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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
(Mark One)
/X/ Annual Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 [Fee Required]
For the fiscal year ended December 31, 1994 or
/ / Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 [No Fee Required]
For the transition period from ________________to ______________
Commission file number 1-8309.
PRICE COMMUNICATIONS CORPORATION
(Exact name of registrant as specified in its charter)
New York 13-2991700
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
45 Rockefeller Plaza, New York, New York 10020
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 757-5600
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
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Common Stock, par value $.01 per share American Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None.
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under its Plan
of Reorganization as confirmed by the court.
Yes X No
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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports); and (2) has been subject to the
filing requirements for the past 90 days. YES X NO .
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Page 1 of ____ Pages
The Exhibit Index Appears on Page ___
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K (229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to the Form 10-K. / /
AGGREGATE MARKET VALUE OF THE VOTING STOCK
HELD BY NONAFFILIATES OF THE COMPANY
Aggregate market value of the Common Stock held by non-affiliates of
the Company, based on the last sale price on the American Stock Exchange
("AMEX") on January 23, 1995 ($6 3/8 as reported in the Wall Street Journal):
approximately $15.5 million. (For this purpose, all outstanding shares of
Common Stock have been considered held by non-affiliates, other than the shares
beneficially owned by directors, executive officers and principal shareholders
of the Company; certain of such persons disclaim that they are affiliates of the
Company.)
Indicate the number of shares outstanding of each of the Company's
classes of common stock as of the latest practicable date:
8,972,445 shares of Common Stock, par value $.01 per share, were
outstanding as of January 23, 1995.
DOCUMENTS INCORPORATED BY REFERENCE: None.
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PART I
Item 1. Business.
GENERAL
The Company is a nationwide communications company whose current
primary business is owning and operating television stations through
wholly-owned indirect subsidiaries. The Company's television properties
currently consist of one ABC affiliated television station, WHTM-TV (which was
acquired by the Company during September 1994), serving Harrisburg/Lancaster/
Lebanon/York, Pennsylvania; and three NBC affiliated television stations,
KSNF-TV, serving Joplin, Missouri/Pittsburg, Kansas; KJAC-TV, serving
Beaumont/Port Arthur, Texas; and KFDX-TV, serving Wichita Falls, Texas/Lawton,
Oklahoma. During 1994, the Company sold its three AM and three FM radio
stations serving the Fort Wayne, Indiana; Buffalo, New York; and West Palm
Beach, Florida markets. The Company intends to continue to investigate
potential media acquisitions involving television and radio properties and,
possibly, outdoor advertising and newspapers.
The Company's business strategy is to acquire communications properties
at prices it considers attractive, finance such properties on terms satisfactory
to it, manage such properties in accordance with its operating strategy and
dispose of them if and when the Company determines such disposition to be in its
best interest. See "Recent Developments" regarding sales and acquisitions of
properties since the beginning of 1994. For the foregoing reasons, the results
of the Company's historical operations are not comparable to or indicative of
results in the future. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
The Company was organized in New York in 1979 and began active
operations in 1981. Its principal executive offices are located at 45
Rockefeller Plaza, New York, New York 10020, and its telephone number is (212)
757-5600. References to the "Company" or "Price" in this report include Price
Communications Corporation and its subsidiaries, unless the context otherwise
indicates.
RECENT DEVELOPMENTS
In February, 1994, the Company entered into an agreement to purchase
WHTM-TV, Channel 27, serving Harrisburg/Lancaster/ Lebanon/York, Pennsylvania,
the nation's 44th largest television market, at a purchase price based (subject
to adjustment) on a 7.25 multiple of the station's cash flow during a 12-month
period preceding the closing. The purchase was consummated on September 16,
1994, at which time the Company paid cash consideration of approximately $47
million plus a $4 million working capital adjustment. The funds utilized to
make such acquisition were
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principally supplied under an amended and restated line of credit agreement
(the "Amended Line of Credit") with Bank of Montreal.
The Amended Line of Credit provided a seven year revolving credit
facility of up to $45 million, which amount is permanently reduced periodically
over its term. On October 17, 1994, the net proceeds from the sale of the
Company's radio stations in West Palm Beach, Florida, were used to repay $22.5
million of borrowings under the Amended Line of Credit, at which time the
facility was reduced to $22.5 million. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
During 1994, the Company consummated the sale of all of its radio
properties as described below (see Note 3 of Notes to Consolidated Financial
Statements), realizing gains on such dispositions and utilizing the proceeds of
such sales principally to reduce indebtedness. The Company continues to
investigate acquisitions of media properties and may reenter radio broadcasting.
On April 14, 1994, the Company sold substantially all of the assets of
radio stations WWKB-AM and WKSE-FM in Buffalo, New York, for $5 million in cash.
A pre-tax gain of approximately $3.2 million was recognized on the sale.
On October 17, 1994, the Company sold substantially all of the assets
of radio stations WBZT-AM and WIRK-FM, West Palm Beach, Florida, for
approximately $23 million in cash. The Company realized a pre-tax gain of
approximately $13.5 million on this transaction.
On November 11, 1994, the Company sold substantially all of the assets
of radio stations WOWO-AM, Fort Wayne, Indiana and WOWO-FM, Huntington, Indiana
for approximately $2.3 million in cash. The Company recognized a pre-tax gain
of approximately $.8 million on this transaction.
In addition to the radio dispositions, the Company sold certain other
properties during 1994 (see Note 3 of Notes to Consolidated Financial
Statements), as follows:
During February 1994, the Company sold its outdoor advertising business
for a total sales price of $875,000, including $200,000 cash and a note from the
buyer for $675,000. A pre-tax loss of approximately $350,000 was recognized in
connection with the sale.
On May 20, 1994, the Company sold to TLM Corporation, a former majority
owned subsidiary of the Company, all of the capital stock of Eimar Realty
Corporation, the sole asset of which is a Nashville, Tennessee office building,
for a total purchase price of $815,000 including $275,000 in cash and a note
from the buyer for
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$540,000. The Company had attempted unsuccessfully to find an unrelated buyer
for the Eimar property during the approximately two years preceding such sale.
A de minimis gain was recognized on the sale.
On October 28, 1994 the Company sold its building in Red Bank, New
Jersey for $1.7 million in cash. The Company realized a small gain on the sale.
Prior to 1994, the Company had written off its investment in Fairmont
Communications Corporation ("Fairmont"), which had filed for relief under
Chapter 11 of the U.S. Bankruptcy Code, with the result that the Company's
carrying value in such investment was zero. In January 1994, the Company
entered into a settlement agreement with the various parties to the Fairmont
bankruptcy proceedings whereby the Company agreed to desist in its challenge to
the Fairmont plan of reorganization, Fairmont reimbursed the Company for
$300,000 of legal fees previously incurred by the Company in connection with
such bankruptcy proceeding, and, as an incentive to the manager of the Fairmont
properties to maximize recovery, the Company agreed that any excess over a
recovery of $5 million by the Company from the sale of Fairmont's properties
would be split with such manager. Although the exact amount of any such
recovery is uncertain at this time, the Company believes it will receive a cash
payment of approximately $7 million in respect of such sale shortly, and
anticipates that it may receive a smaller additional payment in the future upon
the resolution by Fairmont of various state tax issues. See "Interests in
Fairmont" below.
Due to the developments described above, the Company's historical
results of operations should not be regarded as indicative of its future
results.
SEGMENT DATA
See Note 13 of Notes to Consolidated Financial Statements for segment
data concerning the Company's television, radio and other operations. The
Company's television and radio segments contributed 70 percent and 30 percent,
respectively, of the Company's net revenue for the year ended December 31, 1994.
The Company sold 75 percent of its interest in The New York Law Publishing
Company at the end of 1992, and during 1993 accounted for its remaining 25
percent interest (which was disposed of during 1993) as an investment under the
equity method of accounting. For the year ended December 31, 1993, the
Company's television, radio, and other segments contributed 52 percent, 45
percent and 3 percent, respectively. For the year ended December 31, 1992, the
Company's television, radio, and publishing and other segments contributed 21
percent, 17 percent and 62 percent, respectively.
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ACQUISITIONS AND DIVESTITURES
Through its history, the Company has actively acquired and divested
broadcasting and other properties. In pursuing its acquisition and divestiture
strategy, the Company has no fixed formula for determining the purchase price of
properties it seeks. With respect to media properties, to date, the Company
generally concentrates its acquisition activities on properties that have a
history of generating Media Cash Flow (operating profits before deductions for
interest, depreciation, amortization and income taxes) or properties that have
potential for growth. In seeking acquisitions of media properties, the Company
generally gives greater weight to a property's Media Cash Flow than to its net
income, because such Media Cash Flow is a standard widely used in the industry
to evaluate media properties. The Company's strategy is to seek properties that
can be purchased at attractive multiples of "trailing" Media Cash Flow, the
Media Cash Flow for the twelve months immediately prior to such acquisition,
either in anticipation that such Media Cash Flow will continue at historical
levels, or in anticipation that the Company will be able to improve it. However,
the Company may consider acquiring properties without such cash flow if it
believes them to have sufficient potential for growth or to otherwise be
consistent with the Company's objectives.
Prices of media properties are affected by a number of factors in
addition to a property's Media Cash Flow, including the characteristics and
anticipated growth of the market area, the terms of purchase, programming, the
competitive situation within the market area, the possibility of improving Media
Cash Flow, the dial position and signal strength (in the case of radio
stations), operating history, network affiliation and assigned signal frequency
(in the case of television stations), and the value of the fixed assets acquired
in connection with the purchase.
To finance its acquisitions and to provide funds for other purposes,
the Company may consider using a variety of sources, including borrowings from
banks and other institutional lenders, the proceeds of debt sold to the public,
seller financing, convertible preferred stock and common stock issued by the
Company or its subsidiaries, and cash on hand. Historically, the Company often
acquired properties through newly organized subsidiaries, based on the credit of
the properties being acquired or by borrowing or issuing securities at the
parent company level.
From time to time brokers and potential buyers approach the Company
with respect to the potential sale of certain of its media properties. The
Company has generally not listed its properties with brokers, but management
follows the practice of permitting potential responsible buyers to visit its
media properties and of presenting bona fide offers from financially responsible
parties to the Company's Board of Directors for consideration. Proceeds of asset
sales will be used to retire outstanding debt, to repurchase equity, to finance
the Company's
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investments in new properties or for other corporate purposes as determined by
the Board of Directors.
INTERESTS IN FAIRMONT
In connection with the sale in 1987 of seven radio stations to Fairmont
for an aggregate sale price of $120 million, the Company loaned $50 million to
Fairmont (the "Fairmont Notes") and acquired a 27% equity interest in Fairmont.
On August 28, 1992, Fairmont filed for voluntary relief under Chapter 11 of the
U.S. Bankruptcy Code. The Fairmont Notes owned by the Company and the Company's
equity investment in Fairmont had no book value as of December 31, 1994.
By order dated September 10, 1993, the United States Bankruptcy Court
for the Southern District of New York confirmed the Chapter 11 plan of
reorganization (the "Fairmont Plan") for Fairmont and the Fairmont Subsidiaries.
Essentially, the Fairmont Plan provided for the orderly liquidation of the
assets of Fairmont and the Fairmont Subsidiaries, and the distribution of the
proceeds derived therefrom according to the relative priorities of the parties
asserting interests therein. In January 1994, the Company entered into a
settlement agreement with the various parties to the Fairmont bankruptcy
proceedings whereby the Company agreed to desist in its challenge to the
Fairmont Plan, Fairmont reimbursed the Company for $300,000 of legal fees
previously incurred by the Company in connection with such bankruptcy
proceeding, and, as an incentive to the manager of the Fairmont properties to
maximize recovery, the Company agreed that any excess over a recovery of $5
million by the Company from the sale of Fairmont's properties would be split
with such manager. Although the exact amount of any such recovery is uncertain
at this time, the Company believes it will receive a cash payment of
approximately $7 million in respect of such sale shortly, and anticipates that
it may receive a smaller additional payment in the future upon resolution by
Fairmont of various state tax issues.
OPERATING STRATEGY
At the outset, the Company develops specific plans for each property
acquired in an effort to improve its efficiency. The Company attempts to
increase the Media Cash Flow of its broadcasting properties and to make each
property a significant one relative to its competitors. The Company's goal is
to realize annual increases in the net revenue of its properties that exceed
increases in operating expenses.
The Company has sought both to elevate its television and radio
stations' positions in their markets and to increase advertising rates, although
the position of stations in their markets tends to fluctuate. Station revenue
growth benefits from the advertising revenue growth of the markets themselves,
which the
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Company believes can generally be measured by the growth in retail sales in the
areas involved.
Local demographic considerations and promotion play less of a role in
television station programming than in the case of radio stations, because a
significant portion of station programming is provided by the television
networks to the Company's network affiliated television stations. The Company
strives to improve or maintain the ratings of its television stations by fine
tuning non-network programming and news coverage, improving promotional
activities and upgrading physical and technical facilities where necessary.
Within each radio market, the Company historically targeted key
demographic groups (determined by age and/or sex), based on advertiser demand
and the nature of competition in the market. Research was periodically
conducted by outside consultants to help refine and improve the programming of
each station, and the Company attempted to direct its sales efforts, both local
and national, to obtain the largest possible share of advertising budgets.
Although broadcast ratings normally reflect all listeners in a market and the
Company's stations may have performed well in the overall ratings, the Company's
emphasis was on superior performance in the targeted demographic group, which it
believed could result in substantial improvement in revenues and Media Cash Flow
by attracting advertisers interested in reaching the target groups. The Company
also sought to generate radio revenues through promotional events and
print-media tie-ins, techniques that may be particularly important as a station
grows more successful and its ability to increase the number of commercials sold
becomes more limited.
THE TELEVISION BROADCASTING INDUSTRY
Television station revenues are primarily derived from local, regional
and national advertising and from compensation paid by television networks for
the local broadcast of network programming, with a small percentage of revenue
sometimes obtained from studio rental and programming-related activities. The
primary costs involved in owning and operating television stations are salaries,
programming, promotion, depreciation and amortization, and selling expenses.
The majority of national and local advertising contracts are
short-term, generally running for only a few weeks, while advertising contracts
sold by networks are typically for longer periods. National spot and local
advertising revenues are more susceptible to fluctuations in the economy than
network compensation. Advertising rates charged by a television station vary,
depending upon the population and number of television sets in the area served
by the station, a program's popularity among the viewers an advertiser wishes to
attract, the number of advertisers vying for available time, the prices being
charged by competitors
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and the availability of alternative media in the market area. The number of
television sets in an area and a program's popularity are reflected in surveys
made by a rating service of the number of sets tuned to the station at various
times. Advertising rates are highest during the most desirable viewing hours.
Local and most regional sales of advertising time are made by a station's sales
staff. National sales are made by a national "rep firm", specializing in
television advertising sales on the national level, which is compensated on a
commission-only basis.
For most network programming that is broadcast by a network affiliate,
the network pays the affiliate compensation, which varies in amount depending
upon the time of day during which the program is broadcast. "Prime-time"
programming (7 to 11 P.M. E.S.T. Sundays and 8 to 11 P.M. E.S.T. other days)
generally earns the highest rates. Recent trends indicate a general increase in
network compensation levels, and the Company has been attempting to negotiate
increased compensation levels under its network affiliation agreements. In
addition, a network often allocates portions of advertising time during network
broadcasts for direct sale by the local station to advertisers and these time
slots have generally been increasing.
While revenues are spread over the calendar year, the first quarter
generally reflects the lowest and the fourth quarter the highest revenue for the
year. The increase in retail advertising each fall in preparation for the
holiday season, combined with political advertising in election years and new
fall television programming, tend to increase fourth quarter revenues.
A significant portion of the programs broadcast by the Company's
television stations is provided by their networks. Programming costs are
generally lower for network affiliates than the independent television stations,
and network programs generally achieve higher ratings than non-network programs.
The Company's television stations also acquire programs from non- network
sources. Programs obtained from non-network sources usually consists of
syndicated television shows, some of which have been shown previously on a
network, and feature films.
The competitive position of a network affiliated television station is
significantly affected by viewer acceptance of the network's programs. Network
affiliation agreements have historically generally been for a term of one or two
years (although the recent trend has been toward longer terms), and are
generally renewed automatically. A network affiliate may reject particular
network programs, which might then be offered to other stations in the area.
Competitive factors, in addition to management experience, include a
station's authorized transmitter power and antenna location, assigned frequency,
network affiliation, carriage of the station's signal on local cable television
systems, viewer
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acceptance of network and local programming and the strength of local
competition. Generally a television broadcasting station in one market does
not compete with stations in another market.
During the past several years, there has been a steady growth of cable
communications and a significant liberalization of FCC rules which allow cable
systems, satellite master antenna systems, and MMDS services located in areas
served by the stations to provide additional program choices. Additionally,
direct broadcast satellite service is increasingly being made available on a
nationwide basis. Moreover, the FCC has begun to issue authorizations for
telephone companies to offer "video dialtone" service that will be similar in
nature to that provided by cable communications systems. By federal statute,
local telephone companies have been precluded from providing cable television
service within their local service areas. However, several U.S. Courts of
Appeals have ruled that the federal statutory ban is unconstitutional. To date,
the existence of additional program services has not had a demonstrably adverse
effect upon the Company's television stations.
The FCC has adopted "must carry" and "retransmission consent" rules at
the direction of Congress pursuant to the 1992 Cable Television Consumer
Protection and Competition Act. Under this new regulatory regime, virtually all
cable systems that carried the Company's television stations have continued to
do so. Some systems have agreed to provide compensation to the Company's
television stations in return for carriage on the cable system under the new
regulations, although such compensation is not substantial. A number of cable
television entities have appealed the must carry and retransmission consent
rules. A three- judge panel of the U.S. District Court for the District of
Columbia upheld the rules, but the U.S. Supreme Court decided to review the
ruling and heard oral argument in January 1994. A decision by the Court is
expected during 1995. In any event, the Company believes that cable subscriber
demand for programming carried by the Company's television stations makes it
unlikely that the stations will cease to be carried by cable systems served by
those stations, even in the absence of must carry rules.
Several other new technologies are in their developmental stages, such
as high definition television capable of transmitting television pictures with
higher resolution, truer color and wider aspect ratios. The FCC has recently
determined that local television stations such as the Company's will be entitled
to frequencies necessary to broadcast high definition television so long as
those frequencies are used within a specified time period. These developing
technologies have had no immediate impact on the television broadcast industry,
and their potential impact on the Company's business cannot be predicted.
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THE RADIO BROADCASTING INDUSTRY
As indicated above, the Company sold during 1994 all of its radio
properties, although it continues to investigate possible radio acquisitions and
may reenter radio broadcasting. Virtually all of the revenue of a radio station
is derived from local and national advertising, and to a minor extent from
network compensation. Local sales are made by a station's sales staff. National
sales are made by a national "rep firm", specializing in radio advertising sales
on the national level, which is compensated on a commission-only basis.
Advertising rates charged by a radio station are based primarily on the
station's ability to attract audiences in the market area. A station's
listenership is reflected in rating service surveys of the number of radios
tuned to the station at various times. The primary costs incurred in owning and
operating radio stations are salaries, programming, depreciation and
amortization, promotion and advertising, rental of premises for studios and
transmitting equipment, music license royalty fees and selling expenses.
Radio broadcasting stations compete with the other broadcasting
stations in their respective market areas, as well as with other advertising
media such as newspapers, broadcast and cable television, magazines, outdoor
advertising, transit advertising and direct mail marketing. Competition within
the radio broadcasting industry occurs primarily in individual market areas, so
that a station in one market does not generally compete with stations in other
market areas. In addition to management experience, factors that are material
to competitive position include the station's rank in its market, authorized
power, assigned frequency, audience characteristics, local program acceptance
and the number and characteristics of other stations in the market area.
FEDERAL REGULATION OF BROADCASTING
Television and radio broadcasting (as well as some other potential
communications investments of the Company) are subject to the jurisdiction of
the FCC under the Communications Act of 1934, as amended ("Communications Act").
The Communications Act, among other things, prohibits the assignment of a
broadcast license or the transfer of control of a corporation holding a license
without the prior approval of the FCC. Legislation has been introduced from time
to time which would amend the Communications Act in various respects and the FCC
from time to time considers new regulations or amendments to its existing
regulations. During the 103rd Congress, legislation involving major revisions
to the Communications Act passed the House of Representatives but was not acted
on by the Senate. It is expected that one or more bills proposing a
comprehensive revision of the Communications Act will be given substantial
attention in the 104th Congress. The Company cannot predict the effect of any
such new legislation or amendments on the Company.
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Television licenses are issued and renewable for terms of five years.
The Company's licenses have the following expiration dates, until renewed:
KSNF-TV . . . . . . . . . . . . . . February 1, 1998
KJAC-TV . . . . . . . . . . . . . . *
KFDX-TV . . . . . . . . . . . . . . August 1, 1998
WHTM-TV . . . . . . . . . . . . . . August 1, 1999
* The license term for KJAC-TV was to have expired on
August 1, 1993. KJAC-TV filed a timely application
for renewal, thereby extending the license term until
action is taken on the renewal application. That
application remains pending due to a viewer complaint
about the Phil Donahue program. The Company expects
the station's license to be renewed during 1995 for a
term ending August 1, 1998.
In the vast majority of cases, broadcast licenses are renewed by the
FCC. Current FCC regulations permit cognizable ownership by one entity of up to
12 television stations, 20 FM radio stations and 20 AM radio stations. With
respect to television stations, however, there is an additional ownership limit
based on audience reach. Under the audience reach limitation, an entity may
acquire cognizable ownership interests in up to 12 television stations only if
the aggregate number of television households reached by the television stations
does not exceed 25% of the national television household audience as determined
by the Arbitron ADI market rankings. The percentage of the national television
household audience reached by the Company's television stations is significantly
under these limitations. On December 15, 1994, the FCC commenced a rulemaking
proceeding to review its television ownership rules. The FCC has proposed to
relax its national ownership limitations with regard to the number of stations
an entity may own and to permit a higher national audience reach. Any new rules
are not likely to take effect until late 1995 or early 1996. The Company is
unable to predict at this time the impact of this initiative on its television
broadcast operations.
The FCC's rules generally prohibit the common ownership of a television
station and an AM radio station, an FM radio station or general circulation
daily newspaper in the same market, although ownership of up to two AM and two
FM stations is generally permitted. Ownership of a CATV system and television
station in the same market is also prohibited. These rules apply to entities
such as the Company, that seek new authorizations or approval of a transfer of
an existing combination. The FCC has relaxed its ownership restrictions such
that common ownership of television and radio stations may be permissible in the
25 largest markets. In
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its review of the television ownership rules, the FCC has proposed to relax or
eliminate the current restriction outside the 25 largest markets on common
ownership of a television station and radio stations in the same market and has
also proposed to permit common ownership of two television stations in some
large markets. Any new rules are not likely to take effect until late 1995 or
early 1996. The Company is unable to predict at this time the impact of these
initiatives on its television broadcast operations.
The FCC requires the attribution to a broadcast company not only of
licenses held by the Company, but also of licenses attributable to its officers
and directors and certain of its stockholders and their affiliates, such that
there would be a violation of FCC regulations where such an officer, director,
stockholder or stockholder's affiliate together held attributable interest in
more than the permitted number of stations on a nationwide or local market
basis. The Company's By-Laws state that the Board of Directors shall prohibit
any voting or transfer of its capital stock, including its Common Stock, which
would cause the Company to violate the Communications Act or FCC regulations.
The foregoing is only a brief summary of certain provisions of the
Communications Act and the regulations of the FCC. Reference is made to the
Communications Act, FCC regulations and the public notices promulgated by the
FCC for further information. The Company is unable to predict what impact, if
any, changes in these laws would have on its operations.
EMPLOYEES
As of December 31, 1994, the Company employed approximately 222 full
time persons at its television stations. The stations have not experienced any
significant labor problems under the Company's ownership and the Company
considers its labor relations on the whole to be good.
The Company relies on experienced managers for its broadcasting
operations, who are given considerable authority at the local level. Where
appropriate, the Company has also hired new management in an effort to improve
the operations of a particular property.
ITEM 2. PROPERTIES.
The Company and its subsidiaries own their studio and production
facilities and own or lease space for other offices, antenna sites and certain
equipment for each of its stations. The Company believes that its other
facilities are suitable and adequate for carrying on its broadcasting and other
operations and that no major capital improvements will be necessary over the
next year. (See Note 16 of the Notes to Consolidated Financial Statements for
information on minimum lease payments of the Company and its subsidiaries for
the next five years.)
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ITEM 3. LEGAL PROCEEDINGS.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth the executive officers of the Company,
their respective ages, the year in which each was first elected an executive
officer and the office of the Company held by each. Each executive officer
will hold office until removed or until their respective successors have been
duly elected and qualified.
<TABLE>
<CAPTION>
Executive
Officer's Name Age Position Officer Since
-------------- --- -------- -------------
<S> <C> <C> <C>
Robert Price 62 President, Chief Executive 1979
Officer and Treasurer
Kim I. Pressman 38 Executive Vice President and 1984
Secretary
Bill Bengtson 63 Senior Vice President/Television 1989
James Lyndon Kreps 34 Vice President and Controller 1995
</TABLE>
Robert Price (Director, President, Chief Executive Officer and
Treasurer of the Company), an attorney, is a former General Partner of Lazard
Freres & Co. He has served as an Assistant United States Attorney, practiced
law in New York and served as Deputy Mayor of New York City. After leaving
public office, Mr. Price became Executive Vice President of The Dreyfus
Corporation and an Investment Officer of The Dreyfus Fund. In 1972 he joined
Lazard Freres & Co. Mr. Price has served as a Director of Holly Sugar
Corporation, Atlantic States Industries, The Dreyfus Corporation, Graphic
Scanning Corp. and Lane Bryant, Inc., and is currently a member of The Council
on Foreign Relations. Mr. Price is also a Director and President of TLM
Corporation, and a Director and President of PriCellular Corporation.
Kim I. Pressman, a certified public accountant, is a graduate of
Indiana University and holds an M.B.A. from New York University. Before
assuming her present office as Executive Vice President and Secretary in
October 1994, Ms. Pressman was Vice President and
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Treasurer of the Company from November 1987 to December 1989, and Senior Vice
President of the Company from January 1990 to September 1994. She was also
Secretary of the Company from July 1989 to February 1990. Ms. Pressman was
Vice President- Broadcasting and Vice President, Controller, and Assistant
Treasurer of the Company from 1984 to October 1987. Prior to joining the
Company in 1984, Ms. Pressman was employed by Peat, Marwick, Mitchell & Co., a
national certified public accounting firm, was Supervisor, Accounting Policies
for International Paper Company and then Manager, Accounting Operations for
Corinthian Broadcasting Division of Dun & Bradstreet Company, a large group
owner of broadcasting stations. Ms. Pressman is a Director, Vice President,
Treasurer and Secretary of TLM Corporation, and a Director, Vice President and
Secretary of PriCellular Corporation.
Bill Bengtson has held a variety of positions in the broadcasting
industry for 34 years and assumed his current position in July 1989. Mr.
Bengtson is also Vice President and General Manager of KSNF-TV, the Company's
NBC affiliate in Joplin, Missouri/Pittsburg, Kansas, a position he has held
since April 1987. From January 1985 to March 1987, he was Vice President and
General Manager of KRCG-TV, a CBS affiliate in Jefferson City/Columbia,
Missouri formerly owned by the Company. Prior to joining the Company in 1985,
Mr. Bengtson was Vice President and General Manager of KOAM-TV in Pittsburg,
Kansas for 12 years. Mr. Bengtson has served on the National Association of
Broadcasters' Television Board of Directors, and as President of the Pittsburg,
Kansas Chamber of Commerce, President of the Pittsburg, Kansas Industrial
Development Corporation and Mayor of Pittsburg, Kansas.
James Lyndon Kreps, a certified public accountant and graduate of
Bucknell University, assumed his current position in July 1994. Prior to
joining the Company in 1994, Mr. Kreps was Vice President of Promotional
Concept Group, Inc. From June 1989 to September 1992 Mr. Kreps served in
various positions at Paramount Pictures Corporation including Director of
Financial Reporting and Analysis for the Television Group. From April 1988 to
June 1989, Mr. Kreps was a Supervisor of Internal Audit for Gulf & Western
(Paramount Communications Corporation). Mr. Kreps also spent four years with
Coopers & Lybrand.
I-13
<PAGE> 16
PART II
ITEM 5. MARKET FOR COMPANY'S COMMON STOCK AND
RELATED STOCKHOLDER MATTERS
a) Market for Common Stock
The Company's Common Stock is listed for trading on the American Stock
Exchange ("AMEX") under the ticker symbol "PR". The range of high and low last
sale prices for the Company's Common Stock on the AMEX for each of the four
quarters of 1994 and 1993, as reported by the AMEX was:
<TABLE>
<CAPTION>
1994 1993
------------------------- ------------------------
Quarter High Low High Low
------- ---- --- ---- ---
<S> <C> <C> <C> <C>
First 4-5/8 3-5/8 2-7/8 2
Second 4-5/16 3-1/2 2-15/16 2
Third 5-7/8 4-1/8 3-3/16 2-3/8
Fourth 7-1/4 4-11/16 4-3/8 2-3/4
</TABLE>
The high and low last sale prices for the Company's Common Stock on
the AMEX for January 23, 1995, as reported by the AMEX were 6 1/2 and 6 3/8,
respectively. The Company's Common Stock has been afforded unlisted trading
privileges on the Pacific Stock Exchange under the ticker symbol "PR.P", on the
Chicago Stock Exchange under the ticker symbol "PR.M" and on the Boston Stock
Exchange under the ticker symbol "PR.B".
b) Holders
On January 23, 1995, there were 705 holders of record of the Company's
Common Stock. The Company estimates that brokerage firms hold Common Stock in
street name for approximately 3,000 persons.
c) Dividends
The Company, to date, has paid no cash dividends on its Common Stock.
The Board of Directors will determine future dividend policy based on the
Company's earnings, financial condition, capital requirements and other
circumstances. It is not anticipated that dividends will be paid on its Common
Stock in the foreseeable future.
ITEM 6. SELECTED FINANCIAL DATA.
The following table sets forth certain selected consolidated financial
data with respect to the Company for each of the five
II-1
<PAGE> 17
years in the period ended December 31, 1994, derived from audited consolidated
financial statements of the Company and Notes thereto. On December 30, 1992,
the Company's consensual Plan of Reorganization, which had been approved by the
United States Bankruptcy Court in the Southern District of New York in July of
that year, became effective. A vertical black line has been placed to separate
pre-reorganization consolidated operating statement and balance sheet items
from the post-reorganization consolidated operating statement and balance sheet
items since they are not prepared on a comparable basis (see Note 1 of Notes to
Consolidated Financial Statements).
II-2
<PAGE> 18
CONSOLIDATED OPERATING STATEMENT ITEMS
(in thousands, except for per share amounts)
<TABLE>
<CAPTION>
Year Ended December 31(2)
-------------------------------------------------------------
Reorganized Company Predecessor Company
-------------------- -------------------------------
1994(1) 1993 1992 1991 1990
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net Revenue $24,039 $22,790 $ 53,957 $48,452 $48,150
Operating Expenses 14,962 16,335 39,567 37,182 37,146
Corporate Expenses 4,475 3,649 4,973 6,123 5,189
Other Expense (Income) - Net (16,245) 539 (35) 12,925 19,535
Interest Expense 813 1,485 17,768 41,473 40,184
Amortization of Debt Discount and
Deferred Debt Expense 646 766 1,004 2,039 2,534
Depreciation and Amortization 3,312 2,343 4,873 5,132 4,957
Unrealized Noncash (Recovery)
Loss on Marketable Securities(3)
Share of Loss of Partially
Owned Companies - 1,118 2,934 9,005 9,546
------- ------- -------- -------- --------
Income (Loss) Before Reorganization
Items, Income Taxes, and Extraordinary Items 16,076 (3,591) (16,981) (56,951) (71,831)
Reorganization Items - - (5,983) - -
------- ------- -------- -------- --------
Income (Loss) Before Income Taxes and
Extraordinary Items 16,076 (3,591) (22,964) (56,951) (71,831)
Income Tax (Expense) Benefits (1,652) (124) (499) 327 (591)
------- ------- -------- -------- --------
Income (Loss) Before Extraordinary Items 14,424 (3,715) (23,463) (56,624) (72,422)
Extraordinary Items (Net of Income Taxes):
Gain on Early Extinguishments of Debt - 2,010 - - 5,287
Gain on Forgiveness of Debt and Partial
Sale of Subsidiary - - 312,678 - -
------- ------- -------- -------- --------
Net Income (Loss) $14,424 ($1,705) $289,215 ($56,624) ($67,135)
======= ======= ======== ======== ========
Per Share Amounts(4):
Income (loss) Before Extraordinary Items $1.44 ($0.31)
Extraordinary Items - 0.17
----- -----
Net Income (Loss) $1.44 (0.14)
===== =====
</TABLE>
(1) Reflects results of operations of WHTM-TV since its acquisition during
September 1994 and the results of the properties disposed of through their
respective dates of sale. See Notes to 2 and 3 to Consolidated Financial
Statements.
(2) Due to the acquisition and dispositions discussed under "Business-Recent
Developments," the borrowings incurred to effect such acquisition, the
retirement of the Company's Secured Notes, the consummation of the Plan of
Reorganization and the adoption of Fresh Start Reporting, the Company's
historical results should not be regarded as indicative of its future
results.
(3) See Note 1 of Notes to Consolidated Financial Statements.
(4) Per share amounts for the Predecessor Company are neither comparable nor
meaningful due to the forgiveness of debt, partial sale of subsidiary,
issuance of new common stock and adoption of Fresh Start Reporting.
II-3
<PAGE> 19
CONSOLIDATED BALANCE SHEET ITEMS
(in thousands, including notes)
<TABLE>
<CAPTION>
As of December 31
----------------------------------------------------------------
Reorganized Company Predecessor Company
--------------------------------- -------------------
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Total Current Assets $ 9,093 $8,925 $28,494 $18,464 $23,895
Total Assets 90,852 37,272 74,327 92,347 114,887
Total Current Liabilities(1) 9,076 3,292 11,373 338,274 297,605
Long-Term Debt(2) 21,310 3,200 22,100 41,198 45,310
Shareholders' Equity (Deficit) 39,079 30,705 40,646 (287,823) (231,199)
</TABLE>
- -----------------------------------
(1) Net of unamortized original issue discount of $5,124 and $6,203 as of
December 31, 1991 and 1990, respectively.
(2) Net of unamortized original issue discount of $8,705 as of December 31,
1992, respectively.
II-4
<PAGE> 20
ITEM 7. Management's Discussion and Analysis of
Financial Condition and Result of Operations.
The Company reorganized and emerged from bankruptcy proceedings on
December 30, 1992 and adopted Fresh Start Reporting in accordance with the
guidelines established by the American Institute of Certified Public
Accountants in Statement of Position 90-7 "Financial Reporting by Entities in
Reorganization Under the Bankruptcy Code". Under Fresh Start Reporting, assets
and liabilities were recorded at their estimated fair market value and the
historical deficit was eliminated. Accordingly, the Company's financial
statements have been prepared as if it is a new reporting entity and a vertical
black line has been placed to separate the pre- reorganization consolidated
statements of operations and cash flows from the post-reorganization
consolidated statements of operations and cash flows since they are not
prepared on a comparable basis.
Due to the acquisition and dispositions discussed under "Business -
Recent Developments," the borrowings incurred to effect the acquisition, the
retirement of the Company's Secured Notes, the consummation of the Plan of
Reorganization and the adoption of Fresh Start Reporting, the Company's
historical results of operations should not be regarded as indicative of its
future results. The following discussion should be read in conjunction with
the Consolidated Financial Statements and the Notes thereto.
RESULTS OF OPERATIONS - GENERAL
The comparability of results for future periods will be affected by
the acquisition and dispositions during 1994 (see Notes 2 and 3 of Notes to
Consolidated Financial Statements) and by the nature and timing of any future
acquisitions or dispositions. Future acquisitions could substantially increase
the Company's operating expenses, depreciation and amortization charges and, if
additional financing is required, interest expense, as well as increasing
revenues. For these reasons, the results of the Company's historical
operations may not be comparable from period to period or indicative of results
in the future.
1994 COMPARED TO 1993
The Company's net revenue, operating expenses, depreciation and
amortization, and interest expense for the year ended December 31, 1994 are not
comparable to the year ended December 31, 1993 due to the acquisition of
WHTM-TV and the borrowings under the Amended Line of Credit to effect such
acquisition, and the dispositions of the Company's radio properties and other
assets (see Notes 2 and 3 of Notes to Consolidated Financial Statements).
During 1994, net revenue increased by 5% to $24.0 million from $22.8 million.
This increase was due to the acquisition of WHTM-TV during September of 1994
which resulted in an increase in television segment revenues of 42.7% to $16.8
million from $11.7 million during 1993. This
II-5
<PAGE> 21
increase was partially offset by a decline in net revenue from radio and other
segment to $7.3 million from $11.0 million. Television revenues during 1994
were impacted by a large influx of political dollars which contributed to
increases in the Company's stations. Operating expenses of the Company
decreased overall to $15.0 million from $16.3 million due to the dispositions
and despite the acquisition largely as a result of the higher operating margins
in television broadcasting as compared to radio broadcasting. Depreciation and
amortization expense rose to $3.3 million from $2.3 million primarily as a
result of the write off of the portion of the reorganization value remaining on
the Company's balance sheet after adjustment for dispositions (see Note 1(e) of
Notes to Consolidated Financial Statements) and amortization of intangibles
associated with the acquisition of WHTM-TV.
The Company recognized net income of approximately $14.4 million in
1994, primarily as a result of the net gains on the sales of properties during
the year of approximately $17.2 million. Additionally, the Company did not
have a share of loss of partially owned companies since it disposed of its
interest in PriCellular Corporation during the fourth quarter of 1993 and
interest expense decreased by approximately $670,000 due to the retirement of
the Secured Notes at the end of 1993. For a substantial portion of 1994, the
Company had little or no long-term debt outstanding until the acquisition of
WHTM-TV during September of 1994.
These improvements were offset, in part, by the increase in
depreciation and amortization noted above, and by an increase in corporate
expenses of approximately $800,000 and an increase in income taxes of $1.5
million. The increase in corporate expenses was primarily attributable to
increased legal, consulting and fees of investment advisors due to the
acquisition of WHTM-TV and the exploration by the Company of various business
opportunities, as well as to the write off of deferred compensation
attributable to an employment agreement related to the Plan of Reorganization
which was renegotiated. The increase in income taxes was attributable mainly
to the state tax consequences of gains the Company recognized on the sale of
properties.
The Company had net income per share according to generally accepted
accounting principles of $1.44 in 1994, as opposed to a net loss per share of
$.14 in 1993. During 1993 net loss includes an extraordinary gain of $.17 due
to the extinguishment of debt. No such extraordinary item existed during 1994.
1993 COMPARED TO 1992
The Company's net revenue, operating expenses and depreciation and
amortization for the year ended December 31, 1993 are not comparable to the
year ended December 31, 1992 due to the sale of 75 percent of its stock of The
New York Law Publishing Company as part of the Plan. The Company's net revenue
decreased by approximately $31.2 million and operating expenses by $23.2
million
II-6
<PAGE> 22
as the result of that sale. However, net revenue from the broadcasting segment
increased by $1.5 million or 7.1 percent, due to an overall improvement in the
market for broadcast advertising, the impact of political revenues and an
improvement in market shares at certain of the Company's properties. Operating
expenses for the broadcasting segment increased 4% primarily as the result of
programming additions at the Company's radio properties.
The Company's corporate expenses decreased from 1992 primarily because
professional fees and administrative expenses incurred during the Company's
reorganization negotiations, excluding those that are classified as
reorganization items, decreased during 1993. Interest expense and the
amortization of debt discount during 1993 decreased from 1992 primarily because
the Company's long-term debt was substantially reduced as a result of its Plan
of Reorganization. Additionally, approximately $23.2 million face amount of
the new Secured Notes was retired in October 1993, further reducing those
expenses.
The Company's share of loss of partially owned companies decreased in
1993 primarily because the Company ceased to record losses on its share of
PriCellular Corporation, once that investment was reduced to its realizable
value of $11 million, the amount that the Company sold it for in October of
1993. The decrease was offset, in part, by losses related to The New York Law
Publishing Company which was accounted for under the equity method in 1993.
The Company's "Other (income) expense, net" decreased to an expense of $539,000
in 1993, as a result of the purchase of 2,249,086 shares of the Company's
Common Stock from Huff (see Note 14 of Notes to Consolidated Financial
Statements) on which a loss of approximately $4.0 million was recognized. This
loss was offset in part by the sale of the Company's preferred and common stock
in NTG for $2.4 million which resulted in a gain of the same amount since the
stock was carried at a book value of zero. Additionally, the Company had a
recovery of approximately $300,000 on the repayment of the note from LL
Broadcasting which had been recorded at $2.9 million under Fresh Start
Reporting. As a result of the foregoing, the Company recognized a loss before
extraordinary items of approximately $3.7 million as compared to a loss of
$23.5 million in 1992. The 1992 loss also includes net reorganization expense
items totalling approximately $6 million relating to the Company's period under
Chapter 11.
Extraordinary income for 1992 was approximately $313 million due to
the forgiveness of debt and the partial sale of The New York Law Publishing
Company as part of the Company's Plan of Reorganization. Extraordinary income
for 1993 was approximately $2 million due to the early extinguishment of the
Company's Secured Notes.
The Company had net loss per share before extraordinary item of $.31
and net loss per share of $.14 for 1993. Per share amounts for prior periods
are not comparable or meaningful due to the
II-7
<PAGE> 23
forgiveness of debt, partial sale of subsidiary, issuance of new common stock
and adoption of Fresh Start Reporting.
LIQUIDITY AND CAPITAL RESOURCES
The Company had approximately $1.1 million in cash and cash
equivalents and positive net working capital at December 31, 1994. Long-term
debt of $22.5 million was owed by the Company as of December 31, 1994.
During September 1994, certain of the Company's subsidiaries entered
into an Amended Line of Credit with the Bank of Montreal ("BMO"). The Amended
Line of Credit was for $45 million, which the Company permanently reduced upon
the sale of its West Palm Beach radio stations to $22.5 million. The Amended
Line of Credit is permanently reduced quarterly by varying amounts, beginning
on September 30, 1995, bears interest at a rate equal to the BMO base rate, as
defined, plus up to a maximum of .75% and is secured by the assets of the
Company's subsidiaries who are the borrowers on the Amended Line of Credit.
See Note 10 of Notes to Consolidated Financial Statements.
If the Company's acquisition strategy (see "Business-Acquisitions and
Divestitures") continues to be successful the Company may require substantial
capital to finance them. The Company may use a variety of sources including
the proceeds of debt sold to the public, additional borrowings from banks and
other institutional lenders, seller financing, convertible preferred stock and
common stock issued at the parent company or subsidiary level. There can be no
assurance that the Company will be successful in obtaining funds from those
sources.
Although the Company has incurred substantial depreciation and
amortization expenses as a result of the purchase of its properties, it does
not anticipate the need to make major capital expenditures in respect of its
existing media properties (see "Properties") during 1995 and it does not
believe that such lack of major capital expenditures will affect its
competitive position. Capital expenditures for 1994 were approximately
$750,000.
The Company's sources of funds to serve its debt and meet its other
obligations historically have been provided by its liquid assets, cash flow
from its operating and investment activities, proceeds from the sale of
properties and proceeds from loans and financings. The Company intends to seek
to improve cash flow from operations by continuing to impose stringent budget
procedures on its media properties and by continuing to seek to increase
revenues at its properties in excess of increases in operating expenses.
On February 10, 1994, the Company's Board of Directors authorized the
repurchase by the Company of up to 2,000,000 shares of its Common Stock. The
Company is authorized to make such purchases from time to time in the market or
in privately
II-8
<PAGE> 24
negotiated transactions. During the year ended December 31, 1994, the Company
repurchased approximately 996,000 shares pursuant to that authorization.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Price Communications Corporation and Subsidiaries Consolidated
Financial Statements are set forth on the following pages of this Part II.
INDEX TO FINANCIAL STATEMENTS
___________
PRICE COMMUNICATIONS CORPORATION and SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Reports of Independent Auditors II-11-1
Consolidated Balance Sheets at December 31,
1994 and 1993 II-11-3
Consolidated Statements of Operations for
Years ended December 31, 1994, 1993
and 1992 II-11-5
Consolidated Statements of Shareholders'
Equity (Deficit) for Years ended
December 31, 1994, 1993 and 1992 II-11-6
Consolidated Statements of Cash Flows for
Years ended December 31, 1994, 1993
and 1992 II-11-7
Notes to Consolidated Financial Statements II-11-9
</TABLE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
II-9
<PAGE> 25
AUDITED CONSOLIDATED FINANCIAL STATEMENTS
AND SCHEDULES
Price Communications Corporation
and Subsidiaries
December 31, 1994 and 1993
and for each of the three years
in the period ended December 31, 1994
with Reports of Independent Auditors
<PAGE> 26
[KPMG PEAT MARWICK LLP LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Price Communications Corporation:
We have audited the accompanying consolidated balance sheet of Price
Communications Corporation and subsidiaries as of December 31, 1994, and the
related consolidated statements of operations, shareholders' equity (deficit),
and cash flows for the year then ended (Reorganized Company) and the
consolidated statements of operations, shareholders' equity (deficit), and cash
flows for the year ended December 31, 1992 (Predecessor Company). In
connection with our audits of the consolidated financial statements, we have
also audited the related financial statement schedules as listed in Part IV,
Item 14(a). These consolidated financial statements and financial statement
schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements and financial statement schedules 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 consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Price
Communications Corporation and subsidiaries as of December 31, 1994, and the
results of their operations and their cash flows for the years ended December
31, 1994 and 1992 in conformity with generally accepted accounting principles.
Also in our opinion, the related financial statement schedules, when considered
in relation to the basic consolidated financial statements taken as a whole
present fairly, in all material respects, the information set forth therein.
As discussed in note 4 to the consolidated financial statements, effective
December 30, 1992, Price Communications Corporation was reorganized under a
plan confirmed by the Federal Bankruptcy Court and adopted a new basis of
accounting whereby all remaining assets and liabilities were revalued at their
estimated fair values. As discussed in notes 1 and 11, Price Communications
Corporation and subsidiaries (Reorganized Company) have changed their method of
accounting for income taxes in 1992 to adopt the provisions of Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes."
/s/ KPMG Peat Marwick LLP
-------------------------
KPMG PEAT MARWICK LLP
NEW YORK, NEW YORK
JANUARY 20, 1995
1
<PAGE> 27
Report of Independent Auditors
The Board of Directors and Shareholders
Price Communications Corporation
We have audited the accompanying consolidated balance sheet of Price
Communications Corporation and subsidiaries (the "Company") as of December 31,
1993 and the related consolidated statements of operations, shareholders'
equity (deficit) and cash flows for the year then ended. Our audit also
included the financial statement schedules listed in Part IV, Item 14(a).
These consolidated financial statements and financial statement schedules are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements and financial
statement schedules based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the consolidated financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Price Communications
Corporation and subsidiaries at December 31, 1993 and the results of their
operations and their cash flows for the year then ended in conformity with
generally accepted accounting principles. Also in our opinion, the related
financial statement schedules, when considered in relation to the basic
consolidated financial statements taken as a whole present fairly, in all
material respects, the information set forth therein.
/s/ Ernst & Young LLP
March 8, 1994
<PAGE> 28
Price Communications Corporation
and Subsidiaries
Consolidated Balance Sheets
<TABLE>
<CAPTION>
December 31
-----------------------------------
1994 1993
-----------------------------------
<S> <C> <C>
ASSETS:
Current assets:
Cash and cash equivalents $ 1,136,010 $ 1,395,102
Accounts receivable, net of allowance for
doubtful accounts of $395,012 in 1994 and
$487,576 in 1993 5,073,450 4,006,801
Film broadcast rights 1,990,874 565,929
Prepaid expenses and other current assets 892,303 2,957,235
-----------------------------------
Total current assets 9,092,637 8,925,067
-----------------------------------
Property and equipment, at cost, less
accumulated depreciation (Note 7) 11,499,936 13,728,171
Broadcast licenses and other intangibles, less
accumulated amortization of $760,666 in
1994 and $406,441 in 1993
(Notes 1 and 2) 67,528,870 12,797,559
Film broadcast rights 1,867,096 138,383
Notes receivable 817,500 -
Other assets 46,091 470,031
Reorganization value in excess of amounts
allocable to identifiable assets, less
accumulated amortization of $63,805 in
1993 (Note 1) - 1,212,289
-----------------------------------
Total assets $ 90,852,130 $ 37,271,500
===================================
</TABLE>
(continued)
3
<PAGE> 29
Price Communications Corporation
and Subsidiaries
Consolidated Balance Sheets - continued
<TABLE>
<CAPTION>
December 31
----------------------------------
1994 1993
----------------------------------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses
(Note 8) $ 3,602,734 $ 2,249,404
Accrued interest - 7,233
Current portion of long-term debt
(Note 10) 1,209,493 -
Other current liabilities (Note 9) 4,264,326 1,035,585
----------------------------------
Total current liabilities 9,076,553 3,292,222
----------------------------------
Long-term debt (Note 10) 21,310,356 3,200,000
Deferred tax effect of basis difference arising
on acquisition* (Note 11) 18,435,308 -
Other liabilities (Note 9) 2,950,585 74,747
Commitments and contingencies (Note 16)
Shareholders' equity (Notes 14 and 15):
Common stock, par value $.01 per share;
authorized 40,000,000 shares; outstanding
8,970,888 shares in 1994 and 9,883,717
shares in 1993 89,709 98,837
Additional paid-in capital 26,270,661 32,310,285
Retained earnings (deficit) 12,718,958 (1,704,591)
---------------------------------
Total shareholders' equity 39,079,328 30,704,531
---------------------------------
Total liabilities and shareholders' equity $ 90,852,130 $ 37,271,500
=================================
</TABLE>
*The Company also has net operating loss carryforwards which may mitigate
federal income taxes, if any, resulting from disposition of the acquired
assets during the carryforward period (see Note 11).
See accompanying notes to consolidated financial statements.
4
<PAGE> 30
Price Communications Corporation
and Subsidiaries
Consolidated Statements of Operations
<TABLE>
<CAPTION>
Year ended December 31
--------------------------------------------------
Reorganized Company Predecessor
------------------------------ Company
1994 1993 1992
------------------------------ -------------
<S> <C> <C> <C>
Revenue $ 28,053,341 $ 26,010,294 $ 57,178,019
Agency and representatives' commissions 4,014,209 3,220,102 3,221,385
Net revenue ------------------------------ -------------
24,039,132 22,790,192 53,956,634
------------------------------ -------------
Operating expenses 14,961,399 16,334,761 39,567,392
Corporate expenses 4,474,787 3,648,524 4,973,287
Other (income) expense, net (Note 12) (16,244,568) 539,289 (35,492)
Interest expense (contractual interest was
$43,105,988 in 1992) 813,493 1,485,389 17,768,032
Amortization of debt discount and deferred
debt expense 645,835 766,075 1,003,578
Depreciation and amortization 3,312,049 2,343,015 4,873,136
Unrealized noncash loss (recovery) on
marketable securities - 145,884 (145,884)
Share of loss of partially owned companies
(Notes 5 and 6) - 1,118,293 2,933,763
------------------------------ -------------
7,962,995 26,381,230 70,937,812
------------------------------ -------------
Income (loss) before reorganization items,
income taxes and extraordinary item 16,076,137 (3,591,038) (16,981,178)
Reorganization items:
Interest income - - 357,000
Professional fees and other - - (1,312,579)
Valuation adjustment (Note 1) - - (5,026,967)
Income (loss) before income taxes and ------------------------------ -------------
extraordinary item 16,076,137 (3,591,038) (22,963,724)
Income tax expense (Note 11) (1,652,588) (123,885) (499,326)
------------------------------ -------------
Income (loss) before extraordinary item 14,423,549 (3,714,923) (23,463,050)
Extraordinary item, net of income taxes of
$0 in 1993 and $900,000 in 1992 (Notes 4,
10, and 11) - 2,010,332 312,678,036
------------------------------ -------------
Net income (loss) $ 14,423,549 $ (1,704,591) $ 289,214,986
Income (loss) per share (Note 1): ============================== =============
Income (loss) before extraordinary item $ 1.44 $ (.31) *
Extraordinary item - .17 *
------------------------------ -------------
Net income (loss) $ 1.44 $ (.14) *
============================== =============
</TABLE>
*Per share amounts for the Predecessor Company are neither comparable nor
meaningful due to forgiveness of debt, partial sale of subsidiary, issuance of
new common stock and adoption of Fresh Start Reporting.
See accompanying notes to consolidated financial statements.
5
<PAGE> 31
Price Communications Corporation
and Subsidiaries
Consolidated Statements of Shareholders' Equity (Deficit)
Years ended December 31, 1994, 1993 and 1992
<TABLE>
<CAPTION>
Predecessor Company
------------------------------------------------
Common Stock Junior Common Stock
------------------------------------------------
No. of Par Value No. of Par
Shares Shares Value
-------------------------------------------------
<S> <C> <C> <C> <C>
Balance, December 31, 1991 9,028,890 $90,289 500,000 $5,000)
Net income - - - -
Treasury stock (552,182) (5,522) - -
Reorganized Company common stock issued on conversion of
Predecessor Company common stock and junior common stock (8,476,708) (84,767) (500,000) (5,000)
Reorganized Company common stock issued on conversion of
debentures - - - -
Elimination of deficit under Fresh Start Reporting - - - -
REORGANIZED COMPANY: -------------------------------------------------
Balance, December 31, 1992 - - - -
Net loss - - - -
Fractional shares issued on conversion of Predecessor Company
common stock - - - -
Purchase and retirement of common stock - - - -
Stock options exercised - - - -
-------------------------------------------------
Balance, December 31, 1993 - - - -
Net income - - - -
Purchase and retirement of common stock - - - -
Stock options exercised - - - -
------------------------------------------------
Balance, December 31, 1994 - $ - - $ -
================================================
Predecessor Company
-----------------------------------------------
Reorganized Company
Treasury Stock Common Stock
-----------------------------------------------
No. of Par Value No. of Par Value
Shares Shares
-----------------------------------------------
<S> <C> <C> <C> <C>
Balance, December 31, 1991 608,800 $(489,298) - $ -
Net income - - - -
Treasury stock (608,800) 489,298 - -
Reorganized Company common stock issued on conversion of
Predecessor Company common stock and junior common stock - - 666,027 6,660
Reorganized Company common stock issued on conversion of
debentures - - 11,443,556 114,436
Elimination of deficit under Fresh Start Reporting - - - -
REORGANIZED COMPANY: -----------------------------------------------
Balance, December 31, 1992 - - 12,109,583 121,096
Net loss - - - -
Fractional shares issued on conversion of Predecessor Company
common stock - - 2,168 22
Purchase and retirement of common stock - - (2,249,089) (22,491)
Stock options exercised - - 21,055 210
-----------------------------------------------
Balance, December 31, 1993 - - 9,883,717 98,837
Net income - - - -
Purchase and retirement of common stock - - (996,092) (9,961)
Stock options exercised - - 83,263 833
-----------------------------------------------
Balance, December 31, 1994 - $ - 8,970,888 $ 89,709
===============================================
Additional Retained
Paid-in Earnings
Capital (Deficit) Total
-----------------------------------------------------
<S> <C> <C> <C>
Balance, December 31, 1991 $28,393,444 $(315,823,065) $(287,823,630)
Net income - 289,214,986 289,214,986
Treasury stock (438,272) - 45,504
Reorganized Company common stock issued on conversion of
Predecessor Company common stock and junior common stock 883,107 - 800,000
Reorganized Company common stock issued on conversion of
debentures 38,295,115 - 38,409,551
Elimination of deficit under Fresh Start Reporting (26,608,079) 26,608,079 -
REORGANIZED COMPANY: ------------------------------------------------------
Balance, December 31, 1992 40,525,315 - 40,646,411
Net loss - (1,704,591) (1,704,591)
Fractional shares issued on conversion of Predecessor Company
common stock (22) - -
Purchase and retirement of common stock (8,271,014) - (8,293,505)
Stock options exercised 56,006 - 56,216
-----------------------------------------------------
Balance, December 31, 1993 32,310,285 (1,704,591) 30,704,531
Net income - 14,423,549 14,423,549
Purchase and retirement of common stock (6,261,103) - (6,271,064)
Stock options exercised 221,479 - 222,312
-----------------------------------------------------
Balance, December 31, 1994 $26,270,661 $ 12,718,958 $ 39,079,328
=====================================================
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE> 32
Price Communications Corporation
and Subsidiaries
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Year ended December 31
-------------------------------
Reorganized Company
-------------------------------
1994 1993
-------------------------------
<S> <C> <C>
CASH FLOWS PROVIDED BY (USED IN) OPERATING
ACTIVITIES:
Net income (loss) $ 14,423,549 $ (1,704,591)
-------------------------------
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Items not affecting cash:
Amortization of debt discount and deferred debt expense 645,835 766,075
Depreciation and amortization 3,312,049 2,343,015
Share of loss of partially owned companies - 1,118,293
Loss on disposition of equipment 47,529 425
Deficiency of film broadcast rights amortization over
payments - -
Unrealized noncash loss (recovery) on marketable
securities - 145,884
Valuation adjustment, net of working capital valuation - -
Change in assets and liabilities, net of effects of
reorganization:
Decrease (increase) in net accounts receivable 307,979 (354,058)
Decrease (increase) in prepaid expenses and other assets 1,581,117 (297,915)
Decrease in film broadcast rights 536,910 209,948
Decrease in due from broker/dealer - -
Increase (decrease) in accounts payable and accrued
expenses 1,563,455 (1,859,013)
(Decrease) increase in accrued interest payable, net of
forgiveness (1,023,932) (343,602)
Increase (decrease) in other liabilities 1,013,375 (1,080,826)
Reclassification of transactions to investing and
financing activities: (17,219,231) -
Gain on sale of properties, net - 3,976,597
Loss on purchase of common stock - (2,010,332)
Gain on early extinguishment of debt - -
Gain on forgiveness of debt and partial sale of - (6,609)
subsidiary 737,500 (2,730,432)
Gain on sale of securities ----------------------------
Reserve (recovery) on notes receivable
Total adjustments (8,497,414) (122,550)
----------------------------
Net cash provided by (used in) operating activities 5,926,135 (1,827,141)
----------------------------
CASH FLOWS (USED IN) PROVIDED BY INVESTING ACTIVITIES:
Sale of businesses and equipment, net of cash retained 32,451,283 11,000,214
Investment in businesses, net of cash acquired (50,270,793) (454,337)
Purchases of securities under agreements to resell - (8,050,811)
Capital expenditures (751,965) (577,918)
Purchase of marketable securities - (36,704,873)
Proceeds from sale of marketable securities - 54,394,512
(Disbursements of) proceeds from notes receivable (390,000) 5,630,432
----------------------------
Net cash (used in) provided by investing activities (18,961,475) 25,237,219
============================
Year ended
December 31
---------------
Predecessor
Company
1992
---------------
<S> <C>
CASH FLOWS PROVIDED BY (USED IN) OPERATING
ACTIVITIES:
Net income (loss) $ 289,214,986
---------------
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Items not affecting cash:
Amortization of debt discount and deferred debt expense 1,003,578
Depreciation and amortization 4,873,136
Share of loss of partially owned companies 2,933,763
Loss on disposition of equipment 364,024
Deficiency of film broadcast rights amortization over
payments (103,320)
Unrealized noncash loss (recovery) on marketable
securities (145,884)
Valuation adjustment, net of working capital valuation 6,732,774
Change in assets and liabilities, net of effects of
reorganization:
Decrease (increase) in net accounts receivable (959,580)
Decrease (increase) in prepaid expenses and other assets 395,910
Decrease in film broadcast rights 129,953
Decrease in due from broker/dealer 1,410,960
Increase (decrease) in accounts payable and accrued
expenses 1,028,242
(Decrease) increase in accrued interest payable, net of
forgiveness 15,243,681
Increase (decrease) in other liabilities (514,252)
Reclassification of transactions to investing and financing
activities:
Gain on sale of properties, net -
Loss on purchase of common stock -
Gain on early extinguishment of debt (312,678,036)
Gain on forgiveness of debt and partial sale of (6,940)
subsidiary (387,588)
Gain on sale of securities ------------
Reserve (recovery) on notes receivable
Total adjustments (280,679,579)
------------
Net cash provided by (used in) operating activities 8,535,407
------------
CASH FLOWS (USED IN) PROVIDED BY INVESTING ACTIVITIES:
Sale of businesses and equipment, net of cash retained 4,738,627
Investment in businesses, net of cash acquired -
Purchases of securities under agreements to resell -
Capital expenditures (704,681)
Purchase of marketable securities (10,476,315)
Proceeds from sale of marketable securities 1,034,640
(Disbursements of) proceeds from notes receivable 654,707
------------
Net cash (used in) provided by investing activities (4,753,022)
</TABLE> ============
(continued)
7
<PAGE> 33
Price Communications Corporation
and Subsidiaries
Consolidated Statements of Cash Flows (continued)
<TABLE>
<CAPTION>
Year ended December 31
-------------------------------------------------------
Reorganized Company Predecessor
--------------------------------- Company
1994 1993 1992
--------------------------------- -------------
<S> <C> <C> <C>
CASH FLOWS PROVIDED BY (USED IN) FINANCING
ACTIVITIES:
Repurchases and payments of long-term debt - (20,846,643) (5,300,960)
Net borrowings under (repayment of) repurchase
agreements - (4,930,083) 4,930,083
Payment of line of credit origination fee (475,000) - -
Borrowings under line of credit agreements 45,000,000 3,020,065 -
Repayments under line of credit agreements (25,700,000) - -
Purchase of common stock (6,271,064) (8,434,058) -
Proceeds from stock options exercised 222,312 56,216 -
--------------------------------- ------------
Net cash provided by (used in) financing activities 12,776,248 (31,134,503) (370,877)
--------------------------------- ------------
Net (decrease) increase in cash and cash equivalents (259,092) (7,724,425) 3,411,508
Cash and cash equivalents at beginning of year 1,395,102 9,119,527 5,708,019
--------------------------------- ------------
Cash and cash equivalents at end of year $ 1,136,010 $ 1,395,102 $ 9,119,527
================================= ============
</TABLE>
See accompanying notes to consolidated financial statements.
8
<PAGE> 34
Price Communications Corporation
and Subsidiaries
Notes to Consolidated Financial Statements
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Basis of Presentation - The consolidated financial statements include the
accounts of Price Communications Corporation (the "Company" or "Price")
and its subsidiaries. All significant intercompany items and transactions
have been eliminated.
b. Fresh Start Reporting - The Company reorganized and emerged from Chapter
11 bankruptcy proceedings on December 30, 1992 (the "Effective Date"-see
Note 4), and adopted Fresh Start Reporting in accordance with the
guidelines established by the American Institute of Certified Public
Accountants in Statement of Position 90-7, "Financial Reporting by
Entities in Reorganization Under the Bankruptcy Code." Under Fresh Start
Reporting, assets and liabilities are recorded at their estimated fair
market value and the historical deficit is eliminated. Accordingly, the
Company's financial statements were prepared as if it were a new reporting
entity (referred to as the "Reorganized Company") as of the Effective
Date. A vertical black line has been placed to separate the consolidated
statements of operations and cash flows of the Company prior to the
reorganization (referred to as the "Predecessor Company") from those of
the Reorganized Company, since they are not prepared on a comparable
basis.
The Company's operations for the two-day period of December 30 and
December 31, 1992 were insignificant. Accordingly, December 31, 1992
was used as the cut-off date for financial reporting purposes in lieu
of the Effective Date.
The revaluation of the Company's assets and liabilities as of December 31,
1992 was based on an independent appraisal, modified as appropriate, and
resulted in a reduction in net carrying values of assets and liabilities
of approximately $5,027,000.
c. Depreciation and Amortization - Depreciation is computed on the
straight-line method on the basis of estimated useful lives, as follows:
Buildings-15 to 25 years
Broadcasting equipment-10 to 12 years
Leasehold improvements-the life of the underlying lease
Furniture and fixtures-3 to 10 years
Transportation equipment-3 years
9
<PAGE> 35
Price Communications Corporation
and Subsidiaries
Notes to Consolidated Financial Statements (continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
d. Intangible Assets:
i. Excess of purchase price over the fair value of net assets acquired
includes FCC licenses, station call letters, and goodwill. These
assets are integral determinants of a communications property's
economic value, and have long and productive lives. In connection with
Fresh Start Reporting, unamortized goodwill related to acquisitions
prior to December 31, 1992 was eliminated and corresponding FCC
licenses were restated at their approximate fair value as of December
31, 1992. The Predecessor Company amortized such intangible assets
over a 40-year period, the maximum life allowable under Accounting
Principles Board Opinion No. 17. The Reorganized Company continues to
amortize such assets over a 40-year life commencing from the
original date of acquisition.
ii. Deferred expenses associated with debt instruments were amortized
under the straight-line method over their respective lives. Debt
discounts were amortized under the effective interest method. As of
December 31, 1992, the unamortized carrying value of deferred debt
expense and unamortized debt discount associated with debt forgiven or
exchanged under the Company's Plan of Reorganization (the "Plan"-see
Note 4) was eliminated.
e. Reorganization Value in Excess of Amounts Allocable to Identifiable
Assets-The reorganization value in excess of amounts allocable to
identifiable assets, which resulted from the implementation of Fresh
Start Reporting was amortized using the straight-line method over 20
years. During the year ended December 31, 1994, the portion of this asset
remaining after adjustment for dispositions (approximately $670,000) was
written off.
f. Per Share Data-Primary income per common share is based on income for the
period divided by the weighted average number of shares of common stock
and common stock equivalents outstanding, which was approximately 9.9
million shares for 1994 and 11.9 million shares for 1993. Per share
amounts for the Predecessor Company are not presented because they are
neither comparable nor meaningful due to forgiveness of debt, partial sale
of subsidiary, issuance of new common stock and adoption of Fresh Start
Reporting.
10
<PAGE> 36
Price Communications Corporation
and Subsidiaries
Notes to Consolidated Financial Statements (continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
g. Allowance for Doubtful Accounts-The Company provides an allowance for
doubtful accounts based on reviews of its customers' accounts. Included in
operating expense is bad debt expense of approximately $319,000, $264,000,
and $514,000 for the years ended December 31, 1994, 1993, and 1992,
respectively.
h. Barter Transactions-Revenue from barter transactions (advertising provided
in exchange for goods and services) is recognized as income when
advertisements are broadcast, and merchandise or services received are
charged to expense when received or used.
i. Advertising Revenues-Sales of advertisements are recognized as income when
advertisements are broadcasted or printed.
j. Film Broadcast Rights-The capitalized cost of film broadcast rights is
amortized on the basis of the estimated number of showings or, if
unlimited showings are permitted, over the term of the broadcast license
agreements. Unamortized film broadcast rights are classified as current
or noncurrent on the basis of their estimated future usage. Amortization
of film broadcast rights is included in operating expenses and amounted to
approximately $1,077,000, $800,000, and $940,000 for the years ended
December 31, 1994, 1993, and 1992, respectively.
k. Cash and Cash Equivalents-For purposes of the consolidated statements of
cash flows, the Company considers all highly liquid debt instruments,
including Treasury bills, purchased with maturities of three months or
less at the time of purchase to be cash equivalents.
l. Marketable Securities-Dividend and interest income are accrued as earned.
Net realized gains (losses) on the sale of marketable securities are based
upon weighted average cost (see Note 12).
11
<PAGE> 37
Price Communications Corporation
and Subsidiaries
Notes to Consolidated Financial Statements (continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
m. Income Taxes-Effective December 31, 1992, the Company adopted Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes"
("Statement 109"), issued by the Financial Accounting Standards Board
(see Note 11). The cumulative effect of this change had no significant
impact on the Company's consolidated financial statements, including
income tax expense. Under the asset and liability method of Statement
109, deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective
tax bases. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or
settled. Under Statement 109, the effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.
Prior to December 31, 1992, the Company accounted for income taxes
pursuant to the deferred method under APB Opinion 11. Under the deferred
method, deferred income taxes were recognized for income and expense items
that were reported in different years for financial reporting purposes and
income tax purposes using the tax rate applicable for the year of
calculation.
2. ACQUISITION OF WHTM-TV
On September 16, 1994, the Company acquired all of the outstanding shares of
the corporation which owns all of the assets of WHTM- TV, the ABC affiliate
serving the Harrisburg-York-Lancaster-Lebanon, Pennsylvania television market
for approximately $47 million plus a working capital adjustment of
approximately $4 million. The acquisition has been accounted for under the
purchase method, and accordingly, the operating results of WHTM-TV have been
included in the consolidated operating results since the date of acquisition.
The purchase price is subject to adjustment in the Company's favor based upon
resolution of contemplated arbitration proceedings. Funds for the acquisition
were provided by cash on hand and a credit facility from the Bank of Montreal
("BMO") of $45 million (see Note 10), which was reduced to $22.5 million upon
the sale of the Company's radio properties in West Palm Beach during October of
1994 (see Note 3). The acquisition resulted in intangible assets, primarily
broadcast licenses of approximately $44.2 million and goodwill of approximately
$19.7 million, both of which are being amortized over a forty year period.
Condensed pro forma financial information regarding this acquisition and
dispositions during 1994 are included under Note 3.
12
<PAGE> 38
Price Communications Corporation
and Subsidiaries
Notes to Consolidated Financial Statements (continued)
3. DISPOSITIONS
In February 1994, the Company sold its outdoor advertising business for a total
of $875,000 in cash and notes receivable. (see Note 5). This disposition
resulted in a pretax loss of $350,000.
In April 1994, the Company sold substantially all of the assets of its radio
properties, WWKB-AM and WKSE-FM in Buffalo, New York, for $5 million in cash.
The Company realized a pretax gain of approximately $3.2 million on this
transaction.
In May 1994, the Company sold all of the stock of Eimar Realty Corporation, its
then wholly owned subsidiary, owning a building in Nashville, Tennessee, to TLM
Corporation, a former subsidiary of the Company. The purchase price was
$815,000 including a note from the purchaser of $540,000 (see Note 5). The
Company's pretax gain on the transaction was de minimis.
In October 1994, the Company sold substantially all of the assets, together
with certain liabilities of radio stations WBZT-AM and WIRK-FM, West Palm
Beach, Florida, for approximately $23 million in cash. The Company realized a
pretax gain of approximately $13.5 million on this transaction. The net
proceeds were used to retire $22.5 million under the BMO credit facility (see
Note 10).
In October 1994, the Company sold its building in Red Bank, New Jersey for $1.7
million in cash. The Company realized a de minimis gain on the sale.
In November 1994, the Company sold substantially all of the assets of radio
stations WOWO- AM and WOWO-FM in Fort Wayne and Huntington, Indiana,
respectively, for $2.3 million in cash. The Company recognized a pretax gain
on the sale of approximately $.8 million.
The gains and losses on the dispositions outlined above have been included in
other (income) expense, net on the Company's statement of operations for the
year ended December 31, 1994.
13
<PAGE> 39
Price Communications Corporation
and Subsidiaries
Notes to Consolidated Financial Statements (continued)
3. DISPOSITIONS (CONTINUED)
The following unaudited pro forma financial information has been prepared based
on the assumption that the aforementioned 1994 acquisition had occurred on
January 1, 1994 and 1993:
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------------------
1994 1993
---------------------------------------- -------------
<S> <C> <C> <C>
Reflects
Acquisition & Reflects REFLECTS
Dispositions* Acquisitions ACQUISITIONS
---------------------------------------- -------------
Net revenue $ 26,390,566 $ 33,623,990 $ 35,730,813
Income (loss) before
extraordinary item (1,743,754) 14,217,887 (3,400,873)
Net income (loss) (1,743,754) 14,217,887 (1,342,697)
Income (loss) before
extraordinary item per
share $ (.17) $ 1.42 $ (.29)
Net income (loss) per
share $ (.17) $ 1.42 $ (.11)
---------------------------------------- -------------
</TABLE>
*Further reflects the sales during 1994 of radio stations and other properties
as if they had occurred on January 1, 1994.
The pro forma information reflects adjustments for changes in depreciation,
amortization, interest expense and income taxes resulting from the acquisition
and dispositions.
The proforma financial information is not necessarily indicative either of
results of operations that would have occurred had the acquisition and
dispositions been made at the beginning of the periods, or of future results of
operations of the Company.
14
<PAGE> 40
Price Communications Corporation
and Subsidiaries
Notes to Consolidated Financial Statements (continued)
4. REORGANIZATION
On December 30, 1992, The Plan of Reorganization ("the Plan"), which had been
approved by the United States Bankruptcy Court for the Southern District of New
York became effective. Under the Plan, the following occurred:
a. Holders of approximately $31 million principal amount of the Company's
senior debt received new $31 million face amount seven-year 5% Senior
Secured Notes (the "Secured Notes"-see Notes 6 and 10).
b. Apollo Investment Fund, L.P. and James Finkelstein purchased 75% of
Alexandra Publishing Corporation, which owns The New York Law Publishing
Company, in exchange for the cancellation of approximately $19 million
principal amount of senior debt, the payment to the Company of $7.5
million in cash and the assumption of certain liabilities of the Company
of approximately $45 million. See note 14 for subsequent disposal of the
remaining 25% interest in the publishing subsidiaries.
c. The holders of the existing subordinated debt received 94.5% of the common
stock of Price.
d. Shareholders received shares which constituted 3.5% of the common stock of
the Reorganized Company, and Robert Price, President of the Company,
received 2% of such common stock in exchange for the junior common stock,
all of which was held by Mr. Price.
The gain on the partial sale of publishing companies and the gain from
cancellation of indebtedness resulted in extraordinary income of approximately
$312.7 million which is net of a tax provision of $900,000 relating to the sale
of the publishing companies. The gain resulting from the forgiveness of debt
is not taxable for Federal income tax purposes.
In a related transaction, on August 5, 1992, the Company exchanged its interest
in TLM Corporation (until then a 90.7% owned subsidiary) for 90.7% of the
assets of TLM Corporation. These assets consisted of cash and common stock and
certain public debt securities of the Company. The Company's loss from the
transaction was de minimis.
15
<PAGE> 41
Price Communications Corporation
and Subsidiaries
Notes to Consolidated Financial Statements (continued)
5. NOTES RECEIVABLE
Investments in notes receivable include the following:
a. In connection with the sale in 1987 of seven radio stations to Fairmont
Communications Corporation ("Fairmont") for an aggregate sale price of
$120 million, the Company loaned $50 million to Fairmont (the "Fairmont
Notes") and acquired a 27% equity interest in Fairmont. The Fairmont
Notes were issued in three series of 12 1/2% increasing rate subordinated
notes due in 1992, extendible at Fairmont's option to 1994. Interest on
the notes was payable quarterly in cash or additional notes at Fairmont's
election.
During 1992, Fairmont filed for voluntary relief under Chapter 11 of the
U.S. Bankruptcy Code. At that time the Company ceased to record
additional notes related to interest paid in kind since it was not
entitled to interest after that date under the Bankruptcy Code.
The $94.8 million principal amount of Fairmont Notes owned by the Company
(which includes accrued interest paid in additional Fairmont Notes) and
the Company's equity investment in Fairmont had no book value as of
December 31, 1994 and 1993.
During September 1993, the United States Bankruptcy Court for the Southern
District of New York confirmed the Chapter 11 Plan of Reorganization (the
"Fairmont Plan") for Fairmont and its subsidiaries. Essentially, the
Fairmont Plan provides for the orderly liquidation of the assets of
Fairmont and its subsidiaries, and the distribution of the proceeds
derived therefrom according to the relative priorities of the parties
asserting interests therein. The Company believes that the level of asset
sales will be sufficiently high to provide for some recovery upon the
Fairmont Notes, although the exact amount of any such recovery is
uncertain at this time.
b. During February 1994, in connection with the sale of its outdoor
advertising business, the Company received a note from the buyer, Midwest
Media, Inc., for a total of $675,000 (see Note 3). The note bears
interest at the rate of 8% and is payable quarterly. Principal is payable
in quarterly installments of varying amounts beginning in November 1994
through November 1997 with the balance of the principal of $465,000 due in
February 1998. During 1994, the Company set up a partial reserve of
$337,500 against this note.
16
<PAGE> 42
Price Communications Corporation
and Subsidiaries
Notes to Consolidated Financial Statements (continued)
5. NOTES RECEIVABLE (CONTINUED)
c. During May 1994, in connection with the sale of Eimar Realty Corporation,
the Company received a note from the buyer, TLM Corporation (a former
subsidiary of the Company-see Note 3), in the amount of $540,000. The
note bears interest at the rate of 5% per annum, payable quarterly,
with principal payable on May 20, 1998.
6. INVESTMENT IN PARTIALLY OWNED COMPANIES
a. Alexandra Publishing Corporation ("Alexandra")
On December 30, 1992, the Company, in connection with its Plan of
Reorganization, sold 75% of Alexandra (see Note 4). The Company
retained a 25% interest in Alexandra which owns 100% of The New York Law
Publishing Company. In November 1993, in connection with the
repurchase of common stock (see Note 14), the Company transferred its
remaining 25% interest in Alexandra, which had a carrying value of
approximately $3.8 million.
For the year ended December 31, 1992, these subsidiaries were consolidated
in the statements of operations and cash flows of the Predecessor
Company. Based upon audited financial information, Alexandra had net
revenue, operating expenses, and depreciation and amortization of
approximately $32.6 million, $23.9 million (including intercompany
expenses of $1.3 million), and $1.6 million, respectively, for the year
ended December 31, 1992. For the year ended December 31, 1993, the 25%
interest in such subsidiaries was accounted for by the equity method
and the Reorganized Company recognized a charge to operations of
approximately $230,000 for its period of ownership.
b. PriCellular Corporation ("PriCellular")
During 1992 and 1993, the Company accounted for its investment in
PriCellular under the equity method of accounting as it believed its
control in PriCellular to be temporary. The Company recognized 75% of
PriCellular's losses as a charge to operations to the extent of its
investment in PriCellular representing $2.9 million for the year ended
December 31, 1992. Prior to Fresh Start Reporting, the Predecessor
Company's investment in PriCellular had been reduced to zero book
value. In accordance with the court approved Plan, the Company
transferred 1% of PriCellular's common stock to Robert Price, reducing the
Company's interest to 74%. In connection with fresh start reporting, this
investment was reflected at an approximate fair market value of $11.5
million at December 31, 1992.
17
<PAGE> 43
Price Communications Corporation
and Subsidiaries
Notes to Consolidated Financial Statements (continued)
6. INVESTMENT IN PARTIALLY OWNED COMPANIES (CONTINUED)
On October 1, 1993, the Company sold its remaining 74% interest in PriCellular
to a subsidiary of PriCellular for $11 million in cash. The proceeds from the
sale were used to repurchase a portion of the Secured Notes, in accordance with
the terms of the indenture of such notes (see Note 10). During 1993, the
Company recognized a charge of approximately $890,000 related to its share of
PriCellular's losses through October 1, 1993, and realized no gain or loss from
the sale of its interest in PriCellular.
7. PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
<TABLE>
<CAPTION>
December 31
1994 1993
---------------------------------
<S> <C> <C>
Land $ 685,000 $ 2,328,000
Buildings 2,403,409 3,468,209
Broadcasting equipment 9,487,151 7,720,940
Outdoor fixtures - 801,320
Leasehold improvements 115,000 229,783
Furniture and fixtures 510,252 619,870
Transportation equipment 500,222 432,814
----------------------------------
13,701,034 15,600,936
Less, accumulated
depreciation (2,201,098) (1,872,765)
----------------------------------
Net property and equipment $ 11,499,936 $ 13,728,171
==================================
</TABLE>
18
<PAGE> 44
Price Communications Corporation
and Subsidiaries
Notes to Consolidated Financial Statements (continued)
8. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consist of the following:
<TABLE>
<CAPTION>
December 31
1994 1993
---------------------------------
<S> <C> <C>
Accounts payable-suppliers $ 1,594,571 $ 906,770
Accrued professional fees 869,669 299,113
Other 1,138,494 1,043,521
--------------------------------
$ 3,602,734 $ 2,249,404
================================
</TABLE>
9. OTHER LIABILITIES
Other liabilities consist of:
<TABLE>
<CAPTION>
December 31
1994 1993
----------------------------------
<S> <C> <C>
Liability for film broadcast rights $ 4,572,569 $ 507,603
Income and franchise taxes payable 2,001,801 522,512
Other 640,541 80,217
----------------------------------
7,214,911 1,110,332
Less, amounts due currently 4,264,326 1,035,585
----------------------------------
$ 2,950,585 $ 74,747
==================================
</TABLE>
19
<PAGE> 45
Price Communications Corporation
and Subsidiaries
Notes to Consolidated Financial Statements (continued)
10. LONG-TERM DEBT
Long-term debt consists of the following notes payable by wholly-owned
subsidiaries of the Company at December 31, 1994 and 1993 as follows:
<TABLE>
<CAPTION>
DECEMBER 31
1994 1993
-------------------------------------
<S> <C> <C>
Atlantic Broadcasting Corporation, Federal
Broadcasting Corporation, Southeast Texas
Broadcasting Corporation and Tri-State
Broadcasting Corporation:
Note payable to BMO under term loan $ 22,500,000 $ -
agreement(A)
Atlantic Broadcasting Corporation, Southeast
Texas Broadcasting Corporation, Texoma
Broadcasting Corporation and Tri-State
Broadcasting Corporation:
Note payable to BMO under term loan
agreement(B) - 3,200,000
Other long-term debt 19,849 -
-------------------------------------
Total debt 22,519,849 3,200,000
Less amount due currently 1,209,493 -
-------------------------------------
$ 21,310,356 $ 3,200,000
=====================================
</TABLE>
(A) On September 16, 1994, certain subsidiaries of the Company entered into an
Amended and Restated Line of Credit Agreement with BMO (the "Amended Line of
Credit"). The Amended Line of Credit was for $45 million, permanently
reduced by $22.5 million upon the sale of the Company's radio stations in
West Palm Beach (see Note 3) and reduced further quarterly, in varying
amounts through the year 2001 as follows:
<TABLE>
<S> <C>
1995 $ 1.2 million
1996 2.4 million
1997 2.9 million
1998 3.4 million
1999 4.1 million
2000 4.8 million
2001 3.7 million
</TABLE>
20
<PAGE> 46
Price Communication Corporation
and Subsidiaries
Notes to Consolidated Financial Statements (continued)
10. LONG-TERM DEBT (CONTINUED)
Borrowings under the Amended Line of Credit bear interest at the BMO Base
Rate, as defined, plus up to a maximum of .75%, and are secured by the
assets of the subsidiaries, which have a book value of approximately $81.3
million as of December 31, 1994. There is also a fee of .5% on the unused
portion, if any, of the Amended Line of Credit. On December 31, 1994 the
effective interest rate was 9.25%. The terms of the Amended Line of Credit
require the Company to maintain certain financial ratios, restrict the
declaration of dividends and require the Company to apply the proceeds
from future asset sales to the outstanding balance due.
(B) In December 1993, certain subsidiaries of the Company entered into a $10
million Line of Credit Agreement (the "Line of Credit") with BMO.
Borrowings under the Line of Credit bore interest at the BMO Base Rate, as
defined (or at other rates at the borrowers' option), and were secured by
the assets of the subsidiaries. Borrowings of $5.6 million under the Line
of Credit were used to retire the remaining Secured Notes issued in
connection with the Plan of Reorganization. Also in December 1993, the
Company used proceeds of $2.4 million from the sale of its position in
Northstar Television Group, Inc. ("NTG") to repay borrowings under the
Line of Credit (see Note 12).
(C) In connection with the Plan, the Company issued $30,805,000 face amount of
5% Senior Secured Notes. The Company recorded these notes net of a
discount of $8,705,000 under Fresh Start Reporting (see Note 1). During
October and December 1993, the Company repurchased all of the notes for
approximately $20.8 million, plus accrued interest, and realized a gain of
approximately $2.0 million, net of taxes of zero.
21
<PAGE> 47
Price Communications Corporation
and Subsidiaries
Notes to Consolidated Financial Statements (continued)
11. INCOME TAXES
As discussed in Note 1, the Company adopted Statement 109 as of December 31,
1992. The cumulative effect of this change had no significant impact on the
Company's consolidated financial statements, including tax expense, for the
year then ended.
Provision (benefit) for income taxes is approximately:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1994 1993 1992
----------------------------------------------------
<S> <C> <C> <C>
Current:
Federal
$ 300,000 $ - $ -
State and local
1,489,000 124,000 499,000
----------------------------------------------------
1,789,000 124,000 499,000
----------------------------------------------------
Deferred:
Federal (97,000) - -
State and local (39,000) - -
----------------------------------------------------
(136,000) - -
Tax provision $ 1,653,000 $ 124,000 $ 499,000
====================================================
</TABLE>
In addition, a provision of $900,000, primarily for Federal alternative minimum
tax, has been included in extraordinary items for the year ended December 31,
1992 (see Note 4).
For the years ended December 31, 1992 and 1993, the Company was unable to
utilize the tax benefit of capital and net operating losses, and accordingly,
no amounts were provided therefor. For the year ended December 31, 1994, the
provision for income taxes differs from the amount computed by applying the
federal income tax rate (35%) because of the effect of the following items:
<TABLE>
<S> <C>
Tax at federal income tax rate $ 5,627,000
State taxes, net of federal income tax
benefit 942,000
Benefits of utilization of operating
loss carryforwards (5,120,000)
Amortization of goodwill and other
intangibles 309,000
Other (105,000)
-------------
$ 1,653,000
=============
</TABLE>
22
<PAGE> 48
Price Communication Corporation
and Subsidiaries
Notes to Consolidated Financial Statements (continued)
11. INCOME TAXES (CONTINUED)
The Company had, as of December 31, 1994 and 1993, deferred tax assets which
were subject to a valuation allowance of approximately $39,529,000 and
$46,031,000, respectively, and deferred tax liabilities of approximately
$21,154,000 and $3,943,000, respectively. The allowance has been recognized to
offset the related deferred tax asset due to the uncertainty of the realization
of benefit of such amount. These deferred tax assets and liabilities consist
of the following:
<TABLE>
<CAPTION>
DECEMBER 31
DEFERRED TAX ASSETS 1994 1993
-----------------------------------
<S> <C> <C>
Accounts receivable, principally due to
allowance for doubtful accounts $ 134,000 $ 166,000
Notes from and investment in partially
owned companies 15,251,000 15,251,000
Minimum tax credit carryforward 642,000 642,000
Capital loss carryforwards 14,350,000 19,905,000
Net operating loss carryforwards 11,520,000 13,910,000
Investment tax credit carryforwards 100,000 100,000
Note receivable, principally due to reserves 251,000 -
----------------------------------
$ 42,248,000 $ 49,974,000
==================================
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31
DEFERRED TAX LIABILITIES 1994 1993
-----------------------------------
<S> <C> <C>
Property and equipment, principally due
to differences in depreciation and the
effect of Fresh Start Reporting $ 2,719,000 $ 3,662,000
Intangible asset FCC license 18,435,000 281,000
-----------------------------------
$ 21,154,000 $ 3,943,000
===================================
</TABLE>
Net operating loss carryforwards aggregating approximately $32.9 million are
available for federal income tax purposes at December 31, 1994. These
carryforwards expire in the years 2002 through 2006. The Company also has
available investment tax credit carryforwards of approximately $100,000
expiring in the year 2000 and capital loss carryforwards of approximately $41
million expiring in the year 1998. A portion of these carryforwards arose
prior to the reorganization and are subject to the limitations of Internal
Revenue Code Sections 382 and 383.
23
<PAGE> 49
Price Communications Corporation
and Subsidiaries
Notes to Consolidated Financial Statements (continued)
12. OTHER (INCOME) EXPENSE-NET
Other (income) expense-net consists of:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1994 1993 1992
---------------------------------------------------
<S> <C> <C> <C>
Gains on sales of
properties,net
(Note 3) $ (17,219,231) $ - $ -
Interest income (201,896) (715,918) (543,252)
Loss on disposition
of equipment 47,529 425 364,024
Reserve (recovery)
for losses on notes
receivable 737,500 (2,730,432) (387,588)
Loss on purchase of
common stock (Note
14) - 3,976,597 -
Other, net 391,530 8,617 531,324
---------------------------------------------------
$ (16,244,568) $ 539,289 $ (35,492)
===================================================
</TABLE>
As of December 31, 1992, in conjunction with the adoption of Fresh Start
Reporting, the investment in common and preferred stock of NTG was removed from
the Company's consolidated balance sheet since its estimated realizable value
was zero (see Note 1). In December 1993, the Company sold its investment in
NTG for approximately $2.4 million in cash and recognized a gain of
approximately $2.4 million on the sale.
24
<PAGE> 50
Price Communications Corporation
and Subsidiaries
Notes to Consolidated Financial Statements (continued)
13. SEGMENT DATA
The Reorganized Company's business operations are classified into two segments:
Television and Radio Broadcasting and Other. The Company sold its radio
stations during 1994 and has no current contracts to acquire any other radio
stations (see Note 3). The Predecessor Company's business operations included
Publishing with Other. The Company's Publishing operations were transferred to
third parties in 1992 (see Note 4) and therefore, are no longer consolidated in
the Reorganized Company's operations. There are no transfers between segments
of the Company. The segment data follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1994
--------------------------------------------------------------------
BROADCASTING
--------------------------------
TELEVISION RADIO OTHER CONSOLIDATED
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net revenue $ 16,756,288 $ 7,233,424 $ 49,420 $ 24,039,132
Operating expenses 9,651,752 5,250,629 59,018 14,961,399
Depreciation and
amortization 2,464,785 577,430 269,834 3,312,049
--------------------------------------------------------------------
Operating income
(loss)* $ 4,639,751 $ 1,405,365 $ (279,432) $ 5,765,684
====================================================================
</TABLE>
25
<PAGE> 51
Price Communications Corporation
and Subsidiaries
Notes to Consolidated Financial Statements (continued)
13. SEGMENT DATA (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1993
-----------------------------------------------------------------------
BROADCASTING
-------------------------------
TELEVISION RADIO OTHER CONSOLIDATED
-----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Revenue $ 11,744,547 $ 10,271,892 $ 773,753 $ 22,790,192
Operating Expenses 7,484,486 8,226,346 623,929 16,334,761
Depreciation and
amortization 1,153,860 834,346 354,809 2,343,015
-----------------------------------------------------------------------
Operating income
(loss)* $ 3,106,201 $ 1,211,200 $ (204,985) $ 4,112,416
=======================================================================
<CAPTION>
YEAR ENDED DECEMBER 31, 1992
-----------------------------------------------------------------------
BROADCASTING
-------------------------------
PUBLISHING AND
TELEVISION RADIO OTHER CONSOLIDATED
-----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net revenue $ 11,239,395 $ 9,309,229 $ 33,408,010 $ 53,956,634
Operating expenses 7,570,105 7,544,032 24,453,255 39,567,392
Depreciation and
amortization 1,683,309 1,074,407 2,115,420 4,873,136
-----------------------------------------------------------------------
Operating income* $ 1,985,981 $ 690,790 $ 6,839,335 $ 9,516,106
=======================================================================
</TABLE>
*Operating income (loss) is before corporate expenses, other (expense)
income-net, interest expense, amortization of debt discount and deferred debt
expense, unrealized non-cash loss (recovery) on marketable securities, share of
loss of partially owned companies, reorganization items, income taxes and
extraordinary items.
26
<PAGE> 52
Price Communications Corporation
and Subsidiaries
Notes to Consolidated Financial Statements (continued)
13. SEGMENT DATA (CONTINUED)
<TABLE>
<CAPTION>
IDENTIFIABLE CAPITAL
ASSETS EXPENDITURES
------------------------------------
<S> <C> <C>
1994:
Television broadcasting $ 88,645,508 $ 694,159
Radio broadcasting 293,711 50,708
Other 867,500 -
Corporate 1,045,411 7,098
------------------------------------
Consolidated $ 90,852,130 $ 751,965
====================================
<CAPTION>
IDENTIFIABLE CAPITAL
ASSETS EXPENDITURES
------------------------------------
<S> <C> <C>
1993:
Television broadcasting $ 16,208,021 $ 397,604
Radio broadcasting 13,988,511 200,600
Other 3,673,912 50,069
Corporate 3,401,056 3,885
------------------------------------
Consolidated $ 37,271,500 $ 652,158
====================================
<CAPTION>
IDENTIFIABLE CAPITAL
ASSETS EXPENDITURES
------------------------------------
<S> <C> <C>
1992:
Television broadcasting $ 17,067,971 $ 354,779
Radio broadcasting 17,584,247 253,442
Publishing and other 19,322,971 273,955
Corporate 20,351,715 19,959
------------------------------------
Consolidated $ 74,326,904 $ 902,135
</TABLE> ====================================
27
<PAGE> 53
Price Communications Corporation
and Subsidiaries
Notes to Consolidated Financial Statements (continued)
14. SHAREHOLDERS' EQUITY (DEFICIT)
a. Refer to notes 1 and 4 for a description of changes to shareholders'
equity (deficit) pursuant to the Plan of Reorganization.
b. On November 24, 1993, the Company purchased from investment advisory
clients of W.R. Huff Asset Management Co., L.P. ("Huff") a block of
2,249,086 shares of its common stock. The purchase price consisted of
$3.75 per share in cash, plus the stock of its indirect wholly-owned
subsidiary, Price Publishing Corporation, which held the remaining 25%
interest in the New York Law Publishing Company (see Note 4). The stock of
Price Publishing Corporation had a book value of approximately $3,836,000
at such date which in the opinion of management approximated its fair value
(see Note 6). In connection with this transaction, the Company recorded a
loss of approximately $3,977,000 reflecting the difference between the
value of the cash and stock of Price Publishing Corporation transferred to
Huff and the then current trading market price of the common stock. The
loss has been included in other expense (income) for 1993 in the
accompanying statement of operations (see Note 12), and the common stock
purchased from Huff has been treated as constructively retired in the
accompanying balance sheet at December 31, 1993.
c. In connection with the Plan, warrants on the Company's common stock,
originally issued on April 12, 1990, were amended. The warrants will be
exercisable for approximately 124,000 shares of the Reorganized Company's
common stock at an exercise price of $4.23 per share during the five-year
period commencing October 1, 1993.
d. In October 1994, the Company's Board of Directors enacted a Stockholders
Rights Plan designed to protect the interests of the Company's shareholders
in the event of a potential takeover for a price which does not reflect the
Company's full value or which is conducted in a manner or on terms not
approved by the Board as being in the best interests of the Company and its
shareholders. The Board has declared a dividend distribution of One Common
Stock Purchase Right on each outstanding share of Common Stock of the
Company. The Rights provide, in substance, that should any person or group
acquire 20% or more of the Company's Common Stock, each Right, other than
Rights held by the acquiring person or group, would entitle its holder to
purchase a specified number of Price Communications Corporation common
shares for 50% of their then-current market value. In addition, the Rights
may be exercised, at the holders option, at a purchase price of $22.50 per
share at any time prior to the termination of the Plan. Unless a 20%
acquisition has occurred, the Rights may be redeemed by the Company at any
time prior to the termination date of the Plan.
e. On February 10, 1994, the Company's Board of Directors authorized the
repurchase by the Company of up to 2,000,000 shares of its Common Stock.
The Company is authorized to make such purchases from time to time in the
market or in privately negotiated transactions
28
<PAGE> 54
Price Communications Corporation
and Subsidiaries
Notes to Consolidated Financial Statements (continued)
14. SHAREHOLDERS' EQUITY (DEFICIT) - CONTINUED
when it is legally permissible to do so or believed to be in the best
interests of its shareholders. During the year ended December 31, 1994,
the Company repurchased approximately 996,000 shares pursuant to that
authorization. Repurchased common stock of the Company has been treated as
constructively retired in the accompanying balance sheet
as of December 31, 1994.
15. STOCK OPTION PLAN
A long-term incentive plan, (the "1992 Long Term Incentive Plan") was
established under the Plan, which provides for granting incentive stock
options, as defined under current tax law, and other stock-based incentives to
key employees and officers. The maximum number of shares of the Company that
are subject to awards granted under the 1992 Long Term Incentive Plan is
1,000,000. The exercise of such options, other than those granted on December
10, 1992, will be exercisable at a price not less than the fair market value on
the date of the grant, for a period up to ten years.
New incentive stock options were granted on December 10, 1992 under the 1992
Long Term Incentive Plan to key employees and officers. The number of options
issued represents essentially a 1 for 2 reverse split for all previously
awarded stock options granted, which were canceled pursuant to the Plan, except
for options previously awarded to Robert Price which were surrendered by Mr.
Price. Options granted on December 10, 1992 represent 170,911 shares and the
exercise price was set at $2.67 per share.
The following table sets forth information with respect to the Company's stock
options for the years ended December 31, 1994 and 1993:
<TABLE>
<CAPTION>
NUMBER OF SHARES UNDER
OPTION
OPTION
1994 1993 PRICE RANGE
-------------------------------------------
<S> <C> <C> <C>
Exercised 83,263 21,055 $ 2.67
Cancelled 30,374 - 2.67-3.75
Granted 562,000 - 3.75
Outstanding 588,993 140,630 2.67-3.75
Reserved for
Issuance 306,689 838,315
</TABLE>
29
<PAGE> 55
Price Communications Corporation
and Subsidiaries
Notes to Consolidated Financial Statements (continued)
16. COMMITMENTS AND CONTINGENCIES
The Company is involved in various claims and litigation arising in the
ordinary course of business. In the opinion of legal counsel and management,
the ultimate disposition of these matters will not have a material adverse
effect on the Company's financial condition.
The Company has an employment agreement with Robert Price covering base salary
and incentive compensation. The agreement is for a term of three years
commencing October 1994 at a base salary of $300,000 and is extendable for
periods of three years at the Company's option. Cash performance bonuses and
stock options awards are determined solely at the discretion of the Board of
Directors or the Stock Option Committee, respectively.
The Company and its subsidiaries lease a variety of assets used in their
operations, including office space and antenna sites. Renewal options are
available in the majority of leases. The following is a schedule of the
Company's minimum rental commitment for operating leases of real and personal
property for each of the five years subsequent to 1994 and in the aggregate:
<TABLE>
<CAPTION>
OPERATING
LEASES
-----------
<S> <C>
Year:
1995 $ 218,880
1996 214,776
1997 217,356
1998 216,415
1999 216,415
Thereafter -
-----------
Total minimum lease
payments $ 1,083,842
===========
</TABLE>
Rental expense for operating leases was approximately $312,000, $312,000, and
$1,468,000 for the years ended December 31, 1994, 1993, and 1992, respectively.
At December 31, 1994, the Company is committed to the purchase of film
broadcast rights of various syndicated programming aggregating approximately
$1,602,000, $1,141,000, $378,000, and $111,000 for the years 1995, 1996, 1997,
and 1998, respectively.
30
<PAGE> 56
Price Communications Corporation
and Subsidiaries
Notes to Consolidated Financial Statements (continued)
17. SUPPLEMENTAL CASH FLOW INFORMATION
The following is supplemental disclosure cash flow information for the years
ended December 31, 1994, 1993, and 1992:
<TABLE>
<CAPTION>
1994 1993 1992
-----------------------------------------------------------
<S> <C> <C> <C>
Cash paid for:
Income taxes
paid, net of
refunds $ 240,102 $ 158,878 $ 255,225
Interest paid 813,493 1,828,991 3,170,272
Chapter 11 items:
Interest received - - 357,000
Professional and
administrative
expenses paid - 26,085 505,144
Noncash investing
activities:
Fairmont (Note 5):
Notes received - - 8,983,281
Deferred income - - (8,983,281)
NTG (Note 12):
Dividends
accumulated - - 11,030,660
Deferred income - - (11,030,660)
Noncash operating
activities:
Barter Revenue 1,117,218 1,475,733 1,569,802
Barter Expense 962,356 1,421,342 1,646,539
</TABLE>
31
<PAGE> 57
PART III
The information called for by Items 10, 11, 12 and 13 is incorporated
herein by reference from the following portions of the definitive proxy
statement to be filed by the Company in connection with its 1995 Meeting of
Shareholders.
<TABLE>
<CAPTION>
Item Incorporated from
---- -----------------
<S> <C> <C>
ITEM 10. Directors and Executive "Directors and Executive
Officers of the Company Officers"
ITEM 11. Executive Compensation "Executive Compensation"
and "Certain Relationships
and Related Transactions"
ITEM 12. Security Ownership of "Principal Shareholders"
Certain Beneficial and "Security Ownership of
Owners and Management Management"
ITEM 13. Certain Relationships "Executive Compensation"
and Related Transactions and "Certain Relationships
and Related Transactions"
</TABLE>
III-1
<PAGE> 58
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES,
AND REPORTS ON FORM 8-K
(a) (1) and (2) List of financial statements and financial statement schedules:
Independent Auditors' Reports
Consolidated Balance Sheets at December 31, 1994 and 1993
Consolidated Statements of Operations for Years ended December 31,
1994, 1993 and 1992
Consolidated Statements of Shareholders' Equity (Deficit) for Years
ended December 31, 1994, 1993 and 1992
Consolidated Statements of Cash Flows for the Years ended December 31,
1994, 1993 and 1992
Notes to Consolidated Financial Statements
III. Condensed Financial Information of Registrant
VIII. Valuation and Qualifying Accounts
(Schedules other than those listed are omitted for the reason that
they are not required or are not applicable or the required
information is shown in the financial statements or notes thereto.)
(3) Exhibits
See Exhibit Index at page E-1, which is incorporated herein
by reference.
(b) Reports on Form 8-K.
During the quarter ended December 31, 1994, Registrant filed the
following Current Reports on Form 8-K:
On October 6, 1994, the Company filed a Form 8-K to report
an event of September 16, 1994. The report included an
Item 2 discussion of the purchase of WHTM-TV, Harrisburg,
Pennsylvania.
On October 14, 1994, Registrant filed a report on Form 8-K
wherein a change of the Company's Certifying Accountants on
October 6, 1994, was reported at Item 4.
On October 24, 1994, Registrant filed an amended Form 8-K
to its Current Report on Form 8-K filed on October 14,
1994, regarding a change in the Registrant's Certifying
Accountants at Item 4.
IV-1
<PAGE> 59
On December 5, 1994, Registrant filed a report on Form 8-K
wherein adoption of the Registrant's Shareholder Rights
Plan was reported in Item 5.
IV-2
<PAGE> 60
PRICE COMMUNICATIONS CORPORATION AND SUBSIDIARIES
SCHEDULE III - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
Balance Sheets
December 31, 1994 and 1993
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
ASSETS:
Cash and cash equivalents $777,284 $912,044
Prepaid expenses and other current assets 171,387 2,023,123
----------- -----------
Total current assets 948,671 2,935,167
Investments in and receivables from subsidiaries* 40,683,842 28,709,979
Property and equipment, net 96,740 166,693
Other - 299,196
----------- -----------
$41,729,253 $32,111,035
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Accounts payable and accrued expenses $1,989,516 $885,599
Other current liabilities 660,409 520,905
----------- -----------
Total current liabilities 2,649,925 1,406,504
Shareholders' equity 39,079,328 30,704,531
----------- -----------
$41,729,253 $32,111,035
=========== ===========
</TABLE>
- ---------------
* Eliminated in consolidation
<PAGE> 61
PRICE COMMUNICATIONS CORPORATION AND SUBSIDIARIES
SCHEDULE III - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
Statements of Operations
<TABLE>
<CAPTION>
Year Ended December 31
-------------------------------------------------------------
Predecessor
Reorganized Company Company
------------------------------------ ------------
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Corporate expenses $4,474,787 $3,648,524 $4,973,287
Other expense, net 615,608 3,473,391 173,898
Interest expense 9,731 1,465,315 14,531,762
Amortization of debt discount and deferred debt expense - 756,975 877,139
Depreciation and amortization 77,051 75,192 47,480
Unrealized noncash loss (recovery) on marketable securities - 145,884 (145,884)
Earnings of unconsolidated subsidiaries (19,978,726) (5,850,243) (3,273,853)
----------- ----------- ------------
Income (loss) before reorganization items, income taxes
and extraordinary item 14,801,549 (3,715,038) (17,183,829)
Reorganization items - - (5,802,959)
----------- ----------- ------------
Income (loss) before income taxes
and extraordinary item 14,801,549 (3,715,038) (22,986,788)
Income tax (expense) benefit (378,000) 115 (122,887)
----------- ----------- ------------
Income (loss) before extraordinary item 14,423,549 (3,714,923) (23,109,675)
Extraordinary item, net of income tax expense of - 2,010,332 312,324,661
$0 in 1993 and $900,000 in 1992
----------- ----------- ------------
Net income (loss) $14,423,549 ($1,704,591) $289,214,986
=========== =========== ============
</TABLE>
<PAGE> 62
PRICE COMMUNICATIONS CORPORATION AND SUBSIDIARIES
SCHEDULE III - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
Statements of Cash Flows
<TABLE>
<CAPTION>
Year Ended December 31
-----------------------------------
Reorganized Company
-----------------------------------
1994 1993
---- ----
<S> <C> <C>
Cash flows used in operating activities:
Net income (loss) $14,423,549 ($1,704,591)
----------- ------------
Adjustments to reconcile net income (loss) to net cash
used in operating activities:
Items not affecting cash:
Amortization of debt discount and deferred debt expense - 756,975
Depreciation and amortization 77,051 75,192
Unrealized noncash loss (recovery) on marketable securities - 145,884
Reserve on note receivable 400,000 -
Earnings of unconsolidated subsidiaries (19,978,726) (5,850,243)
Valuation adjustment, net of working capital valuation - -
Change in assets and liabilities, net of effects of reorganization:
Decrease (increase) in prepaid expenses and other assets 2,150,932 (458,316)
Decrease in due from broker/dealer - -
Increase (decrease) in accounts payable and accrued expenses 1,103,917 (1,646,172)
Increase (decrease) in other liabilities, net of forgiveness 139,504 (729,095)
(Decrease) increase in accrued interest, net of forgiveness - (350,835)
Reclassification of transactions to investing and financing activities: -
Loss on purchase of common stock - 3,976,597
Gain on early extinguishments of debt - (2,010,332)
Gain on forgiveness of debt and partial sale of subsidiary - -
Gain on sale of securities, net - (6,609)
Recovery on note receivable - -
----------- -----------
Total adjustments (16,107,322) (6,096,954)
----------- -----------
Net cash used in operating activities (1,683,773) (7,801,545)
----------- -----------
Cash flows provided by investing activities:
Cash received from subsidiaries* 8,004,863 24,828,406
Purchases of marketable securities and mutual funds - (36,704,873)
Purchases of securities under agreements to resell - (8,050,811)
Proceeds from sales of marketable securities and mutual funds - 54,394,512
Capital expenditures (7,098) (3,885)
Investment in partially owned company - (66,805)
(Disbursement of ) proceeds from notes receivable (400,000) -
----------- -----------
Net cash provided by investing activities 7,597,765 34,396,544
----------- -----------
Cash flows (used in) provided by financing activities:
Repurchases of long-term debt - (20,846,643)
Purchases of common stock (6,271,064) (8,434,058)
Proceeds from stock options exercised 222,312 56,216
Net (repayments of) borrowings under repurchase agreements - (4,930,083)
----------- -----------
Net cash (used in) provided by financing activities (6,048,752) (34,154,568)
----------- -----------
Net (decrease) increase in cash and cash equivalents (134,760) (7,559,569)
Cash and cash equivalents at beginning of year 912,044 8,471,613
----------- -----------
Cash and cash equivalents at end of year $777,284 $912,044
=========== ===========
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Income taxes, net of refunds $240,102 $158,251
=========== ===========
Interest $813,493 $1,816,150
=========== ===========
Chapter 11 items:
Interest received - -
=========== ===========
Professional and administrative expenses paid - $26,085
=========== ===========
<CAPTION>
Year Ended
December 31
------------
Predecessor
Company
------------
1992
----
<S> <C>
Cash flows used in operating activities:
Net income (loss) $289,214,986
------------
Adjustments to reconcile net income (loss) to net cash
used in operating activities:
Items not affecting cash:
Amortization of debt discount and deferred debt expense 877,139
Depreciation and amortization 47,480
Unrealized noncash loss (recovery) on marketable securities (145,884)
Reserve on note receivable -
Earnings of unconsolidated subsidiaries (3,273,853)
Valuation adjustment, net of working capital valuation 5,515,443
Change in assets and liabilities, net of effects of reorganization:
Decrease (increase) in prepaid expenses and other assets (100,557)
Decrease in due from broker/dealer 237,498
Increase (decrease) in accounts payable and accrued expenses 1,774,500
Increase (decrease) in other liabilities, net of forgiveness (347,038)
(Decrease) increase in accrued interest, net of forgiveness 14,477,864
Reclassification of transactions to investing and financing activities:
Loss on purchase of common stock -
Gain on early extinguishments of debt -
Gain on forgiveness of debt and partial sale of subsidiary (312,324,661)
Gain on sale of securities, net -
Recovery on note receivable (50,000)
------------
Total adjustments (293,312,069)
------------
Net cash used in operating activities (4,097,083)
------------
Cash flows provided by investing activities:
Cash received from subsidiaries* 12,671,261
Purchases of marketable securities and mutual funds (9,632,215)
Purchases of securities under agreements to resell -
Proceeds from sales of marketable securities and mutual funds -
Capital expenditures (19,959)
Investment in partially owned company -
(Disbursement of ) proceeds from notes receivable 50,000
----------
Net cash provided by investing activities 3,069,087
----------
Cash flows (used in) provided by financing activities:
Repurchases of long-term debt -
Purchases of common stock -
Proceeds from stock options exercised -
Net (repayments of) borrowings under repurchase agreements 4,930,083
----------
Net cash (used in) provided by financing activities 4,930,083
----------
Net (decrease) increase in cash and cash equivalents 3,902,087
Cash and cash equivalents at beginning of year 4,569,526
----------
Cash and cash equivalents at end of year $8,471,613
==========
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Income taxes, net of refunds $53,898
==========
Interest $16,054
==========
Chapter 11 items:
Interest received $357,000
==========
Professional and administrative expenses paid $505,144
==========
</TABLE>
- ---------------
* Eliminated in consolidation.
<PAGE> 63
PRICE COMMUNICATIONS CORPORATION AND SUBSIDIARIES
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
DECEMBER 1994, 1993 AND 1992
<TABLE>
<CAPTION>
Balance at Additions
Beginning Charged to Balance at
Description of Period Expenses Deductions(a) End of Period
----------- ---------- ---------- ------------- -------------
<S> <C> <C> <C> <C>
For the year ended December 31, 1994:
Allowance for doubtful accounts $487,576 $319,204 ($411,768)(b) $395,012
For the year ended December 31, 1993:
Allowance for doubtful accounts $565,351 $263,909 ($341,684) $487,576
For the year ended December 31, 1992:
Allowance for doubtful accounts $612,438 $513,908 ($560,995)(c) $565,351
</TABLE>
---------------
(a) Amounts written off as uncollectible and payments.
(b) Includes adjustments for the disposition of properties and the
acquisition of WHTM-TV.
(c) $85,000 relates to the partial sale of companies in 1992.
<PAGE> 64
SIGNATURES
Pursuant to the requirements of Section 13 and 15(d) of the Securities
and Exchange Act of 1934, the Company has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
PRICE COMMUNICATIONS CORPORATION
By /s/ Robert Price
-------------------------------------
Robert Price, President
Dated: January 26, 1995
Pursuant to the requirements of the Securities and Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the Company and in the capacities and on the dates indicated. Each person whose
signature appears below hereby authorizes and appoints Robert Price as his
attorney-in-fact to sign and file in his behalf individually and in each
capacity stated below any and all amendments to this Annual Report.
Dated: January 26, 1995 By /s/ Robert Price
--------------------------------------
Robert Price, Director
and President
(Principal Executive Officer,
Financial Officer and Accounting
Officer)
Dated: January 26, 1995 By /s/ George H. Cadgene
--------------------------------------
George H. Cadgene,
Director
Dated: January 26, 1995 By /s/ Robert F. Ellsworth
--------------------------------------
Robert F. Ellsworth,
Director
Dated: January 26, 1995 By /s/ Robert Paul
--------------------------------------
Robert Paul,
Director
Dated: January 26, 1995 By /s/ Kim I. Pressman
--------------------------------------
Kim I. Pressman,
Director
Dated: January 26, 1995 By /s/ Steven Price
--------------------------------------
Steven Price,
Director
<PAGE> 65
EXHIBIT INDEX
ITEM 14(a)(3)
PRICE COMMUNICATIONS CORPORATION
Annual Report on Form 10-K for the year ended
December 31, 1994
Page(1)
----
(3)(a) Restated Certificate of
Incorporation of the Registrant as
filed with the Secretary of State
of the State of New York on
December 29, 1992, incorporated by
reference to Exhibit 3(a) to
Registrant's Form 10-K for the year
ended December 31, 1992.
(b) Restated By-laws of the Registrant,
incorporated by reference to
Exhibit 3(b) to the Registrant's
Form 10-K for the year ended
December 31, 1993.
(4)(a) Indenture dated as of December 30,
1992 between the Registrant and IBJ
Schroder Bank & Trust Company, as
trustee, relating to the Company's
5% Senior Secured Notes due 1999
(the "Indenture"), incorporated by
reference to Exhibit 4(a) to
Registrant's Form 10-K for the year
ended December 31, 1992.
(b) Pledge, Intercreditor and
Collateral Agency Agreement dated
as of December 30, 1992, among the
Registrant, IBJ Schroder Bank &
Trust Company, as Trustee under the
Indenture, and IBJ Schroder Bank &
Trust Company, as Collateral Agent,
incorporated by reference to
Exhibit 4(b) to Registrant's Form
10-K for the year ended December
31, 1992.
(10)(a) The Registrant's 1992 Long Term
Incentive Plan, incorporated by
reference to Exhibit 10(a) to
- --------------------
1 Page numbers are sequentially numbered pages.
E-1
<PAGE> 66
Page
----
Registrant's Form 10-K for the year
ended December 31, 1992.
(b) Amended and Restated Employment
Agreement dated as of May 8, 1992
between The New York Law Publishing
Company and Robert Price,
incorporated by reference to
Exhibit 10(b) to Registrant's Form
10-K for the year ended December
31, 1992.
(c) Employment Agreement with Robert
Price, dated May 8, 1992,
incorporated by reference to
Exhibit 10(c) to Registrant's Form
10-K for the year ended December
31, 1992.
(d) Agreement dated May 8, 1992 between
the Registrant and Robert Price
with respect to PriCellular
Corporation, incorporated by
reference to Exhibit 10(d) to
Registrant's Form 10-K for the year
ended December 31, 1992.
(e) Amended and Restated Stock Purchase
Agreement dated as of May 8, 1992
among the Registrant, Price
Publishing Corporation, Alexandra
Publishing Corporation, The New
York Law Publishing Company and
Apollo Investment Fund, L.P.,
incorporated by reference to
Exhibit 10(e) to Registrant's Form
10-K for the year ended December
31, 1992.
(f) Amended and Restated Shareholders
Agreement dated as of May 8, 1992
among the Registrant, Apollo
Investment Fund, L.P., Price
Publishing Company, Alexandra
Publishing Corporation and The New
York Law Publishing Company,
incorporated by reference to
Exhibit 10(f) to Registrant's Form
10-K for the year ended December
31, 1992.
(g) Registration Rights Undertaking,
incorporated by reference to
Exhibit
E-2
<PAGE> 67
Page
----
10(g) to Registrant's Form 10-K
for the year ended December 31, 1992.
(h) Warrant Agreement dated April 12,
1990 between Price Communications
Corporation and Warner
Communications Investors, Inc.,
incorporated by reference to
Exhibit (4) to Registrant's Form
8-K filed to report an event of
April 12, 1990.
(i) Form of Amendment to Time Warner
Warrant, incorporated by reference
to Exhibit 10(i) to Registrant's
Form 10-K for the year ended
December 31, 1992.
(j) Stock Purchase Agreement, dated as
of April 27, 1987, among
Registrant, Republic Broadcasting
Corporation and Fairfield
Broadcasting, Inc., as amended July
16, 1987, incorporated by reference
to Annex I to Registrant's
Definitive Proxy Statement dated
July 27, 1987.
(k) Notes and Stock Purchase Agreement
between and among Fairfield
Broadcasting, Inc., Price
Communications Corporation and
Republic Broadcasting Corporation
dated as of September 30, 1987, as
amended, incorporated by reference
to Exhibit 10(a) to Registration
Statement on Form S-1 (File No.
33-30318).
(l) Stockholders' Agreement among
Fairfield Broadcasting, Inc., Price
Communications Corporation,
Citicorp Venture Capital Ltd.,
Osborn Communications Corporation
and Prudential-Bache Interfunding
Inc., dated as of September 30,
1987, incorporated by reference to
Exhibit 10(b) to Registration
Statement on Form S-1 (File No.
33-30318).
(m) Asset Purchase Agreement by and among
E-3
<PAGE> 68
Page
----
NTG, Inc., Price Communications
Corporation and Western Michigan
Broadcasting Corporation, Rhode Island
Broadcasting Corporation, Magnolia
Broadcasting Corporation and
Keystone Broadcasting Corporation,
dated as of June 28, 1989,
incorporated by reference to
Exhibit 10(c) to Registration
Statement on Form S-1 (File No.
33-30318).
(n) Stock Purchase Agreement between
NTG Holdings, Inc. and Price
Communications Corporation, dated
as of June 28, 1989, incorporated
by reference to Exhibit 10(d) to
Registration Statement on Form S-1
(File No. 33-30318).
(o) Network Affiliation Agreement,
dated September 10, 1982, between
National Broadcasting Company,
Inc., and Tri-State Broadcasting
Corporation, as amended (KSNF-TV),
incorporated by reference to
Exhibit 10(v) to Registration
Statement on Form S-1 (File No.
33-30318).
(p) Network Affiliation Agreement,
dated April 22, 1989, between
National Broadcasting Company, Inc.
and Continental Broadcasting
Corporation (KJAC-TV), incorporated
by reference to Exhibit 10(w) to
Registration Statement on Form S-1
(File No. 33-30318).
(q) Network Affiliation Agreement,
dated January 1, 1981, between
National Broadcasting Company, Inc.
and Clay Broadcasting Corporation
of Texas, as amended (KFDX-TV),
incorporated by reference to
Exhibit 10(x) to Registration
Statement on Form S-1 (File No.
33-30318).
(r) Stock Purchase Agreement dated
March 1, 1990 among Time Warner
Inc., Warner Communications
Investors, Inc., Price
Communications Corporation, and
PriCellular Corporation,
incorporated by reference to
Exhibit (1) to
E-4
<PAGE> 69
Page
----
Registrant's Form 8-K filed to
report events of April 12, 1990.
(s) Amendment No. 1 to Stock Purchase
Agreement dated April 6, 1990,
among Time Warner Inc., Warner
Communications Investors, Inc.,
Price Communications Corporation,
and PriCellular Corporation,
incorporated by reference to
Exhibit (2) to Registrant's Form
8-K filed to report an event of
April 12, 1990.
(t) Stock Option Agreement, dated April
12, 1990 between PriCellular
Corporation and Warner
Communications Investors, Inc.,
incorporated by reference to
Exhibit (3) to Registrant's Form
8-K filed to report an event of
April 12, 1990.
(u) Line of Credit Agreement, dated as
of December 21, 1993 among Atlantic
Broadcasting Corporation, Southeast
Texas Broadcasting Corporation,
Texoma Broadcasting Corporation,
Tri-State Broadcasting Corporation,
the Lenders Parties Thereto and the
Bank of Montreal, incorporated by
reference to Exhibit 10(u) to the
Registrant's Form 10-K for the year
ended December 31, 1993.
(v) Securities Purchase Agreement,
dated December 30, 1993, among
Apple Publishing Corporation, Price
Communications Corporation,
Equity-Linked Investors, L.P. and
Equity-Linked Investors-II,
incorporated by reference to
Exhibit 10(v) to the Registrant's
Form 10-K for the year ended
December 31, 1993.
(w) Agreement dated November 19, 1993,
between Price Communications
Corporation, Apple Publishing
Corporation, the Sellers listed on
Exhibit A thereto and W.R. Huff
Asset Management Co., L.P.,
incorporated by reference to
Exhibit 10(w) to the
E-5
<PAGE> 70
Page
----
Registrant's Form 10-K for the year
ended December 31, 1993.
(x) Stock Purchase Agreement, dated as
of October 1, 1993, by and between
Price Communications Cellular,
Inc., Price Communications
Corporation and Atlas Cellular
Corporation, incorporated by
reference to Exhibit 10 to
Registrant's Form 8-K filed to
report an event of October 1, 1993.
(y) Form of Indemnification Agreement
between Registrant and its officers
and directors, incorporated by
reference to Exhibit 10(y) to the
Registrant's Form 10-K for the year
ended December 31, 1993.
(z) Amended and Restated Line of Credit
Agreement among the Co- Borrowers
named therein, the Several Lenders
named therein, and Bank of
Montreal, as Agent, dated as of
September 16, 1994.
(aa) Employment Agreement, dated as of
October 6, 1994, between the
Registrant and Robert Price.
(bb) Employment Agreement, dated as of
January 5, 1995, between the
Registrant and Kim Pressman.
(cc) Stock Option Agreement, dated as of
February 10, 1994, between the
Registrant and Robert Price.
(dd) Rights Agreement dated as of
October 6, 1994 between the
Registrant and Harris Trust Company
of New York, incorporated by
reference to Exhibit 4 to
Registrant's Form 8-K filed to
report an event on October 6, 1994.
(ee) Amendment dated January 12, 1995 to
Rights Agreement dated as of
October 6, 1994 between the
Registrant and Harris Trust Company
of New York, incorporated by
reference to Exhibit 4 to
E-6
<PAGE> 71
Page
----
Registrant's Form 8-K filed to
report an event on January 12,
1995.
(ff) Securities Purchase Agreement,
dated as of February 15, 1994,
between the stockholders and
warrant holders of Smith
Acquisition Corp. and the
Registrant, incorporated by
reference to Exhibit 10 to the
Registrant's Form 8-K filed to
report an event of September 16,
1994.
(11) Statement regarding computation of
per share earnings (omitted;
computation can be clearly
determined from material contained
in the Report).
(21) Subsidiaries of Registrant.
(24) The powers of attorney to sign
amendments to this Report appear on
the signature page.
(27) Financial Data Schedule.
E-7
<PAGE> 1
================================================================================
AMENDED AND RESTATED
LINE OF CREDIT AGREEMENT
AMONG
ATLANTIC BROADCASTING CORPORATION,
FEDERAL BROADCASTING CORPORATION,
SOUTHEAST TEXAS BROADCASTING CORPORATION,
TEXOMA BROADCASTING CORPORATION,
TRI-STATE BROADCASTING CORPORATION,
AS CO-BORROWERS,
The Several Lenders
from Time to Time Parties Hereto,
and
BANK OF MONTREAL,
AS AGENT
DATED AS OF SEPTEMBER 16, 1994
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Other Definitional Provisions . . . . . . . . . . . . . . . . . . 12
SECTION 2. AMOUNT AND TERMS OF . . . . . . . . . . . . . . . . . . . . . . . 12
2.1 Line of Credit. . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.2 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.3 Procedure for Borrowing . . . . . . . . . . . . . . . . . . . . . 13
2.4 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.5 Termination or Reduction of Line of Credit Amounts . . . . . . . 14
2.6 Optional and Mandatory Prepayments . . . . . . . . . . . . . . . 15
2.7 Conversion and Continuation Options . . . . . . . . . . . . . . . 16
2.8 Minimum Amounts of Tranches . . . . . . . . . . . . . . . . . . . 16
2.9 Interest Rates and Payment Dates . . . . . . . . . . . . . . . . 16
2.10 Computation of Interest and Fees . . . . . . . . . . . . . . . . 17
2.11 Inability to Determine Interest Rate . . . . . . . . . . . . . . 17
2.12 Pro Rata Treatment and Payments . . . . . . . . . . . . . . . . 18
2.13 Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.14 Requirements of Law . . . . . . . . . . . . . . . . . . . . . . 19
2.15 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.16 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 3. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . 22
3.1 Financial Condition . . . . . . . . . . . . . . . . . . . . . . . 22
3.2 No Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.3 Corporate Existence; Compliance with Law . . . . . . . . . . . . 22
3.4 Corporate Power; Authorization; Enforceable Obligations . . . . . 23
3.5 No Legal Bar . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.6 No Material Litigation . . . . . . . . . . . . . . . . . . . . . 23
3.7 No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.8 Ownership of Property; Liens . . . . . . . . . . . . . . . . . . 23
3.9 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . 24
3.10 No Burdensome Restrictions . . . . . . . . . . . . . . . . . . . 24
3.11 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.12 Federal Regulations . . . . . . . . . . . . . . . . . . . . . . 24
3.13 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.14 Investment Company Act; Other Regulations . . . . . . . . . . . 25
3.15 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . 25
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C>
3.16 Purpose of Loans . . . . . . . . . . . . . . . . . . . . . . . . 25
3.17 Environmental Matters . . . . . . . . . . . . . . . . . . . . . 25
3.18 Broadcast Licenses, etc. . . . . . . . . . . . . . . . . . . . . 26
3.19 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.20 Stations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 4. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . 27
4.1 Conditions to Effectiveness. . . . . . . . . . . . . . . . . . . 27
SECTION 5. COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.1 Financial Statements . . . . . . . . . . . . . . . . . . . . . . 30
5.2 Certificates; Other Information . . . . . . . . . . . . . . . . . 30
5.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.4 Financial Condition Covenants . . . . . . . . . . . . . . . . . . 32
5.5 Limitation on Indebtedness . . . . . . . . . . . . . . . . . . . 32
5.6 Asset Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.7 Limitation on Restricted Payments . . . . . . . . . . . . . . . . 32
SECTION 6. OFFERING BASIS . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 7. THE AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.1 Appointment . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.2 Delegation of Duties . . . . . . . . . . . . . . . . . . . . . . 33
7.3 Exculpatory Provisions . . . . . . . . . . . . . . . . . . . . . 33
7.4 Reliance by Agent . . . . . . . . . . . . . . . . . . . . . . . . 34
7.5 Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . 34
7.6 Non-Reliance on Agent and Other Lenders . . . . . . . . . . . . . 34
7.7 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.8 Agent in Its Individual Capacity . . . . . . . . . . . . . . . . 35
7.9 Successor Agent . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 8. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
8.1 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . 36
8.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
8.3 No Waiver; Cumulative Remedies . . . . . . . . . . . . . . . . . 37
8.4 Survival of Representations and Warranties . . . . . . . . . . . 37
8.5 Payment of Expenses and Taxes . . . . . . . . . . . . . . . . . . 37
8.6 Successors and Assigns; Participations; Purchasing Lenders . . . 38
8.7 Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C>
8.8 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . 40
8.9 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . 40
8.10 Integration . . . . . . . . . . . . . . . . . . . . . . . . . . 40
8.11 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . 40
8.12 Submission To Jurisdiction; Waivers . . . . . . . . . . . . . . 41
8.13 Acknowledgements . . . . . . . . . . . . . . . . . . . . . . . . 41
8.14 WAIVERS OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . 42
8.15 Joint and Several Liability . . . . . . . . . . . . . . . . . . 42
8.16 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . 42
8.17 Consent to Supplement to Security Agreement . . . . . . . . . . 42
</TABLE>
SCHEDULES
1.1 Line of Credit Amounts; Addresses for Notices
3.1 Certain Transactions
3.18 Broadcast Licenses, Etc.
EXHIBITS
A - Note
B - Assignment and Acceptance
C-1 - Opinion of Proskauer Rose Goetz & Mendelsohn
C-2 - Opinion of Roberts & Eckard
D - Supplement to Stock Pledge Agreement
E - Acknowledgement and Consent
F - Supplement to Security Agreement
G - Federal Subordination Agreement
-iii-
<PAGE> 5
AMENDED AND RESTATED LINE OF CREDIT AGREEMENT, dated as of
September 16, 1994, among:
(i) ATLANTIC BROADCASTING CORPORATION, a Delaware
corporation ("Atlantic"), FEDERAL BROADCASTING CORPORATION, a
New York corporation ("Federal"), SOUTHEAST TEXAS BROADCASTING
CORPORATION, a Texas corporation ("Southeast"), TEXOMA
BROADCASTING CORPORATION, a Texas corporation ("Texoma"), and
TRI-STATE BROADCASTING CORPORATION, a Delaware corporation
("Tri-State"), jointly and severally (collectively, the
"Co-Borrowers" and each a "Co-Borrower"),
(ii) the several banks and other financial
institutions from time to time parties to this Agreement (the
"Lenders") and
(iii) BANK OF MONTREAL, as agent for the Lenders
hereunder (in such capacity, the "Agent").
W I T N E S S E T H:
WHEREAS, the Co-Borrowers (other than Federal), the Agent and
certain banks and other financial institutions (the "Existing Lenders") are
parties to the Credit Agreement, dated as of December 21, 1993 (as amended,
supplemented or otherwise modified to the date hereof, the "Existing Credit
Agreement"), pursuant to which the Existing Lenders made loans to the
Co-Borrowers (other than Federal); and
WHEREAS, Federal intends to acquire all the outstanding
warrants and stock issued by Smith Acquisition Corp., a Delaware corporation
("Smith"), which owns WHTM - TV, Inc. which owns a television station located
in Harrisburg, Pennsylvania and other assets specified in the Acquisition
Agreement (as defined below) for a purchase price not exceeding $52,000,000
(including fees and expenses); and
WHEREAS, the Co-Borrowers have requested that the Agent and
the Existing Lenders amend and restate the Existing Credit Agreement, inter
alia, to include Federal as a Co-Borrower and to provide a $36,000,000 increase
in the Co-Borrowers' outstanding line of credit to finance the WHTM Acquisition
(as defined below), to pay related fees and expenses, and for working capital
and general corporate purposes; and
WHEREAS, the Agent and the Lenders are willing so to amend and
restate the Existing Credit Agreement, but only on the terms and conditions
hereof;
NOW THEREFORE, in consideration of the premises and the mutual
covenants hereinafter set forth, effective as of the Closing Date, the parties
hereto hereby amend and restate the Existing Credit Agreement to read in its
entirety as follows:
<PAGE> 6
2
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following
terms shall have the following meanings:
"Acquisition Agreement": the Securities Purchase Agreement,
dated as of February 15, 1994, between PCC and the stockholders and
warrant holders of Smith, together with all schedules and exhibits
thereto (as the same has been amended, supplemented or otherwise
modified to the date hereto), as assigned to Federal pursuant to the
Assignment Agreement, dated as of September 16, 1994, between Federal
and PCC.
"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 means the power, directly or
indirectly, to direct or cause the direction of the management and
policies of such Person, whether by contract or otherwise.
"Agreement": the Existing Credit Agreement, as amended and
restated by this Amended and Restated Credit Agreement, as further
amended, supplemented or otherwise modified from time to time.
"Applicable Margin": for each Type of Loan during the Margin
Period immediately following each fiscal quarter, the rate per annum
set forth under the relevant column heading below opposite the
applicable ratio of aggregate Indebtedness outstanding on the last day
of such fiscal quarter to Operating Cash Flow for the four consecutive
fiscal quarters ended on such day:
<TABLE>
<CAPTION>
Ratio Base Rate Loans Eurodollar Loans
----- --------------- ----------------
<C> <C> <C>
greater than or equal to 3.5 x .75% 2.00%
<3.5 x greater than or equal to 3.00 x .50% 1.75%
<3.00 x greater than or equal to 2.00 x .25% 1.50%
<2.00 0.00% 1.25%
</TABLE>
provided, however, that until the Margin Period relating to the fiscal
quarter ending September 30, 1994, the Applicable Margin shall be .75%
for Base Rate Loans and 2.00% for Eurodollar Loans, and provided,
further, that if at any time the Co- Borrowers shall fail to deliver
the financial statements required by subsection 5.1(b)
<PAGE> 7
3
for any fiscal quarter or the related Applicable Margin Certificate
required by subsection 5.2(e) on or before the date such statements and
certificate are required to be delivered pursuant to such subsections,
the aggregate Indebtedness to Operating Cash Flow ratio shall be deemed
for purposes of this definition to be greater than 3.5 to 1.0 for the
period which commences five Business Days after such required date of
delivery and ends on the date which is five Business Days after such
financial statements and certificate are actually delivered, after
which the Applicable Margin shall be determined in accordance with the
preceding schedule.
"Applicable Margin Certificate": as defined in subsection
5.2(e).
"Assignee": as defined in subsection 8.6(c).
"Assignment and Acceptance": an assignment and acceptance
entered into by a Lender or an assignee, substantially in the form of
Exhibit B.
"Available Cash Flow": for any period of four consecutive
fiscal quarters, Operating Cash Flow for such period minus the sum of
the aggregate Restricted Payments, Capital Expenditures and taxes paid
in cash by the Co-Borrowers during such period.
"Available Line of Credit": as to any Lender at any time, an
amount equal to the excess, if any, of (a) the amount of such Lender's
Line of Credit Amount over (b) the aggregate principal amount of all
Loans made by such Lender then outstanding.
"Base Rate": for any day, a rate per annum (rounded upwards,
if necessary, to the next 1/16 of 1%) equal to the greater of (a) the
Prime Rate in effect on such day, and (b) the Federal Funds Effective
Rate in effect on such day plus 1/2 of 1%. For purposes hereof:
"Prime Rate" shall mean the rate of interest per annum publicly
announced from time to time by the Agent as its prime rate in effect
at its principal office in New York City (each change in the Prime
Rate to be effective on the date such change is publicly announced);
and " Federal Funds Effective Rate" shall mean, for any day, the
weighted average of the rates on overnight federal funds transactions
with members of the Federal Reserve System arranged by federal funds
brokers, as published on the next succeeding Business Day by the
Federal Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the quotations for
the day of such transactions received by the Agent from three federal
funds brokers of recognized standing selected by it. If for any
reason the Agent shall have determined (which determination shall be
conclusive absent manifest error) that it is unable to ascertain the
Federal Funds Effective Rate for any reason, including the inability
or failure of the Agent to obtain sufficient quotations in accordance
with the terms hereof, the Base Rate shall be determined without
regard to clause (b) of the first sentence of this definition, as
appropriate, until the circumstances giving rise to such inability no
longer exist. Any change in the Base Rate due to a change in the
Prime Rate or the Federal Funds Effective Rate shall be effective on
the
<PAGE> 8
4
effective day of such change in the Prime Rate or the Federal
Funds Effective Rate, respectively.
"Base Rate Loans": Loans the rate of interest applicable to
which is based upon the Base Rate.
"Business": as defined in subsection 3.17.
"Borrowing Date": any Business Day specified in a notice
pursuant to subsection 2.3 as a date on which the Co- Borrowers
request the Lenders to make Loans hereunder.
"Business Day": a day other than a Saturday, Sunday or other
day on which commercial banks in New York City are authorized or
required by law to close.
"Capital Expenditure": any cash expenditure made for the
purpose of acquiring or constructing fixed assets, real property or
equipment which in accordance with GAAP would be added as a debit to
the fixed asset accounts of the Person making such expenditure.
"Capital Stock": any and all shares, interests,
participations or other equivalents (however designated) of capital
stock of a corporation, any and all equivalent ownership interests in
a Person (other than a corporation) and any and all warrants or
options to purchase any of the foregoing.
"Closing Date": the date on which all of the conditions
precedent specified in subsection 4.1 are satisfied.
"Code": the Internal Revenue Code of 1986, as amended from
time to time.
"Commonly Controlled Entity": an entity, whether or not
incorporated, which is under common control with any Co- Borrower
within the meaning of Section 4001(a)(14) of ERISA or is part of a
group which includes any Co-Borrower and which is treated as a single
employer under Section 414(b) or 414(c) of the Code.
"Contractual Obligation": as to any Person, any provision of
any security issued by such Person or of any agreement, instrument or
other undertaking to which such Person is a party or by which it or
any of its property is bound.
"Debt Service": for any period of four consecutive fiscal
quarters, the sum of (i) aggregate interest expense of the
Co-Borrowers for such period and (ii) the aggregate amount of all
reductions of the Line of Credit Amounts required pursuant to
subsection 2.5(b) during such period.
"Default": a violation of, or the failure to observe or
perform, any agreement, covenant, representation or condition of any
Loan Party under the Loan Documents.
<PAGE> 9
5
"Dollars" and "$": dollars in lawful currency of the United
States of America.
"Environmental Laws": any and all foreign, Federal, state,
local or municipal laws, rules, orders, regulations, statutes,
ordinances, codes, decrees, requirements of any Governmental Authority
or other Requirements of Law (including common law) regulating,
relating to or imposing liability or standards of conduct concerning
protection of human health or the environment, as now or may at any
time hereafter be in effect.
"ERISA": the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"Eurocurrency Reserve Requirements": for any day as applied
to a Eurodollar Loan, the aggregate (without duplication) of the rates
(expressed as a decimal fraction) of reserve requirements in effect on
such day (including, without limitation, basic, supplemental, marginal
and emergency reserves under any regulations of the Board of Governors
of the Federal Reserve System or other Governmental Authority having
jurisdiction with respect thereto) dealing with reserve requirements
prescribed for eurocurrency funding (currently referred to as
"Eurocurrency Liabilities" in Regulation D of such Board) maintained
by a member bank of the Federal Reserve System. Eurodollar Loans
shall be deemed to constitute Eurocurrency Liabilities and to be
subject to such reserve requirements without the benefit of or credit
for proration, exceptions or offsets which may be available from time
to time to any Lender under Regulation D.
"Eurodollar Base Rate": with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, the rate per annum
equal to the rate at which the Agent is offered Dollar deposits at or
about 10:00 A.M., New York City time, two Working Days prior to the
beginning of such Interest Period in the interbank eurodollar market
where the eurodollar and foreign currency and exchange operations in
respect of its Eurodollar Loans are then being conducted for delivery
on the first day of such Interest Period for the number of days
comprised therein and in an amount comparable to the amount of the
Eurodollar Loan to be outstanding during such Interest Period.
"Eurodollar Loans": Loans the rate of interest applicable to
which is based upon the Eurodollar Rate.
"Eurodollar Rate": with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, a rate per annum
determined for such day in accordance with the following formula
(rounded upward to the nearest 1/100th of 1%):
Eurodollar Base Rate
----------------------------------------
1.00 - Eurocurrency Reserve Requirements
<PAGE> 10
6
"FCC": the Federal Communications Commission or any successor
agency or authority.
"Federal Subordination Agreement": the Intercompany
Subordination Agreement, dated as of September 16, 1994, made by PCC
and Federal in favor of the Agent, as the same may be amended,
supplemented or otherwise modified from time to time, substantially in
the form of Exhibit G.
"Financing Lease": any lease of property, real or personal,
the obligations of the lessee in respect of which are required in
accordance with GAAP to be capitalized on a balance sheet of the
lessee.
"GAAP": generally accepted accounting principles in the
United States of America in effect from time to time.
"Governmental Authority": any nation or government, any state
or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Guarantee Obligation": as to any Person (the "guaranteeing
person"), any obligation of (a) the guaranteeing person or (b) another
Person (including, without limitation, any bank under any letter of
credit) for which the guaranteeing person has issued a reimbursement,
counterindemnity or similar obligation to induce the creation of such
obligation, in either case guaranteeing or in effect guaranteeing any
indebtedness, leases, dividends or other obligations (the "primary
obligations") of any other third Person (the "primary obligor") in any
manner, whether directly or indirectly, including, without limitation,
any obligation of the guaranteeing 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 (1) for the purchase or payment of any such primary
obligation or (2) 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 owner 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 owner of any such primary obligation against loss in
respect thereof; provided, however, that the term Guarantee Obligation
shall not include endorsements of instruments for deposit or
collection in the ordinary course of business.
"Hazardous Materials": any hazardous materials, hazardous
wastes, hazardous constituents, hazardous or toxic substances,
petroleum products (including crude oil or any fraction thereof),
defined or regulated as such in or under any Environmental Law.
"Indebtedness": of any Person at any date, (a) all
indebtedness of such Person for borrowed money or for the deferred
purchase price of property or services, (b) any other indebtedness of
such Person which is evidenced by a note, bond, debenture or
<PAGE> 11
7
similar instrument and (c) Guarantee Obligations in respect of
Indebtedness of other Persons.
"Insolvency": with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of Section
4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
"Intercompany Subordination Agreement": the Intercompany
Subordination Agreement, dated as of December 21, 1993, made by Atlas
and Continental and each of the Co-Borrowers (other than Federal) in
favor of the Agent, as the same may be amended, supplemented or
otherwise modified from time to time.
"Interest Payment Date": (a) as to any Base Rate Loan, the
last day of each March, June, September and December to occur while
such Loan is outstanding, (b) as to any Eurodollar Loan having an
Interest Period of three months or less, the last day of such Interest
Period and (c) as to any Eurodollar Loan having an Interest Period
longer than three months, each day which is three months, or a whole
multiple thereof, after the first day of such Interest Period and the
last day of such Interest Period.
"Interest Period": with respect to any Eurodollar Loan:
(i) initially, the period commencing on the
borrowing or conversion date, as the case may be, with respect
to such Eurodollar Loan and ending one, two, three or six
months thereafter, as selected by the Co-Borrowers in their
notice of borrowing or notice of conversion, as the case may
be, given with respect thereto; and
(ii) thereafter, each period commencing on the last
day of the next preceding Interest Period applicable to such
Eurodollar Loan and ending one, two, three or six months
thereafter, as selected by the Co-Borrowers by irrevocable
notice to the Agent not less than three Working Days prior to
the last day of the then current Interest Period with respect
thereto;
provided that, all of the foregoing provisions relating to Interest
Periods are subject to the following:
(1) if any Interest Period pertaining to a
Eurodollar Loan would otherwise end on a day that is not a
Working Day, such Interest Period shall be extended to the
next succeeding Working Day unless the result of such
extension would be to carry such Interest Period into another
calendar month in which event such Interest Period shall end
on the immediately preceding Working Day;
<PAGE> 12
8
(2) any Interest Period that would otherwise extend
beyond the Termination Date shall end on the Termination Date;
(3) any Interest Period pertaining to a Eurodollar
Loan that begins on the last Working 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)
shall end on the last Working Day of a calendar month; and
(4) the Co-Borrowers shall select Interest Periods so
as not to require a payment or prepayment of any Eurodollar
Loan during an Interest Period for such Loan.
"Lien": any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), charge or
other security interest or any preference, priority or other security
agreement or preferential arrangement 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).
"Line of Credit Amount": as to any Lender, the amount of the
line of credit made available by such Lender to the Co-Borrowers
hereunder, as such amount is set forth opposite such Lender's name on
Schedule 1.1 and as such amount may be reduced from time to time in
accordance with the provisions of this Agreement.
"Line of Credit Percentage": as to any Lender at any time,
the percentage which such Lender's Line of Credit Amount then
constitutes of the aggregate Line of Credit Amount (or, at any time
after the line of credit made available hereunder shall have expired
or terminated, the percentage which the aggregate principal amount of
such Lender's Loans then outstanding constitutes of the aggregate
principal amount of the Loans then outstanding).
"Line of Credit Period": the period from and including the
Closing Date to but not including the Termination Date or such earlier
date on which the Lenders shall, in their sole and absolute discretion
exercisable at any time, terminate the lines of credit made available
hereunder.
"Loan Documents": this Agreement, the Notes, the Security
Documents, the Supplement to Stock Pledge Agreement, the Supplement to
Security Agreement and the Intercompany Subordination Agreement.
"Loans": all loans made pursuant to this Agreement.
"Loan Parties": each of the Co-Borrowers, each of the
Pledgors, PCC and WHTM-TV, Inc.
<PAGE> 13
9
"Margin Period": in relation to any fiscal quarter, the
period which (i) commences five Business Days after the date of
delivery to the Agent of the financial statements required by
subsection 5.1(b) for such quarter and the related Applicable Margin
Certificate required by subsection 5.2(e), and (ii) ends four Business
Days after the date of delivery to the Agent of such financial
statements and related Applicable Margin Certificate for the next
succeeding fiscal quarter.
"Material Adverse Effect": a material adverse effect on (a)
the business, assets or condition (financial or otherwise) of the
Co-Borrowers taken as a whole or (b) the validity or enforceability of
this Agreement or any of the other Loan Documents or the rights or
remedies of the Agent or any of the Lenders hereunder or thereunder.
"Material Environmental Amount": an amount payable by the
Co-Borrowers in excess of $200,000 for remedial costs, compliance
costs, compensatory damages, punitive damages, fines, penalties or any
combination thereof.
"Materials of Environmental Concern": any gasoline or
petroleum (including crude oil or any fraction thereof) or petroleum
products or any hazardous or toxic substances, materials or wastes,
defined or regulated as such in or under any Environmental Law,
including, without limitation, asbestos, polychlorinated biphenyls and
urea-formaldehyde insulation.
"Multiemployer Plan": a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"Note": as defined in subsection 2.2.
"Obligations": the unpaid principal of and interest on
(including, without limitation, interest accruing after the maturity
of the Loans and interest accruing after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or
like proceeding, relating to any Co-Borrower, whether or not a claim
for post-filing or post- petition interest is allowed in such
proceeding) the Notes and all other obligations and liabilities of the
Co-Borrowers to the Agent or to the Lenders, whether direct or
indirect, absolute or contingent, due or to become due, or now
existing or hereafter incurred, which may arise under, out of, or in
connection with, this Agreement, the Notes or the other Loan Documents
and any other document made, delivered or given in connection
therewith or herewith, whether on account of principal, interest,
fees, indemnities, costs, expenses (including, without limitation, all
fees and disbursements of counsel to the Agent or to the Lenders that
are required to be paid by the Co-Borrowers pursuant to the terms of
this Agreement) or otherwise.
"Operating Cash Flow": for any date of determination, the
aggregate net income of the Co-Borrowers for the four most recently
ended fiscal quarters of the Co-Borrowers, plus the sum of the
aggregate (i) barter expenses, (ii) interest expense, (iii)
depreciation, (iv) amortization, (v) income taxes and (vi) other
non-cash expenses of the Co-Borrowers, in each case for such period,
minus the sum of the aggregate (x)
<PAGE> 14
10
barter revenue of and (y) actual payments for programming made by, the
Co-Borrowers, in each case for such period, all determined in
accordance with GAAP.
"PBGC": the Pension Benefit Guaranty Corporation (or any
successor corporation) established pursuant to Subtitle A of Title IV
of ERISA.
"Participant": as defined in subsection 8.6(b).
"PCC": Price Communications Corporation, a New York
corporation.
"Person": an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint
venture, Governmental Authority or other entity of whatever nature.
"Plan": at a particular time, any employee benefit plan which
is covered by ERISA and in respect of which any Co- Borrower or a
Commonly Controlled Entity is (or, if such plan were terminated at
such time, would under Section 4069 of ERISA be deemed to be) an
"employer" as defined in Section 3(5) of ERISA.
"Pledgors": each of Atlas Broadcasting Corporation, a New
York corporation, ("Atlas"), Continental Broadcasting Corporation, a
Delaware corporation, ("Continental"), PCC, Federal and Smith as the
pledgors under the Stock Pledge Agreement.
"Properties": as defined in subsection 3.17.
"Regulation U": Regulation U of the Board of Governors of the
Federal Reserve System as in effect from time to time.
"Reorganization": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of
Section 4241 of ERISA.
"Reportable Event": any of the events set forth in Section
4043(b) of ERISA or the regulations thereunder, other than those
events as to which the thirty day notice period is waived under
subsections .13, .14, .16, .18, .19 or .20 of PBGC Reg. Section 2615.
"Required Lenders": at any time, Lenders the Line of Credit
Percentages of which aggregate more than 66-2/3%.
"Requirement of Law": as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation or
determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or
any of its property or to which such Person or any of its property is
subject.
<PAGE> 15
11
"Responsible Officer": as to any Person, the chief executive
officer, the president, or any Senior Vice President of such Person
or, with respect to financial matters, the chief financial officer of
such Person.
"Restricted Payments": as defined in subsection 5.7.
"Security Agreement": the Security Agreement, dated as of
December 21, 1993, made by the Co-Borrowers (other than Federal) in
favor of the Agent for the ratable benefit of the Lenders and to which
Federal, Smith and WHTM-TV, Inc. have become parties pursuant to the
provisions of subsection 8.17 and the Supplement to Security
Agreement, as the same may be amended, supplemented or otherwise
modified from time to time.
"Security Documents": the collective reference to the
Security Agreement, the Stock Pledge Agreement and all other security
documents hereafter delivered to the Agent granting a Lien on any
asset or assets of any Person to secure the obligations and
liabilities of the Co-Borrowers hereunder, under the Notes and/or
under any of the other Loan Documents or to secure any guarantee of
any such obligations and liabilities.
"Single Employer Plan": any Plan which is covered by Title IV
of ERISA, but which is not a Multiemployer Plan.
"Station": a television station or AM or FM radio station.
"Stock Pledge Agreement": the Stock Pledge Agreement, dated
as of December 21, 1993, made by the Pledgors (other than PCC, Federal
and Smith) in favor of the Agent for the ratable benefit of the
Lenders and to which PCC, Federal and Smith have become parties
pursuant to the Supplement to Stock Pledge Agreement, as the same may
be amended, supplemented or otherwise modified from time to time.
"Subordinated Intercompany Loans": the collective reference
to (i) the three intercompany loans made by Continental Broadcasting
Corporation to Southeast, Texoma and Tri-State, in the principal
amounts of approximately $16,470,000, $17,265,000 and $22,185,000,
respectively, on November 30, 1993, (ii) the intercompany loans made
by Atlas Broadcasting Corporation to Atlantic in the principal amount
of approximately $10,224,000 on November 30, 1993 and (iii)
Indebtedness of Federal to PCC.
"Subsidiary": as to any Person, a corporation, partnership or
other entity of which shares of stock or other ownership interests
having ordinary voting power (other than stock or such other ownership
interests having such power only by reason of the happening of a
contingency) to elect a majority of the board of directors or other
managers of such corporation, partnership or other entity are at the
time owned, or the management of which is otherwise controlled,
directly or indirectly through one or
<PAGE> 16
12
more intermediaries, or both, by such Person. Unless otherwise
qualified, all references to a "Subsidiary" or to "Subsidiaries" in
this Agreement shall refer to a Subsidiary or Subsidiaries of PCC.
"Supplement to Security Agreement": the Supplement to
Security Agreement to be executed and delivered by Federal, Smith and
WHTM-TV, Inc. substantially in the form of Exhibit F.
"Supplement to Stock Pledge Agreement": the Supplement to
Stock Pledge Agreement to be executed and delivered by PCC, Federal
and Smith substantially in the form of Exhibit D.
"Termination Date": September 30, 2001, or such earlier date
on which the Line of Credit Amounts shall be terminated in accordance
with subsection 2.5.
"Tranche": the collective reference to Eurodollar Loans the
Interest Periods with respect to all of which begin on the same date
and end on the same later date (whether or not such Loans shall
originally have been made on the same day).
"Type": as to any Loan, its nature as a Base Rate Loan or a
Eurodollar Loan.
"WHTM Acquisition": the acquisition by Federal, from the
stockholders and warrant holders of Smith pursuant to the Acquisition
Agreement, of Smith, which owns 100% of the stock of WHTM-TV, Inc., a
Pennsylvania corporation and the owner of WHTM-TV, a television
station located in Harrisburg, Pennsylvania.
"Working Day": any Business Day on which dealings in foreign
currencies and exchange between banks may be carried on in London,
England.
1.2 Other Definitional Provisions. (a) Unless otherwise
specified therein, all terms defined in this Agreement shall have the
defined meanings when used in the Notes or any certificate or other
document made or delivered pursuant hereto.
(b) As used herein and in the Notes, and any certificate or
other document made or delivered pursuant hereto, accounting terms
relating to PCC and its Subsidiaries not defined in subsection 1.1 and
accounting terms partly defined in subsection 1.1, to the extent not
defined, shall have the respective meanings given to them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this
Agreement, and Section, subsection, Schedule and Exhibit references are
to this Agreement unless otherwise specified.
(d) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
<PAGE> 17
13
SECTION 2. AMOUNT AND TERMS OF LINE OF CREDIT
2.1 Line of Credit. (a) Subject to the terms and conditions
hereof, each Lender is pleased to make severally available to the
Co-Borrowers a line of credit in an amount equal to such Lender's Line
of Credit Amount. During the Line of Credit Period the Co-Borrowers
may, subject to the Lenders' continued satisfaction with all matters
related to the credit, use the lines of credit made available hereunder
by borrowing, prepaying the Loans in whole or in part, and reborrowing,
all in accordance with the terms and conditions hereof.
(b) The Loans may from time to time be (i) Eurodollar Loans,
(ii) Base Rate Loans or (iii) a combination thereof, as determined by
the Co-Borrowers and notified to the Agent in accordance with
subsections 2.3 and 2.7, provided that no Loan shall be made as a
Eurodollar Loan after the day that is one month prior to the
Termination Date.
2.2 Notes. The Loans made by each Lender shall be evidenced
by a joint and several demand promissory note made by the Co-Borrowers,
substantially in the form of Exhibit A, with appropriate insertions as
to payee, date and principal amount (a "Note"), payable to the order of
such Lender and in a principal amount equal to the lesser of (a) the
initial Line of Credit Amount of such Lender and (b) the aggregate
unpaid principal amount of all Loans made to the Co-Borrowers by such
Lender. Each Lender is hereby authorized to record the date, Type and
amount of each Loan made by such Lender to the Co-Borrowers, each
continuation thereof, each conversion of all or a portion thereof to
another Type, the date and amount of each payment or prepayment of
principal thereof and, in the case of Eurodollar Loans, the length of
each Interest Period with respect thereto, on the schedule annexed to
and constituting a part of its Note, and any such recordation shall
constitute prima facie evidence of the accuracy of the information so
recorded, provided that the failure by any Lender to make any such
recordation shall not affect any of the Obligations of the Co-Borrowers
under such Note or this Agreement. Each Note shall (x) be dated the
Closing Date, (y) be stated to mature on demand and (z) provide for the
payment of interest in accordance with subsection 2.9.
2.3 Procedure for Borrowing. Subject to the Lenders'
continued satisfaction with all matters related to the credit, the
Co-Borrowers may borrow under the Line of Credit Amount during the Line
of Credit Period on any Business Day, provided that the Co-Borrowers
shall give the Agent irrevocable notice (which notice must be received
by the Agent prior to 10:00 A.M., New York City time, (a) three Working
Days prior to the requested Borrowing Date, if all or any part of the
requested Loans are to be initially Eurodollar Loans, or (b) one
Business Day prior to the requested Borrowing Date, otherwise),
specifying (i) the amount to be borrowed, (ii) the requested Borrowing
Date, (iii) whether the borrowing is to be of Eurodollar Loans, Base
Rate Loans or a combination thereof and (iv) if the borrowing is to be
entirely or partly of Eurodollar Loans, the amount of such Type of Loan
and the length of the initial Interest Period therefor. Each borrowing
hereunder shall be in an amount equal to (x) in the case of Eurodollar
Loans, $500,000 or a whole multiple of $100,000 in excess thereof or
(y) in the case of Base Rate Loans, $100,000 or a whole multiple of
$100,000 in excess thereof. Upon receipt of any such notice from the
Co-Borrowers, the Agent shall promptly notify each Lender thereof. Each
Lender will, subject to such Lender's continued satisfaction with all
matters related to the credit, make the pro-rata share of each
borrowing available to the Agent for the account of the Co-Borrowers at
the office of the Agent specified in subsection 8.2 prior to 11:00
A.M., New York City time, on the Borrowing Date requested by the
Co-Borrowers in funds immediately available to Agent. Such borrowing
will then be made available to the Co-
<PAGE> 18
14
Borrowers by the Agent crediting the account of the Co-Borrowers on the
books of such office with the aggregate of the amounts received by the
Agent from the Lenders in like funds as received by the Agent.
2.4 Fees. (a) The Co-Borrowers jointly and severally agree
to pay to the Agent for the account of each Lender a line of credit fee
for the Line of Credit Period, computed at the rate of 1/2 of 1% per
annum on the average daily amount of the Available Line of Credit of
such Lender during the period for which payment is made, payable
quarterly in arrears on the last day of each March, June, September and
December and on the Termination Date, commencing on the first of such
dates to occur after the date hereof.
(b) The Co-Borrowers shall pay on the Closing Date to the
Agent a fee equal to $350,000.
2.5 Termination or Reduction of Line of Credit Amounts. (a)
The Co-Borrowers shall have the right, upon not less than four Business
Days' notice to the Agent, to terminate the lines of credit made
available hereunder or, from time to time thereafter, to reduce the
aggregate Line of Credit Amounts; provided that no such termination or
reduction shall be permitted if, after giving effect thereto and to any
prepayments of the Loans made on the effective date thereof, the
aggregate principal amount of the Loans then outstanding would exceed
the aggregate Line of Credit Amounts then in effect. Any such reduction
shall be in an amount equal to $100,000 or a whole multiple thereof or,
if less, the remaining Line of Credit Amounts and shall reduce
permanently the Line of Credit Amounts then in effect. Voluntary
reductions of the Line of Credit Amounts shall be applied to the latest
remaining scheduled reductions of the Line of Credit Amounts set forth
in subsection 2.5(b).
(b) The aggregate Line of Credit Amounts will be automatically
and permanently reduced on the dates and in the amounts set forth
below:
<TABLE>
<CAPTION>
Date Reduction Amount
---- ----------------
<S> <C>
September 30, 1995 $ 600,000
December 31, 1995 $ 600,000
March 31, 1996 $ 600,000
June 30, 1996 $ 600,000
September 30, 1996 $ 600,000
December 31, 1996 $ 600,000
March 31, 1997 $ 720,000
June 30, 1997 $ 720,000
September 30, 1997 $ 720,000
December 31, 1997 $ 720,000
</TABLE>
<PAGE> 19
15
<TABLE>
<CAPTION>
Date Reduction Amount
---- ----------------
<S> <C>
March 31, 1998 $ 840,000
June 30, 1998 $ 840,000
September 30, 1998 $ 840,000
December 31, 1998 $ 840,000
March 31, 1999 $ 1,020,000
June 30, 1999 $ 1,020,000
September 30, 1999 $ 1,020,000
December 31, 1999 $ 1,020,000
March 31, 2000 $ 1,200,000
June 30, 2000 $ 1,200,000
September 30, 2000 $ 1,200,000
December 31, 2000 $ 1,200,000
March 31, 2001 $ 1,760,000
June 30, 2001 $ 1,760,000
September 30, 2001 $ 1,760,000 or any amount outstanding
under the Line of Credit Amounts.
</TABLE>
(c) The aggregate Line of Credit Amounts shall be further
permanently reduced by an amount equal to the greater of 100% of the
net proceeds received by Atlantic from the sale by Atlantic of WIRK-FM
and WBZT-AM or $21,000,000 upon the earlier to occur of the sale by
Atlantic of WIRK-FM and WBZT-AM or December 31, 1994.
(d) If any Co-Borrower shall sell any asset (other than the
sale by Atlantic of WIRK-FM and WBZT-AM), the aggregate Line of Credit
Amounts will be permanently reduced by 75% of the greater of (i) the
fair market value of the asset so sold and (ii) the aggregate cash
consideration received therefor. Such reduction shall be applied pro
rata to the remaining scheduled reductions of the Line of Credit
Amounts set forth in subsection 2.5(b).
(e) The aggregate Line of Credit Amounts shall be further
permanently reduced by an amount equal to the amount of proceeds
received by any Co-Borrower from the sale by any such Co-Borrower of
any Capital Stock in such Co-Borrower. Such reduction shall be applied
to the scheduled reductions set forth in subsection 2.5(b) in the order
so scheduled.
(f) The Required Lenders shall have the right at any time to
terminate or reduce the aggregate Line of Credit Amounts. Any such
termination or reduction shall be effective immediately upon notice to
the Co-Borrowers and shall permanently terminate or reduce, as the case
may be, the aggregate Line of Credit Amounts then in effect. Any such
reduction shall be applied to such remaining scheduled reductions of
the Line of Credit Amounts as the Required Lenders shall specify in
such notice.
2.6 Optional and Mandatory Prepayments. (a) The Co-Borrowers
may at any time and from time to time prepay the Loans, in whole or in
part, without premium or penalty (other than as provided for in
subsection 2.16), upon at least three (in the case of Eurodollar Rate
Loans) or one (in the case of Base Rate Loans) Business Days'
irrevocable notice to the
<PAGE> 20
16
Agent, specifying the date and amount of prepayment and whether the
prepayment is of Eurodollar Loans, Base Rate Loans or a combination
thereof, and, if of a combination thereof, the amount allocable to
each. Upon receipt of any such notice the Agent shall promptly notify
each Lender thereof. If any such notice is given, the amount specified
in such notice together with any amounts payable pursuant to subsection
2.16 shall be due and payable on the date specified therein. Partial
prepayments shall be in an aggregate principal amount of $100,000 or a
whole multiple thereof.
(b) If at any time (including, without limitation, following a
reduction in the Line of Credit Amounts pursuant to subsection 2.5) the
aggregate principal amount of the Loans exceeds the aggregate Line of
Credit Amounts then in effect, the Co- Borrowers shall immediately
repay the Loans in an aggregate amount equal to such excess.
2.7 Conversion and Continuation Options. (a) Subject to the
Lenders' continued satisfaction with all matters related to the credit,
the Co-Borrowers may elect from time to time to convert Eurodollar
Loans to Base Rate Loans by giving the Agent at least two Business
Days' prior irrevocable notice of such election, provided that any such
conversion of Eurodollar Loans may only be made on the last day of an
Interest Period with respect thereto. The Co-Borrowers may elect from
time to time to convert Base Rate Loans to Eurodollar Loans by giving
the Agent at least three Working Days' prior irrevocable notice of such
election. Any such notice of conversion to Eurodollar Loans shall
specify the length of the initial Interest Period or Interest Periods
therefor. Upon receipt of any such notice the Agent shall promptly
notify each Lender thereof. All or any part of outstanding Eurodollar
Loans and Base Rate Loans may be converted as provided herein, provided
that (i) no Loan may be converted into a Eurodollar Loan when the Agent
or any Lender has determined that such a conversion is not appropriate,
(ii) any such conversion may only be made if, after giving effect
thereto, subsection 2.8 shall not have been contravened and (iii) no
Loan may be converted into a Eurodollar Loan after the date that is one
month prior to the Termination Date.
(b) Subject to the Lenders' continued satisfaction with all
matters related to the credit, any Eurodollar Loans may be continued as
such upon the expiration of the then current Interest Period with
respect thereto by the Co-Borrowers giving notice to the Agent, in
accordance with the applicable provisions of the term "Interest Period"
set forth in subsection 1.1, of the length of the next Interest Period
to be applicable to such Loans, provided that no Eurodollar Loan may be
continued as such (i) when the Agent or any Lender has determined that
such a continuation is not appropriate, (ii) if, after giving effect
thereto, subsection 2.8 would be contravened or (iii) after the date
that is one month prior to the Termination Date and provided, further,
that if the Co-Borrowers shall fail to give any required notice as
described above in this paragraph or if such continuation is not
permitted pursuant to the preceding proviso such Loans shall be
automatically converted to Base Rate Loans on the last day of such then
expiring Interest Period.
2.8 Minimum Amounts of Tranches. All borrowings, conversions
and continuations of Loans hereunder and all selections of Interest
Periods hereunder shall be in such amounts and be made pursuant to such
elections so that, after giving effect thereto, the
<PAGE> 21
17
aggregate principal amount of the Loans comprising each Tranche shall be equal
to $500,000 or a whole multiple of $100,000 in excess thereof.
2.9 Interest Rates and Payment Dates. (a) Each Eurodollar
Loan shall bear interest for each day during each Interest Period with respect
thereto at a rate per annum equal to the Eurodollar Rate determined for such
day plus the Applicable Margin.
(b) Each Base Rate Loan shall bear interest at a rate per
annum equal to the Base Rate plus the Applicable Margin.
(c) If all or a portion of (i) the principal amount of any
Loan, (ii) any interest payable thereon or (iii) any line of credit fee or
other amount payable hereunder shall not be paid when due (whether at the
stated maturity, upon demand or otherwise), such overdue amount shall bear
interest at a rate per annum which is (x) in the case of overdue principal, the
rate that would otherwise be applicable thereto pursuant to the foregoing
provisions of this subsection plus 2% or (y) in the case of overdue interest,
line of credit fee or other amount, the Base Rate plus 2%, in each case from
the date of such non-payment until such amount is paid in full (as well after
as before judgment).
(d) Interest shall be payable in arrears on each Interest
Payment Date and on the Termination Date, provided that interest accruing
pursuant to paragraph (c) of this subsection shall be payable from time to time
on demand.
2.10 Computation of Interest and Fees. Interest on Base Rate
Loans (when based on the Prime Rate) and interest on overdue interest, line of
credit fees and other amounts payable hereunder shall be calculated on the
basis of a 365 day (or 366 day, as the case may be) year for the actual days
elapsed. Interest on Eurodollar Loans, Base Rate Loans (when based on the
Federal Funds Effective Rate) and line of credit fees shall be calculated on
the basis of a 360-day year for the actual days elapsed. The Agent shall as
soon as practicable notify the Co-Borrowers and the Lenders of each
determination of a Eurodollar Rate. Any change in the interest rate on a Loan
resulting from a change in the Base Rate shall become effective as of the
opening of business on the day on which such change becomes effective. The
Agent shall as soon as practicable notify the Co-Borrowers and the Lenders of
the effective date and the amount of each such change in interest rate.
2.11 Inability to Determine Interest Rate. If prior to the
first day of any Interest Period:
(a) the Agent shall have determined (which determination
shall be conclusive and binding upon the Co-Borrowers) that, by reason
of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the Eurodollar Rate for
such Interest Period, or
(b) the Agent shall have received notice from the Required
Lenders that the Eurodollar Rate determined or to be determined for
such Interest Period will not
<PAGE> 22
18
adequately and fairly reflect the cost to such Lenders (as conclusively
certified by such Lenders) of making or maintaining their affected
Loans during such Interest Period,
the Agent shall give telecopy or telephonic (which is promptly confirmed in
writing) notice thereof to the Co-Borrowers and the Lenders as soon as
practicable thereafter. If such notice is given (x) any Eurodollar Loans
requested to be made on the first day of such Interest Period shall be made as
Base Rate Loans, (y) any Loans that were to have been converted on the first
day of such Interest Period to Eurodollar Loans shall be continued as Base Rate
Loans and (z) any outstanding Eurodollar Loans shall be converted, on the first
day of such Interest Period, to Base Rate Loans. Until such notice has been
withdrawn by the Agent, no further Eurodollar Loans shall be made or continued
as such, nor shall the Co-Borrowers have the right to convert Base Rate Loans
to Eurodollar Loans.
2.12 Pro Rata Treatment and Payments. (a) Each borrowing by
the Co-Borrowers from the Lenders hereunder, each payment on account of any
line of credit fee hereunder and any reduction of the Line of Credit Amounts of
the Lenders shall be made pro rata according to the respective Line of Credit
Percentages of the Lenders. Each payment (including each prepayment) by the
Co- Borrowers on account of principal of and interest on the Loans shall be
made pro rata according to the respective outstanding principal amounts of the
Loans then held by the Lenders. All payments (including prepayments) to be
made by the Co-Borrowers hereunder and under the Notes, whether on account of
principal, interest, fees or otherwise, shall be made without set-off or
counterclaim and shall be made prior to 12:00 Noon, New York City time, on the
due date thereof to the Agent, for the account of the Lenders, at the Agent's
office specified in subsection 8.2, in Dollars and in immediately available
funds. The Agent shall distribute such payments to the Lenders promptly upon
receipt in like funds as received. If any payment hereunder (other than
payments on the Eurodollar Loans) becomes due and payable on a day other than a
Business Day, such payment 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 during such extension. If any payment on a
Eurodollar Loan becomes due and payable on a day other than a Working Day, the
maturity thereof shall be extended to the next succeeding Working Day (and
interest thereon shall be payable at the then applicable rate during such
extension) unless the result of such extension would be to extend such payment
into another calendar month, in which event such payment shall be made on the
immediately preceding Working Day.
(b) Unless the Agent shall have been notified in writing by
any Lender prior to a Borrowing Date that such Lender will not make the amount
that would constitute its Line of Credit Percentage of the borrowing on such
date available to the Agent, the Agent may assume that such Lender has made
such amount available to the Agent on such Borrowing Date, and the Agent may,
in reliance upon such assumption, make available to the Co-Borrowers a
corresponding amount. If such amount is made available to the Agent on a date
after such Borrowing Date, such Lender shall pay to the Agent on demand an
amount equal to the product of (i) the daily average Federal Funds Effective
Rate during such period, times (ii) the amount of such Lender's Line of Credit
Percentage of such borrowing, times (iii) a fraction the numerator of which is
the number of days that elapse from and including such
<PAGE> 23
19
Borrowing Date to the date on which such Lender's Line of Credit Percentage of
such borrowing shall have become immediately available to the Agent and the
denominator of which is 360. A certificate of the Agent submitted to any Lender
with respect to any amounts owing under this subsection shall be conclusive in
the absence of manifest error. If such Lender's Line of Credit Percentage of
such borrowing is not in fact made available to the Agent by such Lender within
three Business Days of such Borrowing Date, the Agent shall be entitled to
recover such amount with interest thereon at a rate per annum equal to the
higher of (i) the rate applicable to such borrowing and (ii) the daily average
Federal Funds Effective Rate from the Co-Borrowers.
2.13 Illegality. Notwithstanding any other provision herein,
if the adoption of or any change in any Requirement of Law or in the
interpretation or application thereof shall make it unlawful for any Lender to
make or maintain Eurodollar Loans as contemplated by this Agreement, (a) the
willingness of such Lender hereunder to make Eurodollar Loans, continue
Eurodollar Loans as such and convert Base Rate Loans to Eurodollar Loans shall
forthwith be cancelled and (b) such Lender's Loans then outstanding as
Eurodollar Loans, if any, shall be converted automatically to Base Rate Loans
on the respective last days of the then current Interest Periods with respect
to such Loans or within such earlier period as required by law. If any such
conversion of a Eurodollar Loan occurs on a day which is not the last day of
the then current Interest Period with respect thereto, the Co-Borrowers shall
pay to such Lender such amounts, if any, as may be required pursuant to
subsection 2.16.
2.14 Requirements of Law. (a) If the adoption of or any
change in any Requirement of Law or in the interpretation or application
thereof or compliance by any Lender with any request or directive (whether or
not having the force of law) from any central bank or other Governmental
Authority made subsequent to the date hereof:
(i) shall subject any Lender to any tax of any kind
whatsoever with respect to this Agreement, any Note or any Eurodollar
Loan made by it, or change the basis of taxation of payments to such
Lender in respect thereof (in each case except for taxes covered by
subsection 2.15 and changes in the rate of tax on the overall net
income of such Lender);
(ii) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets
held by, deposits or other liabilities in or for the account of,
advances, loans or other extensions of credit by, or any other
acquisition of funds by, any office of such Lender which is not
otherwise included in the determination of the Eurodollar Rate
hereunder; or
(iii) shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting
into, continuing or maintaining Eurodollar Loans or to reduce any amount
receivable hereunder in respect thereof, then, in any such case, the
Co-Borrowers shall promptly pay such Lender, upon its demand, any additional
amounts necessary to compensate such Lender for such increased cost
<PAGE> 24
20
or reduced amount receivable. If any Lender becomes entitled to claim any
additional amounts pursuant to this subsection, it shall promptly notify the
Co-Borrowers, through the Agent, of the event by reason of which it has become
so entitled. This covenant shall survive the termination of this Agreement and
the payment of the Notes and all other amounts payable hereunder.
(b) If any Lender shall have determined that the adoption of
or any change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof does or shall have the effect of
reducing the rate of return on such Lender's or such corporation's capital as a
consequence of its obligations hereunder to a level below that which such
Lender or such corporation could have achieved but for such change or
compliance (taking into consideration such Lender's or such corporation's
policies with respect to capital adequacy) by an amount deemed by such Lender
to be material, then from time to time, after submission by such Lender to the
Co-Borrowers (with a copy to the Agent) of a written request therefore, the
Co-Borrowers shall pay to such Lender such additional amount or amounts as will
compensate such Lender for such reduction. This covenant shall survive the
termination of this Agreement and the payment of the Notes and all other
amounts payable hereunder.
2.15 Taxes. (a) All payments made by the Co-Borrowers under
this Agreement and the Notes shall be made free and clear of, and without
deduction or withholding for or on account of, any present or future income,
stamp or other taxes, levies, imposts, duties, charges, fees, deductions or
withholdings, now or hereafter imposed, levied, collected, withheld or assessed
by any Governmental Authority, excluding, in the case of the Agent and each
Lender, taxes on the overall net income of the Agent or such Lender and
franchise taxes (imposed in lieu of such net income taxes) imposed on the Agent
or such Lender, as the case may be, as a result of a present or former
connection between the jurisdiction of the government or taxing authority
imposing such tax and the Agent or such Lender (excluding a connection arising
solely from the Agent or such Lender having executed, delivered or performed
its obligations or received a payment under, or enforced, this Agreement or the
Notes) or any political subdivision or taxing authority thereof or therein (all
such non-excluded taxes, levies, imposts, duties, charges, fees, deductions and
withholdings being hereinafter called "Taxes"). If any Taxes are required to
be withheld from any amounts payable to the Agent or any Lender hereunder or
under the Notes, the amounts so payable to the Agent or such Lender shall be
increased to the extent necessary to yield to the Agent or such Lender (after
payment of all Taxes) interest or any such other amounts payable hereunder at
the rates or in the amounts specified in this Agreement and the Notes.
Whenever any Taxes are payable by any Co-Borrower, as promptly as possible
thereafter the Co-Borrowers shall send to the Agent for its own account or for
the account of such Lender, as the case may be, a certified copy, if available,
of an original official receipt received by the Co-Borrowers showing payment
thereof. If any Co- Borrower fails to pay any Taxes when due to the
appropriate taxing authority or fails to remit to the Agent the required
receipts or other required documentary evidence, the Co-Borrowers shall
indemnify the Agent and the Lenders for any incremental taxes, interest or
penalties that may become payable by the
<PAGE> 25
21
Agent or any Lender as a result of any such failure. The agreements in this
subsection shall survive the termination of this Agreement and the payment of
the Notes and all other amounts payable hereunder.
(b) Each Lender agrees that it will, on or prior to the date
of execution and delivery of this Agreement or the date on which such Lender
becomes a Lender pursuant to an Assignment and Acceptance, as the case may be,
deliver to the Co-Borrowers and the Agent (i) if applicable, two duly completed
copies of United States Internal Revenue Service Form 1001 or 4224 or successor
applicable form, as the case may be, and (ii) an Internal Revenue Service Form
W-8 or W-9 or successor applicable form. Each such Lender also agrees to
deliver to the Co-Borrowers and the Agent two further copies of the said Form
1001 or 4224, if applicable, and Form W-8 or W-9, or successor applicable forms
or other manner of certification, as the case may be, on or before the date
that any such form expires or becomes obsolete or after the occurrence of any
event requiring a change in the most recent form previously delivered by it to
the Co-Borrowers, and such extensions or renewals thereof as may reasonably be
requested by the Co-Borrowers or the Agent, unless in any such case an event
(including, without limitation, any change in treaty, law or regulation) has
occurred prior to the date on which any such delivery would otherwise be
required which renders all such forms inapplicable or which would prevent such
Lender from duly completing and delivering any such form with respect to it and
such Lender so advises the Co-Borrowers and the Agent. Such Lender shall
certify (i) in the case of a Form 1001 or 4224, that it is entitled to receive
payments under this Agreement without deduction or withholding of any United
States federal income taxes and (ii) in the case of a Form W-8 or W-9, that it
is entitled to an exemption from United States backup withholding tax. If the
form provided by a Lender at the time such Lender first becomes a party to this
Agreement indicates a United States interest withholding tax rate in excess of
the rate applicable to the Lender's assignor on the date of the Assignment and
Acceptance pursuant to which it became a Lender, withholding tax attributable
solely to such excess rate shall be considered excluded from Taxes.
2.16 Indemnity. The Co-Borrowers jointly and severally agree
to indemnify each Lender and to hold each Lender harmless from any loss or
expense which such Lender may sustain or incur as a consequence of (a) default
by the Co-Borrowers in payment when due of the principal amount of or interest
on any Eurodollar Loan, (b) default by the Co-Borrowers in making a borrowing
of, conversion into or continuation of Eurodollar Loans after the Co-Borrowers
have given a notice requesting the same in accordance with the provisions of
this Agreement, (c) default by the Co-Borrowers in making any prepayment after
the Co-Borrowers have given a notice thereof in accordance with the provisions
of this Agreement or (d) the making of a prepayment of Eurodollar Loans on a
day which is not the last day of an Interest Period with respect thereto,
including, without limitation, in each case, any such loss or expense arising
from the reemployment of funds obtained by it or from fees payable to terminate
the deposits from which such funds were obtained. Calculation of all amounts
payable to a Lender under this subsection 2.16 shall be made as though such
Lender had actually funded its relevant Eurodollar Loan through the purchase of
a deposit bearing interest at the Eurodollar Rate in an amount equal to the
amount of such Eurodollar Loan and having a maturity comparable to the relevant
Interest Period; provided, however, that each Lender may fund each of its
Eurodollar Loans in any manner it sees fit, and the foregoing
<PAGE> 26
22
assumption shall be utilized only for the calculation of amounts payable under
this subsection 2.16. This covenant shall survive the termination of this
Agreement and the payment of the Notes and all other amounts payable hereunder.
SECTION 3. REPRESENTATIONS AND WARRANTIES
To induce the Agent and the Lenders to enter into this
Agreement and to induce the Lenders to make available the line of credit
hereunder, each Co-Borrower hereby represents and warrants to the Agent and
each Lender that:
3.1 Financial Condition. The consolidated balance sheet of
PCC and its consolidated Subsidiaries as at December 31, 1993 and the related
consolidated statements of income and of cash flows for the fiscal year ended
on such date, reported on by Ernst & Young, copies of which have heretofore
been furnished to each Lender, are complete and correct and present fairly the
consolidated financial condition of PCC and its consolidated Subsidiaries as at
such date, and the consolidated results of their operations and their
consolidated cash flows for the fiscal year then ended. The unaudited
consolidated balance sheet of PCC and its consolidated Subsidiaries as at June
30, 1994 and the related unaudited consolidated statements of income and of
cash flows for the six-month period ended on such date, certified by a
Responsible Officer of PCC, copies of which have heretofore been furnished to
each Lender, are complete and correct and present fairly the consolidated
financial condition of PCC and its consolidated Subsidiaries as at such date,
and the consolidated results of their operations and their consolidated cash
flows for the six-month period then ended (subject to normal year-end audit
adjustments). All such financial statements, including the related schedules
and notes thereto, have been prepared in accordance with GAAP applied
consistently throughout the periods involved (except as approved by such
accountants or Responsible Officer, as the case may be, and as disclosed
therein). Neither PCC nor any of its consolidated Subsidiaries had, at the
date of the most recent balance sheet referred to above, any material Guarantee
Obligation, contingent liability or liability for taxes, or any long-term lease
or unusual forward or long-term commitment, including, without limitation, any
interest rate or foreign currency swap or exchange transaction, which is not
reflected in the foregoing statements or in the notes thereto. During the
period from June 30, 1994 to and including the date hereof there has been no
sale, transfer or other disposition by PCC or any of its consolidated
Subsidiaries of any material part of its business or property and no purchase
or other acquisition of any business or property (including any capital stock
of any other Person) material in relation to the consolidated financial
condition of PCC and its consolidated Subsidiaries at June 30, 1994, other than
as set forth in Schedule 3.1.
3.2 No Change. Except as set forth on Schedule 3.1, since
June 30, 1994, (a) there has been no development or event which has had or
could reasonably be expected to have a Material Adverse Effect and (b) no
dividends or other distributions have been declared, paid or made upon the
Capital Stock of PCC nor has any of the Capital Stock of PCC been redeemed,
retired, purchased or otherwise acquired for value by PCC or any of its
Subsidiaries.
<PAGE> 27
23
3.3 Corporate Existence; Compliance with Law. Each of the
Co-Borrowers (a) is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation, (b) has the corporate power
and authority, and the legal right, to own and operate its property, to lease
the property it operates as lessee and to conduct the business in which it is
currently engaged, (c) is duly qualified as a foreign corporation and in good
standing under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such
qualification and (d) is in compliance with all Requirements of Law except to
the extent that the failure to comply therewith could not, in the aggregate,
reasonably be expected to have a Material Adverse Effect.
3.4 Corporate Power; Authorization; Enforceable Obligations.
Each of the Co-Borrowers has the corporate power and authority, and the legal
right, to make, deliver and perform the Loan Documents to which it is a party
and to borrow hereunder and has taken all necessary corporate action to
authorize the borrowings on the terms and conditions of this Agreement and the
Notes and to authorize the execution, delivery and performance of the Loan
Documents to which it is a party. No consent or authorization of, filing with,
notice to or other act by or in respect of, any Governmental Authority or any
other Person is required in connection with the borrowings hereunder or with
the execution, delivery, performance, validity or enforceability of the Loan
Documents to which any Co-Borrower is a party, other than consents,
authorizations, filings, notices and acts which have been obtained, made or
effected on or prior to the date hereof. This Agreement has been, and each
other Loan Document to which it is a party will be, duly executed and delivered
on behalf of each Co-Borrower. This Agreement constitutes, and each other Loan
Document to which the Co- Borrowers are party when executed and delivered will
constitute, a legal, valid and binding obligation of the Co-Borrowers
enforceable against the Co-Borrowers in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
3.5 No Legal Bar. The execution, delivery and performance of
the Loan Documents, the borrowings hereunder and the use of the proceeds
thereof will not violate any material Requirement of Law or material
Contractual Obligation of any Co-Borrower and will not result in, or require,
the creation or imposition of any material Lien on any of the Co-Borrowers'
respective properties or revenues pursuant to any such material Requirement of
Law or material Contractual Obligation.
3.6 No Material Litigation. No litigation, investigation or
proceeding of or before any arbitrator or Governmental Authority is pending or,
to the knowledge of the Co-Borrowers, threatened by or against any Co-Borrower
or against any of the Co-Borrowers' respective properties or revenues (a) with
respect to any of the Loan Documents or any of the transactions contemplated
hereby or thereby, or (b) which could reasonably be expected to have a Material
Adverse Effect.
<PAGE> 28
24
3.7 No Default. No Co-Borrower is in default under or with
respect to any of its Contractual Obligations in any respect which could
reasonably be expected to have a Material Adverse Effect.
3.8 Ownership of Property; Liens. Each of the Co-Borrowers
has good record and marketable title in fee simple to, or a valid leasehold
interest in, all its real property, and good title to, or a valid leasehold
interest in, all its other property, and none of such property is subject to
any material Lien except pursuant to the Security Documents.
3.9 Intellectual Property. Each of the Co-Borrowers owns, or
is licensed to use, all trademarks, tradenames, copyrights, technology,
know-how and processes necessary for the conduct of its business as currently
conducted except for those the failure to own or license which could not
reasonably be expected to have a Material Adverse Effect (the "Intellectual
Property"). No claim has been asserted and is pending by any Person
challenging or questioning the use of any such Intellectual Property or the
validity or effectiveness of any such Intellectual Property, nor does any
Co-Borrower know of any valid basis for any such claim. The use of such
Intellectual Property by the Co-Borrowers does not infringe on the rights of
any Person, except for such claims and infringements that, in the aggregate,
could not reasonably be expected to have a Material Adverse Effect.
3.10 No Burdensome Restrictions. No Requirement of Law or
Contractual Obligation of any Co-Borrower could reasonably be expected to have
a Material Adverse Effect.
3.11 Taxes. Each of PCC and its Subsidiaries has filed or
caused to be filed all tax returns which, to the knowledge of the Co-Borrowers,
are required to be filed and has paid all taxes shown to be due and payable on
said returns or on any assessments made against it or any of its property and
all other taxes, fees or other charges imposed on it or any of its property by
any Governmental Authority (other than any the amount or validity of which are
currently being contested in good faith by appropriate proceedings and with
respect to which reserves in conformity with GAAP have been provided on the
books of PCC or its Subsidiaries, as the case may be); no tax Lien has been
filed, and, to the knowledge of the Co-Borrowers, no claim is being asserted,
with respect to any such tax, fee or other charge.
3.12 Federal Regulations. No part of the proceeds of any
Loans will be used for "purchasing" or "carrying" any "margin stock" within the
respective meanings of each of the quoted terms under Regulation U of the Board
of Governors of the Federal Reserve System as now and from time to time
hereafter in effect or for any purpose which violates the provisions of the
Regulations of such Board of Governors.
3.13 ERISA. Neither a Reportable Event nor an "accumulated
funding deficiency" (within the meaning of Section 412 of the Code or Section
302 of ERISA) has occurred during the five-year period prior to the date on
which this representation is made or deemed made with respect to any Plan, and
each Plan has complied in all material respects with the applicable provisions
of ERISA and the Code. No termination of a Single Employer Plan has occurred,
and no Lien in favor of the PBGC or a Plan has arisen, during such five-
<PAGE> 29
25
year period. The present value of all accrued benefits under each Single
Employer Plan (based on those assumptions used to fund such Plans) did not, as
of the last annual valuation date prior to the date on which this representation
is made or deemed made, exceed the value of the assets of such Plan allocable to
such accrued benefits. Neither any Co-Borrower nor any Commonly Controlled
Entity has had a complete or partial withdrawal from any Multiemployer Plan, and
neither any Co-Borrower nor any Commonly Controlled Entity would become subject
to any liability under ERISA if such Co-Borrower or any such Commonly Controlled
Entity were to withdraw completely from all Multiemployer Plans as of the
valuation date most closely preceding the date on which this representation is
made or deemed made. No such Multiemployer Plan is in Reorganization or
Insolvent.
3.14 Investment Company Act; Other Regulations. None of the
Co-Borrowers is (a) an "investment company", or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of 1940,
as amended or (b) a "holding company" as defined in, or otherwise subject to
regulation under, the Public Utility Holding Company Act of 1935, as amended.
None of the Co-Borrowers is subject to regulation under any Federal or State
statute or regulation which limits its ability to incur Indebtedness.
3.15 Subsidiaries. Other than Federal, none of the
Co-Borrowers has any Subsidiaries. Each Co-Borrower is a wholly-owned
Subsidiary of PCC.
3.16 Purpose of Loans. The proceeds of the Loans shall be
used by the Co-Borrowers to consummate the WHTM Acquisition and for working
capital purposes of the Co-Borrowers in the ordinary course of business.
3.17 Environmental Matters. (a) The facilities and
properties owned, leased or operated by the Co-Borrowers (the "Properties") do
not contain, and have not previously contained, any Materials of Environmental
Concern in amounts or concentrations which (i) constitute or constituted a
violation of, or (ii) could reasonably be expected to give rise to liability
under, any Environmental Law except in either case insofar as such violation or
liability, or any aggregation thereof, is not reasonably likely to result in
the payment of a Material Environmental Amount.
(b) The Properties and all operations at the Properties are
in compliance, and have in the last five years been in compliance, in all
material respects with all applicable Environmental Laws, and there is no
contamination at, under or about the Properties or violation of any
Environmental Law with respect to the Properties or the business operated by
the Co-Borrowers (the "Business") which could materially interfere with the
continued operation of the Properties or materially impair the fair saleable
value thereof.
(c) None of the Co-Borrowers has received any notice of
violation, alleged violation, non-compliance, liability or potential liability
regarding environmental matters or compliance with Environmental Laws with
regard to any of the Properties or the Business, nor do the Co-Borrowers have
knowledge or reason to believe that any such notice will be received or is
being threatened except insofar as such notice or threatened notice, or any
<PAGE> 30
26
aggregation thereof, does not involve a matter or matters that is or are
reasonably likely to result in the payment of a Material Environmental Amount.
(d) Materials of Environmental Concern have not been
transported or disposed of from the Properties in violation of, or in a manner
or to a location which could reasonably be expected to give rise to liability
under, any Environmental Law, nor have any Materials of Environmental Concern
been generated, treated, stored or disposed of at, on or under any of the
Properties in violation of, or in a manner that could reasonably be expected to
give rise to liability under, any applicable Environmental Law except insofar
as any such violation or liability referred to in this paragraph, or any
aggregation thereof, is not reasonably likely to result in the payment of a
Material Environmental Amount.
(e) No judicial proceeding or governmental or administrative
action is pending or, to the knowledge of the Co- Borrowers, threatened, under
any Environmental Law to which any Co-Borrower is or will be named as a party
with respect to the Properties or the Business, nor are there any consent
decrees or other decrees, consent orders, administrative orders or other
orders, or other administrative or judicial requirements outstanding under any
Environmental Law with respect to the Properties or the Business except insofar
as such proceeding, action, decree, order or other requirement, or any
aggregation thereof, is not reasonably likely to result in the payment of a
Material Environmental Amount.
(f) There has been no release or threat of release of
Materials of Environmental Concern at or from the Properties, or arising from
or related to the operations of the Co-Borrowers in connection with the
Properties or otherwise in connection with the Business, in violation of or in
amounts or in a manner that could reasonably give rise to liability under
Environmental Laws except insofar as any such violation or liability referred
to in this paragraph, or any aggregation thereof, is not reasonably likely to
result in the payment of a Material Environmental Amount.
3.18 Broadcast Licenses, etc. Set forth in Schedule 3.18
hereto is a complete and correct list of all FCC permits and/or licenses held
by the Co-Borrowers, the applicable expiration dates and permitted renewal
periods (if any) for each such permit or license, and the name of the Person
holding each such permit or license. In addition, said Schedule 3.18 sets
forth, with respect to each Station, the respective frequency and call letters
of such Station, and the name of the Person owning the material assets used in
connection with the operation of such Station. Except as set forth in Schedule
3.18 hereto, each Co-Borrower holds all FCC licenses and permits necessary for
the operation of its Stations. Except as set forth in Schedule 3.18 hereto,
the Co- Borrowers are not aware of any basis for challenging or questioning, or
any circumstance which could impede or delay, the timely renewal of any such
license or permit. Except as set forth in Schedule 3.18 hereto, each such
license and permit is valid and in full force and effect, and no Co-Borrower
has received any notice of proceedings relating to the revocation, termination,
suspension, non-renewal or modification of any such license or permit.
<PAGE> 31
27
3.19 Indebtedness. The Co-Borrowers have no material
Indebtedness other than (i) Indebtedness under this Agreement, (ii) trade
accounts payable in the ordinary course of business and (iii) the Subordinated
Intercompany Loans.
3.20 Stations. (a) As of the Closing Date, Atlantic owns and
operates WIRK-FM and WBZT-AM (West Palm Beach, Florida).
(b) Southeast owns and operates KJAC-TV (Beaumont and Port
Arthur, Texas); Federal owns 100% of Smith which owns WHTM-TV, Inc., a
Pennsylvania corporation which operates WHTM-TV, Harrisburg, Pennsylvania;
Texoma owns and operates KFDX-TV (Wichita Falls, Texas); and Tri-State owns and
operates KSNF-TV (Joplin, Missouri).
Each of the foregoing representations and warranties shall
automatically be deemed to be restated by each Co- Borrower on the date of each
Loan as if made on such date.
SECTION 4. CONDITIONS PRECEDENT
4.1 Conditions to Effectiveness. The effectiveness of this
Agreement is subject to the satisfaction on or before October 15, 1994 of the
following conditions precedent:
(a) WHTM Acquisition. The WHTM Acquisition shall have been
(or shall simultaneously with the effectiveness of this Agreement be)
consummated for an aggregate purchase price (including the repayment
of Company Debt (as defined in the Acquisition Agreement), fees and
expenses) not exceeding $52,000,000 (of which up to $7,000,000 shall
have been paid for with the proceeds of an equity investment by PCC
in, or a subordinated loan by PCC to, Federal) in cash, and the Agent
shall have received, with a counterpart for each Lender, (i) a
certified copy of the Acquisition Agreement (including any schedules
and exhibits thereto) relating to the WHTM Acquisition, which shall be
in form and substance satisfactory to the Required Lenders and (ii)
certificates signed by a Responsible Officer of each of PCC and
Federal to the effect that all conditions precedent and other material
transactions contemplated by the Acquisition Agreement relating to the
WHTM Acquisition have been satisfied or consummated, as the case may
be, without amendment, waiver or modification of the terms thereof.
(b) Loan Documents. The Agent shall have received (i) this
Agreement, executed and delivered by a duly authorized officer of each
of the Co-Borrowers, with a counterpart for each Lender, (ii) for the
account of each Lender, a Note conforming to the requirements hereof
and executed by a duly authorized officer of each of the Co-Borrowers
(iii) the Supplement to Security Agreement executed by a duly
authorized officer of each of the parties thereto, (iv) the Supplement
to Stock Pledge Agreement executed by a duly authorized officer of the
parties thereto and (v) the
<PAGE> 32
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Federal Subordination Agreement executed by a duly authorized officer
of the parties thereto.
(c) Corporate Proceedings of the Co-Borrowers. The Agent
shall have received, with a counterpart for each Lender, a copy of the
resolutions, in form and substance satisfactory to the Agent, of the
Board of Directors of each of the Co- Borrowers authorizing (i) the
execution, delivery and performance of this Agreement, the Notes and
the other Loan Documents to which such Co-Borrower is a party, (ii)
the borrowings contemplated hereunder, (iii) the granting by it of the
Liens created pursuant to the Security Documents to which such
Co-Borrower is a party and (iv) the amendment to the Security
Agreement contemplated by the Supplement to Security Agreement,
certified by the Secretary or an Assistant Secretary of such
Co-Borrower as of the Closing Date, which certificate shall be in form
and substance satisfactory to the Agent and shall state that the
resolutions thereby certified have not been amended, modified, revoked
or rescinded.
(d) Corporate Proceedings of Smith and WHTM-TV, Inc., as
Additional Parties to the Security Agreement. The Agent shall have
received, with a counterpart for each Lender, a copy of the
resolutions, in form and substance satisfactory to the Agent, of the
Board of Directors of each of Smith and WHTM-TV, Inc. in their
capacity as parties to the Security Agreement as contemplated by the
Supplement to Security Agreement authorizing (i) the execution and
delivery of the Supplement to Security Agreement and the performance
of the Supplement to Security Agreement and the Security Agreement and
(ii) the granting by them of the Liens created pursuant to the
Supplement to Security Agreement and the Security Agreement, certified
by the Secretary or an Assistant Secretary of Smith and WHTM-TV, Inc.
as of the Closing Date, which certificates shall be in form and
substance satisfactory to the Agent and shall state that the
resolutions thereby certified have not been amended, modified, revoked
or rescinded.
(e) Corporate Proceedings of PCC, Federal and Smith as
Pledgors. The Agent shall have received, with a counterpart for each
Lender, a copy of the resolutions, in form and substance satisfactory
to the Agent, of the Board of Directors of each of PCC, Federal and
Smith in their capacity as Pledgors as contemplated by the Supplement
to Stock Pledge Agreement authorizing (i) the execution and delivery
of the Supplement to Stock Pledge Agreement and the performance of the
Supplement to Stock Pledge Agreement and the Stock Pledge Agreement
and (ii) the granting by them of the guarantees and Liens created
pursuant to the Supplement to Stock Pledge Agreement and the Stock
Pledge Agreement, certified by the Secretary or an Assistant Secretary
of such Pledgors as of the Closing Date, which certificates shall be
in form and substance satisfactory to the Agent and shall state that
the resolutions thereby certified have not been amended, modified,
revoked or rescinded.
(f) Corporate Proceedings of Atlas and Continental. The
Agent shall have received, with a counterpart for each Lender, a copy
of the resolutions, in form and substance satisfactory to the Agent,
of the Board of Directors of each of Atlas and
<PAGE> 33
29
Continental authorizing (i) the amendment to the Stock Pledge Agreement
contemplated by the Supplement to Stock Pledge Agreement and (ii) the
increase in the Obligations hereunder, certified by the Secretary or an
Assistant Secretary of Atlas and Continental, as of the Closing Date,
which certificates shall be in form and substance satisfactory to the
Agent and shall state that the resolutions thereby certified have not
been amended, modified, revoked or rescinded.
(g) Incumbency Certificates. The Agent shall have received,
with a counterpart for each Lender, a Certificate of each of the Loan
Parties, dated the Closing Date, as to the incumbency and signature of
the officers of such Loan Party executing any Loan Document
satisfactory in form and substance to the Agent, executed by the
President or any Vice President and the Secretary or any Assistant
Secretary of such Loan Party.
(h) Corporate Documents. The Agent shall have received, with
a counterpart for each Lender, true and complete copies of the
certificate of incorporation and by-laws of each Loan Party, certified
as of the Closing Date as complete and correct copies thereof by the
Secretary or an Assistant Secretary of such Loan Party.
(i) Fees. The Agent shall have received the fees to be
received on the Closing Date referred to in subsection 2.4(b).
(j) Legal Opinions. The Agent shall have received, with a
counterpart for each Lender, one or more executed legal opinions of
Proskauer Rose Goetz & Mendelsohn substantially in the form of Exhibit
C-1, and the executed legal opinion of Roberts & Eckard substantially
in the form of Exhibit C-2, and/or other counsel to the Co-Borrowers
and the other Loan Parties reasonably satisfactory to the Agent.
(k) Pledged Stock; Stock Powers. The Agent shall have
received the certificates representing the shares pledged pursuant to
the Stock Pledge Agreement as amended by the Supplement to Stock
Pledge Agreement, together with an undated stock power for each such
certificate executed in blank by, a duly authorized officer of the
pledgor thereof.
(l) Acknowledgment and Consent. The Agent shall have
received an Acknowledgement and Consent in the form attached hereto as
Exhibit E, duly executed by WHTM-TV, Inc.
(m) Actions to Perfect Liens. The Agent shall have received
evidence in form and substance satisfactory to it that all filings,
recordings, registrations and other actions, including, without
limitation, the filing of duly executed financing statements on form
UCC-1, necessary or, in the opinion of the Agent, desirable to perfect
the Liens created by the Security Documents shall have been completed.
(n) Lien Searches. The Agent shall have received the results
of a recent search by a Person satisfactory to the Agent, of the
Uniform Commercial Code,
<PAGE> 34
30
judgement and tax lien filings which may have been filed with respect
to personal property of each the Co-Borrowers, and the results of such
search shall be satisfactory to the Agent.
(o) Operating Cash Flow Certificate. The Agent shall have
received, with a counterpart for each Lender, and each Lender shall be
satisfied with the contents of, a statement, certified by a
Responsible Officer of PCC, setting forth the Operating Cash Flow of
the Co-Borrowers for the twelve month period most recently ended prior
to the Closing Date.
SECTION 5. COVENANTS
The Co-Borrowers hereby agree that, so long as this Agreement
remains in effect, any Note remains outstanding and unpaid or any other amount
is owing to any Lender or the Agent hereunder:
5.1 Financial Statements. The Co-Borrowers shall cause to be
furnished to each Lender:
(a) as soon as available, but in any event within 90 days
after the end of each fiscal year of PCC, a copy of the consolidated
balance sheet of PCC and its consolidated Subsidiaries as at the end
of such year and the related consolidated statements of income and
retained earnings and of cash flows for such year, setting forth in
each case in comparative form the figures for the previous year,
reported on without a "going concern" or like qualification or
exception, or qualification arising out of the scope of the audit, by
Ernst & Young or other independent certified public accountants of
nationally recognized standing not unacceptable to the Agent;
(b) as soon as available, but in any event within 60 days
after the end of each fiscal quarter of PCC, a copy of the unaudited
consolidated balance sheet of PCC and its consolidated Subsidiaries as
at the end of such quarter and the related unaudited consolidated
statements of income and of cash flows for such quarter, setting forth
in each case in comparative form the figures for the previous year,
certified by a Responsible Officer of PCC as being fairly stated in
all material respects (subject to normal year-end audit adjustments);
and
(c) as soon as available, but in any event not later than 30
days after the end of each of the first eleven months of each fiscal
year of PCC, the unaudited balance sheet of each Co-Borrower as at the
end of such month and the related unaudited statements of income and
of cash flows of each Co-Borrower for such month and the portion of
the fiscal year through the end of such month, setting forth in each
case in comparative form the figures for the previous year and the
figures projected in the applicable budget provided pursuant to
subsection 5.2(d), certified by a Responsible Officer of PCC as being
fairly stated in all material respects (subject to normal year-end
audit adjustments);
<PAGE> 35
31
all such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by such accountants or officer, as the case may be,
and disclosed therein).
5.2 Certificates; Other Information. The Co-Borrowers shall
cause to be furnished to each Lender:
(a) concurrently with the delivery of the financial
statements referred to in subsection 5.1(a), a certificate of the
independent certified public accountants reporting on such financial
statements stating that in making the examination necessary therefor
no knowledge was obtained of any Default, except as specified in such
certificate;
(b) concurrently with the delivery of the financial
statements referred to in subsection 5.1(a), copies of each
Co-Borrower's year-end unaudited financial statements used in the
preparation of such statements;
(c) concurrently with the delivery of the financial
statements referred to in subsections 5.1(a), 5.1(b) and 5.1(c), a
certificate of a Responsible Officer stating that, to the best of such
officer's knowledge, no Default has occurred during such period,
except as specified in such certificate;
(d) not later than 30 days after the end of each fiscal year
of PCC, a copy of the projections by PCC of the operating budget and
cash flow budget of PCC and its Subsidiaries for such fiscal year,
such projections to be accompanied by a certificate of a Responsible
Officer of PCC to the effect that such projections have been prepared
on the basis of sound financial planning practice and that such
officer has no reason to believe they are incorrect or misleading in
any material respect; and
(e) concurrently with the delivery of the financial
statements referred to in subsection 5.1(b), a certificate of a
Responsible Officer showing in detail the computations necessary to
calculate the Applicable Margin (the "Applicable Margin Certificate").
(f) promptly, such additional financial and other information
as any Lender may from time to time reasonably request.
5.3 Notices. The Co-Borrowers shall promptly give notice to
the Agent and each Lender of:
(a) the occurrence of any Default;
(b) any (i) default or event of default under any Contractual
Obligation of any Co-Borrower or (ii) non-frivolous litigation,
investigation or proceeding which may exist at any time between any
Co-Borrower and any Governmental Authority, which in
<PAGE> 36
32
either case, if not cured or if adversely determined, as the case may
be, could reasonably be expected to have a Material Adverse Effect;
(c) any non-frivolous litigation or proceeding affecting any
Co-Borrower in which the amount involved is $500,000 or more and not
covered by insurance or in which injunctive or similar relief is
sought;
(d) the following events, as soon as possible and in any
event within 30 days after any Co-Borrower knows or has reason to know
thereof: (i) the occurrence or expected occurrence of any Reportable
Event with respect to any Plan, a failure to make any required
contribution to a Plan, the creation of any Lien in favor of the PBGC
or a Plan or any withdrawal from, or the termination, Reorganization
or Insolvency of, any Multiemployer Plan or (ii) the institution of
proceedings or the taking of any other action by the PBGC or any
Co-Borrower or any Commonly Controlled Entity or any Multiemployer
Plan with respect to the withdrawal from, or the terminating,
Reorganization or Insolvency of, any Plan; and
(e) any development or event which could reasonably be
expected to have a Material Adverse Effect.
Each notice pursuant to this subsection shall be accompanied by a statement of
a Responsible Officer setting forth details of the occurrence referred to
therein and stating what action the Co-Borrowers propose to take with respect
thereto.
5.4 Financial Condition Covenants. The Co-Borrowers shall
not permit (a) the ratio of (i) the aggregate Indebtedness of the Co-Borrowers
to (ii) Operating Cash Flow to (x) exceed 4.0 to 1.0 from the Closing Date
through December 30, 1996, (y) exceed 3.5 to 1.0 from December 31, 1996 through
December 30, 1997 and (z) exceed 3.0 to 1.0 from December 31, 1997 through the
Termination Date or (b) at any time the ratio of (i) Available Cash Flow for
any period of four consecutive fiscal quarters to (ii) Debt Service for such
period to be less than 1.2 to 1.0.
5.5 Limitation on Indebtedness. The Co-Borrowers shall not
create, incur, assume or suffer to exist any material Indebtedness, except (i)
the Indebtedness under this Agreement, (ii) trade accounts payable in the
ordinary course of business and (iii) the Subordinated Intercompany Loans.
5.6 Asset Sales. The Co-Borrowers shall not sell any asset
unless cash consideration is received in an amount equal to the fair market
value thereof.
5.7 Limitation on Restricted Payments. The Co-Borrowers
shall not declare or pay any dividend (other than dividends payable solely in
common stock of the Co-Borrowers) on, or make any payment on account of, or set
apart assets for a sinking or other analogous fund for, the purchase,
redemption, defeasance, retirement or other acquisition of, any shares of any
class of Capital Stock of any Co-Borrower or any warrants or options to
purchase any such Capital Stock, whether now or hereafter outstanding, or make
any other distribution in
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33
respect thereof, or make any optional payment on the Subordinated Intercompany
Loans, either directly or indirectly, whether in cash or property or in
obligations of any Co-Borrower (such declarations, payments, setting apart,
purchases, redemptions, defeasances, retirements, acquisitions, distributions
and optional payments being herein called "Restricted Payments"), except for
Restricted Payments permitted to be made pursuant to the Intercompany
Subordination Agreement.
SECTION 6. OFFERING BASIS
NOTWITHSTANDING ANY OTHER PROVISION IN THIS AGREEMENT OR IN
ANY OTHER LOAN DOCUMENT OR THE PAYMENT BY THE CO- BORROWERS OF ANY FEES
SPECIFIED HEREIN OR THE EXISTENCE OR NONEXISTENCE OF ANY DEFAULT, ALL LOANS
MADE BY EACH LENDER SHALL BE PAYABLE ON WRITTEN DEMAND BY SUCH LENDER, AND EACH
LENDER SHALL HAVE THE RIGHT TO TERMINATE ITS LINE OF CREDIT AND/OR REFUSE TO
MAKE ANY REQUESTED LOAN AT ANY TIME FOR ANY REASON, WITHOUT, IN ANY SUCH CASE,
ANY PRIOR NOTICE WHATSOEVER. THE CO-BORROWERS ACKNOWLEDGE THAT CERTAIN
COVENANTS HAVE BEEN INCLUDED IN SECTION 5 TO EMPHASIZE CERTAIN MATTERS WHICH
ARE OF PARTICULAR CONCERN TO THE LENDERS BUT THAT SUCH INCLUSION SHALL NOT IN
ANY WAY BE UNDERSTOOD TO MEAN THAT THE RIGHT OF THE LENDERS TO DEMAND PAYMENT
OF OUTSTANDING LOANS OR TO TERMINATE THE LINE OF CREDIT MADE AVAILABLE
HEREUNDER OR TO REFUSE TO MAKE ANY REQUESTED LOAN SHALL BE LIMITED TO TIMES
WHEN THE CO-BORROWERS ARE IN DEFAULT UNDER SUCH COVENANTS.
SECTION 7. THE AGENT
7.1 Appointment. Each Lender hereby irrevocably designates
and appoints Bank of Montreal as the Agent of such Lender under this Agreement
and the other Loan Documents, and each such Lender irrevocably authorizes Bank
of Montreal, as the Agent for such Lender, to take such action on its behalf
under the provisions of this Agreement and the other Loan Documents and to
exercise such powers and perform such duties as are expressly delegated to the
Agent by the terms of this Agreement and the other Loan Documents, together
with such other powers as are reasonably incidental thereto. Notwithstanding
any provision to the contrary elsewhere in this Agreement, the Agent shall not
have any duties or responsibilities, except those expressly set forth herein,
or any fiduciary relationship with any Lender, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into this Agreement or any other Loan Document or otherwise exist against the
Agent.
7.2 Delegation of Duties. The Agent may execute any of its
duties under this Agreement and the other Loan Documents by or through agents
or attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent
<PAGE> 38
34
shall not be responsible for the negligence or misconduct of any agents or
attorneys in-fact selected by it with reasonable care.
7.3 Exculpatory Provisions. Neither the 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 this Agreement or any other Loan
Document (except for its or such Person's 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 any Co-Borrower or
any officer thereof contained in this Agreement or any other Loan Document or
in any certificate, report, statement or other document referred to or provided
for in, or received by the Agent under or in connection with, this Agreement or
any other Loan Document or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or the Notes or any other Loan
Document or for any failure of any Co-Borrower to perform its obligations
hereunder or thereunder. The Agent shall not be under any 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, this Agreement or any other Loan
Document, or to inspect the properties, books or records of any Co-Borrower.
7.4 Reliance by Agent. The Agent shall be entitled to rely,
and shall be fully protected in relying, upon any Note, writing, resolution,
notice, consent, certificate, affidavit, letter, 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 any Co-Borrower), independent accountants and
other experts selected by the Agent. The Agent may deem and treat the payee of
any Note as the owner thereof for all purposes unless a written notice of
assignment, negotiation or transfer thereof shall have been filed with the
Agent. The Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of the Required Lenders as it deems
appropriate or it shall first be indemnified to its satisfaction by the Lenders
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action except to the extent arising
solely from the gross negligence or willful misconduct of the Agent. The Agent
shall in all cases be fully protected in acting, or in refraining from acting,
under this Agreement and the Notes and the other 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.
7.5 Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default hereunder unless the Agent
has received notice from a Lender or any Co-Borrower referring to this
Agreement, describing such Default and stating that such notice is a "notice of
default". In the event that the Agent receives such a notice, the Agent shall
promptly give notice thereof to the Lenders. The Agent shall take such action
with respect to such Default as shall be reasonably directed by the Required
Lenders; provided that unless and until the Agent shall have received such
directions, the Agent may
<PAGE> 39
35
(but shall not be obligated to) take such action, or refrain from taking such
action, with respect to such Default as it shall deem advisable in the best
interests of the Lenders.
7.6 Non-Reliance on Agent and Other Lenders. Each Lender
expressly acknowledges that neither the 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 Agent hereinafter
taken, including any review of the affairs of any Loan Party, shall be deemed
to constitute any representation or warranty by the Agent to any Lender. Each
Lender represents to the Agent that it has, independently and without reliance
upon the Agent or any other Lender, and based on such documents and information
as it has deemed appropriate, made its own appraisal of and investigation into
the business, operations, property, financial and other condition and
creditworthiness of each Loan Party and made its own decision to make its Loans
hereunder and enter into this Agreement. Each Lender also represents that it
will, independently and without reliance upon the Agent or any other Lender,
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other 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 each Loan Party. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the Agent
hereunder, the Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business,
operations, property, condition (financial or otherwise), prospects or
creditworthiness of any Loan Party which may come into the possession of the
Agent or any of its officers, directors, employees, agents, attorneys-in-fact
or Affiliates.
7.7 Indemnification. The Lenders agree to indemnify the
Agent in its capacity as such (to the extent not reimbursed by the Co-Borrowers
and without limiting the obligation of the Co-Borrowers to do so), ratably
according to their respective Line of Credit Percentages in effect on the date
on which indemnification is sought under this subsection, from and against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind whatsoever 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 Agent
with respect to or in any way arising out of the execution, delivery,
enforcement, performance or administration of this Agreement, any of the other
Loan Documents or any documents contemplated by or referred to herein or
therein or the transactions contemplated hereby or thereby or any action taken
or omitted by the Agent under or in connection with any of the foregoing;
provided 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 resulting solely from the Agent's gross
negligence or willful misconduct. The agreements in this subsection shall
survive the payment of the Notes and all other amounts payable hereunder.
7.8 Agent in Its Individual Capacity. The Agent and its
Affiliates may make loans to, accept deposits from and generally engage in any
kind of business with the Co-Borrowers as though the Agent were not the Agent
hereunder and under the other Loan
<PAGE> 40
36
Documents. With respect to its Loans made or renewed by it and any Note issued
to it, the 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
were not the Agent, and the terms "Lender" and "Lenders" shall include the Agent
in its individual capacity.
7.9 Successor Agent. The Agent may resign as Agent upon 10
days' notice to the Lenders. If the Agent shall resign as Agent under this
Agreement and the other Loan Documents, then the Required Lenders shall appoint
from among the Lenders a successor agent for the Lenders, whereupon such
successor agent shall succeed to the rights, powers and duties of the Agent,
and the term "Agent" shall mean such successor agent effective upon such
appointment and approval, and the former Agent's rights, powers and duties as
Agent shall be terminated, without any other or further act or deed on the part
of such former Agent or any of the parties to this Agreement or any holders of
the Notes. After any retiring Agent's resignation as Agent, the provisions of
this subsection shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was Agent under this Agreement and the other Loan
Documents.
SECTION 8. MISCELLANEOUS
8.1 Amendments and Waivers. Neither this Agreement, any
Note, any other Loan Document, nor any terms hereof or thereof may be amended,
supplemented or modified except in accordance with the provisions of this
subsection. The Required Lenders may, or, with the written consent of the
Required Lenders, the Agent may, from time to time, (a) enter into with the
Co-Borrowers written amendments, supplements or modifications hereto and the
other Loan Documents for the purpose of adding any provisions to this Agreement
or the other Loan Documents or changing in any manner the rights of the Lenders
or of the Co-Borrowers hereunder or thereunder or (b) waive, on such terms and
conditions as the Required Lenders or the Agent, as the case may be, may
specify in such instrument, any of the requirements of this Agreement or the
other Loan Documents; provided, however, that no such waiver and no such
amendment, supplement or modification shall (i) reduce the amount or extend the
scheduled date of maturity of any Note or of any installment thereof, or reduce
the stated rate of any interest or fee payable hereunder or extend the
scheduled date of any payment thereof or increase the amount or extend the
expiration date of any Lender's Line of Credit Amount, in each case without the
consent of each Lender affected thereby, or (ii) amend, modify or waive any
provision of this subsection or Section 6 or waive any failure of the
Co-Borrowers to make any payment of interest or principal when due or reduce
the percentage specified in the definition of Required Lenders, or consent to
the assignment or transfer by any Co-Borrower of any of its rights and
obligations under this Agreement and the other Loan Documents, in each case
without the written consent of all the Lenders, or (iii) amend, modify or waive
any provision of Section 7 without the written consent of the then Agent. Any
such waiver and any such amendment, supplement or modification shall apply
equally to each of the Lenders and shall be binding upon each Co-Borrower, the
Lenders, the Agent and all future holders of the Notes.
<PAGE> 41
37
8.2 Notices. All notices, requests and demands to or upon
the respective parties hereto to be effective shall be in writing (including by
telecopy), and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered by hand, or 2 days after being
deposited in the mail, postage prepaid, or, in the case of telecopy notice,
when received, addressed as follows in the case of the Co-Borrowers and the
Agent, and as set forth in Schedule I in the case of the other parties hereto,
or to such other address as may be hereafter notified by the respective parties
hereto and any future holders of the Notes:
<TABLE>
<S> <C>
The Co-Borrowers: c/o Price Communications Corporation
45 Rockefeller Plaza
New York, New York 10020
Attention: Robert Price, President
Telecopy: (212) 397-3755
The Agent: Bank of Montreal
430 Park Avenue
New York, New York 10022
Attention: Gretchen Shugart
John Decoufle
Telecopy: (212) 605-1618
</TABLE>
provided that any notice, request or demand to or upon the Agent or the Lenders
pursuant to subsection 2.3, 2.5, 2.6, 2.7 or 2.12 shall not be effective until
received.
8.3 No Waiver; Cumulative Remedies. No failure to exercise
and no delay in exercising, on the part of the Agent or any Lender, any right,
remedy, power or privilege hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, remedy, power or privilege
hereunder preclude any other or further exercise thereof or the exercise of any
other right, remedy, power or privilege. The rights, remedies, powers and
privileges herein provided are cumulative and not exclusive of any rights,
remedies, powers and privileges provided by law.
8.4 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 and the Notes.
8.5 Payment of Expenses and Taxes. Each Co-Borrower jointly
and severally agrees (a) to pay or reimburse the Agent for all its reasonable
out-of-pocket costs and expenses incurred in connection with the development,
preparation and execution of, and any amendment, supplement or modification to,
this Agreement and the Notes and the other Loan Documents and any other
documents prepared in connection herewith or therewith, and the consummation
and administration of the transactions contemplated hereby and thereby,
including, without limitation, the reasonable fees and disbursements of counsel
to the Agent, (b) to pay or reimburse each Lender and the Agent for all its
reasonable costs and expenses
<PAGE> 42
38
incurred in connection with the enforcement or preservation of any rights under
this Agreement, the Notes, the other Loan Documents and any such other
documents, including, without limitation, the fees and disbursements of counsel
to the Agent and to the several Lenders, and (c) to pay, indemnify, and hold
each Lender and the Agent harmless from, any and all recording and filing fees
and any and all liabilities with respect to, or resulting from any delay by the
Co-Borrowers 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 or administration of any of the transactions
contemplated by, or any amendment, supplement or modification of, or any waiver
or consent under or in respect of, this Agreement, the Notes, the other Loan
Documents and any such other documents, and (d) to pay, indemnify, and hold each
Lender and the Agent harmless from and against any and all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever with respect to or in
any way arising out of the execution, delivery, enforcement, performance or
administration of this Agreement, the Notes the other Loan Documents and any
such other documents and the transactions contemplated hereby or thereby (all
the foregoing in this clause (d), collectively, the "indemnified liabilities");
provided, that no Co-Borrower shall have any obligation under this subsection
8.5 to the Agent or any Lender with respect to costs, expenses, fees,
liabilities or other indemnified liabilities arising solely from the gross
negligence or willful misconduct of the party to be indemnified. The agreements
in this subsection shall survive repayment of the Notes and all other amounts
payable hereunder.
8.6 Successors and Assigns; Participations; Purchasing
Lenders. (a) This Agreement shall be binding upon and inure to the benefit of
the Co-Borrowers, the Lenders, the Agent, all future holders of the Notes and
their respective successors and assigns, except that no Co-Borrower may assign
or transfer any of its rights or obligations under this Agreement without the
prior written consent of each Lender.
(b) Any Lender may, in the ordinary course of its commercial
lending business and in accordance with applicable law, at any time sell to one
or more banks or other financial or lending institution ("Participants")
participating interests in any Loan owing to such Lender, any Note held by such
Lender, any Line of Credit Amount of such Lender or any other interest of such
Lender hereunder and under the other Loan Documents. In the event of any such
sale by a Lender of a participating interest to a Participant, such Lender's
obligations under this Agreement to the other parties to this Agreement shall
remain unchanged, such Lender shall remain solely responsible for the
performance thereof, such Lender shall remain the holder of any such Note for
all purposes under this Agreement and the other Loan Documents, and the
Co-Borrowers and the Agent shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement and the other Loan Documents. Each Co-Borrower agrees that if
amounts outstanding under this Agreement and the Notes are due or unpaid, or
shall have been declared or shall have become due and payable, each Participant
shall be deemed to have the right of setoff in respect of its participating
interest in amounts owing under this Agreement and any Note to the same extent
as if the amount of its participating interest were owing directly to it as a
Lender under this Agreement or any Note, provided that, in purchasing such
participating interest, such Participant shall be deemed to have agreed to
share with the
<PAGE> 43
39
Lenders the proceeds thereof as provided in subsection 8.7 as fully as if it
were a Lender hereunder. The Co-Borrower also agrees that each Participant
shall be entitled to the benefits of subsections 2.14, 2.15 and 2.16 with
respect to its participation in the Line of Credit Amounts and the Loans
outstanding from time to time; provided, that no Participant shall be entitled
to receive any greater amount pursuant to such subsections than the transferor
Lender would have been entitled to receive in respect of the amount of the
participation transferred by such transferor Lender to such Participant had no
such transfer occurred. Participants shall not be granted any voting rights or
veto power over any action by the participating Lender, except that such Lender
may agree not to (i) extend the maturity of its Note, (ii) reduce the amount of
any payment in respect thereof or (iii) reduce the rate of any interest or fee.
(c) Any Lender may, in the ordinary course of its commercial
lending business and in accordance with applicable law, at any time and from
time to time assign to any Lender or any Affiliate thereof or, with the consent
of the Agent (which shall not be unreasonably withheld), to an additional bank
or financial or lending institution (an "Assignee") all or any part of its
rights and obligations under this Agreement and the Notes pursuant to an
Assignment and Acceptance, executed by such Assignee, such assigning Lender
(and, in the case of an Assignee that is not then a Lender or an Affiliate
thereof, by the Agent) and delivered to the Agent for its acceptance and
recording in the Register. Upon such execution, delivery, acceptance and
recording, from and after the effective date determined pursuant to such
Assignment and Acceptance, (x) the Assignee thereunder shall be a party hereto
and, to the extent provided in such Assignment and Acceptance, have the rights
and obligations of a Lender hereunder with Line of Credit Amounts as set forth
therein, and (y) the assigning Lender thereunder shall, to the extent provided
in such Assignment and Acceptance, be released from its obligations under this
Agreement (and, in the case of an Assignment and Acceptance covering all or the
remaining portion of an assigning Lender's rights and obligations under this
Agreement, such assigning Lender shall cease to be a party hereto).
(d) The Agent shall maintain at its address referred to in
subsection 8.2 a copy of each Assignment and Acceptance delivered to it and a
register (the "Register") for the recordation of the names and addresses of the
Lenders and the Line of Credit Amounts of, and principal amount of the Loans
owing to, each Lender from time to time. The entries in the Register shall be
conclusive, in the absence of manifest error, and the Co-Borrowers, the Agent
and the Lenders may treat each Person whose name is recorded in the Register as
the owner of the Loan recorded therein for all purposes of this Agreement. The
Register shall be available for inspection by the Co-Borrowers or any Lender at
any reasonable time and from time to time upon reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed
by an assigning Lender and an Assignee (and, in the case of an Assignee that is
not then a Lender or an affiliate thereof, by the Agents) the Agent shall (i)
promptly accept such Assignment and Acceptance and (ii) on the effective date
determined pursuant thereto record the information contained therein in the
Register and give notice of such acceptance and recordation to the Lenders and
the Co-Borrowers. On or prior to such effective date, the Co-Borrowers, at
their own expense, shall execute and deliver to the Agent (in exchange for the
<PAGE> 44
40
Notes of the assigning Lender) a new Note to the order of such Assignee in an
amount equal to the Line of Credit Amount assumed by such Purchasing Lender
pursuant to such Assignment and Acceptance and, if the assigning Lender has
retained a Line of Credit Amount hereunder, a Note to the order of the
assigning Lender in an amount equal to the Line of Credit Amount retained by
such Lender hereunder. Such new Notes shall be dated the Closing Date and
shall otherwise be in the form of the Note replaced thereby.
(f) Subject to the provisions of subsection 8.16, the
Co-Borrowers authorize each Lender to disclose to any Participant or Assignee
(each, a "Transferee") and any prospective Transferee any and all financial
information in such Lender's possession concerning the Co-Borrowers and their
Affiliates which has been delivered to such Lender by or on behalf of the Co-
Borrowers pursuant to this Agreement or which has been delivered to such Lender
by or on behalf of the Co-Borrowers in connection with such Lender's credit
evaluation of the Co-Borrowers and their Affiliates prior to becoming a party
to this Agreement.
(g) Nothing herein shall prohibit any Lender from pledging or
assigning any Note to any Federal Reserve Bank in accordance with applicable
law.
8.7 Adjustments. If any Lender (a "benefitted Lender") shall
at any time receive any payment of all or part of its Loans, or interest
thereon, or receive any collateral in respect thereof (whether voluntarily or
involuntarily, by set-off, pursuant to any bankruptcy or insolvency proceeding,
or otherwise), in a greater proportion than any such payment to or collateral
received by any other Lender, if any, in respect of such other Lender's Loans,
or interest thereon, such benefitted Lender shall purchase for cash from the
other Lenders a participating interest in such portion of each such other
Lender's Loan, or shall provide such other Lenders with the benefits of any
such collateral, or the proceeds thereof, as shall be necessary to cause such
benefitted 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 benefitted Lender, such purchase shall be rescinded, and the purchase
price and benefits returned, to the extent of such recovery, but without
interest.
8.8 Counterparts. This Agreement may be executed by one or
more of the parties to this Agreement on any number of separate counterparts,
and all of said counterparts taken together shall be deemed to constitute one
and the same instrument. A set of the copies of this Agreement signed by all
the parties shall be lodged with the Co-Borrowers and the Agent.
8.9 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
<PAGE> 45
41
8.10 Integration. This Agreement and the other Loan
Documents represent the agreement of each Co-Borrower, the Agent and the
Lenders with respect to the subject matter hereof, and there are no promises,
undertakings, representations or warranties by the Agent or any Lender relative
to subject matter hereof not expressly set forth or referred to herein or in
the other Loan Documents.
8.11 GOVERNING LAW. THIS AGREEMENT AND THE NOTES AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT AND THE NOTES SHALL
BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF
THE STATE OF NEW YORK.
8.12 Submission To Jurisdiction; Waivers. Each Co-Borrower
hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action
or proceeding relating to this Agreement and the other Loan Documents
to which it is a party, or for recognition and enforcement of any
judgement in respect thereof, to the non-exclusive general
jurisdiction of the Courts of the State of New York, the courts of the
United States of America for the Southern District of New York, and
appellate courts from any thereof;
(b) consents that any such action or proceeding may be
brought in such courts and waives any objection that it may now or
hereafter have to the venue of any such action or proceeding in any
such court or that such action or proceeding was brought in an
inconvenient court and agrees not to plead or claim the same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to the Co-Borrower at its address set forth in subsection 8.2
or at such other address of which the Agent shall have been notified
pursuant thereto;
(d) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or
shall limit the right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or
proceeding referred to in this subsection any special, exemplary,
punitive or consequential damages.
8.13 Acknowledgements. Each Co-Borrower hereby acknowledges
that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the Notes and the other
Loan Documents;
<PAGE> 46
42
(b) neither the Agent nor any Lender has any fiduciary
relationship with or duty to such Co-Borrower arising out of or in
connection with this Agreement or any of the other Loan Documents, and
the relationship between Agent and Lenders, on one hand, and such
Co-Borrower, on the other hand, in connection herewith or therewith is
solely that of debtor and creditor; and
(c) no joint venture exists among the Lenders or among such
Co-Borrower and the Lenders.
8.14 WAIVERS OF JURY TRIAL. EACH CO-BORROWER, THE AGENT AND
THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY
LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR THE NOTES OR ANY OTHER
LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
8.15 Joint and Several Liability. (a) Subject to paragraph
(b) of this subsection, each Co-Borrower hereby agrees that the obligations of
the Co-Borrowers hereunder and under the other Loan Documents shall be joint
and several in all circumstances, notwithstanding anything herein or in such
other Loan Documents to the contrary. Without limiting the generality of the
foregoing, each Co-Borrower agrees that the obligations of the Co-Borrowers
hereunder and under the other Loan Documents shall be enforceable against such
Co-Borrower even if this Agreement or any other Loan Document may be
unenforceable against any other Co- Borrower for any reason.
(b) Anything herein or in any Loan Document to the contrary
notwithstanding, the maximum liability of each Co- Borrower for the obligations
of the other Co-Borrowers shall in no event exceed the amount on which such
former Co-Borrower can become liable under applicable federal and state laws
relating to the insolvency of debtors.
(c) Notwithstanding anything in this Agreement or the other
Loan Documents, each Co-Borrower further agrees that any notice or action
hereunder or under the other Loan Documents which is required to be given to or
by, or taken by, one or more of the Co-Borrowers may be given to or by, or
taken by, any Co-Borrower alone, with or without the knowledge or agreement of
the other Co-Borrowers, and, if such notice or action is so given or taken, all
of the Co-Borrowers shall be bound thereby as if such notice or action was
given to or by, or taken by, as the case may be, all of the Co-Borrowers.
8.16 Confidentiality. Each Lender agrees to keep
confidential any non-public written or oral information (a) provided to it by
or on behalf of any Co-Borrower pursuant to or in connection with this
Agreement or (b) obtained by such Lender based on a review of the books and
records of any Co-Borrower; provided that nothing herein shall prevent any
Lender from disclosing any such information (i) to the Agent or any other
Lender, (ii) to any Transferee or prospective Transferree which agrees to
comply with the provisions of this subsection, provided that the Co-Borrowers
shall be promptly notified of any such disclosure to a Transferee or
prospective Transferee, (iii) to its employees, directors, agents, attorneys,
accountants and other professional advisors, (iv) upon the request or demand of
any
<PAGE> 47
43
Governmental Authority having jurisdiction over such Lender, (v) in response to
any order of any court or other Governmental Authority or as may otherwise be
required pursuant to any Requirement of Law, (vi) which has been publicly
disclosed other than in breach of this Agreement, or (vii) in connection with
the exercise of any remedy hereunder.
8.17 Consent to Supplement to Security Agreement. By
executing this Agreement, the Co-Borrowers consent to the Supplement to
Security Agreement.
<PAGE> 48
44
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered as of the day and year first above
written.
ATLANTIC BROADCASTING
CORPORATION, as a Co-Borrower
By: /s/ Kim I. Pressman
------------------------------
Title:
FEDERAL BROADCASTING
CORPORATION, as a Co-Borrower
By: /s/ Kim I. Pressman
------------------------------
Title:
SOUTHEAST TEXAS
BROADCASTING CORPORATION,
as a Co-Borrower
By: /s/ Kim I. Pressman
------------------------------
Title:
TEXOMA BROADCASTING
CORPORATION, as a Co-Borrower
By: /s/ Kim I. Pressman
------------------------------
Title:
TRI-STATE BROADCASTING
CORPORATION, as a Co-Borrower
By: /s/ Kim I. Pressman
------------------------------
Title:
BANK OF MONTREAL, as Agent
By: /s/ Kim I. Pressman
------------------------------
Title:
<PAGE> 49
43
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered as of the day and year first above
written.
ATLANTIC BROADCASTING
CORPORATION, as a Co-Borrower
By:
------------------------------
Title:
FEDERAL BROADCASTING
CORPORATION, as a Co-Borrower
By:
-----------------------------
Title:
SOUTHEAST TEXAS
BROADCASTING CORPORATION,
as a Co-Borrower
By:
-----------------------------
Title:
TEXOMA BROADCASTING
CORPORATION, as a Co-Borrower
By:
-----------------------------
Title:
TRI-STATE BROADCASTING
CORPORATION, as a Co-Borrower
By:
-----------------------------
Title:
BANK OF MONTREAL, as Agent
By: /s/ Gretchen Shugert
-----------------------------
Title: Gretchen Shugert
Director
<PAGE> 50
44
BANK OF MONTREAL, CHICAGO
BRANCH, as a Lender
By: /s/ Gretchen Shugert
-----------------------------
Title: Gretchen Shugert
Director
<PAGE> 1
EMPLOYMENT AGREEMENT
AGREEMENT dated as of October 6, 1994 by and between Price
Communications Corporation, a New York corporation with its principal place of
business at 45 Rockefeller Plaza, New York, New York 10020 (together with its
successors and assigns hereinafter referred to as "Employer"), and Robert
Price, an individual residing at 25 East 86th Street, Apartment 8D, New York,
New York 10028 ("Employee").
WHEREAS, Employee is currently employed by Employer pursuant
to an Employment Agreement dated May 8, 1992, as amended to date (the "Existing
Employment Agreement"); and
WHEREAS, as an executive, director and shareholder of
Employer, Employee has extensive and valuable knowledge of the business to be
carried on by Employer, and Employer desires to continue the employment of
Employee as chief executive officer and a director of Employer.
NOW THEREFORE, in consideration of the mutual covenants and
agreements contained herein, it is mutually agreed as follows:
1. Employment. Employer hereby agrees to employ Employee during the Term
(as hereinafter defined), and Employee hereby accepts such employment,
upon the terms and conditions set forth herein. During the Term,
Employee shall be employed as, and shall have the title of, Chairman
of the Board, President and Chief Executive Officer of Employer and
shall be a member of the Board of Directors of and shall perform
services for Employer and each of Employer's direct and indirect
subsidiaries (collectively, the "Companies"). Employee shall report
only to the Boards of Directors of the Companies and shall have
supervision and control over, and complete responsibility for, the
general management and operation of the Companies, and such other
powers and duties as may, from time to time, be prescribed by such
Boards, provided that such duties are substantially and reasonably
consistent with Employee's duties with the Companies prior to the date
hereof and are of the type usually assigned to the Chairman of the
Board of a company (i.e., chairing meetings of shareholders and
directors) and to the President and Chief Executive Officer in charge
of the general management of similar companies.
2. Place of Employment. In connection with his employment hereunder,
Employee shall be based at Employer's principal executive offices in
New York City and Employer shall not, without the written consent of
Employee, relocate its principal executive offices outside of New York
City during the Term.
<PAGE> 2
3. Term. The term of this Agreement (the "Term") shall commence on the
date hereof (the "Effective Date") and shall terminate on the third
anniversary of the Effective Date. The Term shall be automatically
extended for successive additional three year periods on the
expiration of the Term (including upon the expiration of any such
additional three year period) unless the Employer shall at least one
year prior to any such expiration date notify Employee in writing of
its intention to terminate this Agreement upon such expiration date,
in which event the Term shall terminate on such expiration date.
4. Compensation and Related Matters.
(a) Base Salary. During the Term, Employee shall receive a bi-weekly
base salary at the rate of $300,000 per annum; provided, however, that
for each calendar year (or portion thereof) that this Agreement
remains in effect after 1994, such base salary shall be equal to the
(i) base salary for the immediately preceding calendar year multiplied
by (ii) one plus a percentage equal to the percentage increase from
the prior calendar year in the annual consumer price index in the New
York-Northern New Jersey-Long Island Consolidated Metropolitan
Statistical Area for all urban consumers (1982-84 equals 100), as
published by the United States Department of Labor, Bureau of Labor
Statistics, with respect to such immediately preceding calendar year.
(b) Cash Performance Bonuses. In addition to the base salary set
forth in paragraph 4(a) above, Employee shall receive cash performance
bonuses solely as determined by the Board of Directors of the
Employer. Payments of such bonuses shall be made by Employer to
Employee no later than one hundred (100) days after the end of each
calendar year for which such bonuses are determined by the Board.
(c) Stock Options. In addition to the base salary and cash
performance bonuses, if any, set forth in paragraphs 4(a) and 4(b)
above, Employee may be awarded stock options solely as determined by
the Board of Directors or Stock Option Committee of the Employer.
(d) Expenses. Employee shall receive prompt reimbursement for all
expenses reasonably incurred by Employee in performing his services
hereunder. Employee shall provide such invoices or vouchers as
Employer may reasonably request.
(e) Services Furnished. Employer shall furnish Employee with office
space, stenographic assistance and such other facilities, services and
other indicia of his position as shall be commensurate with those
furnished to him on the date hereof.
2
<PAGE> 3
(f) Benefit Plans. Employer shall maintain in full force and effect,
and Employee shall be entitled to continue to participate in, all
employee benefit plans or arrangements in effect on the date hereof in
which Employee now participates or plans and arrangements providing
Employee with at least equivalent benefits thereunder. Subject to the
preceding sentence, Employer shall not make any changes in such plans
and arrangements which would adversely effect Employee's rights or
benefits thereunder. Employee shall be entitled to participate in or
receive benefits under any employee benefit plan or arrangement made
available by Employer in the future to its officers and key management
employees, subject to and on a basis consistent with the terms,
conditions and overall administration of such plans and arrangements.
Employer shall maintain in full force and effect, at Employer's
expense, for the continued benefit of Employee, for a period of two
(2) years after termination of the Agreement, all medical, life and
health and accident insurance plans and programs in which Employee was
entitled to participate immediately prior to the termination of this
Agreement, or in the event Employee's continued participation in such
plans or programs is not permitted under the terms and provisions
thereof, then Employer shall arrange, at Employer's expense, to
provide Employee with substantially similar benefits during such two
year period. Insofar as Employee fails for any reason to obtain
coverage comparable to that described in the preceding sentence prior
to the expiration of the two-year period referred to in that sentence,
the two-year period referred to in such preceding sentence shall be
extended for two years in addition to such two-year period (or for any
lesser portion of such two additional years as to which Employee fails
to obtain such coverage). Nothing paid to Employee under any plan or
arrangement presently in effect or made available in the future shall
be deemed to be in lieu of the salary, incentive or other compensation
payable to Employee pursuant to this Agreement.
(g) Partial Year Payments. Any payments or benefits payable to
Employee in respect of any calendar year or other period during which
Employee is employed by Employer for less than the entire such year or
period, shall be prorated in accordance with the number of days in
such calendar year or period during which Employee is so employed. If
Employee's employment is terminated for any reason before the actual
payment date for any bonus or incentive payment previously awarded by
the Board of Directors of the Employer, Employee shall still be
entitled to such bonus or incentive payment for the previous year or
period.
(h) Vacation. Employee shall be entitled to three weeks of paid
vacation (or salary equivalent thereto) in each calendar year and
other paid absences for holidays, illness,
3
<PAGE> 4
personal time or any similar purpose in accordance with the Employer's
policies in effect on the date hereof.
5. Termination.
(a) Right to Terminate. Employer may terminate Employee's employment
hereunder only for "Cause" (as hereinafter defined). Employee may
terminate his employment at any time following the occurrence of an
event or condition constituting "Good Reason" (as hereinafter
defined). Any such termination shall be effective immediately
(subject to paragraph 5(f)(C) below) upon Employee's or Employer's, as
the case may be, receipt of a "Notice of Termination" (as hereinafter
defined).
(b) Termination for "Cause" or Death. If Employee's employment
hereunder is terminated by Employer for Cause, or as a result of or
after Employee's death, Employer shall pay to Employee (or his estate
or designee(s), as the case may be) a lump sum severance payment equal
to one year's annual base salary as in effect on the date of
termination.
(c) Termination Without "Cause" or for "Good Reason". If Employee's
employment hereunder is terminated by Employer without Cause or
Employee terminates his employment hereunder for "Good Reason" then
Employer shall pay to Employee a lump sum severance payment equal to
three times his annual base salary as in effect on the date of
termination.
(d) Termination Without "Good Reason". If Employee terminates his
employment hereunder without "Good Reason", Employer shall pay to
Employee a lump sum severance payment equal to one year's annual base
salary as in effect on the date of termination.
(e) Other Compensation and Benefits. The provisions of this
paragraph 5, and any payment provided for hereunder, shall not reduce
any amounts otherwise payable, or in any way diminish Employer's or
Employee's existing rights, or rights which would accrue solely as a
result of the passage of time, under any benefit plan, incentive plan
or securities plan, employment agreement or other contract, plan or
arrangement, including without limitation any other provision of this
Agreement. In the event of any termination of this Agreement for any
reason, Employee shall still be entitled to receive all salary and
benefits for the pro-rata portion of the year during which he was
employed in accordance with the number of days in such year during
which he was so employed.
(f) Definitions. For purposes of this Agreement
4
<PAGE> 5
(A) "Cause" shall mean any of the following, (i) Employee's
commission of any felony or any misdemeanor that involves
fraud, moral turpitude or material loss to the Employer or any
subsidiary thereof or its business or reputation, (ii)
Employee's embezzlement or misappropriation of funds or
property of Employer or any subsidiary thereof, (iii)
Employee's being sanctioned by state or federal authorities
for material violation of laws, rules or regulations
applicable to Employer's or any subsidiary's conduct of its
business, (iv) Employee's willful misconduct in the
performance of his reasonably assigned duties and obligations
hereunder which is materially adverse to Employer or any
subsidiary thereof or his unreasonable neglect or refusal to
perform his reasonably assigned duties and obligations
hereunder (unless significantly changed without his consent),
(v) Employee's failure to perform the duties or obligations
hereunder by reason of any physical or mental incapacity (as
hereinafter defined). No act, or failure to act, on
Employee's part shall be considered "willful" unless done, or
omitted to be done, without good faith and without reasonable
belief that the action or omission was in the best interest of
Employer.
(B) "Good Reason" shall mean the occurrence of any of the
events or conditions described in clauses (i) - (v) hereof.
(The enumeration of such events shall not imply that they are
permitted under this Agreement or any other applicable
agreement between the parties hereto.)
(i) A material change in Employee's title,
position or responsibilities (including
reporting responsibilities) which represents
an adverse change from his title, position or
responsibilities as in effect on the
Effective Date or the assignment to Employee
of any duties or responsibilities which are
inconsistent with his title, position or
responsibilities as in effect on the
Effective Date;
(ii) A reduction in Employee's base salary or
other compensation or benefits or any failure
to pay or deliver to Employee any cash, stock
or other compensation or benefits to which he
is entitled within ten (10) days of the date
due;
(iii) Employer's requiring Employee to be based in
any place outside of New York City, except
for reasonably required travel on Employer's
business;
5
<PAGE> 6
(iv) The failure to elect to the Board of
Directors or maintain in office at all times
three directors designated by Employee
(including Employee) or to comply with any
provisions of this Agreement; or
(v) The occurrence of a Change in Control (as
hereinafter defined).
(C) "Notice of Termination" shall mean a written notice
which shall indicate the specific termination provision in
this Agreement relied upon and shall set forth in reasonable
detail the facts and circumstance claimed to provide a basis
for termination. Notwithstanding the foregoing, (A) Employee
shall not be deemed to have been terminated for Cause unless
and until (i) Employee shall have been given reasonable notice
of (and in any instance where the act or omission constituting
Cause may be curable) and a reasonable opportunity to cure any
alleged basis for such termination and (ii) there has been
delivered to Employer a copy of a resolution duly adopted by
the affirmative vote of a majority of the entire membership of
the Board of Directors at a meeting of the Board (after
reasonable notice to Employee and opportunity for Employee
together with his counsel, the reasonable fees and expenses of
which shall be paid by Employer, to be heard at such meeting);
and (B) Employee shall not be deemed to have terminated his
employment for Good Reason unless and until Employer shall
have been given reasonable notice of (and in any instance
where the act or omission constituting Good Reason may be
curable) and a reasonable opportunity to cure any alleged
basis for such termination.
(D) "Physical or mental incapacity" shall mean the inability
of Employee by reason of a physical or mental illness to
perform his duties hereunder for a period of 120 consecutive
days or a total of 150 days in any twelve month period and
such incapacity is determined by a physician selected by
Employee (or his legal representatives) and acceptable to
Employer to be such as prevents Employee from performing
adequately his normal duties to the Employer. During any
period that the Employee is unable to perform his duties by
reason of physical or mental incapacity, Employee shall
continue to receive his full compensation and benefits
hereunder.
(E) "Change of Control" shall mean and be deemed to have
occurred upon the occurrence of any of the following events:
6
<PAGE> 7
(i) Any acquisition by any individual, entity
or group (within the meaning of Section 13(d)(3)
or 14(d)(2) of the Securities Exchange Act of 1934
(the "Exchange Act")) (a "Person") of beneficial
ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of shares of
common stock of the Employer (the "Common Stock")
and/or other voting securities of the Employer
entitled to vote generally in the election of
directors ("Outstanding Company Voting
Securities") after which acquisition such
individual, entity or group is the beneficial
owner of thirty percent (30%) or more of either
(1) the then outstanding shares of Common Stock or
(2) the Outstanding Company Voting Securities;
excluding, however, the following: (1) any
acquisition by the Employer, (2) any acquisition
by an employee benefit plan (or related trust)
sponsored or maintained by the Employer or (3) any
acquisition by any corporation pursuant to a
reorganization, merger, consolidation or similar
corporate transaction (in each case, a "Corporate
Transaction"), if, pursuant to such Corporate
Transaction, the conditions described in clauses
(1), (2) and (3) of paragraph 5(f)(E)(iii) are
satisfied; or
(ii) A change in the composition of the Board of
Directors of the Employer (the "Board") such that
(w) the individuals who, as of the date hereof,
comprise a class of directors of the Board cease
for any reason to constitute at least a majority
of the class or (x) if there shall at any time
cease to be classes of directors of the Board, the
individuals who, as of the date hereof, comprise
the members of the Board cease for any reason to
constitute at least a majority of the Board (the
members of each class of directors of the Board as
of the date hereof shall be hereinafter referred
to as an "Incumbent Class" and the members of all
of the Incumbent Classes (or if there shall cease
at any time to be classes of directors of the
Board, the members of the Board as of the date
hereof) shall be hereinafter collectively referred
to as the "Incumbent Board"); provided, however,
for purposes of this subsection that any
individual who becomes a member of a class of the
Board or of the Board subsequent to the date
hereof
7
<PAGE> 8
whose election, or nomination for election (y) if
by the Employer's shareholders, was approved in
advance or contemporaneously with such election by
the affirmative vote of at least a majority of
those individuals who are members of the Incumbent
Board (or deemed to be such pursuant to this
proviso), and (z) if by the Board, was approved by
the affirmative vote of at least a majority of
those individuals who are members of the Incumbent
Board (or deemed to be such pursuant to this
proviso), shall be considered as though such
individual were a member of the Incumbent Board and
any applicable Incumbent Class; but, provided
further, that any such individual whose initial
assumption of office occurs as a result of either
an actual or threatened election contest (as such
terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act) or other actual
or threatened solicitation of proxies or consents
by or on behalf of a Person other than the Board or
actual or threatened tender offer for shares of the
Employer or similar transaction or other contest
for corporate control (other than a tender offer by
the Employer) shall not be so considered as a
member of the Incumbent Board or any applicable
Incumbent Class;
(iii) The approval by the shareholders of the
Employer of a Corporate Transaction or, if
consummation of such Corporate Transaction is
subject, at the time of such approval by
shareholders, to the consent of any government or
governmental agency, the obtaining of such consent
(either explicitly or implicitly); excluding,
however, such a Corporate Transaction pursuant to
which (1) all or substantially all of the
individuals and entities who are the beneficial
owners, respectively, of the outstanding shares of
Common Stock and Outstanding Company Voting
Securities immediately prior to such Corporate
Transaction will beneficially own, directly or
indirectly, more than seventy percent (70%) of,
respectively, the outstanding shares of common
stock of the corporation resulting from such
Corporate Transaction and the combined voting power
of the outstanding voting securities of such
corporation entitled to vote generally in the
election of directors, (2) no Person (other
8
<PAGE> 9
than the Employer), any employee benefit plan (or
related trust) of the Employer or the corporation
resulting from such Corporate Transaction and any
Person beneficially owning, immediately prior to
such Corporate Transaction, directly or indirectly,
thirty percent (30%) or more of the outstanding
shares of Common Stock or Outstanding Company
Voting Securities, as the case may be) will
beneficially own, directly or indirectly, thirty
percent (30%) or more of, respectively, the
outstanding shares of common stock of the
corporation resulting from such Corporate
Transaction or the combined voting power of the
then outstanding securities of such corporation
entitled to vote generally in the election of
directors and (3) individuals who were members of
the Incumbent Board will constitute at least a
majority of the members of board of directors of
the corporation resulting from such Corporate
Transaction; or
(iv) The approval of the shareholders of the
Employer of (1) a complete liquidation or
dissolution of the Employer or (2) the sale or
other disposition of all or substantially all of
the assets of the Employer; excluding, however,
such a sale or other disposition to a corporation,
with respect to which following such sale or other
disposition, (A) more than seventy percent (70%)
of, respectively, the then outstanding shares of
common stock of such corporation and the combined
voting power of the then outstanding voting
securities of such corporation entitled to vote
generally in the election of directors will be then
beneficially owned, directly or indirectly, by all
or substantially all of the individuals and
entities who were the beneficial owners,
respectively, of the outstanding shares of Common
Stock and Outstanding Company Voting Securities
immediately prior to such sale or other
disposition, (B) no Person (other than the Employer
and any employee benefit plan (or related trust) of
the Employer or such corporation and any Person
beneficially owning, immediately prior to such sale
or other acquisition, directly or indirectly,
thirty percent (30%) or more of, respectively, the
then outstanding shares of common stock or
Outstanding Company Voting
9
<PAGE> 10
Securities, as the case may be) will beneficially own,
directly or indirectly, thirty percent (30%) or more of,
respectively, the then outstanding shares of common
stock of such corporation and the combined voting power
of the then outstanding voting securities of such
corporation entitled to vote generally in the election
of directors and (C) individuals who were members of the
Incumbent Board will constitute at least a majority of
the members of the board of directors of such
corporation.
(g) Wrongful Termination. In the event it is determined that
Employer did not have a basis upon which to terminate Employee's
employment for "Cause", then Employer shall pay Employee severance pay
as if this Agreement had been terminated without Cause.
(h) Payment of Severance. All severance payments due to Employee
pursuant to this paragraph 5 and all other unpaid amounts due to
Employee under this Agreement as of the date of termination shall be
paid in cash within thirty (30) days after the date of termination.
If any payment made pursuant to this paragraph 5 is made as a result
of Employee's death, such payments shall be in addition to any other
payments Employee's spouse, beneficiaries, designees or estate may be
entitled to receive pursuant to any employee benefit plan or life
insurance policy maintained by the Employer.
6. No Mitigation. Employee shall not be required to mitigate damages or
the amount of any payment provided for pursuant to this Agreement by
seeking other employment or otherwise, nor shall the amount of any
payment provided for by this Agreement be reduced by any compensation
earned by Employee as a result of employment by another employer after
the date of termination or otherwise.
7. Releases. Upon payment of all severance amounts due hereunder and
satisfaction of all other obligations under this Agreement, Employer
and Employee shall each execute and deliver general releases to each
other of all claims, rights or causes of action which each party may
then have or may ever be able to assert against the other party hereto
other than (a) any obligations the Employer amy have to indemnify
Employee pursuant to this Agreement, the Certificate of Incorporation
and By-laws of Employer or otherwise and (b) the commission by
Employee of embezzlement or other misappropriation of Employer's (or
any of its subsidiaries') funds or property for the personal benefit
of Employee or for other malfeasance willfully and intentionally
committed by Employee against the Employer (or any of its
10
<PAGE> 11
subsidiaries) for Employee's personal benefit. In addition, in
consideration of past and future services by the Employee to the
Employer, the Employer hereby releases the Employee from any and all
claims Employer may have (other than for the commission by Employee of
embezzlement or other misappropriation of Employer's (or any of its
subsidiaries') funds or property of the personal benefit of Employee
or for other malfeasance willfully and intentionally committed by
Employee against the Employer (or any of its subsidiaries) for
Employee's personal benefit) arising (or which may hereafter arise) in
any way out of Employee's relationship with or work performed for
Employer on or prior to the Effective Date and whether arising in
Employee's capacity as officer, director or employee of Employer or
otherwise.
8. Miscellaneous.
(a) No Setoff etc. Employer's obligations to make the payments
provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any setoff,
counterclaim, recoupment, defense or other claim, right or action
which Employer may have against Employee or others (except insofar as
the Employer's obligation to make such payments may be subject to
setoff as a result of the commission by Employee of embezzlement or
other misappropriation of the Employer's (or any of its subsidiaries')
funds or property for the personal benefit of the Employee or for
other malfeasance willfully and intentionally committed by the
Employee against the Employer (or any of its subsidiaries) for his
personal benefit), provided however, that Employer may deduct
applicable withholding taxes with respect to all such payments.
(b) Right to Reimbursement. Employee shall be entitled to
reimbursement by Employer of any fees or expenses (including
reasonable attorneys' fees) incurred by Employee in connection with
contesting or disputing any wrongful termination of this Agreement by
Employer or in seeking to obtain or enforce any of his rights or
benefits to which he is entitled hereunder and as to which a judgment
or award has been rendered in favor of Employee.
(c) Notices. All notices or other communications required or
permitted to be given hereunder shall be in writing, delivered by hand
or first class mail, postage prepaid, addressed to the addresses
specified above or such addresses later designated by any party hereto
in writing in accordance with this paragraph and shall be deemed to
have been duly given when received by the addressee.
(d) Headings. The headings in this Agreement are for convenience
only and shall not be considered as part of this
11
<PAGE> 12
Agreement or as in any way limiting or amplifying the terms and
provisions hereof.
(e) Late Payments. Any sums due to Employee under this Agreement
which are not paid when due shall bear interest from the date thereof
to the date of payment at the prime or similar rate then in effect of
Employer's then principal lending bank (or Citibank, N.A. if there is
no such lending bank).
(f) Governing Law. This Agreement shall in all respects be
interpreted, construed and governed by and in accordance with the
internal laws of the State of New York without regard to its conflicts
of law rules.
(g) Indemnification. Employer shall indemnify and hold Employee
harmless to the maximum extent permitted by the laws of the State of
New York (and the law of any other appropriate jurisdiction after any
reincorporation) against judgments, fines, amounts paid in settlement
and reasonable expenses, including attorneys' fees incurred by
Employee, in connection with the defense of, or as a result of any
action or proceeding (or any appeal from any action or proceeding) in
which Employee is made or is threatened to be made a party by reason
of the fact that he is or was an officer or director of Employer,
regardless of whether such action or proceeding is one brought by or
in the right of Employer to procure a judgment in its favor (or other
than by or in the right of the Employer).
(h) Counterparts. This Agreement may be executed in one or more
counterparts each of which shall be deemed to be an original but all
of which together will constitute one and the same instrument.
(i) Binding Agreement; Successors and Assigns.
(A) This Agreement and all of the rights of the Employee
hereunder shall inure to the benefit of, and be enforceable by
the Employee and Employee's personal representatives,
executors, administrators, heirs, devices, legatees,
successors and assigns.
(B) Employer shall require any successor or assign to all or
substantially all of the business and/or assets of Employer,
by agreement in form and substance reasonably satisfactory to
Employee, to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that
Employer would be required to perform it, if no succession had
taken place. Failure of Employer to obtain such agreement
prior to the effectiveness of any such succession or
assignment shall be a material breach of this Agreement
12
<PAGE> 13
and shall entitle Employee to compensation from Employer in the
same amount and on the same terms as he would be entitled to
hereunder if he terminated his employment for Good Reason.
(j) Severability. If all or any part of any paragraph or
subparagraph of this Agreement is declared by any court or
governmental authority to be unlawful or invalid, such unlawfulness or
invalidity shall not serve to invalidate all or any part of any
paragraph or subparagraph not declared to be unlawful or invalid, all
of which shall remain enforceable in accordance with their terms. Any
paragraph or subparagraph or part thereof so declared to be unlawful
or invalid shall be construed in a manner which will give effect to
the terms of such paragraph or subparagraph or part thereof to the
fullest extent possible while remaining lawful and valid.
(k) Amendments. This Agreement shall not be altered, amended or
modified except by written instruments executed by both Employer
(approved by the Board of Directors of the Employer) and Employee. A
waiver of any term, covenant, agreement or condition contained in this
Agreement shall not be deemed a waiver of any other term, covenant,
agreement or condition and any waiver of any default in any such term,
covenant, agreement or condition shall not be deemed a waiver of any
later default thereof or of any other term, covenant, agreement or
condition. No waiver shall be effective unless in writing and signed
by the party sought to be held to the terms thereof.
(l) Consent to Jurisdiction. The parties hereto irrevocably submit
to the exclusive jurisdiction of the Supreme Court of the State of New
York, New York County, and of the United States District Court for the
Southern District of New York, for the purposes of any suit, action or
other proceeding brought by any party or their respective successors
or assigns arising out of any breach of any provision hereunder or
otherwise relating to this Agreement or the obligations hereunder or
the transactions contemplated herein and hereby waive, and agree not
to assert by way of motion, as a defense or otherwise, in any such
suit, action or proceeding, any claim that it or he is not personally
subject to the jurisdiction of the above- named courts, that the suit,
action or proceeding is brought in an inconvenient forum, that the
venue of the suit, action or proceeding is improper or that this
Agreement may not be enforced in or by such courts.
Service of process given in the manner contemplated by and
pursuant to the notice terms of this Agreement shall constitute valid
service of process upon the parties, their successors and assigns in
any action, suit or proceeding in
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the Supreme Court of the State of New York, New York County, or the
United States District Court for the Southern District of New York, or
any other tribunal, wherever located having jurisdiction over the
parties or any of their assets or properties with respect to any
matters as to which they have submitted to jurisdiction as set forth
in the immediately preceding paragraph.
(m) Entire Agreement. This Agreement constitutes the entire
agreement of the parties with respect to the subject matter hereof and
supersedes all prior negotiations and agreements except that the
Existing Employment Agreement shall remain in full force and effect
until the commencement of the Term.
(n) Counterparts. This Agreement may be signed in counterparts, each
of which shall be deemed an original but all of which together will
constitute one and the same instrument.
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<PAGE> 15
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered as of the date first above written.
PRICE COMMUNICATIONS CORPORATION
By:
---------------------------
---------------------------
Robert Price
15
<PAGE> 1
EMPLOYMENT AGREEMENT
AGREEMENT dated as of January 5, 1995 by and between Price
Communications Corporation, a New York corporation with its principal place of
business at 45 Rockefeller Plaza, New York, New York 10020 (together with its
successors and assigns hereinafter referred to as "Employer"), and Kim I.
Pressman, an individual residing at 7 Jan River Drive, Upper Saddle River, New
Jersey 07458 ("Employee").
WHEREAS, as an executive and director of Employer, Employee
has extensive and valuable knowledge of the business to be carried on by
Employer, and Employer desires to continue the employment of Employee as
Executive Vice President of Employer.
NOW THEREFORE, in consideration of the mutual covenants and
agreements contained herein, it is mutually agreed as follows:
1. Employment. Employer hereby agrees to employ Employee during the Term
(as hereinafter defined), and Employee hereby accepts such employment,
upon the terms and conditions set forth herein. During the Term,
Employee shall be employed as, and shall have the title of, Executive
Vice President of Employer and shall perform services for Employer and
each of Employer's direct and indirect subsidiaries (collectively, the
"Companies"). Employee shall report only to the Chief Executive
Officer and Boards of Directors of the Companies and shall have such
powers and duties as may, from time to time, be prescribed by such
Chief Executive Officer and Boards, provided that such duties are
substantially and reasonably consistent with Employee's duties with
the Companies prior to the date hereof and are consistent with her
senior executive position with Employer. Employee shall provide her
services on a part-time basis substantially consistent with her
practice prior to the date hereof.
2. Place of Employment. In connection with her employment hereunder,
Employee shall be based at Employer's principal executive offices in
New York City.
3. Term. The term of this Agreement (the "Term") shall commence on the
date hereof (the "Effective Date") and shall terminate on the third
anniversary of the Effective Date. The Term shall be automatically
extended for successive additional three year periods on the
expiration of the Term (including upon the expiration of any such
additional three year period) unless the Employer shall at least three
months
<PAGE> 2
prior to any such expiration date notify Employee in writing of its
intention to terminate this Agreement upon such expiration date, in
which event the Term shall terminate on such expiration date.
4. Compensation and Related Matters.
(a) Base Salary. During the Term, Employee shall receive a base
salary at the rate of $100,000 per annum in accordance with Employer's
standard payroll practices; provided, however, that for each calendar
year (or portion thereof) that this Agreement remains in effect after
1995, such base salary shall be equal to the (i) base salary for the
immediately preceding calendar year multiplied by (ii) one plus a
percentage equal to the percentage increase from the prior calendar
year in the annual consumer price index in the New York-Northern New
Jersey-Long Island Consolidated Metropolitan Statistical Area for all
urban consumers (1982-84 equals 100), as published by the United
States Department of Labor, Bureau of Labor Statistics, with respect
to such immediately preceding calendar year.
(b) Cash Performance Bonuses. In addition to the base salary set
forth in paragraph 4(a) above, Employee may receive cash performance
bonuses.
(c) Stock Options. In addition to the base salary and cash
performance bonuses, if any, set forth in paragraphs 4(a) and 4(b)
above, Employee may be awarded stock options solely as determined by
the Board of Directors or Stock Option Committee of the Employer.
(d) Expenses. Employee shall receive prompt reimbursement for all
expenses reasonably incurred by Employee in performing her services
hereunder. Employee shall provide such invoices or vouchers as
Employer may reasonably request.
(e) Services Furnished. Employer shall furnish Employee with office
space, stenographic assistance and such other facilities, services and
other indicia of her position as shall be commensurate with those
furnished to her on the date hereof.
(f) Benefit Plans. Employer shall maintain in full force and effect,
and Employee shall be entitled to continue to participate in, all
employee benefit plans or arrangements in effect on the date hereof in
which Employee now participates or plans and arrangements providing
Employee with at least equivalent benefits thereunder. Subject to the
preceding sentence, Employer shall not make any changes in such plans
and arrangements which would adversely effect Employee's rights or
benefits thereunder. Employee shall be
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<PAGE> 3
entitled to participate in or receive benefits under any employee
benefit plan or arrangement made available by Employer in the future
to its officers and key management employees, subject to and on a
basis consistent with the terms, conditions and overall administration
of such plans and arrangements. Employer shall maintain in full force
and effect, at Employer's expense, for the continued benefit of
Employee, for a period of two (2) years after termination of the
Agreement, all medical, life and health and accident insurance plans
and programs in which Employee was entitled to participate immediately
prior to the termination of this Agreement, or in the event Employee's
continued participation in such plans or programs is not permitted
under the terms and provisions thereof, then Employer shall arrange,
at Employer's expense, to provide Employee with substantially similar
benefits during such two year period. Insofar as Employee fails for
any reason to obtain coverage comparable to that described in the
preceding sentence prior to the expiration of the two-year period
referred to in that sentence, the two-year period referred to in such
preceding sentence shall be extended for two years in addition to such
two-year period (or for any lesser portion of such two additional
years as to which Employee fails to obtain such coverage). Nothing
paid to Employee under any plan or arrangement presently in effect or
made available in the future shall be deemed to be in lieu of the
salary, incentive or other compensation payable to Employee pursuant
to this Agreement.
(g) Partial Year Payments. Any payments or benefits payable to
Employee in respect of any calendar year or other period during which
Employee is employed by Employer for less than the entire such year or
period, shall be prorated in accordance with the number of days in
such calendar year or period during which Employee is so employed. If
Employee's employment is terminated for any reason before the actual
payment date for any bonus or incentive payment previously awarded by
the Board of Directors of the Employer, Employee shall still be
entitled to such bonus or incentive payment for the previous year or
period.
(h) Vacation. Employee shall be entitled to three weeks of paid
vacation in each calendar year and other paid absences for holidays,
illness, personal time or any similar purpose in accordance with the
Employer's policies in effect on the date hereof.
5. Termination.
(a) Right to Terminate. Employer may terminate Employee's employment
hereunder only for "Cause" (as hereinafter defined). Employee may
terminate her employment at any time following the occurrence of an
event or condition
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<PAGE> 4
constituting "Good Reason" (as hereinafter defined). Any such
termination shall be effective immediately (subject to paragraph
5(f)(C) below) upon Employee's or Employer's, as the case may be,
receipt of a "Notice of Termination" (as hereinafter defined).
(b) Termination for "Cause" or Death. If Employee's employment
hereunder is terminated by Employer for Cause, or as a result of or
after Employee's death, Employer shall pay to Employee (or her estate
or designee(s), as the case may be) a lump sum severance payment equal
to one year's annual base salary as in effect on the date of
termination.
(c) Termination Without "Cause" or for "Good Reason". If Employee's
employment hereunder is terminated by Employer without Cause or
Employee terminates her employment hereunder for "Good Reason" then
Employer shall pay to Employee a lump sum severance payment equal to
three times her annual base salary as in effect on the date of
termination.
(d) Termination Without "Good Reason". If Employee terminates her
employment hereunder without "Good Reason", Employer shall pay to
Employee a lump sum severance payment equal to one year's annual base
salary as in effect on the date of termination.
(e) Other Compensation and Benefits. The provisions of this
paragraph 5, and any payment provided for hereunder, shall not reduce
any amounts otherwise payable, or in any way diminish Employer's or
Employee's existing rights, or rights which would accrue solely as a
result of the passage of time, under any benefit plan, incentive plan
or securities plan, employment agreement or other contract, plan or
arrangement, including without limitation any other provision of this
Agreement. In the event of any termination of this Agreement for any
reason, Employee shall still be entitled to receive all salary and
benefits for the pro-rata portion of the year during which she was
employed in accordance with the number of days in such year during
which she was so employed.
(f) Definitions. For purposes of this Agreement
(A) "Cause" shall mean any of the following, (i) Employee's
commission of any felony or any misdemeanor that involves fraud,
moral turpitude or material loss to the Employer or any subsidiary
thereof or its business or reputation, (ii) Employee's
embezzlement or misappropriation of funds or property of Employer
or any subsidiary thereof, (iii) Employee's being sanctioned by
state or federal authorities for material violation of laws, rules
or regulations applicable to
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<PAGE> 5
Employer's or any subsidiary's conduct of its business, (iv)
Employee's willful misconduct in the performance of her reasonably
assigned duties and obligations hereunder which is materially adverse
to Employer or any subsidiary thereof or her unreasonable neglect or
refusal to perform her reasonably assigned duties and obligations
hereunder (unless significantly changed without her consent), (v)
Employee's failure to perform the duties or obligations hereunder by
reason of any physical or mental incapacity (as hereinafter defined).
No act, or failure to act, on Employee's part shall be considered
"willful" unless done, or omitted to be done, without good faith and
without reasonable belief that the action or omission was in the best
interest of Employer.
(B) "Good Reason" shall mean the occurrence of any of the events or
conditions described in clauses (i) - (iv) hereof. (The enumeration of
such events shall not imply that they are permitted under this
Agreement or any other applicable agreement between the parties
hereto.)
(i) A material change in Employee's title, position
or responsibilities (including reporting responsibilities)
which represents an adverse change from her title,
position or responsibilities as in effect on the Effective
Date or the assignment to Employee of any duties or
responsibilities which are inconsistent with her title,
position or responsibilities as in effect on the Effective
Date;
(ii) A reduction in Employee's base salary or other
compensation or benefits or any failure to pay or deliver
to Employee any cash, stock or other compensation or
benefits to which she is entitled within ten (10) days of
the date due, or the Employer's failure to comply with any
provisions of this Agreement;
(iii) Employer's requiring Employee to be based in any place
outside of New York City, except for reasonably required
travel on Employer's business; or
(iv) The occurrence of a Change in Control (as hereinafter
defined).
(C) "Notice of Termination" shall mean a written notice which
shall indicate the specific termination provision in this Agreement
relied upon and shall set
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<PAGE> 6
forth in reasonable detail the facts and circumstance claimed to
provide a basis for termination. Notwithstanding the foregoing, (A)
Employee shall not be deemed to have been terminated for Cause unless
and until (i) Employee shall have been given reasonable notice of (and
in any instance where the act or omission constituting Cause may be
curable) and a reasonable opportunity to cure any alleged basis for
such termination and (ii) there has been delivered to Employer a copy
of a resolution duly adopted by the affirmative vote of a majority of
the entire membership of the Board of Directors at a meeting of the
Board (after reasonable notice to Employee and opportunity for
Employee together with her counsel, the reasonable fees and expenses
of which shall be paid by Employer, to be heard at such meeting); and
(B) Employee shall not be deemed to have terminated her employment for
Good Reason unless and until Employer shall have been given reasonable
notice of (and in any instance where the act or omission constituting
Good Reason may be curable) and a reasonable opportunity to cure any
alleged basis for such termination.
(D) "Physical or mental incapacity" shall mean the inability of
Employee by reason of a physical or mental illness to perform her
duties hereunder for a period of 120 consecutive days or a total of 150
days in any twelve month period and such incapacity is determined by a
physician selected by Employee (or her legal representatives) and
acceptable to Employer to be such as prevents Employee from performing
adequately her normal duties to the Employer. During any period that
the Employee is unable to perform her duties by reason of physical or
mental incapacity, Employee shall continue to receive her full
compensation and benefits hereunder.
(E) "Change of Control" shall mean and be deemed to have occurred
upon the occurrence of any of the following events:
(i) Any acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of
the Securities Exchange Act of 1934 (the "Exchange
Act")) (a "Person") of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange
Act) of shares of common stock of the Employer (the
"Common Stock") and/or other voting securities of the
Employer entitled to vote generally in the election of
directors ("Outstanding Company Voting Securities")
after which acquisition such individual,
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<PAGE> 7
entity or group is the beneficial owner of
thirty percent (30%) or more of either (1)
the then outstanding shares of Common Stock
or (2) the Outstanding Company Voting
Securities; excluding, however, the
following: (1) any acquisition by the
Employer, (2) any acquisition by an employee
benefit plan (or related trust) sponsored or
maintained by the Employer or (3) any
acquisition by any corporation pursuant to a
reorganization, merger, consolidation or
similar corporate transaction (in each case,
a "Corporate Transaction"), if, pursuant to
such Corporate Transaction, the conditions
described in clauses (1), (2) and (3) of
paragraph 5(f)(E)(iii) are satisfied; or
(ii) A change in the composition of the Board of
Directors of the Employer (the "Board") such
that (w) the individuals who, as of the date
hereof, comprise a class of directors of the
Board cease for any reason to constitute at
least a majority of the class or (x) if there
shall at any time cease to be classes of
directors of the Board, the individuals who,
as of the date hereof, comprise the members
of the Board cease for any reason to
constitute at least a majority of the Board
(the members of each class of directors of
the Board as of the date hereof shall be
hereinafter referred to as an "Incumbent
Class" and the members of all of the
Incumbent Classes (or if there shall cease at
any time to be classes of directors of the
Board, the members of the Board as of the
date hereof) shall be hereinafter
collectively referred to as the "Incumbent
Board"); provided, however, for purposes of
this subsection that any individual who
becomes a member of a class of the Board or
of the Board subsequent to the date hereof
whose election, or nomination for election
(y) if by the Employer's shareholders, was
approved in advance or contemporaneously with
such election by the affirmative vote of at
least a majority of those individuals who are
members of the Incumbent Board (or deemed to
be such pursuant to this proviso), and (z) if
by the Board, was approved by the affirmative
vote of at least a majority of those
individuals who are members of the Incumbent
Board (or deemed to be such pursuant to this
proviso), shall be considered as though such
7
<PAGE> 8
individual were a member of the Incumbent Board
and any applicable Incumbent Class; but, provided
further, that any such individual whose initial
assumption of office occurs as a result of either
an actual or threatened election contest (as such
terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act) or other
actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than
the Board or actual or threatened tender offer for
shares of the Employer or similar transaction or
other contest for corporate control (other than a
tender offer by the Employer) shall not be so
considered as a member of the Incumbent Board or
any applicable Incumbent Class;
(iii) The approval by the shareholders of the
Employer of a Corporate Transaction or, if
consummation of such Corporate Transaction is
subject, at the time of such approval by
shareholders, to the consent of any government or
governmental agency, the obtaining of such consent
(either explicitly or implicitly); excluding,
however, such a Corporate Transaction pursuant to
which (1) all or substantially all of the
individuals and entities who are the beneficial
owners, respectively, of the outstanding shares of
Common Stock and Outstanding Company Voting
Securities immediately prior to such Corporate
Transaction will beneficially own, directly or
indirectly, more than seventy percent (70%) of,
respectively, the outstanding shares of common
stock of the corporation resulting from such
Corporate Transaction and the combined voting
power of the outstanding voting securities of such
corporation entitled to vote generally in the
election of directors, (2) no Person (other than
the Employer), any employee benefit plan (or
related trust) of the Employer or the corporation
resulting from such Corporate Transaction and any
Person beneficially owning, immediately prior to
such Corporate Transaction, directly or
indirectly, thirty percent (30%) or more of the
outstanding shares of Common Stock or Outstanding
Company Voting Securities, as the case may be)
will beneficially own, directly or indirectly,
thirty percent (30%) or more of, respectively, the
outstanding shares of
8
<PAGE> 9
common stock of the corporation resulting from
such Corporate Transaction or the combined voting
power of the then outstanding securities of such
corporation entitled to vote generally in the
election of directors and (3) individuals who were
members of the Incumbent Board will constitute at
least a majority of the members of board of
directors of the corporation resulting from such
Corporate Transaction; or
(iv) The approval of the shareholders of the
Employer of (1) a complete liquidation or
dissolution of the Employer or (2) the sale or
other disposition of all or substantially all of
the assets of the Employer; excluding, however,
such a sale or other disposition to a corporation,
with respect to which following such sale or other
disposition, (A) more than seventy percent (70%)
of, respectively, the then outstanding shares of
common stock of such corporation and the combined
voting power of the then outstanding voting
securities of such corporation entitled to vote
generally in the election of directors will be
then beneficially owned, directly or indirectly,
by all or substantially all of the individuals and
entities who were the beneficial owners,
respectively, of the outstanding shares of Common
Stock and Outstanding Company Voting Securities
immediately prior to such sale or other
disposition, (B) no Person (other than the
Employer and any employee benefit plan (or related
trust) of the Employer or such corporation and any
Person beneficially owning, immediately prior to
such sale or other acquisition, directly or
indirectly, thirty percent (30%) or more of,
respectively, the then outstanding shares of
common stock or Outstanding Company Voting
Securities, as the case may be) will beneficially
own, directly or indirectly, thirty percent (30%)
or more of, respectively, the then outstanding
shares of common stock of such corporation and the
combined voting power of the then outstanding
voting securities of such corporation entitled to
vote generally in the election of directors and
(C) individuals who were members of the Incumbent
Board will constitute at least a majority of the
members
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<PAGE> 10
of the board of directors of such corporation.
(g) Wrongful Termination. In the event it is determined that
Employer did not have a basis upon which to terminate Employee's
employment for "Cause", then Employer shall pay Employee severance pay
as if this Agreement had been terminated without Cause.
(h) Payment of Severance. All severance payments due to Employee
pursuant to this paragraph 5 and all other unpaid amounts due to
Employee under this Agreement as of the date of termination shall be
paid in cash within thirty (30) days after the date of termination.
If any payment made pursuant to this paragraph 5 is made as a result
of Employee's death, such payments shall be in addition to any other
payments Employee's spouse, beneficiaries, designees or estate may be
entitled to receive pursuant to any employee benefit plan or life
insurance policy maintained by the Employer.
6. No Mitigation. Employee shall not be required to mitigate damages or
the amount of any payment provided for pursuant to this Agreement by
seeking other employment or otherwise, nor shall the amount of any
payment provided for by this Agreement be reduced by any compensation
earned by Employee as a result of employment by another employer after
the date of termination or otherwise.
7. Releases. Upon payment of all severance amounts due hereunder and
satisfaction of all other obligations under this Agreement, Employer
and Employee shall each execute and deliver general releases to each
other of all claims, rights or causes of action which each party may
then have or may ever be able to assert against the other party hereto
other than (a) any obligations the Employer may have to indemnify
Employee pursuant to this Agreement, the Certificate of Incorporation
and By-laws of Employer or otherwise and (b) the commission by
Employee of embezzlement or other misappropriation of Employer's (or
any of its subsidiaries') funds or property for the personal benefit
of Employee or for other malfeasance willfully and intentionally
committed by Employee against the Employer (or any of its
subsidiaries) for Employee's personal benefit. In addition, in
consideration of past and future services by the Employee to the
Employer, the Employer hereby releases the Employee from any and all
claims Employer may have (other than for the commission by Employee of
embezzlement or other misappropriation of Employer's (or any of its
subsidiaries') funds or property of the personal benefit of Employee
or for other malfeasance willfully and intentionally committed by
Employee against the Employer (or any of its subsidiaries) for
Employee's personal benefit) arising (or which may hereafter arise) in
any way out of Employee's relationship
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<PAGE> 11
with or work performed for Employer on or prior to the Effective Date
and whether arising in Employee's capacity as officer, director or
employee of Employer or otherwise.
8. Miscellaneous.
(a) No Setoff etc. Employer's obligations to make the payments
provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any setoff,
counterclaim, recoupment, defense or other claim, right or action
which Employer may have against Employee or others (except insofar as
the Employer's obligation to make such payments may be subject to
setoff as a result of the commission by Employee of embezzlement or
other misappropriation of the Employer's (or any of its subsidiaries')
funds or property for the personal benefit of the Employee or for
other malfeasance willfully and intentionally committed by the
Employee against the Employer (or any of its subsidiaries) for her
personal benefit), provided however, that Employer may deduct
applicable withholding taxes with respect to all such payments.
(b) Right to Reimbursement. Employee shall be entitled to
reimbursement by Employer of any fees or expenses (including
reasonable attorneys' fees) incurred by Employee in connection with
contesting or disputing any wrongful termination of this Agreement by
Employer or in seeking to obtain or enforce any of her rights or
benefits to which she is entitled hereunder and as to which a judgment
or award has been rendered in favor of Employee.
(c) Notices. All notices or other communications required or
permitted to be given hereunder shall be in writing, delivered by hand
or first class mail, postage prepaid, addressed to the addresses
specified above or such addresses later designated by any party hereto
in writing in accordance with this paragraph and shall be deemed to
have been duly given when received by the addressee.
(d) Headings. The headings in this Agreement are for convenience
only and shall not be considered as part of this Agreement or as in
any way limiting or amplifying the terms and provisions hereof.
(e) Late Payments. Any sums due to Employee under this Agreement
which are not paid when due shall bear interest from the date thereof
to the date of payment at the prime or similar rate then in effect of
Employer's then principal lending bank (or Citibank, N.A. if there is
no such lending bank).
(f) Governing Law. This Agreement shall in all respects be
interpreted, construed and governed by and in accordance
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<PAGE> 12
with the internal laws of the State of New York without regard to its
conflicts of law rules.
(g) Indemnification. Employer shall indemnify and hold Employee
harmless to the maximum extent permitted by the laws of the State of
New York (and the law of any other appropriate jurisdiction after any
reincorporation) against judgments, fines, amounts paid in settlement
and reasonable expenses, including attorneys' fees incurred by
Employee, in connection with the defense of, or as a result of any
action or proceeding (or any appeal from any action or proceeding) in
which Employee is made or is threatened to be made a party by reason
of the fact that she is or was an officer or director of Employer,
regardless of whether such action or proceeding is one brought by or
in the right of Employer to procure a judgment in its favor (or other
than by or in the right of the Employer).
(h) Counterparts. This Agreement may be executed in one or more
counterparts each of which shall be deemed to be an original but all
of which together will constitute one and the same instrument.
(i) Binding Agreement; Successors and Assigns.
(A) This Agreement and all of the rights of the Employee
hereunder shall inure to the benefit of, and be enforceable by the
Employee and Employee's personal representatives, executors,
administrators, heirs, devices, legatees, successors and assigns.
(B) Employer shall require any successor or assign to all or
substantially all of the business and/or assets of Employer, by
agreement in form and substance reasonably satisfactory to
Employee, to expressly assume and agree to perform this Agreement
in the same manner and to the same extent that Employer would be
required to perform it, if no succession had taken place. Failure
of Employer to obtain such agreement prior to the effectiveness of
any such succession or assignment shall be a material breach of
this Agreement and shall entitle Employee to compensation from
Employer in the same amount and on the same terms as she would be
entitled to hereunder if she terminated her employment for Good
Reason.
(j) Severability. If all or any part of any paragraph or
subparagraph of this Agreement is declared by any court or
governmental authority to be unlawful or invalid, such unlawfulness or
invalidity shall not serve to invalidate all or any part of any
paragraph or subparagraph not declared to be unlawful or invalid, all
of which shall remain enforceable in accordance with their terms. Any
paragraph
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<PAGE> 13
or subparagraph or part thereof so declared to be unlawful or invalid
shall be construed in a manner which will give effect to the terms of
such paragraph or subparagraph or part thereof to the fullest extent
possible while remaining lawful and valid.
(k) Amendments. This Agreement shall not be altered, amended or
modified except by written instruments executed by both Employer
(approved by the Board of Directors of the Employer) and Employee. A
waiver of any term, covenant, agreement or condition contained in this
Agreement shall not be deemed a waiver of any other term, covenant,
agreement or condition and any waiver of any default in any such term,
covenant, agreement or condition shall not be deemed a waiver of any
later default thereof or of any other term, covenant, agreement or
condition. No waiver shall be effective unless in writing and signed
by the party sought to be held to the terms thereof.
(l) Consent to Jurisdiction. The parties hereto irrevocably submit
to the exclusive jurisdiction of the Supreme Court of the State of New
York, New York County, and of the United States District Court for the
Southern District of New York, for the purposes of any suit, action or
other proceeding brought by any party or their respective successors
or assigns arising out of any breach of any provision hereunder or
otherwise relating to this Agreement or the obligations hereunder or
the transactions contemplated herein and hereby waive, and agree not
to assert by way of motion, as a defense or otherwise, in any such
suit, action or proceeding, any claim that it or she is not personally
subject to the jurisdiction of the above- named courts, that the suit,
action or proceeding is brought in an inconvenient forum, that the
venue of the suit, action or proceeding is improper or that this
Agreement may not be enforced in or by such courts.
Service of process given in the manner contemplated by and
pursuant to the notice terms of this Agreement shall constitute valid
service of process upon the parties, their successors and assigns in
any action, suit or proceeding in the Supreme Court of the State of
New York, New York County, or the United States District Court for the
Southern District of New York, or any other tribunal, wherever located
having jurisdiction over the parties or any of their assets or
properties with respect to any matters as to which they have submitted
to jurisdiction as set forth in the immediately preceding paragraph.
(m) Entire Agreement. This Agreement constitutes the entire
agreement of the parties with respect to the subject matter hereof and
supersedes all prior negotiations and agreements.
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(n) Counterparts. This Agreement may be signed in counterparts, each
of which shall be deemed an original but all of which together will
constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered as of the date first above written.
PRICE COMMUNICATIONS CORPORATION
By:
----------------------------
----------------------------
Kim I. Pressman
15
<PAGE> 1
STOCK OPTION AGREEMENT
Agreement dated as of February 10, 1994 between Price
Communications Corporation (the "Company"), a New York corporation with its
principal office at 45 Rockefeller Plaza, New York, New York 10020, and Robert
Price, residing at 25 East 86th Street, Apartment 8D, New York, New York 10028
("Optionee").
1. Grant of Option
The Optionee has been granted, on the terms and conditions set
forth below, options (the "Options") to purchase up to 500,000 shares (the
"Shares") of the Company's Common Stock, par value $.01 (the "Common Stock"),
for a price of $3.75 per share (the "Option Price"). The Options are granted
pursuant to the Company's 1992 Long Term Incentive Plan (the "Plan") and are
subject to the provisions of the Plan, which are incorporated herein by
reference. Unless otherwise specified in this Agreement, all capitalized terms
in this Agreement shall have the same meaning as set forth in the Plan. The
Options, subject to the limits provided for under the Code, are intended to
qualify as Incentive Stock Options. Any portion of the Options that do not
qualify as Incentive Stock Options shall be treated as Non-Qualified Stock
Options.
2. Terms and Conditions of Options
(a) Term of Options
Subject to the provisions of subparagraph 2(c) and paragraph
4, each Option may be exercised at any time in whole or in part, whether or not
the Optionee is employed by the Company at the time of exercise, during the
period (i) beginning on the earlier of (x) the day immediately succeeding the
date on which the average Fair Market Value of the Common Stock for any period
of ten consecutive trading days (i.e., the sum of such Fair Market Values for
such ten days, divided by ten) first equals or exceeds $12 and (y) February 10,
2001, and (ii) terminating on February 10, 2004.
(b) Non-Transferability of Options
The Options shall not be transferable by the Optionee other
than by will or by the laws of descent and distribution, and may be exercised
during the Optionee's lifetime only by the Optionee. If any Options are
exercised after the Optionee's death, the Company may require evidence
reasonably satisfactory to it of the appointment and qualification of the
Optionee's personal representatives and their authority, and of the right of
any heir or distributee to exercise such Options.
<PAGE> 2
(c) Termination of Employment
(i) Incapacity; Good Reason; or Without Cause. If the
Optionee's employment with the Company terminates by reason of (x) Disability
or "physical or mental incapacity" (such term being defined herein as used in
the Employment Agreement (the "Employment Agreement") dated as of May 8, 1992
by and between the Company and Optionee) (any of the foregoing being herein
collectively referred to as "Incapacity"), (y) termination by the Company other
than for Cause, or (z) termination by the Optionee for Good Reason, the Options
shall, notwithstanding any other provision of this Agreement, immediately
become exercisable in full (if not otherwise then exercisable) and may
thereafter be exercised in whole or in part by the Optionee for a period of
three years from the date of such termination or until the expiration of the
remaining term of the Options, whichever is shorter; provided, however, that if
the Optionee dies within such three year period, the Options shall be
exercisable for a period of one year from the date of death or until the
expiration of the remaining term of the Options, whichever is shorter; provided
further, however, that if such termination of employment occurs on or after
February 10, 2001, the options shall remain exercisable until the expiration of
the remaining term of the Options.
(ii) Death. If the Optionee's employment with the Company
terminates by reason of the Optionee's death, the Options shall,
notwithstanding any other provision of this Agreement, become immediately
exercisable in full (if not otherwise then exercisable) and may thereafter be
exercised in whole or in part by the legal representative of the Optionee's
estate for a period of one year from the date of death or until the expiration
of the remaining term of the Options, whichever is shorter; provided, however,
that if the Optionee's death occurs on or after February 10, 2001, the Options
shall remain exercisable until the expiration of the remaining term of the
Options.
(iii) Other Termination. If the Optionee's employment with
the Company terminates by reason of (x) termination by the Company for Cause;
or (y) termination by the Optionee prior to February 10, 2001 other than by
reason of Incapacity or Good Reason, the Options shall thereupon terminate
(provided, however, if the Optionee's employment with the Company terminates by
reason of termination by the Optionee on or after February 10, 2001 other than
by reason of Incapacity or Good Reason, the Options shall remain exercisable
until the expiration of the remaining term of the Options).
(d) Exercise of Options
The Options may be exercised only by written notice to the
Company at its then principal office, Attention: Secretary. Any notice of
exercise of Options shall be accompanied by payment
2
<PAGE> 3
in full of the aggregate Option Price of the Shares being purchased. Payment of
such aggregate Option Price may be made, at the election of the Optionee: (i) in
cash or by check, bank draft or money order payable to the order of the Company,
(ii) through the delivery to the Company of shares of Common Stock owned by the
Optionee (and for which the Optionee has good title free and clear of any liens
and encumbrances) or (if any has been issued to the Optionee under the Plan)
Restricted Stock, or (subject to compliance with such conditions, if any, as are
necessary to prevent the reduction of such shares of Common Stock being subject
to Section 16(b) of the Securities Exchange Act of 1934 ("Section 16(b)") by
reduction in the number of shares of Common Stock issuable upon such exercise,
based, in each case, on the Fair Market Value of the Common Stock on the date of
payment (without regard to any forfeiture restrictions applicable to any
Restricted Stock), or (iii) any combination of the foregoing. The Company shall
have the right to require the Optionee to pay or otherwise satisfy any federal,
state or local taxes required by law to be withheld in connection with such
exercise prior to the issuance of the Shares purchased by such exercise. Subject
to compliance with such conditions, if any, as are necessary to prevent the
withholding of such shares of Common Stock from being subject to Section 16(b),
the Optionee may elect to satisfy such withholding obligation by reducing the
number of shares of Common Stock issuable upon such exercise, based on the Fair
Market Value of the Common Stock on the date of payment.
(e) Issuance of Shares
The Committee may postpone the issuance of Shares for such
reasonable period as will enable the Company to cause a registration statement
with respect to such Shares to be filed or to become or remain effective under
the Securities Act of 1933, as amended, or to cause compliance with applicable
provisions of any state securities laws or the rules and regulations of any
securities exchange on which the Common Stock may be listed. The Optionee
agrees to comply with any and all legal requirements relating to the Optionee's
resale or other disposition of any Shares acquired under this Agreement.
(f) Rights of Shareholder
The Optionee shall acquire none of the rights of a shareholder
of the Company with respect to any Shares under this Agreement unless and until
the Optionee has given written notice of exercise and has paid for such Shares
as provided herein.
3. Adjustment in Case of Changes Affecting Shares
In the event of any change in the capital stock of the Company
by reason of any stock dividend or distribution, stock split or reverse stock
split, recapitalization, reorganization, merger, consolidation, split-up,
combination or exchange of
3
<PAGE> 4
shares, distribution with respect to the outstanding Common Stock or capital
stock other than Common Stock, reclassification of its capital stock, issuance
of warrants or options to purchase any Common Stock or securities convertible
into Common Stock, or rights offering to purchase capital stock at a price below
fair market value, or any similar change affecting the capital stock of the
Company; then the aggregate number and kind of shares that thereafter may be
purchased upon the exercise of the Options, the Option Price and the $12 figure
set forth in Section 2(a) hereof shall be appropriately adjusted consistent with
such change in such manner as the Committee may deem equitable to prevent
substantial dilution or enlargement of the rights granted hereunder, and any
such adjustment determined by the Committee in good faith shall be conclusive
and binding upon the Company, the Optionee and their respective heirs,
executors, administrators, successors and assigns.
4. Change in Control
(a) Exercisability
In accordance with the Plan, in the event of a Change in
Control of the Company, the outstanding Options shall become immediately
exercisable in full (if not otherwise then exercisable), subject to the prior
election by the Company to exercise the right to repurchase the Options
provided in subparagraph 4(b) below.
(b) Buy-Out of Options
In its sole discretion, the Committee may provide for the
purchase of any then outstanding Options by the Company or a Designated
Subsidiary for an amount of cash equal to the excess of (i) the product of the
Change in Control price (as defined below) and the number of Shares subject to
the Options (ii) over the aggregate Option Price of such Options. For purposes
of this subparagraph 4(b), the Change in Control price shall mean the higher of
(i) the highest price per share of Common Stock paid in any transaction related
to a Change in Control of the Company, or (ii) the highest Fair Market Value of
the Common Stock at any time during the 60-day period preceding the Change in
Control.
(c) Parachute Payments
In the event that any benefits to the Optionee under this
Agreement, either alone or together with any other payments or benefits
otherwise owed to the Optionee by the Company or a Designated Subsidiary on or
after a Change in Control would, in the Board of Directors' good faith opinion,
be deemed under Section 280G of the Code, or any successor provision, to be
parachute payments, the benefits under this Plan shall be reduced to the extent
necessary, in the Board of Directors' good faith opinion, so that no portion of
the benefits provided herein shall
4
<PAGE> 5
be considered excess parachute payments under Section 280G of the Code or any
successor provision. The Board of Directors' good faith opinion shall be
conclusive and binding upon the Optionee.
5. Certain Definitions. For purposes of this Agreement:
(a) "Cause" shall mean any of the following, (i) Optionee's commission
of any felony or any misdemeanor that involves fraud, moral turpitude or
material loss to the Company or any subsidiary thereof or its business or
reputation, (ii) Optionee's embezzlement or misappropriation of funds or
property of the Company or any subsidiary thereof, (iii) Optionee's being
sanctioned by state or federal authorities for material violation of laws,
rules or regulations applicable to the Company's or any subsidiary's conduct of
its business, (iv) Optionee's willful misconduct in the performance of the
duties and obligations reasonably assigned to him by the Company's Board of
Directors which is materially adverse to the Company or any subsidiary thereof,
provided that such duties and obligations are consistent with his employment as
the Chairman of the Board, President and Chief Executive Officer of the
Company, include the supervision and control over, and complete responsibility
for, the general management and operation of the Company and its subsidiaries
(collectively, the "Companies"), are substantially and reasonably consistent
with Optionee's duties with the Companies prior to the date of this Agreement,
and are of the type usually assigned to the Chairman of the Board and the
President and Chief Executive Officer in charge of companies similar to the
Company, or (v) the Optionee's unreasonable neglect or refusal to perform such
duties (unless significantly changed without his consent). No act, or failure
to act, on the Optionee's part shall be considered "willful" unless done, or
omitted from being done, without good faith and without reasonable belief that
the act or omission was in the best interest of the Company. Any termination
of the Optionee's employment by the Company as a result of Incapacity, whether
or not constituting Disability, or for any reason other than those specifically
enumerated above, shall be deemed to be termination other than for Cause.
(b) "Good Reason" shall mean the occurrence of any of the events or
conditions described in clauses (i) - (v) hereof. (The enumeration of such
events shall not imply that they are permitted under any employment or other
applicable agreement between the Company and the Optionee.)
(i) A material change in the Optionee's title, position or
responsibilities (including reporting responsibilities) which
represents an adverse change from his title, position or
responsibilities as in effect on the date of this Agreement, or the
assignment to Optionee of any duties or responsibilities which are
inconsistent with his title, position of responsibilities as in
effect on the date of this Agreement;
5
<PAGE> 6
(ii) A reduction in the Optionee's base salary or other compensation or
benefits, or any failure to pay or deliver to the Optionee any
cash, stock or other compensation or benefits to which he is
entitled within ten (10) days of the date due;
(iii) The Company's requiring the Optionee to be based in any place
outside of New York City, except for reasonably required travel on
the Company's business; or
(iv) The failure to elect to the Board of Directors or maintain in
office at all times three directors designated by the Optionee
(including the Optionee) during the three year period commencing on
the Effective Date (as defined in the Employment Agreement) or to
comply with any provisions of this Agreement or any of the
provisions of the Employment Agreement; or
(v) In the case of any merger, consolidation or reorganization
occurring prior to the third anniversary of the Effective Date
involving the Company, the failure of the Optionee and the
surviving corporation to agree upon a new and mutually satisfactory
employment agreement.
6. General
(a) This Agreement shall be interpreted in accordance with the
terms of the Plan. Subject to the next sentence below, in the event of any
conflict between the terms of the Plan and this Agreement, the terms of the
Plan shall be controlling. To the extent that any of the terms of Section 2
hereof vary from those otherwise provided in Article SIX of the Plan, such
variations were expressly provided for by the Committee at the time of grant in
accordance with said Article SIX.
(b) Any communication in connection with this Agreement shall be
deemed duly given when delivered in person or three days after being mailed by
certified or registered mail, return receipt requested, to the Optionee at his
or her address listed above or such other address of which Optionee shall have
advised the Company by similar notice; or to the Company at its then principal
office: Attention: Secretary.
(c) This Agreement (which incorporates the provisions of the Plan)
sets forth the parties' final and entire agreement with respect to its subject
matter, may not be changed or terminated orally, and shall be governed by and
construed in accordance with the internal laws of the State of New York,
regardless of the law that might otherwise govern under applicable New York
principles of conflict of laws. This agreement shall bind and benefit the
Optionee and the heirs, distributees and personal representatives of the
Optionee, and the Company and its successors and assigns.
6
<PAGE> 7
IN WITNESS WHEREOF, the parties have duly executed this
Agreement on the date first above written.
PRICE COMMUNICATIONS CORPORATION
By
-----------------------------
Secretary
-----------------------------
Robert Price
7
<PAGE> 1
Exhibit 21
SUBSIDIARIES*
-------------
Atlas Broadcasting Corporation (New York)
Atlantic Broadcasting Corporation
Republic Broadcasting Corporation (New York)
Dane Broadcasting Corporation
Empire State Broadcasting Corporation
Gulf Coast Broadcasting Corporation
Huntington Broadcasting Corporation
United Radio Corporation
Wayne Broadcasting Corporation (Indiana)
Federal Broadcasting Corporation (New York)
Cardinal Broadcasting Corporation
Keystone Broadcasting Corporation
Eagle Broadcasting Corporation
Western Michigan Broadcasting Corporation
Rhode Island Broadcasting Corporation
Continental Broadcasting Corporation
Old North Broadcasting Corporation (West Virginia)
Magnolia Broadcasting Corporation (Mississippi)
Southeast Texas Broadcasting Corporation (Texas)
Texoma Broadcasting Corporation (Texas)
Tri-State Broadcasting Corporation
Price Acquisition Corp.
WHTM-TV, Inc. (Pennsylvania)
Price Outdoor Media Corporation of America
Price Outdoor Media of Missouri, Inc.
Apple Publishing Corporation
The Red Bank Register (New Jersy)
* all incorporated in Delaware except as otherwise indicated.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A) 10-K AND
IS QUALIFIED IN ITS ENTIRELY BY REFERENCE TO SUCH (B)
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<CASH> 1,136
<SECURITIES> 0
<RECEIVABLES> 5,468
<ALLOWANCES> 395
<INVENTORY> 0
<CURRENT-ASSETS> 9,092
<PP&E> 13,701
<DEPRECIATION> 2,201
<TOTAL-ASSETS> 90,852
<CURRENT-LIABILITIES> 9,076
<BONDS> 21,310
<COMMON> 90
0
0
<OTHER-SE> 38,989
<TOTAL-LIABILITY-AND-EQUITY> 90,852
<SALES> 0
<TOTAL-REVENUES> 28,053
<CGS> 0
<TOTAL-COSTS> 4,014
<OTHER-EXPENSES> 19,435
<LOSS-PROVISION> 1,057
<INTEREST-EXPENSE> 1,459
<INCOME-PRETAX> 16,076
<INCOME-TAX> 1,653
<INCOME-CONTINUING> 14,424
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14,424
<EPS-PRIMARY> 1.44
<EPS-DILUTED> 1.44
</TABLE>
