as may be prescribed by the Board or
the President, under whose supervision the Secretary shall be.
5.11. Each Assistant Secretary shall have such powers and perform such
duties as the Board may from time to time prescribe or as the President may from
time to time delegate.
6
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Other Offices
5.12. Any Vice President elected by the Board shall have such powers and
perform such duties as the Board may from time to time prescribe or as the
President may from time to time delegate.
5.13. Any Treasurer elected by the Board shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements of the Corporation and shall deposit all moneys and
other valuable effects in the name and to the credit of the Corporation in such
depositories as may be designated by the Board.
5.14. Any Treasurer elected by the Board shall disburse the funds of the
corporation as may be ordered by the Board, taking proper vouchers for such
disbursements, and shall render to the directors, at the regular meetings of the
Board, or whenever they may require it, an account of all his or her
transactions as Treasurer and of the financial condition of the Corporation, and
shall perform such other duties as the Board may prescribe or as the President
may from time to time delegate.
5.15. If required by the Board, any Treasurer elected by the Board shall
give the Corporation a bond in such form, in such sum, and with such surety or
sureties as shall be satisfactory to the Board for the faithful performance of
the duties of the office of Treasurer and for the restoration to the
Corporation, in case of death, resignation, retirement, or removal from office,
of all books, papers, vouchers, money, and other property of whatever kind in
the Treasurer's possession or under the Treasurer's control belonging to the
Corporation.
5.16. Each Assistant Treasurer shall have such powers and perform such
duties as the Board may from time to time prescribe or as the President may from
time to time delegate.
ARTICLE VI
CERTIFICATES REPRESENTING SHARES
6.01. Certificates in such form as may be determined by the Board shall be
delivered representing all shares to which Shareholders are entitled. Such
certificates shall be consecutively numbered and shall be entered in the books
of the Corporation as they are issued. Each certificate shall state on the face
thereof the name of the Corporation, the name to whom the certificate is issued,
the number and class of shares and the designation of the series, if any, which
such certificate represents, the par value of such shares or a statement that
such shares are without par value, and that the Corporation is organized under
the laws of Texas. Each certificate shall be signed by either the President or
any Vice President then in office and by either the Secretary, an Assistant
Secretary, or any Treasurer then in office, and may be sealed with the seal of
the Corporation or a facsimile thereof. If any certificate is countersigned by
a transfer agent, or an assistant transfer agent or registered by a registrar,
other than the Corporation or an employee of the Corporation, the signature of
any such officer of the Corporation may be a facsimile. Whenever the
Corporation shall be authorized to issue more than one class of stock, there
shall be (1) set forth conspicuously upon the face or back of each
certificate a full statement of (a) all of
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the designations, preferences, limitations, and relative rights of the shares of
each class authorized to be issued and (b) if the Corporation is authorized to
issue any preferred or special class in series, the variations in the relative
rights and preferences of the shares of each series so far as the same have been
fixed and determined and the authority of the Board to fix and determine the
relative rights and preferences of subsequent series; or (2) stated
conspicuously on the face or back of the certificate that (a) such a statement
is set forth in the Charter on file in the office of the Secretary of State of
Texas and (b) the Corporation will furnish a copy of such statement to the
record holder of the certificate without charge upon request to the Corporation
at its principal place of business or registered office. Whenever the
Corporation by the Charter has limited or denied the preemptive rights of
Shareholders to acquire unissued or treasury shares of the Corporation, each
certificate (1) shall conspicuously set forth upon the face or back of such
certificate a full statement of the limitation or denial of preemptive rights
contained in the Charter, or (2) shall conspicuously state on the face or back
of the certificate that (a) such statement is set forth in the Charter on file
in the office of the Secretary of State of Texas and (b) the Corporation will
furnish a copy of such statement to the record holder of the certificate without
charge upon request to the Corporation at its principal place of business or
registered office. If any restriction on the transfer or the registration of the
transfer of shares shall be imposed or agreed to by the Corporation, as
permitted by law, each certificate representing shares so restricted (1) shall
conspicuously set forth a full or summary statement of the restriction on the
face of the certificate, or (2) shall set forth such statement on the back of
the certificate and conspicuously refer to the same on the face of the
certificate, or (3) shall conspicuously state on the face or back of the
certificate that such a restriction exists pursuant to a specified document and
(a) that the Corporation will furnish to the record holder of the certificate
without charge upon written request to the corporation at its principal place of
business or registered office a copy of the specified document, or (b) if such
document is one required or permitted to be and has been filed under the Texas
Business Corporation Act, that such document is on file in the office of the
Secretary of State of Texas and contains a full statement of such restriction.
Lost Certificates
6.02. The Board may direct a new certificate representing shares to be
issued in place of any certificate issued by the Corporation alleged to have
been lost or destroyed, upon the making of an affidavit of that fact by the
person claiming the certificate to be lost or destroyed. When authorizing such
issue of a new certificate, the Board, in its discretion and as a condition
precedent to the issuance thereof, may require the owner of such lost or
destroyed certificate, or his legal representative, to advertise the same in
such manner as it shall require and/or give the Corporation a bond in such form,
in such sum, and with such surety or sureties as it may direct as indemnity
against any claim that may be made against the Corporation with respect to the
certificate alleged to have been lost or destroyed.
Transfer of Shares
6.03. Upon presentation to the Corporation or the transfer agent of the
Corporation with a request to register the transfer of a certificate
representing shares duly endorsed and otherwise meeting the requirements for
transfer specified in the Texas Business and Commerce Code, it shall
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be the duty of the Corporation or the transfer agent of the Corporation to
register the transfer as requested.
Registered Shareholders
6.04. Prior to due presentment for transfer, the Corporation may treat the
registered owner of any share or shares of stock as the person exclusively
entitled to vote, to receive notifications, and otherwise to exercise all rights
and powers of an owner.
ARTICLE VII
GENERAL PROVISIONS
Dividends
7.01. Dividends upon the outstanding shares of the Corporation, subject to
the provisions of the Charter, if any, may be declared by the Board at any
regular or special meeting of the Board or by any committee of the Board so
authorized. Dividends may be paid in cash, in property, or in shares of the
Corporation, subject to the provisions of any applicable statute or the Charter.
The Board may fix in advance a record date for the purpose of determining
Shareholders entitled to receive payment of any dividend, such record date to be
not more than fifty days prior to the payment date of such dividend, or the
Board may close the stock transfer books for such purpose for a period of not
more than fifty days prior to the payment date of such dividend. In the absence
of any action by the Board, the date upon which the Board adopts the resolution
declaring such dividend shall be the record date.
Reserves
7.02. There may be created by resolution of the Board out of the surplus
of the Corporation such reserve or reserves as the directors from time to time,
in their discretion, think proper to provide for contingencies, or to repair or
maintain any property of the Corporation, or for such other purpose as the
directors shall think beneficial to the Corporation, and the directors may
modify or abolish any such reserve in the manner in which it was created.
Checks
7.03. All checks or demands for money and notes of the Corporation shall
be signed by such officer or officers or such other person or persons as the
Board may from time to time designate.
Execution of Contracts, Deeds, Etc.
7.04. The Board may authorize any officer or officers, agent or agents, in
the name and on behalf of the Corporation, to enter into or execute and deliver
any and all deeds, bonds, mortgages, contracts and other obligations or
instruments, and such authority may be general or confined to specific
instances.
9
<PAGE>
Fiscal Year
7.05. The fiscal year of the Corporation shall be fixed by resolution of
the Board.
Voting of Securities
7.06. Unless otherwise directed by the Board, the President shall have
full power and authority on behalf of the Corporation to attend, vote and act,
and to execute and deliver in the name and on behalf of the Corporation a proxy
authorizing an agent or attorney-in-fact for the Corporation to attend, vote and
act, at any meeting of security holders of any corporation in which the
Corporation may hold securities and to execute and deliver in the name and on
behalf of the Corporation any written consent of security holders in lieu of any
such meeting, and at any such meeting he, or the agent or the attorney-in-fact
duly authorized by him, shall possess and may exercise any and all rights and
powers incident to the ownership of such securities which the Corporation as the
owner thereof might have possessed or exercised if present. The Board may by
resolution from time to time confer like power upon any other person or persons.
Indemnification
7.07 (a) Subject to any limitation which may be contained in the Charter,
the Corporation shall to the full extent permitted by law, including without
limitation, Texas Business Corporation Act Art. 2.02-1, as such Article now
exists or shall hereafter be amended, indemnify any person who was, is, or is
threatened to be made a named defendant or respondent to any threatened,
pending, or completed action, suit, or proceeding, whether civil, criminal,
arbitral, administrative, or investigative, any appeal in such action, suit, or
proceeding, and any inquiry or investigation that could lead to such an action,
suit, or proceeding, because such person is or was a director or officer of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, partner, venturer, proprietor, trustee, employee, agent, or
similar functionary of another corporation, partnership, joint venture, sole
proprietorship, trust, employee benefit plan, or other enterprise, against
judgments, penalties (including excise and similar taxes), fines, settlements,
and reasonable expenses (including attorneys' fees) actually incurred by such
person in connection with such action, suit, or proceeding. The termination of
any action, suit or proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that an individual did not act in good faith and in a manner which
he reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
(b) Subject to any limitation which may be contained in the Charter, the
Corporation shall, to the full extent permitted by law, including without
limitation, Art. 2.02-1 of the Texas Business Corporation Act, as such Article
now exists or shall hereafter be amended, pay or reimburse on a current basis
the expenses incurred by any person described in subsection (a) of this Section
7.07 in connection with any such action, suit, or proceeding in advance of the
final disposition thereof, if the Corporation has received (i) a written
affirmation by the recipient of his good faith belief that he has met the
standard of conduct necessary for indemnification under the Texas Business
Corporation Act and (ii) a written undertaking by or on behalf of the director
to
10
<PAGE>
repay the amount paid or reimbursed if it is ultimately determined that he has
not satisfied such standard of conduct or if indemnification is prohibited by
law.
(c) If required by law at the time such payment is made, any payment of
indemnification or advance of expenses to a director shall be reported in
writing to the shareholders with or before the notice or waiver of notice of the
next Shareholder's meeting or with or before the next submission to Shareholders
of a consent to action without a meeting pursuant to Section A, Article 9.10 of
the Texas Business Corporation Act, and, in any case, within the 12-month period
immediately following the date of the indemnification or advance.
(d) The Corporation may purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee or agent of the Corporation
or who is or was serving at the request of the Corporation as a director,
officer, partner, venturer, proprietor, trustee, employee, agent, or similar
functionary of another foreign or domestic corporation, partnership, joint
venture, sole proprietorship, trust, employee benefit plan, or other enterprise,
against any liability asserted against him and incurred by him in such a
capacity or arising out of his status as such a person, whether or not the
corporation would have the power to indemnify him against that liability under
this article, subject to any restrictions imposed by law. The Corporation may
create a trust fund, establish any form of self-insurance, grant a security
interest or other lien on the assets of the Corporation, or use other means
(including, without limitation, a letter of credit, guarantee or surety
arrangement) to ensure the payment of such sums as may become necessary to
effect indemnification as provided herein.
(e) The rights provided under this Section 7.07 shall not be deemed
exclusive of any other rights permitted by law to which such person may be
entitled under any provision of the Charter, a resolution of Shareholders or
directors of the Corporation, an agreement or otherwise, and shall continue as
to a person who has ceased to be a director, officer, employee, or agent and
shall inure to the benefit of the heirs, executors, and administrators of such a
person. The rights provided in this Section 7.07 shall be deemed to be provided
by a contract between the Corporation and the individuals who serve in the
capacities described in subsection (a) hereof at any time while these bylaws are
in effect, and no repeal or modification of this Section 7.07 by the
Shareholders shall adversely affect any right of any person otherwise entitled
to indemnification by virtue of this Section 7.07 at the time of such repeal or
modification.
ARTICLE VIII
AMENDMENTS
8.01. The Board may amend or repeal these bylaws or adopt new bylaws,
unless:
(l) the Charter or statute reserves the power exclusively to the
Shareholders in whole or part; or
(2) the Shareholders in amending, repealing or adopting a particular
bylaw expressly provide that the Board may not amend or repeal such bylaw.
11
<PAGE>
8.02. Unless the Charter or a bylaw adopted by the Shareholders provides
otherwise as to all or some portion of the Corporation's bylaws, the
Shareholders may amend, repeal, or adopt bylaws of the Corporation even though
such bylaws may also be amended, repealed or adopted by the Board.
12
<PAGE>
EXHIBIT 3.58
1918982
FILED
in the office of the Secretary of State
of the State of California
DEC 20 1994
Tony Miller
Acting Secretary of State
ARTICLES OF INCORPORATION
OF
VISTA BROADCASTING, INC.
One: The name of this Corporation is:
Vista Broadcasting, Inc.
Two: The purpose of this Corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of California other than the banking business, the trust company business or
the practice of a profession permitted to be incorporated by the California
Corporations Code.
Three: The name in the State of California of this Corporation's initial
agent for service of process in accordance with subdivision (b) of Section 1502
of the General Corporation Law is:
Eric H. Halvorson
4880 Santa Rosa Road
Suite 300
Camarillo, CA 93012
Four: The Corporation is authorized to issue only one class of shares of
stock; and the total number of shares which this Corporation is authorized to
issue is one thousand (1,000) shares of Common Stock, no par value.
Five: The liability of the directors of this Corporation for monetary
damages shall be eliminated to the fullest extent permissible under California
law.
Six: The Corporation is authorized to provide indemnification of its
agents (as such term is defined in Section 317 of the California General
Corporation Law) to the fullest extent permissible under California law.
Dated: Dec. 7, 1994
Eric H. Halvorson
-------------------------------
Eric H. Halvorson, Incorporator
<PAGE>
EXHIBIT 3.59
BYLAWS OF
VISTA BROADCASTING, INC.
A CALIFORNIA CORPORATION
-------------------------------------------------------------------
ARTICLE I
SHAREHOLDERS' MEETING
Section 1. PLACE OF MEETINGS.
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Meetings of shareholders shall be held at any place within or outside the
State of California designated by the Board of Directors. In the absence of any
such designation, shareholders' meetings shall be held in the principal
executive office of the corporation.
Section 2. ANNUAL MEETINGS.
- ---------
The annual meeting of shareholders shall be held each year on a date and at
a time designated by the Board of Directors. The date so designated shall be
within five (5) months after the end of the fiscal year of the corporation, and
within fifteen (15) months after the last annual meeting. At each annual
meeting directors shall be elected, and any other proper business may be
transacted.
Section 3. SPECIAL MEETINGS.
- ---------
A special meeting of the shareholders may be called at any time by the
Board of Directors, or by the chairman of the Board, or by the president or by
one or more shareholders holding shares in the aggregate entitled to cast not
less than ten percent (10%) of the votes at that meeting.
If a special meeting is called by any person or persons other than the
Board of Directors, the request shall be in writing, specifying the time of such
meeting and the general nature of the business proposed to be transacted, and
shall be delivered personally or sent by registered mail or by telegraphic or
other facsimile transmission to the chairman of the Board, the president, any
vice-president or the secretary of the corporation. The officer receiving the
request shall cause notice to be promptly given to the shareholders entitled to
vote, in accordance with the provisions of Sections 4 and 5 of this Article I,
that a meeting will be held at the time requested by the person or persons
calling the meeting, not less than thirty-five (35) nor more than sixty (60)
days after the receipt of the request. If the notice is not given within twenty
(20) days after receipt of the request, the person or persons requesting the
meeting may give the notice. Nothing contained in this paragraph of this
Section 3 shall be construed as limiting, fixing or affecting the time when a
meeting of shareholders called by action of the Board of Directors may be held.
Section 4. NOTICE OF MEETINGS.
- ---------
All notices of meetings of shareholders shall be sent or otherwise given in
accordance with Section 5 of this Article I not less than ten (10) nor more than
sixty (60) days before the date of the meeting. The notice shall specify the
place, date and hour of the meeting and (a) in the case of
<PAGE>
a special meeting, the general nature of the business to be transacted or (b) in
the case of the annual meeting, those matters which the Board of Directors, at
the time of giving notice, intends to present for action by the shareholders.
The notice of any meeting at which directors are to be elected shall include the
name of any nominee or nominees whom, at the time of the notice, management
intends to present for election.
If action is proposed to be taken at any meeting for approval of (i) a
contract or transaction in which a director has a direct or indirect financial
interest, pursuant to Section 310 of the Corporations Code of California, (ii)
an amendment of the Articles of Incorporation, pursuant to Section 902 of that
Code, (iii) a reorganization of the corporation, pursuant to Section 1201 of
that Code, (iv) a voluntary dissolution of the corporation, pursuant to Section
1900 of that Code, or (v) a distribution in dissolution other than in accordance
with the rights of outstanding preferred shares, pursuant to Section 2007 of
that Code, the notice shall also state the general nature of that proposal.
Section 5. MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE.
- ---------
Notice of any meeting of shareholders shall be given either personally or
by first-class mail or telegraphic or other written communication, charges
prepaid, addressed to the shareholder at the address of that shareholder
appearing on the books of the corporation or given by the shareholder to the
corporation for the purpose of notice. If no such address appears on the
corporation's books or is given, notice shall be deemed to have been given if
sent to that shareholder by first-class mail or telegraphic or other written
communication to the corporation's principal executive office, or if published
at least once in a newspaper of general circulation, in the county where that
office is located. Notice shall be deemed to have been given at the time when
delivered personally or deposited in the mail or sent by telegram or other means
of written communication.
If any notice addressed to a shareholder at the address of that shareholder
appearing on the books of the corporation is returned to the corporation by the
United States Postal Service marked to indicate that the United States Postal
Service is unable to deliver the notice to the shareholder at that address, all
future notices or reports shall be deemed to have been duly given without
further mailing if these shall be available to the shareholder on written demand
of the shareholder at the principal executive office of the corporation for a
period of one (1) year from the date of the giving of the notice.
An affidavit of the mailing or other means of giving any notice of any
shareholders' meetings shall be executed by the secretary, assistant secretary
or any transfer agent of the corporation giving the notice, and shall be filed
and maintained in the minute book of the corporation.
Section 6. QUORUM.
- ---------
The presence in person or by proxy of the holders of a majority of the
shares entitled to vote at any meeting of shareholders shall constitute a quorum
for the transaction of business. The shareholders present at a duly called or
held meeting at which a quorum is present may continue
2
<PAGE>
to do business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum, if any action taken (other than
adjournment) is approved by at least a majority of the shares required to
constitute a quorum.
Section 7. ADJOURNED MEETING; NOTICE.
- ---------
Any shareholders' meeting, annual or special, whether or not a quorum is
present, may be adjourned from time to time by the vote of the majority of the
shares represented at that meeting, either in person or by proxy, but in the
absence of a quorum, no other business may be transacted at that meeting, except
as provided in Section 6 of this Article I.
When any meeting of shareholders, either annual or special, is adjourned to
another time or place, notice need not be given of the adjourned meeting if the
time and place are announced at a meeting at which the adjournment is taken
unless a new record date for the adjourned meeting is fixed, or unless the
adjournment is for more than forty-five (45) days from the date set for the
original meeting, in which case the Board of Directors shall set a new record
date. Notice of any such adjourned meeting shall be given to each shareholder
of record entitled to vote at the adjourned meeting in accordance with the
provisions of Sections 4 and 5 of this Article I. At any adjourned meeting the
corporation may transact any business which might have been transacted at the
original meeting.
Section 8. VOTING RIGHTS; CUMULATIVE VOTING.
- ---------
The shareholders entitled to vote at any meeting of shareholders shall be
determined in accordance with the provisions of Section 11 of this Article I,
subject to the provisions of Sections 702 through 704, inclusive, of the
Corporations Code of California (relating to voting shares held by a fiduciary,
in the name of a corporation, or in joint ownership). The shareholders' vote
may be by voice vote or by ballot; provided, however, that any election for
directors must be by ballot if demanded by any shareholder before the voting has
begun. On any matter other than elections of directors, any shareholder may
vote part of the shares in favor of the proposal and refrain from voting the
remaining shares or vote them against the proposal, but, if the shareholder
fails to specify the number of shares which the shareholder is voting
affirmatively, it will be conclusively presumed that the shareholder's approving
vote is with respect to all shares that the shareholder is entitled to vote. If
a quorum is present, the affirmative vote of the majority of the shares
represented at the meeting and entitled to vote on any matter (other than the
election of directors) shall be the act of the shareholders, unless a vote of a
greater number or voting by classes is required by the California General
Corporation Law or by the Articles of Incorporation.
At a shareholders' meeting at which directors are to be elected, no
shareholder shall be entitled to accumulate votes (i.e., to cast for any one or
----
more candidates a number of votes greater than the number of the shareholder's
shares) unless the candidates' names have been placed in nomination prior to
commencement of the voting and a shareholder has given notice prior to
commencement of the voting of the shareholder's intention to cumulate votes. If
any shareholder has given such a notice, then every shareholder entitled to vote
may cumulate votes for candidates in nomination and give one candidate a number
of votes equal to the number of directors to be elected multiplied by the number
of votes to which that shareholder's shares are entitled, or
3
<PAGE>
distribute the shareholder's votes on the same principle among any or all of the
candidates, as the shareholder thinks fit. The candidates receiving the highest
number of votes, up to the number of directors to be elected, shall be elected.
Section 9. WAIVER OF NOTICE OR CONSENT BY ABSENT SHAREHOLDERS.
- ---------
The transactions of any meeting of shareholders, either annual or special,
however called and noticed and wherever held, shall be as valid as though had at
a meeting duly held after regular call and notice, if a quorum be present either
in person or by proxy, and if, either before or after the meeting, each person
entitled to vote, who was not present in person or by proxy, signs a written
waiver of notice or a consent to a holding of the meeting or an approval of the
minutes. The waiver of notice or consent need not specify either the business
to be transacted or the purpose of any annual or special meeting of
shareholders, except that if action is taken or proposed to be taken for
approval of any of those matters specified in the second paragraph of Section 4
of this Article I, the waiver of notice or consent shall state the general
nature of the proposal. All such waivers, consents or approvals shall be filed
with the corporate records or made a part of the minutes of the meeting.
Attendance by a person at a meeting shall also constitute a waiver of
notice of that meeting, except when the person objects, at the beginning of the
meeting, to the transaction of any business because the meeting is not lawfully
called or convened and except that attendance at a meeting is not a waiver of
any right to object to the consideration of matters not included in the notice
of the meeting if that objection is expressly made at the meeting.
Section 10. SHAREHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING.
- ----------
Any action which may be taken at any annual or special meeting of
shareholders may be taken without a meeting and without prior notice, if a
consent in writing, setting forth the action so taken, is signed by the holders
of outstanding shares having not less than the minimum number of votes that
would be necessary to authorize or to take that action at a meeting at which all
shares entitled to vote on that action were present and voted. In the case of
election of directors, such consent shall be effective only if signed by the
holders of all outstanding shares entitled to vote for the election of
directors; provided, however, that a director may be elected at any time to fill
a vacancy on the Board of Directors that has not been filled by the directors,
by the written consent of the holders of a majority of the outstanding shares
entitled to vote for the election of directors. All such consents shall be filed
with the secretary of the corporation and shall be maintained in the corporate
records. Any shareholder giving a written consent, or the shareholder's proxy
holder, or a transferee of the shares or a personal representative of the
shareholder or his respective proxy holder, may revoke the consent by a writing
received by the secretary of the corporation before written consents of the
number of shares required to authorize the proposed action have been filed with
the secretary.
If the consents of all shareholders entitled to vote have not been
solicited in writing, and if the unanimous written consent of all such
shareholders shall not have been received, the secretary shall give prompt
notice of the corporate action approved by the shareholders without a meeting.
4
<PAGE>
This notice shall be given in the manner specified in Section 5 of this Article
I. In the case of approval of (a) contracts or transactions in which a director
has a direct or indirect financial interest, pursuant to Section 310 of the
Corporations Code of California, (b) indemnification of agents of the
corporation, pursuant to Section 317 of that Code, (c) a reorganization of the
corporation, pursuant to Section 1201 of that Code, and (d) a distribution in
dissolution other than in accordance with the rights of the outstanding
preferred shares, pursuant to Section 2007 of that Code, the notice shall be
given at least ten (10) days before the consummation of any action authorized by
that approval.
Section 11. RECORD DATE FOR SHAREHOLDERS NOTICE, VOTING AND GIVING CONSENTS.
- ----------
For purposes of determining the shareholders entitled to notice of any
meeting or to vote or entitled to give consent to corporate action without a
meeting, the Board of Directors may fix, in advance, a record date, which shall
be not more than sixty (60) days nor less than ten (10) days before the date of
any such meeting nor more than sixty (60) days before any such action without a
meeting, and in this event only shareholders of record on the date so fixed are
entitled to notice and to vote or to give consents, as the case may be,
notwithstanding the transfer of any shares on the books of the corporation after
the record date, except as otherwise provided in the California General
Corporation Law.
If the Board of Directors does not so fix a record date:
(a) The record date for determining shareholders entitled to notice of
or to vote at a meeting of shareholders shall be at the close of business on the
business day next preceding the day on which notice is given or, if notice is
waived, at the close of business on the business day next preceding the day on
which the meeting is held.
(b) The record date for determining shareholders entitled to give
consent to corporate action in writing without a meeting (i) when no prior
action by the Board has been taken, shall be the day on which the first written
consent is given, or (ii) when prior action of the Board has been taken, shall
be at the close of business on the day on which the Board adopts the resolution
relating to that action or the sixtieth (60th) day before the date of such other
action, whichever is later.
Section 12. PROXIES.
- ----------
Every person entitled to vote for directors or on any other matter shall
have the right to do so either in person or by one or more agents authorized by
a written proxy signed by the person and filed with the secretary of the
corporation. A proxy shall be deemed signed if the shareholder's name is placed
on the proxy (whether by manual signature, typewriting, telegraphic transmission
or otherwise) by the shareholder or the shareholder's attorney in fact. A
validly executed proxy which does not state that it is irrevocable shall
continue in full force and effect unless (a) revoked by the person executing it,
before the vote pursuant to that proxy by a writing delivered to the corporation
stating that the proxy is revoked, or by a subsequent proxy executed by, or
attendance at the meeting and voting in person by, the person executing the
proxy; or
5
<PAGE>
(b) written notice of the death or incapacity of the maker of that proxy is
received by the corporation before the vote pursuant to that proxy is counted;
provided, however, that no proxy shall be valid after the expiration of eleven
(11) months from the date of the proxy, unless otherwise provided in the proxy,
and, provided, further, that the proxy shall be valid only if executed in favor
of another shareholder of the corporation. The revocability of a proxy that
states on its face that it is irrevocable shall be governed by the provisions of
Sections 705(e) and 705(f) of the Corporations Code of California.
Section 13. INSPECTORS OF ELECTION.
- ----------
Before any meeting of shareholders, the Board of Directors may appoint any
persons other than nominees for office to act as inspectors of election at the
meeting or its adjournment. If no inspectors of election are so appointed, the
chairman of the meeting may, and on the request of any shareholder or a
shareholder's proxy shall, appoint inspectors of election at the meeting. The
number of inspectors shall be either one (1) or three (3). If inspectors are
appointed at the meeting on the request of one or more shareholders or proxies,
the holders of a majority of shares or their proxies present at the meeting
shall determine whether one (1) or three (3) inspectors are to be appointed. If
any person appointed as inspector fails to appear or fails or refuses to act,
the chairman of the meeting may, and upon the request of any shareholder or a
shareholder's proxy shall, appoint a person to fill that vacancy.
These inspectors shall:
(a) Determine the number of shares outstanding and the voting power of
each, the shares represented at the meeting, the existence of a quorum and the
authenticity, validity and effect of proxies;
(b) Receive votes, ballots or consents;
(c) Hear and determine all challenges and questions in any way arising
in connection with the right to vote;
(d) Count and tabulate all votes or consents;
(e) Determine when the polls shall close;
(f) Determine the result; and
(g) Do any other acts that may be proper to conduct the election or
vote with fairness to all shareholders.
Section 14. VOTING TRUSTS.
- ----------
If a voting trust agreement is filed in the office of the corporation, the
corporation shall take notice of its terms and the limitations this agreement
places on the authority of the trustee. The agreement shall be valid only if
voting power is vested in another shareholder of the corporation.
6
<PAGE>
ARTICLE II
DIRECTORS; MANAGEMENT
---------------------
Section 1. POWERS.
- ---------
Subject to the limitations of the Articles of Incorporation, of the Bylaws
and of the laws of the State of California as to action to be authorized or
approved by the shareholders, all corporate powers shall be exercised by or
under authority of, and the business and affairs of this corporation shall be
controlled by, a board of directors.
Section 2. NUMBER AND QUALIFICATION.
- ---------
The authorized number of directors shall be two (2) until changed by a duly
adopted amendment of the Articles of Incorporation or by an amendment to these
Bylaws adopted by the vote or written consent of holders of a majority of the
outstanding shares entitled to vote.
Section 3. ELECTION AND TENURE OF OFFICE.
- ---------
Directors shall be elected at each annual meeting of the shareholders to
hold office until the next annual meeting. Each director, including a director
elected to fill a vacancy, shall hold office until the expiration of the term
for which elected and until a successor has been elected and qualified.
Section 4. VACANCIES.
- ---------
Vacancies in the Board of Directors may be filled by a majority of the
remaining directors, though less than a quorum or by a sole remaining director,
except that a vacancy created by the removal of a director by the vote or
written consent of the shareholders or by court order may be filled only by the
vote of a majority of the shares entitled to vote represented at a duly held
meeting at which a quorum is present, or by the written consent of holders of a
majority of the outstanding shares entitled to vote. Each director so elected
shall hold office until the next annual meeting of the shareholders and until a
successor has been elected and qualified.
A vacancy or vacancies in the Board of Directors shall be deemed to exist
in the event of the death, disqualification, resignation, or removal of any
director, or if the Board of Directors by resolution declares vacant the office
of a director who has been declared of unsound mind by an order of court or
convicted of a felony, or if the authorized number of directors is increased or
if the shareholders fail, in any meeting of shareholders at which any director
or directors are elected, to elect the number of directors to be voted for at
that meeting.
The shareholders may elect a director or directors at any time to fill any
vacancy or vacancies not filled by the directors, but any such election by
written consent shall require the consent of a majority of the outstanding
shares entitled to vote.
Any director may resign effective on giving written notice to the chairman
of the board, the president, the secretary or the Board of Directors, unless the
notice specifies a later time for that resignation to become effective. If the
resignation of a director is effective at a future time,
7
<PAGE>
the Board of Directors may elect a successor to take office when the resignation
becomes effective.
No reduction of the authorized number of directors shall have the effect of
removing any director before that director's term of office expires.
Section 5. REMOVAL OF DIRECTORS.
- ---------
The entire Board of Directors or any individual director may be removed
from office as provided by Sections 302, 303 and 304 of the Corporations Code of
the State of California.
Section 6. PLACE OF MEETINGS AND MEETINGS BY TELEPHONE.
- ---------
Regular meetings of the Board of Directors may be held at any place within
or outside the State of California that has been designated from time to time by
resolution of the Board. In the absence of such designation, regular meetings
shall be held at the principal executive office of the corporation. Special
meetings of the board shall be held at any place within or outside the State of
California that has been designated in the notice of the meeting or, if not
stated in the notice or there is no notice, at the principal executive office of
the corporation. Any meeting, regular or special, may be held by conference
telephone or similar communication equipment, so long as all directors
participating in the meeting can hear one another, and all such directors shall
be deemed to be present in person at the meeting.
Section 7. ANNUAL MEETING.
- ---------
Immediately following each annual meeting of shareholders, the Board of
Directors shall hold a regular meeting for the purpose of organization, any
desired election of officers and the transaction of other business. Notice of
this meeting shall not be required.
Section 8. OTHER REGULAR MEETINGS.
- ---------
Other regular meetings of the Board of Directors shall be held without call
at such time as it shall from time to time be fixed by the Board of Directors.
Such regular meetings may be held without notice.
Section 9. SPECIAL MEETINGS - NOTICES.
- ---------
Special meetings of the Board of Directors for any purpose or purposes may
be called at any time by the chairman of the board or the president or any vice-
president or the secretary or any two directors.
Notice of the time and place of special meetings shall be delivered
personally or by telephone to each director, or sent by first-class mail or
telegram, charges prepaid, addressed to each director at that director's address
as it is shown on the records of the corporation. In case the notice is mailed,
it shall be deposited in the United States mail at least four (4) days before
the time of the holding of the meeting. In case the notice is delivered
personally or by telephone or telegram, it shall be delivered personally or by
telephone or to the telegraph company at least
8
<PAGE>
forty-eight (48) hours before the time of the holding of the meeting. Any oral
notice given personally or by telephone may be communicated either to the
director or to a person at the office of the director who the person giving the
notice has reason to believe will promptly communicate it to the director. The
notice need not specify the purpose of the meeting nor the place if the meeting
is to be held at the principal executive offices of the corporation.
Section 10. QUORUM.
- ----------
A majority of the authorized number of directors shall constitute a quorum
for the transaction of business, except to adjourn as provided in Section 13 of
this Article II, unless the authorized number of directors is two or less, in
which case all of the duly elected and acting directors shall constitute a
quorum for the transaction of business. Every act or decision done or made by a
majority of the directors present at a meeting duly held at which a quorum is
present shall be regarded as the act of the Board of Directors, subject to the
provisions of Section 310 of the Corporations Code of the State of California
(as to approval of contracts or transactions in which a director has a direct or
indirect material financial interest), Section 311 of that Code (as to
appointment of committees), and Section 317(e) of that Code (as to
indemnification of directors). A meeting at which a quorum is initially present
may continue to transact business notwithstanding the withdrawal of directors,
if any action taken is approved by at least a majority of the required quorum
for that meeting.
Section 11. WAIVER OF NOTICE.
- ----------
The transactions of any meeting of the Board of Directors, however called
and noticed and wherever held, shall be as valid as though had at a meeting duly
held after regular call and notice if a quorum is present and if, either before
or after the meeting, each of the directors not present signs a written waiver
of notice, a consent to holding the meeting or an approval of the minutes. The
waiver of notice or consent need not specify the purpose of the meeting. All
such waivers, consents and approval shall be filed with the corporate records or
made a part of the minutes of the meeting. Notice of a meeting shall also be
deemed given to any director who attends the meeting without protesting before
or at its commencement, the lack of notice to that director.
Section 12. DIRECTORS ACTING WITHOUT A MEETING BY UNANIMOUS WRITTEN CONSENT.
- ----------
Any action required or permitted to be taken by the Board of Directors may
be taken without a meeting, if all members of the Board shall individually or
collectively consent in writing to that action. Such action by written consent
shall have the same force and effect as a unanimous vote of the Board of
Directors. Such written consent or consents shall be filed with the minutes of
the proceedings of the Board.
Section 13. ADJOURNMENT.
- ----------
A majority of the directors present, whether or not constituting a quorum,
may adjourn any meeting to another time and place.
9
<PAGE>
Section 14. NOTICE OF ADJOURNMENT.
- ----------
Notice of the time and place of holding an adjourned meeting need not be
given, unless the meeting is adjourned for more than twenty-four (24) hours, in
which case notice of the time and place shall be given before the time of the
adjourned meeting, in the manner specified in Section 9 of this Article II, to
the directors who are not present at the time of the adjournment.
Section 15. COMPENSATION OF DIRECTORS.
- ----------
Directors and members of committees, as such, shall not receive any stated
salary for their services, but by resolution of the board a fixed sum and
expense of attendance, if any, may be allowed for attendance at each regular and
special meeting of the board; provided that nothing herein contained shall be
construed to preclude any director from serving the corporation in any other
capacity and receiving compensation therefor.
ARTICLE III
OFFICERS
--------
Section 1. OFFICERS.
- ---------
The officers of the corporation shall consist of a president, vice-
president, secretary, and chief financial officer. The corporation may also
have, at the discretion of the Board of Directors, a chairman of the board, one
or more additional vice-presidents, one or more assistant secretaries, one or
more assistant treasurers and such other officers as may be appointed in
accordance with the provisions of Section 3 of this Article. One person may
hold two or more offices, except those of president and secretary.
Section 2. ELECTION.
- ---------
The officers of the corporation, except those officers as may be appointed
in accordance with the provisions of Section 3 and Section 5 of this Article III
shall be chosen annually by the Board of Directors, and each shall hold his
office until he shall resign or shall be removed or otherwise disqualified to
serve, or his successor shall be elected and qualified.
Section 3. SUBORDINATE OFFICERS, ETC.
- ---------
The Board of Directors may appoint such other officers as the business of
the corporation may require, each of whom shall hold office for such period,
have such authority and perform such duties as are provided in the bylaws or as
the Board of Directors may from time to time determine.
Section 4. REMOVAL AND RESIGNATION.
- ---------
Any officer may be removed, either with or without cause, by the Board of
Directors at any regular or special meeting, or, except in case of an officer
chosen by the Board of Directors, by any officer upon whom such power of removal
may be conferred by the Board of Directors.
10
<PAGE>
Any officer may resign at any time by giving written notice to the Board of
Directors, or to the president or to the secretary of the corporation. Any such
resignation shall take effect at the date of this notice or at any later
specified time; and, unless otherwise specified, the acceptance of this
resignation shall not be necessary to make it effective.
Section 5. VACANCIES.
- ---------
A vacancy in any office because of death, resignation, removal,
disqualification, or because of any other cause shall be filled in the manner
prescribed in the bylaws for regular appointments to the office.
Section 6. CHAIRMAN OF THE BOARD.
- ---------
The chairman of the board, if there shall be such an officer, shall, if
present, preside at all meetings of the Board of Directors and exercise and
perform such other powers and duties as may be from time to time assigned to him
by the Board of Directors or prescribed by the bylaws. If there is no
president, the chairman of the board shall in addition be the chief executive
officer of the corporation and shall have the powers and duties prescribed in
Section 7 of this Article III.
Section 7. PRESIDENT.
- ---------
Subject to such supervisory powers, if any, as may be given by the Board of
Directors to the chairman of the board, if there be such an officer, the
president shall be the chief executive officer of the corporation and shall,
subject to the control of the Board of Directors, have general supervision,
direction and control of the business and officers of the corporation. He shall
preside at all meetings of the shareholders and in the absence of the chairman
of the board, or if there be none, at all meetings of the Board of Directors.
He shall be ex officio a member of all the standing committees, including the
executive committee, if any, and shall have the general powers and duties of a
corporate management usually vested in the office of president of a corporation
and shall have such other powers and duties as may be prescribed by the Board of
Directors or the bylaws.
Section 8. VICE-PRESIDENT.
- ---------
In the absence or disability of the president, the vice-president, if any,
shall perform all the duties of the president, and when so acting shall have all
the powers of, and be subject to, all the restrictions upon, the president. The
vice-president shall have such other powers and perform such other duties as
from time to time may be prescribed by the Board of Directors or the bylaws.
Section 9. SECRETARY.
- ---------
The secretary shall keep, or cause to be kept, a book of minutes at the
principal office or such other place as the Board of Directors may order, of all
meetings of directors and shareholders, with the time and place of holding,
whether regular or special and, if special, how authorized, the notice thereof
given, the names of those present at directors' meetings, the number of shares
present or represented at shareholders' meetings and the proceedings thereof.
11
<PAGE>
The secretary shall keep, or cause to be kept, at the principal office or
at the office of the corporation's transfer agent, a share register, or
duplicate share register, showing the names of the shareholders and their
addresses; the number and classes of shares held by each; the number and date of
certificates issued for the same; and the number and date of cancellation of
every certificate surrendered for cancellation.
The secretary shall give or cause to be given, notice of all the meetings
of the shareholders and of the Board of Directors required by the bylaws or by
law to be given, and he shall keep the seal of the corporation in safe custody
and shall have such other powers and perform such other duties as may be
prescribed by the Board of Directors or by the bylaws.
Section 10. CHIEF FINANCIAL OFFICER.
- ----------
The chief financial officer shall keep and maintain or cause to be kept and
maintained, adequate and correct accounts of the properties and business
transactions of the corporation, including accounts of its assets, liabilities,
receipts, disbursements, gains, losses, capital, surplus and shares. Any
surplus, including earned surplus, paid-in surplus and surplus arising from a
reduction of stated capital shall be classified according to source and shown in
a separate account. The books of account shall at all reasonable times be open
to inspection by any director.
The chief financial officer shall deposit all moneys and other valuables in
the name and to the credit of the corporation with such depositaries as may be
designated by the Board of Directors. He shall disburse the funds of the
corporation as may be ordered by the Board of Directors, shall render to the
president and directors, whenever they request it, an account of all of his
transactions as chief financial officer and of the financial condition of the
corporation and shall have such other powers and perform such other duties as
may be prescribed by the Board of Directors or the bylaws.
Section 11. SALARIES.
- ----------
The salaries of the officers and other shareholders employed by the
corporation shall be fixed from time to time by the Board of Directors or
established under agreements with officers or shareholders approved by the Board
of Directors, and no officer shall be prevented from receiving such salary by
reason of the fact that he is also a director of the corporation.
ARTICLE IV
CORPORATE RECORDS AND REPORTS-INSPECTION
----------------------------------------
Section 1. MAINTENANCE AND INSPECTION OF SHARE REGISTER.
- ---------
The corporation shall keep at its principal executive office, or at the
office of its transfer agent or registrar, if either be appointed and as
determined by resolution of the Board of Directors, a record of its shareholders
giving the names and addresses of all shareholders and the number and class of
shares held by each shareholder.
A shareholder or shareholders of the corporation holding at least five
percent (5%) in the aggregate of the outstanding voting shares of the
corporation may (a) inspect and copy the
12
<PAGE>
records of the shareholders' names and addresses and shareholdings during usual
business hours on five days' prior written demand on the corporation and (b)
obtain from the transfer agent of the corporation, on written demand and on
tender of such transfer agent's usual charges for such list, a list of the
shareholders' names and addresses, who are entitled to vote for the election of
directors and their shareholdings, as of the most recent record date for which
that list has been compiled or as of a date specified by the shareholder after
the date of demand. This list shall be made available to any such shareholder
by the transfer agent on or before the later of five (5) days after the demand
is received or the date specified in the demand as the date as of which the list
is to be compiled. The record of shareholders shall also be open to inspection
on the written demand of any shareholder or holder of a voting trust
certificate, at any time during usual business hours, for a purpose reasonably
related to the holder's interest as a shareholder or as a holder of a voting
trust certificate. Any inspection and copying under this Section 1 may be made
in person or by an agent or attorney of the shareholder or holder of a voting
trust certificate making the demand.
Section 2. MAINTENANCE AND INSPECTION OF BYLAWS.
- ---------
The corporation shall keep at its principal executive office, or if its
principal executive office is not in the State of California, at its principal
business office in this state, the original or a copy of the bylaws as amended
to date, which shall be open to inspection by the shareholders at all reasonable
times during office hours. If the principal executive office of the corporation
is outside the State of California and the corporation has no principal business
office in this state, the secretary shall, upon the written request of any
shareholder, furnish to that shareholder a copy of the bylaws as amended to
date.
Section 3. MAINTENANCE AND INSPECTION OF OTHER CORPORATE RECORDS.
- ---------
The accounting books and records and minutes of proceedings of the
shareholders and the Board of Directors and any committee or committees of the
Board of Directors shall be kept at such place or places designated by the Board
of Directors, or, in the absence of such designation, at the principal executive
office of the corporation. The minutes shall be kept in written form and the
accounting books and records shall be kept either in written form or in any
other form capable of being converted into written form. The minutes and
accounting books and records shall be open to inspection upon the written demand
of any shareholder or holder of a voting trust certificate, at any reasonable
time during usual business hours, for a purpose reasonably related to the
holder's interests as a shareholder or as a holder of a voting trust
certificate. The inspection may be made in person or by an agent or attorney,
and shall include the right to copy and make extracts. These rights of
inspection shall extend to the records of each subsidiary corporation of the
corporation.
Section 4. INSPECTION BY DIRECTORS.
- ---------
Every director shall have the absolute right at any reasonable time to
inspect all books, records and documents of every kind and the physical
properties of the corporation at each of its subsidiary corporations. This
inspection by a director may be made in person or by an agent or attorney and
the right of inspection includes the right to copy and make extracts of
documents.
13
<PAGE>
Section 5. ANNUAL REPORT TO SHAREHOLDERS.
- ---------
The annual report to shareholders referred to in Section 1501 of the
California General Corporation Law is expressly dispensed with, but nothing
herein shall be interpreted as prohibiting the Board of Directors from issuing
annual or other periodic reports to the shareholders of the corporation as they
consider appropriate.
Section 6. FINANCIAL STATEMENTS.
- ---------
A copy of any annual financial statements and any income statement of the
corporation for each quarterly period of each fiscal year, and any accompanying
balance sheet of the corporation as of the end of such period, that has been
prepared by the corporation shall be kept on file in the principal executive
office of the corporation for twelve (12) months and each statement shall be
exhibited at all reasonable times to any shareholder demanding an examination of
such statement or a copy thereof shall be mailed to any such shareholder.
If a shareholder or shareholders holding at least five percent (5%) of the
outstanding shares of any class of stock of the corporation makes a written
request to the corporation for an income statement of the corporation for the
three-month, six-month or nine-month period of the current fiscal year ended
more than thirty (30) days before the date of the request, and a balance sheet
of the corporation as of the end of that period, the treasurer or chief
financial officer shall cause that statement to be prepared, if not already
prepared, and shall deliver personally or mail that statement or statements to
the person making the request within thirty (30) days after the receipt of the
request. If the corporation has not sent to the shareholders its annual report
for the last fiscal year, this report shall likewise be delivered or mailed to
the shareholder or shareholders within thirty (30) days after the request.
The corporation shall also, on the written request of any shareholder, mail
to the shareholder a copy of the last annual, semi-annual or quarterly income
statement which it has prepared, and a balance sheet as of the end of that
period.
The quarterly income statements and balance sheets referred to in this
section shall be accompanied by a report, if any, of any independent accountants
engaged by the corporation or the certificate of an authorized officer of the
corporation that the financial statements were prepared without audit from the
books and records of the corporation.
Section 7. ANNUAL STATEMENT OF GENERAL INFORMATION.
- ---------
The corporation shall annually, during the period commencing five calendar
months preceding the calendar month during which the original Articles of
Incorporation were filed and ending with the end of the calendar month during
which the original Articles of Incorporation were filed with the Secretary of
State, file with the Secretary of State of the State of California, on the
prescribed form, a statement setting forth the authorized number of directors,
the names and complete business or residence addresses of all incumbent
directors, the names and complete business or residence addresses of the chief
executive officer, secretary and chief financial officer, the street address of
its principal executive office or principal business office in the state, and
the
14
<PAGE>
general type of business constituting the principal business activity of
the corporation, together with a designation of the agent of the corporation for
the purpose of service of process, all in compliance with Section 1502 of the
Corporations Code of California.
ARTICLE V
GENERAL CORPORATE MATTERS
-------------------------
Section 1. RECORD DATE FOR PURPOSES OTHER THAN NOTICE AND VOTING.
- ---------
For purposes of determining the shareholders entitled to receive payment of
any dividend or other distribution or allotment of any rights or entitled to
exercise any rights in respect of any other lawful election (other than action
by shareholders by written consent without a meeting) the Board of Directors may
fix, in advance, a record date, which shall not be more than sixty (60) days
before any such action and in that case only shareholders of record on the date
so fixed are entitled to receive the dividend, distribution or allotment of
rights or to exercise the rights, as the case may be, notwithstanding any
transfer of any shares on the books of the corporation after the record date so
fixed, except as otherwise provided in the California General Corporation Law.
If the Board of Directors does not so fix a record date, the record date
for determining shareholders for any such purpose shall be at the close of
business on the day on which the board adopts the applicable resolution or the
sixtieth (60th) day before the date of that action, whichever is later.
Section 2. CHECKS, DRAFTS, EVIDENCES OF INDEBTEDNESS.
- ---------
All checks, drafts or other orders for payment of money, notes or other
evidences of indebtedness, issued in the name of or payable to the corporation
shall be signed or endorsed by such person or persons and in such manner as,
from time to time, shall be determined by the resolution of the Board of
Directors.
Section 3. CORPORATE CONTRACTS AND INSTRUMENTS; HOW EXECUTED.
- ---------
The Board of Directors, except as otherwise provided in these Bylaws, may
authorize any officer or officers, agent or agents, to enter into any contract
or execute any instrument in the name of and on behalf of the corporation and
this authority shall be general or confined to specific instances; and, unless
so authorized or ratified by the Board of Directors or within the agency power
of an officer, no officer, agent or employee shall have any power or authority
to bind the corporation by any contract or engagement or to pledge its credit or
to render it liable for any purpose or for any amount.
Section 4. CERTIFICATES FOR SHARES.
- ---------
A certificate or certificates for shares of the capital stock of the
corporation shall be issued to each shareholder when any of these shares are
fully paid, and the Board of Directors may authorize the issuance of
certificates or shares as partly paid provided that these certificates shall
state the amount of the consideration to be paid for them and the amount paid.
All certificates shall be signed in the name of the corporation by the chairman
of the board or vice-chairman of
15
<PAGE>
the board or the president or vice-president and by the chief financial officer
or an assistant treasurer or the secretary or any assistant secretary,
certifying the number of shares and the class or series of shares owned by the
shareholder. Any or all of the signatures on the certificate may be facsimile.
In case any officer, transfer agent, or registrar who has signed or whose
facsimile signature has been placed on a certificate shall have ceased to be
that officer, transfer agent or registrar before that certificate is issued, it
may be issued by the corporation with the same effect as if that person were an
officer, transfer agent or registrar at the date of issuance.
Section 5. LOST CERTIFICATES.
- ---------
Except as provided in this Section 5, no new certificates for shares shall
be issued to replace an old certificate unless the latter is surrendered to the
corporation and cancelled at the same time. The Board of Directors, in case any
share certificate or certificate for any other security is lost, stolen, or
destroyed, may authorize the issuance of a replacement certificate on such terms
and conditions as the board may require, including provision for indemnification
of the corporation secured by a bond or other adequate security sufficient to
protect the corporation against any claim that may be made against it, including
any expense or liability, on account of the alleged loss, theft or destruction
of the certificate or the issuance of the replacement certificate.
Section 6. REPRESENTATION OF SHARES OF OTHER CORPORATIONS.
- ---------
The chairman of the board, the president or any vice-president, or any
other person authorized by resolution of the Board of Directors or by any of the
foregoing designated officers, is authorized to vote on behalf of the
corporation any and all shares of any other corporation or corporations, foreign
or domestic, standing in the name of the corporation. The authority granted to
these officers to vote or represent on behalf of the corporation any and all
shares held by the corporation in any other corporation or corporations may be
exercised by any of these officers in person or by any person authorized to do
so by a proxy duly executed by these officers.
Section 7. INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND OTHER AGENTS.
- ---------
The corporation shall, to the maximum extent permitted by California
General Corporation Law, indemnify each of its agents against expenses,
judgments, fines, settlements and other amounts actually and reasonably incurred
in connection with any proceeding arising by reason of the fact that any such
person is or was an agent of the corporation. For purposes of this Section 7,
an "agent" of the corporation includes any person who is or was a director,
officer, employee or other agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, or was a
director, officer, employee or agent of a corporation which was a predecessor
corporation of the corporation or of another enterprise at the request of such
predecessor corporation.
Section 8. CONSTRUCTION AND DEFINITIONS.
- ---------
16
<PAGE>
Unless the context requires otherwise, the general provisions, rules of
construction and definitions in the California General Corporation Law shall
govern the construction of these Bylaws. Without limiting the generality of
this provision, the singular in number includes the plural, the plural number
includes the singular and the term "person" includes both a corporation and a
natural person.
ARTICLE VI
OFFICES
-------
Section 1. PRINCIPAL OFFICES.
- ---------
The Board of Directors shall fix the location of the principal executive
offices of the corporation at any place within or outside the State of
California. If the principal executive offices are located outside the state,
and the corporation has one or more business offices in the state, the Board of
Directors shall fix and designate a principal business office in the State of
California.
Section 2. OTHER OFFICES.
- ---------
The Board of Directors may at any time establish branch or subordinate
offices at any place or places where the corporation is qualified to do
business.
ARTICLE VII
AMENDMENTS
----------
Section 1. AMENDMENT BY SHAREHOLDERS.
- ---------
New Bylaws may be adopted or these Bylaws may be amended or repealed by the
vote or written consent of holders of a majority of the outstanding shares
entitled to vote; provided, however, that if the Articles of Incorporation of
the corporation set forth a number of authorized directors of the corporation,
the authorized number of directors may be changed only by an amendment of the
Articles of Incorporation.
Section 2. AMENDMENT BY DIRECTORS.
- ---------
Subject to the rights of the shareholders as provided in Section 1 of this
Article VII, Bylaws, other than a bylaw or an amendment of a bylaw changing the
authorized number of directors, may be adopted, amended or repealed by the Board
of Directors.
17
<PAGE>
EXHIBIT 4.01
SALEM COMMUNICATIONS CORPORATION, a California corporation, as Issuer.
ATEP RADIO, INC.,
BELTWAY MEDIA PARTNERS,
BISON MEDIA, INC.,
CARON BROADCASTING, INC.,
COMMON GROUND BROADCASTING, INC.,
GOLDEN GATE BROADCASTING COMPANY, INC.,
INLAND RADIO, INC.,
INSPIRATION MEDIA, INC.,
INSPIRATION MEDIA OF TEXAS, INC.,
NEW ENGLAND CONTINENTAL MEDIA, INC.,
NEW INSPIRATION BROADCASTING COMPANY, INC.,
OASIS RADIO, INC.,
PENNSYLVANIA MEDIA ASSOCIATES, INC.,
RADIO 1210, INC.,
SALEM COMMUNICATIONS CORPORATION, a Delaware corporation
SALEM MEDIA CORPORATION,
SALEM MEDIA OF CALIFORNIA, INC.,
SALEM MEDIA OF COLORADO, INC.,
SALEM MEDIA OF LOUISIANA, INC.,
SALEM MEDIA OF OHIO, INC.,
SALEM MEDIA OF OREGON, INC.,
SALEM MEDIA OF PENNSYLVANIA, INC.,
SALEM MEDIA OF TEXAS, INC.,
SALEM MUSIC NETWORK, INC.,
SALEM RADIO NETWORK INCORPORATED,
SALEM RADIO REPRESENTATIVES, INC.,
SOUTH TEXAS BROADCASTING, INC.,
SRN NEWS NETWORK, INC.,
VISTA BROADCASTING, INC.,
as Guarantors
and
THE BANK OF NEW YORK, as Trustee
----------
INDENTURE
Dated as of September 25, 1997
----------
$150,000,000
9.5% Senior Subordinated Notes due 2007
<PAGE>
CROSS-REFERENCE TABLE*
---------------------
<TABLE>
<CAPTION>
Trust Indenture
Act Section Indenture Section
- -------------- -----------------
<S> <C>
310(a)(1)..................... 608
(a)(2)..................... 608
(a)(3)..................... N.A.
(a)(4)..................... N.A.
(b)........................ 106; 607; 608; 609; 703
(c)........................ N.A.
311(a)........................ 612
(b)........................ 612
(c)........................ N.A.
312(a)........................ 701
(b)........................ 702
(c)........................ 702
313(a)........................ 703
(b)(1)..................... N.A.
(b)(2)..................... 703
(c)........................ 107; 703
(d)........................ 703
314(a)........................ 106; 1020
(b)........................ N.A.
(c)(1)..................... 103
(c)(2)..................... 103
(c)(3)..................... N.A.
(d)........................ N.A.
(e)........................ 103
(f)........................ N.A.
315(a)........................ 602(a)
(b)........................ 107; 601
(c)........................ 602(k)
(d)........................ 602(e)
(e)........................ 514
316(a)(last sentence)......... 101 (definition of
"Outstanding")
(a)(1)..................... 512
(a)(2)..................... N.A.
(b)........................ 508
(c)........................ 105
317(a)(1)..................... 503
(a)(2)..................... 504
(b)........................ 1003
318(a)........................ 108
</TABLE>
N.A. means not applicable.
- ---------------
*This Cross-Reference Table is not part of the Indenture.
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION............................. 2
Section 101. Definitions.................................................. 2
Section 102. Other Definitions............................................ 20
Section 103. Compliance Certificates and Opinions......................... 20
Section 104. Form of Documents Delivered to Trustee....................... 21
Section 105. Acts of Holders.............................................. 22
Section 106. Notices, etc., to Trustee, the Company and any
Guarantor.................................................... 23
Section 107. Notice to Holders: Waiver.................................... 23
Section 108. Conflict with Trust Indenture Act............................ 24
Section 109. Effect of Headings and Table of Contents..................... 24
Section 110. Successors and Assigns....................................... 24
Section 111. Separability Clause.......................................... 24
Section 112. Benefits of Indenture........................................ 24
Section 113. Governing Law................................................ 24
Section 114. Legal Holidays............................................... 25
Section 115. Schedules and Exhibits....................................... 25
Section 116. Counterparts................................................. 25
ARTICLE II SECURITY FORMS..................................................................... 25
Section 201. Forms Generally.............................................. 25
Section 202. Form of Face of Security..................................... 26
Section 203. Form of Reverse of Securities................................ 32
Section 204. Additional Provisions Required in Global Security............ 39
Section 205. Form of Trustee's Certificate of Authentication.............. 40
Section 206. Form of Guarantee of Each of the Guarantors.................. 40
ARTICLE III THE SECURITIES.................................................................... 43
Section 301. Title and Terms.............................................. 43
Section 302. Denominations................................................ 43
Section 303. Execution, Authentication, Delivery and Dating............... 44
Section 304. Temporary Securities......................................... 45
Section 305. Global Securities............................................ 45
Section 306. Registration, Registration of Transfer and Exchange.......... 46
Section 307. Special Transfer Provisions.................................. 48
Section 308. Mutilated, Destroyed, Lost and Stolen Securities............. 50
Section 309. Payment of Interest; Interest Rights Preserved............... 51
Section 310. Persons Deemed Owners........................................ 52
Section 311. Cancellation................................................. 52
Section 312. Computation of Interest...................................... 53
Section 313. CUSIP Numbers................................................ 53
</TABLE>
- i -
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE IV DEFEASANCE AND COVENANT DEFEASANCE.................................................. 53
Section 401. Company's Option to Effect Defeasance or Covenant
Defeasance.................................................... 53
Section 402. Defeasance and Discharge...................................... 53
Section 403. Covenant Defeasance........................................... 54
Section 404. Conditions to Defeasance or
Covenant Defeasance........................................... 54
Section 405. Deposited Money and U.S. Government Obligations to
Be Held in Trust; Other Miscellaneous Provisions.............. 56
Section 406. Reinstatement................................................. 57
ARTICLE V REMEDIES............................................................................. 57
Section 501. Events of Default............................................. 57
Section 502. Acceleration of Maturity; Rescission and Annulment............ 59
Section 503. Collection of Indebtedness and Suits for Enforcement
by Trustee.................................................... 60
Section 504. Trustee May File Proofs of Claim.............................. 61
Section 505. Trustee May Enforce Claims without Possession of
Securities.................................................... 62
Section 506. Application of Money Collected................................ 62
Section 507. Limitation on Suits........................................... 62
Section 508. Unconditional Right of Holders to Receive Principal,
Premium and Interest.......................................... 63
Section 509. Restoration of Rights and Remedies............................ 63
Section 510. Rights and Remedies Cumulative................................ 63
Section 511. Delay or Omission Not Waiver.................................. 64
Section 512. Control by Holders............................................ 64
Section 513. Waiver of Past Defaults....................................... 64
Section 514. Undertaking for Costs......................................... 64
Section 515. Waiver of Stay, Extension or Usury Laws....................... 65
ARTICLE VI THE TRUSTEE......................................................................... 65
Section 601. Notice of Defaults............................................ 65
Section 602. Certain Rights and Duties of Trustee.......................... 65
Section 603. Trustee Not Responsible for Recitals, Dispositions of
Securities or Application of Proceeds Thereof................. 67
Section 604. Trustee and Agents May Hold Securities; Collections;
etc........................................................... 67
Section 605. Money Held in Trust........................................... 67
Section 606. Compensation and Indemnification of Trustee and Its
Prior Claim................................................... 67
Section 607. Conflicting Interests......................................... 68
Section 608. Corporate Trustee Required,................................... 68
Section 609. Resignation and Removal: Appointment of Successor
Trustee....................................................... 69
Section 610. Acceptance of Appointment by Successor........................ 70
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Section 611. Merger, Conversion, Consolidation or Succession to
Business..................................................... 71
Section 612. Preferential Collection of Claims Against Company............ 71
ARTICLE VII HOLDERS' LISTS AND REPORTS BY TRUSTEE............................................. 71
Section 701. Company to Furnish Trustee with Names and
Addresses of Holders......................................... 71
Section 702. Disclosure of Names and Addresses of Holders................. 72
Section 703. Reports by Trustee........................................... 72
Section 704. Reports by Company and Guarantors............................ 72
ARTICLE VIII CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE............................. 73
Section 801. Company or Any Guarantor May Consolidate, etc.,
Only on Certain Terms........................................ 73
Section 802. Successor Substituted........................................ 75
ARTICLE IX SUPPLEMENTAL INDENTURES............................................................ 75
Section 901. Supplemental Indentures and Agreements without
Consent of Holders........................................... 75
Section 902. Supplemental Indentures and Agreements with Consent
of Holders................................................... 76
Section 903. Execution of Supplemental Indentures and Agreements.......... 77
Section 904. Effect of Supplemental Indentures............................ 77
Section 905. Conformity with Trust Indenture Act.......................... 78
Section 906. Reference in Securities to Supplemental Indentures........... 78
Section 907. Effect on Senior Indebtedness................................ 78
ARTICLE X COVENANTS........................................................................... 78
Section 1001. Payment of Principal, Premium and Interest................... 78
Section 1002. Maintenance of Office or Agency.............................. 78
Section 1003. Money for Security Payments to Be Held in Trust.............. 79
Section 1004. Corporate Existence.......................................... 80
Section 1005. Payment of Taxes and Other Claims............................ 80
Section 1006. Maintenance of Properties.................................... 81
Section 1007. Insurance.................................................... 81
Section 1008. Limitation on Indebtedness................................... 81
Section 1009. Limitation on Restricted Payments............................ 83
Section 1010. Limitation on Transactions with Affiliates................... 85
Section 1011. Limitation on Senior Subordinated Indebtedness............... 85
Section 1012. Limitation on Liens.......................................... 86
Section 1013. Limitation on Sale of Assets................................. 87
Section 1014. Limitation on Issuances of Guarantees of and Pledges
for Indebtedness............................................. 90
Section 1015. Restriction on Transfer of Assets............................ 91
Section 1016. Purchase of Securities upon a Change of Control.............. 91
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Section 1017. Limitation on Subsidiary Equity Interests..................... 95
Section 1018. Limitation on Dividends and Other Payment
Restrictions Affecting Subsidiaries........................... 95
Section 1019. Limitation on Unrestricted Subsidiaries....................... 95
Section 1020. Provision of Financial Statements............................. 96
Section 1021. Statement by Officers as to Default........................... 96
Section 1022. Waiver of Certain Covenants................................... 96
Section 1023. Limitation on Asset Swaps..................................... 97
ARTICLE XI REDEMPTION OF SECURITIES............................................................ 97
Section 1101. Rights of Redemption.......................................... 97
Section 1102. Applicability of Article...................................... 97
Section 1103. Election to Redeem; Notice to Trustee......................... 97
Section 1104. Selection by Trustee of Securities to Be Redeemed............. 98
Section 1105. Notice of Redemption.......................................... 98
Section 1106. Deposit of Redemption Price................................... 99
Section 1107. Securities Payable on Redemption Date......................... 99
Section 1108. Securities Redeemed or Purchased in Part...................... 99
ARTICLE XII SUBORDINATION OF SECURITIES........................................................100
Section 1201. Securities Subordinate to Senior Indebtedness.................100
Section 1202. Payment Over of Proceeds Upon Dissolution, etc................100
Section 1203. Suspension of Payment When Senior Indebtedness in
Default.......................................................101
Section 1204. Payment Permitted if No Default...............................102
Section 1205. Subrogation to Rights of Holders of Senior
Indebtedness..................................................103
Section 1206. Provisions Solely to Define Relative Rights...................103
Section 1207. Trustee to Effectuate Subordination...........................103
Section 1208. No Waiver of Subordination Provisions.........................104
Section 1209. Notice to Trustee.............................................104
Section 1210. Reliance on Judicial Order or Certificate of Liquidating
Agent.........................................................105
Section 1211. Rights of Trustee as a Holder of Senior Indebtedness
Preservation of Trustee's Rights..............................105
Section 1212. Article Applicable to Paying Agents...........................105
Section 1213. No Suspension of Remedies.....................................106
Section 1214. Trustee's Relation to Senior Indebtedness.....................106
ARTICLE XIII SATISFACTION AND DISCHARGE........................................................106
Section 1301. Satisfaction and Discharge of Indenture.......................106
Section 1302. Application of Trust Money....................................107
ARTICLE XIV GUARANTEE..........................................................................107
Section 1401. Guarantors' Guarantee.........................................107
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Section 1402. Continuing Guarantee; No Right of Set-Off;
Independent Obligation....................................... 108
Section 1403. Guarantee Absolute........................................... 109
Section 1404. Right to Demand Full Performance............................. 111
Section 1405. Waivers...................................................... 111
Section 1406. The Guarantors Remain Obligated in Event the
Company Is No Longer Obligated to Discharge
Indenture Obligations........................................ 112
Section 1407. Fraudulent Conveyance; Subrogation........................... 112
Section 1408. Guarantee Is in Addition to Other Security................... 112
Section 1409. Release of Security Interests................................ 112
Section 1410. No Bar to Further Actions.................................... 113
Section 1411. Failure to Exercise Rights Shall Not Operate as a
Waiver; No Suspension of Remedies............................ 113
Section 1412. Trustee's Duties, Notice to Trustee.......................... 113
Section 1413. Successors and Assigns....................................... 113
Section 1414. Release of Guarantee......................................... 113
Section 1415. Execution of Guarantee....................................... 114
Section 1416. Guarantee Subordinate to Guarantor Senior
Indebtedness................................................. 114
Section 1417. Payment Over of Proceeds Upon Dissolution of the
Guarantor, etc............................................... 115
Section 1418. Default on Guarantor Senior.................................. 116
Section 1419. Payment Permitted by Each of the Guarantors if No
Default...................................................... 116
Section 1420. Subrogation to Rights of Holders of Guarantor Senior
Indebtedness................................................. 116
Section 1421. Provisions Solely to Define Relative Rights.................. 117
Section 1422. Trustee to Effectuate Subordination.......................... 117
Section 1423. No Waiver of Subordination Provisions........................ 117
Section 1424. Notice to Trustee by Each of the Guarantors.................. 118
Section 1425. Reliance on Judicial Order or Certificate of Liquidating
Agent........................................................ 119
Section 1426. Rights of Trustee as a Holder of Guarantor Senior
Indebtedness; Preservation of Trustee's Rights............... 119
Section 1427. Article Applicable to Paying Agents.......................... 119
Section 1428. No Suspension of Remedies.................................... 119
Section 1429. Trustee's Relation to Guarantor Senior Indebtedness.......... 120
Section 1430. Limitation on Guarantee...................................... 120
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SCHEDULE I Existing Indebtedness of Salem Communications Corporation and its
Restricted Subsidiaries
SCHEDULE II Existing Liens
SCHEDULE III Existing Encumbrances and Restrictions
EXHIBIT A Form of Restricted Securities Transfer Certificate (General)
EXHIBIT B Form of Intercompany Note
EXHIBIT C Form of Restricted Securities Transfer Certificate (Non-U.S.
Persons)
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INDENTURE, dated as of September 25, 1997, among SALEM COMMUNICATIONS
CORPORATION, a California corporation (the "COMPANY"), ATEP RADIO, INC., a
California corporation, BELTWAY MEDIA PARTNERS, a Virginia partnership, BISON
MEDIA, INC., a California corporation, CARON BROADCASTING, INC., an Ohio
corporation, COMMON GROUND BROADCASTING, INC., an Oregon corporation, GOLDEN
GATE BROAD CASTING COMPANY, INC., a California corporation, INLAND RADIO, INC.,
a California corporation, INSPIRATION MEDIA, INC., a Washington corporation,
INSPIRATION MEDIA OF TEXAS, INC., a Texas corporation, NEW ENGLAND CONTINENTAL
MEDIA, INC., a Massa chusetts corporation, NEW INSPIRATION BROADCASTING COMPANY,
INC., a California corporation, OASIS RADIO, INC., a California corporation,
PENNSYLVANIA MEDIA ASSOCIATES, INC., a Pennsylvania corporation, RADIO 1210,
INC., a California corporation, SALEM COMMUNICATIONS CORPORATION, a Delaware
corporation, SALEM MEDIA COR PORATION, a New York corporation, SALEM MEDIA OF
CALIFORNIA, INC., a California corporation, SALEM MEDIA OF COLORADO, INC., a
Colorado corporation, SALEM MEDIA OF LOUISIANA, INC., a Louisiana corporation
SALEM MEDIA OF OHIO, INC., an Ohio corporation, SALEM MEDIA OF OREGON, INC., an
Oregon corporation, SALEM MEDIA OF PENNSYL VANIA, INC., a Pennsylvania
corporation, SALEM MEDIA OF TEXAS, INC., a Texas corporation, SALEM MUSIC
NETWORK, INC., a Texas corporation, SALEM RADIO NETWORK INCOR PORATED, a
Delaware corporation, SALEM RADIO REPRESENTATIVES, INC., a Texas corporation,
SRN NEWS NETWORK, INC., a Texas corporation, SOUTH TEXAS BROADCAS TING, INC., a
Texas corporation, and VISTA BROADCASTING, INC., a California corporation
(collectively, the "GUARANTORS"), and THE BANK OF NEW YORK, a New York banking
corporation, as trustee (the "TRUSTEE").
RECITALS OF THE COMPANY
The Company has duly authorized the creation of an issue of 9.5%
Senior Subordinated Notes due 2007, Series A (the "INITIAL SECURITIES" or the
"SERIES A SECURITIES"), and an issue of 9.5% Senior Subordinated Notes due 2007,
Series B (the "SERIES B SECURITIES" and, together with the Series A Securities,
the "SECURITIES") of substantially the tenor and amount hereinafter set forth,
and to provide therefor the Company has duly authorized the execution and
delivery of this Indenture and the Securities.
Each Guarantor has duly authorized the issuance of a guarantee (the
"GUARANTEES") of the Securities, of substantially the tenor hereinafter set
forth, and to provide therefor, each Guarantor has duly authorized the execution
and delivery of this Indenture and the Guarantee.
This Indenture is subject to, and shall be governed by, the provisions of
the Trust Indenture Act that are required to be part of and to govern indentures
qualified under the Trust Indenture Act.
All acts and things necessary have been done to make (i) the Securities,
when executed by the Company and authenticated and delivered hereunder and duly
issued by the Company, the valid obligations of the Company, (ii) the
Guarantees, when executed by each of the Guarantors and delivered hereunder, the
valid obligation of each of the Guarantors and (iii) this Indenture a valid
agreement of the Company and each of the Guarantors in accordance with the terms
of this Indenture.
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NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all Holders of the Securities, as follows:
ARTICLE I
---------
DEFINITIONS AND OTHER PROVISIONS OF
-----------------------------------
GENERAL APPLICATION
-------------------
Section 101. Definitions.
-----------
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned to
them in this Article, and include the plural as well as the singular;
(b) all other terms used herein that are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(c) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP;
(d) the words "HEREIN", "HEREOF" and "HEREUNDER" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision; and
(e) all references to $, US$, dollars or United States dollars shall
refer to the lawful currency of the United States of America.
"ACCREDITED INVESTOR" means an institutional "accredited investor"
within the meaning of Rule 501 (a)(1), (2), (3) or (7) of Regulation D under the
Securities Act.
"ACQUIRED INDEBTEDNESS" means Indebtedness of a Person (i) existing at
the time such Person becomes a Subsidiary or (ii) assumed in connection with the
acquisition of assets from such Person, in each case, other than Indebtedness
incurred in connection with, or in contemplation of, such Person becoming a
Subsidiary or such acquisition. Acquired Indebtedness shall be deemed to be
incurred on the date of the related acquisition of assets from any Person or the
date the acquired Person becomes a Subsidiary.
"AFFILIATE" means, with respect to any specified Person, (i) any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person, (ii) any other Person that
owns, directly or indirectly, 5% or more of such Person's Equity Interests or
any officer or director of any such Person or other Person or, with respect to
any natural Person, any Person having a relationship with such Person or other
Person by blood, marriage or
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adoption not more remote than first cousin or (iii) any other Person 10% or more
of the voting Equity Interests of which are beneficially owned or held directly
or indirectly by such specified Person. For the purposes of this definition,
"CONTROL" when used with respect to any specified Person means the power to
direct the management and policies of such Person directly or indirectly,
whether through ownership of voting securities, by contract or otherwise; and
the terms "CONTROLLING" and "CONTROLLED" have meanings correlative to the
foregoing.
"ASSET SALE" means any sale, issuance, conveyance, transfer, lease or
other disposition (including, without limitation, by way of merger,
consolidation or Sale and Leaseback Transaction) (collectively, a "TRANSFER"),
directly or indirectly, in one or a series of related transactions, of (i) any
Equity Interest of any Restricted Subsidiary; (ii) all or substantially all of
the properties and assets of any division or line of business of the Company or
its Restricted Subsidiaries; or (iii) any other properties or assets of the
Company or any Restricted Subsidiary, other than in the ordinary course of
business. For the purposes of this definition, the term "ASSET SALE" shall not
include any transfer of properties and assets (A) that is governed by Section
801(a) or Section 1023, (B) that is by the Company to any Wholly Owned
Restricted Subsidiary, or by any Restricted Subsidiary to the Company or any
Wholly Owned Restricted Subsidiary in accordance with the terms of this
Indenture or (C) that aggregates not more than $1,000,000 in gross proceeds.
"AGENT MEMBER" means any member of, or participant in, the Depositary.
"ASSET SWAP" means an Asset Sale by the Company or any Restricted
Subsidiary in exchange for properties or assets that will be used in the
business of the Company and its Restricted Subsidiaries existing on the date of
this Indenture or reasonably related thereto.
"AVERAGE LIFE TO STATED MATURITY" means, as of the date of
determination with respect to any Indebtedness, the quotient obtained by
dividing (i) the sum of the products of (a) the number of years from the date of
determination to the date or dates of each successive scheduled principal
payment of such Indebtedness multiplied by (b) the amount of each such principal
payment by (ii) the sum of all such principal payments.
"BANK CREDIT AGREEMENT" means the Credit Agreement, dated as of
September 25, 1997, among the Company, the lenders named therein, The Bank of
New York, as administrative agent and Bank of America NT&SA, as documentation
agent, as such agreement may be amended, renewed, extended, substituted,
refinanced, restructured, replaced, supplemented or otherwise modified from time
to time (including, without limitation, any successive renewals, extensions,
substitutions, refinancings, restructurings, replacements, supplementations or
other modifications of the foregoing). For all purposes under this Indenture,
"BANK CREDIT AGREEMENT" shall include any amendments, renewals, extensions,
substitutions, refinancings, restructurings, replacements, supplements or any
other modifications that increase the principal amount of the Indebtedness or
the commitments to lend thereunder and have been made in compliance with Section
1008; provided that, for purposes of the definition of "PERMITTED INDEBTEDNESS,"
--------
no such increase may result in the principal amount of Indebtedness of the
Company under the Bank Credit Agreement exceeding the amount permitted by
Section 1008(b)(i).
"BANKRUPTCY LAW" means Title 11, United States Bankruptcy Code of
1978, as amended, or any similar United States federal or state law relating to
bankruptcy, insolvency,
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receivership, winding-up, liquidation, reorganization or relief of debtors or
any amendment to, succession to or change in any such law.
"BOARD OF DIRECTORS" means the board of directors of the Company or
any Guarantor, as the case may be, or any duly authorized committee of such
board.
"BOARD RESOLUTION" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company or any Guarantor, as the case
may be, to have been duly adopted by the Board of Directors of such entity and
to be in full force and effect on the date of such certification, and delivered
to the Trustee.
"BUSINESS DAY" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in The City of New York,
the State of California or the city in which the Corporate Trust Office is
located are authorized or obligated by law or executive order to close.
"CAPITAL LEASE OBLIGATION" means any obligation of the Company and its
Restricted Subsidiaries on a Consolidated basis under any capital lease of real
or personal property that, in accordance with GAAP, has been recorded as a
capitalized lease obligation.
"CASH EQUIVALENTS" means, (i) any evidence of Indebtedness with a
maturity of one year or less from the date of acquisition issued or directly and
fully guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
--------
States of America is pledged in support thereof); (ii) certificates of deposit
or acceptances with a maturity of one year or less from the date of acquisition
of any financial institution that is a member of the Federal Reserve System
having combined capital and surplus and undivided profits of not less than
$500,000,000; (iii) commercial paper with a maturity of one year or less from
the date of acquisition issued by a corporation that is not an Affiliate of the
Company organized under the laws of any state of the United States or the
District of Columbia and rated A-1 (or higher) according to S&P or P-1 (or
higher) according to Moody's or at least an equivalent rating category of
another nationally recognized securities rating agency: (iv) any money market
deposit accounts issued or offered by a domestic commercial bank having capital
and surplus in excess of $500,000,000: and (v) repurchase agreements and reverse
repurchase agreements relating to marketable direct obligations issued or
unconditionally guaranteed by the government of the United States of America or
issued by any agency thereof and backed by the full faith and credit of the
United States of America, in each case maturing within one year from the date of
acquisition; provided that the terms of such agreements comply with the
--------
guidelines set forth in the Federal Financial Agreements of Depository
Institutions With Securities Dealers and Others, as adopted by the Comptroller
of the Currency on October 31, 1985.
"CHANGE OF CONTROL" means the occurrence of any of the following
events: (i) any "PERSON" or "GROUP" (as such terms are used in Sections 13(d)
and 14(d) of the Exchange Act), other than Permitted Holders, is or becomes the
"BENEFICIAL OWNER" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act,
except that a Person shall be deemed to have beneficial ownership of all shares
that such Person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or indirectly, of more
than 40% of the total outstanding Voting Stock of the Company, provided that the
--------
Permitted Holders "BENEFICIALLY OWN" (as so defined) a lesser
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percentage of such Voting Stock than such other Person and do not have the right
or ability by voting power, contract or otherwise to elect or designate for
election a majority of the Board of Directors of the Company; (ii) during any
period of two consecutive years, individuals who at the beginning of such period
constituted the Board of Directors of the Company (together with any new
directors whose election to such Board or whose nomination for election by the
shareholders of the Company, was approved by a vote of 66% of the directors then
still in office who were either directors at the beginning of such period or
whose election or nomination for election was previously so approved) cease for
any reason to constitute a majority of such Board of Directors then in office;
(iii) the Company consolidates with or merges with or into any Person or
conveys, transfers or leases all or substantially all of its assets to any
Person, or any corporation consolidates with or merges into or with the Company,
in any such event pursuant to a transaction in which the outstanding Voting
Stock of the Company is changed into or exchanged for cash, securities or other
property, other than any such transaction in which the outstanding Voting Stock
of the Company is not changed or exchanged at all (except to the extent
necessary to reflect a change in the jurisdiction of incorporation of the
Company) or in which (A) the outstanding Voting Stock of the Company is changed
into or exchanged for (x) Voting Stock of the surviving corporation which is not
Disqualified Equity Interests or (y) cash, securities and other property (other
than Equity Interests of the surviving corporation) in an amount which could be
paid by the Company as a Restricted Payment in accordance with Section 1009 (and
such amount shall be treated as a Restricted Payment subject to the provisions
described under Sec tion 1009) and (B) no "PERSON" or "GROUP" other than
Permitted Holders owns immediately after such transaction directly or
indirectly, more than the greater of (1) 40% of the total outstanding Voting
Stock of the surviving corporation and (2) the percentage of the outstanding
Voting Stock of the surviving corporation owned, directly or indirectly, by
Permitted Holders immediately after such transaction; or (iv) the Company is
liquidated or dissolved or adopts a plan of liquidation or dissolution other
than in a transaction which complies with the provisions described under Article
Eight.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMISSION" means the Securities and Exchange Commission, as from
time to time constituted, created under the Exchange Act, or if at any time
after the execution of this Indenture such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then the
body performing such duties at such time.
"COMPANY" means Salem Communications Corporation, a corporation
incorporated under the laws of California, until a successor Person shall have
become such pursuant to the applicable provisions of this Indenture, and
thereafter "COMPANY" shall mean such successor Person.
"COMPANY REQUEST" or "COMPANY ORDER" means a written request or order
signed in the name of the Company by any one of its Chairman of the Board, its
Vice Chairman, its President or a Vice President (regardless of vice
presidential designation), and by any one of its Treasurer, an Assistant
Treasurer, its Secretary or an Assistant Secretary, and delivered to the
Trustee.
"CONSOLIDATED INTEREST EXPENSE" means, without duplication, for any
period, the sum of (a) the interest expense of the Company and its Consolidated
Restricted Subsidiaries for such period, on a Consolidated basis, including,
without limitation, (i) amortization of debt discount, (ii) the net cost under
Interest Rate Agreements (including amortization of discounts), (iii) the
interest portion
-5-
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of any deferred payment obligation and (iv) accrued interest, plus (b) the
interest component of the Capital Lease Obligations paid, accrued and/or
scheduled to be paid or accrued by the Company during such period, and all
capitalized interest of the Company and its Consolidated Restricted
Subsidiaries, in each case as determined in accordance with GAAP consistently
applied.
"CONSOLIDATED NET INCOME" means, for any period, the Consolidated net
income (or loss) of the Company and its Consolidated Restricted Subsidiaries for
such period as determined in accordance with GAAP consistently applied,
adjusted, to the extent included in calculating such net income (or loss), by
excluding, without duplication, (i) all extraordinary gains but not losses (less
all fees and expenses relating thereto), (ii) the portion of net income (or
loss) of the Company and its Consolidated Restricted Subsidiaries allocable to
interests in unconsolidated Persons or Unrestricted Subsidiaries, except to the
extent of the amount of dividends or distributions actually paid to the Company
or its Consolidated Restricted Subsidiaries by such other Person during such
period, (iii) net income (or loss) of any Person combined with the Company or
any of its Restricted Subsidiaries on a "pooling of interests" basis
attributable to any period prior to the date of combination, (iv) any gain or
loss, net of taxes, realized upon the termination of any employee pension
benefit plan, (v) net gains but not losses (less all fees and expenses relating
thereto) in respect of dispositions of assets other than in the ordinary course
of business, or (vi) the net income of any Restricted Subsidiary to the extent
that the declaration of dividends or similar distributions by that Restricted
Subsidiary of that income is not at the time permitted, directly or indirectly,
by operation of the terms of its charter or any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation applicable to that
Restricted Subsidiary or its shareholders.
"CONSOLIDATED NET WORTH" means the Consolidated equity of the holders
of Equity Interests (excluding Disqualified Equity Interests) of the Company and
its Restricted Subsidiaries, as determined in accordance with GAAP consistently
applied.
"CONSOLIDATION" means, with respect to any Person, the consolidation
of the accounts of such Person and each of its subsidiaries (other than any
Unrestricted Subsidiaries) if and to the extent the accounts of such Person and
each of its subsidiaries (other than any Unrestricted Subsidiaries) would
normally be consolidated with those of such Person, all in accordance with GAAP
consistently applied. The term "CONSOLIDATED" shall have a similar meaning.
"CORPORATE TRUST OFFICE" means the office of the Trustee or an
affiliate or agent thereof at which at any particular time the corporate trust
business for the purposes of this Indenture shall be principally administered,
which office at the date of execution of this Indenture is located at The Bank
of New York, 101 Barclay Street, 21 W, New York, New York 10286, Attention:
Corporate Trust Administration.
"CUMULATIVE CONSOLIDATED INTEREST EXPENSE" means, as of any date of
determination, Consolidated Interest Expense from the date of this Indenture to
the end of the Company's most recently ended full fiscal quarter prior to such
date, taken as a single accounting period.
"CUMULATIVE OPERATING CASH FLOW" means, as of any date of
determination, Operating Cash Flow from the date of this Indenture to the end of
the Company's most recently ended full fiscal quarter prior to such date, taken
as a single accounting period.
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"DEBT TO OPERATING CASH FLOW RATIO" means, as of any date of
determination, the ratio of (a) the aggregate principal amount of all
outstanding Indebtedness of the Company and its Restricted Subsidiaries as of
such date on a Consolidated basis plus the aggregate liquidation preference or
redemption amount of all Disqualified Equity Interests of the Company (excluding
any such Disqualified Equity Interests held by the Company or a Wholly Owned
Restricted Subsidiary of the Company), to (b) Operating Cash Flow of the Company
and its Restricted Subsidiaries on a Consolidated basis for the four most recent
full fiscal quarters ending immediately prior to such date, determined on a pro
forma basis (and after giving pro forma effect to (i) the incurrence of such
Indebtedness and (if applicable) the application of the net proceeds therefrom,
including to refinance other Indebtedness, as if such Indebtedness was incurred,
and the application of such proceeds occurred, at the beginning of such four-
quarter period; (ii) the incurrence, repayment or retirement of any other
Indebtedness by the Company and its Restricted Subsidiaries since the first day
of such four-quarter period as if such Indebtedness was incurred, repaid or
retired at the beginning of such four-quarter period (except that, in making
such computation, the amount of Indebtedness under any revolving credit facility
shall be computed based upon the average balance of such Indebtedness at the end
of each month during such four-quarter period); (iii) in the case of Acquired
Indebtedness, the related acquisition, as if such acquisition had occurred at
the beginning of such four-quarter period; and (iv) any acquisition or
disposition by the Company and its Restricted Subsidiaries of any company or any
business or any assets out of the ordinary course of business, or any related
repayment of Indebtedness, in each case since the first day of such four-quarter
period, assuming such acquisition or disposition had been consummated on the
first day of such four-quarter period).
"DEFAULT" means any event which is, or after notice or passage of any
time or both would be, an Event of Default.
"DEPOSITARY" means, with respect to the Securities issued in the form
of Global Securities, if any, The Depository Trust Company, a New York limited
purpose corporation, its nominees and successors, in each case registered as a
"clearing agency" under the Exchange Act and maintaining a book-entry system
that qualifies for treatment as "registered form" under Section 163(f) of the
Code.
"DESIGNATED GUARANTOR SENIOR INDEBTEDNESS" means (i) all Guarantor
Senior Indebtedness which guarantees Indebtedness under the Bank Credit
Agreement and (ii) any other Guarantor Senior Indebtedness which is incurred
pursuant to an agreement (or series of related agreements) simultaneously
entered into providing for indebtedness, or commitments to lend, of at least
$25,000,000 at the time of determination and is specifically designated in the
instrument evidencing such Guarantor Senior Indebtedness or the agreement under
which such Guarantor Senior Indebtedness arises as "Designated Guarantor Senior
Indebtedness" by the Guarantor which is the obligor under such Guarantor Senior
Indebtedness.
"DESIGNATED SENIOR INDEBTEDNESS" means (i) all Senior Indebtedness
outstanding under the Bank Credit Agreement and (ii) any other Senior
Indebtedness which is incurred pursuant to an agreement (or series of related
agreements) simultaneously entered into providing for indebtedness, or
commitments to lend, of at least $25,000,000 at the time of determination and is
specifically designated in the instrument evidencing such Senior Indebtedness or
the agreement under which such Senior Indebtedness arises as "Designated Senior
Indebtedness" by the Company.
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<PAGE>
"DISQUALIFIED EQUITY INTERESTS" means any Equity Interests that,
either by their terms or by the terms of any security into which they are
convertible or exchangeable or otherwise, are or upon the happening of an event
or passage of time would be required to be redeemed prior to any Stated Maturity
of the principal of the Securities or are redeemable at the option of the holder
thereof at any time prior to any such Stated Maturity, or are convertible into
or exchangeable for debt securities at any time prior to any such Stated
Maturity at the option of the holder thereof.
"EQUITY INTEREST" of any Person means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) corporate stock or other equity
participations, including partnership interests, whether general or limited, and
any limited liability company interests of such Person, including any Preferred
Equity Interests.
"EVENT OF DEFAULT" has the meaning specified in Article Five.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, or any
successor thereto, and the rules, regulations and forms promulgated thereunder,
all as the same shall be amended from time to time.
"EXCHANGE OFFER" means the exchange offer by the Company of Series B
Securities for Series A Securities to be effected pursuant to Section 2(a) of
the Registration Rights Agreement.
"EXCHANGE OFFER REGISTRATION STATEMENT" means the registration
statement under the Securities Act contemplated by Section 2(a) of the
Registration Rights Agreement.
"FAIR MARKET VALUE" means, with respect to any asset or property, the
sale value that would be obtained in an arm's-length transaction between an
informed and willing seller under no compulsion to sell and an informed and
willing buyer under no compulsion to buy.
"GAAP" means generally accepted accounting principles in the United
States, consistently applied, which are in effect on the date of this
Indenture."
"GLOBAL SECURITY" means a Security in book-entry form in the form
prescribed in Sections 202 through 205 evidencing all or part of the Securities,
issued to the Depositary or its nominee and registered in the name of the
Depositary or such nominee.
"GUARANTEE" means the guarantee by any Guarantor of the Company's
Indenture Obligations pursuant to a guarantee given in accordance with this
Indenture, including, without limitation, the Guarantees by the Guarantors
included in Article Fourteen of this Indenture and any Guarantee delivered
pursuant to Section 1014.
"GUARANTEED DEBT" of any Person means, without duplication, all
Indebtedness of any other Person referred to in the definition of Indebtedness
contained in this Section guaranteed directly or indirectly in any manner by
such Person, or in effect guaranteed directly or indirectly by such Person
through an agreement (i) to pay or purchase such Indebtedness or to advance or
supply funds for the payment or purchase of such Indebtedness, (ii) to purchase,
sell or lease (as lessee or lessor) property, or to purchase or sell services,
primarily for the purpose of enabling the debtor to make
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<PAGE>
payment of such Indebtedness or to assure the holder of such Indebtedness
against loss, (iii) to supply funds to, or in any other manner invest in, the
debtor (including any agreement to pay for property or services without
requiring that such property be received or such services be rendered), (iv) to
maintain working capital or equity capital of the debtor, or otherwise to
maintain the net worth, solvency or other financial condition of the debtor or
(v) otherwise to assure a creditor against loss; provided that the term
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"GUARANTEE" shall not include endorsements for collection or deposit, in either
case in the ordinary course of business.
"GUARANTOR" means the Subsidiaries listed as guarantors in this
Indenture or any other guarantor of the Indenture Obligations.
"GUARANTOR SENIOR INDEBTEDNESS" is defined as the principal of,
premium, if any, and interest (including interest accruing after the filing of a
petition initiating any proceeding under any state, federal or foreign
bankruptcy laws whether or not allowable as a claim in such proceeding) on any
Indebtedness of any Guarantor (other than as otherwise provided in this
definition), whether outstanding on the date of this Indenture or thereafter
created, incurred or assumed, and whether at any time owing, actually or
contingent, unless, in the case of any particular Indebtedness, the instrument
creating or evidencing the same or pursuant to which the same is outstanding
expressly provides that such Indebtedness shall not be senior in right of
payment to any Guarantee. Without limiting the generality of the foregoing,
"Guarantor Senior Indebtedness" shall include (i) the principal of, premium, if
any, and interest (including interest accruing after the filing of a petition
initiating any proceeding under any state, federal or foreign bankruptcy law
whether or not allowable as a claim in such proceeding) and all other
obligations of every nature of any Guarantor from time to time owed to the
lenders (or their agent) under the Bank Credit Agreement; provided, however,
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that any Indebtedness under any refinancing, refunding or replacement of the
Bank Credit Agreement shall not constitute Guarantor Senior Indebtedness to the
extent that the Indebtedness thereunder is by its express terms subordinate to
any other Indebtedness of any Guarantor and (ii) Indebtedness under Interest
Rate Agreements. Notwithstanding the foregoing, "Guarantor Senior Indebtedness"
shall not include (i) Indebtedness evidenced by the Guarantees, (ii)
Indebtedness that is subordinate or junior in right of payment to any
Indebtedness of any Guarantor, (iii) Indebtedness which when incurred and
without respect to any election under Section 1111(b) of Title 11 of the United
States Code, is without recourse to any Guarantor, (iv) Indebtedness which is
represented by Disqualified Equity Interests, (v) any liability for foreign,
federal, state, local or other taxes owed or owing by any Guarantor to the
extent such liability constitutes Indebtedness, (vi) Indebtedness of any
Guarantor to a Subsidiary or any other Affiliate of the Company or any of such
Affiliate's subsidiaries, (vii) Indebtedness evidenced by any guarantee of any
Subordinated Indebtedness or Pari Passu Indebtedness, (viii) that portion of any
Indebtedness which at the time of issuance is issued in violation of this
Indenture and (ix) Indebtedness owed by any Guarantor for compensation to
employees or for services rendered by employees.
"HOLDER" means a Person in whose name a Security is registered in the
Security Register.
"INDEBTEDNESS" means, with respect to any Person, without duplication,
(i) all indebtedness of such Person for borrowed money or for the deferred
purchase price of property or services, excluding any trade payables and other
accrued current liabilities arising in the ordinary course of business, but
including, without limitation, all obligations, contingent or otherwise, of such
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<PAGE>
Person in connection with any letters of credit issued under letter of credit
facilities, acceptance facilities or other similar facilities and in connection
with any agreement to purchase, redeem, exchange, convert or otherwise acquire
for value any Equity Interests of such Person, or any warrants, rights or
options to acquire such Equity Interests, now or hereafter outstanding, (ii) all
obligations of such Person evidenced by bonds, notes, debentures or other
similar instruments, (iii) all indebtedness created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such Person (even if the rights and remedies of the seller or lender
under such agreement in the event of default are limited to repossession or sale
of such property), but excluding trade payables arising in the ordinary course
of business, (iv) all obligations under Interest Rate Agreements of such Person,
(v) all Capital Lease Obligations of such Person, (vi) all Indebtedness referred
to in clauses (i) through (v) above of other Persons and all dividends of other
Persons, the payment of which is secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien, upon or with respect to property (including, without limitation,
accounts and contract rights) owned by such Person, even though such Person has
not assumed or become liable for the payment of such Indebtedness, (vii) all
Guaranteed Debt of such Person, (viii) all Disqualified Equity Interests valued
at the greater of their voluntary or involuntary maximum fixed repurchase price
plus accrued and unpaid dividends, and (ix) any amendment, supplement,
modification, deferral, renewal, extension, refunding or refinancing of any
liability of the types referred to in clauses (i) through (viii) above. The
amount of Indebtedness of any Person at any date shall be, without duplication,
the principal amount that would be shown on a balance sheet of such Person
prepared as of such date in accordance with GAAP and the maximum determinable
liability of any Guaranteed Debt referred to in clause (vii) above at such date.
The Indebtedness of the Company and its Restricted Subsidiaries shall not
include any Indebtedness of Unrestricted Subsidiaries so long as such
Indebtedness is non-recourse to the Company and the Restricted Subsidiaries.
For purposes hereof, the "MAXIMUM FIXED REPURCHASE PRICE" of any Disqualified
Equity Interests which do not have a fixed repurchase price shall be calculated
in accordance with the terms of such Disqualified Equity Interests as if such
Disqualified Equity Interests were purchased on any date on which Indebtedness
shall be required to be determined pursuant to this Indenture, and if such price
is based upon, or measured by, the Fair Market Value of such Disqualified Equity
Interests, such Fair Market Value to be determined in good faith by the Board of
Directors of the issuer of such Disqualified Equity Interests.
"INDENTURE OBLIGATIONS" means the obligations of the Company and any
other obligor under this Indenture or under the Securities, including any
Guarantor, to pay principal, premium, if any, and interest when due and payable,
and all other amounts due or to become due under or in connection with this
Indenture, the Securities and the performance of all other obligations to the
Trustee and the Holders under this Indenture and the Securities, according to
the terms hereof and thereof
"INDEPENDENT DIRECTOR" means a director of the Company other than a
director (i) who (apart from being a director of the Company or any Subsidiary)
is an employee, insider, associate or Affiliate of the Company or a Subsidiary
or has held any such position during the previous five years or (ii) who is a
director, an employee, insider, associate or Affiliate of another party to the
transaction in question.
"INITIAL PURCHASERS" shall mean Furman Selz LLC, Smith Barney Inc.,
BancBoston Securities Inc. and BNY Capital Markets, Inc. as initial purchasers
of the Securities.
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<PAGE>
"INITIAL SECURITIES" has the meaning specified in the Recitals.
"INTEREST PAYMENT DATE" means the Stated Maturity of an installment of
interest on the Securities.
"INTEREST RATE AGREEMENTS" means one or more of the following
agreements which shall be entered into by one or more financial institutions:
interest rate protection agreements (including, without limitation, interest
rate swaps, caps, floors, collars and similar agreements) and/or other types of
interest rate hedging agreements from time to time.
"INVESTMENTS" means, with respect to any Person, directly or
indirectly, any advance, loan (including guarantees), or other extension of
credit or capital contribution to (by means of any transfer of cash or other
property to others or any payment for property or services for the account or
use of others), or any purchase, acquisition or ownership by such Person of any
Equity Interests, bonds, notes, debentures or other securities or assets issued
or owned by any other Person and all other items that would be classified as
investments on a balance sheet prepared in accordance with GAAP.
"LIEN" means any mortgage, charge, pledge, lien (statutory or
otherwise), privilege, security interest, hypothecation or other encumbrance
upon or with respect to any property of any kind (including any conditional sale
or other title retention agreement, any leases in the nature thereof, and any
agreement to give any security interest), real or personal, movable or
immovable, now owned or hereafter acquired.
"MATURITY" when used with respect to any Security means the date on
which the principal of such Security becomes due and payable as therein provided
or as provided in this Indenture, whether at Stated Maturity, the Offer Date, or
the Redemption Date and whether by declaration of acceleration, Offer in respect
of Excess Proceeds, Change of Control, call for redemption or otherwise.
"MOODY'S" means Moody's Investors Service, Inc. or any successor
rating agency.
"NET CASH PROCEEDS" means (a) with respect to any Asset Sale by any
Person, the proceeds thereof in the form of cash or Temporary Cash Investments
including payments in respect of deferred payment obligations when received in
the form of, or stock or other assets when disposed of for, cash or Temporary
Cash Investments (except to the extent that such obligations are financed or
sold with recourse to the Company or any Restricted Subsidiary) net of (i)
brokerage commissions and other reasonable fees and expenses (including fees and
expenses of counsel and investment bankers) related to such Asset Sale, (ii)
provisions for all taxes payable as a result of such Asset Sale, (iii) payments
made to retire Indebtedness where payment of such Indebtedness is secured by the
assets or properties the subject of such Asset Sale or would cause a required
repayment under the Bank Credit Agreement, (iv) amounts required to be paid to
any Person (other than the Company or any Restricted Subsidiary) owning a
beneficial interest in the assets subject to the Asset Sale and (v) appropriate
amounts to be provided by the Company or any Restricted Subsidiary, as the case
may be, as a reserve, in accordance with GAAP, against any liabilities
associated with such Asset Sale and retained by the Company or any Restricted
Subsidiary, as the case may be, after such Asset Sale, including, without
limitation, pension and other post-employment benefit liabilities, liabilities
related to
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<PAGE>
environmental matters and liabilities under any indemnification obligations
associated with such Asset Sale, all as reflected in an Officers' Certificate
delivered to the Trustee and (b) with respect to any issuance or sale of Equity
Interests, or debt securities or Equity Interests that have been converted into
or exchanged for Equity Interests, as referred to under Section 1009, the
proceeds of such issuance or sale in the form of cash or Temporary Cash
Investments, including payments in respect of deferred payment obligations when
received in the form of, or stock or other assets when disposed for, cash or
Temporary Cash Investments (except to the extent that such obligations are
financed or sold with recourse to the Company or any Restricted Subsidiary), net
of attorney's fees, accountant's fees and brokerage, consultation, underwriting
and other fees and expenses actually incurred in connection with such issuance
or sale and net of taxes paid or payable as a result thereof.
"NON-PAYMENT DEFAULT" means any event (other than a Payment Default)
the occurrence of which entitles one or more Persons to accelerate the maturity
of any Designated Senior Indebtedness.
"NON-U.S. PERSON" has the meaning given to it by Regulation S under
the Securities Act.
"OFFICERS' CERTIFICATE" means a certificate signed by the Chairman of
the Board, Vice Chairman, the President or a Vice President (regardless of vice
presidential designation), and by the Treasurer, an Assistant Treasurer, the
Secretary or an Assistant Secretary, of the Company or any Guarantor, as the
case may be, and delivered to the Trustee.
"OPERATING CASH FLOW" means, for any period, the Consolidated Net
Income of the Company and its Restricted Subsidiaries for such period, plus (a)
extraordinary net losses and net losses on sales of assets outside the ordinary
course of business during such period, to the extent such losses were deducted
in computing Consolidated Net Income, plus (b) provision for taxes based on
income or profits, to the extent such provision for taxes was included in
computing such Consolidated Net Income, and any provision for taxes utilized in
computing the net losses under clause (a) hereof, plus (c) Consolidated Interest
Expense of the Company and its Restricted Subsidiaries for such period, plus (d)
depreciation, amortization and all other non-cash charges, to the extent such
depreciation, amortization and other non-cash charges were deducted in computing
such Consolidated Net Income (including amortization of goodwill and other
intangibles).
"OPINION OF COUNSEL" means a written opinion of counsel, who may be
counsel for the Company, any of the Guarantors or the Trustee, unless an Opinion
of Independent Counsel is required pursuant to the terms of this Indenture, and
who shall be acceptable to the Trustee.
"OPINION OF INDEPENDENT COUNSEL" means a written opinion of counsel
issued someone who is not an employee or consultant of the Company or any
Guarantor and who shall be acceptable to the Trustee.
"OUTSTANDING" when used with respect to Securities means, as of the
date of determination, all Securities theretofore authenticated and delivered
under this Indenture, except:
(a) Securities theretofore cancelled by the Trustee or delivered to
the Trustee for cancellation;
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<PAGE>
(b) Securities, or portions thereof, for which payment or redemption
money in the necessary amount has been theretofore deposited with the Trustee or
any Paying Agent (other than the Company or any Affiliate thereof) in trust or
set aside and segregated in trust by the Company or such Affiliate (if the
Company or such Affiliate shall act as the Paying Agent) for the Holders;
provided that if such Securities are to be redeemed, notice of such redemption
- --------
has been duly given pursuant to this Indenture or provision therefor reasonably
satisfactory to the Trustee has been made;
(c) Securities, except to the extent provided in Sections 402 and 403,
with respect to which the Company has effected defeasance or covenant defeasance
as provided in Article Four; and
(d) Securities in exchange for or in lieu of which other Securities
have been authenticated and delivered pursuant to this Indenture, other than any
such Securities in respect of which there shall have been presented to the
Trustee proof reasonably satisfactory to it that such Securities are held by a
bona fide purchaser in whose hands the Securities are valid obligations of the
Company; provided, however, that in determining whether the Holders of the
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requisite principal amount of Outstanding Securities have given any request,
demand, authorization, direction, notice, consent or waiver hereunder,
Securities owned by the Company, any Guarantor, or any other obligor upon the
Securities or any Affiliate of the Company, any Guarantor, or such other obligor
shall be disregarded and deemed not to be Outstanding, except that, in
determining whether the Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only
Securities that a Responsible Officer of the Trustee actually knows to be so
owned shall be so disregarded. Securities so owned which have been pledged in
good faith may be regarded as Outstanding if the pledgee establishes to the
reasonable satisfaction of the Trustee the pledgee's right so to act with
respect to such Securities and that the pledgee is not the Company, any
Guarantor or any other obligor upon the Securities or any Affiliate of the
Company, any Guarantor or such other obligor.
"PARI PASSU INDEBTEDNESS" means any Indebtedness of the Company or any
Guarantor that is pari passu in right of payment to the Securities or any
---- -----
Guarantee, as the case may be.
"PAYING AGENT" means any Person authorized by the Company to pay the
principal of, premium, if any, or interest on any Securities on behalf of the
Company.
"PAYMENT DEFAULT" means any default in the payment of principal of,
premium, if any, or interest, on any Designated Senior Indebtedness.
"PERMITTED GUARANTOR JUNIOR SECURITIES" means (so long as the effect
of any exclusion employing this definition is not to cause any Guarantee to be
treated in any case or proceeding or similar event described in clause (a), (b)
or (c) of Section 1417 as part of the same class of claims as the Guarantor
Senior Indebtedness or any class of claims pari passu with, or senior to, the
---- -----
Guarantor Senior Indebtedness) for any payment or distribution, debt or equity
securities of any Guarantor or any successor corporation provided for by a plan
of reorganization or readjustment that are subordinated to any Guarantee at
least to the same extent that the Guarantee is subordinated to the payment of
all Guarantor Senior Indebtedness then outstanding; provided that (1) if a new
--------
corporation results from such reorganization or readjustment, such corporation
assumes any Guarantor Senior Indebtedness not paid in full in cash or Cash
Equivalents in connection with such reorganization or
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<PAGE>
readjustment and (2) the rights of the holders of such Guarantor Senior
Indebtedness are not, without the consent of such holders, altered by such
reorganization or readjustment.
"PERMITTED HOLDERS" means as of the date of determination (i) any of
Stuart W. Epperson and Edward G. Atsinger III; (ii) family members or the
relatives of the Persons described in clause (i); (iii) any trusts created for
the benefit of the Persons described in clauses (i), (ii) or (iv) or any trust
for the benefit of any such trust; or (iv) in the event of the incompetence or
death of any of the Persons described in clauses (i) and (ii), such Person's
estate, executor, administrator, committee or other personal representative or
beneficiaries, in each case who at any particular date shall beneficially own or
have the right to acquire, directly or indirectly, Equity Interests of the
Company.
"PERMITTED INDEBTEDNESS" has the meaning specified in Section 1008.
"PERMITTED INVESTMENTS" means (i) Temporary Cash Investments; (ii)
Investments by the Company or any of its Restricted Subsidiaries in a Guarantor
and Investments by any Restricted Subsidiary in the Company; (iii) Investments
by the Company or any Restricted Subsidiary in another Person, if as a result of
such Investment (A) such Person becomes a Restricted Subsidiary that is or would
be a Guarantor or (B) such other Person is merged or consolidated with or into,
or transfers or conveys all or substantially all of its assets to, the Company
or a Restricted Subsidiary that is or would be a Guarantor; (iv) promissory
notes received as a result of Asset Sales permitted under Section 1013; (v)
Investments in assets owned or used in the ordinary course of business; (vi)
Investments in existence on the date of this Indenture; (vii) direct or indirect
loans to employees or to a trustee for the benefit of such employees, of the
Company or any of its Restricted Subsidiaries in an aggregate amount outstanding
at any time not exceeding $1,000,000; (viii) Permitted Non-Commercial
Educational Station Investments; provided that immediately after giving effect
--------
to any such Investment, the Company could incur $1.00 of additional Indebtedness
(other than Permitted Indebtedness) pursuant to the restrictions under Section
1008; and (ix) other Investments that do not exceed $5,000,000 at any one time
outstanding.
"PERMITTED NON-COMMERCIAL EDUCATIONAL STATION INVESTMENT" means a loan
made by the Company or a Restricted Subsidiary to a non-profit entity, the
proceeds of which are used to acquire assets used in the operation of a radio
station; provided that so long as any such Investment remains outstanding (i)
--------
such loan shall be evidenced by a promissory note and shall not be subordinated
to any other Indebtedness of such non-profit entity; (ii) at least 40% of the
board seats (or other comparable governing body) of such non-profit entity shall
be held by executive officers of the Company, and (iii) a technical and
professional services agreement shall be in full force and effect between such
non-profit entity and the Company pursuant to which the Company shall be
compensated for providing engineering, accounting, legal and other assistance in
connection with the operation of the station licensed to such non-profit entity
(which agreement shall contain customary terms and conditions for technical and
professional services agreements in the radio broadcasting industry generally).
"PERMITTED JUNIOR SECURITIES" means (so long as the effect of any
exclusion employing this definition is not to cause the Securities to be treated
in any case or proceeding or similar event described in clause (a), (b) or (c)
of Section 1202 as part of the same class of claims as the Senior Indebtedness
or any class of claims pari passu with, or senior to, the Senior Indebtedness)
---- -----
for any payment or distribution, debt or equity securities of the Company or any
successor corporation
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<PAGE>
provided for by a plan of reorganization or readjustment that are subordinated
to the Securities at least to the same extent that the Securities are
subordinated to the payment of all Senior Indebtedness then outstanding;
provided that (1) if a new corporation results from such reorganization or
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readjustment, such corporation assumes any Senior Indebtedness not paid in full
in cash or Cash Equivalents in connection with such reorganization or
readjustment and (2) the rights of the holders of such Senior Indebtedness are
not, without the consent of such holders, altered by such reorganization or
readjustment.
"PERMITTED SUBSIDIARY INDEBTEDNESS" means:
(i) Indebtedness of any Guarantor under Capital Lease Obligations
incurred in the ordinary course of business; and
(ii) Indebtedness of any Guarantor (a) issued to finance or refinance
the purchase or construction of any assets of such Guarantor or (b) secured by a
Lien on any assets of such Guarantor where the lender's sole recourse is to the
assets so encumbered, in either case (x) to the extent the purchase or
construction prices for such assets are or should be included in "property and
equipment" in accordance with GAAP and (y) if the purchase or construction of
such assets is not part of any acquisition of a Person or business unit.
"PERSON" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political
subdivisions thereof.
"PREDECESSOR SECURITY" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security and, for the purposes of this definition, any Security
authenticated and delivered under Section 308 in exchange for a mutilated
Security or in lieu of a lost, destroyed or stolen Security shall be deemed to
evidence the same debt as the mutilated, lost, destroyed or stolen Security.
"PREFERRED EQUITY INTEREST", as applied to the Equity Interest of any
Person, means an Equity Interest of any class or classes (however designated)
which is preferred as to the payment of dividends or distributions, or as to the
distribution of assets upon any voluntary or involuntary liquidation or
dissolution of such Person, over Equity Interests of any other class of such
Person.
"PROSPECTUS" means the prospectus included in a Registration
Statement, including any preliminary prospectus, and any such prospectus as
amended or supplemented by any prospectus supplement, including any such
prospectus supplement with respect to the terms of the offering of any portion
of the Series A Securities covered by a Shelf Registration Statement, and by all
other amendments and supplements to such prospectus, including post-effective
amendments, and in each case including all material incorporated by reference
therein.
"PUBLIC EQUITY OFFERING" means, with respect to any Person, an
underwritten public offering by such Person of some or all of its Equity
Interests (other than Disqualified Equity Interests), the net proceeds of which
(after deducting any underwriting discounts and commissions) exceed $10,000,000.
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"QUALIFIED EQUITY INTERESTS" of any Person means any and all Equity
Interests of such Person other than Disqualified Equity Interests.
"REDEMPTION DATE" when used with respect to any Security to be
redeemed pursuant to any provision in this Indenture means the date fixed for
such redemption by or pursuant to this Indenture.
"REDEMPTION PRICE" when used with respect to any Security to be
redeemed pursuant to any provision in this Indenture means the price at which it
is to be redeemed pursuant to this Indenture.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement, dated as of the date of this Indenture, among the Company, the
Guarantors and the Initial Purchasers.
"REGISTRATION STATEMENT" means any registration statement of the
Company which covers any of the Series A Securities or Series B Securities
pursuant to the provisions of the Registration Rights Agreement, and all
amendments and supplements to any such Registration Statement, including post-
effective amendments, in each case including the Prospectus contained therein,
all exhibits thereto and all material incorporated by reference therein.
"REGULAR RECORD DATE" for the interest payable on any Interest
Payment Date means the 15th day (whether or not a Business Day) next preceding
such Interest Payment Date.
"RESPONSIBLE OFFICER" when used with respect to the Trustee means any
officer assigned to the Corporate Trust Office or the agent of the Trustee
appointed hereunder, including any vice president, assistant vice president,
assistant secretary, or any other officer or assistant officer of the Trustee or
the agent of the Trustee appointed hereunder to whom any corporate trust matter
is referred because of his or her knowledge of and familiarity with the
particular subject.
"RESTRICTED SECURITIES LEGEND" means a legend substantially in the
form of the legend required in the form of Security set forth in Section 202 to
be placed upon a Restricted Security.
"RESTRICTED SECURITIES TRANSFER CERTIFICATE" means a certificate
substantially in the form set forth in Exhibit A.
"RESTRICTED SECURITY" means each Security required pursuant to Section
306 to bear a Restricted Securities Legend.
"RESTRICTED SUBSIDIARY" means a Subsidiary of the Company other than
an Unrestricted Subsidiary.
"RULE 144A INFORMATION" shall be such information with respect to the
Company and the Guarantors as is specified pursuant to Rule 144A(d)(4) under the
Securities Act (or any successor provision thereto).
"SALE AND LEASEBACK TRANSACTION" means any transaction or series of
related transactions pursuant to which the Company or a Restricted Subsidiary
sells or transfers any property
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<PAGE>
or asset in connection with the leasing, or the resale against installment
payments, of such property or asset to the seller or transferor.
"S&P" means Standard & Poor's Ratings Service, a division of the
McGraw Hill Companies, or any successor rating agency.
"SECURITIES" has the meaning specified in the Recitals.
"SECURITIES ACT" means the Securities Act of 1933, or any successor
thereto, and the rules, regulations and forms promulgated thereunder, all as the
same shall be amended from time to time.
"SENIOR INDEBTEDNESS" means the principal of, premium, if any, and
interest (including interest accruing after the filing of a petition initiating
any proceeding under any state, federal or foreign bankruptcy law whether or not
allowable as a claim in such proceeding) on any Indebtedness of the Company
(other than as otherwise provided in this definition), whether outstanding on
the date of this Indenture or thereafter created, incurred or assumed, and
whether at any time owing, actually or on a contingent basis, unless, in the
case of any particular Indebtedness, the instrument creating or evidencing the
same or pursuant to which the same is outstanding expressly provides that such
Indebtedness shall not be senior in right of payment to the Securities. Without
limiting the generality of the foregoing, "SENIOR INDEBTEDNESS" shall include
the principal of, premium, if any, and interest (including interest accruing
after the filing of a petition initiating any proceeding under any state,
federal or foreign bankruptcy law whether or not allowable as a claim in such
proceeding) and all other obligations of every nature of the Company from time
to time owed to the lenders (or their agent) under the Bank Credit Agreement
(provided, however, that any Indebtedness under any refinancing, refunding or
- --------- -------
replacement of the Bank Credit Agreement shall not constitute Senior
Indebtedness to the extent that the Indebtedness thereunder is by its express
terms subordinate to any other Indebtedness of the Company) and (ii)
Indebtedness under Interest Rate Agreements. Notwithstanding the foregoing,
"SENIOR INDEBTEDNESS" shall not include (i) Indebtedness evidenced by the
Securities, (ii) Indebtedness that is subordinate or junior in right of payment,
by contract or otherwise, to any Indebtedness of the Company, (iii) Indebtedness
which when incurred and without respect to any election under Section 1111(b) of
Title 11 of the United States Code, is without recourse to the Company, (iv)
Indebtedness which is represented by Disqualified Equity Interests, (v) any
liability for foreign, federal, state, local or other taxes owed or owing by the
Company, (vi) Indebtedness of the Company to a Subsidiary or any other Affiliate
of the Company or any of such Affiliate's subsidiaries, (vii) that portion of
any Indebtedness which at the time of issuance is issued in violation of this
Indenture, (viii) Indebtedness evidenced by a guarantee of any Subordinated
Indebtedness or Pari Passu Indebtedness and (ix) Indebtedness owed by the
---- -----
Company for compensation to employees or for services rendered by employees.
"SERIES A SECURITIES" has the meaning specified in the Recitals.
"SERIES B SECURITIES" has the meaning specified in the Recitals.
"SHELF REGISTRATION STATEMENT" means a "SHELF" registration statement
of the Company pursuant to Section 2(b) of the Registration Rights Agreement,
which covers all or a portion of the Registrable Securities (as defined in the
Registration Rights Agreement) on an appropriate form
-17-
<PAGE>
under Rule 415 under the Securities Act, or any similar rule that may be adopted
by the Commission, and all amendments and supplements to such registration
statement, including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all material incorporated
by reference therein.
"SPECIAL RECORD DATE" for the payment of any Defaulted Interest means
a date fixed by the Trustee pursuant to Section 309.
"STATED MATURITY" when used with respect to any Indebtedness or any
installment of interest thereon, means the date specified in such Indebtedness
as the fixed date on which the principal of such Indebtedness or such
installment of interest is due and payable.
"SUBORDINATED INDEBTEDNESS" means Indebtedness of the Company or any
Guarantor subordinated in right of payment to the Securities or any Guarantee,
as the case may be.
"SUBSIDIARY" means any Person a majority of the equity ownership or
the Voting Stock of which is at the time owned, directly or indirectly, by the
Company or by one or more other Subsidiaries, or by the Company and one or more
other Subsidiaries.
"SUCCESSOR SECURITY" of any particular Security means every Security
issued after, and evidencing all or a portion of the same debt as that evidenced
by, such particular Security. For the purposes of this definition, any Security
authenticated and delivered under Section 308 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.
"TEMPORARY CASH INVESTMENTS" means (i) any evidence of Indebtedness,
maturing not more than one year after the date of acquisition, issued by the
United States of America, or an instrumentality or agency thereof and guaranteed
fully as to principal, premium, if any, and interest by the United States of
America, (ii) any certificate of deposit, maturing not more than one year after
the date of acquisition, issued by, or time deposit of, a commercial banking
institution (including the Trustee) that is a member of the Federal Reserve
System and that has combined capital and surplus and undivided profits of not
less than $500,000,000, whose debt has a rating, at the time as of which any
investment therein is made, of "P-1" (or higher) according to Moody's or "A-1"
(or higher) according to S&P, (iii) commercial paper, maturing not more than one
year after the date of acquisition, issued by a corporation (other than an
Affiliate or Subsidiary of the Company, including the Trustee) organized and
existing under the laws of the United States of America with a rating, at the
time as of which any investment therein is made, of "P-1" (or higher) according
to Moody's or "A-1" (or higher) according to S&P and (iv) any money market
deposit accounts issued or offered by a domestic commercial bank having capital
and surplus in excess of $500,000,000.
"TRUST INDENTURE ACT" means the Trust Indenture Act of 1939, as
amended.
"TRUSTEE" means the Person named as the "TRUSTEE" in the first
paragraph of this instrument, until a successor trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"TRUSTEE" shall mean such successor trustee.
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<PAGE>
"UNRESTRICTED SUBSIDIARY" means (i) any Subsidiary of the Company that
at the time of determination shall be an Unrestricted Subsidiary (as designated
by the Board of Directors of the Company, as provided below) and (ii) any
Subsidiary of an Unrestricted Subsidiary. The Board of Directors of the Company
may designate any Subsidiary of the Company (including any newly acquired or
newly formed Subsidiary) to be an Unrestricted Subsidiary if all of the
following conditions apply: (a) such Subsidiary is not liable, directly or
indirectly, with respect to any Indebtedness other than Unrestricted Subsidiary
Indebtedness and (b) any Investment in such Subsidiary made as a result of
designating such Subsidiary an Unrestricted Subsidiary shall not violate the
provisions of Section 1019. Any such designation by the Board of Directors of
the Company shall be evidenced to the Trustee by filing with the Trustee a Board
Resolution giving effect to such designation and an Officers' Certificate
certifying that such designation complies with the foregoing conditions. The
Board of Directors of the Company may designate any Unrestricted Subsidiary as a
Restricted Subsidiary; provided that immediately after giving effect to such
--------
designation, the Company could incur $1.00 of additional Indebtedness (other
than Permitted Indebtedness) pursuant to the restrictions under Section 1008.
"UNRESTRICTED SUBSIDIARY INDEBTEDNESS" of any Unrestricted Subsidiary
means Indebtedness of such Unrestricted Subsidiary (i) as to which neither the
Company nor any Restricted Subsidiary is directly or indirectly liable (by
virtue of the Company or any such Restricted Subsidiary being the primary
obligor on, guarantor of, or otherwise liable in any respect to, such
Indebtedness), except Guaranteed Debt of the Company or any Restricted
Subsidiary to any Affiliate, in which case (unless the incurrence of such
Guaranteed Debt resulted in a Restricted Payment at the time of incurrence) the
Company shall be deemed to have made a Restricted Payment equal to the principal
amount of any such Indebtedness to the extent guaranteed at the time such
Affiliate is designated an Unrestricted Subsidiary and (ii) which, upon the
occurrence of a default with respect thereto, does not result in, or permit any
holder of any Indebtedness of the Company or any Restricted Subsidiary to
declare, a default on such Indebtedness of the Company or any Restricted
Subsidiary or cause the payment thereof to be accelerated or payable prior to
its Stated Maturity.
"VOTING STOCK" means stock of the class or classes pursuant to which
the holders thereof have the general voting power under ordinary circumstances
to elect at least a majority of the board of directors, managers or trustees of
a corporation (irrespective of whether or not at the time stock of any other
class or classes shall have or might have voting power by reason of the
happening of any contingency).
"WHOLLY OWNED RESTRICTED SUBSIDIARY" means a Restricted Subsidiary all
the Equity Interests of which are owned by the Company or another Wholly Owned
Restricted Subsidiary.
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<PAGE>
Section 102. Other Definitions.
-----------------
<TABLE>
<S> <C>
Defined in
Term Section
- -------------------------------------- ----------
"ACT" 105
"CHANGE OF CONTROL OFFER" 1016
"CHANGE OF CONTROL PURCHASE DATE" 1016
"CHANGE OF CONTROL PURCHASE NOTICE" 1016
"CHANGE OF CONTROL PURCHASE PRICE" 1016
"COVENANT DEFEASANCE" 403
"DEFAULTED INTEREST" 309
"DEFEASANCE" 402
"DEFEASANCE REDEMPTION DATE" 404
"DEFEASED SECURITIES" 401
"DEFICIENCY" 1013
"EXCESS PROCEEDS" 1013
"GOLDEN GATE" 1009
"GUARANTOR SENIOR REPRESENTATIVE" 1424
"INITIAL BLOCKAGE PERIOD" 1203
"OFFER" 1013
"OFFER DATE" 1013
"OFFERED PRICE" 1013
"NEW INSPIRATION" 1009
"PARI PASSU DEBT AMOUNT" 1013
"PARI PASSU OFFER" 1013
"PAYMENT BLOCKAGE PERIOD" 1203
"PENALTY AMOUNTS" 202
"PERMITTED INDEBTEDNESS" 1008
"PERMITTED PAYMENTS" 1009
"PHYSICAL SECURITIES" 305
"PRESCRIBED TIME PERIOD" 202
"QIB" 203
"RESTRICTED PAYMENT" 1009
"REQUIRED FILING DATES" 1020
"SECURITY AMOUNT" 1013
"SECURITY REGISTER" 306
"SECURITY REGISTRAR" 306
"SENIOR REPRESENTATIVE" 1203
"SURVIVING ENTITY" 801
"U.S. GOVERNMENT OBLIGATIONS" 404
</TABLE>
Section 103. Compliance Certificates and Opinions.
------------------------------------
Upon any application or request by the Company to the Trustee to take
any action under any provision of this Indenture, the Company, any Guarantor and
any other obligor on the Securities shall furnish to the Trustee an Officers'
Certificate stating that all conditions precedent, if
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<PAGE>
any, provided for in this Indenture (including any covenants compliance with
which constitutes a condition precedent) relating to the proposed action have
been complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with, except
that, in the case of any such application or request as to which the furnishing
of such documents, certificates and/or opinions is specifically required by any
provision of this Indenture relating to such particular application or request,
no additional certificate or opinion need be furnished.
Every certificate or Opinion of Counsel with respect to compliance
with a condition or covenant provided for in this Indenture shall include:
(a) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein relating
thereto;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of each such individual, he or
she has made such examination or investigation as is necessary to enable him or
her to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(d) a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.
Section 104. Form of Documents Delivered to Trustee.
--------------------------------------
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company, any Guarantor
or other obligor of the Securities may be based, insofar as it relates to legal
matters, upon a certificate or opinion of, or representations by, counsel,
unless such officer knows that the certificate or opinion or representations
with respect to the matters upon which the certificate or opinion is based are
erroneous. Any such certificate or opinion may be based, insofar as it relates
to factual matters, upon a certificate or opinion of, or representations by, an
officer or officers of the Company, any Guarantor or other obligor of the
Securities stating that the information with respect to such factual matters is
in the possession of the Company, any Guarantor or other obligor of the
Securities, unless such counsel knows that the certificate or opinion or
representations with respect to such matters are erroneous. Opinions of Counsel
required to be delivered to the Trustee may have qualifications customary for
opinions of the type required and counsel delivering such Opinions of Counsel
may rely on certificates of the Company or government or other officials
customary for opinions of the type required, including certificates certifying
as to matters of fact, including that various financial covenants have been
complied with.
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<PAGE>
If any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Section 105. Acts of Holders.
---------------
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "ACT" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Indenture if made in the manner provided in this Section. The fact and date of
the execution by any person of any such instrument or writing or the authority
of the person executing the same may also be proved in any other manner which
the Trustee deems sufficient in accordance with such reasonable rules as the
Trustee may determine.
(b) The ownership of Securities shall be proved by the Security
Register.
(c) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Security shall bind every future
Holder of the same Security or the Holder of every Security issued upon the
transfer thereof or in exchange therefor or in lieu thereof, in respect of
anything done, suffered or omitted to be done by the Trustee, any Paying Agent
or the Company or any Guarantor in reliance thereon, whether or not notation of
such action is made upon such Security.
(d) If the Company shall solicit from the Holders any request, demand,
authorization, direction, notice, consent, waiver or other Act, the Company may,
at its option, by or pursuant to a Board Resolution, fix in advance a record
date for the determination of such Holders entitled to give such request,
demand, authorization, direction, notice, consent, waiver or other Act, but the
Company shall have no obligation to do so. Notwithstanding Trust Indenture Act
Section 316(c), any such record date shall be the record date specified in or
pursuant to such Board Resolution, which shall be a date not more than 30 days
prior to the first solicitation of Holders generally in connection therewith and
no later than the date such solicitation is completed.
In the absence of any such record date fixed by the Company,
regardless as to whether a solicitation of the Holders is occurring on behalf of
the Company or any Holder, the Trustee may, at its option, fix in advance a
record date for the determination of such Holders entitled to give such request,
demand, authorization, direction, notice, consent, waiver or other Act, but the
Trustee shall have no obligation to do so. Any such record date shall be a date
not more than 30 days prior to the first solicitation of Holders generally in
connection therewith and no later than a date such solicitation is completed.
If such a record date is fixed, such request, demand, authorization,
direction, notice, consent, waiver or other Act may be given before or after
such record date, but only the Holders of record at the close of business on
such record date shall be deemed to be Holders for purposes of
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<PAGE>
determining whether Holders of the requisite proportion of Securities then
Outstanding have authorized or agreed or consented to such request, demand,
authorization, direction, notice, consent, waiver or other Act, and for this
purpose the Securities then Outstanding shall be computed as of such record
date; provided that no such request, demand, authorization, direction, notice,
--------
consent, waiver or other Act by the Holders on such record date shall be deemed
effective unless it shall become effective pursuant to the provisions of this
Indenture not later than six months after the record date.
Section 106. Notices, etc., to Trustee, the Company and any
----------------------------------------------
Guarantor.
Any request, demand, authorization, direction, notice, consent, waiver
or Act of Holders or other document provided or permitted by this Indenture to
be made upon, given or furnished to, or filed with:
(a) the Trustee by any Holder or by the Company or any Guarantor or
any other obligor of the Securities or a Senior Representative or holder of
Senior Indebtedness shall be sufficient for every purpose hereunder if in
writing and mailed, first-class postage prepaid, or delivered by recognized
overnight courier, to or with the Trustee at the Corporate Trust Office,
Attention: Corporate Trust Division, or at any other address previously
furnished in writing to the Holders, the Company, any Guarantor, any other
obligor of the Securities or a Senior Representative or holder of Senior
Indebtedness by the Trustee; or
(b) the Company or any Guarantor shall be sufficient for every purpose
(except as provided in Section 501(c)) hereunder if in writing and mailed,
first-class postage prepaid, or delivered by recognized overnight courier, to
the Company or such Guarantor addressed to it at Salem Communications
Corporation, 4880 Santa Rosa Road, Suite 300, Camarillo, California 93012,
Attention: President, or at any other address previously furnished in writing
to the Trustee by the Company;
Section 107. Notice to Holders: Waiver.
-------------------------
If this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, or delivered by
recognized overnight courier, to each Holder affected by such event, at such
Holder's address as it appears in the Security Register, not later than the
latest date, and not earlier than the earliest date, prescribed for the giving
of such notice. In any case in which notice to Holders is given by mail,
neither the failure to mail such notice, nor any defect in any notice so mailed,
to any particular Holder shall affect the sufficiency of such notice with
respect to other Holders. Any notice when mailed to a Holder in the aforesaid
manner shall be conclusively deemed to have been received by such Holder whether
or not actually received by such Holder. If this Indenture provides for notice
in any manner, such notice may be waived in writing by the Person entitled to
receive such notice, either before or after the event, and such waiver shall be
the equivalent of such notice. Waivers of notice by Holders shall be filed with
the Trustee, but such filing shall not be a condition precedent to the validity
of any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause, it shall be impracticable to mail notice of any event
as required by any provision of this
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<PAGE>
Indenture, then any method of giving such notice as shall be reasonably
satisfactory to the Trustee shall be deemed to be a sufficient giving of such
notice.
Section 108. Conflict with Trust Indenture Act.
---------------------------------
If any provision hereof limits, qualifies or conflicts with any
provision of the Trust Indenture Act or another provision which is required or
deemed to be included in this Indenture by any of the provisions of the Trust
Indenture Act, the provision or requirement of the Trust Indenture Act shall
control. If any provision of this Indenture modifies or excludes any provision
of the Trust Indenture Act that may be so modified or excluded, the latter
provision shall be deemed to apply to this Indenture as so modified or to be
excluded, as the case may be. In each case that this Indenture refers to a
provision of the Trust Indenture Act, the portion of such provision required to
be incorporated herein in order for this Indenture to be qualified under the
Trust Indenture Act is so incorporated by reference in and made a part of this
Indenture.
Section 109. Effect of Headings and Table of Contents.
----------------------------------------
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
Section 110. Successors and Assigns.
----------------------
All covenants and agreements in this Indenture by the Company and the
Guarantors shall bind their successors and assigns, whether so expressed or not.
Section 111. Separability Clause.
-------------------
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section 112. Benefits of Indenture.
---------------------
Nothing in this Indenture or in the Securities or the Guarantees,
express or implied, shall give to any Person (other than the parties hereto and
their successors hereunder, any Paying Agent, the Holders and the holders of
Senior Indebtedness or Guarantor Senior Indebtedness) any benefit or any legal
or equitable right, remedy or claim under this Indenture.
Section 113. Governing Law.
-------------
THIS INDENTURE AND THE SECURITIES AND THE GUARANTEES SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (WITHOUT
GIVING EFFECT TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF).
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<PAGE>
Section 114. Legal Holidays.
--------------
In any case where any Interest Payment Date, Redemption Date or Stated
Maturity of any Security shall not be a Business Day, then (notwithstanding any
other provision of this Indenture or of the Securities) payment of interest or
principal or premium. if any, need not be made on such date, but may be made on
the next succeeding Business Day with the same force and effect as if made on
the Interest Payment Date or Redemption Date, or at the Stated Maturity and no
interest shall accrue with respect to such payment for the period from and after
such Interest Payment Date, Redemption Date or Stated Maturity, as the case may
be, to the next succeeding Business Day.
Section 115. Schedules and Exhibits.
----------------------
All schedules and exhibits attached hereto are by this reference made
a part hereof with the same effect as if herein set forth in full.
Section 116. Counterparts.
------------
This Indenture may be executed in any number of counterparts, each of
which shall be an original; but such counterparts shall together constitute but
one and the same instrument.
ARTICLE II
----------
SECURITY FORMS
--------------
Section 201. Forms Generally.
---------------
The Securities and the Trustee's certificate of authentication shall
be in substantially the forms set forth in this Article, with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange, any organizational
document or governing instrument or applicable law or as may, consistently
herewith, be determined by the officers executing such Securities, as evidenced
by their execution of the Securities. Any portion of the text of any Security
may be set forth on the reverse thereof, with an appropriate reference thereto
on the face of the Security.
The definitive Securities shall be printed, lithographed or engraved
or produced by any combination of these methods or may be produced in any other
manner permitted by the rules of any securities exchange on which the Securities
may be listed, all as determined by the officers executing such Securities, as
evidenced by their execution of such Securities.
The terms and provisions contained in the form of Securities set forth
in Sections 202 through 205 shall constitute, and are expressly made, a part of
this Indenture and, to the extent applicable, the Company, the Guarantors and
the Trustee, by their execution and delivery of this Indenture, expressly agree
to such terms and provisions and to be bound thereby.
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<PAGE>
Section 202. Form of Face of Security.
------------------------
(a) The form of the face of any Series A Security authenticated and
delivered hereunder shall be substantially as follows:
Unless and until (A)(i) a Series A Security is sold under an effective
Registration Statement or (ii) a Series A Security is exchanged for a Series B
Security in connection with an effective Registration Statement, in each case
pursuant to the Registration Rights Agreement or (B) the legend requirement is
otherwise terminated in accordance with Section 306, then each Series A Security
shall bear the legend set forth below (the "RESTRICTED SECURITIES LEGEND") on
the face thereof:
Salem Communications Corporation
--------------------------
9.5% SENIOR SUBORDINATED NOTE DUE 2007, SERIES A
[IF THE SECURITY IS A RESTRICTED SECURITY, INSERT -- THIS SECURITY HAS NOT BEEN
REGISTERED UNDER SECTION 5 OF THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD TO, OR FOR THE
ACCOUNT OR BENEFIT OF ANY PERSONS EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION
HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS AN
INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR
(7) UNDER THE SECURITIES ACT) (AN "ACCREDITED INVESTOR"), (2) AGREES THAT IT
WILL NOT WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY RESELL OR
OTHERWISE TRANSFER THIS SECURITY, EXCEPT (A) TO THE COMPANY, OR ANY SUBSIDIARY
THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN
COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES
TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES
(OR HAS FURNISHED ON ITS BEHALF BY A U.S. BROKER-DEALER) TO THE TRUSTEE A SIGNED
LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS (THE FORM OF WHICH
LETTER CAN BE OBTAINED FROM THE TRUSTEE OR REGISTRAR), (D) OUTSIDE THE UNITED
STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 OF REGULATION S
UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION
PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT
IT WILL DELIVER TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF
THIS SECURITY WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THE SECURITY, IF
THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER
MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND THE COMPANY SUCH
CERTIFICATIONS, WRITTEN LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF
-26-
<PAGE>
THEM MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT
TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION" AND "UNITED STATES" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S
UNDER THE SECURITIES ACT. EACH PURCHASER OF THIS SECURITY MAY BE RELYING ON THE
EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY
RULE 144A THEREUNDER.
No. _____________ $ ______________________
Salem Communications Corporation, a California corporation (herein
called the "COMPANY," which term includes any successor Person under the
Indenture hereinafter referred to), for value received, hereby promises to pay
to _____________ or registered assigns, the principal sum of _________ United
States dollars ($___________) on October 1, 2007, at the office or agency of the
Company referred to below, and to pay interest thereon from September 25, 1997,
or from the most recent Interest Payment Date to which interest has been paid or
duly provided for, semiannually on April 1 and October 1 of each year,
commencing April 1, 1998 at the rate of 9.5% per annum, plus Penalty Amounts, if
any, in United States dollars, until the principal hereof is paid or duly
provided for.
The interest so payable, and punctually paid or duly provided for, on
any Interest Payment Date will, as provided in such Indenture, be paid to the
Person in whose name this Series A Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest, which shall be March 15 or September 15 (whether or not a
Business Day), as the case may be, next preceding such Interest Payment Date.
Any such interest not so punctually paid, or duly provided for, and interest on
such defaulted interest at the interest rate borne by the Series A Securities,
to the extent lawful, shall forthwith cease to be payable to the Holder on such
Regular Record Date, and may be paid to the Person in whose name this Series A
Security (or one or more Predecessor Securities) is registered at the close of
business on a Special Record Date for the payment of such defaulted interest to
be fixed by the Trustee, notice whereof shall be given to Holders of Series A
Securities not less than 10 days prior to such Special Record Date, or may be
paid at any time in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Series A Securities may be
listed, and upon such notice as may be required by such exchange, all as more
fully provided in said Indenture.
The Holder of this Series A Security is entitled to the benefits of
the Registration Rights Agreement, dated as of September 25, 1997, among the
Company, the Guarantors and the Initial Purchasers, pursuant to which, subject
to the terms and conditions thereof, the Company is obligated, among other
things, to consummate the Exchange Offer pursuant to which the Holder of this
Series A Security shall have the right to exchange this Series A Security for
9.5% Senior Subordinated Notes due 2007, Series B (herein called the "SERIES B
SECURITIES") in like principal amount as provided therein. The Series A
Securities and the Series B Securities are together referred to as the
"SECURITIES." The Series A Securities rank pari passu in right of payment with
---- -----
the Series B Securities.
-27-
<PAGE>
Additional amounts ("PENALTY AMOUNTS") will be assessed on the Series
A Securities as follows:
(i)(A) if an Exchange Offer Registration Statement (or, in the event
of a change in applicable law or due to current interpretations by the
Commission, the Company and the Guarantors are not permitted to effect the
Exchange Offer, a Shelf Registration Statement), is not filed within 75 days
following the Closing Date, (B) in the event that within 30 days after
commencement of the Exchange Offer, any Holder shall notify the Company that
such Holder (x) is prohibited by applicable law or Commission policy from
participating in the Exchange Offer, (y) may not resell Exchange Securities (as
defined in the Registration Rights Agreement) acquired by it in the Exchange
Offer to the public without delivering a prospectus and that the prospectus
contained in the Exchange Offer Registration Statement is not appropriate or
available for such resales by such Holder or (z) is a broker-dealer and holds
Series A Securities acquired directly from the Company or any Guarantor or an
"AFFILIATE" of the Company or any Guarantor and a Shelf Registration Statement
is not filed within 75 days after such notice or (C) upon the request of an
Initial Purchaser, a Shelf Registration Statement is not filed within 75 days
after such request, then commencing on either the 76th day after the Closing
Date or the expiration of either of the 75-day time periods set forth in clauses
(B) or (C) above (either, a "PRESCRIBED TIME PERIOD"), as the case may be,
Penalty Amounts shall be accrued on the Series A Securities over and above the
stated payment rates thereon at a rate of 0.25% per annum for the first 90 days
immediately following either the 76th day after the Closing Date or the
expiration of the applicable Prescribed Time Period, as the case may be, such
Penalty Amounts rate increasing by an additional 0.25% per annum at the
beginning of each subsequent 90-day period;
(ii) if an Exchange Offer Registration Statement or a Shelf
Registration Statement is filed pursuant to clause (i) above and is not declared
effective within either 150 days following the Closing Date or 75 days following
the expiration of the applicable Prescribed Time Period, as the case may be,
then commencing on the 151st day after the Closing Date or the 76th day
following the expiration of the applicable Prescribed Time Period, as the case
may be, Penalty Amounts shall be accrued on the Series A Securities over and
above the accrued stated payment rates thereon at a rate of 0.25% per annum for
the first 90 days immediately following the 151st day after the Closing Date or
the 76th day after the expiration of the Prescribed Time Period, as the case may
be, such Penalty Amounts rate increasing by an additional 0.25% per annum at the
beginning of each subsequent 90-day period; and
(iii) if either (A) the Company and the Guarantors have not exchanged
the Exchange Securities (as defined in the Registration Rights Agreement) for
all of the Series A Securities validly tendered in accordance with the terms of
the Exchange Offer on or prior to 180 days after the Closing Date, or (B) if
applicable, a Shelf Registration Statement has been declared effective and such
Shelf Registration Statement ceases to be effective prior to two years from its
original effective date or such shorter period that will terminate when all of
the Series A Securities covered by the Shelf Registration Statement have been
sold pursuant to the Shelf Registration Statement, then, subject to certain
exceptions, Penalty Amounts shall be accrued on the Series A Securities over and
above the stated payment rates at a rate of 0.25% per annum for the first 90
days immediately following the (x) 181st day after the Closing Date in the case
of (A) above or (y) the day such Shelf Registration Statement ceases to be
effective in the case of (B) above, such Penalty Amounts rate increasing by an
additional 0.25% per annum at the beginning of each subsequent 90-day period;
-28-
<PAGE>
provided, however, that the Penalty Amounts rate on the Series A Securities may
- -------- -------
not exceed 1.0% per annum; and provided, further that (1) upon the filing of the
-------- -------
Exchange Offer Registration Statement or a Shelf Registration Statement (in the
case of (i) above), (2) upon the effectiveness of the Exchange Offer
Registration Statement or a Shelf Registration Statement (in the case of (ii)
above), or (3) upon the exchange of Exchange Securities for all Series A
Securities tendered in the Exchange Offer or upon the effectiveness of the Shelf
Registration Statement which had ceased to remain effective prior to two years
from its original effective date (in the case of (iii) above), Penalty Amounts
as a result of such clause (i), (ii) or (iii) shall cease to accrue.
Any Penalty Amounts due pursuant to clause (i), (ii) or (iii) above
will be payable in cash on the Interest Payment Date related to the Series A
Securities. The Penalty Amounts will be determined by multiplying the
applicable Penalty Amounts rate by the principal amount of the Series A
Securities, multiplied by a fraction, the numerator of which is the number of
days such Penalty Amounts rate was applicable during such period, and the
denominator of which is 360.
Payment of the principal of, premium, if any, and interest on this
Series A Security will be made at the office or agency of the Company maintained
for that purpose, in such coin or currency of the United States of America as at
the time of payment is legal tender for payment of public and private debts;
provided, however, that payment of interest may be made at the option of the
- -------- -------
Company by check mailed to the address of the Person entitled thereto as such
address shall appear on the Security Register. If any of the Series A
Securities are held by the Depositary, payments of interest to the Depositary
may be made by wire transfer to the Depositary. Interest shall be computed on
the basis of a 360-day year of twelve 30-day months.
Reference is hereby made to the further provisions of this Series A
Security set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
This Series A Security is entitled to the benefits of Guarantees by
each of the Guarantors of the punctual payment when due of the Indenture
Obligations made in favor of the Trustee for the benefit of the Holders.
Reference is hereby made to Article Fourteen of the Indenture for a statement of
the respective rights, limitations of rights, duties and obligations under the
Guarantees of each of the Guarantors.
All references in this Series A Security or in the Indenture to
accrued and unpaid interest shall be deemed to include, to the extent
applicable, a reference to Penalty Amounts.
Unless the certificate of authentication hereon has been duly executed
by the Trustee referred to on the reverse hereof or by the authenticating agent
appointed as provided in the Indenture by manual signature, this Series A
Security shall not be entitled to any benefit under the Indenture, or be valid
or obligatory for any purpose.
-29-
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed by the manual or facsimile signature of its authorized officers and its
corporate seal to be affixed or reproduced hereon.
Dated: Salem Communications Corporation
By: __________________________
Attest:
- -------------------------------
Secretary
(b) The form of the face of any Series B Security authenticated and
delivered hereunder shall be substantially as follows:
Salem Communications Corporation
--------------------------
9.5% SENIOR SUBORDINATED NOTE DUE 2007, SERIES B
No. ____________________ $ __________________
Salem Communications Corporation, a California corporation (herein
called the "COMPANY," which term includes any successor Person under the
Indenture hereinafter referred to), for value received, hereby promises to pay
to ___________ or registered assigns, the principal sum of _____________ United
States dollars ($ _________) on October 1, 2007, at the office or agency of the
Company referred to below, and to pay interest thereon from September 25, 1997,
or from the most recent Interest Payment Date to which interest has been paid or
duly provided for, semiannually on April 1 and October 1, of each year,
commencing April 1, 1998 at the rate of 9.5% per annum, in United States
dollars, until the principal hereof is paid or duly provided for. Interest
amounts paid pursuant to any Predecessor Securities to this Security shall be
deemed paid pursuant to this Security.
The interest so payable, and punctually paid or duly provided for, on
any Interest Payment Date will, as provided in such Indenture, be paid to the
Person in whose name this Series B Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest, which shall be March 15 or September 15 (whether or not a
Business Day), as the case may be, next preceding such Interest Payment Date.
Any such interest not so punctually paid, or duly provided for, and interest on
such defaulted interest at the interest rate borne by the Series B Securities,
to the extent lawful, shall forthwith cease to be payable to the Holder on such
Regular Record Date, and may be paid to the Person in whose name this Series B
Security (or one or more Predecessor Securities) is registered at the close of
business on a Special Record Date for the payment of such defaulted interest to
be fixed by the Trustee, notice whereof shall be given to Holders of Series B
Securities not less than 10 days prior to such Special Record Date, or may be
paid
-30-
<PAGE>
at any time in any other lawful manner not inconsistent with the requirements of
any securities exchange on which the Series B Securities may be listed, and upon
such notice as may be required by such exchange, all as more fully provided in
said Indenture.
This Series B Security was issued pursuant to the Exchange Offer
pursuant to which the 9.5% Senior Subordinated Notes due 2007, Series A (herein
called the "SERIES A SECURITIES") in like principal amount were exchanged for
the Series B Securities. The Series B Securities rank pari passu in right of
---- -----
payment with the Series A Securities.
Any Penalty Amounts payable with respect to any Predecessor Securities
to this Security that have not been paid prior to the consummation of the
Exchange Offer will be payable in full in cash on the first Interest Payment
Date related to this Security following consummation of the Exchange Offer.
Payment of the principal of, premium, if any, and interest on this
Series B Security will be made at the office or agency of the Company maintained
for that purpose, in such coin or currency of the United States of America as at
the time of payment is legal tender for payment of public and private debts;
provided, however, that payment of interest may be made at the option of the
- -------- -------
Company by check mailed to the address of the Person entitled thereto as such
address shall appear on the Security Register. If any of the Series B
Securities are held by the Depositary, payments of interest to the Depositary
may be made by wire transfer to the Depositary. Interest shall be computed on
the basis of a 360-day year of twelve 30-day months.
Reference is hereby made to the further provisions of this Series B
Security set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
This Series B Security is entitled to the benefits of Guarantees by
each of the Guarantors of the punctual payment when due of the Indenture
Obligations made in favor of the Trustee for the benefit of the Holders.
Reference is hereby made to Article Fourteen of the Indenture for a statement of
the respective rights, limitations of rights, duties and obligations under the
Guarantees of each of the Guarantors.
Unless the certificate of authentication hereon has been duly executed
by the Trustee referred to on the reverse hereof or by the authenticating agent
appointed as provided in the Indenture by manual signature, this Series B
Security shall not be entitled to any benefit under the Indenture, or be valid
or obligatory for any purpose.
-31-
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed by the manual or facsimile signature of its authorized officers and its
corporate seal to be affixed or reproduced hereon.
Dated: Salem Communications Corporation
By: __________________________
Attest:
- -------------------------------
Secretary
Section 203. Form of Reverse of Securities.
-----------------------------
(a) The form of the reverse of the Series A Securities shall be
substantially as follows:
Salem Communications Corporation
--------------------------
9.5% SENIOR SUBORDINATED NOTE DUE 2007, SERIES A
This Security is one of a duly authorized issue of Securities of the
Company designated as its 9.5% Senior Subordinated Notes due 2007, Series A
(herein called the "SECURITIES"), limited (except as otherwise provided in the
Indenture referred to below) in aggregate principal amount to $150,000,000,
which may be issued under an indenture (herein called the "INDENTURE"), dated as
of September 25, 1997, among the Company, the Guarantors and The Bank of New
York, as trustee (herein called the "TRUSTEE," which term includes any successor
trustee under the Indenture), to which Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the respective rights,
limitations of rights, duties, obligations and immunities thereunder of the
Company, the Guarantors, the Trustee and the Holders of the Securities, and of
the terms upon which the Securities and the Guarantees are, and are to be,
authenticated and delivered.
The Indenture contains provisions for defeasance at any time of (a)
the entire Indebtedness on the Securities and (b) certain restrictive covenants
and related Defaults and Events of Default, in each case upon compliance or
noncompliance with certain conditions set forth therein.
The Indebtedness evidenced by the Securities is, to the extent and in
the manner provided in the Indenture, subordinate and subject in right of
payment to the prior payment in full of all Senior Indebtedness, whether
Outstanding on the date of the Indenture or thereafter, and this Security is
issued subject to such provisions. Each Holder of this Security, by accepting
the same, (a)
-32-
<PAGE>
agrees to and shall be bound by such provisions, (b) authorizes and directs the
Trustee on his behalf to take such action as may be necessary or appropriate to
effectuate the subordination as provided in the Indenture and (c) appoints the
Trustee his attorney-in-fact for such purpose; provided, however, that, subject
-------- -------
to Section 406 of the Indenture, the Indebtedness evidenced by this Security
shall cease to be so subordinate and subject in right of payment upon any
defeasance of this Security referred to in clause (a) or (b) of the preceding
paragraph.
The Securities are subject to redemption at any time on or after
October 1, 2002, at the option of the Company, in whole or in part, on not less
than 30 nor more than 60 days' prior notice by first-class mail in amounts of
$1,000 or an integral multiple of $1,000 at the following redemption prices
(expressed as a percentage of the principal amount), if redeemed during the 12-
month period beginning October 1 of the years indicated below:
<TABLE>
<CAPTION>
Redemption
Year Price
-------------------------------- -----------
<S> <C>
2002.................. 104.75%
2003.................. 103.17
2004.................. 101.59
2005 and thereafter... 100.00
</TABLE>
in each case together with accrued and unpaid interest, if any, to the
Redemption Date (subject to the right of Holders of record on relevant record
dates to receive interest due on an interest payment date). If less than all of
the Securities are to be redeemed, the Trustee shall select the Securities or
portions thereof to be redeemed pro rata, by lot or by any other method the
Trustee shall deem fair and reasonable.
In addition, at any time on or prior to October 1, 2000, the Company
may redeem up to $50,000,000 of the aggregate principal amount of Securities
with the net proceeds of a Public Equity Offering of the Company at a Redemption
Price equal to 109.50% of the aggregate principal amount thereof, together with
accrued and unpaid interest, if any, to the Redemption Date (subject to the
right of Holders of record on relevant record dates to receive interest due on
an interest payment date); provided that not less than $100,000,000 aggregate
--------
principal amount of the Securities remain outstanding immediately after the
occurrence of such redemption. If less than all of the Notes are to be
redeemed, the Trustee shall select the Securities or portions thereof to be
redeemed pro rata, by lot or by any other method the Trustee shall deem fair and
reasonable.
If a Change of Control shall occur at any time, then each Holder shall
have the right to require the Company to purchase such Holder's Securities in
whole or in part in integral multiples of $1,000, at a purchase price in cash in
an amount equal to 101% of the principal amount thereof, plus accrued and unpaid
interest, if any, to the date of purchase.
Under certain circumstances, in the event the Net Cash Proceeds
received by the Company or a Restricted Subsidiary from any Asset Sale, which
proceeds are not used to prepay Senior Indebtedness or invested in properties or
assets used in the businesses of the Company, exceed $5,000,000 the Company will
be required to apply such proceeds to the repayment of the Securities and
certain Indebtedness ranking pari passu to the Securities.
---- -----
-33-
<PAGE>
In the case of any redemption of Securities, interest installments
whose Stated Maturity is on or prior to the Redemption Date will be payable to
the Holders of such Securities of record as of the close of business on the
relevant record date referred to on the face hereof. Securities (or portions
thereof) for whose redemption and payment provision is made in accordance with
the Indenture shall cease to bear interest from and after the date of
redemption.
In the event of redemption of this Security in part only, a new
Security or Securities for the unredeemed portion hereof shall be issued in the
name of the Holder hereof upon the cancellation hereof.
If an Event of Default shall occur and be continuing, the principal
amount of all the Securities may be declared due and payable in the manner and
with the effect provided in the Indenture.
If this Security is in certificated form, then as provided in the
Indenture and subject to certain limitations therein set forth, the transfer of
this Security is registrable on the Security Register of the Company, upon
surrender of this Security for registration of transfer at the office or agency
of the Company maintained for such purpose, duly endorsed by, or accompanied by
a written instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed by, the Holder hereof or its attorney duly
authorized in writing, and thereupon one or more new Securities, of authorized
denominations and for the same aggregate principal amount, will be issued to the
designated transferee or transferees.
If this Security is a Restricted Security in certificated form, then
as provided in the Indenture and subject to certain limitations therein set
forth, the Holder, provided it is a "qualified institutional buyer" within the
meaning of Rule 144A under the Securities Act (a "QIB"), may exchange this
Security for an interest in a Global Security by instructing the Trustee (by
completing the Restricted Securities Transfer Certificate in the form in Exhibit
A to the Indenture) to arrange for such Security to be represented by a
beneficial interest in a Global Security in accordance with the customary
procedures of the Depositary, unless the Company has elected not to issue a
Global Security.
If this Security is a Global Security, except as described below, it
is not exchangeable for a Security or Securities in certificated form. The
Securities will be delivered in certificated form if (i) the Depositary ceases
to be registered as a clearing agency under the Exchange Act or is no longer
willing or able to provide securities depository services with respect to the
Securities, (ii) the Company so determines and (iii) there shall have occurred
an Event of Default or an event which, with the giving of notice or lapse of
time or both, would constitute an Event of Default with respect to the
Securities represented by such Global Security and such Event of Default or
event continues for a period of 90 days. Upon any such issuance, the Trustee is
required to register such certificated Security in the name of, and cause the
same to be delivered to, such Person or Persons (or the nominee of any thereof).
All such certificated Securities would be required to include the Restricted
Securities Legend.
At any time when the Company is not subject to Sections 13 or 15(d) of
the Exchange Act, upon the written request of a Holder of a Security, the
Company will promptly furnish or cause to be furnished Rule 144A Information to
such Holder or to a prospective purchaser of such Security
-34-
<PAGE>
who such Holder informs the Company is reasonably believed to be a QIB, as the
case may be, in order to permit compliance by such Holder with Rule 144A under
the Securities Act.
The Indenture permits, with certain exceptions (including certain
amendments permitted without the consent of any Holders) as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the Guarantors and the rights of the Holders under the Indenture and
the Guarantees at any time by the Company, the Guarantors and the Trustee with
the consent of the Holders of a specified percentage in aggregate principal
amount of the Securities at the time Outstanding. The Indenture also contains
provisions permitting the Holders of specified percentages in aggregate
principal amount of the Securities at the time Outstanding, on behalf of the
Holders of all the Securities, to waive compliance by the Company and the
Guarantors with certain provisions of the Indenture and the Guarantees and
certain past Defaults under the Indenture and the Guarantees and their
consequences. Any such consent or waiver by or on behalf of the Holder of this
Security shall be conclusive and binding upon such Holder and upon all future
Holders of this Security and of any Security issued upon the registration of
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent or waiver is made upon this Security.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, any
Guarantor or any other obligor upon the Securities (in the event such other
obligor is obligated to make payments in respect of the Securities), which is
absolute and unconditional, to pay the principal of, premium, if any, and
interest on this Security at the times, place, and rate, and in the coin or
currency, herein prescribed, subject to the subordination provisions of the
Indenture.
The Securities, if issued in certificated form, are issuable only in
registered form without coupons in denominations of $1,000 and any integral
multiple thereof. As provided in the Indenture and subject to certain
limitations therein set forth, the Securities are exchangeable for a like
aggregate principal amount of Securities of a different authorized denomination,
as requested by the Holder surrendering the same.
No service charge shall be made for any registration of transfer or
exchange or redemption of Securities, but the Company may require payment of a
sum sufficient to cover any tax or other governmental charge payable in
connection therewith.
Prior to and at the time of due presentment of this Security for
registration of transfer, the Company, the Trustee and any agent of the Company
or the Trustee may treat the Person in whose name this Security is registered as
the owner hereof for all purposes (subject to provisions with respect to record
dates for the payment of interest), whether or not this Security is overdue, and
neither the Company, the Trustee nor any agent shall be affected by notice to
the contrary.
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE CONFLICTS OF
LAWS PRINCIPLES THEREOF).
All terms used in this Security which are defined in the Indenture and
not otherwise defined herein shall have the meanings assigned to them in the
Indenture.
-35-
<PAGE>
(b) The form of the reverse of the Series B Securities shall be
substantially as follows:
SALEM COMMUNICATIONS CORPORATION
------------------------
9.5% SENIOR SUBORDINATED NOTE DUE 2007, SERIES B
This Security is one of a duly authorized issue of Securities of the
Company designated as its 9.5% Senior Subordinated Notes due 2007, Series B
(herein called the "SECURITIES"), limited (except as otherwise provided in the
Indenture referred to below) in aggregate principal amount to $150,000,000,
which may be issued under an indenture (herein called the "INDENTURE"), dated as
of September 25, 1997, among the Company, the Guarantors and The Bank of New
York, as trustee (herein called the "TRUSTEE," which term includes any successor
trustee under the Indenture), to which Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the respective rights,
limitations of rights, duties, obligations and immunities thereunder of the
Company, the Guarantors, the Trustee and the Holders of the Securities, and of
the terms upon which the Securities and the Guarantees are, and are to be,
authenticated and delivered.
The Indenture contains provisions for defeasance at any time of (a)
the entire Indebtedness on the Securities and (b) certain restrictive covenants
and related Defaults and Events of Default, in each case upon compliance or
noncompliance with certain conditions set forth therein.
The Indebtedness evidenced by the Securities is, to the extent and in
the manner provided in the Indenture, subordinate and subject in right of
payment to the prior payment in full of all Senior Indebtedness, whether
Outstanding on the date of the Indenture or thereafter, and this Security is
issued subject to such provisions. Each Holder of this Security, by accepting
the same, (a) agrees to and shall be bound by such provisions, (b) authorizes
and directs the Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate the subordination as provided in the Indenture and (c)
appoints the Trustee his attorney-in-fact for such purpose; provided, however,
-------- -------
that, subject to Section 406 of the Indenture, the Indebtedness evidenced by
this Security shall cease to be so subordinate and subject in right of payment
upon any defeasance of this Security referred to in clause (a) or (b) of the
preceding paragraph.
The Securities are subject to redemption at any time on or after
October 1, 2002, at the option of the Company, in whole or in part, on not less
than 30 nor more than 60 days' prior notice by first-class mail in amounts of
$1,000 or an integral multiple of $1,000 at the following
-36-
<PAGE>
redemption prices (expressed as a percentage of the principal amount), if
redeemed during the 12-month period beginning October 1 of the years indicated
below:
<TABLE>
<CAPTION>
Redemption
Year Price
---- ----------
<S> <C>
2002.................. 104.75%
2003.................. 103.17
2004.................. 101.59
2005 and thereafter... 100.00
</TABLE>
in each case together with accrued and unpaid interest, if any, to the
Redemption Date (subject to the right of Holders of record on relevant record
dates to receive interest due on an interest payment date). If less than all of
the Securities are to be redeemed, the Trustee shall select the Securities or
portions thereof to be redeemed pro rata, by lot or by any other method the
Trustee shall deem fair and reasonable.
In addition, at any time on or prior to October 1, 2000, the Company
may redeem up to $50,000,000 of the aggregate principal amount of Securities
with the net proceeds of a Public Equity Offering of the Company at a Redemption
Price equal to 109.50% of the aggregate principal amount thereof, together with
accrued and unpaid interest, if any, to the Redemption Date (subject to the
right of Holders of record on relevant record dates to receive interest due on
an interest payment date); provided that not less than $100,000,000 aggregate
--------
principal amount of the Securities remains outstanding immediately after the
occurrence of such redemption. If less than all of the Notes are to be
redeemed, the Trustee shall select the Securities or portions thereof to be
redeemed pro rata, by lot or by any other method the Trustee shall deem fair and
reasonable.
If a Change of Control shall occur at any time, then each Holder shall
have the right to require the Company to purchase such Holder's Securities in
whole or in part in integral multiples of $1,000, at a purchase price in cash in
an amount equal to 101% of the principal amount thereof, plus accrued and unpaid
interest, if any, to the date of purchase.
Under certain circumstances, in the event the Net Cash Proceeds
received by the Company or a Restricted Subsidiary from any Asset Sale, which
proceeds are not used to prepay Senior Indebtedness or invested in properties or
assets used in the businesses of the Company, exceed $5,000,000 the Company will
be required to apply such proceeds to the repayment of the Securities and
certain Indebtedness ranking pari passu to the Securities.
---- -----
In the case of any redemption of Securities, interest installments
whose Stated Maturity is on or prior to the Redemption Date will be payable to
the Holders of such Securities of record as of the close of business on the
relevant record date referred to on the face hereof. Securities (or portions
thereof) for whose redemption and payment provision is made in accordance with
the Indenture shall cease to bear interest from and after the date of
redemption.
In the event of redemption of this Security in part only, a new
Security or Securities for the unredeemed portion hereof shall be issued in the
name of the Holder hereof upon the cancellation hereof.
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If an Event of Default shall occur and be continuing, the principal
amount of all the Securities may be declared due and payable in the manner and
with the effect provided in the Indenture.
If this Security is in certificated form, then as provided in the
Indenture and subject to certain limitations therein set forth, the transfer of
this Security is registrable on the Security Register of the Company, upon
surrender of this Security for registration of transfer at the office or agency
of the Company maintained for such purpose, duly endorsed by, or accompanied by
a written instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed by, the Holder hereof or its attorney duly
authorized in writing, and thereupon one or more new Securities, of authorized
denominations and for the same aggregate principal amount, will be issued to the
designated transferee or transferees.
If this Security is a Global Security, except as described below, it
is not exchangeable for a Security or Securities in certificated form. The
Securities will be delivered in certificated form if (i) the Depositary ceases
to be registered as a clearing agency under the Exchange Act or is no longer
willing or able to provide securities depository services with respect to the
Securities, (ii) the Company so determines and (iii) there shall have occurred
an Event of Default or an event which, with the giving of notice or lapse of
time or both, would constitute an Event of Default with respect to the
Securities represented by such Global Security and such Event of Default or
event continues for a period of 90 days. Upon any such issuance, the Trustee is
required to register such certificated Security in the name of, and cause the
same to be delivered to, such Person or Persons (or the nominee of any thereof).
The Indenture permits, with certain exceptions (including certain
amendments permitted without the consent of any Holders) as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the Guarantors and the rights of the Holders under the Indenture and
the Guarantees at any time by the Company, the Guarantors and the Trustee with
the consent of the Holders of a specified percentage in aggregate principal
amount of the Securities at the time Outstanding. The Indenture also contains
provisions permitting the Holders of specified percentages in aggregate
principal amount of the Securities at the time Outstanding, on behalf of the
Holders of all the Securities, to waive compliance by the Company and the
Guarantors with certain provisions of the Indenture and the Guarantees and
certain past Defaults under the Indenture and the Guarantees and their
consequences. Any such consent or waiver by or on behalf of the Holder of this
Security shall be conclusive and binding upon such Holder and upon all future
Holders of this Security and of any Security issued upon the registration of
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent or waiver is made upon this Security.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, any
Guarantor or any other obligor upon the Securities (in the event such other
obligor is obligated to make payments in respect of the Securities), which is
absolute and unconditional, to pay the principal of, premium, if any, and
interest on this Security at the times, place, and rate, and in the coin or
currency, herein prescribed, subject to the subordination provisions of the
Indenture.
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<PAGE>
The Securities if issued in certificated form are issuable only in
registered form without coupons in denominations of $1,000 and any integral
multiple thereof. As provided in the Indenture and subject to certain
limitations therein set forth, the Securities are exchangeable for a like
aggregate principal amount of Securities of a different authorized denomination,
as requested by the Holder surrendering the same.
No service charge shall be made for any registration of transfer or
exchange or redemption of Securities, but the Company may require payment of a
sum sufficient to cover any tax or other governmental charge payable in
connection therewith.
Prior to and at the time of due presentment of this Security for
registration of transfer, the Company, the Trustee and any agent of the Company
or the Trustee may treat the Person in whose name this Security is registered as
the owner hereof for all purposes (subject to provisions with respect to record
dates for the payment of interest), whether or not this Security is overdue, and
neither the Company, the Trustee nor any agent shall be affected by notice to
the contrary.
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE CONFLICTS OF
LAWS PRINCIPLES THEREOF).
All terms used in this Security which are defined in the Indenture and
not otherwise defined herein shall have the meanings assigned to them in the
Indenture.
Section 204. Additional Provisions Required in Global Security.
-------------------------------------------------
Any Global Security issued hereunder shall, in addition to the
provisions contained in Sections 202 and 203, bear a legend in substantially the
following form:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE OF A DEPOSITARY. THIS SECURITY IS EXCHANGEABLE FOR SECURITIES
REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY
IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE AND MAY NOT BE
TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY
OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE
DEPOSITARY, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
IF THE DEPOSITORY TRUST COMPANY IS ACTING AS THE DEPOSITARY, INSERT -- UNLESS
THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT AND ANY SUCH CERTIFICATE ISSUED
IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS
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<PAGE>
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
Section 205. Form of Trustee's Certificate of Authentication.
-----------------------------------------------
The Trustee's certificate of authentication shall be included on the
Securities and shall be substantially in the form as follows:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
This is one of the Securities referred to in the within-mentioned
Indenture.
The Bank of New York,
as Trustee
Dated: September 25, 1997 By:____________________________
Authorized Signatory
Section 206. Form of Guarantee of Each of the Guarantors.
-------------------------------------------
The form of Guarantee shall be set forth on the Securities
substantially as follows:
GUARANTEES
For value received, each of the undersigned hereby unconditionally
guarantees, jointly and severally, to the holder of this Security the payment of
principal of, premium, if any, and interest on this Security in the amounts and
at the time when due and interest on the overdue principal and interest, if any,
of this Security, if lawful, and the payment or performance of all other
obligations of the Company under the Indenture or the Securities, to the holder
of this Security and the Trustee, all in accordance with and subject to the
terms and limitations of this Security and Article Fourteen of the Indenture.
These Guarantees will not become effective until the Trustee duly executes the
certificate of authentication on this Security. The Indebtedness evidenced by
these Guarantees is, to the extent and in the manner provided in the Indenture,
subordinate and subject in right of payment to the prior
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<PAGE>
payment in full of all Guarantor Senior Indebtedness (as defined in the
Indenture), whether Outstanding on the date of the Indenture or thereafter, and
these Guarantees are issued subject to such provisions.
ATEP RADIO, INC.,
BISON MEDIA, INC.,
CARON BROADCASTING, INC.,
COMMON GROUND BROADCASTING, INC.,
GOLDEN GATE BROADCASTING COMPANY, INC.,
INLAND RADIO, INC.,
INSPIRATION MEDIA, INC.,
INSPIRATION MEDIA OF TEXAS, INC.,
NEW ENGLAND CONTINENTAL MEDIA, INC.,
NEW INSPIRATION BROADCASTING COMPANY, INC.,
OASIS RADIO, INC.,
PENNSYLVANIA MEDIA ASSOCIATES, INC.,
RADIO 1210, INC.,
SALEM COMMUNICATIONS CORPORATION, a Delaware
corporation
SALEM MEDIA CORPORATION,
SALEM MEDIA OF CALIFORNIA, INC.,
SALEM MEDIA OF COLORADO, INC.,
SALEM MEDIA OF LOUISIANA, INC.,
SALEM MEDIA OF OHIO, INC.,
SALEM MEDIA OF OREGON, INC.,
SALEM MEDIA OF PENNSYLVANIA, INC.,
SALEM MEDIA OF TEXAS, INC.,
SALEM MUSIC NETWORK, INC.,
SALEM RADIO NETWORK INCORPORATED,
SALEM RADIO REPRESENTATIVES, INC.,
SOUTH TEXAS BROADCASTING, INC.,
SRN NEWS NETWORK, INC., and
VISTA BROADCASTING, INC.,
Attest ____________________ By _________________________________
Jonathan L. Block Edward G. Atsinger, III
Secretary President and Chief Executive Officer
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<PAGE>
BELTWAY MEDIA PARTNERS,
By: Salem Communication Corporation, its general
partner
Attest ____________________ By _________________________________
Jonathan L. Block Edward G. Atsinger, III
Secretary President and Chief Executive Officer
By: Golden Gate Broadcasting Company, Inc., its general
partner
Attest ____________________ By _________________________________
Jonathan L. Block Edward G. Atsinger, III
Secretary President and Chief Executive Officer
By: New Inspirations Broadcasting Company, Inc., its
general partner
Attest ____________________ By _________________________________
Jonathan L. Block Edward G. Atsinger, III
Secretary President and Chief Executive Officer
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ARTICLE III
-----------
THE SECURITIES
--------------
Section 301. Title and Terms.
---------------
The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is limited to $150,000,000 in
principal amount of Securities, except for Securities authenticated and
delivered upon registration of transfer of, or in exchange for, or in lieu of,
other Securities pursuant to Section 303, 304, 305, 306, 307, 308, 906, 1013,
1016 or 1108.
The Securities shall be known and designated as the "9.5% Senior
Subordinated Notes due 2007", in the case of either Series A or Series B, of the
Company. The Stated Maturity of the Securities shall be October 1, 2007, and
the Securities shall each bear interest at the rate of 9.5% plus Penalty
Amounts, if any, from September 25, 1997 or from the most recent Interest
Payment Date to which interest has been paid, as the case may be, payable
semiannually on October 1 and April 1, in each year, commencing April 1, 1998,
until the principal thereof is paid or duly provided for.
Unless otherwise specified herein, the Series A Securities and the
Series B Securities will be treated as one class and are together referred to as
the "SECURITIES." The Series A Securities rank pari passu in right of payment
---- -----
with the Series B Securities.
The principal of, premium, if any, and interest on the Securities
shall be payable at the office or agency of the Company maintained for such
purpose; provided, however, that at the option of the Company interest may be
-------- -------
paid by check mailed to addresses of the Persons entitled thereto as such
addresses shall appear on the Security Register. If any of the Securities are
held by the Depositary, payments of interest may be made by wire transfer to the
Depositary. The Trustee is hereby initially designated as the Paying Agent
under this Indenture.
The Securities shall be redeemable as provided in Article Eleven.
At the election of the Company, the entire Indebtedness on the
Securities or certain of the Company's obligations and covenants and certain
Events of Default thereunder may be defeased as provided in Article Four.
The Securities shall be subordinated in right of payment to Senior
Indebtedness as provided in Article Twelve.
Section 302. Denominations.
-------------
The Securities shall be issuable only in registered form without
coupons and only in denominations of $1,000 and any integral multiple thereof
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Section 303. Execution, Authentication, Delivery and Dating.
----------------------------------------------
The Securities shall be executed on behalf of the Company by one of
its Chairman of the Board, its President or one of its Vice Presidents attested
by its Secretary or one of its Assistant Secretaries.
Securities bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices on the date of such Securities.
At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Securities executed by the Company to
the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Securities; and the Trustee in accordance
with such Company Order shall authenticate and make available for deliver such
Securities as provided in this Indenture and not otherwise.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein duly
executed by the Trustee by manual signature of an authorized officer, and such
certificate upon any Security shall be conclusive evidence, and the only
evidence, that such Security has been duly authenticated and delivered
hereunder.
In case the Company or any Guarantor, pursuant to Article Eight, shall
be consolidated, merged with or into any other Person or shall sell, assign,
convey, transfer or lease substantially all of its properties and assets to any
Person, and the successor Person resulting from such consolidation, or surviving
such merger, or into which the Company or such Guarantor shall have been merged,
or the Person which shall have received a sale, assignment, conveyance, transfer
or lease as aforesaid, shall have executed an indenture supplemental hereto with
the Trustee pursuant to Article Eight, any of the Securities authenticated or
delivered prior to such consolidation, merger, sale, assignment, conveyance,
transfer or lease may, from time to time, at the request of the successor
Person, be exchanged for other Securities executed in the name of the successor
Person with such changes in phraseology and form as may be appropriate, but
otherwise in substance of like tenor as the Securities surrendered for such
exchange and of like principal amount; and the Trustee, upon Company Request of
the successor Person, shall authenticate and deliver Securities as specified in
such request for the purpose of such exchange. If Securities shall at any time
be authenticated and delivered in any new name of a successor Person pursuant to
this Section in exchange or substitution for or upon registration of transfer of
any Securities, such successor Person, at the option of the Holders but without
expense to them, shall provide for the exchange of all Securities at the time
Outstanding for Securities authenticated and delivered in such new name.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Securities on behalf of the Trustee. Unless limited by
the terms of such appointment, an authenticating agent may authenticate
Securities whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
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<PAGE>
authenticating agent has the same rights as any Security Registrar or Paying
Agent to deal with the Company and its Affiliates.
Section 304. Temporary Securities.
--------------------
Pending the preparation of definitive Securities, the Company may
execute, and upon Company Order, the Trustee shall authenticate and make
available for delivery, temporary Securities which are printed, lithographed,
typewritten or otherwise produced, in any authorized denomination, substantially
of the tenor of the definitive Securities in lieu of which they are issued and
with such appropriate insertions, omissions, substitutions and other variations
as the officers executing such Securities may determine, as conclusively
evidenced by their execution of such Securities.
After the preparation of definitive Securities, the temporary
Securities shall be exchangeable for definitive Securities upon surrender of the
temporary Securities at the office or agency of the Company designated for such
purpose pursuant to Section 1002, without charge to the Holder. Upon surrender
for cancellation of any one or more temporary Securities the Company shall
execute and the Trustee shall authenticate and make available for delivery in
exchange therefor a like principal amount of definitive Securities of authorized
denominations. Until so exchanged the temporary Securities shall in all
respects be entitled to the same benefits under this Indenture as definitive
Securities.
Section 305. Global Securities.
-----------------
With respect to transfers by QIBS, a Global Security shall, if the
Depositary permits, (i) be registered in the name of the Depositary for such
Global Security or the nominee of such Depositary, (ii) be deposited with, or on
behalf of, the Depositary and (iii) bear legends as set forth in Sections 202(a)
and 204; provided, however, the Securities are eligible to be in the form of a
-------- -------
Global Security.
Transfers made to Accredited Investors or Non-U.S. Persons shall be
made only in certificated form and not as a beneficial interest in a Global
Security.
Members of, or participants in, the Depositary ("AGENT MEMBERS") shall
have no rights under this Indenture with respect to any Global Security held on
their behalf by the Depositary, or the Trustee as its custodian, or under the
Global Security, and the Depositary may be treated by the Company, the Trustee
and any agent of the Company or the Trustee as the absolute owner of such Global
Security for all purposes whatsoever. Notwithstanding the foregoing, nothing
herein shall prevent the Company, the Trustee or any agent of the Company from
giving effect to any written certification, proxy or other authorization
furnished by the Depositary or shall impair, as between the Depositary and its
Agent Members, the operation of customary practices governing the exercise of
the rights of a holder of any Security.
(a) Transfers of the Global Security shall be limited to transfers of
such Global Security in whole, but not in part, to the Depositary, its
successors or their respective nominees. Interests of beneficial owners in a
Global Security may be transferred in accordance with the rules and procedures
of the Depositary and the provisions of Section 307. Under the circumstances
described in this clause (a) above, and in clause (b) below, beneficial owners
shall obtain physical securities in the
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<PAGE>
form set forth in Sections 202, 203, 204 (if applicable) and 205 ("PHYSICAL
SECURITIES") in exchange for their beneficial interests in a Global Security in
accordance with the Depositary's and the Securities Registrar's procedures. In
connection with the execution, authentication and delivery of such Physical
Securities, the Security Registrar shall reflect on its books and records a
decrease in the principal amount of the Global Security equal to the principal
amount of such Physical Securities and the Company shall execute and the Trustee
shall authenticate and make available for delivery one or more Physical
Securities having an equal aggregate principal amount. The Securities will be
delivered in certificated form if (i) the Depositary ceases to be registered as
a clearing agency under the Exchange Act or is not willing or no longer willing
or able to provide securities depository services with respect to the
Securities, (ii) the Company so determines or (iii) there shall have occurred an
Event of Default or an event which, with the giving of notice or lapse of time
or both, would constitute an Event of Default with respect to the Securities
represented by such Global Security and such Event of Default or event continues
for a period of 90 days.
(b) In connection with any transfer of a portion of the beneficial
interest in a Global Security pursuant to subsection (b) of this Section to
beneficial owners who are required to hold Physical Securities, the Security
Registrar shall reflect on its books and records the date and a decrease in the
principal amount of a Global Security in an amount equal to the principal amount
of the beneficial interest in the Global Security to be transferred, and the
Company shall execute, and the Trustee shall authenticate and make available for
delivery, one or more Physical Securities of like tenor and amount.
(c) In connection with the transfer of the entire Global Security to
beneficial owners pursuant to subsection (b) of this Section, a Global Security
shall be deemed to be surrendered to the Trustee for cancellation, and the
Company shall execute, and the Trustee shall authenticate and make available for
delivery, to each beneficial owner identified by the Depositary in exchange for
its beneficial owner identified by the Depositary in exchange for its beneficial
interest in a Global Security, an equal aggregate principal amount of Physical
Securities of authorized denominations.
(d) Any Physical Security delivered in exchange for an interest in
Global Securities pursuant to subsection (c) or subsection (d) of this Section
shall, except as otherwise provided by paragraph (a)(i)(x) and paragraph (c) of
Section 307, bear the Restricted Securities Legend.
(e) The registered holder of a Global Security may grant proxies and
otherwise authorize any person, including Agent Members and Persons that may
hold interests through Agent Members, to take any action which a Holder is
entitled to take under this Indenture or the Securities.
Section 306. Registration, Registration of Transfer and Exchange.
---------------------------------------------------
The Company shall cause to be kept at the Corporate Trust Office of
the Trustee, or such other office as the Trustee may designate, a register (the
register maintained in such office and in any other office or agency designated
pursuant to Section 1002 being herein sometimes referred to as the "SECURITY
REGISTER") in which, subject to such reasonable regulations as the Security
Registrar may prescribe, the Company shall provide for the registration of
Securities and of transfers of Securities. The Trustee or an agent thereof or
of the Company shall initially be the "SECURITY REGISTRAR" for the purpose of
registering Securities and transfers of Securities as herein provided.
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<PAGE>
Upon surrender for registration of transfer of any Security at the
office or agency of the Company designated pursuant to Section 1002, the Company
shall execute, and the Trustee shall authenticate and make available for
delivery, in the name of the designated transferee or transferees, one or more
new Securities of any authorized denomination or denominations, of a like
aggregate principal amount.
Furthermore, any Holder of a Global Security shall, by acceptance of
such Global Security, agree that transfers of beneficial interest in such Global
Security may be effected only through a book-entry system maintained by the
Holder of such Global Security (or its agent), and that ownership of a
beneficial interest in the Securities shall be required to be reflected in a
book entry.
At the option of the Holder, Securities may be exchanged for other
Securities of any authorized denomination or denominations, of a like aggregate
principal amount, upon surrender of the Securities to be exchanged at such
office or agency. Whenever any Securities are so surrendered for exchange, the
Company shall execute, and the Trustee shall authenticate and make available for
delivery, the Securities of the same series which the Holder making the exchange
is entitled to receive; provided that no exchange of Series A Securities for
Series B Securities shall occur until an Exchange Offer Registration Statement
shall have been declared effective by the Commission and that the Series A
Securities exchanged for the Series B Securities shall be cancelled.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the same
Indebtedness, and entitled to the same benefits under this Indenture, as the
Securities surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer,
or for exchange or redemption shall (if so required by the Company or the
Trustee) be duly endorsed, or be accompanied by a written instrument of transfer
in form satisfactory to the Company and the Security Registrar, duly executed by
the Holder thereof or such Holder's attorney duly authorized in writing.
No service charge shall be made to a Holder for any registration of
transfer or exchange or redemption of Securities, but the Company may require
payment of a sum sufficient to pay all documentary, stamp or similar issue or
transfer taxes or other governmental charges that may be imposed in connection
with any registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 303, 304, 305, 306, 307, 308, 906, 1013, 1016 or
1108 not involving any transfer.
The Company shall not be required (a) to issue, register the transfer
of or exchange any Security during a period beginning at the opening of business
(i) 15 days before the date of selection of Securities for redemption under
Section 1104 and ending at the close of business on the day of such selection or
(ii) 15 days before an Interest Payment Date and ending on the close of business
on the Interest Payment Date, or (b) to register the transfer of or exchange any
Security so selected for redemption in whole or in part, except the unredeemed
portion of Securities being redeemed in part.
Every Restricted Security shall be subject to the restrictions on
transfer provided in the legend required to be set forth on the face of each
Restricted Security pursuant to Section 202(a), and
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<PAGE>
the restrictions set forth in this Section 306, and the Holder of each
Restricted Security, by such Holder's acceptance thereof (or interest therein),
agrees to be bound by such restrictions on transfer.
The restrictions imposed by this Section 306 upon the transferability
of any particular Restricted Security shall cease and terminate on (a) the later
of two years from their date of issuance or two years after the last date on
which the Company or any Affiliate of the Company was the owner of such
Restricted Security (or any predecessor of such Restricted Security) or (b) (if
earlier) if and when such Restricted Security has been sold pursuant to an
effective registration statement under the Securities Act or transferred
pursuant to Rule 144 or under the Securities Act (or any successor provision),
unless the Holder thereof is an affiliate of the Company within the meaning of
Rule 144 (or such successor provisions). Any Restricted Security as to which
such restrictions on transfer shall have expired in accordance with their terms
or shall have terminated may, upon surrender of such Restricted Security for
exchange to the Security Registrar in accordance with the provision of this
Section 306 (accompanied, in the event that such restrictions on transfer have
terminated pursuant to Rule 144 (or any successor provision), by an Opinion of
Counsel satisfactory to the Company and the Trustee, to the effect that the
transfer of such Restricted Security has been made in compliance with Rule 144
(or any such successor provision)), be exchanged for a new Security, of like
tenor and aggregate principal amount, which shall not bear the Restricted
Securities Legend. The Company shall inform the Trustee of the effective date
of any Registration Statement registering the Securities under the Securities
Act no later than two Business Days after such effective date.
Except as provided in the preceding paragraph, any Security
authenticated and delivered upon registration of transfer of, or in exchange
for, or in lieu of, any Global Security, whether pursuant to this Section,
Section 304, 308, 906 or 1108 or otherwise, shall also be a Global Security and
bear the legend specified in Section 202(a).
Section 307. Special Transfer Provisions.
---------------------------
Unless and until (i) a Security is sold under an effective
Registration Statement, or (ii) a Security is exchanged for a Series B Security
in connection with the Exchange Offer, in each case pursuant to the Registration
Rights Agreement, the following provisions shall apply:
(a) Transfers to Non-QIB Institutional Accredited Investors. The
-------------------------------------------------------
following provisions shall apply with respect to the registration of any
proposed transfer of an Initial Security to an "ACCREDITED INVESTOR" which is
not a QIB:
(i) The Security Registrar shall register the transfer of any
Initial Security whether or not such Initial Security bears the
Restricted Securities Legend, if (x) the requested transfer is at
least two years after the original issue date of the Initial
Securities to a Person who is not an affiliate (as defined in Rule
144) of the Company (or subsequent transfer date by any such
affiliate) or (y) the proposed transferee has delivered to the
Security Registrar a certificate substantially in the form set forth
in Exhibit A.
(ii) If the proposed transferor is an Agent Member holding a
beneficial interest in the Global Security, upon receipt by the
Security Registrar of (x) the documents, if any, required by paragraph
(i) and (y) instructions given in accordance
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with the Depositary's and the Security Registrar's procedures
therefor, the Security Registrar shall reflect on its books and
records the date and a decrease in the principal amount of the Global
Security in an amount equal to the principal amount of the beneficial
interest in the Global Security transferred, and the Company shall
execute, and the Trustee shall authenticate and make available for
delivery, one or more Physical Securities of like tenor and amount.
(b) Transfers to QIBs. The following provisions shall apply with
-----------------
respect to the registration of any proposed transfer of an Initial Security to a
QIB:
(i) If the Security to be transferred consists of Physical
Securities, the Security Registrar shall register the transfer if such
transfer is being made by a proposed transferor who has advised the
Company and the Security Registrar in writing pursuant to Exhibit A,
that the sale has been made in compliance with the provisions of Rule
144A to the transferee who has advised the Company and the Security
Registrar in a writing signed by one of its executive officers in the
form required by Rule 144A, that it is purchasing the Initial Security
for its own account or an account with respect to which it exercises
sole investment discretion and that it, or the person on whose behalf
it is acting with respect to any such account, is a QIB within the
meaning of Rule 144A, and is aware that the sale to it is being made
in reliance on Rule 144A and acknowledges that it has received such
information regarding the Company as it has requested pursuant to Rule
144A or has determined not to request such information and that it is
aware that the transferor is relying upon its foregoing
representations in order to claim the exemption from registration
provided by Rule 144A.
(ii) If the proposed transferee is an Agent Member, and the
Initial Security to be transferred consists of Physical Securities,
upon receipt by the Securities Registrar of instructions given in
accordance with the Depositary's and the Security Registrar's
procedures therefor, the Security Registrar shall reflect on its books
and records the date and an increase in the principal amount of the
Global Security in an amount equal to the principal amount of the
Physical Securities, to be transferred, and the Trustee shall cancel
the Physical Security so transferred.
(c) Transfers to Non-U.S. Persons. The following provisions shall
-----------------------------
apply with respect to the registration of any proposed transfer of an Initial
Security to a Non-U.S. Person:
(i) The Security Registrar shall register the transfer of any
Initial Security whether or not such Initial Security bears the
Restricted Securities Legend, if (x) the requested transfer is at
least two years after the original issue date of the Initial
Securities to a Person who is not an affiliate (as defined in Rule
144) of the Company (or subsequent transfer date by any such
affiliate) or (y) in the case of a transfer to a Non-U.S. Person
(including a QIB), the proposed transferor has delivered to the
Security Registrar, a certificate substantially in the form of Exhibit
C, together with written legal opinions or other information as the
Trustee or the Company reasonably may request.
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(ii) If the proposed transferor is an Agent Member holding a
beneficial interest in the Global Security, upon receipt by the
Security Registrar of (x) the documents, if any, required by paragraph
(i) and (y) instructions given in accordance with the Depositary's and
the Security Registrar's procedures therefor, the Security Registrar
shall reflect on its books and records the date and a decrease in the
principal amount of the Global Security in an amount equal to the
principal amount of the beneficial interest in the Global Security
transferred, and the Company shall execute, and the Trustee shall
authenticate and make available for delivery, one or more Physical
Securities of like tenor and amount.
(d) Restricted Securities Legend. Upon the registration of transfer,
----------------------------
exchange or replacement of Securities not bearing the Restricted Securities
Legend, the Security Registrar shall deliver Securities that do not bear the
Restricted Securities Legend. Upon the registration of transfer, exchange or
replacement of Securities bearing the Restricted Securities Legend, the Security
Registrar shall deliver only Securities that bear the Restricted Securities
Legend unless either (i) the circumstances contemplated by paragraph (a)(i)(x)
of this Section 307 exist or (ii) there is delivered to the Security Registrar
an Opinion of Counsel reasonably satisfactory to the Company and the Trustee to
the effect that neither such legend nor the related restrictions on transfer are
required in order to maintain compliance with the provisions of the Securities
Act.
(e) General. By its acceptance of any Security bearing the Restricted
-------
Securities Legend, each Holder of such a Security acknowledges the restrictions
on transfer of such Security set forth in this Indenture and in the Restricted
Securities Legend and agrees that it will transfer such Security only as
provided in this Indenture.
The Security Registrar shall retain copies of all letters, notices and
other written communications received pursuant to Section 306 or this Section
307. The Company shall have the right to inspect and make copies of all such
letters, notices or other written communications at any reasonable time upon the
giving of reasonable written notice to the Security Registrar.
Section 308. Mutilated, Destroyed, Lost and Stolen Securities.
------------------------------------------------
If (a) any mutilated Security is surrendered to the Trustee, or (b)
the Company and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Security, and there is delivered to the
Company, each Guarantor and the Trustee, such security or indemnity, in each
case, as may be required by them to save each of them harmless, then, in the
absence of notice to the Company, any Guarantor or the Trustee that such
Security has been acquired by a bona fide purchaser, the Company shall execute
and upon its written request the Trustee shall authenticate and make available
for delivery, in exchange for any such mutilated Security or in lieu of any such
destroyed, lost or stolen Security, a replacement Security of like tenor and
principal amount, bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its discretion may,
instead of issuing a replacement Security, pay such Security.
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Upon the issuance of any replacement Securities under this Section,
the Company may require the payment of a sum sufficient to pay all documentary,
stamp or similar issue or transfer taxes or other governmental charges that may
be imposed in relation thereto and any other expenses (including the fees and
expenses of the Trustee) connected therewith.
Every replacement Security issued pursuant to this Section in lieu of
any destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company and the Guarantors, whether or not the
destroyed, lost or stolen Security shall be at any time enforceable by anyone,
and shall be entitled to all benefits of this Indenture equally and
proportionately with any and all other Securities duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities.
Section 309. Payment of Interest; Interest Rights Preserved..
-----------------------------------------------
Interest on any Security which is payable, and is punctually paid or
duly provided for, on any Interest Payment Date shall be paid to the Person in
whose name that Security is registered at the close of business on the Regular
Record Date for such interest.
Any interest on any Security which is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date and interest on such
defaulted interest at the then applicable interest rate borne by the Securities,
to the extent lawful (such defaulted interest and interest thereon herein
collectively called "DEFAULTED INTEREST") shall forthwith cease to be payable to
the Holder on the Regular Record Date; and such Defaulted Interest may be paid
by the Company, at its election in each case, as provided in Subsection (a) or
(b) below:
(a) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names the Securities are registered
at the close of business on a Special Record Date for the payment of
such Defaulted Interest, which shall be fixed in the following manner.
The Company shall notify the Trustee in writing of the amount of
Defaulted Interest proposed to be paid on each Security and the date
(not less than 30 days after such notice) of the proposed payment, and
at the same time the Company shall deposit with the Trustee an amount
of money equal to the aggregate amount proposed to be paid in respect
of such Defaulted Interest or shall make arrangements satisfactory to
the Trustee for such deposit prior to the date of the proposed
payment, such money when deposited to be held in trust for the benefit
of the Persons entitled to such Defaulted Interest as in this
Subsection provided. Thereupon the Trustee shall fix a Special Record
Date for the payment of such Defaulted Interest which shall be not
more than 15 days and not less than 10 days prior to the date of the
proposed payment and not less than 10 days after the receipt by the
Trustee of the notice of the proposed payment. The Trustee shall
promptly notify the Company in writing of such Special Record Date.
In the name and at the expense of the Company, the Trustee shall cause
notice of the proposed payment of such Defaulted Interest and the
Special Record Date therefor to be mailed, first-class postage
prepaid, to each Holder at his address as it appears in the Security
Register, not less
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than 10 days prior to such Special Record Date. Notice of the
proposed payment of such Defaulted Interest and the Special Record
Date therefor having been so mailed, such Defaulted Interest shall be
paid to the Persons in whose names the Securities are registered on
such Special Record Date and shall no longer be payable pursuant to
the following Subsection (b).
(b) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities may be listed, and upon
such notice as may be required by such exchange, if, after written
notice given by the Company to the Trustee of the proposed payment
pursuant to this Subsection, such payment shall be deemed practicable
by the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Security.
Section 310. Persons Deemed Owners.
---------------------
The Company, any Guarantor, the Trustee and any agent of the Company,
any Guarantor or the Trustee may treat the Person in whose name any Security is
registered as the owner of such Security for the purpose of receiving payment of
principal of, premium, if any, and (subject to Section 309) interest on such
Security and for all other purposes whatsoever, whether or not such Security is
overdue, and neither the Company, any Guarantor, the Trustee nor any agent of
the Company, any Guarantor or the Trustee shall be affected by notice to the
contrary. No holder of any beneficial interest in any Global Security held on
its behalf by a Depositary shall have any rights under this Indenture with
respect to such Global Security, and such Depositary may be treated by the
Company, any Guarantor, the Trustee and any agent of the Company, any Guarantor
or the Trustee as the owner of such Global Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Company, any
Guarantor, the Trustee or any agent of the Company, any Guarantor or the Trustee
from giving effect to any written certification, proxy or other authorization
furnished by the Depositary or impair, as between the Depositary and such
holders of beneficial interests, the operation of customary practices governing
the exercise of the rights of the Depositary (or its nominee) as Holder of any
Security.
Section 311. Cancellation.
------------
All Securities surrendered for payment, purchase, redemption,
registration of transfer or exchange shall be delivered to the Trustee and, if
not already cancelled, shall be promptly cancelled by it. The Company and any
Guarantor may at any time deliver to the Trustee for cancellation any Securities
previously authenticated and delivered hereunder which the Company or such
Guarantor may have acquired in any manner whatsoever, and all Securities so
delivered shall be promptly cancelled by the Trustee. No Securities shall be
authenticated in lieu of or in exchange for any Securities cancelled as provided
in this Section, except as expressly permitted by this Indenture. All cancelled
Securities held by the Trustee shall be returned to the Company. The Trustee
shall provide
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the Company a list of all Securities that have been cancelled from time to time
as requested by the Company.
Section 312. Computation of Interest.
-----------------------
Interest on the Securities shall be computed on the basis of a 360-day
year of twelve 30-day months.
Section 313. CUSIP Numbers.
-------------
The Company in issuing the Securities may use "CUSIP" numbers (if then
generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices
of redemption as a convenience to Holders; provided that any such notice may
--------
state that no representation is made as to the correctness of such numbers
either as printed on the Securities or as contained in any notice of a
redemption and that reliance may be placed only on the other identification
numbers printed on the Securities, and any such redemption shall not be affected
by any defect in or omission of such numbers.
ARTICLE IV
----------
DEFEASANCE AND COVENANT DEFEASANCE
----------------------------------
Section 401. Company's Option to Effect Defeasance or Covenant
-------------------------------------------------
Defeasance.
----------
The Company may, at its option by Board Resolution, at any time, with
respect to the Securities, elect to have either Section 402 or Section 403 be
applied to all of the Outstanding Securities (the "DEFEASED SECURITIES"), upon
compliance with the conditions set forth below in this Article Four.
Section 402. Defeasance and Discharge.
------------------------
Upon the Company's exercise under Section 401 of the option applicable
to this Section 402, the Company, each of the Guarantors and any other obligor
upon the Securities, if any, shall be deemed to have been discharged from its
obligations with respect to the Defeased Securities on the date the conditions
set forth below are satisfied (hereinafter, "DEFEASANCE"). For this purpose,
such defeasance means that the Company, the Guarantors and any other obligor
upon the Securities, shall be deemed to have paid and discharged the entire
Indebtedness represented by the Defeased Securities, which shall thereafter be
deemed to be "OUTSTANDING" only for the purposes of Section 405 and the other
Sections of this Indenture referred to in (a) and (b) below, and to have
satisfied all its other obligations under such Securities and this Indenture
insofar as such Securities are concerned (and the Trustee, at the expense of the
Company, and, upon written request, shall execute proper instruments
acknowledging the same), except for the following which shall survive until
otherwise terminated or discharged hereunder: (a) the rights of Holders of
Defeased Securities to receive, solely from the trust fund described in Section
404 and as more fully set forth in such Section, payments in respect of the
principal of, premium, if any, and interest on such Securities and pay all other
Indenture Obligations when such payments are due, (b) the Company's obligations
with respect to such Defeased Securities under Sections 304, 305, 306, 308, 1002
and 1003, (c) the rights, powers, trusts, duties and immunities of the Trustee
hereunder, including, without limitation, the Trustee's rights under
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Section 606, and (d) this Article Four. Subject to compliance with this Article
Four, the Company may exercise its option under this Section 402 notwithstanding
the prior exercise of its option under Section 403 with respect to the
Securities.
Section 403. Covenant Defeasance.
-------------------
Upon the Company's exercise under Section 401 of the option applicable
to this Section 403, the Company and each Guarantor shall be released from its
obligations under any covenant or provision contained or referred to in Sections
1006 through 1019 inclusive, and the provisions of Article Twelve and Sections
1416 through 1429 shall not apply, with respect to the Defeased Securities on
and after the date the conditions set forth below are satisfied (hereinafter,
"COVENANT DEFEASANCE"), and the Defeased Securities shall thereafter be deemed
to be not "OUTSTANDING" for the purposes of any direction, waiver, consent or
declaration or Act of Holders (and the consequences of any thereof) in
connection with such covenants and the provisions of Article Twelve and Sections
1416 through 1429, but shall continue to be deemed "OUTSTANDING" for all other
purposes hereunder. For this purpose, such covenant defeasance means that, with
respect to the Defeased Securities, the Company and each Guarantor may omit to
comply with and shall have no liability in respect of any term, condition or
limitation set forth in any such Section or Article, whether directly or
indirectly, by reason of any reference elsewhere herein to any such Section or
Article or by reason of any reference in any such Section or Article to any
other provision herein or in any other document and such omission to comply
shall not constitute a Default or an Event of Default under Section 501(c), (d)
or (g), but, except as specified above, the remainder of this Indenture and such
Defeased Securities shall be unaffected thereby.
Section 404. Conditions to Defeasance or Covenant Defeasance.
-----------------------------------------------
The following shall be the conditions to application of either Section
402 or Section 403 to the Defeased Securities:
(1) The Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee satisfying the requirements of
Section 608 who shall agree to comply with the provisions of this Article Four
applicable to it) as trust funds in trust for the purpose of making the
following payments, specifically pledged as security for, and dedicated solely
to, the benefit of the Holders of such Securities, (a) United States dollars in
an amount, or (b) U.S. Government Obligations which through the scheduled
payment of principal and interest in respect thereof in accordance with their
terms will provide, not later than one day before the due date of any payment,
money in an amount, or (c) a combination thereof, sufficient, in the opinion of
a nationally recognized firm of independent public accountants or a nationally
recognized investment banking firm expressed in a written certification thereof
delivered to the Trustee, to pay and discharge and which shall be applied by the
Trustee (or other qualifying trustee) to pay and discharge the principal of,
premium, if any, and interest on the Defeased Securities on the Stated Maturity
of such principal or installment of principal or interest (or on any date after
October 1, 2002 (such date being referred to as the "DEFEASANCE REDEMPTION
DATE"), if when exercising under Section 401 either its option applicable to
Section 402 or its option applicable to Section 403, the Company shall have
delivered to the Trustee an irrevocable notice to redeem all of the Outstanding
Securities on the Defeasance Redemption Date) and pay all other Indenture
Obligations; provided that the Trustee shall have been irrevocably instructed to
--------
apply such United States dollars or the proceeds of such U.S. Government
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Obligations to said payments with respect to the Securities; and provided,
--------
further, that the United States dollars or U.S. Government Obligations deposited
- -------
shall not be subject to the rights of the holders of Senior Indebtedness or
Guarantor Senior Indebtedness pursuant to the provisions of Articles Twelve and
Fourteen. For this purpose, "U.S. GOVERNMENT OBLIGATIONS" means securities that
are (i) direct obligations of the United States of America for the timely
payment of which its full faith and credit is pledged or (ii) obligations of a
Person controlled or supervised by and acting as an agency or instrumentality of
the United States of America the timely payment of which is unconditionally
guaranteed as a full faith and credit obligation by the United States of
America, which, in either case, are not callable or redeemable at the option of
the issuer thereof, and shall also include a depository receipt issued by a bank
(as defined in Section 3(a)(2) of the Securities Act), as custodian with respect
to any such U.S. Government Obligation or a specific payment of principal of or
interest on any such U.S. Government Obligation held by such custodian for the
account of the holder of such depository receipt, provided that (except as
--------
required by law) such custodian is not authorized to make any deduction from the
amount payable to the holder of such depository receipt from any amount received
by the custodian in respect of the U.S. Government Obligation or the specific
payment of principal of or interest on the U.S. Government Obligation evidenced
by such depository receipt.
(2) In the case of an election under Section 402, the Company shall
have delivered to the Trustee an Opinion of Independent Counsel in the United
States stating that (A) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling or (B) since the date of
this Indenture, there has been a change in the applicable federal income tax
law, in either case to the effect that, and based thereon such Opinion of
Independent Counsel in the United States shall confirm that, the holders of the
Outstanding Securities will not recognize income, gain or loss for federal
income tax purposes as a result of such defeasance and will be subject to
federal income tax on the same amounts, in the same manner and at the same times
as would have been the case if such defeasance had not occurred.
(3) In the case of an election under Section 403, the Company shall
have delivered to the Trustee an Opinion of Independent Counsel in the United
States to the effect that the holders of the Outstanding Securities will not
recognize income, gain or loss for federal income tax purposes as a result of
such covenant defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the case if
such covenant defeasance had not occurred.
(4) No Default or Event of Default shall have occurred and be
continuing on the date of such deposit or insofar as subsections 501(h) and (i)
are concerned, at any time during the period ending on the 91st day after the
date of deposit.
(5) Such defeasance or covenant defeasance shall not cause the Trustee
for the Securities to have a conflicting interest with respect to any securities
of the Company or any Guarantor.
(6) Such defeasance or covenant defeasance shall not result in a
breach or violation of, or constitute a Default under, this Indenture or any
other material agreement or instrument to which the Company or any Guarantor is
a party or by which it is bound.
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(7) The Company shall have delivered to the Trustee an Opinion of
Independent Counsel to the effect that (A) the trust funds will not be subject
to any rights of holders of Senior Indebtedness or Guarantor Senior
Indebtedness, including, without limitation, those arising under this Indenture
and (B) after the 91st day following the deposit, the trust funds will not be
subject to the effect of any applicable bankruptcy, insolvency, reorganization
or similar laws affecting creditors' rights generally.
(8) The Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the intent
of preferring the holders of the Securities or any Guarantee over the other
creditors of the Company or any Guarantor with the intent of defeating,
hindering, delaying or defrauding creditors of the Company, any Guarantor or
others.
(9) No event or condition shall exist that would prevent the Company
from making payments of the principal of, premium, if any, and interest on the
Securities and of all other Indenture Obligations on the date of such deposit or
at any time ending on the 91st day after the date of such deposit.
(10) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Independent Counsel, each stating that all
conditions precedent provided for relating to either the defeasance under
Section 402 or the covenant defeasance under Section 403 (as the case may be)
have been complied with as contemplated by this Section 404.
Opinions of Counsel or Opinions of Independent Counsel required to be delivered
under this Section may have qualifications customary for opinions of the type
required and counsel delivering such opinions may rely on certificates of the
Company or government or other officials customary for opinions of the type
required, including certificates certifying as to matters of fact, including
that various financial covenants have been complied with.
Section 405. Deposited Money and U.S. Government Obligations to Be
-----------------------------------------------------
Held in Trust; Other Miscellaneous Provisions.
---------------------------------------------
Subject to the provisions of the last paragraph of Section 1003, all
United States dollars and U.S. Government Obligations (including the proceeds
thereof) deposited with the Trustee or other qualifying trustee as permitted
under Section 404 (collectively, for purposes of this Section 405, the
"TRUSTEE") pursuant to Section 404 in respect of the Defeased Securities shall
be held in trust and applied by the Trustee, in accordance with the provisions
of such Securities and this Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as its own Paying Agent)
as the Trustee may determine, to the Holders of such Securities of all sums due
and to become due thereon in respect of principal, premium, if any, and
interest, but such money need not be segregated from other funds except to the
extent required by law.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the U.S. Government Obligations
deposited pursuant to Section 404 or the principal and interest received in
respect thereof other than any such tax, fee or other charge which by law is for
the account of the Holders of the Defeased Securities.
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Anything in this Article Four to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon Company
Request any United States dollars or U.S. Government Obligations held by it as
provided in Section 404 which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, are in excess of the amount thereof which would then
be required to be deposited to effect defeasance or covenant defeasance.
Section 406. Reinstatement.
-------------
If the Trustee or Paying Agent is unable to apply any United States
dollars or U.S. Government Obligations in accordance with Section 402 or 403, as
the case may be, by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, then
the Company's and each Guarantor's obligations under this Indenture and the
Securities and the provisions of Articles Twelve and Fourteen hereof shall be
revived and reinstated as though no deposit had occurred pursuant to Section 402
or 403, as the case may be, until such time as the Trustee or Paying Agent is
permitted to apply all such United States dollars or U.S. Government Obligations
in accordance with Section 402 or 403, as the case may be; provided, however,
-------- -------
that if the Company makes any payment to the Trustee or Paying Agent of
principal of, premium, if any, or interest on any Security following the
reinstatement of its obligations, the Trustee or Paying Agent shall promptly pay
any such amount to the Holders of the Securities and the Company shall be
subrogated to the rights of the Holders of such Securities to receive such
payment from the money held by the Trustee or Paying Agent.
ARTICLE V
---------
REMEDIES
--------
Section 501. Events of Default.
-----------------
"EVENT OF DEFAULT", wherever used herein, means any one of the
following events which has occurred and is continuing (whatever the reason for
such Event of Default and whether it shall be occasioned by the provisions of
Article Twelve or be voluntary or involuntary or be effected by operation of law
or pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(a) there shall be a default in the payment of any interest on any
Security (including any Penalty Amounts) when it becomes due and payable, and
such default shall continue for a period of 30 days;
(b) there shall be a default in the payment of the principal of (or
premium, if any, on) any Security at its Maturity (upon acceleration, optional
or mandatory redemption, required repurchase or otherwise);
(c) (i) there shall be a default in the performance, or breach, of any
covenant or agreement of the Company or any Guarantor under this Indenture
(other than a default in the performance or breach of a covenant or agreement
which is specifically dealt with in clause (a) or (b) or in clause (ii), (iii)
or (iv) of this clause (c)) and such default or breach shall continue for a
period of
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30 days after written notice has been given, by certified mail, (y) to the
Company by the Trustee or (z) to the Company and the Trustee by the Holders of
at least 25% in aggregate principal amount of the Outstanding Securities; (ii)
there shall be a default in the performance or breach of the provisions of
Article Eight; (iii) the Company shall have failed to make or consummate an
Offer in accordance with the provisions of Section 1013; or (iv) the Company
shall have failed to make or consummate a Change of Control Offer in accordance
with the provisions of Section 1016;
(d) one or more defaults shall have occurred under any agreements,
indentures or instruments under which the Company, any Guarantor or any
Restricted Subsidiary then has outstanding Indebtedness in excess of $5,000,000
in the aggregate and, if not already matured at its final maturity in accordance
with its terms, such Indebtedness shall have been accelerated;
(e) any Guarantee shall for any reason cease to be, or be asserted in
writing by any Guarantor or the Company not to be, in full force and effect,
enforceable in accordance with its terms, except to the extent contemplated by
this Indenture and any such Guarantee;
(f) one or more judgments, orders or decrees for the payment of money
in excess of $5,000,000 either individually or in the aggregate (net of amounts
covered by insurance, bond, surety or similar instrument) shall be entered
against the Company, any Guarantor, or any Restricted Subsidiary or any of their
respective properties and shall not be discharged and either (a) any creditor
shall have commenced an enforcement proceeding upon such judgment, order or
decree or (b) there shall have been a period of 60 consecutive days during which
a stay of enforcement of such judgment or order, by reason of an appeal or
otherwise, shall not be in effect;
(g) any holder or holders of at least $5,000,000 in aggregate
principal amount of Indebtedness of the Company, any Guarantor or any Restricted
Subsidiary after a default under such Indebtedness shall notify the Trustee of
the intended sale or disposition of any assets of the Company, any Guarantor or
any Restricted Subsidiary that have been pledged to or for the benefit of such
holder or holders to secure such Indebtedness or shall commence proceedings, or
take any action (including by way of set-off), to retain in satisfaction of such
Indebtedness or to collect on, seize, dispose of or apply in satisfaction of
Indebtedness, assets of the Company or any Restricted Subsidiary (including
funds on deposit or held pursuant to lock-box and other similar arrangements);
(h) there shall have been the entry by a court of competent
jurisdiction of (i) a decree or order for relief in respect of the Company, any
Guarantor or any Restricted Subsidiary in an involuntary case or proceeding
under any applicable Bankruptcy Law or (ii) a decree or order adjudging the
Company, any Guarantor or any Restricted Subsidiary bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment or composition of or in respect
of the Company, any Guarantor or any Restricted Subsidiary under any applicable
federal or state law, or appointing a custodian, receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) of the Company, any Guarantor
or any Restricted Subsidiary or of any substantial part of their respective
properties, or ordering the winding up or liquidation of their affairs, and any
such decree or order for relief shall continue to be in effect, or any such
other decree or order shall be unstayed and in effect, for a period of 60
consecutive days; or
(i) (i) the Company, any Guarantor or any Restricted Subsidiary
commences a voluntary case or proceeding under any applicable Bankruptcy Law or
any other case or proceeding to
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be adjudicated bankrupt or insolvent, (ii) the Company, any Guarantor or any
Restricted Subsidiary consents to the entry of a decree or order for relief in
respect of the Company, any Guarantor or such Restricted Subsidiary in an
involuntary case or proceeding under any applicable Bankruptcy Law or to the
commencement of any bankruptcy or insolvency case or proceeding against it,
(iii) the Company, any Guarantor or any Restricted Subsidiary files a petition
or answer or consent seeking reorganization or relief under any applicable
federal or state law, (iv) the Company, any Guarantor or any Restricted
Subsidiary (1) consents to the filing of such petition or the appointment of, or
taking possession by, a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Company, any Guarantor or such
Restricted Subsidiary or of any substantial part of its respective properties,
(2) makes an assignment for the benefit of creditors or (3) admits in writing
its inability to pay its debts generally as they become due, or (v) the Company,
any Guarantor or any Restricted Subsidiary takes any corporate action in
furtherance any such actions in this paragraph (i).
The Company shall deliver to the Trustee within five days after the
occurrence thereof, written notice, in the form of an Officers' Certificate, of
any Default, its status and what action the Company is taking or proposes to
take with respect thereto. Unless the Corporate Trust Office of the Trustee has
received written notice of an Event of Default of the nature described in this
Section, the Trustee shall not be deemed to have knowledge of such Event of
Default for the purposes of Article Five or for any other purpose.
Section 502. Acceleration of Maturity; Rescission and Annulment.
--------------------------------------------------
If an Event of Default (other than an Event of Default specified in
Sections 501(h) and (i)), shall occur and be continuing, the Trustee or the
Holders of not less than 25% in aggregate principal amount of the Securities
Outstanding may, and the Trustee at the request of the Holders of not less than
25% in aggregate principal amount of the Securities Outstanding shall, declare
all unpaid principal of, premium, if any, and accrued interest on all the
Securities to be due and payable immediately, by a notice in writing to the
Company (and to the Trustee if given by the Holders of the Securities); provided
--------
that so long as the Bank Credit Agreement is in effect, such declaration shall
not become effective until the earlier of (a) five Business Days after receipt
of such notice of acceleration from the Holders or the Trustee by the agent
under the Bank Credit Agreement or (b) acceleration of the Indebtedness under
the Bank Credit Agreement. Thereupon the Trustee may, at its discretion,
proceed to protect and enforce the rights of the Holders of the Securities by
appropriate judicial proceedings. If an Event of Default specified in clause
(h) or (i) of Section 501 occurs and is continuing, then all the Securities
shall ipso facto become and be immediately due and payable, in an amount equal
---- -----
to the principal amount of the Securities, together with accrued and unpaid
interest, if any, to the date the Securities become due and payable, without any
declaration or other act on the part of the Trustee or any Holder. The Trustee
or, if notice of acceleration is given by the Holders, the Holders shall give
notice to the agent under the Bank Credit Agreement of any such acceleration.
After such declaration of acceleration, but before a judgment or
decree for payment of the money due has been obtained by the Trustee as
hereinafter in this Article provided, the Holders of
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a majority in aggregate principal amount of the Securities Outstanding, by
written notice to the Company and the Trustee, may rescind and annul such
declaration and its consequences if:
(a) the Company has paid or deposited with the Trustee a sum
sufficient to pay:
(i) all sums paid or advanced by the Trustee under this Indenture
and the reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel,
(ii) all overdue interest on all Securities,
(iii) the principal of and premium, if any, on any Securities
which have become due otherwise than by such declaration of
acceleration and interest thereon at a rate borne by the Securities,
and
(iv) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate borne by the Securities;
and
(b) all Events of Default, other than the non-payment of principal of
the Securities which have become due solely by such declaration of acceleration,
have been cured or waived as provided in Section 513.
No such rescission shall affect any subsequent Default or impair any right
consequent thereon provided in Section 513.
Section 503. Collection of Indebtedness and Suits for Enforcement by
-------------------------------------------------------
Trustee.
-------
The Company and each Guarantor covenant that if:
(a) default is made in the payment of any interest on any
Security when such interest becomes due and payable and such default
continues for a period of 30 days, or
(b) default is made in the payment of the principal of or
premium, if any, on any Security at the Stated Maturity thereof,
the Company and any such Guarantor will, upon demand of the Trustee, pay to it,
for the benefit of the Holders of such Securities, subject to Articles Twelve
and Fourteen, the whole amount then due and payable on such Securities for
principal and premium, if any, and interest, with interest upon the overdue
principal and premium, if any, and, to the extent that payment of such interest
shall be legally enforceable, upon overdue installments of interest, at the rate
borne by the Securities; and, in addition thereto, such further amount as shall
be sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.
If the Company or any Guarantor, as the case may be, fails to pay such
amounts forthwith upon such demand, the Trustee, in its own name and as trustee
of an express trust, may
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institute a judicial proceeding for the collection of the sums so due and unpaid
and may prosecute such proceeding to judgment or final decree, and may enforce
the same against the Company or any Guarantor or any other obligor upon the
Securities and collect the moneys adjudged or decreed to be payable in the
manner provided by law out of the property of the Company or any Guarantor or
any other obligor upon the Securities, wherever situated.
If an Event of Default occurs and is continuing, the Trustee may in
its discretion proceed to protect and enforce its rights and the rights of the
Holders under this Indenture or the Guarantees by such appropriate private or
judicial proceedings as the Trustee shall deem most effectual to protect and
enforce such rights, including, seeking recourse against any Guarantor pursuant
to the terms of any Guarantee, whether for the specific enforcement of any
covenant or agreement in this Indenture or in aid of the exercise of any power
granted herein or therein, or to enforce any other proper remedy, including,
without limitation, seeking recourse against any Guarantor pursuant to the terms
of a Guarantee, or to enforce any other proper remedy, subject however to
Section 512.
Section 504. Trustee May File Proofs of Claim.
--------------------------------
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor, including each
Guarantor, upon the Securities or the property of the Company or of such other
obligor or their creditors, the Trustee (irrespective of whether the principal
of the Securities shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Trustee shall have made
any demand on the Company for the payment of overdue principal or interest)
shall be entitled and empowered, by intervention in such proceeding or
otherwise,
(a) to file and prove a claim for the whole amount of principal, and
premium, if any, and interest owing and unpaid in respect of the Securities and
to file such other papers or documents as may be necessary or advisable in order
to have the claims of the Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel) and of the Holders allowed in such judicial proceeding, and
(b) subject to Articles Twelve and Fourteen, to collect and receive
any moneys, securities or other property payable or deliverable upon any
conversion or exchange of Securities or upon any such claims and to distribute
the same; and any custodian, in any such judicial proceeding is hereby
authorized by each Holder to make such payments to the Trustee and, in the event
that the Trustee shall consent to the making of such payments directly to the
Holders, to pay the Trustee any amount due it for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 606.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
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Section 505. Trustee May Enforce Claims without Possession of
------------------------------------------------
Securities.
----------
All rights of action and claims under this Indenture or the Securities
may be prosecuted and enforced by the Trustee without the possession of any of
the Securities or the production thereof in any proceeding relating thereto, and
any such proceeding instituted by the Trustee shall be brought in its own name
and as trustee of an express trust, and any recovery of judgment shall, after
provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Securities in respect of which such
judgment has been recovered.
Section 506. Application of Money Collected.
------------------------------
Any money collected by the Trustee pursuant to this Article or
otherwise on behalf of the Holders or the Trustee pursuant to this Article or
through any proceeding or any arrangement or restructuring in anticipation or in
lieu of any proceeding contemplated by this Article shall be applied, subject to
applicable law, in the following order, at the date or dates fixed by the
Trustee and, in case of the distribution of such money on account of principal,
premium, if any, or interest, upon presentation of the Securities and the
notation thereon of the payment if only partially paid and upon surrender
thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under Section
606;
SECOND: Subject to Articles Twelve and Fourteen, to the payment of
the amounts then due and unpaid upon the Securities for principal, premium, if
any, and interest, and of all other Indenture Obligations in respect of which or
for the benefit of which such money has been collected, ratably, without
preference or priority of any kind, according to the amounts due and payable on
such Securities for principal, premium, if any, and interest and all other
Indenture Obligations; and
THIRD: Subject to Articles Twelve and Fourteen, the balance, if any,
to the Person or Persons entitled thereto, including the Company, provided that
all sums due and owing to the Holders and the Trustee have been paid in full as
required by this Indenture.
Section 507. Limitation on Suits.
-------------------
No Holder of any Securities shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless
(a) such Holder has previously given written notice to the Trustee of
a continuing Event of Default;
(b) the Holders of not less than 25% in principal amount of the
Outstanding Securities shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name as
trustee hereunder;
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(c) such Holder or Holders have offered to the Trustee an indemnity
satisfactory to the Trustee against the costs, expenses and liabilities to be
incurred in compliance with such request;
(d) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
(e) no direction inconsistent with such written request has been given
to the Trustee during such 60-day period by the Holders of a majority in
principal amount of the Outstanding Securities;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture or any Guarantee to affect, disturb or prejudice the rights of
any other Holders, or to obtain or to seek to obtain priority or preference over
any other Holders or to enforce any right under this Indenture, except in the
manner provided in this Indenture or any Guarantee and for the equal and ratable
benefit of all the Holders.
Section 508. Unconditional Right of Holders to Receive Principal,
----------------------------------------------------
Premium and Interest.
--------------------
Notwithstanding any other provision in this Indenture, but subject to
Articles Twelve and Fourteen, the Holder of any Security shall have the right on
the terms stated herein, which is absolute and unconditional, to receive payment
of the principal of, premium, if any, and (subject to Section 309) interest on
such Security on the respective Stated Maturities expressed in such Security
(or, in the case of redemption or repurchase, on the Redemption Date or
repurchase date) and to institute suit for the enforcement of any such payment,
and such rights shall not be impaired without the consent of such Holder,
subject to Articles Twelve and Fourteen.
Section 509. Restoration of Rights and Remedies.
----------------------------------
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture or the Guarantees and such proceeding
has been discontinued or abandoned for any reason, or has been determined
adversely to the Trustee or to such Holder, then and in every such case the
Company, each of the Guarantors, the Trustee and the Holders shall, subject to
any determination in such proceeding, be restored severally and respectively to
their former positions hereunder, and thereafter all rights and remedies of the
Trustee and the Holders shall continue as though no such proceeding had been
instituted.
Section 510. Rights and Remedies Cumulative.
------------------------------
No right or remedy herein conferred upon or reserved to the Trustee or
to the Holders is intended to be exclusive of any other right or remedy, and
every right and remedy shall, to the extent permitted by law, be cumulative and
in addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
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Section 511. Delay or Omission Not Waiver.
----------------------------
No delay or omission of the Trustee or of any Holder of any Security
to exercise any right or remedy accruing upon any Event of Default shall impair
any such right or remedy or constitute a waiver of any such Event of Default or
an acquiescence therein. Every right and remedy given by this Article or by law
to the Trustee or to the Holders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or by the Holders, as the case
may be.
Section 512. Control by Holders.
------------------
The Holders of not less than a majority in aggregate principal amount
of the Outstanding Securities shall have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee,
or exercising any trust or power conferred on the Trustee; provided that:
--------
(a) such direction shall not be in conflict with any rule of law or
with this Indenture or any Guarantee or expose the Trustee to personal
liability; and
(b) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction.
Section 513. Waiver of Past Defaults.
-----------------------
The Holders of not less than a majority in aggregate principal amount
of the Outstanding Securities may on behalf of the Holders of all the Securities
waive any past Default hereunder and its consequences, except a Default:
(a) in the payment of the principal of, premium, if any, or interest
(including Penalty Amounts) on any Security (unless such Default has been cured
and a sum sufficient to pay all matured installments of interest and principal
due otherwise than by acceleration and any Penalty Amounts has been deposited
with the Trustee); or
(b) in respect of a covenant or a provision hereof which under Article
Nine cannot be modified or amended without the consent of Holders of each
Outstanding Security.
Upon any such waiver, such Default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or impair any right consequent thereon.
Section 514. Undertaking for Costs.
---------------------
All parties to this Indenture agree, and each Holder of any Security
by his acceptance thereof shall be deemed to have agreed, that any court may in
its discretion require, in any suit for the enforcement of any right or remedy
under this Indenture, or in any suit against the Trustee for any action taken,
suffered or omitted by it as Trustee, the filing by any party litigant in such
suit of an undertaking to pay the costs of such suit, and that such court may in
its discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to
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the merits and good faith of the claims or defenses made by such party litigant;
but the provisions of this Section shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Holder, or group of Holders, holding in
the aggregate more than 10% in principal amount of the Outstanding Securities,
or to any suit instituted by any Holder for the enforcement of the payment of
the principal of, premium, if any, or interest on any Security on or after the
respective Stated Maturities expressed in such Security (or, in the case of
redemption, on or after the Redemption Date).
Section 515. Waiver of Stay, Extension or Usury Laws.
---------------------------------------
Each of the Company and any Guarantor covenants (to the extent that it
may lawfully do so) that it will not at any time insist upon, or plead, or in
any manner whatsoever claim or take the benefit or advantage of, any stay or
extension law or any usury or other law wherever enacted, now or at any time
hereafter in force, which would prohibit or forgive the Company or any Guarantor
from paying all or any portion of the principal of, premium, if any, or interest
on the Securities contemplated herein or in the Securities or any other
Indenture Obligations or which may affect the covenants or the performance of
this Indenture; and each of the Company and any Guarantor (to the extent that it
may lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
ARTICLE VI
----------
THE TRUSTEE
-----------
Section 601. Notice of Defaults.
------------------
Within 30 days after the occurrence of any Default, the Trustee shall
transmit by mail to all Holders, as their names and addresses appear in the
Security Register, notice of such Default hereunder actually known to a
Responsible Officer of the Trustee, unless such Default shall have been cured or
waived; provided, however, that, except in the case of a Default in the payment
-------- -------
of the principal of, premium, if any, or interest on any Security, the Trustee
shall be protected in withholding such notice if and so long as a trust
committee of Responsible Officers of the Trustee in good faith determines that
the withholding of such notice is in the interest of the Holders.
Section 602. Certain Rights and Duties of Trustee.
------------------------------------
Subject to the provisions of Trust Indenture Act Sections 315(a)
through 315(d):
(a) the Trustee may conclusively rely and shall be protected in acting
or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of Indebtedness or other paper or document
believed by it to be genuine and to have been signed or presented by the proper
party or parties;
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(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any resolution
of the Board of Directors may be sufficiently evidenced by a Board Resolution;
(c) the Trustee may consult with counsel of its choice and any written
advice of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in reliance thereon in accordance with such
advice or Opinion of Counsel;
(d) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders pursuant to this Indenture, unless such Holders shall have
offered to the Trustee security or indemnity satisfactory to the Trustee against
the costs, expenses and liabilities which might be incurred therein or thereby
in compliance with such request or direction;
(e) the Trustee shall not be liable for any action taken or omitted by
it in good faith and believed by it to be authorized or within the discretion,
rights or powers conferred upon it by this Indenture other than any liabilities
arising out of the negligence of the Trustee;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, approval,
appraisal, bond, debenture, note, coupon, security or other paper or document;
provided, that the Trustee in its discretion may make such further inquiry or
- --------
investigation into such facts or matters as it may deem fit, and, if the Trustee
shall determine to make such further inquiry or investigation, it shall be
entitled to examine the books, records and premises of the Company, personally
or by agent or attorney;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder;
(h) no provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers;
(i) the Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree in writing with the Company, except as
otherwise provided herein;
(j) money held in trust by the Trustee need not be segregated from
other funds except to the extent required by law, except as otherwise provided
herein;
(k) if an Event of Default has occurred and is continuing, in
accordance with Trust Indenture Act Section 315(c), the Trustee shall exercise
such of the rights and powers vested in it by this Indenture, and use the same
degree of care and skill in their exercise, as a prudent person would exercise
or use under the circumstances in the conduct of his or her own affairs; and
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(l) in the event that the Trustee receives notice pursuant to Section
-------
1203(b)(2), the Trustee shall use commercially reasonably efforts to provide a
- ----------
copy of such notice to the Company promptly upon such receipt.
Section 603. Trustee Not Responsible for Recitals, Dispositions of
-----------------------------------------------------
Securities or Application of Proceeds Thereof.
---------------------------------------------
The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and the Trustee assumes no responsibility for their correctness.
The Trustee makes no representations as to the validity or sufficiency of this
Indenture or of the Securities, except that the Trustee represents that it is
duly authorized to execute and deliver this Indenture, authenticate the
Securities and perform its obligations hereunder and that the statements made by
it in any Statement of Eligibility and Qualification on Form T-I supplied to the
Company are true and accurate subject to the qualifications set forth therein.
The Trustee shall not be accountable for the use or application by the Company
of Securities or the proceeds thereof.
Section 604. Trustee and Agents May Hold Securities; Collections;
----------------------------------------------------
etc.
---
The Trustee (or any affiliate), any Paying Agent, Security Registrar
or any agent of the Company, in its individual or any other capacity, may
purchase or otherwise become the owner or pledgee of Securities, with the same
rights it would have if it were not the Trustee, Paying Agent, Security
Registrar or other agent and, subject to Trust Indenture Act Sections 310 and
311, may otherwise deal with the Company and receive, collect, hold and retain
collections from the Company with the same rights it would have if it were not
the Trustee, Paying Agent, Security Registrar or such other agent.
Section 605. Money Held in Trust.
-------------------
All moneys received by the Trustee shall, until used or applied as
herein provided, be held in trust for the purposes for which they were received,
but need not be segregated from other funds except to the extent required by
mandatory provisions of law. Except for funds or securities deposited with the
Trustee pursuant to Article Four, the Trustee may invest all moneys received by
the Trustee, until used or applied as herein provided, in Temporary Cash
Investments in accordance with the written directions of the Company. The
Trustee shall not be liable for any losses incurred in connection with any
investments made in accordance with this Section 605, unless the Trustee acted
with gross negligence or in bad faith. With respect to any losses on
investments made under this Section 605, the Company is liable for the full
extent of any such loss.
Section 606. Compensation and Indemnification of Trustee and Its
---------------------------------------------------
Prior Claim.
-----------
The Company covenants and agrees to pay to the Trustee from time to
time, and the Trustee shall be entitled to, such compensation for all services
rendered by it hereunder (which shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust) set forth in
writing, and the Company covenants and agrees to pay or reimburse the Trustee
and each predecessor Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by or on behalf of it in accordance
with any of the provisions of this Indenture (including the
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reasonable compensation and the expenses and disbursements of its counsel and of
all agents and other persons not regularly in its employ) except any such
expense, disbursement or advance as may arise from its negligence or misconduct.
The Company also covenants to indemnify the Trustee and each predecessor Trustee
for, and to hold it harmless against, any loss, liability, tax, assessment or
other governmental charge (other than taxes applicable to the Trustee's
compensation hereunder) or expense incurred without negligence or bad faith on
such Trustee's part, arising out of or in connection with the acceptance or
administration of this Indenture or the trusts hereunder and such Trustee's
duties hereunder, including enforcement of this Indenture and also including any
liability which the Trustee may incur as a result of failure to withhold, pay or
report any tax, assessment or other governmental charge, and the costs and
expenses of defending itself against or investigating any claim of liability
(whether asserted by any Holder, the Company or any other Person) in connection
with the exercise or performance of any of its powers or duties under this
Indenture. The obligations of the Company under this Section to compensate and
indemnify the Trustee and each predecessor Trustee and to pay or reimburse the
Trustee and each predecessor Trustee for expenses, disbursements and advances
shall constitute an additional obligation hereunder and shall survive the
satisfaction and discharge of this Indenture.
All payments and reimbursements pursuant to this Section 606 shall be
made with interest at the rate borne by the Securities.
As security for the performance of the obligations of the Company
under this Section 606, the Trustee shall have a Lien prior to the Securities
upon all property and funds held or collected by the Trustee, except funds held
in trust for the payment of principal of (and premium, if any) or interest on
particular Securities. The Trustee's right to receive payment of any amounts
due under this Section 606 shall not be subordinate to any other liability or
indebtedness of the Company (even though the Securities may be so subordinate),
and the Securities shall be subordinate to the Trustee's right to receive such
payment.
Section 607. Conflicting Interests.
---------------------
The Trustee shall comply with the provisions of Section 310(b) of the
Trust Indenture Act.
Section 608. Corporate Trustee Required, Eligibility.
---------------------------------------
There shall at all times be a Trustee hereunder which shall be
eligible to act as trustee under Trust Indenture Act Section 310(a)(1) and which
shall have a combined capital and surplus of at least $250,000,000, to the
extent there is an institution eligible and willing to serve. The Trustee shall
be a participant in the Depository Trust Company and FAST distribution systems.
If such corporation publishes reports of condition at least annually, pursuant
to law or to the requirements of federal, state, territorial or District of
Columbia supervising or examining authority, then for the purposes of this
Section, the combined capital and surplus of such corporation shall be deemed to
be its combined capital and surplus as set forth in its most recent report of
condition so published. If at any time the Trustee shall cease to be eligible
in accordance with the provisions of this Section, the Trustee shall resign
immediately in the manner and with the effect hereinafter specified in this
Article. The Corporate Trust Office shall initially be located at The Bank of
New York, 101 Barclay Street, 21 W, New York, New York 10286.
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Section 609. Resignation and Removal: Appointment of Successor
-------------------------------------------------
Trustee.
-------
(a) No resignation or removal of the Trustee and no appointment of a
successor trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor trustee under Section 610.
(b) The Trustee, or any trustee or trustees hereafter appointed, may
at any time resign by giving written notice thereof to the Company. Upon
receiving such notice of resignation, the Company shall promptly appoint a
successor trustee by written instrument executed by authority of the Board of
Directors of the Company, a copy of which shall be delivered to the resigning
Trustee and a copy to the successor trustee. If an instrument of acceptance by
a successor trustee shall not have been delivered to the Trustee within 30 days
after the giving of such notice of resignation, the resigning Trustee may, or
any Holder who has been a bona fide Holder of a Security for at least six months
may, on behalf of himself and all others similarly situated, petition any court
of competent jurisdiction for the appointment of a successor trustee. Such
court may thereupon, after such notice, if any, as it may deem proper, appoint a
successor trustee.
(c) The Trustee may be removed at any time by an Act of the Holders of
not less than a majority in aggregate principal amount of the Outstanding
Securities, delivered to the Trustee and to the Company. If the Trustee is so
removed by an Act of Holders, then any Holder of a Security who has been a bona
fide Holder of a Security for at least six months may, on behalf of such Holder
and all others similarly situated, petition a court of competent jurisdiction
for appointment of a successor Trustee.
(d) If at any time:
(1) the Trustee shall fail to comply with the provisions of Trust
Indenture Act Section 310(b) after written request therefor by the
Company or by any Holder who has been a bona fide Holder of a Security
for at least six months, or
(2) the Trustee shall cease to be eligible under Section 608 and
shall fail to resign after written request therefor by the Company or
by any Holder who has been a bona fide Holder of a Security for at
least six months, or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent, or a receiver of the Trustee or of
its property shall be appointed or any public officer shall take
charge or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation,
then, in any case, (i) the Company by a Board Resolution may remove the Trustee,
or (ii) subject to Section 514, the Holder of any Security who has been a bona
fide Holder of a Security for at least six months may, on behalf of such Holder
and all others similarly situated, petition any court of competent jurisdiction
for the removal of the Trustee and the appointment of a successor trustee. Such
court may thereupon, after such notice, if any, as it may deem proper and
prescribe, remove the Trustee and appoint a successor trustee.
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(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, the
Company, by a Board Resolution, shall promptly appoint a successor trustee. If,
within one year after such resignation, removal or incapability, or the
occurrence of such vacancy, a successor trustee shall be appointed by Act of the
Holders of a majority in principal amount of the Outstanding Securities
delivered to the Company and the retiring Trustee, the successor trustee so
appointed shall, forthwith upon its acceptance of such appointment, become the
successor trustee and supersede the successor trustee appointed by the Company.
If no successor trustee shall have been so appointed by the Company or the
Holders of the Securities and accepted appointment in the manner hereinafter
provided, the Holder of any Security who has been a bona fide Holder for at
least six months may, subject to Section 514, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
appointment of a successor trustee.
(f) The Company shall give notice of each resignation and each removal
of the Trustee and each appointment of a successor trustee by mailing written
notice of such event by first-class mail, postage prepaid, to the Holders of
Securities as their names and addresses appear in the Security Register. Each
notice shall include the name of the successor trustee and the address of its
Corporate Trust Office or agent hereunder.
Section 610. Acceptance of Appointment by Successor.
--------------------------------------
Every successor trustee appointed hereunder shall execute, acknowledge
and deliver to the Company and to the retiring Trustee an instrument accepting
such appointment, and thereupon the resignation or removal of the retiring
Trustee shall become effective and such successor trustee, without any further
act, deed or conveyance, shall become vested with all the rights, powers, trusts
and duties of the retiring Trustee as if originally named as Trustee hereunder;
but, nevertheless, on the written request of the Company or the successor
trustee, upon payment of its charges then unpaid, such retiring Trustee shall,
pay over to the successor trustee all moneys at the time held by it hereunder
and shall execute and deliver an instrument transferring to such successor
trustee all such rights, powers, duties and obligations. Upon request of any
such successor trustee, the Company shall execute any and all instruments for
more fully and certainly vesting in and confirming to such successor trustee all
such rights and powers. Any Trustee ceasing to act shall, nevertheless, retain
a prior claim upon all property or funds held or collected by such Trustee or
such successor trustee to secure any amounts then due such Trustee pursuant to
the provisions of Section 606.
No successor trustee with respect to the Securities shall accept
appointment as provided in this Section 610 unless at the time of such
acceptance such successor trustee shall be eligible to act as trustee under the
provisions of Trust Indenture Act Section 310(a) and this Article Sixth and
shall have a combined capital and surplus of at least $250,000,000 and have a
Corporate Trust Office or an agent selected in accordance with Section 608.
Upon acceptance of appointment by any successor trustee as provided in
this Section 610, the Company shall give notice thereof to the Holders of the
Securities, by mailing such notice to such Holders at their addresses as they
shall appear on the Security Register. If the acceptance of appointment is
substantially contemporaneous with the resignation, then the notice called for
by the preceding sentence may be combined with the notice called for by Section
609. If the Company fails
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to give such notice within 10 days after acceptance of appointment by the
successor trustee, the successor trustee shall cause such notice to be given at
the expense of the Company.
Section 611. Merger, Conversion, Consolidation or Succession to
--------------------------------------------------
Business.
--------
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be eligible under Trust Indenture Act Section
310(a) and this Article Sixth and shall have a combined capital and surplus of
at least $250,000,000 and have a Corporate Trust Office or an agent selected in
accordance with Section 608 without the execution or filing of any paper or any
further act on the part of any of the parties hereto.
In case at the time such successor to the Trustee shall succeed to the
trusts created by this Indenture any of the Securities shall have been
authenticated but not delivered, any such successor to the Trustee may adopt the
certificate of authentication of any predecessor Trustee and deliver such
Securities so authenticated; and, in case at that time any of the Securities
shall not have been authenticated, any successor to the Trustee may authenticate
such Securities either in the name of any predecessor hereunder or in the name
of the successor trustee; and in all such cases such certificate shall have the
full force which it is anywhere in the Securities or in this Indenture provided
that the certificate of the Trustee shall have; provided that the right to adopt
--------
the certificate of authentication of any predecessor Trustee or to authenticate
Securities in the name of any predecessor Trustee shall apply only to its
successor or successors by merger, conversion or consolidation.
Section 612. Preferential Collection of Claims Against Company.
-------------------------------------------------
If and when the Trustee shall be or become a creditor of the Company
(or other obligor under the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against
the Company (or any such other obligor). A Trustee who has resigned or been
removed shall be subject to the Trust Indenture Act Section 311(a) to the extent
indicated therein.
ARTICLE VII
-----------
HOLDERS' LISTS AND REPORTS BY TRUSTEE
-------------------------------------
Section 701. Company to Furnish Trustee with Names and Addresses of
------------------------------------------------------
Holders.
-------
The Company will furnish or cause to be furnished to the Trustee
(a) semiannually, not more than 15 days after each Regular Record
Date, a list, in such form as the Trustee may reasonably require, of the names
and addresses of the Holders as of such Regular Record Date; and
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(b) at such other times as the Trustee may request in writing, within
30 days after receipt by the Company of any such request, a list of similar form
and content as of a date not more than 15 days prior to the time such list is
furnished;
provided, however, that if and so long as the Trustee shall be the Security
- -------- -------
Registrar, no such list need be furnished.
Section 702. Disclosure of Names and Addresses of Holders.
--------------------------------------------
Every Holder of Securities, by receiving and holding the same, agrees
with the Company and the Trustee that neither the Company nor the Trustee nor
any agent of either of them shall be held accountable by reason of the
disclosure of any information as to the names and addresses of the Holders in
accordance with Trust Indenture Act Section 312, regardless of the source from
which such information was derived, and that the Trustee shall not be held
accountable by reason of mailing any material pursuant to a request made under
Trust Indenture Act Section 312.
Section 703. Reports by Trustee.
------------------
Within 60 days after May 15 of each year commencing with the first May
15 after the first issuance of Securities, the Trustee shall transmit by mail to
all Holders, as their names and addresses appear in the Security Register, as
provided in Trust Indenture Act Section 313(c), a brief report dated as of such
May 15 in accordance with and to the extent required by Trust Indenture Act
Section 313(a). The Trustee shall also comply with Trust Indenture Act Section
313(b).
Commencing at the time this Indenture is qualified under the Trustee
Indenture Act, a copy of each report at the time of its mailing to Holders,
shall be filed with the Commission and each stock exchange on which the
Securities are listed.
Section 704. Reports by Company and Guarantors.
---------------------------------
The Company and any Guarantor shall:
(a) file with the Trustee, within 15 days after the Company or any
Guarantor, as the case may be, is required to file the same with the Commission,
copies of the annual reports and of the information, documents and other reports
(or copies of such portions of any of the foregoing as the Commission may from
time to time by rules and regulations prescribe) which the Company or any
Guarantor may be required to file with the Commission pursuant to Section 13 or
Section 15(d) of the Exchange Act; or, if the Company or any Guarantor, as the
case may be, is not required to file information, documents or reports pursuant
to either of said Sections, then it shall file with the Trustee and the
Commission, in accordance with rules and regulations prescribed from time to
time by the Commission, such of the supplementary and periodic information,
documents and reports which may be required pursuant to Section 13 of the
Exchange Act in respect of a security listed and registered on a national
securities exchange as may be prescribed from time to time in such rules and
regulations;
(b) file with the Trustee and the Commission, in accordance with the
rules and regulations prescribed from time to time by the Commission, such
additional information, documents
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and reports with respect to compliance by the Company or any Guarantor, as the
case may be, with the conditions and covenants of this Indenture as may be
required from time to time by such rules and regulations; and
(c) transmit or cause to be transmitted by mail to all Holders, as
their names and addresses appear in the Security Register, within 30 days after
the filing thereof with the Trustee, in the manner and to the extent provided in
Trust Indenture Act Section 313(c), such summaries of any information, documents
and reports required to by filed by the Company or any Guarantor, as the case
may be, pursuant to Subsections (a) and (b) of this Section as may be required
by rules and regulations prescribed from time to time by the Commission.
ARTICLE VIII
------------
CONSOLIDATION, MERGER,
----------------------
CONVEYANCE, TRANSFER OR LEASE
-----------------------------
Section 801. Company or Any Guarantor May Consolidate, etc., Only on
-------------------------------------------------------
Certain Terms.
-------------
(a) The Company shall not, in a single transaction or through a series
of related transactions, consolidate with or merge with or into any other Person
or sell, assign, convey, transfer or lease or otherwise dispose of all or
substantially all of its properties and assets to any Person or group of
affiliated Persons, or permit any of its Subsidiaries to enter into any such
transaction or transactions if such transaction or transactions, in the
aggregate, would result in a sale, assignment, conveyance, transfer, lease or
disposition of all or substantially all of the properties and assets of the
Company and its Subsidiaries on a Consolidated basis to any other Person or
group of affiliated Persons, unless at the time and after giving effect thereto:
(i) either (1) the Company shall be the continuing corporation,
or (2) the Person (if other than the Company) formed by such
consolidation or into which the Company is merged or the Person which
acquires by sale, assignment, conveyance, transfer, lease or
disposition of all or substantially all of the properties and assets
of the Company and its Subsidiaries on a Consolidated basis (the
"SURVIVING ENTITY") shall be a corporation duly organized and validly
existing under the laws of the United States of America, any state
thereof or the District of Columbia and such Person assumes, by a
supplemental indenture in a form reasonably satisfactory to the
Trustee, all the obligations of the Company under the Securities and
this Indenture, and this Indenture shall remain in full force and
effect;
(ii) immediately before and immediately after giving effect to
such transaction, no Default or Event of Default shall have occurred
and be continuing;
(iii) immediately after giving effect to such transaction on a
pro forma basis, the Consolidated Net Worth of the Company (or the
Surviving Entity if the Company is not the continuing obligor under
this Indenture) is equal to or greater than the Consolidated Net Worth
of the Company immediately prior to such transaction;
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(iv) immediately before and immediately after giving effect to
such transaction on a pro forma basis (on the assumption that the
transaction occurred on the first day of the four-quarter period
immediately prior to the consummation of such transaction with the
appropriate adjustments with respect to the transaction being included
in such pro forma calculation), the Company (or the Surviving Entity
if the Company is not the continuing obligor under this Indenture)
could incur $1.00 of additional Indebtedness under Section 1008 (other
than Permitted Indebtedness);
(v) each Guarantor, if any, unless it is the other party to the
transactions described above, shall have by supplemental indenture
confirmed that its Guarantee shall apply to such Person's obligations
under this Indenture and the Securities;
(vi) if any of the property or assets of the Company or any of
its Subsidiaries would thereupon become subject to any Lien, the
provisions of Section 1012 are complied with; and
(vii) the Company or the Surviving Entity shall have delivered,
or caused to be delivered, to the Trustee, in form and substance
reasonably satisfactory to the Trustee, an Officers' Certificate and
an Opinion of Counsel, each to the effect that such consolidation,
merger, transfer, sale, assignment, conveyance, lease or other
transaction and the supplemental indenture in respect thereto comply
with the provisions of this Indenture and that all conditions
precedent herein provided for relating to such transaction have been
complied with.
(b) Each Guarantor shall not, and the Company shall not permit a
Guarantor to, in a single transaction or through a series of related
transactions merge or consolidate with or into any other corporation (other than
the Company or any other Guarantor) or other entity, or sell, assign, convey,
transfer, lease or otherwise dispose of all or substantially all of its
properties and assets on a Consolidated basis to any entity (other than the
Company or any other Guarantor) unless at the time and after giving effect
thereto:
(i) either (1) such Guarantor shall be the continuing
corporation or (2) the entity (if other than such Guarantor) formed by
such consolidation or into which such Guarantor is merged or the
entity which acquires by sale, assignment, conveyance, transfer, lease
or disposition the properties and assets of such Guarantor shall be a
corporation duly organized and validly existing under the laws of the
United States, any state thereof or the District of Columbia and shall
expressly assume by a supplemental indenture, executed and delivered
to the Trustee, in a form reasonably satisfactory to the Trustee, all
the obligations of such Guarantor under its Guarantee and this
Indenture;
(ii) immediately before and immediately after giving effect to
such transaction, no Default or Event of Default shall have occurred
and be continuing; and
(iii) such Guarantor shall have delivered to the Trustee, in
form and substance reasonably satisfactory to the Trustee, an
Officers' Certificate and an Opinion of Counsel, each stating that
such consolidation, merger, sale, assignment, conveyance,
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transfer, lease or disposition and such supplemental indenture comply
with this Indenture, and thereafter all obligations of the predecessor
shall terminate.
The provisions of this Section 801(b) shall not apply to any transaction
(including any Asset Sale made in accordance with Section 1013) with respect to
any Guarantor if the Guarantee of such Guarantor is released in connection with
such transaction in accordance with Section 1014(c).
Section 802. Successor Substituted.
---------------------
Upon any consolidation or merger, or any sale, assignment, conveyance,
transfer, lease or disposition of all or substantially all of the properties and
assets of the Company or any Guarantor in accordance with Section 801, the
successor Person formed by such consolidation or into which the Company or such
Guarantor, as the case may be, is merged or the successor Person to which such
sale, assignment, conveyance, transfer, lease or disposition is made shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company or such Guarantor, as the case may be, under this Indenture, the
Securities and/or such Guarantee, as the case may be, with the same effect as if
such successor had been named as the Company or such Guarantor, as the case may
be, herein, in the Securities and/or in such Guarantee, as the case may be.
When a successor assumes all the obligations of its predecessor under this
Indenture, the Securities or a Guarantee, as the case may be, the predecessor
shall be released from those obligations; provided that in the case of a
--------
transfer by lease, the predecessor shall not be released from the payment of
principal and interest on the Securities or a Guarantee, as the case may be.
ARTICLE IX
----------
SUPPLEMENTAL INDENTURES
-----------------------
Section 901. Supplemental Indentures and Agreements without Consent
------------------------------------------------------
of Holders.
----------
Without the consent of any Holders, the Company and the Guarantors,
when authorized by a Board Resolution, and the Trustee, at any time and from
time to time, may enter into one or more indentures supplemental hereto or
agreements or other instruments with respect to any Guarantee, in form and
substance satisfactory to the Trustee, for any of the following purposes:
(a) to evidence the succession of another Person to the Company, any
Guarantor or any other obligor upon the Securities, and the assumption by any
such successor of the covenants of the Company or such Guarantor or obligor
herein and in the Securities and in any Guarantee, in each case in compliance
with the provisions of this Indenture;
(b) to add to the covenants of the Company, any Guarantor or any other
obligor upon the Securities for the benefit of the Holders, or to surrender any
right or power herein conferred upon the Company, any Guarantor or any other
obligor upon the Securities, as applicable, herein, in the Securities or in any
Guarantee;
(c) to cure any ambiguity, to correct or supplement any provision
herein which may be defective or inconsistent with any other provision herein or
in any Guarantee, or to make any
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other provisions with respect to matters or questions arising under this
Indenture, the Securities or any Guarantee; provided that, in each case, such
--------
provisions shall not adversely affect the interests of the Holders;
(d) to comply with the requirements of the Commission in order to
effect or maintain the qualification of this Indenture under the Trust Indenture
Act, as contemplated by Section 905 or otherwise;
(e) to add a Guarantor pursuant to the requirements of Section 1014;
(f) to evidence and provide the acceptance of the appointment of a
successor trustee hereunder;
(g) to mortgage, pledge, hypothecate or grant a security interest in
favor of the Trustee for the benefit of the Holders as additional security for
the payment and performance of the Indenture Obligations, in any property or
assets, including any which are required to be mortgaged, pledged or
hypothecated, or in which a security interest is required to be granted to the
Trustee pursuant to this Indenture or otherwise; or
(h) to provide for uncertificated Securities in place of or in
addition to certificated Securities.
Section 902. Supplemental Indentures and Agreements with Consent of
------------------------------------------------------
Holders.
-------
With the consent of the Holders of not less than a majority in
aggregate principal amount of the Outstanding Securities, by Act of said Holders
delivered to the Company, each Guarantor, and the Trustee, the Company, each
Guarantor (if a party thereto), when authorized by a Board Resolution, and the
Trustee may enter into an indenture or indentures supplemental hereto or
agreements or other instruments with respect to any Guarantee in form and
substance satisfactory to the Trustee for the purpose of adding any provisions
to or changing in any manner or eliminating any of the provisions of this
Indenture or of modifying in any manner the rights of the Holders under this
Indenture, the Securities or any Guarantee; provided, however, that no such
-------- -------
supplemental indenture, agreement or instrument shall, without the consent of
the Holder of each Outstanding Security affected thereby:
(a) change the Stated Maturity of the principal of, or any installment
of interest on, any Security, or reduce the principal amount thereof or the rate
of interest thereon or any premium payable upon the redemption thereof, or
change the coin or currency in which the principal of any Security or any
premium or the interest thereon is payable, or impair the right to institute
suit for the enforcement of any such payment after the Stated Maturity thereof
(or, in the case of redemption, on or after the Redemption Date);
(b) amend, change or modify the obligation of the Company to make and
consummate an Offer with respect to any Asset Sale or Asset Sales in accordance
with Section 1013 or the obligation of the Company to make and consummate a
Change of Control Offer in the event of a Change of Control in accordance with
Section 1016, including amending, changing or modifying any definitions with
respect thereto;
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(c) reduce the percentage in principal amount of the Outstanding
Securities, the consent of whose Holders is required for any such supplemental
indenture, or the consent of whose Holders is required for any waiver or
compliance with provisions of this Indenture or defaults hereunder and their
consequences provided for in this Indenture or with respect to any Guarantee;
(d) modify any of the provisions of this Section or Sections 513 or
1022, except to increase the percentage in principal amount of the Outstanding
Securities the consent of whose Holders is required for any such actions or to
provide that other provisions of this Indenture cannot be modified or waived
without the consent of the Holder of each Security affected thereby;
(e) except as otherwise permitted under Article Eight, consent to the
assignment or transfer by the Company or any Guarantor of any of its rights and
obligations under this Indenture; or
(f) amend or modify any of the provisions of this Indenture relating
to the subordination of the Securities or any Guarantee in any manner adverse to
the Holders of the Securities or any Guarantee.
Upon the written request of the Company and each Guarantor,
accompanied by a copy of a Board Resolution authorizing the execution of any
such supplemental indenture or Guarantee, and upon the filing with the Trustee
of evidence of the consent of Holders as aforesaid, the Trustee shall, subject
to Section 903, join with the Company and each Guarantor in the execution of
such supplemental indenture or Guarantee.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture or Guarantee
or agreement or instrument relating to any Guarantee, but it shall be sufficient
if such Act shall approve the substance thereof.
Section 903. Execution of Supplemental Indentures and Agreements.
---------------------------------------------------
In executing, or accepting the additional trusts created by, any
supplemental indenture, agreement or instrument permitted by this Article or the
modifications thereby of the trusts created by this Indenture, the Trustee shall
be entitled to receive, and (subject to Trust Indenture Act Section 315(a)
through 315(d) and Section 602 hereof) shall be fully protected in relying upon,
an Opinion of Counsel and an Officers' Certificate stating that the execution of
such supplemental indenture, agreement or instrument is authorized or permitted
by this Indenture. The Trustee may, but shall not be obligated to, enter into
any such supplemental indenture, agreement or instrument which affects the
Trustee's own rights, duties or immunities under this Indenture, any Guarantee
or otherwise.
Section 904. Effect of Supplemental Indentures.
---------------------------------
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
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Section 905. Conformity with Trust Indenture Act.
-----------------------------------
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act as then in effect.
Section 906. Reference in Securities to Supplemental Indentures.
--------------------------------------------------
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities so modified as to conform, in the opinion of the Trustee and the
Board of Directors, to any such supplemental indenture may be prepared and
executed by the Company and each Guarantor and authenticated and delivered by
the Trustee in exchange for Outstanding Securities.
Section 907. Effect on Senior Indebtedness.
-----------------------------
No supplemental indenture shall adversely affect the rights under
Articles Twelve and Fourteen, or any definitions or provisions related thereto,
or the Guarantees of any holder of Senior Indebtedness or Guarantor Senior
Indebtedness unless the requisite holders of each issue of Senior Indebtedness
or Guarantor Senior Indebtedness affected thereby shall have consented to such
supplemental indenture.
ARTICLE X
---------
COVENANTS
---------
Section 1001. Payment of Principal, Premium and Interest.
------------------------------------------
Subject to the provisions of Articles Twelve and Fourteen, the Company
will duly and punctually pay the principal of, premium, if any, and interest on
the Securities in accordance with the terms of the Securities and this
Indenture.
Section 1002. Maintenance of Office or Agency.
-------------------------------
The Company will maintain an office or agency where Securities may be
presented or surrendered for payment. The Company also will maintain an office
or agency where Securities may be surrendered for registration of transfer,
redemption or exchange and where notices and demands to or upon the Company in
respect of the Securities and this Indenture may be served. The Company will
give prompt written notice to the Trustee of the location and any change in the
location of any such offices or agencies. If at any time the Company shall fail
to maintain any such required offices or agencies or shall fail to furnish the
Trustee with the address thereof, such presentations, surrenders, notices and
demands may be made or served at the office of the agent of the Trustee
described above and the Company hereby appoints such agent as its agent to
receive all such presentations, surrenders, notices and demands.
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The Company may from time to time designate one or more other offices
or agencies where the Securities may be presented or surrendered for any or all
such purposes, and may from time to time rescind such designation. The Company
will give prompt written notice to the Trustee of any such designation or
rescission and any change in the location of any such office or agency.
Section 1003. Money for Security Payments to Be Held in Trust.
-----------------------------------------------
If the Company shall at any time act as its own Paying Agent, it will,
on or before 10:00 a.m. each due date of the principal of, premium, if any, or
interest on any of the Securities, segregate and hold in trust for the benefit
of the Holders entitled thereto a sum sufficient to pay the principal, premium,
if any, or interest so becoming due until such sums shall be paid to such
Persons or otherwise disposed of as herein provided, and will promptly notify
the Trustee of its action or failure so to act.
If the Company is not acting as Paying Agent, the Company will, before
each due date of the principal of, premium, if any, or interest on any
Securities, deposit with a Paying Agent a sum in same day funds sufficient to
pay the principal, premium, if any, or interest so becoming due, such sum to be
held in trust for the benefit of the Persons entitled to such principal, premium
or interest, and (unless such Paying Agent is the Trustee) the Company will
promptly notify the Trustee of such action or any failure so to act.
If the Company is not acting as Paying Agent, the Company will cause
each Paying Agent other than the Trustee to execute and deliver to the Trustee
an instrument in which such Paying Agent shall agree with the Trustee, subject
to the provisions of this Section, that such Paying Agent will:
(a) hold all sums held by it for the payment of the principal of,
premium, if any, or interest on Securities in trust for the benefit of the
Persons entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided;
(b) give the Trustee notice of any Default by the Company or any
Guarantor (or any other obligor upon the Securities) in the making of any
payment of principal, premium, if any, or interest;
(c) at any time during the continuance of any such Default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so held in
trust by such Paying Agent; and
(d) acknowledge, accept and agree to comply in all aspects with the
provisions of this Indenture relating to the duties, rights and disabilities of
such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.
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In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor, including each
Guarantor, upon the Securities or the property of the Company or of such other
obligor or their creditors, the Trustee shall serve as the Paying Agent.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of, premium, if any,
or interest on any Security and remaining unclaimed for two years after such
principal and premium, if any, or interest has become due and payable shall
promptly be paid to the Company on Company Request, or (if then held by the
Company) shall be discharged from such trust; and the Holder of such Security
shall thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease; provided, however, that the Trustee or such
-------- -------
Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in The New York Times and The
------------------ ---
Wall Street Journal (national edition), notice that such money remains unclaimed
- -------------------
and that, after a date specified therein, which shall not be less than 30 days
from the date of such notification or publication, any unclaimed balance of such
money then remaining will promptly be repaid to the Company.
Section 1004. Corporate Existence.
-------------------
Subject to Article Eight, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect, the corporate
existence and related rights and franchises (charter and statutory) of the
Company and each Subsidiary; provided, however, that the Company shall not be
-------- -------
required to preserve any such right or franchise or the corporate existence of
any such Subsidiary if the Board of Directors of the Company shall determine
that the preservation thereof is no longer desirable in the conduct of the
business of the Company and its Subsidiaries as a whole and that the loss
thereof could not reasonably be expected to have a material adverse effect on
the ability of the Company to perform its obligations hereunder; and provided,
--------
further, however, that the foregoing shall not prohibit a sale, transfer or
- ------- -------
conveyance of a Subsidiary or any of its assets in compliance with the terms of
this Indenture.
Section 1005. Payment of Taxes and Other Claims.
---------------------------------
The Company will pay or discharge or cause to be paid or discharged,
on or before the date the same shall become due and payable, (a) all taxes,
assessments and governmental charges levied or imposed upon the Company or any
Subsidiary shown to be due on any return of the Company or any Subsidiary or
otherwise assessed or upon the income, profits or property of the Company or any
Subsidiary if failure to pay or discharge the same could reasonably be expected
to have a material adverse effect on the ability of the Company or any Guarantor
to perform its obligations hereunder and (b) all lawful claims for labor,
materials and supplies, which, if unpaid, would by law become a Lien upon the
property of the Company or any Subsidiary, except for any Lien permitted to be
incurred under Section 1012 if failure to pay or discharge the same could
reasonably be expected to have a material adverse effect on the ability of the
Company or any Guarantor to perform its obligations hereunder; provided,
--------
however, that the Company shall not be required to pay or discharge or cause to
- -------
be paid or discharged any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
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proceedings properly instituted and diligently conducted and in respect of which
appropriate reserves (in the good faith judgment of management of the Company)
are being maintained in accordance with GAAP.
Section 1006. Maintenance of Properties.
-------------------------
The Company will cause all material properties owned by the Company or
any Subsidiary or used or held for use in the conduct of its business or the
business of any Subsidiary to be maintained and kept in good condition, repair
and working order (ordinary wear and tear excepted) and supplied with all
necessary equipment and will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment of
the Company may be consistent with sound business practice and necessary so that
the business carried on in connection therewith may be properly and
advantageously conducted at all times; provided, however, that nothing in this
-------- -------
Section shall prevent the Company from discontinuing the maintenance of any of
such properties if such discontinuance is, in the judgment of the Company,
desirable in the conduct of its business or the business of any Subsidiary and
not reasonably expected to have a material adverse effect on the ability of the
Company to perform its obligations hereunder.
Section 1007. Insurance.
---------
The Company will at all times keep all of its and its Subsidiaries'
properties which are of an insurable nature insured with insurers, believed by
the Company to be responsible, against loss or damage to the extent that
property of similar character is usually so insured by corporations similarly
situated and owning like properties.
Section 1008. Limitation on Indebtedness.
--------------------------
(a) The Company shall not, and shall not permit any Restricted
Subsidiary to, create, incur, assume or directly or indirectly guarantee or in
any other manner become directly or indirectly liable for ("INCUR") any
Indebtedness (including Acquired Indebtedness), except that the Company may
incur Indebtedness and a Guarantor may incur Permitted Subsidiary Indebtedness
if, in each case, the Debt to Operating Cash Flow Ratio of the Company and its
Restricted Subsidiaries at the time of the incurrence of such Indebtedness,
after giving pro forma effect thereto, is 7:1 or less.
(b) The foregoing limitation will not apply to the incurrence of any
of the following (collectively, "PERMITTED INDEBTEDNESS"):
(i) Indebtedness of the Company under the Bank Credit Agreement in
an aggregate principal amount at any one time outstanding not to exceed
$75,000,000;
(ii) Indebtedness of the Company pursuant to the Securities and
Indebtedness of any Guarantor pursuant to a Guarantee;
(iii) Indebtedness of any Guarantor consisting of a guarantee of
the Company's Indebtedness under the Bank Credit Agreement;
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(iv) Indebtedness of the Company or any Restricted Subsidiary
outstanding on the date of this Indenture and listed on Schedule I hereto;
(v) Indebtedness of the Company owing to a Restricted Subsidiary;
provided that any Indebtedness of the Company owing to a Restricted Subsidiary
- --------
that is not a Guarantor is made pursuant to an intercompany note in the form
attached to this Indenture as Exhibit B and is subordinated in right of payment
from and after such time as the Securities shall become due and payable (whether
at Stated Maturity, by acceleration or otherwise) to the payment and performance
of the Company's obligations under the Securities; provided further, that any
-------- -------
disposition, pledge or transfer of any such Indebtedness to a Person (other than
a disposition, pledge or transfer to a Wholly Owned Restricted Subsidiary or a
pledge to or for the benefit of the lenders under the Bank Credit Agreement)
shall be deemed to be an incurrence of such Indebtedness by the obligor not
permitted by this clause (v);
(vi) Indebtedness of a Wholly Owned Restricted Subsidiary owing
to the Company or another Wholly Owned Restricted Subsidiary; provided that,
--------
with respect to Indebtedness owing to a Wholly Owned Subsidiary that is not a
Guarantor, (1) any such Indebtedness is made pursuant to an intercompany note in
the form attached to this Indenture as Exhibit B and (2) any such Indebtedness
shall be subordinated in right of payment from and after such time as the
obligations under the Guarantee, if any, by such Wholly Owned Restricted
Subsidiary shall become due and payable to the payment and performance of such
Wholly Owned Restricted Subsidiary's obligations under its Guarantee; provided,
--------
further, that (1) any disposition, pledge or transfer of any such Indebtedness
- -------
to a Person (other than a disposition, pledge or transfer to the Company or a
Wholly Owned Restricted Subsidiary or pledge to or for the benefit of the
lenders under the Bank Credit Agreement) shall be deemed to be an incurrence of
such Indebtedness by the obligor not permitted by this clause (vi) and (2) any
transaction pursuant to which any Wholly Owned Restricted Subsidiary, which has
Indebtedness owing to the Company or any other Wholly Owned Restricted
Subsidiary, ceases to be a Wholly Owned Restricted Subsidiary shall be deemed to
be the incurrence of Indebtedness by such Wholly Owned Restricted Subsidiary
that is not permitted by this clause (vi);
(vii) guarantees of any Restricted Subsidiary made in accordance
with the provisions of Section 1014;
(viii) obligations of the Company entered into in the ordinary
course of business pursuant to Interest Rate Agreements designed to protect the
Company against fluctuations in interest rates in respect of Indebtedness of the
Company as long as such obligations at the time incurred do not exceed the
aggregate principal amount of such Indebtedness then outstanding or in good
faith anticipated to be outstanding within 90 days of such incurrence;
(ix) any renewals, extensions, substitutions, refundings,
refinancings or replacements (collectively, a "REFINANCING") of any Indebtedness
described in clauses (ii), (iii), (iv) and (v) above, including any successive
refinancings so long as the aggregate principal amount of Indebtedness
represented thereby is not increased by such refinancing (except, in the case of
Guarantees under clause (iii), which Guarantees do not exceed the aggregate
principal amount of the Bank Credit Agreement) plus the lesser of (I) the stated
amount of any premium, interest or other payment required to be paid in
connection with such a refinancing pursuant to the terms of the Indebtedness
being refinanced or (II) the amount of premium, interest or other payment
actually paid
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at such time to refinance the Indebtedness, plus, in either case, the amount of
expenses of the Company incurred in connection with such refinancing and, in the
case of Pari Passu Indebtedness or Subordinated Indebtedness, such refinancing
does not reduce the Average Life to Stated Maturity or the Stated Maturity of
such Indebtedness; and
(x) Indebtedness of the Company in addition to that described in
clauses (i) through (ix) above, and any renewals, extensions, substitutions,
refinancings, or replacements of such Indebtedness, so long as the aggregate
principal amount of all such Indebtedness shall not exceed $5,000,000.
Section 1009. Limitation on Restricted Payments.
---------------------------------
(a) The Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly:
(i) declare or pay any dividend on, or make any distribution to
holders of, any of the Company's Equity Interests (other than dividends or
distributions payable solely in its Qualified Equity Interests);
(ii) purchase, redeem or otherwise acquire or retire for value,
directly or indirectly, any Equity Interest of the Company or any Affiliate
thereof (except Equity Interests held by the Company or a Wholly Owned
Restricted Subsidiary);
(iii) make any principal payment on, or repurchase, redeem,
defease, retire or otherwise acquire for value, prior to any scheduled principal
payment, sinking fund or maturity, any Subordinated Indebtedness;
(iv) declare or pay any dividend or distribution on any Equity
Interests of any Subsidiary to any Person (other than the Company or any of its
Wholly Owned Restricted Subsidiaries);
(v) incur, create or assume any guarantee of Indebtedness of any
Affiliate (other than a Wholly Owned Restricted Subsidiary of the Company); or
(vi) make any Investment in any Person (other than any Permitted
Investments) (any of the foregoing payments described in clauses (i) through
(vi), other than any such action that is a Permitted Payment, collectively,
"RESTRICTED PAYMENTS") unless after giving effect to the proposed Restricted
Payment (the amount of any such Restricted Payment, if other than cash, as
determined by the Board of Directors of the Company, whose determination shall
be conclusive and evidenced by a Board Resolution), (1) no Default or Event of
Default shall have occurred and be continuing and such Restricted Payment shall
not be an event which is, or after notice or lapse of time or both, would be, an
"EVENT OF DEFAULT" under the terms of any Indebtedness of the Company or its
Restricted Subsidiaries; and (2) the aggregate amount of all such Restricted
Payments declared or made after the date of this Indenture does not exceed the
sum of:
(A) an amount equal to the Company's Cumulative Operating Cash
Flow less 1.4 times the Company's Cumulative Consolidated Interest Expense; and
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(B) the aggregate Net Cash Proceeds received after the date of
this Indenture by the Company from capital contributions (other than from a
Subsidiary) or from the issuance or sale (other than to any of its Subsidiaries)
of its Qualified Equity Interests (except, in each case, to the extent such
proceeds are used to purchase, redeem or otherwise retire Equity Interests or
Subordinated Indebtedness as set forth below).
(b) Notwithstanding the foregoing, and in the case of clauses (ii)
through (vi) below, so long as there is no Default or Event of Default
continuing, the foregoing provisions shall not prohibit the following actions
(clauses (i) through (vi) being referred to as "PERMITTED PAYMENTS"):
(i) the payment of any dividend within 60 days after the date of
declaration thereof, if at such date of declaration such payment would be
permitted by the provisions of paragraph (a) of this Section and such payment
shall be deemed to have been paid on such date of declaration for purposes of
the calculation required by paragraph (a) of this Section;
(ii) any transaction with an officer or director of the Company
entered into in the ordinary course of business (including compensation or
employee benefit arrangements with any officer or director of the Company);
(iii) the repurchase, redemption, or other acquisition or retirement
of any Equity Interests of the Company in exchange for (including any such
exchange pursuant to the exercise of a conversion right or privilege pursuant to
which cash is paid in lieu of the issuance of fractional shares or scrip), or
out of the Net Cash Proceeds of, a substantially concurrent issuance and sale
for cash (other than to a Subsidiary) of other Qualified Equity Interests of the
Company; provided that the Net Cash Proceeds from the issuance of such Qualified
--------
Equity Interests are excluded from clause (2)(B) of paragraph (a) of this
Section;
(iv) any repurchase, redemption, defeasance, retirement, refinancing
or acquisition for value or payment of principal of any Subordinated
Indebtedness in exchange for, or out of the Net Cash Proceeds of, a
substantially concurrent issuance and sale for cash (other than to any
Subsidiary of the Company) of any Qualified Equity Interests of the Company,
provided that the Net Cash Proceeds from the issuance of such shares of
- --------
Qualified Equity Interests are excluded from clause (2)(B) of paragraph (a) of
this Section;
(v) the repurchase, redemption, defeasance, retirement, refinancing or
acquisition for value or payment of principal of any Subordinated Indebtedness
(other than Disqualified Equity Interests) (a "REFINANCING") through the
issuance of new Subordinated Indebtedness of the Company, as the case may be,
provided that any such new Indebtedness (1) shall be in a principal amount that
- --------
does not exceed the principal amount so refinanced or, if such Subordinated
Indebtedness provides for an amount less than the principal amount thereof to be
due and payable upon a declaration or acceleration thereof, then such lesser
amount as of the date of determination), plus the lesser of (I) the stated
amount of any premium, interest or other payment required to be paid in
connection with such a refinancing pursuant to the terms of the Indebtedness
being refinanced or (II) the amount of premium, interest or other payment
actually paid at such time to refinance the Indebtedness, plus, in either case,
the amount of expenses of the Company incurred in connection with such
refinancing; (2) has an Average Life to Stated Maturity greater than the
remaining Average Life to Stated Maturity of the
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Securities; (3) has a Stated Maturity for its final scheduled principal payment
later than the Stated Maturity for the final scheduled principal payment of the
Securities; and (4) is expressly subordinated in right of payment to the
Securities at least to the same extent as the Indebtedness to be refinanced; and
(vi) the payment prior to maturity of Indebtedness outstanding on the
date of the Indenture evidenced by those certain Promissory Notes dated March 1,
1994 by the Company to New Inspiration Broadcasting Company, Inc. ("NEW
INSPIRATION") and by the Company to Golden Gate Broadcasting Company, Inc.
("GOLDEN GATE") in each case, in connection with the payment prior to maturity
(which payment shall also be permitted under this clause (vi)) of Indebtedness
outstanding on the date of the Indenture evidenced by those certain Promissory
Notes dated August 12, 1997 by Golden Gate to Mr. Atsinger and Mr. Epperson in
the principal amount, in each case, of $1,230,000 and by New Inspiration to Mr.
Atsinger and Mrs. Epperson in the principal amount, in each case, of $2,116,000.
Section 1010. Limitation on Transactions with Affiliates.
------------------------------------------
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, enter into or suffer to exist any
transaction or series of related transactions (including, without limitation,
the sale, purchase, exchange or lease of assets, property or services) with any
Affiliate of the Company (other than the Company or a Wholly Owned Restricted
Subsidiary) unless (a) such transaction or series of transactions is in writing
on terms that are no less favorable to the Company or such Restricted
Subsidiary, as the case may be, than would be available in a comparable
transaction in arm's-length dealings with an unrelated third party and (b)(i)
with respect to any transaction or series of transactions involving aggregate
payments in excess of $1,000,000, the Company delivers an Officers' Certificate
to the Trustee certifying that such transaction or series of related
transactions complies with clause (a) above and such transaction or series of
related transactions has been approved by a majority of the members of the Board
of Directors of the Company (and approved by a majority of Independent Directors
or, in the event there is only one Independent Director, by such Independent
Director) and (ii) with respect to any transaction or series of transactions
involving aggregate payments in excess of $5,000,000, an opinion as to the
fairness to the Company or such Restricted Subsidiary from a financial point of
view issued by an investment banking of national standing. Notwithstanding the
foregoing, this provision will not apply to (A) any transaction with an officer
or director of the Company entered into in the ordinary course of business
(including compensation or employee benefit arrangements with any officer or
director of the Company), (B) any transaction entered into by the Company or one
of its Wholly Owned Restricted Subsidiaries with a Wholly Owned Restricted
Subsidiary of the Company, and (C) transactions in existence on the date of this
Indenture and any renewal, replacement or extension thereof on substantially
similar terms.
Section 1011. Limitation on Senior Subordinated Indebtedness.
----------------------------------------------
The Company shall not, and shall not permit any Guarantor to, directly
or indirectly, create, incur, issue, assume, guarantee or otherwise in any
manner become directly or indirectly liable for or with respect to or otherwise
permit to exist any Indebtedness that is subordinate in right of payment, by
contract or otherwise, to any Indebtedness of the Company or such Guarantor, as
the case may be, unless such Indebtedness is also pari passu with the Securities
---- -----
or the Guarantee of such
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Guarantor, or subordinate in right of payment to the Securities or such
Guarantee to at least the same extent as the Securities or such Guarantee are
subordinate in right of payment to Senior Indebtedness or Guarantor Senior
Indebtedness, as the case may be, as set forth in this Indenture.
Section 1012. Limitation on Liens.
-------------------
The Company shall not, and shall not permit any Restricted Subsidiary to,
directly or indirectly, create, incur, affirm or suffer to exist any Lien of any
kind upon any of its property or assets (including any intercompany notes), now
owned or acquired after the date of this Indenture, or any income or profits
therefrom, except if the Securities are directly secured equally and ratably
with (or prior to in the case of Liens with respect to Subordinated
Indebtedness) the obligation or liability secured by such Lien, excluding,
however, from the operation of the foregoing any of the following;
(a) any Lien existing as of the date of this Indenture and listed on
Schedule II hereto;
(b) any Lien arising by reason of (i) any judgment, decree or order of
any court, so long as such Lien is adequately bonded and any appropriate legal
proceedings which may have been duly initiated for the review of such judgment,
decree or order shall not have been finally terminated or the period within
which such proceedings may be initiated shall not have expired; (ii) taxes not
yet delinquent or which are being contested in good faith; (iii) security for
payment of workers' compensation or other insurance; (iv) good faith deposits in
connection with tenders, leases, contracts (other than contracts for the payment
of money); (v) zoning restrictions, easements, licenses, reservations,
provisions, covenants, conditions, waivers, restrictions on the use of property
or minor irregularities of title (and with respect to leasehold interests,
mortgages, obligations, liens and other encumbrances incurred, created, assumed
or permitted to exist and arising by, through or under a landlord or owner of
the leased property, with or without consent of the lessee), none of which
materially impairs the use of any parcel of property material to the operation
of the business of the Company or any Subsidiary or the value of such property
for the purpose of such business; (vi) deposits to secure public or statutory
obligations, or in lieu of surety or appeal bonds; (vii) certain surveys,
exceptions, title defects, encumbrances, easements, reservations of, or rights
of others for, rights of way, sewers, electric lines, telegraph or telephone
lines and other similar purposes or zoning or other restrictions as to the use
of real property not interfering with the ordinary conduct of the business of
the Company or any of its Subsidiaries; or (viii) operation of law in favor of
mechanics, materialmen, laborers, employees or suppliers, incurred in the
ordinary course of business for sums which are not yet delinquent or are being
contested in good faith by negotiations or by appropriate proceedings which
suspend the collection thereof;
(c) any Lien now or hereafter existing on property of the Company or
any of its Restricted Subsidiaries securing Senior Indebtedness or Guarantor
Senior Indebtedness, in each case which Indebtedness is permitted under the
provisions of Section 1008 and provided that the provisions of Section 1014 are
complied with;
(d) any Lien securing Acquired Indebtedness created prior to (and not
created in connection with or in contemplation of) the incurrence of such
Indebtedness by the Company or any Subsidiary, in each case which Indebtedness
is permitted under the provisions of Section 1008;
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provided that any such Lien only extends to the assets that were subject to such
- --------
Lien securing such Acquired Indebtedness prior to the related transaction by the
Company or its Subsidiaries;
(e) any Lien securing Permitted Subsidiary Indebtedness; and
(f) any extension, renewal, refinancing or replacement, in whole or in
part, of any Lien described in the foregoing clauses (a) through (e) so long as
the amount of security is not increased thereby.
Section 1013. Limitation on Sale of Assets.
----------------------------
(a) The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, consummate an Asset Sale unless (i) at
least 80% of the consideration from such Asset Sale is received in cash and (ii)
the Company or such Restricted Subsidiary receives consideration at the time of
such Asset Sale at least equal to the Fair Market Value of the shares or assets
sold (other than in the case of an involuntary Asset Sale, as determined by the
Board of Directors of the Company and evidenced in a Board Resolution).
(b) If all or a portion of the Net Cash Proceeds of any Asset Sale are
not required to be applied to repay permanently any Senior Indebtedness then
outstanding as required by the terms thereof, or the Company determines not to
apply such Net Cash Proceeds to the permanent prepayment of such Senior
Indebtedness or if no such Senior Indebtedness is then outstanding, then the
Company may, within 12 months of the Asset Sale, invest the Net Cash Proceeds in
properties and assets that (as determined by the Board of Directors) replace the
properties and assets that were the subject of the Asset Sale or in properties
and assets that will be used in the businesses of the Company or its Restricted
Subsidiaries existing on the date of this Indenture or reasonably related
thereto. The amount of such Net Cash Proceeds neither used to permanently repay
or prepay Senior Indebtedness nor used or invested as set forth in this
paragraph constitutes "EXCESS PROCEEDS."
(c) When the aggregate amount of Excess Proceeds equals $5,000,000 or
more, the Company shall apply the Excess Proceeds to the repayment of the
Securities and any Pari Passu Indebtedness required to be repurchased under the
instrument governing such Pari Passu Indebtedness as follows: (a) the Company
shall make an offer to purchase (an "OFFER") from all Holders of the Securities
in accordance with the procedures set forth in this Indenture in the maximum
principal amount (expressed as a multiple of $1,000) of Securities that may be
purchased out of an amount (the "SECURITY AMOUNT") equal to the product of such
Excess Proceeds multiplied by a fraction, the numerator of which is the
outstanding principal amount of the Securities, and the denominator of which is
the sum of the outstanding principal amount of the Securities and such Pari
Passu Indebtedness (subject to proration in the event such amount is less than
the aggregate Offered Price of all Securities tendered) and (b) to the extent
required by such Pari Passu Indebtedness to permanently reduce the principal
amount of such Pari Passu Indebtedness, the Company shall make an offer to
purchase or otherwise repurchase or redeem Pari Passu Indebtedness (a "PARI
PASSU OFFER") in an amount (the "PARI PASSU DEBT AMOUNT") equal to the excess of
the Excess Proceeds over the Security Amount; provided that in no event shall
--------
the Pari Passu Debt Amount exceed the principal amount of such Pari Passu
Indebtedness plus the amount of any premium required to be paid to repurchase
such Pari Passu Indebtedness. The offer price shall be payable in cash in an
amount equal to 100% of the principal amount of the Securities plus accrued and
unpaid interest, if any, to the date (the "OFFER
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DATE") such Offer is consummated (the "OFFERED PRICE"), in accordance with the
procedures set forth in this Indenture. To the extent that the aggregate
Offered Price of the Securities tendered pursuant to the Offer is less than the
Security Amount relating thereto or the aggregate amount of Pari Passu
Indebtedness that is purchased is less than the Pari Passu Debt Amount (the
amount of such shortfall, if any, constituting a "DEFICIENCY"), the Company
shall use such Deficiency in the business of the Company and its Restricted
Subsidiaries. Upon completion of the purchase of all the Securities tendered
pursuant to an Offer and repurchase of the Pari Passu Indebtedness pursuant to a
Pari Passu Offer, the amount of Excess Proceeds, if any, shall be reset at zero.
(d) Whenever the Excess Proceeds received by the Company exceed
$5,000,000, such Excess Proceeds shall be set aside by the Company in a separate
account pending (i) deposit with the Depositary or a Paying Agent of the amount
required to purchase the Securities or Pari Passu Indebtedness tendered in an
Offer or a Pari Passu Offer, (ii) delivery by the Company of the Offered Price
to the Holders of the Securities or Pari Passu Indebtedness tendered in an Offer
or a Pari Passu Offer and (iii) application, as set forth above, of Excess
Proceeds in the business of the Company and its Restricted Subsidiaries. Such
Excess Proceeds may be invested in Temporary Cash Investments, provided that the
--------
maturity date of any such investment made after the amount of Excess Proceeds
exceeds $5,000,000 shall not be later than the Offer Date. The Company shall be
entitled to any interest or dividends accrued, earned or paid on such Temporary
Cash Investments; provided that the Company shall not withdraw such interest
--------
from the separate account if an Event of Default has occurred and is continuing.
(e) If the Company becomes obligated to make an Offer pursuant to
clause (c) above, the Securities shall be purchased by the Company, at the
option of the Holder thereof, in whole or in part, in integral multiples of
$1,000, on a date that is not earlier than 45 days and not later than 60 days
from the date the notice is given to Holders, or such later date as may be
necessary for the Company to comply with the requirements under the Exchange
Act, subject to proration in the event the Security Amount is less than the
aggregate Offered Price of all Securities tendered.
(f) The Company shall comply with the applicable tender offer rules,
including Rule 14e-1 under the Exchange Act, and any other applicable securities
laws or regulations in connection with an Offer.
(g) The Company shall not, and shall not permit any Restricted
Subsidiary to, create or permit to exist or become effective any restriction
(other than restrictions existing under (i) Indebtedness as in effect on the
date of this Indenture and listed on Schedule I hereto as such Indebtedness may
be refinanced from time to time, provided that such restrictions are no less
--------
favorable to the Holders of Securities than those existing on the date of this
Indenture or (ii) any Senior Indebtedness and any Guarantor Senior Indebtedness)
that would materially impair the ability of the Company to make an Offer to
purchase the Securities or, if such Offer is made, to pay for the Securities
tendered for purchase.
(h) Subject to paragraph (f) above, within 30 days after the date on
which the amount of Excess Proceeds equals or exceeds $5,000,000, the Company
shall send or cause to be sent
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by first-class mail, postage prepaid, to the Trustee and to each Holder of the
Securities, at his address appearing in the Security Register, a notice stating
or including:
(1) that the Holder has the right to require the Company to
repurchase, subject to proration, such Holder's Securities at the
Offered Price;
(2) the Offer Date;
(3) the instructions a Holder must follow in order to have its
Securities purchased in accordance with paragraph (c) of this Section;
and
(4) (i) the most recently filed Annual Report on Form 10-K
(including audited consolidated financial statements) of the Company,
the most recent subsequently filed Quarterly Report on Form 10-Q and
any Current Report on Form 8-K of the Company filed subsequent to such
Quarterly Report, other than Current Reports describing Asset Sales
otherwise described in the offering materials (or corresponding
successor reports) (or in the event the Company is not required to
prepare any of the foregoing forms, the comparable information
required pursuant to Section 1020), (ii) a description of material
developments in the Company's business subsequent to the date of the
latest of such Reports, (iii) if material, appropriate pro forma
financial information, and (iv) such other information. if any,
concerning the business of the Company which the Company in good faith
believes will enable such Holders to make an informed investment
decision.
(i) Holders electing to have Securities purchased hereunder will be
required to surrender such Securities at the address specified in the notice at
least three Business Days prior to the Offer Date. Holders will be entitled to
withdraw their election to have their Securities purchased pursuant to this
Section 1013 if the Company receives, not later than three Business Days prior
to the Offer Date, a facsimile transmission or letter setting forth (1) the name
of the Holder, (2) the certificate number of the Security in respect of which
such notice of withdrawal is being submitted, (3) the principal amount of the
Security (which shall be $1,000 or an integral multiple thereof) delivered for
purchase by the Holder as to which his election is to be withdrawn, (4) a
statement that such Holder is withdrawing his election to have such principal
amount of such Security purchased, and (5) the principal amount, if any, of such
Security (which shall be $1,000 or an integral multiple thereof) that remains
subject to the original notice of the Offer and that has been or will be
delivered for purchase by the Company.
(j) The Company shall (i) not later than the Offer Date, accept for
payment Securities or portions thereof tendered pursuant to the Offer, (ii) not
later than 10:00 a.m. (New York City time) on the Offer Date, deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 1003) an amount of
money in same day funds (or New York Clearing House funds if such deposit is
made prior to the Offer Date) sufficient to pay the aggregate Offered Price of
all the Securities or portions thereof that are to be purchased on that date and
(iii) not later than the Offer Date, deliver to the Paying Agent (if other than
the Company) an Officers' Certificate stating the Securities or portions thereof
accepted for payment by the Company.
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Subject to applicable escheat laws, as provided in the Securities, the
Trustee and the Paying Agent shall return to the Company any cash that remains
unclaimed, together with interest, if any, thereon, held by them for the payment
of the Offered Price; provided, however, that (x) to the extent that the
-------- -------
aggregate amount of cash deposited by the Company with the Trustee in respect of
an Offer exceeds the aggregate Offered Price of the Securities or portions
thereof to be purchased, the Trustee shall hold such excess for the Company and
(y) unless otherwise directed by the Company in writing, promptly after the
Business Day following the Offer Date the Trustee shall return any such excess
to the Company together with interest or dividends, if any, thereon.
(k) Securities to be purchased shall, on the Offer Date, become due
and payable at the Offered Price and from and after such date (unless the
Company shall default in the payment of the Offered Price) such Securities shall
cease to bear interest. Such Offered Price shall be paid to such Holder
promptly following the later of the Offer Date and the time of delivery of such
Security to the relevant Paying Agent at the office of such Paying Agent by the
Holder thereof in the manner required. Upon surrender of any such Security for
purchase in accordance with the foregoing provisions, such Security shall be
paid by the Company at the Offered Price; provided, however, that installments
-------- -------
of interest whose Stated Maturity is on or prior to the Offer Date shall be
payable to the Holders of such Securities, or one or more Predecessor
Securities, registered as such on the relevant Regular Record Dates according to
the terms and the provisions of Section 309; provided, further, that Securities
--------
to be purchased are subject to proration in the event the Excess Proceeds are
less than the aggregate Offered Price of all Securities tendered for purchase,
with such adjustments as may be appropriate by the Trustee so that only
Securities in denominations of $1,000 or integral multiples thereof, shall be
purchased. If any Security tendered for purchase shall not be so paid upon
surrender thereof by deposit of funds with the Trustee or a Paying Agent in
accordance with paragraph (j) above, the principal thereof shall, until paid,
bear interest from the Offer Date at the rate borne by such Security. Any
Security that is to be purchased only in part shall be surrendered to a Paying
Agent at the office of such Paying Agent (with, if the Company, the Security
Registrar or the Trustee so requires, due endorsement by, or a written
instrument of transfer in form satisfactory to the Company and the Security
Registrar or the Trustee duly executed by, the Holder thereof or such Holder's
attorney duly authorized in writing), and the Company shall execute and the
Trustee shall authenticate and deliver to the Holder of such Security, without
service charge, one or more new Securities of any authorized denomination as
requested by such Holder in an aggregate principal amount equal to, and in
exchange for, the portion of the principal amount of the Security so surrendered
that is not purchased.
Section 1014. Limitation on Issuances of Guarantees of and Pledges
----------------------------------------------------
for Indebtedness.
----------------
(a) The Company shall not permit any Restricted Subsidiary, other than
the Guarantors, directly or indirectly, to secure the payment of any Senior
Indebtedness of the Company and the Company will not, and will not permit any
Restricted Subsidiary to, pledge any intercompany notes representing obligations
of any Restricted Subsidiary (other than the Guarantors) to secure the payment
of any Senior Indebtedness unless in each case such Restricted Subsidiary
simultaneously executes and delivers a supplemental indenture to this Indenture
providing for a guarantee of payment of the Securities by such Restricted
Subsidiary, which guarantee shall be on the same terms as the guarantee of the
Senior Indebtedness (if a guarantee of Senior Indebtedness is granted by any
such Restricted Subsidiary) except that the guarantee of the Securities need not
be secured and shall be subordinated to the claims against such Restricted
Subsidiary in respect of Senior Indebtedness to the
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same extent as the Securities are subordinated to Senior Indebtedness of the
Company under this Indenture.
(b) The Company shall not permit any Restricted Subsidiary, other than
the Guarantors, directly or indirectly, to guarantee, assume or in any other
manner become liable with respect to any Indebtedness of the Company (other than
guarantees in existence on the date of this Indenture) unless such Restricted
Subsidiary simultaneously executes and delivers a supplemental indenture to this
Indenture providing for a guarantee of the Securities on the same terms as the
guarantee of such Indebtedness except that if the Securities are subordinated in
right of payment to such Indebtedness, the guarantee under the supplemental
indenture shall be subordinated to the guarantee of such Indebtedness to the
same extent as the Securities are subordinated to such Indebtedness under this
Indenture.
(c) Each guarantee created pursuant to the provisions described in the
foregoing paragraph is referred to as a "GUARANTEE" and the issuer of each such
Guarantee is referred to as a "GUARANTOR." Notwithstanding the foregoing, any
Guarantee by a Restricted Subsidiary of the Securities shall provide by its
terms that it shall be automatically and unconditionally released and discharged
upon (i) any sale, exchange or transfer, to any Person not an Affiliate of the
Company, of all of the Company's Equity Interest in, or all or substantially all
the assets of, such Restricted Subsidiary, which is in compliance with this
Indenture or (ii) (with respect to any Guarantees created after the date of this
Indenture) the release by the holders of the Indebtedness of the Company
described in clauses (a) and (b) above of their security interest or their
guarantee by such Restricted Subsidiary (including any deemed release upon
payment in full of all obligations under such Indebtedness), at a time when (A)
no other Indebtedness of the Company has been secured or guaranteed by such
Restricted Subsidiary, as the case may be, or (B) the holders of all such other
Indebtedness which is secured or guaranteed by such Restricted Subsidiary also
release their security interest in, or guarantee by, such Restricted Subsidiary
(including any deemed release upon payment in full of all obligations under such
Indebtedness).
Section 1015. Restriction on Transfer of Assets.
---------------------------------
The Company and the Guarantors shall not sell, convey, transfer or
otherwise dispose of their respective assets or property to any of the Company's
Restricted Subsidiaries (other than any Guarantor), except for sales,
conveyances, transfers or other dispositions made in the ordinary course of
business. For purposes of this provision, any sale, conveyance, transfer, lease
or other disposition of property or assets, having a Fair Market Value in excess
of (a) $ 1,000,000 for any sale, conveyance, transfer, lease or disposition or
series of related sales, conveyances, transfers, leases and dispositions and (b)
$5,000,000 in the aggregate for all such sales, conveyances, transfers, leases
or dispositions in any fiscal year of the Company shall not be considered "IN
THE ORDINARY COURSE OF BUSINESS"; provided that sales by the Company of block
--------
program time and spot advertising shall not be deemed not to be "IN THE ORDINARY
COURSE OF BUSINESS" solely because of the dollar value of such sales.
Section 1016. Purchase of Securities upon a Change of Control.
-----------------------------------------------
(a) If a Change of Control shall occur at any time, then each Holder
of Securities shall have the right to require that the Company purchase such
Holder's Securities in whole or in part
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in integral multiples of $1,000, at a purchase price (the "CHANGE OF CONTROL
PURCHASE PRICE") in cash in an amount equal to 101% of the principal amount of
such Securities, plus accrued and unpaid interest, if any, to the date of
purchase (the "CHANGE OF CONTROL PURCHASE DATE"), pursuant to the offer
described In Subsection (c) of this Section (the "CHANGE OF CONTROL OFFER") and
in accordance with the procedures set forth in Subsections (b), (c), (d) and (e)
of this Section.
(b) Within 30 days following any Change of Control, the Company shall
notify the Trustee thereof and give written notice (a "CHANGE OF CONTROL
PURCHASE NOTICE") of such Change of Control to each Holder by first-class mail,
postage prepaid, at his address appearing in the Security Register stating or
including:
(1) that a Change of Control has occurred, the date of such event,
and that such Holder has the right to require the Company to repurchase such
Holder's Securities at the Change of Control Purchase Price;
(2) the circumstances and relevant facts regarding such Change of
Control (including but not limited to information with respect to pro forma
historical income, cash flow and capitalization after giving effect to such
Change of Control);
(3) (i) the most recently filed Annual Report on Form 10-K
(including audited consolidated financial statements) of the Company, the
most recent subsequently filed Quarterly Report on Form 10-Q, as applicable,
and any Current Report on Form 8-K of the Company filed subsequent to such
Quarterly Report (or in the event the Company is not required to prepare any
of the foregoing Forms, the comparable information required to be prepared
by the Company and any Guarantor pursuant to Section 1020), (ii) a
description of material developments in the Company's business subsequent to
the date of the latest of such reports and (iii) such other information, if
any, concerning the business of the Company that the Company in good faith
believes will enable such Holders to make an informed investment decision;
(4) that the Change of Control Offer is being made pursuant to
this Section 1016(a) and that all Securities property tendered pursuant to
the Change of Control Offer will be accepted for payment at the Change of
Control Purchase Price;
(5) the Change of Control Purchase Date which shall be a Business
Day no earlier than 30 days nor later than 60 days from the date such notice
is mailed, or such later date as is necessary to comply with requirements
under the Exchange Act;
(6) the Change of Control Purchase Price;
(7) the names and addresses of the Paying Agent and the offices or
agencies referred to in Section 1002;
(8) that Securities must be surrendered on or prior to the Change
of Control Purchase Date to the Paying Agent at the office of the Paying
Agent or to an office or agency referred to in Section 1002 to collect
payment;
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(9) that the Change of Control Purchase Price for any Security
which has been properly tendered and not withdrawn will be paid promptly
following the Change of Control Offer Purchase Date;
(10) the procedures for withdrawing a tender of Securities and
Change of Control Purchase Notice;
(11) that any Security not tendered will continue to accrue
interest; and
(12) that, unless the Company defaults in the payment of the
Change of Control Purchase Price, any Security accepted for payment pursuant
to the Change of Control Offer shall cease to accrue interest after the
Change of Control Purchase Date.
(c) Upon receipt by the Company of the proper tender of Securities,
the Holder of the Security in respect of which such proper tender was made shall
(unless the tender of such Security is properly withdrawn) thereafter be
entitled to receive solely the Change of Control Purchase Price with respect to
such Security. Upon surrender of any such Security for purchase in accordance
with the foregoing provisions, such Security shall be paid by the Company at the
Change of Control Purchase Price; provided, however, that installments of
-------- -------
interest whose Stated Maturity is on or prior to the Change of Control Purchase
Date shall be payable to the Holders of such Securities, or one or more
Predecessor Securities, registered as such on the relevant Regular Record Dates
according to the terms and the provisions of Section 309. If any Security
tendered for purchase shall not be so paid upon surrender thereof, the principal
thereof (and premium, if any, thereon) shall, until paid, bear interest from the
Change of Control Purchase Date at the rate borne by such Security. Holders
electing to have Securities purchased will be required to surrender such
Securities to the Paying Agent at the address specified in the Change of Control
Purchase Notice at least two Business Days prior to the Change of Control
Purchase Date. Any Security that is to be purchased only in part shall be
surrendered to a Paying Agent at the office of such Paying Agent (with, if the
Company, the Security Registrar or the Trustee so requires, due endorsement by,
or a written instrument of transfer in form satisfactory to the Company and the
Security Registrar or the Trustee, as the case may be, duly executed by, the
Holder thereof or such Holder's attorney duly authorized in writing), and the
Company shall execute and the Trustee shall authenticate and deliver to the
Holder of such Security, without service charge, one or more new Securities of
any authorized denomination as requested by such Holder in an aggregate
principal amount equal to, and in exchange for, the portion of the principal
amount of the Security so surrendered that is not purchased.
(d) The Company shall (i) not later than the Change of Control
Purchase Date, accept for payment Securities or portions thereof tendered
pursuant to the Change of Control Offer, (ii) not later than 10:00 a.m. (New
York City time) on the Change of Control Purchase Date, deposit with the Paying
Agent an amount of cash sufficient to pay the aggregate Change of Control
Purchase Price of all the Securities or portions thereof which are to be
purchased as of the Change of Control Purchase Date and (iii) not later than the
Change of Control Purchase Date, deliver to the Paying Agent an Officers'
Certificate stating the Securities or portions thereof accepted for payment by
the Company. The Paying Agent shall promptly mail or deliver to Holders of
Securities so accepted payment in an amount equal to the Change of Control
Purchase Price of the Securities purchased from each such Holder, and the
Company shall execute and the Trustee shall promptly authenticate and mail or
make available for delivery to such Holders a new Security equal in principal
amount to any
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unpurchased portion of the Security surrendered. Any Securities not so accepted
shall be promptly returned by the Paying Agent at the Company's expense to the
Holder thereof. The Company will publicly announce the results of the Change of
Control Offer on the Change of Control Purchase Date. For purposes of this
Section 1016, the Company shall choose a Paying Agent which shall not be the
Company.
(e) A Change of Control Purchase Notice may be withdrawn before or
after delivery by the Holder to the Paying Agent at the office of the Paying
Agent of the Security to which such Change of Control Purchase Notice relates,
by means of a written notice of withdrawal delivered by the Holder to the Paying
Agent at the office of the Paying Agent or to the office or agency referred to
in Section 1002 to which the related Change of Control Purchase Notice was
delivered not later than three Business Days prior to the Change of Control
Purchase Date specifying, as applicable:
(1) the name of the Holder:
(2) the certificate number of the Security in respect of which such
notice of withdrawal is being submitted:
(3) the principal amount of the Security (which shall be $1,000 or an
integral multiple thereof) delivered for purchase by the Holder as to which
such notice of withdrawal is being submitted; and
(4) the principal amount, if any, of such Security (which shall be
$1,000 or an integral multiple thereof) that remains subject to the original
Change of Control Purchase Notice and that has been or will be delivered for
purchase by the Company.
(f) Subject to applicable escheat laws, the Trustee and the Paying
Agent shall return to the Company any cash that remains unclaimed, together with
interest or dividends, if any, thereon, held by them for the payment of the
Change of Control Purchase Price; provided, however, that (x) to the extent that
-------- -------
the aggregate amount of cash deposited by the Company pursuant to clause (ii) of
paragraph (d) above exceeds the aggregate Change of Control Purchase Price of
the Securities or portions thereof to be purchased, then the Trustee shall hold
such excess for the Company and (y) unless otherwise directed by the Company in
writing, promptly after the Business Day following the Change of Control
Purchase Date the Trustee shall return any such excess to the Company together
with interest, if any, thereon.
(g) The Company shall comply with the applicable tender offer rules,
including Rule 14e-1 under the Exchange Act, and any other applicable securities
laws or regulations in connection with a Change of Control Offer.
(h) The Company shall not, and shall not permit any Subsidiary to,
create or permit to exist or become effective any restriction (other than
restrictions existing under Indebtedness as in effect on the date of this
Indenture) that would materially impair the ability of the Company to make a
Change of Control Offer to purchase the Securities or, if such Change of Control
Offer is made, to pay for the Securities tendered for purchase.
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Section 1017. Limitation on Subsidiary Equity Interests.
-----------------------------------------
The Company shall not permit any Restricted Subsidiary of the Company
to issue any Equity Interests, except for (a) Equity Interests issued to and
held by the Company or a Wholly Owned Restricted Subsidiary, and (b) Equity
Interests issued by a Person prior to the time (A) such Person becomes a
Restricted Subsidiary, (B) such Person merges with or into a Restricted
Subsidiary or (C) a Restricted Subsidiary merges with or into such Person;
provided, that such Equity Interests were not issued or incurred by such Person
- --------
in anticipation of the type of transaction contemplated by subclause (A), (B) or
(C).
Section 1018. Limitation on Dividends and Other Payment Restrictions
------------------------------------------------------
Affecting Subsidiaries.
----------------------
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary of the Company to (i) pay dividends or make any other
distribution on its Equity Interests, (ii) pay any Indebtedness owed to the
Company or a Restricted Subsidiary of the Company, (iii) make any Investment in
the Company or a Restricted Subsidiary of the Company or (iv) transfer any of
its properties or assets to the Company or any Restricted Subsidiary, except (a)
any encumbrance or restriction pursuant to an agreement in effect on the date of
this Indenture and listed on Schedule III hereto; (b) any encumbrance or
restriction, with respect to a Restricted Subsidiary that is not a Subsidiary of
the Company on the date of this Indenture, in existence at the time such Person
becomes a Restricted Subsidiary of the Company and not incurred in connection
with, or in contemplation of, such Person becoming a Restricted Subsidiary; (c)
any encumbrance or restriction existing under any agreement that extends,
renews, refinances or replaces the agreements containing the encumbrances or
restrictions in the foregoing clauses (a) and (b), or in this clause (c),
provided that the terms and conditions of any such encumbrances or restrictions
- --------
are not materially less favorable to the Holders of the Securities than those
under or pursuant to the agreement evidencing the Indebtedness so extended,
renewed, refinanced or replaced or are not more restrictive than those set forth
in this Indenture; and (d) any encumbrance or restriction created pursuant to an
asset sale agreement, stock sale agreement or similar instrument pursuant to
which an Asset Sale permitted under Section 1013 is to be consummated, so long
as such restriction or encumbrance shall be effective only for a period from the
execution and delivery of such agreement or instrument through a termination
date not later than 270 days after such execution and delivery.
Section 1019. Limitation on Unrestricted Subsidiaries.
---------------------------------------
The Company shall not make, and shall not permit any of its Restricted
Subsidiaries to make, any Investments in Unrestricted Subsidiaries if, at the
time thereof, the aggregate amount of such Investments would exceed the amount
of Restricted Payments then permitted to be made pursuant to Section 1009. Any
Investments in Unrestricted Subsidiaries permitted to be made pursuant to this
covenant (i) will be treated as the payment of a Restricted Payment in
calculating the amount of Restricted Payments made by the Company and (ii) may
be made in cash or property.
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Section 1020. Provision of Financial Statements.
---------------------------------
Whether or not the Company is subject to Section 13(a) or 15(d) of the
Exchange Act, file with the Commission the annual reports, quarterly reports,
information and other documents which the Company would have been required to
file with the Commission pursuant to such Sections 13(a) or 15(d) if the Company
were so subject, such documents to be filed with the Commission on or prior to
the respective dates (the "REQUIRED FILING DATES") by which the Company would
have been required so to file such documents if the Company were so subject.
The Company will also in any event (x) within 15 days of each Required Filing
Date (i) transmit by mail to all Holders, as their names and addresses appear in
the Security Register, without cost to such Holders and (ii) file with the
Trustee copies of the annual reports, quarterly reports, information and other
documents which the Company would have been required to file with the Commission
pursuant to Section 13(a) or 15(d) of the Exchange Act if the Company were
subject to such Sections, (y) if filing such documents by the Company with the
Commission is not permitted under the Exchange Act, promptly upon written
request and payment of the reasonable cost of duplication and delivery, supply
copies of such documents to any prospective Holder at the Company's cost, and
(z) otherwise comply with Section 314(a) of the Trust Indenture Act. In
addition, if the Company has any Unrestricted Subsidiary at such time, it shall
also file with the Trustee, and provide to the Holders, on the same quarterly
basis, all quarterly and annual financial statements (which statements may be
unaudited) as would be required by Forms 10-Q and 10-K if such Subsidiary were
not an Unrestricted Subsidiaries.
Section 1021. Statement by Officers as to Default.
-----------------------------------
(a) The Company will deliver to the Trustee, on or before a date not
more than 60 days after the end of each fiscal quarter and not more than 120
days after the end of each fiscal year of the Company ending after the date
hereof, a written statement signed by two executive officers of the Company, one
of whom shall be the principal executive officer, principal financial officer or
principal accounting officer or the Company, stating whether or not, after a
review of the activities of the Company during such year or such quarter and of
the Company's performance under this Indenture, to the best knowledge, based on
such review, of the signers thereof, the Company has fulfilled all its
obligations and is in compliance with all conditions and covenants under this
Indenture throughout such year or quarter, as the case may be, and, if there has
been a Default specifying each Default and the nature and status thereof.
(b) When any Default or Event of Default has occurred and is
continuing, or if the Trustee or any Holder or the trustee for or the holder of
any other evidence of Indebtedness of the Company or any Subsidiary gives any
notice or takes any other action with respect to a claimed default (other than
with respect to Indebtedness in the principal amount of less than $5,000,000),
the Company shall deliver to the Trustee by registered or certified mail or by
telegram, overnight courier or facsimile transmission followed by hard copy an
Officers' Certificate specifying such Default, Event of Default, notice or other
action within five Business Days of its occurrence.
Section 1022. Waiver of Certain Covenants.
---------------------------
The Company may omit in any particular instance to comply with any
covenant or condition set forth in Sections 1006 through 1012, 1014, 1015 and
1017 through 1020, if, before or after the time for such compliance, the Holders
of not less than a majority in aggregate principal
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amount of the Securities at the time Outstanding shall, by Act of such Holders,
waive such compliance in such instance with such covenant or condition, but no
such waiver shall extend to or affect such covenant or condition except to the
extent so expressly waived, and, until such waiver shall become effective, the
obligations of the Company and the duties of the Trustee in respect of any such
covenant or condition shall remain in full force and effect.
Section 1023. Limitation on Asset Swaps.
-------------------------
The Company will not, and will not permit any Restricted Subsidiary
to, engage in Asset Swaps, unless: (i) at the time of entering into such Asset
Swap, and immediately after giving effect to such Asset Swap, no Default or
Event of Default shall have occurred and be continuing or would occur as a
consequence thereof; and (ii) the Company or such Restricted Subsidiary receives
consideration at the time of such Asset Swap at least equal to the Fair Market
Value of the properties or assets exchanged as determined in writing by a
nationally recognized investment banking or appraisal firm.
ARTICLE XI
----------
REDEMPTION OF SECURITIES
------------------------
Section 1101. Rights of Redemption.
--------------------
(a) The Securities may be redeemed at the election of the Company, in
whole or in part, at any time on or after October 1, 2002, subject to the
conditions, and at the Redemption Price, specified in the form of Security,
together with accrued and unpaid interest, if any, to the Redemption Date.
(b) At any time on or prior to October 1, 2000, the Company may redeem
up to $50,000,000 of the aggregate principal amount of Securities with the net
proceeds of a Public Equity Offering of the Company subject to the conditions,
and at the Redemption Price, specified in the form of Security, together with
accrued and unpaid interest, if any, to the Redemption Date.
Section 1102. Applicability of Article.
------------------------
Redemption of Securities at the election of the Company or otherwise,
as permitted or required by any provision of this Indenture, shall be made in
accordance with such provision and this Article.
Section 1103. Election to Redeem; Notice to Trustee.
-------------------------------------
The election of the Company to redeem any Securities pursuant to
Section 1101 shall be evidenced by a Company Order and an Officers' Certificate.
In case of any redemption at the elec tion of the Company, the Company shall,
not less than 45 nor more than 60 days prior to the Redemption Date fixed by the
Company (unless a shorter notice period shall be satisfactory to the Trustee),
notify the Trustee in writing of such Redemption Date and of the principal
amount of Securities to be redeemed.
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Section 1104. Selection by Trustee of Securities to Be Redeemed.
-------------------------------------------------
If less than all the Securities are to be redeemed, the particular
Securities or portions thereof to be redeemed shall be selected not more than 60
days and not less than 30 days prior to the Redemption Date by the Trustee from
the Outstanding Securities not previously called for redemption, pro rata, by
lot or such other method as the Trustee shall deem fair and reasonable, and the
amounts to be redeemed may be equal to $1,000 or any integral multiple thereof.
The Trustee shall promptly notify the Company and the Security
Registrar in writing of the Securities selected for redemption and, in the case
of any Securities selected for partial redemption, the principal amount thereof
to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to redemption of Securities shall relate, in
the case of any Security redeemed or to be redeemed only in part, to the portion
of the principal amount of such Security which has been or is to be redeemed.
Section 1105. Notice of Redemption.
--------------------
Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption
Date, to each Holder of Securities to be redeemed, at his address appearing in
the Security Register.
All notices of redemption shall state:
(a) the Redemption Date;
(b) the Redemption Price;
(c) if less than all Outstanding Securities are to be redeemed, the
identification of the particular Securities to be redeemed;
(d) in the case of a Security to be redeemed in part, the principal
amount of such Security to be redeemed and that after the Redemption Date upon
surrender of such Security, a new Security or Securities in the aggregate
principal amount equal to the unredeemed portion thereof will be issued;
(e) that Securities called for redemption must be surrendered to the
Paying Agent to collect the Redemption Price;
(f) that on the Redemption Date the Redemption Price will become due
and payable upon each such Security or portion thereof, and that (unless the
Company shall default in payment of the Redemption Price) interest thereon shall
cease to accrue on and after said date;
(g) the place or places where such Securities are to be surrendered
for payment of the Redemption Price; and
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(h) the CUSIP number, if any, relating to such Securities.
Notice of redemption of Securities to be redeemed at the election of
the Company shall be given by the Company or, at the Company's written request,
by the Trustee in the name and at the expense of the Company.
The notice, if mailed in the manner herein provided, shall be
conclusively presumed to have been given whether or not the Holder receives such
notice. In any case, failure to give such notice to any Holder of any Security
designated for redemption as a whole or in part, or any defect in any such
notice, shall not affect the validity of the proceedings for the redemption of
any other Security.
Section 1106. Deposit of Redemption Price.
---------------------------
On or prior to 10:00 a.m. (New York time) on any Redemption Date, the
Company shall deposit with the Trustee or with a Paying Agent (or, if the
Company is acting as its own Paying Agent, segregate and hold in trust as
provided in Section 1003) an amount of money in same day funds sufficient to pay
the Redemption Price of and (except if the Redemption Date shall be an Interest
Payment Date) accrued interest on, all the Securities or portions thereof which
are to be redeemed on that date. When the Redemption Date falls on an Interest
Payment Date, payments of interest due on such date are to be paid as provided
hereunder as if no such redemption were occurring.
Section 1107. Securities Payable on Redemption Date.
-------------------------------------
Notice of redemption having been given as aforesaid, the Securities so
to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest) such Securities shall cease to bear interest. Upon surrender of any
such Security for redemption in accordance with said notice, such Security shall
be paid by the Company at the Redemption Price together with accrued interest to
the Redemption Date; provided, however, that installments of interest whose
-------- -------
Stated Maturity is on or prior to the Redemption Date shall be payable to the
Holders of such Securities, or one or more Predecessor Securities, registered as
such on the relevant Regular Record Dates according to the terms and the
provisions of Section 309.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal and premium, if any, shall,
until paid, bear interest from the Redemption Date at the rate borne by such
Security.
Section 1108. Securities Redeemed or Purchased in Part.
----------------------------------------
Any Security which is to be redeemed or purchased only in part shall
be surrendered to the Paying Agent at the office or agency maintained for such
purpose pursuant to Section 1002 (with, if the Company, the Security Registrar
or the Trustee so requires, due endorsement by, or a written instrument of
transfer in form satisfactory to the Company, the Security Registrar or the
Trustee duly executed by, the Holder thereof or such Holder's attorney duly
authorized in writing), and the Company shall execute, and the Trustee shall
authenticate and make available delivery to the Holder
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of such Security without service charge, a new Security or Securities, of any
authorized denomination as requested by such Holder in aggregate principal
amount equal to, and in exchange for, the unredeemed portion of the principal of
the Security so surrendered that is not redeemed or purchased.
ARTICLE XII
-----------
SUBORDINATION OF SECURITIES
---------------------------
Section 1201. Securities Subordinate to Senior Indebtedness.
---------------------------------------------
The Company covenants and agrees, and each Holder of a Security, by
his acceptance thereof, likewise covenants and agrees, that, to the extent and
in the manner hereinafter set forth in this Article, the Indebtedness
represented by the Securities and the payment of the principal of, premium, if
any, and interest on each and all of the Securities and all other Indenture
Obligations are hereby expressly made subordinate and subject in right of
payment as provided in this Article to the prior payment in full, in cash or
Cash Equivalents or in any other form as acceptable to the holders of Senior
Indebtedness, of all Senior Indebtedness.
This Article Twelve shall constitute a continuing offer to all Persons
who, in reliance upon such provisions, become holders of, or continue to hold
Senior Indebtedness; and such provisions are made for the benefit of the holders
of Senior Indebtedness; and such holders are made obligees hereunder and they or
each of them may enforce such provisions.
Section 1202. Payment Over of Proceeds Upon Dissolution, etc..
-----------------------------------------------
In the event of (a) any insolvency or bankruptcy case or proceeding,
or any receivership, liquidation, reorganization or other similar case or
proceeding in connection therewith, relative to the Company or to its creditors,
as such, or to its assets, or (b) any liquidation, dissolution or other winding
up of the Company, whether voluntary or involuntary and whether or not involving
insolvency or bankruptcy, or (c) any assignment for the benefit of creditors or
any other marshaling of assets or liabilities of the Company, then and in any
such event:
(1) the holders of Senior Indebtedness shall be entitled to receive
payment in full in cash or Cash Equivalents or in any other form as acceptable
to the holders of Senior Indebtedness, of all amounts due on or in respect of
all Senior Indebtedness, before the Holders of the Securities are entitled to
receive any payment or distribution of any kind or character (excluding
Permitted Junior Securities) on account of the principal of, premium, if any, or
interest on the Securities or any other Indenture Obligations; and
(2) any payment or distribution of assets of the Company of any kind
or character, whether in cash, property or securities (excluding Permitted
Junior Securities), by set-off or otherwise, to which the Holders or the Trustee
would be entitled but for the provisions of this Article shall be paid by the
liquidating trustee or agent or other Person making such payment or
distribution, whether a trustee in bankruptcy, a receiver or liquidating trustee
or otherwise, directly to the holders of Senior
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Indebtedness or their representative or representatives or to the trustee or
trustees under any indenture under which any instruments evidencing any of such
Senior Indebtedness may have been issued, ratably according to the aggregate
amounts remaining unpaid on account of the Senior Indebtedness held or
represented by each, to the extent necessary to make payment in full in cash or
Cash Equivalents or in any other form as acceptable to the Holders of Senior
Indebtedness, of all Senior Indebtedness remaining unpaid, after giving effect
to any concurrent payment or distribution to the holders of such Senior
Indebtedness; and
(3) in the event that, notwithstanding the foregoing provisions of
this Section, the Trustee or the Holder of any Security shall have received any
payment or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, in respect of principal, premium, if
any, and interest on the Securities or any other Indenture Obligations before
all Senior Indebtedness is paid in full, then and in such event such payment or
distribution (excluding Permitted Junior Securities) shall be paid over or
delivered forthwith to the trustee in bankruptcy, receiver, liquidating trustee,
custodian, assignee, agent or other person making payment or distribution of
assets of the Company for application to the payment of all Senior Indebtedness
remaining unpaid, to the extent necessary to pay all Senior Indebtedness in full
in cash or Cash Equivalents or in any other form as acceptable to the holders of
Senior Indebtedness, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Indebtedness.
The consolidation of the Company with, or the merger of the Company
with or into, another Person or the liquidation or dissolution of the Company
following the sale, assignment, conveyance, transfer, lease or other disposal
of all or substantially all of the Company's properties or assets to another
Person upon the terms and conditions set forth in Article Eight shall not be
deemed a dissolution, winding up, liquidation, reorganization, assignment for
the benefit of creditors or marshaling of assets and liabilities of the Company
for the purposes of this Section if the Person formed by such consolidation or
the surviving entity of such merger or the Person which acquires by sale,
assignment, conveyance, transfer, lease or other disposal of all or
substantially all of the Company's properties or assets, as the case may be,
shall, as a part of such consolidation, merger, sale, assignment, conveyance,
transfer, lease or other disposal, comply with the conditions set forth in
Article Eight.
Section 1203. Suspension of Payment When Senior Indebtedness in
-------------------------------------------------
Default.
-------
(a) Unless Section 1202 shall be applicable, upon the occurrence of a
Payment Default, no payment (other than any payments previously made pursuant to
the provisions described in Article Four) or distribution of any assets of the
Company, of any, kind or character (excluding Permitted Junior Securities) shall
be made by the Company on account of principal of, premium, if any, or interest
on, the Securities or any other Indenture Obligations or on account of the
purchase, redemption, defeasance (whether under Section 402 or 403) or other
acquisition of or in respect of the Securities unless and until such Payment
Default shall have been cured or waived or shall have ceased to exist or the
Designated Senior Indebtedness with respect to which such Payment Default shall
have occurred shall have been discharged or paid in full in cash or Cash
Equivalents or in any other form as acceptable to the Holders of such Designated
Senior Indebtedness, after which the Company shall resume making any and all
required payments in respect of the Securities, including any missed payments.
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(b) Unless Section 1202 shall be applicable, upon (1) the occurrence
of a Non-payment Default and (2) receipt by the Trustee from the representative
of the holders of Designated Senior Indebtedness (a "SENIOR REPRESENTATIVE") of
written notice of such occurrence, no payment (other than any payments
previously made pursuant to the provisions described in Article Four) or
distribution of any assets of the Company of any kind or character (excluding
Permitted Junior Securities) shall be made by the Company on account of any
principal of, premium, if any, or interest on, the Securities or any other
Indenture Obligations or on account of the purchase, redemption, defeasance or
other acquisition of or in respect of Securities for a period ("PAYMENT BLOCKAGE
PERIOD") commencing on the date of receipt by the Trustee of such notice unless
and until the earliest of (subject to any blockage of payments that may then or
thereafter be in effect under subsection (a) of this Section 1203) (x) 179 days
having elapsed since receipt of such written notice by the Trustee (provided
such Designated Senior Indebtedness as to which notice was given shall
theretofore have not been accelerated), (y) the date such Non-payment Default
(and all Non-payment Defaults as to which notice is also given after such period
is initiated) shall have been cured or waived or shall have ceased to exist or
the Designated Senior Indebtedness related thereto shall have been discharged or
paid in full in cash or Cash Equivalents or in any other form as acceptable to
the Holders of Designated Senior Indebtedness, or (z) the date on which such
Payment Blockage Period (and all Non-payment Defaults as to which notice is
given after such Payment Blockage Period is initiated) shall have been
terminated by written notice to the Trustee from the Senior Representative,
after which, in each such case, the Company shall resume making any and all
required payments in respect of the Securities, including any missed payments.
Notwithstanding any other provision of this Indenture, in no event shall a
Payment Blockage Period extend beyond 179 days from the date of the receipt by
the Company or the Trustee of the notice referred to in clause (2) of this
paragraph (b) (the "INITIAL BLOCKAGE PERIOD"). Any number of notices of Non-
payment Defaults may be given during the Initial Blockage Period; provided that
--------
during any 365-day consecutive period only one Payment Blockage Period during
which payment of principal of, or interest on, the Securities may not be made
may commence and the duration of the Payment Blockage Period may not exceed 179
days. No Non-payment Default with respect to Designated Senior Indebtedness
which existed or was continuing on the date of the commencement of any Payment
Blockage Period will be, or can be, made the basis for the commencement of a
second Payment Blockage Period, whether or not within a period of 365
consecutive days, unless such default shall have been cured or waived for a
period of not less than 90 consecutive days.
(c) In the event that, notwithstanding the foregoing, the Company
shall make any payment to the Trustee or the Holder of any Security prohibited
by the foregoing provisions of this Section, then and in such event such payment
shall be paid over and delivered forthwith to a Senior Representative of the
holders of the Designated Senior Indebtedness or as a court of competent
jurisdiction shall direct.
Section 1204. Payment Permitted if No Default.
-------------------------------
Nothing contained in this Article, elsewhere in this Indenture or in
any other Securities shall prevent the Company, at any time except during the
pendency of any case, proceeding, dissolution, liquidation or other winding up,
assignment for the benefit of creditors or other marshaling of assets and
liabilities of the Company referred to in Section 1202 or under the conditions
described in Section 1203, from making payments at any time of principal of,
premium, if any, or interest on the Securities.
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Section 1205. Subrogation to Rights of Holders of Senior
------------------------------------------
Indebtedness.
------------
Subject to the payment in full of all Senior Indebtedness in cash or
Cash Equivalents or in any other form as acceptable to the holders of Senior
Indebtedness, the Holders of the Securities shall be subrogated to the rights of
the holders of such Senior Indebtedness to receive payments and distributions of
cash, property and securities applicable to the Senior Indebtedness until the
principal of, premium, if any, and interest on the Securities shall be paid in
full. For purposes of such subrogation, no payments or distributions to the
holders of Senior Indebtedness of any cash, property or securities to which the
Holders or the Trustee would be entitled except for the provisions of this
Article, and no payments over pursuant to the provisions of this Article to the
holders of Senior Indebtedness by Holders of the Securities or the Trustee,
shall, as among the Company, its creditors other than holders of Senior
Indebtedness, and the Holders of the Securities, be deemed to be a payment or
distribution by the Company to or on account of the Senior Indebtedness.
Section 1206. Provisions Solely to Define Relative Rights.
-------------------------------------------
The provisions of this Article are intended solely for the purpose of
defining the relative rights of the Holders of the Securities on the one hand
and the holders of Senior Indebtedness on the other hand. Nothing contained in
this Article or elsewhere in this Indenture or in the Securities is intended to
or shall (a) impair, as among the Company, its creditors other than holders of
Senior Indebtedness and the Holders of the Securities, the obligation of the
Company, which is absolute and unconditional, to pay to the Holders of the
Securities the principal of, premium, if any, and interest on the Securities as
and when the same shall become due and payable in accordance with their terms;
or (b) affect the relative rights against the Company of the Holders of the
Securities and creditors of the Company other than the holders of Senior
Indebtedness; or (c) prevent the Trustee or the Holder of any Security from
exercising all remedies otherwise permitted by applicable law upon default under
this Indenture, subject to the rights, if any, under this Article of the holders
of Senior Indebtedness (1) in any case, proceeding, dissolution, liquidation or
other winding up, assignment for the benefit of creditors or other marshaling of
assets and liabilities of the Company referred to in Section 1202, to receive,
pursuant to and in accordance with such Section, cash, property and securities
otherwise payable or deliverable to the Trustee or such Holder, or (2) under the
conditions specified in Section 1203, to prevent any payment prohibited by such
Section or enforce their rights pursuant to Section 1203(c).
Section 1207. Trustee to Effectuate Subordination.
-----------------------------------
Each Holder of a Security by his acceptance thereof authorizes and
directs the Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate the subordination provided in this Article and
appoints the Trustee his attorney-in-fact for any and all such purposes,
including, in the event of any dissolution, winding-up, liquidation or
reorganization of the Company whether in bankruptcy, insolvency, receivership
proceedings, or otherwise, the timely filing of a claim for the unpaid balance
of the Indebtedness of the Company owing to such Holder in the form required in
Such proceedings and the causing of such claim to be approved.
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Section 1208. No Waiver of Subordination Provisions.
-------------------------------------
(a) No right of any present or future holder of any Senior
Indebtedness to enforce subordination as herein provided shall at any time in
any way be prejudiced or impaired by any act or failure to act on the part of
the Company or by any act or failure to act by any such holder, or by any non-
compliance by the Company with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof any such holder may have or be
otherwise charged with.
(b) Without limiting the generality of Subsection (a) of this Section
and notwithstanding any other provision contained herein, the holders of Senior
Indebtedness may, at any time and from time to time, without the consent of or
notice to the Trustee or the Holders of the Securities, without incurring
responsibility to the Holders of the Securities and without impairing or
releasing the subordination provided in this Article or the obligations
hereunder of the Holders of the Securities to the holders of Senior
Indebtedness, do any one or more of the following: (1) change the manner, place
or terms of payment or extend the time of payment of, or renew or alter, Senior
Indebtedness or any instrument evidencing the same or any agreement under which
Senior Indebtedness is outstanding; (2) sell, exchange, release or otherwise
deal with any property pledged, mortgaged or otherwise securing Senior
Indebtedness; (3) release any Person liable in any manner for the collection or
payment of Senior Indebtedness; and (4) exercise or refrain from exercising any
rights against the Company and any other Person, provided, however, that in no
-------- -------
event shall any such actions limit the right of the Holders of the Securities to
take any action to accelerate the maturity of the Securities in accordance with
the provisions set forth in Article Five or to pursue any rights or remedies
under this Indenture or under applicable laws if the taking of such action does
not otherwise violate the terms of this Article.
Section 1209. Notice to Trustee.
-----------------
(a) The Company shall give prompt written notice to the Trustee of any
fact known to the Company which would prohibit the making of any payment to or
by the Trustee in respect of the Securities or other Indenture Obligations.
Notwithstanding the provisions of this Article or any provision of this
Indenture, the Trustee shall not be charged with knowledge of the existence of
any facts which would prohibit the making of any payment to or by the Trustee in
respect of the Securities, unless and until the Trustee shall have received
written notice thereof from the Company or a holder of Senior Indebtedness or
from a Senior Representative or any trustee, fiduciary or agent therefor; and,
prior to the receipt of any such written notice, the Trustee shall be entitled
in all respects to assume that no such facts exist; provided, however, that if
-------- -------
the Trustee shall not have received the notice provided for in this Section
prior to the date upon which by the terms hereof any money may become payable
for any purpose (including, without limitation, the payment of the principal of,
premium, if any, or interest on any Security or other Indenture Obligations),
then, anything herein contained to the contrary notwithstanding but without
limiting the rights and remedies of the holders of Senior Indebtedness or any
trustee, fiduciary or agent thereof, the Trustee shall have full power and
authority to receive such money and to apply the same to the purpose for which
such money was received and shall not be affected by any notice to the contrary
which may be received by it after such date; nor shall the Trustee be charged
with knowledge of the curing of any such default or the elimination of the act
or condition preventing any such payment unless and until the Trustee shall have
received an Officers' Certificate to such effect.
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(b) The Trustee shall be entitled to rely on the delivery to it of a
written notice to the Trustee and the Company by a Person representing himself
to be a Senior Representative or a holder of Senior Indebtedness (or a trustee,
fiduciary or agent therefor) to establish that such notice has been given by a
Senior Representative or a holder of Senior Indebtedness (or a trustee,
fiduciary or agent therefor); provided, however, that failure to give such
-------- -------
notice to the Company shall not affect in any way the ability of the Trustee to
rely on such notice. In the event that the Trustee determines in good faith
that further evidence is required with respect to the right of any Person as a
holder of Senior Indebtedness to participate in any payment or distribution
pursuant to this Article, the Trustee may request such Person to furnish
evidence to the reasonable satisfaction of the Trustee as to the amount of
Senior Indebtedness held by such Person, the extent to which such Person is
entitled to participate in such payment or distribution and any other facts
pertinent to the rights of such Person under this Article, and if such evidence
is not furnished, the Trustee may defer any payment to such Person pending
judicial determination as to the right of such Person to receive such payment.
Section 1210. Reliance on Judicial Order or Certificate of
--------------------------------------------
Liquidating Agent.
-----------------
Upon any payment or distribution of assets of the Company referred to
in this Article, the Trustee and the Holders of the Securities shall be entitled
to rely upon any order or decree entered by any court of competent jurisdiction
in which such insolvency, bankruptcy, receivership, liquidation, reorganization,
dissolution, winding up or similar case or proceeding is pending, or a
certificate of the trustee in bankruptcy, receiver, liquidating trustee,
custodian, assignee for the benefit of creditors, agent or other person making
such payment or distribution, delivered to the Trustee or to the Holders of
Securities, for the purpose of ascertaining the Persons entitled to participate
in such payment or distribution, the holders of Senior Indebtedness and other
Indebtedness of the Company, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon and all other facts pertinent thereto or
to this Article, provided that the foregoing shall apply only if such court has
--------
been fully apprised of the provisions of this Article.
Section 1211. Rights of Trustee as a Holder of Senior Indebtedness
----------------------------------------------------
Preservation of Trustee's Rights.
--------------------------------
The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article with respect to any Senior Indebtedness which
may at any time be held by it, to the same extent as any other holder of Senior
Indebtedness, and nothing in this Indenture shall deprive the Trustee of any of
its rights as such holder. Nothing in this Article shall apply to claims of, or
payments to, the Trustee under or pursuant to Section 606.
Section 1212. Article Applicable to Paying Agents.
-----------------------------------
In case at any time any Paying Agent other than the Trustee shall have
been appointed by the Company and be then acting under this Indenture. the term
"TRUSTEE" as used in this Article shall in such case (unless the context
otherwise requires) be construed as extending to and including such Paying Agent
within its meaning as fully for all intents and purposes as if such Paying Agent
were named in this Article in addition to or in place of the Trustee; provided,
--------
however, that Section 1211 shall not apply to the Company or any Affiliate of
- -------
the Company if it or such Affiliate acts as Paying Agent.
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Section 1213. No Suspension of Remedies.
-------------------------
Nothing contained in this Article shall limit the right of the Trustee
or the Holders of Securities to take any action to accelerate the maturity of
the Securities pursuant to Article Five and as set forth in this Indenture or to
pursue any rights or remedies hereunder or under applicable law, subject to the
rights, if any, under this Article of the holders, from time to time, of Senior
Indebtedness to receive the cash, property, or securities receivable upon the
exercise of such rights or remedies.
Section 1214. Trustee's Relation to Senior Indebtedness.
-----------------------------------------
With respect to the holders of Senior Indebtedness. the Trustee
undertakes to perform or to observe only such of its covenants and obligations
as are specifically, set forth in this Article, and no implied covenants or
obligations with respect to the holders of Senior Indebtedness shall be read
into this Article against the Trustee. The Trustee shall not be deemed to owe
any fiduciary duty to the holders of Senior Indebtedness and the Trustee shall
not be liable to any holder of Senior Indebtedness if it shall mistakenly in the
absence of gross negligence or willful misconduct pay over or deliver to
Holders, the Company or any other Person moneys or assets to which any holder of
Senior Indebtedness shall be entitled by virtue of this Article or otherwise.
ARTICLE XIII
------------
SATISFACTION AND DISCHARGE
--------------------------
Section 1301. Satisfaction and Discharge of Indenture.
---------------------------------------
This Indenture shall cease to be of further effect (except as to
surviving rights of registration of transfer or exchange of Securities herein,
rights to payment, including Penalty Amounts, and rights to replacement of
stolen, lost or mutilated Securities expressly provided for) and the Trustee, on
demand of and at the expense of the Company, shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture, when
(a) either:
(1) all the Securities theretofore authenticated and delivered
(other than (i) Securities which have been destroyed, lost or stolen and
which have been replaced or paid as provided in Section 308 or (ii) all
Securities for whose payment United States dollars have theretofore been
deposited in trust or segregated and held in trust by the Company and
thereafter repaid to the Company or discharged from such trust, as provided
in Section 1003) have been delivered to the Trustee for cancellation; or
(2) all such Securities not theretofore delivered to the Trustee
for cancellation (x) have become due and payable, (y) will become due and
payable at their Stated Maturity within one year, or (z) are to be called
for redemption within one year under arrangements satisfactory to the
Trustee for the giving of notice of redemption by the Trustee in the name,
and at the expense, of the Company, and the Company or any Guarantor, in the
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case of (2)(x), (y) or (z) above, has irrevocably deposited or caused to be
deposited with the Trustee as trust funds in trust for that purpose an
amount in United States dollars sufficient to pay and discharge the entire
Indebtedness on the Securities not theretofore delivered to the Trustee for
cancellation, for the principal of, premium, if any, and accrued interest at
such Stated Maturity or Redemption Date;
(b) the Company or any Guarantor has paid or caused to be paid all
other sums payable hereunder by the Company or any Guarantor; and
(c) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel stating that (i) all conditions precedent herein
provided for relating to the satisfaction and discharge of this Indenture have
been complied with and (ii) such satisfaction and discharge will not result in a
breach or violation of or constitute a default under, this Indenture or any
other material agreement or instrument to which the Company or any Guarantor is
a party or by which the Company or any Guarantor is bound.
Opinions of Counsel required to be delivered under this Section may
have qualifications customary for opinions of the type required and counsel
delivering such Opinions of Counsel may rely on certificates of the Company or
government or other officials customary for opinions of the type required,
including certificates certifying as to matters of fact, including that various
financial covenants have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 606 and, if United
States dollars shall have been deposited with the Trustee pursuant to subclause
(2) of Subsection (a) of this Section. the obligations of the Trustee under
Section 1302 and the last paragraph of Section 1003 shall survive.
Section 1302. Application of Trust Money.
--------------------------
Subject to the provisions of the last paragraph of Section 1003, all
United States dollars deposited with the Trustee pursuant to Section 1301 shall
be held in trust and applied by it, in accordance with the provisions of the
Securities and this Indenture, to the payment, either directly or through any
Paying Agent (including the Company acting as its own Paying Agent) as the
Trustee may determine, to the Persons entitled thereto, of the principal of,
premium, if any, and interest on the Securities for whose payment such United
States dollars have been deposited with the Trustee.
ARTICLE XIV
-----------
GUARANTEE
---------
Section 1401. Guarantors' Guarantee.
---------------------
For value received, each of the Guarantors, in accordance with this
Article Fourteen, hereby absolutely, unconditionally and irrevocably guarantees,
jointly and severally, to the Trustee and the Holders, as if the Guarantors were
the principal debtor, the punctual payment and performance when due of all
Indenture Obligations (which for purposes of this Guarantee shall also be deemed
to
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include all commissions, fees, charges, costs and other expenses (including
reasonable legal fees and disbursements of one counsel in connection with any
one action or separate but similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances) arising out of or
incurred by the Trustee or the Holders in connection with the enforcement of
this Guarantee).
Section 1402. Continuing Guarantee; No Right of Set-Off; Independent
------------------------------------------------------
Obligation.
----------
(a) This Guarantee shall be a continuing guarantee of the payment and
performance of all Indenture Obligations and shall remain in full force and
effect until the payment in full of all of the Indenture Obligations and shall
apply to and secure any ultimate balance due or remaining unpaid to the Trustee
or the Holders; and this Guarantee shall not be considered as wholly or
partially satisfied by the payment or liquidation at any time or from time to
time of any sum of money for the time being due or remaining unpaid to the
Trustee or the Holders. Each Guarantor, jointly and severally, covenants and
agrees to comply with all obligations, covenants, agreements and provisions
applicable to it in this Indenture including those set forth in Article Eight.
Without limiting the generality of the foregoing, each of the Guarantors'
liability shall extend to all amounts which constitute part of the Indenture
Obligations and would be owed by the Company under this Indenture and the
Securities but for the fact that they are unenforceable, reduced, limited,
impaired, suspended or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving the Company.
(b) Each Guarantor, jointly and severally, hereby guarantees that the
Indenture Obligations will be paid to the Trustee without set-off or
counterclaim or other reduction whatsoever (whether for taxes, withholding or
otherwise) in lawful currency of the United States of America.
(c) Each Guarantor, jointly and severally, guarantees that the
Indenture Obligations shall be paid strictly in accordance with their terms
regardless of any law, regulation or order now or hereafter in effect in any
jurisdiction affecting any of such terms or the rights of the holders of the
Securities.
(d) Each Guarantor's liability to pay or perform or cause the
performance of the Indenture Obligations under this Guarantee shall arise
forthwith after demand for payment or performance by the Trustee has been given
to the Guarantors in the manner prescribed in Section 106 hereof.
(e) Except as provided herein, the provisions of this Article Fourteen
cover all agreements between the parties hereto relative to this Guarantee and
none of the parties shall be bound by any representation, warranty or promise
made by any Person relative thereto which is not embodied herein; and it is
specifically acknowledged and agreed that this Guarantee has been delivered by
each Guarantor free of any conditions whatsoever and that no representations,
warranties or promises have been made to any Guarantor affecting its liabilities
hereunder, and that the Trustee shall not be bound by any representations,
warranties or promises now or at any time hereafter made by the Company to any
Guarantor.
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Section 1403. Guarantee Absolute.
------------------
The obligations of the Guarantors hereunder are independent of the
obligations of the Company under the Securities and this Indenture and a
separate action or actions may be brought and prosecuted against any Guarantor
whether or not an action or proceeding is brought against the Company and
whether or not the Company is joined in any such action or proceeding. The
liability of the Guarantors hereunder is irrevocable, absolute and unconditional
and (to the extent permitted by law) the liability and obligations of the
Guarantors hereunder shall not be released, discharged, mitigated, waived,
impaired or affected in whole or in part by, and each Guarantor hereby expressly
waives to the fullest extent permitted by law any defense by reason of:
(a) any defect or lack of validity or enforceability in respect of any
Indebtedness or other obligation of the Company or any other Person
under this Indenture or the Securities, or any agreement or instrument
relating to any of the foregoing;
(b) any grants of time, renewals, extensions, indulgences, releases,
discharges or modifications which the Trustee or the Holders may
extend to, or make with, the Company, any Guarantor or any other
Person, or any change in the time, manner or place of payment of, or
in any other term of, all or any of the Indenture Obligations, or any
other amendment or waiver of, or any consent to or departure from,
this Indenture or the Securities, including any increase or decrease
in the Indenture Obligations;
(c) the taking of security from the Company, any Guarantor or any
other Person, and the release, discharge or alteration of, or other
dealing with, such security;
(d) the occurrence of any change in the laws, rules, regulations or
ordinances of any jurisdiction by any present or future action of any
governmental authority or court amending, varying, reducing or
otherwise affecting, or purporting to amend, vary, reduce or otherwise
affect, any of the Indenture Obligations and the obligations of any
Guarantor hereunder;
(e) the abstention from taking security from the Company, any,
Guarantor or any other Person or from perfecting, continuing to keep
perfected or taking advantage of any security;
(f) any loss, diminution of value or lack of enforceability of any
security received from the Company, any Guarantor or any other Person,
and including any other guarantees received by the Trustee:
(g) any other dealings with the Company, any Guarantor or any other
Person, or with any security;
(h) the Trustee's or the Holders' acceptance of compositions from the
Company or any Guarantor;
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(i) the application by the Holders or the Trustee of all monies at any
time and from time to time received from the Company, any Guarantor or
any other Person on account of any indebtedness and liabilities owing
by the Company or any Guarantor to the Trustee or the Holders, in such
manner as the Trustee or the Holders deems best and the changing of
such application in whole or in part and at any time or from time to
time, or any manner of application of collateral, if any, or proceeds
thereof, to all or any of the Indenture Obligations, or the manner of
sale of any such collateral;
(j) the release or discharge of the Company or any Guarantor of the
Securities or of any Person liable directly as surety or otherwise by
operation of law or otherwise for the Securities, other than an
express release in writing given by the Trustee, on behalf of the
Holders, of the liability and obligations of any Guarantor hereunder;
(k) any change in the name, business, capital structure or governing
instrument of the Company or any Guarantor or any refinancing or
restructuring of any of the Indenture Obligations;
(l) the sale of the Company's or any Guarantor's business or any part
thereof;
(m) subject to Section 1414, any merger or consolidation, arrangement
or reorganization of the Company, any Guarantor, any Person resulting
from the merger or consolidation of the Company or any Guarantor with
any other Person or any other successor to such Person or merged or
consolidated Person or any other change in the corporate existence,
structure or ownership of the Company or any Guarantor;
(n) the insolvency, bankruptcy, liquidation, winding-up, dissolution,
receivership or distribution of the assets of the Company or its
assets or any resulting discharge of any obligations of the Company
(whether voluntary or involuntary) or of any Guarantor or the loss of
corporate existence;
(o) subject to Section 1414, any arrangement or plan of reorganization
affecting the Company or any Guarantor;
(p) any other circumstance (including any statute of limitations) that
might otherwise constitute a defense available to, or discharge of,
the Company or any Guarantor;
(q) any modification, compromise, settlement or release by the
Trustee, or by operation of law or otherwise, of the Indenture
Obligations or the liability of the Company or any other obligor under
the Securities, in whole or in part, and any refusal of payment by the
Trustee, in whole or in part, from any other obligor or other
guarantor in connection with any of the Indenture Obligations, whether
or not with notice to, or further assent by, or any reservation of
rights against, each of the Guarantors;
(r) the illegality, invalidity or unenforceability of all or any part
of the Indenture Obligations, the Indenture or the Notes; or
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(s) any law that provides that the obligation of a surety or guarantor
must neither be larger in amount nor more burdensome than that of the
principal or which reduces a surety's or guarantor's obligation in
proportion to the principal obligation.
Section 1404. Right to Demand Full Performance.
--------------------------------
In the event of any demand for payment or performance by the Trustee
from any Guarantor hereunder, the Trustee or the Holders shall have the right to
demand its full claim and to receive all dividends or other payments in respect
thereof until the Indenture Obligations have been paid in full, and the
Guarantors shall continue to be jointly and severally liable hereunder for any
balance which may be owing to the Trustee or the Holders by the Company under
this Indenture and the Securities. The retention by the Trustee or the Holders
of any security, prior to the realization by the Trustee or the Holders of its
rights to such security upon foreclosure thereon, shall not, as between the
Trustee and any Guarantor, be considered as a purchase of such security, or as
payment, satisfaction or reduction of the Indenture Obligations due to the
Trustee or the Holders by the Company or any part thereof.
Section 1405. Waivers.
-------
(a) Each Guarantor hereby expressly waives (to the extent permitted by
law) notice of the acceptance of this Guarantee and notice of the existence,
renewal, extension or the non-performance, non-payment, or non-observance on the
part of the Company of any of the terms, covenants, conditions and provisions of
this Indenture or the Securities or any other notice whatsoever to or upon the
Company or such Guarantor with respect to the Indenture Obligations. Each
Guarantor hereby acknowledges communication to it of the terms of this Indenture
and the Securities and all of the provisions therein contained and consents to
and approves the same. Each Guarantor hereby expressly waives (to the extent
permitted by law) diligence, presentment, protest and demand for payment.
(b) Without prejudice to any of the rights or recourses which the
Trustee or the Holders may have against the Company, each Guarantor hereby
expressly waives (to the extent permitted by law) any right to require the
Trustee or the Holders to:
(i) initiate or exhaust any rights, remedies or recourse against
the Company, any Guarantor or any other Person;
(ii) value, realize upon, or dispose of any security of the
Company or any other Person held by the Trustee or the Holders:
or
(iii) initiate or exhaust any other remedy which the Trustee or
the Holders may have in law or equity;
before requiring or becoming entitled to demand payment from such Guarantor
under this Guarantee.
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Section 1406. The Guarantors Remain Obligated in Event the Company Is
-------------------------------------------------------
No Longer Obligated to Discharge Indenture Obligations.
------------------------------------------------------
It is the express intention of the Trustee and the Guarantors that if
for any reason the Company has no legal existence, is or becomes under no legal
obligation to discharge the Indenture Obligations owing to the Trustee or the
Holders by the Company or if any of the Indenture Obligations owing by the
Company to the Trustee or the Holders becomes irrecoverable from the Company by
operation of law or for any reason whatsoever, this Guarantee and the covenants,
agreements and obligations of the Guarantors contained in this Article Fourteen
shall nevertheless be binding upon the Guarantors, as principal debtor, until
such time as all such Indenture Obligations have been paid in full to the
Trustee and all Indenture Obligations owing to the Trustee or the Holders by the
Company have been discharged, or such earlier time as Section 402 shall apply to
the Securities and the Guarantors shall be responsible for the payment thereof
to the Trustee or the Holders upon demand.
Section 1407. Fraudulent Conveyance; Subrogation.
----------------------------------
(a) Any term or provision of this Guarantee to the contrary
notwithstanding, the aggregate amount of the Indenture Obligations guaranteed
hereunder shall be reduced to the extent necessary to prevent this Guarantee
from violating or becoming voidable under applicable law relating to fraudulent
conveyance or fraudulent transfer or similar laws affecting the rights of
creditors generally.
(b) Each Guarantor hereby waives all rights of subrogation or
contribution, whether arising by contract or operation of law (including,
without limitation, any such right arising under federal bankruptcy law) or
otherwise by reason of any payment by it pursuant to the provisions of this
Article Fourteen. The Guarantor further agrees that, to the extent that the
waiver of, or agreement not to exercise, any such rights, remedies, powers or
privileges is found by a court of competent jurisdiction to be void or voidable
for any reason, any such rights, remedies, powers or privileges the Guarantor
may have shall be junior and subordinate to the rights, remedies, powers and
privileges of the Holders against the Guarantor under this Guarantee.
Section 1408. Guarantee Is in Addition to Other Security.
------------------------------------------
This Guarantee shall be in addition to and not in substitution for any
other guarantees or other security which the Trustee may now or hereafter hold
in respect of the Indenture Obligations owing to the Trustee or the Holders by
the Company and (except as may be required by law) the Trustee shall be under no
obligation to marshal in favor of each of the Guarantors any other guarantees or
other security or any moneys or other assets which the Trustee may be entitled
to receive or upon which the Trustee or the Holders may have a claim.
Section 1409. Release of Security Interests.
-----------------------------
Without limiting the generality of the foregoing and except as
otherwise provided in this Indenture, each Guarantor hereby consents and agrees,
to the fullest extent permitted by applicable law, that the rights of the
Trustee hereunder, and the liability of the Guarantors hereunder, shall not be
affected by any releases for any purpose of any collateral, if any, from the
Liens and security interests
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created by any collateral document and that this Guarantee shall continue to be
effective or be reinstated, as the case may be, if at any time any payment of
any of the Indenture Obligations is rescinded or must otherwise be returned by
the Trustee upon the insolvency, bankruptcy or reorganization of the Company or
otherwise, all as though such payment had not been made.
Section 1410. No Bar to Further Actions.
-------------------------
Except as provided by law, no action or proceeding brought or
instituted under Article Fourteen and this Guarantee and no recovery or judgment
in pursuance thereof shall be a bar or defense to any further action or
proceeding which may be brought under Article Fourteen and this Guarantee by
reason of any further default or defaults under Article Fourteen and this
Guarantee or in the payment of any of the Indenture Obligations owing by the
Company.
Section 1411. Failure to Exercise Rights Shall Not Operate as a
-------------------------------------------------
Waiver; No Suspension of Remedies.
---------------------------------
(a) No failure to exercise and no delay in exercising, on the part of
the Trustee or the Holders, any right, power, privilege or remedy under this
Article Fourteen and this Guarantee shall operate as a waiver thereof, nor shall
any single or partial exercise of any rights, power, privilege or remedy
preclude any other or further exercise thereof, or the exercise of any other
rights, powers, privileges or remedies. The rights and remedies herein provided
for are cumulative and not exclusive of any rights or remedies provided in law
or equity.
(b) Nothing contained in this Article Fourteen shall limit the right
of the Trustee or the Holders to take any action to accelerate the maturity of
the Securities pursuant to Article Five or to pursue any rights or remedies
hereunder or under applicable law.
Section 1412. Trustee's Duties, Notice to Trustee.
-----------------------------------
Any provision in this Article Fourteen or elsewhere in this Indenture
allowing the Trustee to request any information or to take any action authorized
by, or on behalf of any Guarantor, shall be permissive and shall not be
obligatory on the Trustee except as the Holders may direct in accordance with
the provisions of this Indenture or the failure of the Trustee to request any
such information or to take any such action arises from the Trustee's negligence
or willful misconduct.
Section 1413. Successors and Assigns.
----------------------
All terms, agreements and conditions of this Article Fourteen shall
extend to and be binding upon each Guarantor and its successors and permitted
assigns and shall enure to the benefit of and may be enforced by the Trustee and
its successors and assigns, provided, however, that the Guarantors may not
-------- -------
assign any of their rights or obligations hereunder other than in accordance
with Article Eight.
Section 1414. Release of Guarantee.
--------------------
Concurrently with the payment in full of all of the Indenture
Obligations, the Guarantors shall be released from and relieved of their
obligations under this Article Fourteen. Upon
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the delivery by the Company to the Trustee of an Officer's Certificate and an
Opinion of Counsel to the effect that the transaction giving rise to the release
of this Guarantee was made by the Company in accordance with the provisions of
this Indenture and the Securities, the Trustee shall execute any documents
reasonably required in order to evidence the release of the Guarantors from
their obligations under this Guarantee. If any of the Indenture Obligations are
revived and reinstated after the termination of this Guarantee, then all of the
obligations of the Guarantors under this Guarantee shall be revived and
reinstated as if this Guarantee had not been terminated until such time as the
Indenture Obligations are paid in full, and each Guarantor shall enter into an
amendment to this Guarantee, reasonably satisfactory to the Trustee, evidencing
such revival and reinstatement.
This Guarantee shall terminate with respect to each Guarantor and
shall be automatically and unconditionally released and discharged as provided
in Section 1014(c).
Section 1415. Execution of Guarantee.
----------------------
To evidence the Guarantee, each Guarantor hereby agrees to execute the
guarantee substantially in the form set forth in Section 206, to be endorsed on
each Security authenticated and delivered by the Trustee and that this Indenture
shall be executed on behalf of each Guarantor by its Chairman of the Board, its
President, or one of its Vice Presidents and attested by its Secretary or one of
its Assistant Secretaries. The signature of any of these officers on the
Securities may be manual or facsimile.
Section 1416. Guarantee Subordinate to Guarantor Senior Indebtedness.
------------------------------------------------------
Each Guarantor covenants and agrees, and each Holder of a Guarantee,
by acceptance thereof, likewise covenants and agrees, that, to the extent and in
the manner hereinafter set forth in this Article, the Indebtedness represented
by the Guarantees is hereby made subordinate and subject in right of payment as
provided in this Article to the prior payment in full, in cash or Cash
Equivalents or in any other form as acceptable to the holders of Guarantor
Senior Indebtedness, of all Guarantor Senior Indebtedness; provided, however,
-------- -------
that the Indebtedness represented by this Guarantee in all respects shall rank
equally with, or prior to, all existing and future Indebtedness of such
Guarantor that is expressly subordinated to such Guarantor's Guarantor Senior
Indebtedness.
This Article Fourteen shall constitute a continuing offer to all
Persons who, in reliance upon such provisions, become holders of, or continue to
hold Guarantor Senior Indebtedness, and such provisions are made for the benefit
of the holders of Guarantor Senior Indebtedness; and such holders are made
obligees hereunder and they or each of them may enforce such provisions.
With respect to the relative rights of Holders and holders of Senior
Indebtedness and Guarantor Senior Indebtedness and for the purpose of Section
1407(a), each Holder of a Security by his acceptance thereof acknowledges that
all Senior Indebtedness and any guarantee by a Guarantor of such Senior
Indebtedness shall be deemed to have been incurred prior to the incurrence by
such Guarantor of its liability under its Guarantee.
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Section 1417. Payment Over of Proceeds Upon Dissolution of the
------------------------------------------------
Guarantor, etc.
--------------
In the event of (a) any insolvency or bankruptcy case or proceeding,
or any receivership, liquidation, reorganization or other similar case or
proceeding in connection therewith, relative to any Guarantor or to its
creditors, as such, or to its assets, or (b) any liquidation, dissolution or
other winding up of any Guarantor, whether voluntary or involuntary and whether
or not involving insolvency or bankruptcy, or (c) any assignment for the benefit
of creditors or any other marshaling of assets or liabilities of any Guarantor,
then and in any such event;
(1) the holders of Guarantor Senior Indebtedness shall be entitled to
receive payment in full in cash or Cash Equivalents or in any other form as
acceptable to the holders of Guarantor Senior Indebtedness of all amounts due on
or in respect of all Guarantor Senior Indebtedness, before the Holders of the
Securities are entitled to receive any payment or distribution of any kind or
character (excluding Permitted Guarantor Junior Securities) on account of the
Guarantee of such Guarantor;
(2) any payment or distribution of assets of any Guarantor of any kind
or character, whether in cash, property or securities (excluding Permitted
Guarantor Junior Securities), by set-off or otherwise, to which the Holders or
the Trustee would be entitled but for the provisions of this Article shall be
paid by the liquidating trustee or agent or other Person making such payment or
distribution. whether a trustee in bankruptcy, a receiver or liquidating trustee
or otherwise, directly to the holders of Guarantor Senior Indebtedness or their
representative or representatives or to the trustee or trustees under any
indenture under which any instruments evidencing any of such Guarantor Senior
Indebtedness may have been issued, ratably according to the segregated amounts
remaining unpaid on account of the Senior Guarantor Indebtedness held or
represented by each, to the extent necessary to make payment in full in cash or
Cash Equivalents or in any other form as acceptable to the holders of Guarantor
Senior Indebtedness of all Guarantor Senior Indebtedness remaining unpaid, after
giving effect to any concurrent payment or distribution to the holders of such
Guarantor Senior Indebtedness; and
(3) in the event that, notwithstanding the foregoing provisions of
this Section, the Trustee or the Holder of any Security shall have received any
payment or distribution of assets of any Guarantor of any kind or character,
whether in cash, property or securities, in respect of the Guarantee of such
Guarantor before all Guarantor Senior Indebtedness is paid in full, then and in
such event such payment or distribution (excluding Permitted Guarantor Junior
Securities) shall be paid over or delivered forthwith to the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee, agent or other
person making payment or distribution of assets of such Guarantor for
application to the payment of all Guarantor Senior Indebtedness remaining
unpaid, to the extent necessary to pay all Guarantor Senior Indebtedness in full
in cash or Cash Equivalents or in any other form as acceptable to the holders of
Guarantor Senior Indebtedness after giving effect to any concurrent payment or
distribution to or for the holders of Guarantor Senior Indebtedness.
The consolidation of any Guarantor with, or the merger of any
Guarantor with or into, another Person or the liquidation or dissolution of any
Guarantor following the sale, assignment, conveyance, transfer, lease or other
disposal of all or substantially all of such Guarantor's properties or assets to
another Person upon the terms and conditions set forth in Article Eight shall
not be deemed a dissolution, winding up, liquidation, reorganization, assignment
for the benefit of creditors or
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marshaling of assets and liabilities of such Guarantor for the purposes of this
Section if the Person formed by such consolidation or the surviving entity of
such merger or the Person which acquires by sale, assignment, conveyance,
transfer, lease or other disposal of all or substantially all of such
Guarantor's properties and assets, as the case may be, shall, as a part of such
consolidation, merger, sale, assignment, conveyance, transfer, lease or other
disposal comply with the conditions set forth in Article Eight.
Section 1418. Default on Guarantor Senior Indebtedness.
----------------------------------------
(a) Upon the maturity of any Guarantor Senior Indebtedness by lapse of
time, acceleration or otherwise, all principal thereof and interest thereon and
other amounts due in connection therewith shall first be paid in full or such
payment duly provided for before any payment is made by any of the Guarantors or
any Person acting on behalf of any of the Guarantors in respect of the Guarantee
of such Guarantor.
(b) No payment (excluding payments in the form of Permitted Guarantor
Junior Securities) shall be made by any Guarantor in respect of its Guarantee
during the period in which Section 1417 shall be applicable, during any
suspension of payments in effect under Section 1203(a) of this Indenture or
during any Payment Blockage Period in effect under Section 1203(b) of this
Indenture.
(c) In the event that, notwithstanding the foregoing, any Guarantor
shall make any payment to the Trustee or the Holder of its Guarantee prohibited
by the foregoing provisions of this Section, then and in such event such payment
shall be paid over and delivered forthwith to the Guarantor Senior
Representative or as a court of competent jurisdiction shall direct.
Section 1419. Payment Permitted by Each of the Guarantors if No
-------------------------------------------------
Default.
-------
Nothing contained in this Article, elsewhere in this Indenture or in
any of the Securities shall prevent any Guarantor, at any time except during the
pendency of any case, proceeding, dissolution, liquidation or other winding up,
assignment for the benefit of creditors or other marshaling of assets and
liabilities of such Guarantor referred to in Section 1417 or under the
conditions described in Section 1418, from making payments at any time of
principal of, premium, if any, or interest on the Securities.
Section 1420. Subrogation to Rights of Holders of Guarantor Senior
----------------------------------------------------
Indebtedness.
------------
Subject to the payment in full of all Guarantor Senior Indebtedness in
cash or Cash Equivalents or in any other form acceptable to the holders of
Guarantor Senior Indebtedness, the Holders of the Securities shall be subrogated
to the rights of the holders of such Guarantor Senior Indebtedness to receive
payments and distributions of cash, property and securities applicable to the
Guarantor Senior Indebtedness until the principal of, premium, if any, and
interest on the Securities shall be paid in full. For purposes of such
subrogation, no payments or distributions to the holders of Guarantor Senior
Indebtedness of any cash, property or securities to which the Holders of the
Securities or the Trustee would be entitled except for the provisions of this
Article, and no payments over pursuant to the provisions of this Article to the
holders of Guarantor Senior Indebtedness by Holders of the Securities or the
Trustee, shall, as among any Guarantor, its creditors other than holders
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<PAGE>
of Guarantor Senior Indebtedness, and the Holders of the Securities, be deemed
to be a payment or distribution by such Guarantor to or on account of the
Guarantor Senior Indebtedness.
Section 1421. Provisions Solely to Define Relative Rights.
-------------------------------------------
The provisions of Sections 1416 through 1429 of this Indenture are
intended solely, for the purpose of defining the relative rights of the Holders
of the Securities on the one hand and the holders of Guarantor Senior
Indebtedness on the other hand. Nothing contained in this Article or elsewhere
in this Indenture or in the Securities is intended to or shall (a) impair, as
among any Guarantor, its creditors other than holders of Guarantor Senior
Indebtedness and the Holders of the Securities, the obligation of such
Guarantor, which is absolute and unconditional, to pay to the Holders of the
Securities the principal of, premium, if any, and interest on the Securities as
and when the same shall become due and payable in accordance with their terms;
or (b) affect the relative rights against each of the Guarantors of the Holders
of the Securities and creditors of each of the Guarantors other than the holders
of Guarantor Senior Indebtedness; or (c) prevent the Trustee or the Holder of
any Security from exercising all remedies otherwise permitted by applicable law
upon default under this Indenture, subject to the rights, if any, under this
Article of the holders of Guarantor Senior Indebtedness (1) in any case,
proceeding, dissolution, liquidation or other winding up, assignment for the
benefit of creditors or other marshaling of assets and liabilities of the
Guarantors referred to in Section 1417, to receive, pursuant to and in
accordance with such Section, cash, property and securities otherwise payable or
deliverable to the Trustee or such Holder, or (2) under the conditions specified
in Section 1418, to prevent any payment prohibited by such Section or enforce
their rights pursuant to Section 1418(c).
Section 1422. Trustee to Effectuate Subordination.
-----------------------------------
Each Holder of a Security by his acceptance thereof authorizes and
directs the Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate the subordination provided in this Article and
appoints the Trustee his attorney-in-fact for any and all such purposes,
including, in the event of any dissolution, winding-up, liquidation or
reorganization of any Guarantor whether in bankruptcy, insolvency, receivership
proceedings, or otherwise, the timely filing of a claim for the unpaid balance
of the Indebtedness of any Guarantor owing to such Holder in the form required
in such proceedings and the causing of such claim to be approved.
Section 1423. No Waiver of Subordination Provisions.
-------------------------------------
(a) No right of any present or future holder of any Guarantor Senior
Indebtedness to enforce subordination as herein provided shall at any time in
any way be prejudiced or impaired by any act or failure to act on the part of
any Guarantor or by, any act or failure to act by any such holder, or by any
non-compliance by any Guarantor with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof any such holder may have or be
otherwise charged with.
(b) Without limiting the generality of Subsection (a) of this Section
and notwithstanding any other provision contained herein, the holders of
Guarantor Senior Indebtedness may at any time and from time to time, without the
consent of or notice to the Trustee or the Holders of the Securities, without
incurring responsibility to the Holders of the Securities and without
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impairing or releasing the subordination provided in this Article or the
obligations hereunder of the Holders of the Securities to the holders of
Guarantor Senior Indebtedness, do any one or more of the following: (1) change
the manner, place or terms of payment or extend the time of payment of, or renew
or alter, Guarantor Senior Indebtedness or any instrument evidencing the same or
any agreement under which Guarantor Senior Indebtedness is outstanding; (2)
sell, exchange, release or otherwise deal with any property pledged, mortgaged
or otherwise securing Guarantor Senior Indebtedness; (3) release any Person
liable in any manner for the collection or payment of Guarantor Senior
Indebtedness; and (4) exercise or refrain from exercising any rights against any
of the Guarantors and any other Person; provided, however, that in no event
-------- -------
shall any such actions limit the right of the Holders of the Securities to take
any action to accelerate the maturity of the Securities in accordance with the
provisions set forth in Article 5 or to pursue any rights or remedies under this
Indenture or under applicable laws if the taking of such action does not
otherwise violate the terms of this Article.
Section 1424. Notice to Trustee by Each of the Guarantors.
-------------------------------------------
(a) Each Guarantor shall give prompt written notice to the Trustee of
any fact known to such Guarantor which would prohibit the making of any payment
to or by the Trustee in respect of the Guarantee. Notwithstanding the
provisions of this Article or any provision of this Indenture, the Trustee shall
not be charged with knowledge of the existence of any facts which would prohibit
the making of any payment to or by the Trustee in respect of the Securities,
unless and until the Trustee shall have received written notice thereof from any
Guarantor or a holder of Guarantor Senior Indebtedness or from a Guarantor
Senior Representative or any trustee, fiduciary or agent therefor; and, prior to
the receipt of any such written notice, the Trustee shall be entitled in all
respects to assume that no such facts exist; provided, however, that if the
-------- -------
Trustee shall not have received the notice provided for in this Section prior to
the date upon which by the terms hereof any money may become payable for any
purpose (including, without limitation, the payment of the principal of,
premium, if any, or interest on any Security or any other Indenture
Obligations), then, anything herein contained to the contrary notwithstanding
but without limiting the rights and remedies of the holders of Guarantor Senior
Indebtedness or any trustee, fiduciary or agent thereof, the Trustee shall have
full power and authority to receive such money and to apply the same to the
purpose for which such money was received and shall not be affected by any
notice to the contrary which may be received by it after such date; nor shall
the Trustee be charged with knowledge of the curing of any such default or the
elimination of the act or condition preventing any such payment unless and until
the Trustee shall have received an Officers' Certificate to such effect.
(b) The Trustee shall be entitled to rely on the delivery to it of a
written notice to the Trustee and each Guarantor by a Person representing
himself to be a representative of one or more holders of Designated Guarantor
Senior Indebtedness (a "GUARANTOR SENIOR REPRESENTATIVE") or a holder of
Guarantor Senior Indebtedness (or a trustee, fiduciary or agent therefor) to
establish that such notice has been given by a Guarantor Senior Representative
or a holder of Guarantor Senior Indebtedness (or a trustee, fiduciary or agent
therefor); provided, however, that failure to give such notice to the Company
-------- -------
shall not affect in any way the ability of the Trustee to rely on such notice.
In the event that the Trustee determines in good faith that further evidence is
required with respect to the right of any Person as a holder of Guarantor Senior
Indebtedness to participate in any payment or distribution pursuant to this
Article, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Guarantor Senior
Indebtedness held by such
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Person, the extent to which such Person is entitled to participate in such
payment or distribution and any other facts pertinent to the rights of such
Person under this Article, and if such evidence is not furnished, the Trustee
may defer any payment to such Person pending judicial determination as to the
right of such Person to receive such payment.
Section 1425. Reliance on Judicial Order or Certificate of
--------------------------------------------
Liquidating Agent.
-----------------
Upon any payment or distribution of assets of any Guarantor referred
to in this Article, the Trustee and the Holders of the Securities shall be
entitled to rely upon any order or decree entered by any court of competent
jurisdiction in which such insolvency, bankruptcy, receivership, liquidation,
reorganization, dissolution, winding up or similar case or proceeding is
pending, or a certificate of the trustee in bankruptcy, receiver, liquidating
trustee, custodian, assignee for the benefit of creditors, agent or other person
making such payment or distribution, delivered to the Trustee or to the Holders
of Securities, for the purpose of ascertaining the Persons entitled to
participate in such payment or distribution, the holders of Guarantor Senior
Indebtedness and other Indebtedness of such Guarantor, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article; provided that the foregoing shall
--------
apply only if such court has been fully apprised of the provisions of this
Article.
Section 1426. Rights of Trustee as a Holder of Guarantor Senior
-------------------------------------------------
Indebtedness; Preservation of Trustee's Rights.
----------------------------------------------
The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article with respect to any Guarantor Senior
Indebtedness which may at any time be held by it, to the same extent as any
other holder of Guarantor Senior Indebtedness, and nothing in this Indenture
shall deprive the Trustee of any of its rights as such holder. Nothing in this
Article shall apply to claims of, or payments to, the Trustee under or pursuant
to Section 606.
Section 1427. Article Applicable to Paying Agents.
-----------------------------------
In case at any time any Paying Agent other than the Trustee shall have
been appointed by the Company and be then acting under this Indenture, the term
"TRUSTEE" as used in this Article shall in such case (unless the context
otherwise requires) be construed as extending to and including such Paying Agent
within its meaning as fully for all intents and purposes as if such Paying Agent
were named in this Article in addition to or in place of the Trustee, provided,
--------
however, that Sections 1414, 1424 and 1426 shall not apply to the Company or any
- -------
Affiliate of the Company if it or such Affiliate acts as Paying Agent.
Section 1428. No Suspension of Remedies.
-------------------------
Nothing contained in this Article shall limit the right of the Trustee
or the Holders of Securities to take any action to accelerate the maturity of
the Securities pursuant to the provisions described under Article Five and as
set forth in this Indenture or to pursue any rights or remedies hereunder or
under applicable law, subject to the rights, if any, under this Article of the
holders, from time to time, of Guarantor Senior Indebtedness to receive the
cash, property or securities receivable upon the exercise of such rights or
remedies.
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Section 1429. Trustee's Relation to Guarantor Senior Indebtedness.
---------------------------------------------------
With respect to the holders of Guarantor Senior Indebtedness, the
Trustee undertakes to perform or to observe only such of its covenants and
obligations as are specifically set forth in this Article, and no implied
covenants or obligations with respect to the holders of Guarantor Senior
Indebtedness shall be read into this Article against the Trustee. The Trustee
shall not be deemed to owe any fiduciary duty to the holders of Guarantor Senior
Indebtedness and the Trustee shall not be liable to any holder of Guarantor
Senior Indebtedness if it shall mistakenly in the absence of gross negligence or
willful misconduct pay over or deliver to Holders, the Company or any other
Person moneys or assets to which any holder of Guarantor Senior Indebtedness
shall be entitled by virtue of this Article or otherwise.
Section 1430. Limitation on Guarantee.
-----------------------
In any proceeding involving any state corporate law or any state or
federal bankruptcy, insolvency, reorganization or other law affecting the rights
of creditors generally, if the obligations of any Guarantor under its Guarantee
would otherwise, be held or determined to be void, invalid or unenforceable or
if the claims of the Holders in respect of such obligations would be
subordinated to the claims of any other creditors other than creditors under
Senior Indebtedness on account of the Guarantor's liability under its Guarantee,
then, notwithstanding any other provision of this Guarantee to the contrary, the
amount of such liability shall, without any further action by the Guarantor, the
Holders or any other Person, be automatically limited and reduced to the highest
amount that is valid and enforceable and not subordinated to the claims of other
creditors as determined in such action or proceeding.
If an officer whose signature is on this Indenture no longer holds
that office at the time the Trustee authenticates a Security on which a
Guarantee is endorsed, such Guarantee shall be valid nevertheless.
********
-120-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, all as of the day and year first above written.
SALEM COMMUNICATIONS CORPORATION, a California
corporation, as issuer
Attest /s/ Jonathan L. Block By: /s/ Edward G. Atsinger
_____________________ ______________________
Jonathan L. Block Edward G. Atsinger, III
Secretary President and Chief Executive Officer
ATEP RADIO, INC.,
BISON MEDIA, INC.,
CARON BROADCASTING, INC.,
COMMON GROUND BROADCASTING, INC.,
GOLDEN GATE BROADCASTING COMPANY, INC.,
INLAND RADIO, INC.,
INSPIRATION MEDIA, INC.,
INSPIRATION MEDIA OF TEXAS, INC.,
NEW ENGLAND CONTINENTAL MEDIA, INC.,
NEW INSPIRATION BROADCASTING COMPANY, INC.,
OASIS RADIO, INC.,
PENNSYLVANIA MEDIA ASSOCIATES, INC.,
RADIO 1210, INC.,
SALEM COMMUNICATIONS CORPORATION, a Delaware
corporation
SALEM MEDIA CORPORATION,
SALEM MEDIA OF CALIFORNIA, INC.,
SALEM MEDIA OF COLORADO, INC.,
SALEM MEDIA OF LOUISIANA, INC.,
SALEM MEDIA OF OHIO, INC.,
SALEM MEDIA OF OREGON, INC.,
SALEM MEDIA OF PENNSYLVANIA, INC.,
SALEM MEDIA OF TEXAS, INC.,
SALEM MUSIC NETWORK, INC.,
SALEM RADIO NETWORK INCORPORATED,
SALEM RADIO REPRESENTATIVES, INC.,
SOUTH TEXAS BROADCASTING, INC.,
SRN NEWS NETWORK, INC., and
VISTA BROADCASTING, INC.
as Guarantors
Attest /s/ Jonathan L. Block By: /s/ Edward G. Atsinger
_____________________ ______________________
Jonathan L. Block Edward G. Atsinger, III
Secretary President and Chief Executive Officer
-121-
<PAGE>
BELTWAY MEDIA PARTNERS, a California
corporation, as a Guarantor
By: Salem Communication Corporation, its general
partner
Attest /s/ Jonathan L. Block By: /s/ Edward G. Atsinger
_____________________ ______________________
Jonathan L. Block Edward G. Atsinger, III
Secretary President and Chief Executive Officer
By: Golden Gate Broadcasting Company, Inc.,
its general partner
Attest /s/ Jonathan L. Block By: /s/ Edward G. Atsinger
_____________________ ______________________
Jonathan L. Block Edward G. Atsinger, III
Secretary President and Chief Executive Officer
By: New Inspirations Broadcasting Company, Inc.,
its general partner
Attest /s/ Jonathan L. Block By: /s/ Edward G. Atsinger
_____________________ ______________________
Jonathan L. Block Edward G. Atsinger, III
Secretary President and Chief Executive Officer
THE BANK OF NEW YORK, as Trustee
By: /s/ MaryBeth A. Lewicki
______________________________
MaryBeth A. Lewicki
Assistant Vice President
-122-
<PAGE>
STATE OF CALIFORNIA )
COUNTY OF VENTURA ) ss.:
CITY OF CAMARILLO )
On the 30th day of September, 1997, before me, V. Lynne Yeaman, Notary Public,
personally came Edward G. Atsinger, III and Jonathan L. Block to me to be the
person whose names are subscribed to the within instrument as President, Chief
Executive Officer and Secretary, respectively; and Salem Communications
Corporation, a Cali fornia corporation, ATEP Radio, Inc., Bison Media, Inc.,
Caron Broadcasting, Inc., Common Ground Broadcasting, Inc., Golden Gate
Broadcasting Company, Inc., Inland Radio, Inc., Inspiration Media, Inc.,
Inspiration Media of Texas, Inc., New England Continental Media, Inc., New
Inspiration Broadcasting Company, Inc., Oasis Radio, Inc., Pennsylvania Media
Associates, Inc., Radio 1210, Inc., Salem Communications Corporation, a Delaware
corporation, Salem Media Corporation, Salem Media of California, Inc., Salem
Media of Colorado, Inc., Salem Media of Louisiana, Inc., Salem Media of Ohio,
Inc., Salem Media of Oregon, Inc., Salem Media of Pennsylvania, Inc., Salem
Media of Texas, Inc., Salem Music Network, Inc., Salem Radio Network
Incorporated, Salem Radio Representatives, Inc., South Texas Broadcasting, Inc.,
SRN News Network, Inc., Vista Broadcasting, Inc., the corporations described in
and which executed the foregoing instrument; and that he signed his name thereto
pursuant to authority of the Boards of Directors of such corporations.
(NOTARIAL
SEAL)
WITNESS my hand and official seal.
/s/ V. Lynne Yeaman
_____________________________
<PAGE>
SCHEDULE I
EXISTING INDEBTEDNESS OF SALEM COMMUNICATIONS CORPORATION
AND RESTRICTED SUBSIDIARIES
(i) Promissory Note dated March 1, 1994 by the Company to New Inspiration (with
respect to the amounts owed by New Inspiration in items (iv) and (vi) below);
(ii) Promissory Note dated March 1, 1994 by the Company to Golden Gate (with
respect to the amounts owed by Golden Gate in items (iii) and (v) below);
(iii) Promissory Note dated August 12, 1997 by Golden Gate to Mr. Epperson in
the aggregate principal amount of $1,230,000;
(iv) Promissory Note dated August 12, 1997 by New Inspiration to Mrs. Epperson
in the aggregate principal amount of $2,116,000;
(v) Promissory Note dated August 12, 1997 by Golden Gate to Mr. Atsinger in the
aggregate principal amount of $1,230,000; and
(vi) Promissory Note dated August 12, 1997 by New Inspiration to Mr. Atsinger in
the aggregate principal amount of $2,116,000.
<PAGE>
SCHEDULE II
EXISTING LIENS
Liens created pursuant to each of the Borrower Security Agreement and
the Subsidiary Guaranty (each as defined in the Bank Credit Agreement).
<PAGE>
SCHEDULE III
EXISTING ENCUMBRANCES AND RESTRICTIONS
Encumbrances and restrictions created pursuant to each of the Bank
Credit Agreement, the Borrower Security Agreement and the Subsidiary Guaranty
(each as defined in the Bank Credit Agreement).
<PAGE>
EXHIBIT A
---------
[Form of Restricted Securities Transfer Certificate]
RESTRICTED SECURITIES TRANSFER CERTIFICATE (GENERAL)
(For transfers pursuant to Section 307(a) of
the Indenture referred to below)
The Bank of New York,
as Securities Registrar
101 Barclay Street, 21 W,
New York, New York 10286
Re: 9.5% Senior Subordinated Notes Due 2007 (the "SECURITIES")
Reference is made to the Indenture, dated as of September 25, 1997 (the
"INDENTURE"), among Salem Communications Corporation, a California corporation,
the guarantors party thereto and The Bank of New York, as trustee. Terms used
herein and defined in the Indenture Rule, 144A or Rule 144 under the U.S.
Securities Act of 1933 (the "SECURITIES ACT") are used herein as so defined.
This certificate relates to $____________ aggregate principal amount of
Securities, which are evidenced by the following certificate(s) (the "SPECIFIED
SECURITIES"):
CUSIP No(s).____________________________
CERTIFICATE No(s).______________________
CURRENTLY IN BOOK-ENTRY FORM: Yes __ No __ (check one)
The person in whose name this certificate is executed below (the
"UNDERSIGNED") hereby certifies that either (i) such person is the sole
beneficial owner of the Specified Securities or (ii) such person is acting on
behalf of all the beneficial owners of the Specified Securities and is duly
authorized by them to do so. Such beneficial owner or owners are referred to
herein collectively as the "OWNER". If the Specified Securities are represented
by a Global Security, they are held through a Depositary (except in the name of
the "The Depository Trust Company") or an Agent Member in the name of the
Undersigned, as or on behalf of the Owner. If the Specified Securities are not
represented by a Global Security, they are registered in the name of the
Undersigned, as or on behalf of the Owner.
The Owner has requested that the Specified Securities be transferred to a
person (the "TRANSFEREE") who will take delivery in the form of a Restricted
Security. In connection with such transfer, the Owner hereby certifies that,
unless such transfer is being effected pursuant to an effective registration
statement under the Securities Act, it is being effected in accordance with Rule
144A or
A-1
<PAGE>
Rule 144 under the Securities Act and all applicable securities laws of the
states of the United States. Accordingly, the Owner hereby further certifies
that:
(1) Rule 144A Transfers. If the transfer is being effected in accordance with
-------------------
Rule 144A:
(A) the Specified Securities are being transferred to a person that the
Owner and any person acting on its behalf reasonably believe is a
"qualified institutional buyer" within the meaning of Rule 144A,
acquiring for its own account or for the account of a qualified
institutional buyer; and
(B) the Owner and any person acting on its behalf have taken reasonable
steps to ensure that the Transferee is aware that the Owner may be
relying on Rule 144A in connection with the transfer; and
(2) Rule 144 Transfers. If the transfer is being effected pursuant to Rule
------------------
144:
(A) the transfer is occurring after a holding period of at least two years
(computed in accordance with paragraph (d) of Rule 144) has elapsed
since the date the Specified Securities were acquired from the Company
or from an affiliate (as such term is defined in Rule 144) of the
Company, whichever is later, and is being effected in accordance with
the applicable amount, manner of sale and notice requirements of
paragraphs (e), (f) and (h) of Rule 144; or
(B) the transfer is occurring after a holding period by the Owner of at
least two years has elapsed since the date the Specified Securities
were acquired from the Company or from an affiliate (as such term is
defined in Rule 144) of the Company, whichever is later, and the Owner
is not, and during the preceding three months has not been, an
affiliate of the Company;
This certificate and the statements contained herein are made for your benefit
and the benefit of the Company.
Dated:___________________ ___________________________________________
(Print the name of the Undersigned, as such term is
defined in the second paragraph of this certificate.)
By:____________________________________
Name:
Title:
A-2
<PAGE>
(If the Undersigned is a corporation, partnership or
fiduciary, the title of the person signing on behalf of
the Undersigned must be stated.)
Signature Guarantee: _____________________
(Signatures must be guaranteed by an "eligible
guarantor institution" meeting the requirements of the
Security Registrar, which requirements include
membership or participation in the Security Transfer
Agent Medallion Program ("STAMP") or such other
"signature guarantee program" as may be determined by
the Security Registrar in addition to, or in
substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended)
A-3
<PAGE>
EXHIBIT B
---------
INTERCOMPANY NOTE
-----------------
_____________ __, ___
Evidences of all loans or advances ("LOANS") hereunder shall be reflected
on the grid attached hereto. FOR VALUE RECEIVED, _____________, a _____________
corporation (the "MAKER"), HEREBY PROMISES TO PAY ON DEMAND to the order of
_____________ (the "HOLDER") the principal sum of the aggregate unpaid principal
amount of all Loans (plus accrued interest thereon) at any time and from time to
time made hereunder which has not been previously paid.
All capitalized terms used herein that are defined in, or by reference in,
the Indenture among Salem Communications Corporation, a California corporation
(the "COMPANY"), the guarantors party thereto and The Bank of New York, as
trustee, dated as of September 25, 1997 (the "INDENTURE"), have the meanings
assigned to such terms therein, or by reference therein, unless otherwise
defined.
ARTICLE I
TERMS OF INTERCOMPANY NOTE
Section 1.01 Note Forgiveness. Unless the Maker of the Loan
----------------
hereunder is either of the Company or any Guarantor, the Holder may not forgive
any amounts owing under this intercompany note.
Section 1.02 Interest, Prepayment. (a) The interest rate ("INTEREST
--------------------
RATE") on the Loans shall be a rate per annum equal to the interest rate on the
Securities.
(b) The interest, if any, payable on each of the Loans shall accrue
from the date such Loan is made and, subject to Section 2.01, shall be payable
upon demand of the Holder.
(c) If the principal or accrued interest, if any, of the Loans is not
paid on the date demand is made, interest on the unpaid principal and interest
will accrue at a rate equal to the Interest Rate, if any, plus 100 basis points
per annum from maturity until the principal and interest on such Loans are fully
paid.
(d) Subject to Section 2.01, any amounts hereunder may be prepaid at
any time by the Maker.
Section 1.03. Subordination. All loans made to either of the Company
-------------
or any Guarantor shall be subordinated in right of payment to the payment and
performance of the obligations of the Company and any Subsidiary under the
Indenture, the Securities, the Guarantees or any other Indebtedness ranking
senior to or pari passu with the Securities, or any Guarantees, including,
----------
without limitation, any Indebtedness incurred under the Bank Credit Agreement.
B-1
<PAGE>
ARTICLE II
EVENTS OF DEFAULT
Section 2.01. Events of Default. If after the date of issuance of
-----------------
this Loan (i) an Event of Default has occurred under the Indenture, (ii) an
"Event of Default" (as defined) has occurred under the Bank Credit Agreement, or
any refinancing of the Bank Credit Agreement or (iii) an "event of default" (as
defined) on any other Indebtedness of the Company or any Guarantor then (x) in
the event of the Maker is not either one of the Company or a Guarantor, all
amounts owing under the Loans hereunder shall be immediately due and payable to
the Holder, and (y) in the event the Maker is either the Company or, the amounts
owing under the Loans hereunder shall not be due and payable unless the Maker is
a Guarantor and the Holder is the Company; provided, however, that if such Event
-------- -------
of Default or event of default has been waived, cured or rescinded, such amounts
shall no longer be due and payable in the case of clause (x), and such amounts
may be payable in the case of clause (y). If the Holder is a Subsidiary, then
the Holder hereby agrees that if it receives any payments or distributions on
any Loan from the Company or a Guarantor which is not payable pursuant to clause
(y) of the prior sentence after any Event of Default or event or default
described in clauses (i), (ii) or (iii) above has occurred, is continuing and
has not been waived, cured or rescinded, it will pay over and deliver forthwith
to the Company or such Guarantor, as the case may be, all such payments and
distributions.
ARTICLE III
MISCELLANEOUS
Section 3.01 Amendments, Etc. No amendment or waiver of any
---------------
provision of this intercompany note, or consent to depart herefrom is permitted
at any time for any reason, except with the consent of the holders of not less
than a majority in aggregate principal amount of the Outstanding Securities.
Section 3.02 Assignment. No party to this Agreement may assign, in
----------
whole or in part, any of its rights and obligations under this intercompany
note, except to its legal successor in interest.
Section 3.03 Third Party Beneficiaries. The holders of the
-------------------------
Securities or any other Indebtedness ranking pari passu with or senior to, the
---- -----
Securities or any Guarantees, including without limitation, any Indebtedness
incurred under the Bank Credit Agreement, shall be third party beneficiaries to
this intercompany note and shall have the right to enforce this intercompany
note against the Company or any of their Subsidiaries.
Section 3.04 Headings. Article and Section headings in this
--------
intercompany note are included for convenience of reference only and shall not
constitute a part of this intercompany note for any other purpose.
Section 3.05 Entire Agreement. This intercompany note sets forth the
----------------
entire agreement or the parties with respect to its subject matter and
supersedes all previous understandings, written or oral, in respect thereof.
B-2
<PAGE>
Section 3.06 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
-------------
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING
EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF).
Section 3.07 Waivers. The Maker hereby waives presentment, demand
-------
for payment, notice of protest and all other demands and notices in connection
with the delivery, acceptance, performance or enforcement hereof.
By:_______________________________
Name:
Title:
B-3
<PAGE>
BORROWINGS, MATURITIES, AND PAYMENTS OF PRINCIPAL
-------------------------------------------------
<TABLE>
<CAPTION>
Amount of Maturity Amount Unpaid
Borrowing/ of Principal Paid Principal Notation
Principal Borrowing/ or Prepaid Balance Made by
Date ----------- Principal --------------- ---------- --------
- ------- -----------
<S> <C> <C> <C> <C> <C>
</TABLE>
B-4
<PAGE>
EXHIBIT C
---------
[Form of Restricted Securities Transfer Certificate]
RESTRICTED SECURITIES TRANSFER CERTIFICATE (NON-U.S. PERSONS)
(For transfers pursuant to Section 307(c) of
the Indenture referred to below)
The Bank of New York,
as Securities Registrar
101 Barclay Street, 21 W,
New York, New York 10286
Re: 9.5% Senior Subordinated Notes Due 2007 (the "SECURITIES")
Reference is made to the Indenture, dated as of September 25, 1997 (the
"INDENTURE"), among Salem Communications Corporation, a California corporation,
the guarantors party thereto and The Bank of New York, as trustee. Terms used
herein and defined in Regulations S under the U.S. Securities Act of 1933 (the
"SECURITIES ACT") are used herein as so defined.
In connection with our proposed sale of ________ aggregate principal amount
of the Notes, we confirm that such sale has been affected pursuant to and in
accordance with Regulation S under the U.S. Securities Act of 1933, as amended
(the "SECURITIES ACT"), and, accordingly, we represent that:
(1) the offer of the Notes was not made to a U.S. person or to a
person in United States;
(2) either (a) at the time the buy offer was originated, the
transferee was outside the United States or we and any person acting on our
behalf reasonably believed that the transferee was outside the United
States, or (b) the transaction was executed in, on or through the
facilities of a designated off-shore securities market and neither we nor
any person acting on our behalf knows that the transaction has been pre-
arranged with a buyer in the United States;
(3) no directed selling efforts have been made in the United
States in contravention of the requirements of Rule 903(b) or Rule 904(b)
of Regulation S, as applicable;
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act; and
(5) we have advised the transferee of the transfer restrictions
applicable to the Notes.
C-1
<PAGE>
This certificate and the statements contained herein are made for your benefit
and the benefit of the Company.
Dated:___________________ ________________________________________________
(Print the name of the Undersigned, as such term is
defined in the second paragraph of this certificate.)
By:____________________________________
Name:
Title:
(If the Undersigned is a corporation, partnership or
fiduciary, the title of the person signing on behalf of
the Undersigned must be stated.)
Signature Guarantee: _____________________
(Signatures must be guaranteed by an "eligible
guarantor institution" meeting the requirements of the
Security Registrar, which requirements include
membership or participation in the Security Transfer
Agent Medallion Program ("STAMP") or such other
"signature guarantee program" as may be determined by
the Security Registrar in addition to, or in
substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended)
C-2
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
EXHIBIT 4.07
SALEM COMMUNICATIONS CORPORATION
___________________________
CREDIT AGREEMENT
DATED AS OF SEPTEMBER 25, 1997
BY AND AMONG
SALEM COMMUNICATIONS CORPORATION,
THE BANK OF NEW YORK,
AS ADMINISTRATIVE AGENT,
BANK OF AMERICA NT&SA,
AS DOCUMENTATION AGENT,
AND
THE LENDERS PARTY HERETO
___________________________
WITH
BNY CAPITAL MARKETS, INC.,
AS ARRANGER
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<S> <C>
8.14 Transactions with Affiliates............................ 53
8.15 Sale and Leaseback...................................... 54
8.16 Stock Issuance.......................................... 54
8.17 Subordinated Indenture.................................. 54
8.18 Federal Reserve Regulations............................. 54
8.19 Change in Name; Nature of Business...................... 54
8.20 Lease Obligations....................................... 54
9. DEFAULT....................................................... 55
9.1 Events of Default....................................... 55
10. THE ADMINISTRATIVE AGENT..................................... 58
10.1 Appointment............................................. 58
10.2 Delegation of Duties.................................... 58
10.3 Exculpatory Provisions.................................. 58
10.4 Reliance by Administrative Agent........................ 59
10.5 Notice of Default....................................... 59
10.6 Non-Reliance............................................ 59
10.7 Indemnification......................................... 60
10.8 Administrative Agent in its Individual
Capacity................................................ 60
10.9 Successor............................................... 60
10.10 Updating Exhibits and Schedules........................ 61
10.11 The Arranger........................................... 61
10.12 The Documentation Agent................................ 61
11. MISCELLANEOUS................................................ 61
11.1 Amendments and Waivers.................................. 61
11.2 Notices................................................. 62
11.3 No Waiver; Cumulative Remedies.......................... 64
11.4 Survival of Representations and Warranties.............. 64
11.5 Payment of Expenses and Taxes........................... 64
11.6 Lending Offices......................................... 65
11.7 Successors and Assigns.................................. 65
11.8 Counterparts............................................ 66
11.9 Adjustments; Set-off.................................... 67
11.10 No Third Party Beneficiary............................. 68
11.11 Indemnity.............................................. 68
11.12 Governing Law.......................................... 69
11.13 Headings............................................... 69
11.14 Severability........................................... 69
11.15 Integration............................................ 69
11.16 Limitation of Liability................................ 69
11.17 Consent of Jurisdiction................................ 70
11.18 Service of Process..................................... 70
11.19 No Limitation of Service or Suit....................... 70
11.20 WAIVER OF TRIAL BY JURY................................ 70
11.21 Confidentiality........................................ 71
</TABLE>
iii
<PAGE>
EXHIBITS
- --------
Exhibit A List of Commitments
Exhibit B Form of Revolving Credit Note
Exhibit C Form of Borrowing Request
Exhibit D Form of Letter of Credit Request
Exhibit E Form of Opinion of Secret Counsel
Exhibit F Form of Opinion of Counsel to the Borrower
and Subsidiaries
Exhibit G Form of Opinion of FCC Counsel to the
Borrower and Subsidiaries
Exhibit H Form of Compliance Certificate
Exhibit I Form of Borrower Security Agreement
Exhibit J Form of Subsidiary Guaranty
Exhibit K Form of Assignment and Assumption Agreement
SCHEDULES
- ---------
Schedule 1.1(L) List of Lending Offices
Schedule 4.1 List of Subsidiaries
Schedule 4.6 List of Litigation
Schedule 4.7 List of Conflicting Agreements
Schedule 4.8 List of Taxes
Schedule 4.11(b) List of Property
Schedule 4.11(c) FCC Matters
Schedule 4.14 List of Plans
Schedule 4.18 List of Environmental Plans
Schedule 8.1 List of Borrowing
Schedule 8.2 List of Liens
Schedule 8.5(c) List of Investments
-iv-
<PAGE>
CREDIT AGREEMENT, dated as of September 25, 1997, by and among SALEM
COMMUNICATIONS CORPORATION, a California corporation (the "Borrower"), THE BANK
--------
OF NEW YORK, as administrative agent for the Lenders hereunder (in such
capacity, the "Administrative Agent"), BANK OF AMERICA NT&SA, as documentation
--------------------
agent (in such capacity, the "Documentation Agent"), and each Lender party
-------------------
hereto or which becomes a "Lender" pursuant to the provisions of section 11.7
(each a "Lender" and, collectively, the "Lenders").
------ -------
1. DEFINITIONS
-----------
1.1 Defined Terms.
-------------
As used in this Agreement, terms defined in the preamble have the
meanings therein indicated, and the following terms have the following meanings:
"ABR Loans": the Loans (or any portions thereof) at such time as they (or
---------
such portions) are made or are being maintained at a rate of interest based upon
the Alternate Base Rate.
"Accountants": Ernst & Young LLP, or such other firm of certified public
-----------
accountants of recognized national standing selected by the Borrower and
reasonably satisfactory to the Administrative Agent.
"Adjusted Operating Cash Flow": Operating Cash Flow less Excluded Cash
----------------------------
Flow.
"Affected Loan": as defined in section 2.15.
-------------
"Affected Principal Amount": (i) in the event that the Borrower shall fail
-------------------------
for any reason to borrow or convert a Loan after it shall have notified the
Administrative Agent of its intent to do so in which it shall have requested a
Eurodollar Loan pursuant to section 2.3 or 2.8, as the case may be, an amount
equal to the principal amount of such Loan; (ii) in the event that a Eurodollar
Loan shall terminate for any reason prior to the last day of the Interest Period
applicable thereto, an amount equal to the principal amount of such Loan; and
(iii) in the event that the Borrower shall prepay or repay all or any part of
the principal amount of a Eurodollar Loan prior to the last day of the Interest
Period applicable thereto, an amount equal to the principal amount of such Loan
so prepaid or repaid.
"Affiliate": as to any Person, any other Person which, directly or
---------
indirectly, is in control of, is controlled by, or is under common control with,
such Person. For purposes of this definition, control of a Person shall mean
the power, direct or indirect, (i) to vote 5% or more of the securities having
ordinary voting power for the election of directors of such Person or (ii) to
direct or cause direction of the management and policies of such Person whether
by contract or otherwise.
"Agreement": this Credit Agreement, as the same may be amended, supplemented
---------
or otherwise modified from time to time.
<PAGE>
"Alternate Base Rate": on any date, a rate of interest per annum equal to
-------------------
the higher of (i) the BNY Rate in effect on such date or (ii) 1/2 of 1% plus the
Federal Funds Rate in effect on such date.
"Applicable Margin": (a) subject to paragraph (b) of this definition, at all
-----------------
times during the applicable periods set forth below, (i) with respect to the
unpaid principal amount of the ABR Loans, the percentage set forth below under
the heading "Alternate Base Rate Margin" next to the applicable period and (ii)
with respect to the unpaid principal amount of the Eurodollar Loans, the
percentage set forth below under the heading "Eurodollar Rate Margin" next to
the applicable period:
<TABLE>
<CAPTION>
Alternate Base Eurodollar
Period Rate Margin Rate Margin
- ------ ----------- -----------
<S> <C> <C>
when the Total
Leverage Ratio
is equal to or
greater than
6.00:1.00 1.750% 3.000%
when the Total
Leverage Ratio
is equal to or greater
than 5.50:1.00 but
less than 6.00:1.00 1.250% 2.500%
when the Total
Leverage Ratio
is equal to or greater
than 5.00:1.00 but
less than 5.50:1.00 1.000% 2.250%
when the Total
Leverage Ratio
is equal to or greater
than 4.50:1.00 but less
than 5.00:1.00 0.500% 1.750%
when the Total
Leverage Ratio
is equal to or greater
than 4.00:1.00 but
less than 4.50:1.00 0.250% 1.500%
when the Total
Leverage Ratio
is equal to or greater
than 3.50:1.00 but
less than 4.00:1.00 0.000% 1.250%
</TABLE>
-2-
<PAGE>
<TABLE>
<S> <C> <C>
when the Total
Leverage Ratio
is less than 3.50:1.00 0.000% 1.000%
</TABLE>
(b) Changes in the Applicable Margin resulting from a change in the
Total Leverage Ratio, as evidenced by a Compliance Certificate delivered to the
Administrative Agent pursuant to section 7.1(d) or a Borrowing Request or Letter
of Credit Request delivered to the Administrative Agent pursuant to section
5.2(c) evidencing such a change, shall become effective upon (i) in the case of
the delivery of a Compliance Certificate, the first Business Day following the
delivery of (x) such Compliance Certificate and (y) the applicable financial
statements required to be delivered pursuant to section 7.1(a) or (c), as the
case may be, and (ii) in the case of the delivery of a Borrowing Request or
Letter of Credit Request, the Borrowing Date applicable thereto. If the
Borrower shall fail to deliver a Compliance Certificate within 60 days after the
end of any of the first three fiscal quarters, or within 120 days after the end
of the last fiscal quarter, of each fiscal year (each a "certificate delivery
--------------------
date"), for purposes of calculating the Applicable Margin, the Total Leverage
- ----
Ratio from and including such certificate delivery date to the date of delivery
by the Borrower to the Administrative Agent of such Compliance Certificate shall
be conclusively presumed to be greater than 6.00:1.00.
"Arranger": BNY Capital Markets, Inc.
--------
"Assignment": as defined in section 11.7(b).
----------
"Assignment and Assumption Agreement": an agreement substantially in the
-----------------------------------
form of Exhibit K.
"Assignment Fee": as defined in section 11.7(b).
--------------
"Authorized Signatory": the chief executive officer, the chief financial
--------------------
officer, the chief operating officer, the president, a general partner or any
other duly authorized officer (acceptable to the Administrative Agent) of a Loan
Party.
"BNY": The Bank of New York.
---
"BNY Rate": a rate of interest per annum equal to the rate of interest
--------
publicly announced in New York City by BNY from time to time as its prime
commercial lending rate, such rate to be adjusted automatically (without notice)
on the effective date of any change in such publicly announced rate.
"Borrower Security Agreement": the Borrower Security Agreement, dated as
---------------------------
of the date hereof, between the Borrower and the Administrative Agent,
substantially in the form attached hereto as Exhibit I, as the same may be
amended, supplemented or otherwise modified from time to time.
"Borrowing Date": (i) any Business Day specified in a Borrowing Request as
--------------
a date on which the Borrower requests the Lenders to make Loans or (ii) any
Business Day specified in a Letter of Credit Request as a date on which the
Borrower requests the Issuing Bank to issue a Letter of Credit.
-3-
<PAGE>
"Borrowing Request": a Borrowing Request substantially in the form of
-----------------
Exhibit C.
"Broadcasting Station": all related licenses, franchises and permits
--------------------
issued under federal, state or local laws from time to time which authorize a
Person to receive or distribute, or both, over the airwaves, audio and visual,
radio or microwave signals within a geographic area for the purpose of providing
commercial broadcasting radio programming, together with all Property owned or
used in connection with the programming provided pursuant to, and all interest
of such Person to receive revenues from any other Person which derives revenues
from or pursuant to, said licenses, franchises and permits. The term
"Broadcasting Station" shall also include a corporation incorporated in the
United States which shall own one or more Broadcasting Stations.
"Business Day": (i) for all purposes other than as set forth in clause
------------
(ii) below, any day other than a Saturday, Sunday or other day on which
commercial banks in New York City are authorized or required by law or other
governmental action to close and (ii) with respect to all notices and
determinations in connection with, and payments of principal and interest on,
Eurodollar Loans, any day which is a Business Day described in clause (i) above
and which is also a day on which dealings in foreign currency and exchange
between banks in the interbank eurodollar market may be carried on as determined
by the Administrative Agent.
"CERCLA": the Comprehensive Environmental Response, Compensation and
------
Liability Act, as set forth at 42 U.S.C. (S)9601, et seq. as the same may be
-- ---
amended from time to time, and the rules and regulations issued thereunder, as
from time to time in effect.
"Change of Control": any of the following: (i) the Permitted Holders fail
-----------------
to own at least 75% of the total outstanding Voting Stock of the Borrower, (ii)
if neither Edward G. Atsinger III nor Stuart W. Epperson is serving as chief
executive officer of the Borrower and, if such circumstance is caused solely as
a result of death or incapacity, the continuation thereof for a period of 30
days or (iii) a "Change of Control" (under and as defined in the Subordinated
Indenture) occurs.
"Code": the Internal Revenue Code of 1986, as the same may be amended from
----
time to time, or any successor thereto, and the rules and regulations issued
thereunder, as from time to time in effect.
"Collateral": collectively, the Collateral under and as defined in the
----------
Collateral Documents.
"Collateral Documents": collectively, the Borrower Security Agreement and
--------------------
the Subsidiary Guaranty.
"Commitment Fee" and "Commitment Fees": as defined in section 3.1(a).
-------------- ---------------
"Commonly Controlled Entity": any Subsidiary or any entity, whether or not
--------------------------
incorporated, which is under common control with the Borrower within the meaning
of Section 414(b) or 414(c) of the Code.
-4-
<PAGE>
"Communications Act": the Communications Act of 1934, as the same may be
------------------
amended from time to time, and the rules and regulations issued thereunder, as
from time to time in effect.
"Compliance Certificate": a certificate substantially in the form of
----------------------
Exhibit H.
"Consolidated": the Borrower and its Subsidiaries which are consolidated
------------
for financial reporting purposes.
"Consolidated Adjusted Operating Cash Flow": Adjusted Operating Cash Flow
-----------------------------------------
of the Borrower and its Subsidiaries on a Consolidated basis.
"Consolidated Annual Adjusted Operating Cash Flow": at any time,
------------------------------------------------
Consolidated Adjusted Operating Cash Flow for the immediately preceding four
fiscal quarters for which financial statements have been delivered pursuant to
section 7.1(a) or (c), or, in the event that the date of determination is a
fiscal quarter ending date, the fiscal quarter then ended and the immediately
preceding three fiscal quarters.
"Consolidated Annual Operating Cash Flow": at any time, Consolidated
---------------------------------------
Operating Cash Flow for the immediately preceding four fiscal quarters for which
financial statements have been delivered pursuant to section 7.1(a) or (c), or,
in the event that the date of determination is a fiscal quarter ending date, the
fiscal quarter then ended and the immediately preceding three fiscal quarters.
"Consolidated Operating Cash Flow": Operating Cash Flow of the Borrower
--------------------------------
and its Subsidiaries on a Consolidated basis.
"Consolidating": the Borrower and each of its Subsidiaries taken
-------------
separately.
"Contingent Obligation": as to any Person, any obligation of such Person
---------------------
guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends or
other obligations ("primary obligations") of any other Person (the "primary
obligor") in any manner, whether directly or indirectly, including, without
limitation, any obligation of such Person, whether or not contingent, (i) to
purchase any such primary obligation or any Property constituting direct or
indirect security therefor, (ii) to advance or supply funds for the purchase or
payment of any such primary obligation or to maintain working capital or equity
capital of the primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, (iii) to purchase Property, securities or
services primarily for the purpose of assuring the beneficiary of any such
primary obligation of the ability of the primary obligor to make payment of such
primary obligation or (iv) otherwise to assure or hold harmless the beneficiary
of such primary obligation against loss in respect thereof; provided, however,
that the term Contingent Obligation shall not include the indorsement of
instruments for deposit or collection in the ordinary course of business. The
term Contingent Obligation shall also include the liability of a general partner
in respect of the Indebtedness of a partnership in which it is a general
partner, excluding Indebtedness which is non-recourse to such general partner.
The amount of any Contingent Obligation of a Person shall be deemed to be an
amount equal to the stated or determinable amount of the primary obligation in
respect of which such Contingent Obligation is made or, if not stated or
determinable, the maximum reasonably anticipated liability in respect thereof as
determined by such Person in good faith.
-5-
<PAGE>
"Control Person": as defined in section 2.14.
--------------
"Copyright Act": Title 17 of the United States Code, as amended, and the
-------------
rules and regulations issued thereunder, as from time to time in effect.
"Credit Exposure" with respect to any Lender at any time, its RC
---------------
Commitment or, if no RC Commitment is in effect, the sum of its outstanding RC
Loans and Letter of Credit Exposure, at such time.
"Debt Service": the sum of Interest Expense and scheduled principal
------------
amortization (including scheduled mandatory reductions of revolving credit and
similar commitments) of Total Debt, whether or not actually paid, for, as
applicable, the immediately preceding four fiscal quarters for which financial
statements have been delivered pursuant to section 7.1(a) or (c), or, in the
event that the date of determination is a fiscal quarter ending date, the fiscal
quarter then ended and the immediately preceding three fiscal quarters.
"Default": any of the events specified in section 9, whether or not any
-------
requirement for the giving of notice, the lapse of time, or both, or any other
condition, has been satisfied.
"Dollars" and "$": lawful currency of the United States of America.
------- -
"Effective Date": September 25, 1997.
--------------
"Environmental Laws": any and all federal, state and local laws relating
------------------
to the environment, the use, storage, transporting, manufacturing, handling,
discharge, disposal or recycling of hazardous substances, materials or
pollutants or industrial hygiene and including, without limitation, (i) CERCLA;
(ii) the Resource Conservation and Recovery Act of 1976, as amended, 42 USCA
(S)6901 et seq.; (iii) the Toxic Substance Control Act, as amended, 15 USCA
-- ---
(S)2601 et. seq.; (iv) the Water Pollution Control Act, as amended, 33 USCA
-- ---
(S)1251 et. seq.; (v) the Clean Air Act, as amended, 42 USCA (S)7401 et seq.;
-- ---
(vi) the Hazardous Material Transportation Authorization Act of 1994, as
amended, 49 USCA (S)5101 et seq. and (viii) all rules, regulations judgments,
-- ---
decrees, injunctions and restrictions thereunder and any analogous state law, in
each case as from time to time in effect.
"ERISA": the Employee Retirement Income Security Act of 1974, as amended
-----
from time to time, and the rules and regulations issued thereunder, as from time
to time in effect.
"Eurodollar Loan": a portion of the Loans selected by the Borrower to
---------------
bear interest during an Interest Period selected by the Borrower at a rate per
annum based upon a Eurodollar Rate determined with reference to such Interest
Period, all pursuant to and in accordance with sections 2.3 and 2.8.
"Eurodollar Rate": with respect to any Interest Period, the rate per
---------------
annum, as determined by the Administrative Agent, obtained by dividing (and then
rounding to the nearest 1/16 of 1%, or, if there is no nearest 1/16 of 1%, the
next higher 1/16 of 1%):
(a) the rate quoted by the Administrative Agent to major banks in the
interbank eurodollar market as the rate at which the Administrative Agent is
offering
-6-
<PAGE>
Dollar deposits in an amount approximately equal to BNY's pro rata share of the
given portion of the Loans selected by the Borrower to bear interest during such
Interest Period based upon a rate of interest determined under this definition,
and having a term to maturity corresponding to such Interest Period, as quoted
at approximately 10:00 A.M. two Business Days prior to the date upon which such
Interest Period is to commence, by
(b) a number equal to 1.00 minus the aggregate of the then stated
maximum rates during such Interest Period of all reserve requirements
(including, without limitation, marginal, emergency, supplemental and special
reserves), expressed as a decimal, established by the Board of Governors of the
Federal Reserve System and any other banking authority to which BNY and other
major United States banks or money center banks are subject, in respect of
eurocurrency funding (currently referred to as "Eurocurrency liabilities" in
Regulation D of the Board of Governors of the Federal Reserve System). Such
reserve requirements shall include, without limitation, those imposed under such
Regulation D. Eurodollar Loans shall be deemed to constitute Eurocurrency
liabilities and as such shall be deemed to be subject to such reserve
requirements without benefit of credits for proration, exceptions or offsets
which may be available from time to time to any Lender under such Regulation D.
The Eurodollar Rate shall be adjusted automatically on and as of the effective
date of any change in any such reserve requirement.
"Event of Default": any of the events specified in section 9, provided
----------------
that any requirement for the giving of notice, the lapse of time, or both, or
any other condition, has been satisfied.
"Excess Cash Flow": at any time, in respect of any period, Consolidated
----------------
Operating Cash Flow for such period (before any adjustments to reflect
acquisitions, sales and exchanges of Property during such period) less the sum
of, without duplication, (i) Fixed Charges and (ii) voluntary principal
prepayments made pursuant to section 2.5(a), provided that the RC Commitments
are permanently reduced in an aggregate amount equal to such prepayments made
under section 2.5(a).
"Exchange Act": the Securities Exchange Act of 1934, as amended.
------------
"Excluded Cash Flow": at any time, for any period, Operating Cash Flow
------------------
for such period allocable to all Excluded Properties at such time.
"Excluded Property": at any time, any Broadcasting Station, designated in
-----------------
writing by the Borrower to the Administrative Agent and the Lenders as an
Excluded Property, that was acquired by the Borrower within the immediately
preceding 18 month period and in respect of which the Borrower changed the
format from that in effect at the time such Broadcasting Station was acquired by
the Borrower.
"Existing Credit Agreement": the Third Amended and Restated Credit
-------------------------
Agreement, dated as of January 10, 1997, by and among the Borrower, New
Inspiration Broadcasting Company, Inc., Golden Gate Broadcasting Company, Inc.,
Beltway Media Partners, the banks party thereto, Bank of America National Trust
and Savings Association, as Agent and Collateral Agent, and The Bank of New
York, as Documentation Agent, as amended.
-7-
<PAGE>
"FCC": the Federal Communications Commission, or any Governmental
---
Authority succeeding to the functions thereof.
"Federal Funds Rate": for any day, the rate per annum (rounded to the
------------------
nearest 1/16 of 1% or, if there is no nearest 1/16 of 1%, then to the next
higher 1/16 of 1%) equal to the weighted average of the rates on overnight
federal funds transactions with members of the Federal Reserve System arranged
by federal funds brokers on such day, as published by the Federal Reserve Bank
of New York on the Business Day next succeeding such day, provided that (i) if
the day for which such rate is to be determined is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next succeeding Business Day,
and (ii) if such rate is not so published for any day, the Federal Funds Rate
for such day shall be the average rate charged to the Administrative Agent on
such day on such transactions as determined by the Administrative Agent.
"Fixed Charges": the sum, without duplication, of (a) Debt Service, (b)
-------------
cash income taxes paid and (c) capital expenditures (excluding capital
expenditures made with insurance proceeds and capital expenditures associated
with an acquisition made within the 12 month period immediately following such
acquisition), in each case of the Borrower and its Subsidiaries on a
Consolidated basis, determined in accordance with GAAP, for, as applicable, the
immediately preceding four fiscal quarters for which financial statements have
been delivered pursuant to section 7.1(a) or (c), or, in the event that the date
of determination is a fiscal quarter ending date, the fiscal quarter then ended
and the immediately preceding three fiscal quarters.
"GAAP": generally accepted accounting principles set forth in the opinions
----
and pronouncements of the Accounting Principles Board and the American Institute
of Certified Public Accountants and statements and pronouncements of the
Financial Accounting Standards Board or in such other statement by such other
entity as may be approved by a significant segment of the accounting profession,
which are applicable to the circumstances as of the date of determination,
consistently applied. If at any time any change in GAAP would affect the
computation of any financial ratio or requirement set forth in this Agreement,
the Administrative Agent, the Lenders and the Borrower shall negotiate in good
faith to amend such ratio or requirement to reflect such change in GAAP (subject
to the approval of the Required Lenders), provided that, until so amended, (i)
such ratio or requirement shall continue to be computed in accordance with GAAP
prior to such change therein and (ii) the Borrower shall provide to the
Administrative Agent, and the Lenders financial statements and other documents
required under this Agreement or as reasonably requested hereunder setting forth
a reconciliation between calculations of such ratio or requirement made before
and after giving effect to such change in GAAP.
"Governmental Authority": any nation or government, any state or other
----------------------
political subdivision thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government
and any court or arbitrator.
"Hazardous Discharge": as defined in section 11.11(b).
-------------------
"Highest Lawful Rate": as to any Lender, the maximum rate of interest, if
-------------------
any, that at any time or from time to time may be contracted for, taken, charged
or received by such Lender on the Notes held thereby, or which may be owing to
such Lender pursuant
-8-
<PAGE>
to this Agreement and the other Loan Documents under the laws applicable to such
Lender and this transaction.
"Indebtedness": as to any Person, at a particular time, all items which
------------
constitute, without duplication, (i) indebtedness for borrowed money or the
deferred purchase price of Property (other than trade payables incurred in the
ordinary course of business), (ii) indebtedness evidenced by notes, bonds,
debentures or similar instruments, (iii) obligations with respect to any
conditional sale agreement or title retention agreement, (iv) indebtedness
arising under acceptance facilities and the amount available to be drawn under
all letters of credit issued for the account of such Person and, without
duplication, all drafts drawn thereunder to the extent such Person shall not
have reimbursed the issuer in respect of the issuer's payment of such drafts,
(v) all liabilities secured by any Lien on any Property owned by such Person
even though such Person has not assumed or otherwise become liable for the
payment thereof (other than Liens permitted under sections 8.2(i) through (iv)
and carriers', warehousemen's, mechanics', repairmen's or other like non-
consensual Liens arising in the ordinary course of business), (vi) obligations
for principal payments under leases which have been, or under GAAP are required
to be, capitalized and (vii) all Contingent Obligations.
"Indemnified Party": shall have the meaning set forth in section
-----------------
11.11(a).
"Interest Expense": the sum of all (i) interest (adjusted to give effect
----------------
to all Interest Rate Protection Arrangements and fees and expenses paid in
connection with same, all as determined in accordance with GAAP) on Total Debt
and (ii) commitment, letter of credit and similar fees, in each case of the
Borrower and its Subsidiaries on a Consolidated basis, determined in accordance
with GAAP, for, as applicable, the immediately preceding four fiscal quarters
for which financial statements have been delivered pursuant to section 7.1(a) or
(c), or, in the event that the date of determination is a fiscal quarter ending
date, the fiscal quarter then ended and the immediately preceding three fiscal
quarters.
"Interest Payment Date": (i) as to any ABR Loan, the last day of each
---------------------
March, June, September and December commencing on the first of such days to
occur after such ABR Loan is made, (ii) as to any Eurodollar Loan in respect of
which the Borrower has selected an Interest Period of one, two or three months,
the last day of such Interest Period and (iii) as to any Eurodollar Loan in
respect of which the Borrower has selected an Interest Period of six months, the
last day of such Interest Period and the corresponding day of the month which is
three months after the date of the commencement of such Interest Period, or, if
such day is not a Business Day or does not exist, on the immediately preceding
Business Day.
"Interest Period": the period commencing on any Business Day selected by
---------------
the Borrower in accordance with section 2.3 or 2.8 and ending one, two, three or
six months thereafter, as selected by the Borrower in accordance with such
section, subject to the following:
(a) if any Interest Period would otherwise end on a day which is not a
Business Day, such Interest Period shall be extended to the immediately
succeeding Business Day unless the result of such extension would be to carry
the end of such Interest Period into another calendar month, in which event such
Interest Period shall end on the Business Day immediately preceding such day;
and
-9-
<PAGE>
(b) if any Interest Period shall begin on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding day
in the calendar month at the end of such Interest Period), such Interest Period
shall end on the last Business Day of a calendar month.
"Interest Rate Protection Arrangement": any interest rate swap, cap or
------------------------------------
collar arrangement or any other derivative product customarily offered by banks
to their customers in order to manage the exposure of such customers to interest
rate fluctuations.
"Investments": as defined in section 8.5.
-----------
"Issuing Bank": BNY.
------------
"Lending Office": in respect of any Lender, initially, the office or
--------------
offices of such Lender designated as such in Schedule 1.1(L) hereto; thereafter,
such other office or offices of such Lender, if any, which shall be making or
maintaining Loans.
"Letter of Credit": as defined in Section 2.18.
----------------
"Letter of Credit Commitment": the commitment of the Issuing Bank to issue
---------------------------
Letters of Credit in accordance with the terms hereof in an aggregate
outstanding face amount not exceeding $15,000,000 (or, if less, the RC
Commitments) at any time, as the same may be reduced pursuant to Section 2.4.
"Letter of Credit Exposure": at any time, (a) in respect of all Lenders,
-------------------------
the sum, without duplication, of (i) the maximum aggregate amount which may be
drawn under all unexpired Letters of Credit at such time (whether the conditions
for drawing thereunder have or may be satisfied), (ii) the aggregate amount, at
such time, of all unpaid drafts (which have not been dishonored) drawn under all
Letters of Credit, and (iii) the aggregate unpaid principal amount of the
Reimbursement Obligations at such time, and (b) in respect of any Lender, an
amount equal to such Lender's RC Commitment Percentage at such time multiplied
by the amount determined under clause (a) of this definition.
"Letter of Credit Fee": as defined in Section 3.1(c).
--------------------
"Letter of Credit Participation": with respect to each Lender, its
------------------------------
obligations to the Issuing Bank under Section 2.19.
"Letter of Credit Request": a request in the form of Exhibit D.
------------------------
"Lien": any mortgage, pledge, hypothecation, assignment, deposit
----
arrangement, encumbrance, lien (statutory or other), or other security agreement
or security interest of any kind or nature whatsoever, including, without
limitation, any conditional sale or other title retention agreement and any
financing lease having substantially the same economic effect as any of the
foregoing.
"Loans": the RC Loans.
-----
"Loan Documents": collectively, this Agreement, the Notes, the
--------------
Reimbursement Agreements and the Collateral Documents.
-10-
<PAGE>
"Loan Party": the Borrower, each Subsidiary Guarantor and each other party
----------
(other than the Administrative Agent, the Issuing Bank and the Lenders) that is
a signatory to a Loan Document.
"Margin Stock": any "margin stock", as said term is defined in Regulation
------------
U of the Board of Governors of the Federal Reserve System, as the same may be
amended or supplemented from time to time.
"Material Adverse Change": a material adverse change in (i) the
-----------------------
operations, business, prospects, Property or condition (financial or otherwise)
of (a) the Borrower or (b) the Borrower and its Subsidiaries on a Consolidated
basis, (ii) the ability of the Borrower or any other Loan Party to perform its
obligations under the Loan Documents to which it is a party or (iii) the ability
of the Administrative Agent or any of the Lenders to enforce any of the Loan
Documents.
"Material Adverse Effect": a material adverse effect on (i) the
-----------------------
operations, business, prospects, Property or condition (financial or otherwise)
of (a) the Borrower or (b) the Borrower and its Subsidiaries on a Consolidated
basis, (ii) the ability of the Borrower or any other Loan Party to perform its
obligations under the Loan Documents to which it is a party or (iii) the ability
of the Administrative Agent or any of the Lenders to enforce any of the Loan
Documents.
"Maturity Date": August 31, 2004.
-------------
"Multiemployer Plan": a Plan which is a multiemployer plan as defined in
------------------
Section 4001(a)(3) of ERISA.
"Net Equity Proceeds": as defined in section 2.4(b)(v).
-------------------
"Notes": the RC Notes.
-----
"Operating Cash Flow": at any time, with respect to any Person, for any
-------------------
period: (i) revenues (exclusive of reciprocal and barter revenues) of such
Person, determined in accordance with GAAP, for such period, less (ii) expenses
----
(exclusive of depreciation, amortization, interest, income tax and reciprocal
and barter expenses included therein), plus (iii) non-recurring expense items
----
and other non-cash expense items of such Person for such period, in each case
mutually agreed upon between the Borrower and the Required Lenders, to the
extent deducted in accordance with clause (ii) above, less (iv) the amount of
----
any cash payments related to non-cash expense items added pursuant to clause
(iii) above. Operating Cash Flow shall be adjusted on a consistent basis to
reflect the acquisition, sale, exchange and disposition of Property during such
period. Operating Cash Flow shall exclude all gains and losses from the sale or
disposition of Property and all extraordinary gains and losses.
"PBGC": the Pension Benefit Guaranty Corporation established pursuant to
----
Subtitle A of Title IV of ERISA, or any Governmental Authority succeeding to the
functions thereof.
"Permitted Holders": as of any date of determination (i) any of Stuart W.
-----------------
Epperson and Edward G. Atsinger III; (ii) family members or the relatives of the
Persons described in clause (i); (iii) any trusts created for the benefit of the
Persons described in
-11-
<PAGE>
clauses (i), (ii) or (iv) or any trust for the benefit of such trust; or (iv) in
the event of the incompetence or death of any of the Persons described in
clauses (i) and (ii), such Persons's estate, executor, administrator, committee
or other personal representative or beneficiaries, in each case who at any
particular date shall beneficially own or have the right to acquire, directly or
indirectly, Voting Stock of the Borrower.
"Permitted Liens": Liens permitted to exist pursuant to section 8.2.
---------------
"Permitted Non-Commercial Educational Station Investment": a loan made by
-------------------------------------------------------
the Borrower or a Subsidiary to a non-profit entity, the proceeds of which are
used to acquire assets used in the operation of a Broadcasting Station; provided
that so long as any such Investment remains outstanding (i) such loan shall be
evidenced by a promissory note and shall not be subordinated to any other
Indebtedness of such non-profit entity; (ii) at least 40% of the board seats (or
other comparable governing body) of such non-profit entity shall be held by
executive officers of the Borrower, and (iii) a technical and professional
services agreement shall be in full force and effect between such non-profit
entity and the Borrower pursuant to which the Borrower shall be compensated for
providing engineering, accounting, legal and other assistance in connection with
the operation of the station licensed to such non-profit entity (which agreement
shall contain customary terms and conditions for technical and professional
services agreements in the radio broadcasting industry generally).
"Person": an individual, a partnership, a corporation, a business trust, a
------
joint stock company, a trust, an unincorporated association, a joint venture, a
limited liability company, a Governmental Authority or any other entity of
whatever nature.
"Plan": any pension plan which is covered by Title IV of ERISA and which
----
is maintained by or to which contributions are made by the Borrower or a
Commonly Controlled Entity or in respect of which the Borrower or a Commonly
Controlled Entity has or may have any liability.
"Pro-Forma Debt Service": the sum of Pro-Forma Interest Expense and the
----------------------
scheduled payments of principal (including scheduled mandatory reductions of
revolving credit and similar commitments) in respect of Total Debt required to
be made during the four fiscal quarters of the Borrower immediately succeeding
any determination thereof. For purposes of calculating Pro-Forma Debt Service,
the principal amount outstanding under any revolving or line of credit facility
on the date of any calculation of Pro-Forma Debt Service shall be assumed to be
outstanding during the entire applicable four fiscal quarter period, subject to
any mandatory scheduled payments of principal required to be made during such
period.
"Pro-Forma Interest Expense": the sum of all interest (adjusted to give
--------------------------
effect to all Interest Rate Protection Arrangements and fees and expenses paid
in connection with the same, all as determined in accordance with GAAP) in
respect of Total Debt for the four fiscal quarters of the Borrower immediately
succeeding any determination thereof. Where any item of interest varies or
depends upon a variable rate of interest (or other rate of interest which is not
fixed for such entire four fiscal quarters), such rate, for purposes of
calculating Pro-Forma Interest Expense, shall be assumed to equal the interest
rate in effect on the date of such calculation. Also, for purposes of
calculating Pro-Forma Interest Expense, the principal amount outstanding under
any revolving or line of credit facility on the date of any calculation of Pro-
Forma Debt Service shall be assumed to be
-12-
<PAGE>
outstanding during the entire applicable four fiscal quarter period, subject to
any mandatory scheduled payments of principal required to be made during such
period.
"Property": all types of real, personal, tangible, intangible or mixed
--------
property.
"RC Commitment": as to any Lender, the amount set forth next to the name
-------------
of such Lender on Exhibit A under the heading "RC Commitment", as such RC
Commitment may be reduced from time to time pursuant to section 2.4.
"RC Commitments": the RC Commitments of all Lenders.
--------------
"RC Commitment Percentage": as to any Lender, the percentage set forth
------------------------
opposite the name of such Lender on Exhibit A under the heading "RC Commitment
Percentage".
"RC Commitment Period": the period from the Effective Date until the RC
--------------------
Commitment Termination Date.
"RC Commitment Termination Date": the earlier of the Business Day
------------------------------
immediately preceding the Maturity Date or such other date upon which the RC
Commitments shall have been terminated in accordance with section 2.4 or 9.1.
"RC Loan" and "RC Loans": as defined in section 2.1.
------- --------
"RC Note" and "RC Notes": as defined in section 2.2.
------- --------
"Reimbursement Agreement": as defined in Section 2.18(b).
-----------------------
"Reimbursement Obligations": all obligations and liabilities of the
-------------------------
Borrower due and to become due (a) under the Reimbursement Agreements and (b)
hereunder in respect of Letters of Credit.
"Reinvested Proceeds": net cash proceeds from the sale, exchange or other
-------------------
disposition of all or substantially all of a Broadcasting Station, after giving
effect to the payment of cash taxes payable in connection with the same, which
cash proceeds are used to acquire one or more additional Broadcasting Stations
through a merger or acquisition in accordance with section 8.3 during the
Reinvestment Period.
"Reinvestment Period": the period which is 360 days from the date that
-------------------
proceeds from the sale, exchange or other disposition of all or substantially
all of a Broadcasting Station are received by the Borrower.
"Remaining Interest Period": (i) in the event that the Borrower shall fail
-------------------------
for any reason to borrow or convert Loans after it shall have notified the
Administrative Agent of its intent to do so in which it shall have requested a
Eurodollar Loan pursuant to section 2.3 or 2.8, a period equal to the Interest
Period that the Borrower elected in respect of such Eurodollar Loan; (ii) in the
event that a Eurodollar Loan shall terminate for any reason prior to the last
day of the Interest Period applicable thereto, a period equal to the period from
and including the date of such termination to but excluding the last day of such
Interest Period; and (iii) in the event that the Borrower shall prepay or repay
all or any part of the principal amount of a Eurodollar Loan prior to the last
day of the Interest
-13-
<PAGE>
Period applicable thereto, a period equal to the period from and including the
date of such prepayment or repayment to but excluding the last day of such
Interest Period.
"Reportable Event": any event described in Section 4043(b) of ERISA, other
----------------
than an event (excluding an event described in Section 4043(b)(1) relating to
tax disqualification) with respect to which the 30-day notice requirement has
been waived.
"Required Lenders": at any date of determination, Lenders having Credit
----------------
Exposures equal to or greater than 51% of the Total Credit Exposure.
"Restricted Payment": as defined in section 8.4.
------------------
"Single Employer Plan": any Plan which is not a Multiemployer Plan.
--------------------
"Solvent": with respect to any Person as of any date of determination, on
-------
such date (i) the fair value of the assets of such Person (both at fair
valuation and at present fair saleable value) is, as of such date of
determination, greater than the total amount of liabilities, including, without
limitation, contingent and unliquidated liabilities, of such Person, (ii) such
Person is able to pay all of its liabilities as they mature, and (iii) such
Person does not have unreasonably small capital with which to carry on its
business. In computing the amount of contingent or unliquidated liabilities at
any time, such liabilities will be computed at the amount which, in light of all
the facts and circumstances existing at such time, represents the amount that
can reasonably be expected to become an actual or matured liability.
"Special Counsel": Emmet, Marvin & Martin, LLP, special counsel to the
---------------
Administrative Agent.
"Stock": any and all shares, interests, participations, options, warrants
-----
or other equivalents (however designated) of corporate stock, including, without
limitation, phantom stock.
"Subordinated Indenture": the Indenture, dated as of September 25, 1997,
----------------------
between the Borrower and The Bank of New York, as trustee, as the same may be
amended, supplemented or otherwise modified from time to time in accordance with
section 8.19.
"Subordinated Indenture Notes": the 9.5% Senior Subordinated Notes, due
----------------------------
2007, in the aggregate principal amount of $150,000,000, issued pursuant to the
Subordinated Indenture, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with section 8.19.
"Subordinated Indenture Subsidiary Guaranty": the subordinated guaranty
------------------------------------------
or guaranties executed and delivered by one or more of the Subsidiaries in
connection with the Subordinated Indenture, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with section
8.19.
"Subsidiary": any corporation, association, partnership, joint venture or
----------
other business entity of which the Borrower and/or any Subsidiary of the
Borrower, directly or indirectly, either (i) in respect of a corporation, owns
or controls more than 50% of the
-14-
<PAGE>
outstanding Stock having ordinary voting power to elect a majority of the board
of directors or similar managing body, irrespective of whether or not a class or
classes shall or might have voting power by reason of the happening of any
contingency, or (ii) in respect of an association, partnership, joint venture or
other business entity, is entitled to share in more than 50% of the profits and
losses, however determined.
"Subsidiary Guarantor": each Subsidiary.
--------------------
"Subsidiary Guaranty": the Subsidiary Guaranty and Security Agreement,
-------------------
dated as of the date hereof, made by the Subsidiaries to the Administrative
Agent, substantially in the form attached hereto as Exhibit J, as the same may
be amended, supplemented or otherwise modified from time to time.
"Taxes": any present or future income, stamp or other taxes, levies,
-----
imposts, duties, fees, assessments, deductions, withholding, or other charges of
whatever nature, now or hereafter imposed, levied, collected, withheld, or
assessed by any jurisdiction, or by any department, agency, state or other
political subdivision thereof or therein.
"Total Adjusted Debt": Total Debt less, with respect to each Excluded
------------------- ----
Property, the lesser of (i) 50% of the lesser of (x) the purchase price of such
Excluded Property and (y) the independent appraisal value (if required under
clause (i) of the first paragraph of section 8.3(b)) of such Excluded Property
and (ii) $40,000,000 prior to December 31, 1998 and $25,000,000 thereafter.
"Total Credit Exposure": at any time, the sum of the Credit Exposures of
---------------------
all Lenders at such time.
"Total Debt": the aggregate Indebtedness of the Borrower and its
----------
Subsidiaries on a Consolidated basis, determined in accordance with GAAP.
"Total Leverage Ratio": the ratio of (i) Total Adjusted Debt less cash and
--------------------
cash equivalents in excess of $5,000,000 to (ii) Consolidated Annual Adjusted
Operating Cash Flow.
"Upstream Transfers": as defined in section 8.13.
------------------
"Voting Stock": Stock of the class or classes pursuant to which the
------------
holders thereof have the general voting power under ordinary circumstances to
elect at least a majority of the board of directors, managers or trustees of a
corporation (irrespective of whether or not at the time Stock of any other class
or classes shall have or might have voting power by reason or the happening of
any contingency).
1.2 Principles of Construction.
--------------------------
(a) All terms defined in this Agreement shall have the meanings given
such terms herein when used in the Loan Documents or any certificate or other
document made or delivered pursuant hereto or thereto, unless otherwise defined
therein.
(b) Unless otherwise specified herein, as used in the Loan Documents
and in any certificate, opinion or other document made or delivered pursuant
hereto or
-15-
<PAGE>
thereto, all accounting terms used herein shall be interpreted, and all
accounting determinations hereunder shall be made, in accordance with GAAP.
(c) The words "hereof", "herein", "hereto" and "hereunder" and similar
words when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and section, paragraph,
schedule and exhibit references contained herein shall refer to sections or
paragraphs hereof or schedules or exhibits hereto unless otherwise expressly
provided herein.
(d) The word "or" shall not be exclusive; "may not" is prohibitive and
not permissive; and the singular includes the plural.
(e) Unless otherwise specifically set forth herein, all references to
time shall refer to New York City time.
2. AMOUNT AND TERMS OF LOANS.
--------------------------
2.1 Loans.
-----
Subject to the terms and conditions hereof, each Lender having an RC
Commitment agrees to make loans (each an "RC Loan" and, collectively with the
-------
other RC Loans of such Lender and/or with the RC Loans of each other Lender, the
"RC Loans") to the Borrower from time to time during the RC Commitment Period.
--------
At all times during the RC Commitment Period, the Borrower may borrow, prepay
and reborrow RC Loans in accordance with the provisions hereof, provided that
the aggregate unpaid principal amount of all RC Loans and the Letter of Credit
Exposure of all Lenders at any one time shall not exceed the RC Commitments then
in effect, and provided further that the aggregate unpaid principal amount of
each Lender's RC Loans and its Letter of Credit Exposure at any one time shall
not exceed such Lender's RC Commitment. The principal amount of each Lender's
RC Loan made on a Borrowing Date shall be an amount equal to its RC Commitment
Percentage of all RC Loans made on such date. Subject to the provisions of
sections 2.3, 2.8 and 2.15, RC Loans may be (i) ABR Loans, (ii) Eurodollar Loans
or (iii) any combination thereof.
2.2 Notes.
-----
The RC Loans of each Lender shall be evidenced by a promissory note in
the form of Exhibit B (each as indorsed or modified from time to time, including
all replacements thereof and substitutions therefor, an "RC Note" and,
-------
collectively with the RC Note of each other Lender, the "RC Notes"), payable to
--------
the order of such Lender, in the maximum stated principal amount equal to such
Lender's RC Commitment. Each RC Note shall (i) be dated the Effective Date,
(ii) be stated to mature on the Maturity Date and be payable in the amounts and
at the times required by section 2.5 and (iii) bear interest on the unpaid
principal amount thereof at the applicable interest rate or rates per annum
determined as provided in section 2.6, payable as specified in section 2.6.
Each Lender is hereby irrevocably authorized by the Borrower to enter on the
schedule attached to its RC Note and/or in its internal books and records the
amount of each RC Loan made by it thereunder, each payment thereon, and the
other information provided for on such schedule, and such schedule and books and
records shall be presumptively correct absent manifest error as to the amount of
such Lender's RC Loans and as to the amount of
-16-
<PAGE>
principal and interest paid by the Borrower in respect of such RC Loans and as
to the other information set forth on such schedule or books and records
relating to the RC Loans, provided, however, that the failure to make any such
entry (or any error therein) with respect to any RC Loan shall not limit or
otherwise affect the obligations of the Borrower hereunder or under such RC
Note. Each Lender may attach one or more continuations to such schedule as and
when required. In all events, the principal amount owing by the Borrower to each
Lender in respect of such Lender's RC Note shall be the aggregate amount of all
RC Loans made by such Lender thereunder less all payments of principal thereon
made by the Borrower.
2.3 Procedure for Borrowing Loans.
-----------------------------
(a) The Borrower may borrow RC Loans on any Business Day occurring
during the RC Commitment Period, provided that, with respect to any requested
borrowing, the Borrower shall notify the Administrative Agent (by telephone or
telecopy) no later than 1:00 P.M., three Business Days prior to the requested
Borrowing Date, in the case of Eurodollar Loans, and no later than 1:00 P.M.,
one Business Day prior to the requested Borrowing Date, in the case of ABR
Loans, specifying (i) the aggregate amounts to be borrowed under the RC
Commitments, (ii) the requested Borrowing Date, (iii) whether the borrowing is
to be a Eurodollar Loan, an ABR Loan, or a combination thereof, and (iv) if the
borrowing is to be a Eurodollar Loan, the length of the initial Interest Period
for such Eurodollar Loan. Each such notice shall be irrevocable and confirmed
immediately by delivery to the Administrative Agent of a Borrowing Request.
Each borrowing of RC Loans, consisting of ABR Loans shall be in an aggregate
principal amount equal to $1,000,000 or such amount plus an integral multiple of
$100,000 in excess thereof or, if less, the unused amount of the RC Commitments.
Each borrowing of RC Loans, as the case may be, consisting of Eurodollar Loans
shall be in a minimum aggregate principal amount equal to $2,000,000 or an
integral multiple of $250,000 in excess thereof. Upon receipt of each notice of
borrowing from the Borrower, the Administrative Agent shall promptly notify each
Lender (by telephone or otherwise, such notice to be confirmed by telecopy or
other writing) of the requested borrowing. Subject to its receipt of the notice
referred to in the preceding sentence and to the other terms and conditions of
this Agreement, each Lender will make the amount of its applicable RC Commitment
Percentage, of each borrowing available to the Administrative Agent for the
account of the Borrower at the office of the Administrative Agent set forth in
section 11.2 not later than 12:00 Noon, on the Borrowing Date requested by the
Borrower, in funds immediately available to the Administrative Agent at such
office. The amounts so made available to the Administrative Agent on a Borrowing
Date will then, subject to the satisfaction of the terms and conditions of this
Agreement as determined by the Administrative Agent, be made available on such
date to the Borrower by the Administrative Agent, in immediately available
funds, at the office of the Administrative Agent specified in section 11.2 by
crediting the account of the Borrower on the books of such office with the
aggregate of said amounts received by the Administrative Agent.
(b) Unless the Administrative Agent shall have received prior notice
from a Lender (by telephone or otherwise, such notice to be confirmed by
telecopy or other writing) that such Lender will not make available to the
Administrative Agent such Lender's pro rata share of the Loans requested by the
Borrower, the Administrative Agent may assume that such Lender has made such
share available to the Administrative Agent on such Borrowing Date in accordance
with this section 2.3 provided that such Lender
-17-
<PAGE>
received notice of the proposed borrowing from the Administrative Agent, and the
Administrative Agent may, in reliance upon such assumption, make available to
the Borrower on such Borrowing Date a corresponding amount. If and to the extent
such Lender shall not have so made such pro rata share available to the
Administrative Agent, such Lender and the Borrower severally agree to pay to the
Administrative Agent forthwith on demand such corresponding amount (to the
extent not previously paid by the other), together with interest thereon for
each day from the date such amount is made available to the Borrower until the
date such amount is paid to the Administrative Agent, at a rate per annum equal
to, in the case of the Borrower, the applicable interest rate set forth in
section 2.6, and, in the case of such Lender, the Federal Funds Rate in effect
on such date (as determined by the Administrative Agent). Such payment by the
Borrower, however, shall be without prejudice to its rights against such Lender.
If such Lender shall pay to the Administrative Agent such corresponding amount,
such amount so paid shall constitute such Lender's Loan as part of such Loans
for purposes of this Agreement, which Loan shall be deemed to have been made by
such Lender on the Borrowing Date applicable to such Loans.
2.4 Reduction of Commitments.
------------------------
(a) Voluntary Reductions. The Borrower shall have the right, upon at
--------------------
least three Business Days' prior irrevocable written notice to the
Administrative Agent, to reduce permanently the RC Commitments or the Letter of
Credit Commitment, in whole at any time, or in part from time to time, without
premium or penalty, to an amount not less than (i) in the case of the RC
Commitments, the sum of the aggregate outstanding principal balance of the RC
Loans, after giving effect to any contemporaneous prepayment thereof, and the
Letter of Credit Exposure of all Lenders, provided that each partial reduction
of such RC Commitments shall be in a minimum amount of $5,000,000 or an integral
multiple of $1,000,000 in excess thereof or, if less, the amount of the RC
Commitments then in effect, and (ii) in the case of the Letter of Credit
Commitment, the Letter of Credit Exposure of all Lenders, provided that each
partial reduction of the Letter of Credit Commitment shall be in a minimum
amount of $1,000,000 or an integral multiple of $1,000,000 in excess thereof or,
if less, the Letter of Credit Commitment then in effect.
(b) Mandatory Reductions of RC Commitments.
--------------------------------------
(i) Mandatory Scheduled Reductions of RC Commitments. On each date
------------------------------------------------
set forth below, the RC Commitments shall be reduced by the amount set forth
below next to such date:
<TABLE>
<CAPTION>
Reduction
Dates Amounts
----- -------
<S> <C>
March 31, 1999 $ 2,500,000
June 30, 1999 $ 2,500,000
September 30, 1999 $ 2,500,000
December 31, 1999 $ 2,500,000
March 31, 2000 $ 2,500,000
June 30, 2000 $ 2,500,000
September 30, 2000 $ 2,500,000
December 31, 2000 $ 2,500,000
March 31, 2001 $ 2,500,000
</TABLE>
-18-
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
June 30, 2001 $ 2,500,000
September 30, 2001 $ 2,500,000
December 31, 2001 $ 2,500,000
March 31, 2002 $ 2,500,000
June 30, 2002 $ 2,500,000
September 30, 2002 $ 2,500,000
December 31, 2002 $ 2,500,000
March 31, 2003 $ 2,500,000
June 30, 2003 $ 2,500,000
September 30, 2003 $ 2,500,000
December 31, 2003 $ 2,500,000
March 31, 2004 $ 6,250,000
June 30, 2004 $ 6,250,000
August 31, 2004 $12,500,000
</TABLE>
(ii) Mandatory Reductions of RC Commitments Relating to Excess Cash
--------------------------------------------------------------
Flow. On the earlier of (i) the date the annual financial statements in respect
- ----
of each fiscal year (commencing with the fiscal year ending December 31, 1998),
are delivered to the Administrative Agent pursuant to section 7.1(a) or (ii) the
120th day following the end of each fiscal year (commencing with the fiscal year
ending December 31, 1998), the RC Commitments shall be reduced by an amount
equal to 50% of Excess Cash Flow with respect to such fiscal year, provided that
no such reduction in respect of such fiscal year shall be required if (x) the
Total Leverage Ratio as at the end of such fiscal year is less than 3.50:1.00
and (y) no Default or Event of Default shall exist at the end of such fiscal
year or on the date the RC Commitments would be required to be reduced.
(iii) Mandatory Reductions of RC Commitments Relating to Insurance
------------------------------------------------------------
and Condemnation. The RC Commitments shall be reduced in the amounts and at the
- ----------------
times required by sections 7.5(b) and 7.5(c).
(iv) Mandatory Reductions of RC Commitments Relating to Proceeds of
--------------------------------------------------------------
Broadcasting Station Sales and Other Property Sales. The RC Commitments shall
- ---------------------------------------------------
be reduced by an amount equal to the difference between (a) 100% of the proceeds
of the sale, exchange or other disposition of (A) all or substantially all of
any Broadcasting Station of the Borrower or any of its Subsidiaries, or (B) any
other Property to the extent not sold, exchanged or disposed of in the ordinary
course of business (net of (1) sales and other commissions and legal and other
expenses incurred, (2) cash taxes payable, and (3) Indebtedness permitted under
sections 8.1(ii) and (iv) which is secured by the Broadcasting Station or other
Property sold, exchanged or disposed of and required to be repaid and is repaid,
in each case in connection therewith), and (b) the amount of Reinvested Proceeds
in connection with such sale, exchange or other disposition of a Broadcasting
Station which has been used prior to the date such reduction is required to be
made to acquire one or more additional Broadcasting Stations through a merger or
acquisition in accordance with section 8.3. Such reduction shall be made on the
earlier of (x) the last day of the Reinvestment Period with respect to such
sale, exchange or other disposition, or (y) the occurrence of a Default or Event
of Default.
(v) Mandatory Reductions of RC Commitments Relating to Issuances of
---------------------------------------------------------------
Equity. The RC Commitments shall be reduced immediately upon receipt by the
- ------
Borrower of the aggregate proceeds of any issuance by the Borrower of Stock (net
of sales and other commissions and legal and other related expenses incurred in
connection with such issuance) (the "Net Equity Proceeds") by an amount equal
-------------------
to:
-19-
<PAGE>
(A) if the Total Leverage Ratio is greater than 6.00:1.00, the lesser
of (x) 100% of the Net Equity Proceeds and (y) if no Default or Event of Default
shall then exist, the amount of the Net Equity Proceeds which when applied to
the prepayment of the Loans will result in the Total Leverage Ratio being equal
to 6.00:1.00;
(B) if the Total Leverage Ratio is greater than 4.50:1.00 but less
than or equal to 6.00:1.00 (whether before or after giving effect to clause (A)
above), the lesser of (x) 50% of the Net Equity Proceeds (excluding the amount
of Net Equity Proceeds applied to the prepayment of the Loans pursuant to clause
(A) above) if no Default or Event of Default shall then exist and (y) if no
Default or Event of Default shall then exist, the amount of the Net Equity
Proceeds which when applied to the prepayment of the Loans will result in the
Total Leverage Ratio not exceeding 4.50:1.00; and
(C) if a Default or Event of Default shall then exist, 100% of the Net
Equity Proceeds.
Notwithstanding the foregoing, provided that no Default or Event of Default
shall exist immediately before or after giving effect thereto, Net Equity
Proceeds shall not reduce the RC Commitments to the extent the RC Commitments
are equal to or less than $50,000,000.
(vi) Mandatory Reductions of RC Commitments Relating to FCC License
--------------------------------------------------------------
Interruption. In the event that for any reason any Broadcasting Station shall
- ------------
be off the air for a period of 30 consecutive days due to action by any
Governmental Authority, the RC Commitments shall be reduced by an amount equal
to the Total Leverage Ratio then in effect (but not exceeding 6.00) multiplied
by the Operating Cash Flow allocable to such Broadcasting Station for the
immediately preceding four fiscal quarters or, if such Broadcasting Station was
acquired by the Borrower within the 18 month period prior to the first day of
such 30 day period, by an amount equal to the aggregate purchase price paid by
the Borrower for such Broadcasting Station.
(c) Application of Reductions.
-------------------------
(i) Each reduction of the RC Commitments made pursuant to this section
2.4 shall effect a corresponding reduction of each Lender's applicable RC
Commitment by an amount equal to such Lender's applicable RC Commitment
Percentage of such reduction.
(ii) Reductions of the RC Commitments made pursuant to section 2.4(a)
or 2.4(b)(ii), (iii), (iv), (v) and (vi) shall be applied in inverse order among
the remaining RC Commitment reductions set forth in section 2.4(b)(i).
(iii) Simultaneously with each reduction of the RC Commitments under
this section 2.4, the Borrower shall pay the applicable Commitment Fee accrued
on the amount by which such RC Commitments have been reduced.
(iv) If for any reason the Letter of Credit Exposure of all Lenders
shall exceed the RC Commitments, the Borrower shall immediately deposit in a
cash collateral account maintained with and under the sole dominion and control
of the Administrative Agent an amount equal to such excess.
-20-
<PAGE>
2.5 Prepayments of the Loans.
------------------------
(a) Voluntary Prepayments. The Borrower may, at its option, prepay the
---------------------
RC Loans, in whole or in part, without premium or penalty, at any time and from
time to time, by notifying the Administrative Agent at least three Business
Days' prior to the proposed prepayment date with respect to Eurodollar Loans,
and at least one Business Day prior to the proposed prepayment date with respect
to ABR Loans. Each such notice shall be in writing and shall specify the Loans
to be prepaid (whether Eurodollar Loans or ABR Loans), the amount to be prepaid,
and the date of prepayment. Upon receipt by the Administrative Agent of any
such notice, the Administrative Agent shall promptly notify each Lender thereof.
If any such notice of the Borrower is given pursuant to this section 2.5, such
notice shall be irrevocable and the payment amount specified in such notice
shall be due and payable on the date specified, together with accrued interest
to the date of such payment on the amount prepaid. Partial prepayments of ABR
Loans shall be in an aggregate principal amount of $1,000,000 or an integral
multiple of $100,000 in excess thereof and partial prepayments of Eurodollar
Loans shall be in an aggregate principal amount of $2,000,000 or an integral
multiple of $250,000 in excess thereof, or, if less, the outstanding principal
balance of such Loans.
(b) Mandatory Prepayments of Loans. The Borrower shall immediately
------------------------------
prepay the RC Loans (i) at any time at which the sum of the aggregate
outstanding principal amount of the outstanding RC Loans and the Letter of
Credit Exposure of all Lenders exceeds the aggregate RC Commitments of all
Lenders in an amount equal to the amount of such excess and (ii) in the amounts
and at the times required by section 7.5.
(c) In General. If any prepayment is made under this section 2.5 with
----------
respect to any Eurodollar Loans, in whole or in part, prior to the last day of
the applicable Interest Period, the Borrower agrees to indemnify the Lenders in
accordance with section 2.9. After giving effect to any partial prepayment with
respect to Eurodollar Loans which were made (whether as the result of a
borrowing or a conversion) on the same date and which had the same Interest
Period, the outstanding principal amount of such Eurodollar Loans shall not be
less than $2,000,000 or an integral multiple of $250,000 in excess thereof. The
Borrower may designate which Loans (ABR Loans or Eurodollar Loans) are to be
prepaid in connection with any prepayment made under this section 2.5.
2.6 Interest Rate and Payment Dates; Highest Lawful Rate.
----------------------------------------------------
(a) Prior to Maturity. Prior to maturity, the outstanding principal
-----------------
amount of the Loans shall bear interest on the unpaid principal amount thereof
at the Alternate Base Rate or the Eurodollar Rate, as applicable, plus the
Applicable Margin.
(b) Default Rate. After maturity and at all times during the
------------
continuance of any Event of Default under section 9.1(a), (b), (h) or (i) or
during the continuance for more than 30 days of any other Event of Default, the
outstanding principal amount of all Loans hereunder shall bear interest,
notwithstanding the rate which would otherwise be applicable pursuant to section
2.6(a) above, at a rate of interest per annum equal to 2% above such otherwise
applicable rate.
(c) Late Payment Rate. Any payment of interest on any Note or any
-----------------
Reimbursement Obligation and any payment of any Commitment Fee, Letter of Credit
Fee or other fee or payment payable by the Borrower under any Loan Document and
not paid on the
-21-
<PAGE>
date when due and payable shall bear interest, to the extent permitted by law,
at the Alternate Base Rate plus the Applicable Margin for ABR Loans plus 2% per
annum from the due date thereof until the date such payment is made.
(d) General. Interest on ABR Loans, to the extent based on the BNY
-------
Rate, shall be calculated on the basis of a 365 or 366 day year (as the case may
be), and interest on all Eurodollar Loans and ABR Loans, to the extent based on
the Federal Funds Rate, shall be calculated on the basis of a 360 day year, in
each case for the actual number of days elapsed. Interest shall be payable in
arrears on each Interest Payment Date and upon payment (or prepayment (or
required payment or prepayment) of the Loans, except that interest payable
pursuant to sections 2.6(b) and 2.6(c) shall be payable on demand. Any change
in the interest rate on a Loan resulting from a change in the Alternate Base
Rate shall become effective as of the opening of business on the day on which
such change in the Alternate Base Rate shall become effective. The
Administrative Agent shall, as soon as practicable, notify the Borrower and the
Lenders of the effective date and the amount of each such change in the
Alternate Base Rate, but failure to so notify shall not in any manner affect the
obligation of the Borrower to pay interest on the Loans in the amounts and on
the dates required. Each determination of the Alternate Base Rate or Eurodollar
Rate by the Administrative Agent pursuant to this Agreement shall be conclusive
and binding on the Borrower and the Lenders absent manifest error.
(e) Highest Lawful Rate. At no time shall the interest rate payable
-------------------
on the Loans of any Lender, together with the Commitment Fees, the Letter of
Credit Fee and all other fees and other amounts payable hereunder, to the extent
the same are construed to constitute interest, exceed the Highest Lawful Rate
applicable to such Lender. If interest payable to a Lender on any date would
exceed the maximum amount permitted by the Highest Lawful Rate, such interest
payment shall automatically be reduced to such maximum permitted amount, and
interest for any subsequent period, to the extent less than the maximum amount
permitted for such period by the Highest Lawful Rate, shall be increased by the
unpaid amount of such reduction. Any interest actually received for any period
in excess of such maximum allowable amount for such period shall be deemed to
have been applied as a prepayment of such Lender's Loans. The Borrower
acknowledges that to the extent interest payable on ABR Loans is based on the
BNY Rate, such BNY Rate is only one of the bases for computing interest on loans
made by the Lenders, and by basing interest payable on ABR Loans on the BNY
Rate, the Lenders have not committed to charge, and the Borrower has not in any
way bargained for, interest based on a lower or the lowest rate at which the
Lenders may now or in the future make loans to other borrowers.
2.7 Use of Proceeds.
---------------
(a) The proceeds of all Loans shall be used first to repay in full all
obligations under the Existing Credit Agreement and, thereafter, (i) to finance
acquisitions of Broadcasting Stations permitted hereunder, including transaction
expenses in connection therewith, (ii) to make capital expenditures permitted
hereunder, (iii) for working capital purposes and (iv) for general corporate
purposes.
(b) Letters of Credit shall be used to support ordinary course working
capital purposes and to fulfill deposit requirements associated with proposed
acquisitions of Broadcasting Stations.
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<PAGE>
(c) Notwithstanding anything to the contrary contained in any Loan
Document, the Borrower agrees that no part of the proceeds of any Loan or Letter
of Credit have been or will be used, directly or indirectly, for a purpose which
violates any law, rule or regulation of any Governmental Authority, including
without limitation the provisions of Regulations G, T, U or X of the Board of
Governors of the Federal Reserve System, as amended.
2.8 Conversions; Other Matters.
--------------------------
(a) The Borrower may elect from time to time to convert Eurodollar
Loans to ABR Loans by giving the Administrative Agent at least two Business
Days' prior irrevocable notice of such election, specifying the amount to be so
converted, provided, that any such conversion shall only be made on the last day
of the Interest Period applicable thereto. In addition, the Borrower may elect
from time to time to convert ABR Loans to Eurodollar Loans or to convert
Eurodollar Loans to new Eurodollar Loans by giving the Administrative Agent at
least three Business Days' prior irrevocable notice of such election, specifying
the amount to be so converted and the initial Interest Period relating thereto,
provided that any such conversion of ABR Loans to Eurodollar Loans shall only be
made on a Business Day and any such conversion of Eurodollar Loans to new
Eurodollar Loans shall only be made on the last day of the Interest Period
applicable to the Eurodollar Loans which are to be converted to such new
Eurodollar Loans. The Administrative Agent shall promptly provide the Lenders
with notice of any such election. Loans may be converted pursuant to this
section 2.8(a) in whole or in part, provided that conversions of ABR Loans to
Eurodollar Loans, or Eurodollar Loans to new Eurodollar Loans having the same
Interest Period, shall be in an aggregate principal amount of $2,000,000 or such
amount plus a whole multiple of $250,000.
(b) Notwithstanding anything in this Agreement to the contrary, upon
the occurrence and during the continuance of a Default or Event of Default, the
Borrower shall have no right to elect to convert any ABR Loan to a Eurodollar
Loan or to convert any Eurodollar Loan to a new Eurodollar Loan. In such event,
such ABR Loan shall be automatically continued as an ABR Loan or such Eurodollar
Loan shall be automatically converted to an ABR Loan on the last day of the
Interest Period applicable to such Eurodollar Loan. If a Default or an Event of
Default shall have occurred and be continuing, the Administrative Agent shall,
at the request of the Required Lenders, notify the Borrower (by telephone or
otherwise) that all, or such lesser amount as the Administrative Agent and the
Required Lenders shall designate, of the outstanding Eurodollar Loans, if any,
shall be automatically converted to ABR Loans, in which event such Eurodollar
Loans of each Lender, at the option of such Lender, shall be automatically
converted to ABR Loans on the date such notice is given.
(c) Each such conversion shall be effected by each Lender by applying
the proceeds of the new ABR Loan or Eurodollar Loan, as the case may be, to the
Loan (or portion thereof) being converted (it being understood that such
conversion shall not constitute a borrowing for purposes of sections 4 or 5).
(d) Notwithstanding any other provision of this Agreement:
(i) If the Borrower shall have failed to elect a Eurodollar Loan
under sections 2.3 or 2.8, as the case may be, in connection with any borrowing
of new Loans or expiration of an Interest Period with respect to any existing
Eurodollar Loan, the amount of the Loans subject to such borrowing or such
existing Eurodollar
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<PAGE>
Loan shall thereafter be an ABR Loan until such time, if any, as the Borrower
shall elect a new Eurodollar Loan pursuant to section 2.8,
(ii) The Borrower shall not be permitted to select any Eurodollar
Loan the Interest Period in respect of which ends later than the Maturity Date,
(iii) When electing a Eurodollar Loan, the Borrower shall select
an Interest Period such that, on each date that a mandatory principal payment is
required to be made pursuant to section 2.5(b) in connection with a RC
Commitment reduction pursuant to section 2.4(b), the outstanding principal
amount of all Loans which are ABR Loans, when added to the aggregate principal
amount of all Loans which are Eurodollar Loans the Interest Period in respect of
which shall end on such date, shall equal or exceed the aggregate principal
amount of the Loans required to be paid on such date, and
(iv) The Borrower shall not be permitted to have more than five
Interest Periods with respect to outstanding Eurodollar Loans at any one time.
2.9 Indemnification for Loss.
------------------------
Notwithstanding anything contained herein to the contrary, if the
Borrower shall fail to borrow or convert a Loan after it shall have given notice
to do so in which it shall have requested a Eurodollar Loan pursuant to section
2.3 or 2.8, as the case may be, or if a Eurodollar Loan shall be terminated for
any reason prior to the last day of the Interest Period applicable thereto, or
if any repayment or prepayment of the principal amount of a Eurodollar Loan is
made for any reason on a date which is prior to the last day of the Interest
Period applicable thereto, the Borrower agrees to indemnify each Lender against,
and to pay on demand directly to such Lender, any loss or expense suffered by
such Lender as a result of such failure to borrow or convert, or such
termination, repayment or prepayment, including without limitation, an amount
equal to:
A x (B-C) x D
---
360
in which:
"A" equals such Lender's pro rata share of the Affected Principal Amount;
"B" equals the Eurodollar Rate (expressed as a decimal) applicable to such
Eurodollar Loan;
"C" equals the Eurodollar Rate (expressed as a decimal) which would be
applicable to a Eurodollar Loan made on or about the date of such failure to
borrow or convert, or such termination, repayment or prepayment, in an amount
equal approximately to such Lender's pro rata share of the Affected Principal
Amount and having an Interest Period equal approximately to the Remaining
Interest Period with respect thereto; and
"D" equals the number of days during such Remaining Interest Period;
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<PAGE>
and any other out-of-pocket loss, cost or expense (including any internal
processing charge customarily charged by such Lender) suffered by such Lender in
liquidating or employing deposits acquired to fund or maintain the funding of
the Affected Principal Amount, or redeploying funds prepaid or repaid, in
amounts which correspond to such Lender's pro rata share of such proposed
borrowing, conversion, terminated Eurodollar Loan, prepayment or repayment.
2.10 Reimbursement for Costs.
-----------------------
The Borrower hereby agrees to reimburse each Lender and the Issuing
Bank on demand for its reasonable costs (excluding general administrative and
overhead costs) directly attributable to its compliance with this Agreement
during the term hereof with all applicable future laws, executive orders, and
regulations of the governments of the United States and the United Kingdom, and
of any other applicable government, and of any regulatory or administrative
agency thereof (including, without limitation, the reserve requirements
established by the Board of Governors of the Federal Reserve System under
Regulation D), or any change in existing or future applicable laws, executive
orders and regulations and in the interpretations thereof which impose, modify
or deem applicable any reserve, asset, special deposit or special assessment
requirements on deposits obtained in the interbank eurodollar market, or which
subject any Lender or the Issuing Bank to any tax (documentary, stamp or
otherwise) with respect to any Loan Document or Letter of Credit, or change the
basis of taxation of payments to any Lender or the Issuing Bank, of principal,
interest, fees or other amounts payable under any Loan Document or Letter of
Credit (except for any tax, or changes in the rate of tax, on its income or
receipts (including franchise taxes on or based upon such income or receipts)
imposed by the United States or any other jurisdiction). Each such Lender and
the Issuing Bank agrees to provide the Borrower with notice of any law,
executive order or regulation, or change in the interpretation thereof, which
would require the Borrower to indemnify such Lender or the Issuing Bank under
this section 2.10 promptly upon it obtaining actual knowledge thereof and
determining that it intends to require the Borrower to reimburse it pursuant to
this section 2.10 for any costs resulting therefrom. The cost to each Lender in
complying with laws, executive orders or regulations which impose, modify or
deem applicable any reserve, asset, special deposit or special assessment
requirements on deposits obtained in the market for eurocurrency loans shall be
computed by determining the amount by which such requirements effectively
increase such Lender's cost of making and maintaining its Eurodollar Loans and
by computing the additional amount which would have been owing to such Lender
hereunder if such effective increase had been added to the Eurodollar Rate for
purposes of determining the applicable Eurodollar Rate during the period or
applicable portion thereof in question. Each Lender and the Issuing Bank may
make multiple requests for compensation under this section 2.10.
2.11 Illegality of Funding.
---------------------
Notwithstanding anything contained herein to the contrary, if any law,
regulation, treaty or directive, or any change therein or in the interpretation
or application thereof, shall make it unlawful for any Lender to make or
maintain any Eurodollar Loan as contemplated by this Agreement, (i) the
commitment of such Lender to make Eurodollar Loans or convert ABR Loans to
Eurodollar Loans, as the case may be, shall forthwith be suspended and (ii) such
Lender's then outstanding Eurodollar Loans affected thereby, if any, shall be
converted automatically to ABR Loans on the last day of the then
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<PAGE>
current Interest Period applicable thereto or at such earlier time as may be
required. If the commitment of any Lender with respect to Eurodollar Loans is
suspended pursuant to this section 2.11 and such Lender shall notify the
Administrative Agent and the Borrower that it is once again legal for such
Lender to make or maintain Eurodollar Loans, such Lender's commitment to make or
maintain Eurodollar Loans shall be reinstated.
2.12 Option to Fund.
--------------
Each Lender has indicated that, if the Borrower requests a Eurodollar
Loan, such Lender may wish to purchase one or more deposits in order to fund or
maintain its funding of its pro rata share of such Loan during the Interest
Period with respect thereto; it being understood that the provisions of this
Agreement relating to such funding are included only for the purpose of
determining the rate of interest to be paid on such Loan and any amounts owing
under sections 2.9, 2.10, 2.11 and 2.15. Each Lender shall be entitled to fund
and maintain its funding of all or any part of its Eurodollar Loans in any
manner it sees fit, but all such determinations hereunder shall be made as if
each Lender had actually funded and maintained its Eurodollar Loans during the
applicable Interest Period through the purchase of deposits in an amount equal
to its pro rata share of the Eurodollar Loans having a maturity corresponding to
such Interest Period. Any Lender may fund its pro rata share of the Eurodollar
Loans from any branch or office of such Lender as such Lender may choose from
time to time, subject to section 2.17.
2.13 Taxes; Net Payments.
-------------------
(a) All payments made by the Borrower under the Loan Documents shall
be made free and clear of, and without reduction for or on account of, any Taxes
required by law to be withheld from any amounts payable under the Loan
Documents. In the event that the Borrower is prohibited by law from making such
payments free of deductions or withholdings, then the Borrower shall pay such
additional amounts to the Administrative Agent, for the benefit of the Issuing
Bank and the Lenders, as may be necessary in order that the actual amounts
received by the Issuing Bank and the Lenders in respect of interest and any
other amounts payable under the Loan Documents after deduction or withholding
(and after payment of any additional Taxes or other charges due as a consequence
of the payment of such additional amounts) shall equal the amount that would
have been received if such deduction or withholding were not required. In the
event that any such deduction or withholding can be reduced or nullified as a
result of the application of any relevant double taxation convention, the
Lenders, the Issuing Bank and the Administrative Agent will, at the expense of
the Borrower, cooperate with the Borrower in making application to the relevant
taxing authorities seeking to obtain such reduction or nullification, provided
that the Lenders, the Issuing Bank and the Administrative Agent shall have no
obligation to (i) engage in any litigation, hearing or proceeding with respect
thereto or (ii) disclose any tax return or other confidential information. If
the Borrower shall make any payment under this section or shall make any
deduction or withholding from amounts paid under any Loan Document, the Borrower
shall forthwith forward to the Administrative Agent original or certified copies
of official receipts or other evidence acceptable to the Administrative Agent
establishing each such payment, deduction or withholding, as the case may be,
and the Administrative Agent in turn shall distribute copies thereof to the
Issuing Bank and each Lender. In the event that the Issuing Bank or any Lender
determines that it received a refund or credit for Taxes paid by the Borrower
under this section, the Issuing Bank or such Lender, as the case may be, shall
promptly notify the Administrative Agent and the Borrower of such fact and shall
remit to
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<PAGE>
the Borrower the amount of such refund or credit applicable to the payments made
by the Borrower in respect of the Issuing Bank or such Lender, as the case may
be, under this section.
(b) So long as it is lawfully able to do so, each Lender not
incorporated under the laws of the United States or any State thereof shall
deliver to the Administrative Agent and the Borrower such certificates,
documents or other evidence as the Administrative Agent or the Borrower may
reasonably require from time to time as are necessary to establish that such
Lender is not subject to withholding under Section 1441, 1442 or 3406 of the
Code or as may be necessary to establish, under any law imposing upon the
Borrower, hereafter, an obligation to withhold any portion of the payments made
by the Borrower under the Loan Documents, that payments to the Administrative
Agent on behalf of such Lender are not subject to withholding. Notwithstanding
any provision herein to the contrary, the Borrower shall have no obligation to
pay to the Issuing Bank or any Lender any amount that the Borrower is liable to
withhold due to the failure of the Issuing Bank or such Lender, as the case may
be, to file any statement of exemption required by the Code.
2.14 Capital Adequacy.
----------------
If the amount of capital required or expected to be maintained by any
Lender, the Issuing Bank or any Person directly or indirectly owning or
controlling such Lender or the Issuing Bank (each a "Control Person"), shall be
--------------
affected by
(a) the introduction or phasing in of any law, rule or regulation
after the date hereof,
(b) any change after the date hereof in the interpretation of any
existing law, rule or regulation by any central bank or United
States or foreign Governmental Authority charged with the
administration thereof, or
(c) compliance by such Lender, the Issuing Bank or such Control Person
with any directive, guideline or request from any central bank or
United States or foreign Governmental Authority (whether or not
having the force of law) promulgated or made after the date
hereof,
and such Person shall have determined that such introduction, phasing in, change
or compliance shall have had or will thereafter have the effect of reducing (i)
the rate of return on its capital, or (ii) the asset value to such Lender, the
Issuing Bank or such Control Person of the Loans made or maintained by such
Lender, the Letters of Credit issued or maintained by the Issuing Bank or the
Reimbursement Obligations or any participation therein owed to the Issuing Bank
or any Lender to a level below that which such Lender, the Issuing Bank or such
Control Person could have achieved or would thereafter be able to achieve but
for such introduction, phasing in, change or compliance (after taking into
account such Lender's, the Issuing Bank's or such Control Person's policies
regarding capital), in either case by an amount which it deems material, then,
within ten days after demand by such Lender or the Issuing Bank, the Borrower
shall pay to such Lender, the Issuing Bank or such Control Person, as the case
may be, such additional amount or amounts as shall be sufficient to compensate
such Lender, the Issuing Bank or such Control Person, as the case may be, for
such reduction on an after-tax basis.
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<PAGE>
2.15 Substituted Interest Rate.
-------------------------
In the event that (i) the Administrative Agent shall have determined
(which determination shall be conclusive and binding upon the Borrower) that by
reason of circumstances affecting the interbank eurodollar market either
adequate and reasonable means do not exist for ascertaining the Eurodollar Rate
applicable pursuant to section 2.6 or (ii) in the event that any Lender shall
have notified the Administrative Agent that it has determined (which
determination shall be conclusive and binding on the Borrower) that the
applicable Eurodollar Rate will not adequately and fairly reflect the cost to
such Lender of maintaining or funding loans bearing interest based on such
Eurodollar Rate, with respect to a proposed Loan that the Borrower has requested
be made as a Eurodollar Loan, or a Eurodollar Loan that will result from the
requested conversion of any Loan into a Eurodollar Loan (any such Loan being
herein called an "Affected Loan"), the Administrative Agent shall promptly
-------------
notify the Borrower and the Lenders (by telephone or otherwise) of such
determination, confirmed in writing, on or prior to the requested Borrowing Date
for such Affected Loan or the requested conversion date of such Loan. If the
Administrative Agent shall give such notice, (a) any requested Affected Loan
shall be made as an ABR Loan, (b) any Loan that was to have been converted to an
Affected Loan shall be converted to or continued as an ABR Loan and (c) any
outstanding Affected Loan shall be converted, on the last day of the then
current Interest Period with respect thereto, to an ABR Loan. Until any such
notice under clause (i) of this section 2.15 has been withdrawn by the
Administrative Agent (by notice to the Borrower promptly upon the Administrative
Agent's having determined that such circumstances affecting the interbank
eurodollar market no longer exist and that adequate and reasonable means do
exist for determining the Eurodollar Rate pursuant to section 2.6) no further
Eurodollar Loans shall be made by the Lenders nor shall the Borrower have the
right to convert any Loans to Eurodollar Loans. Until any such notice under
clause (ii) of this section 2.15 has been withdrawn by the Administrative Agent
(by notice to the Borrower promptly upon the Administrative Agent's having been
notified by such Lender that circumstances no longer render any Loan an Affected
Loan), no further Eurodollar Loans shall be required to be made by such Lender
nor shall the Borrower have the right to convert any Loan of such Lender to a
Eurodollar Loan of such Lender.
2.16 Transaction Record.
------------------
The Administrative Agent's records regarding the amount of each Loan,
each payment by the Borrower of principal and interest on the Loans, each Letter
of Credit and other information relating to the Loans and Letters of Credit
shall be presumed correct absent manifest error.
2.17 Certificates of Payment and Reimbursement; Other Provisions Regarding
---------------------------------------------------------------------
Yield Protection.
- ----------------
(a) In connection with any request by a Lender or the Issuing Bank for
payment or reimbursement pursuant to section 2.9, 2.10, 2.11, 2.14 or 2.15, such
Lender or the Issuing Bank, as the case may be, shall provide the Borrower with
a certificate, signed by an officer, setting forth a description, in reasonable
detail, of any such payment or reimbursement. Each determination by a Lender or
the Issuing Bank of such amount or amounts owed by the Borrower to it under any
such section shall be presumed correct absent manifest error, and shall be made
without duplication as to any other amounts owing by the Borrower to it under
section 2.9, 2.10, 2.11, 2.14 or 2.15.
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<PAGE>
(b) In the event that any amount is owed by the Borrower to any Lender
pursuant to section 2.9, 2.10, 2.11, 2.14 or 2.15 and an assignment by such
Lender of its rights and a delegation and transfer of its obligations hereunder
to another office or branch of such Lender would cause such amount to cease to
be owed by the Borrower, then such Lender shall make reasonable efforts (which
shall not in any event require such Lender to incur a loss or otherwise suffer
any disadvantage) to make an assignment of its rights and a delegation and
transfer of its obligations hereunder to such other office or branch, so long as
such assignment and delegation will not cause other amounts to be owed by the
Borrower under section 2.9, 2.10, 2.11, 2.14 or 2.15 and so long as the Lender
shall be permitted under applicable law to make and maintain Eurodollar Loans
after giving effect to such assignment and delegation.
(c) The obligations of the Borrower under sections 2.9, 2.10, 2.11,
2.14 and 2.15 shall survive any termination of this Agreement, the expiration of
the RC Commitments and the payment of all indebtedness of the Borrower hereunder
and under the Loan Documents.
2.18 Letter of Credit Sub-Facility.
-----------------------------
(a) Subject to the terms and conditions hereof and the payment by the
Borrower to the Issuing Bank of such fees as the Borrower and the Issuing Bank
shall have agreed in writing, the Issuing Bank agrees, in reliance on the
agreement of the other Lenders set forth in section 2.19, to issue standby
letters of credit (each a "Letter of Credit" and, collectively, the "Letters of
---------------- ----------
Credit") during the RC Commitment Period for the account of the Borrower,
- ------
provided that immediately after the issuance of each Letter of Credit (i) the
Letter of Credit Exposure of all Lenders shall not exceed the Letter of Credit
Commitment, and (ii) the sum of the aggregate outstanding RC Loans and the
Letter of Credit Exposure of all Lenders shall not exceed the RC Commitments.
Each Letter of Credit shall have an expiration date which shall be not later
than the earlier to occur of one year from the date of issuance or last
extension thereof or one Business Day prior to the RC Commitment Termination
Date. No Letter of Credit shall be issued if the Administrative Agent, or any
Lender by notice to the Administrative Agent and the Issuing Bank no later than
3:00 P.M. one Business Day prior to the requested date of issuance of such
Letter of Credit, shall have determined that the applicable conditions set forth
in Section 5 have not been satisfied.
(b) Each Letter of Credit shall be issued for the account of the
Borrower. The Borrower shall give the Administrative Agent and the Issuing Bank
a Letter of Credit Request for the issuance of each Letter of Credit no later
than 1:00 P.M at least three Business Days prior to the requested date of
issuance. Such Letter of Credit Request shall be accompanied by the Issuing
Bank's standard Application and Agreement for Standby Letter of Credit (each a
"Reimbursement Agreement") executed by the Borrower, and shall specify (i) the
- ------------------------
beneficiary of such Letter of Credit and the obligations of the Borrower in
respect of which such Letter of Credit is to be issued, (ii) the Borrower's
proposal as to the conditions under which a drawing may be made under such
Letter of Credit and the documentation to be required in respect thereof, (iii)
the maximum amount to be available under such Letter of Credit and (iv) the
requested date of issuance. Upon receipt of such Letter of Credit Request from
the Borrower, the Administrative Agent shall promptly notify each Lender
thereof. The Issuing Bank shall, on the proposed date of issuance and subject to
the other terms and conditions of this Agreement, issue the requested Letter of
Credit. Each Letter of Credit shall be in a minimum amount of
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$1,000,000 and be in form and substance reasonably satisfactory to the Issuing
Bank, with such provisions with respect to the conditions under which a drawing
may be made thereunder and the documentation required in respect of such drawing
as the Issuing Bank shall reasonably require. Each Letter of Credit shall be
used solely for the purposes described therein.
(c) Each payment by the Issuing Bank of a draft drawn under a Letter
of Credit shall give rise to the obligation of the Borrower to immediately
reimburse the Issuing Bank for the amount thereof. The Issuing Bank shall
promptly notify the Borrower of such payment by the Issuing Bank of a draft
drawn under a Letter of Credit, but any failure to so notify shall not in any
manner affect the obligation of the Borrower to make reimbursement when due. In
lieu of such notice, if the Borrower has not made reimbursement prior to the end
of the Business Day when due, the Borrower hereby irrevocably authorizes the
Issuing Bank to deduct the amount of any such reimbursement from any account(s)
of the Borrower maintained with the Issuing Bank, upon which the Issuing Bank
shall apply the amount of such deduction to such reimbursement. If all or any
portion of any reimbursement obligation in respect of a Letter of Credit shall
not be paid when due (whether at the stated maturity thereof, by acceleration or
otherwise), such overdue amount shall bear interest, payable upon demand, at a
rate per annum equal to the Alternate Base Rate plus the Applicable Margin
applicable to ABR Loans plus 2% (calculated in the same manner as ABR Loans),
from the date of such nonpayment until paid in full (whether before or after the
entry of a judgment thereon).
2.19 Letter of Credit Participation
------------------------------
(a) Each Lender hereby unconditionally and irrevocably, severally (and
not jointly) takes an undivided participating interest in the obligations of the
Issuing Bank under and in connection with each Letter of Credit in an amount
equal to such Lender's RC Commitment Percentage of the amount of such Letter of
Credit. Each Lender shall be liable to the Issuing Bank for its RC Commitment
Percentage of the unreimbursed amount of any draft drawn and honored under each
Letter of Credit. Each Lender shall also be liable for an amount equal to the
product of its RC Commitment Percentage and any amounts paid by the Borrower
pursuant to Sections 2.18 and 2.20 that are subsequently rescinded or avoided,
or must otherwise be restored or returned. Such liabilities shall be
unconditional and without regard to the occurrence of any Default or Event of
Default or the compliance by the Borrower with any of its obligations under the
Loan Documents.
(b) The Issuing Bank shall promptly notify the Administrative Agent,
and the Administrative Agent shall promptly notify each Lender (which notice
shall be promptly confirmed in writing), of the date and the amount of each
draft paid under each Letter of Credit with respect to which full reimbursement
payment shall not have been made by the Borrower as provided in Section 2.18(c),
and forthwith upon receipt of such notice, such Lender shall promptly make
available to the Administrative Agent for the account of the Issuing Bank its RC
Commitment Percentage of the amount of such unreimbursed draft at the office of
the Administrative Agent specified in Section 11.2 in lawful money of the United
States and in immediately available funds. The Administrative Agent shall
distribute the payments made by each Lender pursuant to the immediately
preceding sentence to the Issuing Bank promptly upon receipt thereof in like
funds as received. Each Lender shall indemnify and hold harmless the
Administrative Agent and the Issuing Bank from and against any and all losses,
liabilities (including liabilities for penalties), actions, suits, judgments,
demands, costs and expenses (including, without
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<PAGE>
limitation, reasonable attorneys' fees and expenses) resulting from any failure
on the part of such Lender to provide, or from any delay in providing, the
Administrative Agent with such Lender's RC Commitment Percentage of the amount
of any payment made by the Issuing Bank under a Letter of Credit in accordance
with this subsection (b) above (except in respect of losses, liabilities or
other obligations suffered by the Administrative Agent or the Issuing Bank, as
the case may be, resulting from the gross negligence or willful misconduct of
the Administrative Agent or the Issuing Bank, as the case may be). If a Lender
does not make available to the Administrative Agent when due such Lender's RC
Commitment Percentage of any unreimbursed payment made by the Issuing Bank under
a Letter of Credit, such Lender shall be required to pay interest to the
Administrative Agent for the account of the Issuing Bank on such Lender's RC
Commitment Percentage of such payment at a rate of interest per annum equal to
(i) from the date such Lender should have made such amount available until the
third day therefrom, the Federal Funds Effective Rate, and (ii) thereafter, the
Federal Funds Effective Rate plus 2%, in each case payable upon demand by the
Issuing Bank. The Administrative Agent shall distribute such interest payments
to the Issuing Bank upon receipt thereof in like funds as received.
(c) Whenever the Administrative Agent is reimbursed by the Borrower,
for the account of the Issuing Bank, for any payment under a Letter of Credit
and such payment relates to an amount previously paid by a Lender in respect of
its RC Commitment Percentage of the amount of such payment under such Letter of
Credit, the Administrative Agent (or the Issuing Bank, if such payment by a
Lender was paid by the Administrative Agent to the Issuing Bank) will promptly
pay over such payment to such Lender.
2.20 Absolute Obligation with respect to Letter of Credit Payments
-------------------------------------------------------------
The Borrower's obligation to reimburse the Issuing Bank for each
payment under or in respect of each Letter of Credit shall be absolute and
unconditional under any and all circumstances and irrespective of any set-off,
counterclaim or defense to payment which the Borrower may have or have had
against the beneficiary of such Letter of Credit, the Administrative Agent, the
Issuing Bank, any Lender or any other Person, including, without limitation, any
defense based on the failure of any drawing to conform to the terms of such
Letter of Credit, any drawing document proving to be forged, fraudulent or
invalid, or the legality, validity, regularity or enforceability of such Letter
of Credit, provided, however, that, with respect to any Letter of Credit, the
foregoing shall not relieve the Issuing Bank of any liability it may have to the
Borrower for any actual damages sustained by the Borrower arising from a
wrongful payment (or failure to pay) under such Letter of Credit made as a
result of the Issuing Bank's gross negligence or willful misconduct.
3. FEES; PAYMENTS
--------------
3.1 Fees.
----
(a) The Borrower agrees to pay to the Administrative Agent for the
account of each Lender a fee (the "Commitment Fee") during the RC Commitment
--------------
Period, payable quarterly in arrears on the last day of each March, June,
September and December of each year, commencing on the first such date following
the Effective Date, and on the RC Commitment Termination Date, on the average
daily excess of (i) the RC
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<PAGE>
Commitment of such Lender, over (ii) the aggregate outstanding principal balance
of the RC Loans of such Lender, at a rate per annum equal to (a) at all times
when the Total Leverage Ratio is greater than or equal to 4.50:1.00, 0.500% and
(b) at all times when the Total Leverage Ratio is less than 4.50:1.00, 0.375%.
The Commitment Fee shall be computed on the basis of a 360-day year for the
actual number of days elapsed.
(b) Solely for purposes of calculating the Commitment Fee, changes in
the Total Leverage Ratio, as evidenced by a Compliance Certificate delivered to
the Administrative Agent pursuant to section 7.1(d) or a Borrowing Request or
Letter of Credit Request delivered to the Administrative Agent pursuant to
section 5.2(c) evidencing such a change, shall become effective upon (i) in the
case of the delivery of a Compliance Certificate, the first Business Day
following the delivery of (x) such Compliance Certificate and (y) the applicable
financial statements required to be delivered pursuant to section 7.1(a) or (c),
as the case may be, and (ii) in the case of the delivery of a Borrowing Request
or Letter of Credit Request, the Borrowing Date applicable thereto. Solely for
purposes of calculating the Commitment Fee, if the Borrower shall fail to
deliver a Compliance Certificate within 60 days after the end of each of the
first three fiscal quarters, or within 120 days after the end of the last fiscal
quarter, of each fiscal year (each a "certificate delivery date"), the Total
-------------------------
Leverage Ratio from and including such certificate delivery date to the date of
delivery by the Borrower to the Administrative Agent of such Compliance
Certificate shall be conclusively presumed to be greater than 4.50:1.00.
(c) The Borrower agrees to pay to the Administrative Agent for the
account of each Lender a fee (the "Letter of Credit Fee") with respect to the
--------------------
Letters of Credit during the period commencing on the Effective Date and ending
on the RC Commitment Termination Date or, if later, the date when the Letter of
Credit Exposure of all Lenders is $0, payable quarterly in arrears on the last
day of each March, June, September and December of each year, commencing on the
first such date following the Effective Date, on the RC Commitment Termination
Date and on the last date of such period, on such Lender's RC Commitment
Percentage of the average daily aggregate amount which may be drawn under the
Letters of Credit during such period (whether or not the conditions for drawing
thereunder have or may be satisfied) multiplied by a rate per annum equal to the
Applicable Margin for Eurodollar Loans during such period. The Letter of Credit
Fee shall be computed on the basis of a 360-day year for the actual number of
days elapsed.
3.2 Pro Rata Treatment and Application of Payments.
----------------------------------------------
All payments (including prepayments) made by the Borrower to the
Administrative Agent on account of principal of or interest on the RC Loans
shall be made pro rata according to the outstanding principal amount of each
Lender's RC Loans. All payments by the Borrower shall be made without set-off
or counterclaim and shall be made prior to 1:00 P.M. on the date such payment is
due, to the Administrative Agent for the account of the Lenders, at the
Administrative Agent's office specified in section 11.2, in each case in lawful
money of the United States of America and in immediately available funds, and,
as between the Borrower and the Lenders, any payment by the Borrower to the
Administrative Agent for the account of the Lenders shall be deemed to be
payment by the Borrower to the Lenders. The failure of the Borrower to make any
such payment by 1:00 P.M. on such due date shall not constitute a Default or
Event of Default hereunder, provided that such payment is made on such due date,
but any such payment
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<PAGE>
received by the Administrative Agent on any Business Day after 1:00 P.M. shall
be deemed to have been received on the immediately succeeding Business Day for
the purpose of calculating any interest payable in respect thereof. The
Administrative Agent agrees promptly to notify the Borrower if it shall receive
any such payment after 1:00 P.M. on the due date hereof, provided that the
failure of the Administrative Agent to give such prompt notice shall in no way
affect the Borrower's obligation to make any payment hereunder on the date such
payment is due. The Administrative Agent shall distribute such payments to the
Lenders promptly upon receipt in like funds as received. Unless otherwise set
forth in the definition of "Interest Period", if any payment hereunder or on any
Note becomes due and payable on a day other than a Business Day, the maturity
thereof shall be extended to the next succeeding Business Day and, with respect
to payments of principal, interest thereon shall be payable at the then
applicable rate or rates during such extension.
4. REPRESENTATIONS AND WARRANTIES
------------------------------
In order to induce the Administrative Agent, the Issuing Bank and the
Lenders to enter into this Agreement and to make Loans, and in order to induce
the Issuing Bank to issue Letters of Credit and the Lenders to participate
therein, the Borrower hereby makes the following representations and warranties
to the Administrative Agent, the Issuing Bank and to each Lender:
4.1 Subsidiaries.
------------
The Borrower has only the Subsidiaries set forth in Schedule 4.1.
Except as set forth in Schedule 4.1, the shares of each corporate Subsidiary
owned by the Borrower are duly authorized, validly issued, fully paid and
nonassessable. The shares of each Subsidiary are owned free and clear of any
Liens, except (i) Liens in favor of the Administrative Agent and the Lenders
pursuant to the Collateral Documents and (ii) Permitted Liens.
4.2 Corporate Existence and Power.
-----------------------------
The Borrower and each Subsidiary is duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation,
has all requisite corporate power and authority to own its Property and to carry
on its business as now conducted, and is in good standing and authorized to do
business in each jurisdiction in which the failure to be so authorized could
reasonably be expected to have a Material Adverse Effect.
4.3 Authority.
---------
The Borrower and each other Loan Party has full power and authority to
enter into, execute, deliver and carry out the terms of the Loan Documents to
which it is a party, to make the borrowings contemplated hereby, to execute,
deliver and carry out the terms of the Notes and to incur the obligations
provided for herein and therein, all of which have been duly authorized by all
proper and necessary action and are in full compliance with its certificate of
incorporation and by-laws.
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<PAGE>
4.4 Governmental Authority Approvals.
--------------------------------
No consent, authorizations or approval of, filing with, notice to, or
exemption by, stockholders, any Governmental Authority or any other Person
(except for those which have been obtained, made or given and those which will
be obtained, made or given prior to the Effective Date) is required to
authorize, or is required in connection with the execution, delivery and
performance of the Loan Documents, or is required as a condition to the validity
or, except as expressly set forth in the Collateral Documents with respect to
the FCC, the enforceability of the Loan Documents. Except as set forth in the
preceding sentence, no provision of any applicable statute, law (including,
without limitation, any applicable usury or similar law), rule or regulation of
any Governmental Authority will prevent the execution, delivery or performance
of, or affect the validity of, the Loan Documents.
4.5 Binding Agreement.
-----------------
The Loan Documents constitute the valid and legally binding
obligations of the Borrower and each other Loan Party to which it is a party,
enforceable in accordance with their respective terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of creditors'
rights generally.
4.6 Litigation.
----------
Except as set forth in Schedule 4.6, there are no actions, suits,
arbitration proceedings or claims (whether or not purportedly on behalf of the
Borrower or any Subsidiary) pending or, to the knowledge of the Borrower,
threatened against the Borrower or any Subsidiary, or maintained by the Borrower
or any Subsidiary, at law or in equity, before any Governmental Authority which
could reasonably be expected to have a Material Adverse Effect. There are no
proceedings pending or, to the knowledge of the Borrower, threatened against the
Borrower or any Subsidiary which call into question the validity or
enforceability of any of the Loan Documents.
4.7 No Conflicting Agreements.
-------------------------
Except as set forth in Schedule 4.7, neither the Borrower nor any
Subsidiary is in default under any mortgage, indenture, contract, agreement,
judgment, decree or order to which it is a party or by which it or any of its
Property is bound, which defaults, taken as a whole, could reasonably be
expected to have a Material Adverse Effect. The execution, delivery or carrying
out of the terms of the Loan Documents will not constitute a default under,
conflict with, require any consent under (other than consents which have been
obtained) or result in the creation or imposition of, or obligation to create,
any Lien upon the Property of the Borrower or any Subsidiary pursuant to the
terms of any such mortgage, indenture, contract, agreement, judgment, decree or
order, which defaults, conflicts and consents, if not obtained, taken as a
whole, could reasonably be expected to have a Material Adverse Effect.
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<PAGE>
4.8 Taxes.
-----
Except as set forth in Schedule 4.8, the Borrower and each Subsidiary
has filed or caused to be filed all tax returns required to be filed and has
paid, or has made adequate provision for the payment of, all Taxes shown to be
due and payable on said returns or in any assessments made against it which
would be material to the Borrower or any Subsidiary, and no tax Liens (other
than Permitted Liens) have been filed. Except as set forth in Schedule 4.8, the
charges, accruals and reserves on the books of the Borrower and each Subsidiary
with respect to all federal, state, local and other Taxes are, to the best
knowledge of the Borrower, adequate, and the Borrower knows of no unpaid
assessment which is due and payable against it or any Subsidiary or any claims
being asserted which could reasonably be expected to have a Material Adverse
Effect, except such thereof as are being contested in good faith and by
appropriate proceedings diligently conducted, and for which adequate reserves
have been set aside in accordance with GAAP.
4.9 Compliance with Applicable Laws.
-------------------------------
Neither the Borrower nor any Subsidiary is in default with respect to
any judgment, order, writ, injunction, decree or decision of any Governmental
Authority which default could reasonably be expected to have a Material Adverse
Effect. The Borrower and each Subsidiary is complying in all material respects
with all applicable statutes and regulations, including ERISA, of all
Governmental Authorities, a violation of which could reasonably be expected to
have a Material Adverse Effect.
4.10 Governmental Regulations.
------------------------
Neither the Borrower nor any Subsidiary is subject to regulation under
the Public Utility Holding Company Borrower Act of 1935, the Federal Power Act
or the Investment Company Act of 1940, and neither the Borrower nor any
Subsidiary is subject to any statute or regulation which prohibits or restricts
the incurrence of Indebtedness under the Loan Documents, including, without
limitation, statutes or regulations relative to common or contract carriers or
to the sale of electricity, gas, steam, water, telephone, telegraph or other
public utility services.
4.11 Property; Broadcasting Business.
-------------------------------
(a) The Borrower and each Subsidiary has good and, except with respect
to FCC licenses which cannot be transferred without the consent of the
applicable Governmental Authority, marketable title to all of its Property,
title to which is material to the Borrower and the Subsidiaries taken as a
whole, subject to no Liens, except Liens in favor of the Administrative Agent
and the Lenders pursuant to the Collateral Documents and Permitted Liens.
(b) Schedule 4.11(b) sets forth a summary description of all real
property owned by the Borrower and its Subsidiaries, and of all real property
leasehold estates held by the Borrower and its Subsidiaries, which summary is
accurate and complete in all material respects. Except as set forth in Schedule
4.11(b), the leases creating such real property leasehold estates are in full
force and effect and create a valid leasehold estate on the terms of each such
lease, neither the Borrower nor any of its Subsidiaries is in default or breach
of any thereof and, to the best knowledge of the Borrower, no other party
thereto is in default or breach thereof.
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<PAGE>
(c) The Borrower and the Subsidiaries are the registered holders of
all radio licenses duly issued by the FCC in respect of all Broadcasting
Stations owned and operated by the Borrower and each Subsidiary. Such licenses
constitute all of the authorizations by the FCC or any other Governmental
Authority necessary for the operation of the business of the Borrower and each
Subsidiary substantially in the manner presently being conducted by it, and such
licenses are validly issued and in full force and effect, unimpaired by any act
or omission by the Borrower or such Subsidiary. To the best of the Borrower's
knowledge, except as set forth in Schedule 4.11(c), neither the Borrower nor any
Subsidiary is a party to any investigation, notice of violation, order or
complaint issued by or before the FCC. Except as set forth in Schedule 4.11(c),
there are no proceedings by or before the FCC, which could in any manner
materially threaten or adversely affect the validity of any of such licenses.
Neither the Borrower nor any Subsidiary has knowledge of a threat of any
investigation, notice of violation, order, complaint or proceeding before the
FCC, and has no reason to believe that any of such licenses will not be renewed
in the ordinary course.
4.12 Federal Reserve Regulations; Use of Proceeds.
--------------------------------------------
Neither the Borrower nor any Subsidiary is engaged principally, or as
one of its important activities, in the business of extending credit for the
purpose of purchasing or carrying any Margin Stock. No part of the proceeds of
the Loans or Letters of Credit will be used, directly or indirectly, to purchase
or carry any Margin Stock or for a purpose which violates any law, rule or
regulation of any Governmental Authority, including without limitation the
provisions of Regulations G, T, U or X of the Board of Governors of the Federal
Reserve System, as amended.
4.13 No Misrepresentation.
--------------------
No representation or warranty contained herein and no certificate or
report furnished or to be furnished by the Borrower or any Subsidiary in
connection with the transactions contemplated hereby, contains or will contain a
misstatement of material fact, or, to the best knowledge of the Borrower or any
Subsidiary omits or will omit to state a material fact required to be stated in
order to make the statements herein or therein contained not misleading in the
light of the circumstances under which made.
4.14 Plans.
-----
The Borrower and each Subsidiary have only the Plans listed in
Schedule 4.14. Each Single Employer Plan and, to the best knowledge of the
Borrower, each Multiemployer Plan is in compliance in all material respects with
the applicable provisions of ERISA and the Code, and the Borrower and each
Subsidiary have filed all reports required to be filed by them under ERISA and
the Code with respect to each such Plan. The Borrower and each Subsidiary have
met all material requirements imposed by ERISA and the Code with respect to the
funding of all Plans, including Multiemployer Plans. Since the effective date
of ERISA, there have not been, nor are there now existing, any events or
conditions which would permit any Single Employer Plan or, to the best knowledge
of the Borrower, Multiemployer Plan to be terminated under circumstances which
would cause the Lien provided under Section 4068 of ERISA to attach to the
Property of the Borrower or any Subsidiary. Since the effective date of ERISA,
no Reportable Event which may constitute grounds for the termination of any
Single Employer Plan or, to the
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<PAGE>
best knowledge of the Borrower, Multiemployer Plan under Title IV of ERISA has
occurred and no Single Employer Plan or Multiemployer Plan has been terminated
in whole or in part.
4.15 FCC Matters.
-----------
The Borrower and each Subsidiary (i) have duly and timely filed all
filings which are required to be filed by the Borrower and each Subsidiary under
the Communications Act and the rules and regulations of the FCC, the failure to
file of which could reasonably be expected to have a Material Adverse Effect,
and (ii) are in all material respects in compliance with the Communications Act,
including, without limitation, the rules and regulations of the FCC relating to
the transmission of radio signals.
4.16 Burdensome Obligations.
----------------------
Neither the Borrower nor any Subsidiary is a party to or bound by any
franchise, agreement, deed, lease or other instrument, or subject to any
corporate restriction which, in the opinion of the management of the Borrower,
is so unusual or burdensome, in the context of the Borrower's or such
Subsidiary's business, as in the foreseeable future might materially and
adversely affect or impair the revenue or Operating Cash Flow of the Borrower or
any Subsidiary or the ability of the Borrower or any Subsidiary to perform its
respective obligations under the Loan Documents. The Borrower does not
presently anticipate that future expenditures needed to meet the provisions of
federal or state statutes, orders, rules or regulations will be so burdensome as
to have a Material Adverse Effect.
4.17 Financial Statements.
--------------------
The Borrower has heretofore delivered to the Lenders a copy of (i) the
annual audited Consolidated (and unaudited Consolidating) Balance Sheets of the
Borrower and its Subsidiaries as of December 31, 1996, together with the related
Consolidated and Consolidating Statements of Operations, Shareholders' Equity
and Cash Flows for the period then ended, and (ii) the unaudited Consolidated
and Consolidating Balance Sheets of the Borrower and its Subsidiaries as of
March 31, 1997 and June 30, 1997, together with the related Consolidated and
Consolidating Statements of Operations for the periods then ended. The
foregoing financial statements fairly present the Consolidated and Consolidating
financial condition and results in the operations of the Borrower and its
Subsidiaries as of the dates and for the periods indicated therein and have been
prepared in conformity with GAAP. Except as reflected in such financial
statements or in the footnotes thereto, neither the Borrower nor any of its
Subsidiaries has any obligation or liability of any kind (whether fixed,
accrued, contingent, unmatured or otherwise) which, in accordance with GAAP,
should have been shown on such financial statements and was not. Since December
31, 1996, the Borrower and its Subsidiaries have conducted their business only
in the ordinary course (except with respect to the acquisitions of Broadcasting
Stations permitted by the terms hereof or the Existing Credit Agreement or
otherwise consented to by the Required Lenders (or the required lenders under
the Existing Credit Agreement), and except as set forth in the March 31, 1997
and June 30, 1997 financial statements referred to above), and there has been no
Material Adverse Change.
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<PAGE>
4.18 Environmental Matters.
---------------------
Except as set forth in Schedule 4.18, neither the Borrower nor any
Subsidiary (i) has received written notice or otherwise learned of any claim,
demand, action, event, condition, report or investigation indicating or
concerning any potential or actual liability which individually or in the
aggregate could reasonably be expected to have a Material Adverse Effect arising
in connection with (a) any non-compliance with or violation of the requirements
of any Environmental Law, or (b) the release or threatened release of any toxic
or hazardous waste, substance or constituent, or other substance into the
environment, (ii) to the best knowledge of the Borrower, has any threatened or
actual liability in connection with the release or threatened release of any
toxic or hazardous waste, substance or constituent, or other substance into the
environment which individually or in the aggregate could reasonably be expected
to have a Material Adverse Effect, (iii) has received notice of any federal or
state investigation evaluating whether any remedial action is needed to respond
to a release or threatened release of any toxic or hazardous waste, substance or
constituent or other substance into the environment for which the Borrower or
any Subsidiary is or may be liable, or (iv) has received notice that the
Borrower or any Subsidiary is or may be liable to any Person under any
Environmental Law. The Borrower and each Subsidiary is in compliance in all
material respects with the financial responsibility requirements of all
Environmental Laws to the extent applicable, including, without limitation,
those contained in 40 C.F.R., parts 264 and 265, subpart H, and any analogous
state law.
5. CONDITIONS OF LENDING
---------------------
5.1 First Loans and Letters of Credit on the First Borrowing Date.
-------------------------------------------------------------
In addition to the requirements set forth in section 5.2, the
obligation of each Lender to make one or more Loans or the Issuing Bank to issue
a Letter of Credit on the first Borrowing Date is subject to the fulfillment of
the following conditions precedent:
(a) Evidence of Corporate or Other Action. The Administrative Agent
-------------------------------------
shall have received a certificate, dated the first Borrowing Date, of the
Secretary or an Assistant Secretary of each Loan Party (i) attaching a true and
complete copy of the resolutions of its Board of Directors or other authorizing
documents and of all documents evidencing all necessary corporate or other
action (in form and substance reasonably satisfactory to the Administrative
Agent) taken by it to authorize the Loan Documents to which it is a party and
the transactions contemplated thereby, (ii) attaching a true and complete copy
of its certificate of incorporation and by-laws of other organizational
documents, (iii) setting forth the incumbency of its officer or officers who may
sign such Loan Documents, including therein a signature specimen of such
officer or officers and (iv) attaching a certificate of good standing, if
available, of the Secretary of State of the State of its incorporation or
formation and of each other State in which it is qualified to do business.
(b) Notes. The Borrower shall have delivered to the Administrative
-----
Agent the Notes, each duly executed on behalf of the Borrower by an Authorized
Signatory thereof.
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<PAGE>
(c) No Liens. The Administrative Agent shall have received a
--------
certificate of the Borrower, signed by an Authorized Signatory thereof, dated
the first Borrowing Date, certifying that, upon the making of the first Loans,
there exist no Liens on the Collateral other than Permitted Liens.
(d) Subsidiary Guaranty and Borrower Security Agreement. The Borrower
---------------------------------------------------
shall have delivered to the Administrative Agent (i) the Subsidiary Guaranty,
dated as of the Effective Date, duly executed on behalf of each Subsidiary by an
Authorized Signatory thereof, (ii) the Borrower Security Agreement, dated as of
the Effective Date, duly executed on behalf of the Borrower by an Authorized
Signatory thereof, (iii) one or more share certificates, representing all of the
issued and outstanding Stock of each of the Subsidiaries, together with undated
stock powers, duly executed in blank on behalf of the Borrower by an Authorized
Signatory thereof and bearing an appropriate signature guarantee in all respects
satisfactory to the Administrative Agent, in respect of each such certificate,
(iv) all documents evidencing intercompany Indebtedness owing to the Borrower or
any Subsidiary, and (v) certificates of insurance in all respects satisfactory
to the Administrative Agent evidencing the insurance required to be maintained
pursuant to section 7.5(b).
(e) UCC Searches; Filing of Financing Statements. The Administrative
--------------------------------------------
Agent shall have received such Lien and judgment searches as it shall have
requested. The Borrower shall have executed and delivered to the Administrative
Agent such financing statements, recordations and other documents with respect
to the Collateral Documents as the Administrative Agent or Special Counsel may
request for the purpose of perfecting the Liens granted thereunder. All filing
fees and Taxes in connection with the filing of the Collateral Documents shall
have been paid or otherwise provided for and the Administrative Agent and
Special Counsel shall have received satisfactory evidence thereof.
(f) Existing Indebtedness. Prior to or simultaneously with the making
---------------------
of the first Loans, the Borrower shall have paid all Indebtedness under the
Existing Credit Agreement, and all agreements with respect thereto shall have
been cancelled or terminated, all Liens, if any, securing the same shall have
been terminated, and the Administrative Agent shall have received evidence
reasonably satisfactory to it thereof.
(g) Approvals. The Administrative Agent shall have received evidence
---------
reasonably satisfactory to it that all approvals and consents of all Persons
required to be obtained in connection with the consummation of the transactions
contemplated by the Loan Documents have been obtained and that all required
notices have been given and all required waiting periods have expired.
(h) Litigation. There shall be no injunction, writ, preliminary
----------
restraining order or other order of any nature issued by any Governmental
Authority in any respect affecting any Loan Document, or any transaction
contemplated by the Loan Documents and no action or proceeding by or before any
Governmental Authority shall have been commenced and be pending seeking to
prevent or delay any of the foregoing or challenging any term or provision
thereof or seeking any damages in connection therewith, and the Administrative
Agent shall have received a certificate, in all respects reasonably satisfactory
to the Administrative Agent, of an Authorized Signatory of the Borrower to the
foregoing effect.
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<PAGE>
(i) Approval of Special Counsel. All legal matters incident to the
---------------------------
making of the Loans on the first Borrowing Date shall be reasonably satisfactory
to Special Counsel, and the Administrative Agent shall have received from
Special Counsel an opinion, dated the first Borrowing Date, substantially in the
form of Exhibit E.
(j) Opinion of Counsel to the Borrower and the Subsidiaries. The
-------------------------------------------------------
Administrative Agent shall have received opinions of counsel to the Borrower and
its Subsidiaries, dated the first Borrowing Date, substantially in the form of
Exhibit F.
(k) Opinion of FCC Counsel to the Borrower and the Subsidiaries. The
-----------------------------------------------------------
Administrative Agent shall have received opinions of special FCC counsel to the
Borrower and its Subsidiaries, dated the first Borrowing Date, substantially in
the form of Exhibit G.
(l) Payment of Fees. The Borrower shall have paid to the
---------------
Administrative Agent and the Lenders all fees and expenses which it shall have
agreed to pay, to the extent such fees and expenses have become payable on or
prior to the first Borrowing Date, and shall have paid the reasonable fees and
disbursements of Special Counsel.
(m) Financial Statements and Financial Projections. The Borrower
----------------------------------------------
shall have delivered to the Administrative Agent and the Lenders the financial
statements referred to in section 4.17 together with such projections and other
information as the Administrative Agent and the Lenders shall reasonably
require, all of which shall be in all material respects satisfactory to the
Administrative Agent and the Lenders.
(n) Subordinated Indenture and Subordinated Indenture Subsidiary
------------------------------------------------------------
Guaranty. The Administrative Agent shall have received a copy of the
- --------
Subordinated Indenture and Subordinated Indenture Subsidiary Guaranty duly
certified by an Authorized Signatory of the Borrower as a true and complete copy
thereof and the Borrower shall have received the proceeds of the Subordinated
Indenture Notes.
(o) Asset Valuation. The Administrative Agent shall have received a
---------------
copy of the asset valuation, dated July 31, 1997, prepared by Gary Stevens & Co.
Incorporated.
(p) Other Documents. The Administrative Agent shall have received
---------------
such other documents as the Administrative Agent shall reasonably require in
connection with the making of the first Loans.
5.2 All Loans and Letters of Credit.
-------------------------------
The obligation of the Lenders to make any Loan on a Borrowing Date,
and the obligation of the Issuing Bank to issue a Letter of Credit on a
Borrowing Date, is subject to the satisfaction of the following conditions
precedent as of the date of such Loan or Letter of Credit:
(a) Compliance. On each Borrowing Date and after giving effect to the
----------
Loans or Letter of Credit to be made or issued thereon, (i) the Loan Parties
shall be in compliance with all of the terms, covenants and conditions of the
Loan Documents, (ii) there shall exist no Default or Event of Default, (iii) the
representations and warranties contained in the Loan Documents shall be true and
correct with the same effect as though such representations and warranties had
been made on such Borrowing Date, except as the
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<PAGE>
context otherwise requires, except as otherwise permitted or contemplated by
this Agreement, and except such matters relating thereto as are indicated in
each Borrowing Request which shall be reasonably satisfactory to the
Administrative Agent and the Required Lenders, and (iv) there shall have
occurred no Material Adverse Change since December 31, 1996. Each borrowing by
the Borrower and each issuance of a Letter of Credit shall constitute a
certification by the Borrower as of the date of such borrowing or issuance that
each of the foregoing matters is true and correct in all respects.
(b) Loan Closings. All documents required by the provisions of this
-------------
Agreement to be executed or delivered to the Administrative Agent on or before
the applicable Borrowing Date shall have been executed and shall have been
delivered at the office of the Administrative Agent set forth in section 11.2 on
or before such Borrowing Date.
(c) Borrowing Request or Letter of Credit Request. The Administrative
---------------------------------------------
Agent shall have received a Borrowing Request or a Letter of Credit Request, as
applicable, duly executed by an Authorized Signatory of the Borrower.
(d) Reimbursement Agreement. In connection with any Letter of Credit
-----------------------
Request, the Issuing Bank shall have received a Reimbursement Agreement duly
executed by an Authorized Signatory of the Borrower.
(e) Approval of Counsel. All legal matters in connection with the
-------------------
making of each Loan or issuance of such Letter of Credit shall be reasonably
satisfactory to Special Counsel.
(f) Other Documents. The Administrative Agent shall have received
---------------
such other documents as the Administrative Agent shall reasonably request.
6. FINANCIAL COVENANTS
-------------------
The Borrower covenants and agrees that on and after the Effective Date and
until all obligations of the Borrower under the Notes and the other Loan
Documents have been paid in full and all RC Commitments of the Lenders have been
terminated and no obligations of the Administrative Agent, the Issuing Bank or
any of the Lenders exist under any of the Loan Documents, the Borrower shall:
6.1 Total Leverage Ratio.
--------------------
Maintain at all times a Total Leverage Ratio not greater than the
applicable ratio set forth below opposite the applicable period set forth below:
Periods Ratio
------- -----
Effective Date through
June 29, 1998 7.00:1.00
June 30, 1998 through
December 30, 1998 6.25:1.00
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December 31, 1998 through
December 30, 1999 5.75:1.00
December 31, 1999 through
December 30, 2000 5.25:1.00
December 31, 2000 through
December 30, 2001 4.50:1.00
December 31, 2001
and thereafter 4.00:1.00
6.2 Consolidated Annual Operating Cash Flow to Pro-Forma Debt Service.
-----------------------------------------------------------------
Maintain as at the end of each fiscal quarter a ratio of Consolidated
Annual Operating Cash Flow to Pro-Forma Debt Service not less than 1.10:1.00.
6.3 Consolidated Annual Operating Cash Flow to Pro-Forma Interest Expense.
---------------------------------------------------------------------
Maintain as at the end of each fiscal quarter during the applicable
periods set forth below a ratio of Consolidated Annual Operating Cash Flow to
Pro-Forma Interest Expense not less than the ratio set forth below opposite the
applicable period set forth below:
Periods Ratio
------- -----
Effective Date through
March 31, 1998 1.25:1.00
April 1, 1998 through
March 31, 1999 1.50:1.00
April 1, 1999 through
September 30, 2001 1.75:1.00
October 1, 2001 and
thereafter 2.00:1.00
6.4 Consolidated Annual Operating Cash Flow to Fixed Charges.
--------------------------------------------------------
Maintain as at the end of each fiscal quarter a ratio of Consolidated
Annual Operating Cash Flow to Fixed Charges not less than 1.10:1.00.
7. AFFIRMATIVE COVENANTS
---------------------
The Borrower covenants and agrees that on and after the Effective Date and
until all obligations of the Borrower under the Notes and the other Loan
Documents have been paid in full and all RC Commitments have been terminated and
no obligations of the
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Administrative Agent, the Issuing Bank or any of the Lenders exist under any of
the Loan Documents, the Borrower shall:
7.1 Financial Statements.
--------------------
Maintain, and cause each Subsidiary to maintain, a standard system of
accounting in accordance with GAAP, and furnish or cause to be furnished to the
Administrative Agent and each Lender:
(a) As soon as available, but in any event within 120 days after the
end of each fiscal year of the Borrower, a copy of the Consolidated and
Consolidating Balance Sheets of the Borrower and its Subsidiaries as at the end
of such fiscal year, together with the related Consolidated Statements of
Shareholders' Equity and Cash Flows and Consolidated and Consolidating
Statements of Operations as of and through the end of such fiscal year, setting
forth in each case, in comparative form, the Consolidated and Consolidating
figures for the preceding fiscal year. The Consolidated Balance Sheet and
Statements of Operations, Shareholders' Equity and Cash Flows shall be certified
without qualification by the Accountants, which certification (i) shall state
that the examination by such Accountants in connection with such Consolidated
financial statements has been made in accordance with generally accepted
auditing standards and, accordingly, included such tests of the accounting
records and such other auditing procedures as were considered necessary in the
circumstances, (ii) shall include the opinion of such Accountants that such
Consolidated financial statements have been prepared in accordance with GAAP in
a manner consistent with prior fiscal periods, except as otherwise specified in
such opinion.
(b) Simultaneously with the delivery of the certified Consolidated
financial statements required by clause (a) above, copies of a certificate of
such Accountants stating that, in making the examination necessary for their
audit of such financial statements for such fiscal year, nothing came to their
attention of an accounting nature that caused them to believe that the Borrower
was not in compliance with the terms, covenants, provisions, or conditions of
this Agreement, including, without limitation, sections 6.1, 6.2, 6.3 and 6.4,
or, if so, specifying in such certificate all such instances of noncompliance
and the nature and status thereof.
(c) As soon as available, but in any event not later than 60 days
after the end of each of the first three quarterly accounting periods in each
fiscal year of the Borrower, a copy of the Consolidated and Consolidating
Balance Sheets of the Borrower and its Subsidiaries as at the end of each such
quarterly period, together with the related Consolidated and Consolidating
Statements of Operations, for such period and for the elapsed portion of the
fiscal year through such date, setting forth in each case, in comparative form,
the Consolidated and Consolidating figures for the corresponding periods of the
preceding fiscal year, certified by the Chief Financial Officer of the Borrower
(or such other officer acceptable to the Administrative Agent), as being
complete and correct in all material respects and as presenting fairly the
Consolidated and Consolidating financial condition and the results of operations
of each of the Borrower and its Subsidiaries, subject to normal, non-material
year-end adjustments.
(d) Within 60 days after the end of each of the first three fiscal
quarters (120 days after the end of the fourth fiscal quarter) of the Borrower,
a Compliance Certificate as at the end of such fiscal quarter, certified by the
Chief Financial Officer of the Borrower (or such other officer as shall be
acceptable to the Administrative Agent).
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<PAGE>
(e) Concurrently with the delivery of the financial statements
referred to in Sections 7.1(a) and (c), a profile of each Broadcasting Station,
which shall include, but not be limited to, the call letters and location of
each Broadcasting Station and management's estimate of the fair market value
thereof and a management's discussion and analysis of such financial statements,
including a summary of all acquisitions and dispositions of Broadcasting
Stations that occurred during the period covered by such financial statements,
which shall include a schedule of the consideration paid in each acquisition and
the cash received in each disposition.
(f) Within 30 days after the beginning of each fiscal year, an annual
Consolidated and Consolidating forecast for the Borrower and its Subsidiaries
for such fiscal year and the following two fiscal years, including projected
Consolidated and Consolidating statements of income of the Borrower and its
Subsidiaries, all in reasonable detail acceptable to the Administrative Agent;
(ii) promptly upon preparation thereof, such other forecasts that the Borrower
or any of its Subsidiaries may prepare and any revisions that may be made to any
forecast previously delivered to the Lenders; and (iii) no later than 30 days
after the end of each fiscal quarter in which there has been a material
deviation from a forecast provided to the Lenders, a certificate of an
Authorized Signatory explaining the deviation and the action, if any, that has
been taken or is proposed to be taken with respect thereto; in each case the
foregoing forecasts shall state all underlying assumptions.
7.2 Certificates; Other Information.
-------------------------------
Furnish to the Administrative Agent and each Lender:
(a) Prompt written notice if: (i) any Indebtedness of the Borrower or
any Subsidiary is declared or shall become due and payable prior to its stated
maturity, or called and not paid when due, (ii) a default shall have occurred
under any note (other than the Notes) or the holder of any such note, or other
evidence of Indebtedness, certificate or security evidencing any such
Indebtedness or any obligee with respect to any other Indebtedness of the
Borrower or any Subsidiary has the right to declare any such Indebtedness due
and payable prior to its stated maturity as a result of such default, or (iii)
there shall occur and be continuing a Default or an Event of Default;
(b) Prompt written notice of: (i) any citation, summons, subpoena,
order to show cause or other order naming the Borrower or any Subsidiary a party
to any proceeding before any Governmental Authority which might have a Material
Adverse Effect or which call into question the validity or enforceability of any
of the Loan Documents and include with such notice a copy of such citation,
summons, subpoena, order to show cause or other order, (ii) the commencement or
threat of any action, suit, arbitration proceeding or claim by, on behalf of or
against the Borrower or any Subsidiary, at law or in equity, before any
Governmental Authority, which could reasonably be expected to have a Material
Adverse Effect, (iii) any lapse or other termination of any material license,
permit, franchise or other authorization issued to the Borrower or any
Subsidiary by any Governmental Authority, (iv) any refusal by any Governmental
Authority to renew or extend any such material license, permit, franchise or
other authorization, and (v) any dispute between the Borrower or any Subsidiary
and any Governmental Authority, which dispute might have a material adverse
effect on any Broadcasting Station or a Material Adverse Effect;
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<PAGE>
(c) Promptly upon becoming available, copies of all (i) regular,
periodic or special reports, schedules and other material that the Borrower or
any Subsidiary may now or hereafter be required to file with or deliver to any
securities exchange or the Securities and Exchange Commission, or any other
Governmental Authority succeeding to the functions thereof, (ii) material
reports, schedules and other material which the Borrower or any Subsidiary may
now or hereafter be required to file with or deliver to the FCC and (iii)
material news releases and annual reports relating to the Borrower or any of its
Subsidiaries;
(d) Prompt written notice in the event that (i) the Borrower or any
Commonly Controlled Entity shall receive notice from the Internal Revenue
Service or the Department of Labor that the Borrower or such Commonly Controlled
Entity shall have failed to meet the minimum funding requirements of Section 412
of the Code with respect to a Plan, if applicable, and include therewith a copy
of such notice, or (ii) the Borrower or any Commonly Controlled Entity gives or
is required to give notice to the PBGC of any Reportable Event with respect to a
Plan, or knows that the plan administrator of a Plan has given or is required to
give notice of any such Reportable Event;
(e) With respect to a Single Employer Plan of the Borrower or any
Commonly Controlled Entity, copies of any request for a waiver of the funding
standards or any extension of the amortization periods required by Sections 303
and 304 of ERISA or Section 412 of the Code promptly after any such request is
submitted to the Department of Labor or the Internal Revenue Service, as the
case may be;
(f) Promptly after the filing thereof, a copy of the annual report
required to be filed pursuant to Section 103 of ERISA in connection with each
Single Employer Plan of the Borrower and each Commonly Controlled Entity for
each plan year, including (i) a statement of the assets and liabilities of such
Plan as of the end of such plan year and statements of changes in fund balance
and in financial position, or a statement of changes in net assets available for
plan benefits, for such plan year, certified by the Accountants and (ii) an
actuarial statement of such Plan applicable to such plan year, certified by an
enrolled actuary of recognized standing reasonably acceptable to the
Administrative Agent and the Required Lenders;
(g) Promptly upon request therefor, such other information and reports
relating to the past, present or future financial condition, operations, plans
and projections of the Borrower or its Subsidiaries as the Administrative Agent
or any other Lender (through the Administrative Agent) may at any time and from
time to time reasonably request;
(h) Promptly after the same are received by the Borrower, copies of
all management letters and similar reports provided to the Borrower or any
Subsidiary by its independent certified public accountants;
(i) Prompt written notice of any material change in the accounting
policies or financial reporting practices of the Borrower or any of its
Subsidiaries; and
(j) Prompt written notice of the occurrence of a Material Adverse
Change or the occurrence of any event or facts or circumstances which are
reasonably likely to result in a Material Adverse Change.
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<PAGE>
7.3 Legal Existence.
---------------
Except as otherwise permitted by section 8.3, maintain, and cause each
Subsidiary to maintain, its corporate existence, and maintain its good standing
in the jurisdiction of its incorporation or organization and in each other
jurisdiction in which the failure so to do could reasonably be expected to have
a Material Adverse Effect.
7.4 Taxes.
-----
Pay and discharge when due, and cause each Subsidiary so to do, all
Taxes, assessments and governmental charges, license fees and levies upon or
with respect to the Borrower or such Subsidiary and upon the income, profits and
Property of the Borrower and the Subsidiaries taken as a whole, which if unpaid,
could reasonably be expected to have a Material Adverse Effect or become a Lien
on the Property of the Borrower or any Subsidiary not permitted under section
8.2, unless and to the extent only that such Taxes, assessments, charges,
license fees and levies shall be contested in good faith and by appropriate
proceedings diligently conducted by the Borrower or such Subsidiary and provided
that the Borrower shall give the Administrative Agent prompt notice of such
contest and that such reserve or other appropriate provision as shall be
required by the Accountants in accordance with GAAP shall have been made
therefor.
7.5 Insurance and Condemnation.
--------------------------
(a) Liability Insurance. Maintain, and cause each Subsidiary to
-------------------
maintain, insurance with financially sound insurance carriers on such of its
Property, against at least such risks, and in at least such amounts, as are
customarily insured against by similar businesses and which, in the case of
property insurance, shall be in amounts sufficient to prevent the Borrower or
any Subsidiary from becoming a co- insurer, including, without limitation,
public liability (bodily injury and property damage), fidelity, bonding and
workers' compensation with deductibles not exceeding $25,000 per occurrence, in
each case naming the Administrative Agent as an additional insured under such
policies, and file with the Administrative Agent within five days after request
therefor a detailed list of such insurance then in effect, stating the names of
the carriers thereof, the policy numbers, the insureds thereunder, the amounts
of insurance, dates of expiration thereof, and the Property and risks covered
thereby, together with a certificate of an Authorized Signatory certifying that
in the opinion of such officer such insurance is adequate in nature and amount,
complies with the obligations of the Borrower under this section 7.5, and is in
full force and effect.
(b) Property Insurance. Maintain such property and other insurance as
-------------------
is customarily maintained by companies engaged in similar businesses with
deductibles not exceeding $25,000 per occurrence. Promptly upon request
therefor, the Borrower shall deliver or cause to be delivered to the
Administrative Agent originals or duplicate originals of all such policies of
insurance. All such property insurance shall name the Administrative Agent,
under a standard loss payable clause, as sole loss payee in respect of each
claim resulting in a payment under any such insurance policy exceeding $500,000
and shall contain such endorsements as the Administrative Agent shall require.
Provided that no Default or Event of Default shall exist, the Administrative
Agent agrees, promptly upon its receipt thereof, to pay over to the Borrower the
proceeds of any such payment received by the Administrative Agent in its
capacity as Administrative Agent hereunder. If a Default or Event of Default
shall exist, the Borrower, at the request of the
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Administrative Agent, shall prepay the Loans with such proceeds, in an amount
equal to the total amount of such insurance payment. The RC Commitments shall be
reduced by an amount equal to any such insurance proceeds not used by the
Borrower or any of its Subsidiaries within 360 days to repair or replace any
Property in respect of which it received property insurance proceeds.
(c) Condemnation Awards. If a Default or Event of Default shall
-------------------
exist, promptly upon receipt by the Borrower or any of its Subsidiaries of the
proceeds of any condemnation or similar awards, the Borrower shall pay over the
proceeds thereof to the Administrative Agent and, at the request of the
Administrative Agent, shall prepay the Loans in an amount equal to the total
amount of such proceeds. The RC Commitments shall be reduced by an amount equal
to any such proceeds not used by the Borrower or any of its Subsidiaries within
360 days to repair or replace any Property in respect of which it received a
condemnation or similar award.
7.6 Payment of Indebtedness and Performance of Obligations.
------------------------------------------------------
Pay and discharge, and cause each Subsidiary to pay and discharge,
when due all lawful Indebtedness, obligations and claims for labor, materials
and supplies or otherwise which, if unpaid, might (i) have a Material Adverse
Effect, or (ii) become a Lien upon Property of the Borrower or any Subsidiary
not permitted under section 8.2, unless and to the extent only that the validity
of such Indebtedness (other than Indebtedness under the Loan Documents),
obligation or claim shall be contested in good faith and by appropriate
proceedings diligently conducted by the Borrower or such Subsidiary, and that
any such contested Indebtedness, obligations or claims shall not constitute, or
create, a Lien on any Property of the Borrower senior to the Lien granted to the
Administrative Agent by the Collateral Documents on such Property, and further
provided that the Borrower shall give the Administrative Agent and the Lenders
prompt notice of any such contest and that such reserve or other appropriate
provision as shall be required by the Accountants in accordance with GAAP shall
have been made therefor.
7.7 Condition of Property.
---------------------
At all times, maintain, protect and keep in good repair, working order
and condition (ordinary wear and tear excepted), and cause each Subsidiary so to
do, all Property necessary to the operation of the Borrower's or such
Subsidiary's business.
7.8 Observance of Legal Requirements; ERISA; Environmental Laws.
-----------------------------------------------------------
Observe and comply in all respects, and cause each Subsidiary so to
do, with all laws (including ERISA and Environmental Laws), ordinances, orders,
judgments, rules, regulations, certifications, franchises, permits, licenses,
directions and requirements of all Governmental Authorities, which now or at any
time hereafter may be applicable to the Borrower or such Subsidiary, a violation
of which could reasonably be expected to have a Material Adverse Effect, except
such thereof as shall be contested in good faith and by appropriate proceedings
diligently conducted by the Borrower or such Subsidiary, provided that the
Borrower shall give the Administrative Agent and the Lenders prompt notice of
such contest and that such reserve or other appropriate provision as shall be
required by the Accountants in accordance with GAAP shall have been made
therefor.
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7.9 Inspection of Property; Books and Records; Discussions.
------------------------------------------------------
Keep proper books of record and account in which full, true and
correct entries in conformity with GAAP and all requirements of law shall be
made of all dealings and transactions in relation to its business and
activities; and permit representatives of the Administrative Agent and each
Lender, or potential assignees and/or participants of the Administrative Agent
or any Lender, to visit the offices of the Borrower and the Subsidiaries, to
inspect any of its Property and examine and make copies or abstracts from any of
its books and records at any reasonable time and as often as may reasonably be
desired, and to discuss the business, operations, prospects, licenses, Property
and financial condition of the Borrower and the Subsidiaries with the officers
thereof and with the Accountants.
7.10 FCC Licenses, Etc.
-----------------
Maintain and cause each Subsidiary to maintain, in full force and
effect, each license issued by the FCC to it for each Broadcasting Station. The
Borrower shall also maintain and cause each Subsidiary to maintain, in full
force and effect, all other material licenses, copyrights, patents, including
all licenses, permits, applications, reports, authorizations and other rights as
are necessary for the conduct of its business, except to the extent that such
ownership or right to use shall terminate as a matter of law or expire as a
matter of contractual right through no action or default by the Borrower or any
Subsidiary.
7.11 Subsidiary Guaranty.
-------------------
Promptly upon the creation or acquisition of any Subsidiary, cause
such Subsidiary to execute and deliver to the Administrative Agent a supplement
to the Subsidiary Guaranty in the form attached thereto, together with such
other documents and opinions of counsel as the Administrative Agent shall
reasonably required in connection therewith.
8. NEGATIVE COVENANTS
------------------
The Borrower covenants and agrees that on and after the Effective Date and
until all obligations of the Borrower under Notes and the other Loan Documents
have been paid in full and all RC Commitments have been terminated and no
obligations of the Administrative Agent, the Issuing Bank or any of the Lenders
exist under any of the Loan Documents, the Borrower shall not:
8.1 Borrowing.
---------
Create, incur, assume or suffer to exist any liability for
Indebtedness, or permit any Subsidiary so to do, except: (i) Indebtedness under
the Loan Documents; (ii) Indebtedness (including Contingent Obligations) of the
Borrower and the Subsidiaries existing on the date hereof as set forth in
Schedule 8.1 and other Indebtedness of the Borrower in an aggregate outstanding
principal amount for all such Indebtedness under this clause (ii) not in excess
of $5,000,000; (iii) Indebtedness of the Borrower and the Subsidiaries evidenced
by the Subordinated Indenture Notes and Subordinated Indenture Subsidiary
Guaranty; (iv) intercompany Indebtedness between the Borrower and its
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Subsidiaries; and (v) refinancings of any Indebtedness permitted under clause
(ii) above with other Indebtedness permitted under clause (i) or (ii) above.
8.2 Liens.
-----
Create, incur, assume or suffer to exist, or enter into any agreement
with any third Person agreeing not to create, incur, assume or suffer to exist,
any Lien upon any of its Property, whether now owned or hereafter acquired, or
permit any Subsidiary so to do, except: (i) Liens for Taxes, assessments or
similar charges incurred in the ordinary course of business which are not
delinquent or which are being contested in accordance with section 7.4, provided
that such Liens are not senior to the Liens granted to the Administrative Agent
and the Lenders by the Collateral Documents, (ii) Liens in connection with
workers' compensation, unemployment insurance or other social security
obligations (but not ERISA), (iii) deposits or pledges to secure bids, tenders,
contracts (other than contracts for the payment of money), leases, statutory
obligations, surety and appeal bonds and other obligations of like nature
arising in the ordinary course of business, (iv) zoning ordinances, easements
and other similar restrictions affecting real property which do not materially
adversely affect the value of such real property or the financial condition of
the Borrower or such Subsidiary or materially impair its use for the operation
of the business of the Borrower or such Subsidiary, (v) the Liens created under
the Collateral Documents, (vi) statutory Liens arising by operation of law such
as mechanics' liens incurred in the ordinary course of business which are not
delinquent or which are being contested in accordance with section 7.4, (vii)
Liens arising out of judgments or decrees which are being contested in
accordance with section 7.4, provided that such Liens are subordinate to the
Liens granted to the Administrative Agent and the Lenders by the Collateral
Documents and provided further that enforcement of such Liens is stayed during
such contest, (viii) Liens on Property of the Borrower and the Subsidiaries
existing on the date hereof as set forth in Schedule 8.2, (ix) Liens in
connection with the making of deposits in accordance with section 8.5(e) and (x)
Liens in connection with Indebtedness permitted under Section 8.1(ii), provided
that such Liens extend only to the Property acquired with such Indebtedness.
8.3 Merger and Acquisition or Sale of Property.
------------------------------------------
Consolidate with, be acquired by, or merge into or with any Person, or
acquire all or substantially all of the Stock or Property of any Person, or,
except as otherwise permitted under section 8.7, sell, lease or otherwise
dispose of all or substantially all of its Property, or otherwise alter or
modify its structure, status or existence, or permit any Subsidiary so to do,
except:
(a) any wholly-owned Subsidiary may merge with the Borrower (with the
Borrower as survivor) or with another wholly-owned Subsidiary;
(b) subject to the last paragraph of this section 8.3, upon 30 days'
notice to the Administrative Agent, the Borrower or any wholly- owned Subsidiary
may acquire Broadcasting Station(s) through an acquisition or merger (with the
Borrower or such wholly-owned Subsidiary (or a Person that becomes a wholly-
owned Subsidiary) as the survivor thereof for an aggregate gross consideration
(including capital expenditures anticipated for the 12 month period following
such acquisition) not exceeding $10,000,000 with respect to each such
acquisition of Broadcasting Station(s)), provided that (i) if the aggregate
gross consideration for any such acquisition exceeds $20,000,000 and if the
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Required Lenders shall have consented to such acquisition, there shall have been
delivered to the Administrative Agent and each Lender an independent appraisal
of each Broadcasting Station to be acquired, such appraisal to be in all
respects satisfactory to the Administrative Agent and the Required Lenders, (ii)
if the aggregate gross consideration for any such acquisition exceeds
$10,000,000, and if the Required Lenders shall have consented to such
acquisition, the Administrative Agent and each Lender shall have received such
details of such transaction as the Administrative Agent or any other Lender
(through the Administrative Agent) shall reasonably request, and (iii)
immediately before and after giving effect to such acquisition the Total
Leverage Ratio shall not exceed the lesser of (x) 6.00:1.00 and (y) the maximum
Total Leverage Ratio then permitted under section 6.1; and
(c) as permitted under section 8.5(j).
Immediately before and after giving effect to any proposed acquisition or merger
permitted under this section 8.3, all representations and warranties contained
in the Loan Documents shall be true and correct and no Default or Event of
Default shall exist and, prior to the consummation of such acquisition or
merger, the Borrower shall have delivered to the Administrative Agent a
certificate of an Authorized Signatory of the Borrower certifying as to the
foregoing. Immediately upon the consummation of any acquisition or merger
permitted under section 8.3(b), (i) the Borrower shall have delivered to the
Administrative Agent such UCC financing statements and other documents as the
Administrative Agent shall reasonably require in order to grant to the
Administrative Agent a first priority perfected security interest in the Stock
and/or Property, as applicable, of such Broadcasting Station under and pursuant
to the Collateral Documents, subject to no Liens other than Permitted Liens,
(ii) if the Borrower shall have acquired a Subsidiary in connection with such
acquisition, such Subsidiary shall have become a party to the Subsidiary
Guaranty, (iii) the Borrower shall have received, with respect to each pending
acquisition, a final order (subject to no appeal) from the FCC, and all other
similar material orders from all other applicable Governmental Authorities, with
regard to the acquisition or merger, and the Administrative Agent shall have
received true, complete and correct copies, certified by an Authorized Signatory
of the Borrower, of all such orders and (iv) the Borrower shall have delivered
to the Administrative Agent such opinions and other documents as the
Administrative Agent shall reasonably require in connection therewith.
8.4 Dividends; Purchase of Stock.
----------------------------
Declare or pay any dividends payable in cash or otherwise or apply any
of its Property to the purchase, redemption or other retirement of, or set apart
any sum for the payment of any dividends on, or make any other distribution by
reduction of capital or otherwise in respect of, any of its Stock (each a
"Restricted Payment") or permit any Subsidiary so to do, except that:
- -------------------
(a) any wholly-owned Subsidiary may declare and pay dividends to the
Borrower from time to time.
8.5 Investments, Loans, Etc.
------------------------
At any time, purchase or otherwise acquire, hold or invest in the
Stock of, or any other interest in, any Person, or make any loan or advance
(excluding deposits or
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pledges permitted under section 8.2(iii)) to, or enter into any arrangement for
the purpose of providing funds or credit to, or make any other investment,
whether by way of capital contribution or otherwise, in or with any Person (all
of which are sometimes referred to herein as "Investments"), or permit any
-----------
Subsidiary so to do, except:
(a) Investments in short-term domestic and eurodollar certificates of
deposit issued by any Lender, or any other commercial bank, trust company or
national banking association incorporated under the laws of the United States or
any State thereof and having undivided capital surplus and retained earnings
exceeding $500,000,000;
(b) Investments in short-term direct obligations of the United States
of America or agencies thereof which obligations are guaranteed by the United
States of America;
(c) Investments existing on the date hereof as set forth in Schedule
8.5(c);
(d) Investments to the extent the same are acquisitions permitted
pursuant to section 8.3;
(e) Investments by the Borrower in the form of deposits or options
made in the ordinary course of business in connection with any proposed
acquisition or acquisitions of Property permitted pursuant to the terms of this
Agreement;
(f) loans and advances to employees for travel and relocation
purposes; and
(g) loans and advances to employees for other valid business purposes
that do not exceed $100,000 in the aggregate at any one time outstanding;
(h) intercompany Indebtedness permitted pursuant to section 8.1(iv);
(i) Permitted Non-Commercial Educational Station Investments in an
aggregate amount not exceeding $5,000,000 for any one such Investment or
$10,000,000 for all such Investments for the period from and after the Effective
Date; and
(j) the merger or consolidation of Beltway Media Partners with or
into, or the transfer or conveyance of all or substantially all of its assets
to, a wholly-owned Subsidiary.
8.6 Business Changes.
----------------
Engage in any material line of business substantially different from
those lines of business carried on as of the Effective Date, or permit any
Subsidiary so to do.
8.7 Sale of Property.
----------------
Sell, exchange, lease, transfer or otherwise dispose of any Property
to any Person, or permit any Subsidiary so to do, except sales, exchanges,
leases, transfers or other dispositions made in the ordinary course of business
(which shall not include the sale
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or other disposition of all or substantially all of the Stock or assets of any
Broadcasting Station or involve an FCC license of the Borrower or any of its
Subsidiaries), except that:
(a) the Borrower may sell or exchange any Broadcasting Station,
provided that (i) the aggregate gross consideration to be received for all
Broadcasting Stations that have been sold or exchanged pursuant to the
provisions of this section 8.7(a) during the one year period ending on the date
of the proposed sale of exchange, (including the Broadcasting Station then being
contemplated to be sold or exchanged) shall not exceed $15,000,000 and (ii) the
aggregate gross consideration to be received for all Broadcasting Stations that
have been sold or exchanged pursuant to the provisions of this section 8.7(a)
during the period commencing on the Effective Date and ending through and
including the date of the proposed sale of exchange (including the Broadcasting
Station then being contemplated to be sold or exchanged) shall not exceed
$30,000,000.
In connection with any sale or exchange permitted under section 8.7(a), (i) if
the gross consideration to be received for such sale or exchange is equal to or
exceeds $10,000,000, the Administrative Agent and each Lender shall have
received such information and details with respect to such sale or exchange as
the Administrative Agent or any Lender (through the Administrative Agent) shall
reasonably request and immediately before and after giving effect to the
proposed sale or exchange (including any related change in Indebtedness), all
representations and warranties contained in the Loan Documents shall be true and
correct, no Default or Event of Default shall exist and the Borrower shall be in
pro-forma compliance with all covenants set forth in Sections 6.1, 6.2, 6.3 and
6.4, and the Borrower shall have delivered to the Administrative Agent a
certificate of an Authorized Signatory of the Borrower certifying and
demonstrating as to the same, (ii) the Borrower shall have received fair value
for each Broadcasting Station sold or exchanged and (iii) at least 80% of the
consideration to be received in connection with any such sale shall be in cash
or cash equivalents.
8.8 Subsidiaries.
------------
Create or acquire any other Subsidiary, or permit any Subsidiary so to
do, except in connection with an Acquisition permitted in section 8.3.
8.9 Compliance with ERISA.
---------------------
Adopt any Plan other than those listed in Schedule 4.14 or permit any
Subsidiary so to do, or engage in any "prohibited transaction", as such term is
defined in Section 4975 of the Code or Section 406 of ERISA, with respect to any
Plan, or incur any "accumulated funding deficiency", as such term is defined in
Section 412 of the Code or Section 302 of ERISA, or terminate, or permit any
Commonly Controlled Entity to terminate, any Plan that would result in any
liability of the Borrower or any Commonly Controlled Entity to the PBGC, or
permit the occurrence of any Reportable Event or any other event or condition
that presents a risk of such a termination by the PBGC of any Plan, or withdraw
or effect a partial withdrawal from a Multiemployer Plan, or permit any Commonly
Controlled Entity which is an employer under such a Multiemployer Plan so to do,
if any such withdrawal would result in such withdrawing employer incurring any
withdrawal liability in excess of $250,000.
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8.10 Certificate of Incorporation and By-laws.
----------------------------------------
Amend or otherwise modify its certificate of incorporation, by- laws
or other organizational documents, or permit any Subsidiary so to do, in any way
that would adversely affect the interests of the Lenders or the Issuing Bank or
the obligations of any Loan Party under any of the Loan Documents.
8.11 Prepayments of Indebtedness.
---------------------------
Prepay or obligate itself to prepay, in whole or in part, any
Indebtedness (other than the Loans) prior to the due date thereof, or permit any
Subsidiary so to do, other than (i) the prepayment by any Subsidiary of
Indebtedness owing by such Subsidiary to the Borrower, (ii) the prepayment of
Indebtedness permitted under section 8.1(ii) with the proceeds of other
Indebtedness permitted under section 8.1(i) or (ii) or with the proceeds of
Stock issued by the Borrower pursuant to section 8.16, (iii) provided no Default
or Event of Default shall then exist, the Borrower may prepay the Indebtedness
in the aggregate principal amount of $6,692,000 payable to New Inspiration
Broadcasting Company, Inc. and Golden Gate Broadcasting Company, Inc., and New
Inspiration Broadcasting Company, Inc. and Golden Gate Broadcasting Company,
Inc. may, in turn, prepay the Indebtedness in an equal amount payable to its
former shareholders, and (iv) provided that no Default or Event of Default shall
then exist, the prepayment by the Borrower of Indebtedness incurred by the
Borrower in the ordinary course of its business to any Subsidiary.
8.12 Accounting Practice; Fiscal Year.
--------------------------------
Make any significant change in accounting treatment or reporting
practices, except as required by GAAP, or change its fiscal year from a fiscal
year commencing January 1st and ending December 31st, or permit any of its
Subsidiaries so to do.
8.13 Limitation on Upstream Transfers.
--------------------------------
Permit or cause any of its Subsidiaries to enter into or agree, or
otherwise be or become subject, to any agreement, contract or other arrangement
(other than this Agreement) with any Person pursuant to the terms of which (a)
such Subsidiary is or would be prohibited from making any advances to the
Borrower or declaring or paying any cash dividends on any class of its Stock
owned directly or indirectly by the Borrower or any of the other Subsidiaries or
from making any other distribution on account of any class of any such Stock
(herein referred to as "Upstream Transfers"), or (b) the declaration or payment
------------------
of Upstream Transfers on an annual or cumulative basis is or would be otherwise
limited or restricted.
8.14 Transactions with Affiliates.
----------------------------
Become, or permit any Subsidiary to become, a party to any transaction
with any Affiliate of the Borrower or any Subsidiary on a basis less favorable
to the Borrower or such Subsidiary in any material respect than if such
transaction were not with an Affiliate of the Borrower or such Subsidiary.
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8.15 Sale and Leaseback.
------------------
Enter into any arrangement with any Person, or permit any Subsidiary
so to do, providing for the leasing by the Borrower or such Subsidiary of
Property which has been or is to be sold or transferred by the Borrower or such
Subsidiary to such Person or to any other Person to whom funds have been or are
to be advanced by such Person on the security of such Property or rental
obligations of the Borrower or such Subsidiary.
8.16 Stock Issuance.
--------------
Issue any additional shares of Stock, or permit any of its
Subsidiaries so to do, except (i) the Borrower may issue shares of its common
Stock and (ii) any Subsidiary may issue shares of its Stock to the Borrower or
any wholly-owned Subsidiary.
8.17 Subordinated Indenture.
----------------------
Enter into or agree to any amendment, modification or waiver of any
term or condition of the Subordinated Indenture, the Subordinated Indenture
Notes or the Subordinated Indenture Subsidiary Guaranty, or purchase, redeem or
make any payment with respect to Indebtedness under the Subordinated Indenture
Notes or the Subordinated Indenture Subsidiary Guaranty, or permit any of its
Subsidiaries so to do, except for required payments to the extent expressly
permitted pursuant to the subordination terms set forth therein, provided that
all payments required to be made under this Agreement shall have been made.
8.18 Federal Reserve Regulations.
---------------------------
Own, or permit any of its Subsidiaries to own, Margin Stock in excess
of 25% (or such greater or lesser percentage as is provided in the exclusions
from the definition of "Indirectly Secured" contained in Regulation G and
Regulation U in effect at the time of the making of each Loan or the issuance of
each Letter of Credit) of the value of the assets of (i) the Borrower, or (ii)
the Borrower and the Subsidiaries on a Consolidated basis.
8.19 Change in Name; Nature of Business.
----------------------------------
Change its legal name or make any material change in the nature of its
business, taken as a whole, as conducted on the Effective Date, or permit any of
its Subsidiaries so to do.
8.20 Lease Obligations.
-----------------
Create or suffer to exist any obligations for the payment of rent for
any Property under lease or agreement to lease, or permit any of its
Subsidiaries so to do, except for:
(a) leases in existence on the Effective Date and any renewal,
extension or refinancing thereof;
(b) operating leases entered into after the Effective Date in the
ordinary course of business; and
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(c) capital leases other than those permitted under clauses (a) and
(b) of this section, entered into after the Effective Date to finance the
acquisition of equipment to the extent the Indebtedness evidenced by such
capital leases is permitted under section 8.1.
9. DEFAULT
-------
9.1 Events of Default.
-----------------
The following shall each constitute an "Event of Default" hereunder:
----------------
(a) The failure of the Borrower to pay any installment of principal on
any Note or any reimbursement payment in respect of a Letter of Credit on the
date when due and payable; or
(b) The failure of the Borrower to pay any installment of interest or
any other fees or expenses payable hereunder or under or in connection with any
other Loan Documents within three Business Days of the date when due and
payable; or
(c) The use by the Borrower of the proceeds of any Loan or Letter of
Credit in a manner inconsistent with or in violation of section 2.7; or
(d) The failure of the Borrower to observe or perform any covenant or
agreement contained in section 6, section 7.3, 7.5, 7.10 or 7.11, or section 8;
or
(e) The failure of the Borrower to observe or perform any other term,
covenant, or agreement contained in this Agreement and such failure shall have
continued unremedied for a period of 30 days after the Borrower shall have
obtained knowledge thereof; or
(f) Any representation or warranty of any Loan Party (or of any
officer on its behalf) made in any Loan Document or in any certificate, report,
opinion (other than an opinion of counsel) or other document delivered or to be
delivered pursuant to any Loan Document, shall prove to have been incorrect or
misleading (whether because of misstatement or omission) in any material respect
when made; or
(g) Any obligation of the Borrower or any Subsidiary (other than its
obligations under the Loan Documents), whether as principal, guarantor, surety
or other obligor, for the payment or purchase of any Indebtedness or operating
lease(s) (i) shall become or shall be declared to be due and payable prior to
the expressed maturity thereof, or (ii) shall not be paid or purchased when due
or within any grace period for the payment or purchase thereof, or (iii) the
holder of any such obligation(s) in excess of $500,000 in the aggregate shall
have the right to declare such obligation(s) due and payable or require the
purchase thereof prior to the expressed maturity thereof; or
(h) The Borrower or any Subsidiary shall (i) suspend or discontinue
its business, or (ii) make an assignment for the benefit of creditors, or (iii)
generally not be paying its debts as such debts become due, or (iv) admit in
writing its inability to pay its debts as they become due, or (v) file a
voluntary petition in bankruptcy, or (vi) become insolvent (however such
insolvency shall be evidenced), or (vii) file any petition or answer seeking for
itself any reorganization, arrangement, composition, readjustment of debt,
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<PAGE>
liquidation or dissolution or similar relief under any present or future
statute, law or regulation of any jurisdiction, or (viii) petition or apply to
any tribunal for any receiver, custodian or any trustee for any substantial part
of its Property, or (ix) be the subject of any such proceeding filed against it
which remains undismissed for a period of 60 days, or (x) file any answer
admitting or not contesting the material allegations of any such petition filed
against it or of any order, judgment or decree approving such petition in any
such proceeding, or (xi) seek, approve, consent to, or acquiesce in any such
proceeding, or in the appointment of any trustee, receiver, custodian,
liquidator, or fiscal agent for it, or any substantial part of its Property, or
an order is entered appointing any such trustee, receiver, custodian, liquidator
or fiscal agent and such order remains in effect for 60 days, or (xii) take any
formal action for the purpose of effecting any of the foregoing or looking to
the liquidation or dissolution of the Borrower or such Subsidiary; or
(i) An order for relief is entered under the United States bankruptcy
laws or any other decree or order is entered by a court having jurisdiction (i)
adjudging the Borrower or any Subsidiary a bankrupt or insolvent, or (ii)
approving as properly filed a petition seeking reorganization, liquidation,
arrangement, adjustment or composition of or in respect of the Borrower or any
Subsidiary under the United States bankruptcy laws or any other applicable
Federal or state law, or (iii) appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator (or other similar official) of the Borrower or
any Subsidiary or of any substantial part of the Property thereof, or (iv)
ordering the winding up or liquidation of the affairs of the Borrower or any
Subsidiary, and any such decree or order continues unstayed and in effect for a
period of 60 days; or
(j) Any judgments or decrees against the Borrower or its Subsidiaries
(to the extent not covered by independent third-party insurance as to which the
insurer does not dispute coverage) aggregating in excess of $500,000 for all
such parties shall remain unpaid, unstayed on appeal, undischarged, unbonded or
undismissed for a period of 30 days; or
(k) The occurrence of an Event of Default under and as defined in any
Collateral Document or any Reimbursement Agreement; or
(l) Any of the Loan Documents shall cease, for any reason, to be in
full force and effect, or any Loan Party shall so assert in writing or shall
disavow its obligations thereunder; or
(m) The FCC or any other Governmental Authority revokes or fails to
renew any material license, permit or franchise of the Borrower or any of its
Subsidiaries, or the Borrower or any of its Subsidiaries for any reason loses
any material license, permit or franchise, or the Borrower or any of its
Subsidiaries suffers the imposition of any restraining order, escrow, suspension
or impound of funds in connection with any proceeding (judicial or
administrative) with respect to any material license, permit or franchise; or
(n) The occurrence of a Material Adverse Change; or
(o) A Change of Control shall occur.
Upon the occurrence of an Event of Default or at any time thereafter during
the continuance thereof, (a) if such event is an Event of Default specified in
clauses (h) or (i)
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above, the RC Commitments and the Letter of Credit Commitment shall immediately
and automatically terminate and the Loans, all accrued and unpaid interest
thereon and all other amounts owing under the Loan Documents shall immediately
become due and payable, and the Administrative Agent may, and upon the direction
of the Required Lenders shall, exercise any and all remedies and other rights
provided pursuant to the Loan Documents and (b) if such event is any other Event
of Default, any or all of the following actions may be taken: (i) with the
consent of the Required Lenders, the Administrative Agent may, and upon the
direction of the Required Lenders shall, by notice to the Borrower, declare the
RC Commitments and the Letter of Credit Commitment to be terminated whereupon
the RC Commitments and the Letter of Credit Commitment shall immediately
terminate, and (ii) with the consent of the Required Lenders, the Administrative
Agent may, and upon the direction of the Required Lenders shall, by notice of
default to the Borrower, declare the Loans, all accrued and unpaid interest
thereon and all other amounts owing under the Loan Documents to be due and
payable forthwith, whereupon the same shall immediately become due and payable,
and the Administrative Agent may, and upon the direction of the Required Lenders
shall, exercise any and all remedies and other rights provided pursuant to the
Loan Documents. Except as otherwise provided in this section 9.1, presentment,
demand, protest and all other notices of any kind are hereby expressly waived to
the extent permitted by applicable law. The Borrower hereby further expressly
waives and covenants not to assert any appraisement, valuation, stay, extension,
redemption or similar laws, to the extent permitted by applicable law, now or at
any time hereafter in force, which might delay, prevent or otherwise impede the
performance or enforcement of any of the Loan Documents. In the event that the
Administrative Agent shall fail or refuse so to proceed, the Issuing Bank and
each Lender shall be entitled to take such action as the Required Lenders shall
deem appropriate to enforce its rights under the Loan Documents.
In the event that the RC Commitments or the Letter of Credit Commitment
shall have been terminated or all of the Notes shall have been declared due and
payable pursuant to the provisions of this section 9.1, (i) the Borrower shall
forthwith deposit an amount equal to the Letter of Credit Exposure in a cash
collateral account with and under the sole dominion and control of the
Administrative Agent and (ii) the Lenders and the Issuing Bank agree, among
themselves, that any funds received in respect of the Loan Documents from or on
behalf of the Borrower by any of the Lenders or the Issuing Bank (except funds
received by any Lender or the Issuing Bank as a result of a purchase pursuant to
the provisions of section 11.9) shall be remitted to the Administrative Agent,
and shall be applied by the Administrative Agent in payment of the Loans, the
Reimbursement Obligations and the obligations of the Borrower under the Loan
Documents in the following manner and order: (1) first, to reimburse the
Administrative Agent, the Issuing Bank and the Lenders for any expenses due from
the Borrower pursuant to the provisions of section 11.5; (2) second, to the
payment of the Commitment Fee and Letter of Credit Fee, pro rata according to
the RC Commitment Percentage of each Lender; (3) third, to the payment of any
other fees, expenses or amounts (other than the principal of and interest on the
Notes, the Reimbursement Obligations and any obligations to any Lender (and any
Affiliate of any Lender) arising out of any Interest Rate Protection
Arrangement) payable by the Borrower to the Administrative Agent, the Issuing
Bank or any of the Lenders under the Loan Documents; (4) fourth, to the payment,
pro rata according to the outstanding Loans of each Lender and outstanding
Reimbursement Obligations including any interest by a Lender therein), of
interest due thereon; (5) fifth, on a pro rata basis, to the payment of (1) the
principal outstanding on the Notes, pro rata according to each Lender's
outstanding Loans, (2) the principal outstandings on the Reimbursement
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Obligations, pro rata according to the Issuing Bank's and each other Lender's
interest therein, and (3) the obligations of the Borrower to the Lenders (and
any Affiliate of any Lender) arising out of any Interest Rate Protection
Arrangements; and (6) sixth, any remaining funds shall be paid to whomsoever
shall be entitled thereto or as a court of competent jurisdiction shall direct.
10. THE ADMINISTRATIVE AGENT
------------------------
10.1 Appointment.
-----------
Each Lender hereby irrevocably designates and appoints BNY as the
Administrative Agent of such Lender under and in connection with the Loan
Documents. Each such Lender hereby irrevocably authorizes BNY as the
Administrative Agent for such Lender to take such action on its behalf under the
provisions of the Loan Documents and to exercise such powers and perform such
duties as are expressly delegated to the Administrative Agent by the terms of
the Loan Documents, together with such other powers as are reasonably incidental
thereto. Notwithstanding any provision to the contrary elsewhere in this
Agreement or any of the other Loan Documents, the Administrative Agent shall
have no duties or responsibilities, except those expressly set forth herein or
therein, or any fiduciary relationship with any Lender, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into the Loan Documents or otherwise exist against the Administrative
Agent.
10.2 Delegation of Duties.
--------------------
The Administrative Agent may execute any of its duties under the Loan
Documents by or through agents or attorneys-in-fact and shall be entitled to
rely upon the advice of counsel concerning all matters pertaining to such
duties.
10.3 Exculpatory Provisions.
----------------------
Neither the Administrative Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or affiliates shall be (i) liable for any
action lawfully taken or omitted to be taken by it or such Person under or in
connection with the Loan Documents (except for its own gross negligence or
willful misconduct), or (ii) responsible in any manner to any of the Lenders for
any recitals, statements, representations or warranties made by the Borrower or
any officer thereof contained in the Loan Documents or in any certificate,
report, statement or other document referred to or provided for in, or received
by the Administrative Agent under or in connection with, the Loan Documents or
for the value, validity, effectiveness, genuineness, enforceability or
sufficiency of any of the Loan Documents or for any failure of the Borrower or
any other Person to perform its obligations hereunder or thereunder. The
Administrative Agent shall be under no obligation to any Lender to ascertain or
to inquire as to the observance or performance of any of the agreements
contained in, or conditions of, the Loan Documents, or to inspect the
properties, books or records of the Borrower or any Subsidiary. The
Administrative Agent shall have no liability or responsibility whatsoever to the
Borrower or any other Person as a consequence of any failure or delay in
performance, or any breach, by the Issuing Bank or any Lender of any of its
obligations under any of the Loan Documents.
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10.4 Reliance by Administrative Agent.
--------------------------------
The Administrative Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, opinion, letter, cablegram, telegram, telecopy, telex or
teletype message, statement, order or other document or conversation believed by
it to be genuine and correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal counsel (including,
without limitation, counsel to the Borrower), independent accountants and other
experts selected by it. Subject to section 11.7, the Administrative Agent may
treat each Lender as the holder of all of the interests of such Lender in its RC
Commitment and in its Loans and Notes. The Administrative Agent shall have no
duty to examine or pass upon the validity, effectiveness or genuineness of the
Loan Documents or any instrument, document or communication furnished pursuant
thereto or in connection therewith, and the Administrative Agent shall be
entitled to assume that the same are valid, effective and genuine, have been
signed or sent by the proper parties and are what they purport to be. The
Administrative Agent shall be fully justified in failing or refusing to take any
action under the Loan Documents unless it shall first receive such advice or
concurrence of the Required Lenders as it deems appropriate. The Administrative
Agent shall in all cases be fully protected in acting, or in refraining from
acting, under the Loan Documents in accordance with a request of the Required
Lenders, and such request and any action taken or failure to act pursuant
thereto shall be binding upon all the Lenders and all future holders of the
Notes.
10.5 Notice of Default.
-----------------
The Administrative Agent shall not be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default hereunder unless it
has received written notice thereof from the Issuing Bank, a Lender or the
Borrower. In the event that the Administrative Agent receives such a notice, it
shall promptly give notice thereof to the Issuer and the Lenders. The
Administrative Agent shall take such action with respect to such Default or
Event of Default as shall be reasonably directed by the Required Lenders;
provided, however, that unless and until the Administrative Agent shall have
- -------- -------
received such directions, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem to be in the best interests
of the Lenders.
10.6 Non-Reliance.
------------
Each Lender expressly acknowledges that neither the Administrative
Agent nor any of its officers, directors, employees, agents, attorneys-in-fact
or affiliates has made any representations or warranties to it and that no act
by the Administrative Agent hereinafter, including any review of the affairs of
the Borrower or the Subsidiaries, shall be deemed to constitute any
representation or warranty by the Administrative Agent to any Lender. Each
Lender represents to the Administrative Agent that it has, independently and
without reliance upon the Administrative Agent or any other Lender, and based on
such documents and information as it has deemed appropriate, made its own
evaluation of and investigation into the business, operations, Property,
financial and other condition and creditworthiness of the Borrower and its
Subsidiaries and made its own decision to enter into this Agreement. Each
Lender also represents that it will, independently and without reliance upon the
Administrative Agent or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its
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own credit analysis, evaluations and decisions in taking or not taking action
under this Agreement or any of the Loan Documents, and to make such
investigation as it deems necessary to inform itself as to the business,
operations, Property, financial and other condition and creditworthiness of the
Borrower and its Subsidiaries. Except for notices, reports and other documents
expressly required to be furnished to the Lenders by the Administrative Agent
hereunder, the Administrative Agent shall have no duty or responsibility to
provide any Lender with any credit or other information concerning the business,
operations, Property, financial and other condition or creditworthiness of the
Borrower or its Subsidiaries which may come into the possession of the
Administrative Agent or any of its officers, directors, employees, agents,
attorneys-in-fact or affiliates.
10.7 Indemnification.
---------------
Each Lender agrees to indemnify the Administrative Agent in its
capacity as such (to the extent not promptly reimbursed by or on behalf of the
Borrower and without limiting the obligation of the Borrower or any other Loan
Party to do so), ratably according to its Credit Exposure at such time, from and
against any and all liabilities, obligations, claims, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind whatsoever including, without limitation, any amounts paid to the Lenders
(through the Administrative Agent) by the Borrower pursuant to the terms hereof,
that are subsequently rescinded or avoided, or must otherwise be restored or
returned) which may at any time (including, without limitation, at any time
following the payment of the Notes) be imposed on, incurred by or asserted
against the Administrative Agent in any way relating to or arising out of this
Agreement, the other Loan Documents or any other documents contemplated by or
referred to herein or the transactions contemplated hereby or any action taken
or omitted to be taken by the Administrative Agent under or in connection with
any of the foregoing; provided, however, that no Lender shall be liable for the
-------- -------
payment of any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements to the
extent resulting directly and primarily from the gross negligence or willful
misconduct of the Administrative Agent. The agreements in this section 10.7
shall survive the payment of the Notes and all other amounts payable under the
Loan Documents.
10.8 Administrative Agent in its Individual Capacity.
-----------------------------------------------
BNY and its Affiliates, may make loans to, accept deposits from, issue
letters of credit for the account of and generally engage in any kind of
business with, the Borrower and its Subsidiaries as though BNY were not the
Administrative Agent. With respect to the RC Commitment made by BNY and each
Note issued to BNY, the Administrative Agent shall have the same rights and
powers under this Agreement and the other Loan Documents as any Lender and may
exercise the same as though it was not the Administrative Agent or the Issuing
Bank, and the terms "Lender" and "Lenders" shall in each case include BNY.
10.9 Successor.
---------
If at any time the Administrative Agent deems it advisable, in its
sole discretion, it may submit to each of the Lenders a written notification of
its resignation as Administrative Agent under the Loan Documents, such
resignation to be effective on the later to occur of (i) the thirtieth day after
the date of such notice and (ii) the date upon which any successor
Administrative Agent, in accordance with the provisions of this
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section 10.9, shall have accepted in writing its appointment as such successor
Administrative Agent. Upon any such resignation of the Administrative Agent, the
Required Lenders shall have the right to appoint from among the Lenders a
successor Administrative Agent. If no successor Administrative Agent shall have
been so appointed by the Required Lenders and accepted such appointment within
30 days after the retiring Administrative Agent's giving of notice of
resignation, then the retiring Administrative Agent may, on behalf of the
Lenders, appoint a successor Administrative Agent, which successor
Administrative Agent shall be a commercial bank organized under the laws of the
United States of America or of any State thereof and having a combined capital
and surplus of at least $100,000,000. Upon the acceptance of any appointment as
Administrative Agent by a successor Administrative Agent, such successor
Administrative Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Administrative Agent, and
the retiring Administrative Agent's rights, powers, privileges and duties as
Administrative Agent under the Loan Documents shall be terminated. The Borrower
and the Lenders shall execute such documents as shall be necessary to effect
such appointment. After any retiring Administrative Agent's resignation as
Administrative Agent, the provisions of section 10 shall inure to its benefit as
to any actions taken or omitted to be taken by it while it was Administrative
Agent under the Loan Documents. If at any time hereunder there shall not be a
duly appointed and acting Administrative Agent, the Borrower agrees to make each
payment due under the Loan Documents directly to the Persons entitled thereto
during such time.
10.10 Updating Exhibits and Schedules.
-------------------------------
The Administrative Agent is hereby authorized and directed from time
to time to (i) amend Exhibit A to reflect the RC Commitments of each Lender as
of the date of each assignment pursuant to section 11.7 and, in connection
therewith, the Lending Offices and address for notices of each assignee
"Lender", (ii) amend Schedule 1.1(L) to reflect any change of address of which
the Administrative Agent has received written notice pursuant to section 11.2,
and (iii) in each such case, to send a copy thereof to each party hereto.
10.11 The Arranger.
------------
The Arranger shall have no duties or obligations under the Loan
Documents in its capacity as Arranger.
10.12 The Documentation Agent.
-----------------------
The Documentation Agent shall have no duties or obligations under the
Loan Documents in its capacity as Documentation Agent.
11. MISCELLANEOUS
-------------
11.1 Amendments and Waivers.
----------------------
With the written consent of the Required Lenders, which consent may be
transmitted by telecopier, the Administrative Agent and the appropriate Loan
Parties may, from time to time, enter into written amendments, supplements or
modifications of the Loan Documents and, with the consent of the Required
Lenders, the Administrative Agent
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on behalf of the Lenders may execute and deliver to any such parties a written
instrument waiving or consenting to the departure from, on such terms and
conditions as the Administrative Agent may specify in such instrument, any of
the requirements of the Loan Documents or any Default or Event of Default and
its consequences; provided, however, that:
(a) no such amendment, supplement, modification, waiver or consent
shall, without the written consent of all of the Lenders, (i) increase the RC
Commitments or the Letter of Credit Commitment, (ii) extend the Maturity Date or
the RC Commitment Termination Date, (iii) extend the date or decrease the amount
of any mandatory reduction of the RC Commitments pursuant to section 2.4(b)(i),
(iv) decrease the interest rate, extend the time, forgive or change the pro rata
method of payment of interest or principal on or applicable to any Note or
Reimbursement Obligation, (v) decrease the amount, extend the time, forgive or
change the pro rata method of payment of the Commitment Fee or the Letter of
Credit Fee, (vi) release all or any part of the Collateral or any Subsidiary
Guaranty except in connection with a permitted sale or other permitted
disposition of the Collateral or the applicable Subsidiary Guarantor, as the
case may be, or to the extent that the Administrative Agent shall be required or
permitted to do so under the terms and provisions of the Loan Documents, (vii)
change the definition of Required Lenders, (viii) change the sharing provisions
among the Lenders, (ix) change the several nature of the obligations of the
Lenders to make Loans and participate in Letters of Credit, or (x) change the
provisions of sections 2.9, 2.10, 2.11, 2.13, 2.14, 11.1, 11.7(a) or 11.11;
(b) without the written consent of the Administrative Agent, no such
amendment, supplement, modification or waiver shall amend, modify or waive any
provision of section 10 or otherwise change any of the rights or obligations of
the Administrative Agent under the Loan Documents; and
(c) without the written consent of the Issuing Bank, no such
amendment, supplement, modification or waiver shall amend, modify or waive any
provision relating to the Issuing Bank, the Letter of Credit Commitment or the
Letters of Credit or otherwise change any of the rights or obligations of the
Issuing Bank hereunder or under the Loan Documents.
Any such amendment, supplement, modification or waiver shall apply
equally to each of the Lenders and shall be binding upon the parties to the
applicable agreement, the Lenders, the Administrative Agent, the Issuing Bank
and all future holders of the Notes and the Reimbursement Obligations. In the
case of any waiver, the parties to the applicable agreement, the Lenders, the
Administrative Agent, and the Issuing Bank shall be restored to their former
position and rights under the Loan Documents to the extent provided for in such
waiver, and any Default or Event of Default waived shall not extend to any
subsequent or other Default or Event of Default, or impair any right consequent
thereon.
11.2 Notices.
-------
Except as otherwise expressly provided herein, all notices, requests
and demands to or upon the respective parties hereto to be effective shall be in
writing and, unless otherwise expressly provided herein, shall be deemed to have
been duly given or made (i) when delivered by hand, (ii) one Business Day after
having been sent by
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overnight courier service, (iii) five Business Days after having been deposited
in the mail, first-class postage prepaid, or (iv) in the case of telecopier
notice, when sent and transmission confirmed (which may include electronic
confirmation), addressed as follows in the case of the Borrower, the
Administrative Agent and the Issuing Bank, and as set forth in Schedule 1.1(L)
hereto in the case of each of the Lenders, or to such other addresses as to
which the Administrative Agent may be hereafter notified by the respective
parties hereto or any future holders of the Notes:
The Borrower:
Salem Communications Corporation
4880 Santa Rosa Road, Suite 300
Camarillo, California 93012
Attention: Dirk Gastaldo,
Vice President/
Chief Financial Officer
Telephone: (805) 384-4531
Telecopy: (805) 384-4532
with a copy to:
Salem Communications Corporation
4880 Santa Rosa Road, Suite 300
Camarillo, California 93012
Attention: Jonathon Block, Esq.
Telephone: (805) 487-0400 (ext. 106)
Telecopy: (805) 384-4505
The Administrative Agent, the Issuing Bank and/or BNY:
The Bank of New York
Communications, Publishing & Entertainment Division
One Wall Street, 16th Floor
New York, New York 10286
Attention: Wade E. Layton,
Vice President
Telephone: (212) 635-8693
Telecopy: (212) 635-8593
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<PAGE>
with a copy to, in the case of all Borrowing Requests and Letter of Credit
Requests, prepayment notices under section 2.5(a) and conversion notices under
section 2.8, and to the attention of, in the case of all fundings by the
Lenders:
The Bank of New York, as Administrative Agent
Agency Function Administration
One Wall Street, 18th Floor
New York, New York 10286
Attention: Genoveso Caviness
Telephone: (212) 635-4694
Telecopy: (212) 635-6365 (or 6366/6367)
except that any notice, request or demand by the Borrower to or upon the
Administrative Agent, the Issuing Bank or the Lenders pursuant to section 2.3,
2.4, 2.5, 2.8 or 2.18 shall not be effective until received.
11.3 No Waiver; Cumulative Remedies.
------------------------------
No failure to exercise and no delay in exercising, on the part of the
Administrative Agent, the Issuing Bank or any Lender, any right, remedy, power
or privilege under any Loan Document shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, remedy, power or privilege
under any Loan Document preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges under the Loan Documents are cumulative and not exclusive
of any rights, remedies, powers and privileges provided by law.
11.4 Survival of Representations and Warranties.
------------------------------------------
All representations and warranties made hereunder and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement, the Notes and the
other Loan Documents.
11.5 Payment of Expenses and Taxes.
-----------------------------
The Borrower agrees, promptly upon presentation of a statement or
invoice therefor, and whether or not any Loan is made or Letter of Credit is
issued, (i) to pay or reimburse the Administrative Agent and the Arranger for
all their out-of-pocket reasonable costs and expenses incurred in connection
with the development, preparation, execution and syndication of, and any
amendment, waiver, consent, supplement or modification to, the Loan Documents,
any documents prepared in connection therewith and the consummation of the
transactions contemplated hereby and thereby, whether such Loan Documents or any
such other documents are executed and whether the transactions contemplated
thereby are consummated, including, without limitation, the reasonable fees and
disbursements of Special Counsel, (ii) to pay or reimburse the Administrative
Agent, the Issuing Bank, the Arranger and the Lenders for all of their
respective reasonable costs and expenses incurred in connection with the work-
out, enforcement or preservation of any rights under the Loan Documents and any
such documents, including, without limitation, reasonable fees and disbursements
of counsel (including the allocated cost of internal counsel) to the
Administrative Agent, the Issuing Bank, the Arranger and the Lenders
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including, without limitation, reasonable expenses of the Administrative Agent,
the Issuing Bank, the Arranger and the Lenders in connection with or
attributable to commercial finance examiners, accountants, investment banks and
environmental consultants, (iii) to pay, indemnify, and hold each Lender, the
Administrative Agent, the Issuing Bank and the Arranger harmless from, any and
all recording and filing fees and any and all liabilities with respect to, or
resulting from any delay in paying, stamp, excise and other Taxes, if any, which
may be payable or determined to be payable in connection with the execution and
delivery of, or consummation of any of the transactions contemplated by, or any
amendment, supplement or modification of, or any waiver or consent under or in
respect of, any of the Loan Documents and any such other documents, and (iv) to
pay, indemnify and hold each Lender, the Administrative Agent, the Issuing Bank
and the Arranger and each of their respective officers, directors, employees and
agents harmless from and against any and all other liabilities, obligations,
claims, losses, damages, penalties, actions, judgments, suits, costs, expenses
or disbursements of any kind or nature whatsoever (including, without
limitation, reasonable counsel fees and disbursements (including the allocated
cost of internal counsel)) with respect to the execution, delivery, enforcement
and performance of the Loan Documents or the use of the proceeds of the Loans
and Letters of Credit hereunder (all the foregoing, collectively, the
"indemnified liabilities") and, if and to the extent that the foregoing
-----------------------
indemnity may be unenforceable for any reason, the Borrower agrees to make the
maximum payment permitted under applicable law; provided, however, that the
Borrower shall have no obligation hereunder to pay indemnified liabilities to
the Administrative Agent, the Issuing Bank, the Arranger or any Lender to the
extent arising directly and primarily from the gross negligence or willful
misconduct of the Administrative Agent, the Issuing Bank, the Arranger or such
Lender, as the case may be. The agreements in this section 11.5 shall survive
the termination of the RC Commitments and the payment of the Notes and all other
amounts payable hereunder.
11.6 Lending Offices.
---------------
Subject to section 2.17(b), each Lender shall have the right at any
time and from time to time to transfer any Loan to a different office of such
Lender, provided that such Lender shall promptly notify the Administrative Agent
and the Borrower of any such change of office. Such office shall thereupon
become such Lender's Lending Office.
11.7 Successors and Assigns.
----------------------
(a) This Agreement, the Notes and the other Loan Documents to which
the Borrower is a party shall be binding upon and inure to the benefit of the
Borrower, the Lenders, the Administrative Agent, the Issuing Bank, all future
holders of the Notes and their respective successors and assigns, except that
the Borrower may not assign, delegate or transfer any of its rights or
obligations under this Agreement, the Notes and the Loan Documents to which the
Borrower is a party without the prior written consent of each Lender.
(b) Each Lender shall have the right at any time, upon written notice
to the Administrative Agent of its intent to do so, to sell or assign (each an
"Assignment") all or any part of its Loans, its RC Commitment and its Notes, on
----------
a pro rata basis to one or more of the other Lenders (or, with the written
consent of the Issuing Bank, such consent not to be unreasonably withheld or
delayed, to affiliates of such Lender or such other Lenders) or, with the
written consent of Administrative Agent and the Issuing Bank (such
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<PAGE>
consents not to be unreasonably withheld or delayed), to any other bank,
insurance company, pension fund, mutual fund or other financial institution,
provided that (i) each such partial Assignment shall be in a minimum aggregate
amount of $5,000,000 (unless otherwise consented to by the Borrower), (ii) the
parties to each such Assignment shall execute and deliver to the Administrative
Agent an Assignment and Assumption Agreement along with a fee (the "Assignment
----------
Fee") of $3,500 with respect to the Assignment made under this Agreement and
- ---
(iii) no such assignment may be made to the Borrower or to any Affiliate of the
Borrower. Upon receipt of each such duly executed Assignment and Assumption
Agreement together with the Assignment Fee therefor in compliance with the
provisions hereof, the Administrative Agent shall (x) record the same and
signify its acceptance thereof by executing two copies of such Assignment and
Assumption Agreement in the appropriate place and delivering one copy to the
assignor and one copy to the assignee and (y) request the Borrower to execute
and deliver (1) to such assignee one or more Notes, in an aggregate principal
amount equal to the Loans assigned to, and RC Commitments assumed by, such
assignee and (2) to such assignor one or more Notes, in an aggregate principal
amount equal to the balance of such assignor Lender's Loans and RC Commitment,
if any, in each case against receipt of such assignor Lender's existing Notes.
The Borrower agrees that it shall, upon each such request of the Administrative
Agent, execute and deliver such new Notes at its own cost and expense. Upon such
delivery, acceptance and recording by the Administrative Agent, from and after
the effective date specified in such Assignment and Assumption Agreement, the
assignee thereunder shall be a party hereto and shall for all purposes of this
Agreement and the other Loan Documents be deemed a "Lender" and, to the extent
provided in such Assignment and Assumption Agreement, the assignor Lender
thereunder shall be released from its obligations under this Agreement and the
other Loan Documents.
(c) Each Lender may grant participations in all or any part of its
Loans, its Notes or its RC Commitment to any other bank, insurance company,
pension fund, mutual fund, financial institution or other entity, provided that
no such participant shall have any right to require such Lender to take or omit
to take any action under any Loan Document except any action which would require
the consent of all Lenders pursuant to section 11.1. The Borrower hereby
acknowledges and agrees that any such participant shall for purposes of sections
2.9, 11.5, 11.9 and 11.11 be deemed to be a "Lender".
(d) No Lender shall, as between and among the Borrower, the
Administrative Agent, the Issuing Bank, and such Lender, be relieved of any of
its obligations under the Loan Documents as a result of any Assignment or
granting of a participation in, all or any part of its Loans, its RC Commitment
or its Notes, except that a Lender shall be relieved of its obligations to the
extent of any Assignment of all or any part of its Loans, its RC Commitment or
its Notes pursuant to subsection (b) above.
(e) Notwithstanding anything to the contrary contained in this section
11.7, any Lender may at any time assign all or any portion of its rights under
the Loan Documents to a Federal Reserve Bank. No such assignment shall release
such Lender from its obligations thereunder.
11.8 Counterparts.
------------
This Agreement and each of the other Loan Documents (other than the
Notes) may be executed by one or more of the parties to this Agreement or to
such other Loan Document, as the case may be, on any number of separate
counterparts and all of
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said counterparts taken together shall be deemed to constitute one and the same
agreement. It shall not be necessary in making proof of any Loan Document to
produce or account for more than one counterpart signed by the party to be
charged. Any of the parties to this Agreement and the other Loan Documents may
rely on signatures of such parties hereto and thereto which are transmitted by
telecopier or other electronic means as fully as if originally signed. A set of
the copies of this Agreement and each of the other Loan Documents signed by all
the parties shall be lodged with each of the Borrower and the Administrative
Agent.
11.9 Adjustments; Set-off.
--------------------
(a) If any Lender (a "benefited Lender") shall at any time receive any
----------------
payment of all or any part of its Loans, or interest thereon, or receive any
collateral in respect thereof (whether voluntarily or involuntarily, by set-off,
pursuant to events or proceedings of the nature referred to in section 9.1 (h)
or (i), or otherwise) in a greater proportion than any such payment to and
collateral received by any other Lender, if any, in respect of such other
Lender's Loans, or interest thereon, such benefited Lender shall notify the
Administrative Agent and shall purchase for cash from the other Lenders such
portion of each such other Lender's Loans, or shall provide such other Lenders
with the benefits of any such collateral, or the proceeds thereof, as shall be
necessary to cause such benefited Lender to share the excess payment or benefits
of such collateral or proceeds ratably with each of the Lenders; provided,
however, that if all or any portion of such excess payment or benefits is
thereafter recovered from such benefited Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest, unless the benefitted Lender is required to pay
interest on the amount of the excess payment to be returned, in which case the
other Lenders shall pay their pro rata share of such interest. The Borrower
agrees that each Lender so purchasing a portion of another Lender's Loans may
exercise all rights of payment (including, without limitation, rights of set-
off) with respect to such portion as fully as if such Lender were the direct
holder of such portion.
(b) In addition to any rights and remedies of the Lenders provided by
law, upon the occurrence and at any time during the continuance of an Event of
Default, each Lender shall have the right, without prior notice to any Loan
Party, any such notice being expressly waived by each such Loan Party to the
extent permitted by applicable law, to set off and apply against any
indebtedness, whether matured or unmatured, of such Loan Party to such Lender,
any amount owing from such Lender to such Loan Party, at, or at any time after,
the happening of any of the above-mentioned events. To the extent permitted by
applicable law, the aforesaid right of set-off may be exercised by such Lender
against each Loan Party or against any trustee in bankruptcy, custodian, debtor
in possession, assignee for the benefit of creditors, receiver, or execution,
judgment or attachment creditor of such Loan Party, or against anyone else
claiming through or against such Loan Party or such trustee in bankruptcy,
custodian, debtor in possession, assignee for the benefit of creditors,
receiver, or execution, judgment or attachment creditor, notwithstanding the
fact that such right of set-off shall not have been exercised by such Lender
prior to the making, filing or issuance, or service upon such Lender of, or of
notice of, any such petition, assignment for the benefit of creditors,
appointment or application for the appointment of a receiver, or issuance of
execution, subpoena, order or warrant. Promptly after any such set-off and
application made by a Lender against a Loan Party, such Lender shall notify such
Loan Party and the Administrative Agent, provided
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that the failure to give such notice shall not affect the validity of such set-
off and application.
11.10 No Third Party Beneficiary.
--------------------------
This Agreement is among the Borrower, the Lenders, the Administrative
Agent, the Issuing Bank and the Arranger and no other Person is intended to or
shall have any rights hereunder or shall be permitted to rely hereon.
11.11 Indemnity.
---------
(a) The Borrower agrees to indemnify and hold harmless each of the
Administrative Agent, the Issuing Bank, the Arranger, each Lender and each of
their respective officers, directors, employees and agents (each an "Indemnified
-----------
Party") from and against any loss, cost, liability, damage or expense (including
- -----
the reasonable fees and out-of-pocket expenses of counsel to each such
Indemnified Party, including all local counsel hired by any such counsel)
incurred by each such Indemnified Party in investigating, preparing for,
defending against, or providing evidence, producing documents or taking any
other action in respect of, any claim, commenced or threatened litigation,
administrative proceeding or investigation under any federal securities law or
any other statute of any jurisdiction, or any regulation, or at common law or
otherwise, which is alleged to arise out of or is based upon (i) any untrue
statement or alleged untrue statement of any material fact of the Borrower or
any Subsidiary in any document or schedule executed or filed with the Securities
and Exchange Commission or any other Governmental Authority by or on behalf of
the Borrower or any Subsidiary, (ii) any omission or alleged omission to state
any material fact required to be stated in such document or schedule, or
necessary to make the statements made therein, in light of the circumstances
under which made, not misleading, (iii) any of the Loan Documents, the
transactions contemplated hereby or thereby or any acts, practices or omissions
or alleged acts, practices or omissions of the Borrower or any of its agents
relating to the use of the proceeds of any or all Letters of Credit or Loans
which are alleged to be in violation of section 2.7, or in violation of any
federal securities law or of any other statute, regulation or other law of any
jurisdiction applicable thereto, or (iv) any acquisition or proposed acquisition
by the Borrower or any Subsidiary of all or a portion of the Stock, or all or a
portion of the assets, of any Person, in each case whether or not any
Indemnified Party is a party thereto.
(b) In addition to the indemnity provided under section 11.11(a), the
Borrower agrees to defend, indemnify and hold harmless each Indemnified Party
from and against any loss, cost, liability, fine, penalties, damage or expense
(including the reasonable fees and out-of- pocket expenses of counsel to each
such Indemnified Party, including all local counsel hired by any such counsel)
suffered or incurred by each such Indemnified Party, pertaining to any release
or threatened release of a reportable quantity of any hazardous substance or
hazardous waste at any Property of the Borrower or any of its Subsidiaries (a
"Hazardous Discharge"), including, but not limited to, claims of any
-------------------
Governmental Authority or any third Person, whether arising under or on account
of any Environmental Law or tort, contract or common law, including, without
limitation, the assertion of any Lien thereunder, with respect to any Hazardous
Discharge, the presence of any hazardous substances or hazardous wastes
affecting any Property of the Borrower or any of its Subsidiaries, whether or
not the same originates or engages from such Property or any contiguous real
estate, including any loss of value of such Property as a
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result of the foregoing. The Borrower's obligations under this section 11.11(b)
shall arise upon the discovery of any Hazardous Discharge at such Property,
whether or not any Governmental Authority or any other Person has taken or
threatened any action in connection with the presence of any hazardous
substances or hazardous wastes.
(c) The indemnities set forth herein shall be in addition to any other
obligations or liabilities of the Borrower to the Indemnified Parties hereunder
or at common law or otherwise, and shall survive any termination of this
Agreement, the expiration of the RC Commitments and the payment of all
indebtedness of the Borrower hereunder and under the other Loan Documents,
provided that the Borrower shall have no obligation under this section 11.11 to
an Indemnified Party with respect to any of the foregoing to the extent arising
directly and primarily out of the gross negligence or wilful misconduct of such
Indemnified Party.
11.12 Governing Law.
-------------
This Agreement, the Notes and the other Loan Documents and the rights
and obligations of the parties under this Agreement, the Notes and the other
Loan Documents shall be governed by, and construed and interpreted in accordance
with, the laws of the State of New York, without regard to principles of
conflict of laws.
11.13 Headings.
--------
Section headings have been inserted herein and in the other Loan
Documents for convenience only and shall not be construed to be a part hereof or
thereof.
11.14 Severability.
------------
Every provision of this Agreement and the other Loan Documents is
intended to be severable, and if any term or provision hereof or thereof shall
be invalid, illegal or unenforceable for any reason, the validity, legality and
enforceability of the remaining provisions hereof or thereof shall not be
affected or impaired thereby, and any invalidity, illegality or unenforceability
in any jurisdiction shall not affect the validity, legality or enforceability of
any such term or provision in any other jurisdiction.
11.15 Integration.
-----------
All exhibits and schedules to this Agreement shall be deemed to be a
part of this Agreement or the applicable Loan Document, as the case may be.
Except for agreements between the Borrower and the Administrative Agent, the
Issuing Bank and the Arranger with respect to certain fees, this Agreement and
the other Loan Documents embody the entire agreement and understanding among the
Borrower, the Administrative Agent, the Issuing Bank, the Arranger and the
Lenders with respect to the subject matter hereof and thereof and supersede all
prior agreements and understandings among the Borrower, the Administrative
Agent, the Issuing Bank, the Arranger and the Lenders with respect to the
subject matter hereof and thereof.
11.16 Limitation of Liability.
------------------------
No claim may be made by the Borrower, any of its Subsidiaries, any
other Loan Party, any Lender or other Person against the Administrative Agent,
the Issuing
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Bank, any Lender, the Arranger, or any directors, officers, employees, or agents
of any of them, for any special, indirect, consequential or punitive damages in
respect of any claim for breach of contract or any other theory of liability
arising out of or related to the transactions contemplated by any Loan Document,
or any act, omission or event occurring in connection therewith, and each of the
Borrower, its Subsidiaries, such other Loan Party, any such Lender or other
Person hereby waives, releases and agrees not to sue upon any claim for any such
damages, whether or not accrued and whether or not known or suspected to exist
in its favor.
11.17 Consent to Jurisdiction.
-----------------------
The Borrower hereby irrevocably submits to the jurisdiction of any New
York State or Federal Court sitting in the City of New York over any suit,
action or proceeding arising out of or relating to the Loan Documents. The
Borrower hereby irrevocably waives, to the fullest extent permitted by law, any
objection which it may now or hereafter have to the laying of the venue of any
such suit, action or proceeding brought in such a court and any claim that any
such suit, action or proceeding brought in such a court has been brought in an
inconvenient forum. The Borrower hereby agrees that a final judgment in any
such suit, action or proceeding brought in such a court, after all appropriate
appeals, shall be conclusive and binding upon it.
11.18 Service of Process.
------------------
The Borrower hereby agrees that process may be served in any suit,
action, counterclaim or proceeding of the nature referred to in section 11.17 by
mailing copies thereof by registered or certified mail, postage prepaid, return
receipt requested, to the address of the Borrower set forth in section 11.2 or
to any other address of which the Borrower shall have given written notice to
the Administrative Agent. The Borrower hereby agrees that such service, to the
extent permitted by applicable law (i) shall be deemed in every respect
effective service of process upon it in any such suit, action, counterclaim or
proceeding, and (ii) shall to the fullest extent enforceable by law, be taken
and held to be valid personal service upon and personal delivery to it.
11.19 No Limitation on Service or Suit.
--------------------------------
Nothing in the Loan Documents or any modification, waiver, or
amendment thereto shall affect the right of the Administrative Agent, the
Issuing Bank or any Lender to serve process in any manner permitted by law or
limit the right of the Administrative Agent, the Issuing Bank or any Lender to
bring proceedings against the Borrower in the courts of any jurisdiction or
jurisdictions.
11.20 WAIVER OF TRIAL BY JURY.
-----------------------
THE ADMINISTRATIVE AGENT, THE ISSUING BANK, THE LENDERS AND THE
BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT THEY
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION ARISING OUT OF, UNDER
OR IN CONNECTION WITH THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED
THEREIN. FURTHER, THE BORROWER HEREBY CERTIFIES THAT NO REPRESENTATIVE OR AGENT
OF THE ADMINISTRATIVE AGENT,
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THE ISSUING BANK OR THE LENDERS, OR COUNSEL TO THE ADMINISTRATIVE AGENT, THE
ISSUING BANK OR THE LENDERS, HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE
ADMINISTRATIVE AGENT, THE ISSUING BANK OR THE LENDERS WOULD NOT, IN THE EVENT OF
SUCH LITIGATION, SEEK TO ENFORCE THIS WAIVER OF RIGHT TO JURY TRIAL PROVISION.
THE BORROWER ACKNOWLEDGES THAT THE ADMINISTRATIVE AGENT, THE ISSUING BANK AND
THE LENDERS HAVE BEEN INDUCED TO ENTER INTO THE LOAN DOCUMENTS BY, INTER ALIA,
----- ----
THE PROVISIONS OF THIS SECTION.
11.21 Confidentiality.
---------------
The Administrative Agent, the Issuing Bank and the Lenders each agree
that, without the prior written consent of the Borrower, it will not disclose
the terms of this Agreement or any material confidential information with
respect to the Borrower, or any of its Subsidiaries which is furnished pursuant
to this Agreement to any Person except (i) its accountants, attorneys and other
advisors who have a need to know such information or its Affiliates, and in each
case who agree to be bound by the provisions of this section 11.21, (ii) to the
extent such information is requested to be disclosed to any regulatory or
administrative body or commission to whose jurisdiction the Administrative
Agent, the Issuing Bank or such Lender is subject, (iii) to the extent such
information is requested or required to be disclosed by subpoena or similar
process of applicable law or regulation, (iv) to the extent the Borrower has
previously disclosed such information publicly or such information is otherwise
in the public domain (except by virtue of a breach by the Administrative Agent,
the Issuing Bank or such Lender of its obligations under this section 11.21) at
the time of disclosure, (v) such information which is disclosed in connection
with any litigation or dispute between the Administrative Agent, the Issuing
Bank or such Lender and any Loan Party concerning this Agreement, any other
Loan Document, or any instrument or document executed or delivered in connection
herewith or therewith, (vi) such information which was in the possession of such
Person or such Person's Affiliates without the obligation of confidentiality
prior to the Administrative Agent, the Issuing Bank or such Lender furnishing
it to such Person, and (vii) in connection with a prospective assignment, grant
of a participation interest or other transfer by a Lender of any of its interest
in this Agreement or the Notes, provided that the Person to whom such
information is disclosed shall agree to be bound by the provisions of this
section 11.21.
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SALEM COMMUNICATIONS CORPORATION
CREDIT AGREEMENT
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
SALEM COMMUNICATIONS CORPORATION
By: /s/ Eric H. Halvorson
---------------------
Name: Eric H. Halvorson
-----------------
Title: Executive Vice President
------------------------
THE BANK OF NEW YORK,
Individually and as Administrative Agent and
Issuing Bank
By: /s/ Stephen M. Nettler
----------------------
Name: Stephen M. Nettler
------------------
Title: V.P.
----
<PAGE>
SALEM COMMUNICATIONS CORPORATION
CREDIT AGREEMENT
BANK OF AMERICA NT & SA,
Individually and as Documentation Agent
By: /s/ Matthew J. Koenig
---------------------
Name: Matthew J. Koenig
-----------------
Title: V.P.
----
<PAGE>
SALEM COMMUNICATIONS CORPORATION
CREDIT AGREEMENT
BANKBOSTON, N.A.
By: /s/ Jennifer R. Buras
---------------------
Name: Jennifer R. Buras
-----------------
Title: Director
--------
<PAGE>
SALEM COMMUNICATIONS CORPORATION
CREDIT AGREEMENT
FLEET BANK, N.A.
By: /s/ Garret Komjathy
-------------------
Name: Garret Komjathy
---------------
Title: Vice President
--------------
<PAGE>
SALEM COMMUNICATIONS CORPORATION
CREDIT AGREEMENT
UNION BANK OF CALIFORNIA, N.A.
By: /s/ Kristina M. Mouzakis
------------------------
Name: Kristina M. Mouzakis
--------------------
Title: Assistant Vice President
------------------------
<PAGE>
SALEM EXHIBIT A
---------------
LIST OF RC COMMITMENTS
----------------------
RC RC Commitment
Bank Commitment Percentage
- ---- ----------- -------------
The Bank of New York $20,000,000 20/75
Bank of America NT&SA $17,500,000 17.5/75
BankBoston, N.A. $12,500,000 12.5/75
Fleet Bank, N.A. $12,500,000 12.5/75
Union Bank of California, N.A. $12,500,000 12.5/75
TOTAL $75,000,000.00 100%
============== ====
<PAGE>
SALEM EXHIBIT B
---------------
FORM OF RC NOTE
---------------
$-------------- ____________,1997
New York, New York
FOR VALUE RECEIVED, on the Maturity Date, SALEM COMMUNICATIONS CORPORATION, a
California corporation (the "Borrower"), hereby promises to pay to the
order of ________________________(the "Lender"), at the office of The Bank of
New York, as Administrative Agent (the "Administrative Agent"), located at One
Wall Street, New York, New York, 10286 or at such other place as the
Administrative Agent may specify from time to time, in lawful money of the
United States of America, the principal sum of $ , or such lesser unpaid
---------
principal balance as shall be outstanding hereunder, payable in the amounts and
at the times set forth in the Agreement (as hereinafter defined).
This RC Note shall bear interest from the date hereof on the unpaid balance
hereof payable on the dates and at the rate or rates provided for in the Credit
Agreement, dated as of September 25, 1997, by and among the Borrower, the
Lenders party thereto, Bank of America NT&SA, as Documentation Agent, and the
Administrative Agent (as the same may be amended, modified or supplemented from
time to time, the "Agreement"). Capitalized terms used herein which are defined
in the Agreement shall have the meanings therein defined. In no event shall the
interest rate payable in respect hereof exceed the Highest Lawful Rate.
This RC Note is one of the RC Notes referred to in the Agreement is subject
to the terms, set forth in the Agreement and is entitled to the benefits set
forth in the Loan Documents. The principal of this RC Note is prepayable in the
amounts and under the circumstances, and its maturity is subject to acceleration
upon the terms, set forth in the Agreement. Except as otherwise expressly
provided in the Agreement, if any payment on this RC Note becomes due and
payable on a day which is not a Business Day the maturity thereof shall be
extended to the next Business Day, and interest shall be payable at the
applicable rate or rates specified in the Agreement during such extension
period.
Presentment for payment, demand, notice of dishonor, protest, notice of
protest and all other demands and notices in connection with the delivery,
performance and enforcement of this RC Note are hereby waived, except as
specifically otherwise provided in the Agreement.
This RC Note is being delivered in, is intended to be performed in, shall be
construed and interpreted in accordance with, and be governed by the internal
laws of, the State of New York without regard to principles of conflict of laws.
This RC Note may be amended only by an instrument in writing executed
pursuant to the provisions of Section 11.1 of the Agreement.
SALEM COMMUNICATIONS CORPORATION
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
<PAGE>
SCHEDULE TO RC NOTE
-------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Type of RC Interest Interest
Loan (ABR or Borrowing Principal Rate (if Period (if Unpaid
Eurodollar or Amount of paid or Eurodollar Euro-dollar Principal Notation
Date Loan) Conversion RC Loan prepaid Loan) Loan) Amount Made By
- ---- ------------ ---------- --------- --------- ---------- ----------- --------- -------
</TABLE>
<PAGE>
SALEM EXHIBIT C
---------------
FORM OF BORROWING REQUEST
-------------------------
[DATE]
The Bank of New York, as Administrative Agent
One Wall Street - 16th Floor
New York, New York 10286
Attention: Wade E. Layton,
Vice President
and
The Bank of New York, as Administrative Agent
One Wall Street - 18th Floor
New York, New York 10286
Attention: Genoveso Caviness,
Agency Function Administration
Re: Credit Agreement, dated as of September 25, 1997, by and among
Salem Communications Corporation, the Lenders party thereto, The
Bank of New York, as Administrative Agent, and Bank of America
NT&SA, as Documentation Agent (as the same may be amended,
modified or supplemented from time to time, the "Agreement")
------------------------------------------------------------------
Capitalized terms used herein which are defined in the Agreement shall have
the meanings therein defined.
Pursuant to section 2.3 of the Agreement, the Borrower hereby gives notice of
its intention to borrow RC Loans in an aggregate principal amount of $______, on
__________________, which borrowing shall consist of the following RC Loan(s):
Type of RC Loan
(Eurodollar Interest Period
or ABR) Amount (for Eurodollar Loan)
----------- ------ ---------------------
(1)
(2)
Immediately after giving effect to the RC Loans and Letters of Credit to be
made and issued on the Borrowing Date set forth above, the Total Leverage Ratio
will be ______:1.00, as shown on Exhibit I attached hereto.
<PAGE>
The Borrower hereby certifies that on the date hereof and on the Borrowing
Date set forth above, and after giving effect to the RC Loan(s) requested
hereby:
(a) The Borrower is and shall be in compliance with all of the terms,
covenants and conditions of the Agreement and the other Loan Documents.
(b) There exists and there shall exist no Default or Event of Default under
the Agreement.
(c) The proceeds of such RC Loans will be used in accordance with section 2.7
of the Agreement.
(d) Each of the representations and warranties contained in the Loan
Documents which is required to be made on such Borrowing Date is and shall be
true and correct.
IN WITNESS WHEREOF, the Borrower has caused this certificate to be executed
by its duly authorized officer as of the date and year first written above.
SALEM COMMUNICATIONS CORPORATION
By:________________________
Name:______________________
Title:_____________________
-2-
<PAGE>
EXHIBIT I
---------
Calculation of Total Leverage Ratio
-----------------------------------
-3-
<PAGE>
SALEM EXHIBIT D
---------------
FORM OF LETTER OF CREDIT REQUEST
--------------------------------
[DATE]
The Bank of New York, as Administrative Agent
One Wall Street - 16th Floor
New York, New York 10286
Attention: Wade E. Layton,
Vice President
and
The Bank of New York, as Administrative Agent
One Wall Street - 18th Floor
New York, New York 10286
Attention: Genoveso Caviness
Agency Function Administration
Re: Credit Agreement, dated as of September 25, 1997, by and among Salem
Communications Corporation, the Lenders party thereto, The Bank of New
York, as Administrative Agent, and Bank of America NT&SA, as
Documentation Agent (as the same may be amended, modified or
supplemented from time to time, the "Agreement")
----------------------------------------------------------------------
Capitalized terms used herein which are defined in the Agreement shall have
the meanings therein defined.
Pursuant to section 2.18 of the Agreement, the Borrower hereby requests the
Issuing Bank to issue Letter(s) of Credit in an aggregate principal amount
of $_____, on _________________, in accordance with the information annexed
hereto.
Immediately after giving effect to the RC Loans and Letters of Credit to be
made and issued on the Borrowing Date set forth above, the Total Leverage Ratio
will be _______:1.00, as shown on Exhibit I attached hereto.
The Borrower hereby certifies that on the date hereof and on the Borrowing
Date set forth above, and after giving effect to the Letters of Credit requested
hereby:
(a) The Borrower is and shall be in compliance with all of the terms,
covenants and conditions of the Agreement and the other Loan Documents.
(b) There exists and there shall exist no Default or Event of Default under
the Agreement.
(c) The proceeds of such Letters of Credit will be used in accordance with
section 2.7 of the Agreement:
<PAGE>
(d) Each of the representations and warranties contained in the Loan
Documents which is required to be made on such Borrowing Date is and shall be
true and correct.
IN WITNESS WHEREOF, the Borrower has caused this certificate to be executed
by its duly authorized officer as of the date and year first written above.
SALEM COMMUNICATIONS CORPORATION
By:________________________
Name:______________________
Title:_____________________
-2-
<PAGE>
LETTER OF CREDIT INFORMATION
1. Name of Beneficiary:___________________________.
2. Address of Beneficiary to which Letter of Credit will be sent:
______________________________________________________________________________.
3. Conditions under which a drawing may be made (specify any required
documentation):
______________________________________________________________________________.
4. Maximum amount to be available under such Letter of Credit: $ _______.
5. Requested date of issuance:____________________.
6. Requested date of expiration:___________________.
-3-
<PAGE>
EXHIBIT I
---------
Calculation of Total Leverage Ratio
-----------------------------------
-4-
<PAGE>
SALEM EXHIBIT E
---------------
FORM OF OPINION OF SPECIAL COUNSEL
----------------------------------
____________, 1997
To the Administrative Agent,
the Issuing Bank and the Lenders
under the Agreement
as defined below
Re: Credit Agreement, dated as of September 25, 1997, by and among Salem
Communications Corporation, the Lenders party thereto, The Bank of
New York, as Administrative Agent, and Bank of America NT&SA, as
documentation Agent (the "Agreement")
-----------------------------------------------------------------
We have acted as Special Counsel to the Administrative Agent in connection
with the Agreement. Capitalized terms used herein which are not otherwise
defined herein shall have the respective meanings ascribed thereto in the
Agreement.
We have examined originals or copies certified to our satisfaction of the
documents required to be delivered pursuant to the provisions of Section 5 of
the Agreement. In conducting such examination, we have assumed the genuineness
of all signatures, the authenticity of all documents submitted to us as
originals, and the conformity to originals of all documents submitted to us as
copies.
Based upon the foregoing examination, and assuming the accuracy of (a) the
opinion of Eric H. Halvorson, general counsel for the Borrower and its
Subsidiaries, (b) the opinion of Fletcher, Heald & Hildreth, P.C., special FCC
counsel to the Borrower and its Subsidiaries, (c) the representations and
warranties of the Loan Parties contained in the Loan Documents, and (d) certain
representations of the Administrative Agent, and subject to all assumptions,
qualifications and other limitations contained in such opinions, all of which
are expressly incorporated herein by reference, we are of the opinion that all
legal preconditions to the making of the first Loans on the first Borrowing Date
under the Agreement have been satisfactorily met.
This opinion is rendered solely for your benefit in connection with the
transactions referred to herein and may not be relied upon by any other Person.
<PAGE>
We express no opinion as to laws other than the laws of the State of New
York and the federal laws of the United States of America.
Very truly yours,
-2-
<PAGE>
SALEM EXHIBIT F
---------------
OUTLINE OF LEGAL OPINIONS - COUNSEL TO THE BORROWER
---------------------------------------------------
In connection with the Credit Agreement (the "Agreement"), to be entered, by
---------
and among SALEM COMMUNICATIONS CORPORATION (the "Borrower"), the Lenders party
--------
thereto, THE BANK OF NEW YORK, as Administrative Agent (the "Administrative
---------------
Agent"), and BANK OF AMERICA NT&SA, as Documentation Agent, set forth below is
- -----
an outline of opinions (the "Opinions") to be included in, or covered by, the
--------
legal opinion to be delivered to the Administrative Agent, pursuant to Section
5.l(j) of the Agreement by counsel to the Borrower and its Subsidiaries. The
Opinions, including all assumptions contained therein, shall be in all respects
satisfactory to the Administrative Agent.
DEFINITIONS:
- ------------
(a) Capitalized terms used in the Opinions and which are not otherwise
defined therein shall have the respective meanings ascribed thereto in
the Agreement.
(b) When used in the Opinions, "NYUCC" shall mean Articles 1, 8 and 9 of
-----
the Uniform Commercial Code as in effect in the State of New York on
the date on which the Opinions are rendered.
(c) When used in the Opinions, the following capitalized terms shall have
the respective meanings ascribed thereto in the NYUCC (as defined
above): "Certificated Security", "Chattel Paper", "Instrument",
------------ -------- ------------- ----------
"Issuer", "Security", "Security Interest" and "Uncertificated
------ -------- ----------------- --------------
Security".
--------
OPINIONS:
- ---------
1. The Borrower has only the Subsidiaries set forth on Schedule 4.1 to
the Agreement. The shares of each corporate Subsidiary owned by the Borrower are
duly authorized, validly issued, fully paid and nonassessable. The shares of
each Subsidiary are owned free and clear of any Liens, except (i) Liens in favor
of the Administrative Agent and the Lenders pursuant to the Collateral Documents
and (ii) Permitted Liens.
2. The Borrower and each Subsidiary is duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation,
has all requisite corporate power and authority to own its Property and to carry
on its business as now conducted, and is in good standing and authorized to do
business in each jurisdiction in which the failure to be so authorized could
reasonably be expected to have a Material Adverse Effect.
3. The Borrower and each other Loan Party has full power and authority to
enter into, execute, deliver and carry out the terms of the Loan Documents to
which it is a party, to make the borrowings contemplated thereby, to execute,
deliver and carry out the terms of the Notes and to incur the obligations
provided for therein, all of
<PAGE>
which have been duly authorized by all proper and necessary action and are in
full compliance with its certificate of incorporation and by-laws.
4. The Loan Documents constitute the valid and legally binding
obligations of the Borrower and each other Loan Party to which it is a party,
enforceable in accordance with their respective terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of creditors'
rights generally and by general principles of equity, whether considered in a
proceeding at law or in equity.
5. To the best of my knowledge, except as set forth in Schedule 4.6,
there are no actions, suits, arbitration proceedings or claims (whether or not
purportedly on behalf of the Borrower or any Subsidiary) pending or threatened
against the Borrower or any Subsidiary, or maintained by the Borrower or any
Subsidiary, at law or in equity, before any Governmental Authority which could
reasonably be expected to have a Material Adverse Effect. To the best of my
knowledge, there are no proceedings pending or threatened against the Borrower
or any Subsidiary which call into question the validity or enforceability of any
of the Loan Documents.
6. To the best of my knowledge, except as set forth in Schedule 4.7,
neither the Borrower nor any Subsidiary is in default under any mortgage,
indenture, contract, agreement, judgment, decree or order to which it is a party
or by which it or any of its Property is bound, which defaults, taken as a
whole, could reasonably be expected to have a Material Adverse Effect. To the
best of my knowledge, the execution, delivery or carrying out of the terms of
the Loan Documents will not constitute a default under, conflict with, require
any consent under (other than consents which have been obtained) or result in
the creation or imposition of, or obligation to create, any Lien upon the
Property of the Borrower or any Subsidiary pursuant to the terms of any such
mortgage, indenture, contract, agreement, judgment, decree or order, which
defaults, conflicts and consents, if not obtained, taken as a whole, could
reasonably be expected to have a Material Adverse Effect.
7. To the best of my knowledge, neither the Borrower nor any Subsidiary
is in default with respect to any judgment, order, writ, injunction, decree or
decision of any Governmental Authority which default could reasonably be
expected to have a Material Adverse Effect.
8. Neither the Borrower nor any Subsidiary is subject to regulation under
the Public Utility Holding Company Borrower Act of 1935, the Federal Power Act
or the Investment Company Act of 1940, and neither the Borrower nor any
Subsidiary is subject to any statute or regulation which prohibits or restricts
the incurrence of Indebtedness under the Loan Documents, including, without
limitation, statutes or regulations relative to common or contract carriers or
to the sale of electricity, gas, steam, water, telephone, telegraph or other
public utility services.
9. Neither the Borrower nor any Subsidiary is engaged principally, or as
one of its important activities, in the business of extending credit for the
purpose of purchasing or carrying any Margin Stock. If used solely for the
purposes set forth in Section 2.6 of the Agreement, no part of the proceeds of
the Loans or Letters of Credit will be used, directly or indirectly, to purchase
or carry any Margin Stock or for a
-2-
<PAGE>
purpose which violates any law, rule or regulation of any Governmental
Authority, including without limitation the provisions of Regulations G, T, U or
X of the Board of Governors of the Federal Reserve System, as amended.
10. The fees, interest and other charges payable under the Loan Documents
do not violate any usury or similar laws of the State of California.
11. The Borrower Security Agreement, together with the delivery to the
Administrative Agent of the Certificated Securities constituting Collateral (as
defined in the Borrower Security Agreement) and the continuous possession
thereof by the Administrative Agent in the State of New York, creates a
continuing "enforceable" Security Interest in the Collateral (as defined in the
Borrower Security Agreement) in favor of the Administrative Agent. Upon (a) the
presentation for filing of the Financing Statements (as defined in the Borrower
Security Agreement) at the respective offices listed thereon together with the
appropriate filing fee therefor, (b) the delivery to the Administrative Agent of
the Instruments constituting the Collateral (as defined in the Borrower Security
Agreement), and (c) the registration, in accordance with Article 8 of the NYUCC,
of the Security Interest granted by the Borrower Security Agreement on the books
of each Person which is an Issuer of an Uncertificated Security constituting the
Collateral (as defined in the Borrower Security Agreement), (i) such Security
Interest shall be perfected, and (ii) assuming that the Administrative Agent has
acted in "good faith and without notice of any adverse claim" within the meaning
of Article 8 of the NYUCC, the Administrative Agent shall be a "bona fide
purchaser", within the meaning of such Article, with respect to Collateral (as
defined in the Borrower Security Agreement) consisting of Securities.
12. The Subsidiary Guaranty, together with the delivery to the
Administrative Agent of the Certificated Securities constituting Collateral (as
defined in the Subsidiary Guaranty) and the continuous possession thereof by the
Administrative Agent in the State of New York, creates a continuing
"enforceable" Security Interest in the Collateral (as defined in the Subsidiary
Guaranty) in favor of the Administrative Agent. Upon (a) the presentation for
filing of the Financing Statements (as defined in the Subsidiary Guaranty) of
each Guarantor (as defined in the Subsidiary Guaranty) at the respective offices
listed thereon together with the appropriate filing fee therefor, (b) the
delivery to the Administrative Agent of the Instruments constituting the
Collateral (as defined in the Subsidiary Guaranty), and (c) the registration, in
accordance with Article 8 of the NYUCC, of the Security Interest granted by the
Subsidiary Guaranty on the books of each Person which is an Issuer of an
Uncertificated Security constituting the Collateral (as defined in the
Subsidiary Guaranty), (i) such Security Interest shall be perfected, and (ii)
assuming that the Administrative Agent has acted in "good faith and without
notice of any adverse claim" within the meaning of Article 8 of the NYUCC, the
Administrative Agent shall be a "bona fide purchaser", within the meaning of
such Article, with respect the Collateral (as defined in the Subsidiary
Guaranty) consisting of Securities.
13. Neither the Administrative Agent nor any Lender is required to comply
with the requirements of any foreign lender statute in the State of California
in order to avail itself of the remedies provided thereby.
-3-
<PAGE>
Exhibit G
[LETTERHEAD OF FLETCHER, HEALD & HILDRETH, P.L.C.]
SEPTEMBER 25, 1997
The Bank of New York, as Administrative Agent
One Wall Street
New York, NY 10286
and each Lender from
time to time party
to the Credit Agreement
defined below
Re: Salem Communications Corporation
Dear Sirs:
We have represented Salem Communications Corporation (the "Borrower") and
the Subsidiaries as special counsel before the Federal Communications Commission
("FCC") with respect to matters related to the Communications Act of 1934, as
amended, and the rules, regulations, interpretations, policies, and published
opinions of the FCC (collectively, the "Communications Laws") in connection with
the FCC licenses held by the Subsidiaries for the Broadcasting Stations owned by
the Borrower and its Subsidiaries and regulation by the FCC under the
Communications Laws of the operations of such Stations as well as in connection
with the regulation by the FCC of the Borrower's or a Subsidiary's operation of
broadcast stations not licensed to the Borrower or a Subsidiary. Capitalized
terms used herein and not otherwise defined have the respective meanings given
those terms in the Credit Agreement, dated as of September 25, 1997
("Agreement"), by and among the Borrower, the lenders party thereto, The Bank of
New York, as Administrative Agent, and Bank of America NT&SA, as Documentation
Agent.
This opinion is being furnished to you at the request of the Borrower and
the Subsidiaries pursuant to Section 5.1(k) of the Agreement.
<PAGE>
FLETCHER, HEALD & HILDRETH, P.L.C.
The Bank of New York
September 25, 1997
Page 2
As to questions of fact relevant to this opinion, we have relied
solely upon (a) a review of the pertinent public files of the FCC and
inquiries of appropriate staff members of the FCC, (b) an examination of
appropriate files of this firm and an inquiry of this firm's lawyers who
have had substantial responsibility for the Borrower's legal matters
handled by this firm, and (c) representations made by the Borrower in the
Agreement and by it to the FCC in documents and filings which are available
in the public files of the FCC. We have assumed the correctness and
completeness of FCC public files and of records and certificates issued by
the FCC. We have not performed any on-site investigations of facilities
owned or operated by the Borrower and the Subsidiaries, and in any event do
not express any opinion regarding the actual operations of the Broadcasting
Stations. You should be aware that records of the FCC that are public as a
matter of law (e.g., pursuant to the Federal Freedom of Information Act)
may not, in fact, be contained in the public files of the FCC which we
examined in connection with this opinion. Furthermore, there may be records
of matters pending at the FCC that are not available for inspection by the
public as a matter of law.
We have also examined such provisions of the Communications Laws as we
have deemed necessary for purposes of this opinion. This opinion is limited
to matters arising under the Communications Laws, and we express no opinion
as to any other laws.
Based upon and subject to the foregoing, and to the further
qualifications, assumptions, and limitations set forth herein, we are of
the opinion that:
1. The Borrower and the Subsidiaries are the registered holders of all
radio licenses duly issued by the FCC in respect of all Broadcasting
Stations owned by the Borrower and the Subsidiaries, as listed in
Schedule A to this opinion. Such licenses constitute all of the
authorizations of the FCC necessary for the operation of the
Broadcasting Stations owned by the Borrower and the Subsidiaries, and
such licenses are validly held by the Borrower and the Subsidiaries
and in full force and effect. To the best of our knowledge, neither
the Borrower nor any Subsidiary is a party to any investigation,
notice of violation, order or complaint issued by or before the FCC.
To the best of our knowledge, there are no proceedings by or before
the FCC, other than rulemaking proceedings or similar proceedings of
general applicability to entities such as the Borrower or Subsidiaries
or to facilities such as the Broadcasting Stations, which could
reasonably be expected to materially threaten or adversely affect the
validity of any such licenses.
2. To the best of our knowledge, the Borrower and each Subsidiary have
duly and timely filed all filings which are required to be filed by
the Borrower and each Subsidiary
<PAGE>
FLETCHER, HEALD & HILDRETH, P.L.C.
The Bank of New York
September 25, 1997
Page 3
under the Communications Act, the failure to file of which could
reasonably be expected to have a Material Adverse Effect.
3. No order, approval or consent by the FCC is required for the
execution, delivery and performance of the Loan Documents, except that
any exercise of rights or remedies under the Loan Documents
constituting an exercise of control over, or transfer of control of,
any of the Broadcasting Station licenses issued by the FCC will be
subject to compliance with the Communications Act, including the
obtaining of any required prior approval of the FCC.
This opinion is furnished to you by this firm as special
communications counsel to the Borrower. This opinion is solely for
your benefit under the Agreement and the Loan Documents and may not be
relied upon by any other person or by you in any other context.
Very truly yours,
FLETCHER, HEALD & HILDRETH, P.L.C.
By:/s/JAMES P. RILEY
--------------------------------
James P. Riley
<PAGE>
SCHEDULE A
----------
Call Sign Community of License
- --------- --------------------
KBIQ (FM) Manitou Springs, CO
KGFT (FM) Pueblo, CO
KPRZ (FM) Fountain, CO
KTSL (FM) Medical Lake, WA
WHLO (AM) Akron, OH
WHK (FM) Canton, OH
WITH (AM) Baltimore, MD
WTSJ (AM) Cincinnati, OH
KPXQ (AM) Phoenix, AZ
KKMS (AM) Richfield, MN
WHK (AM) Cleveland, OH
KFAX (AM) San Francisco, CA
KKLA (AM) San Bernardino, CA
KWRD (FM) Arlington, TX
KGNW (AM) Seattle-Burien, WA
KLFE (AM) Seattle, WA
WEZE (AM) Boston, MA
WPZE (AM) Boston, MA
KKLA (FM) Los Angeles, CA
KAVC (FM) Rosamond, CA
<PAGE>
Call Sign Community of License
- --------- --------------------
WFIL (AM) Philadelphia, PA
WZZD (AM) Philadelphia, PA
KPRZ (AM) San Marcos-Poway, CA
WMCA (AM) New York, NY
WYLL (FM) Des Plaines, IL
WWDJ (AM) Hackensack, NJ
KLTX (AM) Long Beach, CA
KRKS (FM) Boulder, CO
KRKS (AM) Denver, CO
KNUS (AM) Denver, CO
WRFD (AM) Columbus-Worthington, OH
KPDQ (AM) Portland, OR
KPDQ (FM) Portland, OR
WORD (FM) Pittsburgh, PA
WPIT (AM) Pittsburgh, PA
KSLR (AM) San Antonio, TX
KKHT (FM) Conroe, TX
KENR (AM) Houston, TX
KFIA (AM) Carmichael, CA
KTKZ (AM) Sacramento, CA
KDAR (FM) Oxnard, CA
WAVA (FM) Arlington, VA
<PAGE>
SALEM EXHIBIT H
---------------
FORM OF COMPLIANCE CERTIFICATE
------------------------------
[DATE]
The Bank of New York, as Administrative Agent
One Wall Street
New York, New York 10286
Attention: Wade E. Layton,
Vice President
Reference is made to the Credit Agreement, dated as of September 25,
1997, by and among Salem Communications Corporation, the Lenders party thereto,
The Bank of New York, as Administrative Agent, and Bank of America NT&SA, as
Documentation Agent (as the same may be amended, modified or supplemented from
time to time, the "Agreement"). Capitalized terms used herein which are defined
---------
in the Agreement shall have the meanings therein defined.
There exists no violation of any of the terms or provisions of the
Loan Documents, or the occurrence of any condition or event which would
constitute a Default or Event of Default, except ____________.
The Total Leverage Ratio as of ______________ for the four fiscal
quarter period ended ______________ is __._:1.00, as determined on Exhibit I
attached hereto.
The ratio of Consolidated Annual Operating Cash Flow to Pro/Forma Debt
Service as of _____________ is __._:1.00, as determined on Exhibit I attached
hereto.
The ratio of Consolidated Annual Operating Cash Flow to Pro/Forma
Interest Expense as of ___________________ is __._:1.00, as determined on
Exhibit I attached hereto.
The ratio of Consolidated Annual Operating Cash Flow to Fixed Charges
as of _______________ is __._:1.00, as determined on Exhibit I attached hereto.
SALEM COMMUNICATIONS CORPORATION
By:________________________
Name:______________________
Title:_____________________
<PAGE>
EXHIBIT I
---------
Calculation of Total Leverage Ratio
-----------------------------------
Calculation of Ratio of
-----------------------
Consolidated Annual Operating Cash Flow
---------------------------------------
to Pro-Forma Debt Service
-------------------------
Calculation of Ratio of
-----------------------
Consolidated Annual Operating Cash Flow
---------------------------------------
to Pro-Forma Interest Expense
-----------------------------
Calculation of Ratio of
-----------------------
Consolidated Annual Operating Cash Flow
---------------------------------------
to Fixed Charges
----------------
<PAGE>
SALEM EXHIBIT I
---------------
FORM OF BORROWER SECURITY AGREEMENT
-----------------------------------
BORROWER SECURITY AGREEMENT (as the same may be amended, supplemented or
otherwise modified from time to time, this "Agreement"), dated as of September
---------
25, 1997, by and between SALEM COMMUNICATIONS CORPORATION, a California
corporation (the "Borrower"), and THE BANK OF NEW YORK (the "Administrative
-------- --------------
Agent"), in its capacity as Administrative Agent for the Lenders under the
- -----
Credit Agreement referred to below and the Rate Protection Lenders as defined
therein.
RECITALS
--------
I. Reference is made to the Credit Agreement, dated as of the date
hereof, by and among the Borrower, the Lenders party thereto, the Administrative
Agent, and Bank of America NT&SA, as Documentation Agent (as the same may be
amended, supplemented or otherwise modified from time to time, the "Credit
------
Agreement").
- ---------
II. It is a condition precedent to the making of all loans and all other
extensions of credit under the Credit Agreement that the Borrower shall have
executed and delivered this Agreement.
Therefore, in consideration of the Recitals, the terms and conditions herein
contained and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Borrower and the Administrative Agent
hereby agree as follows:
1. Defined Terms
-------------
(a) Capitalized terms used herein which are not otherwise defined herein
shall have the respective meanings ascribed thereto in the Credit Agreement.
(b) When used in this Agreement, the following capitalized terms shall have
the respective meanings ascribed thereto as follows:
"Collateral": as defined in section 2.
"Equity Interest": (i) with respect to a corporation, the capital stock
---------------
thereof, (ii) with respect to a partnership, a partnership interest therein, all
rights of a partner in such partnership, whether arising under the partnership
agreement of such partnership or otherwise; (iii) with respect to a limited
liability company, a membership interest therein, all rights of a member of
such limited liability company, whether arising under the limited liability
company agreement of such limited liability company or otherwise; (iv) with
respect to any other firm, association, trust, business enterprise or other
entity, any equity interest therein, any interest therein which entitles the
holder thereof to share in the revenue, income, earnings or losses thereof or to
vote or otherwise participate in any election of one or more members of the
Managing Person thereof, and (v) all
<PAGE>
warrants and options in respect of any of the foregoing and all other securities
which are convertible or exchangeable therefor.
"Event of Default": as defined in section 6.
----------------
"Financing Statements": the UCC financing statements executed by the
--------------------
Borrower and delivered pursuant to the Credit Agreement.
"Grants of Security Interests": collectively, the Grant of Security
----------------------------
Interest (Patents) and the Grant of Security Interest (Trademarks), in the form
of Annexes B-1 and B-2 hereto, respectively, in each case appropriately
completed and signed by the Borrower.
"NYUCC": the UCC as in effect in the State of New York on the date hereof.
-----
"Obligations": all of the obligations and liabilities of the Borrower under
-----------
the Loan Documents and under each Interest Rate Protection Arrangement entered
into by the Borrower with a Rate Protection Lender, in each case whether fixed,
contingent, now existing or hereafter arising, created, assumed, incurred or
acquired, as such obligations and liabilities may be amended, increased,
modified, renewed, refinanced by the Administrative Agent and the Lenders,
refunded or extended from time to time.
"Office Location": as defined in section 3(a).
---------------
"Patents": all patents issued under the laws of the United States of America
-------
and all patent applications filed with the United States Patent and Trademark
Office, and all of the rights associated with each of the foregoing.
"Proceeds": as defined in the NYUCC, together with (i) all dividends,
--------
distributions and income on and in respect of all of the Securities and
Instruments and all other rights and benefits in respect thereof, and (ii) with
respect to the Patents and Trademarks, all renewals thereof, all proceeds of
infringement suits, all rights to sue for infringement, all license royalties,
all reissues, divisions, continuations, extensions and continuations-in-part
thereof.
"Rate Protection Lenders": collectively, the Lenders and any affiliates
-----------------------
of the Lenders which from time to time enter or have entered into Interest Rate
Protection Arrangements with the Borrower.
"Registrations": (i) patents issued under the laws of the United States of
-------------
America, (ii) patent applications filed with the United States Patent and
Trademark Office, and (iii) all registered trademarks.
"Trademarks": (i) all rights under the laws of the United States of America,
----------
and each State thereof, to trademarks, together with all registrations thereof,
applications therefor and all of the rights associated therewith, and (ii) the
goodwill of the Borrower's business symbolized by registered trademarks.
-2-
<PAGE>
"Transaction Statement": a transaction statement in the form of Annex A
---------------------
hereto.
"UCC": with respect to any jurisdiction, Articles 1, 8 and 9 of the
---
Uniform Commercial Code as from time to time in effect in such jurisdiction.
(c) When used in this Agreement, the following capitalized terms shall
have the respective meanings ascribed thereto in the NYUCC: "Account",
-------
"Certificated Security", "Chattel Paper", "Document", "Equipment", "Fixture",
--------------------- ------------- -------- --------- -------
"General Intangible", "Instrument", "Inventory", "Issuer", "Secured Party",
------------------ ---------- --------- ------ -------------
"Security", "Security Interest" and "Uncertificated Security".
-------- ----------------- -----------------------
2. Grant of Security Interest
--------------------------
To secure the prompt and complete payment, observance and
performance of the Obligations, the Borrower hereby grants to the Administrative
Agent, for its benefit and the ratable benefit of the Lenders, the Issuing Bank
and the Rate Protection Lenders, a Security Interest in and to all of the
Borrower's right, title and interest in and to all: Accounts, Chattel Paper,
Documents, Equipment, Fixtures, General Intangibles, Instruments, including,
without limitation, Instruments evidencing intercompany Indebtedness, Inventory,
Patents, Trademarks, Equity Interests in each Person which now is or may
hereafter become a Subsidiary of the Borrower, whether or not evidenced by a
Security, and all Proceeds of all of the foregoing, in each case whether now
owned or existing or hereafter arising or acquired, and including, without
limitation, all licenses, approvals, permits and other authorizations issued by
the FCC, including the Proceeds of any sale or other disposition thereof, in
each case to the extent that a security interest therein is not prohibited by
law, provided that to the extent that a security interest therein is now so
prohibited and to the extent that such security interest at any time hereafter
shall no longer be so prohibited, then such security interest shall
automatically and without any further action attach and become fully effective
at that time (giving effect to any retroactive effect to any change in
applicable law or regulation) (collectively, the "Collateral").
----------
3. Representations and Warranties
------------------------------
The Borrower hereby represents and warrants to the Administrative Agent
as follows:
(a) Chief Executive Office. As of the date hereof, the Borrower's
----------------------
place of business or, if the Borrower has more than one place of business, its
chief executive office, is, and has been continuously for the immediately
preceding 5 month period, located at the address set forth for notices to the
Borrower contained in the Credit Agreement (the "Office Location"). The Borrower
has not changed its legal name during the six year period immediately preceding
the date hereof.
(b) Information. As of the date hereof, all of the information set forth
-----------
on each of the Schedules hereto is true, complete and correct.
(c) Security Interest. This Agreement, together with the delivery to the
-----------------
Administrative Agent of the Certificated Securities constituting Collateral and
the
-3-
<PAGE>
continuous possession thereof by the Administrative Agent in the State of New
York, creates a continuing "enforceable" Security Interest in the Collateral in
favor of the Administrative Agent. Upon (i) the presentation for filing of the
Financing Statements at the respective offices listed thereon together with the
appropriate filing fee therefor, (ii) the delivery to the Administrative Agent
of the Instruments constituting the Collateral, and (iii) the registration, in
accordance with Article 8 of the NYUCC, of the Security Interest granted hereby
on the books of each Person which is an Issuer of an Uncertificated Security
constituting the Collateral, and (iv) the filing of the Grants of Security
Interests in the United States Patent and Trademark Office with respect to
Patents, Registrations, and Trademarks, (A) such Security Interest shall be
perfected, and (B) assuming that the Administrative Agent has acted in "good
faith and without notice of any adverse claim" within the meaning of Article 8
of the NYUCC, the Administrative Agent shall be a "bona fide purchaser", within
the meaning of such Article, with respect to the Collateral consisting of
Securities.
(d) Absence of Liens. There are no Liens upon the Collateral other than
----------------
Permitted Liens, if any.
(e) Equity Interests. The Equity Interests listed on Schedule 3(e) hereto
----------------
constitute, as of the date hereof, all of the Equity Interests in each
Subsidiary in which the Borrower has any right, title or interest, and each such
Equity Interest issued by a corporate Issuer has been duly authorized, validly
issued and fully paid for, and is non-assessable. As of the Effective Date,
except as set forth on Schedule 3(e), (i) no Subsidiary of the Borrower has
issued any securities convertible into, or options or warrants for, any common
or preferred equity securities thereof and (ii) there are no agreements, voting
trusts or understandings binding upon the Borrower or any of its Subsidiaries
with respect to the voting securities of any of such Subsidiary or affecting in
any manner the sale, pledge, assignment or other disposition thereof, including
any right of first refusal, option, redemption, call or other right with respect
thereto, whether similar or dissimilar to any of the foregoing.
(f) Chattel Paper, Documents and Instruments. The Chattel Paper, Documents
-----------------------------------------
and Instruments listed on Schedule 3(f) hereto constitute, as of the date
hereof, all of the Chattel Paper, Documents and Instruments which constitute the
Collateral, and, to the best of the Borrower's knowledge, all such Chattel
Paper, Documents and Instruments have been duly authorized, issued and
delivered, and constitute the legal, valid, binding and enforceable obligations
of the respective makers thereof.
(g) Accounts. As of the date hereof, all records concerning any Account
--------
constituting the Collateral are located at its Office Location, and no such
Account is evidenced by a promissory note or other instrument.
(h) Equipment and Inventory. Except for Equipment and Inventory in transit
-----------------------
with common carriers, the Borrower has exclusive possession and control of all
Equipment and Inventory constituting the Collateral, all of which is as of the
date hereof and has been continuously for the 5 month period immediately
preceding the date hereof, located at one or more of the places listed on
Schedule 3(h) hereto.
-4-
<PAGE>
(i) Patents and Trademarks. The Borrower has no Registrations relating to
----------------------
Patents other than those listed on Schedule 3(i) hereto, and each such
Registration is subsisting and is not invalid or unenforceable, in whole or in
part, except to the extent that the unenforceability thereof could not
reasonably be expected to have a material adverse effect on the value of the
Patents taken as a whole. The Borrower has no Registrations relating to
Trademarks other than those listed on Schedule 3(i) hereto, and each such
Registration is subsisting and has not been adjudged invalid or unenforceable,
in whole or in part, except to the extent that the unenforceability thereof
could not reasonably be expected to have a material adverse effect on the value
of the Trademarks taken as a whole. To the best of the Borrower's knowledge,
each Patent and Trademark constituting Collateral is valid and enforceable.
Except for Permitted Liens, the Borrower is the sole and exclusive owner of the
entire and unencumbered right, title and interest in and to each of the Patents
and Trademarks constituting Collateral, free and clear of all Liens. To the best
of the Borrower's knowledge, no claim has been made that the use of any Patent
or Trademark violates the rights of any third person. The Borrower has used
consistent standards of quality in its manufacture of products sold under the
Patents and Trademarks.
4. Covenants of the Borrower
-------------------------
The Borrower hereby covenants with the Administrative Agent as follows:
(a) Chief Executive Office. The Borrower shall maintain its place of
----------------------
business, or if the Borrower has more than one place of business, its chief
executive office, at the Office Location or at such other location in respect of
which (A) the Borrower shall have provided the Administrative Agent with prior
written notice thereof, and (B) UCC financing statements (or amendments
thereto), in form and substance reasonably satisfactory to the Administrative
Agent, shall have been filed within two months of such change.
(b) Further Assurances. The Borrower shall, at its own expense,
------------------
promptly execute and deliver all certificates, documents, instruments, financing
and continuation statements and amendments thereto, notices and other
agreements, and take all further action, that the Administrative Agent may
reasonably request from time to time, in order to perfect and protect the
Security Interest granted hereby or to enable the Administrative Agent to
exercise and enforce its rights and remedies hereunder with respect to the
Collateral. The Borrower hereby irrevocably appoints the Administrative Agent as
the Borrower's true and lawful attorney-in-fact, in the name, place and stead of
the Borrower, to perform on behalf of the Borrower any and all obligations of
the Borrower under this Agreement, and the Borrower agrees that the power of
attorney herein granted constitutes a power coupled with an interest, provided,
however, that the Administrative Agent shall have no obligation to perform any
such obligation and such performance shall be at the sole cost and expense of
the Borrower. If the Borrower fails to comply with any of its obligations
hereunder, the Administrative Agent may do so in the Borrower's name or in the
Administrative Agent's name, but at the Borrower's expense, and the Borrower
hereby agrees to reimburse the Administrative Agent in full for all reasonable
expenses, including reasonable attorney's fees, incurred by the Administrative
Agent in connection therewith.
-5-
<PAGE>
(c) Information. The Borrower at its own expense shall furnish to the
-----------
Administrative Agent such information, reports, statements and schedules with
respect to the Collateral as the Administrative Agent may reasonably request
from time to time.
(d) Defense of Collateral. The Borrower at its own expense shall defend the
---------------------
Collateral against all claims of any kind or nature (other than Permitted Liens,
if any) of all Persons at any time claiming the same or any interest therein
adverse to the interests of the Administrative Agent, the Issuing Bank, any Rate
Protection Lender or any Lender, and the Borrower shall not cause, permit or
suffer to exist any Lien upon the Collateral other than Permitted Liens, if any.
(e) Uncertificated Securities. The Borrower shall cause each Person which is
-------------------------
an Issuer of an Uncertificated Security constituting Collateral (i) to register
the Security Interest granted hereby upon the books of such Person in accordance
with Article 8 of the NYUCC, and (ii) to issue to the Administrative Agent an
initial Transaction Statement and issue to the Administrative Agent subsequent
Transaction Statements in accordance with Section 8-408 of the UCC in effect in
the State of New York.
(f) Delivery of Pledged Collateral. Each Certificated Security representing
-------------------------------
an Equity Interest in a Person which is or shall become a Subsidiary of the
Borrower shall be promptly delivered to the Administrative Agent, to be held by
the Administrative Agent pursuant hereto, in suitable form for transfer by
delivery or accompanied by duly executed documents of transfer or assignment in
blank, all in form and substance satisfactory to the Administrative Agent. The
Borrower agrees that until so delivered, each such Certificated Security shall
be held by the Borrower in trust for the benefit of the Administrative Agent and
be segregated from the other Property of the Borrower.
(g) Chattel Paper, Documents and Instruments. All of the Instruments,
----------------------------------------
Documents and Chattel Paper now or hereafter owned by or in the possession of
the Borrower which constitute Collateral (other than checks received in the
ordinary course of collection) shall be promptly delivered to the Administrative
Agent, to be held by the Administrative Agent pursuant hereto, in suitable form
for transfer by delivery or accompanied by duly executed documents of transfer
or assignment in blank, all in form and substance reasonably satisfactory to the
Administrative Agent. The Borrower agrees that, with respect to all items of the
Collateral which it is or shall hereafter be obligated to deliver to the
Administrative Agent, until so delivered such items shall be held by the
Borrower in trust for the benefit of the Administrative Agent and be segregated
from the other Property of the Borrower.
(h) Accounts. Except as otherwise provided in this section 4(h), the Borrower
--------
shall continue to collect in accordance with its customary practice, at its own
expense, all amounts due or to become due to the Borrower in respect of the
Borrower's Accounts and, prior to the occurrence of an Event of Default, the
Borrower shall have the right to adjust, settle or compromise the amount or
payment of any such Account, all in accordance with its customary practices. In
connection with such collections, the Borrower may take and, at the direction of
the Administrative Agent at any time that an Event of Default shall have
occurred and be continuing shall take, such action as the Borrower
-6-
<PAGE>
or the Administrative Agent may reasonably deem necessary or advisable to
enforce collection of such Accounts.
(i) Equipment and Inventory. The Borrower shall keep the Equipment and
-----------------------
Inventory constituting Collateral at the places listed on Schedule 3(h) hereto,
and at such other places located within the United States in respect of which
(i) the Borrower shall have provided the Administrative Agent with prior written
notice, and (ii) UCC financing statements (or amendments thereto), in form and
substance satisfactory to the Administrative Agent, shall have been filed within
two months of such change. The Borrower shall promptly furnish to the
Administrative Agent a statement respecting any material loss or damage to any
of the Equipment or Inventory constituting Collateral except to the extent that
such loss or damage shall be insured pursuant to policies required to be
maintained pursuant to the Credit Agreement.
(j) Patent and Trademarks. The Borrower will continue to use for the
---------------------
duration of this Agreement, consistent standards of quality in its manufacture
of products sold under the Patents and Trademarks constituting Collateral. The
Borrower shall give to the Administrative Agent prompt written notice thereof in
the event that the Borrower shall obtain any right to any new Patent or
Trademark or to any reissue, division, continuation, renewal, extension, or
continuation-in-part of any Patent or Trademark. The Borrower shall prosecute
diligently any applications of the Patents and Trademarks constituting
Collateral pending as of the date of this Agreement or thereafter, and preserve
and maintain all rights in applications of Patents and Trademarks constituting
Collateral consistent with past practice, including the payment of all
maintenance fees, except to the extent the failure so to preserve or maintain
such rights could not reasonably be expected to have a material adverse effect
on either (i) the value of the Patents taken as a whole, or (ii) the value of
the Trademarks taken as a whole. The Borrower shall not abandon any right to
file an application or any pending application for any Patent or Trademark
unless the failure so to do could not reasonably be expected to have a material
adverse effect on either (i) the value of the Patents taken as a whole, or (ii)
the value of the Trademarks taken as a whole. The Borrower agrees that it will
not enter into any agreement, including a license agreement, with respect to any
Patent or Trademark which is inconsistent with the Borrower's past practices of
licensing Patents or Trademarks as the case may be. The Borrower hereby grants
to the Administrative Agent the right to visit the Borrower's plants and
facilities which manufacture, inspect or store products sold under any of the
Patents and Trademarks, and to inspect the products and quality control records
relating thereto at reasonable times during regular business hours upon
reasonable prior notice.
5. Other Agreements of the Borrower
--------------------------------
(a) No Duty to Preserve. Except as otherwise required by law, the Borrower
-------------------
agrees that, with respect to the Collateral, neither the Administrative Agent,
the Issuing Bank, any Rate Protection Lender nor any Lender has any obligation
to preserve rights against prior or third parties.
(b) Administrative Agent's Duty With Respect to Collateral. The
------------------------------------------------------
Administrative Agent's only duty with respect to the Collateral delivered to it
shall be to use reasonable care in the custody and preservation of the
Collateral, and the Borrower agrees that if the Administrative Agent accords the
Collateral substantially the same kind
-7-
<PAGE>
of care as it accords its own Property, such care shall conclusively be deemed
reasonable. In the event that all or any part of the Certificated Securities or
Instruments constituting the Collateral are lost, destroyed or wrongfully taken
while such Certificated Securities or Instruments are in the possession of the
Administrative Agent, the Borrower agrees that it will use its best efforts to
cause the delivery of new Certificated Securities or Instruments in place of the
lost, destroyed or wrongfully taken Certificated Securities or Instruments upon
request therefor by the Administrative Agent, without the necessity of any
indemnity bond or other security, other than the Administrative Agent's
agreement of indemnity upon usual and customary terms therefor. Anything herein
to the contrary notwithstanding, the Administrative Agent shall not be under any
duty to send notices, perform services, exercise any rights of collection,
enforcement, conversion or exchange, vote, pay for insurance, taxes or other
charges or take any action of any kind in connection with the management of the
Collateral.
(c) Liability of Borrower under Contracts and Agreements Included in the
--------------------------------------------------------------------
Collateral. Anything herein to the contrary notwithstanding, (i) the Borrower
- ----------
shall remain liable under the contracts and agreements included in the
Collateral to the extent set forth therein to perform all of its duties and
obligations thereunder to the same extent as if this Agreement had not been
executed, (ii) the exercise by the Administrative Agent, the Issuing Bank, any
Rate Protection Lender or any Lender of any of its rights hereunder shall not
release the Borrower from any of its duties or obligations under any such
contract or agreement, (iii) neither the Administrative Agent, the Issuing Bank,
any Rate Protection Lender nor any Lender shall have any obligation or
liability, including indemnification obligations, under any such contract or
agreement by reason of this Agreement, nor shall the Administrative Agent, the
Issuing Bank, any Rate Protection Lender or any Lender be obligated to perform
any of the obligations or duties of the Borrower thereunder, to make any
payment, to make any inquiry as to the nature or sufficiency of any payment
received by the Borrower or the sufficiency of any performance by any party
under any such contract or agreement or to take any action to collect or enforce
any claim for payment assigned hereunder, and (iv) neither the Administrative
Agent, the Issuing Bank, any Rate Protection Lender nor any Lender shall be
under any duty to send notices, perform services, exercise any rights of
collection, enforcement, conversion or exchange, vote, pay for insurance, taxes
or other charges or take any action of any kind in connection with the
management of the Collateral.
6. Events of Default
-----------------
Each of the following shall constitute an "Event of Default":
----------------
(a) If the Borrower shall fail to observe or perform any term, covenant
or agreement contained in this Agreement; or
(b) The occurrence and continuance of an Event of Default under, and as
such term is defined in, the Credit Agreement.
-8-
<PAGE>
7. Remedies
--------
(a) Upon the occurrence of an Event of Default or at any time thereafter
during the continuance thereof, the Administrative Agent may:
(i) exercise any and all rights and remedies (A) granted to a Secured
Party by the UCC in effect in the State of New York or otherwise allowed at
law, and (B) otherwise provided by this Agreement, and
(ii) dispose of the Collateral as it may choose, so long as every aspect
of the disposition including the method, manner, time, place and terms are
commercially reasonable, and the Borrower agrees that, without limitation,
the following are each commercially reasonable: (A) the Administrative
Agent shall not in any event be required to give more than 10 days' prior
notice to the Borrower of any such disposition, (B) any place within the
City of New York or the Counties of Nassau, Suffolk, and Westchester may be
designated by the Administrative Agent for disposition, and (C) the
Administrative Agent may adjourn any public or private sale from time to
time by announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to which it was
so adjourned.
(b) The Borrower acknowledges and agrees that the Administrative Agent may
elect, with respect to the offer or sale of any or all of the Equity Interests
constituting the Collateral, to conduct such offer and sale in such a manner as
to avoid the need for registration or qualification of such Equity Interests or
the offer and sale thereof under any Federal or state securities laws and that
the Administrative Agent is authorized to comply with any limitation or
restriction in connection with such sale as counsel may advise the
Administrative Agent is reasonably necessary in order to avoid any violation of
applicable law, compliance with such procedures as may restrict the number of
prospective bidders and purchasers, require that such prospective bidders and
purchasers have certain qualifications, and restrict such prospective bidders
and purchasers to Persons who will represent and agree that they are purchasing
for their own account for investment and not with a view to the distribution or
resale of such Equity Interests, or in order to obtain any required approval of
the sale or of the purchaser by any Governmental Authority. The Borrower further
acknowledges and agrees that any such transaction may be at prices and on terms
less favorable than those which may be obtained through a public sale and not
subject to such restrictions and agrees that, notwithstanding the foregoing, the
Administrative Agent is under no obligation to conduct any such public sale and
may elect to impose any or all of the foregoing restrictions, or any other
restrictions which may be reasonably necessary in order to avoid any such
registration or qualification, at its sole discretion or with the consent or
direction of the Required Lenders, and that any such offer and sale so conducted
shall be deemed to have been made in a commercially reasonable manner.
(c) To the extent permitted by law, the Borrower hereby expressly waives and
covenants not to assert any appraisement, valuation, stay, extension, redemption
or similar laws, now or at any time hereafter in force, which might delay,
prevent or otherwise impede the performance or enforcement of this Agreement.
-9-
<PAGE>
(d) Notwithstanding anything to the contrary contained in this
Agreement, any other Loan Document or in any other agreement, instrument or
document executed by the Borrower and delivered to the Administrative Agent, the
Issuing Bank or any Lender, neither the Administrative Agent, the Issuing Bank
nor any Lender will take any action pursuant to this Agreement, any other Loan
Document or any other document referred to above which would constitute or
result in any assignment of any license, approval, permit, certificate or other
authorization issued by the FCC or any change of control of the Borrower or any
Subsidiary if such assignment or change of control would require, under then
existing law, the prior approval of the FCC without first obtaining such prior
approval of the FCC. Upon the occurrence of an Event of Default or at any time
during the continuance thereof, the Borrower waives, to the extent permitted by
law, any right it may have to oppose, and agrees to take any action that the
Administrative Agent may reasonably request in order to obtain from the FCC,
such approval as may be necessary to enable the Administrative Agent, the
Issuing Bank and the Lenders to exercise and enjoy the full rights and benefits
granted to the Administrative Agent, the Issuing Bank and the Lenders by this
Agreement, the other Loan Documents and the other documents referred to above,
including specifically, at the cost and expense of the Borrower, the use of
commercially reasonable efforts to assist in obtaining approval of the FCC for
any action or transaction contemplated by this Agreement for which such approval
is or shall be required by law, and specifically, without limitation, upon
request, to prepare, sign and file with the FCC the assignor's or transferor's
portion of any application or applications for consent to the assignment of
license or transfer of control necessary or appropriate under the FCC's rules
and regulations for approval of (a) any sale or other disposition of the
Collateral by or on behalf of the Administrative Agent, or (b) any assumption by
the Administrative Agent of voting rights in the Collateral effected in
accordance with the terms of this Agreement. It is understood and agreed that
all foreclosure and related actions will be made in accordance with the
Communications Act and applicable regulations and published policies and
decisions of the FCC pertaining to such foreclosure and related actions.
8. Voting
------
Notwithstanding anything to the contrary contained in this Agreement,
the Borrower shall have the right to vote all Securities and General Intangibles
constituting the Collateral and receive and retain all dividends and
distributions thereon until such time, if any, as an Event of Default shall have
occurred and be continuing and the Administrative Agent shall have notified the
Borrower that the Administrative Agent shall have elected to terminate the
rights of the Borrower under this section, at which time the Administrative
Agent shall then be vested with the right to vote all Securities constituting
the Collateral and receive and retain all dividends and distributions thereon,
until such time as such Event of Default is cured or waived.
9. Notices
-------
All notices and other communications provided for or otherwise required
hereunder or in connection herewith shall be given in the manner and to the
addresses set forth in section 11.2 of the Credit Agreement.
-10-
<PAGE>
10. Termination
-----------
On any date upon which (i) the Lenders shall no longer have any obligation to
make Loans, (ii) the Issuing Bank shall no longer have (A) any obligation to
issue Letters of Credit and (B) any obligations under the Letters of Credit
theretofor issued, and (iii) the Obligations shall have been paid in full in
cash, the outstanding principal balance of the Loans together with all accrued
interest thereon, all of the Reimbursement Obligations and all other sums then
due and owing under the Loan Documents, the Liens granted hereby shall cease and
the Administrative Agent shall, at the Borrower's expense (A) execute and
deliver all UCC Termination Statements and other documents necessary to
terminate the Liens granted hereby that the Borrower shall have reasonably
requested, and (B) return to the Borrower all Collateral that shall remain in
the possession of the Administrative Agent at such time.
11. Relationship to Credit Agreement
--------------------------------
This Agreement is the "Borrower Security Agreement" under, and as such term
is defined in, the Credit Agreement, and is subject to, and should be construed
in accordance with, the provisions thereof. Each of the Administrative Agent and
the Borrower acknowledges that certain provisions of the Credit Agreement,
including, without limitation, sections 1.2 (Principles of Construction), 11.1
(Amendments and Waivers), 11.3 (No Waiver; Cumulative Remedies), 11.4 (Survival
of Representations and Warranties), 11.7 (Successors and Assigns), 11.8
(Counterparts), 11.9 (Adjustments; Set-off), 11.12 (Governing Law), 11.13
(Headings), 11.14 (Severability), 11.15 (Integration), 11.16 (Limitation of
Liability), 11.17 (Consent to Jurisdiction), 11.18 (Service of Process), 11.19
(No Limitation on Service or Suit) and 11.20 (WAIVER OF TRIAL BY JURY) thereof,
are made applicable to this Agreement and all such provisions are incorporated
by reference herein as if fully set forth herein.
-11-
<PAGE>
IN EVIDENCE of the agreement by the parties hereto to the terms and
conditions herein contained, each such party has caused this Borrower Security
Agreement to be duly executed on its behalf.
SALEM COMMUNICATIONS CORPORATION
By:________________________________
Name:______________________________
Title:_____________________________
THE BANK OF NEW YORK, as Administrative Agent
By:________________________________
Name:______________________________
Title:_____________________________
-12-
<PAGE>
Schedule 3(e) to the Borrower Security Agreement
Dated as of September 25, 1997
LIST OF EQUITY INTERESTS
------------------------
Percentage of
Number of Cert. Outstanding
Issuer Class Shares Number Shares
- ------ ----- ------ ------ -------------
-13-
<PAGE>
Schedule 3(f) to the Borrower Security Agreement
Dated as of September 25, 1997
LIST OF CHATTEL PAPER, DOCUMENTS AND INSTRUMENTS
------------------------------------------------
-14-
<PAGE>
Schedule 3(h) to the Borrower Security Agreement
Dated as of September 25, 1997
ADDRESSES FOR EQUIPMENT AND INVENTORY LOCATIONS
------------------------------------------------
-15-
<PAGE>
Schedule 3(i) to the Borrower Security Agreement
Dated as of September 25, 1997
LIST OF REGISTRATIONS
---------------------
A. Patents
-------
B. Trademarks
----------
-16-
<PAGE>
ANNEX A TO THE BORROWER SECURITY AGREEMENT
DATED AS OF SEPTEMBER 25, 1997
FORM OF TRANSACTION STATEMENT
-----------------------------
THIS STATEMENT IS MERELY A RECORD OF THE RIGHTS OF THE ADDRESSEE AS OF THE
TIME OF ITS ISSUANCE. DELIVERY OF THIS STATEMENT, OF ITSELF, CONFERS NO RIGHT ON
THE RECIPIENT. THIS STATEMENT IS NEITHER A NEGOTIABLE INSTRUMENT NOR A SECURITY.
[DATE]
The Bank of New York, as Administrative Agent
One Wall Street
New York, New York 10286
Ladies and Gentlemen:
The undersigned,_________________ (the "Issuer"), hereby acknowledges receipt
of the Borrower Security Agreement (as the same may be amended, supplemented or
otherwise modified from time to time, the "Agreement"), dated as of September
25, 1997, by and between SALEM COMMUNICATIONS CORPORATION (the "Borrower") and
THE BANK OF NEW YORK, as Administrative Agent (in such capacity, the
"Administrative Agent"), and (i) consents to the terms thereof and (ii) confirms
--------------------
that a pledge of the right, title and interest in the security referred to below
has been registered in the books and records of the Issuer in the name of the
Administrative Agent, as set forth below. This Transaction Statement is issued
under Section 8-408 of the New York State Uniform Commercial Code.
1. Description of the Security:__________________________________
2. Number of Shares or Units Pledged:____________________________
3. Registered Owner:
SALEM COMMUNICATIONS CORPORATION
4880 Santa Rosa Road Suite 300
Camarillo, California 93012
Attention: Vice President/
Chief Financial Officer
Taxpayer ID# ______________________.
<PAGE>
4. REGISTERED PLEDGEE AND TAXPAYER INDENTIFICATION NUMBER (IF ANY):
The Bank of New York, as Administrative Agent
One Wall Street
New York, New York 10286
Attention: ______________________________
____________________________
Taxpayer ID# 13-5160382
5. DATE OF REGISTRATION OF THE PLEDGE: The pledge described herein was
registered on _____________, on the books and records of the Issuer.
6. NOTATION OF LIENS: There are no liens, restrictions or adverse claims as to
which the Issuer has a duty under Section 8-403(4) of the Uniform
Commercial Code (the "UCC") to which such security is or may be subject,
---
other than those set forth in the Loan Documents (as defined in that
certain Credit Agreement, dated as of ________________, 1997, by and among
the Borrower, the Lenders party thereto and The Bank of New York, as
Administrative Agent and Bank of America NT & SA, as Documentation Agent,
as amended, supplemented or otherwise modified from time to time) or [list
applicable organizational documents].
The Issuer hereby agrees, at the request of the Administrative Agent
and at the expense of the Issuer, to register any further assignment or transfer
of the foregoing security effected in the manner contemplated by the Agreement
and promptly to furnish to the Administrative Agent and any such assignee or
transferee any statement contemplated by Section 8-408 of the UCC.
[NAME OF ISSUER]
By:_________________________
Name:_______________________
Title:______________________
-2-
<PAGE>
ANNEX B-1 TO THE BORROWER SECURITY AGREEMENT
DATED AS OF SEPTEMBER 25, 1997
FORM OF GRANT OF SECURITY INTEREST (PATENTS)
--------------------------------------------
SALEM COMMUNICATIONS CORPORATION, a California corporation (the "Borrower"),
--------
is obligated to THE BANK OF NEW YORK, as Administrative Agent (the
"Administrative Agent"), and has entered into a Borrower Security Agreement
--------------------
dated the date hereof (the "Agreement") with the Administrative Agent.
---------
Pursuant to the Agreement, the Borrower granted to the Administrative Agent a
security interest in all of the right, title and interest of the Borrower in and
to the letters patent or applications for letters patent, of the United States,
more particularly described on Schedule 1 (the "Patents") together with any
-------
reissue, continuation, continuation-in-part or extension thereof, and all
proceeds thereof, any and all causes of action which may exist by reason of
infringement thereof for the full term of the Patents (the "Collateral"), to
----------
secure the prompt payment, performance and observance of the Obligations (as
defined in the Agreement).
For good and valuable consideration, the receipt of which is hereby
acknowledged, and for the purpose of recording the grant of the security
interest as aforesaid, the Borrower does hereby further assign to the
Administrative Agent, and grant to the Administrative Agent a security interest
in, the Collateral to secure the prompt payment, performance and observance of
the Obligations.
The Borrower does hereby further acknowledge and affirm that the rights and
remedies of the Administrative Agent with respect to the assignment of and
security interest in the Collateral made and granted hereby are set forth in the
Agreement, the terms and provisions of which are hereby incorporated herein by
reference as if fully set forth herein.
Upon the indefeasible cash payment in full of all Obligations (as such term
is defined in the Agreement), the Administrative Agent will take whatever
actions are necessary at the Borrower's expense to release or reconvey to
Borrower all right, title and interest of the Borrower in and to the Patents.
The Administrative Agent's address is: One Wall Street, New York, New
York 10286.
-19-
<PAGE>
IN WITNESS WHEREOF, the Borrower has caused this Assignment to be duly
executed by its duly authorized officer as of the __ day of_____,________.
SALEM COMMUNICATIONS CORPORATION
By:___________________________
Name:_________________________
Title:________________________
- 20 -
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this __ day of __, __, before me personally came _________________, to me
known, who, being by me duly sworn, did depose and say that he resides at
_________________; that he is the ________ of SALEM COMMUNICATIONS CORPORATION,
the corporation described in and which executed the above instrument, and that
he signed his name thereto by order of the board of directors thereof.
_____________________________
Notary Public
[Notary's Stamp]
- 21 -
<PAGE>
Schedule 1
to
Grant of Security Interest (Patents)
Dated as of_____________________
- 22 -
<PAGE>
Annex B-2 to the Borrower Security Agreement
Dated as of September 25, 1997
FORM OF GRANT OF SECURITY INTEREST (TRADEMARKS)
-----------------------------------------------
SALEM COMMUNICATIONS CORPORATION, a California corporation (the "Borrower"),
--------
is obligated to THE BANK OF NEW YORK, as Administrative Agent (the
"Administrative Agent"), and has entered into a Borrower Security Agreement
--------------------
dated the date hereof (the "Agreement") with the Administrative Agent.
---------
Pursuant to the Agreement, the Borrower granted to the Administrative Agent a
security interest in all of the right, title and interest of the Borrower in and
to the trademarks listed on Schedule 1, which trademarks are registered in the
United States Patent and Trademark Office (the "Trademarks"), together with the
----------
goodwill of the business symbolized by the Trademarks and the applications and
registrations therefor, and all proceeds thereof, any and all causes of action
which may exist by reason of infringement thereof (the "Collateral"), to secure
----------
the prompt payment, performance and observance of the Obligations (as defined in
the Agreement).
For good and valuable consideration, the receipt of which is hereby
acknowledged, and for the purpose of recording the grant of the security
interest as aforesaid, the Borrower does hereby further assign to the
Administrative Agent, and grant to the Administrative Agent a security interest
in, the Collateral to secure the prompt payment, performance and observance of
the Obligations.
The Borrower does hereby further acknowledge and affirm that the rights and
remedies of the Administrative Agent with respect to the assignment of and
security interest in the Collateral made and granted hereby are set forth in the
Agreement, the terms and provisions of which are hereby incorporated herein by
reference as if fully set forth herein.
Upon the indefeasible cash payment in full of all Obligations (as such term
is defined in the Agreement), the Administrative Agent will take whatever
actions are necessary at the Borrower's expense to release or reconvey to the
Borrower all right, title and interest of the Borrower in and to the Trademarks.
The Administrative Agent's address is: One Wall Street, New York, New
York 10286.
- 23 -
<PAGE>
IN WITNESS WHEREOF, the Borrower has caused this Assignment to be duly
executed by its duly authorized officer as of the __ day of _______,_______.
SALEM COMMUNICATIONS CORPORATION
By:____________________________________
Name:__________________________________
Title:_________________________________
- 24 -
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this _____ day of ________, _________, before me personally
came __________________ , to me known, who, being by me duly sworn, did depose
and say that he resides at ______________ ; that he is the ________________
of SALEM COMMUNICATIONS CORPORATION, the corporation described in and which
executed the above instrument, and that he signed his name thereto by order of
the board of directors thereof.
------------------------
Notary Public
[Notary's Stamp]
- 25 -
<PAGE>
Schedule 1
to
Grant of Security Interest Trademarks)
Dated as of _____________
- 26 -
<PAGE>
SALEM EXHIBIT J
---------------
FORM OF SUBSIDIARY GUARANTY AND SECURITY AGREEMENT
--------------------------------------------------
SUBSIDIARY GUARANTY AND SECURITY AGREEMENT (as the same may be amended,
supplemented or otherwise modified from time to time, this "Agreement"), dated
---------
as of September 25, 1997, by and among the Persons party hereto (the "Current
-------
Guarantors"), such other Persons which from time to time may become party hereto
- ----------
(the "Additional Guarantors", and collectively with the Current Guarantors, the
----------------------
"Guarantors"), SALEM COMMUNICATIONS CORPORATION, a California corporation (the
- -----------
"Borrower"), and THE BANK OF NEW YORK (the "Administrative Agent"), in its
-------- --------------------
capacity as Administrative Agent for the Lenders under the Credit Agreement
referred to below and the Rate Protection Lenders as hereinafter defined.
RECITALS
--------
I. Reference is made to the Credit Agreement, dated as of the date hereof,
by and among the Borrower, the Lenders party thereto, the Administrative Agent,
and Bank of America NT&SA, as Documentation Agent (as the same may be amended,
supplemented or otherwise modified from time to time, the "Credit Agreement").
----------------
II. In the past, as now, the Borrower has provided financing for the
Guarantors and the Guarantors have relied upon the Borrower to provide such
financing. In addition, it is anticipated that, if the Guarantors execute and
deliver this Agreement, the Borrower will continue to provide such financing to
the Guarantors, and that the proceeds of the Loans to be made and Letters of
Credit to be issued will be used, in part, for the general corporate and working
capital purposes of the Guarantors. Pursuant to the Credit Agreement, the
Lenders will not make Loans and the Issuing Bank will not issue Letters of
Credit unless and until the Guarantors shall have executed and delivered this
Agreement and, therefore, in light of all of the foregoing, each Guarantor
expects to derive substantial benefit from the Credit Agreement and the
transactions contemplated thereby and, in furtherance thereof, has agreed to
execute and deliver this Agreement.
Therefore, in consideration of the Recitals, the terms and conditions herein
contained and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Guarantors, the Borrower and the
Administrative Agent hereby agree as follows:
1. Defined Terms
-------------
(a) Capitalized terms used herein which are not otherwise defined herein
shall have the respective meanings ascribed thereto in the Credit Agreement.
<PAGE>
(b) When used in this Agreement, the following capitalized terms shall have
the respective meanings ascribed thereto as follows:
"Borrower Obligations": all of the obligations and liabilities of the
--------------------
Borrower under the Loan Documents and under each Interest Rate Protection
Arrangement entered into by the Borrower with a Rate Protection Lender, in each
case whether fixed, contingent, now existing or hereafter arising, created,
assumed, incurred or acquired, and whether before or after the occurrence of any
Insolvency Event, and including (i) any obligation or liability in respect of
any breach of any representation or warranty and (ii) all post-petition interest
and funding losses, whether or not allowed as a claim in any proceeding arising
in connection with an Insolvency Event.
"Collateral": as defined in section 4.
----------
"Equity Interest": (i) with respect to a corporation, the capital stock
---------------
thereof, (ii) with respect to a partnership, a partnership interest therein, all
rights of a partner in such partnership, whether arising under the partnership
agreement of such partnership or otherwise; (iii) with respect to a limited
liability company, a membership interest therein, all rights of a member of such
limited liability company, whether arising under the limited liability company
agreement of such limited liability company or otherwise; (iv) with respect to
any other firm, association, trust, business enterprise or other entity, any
equity interest therein, any interest therein which entitles the holder thereof
to share in the revenue, income, earnings or losses thereof or to vote or
otherwise participate in any election of one or more members of the Managing
Person thereof, and (v) all warrants and options in respect of any of the
foregoing and all other securities which are convertible or exchangeable
therefor.
"Financing Statements": the UCC financing statements executed by the
--------------------
Guarantor and delivered pursuant to the Credit Agreement.
"Grants of Security Interests": collectively, the Grant of Security
----------------------------
Interest (Patents) and the Grant of Security Interest (Trademarks), in the form
of Annexes C-1 and C-2 hereto, respectively, in each case appropriately
completed and signed by the Guarantor.
"Guarantor Obligations": with respect to each Guarantor, all of the
---------------------
obligations and liabilities of such Guarantor hereunder, whether fixed,
contingent, now existing or hereafter arising, created, assumed, incurred or
acquired.
"Insolvency Event": any Event of Default under section 9.l(h) or (i) of
----------------
the Credit Agreement.
"NYUCC": the UCC as in effect in the State of New York on the
-----
date hereof.
"Office Location": as defined in section 5(c).
---------------
"Patents": all patents issued under the laws of the United States of
-------
America and all patent applications filed with the United States Patent and
Trademark Office, and all of the rights associated with each of the foregoing.
-2-
<PAGE>
"Proceeds": as defined in the NYUCC, together with (i) all dividends,
--------
distributions and income on and in respect of all of the Securities and
Instruments and all other rights and benefits in respect thereof, and (ii) with
respect to the Patents and Trademarks, all renewals thereof, all proceeds of
infringement suits, all rights to sue for infringement, all license royalties,
all reissues, divisions, continuations, extensions and continuations-in-part
thereof.
"Registrations": (i) patents issued under the laws of the United States of
-------------
America, (ii) patent applications filed with the United States Patent and
Trademark Office, and (iii) all registered trademarks.
"Rate Protection Lenders": collectively, the Lenders and any affiliates
-----------------------
of the Lenders which from time to time enter or have entered into Interest Rate
Protection Arrangements with the Borrower.
"Supplement": a Supplement to this Agreement, duly completed, in the form
----------
of Annex A hereto.
"Trademarks": as to any Guarantor (i) all rights under the laws of the
----------
United States of America, and each State thereof, to trademarks, together with
all registrations thereof, applications therefor and all of the rights
associated therewith, and (ii) the goodwill of such Guarantor's business
symbolized by registered trademarks.
"Transaction Statement": a transaction statement in the form of An-
---------------------
nex B hereto.
"UCC": with respect to any jurisdiction, Articles 1, 8 and 9 of the
---
Uniform Commercial Code as from time to time in effect in such jurisdiction.
(c) When used in this Agreement, the following capitalized terms shall have
the respective meanings ascribed thereto in the NYUCC: "Account", "Certificated
-------- ------------
Security", "Chattel Paper", "Document", "Equipment", "Fixture", "General
- -------- ------------- -------- --------- ------- -------
Intangible", "Instrument", "Inventory", "Issuer", "Secured Party", "Security",
- ---------- ---------- --------- ------ ------------- --------
"Security Interest" and "Uncertificated Security".
- ------------------ -----------------------
2. Guaranty
--------
(a) Subject to section 2(b) hereof, each Guarantor hereby absolutely,
irrevocably and unconditionally guarantees the full and prompt payment when due
(whether at stated maturity, by acceleration or otherwise) of the Borrower
Obligations. This Agreement constitutes a guaranty of payment and neither the
Administrative Agent, the Issuing Bank nor any Lender shall have any obligation
to enforce any Loan Document or any Interest Rate Protection Arrangement or
exercise any right or remedy with respect to any collateral security thereunder
by any action, including making or perfecting any claim against any Person or
any collateral security for any of the Borrower Obligations, prior to being
entitled to the benefits of this Agreement. The Administrative Agent may, at its
option, proceed against the Guarantors, or any one or more of them, in the first
instance, to enforce the Guarantor Obligations without first proceeding against
the Borrower or any other Person, and without first resorting to any other
rights or remedies, as the Administrative Agent may deem advisable. In
furtherance hereof, if the Administrative
-3-
<PAGE>
Agent, the Issuing Bank or any Lender is prevented by law from collecting or
otherwise hindered from collecting or otherwise enforcing any Borrower
Obligation in accordance with its terms, the Administrative Agent, the Issuing
Bank or such Lender, as the case may be, shall be entitled to receive hereunder
from the Guarantors after demand therefor, the sums which would have been
otherwise due had such collection or enforcement not been prevented or hindered.
(b) Anything contained in this Agreement to the contrary
notwithstanding, the obligations of each Guarantor hereunder shall be limited to
a maximum aggregate amount equal to the greatest amount that would not render
such Guarantor's obligations hereunder subject to avoidance as a fraudulent
transfer or conveyance under Section 548 of Title 11 of the United States Code
or any provisions of applicable state law (collectively, the "Fraudulent
Transfer Laws"), in each case after giving effect to all other liabilities of
such Guarantor, contingent or otherwise, that are relevant under the Fraudulent
Transfer Laws (specifically excluding, however, any liabilities of such
Guarantor (a) in respect of intercompany indebtedness to the Borrower or
Affiliates of the Borrower to the extent that such indebtedness would be
discharged in an amount equal to the amount paid by such Guarantor hereunder and
(b) under any guarantee of senior unsecured indebtedness or Indebtedness
subordinated in right of payment to the Obligations which guarantee contains an
assumption that indebtedness incurred under the Credit Agreement shall be deemed
to have been incurred prior to any indebtedness incurred under any such
guarantee or contains a limitation as to maximum amount similar to that set
forth in this subsection, pursuant to which the liability of such Guarantor
hereunder is included in the liabilities taken into account in determining such
maximum amount) and after giving effect as assets to the value (as determined
under the applicable provisions of the Fraudulent Transfer Laws) of any rights
------------------------
to subrogation, contribution, reimbursement, indemnity or similar rights of such
Guarantor pursuant to (i) applicable law or (ii) any agreement providing for an
equitable allocation among such Guarantor and other Affiliates of the Borrower
of obligations arising under guarantees by such parties.
(c) Each Guarantor agrees that the Guarantor Obligations may at any
time and from time to time exceed the maximum liability of such Guarantor
hereunder without impairing this Agreement or affecting the rights and remedies
of the Administrative Agent, the Issuing Bank or any Lender hereunder.
3. Absolute Obligation
-------------------
No Guarantor shall be released from liability hereunder unless and until the
Maturity Date shall have occurred and either (a) the Issuing Bank shall not
have any obligation under the Letters of Credit and the Borrower shall have paid
in full in cash the outstanding principal balance of the Loans, together with
all accrued interest thereon, all of the Reimbursement Obligations, and all
other sums then due and owing under the Loan Documents, or (b) the Guarantor
Obligations of such Guarantor shall have been paid in full in cash. Each
Guarantor acknowledges and agrees that (i) neither the Administrative Agent, the
Issuing Bank nor any Lender has made any representation or warranty to such
Guarantor with respect to the Borrower, its Subsidiaries, any Loan Document, any
Interest Rate Protection Arrangement, or any agreement, instrument or document
executed or delivered in connection therewith, or any other matter whatsoever,
and (ii) such Guarantor shall be liable hereunder, and such liability shall not
be affected or impaired, irrespective
-4-
<PAGE>
of (A) the validity or enforceability of any Loan Document, any Interest Rate
Protection Arrangement, or any agreement, instrument or document executed or
delivered in connection therewith, or the collectability of any of the Borrower
Obligations, (B) the preference or priority ranking with respect to any of the
Borrower Obligations, (C) the existence, validity, enforceability or perfection
of any security interest or collateral security under any Loan Document, or any
Interest Rate Protection Arrangement, or the release, exchange, substitution or
loss or impairment of any such security interest or collateral security, (D) any
failure, delay, neglect or omission by the Administrative Agent, the Issuing
Bank or any Lender to realize upon, enforce or protect any direct or indirect
collateral security, indebtedness, liability or obligation, any Loan Document,
any Interest Rate Protection Arrangement, or any agreement, instrument or
document executed or delivered in connection therewith, or any of the Borrower
Obligations, (E) the existence or exercise of any right of set-off by the
Administrative Agent, the Issuing Bank or any Lender, (F) the existence,
validity or enforceability of any other guaranty with respect to any of the
Borrower Obligations, the liability of any other Person in respect of any of the
Borrower Obligations, or the release of any such Person or any other guarantor
of any of the Borrower Obligations, (G) any act or omission of the
Administrative Agent, the Issuing Bank or any Lender in connection with the
administration of any Loan Document, any Interest Rate Protection Arrangement,
or any of the Borrower Obligations, (H) the bankruptcy, insolvency,
reorganization or receivership of, or any other proceeding for the relief of
debtors commenced by or against, any Person, (I) the disaffirmance or rejection,
or the purported disaffirmance or purported rejection, of any of the Borrower
Obligations, any Loan Document, any Interest Rate Protection Arrangement, or any
agreement, instrument or document executed or delivered in connection therewith,
in any bankruptcy, insolvency, reorganization or receivership, or any other
proceeding for the relief of debtor, relating to any Person, (J) any law,
regulation or decree now or hereafter in effect which might in any manner affect
any of the terms or provisions of any Loan Document, any Interest Rate
Protection Arrangement, or any agreement, instrument or document executed or
delivered in connection therewith or any of the Borrower Obligations, or which
might cause or permit to be invoked any alteration in the time, amount, manner
or payment or performance of any of the Borrower's obligations and liabilities
(including the Borrower Obligations), (K) the merger or consolidation of the
Borrower into or with any Person, (L) the sale by the Borrower of all or any
part of its assets, (M) the fact that at any time and from time to time none of
the Borrower Obligations may be outstanding or owing to the Administrative
Agent, the Issuing Bank or any Lender, (N) any amendment or modification of, or
supplement to, any Loan Document or any Interest Rate Protection Arrangement or
(O) any other reason or circumstance which might otherwise constitute a defense
available to or a discharge of the Borrower in respect of its obligations or
liabilities (including the Borrower Obligations) or of such Guarantor in respect
of any of the Guarantor Obligations (other than by the performance in full
thereof).
4. Grant of Security Interest
--------------------------
To secure the prompt and complete payment, observance and performance
of the Guarantor Obligations, each Guarantor hereby grants to the Administrative
Agent, for its benefit and the ratable benefit of the Issuing Bank, the Lenders
and the Rate Protection Lenders, a Security Interest in and to all of such
Guarantor's right, title and interest in and to all: Accounts, Chattel Paper,
Documents, Equipment, Fixtures, General Intangibles, Instruments, including,
without limitation, Instruments evidencing intercompany Indebtedness,
Inventory, Patents, Trademarks, Equity Interests in each Person which
-5-
<PAGE>
now is or may hereafter become a Subsidiary of such Guarantor or of the
Borrower, whether or not evidenced by a Security, and all Proceeds of all of the
foregoing, and including, without limitation, all licenses, approvals, permits
and other authorizations issued by the FCC, including the Proceeds of any sale
or other disposition thereof, in each case to the extent that a security
interest therein is not prohibited by law, provided that to the extent that a
security interest therein is now so prohibited and to the extent that such
security interest at any time hereafter shall no longer be so prohibited, then
such security interest shall automatically and without any further action attach
and become fully effective at that time (giving effect to any retroactive effect
to any change in applicable law or regulation), in each case whether now owned
or existing or hereafter arising or acquired, (collectively, the "Collateral").
----------
5. Representations and Warranties
------------------------------
Each Guarantor hereby represents and warrants to the Administrative
Agent as follows:
(a) Binding Obligation. This Agreement constitutes the valid and binding
------------------
obligation of such Guarantor, enforceable in accordance with its terms, except
as such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws related to or affecting the
enforcement of creditors' rights generally.
(b) Solvency. Such Guarantor (if a Current Guarantor, both immediately before
--------
and after giving effect to this Agreement and to all Indebtedness incurred by
the Borrower in connection with the Loan Documents or, if an Additional
Guarantor, immediately before and after giving effect to this Agreement) (i) is
not insolvent, (ii) is not engaged, and is not about to engage, in any business
or transaction, for which it has unreasonably small capital, and (iii) does not
intend to incur, and does not believe that it would incur, debts that would be
beyond its ability to pay such debts as they mature, in each case referred to
above within the meaning of both Title XI of the United States Code and Article
10 of New York Debtor Credit Law, each as in effect on the date hereof.
(c) Chief Executive Office. As of the date hereof, such Guarantor's place of
----------------------
business or, if such Guarantor has more than one place of business, its chief
executive office, is, and has been continuously for the immediately preceding 5
month period, located (the "Office Location") at, (i) if such Guarantor is a
---------------
Current Guarantor, the address therefor referred to in Schedule 5(c) hereto, or
(ii) if such Guarantor is an Additional Guarantor, the address therefor set
forth on Schedule 5(c) to the Supplement delivered by such Additional Guarantor.
Such Guarantor, (i) in the case of a Current Guarantor, has not changed its
legal name during the 6 year period immediately preceding the date hereof, and
(ii) in the case of an Additional Guarantor, has not changed its legal name
during the 6 year period immediately preceding the date it became a Guarantor
hereunder, except as otherwise disclosed on the Supplement delivered by such
Additional Guarantor.
(d) Information. If such Guarantor is a Current Guarantor, all of the
-----------
information with respect to such Guarantor, or any of its Property, set forth on
each of the Schedules hereto is true, complete and correct as of the date
hereof. If such Guarantor is an Additional Guarantor, all of the information
with respect to such Guarantor, or any
- 6-
<PAGE>
of its Property, set forth on each of the Schedules to the Supplement delivered
by such Additional Guarantor is true, complete and correct as of the date of
such Supplement. All of such Guarantor's books, records and documents relating
to its Guarantor Collateral are in all material respects what they purport to
be.
(e) Security Interest. This Agreement, together with the delivery to the
-----------------
Administrative Agent of the Certificated Securities constituting Collateral and
the continuous possession thereof by the Administrative Agent in the State of
New York, creates a continuing "enforceable" Security Interest in the Collateral
in favor of the Administrative Agent. Upon (i) the presentation for filing of
the Financing Statements at the respective offices listed thereon together with
the appropriate filing fee therefor, (ii) the delivery to the Administrative
Agent of the Instruments constituting the Collateral, (iii) the registration, in
accordance with Article 8 of the NYUCC, of the Security Interest granted hereby
on the books of each Person which is an Issuer of an Uncertificated Security
constituting the Collateral, and (iv) the filing of the Grants of Security
Interests in the United States Patent and Trademark Office with respect to
Patents, Registrations, and Trademarks, (A) such Security Interest shall be
perfected, and (B) assuming that the Administrative Agent has acted in "good
faith and without notice of any adverse claim" within the meaning of Article 8
of the NYUCC, the Administrative Agent shall be a "bona fide purchaser", within
the meaning of such Article, with respect to the Collateral consisting of
Securities.
(f) Absence of Liens. There are no Liens upon the Collateral other than
----------------
Permitted Liens, if any.
(g) Equity Interests. As of the Effective Date with respect to each Current
----------------
Guarantor, as of the date of the Supplement executed by an Additional Guarantor
with respect to such Additional Guarantor, (i) the Equity Interests listed on
Schedule 5(g) or Schedule 5(g) to the Supplement, as the case may be, constitute
all of the Equity Interests in each Subsidiary in which such Guarantor has any
right, title or interest, and each such Equity Interest issued by a corporate
Issuer has been duly authorized, validly issued and fully paid for, and is non-
assessable and (ii) except as set forth in such Schedule 5(g) or Schedule 5(g)
to such Supplement, (A) no Subsidiary of such Guarantor has issued any
securities convertible into, or options or warrants for, any common or preferred
equity securities thereof, (B) there are no agreements, voting trusts or
understandings binding upon such Guarantor or any of its Subsidiaries with
respect to the voting securities of any of such Subsidiary or affecting in any
manner the sale, pledge, assignment or other disposition thereof, including any
right of first refusal, option, redemption, call or other right with respect
thereto, whether similar or dissimilar to any of the foregoing and (C) no such
Equity Interest is represented by an Uncertificated Security.
(h) Chattel Paper, Documents and Instruments. With respect to each Current
----------------------------------------
Guarantor, the Chattel Paper, Documents and Instruments listed on Schedule 5(h)
hereto constitute, as of the date hereof, and with respect to each Additional
Guarantor, the Chattel Paper, Documents and Instruments listed on Schedule 5(h)
to the Supplement delivered by such Additional Guarantor constitute, as of the
date of such Supplement, all of the Chattel Paper, Documents and Instruments
which constitute the Collateral, and, to the best of such Guarantor's knowledge,
all such Chattel Paper, Documents and Instruments have been duly authorized,
issued and delivered, and constitute the legal, valid, binding and enforceable
obligations of the respective makers thereof.
-7-
<PAGE>
(b) Further Assurances. Such Guarantor shall, at its own expense, promptly
------------------
execute and deliver all certificates, documents, instruments, financing and
continuation statements and amendments thereto, notices and other agreements,
and take all further action, that the Administrative Agent may reasonably
request from time to time, in order to perfect and protect the Security Interest
granted hereby or to enable the Administrative Agent to exercise and enforce its
rights and remedies hereunder with respect to the Collateral. Such Guarantor
hereby irrevocably appoints the Administrative Agent as such Guarantor's true
and lawful attorney-in-fact, in the name, place and stead of such Guarantor, to
perform on behalf of such Guarantor any and all obligations of such Guarantor
under this Agreement, and such Guarantor agrees that the power of attorney
herein granted constitutes a power coupled with an interest, provided, however,
that the Administrative Agent shall have no obligation to perform any such
obligation and such performance shall be at the sole cost and expense of such
Guarantor. If such Guarantor fails to comply with any of its obligations
hereunder, the Administrative Agent may do so in such Guarantor's name or in the
Administrative Agent's name, but at such Guarantor's expense, and such Guarantor
hereby agrees to reimburse the Administrative Agent in full for all reasonable
expenses, including reasonable attorney's fees, incurred by the Administrative
Agent in connection therewith.
(c) Information. Such Guarantor shall, at its own expense, furnish to the
-----------
Administrative Agent such information, reports, statements and schedules with
respect to the Collateral as the Administrative Agent may reasonably request
from time to time.
(d) Defense of Collateral. Such Guarantor shall, at its own expense, defend
---------------------
the Collateral against all claims of any kind or nature (other than Permitted
Liens, if any) of all Persons at any time claiming the same or any interest
therein adverse to the interests of the Administrative Agent, the Issuing Bank,
any Rate Protection Lender or any Lender, and such Guarantor shall not cause,
permit or suffer to exist any Lien upon the Collateral other than Permitted
Liens, if any.
(e) Uncertificated Securities. Such Guarantor shall cause each Person which
-------------------------
is an Issuer of an Uncertificated Security constituting the Collateral (i) to
register the Security Interest granted hereby upon the books of such Person in
accordance with Article 8 of the NYUCC, and (ii) to issue to the Administrative
Agent an initial Transaction Statement and issue to the Administrative Agent
subsequent Transaction Statements in accordance with Section 8-408 of the UCC in
effect in the State of New York.
(f) Delivery of Pledged Collateral. Each Certificated Security
------------------------------
representing an Equity Interest in a Person which is or shall become a
Subsidiary of the Borrower shall be promptly delivered to the Administrative
Agent, to be held by the Administrative Agent pursuant hereto, in suitable form
for transfer by delivery or accompanied by duly executed documents of transfer
or assignment in blank, all in form and substance satisfactory to the
Administrative Agent. Such Guarantor agrees that until so delivered, each such
Certificated Security shall be held by such Guarantor in trust for the benefit
of the Administrative Agent and be segregated from the other Property of such
Guarantor.
-9-
<PAGE>
(g) Chattel Paper, Documents and Instruments. All of the Instruments,
----------------------------------------
Documents and Chattel Paper now or hereafter owned by or in the possession of
such Guarantor which constitute Collateral (other than checks received in the
ordinary course of collection) shall be promptly delivered to the Administrative
Agent, to be held by the Administrative Agent pursuant hereto, in suitable form
for transfer by delivery or accompanied by duly executed documents of transfer
or assignment in blank, all in form and substance reasonably satisfactory to the
Administrative Agent. Such Guarantor agrees that, with respect to all items of
the Collateral which it is or shall hereafter be obligated to deliver to the
Administrative Agent, until so delivered such items shall be held by such
Guarantor in trust for the benefit of the Administrative Agent and be segregated
from the other Property of such Guarantor.
(h) Accounts. Except as otherwise provided in this subsection, such
--------
Guarantor shall continue to collect in accordance with its customary practice,
at its own expense, all amounts due or to become due to such Guarantor in
respect of such Guarantor's Accounts and, prior to the occurrence of an Event of
Default, such Guarantor shall have the right to adjust, settle or compromise the
amount or payment of any such Account, all in accordance with its customary
practices. In connection with such collections, such Guarantor may take and, at
the direction of the Administrative Agent at any time that an Event of Default
shall have occurred and be continuing shall take, such action as such Guarantor
or the Administrative Agent may reasonably deem necessary or advisable to
enforce collection of such Accounts.
(i) Equipment and Inventory. Such Guarantor shall keep the Equipment and
-----------------------
Inventory constituting Collateral at the places listed on (i) if such Guarantor
is a Current Guarantor, Schedule 5(1) hereto, and (ii) if such Guarantor is an
Additional Guarantor, Schedule 5(1) to the Supplement delivered by such
Guarantor, and at such other places located within the United States in respect
of which (A) such Guarantor shall have provided the Administrative Agent with
prior written notice, and (B) UCC financing statements (or amendments thereto),
in form and substance satisfactory to the Administrative Agent, shall have been
filed within two months of such change. Such Guarantor shall promptly furnish to
the Administrative Agent a statement respecting any material loss or damage to
any of the Equipment or Inventory constituting Collateral except to the extent
that such loss or damage shall be insured pursuant to policies required to be
maintained pursuant to the Credit Agreement.
(j) Patents and Trademarks. Such Guarantor will continue to use for the
----------------------
duration of this Agreement, consistent standards of quality in its manufacture
of products sold under the Patents and Trademarks constituting Collateral. Such
Guarantor shall give to the Administrative Agent prompt written notice thereof
in the event that such Guarantor shall obtain any right to any new Patent or
Trademark or to any reissue, division, continuation, renewal, extension, or
continuation-in-part of any Patent or Trademark. Such Guarantor shall prosecute
diligently any applications of the Patents and Trademarks constituting
Collateral pending as of the date of this Agreement or thereafter, and preserve
and maintain all rights in applications of Patents and Trademarks constituting
Collateral consistent with past practice, including the payment of all
maintenance fees, except to the extent the failure so to preserve or maintain
such rights could not reasonably be expected to have a material adverse effect
on either (i) the value of the Patents taken as a whole, or (ii) the value of
the Trademarks taken as a whole. Such Guarantor shall not abandon any right to
file an application or any pending application for any Patent or
- 10-
<PAGE>
Trademark unless the failure so to do could not reasonably be expected to have
a material adverse effect on either (i) the value of the Patents taken as a
whole, or (ii) the value of the Trademarks taken as a whole. Such Guarantor
agrees that it will not enter into any agreement, including a license agreement,
with respect to any Patent or Trademark which is inconsistent with such
Guarantor's past practices of licensing Patents or Trademarks as the case may
be. Such Guarantor hereby grants to the Administrative Agent the right to visit
such Guarantor's plants and facilities which manufacture, inspect or store
products sold under any of the Patents and Trademarks, and to inspect the
products and quality control records relating thereto at reasonable times during
regular business hours upon reasonable prior notice.
7. Other Agreements of the Guarantors
----------------------------------
(a) No Duty to Preserve. Except as otherwise required by law, each
-------------------
Guarantor agrees that, with respect to the Collateral, neither the
Administrative Agent, the Issuing Bank, any Rate Protection Lender nor any
Lender has any obligation to preserve rights against prior or third parties.
(b) Administrative Agent's Duty With Respect to Collateral. Each
------------------------------------------------------
Guarantor agrees that the Administrative Agent's only duty with respect to the
Collateral delivered to the Administrative Agent shall be to use reasonable care
in the custody and preservation of the Collateral, and each Guarantor agrees
that if the Administrative Agent accords the Collateral substantially the same
kind of care as the Administrative Agent accords its own Property, such care
shall conclusively be deemed reasonable. In the event that all or any part of
the Certificated Securities or Instruments constituting the Collateral are lost,
destroyed or wrongfully taken while such Certificated Securities or Instruments
are in the possession of the Administrative Agent, each Guarantor agrees that it
will use its best efforts to cause the delivery of new Certificated Securities
or Instruments in place of the lost, destroyed or wrongfully taken Certificated
Securities or Instruments upon request therefor by the Administrative Agent,
without the necessity of any indemnity bond or other security, other than the
Administrative Agent's agreement of indemnity upon usual and customary terms
therefor. Anything herein to the contrary notwithstanding, the Administrative
Agent shall not be under any duty to send notices, perform services, exercise
any rights of collection, enforcement, conversion or exchange, vote, pay for
insurance, taxes or other charges or take any action of any kind in connection
with the management of the Collateral.
(c) Liability of Guarantors under Contracts and Agreements Included
---------------------------------------------------------------
in the Collateral. Anything herein to the contrary notwithstanding, (i) each
- -----------------
Guarantor shall remain liable under the contracts and agreements to which it is
a party and which is included in the Collateral to the extent set forth therein
to perform all of its duties and obligations thereunder to the same extent as if
this Agreement had not been executed, (ii) the exercise by the Administrative
Agent, the Issuing Bank, any Rate Protection Lender or any Lender of any of its
rights hereunder shall not release any Guarantor from any of its duties or
obligations under any such contract or agreement, (iii) neither the
Administrative Agent, the Issuing Bank, any Rate Protection Lender nor any
Lender shall have any obligation or liability, including indemnification
obligations, under any such contract or agreement by reason of this Agreement,
nor shall the Administrative Agent, the Issuing Bank, any Rate Protection Lender
or any Lender be obligated to perform any of the obligations or duties of any
Guarantor thereunder, to make any payment, to make any
-11-
<PAGE>
inquiry as to the nature or sufficiency of any payment received by any Guarantor
or the sufficiency of any performance by any party under any such contract or
agreement or to take any action to collect or enforce any claim for payment
assigned hereunder, and (iv) neither the Administrative Agent, the Issuing Bank,
any Rate Protection Lender nor any Lender shall be under any duty to send
notices, perform services, exercise any rights of collection, enforcement,
conversion or exchange, vote, pay for insurance, taxes or other charges or take
any action of any kind in connection with the management of the Collateral.
8. Events of Default
-----------------
Each of the following shall constitute an "Event of Default":
----------------
(a) The failure of any Guarantor to observe or perform any term,
covenant or agreement contained in this Agreement; or
(b) The occurrence and continuance of an Event of Default under, and as
such term is defined in, the Credit Agreement.
9. Remedies
--------
(a) Upon the occurrence of an Event of Default or at any time thereafter
during the continuance thereof, the Administrative Agent may:
(i) exercise any and all rights and remedies (A) granted to a Secured
Party by the UCC in effect in the State of New York or otherwise allowed at
law, and (B) otherwise provided by this Agreement, and
(ii) dispose of the Collateral as it may choose, so long as every
aspect of the disposition including the method, manner, time, place and
terms are commercially reasonable, and each Guarantor agrees that, without
limitation, the following are each commercially reasonable: (A) the
Administrative Agent shall not in any event be required to give more than
10 days' prior notice to the Guarantors of any such disposition, (B) any
place within the City of New York or the Counties of Nassau, Suffolk, and
Westchester may be designated by the Administrative Agent for disposition,
and (C) the Administrative Agent may adjourn any public or private sale
from time to time by announcement at the time and place fixed therefor,
and such sale may, without further notice, be made at the time and place to
which it was so adjourned.
(b) Each Guarantor acknowledges and agrees that the Administrative Agent
may elect, with respect to the offer or sale of any or all of the Equity
Interests constituting the Collateral, to conduct such offer and sale in such a
manner as to avoid the need for registration or qualification of such Equity
Interests or the offer and sale thereof under any Federal or state securities
laws and that the Administrative Agent is authorized to comply with any
limitation or restriction in connection with such sale as counsel may advise the
Administrative Agent is reasonably necessary in order to avoid any violation of
applicable law, compliance with such procedures as may restrict the number of
prospective bidders and purchasers, require that such prospective bidders and
purchasers have certain qualifications, and restrict such prospective bidders
and purchasers to Persons
-12-
<PAGE>
who will represent and agree that they are purchasing for their own account for
investment and not with a view to the distribution or resale of such Equity
Interests, or in order to obtain any required approval of the sale or of the
purchaser by any Governmental Authority. Each Guarantor further acknowledges and
agrees that any such transaction may be at prices and on terms less favorable
than those which may be obtained through a public sale and not subject to such
restrictions and agrees that, notwithstanding the foregoing, the Administrative
Agent is under no obligation to conduct any such public sale and may elect to
impose any or all of the foregoing restrictions, or any other restrictions which
may be reasonably necessary in order to avoid any such registration or
qualification, at its sole discretion or with the consent or direction of the
Required Lenders, and that any such offer and sale so conducted shall be deemed
to have been made in a commercially reasonable manner.
(c) To the extent permitted by law, each Guarantor hereby expressly waives
and covenants not to assert any appraisement, valuation, stay, extension,
redemption or similar laws, now or at any time hereafter in force, which might
delay, prevent or otherwise impede the performance or enforcement of this
Agreement.
(d) Notwithstanding anything to the contrary contained in this Agreement, any
other Loan Document or in any other agreement, instrument or document executed
by any Guarantor and delivered to the Administrative Agent, the Issuing Bank or
any Lender, neither the Administrative Agent, the Issuing Bank nor any Lender
will take any action pursuant to this Agreement, any other Loan Document or any
other document referred to above which would constitute or result in any
assignment of any license, approval, permit, certificate or other authorization
issued by the FCC or any change of control of the Borrower or any Subsidiary if
such assignment or change of control would require, under then existing law, the
prior approval of the FCC without first obtaining such prior approval of the
FCC. Upon the occurrence of an Event of Default or at any time thereafter during
the continuance thereof, each Guarantor waives, to the extent permitted by law,
any right it may have to oppose, and agrees to take any action that the
Administrative Agent may reasonably request in order to obtain from the FCC,
such approval as may be necessary to enable the Administrative Agent, the
Issuing Bank and the Lenders to exercise and enjoy the full rights and benefits
granted to the Administrative Agent, the Issuing Bank and the Lenders by this
Agreement, the other Loan Documents and the other documents referred to above,
including specifically, at the cost and expense of the Borrower, the use of
commercially reasonable efforts to assist in obtaining approval of the FCC for
any action or transaction contemplated by this Agreement for which such approval
is or shall be required by law, and specifically, without limitation, upon
request, to prepare, sign and file with the FCC the assignor's or transferor's
portion of any application or applications for consent to the assignment of
license, approval, permit, certificate or other authorization or transfer of
control necessary or appropriate under the FCC's rules and regulations for
approval of (i) any sale or other disposition of the Collateral by or on behalf
of the Administrative Agent, or (ii) any assumption by the Administrative Agent
of voting rights in the Collateral effected in accordance with the terms of this
Agreement. It is understood and agreed that all foreclosure and related actions
will be made in accordance with the Communications Act and applicable
regulations and published policies and decisions of the FCC pertaining to such
foreclosure and related actions.
-13-
<PAGE>
10. Voting
------
Notwithstanding anything to the contrary contained in this Agreement,
each Guarantor shall have the right to vote all Securities constituting its
Collateral and receive and retain all dividends and distributions thereon until
such time, if any, as an Event of Default shall have occurred and be continuing
and the Administrative Agent shall have notified such Guarantor that the
Administrative Agent shall have elected to terminate the rights of such
Guarantor under this section, at which time the Administrative Agent shall then
be vested with the right to vote all Securities constituting the Collateral and
receive and retain all dividends and distributions thereon, until such time as
such Event of Default is cured or waived.
11. Termination
-----------
On any date upon which (i) the Lenders shall no longer have any
obligation to make Loans, (ii) the Issuing Bank shall no longer have (A) any
obligation to issue Letters of Credit and (B) any obligations under the Letters
of Credit theretofor issued, and (iii) the Obligations shall have been paid in
full in cash, the outstanding principal balance of the Loans together with all
accrued interest thereon, all of the Reimbursement Obligations and all other
sums then due and owing under the Loan Documents, the Liens granted hereby shall
cease and the Administrative Agent shall, at the Guarantors' expense (A) execute
and deliver all UCC Termination Statements and other documents necessary to
terminate the Liens granted hereby that the Guarantors shall have reasonably
requested, and (B) return to the Guarantors all their respective Collateral that
shall remain in the possession of the Administrative Agent at such time.
12. Notices
-------
Except as otherwise specifically provided herein, all notices, requests,
consents, demands, waivers and other communications hereunder shall be in
writing (including facsimile) and shall be electronically transmitted or mailed
by registered or certified mail or delivered in person, and all statements,
reports, documents, certificates and papers to be delivered hereunder shall be
mailed by first class mail or delivered in person, in each case to the
respective parties to this Agreement as follows: in the case of the
Administrative Agent or the Borrower, as set forth in section 11.2 of the Credit
Agreement, in the case of each Current Guarantor, as set forth adjacent to the
name of such Current Guarantor on the signature page(s) hereof, and, in the case
of each Additional Guarantor, as set forth adjacent to the name of such
Additional Guarantor on the signature page(s) of the Supplement delivered by
such Additional Guarantor, or to such other addresses as to which the
Administrative Agent may be hereafter notified by the respective parties hereto.
Any notice, request, consent, demand, waiver or communication given in
accordance with the provisions of this section shall be conclusively deemed to
have been received by a party hereto and to be effective on the day on which
delivered to such party at its address specified above or, if sent by registered
or certified mail, on the delivery date noted on the receipt therefor, provided
that a notice of change of address shall be deemed to be effective only when
actually received. Any party hereto may rely on signatures of the other parties
hereto which are transmitted by facsimile or other electronic means as fully as
if originally signed.
-14-
<PAGE>
13. Expenses
--------
Each Guarantor agrees that it shall, upon demand, pay to the
Administrative Agent any and all reasonable out-of-pocket sums, costs and
expenses, which the Administrative Agent, the Issuing Bank or any Lender may pay
or incur defending, protecting or enforcing this Agreement (whether suit is
instituted or not), reasonable attorneys' fees and disbursements. All sums,
costs and expenses which are due and payable pursuant to this section shall bear
interest, payable on demand, at the highest rate then payable on the Borrower
Obligations.
14. Repayment in Bankruptcy, etc.
-----------------------------
If, at any time or times subsequent to the payment of all or any part of
the Borrower Obligations or the Guarantor Obligations, the Administrative Agent,
the Issuing Bank or any Lender shall be required to repay any amounts previously
paid by or on behalf of the Borrower or any Guarantor in reduction thereof by
virtue of an order of any court having jurisdiction in the premises, as a result
of an adjudication that such amounts constituted preferential payments or
fraudulent conveyances, the Guarantors unconditionally agree to pay to the
Administrative Agent within 10 days after demand a sum in cash equal to the
amount of such repayment, together with interest on such amount from the date of
such repayment by the Administrative Agent, the Issuing Bank or such Lender, as
the case may be, to the date of payment to the Administrative Agent at the
applicable after-maturity rate set forth in the Credit Agreement.
15. Additional Guarantors
---------------------
Upon the execution and delivery to the Administrative Agent of a
Supplement by any Person, appropriately acknowledged, such Person shall be a
Guarantor.
16. Agreement to Pay; Subordination
--------------------------------
In furtherance of the foregoing and not in limitation of any other right
that the Administrative Agent, the Issuing Bank, any Lender or any Rate
Protection Lender has at law or in equity against any Guarantor by virtue
hereof, upon the failure of the Borrower or any other Loan Party to pay any
Borrower Obligations when and as the same shall become due, whether at maturity,
be acceleration, after notice of prepayment or otherwise, each Guarantor hereby
promises to and will forthwith pay, or cause to be paid, to the Administrative
Agent in cash the amount of such unpaid Obligations. Upon payment by any
Guarantor of any sums to the Administrative Agent as provided above, all rights
of such Guarantor against the Borrower arising as a result thereof by way of
right of subrogation, contribution, reimbursement, indemnity or otherwise shall
in all respects be subordinate and junior in right of payment to the prior
indefeasible payment in full in cash of all the Borrower Obligations. In
addition, any indebtedness of the Borrower now or hereafter held by any
Guarantor is hereby subordinated in right of payment to the prior payment in
full in cash of the Borrower Obligations. If any amount shall erroneously be
paid to any Guarantor on account of (i) such subrogation, contribution,
reimbursement, indemnity or similar right or (ii) any such indebtedness of the
Borrower, such amount shall be held in trust for the benefit of the
Administrative Agent, the Issuing Bank, the Lenders and the Rate Protection
Lenders and shall forthwith be paid to the Administrative
-15-
<PAGE>
Agent to be credited against the payment of the Borrower Obligations, whether
matured or unmatured, in accordance with the terms of the Loan Documents.
17. Miscellaneous
-------------
(a) Except as otherwise expressly provided in this Agreement, each
Guarantor hereby waives presentment, demand for payment, notice of default,
nonperformance and dishonor, protest and notice of protest of or in respect of
this Agreement, the other Loan Documents, each Interest Protection Arrangement,
and the Borrower Obligations, notice of acceptance of this Agreement and
reliance hereupon by the Administrative Agent, the Issuing Bank and each Lender,
and the incurrence of any of the Borrower Obligations, notice of any sale of
collateral security or any default of any sort.
(b) No Guarantor is relying upon the Administrative Agent, the Issuing
Bank or any Lender to provide to such Guarantor any information concerning the
Borrower or any of its Subsidiaries, and each Guarantor has made arrangements
satisfactory to such Guarantor to obtain from the Borrower on a continuing basis
such information concerning the Borrower and its Subsidiaries as such Guarantor
may desire.
(c) Each Guarantor agrees that any statement of account with respect to
the Borrower Obligations from the Administrative Agent, the Issuing Bank or any
Lender to the Borrower which binds the Borrower shall also be binding upon such
Guarantor, and that copies of said statements of account maintained in the
regular course of the Administrative Agent's, the Issuing Bank's or such
Lender's business, as the case may be, may be used in evidence against such
Guarantor in order to establish its Guarantor Obligations.
(d) Each Guarantor acknowledges that it has received a copy of the Loan
Documents and each Interest Rate Protection Arrangement and has approved of the
same. In addition, such Guarantor acknowledges having read each Loan Document
and each such Interest Rate Protection Arrangement and having had the advice of
counsel in connection with all matters concerning its execution and delivery of
this Agreement.
(e) No Guarantor may assign any right, or delegate any duty, it may have
under this Agreement.
(f) Subject to the limitations set forth in section 2(b), the Guarantor
Obligations shall be joint and several and shall also be joint and several.
(g) This Agreement is the "Subsidiary Guaranty" referred to in the Credit
Agreement, and is subject to, and should be construed in accordance with, the
provisions thereof. Each of the Administrative Agent, the Guarantors and the
Borrower acknowledges that certain provisions of the Credit Agreement,
including, without limitation, sections 1.2 (Principles of Construction), 11.1
(Amendments and Waivers), 11.3 (No Waiver; Cumulative Remedies), 11.4 (Survival
of Certain Obligations), 11.7 (Successors and Assigns), 11.8 (Counterparts),
11.9 (Adjustments; Set-off), 11.12 (Governing Law), 11.13 (Headings), 11.14
(Severability), 11.15 (Integration), 11.16 (Limitation of Liability), 11.17
(Consent to Jurisdiction), 11.18 (Service of Process), 11.19 (No Limitation on
Service or Suit) and 11.20 (WAIVER OF TRIAL BY JURY) thereof, are made
-16-
<PAGE>
applicable to this Agreement and all such provisions are incorporated by
reference herein as if fully set forth herein.
-17-
<PAGE>
IN EVIDENCE of the agreement by the parties hereto to the terms and
conditions herein contained, each such party has caused this Subsidiary Guaranty
and Security Agreement to be duly executed on its behalf.
[NAME OF CURRENT GUARANTOR]
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
Address for Notices:
--------------------
------------------------
------------------------
------------------------
Attention:
--------------
Telephone: ( ) -
--- --- ----
Telecopy: ( ) _
--- --- ----
[NAME OF CURRENT GUARANTOR]
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
Address for Notices:
--------------------
------------------------
------------------------
------------------------
Attention:
--------------
Telephone: ( ) _
--- --- ----
Telecopy: ( ) _
--- --- ----
-18-
<PAGE>
[NAME OF CURRENT GUARANTOR]
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
Address for Notices:
--------------------
------------------------
------------------------
------------------------
Attention:
--------------
Telephone: ( ) _
--- --- ----
Telecopy: ( ) _
--- --- ----
SALEM COMMUNICATIONS
CORPORATION
By:
-----------------------
Name:
---------------------
Title:
--------------------
THE BANK OF NEW YORK, as
Administrative Agent
By:
-----------------------
Name:
---------------------
Title:
--------------------
-19-
<PAGE>
Schedule 5(c) to the Subsidiary Guaranty
and Security Agreement
Dated as of September 25, 1997
LIST OF OFFICE LOCATIONS
------------------------
-20-
<PAGE>
Schedule 5(g) to the Subsidiary Guaranty
and Security Agreement
Dated as of September 25, 1997
LIST OF EQUITY INTERESTS
------------------------
<TABLE>
<CAPTION>
Percentage of
Number of Cert. Outstanding
Issuer Class Shares Number Shares
- ------ ----- -------- ------ -------------
<S> <C> <C> <C> <C>
</TABLE>
-21-
<PAGE>
Schedule 5(h) to the Subsidiary Guaranty
and Security Agreement
Dated as of September 25, 1997
LIST OF CHATTEL PAPER, DOCUMENTS AND INSTRUMENTS
------------------------------------------------
-22-
<PAGE>
Schedule 5(j) to the Subsidiary Guaranty
and Security Agreement
Dated as of September 25, 1997
ADDRESSES FOR EQUIPMENT AND INVENTORY LOCATIONS
-----------------------------------------------
-23-
<PAGE>
Schedule 5(k) to the Subsidiary Guaranty
and Security Agreement
Dated as of September 25, 1997
LIST OF REGISTRATIONS
---------------------
A. Patents
-------
B. Trademarks
----------
- 24 -
<PAGE>
ANNEX A TO THE SUBSIDIARY GUARANTY
FORM OF SUPPLEMENT TO SUBSIDIARY GUARANTY
------------------------------------------
SUBSIDIARY GUARANTY AND SECURITY AGREEMENT, dated as of September 25, 1997,
by and among the Guarantors party thereto and The Bank of New York, as
Administrative Agent (as the same may be amended, supplemented or otherwise
modified from time to time, the "Agreement").
---------
[DATE]
Capitalized terms used heroin which are not otherwise defined herein shall
have the respective meanings ascribed thereto in the Agreement. Pursuant to
section 15 of the Agreement, by execution and delivery of this Supplement and,
upon acceptance hereof by the Administrative Agent, the undersigned (i) shall
be, and shall be deemed to be, a "Guarantor" under, and as such term is defined
in, the Agreement, (ii) shall have made, and shall be deemed to have made, the
representations and warranties contained in section 5 of the Agreement on and as
of the date hereof, (iii) as security for the payment and performance in full of
its Guarantor Obligations, does hereby create and grant to the Administrative
Agent, its successors and permitted assigns, for its benefit and the ratable
benefit of the Issuing Bank, the Lenders and the Rate Protection Lenders, their
respective successors and permitted assigns, a security interest in the
Collateral (as defined in the Agreement) of the Additional Guarantor and (iv)
shall have made, and shall be deemed to have made, all of the covenants and
agreements of a Guarantor set forth in the Agreement.
[NAME OF ADDITIONAL GUARANTOR]
By:
------------------
Name:
----------------
Title:
---------------
Address for Notices:
-------------------
-------------------
-------------------
-------------------
Attention:
--------
Telephone: ( ) -
--- --- ----
Telecopy: ( ) -
--- --- ----
-25-
<PAGE>
Accepted and agreed to as
of the date first above written:
THE BANK OF NEW YORK, as Administrative Agent
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
[SCHEDULES CORRESPONDING TO THE SCHEDULES
IN THE AGREEMENT ARE TO BE ATTACHED]
- 26 -
<PAGE>
ANNEX B TO THE SUBSIDIARY GUARANTY
AND SECURITY AGREEMENT
DATED AS OF September 25, 1997
FORM OF TRANSACTION STATEMENT
-----------------------------
THIS STATEMENT IS MERELY A RECORD OF THE RIGHTS OF THE ADDRESSEE AS OF THE
TIME OF ITS ISSUANCE. DELIVERY OF THIS STATEMENT, OF ITSELF, CONFERS NO RIGHT ON
THE RECIPIENT. THIS STATEMENT IS NEITHER A NEGOTIABLE INSTRUMENT NOR A SECURITY.
[DATE]
The Bank of New York, as Administrative Agent
One Wall Street
New York, New York 10286
Ladies and Gentlemen:
The undersigned, (the "Issuer"), hereby acknowledges receipt
----------------- ------
of the Subsidiary Guaranty and Security Agreement, dated as of September 25,
1997 (as the same may be amended, supplemented or otherwise modified from time
to time, the "Agreement"), by and among each Guarantor party thereto, SALEM
---------
COMMUNICATIONS CORPORATION (the "Borrower") and THE BANK OF NEW YORK, as
--------
Administrative Agent (in such capacity, the "Administrative Agent") and (i)
--------------------
consents to the terms thereof and (ii) confirms that a pledge of the right,
title and interest in the security referred to below has been registered in the
books and records of the Issuer in the name of the Administrative Agent, as set
forth below. This Transaction Statement is issued under Section 8-408 of the New
York State Unifortn Commercial Code.
1. Description of the Security:
-----------------------------------.
2. Number of Shares or Units Pledged:
------------------------------.
3. Registered Owner:
[NAME OF PLEDGING GUARANTOR]
-------------------------
-------------------------
-------------------------
Attention:
---------------
---------------
Taxpayer ID#
-------------.
<PAGE>
4. Registered Pledgee and Taxpayer Identification Number (if any):
The Bank of New York, as Administrative Agent
One Wall Street
New York, New York 10286
Attention:
------------------
------------------
Taxpayer ID# 13-5160382
5. Date of Registration of the Pledge: The pledge described herein was
registered on on the books and records of the Issuer.
------------------
6. Notation of Liens: There are no liens, restrictions or adverse claims as to
which the Issuer has a duty under Section 8-403(4) of the Uniform Commercial
Code (the "UCC") to which such security is or may be subject, other than
---
those set forth in the Loan Documents (as defined in that certain Credit
Agreement, dated as of the date hereof, by and among the Borrower, the
Lenders party thereto and The Bank of New York, as Administrative Agent and
Bank of America NT & SA, as Documentation Agent, as amended, supplemented or
otherwise modified from time to time) or [LIST APPLICABLE ORGANIZATIONAL
DOCUMENTS].
The Issuer hereby agrees, at the request of the Administrative Agent and
at the expense of the Issuer, to register any further assignment or transfer of
the foregoing security effected in the manner contemplated by the Agreement
and promptly to furnish to the Administrative Agent and any such assignee or
transferee any statement contemplated by Section 8-408 of the UCC.
[NAME OF ISSUER]
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
-2-
<PAGE>
IN WITNESS WHEREOF, the Guarantor has caused this Assignment to be duly
executed by its duly authorized officer as of the day of , .
-- ----- ---------
[NAME OF GUARANTOR]
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
- 30 -
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this day of , , before me personally came
-- -- ----
, to me known, who, being by me duly sworn, did depose and say that he
- --------
resides at ; that he is the of [NAME OF GUARANTOR], the
------------------ ---------
corporation described in and which executed the above instrument, and that he
signed his name thereto by order of the board of directors thereof.
----------------------------
Notary Public
[Notary's Stamp]
-31-
<PAGE>
Schedule 1
to
Grant of Security Interest (Patents)
Dated as of ____________
-32-
<PAGE>
Annex C-2 to the Subsidiary Guaranty
and Security Agreement
Dated as of September 25, 1997
FORM OF GRANT OF SECURITY INTEREST (TRADEMARKS)
-----------------------------------------------
[NAME OF GUARANTOR], a _______________ corporation (the "Guarantor"),
---------
is obligated to THE BANK OF NEW YORK, as Administrative Agent (the
"Administrative Agent"), and has entered into a Subsidiary Guaranty and
--------------------
Security Agreement, dated as of September 25, 1997 (as the same may be amended,
supplemented or otherwise modified from time to time, the "Agreement"), by and
---------
among each Guarantor party thereto, SALEM COMMUNICATIONS CORPORATION (the
"Borrower") and THE BANK OF NEW YORK, as Administrative Agent (in such capacity,
--------
the "Administrative Agent").
--------------------
Pursuant to the Agreement, the Guarantor granted to the Administrative
Agent a security interest in all of the right, title and interest of the
Guarantor in and to the trademarks listed on Schedule 1, which trademarks are
registered in the United States Patent and Trademark Office (the "Trademarks"),
----------
together with the goodwill of the business symbolized by the Trademarks and the
applications and registrations therefor, and all proceeds thereof, any and all
causes of action which may exist by reason of infringement thereof (the
"Collateral"), to secure the prompt payment, performance and observance of the
Guarantor Obligations (as defined in the Agreement).
For good and valuable consideration, the receipt of which is hereby
acknowledged, and for the purpose of recording the grant of the security
interest as aforesaid, the Guarantor does hereby further assign to the
Administrative Agent, and grant to the Administrative Agent a security interest
in, the Collateral to secure the prompt payment, performance and observance of
the Guarantor Obligations.
The Guarantor does hereby further acknowledge and affirm that the
rights and remedies of the Administrative Agent with respect to the assignment
of and security interest in the Collateral made and granted hereby are set forth
in the Agreement, the terms and provisions of which are hereby incorporated
herein by reference as if fully set forth herein.
Upon the indefeasible cash payment in full of all Guarantor
Obligations (as such term is defined in the Agreement), the Administrative Agent
will take whatever actions are necessary at the Guarantor's expense to release
or reconvey to the Guarantor all right, title and interest of the Guarantor in
and to the Trademarks.
The Administrative Agent's address is: One Wall Street, New York, New
York 10286.
-33-
<PAGE>
IN WITNESS WHEREOF, the Guarantor has caused this Assignment to be
duly executed by its duly authorized officer as of the __ day of ________, ____.
[NAME OF GUARANTOR]
By: __________________________
Name: ________________________
Title:________________________
-34-
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this __ day of ____________, ____, before me personally came
________________, to me known, who, being by me duly sworn, did depose and say
that he resides at ________________; that he is the _______ of [NAME OF
GUARANTOR], the corporation described in and which executed the above
instrument, and that he signed his name thereto by order of the board of
directors thereof.
______________________________
Notary Public
[Notary's Stamp]
-35-
<PAGE>
Schedule 1
to
Grant of Security Interest (Trademarks)
Dated as of ____________
-36-
<PAGE>
SALEM EXHIBIT K
---------------
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
-------------------------------------------
This Assignment and Assumption Agreement is made and entered into as of
_______________, by and between __________ (the "Assignor") and __________ (the
--------
"Assignee").
R E C I T A L S
- - - - - - - -
A. Capitalized terms used herein which are not defined herein shall have
the meanings set forth in the Credit Agreement (as hereinafter defined).
B. The Assignor, certain other lenders (together with any prior
assignees, the "Lenders") and The Bank of New York, as Administrative Agent (the
-------
"Administrative Agent"), and Bank of America NT&SA, as Documentation Agent, are
--------------------
parties to that certain Credit Agreement, dated as of September 25, 1997 (as
amended, modified or otherwise supplemented, the "Credit Agreement"), with Salem
----------------
Communications Corporation, a California corporation (the "Borrower"). Pursuant
--------
to the Credit Agreement, the Lenders agreed to make RC Loans to the Borrower
under the RC Commitments in the aggregate amount of $75,000,000 and the Issuing
Bank agreed to issue Letters of Credit under the Letter of Credit Commitment in
the aggregate amount of $15,000,000. The amount of the Assignor's RC Commitment
is specified in Item 1 of Schedule 1 hereto. The type and outstanding principal
amount of the Assignor's RC Loans are specified in Item 2 of Schedule 1 hereto.
The Assignor's Letter of Credit Exposure is specified in Item 3 of Schedule 1
hereto.
C. The Assignor wishes to sell and assign to the Assignee, and the
Assignee wishes to purchase and assume from the Assignor, (i) the portion of the
Assignor's RC Commitment specified in Item 4 of Schedule 1 hereto (the "Assigned
--------
Commitment"), (ii) the portion of the Assignor's RC Loans specified in Item 5 of
- ----------
Schedule 1 hereto (the "Assigned Loans") and (iii) the portion of the Assignor's
--------------
Letter of Credit Exposure specified in Item 7 of Schedule 1 hereto (the
"Assigned Letter of Credit Exposure").
----------------------------------
The parties agree as follows:
1. Assignment. Subject to the terms and conditions set forth herein and
----------
in the Credit Agreement, the Assignor hereby sells and assigns to the Assignee,
and the Assignee hereby purchases and assumes from the Assignor, without
recourse, on the date set forth above (the "Assignment Date") all right, title,
---------------
interest and obligations under the Credit Agreement and the other Loan Documents
of the Assignor in and with respect to the Assigned Loans, the Assigned Letter
of Credit Exposure and the Assigned Commitments. As full consideration for the
sale of the Assigned Loans, the Assigned Letter of Credit Exposure and the
Assigned Commitment, the Assignee shall pay to the Assignor on the Assignment
Date the principal amount of the Assigned Loans (the "Purchase Price").
--------------
2. Representation and Warranties. Each of the Assignor and the Assignee
-----------------------------
represents and warrants to the other that (a) it has full power and legal right
to execute and deliver this Agreement and to perform the provisions of this
Agreement; (b) the execution,
<PAGE>
delivery and performance of this Agreement have been authorized by all action,
corporate or otherwise, and do not violate any provisions of its charier or by-
laws or any contractual obligations or requirement of law binding on it; and (c)
this Agreement constitutes its legal, valid and binding obligation, enforceable
against it in accordance with its terms.
3. Condition Precedent. The obligations of the Assignor and the Assignee
-------------------
hereunder shall be subject to the fulfillment of the condition that the Assignor
shall have (a) received payment in full of the Purchase Price, and (b) complied
with the other applicable provisions of section 11.7 of the Credit Agreement.
4. Notice of Assignment. The Assignor agrees to give notice of the
--------------------
assignment and assumption of the Assigned Loans, the Assigned Letter of Credit
Exposure and the Assigned Commitment to the Administrative Agent and the
Borrower and hereby instructs the Administrative Agent and the Borrower to make
all payments with respect to the Assigned Loans, the Assigned Letter of Credit
Exposure and the Assigned Commitment directly to the Assignee at the applicable
Lending Offices specified in Item 8 on Schedule 1 hereto; provided, however,
that the Borrower and the Administrative Agent shall be entitled to continue to
deal solely and directly with the Assignor in connection with the interests so
assigned until the Administrative Agent and the Borrower shall have received
notice of the assignment, the Administrative Agent and the Issuing Bank (to the
extent required by section 11.7 of the Credit Agreement) shall have consented in
writing thereto, and the Administrative Agent shall have recorded and accepted
this Agreement and received the Assignment Fee required to be paid pursuant to
section 11.7 of the Credit Agreement. From and after the date (the "Effective
---------
Date") on which the Administrative Agent shall notify the Borrower and the
- ----
Assignor that the requirements set forth in the foregoing sentence shall have
occurred and all consents (if any) required shall have been given, (i) the
Assignee shall be deemed to be a party to the Credit Agreement and, to the
extent that rights and obligations thereunder shall have been assigned to
Assignee as provided in such notice of assignment to the Administrative Agent,
shall have the rights and obligations of a Lender under the Credit Agreement,
and (ii) the Assignee shall be deemed to have appointed the Administrative Agent
to take such action as Administrative Agent on its behalf and to exercise such
powers under the Loan Documents as are delegated to the Administrative Agent by
the terms thereof, together with such powers as are reasonably incidental
thereto. After the Effective Date, the Administrative Agent shall make all
payments in respect of the interest assigned hereby (including payments of
principal, interest, fees and other amounts) to the Assignee. The Assignor and
Assignee shall make all appropriate adjustment in payments under the Assigned
Loans, the Assigned Letter of Credit Exposure and the Assigned Commitment for
periods prior to the Effective Date hereof directly between themselves. The
Assignee agrees to deliver to the Borrower and the Administrative Agent such
Internal Revenue Service forms as may be required to establish that the Assignee
is entitled to receive payments under the Credit Agreement without deduction or
withholding of tax.
5. Independent Investigation. The Assignee acknowledges that it is
-------------------------
purchasing the Assigned Loans, the Assigned Letter of Credit Exposure and the
Assigned Commitment from the Assignor totally without recourse and, except as
provided in Section 2 hereof, without representation or warranty. The Assignee
further acknowledges that it has made its own independent investigation and
credit evaluation of the Borrower and the other Loans Parties in connection with
its purchase of the Assigned Loans, the Assigned Letter of Credit Exposure and
the Assigned Commitment. Except for the
-2-
<PAGE>
representations or warranties set forth in Section 2, the Assignee acknowledges
that it is not relying on any representation or warranty of the Assignor,
expressed or implied, including without limitation, any representation or
warranty relating to the legality, validity, genuineness, enforceability,
collectibility, interest rate, repayment schedule or accrual status of the
Assigned Loans, the Assigned Letter of Credit Exposure or the Assigned
Commitment, the legality, validity, genuineness or enforceability of the Credit
Agreement, the related Notes, or any other Loan Document referred to in or
delivered pursuant to the Credit Agreement, or financial condition or
creditworthiness of the Borrower or any other Person. The Assignor has not and
will not be acting as either the representative, Administrative Agent or trustee
of the Assignee with respect to matters arising out of or relating to the Credit
Agreement or this Agreement. From and after the Effective Date, except as set
forth in Section 4 above, the Assignor shall have no rights or obligations with
respect to the Assigned Loans, the Assigned Letter of Credit Exposure or the
Assigned Commitment.
6. Method of Payment. All payments to be made by either party hereunder
-----------------
shall be in funds available at the place of payment on the same day and shall be
made by wire transfer to the account designated by the party to receive payment.
7. Integration. This Agreement shall supersede any prior agreement or
-----------
understanding between the parties (other than the Credit Agreement) as to the
subject matter hereof.
8. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be deemed to be an original and shall be
binding upon both parties, their successors and assigns.
9. Headings. Section headings have been inserted herein for convenience
--------
only and shall not be construed to be a part hereof.
10. Amendments; Waivers. This Agreement may not be amended, changed,
-------------------
waived or modified except by a writing executed by the parties hereto, and may
not be amended, changed, waived or modified in any manner inconsistent with
section 11.7 of the Credit Agreement without the prior written consent of the
Administrative Agent.
11. Governing Law. This Agreement shall be governed by, and construed in
-------------
accordance with the laws of, the State of New York.
[ASSIGNOR]
By: _______________________________
Title: ____________________________
[ASSIGNEE]
By: ________________________________
Title:______________________________
-3-
<PAGE>
Consented and Accepted:
THE BANK OF NEW YORK, as Administrative Agent
By: ______________________________
Title: ___________________________
Consented:
THE BANK OF NEW YORK, as Issuing Bank
By: ______________________________
Title: ___________________________
-4-
<PAGE>
SCHEDULE 1
TO
ASSIGNMENT AND ASSUMPTION AGREEMENT
relating to the
Credit Agreement, dated as of September 25, 1997, by and among Salem
Communications Corporation, the Lenders party thereto, The Bank of New
York, as Administrative Agent, and Bank of America NT&SA, as Documentation
Agent, as amended, modified or otherwise supplemented.
Item 1. Assignor's RC Commitment $______________
Item 2. Assignor's RC Loans $______________
consisting of:
ABR Loans $______________
Eurodollar Loans $______________
Item 3. Assignor's Letter of $______________
Credit Exposure
Item 4. Amount of Assigned RC $______________
Commitment
Item 5. Percentage of RC
Commitment Assigned
as a percentage of
the aggregate RC
Commitments of all
Lenders _________%
Item 6. Amount of Assigned RC Loans $______________
consisting of:
ABR Loans $______________
Eurodollar Loans $______________
Item 7. Amount of Assigned Letter
of Credit Exposure $______________
Item 8. Applicable Lending Offices
of Assignee and Address for
Notices pursuant to section
11.2 of the Credit Agreement
<PAGE>
Applicable Applicable
Lending Lending Office
Office for ABR for Eurodollar Address
Loans Loans for Notices
- ------------- --------------- -----------
_____________ _______________ ___________
_____________ _______________ ___________
Attention: Attention: Attention:
Telephone: Telephone: Telephone:
Telecopier: Telecopier: Telecopier:
-2-
<PAGE>
SALEM COMMUNICATIONS CORPORATION
SCHEDULE 1.1(L)
LIST OF APPLICABLE LENDING OFFICES
----------------------------------
APPLICABLE LENDING OFFICE
FOR BASE RATE LOANS APPLICABLE LENDING OFFICE
AND CD RATE LOANS FOR LIBOR RATE LOANS
------------------------- --------------------------
1. The Bank of New York 1. The Bank of New York
One Wall Street One Wall Street
New York, New York 10286 New York, New York 10286
Attention: Michael Pizarro Attention: Michael Pizarro
Telephone: (212) 635-4697 Telephone: (212) 635-4697
Telecopy: (212) 635-6365 Telecopy: (212) 635-6365
2. Bank of America NT & SA 2. Bank of America NT & SA
333 So. Beaudry - 19th Floor 333 So. Beaudry - 19th Floor
Los Angeles, CA 90071 Los Angeles, CA 90071
Attention: Yolanda Monarrez Attention: Yolanda Monarrez
Telephone: (213) 345-6534 Telephone: (213) 345-6534
Telecopy: (213) 345-6550 Telecopy: (213) 345-6550
3. BankBoston, N.A. 3. BankBoston, N.A.
100 Federal Street 100 Federal Street
MS 01-08-08 MS 01-08-08
Boston, MA 02110 Boston, MA 02110
Attention: Steve Lynn Attention: Steve Lynn
Telephone: (617) 434-9627 Telephone: (617) 434-9627
Telecopy: (617) 434-9829 Telecopy: (617) 434-9829
4. Fleet Bank, N.A. 4. Fleet Bank, N.A.
60 East 42nd Street - 3rd F1. 60 East 42nd Street - 3rd Fl.
New York, NY 10017 New York, NY 10017
Attention: Garrett Komjathy Attention: Garrett Komjathy
Telephone: (212) 907-5677 Telephone: (212) 907-5677
Telecopy: (212) 907-5627 Telecopy: (212) 907-5627
Address as of 9/29/97: Address as of 9/29/97:
Fleet National Bank Fleet National Bank
1185 Avenue of the Americas 1185 Avenue of the Americas
16th Floor 16th Floor
New York, NY 10036 New York, NY 10036
Attention: Garrett Komjathy Attention: Garrett Komjathy
Telephone: (212) 819-6043 Telephone: (212) 819-6043
Telecopy: (212) 819-6202 Telecopy: (212) 819-6202
<PAGE>
5. Union Bank of California, N.A. 5. Union Bank of California, N.A.
445 South Figueroa Street 445 South Figueroa Street
7th Floor 7th Floor
Los Angeles, CA 90071 Los Angeles, CA 90071
Attention:______________ Attention: ______________
Telephone: (___) ___-____ Telephone: (___) ___-____
Telecopy: (___) ___-____ Telecopy: (___) ___-____
-2-
<PAGE>
SCHEDULE 4.1
------------
TO CREDIT AGREEMENT
-------------------
Schedule 4.1 to the Credit Agreement
Dated as of September 25, 1997
LIST OF SUBSIDIARIES
--------------------
NOTE: All listed entities are corporations except Beltway Media Partners,
which is a general partnership. Salem Communications Corporation
("Salem"), New Inspiration Broadcasting, Inc. and Golden Gate
Broadcasting, Inc. are the sole partners of Beltway Media Partners.
ATEP Radio, Inc.
Beltway Media Partners
Bison Media, Inc.
Caron Broadcasting, Inc.
Common Ground Broadcasting, Inc.
Golden Gate Broadcasting Co., Inc.
Inland Radio, Inc.
Inspiration Media of Texas, Inc.
Inspiration Media, Inc.
New England Continental Media, Inc.
New Inspiration Broadcasting Co., Inc.
Oasis Radio, Inc.
Pennsylvania Media Associates, Inc.
Radio 1210, Inc.
Salem Communications Corporation, a Delaware corporation
Salem Media Corporation
Salem Media of California, Inc.
Salem Media of Colorado, Inc.
Salem Media of Louisiana, Inc.
Salem Media of Ohio, Inc.
Salem Media of Oregon, Inc.
Salem Media of Pennsylvania, Inc.
Salem Media of Texas, Inc.
Salem Music Network, Inc.
Salem Radio Network Incorporated
Salem Radio Representatives, Inc.
South Texas Broadcasting, Inc.
SRN News Network, Inc.
Vista Broadcasting, Inc.
<PAGE>
SCHEDULE 4.6
------------
TO CREDIT AGREEMENT
-------------------
Schedule 4.6 to the Credit Agreement
Dated as of September 25, 1997
BORROWER'S MATERIAL LITIGATION
------------------------------
None.
<PAGE>
SCHEDULE 4.7
------------
TO CREDIT AGREEMENT
-------------------
SCHEDULE 4.7 TO THE CREDIT AGREEMENT
DATED AS OF SEPTEMBER 25, 1997
BORROWER'S CONFLICTING AGREEMENTS
---------------------------------
None.
<PAGE>
SCHEDULE 4.8
------------
TO CREDIT AGREEMENT
-------------------
SCHEDULE 4.8 TO THE CREDIT AGREEMENT
DATED AS OF SEPTEMBER 25, 1997
BORROWER'S TAXES
----------------
None.
<PAGE>
SCHEDULE 4.11(b)
TO CREDIT AGREEMENT
Schedule 4.11(b) to the Credit Agreement
Dated as of September 25, 1997
LIST OF PROPERTY
----------------
The following is a summary description of all real property owned and all
real property leasehold estates held by each Borrower and its Subsidiaries:
ATEP Radio, Inc. The Corporation leases office and studio space in a building in
- ---------------
Oxnard, California, from Martin V. Smith & Associates under a lease expiring in
2002. The Corporation licenses the main antenna site in Ventura, California,
from Fox/Loe Properties under a lease agreement expiring in 2006, with three (3)
options to extend the term by five (5) years each.
Beltway Media Partners. The Partnership leases office and studio space in
- ----------------------
Arlington, Virginia, from Rosslyn Building East, L.P. under a lease expiring in
2005. The Partnership leases antenna tower space in Arlington, Virginia, from
WAVA Building Limited Partnership under a lease expiring in 2047. However, the
Partnership may terminate the tower lease with one-year's notice.
BISON Media, Inc. The Corporation leases office space from Cambridge Holdings,
- ----------------
Ltd. under a lease expiring in 2002. The Corporation leases antenna and
transmitter space from Cheyenne Propagation under leases expiring in 2005
(KBIQ), 2003 (KGFT) and 2002 (KPRZ). The Corporation leases studio space in
Spokane, Washington from Walter B. Worthy under lease terminable by either party
upon 90 days notice. The Corporation leases antenna and transmitter space in
Washington from James Codiga under a lease expiring in 2001 with the option to
renew for five (5) successive periods of five (5) years each.
Caron Broadcasting. Inc. The Corporation leases office/studio space for WHK and
- ------------------------
WHLO from S&S Realty Investments under a lease expiring in 1998, with two
options to renew for five (5) years each. The Corporation leases transmitter
space for WHK & WTSJ from Messrs. Atsinger and Epperson under lease expiring in
2007; for WITH from Curtain Avenue Limited under a lease expiring in 1998; and
for WCCD from Walter Oschek under a lease expiring in 2022. The Corporation
leases office/studio space for WITH from Executive Offices Corporation under a
lease expiring in 1998; and, for WTSJ from Messrs. Atsinger and Epperson under
lease expiring in 2007.
Common Ground Broadcasting. Inc. The Corporation leases office space in Phoenix,
- --------------------------------
Arizona, from Esplanade Office Limited Partnership under a lease expiring in
2006 and antenna and transmitter space from Johnaquille J. Hegel under a lease
expiring in 2016. The Corporation lease office and transmitter space in Eagan,
Minnesota, from Messrs. Atsinger and Epperson under a lease expiring in 2006.
The Corporation leases office space in Cleveland, Ohio under lease from Summit
Office Park Limited Partnership expiring in 2009 and leases antenna and
transmitter space in Seven Hills, Ohio from Messrs. Atsinger and Epperson under
a lease expiring in 2007.
<PAGE>
Golden Gate Broadcasting Company, Inc. The Corporation leases office and studio
- --------------------------------------
space in Fremont, California, from San Francisco Federal Savings & Loan under a
lease expiring in 1999. The antenna and tower site, consisting of 11 acres of
land in Hayward, California, is leased from Salem Broadcasting Company, a
partnership consisting of Messrs. Atsinger and Epperson, under a lease expiring
in 2003.
Inland Radio, Inc. The Corporation leases the studio and transmitter site,
- ------------------
consisting of three acres of land and two buildings in San Bernardino,
California, from Messrs. Atsinger and Epperson under a lease expiring in 2002.
Inspiration Media of Texas. The Corporation leases office space in Irving,
- ---------------------------
Texas, from TRST Las Colinas, Inc. under a lease expiring in 2001. The antenna
site is leased from Aretex Corporation under a lease expiring in 2005.
Inspiration Media, Inc. The Corporation leases office and studio space in
- -----------------------
Seattle, Washington, from Inter Co-op USA, No. 2 under a lease expiring in 2000,
with an option to extend the lease for an additional five years. The transmitter
site for KGNW, consisting of 20 acres of land located on Vashon Island near
Seattle, Washington, is leased by the Corporation from Messrs. Atsinger and
Epperson under a lease expiring in 2002. The transmitter site for KLFE,
consisting of 12 acres on Bainbridge Island near Seattle, Washington, is leased
by the Corporation from Messrs. Atsinger and Epperson under a lease expiring in
2004.
New England Continental Media, Inc. The Corporation leases office and studio
- -----------------------------------
space in Quincy, Massachusetts, from 500 Victory Road Associates Limited
Partnership under a lease expiring in 1999. The transmitter site for WPZE is
leased by the Corporation from Messrs. Atsinger and Epperson under a lease
expiring in 2007. The transmitter site for WEZE is leased from the Fellsway
Plaza Trust under a Lease expiring in 2008.
New Inspiration Broadcasting Company, Inc. The Corporation leases office and
- ------------------------------------------
studio space in Glendale, California, from 701 N. Brand Partnership under a
lease expiring in 2002. The Corporation leases an antenna and transmitter site
on Mt. Wilson, California, from KCET-TV under a lease expiring in 1999. A backup
antenna and transmitter site is located on Flint Peak in Glendale, California,
and is leased from KPWR, Inc. under a lease expiring in 1997.
Oasis Radio, Inc. The Corporation leases office and studio space in Lancaster,
- -----------------
California, from Fischer Industrial Properties under a lease expiring in 1999.
The transmitter site, consisting of nine acres of land in Rosamond, California,
is leased from the Atsinger Family Trust under a lease expiring in 2002.
Pennsylvania Media Associates, Inc. The Corporation leases studio and
- -----------------------------------
transmitter (WZZD) property in Lafayette Hill, Pennsylvania, from Messrs.
Atsinger and Epperson under a lease expiring in 2004. The Corporation leases
antenna tower space for WFIL in Lafayette Hill, Pennsylvania, from Messrs.
Atsinger and Epperson under a lease expiring in 1998, with options to renew for
an additional 15 years.
Radio 1210, Inc. The Corporation leases office and studio space in San Diego,
- ----------------
California, from Radnor/La Jolla Center Partnership under a lease expiring in
2001. The transmitter site, consisting of 11 acres of land in Olivenhain,
California, is leased from the Atsinger Family. Trust under a lease expiring in
2002.
Salem Communications Corporation. The Corporation leases office space in
- ---------------------------------
Camarillo, California, from the Pardee Construction Company under a lease
expiring in 2000.
-2-
<PAGE>
Salem Media Corporation The Corporation leases office and studio space in
- -----------------------
Rutherford, New Jersey, from HIP-Linque Partners One, L.P. under a lease
expiring in 2001. The Corporation owns a perpetual easement to use the
transmitter site in Kearney, New Jersey for WMCA. The transmitter site for WWDJ
in Hackensack is leased by the Corporation from Industrialand Associates under a
lease expiring in 2016. The Corporation leases office and studio space in Elk
Grove Village, Illinois, from Metropolitan Life Insurance Company under a lease
expiring in 2002. The transmitter site is located in Arlington Heights,
Illinois, and is leased by the Corporation from Messrs. Atsinger and Epperson
under a lease expiring in 2002.
Salem Media of California, Inc. The Corporation shares studios with New
- -------------------------------
Inspiration Media, Inc. and a transmitter site consisting of six acres of
property in Paramount, California, from Messrs. Atsinger and Epperson under
leases expiring in 2002.
Salem Media of Colorado, Inc. The Corporation leases office and studio space in
- -----------------------------
Aurora, Colorado from Plaza Place Corporation under a lease expiring in 2006.
The Corporation leases the AM antenna and transmitter site from the KRKS General
Partnership under a lease expiring in 1999. The Corporation leases the FM
transmitter and antenna site from Sterling Realty Organization under a lease
expiring in 2018. The Corporation leases the KNUS tower site from Messrs.
Atsinger and Epperson under a lease expiring in 2006.
Salem Media of Ohio, Inc. The Corporation leases office and studio space in
- -------------------------
Columbus, Ohio, from Eastrich No. 152 Corporation under a lease expiring in
2005. The transmitter site in Columbus, Ohio, is leased by the Corporation from
Messrs. Atsinger and Epperson under a lease expiring in 2002.
Salem Media of Oregon, Inc. The Corporation leases the office and studio
- ---------------------------
building in Portland, Oregon, from Messrs. Atsinger and Epperson under a lease
expiring in 2002. The Corporation also leases the AM transmitter site,
consisting of 15 acres in Raleigh Hills, Oregon, from Messrs. Atsinger and
Epperson under a lease expiring in 2002. The Corporation leases the FM
transmitter site in Portland, Oregon, from KSGO/KGON, Inc. under a lease
expiring in 2000.
Salem Media of Pennsylvania, Inc. The Corporation leases offices and studio
- ---------------------------------
space in Pittsburgh, Pennsylvania, from PWC Associates under a lease expiring in
2001. The Corporation leases the transmitter site in Pittsburgh, Pennsylvania,
from Messrs. Atsinger and Epperson under a lease expiring in 2003.
Salem Media of Texas, Inc. The Corporation lease office and studio space in San
- --------------------------
Antonio, Texas, from Fiesta Properties under a lease expiring in 2002 with an
option to renew for five (5) years. The transmitter site located on Gonzalez
Road in San Antonio is leased from Messrs. Atsinger and Epperson under a lease
expiring in 2004.
Salem Music Network, Inc. The Corporation leases office space in Colorado
- -------------------------
Springs, Colorado, from Bethesda Management Company under a lease expiring in
2003 and in Nashville, Tennessee, from the Equitable Life Assurance Society of
the United States under a lease expiring in 1997.
Salem Radio Network Incorporated The Corporation leases office space in Irving,
- --------------------------------
Texas, from TRST Last Colinas, Inc. under a lease expiring in 2001. The
Corporation leases office space in Arlington, Virginia, from Rosslyn Building
East, L.P. under a lease expiring in 2005.
-3-
<PAGE>
Salem Radio Representatives, Inc. The Corporation leases office space in
- ---------------------------------
Irving, Texas, from Cambridge/Las Colinas Limited Parmership under a lease
expiring in 1997. The Corporation shares office space with WAVA (Arlington,
Virginia), WYLL (Elk Grove, Illinois), KGNW (Seattle, Washington), Salem Music
Network, Inc. (Nashville, Tennessee) and Salem Communications Corporation
(Camarillo, California).
South Texas Broadcasting. Inc. The Corporation leases office and studio space in
- ------------------------------
Houston, Texas, from American National Insurance Company under two leases
expiring in 2000 and 2005, respectively. The FM transmitter site, located in San
Jacinto County, Texas, and the AM transmitter site, located in Harris County,
Texas, are leased from Messrs. Atsinger and Epperson under a lease expiring in
2005.
SRN News Network, Inc. The Corporation leases office space in Arlington,
- ----------------------
Virginia, from Rosslyn Building East Limited Partnership under a lease expiring
in 2005.
Vista Broadcasting. Inc. The Corporation leases office and studio space in
- ------------------------
Sacramento, California, from P. T. West Associates, L.P. under a lease expiring
in 2007. The antenna site for KFIA is leased from Messrs. Atsinger and Epperson
under a lease expiring in 2005. The antenna site for KMJI is leased from Krisik,
et. al., under a lease expiring in 2029 and from Messrs. Tracy under a lease
expiring in 1999.
-4-
<PAGE>
SCHEDULE 4.11(c)
TO CREDIT AGREEMENT
Schedule 4.11(c) to the Credit Agreement
Dated as of September 25, 1997
FCC MATTERS
-----------
None.
<PAGE>
SCHEDULE 4.14
-------------
TO CREDIT AGREEMENT
-------------------
Schedule 4.14 to the Credit Agreement
Dated as of September 25, 1997
BORROWER'S TAXES
----------------
1. The Borrower provides a 401(k) Savings Plan to employees for the purposes
of providing retirement benefits to full-time employees of the Borrower and
its Subsidiaries.
<PAGE>
SCHEDULE 4.18
-------------
TO CREDIT AGREEMENT
-------------------
Schedule 4.18 to the Credit Agreement
Dated as of September 25, 1997
BORROWER'S ENVIRONMENTAL MATTERS
--------------------------------
None.
<PAGE>
SCHEDULE 8.1
------------
TO CREDIT AGREEMENT
-------------------
Schedule 8.1 to the Credit Agreement
Dated as of September 25, 1997
LIST OF BORROWINGS
------------------
None.
<PAGE>
SCHEDULE 8.2
------------
TO CREDIT AGREEMENT
-------------------
Schedule 8.2 to the Credit Agreement
Dated as of September 25, 1997
LIST OF LIENS
-------------
1. Liens on the property of Borrower or its Subsidiaries arising out of or
relating to the Existing Credit Agreement.
<PAGE>
SCHEDULE 8.5(c)
---------------
TO CREDIT AGREEMENT
-------------------
Schedule 8.5(c) to the Credit Agreement
Dated as of September 25, 1997
BORROWER'S INVESTMENTS, LOANS, ETC.
-----------------------------------
1. Borrower loaned $350,000 to Truth for Life, an Ohio non-profit corporation,
pursuant to a Loan Agreement dated January 9, 1995, as amended July 1,
1996.
<PAGE>
EXHIBIT 4.08
BORROWER SECURITY AGREEMENT
---------------------------
BORROWER SECURITY AGREEMENT (as the same may be amended, supplemented or
otherwise modified from time to time, this "Agreement"), dated as of September
---------
25, 1997, by and between SALEM COMMUNICATIONS CORPORATION, a California
corporation (the "Borrower"), and THE BANK OF NEW YORK (the "Administrative
-------- --------------
Agent"), in its capacity as Administrative Agent for the Lenders under the
- -----
Credit Agreement referred to below and the Rate Protection Lenders as defined
therein.
RECITALS
--------
I. Reference is made to the Credit Agreement, dated as of the date
hereof, by and among the Borrower, the Lenders party thereto, the Administrative
Agent, and Bank of America NT&SA, as Documentation Agent (as the same may be
amended, supplemented or otherwise modified from time to time, the "Credit
------
Agreement").
- ---------
II. It is a condition precedent to the making of all loans and all other
extensions of credit under the Credit Agreement that the Borrower shall have
executed and delivered this Agreement.
Therefore, in consideration of the Recitals, the terms and conditions
herein contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrower and the
Administrative Agent hereby agree as follows:
1. Defined Terms
-------------
(a) Capitalized terms used herein which are not otherwise defined
herein shall have the respective meanings ascribed thereto in the Credit
Agreement.
(b) When used in this Agreement, the following capitalized terms shall
have the respective meanings ascribed thereto as follows:
"Collateral": as defined in section 2.
----------
"Equity Interest": (i) with respect to a corporation, the capital
---------------
stock thereof, (ii) with respect to a partnership, a partnership interest
therein, all rights of a partner in such partnership, whether arising under the
partnership agreement of such partnership or otherwise; (iii) with respect to a
limited liability company, a membership interest therein, all rights of a member
of such limited liability company, whether arising under the limited liability
company agreement of such limited liability company or otherwise; (iv) with
respect to any other firm, association, trust, business enterprise or other
entity, any equity interest therein, any interest therein which entitles the
holder thereof to share in the revenue, income, earnings or losses thereof or to
vote or otherwise participate in any election of one or more members of the
Managing Person thereof, and (v) all warrants and options in respect of any of
the foregoing and all other securities which are convertible or exchangeable
therefor.
<PAGE>
"Event of Default": as defined in section 6.
----------------
"Financing Statements": the UCC financing statements executed by
--------------------
the Borrower and delivered pursuant to the Credit Agreement.
"Grants of Security Interests": collectively, the Grant of
----------------------------
Security Interest (Patents) and the Grant of Security Interest (Trademarks), in
the form of Annexes B-1 and B-2 hereto, respectively, in each case appropriately
completed and signed by the Borrower.
"NYUCC": the UCC as in effect in the State of New York on the
-----
date hereof.
"Obligations": all of the obligations and liabilities of the
-----------
Borrower under the Loan Documents and under each Interest Rate Protection
Arrangement entered into by the Borrower with a Rate Protection Lender, in each
case whether fixed, contingent, now existing or hereafter arising, created,
assumed, incurred or acquired, as such obligations and liabilities may be
amended, increased, modified, renewed, refinanced by the Administrative Agent
and the Lenders, refunded or extended from time to time.
"Office Location": as defined in section 3(a).
---------------
"Patents": all patents issued under the laws of the United
-------
States of America and all patent applications filed with the United States
Patent and Trademark Office, and all of the rights associated with each of the
foregoing.
"Proceeds": as defined in the NYUCC, together with (i) all
--------
dividends, distributions and income on and in respect of all of the Securities
and Instruments and all other rights and benefits in respect thereof, and
(ii) with respect to the Patents and Trademarks, all renewals thereof, all
proceeds of infringement suits, all rights to sue for infringement, all license
royalties, all reissues, divisions, continuations, extensions and continuations-
in-part thereof.
"Rate Protection Lenders": collectively, the Lenders and any
-----------------------
affiliates of the Lenders which from time to time enter or have entered into
Interest Rate Protection Arrangements with the Borrower.
"Registrations": (i) patents issued under the laws of the United
-------------
States of America, (ii) patent applications filed with the United States Patent
and Trademark Office, and (iii) all registered trademarks.
"Trademarks": (i) all rights under the laws of the United States
----------
of America, and each State thereof, to trademarks, together with all
registrations thereof, applications therefor and all of the rights associated
therewith, and (ii) the goodwill of the Borrower's business symbolized by
registered trademarks.
"Transaction Statement": a transaction statement in the form of
---------------------
Annex A hereto.
- 2 -
<PAGE>
"UCC": with respect to any jurisdiction, Articles 1, 8 and 9 of
---
the Uniform Commercial Code as from time to time in effect in such jurisdiction.
(c) When used in this Agreement, the following capitalized terms shall
have the respective meanings ascribed thereto in the NYUCC: "Account",
-------
"Certificated Security", "Chattel Paper", "Document", "Equipment", "Fixture",
- ---------------------- ------------- -------- --------- -------
"General Intangible", "Instrument", "Inventory", "Issuer", "Secured Party",
- ------------------- ---------- --------- ------ -------------
"Security", "Security Interest" and "Uncertificated Security".
- --------- ----------------- -----------------------
2. Grant of Security Interest
--------------------------
To secure the prompt and complete payment, observance and performance
of the Obligations, the Borrower hereby grants to the Administrative Agent, for
its benefit and the ratable benefit of the Lenders, the Issuing Bank and the
Rate Protection Lenders, a Security Interest in and to all of the Borrower's
right, title and interest in and to all: Accounts, Chattel Paper, Documents,
Equipment, Fixtures, General Intangibles, Instruments, including, without
limitation, Instruments evidencing intercompany Indebtedness, Inventory,
Patents, Trademarks, Equity Interests in each Person which now is or may
hereafter become a Subsidiary of the Borrower, whether or not evidenced by a
Security, and all Proceeds of all of the foregoing, in each case whether now
owned or existing or hereafter arising or acquired, and including, without
limitation, all licenses, approvals, permits and other authorizations issued by
the FCC, including the Proceeds of any sale or other disposition thereof, in
each case to the extent that a security interest therein is not prohibited by
law, provided that to the extent that a security interest therein is now so
prohibited and to the extent that such security interest at any time hereafter
shall no longer be so prohibited, then such security interest shall
automatically and without any further action attach and become fully effective
at that time (giving effect to any retroactive effect to any change in
applicable law or regulation) (collectively, the "Collateral").
----------
3. Representations and Warranties
------------------------------
The Borrower hereby represents and warrants to the Administrative
Agent as follows:
(a) Chief Executive Office. As of the date hereof, the Borrower's
----------------------
place of business or, if the Borrower has more than one place of business, its
chief executive office, is, and has been continuously for the immediately
preceding 5 month period, located at the address set forth for notices to the
Borrower contained in the Credit Agreement (the "Office Location"). The
---------------
Borrower has not changed its legal name during the six year period immediately
preceding the date hereof.
(b) Information. As of the date hereof, all of the information set
-----------
forth on each of the Schedules hereto is true, complete and correct.
(c) Security Interest. This Agreement, together with the delivery to
-----------------
the Administrative Agent of the Certificated Securities constituting Collateral
and the continuous possession thereof by the Administrative Agent in the State
of New York, creates a continuing "enforceable" Security Interest in the
Collateral in favor of the Administrative Agent. Upon (i) the presentation for
filing of the Financing Statements at
- 3 -
<PAGE>
the respective offices listed thereon together with the appropriate filing fee
therefor, (ii) the delivery to the Administrative Agent of the Instruments
constituting the Collateral, and (iii) the registration, in accordance with
Article 8 of the NYUCC, of the Security Interest granted hereby on the books of
each Person which is an Issuer of an Uncertificated Security constituting the
Collateral, and (iv) the filing of the Grants of Security Interests in the
United States Patent and Trademark Office with respect to Patents,
Registrations, and Trademarks, (A) such Security Interest shall be perfected,
and (B) assuming that the Administrative Agent has acted in "good faith and
without notice of any adverse claim" within the meaning of Article 8 of the
NYUCC, the Administrative Agent shall be a "bona fide purchaser", within the
meaning of such Article, with respect to the Collateral consisting of
Securities.
(d) Absence of Liens. There are no Liens upon the Collateral
----------------
other than Permitted Liens, if any.
(e) Equity Interests. The Equity Interests listed on Schedule 3(e)
----------------
hereto constitute, as of the date hereof, all of the Equity Interests in each
Subsidiary in which the Borrower has any right, title or interest, and each such
Equity Interest issued by a corporate Issuer has been duly authorized, validly
issued and fully paid for, and is non-assessable. As of the Effective Date,
except as set forth on Schedule 3(e), (i) no Subsidiary of the Borrower has
issued any securities convertible into, or options or warrants for, any common
or preferred equity securities thereof and (ii) there are no agreements, voting
trusts or understandings binding upon the Borrower or any of its Subsidiaries
with respect to the voting securities of any of such Subsidiary or affecting in
any manner the sale, pledge, assignment or other disposition thereof, including
any right of first refusal, option, redemption, call or other right with respect
thereto, whether similar or dissimilar to any of the foregoing.
(f) Chattel Paper, Documents and Instruments. The Chattel Paper,
----------------------------------------
Documents and Instruments listed on Schedule 3(f) hereto constitute, as of the
date hereof, all of the Chattel Paper, Documents and Instruments which
constitute the Collateral, and, to the best of the Borrower's knowledge, all
such Chattel Paper, Documents and Instruments have been duly authorized, issued
and delivered, and constitute the legal, valid, binding and enforceable
obligations of the respective makers thereof.
(g) Accounts. As of the date hereof, all records concerning any
--------
Account constituting the Collateral are located at its Office Location, and no
such Account is evidenced by a promissory note or other instrument.
(h) Equipment and Inventory. Except for Equipment and Inventory in
-----------------------
transit with common carriers, the Borrower has exclusive possession and control
of all Equipment and Inventory constituting the Collateral, all of which is as
of the date hereof and has been continuously for the 5 month period immediately
preceding the date hereof, located at one or more of the places listed on
Schedule 3(h) hereto.
(i) Patents and Trademarks. The Borrower has no Registrations relating
----------------------
to Patents other than those listed on Schedule 3(i) hereto, and each such
Registration is subsisting and is not invalid or unenforceable, in whole or in
part , except to the extent that the unenforceability thereof could not
reasonably be expected to have a material adverse effect on the value of the
Patents taken as a whole. The Borrower has no
- 4 -
<PAGE>
Registrations relating to Trademarks other than those listed on Schedule 3(i)
hereto, and each such Registration is subsisting and has not been adjudged
invalid or unenforceable, in whole or in part , except to the extent that the
unenforceability thereof could not reasonably be expected to have a material
adverse effect on the value of the Trademarks taken as a whole. To the best of
the Borrower's knowledge, each Patent and Trademark constituting Collateral is
valid and enforceable. Except for Permitted Liens, the Borrower is the sole and
exclusive owner of the entire and unencumbered right, title and interest in and
to each of the Patents and Trademarks constituting Collateral, free and clear of
all Liens. To the best of the Borrower's knowledge, no claim has been made that
the use of any Patent or Trademark violates the rights of any third person. The
Borrower has used consistent standards of quality in its manufacture of products
sold under the Patents and Trademarks.
4. Covenants of the Borrower
-------------------------
The Borrower hereby covenants with the Administrative Agent as
follows:
(a) Chief Executive Office. The Borrower shall maintain its place of
----------------------
business, or if the Borrower has more than one place of business, its chief
executive office, at the Office Location or at such other location in respect of
which (A) the Borrower shall have provided the Administrative Agent with prior
written notice thereof, and (B) UCC financing statements (or amendments
thereto), in form and substance reasonably satisfactory to the Administrative
Agent, shall have been filed within two months of such change.
(b) Further Assurances. The Borrower shall, at its own expense,
------------------
promptly execute and deliver all certificates, documents, instruments, financing
and continuation statements and amendments thereto, notices and other
agreements, and take all further action, that the Administrative Agent may
reasonably request from time to time, in order to perfect and protect the
Security Interest granted hereby or to enable the Administrative Agent to
exercise and enforce its rights and remedies hereunder with respect to the
Collateral. The Borrower hereby irrevocably appoints the Administrative Agent
as the Borrower's true and lawful attorney-in-fact, in the name, place and stead
of the Borrower, to perform on behalf of the Borrower any and all obligations of
the Borrower under this Agreement, and the Borrower agrees that the power of
attorney herein granted constitutes a power coupled with an interest, provided,
however, that the Administrative Agent shall have no obligation to perform any
such obligation and such performance shall be at the sole cost and expense of
the Borrower. If the Borrower fails to comply with any of its obligations
hereunder, the Administrative Agent may do so in the Borrower's name or in the
Administrative Agent's name, but at the Borrower's expense, and the Borrower
hereby agrees to reimburse the Administrative Agent in full for all reasonable
expenses, including reasonable attorney's fees, incurred by the Administrative
Agent in connection therewith.
(c) Information. The Borrower at its own expense shall furnish to the
-----------
Administrative Agent such information, reports, statements and schedules with
respect to the Collateral as the Administrative Agent may reasonably request
from time to time.
- 5 -
<PAGE>
(d) Defense of Collateral. The Borrower at its own expense shall
---------------------
defend the Collateral against all claims of any kind or nature (other than
Permitted Liens, if any) of all Persons at any time claiming the same or any
interest therein adverse to the interests of the Administrative Agent, the
Issuing Bank, any Rate Protection Lender or any Lender, and the Borrower shall
not cause, permit or suffer to exist any Lien upon the Collateral other than
Permitted Liens, if any.
(e) Uncertificated Securities. The Borrower shall cause each Person
-------------------------
which is an Issuer of an Uncertificated Security constituting Collateral (i) to
register the Security Interest granted hereby upon the books of such Person in
accordance with Article 8 of the NYUCC, and (ii) to issue to the Administrative
Agent an initial Transaction Statement and issue to the Administrative Agent
subsequent Transaction Statements in accordance with Section 8-408 of the UCC in
effect in the State of New York.
(f) Delivery of Pledged Collateral. Each Certificated Security
------------------------------
representing an Equity Interest in a Person which is or shall become a
Subsidiary of the Borrower shall be promptly delivered to the Administrative
Agent, to be held by the Administrative Agent pursuant hereto, in suitable form
for transfer by delivery or accompanied by duly executed documents of transfer
or assignment in blank, all in form and substance satisfactory to the
Administrative Agent. The Borrower agrees that until so delivered, each such
Certificated Security shall be held by the Borrower in trust for the benefit of
the Administrative Agent and be segregated from the other Property of the
Borrower.
(g) Chattel Paper, Documents and Instruments. All of the Instruments,
----------------------------------------
Documents and Chattel Paper now or hereafter owned by or in the possession of
the Borrower which constitute Collateral (other than checks received in the
ordinary course of collection) shall be promptly delivered to the Administrative
Agent, to be held by the Administrative Agent pursuant hereto, in suitable form
for transfer by delivery or accompanied by duly executed documents of transfer
or assignment in blank, all in form and substance reasonably satisfactory to the
Administrative Agent. The Borrower agrees that, with respect to all items of
the Collateral which it is or shall hereafter be obligated to deliver to the
Administrative Agent, until so delivered such items shall be held by the
Borrower in trust for the benefit of the Administrative Agent and be segregated
from the other Property of the Borrower.
(h) Accounts. Except as otherwise provided in this section 4(h), the
--------
Borrower shall continue to collect in accordance with its customary practice, at
its own expense, all amounts due or to become due to the Borrower in respect of
the Borrower's Accounts and, prior to the occurrence of an Event of Default, the
Borrower shall have the right to adjust, settle or compromise the amount or
payment of any such Account, all in accordance with its customary practices. In
connection with such collections, the Borrower may take and, at the direction of
the Administrative Agent at any time that an Event of Default shall have
occurred and be continuing shall take, such action as the Borrower or the
Administrative Agent may reasonably deem necessary or advisable to enforce
collection of such Accounts.
(i) Equipment and Inventory. The Borrower shall keep the Equipment and
-----------------------
Inventory constituting Collateral at the places listed on Schedule 3(h)
- 6 -
<PAGE>
hereto, and at such other places located within the United States in respect of
which (i) the Borrower shall have provided the Administrative Agent with prior
written notice, and (ii) UCC financing statements (or amendments thereto), in
form and substance satisfactory to the Administrative Agent, shall have been
filed within two months of such change. The Borrower shall promptly furnish to
the Administrative Agent a statement respecting any material loss or damage to
any of the Equipment or Inventory constituting Collateral except to the extent
that such loss or damage shall be insured pursuant to policies required to be
maintained pursuant to the Credit Agreement.
(j) Patents and Trademarks. The Borrower will continue to use for the
----------------------
duration of this Agreement, consistent standards of quality in its manufacture
of products sold under the Patents and Trademarks constituting Collateral. The
Borrower shall give to the Administrative Agent prompt written notice thereof in
the event that the Borrower shall obtain any right to any new Patent or
Trademark or to any reissue, division, continuation, renewal, extension, or
continuation-in-part of any Patent or Trademark. The Borrower shall prosecute
diligently any applications of the Patents and Trademarks constituting
Collateral pending as of the date of this Agreement or thereafter, and preserve
and maintain all rights in applications of Patents and Trademarks constituting
Collateral consistent with past practice, including the payment of all
maintenance fees , except to the extent the failure so to preserve or maintain
such rights could not reasonably be expected to have a material adverse effect
on either (i) the value of the Patents taken as a whole, or (ii) the value of
the Trademarks taken as a whole. The Borrower shall not abandon any right to
file an application or any pending application for any Patent or Trademark
unless the failure so to do could not reasonably be expected to have a material
adverse effect on either (i) the value of the Patents taken as a whole, or
(ii) the value of the Trademarks taken as a whole. The Borrower agrees that it
will not enter into any agreement, including a license agreement, with respect
to any Patent or Trademark which is inconsistent with the Borrower's past
practices of licensing Patents or Trademarks as the case may be. The Borrower
hereby grants to the Administrative Agent the right to visit the Borrower's
plants and facilities which manufacture, inspect or store products sold under
any of the Patents and Trademarks, and to inspect the products and quality
control records relating thereto at reasonable times during regular business
hours upon reasonable prior notice.
5. Other Agreements of the Borrower
--------------------------------
(a) No Duty to Preserve. Except as otherwise required by law, the
-------------------
Borrower agrees that, with respect to the Collateral, neither the Administrative
Agent, the Issuing Bank, any Rate Protection Lender nor any Lender has any
obligation to preserve rights against prior or third parties.
(b) Administrative Agent's Duty With Respect to Collateral. The
------------------------------------------------------
Administrative Agent's only duty with respect to the Collateral delivered to it
shall be to use reasonable care in the custody and preservation of the
Collateral, and the Borrower agrees that if the Administrative Agent accords the
Collateral substantially the same kind of care as it accords its own Property,
such care shall conclusively be deemed reasonable. In the event that all or any
part of the Certificated Securities or Instruments constituting the Collateral
are lost, destroyed or wrongfully taken while such Certificated Securities or
Instruments are in the possession of the Administrative Agent, the Borrower
agrees that it will use its best efforts to cause the delivery of new
Certificated Securities or Instruments
- 7 -
<PAGE>
in place of the lost, destroyed or wrongfully taken Certificated Securities or
Instruments upon request therefor by the Administrative Agent, without the
necessity of any indemnity bond or other security, other than the Administrative
Agent's agreement of indemnity upon usual and customary terms therefor. Anything
herein to the contrary notwithstanding, the Administrative Agent shall not be
under any duty to send notices, perform services, exercise any rights of
collection, enforcement, conversion or exchange, vote, pay for insurance, taxes
or other charges or take any action of any kind in connection with the
management of the Collateral.
(c) Liability of Borrower under Contracts and Agreements Included in
----------------------------------------------------------------
the Collateral. Anything herein to the contrary notwithstanding, (i) the
- --------------
Borrower shall remain liable under the contracts and agreements included in the
Collateral to the extent set forth therein to perform all of its duties and
obligations thereunder to the same extent as if this Agreement had not been
executed, (ii) the exercise by the Administrative Agent, the Issuing Bank, any
Rate Protection Lender or any Lender of any of its rights hereunder shall not
release the Borrower from any of its duties or obligations under any such
contract or agreement, (iii) neither the Administrative Agent, the Issuing Bank,
any Rate Protection Lender nor any Lender shall have any obligation or
liability, including indemnification obligations, under any such contract or
agreement by reason of this Agreement, nor shall the Administrative Agent, the
Issuing Bank, any Rate Protection Lender or any Lender be obligated to perform
any of the obligations or duties of the Borrower thereunder, to make any
payment, to make any inquiry as to the nature or sufficiency of any payment
received by the Borrower or the sufficiency of any performance by any party
under any such contract or agreement or to take any action to collect or enforce
any claim for payment assigned hereunder, and (iv) neither the Administrative
Agent, the Issuing Bank, any Rate Protection Lender nor any Lender shall be
under any duty to send notices, perform services, exercise any rights of
collection, enforcement, conversion or exchange, vote, pay for insurance, taxes
or other charges or take any action of any kind in connection with the
management of the Collateral.
6. Events of Default
-----------------
Each of the following shall constitute an "Event of Default":
----------------
(a) If the Borrower shall fail to observe or perform any term,
covenant or agreement contained in this Agreement; or
(b) The occurrence and continuance of an Event of Default under, and
as such term is defined in, the Credit Agreement.
7. Remedies
--------
(a) Upon the occurrence of an Event of Default or at any time
thereafter during the continuance thereof, the Administrative Agent may:
(i) exercise any and all rights and remedies (A) granted to a
Secured Party by the UCC in effect in the State of New York or otherwise
allowed at law, and (B) otherwise provided by this Agreement, and
- 8 -
<PAGE>
(ii) dispose of the Collateral as it may choose, so long as every
aspect of the disposition including the method, manner, time, place and
terms are commercially reasonable, and the Borrower agrees that, without
limitation, the following are each commercially reasonable: (A) the
Administrative Agent shall not in any event be required to give more than
10 days' prior notice to the Borrower of any such disposition, (B) any
place within the City of New York or the Counties of Nassau, Suffolk, and
Westchester may be designated by the Administrative Agent for disposition,
and (C) the Administrative Agent may adjourn any public or private sale
from time to time by announcement at the time and place fixed therefor, and
such sale may, without further notice, be made at the time and place to
which it was so adjourned.
(b) The Borrower acknowledges and agrees that the Administrative Agent
may elect, with respect to the offer or sale of any or all of the Equity
Interests constituting the Collateral, to conduct such offer and sale in such a
manner as to avoid the need for registration or qualification of such Equity
Interests or the offer and sale thereof under any Federal or state securities
laws and that the Administrative Agent is authorized to comply with any
limitation or restriction in connection with such sale as counsel may advise the
Administrative Agent is reasonably necessary in order to avoid any violation of
applicable law, compliance with such procedures as may restrict the number of
prospective bidders and purchasers, require that such prospective bidders and
purchasers have certain qualifications, and restrict such prospective bidders
and purchasers to Persons who will represent and agree that they are purchasing
for their own account for investment and not with a view to the distribution or
resale of such Equity Interests, or in order to obtain any required approval of
the sale or of the purchaser by any Governmental Authority. The Borrower
further acknowledges and agrees that any such transaction may be at prices and
on terms less favorable than those which may be obtained through a public sale
and not subject to such restrictions and agrees that, notwithstanding the
foregoing, the Administrative Agent is under no obligation to conduct any such
public sale and may elect to impose any or all of the foregoing restrictions, or
any other restrictions which may be reasonably necessary in order to avoid any
such registration or qualification, at its sole discretion or with the consent
or direction of the Required Lenders, and that any such offer and sale so
conducted shall be deemed to have been made in a commercially reasonable manner.
(c) To the extent permitted by law, the Borrower hereby expressly
waives and covenants not to assert any appraisement, valuation, stay, extension,
redemption or similar laws, now or at any time hereafter in force, which might
delay, prevent or otherwise impede the performance or enforcement of this
Agreement.
(d) Notwithstanding anything to the contrary contained in this
Agreement, any other Loan Document or in any other agreement, instrument or
document executed by the Borrower and delivered to the Administrative Agent, the
Issuing Bank or any Lender, neither the Administrative Agent, the Issuing Bank
nor any Lender will take any action pursuant to this Agreement, any other Loan
Document or any other document referred to above which would constitute or
result in any assignment of any license, approval, permit, certificate or other
authorization issued by the FCC or any change of control of the Borrower or any
Subsidiary if such assignment or change of control would require, under then
existing law, the prior approval of the FCC without first obtaining such prior
approval of the FCC. Upon the occurrence of an Event of Default or at any
- 9 -
<PAGE>
time during the continuance thereof, the Borrower waives, to the extent
permitted by law, any right it may have to oppose, and agrees to take any action
that the Administrative Agent may reasonably request in order to obtain from the
FCC, such approval as may be necessary to enable the Administrative Agent, the
Issuing Bank and the Lenders to exercise and enjoy the full rights and benefits
granted to the Administrative Agent, the Issuing Bank and the Lenders by this
Agreement, the other Loan Documents and the other documents referred to above,
including specifically, at the cost and expense of the Borrower, the use of
commercially reasonable efforts to assist in obtaining approval of the FCC for
any action or transaction contemplated by this Agreement for which such approval
is or shall be required by law, and specifically, without limitation, upon
request, to prepare, sign and file with the FCC the assignor's or transferor's
portion of any application or applications for consent to the assignment of
license or transfer of control necessary or appropriate under the FCC's rules
and regulations for approval of (a) any sale or other disposition of the
Collateral by or on behalf of the Administrative Agent, or (b) any assumption by
the Administrative Agent of voting rights in the Collateral effected in
accordance with the terms of this Agreement. It is understood and agreed that
all foreclosure and related actions will be made in accordance with the
Communications Act and applicable regulations and published policies and
decisions of the FCC pertaining to such foreclosure and related actions.
8. Voting
------
Notwithstanding anything to the contrary contained in this Agreement,
the Borrower shall have the right to vote all Securities and General Intangibles
constituting the Collateral and receive and retain all dividends and
distributions thereon until such time, if any, as an Event of Default shall have
occurred and be continuing and the Administrative Agent shall have notified the
Borrower that the Administrative Agent shall have elected to terminate the
rights of the Borrower under this section, at which time the Administrative
Agent shall then be vested with the right to vote all Securities constituting
the Collateral and receive and retain all dividends and distributions thereon,
until such time as such Event of Default is cured or waived.
9. Notices
-------
All notices and other communications provided for or otherwise
required hereunder or in connection herewith shall be given in the manner and to
the addresses set forth in section 11.2 of the Credit Agreement.
10. Termination
-----------
On any date upon which (i) the Lenders shall no longer have any
obligation to make Loans, (ii) the Issuing Bank shall no longer have (A) any
obligation to issue Letters of Credit and (B) any obligations under the Letters
of Credit theretofor issued, and (iii) the Obligations shall have been paid in
full in cash, the outstanding principal balance of the Loans together with all
accrued interest thereon, all of the Reimbursement Obligations and all other
sums then due and owing under the Loan Documents, the Liens granted hereby shall
cease and the Administrative Agent shall, at the Borrower's expense (A) execute
and deliver all UCC Termination Statements and other documents necessary to
terminate the Liens granted hereby that the Borrower shall have reasonably
requested,
- 10 -
<PAGE>
and (B) return to the Borrower all Collateral that shall remain in the
possession of the Administrative Agent at such time.
11. Relationship to Credit Agreement
--------------------------------
This Agreement is the "Borrower Security Agreement" under, and as such
term is defined in, the Credit Agreement, and is subject to, and should be
construed in accordance with, the provisions thereof. Each of the
Administrative Agent and the Borrower acknowledges that certain provisions of
the Credit Agreement, including, without limitation, sections 1.2 (Principles of
Construction), 11.1 (Amendments and Waivers), 11.3 (No Waiver; Cumulative
Remedies), 11.4 (Survival of Representations and Warranties), 11.7 (Successors
and Assigns), 11.8 (Counterparts), 11.9 (Adjustments; Set-off), 11.12 (Governing
Law), 11.13 (Headings), 11.14 (Severability), 11.15 (Integration), 11.16
(Limitation of Liability), 11.17 (Consent to Jurisdiction), 11.18 (Service of
Process), 11.19 (No Limitation on Service or Suit) and 11.20 (WAIVER OF TRIAL BY
JURY) thereof, are made applicable to this Agreement and all such provisions are
incorporated by reference herein as if fully set forth herein.
- 11 -
<PAGE>
IN EVIDENCE of the agreement by the parties hereto to the terms and
conditions herein contained, each such party has caused this Borrower Security
Agreement to be duly executed on its behalf.
SALEM COMMUNICATIONS CORPORATION
By: /s/ Eric H. Halvorson
------------------------------
Name: Eric H. Halvorson
----------------------------
Title: Executive Vice President
---------------------------
THE BANK OF NEW YORK, as Administrative Agent
By: /s/ Steve M. Nettler
------------------------------
Name: Steve M. Nettler
----------------------------
Title:
---------------------------
- 12 -
<PAGE>
SCHEDULE 3(e)
TO BORROWER SECURITY AGREEMENT
SCHEDULE 3 (e) TO THE BORROWER SECURITY AGREEMENT
DATED AS OF SEPTEMBER 25, 1997
LIST OF EQUITY INTERESTS
------------------------
<TABLE>
<CAPTION>
PERCENTAGE OF
NUMBER OF CERT. OUTSTANDING
ISSUER CLASS SHARES NUMBER SHARES
------ ----- ------ ------ ------
<S> <C> <C> <C> <C>
ATEP Radio, Inc. Common 100 0001 100%
Beltway Media Partners NA (1) NA 100%
Bison Media, Inc. Common 1,000 0002 100%
Caron Broadcasting, Inc. Common 1,000 0001 100%
Common Ground Broadcasting, Common 1,000 0002 100%
Inc.
Golden Gate Broadcasting Co., Common 1,000 0003 100%
Inc.
Inland Radio, Inc. Common 200 0004 100%
Inspiration Media of Texas, Inc. Common 1,000 0001 100%
Inspiration Media, Inc. Common 100 0001 100%
New England Continental Media, Common 1,000 A-006 100%
Inc.
New Inspiration Broadcasting Common 30,600 0003 100%
Co., Inc.
Oasis Radio, Inc. Common 1,960 0005 100%
Pennsylvania Media Associates, Common 1,000 0001 100%
Inc.
Radio 1210, Inc. Common 100 0006 100%
Salem Communications Common 100 0001 100%
Corporation, a Delaware
corporation
Salem Media Corporation Common 10,000 0003 100%
Salem Media of California, Inc. Common 1 0003 100%
Salem Media of Colorado, Inc. Common 1,000 0001 100%
Salem Media of Louisiana, Inc. Common 200 0003 100%
Salem Media of Ohio, Inc. Common 100 0006 100%
Salem Media of Oregon, Inc. Common 100 0003 100%
Salem Media of Pennsylvania, Common 100 0001 100%
Inc.
Salem Media of Texas, Inc. Common 1,000 0001 100%
Salem Music Network, Inc. Common 1,000 0001 100%
Salem Radio Network Common 200 0005 100%
Incorporated
Salem Radio Representatives, Common 1,000 0003 100%
Inc.
South Texas Broadcasting, Inc. Common 1,000 0001 100%
SRN News Network, Inc. Common 1,000 0001 100%
Vista Broadcasting, Inc. Common 1,000 0001 100%
</TABLE>
<PAGE>
NOTE 1: All listed entities are corporations except Beltway Media Partners,
which is a general partnership. Salem Communications Corporation,
New Inspiration Broadcasting Co., Inc. and Golden Gate Broadcasting
Co., Inc. are the sole partners of Beltway Media Partners, as
follows:
New Inspiration Broadcasting Co., Inc. 45% ownership interest
Golden Gate Broadcasting Co., Inc. 40% ownership interest
Salem Communications Corporation 15% ownership interest
NOTE 2: The chief executive office of all entities is 4880 Santa Rosa Road,
Suite 300, Camarillo, California 93012.
NOTE 3: All shares are nonassessable except for shares issued in
Massachusetts, where shares are subject to assessments for unpaid
services and wage claims. The applicable statute is Section 35 of
the Massachusetts General Corporation Law.
<PAGE>
SCHEDULE 3(f)
TO BORROWER SECURITY AGREEMENT
Schedule 3(f) to the Borrower Security Agreement
Dated as of September 25, 1997
LIST OF CHATTEL PAPER, DOCUMENTS AND INSTRUMENTS
------------------------------------------------
Promissory Note, dated February 12, 1992, in the original
principal amount of $20,000,000, made by Beltway Media Partners to
Salem Communications Corporation, New Inspiration Broadcasting
Company, Inc. and Golden Gate Broadcasting Company, Inc.
<PAGE>
SCHEDULE 3(h)
TO BORROWER SECURITY AGREEMENT
Schedule 3(h) to the Borrower Security Agreement
Dated as of September 25, 1997
ADDRESSES FOR EQUIPMENT AND INVENTORY LOCATIONS
-----------------------------------------------
<TABLE>
<CAPTION>
ENTITY STUDIO/OFFICE LOCATION TRANSMITTER LOCATION
------ ---------------------- --------------------
<S> <C> <C>
Salem Communications 4880 Santa Rosa Road, Suite 300 N/A
Corporation Camarillo, CA 93012
</TABLE>
<PAGE>
SCHEDULE 3(i)
TO BORROWER SECURITY AGREEMENT
SCHEDULE 3(i) TO THE BORROWER SECURITY AGREEMENT
DATED AS OF SEPTEMBER 25, 1997
LIST OF REGISTRATIONS
---------------------
A. Patents
-------
None.
B. Trademarks
----------
None.
C. Servicemarks
------------
1. "Salem Communications Corporation" - Reg. No. 1,996,372
2. Salem Logo - Reg. No. 1,940,452
<PAGE>
ANNEX A TO THE BORROWER SECURITY AGREEMENT
DATED AS OF SEPTEMBER 25, 1997
FORM OF TRANSACTION STATEMENT
-----------------------------
THIS STATEMENT IS MERELY A RECORD OF THE RIGHTS OF THE ADDRESSEE AS OF THE
TIME OF ITS ISSUANCE. DELIVERY OF THIS STATEMENT, OF ITSELF, CONFERS NO RIGHT
ON THE RECIPIENT. THIS STATEMENT IS NEITHER A NEGOTIABLE INSTRUMENT NOR A
SECURITY.
[DATE]
The Bank of New York, as Administrative Agent
One Wall Street
New York, New York 10286
Ladies and Gentlemen:
The undersigned, _________________ (the "Issuer"), hereby acknowledges
------
receipt of the Borrower Security Agreement (as the same may be amended,
supplemented or otherwise modified from time to time, the "Agreement"), dated as
---------
of September 25, 1997, by and between SALEM COMMUNICATIONS CORPORATION (the
"Borrower") and THE BANK OF NEW YORK, as Administrative Agent (in such capacity,
- ---------
the "Administrative Agent"), and (i) consents to the terms thereof and (ii)
--------------------
confirms that a pledge of the right, title and interest in the security referred
to below has been registered in the books and records of the Issuer in the name
of the Administrative Agent, as set forth below. This Transaction Statement is
issued under Section 8-408 of the New York State Uniform Commercial Code.
1. DESCRIPTION OF THE SECURITY: __________________________________.
2. NUMBER OF SHARES OR UNITS PLEDGED: ____________________________.
3. REGISTERED OWNER:
SALEM COMMUNICATIONS CORPORATION
4880 Santa Rosa Road
Suite 300
Camarillo, California 93012
Attention: Vice President/
Chief Financial Officer
Taxpayer ID# ____________.
<PAGE>
4. REGISTERED PLEDGEE AND TAXPAYER IDENTIFICATION NUMBER (IF ANY):
The Bank of New York, as Administrative Agent
One Wall Street
New York, New York 10286
Attention:___________________________
___________________________
Taxpayer ID# 13-5160382
5. DATE OF REGISTRATION OF THE PLEDGE: The pledge described herein was
registered on ________, on the books and records of the Issuer.
6. NOTATION OF LIENS: There are no liens, restrictions or adverse claims as to
which the Issuer has a duty under Section 8-403(4) of the Uniform
Commercial Code (the "UCC") to which such security is or may be subject,
---
other than those set forth in the Loan Documents (as defined in that
certain Credit Agreement, dated as of ________, 1997, by and among the
Borrower, the Lenders party thereto and The Bank of New York, as
Administrative Agent and Bank of America NT & SA, as Documentation Agent,
as amended, supplemented or otherwise modified from time to time) or [LIST
APPLICABLE ORGANIZATIONAL DOCUMENTS].
The Issuer hereby agrees, at the request of the Administrative Agent
and at the expense of the Issuer, to register any further assignment or transfer
of the foregoing security effected in the manner contemplated by the Agreement
and promptly to furnish to the Administrative Agent and any such assignee or
transferee any statement contemplated by Section 8-408 of the UCC.
[NAME OF ISSUER]
By:
_______________________________________
Name:
_____________________________________
Title:
____________________________________
- 2 -
<PAGE>
ANNEX B-1 TO THE BORROWER SECURITY AGREEMENT
DATED AS OF SEPTEMBER 25, 1997
FORM OF GRANT OF SECURITY INTEREST (PATENTS)
--------------------------------------------
SALEM COMMUNICATIONS CORPORATION, a California corporation (the
"Borrower"), is obligated to THE BANK OF NEW YORK, as Administrative Agent (the
- ---------
"Administrative Agent"), and has entered into a Borrower Security Agreement
--------------------
dated the date hereof (the "Agreement") with the Administrative Agent.
---------
Pursuant to the Agreement, the Borrower granted to the Administrative
Agent a security interest in all of the right, title and interest of the
Borrower in and to the letters patent or applications for letters patent, of the
United States, more particularly described on Schedule 1 (the "Patents")
-------
together with any reissue, continuation, continuation-in-part or extension
thereof, and all proceeds thereof, any and all causes of action which may exist
by reason of infringement thereof for the full term of the Patents (the
"Collateral"), to secure the prompt payment, performance and observance of the
- -----------
Obligations (as defined in the Agreement).
For good and valuable consideration, the receipt of which is hereby
acknowledged, and for the purpose of recording the grant of the security
interest as aforesaid, the Borrower does hereby further assign to the
Administrative Agent, and grant to the Administrative Agent a security interest
in, the Collateral to secure the prompt payment, performance and observance of
the Obligations.
The Borrower does hereby further acknowledge and affirm that the
rights and remedies of the Administrative Agent with respect to the assignment
of and security interest in the Collateral made and granted hereby are set forth
in the Agreement, the terms and provisions of which are hereby incorporated
herein by reference as if fully set forth herein.
Upon the indefeasible cash payment in full of all Obligations (as such
term is defined in the Agreement), the Administrative Agent will take whatever
actions are necessary at the Borrower's expense to release or reconvey to
Borrower all right, title and interest of the Borrower in and to the Patents.
The Administrative Agent's address is: One Wall Street, New York, New
York 10286.
IN WITNESS WHEREOF, the Borrower has caused this Assignment to be duly
executed by its duly authorized officer as of the __ day of _____, _____.
SALEM COMMUNICATIONS CORPORATION
By:
______________________________________
Name:
____________________________________
Title:
___________________________________
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this __ day of _____, ____, before me personally came
___________________, to me known, who, being by me duly sworn, did depose and
say that he resides at __________________; that he is the ________ of SALEM
COMMUNICATIONS CORPORATION, the corporation described in and which executed the
above instrument, and that he signed his name thereto by order of the board of
directors thereof.
____________________________
Notary Public
[Notary's Stamp]
- 3 -
<PAGE>
Schedule 1
to
Grant of Security Interest (Patents)
Dated as of ______________
- 4 -
<PAGE>
ANNEX B-2 TO THE BORROWER SECURITY AGREEMENT
DATED AS OF SEPTEMBER 25, 1997
FORM OF GRANT OF SECURITY INTEREST (TRADEMARKS)
-----------------------------------------------
SALEM COMMUNICATIONS CORPORATION, a California corporation (the
---------------------------------------------------------------
"Borrower"), is obligated to THE BANK OF NEW YORK, as Administrative Agent (the
- ---------
"Administrative Agent"), and has entered into a Borrower Security Agreement
--------------------
dated the date hereof (the "Agreement") with the Administrative Agent.
---------
Pursuant to the Agreement, the Borrower granted to the Administrative
Agent a security interest in all of the right, title and interest of the
Borrower in and to the trademarks listed on Schedule 1, which trademarks are
registered in the United States Patent and Trademark Office (the "Trademarks"),
----------
together with the goodwill of the business symbolized by the Trademarks and the
applications and registrations therefor, and all proceeds thereof, any and all
causes of action which may exist by reason of infringement thereof (the
"Collateral"), to secure the prompt payment, performance and observance of the
- -----------
Obligations (as defined in the Agreement).
For good and valuable consideration, the receipt of which is hereby
acknowledged, and for the purpose of recording the grant of the security
interest as aforesaid, the Borrower does hereby further assign to the
Administrative Agent, and grant to the Administrative Agent a security interest
in, the Collateral to secure the prompt payment, performance and observance of
the Obligations.
The Borrower does hereby further acknowledge and affirm that the
rights and remedies of the Administrative Agent with respect to the assignment
of and security interest in the Collateral made and granted hereby are set forth
in the Agreement, the terms and provisions of which are hereby incorporated
herein by reference as if fully set forth herein.
Upon the indefeasible cash payment in full of all Obligations (as such
term is defined in the Agreement), the Administrative Agent will take whatever
actions are necessary at the Borrower's expense to release or reconvey to the
Borrower all right, title and interest of the Borrower in and to the Trademarks.
The Administrative Agent's address is: One Wall Street, New York, New
York 10286.
<PAGE>
IN WITNESS WHEREOF, the Borrower has caused this Assignment to be duly
executed by its duly authorized officer as of the __ day of _____, ____.
SALEM COMMUNICATIONS CORPORATION
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
- 2 -
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this __ day of _____, _____, before me personally came
___________________, to me known, who, being by me duly sworn, did depose and
say that he resides at __________________; that he is the ________ of SALEM
COMMUNICATIONS CORPORATION, the corporation described in and which executed the
above instrument, and that he signed his name thereto by order of the board of
directors thereof.
____________________________
Notary Public
[Notary's Stamp]
- 3 -
<PAGE>
Schedule 1
to
Grant of Security Interest (Trademarks)
Dated as of ____________
- 4 -
<PAGE>
TRANSACTION STATEMENT
--------------------
THIS STATEMENT IS MERELY A RECORD OF THE RIGHTS OF THE ADDRESSEE AS OF THE
TIME OF ITS ISSUANCE. DELIVERY OF THIS STATEMENT, OF ITSELF, CONFERS NO RIGHT
ON THE RECIPIENT. THIS STATEMENT IS NEITHER A NEGOTIABLE INSTRUMENT NOR A
SECURITY.
September 25, 1997
The Bank of New York, as Administrative Agent
One Wall Street
New York, New York 10286
Ladies and Gentlemen:
The undersigned, Beltway Media Partners, a Virginia general partnership
(the "Issuer"), hereby acknowledges receipt of (a) the Borrower Security
------
Agreement (as the same may be amended, supplemented or otherwise modified from
time to time, the "Borrower Security Agreement"), dated as of September 25,
---------------------------
1997, by and between SALEM COMMUNICATIONS CORPORATION (the "Borrower") and THE
--------
BANK OF NEW YORK, as Administrative Agent (in such capacity, the "Administrative
--------------
Agent"), and (b) the Subsidiary Guaranty and Security Agreement (as the same may
- -----
be amended, supplemented or otherwise modified from time to time, the
"Subsidiary Guaranty"), dated as of September 25, 1997, by and among the Persons
-------------------
party thereto, the Borrower and the Administrative Agent, and (i) consents to
the terms thereof and (ii) confirms that a pledge of the right, title and
interest in the security referred to below has been registered in the books and
records of the Issuer in the name of the Administrative Agent as set forth
below. This Transaction Statement is issued under Section 8-408 of the New York
State Uniform Commercial Code.
1. DESCRIPTION OF THE SECURITY: 100% of the General Partnership interests in
the Issuer.
2. NUMBER OF SHARES OR UNITS PLEDGED: N/A.
3. REGISTERED OWNER:
As to 15% of the General Partnership interests:
SALEM COMMUNICATIONS CORPORATION
4880 Santa Rosa Road
Suite 300
Camarillo, California 93012
Attention: Vice President/
Chief Financial Officer
Taxpayer ID# 77-0121400.
The Issuer hereby agrees, at the request of the Administrative Agent and
at the expense of the Issuer, to register any further assignment or transfer of
the foregoing security effected in the manner contemplated by the Borrower
Security Agreement and the Subsidiary Guaranty and promptly to furnish to the
Administrative Agent and any such assignee or transferee any statement
contemplated by Section 8-408 of the UCC.
SALEM COMMUNICATIONS CORPORATION
By: /s/ Eric H. Halvorson
---------------------------
Name: Eric H. Halvorson
Title: Executive Vice President
NEW INSPIRATION BROADCASTING
COMPANY, INC.
By: /s/ Eric H. Halvorson
---------------------------
Name: Eric H. Halvorson
Title: Executive Vice President
GOLDEN GATE BROADCASTING COMPANY,
INC.
By: /s/ Eric H. Halvorson
---------------------------
Name: Eric H. Halvorson
Title: Executive Vice President
<PAGE>
The Issuer hereby agrees, at the request of the Administrative Agent and
at the expense of the Issuer, to register any further assignment or
transfer of the foregoing security effected in the manner contemplated
by the Borrower Security Agreement and the Subsidiary Guaranty and
promptly to furnish to the Administrative Agent and any such assignee or
transferee any statement contemplated by Section 8-408 of the UCC.
SALEM COMMUNICATIONS CORPORATION
By: /s/ Eric H. Halvorson
---------------------
Name: Eric H. Halvorson
---------------------
Title: Executive Vice President
------------------------
NEW INSPIRATION BROADCASTING
COMPANY, INC.
By: /s/ Eric H. Halvorson
---------------------
Name: Eric H. Halvorson
---------------------
Title: Executive Vice President
------------------------
GOLDEN GATE BROADCASTING COMPANY,
INC.
By: /s/ Eric H. Halvorson
---------------------
Name: Eric H. Halvorson
---------------------
Title: Executive Vice President
------------------------
<PAGE>
As to 45% of the General Partnership interests:
NEW INSPIRATION BROADCASTING COMPANY, INC.
4880 Santa Rosa Road
Suite 300
Camarillo, California 93012
Attention: Vice President/
Chief Financial Officier
Taxpayer ID# 95-3356921.
As to 40% of the General Partnership interests:
GOLDEN GATE BROADCASTING COMPANY, INC.
4880 Santa Rosa Road
Suite 300
Camarillo, California 93012
Attention: Vice President/
Chief Financial Officer
Taxpayer ID# 94-3082936.
4. REGISTERED PLEDGEE AND TAXPAYER IDENTIFICATION NUMBER (IF ANY):
The Bank of New York, as Administrative Agent
One Wall Street
New York, New York 10286
Attention: Wade E. Layton,
Vice President
Taxpayer ID# 13-5160382
5. DATE OF REGISTRATION OF THE PLEDGE: The pledge described herein was
registered on September 25, 1997, on the books and records of the Issuer.
6. NOTATION OF LIENS: There are no liens, restrictions or adverse claims as
to which the Issuer has a duty under Section 8-403(4) of the Uniform
Commercial Code (the "UCC") to which such security is or may be subject,
---
other than those set forth in the Loan Documents (as defined in that
certain Credit Agreement, dated as of September 25, 1997, by and among
the Borrower, the Lenders party thereto, The Bank of New York, as
Administrative Agent, and Bank of America NT&SA, as Documentation Agent,
as amended, supplemented or otherwise modified from time to time).
<PAGE>
EXHIBIT 4.09
SUBSIDIARY GUARANTY AND SECURITY AGREEMENT
------------------------------------------
SUBSIDIARY GUARANTY AND SECURITY AGREEMENT (as the same may be
amended, supplemented or otherwise modified from time to time, this
"Agreement"), dated as of September 25, 1997, by and among the Persons party
---------
hereto (the "Current Guarantors"), such other Persons which from time to time
------------------
may become party hereto (the "Additional Guarantors", and collectively with the
---------------------
Current Guarantors, the "Guarantors"), SALEM COMMUNICATIONS CORPORATION, a
----------
California corporation (the "Borrower"), and THE BANK OF NEW YORK (the
--------
"Administrative Agent"), in its capacity as Administrative Agent for the Lenders
--------------------
under the Credit Agreement referred to below and the Rate Protection Lenders as
hereinafter defined.
RECITALS
--------
I. Reference is made to the Credit Agreement, dated as of the date
hereof, by and among the Borrower, the Lenders party thereto, the Administrative
Agent, and Bank of America NT&SA, as Documentation Agent (as the same may be
amended, supplemented or otherwise modified from time to time, the "Credit
------
Agreement").
- ---------
II. In the past, as now, the Borrower has provided financing for the
Guarantors and the Guarantors have relied upon the Borrower to provide such
financing. In addition, it is anticipated that, if the Guarantors execute and
deliver this Agreement, the Borrower will continue to provide such financing to
the Guarantors, and that the proceeds of the Loans to be made and Letters of
Credit to be issued will be used, in part, for the general corporate and working
capital purposes of the Guarantors. Pursuant to the Credit Agreement, the
Lenders will not make Loans and the Issuing Bank will not issue Letters of
Credit unless and until the Guarantors shall have executed and delivered this
Agreement and, therefore, in light of all of the foregoing, each Guarantor
expects to derive substantial benefit from the Credit Agreement and the
transactions contemplated thereby and, in furtherance thereof, has agreed to
execute and deliver this Agreement.
Therefore, in consideration of the Recitals, the terms and conditions
herein contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Guarantors, the Borrower and
the Administrative Agent hereby agree as follows:
1. Defined Terms
-------------
(a) Capitalized terms used herein which are not otherwise defined
herein shall have the respective meanings ascribed thereto in the Credit
Agreement.
(b) When used in this Agreement, the following capitalized terms shall
have the respective meanings ascribed thereto as follows:
"Borrower Obligations": all of the obligations and liabilities of the
--------------------
Borrower under the Loan Documents and under each Interest Rate Protection
Arrangement entered into by the Borrower with a Rate Protection Lender, in each
case whether fixed, contingent, now existing or hereafter arising, created,
assumed, incurred or
<PAGE>
acquired, and whether before or after the occurrence of any Insolvency Event,
and including (i) any obligation or liability in respect of any breach of any
representation or warranty and (ii) all post-petition interest and funding
losses, whether or not allowed as a claim in any proceeding arising in
connection with an Insolvency Event.
"Collateral": as defined in section 4.
----------
"Equity Interest": (i) with respect to a corporation, the capital
---------------
stock thereof, (ii) with respect to a partnership, a partnership interest
therein, all rights of a partner in such partnership, whether arising under the
partnership agreement of such partnership or otherwise; (iii) with respect to a
limited liability company, a membership interest therein, all rights of a member
of such limited liability company, whether arising under the limited liability
company agreement of such limited liability company or otherwise; (iv) with
respect to any other firm, association, trust, business enterprise or other
entity, any equity interest therein, any interest therein which entitles the
holder thereof to share in the revenue, income, earnings or losses thereof or to
vote or otherwise participate in any election of one or more members of the
Managing Person thereof, and (v) all warrants and options in respect of any of
the foregoing and all other securities which are convertible or exchangeable
therefor.
"Financing Statements": the UCC financing statements executed by the
--------------------
Guarantor and delivered pursuant to the Credit Agreement.
"Grants of Security Interests": collectively, the Grant of Security
----------------------------
Interest (Patents) and the Grant of Security Interest (Trademarks), in the form
of Annexes C-1 and C-2 hereto, respectively, in each case appropriately
completed and signed by the Guarantor.
"Guarantor Obligations": with respect to each Guarantor, all of the
---------------------
obligations and liabilities of such Guarantor hereunder, whether fixed,
contingent, now existing or hereafter arising, created, assumed, incurred or
acquired.
"Insolvency Event": any Event of Default under section 9.1(h) or
----------------
(i) of the Credit Agreement.
"NYUCC": the UCC as in effect in the State of New York on the date
-----
hereof.
"Office Location": as defined in section 5(c).
---------------
"Patents": all patents issued under the laws of the United States of
-------
America and all patent applications filed with the United States Patent and
Trademark Office, and all of the rights associated with each of the foregoing.
"Proceeds": as defined in the NYUCC, together with (i) all dividends,
--------
distributions and income on and in respect of all of the Securities and
Instruments and all other rights and benefits in respect thereof, and (ii) with
respect to the Patents and Trademarks, all renewals thereof, all proceeds of
infringement suits, all rights to sue for infringement, all license royalties,
all reissues, divisions, continuations, extensions and continuations-in-part
thereof.
-2-
<PAGE>
"Registrations": (i) patents issued under the laws of the United
-------------
States of America, (ii) patent applications filed with the United States Patent
and Trademark Office, and (iii) all registered trademarks.
"Rate Protection Lenders": collectively, the Lenders and any
-----------------------
affiliates of the Lenders which from time to time enter or have entered into
Interest Rate Protection Arrangements with the Borrower.
"Supplement": a Supplement to this Agreement, duly completed, in the
----------
form of Annex A hereto.
"Trademarks": as to any Guarantor (i) all rights under the laws of the
----------
United States of America, and each State thereof, to trademarks, together with
all registrations thereof, applications therefor and all of the rights
associated therewith, and (ii) the goodwill of such Guarantor's business
symbolized by registered trademarks.
"Transaction Statement": a transaction statement in the form of
---------------------
Annex B hereto.
"UCC": with respect to any jurisdiction, Articles 1, 8 and 9 of the
---
Uniform Commercial Code as from time to time in effect in such jurisdiction.
(c) When used in this Agreement, the following capitalized terms shall
have the respective meanings ascribed thereto in the NYUCC: "Account",
-------
"Certificated Security", "Chattel Paper", "Document", "Equipment", "Fixture",
--------------------- ------------- -------- --------- -------
"General Intangible", "Instrument", "Inventory", "Issuer", "Secured Party",
---------- --------- ------ -------------
"Security", "Security Interest" and "Uncertificated Security".
-------- ----------------- -----------------------
2. Guaranty
--------
(a) Subject to section 2(b) hereof, each Guarantor hereby absolutely,
irrevocably and unconditionally guarantees the full and prompt payment when due
(whether at stated maturity, by acceleration or otherwise) of the Borrower
Obligations. This Agreement constitutes a guaranty of payment and neither the
Administrative Agent, the Issuing Bank nor any Lender shall have any obligation
to enforce any Loan Document or any Interest Rate Protection Arrangement or
exercise any right or remedy with respect to any collateral security thereunder
by any action, including making or perfecting any claim against any Person or
any collateral security for any of the Borrower Obligations, prior to being
entitled to the benefits of this Agreement. The Administrative Agent may, at
its option, proceed against the Guarantors, or any one or more of them, in the
first instance, to enforce the Guarantor Obligations without first proceeding
against the Borrower or any other Person, and without first resorting to any
other rights or remedies, as the Administrative Agent may deem advisable. In
furtherance hereof, if the Administrative Agent, the Issuing Bank or any Lender
is prevented by law from collecting or otherwise hindered from collecting or
otherwise enforcing any Borrower Obligation in accordance with its terms, the
Administrative Agent, the Issuing Bank or such Lender, as the case may be, shall
be entitled to receive hereunder from the Guarantors after demand therefor, the
sums which would have been otherwise due had such collection or enforcement not
been prevented or hindered.
-3-
<PAGE>
(b) Anything contained in this Agreement to the contrary
notwithstanding, the obligations of each Guarantor hereunder shall be limited to
a maximum aggregate amount equal to the greatest amount that would not render
such Guarantor's obligations hereunder subject to avoidance as a fraudulent
transfer or conveyance under Section 548 of Title 11 of the United States Code
or any provisions of applicable state law (collectively, the "Fraudulent
----------
Transfer Laws"), in each case after giving effect to all other liabilities of
- -------------
such Guarantor, contingent or otherwise, that are relevant under the Fraudulent
Transfer Laws (specifically excluding, however, any liabilities of such
Guarantor (a) in respect of intercompany indebtedness to the Borrower or
Affiliates of the Borrower to the extent that such indebtedness would be
discharged in an amount equal to the amount paid by such Guarantor hereunder and
(b) under any guarantee of senior unsecured indebtedness or Indebtedness
subordinated in right of payment to the Obligations which guarantee contains an
assumption that indebtedness incurred under the Credit Agreement shall be deemed
to have been incurred prior to any indebtedness incurred under any such
guarantee or contains a limitation as to maximum amount similar to that set
forth in this subsection, pursuant to which the liability of such Guarantor
hereunder is included in the liabilities taken into account in determining such
maximum amount) and after giving effect as assets to the value (as determined
under the applicable provisions of the Fraudulent Transfer Laws) of any rights
to subrogation, contribution, reimbursement, indemnity or similar rights of such
Guarantor pursuant to (i) applicable law or (ii) any agreement providing for an
equitable allocation among such Guarantor and other Affiliates of the Borrower
of obligations arising under guarantees by such parties.
(c) Each Guarantor agrees that the Guarantor Obligations may at any
time and from time to time exceed the maximum liability of such Guarantor
hereunder without impairing this Agreement or affecting the rights and remedies
of the Administrative Agent, the Issuing Bank or any Lender hereunder.
3. Absolute Obligation
-------------------
No Guarantor shall be released from liability hereunder unless and
until the Maturity Date shall have occurred and either (a) the Issuing Bank
shall not have any obligation under the Letters of Credit and the Borrower shall
have paid in full in cash the outstanding principal balance of the Loans,
together with all accrued interest thereon, all of the Reimbursement
Obligations, and all other sums then due and owing under the Loan Documents, or
(b) the Guarantor Obligations of such Guarantor shall have been paid in full in
cash. Each Guarantor acknowledges and agrees that (i) neither the
Administrative Agent, the Issuing Bank nor any Lender has made any
representation or warranty to such Guarantor with respect to the Borrower, its
Subsidiaries, any Loan Document, any Interest Rate Protection Arrangement, or
any agreement, instrument or document executed or delivered in connection
therewith, or any other matter whatsoever, and (ii) such Guarantor shall be
liable hereunder, and such liability shall not be affected or impaired,
irrespective of (A) the validity or enforceability of any Loan Document, any
Interest Rate Protection Arrangement, or any agreement, instrument or document
executed or delivered in connection therewith, or the collectability of any of
the Borrower Obligations, (B) the preference or priority ranking with respect to
any of the Borrower Obligations, (C) the existence, validity, enforceability or
perfection of any security interest or collateral security under
-4-
<PAGE>
any Loan Document, or any Interest Rate Protection Arrangement, or the release,
exchange, substitution or loss or impairment of any such security interest or
collateral security, (D) any failure, delay, neglect or omission by the
Administrative Agent, the Issuing Bank or any Lender to realize upon, enforce or
protect any direct or indirect collateral security, indebtedness, liability or
obligation, any Loan Document, any Interest Rate Protection Arrangement, or any
agreement, instrument or document executed or delivered in connection therewith,
or any of the Borrower Obligations, (E) the existence or exercise of any right
of set-off by the Administrative Agent, the Issuing Bank or any Lender, (F) the
existence, validity or enforceability of any other guaranty with respect to any
of the Borrower Obligations, the liability of any other Person in respect of any
of the Borrower Obligations, or the release of any such Person or any other
guarantor of any of the Borrower Obligations, (G) any act or omission of the
Administrative Agent, the Issuing Bank or any Lender in connection with the
administration of any Loan Document, any Interest Rate Protection Arrangement,
or any of the Borrower Obligations, (H) the bankruptcy, insolvency,
reorganization or receivership of, or any other proceeding for the relief of
debtors commenced by or against, any Person, (I) the disaffirmance or rejection,
or the purported disaffirmance or purported rejection, of any of the Borrower
Obligations, any Loan Document, any Interest Rate Protection Arrangement, or any
agreement, instrument or document executed or delivered in connection therewith,
in any bankruptcy, insolvency, reorganization or receivership, or any other
proceeding for the relief of debtor, relating to any Person, (J) any law,
regulation or decree now or hereafter in effect which might in any manner affect
any of the terms or provisions of any Loan Document, any Interest Rate
Protection Arrangement, or any agreement, instrument or document executed or
delivered in connection therewith or any of the Borrower Obligations, or which
might cause or permit to be invoked any alteration in the time, amount, manner
or payment or performance of any of the Borrower's obligations and liabilities
(including the Borrower Obligations), (K) the merger or consolidation of the
Borrower into or with any Person, (L) the sale by the Borrower of all or any
part of its assets, (M) the fact that at any time and from time to time none of
the Borrower Obligations may be outstanding or owing to the Administrative
Agent, the Issuing Bank or any Lender, (N) any amendment or modification of, or
supplement to, any Loan Document or any Interest Rate Protection Arrangement or
(O) any other reason or circumstance which might otherwise constitute a defense
available to or a discharge of the Borrower in respect of its obligations or
liabilities (including the Borrower Obligations) or of such Guarantor in respect
of any of the Guarantor Obligations (other than by the performance in full
thereof).
4. Grant of Security Interest
--------------------------
To secure the prompt and complete payment, observance and performance
of the Guarantor Obligations, each Guarantor hereby grants to the Administrative
Agent, for its benefit and the ratable benefit of the Issuing Bank, the Lenders
and the Rate Protection Lenders, a Security Interest in and to all of such
Guarantor's right, title and interest in and to all: Accounts, Chattel Paper,
Documents, Equipment, Fixtures, General Intangibles, Instruments, including,
without limitation, Instruments evidencing intercompany Indebtedness, Inventory,
Patents, Trademarks, Equity Interests in each Person which now is or may
hereafter become a Subsidiary of such Guarantor or of the Borrower, whether or
not evidenced by a Security, and all Proceeds of all of the foregoing, and
including, without limitation, all licenses, approvals, permits and other
authorizations issued by the FCC, including the Proceeds of any sale or other
disposition thereof, in each case to the extent that a security interest therein
is not prohibited by law, provided that to
-5-
<PAGE>
the extent that a security interest therein is now so prohibited and to the
extent that such security interest at any time hereafter shall no longer be so
prohibited, then such security interest shall automatically and without any
further action attach and become fully effective at that time (giving effect to
any retroactive effect to any change in applicable law or regulation), in each
case whether now owned or existing or hereafter arising or acquired,
(collectively, the "Collateral").
----------
5. Representations and Warranties
------------------------------
Each Guarantor hereby represents and warrants to the Administrative
Agent as follows:
(a) Binding Obligation. This Agreement constitutes the valid and
------------------
binding obligation of such Guarantor, enforceable in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws related to or affecting
the enforcement of creditors' rights generally.
(b) Solvency. Such Guarantor (if a Current Guarantor, both immediately
--------
before and after giving effect to this Agreement and to all Indebtedness
incurred by the Borrower in connection with the Loan Documents or, if an
Additional Guarantor, immediately before and after giving effect to this
Agreement) (i) is not insolvent, (ii) is not engaged, and is not about to
engage, in any business or transaction, for which it has unreasonably small
capital, and (iii) does not intend to incur, and does not believe that it would
incur, debts that would be beyond its ability to pay such debts as they mature,
in each case referred to above within the meaning of both Title XI of the United
States Code and Article 10 of New York Debtor Credit Law, each as in effect on
the date hereof.
(c) Chief Executive Office. As of the date hereof, such Guarantor's
----------------------
place of business or, if such Guarantor has more than one place of business, its
chief executive office, is, and has been continuously for the immediately
preceding 5 month period, located (the "Office Location") at, (i) if such
---------------
Guarantor is a Current Guarantor, the address therefor referred to in Schedule
5(c) hereto, or (ii) if such Guarantor is an Additional Guarantor, the address
therefor set forth on Schedule 5(c) to the Supplement delivered by such
Additional Guarantor. Such Guarantor, (i) in the case of a Current Guarantor,
has not changed its legal name during the 6 year period immediately preceding
the date hereof, and (ii) in the case of an Additional Guarantor, has not
changed its legal name during the 6 year period immediately preceding the date
it became a Guarantor hereunder, except as otherwise disclosed on the Supplement
delivered by such Additional Guarantor.
(d) Information. If such Guarantor is a Current Guarantor, all of the
-----------
information with respect to such Guarantor, or any of its Property, set forth on
each of the Schedules hereto is true, complete and correct as of the date
hereof. If such Guarantor is an Additional Guarantor, all of the information
with respect to such Guarantor, or any of its Property, set forth on each of the
Schedules to the Supplement delivered by such Additional Guarantor is true,
complete and correct as of the date of such Supplement. All of such Guarantor's
books, records and documents relating to its Guarantor Collateral are in all
material respects what they purport to be.
-6-
<PAGE>
(e) Security Interest. This Agreement, together with the delivery to
-----------------
the Administrative Agent of the Certificated Securities constituting Collateral
and the continuous possession thereof by the Administrative Agent in the State
of New York, creates a continuing "enforceable" Security Interest in the
Collateral in favor of the Administrative Agent. Upon (i) the presentation for
filing of the Financing Statements at the respective offices listed thereon
together with the appropriate filing fee therefor, (ii) the delivery to the
Administrative Agent of the Instruments constituting the Collateral, (iii) the
registration, in accordance with Article 8 of the NYUCC, of the Security
Interest granted hereby on the books of each Person which is an Issuer of an
Uncertificated Security constituting the Collateral, and (iv) the filing of the
Grants of Security Interests in the United States Patent and Trademark Office
with respect to Patents, Registrations, and Trademarks, (A) such Security
Interest shall be perfected, and (B) assuming that the Administrative Agent has
acted in "good faith and without notice of any adverse claim" within the meaning
of Article 8 of the NYUCC, the Administrative Agent shall be a "bona fide
purchaser", within the meaning of such Article, with respect to the Collateral
consisting of Securities.
(f) Absence of Liens. There are no Liens upon the Collateral other
----------------
than Permitted Liens, if any.
(g) Equity Interests. As of the Effective Date with respect to each
----------------
Current Guarantor, as of the date of the Supplement executed by an Additional
Guarantor with respect to such Additional Guarantor, (i) the Equity Interests
listed on Schedule 5(g) or Schedule 5(g) to the Supplement, as the case may be,
constitute all of the Equity Interests in each Subsidiary in which such
Guarantor has any right, title or interest, and each such Equity Interest issued
by a corporate Issuer has been duly authorized, validly issued and fully paid
for, and is non-assessable and (ii) except as set forth in such Schedule 5(g) or
Schedule 5(g) to such Supplement, (A) no Subsidiary of such Guarantor has issued
any securities convertible into, or options or warrants for, any common or
preferred equity securities thereof, (B) there are no agreements, voting trusts
or understandings binding upon such Guarantor or any of its Subsidiaries with
respect to the voting securities of any of such Subsidiary or affecting in any
manner the sale, pledge, assignment or other disposition thereof, including any
right of first refusal, option, redemption, call or other right with respect
thereto, whether similar or dissimilar to any of the foregoing and (C) no such
Equity Interest is represented by an Uncertificated Security.
(h) Chattel Paper, Documents and Instruments. With respect to each
----------------------------------------
Current Guarantor, the Chattel Paper, Documents and Instruments listed on
Schedule 5(h) hereto constitute, as of the date hereof, and with respect to each
Additional Guarantor, the Chattel Paper, Documents and Instruments listed on
Schedule 5(h) to the Supplement delivered by such Additional Guarantor
constitute, as of the date of such Supplement, all of the Chattel Paper,
Documents and Instruments which constitute the Collateral, and, to the best of
such Guarantor's knowledge, all such Chattel Paper, Documents and Instruments
have been duly authorized, issued and delivered, and constitute the legal,
valid, binding and enforceable obligations of the respective makers thereof.
(i) Accounts. As of the date hereof, all records concerning any
--------
Account constituting the Collateral are located at its Office Location, and no
such Account is evidenced by a promissory note or other instrument.
-7-
<PAGE>
(j) Equipment and Inventory. Except for Equipment and Inventory in
-----------------------
transit with common carriers, such Guarantor has exclusive possession and
control of all Equipment and Inventory constituting the Collateral, all of which
is as of the date hereof and has been continuously for the 5 month period
immediately preceding the date hereof (or, in the case of an Additional
Guarantor, the date of the Supplement delivered by such Additional Guarantor),
located at one or more of the places listed on (i) if such Guarantor is a
Current Guarantor, Schedule 5(j) hereto hereto, and (ii) if such Guarantor is an
Additional Guarantor, Schedule 5(j) hereto to the Supplement delivered by such
Additional Guarantor. Within the last 5-1/2 years as of the date hereof (or of
the Supplement of such Additional Guarantor) such Guarantor has not acquired any
Inventory or Equipment in connection with any bulk sale, or other than in the
ordinary course of business.
(k) Patents and Trademarks. Such Guarantor has no Registrations
----------------------
relating to Patents other than those listed on (i) if such Guarantor is a
Current Guarantor, Schedule 5(k) hereto, and (ii) if such Guarantor is an
Additional Guarantor, Schedule 5(k) to the Supplement delivered by such
Guarantor, and each such Registration is subsisting and is not invalid or
unenforceable, in whole or in part, except to the extent that the
unenforceability thereof could not reasonably be expected to have a material
adverse effect on the value of the Patents taken as a whole. Such Guarantor has
no Registrations relating to Trademarks other than those listed on (i) if such
Guarantor is a Current Guarantor, Schedule 5(k) hereto, and (ii) if such
Guarantor is an Additional Guarantor, Schedule 5(k) to the Supplement delivered
by such Guarantor, and each such Registration is subsisting and has not been
adjudged invalid or unenforceable, in whole or in part , except to the extent
that the unenforceability thereof could not reasonably be expected to have a
material adverse effect on the value of the Trademarks taken as a whole. To the
best of such Guarantor's knowledge, each Patent and Trademark constituting
Collateral is valid and enforceable. Except for Permitted Liens, such Guarantor
is the sole and exclusive owner of the entire and unencumbered right, title and
interest in and to each of the Patents and Trademarks constituting Collateral,
free and clear of all Liens. To the best of such Guarantor's knowledge, no
claim has been made that the use of any Patent or Trademark violates the rights
of any third person. Such Guarantor has used consistent standards of quality in
its manufacture of products sold under the Patents and Trademarks.
6. Covenants
---------
Each Guarantor covenants with the Administrative Agent as follows:
(a) Chief Executive Office. Such Guarantor shall maintain its place of
----------------------
business, or if it has more than one place of business, its chief executive
office, at the Office Location or at such other location in respect of which (i)
such Guarantor shall have provided the Administrative Agent with prior written
notice thereof, and (ii) UCC financing statements (or amendments thereto), in
form and substance reasonably satisfactory to the Administrative Agent, shall
have been filed within two months of such change.
(b) Further Assurances. Such Guarantor shall, at its own expense,
------------------
promptly execute and deliver all certificates, documents, instruments, financing
and continuation statements and amendments thereto, notices and other
agreements, and take
-8-
<PAGE>
all further action, that the Administrative Agent may reasonably request from
time to time, in order to perfect and protect the Security Interest granted
hereby or to enable the Administrative Agent to exercise and enforce its rights
and remedies hereunder with respect to the Collateral. Such Guarantor hereby
irrevocably appoints the Administrative Agent as such Guarantor's true and
lawful attorney-in-fact, in the name, place and stead of such Guarantor, to
perform on behalf of such Guarantor any and all obligations of such Guarantor
under this Agreement, and such Guarantor agrees that the power of attorney
herein granted constitutes a power coupled with an interest, provided, however,
that the Administrative Agent shall have no obligation to perform any such
obligation and such performance shall be at the sole cost and expense of such
Guarantor. If such Guarantor fails to comply with any of its obligations
hereunder, the Administrative Agent may do so in such Guarantor's name or in the
Administrative Agent's name, but at such Guarantor's expense, and such Guarantor
hereby agrees to reimburse the Administrative Agent in full for all reasonable
expenses, including reasonable attorney's fees, incurred by the Administrative
Agent in connection therewith.
(c) Information. Such Guarantor shall, at its own expense, furnish to
-----------
the Administrative Agent such information, reports, statements and schedules
with respect to the Collateral as the Administrative Agent may reasonably
request from time to time.
(d) Defense of Collateral. Such Guarantor shall, at its own expense,
---------------------
defend the Collateral against all claims of any kind or nature (other than
Permitted Liens, if any) of all Persons at any time claiming the same or any
interest therein adverse to the interests of the Administrative Agent, the
Issuing Bank, any Rate Protection Lender or any Lender, and such Guarantor shall
not cause, permit or suffer to exist any Lien upon the Collateral other than
Permitted Liens, if any.
(e) Uncertificated Securities. Such Guarantor shall cause each Person
-------------------------
which is an Issuer of an Uncertificated Security constituting the Collateral (i)
to register the Security Interest granted hereby upon the books of such Person
in accordance with Article 8 of the NYUCC, and (ii) to issue to the
Administrative Agent an initial Transaction Statement and issue to the
Administrative Agent subsequent Transaction Statements in accordance with
Section 8-408 of the UCC in effect in the State of New York.
(f) Delivery of Pledged Collateral. Each Certificated Security
------------------------------
representing an Equity Interest in a Person which is or shall become a
Subsidiary of the Borrower shall be promptly delivered to the Administrative
Agent, to be held by the Administrative Agent pursuant hereto, in suitable form
for transfer by delivery or accompanied by duly executed documents of transfer
or assignment in blank, all in form and substance satisfactory to the
Administrative Agent. Such Guarantor agrees that until so delivered, each such
Certificated Security shall be held by such Guarantor in trust for the benefit
of the Administrative Agent and be segregated from the other Property of such
Guarantor.
(g) Chattel Paper, Documents and Instruments. All of the Instruments,
----------------------------------------
Documents and Chattel Paper now or hereafter owned by or in the possession of
such Guarantor which constitute Collateral (other than checks received in the
ordinary course of collection) shall be promptly delivered to the Administrative
Agent, to be held
-9-
<PAGE>
by the Administrative Agent pursuant hereto, in suitable form for transfer by
delivery or accompanied by duly executed documents of transfer or assignment in
blank, all in form and substance reasonably satisfactory to the Administrative
Agent. Such Guarantor agrees that, with respect to all items of the Collateral
which it is or shall hereafter be obligated to deliver to the Administrative
Agent, until so delivered such items shall be held by such Guarantor in trust
for the benefit of the Administrative Agent and be segregated from the other
Property of such Guarantor.
(h) Accounts. Except as otherwise provided in this subsection, such
--------
Guarantor shall continue to collect in accordance with its customary practice,
at its own expense, all amounts due or to become due to such Guarantor in
respect of such Guarantor's Accounts and, prior to the occurrence of an Event of
Default, such Guarantor shall have the right to adjust, settle or compromise the
amount or payment of any such Account, all in accordance with its customary
practices. In connection with such collections, such Guarantor may take and, at
the direction of the Administrative Agent at any time that an Event of Default
shall have occurred and be continuing shall take, such action as such Guarantor
or the Administrative Agent may reasonably deem necessary or advisable to
enforce collection of such Accounts.
(i) Equipment and Inventory. Such Guarantor shall keep the Equipment
-----------------------
and Inventory constituting Collateral at the places listed on (i) if such
Guarantor is a Current Guarantor, Schedule 5(l) hereto, and (ii) if such
Guarantor is an Additional Guarantor, Schedule 5(l) to the Supplement delivered
by such Guarantor, and at such other places located within the United States in
respect of which (A) such Guarantor shall have provided the Administrative Agent
with prior written notice, and (B) UCC financing statements (or amendments
thereto), in form and substance satisfactory to the Administrative Agent, shall
have been filed within two months of such change. Such Guarantor shall promptly
furnish to the Administrative Agent a statement respecting any material loss or
damage to any of the Equipment or Inventory constituting Collateral except to
the extent that such loss or damage shall be insured pursuant to policies
required to be maintained pursuant to the Credit Agreement.
(j) Patents and Trademarks. Such Guarantor will continue to use for
----------------------
the duration of this Agreement, consistent standards of quality in its
manufacture of products sold under the Patents and Trademarks constituting
Collateral. Such Guarantor shall give to the Administrative Agent prompt
written notice thereof in the event that such Guarantor shall obtain any right
to any new Patent or Trademark or to any reissue, division, continuation,
renewal, extension, or continuation-in-part of any Patent or Trademark. Such
Guarantor shall prosecute diligently any applications of the Patents and
Trademarks constituting Collateral pending as of the date of this Agreement or
thereafter, and preserve and maintain all rights in applications of Patents and
Trademarks constituting Collateral consistent with past practice, including the
payment of all maintenance fees , except to the extent the failure so to
preserve or maintain such rights could not reasonably be expected to have a
material adverse effect on either (i) the value of the Patents taken as a whole,
or (ii) the value of the Trademarks taken as a whole. Such Guarantor shall not
abandon any right to file an application or any pending application for any
Patent or Trademark unless the failure so to do could not reasonably be expected
to have a material adverse effect on either (i) the value of the Patents taken
as a whole, or (ii) the value of the Trademarks taken as a whole. Such
Guarantor agrees that it will not enter into any agreement, including a license
agreement, with respect to any Patent or Trademark which
-10-
<PAGE>
is inconsistent with such Guarantor's past practices of licensing Patents or
Trademarks as the case may be. Such Guarantor hereby grants to the
Administrative Agent the right to visit such Guarantor's plants and facilities
which manufacture, inspect or store products sold under any of the Patents and
Trademarks, and to inspect the products and quality control records relating
thereto at reasonable times during regular business hours upon reasonable prior
notice.
7. Other Agreements of the Guarantors
----------------------------------
(a) No Duty to Preserve. Except as otherwise required by law, each
-------------------
Guarantor agrees that, with respect to the Collateral, neither the
Administrative Agent, the Issuing Bank, any Rate Protection Lender nor any
Lender has any obligation to preserve rights against prior or third parties.
(b) Administrative Agent's Duty With Respect to Collateral. Each
------------------------------------------------------
Guarantor agrees that the Administrative Agent's only duty with respect to the
Collateral delivered to the Administrative Agent shall be to use reasonable care
in the custody and preservation of the Collateral, and each Guarantor agrees
that if the Administrative Agent accords the Collateral substantially the same
kind of care as the Administrative Agent accords its own Property, such care
shall conclusively be deemed reasonable. In the event that all or any part of
the Certificated Securities or Instruments constituting the Collateral are lost,
destroyed or wrongfully taken while such Certificated Securities or Instruments
are in the possession of the Administrative Agent, each Guarantor agrees that it
will use its best efforts to cause the delivery of new Certificated Securities
or Instruments in place of the lost, destroyed or wrongfully taken Certificated
Securities or Instruments upon request therefor by the Administrative Agent,
without the necessity of any indemnity bond or other security, other than the
Administrative Agent's agreement of indemnity upon usual and customary terms
therefor. Anything herein to the contrary notwithstanding, the Administrative
Agent shall not be under any duty to send notices, perform services, exercise
any rights of collection, enforcement, conversion or exchange, vote, pay for
insurance, taxes or other charges or take any action of any kind in connection
with the management of the Collateral.
(c) Liability of Guarantors under Contracts and Agreements Included in
------------------------------------------------------------------
the Collateral. Anything herein to the contrary notwithstanding, (i) each
- --------------
Guarantor shall remain liable under the contracts and agreements to which it is
a party and which is included in the Collateral to the extent set forth therein
to perform all of its duties and obligations thereunder to the same extent as if
this Agreement had not been executed, (ii) the exercise by the Administrative
Agent, the Issuing Bank, any Rate Protection Lender or any Lender of any of its
rights hereunder shall not release any Guarantor from any of its duties or
obligations under any such contract or agreement, (iii) neither the
Administrative Agent, the Issuing Bank, any Rate Protection Lender nor any
Lender shall have any obligation or liability, including indemnification
obligations, under any such contract or agreement by reason of this Agreement,
nor shall the Administrative Agent, the Issuing Bank, any Rate Protection Lender
or any Lender be obligated to perform any of the obligations or duties of any
Guarantor thereunder, to make any payment, to make any inquiry as to the nature
or sufficiency of any payment received by any Guarantor or the sufficiency of
any performance by any party under any such contract or agreement or to take any
action to collect or enforce any claim for payment assigned hereunder, and (iv)
neither the Administrative Agent, the Issuing Bank, any Rate Protection Lender
nor any
-11-
<PAGE>
Lender shall be under any duty to send notices, perform services, exercise any
rights of collection, enforcement, conversion or exchange, vote, pay for
insurance, taxes or other charges or take any action of any kind in connection
with the management of the Collateral.
8. Events of Default
-----------------
Each of the following shall constitute an "Event of Default":
----------------
(a) The failure of any Guarantor to observe or perform any term,
covenant or agreement contained in this Agreement; or
(b) The occurrence and continuance of an Event of Default under, and
as such term is defined in, the Credit Agreement.
9. Remedies
--------
(a) Upon the occurrence of an Event of Default or at any time
thereafter during the continuance thereof, the Administrative Agent may:
(i) exercise any and all rights and remedies (A) granted to a
Secured Party by the UCC in effect in the State of New York or otherwise
allowed at law, and (B) otherwise provided by this Agreement, and
(ii) dispose of the Collateral as it may choose, so long as every
aspect of the disposition including the method, manner, time, place and
terms are commercially reasonable, and each Guarantor agrees that, without
limitation, the following are each commercially reasonable: (A) the
Administrative Agent shall not in any event be required to give more than
10 days' prior notice to the Guarantors of any such disposition, (B) any
place within the City of New York or the Counties of Nassau, Suffolk, and
Westchester may be designated by the Administrative Agent for disposition,
and (C) the Administrative Agent may adjourn any public or private sale
from time to time by announcement at the time and place fixed therefor, and
such sale may, without further notice, be made at the time and place to
which it was so adjourned.
(b) Each Guarantor acknowledges and agrees that the Administrative
Agent may elect, with respect to the offer or sale of any or all of the Equity
Interests constituting the Collateral, to conduct such offer and sale in such a
manner as to avoid the need for registration or qualification of such Equity
Interests or the offer and sale thereof under any Federal or state securities
laws and that the Administrative Agent is authorized to comply with any
limitation or restriction in connection with such sale as counsel may advise the
Administrative Agent is reasonably necessary in order to avoid any violation of
applicable law, compliance with such procedures as may restrict the number of
prospective bidders and purchasers, require that such prospective bidders and
purchasers have certain qualifications, and restrict such prospective bidders
and purchasers to Persons who will represent and agree that they are purchasing
for their own account for investment and not with a view to the distribution or
resale of such Equity Interests, or in order to obtain any required approval of
the sale or of the purchaser by any Governmental Authority. Each Guarantor
further acknowledges and agrees that any such transaction may be at
-12-
<PAGE>
prices and on terms less favorable than those which may be obtained through a
public sale and not subject to such restrictions and agrees that,
notwithstanding the foregoing, the Administrative Agent is under no obligation
to conduct any such public sale and may elect to impose any or all of the
foregoing restrictions, or any other restrictions which may be reasonably
necessary in order to avoid any such registration or qualification, at its sole
discretion or with the consent or direction of the Required Lenders, and that
any such offer and sale so conducted shall be deemed to have been made in a
commercially reasonable manner.
(c) To the extent permitted by law, each Guarantor hereby expressly
waives and covenants not to assert any appraisement, valuation, stay, extension,
redemption or similar laws, now or at any time hereafter in force, which might
delay, prevent or otherwise impede the performance or enforcement of this
Agreement.
(d) Notwithstanding anything to the contrary contained in this
Agreement, any other Loan Document or in any other agreement, instrument or
document executed by any Guarantor and delivered to the Administrative Agent,
the Issuing Bank or any Lender, neither the Administrative Agent, the Issuing
Bank nor any Lender will take any action pursuant to this Agreement, any other
Loan Document or any other document referred to above which would constitute or
result in any assignment of any license, approval, permit, certificate or other
authorization issued by the FCC or any change of control of the Borrower or any
Subsidiary if such assignment or change of control would require, under then
existing law, the prior approval of the FCC without first obtaining such prior
approval of the FCC. Upon the occurrence of an Event of Default or at any time
thereafter during the continuance thereof, each Guarantor waives, to the extent
permitted by law, any right it may have to oppose, and agrees to take any action
that the Administrative Agent may reasonably request in order to obtain from the
FCC, such approval as may be necessary to enable the Administrative Agent, the
Issuing Bank and the Lenders to exercise and enjoy the full rights and benefits
granted to the Administrative Agent, the Issuing Bank and the Lenders by this
Agreement, the other Loan Documents and the other documents referred to above,
including specifically, at the cost and expense of the Borrower, the use of
commercially reasonable efforts to assist in obtaining approval of the FCC for
any action or transaction contemplated by this Agreement for which such approval
is or shall be required by law, and specifically, without limitation, upon
request, to prepare, sign and file with the FCC the assignor's or transferor's
portion of any application or applications for consent to the assignment of
license, approval, permit, certificate or other authorization or transfer of
control necessary or appropriate under the FCC's rules and regulations for
approval of (i) any sale or other disposition of the Collateral by or on behalf
of the Administrative Agent, or (ii) any assumption by the Administrative Agent
of voting rights in the Collateral effected in accordance with the terms of this
Agreement. It is understood and agreed that all foreclosure and related actions
will be made in accordance with the Communications Act and applicable
regulations and published policies and decisions of the FCC pertaining to such
foreclosure and related actions.
10. Voting
------
Notwithstanding anything to the contrary contained in this Agreement,
each Guarantor shall have the right to vote all Securities constituting its
Collateral and receive and retain all dividends and distributions thereon until
such time, if any, as an Event of
-13-
<PAGE>
Default shall have occurred and be continuing and the Administrative Agent shall
have notified such Guarantor that the Administrative Agent shall have elected to
terminate the rights of such Guarantor under this section, at which time the
Administrative Agent shall then be vested with the right to vote all Securities
constituting the Collateral and receive and retain all dividends and
distributions thereon, until such time as such Event of Default is cured or
waived.
11. Termination
-----------
On any date upon which (i) the Lenders shall no longer have any
obligation to make Loans, (ii) the Issuing Bank shall no longer have (A) any
obligation to issue Letters of Credit and (B) any obligations under the Letters
of Credit theretofor issued, and (iii) the Obligations shall have been paid in
full in cash, the outstanding principal balance of the Loans together with all
accrued interest thereon, all of the Reimbursement Obligations and all other
sums then due and owing under the Loan Documents, the Liens granted hereby shall
cease and the Administrative Agent shall, at the Guarantors' expense (A) execute
and deliver all UCC Termination Statements and other documents necessary to
terminate the Liens granted hereby that the Guarantors shall have reasonably
requested, and (B) return to the Guarantors all their respective Collateral that
shall remain in the possession of the Administrative Agent at such time.
12. Notices
-------
Except as otherwise specifically provided herein, all notices,
requests, consents, demands, waivers and other communications hereunder shall be
in writing (including facsimile) and shall be electronically transmitted or
mailed by registered or certified mail or delivered in person, and all
statements, reports, documents, certificates and papers to be delivered
hereunder shall be mailed by first class mail or delivered in person, in each
case to the respective parties to this Agreement as follows: in the case of the
Administrative Agent or the Borrower, as set forth in section 11.2 of the Credit
Agreement, in the case of each Current Guarantor, as set forth adjacent to the
name of such Current Guarantor on the signature page(s) hereof, and, in the case
of each Additional Guarantor, as set forth adjacent to the name of such
Additional Guarantor on the signature page(s) of the Supplement delivered by
such Additional Guarantor, or to such other addresses as to which the
Administrative Agent may be hereafter notified by the respective parties hereto.
Any notice, request, consent, demand, waiver or communication given in
accordance with the provisions of this section shall be conclusively deemed to
have been received by a party hereto and to be effective on the day on which
delivered to such party at its address specified above or, if sent by registered
or certified mail, on the delivery date noted on the receipt therefor, provided
that a notice of change of address shall be deemed to be effective only when
actually received. Any party hereto may rely on signatures of the other parties
hereto which are transmitted by facsimile or other electronic means as fully as
if originally signed.
13. Expenses
--------
Each Guarantor agrees that it shall, upon demand, pay to the
Administrative Agent any and all reasonable out-of-pocket sums, costs and
expenses, which the Administrative Agent, the Issuing Bank or any Lender may pay
or incur defending,
-14-
<PAGE>
protecting or enforcing this Agreement (whether suit is instituted or not),
reasonable attorneys' fees and disbursements. All sums, costs and expenses which
are due and payable pursuant to this section shall bear interest, payable on
demand, at the highest rate then payable on the Borrower Obligations.
14. Repayment in Bankruptcy, etc.
----------------------------
If, at any time or times subsequent to the payment of all or any part
of the Borrower Obligations or the Guarantor Obligations, the Administrative
Agent, the Issuing Bank or any Lender shall be required to repay any amounts
previously paid by or on behalf of the Borrower or any Guarantor in reduction
thereof by virtue of an order of any court having jurisdiction in the premises,
as a result of an adjudication that such amounts constituted preferential
payments or fraudulent conveyances, the Guarantors unconditionally agree to pay
to the Administrative Agent within 10 days after demand a sum in cash equal to
the amount of such repayment, together with interest on such amount from the
date of such repayment by the Administrative Agent, the Issuing Bank or such
Lender, as the case may be, to the date of payment to the Administrative Agent
at the applicable after-maturity rate set forth in the Credit Agreement.
15. Additional Guarantors
---------------------
Upon the execution and delivery to the Administrative Agent of a
Supplement by any Person, appropriately acknowledged, such Person shall be a
Guarantor.
16. Agreement to Pay; Subordination
-------------------------------
In furtherance of the foregoing and not in limitation of any other
right that the Administrative Agent, the Issuing Bank, any Lender or any Rate
Protection Lender has at law or in equity against any Guarantor by virtue
hereof, upon the failure of the Borrower or any other Loan Party to pay any
Borrower Obligations when and as the same shall become due, whether at maturity,
be acceleration, after notice of prepayment or otherwise, each Guarantor hereby
promises to and will forthwith pay, or cause to be paid, to the Administrative
Agent in cash the amount of such unpaid Obligations. Upon payment by any
Guarantor of any sums to the Administrative Agent as provided above, all rights
of such Guarantor against the Borrower arising as a result thereof by way of
right of subrogation, contribution, reimbursement, indemnity or otherwise shall
in all respects be subordinate and junior in right of payment to the prior
indefeasible payment in full in cash of all the Borrower Obligations. In
addition, any indebtedness of the Borrower now or hereafter held by any
Guarantor is hereby subordinated in right of payment to the prior payment in
full in cash of the Borrower Obligations. If any amount shall erroneously be
paid to any Guarantor on account of (i) such subrogation, contribution,
reimbursement, indemnity or similar right or (ii) any such indebtedness of the
Borrower, such amount shall be held in trust for the benefit of the
Administrative Agent, the Issuing Bank, the Lenders and the Rate Protection
Lenders and shall forthwith be paid to the Administrative Agent to be credited
against the payment of the Borrower Obligations, whether matured or unmatured,
in accordance with the terms of the Loan Documents.
-15-
<PAGE>
17. Miscellaneous
-------------
(a) Except as otherwise expressly provided in this Agreement, each
Guarantor hereby waives presentment, demand for payment, notice of default,
nonperformance and dishonor, protest and notice of protest of or in respect of
this Agreement, the other Loan Documents, each Interest Protection Arrangement,
and the Borrower Obligations, notice of acceptance of this Agreement and
reliance hereupon by the Administrative Agent, the Issuing Bank and each Lender,
and the incurrence of any of the Borrower Obligations, notice of any sale of
collateral security or any default of any sort.
(b) No Guarantor is relying upon the Administrative Agent, the Issuing
Bank or any Lender to provide to such Guarantor any information concerning the
Borrower or any of its Subsidiaries, and each Guarantor has made arrangements
satisfactory to such Guarantor to obtain from the Borrower on a continuing basis
such information concerning the Borrower and its Subsidiaries as such Guarantor
may desire.
(c) Each Guarantor agrees that any statement of account with respect
to the Borrower Obligations from the Administrative Agent, the Issuing Bank or
any Lender to the Borrower which binds the Borrower shall also be binding upon
such Guarantor, and that copies of said statements of account maintained in the
regular course of the Administrative Agent's, the Issuing Bank's or such
Lender's business, as the case may be, may be used in evidence against such
Guarantor in order to establish its Guarantor Obligations.
(d) Each Guarantor acknowledges that it has received a copy of the
Loan Documents and each Interest Rate Protection Arrangement and has approved of
the same. In addition, such Guarantor acknowledges having read each Loan
Document and each such Interest Rate Protection Arrangement and having had the
advice of counsel in connection with all matters concerning its execution and
delivery of this Agreement.
(e) No Guarantor may assign any right, or delegate any duty, it may
have under this Agreement.
(f) Subject to the limitations set forth in section 2(b), the
Guarantor Obligations shall be joint and several and shall also be joint and
several.
(g) This Agreement is the "Subsidiary Guaranty" referred to in the
Credit Agreement, and is subject to, and should be construed in accordance with,
the provisions thereof. Each of the Administrative Agent, the Guarantors and the
Borrower acknowledges that certain provisions of the Credit Agreement,
including, without limitation, sections 1.2 (Principles of Construction), 11.1
(Amendments and Waivers), 11.3 (No Waiver; Cumulative Remedies), 11.4 (Survival
of Certain Obligations), 11.7 (Successors and Assigns), 11.8 (Counterparts),
11.9 (Adjustments; Set-off), 11.12 (Governing Law), 11.13 (Headings), 11.14
(Severability), 11.15 (Integration), 11.16 (Limitation of Liability), 11.17
(Consent to Jurisdiction), 11.18 (Service of Process), 11.19 (No Limitation on
Service or Suit) and 11.20 (WAIVER OF TRIAL BY JURY) thereof, are made
applicable to this Agreement and all such provisions are incorporated by
reference herein as if fully set forth herein.
-16-
<PAGE>
IN EVIDENCE of the agreement by the parties hereto to the terms and
conditions herein contained, each such party has caused this Subsidiary Guaranty
and Security Agreement to be duly executed on its behalf.
Beltway Media Partners
By: Salem Communications
Corporation, a General Partner
By: /s/ Eric H. Halvorson
---------------------
Name: Eric H. Halvorson
Title: Executive Vice President
By: Golden Gate Broadcasting
Company, Inc., a General Partner
By: /s/ Eric H. Halvorson
---------------------
Name: Eric H. Halvorson
Title: Vice President
By: New Inspiration Broadcasting Company,
Inc.,
a General Partner
By: /s/ Eric H. Halvorson
---------------------
Name: Eric H. Halvorson
Title: Vice President
ATEP Radio, Inc.
Bison Media, Inc.
Caron Broadcasting, Inc.
Common Ground Broadcasting, Inc.
Golden Gate Broadcasting Company, Inc.
Inland Radio, Inc.
Inspiration Media of Texas, Inc.
Inspiration Media, Inc.
New England Continental Media, Inc.
New Inspiration Broadcasting Company, Inc.
Oasis Radio, Inc.
Pennsylvania Media Associates, Inc.
Radio 1210, Inc.
Salem Communications Corporation, a
Delaware corporation
Salem Media Corporation
Salem Media of California, Inc.
Salem Media of Colorado, Inc.
Salem Media of Louisiana, Inc.
-17-
<PAGE>
Salem Media of Ohio, Inc.
Salem Media of Oregon, Inc.
Salem Media of Pennsylvania, Inc.
Salem Media of Texas, Inc.
Salem Music Network, Inc.
Salem Radio Network Incorporated
Salem Radio Representatives, Inc.
South Texas Broadcasting, Inc.
SRN News Network, Inc.
Vista Broadcasting, Inc.
By: /s/ Eric H. Halvorson
---------------------
Name: Eric H. Halvorson
Title: Vice President
Address for Notices:
--------------------
4880 Santa Rosa Road
Suite 300
Camarillo, California 93012
Attention:Jonathon L. Block
Telephone:(805)987-0400(ext.106)
Telecopy: (805)384-4505
SALEM COMMUNICATIONS CORPORATION
By: /s/ Eric H. Halvorson
---------------------
Name: Eric H. Halvorson
Title: Executive Vice President
THE BANK OF NEW YORK, as
Administrative Agent
By: ILLEGIBLE
-----------------
Name:
Title:
-18-
<PAGE>
SCHEDULE 5(c)
TO SUBSIDIARY GUARANTY
SCHEDULE 5(c) TO THE SUBSIDIARY GUARANTY AND SECURITY AGREEMENT
DATED AS OF SEPTEMBER 25, 1997
LIST OF OFFICE LOCATIONS
------------------------
1. The chief executive office of all Guarantors is 4880 Santa Rosa Road, Suite
300, Camarillo, California 93012.
<PAGE>
SCHEDULE 5(g)
TO SUBSIDIARY GUARANTY
SCHEDULE 5(g) TO THE SUBSIDIARY GUARANTY AND SECURITY AGREEMENT
DATED AS OF SEPTEMBER 25, 1997
LIST OF EQUITY INTERESTS
------------------------
1. Borrower, New Inspiration Broadcasting Co., Inc. and Golden Gate
Broadcasting Co., Inc. are the sole partners of Beltway Media Partners, as
follows:
New Inspiration Broadcasting Co., Inc. 45% ownership interest
Golden Gate Broadcasting Co., Inc. 40% ownership interest
Borrower 15% ownership interest
<PAGE>
SCHEDULE 5(h)
TO SUBSIDIARY GUARANTY
SCHEDULE 5(h) TO THE SUBSIDIARY GUARANTY AND SECURITY AGREEMENT
DATED AS OF SEPTEMBER 25, 1997
LIST OF CHATTEL PAPER, DOCUMENTS AND INSTRUMENTS
- ------------------------------------------------
Promissory Note, dated February 12, 1992, in the original
principal amount of $20,000,000, made by Beltway Media Partners
to Salem Communications Corporation, New Inspiration
Broadcasting Company, Inc. and Golden Gate Broadcasting Company,
Inc.
<PAGE>
SCHEDULE 5(j)
-------------
TO BORROWER SECURITY AGREEMENT
------------------------------
Schedule 5(j) to the Subsidiary Guaranty and Security Agreement
Dated as of October 8, 1997
ADDRESSES FOR EQUIPMENT AND INVENTORY LOCATIONS
-----------------------------------------------
<TABLE>
<CAPTION>
ENTITY STUDIO/OFFICE LOCATION TRANSMITTER LOCATION
------ ---------------------- --------------------
<S> <C> <C>
ATEP Radio, Inc. KDAR(FM) AT&T site at Hall Canyon
P.O. Box 5626/Zip 93031 2.9 Km NE of Ventura,
500 Esplanade Drive, Suite 1500 Ventura County, CA
Oxnard, CA 93030
Beltway Media Partners WAVA(FM) 5230 Lee Highway
1901 N. Moore Street, Suite 200 Arlington, VA 22207
Arlington, VA 22209
Bison Media, Inc. KGFT(FM), KPRZ(FM),KBIQ(FM): KBIQ(FM)
6760 Corporate Dr., Suite 340 5145 Centennial Blvd.
Colorado Springs, CO 80919 Colorado Springs, CO
KPRZ-FM
6105 Transmitter Ln.,
Cheyenne Mountains, El Paso
County, CO
KTSL(FM): Needham Hill, 1 km S of
1212 N. Washington, Suite 124 Melville Road, E of
Spokane, WA 99201 FourLakes, 8 km ESE of
Medical Lake, WA
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE 5(j)
-------------
TO SUBSIDIARY GUARANTY
----------------------
ENTITY STUDIO/OFFICE LOCATION TRANSMITTER LOCATION
- ------ ---------------------- --------------------
<S> <C> <C>
Caron Broadcasting, Inc. WITH(AM 1220 Curtain Avenue
3700 Koppers St., #124 Baltimore, MD
Baltimore, MD 21227
WTSJ(AM) 9th and Willow Run
641 West 9th St. Covington, KY 41011
Covington, KY 41011
WHK(FM) 6901 Hahn Street NE
12721 Abbey Road Louisville, OH
Cleveland, OH 44133
WHLO(AM) Road and Cleveland
2780 S. Arlington Massillon Road
Akron, OH 44312 Fairlawn, OH
Common Ground KKMS(AM) 2110 Cliff Road
Broadcasting, Inc. 2110 Cliff Road Eagan, MN 55122
Eagan, MN 55122
KPXQ-AM 3701 E. Pinnacle Peak Rd.
2425 E. Camelback Road, #570 Phoenix, AZ
Phoenix, AZ 85016
WHK-AM 3600 Pleasant Valley Road
12727 Abbey Road Seven Hill, OH
Cleveland, OH 44133
Golden Gate Broadcasting KFAX 3636 Enterprise Road
Co., Inc. P.O. Box 8125, Zip Code 94537-8125 Alameda County
39138 Fremont Blvd., 3rd Floor Hayward, CA
Fremont, CA 94538
</TABLE>
<PAGE>
SCHEDULE 5(j)
-------------
TO SUBSIDIARY GUARANTY
----------------------
<TABLE>
<CAPTION>
ENTITY STUDIO/OFFICE LOCATION TRANSMITTER LOCATION
------ ---------------------- --------------------
<S> <C> <C>
Inland Radio, Inc. KKLA(AM)/KKLA(FM) KKLA(AM)
922 Inland Center Drive 990 Inland Center Drive
San Bernardino, CA 92408 San Bernardino, CA 92408
KKLA(FM)
Main: Mt. Wilson Antenna
Farm
Emergency: Flint Peak, Los
Angeles
Inspiration Media of KWRD(FM) Hunter Farrell Road
Texas, Inc. 545 E. John Carpenter Freeway, Suite 0.45 miles E of Myers Road
450 Irving, TX
Irving, TX 75062
Inspiration Media, KGNW-AM/KLFE-AM/KKOL-AM KKOL-AM
Inc. 2815 Second Avenue, Suite 550 1100 S.W. Florida Street
Seattle, WA 98121 Seattle, WA
KLFE-AM
NE Corner Pt. Blakely
Pt. Madison, Manitou Drive
Near Winslow, WA
New England WPZE(AM)/WEZE(AM) WPZE(AM)
Continental Media, P.O. Box 9121 Corner of Vershire St. and
Inc. 500 Victory Road Harriet Ave.
North Quincy, MA 02171 Quincy, MA 02171
WEZA(AM)
4068 Mystic Valley Pkwy.
Middlesex County
Medford, MA
</TABLE>
<PAGE>
SCHEDULE 5(j)
-------------
TO SUBSIDIARY GUARANTY
----------------------
<TABLE>
<CAPTION>
ENTITY STUDIO/OFFICE LOCATION TRANSMITTER LOCATION
------ ---------------------- --------------------
<S> <C> <C>
New Inspiration KKLA-AM 990 Inland Center Drive
Broadcasting Co., Inc. 922 Inland Center Drive San Bernardino, CA 92408
San Bernardino, CA 92408
KKLA(FM) Main: Mt. Wilson Antenna
701 N. Brand Blvd. Suite 550 Farm
Glendale, CA 91203 Emergency: Flint Peak
Los Angeles
Oasis Radio, Inc. KAVC-FM 2064 15th Street West
43301 North Division, Suite 201 Rosamond, CA 93560
Lancaster, CA 93535
Pennsylvania Media WFIL(AM)/WZZD(AM) 117 Ridge Peak
Associates, Inc. 117 Ridge Peak Lafayette Hill, PA 19444
Lafayette Hill, PA 19444
Radio 1210, Inc. KPRZ(AM) 1835 Seaquest Trail
9255 Towne Centre Dr., Suite 535 Fortuna Ranch Road
San Diego, CA 92121-3038 Encinatas, CA
Salem Media of KLTX(AM) (K-LIGHT) 6417 E. Alondra Blvd.
California, Inc. 701 N. Brand Blvd., Suite 550 Paramount, CA 90723
Glendale, CA 91203
Salem Media of KRKS(AM&FM)/KNUS(AM) KRKS(AM)
Colorado, Inc. 3131 South Vaughn Way, Suite 601 6535 W. Jewell Ave.
Aurora, CO 80014 Lakewood, CO
KRKS(FM)
CO-111 Mine Lane, 4.8
Kilometers West of Boulder,
CO
KNUS(AM)
US Highway 85, 3 miles SW
of Brighton, CO
</TABLE>
<PAGE>
SCHEDULE 5(j)
-------------
TO SUBSIDIARY GUARANTY
----------------------
<TABLE>
<CAPTION>
ENTITY STUDIO/OFFICE LOCATION TRANSMITTER LOCATION
------ ---------------------- --------------------
<S> <C> <C>
Salem Media of WRFD-AM .8 km E from intersection of
Ohio, Inc. 8101 North High Street, Suite 360 Powell Rd., U.S. Highway 23,
Columbus, OH 43235-1406 Westerville, OH
Salem Media of KPDQ(AM) & (FM) KPDQ(AM)
Oregon, Inc. 5110 S.E. Stark St. Approx. 2.7 miles East of
Portland, OR 97215 Beaverton, OR
KPDQ-FM
OR - 4700 N.W. Council
Crest Drive
Portland, OR 97207
Salem Media of WORD(FM)/WPIT(AM) 3201 Mt. Troy Road
Pennsylvania, Inc. 7 Parkway Center Allegheny County
875 Greentree Road, Suite 625 Pittsburgh, PA 15212
Pittsburgh, PA 15220
Salem Media of KSLR-AM US Highway 87
Texas, Inc. 9601 McAllister Freeway, Suite 1200 China Grove, TX
San Antonio, TX 78216
Salem Media Corporation WMCA-AM/WWDJ-AM WMCA-AM
201 Route 17N, Suite 601 949 Belleville Turnpike
Rutherford, NJ 07070 Kearny, NJ
WWDJ-AM
110 Commerce Way
Hackensack, NJ
WYLL-FM 11 W. Dundee Road
25 Northwest Point, Suite 400 Arlington Heights, IL
Elk Grove Village, IL 60007
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE 5(j)
-------------
TO SUBSIDIARY GUARANTY
----------------------
ENTITY STUDIO/OFFICE LOCATION TRANSMITTER LOCATION
------ ---------------------- --------------------
<S> <C> <C>
Salem Music Network (The Word in Music) N/A
1465 Kelly Johnson Blvd., Suite 340
Colorado Springs, CO 80920
(Morningstar) N/A
402 BNA Drive, Suite 207
Nashville, TN 37217
Salem Radio Network, SRN Hunter Farrell Rd., 0.45 miles
Incorporated 545 E. John Carpenter Freeway, #450 E of Meyers Rd., Irving, TX
Irving, TX 75062
SRN East 5230 Lee Highway
1901 N. Moore Street, Suite 201 Arlington, VA
Arlington, VA 22209
Salem Radio 600 E. Las Colinas Blvd., Suite 560 N/A
Representatives, Inc. Irving, TX 75039
402 BNA Drive, Suite 207
Nashville, TN 37217
25 Northwest Point, Suite 400
Elk Grove Village, IL 60007
2815 Second Ave., Suite 550
Seattle, WA 98121
4880 Santa Rosa Road, Suite 300
Camarillo, CA 93012
South Texas Broadcasting, 6161 Savoy Drive, Suite 1100 Scott Rd., off Hwy. 105
Inc. Houston, TX 77036 7 miles west of Cleveland, TX
SRN News Network, Inc. 1901 N. Moore St., Suite 201 N/A
Arlington, VA 22209
</TABLE>
<PAGE>
SCHEDULE 5(j)
-------------
TO SUBSIDIARY GUARANTY
----------------------
<TABLE>
<CAPTION>
ENTITY STUDIO/OFFICE LOCATION TRANSMITTER LOCATION
- ------ ---------------------- --------------------
<S> <C> <C>
Vista Broadcasting, Inc. KFIA (AM)/KTZA(AM) KFIA(AM)
1425 Riverpark Drive, Suite 520 1701 Athens Avenue
Sacramento, CA 95815 Lincoln, CA
KTKZ(AM)
3500 Old Auburn Road
Roseville, CA
</TABLE>
<PAGE>
SCHEDULE 5(k)
TO SUBSIDIARY GUARANTY
SCHEDULE 5(k) TO THE SUBSIDIARY GUARANTY AND SECURITY AGREEMENT
DATED AS OF SEPTEMBER 25, 1997
LIST OF REGISTRATIONS
---------------------
A. Patents
-------
None
B. Trademarks
----------
None
C. Servicemarks
------------
1. "Salem Radio Network" - Reg. No. 1,968,784
2. "SRN" - Reg. No. 1,935,920
3. Salem Radio Network Logo - Reg. No. 1,946,784
4. "StandardNews" - Reg. No. 1,869,020
5. "The Washington Newsdesk" - Reg. No. 1,875,741
<PAGE>
ANNEX A TO THE SUBSIDIARY GUARANTY
FORM OF SUPPLEMENT TO SUBSIDIARY GUARANTY
-----------------------------------------
SUBSIDIARY GUARANTY AND SECURITY AGREEMENT, dated as of September
25, 1997, by and among the Guarantors party thereto and The Bank of New York, as
Administrative Agent (as the same may be amended, supplemented or otherwise
modified from time to time, the "Agreement").
---------
[DATE]
Capitalized terms used herein which are not otherwise defined herein
shall have the respective meanings ascribed thereto in the Agreement. Pursuant
to section 15 of the Agreement, by execution and delivery of this Supplement
and, upon acceptance hereof by the Administrative Agent, the undersigned (i)
shall be, and shall be deemed to be, a "Guarantor" under, and as such term is
defined in, the Agreement, (ii) shall have made, and shall be deemed to have
made, the representations and warranties contained in section 5 of the Agreement
on and as of the date hereof, (iii) as security for the payment and performance
in full of its Guarantor Obligations, does hereby create and grant to the
Administrative Agent, its successors and permitted assigns, for its benefit and
the ratable benefit of the Issuing Bank, the Lenders and the Rate Protection
Lenders, their respective successors and permitted assigns, a security interest
in the Collateral (as defined in the Agreement) of the Additional Guarantor and
(iv) shall have made, and shall be deemed to have made, all of the covenants and
agreements of a Guarantor set forth in the Agreement.
[NAME OF ADDITIONAL GUARANTOR]
By:______________________________
Name:____________________________
Title:___________________________
Address for Notices:
--------------------
____________________________
____________________________
____________________________
Attention:__________________
_______________
Telephone: (___) ___-____
Telecopy: (___) ___-____
<PAGE>
Accepted and agreed to as
of the date first above written:
THE BANK OF NEW YORK, as Administrative Agent
By:________________________
Name:______________________
Title:_____________________
[SCHEDULES CORRESPONDING TO THE SCHEDULES
IN THE AGREEMENT ARE TO BE ATTACHED]
-2-
<PAGE>
ANNEX B TO THE SUBSIDIARY GUARANTY
AND SECURITY AGREEMENT
DATED AS OF SEPTEMBER 25, 1997
FORM OF TRANSACTION STATEMENT
-----------------------------
THIS STATEMENT IS MERELY A RECORD OF THE RIGHTS OF THE ADDRESSEE AS OF THE
TIME OF ITS ISSUANCE. DELIVERY OF THIS STATEMENT, OF ITSELF, CONFERS NO RIGHT
ON THE RECIPIENT. THIS STATEMENT IS NEITHER A NEGOTIABLE INSTRUMENT NOR A
SECURITY.
[DATE]
The Bank of New York, as Administrative Agent
One Wall Street
New York, New York 10286
Ladies and Gentlemen:
The undersigned, _________________ (the "Issuer"), hereby acknowledges
------
receipt of the Subsidiary Guaranty and Security Agreement, dated as of September
25, 1997 (as the same may be amended, supplemented or otherwise modified from
time to time, the "Agreement"), by and among each Guarantor party thereto, SALEM
---------
COMMUNICATIONS CORPORATION (the "Borrower") and THE BANK OF NEW YORK, as
--------
Administrative Agent (in such capacity, the "Administrative Agent") and (i)
--------------------
consents to the terms thereof and (ii) confirms that a pledge of the right,
title and interest in the security referred to below has been registered in the
books and records of the Issuer in the name of the Administrative Agent, as set
forth below. This Transaction Statement is issued under Section 8-408 of the
New York State Uniform Commercial Code.
1. DESCRIPTION OF THE SECURITY:_______________________.
2. NUMBER OF SHARES OR UNITS PLEDGED:_________________.
3. REGISTERED OWNER:
[NAME OF PLEDGING GUARANTOR]
__________________________
__________________________
__________________________
Attention:_______________________
_______________________
Taxpayer ID# ___________.
<PAGE>
4. REGISTERED PLEDGEE AND TAXPAYER IDENTIFICATION NUMBER (IF ANY):
The Bank of New York, as Administrative Agent
One Wall Street
New York, New York 10286
Attention:___________________
________________
Taxpayer ID# 13-5160382
5. DATE OF REGISTRATION OF THE PLEDGE: The pledge described herein was
registered on _______ on the books and records of the Issuer.
6. NOTATION OF LIENS: There are no liens, restrictions or adverse claims as to
which the Issuer has a duty under Section 8-403(4) of the Uniform
Commercial Code (the "UCC") to which such security is or may be subject,
---
other than those set forth in the Loan Documents (as defined in that
certain Credit Agreement, dated as of the date hereof, by and among the
Borrower, the Lenders party thereto and The Bank of New York, as
Administrative Agent and Bank of America NT & SA, as Documentation Agent,
as amended, supplemented or otherwise modified from time to time) or [LIST
APPLICABLE ORGANIZATIONAL DOCUMENTS].
The Issuer hereby agrees, at the request of the Administrative Agent
and at the expense of the Issuer, to register any further assignment or transfer
of the foregoing security effected in the manner contemplated by the Agreement
and promptly to furnish to the Administrative Agent and any such assignee or
transferee any statement contemplated by Section 8-408 of the UCC.
[NAME OF ISSUER]
By:____________________________
Name:__________________________
Title:_________________________
-2-
<PAGE>
ANNEX C-1 TO THE SUBSIDIARY GUARANTY
AND SECURITY AGREEMENT
DATED AS OF SEPTEMBER 25, 1997
FORM OF GRANT OF SECURITY INTEREST (PATENTS)
--------------------------------------------
[NAME OF GUARANTOR], a _____________ corporation (the "Guarantor"), is
---------
obligated to THE BANK OF NEW YORK, as Administrative Agent (the "Administrative
--------------
Agent"), and has entered into a Subsidiary Guaranty and Security Agreement,
- -----
dated as of September 25, 1997 (as the same may be amended, supplemented or
otherwise modified from time to time, the "Agreement"), by and among each
---------
Guarantor party thereto, SALEM COMMUNICATIONS CORPORATION (the "Borrower") and
--------
THE BANK OF NEW YORK, as Administrative Agent (in such capacity, the
"Administrative Agent").
- ---------------------
Pursuant to the Agreement, the Guarantor granted to the Administrative
Agent a security interest in all of the right, title and interest of the
Guarantor in and to the letters patent or applications for letters patent, of
the United States, more particularly described on Schedule 1 (the "Patents")
-------
together with any reissue, continuation, continuation-in-part or extension
thereof, and all proceeds thereof, any and all causes of action which may exist
by reason of infringement thereof for the full term of the Patents (the
"Collateral"), to secure the prompt payment, performance and observance of the
- -----------
Guarantor Obligations (as defined in the Agreement).
For good and valuable consideration, the receipt of which is hereby
acknowledged, and for the purpose of recording the grant of the security
interest as aforesaid, the Guarantor does hereby further assign to the
Administrative Agent, and grant to the Administrative Agent a security interest
in, the Collateral to secure the prompt payment, performance and observance of
the Guarantor Obligations.
The Guarantor does hereby further acknowledge and affirm that the
rights and remedies of the Administrative Agent with respect to the assignment
of and security interest in the Collateral made and granted hereby are set forth
in the Agreement, the terms and provisions of which are hereby incorporated
herein by reference as if fully set forth herein.
Upon the indefeasible cash payment in full of all Guarantor
Obligations (as such term is defined in the Agreement), the Administrative Agent
will take whatever actions are necessary at the Guarantor's expense to release
or reconvey to Guarantor all right, title and interest of the Guarantor in and
to the Patents.
The Administrative Agent's address is: One Wall Street, New York, New
York 10286.
<PAGE>
IN WITNESS WHEREOF, the Guarantor has caused this Assignment to be
duly executed by its duly authorized officer as of the __ day of _____, ____.
[NAME OF GUARANTOR]
By:_____________________________
Name:___________________________
Title:__________________________
-2-
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this __ day of _____, ____, before me personally came
___________________, to me known, who, being by me duly sworn, did depose and
say that he resides at __________________; that he is the ________ of [NAME OF
GUARANTOR], the corporation described in and which executed the above
instrument, and that he signed his name thereto by order of the board of
directors thereof.
____________________________
Notary Public
[Notary's Stamp]
-3-
<PAGE>
Schedule 1
to Grant of Security Interest (Patents)
Dated as of __________
-4-
<PAGE>
ANNEX C-2 TO THE SUBSIDIARY GUARANTY
AND SECURITY AGREEMENT
DATED AS OF SEPTEMBER 25, 1997
FORM OF GRANT OF SECURITY INTEREST (TRADEMARKS)
-----------------------------------------------
[NAME OF GUARANTOR], a _____________ corporation (the
"Guarantor"), is obligated to THE BANK OF NEW YORK, as Administrative Agent (the
---------
"Administrative Agent"), and has entered into a Subsidiary Guaranty and Security
--------------------
Agreement, dated as of September 25, 1997 (as the same may be amended,
supplemented or otherwise modified from time to time, the "Agreement"), by and
---------
among each Guarantor party thereto, SALEM COMMUNICATIONS CORPORATION (the
"Borrower") and THE BANK OF NEW YORK, as Administrative Agent (in such capacity,
--------
the "Administrative Agent").
--------------------
Pursuant to the Agreement, the Guarantor granted to the Administrative
Agent a security interest in all of the right, title and interest of the
Guarantor in and to the trademarks listed on Schedule 1, which trademarks are
registered in the United States Patent and Trademark Office (the "Trademarks"),
----------
together with the goodwill of the business symbolized by the Trademarks and the
applications and registrations therefor, and all proceeds thereof, any and all
causes of action which may exist by reason of infringement thereof (the
"Collateral"), to secure the prompt payment, performance and observance of the
----------
Guarantor Obligations (as defined in the Agreement).
For good and valuable consideration, the receipt of which is hereby
acknowledged, and for the purpose of recording the grant of the security
interest as aforesaid, the Guarantor does hereby further assign to the
Administrative Agent, and grant to the Administrative Agent a security interest
in, the Collateral to secure the prompt payment, performance and observance of
the Guarantor Obligations.
The Guarantor does hereby further acknowledge and affirm that the
rights and remedies of the Administrative Agent with respect to the assignment
of and security interest in the Collateral made and granted hereby are set forth
in the Agreement, the terms and provisions of which are hereby incorporated
herein by reference as if fully set forth herein.
Upon the indefeasible cash payment in full of all Guarantor
Obligations (as such term is defined in the Agreement), the Administrative Agent
will take whatever actions are necessary at the Guarantor's expense to release
or reconvey to the Guarantor all right, title and interest of the Guarantor in
and to the Trademarks.
The Administrative Agent's address is: One Wall Street, New York, New
York 10286.
<PAGE>
IN WITNESS WHEREOF, the Guarantor has caused this Assignment to be
duly executed by its duly authorized officer as of the __ day of _____, ____.
[NAME OF GUARANTOR]
By:_____________________________
Name:___________________________
Title:__________________________
-2-
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this __ day of _____, ____, before me personally came
___________________, to me known, who, being by me duly sworn, did depose and
say that he resides at __________________; that he is the ________ of [NAME OF
GUARANTOR], the corporation described in and which executed the above
instrument, and that he signed his name thereto by order of the board of
directors thereof.
____________________________
Notary Public
[Notary's Stamp]
-3-
<PAGE>
Schedule 1
to Grant of Security Interest (Trademarks)
Dated as of _________
-4-
<PAGE>
EXHIBIT 10.01
EMPLOYMENT AGREEMENT
--------------------
This Employment Agreement (the "Agreement") is entered into as of August 1,
1997, by and between Edward G. Atsinger III, an individual ("Executive"), and
Salem Communications Corporation, a California corporation (the "Company").
RECITALS
--------
WHEREAS, the Company desires to employ Executive in the capacity of
President and Chief Executive Officer of the Company on the terms and conditions
set forth herein; and
WHEREAS, Executive desires to serve in such capacity on behalf of the
Company and to provide to the Company the services described herein on the terms
and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing recitals, the terms and
conditions set forth herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Executive and the
Company hereby agree as follows:
1. EMPLOYMENT BY THE COMPANY AND TERM.
----------------------------------
(a) Full Time and Best Efforts. Subject to the terms set forth
--------------------------
herein, the Company agrees to employ Executive as President and Chief Executive
Officer and Executive hereby accepts such employment. As President and Chief
Executive Officer, Executive shall have responsibility for the day-to-day
operations of the Company and shall have the authority, functions, duties,
powers and responsibilities for Executive's corporate offices and positions
which are set forth in the Company's bylaws from time to time in effect and such
other authority, functions, duties, powers and responsibilities as the Board of
Directors of the Company may from time to time prescribe or delegate to
Executive, in all cases to be consistent with Executive's corporate offices and
positions. During the term of his employment with the Company, Executive will
apply, on a full-time basis, all of his skill and experience to the performance
of his duties in such employment and will not, without the prior consent of the
Board of Directors, devote substantial amounts of time to outside business
activities. The performance of Employee's duties shall be in Camarillo,
California, subject to reasonable travel as the performance of his duties in the
business may require. Notwithstanding the foregoing, Executive may devote a
reasonable amount of his time to civic, community, charitable or passive
investment activities.
(b) Company Policies. The employment relationship between the parties
----------------
shall be governed by the general employment policies and practices of the
Company, except that when the terms of this Agreement differ from or are in
conflict with the Company's general employment policies or practices, this
Agreement shall control.
(c) Term. The initial term of the employment of Executive under this
----
Agreement shall begin as of August 1, 1997 for an initial term ending on July
31, 2000 (such
<PAGE>
three-year period, the "Initial Term"), subject to the provisions for
termination set forth herein and renewal as provided in Section 1(d) below.
(d) Renewal. Unless the Company or Executive shall have given the
-------
other party hereto notice that this Agreement shall not be renewed at least 90
days prior to the end of the Initial Term, the term of this Agreement shall be
automatically extended for a period of one year, such procedure to be followed
in each such successive period. Each extended term shall continue to be subject
to the provisions for termination set forth herein.
2. COMPENSATION AND BENEFITS.
-------------------------
(a) Salary. Executive shall receive for services to be rendered
------
hereunder an annual base salary as set forth on Exhibit A attached hereto ("Base
Salary"). The Base Salary will be reviewed by and shall be subject to
adjustment at the sole discretion of the Board each year during the term of this
Agreement.
(b) Participation in Benefit Plans. During the term hereof, Executive
------------------------------
shall be entitled to participate in any group insurance, hospitalization,
medical, dental, health and accident, disability or similar plan or program of
the Company now existing or established hereafter to the extent that he is
eligible under the general provisions thereof. The Company may, in its sole
discretion and from time to time, amend, eliminate or establish additional
benefit programs as it deems appropriate. Executive shall also participate in
all fringe benefits offered by the Company to any of its Executives.
3. BONUSES.
-------
Subject to the provisions of Section 4 hereof, Executive shall receive an
annual bonus during the term of this Agreement at the discretion of the Board.
4. TERMINATION OF EMPLOYMENT.
-------------------------
The date on which Executive's employment by the Company ceases, under any
of the following circumstances, shall be defined herein as the "Termination
Date."
(a) TERMINATION FOR CAUSE.
---------------------
(i) Termination; Payment of Accrued Salary. The Board may
--------------------------------------
terminate Executive's employment with the Company at any time for cause,
immediately upon notice to Executive of the circumstances leading to such
termination for cause. In the event that Executive's employment is terminated
for cause, Executive shall receive payment for all accrued salary through the
Termination Date, which in this event shall be the date upon which notice of
termination is given. The Company shall have no further obligation to pay
severance of any kind nor to make any payment in lieu of notice.
(ii) Definition of Cause. "Cause" means the occurrence or
existence of any of the following with respect to Executive, as determined by a
majority of the disinterested
2
<PAGE>
directors of the Board: (A) a material breach by Executive of any of his
obligations hereunder which remains uncured after the lapse of 30 days following
the date that the Company has given Executive written notice thereof, provided,
however, that the failure by the Company to achieve performance targets shall
not, in and of itself, constitute a material breach under this Section
4(a)(ii)(A); (B) any misappropriation, embezzlement, intentional fraud or
similar conduct involving the Company or any person or entity directly or
indirectly controlling, controlled by or under direct or indirect common control
with the Company (an "Affiliate"); (C) the conviction or the plea of nolo
contendere or the equivalent in respect of any felony or a crime involving moral
turpitude; or ([)) the repeated non-prescription use of any controlled substance
or the repeated use of alcohol or any other non-controlled substance which, in
any case described in this clause, the Board reasonably determines renders the
Executive unfit to serve in his capacity as an officer or employee of the
Company or its Affiliates.
(b) Termination by Executive. Executive shall have the right, at his
------------------------
election, to terminate his employment with the Company by written notice to the
Company to that effect (i) if the Company shall have failed to substantially
perform a material condition or covenant of this Agreement ("Company's Material
Breach") or (ii) if the Company materially reduces or diminishes Executive's
powers and responsibilities hereunder; provided, however, that a termination
under clauses (i) and (ii) of this Section 4(b) will not be effective until
Executive shall have given written notice specifying the claimed breach and,
provided such breach is curable, Company fails to correct the claimed breach
within 30 days after the receipt of the applicable notice or such longer term as
may be reasonably required by the nature of the claimed breach (but within 10
days if the failure to perform is a failure to pay monies when due under the
terms of this Agreement).
(c) Termination Upon Disability. The Company may terminate
---------------------------
Executive's employment in the event Executive suffers a disability that renders
Executive unable to perform the essential functions of his position, even with
reasonable accommodation, for 180 days within any 270 day period and fails to
return to work within 10 days of notice of intention to terminate. After the
Termination Date, which in this event shall be the date upon which notice of
termination is given, no further compensation will be payable under this
Agreement except that Executive shall receive the accrued portion of any salary
and bonus through the Termination Date, less standard with holdings for tax,
social security purposes, payable, in the case of a bonus, upon such date or
over such period of time which is in accordance with the applicable bonus plan
plus severance equal to 100% of his then Base Salary without offset for any
disability payments Executive may receive, payable in monthly installments over
a fifteen month period.
(d) Termination Without Cause; Failure to Renew.
-------------------------------------------
(i) Termination Payments. In the event that, during the Initial
--------------------
Term,Executive's employment is terminated by the Company other than pursuant to
Section 4(a) or 4(c), or by Executive pursuant to Section 4(b)(i), (ii) or
(iii), the Company shall pay Executive as severance an amount equal to his then
Base Salary for the longer of six months or the remainder of the Initial Term,
less standard withholdings for tax and social security purposes, payable in
equal installments over six consecutive months, or, if longer, the number of
months remaining in
3
<PAGE>
the Initial Term, commencing immediately following termination, in monthly pro
rata payments commencing as of the Termination Date, plus the accrued portion of
any bonus through the Termination Date, less standard withholdings for tax and
social security purposes, payable, in the case of a bonus, upon such date or
over such period of time which is in accordance with the applicable bonus plan.
In the event that after the Initial Term Executive's employment is terminated by
the Company other than pursuant to Section 4(a) or 4(c), or by Executive
pursuant to Section 4(b)(i) and (ii), or if the Company shall fail to renew the
term of this Agreement at the expiration of the Initial Term (including any
renewal term thereof), the Company shall pay Executive as severance an amount
equal to three months of his then Base Salary, less standard withholdings for
tax and social security purposes, payable in equal installments over three
consecutive months commencing immediately following termination or failure to
renew in monthly pro rata payments commencing as of the Termination Date, plus
the accrued portion of any bonus through the Termination Date, less standard
withholdings for tax and social security purposes, payable, in the case of a
bonus, upon such date or over such period of time which is in accordance with
the applicable bonus plan.
(e) Benefits Upon Termination. All benefits provided under Section
-------------------------
2(b) hereof shall be extended at the Executive's cost, to the extent permitted
by the Company's insurance policies and benefit plans, for six months after
Executive's Termination Date, except (a) as required by law (e.g. COBRA health
insurance continuation election) or (b) in the event of a termination described
in Section 4(a).
(f) Termination Upon Death. If Executive dies prior to the expiration
----------------------
of the term of this Agreement, the Company shall (i) continue coverage of
Executive's dependents (if any) under all applicable benefit plans or programs
of the type listed above in Section 2(b) herein for a period of 12 months, and
(ii) pay to Executive's estate the accrued portion of any salary and bonus
through the Termination Date, less standard withholdings for tax and social
security purposes, payable, in the case of a bonus, upon such date or over such
period of time which is in accordance with the applicable bonus plan.
(g) No Offset. Executive shall have no duty to mitigate any of his
---------
damages or losses and the Company shall not be entitled to reduce or offset any
payments owed to Executive hereunder for any reason.
5. RIGHT OF FIRST REFUSAL ON CORPORATE OPPORTUNITIES.
-------------------------------------------------
During the term of employment under this Agreement, Executive agrees that
he will, prior to exploiting a Corporate Opportunity for his own account, offer
the Company a right of first refusal with respect to such Corporate Opportunity.
For purposes of this Section 5, "Corporate Opportunity" shall mean any business
opportunity that is in the same or a related business as any of the businesses
in which the Company is involved. The determination as to whether a business
opportunity constitutes a Corporate Opportunity shall be made by a majority of
the disinterested members of the Board, and their determination shall be based
on an evaluation of (i) the extent to which the opportunity is within the
Company's existing lines of business or its existing plans to expand; (ii) the
extent to which the opportunity supplements the
4
<PAGE>
Company's existing lines of activity or complements the Company's existing
methods of service; (iii) whether the Company has available resources that can
be utilized in connection with the opportunity; (iv) whether the Company is
legally or contractually barred from utilizing the opportunity; (v) the extent
to which utilization of the opportunity by Executive would create conflicts of
interest with the Company; and (vi) any other factors the disinterested Board
members deem appropriate under the circumstances.
6. PROPRIETARY INFORMATION OBLIGATIONS.
-----------------------------------
During the term of employment under this Agreement, Executive will have
access to and become acquainted with the Company's confidential and proprietary
information, including but not limited to information or plans regarding the
Company's customer relationships, personnel, or sales, marketing, and financial
operations and methods; and other compilations of information, records, and
specifications (collectively "Proprietary Information"). Executive shall not
disclose any of the Company's Proprietary Information directly or indirectly, or
use it in any way, either during the term of this Agreement or at any time
thereafter, except as required in the course of his employment for the Company
or as authorized in writing by the Company. All files, records, documents,
computer-recorded information and similar items relating to the business of the
Company, whether prepared by Executive or otherwise coming into his possession,
shall remain the exclusive property of the Company and shall not be removed from
the premises of the Company under any circumstances whatsoever without the prior
written consent of the Company, except when (and only for the period) necessary
to carry out Executive's duties hereunder, and if removed shall be immediately
returned to the Company upon any termination of his employment and no copies
thereof shall be kept by Executive; provided, however, that Executive shall be
entitled to retain documents reasonably related to his prior interest as a
shareholder.
7. NONINTERFERENCE.
---------------
While employed by the Company, Executive agrees not to interfere with the
business of the Company by directly or indirectly soliciting, attempting to
solicit, inducing, or otherwise causing any employee of the Company to terminate
his or her employment in order to become an employee, consultant or independent
contractor to or for any other employer.
8. NONCOMPETITION.
--------------
Executive agrees that during the term of this Agreement and for a period of
two years thereafter, he will not, without the prior consent of the Company,
directly or indirectly, have an interest in, be employed by, be connected with,
or have an interest in, as an employee, consultant, officer, director, partner,
stockholder or joint venturer, in any person or entity owning, managing,
controlling, operating or otherwise participating or assisting in any business
that is in competition with the business of the Company (i) during the term of
this Agreement, in any location, and (ii) for the two-year period following the
termination of this Agreement, in any province, state or jurisdiction in which
the Company was conducting business at the date of termination of Executive's
employment and continues to do so thereafter; provided, however, that the
foregoing shall not prevent Executive from being a stockholder of less than one
percent of the
5
<PAGE>
issued and outstanding securities of any class of a corporation listed on a
national securities exchange or designated as national market system securities
on an interdealer quotation system by the National Association of Securities
Dealers, Inc.
9. REMEDIES.
--------
Executive acknowledges that a breach or threatened breach by Executive of
any the provisions of Sections 5, 6, 7 or 8 will result in the Company and its
shareholders suffering irreparable harm which cannot be calculated or fully or
adequately compensated by recovery of damages alone. Accordingly, Executive
agrees that the Company shall be entitled to interim, interlocutory and
permanent injunctive relief, specific performance and other equitable remedies,
in addition to any other relief to which the Company may become entitled should
there be such a breach or threatened breach.
10. MISCELLANEOUS.
-------------
(a) Notices. Any notices provided hereunder must be in writing and
-------
shall be deemed effective upon the earlier of personal delivery (including
personal delivery by telecopy or telex) on the third day after mailing by first
class mail to the recipient at the address indicated below:
To the Company:
Salem Communications Corporation
4880 Santa Rosa Road, Suite 300
Camarillo, California 93012
Attention: Eric H. Halvorson, Executive Vice President
Telephone: (805) 987-0400, Ext. 108
Facsimile: (805) 482-7290
To Executive:
Edward G. Atsinger III
4880 Santa Rose Road, Suite 300
Camarillo, CA 93012
Telephone: (805) 987-0400, Ext. 104
Facsimile: (805) 987-6072
or to such other address or to the attention of such other person as the
recipient party will have specified by prior written notice to the sending
party.
(b) Severability. If any provision of this Agreement is determined to
------------
be invalid or unenforceable by a court of competent jurisdiction from which no
further appeal lies or is taken, that provision shall be deemed to be severed
herefrom, and all remaining provisions of this Agreement shall not be affected
thereby and shall remain valid and enforceable.
6
<PAGE>
(c) Entire Agreement. This document constitutes the final, complete,
----------------
and exclusive embodiment of the entire agreement and understanding between the
parties related to the subject matter hereof and supersedes and preempts any
prior or contemporaneous understandings, agreements, or representations by or
between the parties, written or oral. Without limiting the generality of the
foregoing, except as provided in this Agreement, all understandings and
agreements, written or oral, relating to the employment of Executive by the
Company or the payment of any compensation or the provision of any benefit in
connection therewith or otherwise, are hereby terminated and shall be of no
further force and effect.
(d) Counterparts. This Agreement may be executed in separate
------------
counterparts, any one of which need not contain signatures of more than one
party, but all of which taken together will constitute one and the same
agreement.
(e) Successors and Assigns. This Agreement is intended to bind and
----------------------
inure to the benefit of and be enforceable by Executive and the Company, and
their respective successors and assigns, except that Executive may not assign
any of his duties hereunder and he may not assign any of his rights hereunder
without the prior written consent of the Company.
(f) Amendments. No amendments or other modifications to this
----------
Agreement may be made except by a writing signed by both parties. No amendment
or waiver of this Agreement requires the consent of any individual, partnership,
corporation or other entity not a party to this Agreement. Nothing in this
Agreement, express or implied, is intended to confer upon any third person any
rights or remedies under or by reason of this Agreement.
(g) Attorneys' Fees. If any legal proceeding is necessary to enforce
---------------
or interpret the terms of this Agreement, or to recover damages for breach
therefore, the prevailing party shall be entitled to reasonable attorney's fees,
as well as costs and disbursements, in addition to other relief to which he or
it may be entitled.
(h) Choice of Law. All questions concerning the construction,
-------------
validity and interpretation of this Agreement will be governed by the internal
law, and not the law of conflicts, of the State of California.
(i) Arbitration. The parties expressly agree that in the event of any
-----------
dispute, controversy or claim by any party concerning this Agreement, the
prevailing party shall be entitled to a reimbursement of its reasonable
attorneys' fees and costs from the other party to the proceeding. Any dispute,
controversy or claim arising hereunder or in any way related to this Agreement
shall be resolved by arbitration in the City of Los Angeles pursuant to the
rules of the American Arbitration Association. The Arbitrator's decision shall
be final and binding on both parties. The parties intend this arbitration
provision to be valid, enforceable, irrevocable and construed as broadly as
possible. The Arbitrator shall have full authority to award all legal and
equitable relief, including, without limitation, injunctive relief, to the same
extent as a court of competent jurisdiction; provided, however, that the
Arbitrator shall have no authority to award damages for emotional distress or
punitive damages. Judgment upon the award rendered by the Arbitrator may be
entered by any court having jurisdiction thereof . The parties agree that in
the event of a breach or threatened breach by any part of any one of more of the
covenants set forth
7
<PAGE>
in this Agreement, the other party would not have any adequate remedy at law.
Accordingly, in the event of any such breach or threatened breach, such other
party may, in addition to the other remedies which may be available to it, seek
in arbitration to enjoin the breaching party from such breach or threatened
breach.
IN WITNESS WHEREOF, the parties have executed this agreement effective
as of the date first written above.
/s/ Edward G. Atsinger III
--------------------------
EDWARD G. ATSINGER III
SALEM COMMUNICATIONS CORPORATION
By: /s/ Eric H. Halvorson
---------------------
Eric H. Halvorson, Executive Vice President
8
<PAGE>
EXHIBIT A
---------
The annual base salary of Executive shall be Four Hundred Thousand Dollars
($400,000) each year.
9
<PAGE>
EXHIBIT 10.02
EMPLOYMENT AGREEMENT
--------------------
This Employment Agreement (the "Agreement") is entered into as of August 1,
1997, by and between Stuart W. Epperson, an individual ("Executive"), and Salem
Communications Corporation, a California corporation (the "Company").
RECITALS
WHEREAS, the Company desires to employ Executive in the capacity of
Chairman of the Company on the terms and conditions set forth herein; and
WHEREAS, Executive desires to serve in such capacity on behalf of the
Company and to provide to the Company the services described herein on the terms
and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing recitals, the terms and
conditions set forth herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Executive and the
Company hereby agree as follows:
1. EMPLOYMENT BY THE COMPANY AND TERM.
----------------------------------
(a) Full Time and Best Efforts. Subject to the terms set forth herein, the
--------------------------
Company agrees to employ Executive as Chairman and Executive hereby accepts such
employment. Executive shall have the authority, functions, duties, powers and
responsibilities for Executive's corporate offices and positions which are set
forth in the Company's bylaws from time to time in effect and such other
authority, functions, duties, powers and responsibilities as the Board of
Directors of the Company may from time to time prescribe or delegate to
Executive, in all cases to be consistent with Executive's corporate offices and
positions. During the term of his employment, Executive will apply, on a full-
time basis, all of his skill and experience to the performance of his duties in
such employment and will not, without the prior consent of the Board of
Directors, devote substantial amounts of time to outside business activities.
The performance of Employee's duties shall be in Winston-Salem, North Carolina,
subject to such reasonable travel as the performance of his duties in the
business may require. Notwithstanding the foregoing, Executive may devote a
reasonable amount of his time to civic, community, charitable or passive
investment activities.
(b) Company Policies. The employment relationship between the parties
----------------
shall be governed by the general employment policies and practices of the
Company, except that when the terms of this Agreement differ from or are in
conflict with the Company's general employment policies or practices, this
Agreement shall control.
<PAGE>
(c) Term. The initial term of the employment of Executive under this
----
Agreement shall begin as of August 1, 1997 for an initial term ending on July
31, 2000 (such three-year period, the "Initial Term"), subject to the provisions
for termination set forth herein and renewal as provided in Section 1(d) below.
(d) Renewal. Unless the Company or Executive shall have given the other
-------
party hereto notice that this Agreement shall not be renewed at least 90 days
prior to the end of the Initial Term, the term of this Agreement shall be
automatically extended for a period of one year, such procedure to be followed
in each such successive period. Each extended term shall continue to be subject
to the provisions for termination set forth herein.
2. COMPENSATION AND BENEFITS.
-------------------------
(a) Salary. Executive shall receive for services to be rendered hereunder
------
an annual base salary as set forth on Exhibit A attached hereto ("Base Salary").
The Base Salary will be reviewed by and shall be subject to the adjustment at
the sole discretion of the Board each year during the term of this Agreement.
(b) Participation in Benefit Plans. During the term hereof, Executive
------------------------------
shall be entitled to participate in any group insurance, hospitalization,
medical, dental, health and accident, disability or similar plan or program of
the Company now existing or established hereafter to the extent that he is
eligible under the general provisions thereof. The Company may, in its sole
discretion and from time to time, amend, eliminate or establish additional
benefit programs as it deems appropriate. Executive shall also participate in
all fringe benefits offered by the Company to any of its executives.
3. BONUSES.
-------
Subject to the provisions of Section 4 hereof, Executive shall receive an
annual bonus during the term of this Agreement at the discretion of the Board.
4. TERMINATION OF EMPLOYMENT.
-------------------------
The date on which Executive's employment by the Company ceases, under any
of the following circumstances, shall be defined herein as the "Termination
Date."
(a) TERMINATION FOR CAUSE.
---------------------
(i) Termination: Payment of Accrued Salary. The Board may terminate
---------------------------------------
Executive's employment with the Company at any time for cause, immediately upon
notice to Executive of the circumstances leading to such termination for cause.
In the event that Executive's employment is terminated for cause, Executive
shall receive payment for all accrued salary through the Termination Date, which
in this event shall be the date upon which notice of termination is given. The
Company shall have no further obligation to pay severance of any kind nor make
any payment in lieu of notice.
2
<PAGE>
(ii) Definition of Cause. "Cause" means the occurrence or existence of
-------------------
any of the following with respect to Executive, as determined by a majority of
the disinterested directors of the Board: (A) a material breach by Executive of
any of his obligations hereunder which remains uncured after the lapse of 30
days following the date that the Company has given Executive written notice
thereof, provided, however, that the failure by the Company to achieve
performance targets shall not, in and of itself, constitute a material breach
under this Section 4(a)(ii)(A); (B) any misappropriation, embezzlement,
intentional fraud or similar conduct involving the Company or any person or
entity directly or indirectly controlling, controlled by or under direct or
indirect common control with the Company (an "Affiliate"); (C) the conviction or
the plea of nolo contendere or the equivalent in respect of any felony or a
crime involving moral turpitude; or (D) the repeated non-prescription use of any
controlled substance or the repeated use of alcohol or any other non-controlled
substance which, in any case described in this clause, the Board reasonably
determines renders the Executive unfit to serve in his capacity as an officer or
employee of the Company or its Affiliates.
(b) Termination by Executive. Executive shall have the right, at his
------------------------
election, to terminate his employment with the Company by written notice to the
Company to that effect (i) if the Company shall have failed to substantially
perform a material condition or covenant of this Agreement ("Company's Material
Breach") or (ii) if the Company materially reduces or diminishes Executive's
powers and responsibilities hereunder; provided, however, that a termination
under clauses (i) and (ii) of this Section 4(b) will not be effective until
Executive shall have given written notice specifying the claimed breach and,
provided such breach is curable, Company fails to correct the claimed breach
within 30 days after the receipt of the applicable notice or such longer term as
may be reasonably required by the nature of the claimed breach (but within 10
days if the failure to perform is a failure to pay monies when due under the
terms of this Agreement).
(c) Termination Upon Disability. The Company may terminate Executive's
---------------------------
employment in the event Executive suffers a disability that renders Executive
unable to perform the essential functions of his position, even with reasonable
accommodation, for 180 days within any 270 day period and fails to return to
work within 10 days of notice of intention to terminate. After the Termination
Date, which in this event shall be the date upon which notice of termination is
given, no further compensation will be payable under this Agreement except that
Executive shall receive the accrued portion of any salary and bonus through the
Termination Date, less standard with holdings for tax, social security purposes,
payable, in the case of a bonus, upon such date or over such period of time
which is in accordance with the applicable bonus plan plus severance equal to
100% of his then Base Salary without offset for any disability payments
Executive may receive, payable in monthly installments over a fifteen month
period.
3
<PAGE>
(d) Termination Without Cause; Failure to Renew.
-------------------------------------------
(i) Termination Payments. In the event that, during the Initial Term,
--------------------
Executive's employment is terminated by the Company other than pursuant to
Section 4(a) or 4(c), or by Executive pursuant to Section 4(b)(i), (ii) or
(iii), the Company shall pay Executive as severance an amount equal to his then
Base Salary for the longer of six months or the remainder of the Initial Term,
less standard withholdings for tax and social security purposes, payable in
equal installments over six consecutive months, or, if longer, the number of
months remaining in the Initial Term, commencing immediately following
termination, in monthly pro rata payments commencing as of the Termination Date,
plus the accrued portion of any bonus through file Termination Date, less
standard withholdings for tax and social security purposes, payable, in the case
of a bonus, upon such date or over such period of time which is in accordance
with the applicable bonus plan. In the event that after the Initial Term
Executive's employment is terminated by the Company other than pursuant to
Section 4(a) or 4(c), or by Executive pursuant to Section 4(b)(i) and (ii), or
if the Company shall fail to renew file term of this Agreement at the expiration
of the Initial Term (including any renewal term thereof), the Company shall pay
Executive as severance an amount equal to three months of his then Base Salary,
less standard withholdings for tax and social security purposes, payable in
equal installments over three consecutive months commencing immediately
following termination or failure to renew in monthly pro rata payments
commencing as of the Termination Date, plus the accrued portion of any bonus
through the Termination Date, less standard withholdings for tax and social
security purposes, payable, in the case of a bonus, upon such date or over such
period of time which is in accordance with the applicable bonus plan.
(e) Benefits Upon Termination. All benefits provided under Section 2(b)
-------------------------
hereof shall be extended at the Executive's cost, to the extent permitted by the
Company's insurance policies and benefit plans, for six months after Executive's
Termination Date, except (a) as required by law (e.g. COBRA health insurance
continuation election) or (b) in the event of a termination described in Section
4(a).
(f) Termination Upon Death. If Executive dies prior to the expiration of
----------------------
the term of this Agreement, the Company shall (i) continue coverage of
Executive's dependents (if any) under all applicable benefit plans or programs
of the type listed above in Section 2(b) herein for a period of 12 months, and
(ii) pay to Executive's estate the accrued portion of any salary and bonus
through the Termination Date, less standard withholdings for tax and social
security purposes, payable, in the case of a bonus, upon such date or over such
period of time which is in accordance with the applicable bonus plan.
(g) No Offset. Executive shall have no duty to mitigate any of his damages
---------
or losses and the Company shall not be entitled to reduce or offset any payments
owed to Executive hereunder for any reason.
4
<PAGE>
5. RIGHT OF FIRST REFUSAL ON CORPORATE OPPORTUNITIES.
-------------------------------------------------
During the term of employment under this Agreement; Executive agrees that
he will, prior to exploiting a Corporate Opportunity for his own account, offer
the Company a right of first refusal with respect to such Corporate Opportunity.
For purposes of this Section 5, "Corporate Opportunity" shall mean any business
opportunity that is in the same or a related business as any of the businesses
in which the Company is involved. The determination as to whether a business
opportunity constitutes a Corporate Opportunity shall be made by a majority of
the disinterested members of the Board, and their determination shall be based
on an evaluation of (i) the extent to which the opportunity is within the
Company's existing lines of business or its existing plans to expand; (ii) the
extent to which the opportunity supplements the Company's existing lines of
activity or complements the Company's existing methods of service; (iii) whether
the Company has available resources that can be utilized in connection with the
opportunity; (iv) whether the Company is legally or contractually barred from
utilizing the opportunity; (v) the extent to which utilization of the
opportunity by Executive would create conflicts of interest with the Company;
and (vi) any other factors file disinterested Board members deem appropriate
under the circumstances.
6. PROPRIETARY INFORMATION OBLIGATIONS.
-----------------------------------
During the term of employment under this Agreement, Executive will have
access to and become acquainted with the Company's confidential and proprietary
information, including but not limited to information or plans regarding the
Company's customer relationships, personnel, or sales, marketing, and financial
operations and methods; and other compilations of information, records, and
specifications (collectively "Proprietary Information"). Executive shall not
disclose any of the Company's Proprietary Information directly or indirectly, or
use it in any way, either during the term of this Agreement or at any time
thereafter, except as required in the course of his employment for the Company
or as authorized in writing by the Company. All files, records, documents,
computer-recorded information and similar items relating to the business of the
Company, whether prepared by Executive or otherwise coming into his possession
shall remain the exclusive property of the Company and shall not be removed from
the premises of the Company under any circumstances whatsoever without the prior
written consent of file Company, except when (and only for the period) necessary
to carry out Executive's duties hereunder, and if removed shall be immediately
returned to the Company upon any termination of his employment and no copies
thereof shall be kept by Executive; provided, however, that Executive shall be
entitled to retain documents reasonably related to his prior interest as a
shareholder.
5
<PAGE>
7. NONINTERFERENCE.
---------------
While employed by the Company, Executive agrees not to interfere wit the
business of the Company by directly or indirectly soliciting, attempting to
solicit, inducing, or otherwise causing any employee of the Company to terminate
his or her employment in order to become an employee, consultant or independent
contractor to or for any other employer.
8. NONCOMPETITION.
--------------
Executive agrees that during the term of this Agreement and for a period of
two years thereafter, he will not, without the prior consent of the Company,
directly or indirectly, have an interest in, be employed by, be connected with,
or have an interest in, as an employee, consultant, officer, director, partner,
stockholder or joint venturer, in any person or entity owning, managing,
controlling, operating or otherwise participating or assisting in any business
that is in competition with the business of the Company (i) during the term of
this Agreement, in any location, and (ii) for the two-year period following the
termination of this Agreement in any province, state or jurisdiction in which
the Company was conducting business at the date of termination of Executives
employment and continues to do so thereafter; provided, however, that the
foregoing shall not prevent Executive from being a stockholder of less than one
percent of the issued and outstanding securities of any class of a corporation
listed on a national securities exchange or designated as national market system
securities on an interdealer quotation system by the National Association of
Securities Dealers, Inc.
9. REMEDIES.
--------
Executive acknowledges that a breach or threatened breach by Executive of
any of the provisions of Sections 5, 6, 7 or 8 will result in the Company and
its shareholders suffering irreparable harm which cannot be calculated or fully
or adequately compensated by recovery of damages alone. Accordingly, Executive
agrees that the Company shall be entitled to interim, interlocutory and
permanent injunctive relief, specific performance and other equitable remedies,
in addition to any other relief to which the Company may become entitled should
there be such a breach or threatened breach.
6
<PAGE>
9. MISCELLANEOUS.
-------------
(a) Notices. Any notices provided hereunder must be in writing and shall
-------
be deemed effective upon the earlier of personal delivery (including personal
delivery by telecopy or telex) on the third day after mailing by first class
mail to the recipient at the address indicated below:
To the Company:
Salem Communications Corporation
4880 Santa Rosa Road, Suite 300
Camarillo, California 93012
Attention: Eric H. Halvorson, Executive Vice President
Telephone: (805) 987-0400, Ext. 108
Facsimile: (805) 482-7290
To Executive:
Stuart W. Epperson
3780 Will Scarlet Road
Winston-Salem, NC 27104
or to such other address or to the attention of such other person as the
recipient party will have specified by prior written notice to the sending
party.
(b) Severability. If any provision of this Agreement is determined to be
------------
invalid or unenforceable by a court of competent jurisdiction from which no
further appeal lies or is taken, that provision shall be deemed to be severed
herefrom, and all remaining provisions of this Agreement shall not be affected
thereby and shall remain valid and enforceable.
(c) Entire Agreement. This document constitutes the final, complete, and
----------------
exclusive embodiment of the entire agreement and understanding between the
parties related to the subject matter hereof and supersedes and preempts any
prior or contemporaneous understandings, agreements, or representations by or
between the parties, written or oral. Without limiting the generality of the
foregoing, except as provided in this Agreement, all understandings and
agreements, written or oral, relating to the employment of Executive by the
Company or the payment of any compensation or the provision of any benefit in
connection therewith or otherwise, are hereby terminated arid shall be of no
further force and effect.
(d) Counterparts. This Agreement may be executed in separate counterparts,
------------
any one of which need not contain signatures of more than one party, but all of
which taken together will constitute one and the same agreement.
7
<PAGE>
(e) Successors and Assigns. This Agreement is intended to bind and inure
----------------------
to the benefit of and be enforceable by Executive and the Company, and their
respective successors and assigns, except that Executive may not assign any of
his duties hereunder and he may not assign any of his rights hereunder without
the prior written consent of the Company.
(f) Amendments. No amendments or other modifications to this Agreement may
----------
be made except by a writing signed by both parties. No amendment or waiver of
this Agreement requires the consent of any individual, partnership, corporation
or other entity not a party to this Agreement. Nothing in this Agreement,
express or implied, is intended to confer upon any third person any rights or
remedies under or by reason of this Agreement.
(g) Attorneys Fees. If any legal proceeding is necessary to enforce or
--------------
interpret the terms of this Agreement, or to recover damages for breach
therefore, the prevailing party shall be entitled to reasonable attorney's fees,
as well as costs and disbursements, in addition to other relief to which he or
it may be entitled.
(h) Choice of Law. All questions concerning the construction, validity and
-------------
interpretation of this Agreement will be governed by the internal law, and not
the law of conflicts, of the State of California.
(i) Arbitration. The parties expressly agree that in the event of any
-----------
dispute, controversy or claim by any party concerning this Agreement, the
prevailing party shall be entitled to a reimbursement of its reasonable
attorneys' fees and costs from the other party to the proceeding. Any dispute,
controversy or claim arising hereunder or in any way related to this Agreement
shall be resolved by arbitration in the City of Los Angeles pursuant to the
rules of the American Arbitration Association. The Arbitrator's decision shall
be final and binding on both parties. The parties intend this arbitration
provision to be valid, enforceable, irrevocable and construed as broadly as
possible. The Arbitrator shall have full authority to award all legal and
equitable relief, including, without limitation, injunctive relief, to the same
extent as a court of competent jurisdiction; provided, however, that the
Arbitrator shall have no authority to award damages for emotional distress or
punitive damages. Judgment upon the award rendered by the Arbitrator may be
entered by any court having jurisdiction thereof. The parties agree that in the
8
<PAGE>
event of a breach or threatened breach by any part of any one of more of the
covenants set forth in this Agreement, the other party would not have any
adequate remedy at law. Accordingly, in the event of any such breach or
threatened breach, such other party may, in addition to the other remedies which
may be available to it, seek in arbitration to enjoin the breaching party from
such breach or threatened breach.
IN WITNESS WHEREOF, the parties have executed this agreement effective as
of the date first written above.
/s/ Stuart W. Epperson
----------------------
STUART W. EPPERSON
SALEM COMMUNICATIONS CORPORATION
By: /s/ Eric H. Halvorson
---------------------
Eric H. Halvorson, Executive Vice President
9
<PAGE>
EXHIBIT A
---------
The annual base salary of Executive shall be Four Hundred Thousand Dollars
($400,000) each year.
<PAGE>
EXHIBIT 10.03.01
EMPLOYMENT CONTRACT
-------------------
THIS AGREEMENT, made as of the 7th day of November, 1991, by and between
SALEM COMMUNICATIONS CORPORATION, a Wisconsin corporation, hereinafter sometimes
referred to as "Company", and ERIC HALVORSON, hereinafter sometimes referred to
as "Employee".
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, Company and Employee have reached an agreement relative to the
terms and conditions of the future employment of Employee by Company and desire
to reduce such agreement to written form.
NOW, THEREFORE, Company and Employee, in consideration of the mutual
promises hereinafter set forth, hereby agree as follows:
ARTICLE I
---------
EMPLOYMENT
----------
Company shall employ Employee and Employee shall serve Company as a regular
employee with the title Executive Vice President. Employee shall devote his
full time and energies to the business and affairs of the Company and shall not
undertake any outside business activities without the full knowledge and express
consent of the President of the Company. Employee shall perform such duties as
are assigned to him from time to time by the President of the Company, including
without limitation those duties described in a letter to Employee from the
President of the Company dated June 5, 1991.
<PAGE>
ARTICLE II
----------
TERM
----
The term of Employee's employment by the Company under this Agreement shall
commence as of the date hereof and shall continue thereafter for a period of
seven (7) years, unless terminated earlier upon the occurrence of any of the
following:
2.1. Death. Employee's death.
-----
2.2. Disability. Employee's disability. For purposes hereof, Employee
----------
shall be considered to be disabled if he is unable to render his customary
services on behalf of the Company by reason of physical or mental illness or
incapacity for a continuing period of one hundred eighty (180) days or for an
aggregate of one hundred eighty (180) days in any continuous period of three
hundred sixty-five (365) days. If there is any dispute as to whether Employee
is or was unable to perform his customary services for the Company, such dispute
shall be submitted to a licensed physician agreed upon by the parties or, if the
parties are unable to agree, appointed by the President of the Medical Society
of Ventura County, California at the request of either party. Employee shall
promptly submit to such examinations and provide such information as any such
physician may request, and the determination of such physician as to Employee's
physical or mental condition shall be binding and conclusive.
2.3 Resignation. Employee's voluntary resignation upon notice given to
-----------
the Board of Directors of the Company not less than ninety (90) days prior to
the effective date of such resignation or such shorter period as may be
established by the Board of Directors.
2.4 Dismissal. The termination of Employee's employment, with or without
---------
cause, upon the vote of a majority of the members of the Board of Directors of
the Company; provided,
2
<PAGE>
however, that if Employee is serving on the Board of Directors at such time as a
vote for dismissal is taken, Employee shall not participate in such vote.
ARTICLE III
-----------
COMPENSATION
------------
3.1 Base Salary. Company shall pay to Employee during the term of his
-----------
employment the following amounts of annual base salary in equal semi-monthly
installments:
<TABLE>
<CAPTION>
YEAR BASE SALARY
---- -----------
<S> <C>
1 $ 175,000
2 $ 186,000
3 $ 197,000
4 $ 209,000
5 $ 222,000
6 $ 236,000
7 $ 250,000
</TABLE>
[3.2 Deleted]
3.3 Payments on Termination. Upon the termination of Employee's
-----------------------
employment as provided in Article II, the Company shall pay to Employee, in
addition to any amounts to which he may be entitled as provided in Article IV,
the base salary to which he is then entitled pursuant to Section 3.1 through the
following dates:
3
<PAGE>
A. If Employee's employment is terminated by reason of his death or
disability, the Company shall pay to Employee his base salary through the
end of the month in which such termination occurs; and
B. If Employee is dismissed by the Company without "cause", as
defined below, the Company shall pay to Employee his base salary for the
remainder of the seven (7) years during which this Agreement would have
been in effect if Employee has not been terminated. If dismissal is for
"cause", which shall be defined as a determination by the Board of
Directors (excluding Employee, if he is a member of the Board of Directors)
that Employee, after fair warning, has been consistently and inadequately
performing his duties hereunder or has engaged in conduct materially
injurious to the Company, then Employee shall receive his base salary
through the end of the month in which such termination occurs. For
purposes of this Agreement, Employee's voluntary termination of employment
shall be demeaned a termination for cause.
ARTICLE IV
----------
VACATION, EXPENSES, FRINGE BENEFITS
-----------------------------------
4.1 Vacation. Employee shall be entitled to four (4) weeks paid vacation,
--------
non-cumulative, during each calendar year.
4.2 Expenses. Company shall reimburse Employee for all reasonable
--------
expenses incurred in connection with his employment. The Company shall pay all
professional society dues of Employee and shall pay all reasonable expenses of
Employee in attending programs to satisfy continuing professional education
requirements, provided such attendance has first been approved by the Board of
Directors of the Company.
4
<PAGE>
4.3 Fringe Benefits. In addition to the compensation to which Employee is
---------------
entitled under Article III above, Employee shall be entitled to participate in
family group health insurance, life insurance and long-term disability insurance
programs currently in effect and which may be established from time to time by
the Company. All costs associated with these insurance programs shall be paid
by the Company.
4.4 Country Club Membership. The Company agrees to loan Employee the
-----------------------
amount of Fifty-Five Thousand Dollars ($55,000.00) for the purposes of
purchasing a membership in Spanish Hills Country Club. Interest shall accrue on
the loan at the prime rate established from time to time by Security Pacific
National Bank. Repayment terms will be established by the Company and
Employee in good faith. All dues related to Employee's membership in Spanish
Hills Country Club shall be paid by the Company.
ARTICLE V
---------
MISCELLANEOUS
-------------
5.1 Notices. Any notices required or permitted to be given under this
-------
Agreement shall be sufficient if in writing and if sent by registered or
certified mail or personally delivered to the residence of Employee or the legal
representative of his estate or to the principal office of the Company directed
to the attention of the Board of Directors, as the case may be.
5.2 Waiver of Breach. The waiver by Company or Employee of any breach of
----------------
any provision of this Agreement by the other shall not be deemed a waiver of any
subsequent breach.
5.3 Assignment. This Agreement shall not be assignable by the Company
----------
without the written consent of Employee except that if Company shall merge or
consolidate with or into or transfer substantially all of its assets, including
goodwill, to another corporation or other form of
5
<PAGE>
business organization, this Agreement shall be binding upon and inure to the
benefit of the successor of Company resulting from such merger, consolidation or
transfer. Neither Employee nor his beneficiaries may assign, pledge or encumber
his interest in this Agreement or any part thereof without the written consent
of Company.
5.4 Governing Law. This Agreement and all questions arising in connection
-------------
therewith shall be governed by the laws of the State of California.
5.5 Arbitration. Any dispute or controversy arising under or relating to
-----------
the application or interpretation of this Agreement shall be determined by
arbitration in Camarillo, California, according to the rules then obtaining of
the American Arbitration Association for the resolution of commercial disputes
and the decision so rendered shall be binding and conclusive upon Employee and
Company.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
COMPANY:
SALEM COMMUNICATIONS CORPORATION
By: /s/ Edward G. Altsinger III
-----------------------------------
EDWARD G. ALTSINGER III, President
By: /s/ Stuart W. Epperson
-----------------------------------
STUART W. EPPERSON, Chairman
EMPLOYEE:
By: /s/ Eric Halvorson
-----------------------------------
ERIC HALVORSON, Employee
6
<PAGE>
EXHIBIT 10.03.02
FIRST AMENDMENT TO
EMPLOYMENT CONTRACT
This First Amendment to Employment Contract is entered into this 22nd day of
April, 1996, between SALEM COMMUNICATIONS CORPORATION, a California corporation
("Company"), and ERIC HALVORSON ("Employee").
WITNESSETH:
WHEREAS, Company and Employee entered into a contract for the employment of
Employee by Company on November 7, 1991 (the "Agreement"); and
WHEREAS, the parties desire to amend the Agreement.
NOW THEREFORE, for valuable consideration, the receipt of which is hereby
acknowledged, the parties agree as follows:
1. Article II of the Agreement is hereby amended to provide that the term
of Employee's employment by the Company shall, subject to early
termination as provided therein, continue through December 31, 1998.
2. Section 3.1 of the Agreement is hereby amended to provide that the
annual base salary of Employee shall be as follows:
Calendar year 1996.... $255,000
Calendar year 1997.... $270,000
Calendar year 1998.... $285,000
<PAGE>
3. Except as specifically amended herein, all terms and conditions of the
Agreement shall remain in full force and effect.
Executed as of the date first above written.
SALEM COMMUNICATIONS CORPORATION
By: /s/ Edward G. Atsinger III
--------------------------
Edward G. Atsinger III, President
/s/ Eric Halvorson
--------------------------
Eric Halvorson
2
<PAGE>
EXHIBIT 10.03.03
SECOND AMENDMENT TO
EMPLOYMENT CONTRACT
This Second Amendment to Employment Contract is entered into this 8th day of
July, 1997, between SALEM COMMUNICATIONS CORPORATION, a California corporation
("Company"), and ERIC HALVORSON ("Employee").
WITNESSETH:
WHEREAS, Company and Employee entered into a contract for the employment of
Employee by Company on November 7, 1991, which contract was amended on April 22,
1996 (the "Agreement"); and
WHEREAS, the parties desire to amend the Agreement.
NOW THEREFORE, for valuable consideration, the receipt of which is hereby
acknowledged, the parties agree as follows:
1. Article II of the Agreement is hereby amended to provide that the term
of Employee's employment by the Company shall, subject to early termination as
provided therein, continue through December 31, 2003.
2. Section 3.1 of the Agreement is hereby amended to provide that the
annual base salary of Employee shall be $285,000 in 1998 and $300,000 in 1999,
2000, 2001, 2002 and 2003.
3. Section 3.3B. of the Agreement is hereby amended by deleting the words
"seven (7) years" and replacing them with the word "term."
3. Section 4.4 of the Agreement is deleted in its entirety.
4. Except as specifically amended herein, all terms and conditions of the
Agreement shall remain in full force and effect.
Executed as of the date first above written.
SALEM COMMUNICATIONS CORPORATION
By: /s/ Edward G. Atsinger III
--------------------------
Edward G. Atsinger III
/s/ Eric Halvorson
--------------------------
Eric Halvorson
<PAGE>
EXHIBIT 10.03.04
DEFERRED COMPENSATION AGREEMENT
-------------------------------
THIS AGREEMENT is made and entered into this 7th day of November, 1991, by
and between SALEM COMMUNICATIONS, a California corporation, hereinafter referred
to as the "Company" and ERIC HALVORSON, hereinafter referred to as "Employee".
W I T N E S S E T H
- - - - - - - - - -
WHEREAS,the Employee is currently employed by the Company and has
heretofore been a valuable employee of the Company; and
WHEREAS, the Company desires to provide for the payment of deferred
compensation to the Employee or to his designated beneficiary or beneficiaries
following the termination of his employment with the Company, as consideration
for assuring the retention of his services; and
WHEREAS, the Employee understands and accepts the terms and conditions with
respect to the payment of deferred compensation and desires that such agreement
be reduced to written form.
NOW, THEREFORE, the Company and the Employee, in consideration of the
mutual promises hereinafter set forth, do hereby promise and agree as follows:
ARTICLE I
---------
DEFERRED COMPENSATION
---------------------
1.1. Definitions. For purposes of this Agreement, the following terms
-----------
shall have the following meanings:
(a) Total Compensation Earned. The term "Total Compensation Earned"
-------------------------
shall mean the base salary and bonus paid during a fiscal year with respect
to such fiscal year. "Total Compensation Earned" shall also include any
bonus paid with respect to such fiscal year on or before March 15 of the
following fiscal year and the contribution by Employee to the 401(K) Plan
with respect to such fiscal year.
(b) Covered Compensation. The term "Covered Compensation" shall mean
--------------------
an amount equal to the average (i.e. arithmatic mean) Total Compensation
Earned by the Employee for the three (3) fiscal years for which he received
the highest total Compensation Earned among the fiscal years consisting of
(i) the fiscal year in or as of which the termination of his employment
becomes effective, and (ii) all preceding fiscal years during which
Employee was employed by the Company.
<PAGE>
(c) Discounted Compensation. The term "Discounted Compensation" shall
-----------------------
mean the aggregate amount of deferred compensation which would have been
paid to Employee under Section 1.2(a), below, if he had remained employed
by the Company to age sixty (60) (and assuming no compensation increase
would have been granted between the date of termination and age 60),
discounted at eight percent (8%) per annum to the present value of such
amount as of the date of termination of employment. In determining present
value, the monthly payments that would have begun at age sixty (60) shall
first be discounted to their present value at age sixty (60), and this
amount shall be further discounted to its present value as of the date of
termination of employment.
(d) 401K Plan. The term "401K Plan" shall mean the 401(K) Profit
---------
Sharing Plan of the Company as may be in effect from time to time.
(e) Termination for Cause. The term "Termination for Cause" shall
---------------------
mean the termination of Employee's employment with the Company pursuant to
a determination by the Company's Board of Directors (excluding Employee, if
he is a member of the Company's Board of Directors) that Employee, after
fair warning, has been consistently and inadequately performing his duties
hereunder or has engaged in conduct materially injurious to the Company.
(f) Disability. The term "Disability" shall mean the inability of
----------
Employee to render his customary services on behalf of the Company by
reason of physical or mental illness or incapacity for continuing period of
one hundred eighty (180) days or for an aggregate of one hundred eighty
(180) days in any continuous period of three hundred sixty-five days. If
there is any dispute as to whether Employee is or was unable to perform his
customary services for the Company, such dispute shall be submitted to a
licensed physician agreed upon by the parties or, if the parties are unable
to agree, appointed by the President of the Medical Society of Milwaukee
County, Wisconsin, at the request of either party. Employee shall promptly
submit to such examinations and provide such information as any such
physician may request, and the determination of such physician as to
Employee's physical or mental condition shall be binding and conclusive.
(g) Employment Agreement. The term "Employment Agreement" shall mean
--------------------
the Employment Agreement between the Company and Employee dated November 7,
1991.
1.2. Benefits. Following termination of his employment with the Company
--------
(unless termination is a Termination for Cause, in which event Employee shall be
entitled to no amounts under this Agreement), Employee shall be entitled to the
following benefits:
(a) Termination After Age 60. If Employee's employment with the
------------------------
Company terminates for any reason on or after the date Employee attains age
sixty (60), Employee shall be entitled to receive each year, for ten (10)
2
<PAGE>
consecutive years, benefits in an amount equal to fifty percent (50%) of
Employee's Covered Compensation, with such amounts to be paid in equal
monthly installments commencing thirty (30) days after the date of
termination of employment.
(b) Termination Before Age 60. If Employee's employment with the
-------------------------
Company terminates for any reason prior to the date Employee attains age
sixty (60), the following shall apply:
(i) If termination occurs by reason of death or Disability at any
time prior to the date Employees attains age sixty (60), or if
termination occurs for any reason after the expiration of the term of
the Employment Agreement, Employee shall be entitled to receive an
amount equal to the Discounted Compensation. The aggregate amount of
Discounted Compensation shall be paid, until exhausted, in monthly
installments commencing thirty (30) days after the date of
termination, with such installments to be equal to Employee's monthly
salary immediately preceding his termination.
(ii) If the Company terminates Employee's employment prior to
expiration of the term of the Employment Agreement, Employee shall be
entitled to receive an amount equal to the Discounted Compensation;
provided that the calculation of Discounted Compensatoin shall be
based on an assumed termination date coinciding with the last day of
the term of Employee's employment under the Employment Agreement, and
the Covered Compensation used in determining Discounted Compensation
shall be based on the three (3) highest years of compensation paid to
Employee during the seven (7) year term of his Employment Agreement,
whether or not such payments are made prior to or after termination of
employment. The aggregate amount of Discounted Compensatoin shall be
paid, until exhausted, in monthly installments commencing thirty (30)
days after the expiration of the seven (7) year term of employment
under the Employment Agreement, with such installments to be equal to
the monthly salary payable to Employee in the last year of the seven
(7) year term of the Employment Agreement.
(c) Payment on Death. In the event any payment under this Agreement
----------------
is to be made by reason of Employee's death, or if Employee dies after he
has otherwise become entitled to receive payments hereunder, the Company
shall make the payments to which Employee would otherwise be entitled to
such beneficiary as Employee may have last designated in writing to the
Secretary of the Company. If on beneficiary designation has been made, or
if any designated beneficiary shall have predeceased Employee, such
payments shall be made to Employee's estate. If any designated beneficiary
should survive Employee but die before payment of all amounts due
hereunder, such amounts
3
<PAGE>
shall, unless Employee shall have designated otherwise, be paid to such
beneficiary's estate.
ARTICLE II
----------
ACCRUALS REMAIN PROPERTY OF COMPANY
-----------------------------------
Any amounts accruing to Employee hereunder shall remain solely the property
of the Company and subject to the claims of its creditors, and no assets of the
Company shall be segregated or subject to any trusts for the Employee's benefit
by reason of this Agreement. Neither the Employee nor his designated
beneficiary or beneficiaries shall have any interest in any fund or in any
general or any specific asset or assets of the Company by reason of the amount
credited to Employee hereunder other than the contractual rights provided in
this Agreement. Nothing contained herein shall be construed to require the
Company to establish any deferred compensation account in the Employee's name or
on his behalf or to accrue any amounts for his benefit hereunder.
ARTICLE III
-----------
BENEFICIARY
-----------
If the Employee's employment with the Company is terminated by reason of
his death, or if he dies after termination of his employment but prior to
receiving all of the deferred compensation payable to him hereunder, the amounts
that would otherwise be payable to him under this Agreement shall be distributed
to such beneficiary or beneficiaries that the Employee may have last designated
in writing to the Secretary of the Company. All beneficiary designations shall
be made in such form and such manner as may from time to time be prescribed by
the Board of Directors of the Company. Employee may from time to time revoke or
change any beneficiary designation on file with the Company. If there is no
effective beneficiary designation on file with the Company at the time of the
death of the Employee or if any designated beneficiary shall predecease the
Employee, the distribution of amounts otherwise payable to the Employee under
this Agreement shall be made to the personal representative of the Employee's
estate. If any designated beneficiary should survive the Employee but shall die
before payment of all amounts payable pursuant to this Agreement, such payment
shall, unless the Employee shall have designated otherwise, be made to such
beneficiary's estate. The Company shall have no responsibility with respect to
the validity of any beneficiary designation made by the Employee if it acts
thereon in good faith.
4
<PAGE>
ARTICLE IV
----------
COMPETENCE PRESUMED
-------------------
Every person receiving or claiming payments under this Agreement shall be
conclusively presumed to be mentally competent until the date that the Company
receives a written notice in a form and in a manner acceptable to the Company
that such person is incompetent and that a guardian, conservator, or other
person legally vested with the interest of his estate has been appointed. In
the event a guardian or conservator of the estate of any person receiving or
claiming payments under this Agreement shall be applied by a court of competent
jurisdiction, payments under this Agreement may be made to such guardian or
conservator provided that the proper proof of appointment and continuing
qualification is furnished in a form and manner acceptable to the Company. Any
such payments so made shall be a complete discharge of any liability of the
Company therefor.
ARTICLE V
---------
MISCELLANEOUS
-------------
5.1. Notices. Any notices required or permitted to be given under this
-------
Agreement shall be sufficient if in writing and is sent by registered or
certified mail or personally delivered to the residence of Employee or the legal
representative of his estate or to the principal office of the Company directed
to the attention of the Board of Directors, as the case may be.
5.2. Waiver of Breach. The waiver by Company or Employee of any breach of
----------------
any provision of this Agreement by the other shall not be deemed a waiver of any
subsequent breach.
5.3. Assignment. This Agreement shall not be assignable by the Company
----------
without the written consent of Employee except that if Company shall merge or
consolidate with or into or transfer substantially all of its assets, including
goodwill, to another corporation or other form of business organization, this
Agreement shall be binding upon and inure to the benefit of the successor of
Company resulting from such merger, consolidation or transfer. Neither Employee
nor his beneficiaries may assign, pledge or encumber his interest in this
Agreement or any part thereof without the written consent of Company.
5.4. Governing Law. This Agreement and all questions arising in
-------------
connection therewith shall be governed by the laws of the State of Wisconsin.
5
<PAGE>
5.5. Arbitration. Any dispute or controversy arising under or relating to
-----------
the application or interpretation of this Agreement shall be determined by
arbitration in Milwaukee, Wisconsin according to the rules then obtaining of the
American Arbitration Association for the resolution of commercial disputes and
the decision so rendered shall be binding and conclusive upon Employee and
Company.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
COMPANY:
SALEM COMMUNICATIONS CORPORATION
By: /s/ Edward G. Altsinger III
----------------------------------
EDWARD G. ALTSINGER III, President
EMPLOYEE:
By: /s/ Eric Halvorson
----------------------------------
ERIC HALVORSON
6
<PAGE>
EXHIBIT 10.04.01
EMPLOYMENT AGREEMENT
--------------------
THIS AGREEMENT, made and entered into this 9th day of February, 1995, by
and between Salem Radio Network Incorporated, a Delaware corporation having its
principal place of business at 545 East John Carpenter Freeway, Suite 450,
Irving, Texas 76092, (hereinafter referred to as "the Company"), and Greg R.
Anderson, residing at 1414 Stone Lakes Drive, Southlake, Texas 76092,
(hereinafter referred to as "Employee"):
WHEREAS, the Company desires to employ Employee for the term of this
agreement in connection with the management and direction of its entire radio
network enterprise, and
WHEREAS, Employee is experienced in such aspects of radio networking and
desires to be retained by the Company,
NOW, THEREFORE, in order to carry out the mutual desires of the Company and
Employee, the parties promise and agree as follows:
1. TERM The term of this Agreement will be for the period beginning
----
October 1, 1994 and ending September 30, 1997.
- --------------- ------------------
2. SERVICES TO BE PROVIDED Employee will serve as President of the
-----------------------
Company under the direction of the Chief Executive Officer, Salem Communications
Corporation.
3. EMPLOYEE RESPONSIBILITIES
-------------------------
3.1 Employee, during the term of this contract, shall devote his
principal skills and energy to the service of the Company, and shall
not render those services, or any other services, to any other entity
or engage in any other services or business or employment, directly or
indirectly, without prior written consent of the Company.
3.2 Specifically, the responsibilities of Employee shall encompass
the overall supervision and management of the entire Company
enterprise, including, but not limited to, the day-to-day operations,
the identity and development of programming, the development and
maintenance of affiliates, recruitment of talent, negotiation of
talent and syndication contracts, the preparation of annual expense
and capital budgets and participation in strategic planning on an
interactive basis with the Company's Chief Executive Officer, its
officers and Board of Directors.
<PAGE>
3.3 Employee acknowledges that the development and maintenance of
advertising revenue is a major factor in the continued viability and
growth of the Company and as such shall work closely and regularly, in
a consultative manner with the general manager and account
representatives of Salem Radio Representatives, Inc. (SRR) to develop
a revenue budget and sales strategy for all Company programs available
for sponsorship. Company acknowledges, however, that at this time and
under the current structure, Employee has limited control over the
sales effort of SRR and its employees. Notwithstanding the foregoing,
the Company shall expect Employee to work successfully in partnership
with SRR in maximizing Company advertising opportunities. Employee
shall be expected to continuously monitor current sales arrangement
utilizing SRR as to its effectiveness for SRN. If Employee determines
that the current sales arrangement and performance employing SRR
proves unsatisfactory, Employee shall alert Company of that judgment
and make appropriate recommendations to modify the arrangement.
3.4 Employee shall not accept or agree to accept from any person,
other than the Company, any money, service or other valuable
consideration for the inclusion of any matter as a part of the
Company's programming or in connection with the production or
preparation of any program or program matter intended for
broadcasting.
3.5 The Company may make use of Employee's name, photograph, drawing
and other likeness in connection with the advertising and giving of
publicity to a Company program, or the advertising of the Company
during the period beginning with Employee's term of employment and
continuing up to ninety (90) days after the last broadcast rendered
during the term of this agreement. The Company may make recordings,
transcriptions, videotapes and films of any and all services which
Employee performs and may make use of any announcing material supplied
by Employee. the Company shall have the right to have such recordings,
transcriptions, videotapes and films broadcast royalty-free over any
radio or television station at any time.
4. COMPENSATION
------------
A. Company agrees to pay Employee in full for services rendered as
described in Part 3 above, a base salary as follows:
1. From October 1, 1994 to September 30, 1995, at the rate of
$10,000 per month.
2. From October 1, 1995 to September 30, 1996, at the rate of
$10,500 per month.
3. From October 1, 1996 to September 30, 1997, at the rate of
$11,025 per month.
2
<PAGE>
B. In addition, Employee shall be eligible for an annual performance
bonus consideration based on the following:
At the completion of year-end audited financial statements of the
Company during the term of this agreement, consideration will be given
by the Company Board of Directors to paying Employee a discretionary
bonus, following its evaluation of Employee's performance. Criteria
to be considered will include but not be limited to: Meeting or
exceeding Company's net operating income budget; working successfully
with SRR to meet or exceed sales goals; identifying talent and
development of new programming; continued expansion of the Company
affiliate base; development and skillful management of the Company
organization, and in particular the Company's managerial and affiliate
relations staffs and the Company talent pool. Bonuses, if declared,
will be paid not later than 30 days after the completion of the
audited year-end financial statements.
5. BENEFITS Company agrees that Employee shall receive all standard
--------
company benefits in accordance with the Company Employee Handbook, with the
-----------------
exception that Company shall pay the entire premium for Employee's personal
group health and life coverage and fifty percent (50%) of the premium for
Employee's dependent health coverage based on the terms and conditions of the
group health master contract. Employee shall receive two weeks (10 days) of
paid vacation time per annum through the term of this contract.
6. CANCELLATION This contract may be canceled and/or terminated:
------------
A. By either party at any time upon breach by the other of any of the
covenants and agreements contained herein.
B. By Company at any time for cause. "Cause" is defined as
Employee's failure to comply with all present and future policies,
requirements, directions, requests and rules and regulations of
Company in connection with Company's business, or any act or
involvement by Employee in any situation or occurrence tending to
bring Company into public scandal, ridicule or which will reflect
unfavorably on the reputation of Company. In the event of termination
under this Paragraph B, provisions of severance under Paragraph C
(below) shall not apply.
C. By Company at any time provided one hundred and fifty (150) days
of salary, excluding bonuses, and all accrued vacation is paid.
7. ADDITIONAL TERMS AND CONDITIONS
-------------------------------
A. Any questions as to the validity, construction or performance of
the Agreement shall be governed by the laws of the state of Texas.
B. Because the performance of Employee's duties will give him access
to Station's proprietary client information, all such client and/or
other proprietary station information is acknowledged by Employee as
being the sole property of
3
<PAGE>
the Station, and may not be used by Employee for any purpose other
than that which is specifically related to Employee's responsibilities
and performance as an employee of the Company.
C. This instrument contains the entire agreement of the parties, and
supersedes any previous employment agreement or understanding between
the parties effective on or after the beginning of the term of this
Agreement. It may not be changed orally but only by an agreement, in
writing, signed by the party against whom enforcement of any waiver,
change, modification, extension or discharge is sought.
D. If any portion of this agreement shall be held to be illegal,
invalid or unenforceable in any respect, such invalidity, illegality,
or unenforceability shall not affect any other provision hereof, and
this contract shall be construed as if such invalid, illegal invalid
or unenforceable provision, had never been contained herein.
Additionally, in lieu of each such illegal or unenforceable provision,
there shall be added automatically as part of the contract a provision
as similar to such former provision as shall be legal, valid and
enforceable.
E. Each notice, consent, approval or request permitted or required to
be given hereafter, except for legal process, shall be given in
writing, either by personal delivery, U.S. Postal Service, mailgram or
by facsimile with the original sent same day by certified mail to the
parties at the respective addresses below their signatures of the face
of this contract or at such other substitute address as either may
designate by notice given in the same manner.
4
<PAGE>
F. The parties agree that the terms and conditions of this contract
shall be and remain confidential as between the parties and neither
party shall disclose, divulge or reveal such terms and conditions to
any third party agent without the other's prior written consent.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement, on the
day and year first above written and effective as of October 1, 1994.
EMPLOYEE COMPANY
SALEM RADIO NETWORK INCORPORATED
By: /s/ Greg R. Anderson By: /s/ Edward G. Atsinger III
----------------------- ---------------------------
Title:
Date: ---------------------------
----------------------- Date:
---------------------------
Address: 1414 Stone Lakes Drive Address: 4880 Santa Rosa Road
Southlake, Texas 76092 Suite 300
Camarillo, California 93012
5
<PAGE>
EXHIBIT 10.04.02
December 22, 1995
Mr. Greg Anderson
1414 Stone Lakes Drive
Southlake, TX 76092
Dear Greg:
This letter will amend your present Employment Agreement for the purpose of
compensating you in your capacity as General Manager of Radio Station KDFX,
which is owned and operated by Inspiration Media of Texas, Inc., effective and
retroactive to November 1, 1995.
RESPONSIBILITIES
- ----------------
(Please see attached description, specifically under "Position Summary".
COMPENSATION
- ------------
For the fulfillment of responsibilities as General Manager of Radio Station
KDFX, for an unspecified period of time, you will receive a base salary of
$2,500 per month, payable in two equal installments on the 20th and 5th of each
month.
No incentive compensation or insurance benefits are forthcoming from KDFX.
With the exception of this compensation increase, no aspects of your Salem Radio
Network Employment Agreement, which was effective October 1, 1994, shall be
--------------------
changed.
Sincerely,
INSPIRATION MEDIA OF TEXAS, INC.
/s/ Edward G. Atsinger III
Edward G. Atsinger III
President
cc: Eric Halvorson
Russ Hauth
Dirk Gastaldo
KDFX Payroll
<PAGE>
EXHIBIT 10.04.03
FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
---------------------------------------
This First Amendment to Employment Agreement is entered into as of the 1st day
of August, 1997, between SALEM RADIO NETWORK INCORPORATED, a Delaware
corporation ("Company"), and GREG R. ANDERSON ("Employee").
WITNESSETH:
WHEREAS, the Company and Employee entered into a contract for the employment of
Employee by Company on February 9, 1995 (the "Agreement"); and
WHEREAS, the parties desire to amend the Agreement.
NOW THEREFORE, for valuable consideration, the receipt of which is hereby
acknowledged, the parties agree as follows:
1. Paragraph 1 of the Agreement is hereby amended to read as follows:
1. TERM. The term of this Agreement will be for the period beginning
----
August 1, 1997 and ending September 30, 2000.
2. Subparagraph 3.3 of the Agreement is hereby amended to read as
follows:
3.3 In addition to Employee's responsibilities with respect to the
Company enterprise set forth in subparagraph 3.2, above, Employee
shall supervise and manage the operations of Salem Radio
Representatives, Inc., SRN News and the Morningstar music format.
3. Paragraph 4A of the Agreement is hereby amended to read as follows:
A. Company agrees to pay Employee in full for services rendered as
described in Part 3 above, a base salary of $13,525 per month during
the term of this Agreement.
4. Paragraph 4B of the Agreement is hereby amended to read as follows:
B. In addition, Employee shall be eligible for an annual performance
bonus consideration based on the following:
At the completion of year-end audited financial statements of the
Company and the other entities supervised and managed by Employee
during the term of this Agreement, consideration will be given by the
Company Board of Directors to paying Employee a discretionary bonus,
following its evaluation of Employee's performance. Criteria to be
considered will include but not be limited to: Meeting or exceeding
the net operating income budgets of the Company and the other entities
supervised and managed by Employee; identifying talent and
<PAGE>
development of new programming; continued expansion of the Company
affiliate base, and in particular the expansion of affiliates for and
establishment of profitability at SRN News; and development and
skillful management of the organization of all entities supervised and
managed by Employee, and in particular the development of managerial
and affiliate relations staffs. Bonuses, if declared, will be paid not
later than 30 days after the completion of the audited year-end
financial statements.
5. The second sentence of Paragraph 5 of the Agreement is hereby amended
to read as follows:
Employee shall receive three weeks (15 days) of paid vacation time per
annum through the term of this contract.
6. Paragraph 6C of the Agreement is hereby amended to read as follows:
C. By Company at any time provided one hundred eighty (180) days of
salary, excluding bonuses, and all accrued vacation is paid.
7. Except as specifically amended herein, all terms and conditions of the
Agreement shall remain in full force and effect.
Executed as of the date first above written.
SALEM RADIO NETWORK INCORPORATED
By: /s/ Edward G. Atsinger III
-------------------------
Edward G. Atsinger III
Chief Executive Officer
/s/ Greg R. Anderson
-------------------------
Greg R. Anderson
2
<PAGE>
EXHIBIT 10.05.01
LEASE AGREEMENT
---------------
This Agreement ("Agreement") is made as of the 19th day of February, 1997,
by and between EDWARD G. ATSINGER III and STUART W. EPPERSON (collectively
referred to herein as "Lessor") and CARON BROADCASTING, INC. ("Lessee").
WHEREAS, Lessor owns certain land (the "Land") and Lessee owns certain
improvements thereon (the "Improvements"), which Land and Improvements together
comprise certain real property, more particularly described as set forth in
Exhibit "A", which is attached hereto and made a part hereof (the "Real
Property"); and,
WHEREAS, Lessee desires to use said Real Property in operating its radio
station WHLO(AM), AKRON, OHIO; and,
WHEREAS, the parties are desirous of making a mutually suitable and
satisfactory agreement whereby Lessor will lease to Lessee the Real Property
(constituting the "Leased Premises") on the terms and conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the following covenants, agreements,
conditions and representations, the parties hereto agree as follows:
SECTION 1
---------
USE OF THE LEASED PREMISES
--------------------------
(a) Lessor, in consideration of the rents to be paid and covenants herein
contained, hereby leases to Lessee the Leased Premises.
(b) Lessee may use the Leased Premises for the operation of its radio
station, and, in connection therewith, for the installation, repair,
maintenance, operation, housing and removal of its Improvements and other
related broadcasting equipment (together comprising the "Installations").
Lessee is fully familiar with the physical condition of the Land and has
received the same in good order and condition, and agrees that the Land complies
in all respects with all requirements of this Agreement. Lessee shall use the
Land exclusively for purposes associated with the operation of a radio station.
(c) Lessee shall have the right from time to time to substitute Installations
of similar kind and character for those hereinabove specified, provided such
changes shall be approved in
<PAGE>
advance by Lessor, and Lessor shall not unreasonably delay or withhold its
approval. In the event Lessee submits any such changes for Lessor's approval
and Lessor does not respond within thirty (30) days after Lessor's receipt
thereof, then such changes shall be deemed approved by Lessor, so long as such
changes otherwise comply with this Agreement, five (5) days after Lessor's
receipt of notice that it has not responded.
(d) Lessee shall have access to the Leased Premises twenty-four (24) hours
per day, seven (7) days per week, for the purpose of installing, maintaining and
repairing its Installations, provided that the contractors performing such work
are reasonably acceptable to Lessor.
(e) Lessor shall not be responsible for repairs or maintenance to the
Installations, except for repairs occasioned by the negligence of Lessor, its
agents, employees or contractors.
(f) During the Term (as hereinafter defined), Lessor and Lessee shall each
provide the other with a telephone number which, if called will ring at a
location that is staffed by their respective agents twenty-four (24) hours each
and every day, seven (7) days each and every week; and Lessor and Lessee shall
notify each other promptly in the event of any change in such telephone number.
(g) Lessee shall not use or permit the Leased Premises to be used by any
dangerous, toxic, noxious or offensive trade or business, or for any unlawful
purpose.
(h) Lessee shall not directly or indirectly create or permit to be created or
to remain, and will discharge any mortgage, lien, security interest, encumbrance
or charge on, pledge of or conditional sale or other title retention agreement
with respect to the Real Property or any part thereof or Lessee's interest
therein other than (i) this Agreement, (ii) any lien, including a mortgage on
the leasehold interest of Lessee, which may be approved by the Lessor in
writing, which approval shall not be unreasonably withheld, (iii) liens for
impositions not yet payable, or payable without the addition of any fine,
penalty, interest or cost for non-payment, or being contested as permitted by
Paragraph 3(d), below, and (iv) liens of mechanics, materialmen, suppliers or
vendors, or rights thereto, incurred in the ordinary course of business for sums
which under the terms of the related contracts are not at the time due, provided
that adequate provision for the payment thereof shall have been made.
SECTION 2
---------
TERM AND RENT
-------------
(a) The term of this Lease (the "Term") shall commence on February 19, 1997
(the "Commencement Date"), and shall expire on June 30, 2007 (the "Expiration
Date"). If the Term has been extended as provided in subparagraph (b), below,
the Expiration Date shall be the last day of the Term as so extended.
<PAGE>
(b) Lessee shall have the option, if Lessee is not at the time in default
under this Agreement, to extend the Term of this Agreement for up to two (2)
successive periods of five (5) years each (the "Extended Terms"), and, except as
set forth in subparagraph (c), below, on the same terms, covenants and
conditions herein contained. The word "Term" as used in this Agreement shall be
deemed to include the Extended Terms when and if the Agreement is extended. Each
option to extend the Term shall be exercised only by Lessee's delivery to Lessor
by United States mail on or before ninety (90) days prior to the commencement of
the renewal term of written notice of Lessee's election to extend as provided
herein.
(c) Lessee agrees to pay rent to Lessor from the Commencement Date through
the Expiration Date, or such earlier date as this Agreement is terminated as
provided herein, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn:
Accounting, or to such other person or place as Lessor may designate from time
to time by notice to Lessee, in the following amounts and in the following
manner:
(i) During the first year beginning with the Commencement Date Lessee
shall pay a base rent of $12,000 per annum, in equal monthly installments of
$1,000 (the "Base Rent") in advance on the first day of each month; and
thereafter on each and every Adjustment Date (hereinafter defined) the monthly
rent shall be computed according to subparagraph (ii) below.
(ii) The term "Adjustment Date" shall mean the first (1st) day of
February following the Commencement Date and each subsequent anniversary of such
date this Agreement remains in effect. During the one (1) year period beginning
with each Adjustment Date, the monthly rent payable by Lessee shall reflect an
adjustment, as herein provided, for the change, if any, from the year in which
the Commencement Date falls, in the Consumer Price Index for Urban Wage Earners
and Clerical Workers, Los Angeles area [Base Year 1982-84=100] ("CPI") as
measured in February and published by the United States Department of Labor,
Bureau of Labor Statistics; i.e., during the one (1) year period beginning with
the Adjustment Date, the monthly rent shall be the product obtained by
multiplying the Base Rent times a fraction, the numerator of which shall be the
CPI for February of the year such Adjustment Date falls and the denominator of
which shall be the CPI for February of the year in which the Commencement Date
falls. Notwithstanding the results of the foregoing calculation, the amount
payable by Lessee hereunder shall not in any event be less than the rental paid
during the immediately preceding one (1) year period. In the event that the
Bureau of Labor Statistics shall change the base period for the CPI, the new
index number shall be substituted for the old index number in making the above
computation. In the event the Bureau of Labor Statistics ceases publishing the
CPI, or materially changes the method of its computation, Lessor and Lessee
shall accept comparable statistics on the purchasing power of the consumer
dollar as published at the time of said discontinuation or change by a
responsible financial periodical of recognized authority to be chosen by Lessor
subject to reasonable consent of Lessee.
(d) Rent and all other sums payable to Lessor hereunder shall be paid without
notice, demand, counterclaim, set-off, deduction or defense and without
abatement, suspension, deferment, diminution or reduction. Except as expressly
provided herein, Lessee waives all rights now or hereafter conferred by statute
or otherwise to quit, terminate or surrender this Agreement
<PAGE>
or the Real Property or any part thereof, or to any abatement, suspension,
deferment, diminution or reduction of rent or any other sum payable by Lessee
hereunder.
SECTION 3
---------
CHARGES AND UTILITIES
---------------------
(a) Lessee, at its sole expense, shall keep the Real Property and the
adjoining streets and ways in good and clean order and condition and will
promptly make all necessary or appropriate repairs, replacements and renewals
thereof, whether interior or exterior, structural or non-structural, ordinary or
extraordinary, foreseen or unforeseen. All repairs, replacements and renewals
shall be equal in quality and class to the original work. Lessee waives any
right created by any law now or hereafter in force to make repairs to the Real
Property at Lessor's expense. Lessee, at its sole expense, shall do or cause
others to do every act necessary or appropriate for the preservation and safety
of the Real Property whether or not the Lessor shall be required by any legal
requirement to take such action or be liable for failure to do so.
(b) If not at the time in default under this Agreement, Lessee, at its sole
expense, may make reasonable alterations of and additions to the Improvements or
any part thereof, provided that any alteration or addition (i) shall not change
the general character of the Improvements, or reduce the fair market value
thereof below their value immediately before such alteration or addition, or
impair their usefulness, (ii) is effected with due diligence, in a good and
workmanlike manner and in compliance with all legal requirements and insurance
requirements, (iii) is promptly and fully paid for by Lessee, (iv) is made, in
case the estimated cost of such alteration or addition exceeds Ten Thousand
Dollars ($10,000), under the supervision of an architect or engineer
satisfactory to Lessor and in accordance with plans, specifications and cost
estimates approved by Lessor, and (v) does not interfere with Lessor's rights of
use under this Agreement.
(c) Subject to subparagraph (d), below, relating to contests, Lessee shall
pay all taxes, assessments (including without limitation, all assessments for
public improvements or benefits, whether or not commenced or completed prior to
the date hereof and whether or not to be completed within the Term hereof),
ground rents, water, sewer or similar rents, rates and charges, excises, levies,
license fees, permit fees, inspection fees and other authorization fees and
other charges in each case, whether general or special, ordinary or
extraordinary, foreseen or unforeseen, of every character (including all
interest and penalties thereof), which at any time during or in respect of the
Term hereof may be assessed, levied, confirmed or imposed on or in respect of or
be a lien upon the Real Property or any part thereof or any rent therefrom or
any estate, right or interest therein, or any occupancy, use or possession of or
activity conducted on the Real Property or any part thereof, other than any
income or excess profits tax imposed upon the Lessor's general income or
revenues, but excluding any income or excess profits or franchise taxes of
Lessor determined on the basis of general income or revenue or any interest or
penalties in respect thereof. Lessee shall furnish to Lessor for inspection
within thirty (30) days after written request, official receipts of the
appropriate taxing authority or other proof satisfactory to Lessor evidencing
such payment. If by law any such amount may be paid in installments, Lessee
shall be obligated to pay only those installments as they become due from time
to time before any
<PAGE>
interest, penalty, fine or cost may be added thereto; and any such amount
relating to the fiscal period of the taxing authority, part of which is included
within the Term and a part of which extends beyond the Term shall, if Lessee
shall not be in default under this Agreement, be apportioned between Lessee and
Lessor as of the expiration of the Term of this Agreement.
(d) Lessee, at its sole expense, may contest, after prior written notice to
Lessor, by appropriate legal proceedings conducted in good faith and with due
diligence, the amount or validity or application, in whole or in part, of any
tax, lien or other imposition on the Real Property, provided that (i) Lessee
shall first make all contested payments, under protest if it desires, (ii)
neither the Real Property nor any part thereof or interest therein nor any such
rents or other sums would be in any danger of being sold, forfeited, lost or
interfered with, and (iii) Lessee shall have furnished such security, if any, as
may be required in the proceedings or reasonably requested by Lessor.
(e) Lessee shall pay or cause to be paid all charges for all public or
private utility services and all sprinkler systems and protective services at
any time rendered to or in connection with the Real Property or any part
thereof, will comply with all contracts relating to any such services, and will
do all other things required for the maintenance and continuance of all such
services.
SECTION 4
---------
INSURANCE AND INDEMNIFICATION
-----------------------------
(a) Lessee shall, at its sole cost and expense, during the Term hereof,
obtain or provide and keep in full force for the benefit of Lessor, as an
additional named insured (i) general public liability insurance, insuring Lessor
against any and all liability or claims or liability arising out of, occasioned
by or resulting from any accident or other occurrence in or about the Real
Property arising out of any act or omission of Lessee or any officer, employee,
agent or contractor of Lessee, for injuries to any person or persons, with
limits of not less than Three Million Dollars ($3,000,000.00) for injuries to
one person, Five Million Dollars ($5,000,000.00) for injuries to more than one
person, in any one accident or occurrence, and for loss or damage to the
property of any person or persons, for not less than Five Million Dollars
($5,000,000.00); (ii) insurance with respect to the Improvements against loss or
damage by fire, lightning, windstorm, hail, explosion, riot, riot attending a
strike, civil commotion, aircraft, vehicles, smoke and other risks from time to
time included under "extended coverage" policies, in an amount equal to at least
One Hundred Percent (100%) of the full replacement value of the Improvements
and, in any event, in an amount sufficient to prevent Lessor or Lessee from
becoming a co-insurer of any partial loss under the applicable policies, which
shall be written on a replacement cost basis; (iii) appropriate workers'
compensation or other insurance against liability arising from claims of workers
in respect of and during the period of any work on or about the Real Property;
and (iv) insurance against such other hazards and in such amounts as is
customarily carried by owners and operators of similar properties, and as Lessor
may reasonably require for its protection. Lessee shall comply with such other
requirements as Lessor, or any mortgagee, may from time to time reasonably
request for the protection by insurance of their respective interests. The
policy or policies of insurance maintained by Lessee pursuant to this Paragraph
shall be of a company or companies
<PAGE>
authorized to do business in Ohio and a certificate thereof shall be delivered
to Lessor, together with evidence of the payment of the premiums therefor, not
less than fifteen (15) days prior to the commencement of the Term hereof or of
the date when Lessee shall enter upon the Leased Premises, whichever occurs
sooner. At least fifteen (15) days prior to the expiration or termination date
of any policy, Lessee shall deliver a certificate of a renewal or replacement
policy with proof of the payment of the premium therefor. Any such insurance
required by this Paragraph may, at Lessee's option, be provided through a
blanket policy or policies.
(b) Lessee shall indemnify Lessor and hold Lessor harmless from and against
all claims, actions, losses, damages, liabilities and expenses (including
reasonable attorneys' fees) incurred by or asserted against Lessor, whether
during or after the Term of this Agreement, including by reason of personal
injury, loss of life, or damage to property, caused by or resulting from in
whole or any material part, (i) any breach of this Agreement by Lessee, (ii) any
negligent or intentional act or omission of Lessee, its employees, agents,
invitees or contractors, whether in, on, about or with respect to the Leased
Premises or otherwise, (iii) the use by Lessee of any part of the Leased
Premises, (iv) any work undertaken by or at the request of Lessee on or about
the Leased Premises, (v) any other activity undertaken by or at the request of
Lessee pursuant to or in connection with this Agreement, or (vi) the presence of
any individuals on the Leased Premises as a result of Lessee's request or this
Agreement; provided, however, that Lessee shall not be required to indemnify
Lessor for any damages, injury, loss or expense arising out of Lessor's or its
agents', employees', invitees' or contractors' negligent acts or omissions.
(c) If Lessor so elects by notice to Lessee, Lessee shall have the obligation
of defending, at its sole cost and expense, by counsel selected by Lessee and
approved by Lessor (such approval not to be unreasonably withheld), against any
claim to which the foregoing indemnity may apply. Lessor may assume, or require
that such defense be assumed, by Lessor and counsel selected by Lessor, at the
cost and expense of Lessee if Lessor is for any reason dissatisfied with the
defense by Lessee, or believes that its interests would be better served
thereby. In any case where Lessee is defending any such claim, Lessor may
participate in the defense thereof by counsel selected by it, but at Lessor's
expense. Lessee shall not enter into any settlement of any claim without the
consent of Lessor, which consent shall not be unreasonably withheld.
(d) Lessor shall indemnify Lessee and hold Lessee harmless from and against
all claims, actions, losses, damages, liabilities and expenses (including
reasonable attorneys' fees) incurred by or asserted against Lessee, whether
during or after the Term of this Agreement, including by reason of personal
injury, loss of life, or damage to property, caused by or resulting from in
whole or any material part, (i) any breach of this Agreement by Lessor, (ii) any
negligent or intentional act or omission of Lessor, its employees, agents,
invitees or contractors, whether in, on, about or with respect to the Leased
Premises or otherwise, (iii) the use by Lessor of any part of the Leased
Premises, (iv) any work undertaken by or at the request of Lessor on or about
the Leased Premises, (v) any other activity undertaken by or at the request of
Lessor pursuant to or in connection with this Agreement, or (vi) the presence of
any individuals on the Leased Premises as a result of Lessor's request or this
Agreement; provided, however, that Lessor shall not be required to indemnify
Lessee for any damages, injury, loss or expense arising out of Lessee's or its
agents', employees', invitees' or contractors' negligent acts or omissions.
<PAGE>
(e) If Lessee so elects by notice to Lessor, Lessor shall have the obligation
of defending, at its sole cost and expense, by counsel selected by Lessor and
approved by Lessee (such approval not to be unreasonably withheld), against any
claim to which the foregoing indemnity may apply. Lessee may assume, or require
that such defense be assumed, by Lessee and counsel selected by Lessee, at the
cost and expense of Lessor if Lessee is for any reason dissatisfied with the
defense by Lessor, or believes that its interests would be better served
thereby. In any case where Lessor is defending any such claim, Lessee may
participate in the defense thereof by counsel selected by it, but at Lessee's
expense. Lessor shall not enter into any settlement of any claim without the
consent of Lessee, which consent shall not be unreasonably withheld.
(f) Nothing in this Agreement shall be construed so as to authorize or permit
any insurer of Lessor or Lessee to be subrogated to any right of Lessor or
Lessee against the other. Each of Lessor and Lessee hereby releases the other
to the extent of its insurance coverage for any loss or damage caused by fire or
any of the extended coverage casualties, even if such fire or other casualty
shall be brought about by the fault or negligence of the other party or persons
for whose acts said party is liable.
SECTION 5
---------
REPRESENTATIONS, WARRANTIES AND OTHER OBLIGATIONS
-------------------------------------------------
(a) Lessor represents and warrants that:
(i) The execution and performance of this Agreement shall not constitute
a breach or violation under any Agreement to which Lessor is a party.
(ii) To the best of Lessor's knowledge, there are no violations of any
federal, state, county or municipal law, ordinance, order, regulations or
requirement with respect to the Leased Premises, and as of the date of this
Agreement, no notice of any kind relating thereto (which would adversely affect
the transactions contemplated by this Agreement) has been issued by public
authorities having jurisdiction over the Leased Premises.
(iii) No person or party other than Lessor has a right to use the Leased
Premises for any purpose which would affect Lessee's right to use the Leased
Premises as contemplated hereunder.
(iv) Lessor has not received written notice of pending or contemplated
condemnation proceedings affecting the Leased Premises or any part thereof.
(v) To the best of Lessor's knowledge, there is no action, suit or
proceeding pending or threatened against or affecting the Leased Premises or any
portion thereof and Lessor has not received notice written or otherwise of any
litigation affecting or concerning the Leased Premises relating to or arising
out of its ownership, management, use or operation. Lessor shall give to Lessee
prompt notice of institution of any such proceeding or litigation.
(vi) To the best of Lessor's knowledge, there are presently no
proceedings for
<PAGE>
overdue real estate taxes assessed against the Leased Premises for any fiscal
period.
(vii) Lessor shall promptly advise Lessee in writing of any written
notice received from any governmental authority to comply with the terms,
provisions and requirements of any local, state and federal laws, ordinances,
directives, orders, regulations and requirements which apply to any portion of
the Leased Premises or to any adjacent street or other public area or to the
maintenance, operation or use thereof.
(viii) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby, have been duly and validly
authorized by all necessary actions on the part of Lessor (none of which actions
have been modified or rescinded and all of which actions are in full force and
effect). This Agreement constitutes a valid and binding agreement and
obligation of Lessor, enforceable in accordance with its terms.
(ix) Subject to liens and encumbrances of record, Lessor owns good and
marketable title in fee simple to the Real Property on which the Leased Premises
are located, and Lessor acknowledges that Lessee is relying upon the foregoing
representation and warranty in entering into this Agreement and in expending
moneys in connection herewith. Lessor shall not encumber or permit any
encumbrances, liens or restrictions on Lessee's Installations, except with the
prior written approval of Lessee.
(b) Each party shall comply in all material respects with all local, state
and federal laws, statutes, ordinances, rules, regulations, orders and decrees
that it knows to be applicable in connection with its activities and operations
at the Leased Premises, and Lessor shall require the same representation and
warranty from all additional users of the facilities at the Leased Premises.
(c) The parties agree that, during the Term of this Agreement neither party
shall intentionally do anything at the Leased Premises which will interfere with
or adversely affect the operations of the other party.
(d) In the event that during the Term of this Agreement there shall be an
actual condemnation or foreclosure and taking of all of the Leased Premises, or
a portion thereof such that it renders the premises unsuitable for broadcasting,
this Agreement may be terminated by written notice from either party to the
other and thereafter each of the parties shall be relieved of any future
liability to the other under this Agreement, except as to obligations accrued
and not yet discharged at the date of termination. Following any condemnation
or foreclosing order, Lessee may continue to use the property for operations
under the terms of this Agreement until Lessee finds and begins to utilize new
facilities or until prevented by the condemning or foreclosing authority from
utilizing the Leased Premises, whichever occurs first.
(e) Lessee represents and warrants that its Installations to be located on or
about the Leased Premises, together with the existence of the equipment of
Lessor, and the operation thereof do not and will not result in exposure of
workers or the general public to levels of radio frequency radiation in excess
of the "Radio Frequency Protection Guides" recommended in "American National
Standard Safety Levels With Respect to Human Exposure to Radio
<PAGE>
Frequency Electromagnetic Fields, 300 KHz to 100 GHz," issued by the American
National Standards Institute ("Acceptable Radio Frequency Radiation Standards").
(f) Lessee covenants that it will not at any time during the Term of this
Agreement, transmit, store, handle or dump toxic or hazardous wastes anywhere at
or around the Leased Premises.
(g) Lessee shall promptly advise Lessor in writing of any written notice
received from any governmental authority to comply with the terms, provisions
and requirements of any local, state and federal laws, ordinances, directives,
orders, regulations, and requirements which apply to any portion of the Leased
Premises or to any adjacent street or other public area or the maintenance,
operation or use thereof.
(h) Lessee represents and warrants that the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby, have been duly and validly authorized by all necessary
actions on the part of Lessee (none of which actions have been modified or
rescinded and all of which actions are in full force and effect). This
Agreement constitutes a valid and binding agreement and obligation of Lessee,
enforceable in accordance with its terms.
(i) Lessee warrants unto Lessor that the Improvements (including the radio
tower(s) located on the Real Property) are and will remain in material
compliance at all times during the Term and any Extension Term with all federal,
state, county, municipal, local, administrative and other governmental laws,
statutes, ordinances, codes, rules, regulations and orders pertaining thereto,
including, without limitation, to the extent applicable, all zoning laws and
building codes and all regulations of the Federal Aviation Administration
("FAA") and the Federal Communications Commission ("FCC").
(j) In case of any material damage to or destruction of the Real Property or
any part thereof, Lessee shall promptly give written notice thereof to Lessor
and any mortgagee, generally describing the nature and extent of such damage or
destruction. In case of any damage to or destruction of the Improvements or any
parts thereof, Lessee, whether or not the insurance proceeds, if any, on account
of such damage or destruction shall be sufficient for the purpose, at its sole
expense, shall promptly commence and complete the restoration, replacement or
rebuilding of the Improvements as nearly as possible to their value, condition
and character immediately prior to such damage or destruction.
(k) Lessee will execute, acknowledge and deliver to the Lessor, promptly upon
request, a certificate certifying that (i) this Agreement is unmodified and in
full force and effect (or, if there have been modifications, that the Agreement
is in full force and effect, as modified, and stating the modifications), (ii)
the dates, if any, to which rent and other sums payable hereunder have been
paid, and (iii) no notice has been received by Lessee of any default which has
not been cured, except as to defaults specified in said certificate. Any such
certificate may be relied upon by any prospective purchaser or mortgagee of the
Real Property or any part thereof.
<PAGE>
(l) Lessor will execute, acknowledge and deliver to the Lessee or any
mortgagee, promptly upon request, a certificate certifying that (i) this
Agreement is unmodified and in full force and effect (or, if there have been
modifications, that the Agreement is in full force and effect, as modified, and
stating the modifications), (ii) the dates, if any, to which rent and other sums
payable hereunder have been paid, and (iii) whether or not, to the knowledge of
Lessor, there are then existing any defaults under this Agreement (and if so,
specifying the same). Any such certificate may be relied upon by any
prospective purchaser transferee or mortgagee of Lessee's interest under this
Agreement.
SECTION 6
---------
EVENTS OF DEFAULT
-----------------
(a) Any of the following events shall constitute a default on the part of
Lessee:
(i) The failure of Lessee to pay rent or additional rent, and
continuation of such failure for more than ten (10) days after Lessee's receipt
of written notice thereof from Lessor; provided, however, that Lessor shall not
be required to provide such written notice to Lessee more than twice in any
twelve (12) month period prior to declaring such failure to pay an event of
default; or
(ii) The failure of Lessee to cure any other default under the terms
hereof, and continuation of such failure to cure for more than thirty (30) days
after notice by Lessor, provided, however, that if the nature of Lessee's
default is such that more than thirty (30) days is required for its cure, then
Lessee shall not be deemed to be in default if Lessee has commenced such cure
within the thirty (30) day period, demonstrates to Lessor's reasonable
satisfaction that such default is curable and thereafter diligently prosecutes
such cure to completion; or
(iii) Lessee is finally and without further right of appeal or review,
adjudicated a bankrupt or insolvent, or has a receiver appointed for all or
substantially all of its business or assets on the ground of its insolvency, or
has a trustee appointed for it after a petition has been filed for Lessee's
reorganization under the Bankruptcy Act of the United States, or any future law
of the United States having the same general purpose, or if Lessee shall make an
assignment for the benefit of its creditors, or if Lessee's interest hereunder
shall be levied upon or attached, which levy or attachment shall not be removed
within twenty (20) days from the date thereof.
(b) If an event of default on the part of Lessee shall occur at any time,
Lessor, at its election, may give Lessee a notice of termination specifying a
day not less than thirty (30) days thereafter on which the Term of this
Agreement shall end, unless such default shall be cured within said period, or,
if the default is such that more than thirty (30) days is required for its cure,
unless Lessee has commenced such cure within said period. If such notice is
given, the Agreement shall expire on the day so specified as fully and
completely as if that day were the day herein originally fixed for such
expiration, and Lessee shall then quit and surrender the Leased Premises to
Lessor, but Lessee shall remain liable for the payment of rent during the full
period which would otherwise constitute the balance of the Term of this
Agreement; and without
<PAGE>
prejudice to any other right or remedy which it may have hereunder or by law,
and notwithstanding any waiver of any prior breach of condition or event of
default hereunder, Lessor may re-enter the Leased Premises either by reasonable
force or otherwise, or dispossess Lessee, any legal representative of Lessee or
other occupant of the Leased Premises by appropriate suit, action or proceeding
and remove its effects and hold the Leased Premises as if this Agreement had not
been made.
(c) The failure of Lessor to cure any default under the terms hereof, and
continuation of such failure to cure for more than thirty (30) days after notice
by Lessee, shall constitute a default on the part of Lessor; provided, however,
that if the nature of Lessor's default is such that more than thirty (30) days
is required for its cure, then Lessor shall not be deemed to be in default if
Lessor has commenced such cure within the thirty (30) day period, demonstrates
to Lessee's reasonable satisfaction that such default is curable and thereafter
diligently prosecutes such cure to completion.
(d) If an event of default on the part of Lessor shall occur at any time,
Lessee, at its election, may give Lessor a notice of termination specifying a
day not less than thirty (30) days thereafter on which the Term of this
Agreement shall end, unless such default shall be cured within said period, or,
if the default is such that more than thirty (30) days is required for its cure,
unless Lessor has commenced such cure within said period. If such notice is
given, the Agreement shall expire on the day so specified as fully and
completely as if that day were the day herein originally fixed for such
expiration, and Lessee shall then quit and surrender the Leased Premises to
Lessor, and Lessee shall not be liable for payment of rent for any period after
such expiration.
SECTION 7
---------
ASSIGNMENT
----------
Lessee shall not assign this Agreement nor sublet any portion of the Leased
Premises without the prior written consent of the Lessor, which consent shall
not be unreasonably withheld. Notwithstanding any assignment or sublease,
Lessee shall remain primarily liable under this Agreement.
SECTION 8
---------
SUBORDINATION, NONDISTURBANCE AND ATTORNMENT
--------------------------------------------
This Agreement shall not be a lien against the Leased Premises in respect to
any mortgages and security agreements placed or hereafter to be placed by Lessor
upon the Leased Premises. The recording of such mortgages and security
agreements shall have preference and precedence and be superior and prior in
lien to this Agreement, irrespective of the date of recording, and Lessee agrees
to execute any instruments, without cost, which may be deemed necessary or
desirable to further effect the subordination of this Agreement. Lessor shall
make a reasonable effort to obtain from any mortgagees or lenders holding an
interest in the nature of a mortgage in the Leased Premises an agreement that
the mortgagee or lender shall not disturb
<PAGE>
Lessee's quiet possession in the event of foreclosure. If any proceedings are
brought for foreclosure, or in the event of the exercise of the power of sale
under any mortgage or deed of trust made by the Lessor encumbering the Leased
Premises, Lessee shall attorn to the purchaser upon any such foreclosure or sale
and recognize such purchaser as the Lessor under this Lease.
SECTION 9
---------
NON-LIABILITY OF LESSOR
-----------------------
Lessor shall not be liable for any damages or injury which may be sustained by
Lessee or any other person by reason of the failure, breakage, leakage or
obstruction of the water, sewer, plumbing, roof, drains, leaders, electrical,
air conditioning or any other equipment; or by reason of the elements; or
resulting from the carelessness, negligence or improper conduct of Lessee, its
agents, employees, contractors, invitees, assignees or successors; or
attributable to any interference with or the interruption of or failure of any
services, beyond the control of Lessor, to be supplied by Lessor.
SECTION 10
----------
QUIET ENJOYMENT
---------------
(a) Lessor agrees that it shall not enforce any unreasonable rules or
regulations which would unduly prejudice the conduct of Lessee's business, or
which would prevent full and free access to the Leased Premises by Lessee, as
herein provided.
(b) Lessor reserves and shall at all times have the right to re-enter the
Real Property to inspect the same, to supply any service to be provided by
Lessor to Lessee hereunder, and to show the Real Property to prospective
purchasers, mortgagees, or lessees, to post notices of non-responsibility,
without abatement of rent, provided entrance to the Real Property shall not be
denied Lessee.
SECTION 11
----------
SALE OF LEASED PREMISES BY LESSOR
---------------------------------
Notwithstanding any of the provisions of this Lease, Lessor (a) may assign, in
whole or in part, Lessor's interest in this Lease and (b) may sell all or part
of the Real Property. In the event of any sale or exchange of the Leased
Premises by Lessor and assignment by Lessor of this Lease, Lessor shall be and
is hereby relieved of all liability under any and all of its covenants and
obligations contained in or derived from this Lease arising out of any act,
occurrence or omission relating to the Leased Premises occurring after the
consummation of such sale or exchange and assignment, but only upon the
condition that, as part of such sale or exchange, Lessor will cause the grantee
to agree in writing to assume to carry out any and all of the covenants and
obligations of Lessor under this Lease occurring after the consummation of
Lessor's assignment of its interest in and to this Lease.
<PAGE>
SECTION 12
----------
BROKERAGE
---------
The parties acknowledge and agree that this Agreement has not been brought
about as a result of the services of any real estate broker, firm or
corporation, and each indemnifies and saves the other harmless from any and all
claims from any person(s) claiming to have rendered real estate services in
connection with this Agreement.
SECTION 13
----------
SURRENDER OF PREMISES
---------------------
Upon the expiration of the Term hereof, Lessee shall surrender the Leased
Premises, and, at Lessor's option, all interest of the Lessee in and to the
Improvements (including the radio towers located on the Land), to Lessor in good
order and condition, reasonable wear and tear excepted. Any equipment,
fixtures, goods or other property of Lessee not removed within ten (10) days
after any quitting, vacating or abandonment of the Leased Premises, or upon
Lessee's eviction therefrom, shall be considered abandoned, and Lessor shall
have the right, without notice to Lessee, to sell or otherwise dispose of same
without having to account to Lessee for any part of the proceeds of such sale.
SECTION 14
----------
NOTICES
-------
All notices, demands, and requests required or permitted to be given hereunder
shall be in writing and sent certified mail, return receipt requested, and if to
Lessor, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn: Edward
G. Atsinger III, and if Lessee, at 4880 Santa Rosa Road, Suite 300, Camarillo,
CA 93012, Attn: Accounting. Either party hereto may change the place for
notice to it by sending like written notice to the other party hereto.
SECTION 15
----------
BINDING NATURE
--------------
The provisions of this Agreement shall apply to, bind and inure to the benefit
of Lessor and Lessee, their respective successors, legal representatives or
assigns. The terms of this Agreement and any disputes arising therefrom, shall
be governed by the laws of the State of Texas.
<PAGE>
SECTION 16
----------
ENTIRE AGREEMENT
----------------
This Agreement contains the entire understanding and agreement between the
parties. No representative, agent or employee of Lessor has been authorized to
make any representations or promises with reference to the within agreement or
to vary, alter or modify the terms hereof. No additions, changes or
modifications shall be binding unless reduced to writing and signed by the
parties.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.
LESSOR: LESSEE
CARON BROADCASTING, INC.
/s/ EDWARD G. ATSINGER, III /s/ ERIC H. HALVORSON
- --------------------------- ------------------------------
EDWARD G. ATSINGER, III ERIC H. HALVORSON
Vice-President
/s/ STUART W. EPPERSON
- ---------------------------
STUART W. EPPERSON
<PAGE>
EXHIBIT 10.05.02
LEASE AGREEMENT
---------------
This Agreement ("Agreement") is made as of the 18th day of July, 1997, by
and between EDWARD G. ATSINGER III and STUART W. EPPERSON (collectively referred
to herein as "Lessor") and CARON BROADCASTING, INC. ("Lessee").
WHEREAS, Lessor owns certain land (the "Land") and Lessee owns certain
improvements thereon (the "Improvements"), which Land and Improvements together
comprise certain real property, more particularly described as set forth in
Exhibit "A", which is attached hereto and made a part hereof (the "Real
Property"); and,
WHEREAS, Lessee desires to use said Real Property in operating its radio
station WTSJ(AM), CINCINNATI, OHIO; and,
WHEREAS, the parties are desirous of making a mutually suitable and
satisfactory agreement whereby Lessor will lease to Lessee the Real Property
(constituting the "Leased Premises") on the terms and conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the following covenants, agreements,
conditions and representations, the parties hereto agree as follows:
SECTION 1
---------
USE OF THE LEASED PREMISES
--------------------------
(a) Lessor, in consideration of the rents to be paid and covenants herein
contained, hereby leases to Lessee the Leased Premises.
(b) Lessee may use the Leased Premises for the operation of its radio
station, and, in connection therewith, for the installation, repair,
maintenance, operation, housing and removal of its Improvements and other
related broadcasting equipment (together comprising the "Installations").
Lessee is fully familiar with the physical condition of the Land and has
received the same in good order and condition, and agrees that the Land complies
in all respects with all requirements of this Agreement. Lessee shall use the
Land exclusively for purposes associated with the operation of a radio station.
(c) Lessee shall have the right from time to time to substitute Installations
of similar kind and character for those hereinabove specified, provided such
changes shall be approved in
<PAGE>
advance by Lessor, and Lessor shall not unreasonably delay or withhold its
approval. In the event Lessee submits any such changes for Lessor's approval
and Lessor does not respond within thirty (30) days after Lessor's receipt
thereof, then such changes shall be deemed approved by Lessor, so long as such
changes otherwise comply with this Agreement, five (5) days after Lessor's
receipt of notice that it has not responded.
(d) Lessee shall have access to the Leased Premises twenty-four (24) hours
per day, seven (7) days per week, for the purpose of installing, maintaining and
repairing its Installations, provided that the contractors performing such work
are reasonably acceptable to Lessor.
(e) Lessor shall not be responsible for repairs or maintenance to the
Installations, except for repairs occasioned by the negligence of Lessor, its
agents, employees or contractors.
(f) During the Term (as hereinafter defined), Lessor and Lessee shall each
provide the other with a telephone number which, if called will ring at a
location that is staffed by their respective agents twenty-four (24) hours each
and every day, seven (7) days each and every week; and Lessor and Lessee shall
notify each other promptly in the event of any change in such telephone number.
(g) Lessee shall not use or permit the Leased Premises to be used by any
dangerous, toxic, noxious or offensive trade or business, or for any unlawful
purpose.
(h) Lessee shall not directly or indirectly create or permit to be created or
to remain, and will discharge any mortgage, lien, security interest, encumbrance
or charge on, pledge of or conditional sale or other title retention agreement
with respect to the Real Property or any part thereof or Lessee's interest
therein other than (i) this Agreement, (ii) any lien, including a mortgage on
the leasehold interest of Lessee, which may be approved by the Lessor in
writing, which approval shall not be unreasonably withheld, (iii) liens for
impositions not yet payable, or payable without the addition of any fine,
penalty, interest or cost for non-payment, or being contested as permitted by
Paragraph 3(d), below, and (iv) liens of mechanics, materialmen, suppliers or
vendors, or rights thereto, incurred in the ordinary course of business for sums
which under the terms of the related contracts are not at the time due, provided
that adequate provision for the payment thereof shall have been made.
SECTION 2
---------
TERM AND RENT
-------------
(a) The term of this Lease (the "Term") shall commence on July 18, 1997
(the "Commencement Date"), and shall expire on June 30, 2007 (the "Expiration
Date"). If the Term has been extended as provided in subparagraph (b), below,
the Expiration Date shall be the last day of the Term as so extended.
<PAGE>
(b) Lessee shall have the option, if Lessee is not at the time in
default under this Agreement, to extend the Term of this Agreement for up to two
(2) successive periods of five (5) years each (the "Extended Terms"), and,
except as set forth in subparagraph (c), below, on the same terms, covenants and
conditions herein contained. The word "Term" as used in this Agreement shall be
deemed to include the Extended Terms when and if the Agreement is extended. Each
option to extend the Term shall be exercised only by Lessee's delivery to Lessor
by United States mail on or before ninety (90) days prior to the commencement of
the renewal term of written notice of Lessee's election to extend as provided
herein.
(c) Lessee agrees to pay rent to Lessor from the Commencement Date
through the Expiration Date, or such earlier date as this Agreement is
terminated as provided herein, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA
93012, Attn: Accounting, or to such other person or place as Lessor may
designate from time to time by notice to Lessee, in the following amounts and in
the following manner:
(i) During the first year beginning with the Commencement Date
Lessee shall pay a base rent of $24,000 per annum, in equal monthly installments
of $2,000 (the "Base Rent") in advance on the first day of each month; and
thereafter on each and every Adjustment Date (hereinafter defined) the monthly
rent shall be computed according to subparagraph (ii) below.
(ii) The term "Adjustment Date" shall mean the first (1st) day of
February following the Commencement Date and each subsequent anniversary of such
date this Agreement remains in effect. During the one (1) year period beginning
with each Adjustment Date, the monthly rent payable by Lessee shall reflect an
adjustment, as herein provided, for the change, if any, from the year in which
the Commencement Date falls, in the Consumer Price Index for Urban Wage Earners
and Clerical Workers, Los Angeles area [Base Year 1982-84=100] ("CPI") as
measured in February and published by the United States Department of Labor,
Bureau of Labor Statistics; i.e., during the one (1) year period beginning with
the Adjustment Date, the monthly rent shall be the product obtained by
multiplying the Base Rent times a fraction, the numerator of which shall be the
CPI for February of the year such Adjustment Date falls and the denominator of
which shall be the CPI for February of the year in which the Commencement Date
falls. Notwithstanding the results of the foregoing calculation, the amount
payable by Lessee hereunder shall not in any event be less than the rental paid
during the immediately preceding one (1) year period. In the event that the
Bureau of Labor Statistics shall change the base period for the CPI, the new
index number shall be substituted for the old index number in making the above
computation. In the event the Bureau of Labor Statistics ceases publishing the
CPI, or materially changes the method of its computation, Lessor and Lessee
shall accept comparable statistics on the purchasing power of the consumer
dollar as published at the time of said discontinuation or change by a
responsible financial periodical of recognized authority to be chosen by Lessor
subject to reasonable consent of Lessee.
(d) Rent and all other sums payable to Lessor hereunder shall be paid
without notice, demand, counterclaim, set-off, deduction or defense and without
abatement, suspension, deferment, diminution or reduction. Except as expressly
provided herein, Lessee waives all rights now or hereafter conferred by statute
or otherwise to quit, terminate or surrender this Agreement
<PAGE>
or the Real Property or any part thereof, or to any abatement, suspension,
deferment, diminution or reduction of rent or any other sum payable by Lessee
hereunder.
SECTION 3
---------
CHARGES AND UTILITIES
---------------------
(a) Lessee, at its sole expense, shall keep the Real Property and the
adjoining streets and ways in good and clean order and condition and will
promptly make all necessary or appropriate repairs, replacements and renewals
thereof, whether interior or exterior, structural or non-structural, ordinary or
extraordinary, foreseen or unforeseen. All repairs, replacements and renewals
shall be equal in quality and class to the original work. Lessee waives any
right created by any law now or hereafter in force to make repairs to the Real
Property at Lessor's expense. Lessee, at its sole expense, shall do or cause
others to do every act necessary or appropriate for the preservation and safety
of the Real Property whether or not the Lessor shall be required by any legal
requirement to take such action or be liable for failure to do so.
(b) If not at the time in default under this Agreement, Lessee, at its sole
expense, may make reasonable alterations of and additions to the Improvements or
any part thereof, provided that any alteration or addition (i) shall not change
the general character of the Improvements, or reduce the fair market value
thereof below their value immediately before such alteration or addition, or
impair their usefulness, (ii) is effected with due diligence, in a good and
workmanlike manner and in compliance with all legal requirements and insurance
requirements, (iii) is promptly and fully paid for by Lessee, (iv) is made, in
case the estimated cost of such alteration or addition exceeds Ten Thousand
Dollars ($10,000), under the supervision of an architect or engineer
satisfactory to Lessor and in accordance with plans, specifications and cost
estimates approved by Lessor, and (v) does not interfere with Lessor's rights of
use under this Agreement.
(c) Subject to subparagraph (d), below, relating to contests, Lessee shall
pay all taxes, assessments (including without limitation, all assessments for
public improvements or benefits, whether or not commenced or completed prior to
the date hereof and whether or not to be completed within the Term hereof),
ground rents, water, sewer or similar rents, rates and charges, excises, levies,
license fees, permit fees, inspection fees and other authorization fees and
other charges in each case, whether general or special, ordinary or
extraordinary, foreseen or unforeseen, of every character (including all
interest and penalties thereof), which at any time during or in respect of the
Term hereof may be assessed, levied, confirmed or imposed on or in respect of or
be a lien upon the Real Property or any part thereof or any rent therefrom or
any estate, right or interest therein, or any occupancy, use or possession of or
activity conducted on the Real Property or any part thereof, other than any
income or excess profits tax imposed upon the Lessor's general income or
revenues, but excluding any income or excess profits or franchise taxes of
Lessor determined on the basis of general income or revenue or any interest or
penalties in respect thereof. Lessee shall furnish to Lessor for inspection
within thirty (30) days after written request, official receipts of the
appropriate taxing authority or other proof satisfactory to Lessor evidencing
such payment. If by law any such amount may be paid in installments, Lessee
shall be obligated to pay only those installments as they become due from time
to time before any
<PAGE>
interest, penalty, fine or cost may be added thereto; and any such amount
relating to the fiscal period of the taxing authority, part of which is included
within the Term and a part of which extends beyond the Term shall, if Lessee
shall not be in default under this Agreement, be apportioned between Lessee and
Lessor as of the expiration of the Term of this Agreement.
(d) Lessee, at its sole expense, may contest, after prior written notice to
Lessor, by appropriate legal proceedings conducted in good faith and with due
diligence, the amount or validity or application, in whole or in part, of any
tax, lien or other imposition on the Real Property, provided that (i) Lessee
shall first make all contested payments, under protest if it desires, (ii)
neither the Real Property nor any part thereof or interest therein nor any such
rents or other sums would be in any danger of being sold, forfeited, lost or
interfered with, and (iii) Lessee shall have furnished such security, if any, as
may be required in the proceedings or reasonably requested by Lessor.
(e) Lessee shall pay or cause to be paid all charges for all public or
private utility services and all sprinkler systems and protective services at
any time rendered to or in connection with the Real Property or any part
thereof, will comply with all contracts relating to any such services, and will
do all other things required for the maintenance and continuance of all such
services.
SECTION 4
---------
INSURANCE AND INDEMNIFICATION
-----------------------------
(a) Lessee shall, at its sole cost and expense, during the Term hereof,
obtain or provide and keep in full force for the benefit of Lessor, as an
additional named insured (i) general public liability insurance, insuring Lessor
against any and all liability or claims or liability arising out of, occasioned
by or resulting from any accident or other occurrence in or about the Real
Property arising out of any act or omission of Lessee or any officer, employee,
agent or contractor of Lessee, for injuries to any person or persons, with
limits of not less than Three Million Dollars ($3,000,000.00) for injuries to
one person, Five Million Dollars ($5,000,000.00) for injuries to more than one
person, in any one accident or occurrence, and for loss or damage to the
property of any person or persons, for not less than Five Million Dollars
($5,000,000.00); (ii) insurance with respect to the Improvements against loss or
damage by fire, lightning, windstorm, hail, explosion, riot, riot attending a
strike, civil commotion, aircraft, vehicles, smoke and other risks from time to
time included under "extended coverage" policies, in an amount equal to at least
One Hundred Percent (100%) of the full replacement value of the Improvements
and, in any event, in an amount sufficient to prevent Lessor or Lessee from
becoming a co-insurer of any partial loss under the applicable policies, which
shall be written on a replacement cost basis; (iii) appropriate workers'
compensation or other insurance against liability arising from claims of workers
in respect of and during the period of any work on or about the Real Property;
and (iv) insurance against such other hazards and in such amounts as is
customarily carried by owners and operators of similar properties, and as Lessor
may reasonably require for its protection. Lessee shall comply with such other
requirements as Lessor, or any mortgagee, may from time to time reasonably
request for the protection by insurance of their respective interests. The
policy or policies of insurance maintained by Lessee pursuant to this Paragraph
shall be of a company or companies
<PAGE>
authorized to do business in Ohio and a certificate thereof shall be delivered
to Lessor, together with evidence of the payment of the premiums therefor, not
less than fifteen (15) days prior to the commencement of the Term hereof or of
the date when Lessee shall enter upon the Leased Premises, whichever occurs
sooner. At least fifteen (15) days prior to the expiration or termination date
of any policy, Lessee shall deliver a certificate of a renewal or replacement
policy with proof of the payment of the premium therefor. Any such insurance
required by this Paragraph may, at Lessee's option, be provided through a
blanket policy or policies.
(b) Lessee shall indemnify Lessor and hold Lessor harmless from and against
all claims, actions, losses, damages, liabilities and expenses (including
reasonable attorneys' fees) incurred by or asserted against Lessor, whether
during or after the Term of this Agreement, including by reason of personal
injury, loss of life, or damage to property, caused by or resulting from in
whole or any material part, (i) any breach of this Agreement by Lessee, (ii) any
negligent or intentional act or omission of Lessee, its employees, agents,
invitees or contractors, whether in, on, about or with respect to the Leased
Premises or otherwise, (iii) the use by Lessee of any part of the Leased
Premises, (iv) any work undertaken by or at the request of Lessee on or about
the Leased Premises, (v) any other activity undertaken by or at the request of
Lessee pursuant to or in connection with this Agreement, or (vi) the presence of
any individuals on the Leased Premises as a result of Lessee's request or this
Agreement; provided, however, that Lessee shall not be required to indemnify
Lessor for any damages, injury, loss or expense arising out of Lessor's or its
agents', employees', invitees' or contractors' negligent acts or omissions.
(c) If Lessor so elects by notice to Lessee, Lessee shall have the obligation
of defending, at its sole cost and expense, by counsel selected by Lessee and
approved by Lessor (such approval not to be unreasonably withheld), against any
claim to which the foregoing indemnity may apply. Lessor may assume, or require
that such defense be assumed, by Lessor and counsel selected by Lessor, at the
cost and expense of Lessee if Lessor is for any reason dissatisfied with the
defense by Lessee, or believes that its interests would be better served
thereby. In any case where Lessee is defending any such claim, Lessor may
participate in the defense thereof by counsel selected by it, but at Lessor's
expense. Lessee shall not enter into any settlement of any claim without the
consent of Lessor, which consent shall not be unreasonably withheld.
(d) Lessor shall indemnify Lessee and hold Lessee harmless from and against
all claims, actions, losses, damages, liabilities and expenses (including
reasonable attorneys' fees) incurred by or asserted against Lessee, whether
during or after the Term of this Agreement, including by reason of personal
injury, loss of life, or damage to property, caused by or resulting from in
whole or any material part, (i) any breach of this Agreement by Lessor, (ii) any
negligent or intentional act or omission of Lessor, its employees, agents,
invitees or contractors, whether in, on, about or with respect to the Leased
Premises or otherwise, (iii) the use by Lessor of any part of the Leased
Premises, (iv) any work undertaken by or at the request of Lessor on or about
the Leased Premises, (v) any other activity undertaken by or at the request of
Lessor pursuant to or in connection with this Agreement, or (vi) the presence of
any individuals on the Leased Premises as a result of Lessor's request or this
Agreement; provided, however, that Lessor shall not be required to indemnify
Lessee for any damages, injury, loss or expense arising out of Lessee's or its
agents', employees', invitees' or contractors' negligent acts or omissions.
<PAGE>
(e) If Lessee so elects by notice to Lessor, Lessor shall have the obligation
of defending, at its sole cost and expense, by counsel selected by Lessor and
approved by Lessee (such approval not to be unreasonably withheld), against any
claim to which the foregoing indemnity may apply. Lessee may assume, or require
that such defense be assumed, by Lessee and counsel selected by Lessee, at the
cost and expense of Lessor if Lessee is for any reason dissatisfied with the
defense by Lessor, or believes that its interests would be better served
thereby. In any case where Lessor is defending any such claim, Lessee may
participate in the defense thereof by counsel selected by it, but at Lessee's
expense. Lessor shall not enter into any settlement of any claim without the
consent of Lessee, which consent shall not be unreasonably withheld.
(f) Nothing in this Agreement shall be construed so as to authorize or permit
any insurer of Lessor or Lessee to be subrogated to any right of Lessor or
Lessee against the other. Each of Lessor and Lessee hereby releases the other
to the extent of its insurance coverage for any loss or damage caused by fire or
any of the extended coverage casualties, even if such fire or other casualty
shall be brought about by the fault or negligence of the other party or persons
for whose acts said party is liable.
SECTION 5
---------
REPRESENTATIONS, WARRANTIES AND OTHER OBLIGATIONS
-------------------------------------------------
(a) Lessor represents and warrants that:
(i) The execution and performance of this Agreement shall not
constitute a breach or violation under any Agreement to which Lessor is a party.
(ii) To the best of Lessor's knowledge, there are no violations of any
federal, state, county or municipal law, ordinance, order, regulations or
requirement with respect to the Leased Premises, and as of the date of this
Agreement, no notice of any kind relating thereto (which would adversely affect
the transactions contemplated by this Agreement) has been issued by public
authorities having jurisdiction over the Leased Premises.
(iii) No person or party other than Lessor has a right to use the Leased
Premises for any purpose which would affect Lessee's right to use the Leased
Premises as contemplated hereunder.
(iv) Lessor has not received written notice of pending or contemplated
condemnation proceedings affecting the Leased Premises or any part thereof.
(v) To the best of Lessor's knowledge, there is no action, suit or
proceeding pending or threatened against or affecting the Leased Premises or any
portion thereof and Lessor has not received notice written or otherwise of any
litigation affecting or concerning the Leased Premises relating to or arising
out of its ownership, management, use or operation. Lessor shall give to Lessee
prompt notice of institution of any such proceeding or litigation.
(vi) To the best of Lessor's knowledge, there are presently no
proceedings for
<PAGE>
overdue real estate taxes assessed against the Leased Premises for any fiscal
period.
(vii) Lessor shall promptly advise Lessee in writing of any written
notice received from any governmental authority to comply with the terms,
provisions and requirements of any local, state and federal laws, ordinances,
directives, orders, regulations and requirements which apply to any portion of
the Leased Premises or to any adjacent street or other public area or to the
maintenance, operation or use thereof.
(viii) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby, have been duly and validly
authorized by all necessary actions on the part of Lessor (none of which actions
have been modified or rescinded and all of which actions are in full force and
effect). This Agreement constitutes a valid and binding agreement and
obligation of Lessor, enforceable in accordance with its terms.
(ix) Subject to liens and encumbrances of record, Lessor owns good and
marketable title in fee simple to the Real Property on which the Leased Premises
are located, and Lessor acknowledges that Lessee is relying upon the foregoing
representation and warranty in entering into this Agreement and in expending
moneys in connection herewith. Lessor shall not encumber or permit any
encumbrances, liens or restrictions on Lessee's Installations, except with the
prior written approval of Lessee.
(b) Each party shall comply in all material respects with all local, state
and federal laws, statutes, ordinances, rules, regulations, orders and decrees
that it knows to be applicable in connection with its activities and operations
at the Leased Premises, and Lessor shall require the same representation and
warranty from all additional users of the facilities at the Leased Premises.
(c) The parties agree that, during the Term of this Agreement neither party
shall intentionally do anything at the Leased Premises which will interfere with
or adversely affect the operations of the other party.
(d) In the event that during the Term of this Agreement there shall be an
actual condemnation or foreclosure and taking of all of the Leased Premises, or
a portion thereof such that it renders the premises unsuitable for broadcasting,
this Agreement may be terminated by written notice from either party to the
other and thereafter each of the parties shall be relieved of any future
liability to the other under this Agreement, except as to obligations accrued
and not yet discharged at the date of termination. Following any condemnation
or foreclosing order, Lessee may continue to use the property for operations
under the terms of this Agreement until Lessee finds and begins to utilize new
facilities or until prevented by the condemning or foreclosing authority from
utilizing the Leased Premises, whichever occurs first.
(e) Lessee represents and warrants that its Installations to be located on or
about the Leased Premises, together with the existence of the equipment of
Lessor, and the operation thereof do not and will not result in exposure of
workers or the general public to levels of radio frequency radiation in excess
of the "Radio Frequency Protection Guides" recommended in "American National
Standard Safety Levels With Respect to Human Exposure to Radio
<PAGE>
Frequency Electromagnetic Fields, 300 KHz to 100 GHz," issued by the American
National Standards Institute ("Acceptable Radio Frequency Radiation Standards").
(f) Lessee covenants that it will not at any time during the Term of this
Agreement, transmit, store, handle or dump toxic or hazardous wastes anywhere at
or around the Leased Premises.
(g) Lessee shall promptly advise Lessor in writing of any written notice
received from any governmental authority to comply with the terms, provisions
and requirements of any local, state and federal laws, ordinances, directives,
orders, regulations, and requirements which apply to any portion of the Leased
Premises or to any adjacent street or other public area or the maintenance,
operation or use thereof.
(h) Lessee represents and warrants that the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby, have been duly and validly authorized by all necessary
actions on the part of Lessee (none of which actions have been modified or
rescinded and all of which actions are in full force and effect). This
Agreement constitutes a valid and binding agreement and obligation of Lessee,
enforceable in accordance with its terms.
(i) Lessee warrants unto Lessor that the Improvements (including the radio
tower(s) located on the Real Property) are and will remain in material
compliance at all times during the Term and any Extension Term with all federal,
state, county, municipal, local, administrative and other governmental laws,
statutes, ordinances, codes, rules, regulations and orders pertaining thereto,
including, without limitation, to the extent applicable, all zoning laws and
building codes and all regulations of the Federal Aviation Administration
("FAA") and the Federal Communications Commission ("FCC").
(j) In case of any material damage to or destruction of the Real Property or
any part thereof, Lessee shall promptly give written notice thereof to Lessor
and any mortgagee, generally describing the nature and extent of such damage or
destruction. In case of any damage to or destruction of the Improvements or any
parts thereof, Lessee, whether or not the insurance proceeds, if any, on account
of such damage or destruction shall be sufficient for the purpose, at its sole
expense, shall promptly commence and complete the restoration, replacement or
rebuilding of the Improvements as nearly as possible to their value, condition
and character immediately prior to such damage or destruction.
(k) Lessee will execute, acknowledge and deliver to the Lessor, promptly upon
request, a certificate certifying that (i) this Agreement is unmodified and in
full force and effect (or, if there have been modifications, that the Agreement
is in full force and effect, as modified, and stating the modifications), (ii)
the dates, if any, to which rent and other sums payable hereunder have been
paid, and (iii) no notice has been received by Lessee of any default which has
not been cured, except as to defaults specified in said certificate. Any such
certificate may be relied upon by any prospective purchaser or mortgagee of the
Real Property or any part thereof.
<PAGE>
(l) Lessor will execute, acknowledge and deliver to the Lessee or any
mortgagee, promptly upon request, a certificate certifying that (i) this
Agreement is unmodified and in full force and effect (or, if there have been
modifications, that the Agreement is in full force and effect, as modified, and
stating the modifications), (ii) the dates, if any, to which rent and other sums
payable hereunder have been paid, and (iii) whether or not, to the knowledge of
Lessor, there are then existing any defaults under this Agreement (and if so,
specifying the same). Any such certificate may be relied upon by any
prospective purchaser transferee or mortgagee of Lessee's interest under this
Agreement.
SECTION 6
---------
EVENTS OF DEFAULT
-----------------
(a) Any of the following events shall constitute a default on the part of
Lessee:
(i) The failure of Lessee to pay rent or additional rent, and
continuation of such failure for more than ten (10) days after Lessee's receipt
of written notice thereof from Lessor; provided, however, that Lessor shall not
be required to provide such written notice to Lessee more than twice in any
twelve (12) month period prior to declaring such failure to pay an event of
default; or
(ii) The failure of Lessee to cure any other default under the terms
hereof, and continuation of such failure to cure for more than thirty (30) days
after notice by Lessor, provided, however, that if the nature of Lessee's
default is such that more than thirty (30) days is required for its cure, then
Lessee shall not be deemed to be in default if Lessee has commenced such cure
within the thirty (30) day period, demonstrates to Lessor's reasonable
satisfaction that such default is curable and thereafter diligently prosecutes
such cure to completion; or
(iii) Lessee is finally and without further right of appeal or review,
adjudicated a bankrupt or insolvent, or has a receiver appointed for all or
substantially all of its business or assets on the ground of its insolvency, or
has a trustee appointed for it after a petition has been filed for Lessee's
reorganization under the Bankruptcy Act of the United States, or any future law
of the United States having the same general purpose, or if Lessee shall make an
assignment for the benefit of its creditors, or if Lessee's interest hereunder
shall be levied upon or attached, which levy or attachment shall not be removed
within twenty (20) days from the date thereof.
(b) If an event of default on the part of Lessee shall occur at any time,
Lessor, at its election, may give Lessee a notice of termination specifying a
day not less than thirty (30) days thereafter on which the Term of this
Agreement shall end, unless such default shall be cured within said period, or,
if the default is such that more than thirty (30) days is required for its cure,
unless Lessee has commenced such cure within said period. If such notice is
given, the Agreement shall expire on the day so specified as fully and
completely as if that day were the day herein originally fixed for such
expiration, and Lessee shall then quit and surrender the Leased Premises to
Lessor, but Lessee shall remain liable for the payment of rent during the full
period which would otherwise constitute the balance of the Term of this
Agreement; and without
<PAGE>
prejudice to any other right or remedy which it may have hereunder or by law,
and notwithstanding any waiver of any prior breach of condition or event of
default hereunder, Lessor may re-enter the Leased Premises either by reasonable
force or otherwise, or dispossess Lessee, any legal representative of Lessee or
other occupant of the Leased Premises by appropriate suit, action or proceeding
and remove its effects and hold the Leased Premises as if this Agreement had not
been made.
(c) The failure of Lessor to cure any default under the terms hereof, and
continuation of such failure to cure for more than thirty (30) days after notice
by Lessee, shall constitute a default on the part of Lessor; provided, however,
that if the nature of Lessor's default is such that more than thirty (30) days
is required for its cure, then Lessor shall not be deemed to be in default if
Lessor has commenced such cure within the thirty (30) day period, demonstrates
to Lessee's reasonable satisfaction that such default is curable and thereafter
diligently prosecutes such cure to completion.
(d) If an event of default on the part of Lessor shall occur at any time,
Lessee, at its election, may give Lessor a notice of termination specifying a
day not less than thirty (30) days thereafter on which the Term of this
Agreement shall end, unless such default shall be cured within said period, or,
if the default is such that more than thirty (30) days is required for its cure,
unless Lessor has commenced such cure within said period. If such notice is
given, the Agreement shall expire on the day so specified as fully and
completely as if that day were the day herein originally fixed for such
expiration, and Lessee shall then quit and surrender the Leased Premises to
Lessor, and Lessee shall not be liable for payment of rent for any period after
such expiration.
SECTION 7
---------
ASSIGNMENT
----------
Lessee shall not assign this Agreement nor sublet any portion of the Leased
Premises without the prior written consent of the Lessor, which consent shall
not be unreasonably withheld. Notwithstanding any assignment or sublease,
Lessee shall remain primarily liable under this Agreement.
SECTION 8
---------
SUBORDINATION, NONDISTURBANCE AND ATTORNMENT
--------------------------------------------
This Agreement shall not be a lien against the Leased Premises in respect to
any mortgages and security agreements placed or hereafter to be placed by Lessor
upon the Leased Premises. The recording of such mortgages and security
agreements shall have preference and precedence and be superior and prior in
lien to this Agreement, irrespective of the date of recording, and Lessee agrees
to execute any instruments, without cost, which may be deemed necessary or
desirable to further effect the subordination of this Agreement. Lessor shall
make a reasonable effort to obtain from any mortgagees or lenders holding an
interest in the nature of a mortgage in the Leased Premises an agreement that
the mortgagee or lender shall not disturb
<PAGE>
Lessee's quiet possession in the event of foreclosure. If any proceedings are
brought for foreclosure, or in the event of the exercise of the power of sale
under any mortgage or deed of trust made by the Lessor encumbering the Leased
Premises, Lessee shall attorn to the purchaser upon any such foreclosure or sale
and recognize such purchaser as the Lessor under this Lease.
SECTION 9
---------
NON-LIABILITY OF LESSOR
-----------------------
Lessor shall not be liable for any damages or injury which may be sustained by
Lessee or any other person by reason of the failure, breakage, leakage or
obstruction of the water, sewer, plumbing, roof, drains, leaders, electrical,
air conditioning or any other equipment; or by reason of the elements; or
resulting from the carelessness, negligence or improper conduct of Lessee, its
agents, employees, contractors, invitees, assignees or successors; or
attributable to any interference with or the interruption of or failure of any
services, beyond the control of Lessor, to be supplied by Lessor.
SECTION 10
----------
QUIET ENJOYMENT
---------------
(a) Lessor agrees that it shall not enforce any unreasonable rules or
regulations which would unduly prejudice the conduct of Lessee's business, or
which would prevent full and free access to the Leased Premises by Lessee, as
herein provided.
(b) Lessor reserves and shall at all times have the right to re-enter the
Real Property to inspect the same, to supply any service to be provided by
Lessor to Lessee hereunder, and to show the Real Property to prospective
purchasers, mortgagees, or lessees, to post notices of non-responsibility,
without abatement of rent, provided entrance to the Real Property shall not be
denied Lessee.
SECTION 11
----------
SALE OF LEASED PREMISES BY LESSOR
---------------------------------
Notwithstanding any of the provisions of this Lease, Lessor (a) may assign, in
whole or in part, Lessor's interest in this Lease and (b) may sell all or part
of the Real Property. In the event of any sale or exchange of the Leased
Premises by Lessor and assignment by Lessor of this Lease, Lessor shall be and
is hereby relieved of all liability under any and all of its covenants and
obligations contained in or derived from this Lease arising out of any act,
occurrence or omission relating to the Leased Premises occurring after the
consummation of such sale or exchange and assignment, but only upon the
condition that, as part of such sale or exchange, Lessor will cause the grantee
to agree in writing to assume to carry out any and all of the covenants and
obligations of Lessor under this Lease occurring after the consummation of
Lessor's assignment of its interest in and to this Lease.
<PAGE>
SECTION 12
----------
BROKERAGE
---------
The parties acknowledge and agree that this Agreement has not been brought
about as a result of the services of any real estate broker, firm or
corporation, and each indemnifies and saves the other harmless from any and all
claims from any person(s) claiming to have rendered real estate services in
connection with this Agreement.
SECTION 13
----------
SURRENDER OF PREMISES
---------------------
Upon the expiration of the Term hereof, Lessee shall surrender the Leased
Premises, and, at Lessor's option, all interest of the Lessee in and to the
Improvements (including the radio towers located on the Land), to Lessor in good
order and condition, reasonable wear and tear excepted. Any equipment,
fixtures, goods or other property of Lessee not removed within ten (10) days
after any quitting, vacating or abandonment of the Leased Premises, or upon
Lessee's eviction therefrom, shall be considered abandoned, and Lessor shall
have the right, without notice to Lessee, to sell or otherwise dispose of same
without having to account to Lessee for any part of the proceeds of such sale.
SECTION 14
----------
NOTICES
-------
All notices, demands, and requests required or permitted to be given hereunder
shall be in writing and sent certified mail, return receipt requested, and if to
Lessor, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn: Edward
G. Atsinger III, and if Lessee, at 4880 Santa Rosa Road, Suite 300, Camarillo,
CA 93012, Attn: Accounting. Either party hereto may change the place for
notice to it by sending like written notice to the other party hereto.
SECTION 15
----------
BINDING NATURE
--------------
The provisions of this Agreement shall apply to, bind and inure to the benefit
of Lessor and Lessee, their respective successors, legal representatives or
assigns. The terms of this Agreement and any disputes arising therefrom, shall
be governed by the laws of the State of Texas.
<PAGE>
SECTION 16
----------
ENTIRE AGREEMENT
----------------
This Agreement contains the entire understanding and agreement between the
parties. No representative, agent or employee of Lessor has been authorized to
make any representations or promises with reference to the within agreement or
to vary, alter or modify the terms hereof. No additions, changes or
modifications shall be binding unless reduced to writing and signed by the
parties.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.
LESSOR: LESSEE
CARON BROADCASTING, INC.
/s/ Edward G. Atsinger, III /s/ Eric H. Halvorson
- ------------------------------------ ------------------------------------
EDWARD G. ATSINGER, III ERIC H. HALVORSON
Vice-President
/s/ Stuart W. Epperson
- ------------------------------------
STUART W. EPPERSON
<PAGE>
EXHIBIT 10.05.03
LEASE AGREEMENT
---------------
This Agreement ("Agreement") is made as of the 19th day of February, 1997,
by and between EDWARD G. ATSINGER III and STUART W. EPPERSON (collectively
referred to herein as "Lessor") and CARON BROADCASTING, INC. ("Lessee").
WHEREAS, Lessor owns certain land (the "Land") and Lessee owns certain
improvements thereon (the "Improvements"), which Land and Improvements together
comprise certain real property, more particularly described as set forth in
Exhibit "A", which is attached hereto and made a part hereof (the "Real
Property"); and,
WHEREAS, Lessee desires to use said Real Property in operating its radio
station WTOF(FM), CANTON, OHIO; and,
WHEREAS, the parties are desirous of making a mutually suitable and
satisfactory agreement whereby Lessor will lease to Lessee the Real Property
(constituting the "Leased Premises") on the terms and conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the following covenants, agreements,
conditions and representations, the parties hereto agree as follows:
SECTION 1
---------
USE OF THE LEASED PREMISES
--------------------------
(a) Lessor, in consideration of the rents to be paid and covenants herein
contained, hereby leases to Lessee the Leased Premises.
(b) Lessee may use the Leased Premises for the operation of its radio
station, and, in connection therewith, for the installation, repair,
maintenance, operation, housing and removal of its Improvements and other
related broadcasting equipment (together comprising the "Installations").
Lessee is fully familiar with the physical condition of the Land and has
received the same in good order and condition, and agrees that the Land complies
in all respects with all requirements of this Agreement. Lessee shall use the
Land exclusively for purposes associated with the operation of a radio station.
(c) Lessee shall have the right from time to time to substitute Installations
of similar kind and character for those hereinabove specified, provided such
changes shall be approved in
<PAGE>
advance by Lessor, and Lessor shall not unreasonably delay or withhold its
approval. In the event Lessee submits any such changes for Lessor's approval
and Lessor does not respond within thirty (30) days after Lessor's receipt
thereof, then such changes shall be deemed approved by Lessor, so long as such
changes otherwise comply with this Agreement, five (5) days after Lessor's
receipt of notice that it has not responded.
(d) Lessee shall have access to the Leased Premises twenty-four (24) hours
per day, seven (7) days per week, for the purpose of installing, maintaining and
repairing its Installations, provided that the contractors performing such work
are reasonably acceptable to Lessor.
(e) Lessor shall not be responsible for repairs or maintenance to the
Installations, except for repairs occasioned by the negligence of Lessor, its
agents, employees or contractors.
(f) During the Term (as hereinafter defined), Lessor and Lessee shall each
provide the other with a telephone number which, if called will ring at a
location that is staffed by their respective agents twenty-four (24) hours each
and every day, seven (7) days each and every week; and Lessor and Lessee shall
notify each other promptly in the event of any change in such telephone number.
(g) Lessee shall not use or permit the Leased Premises to be used by any
dangerous, toxic, noxious or offensive trade or business, or for any unlawful
purpose.
(h) Lessee shall not directly or indirectly create or permit to be created or
to remain, and will discharge any mortgage, lien, security interest, encumbrance
or charge on, pledge of or conditional sale or other title retention agreement
with respect to the Real Property or any part thereof or Lessee's interest
therein other than (i) this Agreement, (ii) any lien, including a mortgage on
the leasehold interest of Lessee, which may be approved by the Lessor in
writing, which approval shall not be unreasonably withheld, (iii) liens for
impositions not yet payable, or payable without the addition of any fine,
penalty, interest or cost for non-payment, or being contested as permitted by
Paragraph 3(d), below, and (iv) liens of mechanics, materialmen, suppliers or
vendors, or rights thereto, incurred in the ordinary course of business for sums
which under the terms of the related contracts are not at the time due, provided
that adequate provision for the payment thereof shall have been made.
SECTION 2
---------
TERM AND RENT
-------------
(a) The term of this Lease (the "Term") shall commence on February 19, 1997
(the "Commencement Date"), and shall expire on June 30, 2007 (the "Expiration
Date"). If the Term has been extended as provided in subparagraph (b), below,
the Expiration Date shall be the last day of the Term as so extended.
<PAGE>
(b) Lessee shall have the option, if Lessee is not at the time in default
under this Agreement, to extend the Term of this Agreement for up to two (2)
successive periods of five (5) years each (the "Extended Terms"), and, except as
set forth in subparagraph (c), below, on the same terms, covenants and
conditions herein contained. The word "Term" as used in this Agreement shall be
deemed to include the Extended Terms when and if the Agreement is extended. Each
option to extend the Term shall be exercised only by Lessee's delivery to Lessor
by United States mail on or before ninety (90) days prior to the commencement of
the renewal term of written notice of Lessee's election to extend as provided
herein.
(c) Lessee agrees to pay rent to Lessor from the Commencement Date through
the Expiration Date, or such earlier date as this Agreement is terminated as
provided herein, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn:
Accounting, or to such other person or place as Lessor may designate from time
to time by notice to Lessee, in the following amounts and in the following
manner:
(i) During the first year beginning with the Commencement Date Lessee
shall pay a base rent of $12,000 per annum, in equal monthly installments of
$1,000 (the "Base Rent") in advance on the first day of each month; and
thereafter on each and every Adjustment Date (hereinafter defined) the monthly
rent shall be computed according to subparagraph (ii) below.
(ii) The term "Adjustment Date" shall mean the first (1st) day of
February following the Commencement Date and each subsequent anniversary of such
date this Agreement remains in effect. During the one (1) year period beginning
with each Adjustment Date, the monthly rent payable by Lessee shall reflect an
adjustment, as herein provided, for the change, if any, from the year in which
the Commencement Date falls, in the Consumer Price Index for Urban Wage Earners
and Clerical Workers, Los Angeles area [Base Year 1982-84=100] ("CPI") as
measured in February and published by the United States Department of Labor,
Bureau of Labor Statistics; i.e., during the one (1) year period beginning with
the Adjustment Date, the monthly rent shall be the product obtained by
multiplying the Base Rent times a fraction, the numerator of which shall be the
CPI for February of the year such Adjustment Date falls and the denominator of
which shall be the CPI for February of the year in which the Commencement Date
falls. Notwithstanding the results of the foregoing calculation, the amount
payable by Lessee hereunder shall not in any event be less than the rental paid
during the immediately preceding one (1) year period. In the event that the
Bureau of Labor Statistics shall change the base period for the CPI, the new
index number shall be substituted for the old index number in making the above
computation. In the event the Bureau of Labor Statistics ceases publishing the
CPI, or materially changes the method of its computation, Lessor and Lessee
shall accept comparable statistics on the purchasing power of the consumer
dollar as published at the time of said discontinuation or change by a
responsible financial periodical of recognized authority to be chosen by Lessor
subject to reasonable consent of Lessee.
(d) Rent and all other sums payable to Lessor hereunder shall be paid without
notice, demand, counterclaim, set-off, deduction or defense and without
abatement, suspension, deferment, diminution or reduction. Except as expressly
provided herein, Lessee waives all rights now or hereafter conferred by statute
or otherwise to quit, terminate or surrender this Agreement
<PAGE>
or the Real Property or any part thereof, or to any abatement, suspension,
deferment, diminution or reduction of rent or any other sum payable by Lessee
hereunder.
SECTION 3
---------
CHARGES AND UTILITIES
---------------------
(a) Lessee, at its sole expense, shall keep the Real Property and the
adjoining streets and ways in good and clean order and condition and will
promptly make all necessary or appropriate repairs, replacements and renewals
thereof, whether interior or exterior, structural or non-structural, ordinary or
extraordinary, foreseen or unforeseen. All repairs, replacements and renewals
shall be equal in quality and class to the original work. Lessee waives any
right created by any law now or hereafter in force to make repairs to the Real
Property at Lessor's expense. Lessee, at its sole expense, shall do or cause
others to do every act necessary or appropriate for the preservation and safety
of the Real Property whether or not the Lessor shall be required by any legal
requirement to take such action or be liable for failure to do so.
(b) If not at the time in default under this Agreement, Lessee, at its sole
expense, may make reasonable alterations of and additions to the Improvements or
any part thereof, provided that any alteration or addition (i) shall not change
the general character of the Improvements, or reduce the fair market value
thereof below their value immediately before such alteration or addition, or
impair their usefulness, (ii) is effected with due diligence, in a good and
workmanlike manner and in compliance with all legal requirements and insurance
requirements, (iii) is promptly and fully paid for by Lessee, (iv) is made, in
case the estimated cost of such alteration or addition exceeds Ten Thousand
Dollars ($10,000), under the supervision of an architect or engineer
satisfactory to Lessor and in accordance with plans, specifications and cost
estimates approved by Lessor, and (v) does not interfere with Lessor's rights of
use under this Agreement.
(c) Subject to subparagraph (d), below, relating to contests, Lessee shall
pay all taxes, assessments (including without limitation, all assessments for
public improvements or benefits, whether or not commenced or completed prior to
the date hereof and whether or not to be completed within the Term hereof),
ground rents, water, sewer or similar rents, rates and charges, excises, levies,
license fees, permit fees, inspection fees and other authorization fees and
other charges in each case, whether general or special, ordinary or
extraordinary, foreseen or unforeseen, of every character (including all
interest and penalties thereof), which at any time during or in respect of the
Term hereof may be assessed, levied, confirmed or imposed on or in respect of or
be a lien upon the Real Property or any part thereof or any rent therefrom or
any estate, right or interest therein, or any occupancy, use or possession of or
activity conducted on the Real Property or any part thereof, other than any
income or excess profits tax imposed upon the Lessor's general income or
revenues, but excluding any income or excess profits or franchise taxes of
Lessor determined on the basis of general income or revenue or any interest or
penalties in respect thereof. Lessee shall furnish to Lessor for inspection
within thirty (30) days after written request, official receipts of the
appropriate taxing authority or other proof satisfactory to Lessor evidencing
such payment. If by law any such amount may be paid in installments, Lessee
shall be obligated to pay only those installments as they become due from time
to time before any
<PAGE>
interest, penalty, fine or cost may be added thereto; and any such amount
relating to the fiscal period of the taxing authority, part of which is included
within the Term and a part of which extends beyond the Term shall, if Lessee
shall not be in default under this Agreement, be apportioned between Lessee and
Lessor as of the expiration of the Term of this Agreement.
(d) Lessee, at its sole expense, may contest, after prior written notice to
Lessor, by appropriate legal proceedings conducted in good faith and with due
diligence, the amount or validity or application, in whole or in part, of any
tax, lien or other imposition on the Real Property, provided that (i) Lessee
shall first make all contested payments, under protest if it desires, (ii)
neither the Real Property nor any part thereof or interest therein nor any such
rents or other sums would be in any danger of being sold, forfeited, lost or
interfered with, and (iii) Lessee shall have furnished such security, if any, as
may be required in the proceedings or reasonably requested by Lessor.
(e) Lessee shall pay or cause to be paid all charges for all public or
private utility services and all sprinkler systems and protective services at
any time rendered to or in connection with the Real Property or any part
thereof, will comply with all contracts relating to any such services, and will
do all other things required for the maintenance and continuance of all such
services.
SECTION 4
---------
INSURANCE AND INDEMNIFICATION
-----------------------------
(a) Lessee shall, at its sole cost and expense, during the Term hereof,
obtain or provide and keep in full force for the benefit of Lessor, as an
additional named insured (i) general public liability insurance, insuring Lessor
against any and all liability or claims or liability arising out of, occasioned
by or resulting from any accident or other occurrence in or about the Real
Property arising out of any act or omission of Lessee or any officer, employee,
agent or contractor of Lessee, for injuries to any person or persons, with
limits of not less than Three Million Dollars ($3,000,000.00) for injuries to
one person, Five Million Dollars ($5,000,000.00) for injuries to more than one
person, in any one accident or occurrence, and for loss or damage to the
property of any person or persons, for not less than Five Million Dollars
($5,000,000.00); (ii) insurance with respect to the Improvements against loss or
damage by fire, lightning, windstorm, hail, explosion, riot, riot attending a
strike, civil commotion, aircraft, vehicles, smoke and other risks from time to
time included under "extended coverage" policies, in an amount equal to at least
One Hundred Percent (100%) of the full replacement value of the Improvements
and, in any event, in an amount sufficient to prevent Lessor or Lessee from
becoming a co-insurer of any partial loss under the applicable policies, which
shall be written on a replacement cost basis; (iii) appropriate workers'
compensation or other insurance against liability arising from claims of workers
in respect of and during the period of any work on or about the Real Property;
and (iv) insurance against such other hazards and in such amounts as is
customarily carried by owners and operators of similar properties, and as Lessor
may reasonably require for its protection. Lessee shall comply with such other
requirements as Lessor, or any mortgagee, may from time to time reasonably
request for the protection by insurance of their respective interests. The
policy or policies of insurance maintained by Lessee pursuant to this Paragraph
shall be of a company or companies
<PAGE>
authorized to do business in Ohio and a certificate thereof shall be delivered
to Lessor, together with evidence of the payment of the premiums therefor, not
less than fifteen (15) days prior to the commencement of the Term hereof or of
the date when Lessee shall enter upon the Leased Premises, whichever occurs
sooner. At least fifteen (15) days prior to the expiration or termination date
of any policy, Lessee shall deliver a certificate of a renewal or replacement
policy with proof of the payment of the premium therefor. Any such insurance
required by this Paragraph may, at Lessee's option, be provided through a
blanket policy or policies.
(b) Lessee shall indemnify Lessor and hold Lessor harmless from and against
all claims, actions, losses, damages, liabilities and expenses (including
reasonable attorneys' fees) incurred by or asserted against Lessor, whether
during or after the Term of this Agreement, including by reason of personal
injury, loss of life, or damage to property, caused by or resulting from in
whole or any material part, (i) any breach of this Agreement by Lessee, (ii) any
negligent or intentional act or omission of Lessee, its employees, agents,
invitees or contractors, whether in, on, about or with respect to the Leased
Premises or otherwise, (iii) the use by Lessee of any part of the Leased
Premises, (iv) any work undertaken by or at the request of Lessee on or about
the Leased Premises, (v) any other activity undertaken by or at the request of
Lessee pursuant to or in connection with this Agreement, or (vi) the presence of
any individuals on the Leased Premises as a result of Lessee's request or this
Agreement; provided, however, that Lessee shall not be required to indemnify
Lessor for any damages, injury, loss or expense arising out of Lessor's or its
agents', employees', invitees' or contractors' negligent acts or omissions.
(c) If Lessor so elects by notice to Lessee, Lessee shall have the obligation
of defending, at its sole cost and expense, by counsel selected by Lessee and
approved by Lessor (such approval not to be unreasonably withheld), against any
claim to which the foregoing indemnity may apply. Lessor may assume, or require
that such defense be assumed, by Lessor and counsel selected by Lessor, at the
cost and expense of Lessee if Lessor is for any reason dissatisfied with the
defense by Lessee, or believes that its interests would be better served
thereby. In any case where Lessee is defending any such claim, Lessor may
participate in the defense thereof by counsel selected by it, but at Lessor's
expense. Lessee shall not enter into any settlement of any claim without the
consent of Lessor, which consent shall not be unreasonably withheld.
(d) Lessor shall indemnify Lessee and hold Lessee harmless from and against
all claims, actions, losses, damages, liabilities and expenses (including
reasonable attorneys' fees) incurred by or asserted against Lessee, whether
during or after the Term of this Agreement, including by reason of personal
injury, loss of life, or damage to property, caused by or resulting from in
whole or any material part, (i) any breach of this Agreement by Lessor, (ii) any
negligent or intentional act or omission of Lessor, its employees, agents,
invitees or contractors, whether in, on, about or with respect to the Leased
Premises or otherwise, (iii) the use by Lessor of any part of the Leased
Premises, (iv) any work undertaken by or at the request of Lessor on or about
the Leased Premises, (v) any other activity undertaken by or at the request of
Lessor pursuant to or in connection with this Agreement, or (vi) the presence of
any individuals on the Leased Premises as a result of Lessor's request or this
Agreement; provided, however, that Lessor shall not be required to indemnify
Lessee for any damages, injury, loss or expense arising out of Lessee's or its
agents', employees', invitees' or contractors' negligent acts or omissions.
<PAGE>
(e) If Lessee so elects by notice to Lessor, Lessor shall have the obligation
of defending, at its sole cost and expense, by counsel selected by Lessor and
approved by Lessee (such approval not to be unreasonably withheld), against any
claim to which the foregoing indemnity may apply. Lessee may assume, or require
that such defense be assumed, by Lessee and counsel selected by Lessee, at the
cost and expense of Lessor if Lessee is for any reason dissatisfied with the
defense by Lessor, or believes that its interests would be better served
thereby. In any case where Lessor is defending any such claim, Lessee may
participate in the defense thereof by counsel selected by it, but at Lessee's
expense. Lessor shall not enter into any settlement of any claim without the
consent of Lessee, which consent shall not be unreasonably withheld.
(f) Nothing in this Agreement shall be construed so as to authorize or permit
any insurer of Lessor or Lessee to be subrogated to any right of Lessor or
Lessee against the other. Each of Lessor and Lessee hereby releases the other
to the extent of its insurance coverage for any loss or damage caused by fire or
any of the extended coverage casualties, even if such fire or other casualty
shall be brought about by the fault or negligence of the other party or persons
for whose acts said party is liable.
SECTION 5
---------
REPRESENTATIONS, WARRANTIES AND OTHER OBLIGATIONS
-------------------------------------------------
(a) Lessor represents and warrants that:
(i) The execution and performance of this Agreement shall not
constitute a breach or violation under any Agreement to which Lessor is a party.
(ii) To the best of Lessor's knowledge, there are no violations of any
federal, state, county or municipal law, ordinance, order, regulations or
requirement with respect to the Leased Premises, and as of the date of this
Agreement, no notice of any kind relating thereto (which would adversely affect
the transactions contemplated by this Agreement) has been issued by public
authorities having jurisdiction over the Leased Premises.
(iii) No person or party other than Lessor has a right to use the Leased
Premises for any purpose which would affect Lessee's right to use the Leased
Premises as contemplated hereunder.
(iv) Lessor has not received written notice of pending or contemplated
condemnation proceedings affecting the Leased Premises or any part thereof.
(v) To the best of Lessor's knowledge, there is no action, suit or
proceeding pending or threatened against or affecting the Leased Premises or any
portion thereof and Lessor has not received notice written or otherwise of any
litigation affecting or concerning the Leased Premises relating to or arising
out of its ownership, management, use or operation. Lessor shall give to Lessee
prompt notice of institution of any such proceeding or litigation.
(vi) To the best of Lessor's knowledge, there are presently no
proceedings for
<PAGE>
overdue real estate taxes assessed against the Leased Premises for any fiscal
period.
(vii) Lessor shall promptly advise Lessee in writing of any written
notice received from any governmental authority to comply with the terms,
provisions and requirements of any local, state and federal laws, ordinances,
directives, orders, regulations and requirements which apply to any portion of
the Leased Premises or to any adjacent street or other public area or to the
maintenance, operation or use thereof.
(viii) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby, have been duly and validly
authorized by all necessary actions on the part of Lessor (none of which actions
have been modified or rescinded and all of which actions are in full force and
effect). This Agreement constitutes a valid and binding agreement and
obligation of Lessor, enforceable in accordance with its terms.
(ix) Subject to liens and encumbrances of record, Lessor owns good and
marketable title in fee simple to the Real Property on which the Leased Premises
are located, and Lessor acknowledges that Lessee is relying upon the foregoing
representation and warranty in entering into this Agreement and in expending
moneys in connection herewith. Lessor shall not encumber or permit any
encumbrances, liens or restrictions on Lessee's Installations, except with the
prior written approval of Lessee.
(b) Each party shall comply in all material respects with all local, state
and federal laws, statutes, ordinances, rules, regulations, orders and decrees
that it knows to be applicable in connection with its activities and operations
at the Leased Premises, and Lessor shall require the same representation and
warranty from all additional users of the facilities at the Leased Premises.
(c) The parties agree that, during the Term of this Agreement neither party
shall intentionally do anything at the Leased Premises which will interfere with
or adversely affect the operations of the other party.
(d) In the event that during the Term of this Agreement there shall be an
actual condemnation or foreclosure and taking of all of the Leased Premises, or
a portion thereof such that it renders the premises unsuitable for broadcasting,
this Agreement may be terminated by written notice from either party to the
other and thereafter each of the parties shall be relieved of any future
liability to the other under this Agreement, except as to obligations accrued
and not yet discharged at the date of termination. Following any condemnation
or foreclosing order, Lessee may continue to use the property for operations
under the terms of this Agreement until Lessee finds and begins to utilize new
facilities or until prevented by the condemning or foreclosing authority from
utilizing the Leased Premises, whichever occurs first.
(e) Lessee represents and warrants that its Installations to be located on or
about the Leased Premises, together with the existence of the equipment of
Lessor, and the operation thereof do not and will not result in exposure of
workers or the general public to levels of radio frequency radiation in excess
of the "Radio Frequency Protection Guides" recommended in "American National
Standard Safety Levels With Respect to Human Exposure to Radio
<PAGE>
Frequency Electromagnetic Fields, 300 KHz to 100 GHz," issued by the American
National Standards Institute ("Acceptable Radio Frequency Radiation Standards").
(f) Lessee covenants that it will not at any time during the Term of this
Agreement, transmit, store, handle or dump toxic or hazardous wastes anywhere at
or around the Leased Premises.
(g) Lessee shall promptly advise Lessor in writing of any written notice
received from any governmental authority to comply with the terms, provisions
and requirements of any local, state and federal laws, ordinances, directives,
orders, regulations, and requirements which apply to any portion of the Leased
Premises or to any adjacent street or other public area or the maintenance,
operation or use thereof.
(h) Lessee represents and warrants that the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby, have been duly and validly authorized by all necessary
actions on the part of Lessee (none of which actions have been modified or
rescinded and all of which actions are in full force and effect). This
Agreement constitutes a valid and binding agreement and obligation of Lessee,
enforceable in accordance with its terms.
(i) Lessee warrants unto Lessor that the Improvements (including the radio
tower(s) located on the Real Property) are and will remain in material
compliance at all times during the Term and any Extension Term with all federal,
state, county, municipal, local, administrative and other governmental laws,
statutes, ordinances, codes, rules, regulations and orders pertaining thereto,
including, without limitation, to the extent applicable, all zoning laws and
building codes and all regulations of the Federal Aviation Administration
("FAA") and the Federal Communications Commission ("FCC").
(j) In case of any material damage to or destruction of the Real Property or
any part thereof, Lessee shall promptly give written notice thereof to Lessor
and any mortgagee, generally describing the nature and extent of such damage or
destruction. In case of any damage to or destruction of the Improvements or any
parts thereof, Lessee, whether or not the insurance proceeds, if any, on account
of such damage or destruction shall be sufficient for the purpose, at its sole
expense, shall promptly commence and complete the restoration, replacement or
rebuilding of the Improvements as nearly as possible to their value, condition
and character immediately prior to such damage or destruction.
(k) Lessee will execute, acknowledge and deliver to the Lessor, promptly upon
request, a certificate certifying that (i) this Agreement is unmodified and in
full force and effect (or, if there have been modifications, that the Agreement
is in full force and effect, as modified, and stating the modifications), (ii)
the dates, if any, to which rent and other sums payable hereunder have been
paid, and (iii) no notice has been received by Lessee of any default which has
not been cured, except as to defaults specified in said certificate. Any such
certificate may be relied upon by any prospective purchaser or mortgagee of the
Real Property or any part thereof.
<PAGE>
(l) Lessor will execute, acknowledge and deliver to the Lessee or any
mortgagee, promptly upon request, a certificate certifying that (i) this
Agreement is unmodified and in full force and effect (or, if there have been
modifications, that the Agreement is in full force and effect, as modified, and
stating the modifications), (ii) the dates, if any, to which rent and other sums
payable hereunder have been paid, and (iii) whether or not, to the knowledge of
Lessor, there are then existing any defaults under this Agreement (and if so,
specifying the same). Any such certificate may be relied upon by any
prospective purchaser transferee or mortgagee of Lessee's interest under this
Agreement.
SECTION 6
---------
EVENTS OF DEFAULT
-----------------
(a) Any of the following events shall constitute a default on the part of
Lessee:
(i) The failure of Lessee to pay rent or additional rent, and
continuation of such failure for more than ten (10) days after Lessee's receipt
of written notice thereof from Lessor; provided, however, that Lessor shall not
be required to provide such written notice to Lessee more than twice in any
twelve (12) month period prior to declaring such failure to pay an event of
default; or
(ii) The failure of Lessee to cure any other default under the terms
hereof, and continuation of such failure to cure for more than thirty (30) days
after notice by Lessor, provided, however, that if the nature of Lessee's
default is such that more than thirty (30) days is required for its cure, then
Lessee shall not be deemed to be in default if Lessee has commenced such cure
within the thirty (30) day period, demonstrates to Lessor's reasonable
satisfaction that such default is curable and thereafter diligently prosecutes
such cure to completion; or
(iii) Lessee is finally and without further right of appeal or review,
adjudicated a bankrupt or insolvent, or has a receiver appointed for all or
substantially all of its business or assets on the ground of its insolvency, or
has a trustee appointed for it after a petition has been filed for Lessee's
reorganization under the Bankruptcy Act of the United States, or any future law
of the United States having the same general purpose, or if Lessee shall make an
assignment for the benefit of its creditors, or if Lessee's interest hereunder
shall be levied upon or attached, which levy or attachment shall not be removed
within twenty (20) days from the date thereof.
(b) If an event of default on the part of Lessee shall occur at any time,
Lessor, at its election, may give Lessee a notice of termination specifying a
day not less than thirty (30) days thereafter on which the Term of this
Agreement shall end, unless such default shall be cured within said period, or,
if the default is such that more than thirty (30) days is required for its cure,
unless Lessee has commenced such cure within said period. If such notice is
given, the Agreement shall expire on the day so specified as fully and
completely as if that day were the day herein originally fixed for such
expiration, and Lessee shall then quit and surrender the Leased Premises to
Lessor, but Lessee shall remain liable for the payment of rent during the full
period which would otherwise constitute the balance of the Term of this
Agreement; and without
<PAGE>
prejudice to any other right or remedy which it may have hereunder or by law,
and notwithstanding any waiver of any prior breach of condition or event of
default hereunder, Lessor may re-enter the Leased Premises either by reasonable
force or otherwise, or dispossess Lessee, any legal representative of Lessee or
other occupant of the Leased Premises by appropriate suit, action or proceeding
and remove its effects and hold the Leased Premises as if this Agreement had not
been made.
(c) The failure of Lessor to cure any default under the terms hereof, and
continuation of such failure to cure for more than thirty (30) days after notice
by Lessee, shall constitute a default on the part of Lessor; provided, however,
that if the nature of Lessor's default is such that more than thirty (30) days
is required for its cure, then Lessor shall not be deemed to be in default if
Lessor has commenced such cure within the thirty (30) day period, demonstrates
to Lessee's reasonable satisfaction that such default is curable and thereafter
diligently prosecutes such cure to completion.
(d) If an event of default on the part of Lessor shall occur at any time,
Lessee, at its election, may give Lessor a notice of termination specifying a
day not less than thirty (30) days thereafter on which the Term of this
Agreement shall end, unless such default shall be cured within said period, or,
if the default is such that more than thirty (30) days is required for its cure,
unless Lessor has commenced such cure within said period. If such notice is
given, the Agreement shall expire on the day so specified as fully and
completely as if that day were the day herein originally fixed for such
expiration, and Lessee shall then quit and surrender the Leased Premises to
Lessor, and Lessee shall not be liable for payment of rent for any period after
such expiration.
SECTION 7
---------
ASSIGNMENT
----------
Lessee shall not assign this Agreement nor sublet any portion of the Leased
Premises without the prior written consent of the Lessor, which consent shall
not be unreasonably withheld. Notwithstanding any assignment or sublease,
Lessee shall remain primarily liable under this Agreement.
SECTION 8
---------
SUBORDINATION, NONDISTURBANCE AND ATTORNMENT
--------------------------------------------
This Agreement shall not be a lien against the Leased Premises in respect to
any mortgages and security agreements placed or hereafter to be placed by Lessor
upon the Leased Premises. The recording of such mortgages and security
agreements shall have preference and precedence and be superior and prior in
lien to this Agreement, irrespective of the date of recording, and Lessee agrees
to execute any instruments, without cost, which may be deemed necessary or
desirable to further effect the subordination of this Agreement. Lessor shall
make a reasonable effort to obtain from any mortgagees or lenders holding an
interest in the nature of a mortgage in the Leased Premises an agreement that
the mortgagee or lender shall not disturb
<PAGE>
Lessee's quiet possession in the event of foreclosure. If any proceedings are
brought for foreclosure, or in the event of the exercise of the power of sale
under any mortgage or deed of trust made by the Lessor encumbering the Leased
Premises, Lessee shall attorn to the purchaser upon any such foreclosure or sale
and recognize such purchaser as the Lessor under this Lease.
SECTION 9
---------
NON-LIABILITY OF LESSOR
-----------------------
Lessor shall not be liable for any damages or injury which may be sustained by
Lessee or any other person by reason of the failure, breakage, leakage or
obstruction of the water, sewer, plumbing, roof, drains, leaders, electrical,
air conditioning or any other equipment; or by reason of the elements; or
resulting from the carelessness, negligence or improper conduct of Lessee, its
agents, employees, contractors, invitees, assignees or successors; or
attributable to any interference with or the interruption of or failure of any
services, beyond the control of Lessor, to be supplied by Lessor.
SECTION 10
----------
QUIET ENJOYMENT
---------------
(a) Lessor agrees that it shall not enforce any unreasonable rules or
regulations which would unduly prejudice the conduct of Lessee's business, or
which would prevent full and free access to the Leased Premises by Lessee, as
herein provided.
(b) Lessor reserves and shall at all times have the right to re-enter the
Real Property to inspect the same, to supply any service to be provided by
Lessor to Lessee hereunder, and to show the Real Property to prospective
purchasers, mortgagees, or lessees, to post notices of non-responsibility,
without abatement of rent, provided entrance to the Real Property shall not be
denied Lessee.
SECTION 11
----------
SALE OF LEASED PREMISES BY LESSOR
---------------------------------
Notwithstanding any of the provisions of this Lease, Lessor (a) may assign, in
whole or in part, Lessor's interest in this Lease and (b) may sell all or part
of the Real Property. In the event of any sale or exchange of the Leased
Premises by Lessor and assignment by Lessor of this Lease, Lessor shall be and
is hereby relieved of all liability under any and all of its covenants and
obligations contained in or derived from this Lease arising out of any act,
occurrence or omission relating to the Leased Premises occurring after the
consummation of such sale or exchange and assignment, but only upon the
condition that, as part of such sale or exchange, Lessor will cause the grantee
to agree in writing to assume to carry out any and all of the covenants and
obligations of Lessor under this Lease occurring after the consummation of
Lessor's assignment of its interest in and to this Lease.
<PAGE>
SECTION 12
----------
BROKERAGE
---------
The parties acknowledge and agree that this Agreement has not been brought
about as a result of the services of any real estate broker, firm or
corporation, and each indemnifies and saves the other harmless from any and all
claims from any person(s) claiming to have rendered real estate services in
connection with this Agreement.
SECTION 13
----------
SURRENDER OF PREMISES
---------------------
Upon the expiration of the Term hereof, Lessee shall surrender the Leased
Premises, and, at Lessor's option, all interest of the Lessee in and to the
Improvements (including the radio towers located on the Land), to Lessor in good
order and condition, reasonable wear and tear excepted. Any equipment,
fixtures, goods or other property of Lessee not removed within ten (10) days
after any quitting, vacating or abandonment of the Leased Premises, or upon
Lessee's eviction therefrom, shall be considered abandoned, and Lessor shall
have the right, without notice to Lessee, to sell or otherwise dispose of same
without having to account to Lessee for any part of the proceeds of such sale.
SECTION 14
----------
NOTICES
-------
All notices, demands, and requests required or permitted to be given hereunder
shall be in writing and sent certified mail, return receipt requested, and if to
Lessor, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn: Edward
G. Atsinger III, and if Lessee, at 4880 Santa Rosa Road, Suite 300, Camarillo,
CA 93012, Attn: Accounting. Either party hereto may change the place for
notice to it by sending like written notice to the other party hereto.
SECTION 15
----------
BINDING NATURE
--------------
The provisions of this Agreement shall apply to, bind and inure to the benefit
of Lessor and Lessee, their respective successors, legal representatives or
assigns. The terms of this Agreement and any disputes arising therefrom, shall
be governed by the laws of the State of Texas.
<PAGE>
SECTION 16
----------
ENTIRE AGREEMENT
----------------
This Agreement contains the entire understanding and agreement between the
parties. No representative, agent or employee of Lessor has been authorized to
make any representations or promises with reference to the within agreement or
to vary, alter or modify the terms hereof. No additions, changes or
modifications shall be binding unless reduced to writing and signed by the
parties.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.
LESSOR: LESSEE
CARON BROADCASTING, INC.
/s/ EDWARD G. ATSINGER, III /s/ ERIC H. HALVORSON
- -------------------------------- --------------------------------
EDWARD G. ATSINGER, III ERIC H. HALVORSON
Vice-President
/s/ STUART W. EPPERSON
- --------------------------------
STUART W. EPPERSON
<PAGE>
EXHIBIT 10.05.04
LEASE AGREEMENT
---------------
This Agreement ("Agreement") is made as of the 6th day of December, 1996,
by and between EDWARD G. ATSINGER III and STUART W. EPPERSON (collectively
referred to herein as "Lessor") and COMMON GROUND BROADCASTING, INC. ("Lessee").
WHEREAS, Lessor owns certain land (the "Land") and Lessee owns certain
improvements thereon (the "Improvements"), which Land and Improvements together
comprise certain real property, more particularly described as set forth in
Exhibit "A", which is attached hereto and made a part hereof (the "Real
Property"); and,
WHEREAS, Lessee desires to use said Real Property in operating its radio
station KKMS(AM), MINNEAPOLIS, MINNESOTA; and,
WHEREAS, the parties are desirous of making a mutually suitable and
satisfactory agreement whereby Lessor will lease to Lessee the Real Property
(constituting the "Leased Premises") on the terms and conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the following covenants, agreements,
conditions and representations, the parties hereto agree as follows:
SECTION 1
---------
USE OF THE LEASED PREMISES
--------------------------
(a) Lessor, in consideration of the rents to be paid and covenants herein
contained, hereby leases to Lessee the Leased Premises.
(b) Lessee may use the Leased Premises for the operation of its radio
station, and, in connection therewith, for the installation, repair,
maintenance, operation, housing and removal of its Improvements and other
related broadcasting equipment (together comprising the "Installations").
Lessee is fully familiar with the physical condition of the Land and has
received the same in good order and condition, and agrees that the Land complies
in all respects with all requirements of this Agreement. Lessee shall use the
Land exclusively for purposes associated with the operation of a radio station.
(c) Lessee shall have the right from time to time to substitute Installations
of similar kind and character for those hereinabove specified, provided such
changes shall be approved in
<PAGE>
advance by Lessor, and Lessor shall not unreasonably delay or withhold its
approval. In the event Lessee submits any such changes for Lessor's approval
and Lessor does not respond within thirty (30) days after Lessor's receipt
thereof, then such changes shall be deemed approved by Lessor, so long as such
changes otherwise comply with this Agreement, five (5) days after Lessor's
receipt of notice that it has not responded.
(d) Lessee shall have access to the Leased Premises twenty-four (24) hours
per day, seven (7) days per week, for the purpose of installing, maintaining and
repairing its Installations, provided that the contractors performing such work
are reasonably acceptable to Lessor.
(e) Lessor shall not be responsible for repairs or maintenance to the
Installations, except for repairs occasioned by the negligence of Lessor, its
agents, employees or contractors.
(f) During the Term (as hereinafter defined), Lessor and Lessee shall each
provide the other with a telephone number which, if called will ring at a
location that is staffed by their respective agents twenty-four (24) hours each
and every day, seven (7) days each and every week; and Lessor and Lessee shall
notify each other promptly in the event of any change in such telephone number.
(g) Lessee shall not use or permit the Leased Premises to be used by any
dangerous, toxic, noxious or offensive trade or business, or for any unlawful
purpose.
(h) Lessee shall not directly or indirectly create or permit to be created or
to remain, and will discharge any mortgage, lien, security interest, encumbrance
or charge on, pledge of or conditional sale or other title retention agreement
with respect to the Real Property or any part thereof or Lessee's interest
therein other than (i) this Agreement, (ii) any lien, including a mortgage on
the leasehold interest of Lessee, which may be approved by the Lessor in
writing, which approval shall not be unreasonably withheld, (iii) liens for
impositions not yet payable, or payable without the addition of any fine,
penalty, interest or cost for non-payment, or being contested as permitted by
Paragraph 3(d), below, and (iv) liens of mechanics, materialmen, suppliers or
vendors, or rights thereto, incurred in the ordinary course of business for sums
which under the terms of the related contracts are not at the time due, provided
that adequate provision for the payment thereof shall have been made.
SECTION 2
---------
TERM AND RENT
-------------
(a) The term of this Lease (the "Term") shall commence on December 6, 1996
(the "Commencement Date"), and shall expire on November 1, 2006 (the "Expiration
Date"). If the Term has been extended as provided in subparagraph (b), below,
the Expiration Date shall be the last day of the Term as so extended.
<PAGE>
(b) Lessee shall have the option, if Lessee is not at the time in default
under this Agreement, to extend the Term of this Agreement for up to two (2)
successive periods of five (5) years each (the "Extended Terms"), and, except as
set forth in subparagraph (c), below, on the same terms, covenants and
conditions herein contained. The word "Term" as used in this Agreement shall be
deemed to include the Extended Terms when and if the Agreement is extended. Each
option to extend the Term shall be exercised only by Lessee's delivery to Lessor
by United States mail on or before ninety (90) days prior to the commencement of
the renewal term of written notice of Lessee's election to extend as provided
herein.
(c) Lessee agrees to pay rent to Lessor from the Commencement Date through
the Expiration Date, or such earlier date as this Agreement is terminated as
provided herein, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn:
Accounting, or to such other person or place as Lessor may designate from time
to time by notice to Lessee, in the following amounts and in the following
manner:
(i) During the first year beginning with the Commencement Date Lessee
shall pay a base rent of $133,200 per annum, in equal monthly installments of
$11,100 (the "Base Rent") in advance on the first day of each month; and
thereafter on each and every Adjustment Date (hereinafter defined) the monthly
rent shall be computed according to subparagraph (ii) below.
(ii) The term "Adjustment Date" shall mean the first (1st) day of
February following the Commencement Date and each subsequent anniversary of such
date this Agreement remains in effect. During the one (1) year period beginning
with each Adjustment Date, the monthly rent payable by Lessee shall reflect an
adjustment, as herein provided, for the change, if any, from the year in which
the Commencement Date falls, in the Consumer Price Index for Urban Wage Earners
and Clerical Workers, Los Angeles area [Base Year 1982-84=100] ("CPI") as
measured in February and published by the United States Department of Labor,
Bureau of Labor Statistics; i.e., during the one (1) year period beginning with
the Adjustment Date, the monthly rent shall be the product obtained by
multiplying the Base Rent times a fraction, the numerator of which shall be the
CPI for February of the year such Adjustment Date falls and the denominator of
which shall be the CPI for February of the year in which the Commencement Date
falls. Notwithstanding the results of the foregoing calculation, the amount
payable by Lessee hereunder shall not in any event be less than the rental paid
during the immediately preceding one (1) year period. In the event that the
Bureau of Labor Statistics shall change the base period for the CPI, the new
index number shall be substituted for the old index number in making the above
computation. In the event the Bureau of Labor Statistics ceases publishing the
CPI, or materially changes the method of its computation, Lessor and Lessee
shall accept comparable statistics on the purchasing power of the consumer
dollar as published at the time of said discontinuation or change by a
responsible financial periodical of recognized authority to be chosen by Lessor
subject to reasonable consent of Lessee.
(d) Rent and all other sums payable to Lessor hereunder shall be paid
without notice, demand, counterclaim, set-off, deduction or defense and without
abatement, suspension, deferment, diminution or reduction. Except as expressly
provided herein, Lessee waives all rights now or hereafter conferred by statute
or otherwise to quit, terminate or surrender this Agreement
<PAGE>
or the Real Property or any part thereof, or to any abatement, suspension,
deferment, diminution or reduction of rent or any other sum payable by Lessee
hereunder.
SECTION 3
---------
CHARGES AND UTILITIES
---------------------
(a) Lessee, at its sole expense, shall keep the Real Property and the
adjoining streets and ways in good and clean order and condition and will
promptly make all necessary or appropriate repairs, replacements and renewals
thereof, whether interior or exterior, structural or non-structural, ordinary or
extraordinary, foreseen or unforeseen. All repairs, replacements and renewals
shall be equal in quality and class to the original work. Lessee waives any
right created by any law now or hereafter in force to make repairs to the Real
Property at Lessor's expense. Lessee, at its sole expense, shall do or cause
others to do every act necessary or appropriate for the preservation and safety
of the Real Property whether or not the Lessor shall be required by any legal
requirement to take such action or be liable for failure to do so.
(b) If not at the time in default under this Agreement, Lessee, at its sole
expense, may make reasonable alterations of and additions to the Improvements or
any part thereof, provided that any alteration or addition (i) shall not change
the general character of the Improvements, or reduce the fair market value
thereof below their value immediately before such alteration or addition, or
impair their usefulness, (ii) is effected with due diligence, in a good and
workmanlike manner and in compliance with all legal requirements and insurance
requirements, (iii) is promptly and fully paid for by Lessee, (iv) is made, in
case the estimated cost of such alteration or addition exceeds Ten Thousand
Dollars ($10,000), under the supervision of an architect or engineer
satisfactory to Lessor and in accordance with plans, specifications and cost
estimates approved by Lessor, and (v) does not interfere with Lessor's rights of
use under this Agreement.
(c) Subject to subparagraph (d), below, relating to contests, Lessee shall
pay all taxes, assessments (including without limitation, all assessments for
public improvements or benefits, whether or not commenced or completed prior to
the date hereof and whether or not to be completed within the Term hereof),
ground rents, water, sewer or similar rents, rates and charges, excises, levies,
license fees, permit fees, inspection fees and other authorization fees and
other charges in each case, whether general or special, ordinary or
extraordinary, foreseen or unforeseen, of every character (including all
interest and penalties thereof), which at any time during or in respect of the
Term hereof may be assessed, levied, confirmed or imposed on or in respect of or
be a lien upon the Real Property or any part thereof or any rent therefrom or
any estate, right or interest therein, or any occupancy, use or possession of or
activity conducted on the Real Property or any part thereof, other than any
income or excess profits tax imposed upon the Lessor's general income or
revenues, but excluding any income or excess profits or franchise taxes of
Lessor determined on the basis of general income or revenue or any interest or
penalties in respect thereof. Lessee shall furnish to Lessor for inspection
within thirty (30) days after written request, official receipts of the
appropriate taxing authority or other proof satisfactory to Lessor evidencing
such payment. If by law any such amount may be paid in installments, Lessee
shall be obligated to pay only those installments as they become due from time
to time before any
<PAGE>
interest, penalty, fine or cost may be added thereto; and any such amount
relating to the fiscal period of the taxing authority, part of which is included
within the Term and a part of which extends beyond the Term shall, if Lessee
shall not be in default under this Agreement, be apportioned between Lessee and
Lessor as of the expiration of the Term of this Agreement.
(d) Lessee, at its sole expense, may contest, after prior written notice to
Lessor, by appropriate legal proceedings conducted in good faith and with due
diligence, the amount or validity or application, in whole or in part, of any
tax, lien or other imposition on the Real Property, provided that (i) Lessee
shall first make all contested payments, under protest if it desires, (ii)
neither the Real Property nor any part thereof or interest therein nor any such
rents or other sums would be in any danger of being sold, forfeited, lost or
interfered with, and (iii) Lessee shall have furnished such security, if any, as
may be required in the proceedings or reasonably requested by Lessor.
(e) Lessee shall pay or cause to be paid all charges for all public or
private utility services and all sprinkler systems and protective services at
any time rendered to or in connection with the Real Property or any part
thereof, will comply with all contracts relating to any such services, and will
do all other things required for the maintenance and continuance of all such
services.
SECTION 4
---------
INSURANCE AND INDEMNIFICATION
-----------------------------
(a) Lessee shall, at its sole cost and expense, during the Term hereof,
obtain or provide and keep in full force for the benefit of Lessor, as an
additional named insured (i) general public liability insurance, insuring Lessor
against any and all liability or claims or liability arising out of, occasioned
by or resulting from any accident or other occurrence in or about the Real
Property arising out of any act or omission of Lessee or any officer, employee,
agent or contractor of Lessee, for injuries to any person or persons, with
limits of not less than Three Million Dollars ($3,000,000.00) for injuries to
one person, Five Million Dollars ($5,000,000.00) for injuries to more than one
person, in any one accident or occurrence, and for loss or damage to the
property of any person or persons, for not less than Five Million Dollars
($5,000,000.00); (ii) insurance with respect to the Improvements against loss or
damage by fire, lightning, windstorm, hail, explosion, riot, riot attending a
strike, civil commotion, aircraft, vehicles, smoke and other risks from time to
time included under "extended coverage" policies, in an amount equal to at least
One Hundred Percent (100%) of the full replacement value of the Improvements
and, in any event, in an amount sufficient to prevent Lessor or Lessee from
becoming a co-insurer of any partial loss under the applicable policies, which
shall be written on a replacement cost basis; (iii) appropriate workers'
compensation or other insurance against liability arising from claims of workers
in respect of and during the period of any work on or about the Real Property;
and (iv) insurance against such other hazards and in such amounts as is
customarily carried by owners and operators of similar properties, and as Lessor
may reasonably require for its protection. Lessee shall comply with such other
requirements as Lessor, or any mortgagee, may from time to time reasonably
request for the protection by insurance of their respective interests. The
policy or policies of insurance maintained by Lessee pursuant to this Paragraph
shall be of a company or companies
<PAGE>
authorized to do business in Ohio and a certificate thereof shall be delivered
to Lessor, together with evidence of the payment of the premiums therefor, not
less than fifteen (15) days prior to the commencement of the Term hereof or of
the date when Lessee shall enter upon the Leased Premises, whichever occurs
sooner. At least fifteen (15) days prior to the expiration or termination date
of any policy, Lessee shall deliver a certificate of a renewal or replacement
policy with proof of the payment of the premium therefor. Any such insurance
required by this Paragraph may, at Lessee's option, be provided through a
blanket policy or policies.
(b) Lessee shall indemnify Lessor and hold Lessor harmless from and against
all claims, actions, losses, damages, liabilities and expenses (including
reasonable attorneys' fees) incurred by or asserted against Lessor, whether
during or after the Term of this Agreement, including by reason of personal
injury, loss of life, or damage to property, caused by or resulting from in
whole or any material part, (i) any breach of this Agreement by Lessee, (ii) any
negligent or intentional act or omission of Lessee, its employees, agents,
invitees or contractors, whether in, on, about or with respect to the Leased
Premises or otherwise, (iii) the use by Lessee of any part of the Leased
Premises, (iv) any work undertaken by or at the request of Lessee on or about
the Leased Premises, (v) any other activity undertaken by or at the request of
Lessee pursuant to or in connection with this Agreement, or (vi) the presence of
any individuals on the Leased Premises as a result of Lessee's request or this
Agreement; provided, however, that Lessee shall not be required to indemnify
Lessor for any damages, injury, loss or expense arising out of Lessor's or its
agents', employees', invitees' or contractors' negligent acts or omissions.
(c) If Lessor so elects by notice to Lessee, Lessee shall have the
obligation of defending, at its sole cost and expense, by counsel selected by
Lessee and approved by Lessor (such approval not to be unreasonably withheld),
against any claim to which the foregoing indemnity may apply. Lessor may assume,
or require that such defense be assumed, by Lessor and counsel selected by
Lessor, at the cost and expense of Lessee if Lessor is for any reason
dissatisfied with the defense by Lessee, or believes that its interests would be
better served thereby. In any case where Lessee is defending any such claim,
Lessor may participate in the defense thereof by counsel selected by it, but at
Lessor's expense. Lessee shall not enter into any settlement of any claim
without the consent of Lessor, which consent shall not be unreasonably withheld.
(d) Lessor shall indemnify Lessee and hold Lessee harmless from and against
all claims, actions, losses, damages, liabilities and expenses (including
reasonable attorneys' fees) incurred by or asserted against Lessee, whether
during or after the Term of this Agreement, including by reason of personal
injury, loss of life, or damage to property, caused by or resulting from in
whole or any material part, (i) any breach of this Agreement by Lessor, (ii) any
negligent or intentional act or omission of Lessor, its employees, agents,
invitees or contractors, whether in, on, about or with respect to the Leased
Premises or otherwise, (iii) the use by Lessor of any part of the Leased
Premises, (iv) any work undertaken by or at the request of Lessor on or about
the Leased Premises, (v) any other activity undertaken by or at the request of
Lessor pursuant to or in connection with this Agreement, or (vi) the presence of
any individuals on the Leased Premises as a result of Lessor's request or this
Agreement; provided, however, that Lessor shall not be required to indemnify
Lessee for any damages, injury, loss or expense arising out of Lessee's or its
agents', employees', invitees' or contractors' negligent acts or omissions.
<PAGE>
(e) If Lessee so elects by notice to Lessor, Lessor shall have the
obligation of defending, at its sole cost and expense, by counsel selected by
Lessor and approved by Lessee (such approval not to be unreasonably withheld),
against any claim to which the foregoing indemnity may apply. Lessee may assume,
or require that such defense be assumed, by Lessee and counsel selected by
Lessee, at the cost and expense of Lessor if Lessee is for any reason
dissatisfied with the defense by Lessor, or believes that its interests would be
better served thereby. In any case where Lessor is defending any such claim,
Lessee may participate in the defense thereof by counsel selected by it, but at
Lessee's expense. Lessor shall not enter into any settlement of any claim
without the consent of Lessee, which consent shall not be unreasonably withheld.
(f) Nothing in this Agreement shall be construed so as to authorize or
permit any insurer of Lessor or Lessee to be subrogated to any right of Lessor
or Lessee against the other. Each of Lessor and Lessee hereby releases the other
to the extent of its insurance coverage for any loss or damage caused by fire or
any of the extended coverage casualties, even if such fire or other casualty
shall be brought about by the fault or negligence of the other party or persons
for whose acts said party is liable.
SECTION 5
---------
REPRESENTATIONS, WARRANTIES AND OTHER OBLIGATIONS
-------------------------------------------------
(a) Lessor represents and warrants that:
(i) The execution and performance of this Agreement shall not
constitute a breach or violation under any Agreement to which Lessor is a party.
(ii) To the best of Lessor's knowledge, there are no violations of any
federal, state, county or municipal law, ordinance, order, regulations or
requirement with respect to the Leased Premises, and as of the date of this
Agreement, no notice of any kind relating thereto (which would adversely affect
the transactions contemplated by this Agreement) has been issued by public
authorities having jurisdiction over the Leased Premises.
(iii) No person or party other than Lessor has a right to use the
Leased Premises for any purpose which would affect Lessee's right to use the
Leased Premises as contemplated hereunder.
(iv) Lessor has not received written notice of pending or contemplated
condemnation proceedings affecting the Leased Premises or any part thereof.
(v) To the best of Lessor's knowledge, there is no action, suit or
proceeding pending or threatened against or affecting the Leased Premises or any
portion thereof and Lessor has not received notice written or otherwise of any
litigation affecting or concerning the Leased Premises relating to or arising
out of its ownership, management, use or operation. Lessor shall give to Lessee
prompt notice of institution of any such proceeding or litigation.
(vi) To the best of Lessor's knowledge, there are presently no
proceedings for
<PAGE>
overdue real estate taxes assessed against the Leased Premises for any fiscal
period.
(vii) Lessor shall promptly advise Lessee in writing of any written
notice received from any governmental authority to comply with the terms,
provisions and requirements of any local, state and federal laws, ordinances,
directives, orders, regulations and requirements which apply to any portion of
the Leased Premises or to any adjacent street or other public area or to the
maintenance, operation or use thereof.
(viii) The execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby, have been duly and
validly authorized by all necessary actions on the part of Lessor (none of which
actions have been modified or rescinded and all of which actions are in full
force and effect). This Agreement constitutes a valid and binding agreement and
obligation of Lessor, enforceable in accordance with its terms.
(ix) Subject to liens and encumbrances of record, Lessor owns good
and marketable title in fee simple to the Real Property on which the Leased
Premises are located, and Lessor acknowledges that Lessee is relying upon the
foregoing representation and warranty in entering into this Agreement and in
expending moneys in connection herewith. Lessor shall not encumber or permit any
encumbrances, liens or restrictions on Lessee's Installations, except with the
prior written approval of Lessee.
(b) Each party shall comply in all material respects with all local, state
and federal laws, statutes, ordinances, rules, regulations, orders and decrees
that it knows to be applicable in connection with its activities and operations
at the Leased Premises, and Lessor shall require the same representation and
warranty from all additional users of the facilities at the Leased Premises.
(c) The parties agree that, during the Term of this Agreement neither party
shall intentionally do anything at the Leased Premises which will interfere with
or adversely affect the operations of the other party.
(d) In the event that during the Term of this Agreement there shall be an
actual condemnation or foreclosure and taking of all of the Leased Premises, or
a portion thereof such that it renders the premises unsuitable for broadcasting,
this Agreement may be terminated by written notice from either party to the
other and thereafter each of the parties shall be relieved of any future
liability to the other under this Agreement, except as to obligations accrued
and not yet discharged at the date of termination. Following any condemnation
or foreclosing order, Lessee may continue to use the property for operations
under the terms of this Agreement until Lessee finds and begins to utilize new
facilities or until prevented by the condemning or foreclosing authority from
utilizing the Leased Premises, whichever occurs first.
(e) Lessee represents and warrants that its Installations to be located on or
about the Leased Premises, together with the existence of the equipment of
Lessor, and the operation thereof do not and will not result in exposure of
workers or the general public to levels of radio frequency radiation in excess
of the "Radio Frequency Protection Guides" recommended in "American National
Standard Safety Levels With Respect to Human Exposure to Radio
<PAGE>
Frequency Electromagnetic Fields, 300 KHz to 100 GHz," issued by the American
National Standards Institute ("Acceptable Radio Frequency Radiation Standards").
(f) Lessee covenants that it will not at any time during the Term of this
Agreement, transmit, store, handle or dump toxic or hazardous wastes anywhere at
or around the Leased Premises.
(g) Lessee shall promptly advise Lessor in writing of any written notice
received from any governmental authority to comply with the terms, provisions
and requirements of any local, state and federal laws, ordinances, directives,
orders, regulations, and requirements which apply to any portion of the Leased
Premises or to any adjacent street or other public area or the maintenance,
operation or use thereof.
(h) Lessee represents and warrants that the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby, have been duly and validly authorized by all necessary
actions on the part of Lessee (none of which actions have been modified or
rescinded and all of which actions are in full force and effect). This
Agreement constitutes a valid and binding agreement and obligation of Lessee,
enforceable in accordance with its terms.
(i) Lessee warrants unto Lessor that the Improvements (including the radio
tower(s) located on the Real Property) are and will remain in material
compliance at all times during the Term and any Extension Term with all federal,
state, county, municipal, local, administrative and other governmental laws,
statutes, ordinances, codes, rules, regulations and orders pertaining thereto,
including, without limitation, to the extent applicable, all zoning laws and
building codes and all regulations of the Federal Aviation Administration
("FAA") and the Federal Communications Commission ("FCC").
(j) In case of any material damage to or destruction of the Real Property or
any part thereof, Lessee shall promptly give written notice thereof to Lessor
and any mortgagee, generally describing the nature and extent of such damage or
destruction. In case of any damage to or destruction of the Improvements or any
parts thereof, Lessee, whether or not the insurance proceeds, if any, on account
of such damage or destruction shall be sufficient for the purpose, at its sole
expense, shall promptly commence and complete the restoration, replacement or
rebuilding of the Improvements as nearly as possible to their value, condition
and character immediately prior to such damage or destruction.
(k) Lessee will execute, acknowledge and deliver to the Lessor, promptly upon
request, a certificate certifying that (i) this Agreement is unmodified and in
full force and effect (or, if there have been modifications, that the Agreement
is in full force and effect, as modified, and stating the modifications), (ii)
the dates, if any, to which rent and other sums payable hereunder have been
paid, and (iii) no notice has been received by Lessee of any default which has
not been cured, except as to defaults specified in said certificate. Any such
certificate may be relied upon by any prospective purchaser or mortgagee of the
Real Property or any part thereof.
<PAGE>
(l) Lessor will execute, acknowledge and deliver to the Lessee or any
mortgagee, promptly upon request, a certificate certifying that (i) this
Agreement is unmodified and in full force and effect (or, if there have been
modifications, that the Agreement is in full force and effect, as modified, and
stating the modifications), (ii) the dates, if any, to which rent and other sums
payable hereunder have been paid, and (iii) whether or not, to the knowledge of
Lessor, there are then existing any defaults under this Agreement (and if so,
specifying the same). Any such certificate may be relied upon by any
prospective purchaser transferee or mortgagee of Lessee's interest under this
Agreement.
SECTION 6
---------
EVENTS OF DEFAULT
-----------------
(a) Any of the following events shall constitute a default on the part of
Lessee:
(i) The failure of Lessee to pay rent or additional rent, and
continuation of such failure for more than ten (10) days after Lessee's receipt
of written notice thereof from Lessor; provided, however, that Lessor shall not
be required to provide such written notice to Lessee more than twice in any
twelve (12) month period prior to declaring such failure to pay an event of
default; or
(ii) The failure of Lessee to cure any other default under the terms
hereof, and continuation of such failure to cure for more than thirty (30) days
after notice by Lessor, provided, however, that if the nature of Lessee's
default is such that more than thirty (30) days is required for its cure, then
Lessee shall not be deemed to be in default if Lessee has commenced such cure
within the thirty (30) day period, demonstrates to Lessor's reasonable
satisfaction that such default is curable and thereafter diligently prosecutes
such cure to completion; or
(iii) Lessee is finally and without further right of appeal or review,
adjudicated a bankrupt or insolvent, or has a receiver appointed for all or
substantially all of its business or assets on the ground of its insolvency, or
has a trustee appointed for it after a petition has been filed for Lessee's
reorganization under the Bankruptcy Act of the United States, or any future law
of the United States having the same general purpose, or if Lessee shall make an
assignment for the benefit of its creditors, or if Lessee's interest hereunder
shall be levied upon or attached, which levy or attachment shall not be removed
within twenty (20) days from the date thereof.
(b) If an event of default on the part of Lessee shall occur at any time,
Lessor, at its election, may give Lessee a notice of termination specifying a
day not less than thirty (30) days thereafter on which the Term of this
Agreement shall end, unless such default shall be cured within said period, or,
if the default is such that more than thirty (30) days is required for its cure,
unless Lessee has commenced such cure within said period. If such notice is
given, the Agreement shall expire on the day so specified as fully and
completely as if that day were the day herein originally fixed for such
expiration, and Lessee shall then quit and surrender the Leased Premises to
Lessor, but Lessee shall remain liable for the payment of rent during the full
period which would otherwise constitute the balance of the Term of this
Agreement; and without
<PAGE>
prejudice to any other right or remedy which it may have hereunder or by law,
and notwithstanding any waiver of any prior breach of condition or event of
default hereunder, Lessor may re-enter the Leased Premises either by reasonable
force or otherwise, or dispossess Lessee, any legal representative of Lessee or
other occupant of the Leased Premises by appropriate suit, action or proceeding
and remove its effects and hold the Leased Premises as if this Agreement had not
been made.
(c) The failure of Lessor to cure any default under the terms hereof, and
continuation of such failure to cure for more than thirty (30) days after notice
by Lessee, shall constitute a default on the part of Lessor; provided, however,
that if the nature of Lessor's default is such that more than thirty (30) days
is required for its cure, then Lessor shall not be deemed to be in default if
Lessor has commenced such cure within the thirty (30) day period, demonstrates
to Lessee's reasonable satisfaction that such default is curable and thereafter
diligently prosecutes such cure to completion.
(d) If an event of default on the part of Lessor shall occur at any time,
Lessee, at its election, may give Lessor a notice of termination specifying a
day not less than thirty (30) days thereafter on which the Term of this
Agreement shall end, unless such default shall be cured within said period, or,
if the default is such that more than thirty (30) days is required for its cure,
unless Lessor has commenced such cure within said period. If such notice is
given, the Agreement shall expire on the day so specified as fully and
completely as if that day were the day herein originally fixed for such
expiration, and Lessee shall then quit and surrender the Leased Premises to
Lessor, and Lessee shall not be liable for payment of rent for any period after
such expiration.
SECTION 7
---------
ASSIGNMENT
----------
Lessee shall not assign this Agreement nor sublet any portion of the Leased
Premises without the prior written consent of the Lessor, which consent shall
not be unreasonably withheld. Notwithstanding any assignment or sublease,
Lessee shall remain primarily liable under this Agreement.
SECTION 8
---------
SUBORDINATION, NONDISTURBANCE AND ATTORNMENT
--------------------------------------------
This Agreement shall not be a lien against the Leased Premises in respect to
any mortgages and security agreements placed or hereafter to be placed by Lessor
upon the Leased Premises. The recording of such mortgages and security
agreements shall have preference and precedence and be superior and prior in
lien to this Agreement, irrespective of the date of recording, and Lessee agrees
to execute any instruments, without cost, which may be deemed necessary or
desirable to further effect the subordination of this Agreement. Lessor shall
make a reasonable effort to obtain from any mortgagees or lenders holding an
interest in the nature of a mortgage in the Leased Premises an agreement that
the mortgagee or lender shall not disturb
<PAGE>
Lessee's quiet possession in the event of foreclosure. If any proceedings are
brought for foreclosure, or in the event of the exercise of the power of sale
under any mortgage or deed of trust made by the Lessor encumbering the Leased
Premises, Lessee shall attorn to the purchaser upon any such foreclosure or sale
and recognize such purchaser as the Lessor under this Lease.
SECTION 9
---------
NON-LIABILITY OF LESSOR
-----------------------
Lessor shall not be liable for any damages or injury which may be sustained by
Lessee or any other person by reason of the failure, breakage, leakage or
obstruction of the water, sewer, plumbing, roof, drains, leaders, electrical,
air conditioning or any other equipment; or by reason of the elements; or
resulting from the carelessness, negligence or improper conduct of Lessee, its
agents, employees, contractors, invitees, assignees or successors; or
attributable to any interference with or the interruption of or failure of any
services, beyond the control of Lessor, to be supplied by Lessor.
SECTION 10
----------
QUIET ENJOYMENT
---------------
(a) Lessor agrees that it shall not enforce any unreasonable rules or
regulations which would unduly prejudice the conduct of Lessee's business, or
which would prevent full and free access to the Leased Premises by Lessee, as
herein provided.
(b) Lessor reserves and shall at all times have the right to re-enter the
Real Property to inspect the same, to supply any service to be provided by
Lessor to Lessee hereunder, and to show the Real Property to prospective
purchasers, mortgagees, or lessees, to post notices of non-responsibility,
without abatement of rent, provided entrance to the Real Property shall not be
denied Lessee.
SECTION 11
----------
SALE OF LEASED PREMISES BY LESSOR
---------------------------------
Notwithstanding any of the provisions of this Lease, Lessor (a) may assign, in
whole or in part, Lessor's interest in this Lease and (b) may sell all or part
of the Real Property. In the event of any sale or exchange of the Leased
Premises by Lessor and assignment by Lessor of this Lease, Lessor shall be and
is hereby relieved of all liability under any and all of its covenants and
obligations contained in or derived from this Lease arising out of any act,
occurrence or omission relating to the Leased Premises occurring after the
consummation of such sale or exchange and assignment, but only upon the
condition that, as part of such sale or exchange, Lessor will cause the grantee
to agree in writing to assume to carry out any and all of the covenants and
obligations of Lessor under this Lease occurring after the consummation of
Lessor's assignment of its interest in and to this Lease.
<PAGE>
SECTION 12
----------
BROKERAGE
---------
The parties acknowledge and agree that this Agreement has not been brought
about as a result of the services of any real estate broker, firm or
corporation, and each indemnifies and saves the other harmless from any and all
claims from any person(s) claiming to have rendered real estate services in
connection with this Agreement.
SECTION 13
----------
SURRENDER OF PREMISES
---------------------
Upon the expiration of the Term hereof, Lessee shall surrender the Leased
Premises, and, at Lessor's option, all interest of the Lessee in and to the
Improvements (including the radio towers located on the Land), to Lessor in good
order and condition, reasonable wear and tear excepted. Any equipment,
fixtures, goods or other property of Lessee not removed within ten (10) days
after any quitting, vacating or abandonment of the Leased Premises, or upon
Lessee's eviction therefrom, shall be considered abandoned, and Lessor shall
have the right, without notice to Lessee, to sell or otherwise dispose of same
without having to account to Lessee for any part of the proceeds of such sale.
SECTION 14
----------
NOTICES
-------
All notices, demands, and requests required or permitted to be given hereunder
shall be in writing and sent certified mail, return receipt requested, and if to
Lessor, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn: Edward
G. Atsinger III, and if Lessee, at 4880 Santa Rosa Road, Suite 300, Camarillo,
CA 93012, Attn: Accounting. Either party hereto may change the place for
notice to it by sending like written notice to the other party hereto.
SECTION 15
----------
BINDING NATURE
--------------
The provisions of this Agreement shall apply to, bind and inure to the benefit
of Lessor and Lessee, their respective successors, legal representatives or
assigns. The terms of this Agreement and any disputes arising therefrom, shall
be governed by the laws of the State of Texas.
<PAGE>
SECTION 16
----------
ENTIRE AGREEMENT
----------------
This Agreement contains the entire understanding and agreement between the
parties. No representative, agent or employee of Lessor has been authorized to
make any representations or promises with reference to the within agreement or
to vary, alter or modify the terms hereof. No additions, changes or
modifications shall be binding unless reduced to writing and signed by the
parties.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.
LESSOR: LESSEE
COMMON GROUND BROADCASTING, INC.
/s/ Edward G. Atsinger, III /s/ Eric H. Halvorson
- ----------------------------------- --------------------------------
EDWARD G. ATSINGER, III ERIC H. HALVORSON
Vice-President
/s/ Stuart W. Epperson
- -----------------------------------
STUART W. EPPERSON
<PAGE>
EXHIBIT 10.07.02
AMENDMENT TO
TOWER PURCHASE AGREEMENT
This Amendment to the Tower Purchase Agreement ("Amendment") is made this 10th
day of November, 1997 by and between SALEM COMMUNICATIONS CORPORATION
("Seller"), and SONSINGER BROADCASTING COMPANY OF HOUSTON, LP. ("Buyer").
WHEREAS Buyer and Seller entered into that certain Tower Purchase Agreement
dated the 22nd day of August, 1997 (the "Agreement");
WHEREAS Seller and Buyer desire to modify the terms of the Agreement as set
forth herein;
WHEREAS each capitalized term not otherwise defined herein shall have the
meaning ascribed to said term by the Agreement;
NOW THEREFORE, in consideration of the mutual covenants contained herein, Seller
and Buyer hereby agree as follows:
1. Section 2.4 of the Agreement shall be deleted in its entirety and replaced
-----------
with the following language: "PAYMENT OF THE PURCHASE PRICE. In lieu of a cash
-----------------------------
payment at closing, Buyer shall execute a promissory note ("Note") for the
Purchase Price, substantially in the form of Exhibit "A" hereto."
-----------
2. Section 5.1 of the Agreement shall be deleted in its entirety and replaced
-----------
with the following language: "TIME. The closing (the "Closing") shall take
----
place on or before December 25, 1997."
3. Section 5.2 and Section 5.3 of the Agreement shall be modified to provide
----------- -----------
that each party shall execute and deliver to the other the Note, substantially
in the form of Exhibit "A" hereto.
-----------
4. Except as expressly provided herein, the terms of the Agreement shall
remain in full force and effect and shall remain unmodified.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed
as of the date first written above.
SONSINGER BROADCASTING COMPANY OF SALEM COMMUNICATIONS CORPORATION
HOUSTON, LP.
By: Sonsinger Management, Inc.,
Its General Partner
By: /s/ Eric H. Halvorson By: /s/ Eric H. Halvorson
----------------------------- ------------------------------
Eric H. Halvorson Eric H. Halvorson
Vice President Executive Vice President
<PAGE>
EXHIBIT "A"
PRINCIPAL AMOUNT: REVOLVING DATE: -
INTEREST RATE: AFR
PROMISSORY NOTE
FOR VALUE RECEIVED, the undersigned, SONSINGER BROADCASTING COMPANY OF HOUSTON,
L.P. ("Maker") and SALEM COMMUNICATIONS CORPORATION ("Payee") agree as follows:
1. Payee agrees to lend to Maker, from time to time, at the discretion of
Payee, such amounts as requested by Maker. Maker promises to pay to Payee at
4880 Santa Rosa Road, Suite 300, Camarillo, California, or at such other place
as Payee shall direct, the amounts borrowed by Maker pursuant to this paragraph.
Interest shall accrue on the unpaid principal amount due hereunder at the
applicable federal rate for short term loans as published monthly by the United
States Internal Revenue Service (the "Interest Rate"). On or before
_______________, Maker shall make a payment to Payee of the unpaid principal
amount of this Note, together with all interest accrued thereon and owing Payee
hereunder.
2. The unpaid principal amount of this Note, together with all interest
accrued thereon shall, at the option of Payee, become immediately due and
payable in case any one of the following events occur (an "Event of Default"):
2.1. Maker shall commence any case, proceeding or other action under any
existing or future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization, composition, arrangement, readjustment
of debt, dissolution, liquidation of relief or debtors.
2.2. Maker shall commence any case, proceeding or other action seeking
appointment of a receiver, trustee, custodian or other similar official for it
or for all or any substantial part of its assets; or (ii) Maker shall make a
general assignment for the benefit of its creditors; or (iii) there shall be
commenced against Maker any case, proceeding or other action of a nature
referred to in clause (i), above, which (A) results in an order for relief or
any such adjudication or appointment or (B) remains undismissed, undischarged or
unhanded for a period of sixty (60) days; or (iv) there shall be commenced
against Maker any case, proceeding or other action seeking issuance of a warrant
of attachment, execution or similar process against all or any substantial part
of its assets which results in the entry of an order or any such relief which
shall not have been vacated, discharged, or stayed or bonded pending appeal
within sixty (60) days from the entry thereof; or (b) Maker shall take any
action in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clause (i), (ii), (iii) or (iv)
above; or (vi) Maker shall be unable to, or shall admit in writing its inability
to, pay its debts as they become due; or (vii) Maker shall conceal, remove, or
permit to be concealed or removed, any part of its property, with intent to
hinder, delay or defraud its creditors or any of them, or make or suffer a
transfer of any of its property which may be fraudulent under any bankruptcy,
fraudulent conveyance or similar
<PAGE>
law, or shall make any transfer of its property to or for the benefit of a
creditor at a time when other creditors similarly situated have not been paid,
or shall suffer or permit, while insolvent, any creditor to obtain a lien upon
any of its property through legal proceedings which is not vacated within sixty
(60) days from the date thereof.
3. No delay or omission on the part of Payee in exercising any right or
option herein given to it shall impair such right or option or be considered as
a waiver thereof or acquiescence in any default hereunder.
4. Maker waives presentment, demand, notice of dishonor and protest and
consents to any and all extensions and renewals hereof without notice.
5. This instrument shall be construed in accordance with the laws of the
State of California.
6. This instrument may be prepaid in whole or in part at any time without
penalty.
7. Maker, its directors, officers, employees, members, and agents will have
no personal liability for any deficiency under this instrument.
8. In the event a suit or action is filed to enforce this Note or with
respect to this Note, the prevailing party shall be reimbursed by the other
party for all costs and expenses incurred in connection with the suit or action,
including without limitation reasonable attorneys' fees at the trial level and
on appeal.
IN WITNESS WHEREOF, the parties have executed this instrument as of this _____
day of ________________, 1997.
PAYEE: MAKER:
SALEM COMMUNICATIONS CORPORATION SONSINGER BROADCASTING COMPANY OF
HOUSTON, L.P.
BY SONSINGER MANAGEMENT, INC.
ITS GENERAL PARTNER
- --------------------------------- ---------------------------------
Eric H. Halvorson Eric H. Halvorson
Vice President Vice President
<PAGE>
EXHIBIT 10.07.03
Principal Amount: Revolving Date: November 11, 1997
Interest Rate: AFR
PROMISSORY NOTE
FOR VALUE RECEIVED, the undersigned, SONSINGER BROADCASTING COMPANY OF
HOUSTON, L.P. ("Maker") and SALEM COMMUNICATIONS CORPORATION ("Payee") agree as
follows:
1. Payee agrees to lend to Maker, from time to time, at the discretion of
Payee, such amounts as requested by Maker. Maker promises to pay to Payee at
4880 Santa Rosa Road, Suite 300, Camarillo, California, or at such other place
as Payee shall direct, the amounts borrowed by Maker pursuant to this paragraph.
Interest shall accrue on the unpaid principal amount due hereunder at the
applicable federal rate for short term loans as published monthly by the United
States Internal Revenue Service (the "Interest Rate"). On or before NOVEMBER 10,
1998, Maker shall make a payment to Payee of the unpaid principal amount of this
Note, together with all interest accrued thereon and owing Payee hereunder.
2. The unpaid principal amount of this Note, together with all interest
accrued thereon shall, at the option of Payee, become immediately due and
payable in case any one of the following events occur (an "Event of Default"):
2.1. Maker shall commence any case, proceeding or other action under any
existing or future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization, composition, arrangement, readjustment
of debt, dissolution, liquidation of relief or debtors.
2.2. Maker shall commence any case, proceeding or other action seeking
appointment of a receiver, trustee, custodian or other similar official for it
or for all or any substantial part of its assets; or (ii) Maker shall make a
general assignment for the benefit of its creditors; or (iii) there shall be
commenced against Maker any case, proceeding or other action of a nature
referred to in clause (i), above, which (A) results in an order for relief or
any such adjudication or appointment or (B) remains undismissed, undischarged or
unhanded for a period of sixty (60) days; or (iv) there shall be commenced
against Maker any case, proceeding or other action seeking issuance of a warrant
of attachment, execution or similar process against all or any substantial part
of its assets which results in the entry of an order or any such relief which
shall not have been vacated, discharged, or stayed or bonded pending appeal
within sixty (60) days from the entry thereof; or (b) Maker shall take any
action in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clause (i), (ii), (iii) or (iv)
above; or (vi) Maker shall be unable to, or shall admit in writing its inability
to, pay its debts as they become due; or (vii) Maker shall conceal, remove, or
permit to be concealed or removed, any part of its property, with intent to
hinder, delay or defraud its creditors or any of them, or make or suffer a
transfer of any of its property which may be fraudulent under any bankruptcy,
fraudulent conveyance or similar law, or shall make any transfer of its property
to or for the benefit of a creditor at a time when other creditors similarly
situated have not been paid, or shall suffer or
<PAGE>
permit, while insolvent, any creditor to obtain a lien upon any of its property
through legal proceedings which is not vacated within sixty (60) days from the
date thereof.
3. No delay or omission on the part of Payee in exercising any right or
option herein given to it shall impair such right or option or be considered as
a waiver thereof or acquiescence in any default hereunder.
4. Maker waives presentment, demand, notice of dishonor and protest and
consents to any and all extensions and renewals hereof without notice.
5. This instrument shall be construed in accordance with the laws of the
State of California.
6. This instrument may be prepaid in whole or in part at any time without
penalty.
7. Maker, its directors, officers, employees, members, and agents will have
no personal liability for any deficiency under this instrument.
8. In the event a suit or action is filed to enforce this Note or with
respect to this Note, the prevailing party shall be reimbursed by the other
party for all costs and expenses incurred in connection with the suit or action,
including without limitation reasonable attorneys' fees at the trial level and
on appeal.
IN WITNESS WHEREOF, the parties have executed this instrument as of this 11th
day of November, 1997.
PAYEE: MAKER:
SALEM COMMUNICATIONS CORPORATION SONSINGER BROADCASTING COMPANY OF
HOUSTON, L.P.
BY SONSINGER MANAGEMENT, INC.
ITS GENERAL PARTNER
/s/ Eric H. Halvorson /s/ Eric H. Halvorson
- --------------------------------- ---------------------------------
Eric H. Halvorson Eric H. Halvorson
Vice President Vice President
<PAGE>
EXHIBIT 10.08.01
LOCAL PROGRAMMING AND MARKETING AGREEMENT
-----------------------------------------
This Local Programming and Marketing Agreement (the "Agreement"), dated as
of June 13, 1997, is entered into by and between SONSINGER, INC. (the
"Licensee"), the licensee of radio station KKOL(AM), Seattle, Washington (the
"Station"), pursuant to authorizations issued by the Federal Communications
Commission (the "FCC"), and INSPIRATION MEDIA, INC. (the "Programmer").
WHEREAS, the Licensee has available broadcasting time and is engaged in the
business of radio broadcasting on the Station; and
WHEREAS, the Programmer desires to avail itself of Station's broadcast time
for the presentation of a programming service, including the sale of program and
advertising time, in accordance with procedures and policies approved by the
FCC;
NOW, THEREFORE, for and in consideration of the mutual covenants herein
contained, the parties hereto have agreed and do agree as follows:
1. PURCHASE OF AIR TIME AND BROADCAST OF THE PROGRAMMING. The Licensee
-----------------------------------------------------
agrees to make the broadcasting transmission facilities of the Station available
to the Programmer and to broadcast on the Station, or cause to be broadcast, the
Programmer's programs for up to 24 hours a day, seven days a week (the
"Programming"). The studio facilities and the transmitting equipment of the
Licensee relating to the Station, including any equipment owned by the Licensee
not currently in service, shall be made available to the Programmer for its use
during the term of this Agreement.
2. CONSIDERATION. The terms and conditions of payment to the Licensee for
-------------
the broadcasting of the Programming during the term of this Agreement shall be
as set forth in Schedule 2.
----------
3. TERM. This Agreement shall commence at 12:00:01 a.m. on June 13, 1997
----
("Commencement Date"). Unless earlier terminated as provided by this Agreement,
the term of this Agreement shall terminate on the tenth (10th) anniversary of
the Commencement Date; provided that either party hereto may terminate this
Agreement on thirty (30) days written notice. In the event that either party
receives formal or informal notice from the FCC that this Agreement or any of
its terms is contrary to the public interest or violates any FCC statute,
regulation, rule or policy, either party shall have the right to terminate this
Agreement immediately by written notice to the other party.
4. STATION FACILITIES.
------------------
4.1 OPERATION OF STATION. Throughout the term of this Agreement, the
--------------------
Licensee shall make the Station available to the Programmer for operation with
the maximum authorized facilities, as defined below, for up to 24 hours a day,
seven days a week, except for downtime occasioned by routine maintenance which
will be performed between the hours of 12
1
<PAGE>
midnight and 6:00 a.m. Any maintenance work affecting the operation of the
Station at full power shall be scheduled upon at least 48 hours prior notice
with the agreement of the Programmer, such agreement not to be unreasonably
withheld. For purposes of this Agreement, the term "maximum authorized
facilities" is used with reference to the Station's signal as of the date of
commencement of this Agreement.
4.2 INTERRUPTION OF NORMAL OPERATIONS. If the Station suffers loss
---------------------------------
or damage of any nature to its transmission facilities which results in the
interruption of service or the inability of the Station to operate with its
maximum authorized facilities, the Licensee shall immediately notify the
Programmer, and shall undertake such repairs as necessary to restore the full-
time operation of the Station with its maximum authorized facilities as quickly
as reasonably practicable, but in no event more than seven (7) days from the
occurrence of such loss or damage.
5. HANDLING OF MAIL. The Programmer shall provide to the Licensee the
----------------
original or a copy of any correspondence which it receives from a member of the
public relating to the Programming to enable the Licensee to comply with FCC
rules and policies, including those regarding the maintenance of the public
inspection file (which shall at all times remain the responsibility of the
Licensee).
6. PROGRAMMING AND OPERATIONS STANDARDS. All programs supplied by the
------------------------------------
Programmer shall be in good taste and shall meet in all material respects all
requirements of the Communications Act of 1934 and all applicable rules,
regulations and policies of the FCC and the policies of the Station. All
advertising spots and promotional material or announcements shall comply with
all applicable federal, state and local regulations and Station policies. If,
in the judgment of the Licensee or the Station's General Manager, any portion of
the Programming presented by the Programmer does not meet such standards, the
Licensee may suspend or cancel any such portion of the Programming.
7. RESPONSIBILITY FOR EMPLOYEES AND RELATED EXPENSES.
-------------------------------------------------
7.1 PROGRAMMER EMPLOYEES. The Programmer shall furnish or cause to
--------------------
be furnished the personnel and material for the production of the Programming to
be provided by this Agreement. The Programmer shall not pay or reimburse the
salaries or other costs associated with any employees of Station that Licensee
may be required to employ or may elect to employ on or after the date of
commencement of this Agreement.
7.2 LICENSEE EMPLOYEES. The Licensee will provide and have
------------------
responsibility for the Station personnel necessary for the broadcast
transmission of Programmer's programs and compliance with other requirements of
the Licensee as set forth by the FCC and will be responsible for the salaries,
taxes, insurance and related costs for all such Station personnel.
8. OPERATION OF THE STATION.
------------------------
8.1 VERIFICATION OF LICENSEE CONTROL AND RIGHTS OF LICENSEE.
-------------------------------------------------------
Notwithstanding anything to the contrary in this Agreement, the Licensee shall
have full authority and power over the operation of the Station during the
period of this Agreement. The Licensee
2
<PAGE>
shall retain control over the polices, programming and operations of
the Station, including, without limitation, the right to decide whether to
accept or reject any programming or advertisements which the Licensee deems
unsuitable or contrary to the public interest; the right to preempt any programs
in order to broadcast a program deemed by Licensee to be of greater national,
regional, or local interest; and the right to take any other actions necessary
for compliance with the laws of the United States, the rules, regulations, and
policies of the FCC (including the prohibition on unauthorized transfers of
control), and the rules, regulations and policies of other federal, state or
local governmental authorities, including the Federal Trade Commission and the
Department of Justice. The Licensee agrees that it shall carry its own public
service programming at such times as the parties may agree based on the
reasonable programming needs of the Programmer. With respect to the operation
of the Station, the Licensee shall at all times be solely responsible for
meeting all of the FCC's requirements with respect to the broadcast and nature
of any public service programming, for maintaining the political and public
inspection files and the Station log, and for the preparation of all
programs/issues lists. The Licensee expressly acknowledges that its duty to
maintain the Station's public inspection file is non-delegable and that Licensee
retains sole responsibility for maintenance of such file. The Licensee verifies
that it shall maintain the ultimate control over the Station's facilities,
including specifically control over the finances with respect to its operation
of the Station, over the personnel operating the Station, and over the
programming to be broadcast by the Station.
8.2. VERIFICATION BY PROGRAMMER AND OBLIGATIONS OF PROGRAMMER. The
--------------------------------------------------------
Programmer will, during the term of this Agreement, provide local news and
public affairs programming relevant to the Station's community to assist
Licensee in satisfying its obligations to respond to the needs of its community.
Programmer will also forward to Licensee within twenty-four (24) hours of
receipt by Programmer, any letter from a member of the general public addressing
Station programming or documentation which comes into its custody which is
required to be included in the Station's public file or which is reasonably
requested by Licensee. The Programmer shall furnish within the Programming on
behalf of the Licensee all Station Identification Announcements required by the
FCC rules, and shall, upon request by the Licensee, provide monthly
documentation with respect to such of the Programmer's programs which are
responsive to the public needs and interests of the area served by the Station
in order to assist the Licensee in the preparation of any required programming
reports, and will provide upon request other information to enable the Licensee
to prepare other records, reports and logs required by the FCC or other local,
state or federal governmental agencies.
9. PAYOLA. The Programmer will provide to the Station in advance of
------
broadcast any information known to the Programmer regarding any money or other
consideration which has been paid or accepted, or has been promised to be paid
or to be accepted, for the inclusion of any matter as a part of any programming
or commercial material to be supplied to the Licensee by the Programmer for
broadcast on the Station, unless the party making or accepting such payment is
identified in the program as having paid for or furnished such consideration in
accordance with FCC requirements. Should the Station determine that an
announcement is required by Section 317 of the Communications Act of 1934 and
related FCC rules, the Programmer will insert that announcement in the
Programming. The Programmer will obtain from its employees responsible for the
Programming appropriate anti-payola/plugola affidavits. Commercial matter with
obvious sponsorship identification will not require disclosure beyond the
sponsorship identification
3
<PAGE>
contained in the commercial copy. The Programmer will at all times comply, and
seek to have its employees comply, in all material respects with the
requirements of Sections 317 and 507 of the Communications Act of 1934, as
amended, and the related rules and regulations of the FCC.
10. COMPLIANCE WITH LAW. The Programmer will comply in all material
-------------------
respects with all laws and regulations applicable to the broadcast of
programming by the Station.
11. INDEMNIFICATION: RIGHTS OF THE LICENSEE. The Programmer will
---------------------------------------
indemnify and hold the Licensee, its officers, directors, stockholders, partners
and employees harmless from and against all liability for libel, slander,
illegal competition or trade practice, violation of rights of privacy, and
infringement of copyrights or other proprietary rights and violations of the
Communications Act of 1934 or FCC rules resulting from the broadcast of
Programming furnished by the Programmer. Such indemnification shall apply to
any and all claims, damages, liability, forfeitures, costs and expenses,
including reasonable attorneys' fees, arising from the broadcasting of any
programs supplied by the Programmer and shall survive the termination of this
Agreement.
12. EVENTS OF DEFAULT: CURE PERIODS AND REMEDIES.
--------- ----------------------------------
12.1 EVENTS OF DEFAULT. The following shall constitute Events of
-----------------
Default under this Agreement:
12.1.1. NON-PAYMENT. If Programmer shall fail to pay, within five
-----------
business days of the date when due, the fees payable in accordance with Schedule
--------
2, hereof.
- -
12.1.2 DEFAULT IN COVENANTS OR ADVERSE LEGAL ACTION. The default by
--------------------------------------------
either party in the performance of any material covenant, condition or
undertaking contained in this Agreement and such default is not cured within
thirty (30) days after receipt of notice of default.
12.1.3 BREACH OF REPRESENTATION. If any material representation or
------------------------
warranty made by either party to this Agreement, or in any certificate or
document furnished by either party to the other pursuant to the provisions of
this Agreement, shall prove to have been false or misleading in any material
respect as of the time made or furnished, and such misrepresentation or breach
of warranty is not cured within thirty (30) days after receipt of notice of
misrepresentation or breach.
12.2. TERMINATION UPON DEFAULT. Upon the occurrence of an Event of
------------------------
Default, the non-defaulting party may terminate this Agreement, provided that it
is not also in material default under this Agreement.
12.3. LIABILITIES UPON TERMINATION. The Programmer shall be
----------------------------
responsible for all of its liabilities, debts and obligations accrued from the
purchase of broadcast time and transmission facilities of the Station,
including, without limitation, indemnification pursuant to
Section 16 hereof; accounts payable, barter agreements and unaired
- ----------
advertisements, but not for the Licensee's federal, state, and local tax
liabilities associated with Programmer's payments to
4
<PAGE>
Licensee as provided for herein, or for any other obligations or liabilities of
the Licensee or the Station unless specifically assumed by the Programmer under
this Agreement. Upon termination, the Programmer shall return to the Licensee
any equipment or property of the Station used by the Programmer, its employees
or agents, in substantially the same condition as such equipment existed on the
date of this Agreement, ordinary wear and tear excepted, provided that the
Programmer shall have no liability to the Licensee for any property of the
Licensee which through ordinary use became obsolete or unusable, and any
equipment purchased by the Programmer, whether or not in replacement of any
obsolete or unusable equipment of the Licensee, shall remain the property of the
Programmer.
13. TERMINATION UPON ORDER OF JUDICIAL OR GOVERNMENTAL AUTHORITY. If any
------------------------------------------------------------
court of competent jurisdiction or any federal, state or local governmental
authority designates a hearing with respect to the continuation or renewal of
any license or authorization held by the Licensee for the operation of the
Station, advises any party to this Agreement of its intention to investigate or
to issue a challenge to or a complaint concerning the activities permitted by
this Agreement, or orders the termination of this Agreement and/or the
curtailment in any manner material to the relationship between the parties to
this Agreement of the provision of programming by the Programmer, the Programmer
shall have the option to seek administrative or judicial appeal of or relief
from such order(s) (in which event the Licensee shall cooperate with the
Programmer provided that the Programmer shall be responsible for legal fees
incurred in such proceedings) or the Programmer shall notify the Licensee that
the Agreement will be terminated in accordance with such order(s). If the FCC
designates the renewal application of the Station for a hearing as a consequence
of this Agreement or for any other reason, the Licensee shall be responsible for
its expenses incurred as a consequence of the FCC proceeding; provided, however,
that the Programmer shall cooperate and comply with any reasonable request of
the Licensee to assemble and provide to the FCC information relating to the
Programmer's performance under this Agreement. Upon termination following such
governmental order(s), the Programmer shall pay to the Licensee any fees due but
unpaid as of the date of termination as may be permitted by such order(s), and
the Licensee shall reasonably cooperate with the Programmer to the extent
permitted to enable the Programmer to fulfill advertising or other programming
contracts then outstanding. Thereafter, neither party shall have any liability
to the other.
14. MODIFICATION AND WAIVER. No modification or waiver of any provision
-----------------------
of this Agreement shall be effective unless made in writing and signed by the
party adversely affected, and any such waiver and consent shall be effective
only in the specific.
15. NO WAIVER: REMEDIES CUMULATIVE. No failure or delay on the part of
------------------------------
the Licensee or the Programmer in exercising any right or power under this
Agreement shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right or power, or any abandonment or discontinuance of
steps to enforce such a right or power, preclude any other or further exercise
thereof or the exercise of any other right or power. The rights and remedies of
the parties to this Agreement are cumulative and are not exclusive of any right
or remedies which either may otherwise have.
5
<PAGE>
16. CONSTRUCTION. This Agreement shall be construed in accordance with
------------
the laws of the Station is located. The obligations of the parties to this
Agreement are subject to all federal, state or local laws or regulations,
including those of the FCC, now or hereafter in force.
17. HEADINGS. The headings contained in this Agreement are included for
--------
convenience only and shall not in any way alter the meaning of any provision.
18. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
----------------------
inure to the benefit of the parties and their respective successors and assigns.
19. ENTIRE AGREEMENT. This Agreement embodies the entire agreement
----------------
between the parties and there are no other agreements, representations,
warranties, or understandings, oral or written, between them with respect to the
subject matter hereof.
20. SEVERABILITY. The event that any of the provisions contained in this
------------
Agreement is held to be invalid, illegal or unenforceable shall not affect any
other provision hereof; and this Agreement shall be construed as if such
invalid, illegal or unenforceable provisions had not been contained herein.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
SONSINGER, INC. INSPIRATION MEDIA, INC.
By: /s/ Eric H. Halvorson By: /s/ Eric H. Halvorson
-------------------------- -------------------------
Eric H. Halvorson Eric H. Halvorson
Vice President Vice President
6
<PAGE>
SCHEDULE 2
CALCULATION OF LMA FEE
BASE FEE
- --------
1. CALCULATION. The Licensee shall be paid, in advance on the first day
-----------
of each month, a base monthly fee equal to the sum of:
(a) ______________, and
(b) The operational costs of the Station paid by Licensee.
Operational costs under this Subsection (b) shall include without limitation any
-------------
rental expenses associated with studio and transmitter locations, music license
fees, maintenance and utilities and any other expenses associated with operation
of the Station which, by virtue of existing contracts with Licensee or
otherwise, must continue to be paid directly by Licensee during the term of this
Agreement. Operational costs shall not include professional fees or any
principal or interest payments on notes payable. All other operational costs of
the Station shall be paid directly by the Programmer.
<PAGE>
EXHIBIT 10.08.02
LOCAL PROGRAMMING AND MARKETING AGREEMENT
-----------------------------------------
AND
---
PUT/CALL AGREEMENT
------------------
This Local Programming and Marketing Agreement and Put/Call Agreement (the
"Agreement"), dated as of October 23, 1997, is entered into by and between
----------------
CHEROKEE BROADCASTING CO., INC. ("Licensee"), the owner of certain assets
relating to radio station WGST(FM) 105.7MHz, Canton, Georgia (the "Station"),
and SALEM MEDIA OF GEORGIA, INC. (the "Programmer").
WHEREAS, in accordance with procedures and policies approved by the Federal
Communications Commission ("FCC"), the Programmer desires to avail itself of
Station's broadcast time for the presentation of a programming service,
including the sale of program and advertising time; and
WHEREAS, in accordance with procedures and policies approved by the FCC,
Licensee desires to provide to Programmer the Station's broadcast time for the
presentation of a programming service, including the sale of program and
advertising time; and
WHEREAS, Programmer is not willing to commit to the presentation of a
programming service without securing an option to purchase the Station; and
WHEREAS, pursuant to a Time Brokerage Agreement ("TBA") dated as of
September 30, 1993, by and between Licensee, Jacor Broadcasting of Atlanta, Inc.
("JBA") and Jacor Communications, Inc., Licensee granted JBA a right of first
refusal to purchase the Station pursuant to the terms of any offer Licensee is
willing to accept, provided JBA exercises said right within forty-five (45) days
of its receipt of said offer;
NOW, THEREFORE, for and in consideration of the mutual covenants herein
contained, the parties hereto have agreed and do agree as follows:
1. PURCHASE OF AIR TIME AND BROADCAST OF THE PROGRAMMING. Subject to the
-----------------------------------------------------
provisions of Section 4 hereof, Licensee agrees to make the broadcasting
---------
transmission facilities of the Station available to the Programmer and to
broadcast on the Station, or cause to be broadcast, the Programmer's programs
for up to 24 hours a day, seven days a week (the "Programming"), except for the
broadcast of Licensee's public service programming as provided in Section 10.1
------------
of this Agreement ("Licensee Programming"). The facilities and the transmitting
equipment of Licensee relating to the Station, including any equipment owned by
Licensee not currently in service, shall be made available to the Programmer for
its use during the term of this Agreement; provided, however, that Licensee
shall not be required to provide any studio equipment or make any improvements
to the studios of the Station.
2. CONSIDERATION. The terms and conditions of payment ("Consideration")
-------------
to Licensee for the broadcasting of the Programming during the term of this
Agreement shall be as set forth in Schedule 2.
----------
<PAGE>
3. TERM.
----
3.1 COMMENCEMENT/TERMINATION DATE. This Agreement shall commence at
-----------------------------
12:01 a.m. Eastern time on the earlier of (i) October 1, 1998, or (ii) such
earlier date that the Station becomes available for programming by Programmer;
provided that Programmer shall have been given not less than one hundred twenty
(120) days prior written notice of such earlier date that the Station shall
become available (the "Commencement Date"). Unless earlier terminated as
provided by this Agreement, the term of this Agreement shall end upon the last
to occur of (i) 11:59 p.m. Eastern time on September 30, 2003 or (ii) if
Programmer shall have acquired the Station pursuant to Section 21 hereof, the
----------
Closing Date, as defined in the Asset Purchase Agreement described in Section 21
----------
hereof.
3.2 TERMINATION BY FCC. In the event that either party receives
------------------
formal or informal notice from the FCC that this Agreement or any of its terms
are contrary to the public interest or violative of any FCC statute, regulation,
rule or policy, either party shall have the right to terminate this Agreement
(except to the extent the provisions of Section 21 shall survive as provided
----------
therein) immediately by written notice to the other party; provided, however,
-------- -------
that upon such termination Licensee shall repay to Programmer a prorated share
of the prepaid Consideration.
4. THE PROGRAMMING. The Programmer shall furnish programming to Licensee
---------------
for up to 24 hours a day, seven days a week, except for the broadcast of
Licensee's Programming. The nature of the program service to be provided by the
Programmer will be determined by Programmer subject to applicable FCC rules and
regulations and subject further to the requirement that Programming will serve
the public interest.
5. STATION FACILITIES.
------------------
5.1 OPERATION OF STATION. Throughout the term of this Agreement,
--------------------
Licensee shall make the Station available to the Programmer as provided in this
Agreement, except for Licensee's Programming and downtime occasioned by routine
maintenance which will be performed between the hours of 12 midnight and 6:00
a.m. Except for maintenance work and other improvements to the Station or the
Station's equipment performed by or at the direction of Programmer, any
maintenance work affecting the operation of the Station at full power, except
such emergency maintenance as is required to maintain compliance with the
Station's license or FCC regulations, rules or policies, shall be scheduled upon
at least 48 hours prior notice with the agreement of the Programmer.
5.2 INTERRUPTION OF NORMAL OPERATIONS. Except for maintenance work
---------------------------------
and other improvements to the Station or the Station's equipment performed by or
at the direction of Programmer, if the Station suffers loss or damage of any
nature to its transmission facilities which results in the interruption of
service or the inability of the Station to operate with its maximum authorized
facilities, Programmer shall immediately notify Licensee, and Licensee shall
undertake such repairs as necessary to restore the fulltime operation of the
Station with its maximum authorized (i.e. as set forth on it license) facilities
as quickly as reasonably practicable. Except as may be the direct result of any
act or action of Programmer, if the Station is incapable of operating with its
maximum authorized facilities, Licensee shall pay Programmer a prorated share of
the Consideration proportionate to the amount of time the Station was so
impaired as follows: (a) if
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the effective radiated power ("ERP") of the Station is 50% or less of the
maximum ERP as set forth on the Station's license, the Consideration will be
abated 100% for each day, or any portion thereof, the Station so operates; and,
(b) if the ERP of the Station is 90% to 51% of the maximum ERP as set forth on
the Station's license, the Consideration will be abated in proportion to the
percentage loss in ERP, for each day, or any portion thereof, the Station so
operates; and, (c) if the ERP of the Station is 91% or more of the maximum ERP
as set forth on the Station's license, the Consideration will not be abated. If
the required repairs necessary to return the Station to operation with its full
authorized maximum facilities are not made within seven (7) days, the Programmer
may terminate this Agreement upon 10 days notice to Licensee, any other
provision of this Agreement notwithstanding; provided, however, in the event (x)
the required repairs cannot reasonably be completed with seven (7) days, (y)
Licensee has commenced the required repairs within seven (7) days, and (z)
Licensee is diligently proceeding to effectuate said required repairs,
Programmer may not terminate this Agreement pursuant to this Section 5.
---------
6. HANDLING OF MAIL. The Programmer shall provide to Licensee the
----------------
original or a copy of any correspondence which it receives from a member of the
public relating to the Programming to enable Licensee to comply with FCC rules
and policies, including those regarding the maintenance of the public inspection
file (which shall at all times remain the responsibility of Licensee).
7. PROGRAMMING AND OPERATIONS STANDARDS. All programs supplied by the
------------------------------------
Programmer shall be in good taste and shall meet in all material respects all
requirements of the Communications Act of 1934 and all applicable rules,
regulations and policies of the FCC and the policies of the Station described in
Schedule 7. All advertising spots and promotional material or announcements
- ----------
shall comply with all applicable federal, state and local regulations and
Station policies. If, in the reasonable judgment of Licensee or the Station's
General Manager, any portion of the Programming presented by the Programmer does
not meet such standards, Licensee may suspend or cancel any such portion of the
Programming.
8. RESPONSIBILITY FOR EMPLOYEES AND RELATED EXPENSES.
-------------------------------------------------
8.1 PROGRAMMER EMPLOYEES. The Programmer shall furnish (or cause to
--------------------
be furnished) the personnel and material for the production of the Programming
to be provided by this Agreement. The Programmer shall employ and be responsible
for the salaries, taxes, insurance and related costs for all personnel used in
the production of Programming (including sales people, traffic personnel and
programming staff). The Programmer shall not pay or reimburse the salaries or
other costs associated with any employees of Station that Licensee may be
required to employ or may elect to employ on or after the date of commencement
of this Agreement.
8.2 LICENSEE EMPLOYEES. Licensee will provide and have responsibility
------------------
for the Station personnel necessary for the broadcast transmission of
Programmer's programs and compliance with other requirements of Licensee as set
forth by the FCC (which personnel shall be the Station General Manager, Chief
Operator and Receptionist), and will be responsible for the salaries, taxes,
insurance and related costs for all such Station personnel. The parties
acknowledge and agree that the duties of the Station General Manager and the
Chief Operator may be performed by the same person.
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8.3 EMPLOYEE OVERSIGHT. Whenever on the Station's premises, all
------------------
personnel shall be subject to the supervision and the direction of the Station's
General Manager and/or the Station's Chief Operator.
9. ADVERTISING AND PROGRAMMING REVENUES. During the Programming it
------------------------------------
delivers to the Station, the Programmer shall have full authority to sell for
its own account commercial spot advertising and block programming time on the
Station and to retain all revenues from the sale of such advertising and
programming. The parties agree that the Programmer shall have complete
discretion to deal as it deems appropriate with all advertising and programming
accounts relating to advertising and programming sold by it; provided, however,
-------- -------
the Programmer shall deal with political candidate and supporter advertising as
required by law. Programmer shall prepare and supply to Licensee a Political
Advertising Disclosure Statement setting forth the manner in which Programmer
sells program and spot time and informing political advertisers of their rights
and obligations. The Political Advertising Disclosure Statement shall be subject
to the approval of Licensee, which approval shall not unreasonably be withheld.
10. OPERATION OF THE STATION.
------------------------
10.1 VERIFICATION OF LICENSEE'S CONTROL AND RIGHTS OF LICENSEE.
---------------------------------------------------------
Notwithstanding anything to the contrary in this Agreement, Licensee shall have
full authority and power over the operation of the Station during the period of
this Agreement. Licensee shall provide and pay for the General Manager, Chief
Operator and Receptionist of the Station, who shall report and be accountable
solely to Licensee, shall be responsible for the direction of the day-to-day
operation of the Station, and shall maintain the Station's studio and
transmission equipment and facilities, including the tower, antenna, transmitter
and transmission line, and Station's studio transmitter link. Licensee shall
retain control over the policies, programming and operations of the Station,
including, without limitation, the right to decide whether to accept or reject
any programming or advertisements which Licensee deems unsuitable or contrary to
the public interest; the right to preempt any programs in order to broadcast a
program deemed by Licensee to be of greater national, regional, or local
interest; and the right to take any other actions necessary for compliance with
the laws of the United States, the State of Georgia, the rules, regulations, and
policies of the FCC (including the prohibition on unauthorized transfers of
control), and the rules, regulations and policies of other federal governmental
authorities, including the Federal Trade Commission and the Department of
Justice. Licensee reserves the right to refuse to broadcast any program
containing matter which is, or in the reasonable opinion of Licensee may be,
violative of any right of any third party or which may constitute a "personal
attack" (as that term is defined by the FCC). Licensee agrees that it shall
carry its own public service programming at such times as the parties may agree
based on the reasonable programming needs of the Programmer. With respect to the
operation of the Station, Licensee shall at all times be solely responsible for
meeting all of the FCC's requirements with respect to the broadcast and nature
of any public service programming, for maintaining the political and public
inspection files and the Station log, and for the preparation of all
programs/issues lists. Licensee expressly acknowledges that its duty to maintain
the Station's public inspection file is non-delegable and that Licensee retains
sole responsibility for maintenance of such file. Licensee verifies that it
shall maintain the ultimate control over the Station's facilities, including
control over the finances with respect to its operation of the Station, over the
personnel operating the Station, and over the programming to be broadcast by the
Station.
4
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10.2. VERIFICATION BY PROGRAMMER AND OBLIGATIONS OF PROGRAMMER. The
--------------------------------------------------------
Programmer will, during the term of this Agreement, provide local news and
public affairs programming relevant to the Station's community to assist
Licensee in satisfying its obligations to respond to the needs of its community.
Programmer will also forward to Licensee within twenty-four (24) hours of
receipt by Programmer, any letter from a member of the general public addressing
Station programming or documentation which comes into its custody which is
required to be included in the Station's public file or which is reasonably
requested by Licensee. The Programmer shall furnish within the Programming on
behalf of Licensee all station identification announcements required by the FCC
rules, and shall, upon request by Licensee, provide monthly documentation with
respect to such of the Programmer's programs which are responsive to the public
needs and interests of the area served by the Station in order to assist
Licensee in the preparation of any required programming reports, and will
provide upon request other information to enable Licensee to prepare other
records, reports and logs required by the FCC or other local, state or federal
governmental agencies. Programmer shall cause the Station to transmit any
required tests of the Emergency Alert System at such times as are required by
FCC rule.
11. STATION CALL LETTERS.
--------------------
(a) The Programmer shall submit to Licensee any promotional material
which will identify the Station by call letters or frequency for approval by
Licensee at least two (2) days prior to use of such promotional material by the
Programmer. Licensee shall have the right to approve or reject such promotional
material, such approval to not be unreasonably withheld. All documentary
materials used by the Programmer containing the call letters of the Station,
including stationery, bills, rate cards, etc., shall contain a notation that
Licensee holds the license for operation of the Station.
(b) Programmer shall, at Programmer's sole cost and expense, have the
right, subject to Licensee's reasonable consent, to cause Licensee to change the
call letters of the Station to call letters of Programmer's choosing (the "Call
Letters"). License agrees that in the event a closing of the transactions
contemplated by the Asset Purchase Agreement described in Section 21.1 hereof
------------
does not occur, Licensee shall permit Programmer to use the Call Letters on any
radio station of Programmer's choosing. Programmer shall pay all costs and
filing fees associated with any change in Station call letters requested by
Programmer.
12. SPECIAL EVENTS. Licensee shall have the right, in its reasonable
--------------
discretion, to preempt any of the broadcasts of the Programming referred to
herein, and to use part or all of the hours of operation of the Station for the
broadcast of events of special importance. In all such cases, Licensee will use
its best efforts to give the Programmer reasonable advance notice of its
intention to preempt any regularly scheduled programming, and, in the event of
such preemption, the Programmer shall receive a payment credit for any
programming which would have been supplied by it during the time of such
broadcasts by Licensee.
13. RIGHT TO USE THE PROGRAMMING. The right to use the Programming
----------------------------
produced by the Programmer and to authorize its use in any manner and in any
media whatsoever shall be at all times be vested solely in the Programmer except
as authorized by this Agreement.
14. PAYOLA. The Programmer will provide to Licensee in advance of
------
broadcast any
5
<PAGE>
information known to the Programmer regarding any money or other consideration
which has been paid or accepted, or has been promised to be paid or to be
accepted, for the inclusion of any matter as a part of any programming or
commercial material to be supplied to Licensee by the Programmer for broadcast
on the Station, unless the party making or accepting such payment is identified
in the program as having paid for or furnished such consideration in accordance
with FCC requirements. Should the Station determine that an announcement is
required by Section 317 of the Communications Act of 1934 and related FCC rules,
the Programmer will insert that announcement in the Programming. The Programmer
will obtain from its employees responsible for the Programming appropriate anti-
payola/plugola affidavits. Commercial matters with obvious sponsorship
identification will not require disclosure beyond the sponsorship identification
contained in the commercial copy. The Programmer will at all times comply, and
seek to have its employees comply, in all material respects with the
requirements of Sections 317 and 507 of the Communications Act of 1934, as
amended, and the related rules and regulations of the FCC.
15. COMPLIANCE WITH LAW. The Programmer will comply in all material
-------------------
respects with all laws and regulations applicable to the broadcast of
programming by the Station.
16. INDEMNIFICATION. Each party hereto shall indemnify and hold the other,
---------------
its officers, directors, stockholders, partners, affiliates and employees
harmless from and against any and all claims, damages, liability, forfeitures,
costs and expenses, including reasonable attorneys' fees, arising out of: (i)
any breach or non-performance by said party of any of its representations,
warranties, covenants or agreements set forth in this Agreement; (ii) any libel,
slander, illegal competition or trade practice, violation of rights of privacy,
and infringement of copyrights or other proprietary rights; and (iii) any
violations of the Communications Act of 1934 or FCC rules resulting from said
party's operation of the Station or its programming broadcast thereon.
17. EVENTS OF DEFAULT; CURE PERIODS AND REMEDIES.
--------------------------------------------
17.1 EVENTS OF DEFAULT. The following shall constitute Events of
-----------------
Default under this Agreement:
17.1.1 NON-PAYMENT. The Programmer's failure to pay the Consideration
-----------
within ten (10) days after written notice of a failure to pay said amount when
due.
17.1.2 DEFAULT IN COVENANTS OR ADVERSE LEGAL ACTION. The default by
--------------------------------------------
either party in the performance of any material covenant, condition or
undertaking contained in this Agreement, and such default is not cured within
thirty (30) days after receipt of notice of default, or if either party shall
make a general assignment for the benefit of creditors, files or has filed
against it a petition for bankruptcy, for reorganization, or for the appointment
of a receiver, trustee or similar creditors' representative for the property or
assets of such party under any federal or state insolvency law, which, if filed
against such party, has not been dismissed or discharged within 30 days
thereafter.
17.1.3 BREACH OF REPRESENTATION. If any material representation or
------------------------
warranty made by either party in this Agreement, or in any certificate or
document furnished by either party to the other pursuant to the provisions of
this Agreement, shall prove to have been false or misleading in any material
respect as of the time made or furnished, and such misrepresentation or breach
of
6
<PAGE>
warranty is not cured within thirty (30) days after receipt of notice of
misrepresentation or breach.
17.2 TERMINATION UPON DEFAULT. Upon the occurrence of an Event of
------------------------
Default, the non-defaulting party may terminate this Agreement (except to the
extent the provisions of Section 21 shall survive as provided therein), provided
----------
that it is not also in material default under this Agreement. If the Programmer
has defaulted in the performance of its obligations, all amounts accrued or
payable to Licensee up to the date of termination which have not been paid, less
any payment credits outstanding in favor of the Programmer, shall immediately
become due and payable, and Licensee shall be under no further obligation to
make available to the Programmer any broadcast time or broadcast transmission
facilities and Licensee shall not be required to return any portion of the
Consideration, provided that Licensee agrees, for a period of time not to exceed
-------------
ninety (90) days, to cooperate reasonably with the Programmer to discharge any
remaining obligations of the Programmer in the form of air time following the
effective date of termination. Licensee shall retain all revenue for
programming, spots, announcements, or features broadcast on the Station after
the termination of this Agreement pursuant to this Section 17.2. If Licensee has
------------
defaulted in the performance of its obligations, Programmer shall be entitled to
cure the default of Licensee, at Licensee's sole cost, and shall be entitled to
deduct the cost of said cure from any Consideration which is or may become due;
provided, however, that in the event Programmer shall elect to terminate this
Agreement, all Consideration paid to Licensee which relates to periods after
termination shall immediately become due and payable by Licensee to Programmer.
17.3 LIABILITIES UPON TERMINATION. The Programmer shall be
----------------------------
responsible broadcast time and transmission facilities of the Station,
including, without limitation, indemnification pursuant to Section 16 hereof,
----------
accounts payable, barter agreements and unaired advertisements, but not for
Licensee's federal, state, and local tax liabilities associated with
Programmer's payments to Licensee as provided for herein, or for any other
obligations or liabilities of Licensee or the Station unless specifically
assumed by the Programmer under this Agreement. Upon termination, the Programmer
shall return to Licensee any equipment or property of the Station used by the
Programmer, its employees or agents, in substantially the same condition as such
equipment existed on the date of this Agreement, ordinary wear and tear
excepted, provided that the Programmer shall have no liability to Licensee for
-------------
any property of Licensee which through ordinary use became obsolete or unusable,
and any equipment purchased by the Programmer, whether or not in replacement of
any obsolete or unusable equipment of Licensee, shall remain the property of the
Programmer. Provided Programmer is not in default hereof, in the event this
Agreement shall terminate as set forth in Section 3.2, Licensee shall pay
Programmer a prorated share of the Consideration.
18. OPTION TO TERMINATE. The Programmer shall have the right, at its
-------------------
option, to terminate this Agreement (except to the extent the provisions of
Section 22 shall survive as provided therein) at any time if Licensee preempts
- ----------
or substitutes other programming for that supplied by the Programmer during ten
percent or more of the total hours of operation of the Station in any seven
consecutive days. The Programmer shall give Licensee five (5) days written
notice of such termination. Each party shall have the right, at its option, to
terminate this Agreement upon termination of the Asset Purchase Agreement
described in Section 21.
----------
7
<PAGE>
19. TERMINATION UPON ORDER OF JUDICIAL OR GOVERNMENTAL AUTHORITY.
------------------------------------------------------------
19.1 CONDUCT OF THE PARTIES. If any court of competent jurisdiction
----------------------
or any federal, state or local governmental authority designates a hearing with
respect to the continuation or renewal of any license or authorization held by
Licensee for the operation of the Station, advises any party to this Agreement
of its intention to investigate or to issue a challenge to or a complaint
concerning the activities permitted by this Agreement, or orders the termination
of this Agreement and/or the curtailment in any manner material to the
relationship between the parties to this Agreement of the provision of
programming by Programmer, each party shall have the option to seek
administrative or judicial appeal of or relief from such order(s) (in which
event the other party shall cooperate with the party seeking relief from such
order and each party shall be responsible for legal fees they have incurred in
such proceedings). Notwithstanding the foregoing:
19.1.1 OF LICENSEE. Licensee is responsible for all costs of
-----------
defending the license of the Station to the extent any court of competent
jurisdiction or any federal, state or local governmental authority designates a
hearing with respect to the continuation or renewal of any license or
authorization held by Licensee for the operation of the Station, advises any
party to this Agreement of its intention to investigate or to issue a challenge
to or a complaint concerning the activities permitted by this Agreement, or
orders the termination of this Agreement and/or the curtailment in any manner
material to the relationship between the parties to this Agreement of the
provision of programming by Programmer, as a result of the conduct or
programming of Licensee.
19.1.1 OF PROGRAMMER. Programmer is responsible for all costs of
-------------
defending the license of the Station to the extent any court of competent
jurisdiction or any federal, state or local governmental authority designates a
hearing with respect to the continuation or renewal of any license or
authorization held by Licensee for the operation of the Station, advises any
party to this Agreement of its intention to investigate or to issue a challenge
to or a complaint concerning the activities permitted by this Agreement, or
orders the termination of this Agreement and/or the curtailment in any manner
material to the relationship between the parties to this Agreement of the
provision of programming by Programmer, as a result of the conduct or
programming of Programmer.
19.2 EXISTENCE OF THE LMA. If the FCC designates the renewal
--------------------
application of the Station for a hearing as a consequence of the existence of
this Agreement per se or for any reason other than as a result of the conduct or
programming of Programmer, Licensee shall be responsible for its expenses
incurred as a consequence of the FCC proceeding; provided, however, that the
Programmer shall cooperate and comply with any reasonable request of Licensee to
assemble and provide to the FCC information relating to the Programmer's
performance under this Agreement. Upon termination following such governmental
order(s), Licensee shall reasonably cooperate with the Programmer to the extent
permitted to enable the Programmer to fulfill advertising or other programming
contracts then outstanding. Licensee shall retain all revenue for programming,
spots, announcements, or features broadcast on the Station after the termination
of this Agreement pursuant to such governmental order(s).
8
<PAGE>
20. REPRESENTATIONS AND WARRANTIES.
------------------------------
20.1 MUTUAL REPRESENTATIONS AND WARRANTIES. Each of Licensee and the
-------------------------------------
Programmer represents to the other that (a) it is, or as of the Commencement
Date will be, an entity legally qualified and in good standing in all applicable
jurisdictions and is or, as of the Commencement Date will be, qualified to do
business and in good standing with the State of Georgia (b) it is fully
qualified, empowered, and able to enter into this Agreement, (c) this Agreement
has been approved by all necessary corporate and partnership action and that
this Agreement constitutes the valid and binding obligation of such party,
enforceable in accordance with the terms of this Agreement subject only to
applicable bankruptcy, reorganization, insolvency or similar laws affecting
creditors' rights generally; and (d) the execution, delivery and performance
hereof does not constitute a breach or violation of any agreement, contract or
other obligation to which such party is subject or by which it is bound.
20.2 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LICENSEE. Licensee
-----------------------------------------------------
makes the following additional representations, warranties and covenants:
20.2.1 AUTHORIZATIONS. Licensee owns and holds all licenses and
--------------
other permits and authorizations necessary for the operation of the Station as
presently conducted (including licenses, permits and authorizations issued by
the FCC), and such licenses, permits and authorizations will be in full force
and effect for the entire term, unimpaired by any acts or omissions of Licensee,
its principals, employees or agents. There is not now pending or, to Licensee's
best knowledge, threatened, any action by the FCC or other party to revoke,
cancel, suspend, refuse to renew or modify adversely any of such licenses,
permits or authorizations, and, to Licensee's best knowledge, no event has
occurred that allows or, after notice or lapse of time or both, would allow, the
revocation or termination of such license, permits or authorizations or the
imposition of any restriction thereon of such a nature that may limit the
operation of the Station as presently conducted. Licensee has no reason to
believe that any such license, permit or authorization will not be renewed
during the term of this Agreement in its ordinary course. Licensee is not in
violation of any statute, ordinance, rule, regulation, order or decree of any
federal, state, local or foreign governmental agency, court or authority having
jurisdiction over it or over any part of its operations or assets, which default
or violation would have an adverse effect on Licensee or its assets or on its
ability to perform this Agreement.
20.2.2 FILINGS. All material reports and applications required
-------
to be filed with the FCC or any other governmental agency, department or body in
respect of the Station have been, and in the future will be, filed in a timely
manner and are and will be true and complete and accurately present the
information contained therein. All such reports and documents, to the extent
required to be kept in the public inspection files of the Station, are and will
be kept in such files. Upon request by Licensee, Programmer shall provide in a
timely manner any such information in its possession which will enable Licensee
to prepare, file or maintain the records and reports required by the FCC.
20.2.3 FACILITIES. Subject to the terms hereof, the Station's
----------
facilities will be maintained at the expense of Licensee and will comply and be
operated, in all material respects, in accordance with the maximum facilities
permitted by the FCC authorizations for the Station and
9
<PAGE>
with good engineering standards necessary to deliver a high quality technical
signal to the area served by the Station, and with all applicable laws and
regulations (including the requirements of the Communications Act of 1934 and
the rules, regulations, policies and procedures of the FCC promulgated
thereunder). All capital expenditures reasonably required to maintain the
quality of the Station's signal shall be made promptly at the expense of
Licensee, subject to prompt reimbursement by Programmer if such expenditures are
undertaken in furtherance of the improved or continued delivery of Programmer's
Programming over the Station and Programmer has consented to such reimbursement
in advance.
20.2.4 TITLE TO PROPERTIES. Licensee has, and will throughout
-------------------
the term hereof maintain, good and marketable title to all of the assets and
properties including, without limitation, real property, used in the operation
of the Station, free and clear of any liens, claims or security interests that
would affect adversely Licensee's performance hereunder or the business and
operations of Programmer permitted hereby. Licensee will not dispose of,
transfer, assign or pledge any such asset, except with the prior written consent
of Programmer, if such action would affect adversely Licensee's performance
hereunder or the business and operations of Programmer permitted hereby.
20.2.5 PAYMENT OF OBLIGATIONS. Licensee shall pay in a timely
----------------------
fashion all of its debts, assessments and obligations, including without
limitation tax liabilities and payments attributable to the operations of the
Station, as they come due from and after the effective date of this Agreement,
to the extent failure to do so will affect Programmer's rights under this
Agreement.
20.2.6 INSURANCE. Licensee will maintain in full force and
---------
effect throughout the term of this Agreement insurance with responsible and
reputable insurance companies fire and extended coverage and liability insurance
and such other insurance as may be required by law. Except as otherwise
permitted by the Purchase Agreement, any insurance proceeds received by Licensee
in respect of damaged property will be used to repair or replace such property
so that the operations of the Station conform with this Agreement.
20.3. PROGRAMMER'S REPRESENTATIONS, WARRANTIES AND COVENANTS.
------------------------------------------------------
20.3.1 COMPLIANCE WITH 47 C.F.R. SEC. 73.3555(a)(2)(ii).
------------------------------------------------
Programmer hereby verifies that this Agreement complies with the FCC's
restrictions on local and national multiple station ownership set out in Section
73.3555(a)(1) and (e)(1) of the FCC Rules.
20.3.2 COMPLIANCE WITH APPLICABLE LAW. Programmer's
------------------------------
performance of its obligations under the Agreement and its furnishing of
Programming will be in compliance with, and will not violate, any applicable
laws or any applicable rules, regulations, or orders of the FCC or any other
governmental agency.
20.3.3 FCC QUALIFICATIONS. Programmer has no knowledge after
------------------
due inquiry of any facts concerning Programmer or any other person with an
attributable interest in Programmer (as such term is defined under the Rules and
Regulations of the FCC) which, under present law (including the Communications
Act of 1934, as amended ("the Act")) and the Rules and Regulations of the FCC,
would disqualify Programmer from being the holder of the FCC Licenses, the owner
of the Sale Assets or the operator of the Station upon consummation of the
10
<PAGE>
transactions contemplated by this Agreement; or raise a substantial and material
question of fact (within the meaning of Section 309(e) of the Act) respecting
Programmer's qualifications.
20.3.4 COMPLIANCE WITH COPYRIGHT ACT. Programmer represents
-----------------------------
and warrants that Programmer has full authority to broadcast its programming on
the Station and the Programmer shall not broadcast any material in violation of
any law, rule, regulation or the Copyright Act. Programmer acknowledges that it
is solely responsible for payment of any public performance music license fees
or royalties for music contained in the Programming, spots, announcements,
features or any other programming of Programmer including, without limitation,
fees payable to ASCAP, BMI and/or SESAC.
21. PUT AND CALL RIGHTS FOR THE STATION.
-----------------------------------
21.1 PUT RIGHT. At any time after September 30, 1999 that Programmer
---------
is programming the Station pursuant to this Agreement and Licensee is not in
default under this Agreement, Licensee may require Programmer to purchase the
assets of the Station ("the Put Right") on the terms and conditions set forth in
the Asset Purchase Agreement attached hereto as Exhibit "A" and incorporated
herein by reference (the "Asset Purchase Agreement").
21.2 CALL RIGHT. At any time after May 31, 2003 and on or before
----------
September 30, 2003, and provided Programmer is not in default under this
Agreement, Programmer may purchase the assets of the Station ("the Call Right")
on the terms and conditions set forth in the Asset Purchase Agreement.
21.3 EXERCISE OF PUT OR CALL. The Put Right may only be exercised
-----------------------
by the Licensee's delivery to the Programmer of written notice of exercise of
the Put Right and the Call Right may only be exercised by Programmer's delivery
to the Licensee of written notice of exercise of the Call Right (in either case,
the "Exercise Notice"). The Exercise Notice shall state that the Put Right or
Call Right, as the case may be, is exercised without condition or qualification
other than (i) the receipt by Programmer of updated schedules to the Asset
Purchase Agreement reasonably satisfactory to Programmer, (ii) the receipt of
any required approval of the FCC for the assignment of the Station's FCC
licenses pursuant hereto, and (iii) the satisfaction of all conditions set forth
in the Asset Purchase Agreement. Within five (5) business days following
delivery of the Exercise Notice, Licensee shall deliver updated schedules to the
Asset Purchase Agreement to Programmer, and Programmer shall have five (5)
business days thereafter to review such schedules. In the event (y) the updated
schedules discloses information that Programmer reasonably determines would have
a material adverse effect on the Station after Programmer's acquisition of the
station and (z) the information (i) was not known by Programmer at the time of
entering into this Agreement or (ii) discloses a change in the Station caused by
Licensee; the Programmer may elect not to proceed with the purchase; provided
however, that Programmer's election not to proceed may be made only after
Licensee has been given a reasonable period of time to remedy or cure the
matters at issue and such matters cannot be remedied or cured to the reasonable
satisfaction of Programmer. If Programmer elects to proceed with the purchase,
Licensee and Programmer shall execute the Asset Purchase Agreement and
diligently proceed pursuant to the provisions contained therein.
11
<PAGE>
21.4 SURVIVAL OF PUT/CALL RIGHTS UPON TERMINATION OF PROGRAMMING
-----------------------------------------------------------
ARRANGEMENT.
-----------
(a) In the event Programmer's right to program the Station
under this Agreement is terminated prior to September 30, 2002 for any reason
other than the fault or default of Programmer, (i) the Put Right shall
terminate, and (ii) Programmer may, within thirty (30) days following such
termination, give notice, pursuant to Section 21.3 hereof, of its intention to
------------
purchase the assets of the Station on the terms and conditions set forth in the
Asset Purchase Agreement; provided, however, in no event shall the closing of
the purchase occur earlier than January 2, 2000. In the event Programmer does
not give such notice within such thirty (30) day period, the Call Right shall
terminate.
(b) In the event Programmer's right to program the Station
under this Agreement is terminated prior to September 30, 2002 by reason of the
fault or default of Programmer, (i) the Call Right shall terminate, and (ii)
Licensee may, within thirty (30) days following such termination, give notice,
pursuant to Section 21.3 hereof, of its intention to require Programmer to
------------
purchase the assets of the Station on the terms and conditions set forth in the
Asset Purchase Agreement; provided, however, in no event shall the closing of
the purchase occur earlier than January 2, 2002. In the event Licensee does not
give such notice within such thirty (30) day period, the Put Right shall
terminate.
21.5 LICENSEE'S WARRANTIES. Licensee warrants and represents to
---------------------
Programmer that:
(a) At Closing (as defined in the Asset Purchase Agreement)
Licensee will have, good, marketable and indefeasible title to and full power of
disposition over the Sale Assets (as defined in the Asset Purchase Agreement),
and the full right to sell and transfer to Programmer all of the Sale Assets
without the requirement of obtaining the consent or approval of any other
person, entity, agency or authority except the FCC.
(b) Except for any liens created by the recording of this
Agreement, the Sale Assets will be free of all liens, claims, debts or other
encumbrances at Closing.
21.6. LICENSEE'S COVENANTS. Licensee covenants that, commencing on the
--------------------
Commencement Date hereof and continuing through the term of the Put Right and
the Call Right, the Station shall be operated in accordance with the covenants
set forth in Section 5.1 of the Asset Purchase Agreement, which covenants are
-----------
incorporated herein by reference.
22. RIGHT OF FIRST REFUSAL/DUE DILIGENCE.
------------------------------------
(a) Notwithstanding anything in this Agreement to the contrary, this
Agreement shall be non-binding on the parties hereto in the event JBA exercises
its right of first refusal as set forth in the TBA; provided, however, in the
event JBA does not exercise its right of first refusal as set forth in the TBA,
this Agreement shall be fully effective and binding on the parties hereto.
Licensee agrees to deliver a fully executed copy of this Agreement to JBA within
two (2) business days of the joint execution of this Agreement. Licensee shall
promptly deliver to Programmer
12
<PAGE>
written notice ("Exercise Notice") of JBA's exercise of its right of first
refusal or its failure to exercise its right of first refusal as set forth in
the TBA.
(b) Notwithstanding anything in this Agreement to the contrary,
Programmer shall have forty-five (45) calendar days ("Diligence Period") from
the date of Programmer's receipt of the Exercise Notice notifying Programmer
that JBA has failed to exercise its right of first refusal to conduct any due
diligence it requires. Should Programmer determine, in Programmer's sole and
absolute discretion and within the aforementioned Diligence Period, that the
Station is not acceptable for any reason, Programmer shall, on or before the
expiration of the Diligence Period, notify Licensee in writing of Programmer's
decision to terminate this Agreement ("Diligence Notice"), in which event this
Agreement shall be canceled with no further obligation of any party hereto.
Notwithstanding anything in this Agreement or the Asset Purchase Agreement to
the contrary, Programmer's failure to deliver the Diligence Notice within the
Diligence period shall not constitute a waiver of or otherwise diminish the
enforceability of any warranty of Licensee hereunder or under the Asset Purchase
Agreement.
23. MODIFICATION AND WAIVER. No modification or waiver of any provision
-----------------------
of this Agreement shall be effective unless made in writing and signed by the
party adversely affected, and any such waiver and consent shall be effective
only in the specific instance and for the purpose for which such consent was
given.
24. NO WAIVER: REMEDIES CUMULATIVE. No failure or delay on the part of
------------------------------
Licensee or the Programmer in exercising any right or power under this Agreement
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right or power, or any abandonment or discontinuance of steps to
enforce such a right or power, preclude any other or further exercise thereof or
the exercise of any other right or power. The rights and remedies of the parties
to this Agreement are cumulative and are not exclusive of any right or remedies
which either may otherwise have.
25. CONSTRUCTION. This Agreement shall be construed in accordance with
------------
the laws of the State of Georgia. The obligations of the parties to this
Agreement are subject to all federal, state or local laws or regulations,
including those of the FCC, now or hereafter in force.
26. HEADINGS. The headings contained in this Agreement are included for
--------
convenience only and shall not in any way alter the meaning of any provision.
27. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
----------------------
inure to the benefit of the parties and their respective successors and assigns.
Neither party may assign any of its rights or obligations under this Agreement
without the prior written consent of the other party, except that Programmer may
assign its rights and obligations, or any of them, to an entity controlled
directly or indirectly by Edward G. Atsinger III and Stuart W. Epperson without
the prior written consent of Licensee.
28. COUNTERPART SIGNATURES. This Agreement may be signed in one or more
----------------------
counterparts, each of which shall be deemed a duplicate original and be binding
on the parties to this Agreement.
13
<PAGE>
29. NOTICES. Any notice required hereunder shall be in writing and shall
-------
be sufficiently given if delivered by overnight delivery service or sent by
registered or certified mail, first class postage prepaid, or by telegram,
facsimile or similar means of communication, addressed as follows:
If to Licensee, to:
Cherokee Broadcasting, Inc.
1353 13th Avenue
Columbus, Georgia 31901
Attn: Mr. Charles McClure, Sr.
Telephone: (706) 324-0338
Facsimile:
Copy to:
Mr. John E. Griffin, Esq.
Fortson, Bently & Griffin, P.A.
440 College Avenue North, Suite 220
Atlanta, Georgia 30613
Telephone: (706) 548-1151
Facsimile: (706) 548-8113
If to the Programmer, to:
c/o Salem Communications Corporation
4800 Santa Rosa Road
Suite 300
Camarillo, CA 9301230613
Telephone: (805) 987-0400
Facsimile No.: (805) 482-7290
Attention: Eric H. Halvorson
Executive Vice President
Copy to:
Salem Communications Corporation
4880 Santa Rosa Road, Suite 300
Camarillo, California 93012
Telephone: (805) 987-0400
Facsimile No.: (805) 482-7290
Attention: Jonathan L. Block, Esq.
Corporate Counsel
30. EXPENSES; ATTORNEY'S FEES. In the event any action is filed with
-------------------------
respect to this Agreement, the prevailing party shall be reimbursed by the other
party for all costs and expenses incurred in connection with the action,
including without limitation reasonable attorney's fees.
14
<PAGE>
31. ENTIRE AGREEMENT. This Agreement embodies the entire agreement
----------------
between the parties and there are no other agreements, representations,
warranties, or understandings, oral or written, between them with respect to the
subject matter hereof.
32. SPECIFIC PERFORMANCE. Licensee acknowledges that the Station is of a
--------------------
special, unique, and extraordinary character, and that any breach of this
Agreement by Licensee could not be compensated for by damages. Accordingly, if
Licensee shall breach its obligations under this Agreement, Programmer shall be
entitled, in addition to any of the remedies that it may have, to enforcement of
this Agreement (subject to obtaining any required approval of the FCC) by decree
of specific performance or injunctive relief requiring Licensee to fulfill its
obligations under this Agreement. In any action by Programmer to equitably
enforce the provisions of this Agreement, Licensee shall waive the defense that
there is an adequate remedy at law or equity and agrees that Programmer shall
have the right to obtain specific performance of the terms of this Agreement
without being required to prove actual damages, post bond or furnish other
security.
33. BROKERAGE FEES. Any and all commissions, fees, costs, and expenses
--------------
and related amounts due Questcom Media Brokerage and any other broker, agent,
finder or other similarly situated party arising out of the transactions set
forth in this Agreement, shall be paid and borne exclusively by Licensee.
34. TIME OF THE ESSENCE. Time is of the essence with respect to all
-------------------
rights and obligations of this Agreement.
35. RESOLUTION OF CLAIMS AND DISPUTES.
---------------------------------
Regardless of the place of execution, this Agreement shall be deemed to be a
contract made in Atlanta, Georgia and shall be interpreted as a contract to be
performed wholly in the State of Georgia . The law of the State of Georgia shall
be applied without regard to the principles of conflicts of laws. Each party
expressly waives any presumption or rule, if any, which requires this Agreement
and/or any other Agreement to be construed against the drafting party. Any
claims or disputes arising out of or relating to this Agreement shall be
resolved only by mediation or, if mediation does not resolve the claim or
dispute within ten (10) days of notice demanding mediation, by arbitration in
accordance with the Rules of Procedure for Commercial Arbitration of the
American Arbitration Association and any award therefrom shall be rendered by
the arbitrators as a judgment in any trial court having jurisdiction in the city
of Atlanta, Georgia, or of any other court having competent jurisdiction.
{Signatures on following page.}
15
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
"LICENSEE" "PROGRAMMER"
CHEROKEE BROADCASTING, INC. SALEM MEDIA OF GEORGIA, INC.
By: /s/ C.A. McClure Jr. By: /s/ Eric H. Halvorson
----------------------------- --------------------------------
Name: C.A. McClure Jr. Eric H. Halvorson
Title: President Vice President
16
<PAGE>
GUARANTY
Salem Communications Corporation ("Guarantor"), as the sole shareholder of Salem
Media of Georgia, Inc. ("Programmer"), hereby absolutely and unconditionally
guarantees the following (the "Guaranteed Obligations"):
(a) the punctual and full payment when due of all the obligations of
Programmer in connection with the Agreement and all documents and agreements
executed in connection with the Agreement (collectively, the "Agreements"); it
being the intention of Guarantor that this guaranty be an absolute and
unconditional guarantee of payment; and
(b) the performance and observance by Programmer of all its obligations
and covenants under the Agreements.
Guarantor further agrees that the guaranty will not be discharged or affected by
the fact that the Guaranteed Obligations or any of them shall be invalid or
unenforceable for any reason. The guaranty shall be liberally construed in
favor of Licensee. Guarantor hereby waives any right to require payment of the
Guaranteed Obligations by Programmer, or to require Licensee to proceed against
any collateral or escrow for the Guaranteed Obligations, or to require any
action or proceeding against Programmer on the Guaranteed Obligations, or
otherwise to require Licensee to exhaust any and all remedies against Programmer
or any other person before proceeding against Guarantor on the guaranty.
SALEM COMMUNICATIONS CORPORATION
By: /s/ Eric H. Halvorson
-----------------------------
Eric H. Halvorson
Executive Vice President
17
<PAGE>
SCHEDULE 2
----------
FEES
----
(a) On or before the first day of each month commencing on the Commencement
Date, Programmer shall pay Licensee a fee of $206,666.67.
(b) From and after the Commencement Date, Programmer shall pay Licensee a
facility fee for all costs and expenses associated with or arising out of the
operation of the Station ("Station Expenses") including the cost to maintain the
station's transmitter and antennas, premiums for insurance, and the cost and
expense of all utilities for the operation of the Station. Notwithstanding the
preceding sentence, "Station Expenses" shall not include any cost or expenses
associated with employment, including salaries, taxes, insurance and related
costs, of employees unless the FCC shall require Licensee to employ employees in
addition to those currently employed. All Station Expenses shall be due and
payable not later than fifteen (15) days after Programmer's receipt of written
itemizations of said expenses.
18
<PAGE>
SCHEDULE 7
----------
The Programmer agrees to cooperate with Licensee in the broadcasting of
programs in a manner consistent with the standards of Licensee, as set forth
below:
1. ELECTION PROCEDURES. At least 90 days before the start of any primary
-------------------
or regular election campaign, the Programmer will coordinate with Licensee's
General Manager the rate the Programmer will charge for time to be sold to
candidates for public office and/or their supporters to make certain that the
rate charged conforms to all applicable laws and Station policy. Throughout a
campaign, the Programmer will comply with all applicable laws and rules
concerning political candidacy broadcasts and will promptly notify Licensee's
General Manager of any disputes concerning either the treatment of or rate
charged a candidate or supporter.
2. REQUIRED ANNOUNCEMENTS. The Programmer shall broadcast (i) an
----------------------
announcement in a form satisfactory to Licensee at the beginning of each hour to
identify the Station, (ii) an announcement at the beginning and end of each
program, and hourly, as appropriate, to indicate that program time has been
purchased by the Programmer, and (iii) any other announcement that may be
required by law, regulation, or Station policy.
3. COMMERCIAL RECORDKEEPING. The Programmer shall maintain such records
------------------------
of the receipt of, and provide such disclosure to Licensee of, any
consideration, whether in money, goods, services, or otherwise, which is paid or
promised to be paid, either directly or indirectly, by any person or company for
the presentation of any programming over the Station as are required by Sections
317 and 507 of the Communications Act and the rules and regulations of the FCC.
4. NO ILLEGAL ANNOUNCEMENTS. No announcements or promotion prohibited by
------------------------
federal or state law or regulation of any lottery, game or contest shall be made
over the Station.
5. LICENSEE DISCRETION PARAMOUNT. In accordance with Licensee's
-----------------------------
responsibility under the Communications Act of 1934, as amended, and the rules
and regulations of the Federal Communications Commission, Licensee reserves the
right to reject or terminate any advertising or other programming proposed to be
presented or being presented over the Station which is in conflict with law,
regulation, Station policy or which in the reasonable judgment of Licensee or
its General Manager would not serve the public interest.
6. INDECENCY HOAXES. No programming violative of applicable laws and
----------------
rules concerning indecency or hoaxes will be broadcast over the Station.
7. CONTROVERSIAL ISSUES. Any broadcast over the Station concerning
--------------------
controversial issues of public importance shall comply with the then current FCC
rules and policies.
8. SPOT COMMERCIALS. The Programmer will provide, for attachment to the
----------------
Station logs, a list of all commercial announcements carried during its
programming.
19
<PAGE>
Licensee may waive any of the foregoing regulations in specific instances
if, in its reasonable opinion, good broadcasting in the public interest will be
served thereby. In any case where questions of policy or interpretation arise,
the Programmer shall notify Licensee before making any commitments to broadcast
any programming affected by such issues.
20
<PAGE>
EXHIBIT "A" TO THE
LOCAL PROGRAMMING AND MARKETING
AGREEMENT AND PUT/CALL
AGREEMENT
ASSET PURCHASE AGREEMENT
------------------------
(WGST-FM, Canton, Georgia)
This AGREEMENT (the "Agreement") is dated as of _______________, by
and between CHEROKEE BROADCASTING CO., INC. ("Seller") and SALEM MEDIA OF
GEORGIA, INC. ("Buyer").
RECITALS:
---------
1. Seller owns and operates radio station WGST-FM licensed to Canton,
Georgia (the "Station"), and holds the licenses and authorizations issued by the
FCC for the operation of the Station.
2. Buyer desires to acquire certain assets of the Station, and Seller is
willing to convey such assets to Buyer.
3. The acquisition of the Station is subject to prior approval of the FCC.
NOW THEREFORE, in consideration of the mutual covenants contained herein,
Seller and Buyer hereby agree as follows:
ARTICLE 1
---------
TERMINOLOGY
-----------
1.1 Act. The Communications Act of 1934, as amended.
----
1.2 Adjustment Amount. As provided in Section 2.7(b), the amount by which
------------------ --------------
Buyer's account is to be credited or charged, as reflected on the Adjustment
List.
1.3 Adjustment List. As provided in Section 2.7(b), an itemized list of
---------------- --------------
all sums to be credited or charged against the account of Buyer, with a brief
explanation in reasonable detail of the credits or charges.
1
<PAGE>
1.4 Assumed Obligations. Such term shall have the meaning defined in
--------------------
Section 2.3.
- ------------
1.5 Business Day. Any calendar day, excluding Saturdays and Sundays, on
-------------
which federally chartered banks in the city of Camarillo, California, are
regularly open for business.
1.6 Buyer's Threshold Limitation. As provided in Section 9.3(b), the
----------------------------- --------------
threshold dollar amount for the aggregate of claims, liabilities, damages,
losses, costs and expenses that must be incurred by Buyer before Seller shall be
obligated to indemnify Buyer. The Buyer's Threshold Limitation shall be Ten
Thousand Dollars ($10,000).
1.7 Closing. The closing with respect to the transactions contemplated by
--------
this Agreement.
1.8 Closing Date. The date determined as the Closing Date as provided in
-------------
Section 8.1.
- -----------
1.9 Documents. This Agreement and all Exhibits and Schedules hereto, and
----------
each other agreement, certificate, or instrument delivered pursuant to or in
connection with this Agreement, including amendments thereto that are expressly
permitted under the terms of this Agreement.
1.10 Earnest Money. The amount of Seven Hundred Fifty Thousand Dollars
--------------
($750,000).
1.11 Environmental Assessment. Such term shall have the meaning defined
-------------------------
in Section 5.10.
------------
1.12 Environmental Laws. The Comprehensive Environmental Response
-------------------
Compensation and Liability Act, the Resource Conservation and Recovery Act, the
Clean Water Act, the Clean Air Act and the Toxic Substances Control Act, each as
amended, and any other applicable federal, state and local laws, statutes, rules
or regulations concerning the treating, producing, handling, storing, releasing,
spilling, leaking, pumping, pouring, emitting or dumping of Hazardous Materials.
1.13 Escrow Agent. (To be determined.)
-------------
1.14 Escrow Agreement. The Escrow Agreement in the form attached as
-----------------
Exhibit A which Seller, Buyer and the Escrow Agent have entered into
- ---------
concurrently with the execution of this Agreement relating to the deposit,
holding, investment and disbursement of the Earnest Money.
2
<PAGE>
1.15 Excluded Assets. Such term shall have the meaning defined in Section
---------------- -------
2.2.
- ----
1.16 FCC. Federal Communications Commission.
----
1.17 FCC Licenses. The licenses, permits and authorizations of the FCC
-------------
for the operation of the Station as listed on Schedule 3.8.
-------------
1.18 FCC Order. An action, order or decision of the FCC granting its
----------
consent to the assignment of the FCC Licenses to Buyer.
1.19 Final Action. An action of the FCC that has not been reversed,
-------------
stayed, enjoined, set aside, annulled or suspended; with respect to which no
timely petition for reconsideration or administrative or judicial appeal or sua
---
sponte action of the FCC with comparable effect is pending and as to which the
- ------
time for filing any such petition or appeal (administrative or judicial) or for
the taking of any such sua sponte action of the FCC has expired.
----------
1.20 Hazardous Materials. Toxic materials, hazardous wastes, hazardous
--------------------
substances, pollutants or contaminants, asbestos or asbestos-related products,
polychlorinated biphenyls ("PCBs"), petroleum, crude oil or any fraction or
distillate thereof (as such terms are defined in any applicable federal,
state or local laws, ordinances, rules and regulations, and including any other
terms which are or may be used in any applicable environmental laws to define
prohibited or regulated substances).
1.21 Indemnified Party. Any party described in Section 9.3(a) or 9.4(a)
------------------ -------------- ------
against which any claim or liability may be asserted by a third party which
would give rise to a claim for indemnification under the provisions of this
Agreement by such party.
1.22 Indemnifying Party. The party to the Agreement (not the Indemnified
-------------------
Party) that, in the event of a claim or liability asserted by a third party
against the Indemnified Party which would give rise to a claim for
indemnification under the provisions of this Agreement, may at its own expense,
and upon written notice to the Indemnified Party, compromise or defend such
claim.
1.23 Lien. Any mortgage, deed of trust, pledge, hypothecation, security
-----
interest, encumbrance, lien, lease or charge of any kind, whether voluntarily
incurred or arising by operation of law or otherwise, affecting any assets or
property, including any written or oral agreement to give or grant any of the
foregoing, any conditional sale or other title retention agreement, and the
filing of or agreement to give any financing statement with respect to any
assets or property under the Uniform Commercial Code or comparable law of any
jurisdiction.
3
<PAGE>
1.24 LMA. The Local Programming and Marketing Agreement by and between
----
Buyer and Seller relative to the programming of the Station.
1.25 Material Adverse Condition. A condition which would materially
---------------------------
restrict, limit, increase the cost or burden of or otherwise adversely affect or
materially impair the right of Buyer to the ownership, use, control, enjoyment
or operation of the Station or the proceeds therefrom; provided, however, that
any condition which requires that the Station be operated in accordance with a
condition similar to those contained in the present FCC licenses issued for
operation of the Station shall not be deemed a Material Adverse Condition.
1.26 OSHA Laws. The Occupational Safety and Health Act of 1970, as
----------
amended, and all other federal, state or local laws or ordinances, including
orders, rules and regulations thereunder, regulating or otherwise affecting
health and safety of the workplace.
1.27 Permitted Encumbrances. For purposes hereof, "Permitted
-----------------------
Encumbrances" shall mean (i) easements, restrictions, and other similar matters
which will not adversely affect the use of the Real Property in the ordinary
course of business; (ii) liens for taxes not due and payable or, that are being
contested in good faith by appropriate proceedings; (iii) mechanics,
materialmen's, carriers', warehousemen's, landlords' or other similar liens in
the ordinary course of business for sums not yet due or being contested in good
faith by appropriate proceedings; (iv) deposits or pledges to secure the
performance of bids, tenders, contracts (other than for borrowed money), leases,
statutory obligations, surety or appeal bonds or other deposits or pledges for
purposes of a like general nature made or given in the ordinary course of
business: and (v) liens or mortgages that will be released at Closing; (vi)
zoning ordinances and regulations, including statutes and ordinances relating to
the liens of streets and to other municipal improvements, which will not
adversely affect the use of the Real Property in the ordinary course of
business.
1.28 Permitted Lien. Any statutory lien which secures a payment not yet
---------------
due that arises, and is customarily discharged, in the ordinary course of
Seller's business; any easement, right-of-way or similar imperfection in the
Seller's title to its assets or properties that, individually and in the
aggregate, are not material in character or amount and do not and are not
reasonably expected to materially impair the value or materially interfere with
the use of any asset or property of the Seller material to the operation of its
business as it has been and is now conducted.
1.29 Purchase Price. The consideration to be paid by Buyer to Seller for
---------------
purchase of the Sale Assets in an amount equal to Thirty One Million Dollars
($31,000,000).
1.30 Real Property. Such term shall have the meaning defined in Section
-------------- -------
3.7.
- ----
4
<PAGE>
1.31 Rules and Regulations. The rules of the FCC as set forth in Volume
----------------------
47 of the Code of Federal Regulations, as well as such other policies of the
Commission, whether contained in the Code of Federal Regulations, or not, that
apply to the Station.
1.32 Sale Assets. All of the tangible and intangible assets to be
------------
transferred by Seller to Buyer as set forth in Section 2.1.
------------
1.33 Seller's Threshold Limitation. As provided in Section 9.4(b), the
------------------------------ --------------
threshold dollar amount for the aggregate of claims, liabilities, damages,
losses, costs and expenses that must be incurred by Seller before Buyer shall be
obligated to indemnify Seller. The Seller's Threshold Limitation shall be Ten
Thousand Dollars ($10,000).
1.34 Station Agreements. The agreements, commitments, contracts, leases
-------------------
and other items described in Section 2.1(d) which relate to operation of the
--------------
Station.
1.35 Survival Period. The term following the Closing Date during which
----------------
all representations, warranties, covenants and agreements of the parties under
this Agreement shall survive. The term shall be twelve (12) months.
1.36 Tangible Personal Property. The personal property described in
---------------------------
Section 2.1(a).
- --------------
1.37 Tower Coordinates. Such term shall have the meaning defined in
------------------
Section 3.15 hereof.
- ------------
ARTICLE II
----------
PURCHASE AND SALE
-----------------
2.1 Sale Assets. On the Closing Date, Seller will sell, transfer, assign
------------
and convey to Buyer, and Buyer will purchase from Seller, free and clear of all
Liens, except Permitted Liens, all of Seller's right, title and interest, legal
and equitable, in and to the tangible and intangible assets (except Excluded
Assets) used or useful in the operation of the Station as specifically set forth
in the following:
(a) Tangible Personal Property. All equipment, parts, supplies,
---------------------------
furniture, fixtures and other tangible personal property now or hereinafter
owned by Seller and used in the operation of the Station including, but not
limited to the tangible personal property listed on Schedule 3.6, together with
------------
such modifications, replacements, improvements and additional items, and subject
to such deletions therefrom, made or acquired between the date hereof and the
Closing Date in accordance with the terms and provisions of this Agreement;
5
<PAGE>
(b) Real Property. Except as provided on Schedule 3.7, Seller's
-------------- ------------
interests in the Real Property including, without limitation, all right, title
and interest of Seller in and to the Station's transmitting facilities;
(c) Licenses and Permits. The FCC Licenses and all other assignable
---------------------
or transferable governmental permits, licenses and authorizations (and any
renewals, extensions, amendments or modifications thereof) now held by Seller or
hereafter obtained by Seller between the date hereof and the Closing Date, to
the extent such other permits, licenses and authorizations pertain to or are
used in the operation of the Station;
(d) Station Agreements. All agreements which are listed on Schedule
------------------- --------
3.9 as agreements which Buyer elects to assume; any renewals, extensions,
- ---
amendments or modifications of those agreements being assumed which are made in
the ordinary course of Seller's operation of the Station and in accordance with
the terms and provisions of this Agreement;
(e) Records. True and complete copies of all of the books, records,
--------
accounts, files, logs, ledgers, reports of engineers and other consultants or
independent contractors, pertaining to or used in the operation of the Station
(other than corporate records);
(f) Miscellaneous Assets. Any other tangible or intangible asset,
---------------------
properties or rights of any kind or nature not otherwise described in this
Section 2.1 and now or hereinafter owned or used by Seller in the operation of
- -----------
the Station including, but not limited to, goodwill, call letters, slogans and
other intellectual property of the Station.
2.2 Excluded Assets. Notwithstanding any provision of this Agreement to
----------------
the contrary, Seller shall not transfer, convey or assign to Buyer, but shall
retain all of its right, title and interest in and to, the following assets
owned or held by it on the Closing Date ("Excluded Assets"):
(a) Any and all cash, cash equivalents, cash deposits to secure
contract obligations (except to the extent Seller receives a credit therefor
under Section 2.7, in which event the deposit shall be included as part of the
-----------
Sale Assets), all inter-company receivables from any affiliate of Seller and all
other accounts receivable, bank deposits and securities held by Seller in
respect of the Station at the Closing Date.
(b) Any and all claims of Seller with respect to transactions prior
to the Closing including, without limitation, claims for tax refunds and refunds
of fees paid to the FCC.
(c) All prepaid expenses (except to the extent Seller receives a
credit therefor under Section 2.7, in which event the prepaid expense shall be
-----------
included as part of the Sale Assets).
6
<PAGE>
(d) All contracts of insurance and claims against insurers.
(e) All employee benefit plans and the assets thereof and all
employment contracts.
(f) All contracts that are terminated in accordance with the terms
and provisions of this Agreement or have expired prior to the Closing Date in
the ordinary course of business; and all loans and loan agreements.
(g) All tangible personal property disposed of or consumed between
the date hereof and the Closing Date in accordance with the terms and provisions
of this Agreement; all tangible personal property not specifically assumed by
Buyer pursuant to Section 2.1(a) above.
(h) Seller's corporate records except to the extent such records
pertain to or are used in the operation of the Station, in which case Seller
shall deliver accurate copies thereof to Buyer.
(i) All commitments, contracts and agreements not specifically
assumed by Buyer pursuant to Section 2.1(d), above.
--------------
(j) All real property not specifically assumed by Buyer pursuant to
Section 2.1(b) above.
- --------------
2.3 Assumption of Liabilities.
--------------------------
(a) At the Closing, Buyer shall assume and agree to perform, without
duplication of Seller's performance, the following liabilities and obligations
of Seller (the "Assumed Obligations"):
(i) Current liabilities of Seller for which Buyer receives a
credit pursuant to Section 2.7, but not in excess of the amount of such credit.
-----------
(ii) Liabilities and obligations arising under the Station
Agreements, if any, assumed by and transferred to Buyer in accordance with this
Agreement, but only to the extent such liabilities and obligations relate to any
period of time after the Closing Date.
(b) Except for the Assumed Obligations, Buyer shall not assume or in
any manner be liable for any duties, responsibilities, obligations or
liabilities of Seller of any kind or nature, whether express or implied, known
or unknown, contingent or absolute, including, without limitation, any
liabilities to or in connection with Seller's employees whether arising in
connection with the transaction contemplated hereunder or otherwise.
7
<PAGE>
2.4 Earnest Money.
--------------
(a) Concurrently with the execution of this Agreement, Buyer has
deposited with Escrow Agent under the Escrow Agreement, in immediately available
funds, the Earnest Money. The Escrow Agent shall hold the Earnest Money under
the terms of the Escrow Agreement in trust for the benefit of the parties
hereto. Interest and other earnings on the Earnest Money shall be distributed by
the Escrow Agent to Buyer from time to time upon the request of Buyer.
(b) If Closing does not occur, the Earnest Money shall be delivered
to Seller or returned to Buyer in accordance with Section 10.2, and if Closing
------------
does occur, the Earnest Money shall be applied to payment of the Purchase Price
at Closing as provided in Section 2.5.
-----------
2.5 Payments.
---------
(a) The Purchase Price shall be paid by Buyer as follows:
(i) At the Closing, the Earnest Money shall, subject to
execution and delivery of the closing documents described in Section 8.2, become
-----------
the property of Seller and shall, pursuant to the Escrow Agreement, be disbursed
to Seller by cashier's check or wire transfer of immediately available funds.
(ii) At the Closing the Purchase Price, less the amount of the
Earnest Money disbursed to Seller, shall be paid to Seller at Closing by wire
transfer of immediately available funds.
(b) Buyer shall pay to Seller, or Seller shall pay to Buyer, the
Adjustment Amount in accordance with Section 2.7.
-----------
2.6 Allocation of the Purchase Price. Prior to Closing, Buyer and Seller
---------------------------------
shall agree to an allocation of the Purchase Price. Buyer and Seller shall use
such allocation for all reporting purposes in connection with federal, state and
local income and, to the extent permitted under applicable law, franchise taxes.
Buyer and Seller agree to report such allocation to the Internal Revenue Service
in the form required by Treasury Regulation (S) 1.1060-1T. Seller and Buyer
acknowledge that the allocation will be the result of arms length bargaining
regarding the fair value of the Sale Assets; not materially different in result
from the results of an independent appraisal undertaken by Seller at its
expense.
8
<PAGE>
2.7 Adjustment of Purchase Price.
-----------------------------
(a) Except as provided in the LMA, all operating income and operating
expenses of the Station shall be adjusted and allocated between Seller and
Buyer, and an adjustment in the Purchase Price shall be made as provided in this
Section, to the extent necessary to reflect the principle that all such income
and expenses attributable to the operation of the Station on or before the
Closing Date shall be for the account of Seller, and all income and expenses
attributable to the operation of the Station after the closing Date shall be for
the account of Buyer.
(b) To the extent not inconsistent with the express provisions of
this Agreement, the allocations made pursuant to this Section 2.7 shall be made
-----------
in accordance with generally accepted accounting principles.
(c) For purposes of making the adjustments pursuant to this Section,
Buyer shall prepare and deliver the Adjustment List to Seller within thirty (30)
days following the Closing Date, or such earlier or later date as shall be
mutually agreed to by Seller and Buyer. The Adjustment List shall set forth the
Adjustment Amount. If the Adjustment Amount is a credit to the account of Buyer,
Seller shall pay such amount to Buyer, and if the Adjustment Amount is a charge
to the account of Buyer, Buyer shall pay such amount to Seller. In the event
Seller disagrees with the Adjustment Amount determined by Buyer or with any
other matter arising out of this subsection, and Buyer and Seller cannot within
sixty (60) days resolve the disagreement themselves, the parties will refer the
disagreement to a firm of independent certified public accountants, mutually
acceptable to Seller and Buyer, whose decision shall be final and whose fees and
expenses shall be allocated between and paid by Seller and Buyer, respectively,
to the extent that such party does not prevail on the disputed matters decided
by the accountants.
ARTICLE III
-----------
REPRESENTATIONS AND WARRANTIES OF SELLER
----------------------------------------
Seller hereby represents and warrants to Buyer as follows:
3.1 Organization and Good Standing. Seller is a corporation, validly
-------------------------------
existing and in good standing under the laws of the State of Georgia. Seller
has all requisite power to own, operate and lease its properties and carry on
its business as it is now being conducted and as the same will be conducted
until the Closing.
3.2 Authorization and Binding Effect of Documents. The execution and
----------------------------------------------
delivery of, and the performance of its obligations under, this Agreement and
each of the other Documents by Seller, and the consummation by Seller of the
transactions contemplated hereby and thereby, have been duly authorized and
approved by all
9
<PAGE>
necessary corporate action on the part of Seller. Seller has the power and
authority to execute, deliver and perform its obligations under this Agreement
and each of the other Documents and to consummate the transactions hereby and
thereby contemplated. This Agreement and each of the other Documents have been,
or at or prior to the Closing will be, duly executed by Seller. This Agreement
constitutes (and each of the other Documents, when so executed and delivered,
will constitute) legal and valid obligations of Seller enforceable against it in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting the enforcement of
creditors' rights or remedies generally, and subject, as to enforceability, to
general principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
3.3 Absence of Conflicts. The execution and delivery of, and the
---------------------
performance of its obligations under, this Agreement and each of the other
Documents by Seller, and the consummation by Seller of the transactions
contemplated hereby and thereby:
(a) do not in any material respect (with or without the giving of
notice or the passage of time or both) violate (or result in the creation of any
Lien other than a Permitted Lien on any of the Sale Assets under), any provision
of law, rule or regulation or any order, judgment, injunction, decree or ruling
applicable to Seller;
(b) do not (with or without the giving of notice or the passage of
time or both) conflict with or result in a breach or termination of, or
constitute a default or give rise to a right of termination or acceleration
under the Articles of Incorporation or Bylaws of Seller or pursuant to any
lease, agreement, commitment or other instrument which Seller is a party to, or
bound by, or by which any of the Sale Assets may be bound, or result in the
creation of any Lien, other than a Permitted Lien, upon any of the Sale Assets.
3.4 Governmental Consents and Consents of Third Parties. Except for such
----------------------------------------------------
consents as are required by the FCC and as are disclosed on Schedule 3.9, to
------------
Seller's actual knowledge, the execution and delivery of, and the performance of
its obligations under, this Agreement and each of the other Documents by Seller,
and the consummation by Seller of the transactions contemplated hereby and
thereby, do not require the consent, waiver, approval, permit, license,
clearance or authorization of, or any declaration of filing with, any court or
public agency or other authority, or the consent of any person under any
agreement, arrangement or commitment of a nature to which Seller is a party or
by which it is bound or by which the Sale Assets are bound or to which they are
subject to, the failure of which to obtain would have a material adverse effect
on the Sale Assets or the operation of the Station.
3.5 Sale Assets. The Sale Assets include all of the assets, properties
-----------
and rights of every type and description, real, personal and mixed, tangible and
intangible,
10
<PAGE>
that are used to a material extent in the conduct of the business of owning and
operating the Station in the manner in which that business is now conducted,
with the exception of the Excluded Assets and any asset owned by Buyer and used
in the operation of the Station pursuant to the LMA.
3.6 Tangible Personal Property. Except for supplies and other incidental
---------------------------
items which in the aggregate are not of material value and studio equipment, the
list of Tangible Personal Property set forth on Schedule 3.6 is a complete and
------------
correct list of all of the items of tangible personal property (other than
Excluded Assets and any asset owned by Buyer and used in the operation of the
Station pursuant to the LMA) used to a material extent in the operation of the
Station in the manner in which it is now operated. Except as set forth on
Schedule 3.6:
- ------------
(a) Seller has good, marketable and valid title to all of the items
of Tangible Personal Property free and clear of all Liens except Permitted
Liens, and including the right to transfer same.
(b) The Tangible Personal Property has been maintained in accordance
with industry practices and is in good operating condition subject to ordinary
wear and tear.
(c) The Tangible Personal Property complies with applicable rules and
regulations of the FCC and the terms of the FCC Licenses.
(d) Seller has no knowledge of any defect in the condition or
operation of any item of the Tangible Personal Property which is reasonably
likely to have a material adverse effect on the operation of the Station.
3.7 Real Property.
--------------
(a) The real property described on Schedule 3.7 constitutes a
------------
complete and correct summary description in all material respects of all of the
interests in real estate (other than any real property leased by Seller pursuant
to a lease described in Schedule 3.9) used to any extent in the operation of the
------------
Station in the manner in which it has been and is now operated. Said real
property, together with all improvements affixed thereto, is herein defined as
the "Real Property."
(b) Seller does not owe any money to any architect, contractor,
subcontractor or materialman for labor or materials performed, rendered or
supplied to or in connection with the Real Property within the past four (4)
months which shall not be paid in full on or before Closing. There is no work
being done at or materials being supplied to the Real Property at the date
hereof other than routine maintenance projects having an aggregate cost through
completion thereof of no more than Ten Thousand Dollars ($10,000).
11
<PAGE>
(c) To the best of Seller's knowledge the present use of the Real
Property is in compliance with all applicable zoning codes in effect as of the
date hereof, and Seller has not received any notices of uncorrected violations
of the applicable housing, building, safety or fire ordinances. The Real
Property is served by electricity and water in capacities adequate for the
present use of the Real Property and improvements thereon. Except as set forth
on Section 3.9, Seller has not made any other agreement for the sale or lease
-----------
of, or given any other person an option to purchase or lease or a right of first
refusal to purchase or lease, all or any part of the Real Property, and Seller
has not subjected the Real Property to any liens (other than Permitted Liens),
easements, rights, duties, obligations, convenants, conditions, restrictions,
limitations or agreements not of record.
3.8 FCC Licenses. Seller is the holder of the FCC Licenses listed on
-------------
Schedule 3.8, and except as set forth on such Schedule, the FCC Licenses (i) are
- ------------
valid, in good standing and in full force and effect and constitute all of the
licenses, permits and authorizations required by the Act, the Rules and
Regulations or the FCC for, or used in, the operation of the Station in all
material respects as now operated, and (ii) constitute all the current licenses
and authorizations issued by the FCC to Seller for or in connection with the
current operation of the Station. Seller has no knowledge of any condition
imposed by the FCC as part of any FCC License which is neither set forth on the
face thereof as issued by the FCC nor contained in the Rules and Regulations
applicable generally to stations of the type, nature, class or location of the
Station. The Station is being operated at full authorized power, in accordance
with the terms and conditions of the FCC Licenses applicable to it and in
accordance with the Rules and Regulations. No proceedings are pending or, to
the knowledge of the Seller, are threatened which may result in the revocation,
modification, non-renewal or suspension of any of the FCC Licenses, the denial
of any pending applications, the issuance of any cease and desist order or the
imposition of any fines, forfeitures or other administrative actions by the FCC
with respect to the Station or its operation, other than proceedings affecting
the radio broadcasting industry in general. Seller has complied in all material
respects with all requirements to file reports, applications and other documents
with the FCC with respect to the Station, and all such reports, applications and
documents are complete and correct in all material respects. Seller has no
knowledge of any matters (i) which could reasonably be expected to result in the
suspension or revocation of or the refusal to renew any of the FCC Licenses or
the imposition of any fines or forfeitures by the FCC, or (ii) against Seller
which could reasonably be expected to result in the FCC's refusal to grant
approval of the assignment to Buyer of the FCC Licenses or the imposition of any
Material Adverse Condition in connection with approval of such assignment.
There are not any unsatisfied or otherwise outstanding citations issued by the
FCC with respect to the Station or its operation. Complete and accurate copies
of all FCC Licenses are attached as a part of Schedule 3.8. The "Public
------------
Inspection File" of the Station is complete and in substantial and material
compliance with Section 73.3526 of the Rules and Regulations.
12
<PAGE>
3.9 Station Agreements.
-------------------
(a) Schedule 3.9 sets forth an accurate and complete list of all
------------
material agreements, contracts, arrangements or commitments in effect as of the
date hereof, including all amendments, modifications and supplements thereto
which the Station or its assets or properties are bound by, except (A) employee
benefit plans and employment contracts, (B) contracts for the sale of time on
the Station, and (C) contracts which are cancelable by Seller or its assignee
without breach or penalty on not more than sixty (60) days' notice. Complete and
correct copies of all such agreements, contracts, arrangements or commitments
that are in writing, including all amendments, modifications and supplements
thereto, have been delivered to Buyer.
(b) Except as set forth in the Schedules, and with respect to all
Station Agreements being assumed by Buyer, (i) all Station Agreements are legal,
valid and enforceable in accordance with their terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws affecting
creditors' rights generally, and subject, as to enforceability, to general
principles of equity regardless of whether enforcement is sought in any
proceeding at law or in equity; (ii) neither Seller nor, to the knowledge of
Seller, any other party thereto, is in material breach of or in material default
under any Station Agreements; (iii) to the knowledge of Seller, there has not
occurred any event which, after the giving of notice or the lapse of time or
both, would constitute a material default under, or result in the material
breach of, any Station Agreements which are, individually or in the aggregate,
material to the operation of the Station; and (iv) Seller holds the right to
enforce and receive the benefits under all of the Station Agreements, free and
clear of all Liens (other than Permitted Liens) but subject to the terms and
provision of each such agreement.
(c) Schedule 3.9 indicates, for each Station Agreement listed thereon
------------
which is being assumed by Buyer, whether consent or approval by any party
thereto is required thereunder for consummation of the transactions contemplated
hereby.
3.10 Litigation. There are no claims, investigations or administrative,
-----------
arbitration or other proceedings pending or, to the actual knowledge of Seller,
threatened against Seller which would, individually or in the aggregate if
adversely determined, have a material adverse effect on the Sale Assets or the
operation of the Station, or which would give any third party the right to
enjoin the transactions contemplated by this Agreement. To the actual knowledge
of Seller, there is no basis for any such claim, investigation, action, suit or
proceeding which would, individually or in the aggregate if adversely
determined, have a material adverse effect on the Sale Assets or operation of
the Station. There are no existing or, to the actual knowledge of Seller,
pending orders, judgments or decrees of any court or governmental agency
affecting Seller, the Station or any of the Sale Assets.
13
<PAGE>
3.11 Labor Matters.
--------------
(a) Seller is not a party to any collective bargaining agreement,
and there is no collective bargaining agreement that determines the terms and
conditions of employment of any employees of Seller.
(b) With respect to the Station:
(i) There is no labor strike, dispute, slow-down or stoppage
pending or, to the knowledge of Seller, threatened against the Station;
(ii) There are neither pending nor, to the actual knowledge of
Seller threatened, any suits, actions, administrative proceedings, union
organizing activities, arbitrations, grievances or other proceedings between
Seller and any employees of the Station or any union representing such
employees; and there are no existing labor or employment or other controversies
or grievances involving employees of the Station which have had or are
reasonably likely to have a material adverse effect on the operation of the
Station;
(iii) (A) Seller is in compliance in all material respects with
all laws, rules and regulations relating to the employment of labor and all
employment contractual obligations, including those relating to wages, hours,
collective bargaining, affirmative action, discrimination, sexual harassment,
wrongful discharge and the withholding and payment of taxes and contributions
except for such non-compliance which individually or in the aggregate would not
have a material adverse effect on the business or financial condition of the
Station; (B) Seller has withheld all amounts required by law or agreement to be
withheld from the wages or salaries of its employees; and (C) Seller is not
liable to any present or former employees or any governmental authority for
damages, arrears of wages or any tax or penalty for failure to comply with the
foregoing except for such liability which individually or in the aggregate would
not have a material adverse effect on the business or financial condition of the
Station;
(iv) Buyer's consummation of the transactions contemplated by
this Agreement in accordance with the terms hereof shall not, as a result of or
in connection with the transactions contemplated hereby, impose upon Buyer the
obligation to pay any severance or termination pay under any agreement, plan or
arrangement binding upon Seller.
3.12 Employee Benefit Plans. Buyer's consummation of the transactions
-----------------------
contemplated by this Agreement in accordance with the terms hereof shall not, as
a result of or in connection with the transactions contemplated hereby, impose
upon Buyer any obligation under any benefit plan, contract or arrangement
(regardless of whether they are written or unwritten and funded or unfunded)
covering employees or former employees
14
<PAGE>
of Seller in connection with their employment by Seller. For purposes of the
Agreement, "benefit plans" shall include without limitation employee benefit
plans within the meaning of Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended, vacation benefits, employment and severance
contracts, stock option plans, bonus programs and plans of deferred
compensation.
3.13 Compliance with Law. The operation of the Station complies in all
--------------------
material respects with the applicable rules and regulations of the FCC and all
federal, state, local or other laws, statutes, ordinances, regulations, and any
applicable order, writ, injunction or decree of any court, commission, board,
agency or other instrumentality.
3.14 Environmental Matters; OSHA.
----------------------------
(a) Seller has obtained all material, environmental, health and
safety permits necessary or required for either the operation of the Station as
currently operated or the ownership of the Sale Assets and all such permits are
in full force and effect and Seller is in compliance with all material terms and
conditions of such permits.
(b) There is no proceeding pending or, to Seller's actual knowledge,
threatened which may result in the reversal, rescission, termination,
modification or suspension of any environmental or health or safety permits
necessary for the operation of the Station as currently conducted or the
ownership of the Sale Assets.
(c) With respect to the Station and the Sale Assets, Seller is in
compliance in all material respects with the provisions of Environmental Laws.
(d) Seller has not, and to Seller's actual knowledge, no other
person or entity has caused or permitted materials to be generated, released,
stored, treated, recycled, disposed of on, under or at such parcels, which
materials, if known to be present, would require clean up, removal or other
remedial or responsive action under Environmental Laws (other than normal
office, cleaning and maintenance supplies in reasonable quantities used and /or
stored appropriately in the buildings or improvements on the Real Property).
Seller has not caused the migration of any materials from the Sale Assets onto
or under any property, which materials, if known to be present, would require
cleanup, removal or other remedial or responsive action under Environmental
Laws. There are no underground storage tanks and no PCBs or friable asbestos in
or on the Sale Assets or the Real Property.
(e) Seller is not subject to any judgment, decree, order or citation
with respect to the Sale Assets related to or arising out of Environmental Laws,
and Seller has not received notice that it has been named or listed as a
potentially responsible party by any person or governmental body or agency in
any matter arising under Environmental Laws.
15
<PAGE>
(f) Seller has not discharged or disposed of any petroleum product
or solid waste on the Real Property or on the property adjacent to the Real
Property owned by third parties, which, to the best of Seller's knowledge, may
form the basis for any present or future claim based upon the Environmental Laws
in existence on the date hereof or as of the Closing, or any demand or action
seeking clean-up of any site, location, body of water, surface or subsurface,
under any Environmental Laws or otherwise, or which may subject the owner of the
Real Property to claims by third parties (except to the extent third party
liability can be established) for damages.
(g) No portion of the Sale Assets have ever been used by Seller,
nor, to the best of Seller's knowledge, by any previous owner of the Sale
Assets, or any of them, in material violation of Environmental Laws or as a
landfill, dump site or any other use which involves the disposal or storage of
Hazardous Materials on-site or in any manner which may materially adversely
affect the value of the Real Property or the Sale Assets.
(h) No pesticides, herbicides, fertilizers or other materials have
been used on, applied to or disposed of by Seller on or in the Sale Assets in
material violation of any Environmental Laws (other than normal office, cleaning
and maintenance supplies in reasonable quantities used and/or stored
appropriately in the buildings or improvements on the Real Property).
(i) With respect to the Sale Assets, Seller has disposed of all
waste in full compliance with all Environmental Laws and, to the best of
Seller's knowledge, there is no existing condition that may form the basis of
any present or future claim, demand or action seeking clean up of any facility,
site, location or body of water, surface or subsurface, for which the Buyer
could be liable or responsible solely as a result of the disposal of waste at
such site by a prior owner of the Sale Assets.
(j) Seller is in material compliance with all OSHA Laws applicable
to the Sale Assets.
3.15 Tower Coordinates. The current vertical elevation and geographical
------------------
coordinates of the Station's towers ("the Tower Coordinates") are as set forth
on Schedule 3.15 hereto. Seller further represents and warrants that (i) the
-------------
Station's tower is properly registered with the FCC; and (ii) the Tower
Coordinates comply with and correspond to the current vertical elevation an
geographical coordinates authorized by the FAA, FCC and any other governmental
authority, including any federal, state or local authority having jurisdiction
over the Station or said towers.
3.16 Filing of Tax Returns. Seller has filed all federal, state and local
----------------------
tax returns which are required to be filed, and has paid all taxes and all
assessments to the extent that such taxes and assessments have become due, other
than such returns, taxes and assessments, the failure to file or pay would not,
individually or in the aggregate, have a material adverse effect on Buyer.
16
<PAGE>
3.17 Absence of Insolvency. No insolvency proceedings of any character
----------------------
including without limitation, bankruptcy, receivership, reorganization,
composition or arrangement with creditors, voluntary or involuntary, affecting
the Seller or any of the Sale Assets, are pending or, to the best knowledge of
Seller, threatened, and Seller has made no assignment for the benefit of
creditors, nor taken any action with a view to, or which would constitute the
basis for the institution of, any such insolvency proceedings.
3.18 Broker's or Finder's Fees. Except for Questcom Media Brokerage, no
--------------------------
agent, broker, investment banker or other person or firm acting on behalf of or
under the authority of Seller or any affiliate of Seller is or will be entitled
to any broker's or finder's fee or any other commission or similar fee, directly
or indirectly, in connection with the transactions contemplated by this
Agreement. Seller shall pay Questcom Media Brokerage and bear any and all
broker's or finder's fee or any other commission or similar fee, directly or
indirectly, owed Questcom Media Brokerage in connection with the transactions
contemplated by this Agreement.
3.19 Insurance. There is now in full force and effect with reputable
----------
insurance companies fire and extended coverage insurance with respect to all
material tangible Sale Assets and public liability insurance, all in
commercially reasonable amounts.
ARTICLE IV
----------
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Buyer represents and warrants to Seller as follows:
4.1 Organization and Good Standing. Buyer is a corporation duly
-------------------------------
organized, validly existing and in good standing under the laws of the State of
Georgia. Buyer has all requisite corporate power to own, operate and lease its
properties and carry on its business as it is now being conducted and as the
same will be conducted following the Closing.
4.2 Authorization and Binding Effect of Documents. Buyer's execution and
----------------------------------------------
delivery of, and the performance of its obligations under, this Agreement and
each of the other Documents, and the consummation by Buyer of the transactions
contemplated hereby and thereby, have been duly authorized and approved by all
necessary corporate action on the part of Buyer. This Agreement and each of the
other Documents to be executed by Buyer have been, or at or prior to the Closing
will be, duly executed by Buyer. The Documents, when executed and delivered by
the parties hereto, will constitute the valid and legally binding agreement of
Buyer, enforceable against Buyer in accordance with their terms, except as may
be limited by bankruptcy, insolvency, or other similar laws affecting the
enforcement of creditors' rights generally, and except as may be
17
<PAGE>
limited by general principles of equity (regardless of whether such
enforceability is sought in a proceeding in equity or at law).
4.3 Absence of Conflicts. Buyer's execution and delivery of, and the
---------------------
performance of its obligations under, this Agreement and each of the other
Documents and the consummation by Buyer of the transaction contemplated hereby
and thereby:
(a) Do not in any material respect (with or without the giving of
notice or the passage of time or both) violate (or result in the creation of any
claim, lien, charge or encumbrance on any of the assets or properties of Buyer
under) any provision of law, rule or regulation or any order, judgment,
injunction, decree or ruling applicable to Buyer in any manner which would have
a material adverse effect on the assets, business, operation or financial
condition or results of operations of Buyer;
(b) Do not (with or without the giving of notice or the passage of
time or both) conflict with or result in a breach or termination of, or
constitute a default or give rise to a right of termination or acceleration
under, the articles of incorporation or bylaws of Buyer or any lease, agreement,
commitment, or other instrument which Buyer is a party to, bound by, or by which
any of its assets or properties may be bound.
4.4 Governmental Consents and Consents of Third Parties. Except for the
----------------------------------------------------
required consent of the FCC, Buyer's execution and delivery of, and the
performance of its obligations under, this Agreement and each of the other
Documents and the consummation by Buyer of the transaction contemplated hereby
and thereby, do not require the consent, waiver, approval, permit, license,
clearance or authorization of, or any declaration or filing with, any court or
public agency or other authority, or the consent of any person under any
agreement, arrangement or commitment of any nature to which Buyer is a party or
by which it is bound, the failure of which to obtain would have a material
adverse effect on the assets, business, operation or financial condition or
results of operations of Buyer.
4.5 Qualification.
--------------
(a) Buyer has no knowledge after due inquiry of any facts concerning
Buyer or any other person with an attributable interest in Buyer (as such term
is defined under the Rules and Regulations) which, under present law (including
the Act) and the Rules and Regulations, would (i) disqualify Buyer from being
the holder of the FCC Licenses, the owner of the Sale Assets or the operator of
the Station upon consummation of the transactions contemplated by this
Agreement, or (ii) raise a substantial and material question of fact (within the
meaning of Section 309(e) of the Act) respecting Buyer's qualifications.
18
<PAGE>
(b) Without limiting the foregoing Subsection (a), Buyer shall make
--------------
the affirmative certifications provided in Section III of FCC Form 314 at the
time of filing of such form with the FCC as contemplated by Section 5.2.
-----------
4.6 Broker's or Finder's Fees. No agent, broker, investment banker, or
--------------------------
other person or firm acting on behalf of or under the authority or Buyer or any
affiliate of Buyer is or will be entitled to any broker's or finder's fee or any
other commission or similar fee, directly or indirectly, in connection with
transactions contemplated by this Agreement.
4.7 Litigation. There are no legal, administrative, arbitration or other
-----------
proceedings or governmental investigations pending or, to the knowledge of
Buyer, threatened against Buyer that would give any third party the right to
enjoin the transactions contemplated by this Agreement.
ARTICLE V
---------
TRANSACTIONS PRIOR TO THE CLOSING DATE
--------------------------------------
5.1 Conduct of the Station's Business Prior to the Closing Date.
------------------------------------------------------------
Subject to the terms and conditions of the LMA, Seller covenants and agrees with
Buyer that between the date hereof and the Closing Date, unless the Buyer
otherwise agrees in writing (which agreement shall not be unreasonably
withheld), Seller shall:
(a) Use reasonable commercial efforts to maintain insurance upon all
of the tangible Sale Assets in such amounts and of such kind comparable to that
in effect on the date hereof with respect to such Sale Assets and with respect
to the operation of the Station, with insurers of substantially the same or
better financial condition;
(b) Operate the Station and otherwise conduct its business in all
material respects in accordance with the terms or conditions of its FCC
Licenses, the Rules and Regulations, the Act and all other rules and
regulations, statutes, ordinances and orders of all governmental authorities
having jurisdiction over any aspect of the operation of the Station, except
where the failure to so operate the Station would not have a material adverse
effect on the Sale Assets or the operation of the Station or on the ability of
Seller to consummate the transactions contemplated hereby;
(c) Comply in all material respects with all Station Agreements now
or hereafter existing which are material, individually or in the aggregate, to
the operation of the Station;
(d) Promptly notify Buyer of any material default by, or claim of
default against, any party under any Station Agreements which are material,
individually or in the aggregate, to the operation of the Station, and any event
or condition which, with
19
<PAGE>
notice or lapse of time or both, would constitute an event of default under such
Station Agreements;
(e) Not mortgage, pledge or subject to any Lien other than a
Permitted Lien (except in the ordinary course of business) any of the Sale
Assets;
(f) Not sell, lease or otherwise dispose of, nor agree to sell, lease
or otherwise dispose of, any of the Sale Assets, except for dispositions in the
ordinary course of business;
(g) Not amend or terminate any Station Agreement, other than in the
ordinary course of business;
(h) Not introduce any material change with respect to the operation
of the Station including, without limitation, any material changes in the
broadcast hours of the Station or any other material change in the Station's
programming policies, except such changes as in the sole discretion of Seller,
exercised in good faith after consultation with Buyer, are required by the
public interest;
(i) Notify Buyer of any material litigation pending or threatened
against Station or Seller or any material damage to or destruction of any assets
included or to be included in the Sale Assets of which Seller receives actual
knowledge.
5.2 Governmental Consents. Seller and Buyer shall file with the FCC,
----------------------
within ten (10) business days after the execution of this Agreement, such
applications and other documents in the name of Seller or Buyer, as appropriate,
as may be necessary or advisable to obtain the FCC Order. Seller and Buyer
shall take all commercially reasonable steps necessary to prosecute such filings
with diligence and shall diligently oppose any objections to, appeals from or
petitions to reconsider such approval of the FCC, to the end that the FCC Order
and a Final Action with respect thereto may be obtained as soon as practicable;
provided, however, that in the event the application for assignment of the FCC
Licenses has been designated for hearing, either Buyer or Seller may elect to
terminate this Agreement pursuant to Section 10.1(c). Buyer shall not knowingly
---------------
take, and Seller covenants that Seller shall not knowingly take, any action that
party knows or has reason to know would materially and adversely affect or
materially delay issuance of the FCC Order or materially and adversely affect or
materially delay its becoming a Final Action without a Material Adverse
Condition, unless such action is requested or required by the FCC, its staff or
the Rules and Regulations. Should Buyer or Seller become aware of any facts
which could reasonably be expected to materially and adversely affect or
materially delay issuance of the FCC Order without a Material Adverse Condition
(including but not limited to, in the case of Buyer, any facts which would
reasonably be expected to disqualify Buyer from controlling the Station), such
party shall promptly notify the other party thereof in writing and both parties
shall
20
<PAGE>
cooperate to take all steps necessary or desirable to resolve the matter
expeditiously and to obtain the FCC's approval of matters pending before it.
5.3 Other Consents. Seller shall use its reasonable best efforts to
---------------
obtain the consent or waivers to the transactions contemplated by this Agreement
required under any assumed Station Agreements; provided that Seller shall not be
required to pay or grant any material consideration in order to obtain any such
consent or waiver.
5.4 Tax Returns and Payments. All taxes pertaining to ownership of the
-------------------------
Sale Assets or operation of the Station prior to the Closing Date will be timely
paid; provided that Seller shall not be required to pay any such tax so long as
the validity thereof shall be contested in good faith by appropriate proceedings
and Seller shall have set aside adequate reserves with respect to any such tax.
5.5 Access Prior to the Closing Date. Prior to the Closing, Buyer and its
---------------------------------
representatives may make such reasonable investigation of the assets and
business of Seller as it may desire; and Seller shall give to Buyer, its
engineers, counsel, accountants and other representatives reasonable access
during normal business hours throughout the period prior to the Closing to
personnel and all of the assets, books, records and files of or pertaining to
the Station, provided that (i) Buyer shall give Seller reasonable advance notice
of each date on which Buyer or any such other person or entity desires such
access, (ii) each person (other than an officer of Buyer) shall, if requested by
Seller, be accompanied by an officer or their representative of Buyer approved
by Seller, which approval shall not be unreasonably withheld, (iii) the
investigations at the offices of Seller shall be reasonable in number and
frequency, and (iv) all investigations shall be conducted in such a manner as
not to physically damage any property or constitute a disruption of the
operation of the Station or Seller. Seller shall furnish to Buyer during such
period all documents and copies of documents and information concerning the
business and affairs of Seller and the Station as Buyer may reasonably request.
5.6 Confidentiality; Press Release. All information, data and materials
-------------------------------
furnished or to be furnished to either party with respect to the other party in
connection with this transaction or pursuant to this Agreement are confidential.
Each party agrees that prior to Closing (a) it shall not disclose or otherwise
make available, at any time, any such information, data or material to any
person who does not have a confidential relationship with such party; (b) it
shall protect such information, data and material with a high degree of care to
prevent the disclosure thereof; and (c) if, for any reason, this transaction is
not consummated, all information, data or material concerning the other party
obtained by such party, and all copies thereof, will be returned to the other
party. After Closing, neither party will disclose or otherwise make available
to any person any of such information, data or material concerning the other
party, except as may be necessary or appropriate in connection with the
operation of the Station by Buyer. Each party shall use its reasonable efforts
to prevent the violation of any of the foregoing
21
<PAGE>
confidentiality provisions by its respective representatives. Notwithstanding
the foregoing, nothing contained herein shall prohibit Buyer or Seller from:
(i) using such information, data and materials in connection
with any action or proceeding brought or any claim asserted by Buyer or Seller
in respect of any breach by the other of any representation, warranty or
covenant made in or pursuant to this Agreement; or
(ii) supplying or filing such information, data or materials to
or with the FCC or any other valid governmental or court authority to the extent
reasonably necessary to obtain any consent, waiver, amendment, modification,
approval, authorization, permit or license which may be necessary to effectuate
this Agreement, and to consummate the transaction contemplated herein.
In the event that either party determines in good faith that a press release or
other public announcement is desirable under any circumstances, the parties
shall consult with each other to determine the appropriate timing, form and
content of such release or announcement and thereafter may make such release or
announcement.
5.7 Reasonable Best Efforts. Subject to the terms and conditions of this
------------------------
Agreement, each of the parties hereto will use its reasonable best efforts to
take all action and to do all things necessary, proper or advisable to satisfy
any condition to the parties' obligations hereunder in its power to satisfy and
to consummate and make effective as soon as practicable the transactions
contemplated by this Agreement.
5.8 FCC Reports. Seller shall continue to file, on a current basis until
------------
the Closing Date, all reports and documents required to be filed with the FCC
with respect to the Station. Seller shall provide Buyer with copies of all such
filings within five business days of the filing with the FCC.
5.9 Conveyance Free and Clear of Liens. At or prior to the Closing,
-----------------------------------
Seller shall obtain executed releases, in suitable form for filing and otherwise
in form and substance reasonably satisfactory to Buyer, of any security
interests granted in the Sale Assets and properties as security for payment of
loans and other obligations or judgments and of any other Liens on the Sale
Assets. At the closing, Seller shall transfer and convey to Buyer all of the
Sale Assets free and clear of all Liens except Permitted Liens.
5.10 Environmental Assessment. Not later than forty-five (45) days after
-------------------------
execution of this Agreement, Buyer may obtain a Phase I ("the Phase I")
environmental assessment of the Sale Assets by an environmental engineer
selected by Buyer. Within fourteen (14) days after Buyer's receipt of the Phase
I, if the Phase I indicates environmental conditions may exist on, under or
affect such properties that may constitute a violation or breach of Seller's
representations and warranties contained in Section 3.14 of this Agreement or
------------
cause the condition contained in Section 6.9 to not be
-----------
22
<PAGE>
satisfied, then Buyer shall be entitled to obtain a Phase II ("the Phase II")
environmental assessment of the Real Property, or any portion thereof. (The
Phase I and the Phase II, if obtained, shall be referred to herein as the
"Environmental Assessment"). Buyer shall commission and pay the cost of such
Environmental Assessment and shall provide a copy to Seller. The Environmental
Assessment shall be subject to the confidentiality provisions of Section 5.6. If
-----------
after appropriate inquiry into the previous ownership of and uses of the Real
Property consistent with good commercial or customary practice, the engineer
concludes that environmental conditions exist on, under or affecting such
properties that would constitute a violation or breach of Seller's
representations and warranties contained in Section 3.14 of this Agreement or
------------
cause the condition contained in Section 6.9 to not be satisfied, then
-----------
notwithstanding any other provisions of this Agreement to the contrary Seller
shall reimburse Buyer for the cost of the Environmental Assessment, and, subject
to the following sentence, Seller shall at its sole cost and expense (up to a
maximum amount of Fifty Thousand Dollars ($50,000)) remove, correct or remedy
any condition or conditions which constitute a violation or breach of Seller's
representations and warranties contained in Section 3.14 prior to the Closing
------------
Date and provide to Buyer at Closing a certificate from an environmental
abatement firm reasonably acceptable to Buyer that such removal, correction or
remedy has been completed so that Seller's representations and warranties
contained in Section 3.14 will be true as of the Closing Date and the condition
------------
contained in Section 6.9 will be satisfied as of the Closing Date. In the event
-----------
the cost of removal, correction or remedy of the environmental conditions
exceeds Fifty Thousand Dollars ($50,000), Buyer may elect to proceed with the
Closing but shall not be obligated to close under any circumstances which would
require Buyer to assume ownership of the Station under conditions where there
exist any uncured violations of warranties, representations or covenants with
respect to environmental matters.
ARTICLE VI
----------
CONDITIONS PRECEDENT TO THE
OBLIGATIONS OF BUYER TO CLOSE
-----------------------------
Buyer's obligation to close the transaction contemplated by this Agreement
is subject to the satisfaction, on or prior to the Closing Date, of each of the
following conditions, unless waived by Buyer in writing:
6.1 Accuracy of Representations and Warranties; Closing Certificate.
----------------------------------------------------------------
(a) The representations and warranties of Seller contained in this
Agreement or in any other Document shall be complete and correct in all material
respects on the date hereof and at the Closing Date with same effect as though
made at such time except for changes that are not materially adverse to the
Station or the Sale Assets taken as a whole.
23
<PAGE>
(b) Seller shall have delivered to Buyer on the Closing Date a
certificate that (i) the condition specified in Section 6.1(a) is satisfied as
--------------
of the Closing Date, and (ii) except as set forth in such certificate (none of
which exceptions shall be materially adverse to the Station, the Sale Assets or
Seller's ability to consummate the transaction contemplated hereby), the
condition specified in Section 6.2 is satisfied as of the Closing Date.
-----------
6.2 Performance of Agreements. Seller shall have performed in all
--------------------------
material respects all of its covenants, agreements and obligations required by
this Agreement and each of the other Documents to be performed or complied with
by it prior to or upon the Closing Date.
6.3 FCC and Other Consents.
-----------------------
(a) The FCC Order shall have been issued by the FCC and shall have
become a Final Action without any Material Adverse Condition.
(b) Conditions which the FCC Order or any order, ruling or decree of
any judicial or administrative body relating thereto or in connection therewith
specifies and requires to be satisfied by Seller prior to transfer of the FCC
Licenses to Buyer shall have been satisfied by Seller.
(c) All other authorizations, consents, approvals and clearances of
federal, state or local governmental agencies required to permit the
consummation by Buyer of the transactions contemplated by this Agreement
including, without limitation, the assignment of any FCC Authorization requested
by Buyer, shall have been obtained; all statutory and regulatory requirements
for such consummation shall have been fulfilled; and no such authorizations,
consents, approvals or clearances shall contain any conditions that individually
or in the aggregate would have a material adverse effect on the operations of
the Station.
6.4 Adverse Proceedings. Neither Buyer nor any affiliate of Buyer shall
--------------------
be subject to any ruling, decree, order or injunction restraining, imposing
material limitations on or prohibiting (i) the consummation of the transactions
contemplated hereby or (ii) its participation in the operation, management,
ownership or control of the Station; and no litigation, proceeding or other
action seeking to obtain any such ruling, decree, order or injunction shall be
pending or shall have been threatened in writing. No governmental authority
having jurisdiction shall have notified any party to this Agreement that
consummation of the transaction contemplated hereby would constitute a violation
of the laws of the United States or of any state or political subdivision or
that it intends to commence proceedings to restrain such consummation or to
force divestiture, unless such governmental authority shall have withdrawn such
notice. No governmental authority having jurisdiction shall have commenced any
such proceeding.
24
<PAGE>
6.5 Opinion of Seller's FCC Counsel. Buyer shall have received from
--------------------------------
Seller's FCC counsel an opinion, dated the Closing Date, in form and substance
reasonably satisfactory to Buyer's FCC counsel, to the effect that:
(a) The FCC Licenses listed on Schedule 3.8 are valid, in good
------------
standing and in full force and effect and include all licenses, permits and
authorizations which are necessary under the Rules and Regulations for Seller to
operate the Station in the manner in which the Station is currently being
operated.
(b) To counsel's knowledge, no condition has been imposed by the FCC
as part of any FCC License which is not set forth on the face thereof as issued
by the FCC or contained in the Rules and Regulations applicable generally to
stations of the type, nature, class or location of the Station.
(c) No proceedings are pending or, to counsel's knowledge, are
threatened which may result in the revocation, modification, non-renewal of,
suspension of, or the imposition of a Material Adverse Condition upon, any of
the FCC Licenses, the denial of any pending applications, the issuance of any
cease and desist order or the imposition of any fines, forfeitures or other
administrative actions by the FCC with respect to the Station or its operation,
other than proceedings affecting the radio broadcasting industry in general.
In rendering such opinion, counsel shall be entitled to rely upon Seller's
representations and warranties in this Agreement and to limit its inquiry to its
files and such FCC files and records as are available to it as of 10:00 o'clock
A.M. Eastern time the business day immediately preceding the Closing Date.
Counsel may state that, as to any factual matters embodied in, or forming a
basis for any legal opinion expressed in, such opinion, counsel's knowledge is
based solely on such inquiry.
6.6 Other Consents. Seller shall have obtained in writing and provided to
---------------
Buyer on or before the Closing Date, without any condition materially adverse to
Buyer or the Station, the consents or waivers to the transactions contemplated
by this Agreement required under those Station Agreements which Buyer has
elected to assume.
6.7 Delivery of Closing Documents. Seller shall have delivered or caused
------------------------------
to be delivered to Buyer on the Closing Date each of the Documents required to
be delivered pursuant to Section 8.2.
-----------
6.8 No Cessation of Broadcasting.
-----------------------------
(a) Between the date hereof and the Closing Date, the Station shall
not have for a period of more than ten (10) days in the aggregate (i) ceased
broadcasting on its authorized frequency, (ii) lost substantially all of its
normal broadcasting capability or (iii) been broadcasting at a power level of
50% or less of its FCC authorized level. Seller
25
<PAGE>
shall promptly notify Buyer of the occurrence of any one or more of the
foregoing events or conditions, and the non-fulfillment of the condition
precedent set forth in this Subsection caused by the occurrence of the events
specified in Seller's notice shall be deemed waived by Buyer unless, within
fifteen (15) days after Buyer's receipt of Seller's written notice, Buyer
notifies Seller in writing to the contrary.
(b) In addition, during the five (5) days immediately preceding the
Closing Date, the Station shall have been operating continuously with
substantially all of its normal broadcasting capability except for cessation or
reductions for insignificant periods of time resulting from occurrences (such as
lightning strikes) over which Seller has no control. Seller shall have the
right to delay Closing for a period not to exceed thirty (30) days if Seller
reasonably determines that any action to restore the Station substantially all
of its normal broadcasting capability can be completed during such delay period.
6.9 Environmental Conditions. The Environmental Assessment obtained by
-------------------------
Buyer pursuant to Section 5.10 hereof shall not have disclosed any material
------------
violation of any Environmental Law which is not removed or cured by Seller prior
to Closing.
ARTICLE VII
-----------
CONDITIONS PRECEDENT OF THE
OBLIGATION OF SELLER TO CLOSE
-----------------------------
The obligation of Seller to close the transaction contemplated by this Agreement
is subject to the satisfaction, on or prior to the closing Date, of each of the
following conditions, unless waived by Seller in writing:
7.1 Accuracy of Representations and Warranties.
-------------------------------------------
(a) The representations and warranties of Buyer contained in this
Agreement shall be complete and correct in all material respects on the date
hereof and at the Closing Date with the same effect as though made at such time
except for changes that are not materially adverse to Seller.
(b) Buyer shall have delivered to Seller on the Closing Date a
certificate that (i) the condition specified in Section 7.1(a) is satisfied as
--------------
of the Closing Date, and (ii) except as set forth in such certificate (none of
which exceptions shall be materially adverse to Buyer's ability to consummate
the transaction contemplated hereby), the conditions specified in Section 7.2
-----------
are satisfied as of the Closing Date.
7.2 Performance of Agreements. Buyer shall have performed in all material
--------------------------
respects all of its covenants, agreements and obligations required by this
Agreement and
26
<PAGE>
each of the other Documents to be performed or complied with by it prior to or
upon the Closing Date.
7.3. FCC and Other Consents.
-----------------------
(a) The FCC Order shall have been issued by the FCC and shall have
become effective under the rules of the FCC.
(b) Conditions which the FCC Order or any order, ruling or decree of
any judicial or administrative body relating thereto or in connection therewith
specifies and requires to be satisfied by Buyer prior to transfer of the FCC
Licenses to Buyer shall have been satisfied by Buyer.
(c) All other authorizations, consents, approvals and clearances of
all federal, state and local governmental agencies required to permit the
consummation by Seller of the transactions contemplated by this Agreement shall
have been obtained; all statutory and regulatory requirements for such
consummation shall have been fulfilled; and no such authorizations, consents,
approvals or clearances shall contain any conditions that individually or in the
aggregate would have any material adverse effect on Seller.
7.4 Adverse Proceedings. Seller shall not be subject to any ruling,
--------------------
decree, order or injunction restraining, imposing material limitations on or
prohibiting the consummation of the transactions contemplated hereby. No
governmental authority having jurisdiction shall have notified any party to this
Agreement that consummation of the transactions contemplated hereby would
constitute a violation of the laws of the United States or of any state or
political subdivision or that it intends to commence proceedings to restrain
such consummation or to force divestiture, unless such governmental authority
shall have withdrawn such notice. No governmental authority having jurisdiction
shall have commenced any such proceeding.
7.5 Delivery of Closing Documents and Purchase Price. Buyer shall have
-------------------------------------------------
delivered or caused to be delivered to Seller on the Closing Date each of the
Documents required to be delivered pursuant to Section 8.3, and Seller shall
-----------
have received payment of the Purchase Price with the form of payment set forth
in Section 2.5.
-----------
ARTICLE VIII
------------
CLOSING
-------
8.1 Time and Place. Unless otherwise agreed to in advance by the parties,
---------------
Closing shall take place in person or via facsimile at the offices of Buyer's
counsel in Atlanta, Georgia, or at such other place as the parties agree, at
10:00 A.M. Pacific Time on the date (the "Closing Date") that is the later of
(i) the fifth Business Day after the Applicable Date or (ii) the date as soon as
practicable following satisfaction or waiver of
27
<PAGE>
the conditions precedent hereunder. The "Applicable Date" shall be the date on
which issuance of the FCC Order without any Material Adverse Condition has
become a Final Action.
8.2 Documents to be Delivered to Buyer by Seller. At the Closing, Seller
---------------------------------------------
shall deliver or cause to be delivered to Buyer the following:
(a) Certified resolutions of Seller's Board of Directors and
Shareholders approving the execution and delivery of this Agreement and each of
the other documents and authorizing the consummation of the transactions
contemplated hereby and thereby.
(b) The certificate required by Section 6.1(b).
--------------
(c) A bill of sale and other instruments of transfer and conveyance
transferring to Buyer the Tangible Personal Property.
(d) Executed releases, in suitable form for filing and otherwise in
form and substance reasonably satisfactory to Buyer, of any security interests
granted in the Sale Assets as security for payment of loans and other
obligations and of any other Liens (other than Permitted Liens).
(e) Required instruments of transfer and conveyance transferring to
Buyer the Real Property.
(f) An instrument or instruments assigning to Buyer all right, title
and interest of Seller in and to all Station Agreements being assumed by Buyer.
(g) An instrument assigning to Buyer all right, title and interest of
Seller in the FCC Licenses, all pending applications relating to the station
before the FCC, and any remaining Sale Assets not otherwise conveyed.
(h) An instrument assigning to Buyer all rights, title and interest
of Seller to the assets described in Section 2.1(f) hereof.
--------------
(i) The opinion of Seller's FCC counsel, dated the Closing Date, to
the effect set forth in Section 6.5.
-----------
(j) A lease, executed by the owner of the Antenna Tower Site
("Landlord") as is reasonably acceptable to Landlord and Buyer, leasing the
Antenna Tower Site to Buyer at a rate of Two Thousand Five Hundred Dollars
($2,500) (with 4% annual increases in rent) for five (5) years with five (5)
options to renew on the same terms for five (5) years each option.
28
<PAGE>
EXHIBIT "A" TO THE
LOCAL PROGRAMMING AND
MARKETING AGREEMENT
(j) Such additional information and materials as Buyer shall have
reasonably requested, including without limitation, evidence that all consents
and approvals required as a condition to Buyer's obligation to close hereunder
have been obtained.
8.3 Documents to be Delivered to Seller by Buyer. At the Closing, Buyer
shall deliver or cause to be delivered to Seller the following:
(a) Certified resolutions of Buyer's Board of Directors approving the
execution and delivery of this Agreement and each of the other Documents and
authorizing the consummation of the transaction contemplated hereby and thereby.
(b) The Purchase Price as set forth in Section 2.5.
(c) The agreement of Buyer assuming the obligations under any Station
Agreements being assumed by Buyer.
(d) The certificate required under Section 7.1(b).
Such additional information and materials as Seller shall have reasonably
requested.
ARTICLE IX
----------
SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
-------------------------------------------
INDEMNIFICATION
---------------
9.1 Survival of Representation and Warranties. All representations,
-----------------------------------------
warranties, covenants and agreements contained in this Agreement or in any other
Document shall survive the Closing for the Survival Period and the Closing shall
not be deemed a waiver by either party of the representations, warranties,
covenants or agreements of the other party contained herein or in any other
Document. No claim may be brought under this Agreement or any other Document
unless written notice describing in reasonable detail the nature and basis of
such claim is given on or prior to the last day of the Survival Period; except
for claims by Buyer for any amounts owed by Seller to Buyer under Section
-------
9.3(a)(iv) and Section 9.3(a)(v), which claims may be made at any time. In the
- ---------- -----------------
event such a notice is so given, the right to indemnification with respect
thereto under this Article shall survive the Survival Period until such claim is
finally resolved and any obligations with respect thereto are fully satisfied.
Notwithstanding the foregoing, the provisions for survival and the making of
claims shall not apply to the agreements whereby Buyer assumes the obligations
under Subsection 8.3(c), each of which agreements shall be governed by its own
-----------------
terms.
49
<PAGE>
EXHIBIT "A" TO THE
LOCAL PROGRAMMING AND
MARKETING AGREEMENT
9.2 Indemnification in General. Buyer and Seller agree that the rights to
--------------------------
indemnification and to be held harmless set forth in this Agreement shall, as
between the parties hereto and their respective successors and assigns, be
exclusive of all rights to indemnification and to be held harmless that such
party (or its successors or assigns) would otherwise have by statute, common law
or otherwise.
9.3 Indemnification by Seller.
-------------------------
(a) Subject to the provisions of Subsection (b) below and Section 10.2
below, Seller shall indemnify and hold harmless Buyer and any officer, director,
agent, employee and affiliate thereof with respect to any and all demands,
claims, actions, suits, proceedings, assessments, judgments, costs, losses,
damages, liabilities and expenses (including reasonable attorneys' fees)
relating to or arising out of:
(i) Any breach or non-performance by Seller of any of its representations,
warranties, covenants or agreements set forth in this Agreement or any other
Documents; or
(ii) The ownership or operation by Seller of the Station or the Sale
Assets on or prior to the Closing Date; or
(iii) All other liabilities and obligations of Seller other than the
Assumed Obligations; or
(iv) Noncompliance by Seller with the provisions of the Bulk Sales Act, if
applicable, in connection with the transaction contemplated hereby; or
(v) Any violation of any Environmental Laws by Seller or the existence of
any Hazardous Materials on the Real Property on or before Closing.
(b) Except for any amounts owed by Seller to Buyer under Section 9.3(a)
--------------
(iv), Section 9.3(a)(v) and Section 2.7, if Closing occurs, Seller shall not be
- ---- ----------------- -----------
obligated until the aggregate amount of such claims, liabilities, damages,
losses, costs and expenses exceeds Buyer's Threshold Limitation, in which case
Buyer shall then be entitled to indemnification of the entire aggregate amount.
9.4 Indemnification by Buyer.
------------------------
(a) Subject to the provisions of Subsection (b) below and Section 10.2
-------------- ------------
below, Buyer shall indemnify and hold harmless Seller and any officer, director,
agent, employee and affiliate thereof with respect to any and all demands,
claims, actions, suits, proceedings, assessments, judgments, costs, losses,
damages, liabilities and expenses (including reasonable attorneys' fees)
relating to or arising out of:
50
<PAGE>
EXHIBIT "A" TO THE
LOCAL PROGRAMMING AND
MARKETING AGREEMENT
(i) Any breach or non-performance by Buyer of any of its
representations, warranties, covenants or agreements set forth in this Agreement
or any other Document; or
(ii) The ownership or operation of the Station after the Closing Date; or
(iii) All other liabilities or obligations of Buyer.
(b) Except for any amounts owed by Buyer to Seller under Section 2.7, if
-----------
Closing occurs, Buyer shall not be obligated until the aggregate amount of such
claims, liabilities, damages, losses, costs and expenses exceeds Seller's
Threshold Limitation, in which case Seller shall then be entitled to
indemnification of the entire aggregate amount.
9.5 Indemnification Procedures. In the event that an Indemnified Party
--------------------------
may be entitled to indemnification hereunder with respect to any asserted claim
of, or obligation or liability to, any third party, such party shall notify the
Indemnifying Party thereof, describing the matters involved in reasonable
detail, and the Indemnifying Party shall be entitled to assume the defense
thereof upon written notice to the Indemnified Party with counsel reasonably
satisfactory to the Indemnified Party; provided, that once the defense thereof
is assumed by the Indemnifying Party, the Indemnifying Party shall keep the
Indemnified Party advised of all developments in the defense thereof and any
related litigation, and the Indemnified Party shall be entitled at all times to
participate in the defense thereof at its own expense. If the Indemnifying
Party fails to notify the Indemnified Party of its election to defend or contest
its obligation to indemnify under this Article IX, the Indemnified Party may
pay, compromise, or defend such a claim without prejudice to any right it may
have hereunder.
ARTICLE X
---------
TERMINATION; LIQUIDATED DAMAGES
-------------------------------
10.1 Termination. If Closing shall not have previously occurred, this
-----------
Agreement shall terminate upon the earliest of:
(a) the giving of written notice from Seller to Buyer, or from Buyer to
Seller, if:
(i) Seller gives such termination notice and is not at such time in
material default hereunder, or Buyer gives such termination notice and Buyer is
not at such time in material default hereunder; and
(ii) Either:
51
<PAGE>
EXHIBIT "A" TO THE
LOCAL PROGRAMMING AND
MARKETING AGREEMENT
(A) any of the representations or warranties contained herein of Buyer (if
such termination notice is given by Seller), or of Seller (if such termination
notice is given by Buyer), are inaccurate in any respect and materially adverse
to the party giving such termination notice unless the inaccuracy has been
induced by or is the result of actions or omissions of the party giving such
termination notice; or
(B) Any material obligation to be performed by Buyer (if such termination
notice is given by Seller) or by Seller (if such termination notice is given by
Buyer) is not timely performed in any material respect unless the lack of timely
performance has been induced by or is the result of actions or omissions of the
party giving such termination notice; or
(C) Any condition (other than those referred to in foregoing Clauses (A)
and (B)) to the obligation to close the transaction contemplated herein of the
party giving such termination notice has not been timely satisfied; and any such
inaccuracy, failure to perform or non-satisfaction of a condition neither has
been cured nor satisfied within twenty (20) days after written notice thereof
from the party giving such termination notice nor waived in writing by the party
giving such termination notice.
(b) Written notice from Seller to Buyer, or from Buyer to Seller, at any
time after one year from the date this Agreement is executed; provided that
termination shall not occur upon the giving of such termination notice by Seller
if Seller is at such time in material default hereunder or upon the giving of
such termination notice by Buyer if Buyer is at such time in material default
hereunder.
(c) Written notice from Seller to Buyer, or from Buyer to Seller, at any
time following a determination by the FCC that the application for consent to
assignment of the FCC Licenses has been designated for hearing; provided that
the party which is the subject of the hearing (or whose alleged actions or
omissions resulted in the designation for hearing) may not elect to terminate
under this subsection (c).
(d) The written election by Buyer under Article XI.
10.2 Obligations Upon Termination.
----------------------------
(a) In the event this Agreement is terminated pursuant to Section
-------
10.1(a)(ii)(A) or (B), the aggregate liability of Buyer for breach hereunder
- -------------- ---
shall be limited as provided in Subsections (c) and (e), below and the aggregate
-----------------------
liability for Seller for breach hereunder shall be limited as provided in
Subsections (d) and (e), below. In the event this Agreement is terminated for
- -----------------------
any other reason, neither party shall have any liability hereunder.
52
<PAGE>
EXHIBIT "A" TO THE
LOCAL PROGRAMMING AND
MARKETING AGREEMENT
(b) Upon termination of this Agreement, Buyer shall be entitled to the
return of the Earnest Money from the Escrow Agent under the Escrow Agreement (i)
if such termination is effected by Buyer's giving of valid written notice to
Seller pursuant to Subsections 10.1(a), (b) (c) or (d) , or (ii) if such
-----------------------------------
termination is effected by Seller's giving of valid written notice to Buyer
pursuant to Subsections 10.1(a)(ii)(C), 10.1(b) or 10.1(c). If Buyer is
----------------------------------------------
entitled to the return of the Earnest Money, Seller shall cooperate with Buyer
in taking such action as is required under the Escrow Agreement in order to
effect such return from the Escrow Agent.
(c) If this Agreement is terminated by Seller's giving of valid written
notice to Buyer pursuant to Subsection 10.1(a)(ii)(A) or (B), Buyer agrees that
------------------------- ---
Seller shall be entitled to receive upon such termination, as liquidated damages
and not as a penalty, the Earnest Money ("Liquidated Damages Amount"). SELLER'S
RECEIPT OF THE LIQUIDATED DAMAGES AMOUNT SHALL CONSTITUTE PAYMENT OF LIQUIDATED
DAMAGES HEREUNDER AND NOT A PENALTY, AND SHALL BE SELLER'S SOLE REMEDY AT LAW OR
IN EQUITY FOR BUYER'S BREACH HEREUNDER IF CLOSING DOES NOT OCCUR. BUYER AND
SELLER EACH ACKNOWLEDGE AND AGREE THAT THE LIQUIDATED DAMAGE AMOUNT IS
REASONABLE IN LIGHT OF THE ANTICIPATED HARM WHICH WILL BE CAUSED BY BUYER'S
BREACH OF THIS AGREEMENT, THE DIFFICULTY OF PROOF OF LOSS, THE INCONVENIENCE AND
NON-FEASIBILITY OF OTHERWISE OBTAINING AN ADEQUATE REMEDY, AND THE VALUE OF THE
TRANSACTION TO BE CONSUMMATED HEREUNDER.
(d) Notwithstanding any provision of this Agreement to the contrary, but
subject to the provisions of the following sentences, if this Agreement is
terminated by Buyer's giving of written notice to Seller pursuant to Subsection
----------
10.1(a), Buyer shall not be entitled to damages or indemnification from Seller.
- -------
Subject to the following sentence, if Seller attempts to terminate this
Agreement under circumstances where it is not entitled to do so, or if Seller,
by its own action, causes a breach of warranty or fails to satisfy a condition
(including without limitation a refusal to consummate the transaction after
Buyer has satisfied all conditions to Seller's obligation to close and Buyer has
demonstrated its willingness and ability to close on the terms set forth in this
Agreement and Buyer is not in default hereunder) with the intent of creating a
situation whereby Buyer elects to terminate under Section 10.1(a) and Buyer does
---------------
so elect to terminate, the monetary damages, if any, to which Buyer shall be
entitled shall be limited to direct and actual damages and shall in no event
exceed the Liquidated Damages Amount in the aggregate. If a circumstance
described in the preceding sentence should arise and if Buyer establishes that
the action of Seller described therein was taken intentionally in order to allow
Seller to sell or enter into negotiations to sell the Station to another party,
the damages to which Buyer shall be entitled shall not be limited to direct and
actual damages.
53
<PAGE>
EXHIBIT "A" TO THE
LOCAL PROGRAMMING AND
MARKETING AGREEMENT
(e) In any dispute between Buyer and Seller as to which party is entitled
to all or a portion of the Earnest Money, the prevailing party shall receive, in
addition to that portion of the Earnest Money to which it is entitled, an amount
equal to interest on that portion at the rate of 10% per annum, calculated from
the date the prevailing party's demand for all or a portion of the Earnest Money
is received by the Escrow Agent.
10.3 Termination Notice. Each notice given by a party pursuant to Section
------------------ -------
10.1 to terminate this Agreement shall specify the Subsection (and clause or
- ----
clauses thereof) of Section 10.1 pursuant to which such notice is given.
------------
ARTICLE XI
----------
CASUALTY
--------
Upon the occurrence of any casualty loss, damage or destruction material to
the operation of the Station prior to the Closing, Seller shall promptly give
Buyer written notice setting forth in detail the extent of such loss, damage or
destruction and the cause thereof if known. Seller shall use its reasonable
efforts to promptly commence and thereafter to diligently proceed to repair or
replace any such lost, damaged or destroyed property. In the event that such
repair or replacement is not fully completed prior to the Closing Date, Buyer
may elect to postpone the Closing until Seller's repairs have been fully
completed or to consummate the transactions contemplated hereby on the Closing
Date, in which event Seller shall assign to Buyer the portion of the insurance
proceeds (less all reasonable costs and expenses, including without limitation
attorney's fees, expenses and court costs incurred by Seller to collect such
amounts), if any, not previously expended by Seller to repair or replace the
damaged or destroyed property (such assignment of proceeds to take place
regardless of whether the parties close on the scheduled or deferred Closing
Date) and Buyer shall accept the damaged Sale Assets in their damaged condition.
In the event the loss, damage or destruction causes or will cause the Station
to be off the air for more than seven (7) consecutive days or fifteen (15) total
days, whether or not consecutive, then Buyer may elect either (i) to consummate
the transactions contemplated hereby on the Closing Date, in which event Seller
shall assign to Buyer the portion of the insurance proceeds (less all reasonable
costs and expenses, including without limitation attorney's fees, expenses and
court costs, incurred by Seller to collect such amounts), if any, not previously
expended by Seller to repair or replace the damaged or destroyed property, and
Buyer shall accept the damaged Sale Assets in their damaged condition, or (ii)
to terminate this Agreement.
ARTICLE XII
-----------
CONTROL OF STATION
------------------
Subject to the terms and conditions of the LMA, between the date of this
Agreement and the Closing Date, Buyer shall not control, manage or supervise the
54
<PAGE>
EXHIBIT "A" TO THE
LOCAL PROGRAMMING AND
MARKETING AGREEMENT
operation of the Station or conduct of its business, all of which shall remain
the sole responsibility and under the control of Seller, subject to Seller's
compliance with this Agreement.
ARTICLE XIII
------------
MISCELLANEOUS
-------------
13.1 Further Actions. From time to time before, at and after the Closing,
---------------
each party, at its expense and without further consideration, will execute and
deliver such documents to the other party as the other party may reasonably
request in order more effectively to consummate the transactions contemplated
hereby.
13.2 Access After the Closing Date. After the Closing and for a period of
-----------------------------
twelve (12) months, Buyer shall provide Seller, Seller's counsel, accountants
and other representatives with reasonable access during normal business hours to
the books, records, property, personnel, contracts, commitments and documents of
the Station pertaining to transactions occurring prior to the Closing Date when
requested by Seller, and Buyer shall retain such books and records for the
normal document retention period of Buyer. At the request and expense of Seller,
Buyer shall deliver copies of any such books and records to Seller.
13.3 Payment of Expenses.
-------------------
(a) Any fees assessed by the FCC in connection with the filings
contemplated by Section 5.2(a) or consummation of the transactions contemplated
--------------
hereby shall be shared equally between Seller and Buyer.
(b) All state or local sales or use, stamp or transfer, grant and other
similar taxes payable in connection with consummation of the transactions
contemplated hereby shall be paid by the party primarily liable under applicable
law to pay such tax.
(c) Except as otherwise expressly provided in this Agreement, each of the
parties shall bear its own expenses, including the fees of any attorneys and
accountants engaged by such party, in connection with this Agreement and the
consummation of the transactions contemplated herein.
13.4 Specific Performance. Seller acknowledges that the Station is of a
--------------------
special, unique, and extraordinary character, and that any breach of this
Agreement by Seller could not be compensated for by damages. Accordingly, if
Seller shall breach its obligations under this Agreement, Buyer shall be
entitled, in addition to any of the remedies that it may have, to enforcement of
this Agreement (subject to obtaining any required approval of the FCC) by decree
of specific performance or injunctive relief requiring Seller to fulfill its
obligations under this Agreement. In any action by Buyer to
55
<PAGE>
EXHIBIT "A" TO THE
LOCAL PROGRAMMING AND
MARKETING AGREEMENT
equitably enforce the provisions of this Agreement, Seller shall waive the
defense that there is an adequate remedy at law or equity and agrees that Buyer
shall have the right to obtain specific performance of the terms of this
Agreement without being required to prove actual damages, post bond or furnish
other security.
13.5 Notices. All notices, demands or other communications given
-------
hereunder shall be in writing and shall be sufficiently given if delivered by
courier or sent by registered or certified mail, first class, postage prepaid,
or by telex, cable, telegram, facsimile machine or similar written means of
communication, addressed as follows:
(a) If to Seller, to:
Cherokee Broadcasting, Inc.
1353 13th Avenue
Columbus, Georgia 31901
Attn: Mr. Charles McClure, Sr.
Telephone: (706) 324-0338
Facsimile: ___________________
Copy (which shall not constitute notice) to:
Mr. John G. Griffin, Esq.
Fortson, Bradley & Griffin
440 College Avenue North, Suite 220
Atlanta, Georgia 30603
Telephone: (706) 548-1151
Facsimile: __________________
(b) if to Buyer, to:
c/o Salem Communications Corporation
4880 Santa Rosa Road, Suite 300
Camarillo, California 93012
Facsimile No.: (805) 482-7290
Attention: Jonathan L. Block, Esq.
Corporate Counsel
or such other address with respect to any party hereto as such party may from
time to time notify (as provided above) to the other party hereto. Any such
notice, demand or communication shall be deemed to have been given (i) if so
mailed, as of the close of the third (3rd) business day following the date
mailed, and (ii) if personally delivered or otherwise sent as provided above, on
the date received.
56
<PAGE>
EXHIBIT "A" TO THE
LOCAL PROGRAMMING AND
MARKETING AGREEMENT
13.6 Entire Agreement. This Agreement, the Schedules and Exhibits
----------------
hereto, and the other Documents constitute the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersede any prior negotiations, agreements, understandings or
arrangements between the parties with respect to the subject matter hereof.
13.7 Binding Effect; Benefits. Except as otherwise provided herein, this
------------------------
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective successors or assigns. Except to the extent specified
herein, nothing in this Agreement, express or implied, shall confer on any
person other than the parties hereto and their respective successors or assigns
any rights, remedies, obligations or liabilities under or by reason of this
Agreement.
13.8 Assignment. This Agreement and any rights hereunder shall not be
----------
assignable by either party hereto without the prior written consent of the other
party.
13.9 Governing Law. This Agreement shall in all respects be governed by
-------------
and construed in accordance with the laws of the State of Georgia, including all
matters of construction, validity and performance.
13.10 Bulk Sales. Buyer hereby waives compliance by Seller with the
----------
provisions of the Bulk Sales Act and similar laws of any state or jurisdiction,
if applicable. Seller shall, in accordance with Article IX, indemnify and hold
Buyer harmless from and against any and all claims made against Buyer by reason
of such non-compliance.
13.11 Amendments and Waivers. No term or provision of this Agreement may
----------------------
be amended, waived, discharged or terminated orally but only by an instrument in
writing signed by the party against whom the enforcement of such amendment,
waiver, discharge or termination is sought. Any waiver shall be effective only
in accordance with its express terms and conditions.
13.12 Severability. Any provision of this Agreement which is
------------
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such unenforceability without invalidating the remaining
provisions hereof, and any such unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction. To
the extent permitted by applicable law, the parties hereto hereby waive any
provision of law now or hereafter in effect which renders any provision hereof
unenforceable in any respect.
13.13 Headings. The captions in this Agreement are for convenience of
--------
reference only and shall not define or limit any of the terms or provisions
hereof.
57
<PAGE>
EXHIBIT "A" TO THE
LOCAL PROGRAMMING AND
MARKETING AGREEMENT
13.14 Counterparts. This Agreement may be executed in any number of
------------
counterparts, and by either party on separate counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and the
same instrument.
13.15 References. All references in this Agreement to Articles and
----------
Sections are to Articles and Sections contained in this Agreement unless a
different document is expressly specified.
13.15 Dispute Resolution. Any claims or disputes arising out of this
------------------
Agreement shall be resolved by mediation in Atlanta, Georgia, or, if mediation
does not resolve the claim or dispute within ten (10) days of notice demanding
mediation, by arbitration in Atlanta, Georgia, in accordance with the rules for
commercial arbitration of the American Arbitration Association.
13.16 Schedules and Exhibits. Unless otherwise specified herein, each
----------------------
Schedule and Exhibit referred to in this Agreement is attached hereto, and each
such Schedule and Exhibit is hereby incorporated by reference and made a part
hereof as if fully set forth herein.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first written.
"SELLER" "BUYER "
CHEROKEE BROADCASTING CO. , INC. SALEM MEDIA OF GEORGIA, INC.
Name: _____________________________
By:______________________________
Title: _____________________________ Eric H. Halvorson
Vice President
58
<PAGE>
EXHIBIT "A" TO THE
LOCAL PROGRAMMING AND
MARKETING AGREEMENT
<TABLE>
<CAPTION>
LIST OF SCHEDULES
- -----------------
<S> <C>
Schedule 3.6 Tangible Personal Property.
Schedule 3.7 Description of Real Property.
Schedule 3.8 FCC Licenses.
Schedule 3.9 Station Agreements.
Schedule 3.15 Tower Coordinates
</TABLE>
59
<PAGE>
SCHEDULE 3.6
------------
TANGIBLE PERSONAL PROPERTY
--------------------------
TBD
<PAGE>
SCHEDULE 3.7
------------
DESCRIPTION OF REAL PROPERTY
----------------------------
None.
<PAGE>
SCHEDULE 3.8
------------
FCC LICENSE
-----------
See Attached.
<PAGE>
United States of America
FEDERAL COMMUNICATIONS COMMISSION
FM BROADCAST STATION LICENSE
[SEAL OF THE FEDERAL COMMUNICATIONS COMMISSION]
Authorizing Official:
Official Mailing Address: Arthur E. Doak
- ------------------------------- --------------------------
Arthur E. Doak
CHEROKEE BROADCASTING CO., INC. Supervisory Engineer, FM Branch
P.O. Box 1290 Audio Services Division
CANTON, GA 30114 Mass Media Bureau
- --------------------------------
Grant Date: MAR 20, 1990
Call sign: WCHK-FM This license expires 3:00 am
local time: April 01, 1996
License File No.: BLH-890523KB
This license covers Permit No.: 880701IA
Subject to the provisions of the Communications Act of 1934, subsequent acts
and treaties, and all regulations heretofore or hereafter made by this
Commission, and further subject to the conditions set forth in this license,
the licensee is hereby authorized to use and operate the radio transmitting
apparatus herein described.
This license is issued on the licensee's representation that the statements
contained in licensee's application are true and that the undertakings
therein contained so far as they are consistent herewith, will be carried
out in good faith. The licensee shall, during the term of this license,
render such broadcasting service as will serve the public interest,
convenience, or necessity to the full extent of the privileges herein
conferred.
This license shall not vest in the licensee any right to operate the station
nor any right in the use of the frequency designated in the license beyond
the term hereof, nor in any other manner than authorized herein. Neither the
license nor the right granted hereunder shall be assigned or otherwise
transferred in violation of the Communications Act of 1934. This license is
subject to the right of use or control by the Government of the United
States conferred by Section 606 of the Communications Act of 1934.
Name of Licensee:
CHEROKEE BROADCASTING CO., INC.
Station Location:
GA-CANTON
FCC Form 351-B October 21, 1985 Page 1 of 3
<PAGE>
Call sign: WCHK-FM License No.: BLH-890523KB
Frequency (MHz): 105.7
Channel: 289
Class: C2
Hours of Operation: Unlimited
Main Studio Address:
GA-1880 MARIETTA ROAD, CANTON, CHEROKEE COUNTY.
Transmitter location (address or description):
GA-RABBIT HILL ROAD, HOLLY SPRINGS.
Remote control point address:
GA-1880 MARIETTA ROAD, CANTON.
Transmitter: Type accepted. See Sections 73.1660, 73.1665 and 73.1670
of the Commission's Rules.
Transmitter output power (kW): 21.0
Antenna type: (directional or non-directional): Non-directional
Desc: HARRIS FMH-5AE, FIVE SECTIONS, CIRCULARY POLARIZED
SIDE-MOUNTED ON A CROSS-SECTION GUYED STEEL TOWER.
Antenna coordinates: North Latitude: 34 09 14.0
West Latitude: 84 30 44.0
<TABLE>
<CAPTION>
Horizontally Vertically
Polarized Polarized
Antenna Antenna
<S> <C> <C>
Effective radiated power in the
horizontal plane (kW)........................: 50.0 50.0
Height of radiation center above
ground (meters)..............................: 144.0 144.0
Height of radiation center above
mean sea level (meters)......................: 455.0 455.0
Height of radiation center above
average terrain (meters).....................: 150.0 150.0
</TABLE>
FCC Form 351-B October 21, 1995 VJ Page 2 of 3
<PAGE>
Call sign: WCHK-FM License No.: BLH-890523KB
Overall height of antenna structure above ground (including obstruction
lighting, if any) . . . . . . .: 152.0 meters
Obstruction marking and lighting specifications for antenna
structure:
It is to be expressly understood that the issuance of these specifications is in
no way to be considered as precluding additional or modified marking or lighting
as may hereafter be required under the provisions of Section 303(q) of the
Communications Act of 1934, as amended.
Paragraph A, FCC Form 715-A (Nov. 1983):
There shall be installed at the top of the antenna structure a white
capacitor discharge omindirectional light which conforms to FAA/DOD
Specification L-856, High Intensity Obstruction Lighting Systems. This
light shall be mounted on the highest point of the structure. If the
antenna or other appurtenance at its highest point is incapable of
supporting the omindirectional light, one or more such lights shall be
installed on a suitable adjacent support with the lights mounted not
more than 20 feet below the tip of the appurtenance. The lights shall
be positioned so as to permit unobstructed viewing of at least one
light from aircraft at any normal angle of approach. The light
unit(s) shall emit a beam with a peak intensity around its periphery
of approximately 20,000 candelas during daytime and twilight, and
approximately 4,000 candelas at night:
Paragraph H, FCC Form 715-A (Nov. 1983):
All lights shall be syncronized to flash simultaneously at 40 pulses
per minute. The light system shall be equipped with a light sensitive
control device which shall face the north sky and cause the intensity
steps to change automatically when the north sky illumination on a
vertical surface is as follows:
1. Day to Twilight: Shall not occur before the illumination drops
to 60 footcandles, but shall occur before it drops to 30 foot-
candles.
2. Twilight to Night: Shall not occur before the illumination
drops to 5 footcandles, but shall occur before it drops to
2 footcandles.
3. Night to Day: The intensity changes listed in 1. and 2. above
shall be reversed in transitioning from the night to day
modes.
***SPECIAL PAINTING/LIGHTING CONDITIONS***
OBSTRUCTION MARKING IN ACCORDANCE WITH PARAGRAPHS A,H OF
FCC FORM 715A (PARAGRAPH A MODIFIED TO REQUIRE USE OF L-866
LIGHTS IN LIEU OF L-856, AT THE TOP AND MID-LEVELS OF TOWER)
FCC Form 351-B October 21, 1985 VJ Page 3 of 3
<PAGE>
- ------------------------------------------------------------------------------
REVISED LICENSE AUTHORIZATION
PURSUANT OT COMMISSION ACTION IN MM DOCKET No. 96-90 IMPLEMENTING SECTION 203 OF
THE TELECOMMUNICATIONS ACT OF 1996, THIS IS TO NOTIFY YOU THAT THE LICENSE
AUTHORIZATION FOR STATION: WGST-FM
LOCATION: CANTON, GA
HAS BEEN REVISED TO A TERM EXPIRING ON 04-01-2004
ONLY THE LICENSE TERM OF YOUR PREVIOUSLY ISSUED LICENSE AUTHORIZATION IS
AFFECTED. ALL PREVIOUS TERMS AND CONDITIONS ARE STILL IN EFFECT.
THIS ALSO IS THE LICENSE CERTIFICATE FOR YOUR CURRENTLY AUTHORIZED AUXILIARY
SERVICES.
THIS CARD MUST BE POSTED WITH THE STATION'S LICENSE CERTIFICATE, ANY SUBSEQUENT
MODIFICATIONS, AND ANY PREVIOUSLY ISSUED RENEWAL AUTHORIZATION.
[SEAL OF THE FEDERAL COMMUNICATIONS COMMISSION]
- ------------------------------------------------------------------------------
FEDERAL COMMUNICATIONS FIRST CLASS MAIL
COMMISSION POSTAGE & FEES PAID
WASHINGTON, D.C. 20554 FEDERAL
- ---------------------- COMMUNICATIONS
COMMISSION
OFFICIAL BUSINESS PERMIT NO. G111
PENALTY FOR PRIVATE USE $300
CHEROKEE BROADCASTING CO., INC.
WGST-FM STATION
P.O. BOX 1290
CANTON, GA 30114
<PAGE>
- -----------------------------------------------------------------------------
LICENSE RENEWAL AUTHORIZATION
- -----------------------------
THIS IS TO NOTIFY YOU THAT YOUR APPLICATION FOR RENEWAL OF LICENSE WAS GRANTED
ON 06-11-1996 FOR A TERM EXPIRING ON 04-01-2003
THIS IS YOUR LICENSE RENEWAL AUTHORIZATION FOR STATION WGST-FM
LOCATION: CANTON, GA
THIS ALSO IS THE RENEWAL CERTIFICATE FOR YOUR CURRENTLY AUTHORIZED AUXILIARY
SERVICES.
THIS CARD MUST BE POSTED WITH THE STATION'S LICENSE CERTIFICATE AND ANY
SUBSEQUENT MODIFICATIONS.
- -----------------------------------------------------------------------------
FEDERAL COMMUNICATIONS FIRST CLASS MAIL
COMMISSION POSTAGE & FEES PAID
WASHINGTON, D.C. 20554 FEDERAL
--------------- COMMUNICATIONS
OFFICIAL BUSINESS COMMISSION
PENALTY FOR PRIVATE USE $300 PERMIT NO. G111
CHEROKEE BROADCASTING CO., INC.
WGST-FM FM STATION
P.O. BOX 1290
CANTON, GA 30114
<PAGE>
SCHEDULE 3.9
------------
STATION AGREEMENTS
------------------
None.
<PAGE>
SCHEDULE 3.15
-------------
TOWER COORDINATES
-----------------
See Attached.
<PAGE>
EXHIBIT "A"
TO THE ASSET PURCHASE AGREEMENT
ESCROW AGREEMENT
----------------
THIS ESCROW AGREEMENT (the "Agreement") dated as of _________________, is
entered into by and between CHEROKEE BROADCASTING CO., INC. ("Seller"), the
owner of certain assets relating to radio station WGST(FM) 105.7MHz, Canton,
Georgia (the "Station"), SALEM MEDIA OF GEORGIA, INC. (the "Buyer") and
("Escrow Agent").
W I T N E S S E T H
WHEREAS, concurrently with the execution of this Agreement, Seller and
Buyer are entering into an Asset Purchase Agreement (the "Purchase Agreement"),
pursuant to which Seller has agreed to sell to Buyer, subject to the terms and
conditions of the Purchase Agreement, substantially all the assets used in the
operation of the Station; and
WHEREAS, the Purchase Agreement provides, upon the terms and conditions set
forth therein, for Buyer to deposit into escrow the amount of Seven Hundred
Fifty Thousand Dollars ($750,000) (the "Escrow Deposit"), and
WHEREAS, the Escrow Deposit shall be held by the Escrow Agent subject to
the terms and conditions hereof.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements set forth herein and in the Purchase Agreement, the parties hereto
agree as follows:
1. The Escrow Agent is hereby appointed and shall have all the rights,
powers, duties and obligations hereinafter provided, and the Escrow Agent
accepts such appointment.
2. Concurrently with the execution and delivery of this Agreement, Buyer
has deposited with the Escrow Agent, in escrow, the Escrow Deposit. The Escrow
Deposit shall be held and disbursed by Escrow Agent as hereinafter set forth.
3. The Escrow Agent agrees to accept Buyer's deposit of the Escrow
Deposit. The Escrow Agent agrees to invest and reinvest the Escrow Deposit in
accordance with the following provisions:
<PAGE>
(a) The Escrow Agent shall invest and reinvest the Escrow Deposit in one
or more of the following investments as selected from time to time by the Escrow
Agent in its discretion (the "Obligations"):
(i) Direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States of
America, or
(ii) money market funds or certificates of deposit issued by any bank,
trust company or national banking association, provided the capital stock,
surplus, and undivided profits of such institution are not less that Fifty
Million Dollars ($50,000,000), or
(iii) Money market funds authorized to invest solely in direct
obligations of the United States of America.
(b) The Obligations shall have a maturity of thirty (30) days or less
during the sixty (60) days immediately after deposit of the Escrow Deposit, and
thereafter shall be available on demand without penalty unless Escrow Agent is
otherwise directed in writing by both Seller and Buyer.
(c) Notwithstanding anything else in this Agreement to the contrary,
interest and other earnings on the Escrow Deposit shall be distributed by the
Escrow Agent to Buyer from time to time upon the request of Buyer.
4. If the Escrow Agent shall receive a certificate in the form of Exhibit
B executed by an authorized officer of each of Buyer and Seller named on Exhibit
A (each, an "Authorized Officer"), the Escrow Agent shall deliver the Escrow
Deposit to Seller not more than one (1) business day after receipt of such
certificate.
5. If the Escrow Agent shall receive a certificate in the form of Exhibit
C executed by an Authorized Officer of each of Buyer and Seller, the Escrow
Agent shall deliver the Escrow Deposit to Buyer not more than one (1) business
day after receipt of such certificate.
6. Either Buyer or Seller, on its own, may request the Escrow Agent to
release the Escrow Deposit to it by sending a written request to the Escrow
Agent, with a copy to the other party, which request shall state the basis upon
which the Buyer or Seller is requesting the release of the Escrow Deposit. The
Escrow Agent shall deliver the Escrow Deposit to the requesting party if the
other party hereto has not objected in writing to such written request with
seven (7) business days after the date of receipt of the request by the Escrow
Agent.
7. If a controversy arises between the parties hereto with respect to the
release of the Escrow Deposit, the Escrow Agent shall not be required to resolve
such controversy or take any action, but shall await final resolution of the
controversy by joint written
<PAGE>
instructions from the parties hereto or pursuant to a nonappealable order from a
court of competent jurisdiction. In any dispute between the Buyer and Seller as
to which party is entitled to all or a portion of the Escrow Deposit, the
prevailing party shall receive from the losing party, in addition to that
portion of the Escrow Deposit to which it is entitled, an amount equal to
interest on that portion of the Escrow Deposit to which it is entitled at the
rate of ten percent (10%) per annum, calculated from the date the prevailing
party's demand for all or a portion of the Escrow Deposit is received by the
Escrow Agent.
8. The Escrow Agent's duties are only such as are specifically provided
herein, and the Escrow Agent shall incur no liability whatsoever to Buyer or
Seller except for gross negligence or willful misconduct. The Escrow Agent
shall have no responsibility hereunder other than to follow faithfully the
instructions herein contained. The Escrow Agent may consult with counsel and
shall be fully protected in any action taken reasonably and in good faith in
accordance with any written instructions given to it hereunder and believed by
it reasonably and in good faith to have been executed by the proper parties.
9. As between Seller and Buyer on the one hand and Escrow Agent on the
other, Seller and Buyer shall be jointly and severally liable to indemnify
Escrow Agent for all reasonable costs, charges, damages and expenses, including
but not limited to reasonable attorney's fees (the "Indemnifiable Costs")
incurred by Escrow Agent arising out of or in connection with the performance of
its obligations under this Agreement, provided that Indemnifiable Costs shall
not include any costs, charges, damages or expenses, including attorneys' fees,
arising out of or in connection with Escrow Agent's gross negligence or willful
misconduct. Solely as between Seller and Buyer in connection with any
controversy or litigation regarding the Escrow Deposit, (i) the one of them who
as a claimant fails to obtain a majority of the relief sought, or who as a
defendant or respondent fails to obtain denial by a judgment not subject to
further appeal of a majority of the relief sought by the other, shall be
responsible for payment of all of the Escrow Agent's Indemnifiable Costs
relating to the controversy or litigation in question; and (ii) in any other
event, Seller and Buyer shall each be responsible for payment of one-half of
Escrow Agent's Indemnifiable Costs.
10. Escrow Agent agrees to serve without compensation for the services to
be rendered hereunder.
11. The obligations of Seller and Buyer to indemnify Escrow Agent under
Paragraph 9 shall survive termination of this Agreement.
- -----------
12. The Escrow Agent may resign at any time by giving written notice
thereof to the other parties hereto, but such resignation shall not become
effective until a successor escrow agent shall have been appointed by the Escrow
Agent and approved by Seller and Buyer and shall have accepted such appointment
in writing. If an instrument of acceptance by a successor escrow agent shall
not have been delivered to the Escrow Agent within thirty (30) days after the
giving of such notice of resignation, the resigning
<PAGE>
Escrow Agent may at the expense of both Buyer and Seller petition any court of
competent jurisdiction for the appointment of a successor escrow agent.
13. In the event of any litigation between Seller and Buyer involving a
disputed claim to the Escrow Deposit, the one of them who is the prevailing
party shall be entitled to receive from the other reasonable attorneys' fees and
other reasonable costs and expenses reasonably incurred by the prevailing party
in connection with such litigation regardless of whether such litigation is
prosecuted to judgment. As used herein, "prevailing party" shall mean in the
case of a claimant, one who is successful in obtaining a majority of the relief
sought, and in the case of a defendant or respondent, one who is successful in
obtaining denial by a judgment not subject to further appeal of a majority of
the relief sought by the claimant.
14. If a controversy arises between the parties hereto with respect to the
release of the Escrow Deposit, any of the Seller, Buyer or Escrow Agent shall,
at its option, file an action or bill in interpleader, or similar action for
such purpose, in a court of competent jurisdiction and the Escrow Agent shall
promptly pay the Escrow Deposit into said court, in which event the Escrow
Agent's duties, responsibilities and liabilities under this Agreement shall
terminate.
15. This Agreement shall be construed in accordance with the laws of the
State of Georgia. This Agreement may be executed in several counterparts, each
one of which shall constitute an original, and all collectively shall constitute
but one instrument.
16. Any notice, consent or request to be given in connection with any of
the terms or provisions of this Agreement shall be in writing and shall be
sufficiently given if delivered by overnight delivery service or sent by
registered or certified mail, first class postage prepaid, or by telegram,
facsimile machine or similar written means of communication, addressed as
follows:
(a) if to the Escrow Agent, to:
(b) if to Seller, to:
Cherokee Broadcasting, Inc.
1353 13th Avenue
Columbus, Georgia 31901
Attn: Mr. Charles McClure, Sr.
Telephone: (706) 324-0338
Facsimile:
<PAGE>
Copy to:
Mr. John E. Griffin, Esq.
Fortson, Bently & Griffin, P.A.
440 College Avenue North, Suite 220
Atlanta, Georgia 30613
Telephone: (706) 548-1151
Facsimile: (706) 548-8113
(c) if to Buyer, to:
Salem Communications Corporation
4880 Santa Rosa Road, Suite 300
Camarillo, California 93012
Facsimile No.: (805) 482-7290
Attention: Jonathan L. Block
Corporate Counsel
or any such other address with respect to any party hereto as such party may
from time to time notify (as provided above) to the other parties hereto. Any
such notice, demand or communication shall be deemed to have been given (i) if
so mailed, as of the close of the third (3rd) business day following the date so
mailed, and (ii) if personally delivered or sent by overnight mail or otherwise
sent as provided above, on the date received.
17. This Agreement shall terminate upon valid delivery of the Escrow
Deposit to Seller and/or Buyer or to a successor escrow agent which executes an
Escrow Agreement substantially similar to this Agreement.
18. Buyer's Federal Taxpayer Identification Number is______________.
Signatures follow on next page.
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Escrow Agreement as
of the date first written.
"SELLER" "BUYER"
CHEROKEE BROADCASTING CO., INC. SALEM MEDIA OF GEORGIA, INC.
By: By:
------------------------- -------------------------
Eric H. Halvorson
Vice President
"ESCROW AGENT"
BY:
-------------------------
<PAGE>
EXHIBIT A
---------
TO ESCROW AGREEMENT
-------------------
SIGNATURES OF AUTHORIZED OFFICERS
---------------------------------
"SELLER" "BUYER"
CHEROKEE BROADCASTING CO., INC. SALEM MEDIA OF GEORGIA, INC.
By: By:
------------------------- -------------------------
Eric H. Halvorson
Vice President
<PAGE>
EXHIBIT B
---------
TO ESCROW AGREEMENT
-------------------
This Certificate is presented pursuant to Section 4 of the Escrow
Agreement, dated December 16, 1996 by and between by between by and between
CHEROKEE BROADCASTING CO., INC. ("Seller"), the owner of certain assets relating
to radio station WGST(FM) 105.7MHz, Canton, Georgia (the "Station"), SALEM
MEDIA OF GEORGIA, INC. (the "Buyer") and ("Escrow Agent"). All
------------------
capitalized terms used and not otherwise defined shall have their respective
meanings provided in the Escrow Agreement.
Pursuant to Section 4 of the Escrow Agreement, Seller and Buyer DO HEREBY
CERTIFY that Seller is entitled to delivery of the Escrow Deposit.
Accordingly, the Escrow Agent is hereby directed to deliver the Escrow
Deposit to Seller within one (1) business day of the receipt of this
Certificate.
IN WITNESS WHEREOF, the undersigned have hereunto set their hand as of the
date indicated.
Dated: , 1997.
------------------
"SELLER" "BUYER"
CHEROKEE BROADCASTING CO., INC. SALEM MEDIA OF GEORGIA, INC.
By: By:
------------------------ ------------------------
Eric H. Halvorson
Vice President
<PAGE>
EXHIBIT C
---------
TO ESCROW AGREEMENT
-------------------
This Certificate is presented pursuant to Section 5 of the Escrow
Agreement, dated December 16, 1996 by and between by and between CHEROKEE
BROADCASTING CO., INC. ("Seller"), the owner of certain assets relating to radio
station WGST(FM) 105.7MHz, Canton, Georgia (the "Station"), SALEM MEDIA OF
GEORGIA, INC. (the "Buyer") and ("Escrow Agent"). All capitalized
---------------
terms used and not otherwise defined shall have their respective meanings
provided in the Escrow Agreement.
Pursuant to Section 5 of the Escrow Agreement, Seller and Buyer DO HEREBY
CERTIFY that Buyer is entitled to delivery of the Escrow Deposit.
Accordingly, the Escrow Agent is hereby directed to deliver the Escrow
Deposit to Buyer within one (1) business day of the receipt of this Certificate.
Dated: , 1997.
---------------------
"SELLER" "BUYER"
CHEROKEE BROADCASTING CO., INC. SALEM MEDIA OF GEORGIA, INC.
By: By:
------------------------- -------------------------
Eric H. Halvorson
Vice President
<PAGE>
EXHIBIT 10.09.01
<TABLE>
<CAPTION>
SECURITY-CONNECTICUT
LIFE INSURANCE COMPANY
SECURITY DRIVE A STOCK COMPANY AVON, CONNECTICUT 06001
- --------------------------------------------------------------------------------------------
A part of Security-Connecticut Corporation
<S> <C> <C> <C>
POLICY NUMBER 2256440M POLICY DATE FEBRUARY 6, 1997
INSURED EDWARD G. ATSINGER III FACE AMOUNT $5,000,000
AGE ISSUE 57 MALE PREMIUM INTERVAL ANNUAL
FIRST PREMIUM $20,175.00 PREMIUM CLASS PREFERRED NONSMOKER
ISSUE DATE JANUARY 30, 1997 EXPIRY DATE FEBRUARY 6, 2035
</TABLE>
This is a legal contract between you and Security-Connecticut Life Insurance
Company. This contract is called a Policy. The word "you" means the Policy
Owner. The application shows the name of the Policy Owner. The word "we" means
the Security-Connecticut Life Insurance Company. We promise to pay the Death
Benefit to the Beneficiary subject to the provisions of this Policy. See
"Payments By Us," for description of the Death Benefit. The Beneficiary is the
party that you name. We will pay the Death Benefit when we receive proof of
death of the Insured. The Policy Data page shows the name of the Insured. Age
at any time is the Issue Age shown on the Policy Data page increased by the
number of policy years completed. For information or service on this Policy,
contact the person who sold you this Policy, or any of our offices including our
Home Office.
IMPORTANT
YOU HAVE PURCHASED A LIFE INSURANCE POLICY. CAREFULLY REVIEW IT FOR
LIMITATIONS.
THIS POLICY MAY BE RETURNED WITHIN 30 DAYS FROM THE DATE YOU RECEIVED IT FOR A
FULL REFUND, BY RETURNING IT TO EITHER THE INSURANCE COMPANY OR THE AGENT WHO
SOLD YOU THIS POLICY. AFTER 30 DAYS, CANCELLATION MAY RESULT IN A LOSS OF PAID
PREMIUM.
Signed at The Home Office in Avon, Connecticut.
/PATRICIA A. DEVITA/ /RONALD D. JARVIS/
Secretary President
INCREASING PREMIUM TERM INSURANCE POLICY TO AGE 95
WITH EXCHANGE OPTIONS AND PREMIUM ADJUSTMENT PROVISION
NON DIVIDENDS
POLICY SUMMARY
This is a Non-Participating Increasing Premium Term Insurance Policy to Age 95.
Premiums are payable to age 95, or until the Insured's death, whichever comes
first. We may charge a premium which is lower, but never higher, than the
premium specified in the Schedule of Maximum Premium by Year. Exchange Options
are available.
- --------------------------------------------------------------------------------
<PAGE>
EXHIBIT 10.09.02
SECURITY-CONNECTICUT
LIFE INSURANCE COMPANY
SECURITY DRIVE A STOCK COMPANY AVON, CONNECTICUT 06001
- --------------------------------------------------------------------------------
A PART OF SECURITY-CONNECTICUT CORPORATION
POLICY NUMBER 225747H POLICY DATE FEBRUARY 6, 1997
INSURED EDWARD G. ATSINGER III FACE AMOUNT $5,000,000
AGE ISSUE 57 MALE PREMIUM INTERVAL ANNUAL
FIRST PREMIUM $20,175.00 PREMIUM CLASS PREFERRED NONSMOKER
ISSUE DATE JANUARY 30, 1997 EXPIRY DATE FEBRUARY 6, 2035
This is a legal contract between you and Security-Connecticut Life Insurance
Company. This contract is called a Policy. The word "you" means the Policy
Owner. The application shows the name of the Policy Owner. The word "we" means
the Security-Connecticut Life Insurance Company. We promise to pay the Death
Benefit to the Beneficiary subject to the provisions of this Policy. See
"Payments By Us," for description of the Death Benefit. The Beneficiary is the
party that you name. We will pay the Death Benefit when we receive proof of
death of the Insured. The Policy Data page shows the name of the Insured. Age at
any time is the Issue Age shown on the Policy Data page increased by the number
of policy years completed. For information or service on this Policy, contact
the person who sold you this Policy, or any of our offices including our Home
Office.
IMPORTANT
YOU HAVE PURCHASED A LIFE INSURANCE POLICY. CAREFULLY REVIEW IT FOR LIMITATIONS.
THIS POLICY MAY BE RETURNED WITHIN 30 DAYS FROM THE DATE YOU RECEIVED IT FOR A
FULL REFUND, BY RETURNING IT TO EITHER THE INSURANCE COMPANY OR THE AGENT WHO
SOLD YOU THIS POLICY. AFTER 30 DAYS, CANCELLATION MAY RESULT IN A LOSS OF PAID
PREMIUM.
Signed at The Home Office in Avon, Connecticut.
/PATRICIA A. DEVITA/ /RONALD D. JARVIS/
Secretary President
INCREASING PREMIUM TERM INSURANCE POLICY TO AGE 95 WITH EXCHANGE OPTIONS AND
PREMIUM ADJUSTMENT PROVISION NON DIVIDENDS
POLICY SUMMARY
This is a Non-Participating Increasing Premium Term Insurance Policy to Age 95.
Premiums are payable to age 95, or until the Insured's death, whichever comes
first. We may charge a premium which is lower, but never higher, than the
premium specified in the Schedule of Maximum Premium by Year. Exchange Options
are available.
<PAGE>
EXHIBIT 10.09.03
SECURITY-CONNECTICUT
LIFE INSURANCE COMPANY
SECURITY DRIVE A STOCK COMPANY AVON, CONNECTICUT 06001
- --------------------------------------------------------------------------------
A PART OF SECURITY-CONNECTICUT CORPORATION
POLICY NUMBER 2257476B POLICY DATE FEBRUARY 6, 1997
INSURED STUART W. EPPERSON FACE AMOUNT $5,000,000
AGE ISSUE 60 MALE PREMIUM INTERVAL ANNUAL
FIRST PREMIUM $26,375.00 PREMIUM CLASS PREFERRED NONSMOKER
ISSUE DATE JANUARY 30, 1997 EXPIRY DATE FEBRUARY 6, 2032
This is a legal contract between you and Security-Connecticut Life Insurance
Company. This contract is called a Policy. The word "you" means the Policy
Owner. The application shows the name of the Policy Owner. The word "we" means
the Security-Connecticut Life Insurance Company. We promise to pay the Death
Benefit to the Beneficiary subject to the provisions of this Policy. See
"Payments By Us," for description of the Death Benefit. The Beneficiary is the
party that you name. We will pay the Death Benefit when we receive proof of
death of the Insured. The Policy Data page shows the name of the Insured. Age
at any time is the Issue Age shown on the Policy Data page increased by the
number of policy years completed. For information or service on this Policy,
contact the person who sold you this Policy, or any of our offices including our
Home Office.
IMPORTANT
YOU HAVE PURCHASED A LIFE INSURANCE POLICY. CAREFULLY REVIEW IT FOR
LIMITATIONS.
THIS POLICY MAY BE RETURNED WITHIN 30 DAYS FROM THE DATE YOU RECEIVED IT FOR A
FULL REFUND, BY RETURNING IT TO EITHER THE INSURANCE COMPANY OR THE AGENT WHO
SOLD YOU THIS POLICY. AFTER 30 DAYS, CANCELLATION MAY RESULT IN A LOSS OF PAID
PREMIUM.
Signed at The Home Office in Avon, Connecticut.
/PATRICIA A. DEVITA/ /RONALD D. JARVIS/
Secretary President
INCREASING PREMIUM TERM INSURANCE POLICY TO AGE 95
WITH EXCHANGE OPTIONS AND PREMIUM ADJUSTMENT PROVISION
NON DIVIDENDS
POLICY SUMMARY
This is a Non-Participating Increasing Premium Term Insurance Policy to Age 95.
Premiums are payable to age 95, or until the Insured's death, whichever comes
first. We may charge a premium which is lower, but never higher, than the
premium specified in the Schedule of Maximum Premium by Year. Exchange Options
are available.
- --------------------------------------------------------------------------------
<PAGE>
EXHIBIT 12.01
Salem Communications Corporation
Exhibit 12.01 - Computation of Ratio of Earnings to Fixed Charges
<TABLE>
<CAPTION>
-------------------------------------------------------------------- Nine Months
Year Ended December 31 Ended
-------------------------------------------------------------------- September 30
1992 1993 1994 1995 1996 1997
-------- -------- -------- -------- -------- -------------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Pretax income (loss) from continuing
operations $ (460) $3,563 $ 439 $ 312 $19,408 $(4,374)
Interest expense 2,851 2,554 3,668 6,646 7,361 8,548
Interest portion of rent expense 540 702 829 1,042 1,274 1,142
------ ------ ------ ------ ------- -------
Earnings $2,931 $6,819 $4,936 $8,000 $28,043 $ 5,316
====== ====== ====== ====== ======= =======
Interest expense $2,851 $2,554 $3,668 $6,646 $ 7,361 $ 8,548
Interest portion of rent expense 540 702 829 1,042 1,274 1,142
------ ------ ------ ------ ------- -------
Fixed Charges $3,391 $3,256 $4,497 $7,688 $ 8,635 $ 9,690
====== ====== ====== ====== ======= =======
Ratio of Earnings to Fixed Charges 0.9 2.1 1.1 1.0 3.2 0.5
====== ====== ====== ====== ======= =======
</TABLE>
<TABLE>
<CAPTION>
--------------------------
Year Nine months
ended ended
December 31 September 30
1996 1997
----------- ------------
<S> <C> <C>
Pro forma pretax income (loss) from continuing
operations 11,589 (7,209)
Pro forma interest expense 15,179 11,384
Interest portion of rent expense 1,274 1,141
------- -------
Pro forma earnings $28,042 $ 5,316
======= =======
Pro forma interest expense $15,179 11,384
Interest portion of rent expense 1,274 1,141
------- -------
Fixed Charges $16,453 $12,525
======= =======
Pro Forma Ratio of Earnings to Fixed Charges 1.7 0.4
======= =======
</TABLE>
<PAGE>
EXHIBIT 21.01
SUBSIDIARIES OF THE COMPANY
<TABLE>
<CAPTION>
NAME OF SUBSIDIARY STATE OF INCORPORATION/ ORGANIZATION
<S> <C>
ATEP Radio, Inc. California
Beltway Media Partners Virginia
Bison Media, Inc. Colorado
Caron Broadcasting, Inc. Ohio
Common Ground Broadcasting, Inc. Oregon
Golden Gate Broadcasting Company, Inc. California
Inland Radio, Inc. California
Inspiration Media, Inc. Washington
Inspiration Media of Texas, Inc. Texas
New England Continental Media, Inc. Massachusetts
New Inspiration Broadcasting Company, California
Inc.
Oasis Radio, Inc. California
Pennsylvania Media Associates, Inc. Pennsylvania
Radio 1210, Inc. California
Salem Communications Corporation Delaware
Salem Media Corporation New York
Salem Media of California, Inc. California
Salem Media of Colorado, Inc. Colorado
Salem Media of Louisiana, Inc. Louisiana
Salem Media of Ohio, Inc. Ohio
Salem Media of Oregon, Inc. Oregon
Salem Media of Pennsylvania, Inc. Pennsylvania
Salem Media of Texas, Inc. Texas
Salem Music Network, Inc. Texas
Salem Radio Network Incorporated Delaware
Salem Radio Representatives, Inc. Texas
South Texas Broadcasting, Inc. Texas
SRN News Network, Inc. Texas
Vista Broadcasting, Inc. California
</TABLE>
<PAGE>
EXHIBIT 23.01
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" and to the
reference to our firm under the caption "Selected Consolidated Financial
Information of the Company" and to the use of our report dated May 9, 1997
(except Note 1, as to which the date is August 13, 1997) in the Registration
Statement (Form S-4) and related Prospectus of Salem Communications Corporation
for the registration of $150,000,000 9 1/2% Series B Senior Subordinated Notes
Due 2007.
Our audit also included the financial statement schedule of Salem Communications
Corporation listed in Item 21(b). This schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion based on our
audits. In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
/s/ Ernst & Young LLP
Woodland Hills, California
December 5, 1997
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS AS OF AND FOR THE PERIODS ENDED DECEMBER 31, 1996 AND
SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0001049664
<NAME> SALEM COMMUNICATIONS CORPORATION
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 9-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1996
<PERIOD-START> JAN-01-1997 JAN-01-1996
<PERIOD-END> SEP-30-1997 DEC-31-1996
<CASH> 2,103 1,962
<SECURITIES> 0 0
<RECEIVABLES> 12,240 11,547
<ALLOWANCES> 1,249 1,005
<INVENTORY> 0 0
<CURRENT-ASSETS> 20,320 13,613
<PP&E> 57,973 49,405
<DEPRECIATION> 21,801 19,098
<TOTAL-ASSETS> 184,133 159,185
<CURRENT-LIABILITIES> 3,102 5,355
<BONDS> 160,100 121,790
0 0
0 0
<COMMON> 5,832 5,832
<OTHER-SE> 3,554 14,702
<TOTAL-LIABILITY-AND-EQUITY> 184,133 159,185
<SALES> 0 0
<TOTAL-REVENUES> 49,449 59,010
<CGS> 0 0
<TOTAL-COSTS> 49,953 48,558
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 924 1,067
<INTEREST-EXPENSE> 8,548 7,361
<INCOME-PRETAX> (4,374) 19,408
<INCOME-TAX> (1,790) 6,655
<INCOME-CONTINUING> (2,584) 12,753
<DISCONTINUED> 0 0
<EXTRAORDINARY> (1,090) 0
<CHANGES> 0 0
<NET-INCOME> (3,674) 12,753
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
</TABLE>
