FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commission File No. 0-12404
JACOR COMMUNICATIONS, INC.
A Delaware Corporation Employer Identification
No. 31-0978313
Commission File No. 1-8283
CITICASTERS INC.
(Successor by merger to JCAC, Inc.)
A Florida Corporation Employer Identification
No. 59-2054850
1300 PNC Center
201 East Fifth Street
Cincinnati, Ohio 45202
Telephone (513) 621-1300
Indicate by check mark whether the Registrant, Jacor
Communications, Inc.,
(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 twelve months (or for such shorter period that the
Registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past ninety
days.
Yes X No
Indicate by check mark whether the Co-Registrant,
Citicasters Inc. (the successor by merger to JCAC, Inc.),
(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 twelve months (or for such shorter period that the
Co-Registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past
ninety days.
Yes X No
Indicate by check mark whether the Co-Registrant has filed
all documents and reports required to be filed by Section
12, 13 or 15(d) of the Securities Exchange Act of 1934
subsequent to the distribution of securities under a plan
confirmed by a court.
Yes X No
At November 1, 1996, 31,254,338 shares of the Registrant's
common stock were outstanding. At November 1, 1996, 100
shares of the Co-Registrant's common stock were outstanding,
all of which shares are owned by the Registrant.
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
(the "Company")
INDEX
Page
Number
PART I. Financial Information
Item 1. - Financial Statements
Condensed Consolidated Balance Sheets
as of September 30, 1996 and December 31,
1995 3
Condensed Consolidated Statements of
Operations for the three months and
nine months ended September 30, 1996
and 1995 4
Condensed Consolidated Statements of
Cash Flows for the nine months ended
September 30, 1996 and 1995 5
Notes to Condensed Consolidated Financial
Statements 6
Item 2. - Management's Discussion and Analysis
of Financial Condition and Results of
Operations 14
PART II. Other Information
Item 5. - Other Information 21
Item 6. - Exhibits and Reports on Form 8-K 38
Signatures 40
<TABLE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In thousands, except share data)
<CAPTION>
September 30, December 31,
1996 1995
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 52,821 $ 7,437
Accounts receivable, less allowance for
doubtful accounts of $3,877 in 1996
and $1,606 in 1995 70,782 25,262
Other current assets 12,897 3,916
Total current assets 136,500 36,615
Property and equipment, net 141,259 30,801
Intangible assets, net 1,341,430 127,158
Other assets 98,032 14,265
Total assets $ 1,717,221 $ 208,839
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable, accrued expenses
and other current liabilities $ 51,898 $ 12,180
Total current liabilities 51,898 12,180
Long-term debt 626,250 45,500
5.5% Liquid Yield Option Notes 117,090 -
Deferred taxes and other liabilities 393,728 12,086
Shareholders' equity:
Common stock, $.01 par value 312 182
Additional paid-in capital 430,307 118,248
Common stock warrants 72,644 388
Retained earnings 24,992 20,255
Total shareholders' equity 528,255 139,073
Total liabilities and
shareholders' equity $ 1,717,221 $ 208,839
The accompanying notes are an integral part
of the condensed consolidated financial statements.
</TABLE>
<TABLE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the three months and nine months ended September 30, 1996 and 1995
(In thousands, except per share amounts)
(UNAUDITED)
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Broadcast revenue $ 60,143 $ 36,116 $ 142,176 $ 97,648
Less agency commissions 5,817 3,822 14,656 10,472
Net revenue 54,326 32,294 127,520 87,176
Broadcast operating expenses 38,273 23,129 91,694 65,241
Depreciation and amortization 5,166 2,442 10,601 6,783
Corporate general and
administrative expenses 1,658 824 4,080 2,564
Operating income 9,229 5,899 21,145 12,588
Interest expense (6,844) (384) (13,397) (593)
Gain on sale of radio stations - - 2,539 -
Other income, net 3,160 348 4,701 1,052
Income before income taxes
and extraordinary loss 5,545 5,863 14,988 13,047
Income taxes 3,445 2,375 7,285 5,279
Income before
extraordinary loss 2,100 3,488 7,703 7,768
Extraordinary loss, net of
income tax credit (2,015) - (2,966) -
Net income $ 85 $ 3,488 $ 4,737 $ 7,768
NET INCOME PER COMMON SHARE:
Before extraordinary loss $ 0.06 $ 0.17 $ 0.31 $ 0.37
Extraordinary loss (0.06) - (0.12) -
Net income per common share $ 0.00 $ 0.17 $ 0.19 $ 0.37
Number of common shares used
in per share computations 33,303 21,009 24,880 21,136
The accompanying notes are an integral
part of the condensed consolidated financial statements.
</TABLE>
<TABLE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
for the nine months ended September 30, 1996 and 1995
(In thousands)
(UNAUDITED)
<CAPTION>
1996 1995
Cash flows from operating activities:
<S> <C> <C>
Net income $ 4,737 $ 7,768
Adjustments to reconcile net income
to net cash used by operating activities:
Depreciation 3,989 2,306
Amortization of intangibles 6,612 4,476
Extraordinary loss 2,966
Non-cash interest expense 2,525
Deferred income tax provision (benefit) 636 (352)
Gain on sale of radio stations (2,539)
Other (201) 197
Change in current assets and current
liabilities net of effects of
acquisitions and disposals:
Accounts receivable (7,769) (1,146)
Other current assets (2,556) (265)
Accounts payable, accrued expenses
and other current liabilities 9,256 3,976
Net cash provided by operating activities 17,656 16,960
Cash flows from investing activities:
Capital expenditures (7,506) (3,664)
Cash paid for acquisitions (827,941) (33,338)
Purchase of intangible assets - (15,183)
Proceeds from sale of radio stations 6,595 -
Loans originated and other (7,147) (4,397)
Net cash used by investing activities (835,999) (56,582)
Cash flows from financing activities:
Proceeds from issuance of long-term debt 703,000 33,500
Proceeds from issuance of LYONs 115,172 -
Proceeds from issuance of common stock 317,109 254
Repayment of long-term debt (248,500)
Repurchase of common stock - (15,076)
Repurchase of warrants (1,379) -
Payment of finance costs (21,342) -
Other (333) (375)
Net cash provided by financing
activities 863,727 18,303
Net increase (decrease) in cash and
cash equivalents 45,384 (21,319)
Cash and cash equivalents at
beginning of period 7,437 26,975
Cash and cash equivalents at end of period $ 52,821 $ 5,656
The accompanying notes are an integral part
of the condensed consolidated financial statements.
</TABLE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. FINANCIAL STATEMENTS
The December 31, 1995 consolidated balance sheet data
was derived from audited financial statements, but does
not include all disclosures required by generally
accepted accounting principles. The financial
statements included herein have been prepared by the
Company, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission.
Although certain information and footnote disclosures
normally included in financial statements prepared in
accordance with generally accepted accounting
principles have been condensed or omitted pursuant to
such rules and regulations, the Company believes that
the disclosures are adequate to make the information
presented not misleading and reflect all adjustments
(consisting only of normal recurring adjustments) which
are necessary for a fair presentation of results of
operations for such periods. Results for interim
periods may not be indicative of results for the full
year. It is suggested that these financial statements
be read in conjunction with the consolidated financial
statements for the year ended December 31, 1995 and the
notes thereto.
2. ACQUISITIONS
Completed Acquisitions
In February 1996, the Company agreed to acquire Noble Br
oadcast Group, Inc. ("Noble"), for approximately $152
million in cash plus related costs and expenses. Noble
owned ten radio stations serving Denver (two AM and two
FM), St. Louis (one AM, two FM) and Toledo (one AM, two
FM).
The Company entered into an agreement with the
stockholders of Noble to acquire all of the outstanding
capital stock of Noble for approximately $12.5 million.
At the same time, the Company also purchased a warrant
for approximately $52.8 million entitling the Company
to acquire a 79.1% equity interest in Noble (the "Noble
Warrant"). On July 15, 1996, the Company consummated
the purchase of the outstanding Noble capital stock
from the Noble stockholders and exercised the Noble
Warrant, resulting in the Company owning 100% of the
equity interests in Noble.
Also, in February 1996, a wholly owned subsidiary of
the Company purchased for approximately $47 million
certain assets from Noble relating to Noble's San Diego
operations. As part of Noble's San Diego operations,
Noble provided programming to and sold the air time for
two radio stations serving San Diego (one AM, one FM),
which programming and air time is now provided and sold
by the Company. In addition, another wholly owned
subsidiary of the Company provided a credit facility to
Noble in the amount of $41 million of which $40 million
was drawn down. Such amount became part of the purchase
consideration upon consummation of the transaction on
July 15, 1996.
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
2. Completed Acquisitions, Continued
In February 1996, the Company entered into an agreement
to acquire Citicasters Inc. ("Citicasters") through a
merger of Citicasters with and into a wholly owned
Jacor subsidiary (the "Citicasters Merger").
Citicasters owned and/or operated 19 radio stations,
located in Atlanta, Phoenix, Tampa, Portland, Kansas
City, Cincinnati, Sacramento, Columbus and two
television stations, one located in Tampa and one in
Cincinnati. The Company consummated the Citicasters
Merger in September 1996 for an approximate aggregate
value of $847.3 million, which included the purchase of
all outstanding shares of Citicasters common stock, the
assumption of Citicasters outstanding indebtedness and
the issuance of warrants to purchase an aggregate of
4,400,000 shares of Common Stock. Each Citicasters
Warrant is exercisable for .2035247 of a share of the
Company's common stock at an exercise price of $28.00
per full share.
In March 1996, the Company entered into an agreement to
acquire the FCC licenses of WCTQ-FM and WAMR-AM in
Venice, Florida and to purchase certain real estate and
transmission facilities necessary to operate the
stations. In June 1996, the Company consummated this
acquisition for a purchase price of approximately $4.4
million.
In June 1996, the Company entered into an agreement to
acquire the FCC licenses of WLAP-AM, WMXL-FM and WWYC-
FM in Lexington, Kentucky and to purchase real estate
and transmission facilities necessary to operate the
stations. In August 1996, the Company consummated this
acquisition for a purchase price of approximately $14.0
million.
In June 1996, the Company financed the purchase by
Critical Mass Media, Inc. ("CMM") of a 40% interest in
a newly formed limited liability company which
purchased for $540,000 the assets of Duncan American
Radio, Inc. CMM is a marketing research and radio
consulting business which is owned by a limited
partnership of which the Company is the 5% general
partner and a corporation wholly owned by Randy
Michaels, the Chief Executive Officer of the Company,
is the 95% limited partner.
The completed acquisitions are accounted for as
purchases.
The excess cost over the fair value of identifiable
net assets acquired will be amortized over 40 years.
Assuming each of these acquisitions had taken place
at the beginning of 1996 and 1995, respectively,
unaudited pro forma consolidated results of
operations would have been as follows (in thousands
except per share amounts):
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
2. Completed Acquisitions, Continued
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
Net revenue $ 85,887 $ 79,171 $242,548 $225,259
Loss before
extraordinary
items (1,817) (846) (4,487) (7,234)
Net loss per
share $ (0.06) $ (0.03) $ (0.14) $ (0.23)
Pending Acquisitions
In May 1996, the Company entered into an agreement to
acquire the FCC licenses and certain operating assets
of WIOT-FM and WCWA-AM in Toledo, Ohio for $13 million
in cash, which funds have been placed in escrow pending
the closing of the transaction. Subject to certain
conditions, pending the closing of this transaction,
the Company has entered into a time brokerage agreement
with respect to these stations.
In July 1996, the Company entered into an agreement
with New Wave Communications, L.P. and New Wave
Broadcasting, Inc. to acquire the FCC licenses of WSPB-
AM, WSRZ-FM and WYNF-FM in Sarasota, Florida and to
purchase certain real estate and transmission
facilities necessary to operate the stations. The
purchase price for the assets is $12.5 million, of
which $3 million has been placed in escrow, subject to
a maximum purchase price of $15.0 million based on the
timing of the closing.
In September 1996, the Company entered into a binding
agreement with a subsidiary of Gannett Co., Inc.
("Gannett") to effect an exchange of the Company's
Tampa television station, WTSP-TV, acquired by the
Company in the Citicasters Merger, for six of Gannett's
radio stations (the "Gannett Exchange"). The stations
to be acquired by the Company are KIIS-FM and KIIS-AM
in Los Angeles, KSDO-AM and KKBH-FM in San Diego and
WDAE-AM in Tampa-St. Petersburg. The Company will also
acquire the licenses and operating assets of WUSA-FM in
Tampa-St. Petersburg while Gannett will retain the call
letters. The assets to be exchanged are valued by the
Company and Gannett at approximately $190.0 million.
The Company anticipates that this transaction will
constitute a tax-free like-kind exchange.
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Pending Acquisitions, Continued
In October 1996, the Company entered into a definitive
merger agreement with Regent Communications, Inc.
("Regent") whereby Regent will merge with and into the
Company (the "Regent Merger"). Regent owns, operates
or represents 20 radio stations located in Kansas City,
Salt Lake City, Las Vegas, Louisville and Charleston,
S.C. The merger consideration to be paid by the
Company to the Regent stockholders consists of 3.55
million shares of Common Stock, subject to adjustment
pursuant to the terms of the merger agreement, up to
$64.0 million in cash to be used to repay outstanding
Regent indebtedness, and warrants to acquire an
aggregate of 500,000 shares of Common Stock at an
exercise price of $40 per full share. In the event
that the value of the Common Stock to be received by
the Regent stockholders is less than $116.0 million, at
the Company's option: (a) Jacor may make up the
difference by the delivery of additional shares of
Common Stock; (b) pay the difference in cash; or (c)
pay all of the merger consideration in cash.
In October 1996, the Company also entered into binding
agreements with Par Broadcasting Company ("Par") to
purchase four radio stations in San Diego, KOGO-AM,
KCBQ-AM, KIOZ-FM and KKLQ-FM, for $72.0 million in cash
and with Entertainment Communications, Inc.
("Entercom") to sell the Company's two radio stations
in Sacramento, KSEG-FM and KRXQ-FM, for $45.0 million
in cash. Approximately $3.7 million of the purchase
price has been placed in escrow. Although these
transactions are not directly contingent upon each
other, the Company anticipates that these transactions
will occur in a manner that permits the transactions to
be treated as a tax-free like-kind exchange. Par has
entered into a Local Marketing Agreement ("LMA") with
the Company such that the Company will commence
operating the San Diego stations upon the expiration or
termination of the applicable waiting periods under the
Hart Scott Rodino Antitrust Improvements Act of 1976,
as amended ("HSR Act"). The Company has entered into
an LMA with Entercom such that Entercom will commence
operating the Sacramento stations upon the expiration
or termination of the applicable waiting periods under
the HSR Act.
In October 1996, the Company entered into a binding
exchange agreement with Nationwide Communications, Inc.
("Nationwide") whereby the Company will exchange the
assets of its two radio stations in Phoenix, KSLX-AM
and KSLX-FM, for the assets of Nationwide's two radio
stations in San Diego, KGB-FM and KPOP-AM. The assets
to be exchanged are valued by the Company and
Nationwide at approximately $45.0 million. The Company
anticipates that this transaction will constitute a tax-
free like-kind exchange. This transaction is
contingent upon the successful closing of Nationwide's
agreement to purchase KGB-FM and KPOP-AM from KGB, Inc.
Nationwide has assigned to the Company its rights under
an LMA with KGB, Inc. such that the Company will
commence operating the San Diego stations upon the
expiration or termination of the applicable waiting
periods under the HSR Act. The Company has entered
into an LMA with Nationwide such that Nationwide will
commence operating the Phoenix stations upon the
expiration or termination of the applicable waiting
periods under the HSR Act. In connection with entering
into the exchange agreement with Nationwide, the
Company also announced that it intends to sell KCBQ-AM
in San Diego, upon its acquisition from Par, to EXCL
Communications, Inc. ("EXCL") for $6.0 million in cash.
No binding agreement has yet been entered into with
EXCL.
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Pending Acquisitions, Continued
In addition, in October 1996, Jacor entered into three
separate binding agreements with three unaffiliated
radio broadcast companies whereby the Company will
acquire the FCC licenses and assets of a total of nine
radio stations. These agreements are with Palmer
Broadcasting Limited Partnership ("Palmer") to acquire
WHO-AM and KLYF-FM in Des Moines and WMT-AM and WMT-FM
in Cedar Rapids for a purchase price of $52.5 million,
providing the Company with a leading position with four
powerful broadcast signals; with Clear Channel Radio,
Inc. to purchase KTWO-AM, KMGW-FM and the Wyoming Radio
Network, in Casper, Wyoming for a purchase price of
$1.9 million; and with Colfax Communications to acquire
KIDO-AM and KLTB-FM in Boise, Idaho and KARO-FM in
Caldwell, Idaho for a purchase price of $11.0 million
in cash. An aggregate of $5.9 million has been placed
in escrow in connection with these acquisitions.
3. OTHER ASSETS
The Company's other assets at September 30, 1996 and
December 31, 1995 consist of the following (in thousands):
September 30, December 31,
1996 1995
New World Warrants $ 39,800 $ -
Hanna Barbera Escrow 13,700 -
Acquisition escrows 16,000 -
Other 28,532 14,265
$ 98,032 $ 14,265
The New World Warrants and Hanna Barbera Escrow were
included in the Citicasters acquisition. The Hanna Barbera Escrow is
expected to be received in December 1996. Terms of the New World
Warrants allow the Company to purchase 5 million shares of New World
Common Stock at $16.00 per share until September 1999.
4. LONG-TERM DEBT
The Company's debt obligations at September 30, 1996
and December 31, 1995 consist of the following (in thousands):
September 30, December 31,
1996 1995
Credit facility borrowings $ 400,000 $ 45,000
9 3/4% Senior Subordinated Notes 126,250
10 1/8% Senior Subordinated
Notes, due 2006 $ 100,000 -
$ 626,250 $ 45,000
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
4. LONG-TERM DEBT, Continued
Former Credit Facility
On February 20, 1996 the Company entered into a credit
facility (the "Former Credit Facility") with a group of
banks. The Company borrowed approximately $200 million
under the facility in conjunction with the Noble and
other acquisitions. In June 1996, outstanding
borrowings were repaid from a portion of the proceeds
from public debt and common stock offerings (see notes
4, 5 and 6).
New Credit Facility
In June 1996, the Company entered into a new credit
facility (the "New Credit Facility"). The New Credit
Facility is with a syndicate of banks and other
financial institutions. The New Credit Facility
provides availability of up to $600 million of loans in
three components: (i) a revolving credit facility of up
to $200 million with mandatory semi-annual commitment
reductions beginning in December 1998 and a final
maturity date of October 21, 2003; (ii) a term loan of
up to $300 million with scheduled semi-annual
reductions beginning December 1997 and a final maturity
date of September 18, 2003; and (iii) a term loan of up
to $100 million with scheduled semi-annual reductions
beginning December 1998 and a final maturity date of
September 18, 2004.
Borrowings under the New Credit Facility bear interest
at rates that fluctuate with a bank base rate and/or
the Eurodollar rate. The weighted average interest
rate at September 30, 1996 was 7.73%.
Loans under the New Credit Facility are guaranteed by
the Company and each of the Company's direct and
indirect subsidiaries other than certain immaterial
subsidiaries. The Company's obligations with respect
to the New Credit Facility and each guarantor's
obligations with respect to the related guaranty is
collateralized by substantially all of their respective
assets, and, in the case of the Company's subsidiaries,
capital stock.
The New Credit Facility contains covenants and
provisions that restrict, among other things, the
Company's ability to: (i) incur additional
indebtedness; (ii) incur liens on its property; (iii)
make investments and advances; (iv) enter into
guarantees and other contingent obligations; (v) merge
or consolidate with or acquire an other person or
engage in other fundamental changes; (vi) engage in
certain sales of assets; (vii) make capital
expenditures; (viii) enter into leases; (ix) engage in
certain transactions with affiliates; and (x) make
restricted junior payments. The New Credit Facility
also requires satisfaction of certain financial
performance criteria (including a consolidated interest
coverage ratio, a leverage-to-operating cash flow ratio
and a consolidated operating cash flow available for
fixed charges ratio) and the repayment of loans under
the New Credit Facility with proceeds of certain sales
of assets and debt issuances, and with 50% of the
Company's Consolidated Excess Cash Flow (as defined in
the New Credit Facility).
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
4. LONG-TERM DEBT, Continued
10 1/8% Senior Subordinated Notes Due 2006
In June 1996, the Company completed an offering of $100
million of its 10 1/8% Senior Subordinated Notes (the
"Notes"). The Notes will mature on June 15, 2006.
Interest on the Notes is payable semi-annually on June
15 and December 15 of each year, commencing December
15, 1996. The Company will not be required to make any
mandatory redemption or sinking fund payment with
respect to the Notes prior to maturity. The Notes will
be redeemable at the option of the Company, in whole or
in part, at any time on or after June 15, 2001. The
redemption prices commence at 105.063% and are reduced
by 1.688% annually until June 15, 2004 when the
redemption price is 100%.
The Notes are general, unsecured obligations of the
Company subordinated in right of payment to all senior
debt of the Company including the New Credit Facility.
The Note Indenture contains certain covenants which
impose certain limitations and restrictions on the
ability of the Company to incur additional
indebtedness, pay dividends or make other
distributions, make certain loans and investments,
apply the proceeds of asset sales (and use the proceeds
thereof), create liens, enter into certain transactions
with affiliates, merge, consolidate or transfer
substantially all its assets and make investments in
unrestricted subsidiaries.
9 3/4% Senior Subordinated Notes
In September 1996, as a result of the merger with
Citicasters, the Company assumed obligations of
Citicasters' outstanding 9 3/4% Senior Subordinated
notes due 2004 (the "9 3/4% Notes"). As a result of a
change of control covenant in the 9 3/4% Notes, the
holders had the option to cause the Company to purchase
the 9 3/4% Notes at 101%, and in October 1996,
approximately $107 million par value of the 9 3/4%
Notes were put to the Company pursuant to this
covenant.
5. LIQUID YIELD OPTION NOTES
In June 1996, the Company issued 5.5% Liquid Yield
Option Notes ("LYONs") due 2011 in the aggregate
principal amount at maturity of $259,900,000. Each
LYON had an issue price of $443.14 and a principal
amount at maturity of $1,000. At September 30, 1996
the accreted value of the LYONs was $117.1 million
which included $1.6 million of accretion during the
third quarter.
Each LYON is convertible, at the option of the Holder,
at any time on or prior to maturity, unless previously
redeemed or otherwise purchased, into Common Stock at a
conversion rate of 13.412 shares per LYON.
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
5. LIQUID YIELD OPTION NOTES, Continued
The LYONs are not redeemable by the Company prior to
June 12, 2001. Thereafter, the LYONs are redeemable
for cash at any time at the option of the Company, in
whole or in part, at redemption prices equal to the
issue price plus accrued original issue discount to the
date of redemption.
The LYONs will be purchased by the Company, at the
option of the Holder, on June 12, 2001 and June 12,
2006, for a Purchase Price of $581.25 and $762.39
(representing issue price plus accrued original issue
discount to each date), respectively, representing a
5.50% yield per annum to the Holder on such date,
computed on a semiannual bond equivalent basis. The
Company, at its option, may elect to pay the purchase
price on any such purchase date in cash or Common
Stock, or any combination thereof.
6. CAPITAL STOCK
Issuance of Additional Common Stock
In June 1996, the Company issued pursuant to a public
offering (the "1996 Stock Offering"), 11,250,000 shares
of its Common Stock at a price of $28.00 per share.
Net proceeds to the Company from this 1996 Offering
were approximately $303.6 million. The Company used a
portion of the net proceeds to repay all of its
indebtedness under the Former Credit Facility
(approximately $196.5 million).
1993 Warrants
In connection with the 1996 Stock Offering, the Company
determined that it would convert the 1,983,605
outstanding 1993 Warrants into the right to receive the
Fair Market Value (as defined in the 1993 Warrant)
calculated to be $19.70 per Warrant. This resulted in
the issuance by the Company of an additional 1,726,004
shares of Common Stock with proceeds aggregating
approximately $14.3 million. The Company used
approximately $5.1 million of these proceeds to fund
the conversion of the remaining 1993 Warrants presented
for redemption.
Citicasters Warrants
The Company issued the Citicasters Warrants pursuant to
the terms of the Citicasters Merger Agreement. If all
of the Citicasters Warrants are exercised, 4,400,000
shares of Common Stock would be issued. Each
Citicasters Warrant initially entitles the holder
thereof to purchase .2035247 of a share of Common Stock
at a price of $28.00 per full share through September
18, 2001.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
Completed Acquisitions
In March 1996, the Company entered into an agreement to
acquire the FCC licenses of WCTQ-FM and WAMR-AM in Venice,
Florida and to purchase certain real estate and transmission
facilities necessary to operate the stations. In June 1996,
the Company consummated this acquisition for a purchase
price of approximately $4.4 million.
In June 1996, the Company entered into an agreement to
acquire the FCC licenses of WLAP-AM, WMXL-FM and WWYC-FM in
Lexington, Kentucky and to purchase real estate and
transmission facilities necessary to operate the stations.
In August 1996, the Company consummated this acquisition for
a purchase price of approximately $14.0 million.
In July 1996, the Company completed the acquisition of
Noble, which owned ten radio stations serving Denver, St.
Louis and Toledo. Previously, the Company purchased Noble's
operating assets in San Diego which included an exclusive
sales agency agreement under which Noble, and now the
Company, provides programming to and sells air time for two
radio stations serving San Diego (XTRA-AM and XTRA-FM). The
aggregate value of the completed Noble acquisition is
approximately $160.0 million, including related fees and
expenses.
In September 1996, the Company completed the acquisition of
Citicasters through a merger of Citicasters with and into a
wholly owned Jacor subsidiary. Citicasters owned and/or
operated 19 radio stations, located in the United States in
Atlanta, Phoenix, Tampa, Portland, Kansas City, Cincinnati,
Sacramento, Columbus and two television stations, one
located in Tampa and one in Cincinnati. The Company
consummated the Citicasters merger for an approximate
aggregate value of $847.3 million, which included (i) the
purchase of all outstanding shares of Citicasters common
stock at $29.50 per share for approximately $624.5 million
in cash, (ii) the assumption of Citicasters
9 3/4% notes ($125 million), (iii) the payoff of Citicasters
outstanding bank loan ($20 million), and (iv) the issuance
of warrants to purchase an aggregate of 4.4 million shares
of common stock (valued at $72.6 million).
Citicasters' outstanding 9 3/4% Notes became obligations of
the surviving corporation in the merger. As a result of a
change in control covenant in the indenture pursuant to
which such Notes were issued, the holders of the 9 3/4%
Notes were permitted to cause the Company to purchase the
Notes at 101% of the principal amount thereof. In October
1996, approximately $107 million of the 9 3/4% notes were
put to the Company pursuant to the change in control
covenant. The put was funded from borrowings under the New
Credit Facility.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
Completed Acquisitions, Continued
The completed acquisitions were funded as follows: (i)
$303.6 million proceeds from the public offering of 11.25
million shares of Common Stock, (ii) $115.2 million in
proceeds from the Liquid Yield Option Notes public offering,
(iii) $100.0 million from the 10 1/8% Senior Subordinated
Notes public offering, and (iv) $400 million in borrowings
under the New Credit Facility.
Pending Acquisitions
In September 1996, the Company entered into a binding
agreement with a subsidiary of Gannett to effect an exchange
of the Company's Tampa television station. WTSP-TV was
acquired by the Company in the Citicasters Merger, for six
of Gannett's radio stations. The stations to be acquired by
the Company are KIIS-FM and KIIS-AM in Los Angeles, KSDO-AM
and KKBH-FM in San Diego and WDAE-AM in Tampa-St.
Petersburg. The Company will also acquire the licenses and
operating assets of WUSA-FM in Tampa-St. Petersburg while
Gannett will retain the call letters. The exchange will
enhance the Company's existing station portfolios in San
Diego and Tampa and will create a new multiple radio station
platform in the Los Angeles broadcast area. The assets to
be exchanged are valued by the Company and Gannett at
approximately $190.0 million. The Company anticipates that
this transaction will constitute a tax-free like-kind
exchange.
In October 1996, the Company entered into a definitive
merger agreement with Regent whereby Regent will merge with
and into the Company. Regent owns, operates or represents
20 radio stations located in Kansas City, Salt Lake City,
Las Vegas, Louisville and Charleston. The merger
consideration to be paid by the Company to the Regent
stockholders consists of 3.55 million shares of Common Stock
and up to $64.0 million in cash to be used to repay
outstanding Regent indebtedness, and warrants to acquire an
aggregate of 500,000 shares of Common Stock at an exercise
price of $40 per full share, subject to adjustment pursuant
to the terms of the merger agreement. In the event that the
value of the Common Stock to be received by the Regent
stockholders is less than $116.0 million, at the Company's
option: (a) the Company may make up the difference by the
delivery of additional shares of Common Stock; (b) pay the
difference in cash; or (c) pay all of the merger
consideration in cash.
The Company also has acquisitions pending in the following
markets: (i) in Sarasota, Florida, (ii) Toledo, Ohio, (iii)
San Diego, California, (iv) Des Moines and Cedar Rapids,
Iowa, (v) Casper, Wyoming, (vi) and Boise, Idaho. The net
cash to be paid for these acquisitions after giving effect
to escrow deposits of $25.6 million, totals approximately
$150 million.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
Credit Facilities and Other
In June 1996, the Company entered into the New Credit
Facility which provides for availability of $600.0 million
pursuant to a $200.0 million reducing revolving facility
under which the aggregate commitments would reduce on a semi-
annual basis commencing in December 1998; a $300.0 million
amortizing term loan that would reduce on a semi-annual
basis commencing in December 1997; and a $100.0 million
amortizing term loan that would reduce on a semi-annual
basis commencing in December 1998. The New Credit Facility
bears interest at floating rates based on a Eurodollar rate
or a bank base rate. The New Credit Facility also provides
the Company with additional credit for future acquisitions
as well as working capital and other general corporate
purposes. As of November 1, 1996 the Company had incurred
$500.0 million of outstanding indebtedness under the New
Credit Facility.
The pending acquisitions will be primarily funded by the
remaining $100 million available under the New Credit
Facility and excess cash on hand, which will include the
Hanna Barbera Escrow proceeds of $13.7 million which will be
received during the fourth quarter. The Company believes
that various sources are available for the additional funds
required to complete the acquisitions and is currently
exploring those alternatives. Such alternatives include
increased availability under the Company's credit facilities
as well as the possible issuance of additional equity and/or
debt securities of the Company.
The issuance of additional debt will negatively impact the
Company's debt-to-equity ratio and its results of operations
and cash flows due to higher amounts of interest expense,
although the issuance of additional equity will soften this
impact to some extent.
RESULTS OF OPERATIONS
In the following analysis, management discusses station
operating income excluding depreciation and amortization.
Station operating income excluding depreciation and
amortization should not be considered in isolation from, or
as a substitute for, operating income, net income or cash
flow and other consolidated income or cash flow statement
data computed in accordance with generally accepted
accounting principles or as a measure of a company's
profitability or liquidity. Although this measure of
performance is not calculated in accordance with generally
accepted accounting principles, it is widely used in the
broadcasting industry as a measure of a company's operating
performance because it assists in comparing station
performance on a consistent basis across companies without
regard to depreciation and amortization, which can vary
significantly depending on accounting methods (particularly
where acquisitions are involved) or non-operating factors
such as historical cost bases. Station operating income
excluding depreciation and amortization also excludes the
effect of corporate general and administrative expenses,
which generally do not relate directly to station
performance.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THE NINE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO THE
NINE MONTHS ENDED SEPTEMBER 30, 1995
Broadcast revenue for the first nine months of 1996 was
$142.2 million, an increase of $44.5 million or 45.6% from
$97.6 million during the first nine months of 1995. This
increase resulted primarily from the revenue generated at
those properties owned or operated during the 1996 first
nine-months but not during the comparable 1995 period, and
to a lesser extent, from an increase in advertising rates in
both local and national advertising. On a "same station"
basis - reflecting results from stations operated in the
first nine months of both 1996 and 1995 - broadcast revenue
for the 1996 period was $104.9 million, an increase of $10.7
million or 11.3% from $94.2 million for the 1995 period.
Agency commissions for the first nine months of 1996 were
$14.7 million, an increase of $4.2 million or 40.0% from
$10.5 million during the first nine months of 1995 due to
the increase in broadcast revenue.
Broadcast operating expenses for the first nine months of
1996 were $91.7 million, an increase of $26.5 million or
40.5% from $65.2 million during the first nine months of
1996. These expenses increased as a result of expenses
incurred at those properties owned or operated during the
first nine months of 1996 but not during the comparable 1995
period and, to a lesser extent, increased selling and other
payroll costs and programming costs. On a "same station"
basis, broadcast operating expenses for the 1996 period were
$66.3 million, an increase of $4.1 million or 6.6% from
$62.2 million for the 1995 period.
Station operating income excluding depreciation and
amortization for the nine months ended September 30, 1996
was $35.8 million, an increase of $13.9 million or 63.3%
from the $21.9 million for the nine months ended September
30, 1995. On a "same station" basis, station operating
income excluding depreciation and amortization for the 1996
period was $27.4 million, an increase of $5.6 million or
25.6% from $21.8 million for the 1995 period.
Depreciation and amortization for the first nine months of
1996 and 1995 was $10.6 million and $6.8 million,
respectively. The increase from period-to-period resulted
primarily from the acquisitions made by the Company during
the last quarter of 1995 and the first nine months of 1996.
Operating income for the first nine months of 1996 was $21.1
million, an increase of $8.5 million or 68.0% from an
operating income of $12.6 million during the first nine
months of 1995.
Interest expense for the first nine months of 1996 and 1995
was $13.4 million and $0.6 million, respectively. The
increase in interest expense resulted principally from the
increase in the Company's outstanding Credit Facility
borrowings and the issuance of the 10 1/8% Senior
Subordinated Notes and Liquid Yield Option Notes which are
primarily related to the Company's acquisition strategy.
The gain on sale of radio stations in the first nine months
of 1996 resulted from the Company's February sale of two FM
radio stations in Knoxville.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THE NINE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO THE
NINE MONTHS ENDED SEPTEMBER 30, 1995, Continued
The extraordinary item in the first nine months of 1996
represents the write-off of unamortized costs associated
with the Company's 1993 Credit Agreement which was replaced
in February 1996 by the Company's Former Credit Facility and
the write-off of unamortized costs associated with the
Company's Former Credit Facility which was replaced by the
Company's New Credit Facility in June 1996.
Net income for the first nine months of 1996 and 1995 was
$4.7 and $7.8 million, respectively.
THE THREE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO THE
THREE MONTHS ENDED SEPTEMBER 30, 1995
Broadcast revenue for the third quarter of 1996 was $60.1
million, an increase of $24.0 million or 66.5% from $36.1
million during the third quarter of 1995. This increase
resulted primarily from the revenue generated at those
properties owned or operated during the 1996 third quarter
but not during the comparable 1995 period, and to a lesser
extent, from an increase in advertising rates in both local
and national advertising. On a "same station" basis -
reflecting results from stations operated in the third
quarter of both 1996 and 1995 - broadcast revenue for the
1996 period was $38.6 million, an increase of $4.2 million
or 12.4% from $34.4 million for the 1995 period.
Agency commissions for the third quarter of 1996 were $5.8
million, an increase of $2.0 million or 52.2% from $3.8
million during the third quarter of 1995 due to the increase
in broadcast revenue.
Broadcast operating expenses for the third quarter of 1996
were $38.3 million, an increase of $15.2 million or 65.5%
from $23.1 million during the third quarter of 1995. These
expenses increased as a result of expenses incurred at those
properties owned or operated during the 1996 second quarter
but not during the comparable 1995 period and, to a lesser
extent, increased selling and other payroll costs and
programming costs. On a "same station" basis, broadcast
operating expense for the 1996 period were $24.0 million, an
increase of $2.3 million or 10.6% from $21.7 million for the
1995 period.
Station operating income excluding depreciation and
amortization for the three months ended September 30, 1996
was $16.1 million, an increase of $6.9 million or 75.2% from
the $9.2 million for the three months ended September 30,
1995. On a "same station" basis, station operating income
excluding depreciation and amortization for the 1996 period
was $10.6 million, an increase of $1.6 million or 17.4% from
$9.0 million for the 1995 period.
Depreciation and amortization for the third quarter of 1996
and 1995 was $5.2 million and $2.4 million, respectively.
The increase from quarter-to-quarter resulted primarily from
the acquisitions made by the Company during the fourth
quarter of 1995 and the first nine months of 1996.
Operating income for the third quarter of 1996 was $9.2
million, an increase of $3.3 million or 56.5% from $5.9
million during the third quarter of 1995.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THE THREE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO THE
THREE MONTHS ENDED SEPTEMBER 30, 1995, Continued
Interest expense for the third quarter of 1996 and 1995 was
$6.8 million and $0.4 million, respectively. The increase
in interest expense resulted principally from the increase
in the Company's outstanding Credit Facility borrowings
which are primarily related to the Company's acquisition
strategy and the issuance of the 10 1/8% Senior Subordinated
Notes and Liquid Yield Option Notes.
The extraordinary item in the third quarter represents the
write-off of unamortized costs associated with the Company's
Former Credit Facility which was replaced by the Company's
New Credit Facility in June 1996.
Net income for the third quarter of 1996 was $0.1 million,
compared to net income of $3.5 million reported by the
Company for the third quarter of 1995. The 1996 period
includes $2.1 million of income tax expense while the 1995
period includes $2.4 million of income tax expense.
CASH FLOWS
Cash flows provided by operating activities, inclusive of
working capital, were $17.7 million and $17.0 million for
the nine months ended September 30, 1996 and 1995,
respectively. Cash flows provided by operating activities
for the first nine months of 1996 resulted primarily from
the add-back of $10.6 million of depreciation and
amortization together with the add-back of $3.0 million for
the extraordinary loss net of ($2.5) million from the gain
on sale of radio stations together with the ($1.3) million
net change in working capital to net income of $4.7 million
for the period. The additional $3.1 million resulted
principally from the add back of $.6 million net change in
deferred taxes and $2.5 million of non-cash interest. Cash
flows provided by operating activities for the comparable
1995 period resulted primarily from the add-back of $6.8
million of depreciation and amortization together with the
net change in working capital of $2.8 million to net income
of $7.8 million for the period. The additional ($.4)
million resulted from the deferred income tax benefit.
Cash flows used by investing activities were ($836.0)
million and ($56.6) million for the nine months ended
September 30, 1996 and 1995, respectively. Investing
activities include capital expenditures of $7.5 million and
$3.7 million for the first nine months of 1996 and 1995,
respectively. Investing activities during the first nine
months of 1996 include expenditures of $827.9 million and
$7.1 million, respectively, for acquisitions, loans made in
connection with the Company's joint sales agreements and
other. Additionally, investing activities for the 1996
period includes $6.6 million of proceeds from the sale of
radio stations WMYU-FM and WWST-FM in Knoxville. Investing
activities during the first nine months of 1995 include
expenditures of $48.5 million and $4.4 million, respectively
for acquisitions and loans made in connection with the
Company's joint sales agreements.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
CASH FLOWS, Continued
Cash flows from financing activities were $863.7 million and
$18.3 million for the nine months ended September 30, 1996
and 1995, respectively. Cash flows provided by financing
activities during the first nine months of 1996 resulted
primarily from the $818.2 million of proceeds from the
issuance of public debt, Liquid Yield Option Notes and
borrowings under the Existing Credit Facility, together with
$317.1 million in proceeds received from the issuance of
common stock net of the $248.5 million repayment of long-
term debt and $21.3 million of paid debt related finance
costs. Cash flows used from financing activities during the
comparable 1995 nine-month period resulted primarily from
the $15.1 million repurchase of the Company's common stock
net of the $33.5 million in borrowings under the Company's
Former Credit Agreement.
The foregoing discussion sets forth forward looking
statements within the meaning of Section 27A of the
Securities Act of 1933. Such statements are subject to a
number of risks and uncertainties. Actual results in the
future could differ materially from those described in the
forward looking statements. Factors that could cause actual
results to differ materially include, but are not limited
to, the ability to consummate the pending acquisitions,
interest rates, competition and the economy and industry
conditions in general.
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 5. Other Information
COMPETITION; CHANGES IN THE BROADCASTING INDUSTRY
The radio broadcasting industry is a highly competitive
business. The success of each of the Company's stations will
depend significantly upon its audience ratings and its share
of the overall advertising revenue within its broadcast
area. The Company's stations will compete for listeners and
advertising revenue directly with other radio stations as
well as many other advertising media within their respective
broadcast areas. Radio stations attract listeners primarily
on the basis of program content and by hiring high-profile
talent that appeals to a particular demographic group. By
building in each of its broadcast areas a strong listener
base comprised of a specific demographic group, the Company
will be able to compete for advertisers seeking to reach
those listeners.
In addition to management experience, factors which are
material to competitive position include the station's rank
among radio stations in its broadcast area, transmitter
power, assigned frequency, audience characteristics, local
program acceptance and the number and characteristics of
other stations in the broadcast area, and other advertising
media in that broadcast area. The Company attempts to
improve its competitive position with promotional campaigns
aimed at the demographic groups targeted by its stations and
by sales efforts designed to attract advertisers. Recent
changes in the FCC's policies and rules permit increased
joint ownership and joint operation of local radio stations.
Those stations taking advantage of these joint arrangements
may in certain circumstances have lower operational costs
and may be able to offer advertisers more attractive rates
and services.
The Company's audience ratings and competitive position
will be subject to change, and any adverse change in a
particular broadcast area could have a material adverse
effect on the revenue of the Company's stations in that
broadcast area. Although the Company believes that each of
the Company's stations will be able to compete effectively
in the broadcast area, there can be no assurance that any
one of the Company's stations will be able to maintain or
increase its current audience ratings and advertising
revenue.
Although the radio broadcasting industry is highly
competitive, some legal restrictions on entry exist. The
operation of a radio broadcast station requires a license
from the FCC and the number of radio stations that can
operate in a given broadcast area is limited by the
availability of the FM and AM radio frequencies that the FCC
will license in that broadcast area.
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 5. Other Information, Continued
The Company's stations also compete directly for
advertising revenues with other media, including broadcast
television, cable television, newspapers, magazines, direct
mail, coupons and billboard advertising. In addition, the
radio broadcasting industry is subject to competition from
new media technologies that are being developed or
introduced, such as the delivery of audio programming by
cable television systems and the Internet and by digital
audio broadcasting. The radio broadcasting industry
historically has grown despite the introduction of new
technologies for the delivery of entertainment and
information, such as television broadcasting, cable
television, audio tapes and compact disks. Greater
population and greater availability of radios, particularly
car and portable radios, have contributed to this growth.
There can be no assurance, however, that the development or
introduction in the future of any new media technology will
not have an adverse effect on the radio broadcasting
industry. The Company also competes with other radio
station groups to purchase additional stations.
The FCC has allocated spectrum for a new technology,
satellite digital audio radio services ("DARS"), to deliver
audio programming. The FCC has proposed, but not yet adopted
licensing and operating rules for DARS, so that the
allocated spectrum is not yet available for service. The
Company cannot predict when and in what form such rules will
be adopted. The FCC granted a waiver in September 1995 to
permit one potential DARS operator to commence construction
of a DARS satellite system, with the express notice that the
FCC might not license such operator to provide DARS, nor
would such waiver prejudge the ongoing rule making
proceeding. DARS may provide a medium for the delivery by
satellite means of multiple new audio programming formats to
local and/or national audiences. Digital technology also may
be used in the future by terrestrial radio broadcast
stations either on existing or alternate broadcasting
frequencies, and the FCC has stated that it will consider
making changes to its rules to permit AM and FM radio
stations to offer digital sound following industry analysis
of technical standards. In addition, the FCC has authorized
an additional 100 kHz of band width for the AM band and will
soon allocate frequencies in this new band to certain
existing AM station licensees that applied for migration
prior to the FCC's cut-off date. At the end of a transition
period, those licensees will be required to return to the
FCC either the license for their existing AM band station or
the license for the expanded AM band station. None of the
stations to be affiliated with the Company have sought
authorizations for operations on the expanded AM band,
because such signals operate at a lower power and have less
coverage and thereby are not consistent with the Company's
strategic objectives.
Television stations compete for audiences and
advertising revenues with radio and other television
stations and multichannel video delivery systems in
their broadcast areas and with other advertising media such
as newspapers,
magazines, outdoor advertising and direct mail. Competition
for sales of television advertising time is based primarily
on the anticipated and actually delivered size and
demographic characteristics of audiences as determined by
various services, price, the time of day when the
advertising is to be broadcast, competition from other
television stations, including affiliates of other
television broadcast networks, cable television systems and
other media and general economic conditions. Competition for
audiences is based primarily on
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 5. Other Information, Continued
the selection of programming, the acceptance of which is
dependent on the reaction of the viewing public, which is
often difficult to predict. Additional elements that are
material to the competitive position of television stations
include management experience, authorized power and assigned
frequency. The broadcasting industry is continuously faced
with technical changes and innovations, the popularity of
competing entertainment and communications media, changes in
labor conditions, and governmental restrictions or actions
of Federal regulatory bodies, including the FCC, any of
which could possibly have a material effect on a television
station's operations and profits. There are sources of video
service other than conventional television stations, the
most common being cable television, which can increase
competition for a broadcasting television station by
bringing into its broadcast area distant broadcasting
signals not otherwise available to the station's audience,
serving as a distribution system for national
satellite-delivered programming and other non-broadcast
programming originated on a cable system and selling
advertising time to local advertisers. Other principal
sources of competition include home video exhibition,
direct-to-home broadcast satellite television ("DBS")
entertainment services and multichannel multipoint
distribution services ("MMDS"). Moreover, technology
advances and regulatory changes affecting programming
delivery through fiber optic telephone lines and video
compression could lower entry barriers for new video
channels and encourage the development of increasingly
specialized "niche" programming. The Telecommunications Act
of 1996 (the "Telecom Act") permits telephone companies to
provide video distribution services via radio communication,
on a common carrier basis, as "cable systems" or as "open
video systems," ("OVS")each pursuant to different regulatory
schemes. The Company is unable to predict the effect that
technological and regulatory changes will have on the
broadcast television industry and on the future
profitability and value of a particular broadcast television
station.
Recent acquisitions of, or investments in, cable
multiple-system operators ("MSOs") by local exchange
carriers ("LECs") by Regional Bell Operating Companies
("RBOCs") in the United States, market tests by both LECs
and cable MSOs in various states, and major infrastructure
upgrades announced by both LECs and cable MSOs, presage
major expansions of wired communications networks and
consequently their capacities to deliver video programming.
The Telecom Act repealed the "telephone company/cable
television cross-ownership prohibition," thereby enabling
LECs, including the RBOCs, to provide cable television
service in their telephone service areas. LECs may not,
however, acquire more than a 10 percent ownership interest
in, or enter into joint ventures with, cable systems in
their telephone service areas. The 1996 Act also gives LECs
the option to provide video programming services over an
"open video system," or OVS, in which programming on no more
than one-third of the system's channels may be selected by
the LEC or its affiliates. The OVS model may be attractive
to LECs because it is not subject to many of the regulatory
requirements applicable to traditional cable systems, such
as the requirement to obtain a local cable television
franchise. In addition, a number of LECs have announced
their intention to provide video programming services over
MMDS "wireless cable" systems.
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 5. Other Information, Continued
In addition, the FCC authorizes DBS services throughout
the United States. Currently, four entities provide
subscription DBS services via high power communications
satellites and small dish receivers, and other companies
provide direct-to-home video service using lower powered
satellites and larger receivers. Additional companies are
expected to commence direct-to-home operations in the
future. DBS and MMDS, as well as other new technologies,
will further increase competition in the delivery of video
programming.
The Company cannot predict what other matters might be
considered in the future, nor can it judge in advance what
impact, if any, the implementation of any of these proposals
or changes might have on its business.
FEDERAL REGULATION OF BROADCASTING
The ownership, operation and sale of stations are
subject to the jurisdiction of the FCC, which acts under
authority granted by the Communications Act of 1934, as
amended (the "Communications Act"). Among other things, the
FCC assigns frequency bands for broadcasting; determines the
particular frequencies, locations and power of stations;
issues, renews, revokes and modifies station licenses;
determines whether to approve changes in ownership or
control of station licenses; regulates equipment used by
stations; adopts and implements regulations and policies
that directly or indirectly affect the ownership, operation
and employment practices of stations; and has the power to
impose penalties for violations of its rules or the
Communications Act. On February 8, 1996, the President
signed the Telecom Act. The Telecom Act, among other
measures, directs the FCC to (a) eliminate the national
radio ownership limits; (b) increase the local radio
ownership limits as specified in the Telecom Act; (c) issue
broadcast licenses for periods of eight years; (d) eliminate
the opportunity for the filing of competing applications
against broadcast renewal applications and (e) modify the
rules governing in-market radio-television ownership.
Certain of these measures have been adopted by the FCC.
Other provisions of the Telecom Act will be acted upon by
the FCC through rule-making proceedings, presently scheduled
for action during 1996 and 1997.
Radio stations in the United States operate either by
Amplitude Modulation (AM), conducted on 107 different
frequencies located between 540 and 1600 kilohertz (kHz)
(plus 10 frequencies between 1610-1710 kHz on the newly
expanded AM band) in the low frequency band of the
electromagnetic spectrum, or by Frequency Modulation (FM),
conducted on approximately 100 different frequencies located
between 88 and 108 megahertz (MHZ) at the very high
frequency band of the electromagnetic spectrum.
Television stations in the United States operate as
either Very High Frequency (VHF) stations (channels 2
through 13) or Ultra High Frequency (UHF) stations (channels
14 through 69). UHF stations in many cases have a weaker
signal and therefore do not achieve the same coverage as VHF
stations.
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 5. Other Information, Continued
License Grants and Renewals. The Communications Act
provides that a broadcast station license may be granted to
an applicant if the grant would serve the public interest,
convenience and necessity, subject to certain limitations
referred to below. In making licensing determinations, the
FCC considers the legal, technical, financial and other
qualifications of the applicant, including compliance with
the Communications Act's limitations on alien ownership,
compliance with various rules limiting common ownership of
broadcast, cable and newspaper properties, and the
"character" of the licensee and those persons holding
"attributable" interests in the licensee. Broadcast station
licenses are granted for specific periods of time and, upon
application, are renewable for additional terms. The Telecom
Act amends the Communications Act to provide that broadcast
station licenses be granted, and thereafter renewed, for a
term not to exceed eight years, if the FCC finds that the
public interest, convenience, and necessity would be served.
The FCC has not yet implemented the change in license terms
provided in the Telecom Act.
Generally, the FCC renews licenses without a hearing.
The Telecom Act amends the Communications Act to require the
FCC to grant an application for renewal of a broadcast
station license if: (1) the station has served the public
interest, convenience and necessity; (2) there have been no
serious violations by the licensee of the Communications Act
or the rules and regulations of the FCC; and (3) there have
been no other violations by the licensee of the
Communications Act or the rules and regulations of the FCC
which, taken together, would constitute a pattern of abuse.
Pursuant to the Telecom Act, competing applications against
broadcast renewal applications will no longer be
entertained. The Telecom Act provides that if the FCC, after
notice and an opportunity for a hearing, decides that the
requirements for renewal have not been met and that no
mitigating factors warrant lesser sanctions, it may deny a
renewal application. Only thereafter may the FCC accept
applications by third parties to operate on the frequency of
the former licensee. The Communications Act continues to
authorize the filing of petitions to deny against license
renewal applications during particular periods of time
following the filing of renewal applications. Petitions to
deny can be used by interested parties, including members of
the public, to raise issues concerning the qualifications of
the renewal applicant.
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 5. Other Information, Continued
License renewals (expiring in 2003) were granted in
1996 for the Company's Florida, Georgia, Kentucky and
certain of its Ohio radio stations. Presently pending are
renewal applications for six of the Company's Ohio radio
stations and for the Company's three St. Louis radio
stations, four Kansas City radio stations and for WTSP-TV,
St. Petersburg, Florida. The six Ohio radio stations are
subject to a petition challenging the renewal of their
licenses and those of certain other broadcasters for alleged
failure to comply with equal employment opportunity
policies. The Company has responded to that petition and
anticipates obtaining license renewals for full terms for
these Ohio stations. Renewal applications will be filed in
1997 for the remainder of the Company's station licenses
that are currently due to expire in 1997. The Company does
not anticipate any material difficulty in obtaining license
renewals for full terms in the future.
Regent has obtained renewals for full terms (expiring
in 2002) for its South Carolina radio stations and (expiring
2003) for its Kentucky and Indiana stations. Regent has
renewal applications pending before the FCC for its Kansas
City, Missouri, radio station. Regent's renewal
applications for WFIA-AM and WDJX-FM, Louisville, are the
subject of a petition to deny filed by a former employee
against whom a non-compete provision was enforced. Regent
expects the FCC to grant renewals for full terms for these
stations. Renewal applications will be filed for the
remainder of the Regent stations in 1997. The Gannett radio
station renewal applications will be filed in 1997.
Regarding other proposed acquisitions, renewal applications
are presently pending for WCWA-AM and WIOT-FM, Toledo (also
subject to a petition to deny on EEO grounds), and for the
Palmer stations in Cedar Rapids and Des Moines. Renewal
applications will be filed in 1997 for the licenses of the
other stations to be acquired.
When the FCC considers a proposed transfer of control
of an FCC licensee that holds multiple FCC licenses, some of
which licenses are subject to pending renewal applications,
the FCC's past policy has been either to defer action on the
transfer application until the pending renewals have been
granted or to grant the transfer application conditioned on
the transfer not being consummated until the renewals have
been granted. The FCC has recently modified that policy to
provide that so long as there are no unresolved issues
pertaining to the qualifications of the transferor or the
transferee and so long as the transferee is willing to
substitute itself as the renewal applicant, the FCC will
grant a transfer application for a licensee holding multiple
licenses and permit consummation of the transfer
notwithstanding the pendency of renewal applications for one
or several of the licensee's stations. This policy should
permit the parties to consummate the Gannett Exchange and
the Regent Merger (assuming satisfaction or waiver of all
other conditions and the FCC's grant of the subject
application) during those periods when renewal applications
are pending for one or more of the subject stations. To
date, the FCC has not extended this policy to transactions
where all the stations being sold are subject to renewal
applications, such as involving WCWA-AM/WIOT-FM and the
Palmer stations, and it is not expected that the FCC will
grant consent to the assignment of these stations to the
Company until the renewals for these stations are issued.
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 5. Other Information, Continued
License Assignments and Transfers of Control. The
Communications Act prohibits the assignment of a license or
the transfer of control of a corporation holding such a
license without the prior approval of the FCC. Applications
to the FCC for such assignments or transfers are subject to
petitions to deny by interested parties and must satisfy
requirements similar to those for renewal and new station
applicants.
Ownership Rules. Rules of the FCC limit the number and
location of broadcast stations in which one licensee (or any
party with a control position or attributable ownership
interest therein) may have an attributable interest. The
FCC, pursuant to the Telecom Act, eliminated the "national
radio ownership rule." Consequently, there now is no limit
imposed by the FCC to the number of radio stations one party
may own nationally.
The "local radio ownership rule" limits the number of
stations in a radio market in which any one individual or
entity may have a control position or attributable ownership
interest. Pursuant to the Telecom Act, the FCC revised its
rules to increase the local radio ownership limits as
follows: (a) in markets with 45 or more commercial radio
stations, a party may own up to eight commercial radio
stations, no more than five of which are in the same service
(AM or FM); (b) in markets with 30-44 commercial radio
stations, a party may own up to seven commercial radio
stations, no more than four of which are in the same
service; (c) in markets with 15-29 commercial radio
stations, a party may own up to six commercial radio
stations, no more than four of which are in the same
service; and (d) in markets with 14 or fewer commercial
radio stations, a party may own up to five commercial radio
stations, no more than three of which are in the same
service, provided that no party may own more than 50% of the
commercial stations in the market. In addition, the FCC has
a "cross interest" policy that may prohibit a party with an
attributable interest in one station in a market from also
holding either a "meaningful" non-attributable equity
interest (e.g., non-voting stock, voting stock, limited
partnership interests) or key management position in another
station in the same market, or which may prohibit local
stations from combining to build or acquire another local
station. The FCC is presently evaluating its cross-interest
policy as well as policies governing attributable ownership
interests. The Company cannot predict whether the FCC will
adopt any changes in these policies or, if so, what the new
policies will be.
Under the current rules, an individual or other entity
owning or having voting control of 5% or more of a
corporation's voting stock is considered to have an
attributable interest in the corporation and its stations,
except that banks holding such stock in their trust
accounts, investment companies, and certain other passive
interests are not considered to have an attributable
interest unless they own or have voting control over 10% or
more of such stock. The FCC is currently evaluating whether
to raise the foregoing benchmarks to 10% and 20%,
respectively. An officer or director of a corporation or any
general partner of a partnership also is deemed to hold an
attributable interest in the media license. The Company
cannot predict whether the FCC will adopt these or any other
proposals.
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 5. Other Information, Continued
Under current FCC rules, shareholders of the Company
with 5% or more of the outstanding votes (except for
qualified institutional investors, for which the 10%
benchmark is applicable), if any, are considered to hold
attributable interests in the Company. Such holders of
attributable interests must comply with or obtain waivers of
the FCC's multiple and cross ownership limits. Other than
Zell/Chilmark Fund L.P. (the holder of approximately 42% of
the Company's Common Stock), no individuals or entity has
reported to the SEC that is has acquired 5% or more of the
outstanding stock of the Company; however certain qualified
investors need not submit such a report until 45 days after
the end of the calendar year. In the event that the Company
learns of a new attributable shareholder and if such
shareholder holds interests that exceed the FCC limits on
media ownership, the Company has the corporate power to
redeem stock of its shareholders to the extent necessary to
be in compliance with FCC and Communications Act
requirements, including limits on media ownership by
attributable parties and alien ownership.
The rules also generally prohibit the acquisition of an
ownership or control position in a television station and
one or more radio stations serving the same market (termed
the "one-to-a-market" rule). Current FCC policy looks
favorably upon waiver requests relating to television and
AM/FM radio combinations in the top 25 television markets
where at least 30 separately owned broadcast stations will
remain after the combination. One-to-a-market waiver
requests in other markets, as well as those in the top 25
television markets that involve the combination of a
television station and more than one same service (AM or FM)
radio station, presently are evaluated by the FCC pursuant
to a fact-based, five-part, case-by-case review. The FCC
also has an established policy for granting waivers that
involve "failed" stations. The FCC currently is considering
changes to its one-to-a-market waiver standards in a pending
rule-making proceeding. The FCC also plans to review and
possibly modify its current prohibitions relating to
ownership or control positions in a daily newspaper and a
broadcast station in the same market. In conjunction with
the Company's acquisition of the Citicasters stations, the
FCC granted the Company's request for waivers of the one-to-
a-market rule to permit common ownership of radio stations
and a television station in each of Cincinnati and Tampa-St.
Petersburg, subject to the outcome in the pending rule-
making proceeding. The FCC waiver directed that should
divestiture be required as a result of that rule-making
proceeding, the Company will be required to file an
application for FCC consent to sell the necessary stations
within six months from the release of the FCC order in the
rule-making proceeding. The Company filed in October 1996
an application for the sale of WTSP-TV, St. Petersburg. The
sale of that station will render moot the one-to-a-market
waiver granted the Company for radio and television
ownership in Tampa-St. Petersburg. There can be no
assurance that the FCC will adopt a revised one-to-a-market
policy in its rule-making proceeding that would permit the
Company to continue to own WKRC-TV, Cincinnati, along with
all of its current Cincinnati-area radio stations. If
divestitures are required,
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 5. Other Information, Continued
there can be no assurance that the Company would be able to
obtain full value for such stations or that such sales would
not have a material adverse impact upon the Company's
business, financial condition or results of operations. In
such event, the Company's intention would be to seek
reconsideration and/or appellate court review of the FCC's
decision.
Holders of non-voting stock generally will not be
attributed an interest in the issuing entity, and holders of
debt and instruments such as warrants, convertible
debentures, options, or other non-voting interests with
rights of conversion to voting interests generally will not
be attributed such an interest unless and until such
conversion is effected. The FCC is currently considering
whether it should expand its attribution rules to reach
certain of these interests in certain circumstances. The
Company cannot predict whether the FCC will adopt these or
other changes in its attribution policies.
Under the Communications Act, broadcast licenses may
not be granted, transferred or assigned to any corporation
of which more than one-fifth of the capital stock is owned
of record or voted by non-U.S. citizens or foreign
governments or their representatives (collectively,
"Aliens"). In addition, the Communications Act provides that
no broadcast license may be held by any corporation of which
more than one-fourth of the capital stock is owned of record
or voted by Aliens, without an FCC public interest finding.
The FCC has issued interpretations of existing law under
which these restrictions in modified form apply to other
forms of business organizations, including general and
limited partnerships. The FCC also prohibits a licensee from
continuing to control broadcast licenses if the licensee
otherwise falls under Alien influence or control in a manner
determined by the FCC to be in violation of the
Communications Act or contrary to the public interest. No
officers, directors or significant shareholders of the
Company are known by the Company to be Aliens.
Regulation of Broadcast Operations. In order to retain
licenses, broadcasters are obligated, under the
Communications Act, to serve the "public interest." Since
the late 1970s, the FCC gradually has relaxed or eliminated
many of the more formalized regulatory procedures and
requirements developed to promote the broadcast of certain
types of programming responsive to the problems, needs, and
interests of a station's community of license.
The regulatory changes have provided broadcast stations
with increased flexibility to design their program formats
and have provided relief from some recordkeeping and FCC
filing requirements. However, licensees continue to be
required to present programming that is responsive to
significant community issues and to maintain certain records
demonstrating such responsiveness. Complaints from listeners
concerning a station's programming have been considered by
the FCC when evaluating licensee renewal applications and at
other times.
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 5. Other Information, Continued
Stations still are required to follow various rules
promulgated under the Communications Act that regulate
political broadcasts, political advertisements, sponsorship
identifications, technical operations and other matters.
"Equal Opportunity" and affirmative action requirements also
exist. Failure to observe these or other rules can result in
the imposition of monetary forfeitures or in the grant of a
"short" (less than full term) license term or license
revocation. The Telecom Act states that the FCC may deny,
after a hearing, the renewal of a broadcast license for
serious violations of the Communications Act or the FCC's
rules or where there have been other violations which
together constitute a pattern of abuse.
The FCC has adopted rules regarding human exposure to
levels of radio frequency ("RF") radiation. These rules
require applicants for new broadcast stations, renewals of
broadcast licenses or modification of existing licenses to
inform the FCC at the time of filing such applications
whether a new or existing broadcast facility would expose
people to RF radiation in excess of certain guidelines.
Agreements With Other Broadcasters. Over the past
several years a significant number of broadcast licensees,
including certain of the Company's subsidiaries, have
entered into cooperative agreements with other stations in
their broadcast area. These agreements may take varying
forms, subject to compliance with the requirements of the
FCC's rules and policies and other laws. One typical
example is a LMA between two separately owned stations
serving a common service area, whereby the licensee of one
station programs substantial portions of the broadcast day
on the other licensee's station, subject to ultimate
editorial and other controls being exercised by the latter
licensee, and sells advertising time during such program
segments for its own account. Another is a Joint Sales
Agreement (a "JSA") pursuant to which a licensee sells
advertising time on both its own station or stations and on
another separately owned station.
The FCC has held that LMAs do not per se constitute a
transfer of control and are not contrary to the
Communications Act provided that the licensee of the station
maintains complete responsibility for and control over
operations of its broadcast station (including,
specifically, control over station finances, personnel and
programming) and complies with applicable FCC rules and with
antitrust laws. At present, the FCC is considering whether
it should treat as attributable multiple business
arrangements among local stations, such as joint sales
accompanied by debt financing. Separately, the Antitrust
Division of the Department of Justice (the "Antitrust
Division") is evaluating JSA arrangements under the
antitrust laws. The Company cannot predict whether it will
be required to terminate or restructure its JSAs or other
arrangements in the future.
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 5. Other Information, Continued
Under certain circumstances, the FCC will consider a
radio station brokering time on another radio station
serving the same broadcast area to have an attributable
ownership interest in the brokered station for purposes of
the FCC's radio multiple ownership rules. In particular, a
radio station is not permitted to enter into a LMA giving it
the right to program more than 15% of the broadcast time, on
a weekly basis, of another local radio station which it
could not own under the FCC's local radio ownership rules.
The Company provides more than 15% of the broadcast time to
the stations it LMA's.
The FCC's rules also prohibit a radio licensee from
simulcasting more than 25% of its programming on another
radio station in the same broadcast service (i.e., AM-AM or
FM-FM) whether it owns both stations or operates both
through a LMA where both stations serve substantially the
same geographic area.
FCC Consideration of Acquisitions. The Company has
filed the requisite applications with FCC for its consent to
the transactions (each referred to as a "Transfer
Application"). Once a Transfer Application has been
accepted by the FCC, then pursuant to the Communications Act
and the FCC's rules interested third parties may file
petitions to deny the Transfer Application for a period of
thirty days following public notice of the acceptance of the
Transfer Application, and thereafter may file informal
objections until the Transfer Application is granted. To
date, the public comment periods on the Transfer
Applications have not yet expired.
In the event that an opposition against a Transfer
Application is filed that raises substantial issues, the FCC
would determine on the basis of the opposition, responses to
the opposition that may be filed by the applicants, and such
other facts as it may officially notice, whether there were
substantial and material issues of fact that would require
an evidentiary hearing to resolve. In the absence of issues
requiring an evidentiary hearing, and upon a finding that a
grant of the Transfer Application would serve the public
interest, convenience and necessity, the FCC, or the FCC's
staff acting by delegated authority, will grant the Transfer
Application. In the unlikely event that there are any issues
of fact which cannot be resolved without an evidentiary
hearing, the FCC could designate the Transfer Application
for such a hearing, and the consummation of the transaction
at issue could be jeopardized due to the length of time
ordinarily required to complete such proceedings.
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 5. Other Information, Continued
Within thirty days following FCC public notice of such
a grant, parties in interest may file a petition for
reconsideration requesting that the FCC (or the FCC's staff
in the case of a staff grant), reconsider its action.
Alternatively in the case of a staff grant, parties in
interest may within the same thirty-day period file an
"Application for Review" requesting that the FCC review and
set aside the staff grant. In the event of a staff grant, a
party in interest could take both actions, by first filing a
petition for reconsideration with the staff and later,
within thirty days following public notice of the denial of
that petition, filing an Application for Review. In the case
of a staff grant, the FCC may also review the staff action
on its own motion within forty days following public notice
of the staff's action. The FCC may review any of its own
actions on its own motion within thirty days following
public notice of the action.
Within thirty days of public notice of an action by the
FCC (i) granting the Transfer Application, (ii) denying a
petition for reconsideration of such a grant or
(iii) denying an Application for Review of a staff grant,
parties in interest may appeal the FCC's action to the
U.S. Court of Appeals for the District of Columbia Circuit.
In the event that the Transfer Application should be
denied, the Company and the seller would have the same
rights to seek reconsideration or review and to appeal as
set forth above with respect to adverse parties.
If the FCC does not, on its own motion, or upon a
request by an interested party for reconsideration or
review, review a staff grant or its own action within the
time periods set forth above, an action by the FCC or its
staff granting the Transfer Application would become final.
The Gannett Agreement provides that if all other conditions
to the exchange are satisfied or waived, the parties are
obligated under certain conditions to consummate the
exchange upon the issuance of an FCC grant of the Transfer
Application, even if such grant has not become final. The
Regent Merger Agreement provides as a precondition to
closing that the FCC grant of the Transfer Application has
become final, subject to waiver under certain circumstances.
Legislation and Regulation of Television Operations.
Television stations are regulated by the FCC pursuant to
provisions of the Communications Act and the FCC rules that
are in many instances the same or similar to those
applicable to radio stations. Besides technical differences
between television and radio, principal variances in
regulation relate to limits on national and local ownership,
LMAs and simulcasts, children's programming requirements,
advanced television service, signal carriage rights on cable
systems, license terms, "V-chip" technology and
network/affiliate relations.
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 5. Other Information, Continued
The current FCC rules prohibit combined local ownership
or control of television stations with overlapping "Grade B"
service contours (unless established waiver standards are
met). An FCC rule-making proceeding is in process to
determine whether to retain, modify or eliminate these local
television ownership rules. The current FCC rules permit an
entity to have an attributable interest in an unlimited
number of U.S. television stations so long as such stations
do not reach in the aggregate more than 35% of the national
television audience. Additionally, the rules prohibit (with
certain qualifications) the holder of an attributable
interest in a television station from also having an
attributable interest in a radio station, daily newspaper or
cable television system serving a community located within
the relevant coverage area of that television station. As
noted above, the radio/television one-to-a-market rule is
under review and the FCC also is reviewing its current
broadcast/daily newspaper restriction. Pursuant to the
Telecom Act, the FCC eliminated the restriction of network
ownership of cable systems. The FCC will monitor the
response to this change to determine if additional rule
changes are necessary to ensure nondiscriminatory carriage
and channel positioning of nonaffiliated broadcast stations
by network-owned cable systems.
Presently, LMAs between television stations are not
treated as attributable interests and there is no
restriction on same-market television simulcasts. The FCC is
proposing a pending rule-making proceeding to treat
television LMAs similar to radio LMAs for multiple ownership
rule purposes. The Company's television stations are not
participants in LMAs.
On August 8, 1996, the FCC amended its rules
implementing the Children's Television Act of 1990 (the
"CTA") to establish for broadcast television renewal
applications filed after August 31, 1997, a "processing
guideline" of at least three hours per week of educational
and informational programming for children. A television
station will receive FCC staff-level approval of the portion
of its license renewal application pertaining to the CTA if
it satisfies the processing guideline by broadcasting at
least three weekly hours of "Core Programming," which is
defined as educational and informational programming that,
among other things, (a) has serving the educational and
informational needs of children "as a significant purpose,"
(b) has a specified educational and informational objective
and a specified target child audience, (c) is regularly
scheduled, weekly programming, (d) is at least 30 minutes in
length, and (e) airs between 7:00 a.m. and 10:00 p.m.
Alternatively, a station may qualify for staff-level
approval even if it broadcasts "somewhat less" than three
hours per week of Core Programming by demonstrating that it
has aired a weekly package of different types of educational
and informational programming that is "at least equivalent"
to three hours of Core Programming. A licensee that does
not meet the processing guideline under either of these
alternatives will be referred by the FCC's staff to the
Commissioners of the FCC, who will evaluate the licensee's
compliance with CTA on the basis of both its programming and
its other efforts related to children's educational and
informational programming. A television station ultimately
found not to have complied with the CTA could face sanctions
including monetary fines and the possible non-renewal of its
broadcast license.
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 5. Other Information, Continued
The FCC is conducting a rule-making proceeding to
devise a table of channel allotments in connection with the
introduction of digital (or "advanced" or "high definition")
television service ("DTV"). The FCC has preliminarily
decided to allot a second broadcast channel to each
full-power commercial television station for DTV operation.
According to this preliminary decision, stations would be
permitted to phase in their DTV operations over a period of
several years following adoption of a final table of
allotments, after which they would be required to surrender
their non-DTV channel. The FCC has proposed allotting all
full-service television stations a second broadcast channel
for digital operation that substantially replicates the
service areas of their exiting stations. Under this
proposal, most stations, including the Company stations,
would receive a digital channel assignment in the "core
spectrum" between channels 7 and 51. This proposal is open
for public comment. During the past year, Congress has
considered proposals that would require incumbent
broadcasters to bid at auctions for the additional spectrum
required to effect a transition to DTV, or alternatively,
would assign additional DTV spectrum to incumbent
broadcasters and require the early surrender of their
non-DTV channel for sale by public auction. It is not
possible to predict if, or when, any of these proposals will
be adopted or the effect, if any, adoption of such proposals
would have on the Citicasters television stations.
FCC regulations implementing the Cable Television
Consumer Protection and Competition Act of 1992 (the "1992
Cable Act") require each television broadcaster to elect, at
three-year intervals beginning June 17, 1993, either to (a)
require carriage of its signal by cable systems in the
station's market ("must-carry") or (b) negotiate the terms
on which such broadcast station would permit transmission of
its signal by the cable systems within its market
("retransmission consent"). In a 2-1 decision issued on
December 13, 1995, a special three-judge panel of the U.S.
District Court for the District of Columbia upheld the
constitutionality of the must-carry provisions. The District
Court's decision was appealed to the U.S. Supreme Court,
which has heard oral argument in the case and is expected to
issue a decision in the second calendar quarter of 1997. In
the meantime, the FCC's must-carry regulations implementing
the Cable Act remain in effect. The Company cannot predict
the outcome of the Supreme Court review of the case.
Until the passage of the Telecom Act, television
licenses were granted and renewed for a maximum of five
years. The Telecom Act amends the Communications Act to
provide that broadcast station licenses be granted, and
thereafter renewed, for a term not to exceed eight years, if
the FCC finds that the public interest, convenience, and
necessity would be served. The FCC has not yet implemented
the change in license terms provided in the Telecom Act.
The Telecom Act also requires the broadcast and cable
industries to develop and transmit an encrypted rating that
would permit the blocking of violent or indecent video
programming and allow telephone companies to operate cable
television systems in their own service areas.
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 5. Other Information, Continued
The Company's Cincinnati and Tampa television stations
are both CBS-network affiliates. Both are VHF stations. The
FCC currently is reviewing certain of its rules governing
the relationship between broadcast television networks and
their affiliated stations. The FCC is conducting a
rule-making proceeding to examine its rules prohibiting
broadcast television networks from representing their
affiliated stations for the sale of non-network advertising
time and from influencing or controlling the rates set by
their affiliates for the sale of such time. Separately, the
FCC is conducting a rule-making proceeding to consider the
relaxation or elimination of its rules prohibiting broadcast
networks from (a) restricting their affiliates' right to
reject network programming; (b) reserving an option to use
specified amounts of their affiliates' broadcast time; and
(c) forbidding their affiliates from broadcasting the
programming of another network; and to consider the
relaxation of its rule prohibiting network-affiliated
stations from preventing other stations from broadcasting
the programming of their network.
Proposed Changes. The FCC has not yet implemented
formally certain of the changes to its rules necessitated by
the Telecom Act. Moreover, the Congress and the FCC have
under consideration, and may in the future consider and
adopt, new laws, regulations and policies regarding a wide
variety of matters that could, directly or indirectly,
(i) affect the operation, ownership and profitability of the
Company and its broadcast stations, (ii) result in the loss
of audience share and advertising revenues of the Company's
radio broadcast stations, (iii) affect the ability of the
Company to acquire additional broadcast stations or finance
such acquisitions, (iv) affect current cooperative
agreements and/or financing arrangements with other radio
broadcast licensees, or (v) affect the Company's competitive
position in relationship to other advertising media in its
broadcast areas. Such matters include, for example, changes
to the license authorization and renewal process; proposals
to revise the FCC's equal employment opportunity rules and
other matters relating to minority and female involvement in
broadcasting; proposals to alter the benchmarks or
thresholds for attributing ownership interest in broadcast
media; proposals to change rules or policies relating to
political broadcasting; changes to technical and frequency
allocation matters, including those relative to the
implementation of digital audio broadcasting on both a
satellite and terrestrial basis; proposals to restrict or
prohibit the advertising of beer, wine and other alcoholic
beverages on radio; changes in the FCC's cross-interest,
multiple ownership, alien ownership and cross-ownership
policies; proposals to allow greater telephone company
participation in the delivery of audio and video
programming; proposals to limit the tax deductibility of
advertising expenses by advertisers; potential auctions for
ATV or non-ATV television spectrum; the implementation of
"V-chip" technology; and changes to children's television
programming requirements, signal carriage rights on cable
systems and network affiliate relations.
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 5. Other Information, Continued
Although the Company believes the foregoing discussion
is sufficient to provide the reader with a general
understanding of all material aspects of FCC regulations
that affect the Company, it does not purport to be a
complete summary of all provisions of the Communications Act
or FCC rules and policies. Reference is made to the
Communications Act, FCC rules and the public notices and
rulings of the FCC for further information.
ANTITRUST CONSIDERATIONS
Certain acquisitions by the Company of broadcasting
companies, radio station groups or individual radio stations
will be subject to review by the Antitrust Division and the
Federal Trade Commission ("FTC") pursuant to the provisions
of the Hart-Scott-Rodino Act (the "HSR Act"). Generally,
acquisitions involving assets valued at $15.0 million or
more, and certain acquisitions of voting securities, come
within the purview of the HSR Act. Although it is likely
that many proposed acquisitions will not require the parties
to the transaction to comply with the HSR Act, or if such
compliance is required, will result in rapid clearance by
the antitrust agencies, in certain instances, such as is the
case with the proposed acquisitions, the antitrust agencies
may choose to investigate the proposed acquisition,
particularly if it appears that such acquisition will result
in substantial concentration within a specific market. Any
decision by an antitrust agency to challenge a proposed
acquisition could affect the ability of the Company to
consummate the proposed acquisition, or to consummate the
acquisition on the proposed terms.
The Antitrust Division and the FTC determine between
themselves which agency is to take a closer look at a
proposed transaction. The Antitrust Division or the FTC, as
the case may be, may then issue a formal request for
additional information ("the Second Request"). Under the HSR
Act, if a Second Request is issued, the waiting period then
would be extended and would expire at 11:59 p.m., on the
twentieth calendar day after the date of substantial
compliance by both parties with such Second Request. Only
one extension of the waiting period pursuant to a request
for additional information is authorized by the HSR Act.
Thereafter, such waiting period may be extended only by
court order or with the consent of the parties. In practice,
complying with a request for additional information or
material can take a significant amount of time. In addition,
if the Antitrust Division or the FTC raises substantive
issues in connection with a proposed transaction, the
parties frequently engage in negotiations with the relevant
governmental agency concerning possible means of addressing
those issues and may agree to delay consummation of the
transaction while such negotiations continue.
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 5. Other Information, Continued
Subsequent to the passage of the Telecom Act, the radio
broadcast industry has been subject to an increased amount
of scrutiny by the Antitrust Division. Such scrutiny caused
the Company to experience delays in closing both the
Citicasters Merger and the Noble acquisition and to incur
increased transaction costs. The Company could experience
similar delays and increased costs in connection with future
transactions, including one or more of the pending
acquisitions.
The Antitrust Division or the FTC could also compel
changes in the proposed terms of acquisitions. This is
evidenced by the Company's agreement with the Antitrust
Division in connection with the Citicasters Merger pursuant
to which the Company agreed to divest WKRQ-FM in Cincinnati
by February 1997 and to inform the Antitrust Division of
certain transactions in Cincinnati that would not otherwise
be reportable under the HSR Act. Antitrust Division
scrutiny also resulted in the Company terminating its
agreement to finance the acquisition of WGRR-FM in
Cincinnati by Tsunami Communications, Inc., the entity with
whom the Company has a JSA for a Denver radio station.
Subsequent to such termination, the Company received from
the Antitrust Division a civil investigative demand relating
to the proposed transaction.
In addition, the Company has received an industry-wide
civil investigative demand relating to JSAs pursuant to
which the Antitrust Division is examining the antitrust
implications of such arrangements. The Company anticipates
that the Antitrust Division's determinations of the
permissibility of JSAs will depend on the specific
characteristics of the markets, stations and relationships
being reviewed. The Company believes that its existing JSAs
are appropriate under applicable antitrust laws and that its
JSAs are not material to its business as such arrangements
account for approximately only 1.0% of the Company's
revenues.
The Company is in the process of responding to the
civil investigative demands received from the Antitrust
Division. Although the Company does not believe that
antitrust considerations will adversely affect the Company's
ability to successfully implement its business strategy, the
effects of the Antitrust Division's heightened level of
scrutiny on the radio broadcast industry and on the Company
are uncertain. There can be no assurances that these
concerns will not negatively impact the Company.
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
Number Description Page
4.1 Second Amendment dated as of
September 18, 1996 to Credit
Agreement dated as of June 12,
1996 by and among Citicasters Inc.
(as successor by merger to JCAC, Inc.),
the Lenders named therein, The Chase
Manhattan Bank (as successor by merger
to Chemical Bank), as Administrative
Agent, Banque Paribas, as Documentation
Agent, and Bank of America Illinois,
as Syndication Agent (omitting exhibits
not deemed material) 41
4.2 Third Amendment dated as of October 8,
1996 to Credit Agreement dated as of
June 12, 1996 by and among Citicasters Inc.
(as successor by merger to JCAC, Inc.), the
lenders named therein, The Chase Manhattan
Bank (as successor by merger to Chemical
Bank), as Administrative Agent, Banque
Paribas, as Documentation Agent, and Bank
of America Illinois, as Syndication Agent
(omitting exhibits not deemed material) 65
10.1 Employment Agreement dated February 20, 1996
by and between Noble Broadcast Group, Inc.
and John T. Lynch, as assumed by the
Registrant effective July 15, 1996. 89
10.2 Employment Agreement dated February 20, 1996
by and between Noble Broadcast Group, Inc.
and Frank A. DeFrancesco, assumed by the
Registrant effective July 15, 1996. 101
11 Statement re computation of consolidated
income (loss) per common share 113
27 Financial Data Schedule 114
99.1 Press Release dated November 11, 1996 115
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(b) Reports on Form 8-K
During the third quarter of 1996, the Company
filed a Form 8-K relating to the consummation of
the Noble acquisition on July 15, 1996. Such Form
8-K was filed with the Securities and Exchange
Commission (the "Commission") on July 30, 1996.
The Noble historical financial statements and pro
forma financial statements relating to the
Company's acquisition of Noble had been previously
filed with the Commission on May 23, 1996, as an
amendment to the Company's Form 8-K filed with the
Commission on March 6, 1996 in which the Noble
acquisition was first reported as a significant
acquisition.
During the fourth quarter of 1996 to date,
the Company has also filed additional Form 8-Ks on
the following dates: October 3, 1996 (relating to
the consummation of the Citicasters Merger),
October 11, 1996 (relating to the execution of the
definitive agreement for the Gannett Exchange),
October 23, 1996 (relating to the execution of the
definitive agreement for the Regent Merger) and
November 6, 1996 (relating to various other
pending acquisitions announced by the Company
during October 1996).
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, Registrant and Co-Registrant has each duly caused
this Report to be signed on its behalf by the undersigned,
thereunto duly authorized.
JACOR COMMUNICATIONS, INC.
(Registrant)
and
CITICASTERS INC.
(Co-Registrant)
DATED: November 14, 1996 BY /s/ R. Christopher Weber
R. Christopher Weber,
Senior Vice President and
Chief Financial Officer
(Duly Authorized Officer and
Principal Financial and
Accounting Officer of
Registrant
and Co-Registrant)
EXHIBIT 4.1
SECOND AMENDMENT TO CREDIT AGREEMENT
This SECOND AMENDMENT TO CREDIT AGREEMENT (this
"Amendment") is entered into as of September 18, 1996 among
Citicasters Inc., a Florida corporation (as successor by
merger to JCAC, Inc.) (the "Company"), The Chase Manhattan
Bank (as successor by merger to Chemical Bank), as Admin
istrative Agent, Banque Paribas, as Documentation Agent,
Bank of America Illinois, as Syndication Agent (The Chase
Manhattan Bank, Banque Paribas and Bank of America Illinois
in such capacities are hereinafter referred to as the
"Agents"), and the Lenders (as defined in the Credit Agree
ment).
R E C I T A L S:
WHEREAS, the Company, the Agents and the Lenders
are parties to that certain Credit Agreement dated as of
June 12, 1996, as amended by that certain First Amendment to
Credit Agreement dated as of June 18, 1996, among the
Company, the Agents and the Lenders (the "Credit Agreement";
capitalized terms used herein and not otherwise defined
herein shall have the meanings assigned to them in the
Credit Agreement as amended hereby);
WHEREAS, the Company has requested that the
Lenders and the Agents amend certain provisions of the
Credit Agreement as more fully described herein; and
WHEREAS, the Lenders and the Agents have agreed to
amend such provisions upon the terms and conditions con
tained herein;
NOW, THEREFORE, in consideration of the premises
contained herein, and for other good and valuable consider
ation, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
I. SECTION Amendments. Immediately upon the
satisfaction of each of the conditions precedent set forth
in Section 2 of this Amendment, the Credit Agreement and the
Company Security Agreement are amended as follows:
A. Amendment to Article I of the Credit
Agreement. (a) Article I of the Credit Agreement is hereby
amended by (i) deleting the definitions of "Excluded Subsid
iary", "Mexican Assignment Agreement", "Mexican Sales Agency
Agreement", "Noble Stock Escrow and Security Agreement" and
"Noble Stock Purchase and Warrant Redemption Agreement" in
their entirety, as they appear therein and substituting
therefor the following new definitions and (ii) adding there
to, in proper alphabetical order, the new defined terms "IR"
and "Second Amendment":
"Excluded Subsidiary" shall mean each of Jacor
National Corp., a Delaware corporation, WIBX Incorporated, a
New York corporation, Marathon Communications, Inc., a New
York corporation, and Nobro, C.V., a Mexican corporation;
provided that, on and prior to, but not at any time after,
60 days after the Effective Date (as defined in the Second
Amendment), the following shall be deemed to be "Excluded
Subsidiaries": FMI Pennsylvania, Inc., GACC-N26LB, Inc.,
GACC-340, Inc., Settlement Development, Inc., Taft-TCI
Satellite Services, Inc., Great American Television
Productions, Inc., Cine Films Inc., Turp Co., Cine
Guarantors, Inc., Cine Guarantors II, Inc., Cine Guarantors
II, Ltd., Cine Movil S.A.Del O.V., Cine Mobile Systems Int'l
N.V., Great American Merchandising Group, Inc., Location
Productions, Inc., Location Productions II, Inc., Cine
Artists Pictures Corp., Aces High Picture Corp., To The
Devil A Daughter Picture Corp., Echoes of Summer Co., Inc.,
Dreamer Productions, Inc., The Sy Fischer Company Agency,
Inc., River Niger Picture Corp., VTTV Productions, Noble
Broadcast Center, Inc. and Sports Radio Broadcasting, Inc.
"Mexican Assignment Agreement" means, in respect
of the Mexican Sales Agency Agreement, an assignment
agreement, substantially the form of Exhibit B-3 hereto,
providing for the assignment by the Company and certain of
its Subsidiaries of all of their right, title and interest
in the Mexican Sales Agency Agreement, in favor of the
Administrative Agent for the ratable benefit of the Lenders,
duly completed, executed and delivered to the Administrative
Agent by the Company and such Subsidiaries, as the same may
be amended, modified, supplemented or restated and in effect
from time to time.
"Mexican Sales Agency Agreement" means the
Exclusive Promotional, Programming and Sales Agreement dated
as of June 1, 1996 between Xetra Comunicaciones, S.A. de
C.V. and Jacor Broadcasting of San Diego, Inc., including
any amendment thereto or replacement thereof (such amendment
or replacement, as the case may be, to be in form and
substance satisfactory to the Administrative Agent).
"Noble Stock Escrow and Security Agreement" means
that certain Stock Escrow and Security Agreement dated as of
February 20, 1996 by and among (or assigned to) the Company,
Prudential Venture Partners II, L.P., Northeast Ventures II,
John T. Lynch, Frank A. DeFrancesco, Thomas R. Jimenez,
William R. Arbenz and The Fifth Third Bank as amended by
that certain First Amendment to Stock Escrow and Security
Agreement dated as of July 8, 1996.
"Noble Stock Purchase and Warrant Redemption
Agreement" means that certain Stock Purchase and Stock and
Warrant Redemption Agreement dated as of February 20, 1996
by and among (or assigned to) the Company, Prudential
Venture Partners II, L.P., Northeast Ventures, II, John T.
Lynch, Frank A. DeFrancesco, Thomas R. Jimenez, William R.
Arbenz, CIHC, Inc., Bankers Life Holding Corporation, and
Noble, as amended by that certain First Amendment to Stock
Purchase and Stock and Warrant Redemption Agreement dated as
of July 8, 1996, as the same may be further amended in
accordance with the provisions of Section 6.29.
"IR" means Inmobiliaria Radial, S.A. de C.V., a
company incorporated under the laws of the United Mexican
States.
"Second Amendment" means that certain Second
Amendment to this Agreement dated as of September 18, 1996
among the Company, the Agents and the Lenders.
(b) Article I of the Credit Agreement is hereby
amended by inserting the words "Time Brokerage Agreement"
followed by a comma after the words "with respect to each"
in the first line of the definition of "Collateral
Assignment".
(c) Article I of the Credit Agreement is hereby
amended by (i) replacing the word "an" with the words "one
or more" in the first line of the definition of
"Intercompany Acquisition Note", (ii) replacing the word
"and" with a comma after the words "demand note" in the
second line of the definition of "Intercompany Acquisition
Note" and (iii) inserting the phrase "and a second amended
and restated intercompany demand acquisition note" after the
words "restated intercompany acquisition demand note" in the
third line of the definition of "Intercompany Acquisition
Note" immediately before the comma.
(d) Article I of the Credit Agreement is hereby
amended by (i) replacing the word "an" with the words "one
or more" in the first line of the definition of
"Intercompany Demand Note" and (ii) inserting a comma fol
lowed by the words "a second consolidated amended and
restated intercompany demand note" after the words "first
amended and restated intercompany demand note" in the second
line of the definition of "Intercompany Demand Note".
(e) Article I of the Credit Agreement is hereby
amended by replacing the word "second" with the word "third"
in the first line of the definition of "Intercompany Securi
ty Agreement".
(f) Article I of the Credit Agreement is hereby
amended by replacing the reference to "$226,000,000" with a
reference to "$259,900,000" in the third line of the
definition of "Liquid Yield Option Notes".
(g) Article I of the Credit Agreement is hereby
amended by inserting the words "or D-4" immediately after
the reference to "D-3" in clause (iv) of the definition of
"Subsidiary Pledge Agreements".
(h) Article I of the Credit Agreement is hereby
amended by inserting the words "and certain other Subsid
iaries of the Company" immediately after the reference to
"Tampa Bay, Inc." in the fourth line of the definition of
"Subsidiary Trademark Agreements" before the word "and".
A. Amendment to Section 2.17(b)(ii) of the Credit
Agreement. Section 2.17(b)(ii) of the Credit Agreement is
hereby amended by adding the word "fee" immediately after
the words "acquisition of any" in the second line thereof.
A. Amendment to Section 4.1(a)(vi) of the Credit
Agreement. Section 4.1(a)(vi) of the Credit Agreement is
hereby amended by adding the word "fee" immediately after
the words "with respect to each" in the third line thereof.
A. Amendment to Section 4.1(a)(xi) of the Credit
Agreement. Section 4.1(a)(xi) of the Credit Agreement is
hereby amended by adding the parenthetical phrase "(other
than any Equity Interests in any Excluded Subsidiary)" imme
diately after the words "Equity Interests" in the fourth
line thereof.
A. Amendment to Section 4.1(a)(xiii) of the
Credit Agreement. Section 4.1(a)(xiii) of the Credit Agree
ment is hereby amended by adding the word "fee" immediately
after the words "any real property" in the third line
thereof.
A. Amendment to Section 5.20 of the Credit
Agreement. Section 5.20 of the Credit Agreement is hereby
amended by adding two new sentences at the end of Section
5.20 as follows: "The aggregate fair market value of the
assets of Nobro, C.V. does not exceed $5,000. The aggregate
fair market value of the assets (other than assets that are
subject to one or more Mortgages) of IR does not exceed
$50,000."
A. Amendment to Section 6.11(c)(iii) of the
Credit Agreement. Section 6.11(c) of the Credit Agreement
is hereby amended by (a) replacing the parenthetical phrase
which appears in each of clauses (i) and (ii) of Section
6.11(c) with the parenthetical phrase "(other than an
Excluded Subsidiary and other than IR)", (b) adding the
parenthetical phrase "(other than an Excluded Subsidiary and
other than IR)" immediately after the words "any Wholly-
Owned Subsidiary" in the eighth line thereof in clause (iii)
thereof and (c) adding the following phrase at the end of
Section 6.11(c) before the period:
; provided that with respect to each Intercompany
Acquisition Note executed by any such Subsidiary in
favor of the Company, the Company shall cause each such
Subsidiary to enter into such Mortgages, Uniform
Commercial Code financing statements and amendments to
Mortgages as may be reasonably requested by the
Administrative Agent.
A. Amendment to Section 6.26 of the Credit
Agreement. Section 6.26 of the Credit Agreement is hereby
amended by adding a new sentence at the end of Section 6.26
as follows: "The Company will not permit Inmobiliaria
Radial, S.A. de C.V. to own or acquire assets (other than
assets that are subject to one or more Mortgages) in excess
of $50,000."
A. Amendment to Section 6.27 of the Credit
Agreement. Section 6.27 of the Credit Agreement is hereby
amended and restated in its entirety to read as follows:
Section 6.27 FCC Licenses. Neither the Company
nor any Excluded Subsidiary shall obtain or hold, or be
licensee under, any FCC Broadcast Station License.
A. Amendment to Article VI of the Credit
Agreement. Article VI of the Credit Agreement is hereby
amended by adding a new Section 6.31 thereto as follows:
Section 6.31 Dissolution of Certain Excluded
Subsidiaries. Within 60 days of the Effective
Date (as defined in the Second Amendment), the Com
pany shall either (i) dissolve or merge into an
existing Subsidiary of the Company each of the Sub
sidiaries of the Company listed in the proviso of
the definition of "Excluded Subsidiary" in Article
I or (ii) cause each of the Subsidiaries of the
Company listed in the proviso of the definition of
"Excluded Subsidiary" which has not been dissolved
or merged in accordance with clause (i) of this
Section 6.31 to enter into such Collateral
Documents and provide and cause each such
Subsidiary to provide such documents, instruments,
certificates and opinions in each case as request
ed by the Administrative Agent promptly upon the
request of the Administrative Agent and as
required to be delivered with respect to each
newly formed Subsidiary of the Company in ac
cordance with Section 2.17(b), including, without
limitation, the stock of each such Subsidiary with
appropriate stock powers pursuant to the Company
Pledge Agreement or the applicable Subsidiary
Pledge Agreement, as the case may be.
A. Amendment to Section 8.2(d) of the Credit
Agreement. Section 8.2(d) of the Credit Agreement is hereby
amended by adding the following proviso at the end of clause
(iii) thereof immediately before the comma:
; provided, that, each other Person (other than an
existing Lender or an Affiliate thereof) to which
the Company offers an opportunity to participate
in the Revolving Commitment Increase must be
acceptable to the Administrative Agent (the
consent of the Administrative Agent not to be
unreasonably withheld); and provided further that,
if there are any Revolving Loans outstanding on
the effective date of any Revolving Commitment
Increase each existing Lender and new Lender
participating in such Revolving Commitment
Increase shall purchase from the other Lenders
such participations in such Revolving Loans as
shall be necessary to cause each Lender with a
Revolving Loan Commitment to share ratably (based
on the proportion that each such Lender's
Revolving Loan Commitment bears to the Aggregate
Revolving Loan Commitment after giving effect to
the Revolving Commitment Increase) in the then
outstanding Revolving Loans subject to the other
terms of this Agreement.
A. Amendment to Schedule I to the Credit Agree
ment. Schedule I to the Credit Agreement is hereby amended
by deleting such Schedule I in its entirety and replacing it
with a new Schedule I attached hereto as Exhibit A.
A. Amendment to Schedule 5.13(b)(i) to the Credit
Agreement. Schedule 5.13(b)(i) to the Credit Agreement is
hereby amended by deleting such Schedule 5.13(b)(i) in its
entirety and replacing it with a new Schedule 5.13(b)(i)
attached hereto as Exhibit B.
A. Amendment to Schedule 5.13(c) to the Credit
Agreement. Schedule 5.13(c) of the Credit Agreement is
hereby amended by deleting such Schedule 5.13(c) in its
entirety and replacing it with a new Schedule 5.13(c)
attached hereto as Exhibit C.
A. Amendment to Schedule 5.15(a) to the Credit
Agreement. Schedule 5.15(a) to the Credit Agreement is
hereby amended by deleting such Schedule 5.15(a) in its
entirety and replacing it with a new Schedule 5.15(a)
attached hereto as Exhibit D.
A. Amendment to Schedule 5.18(a) to the Credit
Agreement. Schedule 5.18(a) to the Credit Agreement is
hereby amended by deleting such Schedule 5.18(a) in its
entirety and replacing it with a new Schedule 5.18(a)
attached hereto as Exhibit E.
A. Amendment to Schedule 5.25 to the Credit Agree
ment. Schedule 5.25 to the Credit Agreement is hereby
amended by deleting such Schedule 5.25 in its entirety and
replacing it with a new Schedule 5.25 attached hereto as
Exhibit F.
A. Amendment to Schedule 6.17(i) to the Credit
Agreement. Schedule 6.17(i) to the Credit Agreement is
hereby amended by deleting such Schedule 6.17(i) in its
entirety and replacing it with a new Schedule 6.17(i) at
tached hereto as Exhibit G.
A. Amendment to references to "Chemical Bank" in
the Loan Documents. Each reference in each Loan Document to
"Chemical Bank" shall hereafter be a reference to "The Chase
Manhattan Bank".
A. Amendment to Exhibits to the Company Security
Agreement. Exhibit A, Exhibit B and Exhibit E to the Compa
ny Security Agreement are hereby amended by deleting such
Exhibit A, Exhibit B and Exhibit E in their entirety, and
replacing such Exhibits with a new Exhibit A, Exhibit B and
a new Exhibit E, respectively, attached hereto as Exhibit H,
Exhibit I and Exhibit J, respectively.
I. SECTION Conditions to Effectiveness of
Amendment. The effectiveness of this Amendment is subject
to the satisfaction of the following conditions precedent:
A. Documents.
(1) () Amendment. The Company shall have
duly executed and delivered this Amendment.
(1) () Guaranty Reaffirmation. The
Parent shall have executed and delivered a Reaffirmation
with respect to the Parent Guaranty in the form of Exhibit K
hereto (the "Reaffirmation").
A. Good Standing. The Company shall have
delivered to the Administrative Agent a good-standing certif
icate (and any bring-downs) with respect to the Company from
the Secretary of State of Florida as to the good standing of
the Company as of the Effective Date (as defined below).
A. Certified Resolutions, etc. The Adminis
trative Agent shall have received (in sufficient copies for
each Lender) a certificate in form and substance satis
factory to the Administrative Agent of the secretary or
assistant secretary (or comparable officer) of the Company
dated the Effective Date, certifying (i) the resolutions of
its Board of Directors approving and authorizing the execu
tion, delivery and performance by it of this Amendment and
the continued effectiveness thereof, (ii) that there have
been no changes in its certificate of incorporation or by-
laws since the Closing Date and (iii) specimen signatures of
its officers authorized to sign this Amendment.
A. Consents, Licenses, Approval, etc. All
consents, licenses and approvals, if any, required in
connection with the execution, delivery and performance by
the Company and the Parent of this Amendment and the
Reaffirmation (collectively, the "Documents"), or the valid
ity or enforceability hereof or thereof, or in connection
with any of the transactions effected pursuant hereto or
thereto, shall have been obtained by the Company and the
Parent and be in full force and effect.
A. No Default; etc. The Administrative Agent
shall have received a certificate of an Authorized Officer
of the Company dated the Effective Date, certifying as to
matters set forth in Sections 3.2 and 3.9 of this Amendment.
A. No Injunction. No law or regulation shall
have been adopted, no order, judgment or decree of any
governmental authority shall have been issued, and no litiga
tion shall be pending or threatened, which in the reasonable
judgment of the Administrative Agent would enjoin, prohibit
or restrain, or impose or result in the imposition of any
material adverse condition upon, the execution, delivery or
performance by the Company of the Documents, the making or
repayment of the Loans or the consummation of the trans
actions effected pursuant to the terms of the Documents and
the other Loan Documents (as amended hereby).
A. No Material Adverse Change. No event, act or
condition shall have occurred since June 12, 1996 that, in
the reasonable judgment of the Administrative Agent, has had
or could have a material adverse effect on the business,
properties, financial condition or results of operations of
the Company and the Parent.
A. Legal Opinions. The Administrative Agent and
each Lender shall have received favorable legal opinions,
dated the Effective Date, of Graydon, Head & Ritchey, Ohio
counsel to the Company and the Parent, and Weil, Gotshal &
Manges LLP, New York counsel to the Company, in each case in
form and substance satisfactory to the Administrative Agent
and the Lenders.
A. Costs, Fees and Expenses. The Administrative
Agent and the Lenders shall have received all costs, fees
and expenses payable by the Company under the Credit Agree
ment in connection with the preparation, execution or
delivery of the Documents (including, without limitation,
the reasonable fees and expenses accrued through the
Effective Date of counsel to the Administrative Agent); and
the Company hereby agrees to pay, and to hold each Agent and
each Lender harmless against, all documentary, stamp, trans
fer and similar taxes paid or payable in connection with the
execution, delivery or performance of the Documents.
A. Additional Matters. The Administrative Agent
shall have received such other certificates, opinions, docu
ments and instruments relating to the Obligations or the
transactions contemplated hereby as may have been reasonably
requested by the Administrative Agent, and all corporate and
other proceedings and all other documents (including,
without limitation, all documents referred to herein and not
appearing herein and exhibits hereto) and all legal matters
in connection with the transactions contemplated hereby
shall be reasonably satisfactory in form and substance to
the Administrative Agent.
I. SECTION Representations and Warranties. In
order to induce the Agents and the Lenders to enter into
this Amendment, the Company represents and warrants to each
Agent and each Lender, upon the effectiveness of this Amend
ment, which representations and warranties shall survive the
execution and delivery of this Amendment, that:
A. Due Incorporation; etc. Each of the Company
and the Parent is a corporation duly incorporated, validly
existing and in good standing under the laws of its
jurisdiction of incorporation, and has all requisite
authority to conduct its business in each jurisdiction in
which its business is conducted.
A. No Default; etc. No Default or Unmatured
Default has occurred and is continuing after giving effect
to this Amendment or would result from the execution or
delivery of this Amendment or the Reaffirmation or the con
summation of the transactions contemplated hereby or
thereby.
A. Corporate Power and Authority; Authorization.
Each of the Company and the Parent has the corporate power
and authority to execute, deliver and carry out the terms
and provisions of the Documents to which it is a party and
the execution and delivery by the Company and the Parent of
the Documents to which it is a party and the performance by
the Company and the Parent of its obligations hereunder and
thereunder have been duly authorized by all requisite
corporate action by the Company and the Parent.
A. Execution and Delivery. The Company and the
Parent have duly executed and delivered each Document to
which it is a party.
A. Enforceability. Each Document, the Credit
Agreement, as amended by this Amendment, and each other Loan
Document constitute the legal, valid and binding obligation
of the Company and the Parent party thereto, as the case may
be, enforceable against such Person in accordance with its
respective terms, except as enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights
generally, and by general principles of equity.
A. No Conflicts; etc. Neither the execution,
delivery or performance by the Company or the Parent of the
Documents to which it is a party, nor compliance by any of
them with the terms and provisions thereof, (i) will
contravene any applicable provision of any law, statute,
rule, regulation, order, writ, injunction or decree of any
court or governmental instrumentality or (ii) will conflict
or be inconsistent with, or result in any breach of, any of
the terms, covenants, conditions or provisions of, or consti
tute a default under, or result in the creation or impo
sition of (or the obligation to create or impose) any Lien
upon any property or assets owned by it pursuant to the
terms of, any indenture, mortgage, deed of trust, agreement
or other instrument to which it is a party or by which it or
any of its property or assets is bound or to which it may be
subject, or (iii) will violate any provision of its
certificate of incorporation or by-laws.
A. Consents; etc. No order, consent, approval,
license, authorization, or validation of, or filing,
recording or registration with, or exemption by, any
governmental or public body or authority, or any subdivision
thereof, is required to authorize, or is required in
connection with the execution, delivery and performance of
the Documents or the consummation of any of the transactions
contemplated thereby.
A. Excluded Subsidiaries. The Excluded
Subsidiaries listed in the proviso of the definition of
"Excluded Subsidiary" in Article I of the Credit Agreement
(as amended by this Amendment) do not in the aggregate have
any material assets.
A. Representations and Warranties. All of the
representations and warranties contained in the Credit
Agreement and in the other Loan Documents (other than those
which speak expressly only as of a different date) and in
the Documents are true and correct as of the date hereof
after giving effect to this Amendment and the other Docu
ments and the transactions contemplated hereby and thereby.
I. SECTION Miscellaneous.
A. Waiver. The Agents and the Lenders hereby (i)
acknowledge that an irrevocable Borrowing Notice was given
by the Company pursuant to Section 2.5 of the Credit
Agreement requesting that certain Loans be made on September
17, 1996 and that no such borrowing was made on September
17, 1996 and (ii) waive the requirement under the Credit
Agreement that the Company make a borrowing on September 17,
1996. The Agents and the Lenders hereby deem the Borrowing
Notice delivered by the Company on September 16, 1996
requesting that certain Loans be made on September 17, 1996
to be a Borrowing Notice under the Credit Agreement for such
Loans to be made to the Company on September 18, 1996.
A. Effect; Ratification. The amendments and
waivers set forth herein are effective solely for the purpos
es set forth herein and shall be limited precisely as writ
ten, and shall not be deemed to (i) be a consent to any
amendment, waiver or modification of any other term or condi
tion of the Credit Agreement or of any other Loan Document
or (ii) prejudice any right or rights that the Agents or the
Lenders may now have or may have in the future under or in
connection with the Credit Agreement or any other Loan
Document. Each reference in the Credit Agreement to "this
Agreement", "herein", "hereof" and words of like import and
each reference in the other Loan Documents to the "Credit
Agreement" shall mean the Credit Agreement as amended here
by. This Amendment shall be construed in connection with
and as part of the Credit Agreement and all terms, condi
tions, representations, warranties, covenants and agreements
set forth in the Credit Agreement and each other Loan Docu
ment, except as herein amended, are hereby ratified and con
firmed and shall remain in full force and effect.
A. Effectiveness. This Amendment shall
immediately become effective as of the date first written
above upon (i) the receipt by the Administrative Agent of
duly executed counterparts of this Amendment from the
Company, each Agent and the Required Lenders and (ii) the
satisfaction of each condition precedent contained in
Section 2 hereof (the "Effective Date").
A. Loan Documents. This Amendment and the
Reaffirmation are Loan Documents executed pursuant to the
Credit Agreement and shall (unless otherwise expressly
indicated herein) be construed, administered and applied in
accordance with the terms and provisions thereof.
A. Costs, Fees and Expenses. The Company agrees
to pay all costs, fees and expenses in connection with the
Documents as required pursuant to the Credit Agreement.
A. Counterparts. This Amendment may be executed
in any number of counterparts, each such counterpart
constituting an original but all together one and the same
instrument.
A. Severability. Any provision contained in this
Amendment which that is held to be inoperative,
unenforceable or invalid in any jurisdiction shall, as to
that jurisdiction, be inoperative, unenforceable or invalid
without affecting the remaining provisions of this Amendment
in that jurisdiction or the operation, enforceability or
validity of that provision in any other jurisdiction.
A. GOVERNING LAW. THIS AMENDMENT SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have
executed this Amendment as of the date first above written.
CITICASTERS INC.,
a Florida corporation
By: /s/ R. Christopher Weber
Title: Senior Vice President
By: /s/ Jon M. Berry
Title: Senior Vice President
THE CHASE MANHATTAN BANK,
Individually and
as Administrative Agent
By: /s/ C.C. Wardell
Title: Managing Director
By: /s/ C.C. Wardell
Title: Managing Director
BANQUE PARIBAS, Individually
and
as Documentation Agent
By: /s/ S.M. Heinen
Title: Vice President
By: /s/ Gerald E. O'Keefe
Title: Vice President
BANK OF AMERICA ILLINOIS,
Individually and as
Syndication Agent
By: /s/ Kevin P. Morrison
Title: Vice President
ABN AMRO BANK N.V.
By: /s/ James J. Johnston
Title: Vice President
By: /s/ Mary L. Janovksky
Title: Vice President
THE BANK OF NEW YORK
By: /s/ Brenda Nedzi
Title: Vice President
THE BANK OF NOVA SCOTIA
By: /s/ Margo C. Bright
Title:
CAISSE NATIONALE DE CREDIT
AGRICOLE
By: /s/ Dean Balice
Title: Senior Vice President
C.I.B.C., INC.
By: /s/ P.C. Smith
Title: Authorized Signor
CREDIT LYONNAIS NEW YORK BRANCH
By: /s/ Stephen C. Levi
Title: Vice President
DRESDNER BANK AG, NEW YORK AND
GRAND CAYMAN BRANCHES
By: /s/ William E. Lambert
Title: Assistant Vice
President
By: /s/ Jane A. Majeski
Title: Vice President
FIRST BANK NATIONAL ASSOCIATION
By: /s/ John E. Besse
Title: Senior Vice President
THE FIRST NATIONAL BANK OF
BOSTON
By: /s/ Robert Milordi
Title: Managing Director
ING CAPITAL ADVISORS, INC.
By: /s/ Michael P. McAdams
Title: Managing Director
MELLON BANK, N.A.
By: /s/ Lisa Pellow
Title: First Vice President
MERRILL LYNCH SENIOR FLOATING
RATE
FUND, INC.
By: /s/ Anthony R. Clemente
Title: Authorized Signor
MORGAN GUARANTY TRUST COMPANY
By: /s/ Sandra Kurek
Title: Associate
NATIONSBANK OF TEXAS, N.A.
By: /s/ Greg Meador
Title: Vice President
PILGRIM AMERICA PRIME RATE
TRUST
By: /s/ Howard Tiffen
Title: Vice President
PRIME INCOME TRUST
By: /s/ Rafael Scolari
Title:
PROTECTIVE LIFE INSURANCE
COMPANY
By: /s/ Mark Okada
Title: Principal
KEYBANK NATIONAL ASSOCIATION
(formerly known as Society
National
Bank)
By: /s/ Michael Stark
Title: Assistant Vice
President
UNION BANK OF CALIFORNIA, N.A.
By: /s/ Kevin Sampson
Title: Assistant Vice
President
VAN KAMPEN AMERICAN CAPITAL
PRIME RATE INCOME TRUST
By: /s/ Jeffrey W. Maillet
Title: Senior Vice President
EXHIBIT E
REAFFIRMATION
[Attached]
REAFFIRMATION OF
PARENT GUARANTY
This REAFFIRMATION OF
PARENT GUARANTY ("Reaffirmation")
is entered into as of ,
1996 by Jacor Communications,
Inc. (the "Parent Guarantor") in
favor of and for the benefit of
The Chase Manhattan Bank (as
successor by merger to Chemical
Bank), as Administrative Agent
(in such capacity, the "Adminis
trative Agent") for itself, the
Agents and the Lenders party to
the Credit Agreement. Capi
talized terms used and not
defined herein shall have the
meanings assigned to such terms
in the Parent Guaranty referenced
below.
R E C I T A L S:
WHEREAS, Citicasters
Inc., a Florida corporation (the
"Company"), the Lenders and the
Agents are parties to that
certain Credit Agreement dated as
of June 12, 1996, as amended by
that certain First Amendment to
Credit Agreement dated as of June
18, 1996 among the Company, the
Agents and the Lenders (the "Orig
inal Credit Agreement");
WHEREAS, the Company,
the Lenders and the Agents are
entering into that certain Second
Amendment to Credit Agreement
dated as of the date hereof (the
"Credit Agreement Amendment"; and
the Original Credit Agreement as
amended by the Credit Agreement
Amendment being referred to
herein as the "Credit
Agreement"); and
WHEREAS, the Parent
Guarantor is a party to that
certain Parent Guaranty dated as
of June 12, 1996 (the "Parent
Guaranty"), pursuant to which the
Parent Guarantor has guaranteed
the Guaranteed Debt, which term
includes, inter alia, all Obliga
tions of the Company under and as
defined in the Credit Agreement.
Section 1.
Reaffirmation. The Parent Guar
antor hereby (i) acknowledges
that the Company, the Lenders and
the Agents have entered into the
Credit Agreement Amendment, which
Credit Agreement Amendment has
been made available to and has
been reviewed by the Parent
Guarantor and (ii) reaffirms that
its obligations under the Parent
Guaranty and each other Collater
al Document to which it is a
party continues in full force and
effect with respect to the
Original Credit Agreement as
amended by the Credit Agreement
Amendment.
Section 2.
Counterparts. This Reaffirmation
may be executed in any number of
counterparts, each such coun
terpart constituting an original
but all together one and the same
instrument.
Section 3. GOVERNING
LAW. THIS REAFFIRMATION SHALL BE
GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF
NEW YORK.
IN WITNESS WHEREOF, the
Parent Guarantor hereto has
caused this Reaffirmation to be
executed and delivered by a duly
authorized officer thereof as of
the date first above written.
JACOR COMMUNICATIONS, INC.
By:
Title:
Acknowledged:
THE CHASE MANHATTAN BANK, as Ad
ministrative Agent and on behalf
of each Agent and each Lender
By:
Title:
EXHIBIT 4.2
THIRD AMENDMENT TO CREDIT
AGREEMENT
This THIRD AMENDMENT TO
CREDIT AGREEMENT (this "Amend
ment") is entered into as of
October 8, 1996 among Citicasters
Inc., a Florida corporation (as
successor by merger to JCAC,
Inc.) (the "Company"), The Chase
Manhattan Bank (as successor by
merger to Chemical Bank), as
Administrative Agent, Banque
Paribas, as Documentation Agent,
Bank of America Illinois, as
Syndication Agent (The Chase
Manhattan Bank, Banque Paribas
and Bank of America Illinois in
such capacities are hereinafter
referred to as the "Agents"), and
the Lenders (as defined in the
Credit Agreement).
R E C I T A L S:
WHEREAS, the Company,
the Agents and the Lenders are
parties to that certain Credit
Agreement dated as of June 12,
1996, as amended by that certain
First Amendment to Credit Agree
ment dated as of June 18, 1996,
among the Company, the Agents and
the Lenders and as further
amended by that certain Second
Amendment to Credit Agreement
dated as of September 18, 1996,
among the Company, the Agents and
the Lenders (the "Credit Agree
ment"; capitalized terms used
herein and not otherwise defined
herein shall have the meanings
assigned to them in the Credit
Agreement as amended hereby);
WHEREAS, the Company
has requested that the Lenders
and the Agents amend certain
provisions of the Credit
Agreement as more fully described
herein; and
WHEREAS, the Lenders
and the Agents have agreed to
amend such provisions upon the
terms and conditions contained
herein;
NOW, THEREFORE, in
consideration of the premises con
tained herein, and for other good
and valuable consideration, the
receipt and sufficiency of which
are hereby acknowledged, the
parties hereto hereby agree as
follows:
I. SECTION Amendments.
Immediately upon the satisfaction
of each of the conditions prece
dent set forth in Section 2 of
this Amendment, the Credit
Agreement is amended as follows:
A. Amendment to
Article I of the Credit
Agreement. (a) Article I of the
Credit Agreement is hereby
amended by amending clause (c) of
the definition of "Permitted
Acquisition" as follows:
(i) deleting the
word "or" in the second
line of clause (c)
after the reference to
"(2)" and replacing it
with a comma, (ii)
adding the reference to
"or (4)" immediately
after the reference to
"(3)" in the second
line of clause (c),
(iii) deleting the word
"or" in the seventeenth
line of clause (c)
immediately before the
reference to "(3)" and
(iv) adding at the end
of clause (c)
immediately before the
period the clause "or
(4) the assets subject
to such Acquisition are
acquired pursuant to
Dispositions permitted
pursuant to Section
6.13(e)".
(b) Article I of the
Credit Agreement is hereby
amended by amending clause (h) of
the definition of "Permitted
Acquisition" by adding the
following proviso at the end of
such clause (h) immediately
before the period:
"; provided that the
requirements in this
clause (h) shall not
apply to Acquisitions
pursuant to which the
assets thereby acquired
are acquired pursuant
to Dispositions
permitted pursuant to
Section 6.13(e)"
A. Amendment to
Section 6.15(ii) of the Credit
Agreement. Section 6.15(ii) of
the Credit Agreement is hereby
amended by adding the word "not"
in the seventh line of Section
6.15(ii) immediately after the
word "extent" in clause (3)
thereof and immediately before
the word "permitted".
I. SECTION Conditions
to Effectiveness of Amendment.
The effectiveness of this
Amendment is subject to the satis
faction of the following
conditions precedent:
A. Documents.
Amendment. The Company
shall have duly executed and
delivered this Amendment, the
Parent shall have duly executed
and delivered the Reaffirmation
of Parent Guaranty with respect
to the Parent Guaranty in the
form of Exhibit A hereto (the
"Parent Reaffirmation") and each
Subsidiary of the Company shall
have duly executed and delivered
the Reaffirmation of Subsidiary
Guaranty with respect to the
Subsidiary Guaranty in the form
of Exhibit B hereto (the "Subsid
iary Reaffirmation").
A. Good Standing. The
Company shall have delivered to
the Administrative Agent a good-
standing certificate (and any
bring-downs) with respect to the
Company from the Secretary of
State of Florida as to the good
standing of the Company in the
state of Florida as of the Effec
tive Date (as defined below).
A. Certified
Resolutions, etc. The Adminis
trative Agent shall have received
(in sufficient copies for each
Lender) a certificate in form and
substance satisfactory to the
Administrative Agent of the
secretary or assistant secretary
(or comparable officer) of the
Company dated the Effective Date,
certifying (i) the resolutions of
its Board of Directors approving
and authorizing the execution,
delivery and performance by it of
this Amendment and the continued
effectiveness thereof, (ii) that
there have been no changes in its
certificate of incorporation or
by-laws since the Closing Date
and (iii) incumbency and specimen
signatures of its officers autho
rized to sign this Amendment.
A. Consents, Licenses,
Approval, etc. All consents, li
censes and approvals, if any,
required in connection with the
execution, delivery and
performance by the Company, the
Parent and each applicable
Subsidiary of the Company of this
Amendment, the Parent Reaffirma
tion and the Subsidiary
Reaffirmation (collectively, the
"Documents"), or the validity or
enforceability hereof or thereof,
or in connection with any of the
transactions effected pursuant
hereto or thereto, shall have
been obtained by the Company, the
Parent and each Subsidiary of the
Company, and be in full force and
effect.
A. No Default; etc.
The Administrative Agent shall
have received a certificate of an
Authorized Officer of the Company
dated the Effective Date, certi
fying as to matters set forth in
Sections 3.2 and 3.8 of this
Amendment.
A. No Injunction. No
law or regulation shall have been
adopted, no order, judgment or
decree of any governmental
authority shall have been issued,
and no litigation shall be
pending or threatened, which in
the reasonable judgment of the
Administrative Agent would en
join, prohibit or restrain, or
impose or result in the imposi
tion of any material adverse
condition upon, the execution,
delivery or performance by the
Company of the Documents, the
making or repayment of the Loans
or the consummation of the trans
actions effected pursuant to the
terms of the Documents and the
other Loan Documents (as amended
hereby).
A. No Material Adverse
Change. No event, act or condi
tion shall have occurred since
June 12, 1996 that, in the
reasonable judgment of the
Administrative Agent, has had or
could have a material adverse ef
fect on the business, properties,
financial condition or results of
operations of the Company, its
Subsidiaries and the Parent.
A. Additional Matters.
The Administrative Agent shall
have received such other certifi
cates, opinions, documents and
instruments relating to the
Obligations or the transactions
contemplated hereby as may have
been reasonably requested by the
Administrative Agent, and all
corporate and other proceedings
and all other documents (in
cluding, without limitation, all
documents referred to herein and
not appearing herein and exhibits
hereto) and all legal matters in
connection with the transactions
contemplated hereby shall be rea
sonably satisfactory in form and
substance to the Administrative
Agent.
I. SECTION
Representations and Warranties.
In order to induce the Agents and
the Lenders to enter into this
Amendment, the Company represents
and warrants to each Agent and
each Lender, upon the
effectiveness of this Amendment,
which representations and
warranties shall survive the
execution and delivery of this
Amendment, that:
A. Due Incorporation;
etc. Each of the Company, each
of its Subsidiaries executing the
Subsidiary Reaffirmation and the
Parent is a corporation duly
incorporated, validly existing
and in good standing under the
laws of its jurisdiction of
incorporation, and has all requi
site authority to conduct its
business in each jurisdiction in
which its business is conducted.
A. No Default; etc.
No Default or Unmatured Default
has occurred and is continuing
after giving effect to the
Documents or would result from
the execution or delivery of the
Documents or the consummation of
the transactions contemplated
hereby or thereby.
A. Corporate Power and
Authority; Authorization. Each
of the Company, the Parent and
each applicable Subsidiary of the
Company has the corporate power
and authority to execute, deliver
and carry out the terms and provi
sions of each Document to which
it is a party and the execution
and delivery by the Company, the
Parent and each applicable
Subsidiary of the Company of each
Document to which it is a party
and the performance by the Compa
ny, the Parent and each
applicable Subsidiary of the
Company of its respective obliga
tions hereunder or thereunder
have been duly authorized by all
requisite corporate action by the
Company, the Parent and each
applicable Subsidiary of the
Company.
A. Execution and
Delivery. Each of the Company,
the Parent and each applicable
Subsidiary of the Company has
duly executed and delivered each
Document to which it is a party.
A. Enforceability.
Each Document, the Credit
Agreement, as amended by this
Amendment, and each other Loan
Document constitute the legal,
valid and binding obligation of
the Company, the Parent and each
applicable Subsidiary of the
Company, enforceable against such
Person in accordance with its
respective terms, except as en
forcement may be limited by
bankruptcy, insolvency, reorgani
zation, moratorium or similar
laws affecting the enforcement of
creditors' rights generally, and
by general principles of equity.
A. No Conflicts; etc.
Neither the execution, delivery
or performance by the Company,
the Parent or any Subsidiary of
the Company of any Document to
which it is a party, nor compli
ance by any of them with the
terms and provisions thereof, (i)
will contravene any applicable
provision of any law, statute,
rule, regulation, order, writ,
injunction or decree of any court
or governmental instrumentality
or (ii) will conflict or be incon
sistent with, or result in any
breach of, any of the terms,
covenants, conditions or
provisions of, or constitute a
default under, or result in the
creation or imposition of (or the
obligation to create or impose)
any Lien upon any property or
assets owned by it pursuant to
the terms of, any indenture,
mortgage, deed of trust, agree
ment or other instrument to which
it is a party or by which it or
any of its property or assets is
bound or to which it may be
subject, or (iii) will violate
any provision of its certificate
of incorporation or by-laws.
A. Consents; etc. No
order, consent, approval,
license, authorization, or
validation of, or filing,
recording or registration with,
or exemption by, any governmental
or public body or authority, or
any subdivision thereof, is re
quired to authorize, or is
required in connection with the
execution, delivery and
performance of the Documents or
the consummation of any of the
transactions contemplated
thereby.
A. Representations and
Warranties. All of the repre
sentations and warranties
contained in this Agreement, in
the Credit Agreement and in the
other Loan Documents (other than
those which speak expressly only
as of a different date) and in
the Documents are true and cor
rect as of the date hereof after
giving effect to this Amendment
and the other Documents and the
transactions contemplated hereby
and thereby.
I. SECTION
Miscellaneous.
A. Effect;
Ratification. The amendments set
forth herein are effective solely
for the purposes set forth herein
and shall be limited precisely as
written, and shall not be deemed
to (i) be a consent to any amend
ment, waiver or modification of
any other term or condition of
the Credit Agreement or of any
other Loan Document or (ii)
prejudice any right or rights
that the Agents or the Lenders
may now have or may have in the
future under or in connection
with the Credit Agreement or any
other Loan Document. Each refer
ence in the Credit Agreement to
"this Agreement", "herein", "here
of" and words of like import and
each reference in the other Loan
Documents to the "Credit
Agreement" shall mean the Credit
Agreement as amended hereby.
This Amendment shall be construed
in connection with and as part of
the Credit Agreement and all
terms, conditions, represen
tations, warranties, covenants
and agreements set forth in the
Credit Agreement and each other
Loan Document, except as herein
amended, are hereby ratified and
confirmed and shall remain in
full force and effect.
A. Effectiveness.
This Amendment shall immediately
become effective as of the date
first written above upon (i) the
receipt by the Administrative
Agent of duly executed counter
parts of this Amendment from the
Company, each Agent and the
Required Lenders and (ii) the
satisfaction of each condition
precedent contained in Section 2
hereof (the "Effective Date").
A. Loan Documents.
This Amendment, the Parent
Reaffirmation and the Subsidiary
Reaffirmation are Loan Documents
executed pursuant to the Credit
Agreement and shall (unless other
wise expressly indicated herein)
be construed, administered and
applied in accordance with the
terms and provisions thereof.
A. Costs, Fees and
Expenses. The Company agrees to
pay all costs, fees and expenses
in connection with the Documents
as required pursuant to the
Credit Agreement.
A. Counterparts. This
Amendment may be executed in any
number of counterparts, each such
counterpart constituting an
original but all together one and
the same instrument.
A. Severability. Any
provision contained in this
Amendment which that is held to
be inoperative, unenforceable or
invalid in any jurisdiction
shall, as to that jurisdiction,
be inoperative, unenforceable or
invalid without affecting the
remaining provisions of this
Amendment in that jurisdiction or
the operation, enforceability or
validity of that provision in any
other jurisdiction.
A. GOVERNING LAW.
THIS AMENDMENT SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE INTERNAL
LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the
parties hereto have executed this
Amendment as of the date first
above written.
CITICASTERS INC.,
a Florida corporation
By: /s/ R. Christopher Weber
Title: Senior Vice President
By: /s/ Jon M. Berry
Title: Senior Vice President
THE CHASE MANHATTAN BANK,
Individually and
as Administrative Agent
By: /s/ C.C. Wardell
Title: Vice President
BANQUE PARIBAS, Individually and
as Documentation Agent
By: /s/ S.M. Heinen
Title: Vice President
By: /s/ Mark A. Radzak
Title: Vice President
BANK OF AMERICA ILLINOIS,
Individually and as
Syndication Agent
By: /s/ Kevin P. Morrison
Title: Vice President
ABN AMRO BANK N.V.
By: /s/ James J. Johnston
Title: Vice President
By: /s/ Mary L. Honda
Title: Vice President
THE BANK OF NEW YORK
By: /s/ Brenda Nedzi
Title: Vice President
THE BANK OF NOVA SCOTIA
By: /s/ Margo C. Bright
Title: Authorized Signatory
CAISSE NATIONALE DE CREDIT AGRICOLE
By: /s/ Lisa A. Centone
Title: Vice President
C.I.B.C., INC.
By: /s/ P.C. Smith
Title: Authorized Signatory
CREDIT LYONNAIS NEW YORK BRANCH
By: /s/ Stephen C. Levi
Title: Vice President
DRESDNER BANK AG, NEW YORK AND
GRAND CAYMAN BRANCHES
By: /s/ William E. Lambert
Title: Assistant Vice President
By: /s/ Jane A. Majeski
Title: Vice President
FIRST BANK NATIONAL ASSOCIATION
By: /s/ Robert W. Miller
Title: Vice President
THE FIRST NATIONAL BANK OF BOSTON
By: /s/ Robert Milordi
Title: Managing Director
ING CAPITAL ADVISORS, INC.
By: /s/ Michael D. Hatley
Title: Vice President
MELLON BANK, N.A.
By: Michael P. Hizebov
Title: Assistant Vice President
MERRILL LYNCH SENIOR FLOATING RATE
FUND, INC.
By: /s/ Anthony R. Clemente
Title: Authorized Signatory
MORGAN GUARANTY TRUST COMPANY
By: /s/ Sandra Kurek
Title: Associate
NATIONSBANK OF TEXAS, N.A.
By: /s/ Greg Meador
Title: Vice President
PILGRIM AMERICA PRIME RATE TRUST
By: /s/ Thomas C. Hunt
Title: Portfolio Analyst
PRIME INCOME TRUST
By: /s/ Rafael Scolari
Title: V.P. Portfolio Manager
PROTECTIVE LIFE INSURANCE COMPANY
By: /s/ Mark Okada
Title: Principal
KEYBANK NATIONAL ASSOCIATION
(formerly known as Society
National Bank)
By: /s/ Michael Stark
Title: Assistant Vice President
UNION BANK OF CALIFORNIA, N.A.
By: /s/ Kevin Sampson
Title: Assistant Vice President
VAN KAMPEN AMERICAN CAPITAL PRIME RATE INCOME TRUST
By: /s/ Brian W. Good
Title: Vice President
KEYPORT LIFE INSURANCE COMPANY
By: Chancellor Senior Secured
Management, Inc. as
Portfolio Advisor
By: /s/ Gregory L. Smith
Title: Vice President
SENIOR DEBT PORTFOLIO
By: Boston Management and Research,
as Investment Advisor
By: /s/ Barbara Campbell
Title: Assistant Treasurer
MERRILL LYNCH PRIME RATE PORTFOLIO
By: Merrill Lynch Asset Management,
L.P., as Investment Advisor
By: /s/ Anthony R. Clemente
Title: Authorized Signatory
MEDICAL LIABILITY MUTUAL
INSURANCE CO.
By: /s/ Gregory L. Smith
Title: Vice President
Exhibit A
REAFFIRMATION OF
PARENT GUARANTY
This REAFFIRMATION OF PARENT GUARANTY ("Re
affirmation") is entered into as of October 8, 1996 by
Jacor Communications, Inc. (the "Parent Guarantor") in
favor of and for the benefit of The Chase Manhattan
Bank (as successor by merger to Chemical Bank), as
Administrative Agent (in such capacity, the "Adminis
trative Agent") for itself, the Agents and the Lenders
party to the Credit Agreement. Capitalized terms used
and not defined herein shall have the meanings assigned
to such terms in the Parent Guaranty referenced below.
R E C I T A L S:
WHEREAS, Citicasters Inc., a Florida corpo
ration (the "Company"), the Lenders and the Agents are
parties to that certain Credit Agreement dated as of
June 12, 1996, as amended by that certain First Amend
ment to Credit Agreement dated as of June 18, 1996
among the Company, the Agents and the Lenders and as
further amended by that certain Second Amendment to
Credit Agreement dated as of September 18, 1996 among
the Company, the Agents and the Lenders (the "Original
Credit Agreement");
WHEREAS, the Company, the Lenders and the
Agents are entering into that certain Third Amendment
to Credit Agreement dated as of the date hereof (the
"Credit Agreement Amendment"; and the Original Credit
Agreement as amended by the Credit Agreement Amendment
being referred to herein as the "Credit Agreement");
and
WHEREAS, the Parent Guarantor is a party to
that certain Parent Guaranty dated as of June 12, 1996
(the "Parent Guaranty"), pursuant to which the Parent
Guarantor has guaranteed the Guaranteed Debt, which
term includes, inter alia, all Obligations of the
Company under and as defined in the Credit Agreement.
Section 1. Reaffirmation. The Parent Guar
antor hereby (i) acknowledges that the Company, the
Lenders and the Agents have entered into the Credit
Agreement Amendment, which Credit Agreement Amendment
has been made available to and has been reviewed by the
Parent Guarantor and (ii) reaffirms that its obliga
tions under the Parent Guaranty and each other Collater
al Document to which it is a party continues in full
force and effect with respect to the Original Credit
Agreement as amended by the Credit Agreement Amendment.
Section 2. Counterparts. This Reaffirmation
may be executed in any number of counterparts, each
such counterpart constituting an original but all
together one and the same instrument.
Section 3. GOVERNING LAW. THIS REAFFIRMA
TION SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRET
ED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE
OF NEW YORK.
IN WITNESS WHEREOF, the Parent Guarantor
hereto has caused this Reaffirmation to be executed and
delivered by a duly authorized officer thereof as of
the date first above written.
JACOR COMMUNICATIONS, INC.
By:
Title:
Acknowledged:
THE CHASE MANHATTAN BANK, as Administrative Agent and
on behalf of each Agent and each Lender
By:
Title:
Exhibit B
REAFFIRMATION OF
SUBSIDIARY GUARANTY
This REAFFIRMATION OF SUBSIDIARY GUARANTY
("Reaffirmation") is entered into as of October 8, 1996
by each of the parties listed on the signature pages
hereof (collectively, the "Guarantors") in favor of and
for the benefit of The Chase Manhattan Bank (as succes
sor by merger to Chemical Bank), as Administrative
Agent (in such capacity, the "Administrative Agent")
for itself, the Agents and the Lenders party to the
Credit Agreement. Capitalized terms used and not
defined herein shall have the meanings assigned to such
terms in the Subsidiary Guaranty referenced below.
R E C I T A L S:
WHEREAS, Citicasters Inc., a Florida corpo
ration (the "Company"), the Lenders and the Agents are
parties to that certain Credit Agreement dated as of
June 12, 1996, as amended by that certain First Amend
ment to Credit Agreement dated as of June 18, 1996
among the Company, the Agents and the Lenders and as
further amended by that certain Second Amendment to
Credit Agreement dated as of September 18, 1996 among
the Company, the Agents and the Lenders (the "Original
Credit Agreement");
WHEREAS, the Company, the Lenders and the
Agents are entering into that certain Third Amendment
to Credit Agreement dated as of the date hereof (the
"Credit Agreement Amendment"; and the Original Credit
Agreement as amended by the Credit Agreement Amendment
being referred to herein as the "Credit Agreement");
and
WHEREAS, each of the Guarantors is a party
to that certain Subsidiary Guaranty dated as of Septem
ber 18, 1996 (the "Subsidiary Guaranty"), pursuant to
which each Guarantor has guaranteed the Guaranteed
Debt, which term includes, inter alia, all Obligations
of the Company under and as defined in the Credit
Agreement.
Section 1. Reaffirmation. Each Guarantor
hereby (i) acknowledges that the Company, the Lenders
and the Agents have entered into the Credit Agreement
Amendment, which Credit Agreement Amendment has been
made available to and has been reviewed by each Guar
antor and (ii) reaffirms that its obligations under the
Subsidiary Guaranty and each other Collateral Document
to which it is a party continues in full force and
effect with respect to the Original Credit Agreement as
amended by the Credit Agreement Amendment.
Section 2. Counterparts. This Reaffirmation
may be executed in any number of counterparts, each
such counterpart constituting an original but all
together one and the same instrument.
Section 3. GOVERNING LAW. THIS REAFFIRMA
TION SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRET
ED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE
OF NEW YORK.
IN WITNESS WHEREOF, each of the Guarantors
hereto has caused this Reaffirmation to be executed and
delivered by a duly authorized officer thereof as of
the date first above written.
Address for each Guarantor:
1300 PNC Center JACOR BROADCASTING
OF FLORIDA, INC.
201 East Fifth Street
Cincinnati, Ohio 45202
Attn: R. Christopher Weber
By:
Name:
Title:
JACOR BROADCASTING OF ATLAN
TA, INC.
By:
Name:
Title:
JACOR BROADCASTING OF KNOX
VILLE, INC.
By:
Name:
Title:
JACOR BROADCASTING OF COLORA
DO, INC.
By:
Name:
Title:
JACOR BROADCASTING OF TAMPA
BAY, INC.
By:
Name:
Title:
JACOR BROADCASTING OF ST. LOU
IS, INC.
By:
Name:
Title:
JACOR CABLE, INC.
By:
Name:
Title:
GEORGIA NETWORK EQUIPMENT,
INC.
By:
Name:
Title:
JACOR BROADCASTING CORPORA
TION
By:
Name:
Title:
BROADCAST FINANCE, INC.
By:
Name:
Title:
JACOR BROADCASTING OF SAN
DIEGO, INC.
By:
Name:
Title:
JACOR BROADCASTING OF
LEXINGTON, INC.
By:
Name:
Title:
JACOR BROADCASTING OF
SARASOTA, INC.
By:
Name:
Title:
CITICASTERS CO.
By:
Name:
Title:
NOBLE BROADCAST OF COLORADO,
INC.
By:
Name:
Title:
NOBLE BROADCAST OF ST. LOUIS,
INC.
By:
Name:
Title:
NOBLE BROADCAST OF TOLEDO,
INC.
By:
Name:
Title:
NOBLE BROADCAST OF SAN DIEGO,
INC.
By:
Name:
Title:
NOBLE BROADCAST LICENSES,
INC.
By:
Name:
Title:
NOBLE BROADCAST HOLDINGS,
INC.
By:
Name:
Title:
NOBLE BROADCAST GROUP, INC.
By:
Name:
Title:
SPORTS RADIO, INC.
By:
Name:
Title:
NOVA
MARKETING GROUP, INC.
By:
Name:
Title:
INMOBILIARIA RADIAL, S.A. DE
C.V.
By:
Name:
Title:
Acknowledged:
THE CHASE MANHATTAN BANK, as Administrative Agent and
on behalf of each Agent and each Lender
By:
Title:
EXHIBIT 10.1
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement")
is entered into as of February 20, 1996, by and between
Noble Broadcast Group, Inc., a Delaware corporation
(the "Company") and John T. Lynch ("Employee") with
reference to the following facts:
A. Concurrently herewith, Employee, Company
and Jacor Communications, Inc., an Ohio corporation
("Jacor"), and various of their affiliates, are
entering into a series of agreements, including without
limitation that certain Stock Purchase and Stock and
Warrant Redemption Agreement dated as of February 20,
1996 (the "Stock Agreement"), pursuant to which it is
contemplated that Employee will transfer all of his
shares of Company ("Shares") to Jacor, and Company will
become a wholly-owned subsidiary of Jacor. Capitalized
terms not otherwise defined herein shall have the
meaning contemplated by the Stock Agreement;
B. The Stock Agreement contemplates that a
period of time may pass prior to the Closing
thereunder, and the consummation of the Stock Agreement
is conditional upon obtaining the consent of the
Federal Communications Commission ("FCC");
C. Company has made certain covenants and
undertakings, pursuant to the Stock Agreement and other
related documents, for which the continued services of
Employee, including certain duties and responsibilities
not previously applicable to Employee's job
performance, are critical through and including the
Closing Date;
D. Company has obligations under the
Communications Act
of 1934, as amended, and the policies and rules of the
FCC, to ensure that prior to the Closing Date it
maintains control over the programming, personnel and
finances of the radio stations licensed to Noble
Broadcast Licenses, Inc.;
E. The Company and Employee wish to enter
into this Agreement to set forth the rights and
obligations of each of them with respect to Employee's
employment with the Company, and the circumstances
under which such rights and obligations will change.
ACCORDINGLY, in consideration of the premises
and the agreements contained herein, and other good and
valuable consideration, the receipt and adequacy of
which the parties hereby acknowledge, the parties agree
as follows:
I. Section . Employment. The Company
hereby employs Employee, and Employee, in consideration
of such employment and other consideration set forth
herein, hereby accepts employment, upon the terms and
conditions set forth herein.
I. Section . Office and Duties.
A. During the term of this Agreement prior
to the Closing (the "Pre-Closing Period"), Employee
shall be employed in the position of Chairman and Chief
Executive Officer of the Company, performing such
duties as directed by the Board of Directors of the
Company ("Board"). In such capacity, Employee shall
perform the duties historically exercised by him in
such capacity, but shall further use his best
reasonable efforts to assure the Company's compliance
with the Stock Agreement. Such duties of Employee
shall include, but not be limited to: (i) maintaining
Company control over the operations, programming,
sales, finances and employees of the Stations,
including the direct supervision of the general manager
of each Station, consistent when applicable, with any
Time Brokerage Agreement so in effect; and (ii)
ensuring compliance by the Company and its Affiliates
with FCC rules and policies.
A. At the Closing, Company shall assign all
of its rights and obligations hereunder to Jacor
(references to the term "Company" for the period
following the Closing (the "Post-Closing Period") shall
refer to Jacor). During the "Post-Closing Period"
Employee shall serve as the Vice Chairman of Jacor and
as such shall perform such functions and duties as
directed by the President and Co-Chief Operating
Officer and/or the Co-Chief Operating Officer of Jacor
("Jacor Officer") which functions and duties shall
include the general supervision of the Company's San
Diego operations including those management
responsibilities that Jacor Officer determines are
appropriate from time to time. Further, the general
managers of the Company's San Diego operations shall
report to Employee.
A. While employed hereunder, Employee
shall do all things necessary, legal and incident to
the above positions, and shall perform the functions
and duties as either the Board (during the Pre-Closing
Period) or Jacor Officer (during the Post-Closing
Period), may establish from time to time. In the
performance of the functions and duties hereunder,
Employee shall work and travel to such places and on
such occasions as the Board (during the Pre-Closing
Period) or Jacor Officer (during the Post-Closing
Period), may from time to time reasonably require on an
occasional basis. On such occasions the Employee shall
be permitted to fly first class and incur other
travelling expenses consistent with the Company's
policy regarding expenses for its executive employees
of similar position, at the Company's expense.
Notwithstanding any other provision herein, Employee's
services shall be rendered, and Employee's existing
office shall be maintained, in San Diego, California.
I. Section . Remuneration.
A. Base Salary. Employee shall be paid a
monthly base salary of $25,000.00 during the Term
hereof. Except as otherwise provided in Section 9.5,
Employee's base salary shall be paid in equal
installments on the fifteenth and last day of each
month.
A. Fringe Benefits. During the Pre-Closing
Period, Employee shall be entitled to participate in
and receive such insurance and other fringe benefits as
he has historically received from the Company. During
the Post-Closing Period, Employee shall be entitled to
participate in and receive such insurance and other
fringe benefits as may be provided to the executive
employees of Jacor.
A. Additional Compensation. During the Term
of this Agreement, Employee shall be paid an expense
allowance for automobile expenses and club dues of
$1,200.00 per month as additional compensation.
I. Section . Expenses. The Company shall
pay or reimburse Employee for all travel and out-of-
pocket expenses reasonably incurred or paid by Employee
in connection with the performance of Employee's duties
as an employee of the Company, upon presentation of
expense statements or receipts or such other supporting
documentation as the Company may reasonably require.
All of such expenses shall be consistent with the
Company's policy regarding expenses for its executive
employees of similar position.
I. Section . Outside Employment.
A. Except for services performed by Employee
pursuant to the Conseco and Class A Shareholders
Consulting Agreements, Employee shall devote Employee's
full time and attention to the performance of the
duties incident to Employee's position with the Company
and shall not have any other employment with any other
enterprise or substantial responsibility for any
enterprise which would be inconsistent with Employee's
duties hereunder (the foregoing shall not prevent the
Employee from participating in any charitable or civic
organization that does not interfere with Employee's
performance of the duties and responsibilities to be
performed by Employee under this Agreement). Without
limiting the foregoing, other than on behalf of the
Company, and for the exclusive benefit of the Company,
the Employee further specifically agrees that during
the term of this Agreement, Employee will not either
for himself or on behalf of any person, firm,
corporation, limited liability company, partnership or
any other operations or entity, directly or indirectly:
1. render any services
as an officer, director, employee, agent, consultant or
in any other capacity to, or own any interest (other
than an interest of less than five percent (5%) of the
stock of a publicly held company), as an owner,
stockholder, member, partner or in any other manner in
any person, firm, corporation, limited liability
company, partnership or other entity which is a
Competitive Business;
1. solicit or otherwise
attempt to employ or employ any current or future
employee of the Company or any Affiliate (as that term
is defined in Section 5.2 of this Agreement) for
employment in any business or otherwise offer any
inducement to any current or future employee of the
Company or any Affiliate to leave such company's employ
("Solicitation"); or
1. (a) divert or
attempt to divert from the Company or its Affiliates
any business whatsoever by influencing or attempting to
influence any customers or clients of the Company or
its Affiliates or contact, solicit any past, existing
or potential customer or client of the Company or its
Affiliates ("Customers") (a "potential customer or
client of the Company" or its Affiliates shall mean any
individual or business entity with whom the Company or
its Affiliates has directly communicated or
corresponded for the purposes of rendering products or
services or selling advertising time) regarding the
Company's or its Affiliates' business or any
Competitive Business ("Broadcast Business") or (b)
otherwise provide radio broadcast products or services
or any other products or services for any Customers
("Broadcast Services"); or
1. use or divulge to
anyone any information about the identity of the
Customers or suppliers of the Company and/or its
Affiliates (including without limitation, customer
lists and customer prospect lists (whether in writing
or memorized by Employee)), or information about
Customer requirements, transactions, work orders,
pricing policies, plans, or any other Confidential
Information, (as that term is defined in Section 6 of
this Agreement).
A. For the purpose of this Agreement,
"Competitive Business" shall mean any business
operation (including a sole proprietorship) which
engages in, as all or a significant part of its
business, the business of radio broadcasting in markets
which the Company and its Affiliates own and operates
radio stations and/or has a sales agency agreement
relating to such markets, but does not include any
radio broadcasting in the State of California outside
the San Diego metropolitan area ("Non San Diego
Market"). For the purpose of this Agreement
"Affiliate" shall mean as to the Company, (a) any
person which directly or indirectly, is in control of,
is controlled by or is under common control with, the
Company, or (b) any person who is a director, officer
or employee (i) of the Company or (ii) of any person
described in the preceding clause (a). For purposes of
this definition, control of a person shall mean (a) the
power, direct or indirect, (i) to vote ten percent
(10%) or more of the securities having ordinary voting
power for the election of directors of such person or
(ii) to direct or cause the direction of the management
and policies of such person whether by contract or
otherwise, or (b) the ownership, direct or indirect, of
ten percent (10%) or more of any class of equity
securities of such person.
I. Section . Confidential Information.
Employee shall not, during the term of this Agreement
or at any time thereafter, disclose, or cause to be
disclosed, in any way Confidential Information, or any
part thereof, to any person, firm, corporation,
association, or any other operation or entity, or use
the Confidential Information on Employee's own behalf,
for any reason or purpose. Employee further agrees
that, during the term of this Agreement or at any time
thereafter, Employee will not distribute, or cause to
be distributed, Confidential Information to any third
person or permit the reproduction of the Confidential
Information, except on behalf of the Company in
Employee's capacity as an employee of the Company.
Employee shall take all reasonable care to avoid
unauthorized disclosure or use of the Confidential
Information. Employee hereby assumes responsibility
for and shall indemnify and hold the Company harmless
from and against any disclosure or use of the
Confidential Information in violation of this
Agreement.
For the purpose of this Agreement,
"Confidential Information" shall mean any written or
unwritten information which specifically relates to or
is used in the business of the Company or any Affiliate
relating to services, processes, patents, systems,
equipment, creations, designs, formats, programming,
discoveries, inventions, improvements, computer
programs, data kept on computer, engineering, research,
development, applications, financial information,
information regarding services and products in
development, market information including test
marketing or localized marketing, other confidential
information regarding processes or plans in
development, trade secrets, training manuals and know-
how of the Company or any Affiliate, and information
relating to customers, clients, suppliers and others
with whom the Company or its Affiliates do or have in
the past done business, which the Company or any
Affiliate deems confidential and proprietary and which
is generally not known to others outside the Company
and its Affiliates which gives or tends to give the
Company and/or its Affiliates a competitive advantage
over persons who do not possess such information or the
secrecy of which is otherwise of value to the Company,
or its Affiliates in the conduct of their business --
regardless of when and by whom such information was
developed or acquired, and regardless of whether any of
these are described in writing, reduced to practice,
copyrightable or considered copyrightable, patentable
or considered patentable. Provided, however, that
"Confidential Information" shall not include general
industry information or information which is publicly
available or otherwise known to those persons working
in the radio broadcast business or is otherwise in the
public domain without breach of this Agreement,
information which Employee has lawfully acquired from a
source other than the Company or its Affiliates, or
information which is required to be disclosed pursuant
to any law, regulation, or rule of any governmental
body or authority or court order. Employee
acknowledges that the Confidential Information is
novel, proprietary to and of considerable value to the
Company and/or its Affiliates.
Employee agrees that all restrictions
contained in this Section 6 are reasonable and valid
under the circumstances and hereby waives all defenses
to the strict enforcement thereof by the Company.
Employee agrees that, upon the Company's
request, Employee will immediately deliver up to the
Company all Confidential Information in Employee's
possession and/or control, and all notes, records,
memoranda, correspondence, files and other papers, and
all copies, relating to or containing Confidential
Information. Employee does not have, nor can Employee
acquire any property or other right in the Confidential
Information.
I. Section . Creations, Inventions,
Improvements, Etc.
A. It shall be part of the normal duties of
Employee at all times to consider in what manner and by
what new methods or devices the products, services,
processes, equipment or systems of the Company might be
improved and promptly to give to the Board full details
of any creation, design, format, invention, discovery,
or improvement ("Creation") which Employee may, from
time to time, make, discover or become aware of in the
course of Employee's duties and to further the
interests of the Company's undertaking with regard
thereto, and Employee hereby agrees that the sole
ownership of any Creation and all proprietary rights
therein discovered or made by Employee (whether alone
or jointly with others) at any time during Employee's
employment hereunder shall belong free of charge and
exclusively to the Company and/or its Affiliates or as
the Company may direct.
A. Employee hereby agrees (at any time
during Employee's employment or thereafter and at the
Company's expense) to do all such acts and things
(including, without limitation, making application for
letters patent) as the Company may reasonably request
to vest ownership of any Creation and any protection as
to ownership or use (in any part of the world) of any
Creation in the Company and/or its Affiliates or as it
may direct, jointly if necessary, with any joint
inventor thereof, and the Employee hereby irrevocably
appoints the Company for the purposes aforesaid to be
Employee's attorney in Employee's name and on
Employee's behalf to execute and do any such documents,
acts and things aforesaid.
A. Employee is hereby notified, and
Employee hereby acknowledges, that the provisions of
this Agreement shall not apply to an invention that
qualifies fully under the provisions of California
Labor Code 2870.
I. Section . Term. Unless earlier
terminated pursuant to Section 9 hereof, the term of
this Agreement shall be for a term which will begin as
of February __, 1996, and continue until September __,
1999 (the "Term").
I. Section . Termination, Severance, Etc.
A. Death. This Agreement and Employee's
employment hereunder shall be terminated on the death
of Employee, effective as of the date of Employee's
death.
A. Continued Disability. This Agreement and
Employee's employment hereunder shall be terminated, at
the option of the Company, upon a Continued Disability
of Employee, effective as of the date of the
determination of Continued Disability as that term is
hereinafter defined. For the purposes of this
Agreement "Continued Disability" shall be defined as
the inability or incapacity (either mental or physical)
of Employee to continue to perform Employee's duties
hereunder for a continuous period of three (3) months
or for 90 days, whether or not contiguous, during any
period of 365 contiguous days. The determination as to
whether Employee is unable to perform the essential
functions of Employee's job shall be made by the Board
(during the Pre-Closing Period) or Jacor Officer
(during the Post-Closing Period) in the good faith
exercise of its reasonable discretion; provided,
however, that if Employee is not satisfied with the
decision of the Board or Jacor Officer, as the case may
be, Employee will submit to examination by three
competent physicians who practice in the metropolitan
area in which the Employee then resides, one of whom
shall be selected by the Company, another of whom shall
be selected by Employee, with the third to be selected
by the physicians so selected. The decision of a
majority of the physicians so selected shall supersede
the decision of the Board or Jacor Officer, as the case
may be, and shall be final and conclusive.
A. Termination - Good Cause. Notwithstanding
any other provision of this Agreement, the Company may
at any time immediately terminate this Agreement and
Employee's employment hereunder for Good Cause. For
this purpose, "Good Cause" shall include the following:
the current use of illegal drugs; indictment for any
felony or any crime involving moral turpitude; fraud or
misrepresentation; embezzlement of funds or property of
the Company or any Affiliate; willful conduct which is
materially injurious to the business, reputation,
business or business relationships of the Company, or
any Affiliate; failure to comply with the policies,
rules, or directives of the Board or Jacor Officer, as
the case may be; or any material violation of any of
the provisions of this Agreement or the Noncompetition
and Confidentiality Agreement by and among Jacor, the
Company and Employee of even date herewith. Any
alleged cause for termination shall be delivered in
writing to Employee stating the full basis for such
cause as a condition to any notice of such termination.
A. Termination _ Other. On or after February
__, 1998, either Employee or the Company may terminate
the Agreement for any reason at any time following
written notice of not less than thirty (30) days.
A. Payment Upon Termination.
1. Notwithstanding any other
provision hereof, in the event of any termination of
this Agreement pursuant to Section 9.1, Section 9.3 or
Section 9.4, the Company shall pay to Employee (or to
his estate or designated beneficiary in the event of
termination pursuant to Section 9.1) within ten (10)
days thereof, without any discount or offset, as a lump
sum an amount equal to all amounts accrued under
Section 3.1 hereof plus the total amount of all
additional payments otherwise contemplated under
Section 3.1 hereof for the entire originally
contemplated term through and including September __,
1999.
1. In the event of any
termination of this Agreement other than termination
pursuant to Section 9.1, Section 9.3 or Section 9.4,
the Company shall continue to pay Employee the amounts
required under Section 3.1, in the manner provided in
Section 3.1.
I. Section . Notices.
All notices, demands or other communications
which may be or are required to be given by any party
to any other party pursuant to this Agreement, shall be
in writing and shall be mailed by certified mail,
return receipt requested, postage prepaid, or
transmitted by hand delivery, national overnight
express, telegram or facsimile transmission, addressed
as follows:
A. In the case of the Company (during the Pre-
Closing Period), if addressed to it as follows:
Noble Broadcast Group, Inc.
4891 Pacific Highway
San Diego, California 92110-4082
Telecopier: (619) 294-9393
With a copy, which shall not constitute a
required notice, to:
J. Terence O'Malley, Esq.
Gray Cary Ware & Freidenrich
401 B Street, Suite 1700
San Diego, California 92101-4297
Telecopier: (619) 236-1048
A. In the case of the Company (during the
Post-Closing Period), if addressed to it as follows:
Jacor Communications, Inc.
1300 PNC Center
201 East Fifth Street
Cincinnati, Ohio 45202
Attention: Randy Michaels
Telecopier: (513) 621-6087
With a copy, which shall not constitute a
required notice, to:
Graydon, Head & Ritchey
1900 Fifth Third Center
511 Walnut Street
Cincinnati, Ohio 45202
Attention: John J. Kropp, Esq.
Telecopier: (513) 651-3836
A. In the case of Employee, if addressed to
Employee at:
John T. Lynch
1508 Uno Verde Court
Solana Beach, California 92075
Telecopier: (619) 481-3269
With a copy, which shall not constitute a
required notice, to:
J. Terence O'Malley, Esq.
Gray Cary Ware & Freidenrich
401 B Street, Suite 1700
San Diego, California 92101-4297
Telecopier: (619) 236-1048
until such time as either party notifies the other of a
change of address. Each notice or other communication
which shall be mailed, delivered or transmitted in the
manner described above shall be deemed sufficiently
given and received for all purposes at such time as it
is delivered to the addressee (with the return receipt,
the delivery receipt, or the affidavit of messenger or
telefax transmission log being deemed conclusive
evidence of such delivery) or at such time as delivery
is refused by the addressee upon presentation.
I. Section . Assignment, Successors and
Assigns. This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their
respective legal representatives, successor and
assigns. The Company may assign or otherwise transfer
its rights under this Agreement to any successor or
affiliated business or corporation (whether by sale of
stock, merger, consolidation, sale of assets or
otherwise), but this Agreement may not be assigned, nor
may the duties hereunder be delegated by Employee. In
the event that the Company assigns or otherwise
transfers its rights under this Agreement to any
successor or affiliated business or corporation
(whether by sale of stock, merger, consolidation, sale
of assets or otherwise), for all purposes of this
Agreement, the "Company" shall then be deemed to
include the successor or affiliated business or
corporation to which the Company assigned or otherwise
transferred its rights hereunder.
I. Section . Modification. This Agreement
may not be released, discharged, abandoned, changed, or
modified in any manner, except by an instrument in
writing signed by each of the parties hereto.
I. Section . Severability. The invalidity
or unenforceability of any particular provision of this
Agreement shall not affect any other provisions hereof,
and this Agreement shall be construed in all respects
as if any such invalid provision were omitted herefrom.
I. Section . Counterparts. This Agreement
may be signed in counterparts and each of such
counterpart shall constitute an original document and
such counterparts, taken together, shall constitute one
in the same instrument.
I. Section . Governing Law. The
provisions of this Agreement shall be governed by and
interpreted in accordance with the laws of the State of
Ohio and the laws of the United States applicable
therein.
I. Section . Prior Agreement. The
previously existing employment agreement between
Employee and Company is hereby terminated. The
outstanding interest-free loan to Employee of $50,000,
made pursuant to such agreement and made subject to
forgiveness upon achievement of certain economic goals,
is hereby forgiven in consideration of services
rendered.
IN WITNESS WHEREOF, this Agreement has been
executed by the parties hereto effective as of the date
first above written.
NOBLE BROADCAST GROUP, INC. "Employee"
By:/s/ Frank A. DeFrancesco /s/ John T.
Lynch
Frank A. De Francesco John T. Lynch
Executive Vice President and
Chief Financial Officer
APPROVED FOR THE BOARD OF DIRECTORS BY:
/s/ Louis P. Ferrero
Louis P. Ferrero,
Chairman of the Compensation
Committee of the Board
____________________________________________________________
_____
As of the Closing Date, the undersigned, Jacor
Communications, Inc., shall accept and assume the assignment
of the rights and obligations of the Company under this
Agreement, pursuant to Section 2.2 of this Agreement.
JACOR COMMUNICATIONS, INC.
By:/s/ Randy Michaels
Randy Michaels, President
EXHIBIT 10.2
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement") is
entered into as of February 20, 1996, by and between Noble
Broadcast Group, Inc., a Delaware corporation (the
"Company") and Frank A. De Francesco ("Employee") with
reference to the following facts:
A. Concurrently herewith, Employee, Company and
Jacor Communications, Inc., an Ohio corporation ("Jacor"),
and various of their affiliates, are entering into a series
of agreements, including without limitation that certain
Stock Purchase and Stock and Warrant Redemption Agreement
dated as of February 20, 1996 (the "Stock Agreement"),
pursuant to which it is contemplated that Employee will
transfer all of his shares of Company ("Shares") to Jacor,
and Company will become a wholly-owned subsidiary of Jacor.
Capitalized terms not otherwise defined herein shall have
the meaning contemplated by the Stock Agreement;
B. The Stock Agreement contemplates that a
period of time may pass prior to the Closing thereunder, and
the consummation of the Stock Agreement is conditional upon
obtaining the consent of the Federal Communications
Commission ("FCC");
C. Company has made certain covenants and
undertakings, pursuant to the Stock Agreement and other
related documents, for which the continued services of
Employee, including certain duties and responsibilities not
previously applicable to Employee's job performance, are
critical through and including the Closing Date;
D. Company has obligations under the
Communications Act
of 1934, as amended, and the policies and rules of the FCC,
to ensure that prior to the Closing Date it maintains
control over the programming, personnel and finances of the
radio stations licensed to Noble Broadcast Licenses, Inc.;
E. The Company and Employee wish to enter into
this Agreement to set forth the rights and obligations of
each of them with respect to Employee's employment with the
Company, and the circumstances under which such rights and
obligations will change.
ACCORDINGLY, in consideration of the premises and
the agreements contained herein, and other good and valuable
consideration, the receipt and adequacy of which the parties
hereby acknowledge, the parties agree as follows:
I. Section . Employment. The Company hereby
employs Employee, and Employee, in consideration of such
employment and other consideration set forth herein, hereby
accepts employment, upon the terms and conditions set forth
herein.
I. Section . Office and Duties.
A. During the term of this Agreement prior to
the Closing (the "Pre-Closing Period"), Employee shall be
employed in the position of Executive Vice President & Chief
Financial Officer of the Company, performing such duties as
directed by the Board of Directors of the Company ("Board").
In such capacity, Employee shall perform the duties
historically exercised by him in such capacity, but shall
further use his best reasonable efforts to assure the
Company's compliance with the Stock Agreement. Such duties
of Employee shall include, but not be limited to: [(i)
maintaining Company control over the operations,
programming, sales, finances and employees of the Stations,
including the direct supervision of the general manager of
each Station, consistent when applicable, with any Time
Brokerage Agreement so in effect; and (ii) ensuring
compliance by the Company and its Affiliates with FCC rules
and policies].
A. At the Closing, Company shall assign all of
its rights and obligations hereunder to Jacor (references to
the term "Company" for the period following the Closing (the
"Post-Closing Period") shall refer to Jacor). During the
"Post-Closing Period" Employee shall serve as a Senior Vice
President and as such shall perform such functions and
duties as directed by the President and Co-Chief Operating
Officer, the Co-Chief Operating Officer and/or Chief
Financial Officer of Jacor ("Jacor Officer"). Such
functions and duties shall include, but not be limited to,
operational audits; systems and procedures; employee
benefits; training and assisting both corporate and station
financial staff; acquisition evaluation; internal,
operational and financial audit matters; procedures
development and formulating policies.
A. While employed hereunder, Employee shall do
all things necessary, legal and incident to the above
positions, and shall perform the functions and duties as
either the Board (during the Pre-Closing Period) or Jacor
Officer (during the Post-Closing Period), may establish from
time to time. In the performance of the functions and
duties hereunder, Employee shall work and travel to such
places and on such occasions as the Board (during the Pre-
Closing Period) or Jacor Officer (during the Post-Closing
Period), may from time to time reasonably require on an
occasional basis. On such occasions the Employee shall be
permitted to incur travelling expenses consistent with the
Company's policy regarding expenses for its executive
employees of similar position, at the Company's expense.
Notwithstanding any other provision herein, Employee's
services shall be rendered, and Employee's existing office
shall be maintained, in San Diego, California.
I. Section . Remuneration.
A. Base Salary. Employee shall be paid a monthly
base salary of $10,000.00 during the Term hereof. Except as
otherwise provided in Section 9.5, Employee's base salary
shall be paid in equal installments on the fifteenth and
last day of each month.
A. Fringe Benefits. During the Pre-Closing Period,
Employee shall be entitled to participate in and receive
such insurance and other fringe benefits as he has
historically received from the Company. During the Post-
Closing Period, Employee shall be entitled to participate in
and receive such insurance and other fringe benefits as may
be provided to the executive employees of Jacor.
I. Section . Expenses. The Company shall pay or
reimburse Employee for all travel and out-of-pocket expenses
reasonably incurred or paid by Employee in connection with
the performance of Employee's duties as an employee of the
Company, upon presentation of expense statements or receipts
or such other supporting documentation as the Company may
reasonably require. All of such expenses shall be
consistent with the Company's policy regarding expenses for
its executive employees of similar position.
I. Section . Outside Employment.
A. Except for services performed by Employee
pursuant to the Conseco and Class A Shareholders Consulting
Agreements, Employee shall devote Employee's full time and
attention to the performance of the duties incident to
Employee's position with the Company and shall not have any
other employment with any other enterprise or substantial
responsibility for any enterprise which would be
inconsistent with Employee's duties hereunder (the foregoing
shall not prevent the Employee from participating in any
charitable or civic organization that does not interfere
with Employee's performance of the duties and
responsibilities to be performed by Employee under this
Agreement). Without limiting the foregoing, other than on
behalf of the Company, and for the exclusive benefit of the
Company, the Employee further specifically agrees that
during the term of this Agreement, Employee will not either
for himself or on behalf of any person, firm, corporation,
limited liability company, partnership or any other
operations or entity, directly or indirectly:
1. render any services as an
officer, director, employee, agent, consultant or in any
other capacity to, or own any interest (other than an
interest of less than five percent (5%) of the stock of a
publicly held company), as an owner, stockholder, member,
partner or in any other manner in any person, firm,
corporation, limited liability company, partnership or
other entity which is a Competitive Business;
1. solicit or otherwise
attempt to employ or employ any current or future
employee of the Company or any Affiliate (as that term
is defined in
Section 5.2 of this Agreement) for employment in any
business or otherwise offer any inducement to any
current or future employee of the Company or any
Affiliate to leave such company's employ
("Solicitation"); or
1. (a) divert or attempt to
divert from the Company or its Affiliates any business
whatsoever by influencing or attempting to influence any
customers or clients of the Company or its Affiliates or
contact, solicit any past, existing or potential
customer or
client of the Company or its Affiliates ("Customers") (a
"potential customer or client of the Company" or its
Affiliates shall mean any individual or business
entity with whom the Company or its Affiliates has
directly communicated
or corresponded for the purposes of rendering products or
services or selling advertising time) regarding the
Company's or its Affiliates' business or any Competitive
Business ("Broadcast Business") or (b) otherwise provide
radio broadcast products or services or any other
products or services for any Customers ("Broadcast
Services"); or
1. use or divulge to anyone
any information about the identity of the Customers or
suppliers of the Company and/or its Affiliates (including
without limitation, customer lists and customer prospect
lists (whether in writing or memorized by Employee)), or
information about Customer requirements, transactions,
work orders, pricing policies, plans, or any other
Confidential Information, (as that term is defined in
Section 6 of this Agreement).
A. For the purpose of this Agreement,
"Competitive Business" shall mean any business operation
(including a sole proprietorship) which engages in, as all
or a significant part of its business, the business of radio
broadcasting in markets which the Company and its Affiliates
own and operates radio stations and/or has a sales agency
agreement relating to such markets, but does not include any
radio broadcasting in the State of California outside the
San Diego metropolitan area ("Non San Diego Market"). For
the purpose of this Agreement "Affiliate" shall mean as to
the Company, (a) any person which directly or indirectly, is
in control of, is controlled by or is under common control
with, the Company, or (b) any person who is a director,
officer or employee (i) of the Company or (ii) of any person
described in the preceding clause (a). For purposes of this
definition, control of a person shall mean (a) the power,
direct or indirect, (i) to vote ten percent (10%) or more of
the securities having ordinary voting power for the election
of directors of such person or (ii) to direct or cause the
direction of the management and policies of such person
whether by contract or otherwise, or (b) the ownership,
direct or indirect, of ten percent (10%) or more of any
class of equity securities of such person.
I. Section . Confidential Information. Employee
shall not, during the term of this Agreement or at any time
thereafter, disclose, or cause to be disclosed, in any way
Confidential Information, or any part thereof, to any
person, firm, corporation, association, or any other
operation or entity, or use the Confidential Information on
Employee's own behalf, for any reason or purpose. Employee
further agrees that, during the term of this Agreement or at
any time thereafter, Employee will not distribute, or cause
to be distributed, Confidential Information to any third
person or permit the reproduction of the Confidential
Information, except on behalf of the Company in Employee's
capacity as an employee of the Company. Employee shall take
all reasonable care to avoid unauthorized disclosure or use
of the Confidential Information. Employee hereby assumes
responsibility for and shall indemnify and hold the Company
harmless from and against any disclosure or use of the
Confidential Information in violation of this Agreement.
For the purpose of this Agreement, "Confidential
Information" shall mean any written or unwritten information
which specifically relates to or is used in the business of
the Company or any Affiliate relating to services,
processes, patents, systems, equipment, creations, designs,
formats, programming, discoveries, inventions, improvements,
computer programs, data kept on computer, engineering,
research, development, applications, financial information,
information regarding services and products in development,
market information including test marketing or localized
marketing, other confidential information regarding
processes or plans in development, trade secrets, training
manuals and know-how of the Company, or any Affiliate, and
information relating to customers, clients, suppliers and
others with whom the Company or its Affiliates do or have in
the past done business, which the Company or any Affiliate
deems confidential and proprietary and which is generally
not known to others outside the Company and its Affiliates
which gives or tends to give the Company and/or its
Affiliates a competitive advantage over persons who do not
possess such information or the secrecy of which is
otherwise of value to the Company, or its Affiliates in the
conduct of their business -- regardless of when and by whom
such information was developed or acquired, and regardless
of whether any of these are described in writing, reduced to
practice, copyrightable or considered copyrightable,
patentable or considered patentable. Provided, however,
that "Confidential Information" shall not include general
industry information or information which is publicly
available or otherwise known to those persons working in the
radio broadcast business or is otherwise in the public
domain without breach of this Agreement, information which
Employee has lawfully acquired from a source other than the
Company or its Affiliates, or information which is required
to be disclosed pursuant to any law, regulation, or rule of
any governmental body or authority or court order. Employee
acknowledges that the Confidential Information is novel,
proprietary to and of considerable value to the Company
and/or its Affiliates.
Employee agrees that all restrictions contained in
this Section 6 are reasonable and valid under the
circumstances and hereby waives all defenses to the strict
enforcement thereof by the Company.
Employee agrees that, upon the Company's request,
Employee will immediately deliver up to the Company all
Confidential Information in Employee's possession and/or
control, and all notes, records, memoranda, correspondence,
files and other papers, and all copies, relating to or
containing Confidential Information. Employee does not
have, nor can Employee acquire any property or other right
in the Confidential Information.
I. Section . Creations, Inventions,
Improvements, Etc.
A. It shall be part of the normal duties of
Employee at all times to consider in what manner and by what
new methods or devices the products, services, processes,
equipment or systems of the Company might be improved and
promptly to give to the Board full details of any creation,
design, format, invention, discovery, or improvement
("Creation") which Employee may, from time to time, make,
discover or become aware of in the course of Employee's
duties and to further the interests of the Company's under
taking with regard thereto, and Employee hereby agrees that
the sole ownership of any Creation and all proprietary
rights therein discovered or made by Employee (whether alone
or jointly with others) at any time during Employee's
employment hereunder shall belong free of charge and
exclusively to the Company and/or its Affiliates or as the
Company may direct.
A. Employee hereby agrees (at any time during
Employee's employment or thereafter and at the Company's
expense) to do all such acts and things (including, without
limitation, making application for letters patent) as the
Company may reasonably request to vest ownership of any
Creation and any protection as to ownership or use (in any
part of the world) of any Creation in the Company and/or its
Affiliates or as it may direct, jointly if necessary, with
any joint inventor thereof, and the Employee hereby
irrevocably appoints the Company for the purposes aforesaid
to be Employee's attorney in Employee's name and on
Employee's behalf to execute and do any such documents, acts
and things aforesaid.
A. Employee is hereby notified, and Employee
hereby acknowledges, that the provisions of this Agreement
shall not apply to an invention that qualifies fully under
the provisions of California Labor Code 2870.
I. Section . Term. Unless earlier terminated
pursuant to Section 9 hereof, the term of this Agreement
shall be for a term which will begin as of February __,
1996, and continue until September __, 1999 (the "Term").
I. Section . Termination, Severance, Etc.
A. Death. This Agreement and Employee's employment
hereunder shall be terminated on the death of Employee,
effective as of the date of Employee's death.
A. Continued Disability. This Agreement and
Employee's employment hereunder shall be terminated, at the
option of the Company, upon a Continued Disability of
Employee, effective as of the date of the determination of
Continued Disability as that term is hereinafter defined.
For the purposes of this Agreement "Continued Disability"
shall be defined as the inability or incapacity (either
mental or physical) of Employee to continue to perform
Employee's duties hereunder for a continuous period of three
(3) months or for 90 days, whether or not contiguous, during
any period of 365 contiguous days. The determination as to
whether Employee is unable to perform the essential
functions of Employee's job shall be made by the Board
(during the Pre-Closing Period) or Jacor Officer (during the
Post-Closing Period) in the good faith exercise of its
reasonable discretion; provided, however, that if Employee
is not satisfied with the decision of the Board or Jacor
Officer, as the case may be, Employee will submit to
examination by three competent physicians who practice in
the metropolitan area in which the Employee then resides,
one of whom shall be selected by the Company, another of
whom shall be selected by Employee, with the third to be
selected by the physicians so selected. The decision of a
majority of the physicians so selected shall supersede the
decision of the Board or Jacor Officer, as the case may be,
and shall be final and conclusive.
A. Termination - Good Cause. Notwithstanding any
other provision of this Agreement, the Company may at any
time immediately terminate this Agreement and Employee's
employment hereunder for Good Cause. For this purpose,
"Good Cause" shall include the following: the current use
of illegal drugs; indictment for any felony or any crime
involving moral turpitude; fraud or misrepresentation;
embezzlement of funds or property of the Company or any
Affiliate; willful conduct which is materially injurious to
the business, reputation, business or business relationships
of the Company, or any Affiliate; failure to comply with the
policies, rules, or directives of the Board or Jacor
Officer, as the case may be; or any material violation of
any of the provisions of this Agreement or of the
Noncompetition and Confidentiality Agreement by and among
Jacor, the Company and Employee of even date herewith. Any
alleged cause for termination shall be delivered in writing
to Employee stating the full basis for such cause as a
condition to any notice of such termination.
A. Termination _ Other. On or after February 19,
1997, either Employee or the Company may terminate the
Agreement for any reason at any time following written
notice of not less than thirty (30) days.
A. Payment Upon Termination.
1. Notwithstanding any other
provision hereof, in the event of any termination of this
Agreement pursuant to Section 9.1, Section 9.3 or Section
9.4, the Company shall pay to Employee (or to his estate or
designated beneficiary in the event of termination pursuant
to Section 9.1) within ten (10) days thereof, without any
discount or offset, as a lump sum an amount equal to all
amounts accrued under Section 3.1 hereof plus the total
amount of all additional payments otherwise contemplated
under Section 3.1 hereof for the entire originally
contemplated term through and including September __, 1999.
1. In the event of any termination of
this Agreement other than termination pursuant to Section
9.1, Section 9.3 or Section 9.4, the Company shall continue
to pay Employee the amounts required under Section 3.1, in
the manner provided in Section 3.1.
I. Section . Notices.
All notices, demands or other communications which
may be or are required to be given by any party to any other
party pursuant to this Agreement, shall be in writing and
shall be mailed by certified mail, return receipt requested,
postage prepaid, or transmitted by hand delivery, national
overnight express, telegram or facsimile transmission,
addressed as follows:
A. In the case of the Company (during the Pre-
Closing Period), if addressed to it as follows:
Noble Broadcast Group, Inc.
4891 Pacific Highway
San Diego, California 92110-4082
Telecopier: (619) 294-9393
With a copy, which shall not constitute a required
notice, to:
J. Terence O'Malley, Esq.
Gray Cary Ware & Freidenrich
401 B Street, Suite 1700
San Diego, California 92101-4297
Telecopier: (619) 236-1048
A. In the case of the Company (during the Post-
Closing Period), if addressed to it as follows:
Jacor Communications, Inc.
1300 PNC Center
201 East Fifth Street
Cincinnati, Ohio 45202
Attention: Randy Michaels
Telecopier: (513) 621-6087
With a copy, which shall not constitute a required
notice, to:
Graydon, Head & Ritchey
1900 Fifth Third Center
511 Walnut Street
Cincinnati, Ohio 45202
Attention: John J. Kropp, Esq.
Telecopier: (513) 651-3836
A. In the case of Employee, if addressed to
Employee at:
Frank A. De Francesco
13202 Lomas Verdes Drive
Poway, California 92064
Telecopier: (619) 673-9049
With a copy, which shall not constitute a required
notice, to:
J. Terence O'Malley, Esq.
Gray Cary Ware & Freidenrich
401 B Street, Suite 1700
San Diego, California 92101-4297
Telecopier: (619) 236-1048
until such time as either party notifies the other of a
change of address. Each notice or other communication which
shall be mailed, delivered or transmitted in the manner
described above shall be deemed sufficiently given and
received for all purposes at such time as it is delivered to
the addressee (with the return receipt, the delivery
receipt, or the affidavit of messenger or telefax
transmission log being deemed conclusive evidence of such
delivery) or at such time as delivery is refused by the
addressee upon presentation.
I. Section . Assignment, Successors and
Assigns. This Agreement shall inure to the benefit of and
be binding upon the parties hereto and their respective
legal representatives, successor and assigns. The Company
may assign or otherwise transfer its rights under this
Agreement to any successor or affiliated business or
corporation (whether by sale of stock, merger,
consolidation, sale of assets or otherwise), but this
Agreement may not be assigned, nor may the duties hereunder
be delegated by Employee. In the event that the Company
assigns or otherwise transfers its rights under this
Agreement to any successor or affiliated business or
corporation (whether by sale of stock, merger,
consolidation, sale of assets or otherwise), for all
purposes of this Agreement, the "Company" shall then be
deemed to include the successor or affiliated business or
corporation to which the Company assigned or otherwise
transferred its rights hereunder.
I. Section . Modification. This Agreement may
not be released, discharged, abandoned, changed, or modified
in any manner, except by an instrument in writing signed by
each of the parties hereto.
I. Section . Severability. The invalidity or
unenforceability of any particular provision of this
Agreement shall not affect any other provisions hereof, and
this Agreement shall be construed in all respects as if any
such invalid provision were omitted herefrom.
I. Section . Counterparts. This Agreement may
be signed in counterparts and each of such counterpart shall
constitute an original document and such counterparts, taken
together, shall constitute one in the same instrument.
I. Section . Governing Law. The provisions of
this Agreement shall be governed by and interpreted in
accordance with the laws of the State of Ohio and the laws
of the United States applicable therein.
I. Section . Prior Agreement. The previously
existing employment agreement between Employee and Company
is hereby terminated. The outstanding interest-free loan to
Employee of $50,000, made pursuant to such agreement and
made subject to forgiveness upon achievement of certain
economic goals, is hereby forgiven in consideration of
services rendered.
IN WITNESS WHEREOF, this Agreement has been
executed by the parties hereto effective as of the date
first above written.
NOBLE BROADCAST GROUP, INC. "Employee"
By: /s/ Frank A. De Francesco /s/ Frank A. De
Francesco
Frank A. De Francesco Frank A. De
Francesco
Executive Vice President and
Chief Financial Officer
APPROVED FOR THE BOARD OF DIRECTORS BY:
/s/ Louis P. Ferrero
Louis P. Ferrero,
Chairman of the Compensation
Committee of the Board
____________________________________________________________
_____
As of the Closing Date, the undersigned, Jacor
Communications, Inc., shall accept and assume the assignment
of the rights and obligations of the Company under this
Agreement, pursuant to Section 2.2 of this Agreement.
JACOR COMMUNICATIONS, INC.
By: /s/ Randy Michaels
Randy Michaels, President
<TABLE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
EXHIBIT 11
Computation of Consolidated Income Per Common Share
for the three months and nine months ended September 30, 1996 and 1995
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
1996 1995 1996 1995
Income for primary and
fully diluted computation:
<S> <C> <C> <C> <C>
Income $ 85 $ 3,488 $ 4,737 $ 7,768
Primary:
Weighted average common shares
and all other dilutive
securities:
Common stock 31,250 18,774 23,499 19,167
Stock purchase warrants - 1,046 - 890
Stock options and
Citicasters warrants 1,753 889 1,081 779
Contingently issuable
common shares 300 300 300 300
33,303 21,009 24,880 21,136
Primary income per
common share:
Before extraordinary loss $ 0.06 - $ 0.31 -
Net income $ 0.00 $ 0.17 $ 0.19 $ 0.37
<FN>
NOTES:
1. Fully diluted earnings per share is not presented
since it approximates primary income per share.
2. The 5.5% Liquid Yield Option Notes were not
assumed to be converted for purpose of the fully diluted computation
because they would be antidilutive.
3. The Citicasters warrants are not included in the
nine months ended September 30 primary income per share calculation
as they are antidilutive.
</TABLE>
EXHIBIT 99.1
Contact: Kirk Brewer
(847) 256-9282
JACOR REPORTS CONTINUED STRENGTH
IN OPERATING RESULTS;
Broadcast Cash Flow Rises 75% in Quarter
CINCINNATI, November 11, 1996 -- Jacor Communications, Inc.
(NASDAQ: JCOR), one of the nation's leading radio
broadcasting companies, today reported a 63-percent increase
in broadcast cash flow for the nine months ended September
30, 1996, and a 75 percent increase in broadcast cash flow
for the third quarter of 1996.
Jacor's broadcast cash flow for the 1996 nine-month
period rose 63 percent to $35.8 million from $21.9 million
in the same period of 1995. Third quarter broadcast cash
flow rose 75 percent to $16.1 million from $9.2 million in
the third quarter of 1995. Net revenue for the first nine
months of 1996 rose 46 percent to $127.5 million from $87.2
million in the first nine months of 1995. Third quarter
1995 net revenue rose 68 percent, to $54.3 million from
$32.3 million in the 1995 third quarter.
On a "same station" basis -- reflecting results from
stations operated in the first nine months of both 1996 and
1995 -- Jacor's broadcast cash flow rose 26 percent to $27.4
million in the first nine months of 1996 from $21.8 million
in the nine months of 1995. Broadcast cash flow on a "same
station" basis for the third quarter of 1996 rose 17 percent
to $10.6 million from $9.0 million in the same quarter of
1995.
Net revenue on a "same station" basis rose 12 percent
in the first nine months of 1996 to $93.7 million from $84.0
million in the same period of 1995. Third quarter 1996
"same station" net revenue rose 13 percent to $34.6 million
from $30.7 million in the third quarter of 1995.
For the first nine months of 1996, net income was $4.7
million, or 19 cents per share, compared to $7.8 million, or
37 cents per share, in the first nine months of 1995. Net
income for the three months ended September 30, 1996, was
$0.1 million, or 0 cents per share, compared to $3.5
million, or 17 cents per share, in the third quarter of
1995. Net income was affected by significantly higher
interest expense, higher depreciation and amortization
expense and an extraordinary loss, all of which relate to
Jacor's recent acquisitions. The extraordinary loss
resulted from the writedown of deferred financing costs
associated with Jacor's refinancing of its Senior Credit
Facility.
Randy Michaels, chief executive officer of Jacor, said,
"Our `same-station' broadcast cash flow increases are
indicative of the fundamental vitality of our stations and
our broadcast areas, and we're pleased about that. We're
also very excited about the demonstrated benefits and
prospects for continued growth brought about by our
acquisition strategy."
Jacor Communications is headquartered in Cincinnati.
Including announced pending acquisitions, Jacor owns,
operates, represents or provides programming for 102 radio
stations in 22 U.S. cities. The company also owns WKRC-TV
in Cincinnati. Jacor plans to pursue growth through
continued acquisitions of complementary stations in its
existing locations, and radio groups or individual stations
with significant presence in other attractive locations.
# # #
<TABLE>
Jacor Communications, Inc. and Subsidiaries
Consolidated Statements of Operations
(In thousands, except per share amounts)
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Broadcast revenue $60,143 $36,116 $142,176 $97,648
less agency commissions 5,817 3,822 14,656 10,472
Net revenue 54,326 32,294 127,520 87,176
Broadcast operating expenses 38,273 23,129 91,694 65,241
Broadcast cash flow 1 16,053 9,165 35,826 21,935
Depreciation and
amortization 5,166 2,442 10,601 6,783
Corporate general and
administrative expenses 1,658 824 4,080 2,564
Operating income 9,229 5,899 21,145 12,588
Interest expense (6,844) (384) (13,397) (593)
Gain on sale of radio - - 2,539 -
Other income, net 3,160 348 4,701 1,052
Income before income taxes
and extraordinary loss 5,545 5,863 14,988 13,047
Income taxes 3,445 2,375 7,285 5,279
Income before extraordinary
loss 2,100 3,488 7,703 7,768
Extraordinary loss, net of
income tax credit (2,015) - (2,966) -
NET INCOME $85 $3,488 $4,737 $7,768
NET INCOME PER COMMON SHARE:
Before extraordinary loss $0.06 $0.17 $0.31 $0.37
Extraordinary loss ($0.06) - ($0.12) -
Net income per common share $0.00 $0.17 $0.19 $0.37
Average common shares 33,303 21,009 24,880 21,136
<FN>
_______________________________
1 Operating income before depreciation and amortization, and
corporate general and administrative expenses.
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0
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