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 June 30, 1998
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
50 East RiverCenter Blvd.
12TH Floor
Covington, KY 41011
Telephone (606) 655-2267
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 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
At August 5, 1998, 50,958,860 shares of common stock were
outstanding.
<PAGE>
JACOR COMMUNICATIONS, INC.
INDEX
Page
Number
PART I. Financial Information
Item 1. - Financial Statements
Condensed Consolidated Balance Sheets
as of June 30, 1998 and December 31,
1997 3
Condensed Consolidated Statements of
Operations and Comprehensive Income
for the three months and six months
ended June 30, 1998 and 1997 4
Condensed Consolidated Statements of
Cash Flows for the six months ended
June 30, 1998 and 1997 6
Notes to Condensed Consolidated Financial
Statements 7
Item 2. - Management's Discussion and Analysis
of Financial Condition and Results of
Operations 14
PART II. Other Information
Item 4. - Submission of Matters to Vote of
Security Holders 22
Item 5. - Other Information 23
Item 6. - Exhibits and Reports on Form 8-K 23
Signatures 25
<PAGE>
<TABLE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(UNAUDITED)
<CAPTION>
June 30, December 31,
1998 1997
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 314,842 $ 28,724
Accounts receivable, less allowance for
doubtful accounts of $7,676 in 1998
and $6,195 in 1997 162,991 135,073
Prepaid expenses and other 45,083 33,790
Total current assets 522,916 197,587
Property and equipment, net 216,777 206,809
Intangible assets, net 2,144,639 2,128,718
Other assets 86,730 68,764
Total assets $ 2,971,062 $2,601,878
LIABILITIES
Current liabilities:
Accounts payable, accrued expenses
and other current liabilities $ 105,610 $ 118,249
Total current liabilities 105,610 118,249
Long-term debt 939,555 987,500
Liquid Yield Option Notes 298,628 125,300
Deferred tax liability 343,184 338,867
Other liabilities 117,874 115,611
Commitments and contingencies
SHAREHOLDERS' EQUITY
Preferred stock, authorized and unissued
4,000,000 shares - -
Common stock, $0.01 par value; authorized
100,000,000 shares, issued and outstanding
shares: 50,936,410 in 1998 and 45,689,677
in 1997 510 457
Additional paid-in capital 1,114,769 863,086
Common stock warrants 31,500 31,500
Retained earnings 19,432 21,308
Total shareholders' equity 1,166,211 916,351
Total liabilities and
shareholders' equity $ 2,971,062 $2,601,878
The accompanying notes are an integral
part of the condensed consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
for the three months and six months ended June 30, 1998 and 1997
(in thousands, except per share amounts)
(UNAUDITED)
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Broadcast revenue $ 207,101 $ 151,803 $ 366,293 $251,956
Less agency commissions 23,265 16,250 40,429 27,575
Net revenue 183,836 135,553 325,864 224,381
Broadcast operating expenses 120,747 90,474 228,100 157,779
Depreciation and amortization 28,833 17,828 56,283 31,197
Corporate general and
administrative expenses 4,242 3,072 7,786 5,834
Non-cash compensation 288 - 388 -
Operating income 29,726 24,179 33,307 29,571
Interest expense (25,079) (22,211) (49,037) (39,387)
Gain on sale of assets - 6,106 - 10,801
Other income, net 6,275 2,371 8,754 2,776
Income (loss) before income
taxes and extraordinary loss 10,922 10,445 (6,976) 3,761
Income tax (expense) benefit (5,900) (6,300) 5,100 (2,200)
Income (loss) before
extraordinary loss 5,022 4,145 (1,876) 1,561
Extraordinary loss, net
of income tax benefit - - - (5,556)
Net income (loss) 5,022 4,145 (1,876) (3,995)
Reclassification adjustment
for gains included
in net income - (3,689) - -
Other comprehensive income,
net of tax - (3,689) - -
Comprehensive income (loss) $ 5,022 $ 456 $ (1,876) $ (3,995)
(Continued)
</TABLE>
<PAGE>
<TABLE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
for the three months and six months ended June 30, 1998 and 1997
(in thousands, except per share amounts)
(UNAUDITED)
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Basic net income (loss) per
common share:
Before extraordinary loss $ 0.10 $ 0.11 $(0.04) $ 0.04
Extraordinary loss - - - (0.15)
Net income (loss) per
common share $ 0.10 $ 0.11 $(0.04) $(0.11)
Number of common shares used
in basic calculation 50,895 38,968 49,696 35,791
Diluted net income (loss) per
common share:
Before extraordinary loss $ 0.09 $ 0.10 $(0.04) $ 0.04
Extraordinary loss - - - (0.15)
Net income (loss) per
common share $ 0.09 $ 0.10 $(0.04) $(0.11)
Number of common shares used
in diluted calculation 54,892 40,686 49,696 37,460
The accompanying notes are an integral
part of the condensed consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
for the six months ended June 30, 1998 and 1997
(in thousands)
(UNAUDITED)
<CAPTION>
1998 1997
<S> <C> <C>
Cash flows from operating activities:
Net cash provided by operating activities $ 14,521 $ 4,829
Cash flows from investing activities:
Deposits paid on broadcast properties (4,730) (22,900)
Capital expenditures (13,160) (6,057)
Cash paid for acquisitions (68,578) (456,014)
Proceeds from sale of investments - 73,813
Proceeds from sale of radio stations - 16,000
Net cash used by investing activities ( 86,468) (395,158)
Cash flows from financing activities:
Issuance of long-term debt 149,539 411,000
Issuance of LYONs 166,950 -
Issuance of common stock 247,412 247,054
Repayment of long-term debt (197,500) (310,200)
Payment of finance costs (8,336) (6,484)
Other - 787
Net cash provided by financing activities 358,065 342,157
Net increase (decrease) in cash and
cash equivalents 286,118 (48,172)
Cash and cash equivalents at
beginning of period 28,724 78,137
Cash and cash equivalents at end of period $314,842 $ 29,965
Supplemental schedule of non-cash investing
and financing activities:
Common stock issued in acquisitions - $158,475
Warrants issued in acquisitions - 5,000
Liabilities assumed in acquisitions $ 2,687 36,851
Fair value of assets exchanged, excluding
cash paid or received 70,000 165,000
The accompanying notes are an integral part
of the condensed consolidated financial statements.
</TABLE>
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. FINANCIAL STATEMENTS
The December 31, 1997 condensed 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, 1997 and the notes thereto.
2. ACQUISITIONS AND DISPOSITIONS
Completed Radio Station Acquisitions and Dispositions
First Quarter Transactions
In the first three months of 1998, the Company completed
acquisitions of ten stations in three existing and two new
broadcast areas for a purchase price of approximately $33.6
million in cash, of which approximately $17.3 million was placed
in escrow in 1997. The Company also disposed of one station in
Columbus, Ohio for $0.1 million and completed a like-kind
exchange of broadcast properties, exchanging four stations in
Kansas City, Missouri for six stations in Dayton, Ohio.
April Transactions
The Company acquired KYSY-FM (formerly KMXD-FM) in Ankeny, Iowa
from V.O.B. Incorporated for $3.0 million in cash.
The Company acquired WIZE-AM in Springfield, Ohio from Staggs
Broadcasting for approximately $0.5 million in cash.
The Company sold WLOC-AM and WMCC-FM in Munfordville, Kentucky
for approximately $0.2 million in cash.
May Transactions
The Company acquired KLOO-AM and KLOO-FM in Corvallis, Oregon
from Oregon Trail Productions for $2.5 million in cash.
The Company acquired a construction permit for KXMX-FM in
Vancouver, Washington from Smith Broadcasting, Inc. ("Smith")
for approximately $2.2 million in cash. The Company also paid
approximately $18.4 million in cash to Smith for the withdrawal
of competing applicants applications for the construction
permit.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
2. ACQUISITIONS AND DISPOSITIONS, Continued
June Transactions
The Company acquired KWLW-AM (formerly KFAM-AM) in North Salt
Lake City, Utah from General Broadcasting for $1.2 million in
cash.
Completed Broadcasting Services Acquisitions
In the first six months of 1998, the Company completed
acquisitions of two broadcasting service companies and the
assets of three other broadcasting service companies for a
purchase price of approximately $12.7 million in cash, a note
payable of approximately $0.8 million, plus additional
contingent consideration of up to $1.6 million payable over
three years.
The above acquisitions and all 1997 acquisitions have been
accounted for as purchases. The excess cost over the fair value
of net assets acquired is being amortized over 40 years. The
results of operations of the acquired businesses are included in
the Company's financial statements since the respective dates of
acquisition. Assuming the above acquisitions had taken place at
the beginning of 1997 and that the 1997 acquisitions, which were
completed at various dates in 1997, had taken place at the
beginning of 1997, unaudited pro forma consolidated results of
operations would have been as follows (in thousands except per
share amounts):
<TABLE>
<CAPTION>
Pro forma (Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Net revenue $184,006 $156,448 $327,965 $285,207
Net income (loss) before
extraordinary items $ 4,992 $ 5,545 $ (2,032) $ 245
Diluted net income (loss)
per common share before
extraordinary items $ 0.09 $ 0.01 $ (0.04) $ 0.00
</TABLE>
These unaudited pro forma amounts do not purport to be
indicative of the results that might have occurred if the
foregoing transactions had been consummated on the indicated
dates.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
2. ACQUISITIONS AND DISPOSITIONS, Continued
Radio Station Acquisitions and Dispositions Completed Subsequent
to June 30, 1998
In August 1998, the Company completed the acquisition of the
assets of Nationwide Communication Inc.'s 17 radio stations (the
"Nationwide Transaction"), located in Dallas, Houston,
Minneapolis, Phoenix, Baltimore, San Diego, Cleveland, and
Columbus. Simultaneously with the Nationwide Transaction, the
Company also completed the following: i) a multiple station swap
with CBS Corporation (the "CBS Transaction") with the Company
receiving one station each in Baltimore and San Jose, and two
stations in St. Louis in exchange for three stations in
Columbus; ii) the swap of one station in Cleveland with Capstar
for one station in Pittsburgh; iii) the sale of one station in
Columbus to Blue Chip Broadcasting; and iv) the sale of two
stations in San Diego to Heftel Broadcasting Corporation. Net
cash paid for the above transactions was approximately $525
million, excluding $30 million placed in escrow in 1997.
The Company has also completed the acquisitions of seven radio
stations in one existing and three new broadcast areas for $48.5
million in cash, of which $1.5 million was placed in escrow in
1997.
Pending Radio Station Acquisitions and Dispositions
In conjunction with the CBS Transaction, the Company has entered
into a like-kind exchange agreement to obtain one station each
in Baltimore and San Jose for two stations in Minneapolis
acquired in the Nationwide Transaction.
The Company has also entered into agreements to acquire 17 radio
stations in six existing and seven new broadcast areas for
approximately $41.8 million in cash, of which approximately $5.3
million has been placed in escrow, and to exchange the assets of
one station for another station in the same broadcast area.
3. ISSUANCE OF COMMON STOCK
In February 1998, the Company completed an offering of 4,560,000
shares of common stock at $50.50 per share net of underwriting
discounts of $2.02 per share (the "Offering"). The over-
allotment option was also exercised by the underwriters
resulting in the issuance of an additional 513,000 shares. Net
proceeds to the Company from the Offering were approximately
$244.9 million.
4. ISSUANCE OF SUBORDINATED NOTES
In February 1998, the Company issued 8% Senior Subordinated
Notes (the "8% Notes") in the aggregate principal amount at
maturity of $120.0 million. Net proceeds to the Company were
$117.1 million. The 8% Notes will mature on February 15, 2010.
Interest on the 8% Notes is payable semi-annually. The 8% Notes
will be redeemable at the option of the Company, in whole or in
part, at any time on or after February 15, 2003. The redemption
prices commence at 104.00% and are reduced by .80% annually
until February 15, 2008 when the redemption price is 100%.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
4. ISSUANCE OF SUBORDINATED NOTES, Continued
The 8% Notes and the previously issued 10 1/8% Notes, 9 3/4%
Notes, and 8 3/4% Notes are obligations of Jacor Communications
Company ("JCC"), and are jointly and severally, fully and
unconditionally guaranteed on a senior subordinated basis by
Jacor and by all of the Company's subsidiaries (the "Subsidiary
Guarantors"). JCC and the Subsidiary Guarantors constitute all
of the wholly owned direct or indirect subsidiaries of Jacor and
JCC, and JCC is the sole direct subsidiary of Jacor. Separate
financial statements of JCC and each of the Subsidiary
Guarantors are not presented because Jacor believes that such
information would not be material to investors. The direct and
indirect non-guarantor subsidiaries of Jacor are
inconsequential, both individually and in the aggregate.
Additionally, there are no current restrictions on the ability
of the Subsidiary Guarantors to make distributions to JCC,
except to the extent provided by law generally. JCC's credit
facility and the terms of the indentures governing the 8% Notes
do restrict the ability of JCC and of the Subsidiary Guarantors
to make distributions to the Registrant.
The 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.
Summarized financial information with respect to Jacor, JCC and
with respect to the Subsidiary Guarantors on a combined basis as
of June 30, 1998 and for the six months ended June 30, 1998 and
1997 is as follows:
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
4. ISSUANCE OF SUBORDINATED NOTES, Continued
<TABLE>
<CAPTION>
Jacor _________JCC__________
June 30, June 30, June 30, June 30,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Operating Statement
Data (in thousands):
Net revenue - - - -
Equity in earnings
of subsidiaries $ 445 $ (1,406) $ (1,909) $ (1,527)
Operating loss (8,276) (7,495) (1,909) (1,527)
(Loss) income before
extraordinary items (1,876) (3,995) 445 4,150
Net loss (1,876) (3,995) 445 (1,406)
Balance Sheet Data
(in thousands):
Current assets $ 166,433 $ 168,301
Non-current assets 1,418,934 2,194,369
Current liabilities 23,804 13,852
Non-current
liabilities 395,352 1,676,471
Shareholders' equity 1,166,211 672,347
</TABLE>
<TABLE>
<CAPTION>
Combined
Subsidiary Guarantors
June 30, June 30,
1998 1997
<S> <C> <C>
Operating Statement
Data (in thousands):
Net revenue $325,864 $224,381
Equity in earnings
of subsidiaries - -
Operating income 42,028 35,660
Loss before
extraordinary items (1,909) (1,527)
Net loss (1,909) (1,527)
Balance Sheet Data
(in thousands):
Current assets $ 188,182
Non-current assets 2,412,129
Current liabilities 67,954
Non-current
liabilities 1,366,146
Shareholders' equity 1,166,211
</TABLE>
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
5. LIQUID YIELD OPTION NOTES
In February 1998, the Company issued 4 3/4% Liquid Yield Option
Notes due 2018 (the "1998 LYONs") in the aggregate principal
amount at maturity of $426.9 million. Each 1998 LYON had an
issue price of $391.06 and a principal amount at maturity of
$1,000.00. The 1998 LYONs are convertible, at the option of the
holder, at any time on or prior to maturity, into common stock
at a conversion rate of 6.245 shares per each 1998 LYON, for an
aggregate of approximately 2.7 million shares of common stock.
Net proceeds from the issuance of the 1998 LYONs were $161.9
million.
6. EARNINGS PER SHARE
The following is a reconciliation of the numerators and
denominators of the basic and diluted earnings per share ("EPS")
computations for income before extraordinary items for the three
months and six months ended June 30, 1998 and 1997 (in thousands
except per share amounts):
Three Months Ended Six Months Ended
1998 1997 1998 1997
Net income $ 5,022 $ 4,145 $(1,876) $ 1,561
Weighted average
shares - basic 50,895 38,968 49,696 35,791
Effect of dilutive
securities:
Stock options 1,256 1,418 - 1,369
Warrants 2,363 - - -
Other 378 300 - 300
Weighted average
shares - diluted 54,892 40,686 49,696 37,460
Basic EPS $ 0.10 $ 0.11 $(0.04) $ 0.04
Diluted EPS $ 0.09 $ 0.10 $(0.04) $ 0.04
The Company's 1996 Liquid Yield Option Notes and 1998 LYONs
(collectively, the "LYONs") can be converted into approximately
6.2 million shares of common stock at the option of the holder.
Assuming conversion of the LYONs for the three and six months
ended June 30, 1998 and 1997 would result in an increase in per
share amounts, therefore the LYONs are not included in the
computation of diluted EPS.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
7. RECENT PRONOUNCEMENTS
In the first quarter of 1998, the Company adopted Statement of
Financial Accounting Standards No. 130 ("SFAS 130"), "Reporting
Comprehensive Income." SFAS 130 requires the reporting of
comprehensive income in financial statements by all entities
that provide a full set of financial statements. The term
"comprehensive income" describes the total of all components of
comprehensive income including net income. The statement only
deals with reporting and display issues. It does not consider
recognition or measurement issues.
In June 1997, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards No. 131
("SFAS 131"), "Disclosures about Segments of an Enterprise and
Related Information." SFAS 131 provides accounting guidance for
reporting information about operating segments in annual
financial statements and requires such enterprises to report
selected information about operating segments in interim
financial reports. The statement uses a "management approach"
to identify operating segments and provides specific criteria
for operating segments. SFAS 131 is effective for the year
ended December 31, 1998 and will be required for interim periods
in 1999. The Company is currently evaluating the impact SFAS
131 will have on its financial statements, if any.
In June 1998, the FASB issued Statement No. 133 ("SFAS 133"),
"Accounting for Derivative Instruments and Hedging Activities".
SFAS 133 requires that an entity recognize all derivatives as
either assets or liabilities in the balance sheet and measure
such instruments at fair value. The statement is effective for
fiscal quarters of fiscal years beginning after June 15, 1999.
The Company currently has no derivative instruments or hedging
activities.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
GENERAL
The following discussion should be read in conjunction with the
financial statements beginning on page 3.
This report includes certain forward-looking statements within the
meaning of Section 27A of the Securities Act. When used in this
report, the words "believes," "anticipates," "expects" and similar
expressions are intended to identify forward-looking statements.
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 as a result of the
matters discussed in this report generally. The Company undertakes
no obligation to publicly release the result of any revisions to
these forward-looking statements that may be made to reflect any
future events or circumstances.
LIQUIDITY AND CAPITAL RESOURCES
Recent liquidity needs have been driven by the Company's acquisition
strategy. The Company's acquisitions since 1996 have been financed
with funds raised through a combination of debt and equity
instruments. An important factor in management's financing decisions
includes maintenance of leverage ratios consistent with their long-
term growth strategy. The Company currently has borrowing capacity
to finance the Company's pending acquisitions and to pursue other
acquisitions.
Based upon current levels of the Company's operations and anticipated
growth, it is expected that operating cash flow will be sufficient to
meet expenditures for operations, administrative expenses and debt
service.
Financing Activities
Cash provided by financing activities for the first six months of
1998 was $358.1 million compared to $342.2 million for the first six
months of 1997.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
LIQUIDITY AND CAPITAL RESOURCES, Continued
Credit Facilities
The Company has a $1.15 billion credit facility (the "Credit
Facility") with a syndicate of banks and other financial
institutions. The Credit Facility provides loans to the Company in
two components: (i) a reducing revolving credit facility (the
"Revolving Credit Facility") of up to $750 million under which the
aggregate commitments will reduce on a semi-annual basis commencing
in June 2000; and (ii) a $400 million amortizing term loan (the "Term
Loan")that would reduce on a semi-annual basis commencing in December
1999. The Term Loan and the Revolving Credit Facility expire on
December 31, 2004. Amounts repaid or prepaid under the Term Loan may
not be reborrowed. The Credit Facility bears interest at a rate that
fluctuates, with an applicable margin ranging from 0.00% to a maximum
of 1.75%, based on the Company's ratio of total debt to earnings
before interest, taxes, depreciation and amortization for the four
consecutive fiscal quarters then most recently ended (the "Leverage
Ratio"), plus a bank base rate or a Eurodollar base rate, as
applicable. At August 10, 1998, the average interest rate on Credit
Facility borrowings was 6.56%. The Company pays interest on the
unused portion of the Revolving Credit Facility at a rate ranging
from 0.250% to 0.375% per annum, based on the Company's Leverage
Ratio.
As of August 10, 1998, the Company had $400.0 million of outstanding
indebtedness under the Term Loan, $290.0 million of outstanding
indebtedness under the Revolving Credit Facility, and available
borrowings of $460.0 million.
Debt and Equity Offerings
In February 1998, the Company completed offerings of 5.1 million
shares of common stock, 8% Senior Subordinated Notes due 2010, and 4
3/4% Liquid Yield Option Notes (collectively the "February 1998
Offerings"). Net proceeds from the February 1998 Offerings were
$525.0 million, of which $197.5 million was used to pay off the then
outstanding balance of the Revolving Credit Facility. The remaining
proceeds were utilized in the Nationwide Transaction (See
Acquisitions and Dispositions Completed Subsequent to June 30, 1998).
Investing Activities
Cash flows used for investing activities were $86.5 million for the
first six months of 1998 as compared to $395.2 million for the first
six months of 1997. The variations from year to year are related to
station acquisition activity, as described below, as well as the sale
of the Company's investments in the News Corp. Warrants and Paxson
Communications Corporation stock and station dispositions.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
LIQUIDITY AND CAPITAL RESOURCES, Continued
Completed Acquisitions and Dispositions
During the first six months of 1998, the Company completed the
following: acquisitions of 16 radio stations in four existing and
five new broadcast areas; one like-kind exchange, whereby the Company
exchanged four stations in one broadcast area for six stations in
another broadcast area; the disposition of three stations, and;
acquisitions of two and the assets of three broadcasting related
businesses. The Company paid cash consideration for the above
transactions of approximately $68.6 million in the first six months
of 1998, in addition to approximately $17.3 million placed in escrow
in 1997, and received cash consideration of approximately $0.3
million for the sale of three stations. The acquisitions were funded
through borrowings under the Credit Facility.
Acquisitions and Dispositions Completed Subsequent to June 30, 1998
In August 1998, the Company completed the acquisition of the assets
of Nationwide Communication Inc.'s 17 radio stations (the "Nationwide
Transaction"), located in Dallas, Houston, Minneapolis, Phoenix,
Baltimore, San Diego, Cleveland, and Columbus. Simultaneously with
the Nationwide Transaction, the Company also completed the following:
i) a multiple station swap with CBS Corporation (the "CBS
Transaction") with the Company receiving one station each in
Baltimore and San Jose, and two stations in St. Louis in exchange for
three stations in Columbus; ii) the swap of one station in Cleveland
with Capstar for one station in Pittsburgh; iii) the sale of one
station in Columbus to Blue Chip Broadcasting, and; iv) the sale of
two stations in San Diego to Heftel Broadcasting Corporation. Net
cash paid for the above transactions was approximately $525 million,
excluding $30 million placed in escrow in 1997.
The Company also completed the acquisitions of seven radio stations
in one existing and three new broadcast areas for $48.5 million in
cash, of which $1.5 million was placed in escrow in 1997.
Pending Acquisitions and Dispositions
In conjunction with the CBS Transaction, the Company has entered into
a like-kind exchange agreement to obtain one station each in
Baltimore and San Jose for two stations in Minneapolis acquired in
the Nationwide Transaction.
The Company has also entered into agreements to acquire 17 radio
stations in six existing and seven new broadcast areas for
approximately $41.8 million in cash, of which approximately $5.3
million has been placed in escrow and to exchange the assets of one
station for another station in the same broadcast area.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
LIQUIDITY AND CAPITAL RESOURCES, Continued
The Company will finance its pending acquisitions from borrowings
under the Revolving Credit Facility. The Company anticipates after
financing all pending acquisitions, available borrowings under the
Revolving Credit Facility will be approximately $420.0 million.
In May 1998, the Company filed an omnibus shelf registration
statement with the Securities and Exchange Commission for the
possible future registration and issuance of up to $500 million of
additional equity and/or debt securities.
The issuance of additional debt would negatively impact the Company's
debt-to-equity ratio and its results of operations and cash flows due
to higher amounts of interest expense. Any issuance of additional
equity would soften this impact to some extent.
Capital Expenditures
The Company had capital expenditures of $13.2 million and $6.1
million for the quarters ended June 30, 1998 and 1997, respectively.
The Company's capital expenditures consist primarily of broadcasting
equipment, tower upgrades, and purchases related to the Company's
plan to upgrade business, programming, and connectivity technology.
Operating Activities
For the six months ended June 30, 1998, cash flow provided by
operating activities was $14.5 million, as compared to $4.8 million
for the six months ended June 30, 1997. The change is primarily due
to an increase in operating income related to acquisitions.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS
The Six Months Ended June 30, 1998 Compared to the Six Months Ended
June 30, 1997
Broadcast revenue for the first six months of 1998 was $366.3
million, an increase of $114.3 million or 45.4% from $252.0 million
during the first six months of 1997. This increase resulted
primarily from the revenue generated at those properties owned or
operated during the first six months of 1998 but not during the
comparable 1997 period, including revenues generated from commercial
broadcast time received and rights fees from syndicated programming.
On a "same station" basis - reflecting results from stations operated
in the first six months of both 1998 and 1997 - broadcast revenue for
1998 was $232.0 million, an increase of $28.0 million or 13.7% from
$204.0 million for 1997. This increase resulted primarily from
favorable ratings and a strong advertising environment.
Agency commissions for the first six months of 1998 were $40.4
million, an increase of $12.8 million or 46.4% from $27.6 million
during the first six months of 1997 due to the increase in broadcast
revenue. On a "same station" basis, agency commissions for the first
six months of 1998 were $26.7 million, an increase of $3.0 million or
12.7% from $23.7 million for 1997 due to the increase in broadcast
revenue.
Broadcast operating expenses for the first six months of 1998 were
$228.1 million, an increase of $70.3 million or 44.6% from $157.8
million during the first six months of 1997. These expenses
increased primarily as a result of expenses incurred at those
properties owned or operated during the first six months of 1998 but
not during the comparable 1997 period. On a "same station" basis,
broadcast operating expenses for the first six months of 1998 were
$138.5 million, an increase of $12.8 million or 10.2% from $125.7
million for the first six months of 1997. This increase resulted
primarily from increased selling and promotion costs.
Depreciation and amortization for the first six months of 1998 and
1997 was $56.3 million and $31.2 million, respectively. This
increase was due to acquisitions in the last six months of 1997 and
the first six months of 1998.
Operating income for the first six months of 1998 was $33.3 million,
an increase of $3.7 million or 12.5% from an operating income of
$29.6 million for the first six months of 1997.
Interest expense in the first six months of 1998 was $49.0 million,
an increase of $9.6 million from $39.4 million in the first six
months of 1997. Interest expense increased due to an increase in
outstanding debt that was incurred in connection with acquisitions.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS, Continued
The gain on the sale of assets in 1997 resulted from the sale of the
Company's investment in News Corp. Warrants in February 1997 and in
Paxson Communications Corporation ("Paxson") stock in May 1997.
Income tax benefit was $5.1 million for the first six months of 1998
and income tax expense for the first six months of 1997 was $2.2
million. The effective tax rate increased in the first six months of
1998 due to an increase in non-deductible goodwill resulting from
acquisitions.
In the first six months of 1997 the Company recognized an
extraordinary loss of approximately $5.6 million, net of income tax
credit, related to the write off of debt financing costs.
Net loss for the first six months of 1998 was $1.9 million, compared
to net loss of $4.0 million reported by the Company for the first six
months of 1997.
The Quarter Ended June 30, 1998 Compared to The Quarter Ended June 30, 1997
Broadcast revenue for the second quarter of 1998 was $207.1 million,
an increase of $55.3 million or 36.4% from $151.8 million during the
same quarter of 1997. This increase resulted primarily from the
revenue generated at those properties owned or operated during the
second quarter of 1998 but not during the comparable 1997 period,
including revenues generated from commercial broadcast time received
and rights fees from syndicated programming. On a "same station"
basis - reflecting results from stations operated since January 1,
1997 - broadcast revenue for 1998 was $131.6 million, an increase of
$17.6 million or 15.4% from $114.0 million for 1997.
Agency commissions for the second quarter of 1998 were $23.3 million,
an increase of $7.0 million or 42.9% from $16.3 million during the
second quarter of 1997 due to the increase in broadcast revenue. On
a "same station" basis, agency commissions for the second quarter of
1998 were $15.4 million, an increase of $1.9 million or 14.1% from
$13.5 million for the second quarter of 1997.
Broadcast operating expenses for the second quarter of 1998 were
$120.7 million, an increase of $30.2 million or 33.4% from $90.5
million during the comparable period of 1997. These expenses
increased primarily as a result of expenses incurred at those
properties, including broadcast related service businesses, owned or
operated during the second quarter of 1998 but not during the
comparable period of 1997. On a "same station" basis, broadcast
operating expenses for the second quarter of 1998 were $72.3 million,
an increase of $7.4 million or 11.4% from $64.9 million for the
comparable period of 1997. This increase resulted primarily from
increased selling and promotion costs.
Depreciation and amortization for the second quarter of 1998 and 1997
was $28.8 million and $17.8 million, respectively. The increase was
due to acquisitions during the last six months of 1997 and the first
six months of 1998.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS, Continued
Operating income for the second quarter of 1998 was $29.7 million, an
increase of $5.5 million or 22.7% from an operating income of $24.2
million for the same period of 1997.
Interest expense for the second quarter of 1998 was $25.1 million, an
increase of $2.9 million or 13.1% from $22.2 million for the
comparable period in 1997. Interest expense increased due to an
increase in outstanding debt that was incurred in connection with
acquisitions.
The gain on the sale of assets in the second quarter of 1997 resulted
from the sale of the Company's investment in Paxson Communications
Corporation stock in May 1997.
Income tax expense was $5.9 million for the second quarter of 1998
and $6.3 million for the second quarter of 1997.
Net income for the second quarter of 1998 was $5.0 million, compared
to $4.1 million reported by the Company for the comparable period in
1997.
Year 2000 Computer System Compliance
The Year 2000 issue ("Y2K") is the result of computer programs
written with date sensitive codes that contain two digits (rather
than four) to define the year. As the year 2000 approaches, certain
computer systems may be unable to accurately process certain date-
based information as the program may interpret the year 2000 as 1900.
The Company has substantially completed a Y2K assessment inventory of
its computer, broadcast and environmental systems. Additionally, the
Company purchased an enterprise license for Y2K compliance testing
and repair software. The software has been distributed throughout
the Company's locations, where it has been used to assess and repair
PC based hardware for Y2K compliance. The Company has also completed
its process of requesting Y2K compliance certificates from its
vendors and is currently reviewing responses received from vendors
and resubmitting requests for compliance certificates from non-
responsive vendors. The Company has instituted policies to ascertain
that all future purchases of equipment are Y2K compliant.
The Company believes that its Y2K compliance issues will be resolved
on a timely basis and that any related costs will not have a material
impact on the Company's operations, cash flows or financial condition
of future periods.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS, Continued
Recent Pronouncements
In June 1997, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards No. 131 ("SFAS
131"), "Disclosures about Segments of an Enterprise and Related
Information". SFAS 131 provides accounting guidance for reporting
information about operating segments in annual financial statements
and requires such enterprises to report selected information about
operating segments in interim financial reports. The statement uses
a "management approach" to identify operating segments and provides
specific criteria for operating segments. SFAS 131 is effective for
the year ended December 31, 1998 and will be required for interim
periods in 1999. The Company is currently evaluating the impact SFAS
131 will have on its financial statements, if any.
In June 1998, the FASB issued Statement No. 133 ("SFAS 133"),
"Accounting for Derivative Instruments and Hedging Activities". SFAS
133 requires that an entity recognize all derivatives as either
assets or liabilities in the balance sheet and measure such
instruments at fair value. The statement is effective for fiscal
quarters of fiscal years beginning after June 15, 1999. The Company
currently has no derivative instruments or hedging activities.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 4. Submission of Matters to Vote of Security Holders
The Jacor Communications, Inc. Annual Meeting of Stockholders was
held on May 20, 1998. At such meeting the stockholders were asked to
vote upon (1) the election of directors, (2) a proposal to amend the
Company's 1997 Long-Term Incentive Stock Plan to increase the number
of shares of the Company's common stock and the number of incentive
options issuable thereunder, and (3) a proposal to amend the
Company's 1997 Long-Term Incentive Stock Plan to restrict the number
of shares of restricted stock that may be granted to any participant
in any calendar year.
The specific matters voted upon and the results of the voting were as
follows:
(1) The Company's ten incumbent directors were re-elected to serve
for an additional one year term expiring at the Company's 1999 Annual
Meeting of Stockholders. The directors were elected as follows:
Shares Voted Shares
Name of Director "FOR" Withheld
John W. Alexander 45,595,091 135,126
Peter C.B. Bynoe 45,598,191 132,026
Rod F. Dammeyer 45,594,911 135,306
F. Philip Handy 45,594,741 135,476
Marc Lasry 45,598,176 132,041
Robert L. Lawrence 45,581,694 148,523
Randy Michaels 45,592,756 137,461
Sheli Z. Rosenberg 45,593,156 137,061
Maggie Wilderotter 45,598,591 131,626
Samuel Zell 45,593,636 136,581
(2) The proposal to amend the Company's Long-Term Incentive Stock
Plan to increase the number of shares of the Company's common
stock and the number of incentive stock options issuable
thereunder to 4,800,000 and 1,350,000, respectively:
Shares Voted "FOR" 25,169,434
Shares Voted "AGAINST" 16,667,893
Shares "ABSTAINING" 39,947
(3) The proposal to amend the Company's 1997 Long-Term Incentive
Stock Plan, to restrict the number of shares of restricted stock that
may be granted to any participant in any calendar year to 100,000
shares:
Shares Voted "FOR" 41,723,540
Shares Voted "AGAINST" 3,985,895
Shares "ABSTAINING" 20,782
Each proposal received more than the required votes necessary for
approval by the Company's outstanding shares of common stock entitled
to vote at the Annual Meeting and was thereby adopted.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 5. Other Information
During the second quarter of 1998, the Company's Board of
Directors approved the Company's entering into change in control
agreements with the Company's key management personnel. Because of
the distractions and uncertainties inherent in any such situation,
the Board determined that such agreements were in the best interests
of the Company and its stockholders to secure the continued
employment, dedication and efforts of these individuals. Copies of
the change of control agreements entered into by the Company's
executive officers are attached as exhibits to this Form 10-Q.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Numbe Description Page
10.1(+) Change in Control Agreement dated as of June 12,
1998 by and between Jacor Communications, Inc. and
Randy Michaels * 26
10.2(+) Change in Control Agreement dated as of June 12,
1998 by and between Jacor Communications, Inc.
and Martin R. Gausvik ** 36
27 Financial Data Schedule 46
___________
(+) Management Contracts and Compensatory Arrangements.
* Identical agreements were also entered into as of June 12, 1998
between the Company and each of the following senior executive
officers of the Company: Robert L. Lawrence, R. Christopher
Weber, David H. Crowl, Thomas P. Owens, Jon M. Berry, Paul F.
Solomon, John Hogan, Jerome L. Kersting, and Jay Meyers
** Identical agreements were also entered into as of June 12, 1998
between the Company and each of the following executive officers
of the Company: Pamela C. Taylor, Nicholas J. Miller, William P.
Suffa and Alfred Kenyon, III.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
(b) Reports on Form 8-K
The following Form 8-K/A was filed during the second quarter of
1998:
On April 30, 1998, the Company amended its prior Form 8-K,
originally dated January 5, 1998 and amended on January 21,
1998, relating to the Company's entering into of a definitive
agreement to purchase the assets of 17 radio stations from
Nationwide Communications, Inc. and its affiliated entities for
a purchase price of $620.0 million. The Form 8-K/A dated April
30, 1998 was filed to include the historical audited financial
statements of Nationwide Communications for the year ended
December 31, 1997 and the unaudited pro forma financial
statements reflecting the financial statement effect of such
acquisition on the Company.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Registrant has duly caused this Report to be signed on its behalf by
the undersigned, thereunto duly authorized.
JACOR COMMUNICATIONS, INC.
(Registrant)
DATED: August 14, 1998 BY /s/ R. Christopher Weber
R. Christopher Weber,
Senior Vice President and
Chief Financial Officer
<PAGE>
EXHIBIT 10.1
CHANGE IN CONTROL AGREEMENT
THIS AGREEMENT made as of the 12th day of June, 1998, by and
between JACOR COMMUNICATIONS, INC. (the "Company") and Randy Michaels
(the "Executive").
WHEREAS, the Board of Directors of the Company (the "Board")
recognizes that the possibility of a Change in Control (as
hereinafter defined) exists and that the occurrence of a Change in
Control can result in significant distractions of its key management
personnel because of the uncertainties inherent in such a situation;
WHEREAS, the Board has determined that it is essential and in
the best interest of the Company and its stockholders to retain the
services of the Executive in the event of a Change in Control and to
ensure his continued dedication and efforts in such event without
undue concern for his personal, financial and employment security;
and
WHEREAS, in order to induce the Executive to remain in the
employ of the Company or a Subsidiary (as hereinafter defined), as
the case may be, particularly in the event of a threat of or the
occurrence of a Change in Control, the Company desires to enter into
this Agreement with the Executive to provide the Executive with
certain benefits in the event his employment is terminated as a
result of, or in connection with, a Change in Control.
NOW, THEREFORE, in consideration of the respective agreements of
the parties contained herein, it is agreed as follows:
1. Term of Agreement. This Agreement shall commence as of the
12th day of June, 1998, and shall continue in effect until June 12,
2004, provided, however, that commencing on June 12, 2004, and on
each June 12th thereafter, the term of this Agreement shall
automatically be extended for one (1) year unless either the Company
or the Executive shall have given written notice to the other at
least one (1) year prior thereto that the term of this Agreement
shall not be so extended; provided, however, that notwithstanding any
such notice by the Company not to extend, the term of this Agreement
shall not expire prior to the expiration of twenty-four (24) months
after the occurrence of any Change in Control which occurs while this
Agreement is in effect. Notwithstanding the foregoing provisions of
this Section 1, if prior to a Change in Control the Executive ceases
for any reason to be an employee of the Company or a Subsidiary,
thereupon this Agreement shall, without further action by either the
Company or the Executive, automatically terminate and be of no
further force or effect.
2. Definitions.
2.1 Base Amount; Bonus Amount. For purposes of this Agreement,
"Base Amount" shall mean the Executive's highest annual base salary
(including all amounts of base salary that are deferred under any
qualified and non-qualified employee benefit plans of the Company or
any Subsidiary or under any other agreement or arrangement) during
any one of the Company's three (3) immediately preceding fiscal years
(including the fiscal year during which the Change in
<PAGE>
Control occurs), provided that the base salary for the fiscal year
during which the Change in Control occurs shall be calculated on an
annualized basis if
necessary. For purposes of this Agreement, "Bonus Amount" shall mean
the Executive's target award under the Short Term Incentive Plan or
other applicable Company bonus program for the full fiscal year
immediately preceding the fiscal year during which the Change in
Control occurs.
2.2 Cause. For purposes of this Agreement, a termination for
"Cause" shall mean a termination by the Company or a Subsidiary of
Executive's employment after a Change in Control for any of the
following reasons: (a) repeated gross negligence by the Executive in
performing the reasonably assigned duties on behalf of the Company or
a Subsidiary required by and in accordance with his employment by the
Company or a Subsidiary, (b) the Executive's commission of a felony
in the course of performing his duties on behalf of the Company or a
Subsidiary, (c) the Executive's intentional and wrongful disclosure
of any confidential information or trade secrets of the Company or a
Subsidiary, or (d) the Executive's acting as a proprietor, partner,
member, stockholder (other than an interest of less than five percent
(5%) of the stock of a publicly held company), consultant, director,
officer or employee in any business engaged in the radio broadcasting
or syndication business in direct competition with the Company or a
Subsidiary in any market, without the prior written consent of the
Company. Notwithstanding anything contained in this Agreement to the
contrary, no failure to perform by the Executive after a Notice of
Termination (as hereinafter defined) is given by the Executive shall
constitute Cause for purposes of this Agreement. No act, or failure
to act, on Executive's part shall be deemed to be "repeated" unless
the Executive shall have received a written notice from the Chairman
of the Board, Chief Executive Officer or President of the Company
setting forth in detail the particulars of the act, or the failure to
act, which the Company contends would constitute Cause when repeated
and Executive then repeats such act or failure to act. Any act or
failure to act on the Executive's part at the direction of an officer
to whom Executive reports (directly or indirectly) or upon the advice
of the Company's General Counsel shall not constitute "Cause."
2.3 Change in Control. For purposes of this Agreement, a
"Change in Control" shall mean the occurrence during the term of this
Agreement of any of the following events:
(a) An acquisition of any securities of the Company
entitled generally to vote on the election of directors (the "Voting
Securities") by any "Person" (as the term person is used for purposes
of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as
amended (the "1934 Act")) immediately after which such Person has
"Beneficial Ownership" (within the meaning of Rule 13d-3 promulgated
under the 1934 Act) of thirty percent (30%) or more of the combined
voting power of the Company's then outstanding Voting Securities;
provided, however, in determining whether a Change in Control has
occurred, Voting Securities which are acquired in a "Non-Control
Acquisition" (as hereinafter defined) shall not constitute an
acquisition which would cause a Change in Control. A "Non-Control
Acquisition" shall mean an acquisition by (1) an employee benefit
plan (or a trust forming a part thereof) maintained by (a) the
Company or (b) any corporation or other Person of which a majority of
its voting power or its equity securities or equity interest is owned
directly or indirectly by the Company (a "Subsidiary"), (2) the
Company or any Subsidiary, or (3) Zell/Chilmark Fund L.P.
<PAGE>
(b) The individuals who, as of the date this Agreement is
approved by the Board, are members of the Board (the "Incumbent
Board"), cease for any reason to constitute at least a majority of
the Board; provided, however, that if the election, or nomination for
election by the Company's stockholders or directors, of any new
director was approved by a vote of at least a majority of the
Incumbent Board, such new director shall, for purposes of the
Agreement, be considered as a member of the Incumbent Board; provided
further, however, that no individual shall be considered a member of
the Incumbent Board if such individual initially assumed office as a
result of either an actual or threatened "Election Contest" (as
described in Rule 14a-11 promulgated under the 1934 Act) or other
actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board (a "Proxy Contest") including
by reason of any agreement intended to avoid or settle any Election
Contest or Proxy Contest; or
(c) A merger, consolidation or reorganization involving
the Company (or the approval by the stockholders of the Company of a
merger, consolidation or reorganization involving the Company),
unless
(1) the stockholders of the Company immediately
before such merger, consolidation or reorganization, own (or will
own), directly or indirectly immediately following such merger,
consolidation or reorganization, at least seventy percent (70%) of
the combined voting power of the outstanding voting securities of the
corporation resulting from such merger or consolidation or
reorganization (the "Surviving Corporation") in substantially the
same proportion as their ownership of the Voting Securities
immediately before such merger, consolidation or reorganization, and
(2) the individuals who were members of the Incumbent
Board immediately prior to the execution of the agreement providing
for such merger, consolidation or reorganization constitute (or will
constitute) at least a majority of the members of the board of
directors of the Surviving Corporation;
(d) Adoption of a plan of a complete liquidation or
dissolution of the Company; or
(e) An agreement for the sale or other disposition of all
or substantially all of the assets of the Company and its
Subsidiaries to any Person (other than a transfer to a Subsidiary).
(f) Notwithstanding anything contained in this Agreement to the
contrary, if the Executive's employment is terminated during the
term of this Agreement and the Executive reasonably demonstrates
that such termination (1) was at the request of a third party
who has indicated an intention or taken steps reasonably
calculated to effect a Change in Control and who effectuates a
Change in Control (a "Third Party"), or (2) otherwise occurred
in connection with, or in anticipation of, a Change in Control
which actually occurs, then for all purposes of this Agreement,
the date of a Change in Control with respect to the Executive
shall mean the date immediately prior to the date of such
termination of the Executive's employment.
<PAGE>
2.4 Disability. For purposes of this Agreement, "Disability"
shall mean (1) a physical or mental infirmity which has been
determined to be a total and permanent disability under and in
accordance with the provisions of the Company's Long Term Disability
Income Plan, or (2) in the event the Company does not maintain such
plan at the time of the determination of the Executive's Disability
or the Executive is not a participant in any such plan, a physical or
mental infirmity which impairs the Executive's ability to
substantially perform his duties which continues for a period of at
least one hundred eighty (180) consecutive days.
2.5 Good Reason.
(a) For purposes of this Agreement, a termination for "Good
Reason" shall mean a termination by Executive of his employment
with the Company or a Subsidiary as a result of the occurrence
after a Change in Control of any of the events or conditions
described in subsections (1) through (10) hereof:
(1) a reduction by the Company or a Subsidiary in the
Executive's base salary in effect immediately prior to the Change in
Control or any failure to pay the Executive any compensation or
benefits to which the Executive is entitled within five days of the
due date or any failure to increase the Executive's base salary
substantially at the same frequency and by the same percentage as
applicable generally to the other officers of the Company;
(2) the Company or a Subsidiary requires the Executive to be
relocated anywhere in excess of thirty (30) miles of his present
office location, except for required travel on the Company's or
Subsidiary's business to an extent substantially consistent with his
present business travel obligations;
(3) a substantial increase, either as to frequency or time
expended, in travel of the Executive relative to the discharge of the
Executive's responsibilities to the Company or a Subsidiary;
(4) a failure by the Company and its Subsidiaries to maintain
plans providing compensation or benefits as beneficial in all
material respects as those provided by any benefit or compensation
plan, retirement or pension plan, stock option plan, bonus plan, long-
term incentive plan, short-term incentive plan, life insurance plan,
health and accident plan or disability plan in which the Executive is
participating at the time of a Change in Control, or if the Company
or any Subsidiary has taken any action which would materially
adversely affect the Executive's participation in or materially
reduce the Executive's benefits under any of such plans or deprive
him of any material fringe benefit enjoyed by him at the time of the
Change in Control, or if the Company or any Subsidiary has failed to
provide him with the number of paid vacation days to which he would
be entitled in accordance with the Company's or the Subsidiary's
normal vacation policy in effect at the time of the Change in Control
(provided that any reduction in the foregoing benefits that is
required by law or applies generally to all employees of the Company
shall not constitute "Good Reason" as defined herein).
<PAGE>
(5) the Company or a Subsidiary reduces the Executive's title,
job authorities or responsibilities immediately prior to the Change in
Control, or the Company or a Subsidiary imposes job authorities or
responsibilities upon the Executive which are materially inconsistent
with the Executive's position, skill and background or which impose
time commitments on the Executive which are materially greater than
his time commitments to the Company or a Subsidiary immediately prior
to the Change in Control;
(6) the Company fails to obtain the assumption of the obligations
contained in this Agreement by any successor as contemplated in
Section 7 hereof;
(7) any purported termination of the Executive's employment by the
Company which is not effected pursuant to a Notice of Termination
satisfying the requirements of Section 4 below; and for purposes of
this Agreement, no such purported termination shall be effective;
(8) any material breach by the Company of any provision of this
Agreement;
(9) any purported termination of the Executive's employment for
Cause by the Company which does not comply with the terms of Section
2.2 of this Agreement; or
(10) the insolvency or the filing (by any party, including the
Company) of a petition for bankruptcy of the Company, which petition
is not dismissed within 60 days.
(b) Any event or condition described in this Section
2.5(a)(1) through (10) which occurs prior to a Change in Control but
which the Executive reasonably demonstrates (1) was at the request of
a Third Party, or (2) otherwise arose in connection with or in
anticipation of a Change in Control which actually occurs, shall
constitute Good Reason for purposes of this Agreement notwithstanding
that it occurred prior to the Change in Control.
(c) Until the Executive's Disability, the Executive's right to
terminate his employment for Good Reason pursuant to Section 2.5
shall not be affected by his incapacity due to physical or mental
illness.
3. Termination of Employment; Severance Payments.
3.1 Subject to the obligations of the Company set forth in
Section 3.2 (a) the Company may terminate the Executive's employment
with or without Cause, and (b) the Executive may terminate his
employment with or without Good Reason.
3.2 If, during the term of this Agreement, the Executive's
employment with the Company or a Subsidiary shall be terminated
within twenty-four (24) months following a Change in Control, the
Executive shall be entitled to the following compensation and
benefits:
<PAGE>
(a) If the Executive's employment with the Company or a
Subsidiary shall be terminated (1) by the Company or a Subsidiary for
Cause or Disability, (2) by reason of the Executive's death, or (3)
by the Executive other than for Good Reason, the Company shall pay
the Executive all amounts earned or accrued for or on behalf of the
Company or any of its Subsidiaries through the Termination Date (as
hereinafter defined) but not paid as of the Termination Date,
including (i) base salary, (ii) reimbursement for reasonable and
necessary expenses incurred by the Executive on behalf of the Company
or any Subsidiary during the period ending on the Termination Date,
and (iii) vacation pay (collectively, "Accrued Compensation").
(b) If the Executive's employment with the Company or a
Subsidiary shall be terminated by the Company or a Subsidiary for any
reason other than as specified in clause (1) or (2) of Section 3.2(a)
or if the Executive's employment with the Company or a Subsidiary is
terminated by the Executive for Good Reason, the Executive shall be
entitled to the following:
(1) The Company shall pay the Executive all Accrued
Compensation;
(2) The Company shall pay as a severance amount to
the Executive after the Date of Termination, an amount equal to three
(3) times the sum of (a) the Base Amount and (b) the Bonus Amount.
(3) For a number of months equal to the lesser of (a)
thirty-six (36) or (b) the number of months remaining until the
Executive's 65th birthday (the "Continuation Period"), the Company
shall at its expense continue on behalf of the Executive and his
dependents and beneficiaries (to the same extent provided to the
dependents and beneficiaries prior to the Executive's termination)
the life insurance, medical, dental, and hospitalization benefits
provided (x) to the Executive by the Company and/or its Subsidiaries
at any time within ninety (90) days preceding a Change in Control or
at any time thereafter, or (y) to other similarly situated executives
who continue in the employ of the Company or its Subsidiaries during
the Continuation Period. The coverage and benefits (including
deductibles and costs) provided in this Section 3.2(b)(3) during the
Continuation Period shall be no less favorable to the Executive and
his dependents and beneficiaries, than the most favorable of such
coverages and benefits set forth in clauses (x) and (y) above. The
Company's obligation hereunder with respect to the foregoing benefits
shall be limited to the extent that the Executive obtains any such
benefits pursuant to a subsequent employer's benefit plans, in which
case the Company may reduce the coverage of any benefits it is
required to provide the Executive hereunder as long as the aggregate
coverages and benefits of the combined benefit plans are no less
favorable to the Executive than the coverages and benefits required
to be provided hereunder. This Subsection (3) shall not be
interpreted so as to limit any benefits to which the Executive or his
dependents may be entitled under any of the Company's or any
Subsidiary's employee benefit plans, programs or practices following
the Executive's termination of employment, including without
limitation, retiree medical and life insurance benefits; and
(4) The Company shall provide to the Executive an
amount equal to twenty percent (20%) of the Base Amount to be used
for out-placement services.
(c) The amounts provided for in Section 3.2(a) and
3.2(b)(1), (2) and (4) shall be paid to the Executive in a lump sum
and in immediately available funds on the Executive's Termination
Date.
<PAGE>
(d) The Executive shall not be required to mitigate the
amount of any payment provided for in this Agreement by seeking other
employment or otherwise and no such payment shall be offset or
reduced by the amount of any compensation or benefits provided to the
Executive in any subsequent employment except as specifically
provided in Section 3.2(b)(3).
3.3 The provisions of this Agreement, and any payment provided
for hereunder, shall not reduce any amounts otherwise payable, or in
any way diminish the Executive's existing rights, or rights which
would accrue solely as a result of the passage of time, under any
benefit plan, incentive plan or securities plan, employment agreement
or other contract, plan or arrangement with the Company, any
Subsidiary or any other party; provided, however, the Company shall
not be required to make duplicative payments of Accrued Compensation.
4. Notice of Termination. Any purported termination by the Company
or a Subsidiary or by the Executive shall be communicated by written
Notice of Termination to the other. For purposes of this Agreement,
a "Notice of Termination" shall mean a notice which indicates the
specific termination provision in this Agreement relied upon and
shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's
employment under the provision so indicated and a Termination Date.
For purposes of this Agreement, no such purported termination shall
be effective without such Notice of Termination.
5. Termination Date. "Termination Date" shall mean in the case of
the Executive's death, his date of death, and in all other cases, the
date specified in the Notice of Termination subject to the following:
(a) If the Executive's employment is terminated by the
Company due to Disability, the date specified in the Notice of
Termination shall be at least thirty (30) days from the date the
Notice of Termination is given to the Executive, provided that in the
case of Disability the Executive shall not have returned to the full-
time performance of his duties during such period of at least thirty
(30) days; and
(b) If the Executive's employment is terminated by the Executive for
Good Reason, the date specified in the Notice of Termination shall
not be more than thirty (30) days from the date the Notice of
Termination is given to the Company.
6. Additional Payments by the Company. The Company shall make a
cash payment to the Executive at the time set forth below equal to
the amount of excise taxes (i.e., the "excise tax gross-up payment")
which the Executive would be required to pay pursuant to Section 4999
of the Internal Revenue Code of 1986, as amended ("Code"), as a
result of any payments or benefits made or provided by or on behalf
of the Company and/or a Subsidiary or any successor thereto resulting
in an "excess parachute payment" within the meaning of Section
280G(b) of the Code. In addition to the foregoing, the cash payment
due to the
<PAGE>
Executive under this Section 6 shall be increased by the aggregate of
the amount of federal, state and local income, employment and excise
taxes for which the Executive will be liable on account of the cash
payment to be made under this Section 6, such that the Executive will
receive the excise tax gross-up payment net of all income, employment
and excise taxes imposed on him on account of the receipt of the
excise tax gross-up payment. The computation of this payment shall
be determined, at the expense of the Company, by an independent
accounting, actuarial or consulting firm selected by the Company.
Payment of the cash amount set forth above shall be made at such time
as the Company shall determine, in its sole discretion, but in no
event later than the date five (5) business days before the due date,
without regard to any extension, for filing the Executive's federal
income
tax return for the calendar year which includes the date as of which
the aforementioned "excess parachute payments" are determined.
Notwithstanding the foregoing, there shall be no duplication of
payments by the Company under this Section 6 in respect of excise
taxes under Section 4999 of the Code to the extent the Company is
making cash payments in respect
of such excise taxes for any other arrangement with Employee. In the
event that the Executive is ultimately assessed with excise taxes
under Section 4999 of the Code as a result of payments made by the
Company or any successor thereto which exceed the amount of excise
taxes used in computing the Executive's payment under this Section 6,
the Company or its successor shall indemnify and promptly pay
Employee the amount of such additional excise taxes plus any
additional excise taxes, income and employment taxes, interest and
penalties resulting from the additional excise taxes and the
indemnity hereunder.
7. Successors; Binding Agreement.
(a) This Agreement shall be binding upon and shall inure to the
benefit of the Company, its successors and assigns and, at the time
of any such succession or assignment, the Company shall require any
successor or assign to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company
would be required to perform it if no such succession or assignment
had taken place (by an agreement in form and substance reasonably
satisfactory to Employee). Notwithstanding the preceding sentence,
the Company shall not assign this Agreement to any entity or
individual unless such entity or individual contemporaneously
therewith succeeds (whether by purchase of stock or assets, merger,
consolidation, reorganization or otherwise) to all or substantially
all of the business and/or assets of the Company and its
Subsidiaries. The term "the Company" as used herein shall include any
permitted successors and assigns of the Company. The term
"successors and assigns" as used herein shall mean a corporation or
other entity acquiring ownership, directly or indirectly, of all or
substantially all the assets and business of the Company (including
this Agreement) whether by operation of law or otherwise.
(b) Neither this Agreement nor any right or interest
hereunder shall be assignable or transferable by the Executive, his
beneficiaries or legal representatives, except by will or by the laws
of descent and distribution. This Agreement shall inure to the
benefit of and be enforceable by the Executive's legal personal or
legal representatives.
<PAGE>
8. Fees and Expenses. The Company shall pay all legal fees and
related expenses (including the cost of experts, evidence and
counsel) incurred by the Executive as they become due as a result of
the Executive seeking to obtain or enforce any right or benefit
provided by this Agreement.
9. Notice. For the purpose of this Agreement, notices and all
other communications provided for in the Agreement (including the
Notice of Termination) shall be in writing and shall be deemed to
have been duly given when personally delivered or sent by certified
mail, return receipt requested, postage prepaid, addressed to the
respective addresses last given by each party to the other, provided
that all notices to the Company shall be directed to the attention of
the Board with a copy to the Secretary of the Company. All notices
and communications shall be deemed to have been received on the date
of delivery thereof or on the third business day after the mailing
thereof, except that notice of change of address shall be effective
only upon receipt.
10. Non-Exclusivity of Rights. Nothing in this Agreement shall
prevent or limit the Executive's continuing or future participation
in any benefit, bonus, incentive or other plan or program provided by
the Company or any of its Subsidiaries and for which the Executive
may qualify, nor shall anything herein limit or reduce such rights as
the Executive may have under any other agreements with the Company or
any of its Subsidiaries. Amounts which are vested benefits or which
the Executive is otherwise entitled to receive under any plan or
program of the Company or any of its Subsidiaries shall be payable in
accordance with such plan or program.
11. Settlement of Claims. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any circumstances,
including, without limitation, any set-off, counterclaim, recoupment,
defense or other right which the Company or any of it Subsidiaries
may have against the Executive or others.
12. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is
agreed to in writing and signed by the Executive and the Company. No
waiver by either party hereto at any time of any breach by the other
party hereto of, or compliance with, any condition or provision of
this Agreement to be performed by such other party shall be deemed a
waiver of similar or dissimilar provisions or conditions at the same
or at any prior or subsequent time. No agreement or representations,
oral or otherwise, express or implied, with respect to the subject
matter hereof have been made by either party which are not expressly
set forth in this Agreement. No additional compensation provided
under any benefit or compensation plans to the Executive shall be
deemed to modify or otherwise affect the terms of this Agreement or
any of the Executive's entitlements hereunder
13. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same Agreement.
<PAGE>
14. Withholding of Taxes. The Company may withhold from any amounts
payable under this Agreement all federal, state, city or other taxes
as shall be required pursuant to any law or government ruling or
regulation.
15. Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto and supersedes all prior
agreements, if any, understandings and arrangements, oral or written,
between the parties hereto with respect to the subject matter hereof.
16. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of
Delaware.
17. Severability. The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any
provision shall not affect the validity or enforceability of the
other provisions hereof.
18. Employment Rights. Nothing express or implied in this
Agreement shall create any right or duty on the part of the Company
or the Executive to have the Executive continue as an officer or
employee of the Company prior to any Change in Control or, subject to
the obligation of the Company to make the payments and provide the
benefits set forth in Section 3.2 hereof, after any Change in
Control.
19. Vesting of Options. All options to acquire stock of the
Company previously awarded to the Executive shall immediately vest
100% in the Executive upon the occurrence of a Change in Control.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized representative and the Executive has
executed this Agreement as of the day and year first above written.
JACOR COMMUNICATIONS, INC.
By: _____Sheli Rosenberg____________
SHELI ROSENBERG
Vice Chairman of the Board
___Randy Michaels________________
[NAME OF EXECUTIVE]
<PAGE>
EXHIBIT 10.2
CHANGE IN CONTROL AGREEMENT
THIS AGREEMENT made as of the 12th day of June, 1998, by and
between JACOR COMMUNICATIONS, INC. (the "Company") and Martin R.
Gausvik (the "Executive").
WHEREAS, the Board of Directors of the Company (the "Board")
recognizes that the possibility of a Change in Control (as
hereinafter defined) exists and that the occurrence of a Change in
Control can result in significant distractions of its key management
personnel because of the uncertainties inherent in such a situation;
WHEREAS, the Board has determined that it is essential and in
the best interest of the Company and its stockholders to retain the
services of the Executive in the event of a Change in Control and to
ensure his continued dedication and efforts in such event without
undue concern for his personal, financial and employment security;
and
WHEREAS, in order to induce the Executive to remain in the
employ of the Company or a Subsidiary (as hereinafter defined), as
the case may be, particularly in the event of a threat of or the
occurrence of a Change in Control, the Company desires to enter into
this Agreement with the Executive to provide the Executive with
certain benefits in the event his employment is terminated as a
result of, or in connection with, a Change in Control.
NOW, THEREFORE, in consideration of the respective agreements of
the parties contained herein, it is agreed as follows:
1. Term of Agreement. This Agreement shall commence as of the
12th day of June, 1998, and shall continue in effect until June 12,
2004, provided, however, that commencing on June 12, 2004, and on
each June 12th thereafter, the term of this Agreement shall
automatically be extended for one (1) year unless either the Company
or the Executive shall have given written notice to the other at
least one (1) year prior thereto that the term of this Agreement
shall not be so extended; provided, however, that notwithstanding any
such notice by the Company not to extend, the term of this Agreement
shall not expire prior to the expiration of twenty-four (24) months
after the occurrence of any Change in Control which occurs while this
Agreement is in effect. Notwithstanding the foregoing provisions of
this Section 1, if prior to a Change in Control the Executive ceases
for any reason to be an employee of the Company or a Subsidiary,
thereupon this Agreement shall, without further action by either the
Company or the Executive, automatically terminate and be of no
further force or effect.
2. Definitions.
2.1 Base Amount; Bonus Amount. For purposes of this Agreement,
"Base Amount" shall mean the Executive's highest annual base salary
(including all amounts of base salary that are deferred under any
qualified and non-qualified employee benefit plans of the Company or
any Subsidiary or under any other
<PAGE>
agreement or arrangement) during any one of the Company's three (3)
immediately preceding fiscal years (including the fiscal year during
which the Change in Control occurs), provided that the base salary
for the fiscal year during which the Change in Control occurs shall
be calculated on an annualized basis if necessary. For purposes of
this Agreement, "Bonus Amount" shall mean the Executive's target
award under the Short Term Incentive Plan or other applicable Company
bonus program for the full fiscal year immediately preceding the
fiscal year during which the Change in Control occurs.
2.2 Cause. For purposes of this Agreement, a termination for
"Cause" shall mean a termination by the Company or a Subsidiary of
Executive's employment after a Change in Control for any of the
following reasons: (a) repeated gross negligence by the Executive in
performing the reasonably assigned duties on behalf of the Company or
a Subsidiary required by and in accordance with his employment by the
Company or a Subsidiary, (b) the Executive's commission of a felony
in the course of performing his duties on behalf of the Company or a
Subsidiary, (c) the Executive's intentional and wrongful disclosure
of any confidential information or trade secrets of the Company or a
Subsidiary, or (d) the Executive's acting as a proprietor, partner,
member, stockholder (other than an interest of less than five percent
(5%) of the stock of a publicly held company), consultant, director,
officer or employee in any business engaged in the radio broadcasting
or syndication business in direct competition with the Company or a
Subsidiary in any market, without the prior written consent of the
Company. Notwithstanding anything contained in this Agreement to the
contrary, no failure to perform by the Executive after a Notice of
Termination (as hereinafter defined) is given by the Executive shall
constitute Cause for purposes of this Agreement. No act, or failure
to act, on Executive's part shall be deemed to be "repeated" unless
the Executive shall have received a written notice from the Chairman
of the Board, Chief Executive Officer or President of the Company
setting forth in detail the particulars of the act, or the failure to
act, which the Company contends would constitute Cause when repeated
and Executive then repeats such act or failure to act. Any act or
failure to act on the Executive's part at the direction of an officer
to whom Executive reports (directly or indirectly) or upon the advice
of the Company's General Counsel shall not constitute "Cause."
2.3 Change in Control. For purposes of this Agreement, a
"Change in Control" shall mean the occurrence during the term of this
Agreement of any of the following events:
(a) An acquisition of any securities of the Company
entitled generally to vote on the election of directors (the "Voting
Securities") by any "Person" (as the term person is used for purposes
of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as
amended (the "1934 Act")) immediately after which such Person has
"Beneficial Ownership" (within the meaning of Rule 13d-3 promulgated
under the 1934 Act) of thirty percent (30%) or more of the combined
voting power of the Company's then outstanding Voting Securities;
provided, however, in determining whether a Change in Control has
occurred, Voting Securities which are acquired in a "Non-Control
Acquisition" (as hereinafter defined) shall not constitute an
acquisition which would cause a Change in Control. A "Non-Control
Acquisition" shall mean an acquisition by (1) an employee benefit
plan (or a trust forming a part thereof) maintained by (a) the
Company or (b) any corporation or other Person of which a majority of
its voting power or its equity securities or equity interest is owned
directly or indirectly by the Company (a "Subsidiary"), (2) the
Company or any Subsidiary, or (3) Zell/Chilmark Fund L.P.
<PAGE>
(b) The individuals who, as of the date this Agreement is
approved by the Board, are members of the Board (the "Incumbent
Board"), cease for any reason to constitute at least a majority of
the Board; provided, however, that if the election, or nomination for
election by the Company's stockholders or directors, of any new
director was approved by a vote of at least a majority of the
Incumbent Board, such new director shall, for purposes of the
Agreement, be considered as a member of the Incumbent Board; provided
further, however, that no individual shall be considered a member of
the Incumbent Board if such individual initially assumed office as a
result of either an actual or threatened "Election Contest" (as
described in Rule 14a-11 promulgated under the 1934 Act) or other
actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board (a "Proxy Contest") including
by reason of any agreement intended to avoid or settle any Election
Contest or Proxy Contest; or
(c) A merger, consolidation or reorganization involving
the Company (or the approval by the stockholders of the Company of a
merger, consolidation or reorganization involving the Company),
unless
(1) the stockholders of the Company immediately
before such merger, consolidation or reorganization, own (or will
own), directly or indirectly immediately following such merger,
consolidation or reorganization, at least seventy percent (70%) of
the combined voting power of the outstanding voting securities of the
corporation resulting from such merger or consolidation or
reorganization (the "Surviving Corporation") in substantially the
same proportion as their ownership of the Voting Securities
immediately before such merger, consolidation or reorganization, and
(2) the individuals who were members of the Incumbent
Board immediately prior to the execution of the agreement providing
for such merger, consolidation or reorganization constitute (or will
constitute) at least a majority of the members of the board of
directors of the Surviving Corporation;
(d) Adoption of a plan of a complete liquidation or
dissolution of the Company; or
(e) An agreement for the sale or other disposition of all
or substantially all of the assets of the Company and its
Subsidiaries to any Person (other than a transfer to a Subsidiary).
(f) Notwithstanding anything contained in this Agreement to the
contrary, if the Executive's employment is terminated during the
term of this Agreement and the Executive reasonably demonstrates
that such termination (1) was at the request of a third party
who has indicated an intention or taken steps reasonably
calculated to effect a Change in Control and who effectuates a
Change in Control (a "Third Party"), or (2) otherwise occurred
in connection with, or in anticipation of, a Change in Control
which actually occurs, then for all purposes of this Agreement,
the date of a Change in Control with respect to the Executive
shall mean the date immediately prior to the date of such
termination of the Executive's employment.
<PAGE>
2.4 Disability. For purposes of this Agreement, "Disability"
shall mean (1) a physical or mental infirmity which has been
determined to be a total and permanent disability under and in
accordance with the provisions of the Company's Long Term Disability
Income Plan, or (2) in the event the Company does not maintain such
plan at the time of the determination of the Executive's Disability
or the Executive is not a participant in any such plan, a physical or
mental infirmity which impairs the Executive's ability to
substantially perform his duties which continues for a period of at
least one hundred eighty (180) consecutive days.
2.5 Good Reason.
(a) For purposes of this Agreement, a termination for "Good
Reason" shall mean a termination by Executive of his employment
with the Company or a Subsidiary as a result of the occurrence
after a Change in Control of any of the events or conditions
described in subsections (1) through (10) hereof:
(1) a reduction by the Company or a Subsidiary in the
Executive's base salary in effect immediately prior to the Change in
Control or any failure to pay the Executive any compensation or
benefits to which the Executive is entitled within five days of the
due date or any failure to increase the Executive's base salary
substantially at the same frequency and by the same percentage as
applicable generally to the other officers of the Company;
(2) the Company or a Subsidiary requires the Executive to be
relocated anywhere in excess of thirty (30) miles of his present
office location, except for required travel on the Company's or
Subsidiary's business to an extent substantially consistent with his
present business travel obligations;
(3) a substantial increase, either as to frequency or time
expended, in travel of the Executive relative to the discharge of the
Executive's responsibilities to the Company or a Subsidiary;
(4) a failure by the Company and its Subsidiaries to
maintain plans providing compensation or benefits as beneficial in
all material respects as those provided by any benefit or
compensation plan, retirement or pension plan, stock option plan,
bonus plan, long-term incentive plan, short-term incentive plan, life
insurance plan, health and accident plan or disability plan in which
the Executive is participating at the time of a Change in Control, or
if the Company or any Subsidiary has taken any action which would
materially adversely affect the Executive's participation in or
materially reduce the Executive's benefits under any of such plans or
deprive him of any material fringe benefit enjoyed by him at the time
of the Change in Control, or if the Company or any Subsidiary has
failed to provide him with the number of paid vacation days to which
he would be entitled in accordance with the Company's or the
Subsidiary's normal vacation policy in effect at the time of the
Change in Control (provided that any reduction in the foregoing
benefits that is required by law or applies generally to all
employees of the Company shall not constitute "Good Reason" as
defined herein).
<PAGE>
(5) the Company or a Subsidiary reduces the
Executive's title, job authorities or responsibilities immediately
prior to the Change in Control, or the Company or a Subsidiary
imposes job authorities or responsibilities upon the Executive which
are materially inconsistent with the Executive's position, skill and
background or which impose time commitments on the Executive which
are materially greater than his time commitments to the Company or a
Subsidiary immediately prior to the Change in Control;
(6) the Company fails to obtain the assumption of the
obligations contained in this Agreement by any successor as
contemplated in Section 7 hereof;
(7) any purported termination of the Executive's
employment by the Company which is not effected pursuant to a Notice
of Termination satisfying the requirements of Section 4 below; and
for purposes of this Agreement, no such purported termination shall
be effective;
(8) any material breach by the Company of any
provision of this Agreement;
(9) any purported termination of the Executive's
employment for Cause by the Company which does not comply with the
terms of Section 2.2 of this Agreement; or
(10) the insolvency or the filing (by any party,
including the Company) of a petition for bankruptcy of the Company,
which petition is not dismissed within 60 days.
(b) Any event or condition described in this Section
2.5(a)(1) through (10) which occurs prior to a Change in Control but
which the Executive reasonably demonstrates (1) was at the request of
a Third Party, or (2) otherwise arose in connection with or in
anticipation of a Change in Control which actually occurs, shall
constitute Good Reason for purposes of this Agreement notwithstanding
that it occurred prior to the Change in Control.
(c) Until the Executive's Disability, the Executive's right to
terminate his employment for Good Reason pursuant to Section 2.5
shall not be affected by his incapacity due to physical or mental
illness.
3. Termination of Employment; Severance Payments.
3.1 Subject to the obligations of the Company set forth in
Section 3.2 (a) the Company may terminate the Executive's employment
with or without Cause, and (b) the Executive may terminate his
employment with or without Good Reason.
3.2 If, during the term of this Agreement, the Executive's
employment with the Company or a Subsidiary shall be terminated
within twenty-four (24) months following a Change in Control, the
Executive shall be entitled to the following compensation and
benefits:
<PAGE>
(a) If the Executive's employment with the Company or a
Subsidiary shall be terminated (1) by the Company or a Subsidiary for
Cause or Disability, (2) by reason of the Executive's death, or (3)
by the Executive other than for Good Reason, the Company shall pay
the Executive all amounts earned or accrued for or on behalf of the
Company or any of its Subsidiaries through the Termination Date (as
hereinafter defined) but not paid as of the Termination Date,
including (i) base salary, (ii) reimbursement for reasonable and
necessary expenses incurred by the Executive on behalf of the Company
or any Subsidiary during the period ending on the Termination Date,
and (iii) vacation pay (collectively, "Accrued Compensation").
(b) If the Executive's employment with the Company or a
Subsidiary shall be terminated by the Company or a Subsidiary for any
reason other than as specified in clause (1) or (2) of Section 3.2(a)
or if the Executive's employment with the Company or a Subsidiary is
terminated by the Executive for Good Reason, the Executive shall be
entitled to the following:
(1) The Company shall pay the Executive all Accrued
Compensation;
(2) The Company shall pay as a severance amount to
the Executive after the Date of Termination, an amount equal to two
(2) times the sum of (a) the Base Amount and (b) the Bonus Amount.
(3) For a number of months equal to the lesser of (a)
twenty-four (24) or (b) the number of months remaining until the
Executive's 65th birthday (the "Continuation Period"), the Company
shall at its expense continue on behalf of the Executive and his
dependents and beneficiaries (to the same extent provided to the
dependents and beneficiaries prior to the Executive's termination)
the life insurance, medical, dental, and hospitalization benefits
provided (x) to the Executive by the Company and/or its Subsidiaries
at any time within ninety (90) days preceding a Change in Control or
at any time thereafter, or (y) to other similarly situated executives
who continue in the employ of the Company or its Subsidiaries during
the Continuation Period. The coverage and benefits (including
deductibles and costs) provided in this Section 3.2(b)(3) during the
Continuation Period shall be no less favorable to the Executive and
his dependents and beneficiaries, than the most favorable of such
coverages and benefits set forth in clauses (x) and (y) above. The
Company's obligation hereunder with respect to the foregoing benefits
shall be limited to the extent that the Executive obtains any such
benefits pursuant to a subsequent employer's benefit plans, in which
case the Company may reduce the coverage of any benefits it is
required to provide the Executive hereunder as long as the aggregate
coverages and benefits of the combined benefit plans are no less
favorable to the Executive than the coverages and benefits required
to be provided hereunder. This Subsection (3) shall not be
interpreted so as to limit any benefits to which the Executive or his
dependents may be entitled under any of the Company's or any
Subsidiary's employee benefit plans, programs or practices following
the Executive's termination of employment, including without
limitation, retiree medical and life insurance benefits; and
(4) The Company shall provide to the Executive an
amount equal to twenty percent (20%) of the Base Amount to be used
for out-placement services.
(c) The amounts provided for in Section 3.2(a) and
3.2(b)(1), (2) and (4) shall be paid to the Executive in a lump sum
and in immediately available funds on the Executive's Termination
Date.
<PAGE>
(d) The Executive shall not be required to mitigate the
amount of any payment provided for in this Agreement by seeking other
employment or otherwise and no such payment shall be offset or
reduced by the amount of any compensation or benefits provided to the
Executive in any subsequent employment except as specifically
provided in Section 3.2(b)(3).
3.3 The provisions of this Agreement, and any payment provided
for hereunder, shall not reduce any amounts otherwise payable, or in
any way diminish the Executive's existing rights, or rights which
would accrue solely as a result of the passage of time, under any
benefit plan, incentive plan or securities plan, employment agreement
or other contract, plan or arrangement with the Company, any
Subsidiary or any other party; provided, however, the Company shall
not be required to make duplicative payments of Accrued Compensation.
4. Notice of Termination. Any purported termination by the
Company or a Subsidiary or by the Executive shall be communicated by
written Notice of Termination to the other. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which
indicates the specific termination provision in this Agreement relied
upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated and a
Termination Date. For purposes of this Agreement, no such purported
termination shall be effective without such Notice of Termination.
5. Termination Date. "Termination Date" shall mean in the
case of the Executive's death, his date of death, and in all other
cases, the date specified in the Notice of Termination subject to the
following:
(a) If the Executive's employment is terminated by the
Company due to Disability, the date specified in the Notice of
Termination shall be at least thirty (30) days from the date the
Notice of Termination is given to the Executive, provided that in the
case of Disability the Executive shall not have returned to the full-
time performance of his duties during such period of at least thirty
(30) days; and
(c) If the Executive's employment is terminated by the Executive for
Good Reason, the date specified in the Notice of Termination shall
not be more than thirty (30) days from the date the Notice of
Termination is given to the Company.
6. Additional Payments by the Company. The Company shall make
a cash payment to the Executive at the time set forth below equal to
the amount of excise taxes (i.e., the "excise tax gross-up payment")
which the Executive would be required to pay pursuant to Section 4999
of the Internal Revenue Code of 1986, as amended ("Code"), as a
result of any payments or benefits made or provided by or on behalf
of the Company and/or a Subsidiary or any successor thereto resulting
in an "excess parachute payment" within the meaning of Section
280G(b) of the Code. In addition to the foregoing, the cash payment
due to the Executive under this Section 6 shall be increased by the
aggregate of the amount of federal, state and local income,
employment and excise taxes for which the Executive will be liable on
account of the cash payment to be made under this Section 6, such
that the Executive will receive the excise tax gross-up payment net
of all income, employment and excise taxes imposed on him on account
of the receipt of the excise tax
<PAGE>
gross-up payment. The computation of this payment shall be
determined, at the expense of the Company, by an independent
accounting, actuarial or consulting firm selected by the Company.
Payment of the cash amount set forth above shall be made at such time
as the Company shall determine, in its sole discretion, but in no
event later than the date five (5) business days before the due date,
without regard to any extension, for filing the Executive's federal
income tax return for the calendar year which includes the date as of
which the aforementioned "excess parachute payments" are determined.
Notwithstanding the foregoing, there shall be no duplication of
payments by the Company under this Section 6 in respect of excise
taxes under Section 4999 of the Code to the extent the Company is
making cash payments in respect of such excise taxes for any other
arrangement with Employee. In the event that the Executive is
ultimately assessed with excise taxes under Section 4999 of the Code
as a result of payments made by the Company or any successor thereto
which exceed the amount of excise taxes used in computing the
Executive's payment under this Section 6, the Company or its
successor shall indemnify and promptly pay Employee the amount of
such additional excise taxes plus any additional excise taxes, income
and employment taxes, interest and penalties resulting from the
additional excise taxes and the indemnity hereunder.
7. Successors; Binding Agreement.
(a) This Agreement shall be binding upon and shall inure to the
benefit of the Company, its successors and assigns and, at the
time of any such succession or assignment, the Company shall
require any successor or assign to expressly assume and agree to
perform this Agreement in the same manner and to the same extent
that the Company would be required to perform it if no such
succession or assignment had taken place (by an agreement in
form and substance reasonably satisfactory to Employee).
Notwithstanding the preceding sentence, the Company shall not
assign this Agreement to any entity or individual unless such
entity or individual contemporaneously therewith succeeds
(whether by purchase of stock or assets, merger, consolidation,
reorganization or otherwise) to all or substantially all of the
business and/or assets of the Company and its Subsidiaries. The
term "the Company" as used herein shall include any permitted
successors and assigns of the Company. The term "successors and
assigns" as used herein shall mean a corporation or other entity
acquiring ownership, directly or indirectly, of all or
substantially all the assets and business of the Company
(including this Agreement) whether by operation of law or
otherwise.
(b) Neither this Agreement nor any right or interest
hereunder shall be assignable or transferable by the Executive, his
beneficiaries or legal representatives, except by will or by the laws
of descent and distribution. This Agreement shall inure to the
benefit of and be enforceable by the Executive's legal personal or
legal representatives.
8. Fees and Expenses. The Company shall pay all legal fees
and related expenses (including the cost of experts, evidence and
counsel) incurred by the Executive as they become due as a result of
the Executive seeking to obtain or enforce any right or benefit
provided by this Agreement.
<PAGE>
9. Notice. For the purpose of this Agreement, notices and
all other communications provided for in the Agreement (including the
Notice of Termination) shall be in writing and shall be deemed to
have been duly given when personally delivered or sent by certified
mail, return receipt requested, postage prepaid, addressed to the
respective addresses last given by each party to the other, provided
that all notices to the Company shall be directed to the attention of
the Board with a copy to the Secretary of the Company. All notices
and communications shall be deemed to have been received on the date
of delivery thereof or on the third business day after the mailing
thereof, except that notice of change of address shall be effective
only upon receipt.
10. Non-Exclusivity of Rights. Nothing in this Agreement
shall prevent or limit the Executive's continuing or future
participation in any benefit, bonus, incentive or other plan or
program provided by the Company or any of its Subsidiaries and for
which the Executive may qualify, nor shall anything herein limit or
reduce such rights as the Executive may have under any other
agreements with the Company or any of its Subsidiaries. Amounts
which are vested benefits or which the Executive is otherwise
entitled to receive under any plan or program of the Company or any
of its Subsidiaries shall be payable in accordance with such plan or
program.
11. Settlement of Claims. The Company's obligation to make
the payments provided for in this Agreement and otherwise to perform
its obligations hereunder shall not be affected by any circumstances,
including, without limitation, any set-off, counterclaim, recoupment,
defense or other right which the Company or any of it Subsidiaries
may have against the Executive or others.
12. Miscellaneous. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing and signed by the Executive and the
Company. No waiver by either party hereto at any time of any breach
by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall
be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time. No agreement or
representations, oral or otherwise, express or implied, with respect
to the subject matter hereof have been made by either party which are
not expressly set forth in this Agreement. No additional
compensation provided under any benefit or compensation plans to the
Executive shall be deemed to modify or otherwise affect the terms of
this Agreement or any of the Executive's entitlements hereunder
13. Counterparts.. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same Agreement.
14. Withholding of Taxes. The Company may withhold from any
amounts payable under this Agreement all federal, state, city or
other taxes as shall be required pursuant to any law or government
ruling or regulation.
15. Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto and supersedes all prior
agreements, if any, understandings and arrangements, oral or written,
between the parties hereto with respect to the subject matter hereof.
<PAGE>
16. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of
Delaware.
17. Severability. The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any
provision shall not affect the validity or enforceability of the
other provisions hereof.
18. Employment Rights. Nothing express or implied in this
Agreement shall create any right or duty on the part of the Company
or the Executive to have the Executive continue as an officer or
employee of the Company prior to any Change in Control or, subject to
the obligation of the Company to make the payments and provide the
benefits set forth in Section 3.2 hereof, after any Change in
Control.
19. Vesting of Options. All options to acquire stock of the
Company previously awarded to the Executive shall immediately vest
100% in the Executive upon the occurrence of a Change in Control.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized representative and the Executive has
executed this Agreement as of the day and year first above written.
JACOR COMMUNICATIONS, INC.
By: ____Robert L. Lawrence____
ROBERT L. LAWRENCE
President
____Martin R. Gausvik__________
[NAME OF EXECUTIVE]
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