<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 29, 1997
REGISTRATION NO. 333-
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------
AMERICAN RADIO SYSTEMS CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 4832 04-3196245
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Identification No.)
incorporation or Classification Code
organization) Number)
116 Huntington Avenue, Boston, Massachusetts 02116
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
------------------
STEVEN B. DODGE
AMERICAN RADIO SYSTEMS CORPORATION
116 HUNTINGTON AVENUE
BOSTON, MASSACHUSETTS 02116
(617) 375-7500
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------
Copy to:
NORMAN A. BIKALES, ESQ.
SULLIVAN & WORCESTER LLP
ONE POST OFFICE SQUARE
BOSTON, MASSACHUSETTS 02109
(617) 338-2800
------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is a compliance
with General Instruction G, check the following box. [_]
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED PROPOSED
TITLE OF EACH CLASS OF AMOUNT MAXIMUM MAXIMUM
SECURITIES TO BE TO BE OFFERING PRICE AGGREGATE AMOUNT OF
REGISTERED REGISTERED PER SECURITY OFFERING PRICE REGISTRATION FEE
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
11 3/8% Cumulative
Exchangeable Preferred
Stock, Series B....... 2,047,391 $100 $204,739,100(1) $62,043
- ----------------------------------------------------------------------------------------
11 3/8% Subordinated
Exchange Debentures due
2009(2)............... -- -- -- --
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</TABLE>
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(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(f) under the Securities Act of 1933, as amended.
(2) No separate consideration will be received for the exchange debentures.
------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS
REGISTRATION STATEMENT WILL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES
AND EXCHANGE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY DETERMINE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED APRIL 29, 1997
OFFER TO EXCHANGE
all outstanding
11 3/8% CUMULATIVE EXCHANGEABLE PREFERRED STOCK
for
11 3/8% CUMULATIVE EXCHANGEABLE PREFERRED STOCK, SERIES B
LOGO
The Exchange Offer will expire at 5:00 p.m., New York City Time on [a], 1997,
unless extended
-------
American Radio Systems Corporation ("American" or the "Company"), hereby
offers, on the terms and subject to the conditions set forth in this Prospectus
and the accompanying Letter of Transmittal (the "Letter of Transmittal"), to
exchange one share of 11 3/8% Cumulative Exchangeable Preferred Stock, Series
B, $100 liquidation preference per share (the "New Preferred Stock"), for each
share of 11 3/8% Cumulative Exchangeable Preferred Stock, $100 liquidation
preference per share (the "Old Preferred Stock"), of American (the "Exchange
Offer"). The powers, preferences and relative rights of the New Preferred Stock
and the Old Preferred Stock are substantially identical, except that the shares
of New Preferred Stock have been registered under the Securities Act of 1933,
as amended (the "Securities Act"), and will not bear any legends restricting
their transfer. The Exchange Offer is being made in order to satisfy certain
contractual obligations of American. See "The Exchange Offer" and "Description
of the New Preferred Stock".
American will accept for exchange any and all shares of Old Preferred Stock
validly tendered and not withdrawn prior to 5:00 p.m., New York City time, on
[a], 1997, unless the Exchange Offer is extended by American (as so extended,
the "Expiration Date"). Tenders of shares of Old Preferred Stock may be
withdrawn at any time prior to the Expiration Date. The Exchange Offer is
subject to certain customary conditions but is not conditioned upon any minimum
number of shares of Old Preferred Stock being tendered for exchange. See "The
Exchange Offer".
Each broker-dealer that receives shares of New Preferred Stock for its own
account pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such shares of New Preferred Stock.
The Letter of Transmittal states that by so acknowledging and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. This Prospectus, as it
may be amended or supplemented from time to time, may be used by a broker-
dealer in connection with resales of shares of New Preferred Stock received in
exchange for shares of Old Preferred Stock acquired by such broker-dealer as a
result of market-making activities or other trading activities. American has
agreed that it will make this Prospectus available to any broker-dealer for use
in connection with any such resale for a period of 180 days from the date of
this Prospectus, or such shorter period as will terminate when all Old
Preferred Stock acquired by broker-dealers for their own accounts as a result
of market-making activities or other trading activities have been exchanged for
New Preferred Stock and resold by such broker-dealers. See "Plan of
Distribution".
Following the completion of the Exchange Offer, holders of shares of Old
Preferred Stock not tendered will not have any further registration rights and
such shares will continue to be subject to restrictions on transfer.
Accordingly, the liquidity of the market for a holder's shares of Old Preferred
Stock could be adversely affected if the holder does not participate in the
Exchange Offer.
FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION
WITH AN INVESTMENT IN THE SECURITIES OFFERED HEREBY, SEE "RISK FACTORS"
BEGINNING ON PAGE 14.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is 1997.
<PAGE>
AVAILABLE INFORMATION
American has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-4 under the Securities Act
with respect to the New Preferred Stock offered hereby. As permitted by the
rules and regulations of the Commission, this Prospectus omits certain
information, exhibits and undertakings contained in the Registration
Statement. American is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports and other information with the Commission.
For further information with respect to American and the New Preferred Stock
offered hereby, reference is made to the Registration Statement, including the
exhibits thereto and the financial statements, notes and schedules filed as a
part thereof, as well as the periodic reports and other information filed by
American with the Commission, all of which may be inspected and copied at the
public reference facilities of the SEC at Room 1024, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549, and at the following Regional
Offices of the Commission: 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511 and Seven World Trade Center, 13th Floor, New York, New
York 10048. Copies of such material may also be obtained from the Public
Reference Section of the SEC at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. American's Class A Common Stock
is listed on the New York Stock Exchange ("NYSE") under the symbol "AFM", and
such reports, proxy statements and certain other information can also be
inspected at the office of the NYSE at 20 Broad Street, New York, New York
10005. The Commission maintains a web site that contains reports, proxy
information statements and other information regarding American; the address
of such site is http://www.sec.gov. Statements contained in this Prospectus as
to the contents of any contract or other document are not necessarily
complete, and in each instance reference is made to the copy of such contract
or other document filed as an exhibit to the Registration Statement, each such
statement being qualified in all respects by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed by American with the
Commission (File No. 0-26102), are incorporated herein by reference: (i)
Annual Report on Form 10-K for the year ended December 31, 1996 (the "American
10-K"), (ii) Current Reports on Form 8-K/A dated September 16, 1996, October
2, 1996 and April 17, 1997, and (iii) Current Reports on Form 8-K dated
January 3, 1997, January 22, 1997, February 10, 1997, February 18, 1997, March
18, 1997, March 24, 1997 and April 18, 1997. All documents filed by American
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent
to the date of the initial registration statement and prior to the termination
of the offering made hereby shall be deemed to be incorporated by reference
into this Prospectus and to be a part hereof from the date any such document
is filed.
The following documents, which have been filed by EZ Communications, Inc.
with the Commission (File No. 0-16265), are incorporated herein by reference:
(i) Annual Report on Form 10-K for the year ended December 31, 1996 (the "EZ
10-K").
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE UPON REQUEST FROM
BRUCE G. DANZIGER, DIRECTOR OF INVESTOR RELATIONS, AMERICAN RADIO SYSTEMS
CORPORATION, 116 HUNTINGTON AVENUE, BOSTON, MASSACHUSETTS 02116, TELEPHONE
NUMBER (617) 375-7500. IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS,
ANY REQUEST SHOULD BE MADE BY , 1997 [FIVE BUSINESS DAYS PRIOR TO THE
EXPIRATION DATE].
i
<PAGE>
The term "American Probable Transactions" means the acquisitions and
dispositions of radio stations described under "Business--Recent Transactions".
It does not, however, include those referred to under "Business--Recent
Transactions--Other Transactions" and "--Tower Subsidiary (other than the
Meridian Transaction)" because those are not, at this time, considered
"probable" within the meaning of the applicable SEC accounting rules.
SUMMARY
The following is a summary of certain information contained in this
Prospectus. This summary is not intended to be complete and is qualified in its
entirety by reference to the more detailed information set forth elsewhere in
this Prospectus.
AMERICAN
American is a national radio broadcasting company committed to acquiring,
developing and operating leading clusters of complementary radio stations in
major and growing advertising markets. American will be among the five largest
radio groups in the nation owning and/or operating 95 radio stations in 20
markets across the United States upon consummation of the American Probable
Transactions. Consistent with its strategy of operating in the top 60 markets
(with an emphasis on markets ranked 10 through 50), American will, upon such
consummation, own stations in the following markets: Boston, Seattle, St.
Louis, Baltimore, Cincinnati, Portland, Pittsburgh, Sacramento, Charlotte,
Kansas City, Hartford, Austin, Buffalo, Las Vegas, San Jose, West Palm Beach,
Rochester, Dayton, Fresno and Riverside/San Bernardino. Giving effect to the
American Probable Transactions, American station groups ranked first or second
among station operators in radio advertising revenues in 18 of its 20 markets
based on the 1997 edition of Duncan's Radio Market Guide (the "Duncan Guide").*
As a key part of the Company's acquisition strategy, on April 4, 1997, EZ
Communications, Inc. ("EZ") was merged into American (the "EZ Merger").
Pursuant to the EZ Merger (excluding the consummation of the prospective EZ
transactions which are included in American Probable Transactions), American
acquired 18 FM and six AM stations in eight markets, assumed approximately
$222.4 million of long-term debt, paid approximately $108.9 million in cash and
issued approximately 8.3 million shares of Class A Common Stock to the EZ
stockholders.
In July 1995, the Company organized American Tower Systems, Inc. (the "Tower
Subsidiary" or "Tower") for the purpose of acquiring, developing and operating
communications towers throughout the United States, principally for other radio
and telecommunications companies.
American's stations have demonstrated significant same station growth in net
revenues and broadcast cash flow. Growth in net revenues and, to a greater
extent, broadcast cash flow from such same stations is affected by a number of
factors, among the most significant of which are the number of stations
acquired in a particular period, the stage of development of the acquired
stations and the period of time such stations have been operated by American.
Net revenues and broadcast cash flow from stations owned and/or operated by
American as of December 31, 1996 (including for periods prior to their
acquisition by American) increased by 12.1% and 20.7%, respectively, from 1995
to 1996. Giving effect to the American Probable Transactions as though all of
them had been consummated at January 1, 1996, net revenues and broadcast cash
flow in 1996 would have been approximately $360.9 million and $120.7 million,
respectively. See "Summary Combined Financial Information" and "Unaudited Pro
Forma Condensed Financial Statements of American".
Management believes that American's substantial same station growth is a
result of a number of factors that include the following:
- --------
* The Duncan Guide is published by a company partially owned by James H.
Duncan, Jr., a director of American.
1
<PAGE>
. Market Selection. American has targeted markets that offer geographic
diversity and fast growing economic bases. Five of American's markets are
among the ten fastest growing U.S. markets and eight are among the top
25, as identified by the U.S. Department of Commerce, Bureau of Economic
Analysis, "Projection of Economic Growth", as of May 1996.
. Station Groups. American operates at least three FMs in each market
(other than Austin, Cincinnati, Kansas City and Riverside/San Bernardino)
and in most markets has developed radio station groups with many
complementary FM and AM stations. These groups are generally composed of
a mixture of leading and underperforming stations. Management believes
this configuration enables American to accelerate the growth potential of
these station groups, while reducing the risks associated with launching
new formats and undertaking other means of improving underperforming
radio properties. Management estimates that approximately one quarter of
its stations, assuming consummation of the American Probable
Transactions, have negligible or negative broadcast cash flow. American
seeks to improve the performance of these stations by leveraging the
enhanced management, programming, promotional and operational resources
available to multiple station groups.
American also believes that the operation of station clusters may: (i)
enhance net revenue growth by increasing the appeal of the stations to
advertisers and enabling such stations to compete more effectively with
other advertising media; (ii) achieve operating efficiencies by
consolidating broadcast facilities, eliminating duplicative management
and staff functions and reducing overhead; (iii) enhance the
competitiveness of American in bidding for top quality talent; (iv)
facilitate cross promotion, sponsorship of larger events and increased
spending on television, outdoor and other advertising designed to
establish "brand" identity for the station cluster; (v) support more
extensive and specialized market research; and (vi) promote the
development of enhanced client services for advertisers.
. Station Operating Strategies. American views itself as a product oriented
company that seeks to establish and maintain listener loyalty through
sound audience research, employment of high profile personalities, strong
production values, and tailored marketing approaches that vary according
to market, format and individual station need. American also seeks to
assemble a large group of stations in each market, enabling it to attract
a broad range of demographic audiences and to respond to differing needs
of individual advertisers. Through these and other strategies American
seeks to increase its share of total advertising dollars, targeting in
particular its two most direct competitors, newspapers and broadcast
television. These strategies have enabled American to build station
groups with leading revenue and audience market share.
. Diversified Programming. American's programming diversification has
helped to insulate it from changes in listening preferences. American
currently programs 18 different formats at its stations, a substantial
increase from the six formats programmed in January 1994.
. Management Structure. In order to manage a national group of radio
stations and to provide a strong operational focus to each market,
American has divided its markets into three groups, with a highly
experienced Co-Chief Operating Officer responsible for each. While the
management structures in each market vary according to the number of
stations, their stage of development, and other factors, in most markets
overall responsibility for the market is assigned to a single individual
market leader. American believes this structure facilitates the
coordination of programming and selling and reduction of operating
expenses, while maintaining accountability for individual station
performance. Individual market leaders each report to a Co-Chief
Operating Officer, who in turn report to Steven B. Dodge, Chairman and
Chief Executive Officer.
2
<PAGE>
The following table sets forth certain information regarding American and its
markets, assuming all of the American Probable Transactions had been
consummated as of January 1, 1996. For important information regarding the
stations set forth below, including the source and calculation of "Market
Ranking by Revenue" and "Market Revenue Rank", see the table under "Business--
Operations".
<TABLE>
<CAPTION>
NUMBER
MARKET MARKET OF STATIONS
RANKING BY REVENUE -----------
REVENUE RANK FM AM
---------- ------- ----- -----
<S> <C> <C> <C> <C>
Boston......................................... 9 2 3 3
Seattle........................................ 13 2 4 1
St. Louis...................................... 18 1 3 1
Cincinnati..................................... 20 2 2 --
Baltimore...................................... 21 1 3 2
Portland....................................... 22 1 5 1
Pittsburgh..................................... 24 2 3 --
Sacramento..................................... 25 1 5 3
Charlotte...................................... 27 1 5 2
Kansas City.................................... 29 3 2 1
Hartford....................................... 35 1 3 1
Austin......................................... 37 4 2 1
Las Vegas...................................... 39 2 4 2
Buffalo........................................ 42 2 4 1
San Jose....................................... 43 1 5 --
West Palm Beach................................ 49 2 4 --
Rochester...................................... 53 1 4 --
Dayton......................................... 58 1 5 1
Fresno......................................... 62 1 5 2
Riverside/San Bernardino....................... 64 1 2 --
</TABLE>
American was incorporated under the laws of the State of Delaware in 1993.
American's principal offices are located at 116 Huntington Avenue, Boston,
Massachusetts 02116, and its telephone number is (617) 375-7500.
3
<PAGE>
THE EXCHANGE OFFER
The Exchange Offer.... One share of New Preferred Stock in exchange for
each outstanding share of Old Preferred Stock. As
of the date hereof, 2,047,391 shares of Old
Preferred Stock are issued and outstanding. The New
Preferred Stock offered hereby is identical in all
material respects to the Old Preferred Stock,
except that shares of New Preferred Stock will be
freely transferable by the holders thereof except
as otherwise provided herein. See "Description of
the New Preferred Stock".
Based on an interpretation by the Commission's
staff set forth in no-action letters issued to
third parties unrelated to it, American believes
that the shares of New Preferred Stock issued
pursuant to the Exchange Offer in exchange for Old
Preferred Stock may be offered for sale, sold and
otherwise transferred by any person receiving the
New Preferred Stock, whether or not that person is
the registered holder (other than any such holder
or such other person that is an "affiliate" of
American within the meaning of Rule 405 under the
Securities Act), without compliance with the
registration and prospectus delivery provisions of
the Securities Act, provided that (i) the shares of
New Preferred Stock are acquired in the ordinary
course of business of that holder or such other
person, (ii) neither the holder nor such other
person is engaging in or intends to engage in a
distribution of the New Preferred Stock, and (iii)
neither the holder nor such other person has an
arrangement or understanding with any person to
participate in the distribution of the New
Preferred Stock. See "The Exchange Offer--Purpose
and Effect". Each broker-dealer that receives
shares of New Preferred Stock for its own account
in exchange for shares of Old Preferred Stock,
where those shares of Old Preferred Stock were
acquired by the broker-dealer as a result of its
market-making activities or other trading
activities, must acknowledge that it will deliver a
prospectus in connection with any resale of such
shares of New Preferred Stock. See "Plan of
Distribution".
Registration Rights
Agreement............ The shares of Old Preferred Stock were sold by
American on January 30, 1997, in a private
placement in reliance on Section 4(2) of the
Securities Act and immediately resold by the
initial purchasers thereof to certain qualified
institutional buyers in reliance on Rule 144A under
the Securities Act and to a limited number of
institutional "accredited investors" (as defined in
Rule 501(A)(1), (2), (3) or (7) under the
Securities Act) (the "Original Offering"). In
connection with the sale, American entered into a
Registration Rights Agreement with the initial
purchasers of the Old Preferred Stock (the
"Registration Rights Agreement") requiring American
to make the Exchange Offer. The Registration Rights
Agreement further provides that American must use
its best efforts to (i) cause the Registration
Statement with respect to the Exchange Offer to be
declared effective on or before July 29, 1997 and
(ii) consummate the Exchange Offer on or before
September 12, 1997. See "The Exchange Offer--
Purpose and Effect".
Expiration Date....... The Exchange Offer will expire at 5:00 p.m., New
York City time, [a], 1997, or such later date and
time to which it is extended by American.
Withdrawal............ The tender of shares of Old Preferred Stock
pursuant to the Exchange Offer may be withdrawn at
any time prior to 5:00 p.m., New York City time, on
the Expiration Date. Any shares of Old Preferred
Stock not accepted for exchange for any reason will
be returned without expense to the tendering holder
thereof as promptly as practicable after the
expiration or termination of the Exchange Offer.
4
<PAGE>
Dividends on the New
Preferred Stock and
Old Preferred
Stock................
Dividends on each share of New Preferred Stock will
accrue from the last dividend payment (or deemed
dividend payment) on the Old Preferred Stock. No
additional dividends will be paid on Old Preferred
Stock tendered and accepted for exchange.
Conditions to the
Exchange Offer....... The Exchange Offer is subject to certain customary
conditions, certain of which may be waived by
American. It is not, however, conditioned on any
minimum number of shares of Old Preferred Stock
being tendered for exchange. See "The Exchange
Offer--Conditions to Exchange Offer."
Termination........... American may terminate the Exchange Offer if it
determines that its ability to proceed with the
Exchange Offer could be materially impaired due to
any legal or governmental action, any new law,
statute, rule or regulation or any interpretation
by the staff of the Commission of any existing law,
statute, rule or regulation. Holders of Old
Preferred Stock will have certain rights against
American under the Registration Rights Agreement
should American fail to consummate the Exchange
Offer. No federal or state regulatory requirements
must be complied with or approvals obtained in
connection with the Exchange Offer, other than
applicable requirements under federal and state
securities laws.
Procedures for
Tendering Old Each holder of shares of Old Preferred Stock
Preferred Stock...... wishing to accept the Exchange Offer must complete,
sign and date the Letter of Transmittal, or a copy
thereof, in accordance with the instructions
contained herein and therein, and mail or otherwise
deliver the Letter of Transmittal, or copy thereof,
together with certificates representing the shares
of Old Preferred Stock and any other required
documentation, to the Exchange Agent at the address
set forth herein. Persons holding shares of Old
Preferred Stock through the Depository Trust
Company ("DTC") and wishing to accept the Exchange
Offer must do so pursuant to the DTC's Automated
Tender Offer Program, by which each tendering
participant will agree to be bound by the Letter of
Transmittal. By executing or agreeing to be bound
by the Letter of Transmittal, each holder will
represent to American that, among other things, (i)
the shares of New Preferred Stock acquired pursuant
to the Exchange Offer are being obtained in the
ordinary course of business of the person receiving
such New Preferred Stock, whether or not such
person is the registered holder of the Old
Preferred Stock, (ii) neither the holder nor any
such other person is engaging in or intends to
engage in a distribution of such New Preferred
Stock, (iii) has an arrangement or understanding
with any person to participate in the distribution
of such New Preferred Stock, and (iv) neither the
holder nor any such other person is an "affiliate",
as defined under Rule 405 promulgated under the
Securities Act, of American. Pursuant to the
Registration Rights Agreement, American is required
to file a "shelf" registration statement for a
continuous offering pursuant to Rule 415 under the
Securities Act in respect of the Old Preferred
Stock if (i) because of any change in law or in
currently prevailing interpretations of the staff
of the Commission, American is not permitted to
effect the Exchange Offer, (ii) the Exchange Offer
is not consummated within 225 days of the Original
Offering, (iii) the holders of
5
<PAGE>
not less than a majority of shares of the Old
Preferred Stock determine that the interests of the
holders would be adversely affected by consummation
of the Exchange Offer, or (iv) any holder of Old
Preferred Stock participates in the Exchange Offer
and does not receive freely transferrable shares of
New Preferred Stock in exchange for Old Preferred
Stock (other than as a result of the status of such
holder as an "affiliate" of American within the
meaning of the Securities Act). See "The Exchange
Offer--Purpose and Effect".
Acceptance of Old
Preferred Stock and
Delivery of New
Preferred Stock......
The Company will accept for exchange any and all
shares of Old Preferred Stock which are properly
tendered (and not withdrawn) in the Exchange Offer
prior to 5:00 p.m., New York City time, on the
Expiration Date. The New Preferred Stock issued
pursuant to the Exchange Offer will be delivered
promptly following the Expiration Date. See "The
Exchange Offer--Terms of the Exchange Offer".
Exchange Agent........ Harris Trust Company of New York is serving as
Exchange Agent (the "Exchange Agent") in connection
with the Exchange Offer.
Federal Income Tax
Consequences......... The exchange pursuant to the Exchange Offer should
not be a taxable event for federal income tax
purposes. See "Certain Federal Income Tax
Consequences".
Effect of Not Shares of Old Preferred Stock that are not tendered
Tendering............ or that are tendered but not accepted will,
following the completion of the Exchange Offer,
continue to be subject to the existing restrictions
upon transfer thereof. American will have no
further obligation to provide for the registration
under the Securities Act of such shares of Old
Preferred Stock.
SUMMARY OF THE TERMS OF THE NEW PREFERRED STOCK AND EXCHANGE DEBENTURES
NEW PREFERRED STOCK
Securities Offered.... 2,047,391 shares of 11 3/8% Cumulative Exchangeable
Preferred Stock, Series B, $100 liquidation
preference per share.
Dividends............. Cumulative from the last dividend payment (or
deemed dividend payment) of the Old Preferred Stock
at the annual rate of 11 3/8% of the liquidation
preference per share of the New Preferred Stock,
payable quarterly on January 15, April 15, July 15
and October 15 of each year, commencing July 15,
1997, out of funds legally available therefor,
when, as and if declared by the Board of Directors
of American. American may, at its option, pay
dividends on any dividend payment date occurring on
or before January 15, 2002 either in cash or in
additional shares of New Preferred Stock (or, at
American's option, cash in lieu of fractional
shares).
Liquidation $100 per share, plus accumulated and unpaid
Preference........... dividends.
Optional Redemption... The New Preferred Stock is redeemable for cash at
any time after January 15, 2002, at the option of
American, in whole or in part, at a redemption
price initially of 105.688% of the liquidation
preference, declining ratably immediately after
January 15 of each year thereafter to a redemption
price of
6
<PAGE>
100% of the liquidation preference, after January
15, 2007, plus in each case, without duplication,
accumulated and unpaid dividends. In addition,
prior to January 15, 2000, American may, at its
option, use the net proceeds of one or more Public
or Rule 144A Equity Offerings to redeem up to 35%
of the outstanding New Preferred Stock at 111.375%
of the liquidation preference, plus, without
duplication, accumulated and unpaid dividends to
the date of redemption; provided, however, that,
after any such redemption, there must be at least
$130.0 million aggregate liquidation preference of
New Preferred Stock outstanding.
Mandatory American is required, subject to certain
Redemption........... conditions, to redeem all of the New Preferred
Stock outstanding on January 15, 2009 at a
redemption price equal to the liquidation
preference, plus, without duplication, accumulated
and unpaid dividends to the date of redemption.
Change of Control..... Under certain circumstances involving a Change of
Control, American is required to offer to purchase
each share of New Preferred Stock at a purchase
price equal to the 101% of the liquidation
preference thereof, plus, without duplication,
accumulated and unpaid dividends. There can be no
assurance that American will have sufficient funds
to purchase all of the New Preferred Stock in the
event of a Change of Control or that it would be
able to obtain financing for such purpose on
favorable terms, if at all. American's debt
instruments also contain provisions relating to a
change of control which require repayment of such
debt in the event of a change of control as defined
therein.
Ranking............... The New Preferred Stock will rank, with respect to
dividends and upon liquidation, dissolution or
winding up of American, senior to all classes of
American's Common Stock and junior to any other
series of Preferred Stock that may hereafter be
created that states it ranks senior to the New
Preferred Stock. The New Preferred Stock will rank
pari passu with any Old Preferred Stock which is
not exchanged and the 137,500 shares of 7%
Convertible Exchangeable Preferred Stock, $1,000
liquidation preference per share, issued in June
1996 (the "Convertible Preferred Stock").
Voting Rights......... Except as required by law or with respect to an
amendment of the Restated Certificate of
Incorporation of American, as amended (the
"Restated Certificate") adversely affecting the
rights of the New Preferred Stock, the holders of
the New Preferred Stock will not be entitled to any
voting rights except as follows: (i) amending
certain rights of the holders of the New Preferred
Stock or (ii) with respect to the creation,
authorization or issuance of capital stock ranking
senior (in certain respects) to the New Preferred
Stock. In addition, if (i) the equivalent of six
quarterly dividends payable on the New Preferred
Stock are in arrears, (ii) American fails to make a
mandatory redemption or an Offer to Purchase
following a Change of Control, or (iii) American
fails to comply with certain covenants in the New
Preferred Stock or to make certain payments on its
Indebtedness, the number of directors of American
will be increased by two and the holders of the New
Preferred Stock, voting separately as a class with
the holders of shares of any other series of parity
Preferred Stock upon which like voting rights have
been conferred and are exercisable, will be
entitled to elect two directors, who shall serve
until such time as, in the case of a dividend
default, all dividends in arrears have been paid or
declared and set apart for payment, and, in all
other cases, any failure, breach or default giving
rise to such voting rights is
7
<PAGE>
remedied or waived by the holders of not less than
a majority of the shares of New Preferred Stock
then outstanding.
Certain Restrictive The holders of shares of New Preferred Stock will
Covenants............ be entitled to the benefit of certain restrictive
provisions that, among other things, will limit the
ability of American and its Restricted Subsidiaries
to incur additional Indebtedness, pay dividends or
make certain other Restricted Payments, or merge or
consolidate with or sell all or substantially all
of their assets to any other person and will limit
the ability of Restricted Subsidiaries to issue
equity interests.
Senior Debt American's debt instruments contain provisions
Restrictions......... which restrict, and if a default under any thereof
exists prohibit, redemption or repurchase of the
New Preferred Stock, including upon a Change of
Control or through the issue of Exchange
Debentures, and the payment of cash dividends on
the New Preferred Stock. See "Risk Factors--Factors
Relating to American and its Business--Restrictions
Imposed by Terms of Indebtedness" and "Description
of Capital Stock--Dividend Restrictions" and
"Indebtedness of American".
Exchange Debentures... The New Preferred Stock will be exchangeable,
subject to certain conditions, at the option of
American, in whole but not in part, on any dividend
payment date commencing July 15, 1997, for
American's 11 3/8% Subordinated Exchange Debentures
due 2009 (the "Exchange Debentures") in an
aggregate principal amount equal to the liquidation
preference, plus, without duplication, accumulated
and unpaid dividends to the date of exchange.
Federal Income Tax
Consequences......... There are certain federal income tax consequences
associated with the purchasing, holding and
disposing of the New Preferred Stock (or the
Exchange Debentures), including the fact that a
redemption of shares of the New Preferred Stock for
cash or an exchange of the New Preferred Stock for
Exchange Debentures will be a taxable transaction
and that any Exchange Debentures may be issued with
original issue discount resulting in income without
a cash distribution. See "Certain Federal Income
Tax Consequences".
THE EXCHANGE DEBENTURES
Issue................. 11 3/8% Subordinated Exchange Debentures due 2009
issuable in exchange for the New Preferred Stock in
an aggregate principal amount equal to the
liquidation preference of the New Preferred Stock,
plus, without duplication, accrued and unpaid
dividends to the date fixed for the exchange
thereof (the "Exchange Date"), plus any additional
Exchange Debentures issued in lieu of cash
interest.
Maturity.............. January 15, 2009.
Interest Rate and
Payment Dates........ The Exchange Debentures will bear interest at a
rate of 11 3/8% per annum. Interest will accrue
from the date of issuance or from the most recent
interest payment date to which interest has been
paid or provided for or, if no interest has been
paid or provided for, from the Exchange Date.
Interest will be payable semi-annually in cash (or,
at the option of American, on or prior to
8
<PAGE>
January 15, 2002, in additional Exchange
Debentures) in arrears on each January 15 and July
15, commencing with the first such date after the
Exchange Date.
Optional Redemption... The Exchange Debentures are redeemable, at the
option of American, in whole or in part, at any
time on or after January 15, 2002 at the redemption
prices set forth herein, plus accrued and unpaid
interest to the date of redemption. In addition,
prior to January 15, 2000, American may, at its
option, redeem up to 35% of the outstanding
Exchange Debentures from the net cash proceeds of a
Public or Rule 144A Equity Offering at 111.375% of
their principal amount, plus accrued and unpaid
interest to the date of redemption; provided,
however, that after any such redemption, the
aggregate principal amount of the Exchange
Debentures outstanding must equal at least $130.0
million.
Ranking............... The Exchange Debentures will be subordinated to all
existing and future Senior Debt of American. In
addition, the Exchange Debentures will be
effectively subordinated to all existing and future
Indebtedness of American's subsidiaries (including
guarantees of American's Indebtedness). The
Exchange Debentures will rank pari passu or senior
to any class or series of Indebtedness that
expressly provides that it ranks pari passu or
subordinate to the Exchange Debentures, as the case
may be. After giving effect to the American
Probable Transactions, the financing thereof, the
Original Offering and, in each case, the use of the
proceeds therefrom, as though each had occurred on
December 31, 1996, there would have been
approximately $690.7 million of Senior Debt
outstanding. The debentures issuable upon exchange
of the Convertible Preferred Stock will be Senior
Debt unless American otherwise designates prior to
their issuance.
Change of Control..... In the event of a Change of Control, American will,
subject to certain conditions, be required to offer
to purchase all outstanding Exchange Debentures at
a purchase price equal to 101% of the principal
amount thereof, plus accrued and unpaid interest to
the date of purchase. There can be no assurance
that American will have sufficient funds to
purchase all the Exchange Debentures in the event
of a Change of Control or that American would be
able to obtain financing for such purpose on
favorable terms, if at all. American's debt
instruments also contain provisions relating to a
change of control which require repayment of such
debt in the event of a change of control as defined
herein.
Certain Restrictive The Exchange Indenture will contain certain
Covenants............ restrictive covenants, including limitations on (i)
the incurrence of indebtedness and issuance of
preferred stock by the Company and the Restricted
Subsidiaries; (ii) the payment of dividends and the
making of restricted payments; (iii) transactions
with affiliates; (iv) the existence of liens; (v)
the disposition of proceeds of asset sales; (vi)
Asset Swaps; (vii) the making of guarantees by the
Company and the Restricted Subsidiaries; (viii)
transfers and issuances of stock of the Restricted
Subsidiaries; (ix) the imposition of restrictions
on certain payments by the Restricted Subsidiaries;
(x) investments in Unrestricted Subsidiaries; and
(xi) certain mergers and sales of assets. See
"Description of the Exchange Debentures--Certain
Covenants" and "--Limitation on Merger,
Consolidation and Sale of Assets".
9
<PAGE>
Senior Debt American's debt instruments contain provisions
Restrictions......... which restrict, and if a default under any thereof
exists prohibit, redemption or repurchase of the
Exchange Debentures, including upon a Change of
Control. See "Risk Factors--Factors Relating to
American and its Business--Restrictions Imposed by
Terms of Indebtedness" and "Indebtedness of
American".
USE OF PROCEEDS
There will be no cash proceeds to American from the exchange pursuant to the
Exchange Offer.
The net proceeds from the Old Preferred Offering were used initially to repay
indebtedness under the Credit Agreements and, thereafter, to finance American's
acquisition program. See "Use of Proceeds".
RISK FACTORS
An investment in the New Preferred Stock involves certain risks that a
prospective investor should carefully consider. See "Risk Factors".
10
<PAGE>
SELECTED COMBINED FINANCIAL DATA
The following Selected Combined Financial Data has been derived from the
consolidated financial statements of American and the Selected Financial Data
of the predecessor entities of American (Stoner, Atlantic, Multi Market and
Boston AM (the "American Predecessor Entities")), which are contained in the
American 10-K for the year ended December 31, 1996 which has been filed with
the Commission pursuant to the Exchange Act and which is incorporated herein by
reference. The Selected Combined Financial Data should be read in conjunction
with American's financial statements and the notes thereto and with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations". The following financial information presents the combined
operating results of the American Predecessor Entities for periods prior to the
date of the formation of American (the "American Reorganization") (November 1,
1993) for 1992 and the ten months ended October 31, 1993 as if such entities
had combined effective January 1, 1992 or, if later, the date of commencement
of operations of certain American Predecessor Entities. The information for the
two months ended December 31, 1993 and the years ended December 31, 1994, 1995
and 1996 is based on the historical American consolidated financial statements.
The pro forma financial information with respect to the year ended December 31,
1996 included below reflects certain adjustments, as explained elsewhere in
this Prospectus, and therefore any comparison of the pro forma 1996 financial
information with the Selected Combined Financial Data appearing below and
elsewhere in this Prospectus for periods prior to 1996 is inappropriate. Such
pro forma financial information gives effect, among other things, to the
American Pro Forma Transactions (which term means the EZ Merger (excluding the
prospective EZ transactions which were not then consummated and are included in
the American Probable Transactions), the Hartford Transaction, the HBC Merger
(excluding the Omaha stations which are under an agreement to be sold), the
BayCom Transaction and the Baltimore Transaction. The American Pro Forma
Transactions do not include all of the American Probable Transactions, or the
transactions referred to under "Business--Recent Transactions--Other
Transactions". See "Management's Discussion and Analysis of Financial Condition
and Results of Operations" in the American 10-K and the financial statements of
EZ in the EZ 10-K, all of which are incorporated herein by reference.
11
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION
<TABLE>
<CAPTION>
COMBINED PREDECESSOR
COMBINED PREDECESSOR ENTITIES AND
ENTITIES(1) AMERICAN(1) AMERICAN(1) AMERICAN
------------------------ ------------ -------------------- ---------------------------------------------
YEAR ENDED DECEMBER 31,
---------------------------------------------
TEN MONTHS TWO MONTHS PRO
YEAR ENDED ENDED ENDED COMBINED YEAR ENDED HISTORICAL FORMA
DECEMBER 31, OCTOBER 31, DECEMBER 31, DECEMBER 31, -------------------------- --------
1992(2) 1993 1993 1993(1) 1994(2) 1995(2) 1996(2) 1996(3)
------------ ----------- ------------ -------------------- ------- ------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF
OPERATIONS
DATA(2):
Net revenues.... $46,306 $45,010 $8,943 $53,953 $68,034 $97,772 $178,019 $319,512
Operating
expenses....... 36,698 37,058 6,493 43,551 50,129 66,448 120,004 211,602
Net LMA
expenses(4).... -- -- -- -- -- 600 8,128 8,128
Depreciation and
amortization... 4,465 5,900 1,415 7,315 9,920 12,364 17,810 60,405
Corporate
general and
administrative
expenses....... 3,657 2,897 944 3,841 2,229 3,908 5,046 6,046
------- ------- ------ ------- ------- ------- -------- --------
Operating income
(loss)......... 1,486 (845) 91 (754) 5,756 14,452 27,031 33,331
Net interest
expense........ (4,370) (5,517) (801) (6,318) (7,051) (10,062) (16,762) (42,196)
Gains (losses)
on sale of
assets, net.... (964) 3,133 -- 3,133 2,345 11,544 (308) (308)
Other non-
operating
income
(expense),
net............ (3) 42 -- 42 (568) -- -- --
------- ------- ------ ------- ------- ------- -------- --------
Income (loss)
before income
taxes and other
items(3)....... (3,851) (3,187) (710) (3,897) 482 15,934 9,961 (9,173)
Provision
(benefit) for
income
taxes(5)....... 382 1,690 (263) 1,427 556 6,829 4,826 (2,373)
------- ------- ------ ------- ------- ------- -------- --------
Income (loss)
before
extraordinary
item........... $(4,233) $(4,877) $ (447) $(5,324) (74) 9,105 5,135 (6,800)
======= ======= ====== =======
Extraordinary
losses......... (1,159) (817) -- --
------- ------- -------- --------
Net income
(loss)......... (1,233) 8,288 5,135 (6,800)
Preferred stock
and Series C
Common Stock
dividends...... (1,887) (815) (4,973) (27,723)
------- ------- -------- --------
Net income
(loss)
applicable to
common
stockholders... $(3,120) $ 7,473 $ 162 $(34,523)
======= ======= ======== ========
OTHER FINANCIAL
DATA:
Broadcast cash
flow(6)........ $ 9,608 $ 7,952 $2,450 $10,402 $17,905 $31,324 $ 58,015 $107,910
EBITDA(6)....... 5,951 5,055 1,506 6,561 15,676 27,416 52,969 101,864
After-tax cash
flow(6)........ -- -- -- -- 7,959 20,654 17,972 25,882
Ratio of
earnings to
fixed charges
and preferred
stock
dividends(7)... -- -- -- -- -- 2.09x 1.17x --
Ratio of total
debt to
EBITDA......... 6.24x 5.13x
Ratio of EBITDA
to net interest
expense and
preferred stock
dividends...... 2.44x 1.46x
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1996
-----------------------
HISTORICAL PRO FORMA(3)
---------- ------------
(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents............................. $ 10,447 $ 13,500
Working capital, excluding current portion of long-
term debt............................................ 35,547 50,251
Intangible assets, net................................ 493,260 1,234,258
Total assets.......................................... 796,303 1,615,931
Long-term debt, including current portion............. 330,672 522,594
Cumulative Exchangeable Preferred Stock............... -- 200,000
Stockholders' equity.................................. 396,163 711,875
</TABLE>
12
<PAGE>
- --------
(1) The information for the Combined American Predecessor Entities includes the
results of operations of the following entities for the following periods:
Stoner and Atlantic--the year ended December 31, 1992 and ten months ended
October 31, 1993; Multi Market--the fiscal year ended August 31, 1992
(included in calendar year 1992) and the sum of (a) eight-twelfths of the
fiscal year ended August 31, 1993 and (b) the historical results for the
two months ended October 31, 1993 (included in the ten months ended October
31, 1993); and Boston AM--the one-month period ended December 31, 1992 (in
calendar year 1992) and the ten months ended October 31, 1993 (in that
period). In addition, the 1993 financial information combines the American
Predecessor Entities for the ten months ended October 31, 1993 and
historical American financial statements for the two month period ended
December 31, 1993.
(2) Year-to-year comparisons are significantly affected by the timing of
acquisitions and dispositions of radio stations, which have been numerous
during the periods shown. See "Business--Recent Transactions" and
"Management's Discussion and Analysis of the Financial Condition and
Results of Operations" in the American 10-K for a description of the
acquisitions and dispositions made in 1994, 1995 and 1996.
(3) The unaudited pro forma Statement of Operations Data and Other Financial
Data for the year ended December 31, 1996 give effect to (i) the American
Pro Forma Transactions and (ii) the offering of the Old Preferred Stock
(the "Original Offering") and the use of the proceeds thereof and the
Exchange Offer, as if each of the foregoing had occurred on January 1,
1996. The term "American Pro Forma Transactions" means the EZ Merger
(including the prospective EZ transactions which are included in the
American Probable Transactions), the BayCom Transaction, the Hartford
Transaction, the HBC Merger (excluding the Omaha stations which are under
an agreement to be sold) and the Baltimore Transaction and does not include
all of the American Probable Transactions. See "Business--Recent
Transactions" and "Unaudited Pro Forma Financial Statements of American".
(4) In connection with a number of American Probable Transactions (and certain
consummated acquisitions) American entered into local marketing agreements
("LMAs"). Net LMA expense represents the excess of monthly payments payable
by American to the station owners over LMA revenue received by American.
Net LMA expense is, in effect, a reimbursement to the station owners of
their depreciation and amortization and interest expense and, upon
acquisition of the stations by American, will be replaced by such expenses.
(5) The American Predecessor Entities' provision (benefit) for income taxes for
the periods prior to 1994 represents the historical provision (benefit) for
Stoner. Atlantic was a partnership and Boston AM was an S corporation and,
accordingly, taxable income or loss flowed through to the partners and
stockholder, respectively, of those entities. Multi Market has net
operating loss carryforwards available to reduce future taxable income. As
the realization of the benefit of those losses was not assured, no income
tax benefit was recorded. Based on these circumstances, a combined tax
provision for periods prior to 1994 has not been presented.
(6) "Broadcast cash flow" means operating income (loss) before net LMA
expenses, depreciation and amortization and corporate general and
administrative expenses. "EBITDA" means operating income (loss) before LMA
expenses and depreciation and amortization. LMA expenses are, as explained
in note (4), fees paid by American which permit American to program
stations prior to their acquisition. "After-tax cash flow" means income
(loss) before extraordinary items, plus depreciation and amortization, less
stock dividends. Broadcast cash flow, EBITDA and after-tax cash flow should
not be considered in isolation from, or as a substitute for, operating
income, net income or cash flow and other consolidated income or cash flow
statement data computed in accordance with generally accepted accounting
principles or as a measure of American's profitability or liquidity.
Although these measures of performance are not calculated in accordance
with generally accepted accounting principles, they are widely used in the
broadcasting industry as a measure of a radio company's operating
performance because they assist in comparing radio station performance on a
consistent basis across radio companies without regard to depreciation and
amortization, which can vary significantly depending on accounting methods
(particularly where acquisitions are involved) or non-operating factors
such as historical cost bases. Broadcast cash flow also excludes the effect
of corporate general and administrative expenses, which generally do not
relate directly to station performance.
(7) For the purposes of this calculation, "earnings" consist of net income
(loss) before income taxes, extraordinary items and fixed charges. "Fixed
charges" consist of interest expense and amortization of debt discount and
related expenses and the component of rental expense believed by management
to be representative of the interest factor thereon. Earnings were
insufficient to cover fixed charges and preferred stock dividends for each
of the three years ended December 31, 1994 by approximately $4.4 million,
$4.7 million and $1.4 million, respectively, and by approximately $37.9
million for the pro forma year ended December 31, 1996.
Giving effect to (i) the American Pro Forma Transactions, (ii) the remaining
American Probable Transactions not included therein and (iii) the Original
Offering and the use of the proceeds thereof, as if each had occurred on
January 1, 1996 (December 31, 1996, in the case of balance sheet data), for the
year ended December 31, 1996, net revenues would have been $360.9 million,
broadcast cash flow would have been $120.7 million, EBITDA would have been
$114.7 million, net interest expense and preferred stock dividends requirements
would have been $88.2 million, and long-term debt, including current portion,
would have been $690.7 million. On such basis, the ratio of total debt to
EBITDA would have been 6.02x and the ratio of EBITDA to interest expense and
preferred stock dividend requirements would have been 1.30x.
13
<PAGE>
RISK FACTORS
Prospective investors in the securities offered hereby should carefully
review the information contained elsewhere in this Prospectus and should
particularly consider the following matters:
FACTORS RELATING TO AMERICAN AND ITS BUSINESS
FINANCIAL LEVERAGE; DEBT SERVICE REQUIREMENTS. At December 31, 1996,
American had approximately $330.7 million in long-term debt (including the
current portion thereof) outstanding. After giving effect to the Original
Offering, the application of the net proceeds therefrom, and the American
Probable Transactions, as if each had occurred on December 31, 1996,
American's long-term debt outstanding would have been approximately $690.7
million, which would have comprised approximately 43.1% of American's total
capitalization, and its combined long-term debt and liquidation and redemption
obligations relating to the Convertible Preferred Stock and the Old Preferred
Stock (and/or the New Preferred Stock) would have been $1,028.2 million, which
would have comprised approximately 64.5% of American's total capitalization.
Had the Original Offering and the American Probable Transactions, as well as
the acquisitions and dispositions consummated during 1996 or thereafter,
occurred on January 1, 1996, pro forma net interest expense and net
distribution requirements on the Convertible Preferred Stock and Old Preferred
Stock (and/or the New Preferred Stock) for the year ended December 31, 1996
would have been approximately $88.2 million.
In order to finance acquisitions of radio stations and for general corporate
purposes, American has borrowed and expects to continue to borrow and issue
indebtedness. A substantial portion of American's cash flow from operations is
required for debt service. American believes that cash flow from operations
will be sufficient to meet debt service requirements for interest and
scheduled payments of principal under the terms of its outstanding
indebtedness. However, American's leverage could make it vulnerable to a
downturn in the operating performance of its radio stations or a downturn in
economic conditions. If such cash flow was not sufficient to meet such debt
service requirements or payments of principal, American could be required to
sell equity securities, refinance its obligations or dispose of one or more of
its stations in order to make scheduled payments. There can be no assurance
that American would be able to effect any such transactions on favorable
terms. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Liquidity and Capital Resources" in the American 10-K.
American and the Tower Subsidiary are parties to three credit agreements (in
the case of American, the "Credit Agreements" and in the case of the Tower
Subsidiary, the "Tower Credit Agreement"), the borrowings under which bear
interest at variable rates. Therefore, increases in interest rates on
borrowings under such agreements would adversely affect American's income and
cash flow otherwise available for principal and operating requirements and the
ability of American to implement fully its strategic plan. Although American
intends to manage its exposure to fluctuating interest rates by entering into
interest rate protection and similar agreements, including interest rate
swaps, collars and caps with respect to a portion of the borrowings
thereunder, there can be no assurance that American will continue to be able
to enter into such agreements. See "Indebtedness of American".
RESTRICTIONS IMPOSED BY TERMS OF INDEBTEDNESS. The indentures under which
the 9% Senior Subordinated Notes due 2006 of American (the "American Notes")
are outstanding (the "American Note Indenture") and the indenture under which
the 9 3/4% Senior Subordinated Notes of American (the "American-EZ Notes") are
outstanding (the "American-EZ Note Indenture" and, collectively with the
American Note Indenture, the "Note Indentures") contain certain restrictive
covenants, including limitations on (i) the incurrence of indebtedness and the
issuance of preferred stock by American and the Restricted Subsidiaries (as
defined in the Note Indentures); (ii) the payment of dividends and the making
of restricted payments; (iii) transactions with affiliates; (iv) the existence
of liens; (v) the disposition of proceeds of asset sales; (vi) Asset Swaps (as
defined in the Note Indentures); (vii) the making of guarantees by American
and the Restricted Subsidiaries; (viii) transfers and issuances of stock of
the Restricted Subsidiaries; (ix) the imposition of restrictions on certain
payments by the Restricted Subsidiaries; (x) investment in Unrestricted
Subsidiaries (as defined in the Note Indentures); and (xi) certain mergers and
sales of assets. The American-EZ Note Indenture
14
<PAGE>
requires American to offer to purchase all of the American-EZ Notes at 101% of
their principal amount, upon consummation of the EZ Merger. Such offer
commenced on April 19, 1997 and expires May 19, 1997 and, to the extent it is
accepted, American will borrow the funds necessary to purchase tendered
American-EZ Notes under the applicable Credit Agreement. American will pay
$1,056.31 per $1,000 aggregate principal amount of EZ Notes tendered in
accordance with the offer to purchase.
The Credit Agreements contain certain other and more restrictive covenants
than those contained in the Note Indentures, including requirements that
certain conditions be satisfied prior to the consummation of future
acquisitions of radio stations not in the largest 75 radio markets and
limitations on station dispositions. These covenants may adversely affect
American's ability to pursue its acquisition strategy. The Credit Agreements
also require American to maintain specific financial ratios and to satisfy
certain financial condition tests. The ability of American to meet these
financial ratios and financial condition tests can be affected by events
beyond its control, and there can be no assurance that American will meet
those tests.
The breach of any of these covenants could result in a default under the
Credit Agreements, either Note Indenture, or all of them. In the event of a
default under the Credit Agreements or either Note Indenture, the lenders or
the noteholders, as the case may be, could seek to declare all amounts
outstanding under either or both of the Credit Agreements or the applicable
Note Indenture, as the case may be, together with accrued and unpaid interest,
if any, to be immediately due and payable. Under such circumstances, cross
default provisions would probably result in the amounts outstanding under all
such instruments becoming due and payable. If American were unable to repay
those amounts, the lenders under the Credit Agreements could proceed against
the collateral granted to them to secure that indebtedness. The Credit
Agreements provide for a lien on the capital stock of American's Restricted
Subsidiaries (including its FCC broadcast license holding subsidiary), and all
instruments and material agreements.
The Tower Credit Agreement restricts the Tower Subsidiary's ability to pay
dividends to, or make loans to, or engage in other transactions with, American
and the Restricted Subsidiaries. The Tower Subsidiary is an unrestricted
subsidiary under the Credit Agreements and the Note Indentures. See
"Indebtedness of American" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Liquidity and Capital
Resources" and the Notes to the Consolidated Financial Statements of American
in the American 10-K.
COMPETITION. Radio broadcasting is a highly competitive business. Each of
American's radio stations competes for audience share and advertising revenue
directly with other radio stations, as well as with other media such as
newspapers, broadcast and cable television, magazines, billboards, direct
mail, compact discs and music videos. There are typically other well-
capitalized firms competing in the same geographic markets as American, many
of which have substantial financial resources. With the elimination of any
restrictions on the number of radio stations which may be owned nationally by
a single operator and the liberalization of local ownership restrictions
effected by the Telecommunications Act of 1996 (the "Telecommunications Act"),
the radio industry is experiencing a consolidation of ownership, as a result
of which competition may intensify as companies with substantial resources
emerge.
The financial success of each of American's radio stations is dependent
principally upon each such station's share of the overall advertising revenue
within its geographic market, its promotion and other expenses incurred to
obtain that revenue and the economic health of the geographic market. Radio
advertising revenues are, in turn, highly dependent upon audience share.
Audience share is influenced by factors including: changes in listener
preference, audience migration to other media supplying music, news and other
entertainment and the programming decisions and promotional efforts of
competing stations in American's markets. The broadcast cash flow of
American's affected stations could decrease due to increased promotion and
other expenses incurred to respond to changes in its markets and/or lower
advertising revenues resulting from lower ratings.
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In addition to management experience, factors that may materially influence
a station's competitiveness include audience characteristics, local program
acceptance and the characteristics of other stations in the market area.
As noted above, radio broadcasting is also subject to competition from
electronic and print media. Potential advertisers can substitute advertising
through broadcast television, cable television systems (which can offer
through cable interconnects concurrent exposure on a number of cable networks
to enlarge the potential audience), daily, weekly and free-distribution
newspapers, other print media, direct mail and on-line computer services for
radio advertising. Competing media frequently target the customers of their
competitors, and advertisers regularly shift dollars from radio to these
competing media and vice versa.
Radio broadcasting is also subject to competition from new media
technologies that are being developed or introduced, such as the delivery of
audio programming by cable television systems or the introduction of digital
audio broadcasting ("DAB"). DAB may deliver by satellite to nationwide and
regional audiences, multi-channel, multi-format digital radio services with
sound quality equivalent to compact discs. The FCC has allotted and auctioned
spectrum for DAB to two companies that plan to implement DAB within the next
five years. Another possible competitor to traditional radio is In Band On
Channel ("IBOC") digital radio broadcasting. IBOC could provide multi-channel,
multi-format digital radio services in the same bandwidth currently occupied
by traditional FM radio services. American cannot predict the effect, if any,
that new technologies may have on the radio broadcasting industry. See
"Business--Federal Regulation of Radio Broadcasting".
For information concerning additional potential competition from other
media, entertainment and telecommunications companies which might be able to
enter the radio broadcasting industry in the event of legislative or
regulatory change, see "--Regulatory Matters" below.
There can be no assurance that any of American's radio stations will be able
to maintain or increase their current audience ratings and revenue market
share. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations" in the American 10-K and "Business--Operating
Philosophy" and "--Advertising Sales".
CONTROL BY THE PRINCIPAL STOCKHOLDERS; RESTRICTIONS ON CHANGE OF CONTROL. As
of March 31, 1997, Steven B. Dodge, Chairman of the Board, President and Chief
Executive Officer, and Thomas H. Stoner, Chairman of the Executive Committee
of the Board, together with their affiliates (the "Principal Stockholders"),
owned approximately 49.89% of the combined votes of the American voting stock.
After giving effect to the consummation of the EZ Merger, as of such date, the
Principal Stockholders would have owned approximately 43.94% of such combined
votes. Accordingly, the Principal Stockholders may, in effect, be able to
control the vote on all matters submitted to a vote of the holders of the
Common Stock, except with respect to (i) the election of two independent
directors, (ii) those matters which the Restated Certificate or applicable law
requires a 66 2/3% vote, and (iii) those matters requiring a class vote by
law. Control by the Principal Stockholders may have the effect of discouraging
certain types of transactions involving an actual or potential change of
control of American. See "Description of Capital Stock".
The Credit Agreements, each of the Note Indentures, the Old Preferred Stock
and the Convertible Preferred Stock, as well as the agreement relating to the
broadcast of Boston Red Sox games, restrict, and the New Preferred Stock will
restrict, certain changes in control of American. In addition, the
Communications Act of 1934, as amended, including by the Telecommunications
Act (the "Communications Act"), and the rules of the FCC require the prior
consent of the FCC to any change of control of American. See "Business--
Federal Regulation of Radio Broadcasting".
In addition to the stock ownership by the Principal Stockholders and the FCC
restrictions referred to above, certain provisions of the Restated Certificate
and Delaware law may have the effect of discouraging a third party from making
an acquisition proposal for the Company and may thereby inhibit a change of
control. See "Description of Capital Stock--Ownership Provisions" and "--
Delaware Business Combination Provisions".
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DEPENDENCE ON KEY PERSONNEL. American's business is partially dependent upon
the performance of certain key individuals, including its executive officers,
station general managers and on-air announcers who are well recognized and
established in the markets in which American conducts business. American has
not entered into employment agreements with any of its executive officers, but
has entered into employment agreements, which contain non-compete provisions,
with certain of its station general managers and high-profile on-air
announcers. As additional incentive, certain of American's general managers
and executive officers have been granted options to purchase shares of Common
Stock which are subject to vesting provisions over a five year period.
However, there can be no assurance that American will be able to retain such
officers, managers or announcers, the loss of whom could have a material
adverse effect upon American, or that American will be able to prevent them
from competing with American in the event of their departure. American does
not maintain key man life insurance of any significance on the lives of any of
such officers, managers or announcers.
ACQUISITION STRATEGY. As a result of recent acquisitions, including the EZ
Merger, American has experienced significant expansion. Since January 1, 1996,
American has consummated or has pending acquisitions for an aggregate
consideration of approximately $1.4 billion. American intends to continue its
active acquisition strategy as described elsewhere in this Prospectus.
Inherent in such a strategy are certain risks, such as increasing leverage and
debt service requirements, combining disparate company cultures and
facilities, and operating stations in many geographically diverse markets,
which could adversely affect ratings and revenues in a given market. Certain
of these risks may be increased to the extent that American's future
acquisitions are in larger markets and/or involve multiple stations in several
markets, as did the EZ Merger. Accordingly, there can be no assurance that one
or more of American's past or future acquisitions may not have an adverse
effect on its business.
The Credit Agreements impose certain restrictions on acquisitions of radio
stations not in the largest 75 radio markets and, in addition, the Credit
Agreements and each Note Indenture contain borrowing limits. Since American
may, from time to time, be at or near its borrowing limits, there can be no
assurance that the lenders will consent to increased borrowing levels, and
this may inhibit the ability of American to implement its acquisition
strategy. The Note Indentures also contain restrictions which, under certain
circumstances, could impair the ability of American to make acquisitions.
American competes and will continue to compete with many other buyers, both
radio operators and financial institutions, for the acquisition of radio
stations. Certain of those competitors have greater financial and other
resources than those of American. In addition, if the prices sought by sellers
of radio stations continue to rise, American may find fewer acceptable
acquisition opportunities. For information concerning additional potential
competition from other media, entertainment and telecommunication companies
for acquisitions, see "Business--Federal Regulation of Radio Broadcasting".
American may not be able to implement its acquisition strategy because of
the application of the FCC's cross ownership rules, cross-interest policy or
other rules and policies. These rules and policies could prevent American from
making future acquisitions if the Principal Stockholders or certain other
stockholders or officers and directors also have or acquire attributable
interests in broadcast or other media properties. It is not possible to know,
however, whether future legislative or regulatory action may change applicable
ownership rules or policies or, if it does, whether such changes would make
those limitations more or less restrictive. See "Business--Acquisition
Strategy" and "--Federal Regulation of Radio Broadcasting".
ANTITRUST MATTERS. As a consequence of the consolidation of ownership in the
radio broadcast industry resulting from the enactment of the
Telecommunications Act, the Antitrust Division of the United States Department
of Justice (the "Antitrust Division") has been giving closer scrutiny to
acquisitions in the industry, including some of those of American. The
consummation of many of the acquisitions are subject to notification filing
requirements, applicable waiting periods and possible review by the Antitrust
Division or the Federal Trade Commission ("FTC") under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"). The Antitrust
Division issued Second Requests for additional information in connection with
acquisitions
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by American in Rochester, Sacramento and West Palm Beach. See "Business--
Recent Transactions--Consummated Transactions--Rochester" and "--Sacramento".
The Antitrust Division also issued a Civil Investigative Demand to both EZ and
American in connection with one of the American Probable Transactions in
Charlotte. See "Business--Recent Transactions--Pending Acquisitions and
Dispositions--Charlotte." In October 1996, American entered into a consent
decree (the "Rochester Consent Decree") with the Antitrust Division with
respect to the American Probable Transactions in Rochester resulting in a
negotiated settlement with the Antitrust Division which modified the Rochester
Transaction. In February 1997, American entered into consent decrees (the
"Charlotte Consent Decree" and the "Sacramento Consent Decree") with the
Antitrust Division with respect to the American Probable Transactions in
Charlotte and Sacramento, respectively, resulting in a negotiated settlement
with the Antitrust Division with respect to the disposition of one FM station
in each of those markets. See "Business--Recent Transactions--Pending
Acquisitions and Dispositions--Charlotte" and "--Sacramento". Antitrust
Division review of certain transactions has caused, and may continue to cause,
delays in anticipated consummations of certain transactions and, in some
cases, resulted and may result in negotiated modifications of the proposed
transactions. Antitrust agency review and/or such delays and modifications
could have an adverse effect on American and could result in the required
divestiture of presently owned stations or the abandonment of some of these or
other attractive transactions.
As part of its increased scrutiny of radio broadcast industry transactions,
the Antitrust Division is currently reviewing its internal guidelines for
antitrust review of other widespread radio broadcasting agreements, including
local marketing agreements ("LMAs"), time brokerage agreements ("TBAs") and
certain joint sales and service agreements ("JSAs"). The Antitrust Division
has informally contacted industry representatives to express certain concerns
regarding LMAs and TBAs and has suggested that radio broadcasting companies
file notification and obtain clearance under the HSR Act prior to commencing
certain LMAs or TBAs. As a result of these informally expressed concerns,
American has instituted internal policies to obtain any required HSR Act
clearance prior to commencing any future LMAs or TBAs. See "Business--Federal
Regulation of Radio Broadcasting--Local Marketing Agreements" for a
description of local marketing agreements and time brokerage agreements. The
Antitrust Division has also informally expressed to American that it is
investigating whether the terms of certain JSAs in certain markets may violate
antitrust laws. A JSA involves the purchase by a third party of some or all of
the commercial advertising time of a particular radio station for resale by
the third party directly to advertisers. As part of the Rochester Consent
Decree, American terminated a JSA in that market. Although American believes
that each of its LMAs and TBAs is in compliance with the antitrust laws, the
Antitrust Division or others could take action under the antitrust laws to
enjoin or otherwise challenge such arrangements. There can be no assurance
that such a challenge will not be made or, if made, will not be successful.
REGULATORY MATTERS. The radio broadcasting industry is subject to extensive
and changing regulation governing, among other things, technical operations,
ownership, business and employment practices, and certain types of program
content (including indecent and obscene program material). The FCC regulates
radio broadcast stations pursuant to the Communications Act. The
Communications Act permits the operation of radio broadcast stations only in
accordance with a license issued by the FCC upon a finding that the grant of a
license would serve the public interest, convenience and necessity. The
Communications Act provides for the FCC to exercise its licensing authority to
provide a fair, efficient and equitable distribution of broadcast service
through out the United States. Among other things, the FCC assigns frequency
bands for radio broadcasting; determines the particular frequencies, locations
and operating power of radio broadcast stations; issues, renews, revokes and
modifies radio broadcast station licenses; regulates transmitting equipment
used by radio broadcast stations; adopts and implements regulations and
policies that directly or indirectly affect the ownership, operation, program
content and employment and business practices of radio broadcast stations; and
has the power to impose penalties for violations of its rules and the
Communications Act.
The FCC also regulates the ownership, operation and sale of radio broadcast
stations. The Communications Act prohibits the assignment of an FCC license,
or the transfer of control of an FCC licensee, without the prior approval of
the FCC. In determining whether to grant requests for consents to assignments
or transfers, and in determining whether to grant or renew a radio broadcast
license, the FCC considers a number of factors
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pertaining to the legal and other qualifications of the licensee (and any
proposed licensee), including restrictions on foreign ownership, compliance
with FCC media ownership rules, licensee "character" and compliance with the
Anti-Drug Abuse Act of 1988, which allows courts to disqualify individuals
from the benefits of federal licenses as a penalty for certain drug-related
offenses.
The Congress and the FCC have had under consideration, and may in the future
consider and adopt, new laws, regulations and policies regarding a wide
variety of matters that could, directly or indirectly, affect the operation,
ownership and profitability of American's radio broadcast stations, result in
the loss of audience share and advertising revenues for American's radio
broadcast stations or affect its ability to acquire additional radio broadcast
stations or make other acquisitions. American cannot predict whether or when
any proposed changes will be adopted nor can it predict what other matters
might be considered in the future, nor can it judge in advance the impact, if
any, the implementation of any of these proposals or changes might have on its
business. See "Business--Federal Regulation of Radio Broadcasting".
FACTORS RELATING TO THE SECURITIES
DIVIDEND AND REPAYMENT RESTRICTIONS ON NEW PREFERRED STOCK AND EXCHANGE
DEBENTURES. American is and will be restricted under its debt instruments from
paying dividends on and repurchasing, redeeming or otherwise acquiring any
shares of Preferred Stock, including the New Preferred Stock, and from
repurchasing, redeeming or otherwise acquiring for value the Exchange
Debentures unless certain financial tests are met and then only in accordance
with a formula based on cash flow and only in the absence of a default. See
"Description of Capital Stock--Dividend Restrictions", "Indebtedness of
American" and "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Liquidity and Capital Resources" in the American 10-K.
American may elect to pay dividends on the New Preferred Stock on any
dividend payment date occurring on or before January 15, 2002 by issuing
additional shares of New Preferred Stock. If at any time American is in cash
dividend arrears on the Convertible Preferred Stock or any other Parity
Securities (as defined under "Description of the New Preferred Stock--
Ranking"), whether as a result of payment restrictions contained in American's
debt instruments or otherwise, American will be permitted to pay dividends on
the New Preferred Stock only pro rata with such Parity Securities (if at all),
even if American elects to pay such dividends by issuing additional shares of
New Preferred Stock.
SUBORDINATION OF EXCHANGE DEBENTURES. The payment of principal of and
interest on the Exchange Debentures will be subordinated to all existing and
future Senior Debt (as defined in the Indenture relating to the Exchange
Debentures) of American. In addition, the Exchange Debentures will be
effectively subordinated to all existing and future Indebtedness of American's
subsidiaries (including guarantees of American's Indebtedness). As a result of
such subordination, in the event of American's insolvency, liquidation,
reorganization, dissolution or other winding up, or upon the acceleration of
any Senior Debt, the holders of Senior Debt must be paid in full before the
holders of the Exchange Debentures may be paid. Furthermore, payments on the
Exchange Debentures will not be permitted if a default exists or would be
caused with respect to any Senior Debt. Senior Debt includes indebtedness
outstanding under the Credit Agreements, the American Notes, the American-EZ
Notes and, unless otherwise designated by American prior to their issuance,
the Convertible Exchange Debentures. See "Description of the Exchange
Debentures--Subordination of Exchange Debentures" and "Indebtedness of
American".
RISK OF INABILITY TO FINANCE CHANGE OF CONTROL OFFER. In the event of a
Change of Control, American will be required to make an offer to purchase all
New Preferred Stock or Exchange Debentures, as the case may be, then
outstanding at a purchase price, in cash, equal to 101% of the liquidation
preference or principal amount thereof plus accumulated and unpaid dividends
or interest, if any, to the date of purchase. There can be no assurance that
American would be able to obtain such funds through a refinancing of the New
Preferred Stock or Exchange Debentures, as the case may be, to be purchased or
otherwise, or that the purchase would be permitted
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under the Credit Agreements or either Note Indenture. American's debt
instruments also contain provisions relating to a change of control which
require repayment of such debt in the event of a change of control as defined
therein. Also, the requirement that American make an offer to purchase all New
Preferred Stock or Exchange Debentures, as the case may be, then outstanding in
the event of a Change of Control may have the effect of deterring a third party
from effecting a transaction that would constitute a Change of Control.
American's debt instruments restrict, and if a default under any thereof exists
prohibit, repurchase of the New Preferred Stock and the Exchange Debentures,
including upon a change of control. See "Description of the New Preferred
Stock--Certain Covenants--Change of Control", "Description of the Exchange
Debentures--Certain Covenants--Change of Control" and "Indebtedness of
American".
LACK OF TRADING MARKET FOR THE NEW PREFERRED STOCK. There is no existing
trading market for the Old Preferred Stock, and there can be no assurance
regarding the future development of a market for the New Preferred Stock, or
the ability of holders to sell, or the price at which such holders may be able
to sell, their New Preferred Stock. If such a market were to develop, the New
Preferred Stock could trade at prices that may be higher or lower than the
initial offering price depending on many factors, including prevailing interest
rates, American's operating results and the market for similar securities.
Credit Suisse First Boston, Alex. Brown & Sons Incorporated, BT Securities
Corporation, Morgan Stanley & Co Incorporated and Smith Barney Inc. (the
"Initial Purchasers") have advised American that they currently intend to make
a market in the New Preferred Stock. The Initial Purchasers are not obligated
to do so, however, and any market making with respect to the New Preferred
Stock may be discontinued at any time without notice. Therefore, there can be
no assurance as to the liquidity of any trading market for the New Preferred
Stock or that an active market for the New Preferred Stock will develop. The
foregoing considerations would also apply to any Exchangeable Debentures.
American does not intend to list the New Preferred Stock on any securities
exchange or to seek approval for quotation through any automated quotation
system.
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THE EXCHANGE OFFER
PURPOSE AND EFFECT
The shares of Old Preferred Stock were sold by American on January 30, 1997,
in the Original Offering. In connection with that placement, American entered
into the Registration Rights Agreement, which requires American to file a
registration statement under the Securities Act with respect to the New
Preferred Stock and, upon the effectiveness of that registration statement, to
offer to the holders of the Old Preferred Stock the opportunity to exchange
their shares of Old Preferred Stock for the same number of shares of New
Preferred Stock, which will be issued without a restrictive legend and which
may be reoffered and resold by the holder without registration under the
Securities Act. The Registration Rights Agreement further provides that
American must use its best efforts to (i) cause the Registration Statement
with respect to the Exchange Offer to be declared effective on or before July
29, 1997 and (ii) consummate the Exchange Offer on or before September 12,
1997. Except as provided below, upon the completion of the Exchange Offer,
American's obligations with respect to the registration of the Old Preferred
Stock and the New Preferred Stock will terminate. A copy of the Registration
Rights Agreement has been filed as an exhibit to the Registration Statement of
which this Prospectus is a part and the summary herein of certain provisions
thereof does not purport to be complete and is subject to, and is qualified in
its entirety by reference to, such agreement. As a result of the filing and
the effectiveness of the Registration Statement, certain additional dividends
provided for in the certificate of designations governing the Old Preferred
Stock will not become payable by American. Following the completion of the
Exchange Offer (except as set forth in the paragraph immediately below),
holders of shares of Old Preferred Stock not tendered will not have any
further registration rights and those shares of Old Preferred Stock will
continue to be subject to certain restrictions on transfer. Accordingly, the
liquidity of the market for the Old Preferred Stock could be adversely
affected upon completion of the Exchange Offer.
In order to participate in the Exchange Offer, a holder must represent to
American, among other things, that (i) the shares of New Preferred Stock
acquired pursuant to the Exchange Offer are being obtained in the ordinary
course of business of the person receiving the New Preferred Stock, (ii)
neither the holder nor any such other person is engaging in or intends to
engage in a distribution of the New Preferred Stock, (iii) neither the holder
nor any such other person has an arrangement or understanding with any person
to participate in the distribution of the New Preferred Stock, and (iv)
neither the holder nor any such other person is an "affiliate," as defined in
Rule 405 under the Securities Act, of American. Pursuant to the Registration
Rights Agreement, American is required to file a "shelf" registration
statement for a continuous offering pursuant to Rule 415 under the Securities
Act in respect of the Old Preferred Stock if (i) because of any change in law
or in currently prevailing interpretations of the staff of the Commission,
American is not permitted to effect the Exchange Offer, (ii) the Exchange
Offer is not consummated within 225 days of the Original Offering, (iii) the
holders of not less than a majority of shares of Old Preferred Stock determine
that the interests of the holders would be adversely affected by the
consummation of the Exchange Offer, or (iv) any holder of Old Preferred Stock
participates in the Exchange Offer and does not receive freely transferrable
shares of New Preferred Stock in exchange for Old Preferred Stock (other than
as a result of the status of such holder as an "affiliate" of American. In the
event that American is obligated to file a "shelf" registration statement, it
will be required to keep such "shelf" registration statement effective until
such time as all of the New Preferred Stock has been sold thereunder or on the
date which all New Preferred Stock held by persons that are not "affiliates"
of American may be resold without registration pursuant to Rule 144(b) under
the Securities Act. Other than as set forth in this paragraph, no holder will
have the right to participate in the "shelf" registration statement nor
otherwise to require that American register such holder's shares of Old
Preferred Stock under the Securities Act. See "--Procedures for Tendering."
Based on an interpretation by the Commission's staff set forth in no-action
letters issued to third-parties unrelated to American, American believes that,
with the exceptions set forth below, shares of New Preferred Stock issued
pursuant to the Exchange Offer in exchange for Old Preferred Stock may be
offered for resale, resold and otherwise transferred by any person receiving
such New Preferred Stock, whether or not such person is the holder (other than
any such holder or such other person which is an "affiliate" of American)
without
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compliance with the registration and prospectus delivery provisions of the
Securities Act, provided that the shares of New Preferred Stock are acquired
in the ordinary course of business of the holder or such other person and
neither the holder nor such other person has an arrangement or understanding
with any person to participate in the distribution of such New Preferred
Stock. Any holder who tenders in the Exchange Offer for the purpose of
participating in a distribution of the New Preferred Stock cannot rely on this
interpretation by the Commission's staff and must comply with the registration
and prospectus delivery requirements of the Securities Act in connection with
an secondary resale transaction. Each broker-dealer that receives shares of
New Preferred Stock for its own account in exchange for Old Preferred Stock,
where the shares of Old Preferred Stock were acquired by that broker-dealer as
a result of market-making activities or other trading activities, must
acknowledge that it will deliver a prospectus in connection with any resale of
such New Preferred Stock. See "Plan of Distribution."
CONSEQUENCES OF FAILURE TO EXCHANGE
Following the completion of the Exchange Offer (except as set forth in the
second paragraph under "--Purpose and Effect" above), holders of shares of Old
Preferred Stock not tendered will not have any further registration rights and
untendered shares of Old Preferred Stock will continue to be subject to
certain restrictions on transfer. Accordingly, the liquidity of the market for
a holder's shares of Old Preferred Stock could be adversely affected upon
completion of the Exchange Offer if the holder does not participate in the
Exchange Offer.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal, American will accept any and all shares of
Old Preferred Stock validly tendered and not withdrawn prior to 5:00 p.m., New
York City time, on the Expiration Date. American will issue one share of New
Preferred Stock in exchange for each share of outstanding Old Preferred Stock
accepted in the Exchange Offer. Holders may tender some or all of their shares
of Old Preferred Stock pursuant to the Exchange Offer.
The powers, preferences and relative rights of the New Preferred Stock are
substantially the same as those of the Old Preferred Stock except that the
shares of New Preferred Stock have been registered under the Securities Act
and will not bear legends restricting their transfer.
As of April 15, 1997, 2,047,391 shares of Old Preferred Stock were issued
and outstanding and there was one registered holder, a nominee of DTC. This
Prospectus, together with the Letter of Transmittal, is being sent to such
registered holder and to others believed to have beneficial interests in the
Old Preferred Stock. Holders of shares of Old Preferred Stock do not have any
appraisal or dissenters' rights under the General Corporation Law of the State
of Delaware in connection with the Exchange Offer. American intends to conduct
the Exchange Offer in accordance with the applicable requirements of the
Exchange Act and the rules and regulations of the Commission promulgated
thereunder.
American shall be deemed to have accepted validly tendered shares of Old
Preferred Stock when, as and if American has given oral or written notice
thereof to the Exchange Agent. The Exchange Agent will act as agent for the
tendering holders for the purpose of receiving the shares of New Preferred
Stock from American. If any tendered shares of Old Preferred Stock are not
accepted for exchange because of an invalid tender, the occurrence of certain
other events set forth herein or otherwise, certificates for any such
unaccepted shares of Old Preferred Stock will be returned, without expense, to
the tendering holder thereof as promptly as practicable after the Expiration
Date.
Holders who tender shares of Old Preferred Stock in the Exchange Offer will
not be required to pay brokerage commissions or fees or, subject to the
instructions in the Letter of Transmittal, transfer taxes with respect to the
exchange of shares of Old Preferred Stock pursuant to the Exchange Offer.
American will pay all charges and expenses, other than certain applicable
taxes, in connection with the Exchange Offer. See "--Fees and Expenses".
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EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" shall mean 5:00 p.m., New York City time, on [a],
1997, unless American, in its sole discretion, extends the Exchange Offer, in
which case the term "Expiration Date" shall mean the latest date and time to
which the Exchange Offer is extended. In order to extend the Exchange Offer,
American will notify the Exchange Agent and issue a notice of such extension
by press release or other public announcement prior to 9:00 a.m., New York
City time, on the next business day after the previously scheduled Expiration
Date. American reserves the rights, in its sole discretion, (i) to delay
accepting any shares of Old Preferred Stock, to extend the Exchange Offer or,
if any of the conditions set forth under "--Conditions to Exchange Offer"
shall not have been satisfied, to terminate the Exchange Offer, by giving oral
or written notice of such delay, extension or termination to the Exchange
Agent, or (ii) to amend the terms of the Exchange Offer in any manner.
PROCEDURES FOR TENDERING
Only a registered holder of shares of Old Preferred Stock may tender the Old
Preferred Stock in the Exchange Offer. Except as set forth under "--Book-Entry
Transfer" below, to tender in the Exchange Offer a holder must complete, sign,
and date the Letter of Transmittal, or a copy thereof, have the signatures
thereon guaranteed if required by the Letter of Transmittal, and mail or
otherwise deliver the Letter of Transmittal or copy thereof to the Exchange
Agent prior to the Expiration Date. In addition, either (i) certificates for
such shares of Old Preferred Stock must be received by the Exchange Agent
along with the Letter of Transmittal, or (ii) a timely confirmation of a book-
entry transfer (a "Book-Entry Confirmation") of such shares of Old Preferred
Stock, if that procedure is available, into the Exchange Agent's account at
DTC (the "Book-Entry Transfer Facility") pursuant to the procedure for book-
entry transfer described below, must be received by the Exchange Agent prior
to the Expiration Date, or (iii) the holder must comply with the guaranteed
delivery procedures described below. To be tendered effectively, the Letter of
Transmittal and other required documents must be received by the Exchange
Agent at the address set forth under "--Exchange Agent" below prior to the
Expiration Date.
Tender of Old Preferred Stock by a holder that is not withdrawn before the
Expiration Date will constitute an agreement between that holder and American
in accordance with the terms and subject to the conditions set forth herein
and in the Letter of Transmittal.
THE METHOD OF DELIVERY OF SHARES OF OLD PREFERRED STOCK AND THE LETTER OF
TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE
ELECTION AND RISK OF THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS
RECOMMENDED THAT HOLDERS USE AN OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL
CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE
AGENT BEFORE THE EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR OLD PREFERRED
STOCK SHOULD BE SENT TO AMERICAN. HOLDERS MAY REQUEST THEIR RESPECTIVE
BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES, OR NOMINEES TO EFFECT
THESE TRANSACTIONS FOR SUCH HOLDERS.
Any beneficial owner whose shares of Old Preferred Stock are registered in
the name of a broker, dealer, commercial bank, trust company, or other nominee
and who wishes to tender should contact the registered holder promptly and
instruct the registered holder to tender on the beneficial owner's behalf. If
the beneficial owner wishes to tender on the owner's own behalf, the owner
must, prior to completing and executing the Letter of Transmittal and
delivering the owner's shares of Old Preferred Stock, either make appropriate
arrangements to register ownership of the Old Preferred Stock in the
beneficial owner's name or obtain a properly completed power from the
registered holder. The transfer of registered ownership may take considerable
time.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the case
may be, must be guaranteed by an Eligible Institution (as defined below)
unless shares of Old Preferred Stock tendered pursuant thereto are tendered
(i) by a registered holder who has not completed the box entitled "Special
Delivery Instructions" on
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<PAGE>
the Letter of Transmittal or (ii) for the account of an Eligible Institution.
If signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, are required to be guaranteed, the guarantee must be by any
eligible guarantor institution that is a member of or participant in the
Securities Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Program, the Stock Exchange Medallion Program, or an
"eligible guarantor institution" within the meaning of Rule 17Ad-15 under the
Exchange Act (an "Eligible Institution").
If the Letter of Transmittal is signed by a person other than the registered
holder of any shares of Old Preferred Stock listed therein, the shares of Old
Preferred Stock must be endorsed or accompanied by a properly completed stock
power, signed by the registered holder as that registered holder's name
appears on the Old Preferred Stock.
If the Letter of Transmittal or any shares of Old Preferred Stock or stock
powers are signed by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations, or others acting in a fiduciary
or representative capacity, such persons should so indicate when signing, and
evidence satisfactory to American of their authority to so act must be
submitted with the Letter of Transmittal unless waived by American.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance, and withdrawal of tendered shares of Old Preferred Stock
will be determined by American in its sole discretion, which determination
will be final and binding. American reserves the absolute right to reject any
and all shares of Old Preferred Stock not properly tendered or any shares of
Old Preferred Stock American's acceptance of which would, in the opinion of
counsel for American, be unlawful. American also reserves the right to waive
any defects, irregularities, or conditions of tender as to particular shares
of Old Preferred Stock. American's interpretation of the terms and conditions
of the Exchange Offer (including the instructions in the Letter of
Transmittal) will be final and binding on all parties. Unless waived, any
defects or irregularities in connection with tenders of shares of Old
Preferred Stock must be cured within such time as American shall determine.
Although American intends to notify holders of defects or irregularities with
respect to tenders of shares of Old Preferred Stock, neither American, the
Exchange Agent, nor any other person shall incur any liability for failure to
give such notification. Tenders of shares of Old Preferred Stock will not be
deemed to have been made until such defects or irregularities have been cured
or waived. Any shares of Old Preferred Stock received by the Exchange Agent
that are not properly tendered and as to which the defects or irregularities
have not been cured or waived will be returned by the Exchange Agent to the
tendering holders, unless otherwise provided in the Letter of Transmittal, as
soon as practicable following the Expiration Date.
In addition, American reserves the right in its sole discretion to purchase
or make offers for any shares of Old Preferred Stock that remain outstanding
after the Expiration Date or, as set forth under "--Conditions" below, to
terminate the Exchange Offer and, to the extent permitted by applicable law,
purchase shares of Old Preferred Stock in the open market, in privately
negotiated transactions, or otherwise. The terms of any such purchases or
offers could differ from the Exchange Offer.
By tendering, each holder will represent to American that, among other
things, (i) the shares of New Preferred Stock acquired pursuant to the
Exchange Offer are being obtained in the ordinary course of business of the
person receiving such New Preferred Stock, whether or not such person is the
registered holder, (ii) neither the holder nor any such other person is
engaging in or intends to engage in a distribution of such New Preferred
Stock, (iii) neither the holder nor any such other person has an arrangement
or understanding with any person to participate in the distribution of such
New Preferred Stock, and (iv) neither the holder nor any such other person is
an "affiliate," as defined in Rule 405 under the Securities Act, of American.
In all cases, issuance of shares of New Preferred Stock for Old Preferred
Stock that are accepted for exchange pursuant to the Exchange Offer will be
made only after timely receipt by the Exchange Agent of certificates for such
shares of Old Preferred Stock or a timely Book-Entry Confirmation of such
shares of Old Preferred Stock into the Exchange Agent's account at the Book-
Entry Transfer Facility, a properly completed and duly executed Letter of
Transmittal (or, with respect to the DTC and its participants, electronic
instructions
24
<PAGE>
in which the tendering holder acknowledges its receipt of and agreement to be
bound by the Letter of Transmittal), and all other required documents. If any
tendered shares of Old Preferred Stock are not accepted for any reason set
forth in the terms and conditions of the Exchange Offer or if certificates
representing Old Preferred Stock are submitted for a greater number of shares
than the holder desires to exchange, such unaccepted or non-exchanged shares
of Old Preferred Stock will be returned without expense to the tendering
Holder thereof (or, in the case of shares of Old Preferred Stock tendered by
book-entry transfer into the Exchange Agent's account at the Book-Entry
Transfer Facility pursuant to the book-entry transfer procedures described
below, such nonexchanged shares of Old Preferred Stock will be credited to an
account maintained with such Book-Entry Transfer Facility) as promptly as
practicable after the expiration or termination of the Exchange Offer.
BOOK-ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with respect
to the Old Preferred Stock at the Book-Entry Transfer Facility for purposes of
the Exchange Offer within two business days after the date of this Prospectus,
and any financial institution that is a participant in the Book-Entry Transfer
Facility's systems may make book-entry delivery of Old Preferred Stock being
tendered by causing the Book-Entry Transfer Facility to transfer such Old
Preferred Stock into the Exchange Agent's account at the Book-Entry Transfer
Facility in accordance with such Book-Entry Transfer Facility's procedures for
transfer. However, although delivery of shares of Old Preferred Stock may be
effected through book-entry transfer at the Book-Entry Transfer Facility, the
Letter of Transmittal or copy thereof, with any required signature guarantees
and any other required documents, must, in any case other than as set forth in
the following paragraph, be transmitted to and received by the Exchange Agent
at the address set forth under "--Exchange Agent" below on or prior to the
Expiration Date or the guaranteed delivery procedures described below must be
complied with.
DTC's Authorized Tender Offer Program ("ATOP") is the only method of
processing exchange offers through DTC. To accept the Exchange Offer through
ATOP, participants in DTC must send electronics instructions to DTC through
DTC's communication system in lieu of sending a signed, hard copy Letter of
Transmittal. DTC is obligated to communicate those electronic instructions to
the Exchange Agent. To tender shares of Old Preferred Stock through ATOP, the
electronic instructions sent to DTC and transmitted by DTC to the Exchange
Agent must contain the character by which the participant acknowledges its
receipt of, and agrees to be bound by the terms of, the Letter of Transmittal.
GUARANTEED DELIVERY PROCEDURES
If a registered holder of the shares of Old Preferred Stock desires to
tender such Old Preferred Stock and the shares of Old Preferred Stock are not
immediately available, or time will not permit such holder's Old Preferred
Stock or other required documents to reach the Exchange Agent before the
Expiration Date, or the procedure for book-entry transfer cannot be completed
on a timely basis, a tender may be effected if (i) the tender is made through
an Eligible Institution, (ii) prior to the Expiration Date, the Exchange Agent
received from such Eligible Institution a properly completed and duly executed
Letter of Transmittal (or a facsimile thereof) and Notice of Guaranteed
Delivery, substantially in form provided by American (by telegram, telex,
facsimile transmission, mail or hand delivery), setting forth the name and
address of the holder of shares of Old Preferred Stock and the amount of
shares of Old Preferred Stock tendered, stating that the tender is being made
thereby and guaranteeing that within three New York Stock Exchange ("NYSE")
trading days after the date of execution of the Notice of Guaranteed Delivery,
the certificates for all physically tendered shares of Old Preferred Stock, in
proper form for transfer, or a Book-Entry Confirmation, as the case may be,
and any other documents required by the Letter of Transmittal will be
deposited by the Eligible Institution with the Exchange Agent, and (iii) the
certificates for all physically tendered shares of Old Preferred Stock, in
proper form for transfer, or a Book-Entry Confirmation, as the case may be,
and all other documents required by the Letter of Transmittal, are received by
the Exchange Agent within three NYSE trading days after the date of execution
of the Notice of Guaranteed Delivery.
25
<PAGE>
WITHDRAWAL RIGHTS
Tenders of shares of Old Preferred Stock may be withdrawn at any time prior
to 5:00 p.m., New York City time, on the Expiration Date.
For a withdrawal of a tender of shares of Old Preferred Stock to be
effective, a written or (for DTC participants) electronic ATOP transmission
notice of withdrawal must be received by the Exchange Agent at its address set
forth in this Prospectus prior to 5:00 p.m., New York City time, on the
Expiration Date. Any such notice of withdrawal must (i) specify the name of
the person having deposited the shares of Old Preferred Stock to be withdrawn
(the "Depositor"), (ii) identify the shares of Old Preferred Stock to be
withdrawn (including the certificate number of numbers and principal amount of
such shares of Old Preferred Stock), (iii) be signed by the holder in the same
manner as the original signature on the Letter of Transmittal by which such
shares of Old Preferred Stock were tendered (including any required signature
guarantees) or be accompanied by documents of transfer sufficient to have the
Exchange Agent registered the transfer of such Old Preferred Stock into the
name of the person withdrawing the tender, and (iv) specify the name in which
any such shares of Old Preferred Stock are to be registered, if different from
that of the Depositor. All questions as to the validity, form, and eligibility
(including time of receipt) of such notices will be determined by American,
whose determination shall be final and binding on all parties. Any shares of
Old Preferred Stock so withdrawn will be deemed not to have been validly
tendered for exchange for purposes of the Exchange Offer. Any shares of Old
Preferred Stock which have been tendered for exchange but which are not
exchanged for any reason will be returned to the holder thereof without cost
to such holder as soon as practicable after withdrawal, rejection of tender or
termination of the Exchange Offer. Properly withdrawn shares of Old Preferred
Stock may be retendered by following one of the procedures under "--Procedures
for Tendering" above at any time on or prior to the Expiration Date.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provision of the Exchange Offer, American shall
not be required to accept for exchange, or to issue shares of New Preferred
Stock in exchange for, any shares of Old Preferred Stock and may terminate or
amend the Exchange Offer if, any time before the acceptance of such Old
Preferred Stock for exchange or the exchange of the New Preferred Stock for
such Old Preferred Stock, American determines that the Exchange Offer violates
applicable law, any applicable interpretation of the staff of the Commission
or any order of any governmental agency or court of competent jurisdiction.
The foregoing conditions are for the sole benefit of American and may be
asserted by American regardless of the circumstances giving rise to any such
condition or may be waived by American in whole or in part at any time and
from time to time in its sole discretion. The failure by American at any time
to exercise any of the foregoing rights shall not be deemed a waiver of any
such right and each such right shall be deemed on ongoing right which may be
asserted at any time from time to time.
In addition, American will not accept for exchange any shares of Old
Preferred Stock tendered, and no shares of New Preferred Stock will be issued
in exchange for any such Old Preferred Stock, if at such time any stop order
shall be threatened or in effect with respect to the Registration Statement of
which this Prospectus constitutes a part. In any such event American is
required to use every reasonable effort to obtain the withdrawal of any stop
order at the earliest possible time.
26
<PAGE>
EXCHANGE AGENT
All executed Letters of Transmittal should be directed to the Exchange Agent.
Harris Trust Company of New York has been appointed as Exchange Agent for the
Exchange Offer. Questions, requests for assistance and requests for additional
copies of this Prospectus or of the Letter of Transmittal should be directed to
the Exchange Agent addressed as follows:
By Mail: Harris Trust Company of New York
P.O. Box 1010
Wall Street Station
New York, N.Y. 10268
Attention: Reorganization Department
By Hand or Overnight Courier:
Harris Trust Company of New York
77 Water Street, 4th Floor
New York, N.Y. 10004
Attention: Reorganization Department
Facsimile Transmission:(212) 701-7636
Confirm by Telephone: (212) 701-7624
FEES AND EXPENSES
American will not make any payments to brokers, dealers, or others soliciting
acceptances of the Exchange Offer. The principal solicitation is being made by
mail; however, additional solicitations may be made in person or by telephone
by officers and employees of American.
The estimated cash expenses to be incurred in connection with the Original
Offering and the Exchange Offer will be paid by American and are estimated in
the aggregate to be approximately $600,000, which includes fees and expenses of
the Exchange Agent, accounting, legal, printing, and related fees and expenses.
TRANSFER TAXES
Holders who tender their Old Preferred Stock for exchange will not be
obligated to pay any transfer taxes in connection therewith, except that
holders who instruct American to register shares of New Preferred Stock in the
name of, or request that shares of Old Preferred Stock not tendered or not
accepted in the Exchange Offer be returned to, a person other than the
registered tendering holder will be responsible for the payment of any
applicable transfer tax thereon.
27
<PAGE>
USE OF PROCEEDS
American will not receive any cash proceeds upon consummation of the
Exchange Offer.
The net proceeds from the sale of the Old Preferred Stock were used
initially to repay indebtedness under the Credit Agreements, and thereafter
were used, along with borrowings under the Credit Agreements and proceeds from
certain asset dispositions described herein, to finance the consummation of
the EZ Merger and the remaining acquisitions and obligations included in the
American Probable Transactions. American may also utilize borrowings under the
Credit Agreements to finance, among other things, acquisitions of additional
radio stations. However, American has no binding agreements or letters of
intent with respect to any such acquisition other than as described elsewhere
in this Prospectus. As of December 31, 1996, there was an aggregate of
approximately $154.0 million outstanding under American's previous credit
agreements. After giving effect to the American Pro Forma Transactions, the
Original Offering and the use of the proceeds thereof, as if each of the
foregoing had occurred on December 31, 1996, there would have been
approximately $195.9 million of borrowings outstanding under the Credit
Agreements. Giving further effect to the American Probable Transactions that
were not part of the American Pro Forma Transactions, there would have been
approximately $364.0 million of borrowings outstanding under the Credit
Agreements. See "Capitalization".
28
<PAGE>
CAPITALIZATION
The following table sets forth the actual and pro forma capitalization of
American after giving effect to (a) the American Pro Forma Transactions and
(b) in addition, the Original Offering and the use of the proceeds thereof and
the Exchange Offer (assuming 100% acceptance), as if each had occurred on
December 31, 1996.
<TABLE>
<CAPTION>
DECEMBER 31, 1996
------------------------------------
PRO FORMA
-------------------------
AFTER THE
ORIGINAL
AMERICAN OFFERING AND
PRO FORMA EXCHANGE
HISTORICAL TRANSACTIONS OFFER
---------- ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C>
Cash and cash equivalents................. $ 10,447 $ 13,500 $ 13,500
======== ========== ==========
Long-term debt, including current
portion(1):
Borrowings under credit facilities....... $154,000 $ 388,322 $ 195,922
American-EZ Notes(2)..................... 150,000 150,000
American Notes(3)........................ 173,665 173,665 173,665
Other long-term debt..................... 3,007 3,007 3,007
-------- ---------- ----------
Total long-term debt................... 330,672 714,994 522,594
-------- ---------- ----------
New Preferred Stock offered hereby(4)(5).. -- -- 200,000
-------- ---------- ----------
Stockholders' equity(5):
Preferred Stock:
Convertible Preferred Stock ($137.5
million aggregate liquidation
preference)............................. 1 1 1
American Common Stock:
Class A Common Stock..................... 151 234 234
Class B Common Stock..................... 47 47 47
Class C Common Stock..................... 13 13 13
Additional paid-in capital................ 390,731 713,960 706,360
Retained earnings......................... 5,955 5,955 5,955
Other (net)............................... (735) (735) (735)
-------- ---------- ----------
Total stockholders' equity............. 396,163 719,475 711,875
-------- ---------- ----------
Total capitalization................... $726,835 $1,434,469 $1,434,469
======== ========== ==========
</TABLE>
- --------
(1) See Notes to Consolidated Financial Statements of American in the American
10-K and "Indebtedness of American" for additional information regarding
the components and terms of American's long-term debt. The pro forma
information includes approximately $47.5 million of long-term debt
expected to be incurred or assumed to finance the American Pro Forma
Transactions. See Note (2) below. Approximately $168.1 million of
additional long-term debt borrowings are expected to be required (on a net
basis) to finance the American Probable Transactions not included in the
American Pro Forma Transactions.
(2) At par value which approximates estimated fair value. American has, as
required, offered to purchase the American-EZ Notes at 101% of their
principal amount. American intends to borrow any funds required for such
purpose under the applicable Credit Agreement.
(3) Net of unamortized discount of $1.3 million.
(4) Consists of shares of Old Preferred Stock and New Preferred Stock, $100
liquidation preference, authorized (3,700,000) and outstanding (2,000,000)
pro forma for the Original Offering and the Exchange Offer (excluding
47,391 additional shares issued on April 15, 1997 pursuant to deemed
dividend payments). Such stock has been reflected at fair value at
issuance; Initial Purchasers discount and expenses of the Original
Offering and the Exchange Offer have been offset against additional paid-
in capital.
(5) Consists of (a) Preferred Stock, par value $.01 per share, authorized,
10,000,000 shares; 137,500 shares of Convertible Preferred Stock, $1,000
liquidation preference per share, issued and outstanding (historical and
pro forma) and (i) shares of Old Preferred Stock and New Preferred Stock
as shown in note (4); (b) Class A Common Stock, par value $.01 per share,
authorized 100,000,000 shares; 15,101,022 shares issued and outstanding
(historical); 23,444,530 shares issued and outstanding (pro forma); (c)
Class B Common Stock, par value $.01 per share, authorized 15,000,000
shares; 4,658,096 shares issued and outstanding (historical and pro
forma); and (d) Class C Common Stock, par value $.01 per share, authorized
6,000,000 shares; 1,295,518 shares issued and outstanding (historical and
pro forma).
29
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS OF AMERICAN
The following unaudited pro forma condensed consolidated financial
statements of American consist of an unaudited pro forma condensed
consolidated balance sheet as of December 31, 1996 and an unaudited pro forma
condensed consolidated statement of operations for the year ended December 31,
1996. With respect to acquisitions, the pro forma financial information gives
effect only to the Pro Forma Transactions (which means the EZ Merger, the
Hartford Transaction, the HBC Merger (excluding the Omaha stations which are
under an agreement to be sold), the BayCom Transaction and the Baltimore
Transaction) based on their significance in relation to all of the American
Probable Transactions. See "Business--Recent Transactions--Consummated
Transactions". The unaudited pro forma condensed consolidated financial
statements should be read in conjunction with American's consolidated
financial statements and notes thereto, as well as the consolidated financial
statements and notes thereto of EZ and certain businesses that have been or
may be acquired, which are incorporated by reference in this Prospectus. For
purposes of presenting the unaudited pro forma condensed statement of
operations for the year ended December 31, 1996, the pro forma amounts
included for EZ do not give effect to acquisitions either consummated during
1996 or probable of completion during 1997. See Note 3 to the EZ 10-K
incorporated herein by reference. The unaudited pro forma condensed
consolidated financial statements are not necessarily indicative of the
results that would have been reported had such events actually occurred on the
date specified, nor are they indicative of American's future results of
operations.
30
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADJUSTMENTS
FOR THE
ADJUSTMENTS ORIGINAL
FOR OFFERING
PRO FORMA AMERICAN AND
HISTORICAL TRANSACTIONS(A) PRO FORMA EXCHANGE OFFER PRO FORMA
---------- --------------- ---------- -------------- ----------
<S> <C> <C> <C> <C> <C>
ASSETS
Cash and cash
equivalents............ $ 10,447 $ 3,053 $ 13,500 $ 13,500
Accounts receivable,
net.................... 51,897 23,659 75,556 75,556
Other current assets.... 6,973 5,036 12,009 12,009
Property and equipment,
net.................... 90,247 51,382 141,629 141,629
Station investment
notes(b)............... 69,920 69,920 69,920
Intangible assets, net.. 493,260 740,998 1,234,258 1,234,258
Deposits and other
assets(b).............. 26,064 (4,500) 21,564 21,564
Net assets held under
exchange agreement..... 47,495 47,495 47,495
-------- -------- ---------- --------- ----------
Total................. $796,303 $819,628 $1,615,931 $ -- $1,615,931
======== ======== ========== ========= ==========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities,
excluding current
portion of long-term
debt................... $ 33,770 $ 17,044 $ 50,814 $ 50,814
Deferred income taxes... 33,205 94,950 128,155 128,155
Other long-term
liabilities............ 2,149 2,149 2,149
Long-term debt,
including current
portion(a)(c).......... 330,672 384,322 714,994 $(192,400) 522,594
Minority interest....... 344 344 344
Old/New Preferred
Stock(d)............... 200,000 200,000
Stockholders' equity.... 396,163 323,312 719,475 (7,600) 711,875
-------- -------- ---------- --------- ----------
Total................. $796,303 $819,628 $1,615,931 $ 0 $1,615,931
======== ======== ========== ========= ==========
</TABLE>
See Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet.
31
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(a) The Pro Forma Transactions will be accounted for under the purchase
method of accounting. The following adjustments have been recorded as of
December 31, 1996: (i) American (A) will borrow, after giving effect to the
sale of the Omaha stations, approximately $47.5 million, net and use currently
outstanding escrow deposits to finance the Pro Forma Transactions (other than
the EZ Merger); and (B) borrowed approximately $186.8 million, which included
$114.4 of additional debt and the refunding of approximately $72.4 million of
existing EZ debt, assumed $150.0 million principal amount of American-EZ Notes
and issued approximately 8,343,508 shares of Class A Common Stock valued at
$310.8 million, (based on the closing price of the American Class A Common
Stock during a reasonable period before and after August 5, 1996) in
connection with the consummation of the EZ Merger; (ii) the American-EZ Notes
have been recorded at par value, which approximates estimated fair value, and
effect has not given to American's offer to purchase the American-EZ Notes at
101% of principal amount and accrued interest through May 19, 1997, or
$1,056.31 per $1,000 aggregate principal amount. Estimated fair value may
change upon completion of the offer to purchase (the impact of such offer will
be determined upon consummation of such offer); (iii) the excess of purchase
price over property, plant and equipment and FCC licenses has been recorded in
intangible assets; and (iv) a deferred tax liability has been recorded to
reflect the temporary differences associated with the book and tax basis of
assets acquired. Transaction costs estimated at approximately $5.5 million
have been included in the estimated purchase price allocation. The preliminary
estimates of fair value of property, plant and equipment and FCC licenses may
change upon final appraisal.
(b) Relates to certain American Probable Transactions that are not included
within American Pro Forma Transactions, except for $0.7 million of station
investment notes which were repaid at their principal amount ($1.2 million) in
February 1997. Station investment notes represent American's loans to entities
(or their affiliates) owning stations as follows: Boston--$0.7 million; West
Palm Beach--$9.9 million; Buffalo--$8.0 million; Dayton--$15.6 million; Jensen
Beach--$7.2 million; and Rochester--$28.5 million. Such loans have stated
annual interest rates ranging from 6%-12% or, in certain cases, American's
borrowing rate under the Credit Agreements. Substantially all of the station
investment notes were issued in connection with the prospective acquisitions
of the related stations.
(c) Excludes approximately $168.1 million of additional long-term debt
required (on a net basis) to finance the American Probable Transactions which
are not included in the American Pro Forma Transactions.
(d) Excludes 47,391 additional shares issued on April 15, 1997 pursuant to
deemed dividend payments.
32
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADJUSTMENTS FOR
THE ORIGINAL
ADJUSTMENTS OFFERING
FOR PRO FORMA AMERICAN AND
HISTORICAL TRANSACTIONS(A) PRO FORMA EXCHANGE OFFER PRO FORMA
---------- --------------- --------- --------------- ---------
<S> <C> <C> <C> <C> <C>
Net revenues............ $178,019 $141,493 $319,512 $319,512
Operating expenses...... 120,004 91,598 211,602 211,602
Net LMA expenses........ 8,128 8,128 8,128
Depreciation and
amortization........... 17,810 42,595 60,405 60,405
Corporate general and
administrative
expenses............... 5,046 1,000 6,046 6,046
-------- -------- -------- --------
Operating income........ 27,031 6,300 33,331 33,331
-------- -------- -------- --------
Other (income) expense:
Interest expense, net.. 16,762 42,315 59,077 $(16,881)(c) 42,196
(Gains) losses on sale
of assets, net........ 308 308 308
-------- -------- -------- -------- --------
Total other (income)
expense.............. 17,070 42,315 59,385 (16,881) 42,504
-------- -------- -------- -------- --------
Income (loss) before
income taxes........... 9,961 (36,015) (26,054) 16,881 (9,173)
Provision (benefit) for
income taxes........... 4,826 (14,120)(b) (9,294) 6,921 (b) (2,373)
-------- -------- -------- -------- --------
Net income (loss)....... 5,135 (21,895) (16,760) 9,960 (6,800)
Preferred stock
dividends.............. (4,973) (4,973) (22,750)(d) (27,723)
-------- -------- -------- -------- --------
Net income (loss)
applicable to common
stockholders........... $ 162 $(21,895) $(21,733) $(12,790) $(34,523)
======== ======== ======== ======== ========
</TABLE>
See Notes to Unaudited Pro Forma Condensed Consolidated Statement of
Operations.
33
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
The unaudited pro forma condensed consolidated statement of operations for
the year ended December 31, 1996 gives effect to the EZ Merger, the Hartford
Transaction, the HBC Merger (excluding the Omaha stations which are under an
agreement to be sold), the BayCom Transaction and the Baltimore Transaction
(collectively, the Pro Forma Transactions), as if each of the foregoing had
occurred on January 1, 1996.
(a) To record the results of operations for the Pro Forma Transactions. The
results of operations have been adjusted to (i) reverse historical interest
expense of $25.9 million and $1.3 million of interest income recorded on the
Hartford Transaction station investment notes and (ii) record interest expense
of $41.0 million for the year ended December 31, 1996, as a result of
approximately $161.9 million of additional debt and the refunding of
approximately $72.4 million of existing EZ debt, both bearing interest at an
assumed rate of 8.75%, and the assumption of $150.0 million principal amount
of American-EZ Notes bearing interest at 9.75%, all to be incurred in
connection with the Pro Forma Transactions. Each 1/4% change in the interest
rate applicable to the change in floating rate debt would increase or
decrease, as appropriate, the net adjustment to interest expense by
approximately $0.6 million.
The results of operations have also been adjusted to reverse historical
depreciation and amortization expense of $13.4 million for the year ended
December 31, 1996 and record depreciation and amortization expense of $42.6
million for the year ended December 31, 1996 based on estimated allocations of
purchase prices. Depreciation expense for property, plant and equipment
acquired has been determined based on an average life of ten years. Costs of
acquired FCC licenses and goodwill for the transactions are amortized over 25
and 40 years, respectively. The preliminary estimates of the fair value of
property, plant and equipment, FCC licenses and goodwill may change upon final
appraisal.
Corporate general and administrative expenses of the prior owners have not
been carried forward into the pro forma condensed financial statements as
these costs represent duplicative facilities and compensation to owners and/or
executives not retained by American. Because American maintains a separate
corporate headquarters which provides to all stations services substantially
similar to those represented by these costs, they are not expected to recur
following acquisition. After giving effect to an estimated $1.0 million of
incremental costs, American believes that it has existing management capacity
sufficient to provide such services without incurring additional incremental
costs.
The following table sets forth the historical results of operations for the
Pro Forma Transactions for the periods in which they were not owned by
American for the year ended December 31, 1996.
<TABLE>
<CAPTION>
EZ HARTFORD HBC BAYCOM BALTIMORE PRO FORMA
MERGER TRANSACTION MERGER TRANSACTION TRANSACTION ADJUSTMENTS TOTAL
-------- ----------- ------ ----------- ----------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net revenues............ $105,963 $4,117 $8,371 $ 9,789 $13,253 $141,493
Operating expenses...... 68,084 2,594 4,762 7,358 8,800 91,598
Depreciation and
amortization........... 9,104 129 374 2,012 1,829 $ 29,147 42,595
Merger costs............ 10,433 (10,433)
Corporate general and
administrative......... 3,808 1,913 441 1,943 (7,105) 1,000
-------- ------ ------ ------- ------- -------- --------
Operating income
(loss)................. 14,534 1,394 1,322 (22) 681 (11,609) 6,300
Other (income) expense..
Interest expense, net.. 20,360 1,395 4,105 16,455 42,315
Other expense
(income).............. 450 7 (22) 104 (539)
-------- ------ ------ ------- ------- -------- --------
Income (loss) from
operations before
income taxes........... $ (6,276) $1,387 $ (73) $(4,105) $ 577 $(27,525) $(36,015)
======== ====== ====== ======= ======= ======== ========
</TABLE>
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Merger costs of EZ have not been carried forward into the pro forma
condensed financial statements as these costs represent costs incurred by EZ
as a result of the EZ Merger and are not expected to recur following the EZ
Merger. Such costs consist primarily of professional fees, compensation to
employees of EZ and regulatory related costs, including $4.5 million which was
paid pursuant to a license renewal proceeding, satisfactory arrangements with
respect to the station involved were a condition precedent to closing.
(b) To record the tax effect of the pro forma adjustments and impact on
American's estimated effective tax rate. The actual effective tax rate may be
different once the final allocation of purchase price is determined.
(c) Estimated reduction in interest expense from an application of the net
proceeds from the Original Offering at an assumed rate of 8.75%.
(d) Based on an annual dividend rate of 11 3/8% on the Old Preferred Stock
as if the Original Offering had taken place on January 1, 1996.
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BUSINESS
GENERAL
American is a national radio broadcasting company committed to acquiring,
developing and operating clusters of complementary radio stations in major and
growing advertising markets. American will be among the five largest radio
groups in the nation owning and/or operating 95 radio stations in 20 markets
across the United States upon consummation of the American Probable
Transations. Consistent with its strategy of operating in the top 60 markets
(with an emphasis on markets ranked 10 through 50), American will, upon such
consummation, own stations in the following markets: Boston, Seattle, St.
Louis, Baltimore, Cincinnati, Portland, Pittsburgh, Sacramento, Charlotte,
Kansas City, Hartford, Austin, Buffalo, Las Vegas, San Jose, West Palm Beach,
Rochester, Dayton, Fresno and Riverside/San Bernardino. Giving effect to the
American Probable Transactions, American station groups ranked first or second
among station operators in radio advertising revenues in 18 of its 20 markets,
based on the Duncan Guide.
American's stations have demonstrated significant same station growth in net
revenues and broadcast cash flow. Growth in net revenues and, to a greater
extent, broadcast cash flow from such same stations is affected by a number of
factors, among the most significant of which are the number of stations
acquired in a particular period, the stage of development of the acquired
stations and the period of time such stations have been operated by American.
Net revenues and broadcast cash flow from stations owned and/or operated by
American as of December 31, 1996 (including for periods prior to their
acquisition by American) increased by 12.1% and 20.7%, respectively, from 1995
to 1996. Giving effect to the American Probable Transactions as though all of
them had been consummated at January 1, 1996, net revenues and broadcast cash
flow in 1996 would have been approximately $360.9 million and $120.7 million,
respectively. See "Summary Combined Financial Information" and "Unaudited Pro
Forma Condensed Financial Statements of American".
Management believes that its substantial same station growth is a result of
a number of factors that include the following:
. Market Selection. American has targeted markets that offer geographic
diversity and fast growing economic bases. Five of American's markets
are among the ten fastest growing U.S. markets and eight are among the
top 25, as identified by the U.S. Department of Commerce, Bureau of
Economic Analysis, "Projection of Economic Growth", as of May 1996.
. Station Groups. American operates at least three FMs in each market
(other than Austin, Cincinnati, Kansas City and San
Bernardino/Riverside) and in most markets has developed radio station
groups with many complementary FM and AM stations. These groups are
generally composed of a mixture of leading and underperforming
stations. Management believes this configuration enables American to
accelerate the growth potential of these station groups, while reducing
the risks associated with launching new formats and undertaking other
means of improving underperforming radio properties. Management
estimates that approximately one quarter of its stations, assuming
consummation of the American Probable Transactions, have negligible or
negative broadcast cash flow. American seeks to improve the performance
of these stations by leveraging the enhanced management, programming,
promotional and operational resources available to multiple station
groups.
American also believes that the operation of station clusters may: (i)
enhance net revenue growth by increasing the appeal of the stations to
advertisers and enabling such stations to compete more effectively with
other advertising media; (ii) achieve operating efficiencies by
consolidating broadcast facilities, eliminating duplicative management
and staff functions and reducing overhead; (iii) enhance the
competitiveness of American in bidding for top quality talent; (iv)
facilitate cross promotion, sponsorship of larger events and increased
spending on television, outdoor and other advertising designed to
establish "brand" identity for the station cluster; (v) support more
extensive and specialized market research; and (vi) promote the
development of enhanced client services for advertisers.
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. Station Operating Strategies. American views itself as a product
oriented company that seeks to establish and maintain listener loyalty
through sound audience research, employment of high profile
personalities, strong production values, and tailored marketing
approaches that vary according to market, format and individual station
need. American also seeks to assemble a large group of stations in each
market, enabling it to attract a broad range of demographic audiences
and to respond to differing needs of individual advertisers. Through
these and other strategies American seeks to increase its share of
total advertising dollars, targeting in particular its two most direct
competitors, newspapers and broadcast television. These strategies have
enabled American to build station groups with leading revenue and
audience market share.
. Diversified Programming. American's programming diversification has
helped to insulate its performance from changes in listening
preferences. American currently programs 18 different formats at its
stations, a substantial increase from the six formats programmed in
January 1994.
. Management Structure. In order to manage a national group of radio
stations and to provide a strong operational focus to each market,
American has divided its markets into three groups, with a highly
experienced Co-Chief Operating Officer responsible for each. While the
management structures in each market vary according to the number of
stations, their stage of development, and other factors, in most
markets overall responsibility for the market is assigned to a single
individual market leader. American believes this structure facilitates
the coordination of programming and selling and reduction of operating
expenses, while maintaining accountability for individual station
performance. Individual market leaders each report to a Co-Chief
Operating Officer, who in turn report to Steven B. Dodge, Chairman and
Chief Executive Officer.
OPERATING PHILOSOPHY
American's objective is to operate leading radio station groups in each of
its markets as measured by audience ratings and revenue share. American
operates its stations in clusters to (i) enhance growth by increasing the
appeal of American's stations to advertisers and enabling such stations to
compete more effectively with other advertising media and (ii) achieve
operating efficiencies by consolidating broadcast facilities, eliminating
duplicative management and staff positions and reducing overhead. Management
believes that station groups create the opportunity to develop leadership
positions within American's markets, which significantly improve its stations'
appeal to advertisers and their revenue and profit potential. American
believes that group, rather than individual station, results present a more
meaningful measure of performance because a significant percentage of revenues
in most of its markets is earned by companies owning multiple stations.
Consistent with such belief, American seeks to enhance the overall performance
of its station groups through means such as complementary programming and
joint marketing of its individual stations.
To maintain or improve its position in each market, American combines
extensive research with an assessment of its competitors' vulnerabilities in
order to identify specific audience opportunities within each market. American
then tailors the programming, marketing and promotion of each station to
maximize its appeal to its target audience. Management seeks to create a
distinct and marketable personality for each of its stations in order to
enhance audience share and listener loyalty. To help achieve this objective,
American employs and promotes distinctive, high-profile on-air personalities
in many of its stations.
American's radio stations employ a number of programming formats, each of
which is designed to appeal to a specific target audience in each local
market. American's portfolio of stations is diversified in terms of format,
target audience and geographic location. Management believes this
diversification helps to insulate its performance from potential local
economic downturns and changes in listening preferences. American's station
groups are, in many instances, composed of stations in different phases of
development. Management believes this configuration enables it to maximize the
growth potential of those station groups, while reducing the risks associated
with launching new formats and undertaking other means of improving
underperforming properties.
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<PAGE>
Management employs an operating philosophy designed to achieve market
leadership which includes: (i) owning multiple stations and establishing
program formats within its individual markets that target specific diverse
demographics, (ii) developing and maintaining popular programming to attract a
large share of the target audience, (iii) promoting its radio stations
frequently to develop high awareness among its target listeners,
(iv) leveraging the skills of experienced general managers with strong local
market knowledge, and (v) developing well trained client-oriented local sales
professionals.
Strategic Programming of Station Groups. Giving effect to the American
Probable Transactions, American will own and/or operate at least three FM
stations in each of its markets other than Austin, Cincinnati, Kansas City and
San Bernardino/Riverside (in each of which it owns two FM stations). American
customizes the programming of its groups to maximize their combined audience
share and revenue potential. American does not utilize a predetermined formula
to target demographic niches; instead, American believes that each market has
individual characteristics and should be evaluated independently.
American believes that clustering of radio stations promotes the development
of specialized or "niche" formats that can effectively expand the overall
demographic reach of a station group while delivering new target audiences to
advertisers. American believes that the flexibility to program niche formats
provides station groups with potential competitive advantages generally
unavailable to stations operated on a stand-alone basis. In markets where one
American station is a leader in a demographic group, American may use its
other stations to expand audience reach. American may, under certain
circumstances, utilize a strongly performing group to enhance the relative
position of one of its leading stations by initiating a format competition
between one of its other stations and another leading station in the market.
Popular Programming. American tailors the programming, marketing and
promotion of each station to maximize its appeal to that station's target
audience and to create a distinct and marketable personality for each station.
An important element of this approach is American's strong preference for
employing and promoting high profile and marketable on-air personalities,
especially in the morning drive day part, which is 6-10 a.m. In order to
adjust to developing trends and identify new opportunities, American conducts
frequent market research to provide its stations with the information
necessary to refine and improve their programming to identify and exploit new
audience opportunities.
Aggressive Station Promotion. American's stations typically engage in
significant local promotional activities, including extensive community
involvement. American's stations also typically advertise on local television,
utilize billboards and print media, participate in telemarketing and direct
mailings and sponsor local contests, concerts and events. In Boston, WBMX-FM
sponsors events such as "MIX Fest", WRKO-AM sponsors "Taste of Boston" and
WEEI-AM sponsors "The Hot Dog Safari". In Hartford, WZMX-FM sponsors an annual
"penny pitch" charity event designed to raise funds for the Hartford
Children's Hospital. See
"--Community Involvement". The operation of radio clusters also creates unique
cross-promotional opportunities and enables American, through the broader
combined reach of its station groups, to compete more effectively with
television stations and newspapers in sponsoring local community events,
employment fairs and trade shows. American believes that such sponsorships may
provide radio station group owners with opportunities to realize substantial
"non-traditional" radio revenues. American has also invested in database
marketing programs with the objective of developing more personal contact with
listeners.
Strong Local Management and Sales Effort. In each of its markets, American
employs a highly experienced general manager who is responsible for the
performance of the stations in his or her market. The general managers of
American's stations have an average of six years experience as general
managers and an average of more than twenty years experience in the radio
industry. A portion of each general manager's compensation is dependent on the
financial results of the stations in his or her markets, aligning the
manager's goals with those of American. As incentive compensation, American's
general managers and executive officers have been granted options to purchase
shares of Common Stock which are subject to vesting provisions over a five-
year period. Since a significant portion of American's revenues are generated
from local advertising, American also focuses on developing a high quality,
client-oriented local sales force at each radio station. Such
38
<PAGE>
a sales force allows American to establish and maintain direct relationships
with advertisers and capture significant advertising dollars.
ACQUISITION STRATEGY
American intends to continue to pursue the acquisition of additional radio
stations in new and existing markets in order, among other things, to
implement its business strategy discussed above and to achieve greater
geographic diversification. American expects to concentrate these efforts in
markets ranked in the top 60 (with an emphasis on markets ranked 10 through
50) in terms of radio advertising revenues. When evaluating acquisition
opportunities in new markets, American also assesses the potential to attract
listeners and to increase audience share and to generate strong cash flow
growth through improved programming, marketing, sales and operating
efficiencies. While American intends to continue to focus its principal
acquisition efforts on radio stations, it also intends to continue to expand
its ownership and operation of communications towers and to explore the
syndication of radio programming. See "--Recent Transactions--Tower
Subsidiary".
American intends to pursue acquisitions opportunistically and to evaluate
both market and station characteristics.
Market Selection Considerations. American intends to make acquisitions in
markets that provide the opportunity to expand audience and revenue. In
assessing potential acquisitions, American evaluates the existence of
underserved audience segments and competitors with perceived vulnerabilities.
In addition, American considers the potential to acquire two or more FM
stations in the market. American believes the potential to acquire two or more
FM stations is essential to its ability to compete with electronic and print
media, expand audience, gain broad acceptance with advertisers, and achieve
sustainable growth in profitability. American will also consider the
acquisition of AM stations which it believes have profit potential and whose
ownership will enhance American's overall appeal to advertisers.
American seeks to acquire stations in markets that have already experienced
or are poised for significant growth activity. American also closely examines
the state of the economy in its potential markets, specifically the size,
historical growth rates and projected future growth rates of the market's
radio advertising revenue, population and retail sales.
Station Selection Considerations. Within markets meeting the above criteria,
American intends to acquire stations in varying stages of development, based
primarily on management's evaluation of the target station's facilities,
including the relative strength and market coverage of its signal, and its
past and current operating performance. When entering a new market, American
generally plans to employ a "core station" strategy, acquiring a profitable
station, thereby reducing the risk of entry. Having established its presence
in a new market, American may then continue its selective acquisition of
underperforming stations which generally represent greater growth potential
than well-established and profitable stations. By applying its turnaround
expertise, and leveraging the core station's management and market presence,
American believes that it will be able to promote the development of
underperforming stations and thereby enhance asset value.
Purchase Price Considerations. American has never applied a fixed formula to
determine the purchase price of radio stations. In determining the purchase
price for an acquisition, management places emphasis on multiples of projected
station broadcast cash flow rather than historical measures. This is because
American frequently considers acquisitions of radio stations requiring
significant reconfiguration which have nominal or negative historical station
broadcast cash flow.
American believes that its acquisition strategy, if properly implemented,
could have a number of benefits, including the following: (i) diversification
of revenues and broadcast cash flow across a greater number of stations and
markets, (ii) more efficient utilization of its senior management team, (iii)
enhanced appeal to top industry management talent, and (iv) increased overall
scale which should broaden the range of and facilitate American's capital
raising activities. See "Risk Factors--Acquisition Strategy".
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<PAGE>
Although American has had discussions with a number of other radio operators
concerning potential acquisitions, it is not currently a party to any binding
agreement or letter of intent relating to any such acquisition, except as
described elsewhere in this Prospectus.
HISTORY
On November 1, 1993 the American Reorganization became effective with the
merger of four radio broadcasting entities: Stoner Broadcasting Systems, Inc.
("Stoner"), Atlantic Radio, L.P. ("Atlantic"), Multi Market Communications,
Inc. ("Multi Market") and Boston AM Radio Corporation ("Boston AM")
(collectively, the "American Predecessor Entities"). As a result, American
owned and operated 11 FM and seven AM stations in eight markets consisting of
Boston, Hartford, Buffalo, Rochester, Dayton, Des Moines, Binghamton and
Louisville. Between November 1, 1993 and January 1, 1996, American entered
three new markets, Baltimore, Austin and West Palm Beach, and disposed of all
of its stations in Des Moines, Binghamton and Louisville. During such period,
American also agreed to purchase or acquired options to purchase additional
stations in several existing and new markets. See Notes to the Consolidated
Financial Statements of American in the American 10-K.
RECENT TRANSACTIONS
Consistent with American's acquisition strategy, since January 1, 1996,
American has consummated or has pending the following transactions.
Consummated Transactions
EZ Merger: Pursuant to the consummation of the EZ Merger on April 4, 1997,
American acquired 18 FM and six AM stations in eight markets: Seattle, St.
Louis, Pittsburgh, Sacramento, Charlotte, Kansas City, New Orleans and
Philadelphia, assumed approximately $222.4 million of long-term debt, paid
approximately $108.9 million and issued approximately 8.3 million shares of
Class A Common Stock to the EZ stockholders. The foregoing station information
does not give effect to the consummation of certain prospective EZ
transactions which are included in the American Probable Transactions. See "--
Seattle" below and "--Pending Acquisitions and Dispositions--Seattle", "--
St. Louis" and "--Charlotte--".
Marlin Transaction: In May 1996, American consummated the transactions
contemplated by a merger agreement (the "Marlin Transaction") with Marlin
Broadcasting, Inc. ("Marlin"). American acquired WFLN- FM in Philadelphia,
WQRS-FM in Detroit and WTMI-FM in Miami for an aggregate purchase price of
approximately $58.5 million, together with the assumption of approximately
$9.0 million of long-term debt which was paid in full at closing. The
principal stockholder of Marlin immediately thereafter acquired WTMI- FM from
American for approximately $18.0 million. American retained certain
Philadelphia real estate and tower assets valued at approximately $1.5
million. In February 1997, American exchanged the Philadelphia station for two
stations serving Sacramento and sold the Detroit station for approximately
$20.0 million in cash, to an unaffiliated party which had been programming and
marketing the Philadelphia and Detroit stations under LMAs. See "--Sacramento"
below.
Boston, Worcester: In January 1997, American acquired WAAF-FM and WWTM-AM in
Worcester, Massachusetts for approximately $24.8 million in cash. American
began programming and marketing the stations pursuant to an LMA in August
1996.
Seattle: In April 1997, American (as successor to EZ) exchanged WEZB-FM,
WRNO-FM and WBYU-AM, serving New Orleans, for KBKS-FM (formerly KCIN-FM) and
KRPM-AM, serving Seattle. The parties began programming and marketing the
stations to be acquired by each pursuant to separate LMAs in March 1996.
40
<PAGE>
Baltimore: In October 1996, American acquired WBGR-AM serving Baltimore for
a purchase price of approximately $2.8 million.
In February 1997, American acquired WWMX-FM and WOCT-FM serving Baltimore
for approximately $90.0 million. American began programming and marketing the
stations pursuant to an LMA in November 1996.
Cincinnati: In April 1997, American exchanged WVOR-FM, WHAM-AM and WHTK-AM
serving Rochester, together with $16.0 million, for WKRQ-FM serving
Cincinnati. See "--Rochester" below.
In an unrelated transaction, in January 1997, American merged with an
unaffiliated corporation pursuant to which it became a party to an agreement
to acquire WGRR-FM serving Cincinnati, for approximately $30.0 million in
cash. In addition, American issued 18,341 shares of Class A Common Stock
pursuant to such merger. The acquisition of WGRR-FM is expected to be
consummated in the second quarter of 1997.
Portland, Oregon: In July 1996, American consummated a merger (the "HBC
Merger") pursuant to which Henry Broadcasting Company ("HBC") merged into
American. Pursuant to the HBC Merger, American issued an aggregate of
1,879,034 shares of Class A Common Stock valued at $64.0 million, paid
approximately $10.4 million in cash, and assumed long-term debt of
approximately $37.3 million which was paid in full at closing. As part of a
related transaction, American acquired certain real estate used in the
business of HBC for approximately $2.0 million and obtained a five-year option
to acquire certain other real estate for approximately $1.0 million. HBC owned
an aggregate of twelve stations, of which nine were included as part of the
HBC Merger as follows: KUFO-FM and KUPL-AM (formerly KBBT-AM) in Portland,
Oregon, KYMX-FM and KCTC-AM in Sacramento, KGOR-FM and KFAB-AM in Omaha and
KSKS-FM, KKDJ-FM and KMJ-AM in Fresno.
In July 1996, American acquired KBBT-FM (formerly KDBX-FM) for a purchase
price of approximately $14.0 million. As part of such arrangement, American
granted the seller the right, effective at any time after August 31, 1998, to
cause American to exercise its option to acquire WBNW-AM in Boston for $6.0
million and to sell such station to the seller of KBBT-FM. See Notes to
Consolidated Financial Statements of American in the American 10-K for
information concerning that option. In February 1997, such seller and the
owner of WBNW-AM consummated a purchase and sale agreement with respect to
such station.
In August 1996, American acquired KUPL-FM and KKJZ-FM, together with two FM
stations in San Jose (the "BayCom Transaction"), for an aggregate purchase
price of approximately $103.0 million.
Sacramento: As part of the HBC Merger, American acquired KYMX-FM and KCTC-AM
in Sacramento in July 1996. See "--Portland, Oregon" above.
In July 1996, American acquired KSTE-AM for a purchase price of
approximately $7.25 million. American had been programming and marketing this
station pursuant to an LMA since April 1996. In March 1997, American
consummated a station asset swap agreement to exchange KSTE-AM as part of the
acquisition of three stations serving West Palm Beach. The other party to the
agreement began programming and marketing KSTE-AM pursuant to an LMA in August
1996. See "--West Palm Beach" below.
In September 1996, American acquired KSSJ-FM for a purchase price of
approximately $14.0 million. American had been programming and marketing the
station pursuant to an LMA since July 1996. See "--Pending Acquisitions and
Dispositions--Portland" for information concerning the proposed exchange of
KSSJ-FM.
In February 1997, American consummated an agreement to exchange the
Philadelphia station which it acquired as part of the Marlin Transaction for
KSFM-FM and KMJI-AM serving Sacramento. As part of such transaction (the
"Secret Transaction"), American sold the Detroit station acquired as part of
the Marlin Transaction to the owner of the Sacramento stations for
approximately $20.0 million. American began programming and marketing the
Sacramento stations under an LMA, and the prospective acquiror of the
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Philadelphia and Detroit stations began programming and marketing those
stations under LMAs, in June 1996. In April 1997, American sold KMJI-AM for
approximately $1.5 million in cash.
In March 1997, American acquired KXOA-FM, KQPT-AM (formerly KXOA-AM) and
KQPT-FM serving Sacramento for approximately $50.0 million in cash. American
has been programming and marketing the stations pursuant to an LMA in August
1996. See "--Pending Acquisitions and Dispositions--Sacramento" for
information with respect to the sale of KXOA-FM, including the transfer in
April 1997 to an independent and insulated trustee (under a trust for the
benefit of American).
Subsequent to October 1996, American received Second Requests for additional
information with respect to each of the pending American transactions which
involve, in whole or in part, Sacramento-area radio stations from the
Antitrust Division. As a consequence of ongoing discussions with the Antitrust
Division to address those concerns, in February 1997, American entered into
the Sacramento Consent Decree with the Justice Department pursuant to which it
agreed, among other things, to divest its ownership of KSSJ-FM. The Sacramento
Consent Decree also provides that, in the event a class B FM license has not
been issued to KSSJ-FM prior to January 1, 1998, the Justice Department shall
have the right to require American to divest a different class B FM station
serving Sacramento. American believes that the class B FM license will be
granted to KSSJ-FM prior to December 31, 1997, although there can be no
assurance that such grant will occur. The Sacramento Consent Decree is subject
to approval by the United States District Court for the District of Columbia
and a sixty-day public comment period. In the unlikely event that the District
Court does not approve the Sacramento Consent Decree, the Antitrust Division
or others could take action under the antitrust laws to enjoin or otherwise
challenge the Sacramento Transactions. In such event, there can be no
assurance that such a challenge will not be made or, if made, will not be
successful. See "--Pending Acquisitions and Dispositions--Portland" for
information concerning the proposed exchange of KSSJ-FM.
Hartford: In May 1996, American consummated the acquisition of WTIC-FM and
WTIC-AM in Hartford. In August 1995, American had entered into a series of
transactions (the "Hartford Transaction") with the owner of those stations and
certain affiliates, pursuant to which, among other things, American agreed to
purchase the assets of those stations for approximately $39.0 million,
including approximately $1.1 million of working capital and an obligation to
make payments aggregating $8.5 million pursuant to a consulting and non-
competition agreement with an affiliate of the owner of the stations. Also as
part of the Hartford Transaction, American paid $1.0 million for a two-year
option to purchase for $1.00 the New England Weather Service (which provides
weather information to subscribers). Because American was prevented under the
then current FCC regulations from acquiring these stations, it loaned an
aggregate of $35.5 million to the owner of such stations and an affiliate
thereof and made a $2.0 million escrow deposit. A portion of the loans was
used to finance the acquisition of the stations and the balance was used to
satisfy American's obligations under the consulting and non-competition
agreement. The Company also paid $3.5 million to purchase the tower of one of
the stations in October 1995.
In December 1996, American sold WNEZ-AM serving New Britain, Connecticut for
approximately $0.7 million.
Austin: In February 1997, American exercised its option to acquire, and in
March 1997 acquired, KAMX-FM, KKMJ-FM and KJCE-AM, serving Austin, Texas for
approximately $28.7 million. American commenced programming and marketing the
stations pursuant to an LMA in August 1995.
Las Vegas: In July 1996, American acquired KMXB-FM (formerly KJMZ-FM) for
approximately $8.0 million. American had been programming and marketing the
station pursuant to an LMA since April 1996.
In July 1996, American acquired KLUC-FM and KXNO-AM for approximately $11.0
million.
In September 1996, American acquired KXNT-AM (formerly KVEG-AM) for
approximately $1.9 million. American had been programming and marketing this
station pursuant to an LMA since May 1996.
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<PAGE>
In October 1996, American acquired KMZQ-FM and KXTE-FM (formerly KFBI-FM) for
a purchase price of approximately $28.0 million. American began programming and
marketing the stations pursuant to an LMA in May 1996. As part of such
transaction, American paid an additional $0.2 million to acquire the seller's
right (and obligation) to purchase KXNT-AM for approximately $1.9 million
which, as noted above, it did in September 1996.
Buffalo: In August 1996, American acquired WSJZ-FM in Buffalo for a purchase
price of approximately $12.5 million. This station had been programmed and
marketed by American pursuant to an LMA since April 1996.
San Jose: As part of the BayCom Transaction, American acquired KSJO-FM and
KUFX-FM in August 1996. See "--Portland, Oregon" above.
In February 1997, American acquired KBAY-FM and KKSJ-AM serving San Jose for
approximately $31.0 million in cash. American began programming and marketing
the stations pursuant to an LMA in August 1996. See "Pending Acquisitions and
Dispositions--Portland" for information concerning the proposed exchange of
KBAY-FM and "--San Jose" for information concerning the proposed sale of KKSJ-
AM.
West Palm Beach: In March 1997, American exchanged KSTE-AM serving Sacramento
plus $33.0 million in cash for WEAT-FM, WEAT-AM and WOLL-FM serving West Palm
Beach. American began programming and marketing the West Palm stations pursuant
to an LMA in August 1996. See "--Pending Acquisitions and Dispositions--West
Palm Beach" for information concerning the proposed sale of WOLL-FM, WEAT-AM
and two other West Palm Beach stations.
Omaha: As part of the HBC Merger, American acquired KGOR-FM and KFAB-AM in
Omaha in July 1996. See "--Portland, Oregon" above. See also "--Pending
Acquisitions and Dispositions--Omaha" below for information concerning proposed
sale of these stations.
Rochester: In February 1997, American acquired two FM (WVOR-FM and WPXY-FM)
and two AM (WHAM-AM and WHTK-AM) stations serving the Rochester market for a
purchase price of approximately $31.5 million including working capital (the
"Rochester Acquisition"). American used the loans which it had made in July
1996 to the owner of the Rochester stations to be acquired of approximately
$28.5 million, together with an escrow deposit, to finance the acquisition. On
May 17, 1996, American and the seller had received Second Requests for
additional information from the Antitrust Division. American engaged in ongoing
negotiations with the Antitrust Division in an effort to reach a settlement of
the matter and as a result of those negotiations, on October 24, 1996, American
and the seller entered into a consent decree with the Antitrust Division and
the Attorney General of the State of New York (the "Rochester Consent Decree"),
pursuant to which, among other things, American could consummate the Rochester
Acquisition. However, the Rochester Consent Decree required it to divest WHAM-
AM and WVOR-FM. As part of the Rochester Consent Decree, American agreed not to
acquire any additional stations in the Rochester market, other than, with
certain specified exceptions, one Class A FM station which it acquired in April
1997.
In December 1996, pursuant to the Rochester Consent Decree, American entered
into an asset swap agreement pursuant to which it agreed to exchange WHAM-AM,
WVOR-FM and WHTK-AM, together with $16.0 million, for WKRQ-FM serving
Cincinnati. The exchange was consummated in April 1997. Pursuant to the
Rochester Consent Decree, American terminated the joint sales agreement with,
and assigned its option to purchase, another FM station in Rochester to the
party with which it exchanged Rochester stations.
In April 1997, American acquired WZNE-FM (formerly WAQB-FM), a newly licensed
Class A FM station for approximately $3.5 million.
Fresno: As part of the HBC Merger, American acquired KSKS-FM, KKDJ-FM and
KMJ-AM in July 1996. See "--Portland, Oregon" above.
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<PAGE>
In December 1996, American acquired KNAX-FM and KVSR-FM (formerly KRBT-FM)
in Fresno for approximately $11.0 million in cash. American began programming
and marketing the stations pursuant to an LMA in August 1996.
In April 1997, American acquired KOQO-AM and KOQO-FM for approximately $6.0
million in cash. American had been programming and marketing the stations
pursuant to an LMA in August 1996.
Dayton: In February 1997, American acquired WXEG-FM for approximately $3.6
million, using the loans described below to finance the purchase. In December
1995, American had loaned approximately $1.4 million to the buyer to finance
the acquisition of WXEG-FM and purchased from Mr. Steven B. Dodge, Chairman of
the Board, President and Chief Executive Officer of American, interim loans of
approximately $2.2 million (including accrued interest) which he had made to
the seller of the station and which had been assumed by the new owner of the
station.
In February 1997, American acquired WLQT-FM and WBTT-FM for approximately
$12.0 million. American had an option to acquire these stations which, because
of then existing FCC regulations, it had assigned to Palm Beach Radio
Broadcasting, Inc. ("Palm Beach Broadcasting"). American loaned Palm Beach
Broadcasting approximately $12.0 million to finance the original acquisition
(which occurred in March 1996) and purchased the stations in February 1997,
using the loans to do so.
All of the Dayton stations had been programmed and marketed by American
pursuant to LMAs.
Pending Acquisitions and Dispositions
Seattle: In December 1996, EZ entered into an agreement to sell the assets
of KMPS-AM in Seattle for approximately $2.0 million. Consummation of the
transaction, which is expected to be consummated in the second quarter of
1997, is subject to the approval of the FCC.
St. Louis: In December 1996, EZ entered into an agreement to sell the assets
of KTRS-AM (formerly KSD-AM) in St. Louis for approximately $10.0 million.
Subject to the receipt of FCC approval, the acquisition is expected to be
consummated in the second quarter of 1997.
Portland: In April 1997, American entered into an asset exchange agreement
pursuant to which it will acquire KINK-FM, serving Portland, KBRG-FM, serving
Fremont, California, $2.0 million in cash, and 150,000 shares of Common Stock
of Latin Communications, Inc. in exchange for KBAY-FM, serving San Jose, and
KSSJ-FM, serving Sacramento. The agreement also provides for the exchange of
KINK-FM for KBAY-FM in the event regulatory approval for the exchange of KBRG-
FM and KSSJ-FM cannot be obtained. Subject to certain conditions, including
the receipt of FCC approval and the expiration or earlier termination of the
HSR Act waiting period, and, in the case of the exchange of KSSJ-FM for KBRG-
FM, Justice Department approval of the acquisition pursuant to the Sacramento
Consent Decree, the acquisition is expected to be consummated in third quarter
of 1997.
Pittsburgh: In February 1997, EZ entered into an exchange agreement pursuant
to which it will acquire WDSY-FM. See "--Charlotte" below.
Sacramento: In October 1996, American entered into an agreement to sell
KXOA-FM for approximately $27.5 million in cash. After the expiration of the
HSR Act waiting period, the other party to the agreement began programming and
marketing KXOA-FM pursuant to an LMA in January 1997. As a condition to
consummation of the EZ Merger, KXOA-FM was transferred to an independent and
insulated trustee (under a trust for the benefit of American) and will be held
by the trustee subject to sale pursuant to the foregoing agreement. Subject
to the receipt of FCC approval, the sale from the trustee to the ultimate
purchaser is expected to be consummated in the second quarter of 1997.
See "--Portland" above for information concerning the proposed exchange of
KSSJ-FM.
44
<PAGE>
Charlotte: In December 1996, EZ entered into an asset exchange agreement with
Evergreen Media Corporation ("Evergreen"), pursuant to which EZ will exchange
WIOQ-FM and WUSL-FM in Philadelphia for WRFX-FM, WPEG-FM, WBAV-FM, WBAV-AM and
WFNZ-AM serving Charlotte, and an asset purchase agreement with Evergreen to
purchase WNKS-FM serving Charlotte for approximately $10.0 million.
Consummation of the asset exchange agreement is not conditioned on consummation
of the asset purchase agreement, although consummation of the asset purchase
agreement is conditioned on consummation of the asset exchange agreement. On
September 16, 1996, EZ and American each received a Civil Investigative Demand
from the Antitrust Division requesting certain documentary materials regarding
the purchase, sale, trade or other transfer of radio stations in Charlotte,
North Carolina. As a consequence of ongoing discussions with the Justice
Department, EZ and Evergreen entered into the Charlotte Consent Decree in
February 1997. Pursuant to the Charlotte Consent Decree, and to comply with the
FCC's multiple ownership rules, EZ agreed to dispose of WRFX-FM (which will,
upon consummation of the exchange be transferred to an independent and
insulated trustee). Consummation of the exchange and the acquisition, which is
expected in the second quarter of 1997, is subject to, among other conditions,
the consent of the FCC.
In order to comply with the Charlotte Consent Decree and the FCC's multiple
ownership rules, in February 1997, EZ entered into an asset exchange agreement
pursuant to which it would exchange WRFX-FM for WDSY-FM, serving Pittsburgh and
$20.0 million in cash. Consummation of the exchange, which is expected in the
second or third quarter of 1997, is subject to, among other conditions, the
expiration or ealier termination of the HSR Act waiting period, approval by the
Antitrust Division pursuant to the Charlotte Consent Decree and the consent of
the FCC.
Buffalo: In August 1995, American entered into an agreement to purchase WBLK-
FM serving Buffalo for approximately $8.0 million. Because of the then current
FCC regulations, American was not permitted to consummate this acquisition and
assigned its rights to purchase the station, and agreed to make loans to
finance the purchase, to Palm Beach Broadcasting which owns WPBZ-FM serving
West Palm Beach, as a consequence of an earlier assignment to it by American.
The acquisition was consummated by Palm Beach Broadcasting in March 1996, using
the proceeds of loans of approximately $8.0 million from American to do so.
This station is currently being programmed and marketed by American pursuant to
an LMA. American intends to exercise its option to acquire this station or
enter into a merger agreement with Palm Beach Broadcasting, pursuant to which
it will acquire WBLK-FM. Subject to certain conditions, including the receipt
of FCC approval and the expiration or earlier termination of the HSR Act
waiting period, American expects the acquisition or merger to be consummated in
the second half of 1997. See "--West Palm Beach" below.
San Jose: In March 1997, American entered into an agreement to acquire KEZR-
FM serving San Jose, CA and KLUE-FM serving Soledad, CA for approximately $24.0
million, of which $20.0 million will be paid in the form of 723,402 shares of
Class A Common Stock. Subject to certain conditions, including the receipt of
FCC approval and the expiration or earlier termination of the HSR Act waiting
period, the acquisition is expected to be consummated in the third quarter of
1997.
In April 1997, American entered into an agreement to sell KKSJ-AM for
approximately $3.2 million in cash. Subject to certain conditions, including
the receipt of FCC approval, the acquisition is expected to be consummated in
the third quarter of 1997.
See "--Portland" above for information concerning the proposed exchange of
KBAY-FM serving San Jose and another station for, among other things, KBRG-FM,
serving Fremont.
West Palm Beach: In August 1995, American purchased options to acquire WSTU-
AM in Stuart and WHLG-FM (which is in the process of constructing a signal
upgrade) in Jensen Beach, the latter of which is in the same radio market as
West Palm Beach, for an aggregate purchase price of approximately $7.2 million.
Because American was prevented under then current FCC regulations from
acquiring these stations, it assigned its acquisition rights to Palm Beach
Broadcasting. American loaned Palm Beach Broadcasting approximately $7.2
million to finance the acquisitions. Palm Beach Broadcasting also owns WPBZ-FM,
as a result of an earlier assignment of the right to acquire such station by
American. In November 1996, Palm Beach Broadcasting sold
45
<PAGE>
WSTU-AM to a third party. American expects to exercise its option to acquire
the stations or to enter into a merger agreement with Palm Beach Broadcasting
pursuant to which it will acquire WHLG-FM and WPBZ-FM and, in addition to the
cancellation of loans (including the $8.0 million loan used to finance the
acquisition of WBLK-FM, serving Buffalo which will also be acquired) in the
aggregate principal amount of $25.3 million, will pay approximately $3.0
million in cash for such stations (and WBLK- FM). Subject to certain
conditions, including the receipt of FCC approval and the expiration or earlier
termination of the HSR Act waiting period, American expects to consummate the
acquisition or merger in the second half of 1997.
American expects to enter into an agreement in April 1997 to sell WKGR-FM,
WOLL-FM, WBZT-AM and WEAT-AM serving West Palm Beach for approximately $33.0
million. Subject to certain conditions, including the signing of a definitive
agreement, the receipt of FCC approval and the expiration or earlier
termination of the HSR Act waiting period, American expects to consummate the
sale in the third quarter of 1997.
In December 1996, American acquired an option to purchase another station
serving West Palm Beach for approximately $11.0 million. American also agreed
to loan up to $150,000 to the party to this option agreement. American intends
to exercise the option and subject to certain conditions, including the receipt
of FCC approval, American expects to consummate the acquisition in the third
quarter of 1997.
Omaha: In October 1996, American entered into an agreement, as amended, to
sell KGOR-FM, KFAB-AM and Business Music Service for approximately $38.0
million. FCC approval has been received and the HSR Act waiting period was
terminated early. American expects to consummate the sale in the second quarter
of 1997.
Rochester: In February 1997, American entered into an agreement to sell WCMF-
AM for approximately $0.7 million. FCC approval has been obtained and American
expects to consummate the acquisition in the second quarter of 1997.
Riverside/San Bernardino: In April 1997, American entered into an agreement
to acquire KFRG-FM, serving the Riverside/San Bernardino market, and KXFG-FM,
serving Sun City, California, for approximately $60.0 million in cash. Subject
to the receipt of FCC approval and expiration or earlier termination of the HSR
Act waiting period, the acquisition is expected to be consummated in the first
quarter of 1998.
Other Transactions
American has entered into letters of intent to acquire six stations (four FM
and two AM) for an aggregate purchase price of approximately $17.2 million. For
information with respect to letters of intent relating to the acquisition of
affiliated companies owning and managing tower communication sites, see "--
Tower Subsidiary" below. The transactions contemplated by such letters of
intent have not been included in the American Probable Transactions or
reflected in the Pro Forma Financial Information included in this Prospectus
because of, among other things, the absence of definitive purchase and sale
agreements. While American continues to discuss possible acquisitions and
exchanges of radio stations, American has no binding agreements or letters of
intent with respect to any such acquisition or exchange other than as described
elsewhere in this Prospectus.
Tower Subsidiary
In July 1995, American organized the Tower Subsidiary to acquire, own and
operate telecommunications antenna sites and towers, principally for other
radio and telecommunications operators. In February 1996, the Tower Subsidiary
acquired Skyline Communications Limited Partnership and Skyline Antenna
Management, Inc. in exchange for an aggregate of 26,989 shares of its Class A
Common Stock, then valued at approximately $0.8 million, $2.2 million in cash
and the assumption of approximately $0.3 million of long-term debt which was
paid in full at closing. Skyline Communications Limited Partnership owns eight
towers, six in West Virginia and two in Northern Virginia. Skyline Antenna
Management, Inc. manages more than 200 antenna sites, primarily in the
northeast region of the United States.
46
<PAGE>
In April 1996, the Tower Subsidiary acquired BDS Communications, Inc. and
BRIDAN Communications Corporation for 257,495 shares of its Class A Common
Stock, then valued at approximately $7.4 million, and the assumption of $1.7
million of long-term debt of which $1.5 million was paid at closing. BDS
Communications, Inc. owns three towers in Pennsylvania and BRIDAN
Communications Corporation manages or has sublease agreements on approximately
40 tower sites located throughout the mid-Atlantic Region.
In July 1996, the Tower Subsidiary became a member of a limited liability
company with an unaffiliated party relating to the ownership and operation of a
tower site in Needham, Massachusetts. In connection with such agreement,
American Tower advanced approximately $3.8 million and acquired a 50.1%
interest in the limited liability company.
In October 1996, the Tower Subsidiary acquired tower sites located in
Hampton, Virginia and North Stonington, Connecticut for approximately $1.4
million and $1.0 million, respectively.
In November 1996, the Tower subsidiary acquired for approximately $0.3
million a 32.5% interest in a partnership which owns and operates a tower site
in Los Angeles, California.
In December 1996, American transferred its towers and tower sites in
Philadelphia (acquired as part of the Marlin Transaction and not included in
the Secret Transaction) and in Peabody, Massachusetts to the Tower Subsidiary.
In February 1997, the Tower Subsidiary entered into asset purchase agreements
with three entities that are affiliated with each other (the "Meridian
Transaction") to purchase tower sites and a tower site management business in
southern California for an aggregate purchase price of approximately $32.1
million. Consummation of the transaction is conditioned on, among other things,
the expiration or earlier termination of the HSR Act waiting period. Subject to
such contingencies, the acquisitions are expected to be consummated in the
second quarter of 1997.
In December 1996, the Tower Subsidiary entered into letters of intent with
two entities which are affiliated with each other, to acquire tower sites and a
tower site management business primarily in northern California for
approximately $42.0 million. In connection therewith, American agreed to loan
up to $1.35 million to the sellers on an unsecured basis. Consummation of the
transaction is conditioned on, among other things, negotiation and execution of
definitive purchase and sale agreements and the expiration or earlier
termination of the HSR Act waiting period. Subject to such execution and
expiration or termination, the acquisitions are expected to be consummated in
the second quarter of 1997.
In March 1997, the Tower Subsidiary entered into a letter of intent to
purchase an aggregate of 21 tower sites and a tower site management business in
Georgia, North Carolina and South Carolina for approximately $5.3 million. The
agreement will also provide for additional payments if the seller is able to
arrange the purchase
or management of tower sites presently owned by an unaffiliated public utility
in South Carolina, which payments are estimated could aggregate up to
approximately $1.2 million. Consummation of the transaction is conditioned on,
among other things, negotiation and execution of definitive purchase and sale
agreement. Subject to such execution, the acquisition is expected to be
consummated in the second quarter of 1997.
In March 1997, the Tower Subsidiary entered into a letter of intent to
acquire two companies that are affiliated with one another and are engaged in
the business of acquiring and developing tower sites for unaffiliated third
parties in various locations in the United States for approximately $12.5
million. Consummation of the transaction is conditioned on, among other things,
negotiation and execution of definitive purchase and sale agreement. Subject to
such execution, the acquisition is expected to be consummated in the second
quarter of 1997.
In March 1997, the Tower Subsidiary entered into a letter of intent to
acquire the assets of a company relating to 63 sites in northern California on
which communication towers are to be constructed. The letter of intent provides
for the formation of a joint venture with the seller to construct the towers in
which the Tower Subsidiary would own 70% and the seller would own 30%. The
seller would also receive approximately $1.1
47
<PAGE>
million in cash. The Tower Subsidiary is obligated to provide equity financing
for construction of those towers as well as any others that the joint venture
may construct in the future. Consummation of the transaction is conditioned on,
among other things, negotiation and execution of definitive purchase and sale
agreement and joint venture agreement. Subject to such execution, the
acquisition is expected to be consummated in the second quarter of 1997.
In November 1996, the Tower Subsidiary entered into the Tower Credit
Agreement with The Toronto-Dominion Bank, as agent, and the banks named therein
relating to a $90.0 million eight-year secured revolving credit facility.
Equity and Debt Financings
February Public Offerings. In February 1996, American consummated an offering
of 5,514,707 shares of Class A Common Stock at an offering price of $27 per
share, including 4,501,337 shares sold by American and 1,013,370 shares sold by
the selling stockholders. Proceeds to American, net of underwriters' discount
and associated costs, were approximately $114.5 million. Concurrent with the
stock offering, American sold $175,000,000 principal amount of the American
Notes at a discount of $1,419,250 to yield 9.125%. Proceeds of the debt
offering to American, net of the underwriters' discount and associated costs,
were approximately $167.5 million.
June Private Offering. In June 1996, American consummated an offering exempt
from registration under the Securities Act of 137,500 shares of Convertible
Preferred Stock. Net proceeds to American from the offering were approximately
$132.8 million. The Convertible Preferred Stock is convertible into shares of
Class A Common Stock at a conversion price of $42.50, subject to adjustment for
certain dilutive stock issuances, and exchangeable at American's option after
June 30, 1997 for the Convertible Exchange Debentures which are convertible
into Class A Common Stock on the same terms as the Convertible Preferred Stock.
Original Offering. In January 1997, American consummated the Original
Offering. Net proceeds to American from the offering were approximately $192.4
million.
Credit Agreements. In January 1997, American entered into the Credit
Agreements pursuant to which American may borrow a maximum combined principal
amount of $900.0 million, of which $150.0 million is available only to finance
the repurchase of American-EZ Notes. See "Indebtedness of American".
48
<PAGE>
OPERATIONS
The following table sets forth information about each of American's stations
and each of the stations which will be owned by American upon consummation of
the American Probable Transactions.
<TABLE>
<CAPTION>
STATION RANK STATION
MARKET MARKET STATION PRIMARY IN PRIMARY RANK IN
RANKING BY REVENUE BROADCASTING DEMOGRAPHIC DEMOGRAPHIC ADULTS
MARKET/STATION(1) REVENUE(2) RANK(2) FORMAT TARGET(3) TARGET(4) 25-54(4)
----------------- ---------- ------- ------------ ------------ ------------ --------
<S> <C> <C> <C> <C> <C> <C>
BOSTON, WORCESTER MA.... 9 2
WBMX-FM................ Modern Adult Contemporary Women 25-44 3 6
WEEI-AM................ Sports/Talk Men 35-54 2 9
WRKO-AM................ Talk Adults 35+ 2 13
WEGQ-FM................ 70's Oldies Adults 25-44 8 14
WAAF-FM................ Album Oriented Rock Men 18-34 2 16
WWTM-AM................ Sports/Talk Men 35-54 -- --
SEATTLE, WA............. 13 2
KMPS-FM................ Country Adults 25-54 2 2
KZOK-FM................ Classic Rock Men 25-54 1+ 4
KYCW-FM................ Country Adults 18-34 9+ 9
KBKS-FM................ Rhythmic Adult Contemporary Adults 18-34 9+ 16
KRPM-AM(5)............. Rhythmic Adult Contemporary Adults 18-34 -- --
ST. LOUIS, MO........... 18 1
KEZK-FM................ Adult Contemporary Women 25-54 1 2
KYKY-FM................ Adult Contemporary Women 25-54 2 5
KSD-FM................. Classic Rock Men 25-54 6+ 9
KFNS-AM................ Sports/Talk Men 25-54 -- --
BALTIMORE, MD........... 21 1
WQSR-FM................ 60's Oldies Adults 35-54 1 1
WWMX-FM................ Hot Adult Contemporary Women 25-44 1 2
WOCT-FM................ 70's Oldies Adults 25-44 7 7
WBGR-AM................ Religious Adults 18+ -- --
WBMD-AM................ Religious Adults 18+ -- --
CINCINNATI, OH.......... 20 2
WGRR-FM................ Oldies Adults 35-64 1 4
WKRQ-FM................ Contemporary Hit Radio Adults 18-34 3 8
PORTLAND, OR............ 22 1
KUPL-FM................ Country Adults 25-54 4+ 4+
KINK-FM*............... Adult Album Alternative Men 25-54 6 7+
KUFO-FM................ Album Oriented Rock Men 18-34 1 9
KBBT-FM................ Modern Adult Contemporary Adults 18-34 4 12
KKJZ-FM................ Smooth Jazz Adults 35-54 9 13
KUPL-AM................ Country Adults 25-54 -- --
PITTSBURGH, PA.......... 24 2
WDSY-FM*............... Country Adults 25-54 2 2
WBZZ-FM................ Contemporary Hit Radio Adults 18-34 3 5
WZPT-FM................ 70's Oldies Adults 25-54 12 12
SACRAMENTO, CA.......... 25 1
KSFM-FM................ Contemporary Hit Radio Adults 18-34 2 4
KNCI-FM................ Country Adults 25-54 5 5
KQPT-FM................ Modern Adult Contemporary Women 25-44 3 6
KYMX-FM................ Soft Adult Contemporary Women 35-54 3+ 10
KHTK-AM................ Talk/Sports Adults 25-54 12 12
KRAK-FM................ Country Adults 25-54 13 13
KCTC-AM................ Nostalgia Adults 45+ 2 19
KQPT-AM................ Oldies Adults 35-54 18+ 20+
</TABLE>
49
<PAGE>
<TABLE>
<CAPTION>
STATION RANK STATION
MARKET MARKET STATION PRIMARY IN PRIMARY RANK IN
RANKING BY REVENUE BROADCASTING DEMOGRAPHIC DEMOGRAPHIC ADULTS
MARKET/STATION(1) REVENUE(2) RANK(2) FORMAT TARGET(3) TARGET(4) 25-54(4)
----------------- ---------- ------- ------------ ------------ ------------ --------
<S> <C> <C> <C> <C> <C> <C>
CHARLOTTE, NC........... 27 1
WSOC-FM................ Country Adults 25-54 2 2
WPEG-FM*............... Urban Adults 18-34 1 5+
WSSS-FM................ 70's Oldies Adults 25-49 6 7
WBAV-FM*............... Urban Adults 25-54 9 9
WNKS-FM*............... Contemporary Hit Radio Adults 18-34 3 11
WBAV-AM*............... Urban Adults 25-54 16+ 16+
WFNZ-AM*............... Sports Adults 25-54 21 21
KANSAS CITY, MO......... 29 3
KFKF-FM................ Country Adults 25-54 2 2
KBEQ-FM................ Country Adults 18-34 3 4+
KOWW-AM................ Talk Adults 35+ -- --
HARTFORD, CT............ 35 1
WRCH-FM................ Soft Adult Contemporary Women 35-54 1 1
WTIC-AM................ News/Talk Adults 35+ 1 2
WTIC-FM................ Contemporary Hit Radio Adults 18-34 2 4
WZMX-FM................ 70's Oldies Adults 25-44 4 6+
AUSTIN, TX.............. 37 4
KKMJ-FM................ Soft Adult Contemporary Women 35-54 1+ 3
KAMX-FM................ Hot Adult Contemporary Women 25-44 6 11
KJCE-AM................ Urban Adult Contemporary Adults 35-54 14+ 15+
LAS VEGAS, NV........... 39 2
KMZQ-FM................ Soft Adult Contemporary Women 35-54 2 2
KLUC-FM................ Contemporary Hit Radio Adults 18-34 1 3
KMXB-FM................ Modern Adult Contemporary Women 25-44 5 10
KXTE-FM................ Alternative Rock Adults 18-34 5 11
KXNT-AM................ Sports/Talk Men 35-54 -- --
KXNO-AM................ Casino Adults 18+ -- --
BUFFALO, NY............. 42 2
WJYE-FM................ Soft Adult Contemporary Women 35-54 1 2
WYRK-FM................ Country Adults 25-54 3+ 3+
WBLK-FM*............... Urban Adults 18-34 4 9
WSJZ-FM(6)............. Modern Adult Contemporary Women 25-44 N/A 11
WECK-AM................ Big Band Adults 45+ 2 12
SAN JOSE, CA............ 43 1
KSJO-FM................ Album Oriented Rock Men 18-34 1 2
KEZR-FM*............... Adult Contemporary Women 35-54 13+ 4
KBRG-FM*(7)............ Undetermined at Present Undetermined N/A N/A
KUFX-FM*(7)............ Soft Adult Contemporary Women 35-54 N/A N/A
KLUE-FM*(7)............ Hot Adult Contemporary Women 25-44 -- --
WEST PALM BEACH, FL..... 49 2
WEAT-FM................ Soft Adult Contemporary Women 35-54 2 2
WIRK-FM................ Country Adults 25-54 3 3
WPBZ-FM*............... Alternative Rock Adults 18-34 1 5
WMBX-FM*(8)............ Modern Adult Contemporary Women 25-44 -- --
ROCHESTER, NY........... 53 1
WRMM-FM................ Soft Adult Contemporary Women 35-54 1 3
WCMF-FM................ Album Oriented Rock Men 18-34 1 4
WPXY-FM................ Contemporary Hit Radio Adults 18-34 1 5
WZNE-FM(9)............. Modern Adult Contemporary Women 25-44 -- --
DAYTON, OH.............. 58 1
WMMX-FM................ Hot Adult Contemporary Women 25-44 1 2
WLQT-FM................ Soft Adult Contemporary Women 35-54 3 3
WTUE-FM................ Album Oriented Rock Men 18-34 1 5
WBTT-FM................ Contemporary Hit Radio Adults 18-34 5 10
WXEG-FM................ Alternative Rock Adults 18-34 4 11
WONE-AM................ Nostalgia Adults 45+ 3 16+
</TABLE>
50
<PAGE>
<TABLE>
<CAPTION>
STATION RANK STATION
MARKET MARKET STATION PRIMARY IN PRIMARY RANK IN
RANKING BY REVENUE BROADCASTING DEMOGRAPHIC DEMOGRAPHIC ADULTS
MARKET/STATION(1) REVENUE(2) RANK(2) FORMAT TARGET(3) TARGET(4) 25-54(4)
----------------- ---------- ------- ------------ ------------ ------------ --------
<S> <C> <C> <C> <C> <C> <C>
FRESNO, CA.............. 62 1
KMJ-AM................. News/Talk Adults 35+ 1 1
KSKS-FM................ Country Adults 25-54 5 5
KVSR-FM................ Modern Adult Contemporary Women 25-44 6+ 8+
KNAX-FM................ Country Adults 25-54 11 11
KOQO-FM................ Spanish Adults 18-54 9 12+
KKDJ-FM................ Spanish Romance Adults 18-54 13 14
KOQO-AM................ Spanish Adults 18-54 -- --
RIVERSIDE/SAN
BERNARDINO, CA......... 64 1
KFRG-FM*............... Country Adults 25-54 1 1
KXFG-FM*(10)........... Country Adults 25-54 -- --
</TABLE>
- --------
N/A Not applicable.
* Included in American Probable Transactions. Several of these stations are
being programmed and marketed by American, pursuant to LMAs.
+ Tied.
(1) Actual community of license may differ from the metropolitan market served.
This listing and the accompanying notes to not correspond top the formal
call signatures recognized by the FCC, which do not include the "-AM"
suffix or, in most instances, the "-FM" suffix.
(2) "Market Ranking by Revenue" is the ranking of the principal radio market
served by the station among all radio markets in the United States, by 1996
market revenue, according to the Duncan Guide. "Market Revenue Rank" is the
ranking of American's station group (currently owned or operated and giving
effect to the American Probable Transactions) among all radio stations in
its market by gross radio revenue (excluding trade items) for 1996,
according to the Duncan Guide. American has attempted to recompute Market
Revenue Rank and Market Revenue Percent of its competitors based on
consummated or announced acquisitions of such competitors. However, there
can be no assurance that American is aware of all such acquisitions.
Accordingly, the Market Revenue Rank of American's stations shown may not
necessarily be the same were all such competitor's acquisitions taken into
account.
(3) Due to variations that may exist within the same station programming format
(such as variations in the tempo of the music or the age of the songs
broadcast), the primary demographic target may be different even though the
station programming format is the same.
(4) "Station Rank in Primary Demographic Target" is the ranking of the station
among all radio stations in its market that are ranked in its target
demographic group and is based on the station's average persons share in
the primary demographic target in the applicable Metro Survey Area, Average
Quarter Hour Share, Monday through Sunday, 6:00 A.M. to Midnight, according
to the Fall 1996 Arbitron reports. Arbitron is the generally accepted
industry source for statistical information concerning audience ratings.
The table includes stations having at least a 0.1% market share. Due to the
nature of listener surveys, other radio rating services may report
different rankings; however, American does not believe that any radio
rating service other than Radio Arbitron prepared by the Arbitron Company
("Arbitron")* is accorded significant weight in the radio broadcast
industry. "Station Rank in Adults 25-54" is also based on the Fall 1996
Radio Arbitron reports (the "Fall 1996 Arbitron reports"). The information
provided herein regarding Arbitron's audience listening estimates is based
on Arbitron's copyrighted and proprietary data and estimates concerning the
applicable station's average quarter hour persons share, Monday-Sunday,
6:00 A.M.-Midnight, from the applicable Fall 1996 Arbitron reports for the
demographic, daypart and metro areas listed. Stations referenced herein are
ranked according to calculations made by Arbitron based on Arbitron's data
and estimates for stations that have met Arbitron's minimum reporting
standards for the applicable market and survey.
(5) Simulcast with KBKS-FM.
(6) WSJZ-FM underwent a format change in April 1997; Arbitron figures reflect
prior format.
(7) KBRG-FM is licensed to Fremont, California and serves the Fremont/San
Francisco area. KUFX-FM will continue the programming of, and change its
call letters to, KBAY-FM. KLUE-FM is licensed to broadcast in Soledad,
California, which is not a part of the San Jose market and is not expected
to have an impact in San Jose.
(8) Formerly WHLG-FM. Relaunched as Modern Adult Contemporary in January 1997.
(9) WZNE-FM (formerly WAQB-FM) is a newly licensed Class A FM station which
went on-the-air in December 1996.
(10) KXFG-FM is licensed to Sun City, California and went on-the-air in
February 1997. The station is simulcast with KFRG-FM.
- --------
* Copyright 1996, The Arbitron Company. All Rights Reserved.
ADVERTISING SALES
Virtually all of American's revenues are generated from the sale of local and
national advertising for broadcast on its radio stations. During 1996,
approximately 77% and 23% of American's net revenues were generated from local
and national advertising, respectively. American's revenues vary throughout the
year, with the first calendar quarter historically producing the lowest
revenues for the year and each of the other quarters producing roughly
equivalent revenues.
American believes that radio is an efficient and cost-effective means for
advertisers to reach specific demographic groups. Advertising rates charged by
radio stations are based primarily on (i) a station's share of the audience in
the demographic groups targeted by advertisers, (ii) the number of stations and
alternative media (electronic, print and others) in the market competing for
the same demographic groups, and (iii) the supply of
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and demand for radio advertising time, and the supply of and demand for
advertising in alternative media. Rates are generally highest during morning
and afternoon commuting hours.
American believes that operating several radio stations in each of its
markets will enable its sales teams to offer advertisers more attractive
advertising packages. Furthermore, as radio station groups achieve significant
audience shares, they can deliver the audience reach to advertisers that
historically only television and newspapers could offer, with the added
benefit of frequent exposure to advertisers' potential customers. Management
believes that American's station groups, and their corresponding audience
shares, provide opportunities to capture an increased share of total
advertising revenue in each of American's markets.
Depending on the format of a particular station, there are predetermined
numbers of advertisements that are broadcast each hour. American determines
the number of advertisements broadcast hourly that can maximize available
revenue dollars without jeopardizing listening levels. Although the number of
advertisements broadcast during a given time period may vary, the total number
of advertisements broadcast on a particular station generally does not vary
significantly from year to year. As is typical of the broadcasting industry,
American's stations respond to changing demand for advertising inventory by
varying prices based on supply and demand rather than by varying the target
inventory level (and potentially jeopardizing audience levels) for a
particular station.
Local and most regional advertising sales are made by a station's sales
staff. To achieve greater access to potential advertising dollars, American's
sales force focuses on establishing direct relationships with local
advertisers. National sales are made by firms specializing in such sales which
are compensated on a commission-only basis. The majority of advertising
contracts run for only a few weeks.
Advertising sales in connection with its sports network generated
approximately 8% of American's revenues during 1996. American believes that
live sports event broadcasting, absent unusual circumstances, is a relatively
stable source of advertising revenues. Because only one radio station can
offer a particular game, the station carrying the game achieves a higher
degree of differentiation from its competitors. In addition, due to the higher
degree of audience predictability, sports advertisers tend to sign contracts
which are generally longer term and more stable than those with American's
other advertisers. American's sports network also benefits from a dedicated
and experienced sales force that has specialized expertise in sports
advertising.
American believes its multi-station combinations give it significant
advantages in the competition for advertising dollars. A leading group in a
market better positions American to access a significant share of various
demographic segments, making its stations more attractive to advertisers
seeking to reach a given segment. In addition, management believes the larger
size of the American organization attracts a higher quality sales force, a key
asset for the profitability of a radio station.
COMPETITION
Radio broadcasting is a highly competitive business. Each of American's
radio stations competes for audience share and advertising revenue directly
with other radio stations, as well as with other media such as newspapers,
broadcast and cable television, magazines, billboards, direct mail, compact
discs and music videos. There are typically other well-capitalized firms
competing in the same geographic markets as American, many of which have
substantial financial resources. With the elimination of restrictions on the
number of radio stations which may be owned nationally by a single entity and
the liberalization of local ownership restrictions effected by the
Telecommunications Act, the radio industry is experiencing a consolidation of
ownership, as a result of which competition may intensify as companies with
substantial resources emerge.
The financial success of each of American's radio stations is dependent
principally upon its share of the overall advertising revenue within its
geographic market, its promotion and other expenses incurred to obtain that
revenue and the economic health of the geographic market. A radio station's
advertising revenues are, in turn, highly dependent upon audience share.
Audience share is influenced by factors including: changes in listener
preference, audience migration to other media supplying music, news and other
entertainment and the programming decisions and promotional efforts of
competing stations in American's markets. The broadcast cash
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flow of American's affected stations could decrease due to increased
promotional and other expenses incurred in response to changes in its markets
and/or lower advertising revenues resulting from lower ratings.
In addition to management experience, factors that may materially influence
a station's competitiveness include audience characteristics, local program
acceptance and the characteristics of other stations in the market area.
American attempts to improve its competitive position in each market by
devoting extensive research to its stations' programming, implementing
advertising campaigns aimed at the demographic groups for which its stations
program and managing its sales efforts to attract a larger share of
advertising dollars.
As noted above, radio broadcasting is also subject to competition from
electronic and print media. Potential advertisers can substitute advertising
through broadcast television, cable television systems (which can offer
through cable interconnects concurrent exposure on a number of cable networks
to enlarge the potential audience), daily, weekly and free-distribution
newspapers, other print media, direct mail and on-line computer services for
radio advertising. Competing media frequently target the customers of their
competitors, and advertisers regularly shift dollars from radio to these
competing media and vice versa.
Radio broadcasting is also subject to competition from new media
technologies that are being developed or introduced, such as the delivery of
audio programming by cable television systems or the introduction of DAB. DAB
may deliver to nationwide and regional audiences by satellite multi-channel,
multi-format digital radio services with sound quality equivalent to compact
discs. The FCC has allotted and auctioned spectrum for DAB to two companies
that plan to implement DAB within the next five years. American cannot predict
the effect, if any, that any such new technologies may have on the radio
broadcasting industry. Another possible competitor to traditional radio is
IBOC digital radio. IBOC could provide multi- channel, multi-format digital
radio services in the same bandwidth currently occupied by traditional FM
radio services. See "--Federal Regulation of Radio Broadcasting". See "--
Federal Regulation of Radio Broadcasting" for information concerning
additional competitions from other media, entertainment and telecommunication
companies which might be able to enter the radio broadcasting industry in the
event of legislative or regulatory change. The radio broadcasting industry
historically has grown in terms of total revenues despite the introduction of
new technologies for the delivery of entertainment and information, such as
television broadcasting, cable television, audio tapes and compact disks.
There can be no assurance that any of American's radio stations will be able
to maintain or increase its current audience share and advertising revenue
share.
EMPLOYEES
At April 15, 1997, American employed approximately 2,631 employees
(approximately 1,883 full time and approximately 748 part time persons).
American has three agreements with the American Federation of Television and
Radio Artists ("AFTRA") covering various on-air personnel at four of its
Boston stations, at two of its Hartford stations and one of its Cincinnati
stations. American also has agreements with the International Brotherhood of
Electrical Workers, AFL-CIO ("IBEW") in Boston expiring on April 30, 1997 and
in Fresno, which expired on March 1, 1997 and is currently in negotiation.
American considers its relations with its employees, AFTRA and IBEW to be
satisfactory. See "Risk Factors--Dependence on Key Personnel" for information
with respect, among other things, to the dependence of American upon the
performance of certain key individuals, particularly the executive officers
and general managers and high-profile on-air announcers of its stations.
COMMUNITY INVOLVEMENT
American considers its community involvement to be of considerable
importance, and, to that end, each of its stations participates in many
community programs, fund raisers and activities that benefit a wide variety of
organizations. Charitable organizations that have been the beneficiaries of
American's telethons, marathons, walkathons, swimathons, parades, food banks,
fairs and festivals include, among others, the American Cancer Society,
American Heart Association, Big Brothers, Big Sisters, Red Cross, United Way,
Salvation Army, Jimmy Fund (Dana Farber Cancer Institute), St. Jude's Hospital
and many other organizations.
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FEDERAL REGULATION OF RADIO BROADCASTING
The radio broadcasting industry is subject to extensive and changing
regulatory oversight, governing among other things, technical operations,
ownership and business and employment practices, and certain types of program
content (including indecent and obscene program material).
The ownership, operation and sale of radio broadcast stations (including
those licensed to American) are subject to the jurisdiction of the FCC, which
acts under authority granted by the Communications Act. The Communications Act
prohibits the assignment of an FCC license or any transfer of control of an
FCC licensee without the prior written approval of the FCC. In determining
whether to grant requests for consents to such assignments or transfers, and
in determining whether to grant or renew a radio broadcast license, the FCC
considers a number of factors pertaining to the licensee (and proposed
licensee) including compliance with alien ownership restrictions and rules
governing the multiple ownership and cross-ownership of broadcast and other
media properties, the "character" of the applicant and those persons or
entities holding "attributable" interests in the applicant and compliance with
the Anti-Drug Abuse Act of 1988. Among other things, the FCC assigns frequency
bands for radio broadcast stations; issues, renews, revokes and modifies radio
broadcast station licenses; regulates transmitting equipment used by radio
broadcast stations; and adopts and implements regulations and policies that
directly or indirectly affect the ownership, operation, program content and
employment and business practices of radio broadcast stations. The FCC also
has the power to impose penalties for violations of its rules and the
Communications Act.
On February 8, 1996, the President signed the Telecommunications Act which
substantially amended the Communications Act. The Telecommunications Act,
among other things, eliminated the national radio broadcast ownership
restrictions in the FCC's broadcast ownership regulations and raised the
ceiling on the number of radio broadcast stations that a single entity may own
in a local radio market. The precise number of stations that may be commonly
owned in a particular local market depends upon the number of commercial radio
stations serving the local market.
The following is a brief summary of certain provisions of the Communications
Act and specific FCC rules and policies. Reference should be made to the
Communications Act, the FCC's rules and the public notices and rulings of the
FCC for further information concerning the nature and extent of federal
regulation of radio broadcast stations.
License Renewal. Under present FCC rules, radio broadcast licenses are
granted for maximum terms of eight years and upon application may be renewed
for additional terms. Broadcast licenses may be renewed through an application
to the FCC and licensees are entitled to renewal expectancies. The
Communications Act authorizes the filing of petitions to deny a license
renewal application during specified periods after the renewal application has
been filed. Interested parties, including members of the public, may file
petitions as a means to raise issues concerning the renewal applicant's
qualifications. The FCC may not consider applications for the channel by other
parties until it first has decided to deny renewal to the incumbent. Before
denying renewal to an incumbent, the FCC must allow the licensee a hearing on
the licensee's alleged failure to satisfy the statutory standard. The
Communications Act now prohibits the FCC from considering whether another
licensee would be preferable until it first has determined that the incumbent
does not qualify for renewal. In the vast majority of cases the FCC has
renewed incumbent operators' station licenses. Also, during certain periods
when a renewal application is pending, the transferability of the applicant's
license may be restricted. American is not aware of any facts or circumstances
that would prevent it from obtaining renewal of the radio broadcast licenses
that it holds. There can be no assurance, however, that each of American's
licenses will necessarily be renewed.
The current expiration date of American's stations (including the American
Probable Transactions) is as follows: Boston--April 1998; Seattle--February
1998; Baltimore--October 2003; Cincinnati--October 2004; Portland--February
1998; Pittsburgh--August 1998; Sacramento--December 1997; Kansas City--June
1997; Charlotte--December 2003; Hartford--April 1998; Buffalo--June 1998; Las
Vegas--October 1997; San Jose--December 1997; West Palm Beach--February 2004;
Rochester--June 1998; Dayton--2004, Fresno--December 1997; and Riverside/San
Bernardino--December 1997. Applications are pending for the renewal of
licenses for certain of the St. Louis and Kansas City stations and all of the
Austin stations.
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Ownership Matters. The FCC's broadcast multiple ownership rules restrict the
number of radio broadcast stations one person or entity may own, operate or
control in a local market. The Telecommunications Act eliminated all of the
FCC's restrictions on the number of FM and AM radio stations that an entity may
own nationwide. The Telecommunications Act also raised the limitation on the
number of radio broadcast stations that a single entity may own in a given
local market, as follows:
(i) In radio markets with 14 or fewer commercial radio stations, one person
or entity may hold attributable interests in up to five radio stations,
no more than three of which may be in any one service (i.e., AM or FM),
as long as the commonly owned stations amount to no more than 50% of
the commercial radio stations in that market;
(ii) In radio markets with between 15 and 29 commercial radio stations, one
person or entity may hold attributable interests in up to six radio
stations, no more than four of which may be in any one service;
(iii) In radio markets with between 30 and 44 commercial radio stations,
one person or entity may hold attributable interest in up to seven radio
stations, no more than four of which may be in any one service; and
(iv) In radio markets with 45 or more commercial radio stations, one person
or entity may hold attributable interests in up to eight radio stations,
no more than five of which may be in any one service.
The FCC rules also generally restrict the common ownership, operation or
control of (i) a radio broadcast station and a television broadcast station
serving the same local market, and (ii) a radio broadcast station and a daily
newspaper serving the same local market. Under these "cross-ownership" rules,
American, absent waivers, would not be permitted to acquire an attributable
interest in any daily newspaper or television broadcast station (other than a
low-power television station) in a local market where it then owned any radio
broadcast station. American is not aware of any reason why these cross-
ownership rules would require any change in American's current ownership of
radio broadcast stations.
Programming and Operation. The Communications Act requires broadcasters to
serve the "public interest". A broadcast licensee is required to present
programming in response to community problems, needs and interest and to
maintain certain records demonstrating its responsiveness. The FCC will
generally consider complaints from listeners concerning a broadcast station's
programming when it evaluates the licensee's renewal application, but such
complaints may be filed and considered at any time. Stations also must follow
various FCC rules that regulate, among other things, political advertising, the
broadcast of obscene or indecent programming, sponsorship identification, the
broadcast of contests and lotteries and technical operation (including limits
on human exposure to radio frequency energy). From time to time, complaints
have been and may be filed against American's stations alleging violations of
these or other rules. A complaint is pending against a station licensed to
American alleging violation of the political broadcasting rules by
discriminatory political sales practices. American believes that these
complaints will not, either separately or in the aggregate, result in either
monetary forfeitures of a material nature or any other regulatory action which
might have a materially adverse effect on American's stations or FCC licenses.
In addition, licensees must develop and implement programs designed to
promote equal employment opportunities and must submit reports to the FCC on
these matters annually and in connection with the licensee's renewal
application. The FCC has begun a rule making proceeding to revise its equal
employment opportunity rules. At this time, however, American cannot predict
what changes, if any, the FCC will implement, or the effect of those changes on
American's current equal employment opportunity programs.
Local Marketing Agreements. In recent years, a number of radio stations,
including certain of American's stations, have entered into what are referred
to as "local marketing agreements" ("LMAs"), "time brokerage agreements"
("TBAs") or joint sales and service agreements. These agreements take various
forms. Separately
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owned and licensed stations may agree to function cooperatively with respect
to certain other matters, subject to compliance with the antitrust laws and
the FCC's rules and policies, including the requirement that the licensee of
each station maintain independent control over the programming and other
operations of its own station. The FCC has held that such agreements do not
violate the Communications Act as long as the licensee of the radio broadcast
station that is being substantially programmed by another entity maintains
complete responsibility for, and control over, operations of its station and
otherwise ensures compliance with applicable FCC rules and policies. A radio
broadcast station that brokers time on another radio broadcast station or
engages in a TBA or LMA with a radio broadcast station in the same market will
be considered to have an attributable ownership interest in the brokered radio
station for purposes of the FCC's multiple ownership rules, if the arrangement
covers more than 15% of the brokered station's weekly broadcast hours.
Failure to observe these or other FCC rules and policies may result in the
imposition of various sanctions, including admonishment, fines, the grant of
"short" (less than the full) renewal terms or, for particularly egregious
violations, the denial of a license renewal application, the revocation of FCC
licenses or the denial of FCC consent to acquire additional broadcast
properties.
Digital Audio Broadcasting. The FCC recently has allocated spectrum to a new
technology, DAB to deliver satellite-based audio programming to a national or
regional audience. The FCC has issued regulations for a DAB service and has
auctioned the allocated spectrum to two companies that plan to initiate
service within five years. DAB may provide a medium for the delivery by
satellite or terrestrial means of multiple new audio programming formats with
compact disc quality sound to local and national audiences. Another form of
DAB, known as IBOC, is being developed by the radio industry and could provide
DAB in the present FM radio band. Implementation of DAB would provide an
additional audio programming service that could compete with American's radio
stations for listeners, but the effect upon American cannot be predicted.
Future Changes. The Congress and the FCC have under consideration, and may
in the future consider and adopt, new laws, regulations and policies regarding
a wide variety of matters that could, directly or indirectly: (i) affect the
operation, ownership and profitability of American and its radio stations;
(ii) result in the loss of audience share and advertising revenue of
American's radio stations; and (iii) affect the ability of American to acquire
additional radio stations or finance such acquisitions. Such matters include,
but are not limited to, for example, changes to the license renewal process;
proposals to impose spectrum use or other governmentally-imposed fees upon
licensees; proposals to repeal or modify some or all of the FCC's multiple
ownership rules and/or policies; proposals to permit expanded use of FM
translator stations; proposals to restrict or prohibit the advertising of
beer, wine and other alcoholic beverages on radio and television; changes in
the FCC's cross-interest, multiple ownership, alien ownership and cross-
ownership rules and policies; changes to broadcast technical requirements;
proposals to limit the tax deductibility of advertising expenses by
advertisers; and proposals to auction the right to use the broadcast spectrum
to the highest bidder, instead of granting broadcast licenses and subsequent
license renewals free of charge.
American cannot predict what other matters may be considered in the future,
nor can it judge in advance what impact, if any, the implementation of any of
these proposals or changes might have on its business.
* * *
The foregoing is only a brief summary of certain provisions of the
Communications Act, the Telecommunications Act and of specific FCC rules and
other regulations. Reference should be made to the Communications Act, the
Telecommunications Act, FCC regulations, and the public notices and rulings of
the FCC for further information concerning the nature and extent of federal
regulation of broadcast stations. In addition to the Telecommunications Act,
the Congress and the FCC have had under consideration, and may in the future
consider and adopt, new laws, regulations and policies regarding a wide
variety of matters that could, directly or indirectly, affect the operation,
ownership and profitability of American's radio broadcast stations,
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result in the loss of audience share and advertising revenues for American's
radio broadcast stations or affect its ability to acquire additional radio
broadcast stations or finance such acquisitions. Such matters may include
changes to the comparative licensing and hearing process; proposals to impose
spectrum use or other fees on FCC licensees; changes to the FCC's equal
employment opportunity regulations and other matters relating to involvement
of minorities and women in the broadcasting industry; proposals to change
rules relating to political broadcasting; technical and frequency allocation
matters; changes in broadcast cross- interest, multiple ownership and cross-
ownership policies; changes to technical broadcast requirements; proposals to
allow telephone companies to deliver audio and video programming to homes in
their service areas; and proposals to alter provisions of the tax laws
affecting broadcast operations and acquisitions.
American cannot predict whether or when any proposed changes will be adopted
nor can it predict what other matters might be considered in the future, nor
can it judge in advance what impact, if any, the implementation of any of
these proposals or changes might have on its business.
PROPERTIES
American's corporate headquarters are located in leased facilities at 116
Huntington Avenue, Boston, Massachusetts. The properties used by American's
radio stations and owned by the Tower Subsidiary consist of office and studio
facilities, towers, and tower and transmitter sites. Station studio and sales
offices are generally located in a downtown or business district. Antennas are
located on either American-owned or leased towers. Transmitter and tower sites
are generally located to provide maximum market coverage. American believes
that owning its tower and transmitter sites is an important goal for American
inasmuch as such ownership provides a station with the stabilizing benefits of
predictable cash flow and lower fixed operating costs. American office and
studio facilities, towers and tower and transmitter sites that are leased by
American are under leases that expire in three to twenty-five years, most of
which are renewable. American does not anticipate any difficulties in renewing
its leases, where required, or in leasing additional space, if required, and
it believes that its properties are adequate for its operations. American owns
substantially all of the equipment it uses, including its transmitting
antennas, transmitters, studio equipment and general office equipment.
American believes that its properties are in good condition and suitable for
its operations; however, American continually reviews opportunities to upgrade
its properties. See Notes to Consolidated Financial Statements of American in
the American 10-K for additional information regarding the minimum annual
rental commitments of American.
LEGAL PROCEEDINGS
From time to time, American becomes involved in various claims and lawsuits
that are incidental to its business. In the opinion of American's management,
there are no material legal proceedings pending against American.
In January, 1997, EZ and American were served with a Civil Investigative
Demand by the Department of Justice concerning activities of the Charlotte
Area Radio Managers organization ("CHARM") with respect to radio advertising
pricing in the Charlotte area. It is American's understanding that many radio
operators in Charlotte were served with similar or identical Civil
Investigative Demands. Although it is impossible to predict the outcome of
this investigation, American believes it will not have a material adverse
effect on American.
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MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The executive officers and directors of American are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITIONS
---- --- ---------
<S> <C> <C>
Steven B. Dodge(1)...... 51 Chairman of the Board, President and Chief Executive Officer
Thomas H. Stoner(1)(3).. 62 Chairman of the Executive Committee of the Board
Alan L. Box............. 45 Executive Vice President and Director
Joseph L. Winn.......... 45 Treasurer, Chief Financial Officer and Director
Don P. Bouloukos........ 48 Co-Chief Operating Officer
John R. Gehron.......... 50 Co-Chief Operating Officer
David Pearlman.......... 46 Co-Chief Operating Officer
Charlton H. Buckley(1).. 59 Director
Arnold L.
Chavkin(1)(2)(3)....... 45 Director
James H. Duncan,
Jr.(2)(4).............. 49 Director
Arthur C. Kellar(1)(3).. 74 Director
Charles D. Peebler,
Jr.(3)(4).............. 60 Director
Lance R. Primis(2)...... 50 Director
</TABLE>
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(1) Member of the Executive Committee; Mr. Stoner is the Chairman of the
Executive Committee.
(2) Member of the Audit Committee; Mr. Chavkin is the Chairman of the Audit
Committee.
(3) Member of the Compensation Committee; Mr. Stoner is the Chairman of the
Compensation Committee.
(4) Independent director elected by holders of the Class A Common Stock.
The Board of Directors of American currently consists of ten members. All
directors hold office until the annual meeting of the stockholders of American
next following their election or until their successors are elected and
qualified. The holders of the shares of Class A Common Stock, voting separately
as a class, are entitled to elect two independent directors. Each executive
officer is appointed annually by the Board of Directors and serves at the
discretion of the Board.
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DESCRIPTION OF THE NEW PREFERRED STOCK
GENERAL
When issued, the New Preferred Stock will be fully paid and nonassessable.
The holders of the New Preferred Stock will have no preemptive rights with
respect to any shares of capital stock of American or any other securities of
American convertible into or carrying rights or options to purchase any such
shares. Harris Trust and Savings Bank is the registrar, transfer agent and
dividend disbursing agent for the New Preferred Stock. The following summary
description of the terms of the New Preferred Stock is qualified in its
entirety by reference to the Certificate of Designation of the New Preferred
Stock (the "Certificate of Designation"), a copy of which has been filed as an
exhibit to the Registration Statement of which this Prospectus is a part and
the summary herein of certain provisions thereof does not purport to be
complete and is subject to, and is qualified in its entirety by, reference
thereto. Wherever particular provisions of the Certificate of Designation are
referred to, such provisions are incorporated by reference as a part of the
statements made, and the statements are qualified in their entirety by such
reference. Certain terms used in this summary without definition are defined
in the Certificate of Designation and, unless otherwise noted, have the same
meaning as given such terms in the Certificate of Designation.
RANKING
The New Preferred Stock will rank, with respect to the dividend rights and
rights on liquidation, winding up and dissolution, (i) senior to all classes
of Common Stock of American, each other class of capital stock or series of
Preferred Stock established after the date of this Prospectus by the Board of
Directors of American (or, to the extent permitted by the Delaware General
Corporation Law, the Executive Committee thereof) (the "Board") which does not
expressly provide that it ranks senior to or on a parity with the New
Preferred Stock as to dividend rights and rights on liquidation, winding up
and dissolution (collectively referred to with the Common Stock of American as
"Junior Securities"); (ii) on a parity with the Old Preferred Stock and the
Convertible Preferred Stock and each other class of capital stock or series of
Preferred Stock established after the date of this Prospectus by the Board,
which expressly provides that such series will rank on a parity with the New
Preferred Stock as to dividend rights and rights on liquidation, winding up
and dissolution (collectively referred to as "Parity Securities"); and (iii)
junior to each other class of capital stock or series of Preferred Stock
established after the date of this Prospectus by the Board the terms of which
specifically provide that such series will rank senior to the New Preferred
Stock as to dividend rights and rights on liquidation, winding up and
dissolution (collectively referred to as "Senior Securities"). While any
shares of New Preferred Stock are outstanding, American may not issue,
authorize or increase the authorized amount of, or issue, authorize or
increase the authorized amount of any obligation or security convertible into
or evidencing a right to purchase, any class or series of Senior Securities,
without the vote or consent of a majority of the holders of the outstanding
shares of New Preferred Stock and any Parity Securities (including without
limitation the Old Preferred Stock and the Convertible Preferred Stock),
voting as a single class (with each share being entitled to the number of
votes specified, if so specified, for such securities) without regard to
series. However, American may create additional classes of Junior or Parity
Securities, authorize or increase the authorized amount of any obligation or
security (other than Senior Securities) convertible into or evidencing a right
to purchase Junior or Parity Securities, increase the authorized number of
shares of any Junior or Parity Security or issue any Junior or Parity
Securities or any obligation or security (other than Senior Securities)
without the consent of any holder of the New Preferred Stock. See "--Voting
Rights".
LIQUIDATION RIGHTS
In the event of any voluntary or involuntary liquidation, dissolution or
winding up of American, before any payment or distribution of assets is made
on any Junior Securities, including, without limitation, Common Stock of
American, the holders of New Preferred Stock shall receive the liquidation
preference per share of New Preferred Stock ($100 per share), plus, without
duplication, an amount in cash equal to all accumulated and unpaid dividends
through the date of distribution, and the holders of any Parity Securities
shall be entitled to
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receive the full respective liquidation preferences (including any premium) to
which they are entitled and shall receive all accumulated and unpaid dividends
with respect to their respective shares through and including the date of
distribution. If, upon such a voluntary or involuntary liquidation,
dissolution or winding up of American, the assets of American are insufficient
to pay in full the amounts described above as payable with respect to the New
Preferred Stock and any Parity Securities, the holders of the New Preferred
Stock and such Parity Securities will share ratably in any such distribution
of assets of American first in proportion to their respective liquidation
preferences until such preferences are paid in full, and then in proportion to
their respective amounts of accumulated and unpaid dividends. After payment of
any such liquidation preference and accumulated and unpaid dividends, the
shares of New Preferred Stock will not be entitled to any further
participation in any distribution of assets by American. Neither the sale or
transfer of all or substantially all the assets of American, nor the merger or
consolidation of American into or with any other corporation or other entity
or a merger of any other corporation or other entity with or into American,
will be deemed to be a liquidation, dissolution or winding up of American.
DIVIDENDS
Holders of shares of the New Preferred Stock will be entitled to receive,
when, as and if declared by the Board out of funds of American legally
available for payment, cash dividends at an annual rate equal to 11 3/8% of
the liquidation preference per share of the New Preferred Stock. All dividends
will be cumulative, whether or not earned or declared, on a daily basis from
the date to which dividends have been paid (or deemed to have been paid) on
the Old Preferred Stock and will be payable in arrears on January 15, April
15, July 15 and October 15 of each year (each a "Dividend Payment Date"),
commencing July 15, 1997. American may, at its option, pay dividends on any
Dividend Payment Date occurring on or before January 15, 2002 either in cash
or in additional shares of New Preferred Stock. In the event that, after
January 15, 2002, cash dividends on the New Preferred Stock are in arrears and
unpaid for six or more quarterly dividends periods (whether or not
consecutive), holders of New Preferred Stock will be entitled to certain
voting rights. See "--Voting Rights" below. Each dividend will be payable to
holders of record as they appear on the stock transfer books of American on a
record date, not more than sixty (60) nor less than ten (10) days before the
payment date, fixed by the Board. Dividends payable for any period less than a
full dividend period will be computed on the basis of a 360-day year
consisting of twelve 30-day months and the actual number of days elapsed in
the period for which payable. The New Preferred Stock will not be entitled to
any dividend, whether payable in cash, property or stock, in excess of full
cumulative dividends. No interest, or sum of money in lieu of interest, will
be payable in respect of any accumulated and unpaid dividends. The ability of
American to pay dividends on the New Preferred Stock is restricted under the
terms of the Note Indentures and is prohibited during the existence of a
default under the Credit Agreements or either of the Note Indentures. See
"Risk Factors--Factors Relating to American and its Business--Restrictions
Imposed by Terms of Indebtedness", "Indebtedness of American", "Description of
Capital Stock--Dividend Restrictions", and Notes to Consolidated Financial
Statements of American in the American 10-K.
Unless otherwise resolved by the Board of Directors with respect to any
Dividend Payment Date, if any dividend payable on such Dividend Payment Date
on or before January 15, 2002 is not declared or paid in full in cash on such
Dividend Payment Date, the amount payable as dividends on such Dividend
Payment Date that is not paid in cash on such Dividend Payment Date will be
paid in additional shares of New Preferred Stock on such Dividend Payment Date
and, unless such shares are not issued, will be deemed paid in full and will
not accumulate. All dividends paid with respect to shares of the New Preferred
Stock pursuant to the foregoing shall be paid pro rata to the Holders entitled
thereto.
No full dividends may be declared or paid or funds set apart for the payment
of dividends on any Parity Securities for any period unless full cumulative
dividends shall have been paid (or deemed paid) or, if payable in cash, set
apart for such payment on the New Preferred Stock. If full dividends are not
so paid, the New Preferred Stock shall share dividends pro rata with the
Parity Securities. No dividends may be paid or set apart for such payment on
Junior Securities (except dividends on Junior Securities in additional shares
of Junior Securities) and no Junior Securities may be repurchased, redeemed or
otherwise retired nor may funds be set apart for
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payment with respect thereto, if full dividends have not been paid on the New
Preferred Stock. Accumulated unpaid dividends will not bear interest. Prior to
January 15, 2002, the Company may elect to pay dividends on the New Preferred
Stock by issuing additional shares of New Preferred Stock, as described above,
while at the same time paying cash dividends on Parity Securities (including
the Convertible Preferred Stock) or Junior Securities. Conversely, if at any
time the Company is in cash dividend arrears as to Parity Securities, whether
as a result of payment restrictions contained in the Company's debt
instruments or otherwise, the Company will be permitted to pay dividends on
the New Preferred Stock only pro rata with such Parity Securities (if at all),
even if the Company elects to pay such dividends by issuing additional shares
of New Preferred Stock.
OPTIONAL REDEMPTION
Shares of the New Preferred Stock are not subject to any sinking fund or
other similar provision and may not be redeemed by American on or prior to
January 15, 2002. After January 15, 2002, the New Preferred Stock will be
redeemable at the option of American upon notice at any time, in whole or in
part, at the following redemption prices per share (expressed as a percentage
of the liquidation preference thereof), plus accumulated and unpaid dividends,
if any, up to but excluding the date fixed for redemption, if redeemed during
the twelve-month period commencing immediately after January 15 of the years
indicated below:
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE
---- ----------------
<S> <C>
2002...................................................... 105.688%
2003...................................................... 104.550
2004...................................................... 103.413
2005...................................................... 102.275
2006...................................................... 101.138
2007 and thereafter....................................... 100.000
</TABLE>
In addition, prior to January 15, 2000, the Company may, at its option, use
the net cash proceeds of one or more Public or Rule 144A Equity Offerings to
redeem up to 35% of the outstanding New Preferred Stock, at a redemption price
of 111.375% of the liquidation preference thereof plus, in each case, without
duplication, an amount in cash equal to all accumulated and unpaid dividends
to the redemption date (including an amount in cash equal to a prorated
dividend for the period from the Dividend Payment Date immediately prior to
the redemption date to the redemption date); provided, however, that after any
such redemption, there must be at least $130.0 million aggregate liquidation
preference of New Preferred Stock outstanding. Any such redemption will be
required to occur on or prior to sixty (60) days after the receipt by the
Company of the proceeds of each Public or Rule 144A Equity Offering. In the
event of a redemption of only a portion of the then outstanding shares of the
New Preferred Stock, the Company shall effect such redemption on a pro rata
basis, except that the Company may redeem such shares held by holders of fewer
than 100 shares (or shares held by holders who would hold less than 100 shares
as a result of such redemption), as may be determined by the Company.
MANDATORY REDEMPTION
The New Preferred Stock will also be subject to mandatory redemption
(subject to the legal availability of funds therefor) in whole on January 15,
2009, at a price equal to 100% of the liquidation preference thereof, plus,
without duplication, all accumulated and unpaid dividends to the date of
redemption. Future agreements of the Company may restrict or prohibit the
Company from redeeming the New Preferred Stock.
PROCEDURE FOR REDEMPTION
Notice of redemption will be given by mail, not less than thirty (30) nor
more than sixty (60) days prior to the date fixed for redemption thereof, to
each record holder of the shares of New Preferred Stock to be redeemed at the
address of such holder in the stock register of American. If a notice of
redemption has been given, from and after the specified redemption date
(unless American defaults in making payment of the redemption price),
dividends on the New Preferred Stock so called for redemption will cease to
accumulate, such shares will no
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longer be deemed to be outstanding and all rights of the holders thereof as
stockholders of American (except the right to receive the redemption price)
will cease.
The ability of American to redeem New Preferred Stock is restricted under
the terms of the Credit Agreements and the Note Indentures and is prohibited
during the existence of a default under any thereof. See "Risk Factors--
Factors Relating to American and its Business--Restrictions Imposed by Terms
of Indebtedness", "Indebtedness of American", and Notes to Consolidated
Financial Statements of American in the American 10-K.
VOTING RIGHTS
Except as indicated below or as expressly required by applicable law, the
holders of the New Preferred Stock will have no voting rights.
If (i) dividends (either in cash or, on or before January 15, 2002, through
the issuance of additional shares of New Preferred Stock) on the New Preferred
Stock are in arrears and unpaid for six or more quarterly dividend periods
(whether or not consecutive), (ii) the Company fails to redeem the New
Preferred Stock on January 15, 2009, or fails to otherwise discharge any
redemption obligation with respect to the New Preferred Stock, (iii) the
Company fails to make an Offer to Purchase if such offer is required by the
provisions set forth under "--Change of Control" below or fails to purchase
shares of New Preferred Stock from holders who elect to have such shares
purchased pursuant to the Offer to Purchase, (iv) a breach or violation of any
of the provisions described under the caption "--Certain Covenants" occurs and
the breach or violation continues for a period of thirty (30) days or more
after the Company receives notice thereof specifying the default from the
holders of at least 25% of the shares of New Preferred Stock then outstanding,
or (v) the Company fails to pay at the final stated maturity (giving effect to
any extensions thereof) the principal amount of any Indebtedness of the
Company or any Restricted Subsidiary of the Company, or the final stated
maturity of any such Indebtedness is accelerated, if the aggregate principal
amount of such Indebtedness, together with the aggregate principal amount of
any other such Indebtedness in default for failure to pay principal at the
final stated maturity (giving effect to any extensions thereof) or which has
been accelerated, aggregates $5,000,000 or more at any time, in each case,
after a 30-day period during which such default shall not have been cured or
such acceleration rescinded, then the maximum authorized number of directors
of American will be increased by two and the holders of New Preferred Stock,
voting separately as a class with the holders of shares of any Parity
Securities upon which like voting rights have been conferred and are then
exercisable, will be entitled to elect two directors for successive one-year
terms. Such voting rights will continue until such time as, in the case of a
dividend default, all dividends in arrears on the New Preferred Stock are paid
in full in cash and, in all other cases, any failure, breach or default giving
rise to such voting rights is remedied or waived by the holders of at least a
majority of the shares of New Preferred Stock then outstanding, at which time
the term of any directors elected pursuant to the provisions of this paragraph
shall terminate and the number of directors constituting the entire Board will
be reduced by the number of directors elected by the holders of the New
Preferred Stock and any Parity Securities. Each such event described in
clauses (i) through (v) above is referred to herein as a "Voting Rights
Triggering Event". The voting rights provided herein shall be the holder's
exclusive remedy at law or in equity. The Certificate of Designation contains
provisions with respect to the qualifications of any directors elected
pursuant to the provisions of this paragraph designed to ensure compliance by
American with the Communication Act and the FCC rules and regulations.
The vote or consent of the holders of a majority of the outstanding shares
of New Preferred Stock and any Parity Securities, voting as a single class
(with each share being entitled to the number of votes otherwise specified, if
so specified, for such securities) without regard to series, will be required
to issue, authorize or increase the authorized amount of any obligation or
security convertible into or evidencing a right to purchase, any class or
series of Senior Securities. However, American may create additional classes
of Junior or Parity Securities, increase the authorized number of shares of
any Junior or Parity Security, or issue, authorize or increase the authorized
amount of any obligation or security (other than Senior Securities)
convertible into or evidencing a right to purchase, any Junior or Parity
Securities without the consent of any holder of the New
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Preferred Stock. Prior to the Exchange Date (as defined in "Description of the
Exchange Debentures--Certain Definitions"), American shall not amend or modify
the Exchange Indenture (as defined in "Description of the Exchange
Debentures") without the affirmative vote or consent of holders of at least a
majority of the outstanding shares of New Preferred Stock, voting together as
a single class; provided, however, that American and the Trustee (as defined
in "Description of the Exchange Debentures") shall be permitted, without any
vote or consent of such holders, to effect any amendments to the Exchange
Indenture that could have been effected under the Exchange Indenture without
the consent of holders of Exchange Debentures if any Exchange Debentures were
then outstanding.
Without the affirmative vote or consent of the holders of at least a
majority of the outstanding shares of New Preferred Stock, the Company shall
not consolidate or merge with or into (whether or not the Company is the
Surviving Person), or sell, assign, transfer, lease, convey or otherwise
dispose of all or substantially all of its properties or assets in one or more
related transactions, to another Person, unless:
(i) the Surviving Person is a corporation organized or existing under the
laws of the United States, any state thereof or the District of Columbia;
(ii) the Surviving Person (if other than the Company) assumes all the
obligations of the Company under the Certificate of Designation;
(iii) at the time of and immediately after such Disposition, no Voting
Rights Triggering Event shall have occurred and be continuing; and
(iv) the Surviving Person shall at the time of such Disposition and after
giving pro forma effect thereto, be permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Debt to EBITDA Ratio test described
below under "--Certain Covenants--Limitation on Incurrence of Indebtedness
and Issuance of Preferred Stock".
Under Delaware law, holders of the New Preferred Stock will be entitled to
vote as a class upon a proposed amendment to the Restated Certificate, whether
or not entitled to vote thereon by the Restated Certificate, if the amendment
would increase or decrease the aggregate number of authorized shares of such
class, increase or decrease the par value of the shares of such class, or
alter or change the powers, preferences or special rights of the shares of
such class so as to affect them adversely.
CHANGE OF CONTROL
The Certificate of Designation will provide that the Company will commence
an Offer to Purchase all of the outstanding shares of New Preferred Stock
within fifteen (15) days after the occurrence of a Change of Control. In the
event that the Company makes an Offer to Purchase the Exchange Preferred
Stock, the Company intends to comply with applicable securities laws and
regulations.
The ability of American to purchase New Preferred Stock upon a Change of
Control is restricted under the terms of the Credit Agreements and the Note
Indentures and is prohibited during the existence of a default under any
thereof. See "Risk Factors--Factors Relating to American and its Business--
Restrictions Imposed by Terms of Indebtedness", "Indebtedness of American",
and Notes to Consolidated Financial Statements of American in the American 10-
K.
CERTAIN COVENANTS
Limitation on Incurrence of Indebtedness and Issuance of Preferred
Stock. The Certificate of Designation provides that the Company will not, and
will not permit any of its Restricted Subsidiaries to, create, incur, assume
or directly or indirectly guarantee or in any other manner become directly or
indirectly liable for ("incur") any Indebtedness (including Acquired Debt) or
issue any preferred stock, except that the Company may:
(x) issue (i) preferred stock that is not Disqualified Stock at any time
(subject to the provisions described above under "--Voting Rights" in the
case of an issuance of preferred stock constituting Senior
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Securities), and (ii) additional shares of New Preferred Stock as described
above under "--Dividends", and
(y) incur Indebtedness or issue Disqualified Stock (subject to such
voting rights provisions described above), if the Debt to EBITDA Ratio of
the Company and its Restricted Subsidiaries at the time of incurrence of
such Indebtedness or issuance of such Disqualified Stock, after giving pro
forma effect thereto, is 7.0:1 or less.
The foregoing limitations shall not apply to the incurrence of any of the
following:
(i) Senior Bank Debt (including guarantees thereof by the Company's
Subsidiaries) pursuant to either of the Credit Agreements (which include as
a condition a maximum Total Debt to Consolidated Annual Operating Cash Flow
ratio of 7.00:1 declining in stages over time; see "Indebtedness of
American--Credit Agreements" for a description of the Credit Agreements);
(ii) Existing Indebtedness;
(iii) Indebtedness represented by (1) the Exchange Debentures, and (2)
guarantees by Restricted Subsidiaries of (A) Senior Bank Debt and (B) any
other Indebtedness of the Company permitted to be incurred under the
Certificate of Designation;
(iv) Refinancing Indebtedness; provided, however, that the principal
amount of such Refinancing Indebtedness shall not exceed the principal
amount of Indebtedness or amount of Disqualified Stock so extended,
refinanced, renewed, replaced, substituted, defeased or refunded (plus the
amount of expenses incurred and premiums paid in connection therewith);
(v) intercompany Indebtedness between the Company and any of its
Restricted Subsidiaries or among its Restricted Subsidiaries, or Equity
Interests issued by a Restricted Subsidiary in conformity with the covenant
described below under "--Limitations on Restricted Subsidiary Equity
Interests";
(vi) Hedging Obligations, including interest rate swap obligations, that
are incurred in the ordinary course of business for the purpose of fixing
or hedging interest rate risk with respect to any floating rate
Indebtedness that is permitted by the terms of the Certificate of
Designation to be outstanding; and
(vii) additional Indebtedness of the Company, which may be guaranteed by
any of its Restricted Subsidiaries, in an aggregate outstanding principal
amount not to exceed $20,000,000 at any time.
Limitation on Restricted Payments. The Certificate of Designation provides
that the Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly:
(i) declare or pay any dividend, or make any other distribution or
payment, on any Junior Securities of the Company or on any Equity Interests
of any Restricted Subsidiary (other than dividends or distributions payable
by the Company in Junior Securities (other than Disqualified Stock) of the
Company or by a Restricted Subsidiary in Equity Interests (other than
Disqualified Stock) of such Restricted Subsidiary or dividends or
distributions payable to the Company or any Restricted Subsidiary);
(ii) purchase, redeem or otherwise acquire or retire for value any Junior
Securities of the Company or any Equity Interests of any Restricted
Subsidiary or other Affiliate of the Company (other than any Equity
Interests owned by the Company or any Restricted Subsidiary); or
(iii) make an Investment other than (a) a Permitted Investment and (b)
Investments of the Company or any Restricted Subsidiary in the Company or
any Restricted Subsidiary;
(any payment made for any of the foregoing purposes being herein referred to
as a "Restricted Payment"),
unless:
(I) at the time of and immediately after giving effect to the proposed
Restricted Payment, no Voting Rights Triggering Event shall have occurred
and be continuing or would occur as a consequence thereof,
(II) the Company would, at the time of such Restricted Payment and after
giving pro forma effect thereto as if such Restricted Payment had been made
at the beginning of the applicable four-quarter period,
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have been permitted to incur at least $1.00 of additional Indebtedness
under the Debt to EBITDA Ratio test described above under "--Limitation on
Incurrence of Indebtedness and Issuance of Preferred Stock", and
(III) at the time of and immediately after giving effect to the proposed
Restricted Payment (valued at its Fair Market Value, if other than cash),
the aggregate amount of all Restricted Payments (excluding all payments,
investments, redemptions, repurchases, retirements and other acquisitions
described in clauses (2) and (3) of the following paragraph) declared or
made after December 31, 1995 shall not exceed the sum of
(A) an amount equal to the Company's EBITDA cumulated from December
31, 1995 to the end of the Company's most recently ended full fiscal
quarter, taken as a single accounting period, less 1.4 times the sum of
(i) the Company's Consolidated Interest Expense from December 31, 1995
to the end of the Company's most recently ended full fiscal quarter,
taken as a single accounting period, plus (ii) all dividends or other
distributions paid or made by the Company or any Restricted Subsidiary
on any Disqualified Stock of the Company or any of its Subsidiaries
during such period, plus
(B) an amount equal to the aggregate sum of all net cash proceeds
received after December 31, 1995 by the Company from the issuance and
sale of Junior Securities (other than any Disqualified Stock and other
than to Restricted Subsidiaries) to the extent that such proceeds are
not used to redeem, repurchase, retire or otherwise acquire Junior
Securities of the Company pursuant to clause (2) in the next paragraph,
plus
(C) the aggregate net proceeds received after December 31, 1995 by
the Company and its Restricted Subsidiaries from the sale or
disposition of any Investment other than a Permitted Investment.
The foregoing provisions will not prohibit:
(1) the payment of any dividend within 60 days after the date of
declaration thereof, if at such date of declaration such payment would have
been permitted by the provisions of the Certificate of Designation;
(2) the redemption, repurchase, retirement or other acquisition for value
of any Junior Securities of the Company in exchange for, or out of the
proceeds of, the substantially concurrent sale (other than to the Company
or a Restricted Subsidiary) of Junior Securities of the Company (other than
Disqualified Stock); or
(3) Restricted Payments made or paid since December 31, 1995 in an
aggregate amount not exceeding $10,000,000.
Payments made pursuant to clause (1) above shall nevertheless be considered
Restricted Payments for purposes of computing the aggregate amount of
Restricted Payments under clause (III) of the preceding paragraph. For
purposes of clause (B) of the preceding paragraph, the conversion or exchange
of Indebtedness or Disqualified Stock of the Company into Junior Securities of
the Company (other than into Equity Interests constituting Indebtedness or
Disqualified Stock) shall be deemed to be the issuance and sale by the Company
of such Junior Securities at the time of such conversion or exchange for net
cash proceeds equal to the net cash proceeds originally received by the
Company for the Indebtedness or Disqualified Stock so converted or exchanged
(or received by the Company for any other Indebtedness or Disqualified Stock
previously converted into or exchanged for such Indebtedness or Disqualified
Stock), plus any additional net cash proceeds received by the Company upon
such conversion or exchange (or such previous conversion or exchange) and less
any cash paid by the Company in connection therewith.
Limitation on Restricted Subsidiary Equity Interests. The Certificate of
Designation provides that the Company will not permit any Restricted
Subsidiary to issue any Equity Interests, except for (i) Equity Interests
issued to and held by the Company or a Restricted Subsidiary, and (ii) Equity
Interests issued by a Person prior to the time that (A) such Person becomes a
Restricted Subsidiary, (B) such Person merges with or into a Restricted
Subsidiary or (C) a Restricted Subsidiary merges with or into such Person;
provided that such Equity Interests were not issued or incurred by such Person
in anticipation of the type of transaction contemplated by subclause (A), (B)
or (C).
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Provision of Financial Information. The Certificate of Designation provides
that whether or not required by the rules and regulations of the Commission,
so long as any shares of New Preferred Stock are outstanding, the Company will
furnish to the holders of New Preferred Stock:
(i) all quarterly and annual financial information that would be required
to be contained in a filing with the Commission on Forms 10-Q and 10-K
if the Company were required to file such Forms, including a
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" and, with respect to the annual information
only, a report thereon by the Company's independent certified public
accountants, and
(ii) all reports that would be required to be filed with the Commission on
Form 8-K if the Company were required to file such reports.
In addition, whether or not required by the rules and regulations of the
Commission, the Company will file a copy of all such information with the
Commission for public availability (unless the Commission will not accept such
filing) and make such information available to investors who request it in
writing.
EXCHANGE PROVISIONS
The Company may, at its option, subject to certain conditions, on any
scheduled Dividend Payment Date, exchange the New Preferred Stock, in whole
but not in part, for the Exchange Debentures; provided that (i) on the date of
such exchange there are no accumulated and unpaid dividends on the New
Preferred Stock (including the dividend payable on such date) or other
contractual impediment to such exchange; (ii) there shall be funds legally
available sufficient therefor; and (iii) immediately after giving effect to
such exchange, no Default or Event of Default (each as defined in the Exchange
Indenture) would exist under the Exchange Indenture and no default or event of
default would exist under either of the Credit Agreements, either of the Note
Indentures or any other Indebtedness of the Company.
Upon any exchange pursuant to the preceding paragraph, holders of
outstanding shares of New Preferred Stock will be entitled to receive, subject
to the second succeeding sentence, $1.00 principal amount of Exchange
Debentures for each $1.00 liquidation preference of New Preferred Stock held
by them. The Exchange Debentures will be issued in registered form, without
coupons. Exchange Debentures issued in exchange for New Preferred Stock will
be issued in principal amounts of $1,000 and integral multiples thereof to the
extent possible, and will also be issued in principal amounts less than $1,000
so that each holder of New Preferred Stock will receive certificates
representing the entire amount of Exchange Debentures to which such holder's
shares of New Preferred Stock entitle such holder, provided that the Company
may pay cash in lieu issuing an Exchange Debenture in a principal amount less
than $1,000. The Company will send a written notice of exchange by mail to
each holder of record of shares of New Preferred Stock not less than 30 days
nor more than 60 days before the date fixed for such exchange. On and after
the date of exchange, dividends will cease to accumulate on the outstanding
shares of New Preferred Stock, and all rights of the holder of New Preferred
Stock (except the right to receive the Exchange Debentures, an amount in cash,
to the extent applicable, equal to the accumulated and unpaid dividends to the
Exchange Date and, if the Company so elects, cash in lieu of any Exchange
Debenture that is in a principal amount that is not an integral multiple of
$1,000) will terminate. The person entitled to receive the Exchange Debentures
issuable upon such exchange will be treated for all purposes as the registered
holder of such Exchange Debentures. See "Description of the Exchange
Debentures".
The ability of American to exchange New Preferred Stock for Exchange
Debentures is restricted under the terms of the Credit Agreements and the Note
Indentures and is prohibited during the existence of a default under any
thereof. See "Risk Factors--Factors Relating to American and its Business--
Restrictions Imposed by Terms of Indebtedness", "Indebtedness of American",
and Notes to Consolidated Financial Statements of American in the American 10-
K. The ability of American to exchange New Preferred Stock for Exchange
Debentures is also subject to certain conditions contained in the Exchange
Indenture relating to the Exchange Debentures and to limitations imposed under
the Delaware General Corporation Law and by applicable laws protecting the
rights of creditors.
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DESCRIPTION OF THE EXCHANGE DEBENTURES
If American elects to issue Exchange Debentures in exchange for the New
Preferred Stock, the Exchange Debentures will be issued under the Indenture
dated as of January 30, 1997 (the "Exchange Indenture") between American and
Fleet National Bank, as trustee, or any successor trustee appointed in
accordance with the terms of the Exchange Indenture, as Trustee (the
"Trustee") at a rate of $1.00 principal amount of Exchange Debentures for
$1.00 in the liquidation preference plus, without duplication, accumulated and
unpaid dividends. The following statements are subject to the detailed
provisions of the Exchange Indenture and are qualified in their entirety by
reference to the Exchange Indenture, a copy of the form of which has been
filed as an exhibit to the Registration Statement of which this Prospectus is
a part and the summary herein of certain provisions thereof does not purport
to be complete and is subject to, and is qualified in its entirety by,
reference thereto. Wherever particular provisions of the Exchange Indenture
are referred to, such provisions are incorporated by reference as a part of
the statements made, and the statements are qualified in their entirety by
such reference. Unless otherwise indicated, references under this caption to
sections, "(S)" or articles are references to the Exchange Indenture.
GENERAL
The Exchange Debentures will represent unsecured general obligations of
American subordinate in right of payment to all Senior Debt (as defined) of
American as described under "--Subordination of Exchange Debentures" below.
The Exchange Debentures will be limited to the liquidation preference of the
New Preferred Stock, plus, without duplication, accumulated and unpaid
dividends (plus any additional Exchange Debentures issued in lieu of cash
interest as described herein), will be issued in fully registered form only in
denominations of $1,000 or any multiple thereof (other than as described in
"Description of the New Preferred Stock--Exchange Provisions" or with respect
to additional Exchange Debentures issued in lieu of cash interest as described
herein) and will mature on January 15, 2009, unless earlier redeemed at the
option of American. The Exchange Debentures will initially be issued on the
Exchange Date.
Exchange Debentures will bear interest at the annual rate of 11 3/8% payable
in cash (or, on or prior to January 15, 2002, in additional Exchange
Debentures, at the option of the Company) from the Exchange Date or from the
most recent Interest Payment Date to which interest has been paid or provided
for, payable semi-annually on January 15 and July 15 of each year, commencing
on the first payment date following the Exchange Date to the person in whose
name the Exchange Debenture (or any predecessor Exchange Debenture) is
registered at the close of business on the preceding January 1 or July 1, as
the case may be. The Exchange Debentures will bear interest on overdue
principal and premium, if any, and, to the extent permitted by law, overdue
interest at the rate per annum set forth in the first sentence of this
paragraph plus 2%. Interest on the Exchange Debentures will be computed on the
basis of a 360-day year of twelve 30-day months. ((S)(S) 301, 307 and 310)
Principal of, and premium, if any, and interest on the Exchange Debentures
will be payable, and the Exchange Debentures may be presented for registration
of transfer and exchange, at the office or agency of the Company maintained
for that purpose in the Borough of Manhattan, The City of New York, provided
that at the option of the Company, payment of interest on the Exchange
Debentures may be made by check mailed to the address of the Person entitled
thereto as it appears in the Securities Register or, at the timely election of
a registered owner of greater than $1,000,000 principal amount of the Exchange
Debentures, by wire transfer. Until otherwise designated by the Company, such
office or agency will be the corporate trust office of the Trustee, which will
act as Paying Agent and Registrar. ((S)(S) 301, 305 and 1002)
The Exchange Debentures will, except as otherwise noted above, be issued
only in fully registered form, without coupons, in denominations of $1,000 and
any integral multiple thereof. ((S) 302) No service change will be made for
any registration of transfer or exchange of Exchange Debentures, but the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith. ((S) 305)
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OPTIONAL REDEMPTION
The Exchange Debentures will be subject to redemption, at the option of the
Company, in whole or in part, at any time on or after January 15, 2002 and
prior to maturity, upon not less than 30 nor more than 60 days notice mailed
to each Holder of Exchange Debentures to be redeemed at such Holder's address
appearing in the Security Register, in amounts of $1,000 or an integral
multiple of $1,000, at the following Redemption Prices (expressed as
percentages of principal amounts) plus accrued and unpaid interest, if any, to
but excluding the Redemption Date (subject to the right of Holders of record
on the relevant Regular Record Date to receive interest due on an Interest
Payment Date that is on or prior to the Redemption Date), if redeemed during
the 12-month period beginning January 15 of the years indicated:
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE
---- ----------------
<S> <C>
2002...................................................... 105.688%
2003...................................................... 104.550
2004...................................................... 103.413
2005...................................................... 102.275
2006...................................................... 101.138
2007 and thereafter....................................... 100.000
</TABLE>
Notwithstanding the foregoing, at any time prior to January 15, 2000, the
Company may redeem up to 35% of the outstanding Exchange Debentures from the
net proceeds of a Public or Rule 144A Equity Offering, in cash, within 60 days
of any such sale upon not less than 30 nor more than 60 days' notice mailed to
each Holder of Exchange Debentures to be redeemed at such Holder's address
appearing in the Security Register, in amounts of $1,000, or any integral
multiple of $1,000, at a Redemption Price equal to 111.375% of the principal
amount thereof plus, in each case, accrued and unpaid interest, if any, to the
Redemption Date; provided, however, that after any such redemption, the
aggregate principal amount of the Exchange Debentures outstanding must equal
at least $130.0 million. ((S) 1101). If less than all the Exchange Debentures
are to be redeemed, the Trustee shall select, in such manner as it shall deem
fair and appropriate, the particular Exchange Debentures to be redeemed or any
portion thereof that is an integral multiple of $1,000. ((S) 1104).
The Exchange Debentures will not have the benefit of any sinking fund.
The ability of American to redeem Exchange Debentures is restricted under
the terms of the Credit Agreements and the Note Indentures and is prohibited
during the existence of any default pursuant under any thereof. See "Risk
Factors--Factors Relating to American and its Business--Restrictions Imposed
by Terms of Indebtedness", and Notes to Consolidated Financial Statements of
American in the American 10-K.
SUBORDINATION OF EXCHANGE DEBENTURES
The Exchange Debentures will, to the extent set forth in the Exchange
Indenture, be subordinate in right of payment to the prior payment in full in
cash or Cash Equivalents of all Senior Debt. Upon any payment or distribution
of assets to creditors upon any liquidation, dissolution, winding up,
reorganization, assignment for the benefit of creditors, marshaling of assets
or any bankruptcy, insolvency or similar proceedings of the Company, the
holders of Senior Debt will first be entitled to receive any payment in
respect of the principal of (and premium, if any) or interest on the Exchange
Debentures. In the event that notwithstanding the foregoing, the Trustee or
the Holder of any Exchange Debenture receives any payment or distribution of
assets of the Company of any kind or character, before all the Senior Debt is
paid in full in cash or Cash Equivalents, then such payment or distribution
will be required to be paid over or delivered forthwith to the trustee in
bankruptcy or other person making payment or distribution of assets of the
Company for application to the payment of all Senior Debt remaining unpaid, to
the extent necessary to pay the Senior Debt in full in cash or Cash
Equivalents. ((S) 1202).
In the event that any of the Exchange Debentures are declared due and
payable prior to their stated maturity, the Holders of Senior Debt shall be
entitled to receive payment in full in cash or Cash Equivalents of all Senior
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Debt before the Holders of the Exchange Debentures shall be entitled to
receive any payment on account of the principal of (or premium, if any) or
interest on the Exchange Debentures or on account of the purchase or
redemption or other acquisition of the Exchange Debentures.
The Company may not make any payments on account of the Exchange Debentures
or on account of the purchase, redemption or other acquisition of Exchange
Debentures following the maturity (on the due date, upon acceleration or
otherwise) of any Senior Debt until such Senior Debt is paid in full in cash
or Cash Equivalents. The Company also may not make any payments on the account
of the Exchange Debentures or on account of the purchase or redemption or
other acquisition of Exchange Debentures if there shall have occurred and be
continuing a default in the payment of Senior Debt (a "Payment Default"). In
addition, if any default (other than a Payment Default) with respect to any
Designated Senior Debt permitting the holders thereof (or a trustee on behalf
thereof) to accelerate the maturity thereof (a "Monetary Default") has
occurred and is continuing and the Company and the Trustee have received
written notice thereof from the representatives of holders of such Designated
Senior Debt, then the Company may not make any payments (other than the
payments previously made pursuant to the provisions described under "--
Defeasance") on account of the Exchange Debentures or on account of the
purchase or redemption or other acquisition of Exchange Debentures for a
period (a "blockage period") commencing on the date the Company and the
Trustee receive such written notice and ending on the earlier of (x) 179 days
after such date and (y) the date, if any, on which the Designated Senior Debt
to which such default relates is discharged or such default is waived or
otherwise cured. In any event, not more than one blockage period may be
commenced during any period of 360 consecutive days when no blockage period is
in effect. No Nonmonetary Default that existed or was continuing on the date
of the commencement of any blockage period with respect to the Designated
Senior Debt initiating such blockage period will be, or can be, made the basis
for the commencement of a subsequent blockage period, unless such default has
been cured or waived for a period of not less than 180 consecutive days. In
the event that, notwithstanding the foregoing, the Company makes any payment
to the Trustee or the Holder of any Exchange Debenture prohibited by these
subordination provisions, then such payment will be required to be paid over
and delivered forthwith to the holders of the Senior Debt remaining unpaid, to
the extent necessary to pay in full all the Senior Debt. ((S)1203)
By reason of such subordination, in the event of insolvency, creditors of
the Company who are not holders of Senior Debt may recover less, ratably, than
holders of Senior Debt and may recover more, ratably, than the Holders of the
Exchange Debentures.
The subordination provisions described above will cease to be applicable to
the Exchange Debentures upon any defeasance or covenant defeasance of the
Exchange Debentures as described under "--Defeasance". (Article Thirteen)
The Company expects to incur Indebtedness under the Credit Agreements which
will constitute Senior Bank Debt and the Company may from time to time incur
additional Indebtedness constituting Senior Debt. The Exchange Indenture does
not prohibit or limit the incurrence of additional Senior Debt, provided that
the incurrence of such Senior Debt is otherwise permitted thereunder including
under the limitations described under "--Certain Covenants--Limitation on
Incurrence of Indebtedness and Issuance of Preferred Stock" below.
The Exchange Debentures will be subordinate to the American Notes, the
American-EZ Notes and the Credit Agreements and, unless otherwise designated
by the Company prior to the issuance thereof, the Convertible Exchange
Debentures. At December 31, 1996, Senior Debt of American on a historical and
pro forma basis equaled the corresponding amounts of total long-term debt set
forth in the table under "Capitalization".
CERTAIN COVENANTS
The Exchange Indenture contains, among others, the following covenants.
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Limitation on Certain Asset Sales. The Exchange Indenture provides that
neither the Company nor any of its Restricted Subsidiaries will:
(i) sell, lease, convey or otherwise dispose of any assets (including by
way of a sale-and-leaseback) other than in the ordinary course of business,
or
(ii) issue or sell Equity Interests of any of its Restricted
Subsidiaries,
in each case, whether in a single transaction or a series of related
transactions, to any Person (other than an issuance, sale, lease, conveyance
or disposal by a Restricted Subsidiary to the Company or one of its Restricted
Subsidiaries or an Asset Swap permitted by the covenant described below under
"--Limitation on Asset Swaps"), for Net Proceeds in excess of $1,000,000 (each
of the foregoing, an "Asset Sale"), unless:
(x) the Company or such Restricted Subsidiary, as the case may be,
receives consideration at the time of such Asset Sale at least equal to the
Fair Market Value of the assets or Equity Interests sold or otherwise
disposed of;
(y) at least 80% of such consideration is in the form of cash, provided,
however, that the following will be deemed to be cash for purposes of this
covenant:
(A) the amount of any Senior Debt that is assumed by the transferee
of any such assets, and
(B) any notes or other obligations received by the Company or any
such Restricted Subsidiary from a transferee that are immediately
converted by the Company or such Restricted Subsidiary into cash, and
(z) if such Asset Sale includes Equity Interests of any Restricted
Subsidiary, 100% of the Equity Interests of such Restricted Subsidiary
owned by the Company or any other Restricted Subsidiary is sold or
otherwise disposed of in such Asset Sale.
Following any Asset Sale, the Company may elect to apply the Net Proceeds
from such Asset Sale, within 360 days of the Asset Sale, (a) to reduce
permanently Senior Bank Debt (or in the event that Senior Bank Debt is
extended under a revolving credit or similar facility, to reduce permanently
the aggregate commitments thereunder and to make any principal payments on the
Senior Bank Debt required or permitted thereby) as then in effect or (b) to
acquire Broadcast Assets. Pending the final application of any such Net
Proceeds, the Company may reduce temporarily Senior Bank Debt or temporarily
invest such Net Proceeds in any manner permitted by the Exchange Indenture.
Any Net Proceeds from an Asset Sale not applied to the payment of or reduction
of commitments under the Senior Bank Debt or to the acquisition of Broadcast
Assets or invested as provided in the first sentence of this paragraph, upon
expiration of such 360-day period or such earlier date as the Company decides
not to so apply or invest such Net Proceeds, will be deemed to constitute
"Excess Proceeds". Whenever Excess Proceeds minus the aggregate purchase price
of the Exchange Debentures which have been the subject of any previous Offer
to Purchase ("Net Excess Proceeds") exceeds $5,000,000, the Company will
commence an Offer to Purchase within thirty (30) days after the date on which
the Net Excess Proceeds exceeded $5,000,000. Such Offer to Purchase shall be
for a principal amount of Outstanding Exchange Debentures having an aggregate
purchase price equal to Net Excess Proceeds. (Section 1008)
Limitation on Asset Swaps. The Exchange Indenture provides that neither the
Company nor any Restricted Subsidiary will engage in any Asset Swaps, unless:
(i) at the time of entering into the agreement to swap assets and
immediately after giving effect to the proposed Asset Swap, no Default or
Event of Default shall have occurred and be continuing or would occur as a
consequence thereof;
(ii) the Company would, at the time of entering into the agreement to
swap assets and after giving pro forma effect to the proposed Asset Swap,
as if such Asset Swap had occurred at the beginning of the applicable four-
quarter period, have been permitted to incur at least $1.00 of additional
Indebtedness under the Debt to EBITDA Ratio test described below under "--
Limitation on Incurrence of Indebtedness and Issuance of Preferred Stock";
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(iii) the respective Fair Market Values of the assets being purchased and
sold by the Company or any of its Restricted Subsidiaries are substantially
the same at the time of entering into the agreement to swap assets; and
(iv) at the time of the consummation of the proposed Asset Swap, the
percentage of any decline in the Fair Market Value of the asset or assets
being acquired by the Company and its Restricted Subsidiaries shall not be
significantly greater than the percentage of any decline in the Fair Market
Value of the assets being disposed of by the Company, calculated from the
time the agreement to swap assets was entered into. (Section 1009)
Limitation on Restricted Payments. The Exchange Indenture provides that
neither the Company nor any Restricted Subsidiary will, directly or
indirectly:
(i) declare or pay any dividend, or make any other distribution or
payment, on any Equity Interests of the Company or any of its Restricted
Subsidiaries (other than dividends or distributions payable in Equity
Interests (other than Indebtedness or Disqualified Stock) of the Company or
such Restricted Subsidiary or dividends or distributions payable to the
Company or any Restricted Subsidiary);
(ii) purchase, redeem or otherwise acquire or retire for value any Equity
Interests of the Company or any Restricted Subsidiary or other Affiliate of
the Company (other than any Equity Interests owned by the Company or any
Restricted Subsidiary);
(iii) purchase, redeem, defease, or otherwise acquire or retire for value
any Indebtedness that is subordinated in right of payment to, or pari passu
with, the Exchange Debentures (other than with the proceeds of Refinancing
Indebtedness permitted under clause (d) of the last paragraph under "--
Limitation on Incurrence of Indebtedness and Issuance of Preferred Stock"
below); or
(iv) make an Investment other than (a) a Permitted Investment or (b)
Investments of the Company or any Restricted Subsidiary in the Company or
any Restricted Subsidiary;
(any payment made for any of the foregoing purposes being herein referred to
as a "Restricted Payment"),
unless:
(I) at the time of and immediately after giving effect to the proposed
Restricted Payment, no Default or Event of Default shall have occurred and
be continuing or would occur as a consequence thereof,
(II) the Company would, at the time of such Restricted Payment and after
giving pro forma effect thereto as if such Restricted Payment had been made
at the beginning of the applicable four-quarter period, have been permitted
to incur at least $1.00 of additional Indebtedness under the Debt to EBITDA
Ratio test described below under "--Limitation on Incurrence of
Indebtedness and Issuance of Preferred Stock", and
(III) at the time of and immediately after giving effect to the proposed
Restricted Payment (valued at its Fair Market Value, if other than cash),
the aggregate amount of all Restricted Payments (excluding all payments,
investments, redemptions, repurchases, retirements and other acquisitions
described in clauses (2), (3) and (4) of the following paragraph) declared
or made after December 31, 1995 shall not exceed the sum of
(A) an amount equal to the Company's EBITDA cumulated from December
31, 1995 to the end of the Company's most recently ended full fiscal
quarter, taken as a single accounting period, less 1.4 times the sum of
(i) the Company's Consolidated Interest Expense from December 31, 1995
to the end of the Company's most recently ended full fiscal quarter,
taken as a single accounting period, plus (ii) all dividends or other
distributions paid or made by the Company or any Restricted Subsidiary
on any Disqualified Stock of the Company or any of its Subsidiaries
during such period, plus
(B) an amount equal to the aggregate sum of all net cash proceeds
received after December 31, 1995 by the Company from the issuance and
sale of Equity Interests (other than any Indebtedness or Disqualified
Stock and other than to Restricted Subsidiaries) to the extent that
such proceeds are not used to redeem, repurchase, retire or otherwise
acquire Equity Interests of the Company pursuant to clause (2) in the
next paragraph, plus
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(C) the aggregate net proceeds received after December 31, 1995 by
the Company and its Restricted Subsidiaries from the sale or
disposition of any Investment other than a Permitted Investment.
The foregoing provisions will not prohibit:
(1) the payment of any dividend within sixty (60) days after the date
of declaration thereof, if at such date of declaration such payment
would have complied with the provisions of the Exchange Indenture;
(2) the redemption, repurchase, retirement or other acquisition for
value of any Equity Interests of the Company in exchange for, or out of
the proceeds of, the substantially concurrent sale (other than to the
Company or a Restricted Subsidiary) of Equity Interests of the Company
(other than any Indebtedness or Disqualified Stock);
(3) Payments of Senior Debt or pursuant to any guarantee by any
Restricted Subsidiary of Senior Debt; or
(4) Restricted Payments made or paid since December 31, 1995 in an
aggregate amount not exceeding $10,000,000.
Payments made pursuant to clause (1) above shall nevertheless be considered
Restricted Payments for purposes of computing the aggregate amount of
Restricted Payments under clause (III) of the preceding paragraph. For
purposes of clause (B) of the preceding paragraph, the conversion or exchange
of Indebtedness or Disqualified Stock of the Company into Equity Interests of
the Company (other than into Equity Interests constituting Indebtedness or
Disqualified Stock) shall be deemed to be the issuance and sale by the Company
of such Equity Interests at the time of such conversion or exchange for net
cash proceeds equal to the net cash proceeds originally received by the
Company for the Indebtedness or Disqualified Stock so converted or exchanged
(or received by the Company for any other Indebtedness or Disqualified Stock
previously converted into or exchanged for such Indebtedness or Disqualified
Stock), plus any additional net cash proceeds received by the Company upon
such conversion or exchange (or such previous conversion or exchange) and less
any cash paid by the Company in connection therewith. (Section 1010)
Limitation on Incurrence of Indebtedness and Issuance of Preferred
Stock. The Exchange Indenture provides that neither the Company nor any
Restricted Subsidiary will create, incur, assume or directly or indirectly
guarantee or in any other manner become directly or indirectly liable for
("incur") any Indebtedness (including Acquired Debt) or issue any preferred
stock, except that the Company may:
(i) issue preferred stock that is not Disqualified Stock at any time, and
(ii) incur Indebtedness or issue Disqualified Stock, if the Debt to
EBITDA Ratio of the Company and its Restricted Subsidiaries at the time of
incurrence of such Indebtedness or issuance of such Disqualified Stock,
after giving pro forma effect thereto, is 7.0:1 or less; provided, however,
that any such Indebtedness (other than Senior Debt) incurred by the Company
shall, at the time of incurrence, have a Weighted Average Life to Maturity
equal to or greater than the Weighted Average Life to Maturity of the
Exchange Debentures.
The foregoing limitations shall not apply to the incurrence of any of the
following:
(a) Senior Bank Debt (including guarantees thereof by the Company's
Subsidiaries) pursuant to either of the Credit Agreements (which include as
a condition a maximum Total Debt to Consolidated Annual Operating Cash Flow
ratio 7.00:1 declining in stages over time; see "Indebtedness of American--
Credit Agreements" for a description of the Credit Agreements);
(b) Existing Indebtedness;
(c) Indebtedness represented by (1) the Exchange Debentures and (2)
guarantees by Restricted Subsidiaries of (x) Senior Bank Debt and (y) any
other Senior Debt permitted to be incurred by the Company under the terms
of the Exchange Indenture;
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(d) Refinancing Indebtedness, provided, however, that
(1) the principal amount of such Refinancing Indebtedness shall not
exceed the principal amount of Indebtedness or amount of Disqualified
Stock so extended, refinanced, renewed, replaced, substituted, defeased
or refunded (plus the amount of expenses incurred and premiums paid in
connection therewith),
(2) with respect to Refinancing Indebtedness of any Indebtedness
other than Senior Debt or Disqualified Stock, the Refinancing
Indebtedness shall have a Weighted Average Life to Maturity equal to or
greater than the Weighted Average Life to Maturity of the Indebtedness
being extended, refinanced, renewed, replaced, substituted, defeased or
refunded, and
(3) with respect to Refinancing Indebtedness of Indebtedness other
than Senior Debt or any Disqualified Stock incurred by the Company,
such Refinancing Indebtedness shall rank no more senior, and shall be
at least as subordinated, in right of payment to the Exchange
Debentures as the Indebtedness being extended, refinanced, replaced,
renewed, substituted, defeased or refunded;
(e) intercompany Indebtedness between the Company and any of its
Restricted Subsidiaries or among its Restricted Subsidiaries, or Equity
Interests issued by a Restricted Subsidiary in conformity with the covenant
described below under "--Limitation on Restricted Subsidiary Equity
Interests";
(f) Hedging Obligations, including interest rate swap obligations, that
are incurred in the ordinary course of business for the purpose of fixing
or hedging interest rate risk with respect to any floating rate
Indebtedness that is permitted by the terms of this Indenture to be
outstanding; and
(g) additional Indebtedness of the Company, which may be guaranteed by
any of its Restricted Subsidiaries, in an aggregate outstanding principal
amount not to exceed $20,000,000 at any time. (Section 1011)
Limitation on Liens. The Exchange Indenture provides that neither the
Company nor any Restricted Subsidiary will, directly or indirectly, create,
incur, assume or suffer to exist any Lien (other than Permitted Liens) on any
asset now owned or hereafter acquired, or any income or profits therefrom or
assign or convey any right to receive income therefrom to secure any
Indebtedness. (Section 1012)
Limitation on Restricted Subsidiary Equity Interests. The Exchange Indenture
provides that the Company will not permit any Restricted Subsidiary to issue
any Equity Interests, except for (i) Equity Interests issued to and held by
the Company or a Restricted Subsidiary, and (ii) Equity Interests issued by a
Person prior to the time that (A) such Person becomes a Restricted Subsidiary,
(B) such Person merges with or into a Restricted Subsidiary or (C) a
Restricted Subsidiary merges with or into such Person; provided that such
Equity Interests were not issued or incurred by such Person in anticipation of
the type of transaction contemplated by subclause (A), (B) or (C). (Section
1013)
Limitation on Dividend and Other Payment Restrictions Affecting Restricted
Subsidiaries. The Exchange Indenture provides that neither the Company nor any
Restricted Subsidiary will, directly or indirectly, create or otherwise cause
or suffer to exist or become effective any encumbrance or restriction on the
ability of any Restricted Subsidiary to:
(i) (a) pay dividends or make any other distributions to the Company or
any other Restricted Subsidiary (1) on its Capital Stock or (2) with
respect to any other interest or participation in, or measured by, its
profits, or (b) pay any Indebtedness owed to the Company or any other
Restricted Subsidiary,
(ii) make loans or advances to the Company or any other Restricted
Subsidiary, or
(iii) transfer any of its properties or assets to the Company or any
other Restricted Subsidiary,
except for such encumbrances or restrictions existing under or by reason of:
(t) any Existing Indebtedness;
(u) the Credit Agreements as in effect on the Issue Date, and any
amendments, modifications, restatements, renewals, increases, supplements,
refundings, replacements or refinancings thereof, provided,
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however, that such amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacements or refinancings are no
more restrictive in the aggregate with respect to such dividend and other
payment restrictions than those contained in the Credit Agreements (or, if
more restrictive, the Exchange Indenture) immediately prior to any such
amendment, modification, restatement, renewal, increase, supplement,
refunding, replacement or refinancing;
(v) applicable law;
(w) any instrument governing Indebtedness or Capital Stock of a Person
acquired by the Company or any of its Restricted Subsidiaries as in effect
at the time of such acquisition (except to the extent such Indebtedness was
incurred in connection with or in contemplation of such acquisition),
provided, however, that (1) such restriction is not applicable to any other
Person (other than any Subsidiary of such Person) or the properties or
assets of any other Person (other than any Subsidiary of such Person), and
(2) the consolidated net income (loss) of such acquired Person (or any such
Subsidiary) for any period prior to such acquisition shall not be taken
into account in determining whether such acquisition was permitted by the
terms of the Exchange Indenture;
(x) by reason of customary non-assignment provisions in leases entered
into in the ordinary course of business and consistent with past practices;
(y) Purchase Money Indebtedness for property acquired in the ordinary
course of business that only impose restrictions on the property so
acquired; or
(z) Refinancing Indebtedness permitted under the Exchange Indenture,
provided, however, that the restrictions contained in the agreements
governing such Refinancing Indebtedness are no more restrictive in the
aggregate than those contained in the agreements governing the Indebtedness
being refinanced immediately prior to such refinancing. (Section 1014)
Transactions with Affiliates. The Exchange Indenture provides that neither
the Company nor any Restricted Subsidiary will, directly or indirectly, sell,
lease, transfer or otherwise dispose of any of its properties or assets to, or
purchase any property or assets from, or enter into any contract, agreement,
understanding, loan, advance or guarantee with, or for the benefit of, any
Affiliate of the Company or any Restricted Subsidiary (each of the foregoing,
an "Affiliate Transaction"), unless:
(i) such Affiliate Transaction is on terms that are no less favorable to
the Company or the relevant Restricted Subsidiary than those that would
have been obtained in a comparable transaction by the Company or such
Restricted Subsidiary with a non-Affiliated Person;
(ii) such Affiliate Transaction is approved by a majority of
disinterested members of the Company's Board of Directors; and
(iii) the Company delivers to the Trustee--
(a) with respect to any Affiliate Transaction involving aggregate
payments in excess of $1,000,000, an Officers' Certificate certifying
that such Affiliate Transaction complies with clause (i) above and such
Affiliate Transaction has been approved by a majority of the
disinterested members of the Company's Board of Directors; and
(b) with respect to any Affiliate Transaction (or series of related
transactions) with an aggregate value in excess of $5,000,000 an
opinion from a nationally recognized investment bank to the effect that
the transaction is fair to the Company or the Restricted Subsidiary, as
the case may be, from a financial point of view;
provided, however, that none of the following shall constitute an Affiliate
Transaction:
(x) employment arrangements (including customary benefits thereunder)
entered into by the Company or any of its Restricted Subsidiaries in the
ordinary course of business and consistent with the past practice of the
Company or such Restricted Subsidiary,
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(y) transactions solely between or among the Company and its Restricted
Subsidiaries or solely between or among Restricted Subsidiaries, and
(z) transactions permitted by the provisions of the restrictions
described under "--Limitation on Restricted Payments". (Section 1015)
Provision of Financial Information. The Exchange Indenture provides that
whether or not required by the rules and regulations of the Commission, so
long as any Exchange Debentures are outstanding, the Company will furnish to
the Trustee and to the Holders of Exchange Debentures:
(i) all quarterly and annual financial information that would be required
to be contained in a filing with the Commission on Forms 10-Q and 10-K if
the Company were required to file such Forms, including a "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
and, with respect to the annual information only, a report thereon by the
Company's independent certified public accountants, and
(ii) all reports that would be required to be filed with the Commission
on Form 8-K if the Company were required to file such reports.
In addition, whether or not required by the rules and regulations of the
Commission, the Company will file a copy of all such information with the
Commission for public availability (unless the Commission will not accept such
filing) and make such information available to investors who request it in
writing. (Section 1016)
Change of Control. The Exchange Indenture provides that the Company will
commence an Offer to Purchase all of the Outstanding Exchange Debentures
within fifteen (15) days after the occurrence of a Change of Control. (Section
1017) In the event that the Company makes an Offer to Purchase the Exchange
Debentures, the Company intends to comply with applicable securities laws and
regulations.
The ability of American to purchase Exchange Debentures upon a Change of
Control is restricted under the terms of the Credit Agreements and the Note
Indenture and is prohibited during the existence of a default under any
thereof. See "Risk Factors--Factors Relating to American and its Business--
Restrictions Imposed by Terms of Indebtedness", "Indebtedness of American",
and the Notes to Consolidated Financial Statements of American in the American
10-K.
LIMITATION ON MERGER, CONSOLIDATION AND SALE OF ASSETS
The Exchange Indenture provides that the Company may not consolidate or
merge with or into (whether or not the Company is the Surviving Person), or
sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of its properties or assets in one or more related
transactions, to another Person, unless:
(i) the Surviving Person is a corporation organized or existing under the
laws of the United States, any state thereof or the District of Columbia;
(ii) the Surviving Person (if other than the Company) assumes all the
obligations of the Company under the Exchange Debentures and the Exchange
Indenture pursuant to a supplemental indenture in a form reasonably
satisfactory to the Trustee;
(iii) at the time of and immediately after such Disposition, no Default
or Event of Default shall have occurred and be continuing; and
(iv) the Surviving Person shall at the time of such Disposition and after
giving pro forma effect thereto, be permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Debt to EBITDA Ratio test described
above under "--Limitation on Incurrence of Indebtedness and Issuance of
Preferred Stock". (Article Eight)
EVENTS OF DEFAULT AND REMEDIES
The following will be Events of Default under the Exchange Indenture; (a)
failure to pay (whether or not prohibited by the subordination provisions of
the Indenture) principal of (or premium, if any, on) any Exchange
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Debenture when due; (b) failure to pay (whether or not prohibited by the
subordination provisions of the Exchange Indenture) any interest on any
Exchange Debenture when due, continued for 30 days; (c) default in the payment
(whether or not prohibited by the subordination provisions of the Exchange
Indenture) of principal and interest on Exchange Debentures required to be
purchased pursuant to an Offer to Purchase as described above under "--Certain
Covenants--Change of Control" and "--Limitation on Certain Asset Sales" when
due and payable; (d) failure to perform or comply with the provisions
described above under "--Limitation on Merger, Consolidation and Sale of
Assets"; (e) failure to perform any other covenant or agreement of the Company
under the Exchange Indenture or the Exchange Debentures continued for 60 days
after written notice to the Company by the Trustee or Holders of at least 25%
in aggregate principal amount of Exchange Debentures then outstanding; (f)
default under the terms of any instrument evidencing or securing Indebtedness
for money borrowed by the Company or any Restricted Subsidiary having an
outstanding principal amount of $5,000,000 individually or in the aggregate
which default results in the acceleration of the payment of such Indebtedness
or constitutes the failure to pay such Indebtedness when due at final maturity
and such failure to pay such Indebtedness (whether at maturity or upon
becoming due or being declared due and payable) shall have continued for 30
days; (g) the rendering of a final judgement or judgments (not subject to
appeal) against the Company or any Restricted Subsidiary in an amount in
excess of $5,000,000 which remains undischarged or unstayed for a period of 60
days after the date on which the right to appeal has expired; and (h) certain
events of bankruptcy, insolvency or reorganization affecting the company or
any Restricted Subsidiary. ((S) 501) Subject to the provisions of the Exchange
Indenture relating to the duties of the Trustee in case an Event of Default
(as defined) shall occur and be continuing, the Trustee will be under no
obligation to exercise any of its rights or powers under the Exchange
Indenture at the request or direction of any of the Holders, unless such
Holders shall have offered to the Trustee reasonable indemnity. ((S) 603)
Subject to such provisions for the indemnification of the Trustee, the Holders
of a majority in aggregate principal amount of the Exchange Debentures then
outstanding will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee. ((S) 512)
If an Event of Default (other than an Event of Default described in Clause
(h) above) shall occur and be continuing, either the Trustee or the Holders of
at least 25% in aggregate principal amount of the Exchange Debentures
outstanding may accelerate the maturity of all Exchange Debentures; provided,
however, that after such acceleration, but before a judgment or decree based
on acceleration, the Holders of a majority in aggregate principal amount of
Exchange Debentures then outstanding may, under certain circumstances, rescind
and annul such acceleration if all Events of Default, other than the non-
payment of accelerated principal, have been cured or waived as provided in the
Exchange Indenture. If an Event of Default specified in Clause (h) above
occurs, the Exchange Debentures then outstanding will ipso facto become
immediately due and payable without any declaration or other act on the part
of the Trustee or any Holder. ((S) 502) For information as to waiver of
defaults, see "--Modifications and Waiver" below.
No holder of any Exchange Debenture will have any right to institute any
proceeding with respect to the Exchange Indenture or for any remedy
thereunder, unless such Holder shall have previously given to the Trustee
written notice of a continuing Event of Default and unless also the Holders of
at least 25% in aggregate principal amount of the Exchange Debentures then
outstanding shall have made written request, and offered reasonable indemnity,
to the Trustee to institute such proceeding as trustee and the Trustee shall
not have received from the Holders of a majority in aggregate principal amount
of the Exchange Debentures then outstanding a direction inconsistent with such
request and shall have failed to institute such proceeding within 60 days.
((S) 507) However, such limitations do not apply to a suit instituted by a
Holder of an Exchange Debenture for enforcement of payment of the principal of
and premium, if any, or interest on such Exchange Debenture on or after the
respective due dates stated in such Exchange Debenture. ((S) 508)
The Company will be required to furnish to the Trustee quarterly a statement
as to the performance by the Company of certain of its obligations under the
Exchange Indenture and as to any default in such performance. ((S) 1018)
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GOVERNING LAW
The Exchange Indenture and the Exchange Debentures will be governed by the
laws of the State of New York.
DEFEASANCE
The Exchange Indenture will provide that, at the option of the Company, (A)
if applicable, the Company will be discharged from any and all obligations in
respect of the Exchange Debentures then outstanding (including the provisions
described above under "--Subordination of Exchange Debentures") or (B) if
applicable, the Company may omit to comply with certain restrictive covenants
and the provisions described above under "--Subordination of Exchange
Debentures", and that such omission shall not be deemed to be an Event of
Default under the Exchange Indenture and the Exchange Debenture, in the case
of either clause (A) or (B) upon irrevocable deposit with the Trustee, in
trust, of money or U.S. Government Obligations which will provide money in an
amount sufficient in the opinion of a nationally recognized firm of
independent certified public accountants to pay the principal of and premium,
if any, and each installment of interest, if any, on the Exchange Debentures
then outstanding. With respect to clause (B), the obligations under the
Exchange Indenture other than with respect to such covenants and the Events of
Default other than the Events of Default relating to such covenants above
shall remain in full force and effect. Such trust may only be established if,
among other things (i) with respect to clause (A), the Company has received
from, or there has been published by, the Internal Revenue Service a ruling or
there has been a change in law, which in the Opinion of Counsel provides that
Holders of the Exchange Debentures will not recognize gain or loss for Federal
income tax purposes as a result of such deposit, defeasance and discharge and
will be subject to Federal income tax on the same amount, in the same manner
and at the same times as would have been the case if such deposit, defeasance
and discharge had not occurred; or, with respect to clause (B), the Company
has delivered to the Trustee an Opinion of Counsel to the effect that the
Holders of the Exchange Debentures will not recognize gain or loss for Federal
income tax purposes as a result of such deposit and defeasance and will be
subject to Federal income tax on the same amount, in the same manner and at
the same times as would have been the case if such deposit and defeasance had
not occurred; (ii) no Event of Default or event that with the passing of time
or the giving of notice, or both, shall constitute an Event of Default shall
have occurred or be continuing; (iii) the Company has delivered to the Trustee
an Opinion of Counsel to the effect that such deposit shall not cause the
Trustee or the Trust so created to be subject to the Investment Company Act of
1940; and (iv) certain other customary conditions precedent are satisfied.
(Article Thirteen)
MODIFICATION AND WAIVER
Modifications and amendments of the Exchange Indenture may be made by the
Company and the Trustee with the consent of the Holders of a majority in
aggregate principal amount of the Exchange Debentures then outstanding;
provided, however, that no such modification or amendment may, without the
consent of the Holder of each Exchange Debenture then outstanding affected
thereby, (a) change the Stated Maturity of the principal of, or any
installment of interest on, any Exchange Debenture, (b) reduce the principal
amount of (or the premium), or interest on, any Exchange Debenture; (c) change
the place or currency of payment of principal of (or premium), or interest on
any Exchange Debenture, (d) impair the right to institute suit for the
enforcement of any payment on or with respect to any Exchange Debenture, (e)
reduce the above-stated percentage of Exchange Debentures then outstanding
necessary to modify or amend the Exchange Indenture, (f) reduce the percentage
of aggregate principal amount of Exchange Debentures then outstanding
necessary for waiver of compliance with certain provisions of the Exchange
Indenture or for waiver of certain defaults, (g) modify any provisions of the
Exchange Indenture relating to the modification and amendment of the Exchange
Indenture or the waiver of past defaults or covenants, except as otherwise
specified, (h) modify any of the provisions of the Exchange Indenture relating
to the subordination of the Exchange Debentures in a manner materially adverse
to the Holders, (i) modify any provisions of the Exchange Indenture relating
to the guarantee by the Company of the Indebtedness of any Unrestricted
Subsidiaries or (j) following the mailing of any Offer to Purchase, modify any
Offer to Purchase for the Exchange Debentures required under covenants
described above under "--Certain Covenants--
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Limitation on Certain Asset Sales" and "--Change of Control" in a manner
materially adverse to the Holders thereof. ((S)902)
The Holders of a majority in aggregate principal amount of the Outstanding
Exchange Debentures, on behalf of all Holders of Exchange Debentures, may
waive compliance by the Company with certain restrictive provisions of the
Exchange Indenture. ((S) 1019) Subject to certain rights of the Trustee, as
provided in the Exchange Indenture, the Holders of a majority in aggregate
principal amount of the Exchange Debentures then outstanding, on behalf of all
Holders of Exchange Debentures, may waive any past default arising from
failure to purchase any Exchange Debentures tendered pursuant to an Offer to
Purchase. ((S) 513)
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
Certificate of Designation and/or the Exchange Indenture. Reference is made to
the Certificate of Designation and/or the Exchange Indenture for the full
definition of all such terms, as well as any other terms used herein for which
no definition is provided.
"Acquired Debt" means, with respect to any specified Person, Indebtedness of
any other Person existing at the time such other Person merges with or into,
or becomes a Subsidiary of, such specified Person, including Indebtedness
incurred in connection with, or in contemplation of, such other Person merging
with or into, or becoming a Subsidiary of, such specified Person.
"Affiliate" means, with respect to any specified Person, any other Person
directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person. For purposes of this
definition, "control of" (including, with correlative meanings, the terms
"controlling," "controlled by" and "under common control with") any Person
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of such Person, whether through
the ownership of voting securities, by agreement or otherwise; provided,
however, that beneficial ownership of 10% or more of the voting securities of
a Person shall be deemed to be control.
"Asset Swap" means the execution of a definitive agreement, subject only to
FCC approval, expiration or earlier termination of the HSR Act waiting period
to the extent applicable and other customary closing conditions, that the
Company in good faith believes will be satisfied, for a substantially
concurrent purchase and sale, or exchange, of Broadcast Assets between the
Company or any of its Restricted Subsidiaries and another Person or group of
Affiliated Persons; provided that any amendment to or waiver of any closing
condition which individually or in the aggregate is material to the Asset Swap
shall be deemed to be a new Asset Swap.
"Broadcast Assets" means assets used or useful in the ownership or operation
of an AM or FM radio station.
"Broadcast License" means an authorization issued by the FCC for the
operation of an AM or FM radio station.
"Capital Lease Obligation" means, at any time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that
would at such time be required to be capitalized on the balance sheet in
accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation, capital stock, (ii)
in the case of any association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) or
capital stock and (iii) in the case of a partnership, partnership interests
(whether general or limited) and any other interest or participation that
confers on a Person the right to receive a share of the profits and losses of,
or distributions of assets of, such partnership.
"Cash Equivalents" means (i) United States dollars, (ii) securities issued
or directly and fully guaranteed or insured by the United States government or
any agency or instrumentality thereof having maturities of less
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than one year from the date of acquisition, (iii) certificates of deposit and
eurodollar time deposits with maturities of less than one year from the date
of acquisition, bankers' acceptances with maturities of less than one year and
overnight bank deposits, in each case with any lender party to either of the
Credit Agreements or with any domestic commercial bank having capital and
surplus in excess of $500,000,000 and a Keefe Bank Watch Rating of "B" or
better, (iv) repurchase obligations with a term of not more than seven days
for underlying securities of the types described in clauses (ii) and (iii)
entered into with any financial institution meeting the qualifications
specified in clause (iii) above and (v) commercial paper having the highest
rating obtainable from Moody's Investors Service, Inc. or Standard & Poor's
Ratings Services, a division of the McGraw-Hill Companies, Inc., and in each
case maturing within nine months after the date of acquisition.
"Change of Control" means the occurrence of any of the following:
(i) the sale, lease or transfer, in one or a series of related
transactions, of all or substantially all of the Company's assets to any
Person or group (as such term is used in Section 13(d)(3) of the Exchange
Act) (other than the Principal Shareholders or their Related Parties),
(ii) the adoption of a plan relating to the liquidation or dissolution of
the Company,
(iii) the acquisition, directly or indirectly, by any Person or group (as
such term is used in Section 13(d)(3) of the Exchange Act) (other than one
or more of the Principal Shareholders and their Related Parties) of 40% or
more of the voting power of the voting stock of the Company by way of
merger or consolidation or otherwise, provided that such acquisition will
not constitute a "Change of Control" unless or until such Person or group
owns, directly or indirectly, more of the voting power of the voting stock
of the Company than the Principal Shareholders and their Related Parties,
or
(iv) the Continuing Directors cease for any reason to constitute a
majority of the directors of the Company then in office.
For purposes of this definition, any transfer of an Equity Interest of an
entity that was formed for the purpose of acquiring voting stock of the
Company shall be deemed to be a transfer of such portion of such voting stock
as corresponds to the portion of the equity of such entity that has been so
transferred.
"Consolidated Interest Expense" means, without duplication, with respect to
any period, the sum of (i) the interest expense and all capitalized interest
of the Company and its Restricted Subsidiaries for such period, on a
consolidated basis, including, without limitation, (a) amortization of debt
discount, (b) the net cost under interest rate contracts (including
amortization of debt discount), (c) the interest portion of any deferred
payment obligation and (d) accrued interest, plus (ii) the interest component
of any Capital Lease Obligation paid or accrued or scheduled to be paid or
accrued by the Company during such period, determined on a consolidated basis
in accordance with GAAP.
"Continuing Director" means any member of the Board of Directors of the
Company who (i) is a member of that Board of Directors on the Issue Date or
(ii) was nominated for election by either (a) one or more of the Principal
Shareholders (or a Related Party thereof) or (b) the Board of Directors a
majority of whom were directors at the Issue Date or whose election or
nomination for election was previously approved by one or more of the
Principal Shareholders or such directors.
"Convertible Exchange Debentures" means any debentures issued pursuant to
the Indenture, dated as of June 25, 1996, between the Company and Bank of
Montreal Trust Company, as Trustee.
"Credit Agreements" means both the $550,000,000 Credit Agreement and the
$350,000,000 Credit Agreement, each dated as of January 24, 1997, among the
Company, The Bank of New York, as collateral agent and administrative agent,
the co-syndication agents, the managing agents, the agent and the co-agents
named therein and the lenders parties thereto, including in each case (i) any
related notes, guarantees (including guarantees by the Company's
Subsidiaries), collateral documents, instruments and agreements executed in
connection therewith, and in each case as amended, modified, renewed,
refunded, replaced or refinanced from time to time, and (ii) any notes,
guarantees (including guarantees by the Company's Subsidiaries), collateral
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documents, instruments and agreements executed in connection with any such
amendment, modification, renewal, refunding, replacement or refinancing.
"Debt to EBITDA Ratio" means, with respect to any date, the ratio of (a) the
aggregate principal amount of all outstanding Indebtedness (excluding Hedging
Obligations, including interest rate swap obligations, that are incurred in
the ordinary course of business for the purpose of fixing or hedging interest
rate risk with respect to any floating rate Indebtedness that is permitted by
the terms of the Exchange Indenture or the Certificate of Designation, as the
case may be, to be outstanding) of the Company and its Restricted Subsidiaries
as of such date on a consolidated basis, plus the aggregate liquidation
preference or redemption amount of all outstanding Disqualified Stock of the
Company and its Restricted Subsidiaries as of such date (excluding any such
Disqualified Stock held by the Company or a Wholly Owned Restricted
Subsidiary), to (b) EBITDA of the Company and its Restricted Subsidiaries on a
consolidated basis for the four most recent full fiscal quarters ending
immediately prior to such date, determined on a pro forma basis after giving
effect to each acquisition or disposition of assets made by the Company and
its Restricted Subsidiaries from the beginning of such four-quarter period
through such date as if such acquisition or disposition had occurred at the
beginning of such four-quarter period.
"Default" means any event that is, or after the giving of notice or passage
of time or both would be, an Event of Default.
"Designated Senior Debt" means (i) the Senior Bank Debt, and (ii) any other
Senior Debt of the Company permitted under the Exchange Indenture, the
principal amount of which is $25,000,000 or more at the time of designation by
the Company in a written instrument delivered to the Trustee.
"Disposition" means, with respect to any Person, any merger, consolidation
or other business combination involving such Person (whether or not such
Person is the Surviving Person) or the sale, assignment, transfer, lease
conveyance or other disposition of all or substantially all of such Person's
assets.
"Disqualified Stock" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or is
redeemable at the option of the holder thereof (other than upon a Change of
Control of the Company in circumstances where the holders of the New Preferred
Stock or Exchange Debentures, as the case may be, would have similar rights),
in whole or in part on or prior to one year after (i) January 15, 2009, in the
case of the New Preferred Stock or (ii) the Stated Maturity of the Exchange
Debentures, in the case of the Exchange Debentures. The amount of Disqualified
Stock shall be the greater of the liquidation preference or mandatory or
optional redemption price thereof.
"EBITDA" of a specified person means, for any period, the consolidated net
income of such specified Person and its Restricted Subsidiaries for such
period:
(i) plus (without duplication and to the extent involved in computing
such consolidated net income) (a) interest expense, (b) provision for
income taxes, (c) depreciation and amortization and other non-cash charges
(including amortization of goodwill and other intangibles and barter
expenses), (d) EBITDA of Sponsored Investees (where such Person is the
Company), and (e) LMA expenses; and
(ii) minus (without duplication and to the extent involved in computing
such consolidated net income) (a) any gains (or plus losses), together with
any related provision for taxes on such gains or losses, realized in
connection with any sale of assets (including, without limitation,
dispositions pursuant to sale and leaseback transactions), (b) any non-cash
or extraordinary gains (or plus losses), together with any related
provision for taxes on such extraordinary gains or losses, (c) the amount
of any cash payments related to non-cash charges that were added back in
determining EBITDA in any prior period, (d) barter revenues, and (e)
interest attributable to Indebtedness of Sponsored Investees (where such
Person is the Company) that is owed to the Company or a Restricted
Subsidiary, together with any taxes attributable thereto;
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provided, however, that:
(i) the net income of any other Person (other than a Sponsored Investee)
that is accounted for by the equity method of accounting shall be included
only to the extent of the amount of dividends or distributions paid in cash
to such specified Person whose EBITDA is being determined or a Wholly Owned
Restricted Subsidiary thereof;
(ii) the net income of any other Person that is a Restricted Subsidiary
(other than a Wholly Owned Restricted Subsidiary) or is an Unrestricted
Subsidiary shall be included only to the extent of the amount of dividends
or distributions paid in cash to such specified Person whose EBITDA is
being determined or a Wholly Owned Restricted Subsidiary thereof;
(iii) the net income (loss) of any other Person acquired after the Issue
Date in a pooling of interests transaction for any period prior to the date
of such acquisition shall be excluded (to the extent otherwise included);
and
(iv) gains or losses from sales of assets other than sales of assets
acquired and held for resale in the ordinary course of business shall be
excluded (to the extent otherwise included).
All of the foregoing will be determined in accordance with GAAP.
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (including any Indebtedness or Disqualified
Stock that is convertible into, or exchangeable for, Capital Stock).
"Exchange Date" means the date of original issuance of the Exchange
Debentures in exchange for New Preferred Stock.
"Exchangeable Preferred Stock" means the Old Preferred Stock or New
Preferred Stock issued in exchange therefor.
"Existing Indebtedness" means any outstanding Indebtedness of the Company
and its Restricted Subsidiaries as of the Issue Date (in the case of the New
Preferred Stock) or the Exchange Date (in the case of the Exchange Debentures)
or which thereafter becomes Indebtedness of the Company or any of its
Restricted Subsidiaries as a result of the EZ Merger and which was outstanding
Indebtedness of EZ or its Subsidiaries as of the Issue Date or the Exchange
Date, as the case may be.
"Existing Investments" means any Investments of the Company and its
Restricted Subsidiaries (other than Investments in Unrestricted Subsidiaries)
as of the Issue Date or which thereafter becomes an Investment of the Company
or any of its Restricted Subsidiaries as a result of the EZ Merger and was an
Investment of EZ or its Subsidiaries on the Issue Date.
"EZ" means EZ Communications, Inc., a Virginia corporation.
"Fair Market Value" means, with respect to any asset or property, the sale
value that would be obtained in an arm's-length transaction between an
informed and willing seller under no compulsion to sell and an informed and
willing buyer under no compulsion to buy. All determinations of Fair Market
Value shall be made by the Board of Directors of the Company and shall be
evidenced by a resolution of such Board set forth in an Officers' Certificate.
In the case of the Exchange Debentures, the Officer's Certificate shall be
delivered to the Trustee, and the Trustee may conclusively rely upon it.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board, or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect on the Issue Date.
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"Hedging Obligations" means, with respect to any Person, the Obligations of
such Person under (i) interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements, and (ii) other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates.
"Immediate Family Member" means, with respect to any individual, such
individual's spouse (past or current), descendants (natural or adoptive, of
the whole or half blood) of the parents of such individual, such individual's
grandparents and parents (natural or adoptive), and the grandparents, parents
and descendants of parents (natural or adoptive, of the whole or half blood)
of such individual's spouse (past or current).
"Indebtedness" means, with respect to any Person, whether or not contingent,
(i) all indebtedness of such Person for borrowed money or for the deferred
purchase price of property or services (other than current trade liabilities
incurred in the ordinary course of business and payable in accordance with
customary practices) or which is evidenced by a note, bond, debenture or
similar instrument, (ii) all Capital Lease Obligations of such Person, (iii)
all obligations of such Person in respect of letters of credit or bankers'
acceptances issued or created for the account of such Person, (iv) all Hedging
Obligations of such Person, (v) all liabilities secured by any Lien on any
property owned by such Person even if such Person has not assumed or otherwise
become liable for the payment thereof to the extent of the value of the
property subject to such Lien, and (vi) to the extent not otherwise included,
any guarantee by such person of any other Person's indebtedness or other
obligations described in clauses (i) through (v) above.
"Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates of such Person) in the form of
loans, guarantees, advances or capital contributions (excluding commission,
travel and similar advances to officers and employees made in the ordinary
course of business), purchases or other acquisitions for consideration of
Indebtedness, Equity Interests or other securities of any other Person and all
other items that are or would be classified as investments on a balance sheet
prepared in accordance with GAAP.
"Issue Date" means the date of original issuance of the Exchangeable
Preferred Stock.
"Lien" means, with respect to any asset, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind in respect of such asset, whether
or not filed, recorded or otherwise perfected under applicable law (including
any conditional sale or other title retention agreement, any lease in the
nature thereof, any option or other agreement to sell or give a security
interest in any asset and any filing of, or agreement to give, any financing
statement under the "Uniform Commercial Code" (or equivalent statutes) of any
jurisdiction).
"Net Proceeds" means, with respect to any Asset Sale by any Person, the
aggregate cash proceeds received by such Person in respect of such Asset Sale,
which amount is equal to the excess, if any, of:
(i) the cash received by such Person (including any cash payments
received by way of deferred payment pursuant to, or monetization of, a note
or installment receivable or otherwise, but only as and when received) in
connection with such Asset Sale, over
(ii) the sum of
(a) the amount of any Indebtedness including any premium thereon and
fees and expenses associated therewith which is required to be repaid
by such Person in connection with such Asset Sale, plus
(b) the out-of-pocket expenses (1) incurred by such Person in
connection with such Asset Sale, and (2) if such Person is a Restricted
Subsidiary, incurred in connection with the transfer of such amount to
the parent company or entity of such Person, plus
(c) provision for taxes, including income taxes, attributable to the
Asset Sale or attributable to required prepayments or repayments of
Indebtedness with the proceeds of such Asset Sale, plus
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(d) a reasonable reserve for the after-tax cost of any
indemnification payments (fixed or contingent) attributable to the
seller's indemnities to the purchaser in respect of such Asset Sale
undertaken by the Company or any of its Restricted Subsidiaries in
connection with such Asset Sale.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Offer to Purchase", with respect to the Exchange Debentures, means a
written offer ("Offer") to each Holder at such Holder's address appearing in
the Security Register on the date of the Offer, offering to purchase in cash
up to the principal amount of Exchange Debentures specified in such Offer at a
purchase price equal to 101% of the principal amount of the Exchange
Debentures plus accrued and unpaid interest, if any. Unless otherwise required
by applicable law, the Offer shall specify an expiration date ("Expiration
Date") of the Offer to Purchase which shall be, subject to any contrary
requirements of applicable law, not less than 30 days or more than 60 days
after the date of such Offer and a settlement date ("Purchase Date") for
purchase of Exchange Debentures within five Business Days after the Expiration
Date. The Company shall notify the Trustee at least 15 Business Days (or such
shorter period as is acceptable to the Trustee) prior to the mailing of the
Offer of the Company's obligation to make an Offer to Purchase, and the Offer
shall be sent by first class mail by the Company or, at the Company's request
and expense, by the Trustee in the name and at the expense of the Company. The
Offer shall contain information concerning the business of the Company and its
Subsidiaries which the Company in good faith believes will enable such Holders
to make an informed decision with respect to the Offer to Purchase (which at a
minimum will include (i) the most recent annual and quarterly financial
statements and "Management's Discussion and Analysis of Financial Condition
and Results of Operations" contained in the documents required to be filed
with the Trustee pursuant to the Exchange Debenture (which requirements may be
satisfied by delivery of such documents together with the Offer), (ii) a
description of material developments in the Company's business subsequent to
the date of the latest of such financial statements referred to in Clause (i)
(including a description of the events requiring the Company to make the Offer
to Purchase), (iii) if applicable, appropriate pro forma financial information
concerning the Offer to Purchase and the events requiring the Company to make
the Offer to Purchase and (iv) any other information required by applicable
law to be included therein. The Offer shall contain all instructions and
materials necessary to enable such Holders to tender Exchange Debentures
pursuant to the Offer to Purchase. The Offer shall also state:
(1) the Section of the Exchange Indenture pursuant to which the Offer to
Purchase is being made;
(2) the Expiration Date and the Purchase Date;
(3) the aggregate principal amount of the Outstanding Exchange Debentures
offered to be purchased by the Company (the "Purchase Amount") pursuant to
the Offer to Purchase (including, if less than 100%, the manner by which
such has been determined pursuant to the Section of the Exchange Debenture
requiring the Offer to Purchase);
(4) the purchase price to be paid by the Company (the "Purchase Price")
for each $1,000 aggregate principal amount of Exchange Debentures accepted
for payment (as specified pursuant to the Exchange Indenture);
(5) that the Holder may tender all or any portion of the Exchange
Debentures registered in the name of such Holder and that any portion of
Securities tendered must be tendered in an integral multiple of $1,000
principal amount;
(6) the place or places where Exchange Debentures are to be surrendered
for tender pursuant to the Offer to Purchase;
(7) that interest on any Exchange Debenture not tendered or tendered but
not purchased by the Company pursuant to the Offer to Purchase will
continue to accrue;
(8) that on the Purchase Date the Purchase Price will become due and
payable upon each Exchange Debenture being accepted for payment pursuant to
the Offer to Purchase and that interest thereon shall cease to accrue on
and after the Purchase Date;
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(9) that each Holder electing to tender an Exchange Debenture pursuant to
the Offer to Purchase will be required to surrender such Exchange Debenture
at the place or places specified in the Offer prior to the close of
business on the Expiration Date (such Exchange Debenture being, if the
Company or the Trustee so requires, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Company and the
Trustee duly executed by, the Holder thereof or his attorney duly
authorized in writing);
(10) that Holders will be entitled to withdraw all or any portion of
Exchange Debentures tendered if the Company (or the Paying Agent) receives,
not later than the close of business on the Expiration Date, a telegram,
telex, facsimile transmission or letter setting forth the name of the
Holder, the principal amount of the Exchange Debenture that the Holder
tendered, the certificate number of the Exchange Debenture that the Holder
tendered and a statement that such Holder is withdrawing all or a portion
of his tender;
(11) that (a) if Exchange Debentures in an aggregate principal amount
less than or equal to the Purchase Amount are duly tendered and not
withdrawn pursuant to the Offer to Purchase, the Company shall purchase all
such Exchange Debentures and (b) if Exchange Debentures in an aggregate
principal amount in excess of the Purchase Amount are tendered and not
withdrawn pursuant to the Offer to Purchase, the Company shall purchase
Exchange Debentures having an aggregate principal amount equal to the
Purchase Amount on a pro rata basis (with such adjustments as may be deemed
appropriate so that only Exchange Debentures in denominations of $1,000 or
integral multiples thereof shall be purchased); and
(12) that in the case of any Holder whose Exchange Debenture is purchased
only in part, the Company shall execute, and the Trustee shall authenticate
and deliver to the Holder of such Exchange Debenture without service
charge, a new Exchange Debenture or Exchange Debentures, of any authorized
denomination as requested by such Holder, in an aggregate principal amount
equal to and in exchange for the unpurchased portion of the Exchange
Debenture so tendered.
Any Offer to Purchase shall be governed by and effected in accordance with
the Offer for such Offer to Purchase.
"Offer to Purchase," with respect to the New Preferred Stock, has the same
meaning as Offer to Purchase with respect to the Exchange Debentures, except
that references to (i) Exchange Debentures shall be to New Preferred Stock,
(ii) principal amount and interest shall be to the liquidation preference and
dividends, respectively, (iii) the Trustee and the Exchange Indenture shall be
deleted, (iv) documents filed with the Trustee shall be to documents
contemplated in the covenant described above under "Description of the New
Preferred Stock--Provision of Financial Information," and (v) minimum
denominations or multiples of $1,000 shall be to whole shares.
"Permitted Investment" means:
(i) any Investment in the Company or any Wholly Owned Restricted
Subsidiary;
(ii) any Investment in Cash Equivalents;
(iii) any Investment in a Person if, as a result of such Investment, (a)
such Person becomes a Wholly Owned Restricted Subsidiary of the Company, or
(b) such Person either (1) is merged, consolidated or amalgamated with or
into the Company or one of its Wholly Owned Restricted Subsidiaries and the
Company or such Wholly Owned Restricted Subsidiary is the Surviving Person
or the Surviving Person becomes a Wholly Owned Restricted Subsidiary, or
(2) transfers or conveys all or substantially all of its assets to, or is
liquidated into, the Company or one of its Wholly Owned Restricted
Subsidiaries;
(iv) any Investment in a Sponsored Investee as contemplated by clause
(ii) of the definition of "Sponsored Investee";
(v) any Investment in accounts and notes receivable acquired in the
ordinary course of business;
(vi) notes from employees issued to the Company representing payment of
the exercise price of options to purchase capital stock of the Company;
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(vii) investments in Tower Parent and Tower (excluding Existing
Investments) aggregating up to $25,000,000 in cash and/or property made
within two years from the Issue Date, provided that at the time of and
immediately after giving effect to each proposed Investment, (a) each of
Tower Parent and Tower is an Unrestricted Subsidiary, (b) no Default or
Event of Default shall have occurred and be continuing or would occur as a
consequence thereof and (c) the Debt to EBITDA Ratio of the Company and its
Restricted Subsidiaries is 7.0:1 or less;
(viii) Investments in Unrestricted Subsidiaries represented by shares of
Capital Stock (other than Disqualified Stock) of the Company or assets and
property acquired in exchange for Capital Stock (other than Disqualified
Stock) of the Company; and
(ix) any Existing Investment.
Any Investment in an Unrestricted Subsidiary shall not be a Permitted
Investment unless included in clauses (i) through (ix) above.
"Permitted Liens" means (i) Liens securing Senior Debt; (ii) Liens in favor
of the Company or any Restricted Subsidiary; (iii) Liens on property of a
Person existing at the time such Person is merged with or into or consolidated
with the Company or any Restricted Subsidiary, provided, however, that such
Liens were in existence prior to the contemplation of such merger or
consolidation and do not extend to any assets other than those of the Person
merged with or into or consolidated with the Company or any Restricted
Subsidiary; (iv) Liens on property existing at the time of acquisition thereof
by the Company or any Restricted Subsidiary, provided, however, that such
Liens were in existence prior to the contemplation of such acquisition; (v)
Liens to secure the performance of statutory obligations, surety or appeal
bonds, performance bonds, bids, tenders, contracts (other than contracts for
the payment of money) escrow deposits in connection with permitted
acquisitions, leases or other obligations of a like nature incurred in the
ordinary course of business; (vi) Liens existing on the Issue Date (in the
case of the New Preferred Stock) or the Exchange Date (in the case of the
Exchange Debentures); (vii) Liens for taxes, workers compensation,
unemployment insurance, social security obligations, assessments or
governmental charges or claims that are not yet delinquent or that are being
contested in good faith by appropriate proceedings promptly instituted and
diligently concluded, provided, however, that any reserve or other appropriate
provision as shall be required in conformity with GAAP shall have been made
therefor; (viii) Liens imposed by law, such as mechanics', carriers',
warehousemen's, materialmen's, and vendors' Liens, incurred in good faith in
the ordinary course of business with respect to amounts not yet delinquent or
being contested in good faith by appropriate proceedings if a reserve or other
appropriate provisions, if any, as shall be required by GAAP shall have been
made therefor; (ix) zoning restrictions, easements, licenses, covenants,
reservations, restrictions on the use of real property or minor irregularities
of title incident thereto that do not, in the aggregate, materially detract
from the value of the property or the assets of the Company or materially
impair the use of such property in the operation of the Company's business;
(x) judgment Liens to the extent that such judgments do not cause or
constitute a Default or an Event of Default; (xi) Liens to secure the payment
of all or a part of the purchase price of property or assets acquired or the
construction costs of property or assets constructed in the ordinary course of
business on or after the Exchange Date, provided, however, that (a) such
property or assets are used in the same or similar line of business as the
Company was engaged in on the Exchange Date, (b) at the time of incurrence of
any such Lien, the aggregate principal amount of the obligations secured by
such Lien does not exceed the lesser of the cost or Fair Market Value of the
assets or property (or portions thereof) so acquired or constructed, (c) each
such Lien encumbers only the assets or property (or portions thereof) so
acquired or constructed and attaches to such assets or property within 120
days of the purchase or construction thereof and (d) any Indebtedness secured
by such Lien is permitted to be incurred under "--Certain Covenants--
Limitation on Incurrence of Indebtedness and Issuance of Preferred Stock";
(xii) to the extent deemed to create a Lien, any negative pledge covenants
contained in any Senior Debt; (xiii) Liens arising in connection with any
agreement or option to sell or otherwise dispose of any assets of the Company
or any Restricted Subsidiary not prohibited by the provisions of the Exchange
Indenture; and (xiv) Liens incurred in the ordinary course of business of the
Company or any Restricted Subsidiary with respect to obligations that do not
exceed $500,000 at any one time outstanding and that (a) are not incurred in
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connection with the borrowing of money or the obtaining of advances or credit
(other than trade credit in the ordinary course of business) and (b) do not in
the aggregate materially detract from the value of the property or materially
impair the use thereof in the operation of business by the Company or such
Restricted Subsidiary.
"Permitted Sponsored Investee Indebtedness" means Indebtedness of a
Sponsored Investee to a Person other than the Company or a Wholly Owned
Restricted Subsidiary, provided that:
(a) such Indebtedness ranks junior in right of payment to the Investments
of the Company and any Wholly Owned Restricted Subsidiary in the Sponsored
Investee;
(b) the net proceeds of such Indebtedness are utilized to reduce the
amount outstanding on the Company's or a Wholly Owned Restricted
Subsidiary's Investments in the Sponsored Investee;
(c) the terms of such Indebtedness do not restrict the ability of the
Sponsored Investee to make any payments to the Company or a Wholly Owned
Restricted Subsidiary; and
(d) if such Sponsored Investee becomes a Restricted Subsidiary, such
Indebtedness is refinanced by the Company (and no longer outstanding to
such other Person) prior to or simultaneously with the Sponsored Investee
becoming a Restricted Subsidiary.
"Person" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political
subdivision thereof.
"Preferred Stock Source Date" means the date of original issue of the
Exchangeable Preferred Stock.
"Principal Shareholders" means Steven B. Dodge and Thomas H. Stoner.
"Public or Rule 144A Equity Offering" means an underwritten public offering,
or an exempt offering made on a firm commitment basis by initial purchasers
the substantial majority of which is contemplated to be resold by the initial
purchasers pursuant to Rule 144A under the Securities Act, of Equity Interests
(other than Indebtedness or Disqualified Stock) of a Person, the net proceeds
from which (after deducting any underwriting discounts and commissions)
exceeds $10,000,000.
"Purchase Money Indebtedness" means Indebtedness of the Company and its
Restricted Subsidiaries incurred in connection with the purchase of property
or assets for the business of the Company and its Restricted Subsidiaries.
"Radio Data" means Radio Data Group, Inc., a Virginia corporation.
"Refinancing Indebtedness" means (i) Indebtedness of the Company or any
Restricted Subsidiary incurred or given in exchange for, or the proceeds of
which are used to, extend, refinance, renew, replace, substitute, defease or
refund any other Indebtedness or Disqualified Stock incurred by the Company in
accordance with the terms of this Indenture, and (ii) Indebtedness of any
Restricted Subsidiary incurred or given in exchange for, or the proceeds of
which are used to, extend, refinance, renew, replace, substitute, defease or
refund any other Indebtedness or Disqualified Stock of the Company or any
Restricted Subsidiary in accordance with the terms of the Exchange Indenture.
"Related Party" with respect to any Principal Shareholder means (i) any 80%
(or more) owned Subsidiary or Immediate Family Member (in the case of an
individual) of such Principal Shareholder or (ii) any Person, the
beneficiaries, stockholders, partners, owners or Persons beneficially holding
an 80% or more controlling interest of which consist of such Principal
Shareholder or an Immediate Family Member, or (iii) any Person employed by the
Company in a management capacity as of the Issue Date.
"Restricted Subsidiary" means a Subsidiary of the Company other than an
Unrestricted Subsidiary.
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"Senior Bank Debt" means (i) the Indebtedness outstanding under either of
the Credit Agreements, provided that Senior Bank Debt under this clause (i)
shall not exceed the difference between (a) the sum of $750,000,000 plus the
aggregate principal amount (up to $150,000,000) of borrowings incurred under
the applicable Credit Agreement to finance the repurchase by the Company of EZ
Notes (the "EZ Note Amount") plus any borrowings and letters of credit under
either of the Credit Agreements after the Issue Date to the extent that such
borrowings or letters of credit at the time of incurrence or issuance, as the
case may be, resulted in combined Indebtedness under the Credit Agreements
exceeding $750,000,000 plus the EZ Note Amount and to the extent that such
borrowings or letters of credit at the time of incurrence or issuance, as the
case may be, were permitted under the covenant described above under "--
Certain Covenants--Limitation on Incurrence of Indebtedness and Issuance of
Preferred Stock" with respect to the New Preferred Stock or the Exchange
Debentures, as the case may be, and (b), in the case of the New Preferred
Stock, the aggregate amount of net proceeds from asset sales applied to
permanently reduce the level of permitted borrowings under the Credit
Agreements pursuant to the terms of any of the Company's outstanding
Indebtedness or, in the case of the Exchange Debentures, the aggregate amount
of Net Proceeds from Asset Sales applied to reduce permanently borrowings
under the Credit Agreements pursuant to the covenant described above under "--
Certain Covenants--Limitation on Certain Asset Sales", and (ii) all
Obligations incurred by or owing to the holders or their agent or
representatives of such Indebtedness outstanding under either of the Credit
Agreements (including, but not limited to, all fees and expenses of counsel
and all other interest, charges, fees and expenses).
"Senior Debt" means the principal of and interest (including post-petition
interest whether or not allowed as a claim) on, and all other amounts owing in
respect of, (a) Senior Bank Debt, (b) the American Notes, (c) the EZ Notes (as
defined in the Exchange Indenture) upon consummation of the EZ Merger, (d) the
Convertible Exchange Debentures, unless otherwise designated by the Company
pursuant to the indenture under which they are issued, and (e) any other
Indebtedness permitted to be incurred by the Company under the terms of the
Exchange Indenture (including, but not limited to, reasonable fees and
expenses of counsel and all other charges, fees and expenses incurred in
connection with such Indebtedness), unless (i) the instrument creating or
evidencing such Indebtedness or pursuant to which such Indebtedness is
outstanding expressly provides that such Indebtedness is pari passu with or
subordinated in right of payment to the Exchange Debentures or (ii) such
Indebtedness is Acquired Debt that, after taking into account the provisions
of the Exchange Indenture described in the next sentence, is pari passu with
the Exchange Debentures. The Exchange Debentures shall be pari passu with
junior subordinated Acquired Debt unless such treatment would result in a
breach or a default under the terms of such Acquired Debt.
Notwithstanding the foregoing, Senior Debt shall not include (v) any
Indebtedness that is represented by Disqualified Stock, (w) any liability for
federal, state, local, or other taxes, (x) any Indebtedness among or between
the Company, any Restricted Subsidiary or any of their Affiliates, (y) any
trade payables and any Indebtedness to trade creditors (other than amounts
accrued thereon) incurred for the purchase of goods or materials, or for
services obtained, in the ordinary course of business or any Obligations to
trade creditors in respect of any such Indebtedness, or (z) any Indebtedness
(other than Senior Bank Debt) that is incurred in violation of the Exchange
Indenture.
"Significant Subsidiary" means any Subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Securities Act, as such Regulation is in effect on the Issue
Date.
"Sponsored Investee" means a Person:
(i) which owns or acquires Broadcast Assets (including a Broadcast
License);
(ii) which either (A) obtains substantially all of the funds required for
such acquisition (other than capital contributions from the stockholders of
such Person) and for the physical improvement of such Broadcast Assets
approved by the Company at the time of such acquisition, from the proceeds
of Investments by the Company in such Person or (B) receives all or a
portion of the purchase price for such
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assets, in either case, in the form of Indebtedness bearing interest at a
rate of not less than the lesser of 10% per annum or the prime rate plus 1%
per annum;
(iii) in respect of which the Company has a right to acquire either (A)
all of such Person's Equity Interests outstanding on the acquisition date
or (B) such Broadcast Assets (including such Broadcast License), subject,
in either case to no conditions other than customary closing conditions,
including without limitation compliance with the rules and regulations of
the FCC relating to acquisitions of Broadcast Licenses and any Federal laws
restricting the number of Broadcast Licenses or share of a market which any
Person may own or control;
(iv) in which the Company has the right to share in not less than 75% of
the appreciation in value of the Broadcast Assets, subject to the right of
the stockholders of the Sponsored Investee to receive a return on their
capital contribution which is not greater than the annual interest rate on
the Indebtedness owed to the Company;
(v) which has agreed that it will not--
(a) incur or be liable for any Indebtedness, except for Investments
owned by the Company and Permitted Sponsored Investee Indebtedness,
(b) make any Investments, except Investments of the type mentioned in
clauses (ii), (iv) and (v) of the definition of Permitted Investments,
(c) declare or pay any dividend or other distribution on any of its
Equity Interests or purchase, redeem or otherwise acquire or retire for
value any of its Equity Interests, other than Equity Interests owned by
the Company or any Restricted Subsidiary,
(d) sell, lease, convey or otherwise dispose of any assets (including
by way of a sale-and-leaseback) other than in the ordinary course of
business or to the Company or any Restricted Subsidiary, or
(e) permit to exist any Liens, except Permitted Liens or Liens in
favor of the Company or any Restricted Subsidiary;
(vi) which has employed a general manager of each radio station owned by
such Person who has, in the reasonable opinion of the Company's Board of
Directors, experience commensurate with that which the Company would expect
of its radio station general managers; and
(vii) which has agreed that not less than 90% of the excess of its
cumulative cash flow from operations that exceeds $500,000 will be used to
meet its obligations on the Investments in it held by the Company or to
prepay such Investments, except such portion of its cash flow which is used
to purchase property, plant and equipment (a) in the ordinary course of
business and approved by the Company (to the extent permitted by FCC
regulations) or (b) pursuant to plans approved in writing by the Company at
the time the Person became a Sponsored Investee.
"Subsidiary" means, with respect to any Person, any corporation, or other
business entity of which more than 50% of the total voting power of shares of
Equity Interests entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees or
other governing body thereof is at the time owned or controlled by such Person
(regardless of whether such Equity Interests are owned directly or through one
or more other Subsidiaries of such Person or a combination thereof).
"Surviving Person" means, with respect to any Person involved in or that
makes any Disposition, the Person formed by or surviving such Disposition or
the Person to which such Disposition is made.
"Tower" means American Tower Systems Inc., a Delaware corporation.
"Tower Parent" means American Tower Systems Holding Corporation, a Delaware
corporation.
"Unrestricted Subsidiary" means (i) Tower, (ii) Tower Parent, (iii) Radio
Data, (iv) American Merger Corporation, (v) any Subsidiary of the Company that
at the time of determination shall be an Unrestricted
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Subsidiary (as designated by the Board of Directors of the Company, as
provided below) and (vi) any Subsidiary of an Unrestricted Subsidiary. The
Board of Directors of the Company may designate any Subsidiary of the Company
(including any newly acquired or newly formed Subsidiary) to be an
Unrestricted Subsidiary if all of the following conditions apply: (a) neither
the Company nor any of its Restricted Subsidiaries provides credit support for
any Indebtedness of such Subsidiary (including any undertaking, agreement or
instrument evidencing such Indebtedness), (b) such Subsidiary is not liable,
directly or indirectly, with respect to any Indebtedness other than
Unrestricted Subsidiary Indebtedness, (c) such Unrestricted Subsidiary is not
a party to any agreement, contract, arrangement or understanding at such time
with the Company or any Restricted Subsidiary of the Company unless the terms
of any such agreement, contract, arrangement or understanding are no less
favorable to the Company or such Restricted Subsidiary than those that might
be obtained at the time from Persons who are not Affiliates of the Company
(the "Third Party Value") or, in the event such condition is not satisfied, an
amount equal to the value of the portion of such agreement, contract,
arrangement or understanding to such Subsidiary in excess of the Third Party
Value shall be deemed a Restricted Payment, and (d) such Unrestricted
Subsidiary does not own any Capital Stock of any Subsidiary of the Company
that has not theretofore been or is not simultaneously being designated an
Unrestricted Subsidiary. Any such designation by the Board of Directors of the
Company shall be evidenced to the Trustee by filing with the Trustee a board
resolution giving effect to such designation and an Officers' Certificate
certifying that such designation complies with the foregoing conditions. The
Board of Directors of the Company may designate any Unrestricted Subsidiary as
a Restricted Subsidiary; provided, however, that (i) immediately after giving
effect to such designation, the Company could incur $1.00 of additional
Indebtedness pursuant to the restrictions above under "--Certain Covenants--
Limitation on Incurrence of Indebtedness and Issuance of Preferred Stock", and
(ii) all Indebtedness of such Unrestricted Subsidiary shall be deemed to be
incurred on the date such Subsidiary is designated a Restricted Subsidiary.
"Unrestricted Subsidiary Indebtedness" of any Unrestricted Subsidiary means
Indebtedness of such Unrestricted Subsidiary (i) as to which neither the
Company nor any Restricted Subsidiary is directly or indirectly liable (by
virtue of the Company or any such Restricted Subsidiary being the primary
obligor on, guarantor of, or otherwise liable in any respect to, such
Indebtedness) and (ii) which, upon the occurrence of a default with respect
thereto, does not result in, or permit any holder of any Indebtedness of the
Company or any Restricted Subsidiary to declare, a default on such
Indebtedness of the Company or any Restricted Subsidiary or cause the payment
thereof to be accelerated or payable prior to its Stated Maturity.
"U.S. Government Obligations" means direct obligations (or certificates
representing an ownership interest in such obligations) of the United States
of America (including any agency or instrumentality thereof) for the payment
of which the full faith and credit of the United States of America is pledged
and which are not callable or redeemable at the issuer's option.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (i) the sum of the
products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required scheduled payment
of principal, including payment at final maturity, in respect thereof, with
(b) the number of years (calculated to the nearest one-twelfth) that will
elapse between such date and the making of such payment, by (ii) the then
outstanding aggregate principal amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" means any Restricted Subsidiary all of
the outstanding Equity Interests (other than directors' qualifying shares) of
which are owned, directly or indirectly, by the Company or a Surviving Person
of any Disposition involving the Company, as the case may be.
THE TRUSTEE
The Exchange Indenture provides that, except during the continuance of an
Event of Default, the Trustee will perform only such duties as are
specifically set forth in the Exchange Indenture. During the existence of an
Event of Default, the Trustee will exercise such rights and powers vested in
it under the Exchange Indenture and
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use the same degree of care and skill in its exercise as a prudent person
would exercise under the circumstances in the conduct of such person's own
affairs. ((S) 601, 603)
The Exchange Indenture and provisions of the Trust Indenture Act
incorporated by reference therein contain limitations on the rights of the
Trustee, should it become a creditor of the Company, to obtain payment of
claims in certain cases or to realize on certain property received by it in
respect of any such claim as security or otherwise. The Trustee is permitted
to engage in other transactions with the Company or any Affiliate; provided,
however, that if it acquires any conflicting interest (as defined in the
Exchange Indenture or in the Trust Indenture Act), it must eliminate such
conflict or resign. ((S) 608)
The Trustee is also the trustee under the American Note Indenture, is a
lender and one of the Managing Agents under each of the Credit Agreements, and
may provide other commercial banking services to the Company. In the event of
a default under any or all of the Credit Agreements, or either of the Note
Indentures, the Trustee could be required to resign due to a conflict of
interest.
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INDEBTEDNESS OF AMERICAN
The summaries contained herein of the material provisions of certain
indebtedness of American do not purport to be complete and are qualified in
their entirety by reference to the provisions of the Credit Agreements, the
American Note Indenture, the American-EZ Note Indenture and the Tower Credit
Agreement, copies of each of which have been filed as an exhibit to the
Registration Statement of which this Prospectus is a part and the summary
herein of certain provisions thereof does not purport to be complete and is
subject to, and is qualified in its entirety by, reference thereto.
Capitalized terms used in this Section which are not otherwise defined in this
Prospectus have the respective meanings assigned thereto in the Credit
Agreements, the American Note Indenture, the American-EZ Note Indenture or the
Tower Credit Agreement, as the case may be.
CREDIT AGREEMENTS
In order to finance acquisitions of radio stations and for general corporate
purposes, American has borrowed and expects to continue to borrow under the
Credit Agreements. The Credit Agreements (which consists of two separate
agreements) provide for facilities consisting of (i) a $550.0 million reducing
revolving credit facility which may be borrowed, repaid and reborrowed until
December 31, 2004 (the "Reducing R/C"), (ii) a $200.0 million revolving credit
converting to a term loan facility maturing December 31, 2004 (the "RC/TL"),
and (iii) a $150.0 million single draw converting to a term loan facility
maturing December 31, 2004 which can be used only to repurchase the EZ Notes
(the "SD/TL"). Until interest rates are fixed or capped at American's request,
all outstanding amounts under the Credit Agreements bear interest at a
variable base rate plus a variable margin based on certain of American's
financial ratios. Interest rates under the Credit Agreements are determined,
at the option of American, at either the Eurodollar Rate plus 0.50% to 2.00%
or the Alternate Base Rate plus 0.00% to 0.75%. The spread over the Eurodollar
Rate and the Alternate Base Rate varies from time to time, depending upon
American's financial leverage. American pays quarterly commitment fees equal
to 0.375% or 0.250% per annum (in the case of the Reducing R/C) or equal to
0.1250% or 0.1875% (in the case of the RC/TL and SD/TL), in each case
depending on American's financial leverage, on the aggregate unused portion of
the aggregate commitment. American may make borrowings under the Credit
Agreements only so long as it remains in compliance with certain financial
covenants and meets certain other conditions.
American may incur Indebtedness under the Credit Agreements for
acquisitions, capital expenditures, investments in the Tower Subsidiary,
working capital and general corporate purposes. All such Indebtedness will be
subject to satisfaction of certain conditions with respect to the maintenance
of debt levels, including the maintenance of the following ratios: (i) maximum
Total Debt to Consolidated Annual Operating Cash Flow ratio of 7.00:1
declining in stages to 4.00:1 by December 31, 2000 and thereafter, (ii)
maximum Senior Debt to Consolidated Annual Operating Cash Flow ratio of 5.75:1
declining in stages to 3.25:1 by December 31, 2000 and thereafter, (iii)
minimum Consolidated Annual Operating Cash Flow to Interest Expense ratio of
2.00:1 increasing to 2.25:1 at December 31, 1999 and thereafter, (iv) minimum
Consolidated Annual Operating Cash Flow to Fixed Charges ratio of 1.05:1 at
all times, and (v) minimum Consolidated Annual Operating Cash Flow to Pro
Forma Debt Service ratio of 1.10:1 at all times.
The Credit Agreements restrict the ability of American to redeem, purchase
or otherwise acquire shares of New Preferred Stock and the Exchange Debentures
and prohibit any such redemption, purchase or other acquisition during the
existence of a default or event of default thereunder. See "Description of
Capital Stock--Dividend Restrictions".
The obligations of American under the Credit Agreements are secured by a
first priority security interest in all of the capital stock of each of
American's Restricted Subsidiaries (including its FCC broadcast license
holding subsidiary) and all instruments and material agreements. The
Restricted Subsidiaries have also guaranteed the obligations of American under
the Credit Agreements. If American becomes insolvent or is liquidated or if
the indebtedness under the Credit Agreements is accelerated, the lenders under
the Credit Agreements would be entitled to exercise the remedies available to
a secured lender. Accordingly, such lenders will have a prior claim on such
assets of American and its Restricted Subsidiaries.
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The Tower Subsidiary is a party to the Tower Credit Agreement relating to
aggregate borrowings of up to $90.0 million. The Tower Subsidiary is an
Unrestricted Subsidiary under the Credit Agreement and the Note Indentures.
The Tower Credit Agreement restricts the ability of the Tower Subsidiary to
pay dividends to, make loans to, or to engage in other transactions with,
American and its Restricted Subsidiaries. Indebtedness under the Tower Credit
Agreement is secured by a lien on substantially all of the property and assets
of the Tower Subsidiary (other than its leasehold mortgages). Neither American
nor any of the Restricted Subsidiaries has any obligations with respect to
indebtedness under the Tower Credit Agreement.
AMERICAN NOTES
The American Note Indenture provides for the issuance of $175.0 million
aggregate principal amount of the American Notes, all of which are
outstanding, are unsecured obligations of American and mature in 2006. The
American Notes are, in the case of each existing Restricted Subsidiary, and
will be, in the case of each future direct or indirect Restricted Subsidiary,
unconditionally guaranteed, jointly and severally. The Tower Subsidiary is an
Unrestricted Subsidiary and, accordingly, has not guaranteed the American
Notes. The American Notes are subordinated to all Senior Debt (which includes
indebtedness under the Credit Agreements and the American-EZ Note Indenture)
of American, and the Subsidiary Guarantees are subordinated to all Senior Debt
of the respective Subsidiary Guarantors.
The American Notes are redeemable at the option of American, in whole or in
part, at any time on or after February 1, 2001 at the redemption prices set
forth in the American Note Indenture (beginning at 104.5% of the principal
amount and decreasing annually to 100.0% in 2004 and thereafter) plus accrued
and unpaid interest, if any, to but excluding the date of redemption. Also, on
or prior to February 1, 1999, American may redeem up to $58.3 million
principal amount of the American Notes, in cash, at 109% of the principal
amount thereof, together with accrued and unpaid interest, if any, to the date
of redemption, as long as American Notes having an aggregate principal amount
of at least $116.7 million remain outstanding immediately after any such
redemption. Within 15 days after the occurrence of a Change of Control,
American will be required to make an offer to purchase all American Notes then
outstanding at a purchase price, in cash, equal to 101% of the principal
amount thereof, together with accrued and unpaid interest, if any, to the date
of purchase.
The American Note Indenture contains certain restrictive covenants,
including limitations on (i) the incurrence of indebtedness and the issuance
of Preferred Stock by American and the Restricted Subsidiaries; (ii) the
payment of dividends and the making of restricted payments which include
payment of dividends on the New Preferred Stock and the purchase, redemption
or other acquisition of the New Preferred Stock or the Exchange Debentures;
(iii) transactions with affiliates; (iv) the existence of liens; (v) the
disposition of proceeds of asset sales; (vi) Asset Swaps; (vii) the making of
guarantees by American and the Restricted Subsidiaries; (viii) transfers and
issuances of stock of the Restricted Subsidiaries; (ix) the imposition of
restrictions on certain payments by the Restricted Subsidiaries; (x)
investment in Unrestricted Subsidiaries; and (xi) certain mergers and sales of
assets.
AMERICAN-EZ NOTES
The American-EZ Notes bear interest at a rate of 9.75% per annum, payable
semi-annually on June 1 and December 1 of each year, commencing June 1, 1996.
The American-EZ Notes are redeemable, in whole or in part, at the option of
American at any time on or after December 1, 2000, at a redemption price of
104.875% of the principal amount, plus accrued and unpaid interest to the date
of the redemption. The redemption price reduces over three years to a
redemption price of 100% of the principal amount in 2003 and thereafter. At
any time prior to December 1, 1998, American may redeem up to $50.0 million of
the original aggregate principal amount of the American-EZ Notes with the net
proceeds of one public offering of common stock at 109.75% of the principal
amount thereof, together with accrued and unpaid interest, if any, to the date
of redemption, as long as at least $100.0 million of the original aggregate
amount of the American-EZ Notes remain outstanding. Upon a Change of Control,
holders of the American-EZ Notes will have the right to require American to
repurchase
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their American-EZ Notes at 101% of the principal amount, thereof, plus accrued
and unpaid interest, if any, to the date of the purchase. The EZ Merger
represented a Change of Control. As a result, American is required to purchase
all of the American-EZ Notes at 101% of their principal amount. Such offer
commenced on April 19, 1997 and expires May 19, 1997 and, to the extent it is
accepted, American will borrow the funds necessary to purchase tendered
American-EZ Notes under the applicable Credit Agreement. American will pay
$1,056.31 per $1,000 aggregate principal amount of EZ Notes tendered in
accordance with the offer to purchase.
The American-EZ Notes are general unsecured obligations of American and are
not be subordinated by their express terms in right of payment to any existing
or future debt of American. The American-EZ Notes are guaranteed on a senior
subordinated basis by American's Restricted Subsidiaries. The American-EZ
Notes rank senior to the American Notes and pari passu in right of payment to
indebtedness outstanding under the Credit Agreements. The American-EZ Notes
contain substantially identical covenants to those contained in the American
Note Indenture (including without limitation those with respect to the payment
of dividends or the making of restricted payments).
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DESCRIPTION OF CAPITAL STOCK
GENERAL
The authorized capital stock of American consists of 100,000,000 shares of
Class A Common Stock, $.01 par value per share, 15,000,000 shares of Class B
Common Stock, $.01 par value per share, 6,000,000 shares of Class C Common
Stock, $.01 par value per share, and 10,000,000 shares of Preferred Stock,
$.01 par value per share. The outstanding shares of capital stock as of April
15, 1997 were as follows: Old Preferred Stock--2,047,391 shares; Convertible
Preferred Stock--137,500; Class A Common Stock--23,535,905; Class B Common
Stock--4,604,862 (exclusive of 18,449 shares held in treasury); and Class C
Common Stock--1,295,518. The following statements are subject to the detailed
provisions of the Restated Certificates of Incorporation of American and are
qualified in their entirety by reference to the Restated Certificates of
Incorporation, a copy of which has been filed as an exhibit to the
Registration Statement of which this Prospectus is a part and the summary
herein of certain provisions thereof does not purport to be complete and is
subject to, and is qualified in its entirety by, reference thereto.
PREFERRED STOCK
All authorized and unissued shares of Preferred Stock may be issued with
such designations, preferences, limitations and relative rights as the Board
may authorize, including, but not limited to: (i) the distinctive designation
of each series and the number of shares that will constitute such series; (ii)
the voting rights, if any, of shares of such series; (iii) the dividend rate
on the shares of such series, any restriction, limitation or condition upon
the payment of such dividends, whether dividends shall be cumulative, and the
dates on which dividends are payable; (iv) the prices at which, and the terms
and conditions on which, the shares of such series may be redeemed, if such
shares are redeemable; (v) the purchase or sinking fund provisions, if any,
for the purchase or redemption of shares of such series; (vi) any preferential
amount payable upon shares of such series in the event of the liquidation,
dissolution or winding-up of American or the distribution of its assets; and
(vii) the price or rates of conversion at which, and the terms and conditions
on which the shares of such series may be converted into other securities, if
such shares are convertible. Although American has no present intention to
issue any additional shares of Preferred Stock, the issuance of Preferred
Stock, or the issuance of rights to purchase such shares, could discourage an
unsolicited acquisition proposal.
Convertible Preferred Stock. American has issued an aggregate of 137,500
shares of Convertible Preferred Stock, liquidation preference $1,000 per
share. The Convertible Preferred Stock ranks, with respect to dividend rights
and rights on liquidation, winding upon and dissolution, senior to all classes
of Common Stock. Holders of the Convertible Preferred Stock are entitled to
receive, when, as and if declared by the American Board out of funds legally
available for payment, cash dividends at an annual rate of 7% ($70 per share).
In the event of any liquidation, winding up or dissolution of American, before
any distribution of assets is made on any Common Stock, the holders of the
Convertible Preferred Stock are entitled to receive a liquidation preference
of $1,000 per share, together with all accumulated and unpaid dividends
through the date of distribution. The Convertible Preferred Stock is
convertible at any time (except in the case of Convertible Preferred Stock
called for redemption which shall be convertible at any time prior to the
close of business on the Business Day prior to the redemption date), at the
option of the holder thereof, into shares of Class A Common Stock at an
initial conversion price of $42.50 per share, subject to adjust in certain
events. The Convertible Preferred Stock is redeemable for cash at any time
after July 15, 1999 at the option of American, in whole or in part, at a
redemption price initially of $1,049, declining ratably immediately after July
15 of each year thereafter to a redemption price of $1,000 per share after
July 15, 2006, together in each case with accrued and unpaid dividends.
Except as provided by the DGCL or with respect to an amendment of the
Restated Certificate adversely affecting the rights of the Convertible
Preferred Stock, the holders of the Convertible Preferred Stock will not be
entitled to any voting rights except as follows: (i) in the event the
equivalent of six quarterly dividends payable on the Convertible Preferred
Stock are in arrears, the number of directors of American will be increased by
two
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and the holders of the Convertible Preferred Stock, voting separately as a
class with the holders of shares of any other series of parity New Preferred
Stock upon which like voting rights have been conferred and are exercisable,
will be entitled to elect two directors, who shall serve until all dividends
in arrears have been paid or declared and set apart for payment or (ii) with
respect to the creation, authorization or issuance of capital stock ranking
senior (in certain respects) to the Convertible Preferred Stock.
In the event of a Change in Control of American (as defined in the Restated
Certificate), each share of Convertible Preferred Stock may, at the option of
the holder, be convertible for a limited period into the number of shares of
Class A Common Stock determined by dividing the $1,000 liquidation preference
of the Convertible Preferred Stock, plus accumulated and unpaid dividends, if
any, by the Special Conversion Price. The term Special Conversion Price means,
in effect, the greater of (i) the average of the Last Sale Price (as defined
in the Restated Certificate) of a share of Class A Common Stock prior to the
Change in Control or (ii) $23.00. Upon a Change in Control, American may elect
to pay holders of the Convertible Preferred Stock exercising their special
conversion rights an amount in cash equal to the $1,000 liquidation preference
thereof, plus accumulated and unpaid dividends, if any.
The Convertible Preferred Stock will be exchangeable, subject to certain
conditions, at the option of American, in whole but not in part, on any
dividend payment date commencing June 30, 1997, for American's 7% Convertible
Subordinated Debentures due 2011 (the "Convertible Exchange Debentures") at a
rate of $1,000 principal amount of Convertible Exchange Debentures for each
share of Convertible Preferred Stock. The Convertible Exchange Debentures will
have substantially the same economic terms as the Convertible Preferred Stock
except that upon a Change of Control the holders thereof will have the right
to require American to purchase their Convertible Exchange Debentures at a
price equal to the principal amount thereof, plus accrued and unpaid interest,
if any. The Convertible Exchange Debentures will, unless designated by
American prior to the issuance thereof, constitute Senior Debt for purposes of
American's other debt instruments.
New Preferred Stock. For a description of the New Preferred Stock, see
"Description of the New Preferred Stock".
Old Preferred Stock. The powers, preferences and relative rights of the Old
Preferred Stock are substantially identical to the New Preferred Stock, except
for the transfer restrictions imposed on the Old Preferred Stock.
COMMON STOCK
Dividends. Holders of record of shares of Common Stock on the record date
fixed by the American Board are entitled to receive such dividends as may be
declared by the American Board out of funds legally available for such
purpose. No dividends may be declared or paid in cash or property on any share
of any class of Common Stock, however, unless simultaneously the same dividend
is declared or paid on each share of the other classes of Common Stock. In the
case of any stock dividend, holders of each class of Common Stock are entitled
to receive the same percentage dividend (payable in shares of that class) as
the holders of each other class.
Voting Rights. Except as otherwise required by law and in the election of
directors, holders of shares of Class A Common Stock and Class B Common Stock
have the exclusive voting rights and will vote as a single class on all
matters submitted to a vote of the stockholders, with each share of Class A
Common Stock entitled to one vote and each share of Class B Common Stock
entitled to ten votes. The holders of the Class A Common Stock, voting as a
separate class, have the right to elect two independent directors.
Under Delaware law, the affirmative vote of the holders of a majority of the
outstanding shares of any class of common stock is required to approve, among
other things, a change in the designations, preferences and limitations of the
shares of such class of common stock. Under the Restated Certificate, the
affirmative vote of the holders of not less than 66 2/3% of the Class A Common
Stock and Class B Common Stock, voting as a single class, is required in order
to amend most of the provisions of the Restated Certificate, including those
relating to
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the provisions of the various classes of Common Stock, indemnification of
directors, exoneration of directors for certain acts, and such super-majority
provision.
Conversion Provisions. Shares of Class B Common Stock and, except as
hereinafter noted, Class C Common Stock, are convertible, at any time at the
option of the holder, on a share for share basis into shares of Class A Common
Stock. Class C Common Stock may not be converted into Class A Common Stock if,
as a result thereof, the holder would be a Disqualified Person (as defined in
the Restated Certificate) or would cause a violation of the alien ownership
restrictions set forth in the Restated Certificate. In addition, the owner of
Class C Common Stock can convert such stock only in the event of a Conversion
Event (as defined in the Restated Certificate). Shares of Class B Common Stock
automatically convert into shares of Class A Common Stock upon any sale,
transfer, assignment or other disposition other than to Permitted Transferees
(as defined in the Restated Certificate), which term includes certain family
members, trusts and other family entities and charitable organizations and
upon pledges but not to the pledgee upon foreclosure.
Liquidation Rights. Upon liquidation, dissolution or winding-up of American,
the holders of each class of Common Stock are entitled to share ratably (based
on the number of shares held) in all assets available for distribution after
payment in full of creditors and payment in full to any holders of the
Preferred Stock then outstanding of any amount required to be paid under the
terms of the Preferred Stock.
Other Provisions. The holders of Common Stock are not entitled to preemptive
or subscription rights. The shares of Common Stock presently outstanding are
validly issued, fully paid and nonassessable. In any merger, consolidation or
business combination, the consideration to be received per share by holders of
each class of Common Stock must be identical to that received by holders of
the other class of Common Stock, except that in any such transaction in which
shares of Common Stock are distributed, such shares may differ as to voting
rights to the extent that voting rights now differ between the different
classes of Common Stock. No class of Common Stock may be subdivided,
consolidated, reclassified or otherwise changed unless, concurrently, the
other classes of Common Stock are subdivided, consolidated, reclassified or
otherwise changed in the same proportion and in the same manner.
Each new issuance of Common Stock shall be an issuance of Class A Common
Stock or Class C Common Stock, except for up to an aggregate of 1,600,000
shares of Class B Common Stock issuable pursuant to the Amended and Restated
Stock Option Plan of American or except in connection with stock splits,
dividends or combinations.
DIVIDEND RESTRICTIONS
American is prohibited under the terms of the Credit Agreements from paying
cash dividends on its capital stock (including Preferred Stock other than, in
the absence of a default or event of default, the Convertible Preferred Stock,
the Old Preferred Stock and the New Preferred Stock) except that, beginning on
January 1, 1999, American may pay cash dividends if (a)(i) the ratio of Total
Debt to Consolidated Annual Operating Cash Flow is less than 4.5 to one or
(ii) the ratio of Total Debt to Consolidated Annual Operating Cash Flow is
less than 5.0 to one and the ratio of Senior Debt to Consolidated Annual
Operating Cash Flow is less than 3.0 to one, and (b) then only to the extent
that Restricted Payments do not exceed 50% of Cumulative Excess Cash Flow for
the period commencing January 1, 1998 minus aggregate Restricted Payments (as
each such term is defined in the Credit Agreements). Accordingly, American's
ability to pay dividends to its stockholders is restricted. The Note
Indentures also restrict the ability of American to pay dividends. See the
Notes to Consolidated Financial Statements of American in the Consolidated
Financial Statements of American incorporated herein by reference.
American may elect to pay dividends on the New Preferred Stock on any
dividend payment date occurring on or before January 15, 2002 by issuing
additional shares of New Preferred Stock. If at any time American is in cash
dividend arrears on the Convertible Preferred Stock or any other Parity
Securities (as defined under "Description of the New Preferred Stock--
Ranking"), whether as a result of payment restrictions contained in American's
debt instruments or otherwise, American will be permitted to pay dividends on
the New Preferred
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Stock only pro rata with such Parity Securities (if at all), even if American
elects to pay such dividends by issuing additional shares of New Preferred
Stock.
OWNERSHIP RESTRICTIONS
The Restated Certificate restricts the ownership, voting and transfer of
American's capital stock, including the Class A Common Stock, in accordance
with the Communications Act and the rules of the FCC, to prohibit ownership of
American's outstanding capital stock (or the voting rights it represents) by
or for the account of aliens or corporations otherwise subject to domination
or control by aliens. The Restated Certificate also has provisions designed to
restrict the ownership of the Common Stock to ameliorate a breach or violation
of or default under the FCC's "cross-ownership" or multiple ownership rules,
"cross-interest" policy and other rules and policies. The Restated Certificate
provides that, in the event of a violation of any of these prohibitions,
American has the right, in its sole and absolute discretion, to require a
conversion of Class B Common Stock into Class C Common Stock. In addition, the
Restated Certificate authorizes the American Board to adopt such provisions as
it deems necessary to enforce these prohibitions. See "Business--Federal
Regulation of Radio Broadcasting--Ownership Matters".
DELAWARE BUSINESS COMBINATION PROVISIONS
Under the Delaware General Corporation Law, certain "business combinations"
(including the issuance of equity securities) between a Delaware corporation
and any person who owns, directly or indirectly, 15% or more of the voting
power of the corporation's shares of capital stock (an "Interested
Stockholder") must be approved by the holders of at least 66% of the voting
stock not owned by the Interested Stockholder if it occurs within three years
of the date such person became an Interested Stockholder unless prior to such
date the Board of Directors approved either the business combination or the
transaction which resulted in the stockholder becoming an Interested
Stockholder. The transactions pursuant to which each of Messrs. Dodge and
Stoner became an Interested Stockholder were approved by the American Board.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for the Class A Common Stock is Harris
Trust and Savings Bank, 311 West Monroe Street, Chicago, Illinois 60606
(telephone number is (312) 461-5044).
LISTING
The Class A Common Stock is listed on the New York Stock Exchange and trades
under the symbol "AFM".
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion is a summary of certain federal income tax
considerations relevant to the exchange of Old Preferred Stock for New
Preferred Stock, but does not purport to be a complete analysis of all
potential tax consequences of such exchange. It also summarizes certain
federal income tax considerations relevant to the ownership and disposition of
the New Preferred Stock and the Exchange Debentures by the initial holders of
the Old Preferred Stock and the Exchange Debentures, but does not purport to
be a complete analysis of all the potential tax effects thereof. Further, the
discussion below is not binding on the Internal Revenue Service (the "IRS") or
the courts. American has not sought and will not seek any rulings from the IRS
with respect to the positions discussed herein, and there can be no assurance
that the IRS will not take a different position concerning the tax
consequences of the exchange of the Old Preferred Stock for the New Preferred
Stock or the ownership or disposition of the New Preferred Stock or the
Exchange Debentures, or that any such position would not be sustained.
The following discussion is limited to certain United States federal income
tax consequences relevant to a holder of the New Preferred Stock or the
Exchange Debentures that is a citizen or resident of the United States, or a
corporation or other entity created or organized under the laws of the United
States or any political subdivision thereof, or an estate or trust the income
of which is subject to United States federal income tax regardless of source,
or that is otherwise subject to United States federal income tax on a net
income basis in respect of the New Preferred Stock or the Exchange Debentures.
Further, the discussion does not address all aspects of taxation that may be
relevant to particular purchasers in light of their particular circumstances
(including the effect of any foreign, state or local tax laws) or to certain
types of purchasers subject to special treatment under the federal income tax
laws (including dealers in securities or foreign currency, insurance
companies, foreign persons, financial institutions, tax-exempt entities,
persons that hold New Preferred Stock or Exchange Debentures as part of a
straddle, conversion or hedging transaction for federal income tax purposes,
persons that have a functional currency other than the U.S. dollar or
(generally) holders subject to the alternative minimum tax). In addition, the
summary is limited to persons that will hold the New Preferred Stock or any
Exchange Debentures received in exchange therefor as "capital assets"
(generally, property held for investment) within the meaning of section 1221
of the Internal Revenue Code of 1986, as amended (the "Code").
The discussion of the federal income tax consequences set forth below is
based upon currently existing provisions of the Code, the final, temporary and
proposed regulations promulgated thereunder, judicial decisions and
administrative interpretations now in effect, all of which are subject to
change (possibly with adverse retroactive effect) or different
interpretations. Because individual circumstances may differ, each prospective
owner of New Preferred Stock is strongly urged to consult its own tax advisor
with respect to its particular tax situation and the effects of any state,
local, foreign or other tax laws and possible changes in the tax laws.
Although the matter is not entirely free from doubt, for federal income tax
purposes the New Preferred Stock should be treated as equity and the Exchange
Debentures should be treated as indebtedness. American intends to treat the
New Preferred Stock and the Exchange Debentures consistent with the foregoing
classifications, and the balance of the discussion is based on the assumption
that such treatment will be respected.
EXCHANGE OF THE OLD PREFERRED STOCK PURSUANT TO THE EXCHANGE OFFER
Except to the extent of New Preferred Stock, if any, received in payment of
declared but unpaid dividends on the Old Preferred Stock (which amount will be
taxed as a dividend distribution to the extent of fair market value under the
rules discussed below), an exchange of Old Preferred Stock for New Preferred
Stock pursuant to the Exchange Offer should not result in a taxable event to a
holder for federal income tax purposes. Accordingly, the New Preferred Stock
should be regarded for federal income tax purposes as a continuation of the
Old Preferred Stock, and a holder should have the same adjusted basis and
holding period in the New Preferred Stock upon receipt as it had in the Old
Preferred Stock immediately before the exchange.
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DIVIDENDS ON NEW PREFERRED STOCK
Dividends on the New Preferred Stock paid in cash will be taxable as
ordinary income to the extent of American's current or accumulated earnings
and profits for federal income tax purposes. While the matter is not free from
doubt, in the case of dividends on the New Preferred Stock paid in the form of
additional New Preferred Stock ("Dividend Shares"), the fair market value of
Dividend Shares on the date of their distribution will be taxable as ordinary
income to the extent of American's current or accumulated earnings and profits
for federal income tax purposes.
To the extent that the foregoing amount of distributions paid on the New
Preferred Stock, whether paid in cash or in Dividend Shares, exceeds
American's current or accumulated earnings and profits for federal income tax
purposes, such distributions will be treated first as a return of capital and
will be applied against and reduce the adjusted tax basis of the New Preferred
Stock in the hands of the holder. Any remaining amount after the holder's
basis has been reduced to zero will be taxed as capital gain and will be long-
term capital gain if the holder's holding period for the New Preferred Stock
exceeds one year. American may have accumulated earnings and profits for
federal income tax purposes as of the date of the Exchange Offer, and current
earnings and profits for 1997 and future years will be computed annually at
the close of the taxable year in which the distribution is paid. For purposes
of the remainder of this discussion, the term "dividend" refers to a
distribution paid out of allocable earnings and profits as described above
unless the context indicates otherwise.
A holder's initial tax basis in any Dividend Shares distributed to it will
generally equal the fair market value of such Dividend Shares on the date of
their distribution. The holding period for such Dividend Shares will commence
with their acquisition and will not include the holder's holding period for
the outstanding shares of New Preferred Stock on which such Dividend Shares
were distributed.
Dividends received by corporate holders will be eligible for the 70%
dividends-received deduction under section 243 of the Code, subject to the
limitations contained in sections 246 and 246A of the Code. Under section
246(c) of the Code, the 70% dividends-received deduction will not be available
with respect to shares of New Preferred Stock which are held for 45 days or
less (90 days in the case of a dividend attributable to a period or periods
aggregating more than 366 days), including the day of disposition, but
excluding the day of acquisition or any day which is more than 45 days (or 90
days in the case of the more than 366 day period) after the date on which the
New Preferred Stock becomes ex-dividend. The length of time that a holder is
deemed to have held shares for these purposes is reduced for periods during
which the holder's risk of loss with respect to the stock is diminished by
reason of the existence of certain options, contracts to sell, short sales or
other similar transactions. Section 246(c) also denies the dividends-received
deduction to the extent that a corporate holder is under an obligation with
respect to substantially similar or related property to make payments
corresponding to the dividend received. Under section 246(b) of the Code, the
aggregate dividends-received deductions allowed may not exceed 70% of the
taxable income (with certain adjustments) of the corporate holder. Moreover,
under section 246A of the Code, to the extent that a corporate holder incurs
indebtedness "directly attributable" to investment in the New Preferred Stock
and the New Preferred Stock constitutes "debt financed portfolio stock" within
the meaning of section 246A(c)(1) of the Code, the dividends-received
deduction is proportionately reduced.
In general, for purposes of computing its alternative minimum tax liability,
a corporation claiming a 70% dividends-received deduction will be required to
include in its alternative minimum taxable income a portion of any dividends-
received deduction allowed in computing its regular taxable income. Thus, a
corporate holder's liability for alternative minimum tax may fail to be
reduced as a result of any dividends-received deduction.
On February 6, 1997, President Clinton proposed certain tax law changes (the
"Proposed Legislation") which, among other things, would reduce the dividends-
received deduction under section 243 of the Code from 70% to 50%, and would
alter the limitations contained in section 246 of the Code to provide that the
dividends-received deduction would not be available with respect to New
Preferred Stock held for 45 days or less during
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the 90-day period beginning on the date which is 45 days before the date on
which shares of New Preferred Stock become ex-dividend with respect to such
dividend. Moreover, in the case of dividends attributable to a period or
periods aggregating more than 366 days, the dividends-received deduction would
not be available with respect to New Preferred Stock held for 90 days or less
during the 180-day period beginning on the date which is 90 days before the
date on which shares of New Preferred Stock become ex-dividend with respect to
such dividend. Although the Proposed Legislation prescribes a prospective
effective date for the foregoing proposed provisions, in its current form the
Proposed Legislation provides no grandfather protection for stock issued prior
to such effective date, and therefore if enacted could apply to dividends paid
on the New Preferred Stock after such effective date. The Proposed Legislation
also contains a provision that would eliminate the dividends-received
deduction for certain types of preferred stock. A description of this
legislative proposal suggests that the New Preferred Stock could be the type
of preferred stock to which the eliminated dividends-received deduction would
apply. According to this description, the foregoing legislative proposal would
only apply to preferred stock issued after the thirtieth day after the date of
enactment, which could include the Dividend Shares issued in lieu of cash
dividends. It is not clear whether any such proposals ultimately will be
enacted or, if enacted, will be enacted in the form proposed. There can thus
be no assurance that the Proposed Legislation, or other legislation enacted
after the date hereof, will not adversely affect the tax treatment of the New
Preferred Stock.
Section 1059 of the Code requires a corporate holder to reduce its basis
(but not below zero) in the New Preferred Stock by the "nontaxed portion" of
any "extraordinary dividend" if the holder has not held its New Preferred
Stock for more than two years as of the date the amount or payment of such
dividend is agreed to, announced or declared. Generally, the nontaxed portion
of an extraordinary dividend is the amount excluded from income under section
243 of the Code (relating to the dividends-received deduction). An
"extraordinary dividend" on the New Preferred Stock would include a dividend
that (i) equals or exceeds 5% of the holder's adjusted tax basis in the
underlying New Preferred Stock, treating all dividends having ex-dividend
dates within an 85-day period as one dividend, or (ii) exceeds 20% of the
holder's adjusted tax basis in the underlying New Preferred Stock, treating
all dividends having ex-dividend dates within a 365-day period as one
dividend. In determining whether a dividend paid is an extraordinary dividend,
a holder may elect to use the fair market value of the underlying New
Preferred Stock rather than its basis for purposes of applying the 5% (or 20%)
limitation if the holder is able to establish to the satisfaction of the
Secretary of the Treasury such fair market value as of the day before the ex-
dividend date. An "extraordinary dividend" would also include any amount
treated as a dividend in the case of a redemption of the New Preferred Stock
that is non-pro rata as to all holders, without regard to the period the
holder held the stock. If any part of the nontaxed portion of an extraordinary
dividend has not been applied to reduce basis as a result of the limitation on
reducing basis below zero, the amount thereof will be treated as gain from the
sale or exchange of stock when such stock is disposed of or sold. The Proposed
Legislation would require immediate recognition of gain under section 1059 of
the Code to the extent a corporate holder's tax basis would otherwise be
reduced below zero, instead of deferring such gain until the sale or exchange
of such stock; such change is proposed to take effect retroactively. It is not
clear whether such proposed legislation ultimately will be enacted or, if
enacted, will be enacted in the form proposed. There can thus be no assurance
that the Proposed Legislation, or other legislation enacted after the date
hereof, will not adversely affect the tax treatment of the New Preferred
Stock.
The extraordinary dividend rules of section 1059 of the Code do not apply
with respect to "qualified preferred dividends". A "qualified preferred
dividend" is any fixed dividend payable with respect to New Preferred Stock
which (i) provides for fixed preferred dividends payable no less often than
annually and (ii) is not in arrears as to dividends when acquired, provided
the actual rate of return, as determined under section 1059(e)(3) of the Code,
on such stock does not exceed 15%. It is not clear whether dividends that may
be paid either in cash or instead at the issuer's option in additional
preferred stock will qualify as qualified preferred dividends. Where a
qualified preferred dividend exceeds the 5% (or 20%) threshold for
extraordinary dividend status described above, (i) the extraordinary dividend
rules will not apply to such qualified preferred dividend if the holder holds
the stock for more than five years, and (ii) if the holder disposes of the
stock before it has been held for more than five years, the aggregate
reduction in basis with respect to qualified preferred dividends will
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not exceed the excess of the qualified preferred dividends paid on such stock
during the period held by the holder over the qualified preferred dividends
which would have been paid during such period on the basis of the "stated
rate" of return, as determined under section 1059(e)(3) of the Code. The
length of time that a holder is deemed to have held stock for purposes of
section 1059 of the Code is determined under principles similar to those
contained in section 246(c) of the Code discussed above.
CORPORATE HOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS WITH RESPECT TO
THE POSSIBLE APPLICATION OF SECTION 1059 OF THE CODE TO THEIR OWNERSHIP AND
DISPOSITION OF THE NEW PREFERRED STOCK, AND THE POSSIBLE EFFECTS OF PROPOSED
LEGISLATION OR OTHER CHANGES IN THE TAX LAWS.
REDEMPTION PREMIUM
The New Preferred Stock is subject to mandatory redemption on January 15,
2009 (the "Mandatory Redemption"), and American must offer to redeem each
share of New Preferred Stock under certain circumstances involving a Change of
Control (the "Change of Control Redemption"). In addition, after January 15,
2002 and subject to certain limitations, the New Preferred Stock is redeemable
at any time at the option of American at specified redemption prices, and
prior to January 15, 2000 American may at its option use the net proceeds of
one or more Public or Rule 144A Equity Offerings to redeem the New Preferred
Stock at the specified redemption price (together, the "Optional Redemption").
Also, on any dividend payment date commencing July 15, 1997 and subject to
certain restrictions, American may at its option redeem all (and not less than
all) of the New Preferred Stock in exchange for Exchange Debentures in an
aggregate principal amount equal to the liquidation preference of the New
Preferred Stock (the "Debenture Exchange"). See "Description of the New
Preferred Stock--Optional Redemption", "--Mandatory Redemption", "--Change of
Control", and "--Exchange Provisions".
If the redemption price of redeemable New Preferred Stock exceeds its issue
price, all or a portion of such excess may, pursuant to section 305(c) of the
Code, constitute an excess premium (the "Preferred Stock Discount") that is
treated as a series of constructive distributions of property (and thus as
dividends to the extent of American's current or accumulated earnings and
profits, and otherwise as distributions subject to the treatment described
above) over the period during which the New Preferred Stock cannot be called
for redemption under an economic accrual method similar to the method
described below under "--Original Issue Discount" and "--Taxation of Stated
Interest and Original Issue Discount on Exchange Debentures". For this
purpose, Preferred Stock Discount will generally be treated as zero if it is
less than 1/4 of 1% of the redemption price multiplied by the number of
complete years from the date of issuance of the stock until the stock is to be
redeemed.
Under Treasury Regulations promulgated under section 305 of the Code,
Preferred Stock Discount will arise due to the Optional Redemption feature
only if, based on all of the facts and circumstances as of the date the New
Preferred Stock is issued, redemption pursuant to the Optional Redemption is
more likely than not to occur. Even if such redemption were more likely than
not to occur, however, constructive distribution treatment would not result if
the redemption premium were solely in the nature of a penalty for premature
redemption. For this purpose, a penalty for premature redemption is a premium
paid as a result of changes in economic or market conditions over which
neither the issuer nor the holder has legal or practical control, such as
changes in prevailing dividend rates. The Treasury Regulations provide a safe
harbor pursuant to which constructive distribution treatment will not result
from an issuer call right if (i) the issuer and the holder are unrelated, (ii)
there are no arrangements that effectively require the issuer to redeem the
stock, and (iii) exercise of the option to redeem would not reduce the yield
of the stock. American believes that, under the foregoing criteria, the
Optional Redemption feature does not give rise to Preferred Stock Discount,
and accordingly American will not report redemption premium associated with
the Optional Redemption feature as a constructive distribution. However,
because of the factual nature of this determination, there can be no assurance
that such treatment will be sustained.
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Under the Treasury Regulations promulgated under section 305 of the Code,
Preferred Stock Discount will arise due to the Change of Control Redemption
feature only if, (i) under the same criteria discussed above with regard to
the Optional Redemption feature, a Change of Control Redemption is more likely
than not to occur and in addition the redemption premium associated with such
redemption is other than solely in the nature of a penalty for premature
redemption, or (ii) triggering American's obligation to redeem under the
Change of Control Redemption feature is within the legal or practical control
of the holders of the New Preferred Stock (or parties related thereto) and
based on all the facts and circumstances on the issue date such possibility of
redemption is more than remote. American believes that, under the foregoing
criteria, the Change of Control Redemption feature does not give rise to
Preferred Stock Discount, and accordingly American will not report redemption
premium associated with the Change of Control Redemption feature as a
constructive distribution. However, because of the factual nature of this
determination, there can be no assurance that such treatment will be
sustained.
Because the redemption price associated with the Mandatory Redemption and
the Debenture Exchange is equal to the liquidation preference of the New
Preferred Stock, and because the issue price for the Old Preferred Stock
(exclusive of any shares thereof that were issued as a dividend distribution)
was at or above its liquidation preference of $100 per share, the Mandatory
Redemption and Debenture Exchange features should generally result in no
Preferred Stock Discount for the New Preferred Stock. However, Dividend Shares
received by holders of the New Preferred Stock (including New Preferred Stock
received in exchange for shares of Old Preferred Stock that were issued as a
dividend distribution) will bear Preferred Stock Discount if the redemption
price for such shares exceeds, by more than the de minimis threshold described
above, the issue price of such shares (i.e., the fair market value of such
shares on the date of their distribution).
REDEMPTION, SALE OR EXCHANGE OF NEW PREFERRED STOCK
A redemption of shares of New Preferred Stock for cash or an exchange of
shares of New Preferred Stock for Exchange Debentures will be a taxable event.
If New Preferred Stock is exchanged for Exchange Debentures, the "issue price"
of the Exchange Debentures would be determined in the manner described below
for purposes of computing original issue discount (if any) on Exchange
Debentures according to the Treasury Regulations relating to original issue
discount (the "OID Regulations"). See the discussion below under "--Original
Issue Discount". Applicable Treasury Regulations generally provide that if a
holder disposes of property in exchange for a debt instrument, the amount
realized in the exchange attributable to the debt instrument is the issue
price of the debt instrument as determined for purposes of determining
original issue discount. The balance of this discussion assumes that the issue
price of an Exchange Debenture should be taken into account for purposes of
computing the amount of gain or loss or income realized by a holder upon the
exchange of New Preferred Stock, and such holder's tax basis in an Exchange
Debenture.
A redemption of shares of New Preferred Stock for cash will be treated as a
dividend to the extent of American's current or accumulated earnings and
profits, unless the redemption (i) results in a "complete termination" of the
holder's stock interest in American under section 302(b)(3) of the Code, (ii)
is "substantially disproportionate" with respect to the holder under section
302(b)(2) of the Code, or (iii) is "not essentially equivalent to a dividend"
with respect to the holder under section 302(b)(1) of the Code. In determining
whether any of these tests has been met, the holder must take into account not
only stock it actually owns, but also stock it constructively owns within the
meaning of section 318 of the Code. A distribution to a holder is "not
essentially equivalent to a dividend" if it results in a "meaningful
reduction" in the holder's stock interest in American, but there cannot always
be certainty as to when such "meaningful reduction" has occurred because the
applicable test is not based on numerical criteria. Satisfaction of the
"complete termination" and "substantially disproportionate" exceptions is
dependent upon compliance with the objective tests set forth in sections
302(b)(3) and 302(b)(2) of the Code, respectively.
If the redemption is not treated as a distribution taxable as a dividend,
the redemption of the New Preferred Stock for cash would result in taxable
gain or loss equal to the difference between the amount of cash received
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(except to the extent that the redemption price includes declared but unpaid
dividends prior to the redemption) and the holder's adjusted tax basis in the
New Preferred Stock redeemed. Such gain or loss would be capital gain or loss
and would be long-term capital gain or loss if the holding period for such New
Preferred Stock exceeded one year. An exchange of New Preferred Stock for
Exchange Debentures at the option of American will be subject to the same
general rules as a redemption for cash. If the exchange is treated as other
than a distribution taxable as a dividend, the holder of such New Preferred
Stock would recognize gain or loss equal to the difference between the issue
price of Exchange Debentures received and the holder's adjusted tax basis in
the New Preferred Stock redeemed. Such gain or loss would be capital gain or
loss and would be long-term capital gain or loss if the holding period for the
New Preferred Stock exceeded one year.
A sale of New Preferred Stock will generally result in taxable gain or loss
equal to the difference between the amount of cash received and the holder's
adjusted tax basis in the New Preferred Stock sold. Such gain or loss would be
capital gain or loss and would be long-term capital gain or loss if the
holding period for the New Preferred Stock exceeded one year.
If a redemption of the New Preferred Stock is treated as a distribution that
is taxable as a dividend, the amount of the distribution will be measured by
the amount of cash or the issue price of the Exchange Debentures, as the case
may be, received by the holder. The holder's adjusted tax basis in the
redeemed New Preferred Stock will be transferred to any remaining stock
holdings in American. If the holder does not retain any actual stock ownership
in American (only having a stock interest constructively), the holder may lose
such basis entirely. Under the "extraordinary dividend" provisions of section
1059 of the Code, a corporate holder may, under certain circumstances, be
required to reduce its basis in its remaining shares of stock of American (and
possibly recognize gain upon a disposition of such shares) to the extent the
holder claims the dividends-received deduction with respect to the dividend.
See the discussion above under "--Dividends on New Preferred Stock".
Depending upon a holder's particular circumstances, the tax consequences of
holding Exchange Debentures may be less advantageous than the tax consequences
of holding New Preferred Stock because, for example, payments of interest on
the Exchange Debentures will not be eligible for any dividends-received
deduction that may be available to corporate holders of New Preferred Stock.
ORIGINAL ISSUE DISCOUNT
In the event that the New Preferred Stock is exchanged for Exchange
Debentures and the "stated redemption price at maturity" of the Exchange
Debentures exceeds their "issue price" by more than a de minimis amount ( 1/4
of 1% of the stated redemption price at maturity multiplied by the number of
complete years to maturity), the Exchange Debentures will be treated as having
original issue discount ("OID") equal to the entire amount of such excess.
Issue Price. If the Exchange Debentures are traded on an established
securities market within the sixty-day period ending thirty days after the
exchange date, the issue price of the Exchange Debentures will be their fair
market value as of their issue date. Subject to certain limitations described
in the OID Regulations, the Exchange Debentures will be deemed to be traded on
an established securities market if, among other things, price quotations will
be readily available from dealers, brokers, or traders. If the New Preferred
Stock, but not the Exchange Debentures issued and exchanged therefor, is
traded on an established securities market within the sixty-day period ending
thirty days after the exchange, then the issue price of each Exchange
Debenture should be the fair market value of the New Preferred Stock exchanged
therefor at the time of the exchange. The New Preferred Stock generally will
be deemed to be traded on an established securities market if, among other
things, it appears on a system of general circulation that provides a
reasonable basis to determine fair market value based on either recent price
quotations or recent sales transactions. In the event that neither the New
Preferred Stock nor the Exchange Debentures are traded on an established
securities market within the applicable period, the issue price of the
Exchange Debentures will be their stated principal amount--namely, their face
value--unless either (i) the Exchange Debentures do not bear "adequate stated
interest" within the meaning of section 1274 of the Code, which is unlikely,
or (ii) also unlikely, the Exchange Debentures are issued in a so-called
"potentially
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abusive situation" as defined in the OID Regulations under section 1274 of the
Code (including a situation involving a recent sales transaction), in which
case the issue price of such Exchange Debentures generally will be the fair
market value of the New Preferred Stock surrendered in exchange therefor.
Stated Redemption Price at Maturity. The "stated redemption price at
maturity" of the Exchange Debentures will equal the total of all payments
under the Exchange Debentures, other than payments of "qualified stated
interest." "Qualified stated interest" generally is stated interest that is
unconditionally payable in cash or other property (other than an additional
debt instrument of the issuer) at least annually at a single fixed rate.
Exchange Debentures that are issued when American has the option to pay
interest for certain periods in additional Exchange Debentures should be
treated as having been issued without any qualified stated interest.
Accordingly, the sum of all interest payable pursuant to the stated interest
rate on such Exchange Debentures over the entire term should be included
(along with stated principal) in the stated redemption price at maturity of
such Exchange Debentures. On the other hand, if the Exchange Debentures are
issued after the period for paying interest in additional Exchange Debentures
has passed, then interest thereon would qualify as qualified stated interest
and none of such interest would be included in the stated redemption price at
maturity of the Exchange Debentures.
TAXATION OF STATED INTEREST AND ORIGINAL ISSUE DISCOUNT ON EXCHANGE DEBENTURES
Each holder of an Exchange Debenture with OID will be required to include in
gross income an amount equal to the sum of the "daily portions" of the OID for
all days during the taxable year in which such holder holds the Exchange
Debenture, even though the cash to which such income is attributable may not
be received until sale, redemption, or maturity of the Exchange Debenture. The
daily portions of OID required to be included in a holder's gross income in a
taxable year will be determined under a constant yield method by allocating to
each day during the taxable year in which the holder holds the Exchange
Debenture a pro rata portion of the OID thereon which is attributable to the
"accrual period" in which such day is included. The amount of the OID
attributable to each accrual period will be the product of the "adjusted issue
price" of the Exchange Debenture at the beginning of such accrual period
multiplied by the "yield to maturity" of the Exchange Debenture (properly
adjusted for the length of the accrual period). The adjusted issue price of an
Exchange Debenture at the beginning of an accrual period is the original issue
price of the Exchange Debenture plus the aggregate amount of OID that accrued
in all prior accrual periods, and less any cash payments (other than qualified
stated interest payments, which can only apply if the Exchange Debentures were
issued on or after January 15, 2002) on the Exchange Debenture. The "yield to
maturity" is the discount rate that, when used in computing the present value
of all principal and interest payments to be made under the Exchange
Debenture, produces an amount equal to the issue price of the Exchange
Debenture. An "accrual period" may be of any length and may vary in length
over the term of the debt instrument, provided that each accrual period is no
longer than one year and each scheduled payment of principal or interest
occurs either on the final day or the first day of an accrual period. In
general, the foregoing constant yield method will result in the allocation of
less OID to the early years of the term of the Exchange Debentures and more
for later years.
An additional Exchange Debenture (a "Secondary Debenture") issued in payment
of interest with respect to an initially issued Exchange Debenture (an
"Initial Debenture") will not be considered as a payment made on the Initial
Debenture and will instead be aggregated with the Initial Debenture for
purposes of computing and accruing OID on the Initial Debenture. As between
the Initial Debenture and the Secondary Debenture, the adjusted issue price of
the Initial Debenture would be allocated between the Initial Debenture and the
Secondary Debenture in proportion to their respective principal amounts. That
is, upon the issuance of a Secondary Debenture with respect to an Initial
Debenture, the Initial Debenture and the Secondary Debenture derived from the
Initial Debenture are treated as initially having the same adjusted issue
price and inherent amount of OID per dollar of principal amount. The Initial
Debenture and the Secondary Debenture derived therefrom also would be treated
as having the same yield to maturity. Similar treatment would be applied when
additional Exchange Debentures are issued on Secondary Debentures.
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In the event that the Exchange Debentures are issued on or after January 15,
2002, when American no longer has the option to pay interest thereon in
additional Exchange Debentures, stated interest would be included in income by
a holder in accordance with such holder's usual method of accounting. In all
other cases, all stated interest will be treated as payments on the Exchange
Debentures under the rules discussed above.
American will furnish annually to the IRS and to record holders of the
Exchange Debentures information relating to the OID, if any, accruing during
the calendar year. Such information will be based on the amount of OID that
would have accrued to a holder who acquired the Exchange Debenture on original
issue. Accordingly, other holders will be required to determine for themselves
whether they are eligible to report a reduced amount of OID for federal income
tax purposes.
BOND PREMIUM ON EXCHANGE DEBENTURES
If the holder's basis in the Exchange Debentures exceeds the amount payable
at the maturity date (or earlier call date, if appropriate), such excess will
be deductible by the holder of the Exchange Debentures as amortizable bond
premium over the term of the Exchange Debentures (taking into account earlier
call dates, as appropriate), under a yield-to-maturity formula, if an election
by the holder under section 171 of the Code is made or is already in effect.
An election under section 171 of the Code is available only if the Exchange
Debentures are held as capital assets. This election is revocable only with
the consent of the IRS and applies to all obligations owned or subsequently
acquired by the holder on or after the first day of the taxable year to which
the election applies. To the extent the excess is deducted as amortizable bond
premium, the holder's adjusted tax basis in the Exchange Debentures will be
reduced. Except as may otherwise be provided in future Treasury Regulations,
the amortizable bond premium will be treated as an offset to interest income
on the Exchange Debentures rather than as a separate deduction item. Proposed
regulations with a prospective effective date coordinate these amortizable
bond premium rules with the acquisition premium rules described in "--
Acquisition Premium on Exchange Debentures" below, and in general would defer
to the operation of these acquisition premium rules in the case of Exchange
Debentures issued before January 15, 2002, when American has the option to pay
interest on Exchange Debentures in additional Exchange Debentures (thus
precluding stated interest thereon from being qualified stated interest).
ACQUISITION PREMIUM ON EXCHANGE DEBENTURES
A holder of an Exchange Debenture issued with OID who purchases such
Exchange Debenture for an amount that is greater than its then adjusted issue
price but equal to or less than the sum of all amounts payable on the Exchange
Debenture after the purchase date (other than payments, if any, of qualified
stated interest) will be considered to have purchased such Exchange Debenture
at an "acquisition premium." Under the acquisition premium rules, the amount
of OID which such holder must include in income with respect to such Exchange
Debenture for any taxable year will be reduced by the portion of such
acquisition premium properly allocable to such year.
MARKET DISCOUNT ON EXCHANGE DEBENTURES
Purchasers of New Preferred Stock should be aware that the disposition of
Exchange Debentures may be affected by the market discount provisions of the
Code. The market discount rules generally provide that if a holder of a debt
instrument purchases it at a "market discount" and thereafter realizes gain
upon a disposition or a retirement of the debt instrument, the lesser of such
gain or the portion of the market discount that has accrued on a straight-line
basis (or on a constant interest rate basis, if such alternative rate of
accrual has been elected by the holder under section 1276(b) of the Code)
while the debt instrument was held by such holder will be taxed as ordinary
income at the time of such disposition. "Market discount" with respect to the
Exchange Debentures will be the amount, if any, by which the "revised issue
price" of an Exchange Debenture (or its stated redemption price at maturity if
the Exchange Debenture has no OID) exceeds the holder's basis in the Exchange
Debenture immediately after such holder's acquisition, subject to a de minimis
exception. The "revised issue price" of an Exchange Debenture is its issue
price increased by the portion of OID previously
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includible in the gross income of prior holders for periods prior to the
acquisition of the Exchange Debenture by the holder (without regard to any
acquisition premium exclusion) and reduced by prior payments other than
payments of qualified stated interest.
A holder who acquires an Exchange Debenture at a market discount also may be
required to defer a portion of any interest expense that otherwise may be
deductible on any indebtedness incurred or maintained to purchase or carry
such Exchange Debenture until the holder disposes of the Exchange Debenture in
a taxable transaction. Moreover, to the extent of any accrued market discount
on such Exchange Debenture, any partial principal payment with respect to the
Exchange Debenture will be includible as ordinary income upon receipt.
Similarly, to the extent of any accrued market discount on such Exchange
Debenture, otherwise unrecognized gain in the Exchange Debenture will be
includible as ordinary income upon disposition of such Exchange Debenture in
certain otherwise non-taxable transfers (such as gifts).
A holder of Exchange Debentures acquired at a market discount may elect for
federal income tax purposes to include market discount in gross income as the
discount accrues, either on a straight-line basis or on a constant interest
rate basis. This current inclusion election, once made, applies to all market
discount obligations acquired on or after the first day of the first taxable
year to which the election applies, and may not be revoked without the consent
of the IRS. If a holder of Exchange Debentures makes such an election, the
foregoing rules with respect to the recognition of ordinary income on sales
and other dispositions of such debt instruments, and with respect to the
deferral of interest deductions on indebtedness incurred or maintained to
purchase or carry such debt instruments, would not apply.
REDEMPTION OR SALE OF EXCHANGE DEBENTURES
Generally, any redemption or sale of Exchange Debentures by a holder would
result in taxable gain or loss equal to the difference between the sum of the
amount of cash and the fair market value of other property received (except to
the extent attributable to accrued, but previously untaxed, interest, which
portion of the consideration would be taxed as ordinary income) and the
holder's adjusted tax basis in the Exchange Debentures. The adjusted tax basis
of a holder who receives an Exchange Debenture in exchange for New Preferred
Stock will generally be equal to the issue price of the Exchange Debenture
increased by any OID with respect to the Exchange Debenture included in the
holder's income prior to sale or redemption of the Exchange Debenture, reduced
by any amortizable bond premium applied against the holder's income prior to
sale or redemption of the Exchange Debenture and by payments other than
payments of qualified stated interest. Except to the extent that an intention
to call the Exchange Debentures prior to their maturity existed at the time of
their original issue in the form of an agreement or understanding between
American and the original holders of a substantial amount of the Exchange
Debentures (which is unlikely in the view of American, but nevertheless the
IRS might take this position under the theory that the optional redemption and
the change of control redemption in respect of the Exchange Debentures
manifests such an intention), and subject to the above discussion of market
discount, such gain or loss would be capital gain or loss and would be long-
term capital gain or loss if the holder's holding period for the Exchange
Debentures exceeded one year.
APPLICABLE HIGH YIELD DISCOUNT OBLIGATIONS CONSEQUENCES
Pursuant to section 163 of the Code and in the event that the Exchange
Debentures are "applicable high yield discount obligations" ("AHYDOs"), a
portion of the OID (if any) accruing on the Exchange Debentures may be treated
as a dividend generally eligible for the dividends-received deduction in the
case of corporate holders, and American would not be entitled to deduct the
"disqualified portion" of the OID accruing on the Exchange Debentures and
would be allowed to deduct the remainder of the OID only when paid in cash.
The Exchange Debentures will constitute AHYDOs if they (i) have a term of
more than five years, (ii) have a yield to maturity equal to or greater than
the sum of the applicable federal rate at the time of issuance of the Exchange
Debentures (the "AFR") plus five percentage points, and (iii) have
"significant OID". A debt
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instrument is treated as having "significant OID" if the aggregate amount that
would be includible in gross income with respect to such debt instrument for
periods before the close of any accrual period ending after the date five
years after the date of issue exceeds the sum of (i) the aggregate amount of
interest to be paid in cash under the debt instrument before the close of such
accrual period, and (ii) the product of the initial issue price of such debt
instrument and its yield to maturity. Because the amount of OID, if any,
attributable to the Exchange Debentures will be determined at the time such
Exchange Debentures are issued and the AFR at that point in time is not
predictable, it is impossible currently to determine whether the Exchange
Debentures will be treated as AHYDOs.
If an Exchange Debenture is treated as an AHYDO, a corporate holder would be
treated as receiving dividend income to the extent of the lesser of (i)
American's current and accumulated earnings and profits, and (ii) the
"disqualified portion" of the OID of such AHYDO. The "disqualified portion" of
the OID is defined in section 163(e)(5)(C) of the Code as the lesser of (i)
the amount of OID, and (ii) the portion of the "total return" (i.e., the
excess of all payments to be made with respect to the Exchange Debenture over
its issue price) bearing the same ratio to such total return as the Exchange
Debenture's yield to maturity, less the sum of the AFR plus six percentage
points, bears to such yield to maturity.
BACKUP WITHHOLDING
A holder of New Preferred Stock or Exchange Debentures may be subject to
backup withholding at the rate of 31 percent with respect to dividends on the
New Preferred Stock, interest on the Exchange Debentures or sales proceeds
with respect to the New Preferred Stock or the Exchange Debentures, unless
generally such holder (a) is a corporation or comes within certain other
exempt categories and, when required, demonstrates its exemption, or (b)
provides a correct taxpayer identification number, certifies as to no loss of
exemption from backup withholding and otherwise complies with applicable
requirements of the backup withholding rules. A holder of New Preferred Stock
or Exchange Debentures who does not provide American with the holder's correct
taxpayer identification number may be subject to penalties imposed by the IRS.
Any amount paid as backup withholding would be creditable against the holder's
federal income tax liability.
THE FOREGOING DISCUSSION OF CERTAIN FEDERAL INCOME TAX CONSIDERATIONS DOES
NOT CONSIDER THE FACTS AND CIRCUMSTANCES OF ANY PARTICULAR PROSPECTIVE
HOLDER'S SITUATION OR STATUS, AND ACCORDINGLY DOES NOT CONSTITUTE TAX ADVICE.
EACH HOLDER OF NEW PREFERRED STOCK OR EXCHANGE DEBENTURES SHOULD CONSULT ITS
OWN TAX ADVISOR WITH RESPECT TO THE TAX CONSEQUENCES TO IT, INCLUDING THOSE
UNDER STATE, LOCAL, FOREIGN AND OTHER TAX LAWS, AND UNDER ANY RECENT OR
PROPOSED CHANGES IN APPLICABLE TAX LAWS.
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PLAN OF DISTRIBUTION
Each broker-dealer that receives New Preferred Stock for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such New Preferred Stock. This
Prospectus, as it may be amended or supplemented from time to time, may be
used by a broker-dealer in connection with resales of New Preferred Stock
received in exchange for Old Preferred Stock where such Old Preferred Stock
was acquired as a result of market-making activities or other trading
activities. American has agreed that, for a period of 180 days after the
Expiration Date, or such shorter period as will terminate when all Old
Preferred Stock acquired by broker-dealers for their own accounts as a result
of market making activities or other trading activities have been exchanged
for New Preferred Stock and resold by such broker-dealers, it will make this
Prospectus, as amended or supplemented, available to any broker-dealer for use
in connection with any such resale.
American will not receive any proceeds from any sale of New Preferred Stock
by broker-dealers. New Preferred Stock received by broker-dealers for their
own account pursuant to the Exchange Offer may be sold from time to time in
one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the New Preferred Stock or a
combination of such methods of resale, at market prices or negotiated prices.
Any such resale may be made directly to purchasers or to or through brokers or
dealers who may receive compensation in the form of commissions or concessions
from any such broker-dealer or the purchasers of any such New Preferred Stock.
Any broker-dealer that resells shares of New Preferred Stock that it received
for its own account pursuant to the Exchange Offer and any broker or dealer
that participates in a distribution of such New Preferred Stock may be deemed
to be an "underwriter" within the meaning of the Securities Act, and any
profit on any such resale of New Preferred Stock and any commissions or
concessions received by any such persons may be deemed to be underwriting
compensation under the Securities Act. The Letter of Transmittal states that
by acknowledging that it will deliver and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act.
For a period of 180 days after the Expiration Date, American will promptly
send additional copies of this Prospectus and any amendment or supplement to
this Prospectus to any broker-dealer that requests such documents in the
Letter of Transmittal. American has agreed to pay all expenses incident to the
Exchange Offer (including the reasonable expenses of one counsel for the
holders of the Old Preferred Stock) other than commissions or concessions of
any brokers or dealers and will indemnify holders of the Old Preferred Stock
(including broker-dealers) against certain liabilities, including certain
liabilities under the Securities Act.
108
<PAGE>
TRANSFER RESTRICTIONS
Unless and until the Old Preferred Stock is exchanged for New Preferred
Stock, the Old Preferred Stock (and any Exchange Debentures issues in exchange
therefor) will, until the third anniversary of the date of original issuance
of the Old Preferred Stock (or such shorter period as may be permitted by Rule
144(k)), unless otherwise agreed by American and the holder thereof, bear a
legend substantially to the following effect:
"This security (or its predecessor) was originally issued in a
transaction exempt from registration under the United States Securities Act
of 1933 (the "Securities Act"), and this security and any security into
which such security is exchangeable may not be offered, sold or otherwise
transferred in the absence of such registration or an applicable exemption
therefrom. Each purchaser of this security is hereby notified that the
seller of this security may be relying on the exemption from the provisions
of Section 5 of the Securities Act provided by Rule 144A thereunder.
"The holder of this security agrees for the benefit of American that (A)
this security and any security into which such security is exchangeable may
be offered, resold, pledged or otherwise transferred, only (i) inside the
United States to a person whom the seller reasonably believes is a
qualified institutional buyer (as defined in Rule 144A under the Securities
Act) in a transaction meeting the requirements of Rule 144A, (ii) outside
the United States in a transaction in accordance with Rule 904 under the
Securities Act, (iii) pursuant to an exemption from registration under the
Securities Act provided by Rule 144 thereunder (if available) or (iv)
pursuant to an effective registration statement under the Securities Act,
in each of cases (i) through (iv) in accordance with any applicable
securities laws of any State of the United States, and (B) the holder will,
and each subsequent holder is required to, notify any purchaser of this
security from it of the resale restrictions referred to in (A) above."
LEGAL MATTERS
The validity of the New Preferred Stock and the Exchange Debentures will be
passed upon for American by Sullivan & Worcester LLP, Boston, Massachusetts.
Norman A. Bikales, a member of the firm of Sullivan & Worcester LLP, is the
owner of 9,000 shares of Class A Common Stock and 41,900 shares of Class B
Common Stock of American.
EXPERTS
The following financial statements incorporated in this Prospectus by
reference have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their reports, which are incorporated by reference herein, and have
been so incorporated in reliance upon the reports of such firm given upon
their authority as experts in accounting and auditing:
(1) The consolidated financial statements of the Company as of December
31, 1995 and 1996 and for each of the three years in the period ended
December 31, 1996 and the related financial statement schedule
(incorporated by reference from the Company's Annual Report on Form 10-K
for the year ended December 31, 1996);
(2) The consolidated financial statements of BayCom Partners, L.P. (a
limited partnership) and consolidated entities as of December 31, 1994 and
1995 and for each of the three years in the period ended December 31, 1995
(incorporated by reference from the Company's Current Report on Form 8-K/A
dated September 16, 1996);
(3) The statement of assets of The Ten Eighty Corporation to be sold to
American Radio Systems, Inc. as of December 31, 1995, and the related
statements of income and of cash flows derived from those assets for the
year then ended (incorporated by reference from the Company's Current
Report on Form 8-K/A dated October 2, 1996); and
109
<PAGE>
(4) The consolidated financial statements of EZ Communications, Inc. and
subsidiary as of December 31, 1996 and for the year then ended and the
related financial statement schedule (incorporated by reference from EZ
Communications, Inc.'s Annual Report on Form 10-K for the year ended
December 31, 1996).
The consolidated financial statements of Henry Broadcasting Company as of
December 31, 1994 and 1995 and for each of the three years in the period ended
December 31, 1995 incorporated by reference in this Prospectus to American's
report on Form 8-K/A dated September 16, 1996 have been audited by Miller,
Kaplan, Arase & Co., independent auditors, as stated in their report
incorporated by reference in this Prospectus and have been so included in
reliance upon the report of such firm given upon their authority as experts in
accounting and auditing.
The combined financial statements of CBC of Baltimore, Inc. (d/b/a WOCT-FM)
and WWMX-FM, Inc. (wholly-owned subsidiaries of Capitol Broadcasting Company,
Inc.) as of December 31, 1995 and 1996 and for the years then ended,
incorporated in this Prospectus by reference to American's Current Report on
Form 8-K/A (Amendment No. 1) dated April 17, 1997, have been so incorporated
in reliance on the report of Price Waterhouse LLP, independent accountants,
given on their authority as experts in auditing and accounting.
The consolidated financial statements of EZ Communications, Inc. as of
December 31, 1995 and for each of the two years in the period ended December
31, 1995 incorporated by reference in this Prospectus from EZ Communications,
Inc.'s Annual Report on Form 10-K for the year ended December 31, 1996 have
been audited by Ernst & Young LLP, independent auditors, as stated in their
report incorporated by reference in this Prospectus and have been so included
in reliance upon the report of such firm given upon their authority as experts
in accounting and auditing.
110
<PAGE>
LOGO
CORE PRINCIPLES
----------------
GROW PEOPLE FASTER THAN ASSETS
EARN OUR LISTENERS' LOYALTY
BE COMMITTED TO THE SUCCESS OF OUR CLIENTS
DO WHAT YOU SAY YOU'RE GOING TO DO
HAVE FUN
PLAY TO WIN
<PAGE>
- -------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFOR-
MATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY AMERICAN. THIS PROSPECTUS DOES NOT CONSTITUTE AN OF-
FER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED
HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH
OFFER IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO
THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF AMERICAN
SINCE SUCH DATE.
------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information.................................................... i
Incorporation of Certain Documents by Reference.......................... i
Summary.................................................................. 1
Risk Factors............................................................. 14
The Exchange Offer....................................................... 21
Use of Proceeds.......................................................... 28
Capitalization........................................................... 29
Unaudited Pro Forma Condensed Consolidated Financial Statements of
American................................................................ 30
Business................................................................. 36
Management............................................................... 58
Description of the New Preferred Stock................................... 59
Description of the Exchange Debentures................................... 67
Indebtedness of American................................................. 91
Description of Capital Stock............................................. 94
Certain Federal Income Tax Consequences.................................. 98
Plan of Distribution..................................................... 108
Transfer Restrictions.................................................... 109
Legal Matters............................................................ 109
Experts.................................................................. 109
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
LOGO
2,047,391 SHARES
11 3/8% CUMULATIVE EXCHANGEABLE PREFERRED STOCK, SERIES B
PROSPECTUS
- -------------------------------------------------------------------------------
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION
REGISTRATION STATEMENT ON FORM S-4
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law (the "DGCL") provides,
in effect, that any person made a party to any action by reason of the fact
that he is or was a director, officer, employee or agent of the Company may
and, in certain cases, must be indemnified by the Company against, in the case
of a non-derivative action, judgments, fines, amounts paid in settlement and
reasonable expenses (including attorney's fees), if in either type of action
he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Company and, in a non-derivative action,
which involves a criminal proceeding, in which such person had no reasonable
cause to believe his conduct was unlawful. This indemnification does not
apply, in a derivative action, to matters as to which it is adjudged that the
director, officer, employee or agent is liable to the Company, unless upon
court order it is determined that, despite such adjudication of liability, but
in view of all the circumstances of the case, he is fairly and reasonably
entitled to indemnity for expenses.
Article XII of the Company's By-Laws provides that the Company shall
indemnify each person who is or was an officer or director of the Company to
the fullest extent permitted by Section 145 of the DGCL.
Article Sixth of the Company's Restated Certificate states that no director
of the Company shall be personally liable to the Company or its stockholders
for monetary damages for breach of fiduciary duty as a director, except for
(i) breach of the director's duty of loyalty to the Company or its
stockholders, (ii) acts or omissions not in good faith or which involve
intentional misconduct or knowing violation of law, (iii) liability under
Section 174 of the DGCL relating to certain unlawful dividends and stock
repurchases, or (iv) any transaction from which the director derived an
improper personal benefit.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
Listed below are the exhibit which are filed as part of this registration
statement (according to the number assigned to them in Item 601 of Regulation
S-K). Each exhibit marked by a (*) is incorporated by reference to American's
Report on Form 10-K for the year ended December 31, 1996. Exhibit numbers in
parenthesis refer to the exhibit number in the applicable filing.
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF DOCUMENT EXHIBIT FILE NO.
----------- ----------------------- ----------------
<C> <S> <C>
3 The Certificate of Designation of
Preferences and Rights of the
Series B Cumulative Exchangeable Incorporated by reference
Preferred Stock, as filed with the herein from the Company's
Secretary of State of the State of Form 8-K dated February 10,
Delaware on January 29, 1997....... 1997 (99.10)
4 Indenture, dated as of January 30,
1997, by and between the Company
and Fleet National Bank relating to Incorporated by reference
$200,000,000 of the Company's 11 herein from the Company's
3/8% Subordinated Exchange Form 8-K dated February 10,
Debentures due 2009................ 1997 (99.7)
5 Opinion of Sullivan & Worcester
LLP................................ Filed herewith as Exhibit 5
11 Schedule Re Computation of Earnings
Per Share.......................... *(11)
12 Schedule of Earnings to Fixed
Charges............................ *(12)
23.0 Consent of Sullivan & Worcester Contained in the opinion of
LLP................................ Sullivan & Worcester LLP
filed as Exhibit 5
23.1 Consents of Deloitte & Touche LLP.. Filed herewith as Exhibit
23.1
23.2 Consent of Deloitte & Touche LLP... Filed herewith as Exhibit
23.2
23.3 Consent of Deloitte & Touche LLP... Filed herewith as Exhibit
23.3
23.4 Consent of Miller, Kaplan, Arase & Filed herewith as Exhibit
Co. ............................... 23.4
23.5 Consent of Price Waterhouse LLP.... Filed herewith as Exhibit
23.5
23.6 Consent of Ernst & Young LLP....... Filed herewith as Exhibit
23.6
24 Power of Attorney.................. Filed as page II-4 of the
Registration Statement
25 Form T-1 stating the eligibility
and qualifications of Fleet
National Bank...................... Filed herewith as Exhibit 25
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION OF DOCUMENT EXHIBIT FILE NO.
NO. ----------------------- ----------------
-------
<C> <S> <C>
27 Financial Data Schedule................ *(27)
99.1 Form of Notice of Guaranteed Delivery
for 11 3/8 Cumulative Exchangeable
Preferred Stock, Series B............. Filed herewith as Exhibit 99.1
99.2 Form of Letter of Transmittal for 11
3/8 Cumulative Exchangeable Preferred
Stock, Series B....................... Filed herewith as Exhibit 99.2
99.3 Form of Exchange Agent Agreement
between American and Harris Trust
Company of New York, dated as of April
, 1997............................... Filed herewith as Exhibit 99.3
</TABLE>
ITEM 22. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) to file, during any period in which offers or sales are being made, a post-
effective amendment to this Registration Statement:
(i)to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii)to reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement;
(iii)to include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement:
(2) that, for the purpose of determining any liability under the Securities Act
of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the intitial
bona fide offering thereof; and
(3) to remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering;
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act
of 1934) that is incorporated by reference in the registration statement shall
be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Company pursuant to the foregoing provisions, or otherwise, the Company has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in that Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Company of expenses incurred or
paid by a director, officer or controlling person of the Company in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Company will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act of 1933 and will be governed by the
final adjudication of such issue.
II-2
<PAGE>
(d) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through
the date of responding to the request.
(e) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment, all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Boston, Commonwealth of Massachusetts, on the 29th
day of April, 1997.
AMERICAN RADIO SYSTEMS CORPORATION
By: /s/ Steven B. Dodge
----------------------------------
STEVEN B. DODGE CHAIRMAN OF THE
BOARD, PRESIDENT, CHIEF EXECUTIVE
OFFICER AND DIRECTOR
The undersigned Officers and Directors of American Radio Systems Corporation
(the "Company") hereby severally constitute Joseph L. Winn, Justin D.
Benincasa, Michael B. Milsom and Norman A. Bikales, and each of them, acting
singly, our true and lawful attorneys to sign for us and in our names in the
capacities indicated below the Company's Registration Statement on Form S-4
relating to the registration of an aggregate of 2,047,391 shares of 11 3/8
Cumulative Exchangeable Preferred Stock, Series B and any and all amendments
and supplements thereto, filed with the Securities and Exchange Commission,
for the purpose of registering such shares, under the Securities Act of 1933,
as amended, granting unto each of said attorneys, acting singly, full power
and authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming
our signatures to said registration statement signed by our said attorneys and
all else that said attorneys may lawfully do and cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons on
behalf of the Company and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ Steven B. Dodge Chairman, President, April 29, 1997
- ------------------------------------- Chief Executive Officer
STEVEN B. DODGE and Director
/s/ Joseph L. Winn Chief Financial Officer April 29, 1997
- ------------------------------------- and Director
JOSEPH L. WINN
/s/ Justin D. Benincasa Vice President and April 29, 1997
- ------------------------------------- Corporate Controller
JUSTIN D. BENINCASA
/s/ Alan L. Box Executive Vice President April 29, 1997
- ------------------------------------- and Director
ALAN L. BOX
/s/ Charlton H. Buckley Director April 29, 1997
- -------------------------------------
CHARLTON H. BUCKLEY
</TABLE>
II-4
<PAGE>
<TABLE>
<S> <C> <C>
/s/ Arnold L. Chavkin Director April 29, 1997
- -------------------------------------
ARNOLD L. CHAVKIN
/s/ James H. Duncan, Jr. Director April 29, 1997
- -------------------------------------
JAMES H. DUNCAN, JR.
/s/ Arthur C. Kellar Director April 29, 1997
- -------------------------------------
ARTHUR C. KELLAR
/s/ Charles D. Peebler, Jr. Director April 29, 1997
- -------------------------------------
CHARLES D. PEEBLER, JR.
/s/ Lance R. Primis Director April 29, 1997
- -------------------------------------
LANCE R. PRIMIS
/s/ Thomas H. Stoner Director April 29, 1997
- -------------------------------------
THOMAS H. STONER
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
Listed below are the exhibit which are filed as part of this registration
statement (according to the number assigned to them in Item 601 of Regulation
S-K). Each exhibit marked by a (*) is incorporated by reference to American's
Report on Form 10-K for the year ended December 31, 1996. Exhibit numbers in
parenthesis refer to the exhibit number in the applicable filing.
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF DOCUMENT EXHIBIT FILE NO. PAGE
----------- ----------------------- ---------------- ----
<C> <S> <C> <C>
3 The Certificate of
Designation of Preferences
and Rights of the Series B
Cumulative Exchangeable
Preferred Stock, as filed Incorporated by reference
with the Secretary of State herein from the Company's
of the State of Delaware on Form 8-k dated February 10,
January 29, 1997............. 1997 (99.10)
4 Indenture, dated as of
January 30, 1997, by and
between the Company and Fleet
National Bank relating to Incorporated by reference
$200,000,000 of the Company's herein from the Company's
11 3/8% Subordinated Exchange Form 8-K dated February 10,
Debentures due 2009.......... 1997
Opinion of Sullivan & Filed herewith as Exhibit 5
5 Worcester LLP................
Schedule Re Computation of *(11)
11 Earnings Per Share...........
Schedule of Earnings to Fixed *(12)
12 Charges......................
23.0 Consents of Sullivan & Contained in the opinion of
Worcester LLP................ Sullivan & Worcester LLP
filed as Exhibit 5
Consents of Deloitte & Touche Filed herewith as Exhibit
23.1 LLP.......................... 23.1
Consent of Deloitte & Touche Filed herewith as Exhibit
23.2 LLP.......................... 23.2
Consent of Deloitte & Touche Filed herewith as Exhibit
23.3 LLP.......................... 23.3
Consent of Miller, Kaplan, Filed herewith as Exhibit
23.4 Arase & Co. ................. 23.4
Consent of Price Waterhouse Filed herewith as Exhibit
23.5 LLP.......................... 23.5
Consent of Ernst & Young Filed herewith as Exhibit
23.6 LLP.......................... 23.6
24 Power of Attorney............ Filed as page II-4 of the
Registration Statement
25 Form T-1 stating the
eligibility and
qualifications of Fleet
National Bank................ Filed herewith as Exhibit 25
27 Financial Data Schedule...... *(27)
99.1 Form of Notice of Guaranteed
Delivery for 11 3/8
Cumulative Exchangeable Filed herewith as Exhibit
Preferred Stock, Series B.... 99.1
99.2 Form of Letter of Transmittal
for 11 3/8 Cumulative
Exchangeable Preferred Stock, Filed herewith as Exhibit
Series B..................... 99.2
99.3 Form of Exchange Agent
Agreement between American
and Harris Trust and Savings
Bank, dated as of April , Filed herewith as Exhibit
1997......................... 99.3
</TABLE>
<PAGE>
Exhibit 5
[Sullivan & Worcester LLP Letterhead]
April 29, 1997
American Radio Systems Corporation
116 Huntington Avenue
Boston, MA 02116
Re: Registration Statement on Form S-4 --
2,047,391 shares of 11-3/8 % Series B Cumulative Exchangeable Preferred
Stock 11-3/8% Subordinated Exchange Debentures due 2009
--------------------------------------------------------
Dear Sir or Madam:
In connection with the registration under the Securities Act of 1933, as
amended (the "Securities Act"), by American Radio Systems Corporation, a
Delaware corporation ("American"), of 2,047,391 shares of its 11-3/8 % Series B
Cumulative Exchangeable Preferred Stock, $100 liquidation preference per share
(the "New Preferred") and the underlying 11-3/8% Subordinated Exchange
Debentures due 2009 (the "Exchange Debentures"), the following opinion is
furnished to you to be filed with the Securities and Exchange Commission (the
"Commission") as Exhibit 5 to American's Registration Statement on Form S-4 (the
"Registration Statement"). The New Preferred Stock is being offered in exchange
(the "Exchange Offer") for the outstanding 2,047,391 shares of American 11-3/8%
Cumulative Exchangeable Preferred Stock, $100 liquidation preference (the "Old
Preferred") that were issued in a private placement pursuant to Section 4(2) of
the Securities Act in January 1997.
We have acted as counsel to American in connection with the preparation of
the offering circular dated January 27, 1997 (the "Offering Circular") used in
the aforementioned private placement and the Registration Statement, and we have
examined originals or copies, certified or otherwise identified to our
satisfaction, of the Offering Circular, the Registration Statement, the Restated
Certificate of Incorporation of American, the Certificate of Designation for
each of the Old Preferred and New Preferred, corporate records, certificates and
statements of officers and accountants of American, and of public officials, and
such other documents as we have considered necessary in order to furnish the
opinion hereinafter set forth. We express no opinion herein as to any laws other
than the General Corporation Law of the State of Delaware.
<PAGE>
Based on and subject to the foregoing, we are of the opinion that (i) the
New Preferred has been duly authorized and, upon issue and delivery against
proper surrender of the Old Preferred pursuant to the Exchange Offer, will be
validly issued, fully paid and nonassessable, and (ii) the Exchange Debentures
have been duly authorized, and upon issue and delivery against proper surrender
of the New Preferred, will be validly issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm made therein under the
caption "Experts." In giving such consent, we do not thereby admit that we come
within the category of persons whose consent is required under Section 7 of the
Securities Act or the Rules and Regulations of the Commission promulgated
thereunder.
Very truly yours,
/s/ Sullivan & Worcester LLP
SULLIVAN & WORCESTER LLP
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement
of American Radio Systems Corporation on Form S-4 of our report dated February
25, 1997, related to the consolidated financial statements and financial
statement schedule of American Radio Systems Corporation and subsidiaries as
of December 31, 1995 and 1996 and for each of the three years in the period
ended December 31, 1996, appearing in the Annual Report on Form 10-K of
American Radio Systems Corporation for the year ended December 31, 1996.
We consent to the incorporation by reference in this Registration Statement
of American Radio Systems Corporation on Form S-4 of our report dated March
13, 1996, related to the statement of net assets of The Ten Eighty Corporation
to be sold to American Radio Systems, Inc. and the related statements of
income and cash flows derived from those assets for the year ended December
31, 1995, appearing in the Current Report on Form 8-K/A of American Radio
Systems Corporation filed on October 2, 1996.
We also consent to the reference to us under the heading "Experts" in the
Prospectus, which is part of this Registration Statement.
Deloitte & Touche LLP
Boston, Massachusetts
April 25, 1997
<PAGE>
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement
of American Radio Systems Corporation on Form S-4 of our report dated March 8,
1996 (August 1, 1996 as to Note 8), related to the consolidated financial
statements of BayCom Partners, L.P. (a limited partnership) and consolidated
entities as of December 31, 1994 and 1995 and for each of the three years in
the period ended December 31, 1995, appearing in the Current Report on Form 8-
K/A of American Radio Systems Corporation filed on September 16, 1996 and to
the reference to us under the heading "Experts" in the Prospectus, which is
part of this Registration Statement.
Deloitte & Touche LLP
Birmingham, Alabama
April 25, 1997
<PAGE>
EXHIBIT 23.3
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement
of American Radio Systems Corporation on Form S-4 of our report dated February
26, 1997, related to the consolidated financial statements of EZ
Communications, Inc. and subsidiary as of December 31, 1996 and for the year
then ended, appearing in the Annual Report on Form 10-K of EZ Communications,
Inc., and to the reference to us under the heading "Experts" in the
Prospectus, which is part of this Registration Statement.
Deloitte & Touche LLP
Boston, Massachusetts
April 25, 1997
<PAGE>
EXHIBIT 23.4
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement
of American Radio Systems Corporation (American) on Form S-4 of our report
dated April 16, 1996, (except for Note 18 as to which the date is July 3,
1996), on the financial statements of Henry Broadcasting Company--Special
Financial Statement Presentation, as of December 31, 1994 and 1995 and for
each of the three years in the period ended December 31, 1995, appearing in
the Current Report on Form 8-K/A of American dated September 16, 1996 and to
reference to us under the heading "Experts" in the Prospectus, which is part
of this Registration Statement.
Miller, Kaplan, Arase & Co.
North Hollywood, California
April 25, 1997
<PAGE>
EXHIBIT 23.5
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus,
constituting part of the Registration Statement on Form S-4 of American Radio
Systems Corporation ("American") of our report dated April 3, 1997 relating to
the combined financial statements of CBC of Baltimore, Inc. (d/b/a WOCT-FM) and
WWMX-FM, Inc. (wholly-owned subsidiaries of Capitol Broadcasting Company,
Inc.), which appears in American's Current Report on Form 8-K/A (Amendment No.
1) dated April 17, 1997. We also consent to the reference to us under the
heading "Experts" in such Prospectus.
Price Waterhouse LLP
Raleigh, North Carolina
April 25, 1997
<PAGE>
EXHIBIT 23.6
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference of our firm under the caption "Experts" in the
Registration Statement (Form S-4 to be filed on or about April 25, 1997) and
related Prospectus of American Radio Systems Corporation for the registration
of 2,047,391 shares of its 11 3/8% Cumulative Exchangeable Preferred Stock,
Series B and to the incorporation by reference therein of our report dated
February 9, 1996, with respect to the consolidated financial statements of EZ
Communications, Inc. incorporated by reference in its Annual Report (Form 10-
K) for the year ended December 31, 1995, filed with the Securities and
Exchange Commission.
/s/ Ernst & Young LLP
Washington, DC
April 25, 1997
<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------
FORM T-1
--------------------------
STATEMENT OF ELIGIBILITY AND QUALIFICATION UNDER THE
TRUST INDENTURE ACT OF 1939 OF A CORPORATION
DESIGNATED TO ACT AS TRUSTEE
[ ] CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(B)(2)
FLEET NATIONAL BANK
----------------------------------------------------------
(Exact name of trustee as specified in its charter)
Not applicable 06-0850628
---------------------------- ------------------
(State of incorporation if (I.R.S. Employer
not a national bank) Identification No.)
777 Main Street, Hartford, Connecticut 06115
---------------------------------------------------
(Address of principal executive offices) (Zip Code)
Patricia Beaudry, 777 Main Street, Hartford, CT (860) 728-2065
------------------------------------------------------------------
(Name, address and telephone number of agent for service)
American Radio Systems Corporation, as Issuer
------------------------------------------------------------------
(Exact name of obligor as specified in its charter)
Delaware 04-3196245
- ------------------------------- ------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
116 Huntington Avenue, Boston, Massachusetts 02116
------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
11 3/8% Subordinated Exchange Debentures due 2009
------------------------------------------------------------------
(Title of the indenture securities)
<PAGE>
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject:
The Comptroller of the Currency,
Washington, D.C.
Federal Reserve Bank of Boston
Boston, Massachusetts
Federal Deposit Insurance Corporation
Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers:
The trustee is so authorized.
Item 2. Affiliations with obligor. If the obligor is an affiliate of
the trustee, describe each such affiliation.
None with respect to the trustee; none with respect to Fleet
Financial Group, Inc. and its affiliates (the "affiliates").
Item 16. List of exhibits. List below all exhibits filed as a part of
this statement of eligibility and qualification.
1. A copy of the Articles of Association of the trustee as
now in effect.
2. A copy of the Certificate of Authority of the trustee
to do Business and the Certification of Fiduciary Powers.
3. A copy of the By-laws of the trustee as now in effect.
4. Consent of the trustee required by Section 321(b) of
the Act.
5. A copy of the latest Consolidated Report of Condition
and Income of the trustee, published pursuant to law or the requirements
of its supervising or examining authority.
<PAGE>
NOTES
Inasmuch as this Form T-1 is filed prior to the ascertainment by the
trustee of all facts on which to base its answer to Item 2, the answer to said
Item is based upon incomplete information. Said Item may, however, be
considered correct unless amended by an amendment to this Form T-1.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
trustee, Fleet National Bank, a national banking association organized and
existing under the laws of the United States, has duly caused this statement of
eligibility and qualification to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the City of Hartford, and State of
Connecticut, on the 25th day of April, 1997.
FLEET NATIONAL BANK,
Trustee
By /s/Steven Cimalore
-------------------------------------
Name: Steven Cimalore
Title: Vice President
<PAGE>
EXHIBIT 1
ARTICLES OF ASSOCIATION
OF
FLEET NATIONAL BANK
FIRST. The title of this Association, which shall carry on the business of
banking under the laws of the United States, shall be "Fleet National Bank."
SECOND. The main office of the Association shall be in Springfield, Hampden
County Commonwealth of Massachusetts. The general business of the Association
shall be conducted at its main office and its branches.
THIRD. The board of directors of this Association shall consist of not less
than five (5) nor more than twenty-five (25) shareholders, the exact number of
directors within such minimum and maximum limits to be fixed and determined
from time to time by resolution of a majority of the full board of directors or
by resolution of the shareholders at any annual or special meeting thereof.
Unless otherwise provided by the laws of the United States, any vacancy in the
board of directors for any reason, including an increase in the number thereof,
may be filled by action of the board of directors.
FOURTH. The annual meeting of the shareholders for the election of directors
and the transaction of whatever other business may be brought before said
meeting shall be held at the main office or such other place as the board of
directors may designate, on the day of each year specified therefore in the
bylaws, but if no election is held on that day, it may be held on any
subsequent day according to the provisions of law; and all elections shall be
held according to such lawful regulations as may be prescribed by the board of
directors.
FIFTH. The authorized amount of capital stock of this Association shall be
eight million five hundred thousand (8,500,000) shares of which three million
five hundred thousand (3,500,000) shares shall be common stock with a
par value of six and 25/100 dollars ($6.25) each, and of which five million
(5,000,000) shares without par value shall be preferred stock. The capital
stock may be increased or decreased from time to time, in accordance with
the provisions of the laws of the United States.
No holder of shares of the capital stock of any class of the Association shall
have any pre-emptive or preferential right of subscription to any shares of any
class of stock of the Association, whether now or hereafter authorized, or to
any obligations convertible into stock of the Association, issued or sold, nor
any right of subscription to any thereof other than such, if any, as the board
of directors, in its discretion, may from time to time determine and at such
price as the board of directors may from time to time fix.
<PAGE>
The board of directors of the Association is authorized, subject to limitations
prescribed by law and the provisions of this Article, to provide for the
issuance from time to time in one or more series of any number of the preferred
shares, and to establish the number of shares be included in each series, and
to fix the designation, relative rights, preferences, qualifications and
limitations of the shares of each such series. The authority of the board of
directors with respect to each series shall include, but not be limited to,
determination of the following:
a. The number of shares constituting that series and the distinctive
designation of that series;
b. The dividend rate on the shares of that series, whether dividends shall be
cumulative, and, if so, from which date or dates, and whether they shall be
payable in preference to, or in another relation to, the dividends payable
to any other class or classes or series of stock;
c. Whether that series shall have voting rights, in addition to the voting
rights provided by law, and, if so, the terms of such voting rights;
d. Whether that series shall have conversion or exchange privileges, and,
if so, the terms and conditions of such conversion or exchange, including
provision for the adjustment of the conversion or exchange rate in such
events as the board of directors shall determine;
e. Whether or not the shares of that series shall be redeemable, and, if so,
the terms and conditions of such redemption, including the manner of
selecting shares for redemption if less than all shares are to be redeemed,
the date or dates upon or after which they shall be redeemable, and the
amount per share payable in case of redemption, which amount may vary under
different conditions and at different redemption dates;
f. Whether that series shall be entitled to the benefit of a sinking fund to
be applied to the purchase or redemption of shares of that series, and, if
so, the terms and amounts of such sinking fund;
g. The right of the shares of that series to the benefit of conditions and
restrictions upon the creation of indebtedness of the Association or any
subsidiary, upon the issue of any additional stock (including additional
shares of such series or of any other series) and upon the payment of
dividends or the making of other distributions on, and the purchase,
redemption or other acquisition by the Association or any subsidiary of
any outstanding stock of the Association;
h. The right of the shares of that series in the event of voluntary or
involuntary liquidation, dissolution or winding up of the Association and
whether such rights shall be in preference to, or in another relation to,
the comparable rights of any other class or classes or series of stock; and
i. Any other relative, participating, optional or other special rights,
qualifications, limitations or restrictions of that series.
Shares of any series of preferred stock which have been redeemed (whether
through the operation of a sinking fund or otherwise) or which, if convertible
or exchangeable, have been converted into or exchanged for shares of stock of
any other class or classes shall have the status of authorized and unissued
shares of preferred stock of the same series and may be reissued as a part of
the series of which they were originally a part or may be reclassified and
reissued as part of a new series of preferred stock to be created by resolution
or resolutions of the board of directors or as part of any other series or
preferred stock, all subject to the conditions and the restrictions adopted by
the board of directors providing for the issue of any series of preferred
stock and by the provisions of any applicable law.
Subject to the provisions of any applicable law, or except as otherwise
provided by the resolution or resolutions providing for the issue of any series
of preferred stock, the holders of outstanding shares of common stock shall
exclusively possess voting power for the election of directors and for all
purposes, each holder of record of shares of common stock being entitled to one
vote for each share of common stock standing in his name on the books of the
Association.
Except as otherwise provided by the resolution or resolutions providing for the
issue of any series of preferred stock, after payment shall have been made to
the holders of preferred stock of the full amount of dividends to which they
shall be entitled pursuant to the resolution or resolutions providing for the
issue of any other series of preferred stock, the holders of common stock shall
be entitled, to the exclusion of the holders of preferred stock of any and all
series, to receive such dividends as from time to time may be declared by the
board of directors.
Except as otherwise provided by the resolution or resolutions for the issue
of any series of preferred stock, in the event of any liquidation, dissolution
or winding up of the Association, whether voluntary or involuntary, after
payment shall have been made to the holders of preferred stock of the full
amount to which they shall be entitled pursuant to the resolution or
resolutions providing for the issue of any series of preferred stock the
holders of common stock shall be entitled, to the exclusion of the holders of
preferred stock of any and all series, to share, ratable according to the
number of shares of common stock held by them, in all remaining assets of the
Association available for distribution to its shareholders.
The number of authorized shares of any class may be increased or decreased by
the affirmative vote of the holders of a majority of the stock of the
Association entitled to vote.
<PAGE>
SIXTH. The board of directors shall appoint one of its members president of
this Association, who shall be chairman of the board, unless the board appoints
another director to be the chairman. The board of directors shall have the
power to appoint one or more vice presidents; and to appoint a secretary and
such other officers and employees as may be required to transact the business
of this Association.
The board of directors shall have the power to define the duties of the
officers and employees of the Association; to fix the salaries to be paid to
them; to dismiss them; to require bonds from them and to fix the penalty
thereof; to regulate the manner in which any increase of the capital of the
Association shall be made; to manage and administer the business and affairs of
the Association; to make all bylaws that it may be lawful for them to make; and
generally to do and perform all acts that it may be legal for a board of
directors to do and perform.
SEVENTH. The board of directors shall have the power to change the location of
the main office to any other place within the limits of the City of Hartford,
Connecticut, without the approval of the shareholders but subject to the
approval of the Comptroller of the Currency; and shall have the power to
establish or change the location of any branch or branches of the Association
to any other location, without the approval of the shareholders but subject to
the approval of the Comptroller of the Currency.
EIGHTH. The corporate existence of this Association shall continue until
terminated in accordance with the laws of the United States.
NINTH. The board of directors of this Association, or any three or more
shareholders owning, in the aggregate, not less than ten percent (10%) of the
stock of this Association, may call a special meeting of shareholders at any
time. Unless otherwise provided by the laws of the United States, a notice of
the time, place and purpose of every annual and special meeting of the
shareholders shall be given by first class mail, postage prepaid, mailed at
least ten (10) days prior to the date of such meeting to each shareholder of
record at his address as shown upon the books of this Association.
TENTH. (a) Right to Indemnification. Each person who was or is made a party
or is threatened to be made a party to any threatened, pending or completed
action, suit, or proceeding, whether civil, criminal, administrative, or
investigative (hereinafter a "proceeding"), by reason of the fact that he or
she is or was a director, officer or employee of the Association or is or was
serving at the request of the Association as a director, officer, employee or
agent of another corporation or of a partnership, joint venture, limited
liability company, trust, or other enterprise, including service with respect
to an employee benefit plan, shall be indemnified and held harmless by the
Association to the fullest extent authorized by the law of the state in which
the Association's ultimate parent company is incorporated, except as provided
in subsection (b). The aforesaid indemnity shall protect the indemnified
person against all expense, liability and loss (including attorney's fees,
judgements, fines ERISA excise taxes or penalties, and amounts paid in
settlement) reasonably incurred by such person in connection with such a
proceeding. Such indemnification shall continue as to a person who has ceased
to be a director, officer or employee and shall inure to the benefit of his or
her heirs, executors, and administrators, but shall only cover such person's
period of service with the Association. The Association may, by action of its
Board of Directors, grant rights to indemnification to agents of the
Association and to any director, officer, employee or agent of any of its
subsidiaries with the same scope and effect as the foregoing indemnification
of directors and officers.
(b) Restrictions on Indemnification. Notwithstanding the foregoing, (i) no
person shall be indemnified hereunder by the Association against expenses,
penalties, or other payments incurred in an administrative proceeding or action
instituted by a federal bank regulatory agency which proceeding or action
results in a final order assessing civil money penalties against that person,
requiring affirmative action by that person in the form of payments to the
Association, or removing or prohibiting that person from service with the
Association, and any advancement of expenses to that person in that proceeding
must be repaid; and (ii) no person shall be indemnified hereunder by the
Association and no advancement of expenses shall be made to any person
hereunder to the extent such indemnification or advancement of expenses would
violate or conflict with any applicable federal statute now or hereafter in
force or any applicable final regulation or interpretation now or hereafter
adopted by the Office of the Comptroller of the Currency ("OCC") or the Federal
Deposit Insurance Corporation ("FDIC"). The Association shall comply with any
requirements imposed on it by any such statue or regulation in connection with
any indemnification or advancement of expenses hereunder by the Association.
With respect to proceedings to enforce a claimant's rights to indemnification,
the Association shall indemnify any such claimant in connection with such a
proceeding only as provided in subsection (d) hereof.
(c) Advancement of Expenses. The conditional right to indemnification
conferred in this section shall be a contract right and shall include the
right to be paid by the Association the reasonable expenses (including
attorney's fees) incurred in defending a proceeding in advance of its final
disposition (an "advancement of expenses"); provided, however, that an
advancement of expenses shall be made only upon (i) delivery to the Association
of a binding written undertaking by or on behalf of the person receiving the
advancement to repay all amounts so advanced if it is ultimately determined
that such person is not entitled to be indemnified in such proceeding,
including if such proceeding results in a final order assessing civil money
penalties against that person, requiring affirmative action by that person
in the form of payments to the Association, or removing or prohibiting that
person from service with the Association, and (ii) compliance with any other
actions or determinations required by applicable law, regulation or OCC or FDIC
interpretation to be taken or made by the Board of Directors of the Association
<PAGE>
or other persons prior to an advancement of expenses. The Association shall
cease advancing expenses at any time its Board of Directors believes that any
of the prerequisites for advancement of expenses are no longer being met.
(d) Right of Claimant to Bring Suit. If a claim under subsection (a) of the
section is not paid in full by the Association within thirty (30) days after
written claim has been received by the Association, the claimant may at any time
thereafter bring suit against the Association to recover the unpaid amount
of the claim. If successful in whole or in part in any such suit, or in a
suit brought by the Association to recover an advancement of expenses pursuant
to the terms of an undertaking, the claimant shall be entitled to be paid also
the expense of prosecuting or defending such claim. It shall be a defense to
any such action brought by the claimant to enforce a right to indemnification
hereunder (other than an action brought to enforce a claim for an advancement
of expenses where the required undertaking, if any, has been tendered to the
Association) that the claimant has not met any applicable standard for
indemnification under the law of the state in which the Association's ultimate
parent company is incorporated. In any suit brought by the Association to
recover an advancement of expenses pursuant to the terms of an undertaking, the
Association shall be entitled to recover such expenses upon a final
adjudication that the claimant has not met any applicable standard for
indemnification standard for indemnification under the law of the state in
which the Association's ultimate parent company is incorporated.
(e) Non-Exclusivity of Rights. The rights to indemnification and the
advancement of expenses conferred in this section shall not be exclusive of any
other right which any person may have or hereafter acquired under any statute,
agreement, vote of stockholders or disinterested directors or otherwise.
(f) Insurance. The Association may purchase, maintain, and make payment or
reimbursement for reasonable premiums on, insurance to protect itself and any
director, officer, employee or agent of the Association or another corporation,
partnership, joint venture, trust or other enterprise against any expense,
liability or loss, whether or not the Association would have the power to
indemnify such person against such expense, liability or loss under the law of
the state in which the Association's ultimate parent company is incorporated;
provided however, that such insurance shall explicitly exclude insurance
coverage for a final order of a federal bank regulatory agency assessing civil
money penalties against an Association director, officer, employee or agent.
ELEVENTH. These articles of association may be amended at any regular or
special meeting of the shareholders by the affirmative vote of the holders of a
majority of the stock of this Association, unless the vote of the holders of
greater amount of stock is required by law, and in that case by the vote of the
holders of such greater amount. The notice of any shareholders' meeting at
which an amendment to the articles of association of this Association is to be
considered shall be given as hereinabove set forth.
I hereby certify that the articles of association of this Association, in their
entirety, are listed above in items first through eleventh.
Secretary/Assistant Secretary
- --------------------------------------------------
Dated at , as of .
--------------------------------------- --------------------
Revision of February 15, 1996
<PAGE>
EXHIBIT 2
AMENDED AND RESTATED BY-LAWS OF
FLEET NATIONAL BANK
ARTICLE I
MEETINGS OF SHAREHOLDERS
Section 1. Annual Meeting. The regular annual meeting of the shareholders for
the election of Directors and the transaction of any other business that may
properly come before the meeting shall be held at the Main Office of the
Association, or such other place as the Board of Directors may designate, on
the fourth Thursday of April in each year at 1:15 o'clock in the afternoon
unless some other hour of such day is fixed by the Board of Directors.
If, from any cause, an election of Directors is not made on such day, the Board
of Directors shall order the election to be held on some subsequent day, of
which special notice shall be given in accordance with the provisions of law,
and of these bylaws.
Section 2. Special Meetings. Special meetings of the shareholders may be called
at any time by the Board of Directors, the President, or any shareholders
owning not less than twenty-five percent (25%) of the stock of the Association.
Section 3. Notice of Meetings of Shareholders. Except as otherwise provided
by law, notice of the time and place of annual or special meetings of the
shareholders shall be mailed, postage prepaid, at least ten (10) days before
the date of the meeting to each shareholder of record entitled to vote thereat
at his address as shown upon the books of the Association; but any failure to
mail such notice to any shareholder or any irregularity therein, shall not
affect the validity of such meeting or of any of the proceedings thereat.
Notice of a special meeting shall also state the purpose of the meeting.
Section 4. Quorum; Adjourned Meetings. Unless otherwise provided by law, a
quorum for the transaction of business at every meeting of the shareholders
shall consist of not less than two-fifths (2/5) of the outstanding capital
stock represented in person or by proxy; less than such quorum may adjourn the
meeting to a future time. No notice need be given of an adjourned annual or
special meeting of the shareholders if the adjournment be to a definite place
and time.
Section 5. Votes and Proxies. At every meeting of the shareholders, each
share of the capital stock shall be entitled to one vote except as otherwise
provided by law. A majority of the votes cast shall decide every question
or matter submitted to the shareholder at any meeting, unless otherwise
provided by law or by the Articles of Association or these By-laws. Share-
holders may vote by proxies duly authorized in writing and filed with the
Cashier, but no officer, clerk, teller or bookkeeper of the Association may act
as a proxy.
<PAGE>
Section 6. Nominations to Board of Directors. At any meeting of shareholders
held for the election of Directors, nominations for election to the Board of
Directors may be made, subject to the provisions of this section, by any share-
holder of record of any outstanding class of stock of the Association entitled
to vote for the election of Directors. No person other than those whose names
are stated as proposed nominees in the proxy statement accompanying the notice
of the meeting may be nominated as such meeting unless a shareholder shall have
given to the President of the Association and to the Comptroller of the
Currency, Washington, DC written notice of intention to nominate such other
person mailed by certified mail or delivered not less than fourteen (14) days
nor more than fifty (50) days prior to the meeting of shareholders at which
such nomination is to be made; provided, however, that if less than twenty-one
(21) days' notice of such meeting is given to shareholders, such notice of
intention to nominate shall be mailed by certified mail or delivered to said
President and said Comptroller on or before the seventh day following the day
on which the notice of such meeting was mailed. Such notice of intention to
nominate shall contain the following information to the extent known to the
notifying shareholder: (a) the name and address of each proposed nominee; (b)
the principal occupation of each proposed nominee; (c) the total number of
shares of capital stock of the Association that will be voted for each proposed
nominee; (d) the name and residence address of the notifying shareholder; and
(e) the number of shares of capital stock of the Association owned by the
notifying shareholder. In the event such notice is given, the proposed nominee
may be nominated either by the shareholder giving such notice or by any other
shareholder present at the meeting at which such nomination is to be made.
Such notice may contain the names of more than one proposed nominee, and if
more than one is named, any one or more of those named may be nominated.
Section 7. Action Taken Without a Shareholder Meeting. Any action requiring
shareholder approval or consent may be taken without a meeting and without
notice of such meeting by written consent of the shareholders.
ARTICLE II
DIRECTORS
Section 1. Number. The Board of Directors shall consist of such number of
shareholders, not less than five (5) nor more than twenty-five (25), as from
time to time shall be determined by a majority of the votes to which all of its
shareholders are at the time entitled, or by the Board of Directors as
hereinafter provided.
Section 2. Mandatory Retirement for Directors. No person shall be elected a
director who has attained the age of 68 and no person shall continue to serve
as a director after the date of the first meeting of the stockholders of the
Association held on or after the date on which such person attains the age of
68; provided, however, that any director serving on the Board as of December
15, 1995 who has attained the age of 65 on or prior to such date shall be
permitted to continue to serve as a director until the date of the first
meeting of the stockholders of the Association held on or after the date on
which such person attains the age of 70.
-2-
<PAGE>
Section 3. General Powers. The Board of Directors shall exercise all the
corporate powers of the Association, except as expressly limited by law, and
shall have the control, management, direction and disposition of all its
property and affairs.
Section 4. Annual Meeting. Immediately following a meeting of shareholders
held for the election of Directors, the Cashier shall notify the directors-
elect who may be present of their election and they shall then hold a meeting
at the Main Office of the Association, or such other place as the Board of
Directors may designate, for the purpose of taking their oaths, organizing the
new Board, electing officers and transacting any other business that may come
before such meeting.
Section 5. Regular Meeting. Regular meetings of the Board of Directors shall
be held without notice at the Main Office of the Association, or such other
place as the Board of Directors may designate, at such dates and times as the
Board shall determine. If the day designated for a regular meeting falls on a
legal holiday, the meeting shall be held on the next business day.
Section 6. Special Meetings. A special meeting of the Board of Directors may
be called at anytime upon the written request of the Chairman of the Board, the
President, or of two Directors, stating the purpose of the meeting. Notice of
the time and place shall be given not later than the day before the date of the
meeting, by mailing a notice to each Director at his last known address, by
delivering such notice to him personally, or by telephoning.
Section 7. Quorum; Votes. A majority of the Board of Directors at the time
holding office shall constitute a quorum for the transaction of all business,
except when otherwise provided by law, but less than a quorum may adjourn
a meeting from time to time, and the meeting may be held, as adjourned, without
further notice. If a quorum is present when a vote is taken, the affirmative
vote of a majority of Directors present is the act of the Board of Directors.
Section 8. Action by Directors Without a Meeting. Any action requiring
Director approval or consent may be taken without a meeting and without notice
of such meeting by written consent of all the Directors.
Section 9. Telephonic Participation in Directors' Meetings. A Director or
member of a Committee of the Board of Directors may participate in a meeting of
the Board or of such Committee may participate in a meeting of the Board or of
such Committee by means of a conference telephone or similar communications
equipment enabling all Directors participating in the meeting to hear one
another, and participation in such a meeting shall constitute presence in person
at such a meeting.
Section 10. Vacancies. Vacancies in the Board of Directors may be filled by
the remaining members of the Board at any regular or special meeting of the
Board.
Section 11. Interim Appointments. The Board of Directors shall, if the share-
holders at any meeting for the election of Directors have determined a number
of Directors less than twenty-five (25), have the power, by affirmative vote of
the majority of all the Directors, to increase such number of Directors to not
more than twenty-five (25) and to elect Directors to fill the resulting
vacancies and to serve until the next annual meeting of shareholders or the
next election of Directors; provided, however, that the number of Directors
shall not be so increased by more than two (2) if the number last determined
by shareholders was fifteen (15) or less, or increased by more than four (4) if
the number last determined by shareholders was sixteen (16) or more.
Section 12. Fees. The Board of Directors shall fix the amount and direct the
payment of fees which shall be paid to each Director for attendance at any
meeting of the Board of Directors or of any Committees of the Board.
ARTICLE III
COMMITTEES OF THE BOARD
Section 1. Executive Committee. The Board of Directors shall appoint from its
members an Executive Committee which shall consist of such number of persons as
the Board of Directors shall determine; the Chairman of the Board and the
President shall be members ex-officio of the Executive Committee with full
voting power. The Chairman of the Board or the President may from time to time
appoint from the Board of Directors as temporary additional members of the
Executive Committee, with full voting powers, not more than two members to serve
for such periods as the Chairman of the Board or the President may determine.
The Board of Directors shall designate a member of the Executive Committee to
serve as Chairman thereof. A meeting of the Executive Committee may be called
at any time upon the written request of the Chairman of the Board, the President
or the Chairman of the Executive Committee, stating the purpose of the meeting.
Not less than twenty four hours' notice of said meeting shall be given to each
member of the Committee personally, by telephoning, or by mail. The Chairman of
the Executive Committee or, in his absence, a member of the Committee chosen by
a majority of the members present shall preside at meetings of the Executive
Committee.
-3-
<PAGE>
The Executive Committee shall possess and may exercise all the powers of the
Board when the Board is not in session except such as the Board, only, by law,
is authorized to exercise; it shall keep minutes of its acts and proceedings
and cause same to be presented and reported at every regular meeting and at any
special meeting of the Board including specifically, all its actions relating
to loans and discounts.
All acts done and powers and authority conferred by the Executive Committee,
from time to time, within the scope of its authority, shall be deemed to be,
and may be certified as being, the acts of and under the authority of the
Board.
Section 2. Risk Management Committee. The Board shall appoint from its
members a Risk Management Committee which shall consist of such number as the
Board shall determine. The Board shall designate a member of the Risk
Management Committee to serve as Chairman thereof. It shall be the duty of the
Risk Management Committee to (a) serve as the channel of communication with
management and the Board of Directors of Fleet Financial Group, Inc. to assure
that formal processes supported by management information systems are in place
for the identification, evaluation and management of significant risks inherent
in or associated with lending activities, the loan portfolio, asset-liability
management, the investment portfolio, trust and investment advisory activities,
the sale of nondeposit investment products and new products and services and
such additional activities or functions as the Board may determine from time
to time; (b) assure the formulation and adoption of policies approved by the
Risk Management Committee or Board governing lending activities, management of
the loan portfolio, the maintenance of an adequate allowance for loan and lease
losses, asset-liability management, the investment portfolio, the retail
sale of non-deposit investment products, new products and services and such
additional activities or functions as the Board may determine from time to time
(c) assure that a comprehensive independent loan review program is in place for
the early detection of problem loans and review significant reports of the loan
review department, management's responses to those reports and the risk
attributed to unresolved issues; (d) subject to control of the Board, exercise
general supervision over trust activities, the investment of trust funds, the
disposition of trust investments and the acceptance of new trusts and the terms
of such acceptance, and (e) perform such additional duties and exercise such
additional powers of the Board as the Board may determine from time to time.
Section 3. Audit Committee. The Board shall appoint from its members and
Audit Committee which shall consist of such number as the Board shall determine
no one of whom shall be an active officer or employee of the Association or
Fleet Financial Group, Inc. or any of its affiliates. In addition, members of
the Audit Committee must not (i) have served as an officer or employee of the
Association or any of its affiliates at any time during the year prior to their
appointment; or (ii) own, control, or have owned or controlled at any time
during the year prior to appointment, ten percent (10%) or more of any
outstanding class of voting securities of the Association. At least two (2)
members of the Audit Committee must have significant executive, professional,
educational or regulatory experience in financial, auditing, accounting,
or banking matters. No member of the Audit Committee may have significant
direct or indirect credit or other relationships with the Association, the
termination of which would materially adversely affect the Association's
financial condition or results of operations.
The Board shall designate a member of the Audit Committee to serve as Chairman
thereof. It shall be the duty of the Audit Committee to (a) cause a continuous
audit and examination to be made on its behalf into the affairs of the
Association and to review the results of such examination; (b) review
significant reports of the internal auditing department, management's responses
to those reports and the risk attributed to unresolved issues; (c) review the
basis for the reports issued under Section 112 of The Federal Deposit Insurance
Corporation Improvement Act of 1991; (d) consider, in consultation with the
independent auditor and an internal auditing executive, the adequacy of the
Association's internal controls, including the resolution of identified material
weakness and reportable conditions; (e) review regulatory communications
received from any federal or state agency with supervisory jurisdiction or
other examining authority and monitor any needed corrective action by
management; (f) ensure that a formal system of internal controls is in place
for maintaining compliance with laws and regulations; (g) cause an audit of the
Trust Department at least once during each calendar year and within 15 months
of the last such audit or, in lieu thereof, adopt a continuous audit system and
report to the Board each calendar year and within 15 months of the previous
report on the performance of such audit function; and (h) perform such
additional duties and exercise such additional powers of the Board as the Board
may determine from time to time.
The Audit Committee may consult with internal counsel and retain its own
outside counsel without approval (prior or otherwise) from the Board or
management and obligate the Association to pay the fees of such counsel.
-4-
<PAGE>
Section 4. Community Affairs Committee. The Board shall appoint from its
members a Community Affairs Committee which shall consist of such number as the
Board shall determine. The Board shall designate a member of the Community
Affairs Committee to serve as Chairman thereof. It shall be the duty of the
Community Affairs Committee to (a) oversee compliance by the Association with
the Community Reinvestment Act of 1977, as amended, and the regulations
promulgated thereunder; and (b) perform such additional duties and exercise such
additional powers of the Board as the Board may determine from time to time.
Section 5. Regular Meetings. Except for the Executive Committee which shall
meet on an ad hoc basis as set forth in Section 1 of this Article, regular
meetings of the Committees of the Board of Directors shall be held, without
notice, at such time and place as the Committee or the Board of Directors may
appoint and as often as the business of the Association may require.
Section 6. Special Meetings. A Special Meeting of any of the Committees of
the Board of Directors may be called upon the written request of the Chairman
of the Board or the President, or of any two members of the respective
Committee, stating the purpose of the meeting. Not less than twenty-four
hours' notice of such special meeting shall be given to each member of the
Committee personally, by telephoning, or by mail.
Section 7. Emergency Meetings. An Emergency Meeting of any of the Committees
of the Board of Directors may be called at the request of the Chairman of the
Board or the President, who shall state that an emergency exists, upon not
less than one hour's notice to each member of the Committee personally or by
telephoning.
Section 8. Action Taken Without a Committee Meeting. Any Committee of the
Board of Directors may take action without a meeting and without notice of such
meeting by resolution assented to in writing by all members of such Committee.
Section 9. Quorum. A majority of a Committee of the Board of Directors shall
constitute a quorum for the transaction of any business at any meeting of such
Committee. If a quorum is not available, the Chairman of the Board or the
President shall have power to make temporary appointments to a Committee of-
members of the Board of Directors, to act in the place and stead of members who
temporarily cannot attend any such meeting; provided, however, that any
temporary appointment to the Audit Committee must meet the requirements for
members of that Committee set forth in Section 3 of this Article.
Section 10. Record. The committees of the Board of Directors shall keep a
record of their respective meetings and proceedings which shall be presented
at the regular meeting of the Board of Directors held in the calendar month
next following the meetings of the Committees. If there is no regular Board
of Directors meeting held in the calendar month next following the meeting of
a Committee, then such Committee's records shall be presented at the next
regular Board of Directors meeting held in a month subsequent to such Committee
meeting.
Section 11. Changes and Vacancies. The Board of Directors shall have power
to change the members of any Committee at any time and to fill vacancies on any
Committee; provided, however, that any newly appointed member of the Audit
Committee must meet the requirements for members of that Committee set forth in
Section 3 of this Article.
Section 12. Other Committees. The Board of Directors may appoint, from time
to time, other committees of one or more persons, for such purposes and with
such powers as the Board may determine.
ARTICLE IV
WAIVER OF NOTICE OF MEETINGS
Section 1. Waiver. Whenever notice is required to be given to any shareholder,
Director, or member of a Committee of the Board of Directors, such notice may
be waived in writing either before or after such meeting by any shareholder,
Director or Committee member respectively, as the case may be, who may be
entitled to such notice; and such notice will be deemed to be waived by
attendance at any such meeting.
-5-
<PAGE>
ARTICLE V
OFFICERS AND AGENTS
Section 1. Officers. The Board shall appoint a Chairman of the Board and a
President, and shall have the power to appoint one or more Executive Vice
Presidents, one or more Senior Vice Presidents, one or more Vice Presidents, a
Cashier, a Secretary, an Auditor, a Controller, one or more Trust Officers and-
such other officers as are deemed necessary or desirable for the proper
transaction of business of the Association. The Chairman of the Board and the
President shall be appointed from members of the Board of Directors. Any two
or more offices, except those of President and Cashier, or Secretary, may be
held by the same person. The Board may, from time to time, by resolution
passed by a majority of the entire Board, designate one or more officers of the
Association or of an affiliate or of Fleet Financial Group, Inc. with power to
appoint one or more Vice Presidents and such other officers of the Association
below the level of Vice President as the officer or officers designated in such
resolution deem necessary or desirable for the proper transaction of the
business of the Association.
Section 2. Chairman of the Board. The chairman of the Board shall preside at
all meetings of the Board of Directors. Subject to definition by the Board of
Directors, he shall have general executive powers and such specific powers and
duties as from time to time may be conferred upon or assigned to him by the
Board of Directors.
Section 3. President. The President shall preside at all meetings of the
Board of Directors if there be no Chairman or if the Chairman be absent.
Subject to definition by the Board of Directors, he shall have general
executive powers and such specific powers and duties as from time to time may
be conferred upon or assigned to him by the Board of Directors.
-6-
<PAGE>
Section 4. Cashier and Secretary. The Cashier shall be the Secretary of the
Board and of the Executive Committee, and shall keep accurate minutes of their
meetings and of all meetings of the shareholders. He shall attend to the
giving of all notices required by these By-laws. He shall be custodian of the
corporate seal, records, documents and papers of the Association. He shall
have such powers and perform such duties as pertain by law or regulation to the
office of Cashier, or as are imposed by these By-laws, or as may be delegated
to him from time to time by the Board of Directors, the Chairman of the Board
or the President.
Section 5. Auditor. The Auditor shall be the chief auditing officer of the
Association. He shall continuously examine the affairs of the Association and
from time to time shall report to the Board of Directors. He shall have such
powers and perform such duties as are conferred upon, or assigned to him by
these By-laws, or as may be delegated to him from time to time by the Board
of Directors.
Section 6. Officers Seriatim. The Board of Directors shall designate from
time to time not less than two officers who shall in the absence or disability
of the Chairman or President or both, succeed seriatim to the duties and
responsibilities of the Chairman and President respectively.
Section 7. Clerks and Agents. The Board of Directors may appoint, from time
to time, such clerks, agents and employees as it may deem advisable for the
prompt and orderly transaction of the business of the Association, define
their duties, fix the salaries to be paid them and dismiss them. Subject to
the authority of the Board of Directors, the Chairman of the Board or the
President, or any other officer of the Association authorized by either of them
may appoint and dismiss all or any clerks, agents and employees and prescribe
their duties and the conditions of their employment, and from time to time
fix their compensation.
Section 8. Tenure. The Chairman of the Board of Directors and the President
shall, except in the case of death, resignation, retirement or disqualification
under these By-laws, or unless removed by the affirmative vote of at least two-
thirds of all of the members of the Board of Directors, hold office for the
term of one year or until their respective successors are appointed. Either
of such officers appointed to fill a vacancy occurring in an unexpired term
shall serve for such unexpired term of such vacancy. All other officers,
clerks, agents, attorneys-in-fact and employees of the Association shall hold
office during the pleasure of the Board of Directors or of the officer or
committee appointing them respectively.
ARTICLE VI
TRUST DEPARTMENT
Section 1. General Powers and Duties. All fiduciary powers of the Association
shall be exercised through the Trust Department, subject to such regulations as
the Comptroller of the Currency shall from time to time establish. The Trust
Department shall be to placed under the management and immediate supervision
of an officer or officers appointed by the Board of Directors. The duties of
all officers of the Trust Department shall be to cause the policies and
instructions of the Board and the Risk Management Committee with respect to the
trusts under their supervision to be carried out, and to supervise the due
performance of the trusts and agencies entrusted to the Association and under
their supervision, in accordance with law and in accordance with the terms of
such trusts and agencies.
-7-
<PAGE>
ARTICLE VII
BRANCH OFFICES
Section 1. Establishment. The Board of Directors shall have full power to
establish, to discontinue, or, from time to time, to change the location of any
branch office, subject to such limitations as may be provided by law.
Section 2. Supervision and Control. Subject to the general supervision and
control of the Board of Directors, the affairs of branch offices shall be
under the immediate supervision and control of the President or of such other
officer or officers, employee or employees, or other individuals as the Board
of Directors may from time to time determine, with such powers and duties as
the Board of Directors may confer upon or assign to him or them.
ARTICLE VIII
SIGNATURE POWERS
Section 1. Authorization. The power of officers, employees, agents and
attorneys to sign on behalf of and to affix the seal of the Association shall
be prescribed by the Board of Directors or by the Executive Committee or by
both; provided that the President is authorized to restrict such power of any
officer, employee, agent or attorney to the business of a specific department
or departments, or to a specific branch office or branch offices. Facsimile
signatures may be authorized.
-8-
<PAGE>
ARTICLE IX
STOCK CERTIFICATES AND TRANSFERS
Section 1. Stock Records. The Trust Department shall have custody of the
stock certificate books and stock ledgers of the Association, and shall make
all transfers of stock, issue certificates thereof and disburse dividends
declared thereon.
Section 2. Form of Certificate. Every shareholder shall be entitled to a
certificate conforming to the requirements of law and otherwise in such form
as the Board of Directors may approve. The certificates shall state on the
face thereof that the stock is transferable only on the books of the
Association and shall be signed by such officers as may be prescribed from time
to time by the Board of Directors or Executive Committee. Facsimile signatures
may be authorized.
Section 3. Transfers of Stock. Transfers of stock shall be made only on the
books of the Association by the holder in person, or by attorney duly
authorized in writing, upon surrender of the certificate therefor properly
endorsed, or upon the surrender of such certificate accompanied by a properly
executed written assignment of the same, or a written power of attorney to
sell, assign or transfer the same or the shares represented thereby.
Section 4. Lost Certificate. The Board of Directors or Executive Committee
may order a new certificate to be issued in place of a certificate lost or
destroyed, upon proof of such loss or destruction and upon tender to the
Association by the shareholder, of a bond in such amount and with or without
surety, as may be ordered, indemnifying the Association against all liability,
loss, cost and damage by reason of such loss or destruction and the issuance
of a new certificate.
Section 5. Closing Transfer Books. The Board of Directors may close the
transfer books for a period not exceeding thirty days preceding any regular
or special meeting of the shareholders, or the day designated for the payment
of a dividend or the allotment of rights. In lieu of closing the transfer
books the Board of Directors may fix a day and hour not more than thirty days
prior to the day of holding any meeting of the shareholders, or the day
designated for the payment of a dividend, or the day designated for the
allotment of rights, or the day when any change of conversion or exchange of
capital stock is to go into effect, as the day as of which shareholders
entitled to notice of and to vote at such meetings or entitled to such dividend
or to such allotment of rights or to exercise the rights in respect of any
such change, conversion or exchange of capital stock, shall be determined, and
only such shareholders as shall be shareholders of record on the day and hour
so fixed shall be entitled to notice of and to vote at such meeting or to
receive payment of such dividend or to receive such allotment of rights or to
exercise such rights, as the case may be.
ARTICLE X
THE CORPORATE SEAL
Section 1. Seal. The following is an impression of the seal of the
Association adopted by the Board of Directors.
ARTICLE XI
BUSINESS HOURS
Section 1. Business Hours. The main office of this Association and each
branch office thereof shall be open for business on such days, and for such
hours as the Chairman, or the President, or any Executive Vice President, or
such other officer as the Board of Directors shall from time to time
designate, may determine as to each office to conform to local custom and
convenience, provided that any one or more of the main and branch offices or
certain departments thereof may be open for such hours as the President, or
such other officer as the Board of Directors shall from time to time designate,
may determine as to each office or department on any legal holiday on which
work is not prohibited by law, and provided further that any one or more of
the main and branch offices or certain departments thereof may be ordered
closed or open on any day for such hours as to each office or department as
the President, or such other officer as the Board of Directors shall from time
to time designate, subject to applicable laws regulations, may determine when
such action may be required by reason of disaster or other emergency condition.
ARTICLE IX
CHANGES IN BY-LAWS
Section 1. Amendments. These By-laws may be amended upon vote of a majority
of the entire Board of Directors at any meeting of the Board, provided ten (10)
day's notice of the proposed amendment has been given to each member of the
Board of Directors. No amendment may be made unless the By-law, as amended, is
consistent with the requirements of law and of the Articles of Association.
These By-laws may also be amended by the Association's shareholders.
A true copy
Attest:
Secretary/Assistant Secretary
- ---------------------------------------
Dated at , as of .
--------------------------------------- ----------------------
Revision of January 11, 1993
-9-
<PAGE>
[LOGO] Exhibit 3
- -------------------------------------------------------------------------------
Comptroller of the Currency
Administrator of National Banks
- -------------------------------------------------------------------------------
Washington, D.C. 20219
CERTIFICATE
I, Eugene A. Ludwig, Comptroller of the Currency, do hereby certify that:
1. The Comptroller of the Currency, pursuant to Revised Statutes 324, et
seq., as amended, 12 U.S.C. 1, et seq., as amended, has possession, custody and
control of all records pertaining to the chartering of all National Banking
Associations.
2. "Fleet National Bank," (Charter No. 1338) is a National Banking
Association formed under the laws of the United States and is authorized
thereunder to transact the business of banking and exercise Fiduciary Powers on
the date of this Certificate.
IN TESTIMONY WHEREOF, I have hereunto
subscribed my name and caused my seal of office
to be affixed to these presents at the Treasury
Department in the City of Washington and
[SEAL]
District of Columbia, this 23rd day of
December, 1996.
/s/
----------------------
Comptroller of the Currency
<PAGE>
EXHIBIT 4
CONSENT OF THE TRUSTEE
REQUIRED BY SECTION 321(b)
OF THE TRUST INDENTURE ACT OF 1939
The undersigned, as Trustee under an Indenture to be entered into
between American Radio Systems Corporation, as Issuer, and Fleet National Bank,
Trustee, does hereby consent that, pursuant to Section 321(b) of the Trust
Indenture Act of 1939, reports of examinations with respect to the undersigned
by Federal, State, Territorial or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon request therefor.
FLEET NATIONAL BANK,
Trustee
By /s/ Steven Cimalore
Name: Steven Cimalore
Title: Vice President
EXHIBIT 5
Dated:
<PAGE>
[FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL LETTERHEAD]
- -------------------------------------------------------------------------------
Please refer to page i,
[LOGO] Table of Contents, for 1
the required disclosure
of estimated burden.
- -------------------------------------------------------------------------------
CONSOLIDATED REPORTS OF CONDITION AND INCOME FOR A BANK WITH DOMESTIC AND
FOREIGN OFFICES - FFIEC 031
(961231)
REPORT AT THE CLOSE OF BUSINESS DECEMBER 31, 1996 -----------
(RCRI 9999)
This report is required by law: 12 U.S.C. Section 324 (State member banks); 12
U.S.C. Section 1817 (State nonmember banks); and 12 U.S.C. Section 161
(National banks).
This report form is to be filed by banks with branches and consolidated
subsidiaries in U.S. territories and possessions, Edge or Agreement
subsidiaries, foreign branches, consolidated foreign subsidiaries, or
International Banking Facilities.
- ------------------------------------------------------------------------------
NOTE: The Reports of Condition and Income must be signed by an authorized
officer and the Report of Condition must be attested to by not less than two
directors (trustees) for State nonmember banks and three directors for State
member and National banks.
I, Giro S. DeRosa, Vice President
- -----------------------------------------------------
Name and Title of Officer Authorized to Sign Report
of the named bank do hereby declare that these Reports of Condition and Income
(including the supporting schedules) have been prepared in conformance with
the instructions issued by the appropriate Federal regulatory authority and are
true to the best of my knowledge and belief.
/s/ Giro DeRosa
- ----------------------------------------------
Signature of Officer Authorized to Sign Report
January 23, 1997
- -----------------
Date of Signature
The Reports of Condition and Income are to be prepared in accordance with
Federal regulatory authority instructions. NOTE: These instructions may in
some cases differ from generally accepted accounting principles.
We, the undersigned directors (trustees), attest to the correctness of this
Report of Condition (including the supporting schedules) and declare that it
has been examined by us and to the best of our knowledge and belief has been
prepared in conformance with the instructions issued by the appropriate Federal
regulatory authority and is true and correct.
/s/
- ------------------
Director (Trustee)
/s/
- ------------------
Director (Trustee)
/s/
- -------------------
Director (Trustee)
- -----------------------------------------------------------------------------
FOR BANKS SUBMITTING HARD COPY REPORT FORMS:
STATE MEMBER BANKS: Return the original and one copy to the appropriate Federal
Reserve District Bank.
STATE NONMEMBER BANKS: Return the original only in the special return address
envelope provided. If express mail is used in lieu of the special return
address envelope, return the original only to the FDIC, c/o Quality Data
Systems, 2127 Espey Court, Suite 204, Crofton, MD 21114.
NATIONAL BANKS: Return the original only in the special return address envelope
provided. If express mail is used in lieu of the special return address
envelope, return the original only to the FDIC, c/o Quality Data Systems, 2127
Espey Court, Suite 204, Crofton, MD 21114.
- -------------------------------------------------------------------------------
FDIC Certificate Number [02499] Banks should affix the address label in
----------- this space.
(RCRI 9050)
Fleet National Bank
---------------------------------------
Legal Title of Bank (TEXT 9010)
One Monarch Place
---------------------------------------
City (TEXT 9131)
Springfield, MA 01102
---------------------------------------
State Abbrev. Zip Code
(TEXT 9200) (TEXT 9220)
<PAGE>
FFIEC 031
Consolidated Reports of Condition and Income for a Bank With Page i
Domestic and Foreign Offices 2
- -------------------------------------------------------------------------------
TABLE OF CONTENTS
SIGNATURE PAGE Cover
REPORT OF INCOME
Schedule RI--Income Statement.....................RI-1, 2, 3
Schedule RI-A--Changes in Equity Capital................RI-4
Schedule RI-B--Charge-offs and Recoveries and Changes
in Allowance For Loan and Lease Losses.............RI-4, 5
Schedule RI-C--Applicable Income Taxes by Taxing
Authority.............................................RI-5
Schedule RI-D--Income from International Operations.....RI-6
Schedule RI-E--Explanations..........................RI-7, 8
REPORT OF CONDITION
Schedule RC--Balance Sheet...........................RC-1, 2
Schedule RC-A--Cash and Balances Due from Depository
Institutions..........................................RC-3
Schedule RC-B--Securities.........................RC-3, 4, 5
Schedule RC-C--Loans and Lease Financing
Receivables:
Part I. Loans and Leases..........................RC-6, 7
Part II. Loans to Small Businesses and Small
Farms (included in the forms for June 30
only).........................................RC-7a, 7b
Schedule RC-D--Trading Assets and Liabilities (to
be completed only be selected banks)..................RC-8
Schedule RC-E--Deposit Liabilities..............RC-9, 10, 11
Schedule RC-F--Other Assets............................RC-11
Schedule RC-G--Other Liabilities.......................RC-11
Schedule RC-H--Selected Balance Sheet Items for
Domestic Offices.....................................RC-12
Schedule RC-I--Selected Assets and Liabilities of
IBFs.................................................RC-13
Schedule RC-K--Quarterly Averages......................RC-13
Schedule RC-L--Off-Balance Sheet Items.........RC-14, 15, 16
Schedule RC-M--Memoranda...........................RC-17, 18
Schedule RC-N--Past Due and Nonaccrual Loans,
Leases, and Other Assets.........................RC-19, 20
Schedule RC-O--Other Data for Deposit Insurance
Assessments......................................RC-21, 22
Schedule RC-R--Regulatory Capital..................RC-23, 24
Optional Narrative Statement Concerning the
Amounts Reported in the Reports of Condition
and Income...........................................RC-25
Special Report (TO BE COMPLETED BY ALL BANKS)
Schedule RC-J--Repricing Opportunities (sent only
to and to be completed by savings banks)
DISCLOSURE OF ESTIMATED BURDEN
The estimated average burden associated with this information collection is
32.2 hours per respondent and is estimated to vary from 15 to 230 hours per
response, depending on individual circumstances. Burden estimates include the
time for reviewing instructions, gathering and maintaining data in the
required form, and completing the information collection, but exclude the time
for compiling and maintaining business records in the normal course of a
respondent's activities. Comments concerning the accuracy of this burden
estimate and suggestions for reducing this burden should be directed to the
Office of Information and Regulatory Affairs, Office of Management and Budget,
Washington, D.C. 20503, and to one of the following:
Secretary
Board of Governors of the Federal Reserve System
Washington, D.C. 20551
Legislative and Regulatory Analysis Division
Office of the Comptroller of the Currency
Washington, D.C. 20219
Assistant Executive Secretary
Federal Deposit Insurance Corporation
Washington, D.C. 20429
For Information or assistance, National and State nonmember banks should
contact the FDIC's Call Reports Analysis Unit, 550 17th Street, NW, Washington,
D.C. 20429, toll free on (800) 688-FDIC(3342), Monday through Friday between
8:00 a.m. and 5:00 p.m., Eastern time. State member banks should contact their
Federal Reserve District Bank.
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date:
12/31/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE
PAGE RI-1
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: [0][2][4][9][9]
CONSOLIDATED REPORT OF INCOME
FOR THE PERIOD JANUARY 1, 1996-DECEMBER 31, 1996
ALL REPORT OF INCOME SCHEDULES ARE TO BE REPORTED ON A CALENDAR YEAR-TO-DATE BASIS IN THOUSANDS
OF DOLLARS.
SCHEDULE RI--INCOME STATEMENT
I480 <-
- -------------------
Dollar Amounts in Thousands RIAD
Bil Mil Thou
- -------------------------------------------------------------------------------------------------
- ----------------------------------
<S> <C>
<C> <C>
1. Interest income:
//////////////////
a. Interest and fee income on loans:
//////////////////
(1) In domestic offices:
//////////////////
(a) Loans secured by real estate................................................. 4011
1,092,992 1.a.(1)(a)
(b) Loans to depository institutions............................................. 4019
1,482 1.a.(1)(b)
(c) Loans to finance agricultural production and other loans to farmers.......... 4024
501 1.a.(1)(c)
(d) Commercial and industrial loans.............................................. 4012
1,132,500 1.a.(1)(d)
(e) Acceptances of other banks................................................... 4026
264 1.a.(1)(e)
(f) Loans to individuals for household, family, and other personal expeditures:
//////////////////
(1) Credit cards and related plans............................................ 4054
16,485 1.a.(1)(f)(1)
(2) Other.................................................................... 4055
189,926 1.a.(1)(f)(2)
(g) Loans to foreign governments and official institutions....................... 4056
0 1.a.(1)(g)
(h) Obligations (other than securities and leases) of states and political
//////////////////
subdivisions in the U.S.:
//////////////////
(1) Taxable obligations...................................................... 4503
0 1.a.(1)(h)(1)
(2) Tax-exempt obligations................................................... 4504
10,381 1.a.(1)(h)(2)
(i) All other loans in domestic offices.......................................... 4058
147,087 1.a.(1)(i)
(2) In foreign offices, Edge and Agreement subsidiaries, and IBFs.................... 4059
4,161 1.a.(2)
b. Income from lease financing receivables:
//////////////////
(1) Taxable leases................................................................... 4505
152,848 1.b.(1)
(2) Tax-exempt leases................................................................ 4307
1,511 1.b.(2)
c. Interest income on balances due from depository instituions: (1)
//////////////////
(1) In domestic offices.............................................................. 4105
1,644 1.c.(1)
(2) In foreign offices, Edge and Agreement subsidiaries, and IBFs.................... 4106
142 1.c.(2)
d. Interest and dividend income on securities:
//////////////////
(1) U.S. Treasury securities and U.S. Government agency and corporation obligations.. 4027
422,212 1.d.(1)
(2) Securities issued by states and political subdivisions in the U.S.:
//////////////////
(a) Taxable securities........................................................... 4506
0 1.d.(2)(a)
(b) Tax-Exempt securities........................................................ 4507
6,495 1.d.(2)(b)
(3) Other domestic debt securities................................................... 3657
12,976 1.d.(3)
(4) Foreign debt securities.......................................................... 3658
6,621 1.d.(4)
(5) Equity securities (including investments in mutual funds)........................ 3659
17,504 1.d.(5)
e. Interest income from trading assets.................................................. 4069
479 1.e.
- ------------------
</TABLE>
- ----------
(1) Includes interest income on time certificates of deposit not held for
trading.
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date:
12/31/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE
PAGE RI-2
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: [0][2][4][9][9]
SCHEDULE RI--CONTINUED
Dollar Amounts in Thousands Year-to-date
RIAD Bil Mil Thou
- -------------------------------------------------------------------------------------------------
- -----------------------------
<S> <C> <C>
<C>
1. Interest income (continued)
f. Interest income on federal funds sold and securities purchased under //////////////////
agreements to resell in domestic offices of the bank and of its Edge //////////////////
and Agreement subsidiaries, and in IBFs ............................. 4020 25,839
1.f.
g. Total interest income (sum of items 1.a through 1.f) ................ 4107 3,244,050
1.g.
2. Interest expense: //////////////////
a. Interest on deposits: //////////////////
(1) Interest on deposits in domestic offices: //////////////////
(a) Transaction accounts (NOW accounts, ATS accounts, and //////////////////
telephone and preauthorized transfer accounts) .............. 4508 13,070
2.a.(1)(a)
(b) Nontransaction accounts: //////////////////
(1) Money market deposit accounts (MMDAs) ................... 4509 257,330
2.a.(1)(b)(1)
(2) Other savings deposits .................................. 4511 48,169
2.a.(1)(b)(2)
(3) Time certificates of deposit of $100,000 or more ........ 4174 170,575
2.a.(1)(b)(3)
(4) All other time deposits ................................. 4512 403,831
2.a.(1)(b)(4)
(2) Interest on deposits in foreign offices, Edge and Agreement //////////////////
subsidiaries, and IBFs .......................................... 4172 100,766
2.a.(2)
b. Expense of federal funds purchased and securities sold under //////////////////
agreements to repurchase in domestic offices of the bank and of its //////////////////
Edge and Agreement subsidiaries, and in IBFs ........................ 4180 282,599
2.b.
c. Interest on demand notes issued to the U.S. Treasury, trading //////////////////
liabilities, and other borrowed money ............................... 4185 161,582
2.c.
d. Interest on mortgage indebtedness and obligations under capitalized //////////////////
leases .............................................................. 4072 859
2.d.
e. Interest on subordinated notes and debentures ....................... 4200 69,434
2.e.
f. Total interest expense (sum of items 2.a through 2.e) ............... 4073 1,508,215
2.f.
3. Net interest income (item 1.g minus 2.f) .............................. //////////////////
RIAD 4074 1,735,835 3.
4. Provisions: //////////////////
a. Provision for loan and lease losses ................................. //////////////////
RIAD 4230 (6,834) 4.a.
b. Provision for allocated transfer risk ............................... //////////////////
RIAD 4243 0 4.b.
5. Noninterest income: //////////////////
a. Income from fiduciary activities .................................... 4070 295,272
5.a.
b. Service charges on deposit accounts in domestic offices ............. 4080 222,313
5.b.
c. TRADING REVENUE (MUST EQUAL SCHEDULE RI, SUM OF MEMORANDUM //////////////////
ITEMS 8.a THROUGH 8.d) .............................................. A220 25,253
5.c.
d. Other foreign transaction gains (losses) ............................ 4076 346
5.d.
e. Not applicable //////////////////
f. Other noninterest income: //////////////////
(1) Other fee income ................................................ 5407 797,631
5.f.(1)
(2) All other noninterest income* ................................... 5408 350,869
5.f.(2)
g. Total noninterest income (sum of items 5.a through 5.f) ............. //////////////////
RIAD 4079 1,691,684 5.g.
6. a. Realized gains (losses) on held-to-maturity securities .............. //////////////////
RIAD 3521 52 6.a.
b. Realized gains (losses) on available-for-sale securities ............ //////////////////
RIAD 3196 12,071 6.b.
7. Noninterest expense: //////////////////
a. Salaries and employee benefits ...................................... 4135 645,873
7.a.
b. Expenses of premises and fixed assets (net of rental income) //////////////////
(excluding salaries and employee benefits and mortgage interest ..... 4217 211,199
7.b.
c. Other noninterest expense* .......................................... 4092 1,243,839
7.c.
d. Total noninterest expense (sum of items 7.a through 7.c) ............ //////////////////
RIAD 4093 2,100,911 7.d.
8. Income (loss) before income taxes and extraordinary items and other //////////////////
adjustments (item 3 plus or minus items 4.a, 4.b, 5.g, 6.a, 6.b, and 7.d) //////////////////
RIAD 4301 1,345,565 8.
9. Applicable income taxes (on item 8) .................................... //////////////////
RIAD 4302 548,252 9.
10. Income (loss) before extraordinary items and other adjustments (item 8 //////////////////
minus 9) ............................................................... //////////////////
RIAD 4300 797,313 10.
- ------------
*Describe on Schedule RI-E--Explanations.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date:
12/31/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE
Page RI-3
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: [0][2][4][9][9]
SCHEDULE RI--CONTINUED
Year-to-date
------------
Dollar Amounts in Thousands RIAD Bil Mil Thou
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
<C> <C>
11. Extraordinary items and other adjustments: //////////////////
a. Extraordinary items and other adjustments, //////////////////
gross of income taxes*..................................... 4310 0
11.a.
b. Applicable income taxes (on item 11.a)*.................... 4315 0
11.b.
c. Extraordinary items and other adjustments, //////////////////
net of income taxes (item 11.a minus 11.b)................. ////////////////// RIAD
4320 0 11.c.
12. Net income (loss) (sum of items 10 and 11.c)................... ////////////////// RIAD
4340 797,313 12.
- ----------------------------------------------------
</TABLE>
<TABLE>
I481 <-
------------
Memoranda
Year-to-date
------------
Dollar Amounts in Thousands
RIAD Bil Mil Thou
- -------------------------------------------------------------------------------------------------
- --------------------
<S>
<C> <C> <C>
1. Interest expense incurred to carry tax-exempt securities, loans, and leases acquired after
//////////////////
August 7, 1986, that is not deductible for federal income tax purposes.......................
4513 2,891 M.1.
2. Income from the sale and servicing of mutual funds and annuities in domestic offices
//////////////////
(included in Schedule RI, item 8)............................................................
8431 46,475 M.2.
3.-4. Not applicable
//////////////////
5. Number of full-time equivalent employees on payroll at end of current period (round to
//// Number
nearest whole number)........................................................................
4150 12,425 M.5.
6. Not applicable
//////////////////
7. If the reporting bank has restated its balance sheet as a result of applying push down
//// MM DD YY
accounting this calendar year, report the date of the bank's acquisition.....................
9106 00/00/00 M.7.
8. Trading revenue (from cash instruments and off-balance sheet derivative instruments)
//////////////////
(SUM OF MEMORANDUM ITEMS 8.a THROUGH 8.d MUST EQUAL SCHEDULE RI, ITEM 5.c):
//// Bil Mil Thou
a. Interest rate exposures..................................................................
8757 5,738 M.8.a.
b. Foreign exchange exposures...............................................................
8758 19,515 M.8.b.
c. Equity security and index exposures......................................................
8759 0 M.8.c.
d. Commodity and other exposures............................................................
8760 0 M.8.d.
9. Impact on income of off-balance sheet derivatives held for purposes other than trading:
//////////////////
a. Net increase (decrease) to interest income...............................................
8761 2,698 M.9.a.
b. Net (increase) decrease to interest expense..............................................
8762 (4,902) M.9.b.
c. Other (noninterest) allocations..........................................................
8763 12 M.9.c.
10. CREDIT LOSSES ON OFF-BALANCE SHEET DERIVATIVES (SEE INSTRUCTIONS)............................
A251 0 M.10.
</TABLE>
- -----------------
*Describe on Schedule RI-E--Explanations.
5
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date:
12/31/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE
Page RI-4
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: [0][2][4][9][9]
SCHEDULE RI-A--CHANGES IN EQUITY CAPITAL
Indicate decreases and losses in parentheses.
I483 <-
-----------
Dollar Amounts in Thousands
RIAD Bil Mil Thou
- -------------------------------------------------------------------------------------------------
- ----------------------
<S>
<C> <C> <C>
1. Total equity capital originally reported in the December 31, 1995, Reports of Condition
//////////////////
and Income...............................................................................
3215 1,342,473 1.
2. Equity capital adjustments from amended Reports of Income, net*..........................
3216 0 2.
3. Amended balance end of previous calendar year (sum of items 1 and 2).....................
3217 1,342,473 3.
4. Net income (loss) (must equal Schedule RI, item 12)......................................
4340 797,313 4.
5. Sale, conversion, acquisition, or retirement of capital stock, net.......................
4346 0 5.
6. Changes incident to business combinations, net...........................................
4356 4,161,079 6.
7. LESS: Cash dividends declared on preferred stock.........................................
4470 11,688 7.
8. LESS: Cash dividends declared on common stock............................................
4460 761,473 8.
9. Cumulative effect of changes in accounting principles from prior years* (see instructions
//////////////////
for this schedule).......................................................................
4411 0 9.
10. Corrections of material accounting errors from prior years* (see instructions for this
schedule)................................................................................
4412 0 10.
11. Change in net unrealized holding gains (losses) on available-for-sale securities.........
8433 (4,870) 11.
12. Foreign currency translation adjustments.................................................
4414 0 12.
13. Other transactions with parent holding company* (not included in items 5,7, or 8 above)..
4415 (1,003,722) 13.
14. Total equity capital end of current period (sum of items 3 through 13) (must equal
//////////////////
Schedule RC, item 28)....................................................................
3210 4,519,112 14.
-------------------
</TABLE>
- ---------------
*Describe on Schedule RI-E--Explanations.
<TABLE>
<CAPTION>
SCHEDULE RI-B--CHARGE-OFFS AND RECOVERIES AND CHANGES
IN ALLOWANCE FOR LOAN AND LEASE LOSSES
PART I. CHARGE-OFFS AND RECOVERIES ON LOANS AND LEASES
PART I EXCLUDES CHARGE-OFFS AND RECOVERIES THROUGH
THE ALLOCATED TRANSFER RISK RESERVE.
I486 <-
--------
(Column A)
(Column B)
Charge-offs
Recoveries
- ----------------------------------------
Calendar
year-to-date
- ----------------------------------------
Dollar Amounts in Thousands RIAD Bil Mil Thou
RIAD Bil Mil Thou
- -------------------------------------------------------------------------------------------------
- -------------------
<S> <C> <C>
<C> <C> <C>
1. Loans secured by real estate: //////////////////
//////////////////
a. To U.S. addressees (domicile)................................... 4651 65,946
4661 16,055 1.a.
b. To non-U.S. addressees (domicile)............................... 4652 0
4662 0 1.b.
2. Loans to depository institutions and acceptances of other banks: //////////////////
//////////////////
a. To U.S. banks and other U.S. depository institutions............ 4653 0
4663 0 2.a.
b. To foreign banks................................................ 4654 0
4664 0 2.b.
3. Loans to finance agricultural production and other loans to farmers. 4655 69
4665 105 3.
4. Commercial and industrial loans: //////////////////
//////////////////
a. To U.S. addressees (domicile)................................... 4645 73,869
4617 43,048 4.a.
b. To non-U.S. addressees (domicile)............................... 4646 0
4618 102 4.b.
5. Loans to individuals for household, family, and other personal //////////////////
//////////////////
expenditures: //////////////////
//////////////////
a. Credit cards and related plans.................................. 4656 2,356
4666 1,468 5.a.
b. Other (includes single payment, installment, and all student
loans).............................................................. 4657 29,089
4667 5,303 5.b.
6. Loans to foreign governments and official institutions.............. 4643 0
4627 0 6.
7. All other loans..................................................... 4644 5,253
4628 965 7.
8. Lease financing receivables: //////////////////
//////////////////
a. Of U.S. addressees (domicile)................................... 4658 12,926
4668 4,622 8.a.
b. Of non-U.S. addressees (domicile)............................... 4659 0
4669 0 8.b.
9. Total (sum of items 1 through 8).................................... 4635 189,508
4605 71,668 9.
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date:
12/31/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE
Page RI-5
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: [0][2][4][9][9]
SCHEDULE RI-B--CONTINUED
PART I. CONTINUED
(Column A)
(Column B)
Charge-offs
Recoveries
- -------------------------------------
Calendar-year-to-date
- -------------------------------------
Memoranda
Dollar Amounts in Thousands RIAD BIL MIL THOU
RIAD BIL MIL THOU
- -------------------------------------------------------------------------------------------------
- ------------------
<S> <C> <C>
<C> <C>
1-3. Not applicable //////////////////
//////////////////
4. Loans to finance commercial real estate, construction, and land //////////////////
//////////////////
development activities (NOT SECURED BY REAL ESTATE) included in //////////////////
//////////////////
Schedule RI-B, part I, items 4 and 7, above.......................... 5409 714
5410 1,374 M.4.
5. Loans secured by real estate in domestic offices (included in //////////////////
//////////////////
Schedule RI-B, part I, item 1, above): //////////////////
//////////////////
a. Construction and land development................................. 3582 266
3583 337 M.5.a.
b. Secured by farmland............................................... 3584 145
3585 304 M.5.b.
c. Secured by 1-4 family residential properties: //////////////////
//////////////////
(1) Revolving, open-end loans secured by 1-4 family residential //////////////////
//////////////////
properties and extended under lines of credit................. 5411 4,428
5412 619 M.5.c.(1)
(2) All other loans secured by 1-4 family residential properties.. 5413 31,124
5414 3,602 M.5.c.(2)
d. Secured by multifamily (5 or more) residential properties.......... 3588 5,579
3589 590 M.5.d.
e. Secured by nonfarm nonresidential properties...................... 3590 24,404
3591 10,603 M.5.e.
- --------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PART II. CHANGES IN ALLOWANCE FOR LOAN AND LEASE LOSSES
Dollar Amounts in Thousands
RIAD BIL MIL THOU
- -------------------------------------------------------------------------------------------------
- ------------------
<S>
<C> <C>
1. Balance originally reported in the December 31, 1995, Reports of Condition and Income.......
3124 266,943 1.
2. Recoveries (must equal part I, item 9, column B above)......................................
4605 71,668 2.
3. LESS: Charge-offs (must equal part I, item 9, column A above)................................
4635 189,508 3.
4. Provision for loan and lease losses (must equal Schedule RI, item 4.a)......................
4230 (6,834) 4.
5. Adjustments* (see instructions for this schedule)...........................................
4815 634,542 5.
6. Balance end of current period (sum of items 1 through 5) (must equal Schedule RC,
//////////////////
item 4.b)...................................................................................
3123 776,811 6.
- ------------------
- ------------
*Describe on Schedule RI-E--Explanations.
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE RI-C--APPLICABLE INCOME TAXES BY TAXING AUTHORITY
SCHEDULE RI-C IS TO BE REPORTED WITH THE DECEMBER REPORT OF INCOME.
I489
- -----------------
Dollar Amounts in Thousands
RIAD BIL MIL THOU
- -------------------------------------------------------------------------------------------------
- ------------------
<S>
<C> <C>
1. Federal...................................................................................
4780 461,184 1.
2. State and local...........................................................................
4790 87,068 2.
3. Foreign...................................................................................
4795 0 3.
4. Total (sum of items 1 through 3) (must equal sum of Schedule RI, items 9 and 11.b)........
4770 548,252 4.
5. Deferred portion of item 4............................................ RIAD 4772 274,648
////////////////// 5.
- ------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date:
12/31/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE
PAGE RI-6
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: [0][2][4][9][9]
SCHEDULE RI-D--INCOME FROM INTERNATIONAL OPERATIONS
FOR ALL BANKS WITH FOREIGN OFFICES, EDGE OR AGREEMENT SUBSIDIARIES, OR IBFs WHERE INTERNATIONAL
OPERATIONS ACCOUNT FOR MORE THAN
10 PERCENT OF TOTAL REVENUES, TOTAL ASSETS, OR NET INCOME.
PART I. ESTIMATED INCOME FROM INTERNATIONAL OPERATIONS
I492
- -------------------
Year-to-date
- -------------------
Dollar Amounts in Thousands RIAD
Bil Mil Thou
- -------------------------------------------------------------------------------------------------
- ----------------------------------
<S> <C>
<C> <C>
1. Interest income and expense booked at foreign offices, Edge and Agreement subsidiaries,
//////////////////
and IBFs
//////////////////
a. Interest income booked............................................................... 4837
N/A 1.a.
b. Interest expense booked.............................................................. 4038
N/A 1.b.
c. Net interest income booked at foreign offices, Edge and Agreement subsidiaries, and
//////////////////
IBFs (item 1.a minus 1.b)............................................................ 4839
N/A 1.c.
2. Adjustments for booking location of international operations:
//////////////////
a. Net interest income attributable to international operations booked at domestic
//////////////////
offices.............................................................................. 4840
N/A 2.a.
b. Net interest income attributable to domestic business booked at foreign offices...... 4841
N/A 2.b.
c. Net booking location adjustment (item 2.a minus 2.b)................................. 4842
N/A 2.c.
3. Noninterest income and expense attributable to international operations:
//////////////////
a. Noninterest income attributable to international operations.......................... 4097
N/A 3.a.
b. Provision for loan and lease losses attributable to international operations......... 4235
N/A 3.b.
c. Other noninterest expense attributable to international operations................... 4239
N/A 3.c.
d. Net noninterest income (expense) attributable to international operations (item 3.a
//////////////////
minus 3.b and 3.c).................................................................. 4843
N/A 3.d.
4. Estimated pretax income attributable to international operations before capital
//////////////////
allocation adjustment (sum of items 1.c, 2.c, and 3.d)................................. 4844
N/A 4.
5. Adjustment to pretax income for internal allocations to international operations to
//////////////////
reflect the effects of equity capital on overall bank funding costs.................... 4845
N/A 5.
6. Estimated pretax income attributable to international operations after
//////////////////
capital allocation adjustment (sum of items 4 and 5)................................... 4846
N/A 6.
7. Income taxes attributable to income from international operations as estimated in
//////////////////
item 6................................................................................. 4797
N/A 7.
8. Estimated net income attributable to international operations (item 6 minus 7)......... 4341
N/A 8.
</TABLE>
<TABLE>
<CAPTION>
memoranda Dollar Amounts in Thousands RIAD
Bil Mil Thou
- -------------------------------------------------------------------------------------------------
- ----------------------------------
<S> <C>
<C> <C>
1. Intracompany interest income included in item 1.a above................................ 4847
N/A M.1.
2. Intracompany interest expense included in item 1.b above............................... 4848
N/A M.2.
</TABLE>
PART II. SUPPLEMENTARY DETAILS ON INCOME FROM INTERNATIONAL OPERATIONS REQUIRED
BY THE DEPARTMENTS OF COMMERCE AND TREASURY FOR PURPOSES OF THE U.S.
INTERNATIONAL ACCOUNTS AND THE U.S. NATIONAL INCOME AND PRODUCT ACCOUNTS
<TABLE>
<CAPTION>
Year-to-date
- -------------------
Dollar Amounts in Thousands RIAD
Bil Mil Thou
- -------------------------------------------------------------------------------------------------
- ----------------------------------
<S> <C>
<C> <C>
1. Interest income booked at IBFs......................................................... 4849
N/A 1.
2. Interest expense booked at IBFs........................................................ 4850
N/A 2.
3. Noninterest income attributable to international operations booked at domestic
//////////////////
offices (excluding IBFs):
//////////////////
a. Gains (losses) and extraordinary items.............................................. 5491
N/A 3.a.
b. Fees and other noninterest income................................................... 5492
N/A 3.b.
4. Provision for loan and lease losses attributable to international operations booked at
//////////////////
domestic offices (excluding IBFs)...................................................... 4852
N/A 4.
5. Other noninterest expense attributable to international operations booked at domestic
//////////////////
offices (excluding IBFs)............................................................... 4853
N/A 5.
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date:
12/31/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE
PAGE RI-7
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: [0][2][4][9][9]
SCHEDULE RI-E--EXPLANATIONS
SCHEDULE RI-E IS TO BE COMPLETED EACH QUARTER ON A CALENDER YEAR-TO-DATE BASIS.
Detail all adjustments in Schedule RI-A and RI-B, all extraordinary items and other adjustments
in Schedule RI, and all
significant items of other noninterest income and other noninterest expense in Schedule RI. (See
instructions for details.)
I495 <-
- -------------------
Year-to-date
- -------------------
Dollar Amounts in Thousands RIAD
Bil Mil Thou
- -------------------------------------------------------------------------------------------------
- ---------------------------------
<S> <C>
<C> <C>
1. All other noninterest income (from Schedule RI, item 5.f.(2))
//////////////////
Report amounts that exceed 10% of Schedule RI, item 5.f.(2):
//////////////////
a. Net gains on other real estate owned................................................ 5415
0 1.a.
b. Net gains on sales of loans......................................................... 5416
0 1.b.
c. Net gains on sales of premises and fixed assets..................................... 5417
0 1.c.
Itemize and describe the three largest other amounts that exceed 10% of Schedule RI,
//////////////////
item 5.f.(2):
//////////////////
d. TEXT 4461 INCOME ON MORTGAGES HELD FOR RESALE 4461
147,813 1.d.
e. TEXT 4462 GAIN FROM BRANCH DIVESTITURES 4462
77,976 1.e.
f. TEXT 4463 4463
1.f.
2. Other noninterest expense (from Schedule RI, item 7.c):
//////////////////
a. Amortization expense of intangible assets........................................... 4531
278,276 2.a.
Report amounts that exceed 10% of Schedule RI, item 7.c:
//////////////////
b. Net losses on other real estate owned............................................... 5418
0 2.b.
c. Net losses on sales of loans........................................................ 5419
0 2.c.
d. Net losses on sales of premises and fixed assets.................................... 5420
0 2.d.
Itemize and describe the three largest other amounts that exceed 10% of Schedule RI,
//////////////////
item 7.c:
//////////////////
e. TEXT 4464 INTERCOMPANY CORPORATE SUPPORT FUNCTION CHARGES 4464
296,172 2.e.
f. TEXT 4467 INTERCOMPANY DATA PROCESSING & PROGRAMMING CHARGES 4467
315,897 2.f.
g. TEXT 4468 4468
2.g.
3. Extraordinary items and other adjustments (from Schedule RI, item 11.a) and applicable
//////////////////
income tax effect (from Schedule RI, item 11.b) (itemize and describe all extraordinary
//////////////////
items and other adjustments):
//////////////////
a. (1) TEXT 4469 4469
3.a.(1)
(2) Applicable income tax effect RIAD 4486
////////////////// 3.a.(2)
b. (1) TEXT 4487 4487
3.b.(1)
(2) Applicable income tax effect RIAD 4488
////////////////// 3.b.(2)
c. (1) TEXT 4489 4489
3.c.(1)
(2) Applicable income tax effect RIAD 4491
////////////////// 3.c.(2)
4. Equity capital adjustments from amended Reports of Income (from Schedule RI-A, item 2)
//////////////////
(itemize and describe all adjustments):
//////////////////
a. TEXT 4492 4492
4.a.
b. TEXT 4493 4493
4.b.
5. Cumulative effect of changes in accounting principles from prior years (from Schedule
//////////////////
RI-A, item 9) (itemize and describe all changes in accounting principles):
//////////////////
a. TEXT 4494 4494
5.a.
b. TEXT 4495 4495
5.b.
6. Corrections of material accounting errors from prior years (from Schedule RI-A, item 10)
//////////////////
(itemize and describe all corrections):
//////////////////
a. TEXT 4496 4496
6.a.
b. TEXT 4497 4497
6.b.
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date:
12/31/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE
PAGE RI-8
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: [0][2][4][9][9]
SCHEDULE RI-E--CONTINUED
- -------------------
Year-to-date
- -------------------
Dollar Amounts in Thousands
RIAD Bil Mil Thou
- -------------------------------------------------------------------------------------------------
- ----------------------------------
<S> <C>
<C> <C>
7. Other transactions with parent holding company (from Schedule RI-A, item 13)
//////////////////
(itemize and describe all such transactions):
//////////////////
a. TEXT 4498 FLEET NATIONAL BANK SURPLUS DISTRIBUTION TO FFG ..........................
4498 (1,003,722) 7.a.
b. TEXT 4499 ...........................................................................
4499 7.b.
8. Adjustments to allowance for loan and lease losses (from Schedule RI-B, part II, item 5)
//////////////////
(itemize and describe all adjustments):
//////////////////
a. TEXT 4521 12/31/95 ENDING BALANCE OF POOLED ENTITIES ...............................
4521 636,497 8.a.
b. TEXT 4522 DIVESTED ALLOWANCE RELATED TO SOLD LOANS .................................
4522 (1,955) 8.b.
9. Other explanations (the space below is provided for the bank to briefly describe, at its
- -------------------
option, any other significant items affecting the Report of Income):
I498 | I499 <-
No comment [X] (RIAD 4769)
- -------------------
Other explanations (please type or print clearly):
(TEXT 4769)
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date:
12/31/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE
PAGE RC-1
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: [0][2][4][9][9]
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL
AND STATE-CHARTERED SAVINGS BANKS FOR DECEMBER 31, 1996
All schedules are to be reported in thousands of dollars. Unless otherwise indicated,
report the amount outstanding as of the last business day of the quarter.
SCHEDULE RC -- BALANCE SHEET
C400
- ------------------
Dollar Amounts in Thousands RCFD
Bil Mil Thou
- -------------------------------------------------------------------------------------------------
- ----------------------------------
<S> <C>
<C> <C>
ASSETS
//////////////////
1. Cash and balances due from depository institutions (from Schedule RC-A):
//////////////////
a. Noninterest-bearing balances and currency and coin (1) ........................... 0081
3,923,408 1.a.
b. Interest-bearing balances(2) ..................................................... 0071
68,691 1.b.
2. Securities:
//////////////////
a. Held-to-maturity securities (from Schedule RC-B, column A) ....................... 1754
261,390 2.a.
b. Available-for-sale securities (from Schedule RC-B, column D) ..................... 1773
4,958,338 2.b.
3. Federal funds sold and securities purchased under agreements to resell in domestic
//////////////////
offices of the bank and of its Edge and Agreement subsidiaries, and in IBFs:
//////////////////
a. Federal funds sold .............................................................. 0276
25,709 3.a.
b. Securities purchased under agreements to resell .................................. 0277
0 3.b.
4. Loans and lease financing receivables:
//////////////////
a. Loans and leases, net of unearned income (from Schedule RC-C) RCFD 2122 31,260,436
////////////////// 4.a.
b. LESS: Allowance for loan and lease losses ................... RCFD 3123 776,811
////////////////// 4.b.
c. LESS: Allocated transfer risk reserve ....................... RCFD 3128 0
////////////////// 4.c.
d. Loans and leases, net of unearned income,
//////////////////
allowance, and reserve (item 4.a minus 4.b and 4.c) .............................. 2125
30,483,625 4.d.
5. Trading assets (from Schedule RC-D) ................................................. 3545
73,333 5.
6. Premises and fixed assets (including capitalized leases) ............................ 2145
536,686 6.
7. Other real estate owned (from Schedule RC-M) ........................................ 2145
18,911 7.
8. Investments in unconsolidated subsidiaries and associated companies
//////////////////
(from Schedule RC-M) ................................................................ 2130
0 8.
9. Customers' liability to this bank on acceptances outstanding......................... 2155
6,380 9.
10. Intangible assets (from Schedule RC-M) .............................................. 2143
2,316,633 10.
11. Other assets (from Schedule RC-F) ................................................... 2160
3,907,689 11.
12. Total assets (sum of items 1 through 11) ............................................ 2170
46,580,793 12.
- ------------------
</TABLE>
- ------------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
11
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date:
12/31/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE
PAGE RC-2
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: [0][2][4][9][9]
SCHEDULE RC--CONTINUED
- -----------------------
Dollar Amounts in Thousands
///////// Bil Mil Thou
- -------------------------------------------------------------------------------------------------
- ------------------------------
<S> <C>
<C> <C> <C>
LIABILITIES
///////////////////////
13. Deposits:
///////////////////////
a. In domestic offices (sum of totals of columns A and C from Schedule RC-E,
///////////////////////
part I) ........................................................................... RCON
2200 32,792,158 13.a.
(1) Noninterest-bearing(1) .............................. RCON 6631 10,359,674
/////////////////////// 13.a.(1)
(2) Interest-bearing .................................... RCON 6636 22,432,484
/////////////////////// 13.a.(2)
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from
///////////////////////
Schedule RC-E, part II ............................................................ RCFN
2200 2,414,427 13.b.
(1) Noninterest-bearing ................................. RCFN 6631 51,133
/////////////////////// 13.b.(1)
(2) Interest-bearing .................................... RCFN 6636 2,363,294
/////////////////////// 13.b.(2)
14. Federal funds purchased and securities sold under agreements to repurchase in domestic
///////////////////////
offices of the bank and of its Edge and Agreement subsidiaries, and in IBFs:
///////////////////////
a. Federal funds purchased ........................................................... RCFD
0278 2,999,129 14.a.
b. Securities sold under agreements to repurchase .................................... RCFD
0279 119,013 14.b.
15. a. Demand notes issued to the U.S. Treasury .......................................... RCON
2840 2,393 15.a.
b. Trading liabilities (from Schedule RC-D) .......................................... RCFD
3548 60,855 15.b.
16. Other borrowed money:
///////////////////////
a. WITH A REMAINING MATURITY OF ONE YEAR OR LESS ..................................... RCFD
2332 304,551 16.a.
b. WITH A REMAINING MATURITY OF MORE THAN ONE YEAR ................................... RCFD
2333 631,435 16.b.
17. Mortgage indebtedness and obligations under capitalized leases ....................... RCFD
2910 11,267 17.
18. Bank's liability on acceptances executed and outstanding ............................. RCFD
2920 6,380 18.
19. Subordinated notes and debentures .................................................... RCFD
3200 1,213,219 19.
20. Other liabilities (from Schedule RC-G) ............................................... RCFD
2930 1,506,854 20.
21. Total liabilities (sum of items 13 through 20) ....................................... RCFD
2948 42,061,681 21.
///////////////////////
22. Limited-life preferred stock and related surplus ..................................... RCFD
3282 0 22.
EQUITY CAPITAL
///////////////////////
23. Perpetual preferred stock and related surplus ........................................ RCFD
3838 125,000 23.
24. Common stock ......................................................................... RCFD
3230 19,487 24.
25. Surplus (exclude all surplus related to preferred stock) ............................. RCFD
3839 2,551,927 25.
26. a. Undivided profits and capital reserves ............................................ RCFD
3632 1,813,664 26.a.
b. Net unrealized holding gains (losses) on available-for-sale securities ............ RCFD
8434 9,034 26.b.
27. Cumulative foreign currency translation adjustments .................................. RCFD
3284 0 27.
28. Total equity capital (sum of items 23 through 27) .................................... RCFD
3210 4,519,112 28.
29. Total liabilities, limited-life preferred stock, and equity capital
///////////////////////
(sum of items 21, 22, and 28)......................................................... RCFD
3300 46,580,793 29.
Memorandum
TO BE REPORTED ONLY WITH THE MARCH REPORT OF CONDITION.
1. Indicate in the box at the right the number of the statement below that best describes the
Number
most comprehensive level of auditing work performed for the bank by independent external
---------------------
auditors as of any date during 1995 ..................................................
RCFD 6724 N/A M.1.
---------------------
</TABLE>
1 - Independent audit of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm which
submits a report on the bank
2 - Independent audit of the bank's parent holding company conducted in
accordance with generally accepted auditing standards by a certified public
accounting firm which submits a report on the consolidated holding company
(but not on the bank separately)
3 - Directors' examination of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm (may be
required by state chartering authority)
4 - Directors' examination of the bank performed by other external auditors (may
be required by state chartering authority)
5 - Review of the bank's financial statements by external auditors
6 - Compilation of the bank's financial statements by external auditors
7 - Other audit procedures (excluding tax preparation work)
8 - No external audit work
- ------------
(1) Includes total demand deposits and noninterest-bearing time and
savings deposits.
12
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank : FLEET NATIONAL BANK Call Date: 12/31/96
ST-BK: 25-0590 FFIEC 031
Address : ONE MONARCH PLACE
Page RC-3
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: [0][2][4][9][9]
SCHEDULE RC-A--CASH AND BALANCES DUE FROM DEPOSITORY INSTITUTIONS
Exclude assets held for trading.
--------
C405 <-
- --------------------------------------
(Column A)
(Column B)
Consolidated
Domestic
Bank
Offices
- --------------------------------------
Dollar Amounts in Thousands RCFD BIL MIL THOU
RCFD BIL MIL THOU
- -------------------------------------------------------------------------------------------------
- --------------------
<S> <C> <C>
<C> <C>
1. Cash items in process of collection, unposted debits, and currency and //////////////////
//////////////////
coin ................................................................... 0022 3,548,380
////////////////// 1.
a. Cash items in process of collection and unposted debits.............. //////////////////
0020 2,693,954 1.a.
b. Currency and coin ................................................... //////////////////
0080 854,426 1.b.
2. Balances due from depository institutions in the U.S.................... //////////////////
0082 87,601 2.
a. U.S. branches and agencies of foreign banks (including their IBFs)... 0083 0
////////////////// 2.a.
b. Other commercial banks in the U.S. and other depository //////////////////
//////////////////
institutions in the U.S. (including their IBFs)...................... 0085 87,676
////////////////// 2.b.
3. Balances due from banks in foreign countries and foreign central banks.. //////////////////
0070 12,440 3.
a. Foreign branches of other U.S. banks................................. 0073 208
////////////////// 3.a.
b. Other banks in foreign countries and foreign central banks........... 0074 12,491
////////////////// 3.b.
4. Balances due from Federal Reserve Banks................................. 0090 343,344
0090 343,344 4.
5. Total (sum of items 1 through 4) (total of column A must equal //////////////////
//////////////////
Schedule RC, sum of items 1.a and 1.b).................................. 0010 3,992,099
0010 3,991,765 5.
- --------------------------------------
-----------------
Memorandum Dollar Amounts in Thousands
RCON BIL MIL THOU
- -------------------------------------------------------------------------------------------------
- --------------------
<S>
<C> <C>
1. Non interest-bearing balances due from commercial banks in the U.S. (included in item 2,
//////////////////
column B above) ............................................................................
0050 71,678 M.1.
- ------------------
SCHEDULE RC-B--SECURITIES
Exclude assets held for trading.
--------
C410 <-
- ------------------------------------------------------------------------------
Held-to-maturity
Available-for-sale
- ------------------------------------------------------------------------------
(Column A) (Column B) (Column C)
(Column D)
Amortized Cost Amortized Cost Amortized Cost
Amortized Cost
- ------------------------------------------------------------------------------
Dollar Amounts in Thousands RCFD BIL MIL THOU RCFD BIL MIL THOU RCFD BIL MIL THOU
RCFD BIL MIL THOU
- -------------------------------------------------------------------------------------------------
- --------------------
<S>
<C> <C>
1. U.S. Treasury securities......... 0211 250 0213 250 1286 715,535
1287 718,580 1.
2. U.S. Government agency ////////////////// ////////////////// //////////////////
//////////////////
and corporation obligations ////////////////// ////////////////// //////////////////
//////////////////
(exclude mortgage-backed ////////////////// ////////////////// //////////////////
//////////////////
securities): ////////////////// ////////////////// //////////////////
//////////////////
a. Issued by U.S. Govern- ////////////////// ////////////////// //////////////////
//////////////////
ment agencies(2).............. 1289 0 1290 0 1291 0
1293 0 2.a.
b. Issued by U.S. ////////////////// ////////////////// //////////////////
//////////////////
Government-sponsored ////////////////// ////////////////// //////////////////
//////////////////
agencies(3)................... 1294 0 1295 0 1297 500
1298 500 2.b.
- ------------------------------------------------------------------------------
- ------------
(1) Includes equity securities without readily determinable fair values at historical cost in
item 6.c, column D.
(2) Includes Small Business Administration "Guaranteed Loan Pool Certificates," U.S. Maritime
Administration obligations, and
Export-Import Bank participation certificates.
(3) Includes obligations (other than mortgage-backed securities) issued by the Farm Credit
System, the Federal Home
Loan Bank System, the Federal Home Loan Mortgage Corporation, the Federal National Mortgage
Association, the Financing
Corporation, Resolution Funding Corporation, the Student Loan Marketing Association, and the
Tennessee Valley Authority.
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date:
12/31/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE
PAGE RC-4
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: [0][2][4][9][9]
SCHEDULE RC-B--Continued
Held-to-maturity
Available-for-sale
---------------------------------------
- ---------------------------------------
(Column A) (Column B) (Column C)
(Column D)
Amortized Cost Fair Value Amortized
Cost Fair Value(1)
------------------ ------------------
- ------------------ ------------------
Dollar Amounts in Thousands RFCD Bil Mil Thou RFCD Bil Mil Thou RFCD Bil Mil
Thou RFCD Bil Mil Thou
- -------------------------------------------------------------------------------------------------
- --------------------------------
<S> <C> <C> <C> <C> <C> <C>
<C> <C> <C>
3. Securities issued by states ////////////////// //////////////////
////////////////// //////////////////
and political subdivisions in the ////////////////// //////////////////
////////////////// //////////////////
U.S.: ////////////////// //////////////////
////////////////// //////////////////
a. General obligations........... 1676 151,418 1677 151,394 1678
0 1679 0 3.a.
b. Revenue obligations........... 1681 12,415 1686 12,419 1690
0 1691 0 3.b.
c. Industrial development ////////////////// //////////////////
////////////////// //////////////////
and similar obligations....... 1694 0 1695 0 1696
0 1697 0 3.c.
4. Mortage-backed ////////////////// //////////////////
////////////////// //////////////////
securities (MBS): ////////////////// //////////////////
////////////////// //////////////////
a. Pass-through securities ////////////////// //////////////////
////////////////// //////////////////
(1) Guaranteed by ////////////////// //////////////////
////////////////// //////////////////
GNMA..................... 1698 0 1699 0 1701
792,519 1702 790,901 4.a.(1)
(2) Issued by FNMA ////////////////// //////////////////
////////////////// //////////////////
and FHLMC................ 1703 0 1705 0 1706
3,163,278 1707 3,176,341 4.a.(2)
(3) Other pass-through ////////////////// //////////////////
////////////////// //////////////////
securities............... 1709 0 1710 0 1711
1 1713 1 4.a.(3)
b. Other mortgage-backed ////////////////// //////////////////
////////////////// //////////////////
securities (include CMOs, ////////////////// //////////////////
////////////////// //////////////////
REMICs, and stripped ////////////////// //////////////////
////////////////// //////////////////
MBS): ////////////////// //////////////////
////////////////// //////////////////
(1.) Issued or guaranteed ////////////////// //////////////////
////////////////// //////////////////
by FNMA, FHLMC ////////////////// //////////////////
////////////////// //////////////////
or GNMA................. 1714 0 1715 0 1716
0 1717 0 4.b.(1)
(2.) Collateralized ////////////////// //////////////////
////////////////// //////////////////
by MBS issued or ////////////////// //////////////////
////////////////// //////////////////
guaranteed by FNMA, ////////////////// //////////////////
////////////////// //////////////////
FHLMC, or GNMA.......... 1718 0 1719 0 1731
0 1732 0 4.b.(2)
(3.) All other mortgage- ////////////////// //////////////////
////////////////// //////////////////
backed securities....... 1733 0 1734 0 1735
453 1736 453 4.b.(3)
5. Other debt securities: ////////////////// //////////////////
////////////////// //////////////////
a. Other domestic debt ////////////////// //////////////////
////////////////// //////////////////
securities................... 1737 0 1738 0 1739
629 1741 621 5.a.
b. Foreign debt ////////////////// //////////////////
////////////////// //////////////////
securities................... 1742 97,307 1743 87,332 1744
0 1746 0 5.b.
6. Equity securities: ////////////////// //////////////////
////////////////// //////////////////
a. Investments in mutual ////////////////// //////////////////
////////////////// //////////////////
funds........................ ////////////////// ////////////////// 1747
52,843 1748 52,843 6.a.
b. Other equity securities ////////////////// //////////////////
////////////////// //////////////////
with readily determinable ////////////////// //////////////////
////////////////// //////////////////
fair values.................. ////////////////// ////////////////// 1749
0 1751 0 6.b.
c. All other equity ////////////////// //////////////////
////////////////// //////////////////
securities(1)................ ////////////////// ////////////////// 1752
218,098 1753 218,098 6.c.
7. Total (sum of items 1 ////////////////// //////////////////
////////////////// //////////////////
through 6) (total of ////////////////// //////////////////
////////////////// //////////////////
column A must equal ////////////////// //////////////////
////////////////// //////////////////
Schedule RC, item 2.a) ////////////////// //////////////////
////////////////// //////////////////
(total of column D must ////////////////// //////////////////
////////////////// //////////////////
equal Schedule RC, ////////////////// //////////////////
////////////////// //////////////////
item 2.b)....................... 1754 261,390 1771 251,395 1772
4,943,856 1773 4,958,338 7.
- ----------------------------------------------------------------------------------
</TABLE>
- -----------
(1) Includes equity securities without readily determinable fair values at
historical cost in item 6.c, column D.
14
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank : FLEET NATIONAL BANK Call Date: 12/31/96
ST-BK: 25-0590 FFIEC 031
Address : ONE MONARCH PLACE
Page RC-5
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: [0][2][4][9][9]
SCHEDULE RC-B--CONTINUED
--------
C412 <-
------------------
Memoranda Dollar Amounts in Thousands
RCFD Bil Mil Thou
- -------------------------------------------------------------------------------------------------
- ----------------------
<S>
<C> <C>
1. Pledged
securities(2).......................................................................... 0416
2,436,831 M.1.
2. Maturity and repricing data for debt securities(2), (3), (4) (excluding those in
//////////////////
nonaccrual status):
//////////////////
a. Fixed rate debt securities with a remaining maturity of:
//////////////////
(1) Three months or
less.................................................................... 0343 44,985
M.2.a.(1)
(2) Over three months through 12
months..................................................... 0344 105,214 M.2.a.(2)
(3) Over one year through five
years........................................................ 0345 1,418,544 M.2.a.(3)
(4) Over five years
........................................................................ 0346 2,274,468
M.2.a.(4)
(5) Total fixed rate debt securities (sum of Memorandum items 2.a(1) through
2.a.(4)........ 0347 3,843,211 M.2.a.(5)
b. Floating rate debt securities with a repricing frequency of:
//////////////////
(1) Quarterly or more
frequently............................................................ 4544 302,855
M.2.b.(1)
(2) Annually or more frequently, but less frequently than
quarterly......................... 4545 802,642 M.2.b.(2)
(3) Every five years or more frequently, but less frequently than
annually.................. 4551 79 M.2.b.(3)
(4) Less frequently than every five
years................................................... 4552 0 M.2.b.(4)
(5) Total floating rate debt securities (sum of Memorandum items 2.b.(1) through
2.b.(4))... 4553 1,105,576 M.2.b.(5)
c. Total debt securities (sum of Memorandum items 2.a.(5) and 2.b.(5)) (must equal total
//////////////////
debt securities from Schedule RC-B, sum of items 1 through 5, columns A and D, minus
//////////////////
nonaccrual debt securities included in Schedule RC-N, item 9, column
C)..................... 0393 4,948,787 M.2.c.
3. Not applicable
//////////////////
4. Held-to-maturity debt securities restructured and in compliance with modified terms (included
//////////////////
in Schedule RC-B, items 3 through 5, column A,
above).......................................... 5365 0 M.4.
5. Not applicable
//////////////////
6. Floating rate debt securities with a remaining maturity of one year or less(2), (4) (included
in //////////////////
Memorandum items 2.b.(1) through 2.b.(4)
above)................................................. 5519 4,000 M.6.
7. Amortized cost of held-to-maturity securities sold or transferred to available-for-sale or
//////////////////
trading securities during the calendar year-to-date (report the amortized cost at date of sale
//////////////////
or
transfer)...................................................................................
//////////////////
8. High-risk mortgage securities (included in the held-to-maturity and available-for-sale
//////////////////
accounts in Schedule RC-B, item 4.b):
//////////////////
a. Amortized
cost.............................................................................. 8780
0 M.8.a.
b. Fair
value.................................................................................. 8781
0 M.8.b.
9. Structured notes (included in the held-to-maturity and available-for-sale account in
//////////////////
Schedule RC-B, items 2, 3, and 5):
//////////////////
a. Amortized
cost.............................................................................. 8782
0 M.9.a.
b. Fair
value.................................................................................. 8783
0 M.9.b.
- ----------------
(2) Includes held-to-maturity securities at amortized cost and available-for-sale securities at
fair value.
(3) Exclude equity securities, e.g., investments in mutual funds, Federal Reserve stock, common
stock, and preferred stock.
(4) Memorandum items 2 and 6 are not applicable to savings banks that must complete supplemental
Schedule RC-J.
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank : FLEET NATIONAL BANK Call Date: 12/31/96
ST-BK: 25-0590 FFIEC 031
Address : ONE MONARCH PLACE
Page RC-6
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: [0][2][4][9][9]
SCHEDULE RC-C--LOANS AND LEASE FINANCING RECEIVABLES
PART I. LOANS AND LEASES
Do not deduct the allowance for loan and lease losses from amounts
------------
reported in this schedule. Report total loans and leases, net of unearned
C415 <-
income. Exclude assets held for trading.
- --------------------------------------
(Column A)
(Column B)
Consolidated
Domestic
Bank
Offices
- --------------------------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou
RFCD Bil Mil Thou
- -------------------------------------------------------------------------------------------------
- ---------------------
<S> <C> <C>
<C> <C>
1. Loans secured by real estate............................................ 1410
11,606,306 ////////////////// 1.
a. Construction and land development....................................
////////////////// 1415 599,823 1.a.
b. Secured by farmland (including farm residential and other
////////////////// //////////////////
improvements)........................................................
////////////////// 1420 1,990 1.b.
c. Secured by 1-4 family residential properties:
////////////////// //////////////////
(1) Revolving, open-end loans secured by 1-4 family residential
////////////////// //////////////////
properties and extended under lines of credit....................
////////////////// 1797 1,906,776 1.c.(1)
(2) All other loans secured by 1-4 family residential properties:
////////////////// //////////////////
(a) Secured by first liens.......................................
////////////////// 5367 4,239,378 1.c.(2)(a)
(b) Secured by junior liens......................................
////////////////// 5368 616,562 1.c.(2)(b)
d. Secured by multifamily (5 or more) residential properties............
////////////////// 1460 473,710 1.d.
e. Secured by nonfarm nonresidential properties.........................
////////////////// 1480 3,768,067 1.e.
2. Loans to depository institutions:
////////////////// //////////////////
a. To commercial banks in the U.S. .....................................
////////////////// 1505 76,227 2.a.
(1) To U.S. branches and agencies of foreign banks................... 1506
0 ////////////////// 2.a.(1)
(2) To other commercial banks in the U.S. ........................... 1507
76,227 ////////////////// 2.a.(2)
b. To other depository institutions in the U.S. ........................ 1517
13,345 1517 13,345 2.b.
c. To banks in foreign countries........................................
////////////////// 1510 928 2.c.
(1) To foreign branches of other U.S. banks.......................... 1513
160 ////////////////// 2.c.(1)
(2) To other banks in foreign countries.............................. 1516
768 ////////////////// 2.c.(2)
3. Loans to finance agricultural production and other loans to farmers..... 1590
4,351 1590 4,351 3.
4. Commercial and industrial loans:
////////////////// //////////////////
a. To U.S. addressees (domicile)........................................ 1763
12,626,132 1763 12,574,435 4.a.
b. To non-U.S. addressees (domicile).................................... 1764
78,513 1764 31,092 4.b.
5. Acceptances of other banks:
////////////////// //////////////////
a. Of U.S. banks........................................................ 1756
0 1756 0 5.a.
b. Of foreign banks..................................................... 1757
0 1757 0 5.b.
6. Loans to individuals for household, family, and other personal
////////////////// //////////////////
expenditures (i.e., consumer loans) (includes purchased paper)..........
////////////////// 1975 2,101,041 6.
a. Credit cards and related plans (includes check credit and other
////////////////// //////////////////
revolving credit plans).............................................. 2008
94,750 ////////////////// 6.a.
b. Other (includes single payment, installment, and all student loans).. 2011
2,006,291 ////////////////// 6.b.
7. Loans to foreign governments and official institutions (including
////////////////// //////////////////
foreign central banks).................................................. 2081
0 2081 0 7.
8. Obligations (other than securities and leases) of states and political
////////////////// //////////////////
subdivisions in the U.S. (includes nonrated industrial development
////////////////// //////////////////
obligations)............................................................ 2107
149,176 2107 149,176 8.
9. Other loans ............................................................ 1563
2,018,484 ////////////////// 9.
a. Loans for purchasing or carrying securities (secured and unsecured)..
////////////////// 1545 179,603 9.a.
b. All other loans (exclude consumer loans).............................
////////////////// 1564 1,838,881 9.b.
10. Lease financing receivables (net of unearned income)....................
////////////////// 2165 2,585,933 10.
a. Of U.S. addressees (domicile) ....................................... 2182
2,585,933 ////////////////// 10.a.
b. Of non-U.S. addressees (domicile).................................... 2183
0 ////////////////// 10.b.
11. LESS: Any unearned income on loans reflected in items 1-9 above......... 2123
0 2123 0 11.
12. Total loans and leases, net of unearned income (sum of items 1
////////////////// //////////////////
through 10 minus item 11) (total of column A must equal
////////////////// //////////////////
Schedule RC, item 4.a) ................................................. 2122
31,260,436 2122 31,161,318 12.
- --------------------------------------
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date:
12/31/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE
PAGE RC-7
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: [0][2][4][9][9]
SCHEDULE RC-C--CONTINUED
PART I. CONTINUED
(Column
A) (Column B)
Consolidated Domestic
Bank
Offices
Memoranda
- ------------------ ------------------
Dollar Amounts in Thousands RCFD Bil
Mil Thou RCON Bil Mil Thou
- -------------------------------------------------------------------------------------------------
- ---------------------------
<S> <C> <C>
<C> <C> <C>
1. Commercial paper included in Schedule RC-C, part I, above........................ 1496
0 1496 0 M.1.
2. Loans and leases restructured and in compliance with modified terms
////////////////// //////////////////
(included in Schedule RC-C, part I, above and not reported as past due
////////////////// //////////////////
or nonaccrual in Schedule RC-N, Memorandum item 1):
////////////////// //////////////////
a. Loans secured by real estate:
////////////////// //////////////////
(1) To U.S. addressees (domicile)............................................. 1687
1,681 M.2.a.(1)
(2) To non-U.S. addressees (domicile)......................................... 1689
0 M.2.a.(2)
b. All other loans and lease financing receivable (exclude loans to
//////////////////
individuals for household, family, and other personal expenditures)........... 8691
0 M.2.b.
c. Commercial and industrial loans to and lease financing receivables
//////////////////
of non-U.S. addressees (domicile) included in Memorandum item 2.b
//////////////////
above......................................................................... 8692
0 M.2.c.
3. Maturity and repricing data for loans and leases(1) (excluding those in
//////////////////
nonaccrual status):
//////////////////
a. Fixed rate loans with a remaining maturity of:
//////////////////
(1) Three months or less...................................................... 0348
690,294 M.3.a.(1)
(2) Over three months through 12 months....................................... 0349
566,523 M.3.a.(2)
(3) Over one year through five years.......................................... 0356
2,658,468 M.3.a.(3)
(4) Over five years........................................................... 0357
5,501,645 M.3.a.(4)
(5) Total fixed rate loans and leases (sum of Memorandum
//////////////////
items 3.a.(1) through 3.a.(4))............................................ 0358
9,416,930 M.3.a.(5)
b. Floating rate loans with a repricing frequency of:
//////////////////
(1) Quarterly or more frequently.............................................. 4554
17,235,629 M.3.b.(1)
(2) Annually or more frequently, but less frequently than quarterly........... 4555
3,186,865 M.3.b.(2)
(3) Every five years or more frequently, but less frequently than
//////////////////
annually.................................................................. 4561
977,978 M.3.b.(3)
(4) Less frequently than every five years..................................... 4564
129,282 M.3.b.(4)
(5) Total floating rate loans (sum of Memorandum items 3.b.(1)
//////////////////
through 3.b.(4)........................................................... 4567
21,529,754 M.3.b.(5)
c. Total loans and leases (sum of Memorandum items 3.a.(5) and
//////////////////
3.b.(5)) (must equal the sum of total loans and leases, net, from
//////////////////
Schedule RC-C, part I, item 12, plus unearned income from
//////////////////
Schedule RC-C, part I, item 11, minus total nonaccrual loans and
//////////////////
leases from Schedule RC-N, sum of items 1 through 8, column C)................ 1479
30,946,684 M.3.c.
d. FLOATING RATE LOANS WITH A REMAINING MATURITY OF ONE YEAR OR LESS
//////////////////
(INCLUDED IN MEMORANDUM ITEMS 3.b.(1) THROUGH 3.b.(4) ABOVE).................. A246
0 M.3.d.
4. Loans to finance commercial real estate, construction, and land
//////////////////
development activities (NOT SECURED BY REAL ESTATE) included in
//////////////////
Schedule RC-C, part I, items 4 and 9, column A, page RC-6(2)..................... 2746
335,734 M.4.
5. Loans and leases held for sale (included in Schedule RC-C, part I,
//////////////////
above)........................................................................... 5369
0 M.5.
6. Adjustable rate closed-end loans secured by first liens on 1-4 family
//////////////////
residential properties (included in Schedule RC-C, part I, item 1.c.(2)(a),
////////////////// RCON Bil Mil Thou
column B, page RC-6).............................................................
////////////////// 5370 1,841,822 M.6.
</TABLE>
(1) Memorandum item 3 is not applicable to savings banks that must complete
supplemental Schedule RC-J.
(2) Exclude loans secured by real estate that are included in RC-C, part I,
item 1, column A.
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date:
12/31/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE
PAGE RC-8
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: [0][2][4][9][9]
SCHEDULE RC-D--TRADING ASSETS AND LIABILITIES
Schedule RC-D is to be completed only by banks with $1 billion or more in total assets or with $2
billion or more in par/notional
amount of off-balance sheet derivative contracts (as reported in Schedule RC-L, items 14.a
through 14.e, columns A through D).
---------
C420 <-
- ----------------------
Dollar Amounts in Thousands
//////// Bil Mil Thou
- -------------------------------------------------------------------------------------------------
- ----------------------------------
<S>
<C> <C> <C>
ASSETS
//////////////////////
1. U.S. Treasury securities in domestic offices.............................................
RCON 3531 0 1.
2. U.S. Government agency and corporation obligations in domestic offices (exclude mortgage-
//////////////////////
backed securities).......................................................................
RCON 3532 0 2.
3. Securities issued by states and political subdivisions in the U.S. in domestic offices...
RCON 3533 0 3.
4. Mortgage-backed securities (MBS) in domestic offices:
//////////////////////
a. Pass-through securities issued or guaranteed by FNMA, FHLMC, or GNMA..................
RCON 3534 0 4.a.
b. Other mortgage-backed securities issued or guaranteed by FNMA, FHLMC, or GNMA
//////////////////////
(include CMOs, REMICs, and stripped MBS)..............................................
RCON 3535 0 4.b.
c. All other mortgage-backed securities..................................................
RCON 3536 0 4.c.
5. Other debt securities in domestic offices................................................
RCON 3537 0 5.
6. Certificates of deposit in domestic offices..............................................
RCON 3538 0 6.
7. Commercial paper in domestic offices.....................................................
RCON 3539 0 7.
8. Bankers acceptances in domestic offices..................................................
RCON 3540 0 8.
9. Other trading assets in domestic offices.................................................
RCON 3541 0 9.
10. Trading assets in foreign offices........................................................
RCFN 3542 0 10.
11. Revaluation gains on interest rate, foreign exchange rate, and other commodity and equity
//////////////////////
contracts:
//////////////////////
a. In domestic offices...................................................................
RCON 3543 64,043 11.a.
b. In foreign offices....................................................................
RCFN 3544 9,290 11.b.
12. Total trading assets (sum of items 1 through 11) (must equal Schedule RC, item 5)........
RCFD 3545 73,333 12.
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES
//////// Bil Mil Thou
- ----------------------
<S>
<C> <C> <C>
13. Liability for short positions............................................................
RFCD 3546 0 13.
14. Revaluation losses on interest rate, foreign exchange rate, and other commodity and
//////////////////////
equity contracts.........................................................................
RFCD 3547 60,855 14.
15. Total trading liabilities (sum of items 13 and 14) (must equal Schedule RC, item 15.b)...
RCFD 3548 60,855 15.
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date:
12/31/96 ST-BK: 25-0590 FFIEC 031
Address: One Monarch Place
Page RC-9
City, State Zip: Springfield, MA 01102
FDIC Certificate No.: [0][2][4][9][9]
SCHEDULE RC-E--DEPOSIT LIABILITIES
PART I. DEPOSITS IN DOMESTIC OFFICES
--------------
C425
--------------
Nontransaction
Transactions Accounts
Accounts
- ---------------------------------------------------------------
(Column A) (Column B)
(Column C)
Total transaction Memo: Total
Total
accounts (including demand deposits
nontransaction
total demand (included in
accounts
deposits) column A)
(including MMDAs)
- ----------------------------------------------------------------
Dollar Amounts in Thousands RCON Bil Mil Thou RCON Bil Mil Thou
RCON Bil Mil Thou
- -------------------------------------------------------------------------------------------------
- --------------------------
<S> <C> <C> <C> <C>
<C> <C> <C>
Deposits of: ////////////////// //////////////////
//////////////////
1. Individuals, partnerships, and corporations..... 2201 8,925,633 2240 8,417,538
2346 21,118,482 1.
2. U.S. Government................................. 2202 170,644 2280 170,617
2520 5,680 2.
3. States and political subdivisions in the U.S.... 2203 531,934 2290 508,362
2530 777,806 3.
4. Commercial banks in the U.S..................... 2206 836,406 2310 836,406
2550 397 4.
5. Other depository institutions in the U.S........ 2207 223,383 2312 223,383
2349 2,868 5.
6. Banks in foreign countries...................... 2213 23,850 2320 23,850
2236 0 6.
7. Foreign governments and official institutions ////////////////// //////////////////
//////////////////
(including foreign central banks)............... 2216 0 2300 0
2377 0 7.
8. Certified and official checks................... 2330 175,075 2330 175,075
////////////////// 8.
9. Total (sum of items 1 through 8) (sum of columns ////////////////// //////////////////
//////////////////
A and C must equal Schedule RC, item 13.a....... 2215 10,886,925 2210 10,355,231
2385 21,905,233 9.
- ----------------------------------------------------------------
</TABLE>
Memoranda
<TABLE>
Dollar Amounts in Thousands
RCON Bil Mil Thou
- -------------------------------------------------------------------------------------------------
- ---------------------
<S>
<C> <C> <C>
1. Selected components of total deposits (i.e., sum of item 9, columns A and C):
//////////////////
a. Total Individual Retirement Accounts (IRAs) and Keogh Plan accounts....................
6835 2,607,397 M.1.a.
b. Total brokered deposits................................................................
2365 1,415,235 M.1.b.
c. Fully insured brokered deposits (included in Memorandum item 1.b above):
//////////////////
(1) Issued in denominations of less than $100,,000....................................
2343 2,240 M.1.c.(1)
(2) Issued EITHER in denominations of $100,000 OR in denominations greater than
//////////////////
$100,000 and participated out by the broker in shares of $100,000 or less.........
2344 1,412,995 M.1.c.(2)
D. MATURITY DATA FOR BROKERED DEPOSITS:
//////////////////
(1) BROKERED DEPOSITS ISSUED IN DENOMINATIONS OF LESS THAN $100,000 WITH A REMAINING
//////////////////
MATURITY OF ONE YEAR OR LESS (INCLUDED IN MEMORANDUM ITEM 1.C.(1) ABOVE)..........
A243 20 M.1.d.(1)
(2) BROKERED DEPOSITS ISSUED IN DENOMINATIONS OF $100,000 OR MORE WITH A REMAINING
//////////////////
MATURITY OF ONE YEAR OR LESS (INCLUDED IN MEMORANDUM ITEM 1.B ABOVE)..............
A244 584,547 M.1.d.(2)
e. Preferred deposits (uninsured deposits of states and political subdivisions in the
//////////////////
U.S. reported in item 3 above which are secured or collateralized as required under
//////////////////
state law).............................................................................
5590 346,573 M.1.e.
2. Components of total nontransaction accounts (sum of Memorandum items 2.a through 2.d
//////////////////
must equal item 9, column C above):
//////////////////
a. Savings deposits:
//////////////////
(1) Money market deposit accounts (MMDAs).............................................
6810 10,252,364 M.2.a.(1)
(2) Other savings deposits (excludes MMDAs)..........................................
0352 2,397,861 M.2.a.(2)
b. Total time deposits of less than $100,000..............................................
6648 6,781,917 M.2.b.
c. Time certificates of deposit of $100,000 or more.......................................
6645 2,473,091 M.2.c.
d. Open-account time deposits of $100,000 or more.........................................
6646 0 M.2.d.
3. All NOW accounts (included in column A above)..............................................
2398 531,694 M.3.
4. Not applicable
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date:
12/31/96 ST-BK 25-0590 FFIEC 031
Address: ONE MONARCH PLACE
PAGE RC-10
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: [0][2][4][9][9]
SCHEDULE RC-E--CONTINUED
PART I. CONTINUED
Memoranda (continued)
- ------------------
Dollar Amounts in Thousands
RCON Bil Mil Thou
- -------------------------------------------------------------------------------------------------
- -----------------
<S>
<C> <C> <C>
5. Maturity and repricing data for time deposits of less than $100,000 (sum of
//////////////////
Memorandum items 5.a.(1) through 5.b.(3) must equal Memorandum item 2.b above):(1)
//////////////////
a. Fixed rate time deposits of less than $100,000 with a remaining maturity of:
//////////////////
(1) Three months or less ..............................................................
A225 1,722,551 M.5.a.(1)
(2) Over three months through 12 months ...............................................
A226 3,024,143 M.5.a.(2)
(3) Over one year .....................................................................
A227 1,975,207 M.5.a.(3)
b. Floating rate time deposits of less than $100,000 with a repricing frequency of:
//////////////////
(1) Quarterly or more frequently ......................................................
A228 60,016 M.5.b.(1)
(2) Annually or more frequently, but less frequently than quarterly ...................
A229 0 M.5.b.(2)
(3) Les frequently than annually ......................................................
A230 0 M.5.b.(3)
c. Floating rate time deposits of less than $100,000 with a remaining maturity of
//////////////////
one year or less (included in Memorandum items 5.b.(1) through 5.b.(3) above) .........
A231 39,531 M.5.c.
6. Maturity and repricing data for time deposits of $100,000 or more (i.e., time certificates
//////////////////
of deposit of $100,000 or more and open-account time deposits of $100,000 or more)
//////////////////
(sum of Memorandum items 6.a.(1) through 6.b.(4) must equal the sum of Memorandum
//////////////////
items 2.c and 2.d above): (1)
//////////////////
a. Fixed rate time deposits of $100,000 or more with a remaining maturity of:
//////////////////
(1) Three months or less ..............................................................
A232 720,549 M.6.a.(1)
(2) Over three months through 12 months ...............................................
A233 695,947 M.6.a.(2)
(3) Over one year through five years ..................................................
A234 1,014,722 M.6.a.(3)
(4) Over five years ...................................................................
A235 8,868 M.6.a.(4)
b. Floating rate time deposits of $100,000 or more with a repricing frequency of:
//////////////////
(1) Quarterly or more frequently ......................................................
A236 33,005 M.6.b.(1)
(2) Annually or more frequently, but less frequently than quarterly ...................
A237 0 M.6.b.(2)
(3) Every five years or more frequently, but less frequently than annually ............
A238 0 M.6.b.(3)
(4) Less frequently than every five years .............................................
A239 0 M.6.b.(4)
c. Floating rate time deposits of $100,000 or more with a remaining maturity of
//////////////////
one year or less (included in Memorandum items 6.b.(1) through 6.b.(4) above)..........
A240 1,896 M.6.c.
- ------------------
</TABLE>
- ------------
(1) Memorandum items 5 and 6 are not applicable to savings banks that
must complete supplemental Schedule RC-J.
20
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date:
12/31/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE
Page RC-11
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: [0][2][4][9][9]
SCHEDULE RC-E--CONTINUED
PART II. DEPOSITS IN FOREIGN OFFICES (INCLUDING EDGE AND
AGREEMENT SUBSIDIARIES AND IBFS)
- ------------------
Dollar Amounts in Thousands RCFN
Bil Mil Thou
- -------------------------------------------------------------------------------------------------
- --------------
<S> <C>
<C> <C>
Deposits of:
//////////////////
1. Individuals, partnerships, and corporations.......................................... 2621
2,410,097 1.
2. U.S. banks (including IBFs and foreign branches of U.S. banks)....................... 2623
0 2.
3. Foreign banks (including U.S. branches and agencies of foreign banks, including
their IBFs).......................................................................... 2625
0 3.
4. Foreign governments and official institutions (including foreign central banks)...... 2650
0 4.
5. Certified and official checks........................................................ 2330
0 5.
6. All other deposits................................................................... 2668
4,330 6.
7. Total (sum of items 1 through 6) (must equal Schedule RC, item 13.b)................. 2200
2,414,427 7.
</TABLE>
<TABLE>
<CAPTION>
- ------------------
Memorandum Dollar Amounts in
Thousands RCFN Bil Mil Thou
- -------------------------------------------------------------------------------------------------
- --------------
<S> <C>
<C> <C>
1. TIME DEPOSITS WITH A REMAINING MATURITY OF ONE YEAR OR LESS (INCLUDED IN PART II,
//////////////////
ITEM 7 ABOVE)........................................................................ A245
2,414,425 M.1.
</TABLE>
SCHEDULE RC-F--OTHER ASSETS
<TABLE>
<CAPTION>
---------
C430
- -----------------------
Dollar Amounts in Thousands
////////// Bil Mil Thou
- -------------------------------------------------------------------------------------------------
- -------------------
<S> <C>
<C> <C> <C>
1. Income earned, not collected on loans................................................ RCFD
2164 243,319 1.
2. Net deferred tax assets (1).......................................................... RCFD
2148 0 2.
3. Excess residential mortgage servicing fees receivable................................ RCFD
5371 173,148 3.
4. Other (itemize and describe amounts that exceed 25% of this item).................... RCFD
2168 3,491,222 4.
--------- --------------------
a. TEXT 3549 MORTGAGE HELD FOR RESALE RCFD 3549 1,517,133
/////////////////////// 4.a.
-------------------------------------------------------------
b. TEXT 3550 RCFD 3550
/////////////////////// 4.b.
-------------------------------------------------------------
c. TEXT 3551 RCFD 3551
/////////////////////// 4.c.
-------------------------------------------------------------
5. Total (sum of items 1 through 4) (must equal Schedule RC, item 11)................... RCFD
2160 3,907,689 5.
- -----------------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------
Memorandum Dollar Amounts in Thousands
//////////// Bil Mil Thou
- -------------------------------------------------------------------------------------------------
- --------------
<S> <C>
<C> <C>
1. Deferred tax assets disallowed for regulatory capital purposes.................. RFCD 5610
0 M.1.
</TABLE>
SCHEDULE RC-G--OTHER LIABILITIES
<TABLE>
<CAPTION>
-----------
C435
- ------------------------
Dollar Amounts in thousands
////////// Bil Mil Thou
- -------------------------------------------------------------------------------------------------
- --------------------
<S> <C>
<C> <C>
1. a. Interest accrued and unpaid on deposits in domestic offices (2).................... RCON
3645 50,636 1.a.
b. Other expenses accrued and unpaid (includes accrued income taxes payable)......... RCFD
3646 509,357 1.b.
2. Net deferred tax liabilities(1)....................................................... RCFD
3049 434,426 2.
3. Minority interest in consolidated subsidiaries........................................ RCFD
3000 0 3.
4. Other (itemize and describe amounts that exceed 25% of this item)..................... RCFD
2938 512,435 4.
---------
a. TEXT 3552 RCFD 3552
/////////////////////// 4.a.
-------------------------------------------------------------
b. TEXT 3553 RCFD 3553
/////////////////////// 4.b.
-------------------------------------------------------------
c. TEXT 3554 RCFD 3554
/////////////////////// 4.c.
-------------------------------------------------------------
5. Total (sum of items 1 through 4) (must equal Schedule RC, item 20).................... RCFD
2930 1,506,854 5.
</TABLE>
- ----------------
(1) See discussion of deferred income taxes in Glossary entry on "income taxes."
(2) For savings banks, include "dividends" accrued and unpaid on deposits.
21
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date:
12/31/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE
Page RC-12
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: [0][2][4][9][9]
---------------
SCHEDULE RC-H--SELECTED BALANCE SHEET ITEMS FOR DOMESTIC OFFICES
C440
- ------------------
Domestic Offices
- ------------------
Dollar Amounts in Thousands RCON
Bil Mil Thou
- -------------------------------------------------------------------------------------------------
- --------------
<S> <C>
<C> <C>
1. Customers' liability to this bank on acceptances outstanding......................... 2155
6,380 1.
2. Bank's liability on acceptances executed and outstanding............................. 2920
6,380 2.
3. Federal funds sold and securities purchased under agreements to resell............... 1350
25,709 3.
4. Federal funds purchased and securities sold under agreements to repurchase........... 2800
3,118,142 4.
5. Other borrowed money................................................................. 3190
935,986 5.
EITHER
//////////////////
6. Net due from own foreign offices, Edge and Agreement subsidiaries, and IBFs.......... 2163
N/A 6.
OR
//////////////////
7. Net due to own foreign offices, Edge and Agreement subsidiaries, and IBFs............ 2941
2,311,663 7.
8. Total assets (excludes net due from foreign offices, Edge and Agreement subsidiaries,
//////////////////
and IBFs)............................................................................ 2192
46,468,505 8.
9. Total liabilities (excludes net due to foreign offices, Edge and Agreement
//////////////////
subsidiaries, and IBFs).............................................................. 3129
39,637,730 9.
ITEMS 10-17 INCLUDE HELD-TO-MATURITY AND AVAILABLE-FOR-SALE SECURITIES IN DOMESTIC OFFICES.
</TABLE>
<TABLE>
<CAPTION>
- ------------------
RCON
Bil Mil Thou
- ------------------
<S> <C>
<C> <C>
10. U.S. Treasury securities............................................................. 1779
718,830 10.
11. U.S. Government agency and corporation obligations (exclude mortgage-backed
//////////////////
securities).......................................................................... 1785
500 11.
12. Securities issued by states and political subdivisions in the U.S.................... 1786
163,833 12.
13. Mortgage-backed securities (MBS):
//////////////////
a. Pass-through securities:
//////////////////
(1) Issued or guaranteed by FNMA, FHLMC, OR GNMA................................ 1787
3,967,242 13.a.(1)
(2) Other pass-through securities............................................... 1869
1 13.a.(2)
b. Other mortgage-backed securities (include CMOs, REMICs, and stripped MBS):
//////////////////
(1) Issued or guaranteed by FNMA, FHLMC, or GNMA................................ 1877
0 13.b.(1)
(2) All other mortgage-backed securities........................................ 2253
453 13.b.(2)
14. Other domestic debt securities....................................................... 3159
621 14.
15. Foreign debt securities.............................................................. 3160
97,307 15.
16. Equity securities:
//////////////////
a. Investments in mutual funds...................................................... 3161
52,843 16.a.
b. Other equity securities with readily determinable fair values.................... 3162
0 16.b.
c. All other equity securities...................................................... 3169
218,098 16.c.
17. Total held-to-maturity and available-for-sale securities (sum of items 10 through 16) 3170
5,219,728 17.
</TABLE>
Memorandum (to be completed only by banks with IBFs and other "foreign" offices)
<TABLE>
<CAPTION>
- ------------------
Dollar Amounts in Thousands RCON
Bil Mil Thou
- -------------------------------------------------------------------------------------------------
- --------------
<S> <C>
<C> <C>
EITHER
//////////////////
1. Net due from the IBF of the domestic offices of the reporting bank................... 3051
0 M.1.
OR
//////////////////
2. Net due to the IBF of the domestic offices of the reporting bank..................... 3059
N/A M.2.
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date:
12/31/96 ST-BK: 25-0590 FFIEC 031
Address: One Monarch Place
Page RC-13
City, State Zip: Springfield, MA 01102
FDIC Certificate No.: [0][2][4][9][9]
SCHEDULE RC-I--SELECTED ASSETS AND LIABILITIES OF IBFs
C445
- ------------------
Dollar Amounts in Thousands RCFN
Bil Mil Thou
- -------------------------------------------------------------------------------------------------
- --------------
<S> <C>
<C> <C>
1. Total IBF assets of the consolidated bank (component of Schedule RC, item 12)........ 2133
0 1.
2. Total IBF loans and lease financing receivables (component of Schedule RC-C, part I,
//////////////////
item 12, column A)................................................................... 2076
0 2.
3. IBF commercial and industrial loans (component of Schedule RC-C, part I,
//////////////////
item 4, column A).................................................................... 2077
0 3.
4. Total IBF liabilities (component of Schedule RC, item 21)............................ 2898
0 4.
5. IBF deposit liabilities due to banks, including other IBFs (component of Schedule
//////////////////
RC-E, part II, items 2 and 3)........................................................ 2379
0 5.
6. Other IBF deposit liabilities (component of Schedule RC-E, part II,
//////////////////
items 1,4,5, and 6................................................................... 2381
0 6.
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE RC-K--QUARTERLY AVERAGES (1)
C455
- ------------------
Dollar Amounts in Thousands /////////
Bil Mil Thou
- -------------------------------------------------------------------------------------------------
- --------------
ASSETS
///////////////////////
<S> <C>
<C> <C>
1. Interest-bearing balances due from depository institutions...................... RCFD 3381
28,972 1.
2. U.S. Treasury securities and U.S. Government agency and corporation
obligations (2)................................................................. RCFD 3382
5,849,801 2.
3. Securities issued by states and political subdivisions in the U.S. (2).......... RCFD 3383
171,480 3.
4. a. Other debt securities (2)................................................... RCFD 3647
98,635 4.a.
b. Equity securities (3) (includes investments in mutual funds and Federal
///////////////////////
Reserve stock).................................................................. RCFD 3648
290,211 4.b.
5. Federal funds sold and securities purchased under agreements to resell in
///////////////////////
domestic offices of the bank and of its Edge and Agreement subsidiaries, and in
///////////////////////
IBFs............................................................................ RCFD 3365
34,073 5.
6. Loans:
a. Loans in domestic offices:
(1) Total loans............................................................ RCON 3360
28,772,871 6.a.(1)
(2) Loans secured by real estate........................................... RCON 3385
11,782,561 6.a.(2)
(3) Loans to finance agricultural production and other loans to
///////////////////////
farmers................................................................ RCON 3386
4,568 6.a.(3)
(4) Commercial and industrial loans........................................ RCON 3387
12,208,378 6.a.(4)
(5) Loans to individuals for household, family, and other personal
///////////////////////
expenditures........................................................... RCON 3388
2,106,517 6.a.(5)
b. Total loans in foreign offices, Edge and Agreement subsidiaries, and IBFs... RCFN 3360
93,116 6.b.
7. Trading assets.................................................................. RCFD 3401
70,398 7.
8. Lease financing receivables (net of unearned income)............................ RCFD 3484
2,414,362 8.
9. Total assets(4)................................................................. RCFD 3368
47,043,625 9.
LIABILITIES
10. Interest-bearing transaction accounts in domestic offices (NOW accounts, ATS
///////////////////////
accounts, and telephone and preauthorized transfer accounts) (exclude demand
///////////////////////
deposits)....................................................................... RCON 3485
554,831 10.
11. Nontransaction accounts in domestic offices:
///////////////////////
a. Money market deposit accounts (MMDAs)....................................... RCON 3486
10,212,141 11.a.
b. Other savings deposits...................................................... RCON 3487
2,477,260 11.b.
c. Time certificates of deposit of $100,000 or more............................ RCON 3345
2,533,067 11.c.
d. All other time deposits..................................................... RCON 3469
6,982,619 11.d.
12. Interest-bearing deposits in foreign offices, Edge and Agreement subsidiaries,
///////////////////////
and IBFs........................................................................ RCFN 3404
2,117,139 12.
13. Federal funds purchased and securities sold under agreements to repurchase in
///////////////////////
domestic offices of the bank and of its Edge and Agreement subsidiaries, and in
///////////////////////
IBFs............................................................................ RCFD 3353
4,817,518 13.
14. Other borrowed money............................................................ RCFD 3355
985,125 14.
- ---------------
(1) For all items, banks have the option of reporting either (1) an average of daily figures for
the quarter, or
(2) an average of weekly figures (i.e., the Wednesday of each week of the quarter).
(2) Quarterly averages for all debt securities should be based on amortized cost.
(3) Quarterly averages for all equity securities should be based on historical cost.
(4) The quarterly average for total assets should reflect all debt securities (not held for
trading) at amortized
cost, equity securities with readily determinable fair values at the lower of cost or fair
value, and equity
securities without readily determinable fair values at historical cost.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank : FLEET NATIONAL BANK Call Date: 12/31/96
ST-BK: 25-0590 FFIEC 031
Address : ONE MONARCH PLACE
Page RC-14
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: [0][2][4][9][9]
SCHEDULE RC-L--OFF BALANCE SHEET ITEMS
Please read carefully the instructions for the preparation of Schedule RC-L.
Some of the amounts reported in Schedule RC-L are regarded as volume indicators
and not necessarily as measures of risk.
C460
Dollar Amounts in Thousands
RCFD BIL MIL THOU
- -------------------------------------------------------------------------------------------------
- ----------------------
<S> <C> <C>
<C> <C>
1. Unused commitments:
//////////////////
a. Revolving, open-end lines secured by 1-4 family residential properties, e.g., home equity
//////////////////
lines.......................................................................................
3814 2,159,101 1.a.
b. Credit card
lines........................................................................... 3815
37,038 1.b.
c. Commercial real estate, construction, and land development:
//////////////////
(1) Commitments to fund loans secured by real
estate........................................ 3816 538,163 1.c.(1)
(2) Commitments to fund loans not secured by real
estate.................................... 6550 513,346 1.c.(2)
d. Securities
underwriting..................................................................... 3817
0 1.d.
e. Other unused
commitments.................................................................... 3818
20,572,462 1.e.
2. Financial standby letters of credit and foreign office
guarantees.............................. 3819 2,322,445 2.
--------------------
a. Amount of financial standby letters of credit conveyed to others RCFD 3820 89,650
////////////////// 2.a.
--------------------
3. Performance standby letters of credit and foreign office
guarantees............................ 3821 179,230 3.
--------------------
a. Amount of performance standby letters of credit conveyed to others RCFD 3822 6,004
////////////////// 3.a.
--------------------
4. Commercial and similar letters of
credit....................................................... 3411 137,503 4.
5. Participations in acceptances (as described in the instructions) conveyed to others by the
//////////////////
reporting
bank................................................................................. 3428
112 5.
6. Participations in acceptances (as described in the instructions) acquired by the reporting
//////////////////
(nonaccepting)
bank............................................................................ 3429
12,837 6.
7. Securities
borrowed............................................................................ 3432
0 7.
8. Securities lent (including customers' securities lent where the customer is indemnified
against //////////////////
loss by the reporting
bank).................................................................... 3433 965,792 8.
9. Loans transferred (i.e., sold or swapped) with recourse that have been treated as sold for
//////////////////
Call Report purposes:
//////////////////
a. FNMA and FHLMC residential mortgage loan pools:
//////////////////
(1) Outstanding principal balance of mortgages transferred as or the report
date............ 3650 298,423 9.a.(1)
(2) Amount of recourse exposure on these mortgages as of the report
date.................... 3651 298,423 9.a.(2)
b. Private (nongovernment-issued or guaranteed) residential mortgage loan pools:
//////////////////
(1) Outstanding principal balance of mortgages transferred as of the report
date............ 3652 289,942 9.b.(1)
(2) Amount of recourse exposure on these mortgages as of the report
date.................... 3653 289,942 9.b.(2)
c. Farmer Mac agricultural mortgage loan pools:
//////////////////
(1) Outstanding principal balance of mortgages transferred as of the report
date............ 3654 0 9.c.(1)
(2) Amount of recourse exposure on these mortgages as of the report
date.................... 3655 0 9.c.(2)
d. Small business obligations transferred with recourse under Section 208 of the
//////////////////
Riegle Community Development and Regulatory improvement Act of 1994:
//////////////////
(1) Outstanding principal balance of small business obligations transferred
//////////////////
as of the report
date................................................................... A249 0
9.d.(1)
(2) Amount of retained recourse on these obligations as of the report
date.................. A250 0 9.d.(2)
10. When-issued securities:
//////////////////
a. Gross commitments to
purchase............................................................... 3434 0 10.a
b. Gross commitments to
sell................................................................... 3435 0
10.b.
11. Spot foreign exchange
contracts................................................................ 8765 487,442
11.
12. All other off-balance sheet liabilities (exclude off-balance sheet derivatives) (itemize and
//////////////////
describe each component of this item over 25% of Schedule RC, item 28, "Total equity
capital") 3430 0 12.
- -------------------------------------------------------------------------------------------
//////////////////
a. TEXT 3555 ........................................................ RCFD 3555
////////////////// 12.a.
b. TEXT 3556 ........................................................ RCFD 3556
////////////////// 12.b.
c. TEXT 3557 ........................................................ RCFD 3557
////////////////// 12.c.
d. TEXT 3558 ........................................................ RCFD 3558
////////////////// 12.d.
- -------------------------------------------------------------------------------------------------
- --------------
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date:
12/31/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE
PAGE RC-15
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: [0][2][4][9][9]
SCHEDULE RC-L--CONTINUED
Dollar Amounts in Thousands
RCFD Bil Mil Thou
- -------------------------------------------------------------------------------------------------
- ---------------------
<S>
<C> <C>
13. All other off-balance sheet assets (exclude off-balance sheet derivatives) (itemize and
//////////////////
describe each component of this item over 25% of Schedule RC, item 28, "Total equity
capital") 5591 0 13.
--------- ------------------------------
//////////////////
a. TEXT 5592 RCFD 5592
////////////////// 13.a.
b. TEXT 5593 RCFD 5593
////////////////// 13.b.
c. TEXT 5594 RCFD 5594
////////////////// 13.c.
d. TEXT 5595 RCFD 5595
////////////////// 13.d.
- -------------------------------------------------------------------------------------------------
- -------------
C461 <-
----------------- -----------------
- ----------------- ------------------
(Column A) (Column B) (Column C)
(Column D)
Dollar Amounts in Thousands Interest Rate Foreign Exchange Equity
Derivative Commodity and
- ---------------------------------------- Contracts Contracts Contracts
Other Contracts
Off-balance Sheet Derivatives ----------------- -----------------
- ----------------- ------------------
Position Indicators Tril Bil Mil Thou Tril Bil Mil Thou Tril Bil Mil
Thou Tril Bil Mil Thou
---------------------------------------- ----------------- -----------------
- ----------------- ------------------
<S> <C> <C> <C>
C> <C>
14. Gross amounts (e.g., notional ///////////////// /////////////////
///////////////// /////////////////
amounts) (for each column, sum of ///////////////// /////////////////
///////////////// /////////////////
items 14.a through 14.e must equal ///////////////// /////////////////
///////////////// /////////////////
sum of items 15, 16.a, and 16.b): ///////////////// /////////////////
///////////////// /////////////////
----------------- -----------------
- ----------------- -----------------
a. Futures contracts ................ 0 0
0 39,037 14.a
----------------- -----------------
- ----------------- -----------------
RCFD 8693 RCFD 8694 RCFD 8695
RCFD 8696
----------------- -----------------
- ----------------- -----------------
b. Forward contracts ................ 2,684,800 2,284,466
0 45,604 14.b
----------------- -----------------
- ----------------- -----------------
RCFD 8697 RCFD 8698 RCFD 8699
RCFD 8700
----------------- -----------------
- ----------------- -----------------
c. Exchange-traded option contracts: ///////////////// /////////////////
///////////////// /////////////////
----------------- -----------------
- ----------------- -----------------
(1) Written options .............. 225,000 0
0 0 14.c.(1)
----------------- -----------------
- ----------------- -----------------
RCFD 8701 RCFD 8702 RCFD 8703
RCFD 8704
----------------- -----------------
- ----------------- -----------------
(2) Purchased options ............ 1,276,400 0
0 1,245 14.c.(2)
----------------- -----------------
- ----------------- -----------------
RCFD 8705 RCFD 8706 RCFD 8707
RCFD 8708
----------------- -----------------
- ----------------- -----------------
d. Over-the-counter option contracts: ///////////////// /////////////////
///////////////// /////////////////
----------------- -----------------
- ----------------- -----------------
(1) Written options .............. 5,051,792 5,200
0 0 14.d.(1)
----------------- -----------------
- ----------------- -----------------
RCFD 8709 RCFD 8710 RCFD 8711
RCFD 8712
----------------- -----------------
- ----------------- -----------------
(2) Purchased options ............ 19,427,829 5,200
0 0 14.d.(2)
----------------- -----------------
- ----------------- -----------------
RCFD 8713 RCFD 8714 RCFD 8715
RCFD 8716
----------------- -----------------
- ----------------- -----------------
e. Swaps ............................ 24,549,614 0
0 0 14.e
----------------- -----------------
- ----------------- -----------------
RCFD 3450 RCFD 3826 RCFD 8719
RCFD 8720
----------------- -----------------
- ----------------- -----------------
15. Total gross notional amount of ///////////////// /////////////////
///////////////// /////////////////
derivative contracts held for trading. 5,289,505 2,294,866
0 l,245 15
----------------- -----------------
- ----------------- -----------------
RCFD A126 RCFD A127 RCFD 8723
RCFD 8724
----------------- -----------------
- ----------------- -----------------
l6. Total gross notional amount of ///////////////// /////////////////
///////////////// /////////////////
derivative contracts held for ///////////////// /////////////////
///////////////// /////////////////
purposes other than trading: ///////////////// /////////////////
///////////////// /////////////////
----------------- -----------------
- ----------------- -----------------
a. Contracts marked to market ...... 4,239,800 0
0 39,037 16.a.
----------------- -----------------
- ----------------- -----------------
RCFD 8725 RCFD 8726 RCFD 8727
RCFD 8728
----------------- -----------------
- ----------------- -----------------
b. Contracts not marked to market .. 43,686,130 0
0 45,604 16.b.
----------------- -----------------
- ----------------- -----------------
RCFD 8729 RCFD 8730 RCFD 8731
RCFD 8732
----------------- -----------------
- ----------------- -----------------
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date:
12/31/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE
PAGE RC-16
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: [0][2][4][9][9]
SCHEDULE RC-L--CONTINUED
(Column A) (Column B) (Column C)
(Column D)
Dollar Amounts in Thousands Interest Rate Foreign Exchange Equity
Derivative Commodity and
Off-balance Sheet Derivatives Contracts Contracts Contracts
Other Contracts
Position Indicators ------------------ ------------------
- ------------------ ------------------
RFCD Bil Mil Thou RFCD Bil Mil Thou RFCD Bil Mil
Thou RFCD Bil Mil Thou
- -------------------------------------------------------------------------------------------------
- -----------------------
<S> <C> <C> <C>
<C> <C>
17. Gross fair values of ////////////////// //////////////////
////////////////// //////////////////
derivative contracts: ////////////////// //////////////////
////////////////// //////////////////
a. Contracts held for ////////////////// //////////////////
////////////////// //////////////////
trading: ////////////////// //////////////////
////////////////// //////////////////
(1) Gross positive ////////////////// //////////////////
////////////////// //////////////////
fair value................ 8733 31,626 8734 41,468 8736
0 8736 59 17.a.(1)
(2) Gross negative ////////////////// //////////////////
////////////////// //////////////////
fair value................ 8737 22,099 8738 38,756 8739
0 8740 0 17.a.(2)
b. Contracts held for ////////////////// //////////////////
////////////////// //////////////////
purposes other than ////////////////// //////////////////
////////////////// //////////////////
trading that are marked ////////////////// //////////////////
////////////////// //////////////////
to market: ////////////////// //////////////////
////////////////// //////////////////
(1) Gross positive ////////////////// //////////////////
////////////////// //////////////////
fair value................ 8741 2,258 8742 0 8743
0 8744 1,698 17.b.(1)
(2) Gross negative ////////////////// //////////////////
////////////////// //////////////////
fair value................ 8745 1,417 8746 0 8747
0 8748 0 17.b.(2)
c. Contracts held for ////////////////// //////////////////
////////////////// //////////////////
purposes other than ////////////////// //////////////////
////////////////// //////////////////
trading that are not ////////////////// //////////////////
////////////////// //////////////////
marked to market: ////////////////// //////////////////
////////////////// //////////////////
(1) Gross positive ////////////////// //////////////////
////////////////// //////////////////
fair value................ 8749 165,643 8750 0 8751
0 8752 169 17.c.(1)
(2) Gross negative ////////////////// //////////////////
////////////////// //////////////////
fair value................ 8737 76,308 8754 0 8755
0 8756 0 17.c.(2)
- ---------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Memoranda Dollar Amounts in
Thousands RFCD Bil Mil Thou
- -------------------------------------------------------------------------------------------------
- -----------------------
<S>
<C> <C>
1.-2. Not applicable
//////////////////
3. Unused commitments with an original maturity exceeding one year that are reported in
//////////////////
Schedule RC-L, items 1.a through 1.e, above (report only the unused portions of commitments
//////////////////
that are fee paid or otherwise legally
binding).................................................. 3833 18,552,873 M.3.
a. Participations in commitments with an original maturity
//////////////////
exceeding one year to be conveyed to others......................... RCFD 3834 |
1,789,549 ////////////////// M.3.a.
4. To be completed only by banks with $1 billion or more in total assets:
//////////////////
Standby letters of credit and foreign office guarantees (both financial and performance)
issued //////////////////
to non-U.S. addresses (domicile) included in Schedule RC-L, items 2 and 3,
above................. 3377 360,019 M.4.
5. Installment loans to individuals for household, family, and other personal expenditures that
//////////////////
have been securitized and sold without recourse (with servicing retained), amounts outstanding
//////////////////
by type of loan:
//////////////////
a. Loans to purchase private passenger automobiles (TO BE COMPLETED FOR THE
//////////////////
SEPTEMBER REPORT
ONLY)........................................................................ 2741 N/A
M.5.a.
b. Credit cards and related plans (TO BE COMPLETED
QUARTERLY).................................... 2742 0 M.5.b.
c. All other consumer installment credit (including mobile home loans)(TO BE COMPLETED FOR THE
//////////////////
SEPTEMBER REPORT
ONLY)........................................................................ 2743 N/A
M.5.c.
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date:
12/31/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE
PAGE RC-17
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: [0][2][4][9][9]
SCHEDULE RC-M--MEMORANDA
--------
C465 <-
------------------
Dollar Amounts in
Thousands RFCD Bil Mil Thou
- -------------------------------------------------------------------------------------------------
- ------------------------
<S>
<C> <C> <C>
1. Extensions of credit by the reporting bank to its executive officers, directors, principal
//////////////////
shareholders, and their related interests as of the report date:
//////////////////
a. Aggregate amount of all extensions of credit to all executive officers, directors,
principal //////////////////
shareholders, and their related
interests...................................................... 6164 552,349 1.a.
b. Number of executive officers, directors, and principal shareholders to whom the amount of
//////////////////
all extensions of credit by the reporting bank (including extensions of credit to
//////////////////
related interests) equals or exceeds the lesser of $500,000 or 5 percent
Number //////////////////
of total capital as defined for this purpose in agency regulations. RFCD 6165 |
20 ////////////////// 1.b.
2. Federal funds sold and securities purchased under agreements to resell with U.S. branches
//////////////////
and agencies of FOREIGN BANKS(1) (included in Schedule RC, items 3.a and
3.b)..................... 3405 0 2.
3. Not applicable.
//////////////////
4. Outstanding principal balance of 1-4 family residential mortgage loans serviced for others
//////////////////
(include both retained servicing and purchased servicing):
//////////////////
a. Mortgages serviced under a GNMA
contract....................................................... 5500 25,732,152 4.a.
b. Mortgages services under a FHLMC contract:
//////////////////
(1) Serviced with recourse to
servicer......................................................... 5501 48,720 4.b.(1)
(2) Serviced without recourse to
servicer...................................................... 5502 34,857,978 4.b.(2)
c. Mortgages serviced under a FNMA contract:
//////////////////
(1) Serviced under a regular option
contract................................................... 5503 249,703 4.c.(1)
(2) Serviced under a special option
contract................................................... 5504 41,105,444 4.c.(2)
d. Mortgages serviced under other servicing
contracts............................................. 5505 11,267,486 4.d.
5. To be completed only by banks with $1 billion or more in total assets:
//////////////////
Customers' liability to this bank on acceptances outstanding (sum of items 5.a and 5.b must
//////////////////
equal Schedule RC, item 9):
//////////////////
a. U.S. addresses
(domicile)...................................................................... 2103
6,244 5.a.
b. Non-U.S. addresses
(domicile).................................................................. 2104 136
5.b.
6. Intangible assets:
//////////////////
a. Mortgage servicing
rights...................................................................... 3164 1,563,176
6.a.
b. Other identifiable intangible assets
//////////////////
(1) Purchased credit card
relationships........................................................ 5506 0
6.b.(1)
(2) All other identifiable intangible
assets................................................... 5507 105,984 6.b.(2)
c.
Goodwill.......................................................................................
3163 647,473 6.c.
d. Total (sum of items 6.a through 6.c) (must equal Schedule RC, item
10)......................... 2143 2,316,633 6.d.
e. Amount of intangible assets (included in item 6.b.(2) above) that have been grandfathered
or //////////////////
are otherwise qualifying for regulatory capital
purposes....................................... 6442 0 6.e.
7. Mandatory convertible debt, net of common or perpetual preferred stock dedicated to
//////////////////
redeem the
debt................................................................................... 3295
75,000 7.
</TABLE>
- -----------------
(1) Do not report federal funds sold and securities purchased under agreements
to resell with other commercial banks in the U.S. in this time.
27
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank : FLEET NATIONAL BANK Call Date: 12/31/96
ST-BK: 25-0590 FFIEC 031
Address : ONE MONARCH PLACE
Page RC-18
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: [0][2][4][9][9]
SCHEDULE RC-M--CONTINUED
------------------
Dollar Amounts in Thousands
BIL MIL THOU
- -------------------------------------------------------------------------------------------------
- ----------------------
<S> <C>
<C> <C>
8. a. Other real estate owned:
/////////////////////////
(1) Direct and indirect investments in real estate ventures.........................
RCFD 5372 0 8.a.(1)
(2) All other real estate owned:
/////////////////////////
(a) Construction and land development in domestic offices........................
RCON 5508 332 8.a.(2)(a)
(b) Farmland in domestic offices.................................................
RCON 5509 0 8.a.(2)(b)
(c) 1-4 family residential properties in domestic offices........................
RCON 5510 9,789 8.a.(2)(c)
(d) Multifamily (5 or more) residential properties in domestic offices...........
RCON 5511 347 8.a.(2)(d)
(e) Nonfarm nonresidential properties in domestic offices........................
RCON 5512 8,443 8.a.(2)(e)
(f) In foreign offices...........................................................
RCFN 5513 0 8.a.(2)(f)
(3) Total (sum of items 8.a.(1) and 8.a.(2)) (must equal Schedule RC, item 7)........
RCFD 2150 18,911 8.a.(3)
b. Investments in unconsolidated subsidiaries and associated companies:
/////////////////////////
(1) Direct and indirect investments in real estate ventures..........................
RCFD 5374 0 8.b.(1)
(2) All other investments in unconsolidated subsidiaries and associated companies....
RCFD 5375 0 8.b.(2)
(3) Total (sum of items 8.b.(1) and 8.b.(2)) (must equal Schedule RC, item 8)........
RCFD 2130 0 8.b.(3)
c. TOTAL ASSETS of unconsolidated subsidiaries and associated companies.................
RCFD 5376 0 8.c.
9. Noncumulative perpetual preferred stock and related surplus included in Schedule RC,
/////////////////////////
item 23, "Perpetual preferred stock and related surplus"................................
RCFD 3778 125,000 9.
10. Mutual fund and annuity sales in domestic offices during the quarter (include
/////////////////////////
proprietary, private label, and third party products):
/////////////////////////
a. Money market funds...................................................................
RCON 6441 204,326 10.a.
b. Equity securities funds..............................................................
RCON 8427 116,418 10.b.
c. Debt securities funds................................................................
RCON 8428 12,837 10.c.
d. Other mutual funds...................................................................
RCON 8429 0 10.d.
e. Annuities............................................................................
RCON 8430 103,868 10.e.
f. Sales of proprietary mutual funds and annuities (included in items 10.a. through
/////////////////////////
10.e. above).........................................................................
RCON 8784 302,177 10.f.
- -------------------------
- -------------------------------------------------------------------------------------------------
- ---------------------------------
<CAPTION>
Memorandum Dollar Amounts in
Thousands RCFD Bil Mil Thou
- -------------------------------------------------------------------------------------------------
- ----------------------
<S>
<C> <C>
1. Interbank holdings of capital instruments (TO BE COMPLETED FOR THE DECEMBER REPORT ONLY):
//////////////////
a. Reciprocal holdings of banking organizations' capital
instruments........................... 3836 0 M.1.a.
b. Nonreciprocal holdings of banking organizations' capital
instruments........................ 3837 0 M.1.b.
- -------------------------------------------------------------------------------------------------
- ---------------------------------
</TABLE>
28
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date:
12/31/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE
PAGE RC-19
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: [0][2][4][9][9]
SCHEDULE RC-N--PAST DUE AND NONACCRUAL LOANS, LEASES,
AND OTHER ASSETS
The FFIEC regards the information reported in
all of Memorandum item 1, in items 1 through 10,
column A, and in Memorandum items 2 through 4,
column A, as confidential.
--------
C470
- ------------------------------------------------------------
(Column A) (Column B)
(Column C)
Past due Past due 90
Nonaccrual
30 through 89 days or more
days and still and still
accruing accruing
------------------
- ------------------ ------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou RCFD Bil Mil
Thou RCFD Bil Mil Thou
- -------------------------------------------------------------------------------------------------
- -----------------------
<S> <C> <C> <C>
<C> <C> <C>
1. Loans secured by real estate: //////////////////
////////////////// //////////////////
a. To U.S. addressees (domicile) .................... 1245 1246
65,607 1247 215,496 1.a.
b. To non-U.S. addressees (domicile) ................ 1248 1249
0 1250 0 1.b.
2. Loans to depository institutions and acceptances //////////////////
////////////////// //////////////////
of other banks: //////////////////
////////////////// //////////////////
a. To U.S. banks and other U.S. depository //////////////////
////////////////// //////////////////
institutions ..................................... 5377 5378
0 5379 0 2.a.
b. To foreign banks ................................. 5380 5381
0 5382 0 2.b.
3. Loans to finance agricultural production and //////////////////
////////////////// //////////////////
other loans to farmers ............................... 1594 1597
0 1583 625 3.
4. Commercial and industrial loans: //////////////////
////////////////// //////////////////
a. To U.S. addressees (domicile) .................... 1251 1252
12,042 1253 76,393 4.a.
b. To non-U.S. addressees (domicile) ................ 1254 1255
0 1256 0 4.b.
5. Loans to individuals for household, family, and //////////////////
////////////////// //////////////////
other personal expenditures: //////////////////
////////////////// //////////////////
a. Credit cards and related plans ................... 5383 5384
1,574 5385 370 5.a.
b. Other (includes single payment, installment, //////////////////
////////////////// //////////////////
and all student loans) ........................... 5386 5387
24,812 5388 7,184 5.b.
6. Loans to foreign governments and official //////////////////
////////////////// //////////////////
institutions ......................................... 5389 5390
0 5391 0 6.
7. All other loans ...................................... 5459 5460
11,122 5461 9,921 7.
8. Lease financing receivables: //////////////////
////////////////// //////////////////
a. Of U.S. addressees (domicile) .................... 1257 1258
21 1259 3,763 8.a
b. Of non-U.S. addressees (domicile) ................ 1271 1272
0 1791 0 8.b.
9. Debt securities and other assets (exclude other //////////////////
////////////////// //////////////////
real estate owned and other repossessed assets) ...... 3506 3506
0 3507 32,566 9.
- -------------------------------------------------------------------------------------------------
- --------------------------------
Amounts reported in items 1 through 8 above include guaranteed and unguaranteed portions of past
due and nonaccrual loans and
leases. Report in item 10 below certain guaranteed loans and leases that have already been
included in the amounts reported in
items 1 through 8.
------------------
- ------------------ ------------------
RCFD Bil Mil Thou RCFD Bil Mil
Thou RCFD Bil Mil Thou
10. Loans and leases reported in items 1
- ------------------------------------------------------------
through 8 above which are wholly or partially //////////////////
////////////////// //////////////////
guaranteed by the U.S. Government .................... 5612 5613
17,347 5614 14,395 10.
a. Guaranteed portion of loans and leases //////////////////
////////////////// //////////////////
included in item 10 above ........................ 5615 5616
17,056 5617 11,954 10.a.
</TABLE>
29
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date:
12/31/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE
PAGE RC-20
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: [0][2][4][9][9]
SCHEDULE RI-N--CONTINUED
--------
C473
- ------------------------------------------------------------
(Column A) (Column B)
(Column C)
Past due Past due 90
Nonaccrual
30 through 89 days or more
and still and still
accruing accruing
Memoranda ------------------
- ------------------ ------------------
Dollar Amounts in Thousands RFCD Bil Mil Thou RFCD Bil Mil
Thou RFCD Bil Mil Thou
- -------------------------------------------------------------------------------------------------
- -----------------------
<S> <C> <C> <C>
<C> <C> <C>
1. Restructured loans and leases included in //////////////////
////////////////// //////////////////
Schedule RC-N, items 1 through 8, above (and not //////////////////
////////////////// //////////////////
reported in Schedule RC-C, part I, Memorandum //////////////////
////////////////// //////////////////
item 2)................................................ 1658 1659
1661 M.1.
2. Loans to finance commercial real estate, //////////////////
////////////////// //////////////////
construction, and land development activities //////////////////
////////////////// //////////////////
(NOT SECURED BY REAL ESTATE) included in //////////////////
////////////////// //////////////////
Schedule RC-N, items 4 and 7 above..................... 6558 6559
105 6560 1,919 M.2.
3. Loans secured by real estate in domestic offices RCON Bil Mil Thou RCON Bil Mil
Thou RCON Bil Mil Thou
(included in Schedule RC-N, item 1, above): //////////////////
////////////////// //////////////////
a. Construction and land development................... 2759 2769
0 3492 19,990 M.3.a.
b. Secured by farmland................................. 3493 3494
0 3495 144 M.3.b.
c. Secured by 1-4 family residential properties: //////////////////
////////////////// //////////////////
(1) Revolving, open-end loans secured by //////////////////
////////////////// //////////////////
1-4 family residential properties and //////////////////
////////////////// //////////////////
extended under lines of credit.................. 5398 5399
5,009 5400 10,700 M.3.c.(1)
(2) All other loans secured by 1-4 residential //////////////////
////////////////// //////////////////
properties...................................... 5401 5402
49,978 5403 100,900 M.3.c.(2)
d. Secured by multifamily (5 or more) residential //////////////////
////////////////// //////////////////
properties.......................................... 3499 3500
934 3501 9,456 M.3.d.
e. Secured by nonfarm nonresidential properties........ 3502 3503
9,886 3504 74,306 M.3.e.
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------
(Column A) (Column B)
Past due 30 Past due 90
through 89 days days or more
- ---------------------------------------
RFCD Bil Mil Thou RFCD Bil Mil
Thou
- ---------------------------------------
<S> <C> <C>
<C> <C>
4. Interest rate, foreign exchange rate, and other //////////////////
//////////////////
commodity and equity contracts: //////////////////
//////////////////
a. Book value of amounts carried as assets............. 3522 3528
0 M.4.a.
b. Replacement cost of contracts with a //////////////////
//////////////////
positive replacement cost........................... 3529 3530
0 M.4.b.
</TABLE>
30
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank : FLEET NATIONAL BANK Call Date: 12/31/96
ST-BK: 25-0590 FFIEC 031
Address : ONE MONARCH PLACE
Page RC-21
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: [0][2][4][9][9]
SCHEDULE RC-O--OTHER DATA FOR DEPOSIT INSURANCE ASSESSMENTS
--------
C475 <-
------------------
Dollar Amounts in Thousands
RCON Bil Mil Thou
- -------------------------------------------------------------------------------------------------
- ----------------------
<S>
<C> <C> <C>
1. Unposted debits (see instructions):
//////////////////
a. Actual amount of all unposted
debits........................................................ 0030 0 1.a
OR
//////////////////
b. Separate amount of unposted debits:
//////////////////
(1) Actual amount of unposted debits to demand
deposits..................................... 0031 N/A 1.b.(1)
(2) Actual amount of unposted debits to time and savings
deposits(1)........................ 0032 N/A 1.b.(2)
2. Unposted credits (see instructions):
//////////////////
a. Actual amount of all unposted
credits....................................................... 3510 0 2.a.
OR
//////////////////
b. Separate amount of unposted credits:
//////////////////
(1) Actual amount of unposted credits to demand
deposits.................................... 3512 N/A 2.b.(1)
(2) Actual amount of unposted credits to time and savings
deposits(1)....................... 3514 N/A 2.b.(2)
3. Uninvested trust funds (cash) held in bank's own trust department (not included in total
//////////////////
deposits in domestic
offices).................................................................. 3520 142,277
3.
4. Deposits of consolidated subsidiaries in domestic offices and in insured branches in Puerto
//////////////////
Rico and U.S. territories and possessions (not included in total deposits):
//////////////////
a. Demand deposits of consolidated
subsidiaries................................................ 2211 196,951 4.a.
b. Time and savings deposits(1) of consolidated
subsidiaries................................... 2351 15,807 4.b.
c. Interest accrued and unpaid on deposits of consolidated
subsidiaries........................ 5514 0 4.c.
5. Deposits in insured branches in Puerto Rico and U.S. territories and possessions:
//////////////////
a. Demand deposits in insured branches (included in Schedule RC-E, Part
II).................... 2229 0 5.a.
b. Time and savings deposits(1) in insured branches (included in Schedule RC-E, Part
II)....... 2383 0 5.b.
c. Interest accrued and unpaid on deposits in insured branches
//////////////////
(included in Schedule RC-G, item
1.b)....................................................... 5515 0 5.c.
------------------
------------------
Item 6 is not applicable to state nonmember banks that have not been authorized by the
//////////////////
Federal Reserve to act as pass-through correspondents.
//////////////////
6. Reserve balances actually passed through to the Federal Reserve by the reporting bank on
//////////////////
behalf of its respondent depository institutions that are also reflected as deposit
liabilities //////////////////
of the reporting bank:
//////////////////
a. Amount reflected in demand deposits (included in Schedule RC-E, Part I, item 4 or 5,
//////////////////
column
B)................................................................................... 2314
0 6.a.
b. Amount reflected in time and savings deposits(1) (included in Schedule RC-E, Part I,
//////////////////
item 4 or 5, column A or C, but not column
B)............................................... 2315 0 6.b.
7. Unamortized premiums and discounts on time and savings deposits:(1)
//////////////////
a. Unamortized
premiums........................................................................ 5516
748 7.a.
b. Unamortized
discounts....................................................................... 5517
0 7.b.
------------------
- -------------------------------------------------------------------------------------------------
- ----------------------
8. TO BE COMPLETED BY BANKS WITH "OAKAR DEPOSITS."
------------------
Total "Adjusted Attributable Deposits" of all institutions acquired under Section 5(d)(3) of
//////////////////
the Federal Deposit Insurance Act (from most recent FDIC Oakar Transaction
Worksheet(s))....... 5518 1,395,996 8.
------------------
- -------------------------------------------------------------------------------------------------
- ----------------------
------------------
9. Deposits in lifeline
accounts.................................................................. 5596 /////////////
9.
10. Benefit-responsive "Depository Institution Investment Contracts" (included in total
//////////////////
deposits in domestic
offices).................................................................. 8432 0
10.
- ----------------
(1) For FDIC insurance assessment purposes, "time and savings deposits" consists of
nontransaction accounts
and all transaction accounts other than demand deposits.
</TABLE>
31
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date:
12/31/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE
PAGE RC-22
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: [0][2][4][9][9]
SCHEDULE RC-O--CONTINUED
- -------------------
Dollar Amounts in Thousands RCON
Bil Mil Thou
- -------------------------------------------------------------------------------------------------
- ----------------------------------
<S> <C>
<C> <C>
11. Adjustments to demand deposits in domestic offices reported in Schedule RC-E for
//////////////////
certain reciprocal demand balances:
//////////////////
a. Amount by which demand deposits will be reduced if reciprocal demand balances
//////////////////
between the reporting bank and savings associations were reported on a net basis
//////////////////
rather than a gross basis in Schedule RC-E........................................ 8785
0 11.a.
b. Amount by which demand deposits would be increased if reciprocal demand balances
//////////////////
between the reporting bank and U.S. branches and agencies of foreign banks were
//////////////////
reported on a gross basis rather than a net basis in Schedule RC-E................ A181
0 11.b.
c. Amount by which demand deposits would be reduced if cash items in process of
//////////////////
collection were included in the calculation of net reciprocal demand balances
//////////////////
between the reporting bank and the domestic offices of U.S. banks and savings
//////////////////
associations in Schedule RC-E..................................................... A182
0 11.c.
- -------------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------
Dollar Amounts in Thousands RCON
Bil Mil Thou
- -------------------------------------------------------------------------------------------------
- ----------------------------------
<S> <C>
<C> <C>
1. Total deposits in domestic offices of the bank (sum of Memorandum items 1.a.(1) and
//////////////////
1.b.(1) must equal Schedule RC, item 13.a):
//////////////////
a. Deposit accounts of $100,000 or less:
//////////////////
(1) Amount of deposit accounts of $100,000 or less.................................. 2702
18,219,759 M.1.a.(1)
(2) Number of deposit accounts of $100,000 or less (TO BE Number
//////////////////
COMPLETED FOR THE JUNE REPORT ONLY)........................... RCON 3779 N/A
////////////////// M.1.a.(2)
b. Deposit accounts of more than $100,000:
//////////////////
(1) Amount of deposit accounts of more than $100,000................................ 2710
14,572,399 M.1.b.(1)
Number
//////////////////
(2) Number of deposit accounts of more than $100,000 ............. RCON 2772 28,722
////////////////// M.1.b.(2)
2. Estimated amount of uninsured deposits in domestic offices of the bank:
a. An estimate of your bank's uninsured deposits can be determined by multiplying the
number of deposit accounts of more than $100,000 reported in Memorandum item 1.b.(2)
above by $100,000 and subtracting the result from the amount of deposit accounts of
more than $100,000 reported in Memorandum item 1.b.(1) above.
Indicate in the appropriate box at the right whether your bank has a method or
procedure for determining a better estimate of uninsured deposits than the
YES NO
estimate described above.............................................................. 6861
/// X M.2.a.
b. If the box marked YES has been checked, report the estimate of uninsured deposits RCON
Bil Mil Thou
determined by using your bank's method or procedure................................. 5597
N/A M.2.b.
</TABLE>
- -------------------------------------------------------------------------------
Person to whom questions about the Reports of Condition and Income should be
directed: C477
PAMELA S. FLYNN, VICE PRESIDENT (401) 278-5194
- ------------------------------- ----------------------
Name and Title (TEXT 8901) Area code/phone number/extension (TEXT 8902)
32
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date:
12/31/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE
PAGE RC-23
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: [0][2][4][9][9]
SCHEDULE RC-R--REGULATORY CAPITAL
This schedule must be completed by all banks as follows: Banks that reported total assets of $1
billion or more in Schedule RC,
item 12, for June 30, 1995, must complete items 2 through 9 and Memoranda items 1 and 2. BANKS
WITH ASSETS OF LESS THAN $1 BILLION
MUST COMPLETE ITEMS 1 THROUGH 3 BELOW OR SCHEDULE RC-R IN ITS ENTIRETY, DEPENDING ON THEIR
RESPONSE TO ITEM 1 BELOW.
<S>
<C> <C> <C>
---------------
C480
1. TEST FOR DETERMINING THE EXTENT TO WHICH SCHEDULE RC-R MUST BE COMPLETED. TO BE
- --------------------------------
COMPLETED ONLY BY BANKS WITH TOTAL ASSETS OF LESS THAN $1 BILLION. Indicate in the
YES NO
appropriate box at the right whether the bank has total capital greater than or
- --------------------------------
equal to eight percent of adjusted total assets............................................
RCFD 6056 //// 1.
- --------------------------------
</TABLE>
For purposes of this test, adjusted total assets equals total assets less
cash, U.S. Treasuries, U.S. Government agency obligations, and 80 percent of
U.S. Government-sponsored agency obligations plus the allowance for loan and
lease losses and selected off-balance sheet items as reported on Schedule
RC-L (see instructions).
If the box marked YES has been checked, then the bank only has to complete
items 2 and 3 below. If the box marked NO has been checked, the bank must
complete the remainder of this schedule.
A NO response to item 1 does not necessarily mean that the bank's actual
risk-based capital ratio is less than eight percent or that the bank is not
in compliance with the risk-based capital guidelines.
<TABLE>
- -------------------------------------------------------------------
NOTE: ALL BANKS ARE REQUIRED TO COMPLETE ITEMS 2 AND 3 BELOW.
SEE OPTIONAL WORKSHEET FOR ITEMS 3.a THROUGH 3.f.
- -----------------------------------------
- ----------------------------------------------------------------------------- (Column A)
(Column B)
Dollar Amounts in Thousands Subordinated
Debt(1) Other
- ----------------------------------------------------------------------------- and Intermediate
Limited-Life
2. Subordinated debt(1) and other limited-life capital instruments (original Term Preferred
Stock Capital Instruments
weighted average maturity of at least five years) with a remaining
- -----------------------------------------
maturity of: RCFD Bil Mil Thou
RCFD Bil Mil Thou
- -----------------------------------------
<S> <C> <C>
<C> <C> <C>
a. One year or less....................................................... 3780 25,737
3786 0 2.a.
b. Over one year through two years........................................ 3781 737
3787 0 2.b.
c. Over two years through three years..................................... 3782 10,745
3788 0 2.c.
d. Over three years through four years.................................... 3783 0
3789 0 2.d.
e. Over four years through five years..................................... 3784 341,000
3790 0 2.e.
f. Over five years........................................................ 3785 760,000
3791 0 2.f.
3. AMOUNTS USED IN CALCULATING REGULATORY CAPITAL RATIOS (REPORT AMOUNTS
//////////////////
DETERMINED BY THE BANK FOR ITS OWN INTERNAL REGULATORY CAPITAL ANALYSES
//////////////////
CONSISTENT WITH APPLICABLE CAPITAL STANDARDS):
-------------------------
RCFD Bil Mil Thou
-------------------------
a. TIER 1
CAPITAL................................................................................ 8274
3,756,621 3.a.
b. TIER 2
CAPITAL................................................................................ 8275
1,688,820 3.b.
c. TOTAL RISK-BASED
CAPITAL...................................................................... 3792 5,445,441
3.c.
d. EXCESS ALLOWANCE FOR LOAN AND LEASE
LOSSES.................................................... A222 200,236 3.d.
e. RISK-WEIGHTED ASSETS (NET OF ALL DEDUCTIONS, INCLUDING EXCESS
ALLOWANCE)...................... A223 45,925,732 3.e.
f. "AVERAGE TOTAL ASSETS" (NET OF ALL ASSETS DEDUCTED FROM TIER 1
CAPITAL)(2).................... A224 46,290,168 3.f.
------------------
</TABLE>
<TABLE>
- -----------------------------------------
(Column A)
(Column B)
ITEMS 4-9 AND MEMORANDA ITEMS 1 AND 2 ARE TO BE COMPLETED Assets
Credit Equiv-
BY BANKS THAT ANSWERED NO TO ITEM 1 ABOVE AND Recorded
alent Amount
BY BANKS WITH TOTAL ASSETS OF $1 BILLION OR MORE. on the
of Off-Balance
Balance Sheet
Sheet Items(3)
- -----------------------------------------
RCFD Bil Mil Thou
RCFD Bil Mil Thou
- -----------------------------------------
<S> <C> <C>
<C> <C> <C>
4. Assets and credit equivalent amounts of off-balance sheet items
assigned to the Zero percent risk category: //////////////////
//////////////////
a. Assets recorded on the balance sheet: //////////////////
//////////////////
(1) Securities issued by, other claims on, and claims unconditionally //////////////////
//////////////////
guaranteed by, the U.S. Government and its agencies and //////////////////
//////////////////
other OECD central governments..................................... 3794 1,519,575
////////////////// 4.a.(1)
(2) All other.......................................................... 3795 1,316,143
////////////////// 4.a.(2)
b. Credit equivalent amount of off-balance sheet items.................... //////////////////
3796 1,079,527 4.b
</TABLE>
- -------------
(1) Exclude mandatory convertible debt reported in Schedule RC-M, item 7.
(2) Do not deduct excess allowance for loan and lease losses.
(3) Do not report in column B the risk-weighted amount of assets reported in
column A.
33
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank : FLEET NATIONAL BANK Call Date: 12/31/96
ST-BK: 25-0590 FFIEC 031
Address : ONE MONARCH PLACE
Page RC-24
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: [0][2][4][9][9]
SCHEDULE RC-R--CONTINUED
Column A)
(Column B)
Assets
Credit Equiv-
Recorded
alent Amount
on the
of Off-Balance
Balance Sheet
Sheet Items(1)
- --------------------------------------
Dollar Amounts in Thousands RCFD BIL MIL THOU
RCFD BIL MIL THOU
- -------------------------------------------------------------------------------------------------
- ---------------------
<S> <C> <C>
<C> <C> <C>
5. Assets and credit equivalent amounts of off-balance sheet items
////////////////// //////////////////
assigned to the 20 percent risk category:
////////////////// //////////////////
a. Assets recorded on the balance sheet:
////////////////// //////////////////
(1) Claims conditionally guaranteed by the U.S. Government and
////////////////// //////////////////
its agencies and other OECD central governments.................... 3798
726,530 ////////////////// 5.a.(1)
(2) Claims collateralized by securities issued by the U.S. Government
////////////////// //////////////////
and its agencies and other OECD central governments; by
////////////////// //////////////////
securities issued by U.S. Government-sponsored agencies; and
////////////////// //////////////////
by cash on deposit................................................. 3799
0 ////////////////// 5.a.(2)
(3) All other.......................................................... 3800
7,055,416 ////////////////// 5.a.(3)
b. Credit equivalent amount of off-balance sheet items....................
////////////////// 3801 1,058,252 5.b.
6. Assets and credit equivalent amounts of off-balance sheet items
////////////////// //////////////////
assigned to the 50 percent risk category:
////////////////// //////////////////
a. Assets recorded on the balance sheet................................... 3802
5,371,795 ////////////////// 6.a.
b. Credit equivalent amount of off-balance sheet items....................
////////////////// 3803 866,687 6.b.
7. Assets and credit equivalent amounts of off-balance sheet items
////////////////// //////////////////
assigned to the 100 percent risk category:
////////////////// //////////////////
a. Assets recorded on the balance sheet................................... 3804
31,276,374 ////////////////// 7.a.
b. Credit equivalent amount of off-balance sheet items....................
////////////////// 3805 10,715,771 7.b.
8. On-balance sheet asset values excluded from the calculation of the
////////////////// //////////////////
risk-based capital ratio (2).............................................. 3806
91,771 ////////////////// 8.
9. Total assets recorded on the balance sheet (sum of
////////////////// //////////////////
items 4.a, 5.a, 6.a, 7.a, and 8, column A) (must equal Schedule RC,
////////////////// //////////////////
item 12 plus items 4.b and 4.c)........................................... 3807
47,357,604 ////////////////// 9.
- --------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Memoranda
------------------
Dollar Amounts in Thousands
RCFD Bil Mil Thou
- -------------------------------------------------------------------------------------------------
- ---------------------
<S>
<C> <C> <C>
1. Current credit exposure across all off-balance sheet derivative contracts covered by the
//////////////////
risk-based capital
standards.................................................................. 8764 236,389
M.1.
------------------
- ----------------------------------------------------------------------
With a remaining maturity of
- ----------------------------------------------------------------------
(Column A) (Column B)
(Column C)
One year or less Over one year
Over five years
through five years
2. Notional principal amounts of
- ----------------------------------------------------------------------
off-balance sheet derivative contracts(3): RCFD Tril Bil Mil Thou RCFD Tril Bil Mil Thou
RCFD Tril Bil Mil Thou
- ----------------------------------------------------------------------
<C> <C> <C> <C>
<C> <C> <C>
a. Interest rate contracts................ 3809 7,502,891 8766 33,994,382
8767 779,970 M.2.a.
b. Foreign exchange contracts............. 3812 1,366,429 8769 84,993
8770 0 M.2.b.
c. Gold contracts......................... 8771 33,478 8772 0
8773 0 M.2.c.
d. Other precious metals contracts........ 8774 13,371 8775 0
8776 0 M.2.d.
e. Other commodity contracts.............. 8777 0 8778 0
8779 0 M.2.e.
f. Equity derivative contracts............ A000 0 A001 0
A002 0 M.2.f.
- ----------------------------------------------------------------------
- -----------------
(1) Do not report in column B the risk-weighted amount of assets reported in column A.
(2) Include the difference between the fair value and the amortized cost of available-for-sale
securities in item 8 and report
the amortized cost of these securities in items 4 through 7 above. Item 8 also includes
on-balance sheet asset values (or
portions thereof) of off-balance sheet interest rate, foreign exchange rate, and commodity
contracts and those contracts (e.g.,
futures contracts) not subject to risk-based capital. Exclude from item 8 margin accounts
and accrued receivables not included
in the calculation of credit equivalent amounts of off-balance sheet derivatives as well as
any portion of the allowance for
loan and lease losses in excess of the amount that may be included in Tier 2 capital.
(3) Exclude foreign exchange contracts with an original maturity of 14 days or less and all
futures contracts.
</TABLE>
34
<PAGE>
<TABLE>
<S> <C> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date:
12/31/96 ST-BK: 25-0590 FFIEC 031
Address: One Monarch Place
Page RC-25
City, State Zip: Springfield, MA 01102
FDIC Certificate No.: [0][2][4][9][9]
</TABLE>
OPTIONAL NARRATIVE STATEMENT CONCERNING THE AMOUNTS
REPORTED IN THE REPORTS OF CONDITION AND INCOME
at close of business on December 31, 1996
Fleet National Bank Springfield , Massachusetts
- -----------------------------------------------------------------------------
Legal Title of Bank City State
The management of the reporting bank may, if it wishes, submit a brief
narrative statement on the amounts reported in the Reports of Condition and
Income. This optional statement will be made available to the public, along
with the publicly available data in the Reports of Condition and Income, in
response to any request for individual bank report data. However, the
information reported in column A and in all of Memorandum item 1 of Schedule
RC-N is regarded as confidential and will not be released to the public. BANKS
CHOOSING TO SUBMIT THE NARRATIVE STATEMENT SHOULD ENSURE THAT THE STATEMENT
DOES NOT CONTAIN THE NAMES OR OTHER IDENTIFICATIONS OF INDIVIDUAL BANK
CUSTOMERS, REFERENCES TO THE AMOUNTS REPORTED IN THE CONFIDENTIAL ITEMS IN
SCHEDULE RC-N, OR ANY OTHER INFORMATION THAT THEY ARE NOT WILLING TO HAVE MADE
PUBLIC OR THAT WOULD COMPROMISE THE PRIVACY OF THEIR CUSTOMERS. Banks choosing
not to make a statement may check the "No comment" box below and should make no
entries of any kind in the space provided for the narrative statement; i.e., DO
NOT enter in this space such phrases as "No statement," "Not applicable,"
"N/A," "No comment," and "None."
The optional statement must be entered on this sheet. The statement should not
exceed 100 words. Further, regardless of the number of words, the statement
must not exceed 750 characters, including punctuation, indentation, and
standard spacing between words and sentences. If any submission should exceed
750 characters, as defined, it will be truncated at 750 characters with no
notice to the submitting bank and the truncated statement will appear as the
bank's statement both on agency computerized records and in computer-file
releases to the public.
All information furnished by the bank in the narrative statement must be
accurate and not misleading. Appropriate efforts shall be taken by the
submitting bank to ensure the statement's accuracy. The statement must be
signed, in the space provided below, by a senior officer of the bank who
thereby attests to its accuracy.
If, subsequent to the original submission, material changes are submitted for
the data reported in the Reports of Condition and Income, the existing
narrative statement will be deleted from the files, and from disclosure; the
bank, at its option, may replace it with a statement, under signature,
appropriate to the amended data.
The optional narrative statement will appear in agency records and in release
to the public exactly as submitted (or amended as described in the preceding
paragraph) by the management of the bank (except for the truncation of
statements exceeding the 750-character limit described above). THE STATEMENT
WILL NOT BE EDITED OR SCREENED IN ANY WAY BY THE SUPERVISORY AGENCIES FOR
ACCURACY OR RELEVANCE. DISCLOSURE OF THE STATEMENT SHALL NOT SIGNIFY THAT ANY
FEDERAL SUPERVISORY AGENCY HAS VERIFIED OR CONFIRMED THE ACCURACY OF THE
INFORMATION CONTAINED THEREIN. A STATEMENT TO THIS EFFECT WILL APPEAR ON ANY
PUBLIC RELEASE OF THE OPTIONAL STATEMENT SUBMITTED BY THE MANAGEMENT OF THE
REPORTING BANK.
- --------------------------------------------------------------------------------
No comment [X] (RCON 6979) C471 C472
--- ------------
BANK MANAGEMENT STATEMENT (please type or print clearly):
(TEXT 6980)
/s/ Jan 23, 1997
------------------------ ------------------------
Signature of Executive Date of Signature
Officer of Bank
35
<PAGE>
EXHIBIT 99.1
NOTICE OF GUARANTEED DELIVERY
FOR
11 3/8% CUMULATIVE EXCHANGEABLE PREFERRED STOCK
OF
AMERICAN RADIO SYSTEMS CORPORATION
As set forth in the Prospectus, dated May __, 1997 (the "Prospectus"), of
American Radio Systems Corporation (the "Company"), in the accompanying Letter
of Transmittal and instructions thereto (the "Letter of Transmittal"), this form
or one substantially equivalent hereto must be used to accept the Company's
exchange offer (the "Exchange Offer") to exchange all of its outstanding 11 3/8%
Cumulative Exchangeable Preferred Stock, $100 liquidation preference per share
("Old Preferred Stock"), for shares of 11 3/8% Cumulative Exchangeable Preferred
Stock, Series B, $100 liquidation preference per share ("New Preferred Stock"),
if (i) certificates representing Old Preferred Stock to be tendered for exchange
are not lost but are not immediately available, (ii) time will not permit the
Letter of Transmittal, certificates representing such Old Preferred Stock or
other required documents to reach the Exchange Agent prior to the Expiration
Date or (iii) the procedures for book-entry transfer cannot be completed prior
to the Expiration Date. This form may be delivered by an Eligible Institution
by mail or hand delivery or transmitted, via telegram, telefax or facsimile, to
the Exchange Agent as set forth below. All capitalized terms used herein but
not defined herein shall have the meanings ascribed to them in the Prospectus.
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON JUNE __, 1997 UNLESS THE OFFER IS EXTENDED (THE
"EXPIRATION DATE"). TENDERS OF OLD PREFERRED STOCK MAY BE
WITHDRAWN AT ANY TIME PRIOR TO 5:00 P.M. ON THE EXPIRATION
DATE.
The Exchange Agent:
HARRIS TRUST COMPANY OF NEW YORK
<TABLE>
<CAPTION>
By Mail: By Facsimile: By Hand or Overnight Courier:
<S> <C> <C>
Harris Trust Company of (212) 701-7636 Harris Trust Company of
New York New York
P.O. Box 1010 Confirm by Telephone: 77 Water Street,
Wall Street Station 4th Floor
New York, NY 10268 (212) 701-7624 New York, NY 10004
Attention: Mark Zimkind Attention: Mark Zimkind
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS, OR TRANSMISSION VIA TELEGRAPH,
TELEX OR FACSIMILE, OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID
DELIVERY.
This form is not to be used to guarantee signatures. If a signature on the
Letter of Transmittal is required to be guaranteed by an "Eligible Institution"
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
Ladies and Gentlemen:
The undersigned hereby tender(s) to the Company, upon the terms and subject
to the conditions set forth in the Prospectus and the Letter of Transmittal,
receipt of which is hereby acknowledged, the aggregate number of shares of Old
Preferred Stock set forth below pursuant to the guaranteed delivery procedures
set forth in the Prospectus.
The undersigned understands that tenders of Old Preferred Stock pursuant to
the Exchange Offer may not be withdrawn after 5:00 p.m., New York City time on
the Expiration Date. Tenders of Old Preferred Stock may also be withdrawn if
the Exchange Offer is terminated without any such Old Preferred Stock being
purchased thereunder or as otherwise provided in the Prospectus.
All authority herein conferred or agreed to be conferred by this Notice of
Guaranteed Delivery shall survive the death, incapacity or dissolution of the
undersigned and every obligation of the undersigned under this Notice of
Guaranteed Delivery shall be binding upon the heirs, personal representatives,
executors, administrators, successors, assigns, trustees in bankruptcy and other
legal representatives of the undersigned.
<PAGE>
PLEASE SIGN AND COMPLETE
Signature(s) of Registered Owner(s) Name(s) of Registered Holder(s):
or Authorized Signatory:
- ----------------------------------- --------------------------------------
- ----------------------------------- --------------------------------------
Number of Shares of Old Preferred Address:
Stock Tendered:
-------------------
- ----------------------------------- --------------------------------------
- ----------------------------------- --------------------------------------
Certificate No(s). of Old Preferred Area Code and Telephone No.:
Stock (if available):
-------------
- -----------------------------------
- ----------------------------------- If Old Preferred Stock will be
delivered by book-entry transfer at
The Depository Trust Company, insert,
DTC Book-Entry Account No. and
Transaction Code No.
- ----------------------------------- --------------------------------------
Date:
------------------------------
================================================================================
This Notice of Guaranteed Delivery must be signed by the registered holder(s) of
Old Preferred Stock exactly as its (their) name(s) appear on certificates for
the Old Preferred Stock or on a security position listing as the owner of Old
Preferred Stock, or by person(s) authorized to become registered Holder(s) by
endorsements and documents transmitted with this Notice of Guaranteed Delivery.
If signature is by a trustee, executor, administrator, guardian, attorney-in-
fact, officer or other person acting in a fiduciary or representative capacity,
such person must provide the following information:
Please print name(s) and address(es)
Name(s):
_______________________________________________________________________
_______________________________________________________________________
Capacity:
______________________________________________________________________
______________________________________________________________________
Address(es):
___________________________________________________________________
___________________________________________________________________
Do not send Old Preferred Stock with this form. Old Preferred Stock should be
sent to the Exchange Agent together with a properly completed and duly executed
Letter of Transmittal.
================================================================================
-2-
<PAGE>
================================================================================
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a member firm of a registered national securities exchange
or of the National Association of Securities Dealers, Inc. or a commercial bank
or trust company having an office or a correspondent in the United States,
hereby (a) represents that each holder of Old Preferred Stock on whose behalf
this tender is being made "own(s)" the Old Preferred Stock covered hereby within
the meaning of Rule 14c-4 under the Securities Exchange Act of 1934, as amended,
(b) represents that such tender of Old Preferred Stock complied with such Rule
14e-4, and (c) guarantees that, within three New York Stock Exchange trading
days from the date of this Notice of Guaranteed Delivery, a properly completed
and duly executed Letter of Transmittal (or a facsimile thereof), together with
certificates representing the Old Preferred Stock covered hereby in proper form
for transfer (or confirmation of the book-entry transfer of such Old Preferred
Stock into the Exchange Agent's account at The Depository Trust Company,
pursuant to the procedure for book-entry transfer set forth in the Prospectus)
and required documents will be deposited by the undersigned with the Exchange
Agent.
THE UNDERSIGNED ACKNOWLEDGES THAT IT MUST DELIVER THE LETTER OF TRANSMITTAL
AND OLD PREFERRED STOCK TENDERED HEREBY TO THE EXCHANGE AGENT WITHIN THE TIME
PERIOD SET FORTH ABOVE AND THAT FAILURE TO DO SO COULD RESULT IN FINANCIAL LOSS
TO THE UNDERSIGNED.
Name of Firm:______________________________ _________________________________
Authorized Signature
Address:___________________________________ Name:____________________________
___________________________________________ Title:___________________________
Area Code and Telephone No.:_______________ Date:_____________________________
================================================================================
-3-
<PAGE>
EXHIBIT 99.2
LETTER OF TRANSMITTAL
FOR
11 3/8% CUMULATIVE EXCHANGEABLE PREFERRED STOCK
OF
AMERICAN RADIO SYSTEMS CORPORATION
PURSUANT TO THE
EXCHANGE OFFER
IN RESPECT OF
ALL OF ITS OUTSTANDING 11 3/8% CUMULATIVE EXCHANGEABLE PREFERRED STOCK
FOR
11 3/8% CUMULATIVE EXCHANGEABLE PREFERRED STOCK, SERIES B
__________________
PURSUANT TO THE PROSPECTUS DATED MAY __, 1997
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON JUNE __,
1997 UNLESS THE EXCHANGE OFFER IS EXTENDED (THE "EXPIRATION DATE"). TENDERS OF
OLD PREFERRED STOCK MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE EXPIRATION DATE.
To: Harris Trust Company of New York, Exchange Agent
<TABLE>
<S> <C> <C>
By Mail: By Facsimile: By Hand or Overnight Courier:
Harris Trust Company (212) 701-7636 Harris Trust Company
of New York of New York
P.O. Box 1010 Confirm by Telephone: 77 Water Street
Wall Street Station 4th Floor
New York, NY 10268 (212) 701-7624 New York, NY 10004
Attention: Reorganization Department Attention: Reorganization Department
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS, OR TRANSMISSION VIA
TELEGRAM, TELEX OR FACSIMILE, OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE
A VALID DELIVERY. THE INSTRUCTIONS CONTAINED HEREIN SHOULD BE READ CAREFULLY
BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
HOLDERS WHO WISH TO BE ELIGIBLE TO RECEIVE NEW PREFERRED STOCK FOR THEIR
OLD PREFERRED STOCK PURSUANT TO THE EXCHANGE OFFER MUST VALIDLY TENDER (AND NOT
WITHDRAW) THEIR OLD PREFERRED STOCK TO THE EXCHANGE AGENT PRIOR TO THE
EXPIRATION DATE.
By execution hereof, the undersigned acknowledges receipt of the Prospectus
(the "Prospectus"), dated May __, 1997, of American Radio Systems Corporation, a
Delaware corporation (the "Company"), which, together with this Letter of
Transmittal and the instructions hereto (the "Letter of Transmittal"),
constitute the Company's offer (the "Exchange Offer") to exchange one share of
its 11 3/8% Cumulative Exchangeable Preferred Stock, Series B ("New Preferred
Stock") that have been registered under the Securities Act of 1933, as amended
(the "Securities Act"), pursuant to a Registration Statement of which the
Prospectus constitutes a part, for each share outstanding of its 11 3/8%
<PAGE>
Cumulative Exchangeable Preferred Stock ("Old Preferred Stock"), upon the terms
and subject to the conditions set forth in the Prospectus.
This Letter of Transmittal is to be used by Holders if: (i) certificates
representing Old Preferred Stock are to be physically delivered to the Exchange
Agent herewith by Holders; (ii) tender of Old Preferred Stock is to be made by
book-entry transfer to the Exchange Agent's account at The Depository Trust
Company ("DTC") pursuant to the procedures set forth in the Prospectus under
"The Exchange Offer--Procedures for Tendering" by any financial institution that
is a participant in DTC and whose name appears on a security position listing as
the owner of the Old Preferred Stock (such participants, acting on behalf of
Holders, are referred to herein, together with such Holders, as "Acting
Holders"); or (iii) tender of Old Preferred Stock is to be made according to the
guaranteed delivery procedures set forth in the Prospectus under "The Exchange
Offer--Procedures for Tendering." DELIVERY OF DOCUMENTS TO DTC DOES NOT
CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
The term "Holder" with respect to the Exchange Offer means any person: (i)
in whose name Old Preferred Stock is registered on the books of the Company or
any other person who has obtained a properly completed stock power from the
registered Holder; or (ii) whose Old Preferred Stock is held of record by DTC
who desires to deliver such Old Preferred Stock by book-entry transfer at DTC.
The undersigned has completed, executed and delivered this Letter of
Transmittal to indicate the action the undersigned desires to take with respect
to the Exchange Offer.
All capitalized terms used herein and not defined herein shall have the
meaning ascribed to them in the Prospectus.
The instructions included with this Letter of Transmittal must be followed.
Questions and requests for assistance or for additional copies of the
Prospectus, this Letter of Transmittal and the Notice of Guaranteed Delivery may
be directed to the Exchange Agent. See Instruction 8 herein.
HOLDERS WHO WISH TO ACCEPT THE EXCHANGE OFFER AND TENDER THEIR OLD
PREFERRED STOCK MUST COMPLETE THIS LETTER OF TRANSMITTAL IN ITS ENTIRETY.
-2-
<PAGE>
List below the Old Preferred Stock to which this Letter of Transmittal
relates. If the space provided below is inadequate, list the certificate
numbers and number of shares on a separately executed schedule and affix the
schedule to this Letter of Transmittal.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
DESCRIPTION OF OLD PREFERRED STOCK
- --------------------------------------------------------------------------------
<S> <C> <C>
NAME(S) AND ADDRESS(ES) OF HOLDER(S) CERTIFICATE NUMBER OF SHARES
(PLEASE FILL IN, IF BLANK) NUMBER(S)* TENDERED (IF
(ATTACH SIGNED LESS THAN ALL)**
LIST IF
NECESSARY)
</TABLE>
- --------------------------------------------------------------------------------
----------------------------------
----------------------------------
----------------------------------
----------------------------------
----------------------------------
----------------------------------
----------------------------------
----------------------------------
----------------------------------
----------------------------------
----------------------------------
----------------------------------
----------------------------------
- --------------------------------------------------------------------------------
TOTAL NUMBER OF SHARES OF OLD PREFERRED STOCK TENDERED
- --------------------------------------------------------------------------------
* Need not be completed by Holders tendering by book-entry transfer.
** Need not be completed by Holders who wish to tender with respect to all Old
Preferred Stock listed. See Instruction 2.
- --------------------------------------------------------------------------------
-3-
<PAGE>
[ ] CHECK HERE IF TENDERED OLD PREFERRED STOCK IS BEING DELIVERED BY DTC TO
THE EXCHANGE AGENT'S ACCOUNT AT DTC AND COMPLETE THE FOLLOWING:
Name of Tendering Institution:___________________________________________
DTC Book-Entry Account No.:______________________________________________
Transaction Code No.:____________________________________________________
If Holders desire to tender Old Preferred Stock pursuant to the Exchange Offer
and (i) certificates representing such Old Preferred Stock are not lost but are
not immediately available, (ii) time will not permit this Letter of Transmittal,
certificates representing such Old Preferred Stock or other required documents
to reach the Exchange Agent prior to the Expiration Date or (iii) the procedures
for book-entry transfer cannot be completed prior to the Expiration Date, such
Holders may effect a tender of such Old Preferred Stock in accordance with the
guaranteed delivery procedures set forth in the Prospectus under "The Exchange
Offer--Procedures for Tendering."
[ ] CHECK HERE IF TENDERED OLD PREFERRED STOCK IS BEING DELIVERED PURSUANT TO
A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY DELIVERED TO THE EXCHANGE AGENT
AND COMPLETE THE FOLLOWING:
Name(s) of Holder(s) of Old Preferred Stock:______________________________
Window Ticket No. (if any):_______________________________________________
Date of Execution of
Notice of Guaranteed Delivery:____________________________________________
Name of Eligible Institution that
Guaranteed Delivery:______________________________________________________
If Delivered by Book-Entry Transfer:
Name of Tendering Institution:____________________________________________
DTC Book-Entry Account No.:_______________________________________________
Transaction Code No.:_____________________________________________________
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE ADDITIONAL
COPIES OF THE PROSPECTUS AND COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name:_____________________________________________________________________
Address:__________________________________________________________________
__________________________________________________________________
Number of Copies Requested: __________________
-4-
<PAGE>
Gentlemen:
Subject to the terms of the Exchange Offer, the undersigned hereby tenders
to the Company the number of shares of Old Preferred Stock indicated above.
Subject to and effective upon the acceptance for exchange of the number of
shares of Old Preferred Stock tendered in accordance with this Letter of
Transmittal, the undersigned sells, assigns and transfers to, or upon the order
of, the Company all right, title and interest in and to each shares of Old
Preferred Stock tendered hereby. The undersigned hereby irrevocably constitutes
and appoints the Exchange Agent its agent and attorney-in-fact with respect to
the tendered Old Preferred Stock with full power of substitution to (i) deliver
certificates for such Old Preferred Stock to the Company, or transfer ownership
of such Old Preferred Stock on the account books maintained by DTC, together, in
either such case, with all accompanying evidences of transfer and authenticity
to, or upon the order of, the Company and (ii) present such Old Preferred Stock
for transfer on the books of the Company and receive all benefits and otherwise
exercise all rights of beneficial ownership of such Old Preferred Stock, all in
accordance with the terms of the Exchange Offer. The power of attorney granted
in this paragraph shall be deemed irrevocable and coupled with an interest.
The undersigned hereby represents and warrants that he, she or it has full
power and authority to tender, sell, assign and transfer the Old Preferred Stock
tendered hereby and that the Company will acquire good and unencumbered title
thereto, free and clear of all liens, restrictions, charges and encumbrances and
not subject to any adverse claim, when the same are acquired by the Company.
The undersigned also acknowledges that the Exchange Offer is being made in
reliance upon an interpretation by the staff of the Securities and Exchange
Commission that the New Preferred Stock issued in exchange for the Old Preferred
Stock pursuant to the Exchange Offer may be offered for sale, resold and
otherwise transferred by holders thereof (other than any such holder that is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act) without compliance with the registration and prospectus delivery provisions
of the Securities Act provided that such New Preferred Stock is acquired in the
ordinary course of such holder's business and such holder has no arrangement
with any person to participate in the distribution of such New Preferred Stock.
The undersigned represents that (i) the New Preferred Stock acquired
pursuant to the Exchange Offer is being obtained in the ordinary course of such
holder's business, (ii) such holder has no arrangements with any person to
participate in the distribution of such New Preferred Stock and (iii) such
holder is not an "affiliate," as defined under Rule 405 of the Securities Act,
of the Company or, if such holder is an affiliate, that such holder will comply
with the registration and prospectus delivery requirements of the Securities Act
to the extent applicable. If the undersigned is not a broker-dealer, the
undersigned represents that it is not engaged in, and does not intend to engage
in, a distribution of New Preferred Stock. If the undersigned is a broker-
dealer that will receive New Preferred Stock for its own account in exchange for
Old Preferred Stock that was acquired as a result of market-making activities or
other trading activities, it acknowledges that it will deliver a prospectus in
connection with any resale of such New Preferred Stock; however, by so
acknowledging and by delivering a prospectus, the undersigned will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
The undersigned will upon request, execute and deliver any additional
documents deemed by the Exchange Agent or the Company to be necessary or
desirable to complete the assignment and transfer of the Old Preferred Stock
tendered hereby.
For purposes of the Exchange Offer, the Company shall be deemed to have
accepted validly tendered Old Preferred Stock when, as and if the Company has
given oral or written notice thereof to the Exchange Agent. If any Old
Preferred Stock is not accepted for exchange pursuant to the Exchange Offer for
any reason, certificates for any such unaccepted Old Preferred Stock will be
returned (except as noted below with respect to tenders through DTC), without
expense, to the undersigned at the address shown below or at a different address
shown below under "Special Issuance Instructions" as promptly as practicable
after the Expiration Date.
All authority conferred or agreed to by this Letter of Transmittal shall
survive the death, incapacity or dissolution of the undersigned and every
obligation under this Letter of Transmittal shall be binding upon the
-5-
<PAGE>
undersigned's heirs, personal representatives, executors, administrators,
trustees in bankruptcy, other legal representatives, successors and assigns.
The undersigned understands that tender of Old Preferred Stock pursuant to
the procedures described under the caption "The Exchange Offer--Procedures for
Tendering" in the Prospectus and in the instructions hereto will constitute a
binding agreement between the undersigned and the Company upon the terms and
subject to the conditions of the Exchange Offer.
Unless otherwise indicated under "Special Issuance Instructions" please
issue the certificates representing the New Preferred Stock issued in exchange
for the Old Preferred Stock accepted for exchange and return any Old Preferred
Stock not tendered or not exchanged, in the name(s) of the undersigned (or in
either such event in the case of Old Preferred Stock tendered by DTC, by credit
to the account of the undersigned at DTC). Similarly, unless otherwise
indicated under "Special Delivery Instructions," please send the certificates
representing the New Preferred Stock issued in exchange for the Old Preferred
Stock accepted for exchange and any certificates for Old Preferred Stock not
tendered or not exchanged (and accompanying documents, as appropriate) to the
undersigned at the address shown below the undersigned's signatures, unless, in
either event, tender is being made through DTC. In the event that both "Special
Issuance Instructions" and "Special Delivery Instructions" are completed issue
the certificates representing the New Preferred Stock issued in exchange for the
Old Preferred Stock accepted for exchange and return any Old Preferred Stock not
tendered or not exchanged in the name(s) of, and send said certificates to, the
person(s) so indicated. The undersigned recognizes that the Company has no
obligation pursuant to the "Special Issuance Instructions" and "Special Delivery
Instructions" to transfer any Old Preferred Stock from the name of the
registered holder(s) thereof if the company does not accept for exchange any of
the Old Preferred Stock so tendered.
-6-
<PAGE>
- --------------------------------------------------------------------------------
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS OF
OLD PREFERRED STOCK REGARDLESS OF WHETHER OLD PREFERRED STOCK IS BEING
PHYSICALLY
DELIVERED HEREWITH)
This Letter of Transmittal must be signed by the Holder(s) of Old Preferred
Stock exactly as their name(s) appear(s) on certificate(s) for Old Preferred
Stock or, if tendered by a participant in DTC, exactly as such participant's
name appears on a security position listing as the owner of Old Preferred Stock,
or by person(s) authorized to become registered Holder(s) by endorsements and
documents transmitted with this Letter of Transmittal. If signature is by a
trustee, executor, administrator, guardian, attorney-in-fact, officer or other
person acting in a fiduciary or representative capacity, such person must set
forth his or her full title below under "Capacity" and submit evidence
satisfactory to the Company of such person's authority to so act. See
Instruction 3 herein.
If the signature appearing below is not of the registered Holder(s) of the
Old Preferred Stock, then the registered Holder(s) must sign a valid proxy.
X..................................... Date:.................................
X..................................... Date:.................................
Signature(s) of Holder(s) or Authorized Signatory
Name(s):.............................. Address:..............................
.............................. ..............................
(Please Print) (Including Zip Code)
Capacity:............................. Area Code and Telephone No.:..........
Social Security No.: .................
PLEASE COMPLETE FORM W-9 HEREIN
SIGNATURE GUARANTEE (SEE INSTRUCTION 3 HEREIN)
Certain Signatures Must Be Guaranteed by an Eligible Institution
................................................................................
(Name of Eligible Institution Guaranteeing Signatures)
................................................................................
(Address (including zip code) and Telephone Number (including area code) of
Firm)
................................................................................
(Authorized Signature)
................................................................................
(Printed Name)
................................................................................
(Title)
Date:.........................................
- --------------------------------------------------------------------------------
-7-
<PAGE>
- --------------------------------------------------------------------------------
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTION 4 HEREIN)
To be completed ONLY if certificates for shares of Old Preferred Stock not
tendered are to be issued in the name of, or certificates for shares of New
Preferred Stock issued pursuant to the Exchange Offer are to be issued in the
name of, someone other than the person or persons whose signature(s) appear(s)
within this Letter of Transmittal or issued to an address different from that
shown in the box entitled "Description of Old Preferred Stock" within this
Letter of Transmittal, or if Old Preferred Stock tendered by book-entry transfer
that is not accepted for exchange is to be credited to an account maintained at
DTC.
Name:
...............................................................................
(Please Print)
Address:
...............................................................................
(Please Print)
...............................................................................
Zip Code
...............................................................................
Taxpayer Identification or Social Security Number
(See Form W-9 herein)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTION 4 HEREIN)
To be completed ONLY if certificates for shares of Old Preferred Stock not
tendered or not accepted for exchange or certificates for shares of New
Preferred Stock issued pursuant to the Exchange Offer are to be sent to someone
other than the person or persons whose signature(s) appear(s) within this Letter
of Transmittal or to an address different from that shown in the box entitled
"Description of Old Preferred Stock" within this Letter of Transmittal.
Name:
................................................................................
(Please Print)
Address:
................................................................................
(Please Print)
................................................................................
Zip Code
................................................................................
Taxpayer Identification or Social Security Number
(See Form W-9 herein)
- --------------------------------------------------------------------------------
-8-
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS
OF THE EXCHANGE OFFER AND THE SOLICITATION
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND OLD PREFERRED STOCK. The
certificates for the tendered Old Preferred Stock (or a confirmation of a book-
entry transfer into the Exchange Agent's account at DTC of all Old Preferred
Stock delivered electronically), as well as a properly completed and duly
executed copy of this Letter of Transmittal or facsimile hereof and any other
documents required by this Letter of Transmittal must be received by the
Exchange Agent at its address set forth herein prior to 5:00 P.M., New York City
time, on the Expiration Date. The method of delivery of the tendered Old
Preferred Stock, this Letter of Transmittal and all other required documents to
the Exchange Agent is at the election and risk of the Holder and, except as
otherwise provided below, the delivery will be deemed made only when actually
received by the Exchange Agent. Instead of delivery by mail, it is recommended
that the Holder use an overnight or hand delivery service. In all cases,
sufficient time should be allowed to assure timely delivery. No Letter of
Transmittal or Old Preferred Stock should be sent to the Company. Delivery to
DTC does not constitute delivery to the Exchange Agent.
Holders who wish to tender their Old Preferred Stock and (i) whose Old
Preferred Stock are not immediately available or (ii) who cannot deliver their
Old Preferred Stock, this Letter of Transmittal or any other documents required
hereby to the Exchange Agent prior to the Expiration Date must tender their Old
Preferred Stock and follow the guaranteed delivery procedures set forth in the
Prospectus. Pursuant to such procedures: (i) such tender must be made by or
through an Eligible Institution; (ii) prior to the Expiration Date, the Exchange
Agent must have received from the Eligible Institution a properly completed and
duly executed Notice of Guaranteed Delivery (by facsimile transmission, mail or
hand delivery) setting forth the name and address of the Holder of the Old
Preferred Stock, the certificate number or numbers of such Old Preferred Stock
(or the DTC Book-Entry Account Number and Transaction Code Number at DTC) and
the number of shares of Old Preferred Stock tendered, stating that the tender is
being made thereby and guaranteeing that, within three business days after the
Expiration Date, this Letter of Transmittal (or facsimile thereof) together with
the certificate(s) representing the Old Preferred Stock (or a confirmation of
electronic delivery of book-entry delivery into the Exchange Agent's account at
DTC) and any of the required documents will be deposited by the Eligible
Institution with the Exchange Agent; and (iii) such properly completed and
executed Letter of Transmittal (or facsimile hereof), as well as all other
documents required by this Letter of Transmittal and the certificate(s)
representing all tendered Old Preferred Stock in proper form for transfer (or a
confirmation of electronic mail delivery of book-entry delivery into the
Exchange Agent's account at DTC), must be received by the Exchange Agent within
three business days after the Expiration Date, all as provided in the Prospectus
under the caption "The Exchange Offer--Guaranteed Delivery Procedures." Any
Holder of Old Preferred Stock who wishes to tender Old Preferred Stock pursuant
to the guaranteed delivery procedures described above must ensure that the
Exchange Agent receives the Notice of Guaranteed Delivery prior to 5:00 P.M.,
New York City time, on the Expiration Date.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of tendered Old Preferred Stock will be
determined by the Company in its sole discretion, which determination will be
final and binding on all parties. The Company reserves the absolute right to
reject any and all Old Preferred Stock not properly tendered or any Old
Preferred Stock the Company's acceptance of which would, in the opinion of
counsel for the Company, be unlawful. The Company also reserves the right to
waive any irregularities or conditions of tender as to particular Old Preferred
Stock. The Company's interpretation of the terms and conditions of the Exchange
Offer (including the instructions in this Letter of Transmittal) will be final
and binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of Old Preferred Stock must be cured within such time as
the Company shall determine. Neither the Company, the Exchange Agent nor any
other person shall be under any duty to give notification of defects or
irregularities with respect to tenders of Old Preferred Stock, nor shall any of
them incur any liability for failure to give such notification. Tenders of Old
Preferred Stock will not be deemed to have been made until such defects or
irregularities have been cured or waived. Any Old Preferred Stock received by
the Exchange Agent that is not properly tendered and as to which the defects or
irregularities have not been cured or waived will be returned
-9-
<PAGE>
without cost by the Exchange Agent to the tendering Holders of Old Preferred
Stock, unless otherwise provided in this Letter of Transmittal, as soon as
practicable following the Expiration Date.
2. PARTIAL TENDERS. If less than the entire number of shares of Old
Preferred Stock is tendered, the tendering Holder should fill in the number of
shares tendered in the third column of the chart entitled "Description of Old
Preferred Stock." The entire number of shares of Old Preferred Stock delivered
to the Exchange Agent will be deemed to have been tendered unless otherwise
indicated. If the entire number of shares of Old Preferred Stock is not
tendered, the number of shares of Old Preferred Stock delivered to the Exchange
Agent will be deemed to have been tendered unless otherwise indicated. If the
entire number of shares of Old Preferred Stock is not tendered, shares of Old
Preferred Stock not tendered and a certificate or certificates representing
shares of New Preferred Stock issued in exchange of any Old Preferred Stock
accepted will be sent to the Holder at his, her or its registered address,
unless a different address is provided in the appropriate box on this Letter of
Transmittal or unless tender is made through DTC, promptly after the Old
Preferred Stock are accepted for exchange.
3. SIGNATURES ON THE LETTER OF TRANSMITTAL; STOCK POWERS AND
ENDORSEMENTS; GUARANTEE OF SIGNATURES. If this Letter of Transmittal (or
facsimile hereof) is signed by the registered Holder(s) of the Old Preferred
Stock tendered hereby, the signature must correspond with the name(s) as written
on the certificate representing shares of Old Preferred Stock without
alternation, enlargement or any change whatsoever.
If this Letter of Transmittal (or facsimile hereof) is signed by the
registered Holder(s) of Old Preferred Stock tendered and the certificate(s) for
New Preferred Stock issued in exchange therefor is to be issued (or any
untendered shares of Old Preferred Stock are to be reissued) to the registered
Holder, such Holder need not and should not endorse any tendered Old Preferred
Stock, nor provide a separate stock power. In any other case, such holder must
either properly endorse the Old Preferred Stock tendered or transmit a properly
completed separate stock power with this Letter of Transmittal, with the
signatures on the endorsement or stock power guaranteed by an Eligible
Institution.
If this Letter of Transmittal (or facsimile hereof) is signed by a person
other than the registered Holder(s) of any Old Preferred Stock listed, such Old
Preferred Stock must be endorsed or accompanied by appropriate stock powers
signed as the name of the registered Holder(s) appears on the certificate
representing shares of Old Preferred Stock.
If this Letter of Transmittal (or facsimile hereof) or any Old Preferred
Stock or stock powers are signed by trustees, executors, administrators,
guardians, attorneys-in-fact, or officers of corporations or others acting in a
fiduciary or representative capacity, such persons should so indicate when
signing, and unless waived by the Company, evidence satisfactory to the Company
of their authority so to act must be submitted with this Letter of Transmittal.
Endorsements on Old Preferred Stock or signatures on stock powers required
by this Instruction 3 must be guaranteed by an Eligible Institution.
Signatures on this Letter of Transmittal (or facsimile hereof) must be
guaranteed by an Eligible Institution unless Old Preferred Stock tendered is
tendered (i) by a registered Holder (including any participant in DTC whose name
appears on a security position listing as the owner of Old Preferred Stock) who
has not completed the box set forth herein entitled "Special Issuance
Instructions" or the box entitled "Special Delivery Instructions" or (ii) for
the account of an Eligible Institution.
4. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. Tendering Holders should
indicate, in the applicable spaces, the name and address to which New Preferred
Stock or substitute Old Preferred Stock for shares not tendered or not accepted
for exchange is to be issued or sent, if different from the name and address of
the person signing this Letter of Transmittal (or in the case of tender of the
Old Preferred Stock through DTC, if different from DTC). In the case of
issuance in a different name, the taxpayer identification or social security
number of the person named must also be indicated.
5. TRANSFER TAXES. The Company will pay all transfer taxes, if any,
applicable to the exchange of Old Preferred Stock pursuant to the Exchange
Offer. If, however, certificates representing New Preferred Stock or Old
-10-
<PAGE>
Preferred Stock for shares not tendered or accepted for exchange are to be
delivered to, or are to be registered or issued in the name of, any person other
than the registered Holder of the Old Preferred Stock tendered hereby, or if
tendered Old Preferred Stock is registered in the name of any person other than
the person signing this Letter of Transmittal, or if a transfer tax is imposed
for any reason other than the exchange of Old Preferred Stock pursuant to the
Exchange Offer, then the amount of any such transfer taxes (whether imposed on
the registered Holder or any other person) will be payable by the tendering
Holder. If satisfactory evidence of payment of such taxes or exemption
therefrom is not submitted with this Letter of Transmittal, the amount of such
transfer taxes will be billed directly to such tendering Holder.
Except as provided in this Instruction 5, it will not be necessary for
transfer tax stamps to be affixed to the Old Preferred Stock listed in this
Letter of Transmittal.
6. WAIVER OF CONDITIONS. The Company reserves the absolute right to
amend, waive or modify specified conditions in the Exchange Offer.
7. MUTILATED, LOST, STOLEN OR DESTROYED OLD PREFERRED STOCK. Any
tendering Holder whose Old Preferred Stock has been mutilated, lost, stolen or
destroyed should contact the Exchange Agent at the address indicated herein for
further instruction.
8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests
for assistance and requests for additional copies of the Prospectus or this
Letter of Transmittal may be directed to the Exchange Agent at the address
specified in this Letter of Transmittal. Holders may also contact their broker,
dealer, commercial bank, trust company or other nominee for assistance
concerning the Exchange Offer.
-11-
<PAGE>
IMPORTANT TAX INFORMATION
Under federal income tax laws, a Holder whose tendered Old Preferred Stock
is accepted for exchange is required to provide the Exchange Agent (as payer)
with such Holder's correct TIN on Form W-9 below or otherwise establish a basis
for exemption from backup withholding. If such Holder is an individual, the TIN
is his or her social security number. If the Exchange Agent is not provided with
the correct TIN, a $50 penalty may be imposed by the Internal Revenue Service,
and dividend payments with respect to New Preferred Stock may be subject to
backup withholding.
Certain Holders (including, among others, all corporations and certain
foreign persons) are not subject to these backup withholding and reporting
requirements. Exempt Holders should indicate their exempt status on Form W-9. A
foreign person may qualify as an exempt recipient by submitting to the Exchange
Agent a properly completed Internal Revenue Service Form W-8, signed under
penalties of perjury, attesting to that Holder's exempt status. A Form W-8 can
be obtained from the Exchange Agent. See the enclosed Form W-9 for additional
instructions.
If backup withholding applies, the Exchange Agent is required to withhold
31% of any payments made to the Holder or other payee. Backup withholding is
not an additional federal income tax. Rather, the federal income tax liability
of person subject to backup withholding will be reduced by the amount of tax
withheld. If withholding results in an overpayment of taxes, a refund may be
obtained from the Internal Revenue Service.
PURPOSE OF W-9
To prevent backup withholding with respect to dividend payments on the New
Preferred Stock, the Holder is required to provide the Exchange Agent with
either: (i) the Holder's correct TIN by completing the form below, certifying
that the TIN provided on Form W-9 is correct (or that such Holder is awaiting a
TIN) and that (A) the Holder has not been notified by the Internal Revenue
Service that the Holder is subject to backup withholding as a result of failure
to report all interest or dividends or (B) the Internal Revenue Service has
notified the Holder that the Holder is no longer subject to backup withholding;
or (ii) an adequate basis for exemption.
WHAT NUMBER TO GIVE THE EXCHANGE AGENT
The Holder is required to give the Exchange Agent the TIN (e.g., social
security number or employer identification number) of the registered Holder of
the Old Preferred Stock. If the Old Preferred Stock is held in more than one
name or are held not in the name of the actual owner, consult the enclosed Form
W-9 for additional guidance on which number to report.
-12-
<PAGE>
<TABLE>
<CAPTION>
Form W-9
(Rev. December 1996) Request for Taxpayer Give form to the
Department of the Treasury Identification Number and Certification requester. DO NOT
Internal Revenue Service send to the IRS.
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Please print or type
Name (If a joint account or you changed your name, see Specific Instructions on page 2.)
- ------------------------------------------------------------------------------------------------------------------------------------
Business name, if different from above. (See Specific Instructions on page 2.)
- ------------------------------------------------------------------------------------------------------------------------------------
Check appropriate box: Individual/Sole proprietor Corporation Partnership Other
- ------------------------------------------------------------------------------------------------------------------------------------
Address (number, street, and apt. or suite no.) Requester's name and address (optional)
- -----------------------------------------------------------------------------------
City, state, and ZIP code
- ------------------------------------------------------------------------------------------------------------------------------------
Part I Taxpayer Identification Number (TIN) List account number(s) here (optional)
- -----------------------------------------------------------------------------------
Enter your TIN in the appropriate box. For
individuals, this is your social security number -----------------------------
(SSN). However, if you are a resident alien OR a Social security number
sole proprietor, see the instructions on page 2.
For other entities, it is your employer ----------------------------- ---------------------------------------------
identification number (EIN). If you do not have a OR Part II For Payees Exempt From Backup
number, see HOW TO GET A TIN on page 2. ------------------------------ Withholding (See the instructions
Employer identification number on page 2.)
Note: If the account is in more than one name, ---------------------------------------------
see the chart on page 2 for guidelines on whose ------------------------------
number to enter.
</TABLE>
- --------------------------------------------------------------------------------
Part III Certification
- --------------------------------------------------------------------------------
Under penalties of perjury, I certify that:
1. The number shown on this form is my correct taxpayer identification number
(or I am waiting for a number to be issued to me), and
2. I am not subject to backup withholding because: (a) I am exempt from backup
withholding, or (b) I have not been notified by the Internal Revenue Service
(IRS) that I am subject to backup withholding as a result of a failure to
report all interest or dividends, or (c) the IRS has notified me that I am no
longer subject to backup withholding.
Certification Instructions. - You must cross out item 2 above if you have been
notified by the IRS that you are currently subject to backup withholding because
you have failed to report all interest and dividends on your tax return. For
real estate transactions, item 2 does not apply. For mortgage interest paid,
acquisition or abandonment of secured property, cancellation of debt,
contributions to an individual retirement arrangement (IRA), and generally,
payments other than interest and dividends, you are not required to sign the
Certification, but you must provide your correct TIN. (See the instructions on
page 2.)
- --------------------------------------------------------------------------------
Sign
Here Signature Date
- --------------------------------------------------------------------------------
Purpose of Form. - A person who is required to file an information return with
the IRS must get your correct taxpayer identification number (TIN) to report,
for example, income paid to you, real estate transactions, mortgage interest you
paid, acquisition or abandonment of secured property, cancellation of debt or
contributions you made to an IRA.
Use Form W-9 to give your correct TIN to the person requesting it (the
requester) and, when applicable, to:
1. Certify the TIN you are giving is correct (or you are waiting for a number
to be issued),
2. Certify you are not subject to backup withholding, or
3. Claim exemption from backup withholding if you are an exempt payee.
Note: If a requester gives you a form other than a W-9 to request your TIN, you
must use the requester's form if it is substantially similar to this Form W-9.
What is Backup Withholding? - Persons making certain payments to you must
withhold and pay to the IRS 31% of such payments under certain conditions. This
is called "backup withholding." Payments that may be subject to backup
withholding include Interest, dividends, broker and barter exchange
transactions, rents, royalties, nonemployee pay, and certain payments from
fishing boat operators. Real estate transactions are not subject to backup
withholding.
If you give the requester your correct TIN, make the proper certifications,
and report all your taxable Interest and dividends on your tax return, payments
you receive will not be subject to backup withholding. Payments you receive will
be subject to backup withholding if:
1. You do not furnish your TIN to the requester, or
2. The IRS tells the requester that you furnished an incorrect TIN, or
3. The IRS tells you that you are subject to backup withholding because you
did not report all your interest and dividends on your tax return (for
reportable interest and dividends only) or
4. You do not certify to the requester that you are not subject to backup
withholding under 3 above (for reportable interest and dividend accounts opened
after 1983 only), or
5. You do not certify your TIN when required. See the Part III Instructions
on page 2 for details.
Certain payees and payments are exempt from backup withholding. See the Part
II instructions and the separate Instructions for the Requester of Form W-9.
Penalties
Failure to Furnish TIN. -- If you fail to furnish your correct TIN to a
requester, you are subject to a penalty of $50 for each such failure unless your
failure is due to reasonable cause and not to willful neglect.
Civil Penalty for False Information With Respect to Withholding. -- If you make
a false statement with no reasonable basis that results in no backup
withholding, you are subject to a $500 penalty.
Criminal Penalty for Falsifying Information. -- Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
Misuse of TINs. -- If the requester discloses or uses TIN's in violation of
Federal law, the requester may be subject to civil and criminal penalties.
- --------------------------------------------------------------------------------
Form W-9 (Rev. 12-96)
<PAGE>
Form W-9 (Rev. 12-96) Page 2
- --------------------------------------------------------------------------------
Specific Instructions
Name.--If you are an individual, you must generally enter the name shown on your
social security card. However, if you have changed your last name, for instance,
due to marriage, without informing the Social Security Administration of the
name change, enter your first name, the last name shown on your social security
card, and your new last name.
If the account is in joint names, list first and then circle the name of
the person or entity whose number you enter in Part I of the form.
Sole Proprietor.--You must enter your individual name as shown on your
social security card. You may enter your business, trade, or "doing business
as" name on the business name line.
Other Entities.--Enter the business name as shown on required Federal
tax documents. This name should match the name shown on the charter or other
legal document creating the entity. You may enter any business, trade, or
"doing business as" name on the business name line.
Part I--Taxpayer Identification Number (TIN)
You must enter your TIN in the appropriate box. If you are a resident alien and
you do not have and are not eligible to get an SSN, your TIN is your
IRS individual taxpayer identification number (ITIN). Enter it in the social
security number box. If you do not have an ITIN, see How To Get a TIN below.
If you are a sole proprietor and you have an EIN, you may enter either
your SSN or EIN. However, using your EIN may result in unnecessary notices to
the requester.
Note: See the chart on this page for further clarification of name and TIN
combinations.
How To Get a TIN.--If you do not have a TIN, apply for one immediately. To
apply for an SSN, get Form SS-5 from your local Social Security Administration
office. Get Form W-7 to apply for an ITIN or Form SS-4 to apply for an EIN.
You can get Forms W-7 and SS-4 from the IRS by calling 1-800-TAX-FORM
(1-800-829-3676).
If you do not have a TIN, write "Applied For" in the space for the TIN,
sign and date the form, and give it to the requester. For interest and dividend
payments, and certain payments made with respect to readily tradable
instruments, you will generally have 60 days to get a TIN and give it to the
requester. Other payments are subject to backup withholding.
Note: Writing "Applied For" means that you have already applied for a TIN OR
that you intend to apply for one soon.
Part II--For Payees Exempt From Backup Withholding
Individuals (including sole proprietors) are not exempt from backup withholding.
Corporations are exempt from backup withholding for certain payments, such as
interest and dividends. For more information on exempt payees, see the separate
Instructions for the Requester of Form W-9.
If you are exempt from backup withholding, you should still complete
this form to avoid possible erroneous backup withholding. Enter your correct TIN
in Part I, write "Exempt" in Part II, and sign and date the form.
If you are a nonresident alien or a foreign entity not subject to backup
withholding, give the requester a completed Form W-8, Certificate of Foreign
Status.
Part III--Certification
For a joint account, only the person whose TIN is shown in Part I should sign
(when required).
1. Interest, Dividend, and Barter Exchange Accounts Opened Before 1984
and Broker Accounts Considered Active During 1983. You must give your correct
TIN, but you do not have to sign the certification.
2. Interest, Dividend, Broker, and Barter Exchange Accounts Opened
After 1983 and Broker Accounts Considered Inactive During 1983. You must sign
the certification or backup withholding will apply. If you are subject to
backup withholding and you are merely providing your correct TIN to the
requester, you must cross out item 2 in the certification before signing the
form.
3. Real Estate Transactions. You must sign the certification. You may
cross out item 2 of the certification.
4. Other Payments. You must give your correct TIN, but you do not have
to sign the certification unless you have been notified that you have previously
given an incorrect TIN. "Other payments" include payments made in the course of
the requester's trade or business for rents, royalties, goods (other than bills
for merchandise), medical and health care services (including payments to
corporations), payments to a nonemployee for services (including attorney and
accounting fees), and payments to certain fishing boat crew members.
5. Mortgage Interest Paid by You, Acquisition or Abandonment of Secured
Property, Cancellation of Debt, or IRA Contributions. You must give your
correct TIN, but you do not have to sign the certification.
Privacy Act Notice
Section 6109 of the Internal Revenue Code requires you to give your correct TIN
to persons who must file information returns with the IRS to report interest,
dividends,
[Logo of Recycled Paper Appears Here]
and certain other income paid to you, mortgage interest you paid, the
acquisition or abandonment of secured property, cancellation of debt, or
contributions you made to an IRA. The IRS uses the numbers for identification
purposes and to help verify the accuracy of your tax return. The IRS may also
provide this information to the Department of Justice for civil and criminal
litigation and to cities, states, and the District of Columbia to carry out
their tax laws.
You must provide your TIN whether or not you are required to file a tax
return. Payers must generally withhold 31% of taxable interest, dividend, and
certain other payments to a payee who does not give a TIN to a payer. Certain
penalties may also apply.
What Name and Number To Give the Requester
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
For this type of account: Give name and SSN of:
- --------------------------------------------------------------------------------
<S> <C>
1. Individual The individual
2. Two or more The actual owner of the
individuals (joint account or, if combined
account) funds, the first individual
on the account /1/
3. Custodian account of The minor /2/
a minor (Uniform Gift
to Minors Act)
4. a. The usual The grantor-trustee /1/
revocable savings
trust (grantor is
also trustee)
b. So-called trust The actual owner /1/
account that is not
a legal or valid trust
under state law
5. Sole proprietorship The owner /3/
<CAPTION>
- --------------------------------------------------------------------------------
For this type of account: Give name and EIN of:
- --------------------------------------------------------------------------------
<S> <C>
6. Sole proprietorship The owner /3/
7. A valid trust, estate, or Legal entity /4/
pension trust
8. Corporate The corporation
9. Association, club, The organization
religious, charitable,
educational, or other
tax-exempt
organization
10. Partnership The partnership
11. A broker or registered The broker or nominee
nominee
12. Account with the The public entity
Department of
Agriculture in the name
of a public entity (such
as a state or local
government, school
district, or prison) that
receives agricultural
program payments
- --------------------------------------------------------------------------------
</TABLE>
/1/ List first and circle the name of the person whose number you furnish. If
only one person on a joint account has an SSN, that person's number must be
furnished.
/2/ Circle the minor's name and furnish the minor's SSN.
/3/ You must show your individual name, but you may also enter your business or
"doing business as" name. You may use either your SSN or EIN (if you have one).
/4/ List first and circle the name of the legal trust, estate, or pension trust.
(Do not furnish the TIN of the personal representative or trustee unless the
legal entity itself is not designated in the account title.)
Note: If no name is circled when more than one name is listed, the number will
be considered to be that of the first name listed.
<PAGE>
The Exchange Agent for the Exchange Offer is:
HARRIS TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C> <C>
By Mail: By Facsimile: By Hand or Overnight Courier:
Harris Trust Company of (212) 701-7636 Harris Trust Company of
New York New York
P.O. Box 1010 Confirm by Telephone: 77 Water Street
Wall Street Station 4th Floor
New York, NY 10268 (212) 701-7624 New York, NY 10004
Attention: Reorganization Department Attention: Reorganization Department
</TABLE>
-15-
<PAGE>
EXHIBIT 99.3
EXCHANGE AGENT AGREEMENT
------------------------
May , 1997
Harris Trust Company of New York
77 Water Street, 4th Floor
New York, New York 10004
Attention: Mark Zimkind
Ladies and Gentlemen:
American Radio System Corporation, a Delaware corporation (the "Company"),
intends to make an offer (the "Exchange Offer") to exchange 11 3/8% Cumulative
Exchangeable Preferred Stock, $100 liquidation preference per share, Series B
("New Preferred Stock") for its 11 3/8 Cumulative Exchangeable Preferred Stock,
$100 liquidation preference per share ("Old Preferred Stock"). The terms and
conditions of the Exchange Offer are set forth in a prospectus, dated May __,
1997 (the "Prospectus"), to be distributed to all record holders of the Old
Preferred Stock. Old Preferred Stock and New Preferred Stock are collectively
referred to herein as the "Preferred Stock".
The Company hereby appoints Harris Trust Company of New York to act as
exchange agent (the "Exchange Agent") in connection with the Exchange Offer.
References hereinafter to "you" shall refer to Harris Trust and Savings Bank.
You hereby acknowledge receipt of copies of the Prospectus and a letter of
transmittal, dated the date hereof, with respect to the Exchange Offer (the
"Letter of Transmittal").
The Exchange Offer is expected to be commenced by the Company on or about
the date hereof. The Letter of Transmittal accompanying the Prospectus is to be
used by the holders of Old Preferred Stock to accept the Exchange Offer, and
contains instructions with respect to the delivery of certificates for Old
Preferred Stock tendered.
The Exchange Offer shall expire at 5:00 P.M., New York City time, on the
date specified in the Prospectus or on such later date or time to which the
Company may extend the Exchange Offer (the "Expiration Date"). Subject to the
terms and conditions set forth in the Prospectus, the Company expressly reserves
the right to extend the Exchange Offer from time to time and may extend the
Exchange Offer by giving oral (confirmed in writing) or written notice to you
before 9:00 A.M., New York City time, on the business day following the
previously scheduled Expiration Date.
In carrying out your duties as Exchange Agent, you are to act in accordance
with the following instructions:
1. You will perform such duties and only such duties as are specifically
set forth in the section of the Prospectus captioned "The Exchange Offer", in
the "Letter of Transmittal" or herein; provided, however, that in no way will
your general duty to act in good faith be discharged by the foregoing.
<PAGE>
2. You are to examine each of the Letters of Transmittal and certificates
for Old Preferred Stock and any other documents delivered, faxed or mailed to
you by or for holders of the Old Preferred Stock to ascertain whether: (i) the
Letters of Transmittal and any such other documents are duly executed and
properly completed in accordance with instructions set forth therein and (ii)
the Old Preferred Stock has otherwise been properly tendered. In each case
where the Letter of Transmittal or any other document has been improperly
completed or executed or any of the certificates for Old Preferred Stock are not
in proper form for transfer or some other irregularity in connection with the
acceptance of the Exchange Offer exists, you will endeavor to inform the
presenters of the need for fulfillment of all requirements and to take any other
action as may be necessary or advisable to cause such irregularity to be
corrected.
3. With the approval of the President, any Vice President or the
Treasurer of the Company, or of counsel to the Company, or any other party
designated by any officer named in this Paragraph 3 (such approval, if given
orally, to be confirmed in writing), you are authorized to waive any
irregularities in connection with any tender of Old Preferred Stock pursuant to
the Exchange Offer.
4. Tenders of Old Preferred Stock may be made only as set forth in the
Letter of Transmittal and in the section of the Prospectus captioned "The
Exchange Offer--Procedures for Tendering," and Old Preferred Stock shall be
considered properly tendered to you only when tendered in accordance with the
procedures set forth therein. Notwithstanding the provisions of this paragraph
4, Old Preferred Stock that the President or any Vice President or the Treasurer
of the Company shall approve as having been properly tendered shall be
considered to be properly tendered.
5. You shall advise the Company with respect to any Old Preferred Stock
received subsequent to the Expiration Date and accept its instructions with
respect to disposition of such Old Preferred Stock.
6. You shall accept tenders:
(a) in cases where the Old Preferred Stock are registered in two or
more names only if signed by all named holders;
(b) in cases where the signing person (as indicated on the Letter of
Transmittal) is acting in a fiduciary or a representative capacity only
when proper evidence of his or her authority so to act is submitted; and
(c) from persons other than the registered holder of Old Preferred
Stock provided that customary transfer requirements, including any
applicable transfer taxes, are fulfilled.
You shall accept partial tenders of Old Preferred Stock where so indicated
and as permitted in the Letter of Transmittal and deliver certificates for Old
Preferred Stock to the transfer agent for split-up and return any untendered Old
Preferred Stock to the holder (or such other person as may be designated in the
Letter of Transmittal) as promptly as practicable.
2
<PAGE>
7. The Company will exchange Old Preferred Stock duly tendered for New
Preferred Stock on the terms and subject to the conditions set forth in the
Prospectus and the Letter of Transmittal. Delivery of New Preferred Stock will
be made on behalf of the Company by you at the rate of one share of New
Preferred Stock for each share of Old Preferred Stock tendered as soon as
practicable after the Expiration Date and after notice (such notice if given
orally, to be confirmed in writing) of acceptance of Old Preferred Stock by the
Company; provided, however, that, in all cases, Old Preferred Stock tendered
pursuant to the Exchange Offer will be exchanged only after timely receipt by
you of certificates for such Old Preferred Stock, a properly completed and duly
executed Letter of Transmittal (or facsimile thereof) with any required
signature guarantees and any other required documents.
8. Tenders pursuant to the Exchange Offer are irrevocable, except that,
subject to the terms and upon the conditions set forth in the Prospectus and the
Letter of Transmittal, Old Preferred Stock tendered pursuant to the Exchange
Offer may be withdrawn at any time prior to the Expiration Date.
9. The Company shall not be required to exchange any Old Preferred Stock
tendered if any of the conditions set forth in the Exchange Offer are not met.
Notice of any decision by the Company not to exchange any Old Preferred Stock
tendered shall be given (and confirmed in writing) by the Company to you.
10. If, pursuant to the Exchange Offer, the Company does not accept for
exchange all or part of the Old Preferred Stock tendered because of an invalid
tender, the occurrence of certain other events set forth in the Prospectus under
the caption "The Exchange Offer--Expiration Date; Extensions; Amendments" or
otherwise, you shall as soon as practicable after the expiration or termination
of the Exchange Offer return those certificates for unaccepted Old Preferred
Stock (or advise Depository Trust Company to effect appropriate book-entry
transfer), together with any related required documents and the Letters of
Transmittal relating thereto that are in you possession, to the persons who
deposited them.
11. All certificates for reissued Old Preferred Stock, unaccepted Old
Preferred Stock or New Preferred Stock shall be forwarded by first-class mail
under a blanket surety bond protecting you and the Company from loss or
liability arising out of the non-receipt or non-delivery of such certificates.
12. You are not authorized to pay any concessions, commissions or
solicitation fees to any broker, dealer, bank or other persons or to engage or
utilize any person to solicit tenders.
13. As Exchange Agent hereunder, you:
(a) shall have no duties or obligations other than those specifically
set forth in the section of the Prospectus captioned "The Exchange Offer,"
in the "Letter of Transmittal" or herein or as may be subsequently agreed
to in writing by you and the Company;
(b) shall be regarded as making no representations and having no
responsibilities as to the validity, sufficiency, value or genuineness of
any of the certificates or Old Preferred Stock represented thereby
deposited with you pursuant to the Exchange Offer, and will not
3
<PAGE>
be required to and will make no representation as to the validity, value or
genuineness of the Exchange Offer; provided, however, that in no way will
your general duty to act in good faith be discharged by the foregoing;
(c) shall not be obligated to take any legal action hereunder that
might in your reasonable judgment involve any expense or liability, unless
you shall have been furnished with reasonable indemnity;
(d) may reasonably rely on and shall be protected in acting in
reliance upon any certificate, instrument, opinion, notice, letter,
telegram or other document or security delivered to you and reasonably
believed by you to be genuine and to have been signed by the proper party
or parties;
(e) may reasonably act upon any tender, statement, request, comment,
agreement or other instrument whatsoever not only as to its due execution
and the validity and effectiveness of its provisions, but also as to the
truth and accuracy of any information contained therein, which you shall in
good faith believe to be genuine or to have been signed or represented by a
proper person or persons;
(f) may rely on and shall be protected in acting upon written or oral
instructions from any authorized officer of the Company;
(g) may consult with your counsel with respect to any questions
relating to your duties and responsibilities and the written opinion of
such counsel shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted to be taken by you
hereunder in good faith and in accordance with the written opinion of such
counsel; and
(h) shall not advise any person tendering Old Preferred Stock pursuant
to the Exchange Offer as to the wisdom of making such tender or as to the
market value or decline or appreciation in market value of any Old
Preferred Stock.
14. You shall take such action as may from time to time be requested by
the Company (and such other action as you may reasonably deem appropriate) to
furnish copies of the Prospectus, Letter of Transmittal and the Notice of
Guaranteed Delivery (as referred to in the Letter of Transmittal) or such other
forms as may be approved from time to time by the Company, to all persons
requesting such documents and to accept and comply with telephone requests for
information relating to the Exchange Offer, provided that such information shall
relate only to the procedures for accepting (or withdrawing from) the Exchange
Offer. The Company will furnish you with copies of such documents at your
request.
15. You shall advise by facsimile transmission or telephone (and if such
advice is by telephone promptly thereafter confirm in writing) to the Company
and Sullivan & Worcester LLP, in the manner provided in paragraph 26 below,
weekly (and daily during the week immediately preceding the Expiration Date and
more frequently if otherwise requested up to and including the Expiration Date,
as to the number of shares of Old Preferred Stock that have been tendered
pursuant to the Exchange offer and the items received by you pursuant to this
Agreement, separately reporting
4
<PAGE>
and giving cumulative totals as to items properly received and items improperly
received. In addition, you will also inform, and cooperate in making available
to, the Company or Sullivan & Worcester LLP upon oral request made from time to
time prior to the Expiration Date of such other information as it or they
reasonably may request. Such cooperation shall include, without limitation, the
granting by you to the Company and such person as the Company may request of
access to those persons on your staff who are responsible for receiving tenders,
in order to ensure that immediately prior to the Expiration Date the Company
shall have received information in sufficient detail to enable it to decide
whether to extend the Exchange Offer. You shall prepare promptly a final list of
all persons whose tenders were accepted, the aggregate number of shares of Old
Preferred Stock tendered, the aggregate number of shares of Old Preferred Stock
accepted and deliver said list to the Company.
16. Letters of Transmittal and Notices of Guaranteed Delivery shall be
stamped by you as to the date and the time of receipt thereof and shall be
preserved by you for a period of time at least equal to the period of time you
preserve other records pertaining to the transfer of securities. You shall
dispose of unused Letters of Transmittal and other surplus materials by
returning them to the Company.
17. You hereby expressly waive any lien, encumbrance or right of set-off
whatsoever that you may have with respect to funds deposited with you for the
payment of transfer taxes by reasons of amounts, if any, borrowed by the
Company, or any of its subsidiaries or affiliates pursuant to any loan or credit
agreement with you or for compensation owned to you hereunder.
18. For services rendered as Exchange Agent hereunder, you shall be
entitled to $3,500 plus reasonable out of pocket expenses as agreed upon between
you and the Company.
19. You hereby acknowledge that you have examined each of the Prospectus
and the Letter of Transmittal. Any inconsistency between this Agreement, on the
one hand, and the Prospectus and the Letter of Transmittal (as they may be
amended from time to time), on the other hand, shall be resolved in favor of the
latter two documents, except with respect to the duties, liabilities and
indemnification of you as Exchange Agent which shall be controlled by this
Agreement.
20. The Company covenants and agrees to indemnify and hold you in your
capacity as Exchange Agent hereunder, harmless against any loss, liability, cost
or expense, including reasonable attorneys' fees arising out of or in connection
with any act, omission, delay or refusal made by you in reasonable reliance upon
any signature, endorsement, assignment, certificate, order, request, notice,
instruction or other instrument or document reasonable believed by you in good
faith to be authorized, and in delaying or refusing in good faith to accept any
tenders or effect any transfer of Old Preferred Stock; provided, however, that
the Company shall not be liable for indemnification or otherwise for any loss,
liability, cost or expense to the extent arising out of your gross negligence,
willful misconduct or bad faith. In no case shall the Company be liable under
this indemnity with respect to any claim against you unless the Company shall be
notified by you, by letter or facsimile transmission confirmed by letter, of the
written assertion of a claim against you or of any other action commenced
against you, promptly after you shall have received any such written assertion
or shall have been served with a summons in connection therewith. The Company
shall be entitled to participate at its own expense in the defense of any such
claim or other action, and, if the
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Company so elects, the Company shall assume the defense of any suit brought to
enforce any such claim. In the event that the Company shall assume the defense
of any such suit, the Company shall not be liable for the fees and expenses of
any additional counsel thereafter retained by you, so long as the Company shall
retain counsel reasonably satisfactory to you to defend such suit.
21. You shall deliver or cause to be delivered, in a timely manner to each
governmental authority to which any transfer taxes are payable in respect of the
exchange of Old Preferred Stock, your check in the amount of all transfer taxes
so payable, and the Company shall reimburse you for the amount of any and all
transfer taxes payable by the Company in respect of the exchange of Old
Preferred Stock in accordance with the section of the Prospectus captioned ("The
Exchange Offer--Fees and Expenses"); provided, however, that you shall reimburse
the Company for amounts refunded to you in respect of you payment of any such
transfer taxes, at such time as such refund is received by you.
22. This Agreement and you appointment as Exchange Agent hereunder shall
be construed and enforced in accordance with the laws of the State of New York
applicable to agreements made and to be performed entirely within such state,
without regard to any conflict of laws provisions, and shall inure to the
benefit of, and the obligations created hereby shall be binding upon, the
successors and assigns of each of the parties hereto. This Agreement may not be
modified orally.
23. This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
24. In case any provision of this Agreement shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
25. This Agreement shall not be deemed or construed to be modified,
amended, rescinded, canceled or waived, in whole or in part, except by a written
instrument signed by a duly authorized representative of the party to be
charged.
26. Unless otherwise provided herein, all notices, requests and other
communications to any party hereunder shall be in writing (including telecopy or
similar writing) and shall be given to such party, addressed to it, at its
address or telecopy number set forth below:
If to the Company:
American Radio Systems Corporation
116 Huntington Avenue
Boston, Massachusetts 02116
Facsimile: (617) 375-7575
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with a copy to:
Norman A. Bikales
Sullivan & Worcester LLP
One Post Office Square
Boston, Massachusetts 02109
Facsimile: (617) 338-2880
If to the Exchange Agent:
Harris Trust Company of New York
77 Water Street, 4th Floor
New York, New York 10004
Attention: Mark McLaughlin
Facsimile: (212) 701-7686
27. Unless terminated earlier by the parties hereto, this Agreement shall
terminate ninety days following the Expiration Date. Notwithstanding the
foregoing, Paragraph 20 shall survive the termination of this Agreement. Upon
any termination of this Agreement, you shall promptly deliver to the Company any
certificates, funds or property then held by you as Exchange Agent under this
Agreement.
28. This Agreement shall be binding and effective as of the date hereof.
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Please acknowledge receipt of this Agreement and confirm the arrangements
herein provided by signing and returning the enclosed copy.
AMERICAN RADIO SYSTEMS CORPORATION
By:___________________________________________
Name:
Title:
Accepted as of the date
first above written.
HARRIS TRUST COMPANY OF NEW YORK
By:_________________________________
Name:
Title:
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