<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 17, 1996
REGISTRATION NO.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-1
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
------------------------
COMMODORE MEDIA, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 4832 13-3034720
(STATE OR OTHER (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
JURISDICTION OF CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
INCORPORATION OR
ORGANIZATION)
COMMODORE MEDIA, INC. BRUCE A. FRIEDMAN
500 FIFTH AVENUE, SUITE 3000 COMMODORE MEDIA, INC.
NEW YORK, NEW YORK 10110 500 FIFTH AVENUE, SUITE 3000
(212) 302-2727 NEW YORK, NEW YORK 10110
(ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, (212) 302-2727
INCLUDING AREA CODE OF REGISTRANT'S PRINCIPAL (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE
EXECUTIVE OFFICES) NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
</TABLE>
------------------------
COPIES TO:
IRA J. GOLDSTEIN, ESQ.
BLAKE HORNICK, ESQ.
PRYOR, CASHMAN, SHERMAN & FLYNN
410 PARK AVENUE
NEW YORK, NEW YORK 10022
(212) 421-4100
NICHOLAS P. SAGGESE, ESQ.
MARK C. SMITH, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM
300 SOUTH GRAND AVENUE
LOS ANGELES, CALIFORNIA 90017
(213) 687-5000
------------------------
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration
Statement becomes effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
------------------------
CALCULATION OF REGISTRATION FEE
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<TABLE>
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------
PROPOSED PROPOSED
MAXIMUM MAXIMUM
OFFERING AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO PRICE PER OFFERING REGISTRATION
SECURITIES TO BE REGISTERED BE REGISTERED(1) SHARE(2) PRICE(2) FEE(3)
- ------------------------------------------------------------------------------------------------------------
Class A Common Stock, $.01 par value
shares.................................... 4,945,000 shares $ $75,000,000 $25,863
</TABLE>
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- --------------------------------------------------------------------------------
(1) Includes shares subject to the Underwriters' over-allotment option. See
"Underwriting."
(2) Estimated solely for purposes of calculating the registration fee in
accordance with Rule 457 under the Securities Act of 1933.
(3) Calculated pursuant to Rule 457(a) based upon an estimate of the maximum
offering price.
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, OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
COMMODORE MEDIA, INC.
CROSS REFERENCE SHEET
PURSUANT TO ITEM 501(B) OF REGULATION S-K
<TABLE>
<CAPTION>
FORM S-1 ITEM NUMBER AND CAPTION CAPTION OR LOCATION IN PROSPECTUS
<C> <S> <C>
1. Forepart of the Registration Statement and
Outside Front Cover Page of Prospectus........... Outside Front Cover Page of the
Registration Statement;
Cross-Reference Sheet; Outside Front
Cover Page of Prospectus
2. Inside Front and Outside Back Cover Pages of
Prospectus....................................... Inside Front Cover Page and Outside
Back Cover Page of Prospectus
3. Summary Information, Risk Factors and Ratio of
Earnings to Fixed Charges........................ Prospectus Summary; Risk Factors
4. Use of Proceeds.................................. Prospectus Summary; Use of Proceeds
5. Determination of Offering Price.................. Underwriting
6. Dilution......................................... Dilution
7. Selling Security Holders......................... Principal and Selling Shareholders
8. Plan of Distribution............................. Front Cover Page; Underwriting
9. Description of Securities to be Registered....... Front Cover Page; Prospectus Summary;
Description of Capital Stock
10. Interests of Named Experts and Counsel........... Legal Matters; Experts
11. Information with Respect to Registrant........... Outside Front Cover Page of
Prospectus; Prospectus Summary; Risk
Factors: The Company; Use of
Proceeds; Capitalization; Selected
Pro Forma Financial Statements;
Selected Historical Financial Data;
Management's Discussion and Analysis
of Financial Condition and Results of
Operations; Business; Management;
Certain Transactions; Principal and
Selling Shareholders; Description of
Certain Indebtedness; Description of
Capital Stock; Financial Statements
12. Disclosure of Commission Position on
Indemnification for Securities Act Liabilities... Not applicable
</TABLE>
<PAGE> 3
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 MAY 17, 1996
PROSPECTUS
, 1996
4,300,000 SHARES
COMMODORE MEDIA, INC.
CLASS A COMMON STOCK
Of the 4,300,000 shares of Class A Common Stock, $.01 par value (the "Class
A Common Stock"), offered hereby (the "Offering"), 2,882,143 shares are being
sold by Commodore Media, Inc. (the "Company") and 1,417,857 shares are being
sold by the Selling Shareholders named herein under "Principal and Selling
Shareholders." The Company will not receive any of the proceeds of shares sold
by the Selling Shareholders. The Class A Common Stock entitles the holders to
one vote per share and the Class B Common Stock entitles the holders to eight
votes per share. After the Offering, the Estate of Carter Burden will have
approximately 80% of the total voting power in respect of matters submitted for
the vote of all shareholders.
Prior to the Offering, there has been no public market for the Class A
Common Stock of the Company. It is currently estimated that the initial public
offering price will be between $ and $ per share. See
"Underwriting" for a discussion of the factors considered in determining the
initial public offering price.
Application will be made to have the Class A Common Stock approved for
quotation on the NASDAQ National Market System under the symbol "CMIA."
SEE "RISK FACTORS" BEGINNING ON PAGE 9 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE CLASS A COMMON
STOCK OFFERED HEREBY.
------------------------
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 COMMIS SION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C>
UNDERWRITING PROCEEDS PROCEEDS TO
PRICE TO THE DISCOUNTS AND TO THE THE SELLING
PUBLIC COMMISSIONS(1) COMPANY(2) SHAREHOLDERS
- -------------------------------------------------------------------------------------------------------
Per Share.............................. $ $ $ $
- -------------------------------------------------------------------------------------------------------
Total(3)............................... $ $ $ $
</TABLE>
- --------------------------------------------------------------------------------
(1) The Company and the Selling Shareholders have agreed to indemnify the
Underwriters (as defined herein) against certain liabilities, including
liabilities arising under the Securities Act of 1933, as amended. See
"Underwriting."
(2) Before deducting expenses estimated at $ payable by the Company.
(3) The Company and one of the Selling Shareholders have granted to the
Underwriters a 30-day option to purchase up to an aggregate of 645,000
additional shares from the Company and such Selling Shareholder on the same
terms as set forth above, solely to cover over-allotments, if any. If such
option is exercised in full, the total Price to the Public, Underwriting
Discounts and Commissions, Proceeds to the Company and Proceeds to the
Selling Shareholders will be $ , $ , $ and $ ,
respectively. See "Underwriting."
The shares of Class A Common Stock are offered by the several Underwriters
when, as and if delivered to and accepted by the Underwriters against payment
therefor and subject to various prior conditions, including their right to
reject orders in whole or in part. It is expected that delivery of the
certificates representing the shares of Class A Common Stock will be made in New
York, New York on or about , 1996.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
CS FIRST BOSTON
CIBC WOOD GUNDY SECURITIES CORP.
<PAGE> 4
COMMODORE MEDIA, INC.
[MAP/ARTWORK TO BE PROVIDED]
------------------------------
IN CONNECTION WITH THE OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE CLASS A COMMON
STOCK AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET OR OTHERWISE.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
DURING THE OFFERING, CERTAIN PERSONS AFFILIATED WITH PERSONS PARTICIPATING
IN THE DISTRIBUTION MAY ENGAGE IN TRANSACTIONS FOR THEIR OWN ACCOUNTS OR FOR THE
ACCOUNTS OF OTHERS IN THE CLASS A COMMON STOCK PURSUANT TO EXEMPTIONS FROM RULES
10B-6, 10B-7 AND 10B-8 UNDER THE SECURITIES EXCHANGE ACT OF 1934.
2
<PAGE> 5
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to, and
should be read in conjunction with, the more detailed information and financial
statements contained elsewhere in this Prospectus. Except as otherwise indicated
by the context, references in this Prospectus to the "Company" include Commodore
Media, Inc. and its direct and indirect wholly owned subsidiaries. All numbers
of shares, per share amounts and related information in this Prospectus have
been adjusted to reflect a 7.2-for-1 split of the Common Stock (the "Stock
Split"), which will be effected prior to the sale of the Class A Common Stock
offered hereby. See "Description of Capital Stock." Unless otherwise indicated,
the information contained in this Prospectus assumes no exercise of the
Underwriters' over-allotment option. References in this Prospectus to the
Company's "pro forma" 1995 operating results and related statistical information
give effect to the Recapitalization Transactions, the Offering and the
application of the estimated net proceeds therefrom, the Acquisitions and the
1995 Treasure Coast Acquisition (as such terms are defined herein) as if such
transactions had occurred on January 1, 1995. See "--Market Data and Certain
Definitions," "Unaudited Pro Forma Consolidated Financial Information" and "Use
of Proceeds."
THE COMPANY
Commodore Media, Inc. owns and operates, or provides sales and marketing
services for 33 radio broadcasting stations (nineteen FM and fourteen AM
stations) in six medium-sized markets. The Company is the leading radio group on
a pro forma basis in five of its six markets based on radio advertising revenue
and is the leading radio group in each of its six markets based on audience
share. The Company's average radio revenue share in its markets was 45.1% in pro
forma 1995, which the Company believes is the highest average radio revenue
share of any public radio broadcasting company in the United States. The
Company's radio stations are located in the following markets: Fairfield County,
Connecticut; Allentown, Pennsylvania; Wilmington, Delaware; Westchester/Putnam
Counties, New York; Ft. Pierce-Stuart-Vero Beach, Florida (the "Treasure Coast
Market") and Huntington, West Virginia/Ashland, Kentucky. The Company's pro
forma net revenue and broadcast cash flow for the year ended December 31, 1995
were $42.5 million and $15.3 million, respectively.
The Company believes that operating radio stations in medium-sized markets
offers significant opportunities to apply its programming, marketing and
broadcasting expertise to increase broadcast cash flow and to establish a
dominant market position that would be difficult for a competitor to replicate.
The Company defines medium-sized markets as markets with approximately $10
million to $35 million of radio advertising revenue, which includes markets
ranked between 50 and 150 in terms of radio advertising revenue. The Company
believes that medium-sized markets represent attractive operating environments
because these markets are generally characterized by (i) a limited number of
radio stations, which minimizes the risk of format attack, (ii) fewer
alternative advertising media, (iii) undercapitalized owners/operators, (iv)
strong station brand identity among listeners that is not typically dependent
upon specific on-air talent, (v) a lower cost operating structure and (vi) a
high percentage of local advertisers who make advertising decisions based upon
relationships and customer service and not solely upon station ratings. The
Company believes that these characteristics allow it to capture a greater
percentage of a market's total advertising revenue and to achieve broadcast cash
flow margins typically higher than industry norms while operating in a more
stable competitive environment. In addition, the Company believes that under the
recently enacted Telecommunications Act of 1996, which liberalized radio station
ownership limits, medium-sized markets offer the Company the greatest
opportunity to create dominant, multiple station ownership situations.
The Company's objective is to increase shareholder value by enhancing its
share of the advertising revenue in each of its markets, increasing the
broadcast cash flow of its existing stations and pursuing additional
acquisitions both in its existing markets and in new markets in which the
Company's operational expertise can be successfully applied to increase
broadcast cash flow. Through successful implementation of the Company's
operating and acquisition strategies, the Company's net revenue and broadcast
cash flow have increased at compound annual growth rates of 21.1% and 29.2%,
respectively, from 1991 to pro forma 1995 and the broadcast cash flow margin has
increased from 26.0% in 1991 to 36.1% in pro forma 1995. On a same station
basis, from 1991 to 1995, the Company successfully increased its net revenue and
broadcast cash flow at compound annual growth rates of 13.7% and 20.7%,
respectively.
3
<PAGE> 6
The following table sets forth, on a pro forma basis, certain information
with respect to the Company and its markets:
<TABLE>
<CAPTION>
COMPANY DATA MARKET DATA
---------------------------------------------------------------- ----------------------------------------------
NUMBER OF 1995
RADIO RADIO REVENUE RADIO RADIO AUDIENCE STATIONS(F) RADIO 1990-1995
REVENUE MARKET SHARE AUDIENCE MARKET SHARE --------- VIABLE REVENUE 1995 RADIO REVENUE
MARKET(A) RANK(B) %(C) RANK(D) %(E) AM FM STATIONS(G) RANK(H) REVENUE(I) CAGR %
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Fairfield
County, CT 1 33.2% 1 26.3% 3 3 9 60 $ 27,851 9.6%
Allentown, PA 1 53.7% 1 47.2% 2 2 8 77 $ 19,300 5.1%
Wilmington,
DE 2 33.2% 1 42.2% 1 1 5 78 $ 17,800 10.4%
Westchester/Putnam
Counties,
NY(j) 1 34.3% 1 47.3% 2 3 4 115 $ 12,400 N/A
Treasure
Coast, FL 1 49.7% 1 49.8% 1 5 9 138 $ 9,900 6.5%
Huntington,
WV/
Ashland, KY 1 66.7% 1 70.4% 5 5 9.5 140 $ 9,800 7.3%
</TABLE>
- ------------------------------
(a) Actual city of license may be different from metropolitan market served.
Market names used in this table are those used by Arbitron for Arbitron
Metro Survey Areas or Arbitron Custom Survey Areas for the Company's
markets.
(b) Radio Revenue Rank in each market is the ranking, by 1995 radio group market
revenue share, of each of the Company's radio groups in its market among all
other such radio groups in such market. For each of the Company's radio
groups, except Fairfield County, Radio Revenue Rank was derived by the
Company determining the radio groups in the market and by then calculating
group revenue using the market revenue sources described in note (c) below.
Fairfield County was ranked in the source as indicated in note (c) below.
(c) In each of the markets, except Fairfield County, Radio Revenue Market Share
was derived by dividing (1) the total 1995 radio revenues of the Company's
stations in the market, by (2) the total 1995 radio revenues in that market
as published in BIA's Investing in Radio -- 1996 Market Report (2nd ed.). In
Fairfield County, the total 1995 radio revenues in the market were obtained
from the January 1996 Fairfield Suburban Market Revenue Report by Miller
Kaplan (as hereinafter defined).
(d) Ranking of the Company's combined stations versus other radio groups in the
market for persons aged 12 and older in the applicable Arbitron Metro Survey
Area or Arbitron Custom Survey Areas, Average Quarter Hour Estimates, Monday
through Sunday, 6 am to midnight.
(e) Radio Audience Market Share was derived by dividing (1) the sum of audience
shares from the applicable Arbitron Market Survey of the Company's combined
radio stations, by (2) the total sum of audience shares above the line in
the local market served.
(f) The number of stations for Allentown, Pennsylvania includes WKAP-AM for
which the Company is providing certain sales and marketing services pursuant
to a JSA; the number of stations for the Treasure Coast Market, Florida
includes WPAW-FM for which the Company is providing certain sales and
marketing services pursuant to a JSA; and the number of stations for
Huntington, West Virginia/Ashland, Kentucky includes WMLV-FM, WHRD-AM,
WFXN-FM, WKEE-AM, WKEE-FM, WZZW-AM, WBVB-FM and WIRO-AM, for which the
Company is providing certain sales and marketing services pursuant to LMAs
pending the consummation of the Huntington Acquisitions.
(g) The number of viable radio stations for the Company's Allentown, Wilmington
and Huntington/Ashland markets were taken from Duncan's Radio Market Guide
(1996 Edition). The number of viable stations for the Company's remaining
markets were derived by calculating all radio stations listed home-to-market
by Arbitron which received an average quarter hour share of "1" or greater
in each of the 1995 Arbitron Surveys for the indicated market.
(h) According to BIA's Investing in Radio Market Guide 1996 (2nd ed.) "Revenue
Rank." The Fairfield County, CT and Westchester/Putnam Counties, NY Radio
Revenue Ranks were estimated using BIA's methodology.
(i) Dollars in thousands.
(j) Radio Revenue Rank and Radio Revenue Market Share for Westchester/Putnam
Counties, NY have been estimated by the Company because no data is available
for this sub-market.
4
<PAGE> 7
BUSINESS STRATEGY
The Company believes the most effective way to achieve its objective of
increasing shareholder value is to dominate medium-sized markets by operating
multiple radio stations in each market. Multiple station ownership enables the
Company to maintain greater influence over the pricing of radio advertising
rates and more effectively compete against alternative forms of media
advertising. The Company has the ability to program its multiple stations to
provide advertisers with access to a variety of attractive demographic groups in
a market and as a result, capture a significant share of the market's radio
advertising revenue. In addition, multiple station ownership enables the Company
to attract and retain highly qualified personnel as well as to achieve cost
savings through eliminating duplicative overhead and consolidating broadcast
facilities.
The Company's station operating strategy centers upon (i) strategically
programming its radio stations to dominate specific demographics and/or provide
advertisers a broad spectrum of multiple demographic targets, (ii) conducting
extensive market research, (iii) employing a local sales force that utilizes a
value-added sales approach designed to form marketing partnerships with
advertisers, (iv) employing separate sales forces at each major station in the
Company's markets who coordinate the advertising packages presented to its
advertisers, (v) controlling station operating costs through consolidation of
multiple station facilities and selected use of preprogrammed automation and
automated satellite delivered programming, (vi) providing performance based
management incentives and (vii) building and maintaining broad station awareness
and listener loyalty through strong community involvement.
ACQUISITION STRATEGY
The Company's acquisition strategy is to selectively acquire
underperforming radio stations in medium-sized markets at prices that are
attractive relative to the Company's potential to increase the acquired
stations' broadcast cash flow. The Company believes that significant
opportunities exist in other medium-sized markets for the Company to acquire
additional radio stations at attractive prices relative to their broadcast cash
flow potential. The Company also believes it can effectively capitalize on its
presence in and knowledge of the markets in which it operates to make attractive
acquisitions in adjacent markets. The Company may also enter new markets either
through acquisitions of radio groups that have multiple station ownership in a
market or though acquisitions of individual stations in markets in which the
Company believes it can establish itself as the markets' dominant radio group by
making additional in-market acquisitions.
In analyzing potential acquisitions, the Company considers many factors
including: (i) the price and terms of the purchase in relation to the estimated
potential broadcast cash flow for the station or stations; (ii) the possibility
of obtaining a synergistic combination with additional stations in a given
market; (iii) the existing quality and potential quality of the station's
broadcast signal and transmission facility and (iv) the radio and other media
competition in the market. While the Company continuously evaluates
opportunities to make strategic acquisitions, it has no present commitments or
agreements with respect to any material acquisitions other than the Huntington
Acquisitions.
THE ACQUISITIONS
The Company has recently made, or entered into agreements to make, the
following acquisitions:
Fairfield County, Connecticut. In March 1996, the Company acquired radio
stations WRKI-FM and WINE-AM in Fairfield County, Connecticut (the "Danbury
Acquisition"). In May 1996, the Company acquired radio stations WKHL-FM and
WSTC-AM in Stamford, Connecticut (the "Stamford Acquisition").
Westchester/Putnam Counties, New York. As part of the Danbury Acquisition,
the Company acquired radio stations WZZN-FM (formerly WVIB-FM), WPUT-AM and
WVYB-FM in Westchester/Putnam Counties, New York in March 1996 (the "Westchester
Acquisition").
Treasure Coast Market, Florida. In May 1996, the Company acquired radio
stations WKQS-FM, WAVW-FM and WAXE-AM in the Treasure Coast Market (the "1996
Treasure Coast Acquisition").
Huntington, West Virginia/Ashland, Kentucky. In April 1996, the Company
entered into (i) an agreement to acquire radio stations WKEE-FM and WKEE-AM in
Huntington, West Virginia, WZZW-AM in Milton, West Virginia, WBVB-FM in Coal
Grove, Ohio and WIRO-AM in Ironton, Ohio and
5
<PAGE> 8
(ii) agreements to acquire radio stations WHRD-AM in Huntington, West Virginia,
WFXN-FM in Milton, West Virginia and WMLV-FM in Ironton, Ohio (the "Huntington
Acquisitions"). In connection with these agreements, the Company entered into
LMAs (as defined below) to provide, on a cooperative basis, the programming,
sales, marketing and certain other services to the stations pending the closing
of the acquisitions.
The term "Acquisitions" as used in this Prospectus collectively refers to
the following acquisitions of radio stations by the Company: (i) the Danbury
Acquisition, (ii) the Stamford Acquisition, (iii) the Westchester Acquisition,
(iv) the 1996 Treasure Coast Acquisition and (v) the pending Huntington
Acquisitions. The Company anticipates that the Stamford Acquisition and the 1996
Treasure Coast Acquisition will be consummated in May 1996 and that the
Huntington Acquisitions will be consummated during the second half of 1996.
However, there can be no assurance that any of such transactions will be
consummated. The term "1995 Treasure Coast Acquisition" as used in this
Prospectus refers to the acquisition of radio station WQOL-FM and the Company's
entry into a JSA with respect to WPAW-FM. Both stations are in the Treasure
Coast Market, Florida.
The Company's executive offices are located at 500 Fifth Avenue, Suite
3000, New York, New York 10110. The telephone number is (212) 302-2727.
THE OFFERING
<TABLE>
<S> <C>
Class A Common Stock offered by the Company................. 2,882,143 shares
Class A Common Stock offered by the Selling
Shareholders(a)........................................... 1,417,857 shares
Total.................................................. 4,300,000 shares
Common Stock to be outstanding after the Offering(b)
Class A Common Stock...................................... 4,542,554 shares
Class B Common Stock...................................... 2,280,690 shares
Total.................................................. 6,823,244 shares
Use of proceeds............................................. To repay existing indebtedness, to
redeem the Company's outstanding
shares of Series A Preferred Stock,
to finance a portion of the
Huntington Acquisitions and to pay
deferred compensation. The Company
will not receive any proceeds from
the sale of shares of Class A Common
Stock by the Selling Shareholders.
See "Use of Proceeds."
Voting rights............................................... Each share of Class A Common Stock
is entitled to one vote and each
share of Class B Common Stock is
entitled to eight votes. After the
Offering, the Estate of Carter
Burden will own approximately 80% of
the total voting power and 28% of
the fully-diluted economic interest
in the Company. The Estate of Carter
Burden will continue to have the
ability to control the Company. See
"Principal and Selling Shareholders"
and "Description of Capital Stock."
NASDAQ National Market symbol............................... CMIA
</TABLE>
- ------------------------------
(a) The Selling Shareholders include the Estate of Carter Burden and William
A.M. Burden & Co., L.P.
(b) Excludes: (i) options outstanding on the date hereof to purchase
approximately 694,368 shares of Class A Common Stock at an exercise price of
$6.25 and (ii) warrants outstanding on the date hereof to purchase 597,960
shares of Class A Common Stock at an exercise price of $.01.
6
<PAGE> 9
MARKET DATA AND CERTAIN DEFINITIONS
Unless otherwise indicated herein, all markets, audience ratings and
audience rankings have been derived for the indicated station or group of
stations from surveys of the indicated demographic group listening Monday
through Sunday, 6 a.m. to 12 midnight, based on the average of the survey
periods for the referenced year, as reported by Arbitron, Radio Market Report,
The Arbitron Company ("Arbitron"). Unless otherwise indicated herein, audience
share data is expressed as the "local" average quarter hour share for each
indicated radio station. A radio station's "local" audience share is derived by
comparing the radio station's average quarter hour share to the total average
quarter hour share for all stations listed as inside the Metro Survey Area
("MSA") ("home-to-market" or "above the line") by Arbitron. Average quarter
hour share is the percentage of the estimated number of persons who listened to
a given radio station for a minimum of five minutes within a quarter hour
compared to the total number of persons who listened to radio in the market
within such quarter hour. The most recent Arbitron survey utilized in this
Prospectus is Fall 1995.
Unless otherwise indicated herein, metro rank, market ranking by radio
advertising revenue and market radio advertising revenue have been obtained from
Investing in Radio, 1996 Market Report--Second Edition, BIA Publications Inc.
("BIA"). Revenue share in the Company's markets has been derived from comparing
the Company's 1995 total revenue less barter revenue in each market to the
estimated market radio advertising revenue for 1995. Revenue rankings in the
Company's markets have been derived by comparing the Company's revenue share in
each market to the revenue share for the Company's competitors (utilizing the
estimated revenue for each competing radio station as provided by BIA). Market
radio advertising revenue, revenue share data and revenue rankings in the
Company's Fairfield County, Connecticut market have been obtained from Miller,
Kaplan Market Revenue Report (published monthly), a publication of Miller,
Kaplan, Arase & Co., Certified Public Accountants ("Miller Kaplan"). Market
radio advertising revenue, revenue share data and revenue rankings for
Westchester County, New York have been estimated by the Company without the
benefit of any independent investigation or confirmation, as no published data
on this sub-market is available.
The terms local marketing agreement ("LMA") and joint sales agreement
("JSA") are referred to in various places in this Prospectus. An LMA refers to
an agreement, although it may take various forms, under which a radio station
agrees to provide, on a cooperative basis, the programming, sales, marketing and
similar services for a different radio station. A JSA refers to an agreement,
similar to an LMA, under which a radio station agrees to provide the sales and
marketing services for another station while the owner of such other radio
station provides the programming for such other radio station. The term
"duopoly" is referred to in various places in this Prospectus and refers to the
ownership of two or more AM or two or more FM radio stations in the same
geographic market. Duopolies, LMAs and JSAs are more fully described in
"Business-- Federal Regulation of Radio Broadcasting."
7
<PAGE> 10
SUMMARY CONSOLIDATED FINANCIAL DATA
(dollars in thousands)
The following table sets forth summary historical consolidated financial
data and certain pro forma financial data of the Company for the five years
ended December 31, 1995 and the three-month period ended March 26, 1995 and the
three-month period ended March 31, 1996. The financial information presented
below is qualified in its entirety by, and should be read in conjunction with,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," the Company's Consolidated Financial Statements and the Notes
thereto, and the other information contained elsewhere in this Prospectus.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------------------
YEAR ENDED DECEMBER 31, MARCH 26, MARCH 31,
----------------------------------------------------------- --------- ------------------
1995 PRO 1996 PRO
1991 1992 1993 1994 1995 FORMA(A) 1995 1996 FORMA(A)
------- ------- ------- ------- ------- --------- --------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Total revenue.................. $17,677 $19,578 $21,643 $28,686 $33,653 $46,327 $ 6,507 $ 8,048 $ 9,787
Net revenue.................... 16,335 17,961 19,798 26,225 30,795 42,536 5,967 7,416 9,033
Station operating
expenses(b).................. 12,080 12,713 13,509 16,483 19,033 27,185 4,168 5,375 6,274
Corporate expenses............. 1,167 1,602 2,531 2,110 2,051 2,151 461 466 491
Operating income............... 1,482 1,970 1,133 3,307 5,778 7,634 316 1,095 1,384
Net loss....................... (4,183) (2,580) (3,782) (527) (2,240) (2,317) (585) (1,436) (1,060 )
SUPPLEMENTAL INFORMATION:
Broadcast cash flow(c)......... $ 4,255 $ 5,248 $ 6,289 $ 9,742 $11,762 $15,351 $ 1,799 $ 2,041 $ 2,759
Broadcast cash flow
margin(c).................... 26.0% 29.2% 31.8% 37.1% 38.2% 36.1% 30.1% 27.5% 30.5 %
EBITDA(c)...................... 3,088 3,646 3,758 7,632 9,711 13,200 1,338 1,575 2,268
Capital expenditures........... 179 371 333 623 321 42 124
</TABLE>
<TABLE>
<CAPTION>
AT MARCH 31, 1996
-------------------------
ACTUAL PRO FORMA(D)
-------- ------------
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................................................................. $ 5,087 $ 1,644
Net working capital....................................................................... 6,050 2,307
Total assets.............................................................................. 63,211 89,043
Total debt (including current maturities)................................................. 75,653 67,153
Stockholders' equity (deficit)............................................................ (19,991) 15,323
</TABLE>
- ------------------------------
(a) Pro forma operating data and supplemental information for the year ended
December 31, 1995 give effect to the Recapitalization Transactions (as
hereinafter defined), the Acquisitions, the Offering and the application of
the estimated net proceeds therefrom and the 1995 Treasure Coast Acquisition
as if each had occurred on January 1, 1995. The pro forma operating data and
supplemental information for the three months ended March 31, 1996 give
effect to the Acquisitions and the Offering and the application of the
estimated net proceeds therefrom as if each had occurred on January 1, 1995.
(b) Station operating expenses exclude depreciation and amortization, corporate
expenses, long-term incentive compensation and separation compensation.
(c) For purposes of this Prospectus, EBITDA is defined as net income (loss)
before (i) extraordinary gain (loss), (ii) income taxes, (iii) other
expenses (income), (iv) net interest expense, (v) long-term incentive
compensation and separation compensation and (iv) depreciation and
amortization. Broadcast cash flow is defined as EBITDA before corporate
expenses. Although EBITDA and broadcast cash flow are not measures of
performance calculated in accordance with Generally Accepted Accounting
Principles ("GAAP"), EBITDA and broadcast cash flow are widely used in the
broadcast industry as measures of a radio broadcasting company's operating
performance. Neither EBITDA nor broadcast cash flow should be considered in
isolation or as a substitute for net income, cash flows from operating
activities and other income or cash flow statement data prepared in
accordance with GAAP or as a measure of profitability or liquidity.
Broadcast cash flow and EBITDA differ from cash flow from operations under
GAAP primarily because broadcast cash flow and EBITDA are not reduced by
interest expense and income tax expense, changes in the levels of operating
assets and liabilities and separation and long-term incentive compensation
paid during the period. In addition, broadcast cash flow excludes corporate
expenses that are reflected as a reduction in cash flow from operations.
Broadcast cash flow and EBITDA are not intended to depict funds available
for discretionary uses as they do not reflect the Company's debt service and
capital requirements.
(d) The pro forma balance sheet data give effect to the 1996 Treasure Coast
Acquisition, the Stamford Acquisition and the Huntington Acquisitions and
the Offering and the application of the estimated net proceeds therefrom as
if each had occurred on March 31, 1996.
8
<PAGE> 11
RISK FACTORS
In addition to the other information set forth in this Prospectus,
prospective investors should carefully consider the following risk factors
before purchasing the shares of Class A Common Stock offered hereby.
CONTROL BY PRINCIPAL SHAREHOLDER
After the Offering, the Estate of Carter Burden will retain the power to
control all matters submitted to stockholders of, and to elect all directors of,
the Company by virtue of its stock ownership and the disparate voting rights of
the Class A Common Stock and the Class B Common Stock. The Class A Common Stock
together with the Class B Common Stock are collectively referred to herein as
the "Common Stock." The executors of the estate are Susan L. Burden, S. Carter
Burden III and Flobelle F. Burden. Such control may have the effect of
discouraging certain types of transactions involving an actual or potential
change of control of the Company, including transactions in which the holders of
Class A Common Stock might otherwise receive a premium for their shares over
then-current market prices. See "Principal and Selling Shareholders" and
"Description of Capital Stock." Following the Offering, the Estate of Carter
Burden (and eventually the trust referred to in the next sentence) will have
approximately 80% of the total voting power and approximately 28% of the
fully-diluted economic interest in the Company. Pursuant to Mr. Burden's will,
the shares of the Class A Common Stock held by the Estate of Carter Burden is
expected to be transferred to a trust of which the trustees are the three
executors of the estate and an additional member of the Burden family, and the
beneficiaries of which are members of the Burden family. The Estate of Carter
Burden, by virtue of its ability to transfer some or all of its shares of Class
B Common Stock, will retain the power to convey control of the Company to a
third party in a transaction in which holders of Class A Common Stock do not
participate. Such an event would constitute a change of control under, and
consequent acceleration of, the repayment date of the Company's indebtedness.
The Communications Act of 1934, as amended (the "Communications Act") and
the rules and regulations of the Federal Communications Commission ("FCC")
require the prior consent of the FCC to any change of control of the Company.
See "Business--Federal Regulation of Radio Broadcasting."
EXPANSION THROUGH ACQUISITIONS
There can be no assurance that the Company can successfully implement its
operating strategy with respect to its recent acquisitions or any subsequent
acquisitions, nor can there be any assurance that growth created by its recent
acquisitions, or through any subsequent acquisitions, will not be impaired by
competition from other radio stations in the same market. In addition, rapidly
growing businesses frequently encounter unforeseen expenses and delays in
completing acquisitions, as well as difficulties and complications in
integrating the acquired operations without disruption in the overall
operations. As a result, acquisitions may adversely affect the Company's
operating results in the short term due to many factors, including capital
requirements. The Company intends to continue to evaluate acquisitions of
stations in medium-sized markets. See "Business--Expansion Strategy." Although
the Company has entered into agreements regarding the Huntington Acquisitions,
there can be no assurance that such acquisitions will be consummated or that the
Company will be able to make future acquisitions at purchase prices acceptable
to the Company.
COMPETITION; BUSINESS RISKS
Radio broadcasting is a highly competitive business. The financial success
of each of the Company's radio stations depends, to a significant degree, upon
its audience ratings, its share of the overall radio advertising revenue within
its geographic market and the economic health of the market. The audience
ratings and advertising revenue of the Company's individual stations are subject
to change and any adverse change in a particular market could have a material
adverse effect on the total revenue and broadcast cash flow of the Company. The
Company's radio stations compete for audience share and advertising revenue
directly with other FM and AM radio stations and with other media within their
respective markets, such as newspapers, television, magazines, billboard
advertising, transit advertising, and direct mail advertising. While the Company
already competes with other stations with comparable programming formats in each
of its markets,
9
<PAGE> 12
if another radio station in the market were to convert its programming format to
a format similar to one of the Company's stations, if a new station were to
adopt a competitive format, or if an existing competitor were to strengthen its
operations, the Company's stations could suffer a reduction in ratings and/or
advertising revenue and could require increased promotional and other expenses.
The Telecommunications Act of 1996 will facilitate the entry of other radio
broadcasting companies into the markets in which the Company operates or may
operate in the future, some of which may be larger and have more financial
resources than the Company. In addition, certain of the Company's stations
compete, and in the future other stations of the Company may compete, with
duopolies or other combinations of stations operated by a single operator. There
can be no assurance that the Company's radio stations will be able to maintain
or increase their current audience ratings and radio advertising revenue. See
"Business--Competition."
Radio broadcasting is also subject to competition from new media
technologies that are being developed or have been introduced, such as the
delivery of audio programming through cable television wires or the introduction
of digital audio broadcasting ("DAB"). DAB may provide a medium for the delivery
by satellite (digital audio radio satellite service, or "DARS") or terrestrial
means of multiple audio programming formats to local and national audiences. The
Company cannot predict the effect, if any, that any such new technologies may
have on the radio broadcasting industry or on the Company. See
"Business--Changes in the Broadcasting Industry" and "Business--Federal
Regulation of Radio Broadcasting--Proposed Changes."
The profitability of the Company's radio stations is subject to various
other factors which influence the radio broadcasting industry as a whole. The
Company's radio stations may be affected by changes in audience tastes,
priorities of advertisers, new laws and governmental regulations and policies,
changes in broadcast technical requirements, proposals to limit the tax
deductibility of expenses incurred by advertisers and changes in the willingness
of financial institutions and other lenders to finance radio station
acquisitions and operations. The Company cannot predict which, if any, of these
factors might have a significant impact on the radio broadcasting industry in
the future, nor can it predict what impact, if any, the occurrence of these
events might have on the Company's operations.
GOVERNMENT REGULATION
Each of the Company's radio stations operate pursuant to one or more
licenses issued by the FCC that presently have a maximum term of seven years.
The Company's radio operating licenses expire at various times from April 1998
to February 2003. Although the Company may apply to renew these licenses, third
parties may challenge the Company's renewal applications. While the Company is
not aware of facts or circumstances that would prevent the Company from having
its current licenses renewed and the Company has never previously been denied a
license renewal, there can be no assurance that the licenses will be renewed.
Failure to obtain the renewal of any of the Company's broadcast licenses or to
obtain FCC approval for an assignment or transfer to the Company of a license in
connection with a radio station acquisition may have a material adverse effect
on the Company's business and operations. In addition, if the Company or any of
its officers, directors or significant stockholders violates the FCC's rules and
regulations or the Communications Act, or is convicted of a felony, the FCC may
in response to a petition from a third party or on its own motion, in its
discretion, commence a proceeding to impose sanctions upon the Company which
could involve the imposition of monetary penalties, the revocation of the
Company's broadcast licenses or other sanctions. If the FCC were to issue an
order denying a license renewal application or revoking a license, the Company
would be required to cease operating the radio station subject to the license
only after the Company has exhausted all administrative and judicial review
without success.
The radio broadcasting industry is subject to extensive and changing
regulation. Among other things, the Communications Act and FCC rules and
policies limit the number of stations that one entity can own, or in which that
entity can hold an attributable interest, in a market and require FCC approval
for transfers of control of FCC licensees and assignments of FCC licenses. The
filing of petitions or complaints against the Company or other FCC licensees
could result in the FCC delaying the grant of, or refusing to grant, its consent
to the assignment of licenses to or from an FCC licensee or the transfer of
control of an FCC licensee. In certain circumstances, the Communications Act and
FCC rules will operate to impose limitations on alien ownership and voting of
the Common Stock of the Company. There can be no assurance that there will not
be
10
<PAGE> 13
changes in the current regulatory scheme, the imposition of additional
regulations or the creation of new regulatory agencies, which changes would
restrict or curtail the ability of the Company to acquire, operate and dispose
of stations or, in general, to compete profitably with other operators of radio
and other media properties. Moreover, there can be no assurance that there will
not be other regulatory changes, including aspects of deregulation, that will
result in a decline in the value of broadcasting licenses held by the Company or
adversely affect the Company's competitive position. See "Business--Federal
Regulation of Radio Broadcasting."
DEPENDENCE ON KEY PERSONNEL
The Company's business depends upon the continued efforts, abilities and
expertise of its executive officers and other key employees, including Bruce A.
Friedman, the President and Chief Executive Officer of the Company ("Mr.
Friedman") and James T. Shea, Jr., the Chief Operating Officer of the Company
("Mr. Shea"). The Company has employment agreements with each of Mr. Friedman
and Mr. Shea. For a discussion of such employment agreements, see
"Management--Employment Agreements and Arrangements." The loss of any of the
foregoing could have a material adverse effect on the Company's business. See
"Management--Employment Agreements and Arrangements."
NET LOSSES
The Company reported net losses of approximately $4.2 million, $2.6
million, $3.8 million, $527,000 and $2.2 million for the years ended December
31, 1991, 1992, 1993, 1994 and 1995, respectively, and $1.4 million for the
three-month period ended March 31, 1996. These losses include significant
interest expense as well as substantial non-cash charges such as depreciation
and amortization. There can be no assurance that the Company will not continue
to experience net losses, principally as a result of interest expense and
depreciation and amortization. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
RESTRICTIONS ON DIVIDENDS
The Company intends to retain future earnings for use in its business and
does not anticipate paying any dividends on shares of its Common Stock in the
foreseeable future. In addition, the Company is currently restricted from paying
cash dividends on its Common Stock under the terms of the Indenture dated April
21, 1995 as amended among the Company, IBJ Schroder Bank & Trust Company, as
Trustee, and the Guarantors named therein (the "Indenture") and the terms of the
Loan and Security Agreement (the "Senior Loan Agreement") dated as of March 13,
1996 as amended among Commodore Holdings, Inc. ("Holdings"), the Company, the
Guarantors named therein and the senior lender named therein (the "Senior
Lender"). See "Dividend Policy" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Liquidity and Capital Resources"
and "Description of Capital Stock--Common Stock-- Dividends."
DILUTION
Persons purchasing shares of Class A Common Stock in the Offering will
sustain immediate dilution in net tangible book value per share of Common Stock
of approximately $ per share. This dilution is based on an assumed
initial public offering price of $ per share, the mid-point of the
range shown on the cover page of this Prospectus. Dilution for this purpose
represents the difference between the per share initial public offering of the
Class A Common Stock and the pro forma net tangible book value per share of
Class A Common Stock after the Offering. See "Dilution."
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of the Offering, 4,542,554 shares of Class A Common Stock
will be issued and outstanding and 3,573,018 shares will be issuable upon the
exercise of outstanding stock options, warrants and shares of Class B Common
Stock. The shares of Class A Common Stock sold in the Offering will be freely
11
<PAGE> 14
tradeable by persons other than "affiliates" of the Company, as that term is
defined under the Securities Act of 1933, as amended (the "Securities Act"),
without restrictions or further registration under the Securities Act. The
Company, its officers, directors, the Selling Shareholders and certain other
stockholders, who collectively are the beneficial holders of an aggregate of
shares of Common Stock, have agreed with the Underwriters not to, directly
or indirectly, issue, offer, sell, contract to sell, grant any option to
purchase or otherwise dispose of, without the prior written consent of
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), any shares of
Common Stock or any securities convertible into, or exercisable or exchangeable
for, or warrants, options or rights to purchase or acquire Common Stock or in
any other manner transfer all or a portion of the economic consequences
associated with the ownership of any Common Stock, or enter into any agreement
to do any of the foregoing, for a period of 180 days after the date of this
Prospectus. Upon expiration of such 180 day period, such holders will in general
be entitled to dispose of their shares (including the shares underlying such
options and warrants), although the shares of Common Stock held by affiliates of
the Company will continue to be subject to the volume and other restrictions of
Rule 144 under the Securities Act. In addition, certain existing stockholders of
the Company, including holders of Common Stock for whom the trading or
disposition of such Common Stock is restricted pursuant to the Securities Act,
will have registration rights with respect to Common Stock held by them. Sales
of substantial amounts of Common Stock, or the perception that such sales could
occur, may affect the market price of the Common Stock prevailing from time to
time. See "Shares Eligible for Future Sale" and "Underwriting."
NO PRIOR PUBLIC MARKET
Prior to the Offering, there has been no public market for the Company's
Class A Common Stock or Class B Common Stock and there can be no assurance that
an active public market will develop or be sustained after the Offering or that
the initial public offering price corresponds to the price at which the Class A
Common Stock will trade in the public market subsequent to the Offering. The
initial public offering price for the Class A Common Stock will be determined by
negotiations among the Company and the representatives of the Underwriters based
upon the consideration of certain factors set forth herein under "Underwriting."
Market conditions in the radio industry and market fluctuations in the stock
market generally may have an adverse impact on the market price of the Class A
Common Stock.
12
<PAGE> 15
USE OF PROCEEDS
The net proceeds to the Company from the sale of the 2,882,143 shares of
Class A Common Stock offered by the Company hereby are estimated to be
approximately $36.0 million ($42.0 million if the Underwriters' over-allotment
option is exercised in full), assuming an initial public offering price of
$ per share (the midpoint of the currently anticipated range of the initial
public offering price), and after deducting the underwriting discount and
estimated offering expenses, all of which are payable by the Company. The
Company intends to use such net proceeds (i) to repay all amounts then
outstanding under the Senior Credit Facility (as hereinafter defined), (ii) to
redeem the outstanding shares of Senior Exchangeable Redeemable Preferred Stock,
Series A, $.01 par value per share, of the Company (the "Series A Preferred
Stock"), (iii) to finance a portion of the Huntington Acquisitions and (iv) to
pay deferred compensation to certain executives of the Company. The Company will
not receive any proceeds from the sale of shares of Class A Common Stock by the
Selling Shareholders.
The following table illustrates the pro forma estimated uses of net
proceeds as if the Offering, certain borrowings under the Senior Credit
Facility, the issuance of Series A Preferred Stock under the Preferred Stock
Facility (as hereinafter defined) and the Stamford Acquisition and the 1996
Treasure Coast Acquisition had occurred on or prior to March 31, 1996:
<TABLE>
<CAPTION>
DOLLARS IN
THOUSANDS
<S> <C>
Repayment of Amounts Outstanding Under the Senior Credit Facility(a)....... $ 15,000
Redemption of Series A Preferred Stock(b).................................. 10,000
Huntington Acquisitions(c)................................................. 9,032
Payment of Deferred Compensation........................................... 1,968
----------
Total............................................................ $ 36,000
=======
</TABLE>
- ------------------------------
(a) The Senior Credit Facility (the "Senior Credit Facility") consists of: (i) a
revolving credit facility of $30,000,000 and (ii) a receivable loan facility
of up to $5,000,000, each bearing interest at a floating rate of interest,
adjusted on the first calendar day of each calendar month, equal to 3.5%
over the London Interbank Offer Rate ("LIBOR"). As of March 31, 1996 the
Company's indebtedness under the Senior Credit Facility was $8,500,000.
Following the Offering, the Company expects to be able to reborrow up to $35
million under the Senior Credit Facility. See "Description of Certain
Indebtedness -- Senior Credit Facility."
(b) The Company intends to issue 10,000 shares of the Series A Preferred Stock
in May 1996 for an aggregate consideration of $10.0 million. It is
anticipated that the proceeds of the issuance will be used to consummate the
Stamford Acquisition and the 1996 Treasure Coast Acquisition.
(c) The Company intends to finance the balance of the purchase price of the
Huntington Acquisitions (approximately $2.4 million) through available
funds.
DIVIDEND POLICY
The Company currently intends to retain future earnings for use in its
business and does not anticipate paying any dividends on shares of its Common
Stock in the foreseeable future. In addition, the Company is currently
restricted under the terms of the Indenture and the Senior Loan Agreement from
paying cash dividends on its Common Stock. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Liquidity and Capital
Resources" and "Description of Capital Stock--Common Stock--Dividends."
13
<PAGE> 16
DILUTION
At March 31, 1996, the deficit in net tangible book value of the Company
was approximately $(61.3 million) or $(15.56) per share. Net tangible book value
per share represents the total tangible assets of the Company, less the total
liabilities of the Company, divided by the number of shares of Common Stock
outstanding. After giving effect to the sale by the Company of the 2,882,143
shares of Common Stock offered hereby (and after deducting underwriting
discounts and commissions and estimated offering expenses) and the receipt of
the proceeds therefrom, the pro forma deficit in net tangible book value of the
Company as of March 31, 1996 would have been approximately $(54.4 million) or
$(7.97) per share. This represents an immediate increase in net tangible book
value of $7.59 per share to the existing shareholders and an immediate dilution
of $21.97 per share to new shareholders. Dilution per share represents the
difference between the price per share to be paid by the new shareholders and
the deficit in pro forma net tangible book value per share at March 31, 1996.
The following table illustrates the per share dilution:
<TABLE>
<S> <C> <C>
Initial public offering price per share........................ $
Deficit in net tangible book value per share before the
Offering.................................................. $ (15.56)
Increase in net tangible book value per share attributable
to the Offering........................................... 7.59
Deficit in pro forma net tangible book value per share, as
adjusted
for the Offering............................................. (7.97)
Dilution per share to new shareholders(a)...................... $ 21.97
</TABLE>
The following table sets forth, on a pro forma basis at March 31, 1996, the
difference between the number of shares of Class A Common Stock purchased from
the Company, the total consideration paid to the Company and the average price
per share paid by existing shareholders and to be paid by new shareholders.
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
--------------------- ----------------------- PRICE PER
NUMBER PERCENT AMOUNT PERCENT SHARE
<S> <C> <C> <C> <C> <C>
Existing shareholders(b)(c)............ 3,941,100 57.8% $ 9,806,405 19.6% $ 2.49
New shareholders(b).................... 2,882,143 42.2 40,350,000 80.4
-- --
------- --------
Total........................ 6,823,243 100.0% $50,156,405 100.0%
======= == ======== ==
</TABLE>
- ------------------------------
(a) If the Underwriters' over-allotment option is exercised in full, the pro
forma deficit in net tangible book value will be approximately $(6.64) per
share, resulting in dilution to new shareholders in the Offering of $20.64
per share. See "Underwriting."
(b) Sales by the Selling Shareholders in the Offering will reduce the number of
shares held by existing shareholders to 2,523,243, or 37.0% (2,343,020
shares or 34.3% if the over-allotment option is exercised in full) of the
total number of shares of Common Stock outstanding and will increase the
number of shares held by new investors to 4,300,000 shares, or 63.0%
(4,764,777 shares or 65.4% if the over-allotment option is exercised in
full) of the total number of shares of Common Stock outstanding after the
Offering.
(c) Excludes: (i) options outstanding on the date hereof to purchase
approximately 694,368 shares of Class A Common Stock at an exercise price of
$6.25 and (ii) warrants outstanding on the date hereof to purchase 597,960
shares of Class A Common Stock at an exercise price of $.01.
14
<PAGE> 17
CAPITALIZATION
The following table sets forth the actual capitalization of the Company as
of March 31, 1996, and pro forma to give effect to (i) the Offering and the
application of the estimated net proceeds therefrom and (ii) the 1996 Treasure
Coast Acquisition, the Stamford Acquisition and the Huntington Acquisitions, as
if each of the foregoing had occurred on March 31, 1996. This table should be
read in conjunction with the information contained in the "Pro Forma
Consolidated Financial Information" and the Company's Consolidated Financial
Statements and Notes thereto.
<TABLE>
<CAPTION>
AS OF MARCH 31, 1996
-------------------------
ACTUAL PRO FORMA(A)
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Long-term debt (including current maturities):
Senior Credit Facility.................................... $ 8,500 $ 0
Senior Subordinated Notes(b).............................. 65,978 65,978
Note payable, officer(c).................................. 1,175 1,175
-------- --------
Total long-term debt.............................. 75,653 67,153
-------- --------
Stockholders' equity (deficit)(d)
Class A Common Stock, $.01 par value; 21,600,000 shares
authorized, 1,054,988 shares issued and 439,215 shares
outstanding, 4,542,554 shares issued and outstanding on
a pro forma basis...................................... 10 45
Class B Common Stock, $.01 par value; 3,501,886 shares
authorized, issued and outstanding, 2,280,690 shares
issued and outstanding on a pro forma basis............ 35 23
Additional paid-in capital................................ 23,541 59,518
Accumulated deficit(e).................................... (43,551) (44,237)
Less treasury stock at cost, 615,773 shares............... 26 26
-------- --------
Total stockholders' equity (deficit).............. (19,991) 15,323
-------- --------
Total capitalization.............................. $ 55,662 $ 82,476
======== ========
</TABLE>
- ------------------------------
(a) Does not include the shares of Series A Preferred Stock issued in May 1996,
which are being redeemed with the proceeds from the Offering. See "Use of
Proceeds."
(b) The 13 1/4% Senior Subordinated Notes due 2003 (the "Senior Subordinated
Notes") were issued at a discount and have an accreted value of $67.8
million at March 31, 1996 and an aggregate face amount of $75.5 million.
(c) See Note 5 to the Company's Consolidated Financial Statements.
(d) Outstanding share figures do not include: (i) options outstanding on the
date hereof to purchase approximately 694,368 shares of Class A Common Stock
at a per share exercise price of $6.25 and (ii) warrants outstanding on the
date hereof to purchase 597,960 shares of Class A Common Stock at a per
share exercise price of $.01.
(e) Pro forma accumulated deficit includes an estimated charge of approximately
$686,000 in connection with the payment of deferred compensation to certain
executives of the Company which will be recorded in the period in which the
payment is made. See "Use of Proceeds."
15
<PAGE> 18
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The Unaudited Pro Forma Consolidated Statement of Operations for the year
ended December 31, 1995 presents the statement of operations of the Company as
if the Recapitalization Transactions, the 1995 Treasure Coast Acquisition, the
Acquisitions and the Offering and the application of the estimated net proceeds
therefrom had occurred on January 1, 1995. The Unaudited Pro Forma Consolidated
Statement of Operations for the three months ended March 31, 1996 presents the
statement of operations of the Company as if the Acquisitions and the Offering
and the application of the estimated net proceeds therefrom had occurred on
January 1, 1995. The Unaudited Pro Forma Consolidated Balance Sheet at March 31,
1996 presents the balance sheet of the Company as if the Huntington
Acquisitions, the 1996 Treasure Coast Acquisition and the Stamford Acquisition
and the Offering and the application of the estimated net proceeds therefrom had
occurred on March 31, 1996.
The Acquisitions and the 1995 Treasure Coast Acquisition are accounted for
using the purchase method of accounting. The total cost of such acquisitions
will be allocated to the tangible and intangible assets acquired and liabilities
assumed based upon their respective fair values. The allocation of the
respective purchase prices included in the pro forma financial statements is
preliminary. The Company does not expect that the final allocation of the
purchase price will materially differ from the preliminary allocation.
The pro forma adjustments are based upon available information and upon
certain assumptions that the Company believes are reasonable under the
circumstances. The pro forma consolidated financial information should be read
in conjunction with the Company's Consolidated Financial Statements and Notes
thereto, as well as the Financial Statements and Notes thereto of (i) Danbury
Broadcasting, Inc., with respect to the Danbury Acquisition, (ii) Adventure
Communications, Inc., with respect to the Huntington Acquisitions, (iii) Media
VI, with respect to the 1996 Treasure Coast Acquisition and (iv) Q Broadcasting,
Inc., with respect to the Stamford Acquisition, included elsewhere in this
Prospectus. The pro forma statement of operations data are not necessarily
indicative of the results that would have occurred if the Recapitalization
Transactions, the Acquisitions, the Offering and the application of the
estimated net proceeds therefrom and the 1995 Treasure Coast Acquisition had
occurred on the dates indicated, nor are they indicative of the Company's future
results of operations. There can be no assurance whether or when the Huntington
Acquisitions will be consummated.
The pro forma consolidated financial information does not include the
issuance of Series A Preferred Stock since it was originally issued in May 1996
and will be redeemed by the Company using the proceeds from the Offering.
16
<PAGE> 19
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995
--------------------------------------------------------------------------------------------------------
1996 1995
COMMODORE TREASURE TREASURE
MEDIA, WESTCHESTER DANBURY HUNTINGTON COAST STAMFORD COAST
INC. ACQUISITION ACQUISITION(A) ACQUISITIONS ACQUISITION ACQUISITION(B) ACQUISITION(C)
--------- ------------ -------------- ------------ ----------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Total revenue........... $ 33,653 $ 876 $ 3,268 $ 3,353 $ 2,131 $ 2,509 $ 537
Less: agency
commissions........... (2,858 ) (44) (297) (187) (139) (223) (43)
-------- ----- ------- ------- ------- ------- -----
Net revenue............. 30,795 832 2,971 3,166 1,992 2,286 494
Station operating
expenses.............. 19,033 714 2,165 2,118 1,492 3,110 319
Corporate expenses...... 2,051 0 369 573 0 0 0
Depreciation and
amortization.......... 1,926 173 433 244 149 448 169
Long-term incentive
compensation.......... 2,007 0 0 0 0 0 0
-------- ----- ------- ------- ------- ------- -----
Operating income
(loss)................ 5,778 (55) 4 231 351 (1,272) 6
Interest expense, net... 7,000 145 354 0 216 493 0
Other (income)
expenses.............. 434 (43) 3 (43) 0 (154) 0
-------- ----- ------- ------- ------- ------- -----
Income (loss) before
income taxes and
extraordinary loss.... (1,656 ) (157) (353) 274 135 (1,611) 6
Income taxes............ 140 0 0 76 0 0 0
-------- ----- ------- ------- ------- ------- -----
Net income (loss) before
extraordinary item.... $ (1,796 ) $ (157) $ (353) $ 198 $ 135 $ (1,611) $ 6
===== ======= ======= ======= ======= =====
Preferred stock
dividend.............. 252
--------
Net loss applicable to
common shares before
extraordinary item.... $ (2,048 )
========
Net loss per common
share before
extraordinary item.... $ (0.53 )
Weighted average
common shares
outstanding........... 3,892,300
<CAPTION>
PRO FORMA PRO FORMA
ADJUSTMENTS COMBINED
----------- ----------
<S> <C> <C>
Total revenue........... $ $ 46,327
Less: agency
commissions........... (3,791)
------- --------
Net revenue............. 42,536
Station operating
expenses.............. (1,766)(d) 27,185
Corporate expenses...... 100(e) 2,151
(942)(e)
Depreciation and
amortization.......... 17(f) 3,559
Long-term incentive
compensation.......... 2,007
------- --------
Operating income
(loss)................ 2,591 7,634
Interest expense, net... 606(g) 8,814
Other (income)
expenses.............. 237(h) 485
51(i)
------- --------
Income (loss) before
income taxes and
extraordinary loss.... 1,697 $ (1,665)
-------
Income taxes............ (76)(j) 140
------- --------
Net income (loss) before
extraordinary item.... 1,773 (1,805)
Preferred stock
dividend.............. (252)(k) 0
--------
Net loss applicable to
common shares before
extraordinary item.... $ (1,805)
========
Net loss per common
share before
extraordinary item.... $ (0.26)
Weighted average
common shares
outstanding........... 6,774,300
</TABLE>
17
<PAGE> 20
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1996
------------------------------------------------------------------------------------
1996
COMMODORE TREASURE
MEDIA, HUNTINGTON COAST STAMFORD PRO FORMA PRO FORMA
INC. ACQUISITIONS ACQUISITION ACQUISITION ADJUSTMENTS COMBINED
--------- ------------ ----------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Total revenue................. $ 8,048 $722 $ 310 $ 707 $ $ 9,787
Less: agency commissions...... (632) (49) (15) (58) (754)
------- ---- ---- ---- ----- -----
Net revenue................... 7,416 673 295 649 9,033
Station operating expenses.... 5,375 407 245 852 (605)(d) 6,274
Corporate expenses............ 466 145 0 0 25(l) 491
(145)(l)
Depreciation and
amortization................ 480 53 26 76 249(m) 884
Long-term incentive
compensation................ 0 0 0 0 0
------- ---- ---- ---- ----- -----
Operating income (loss)....... 1,095 68 24 (279) 476 1,384
Interest expense, net......... 2,336 0 46 148 (281)(n) 2,249
Other (income) expenses....... 168 (9) 0 0 9(h) 168
------- ---- ---- ---- ----- -----
Income (loss) before income
taxes....................... (1,409) 77 (22) (427) 748 (1,033)
Income taxes.................. 27 31 0 0 (31)(j) 27
------- ---- ---- ---- -----
Net income (loss)............. (1,436) $ 46 $ (22) $(427) (1,060)
==== ==== ====
Net loss applicable to common
shares...................... $(1,436) $(1,060)
======= =====
Net loss per common share..... $ (0.36) $ (0.16)
Weighted average common shares
outstanding................. 3,949,900 6,831,900
</TABLE>
18
<PAGE> 21
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(a) Reflects the historical statement of operations of Danbury Broadcasting,
Inc. ("Danbury"). Danbury operates on a June 30 fiscal year end. The
historical statement of operations included in the unaudited pro forma
consolidated financial statements, however, have been prepared on a
calendar year basis based on the unaudited quarterly financial statements
of Danbury.
(b) Reflects the historical Q Broadcasting, Inc. statement of operations for
the fiscal year ended September 30, 1995.
(c) Reflects the results of operations of Treasure Coast Media, Inc. for
January through June 1995 when the Company did not own or operate the
station acquired in connection with the 1995 Treasure Coast Acquisition.
(d) Cost savings expected to be realized by combining duplicative programming,
general and administrative functions, sales responsibilities and facilities
in markets with multiple stations, commission reductions, employee benefit
cost savings and reductions in professional fees due to consolidation.
(e) Corporate general and administrative expenses have been incrementally
adjusted principally due to operating as a public company.
(f) To reflect additional incremental depreciation and amortization related to
the 1995 Treasure Coast Acquisition and the Acquisitions.
(g) To reflect adjustment to interest expense associated with the
Recapitalization Transactions and the Acquisitions (dollars in thousands):
<TABLE>
<S> <C>
Incremental pro forma interest expense on debt incurred with
the
Recapitalization Transactions as if they occurred on January
1, 1995..................................................... $ 2,821
Interest expense recorded by the Company in 1995 on debt
retired with the Recapitalization Transactions.............. (1,007)
Interest expense attributable to the Acquisitions............. (1,208)
-------
Pro forma adjustment.......................................... $ 606
=======
</TABLE>
(h) Elimination of non-operating income that is not expected to be realized by
the Company.
(i) To record the increase in amortization of deferred financing costs
associated with the Recapitalization Transactions (dollars in thousands):
<TABLE>
<S> <C>
Incremental pro forma deferred financing costs incurred with
the
Recapitalization Transactions as if they occurred on
January 1, 1995............................................ $ 120
Deferred financing costs recorded by the Company in 1995 on
debt retired with the Recapitalization Transactions........ (69)
--------
Pro forma adjustment......................................... $ 51
========
</TABLE>
(j) No incremental income taxes have been provided as the Company has a net
operating loss. Incremental state taxes are considered immaterial.
(k) To eliminate the preferred stock dividend on preferred stock redeemed in
the Recapitalization Transactions.
(l) Corporate general and administrative expenses have been incrementally
adjusted principally due to operating as a public company.
(m) To reflect additional incremental depreciation and amortization related to
the Acquisitions.
19
<PAGE> 22
(n) To reflect adjustment to interest expense associated with the Acquisitions
(dollars in thousands):
<TABLE>
<S> <C>
Incremental pro forma interest expense on debt incurred with the
Recapitalization Transactions as if they occurred on January
1, 1995....................................................... $ 37
Interest expense on the Senior Credit Facility retired with the
proceeds from the Offering.................................... (12)
Interest expense associated with the Westchester Acquisition and
Danbury Acquisition prior to their acquisition by the
Company....................................................... (112)
Interest expense attributable to the Acquisitions............... (194)
------
-
Pro forma adjustment............................................ $(281)
=======
</TABLE>
20
<PAGE> 23
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
AS OF MARCH 31, 1996
----------------------------------------------------------------------------------
1996
COMMODORE TREASURE
MEDIA, HUNTINGTON COAST STAMFORD PRO FORMA PRO FORMA
INC. ACQUISITIONS ACQUISITION ACQUISITION ADJUSTMENTS COMBINED
--------- ------------ ----------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Cash.................................. $ 5,087 $ 170 $ 36 $ 1 $ 36,000(a) $ 1,644
(8,500)(b)
(1,968)(c)
(30,475)(d)
1,500(d)
(207)(d)
Accounts receivable, net.............. 4,908 561 212 640 (1,413)(d) 4,908
Prepaid expenses and other current
assets.............................. 453 59 9 142 (210)(d) 453
------- ------ ------ ------- -------- -------
Total current assets........ 10,448 790 257 783 (5,273) 7,005
Property, plant and equipment, net.... 10,016 1,186 769 329 12,300
FCC licenses and goodwill, net........ 35,213 131 2,135 2,308 23,917(d) 63,704
Other intangible and other assets,
net................................. 7,534 0 1 37 (38)(d) 6,034
(1,500)(d)
------- ------ ------ ------- -------- -------
Total assets................ $ 63,211 $2,107 $ 3,162 $ 3,457 $ 17,106 $89,043
======= ====== ====== ======= ======== =======
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT):
Accounts payable and accrued
liabilities......................... $ 4,386 $ 76 $ 39 $ 359 $ (174)(d) $ 4,686
Current maturities of long-term
debt................................ 12 2,258 119 5 (2,382)(d) 12
------- ------ ------ ------- -------- -------
Total current liabilities... 4,398 2,334 158 364 (2,556) 4,698
Long-term debt........................ 74,466 0 2,122 7,689 (8,500)(b) 65,966
(9,811)(d)
Noncurrent compensation............... 1,463 0 0 0 (1,282)(c) 181
Note payable, officer................. 1,175 0 0 0 1,175
Deferred income taxes................. 1,700 0 0 0 1,700
Stockholders' equity (deficit)........ (19,991) (227) 882 (4,596) 36,000(a) 15,323
(686)(c)
3,941(d)
------- ------ ------ ------- -------- -------
Total liabilities and
stockholders' equity
(deficit)................. $ 63,211 $2,107 $ 3,162 $ 3,457 $ 17,106 $89,043
======= ====== ====== ======= ======== =======
</TABLE>
21
<PAGE> 24
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
(a) To reflect the proceeds from the Offering:
<TABLE>
<S> <C>
Issuance of 2,882,143 shares of Class A Common Stock............ $40,350,000
Fees and expenses............................................... 4,350,000
-----------
Net proceeds from the Offering........................ $36,000,000
===========
</TABLE>
(b) To reflect the repayment of the outstanding balance of $8.5 million under
the Senior Credit Facility.
(c) To reflect the payment of deferred compensation in accordance with the
provisions of employment agreements with certain executives of the Company.
See "Use of Proceeds." A charge to earnings of approximately $686,000 will
be taken in the period that the payment is made to reflect the payment of
the deferred compensation in a total amount of $1.9 million, as required in
an Initial Public Offering. The deferred compensation is currently carried
on the Company's balance sheet at its present value.
(d) To reflect the purchase of the Huntington Acquisitions, the 1996 Treasure
Coast Acquisition and the Stamford Acquisition and the preliminary
allocation of the purchase price including expenses of $975,000:
<TABLE>
<S> <C>
Huntington Acquisitions......................................... $12,000,000
1996 Treasure Coast Acquisition................................. 8,000,000
Stamford Acquisition............................................ 9,500,000
-----------
Total................................................. 29,500,000
Fees and expenses............................................... 975,000
-----------
Total................................................. $30,475,000
===========
</TABLE>
Deposits totaling $1.5 million have been paid for the Huntington
Acquisitions, the 1996 Treasure Coast Acquisition and the Stamford
Acquisition, and will be applied towards the purchase price or returned to
the Company at the respective closings.
The allocation of the purchase price and the elimination of the assets not
acquired and the liabilities not assumed in connection with the Huntington
Acquisitions, the 1996 Treasure Coast Acquisition and the Stamford
Acquisition are as follows:
<TABLE>
<CAPTION>
ALLOCATION OF
PURCHASE CARRYING
PRICE VALUE ADJUSTMENT
(000'S) (000'S) (000'S) --
------------- --------
<S> <C> <C> <C>
ASSETS:
Cash...................................... $ 0 $ 207 $ (207)
Accounts receivable, net.................. 0 1,413 (1,413)
Prepaid expense and other current
assets.................................. 0 210 (210)
Property, plant and equipment, net........ 2,284 2,284 0
Intangible assets, net.................... 28,491 4,574 23,917
Other assets.............................. 0 38 (38)
------- ------- --------
Total assets.................... $30,775 $ 8,726 $ 22,049
======= ======= ========
LIABILITIES:
Accounts payable and accrued
liabilities............................. $ 300 $ 474 $ (174)
Current portion of long term debt......... 0 2,382 (2,382)
Long term debt............................ 0 9,811 (9,811)
------- ------- --------
Net assets................................ $30,475 $ (3,941) $ 34,416
======= ======= ========
Stockholders' equity...................... $ (3,941) $ 3,941
======= ========
</TABLE>
The preliminary allocation of purchase price may change upon final
determination of the fair value of the net assets acquired.
22
<PAGE> 25
SELECTED HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL DATA
The following selected historical consolidated financial data of the
Company for each of the five years ended December 31, 1995 are derived from the
audited consolidated financial statements of the Company, of which the
consolidated balance sheets at December 31, 1994 and 1995 and the consolidated
statement of operations for the three years in the period ended December 31,
1995 are included herein. The following selected historical consolidated
financial data of the Company for the three months ended March 26, 1995 and
March 31, 1996 are derived from the unaudited consolidated financial statements
of the Company. The selected financial information should be read in conjunction
with the information contained in "Pro Forma Consolidated Financial
Information," "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and the Company's Consolidated Financial Statements and
Notes thereto, as well as the Financial Statements and Notes thereto of (i)
Danbury Broadcasting, Inc., with respect to the Danbury Acquisition, (ii)
Adventure Communications, Inc., with respect to the Huntington Acquisitions,
(iii) Media VI, with respect to the 1996 Treasure Coast Acquisition and (iv) Q
Broadcasting, Inc., with respect to the Stamford Acquisition, included elsewhere
herein.
The pro forma statement of operations data and supplemental information for
the year ended December 31, 1995 has been prepared as if the Recapitalization
Transactions, the 1995 Treasure Coast Acquisition, the Acquisitions, and the
Offering and the application of the estimated net proceeds therefrom had
occurred on January 1, 1995. The pro forma statement of operations data and
supplemental information for the three months ended March 31, 1996 has been
prepared as if the Acquisitions and the Offering and the application of the net
proceeds therefrom had occurred on January 1, 1995. The pro forma balance sheet
data at March 31, 1996 has been prepared as if the 1996 Treasure Coast
Acquisition, the Stamford Acquisition and the Huntington Acquisitions and the
Offering and the application of the estimated net proceeds therefrom had
occurred on March 31, 1996. The selected pro forma financial data is not
necessarily indicative of the results that would have occurred if such
Acquisitions had occurred on the dates indicated, nor is it indicative of the
Company's future results of operations.
23
<PAGE> 26
SELECTED HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL DATA
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------------------
YEAR ENDED DECEMBER 31, MARCH 26, MARCH 31,
--------------------------------------------------------------- --------- -------------------
1995 PRO 1996 PRO
1991 1992 1993 1994 1995 FORMA(A) 1995 1996 FORMA(A)
------- ------- ------- ------- ------- -------- --------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Total revenue............. $17,677 $19,578 $21,643 $28,686 $33,653 $46,327 $ 6,507 $ 8,048 $ 9,787
Less: agency
commissions............. (1,342) (1,617) (1,845) (2,461) (2,858) (3,791 ) (540) (632) (754 )
-------- -------- ------- -------- -------- ------- ------ ------- -------
Net revenue...... 16,335 17,961 19,798 26,225 30,795 42,536 5,967 7,416 9,033
Station operating
expenses(b)............. 12,080 12,713 13,509 16,483 19,033 27,185 4,168 5,375 6,274
Corporate expenses........ 1,167 1,602 2,531 2,110 2,051 2,151 461 466 491
Depreciation and
amortization............ 1,606 1,676 1,129 2,145 1,926 3,559 437 480 884
Long-term incentive
compensation(c)......... 0 0 0 2,180 2,007 2,007 585 0 0
Separation
compensation(d)......... 0 0 1,496 0 0 0 0 0 0
-------- -------- ------- -------- -------- ------- ------ ------- -------
Operating
income......... 1,482 1,970 1,133 3,307 5,778 7,634 316 1,095 1,384
Interest expense.......... 5,139 4,410 4,219 2,932 7,421 9,235 830 2,452 2,364
Interest income........... 5 3 1 0 421 421 0 115 115
Other expenses............ 527 561 658 602 434 485 56 167 168
-------- -------- ------- -------- -------- ------- ------ ------- -------
Loss before income taxes
and extraordinary gain
(loss).................. (4,179) (2,998) (3,743) (227) (1,656) (1,665 ) (570) (1,409) (1,033 )
Income taxes.............. 4 12 39 300 140 140 15 27 27
-------- -------- ------- -------- -------- ------- ------ ------- -------
Loss before extraordinary
gain (loss)............. (4,183) (3,010) (3,782) (527) (1,796) (1,805 ) (585) (1,436) (1,060 )
Extraordinary
gain (loss)(e).......... 0 430 0 0 (444) (512 ) 0 0 0
-------- -------- ------- -------- -------- ------- ------ ------- -------
Net loss......... (4,183) (2,580) (3,782) (527) (2,240) (2,317 ) (585) (1,436) (1,060 )
Preferred stock
dividend................ 0 0 0 691 252 0 208 0 0
-------- -------- ------- -------- -------- ------- ------ ------- -------
Net loss applicable to
common shares........... $(4,183) $(2,580) $(3,782) $(1,218) $(2,492) $(2,317 ) $ (793) $(1,436) $(1,060 )
======== ======== ======= ======== ======== ======= ====== ======= =======
Loss per share:
Before extraordinary
item.................. $ (1.60) $ (1.40) $ (1.88) $ (.32) $ (.53) $ (0.26 ) $ (.21) $ (0.36) $ (0.16 )
Extraordinary item...... 0 .20 0 0 (.11) (.08 ) 0 0 0
-------- -------- ------- -------- -------- ------- ------ ------- -------
Loss per share.......... $ (1.60) $ (1.20) $ (1.88) $ (.32) $ (.64) $ (.34 ) $ (.21) $ (0.36) $ (0.16 )
======== ======== ======= ======== ======== ======= ====== ======= =======
Weighted average common
shares outstanding(f)... 2,610,700 2,149,900 2,013,100 3,762,700 3,892,300 6,774,300 3,755,500 3,949,900 6,831,900
SUPPLEMENTAL INFORMATION:
Broadcast cash flow(g).... $ 4,255 $ 5,248 $ 6,289 $ 9,742 $11,762 $15,351 $ 1,799 $ 2,041 $ 2,759
Broadcast cash flow
margin(g)............... 26.0% 29.2% 31.8% 37.1% 38.2% 36.1% 30.1% 27.5% 30.5%
EBITDA(g)................. 3,088 3,646 3,758 7,632 9,711 13,200 1,338 1,575 2,268
Capital expenditures...... 179 371 333 623 321 42 124
</TABLE>
<TABLE>
<CAPTION>
AT MARCH 31, 1996
AT DECEMBER 31, -------------------
--------------------------------------------------- PRO
1991 1992 1993 1994 1995 ACTUAL FORMA(A)
------- ------- ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash
equivalents............. $ 958 $ 1,045 $ 887 $ 2,042 $10,891 $ 5,087 $ 1,644
Net working capital....... (6,512) 583 2,387 115 13,730 6,050 2,307
Total assets.............. 28,437 27,508 36,192 36,283 52,811 63,211 89,043
Total long-term debt
(including current
maturities)............. 51,211 51,934 41,773 39,075 66,316 75,653 67,153
Stockholders' equity
(deficit)............... (26,185) (28,766) (8,097) (18,038) (18,555) (19,991) 15,323
</TABLE>
24
<PAGE> 27
NOTES TO SELECTED HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL DATA
(a) Pro forma operating data and supplemental information for the year ended
December 31, 1995 give effect to the Recapitalization Transactions (as
hereinafter defined), the Acquisitions, the Offering and the application of
the estimated net proceeds therefrom and the 1995 Treasure Coast Acquisition
as if each had occurred on January 1, 1995. The pro forma operating data and
supplemental information for the three months ended March 31, 1996 give
effect to the Acquisitions and the Offering and the application of the
estimated net proceeds therefrom as if each had occurred on January 1, 1995.
The pro forma balance sheet data give effect to the 1996 Treasure Coast
Acquisition, the Stamford Acquisition and the Huntington Acquisitions and
the Offering and the application of the estimated net proceeds therefrom as
if each had occurred on March 31, 1996.
(b) Station operating expenses exclude depreciation and amortization, corporate
expenses, long-term incentive compensation, other expenses and separation
compensation.
(c) The long-term incentive compensation expense incurred by the Company in 1994
and 1995 consists of non-cash charges taken by the Company pursuant to the
long-term incentive compensation provisions of its then existing employment
agreements with Mr. Friedman and Mr. Shea. See "Management-- Employment
Agreements and Arrangements."
(d) Separation compensation in 1993 consists of a provision for cash payments
made in 1993, cash payments made in 1994 and the present value of future
payments under a separation agreement reached between the Company and a
former president of the Company which became effective December 31, 1993.
Under such separation agreement, the former president will continue to
receive $250,000 per year in equal semi-monthly payments through December
31, 1997. See Note 10 to Consolidated Financial Statements of the Company.
(e) In 1992, the Company renegotiated the Amended and Restated Promissory Note
issued by the Company to Michael Hanson (the "Hanson Note") resulting in a
$430,000 reduction in its principal amount and an equivalent extraordinary
gain for the Company. In 1995, in connection with the Recapitalization
Transactions (as hereinafter defined), the Company wrote off the balance of
the unamortized deferred financing costs on its retired debt resulting in an
extraordinary loss of $444,000, $512,000 on a 1995 pro forma basis. See Note
5 to Consolidated Financial Statements of the Company.
(f) To date the Company has not paid any dividends with respect to the Common
Stock.
(g) For purposes of this Prospectus, EBITDA is defined as net income (loss)
before (i) extraordinary gain (loss), (ii) income taxes, (iii) other
expenses (income), (iv) net interest expense, (v) long-term incentive
compensation and separation compensation and (vi) depreciation and
amortization. Broadcast cash flow is defined as EBITDA before corporate
expenses. Although EBITDA and broadcast cash flow are not measures of
performance calculated in accordance with GAAP, EBITDA and broadcast cash
flow are widely used in the broadcast industry as measures of a radio
broadcasting company's operating performance. Neither EBITDA nor broadcast
cash flow should be considered in isolation or as a substitute for net
income, cash flows from operating activities and other income or cash flow
statement data prepared in accordance with GAAP or as a measure of
profitability or liquidity. Broadcast cash flow and EBITDA differ from cash
flow from operations under GAAP primarily because broadcast cash flow and
EBITDA are not reduced by net interest expense and income tax expense,
changes in the levels of operating assets and liabilities and separation and
long-term incentive compensation paid during the period. In addition,
broadcast cash flow excludes corporate expenses that are reflected as a
reduction in cash flow from operations. Broadcast cash flow and EBITDA are
not intended to depict funds available for discretionary uses as they do not
reflect the Company's debt service and capital requirements.
25
<PAGE> 28
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
The following discussion should be read in conjunction with the financial
statements appearing elsewhere in this Prospectus. Period to period comparisons
of the Company's historical financial statements are significantly impacted by
the acquisition of certain of the Company's radio stations and the use of JSAs
and LMAs. In this discussion, the 1995 results of operations of the Company
include the results of the WKAP-AM JSA that became effective on March 27, 1995,
the acquisition of WQOL-FM on June 27, 1995, the WPAW-FM JSA commencing in
August 1995, and the LMAs with respect to WRKI-FM, WINE-AM, WVYB-FM, WZZN-FM and
WPUT-AM that became effective on October 30, 1995. The 1996 results of
operations of the Company include the results of the JSAs with respect to
WAVW-FM, WKQS-FM and WAXE-AM that became effective on February 16, 1996.
The Company analyzes its financial results in terms of variable expenses
and other operating expenses. Management believes "other operating expenses" are
typically controllable and predictable, and projects such expenses each year
during the Company's annual budgeting process; such expenses consist primarily
of employee salaries, programming and similar expenses, advertising and
promotional expenses and lease costs for office, studio space and transmission
sites, but excludes any barter expense. "Variable expenses," which have averaged
26.2% of non-barter revenue for the last five years, consist primarily of
commissions and music licensing fees.
In the radio broadcasting industry, radio stations may utilize trade or
barter agreements to provide advertising time in exchange for goods or services
(such as travel, products used in promotional campaigns, "giveaways" or meals)
instead of cash compensation. The Company attempts to limit trade or barter,
employing it primarily in situations where use of trade or barter will bring
incremental cash revenue from a potential client or will reduce a cash expense
item. The Company's trade and barter revenue as a percent of total revenue was
9.6%, 8.6%, 7.5%, 8.8% and 10.1% for 1995, 1994, 1993, 1992 and 1991,
respectively.
Although advertising contracts are generally short-term, the Company has
long-term relationships with many of its advertisers. The Company has developed
these relationships through both the long local history of many of its radio
stations and the long personal relationships many of its managers have developed
with advertisers in the stations' markets. In 1995, approximately 86% of the
Company's total cash revenue was generated from the broadcast of local
advertising, approximately 12% was from the broadcast of national advertising
and approximately 2% was from other forms of revenue such as political
advertisements, network revenue and tower rentals. Each radio station's local
sales staff solicits advertisements directly from local advertisers or through
an advertising agency representing local advertisers. National advertising sales
for each of the Company's stations are made in conjunction with the efforts of
an independent advertising representative who specializes in national sales,
acts as an exclusive agent for the stations and is compensated on a commission
only basis.
The Company has net operating loss carryforwards ("NOLs") for federal
income tax purposes which may be available to offset the Company's taxable
income. The Offering will result in a more-than-50-percent ownership change for
purposes of Section 382. Therefore, the Company's use of its NOLs may be reduced
in the years following the ownership change, resulting in a potential increase
in the Company's effective tax rate for such years.
Seasonal revenue fluctuations are common in the radio broadcasting industry
and are due primarily to fluctuations in advertising expenditures by local
retailers. The Company's first fiscal quarter generally produces the lowest
revenue for the year and the fourth fiscal quarter generally produces the
highest revenue. The Company's operating results in any period may also be
affected by the occurrence of advertising and promotional expenses that do not
produce commensurate revenue in the period in which the expenses are incurred.
Since Arbitron typically reports audience ratings on a quarterly or semiannual
basis (depending on the market), a radio station's ability to realize revenue as
a result of increased advertising and promotional expenses and any resulting
audience rating changes may be delayed for several months. The Company believes
26
<PAGE> 29
the relatively moderate rates of inflation over the past three years have not
had a significant impact on the profitability of the Company. In general, the
Company believes the effects of inflation are offset through increases in
advertising rates.
The following table sets forth certain consolidated summary data of the
Company (dollars in thousands):
<TABLE>
<CAPTION>
THREE-MONTHS ENDED
YEAR ENDED DECEMBER 31, ----------------------
--------------------------------------------------- MARCH 26, MARCH 31,
1991 1992 1993 1994 1995 1995 1996
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Non barter revenue................... $15,892 $17,848 $20,026 $26,213 $30,415 $ 5,751 $ 7,132
Barter revenue....................... 1,785 1,730 1,617 2,473 3,238 756 916
------- ------- ------- ------- ------- ------- -------
Total revenue(a)................... 17,677 19,578 21,643 28,686 33,653 6,507 8,048
Variable expenses(b)(c).............. 4,163 4,613 5,312 6,707 8,154 1,679 2,089
Other operating expenses(c)(d)....... 7,492 7,886 8,548 9,886 10,683 2,289 3,048
Barter expense(c).................... 1,767 1,831 1,494 2,351 3,054 740 870
Corporate expenses................... 1,167 1,602 2,531 2,110 2,051 461 466
Depreciation & amortization.......... 1,606 1,676 1,129 2,145 1,926 437 480
Long-term incentive compensation..... 0 0 0 2,180 2,007 585 0
Separation compensation.............. 0 0 1,496 0 0 0 0
------- ------- ------- ------- ------- ------- -------
Operating income................... $ 1,482 $ 1,970 $ 1,133 $ 3,307 $ 5,778 $ 316 $ 1,095
======= ======= ======= ======= ======= ======= =======
OTHER DATA:
Broadcast cash flow(e)............... $ 4,255 $ 5,248 $ 6,289 $ 9,742 $11,762 $ 1,799 $ 2,041
Broadcast cash flow margin........... 26.0% 29.2% 31.8% 37.1% 38.2% 30.1% 27.5%
Variable expenses as a percent of
non-barter revenue................. 26.2% 25.8% 26.5% 25.6% 26.8% 29.2% 29.3%
Other operating expenses as a percent
of non-barter revenue.............. 47.1% 44.2% 42.7% 37.7% 35.1% 39.8% 42.7%
Station operating expenses(c)........ 12,080 12,713 13,509 16,483 19,033 4,168 5,375
</TABLE>
- ------------------------------
(a) Total revenue less agency commissions equals net revenue, as detailed in the
Company's audited financial statements.
(b) Variable expenses consist of all commissions (including agency, salesperson,
national representative and tower representative) and music licensing fees,
and excludes any barter expense.
(c) Station operating expenses consists of variable expenses plus other
operating expenses plus barter expense less agency commissions.
(d) Other operating expenses consist primarily of employee salaries, programming
and similar expenses, advertising and promotional expenses and lease costs
for office, studio space and transmission sites, and excludes any barter
expense.
(e) Broadcast cash flow means EBITDA before corporate expenses.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1996 COMPARED TO THREE MONTHS ENDED MARCH 26,
1995.
Total Revenue. Total revenue increased 23.7% to $8.0 million in the first
quarter of 1996 from $6.5 million during the same period in 1995 primarily due
to the addition of revenues from the acquisition of WQOL-FM in the Treasure
Coast Market, Florida, from the JSAs entered into with WPAW-FM, WAVW-FM, WKQS-FM
and WAXE-AM in the Treasure Coast Market, Florida, and WKAP-AM in Allentown,
Pennsylvania and from the LMAs entered into with WRKI-FM and WINE-AM in
Fairfield County, Connecticut and WVYB-FM, WZZN-FM and WPUT-AM in
Westchester/Putnam Counties, New York. On a same station basis, total revenue
increased 1.1% to $6.6 million in the first quarter of 1996 from $6.5 million in
the first quarter of 1995.
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<PAGE> 30
Station Operating Expenses. Station operating expenses increased 28.9% to
$5.4 million in the first quarter of 1996 from $4.2 million during the same
period in 1995. The increase was primarily due to the addition of operating
expenses from WQOL-FM, WPAW-FM, WAVW-FM, WKQS-FM and WAXE-AM in the Treasure
Coast Market, Florida, WRKI-FM and WINE-AM in Fairfield County, Connecticut and
WVYB-FM, WZZN-FM and WPUT-AM in Westchester/Putnam Counties, New York. On a same
station basis, station operating expenses remained unchanged at $4.2 million in
the first quarter of 1996. The variable expense component of station operating
expenses increased to $2.1 million in the first quarter of 1996 from $1.7
million during the same period in 1995. The increase was due primarily to higher
commissions from increased revenues and a higher effective commission rate at
certain of the Company's stations. Variable expenses as a percent of non barter
revenue were 29.3% in the first quarter of 1996 as compared to 29.2% in the
first quarter of 1995. On a same station basis, variable expenses remained
unchanged at $1.7 million in the first quarter of 1996. On a same station basis,
variable expenses as a percent of non barter revenue were 30.2% in the first
quarter of 1996, as compared to 29.2% in the first quarter of 1995. This
increase was due primarily to higher effective commission rates at certain of
the Company's stations. The other operating expense component of station
operating expenses increased 33.2% to $3.0 million in the first quarter of 1996
from $2.3 million during the same period in 1995 primarily due to the additional
operating expenses associated with WQOL-FM, WPAW-FM, WAVW-FM, WKQS-FM and
WAXE-AM in the Treasure Coast Market, Florida, WKAP-AM in Allentown,
Pennsylvania, WRKI-FM and WINE-AM in Fairfield County, Connecticut and WVYB-FM,
WZZN-FM and WPUT-AM in Westchester/Putnam Counties, New York. Other operating
expenses were 42.7% of non barter revenue in the first quarter of 1996,
increasing from 39.8% of non barter revenue in the first quarter of 1995,
primarily due to the fees associated with the Company's various joint operating
arrangements. On a same station basis, other operating expenses decreased 2.8%
to $2.2 million or 38.5% of non barter revenue in the first quarter of 1996 from
$2.3 million or 39.8% of non barter revenue during the same period of 1995.
Corporate Expenses. Corporate expenses increased 1.1% in the first quarter
of 1996 to approximately $466,000 from approximately $461,000 during the same
period in 1995. In the first quarter of 1996 corporate expenses included higher
salary expenses, which were partially offset by lower incentive accruals as
compared to the first quarter of 1995. Corporate expenses as a percent of non
barter revenue were 6.5% in the first quarter of 1996 compared to 8.0% in the
first quarter of 1995.
Other Expenses. Depreciation and amortization increased 9.9% to
approximately $480,000 in the first quarter of 1996 from approximately $437,000
during the same period in 1995 due primarily to the addition of WQOL-FM in the
Treasure Coast Market, Florida. Interest expense increased to $2.5 million in
the first quarter of 1996 from approximately $830,000 during the same period in
1995 due to increased interest expense associated with the Senior Subordinated
Notes. Interest income of $115,000 was earned on the Company's temporary cash
investments. Other expenses increased to approximately $167,000 in the first
quarter of 1996 from approximately $56,000 during the same period in 1995. The
increase was due primarily to the amortization of financing costs associated
with the Recapitalization Transactions.
Operating Income. Operating income in the first quarter of 1996 increased
to $1.1 million from approximately $316,000 in the first quarter of 1995. The
increase was partially due to higher revenues and lower long-term incentive
compensation which was partially offset by higher station operating expenses. On
a same station basis, operating income for the first quarter of 1996 increased
to approximately $982,000 from approximately $316,000 in the first quarter of
1995. The increase was due primarily to lower long-term incentive compensation
expenses.
Net Loss. Net loss for the three months ended March 31, 1996 was $1.4
million compared to a net loss of approximately $585,000 during the same period
in 1995. The net loss was due primarily to increased interest expense and
depreciation and amortization, which were partially offset by increased revenues
and interest income and lower long-term incentive compensation.
Broadcast Cash Flow. Broadcast cash flow for the three months ended March
31, 1996 was approximately $2.0 million, a 13.5% increase from the first quarter
of 1995.
28
<PAGE> 31
YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994.
Total Revenue. Total revenue increased 17.3% to $33.7 million in 1995 from
$28.7 million in 1994. The inclusion of revenues from the WQOL-FM acquisition
and revenues generated from JSAs and LMAs entered into in 1995 provided
approximately $1.6 million of this increase. On a same station basis total
revenue increased 11.9% to $32.1 million in 1995 from $28.7 million in 1994.
WEFX-FM and WNLK-AM in Fairfield County, Connecticut had combined total revenue
growth of 45.0% to $3.9 million in 1995 from $2.7 million in 1994 primarily due
to increased ratings and selling efforts. WJBR-AM/FM in Wilmington, Delaware and
WAEB-AM/FM in Allentown, Pennsylvania posted revenue increases in 1995 of 14.9%
and 11.6%, respectively, also primarily due to increased ratings and selling
efforts.
Station Operating Expenses. Station operating expenses increased 15.5% to
$19.0 million in 1995 from $16.5 million in 1994 due primarily to the inclusion
of station operating expenses from the newly acquired WQOL-FM, station operating
expenses resulting from JSAs and LMAs and an increase in barter expense. On a
same station basis, station operating expenses increased 9.3% to $18.0 million
in 1995 from $16.5 million in 1994 due primarily to the increase in barter
expense. The variable expense component of station operating expenses increased
21.6% to $8.2 million or 26.8% of non-barter revenue in 1995 from $6.7 million
in 1994 or 25.6% of non-barter revenue in 1994, primarily as a result of
increases in the effective commission rates and royalties resulting from the
increased revenues and an increase in bad debt expense. On a same station basis,
variable expenses increased 17.5% to $7.9 million or 27.2% of non-barter revenue
in 1995 from $6.7 million or 25.6% of non-barter revenue in 1994. The increase
was due primarily to higher commissions and the increase in overall revenue
levels. The other operating expense component of station operating expenses
increased 8.1% to $10.7 million in 1995 from $9.9 million in 1994 primarily due
to increased operating expenses from the acquisition of WQOL-FM, the JSAs and
the LMAs. On a same station basis, other operating expenses remained unchanged
at $9.9 million in 1995 as compared to the same period in 1994.
Corporate Expenses. Corporate expenses decreased 2.8% to $2.0 million in
1995 from $2.1 million in 1994. The decrease was due primarily to reduced travel
and entertainment expenses.
Other Expenses. Depreciation and amortization decreased 10.2% to $1.9
million in 1995 from $2.1 million in 1994 primarily as a result of the Company
fully amortizing certain costs associated with the acquisition of WZZO-FM in
Allentown, Pennsylvania. Long-term incentive compensation decreased 8.0% to $2.0
million in 1995 from $2.2 million in 1994. The 1995 expense reflects the balance
of the long-term incentive compensation obligations due Mr. Friedman and Mr.
Shea pursuant to their respective employment agreements. Interest expense
increased to $7.4 million in 1995 from $2.9 million in 1994. The increase was
due primarily to higher floating rates on the Company's prior senior credit
facilities and the cash and non-cash interest on the Senior Subordinated Notes
issued in the Recapitalization Transactions (as hereinafter defined). In 1995,
interest income of approximately $421,000 was earned on the Company's temporary
cash investments. Other expenses, net, decreased 27.9% from approximately
$600,000 in 1994 to approximately $400,000 in 1995 primarily due to a decrease
in the loss on sale of assets which was partially offset by an increase in the
amortization of the deferred financing charges associated with the
Recapitalization Transactions and the Company's prior credit facilities.
Operating Income. Operating income for the year ended December 31, 1995
increased 74.7% to $5.8 million from $3.3 million in the year ended December 31,
1994. The increase was primarily due to increased revenues which were partially
offset by increased station operating expenses. On a same station basis,
operating income increased 66.8% to $5.5 million in the year ended December 31,
1995 from $3.3 million during the same period in 1994. The increase was due
primarily to increased revenues, which were partially offset by higher station
operating expenses.
Net Loss. Net loss before extraordinary items for the year ended December
31, 1995 was approximately $1.8 million as compared to a net loss before
extraordinary items of approximately $527,000 during the same period in 1994.
The increase was due primarily to higher interest expense and station operating
expenses which were partially offset by increased revenue and interest income
and lower corporate expense, long-term incentive compensation and depreciation
and amortization. Upon consummation of the Recapitalization Transactions, the
Company wrote-off approximately $444,000 of deferred financing fees associated
with its
29
<PAGE> 32
prior credit agreement and recorded it as an extraordinary loss. The income tax
provision of approximately $141,000 for 1995 is related to current state and
local tax expenses.
Broadcast Cash Flow. Broadcast cash flow increased 20.7% to $11.8 million
in 1995 from $9.7 million in 1994. Excluding the results of WQOL-FM and the
results of the JSAs and LMAs, broadcast cash flow increased 16.3% to $11.3
million in 1995 from $9.7 million in 1994. The broadcast cash flow margin was
38.2% in 1995 as compared to 37.1% in 1994 and excluding the results of WQOL-FM
and the results of the JSAs and LMAs the broadcast cash flow margin was 38.6% in
1995.
YEAR ENDED DECEMBER 31, 1994 COMPARED TO THE YEAR ENDED DECEMBER 31, 1993.
Total Revenue. Total revenue increased 32.5% to $28.7 million in 1994 from
$21.6 million in 1993 primarily as a result of the duopoly acquisition of
WZZO-FM on December 28, 1993, increased revenue at WAEB-AM/FM and WJBR-AM/FM as
well as improved selling efforts at all of the Company's stations. All of the
Company's markets showed an increase in revenue in 1994. Excluding WZZO-FM,
total revenue for 1994 was $24.3 million, a 12.4% increase from 1993. This
increase was due to higher revenue at WAEB-AM/FM and WJBR-AM/FM as well as
improved selling efforts at all of the Company's stations.
Station Operating Expenses. Station operating expenses increased 22.0% to
16.5 million in 1994 from $13.5 million in 1993. The increase was primarily due
to the additional operating expenses associated with the acquisition of WZZO-FM
and increased selling expenses due to higher revenues. The variable expense
component of station operating expenses increased 26.3% in 1994 primarily from
increased commissions resulting from the higher levels of revenue and the
addition of the variable expenses from the acquisition of WZZO-FM. Variable
expenses as a percent of non-barter revenue decreased to 25.6% in 1994 from
26.5% in 1993 due primarily to lower levels of bad debt in 1994 as compared to
1993. Excluding WZZO-FM, variable expenses increased 6.3% in 1994 from 1993 and
variable expenses as a percent of non-barter revenue decreased to 25.4% in 1994
from 26.6% in 1993. The other operating expense component of station operating
expenses increased 15.7% to $9.9 million in 1994 from $8.5 million in 1993
primarily as a result of the addition of other operating expenses from the
acquisition of WZZO-FM and increased sales expenses at WFAS-AM/FM, WEFX-FM,
WNLK-AM and WZZR-FM. Excluding WZZO-FM, other operating expenses increased 5.1%
to $9.0 million in 1994 from $8.5 million in 1993 primarily due to increases in
sales expenses at WFAS-AM/FM, WNLK-AM and WZZR-FM.
Corporate Expenses. Corporate expenses decreased 16.6% to $2.1 million in
1994 from $2.5 million in 1993. The decrease in corporate expenses was primarily
attributable to lower legal, travel and entertainment, and severance expenses.
Other Expenses. Long-term incentive compensation expense in 1994 of $2.2
million consisted of a non-cash long-term incentive compensation expense
incurred by the Company pursuant to Mr. Friedman's and Mr. Shea's former
employment agreements. Depreciation and amortization increased 90% to $2.1
million in 1994 from $1.1 million in 1993 primarily as a result of the
acquisition of WZZO-FM. Interest expense, net, decreased to $2.9 million in 1994
from $4.2 million in 1993. The reduction in the Company's annual interest
expense was primarily due to the Company entering into the Second Amended and
Restated Credit Agreement with The Bank of New York and the conversion of
approximately $17.2 million of indebtedness of the Company to Carter Burden and
Radio Financial Partners, Inc. into equity securities of the Company. Income
taxes for the year ended 1994 consisted of a provision for current state and
local tax expenses.
Operating Income. Operating income for the year ended December 31, 1994
increased to $3.3 million from $1.1 million in the year ended December 31, 1993.
The increase was due primarily to increased revenues and the absence of
separation compensation expense incurred in the 1993 fiscal year which was
partially offset by higher station operating expenses and long-term incentive
compensation expense. On a same station basis, operating income increased to
$1.3 million in the year ended December 31, 1994 from $1.1 million in the year
ended December 31, 1993. The increase was partially due to increased revenues
and lower separation compensation expense which were partially offset by higher
station operating expenses.
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<PAGE> 33
Net loss. Net loss for 1994 decreased to approximately $527,000 from
approximately $3.8 million in 1993 primarily due to increased revenues, lower
corporate expenses, separation compensation and interest expense which were
partially offset by increased station operating expenses, depreciation and
amortization, long-term incentive compensation and income taxes.
Broadcast Cash Flow. Broadcast cash flow increased 54.9% to $9.7 million
in 1994 from $6.3 million in 1993. Excluding WZZO-FM, broadcast cash flow
increased 22.5% in 1994 from 1993. The broadcast cash flow margin was 37.1% in
1994, including WZZO-FM, as compared to 31.8% in 1993.
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity needs arise primarily from its debt service
obligations, funding of the Huntington Acquisitions and the Company's working
capital needs and capital expenditures. Net cash flows provided by operating
activities were $1.9 million and approximately $60,000 in the first quarter of
1996 and 1995, respectively. Changes in the Company's net cash flows from
operating activities are primarily the result of changes in advertising revenue,
the timing of its revenue receipts and its operating expense and interest
payments.
During the first quarter of 1996, net cash flow used in investing
activities increased to $15.8 million from approximately $270,000 in the first
quarter of 1995. These investing activities in the first quarter of 1996
included approximately $124,000 of capital expenditures, approximately $291,000
of deferred acquisition costs, $915,000 of deposits on acquisitions (including
$500,000 for WKHL-FM and WSTC-FM in Fairfield County, Connecticut and $400,000
for WAVW-FM, WKQS-FM and WAXE-AM in the Treasure Coast Market, Florida) and
$14.4 million for the acquisition of WRKI-FM and WINE-AM and WVYB-FM, WZZN-FM
and WPUT-AM in Fairfield County, Connecticut and Westchester/Putnam Counties,
New York, respectively. In the first quarter of 1995 investing activities
included approximately $42,000 of capital purchases, approximately $65,000 of
loans to employees and $150,000 of deposits on acquisitions.
Net cash flow provided by financing activities in the first quarter of 1996
totaled $8.1 million as compared to $1.6 million of net cash flow used in
financing activities during the first quarter of 1995. These financing
activities included $8.5 million of senior debt issued by the Senior Lender
under the Company's revolving Senior Credit Facility as partial funding for the
acquisitions of WRKI-FM and WINE-AM and the WVYB-FM, WZZN-FM and WPUT-AM in
Fairfield County, Connecticut and Westchester/Putnam Counties, New York,
respectively, and the payment of approximately $394,000 of deferred debt
issuance costs in connection with the Senior Credit Facility. In the first
quarter of 1995 net cash flows used in investing activities included
approximately $224,000 of deferred debt issuance costs, approximately $333,000
of principal payments on the Senior Credit Facility and payment of $1.0 million
to The Bank of New York for the purchase of the redeemable warrant.
The Senior Credit Facility allows the Company to borrow up to $30 million
in revolving loans and up to $5 million in accounts receivable loans. Interest
is payable monthly at a rate of 3.5% over LIBOR. Principal amortization
commences on November 30, 1997 for the receivable loan.
On May 1, 1996, the Company entered into a Securities Purchase Agreement
with CIBC WG Argosy Merchant Fund 2, LLC ("CIBC Merchant Fund"), pursuant to
which the CIBC Merchant Fund agreed to purchase from the Company, if and when
requested by the Company, up to an aggregate liquidation value of $12,500,000 of
Series A Preferred Stock of the Company in such amounts as the Company may
request (the "Preferred Stock Facility"), provided that such request be for an
aggregate liquidation value of at least $2.5 million and be made no later than
October 31, 1996. The Series A Preferred Stock accrues cash dividends at the
rate of 8% per annum, or 10% per annum if paid in additional shares of Series A
Preferred Stock, through April 30, 1999. The Company intends to redeem the
Series A Preferred Stock with proceeds from the Offering.
The Company has utilized borrowings under the Senior Credit Facility and
the proceeds of issuances of Series A Preferred Stock under the Preferred Stock
Facility (which will be redeemed upon the closing of the Offering), together
with cash from operating activities, to satisfy its financial needs in the
recent past.
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<PAGE> 34
Management believes that after consummation of the Offering contemplated hereby,
cash from operating activities together with available revolving credit
borrowings under the Senior Credit Facility should be sufficient to permit the
Company to meet its financial obligations and fund its operations for the
foreseeable future. Upon the completion of the Offering management expects that
the maximum of $35 million of borrowing capacity under the Senior Credit
Facility will be available to it for future cash needs. The Company's long-term
debt is comprised of the Senior Subordinated Notes and the Senior Credit
Facility. The Company may require additional financing for future acquisitions
and there can be no assurance that it will be able to obtain such financing on
terms considered by management to be favorable.
RECAPITALIZATION TRANSACTIONS
On April 21, 1995, the Company completed the offering of its Senior
Subordinated Notes. The gross proceeds of approximately $65.0 million were used
to: (i) retire existing senior and subordinated indebtedness of approximately
$38.6 million resulting in an extraordinary loss of approximately $444,000; (ii)
redeem the preferred stock of approximately $8.7 million; (iii) pay the
long-term incentive compensation of Mr. Friedman and Mr. Shea of approximately
$1.9 million; (iv) pay the estimated fees and expenses of the Recapitalization
Transactions which total approximately $4.2 million; and (v) reserve
approximately $11.6 million for general corporate purposes and possible future
acquisitions and fund the 1995 Treasure Coast Acquisition. In addition, the
Company converted all of its existing Common Stock for 486,373 shares of its
Class B Common Stock and 119,212 shares (including treasury shares) of its Class
A Common Stock. The consolidated financial statements have been retroactively
adjusted for this conversion. The above transactions constitute the
Recapitalization Transactions. See Note 2 to the "Consolidated Financial
Statements." On May 26, 1995, the Company filed with the Securities and Exchange
Commission a registration statement on Form S-4 offering to exchange the Senior
Subordinated Notes for new notes which are substantially identical except that
they are freely transferable (the "Exchange Offer"). The Form S-4 was effective
on July 28, 1995 and the Exchange Offer was consummated on August 28, 1995.
RECENT ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board issued SFAS No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of" in March 1995, which establishes accounting standards for the impairment of
long-lived assets, certain identifiable intangibles and goodwill related to
those assets to be held and used and for long-lived assets and certain
identifiable intangibles to be disposed of. SFAS No. 121 will be effective for
the Company's financial statements beginning in 1996. The Company evaluates
intangible assets for potential impairment by analyzing the operating results,
trends and prospects of the Company's stations, as well as by comparing them to
their competitors. The Company also takes into consideration recent acquisition
patterns within the broadcast industry, the impact of recently enacted or
potential FCC rules and regulations and any other events or circumstances which
might indicate potential impairment. As a result of continued strong growth in
radio advertising revenue, and based upon recent valuations of various station
acquisitions in many of the Company's markets, management does not believe that
the implementations of SFAS No. 121 will have a material effect on its financial
statements.
The Financial Accounting Standards Board issued SFAS No. 123, "Accounting
for Stock Based Compensation" in October 1995, which establishes financial
accounting and reporting standards for stock based employee compensation plans
including, stock purchase plans, stock options, restricted stock and stock
appreciation rights. The Company has elected to continue accounting for stock
based compensation under Accounting Principles Board Opinion No. 25. The
disclosure requirements of SFAS No. 123 will be effective for the Company's
financial statements beginning in 1996. Management does not believe that the
implementation of SFAS No. 123 will have a material effect on its financial
statements.
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<PAGE> 35
BUSINESS
GENERAL
The Company owns and operates, or provides sales and marketing services for
33 radio broadcasting stations (nineteen FM and fourteen AM stations) in six
medium-sized markets. The Company is the leading radio group on a pro forma
basis in five of its six markets based on radio advertising revenue and is the
leading radio group in each of its six markets based on audience share. The
Company's average radio revenue share in its markets was 45.1% in pro forma
1995, which the Company believes is the highest average radio revenue share of
any public radio broadcasting company in the United States. The Company's radio
stations are located in the following markets: Fairfield County, Connecticut;
Allentown, Pennsylvania; Wilmington, Delaware; Westchester/Putnam Counties, New
York; the Treasure Coast Market, Florida and Huntington, West Virginia/Ashland,
Kentucky. The Company's pro forma net revenue and broadcast cash flow for the
year ended December 31, 1995 were $42.5 million and $15.3 million, respectively.
The Company believes that operating radio stations in medium-sized markets
offers significant opportunities to apply its programming, marketing and
broadcasting expertise to increase broadcast cash flow and to establish a
dominant market position that would be difficult for a competitor to replicate.
The Company defines medium-sized markets as markets with approximately $10
million to $35 million of radio advertising revenue, which includes markets
ranked between 50 and 150 in terms of radio advertising revenue. The Company
believes that medium-sized markets represent attractive operating environments
because these markets are generally characterized by (i) a limited number of
radio stations, which minimizes the risk of format attack, (ii) fewer
alternative advertising media, (iii) undercapitalized owners/operators, (iv)
strong station brand identity among listeners that is not typically dependent
upon specific on-air talent, (v) a lower cost operating structure and (vi) a
high percentage of local advertisers who make advertising decisions based upon
relationships and customer service and not solely upon station ratings. The
Company believes that these characteristics allow it to capture a greater
percentage of a market's total advertising revenue and to achieve broadcast cash
flow margins typically higher than industry norms while operating in a more
stable competitive environment. In addition, the Company believes that under the
recently enacted Telecommunications Act of 1996, which liberalized radio station
ownership limits, medium-sized markets offer the Company the greatest
opportunity to create dominant, multiple station ownership situations.
The Company's objective is to increase shareholder value by enhancing its
share of the advertising revenue in each of its markets, increasing the
broadcast cash flow of its existing stations and pursuing additional
acquisitions both in its existing markets and in new markets in which the
Company's operational expertise can be successfully applied to increase
broadcast cash flow. Through successful implementation of the Company's
operating and acquisition strategies, the Company's net revenue and broadcast
cash flow have increased at compound annual growth rates of 21.1% and 29.2%,
respectively, from 1991 to pro forma 1995 and the broadcast cash flow margin has
increased from 26.0% in 1991 to 36.0% in pro forma 1995. On a same station
basis, from 1991 to 1995, the Company successfully increased its net revenue and
broadcast cash flow at compound annual growth rates of 13.7% and 20.7%,
respectively.
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<PAGE> 36
The following table sets forth, on a pro forma basis, certain information
with respect to the Company and its markets:
<TABLE>
<CAPTION>
COMPANY DATA MARKET DATA
---------------------------------------------------------------- ----------------------------------------------
NUMBER OF 1995
RADIO RADIO REVENUE RADIO RADIO AUDIENCE STATIONS(F) RADIO 1990-1995
REVENUE MARKET SHARE AUDIENCE MARKET SHARE --------- VIABLE REVENUE 1995 RADIO REVENUE
MARKET(A) RANK(B) %(C) RANK(D) %(E) AM FM STATIONS(G) RANK(H) REVENUE(I) CAGR %
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Fairfield
County, CT 1 33.2% 1 26.3% 3 3 9 60 $ 27,851 9.6%
Allentown, PA 1 53.7% 1 47.2% 2 2 8 77 $ 19,300 5.1%
Wilmington,
DE 2 33.2% 1 42.2% 1 1 5 78 $ 17,800 10.4%
Westchester/Putnam
Counties, NY(j) 1 34.3% 1 47.3% 2 3 4 115 $ 12,400 N/A
Treasure
Coast, FL 1 49.7% 1 49.8% 1 5 9 138 $ 9,900 6.5%
Huntington,
WV/
Ashland, KY 1 66.7% 1 70.4% 5 5 9.5 140 $ 9,800 7.3%
</TABLE>
- ------------------------------
(a) Actual city of license may be different from metropolitan market served.
Market names used in this table are those used by Arbitron for Arbitron
Metro Survey Areas or Arbitron Custom Survey Areas for the Company's
markets.
(b) Radio Revenue Rank in each market is the ranking, by 1995 radio group market
revenue share, of each of the Company's radio groups in its market among all
other such radio groups in such market. For each of the Company's radio
groups, except Fairfield County, Radio Revenue Rank was derived by the
Company determining the radio groups in the market and by then calculating
group revenue using the market revenue sources described in note (c) below.
Fairfield County was ranked in the source as indicated in note (c) below.
(c) In each of the markets, except Fairfield County, Radio Revenue Market Share
was derived by dividing (1) the total 1995 radio revenues of the Company's
stations in the market, by (2) the total 1995 radio revenues in that market
as published in BIA's Investing in Radio -- 1996 Market Report (2nd ed.). In
Fairfield County, the total 1995 radio revenues in the market were obtained
from the January 1996 Fairfield Suburban Market Revenue Report by Miller
Kaplan (as hereinafter defined).
(d) Ranking of the Company's combined stations versus other radio groups in the
market for persons aged 12 and older in the applicable Arbitron Metro Survey
Area or Arbitron Custom Survey Areas, Average Quarter Hour Estimates, Monday
through Sunday, 6 am to midnight.
(e) Radio Audience Market Share was derived by dividing (1) the sum of audience
shares from the applicable Arbitron Market Survey of the Company's combined
radio stations, by (2) the total sum of audience shares above the line in
the local market served.
(f) The number of stations for Allentown, Pennsylvania includes WKAP-AM for
which the Company is providing certain sales and marketing services pursuant
to a JSA; the number of stations for the Treasure Coast Market, Florida
includes WPAW-FM for which the Company is providing certain sales and
marketing services pursuant to a JSA; and the number of stations for
Huntington, West Virginia/Ashland, Kentucky includes WMLV-FM, WHRD-AM,
WFXN-FM, WKEE-AM, WKEE-FM, WZZW-AM, WBVB-FM and WIRO-AM, for which the
Company is providing certain sales and marketing services pursuant to LMAs
pending the consummation of the Huntington Acquisitions.
(g) The number of viable radio stations for the Company's Allentown, Wilmington
and Huntington/Ashland markets were taken from Duncan's Radio Market Guide
(1996 Edition). The number of viable stations for the Company's remaining
markets were derived by calculating all radio stations listed home-to-market
by Arbitron which received an average quarter hour share of "1" or greater
in each of the 1995 Arbitron Surveys for the indicated market.
(h) According to BIA's Investing in Radio Market Guide 1996 (2nd ed.) "Revenue
Rank." Fairfield County, CT and Westchester/Putnam Counties, NY Radio
Revenue Ranks were estimated using BIA's methodology.
(i) Dollars in thousands.
(j) Radio Revenue Rank and Radio Revenue Market Share for Westchester/Putnam
Counties, NY have been estimated by the Company because no data is available
for this sub-market.
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<PAGE> 37
BUSINESS STRATEGY
The Company believes the most effective way to achieve its objective of
increasing shareholder value is to dominate medium-sized markets by operating
multiple radio stations. Multiple station ownership enables the Company to
maintain greater influence over the pricing of radio advertising rates and more
effectively compete against alternative forms of media advertising. The Company
has the ability to program its multiple stations to provide advertisers with
access to a variety of attractive demographic groups and as a result capture a
significant share of the market's radio advertising revenue. In addition,
multiple station ownership enables the Company to attract and retain highly
qualified personnel as well as to achieve cost savings through eliminating
duplicative overhead and consolidating broadcast facilities. The Company's
station operating strategy centers upon the following principal elements:
Targeted Programming and Market Research. The Company believes that
targeted programming is a key element in developing brand loyalty and sustaining
high audience and revenue shares. The Company attempts to strategically program
its radio stations to dominate specific demographic groups and/or provide
advertisers a broad spectrum of multiple demographic targets. The Company
utilizes research consultants and performs periodic music testing to assess
listener preferences for the station's music and services and adjusts its
programming to reflect the results of its research. The Company has developed
the in-house expertise to provide weekly call out research and periodic
auditorium music testing and believes that it can perform these functions
in-house more cost effectively.
Marketing Partnerships. The Company believes its value-added sales
approach creates a marketing partnership with advertisers and provides the
Company with a competitive advantage in attracting and retaining advertisers.
While station audience ratings are an important measure for selling advertising
time in all radio markets, management believes that in many medium-sized
markets, the decision to advertise on a given radio station is driven in large
measure by customer relationships and the level of customer success with past
advertising programs. The Company pursues a value-added sales approach by
providing advertisers with: (i) quantitative and qualitative information
regarding customer spending habits in the market which assist the advertiser to
target advertising campaigns; (ii) promotional ideas and support to increase the
effectiveness of the advertising campaign; (iii) "spec" spots, a sample
commercial prepared by the Company's on-air talent, which the Company believes
increases the likelihood the prospective advertiser will purchase advertising
time; (iv) analyses which demonstrate the effectiveness of utilizing radio in
tandem with other media and the ability to enhance customer reach and frequency
by shifting a portion of the advertiser's budget to radio and (v) professional
production of the advertiser's final commercial.
The Company believes that advertisers in its markets are retained through
superior customer service. The Company focuses on providing superior customer
service to its top 100 clients at each station, which the Company believes
generally provide 80% or more of a radio station's revenue. In order to provide
customers with a high level of service, the Company employs separate local sales
forces at each of the Company's major stations. Such superior customer service
consists of assisting businesses in analyzing advertising expenditures,
developing customized promotions and creating jingle packages, among other
things. Management believes that building and solidifying the marketing
partnership with advertisers and retaining such customers through high quality
customer service are significant factors in maintaining leading revenue shares
in its markets.
Cost Controls. Management believes that it is important to maintain the
lowest possible cost structure while achieving its operating objectives. The
Company seeks to reduce station operating costs by consolidating multiple
station facilities in a given market and through the selected use of
preprogrammed automation and automated satellite delivered programming. The
Company attempts to limit trade or barter, employing it primarily in situations
where use of trade or barter will bring incremental cash revenue from a
potential client or will reduce a cash expense item. The Company's detailed
annual budgeting process reviews expense items for possible reduction and its
financial reporting system allows management to track expense variances on a
weekly basis at each radio station.
Performance Based Management Incentives. The Company's senior management
has decentralized the daily operation of its stations, while maintaining tight
controls through a weekly monitoring system and frequent station visits. The
Company believes that it employs highly experienced and qualified station level
35
<PAGE> 38
management. The Company's local radio station management teams have substantial
annual incentive opportunities based on achieving aggressive broadcast cash flow
targets. The Company believes that its management style enhances a local
manager's creativity and enables the Company to attract and retain a highly
skilled management staff. By giving its managers the autonomy to operate their
stations, focusing a significant portion of each manager's compensation on cash
flow incentives, setting target earning goals for each station and providing
managers with the sales and financial tools necessary to succeed, the Company
believes its managers are highly motivated to meet the goals of the station. The
Company provides further incentives to management through potential
participation in the Company's stock option plan.
Community Involvement. The Company believes community involvement is
particularly important in medium-sized markets and seeks to use creative
promotional activities tied to the local community and charitable events. Each
of the Company's radio stations participate in numerous community programs,
fund-raisers and activities that benefit a wide variety of organizations and
provide the station with community identity. The Company believes this
involvement helps to build and maintain station awareness and listener loyalty.
ACQUISITION STRATEGY
The Company's acquisition strategy is to selectively acquire
underperforming radio stations in medium-sized markets at prices that are
attractive relative to the Company's potential to increase the acquired
stations' broadcast cash flow. The Company believes that significant
opportunities exist in other medium-sized markets for the Company to acquire
additional radio stations at attractive prices relative to their broadcast cash
flow potential. The Company also believes it can effectively capitalize on its
presence in and knowledge of the markets in which it operates to make attractive
acquisitions in adjacent markets. The Company may also enter new markets either
through acquisitions of radio groups that have multiple station ownership in a
market or through acquisitions of individual stations in markets in which the
Company believes it can establish itself as the markets' dominant radio group by
making additional in-market acquisitions.
In analyzing potential acquisitions, the Company considers many factors
including: (i) the price and terms of the purchase in relation to the estimated
potential broadcast cash flow for the station or stations; (ii) the possibility
of obtaining a synergistic combination with additional stations in a given
market; (iii) the existing quality and potential quality of the station's
broadcast signal and transmission facility and (iv) the radio and other media
competition in the market. While the Company continuously evaluates
opportunities to make strategic acquisitions, it has no present commitments or
agreements with respect to any material acquisitions other than the Huntington
Acquisitions.
RECENT ACQUISITIONS OF RADIO STATIONS
The Company has made, or has entered into agreements to make, the following
acquisitions:
Fairfield County, Connecticut. In March 1996, the Company consummated the
Danbury Acquisition by acquiring, through a subsidiary, all of the issued and
outstanding stock of Danbury that is the licensee of radio stations WRKI-FM and
WINE-AM in Fairfield County, Connecticut. In May 1996, the Company acquired
radio stations WKHL-FM and WSTC-AM in Stamford, Connecticut from Q Broadcasting,
Inc.
Westchester/Putnam Counties, New York. In conjunction with the Danbury
Acquisition, in March 1996, the Company acquired the radio broadcast business
conducted by radio stations WZZN-FM, WPUT-AM and WVYB-FM in Westchester/Putnam
Counties, New York.
Treasure Coast Market, Florida. In May 1996, the Company acquired radio
stations WKQS-FM, WAVW-FM and WAXE-AM in the Treasure Coast Market, Florida from
Media VI.
Huntington, West Virginia/Ashland, Kentucky. In April 1996, the Company,
through a subsidiary, entered into (i) a purchase agreement with Adventure
Communications, Inc. ("Adventure") to acquire the radio broadcast business
conducted by radio stations WKEE-FM and WKEE-AM in Huntington, West Virginia,
WZZW-AM in Milton, West Virginia, WBVB-FM in Coal Grove, Ohio and WIRO-AM in
Ironton, Ohio, and (ii) a purchase agreement with Simmons Broadcasting Company
("Simmons Broadcasting") and
36
<PAGE> 39
an option agreement to acquire the radio broadcast business conducted by radio
stations WHRD-AM in Huntington, West Virginia, WFXN-FM in Milton, West Virginia
and WMLV-FM in Ironton, Ohio. In connection therewith, the Company entered into
an LMA with Adventure (the "Adventure LMA") and an LMA with Simmons (the
"Simmons LMA") to provide, on a cooperative basis, the programming, sales,
marketing and certain other services to the stations pending the closing of the
acquisitions. The Company anticipates that the Huntington Acquisitions will be
consummated in the second half of 1996, however, there can be no assurance that
such transactions will be consummated.
STATION AND MARKET OVERVIEW
Listed below is selected information, on a pro forma basis, relating to the
Company's stations and markets:
<TABLE>
<CAPTION>
1995
MARKET COMBINED
RADIO RADIO 1995 TARGET
REVENUE REVENUE RADIO STATION TARGET DEMOGRAPHIC
MARKET(A) RANK(B) RANK(C) FORMAT DEMOGRAPHIC SHARE %/RANK
- ------------------------- ------- -------- ----------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Fairfield County, CT 60 1
Persons
WKHL-FM Oldies 25-54 11.0%/3
WRKI-FM AOR Men 18-49 18.7%/3
WEFX-FM Classic Rock Men 18-49 12.5%/4
WINE-AM Country Persons 35+ 3.8%/5(d)
WSTC-AM News/Info/Jazz Persons 35+ 6.2%/6
WNLK-AM Talk Persons 35+ 1.4%/12
Allentown-Bethlehem, PA 77 1
WAEB-FM CHR Women 18-49 32.0%/1
WZZO-FM AOR Men 18-49 35.4%/1
WAEB-AM News/Talk/Sports Persons 35+ 10.4%/4
WKAP-AM(e) MOR Persons 35+ 9.9%/6
Wilmington, DE 78 2
WJBR-FM A/C Women 25-54 48.0%/1
WJBR-AM MOR Persons 35+ 10.9%/5
Westchester/Putnam
Counties, NY (f) 115 1
WFAS-FM A/C Women 25-54 41.3%/1
WVYB-FM(g) Oldies Women 25-54 1.9%/5
WZZN-FM(g) AOR Women 25-54 1.9%/5
WFAS-AM MOR Persons 35+ 19.7%/3
WPUT-AM(h) Country Persons 35+ (i)
Treasure Coast
Market, FL 138 1
Persons
WAVW-FM(e) Country 25-54 22.4%/1
WZZR-FM AOR Men 18-49 32.5%/1
Persons
WQOL-FM Oldies 25-54 16.3%/3
Persons
WKQS-FM(e) Country 25-54 3.2%/8
Persons
WPAW-FM(e) Classic Country 25-54 2.6%/9
WAXE-AM(e) Mature A/C Persons 35+ 3.2%/10
Huntington, WV/
Ashland, KY 140 1
Persons
WTCR-FM Country 25-54 30.6%/1
Persons
WKEE-FM(e) A/C 25-54 21.8%/2
WBVB-FM(e) Country Men 18-34 12.7%/4
WFXN-FM(e) Classic Rock Men 25-54 7.7%/5
WMLV-FM(e) Classic Rock Men 25-54 1.4%/10
WHRD-AM(e) Sports Men 25-54 (i)
WKEE-AM(e) Easy Persons 35+ 6.2%/6
WZZW-AM(e) Sports Men 25-54 (i)
WIRO-AM(e) Sports/Talk Men 25-54 (i)
WTCR-AM Classic Country Persons 35+ 2.4%/9
</TABLE>
- ------------------------------
(a) Actual city of license may be different from metropolitan market served.
Market names used in this table are those used by Arbitron.
37
<PAGE> 40
(b) According to BIA's Investing In Radio, Market Guide 1996 (2nd ed.) "Revenue
Rank". The Fairfield County, CT and Westchester/Putnam Counties, NY Radio
Revenue Ranks were estimated using BIA's methodology.
(c) Combined Radio Revenue Rank in each market is the ranking, by 1995 radio
market revenue, of the Company's combined radio revenue in its markets as
compared to the radio revenue for all other radio groups in such market. For
each of the Company's radio groups, except Fairfield County, Combined Radio
Revenue Rank was derived by the Company determining the radio groups in the
market and then calculating group revenue using the market revenue as
published in BIA's Investing in Radio, 1996 Market Report (2nd ed.). In
Fairfield County, the total 1995 radio revenue in the market was obtained
from the January 1996 Fairfield Suburban Market Revenue Report by Miller
Kaplan. The Combined Revenue Share Rank assumes that the 1995 Treasure Coast
Acquisition and the Acquisitions had occurred as of January 1, 1995.
(d) Data for this station was derived from the Danbury Arbitron Survey.
(e) The Company is providing sales and marketing services pursuant to a JSA or
an LMA.
(f) Radio Revenue Rank and Combined Radio Revenue Rank for Westchester/Putnam
Counties has been estimated by the Company because no published data is
available for this sub-market.
(g) In 1995, WVYB-FM and WZZN-FM simulcasted the same program.
(h) WPUT-AM does not receive ratings in the Westchester County market.
(i) The station did not produce a rating in the Arbitron Survey for this market.
FAIRFIELD COUNTY, CONNECTICUT
Radio Revenue Rank: #60
Market Radio Revenue: $27.9 million
The Company has the #1 combined radio revenue share in Fairfield County and
has increased its radio revenue share from 9.2% in 1994 to 33.2% in pro forma
1995. The Company entered this market with the 1989 acquisitions of WEFX-FM and
WNLK-AM. In 1994, the Company installed a new local management team at these
stations which applied the Company's marketing strategy and invested in new
transmitting equipment which significantly improved WEFX-FM's signal strength.
Following these steps, cash revenue for WEFX-FM and WNLK-AM increased 48.7% to
$3.5 million in 1995 and broadcast cash flow increased 117.0% to $813,000 in
1995.
In 1996, the Company acquired WRKI-FM, WKHL-FM, WSTC-AM and WINE-AM
enhancing its position in this market and giving the Company four of the nine
total viable stations in the market. The Company believes that opportunities
exist to improve the broadcast cash flow of the Company's Fairfield County
stations. Prior to its acquisition by the Company, WRKI-FM had competed directly
with the Company's WEFX-FM station. The Company refocused WRKI-FM's programming
to Album Oriented Rock targeting younger males to complement the Company's
WEFX-FM which targets older males with a Classic Rock format. In 1995, WKHL-FM
and WSTC-AM had a radio revenue share of 9.8% and a local audience share of
12.3% and the Company believes that the stations' radio revenue share can be
significantly increased through implementation of the Company's marketing
strategy.
In 1996, the Company also purchased WVYB-FM which broadcasts from Putnam
County, New York. The Company intends to position WVYB-FM, which has sufficient
signal reach into Fairfield County, to provide the Company with another viable
station in the Fairfield County market. The Company believes it will be able to
improve the station's financial performance by targeting the station to the
larger Fairfield County market.
As the Company integrates its recent acquisitions, the Company intends to
share programming between the Company's three AM radio stations in the market to
capitalize on the strong news and information presence of WSTC-AM and to provide
greater coverage to potential advertisers. In order to capture a greater share
of the national advertising revenue in the region and of new media expenditures
from the New York City market, the Company has combined its 11 Fairfield County
and Westchester County radio stations for
38
<PAGE> 41
national sales purposes using an Interep Radio Store sales representative and
the Company's own full time national sales representative in this region.
Fairfield County is a particularly attractive market to advertisers because
it is in one of the nation's most affluent regions. The Fairfield County market
receives a large share of local and national media expenditures relative to its
population. The comparatively few local FM radio stations competing in Fairfield
County also adds to the appeal of this market.
ALLENTOWN, PENNSYLVANIA
Radio Revenue Rank: #77
Market Radio Revenue: $19.3 million
The Company has the #1 combined radio revenue share in Allentown and has
successfully increased its radio revenue share from 18.7% in 1991 to 53.7% in
1995. The Company entered the market with the 1982 acquisition of WAEB-AM/FM. In
1992, the Company retained a new local management team which created separate
sales forces for each of WAEB-FM and WAEB-AM, implemented the Company's
marketing strategy and conducted in-house auditorium testing. Following these
actions, the stations' cash revenue increased from $2.9 million in 1991 to $5.9
million in 1995, a 19.1% compound annual growth rate, and the stations'
broadcast cash flow increased from $445,000 in 1991 to $2.4 million in 1995, a
51.7% compound annual growth rate.
The Company enhanced its position in the market with the 1993 acquisition
of WZZO-FM. This acquisition created the Company's first duopoly which, in part,
enabled the Company to increase WZZO's cash revenue from $3.2 million in 1993 to
$4.3 million in 1995 and to improve its broadcast cash flow from $1.3 million in
1993 to $2.3 million in 1995. In order to further capitalize on its presence in
the Allentown market, in March 1995 the Company entered into a JSA with WKAP-AM,
an underperforming station which the Company believes will benefit from the
Company's marketing strategy. The Company has also capitalized on its multiple
station ownership position by consolidating all of its radio stations in
Allentown into one broadcast facility, thereby reducing overhead expense and
allowing for greater coordination of the Company's programming, sales and
marketing efforts. The Allentown market has only five viable FM radio stations
and no local television stations affiliated with a network.
WILMINGTON, DELAWARE
Radio Revenue Rank: #78
Market Radio Revenue: $17.8 million
The Company has the #2 combined radio revenue share in Wilmington and has
the #1 combined radio audience share in this market. The Company entered the
market with the 1985 acquisition of WJBR-AM/FM. Cash revenue for WJBR-AM/FM
increased from $3.9 million in 1991 to $5.9 million in 1995, an 11.0% compound
annual growth rate, and broadcast cash flow increased from $1.9 million in 1991
to $3.0 million in 1995, a 12.4% compound annual growth rate. In order to fill a
programming void in the market created by a competitor, in August 1994 the
Company changed WJBR-AM from a simulcast of the WJBR-FM format to a fully
automated satellite-delivered Middle-of-the-Road format which allows advertisers
to target a broader demographic group in this market.
The Wilmington market is particularly attractive due to the fact that the
market has only two and a half viable FM radio stations and no local television
stations.
WESTCHESTER/PUTNAM COUNTIES, NEW YORK
Radio Revenue Rank: #115
Market Radio Revenue: $12.4 million
The Company has the #1 combined radio revenue share in Westchester/Putnam
Counties and has successfully increased its radio revenue market share from an
estimated 33.0% in 1995 to 34.3% in pro forma 1995. The Company entered the
market with the 1986 acquisition of WFAS-AM/FM. Cash revenues for WFAS-AM/FM
increased from $3.2 million in 1991 to $4.1 million in 1995, a 6.1% compound
annual growth
39
<PAGE> 42
rate. By emphasizing cost controls, the Company was able to increase broadcast
cash flow from $751,000 to $1.4 million, a 15.9% compound annual growth rate.
The Company believes that significant opportunities exist to improve
WFAS-AM/FM's net revenue and broadcast cash flow and the Company has hired a new
station general manager with extensive experience in order to capitalize on
these opportunities.
In March 1996, the Company acquired WZZN-FM which had previously simulcast
a Hot Adult Contemporary format. The Company intends to reposition WZZN-FM as an
Album Oriented Rock station serving Westchester County, thus providing a
complementary male-oriented advertising vehicle to the Company's already
dominant female oriented WFAS-FM.
Westchester County is one of the nation's most affluent regions and has a
limited number of viable local FM stations. Westchester County generally has
lower advertising rates than those offered by New York City radio stations,
thereby making the Company's stations attractive to advertisers interested in
reaching only Westchester County listeners as opposed to the entire New York
metropolitan population.
TREASURE COAST MARKET, FLORIDA
Radio Revenue Rank: #138
Market Radio Revenue: $9.9 million
The Company has the #1 combined radio revenue share in the Treasure Coast
Market and has successfully increased its radio revenue market share from 10.1%
in 1991 to 49.7% in pro forma 1995. The Company entered the market with the 1987
acquisition of WZZR-FM. In 1992, the Company retained a new local management
team which applied the Company's marketing strategy and implemented a format
change from Contemporary Hit Radio to Album Oriented Rock. As a result, cash
revenues for WZZR-FM increased from $826,000 in 1991 to $2.1 million in 1995, a
26.7% compound annual growth rate, and broadcast cash flow increased from a loss
of $271,000 in 1991 to a profit of $546,000 in 1995.
In 1995, the Company acquired WQOL-FM and entered into a JSA with WPAW-FM.
In 1996, the Company acquired WAVW-FM, WAXE-AM and WKQS-FM. These acquisitions
enhanced the Company's position in this market, giving the Company five of the
eight viable FM stations and six of the ten total viable stations in the market.
The Company believes that considerable opportunities exist to apply its
operating strategy to improve the broadcast cash flow of the Company's combined
stations in the Treasure Coast Market. In 1995, WZZR-FM, WQOL-FM and WAVW-FM
were ranked #1, #2 and #3, respectively, in the market for adults 25-54 and the
Company is capitalizing on its leading presence in the market by providing
advertisers a full range of advertising options. In addition, the Company
believes that opportunities exist to improve the performance of WKQS-FM, an
undeveloped property in this market which commenced broadcasting in 1995,
through refocusing the format of WKQS-FM, building a viable brand and ultimately
introducing a dedicated local sales force to this station.
The Treasure Coast Market is one of the fastest growing markets in the
United States and is located directly north of the West Palm Beach market. There
is no local television affiliated with a network in the Treasure Coast Market.
HUNTINGTON, WEST VIRGINIA/ASHLAND, KENTUCKY
Radio Revenue Rank: #140
Market Radio Revenue: $9.8 million
The Company has the #1 combined radio revenue share in this market and has
successfully increased its radio revenue share from 35.4% in 1991 to 66.7% in
pro forma 1995. The Company entered the market with the 1982 acquisition of
WTCR-AM/FM. WTCR-FM programs a heritage Country format which consistently ranks
first in its targeted demographic ratings and typically ranks in the top ten
radio stations in the United States based on average quarter hour share of a
market. This strong market position attracted a format competitor beginning in
1992 and a second format competitor in 1995. As a result, cash revenue for WTCR
AM/FM grew moderately from $2.8 million in 1991 to $3.2 million in 1995, a 3.3%
compound annual growth rate, and broadcast cash flow decreased from $1.0 million
in 1991 to $724,000 in 1995. However, the Company believes it has successfully
defended its market position and in the first quarter of 1996 WTCR-
40
<PAGE> 43
AM/FM's cash revenue increased 15.9% from the first quarter of 1995.
Furthermore, one of the Company's competitors in this market is under contract
to be acquired by the Company in connection with the Huntington Acquisitions.
Prior to June 1994, WTCR-AM simulcasted the WTCR-FM format. In order to
cost effectively capitalize on WTCR's strong brand equity, the Company
repositioned WTCR-AM as a primarily satellite-delivered Classic Country format.
In April 1996, the Company entered into purchase agreements to acquire
WKEE-FM, WKEE-AM, WZZW-AM, WBVB-FM, WIRO-FM, WHRD-AM, WHRD-FM and WFXN-FM. These
acquisitions enhance the Company's position in this market, giving the Company
control of six of the nine viable stations in the market. The Company
anticipates that these acquisitions will be consummated during the second half
of 1996.
The Company believes that opportunities exist to apply its operating
strategy to improve the broadcast cash flow of the Company's combined group in
this market. The combination of WBVB-FM and WTCR-AM/FM will enable the Company
to offer advertisers a wide range of advertising options on these three
stations. WFXN-FM and WMLV-FM are relatively undeveloped stations which are in
the process of petitioning for upgrades and signal improvements at the FCC. With
only one other significant radio owner in the market, the Company intends to
focus on achieving a greater share of all media expenditures in this market for
radio.
ADVERTISING
Radio is considered an efficient means of reaching specifically identified
demographic groups. Stations are typically classified by their on-air format,
such as country, adult contemporary, oldies or news/talk. A station's format and
style of presentation enable it to target certain demographic and psychographic
groups. By capturing a specific listening audience share of a market's radio
audience, with particular concentration in a targeted demographic group, a
station is able to market its broadcasting time to advertisers seeking to reach
a specific audience. Advertisers and stations utilize data published by audience
measuring services, such as Arbitron, to estimate how many people within
particular geographical markets and demographic groups listen to specific
stations.
Stations determine the number of advertisements broadcast hourly that will
balance revenue goals 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.
A station's local sales staff generates the majority of its local and
regional advertising sales through direct solicitations of local advertising
agencies and businesses. To generate national advertising sales, a station will
engage a firm that specializes in soliciting radio advertising sales on a
national level. National sales representatives obtain advertising principally
from advertising agencies located outside the station's market and receive
commissions based on the revenue from the advertising obtained.
COMPETITION
The radio broadcasting industry is a highly competitive business. The
success of each of the Company's stations depends largely upon its audience
ratings and its share of the overall advertising revenue within its market. The
Company's stations compete for listeners and advertising revenue directly with
other radio stations within their respective markets. Radio stations compete for
listeners primarily on the basis of program content that appeals to a particular
demographic group. By building a strong listener base consisting of a specific
demographic group in each of its markets, the Company is able to attract
advertisers seeking to reach those listeners.
Factors that are material to a radio station's competitive position include
management experience, the station's local audience rank in its market,
transmitter power, assigned frequency, audience characteristics, local program
acceptance and the number and characteristics of other radio stations in the
market area. The
41
<PAGE> 44
Company attempts to improve its competitive position with promotional campaigns
aimed at the demographic groups targeted by its stations and by sales efforts
designed to attract advertisers. Recent changes in the FCC's policies and rules
permit increased ownership and operation of local radio stations. Management
believes that radio stations which elect to take advantage of these joint
arrangements may in certain circumstances have lower operating costs and may be
able to offer advertisers more attractive rates and services. Although the
Company operates duopolies in Allentown, Pennsylvania, Fairfield County,
Connecticut, the Treasure Coast Market, Florida, Westchester/Putnam Counties,
New York and Huntington, West Virginia/Ashland, Kentucky, and intends to pursue
the creation of additional duopolies, the Company's competitors in certain
markets include operators of duopolies or operators who already have entered
into LMAs or JSAs.
Although the radio broadcasting industry is highly competitive, some
barriers to entry exist. The operation of a radio broadcast station requires a
license from the FCC and the number of radio stations that can operate in a
given market is limited by the availability of FM and AM radio frequencies
allotted by the FCC to communities in that market, as well as by the FCC's
multiple ownership rules which regulate the number of stations which may be
owned and controlled by a single entity.
The Company's stations also compete for advertising revenue with other
media, including broadcast television, cable television, newspapers, magazines,
direct mail, coupons and billboard advertising. In addition, the radio
broadcasting industry is subject to competition from new media technologies that
are being developed or introduced, such as the delivery of audio programming by
cable television systems, by DAB, including DARS. The delivery of information
through the presently unregulated Internet also could create a new form of
competition. The radio broadcasting industry historically has grown despite the
introduction of new technologies for the delivery of entertainment and
information, such as television broadcasting, cable television, audio tapes and
compact disks. Growing population and greater availability of radios,
particularly car and portable radios, have contributed to this growth. There can
be no assurance, however, that the development or introduction in the future of
any new media technology will not have an adverse effect on the radio
broadcasting industry.
CHANGES IN THE BROADCASTING INDUSTRY
Radio stations generate the majority of their revenue from the sale of
advertising time to local and national spot advertisers and national network
advertisers. Radio serves primarily as a medium for local advertising. During
the past decade, local advertising revenue as a percentage of total radio
advertising revenue in a given market has ranged from approximately 75% to 79%.
According to the Radio Advertising Bureau's Radio Marketing Guide and Fact
Book for Advertisers 1994-1995, each week, radio reaches approximately 96% of
all Americans over the age of twelve. More than one-half of all radio listening
is done outside the home, in contrast to other advertising mediums and three out
of four adults are reached by car radio each week. The average listener spends
approximately three hours and twenty minutes per day listening to radio. The
highest portion of radio listenership occurs during the morning, particularly
between the time a listener wakes up and the time the listener reaches work.
This "morning drive time" period reaches more than 86% of people over twelve
years of age and, as a result, radio advertising sold during this period
receives premium advertising rates. Radio listeners have gradually shifted over
the years from AM (amplitude modulation) to FM (frequency modulation) stations.
FM reception, as compared to AM, is generally clearer and provides greater tonal
range and higher fidelity. FM's listener share is now in excess of 80%, despite
the fact that the number of AM and FM commercial stations in the United States
is approximately equal.
The FCC currently has before it proceedings that will permit the use of DAB
to deliver audio programming, and has allocated spectrum for the provision of
satellite DAB service. DAB provides a medium for the delivery by satellite or
terrestrial means of multiple new, high quality audio programming formats to
local and national audiences. This technology also may be used in the future by
radio broadcast stations either on existing or alternate broadcasting
frequencies or on new frequency bands. In addition, the FCC has authorized an
additional 100 kHz of spectrum for the AM band and will soon allocate
frequencies in this new band to certain existing AM station licensees. By the
end of a transition period to be determined by the FCC,
42
<PAGE> 45
those licensees will be required to return to the FCC either the license for
their existing AM band station or the license for the expanded AM band station.
The Company cannot predict what other matters might be considered in the
future by the FCC, nor can it assess in advance what impact, if any, the
implementation of any of these proposals or changes might have on its business.
FEDERAL REGULATION OF RADIO BROADCASTING
The ownership, operation and sale of radio stations are subject to the
jurisdiction of the FCC, which acts under authority granted by the
Communications Act. Among other things, the FCC assigns frequency bands for
broadcasting; determines the particular frequencies, locations and operating
power of stations; issues, renews, revokes and modifies station licenses;
determines whether to approve changes in ownership or control of station
licensees; regulates equipment used by stations; and adopts and implements
regulations and policies that directly or indirectly affect the ownership,
operation and employment practices of stations. The FCC has the power to impose
penalties for violation of its rules or the Communications Act.
In February 1996, President Clinton signed into law the Telecommunications
Act of 1996 (the "1996 Act"). This law amended the Communications Act with
respect to the regulation of broadcasters in several key respects. The 1996 Act
required the FCC to revise its ownership rule with respect to radio stations (a)
to remove the national limit on the number of stations that any one entity could
own or in which it could hold an attributable interest and (b) to increase the
number of stations that one entity could own, or in which that entity could hold
an attributable interest, in a market. The revised rule in most situations
permits an entity to own, or hold an attributable interest in, a maximum of
between five and eight stations (a maximum of between three and five of which
can be FM stations) depending on the size of the market. In addition, whereas
the rule previously prohibited the purchase of a station if the purchase would
result in the licensee's audience share exceeding 25 percent, the revised rule
refers solely to the number of stations that would be owned by the licensee (or
in which the licensee would hold an attributable interest) without regard to
audience share. Further, under the 1996 Act, competing applications can no
longer be filed with respect to a station's renewal unless the FCC first finds
that the station is no longer entitled to a grant of its renewal and the 1996
Act significantly strengthens the incumbent licensee's right to a renewal
expectancy. The 1996 Act also removed certain prohibitions with respect to
foreign ownership of broadcast licenses.
The following is a brief summary of certain provisions of the
Communications Act (as revised by the 1996 Act) and of specific FCC regulations
and policies. Reference should be made to the Communications Act, FCC rules and
the public notices and rulings of the FCC for further information concerning the
nature and extent of Federal regulation of radio stations.
FCC Licenses. Radio stations operate pursuant to broadcasting licenses
that are granted by the FCC. Pursuant to the 1996 Act, the FCC may grant a
broadcast license for a maximum term of eight years. Broadcast licenses may be
renewed through the submission of an application to the FCC. The FCC licenses
for the Company's stations are held by the Company's subsidiaries. During
certain periods when a renewal application is pending, petitions to deny license
renewals can be filed by interested parties, including members of the public.
Historically, the Company's management has not experienced any material
difficulty in renewing any licenses for stations under its control. As a result
of amendments to the Communications Act of 1934 brought about through the 1996
Act, the FCC must grant the renewal application for a station if it finds that,
during the preceding term of that station's license, the station has served the
public interest, convenience, and necessity; there have been no serious
violations by the licensee of the Communications Act or the rules and
regulations of the Commission; and there have been no other violations by the
licensee of the Communications Act or the rules and regulations of the
Commission which, taken together, would constitute a pattern of abuse. If the
Commission is unable to make such findings with respect to the station, it can
grant the station's renewal application, but on terms and conditions that the
Commission considers to be appropriate or, the Commission can, after providing
the licensee with notice and an opportunity for hearing, and if the Commission
determines that no mitigating factors justify the imposition of a lesser
sanction, deny the renewal application. The terms and conditions that could be
imposed by the Commission in granting the renewal include requiring the payment
of a forfeiture, requiring the licensee to make periodic reports to the
Commission or granting the renewal for a period of time less than a normal
license term. In making its
43
<PAGE> 46
determination as to whether the licensee's renewal application can be granted,
the Commission may consider facts brought to its attention by parties filing
petitions seeking denial of the renewal application.
The FCC classifies each AM and FM station. An AM station operates on either
a clear channel, regional channel or local channel. A clear channel is one on
which AM stations are assigned to serve wide areas. Clear channel AM stations
are classified as either: (i) Class A stations, which operate unlimited time and
are designed to render primary and secondary service over an extended area; (ii)
Class B stations, which operate unlimited time and are designed to render
service only over a primary service area; (iii) and Class D stations, which
operate either daytime, limited time or unlimited time with low nighttime power.
A regional channel is one on which Class B and Class D AM stations may operate
and serve primarily a principal center of population and the rural area
contiguous to it. A local channel is one on which AM stations operate unlimited
time and serve primarily a community and the suburban and rural areas
immediately contiguous to it. A Class C AM station operates on a local channel
and is designed to render service only over a primary service area that may be
reduced as a consequence of interference.
The minimum and maximum facilities requirements for an FM station are
determined by its class. Possible FM class designations depend upon the
geographic zone in which the transmitter of the FM station is located. In
general, commercial FM stations are classified as follows, in order of
increasing power and antenna height: Class A, B1, C3, B, C2, C1 or C stations.
The following table sets forth the market, FCC license classification,
antenna height above average terrain (HAAT), power and frequency of each of the
Company's owned stations and the date on which each station's FCC license
expires:
<TABLE>
<CAPTION>
YEAR OF RADIO STATION FCC POWER IN
MARKET(A) STATION ACQUISITION FORMAT CLASS KW'S HEIGHT(B) FREQUENCY
<S> <C> <C> <C> <C> <C> <C> <C>
Fairfield County,
CT WEFX-FM 1989 Classic Rock A 3 300 95.9MHz
WNLK-AM 1989 Talk B 1.0(e) 203 1350kHz
WRKI-FM 1996 AOR B 50 470 95.1MHz
WINE-AM 1996 Country D 1 255 940kHz
WKHL-FM 1996(f) Oldies A 8 828 96.7 MHz
WSTC-AM 1996(f) News/Info/Jazz C .78 444 1400kHz
Allentown, PA WAEB-FM 1982 CHR B 50 499 104.1MHz
WAEB-AM 1982 News/Talk/Sports B 3.6(c) 325 790kHz
WZZO-FM 1993 AOR B 30 631 95.1MHz
Wilmington, DE WJBR-FM 1985 A/C B 50 500 99.5MHz
WJBR-AM 1985 MOR D 2.5(d) 205 1290kHz
Westchester/Putnam
Counties, NY WFAS-FM 1986 A/C A 0.6 670 103.9MHz
WFAS-AM 1986 MOR C 1.0(c) 430 1230kHz
WVYB-FM 1996 Oldies A .9 610 105.5MHz
WZZN-FM 1996 AOR A 1.4 440 106.3MHz
WPUT-AM 1996 Country D 1.0 140 1510kHz
Huntington, WV/
Ashland, KY WTCR-FM 1982 Country B 50 492 103.3MHz
WTCR-AM 1982 Classic Country B 5.0(e) 304 1420kHz
Treasure Coast
Market, FL WZZR-FM 1987 AOR C2 50 482 92.7MHz
WQOL-FM 1995 Oldies C2 50 476 103.7MHz
WKQS-FM 1996(f) Country C3 25 295 94.7MHz
WAVW-FM 1996(f) Country A 8.1 466 101.7MHz
WAXE-AM 1996(f) Mature A/C B 1(d) 190 1370kHz
<CAPTION>
EXPIRATION
MARKET(A) OF LICENSE
<S> <C>
Fairfield County,
CT April 1998
April 1998
April 1998
April 1998
April 1998
April 1998
Allentown, PA August 1998
August 1998
August 1998
Wilmington, DE August 1998
August 1998
Westchester/Putnam
Counties, NY June 1998
June 1998
June 1998
June 1998
June 1998
Huntington, WV/
Ashland, KY October 2002
October 2002
Treasure Coast
Market, FL February 2003
February 2003
February 2003
February 2003
February 2003
</TABLE>
- ------------------------------
(a) Actual city of license may be different from metropolitan market served.
(b) Height in feet of antenna radiation center above average terrain for FM
stations; height in feet of antenna for AM stations.
(c) Power for daytime only; power of 1.0 kilowatt for nighttime.
(d) Power for daytime only.
(e) Power for daytime only; power of 0.5 kilowatt for nighttime.
(f) The Company anticipates that the Stamford Acquisition and the 1996 Treasure
Coast Acquisition will close prior to the effective date of the Offering,
however, there can be no assurance that such acquisitions will be
consummated.
44
<PAGE> 47
Ownership Matters. The Communications Act prohibits the assignment of a
license or the transfer of control of a broadcast licensee without the prior
approval of the FCC. In determining whether to grant or renew a broadcast
license, the FCC considers a number of factors pertaining to the licensee,
including compliance with various rules limiting common ownership of broadcast,
cable and newspaper properties, the "character" of the licensee and those
persons holding "attributable" interests therein, and compliance with the
Communications Act's limitations on alien ownership, as well as compliance with
other FCC policies, including its equal employment opportunity requirements.
Pursuant to the 1996 Act, the FCC has revised its ownership rule so as to
remove the national limit on the number of stations that any one entity may own
or in which that entity may have an attributable interest. Also pursuant to the
1996 Act the FCC revised its ownership rule so as to provide that (a) in a radio
market with 45 or more commercial radio stations, a party may own, operate, or
control up to eight commercial radio stations, not more than five of which may
be in the same service (i.e., AM or FM); (b) in a radio market with between 30
and 44 (inclusive) commercial radio stations, a party may own, operate, or
control up to seven commercial radio stations, not more than four of which may
be in the same service; (c) in a radio market with between 15 and 29 (inclusive)
commercial radio stations, a party may own, operate, or control up to six
commercial radio stations, not more than four of which may be in the same
service; and (d) in a radio market with 14 or fewer commercial radio stations, a
party may own, operate, or control up to five commercial radio stations, not
more than three of which are in the same service, except that the party may not
own, operate, or control more than 50 percent of the stations in such market.
For the purposes of these rules, the FCC considers the "market" of commonly
owned or operated stations to be the area in which such stations provide signals
of a designated strength. Stations that have signals of designated strength that
overlap or intersect the signals of the commonly owned stations are deemed to be
within the same market. Accordingly, the number of stations in a market as
designated by Arbitron or other ratings services are not the same as those used
in applying multiple ownership rules.
The Communications Act and FCC rules also prohibit the common ownership,
operation or control of a radio broadcast station and a television broadcast
station serving the same geographic market (subject to the possibility of a
waiver of such prohibition if certain conditions are satisfied) and of a radio
broadcast station and a daily newspaper serving the same geographic market.
Under these rules, absent waivers, the Company would not be permitted to acquire
any newspaper or television broadcast station (other than a low-power
television) in any geographic market in which it now owns radio broadcast
properties.
The FCC generally applies its ownership limits to "attributable" interests
held by an individual, corporation, partnership or other association. In the
case of corporations holding broadcast licenses, the interests of officers,
directors and those who, directly or indirectly, have the right to vote 5% or
more of the corporation's voting stock (or 10% or more of such stock in the case
of insurance companies, investment companies and bank trust departments) or to
designate any of the Company's directors are generally attributable, as are
positions as an officer or director of a corporate parent of a broadcast
licensee. Currently, none of the Company's officers, directors or holders of
voting stock has an attributable interest in any company licensed to operate
broadcast stations other than the Company's stations.
The Communications Act prohibits the issuance of broadcast licenses to, or
the holding of a broadcast license by, any corporation of which more than 20% of
the capital stock is owned of record or voted by non-U.S. citizens or their
representatives or by a foreign government or a representative thereof, or by
any corporation organized under the laws of a foreign country (collectively,
"Aliens"). The Communications Act also authorizes the FCC, if the FCC determines
that it would be in the public interest, to prohibit the issuance of a broadcast
license to, or the holding of a broadcast license by, any corporation directly
or indirectly controlled by any other corporation of which more than 25% of the
capital stock is owned of record or voted by non-U.S. citizens or their
representatives or by a foreign government or representative thereof, or by any
corporation organized under the laws of a foreign country. The FCC has issued
interpretations of existing law under which these restrictions in modified form
apply to other forms of business organizations, including partnerships. As a
result of these provisions the licenses granted to the radio station
subsidiaries of the Company by the FCC could be rescinded if, among other
restrictions imposed by the FCC, more than 25% of the Company's stock were owned
or voted by Aliens.
45
<PAGE> 48
Local Marketing Agreements. Over the past several years, a number of radio
stations have entered into LMAs. While these agreements may take varying forms,
under a typical LMA, separately owned and licensed radio stations agree to enter
into cooperative arrangements of varying sorts, subject to compliance with the
requirements of antitrust laws and with the FCC's rules and policies. Under
these arrangements, separately-owned stations could agree to function
cooperatively in programming, advertising sales, and similar matters, subject to
the licensee of each station maintaining independent control over the
programming and operations of its own station. One typical type of LMA is a
programming agreement between two separately-owned radio stations serving a
common service area, where the licensee of one station programs substantial
portions of the broadcast day on the other licensee's station, subject to
ultimate editorial and other controls being exercised by the latter licensee,
and sells advertising time during those program segments. Such arrangements are
an extension of the concept of "time brokerage" agreements, under which a
licensee of a station sells blocks of time on its station to an entity or
entities that program the blocks of time and sell their own commercial
advertising announcements during the time periods in question. The Company is
currently a party to the Adventure LMA and the Simmons LMA.
In the past, the FCC has determined that issues of joint advertising sales
should be left to enforcement by antitrust authorities and has revised its
so-called "cross-interest" policy to permit time brokerage arrangements whereby
one station in a market provides programming to another station in the same
market (under this policy, the FCC in certain circumstances may prohibit one
party from acquiring non-attributable economic interests in two broadcast
stations in the same market). Furthermore, over the past several years, the
staff of the FCC's Mass Media Bureau has held that LMAs are not contrary to the
Communications Act provided that the licensee of the station that is being
substantially programmed by another entity maintains complete responsibility
for, and control over, programming and operations of its broadcast station and
assures compliance with applicable FCC rules and policies.
The FCC's multiple ownership rules specifically permit radio station LMAs
to continue to be entered into and implemented, but provide that a station
brokering more than 15% of the time on another station serving the same market
will be considered to have an attributable ownership interest in the brokered
station for purposes of the FCC's multiple ownership rules. As a result, the
Company would not be permitted to enter into an LMA with another local radio
station that it could not own under the FCC's local ownership rules, unless the
Company's programming would constitute 15% or less of the other local station's
programming time on a weekly basis. The FCC's rules also prohibit a broadcast
licensee from simulcasting more than 25% of its programming on another station
in the same broadcast service (i.e., AM-AM or FM-FM) either through a time
brokerage or LMA arrangement or as a result of common ownership, if the coverage
areas of the two stations substantially overlap.
Another type of LMA that recently has come into use is the so-called JSA.
Under a JSA, one station (the "Brokering Station") purchases all, or
substantially all, of the commercial time available on another station (the
"Brokered Station"), while the licensee of the Brokered Station provides all of
the Brokered Station's entertainment programming. Because the Brokering Station
provides no entertainment programming under a JSA, arguments have been advanced
that a JSA is not an LMA for purposes of the FCC's rules, but instead is a type
of joint sales arrangement. Traditionally, the FCC has not treated joint sales
arrangements as causing the Brokering Station to hold an attributable interest
in the Brokered Station. If a JSA were deemed to be an LMA for purposes of the
FCC's attribution rules, and if the Brokering Station aired commercials for more
than 15% of the Brokered Station's broadcast week, the Brokering Station could
be deemed to hold an attributable interest in the Brokered Station, with the
result that the Brokered Station could be counted toward the maximum number of
stations that could be held by the Brokering Station. Currently before the FCC
is a proceeding wherein the FCC is considering whether it should treat JSAs as
LMAs or as joint sales arrangements.
Programming and Operation. The Communications Act requires broadcasters to
serve the "public interest, convenience and necessity." The FCC gradually has
relaxed or eliminated many of the more formalized procedures it had developed in
the past to promote the broadcast of certain types of programming responsive to
the needs of a station's community of license. A licensee continues to be
required, however, to present programming that is responsive to issues of
concern to the station's community, and to maintain
46
<PAGE> 49
certain records demonstrating such responsiveness. Complaints from listeners
concerning a station's programming often will be considered by the FCC when it
evaluates renewal applications of a licensee, although listener complaints may
be filed at any time and generally may be considered by the FCC at any time.
Stations also must follow various rules promulgated under the Communications Act
that regulate, among other things, political advertising, sponsorship
identifications, the advertisement of contests and lotteries, obscene and
indecent broadcasts, and technical operations, including limits on radio
frequency radiation. In addition, licensees must develop and implement
affirmative action programs designed to promote equal employment opportunities,
and must submit reports to the FCC with respect to these matters on an annual
basis and in connection with a renewal application. To ensure that stations
provide service to communities, the FCC's rules generally require a radio
station to maintain a signal of designated strength that encompasses the
community to which it is licensed and to maintain a main studio within an area
of such designated signal strength.
Failure to observe these or other rules and policies can result in the
imposition of various sanctions, including monetary forfeitures, the grant of
"short" (less than the full eight-year term in the case of radio broadcasting)
renewal terms or, for particularly egregious violations, the denial of a license
renewal application or the revocation of a license.
Proposed Changes. On January 12, 1995, the FCC initiated a proceeding to
solicit comment on whether it should alter its radio and television broadcast
ownership "attribution" rules by (i) raising the basic benchmark for attributing
ownership in a corporate licensee from 5% to 10% of the licensee's voting stock;
(ii) increasing from 10% to 20% of the licensee's voting stock the attribution
benchmark for "passive investors" in corporate licensees; (iii) changing the
class of investors eligible for "passive investor" status; (iv) changing the
current exemption which provides that minority voting stock interests held in a
corporate licensee are not attributable if there is a single majority
shareholder of more than 50% of the corporate licensee's outstanding voting
stock; (v) changing the current attribution rule which provides that all
nonvoting interests are generally nonattributable; and (vi) exempting certain
widely-held limited partnership interests from attribution.
The Congress and the FCC have under consideration, and in the future may
consider and adopt, new laws, regulations and policies regarding a wide variety
of matters that could affect, directly or indirectly, the operation, ownership
and profitability of the Company's radio stations, result in the loss of
audience share and advertising revenue for the Company's radio stations, and
affect the ability of the Company to acquire additional radio stations or
finance those acquisitions. Such matters include: changes to the license renewal
process; spectrum use or other fees on FCC licensees; revisions to the FCC's
equal employment opportunity rules and other matters relating to minority and
female involvement in the broadcasting industry; proposals to change rules
relating to political broadcasting; technical and frequency allocation matters;
proposals to restrict or prohibit the advertising of beer, wine and other
alcoholic beverages on radio; changes in the FCC's cross-interest, multiple
ownership and cross-ownership policies; changes to broadcast technical
requirements; the rules under which telephone companies may deliver audio and
video programming to the home through existing phone lines; new technologies
such as DAB; proposals to limit the tax deductibility of advertising expenses by
advertisers; proposals to auction the right to use the radio broadcast spectrum
to the highest bidder, instead of granting FCC licenses and subsequent license
renewals; and proposals to repeal or modify existing restrictions on foreign
ownership of licensed telecommunications facilities and interests.
The FCC has recently allocated spectrum for the provision of digital audio
radio satellite service ("DARS"). When implemented, DARS would permit a few
licensees to broadcast radio programming on a national basis to special
receivers designed to receive and decode digital signals.
The Company cannot predict what other matters might be considered in the
future, nor can it judge in advance what impact, if any, the implementation of
any of these proposals or changes might have on its business.
SEASONALITY
Seasonal revenue fluctuations are common in the radio broadcasting industry
and are due primarily to fluctuations in advertising expenditures by local
retailers. The Company's first fiscal quarter generally
47
<PAGE> 50
produces the lowest revenue for the year and the fourth fiscal quarter generally
produces the highest revenue for the year.
EMPLOYEES
At April 30, 1996, the Company had a staff of approximately 259 full-time
employees and 120 part-time employees. The on-air performance staff of
WFAS-AM/FM is in the process of deciding whether or not the American Federation
of Television and Radio Artists of America will represent them for collective
bargaining purposes. The Company believes that its relations with its employees
are good.
The Company employs several on-air personalities and generally enters into
employment agreements with certain of these personalities to protect its
interests in those relationships that it believes to be valuable. The loss of
certain of these personalities could result in a short-term loss of audience
share, but the Company does not believe that any such loss would have a material
adverse effect on the Company's financial condition or results of operations.
PATENTS AND TRADEMARKS
The Company owns seven domestic trademark registrations related to the
business of the Company and does not own any patents or patent applications. The
Company does not believe that any of its trademarks are material to its business
or operation.
PROPERTIES/FACILITIES
The Company's corporate offices are located in New York, New York. The
types of properties required to support each of the Company's radio stations
include offices, studios, transmitter sites and antenna sites.
The Company owns, leases or licenses the studios, offices, and transmitter
and antenna sites of its stations. The Company considers its facilities to be
suitable and of adequate sizes for its current and intended purposes, and does
not anticipate any difficulties in renewing those leases or licenses or in
leasing or licensing additional space, if required.
The Company owns substantially all its other equipment, consisting
principally of transmitting antennae, transmitters, studio equipment and general
office equipment. The towers, antennae and other transmission equipment used by
the Company's stations are generally in good condition, although opportunities
to upgrade facilities are continuously reviewed.
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<PAGE> 51
The following table sets forth the locations of properties owned by the
Company, the stations utilizing such properties and the uses of such properties:
<TABLE>
<CAPTION>
PROPERTY LOCATION USE
- ---------------------------- ------------
<S> <C>
Norwalk, CT AM/FM Tower
Brookfield, CT Studio
AM/FM Tower
Wilmington, DE AM/FM Tower
Port St. Lucie, FL Studio
FM Tower
Vero Beach, FL Studio
FM Tower
Catlettsburg, KY Studio
AM Tower
Hartsdale, NY Studio
AM/FM Tower
Patterson, NY Studio
Brewster, NY AM Tower
Whitehall, PA AM Tower
</TABLE>
The following table sets forth the locations of properties leased or
licensed by the Company, the stations utilizing such properties and the uses of
such properties:
<TABLE>
<CAPTION>
PROPERTY LOCATION USE
- ------------------------------- ------------
<S> <C>
Norwalk, CT Studio
Claymount, DE Studio
Vero Beach, FL Studio
Pawling, NY FM Tower
Bedford, NY FM Tower
Mt. Kisco, NY Studio
Whitehall, PA Studio
Washington Township, PA FM Tower
Bethlehem, PA FM Tower
Huntington, WV FM Tower
Stamford, CT Studio
AM/FM Tower
Indian River County, FL AM Tower
</TABLE>
LEGAL PROCEEDINGS
The Company is involved in litigation from time to time in the ordinary
course of its business. In management's opinion, the litigation in which the
Company is currently involved, individually and in the aggregate, is not
material to the Company's financial condition or results of operations.
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<PAGE> 52
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth the name, age and position with the Company
of each person who is a director and/or executive officer of the Company as of
May 15, 1996:
<TABLE>
<CAPTION>
NAME AGE POSITION
<S> <C> <C>
Susan L. Burden........................... 48 Chairman of the Board
Bruce A. Friedman......................... 31 President, Chief Executive Officer and
Director
James T. Shea, Jr......................... 42 Chief Operating Officer
James J. Sullivan......................... 39 Chief Financial Officer, Treasurer and
Secretary
Scott J. Bacherman........................ 42 President of the Northeast Region
Charlie V. DiToro......................... 42 President of the Southern Region
Jay M. Sterin............................. 37 Regional President of Wilmington, Delaware
and Huntington, West Virginia
Daniel H. Stern........................... 35 Director
</TABLE>
Set forth below is the background of each of the Company's executive
officers and directors. Upon completion of the Offering, the Company intends to
expand its Board of Directors from three directors to five directors, filling
the two vacancies created by such expansion with individuals who are not
executive officers of or perform other duties for the Company (other than as
directors).
Susan L. Burden. Susan L. Burden has been a member of the Board of
Directors since 1990 and has been a practicing family therapist for 20 years.
Mrs. Burden is co-author of The Evaluation and Treatment of Marital Conflict
(1986) and a Director of The Burden Center for the Aging, The Brookdale Center
of Aging and The Florence V. Burden Foundation. Mrs. Burden is a graduate of the
University of Arizona. Mrs. Burden was elected Chairman of the Board of
Directors in April 1996.
Bruce A. Friedman. Bruce A. Friedman has been the President and Chief
Executive Officer of the Company since December 1993 and joined the Company as
Chief Financial Officer in 1991. From 1989 to 1991 Mr. Friedman was a Partner of
Wedbush Capital Partners, a $30 million private equity fund, and served on the
Board of Directors of Anna's Linens, Inc. From 1988 to 1989 Mr. Friedman was
owner/manager of Hands on Learning Distribution Corporation, a marketer of
educational videotapes and software. Mr. Friedman is a graduate of Stanford
University and the Harvard Business School.
James T. Shea, Jr. James T. Shea, Jr. is the Chief Operating Officer of
the Company. Mr. Shea joined the Company as the President of the Mid-Atlantic
Region in March 1992 with nearly 20 years experience in the radio business,
including eleven years with Wilks-Schwartz Broadcasting. He was Vice President
and General Manager of WKRZ-AM/FM in Wilkes-Barre, Pennsylvania from 1980 to
1984 and Vice President and General Manager of WQQQ-FM and WEEX-AM in Allentown,
Pennsylvania from 1984 to 1989. In 1986 he was promoted to Executive Vice
President of Wilks-Schwartz Broadcasting and from 1989 to 1992 he was the on
site General Manager of WNVZ-FM Norfolk, Virginia. He was also the youngest
sales manager for RKO General at their Boston property WROR-FM in 1979. Mr. Shea
is a graduate of Boston University.
James J. Sullivan. James J. Sullivan is the Chief Financial Officer,
Treasurer and Secretary of the Company. Mr. Sullivan joined the Company in
December of 1994. Prior to joining the Company, Mr. Sullivan was Vice President
in charge of finance and operations for Screen Media Partners from 1990 to 1994.
Before joining Screen Media Partners, Mr. Sullivan was the Senior Manager of
Operations for Grant Tinker/Gannett East, Inc. from 1987 through 1989 and held
various senior management positions in finance and production at NBC News from
1980 through 1987. Mr. Sullivan is a graduate of Fairfield University.
Scott J. Bacherman. Scott J. Bacherman is President of the Northeast
Region the Company (WEFX-FM, WNLK-AM, WRKI-FM and WINE-AM in Fairfield County
and WFAS-AM/FM, WZZN-FM, WVYB-FM and WPUT-AM in Westchester/Putnam County). Mr.
Bacherman joined the
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<PAGE> 53
Company in April 1994 with almost twenty years experience in the radio industry.
Prior to joining the Company, Mr. Bacherman was Vice President/General Manager
with Wilks-Schwartz Broadcasting at WWBB-FM in Providence, Rhode Island from
1987 until 1993. Mr. Bacherman is a graduate of the University of Massachusetts.
Charlie V. DiToro. Charlie V. DiToro is President of the Southern Region
of the Company (WZZR-FM, WQOL-FM and WPAW-FM in the Treasure Coast Market). Mr.
DiToro joined the Company in June of 1992 from Cox Cable Cedar Rapids (Iowa)
where he was Vice President and General Manager from 1989 through 1992. Mr.
DiToro was Director of Field Marketing for eight cable systems comprising one
Cox cable division from 1986 to 1989, and had broad responsibilities for Cox
field sales and telemarketing efforts from 1984 to 1986. Mr. DiToro is a
graduate of Florida State University.
Jay M. Sterin. Jay M. Sterin is Regional President of WJBR-AM/FM in
Wilmington, Delaware; WTCR-AM/FM in Huntington, West Virginia-Ashland, Kentucky;
WKEE-AM/FM in Huntington, West Virginia; WZZW-AM in Milton, West Virginia;
WBVB-FM in Coal Grove, Ohio; WIRO-AM in Ironton, Ohio; WHRD-AM in Huntington,
West Virginia; WFXN-FM in Milton, West Virginia; and WMLV-FM in Ironton, Ohio.
Mr. Sterin joined the Company in September 1993 with over 15 years experience in
the radio business from Wilks-Schwartz Broadcasting where he served for eight
years as Vice President/General Manager and directed all operational aspects of
WKFM-FM and WFBC-AM in Syracuse, New York, including sales, programming and
marketing. From 1980 through 1985 he was General Sales Manager at WROR in
Boston. Mr. Sterin is a graduate of Boston University and has a Masters of
Business Administration from Babson College.
Daniel H. Stern. Daniel H. Stern has been a member of the Board of
Directors since April 1995. Mr. Stern has been President of Ziff Brothers
Investments, LLC, a privately held investment company based in New York City
since 1992. From 1989 to 1992, Mr. Stern was Co-Managing Director of William A.
M. Burden & Co., L.P., an investment limited partnership. From 1983 to 1989, Mr.
Stern was a Director at Adler & Co., a New York based venture capital firm, and
an Associate at Bass Brothers Enterprises, a Fort Worth, Texas based investment
management company. Mr. Stern is a graduate of Harvard College and the Harvard
Business School.
All officers are elected until the next annual meeting of the Board of
Directors or until their respective successors are chosen and qualified.
Directors serve for a one year term or until their successors are elected.
BOARD COMMITTEES
The Board of Directors will establish an audit committee and a compensation
committee at or prior to the consummation of the Offering. The audit committee,
the members of which will be non-management directors, will oversee actions
taken by the Company's independent auditors, recommend the engagement of
auditors and review the scope and results of the Company's accounting and
control procedures and the accuracy of its system of internal accounting and
control procedures. The compensation committee will review and approve the
compensation of executives of the Company, make recommendations to the Board of
Directors with respect to standards for setting compensation levels and
administer the Company's stock option and incentive plans.
DIRECTORS COMPENSATION
Directors who are employed by the Company receive no additional
compensation in their capacities as directors. However, non-employee directors
receive $1,000 for each Board meeting attended.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company does not currently have a compensation committee, however, as
stated above, the Company will establish a compensation committee at or prior to
the consummation of the Offering. See "Board Committees." During 1995, Mr.
Burden and Mr. Friedman established the compensation of the Company's executive
officers, including Mr. Friedman's compensation.
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<PAGE> 54
EXECUTIVE COMPENSATION
The following table sets forth the aggregate compensation paid or accrued
in 1995, 1994 and 1993 to the Chief Executive Officer of the Company and the
next four most highly compensated individuals of the Company:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
OTHER COMPENSATION AWARDS
ANNUAL COMPENSATION ANNUAL -------------------
NAME AND ------------------------- COMPENSA- LTIP
PRINCIPAL POSITION YEAR SALARY($) BONUS($) TION($) PAYOUTS($)
<S> <C> <C> <C> <C> <C>
Bruce A. Friedman............................... 1995 242,361 144,500 4,477 1,796,000
President & Chief 1994 200,000 300,000 6,428 1,750,000
Executive Officer 1993 130,000 294,000 -- --
James T. Shea, Jr............................... 1995 242,361 144,500 22,839 183,000
Chief Operating Officer 1994 200,000 184,000 1,582 430,000
1993 162,500 55,000 -- --
James J. Sullivan............................... 1995 146,944 91,000 1,935 --
Chief Financial Officer 1994 11,667 -- -- --
1993 -- -- -- --
Scott J. Bacherman.............................. 1995 175,885 70,000 -- --
President of the 1994 109,616 25,000 -- --
Northeast Region 1993 -- -- -- --
Jay M. Sterin................................... 1995 168,000 40,000 -- --
Regional President 1994 138,000 20,000 -- --
of Wilmington, DE 1993 39,807 10,000 -- --
and Huntington, WV
</TABLE>
STOCK OPTION PLAN
1995 Stock Option Plan. The Company's 1995 Stock Option Plan (the "1995
Option Plan") became effective upon the consummation of the sale of the Senior
Subordinated Notes and Warrants (as hereinafter defined) on April 21, 1995 (the
"Private Offering"). 951,300 shares of Class A Common Stock are reserved for
issuance under the 1995 Option Plan. The purpose of the 1995 Option Plan is to
attract and retain qualified personnel and to provide additional incentives to
executive and other key employees of the Company.
The 1995 Option Plan provides for the granting to executives and other key
employees of the Company of incentive stock options ("ISOs") within the meaning
of Section 422 of the Code, and nonqualified stock options ("NQOs"). The 1995
Option Plan will be administered by a compensation committee of the Board of
Directors (the "Committee") which will determine the terms of the options
granted under the 1995 Option Plan, including the exercise price, number of
shares subject to the option and excercisability. If as a result of the grant,
the optionee has the right in any calendar year to exercise for the first time
one or more ISOs for shares having an aggregate fair market value (under all
plans of the Company and determined for each share as of the date the option to
purchase the share was granted) in excess of $100,000, or such higher amount as
may be permitted from time to time under the Code, such options shall be treated
as NQOs. Generally, unless the Committee otherwise determines, no option may be
transferred by the optionee other than by will or the laws of descent or
distribution. Each option may be exercised, during the lifetime of the optionee,
only by the optionee. The exercise price of all ISOs and NQOs under the 1995
Option Plan must equal at least the fair market value of the Class A Common
Stock of the Company on the date of grant. Payment of the exercise price may be
made in cash, Class A Common Stock or such other consideration determined by the
Committee.
The 1995 Option Plan authorizes the Committee to permit a participant to
satisfy the exercise price obligation arising from the exercise of an option by
surrendering to the Company other shares of Class A Common Stock held by such
participant which have on the day of exercise an aggregate fair market value
equal to the aggregate exercise price of shares being purchased through exercise
of the option. This right enables a participant to increase such participant's
ownership of Common Stock through a series of
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<PAGE> 55
simultaneous tenders of Class A Common Stock as payment for the exercise of
options to purchase a greater number of shares of Class A Common Stock.
The 1995 Option Plan also permits participants to elect to have the Company
withhold all or a portion of the shares which the participant may acquire upon
exercise of an option, or deliver to the Company other shares of Class A Common
Stock which the participant holds, to satisfy tax withholding obligations of the
participant resulting from an exercise.
The Committee has exclusive discretion to select the participants and to
determine the type, size and terms of each award, to modify the terms of awards,
to determine when awards will be granted and paid, and to make all other
determinations which it deems necessary or desirable in the interpretation and
administration of the 1995 Option Plan. With limited exceptions, including
termination of employment as a result of death, disability or retirement, or
except as otherwise determined by the Committee, rights to these forms of
contingent compensation are forfeited if a recipient's employment or performance
of services terminates within a specified period following the award. In the
event of a proposed sale of all or substantially all of the assets of the
Company, the merger of the Company with or into another corporation or other
transactions constituting a change of control, all restrictions on any
outstanding awards shall lapse and participants will be entitled to the partial
benefit of such awards, as determined by the Committee, immediately prior to the
closing date of such sale or merger.
OPTION GRANTS IN 1995
The following table sets forth certain information concerning stock option
grants during the year ended December 31, 1995 to the named executive officers
pursuant to the 1995 Option Plan.
INDIVIDUAL GRANTS IN 1995
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT
ASSUMED ANNUAL RATES
NUMBER OF PERCENT OF OF STOCK PRICE
SECURITIES TOTAL APPRECIATION
UNDERLYING OPTIONS GRANTED EXERCISE FOR OPTION TERM(A)
OPTIONS TO EMPLOYEES PRICE EXPIRATION -----------------------
NAME GRANTED IN 1995(%) ($/PER SHARE) DATE 5% 10%
<S> <C> <C> <C> <C> <C> <C>
Bruce A. Friedman......... 203,854 29.3% $6.25 4/21/05 $3,375,006 $6,129,075
James T. Shea, Jr......... 203,854 29.3% 6.25 4/21/05 3,375,006 6,129,075
James J. Sullivan......... 81,540 11.7% 6.25 4/21/05 1,350,538 2,448,875
Scott J. Bacherman........ 81,540 11.7% 6.25 4/21/05 1,350,538 2,448,875
Jay M. Sterin............. 54,360 7.8% 6.25 4/21/05 899,984 1,634,388
</TABLE>
- ------------------------------
(a) The potential realizable value portion of the foregoing table illustrates
values that might be realized upon exercise of the options prior to the
expiration of their term, assuming the specified compounded rates of
appreciation on the Company's Common Stock over the remaining life of the
options. This table does not take into account provisions of certain options
providing for termination of the option following termination of employment,
nontransferability or vesting over periods. The dollar amounts under these
columns are the result of calculations at the 5% and 10% rates set by the
Securities and Exchange Commission and therefore are not intended to
forecast possible future appreciation, if any, of the Company's stock price.
The Company did not use an alternative formula for a grant date valuation,
as the Company is not aware of any formula which will determine with
reasonable accuracy a present value based on future unknown or volatile
factors. No gain to the optionees is possible without an increase in stock
price appreciation, which will benefit all stockholders commensurably.
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<PAGE> 56
The following table sets forth the option values at December 31, 1995 for
options held by each named executive officer.
AGGREGATED OPTION/SAR EXERCISES IN
FISCAL YEAR 1995 AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF SECURITIES IN-THE-MONEY
UNDERLYING UNEXERCISED OPTIONS/SARS AT
OPTIONS/SARS AT 12/31/95 12/31/95(A)
SHARES ACQUIRED ON EXERCISABLE/ EXERCISABLE/
NAME EXERCISE ($) VALUE REALIZED ($) UNEXERCISABLE UNEXERCISABLE
------------------ ------------------ ------------------------ --------------------
<S> <C> <C> <C> <C>
Bruce A. Friedman...... 0 0 0/203,854 $0/$1,579,869
James T. Shea, Jr...... 0 0 0/203,854 0/ 1,579,869
James J. Sullivan...... 0 0 0/ 81,540 0/ 631,935
Scott J. Bacherman..... 0 0 0/ 81,540 0/ 631,935
Jay M. Sterin.......... 0 0 0/ 54,360 0/ 421,290
</TABLE>
- ------------------------------
(a) Assumes a per share value of the Company's Common Stock of $ , the
assumed Offering price.
EMPLOYMENT AGREEMENTS AND ARRANGEMENTS
Carter Burden Employment Agreement. Carter Burden served as the Company's
Chairman of the Board from its formation in 1980 until his death in January
1996. For the year ended December 31, 1994, the Company paid Mr. Burden an
annual salary of $27,000 and reimbursed Mr. Burden and certain entities
affiliated with Mr. Burden an aggregate of $172,000 for various expenses
incurred by or on behalf of Mr. Burden in connection with his role as its
Chairman of the Board. On April 21, 1995, Mr. Burden and the Company entered
into a three-year employment agreement. Pursuant to such employment agreement,
Mr. Burden was entitled to receive annual compensation of $250,000, subject to
annual increases at the discretion of the Board of Directors. Such employment
agreement terminated upon the death of Mr. Burden in January 1996. Commencing
April 1, 1996, the Company elected to compensate Susan Burden for her services
to the Company as Chairman of the Board at the rate of $250,000 per annum.
Bruce A. Friedman Employment Agreement. On April 21, 1995, the Company and
Mr. Friedman amended and restated Mr. Friedman's employment agreement with the
Company (the "Amended and Restated Friedman Agreement"). The term of the Amended
and Restated Friedman Agreement is three years, terminating on April 30, 1998,
and provides for annual base compensation of $250,000, with annual increases of
not less than 5% per annum. Mr. Friedman will also be entitled to receive
certain incentives based upon the Company's EBITDA. In 1995 such incentive was
approximately $144,500. In addition, the Company granted Mr. Friedman stock
options to acquire 203,854 shares of Class A Common Stock of the Company under
its 1995 Option Plan. On April 21, 1995, Mr. Friedman purchased from Carter
Burden 197,057 shares of Class A Common Stock of the Company in exchange for
$900,000 in the form of a recourse promissory note (the "Friedman Promissory
Note") which accrues interest at the rate of 8% per annum and is secured by such
shares of Class A Common Stock. Mr. Friedman's shares of Class A Common Stock
are subject to certain rights of repurchase by the Company. Upon the death of
Mr. Friedman, the Company will be required to purchase, to the extent of the
life insurance proceeds received by the Company as a result of his death, any of
the Company's Common Stock which was purchased from Mr. Burden and any shares of
Common Stock purchased under the options issued to him in each case as described
above and which is owned by Mr. Friedman immediately prior to his death, at a
price equal to the fair market value thereof and any excess insurance proceeds
remaining after such repurchase shall be paid to Mr. Friedman's estate. The
Company will maintain, subject to certain limitations, ten-year term life
insurance policies on Mr. Friedman for the benefit of the Company providing
aggregate coverage of approximately $9,000,000. In addition, the agreements
governing Mr. Friedman's Class A Common Stock contain certain voting provisions
which give certain rights to Mr. Burden's estate to vote Mr. Friedman's shares
of Class A Common Stock upon the occurrence of certain events. Such agreements
also grant Mr. Friedman piggyback registration rights and
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<PAGE> 57
demand registration rights. In connection with the Amended and Restated Friedman
Agreement and in lieu of the long-term compensation arrangement under Mr.
Friedman's prior employment agreement, on April 21, 1995: (i) the Company made a
cash payment to Mr. Friedman in the amount of $1.5 million; (ii) the Company
issued to a trust for the benefit of Mr. Friedman $1,308,000 of the Company's
outstanding Senior Subordinated Notes (the "Friedman Senior Subordinated Note");
and (iii) the Company agreed to be obligated to pay Mr. Friedman deferred
compensation in the amount of approximately $1.5 million which accrues interest
at the rate of 7% per annum and is due on the earlier of (a) eight and one-half
years after the consummation of the Private Offering, (b) a Change of Control
(as defined in the Amended and Restated Friedman Agreement), (c) an initial
public offering of Common Stock of the Company (other than on a registration
statement on Form S-4 or S-8) and (d) Mr. Friedman's death; provided, however,
the Company's obligation to pay such deferred compensation in the event of Mr.
Friedman's death is limited to the extent of the life insurance proceeds
actually received by the Company as described above. It is anticipated that
proceeds received by the Company in the Offering will be used for the payment of
the deferred compensation owed to Mr. Friedman in the amount of approximately
$1.5 million plus accrued interest for an aggregate amount of $1,599,247 as of
March 31, 1996. It is further anticipated that Mr. Friedman will use such
proceeds for the repayment of indebtedness under the Friedman Promissory Note
and the 197,057 shares of Class A Common Stock which were pledged to secure the
Friedman Promissory Note will be released to Mr. Friedman. Additionally, it is
anticipated that upon the consummation of the Offering, the Company and Mr.
Friedman will enter into an amendment to the Amended and Restated Friedman
Agreement to provide for the release of the Friedman Senior Subordinated Note
from trust and their subsequent delivery to Mr. Friedman. At such time, the
Friedman Senior Subordinated Note will become freely transferrable, subject to
certain securities laws restrictions. The Company has agreed to indemnify Mr.
Friedman from certain tax liabilities he may incur in the event such deferred
compensation is treated as a parachute payment under Section 280(g) of the
Internal Revenue Code of 1986, as amended.
James T. Shea, Jr. Employment Agreement. On April 21, 1995, the Company
and Mr. Shea amended and restated Mr. Shea's employment agreement with the
Company (the "Amended and Restated Shea Agreement"). The term of the Amended and
Restated Shea Agreement is four years, terminating on April 30, 1999 and
provides for annual base compensation of $250,000, with annual increases of not
less than 5% per annum. Mr. Shea will also be entitled to annual incentives on
terms and conditions substantially similar to Mr. Friedman's annual incentives
as described above. In addition, the Company granted Mr. Shea stock options
under its 1995 Option Plan which entitle Mr. Shea to acquire 203,854 shares of
Class A Common Stock of the Company. The other terms and conditions of the
Amended and Restated Shea Agreement are generally similar to the Amended and
Restated Friedman Agreement. In 1995 Mr. Shea's incentive was approximately
$144,500. In addition, on April 21, 1995, Mr. Shea purchased from Carter Burden
45,497 shares of Class A Common Stock of the Company in exchange for $208,000 in
the form of a recourse promissory note (the "Shea Promissory Note") which
accrues interest at the rate of 8% per annum and is secured by such shares of
Class A Common Stock. In connection with the Amended and Restated Shea Agreement
and in lieu of the long-term incentive compensation arrangements under Mr.
Shea's prior employment agreement, on April 21, 1995: (i) the Company made a
cash payment to Mr. Shea in the amount of $400,000 and (ii) the Company agreed
to be obligated to pay Mr. Shea deferred compensation in the amount of $346,000
on terms and conditions generally similar to Mr. Friedman's deferred
compensation arrangements as described above. It is anticipated that proceeds
received by the Company in the Offering will be used for the payment of the
deferred compensation owed to Mr. Shea in the amount of approximately $346,000
plus accrued interest for an aggregate amount of $368,893 as of March 31, 1996.
It is further anticipated that Mr. Shea will use such proceeds for the repayment
of indebtedness under the Shea Promissory Note and the 45,497 shares of Class A
Common Stock which were pledged to secure the Shea Promissory Note will be
released to Mr. Shea.
James J. Sullivan Employment Agreement. On April 21, 1995, the Company and
Mr. Sullivan entered into an employment agreement that expires on April 30,
1999. The employment agreement provides for a base salary of $150,000 with
annual increases in the base salary of $10,000. Mr. Sullivan's employment
agreement provides for incentive compensation in 1995 equal to 15% of EBITDA
above $9.5 million and 2.5% for all EBITDA above $9.9 million, and in each
calendar year thereafter, as established by the President of the
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<PAGE> 58
Company with a potential target between $60,000 and $75,000. In addition, the
Company granted Mr. Sullivan stock options under its 1995 Option Plan which
entitle Mr. Sullivan to purchase 81,540 shares of Class A Common Stock of the
Company.
Scott J. Bacherman Employment Agreement. On April 21, 1995, the Company
and Mr. Bacherman entered into an employment agreement that expires on April 30,
1999. The employment agreement provides for a base salary of $170,000 with
annual increases in the base salary of an amount which shall not be less than 5%
of the annual base salary in effect immediately prior to such increase. Mr.
Bacherman's employment agreement provides for incentive compensation based on
the operating cash flow of WEFX-FM, WNLK-AM, WFAS-FM and WFAS-AM, with a maximum
payout in 1995 of $70,000, and in each calendar year thereafter, as established
by the President of the Company with a potential target of at least $70,000. In
addition, the Company granted Mr. Bacherman stock options under its 1995 Option
Plan which entitle Mr. Bacherman to purchase 81,540 shares of Class A Common
Stock of the Company.
Charlie V. DiToro Employment Agreement. Mr. DiToro currently has an
employment agreement with the Company that expires on June 30, 1999. The
employment agreement provides for a base salary of $92,500 from July 1, 1995 to
and including December 31, 1995, and a base salary of $170,000 from January 1,
1996 to and including December 31, 1996, with annual increases in the base
salary of 5% of the annual base salary in effect immediately prior to such
increase. In addition, Mr. DiToro's employment agreement provides for incentive
compensation based on the operating cash flow of WZZR-FM, WQOL-FM and WPAW-FM,
with a maximum payout in 1995 of $50,000, and in each calendar year thereafter,
as established by the President of the Company with a potential target of
$50,000. In addition, the Company granted Mr. DiToro stock options under its
1995 Option Plan which entitle Mr. DiToro to purchase 29,880 shares of Class A
Common Stock of the Company.
Jay M. Sterin Employment Agreement. Mr. Sterin currently has an employment
agreement with the Company that expires on April 30, 1999. The employment
agreement provides for a base salary of $158,000 with annual increases in the
base salary of an amount which shall not be less than 5% of the annual base
salary in effect immediately prior to such increase. Mr. Sterin's employment
agreement provides for incentive compensation based on the operating cash flow
of WJBR-AM and WJBR-FM, with a maximum payout in 1995 of $60,000, and in each
calendar year thereafter, as established by the President of the Company with a
potential target of $60,000. In addition, the Company granted Mr. Sterin stock
options under its 1995 Option Plan which entitle Mr. Sterin to purchase 54,360
shares of Class A Common Stock of the Company.
LIMITATIONS ON DIRECTORS AND OFFICERS LIABILITY
The Company's Amended and Restated Certificate of Incorporation limits the
liability of directors to the maximum extent permitted by Delaware law, which
specifies that a director of a company adopting such a provision will not be
personally liable for monetary damages for breach of fiduciary duty as a
director, except for the liability (i) for any breach of the director's duty of
loyalty to the Company or its stockholders; (ii) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law; (iii) for unlawful payments of dividends or unlawful stock purchases or
redemptions as provided in Section 174 of the Delaware General Corporation Law;
or (iv) for any transaction from which the director derived an improper personal
benefit.
The Company's Amended and Restated Certificate of Incorporation provides
for mandatory indemnification of directors and officers (and others) in such
manner, under such circumstances and to the fullest extent permitted by the
Delaware General Corporation Law, which generally authorizes indemnification as
to all expenses incurred or imposed as a result of actions, suits or proceedings
if the indemnified parties act in good faith and in a manner they reasonably
believe to be in or not opposed to the best interests of the Company and the
Amended and Restated Certificate of Incorporation provides the right to such
expenses in advance of the final disposition of any such action, suit or
proceeding. The Company believes that these provisions are necessary or useful
to attract and retain qualified persons as directors and officers.
There is no pending litigation or proceeding involving a director or
officer as to which indemnification is being sought.
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<PAGE> 59
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Since 1993, the Company made various loans to Mr. Burden totalling
approximately $183,000. Such loans did not bear interest and were in the form of
three separate advances of $60,000, $57,500 and $65,500. Mr. Burden repaid all
such loans upon the consummation of the Private Offering. In addition, for the
year ended December 31, 1995, the Company reimbursed Carter Burden and certain
entities affiliated with Mr. Burden for an aggregate amount of approximately
$18,000 for various expenses incurred by or on behalf of Mr. Burden in
connection with his role as its Chairman of the Board; such expenses were
comprised of general administrative and overhead costs, travel and related
expenses incurred by Mr. Burden in connection with his activities on behalf of
the Company.
On December 28, 1993, the Company granted a warrant to William A. M. Burden
& Co., L.P., an investment limited partnership ("WAMBCO"), to purchase 4.99% of
its common stock at an exercise price of $100, on a fully diluted basis. On
April 21, 1995, WAMBCO exercised the warrant and purchased 196,661 shares of
Class A Common Stock of the Company which shares are being registered in the
Offering. See "Principal and Selling Shareholders." WAMBCO consists of partners
which are either individuals or entities directly or indirectly related to or
affiliated with the family of Carter Burden.
On April 21, 1995, the Company entered into employment agreements with each
of Carter Burden, Bruce A. Friedman, James T. Shea, Jr., Scott J. Bacherman,
James J. Sullivan, Judy Jennings and Jay M. Sterin. On July 1, 1995, the Company
entered into employment agreements with Richard Lewis and Charlie V. DiToro. See
"Employment Agreements and Arrangements."
During May 1995 the Company advanced funds to certain executive officers as
loans. As of the date hereof, an aggregate of $250,375 of such advances is
outstanding. Such loans were advanced to enable such officers to purchase
Warrants from unrelated third parties exercisable for an aggregate of 36,000
shares of Class A Common Stock and are evidenced by five year notes bearing
interest at 7.0% with all interest and principal due on the maturity date. As a
result of such advances, the Estate of Carter Burden owes $50,215, Bruce A.
Friedman owes $100,160, James T. Shea, Jr. and James J. Sullivan each owe
$50,000, plus accrued interest, to the Company.
The Company has no current intention of making additional loans to
employees, executive officers and/or affiliates. If the Company does make such
loans in the future, the terms thereof will be determined by the Board of
Directors with respect to executive officers and affiliates, and by the
President and Chief Executive Officer with respect to employees, each acting in
the best interest of the Company. Such determinations will be based upon the
likelihood of repayment and the value of such employee, executive officer or
affiliate to the Company.
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<PAGE> 60
PRINCIPAL AND SELLING SHAREHOLDERS
The following table sets forth information concerning the beneficial
ownership of the Company's Common Stock as of April 30, 1996 by (i) each person
known to the Company to own beneficially more than 5% of any class of Common
Stock, (ii) each director and each named executive officer, (iii) each Selling
Shareholder and (iv) all directors and executive officers of the Company as a
group. All shares are owned with sole voting and investment power other than the
shares held by the Executors of the Estate of Carter Burden.
<TABLE>
<CAPTION>
SHARES OF CLASS A SHARES OF CLASS A SHARES OF CLASS B
COMMON STOCK OWNED COMMON STOCK OWNED COMMON STOCK OWNED
PRIOR TO OFFERING AFTER OFFERING PRIOR TO THE OFFERING
--------------------- SHARES SHARES --------------------- ---------------------
DIRECTORS AND PERCENT OF BEING BEING PERCENT OF PERCENT OF
EXECUTIVE OFFICERS(A) NUMBER(B) CLASS A OFFERED PURCHASED(C) NUMBER CLASS A NUMBER(B) CLASS B
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Susan Burden(d)(l)... -- -- -- -- -- -- 3,501,886 100%
Bruce A.
Friedman(e)......... 284,610 54.0% -- -- 284,610 6.1% -- --
James T. Shea,
Jr.(f).............. 108,771 21.6% -- -- 108,771 2.4% -- --
James J.
Sullivan(g)......... 29,420 6.3% -- -- 29,420 * -- --
Scott J.
Bacherman(h)........ 20,384 4.4% -- -- 20,384 * -- --
Charlie V.
DiToro(i)........... 2,988 * -- -- 2,988 * -- --
Jay Sterin(j)........ 13,587 3.0% -- -- 13,587 * -- --
Daniel Stern......... -- -- -- -- -- -- -- --
All directors and
executive officers
as a group(k)
(8 people).......... 459,760 70.0% -- -- 459,760 9.7% -- --
FIVE PERCENT
SHAREHOLDERS AND
SELLING SHAREHOLDERS
Estate of
Carter Burden(l).... 3,501,886 88.8% 1,201,480 -- 2,280,690 33.4% 3,501,886 100%
William A.M. Burden &
Co., L.P.(m)........ 216,367 47.1% 216,367 -- -- -- -- --
Putnam Co., Inc.
1 Post Office Square
Boston, MA(n)....... 288,000 39.6% -- -- 288,000 6.0% -- --
<CAPTION>
SHARES OF CLASS B PERCENT OF VOTING
COMMON STOCK OWNED PERCENT OF ALL POWER OF ALL
AFTER THE OFFERING COMMON STOCK COMMON STOCK
-------------------- ------------------ ------------------
DIRECTORS AND PERCENT OF PRIOR TO AFTER PRIOR TO AFTER
EXECUTIVE OFFICERS(A) NUMBER CLASS B OFFERING OFFERING OFFERING OFFERING
<S> <C> <C> <C> <C> <C> <C>
Susan Burden(d)(l)... 2,280,690 100% 89% 33.4% 98% 80%
Bruce A.
Friedman(e)......... -- -- 7.0% 4.1% 1.0% 1.2%
James T. Shea,
Jr.(f).............. -- -- 2.7% 1.5% * *
James J.
Sullivan(g)......... -- -- * * * *
Scott J.
Bacherman(h)........ -- -- * * * *
Charlie V.
DiToro(i)........... -- -- * * * *
Jay Sterin(j)........ -- -- * * * *
Daniel Stern......... -- -- -- -- -- --
All directors and
executive officers
as a group(k)
(8 people).......... -- -- 11.1% 6.5% 1.6% 2.0%
FIVE PERCENT
SHAREHOLDERS AND
SELLING SHAREHOLDERS
Estate of
Carter Burden(l).... 2,280,690 100% 89% 33.4% 98% 80%
William A.M. Burden &
Co., L.P.(m)........ -- -- 5.5% -- * --
Putnam Co., Inc.
1 Post Office Square
Boston, MA(n)....... -- -- 6.8% 4.1% 1.0% 1.2%
</TABLE>
- ------------------------------
* less than 1%
(a) The address of all persons in this table, unless otherwise specified, is
c/o Commodore Media, Inc., 500 Fifth Avenue, Suite 3000, New York, New York
10110.
(b) As used in this table, "beneficial ownership" means the sole or shared
power to vote or direct the voting of a security, or the sole or shared
investment power with respect to a security (i.e., the power to dispose, or
direct the disposition, of a security). A person is deemed as of any date
to have "beneficial ownership" of any security that such person has the
right to acquire within 60 days after such date. For purposes of computing
the percentage of outstanding shares held by each person named above, any
security that such person has the right to acquire within 60 days of the
date of calculation is deemed to be outstanding, but is not deemed to be
outstanding for purposes of computing the percentage ownership of any other
person.
(c) For further information regarding shares of Class A Common Stock being
purchased in the Offering, see "Underwriting."
(d) Includes shares owned by the Estate of Carter Burden of which Susan Burden
is an executor and may be deemed a beneficial owner thereof.
(e) Includes (i) 19,599 shares of Class A Common Stock purchasable upon
exercise of Warrants held by Mr. Friedman and (ii) 67,954 shares of Class A
Common Stock currently purchasable pursuant to options granted to Mr.
Friedman under the 1995 Stock Option Plan. Does not include options under
the 1995 Stock Option Plan to acquire 135,900 shares of Class A Common
Stock which are not presently exercisable.
(f) Includes (i) 12,312 shares of Class A Common Stock purchasable upon
exercise of Warrants held by Mr. Shea and (ii) 50,962 shares of Class A
Common Stock currently purchasable pursuant to options granted to Mr. Shea
under the 1995 Stock Option Plan. Does not include options under the 1995
Stock Option Plan to acquire 152,992 shares of Class A Common Stock which
are not presently exercisable.
(g) Includes (i) 9,036 shares of Class A Common Stock purchasable upon exercise
of Warrants held by Mr. Sullivan and (ii) 20,384 shares of Class A Common
Stock currently purchasable pursuant to options granted to Mr. Sullivan
under the 1995 Stock Option Plan. Does not include options under the 1995
Stock Option Plan to acquire 61,157 shares of Class A Common Stock which
are not presently exercisable.
(h) Includes 20,384 shares of Class A Common Stock currently purchasable
pursuant to options granted to Mr. Bacherman under the 1995 Stock Option
Plan. Does not include options under the 1995 Stock Option Plan to acquire
61,157 shares of Class A Common Stock which are not presently exercisable.
(i) Includes 2,988 shares of Class A Common Stock currently purchasable
pursuant to options granted to Mr. DiToro under the 1995 Stock Option Plan.
Does not include options under the 1995 Stock Option Plan to acquire 26,892
shares of Class A Common Stock which are not presently exercisable.
(j) Includes 13,587 shares of Class A Common Stock currently purchasable
pursuant to options granted to Mr. Sterin under the 1995 Stock Option Plan.
Does not include options under the 1995 Stock Option Plan to acquire 62,374
shares of Class A Common Stock which are not presently exercisable.
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<PAGE> 61
(k) Includes (i) 40,947 shares of Class A Common Stock purchasable upon
exercise of Warrants held by all directors and executive officers and (ii)
176,264 shares of Class A Common Stock currently purchasable pursuant to
options granted to all directors and executive officers under the 1995
Stock Option Plan. Does not include options under the 1995 Stock Option
Plan to acquire 478,771 shares of Common Stock which are not presently
exercisable.
(l) Includes 3,501,886 shares of Class A Common Stock issuable upon conversion
of the shares of Class B Common Stock owned by the Estate of Carter Burden.
Carter Burden, the Company's Chairman of the Board, died in January 1996.
The Executors of the Estate of Carter Burden are Susan L. Burden, S. Carter
Burden III and Flobelle F. Burden. Each of Susan L. Burden, Carter Burden
III and Flobelle F. Burden may be deemed to be beneficial owners of the
Common Stock owned by the Estate of Carter Burden.
(m) Includes 19,706 shares of Class A Common Stock purchasable upon partial
exercise of the option granted to WAMBCO by Carter Burden to acquire up to
177,351 shares of Class A Common Stock (the "WAMBCO Option"). Does not
include 157,645 shares of Class A Common Stock purchasable under the portion
of the WAMBCO Option which is not presently exercisable. WAMBCO is an
investment limited partnership, the partners of which are individuals and
other entities that were directly or indirectly related to or affiliated
with the family of Carter Burden. At the time of Carter Burden's death in
January 1996, he was both a limited partner of WAMBCO and controlling
shareholder of its general partner.
(n) Includes 288,000 shares of Class A Common Stock purchasable upon exercise
of Warrants held by Putnam Co., Inc.
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<PAGE> 62
DESCRIPTION OF CERTAIN INDEBTEDNESS
SENIOR CREDIT FACILITY
On March 13, 1996, the Company, Holdings and their subsidiaries entered
into the Senior Loan Agreement pursuant to which the Senior Lender made
available to Holdings senior secured (i) revolving loans (the "Revolving Loans")
in an amount up to $30 million and (ii) accounts receivable loans ("Receivable
Loans") in an amount which must be the lesser of (A) $5 million or (B) 85% of
the net book value of the accounts receivable of the Company and the
wholly-owned subsidiaries of Holdings.
Each Receivable Loan and Revolving Loan bears interest at a floating rate
of interest, adjusted on the first calendar day of each calendar month, equal to
three and one-half percent (3 1/2%) above LIBOR as published in the Eastern
Edition of The Wall Street Journal. Interest on each Receivable Loan and
Revolving Loan is payable monthly in arrears on the first day of each month
beginning April 1, 1996.
The indebtedness of Holdings under the Senior Credit Facility is
collateralized by liens on substantially all of the assets of Holdings and its
subsidiaries and by the Company's pledge of the stock of Holdings and by
Holdings' pledge of the stock of the wholly-owned subsidiaries of Holdings, and
is guaranteed by the Company and the wholly-owned subsidiaries of Holdings.
Principal amortization for the Receivable Loans commences on November 30, 1997
and the principal amortization for the Revolving Loans commences in June 1998.
Restrictive covenants in the Senior Loan Agreement include: (i) a
prohibition on the creation of additional liens on any assets of the Company or
any of its subsidiaries, with certain customary and limited exceptions; (ii) a
restriction on the use of proceeds of any loan pursuant to the Senior Loan
Agreement; (iii) restrictions on non-ordinary course dispositions of assets;
(iv) restrictions on mergers or consolidations involving the Company or any of
its subsidiaries; (v) a prohibition on the payment and declaration of any
dividends or other distributions on any class of its capital stock, with certain
limited exceptions; (vi) restrictions on the incurrence of additional
indebtedness and guarantees; (vii) a prohibition on new investments, except for
certain intercompany advances, permitted acquisitions, reasonable and customary
loans to employees, temporary cash investments and other limited investments;
(viii) restrictions on the disposition of licenses; and (ix) a prohibition on an
amendment to either the Indenture or any Senior Subordinated Note or any
document governing the obligations evidenced by the Indenture or the Senior
Subordinated Notes.
The Company is also required to satisfy, among other things, the following
financial ratios under the Senior Loan Agreement: (i) a ratio of the Company's
consolidated EBITDA to consolidated pro forma total debt service, as defined in
the Senior Loan Agreement, of not less than 1.10 to 1.00 at the end of each
fiscal quarter; (ii) a ratio of the Company's consolidated EBITDA to
consolidated senior debt service of not less that 2.0 to 1.0 at the end of each
fiscal quarter; (iii) at the time of the making of a Revolving Loan, the ratio
of the Company's consolidated debt for borrowed money (excluding the Receivable
Loan) to EBITDA shall not exceed 6.75 to 1.0 at any time prior to May 1, 1998
and shall not exceed 6.25 to 1.0 at any time thereafter; and (iv) the ratio of
the aggregate outstanding balance of all Revolving Loans to the Company's
consolidated EBITDA shall not exceed 3.5 to 1.0 at any time. The Company is
currently in compliance with all maintenance covenants contained in the Senior
Loan Agreement.
THE 13 1/4% SENIOR SUBORDINATED NOTES DUE 2003
The Senior Subordinated Notes are general unsecured obligations of the
Company and are subordinated in rights of payment of all Senior Indebtedness (as
defined in the Indenture) and senior in rights of payment to any current or
future indebtedness of the Company, which is by its terms subordinated to the
Senior Subordinated Notes. The Senior Subordinated Notes are unconditionally
guaranteed, on a senior subordinated basis, as to payment of principal, premium,
if any, and interest, jointly and severally, by the Guarantors named in the
Indenture (together with each other Restricted Subsidiary (as defined in the
Indenture) which guarantees payment of the Senior Subordinated Notes). The
Senior Subordinated Notes were issued pursuant to the Indenture among the
Company, the Guarantors named therein and IBJ Schroder Bank & Trust Company, as
Trustee. The Senior Subordinated Notes mature on May 1, 2003, are limited in
aggregate
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<PAGE> 63
principal amount to $76,808,000 and bear cash interest at a rate of 7 1/2% per
annum from the date of original issuance until May 1, 1998, and at a rate of
13 1/4% per annum from and including May 1, 1998 until maturity. Interest is
payable semi-annually in arrears on May 1 and November 1.
The Senior Subordinated Notes are redeemable at the option of the Company,
in whole or in part, at any time on or after (i) May 1, 1999 at 107.5% of the
principal amount, (ii) May 1, 2000, at 105.0% of the principal amount, (iii) May
1, 2001, at 102.5% of the principal amount and (iv) May 1, 2002 and thereafter,
at 100.0% of the principal amount, together, in each case, with accrued and
unpaid interest to the redemption date. Notwithstanding the foregoing, the
Company may redeem in the aggregate up to 33 1/3% of the original principal
amount of the Senior Subordinated Notes at any time and from time to time prior
to May 1, 1998 at a redemption price equal to 108% of the Accreted Value of the
Senior Subordinated Notes thereof plus accrued interest to the redemption date
out of the net proceeds of one or more Public Equity Offerings (as defined in
the Indenture), provided, that at least $50 million in aggregate principal
amount of Senior Subordinated Notes remains outstanding immediately after the
occurrence of any such redemption and that any such redemption occurs within 120
days following the closing of any such Public Equity Offering.
The Indenture contains, among others, the following covenants:
Limitation on Additional Indebtedness. The Company will not, and will not
permit any Restricted Subsidiary of the Company to, directly or indirectly,
incur any Indebtedness (including Acquired Indebtedness as such term is defined
in the Indenture) unless (a) after giving effect to the incurrence of such
Indebtedness and the receipt and application of the proceeds thereof, the ratio
of the Company's total Indebtedness to the Company's EBITDA (determined on a pro
forma basis for the last four fiscal quarters of the Company for which financial
statements are available at the date of determination) is less than 6.75 to 1 if
the Indebtedness is incurred prior to May 1, 1998 and 6.25 to 1 if the
Indebtedness is incurred thereafter; provided, however, that if the Indebtedness
which is the subject of a determination under this provision is Acquired
Indebtedness, or Indebtedness incurred in connection with the simultaneous
acquisition of any Person, business, property or assets, then such ratio shall
be determined by giving effect to (on a pro forma basis, as if the transaction
had occurred at the beginning of the four-quarter period) both the incurrence or
assumption of such Acquired Indebtedness or such other Indebtedness by the
Company and the inclusion in the Company's EBITDA of the EBITDA of the acquired
Person, business, property or assets, and (b) no Default or Event of Default (as
such terms are defined in the Indenture) shall have occurred and be continuing
at the time or immediately after giving effect to the incurrence of such
Indebtedness.
Limitation on Restricted Payments. Subject to certain exceptions set forth
in the Indenture, the Company will not make, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly, make, any Restricted Payment
(as defined in the Indenture), unless:
(a) no Default or Event of Default shall have occurred and be
continuing at the time of or immediately after giving effect to such
Restricted Payment;
(b) immediately after giving pro forma effect to such Restricted
Payment, the Company could incur $1.00 of additional Indebtedness (other
than Permitted Indebtedness) in compliance with the covenant described
above under "Limitation on Additional Indebtedness"; and
(c) immediately after giving effect to such Restricted Payment, the
aggregate of all Restricted Payments declared or made after the Issue Date
(as defined in the Indenture) does not exceed the sum of (1) 50% of the
Company's cumulative consolidated net income (or in the event such
consolidated net income shall be a deficit, minus 100% of such deficit)
after the Issue Date, plus (2) 100% of the aggregate net proceeds and the
fair market value of securities or other property received by the Company
from the issue or sale, after the Issue Date, of capital stock (other than
Disqualified Capital Stock or Capital Stock of the Company issued to any
Subsidiary of the Company) of the Company or any Indebtedness or other
securities of the Company convertible into or exercisable or exchangeable
for capital stock (other than Disqualified Capital Stock as such term is
defined in the Indenture) of the Company which has been so converted or
exercised or exchanged, as the case may be. For purposes of determining
under this clause (c) the amount expended for Restricted Payments, cash
distributed shall be valued at the face amount thereof and property other
than cash shall be valued at its fair market value.
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<PAGE> 64
DESCRIPTION OF CAPITAL STOCK
The Company's authorized capital stock consists of 25,101,886 shares of
Common Stock, of which 21,600,000 shares are Class A Common Stock, $.01 par
value, 439,215 of which are issued and outstanding; and 3,501,886 shares are
Class B Common Stock, $.01 par value, of which 3,501,886 are issued and
outstanding and 100,000 shares of Preferred Stock, of which 10,000 shares of
Series A Preferred Stock are issued and outstanding. In addition, the Company
has reserved for issuance (i) 3,501,886 shares of Class A Common Stock upon the
conversion of the Class B Common Stock, (ii) 597,960 shares of Class A Common
Stock upon the exercise of the warrants and (iii) 951,300 shares of Class A
Common Stock under the 1995 Option Plan (see "Management--Stock Option Plans").
There is no established trading market for the Common Stock.
COMMON STOCK
Dividends. Holders of shares of Common Stock are entitled to receive such
dividends as may be declared by the Company's Board of Directors 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 Class A
Common Stock are entitled to receive the same percentage dividend (payable in
shares of Class A Common Stock) as the holders of Class B Common Stock receive
(payable in shares of Class B Common Stock). The payment of dividends is
currently restricted by the Indenture governing the Notes. Under the Indenture,
the Company generally is not permitted to pay cash dividends unless (i) no event
of default under the Indenture exists at the time of payment or immediately
thereafter, (ii) certain ratios regarding the incurrence of additional
indebtedness are satisfied and (iii) the aggregate of all dividends or
distributions do not exceed certain limits set forth in the Indenture.
Additionally, under the Senior Loan Agreement, the Company generally may not pay
dividends. However, if no event of default exists the Company may pay noncash
dividends consisting of its capital stock, subject to certain restrictions.
Voting Rights. Holders of shares of Common Stock vote as a single class on
all matters submitted to a vote of the stockholders except as otherwise required
by law. Each share of Class A Common Stock is entitled to one vote and each
share of Class B Common Stock is entitled to eight votes on all matters. Under
Delaware law, the affirmative vote of the holders of a majority of the
outstanding shares of any class of Common Stock voting as a separate class is
required to approve, among other things, a change in the designations,
preferences and limitations of the shares of such class of common stock.
Liquidation Rights. Upon liquidation, dissolution or winding-up of the
Company, the holders of Class A Common Stock are entitled to share ratably with
the holders of Class B Common Stock in all assets available for distribution
after payment in full of all obligations to creditors.
Other Provisions. Each share of Class B Common Stock is convertible, at
the option of its holder, into one share of Class A Common Stock at any time.
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. The shares of Common Stock issuable upon exercise
of the Warrants have been reserved and when issued will be validly issued, fully
paid and nonassessable. In any merger, consolidation or business combination,
the consideration to be received per share by holders of Class A Common Stock
must be identical to that received by holders of Class B 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
differ among the 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.
PREFERRED STOCK
The Amended and Restated Certificate of Incorporation of the Company
authorizes the Company's Board of Directors to establish series of Preferred
Stock (in an aggregate of 100,000 shares) and to determine,
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<PAGE> 65
with respect to any series of Preferred Stock, the voting powers, if any, and
such designations, preferences and relative, participating, optional or other
special rights and such qualifications, limitations or restrictions thereof, as
are stated in the resolutions of the Board of Directors providing for such class
or series and as evidenced by a certificate of designation filed pursuant to the
General Corporation Law of the State of Delaware.
In order to finance prospective acquisitions of radio stations and to
provide working capital, in May 1996 the Company entered into a Securities
Purchase Agreement (the "Preferred Stock Purchase Agreement") with CIBC Merchant
Fund, pursuant to which the CIBC Merchant Fund agreed to purchase from the
Company up to an aggregate liquidation value of $12,500,000 of the Series A
Preferred Stock, at such time and in such amounts as requested by the Company
(the "Preferred Stock Facility"), provided that such request be for an aggregate
liquidation value of at least $2,500,000 and be made no later than October 31,
1996. The Company anticipates that all of the outstanding shares of Series A
Preferred Stock will be redeemed by the Company by using proceeds from the
Offering and that the Preferred Stock Facility will not be utilized by the
Company after the consummation of the Offering.
WARRANTS
Each warrant to purchase one share of the Company's Class A Common Stock
issued in the Private Offering (each, a "Warrant" and collectively the
"Warrants") entitles the registered holder thereof, subject to and upon
compliance with the provisions thereof and of the Warrant Agreement (the
"Warrant Agreement") between the Company and IBJ Schroder Bank & Trust Company
(the "Warrant Agent"), at such holder's option, prior to May 1, 2000, to
purchase at a price of $.01 per Warrant (the "Exercise Price") from the Company
one share of Class A Common Stock (the "Warrant Shares"). The number of shares
of Class A Common Stock for which a Warrant may be exercised is subject to
adjustment as set forth in the Warrant Agreement.
Holders of Warrants will not be entitled, by virtue of being such holders,
to receive dividends, vote, receive notice of any meetings of stockholders or
otherwise have any right of stockholders of the Company. Each Warrant may only
be exercised in whole. Warrants may be exercised after the occurrence of an
Exercise Event which is defined in the Warrant Agreement as the date of the
earliest to occur of: (1) a Change of Control (as defined in the Indenture)
shall have occurred or (2) seven days prior to the date on which the Company
files a registration statement with respect to a Public Equity Offering (as
defined in the Warrant Agreement) or (3) the date on which any class of equity
securities of the Company is listed on a national securities exchange or
authorized for quotation on the National Association of Securities Dealers
Automated Quotation System or (4) May 1, 1999. The Offering will qualify as a
Public Equity Offering and therefore the Warrants are presently exercisable. The
Exercisability Date may be deferred if FCC approval is required for issuance of
the Class A Common Stock upon exercise of the Warrants. In no event will the
Warrants be exercisable for less than one full year following any deferral
required to obtain FCC approval.
In connection with the Preferred Stock Facility, the Company issued to the
CIBC Merchant Fund a warrant to purchase 54,360 shares of the Company's
outstanding Class A Common Stock which is immediately exercisable (the
"Preferred Facility Warrant"). The terms of the Preferred Facility Warrant are
substantially identical to the terms of the Warrants (as hereinafter defined)
issued in connection with the Senior Subordinated Notes. The Preferred Facility
Warrant contains registration rights and tag-along rights which are
substantially similar to the registration rights and tag-along rights of the
holders of the Warrants. See "Description of Capital Stock--Registration and
Tag-Along Rights" and "Description of Capital Stock-- Preferred Stock."
REGISTRATION AND TAG-ALONG RIGHTS
The Company, the Control Stockholders (as defined below) and the holders of
the Warrants entered into a Registration Rights and Stockholders' Agreement (the
"Common Stock Registration Rights Agreement") with respect to the shares of
Class A Common Stock issuable upon exercise of the Warrants ("Registrable
Securities"). The Common Stock Registration Rights Agreement provides that the
purchasers and persons to
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<PAGE> 66
whom Registrable Securities are transferred (collectively, the "Registrable
Holders") will have the registration rights and other rights and obligations
with respect to the Registrable Securities described below.
Registration Rights. The Registrable Holders of at least 25% of the
outstanding Registrable Securities are currently entitled to require the Company
to effect up to two registrations under the Act of such Registrable Securities
(each a "Demand Registration"), subject to certain limitations. In lieu of
filing such registration statement the Company may make an offer to repurchase
all of the Registrable Securities at a price per share equal to the fair market
value per share of Common Stock (without any discount for lack of liquidity, the
amount of Common Stock proposed to be sold or the fact that the shares of Common
Stock held by the Registrable Holders may represent a minority interest in a
private company) determined by a nationally recognized investment banking firm
selected by the Company.
The Registrable Holders will also have the right to include such
Registrable Securities in any registration statement, subject to certain
exceptions, under the Act filed by the Company for its own account or for the
account of any of its securityholders for sale on the same terms and conditions
as the securities of the Company or any other selling securityholder included
therein.
Tag-Along Rights. In the event of any proposed transfer, sale or other
disposition (collectively, a "Transfer") of Common Stock by any of the Control
Stockholders (as defined below) in any transaction, or a series of related
transactions involving shares of Common Stock aggregating at least 15% of the
shares of Common Stock then owned by the Control Stockholders to a person (such
other person being hereinafter referred to as the "proposed purchaser"), other
than pursuant to an Exempt Transfer (as defined below), each of the Registrable
Holders shall have the right to require the proposed purchaser to purchase from
each of them up to a percentage of the number of Warrants or Warrant Shares
owned by such holder equalling the percentage derived by dividing the total
number of shares of Common Stock the Control Stockholders propose to transfer by
the total number of shares of Common Stock owned by such Control Stockholder.
In the event that the proposed purchaser does not purchase Warrants and/or
Warrant Shares from the Registrable Holders on the same terms and conditions as
purchased from the Control Stockholders, then the Control Stockholders making
such Transfer shall purchase such Warrants and/or Warrant Shares if the Transfer
occurs. It is anticipated that the tag-along rights will terminate in accordance
with their terms upon the consummation of the Offering since after giving effect
to the Offering, it is expected that at least 25% of the Company's Common Stock
on a fully-diluted basis will be held by persons other than Control Stockholders
or Mr. Friedman.
As used herein, the term "Exempt Transfer" shall mean a transfer by a
Control Stockholder to another Control Stockholder. As used herein, the term
"Control Stockholder" shall mean (i) the heirs, executors, administrators,
testamentary trustees, legatees or beneficiaries of Carter Burden, to the extent
such Persons beneficially own shares of Common Stock as a result of a Transfer
from Carter Burden after the date hereof (other than pursuant to the WAMBCO
Option) and (ii) a trust the beneficiaries of which include only Carter Burden
and his spouse and lineal descendants.
64
<PAGE> 67
STOCK TRANSFER AND WARRANT AGENT
The Company's registrar and transfer agent for the Common Stock is
and the Company's warrant agent for the Warrants and the
Preferred Facility Warrant is IBJ Schroder Bank & Trust Company.
SHARES ELIGIBLE FOR FUTURE SALE
Prior to the Offering, there has been no public market for the Class A
Common Stock of the Company. Upon completion of the Offering, 4,542,554 shares
of Class A Common Stock will be issued and outstanding and 3,573,018 shares will
be issuable upon exercise of outstanding stock options, warrants and shares of
Class B Common Stock. See "Description of Capital Stock--Common Stock." The
shares of Class A Common Stock sold in the Offering (assuming no exercise of the
Underwriters' over-allotment option) will be freely tradeable in the public
market without restriction under the Securities Act, except that any shares
purchased by "affiliates" of the Company (as defined in Rule 144 promulgated
under the Securities Act ("Rule 144")) may generally only be sold in compliance
with the applicable provisions of Rule 144.
The remaining outstanding shares of Common Stock are deemed "restricted
securities" within the meaning of Rule 144 in that they were originally issued
and sold by the Company in private transactions in reliance upon exemptions from
the Securities Act. The Company, its officers, directors, the Selling
Shareholders and certain other stockholders, who collectively are the beneficial
holders of an aggregate of shares of Common Stock, have agreed with
the Underwriters not to, directly or indirectly, offer, sell, contract to sell,
grant any option to purchase or otherwise dispose of, without the prior written
consent of Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), any
shares of Common Stock or any securities convertible into, or exercisable or
exchangeable for, or warrants, options or rights to purchase or acquire Common
Stock or in any other manner transfer all or a portion of the economic
consequences associated with the ownership of any Common Stock, or enter into
any agreement to do any of the foregoing, for a period of 180 days after the
date of this Prospectus. Upon expiration of such 180 day period, such holders
will in general be entitled to dispose of their shares (including the shares
underlying such options and warrants), although the shares of Common Stock held
by affiliates of the Company will continue to be subject to the volume and other
restrictions of Rule 144 under the Securities Act.
In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated), including an affiliate of the Company, who has
beneficially owned restricted securities for at least two years from the later
of the date such restricted securities were acquired from the Company or the
date they were acquired from an affiliate of the Company, is entitled to sell,
within any three-month period, a number of shares that does not exceed the
greater of (i) 1% of the then outstanding shares of Class A Common Stock or (ii)
the average weekly trading volume of the Class A Common Stock in the
over-the-counter market during the four calendar weeks preceding the date on
which notice of such sale was filed under Rule 144, subject to certain other
limitations and restrictions. In addition, a person who is not deemed to have
been an affiliate of the Company at any time during the 90 days preceding a sale
by such person, and who has beneficially owned the shares proposed to be sold
for at least three years (including the holding period of any prior owner other
than an affiliate), would be entitled to sell such shares under Rule 144(k)
without regard to any of the restrictions described above.
The Company has granted registration rights to certain holders of
securities and other rights convertible into Class A Common Stock. See
"Capitalization" and "Description of Capital Stock." Registration of such shares
under the Securities Act would result in such shares becoming freely tradeable
without restriction under the Securities Act (except for shares held by
affiliates of the Company) immediately upon the effectiveness of such
registration. Sales of substantial amounts of Class A Common Stock in the public
market could adversely affect prevailing market prices and could impair the
Company's future ability to raise capital through the sale of its equity
securities.
65
<PAGE> 68
UNDERWRITING
The Underwriters named below (the "Underwriters"), for whom DLJ, CS First
Boston Corporation and CIBC Wood Gundy Securities Corp. ("CIBC Wood Gundy") are
acting as representatives (the "Representatives"), have severally agreed,
subject to the terms and conditions of an underwriting agreement (the
"Underwriting Agreement"), to purchase from the Company and the Selling
Shareholders the respective number of shares of Class A Common Stock set forth
opposite their names below:
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITERS SHARES
<S> <C>
Donaldson, Lufkin & Jenrette Securities Corporation.......................
CS First Boston Corporation...............................................
CIBC Wood Gundy Securities Corp. .........................................
-------
Total........................................................... 4,300,000
=======
</TABLE>
The Underwriting Agreement provides that the obligation of the several
Underwriters to purchase and accept delivery of the shares of Class A Common
Stock offered hereby is subject to the approval of certain legal matters by
counsel and to certain other conditions. If any of the shares of Class A Common
Stock are purchased by the Underwriters pursuant to the Underwriting Agreement,
all such shares of Class A Common Stock (other than the shares of Class A Common
Stock covered by the overallotment option described below) must be so purchased.
The Representatives have advised the Company and the Selling Shareholders
that the Underwriters propose to offer the Class A Common Stock to the public
initially at the price to the public set forth on the cover page of this
Prospectus and to certain dealers (who may include the Underwriters) at such
price less a concession not to exceed $ per share. The Underwriters may
allow, and such dealers may reallow, discounts not in excess of $ per
share to any other Underwriter and certain other dealers. After the public
offering of the shares of Class A Common Stock, the public offering price and
other selling terms may be changed by the Representatives.
The Company and the Estate of Carter Burden have granted to the
Underwriters options to purchase up to an aggregate of 645,000 additional shares
of Class A Common Stock, at the initial public offering price less underwriting
discounts and commissions, solely to cover overallotments. Such options may be
exercised at any time until 30 days after the date of this Prospectus. To the
extent that the Underwriters exercise such option, each of the Underwriters will
be committed, subject to certain conditions, to purchase a number of option
shares proportionate to such Underwriter's initial commitment as indicated in
the table above.
Of the shares of Class A Common Stock offered hereby, have been
reserved (the "Reserved Shares") for sale to certain individuals, including
employees of the Company, family members of such employees and other persons
associated with the Company. The Reserved Shares will be sold at a price per
share equal to the price to the public set forth on the cover page of this
Prospectus. The number of shares available to the general public will be reduced
to the extent those persons purchase Reserved Shares. Any shares not so
purchased will be offered in the Offering at the price to the public set forth
on the cover page of this Prospectus.
Prior to the Offering, there has been no established trading market for the
Class A Common Stock. The initial price to the public for the shares of Class A
Common Stock offered hereby will be determined by negotiation among the Company,
the Selling Shareholders and the Representatives. The factors considered in
determining the initial price to the public include the history of and the
prospects for the industry in which the Company competes, the past and present
operations of the Company, the historical results of operations of the Company,
the prospects for future earnings of the Company, the recent market prices of
securities of generally comparable companies and the general condition of the
securities markets at the time of the Offering.
66
<PAGE> 69
The Company and the Selling Shareholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act, or to contribute to payments that the Underwriters may be
required to make in respect thereof.
Application has been made to have the shares of Class A Common Stock
offered hereby approved for quotation on the NASDAQ National Market System under
the symbol "CMIA."
The Company, its officers, directors and the Selling Shareholders, who
collectively are the beneficial owners of an aggregate of shares of
Common Stock, have agreed with the Underwriters not to, directly or indirectly,
issue, offer, sell, contract to sell, grant any option to purchase or otherwise
dispose of, without the prior written consent of DLJ, any shares of Common Stock
or any securities convertible into or exercisable or exchangeable for, or
warrants, options or rights to purchase or acquire, Common Stock or in any other
manner transfer all or a portion of the economic consequences associated with
the ownership of any Common Stock, or enter into any agreement to do any of the
foregoing, for a period of 180 days after the date of this Prospectus.
From time to time CIBC Wood Gundy (or its predecessor firm The Argosy
Securities Group, L.P. ("Argosy")) has performed investment banking services for
the Company. Argosy acted as placement agent in respect of the Private Offering,
for which services Argosy received customary fees. In May 1996 the Company
entered into the Preferred Stock Purchase Agreement with the CIBC Merchant Fund,
an affiliate of CIBC Wood Gundy. In connection with the Preferred Stock Purchase
Agreement, the CIBC Merchant Fund received the Preferred Facility Warrant, and
CIBC Wood Gundy will receive a preferred stock advisory fee of $210,000 at the
closing of the Offering.
The CIBC Merchant Fund, an affiliate of CIBC Wood Gundy, will receive more
than 10% of the net proceeds from the Offering as a result of the use of
proceeds by the Company to redeem all of the outstanding shares of the Company's
Series A Preferred Stock. See "Use of Proceeds." As a result, the Offering is
being conducted in accordance with Schedule E to the Bylaws of the National
Association of Securities Dealers, Inc. (the "NASD"), which provides that, among
other things, when more than 10% of the net proceeds of a public offering of
equity securities are to be paid to a member of the NASD or an affiliate of a
member, the price at which such equity securities are to be distributed to the
public can be no higher than that recommended by a "qualified independent
underwriter" meeting certain standards ("QIU"). In accordance with this
requirement, DLJ has assumed the responsibilities of acting as QIU and will
recommend a maximum price to the public in compliance with the requirements of
Schedule E. In connection with the Offering, DLJ is performing due diligence
investigations and reviewing and participating in the preparation of this
Prospectus and the Registration Statement of which this Prospectus forms a part.
As compensation for the services of DLJ as QIU, the Company has agreed to pay
DLJ $5,000.
Pursuant to the provisions of Schedule E, NASD members may not execute
transactions in the shares of Class A Common Stock in discretionary accounts
without the prior written approval of the customer.
LEGAL MATTERS
Certain legal matters with respect to the validity of the issuance of the
Class A Common Stock will be passed upon for the Company by Pryor, Cashman,
Sherman & Flynn, New York, New York. Certain legal matters will be passed upon
for the Underwriters by Skadden, Arps, Slate, Meagher & Flom, New York, New
York.
EXPERTS
The consolidated financial statements of the Company at December 31, 1995
and 1994, and for each of the two years in the period ended December 31, 1995
and the financial statements of Media VI (the 1996 Treasure Coast Acquisition)
at December 31, 1995, and for the year ended December 31, 1995, each appearing
in this Prospectus and Registration Statement have been audited by Ernst & Young
LLP, independent auditors, as set forth in their reports thereon, appearing
elsewhere herein and in the Registration
67
<PAGE> 70
Statement, and are included in reliance upon such reports given upon the
authority of such firm as experts in accounting and auditing.
The consolidated statement of operations, cash flows and stockholders'
deficit for the year ended December 31, 1993 of the Company appearing in this
Prospectus and Registration Statement have been audited by Weeks DeGraw &
Company, P.A., independent auditors, given upon the authority of such firm as
experts in accounting and auditing.
The financial statements of Danbury Broadcasting, Inc. (the Danbury
Acquisitions) at June 30, 1995 and 1994 and for the two years in the period
ended June 30, 1995, appearing in this Prospectus and Registration Statement
have been audited by Paneth, Haber & Zimmerman LLP, independent auditors, as set
forth in their report thereon, appearing elsewhere herein and in the
Registration Statement, and are included in reliance upon such report given upon
the authority of such firm as experts in accounting and auditing.
The financial statements of Q Broadcasting, Inc. (the Stamford Acquisition)
at September 30, 1995 and for the three years in the period ended September 30,
1995, appearing in this Prospectus and Registration Statement have been audited
by Holtz Rubenstein & Co., LLP, independent auditors, as set forth in their
report thereon, appearing elsewhere herein and in the Registration Statement,
and are included in reliance upon such report given upon the authority of such
firm as experts in accounting and auditing.
The financial statements of Adventure Communications, Inc. (the Huntington
Acquisitions) at December 31, 1995 and for the three years in the period ended
December 31, 1995, appearing in this Prospectus and Registration Statement have
been audited by Brown, Edwards & Co., LLP, independent auditors, as set forth in
their report thereon, appearing elsewhere herein and in the Registration
Statement, and are included in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-1 under the Securities Act with
respect to the shares of Class A Common Stock offered hereby. This Prospectus,
which constitutes a part of the Registration Statement, omits certain
information contained in the Registration Statement, and reference is made to
the Registration Statement and the exhibits and schedules thereto for further
information with respect to the Company and the shares of Class A Common Stock
offered hereby. Statements contained herein concerning the provisions of any
documents are not necessarily complete, and in each instance reference is made
to the copy of such document filed as an exhibit to the Registration Statement
or previously filed with the Commission. Each such statement is qualified in its
entirety by such reference. The Company is subject to the informational
requirements of the Securities Exchange Act of 1934, as amended, and the rules
and regulations thereunder, and in accordance therewith, files reports, proxy
and information statements, and other information with the Commission. The
Registration Statement, including exhibits and schedules filed therewith, and
the Company's reports, proxy and information statements, and other information
filed by the Company with the Commission may be inspected without charge at the
Public Reference Room of the Commission, 450 Fifth Street, N.W., Room 1024, Room
1024, Washington, D.C. 20549 or at its Regional Offices located at Room 1400,
500 West Madison Street, Chicago, Illinois 60661 and 7 World Trade Center, New
York, New York 10048. Copies of such material may be obtained from the Public
Reference Section of the Commission, 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, and its public reference facilities in New York, New
York and Chicago, Illinois at prescribed rates.
68
<PAGE> 71
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
COMMODORE MEDIA, INC. AND SUBSIDIARIES:
Reports of Independent Auditors....................................................... F-2
Consolidated Balance Sheets at December 31, 1994 and 1995 and March 31, 1996
(unaudited)......................................................................... F-4
Consolidated Statements of Operations for the years ended December 31, 1993, 1994 and
1995 and for the three months ended March 26, 1995 (unaudited) and March 31, 1996
(unaudited)......................................................................... F-5
Consolidated Statements of Stockholders' Deficit for the years ended December 31,
1993, 1994 and 1995 and for the three months ended March 31, 1996 (unaudited)....... F-6
Consolidated Statements of Cash Flows for the years ended December 31, 1993, 1994 and
1995 and for the three months ended March 26, 1995 (unaudited) and March 31, 1996
(unaudited)......................................................................... F-7
Notes to Consolidated Financial Statements............................................ F-9
MEDIA VI:
Report of Independent Auditors........................................................ F-23
Balance Sheets at December 31, 1995 and March 31, 1996 (unaudited).................... F-24
Statements of Operations for the year ended December 31, 1995 and for the three months
ended March 31, 1995 (unaudited) and 1996 (unaudited)............................... F-25
Statements of Partners' Equity for the year ended December 31, 1995 and for the three
months ended March 31, 1995 (unaudited) and 1996 (unaudited)........................ F-26
Statements of Cash Flows for the year ended December 31, 1995 and for the three months
ended March 31, 1995 (unaudited) and 1996 (unaudited)............................... F-27
Notes to Financial Statements......................................................... F-28
ADVENTURE COMMUNICATIONS--HUNTINGTON:
(Division of Adventure Communications, Inc.)
Independent Auditors' Report.......................................................... F-33
Balance Sheets at December 31, 1994 and 1995 and March 31, 1996 (unaudited)........... F-34
Statements of Operations for the years ended December 31, 1993, 1994 and 1995, and for
the three months ended March 31, 1995 (unaudited) and 1996 (unaudited).............. F-35
Statements of Divisional Equity (Deficit) for the years ended December 31, 1993, 1994
and 1995 and for the three months ended March 31, 1996 (unaudited).................. F-36
Statements of Cash Flows for the years ended December 31, 1993, 1994 and 1995, and for
the three months ended March 31, 1995 (unaudited) and 1996 (unaudited).............. F-37
Notes to Financial Statements......................................................... F-38
DANBURY BROADCASTING, INC.:
Report of Independent Auditors........................................................ F-43
Balance Sheets at June 30, 1994 and 1995 and March 26, 1996 (unaudited)............... F-44
Statements of Operations and Accumulated Deficit for the years ended June 30, 1994 and
1995, for the nine months ended March 31, 1995 (unaudited) and for the period July
1, 1995 through March 26, 1996 (unaudited).......................................... F-45
Statements of Cash Flows for the years ended June 30, 1994 and 1995, for the nine
months ended March 31, 1995 (unaudited) and for the period July 1, 1995 through
March 26, 1996 (unaudited).......................................................... F-46
Notes to Financial Statements......................................................... F-47
Q BROADCASTING, INC.:
Independent Auditors' Report.......................................................... F-53
Balance Sheets at September 30, 1994 and 1995 and March 31, 1996 (unaudited).......... F-54
Statements of Operations and Deficit for the years ended September 30, 1993, 1994 and
1995, and for the six months ended March 31, 1995 (unaudited) and 1996
(unaudited)......................................................................... F-55
Statements of Cash Flows for the years ended September 30, 1993, 1994 and 1995, and
for the six months ended March 31, 1995 (unaudited) and 1996 (unaudited)............ F-56
Notes to Financial Statements......................................................... F-57
</TABLE>
F-1
<PAGE> 72
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors
Commodore Media, Inc.
We have audited the accompanying consolidated balance sheets of Commodore
Media, Inc. and Subsidiaries as of December 31, 1995 and 1994 and the related
consolidated statements of operations, stockholders' deficit and cash flows for
each of the two years in the period ended December 31, 1995. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. These standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Commodore Media, Inc. and Subsidiaries as of December 31, 1995 and 1994, and the
consolidated results of their operations and their cash flows for each of the
two years in the period ended December 31, 1995, in conformity with generally
accepted accounting principles.
ERNST & YOUNG LLP
New York, New York
February 28, 1996, except for Note 14,
as to which the date is May 16, 1996
- --------------------------------------------------------------------------------
The foregoing report is in the form that will be signed upon the completion
of the 7.2:1 stock split on the Company's Common Stock as described in Note 14
to the financial statements.
ERNST & YOUNG LLP
New York, New York
May 16, 1996
F-2
<PAGE> 73
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors
Commodore Media, Inc.
We have audited the accompanying consolidated statements of operations,
stockholders' deficit and cash flows of Commodore Media, Inc. and Subsidiaries
for the year ended December 31, 1993. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. These standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the results of operations and cash flows of Commodore
Media, Inc. and Subsidiaries for the year ended December 31, 1993, in conformity
with generally accepted accounting principles.
WEEKS DEGRAW & COMPANY, P.A.
Edison, New Jersey
March 4, 1994
(except for Note 14, as to which the date is May 16, 1996)
- --------------------------------------------------------------------------------
The foregoing report is in the form that will be signed upon the completion
of the 7.2:1 stock split on the Company's Common Stock as described in Note 14
to the financial statements.
WEEKS DEGRAW & COMPANY, P.A.
Edison, New Jersey
May 16, 1996
F-3
<PAGE> 74
COMMODORE MEDIA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------- MARCH 31,
1994 1995 1996
------------ ------------ ------------
(unaudited)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and short-term cash investments..................... $ 2,042,249 $ 10,891,489 $ 5,086,725
Accounts receivable, less allowance of $532,231 and
$700,336 in 1994 and 1995.............................. 4,768,905 6,131,447 4,908,411
Prepaid expenses and other current assets................ 526,078 285,412 452,451
------------ ------------ ------------
Total current assets....................................... 7,337,232 17,308,348 10,447,587
Property, plant and equipment, net......................... 7,849,037 8,080,043 10,015,567
FCC licenses, net of accumulated amortization of $3,141,761
in 1994 and $3,677,841 in 1995........................... 17,297,619 18,769,172 29,628,878
Goodwill net of accumulated amortization of $182,258 in
1994 and $234,327 in 1995................................ 1,750,522 1,998,453 5,584,498
Other intangible assets.................................... 1,553,574 1,761,306 1,934,213
Deferred charges, net...................................... 439,786 3,910,582 4,184,346
Deposits and other assets.................................. 54,946 982,876 1,415,769
------------ ------------ ------------
Total assets............................................... $ 36,282,716 $ 52,810,780 $ 63,210,858
============ ============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable and accrued expenses.................... $ 1,695,583 $ 1,774,256 $ 1,546,938
Accrued compensation..................................... 1,261,064 815,162 415,972
Accrued interest......................................... 377,843 960,368 2,412,728
Accrued income taxes..................................... 293,975 16,840 10,603
Current maturities of long-term debt..................... 2,908,544 11,977 11,977
Subordinated note payable to affiliate................... 685,000 -- --
------------ ------------ ------------
Total current liabilities.................................. 7,222,009 3,578,603 4,398,218
Long-term debt............................................. 34,112,858 65,142,763 74,465,671
Noncurrent compensation.................................... 2,204,018 1,482,275 1,463,345
Subordinated note payable to affiliate..................... 1,368,000 -- --
8.87% cumulative redeemable preferred stock, $1 par value,
20,000 shares authorized, 10,000 shares issued and
outstanding in 1994...................................... 8,413,660 -- --
Redeemable warrant (Note 5)................................ 1,000,000 -- --
Note payable, officer...................................... -- 1,161,706 1,174,617
Deferred income taxes...................................... -- -- 1,700,000
Stockholders' deficit:
Class A Common Stock, $0.01 par value; 21,600,000 shares
authorized and issued: 858,327 shares in 1994 and
1,054,988 shares in 1995............................... 8,583 10,550 10,550
Class B Common Stock, convertible into Class A Common
Stock, $0.01 par value; 3,501,886 shares authorized and
issued................................................. 35,019 35,019 35,019
Additional paid-in capital............................... 21,794,986 23,540,944 23,540,944
Accumulated deficit...................................... (39,875,417) (42,115,080) (43,551,506)
------------ ------------ ------------
(18,036,829) (18,528,567) (19,964,993)
Less treasury stock, at cost, 612,598 shares in 1994 and
615,773 shares in 1995................................. 1,000 26,000 26,000
------------ ------------ ------------
Total stockholders' deficit................................ (18,037,829) (18,554,567) (19,990,993)
------------ ------------ ------------
Total liabilities and stockholders' deficit................ $ 36,282,716 $ 52,810,780 $ 63,210,858
============ ============ ============
</TABLE>
See accompanying notes.
F-4
<PAGE> 75
COMMODORE MEDIA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, THREE MONTHS ENDED
--------------------------------------- ------------------------
1993 1994 1995 MARCH 26, MARCH 31,
----------- ----------- ----------- 1995 1996
---------- -----------
(unaudited) (unaudited)
<S> <C> <C> <C> <C> <C>
Total revenue..................... $21,643,059 $28,686,381 $33,652,677 $6,507,658 $ 8,047,568
Less agency commissions........... (1,845,502) (2,461,478) (2,857,912) (540,271) (631,887)
----------- ----------- ----------- ---------- -----------
Net revenue....................... 19,797,557 26,224,903 30,794,765 5,967,387 7,415,681
----------- ----------- ----------- ---------- -----------
Operating expenses:
Programming, technical and
news......................... 4,028,677 4,601,374 5,365,686 1,090,881 1,513,468
Sales and promotion............. 5,289,311 7,325,549 8,796,481 1,867,684 2,421,153
General and administrative...... 4,190,735 4,556,515 4,870,463 1,210,206 1,440,612
Corporate expenses.............. 2,530,703 2,109,741 2,051,181 460,738 465,684
Depreciation and amortization... 1,129,379 2,145,201 1,926,250 436,991 480,210
Long-term incentive
compensation................. -- 2,180,000 2,006,550 584,935 --
Separation compensation......... 1,496,000 -- -- -- --
----------- ----------- ----------- ---------- -----------
Operating income................ 1,132,752 3,306,523 5,778,154 315,952 1,094,554
Interest expense.................. 4,217,697 2,932,459 7,420,617 829,680 2,451,638
Interest income................... -- 266 420,659 -- 115,252
Other expenses, net............... 657,861 601,443 433,704 56,666 167,594
----------- ----------- ----------- ---------- -----------
Loss before provision for income
taxes and extraordinary loss.... (3,742,806) (227,113) (1,655,508) (570,394) (1,409,426)
Provision for income taxes........ 39,503 300,000 140,634 15,000 27,000
----------- ----------- ----------- ---------- -----------
Loss before extraordinary loss.... (3,782,309) (527,113) (1,796,142) (585,394) (1,436,426)
Extraordinary loss on
extinguishment of debt (Note
5).............................. -- -- (443,521) -- --
----------- ----------- ----------- ---------- -----------
Net loss.......................... (3,782,309) (527,113) (2,239,663) (585,394) (1,436,426)
Preferred Stock dividend.......... -- 690,660 252,175 208,000 --
----------- ----------- ----------- ---------- -----------
Net loss for common
shareholders.................... $(3,782,309) $(1,217,773) $(2,491,838) $ (793,394) $(1,436,426)
=========== =========== =========== ========== ===========
Loss per share:
Before extraordinary item....... $ (1.88) $ (.32) $ (.53) $ (.21) $ (.36)
Extraordinary item.............. -- -- (.11) -- --
----------- ----------- ----------- ---------- -----------
Loss per share.................. $ (1.88) $ (.32) $ (.64) $ (.21) $ (.36)
=========== =========== =========== ========== ===========
Weighted average common shares
outstanding..................... 2,013,100 3,762,700 3,892,300 3,755,500 3,949,900
=========== =========== =========== ========== ===========
</TABLE>
See accompanying notes.
F-5
<PAGE> 76
COMMODORE MEDIA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
<TABLE>
<CAPTION>
COMMON STOCK
PAR VALUE ADDITIONAL TOTAL
PREFERRED ----------------- PAID-IN ACCUMULATED TREASURY STOCKHOLDERS'
STOCK CLASS A CLASS B CAPITAL DEFICIT STOCK DEFICIT
----------- ------- ------- ----------- ------------ -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1992, AS
RESTATED........................... $ 5,799,686 $8,583 $17,409 $ (25,092) $(34,565,995) $ (1,000) $(28,766,409)
Sale of common stock................. -- -- 8,085 2,491,915 -- -- 2,500,000
Conversion of preferred stock to
common stock....................... (3,300,000) -- 9,525 3,290,475 -- --
Contribution of loans and accrued
interest........................... -- -- -- 14,228,662 -- -- 14,228,662
Contribution of preferred stock...... (2,499,686) -- -- 2,499,686 -- -- --
Loss for the year.................... -- -- -- -- (3,782,309) -- (3,782,309)
----------- ------ ------ ----------- ------------ -------- ------------
BALANCE AT DECEMBER 31, 1993......... -- 8,583 35,019 22,485,646 (38,348,304) (1,000) (15,820,056)
Cumulative dividends on redeemable
preferred stock.................... -- -- -- (690,660) -- -- (690,660)
Adjustment to carrying value of
redeemable warrant................. -- -- -- -- (1,000,000) -- (1,000,000)
Loss for the year.................... -- -- -- -- (527,113) -- (527,113)
----------- ------ ------ ----------- ------------ -------- ------------
BALANCE AT DECEMBER 31, 1994......... -- 8,583 35,019 21,794,986 (39,875,417) (1,000) (18,037,829)
Cumulative dividends on redeemable
preferred stock.................... -- -- -- (252,175) -- -- (252,175)
Allocation of net proceeds of debt
offering to warrants............... -- -- -- 2,000,000 -- -- 2,000,000
Repurchase of common stock........... -- -- -- -- -- (25,000) (25,000)
Exercise of warrants................. -- 1,967 -- (1,867) -- -- 100
Loss for the year.................... -- -- -- -- (2,239,663) -- (2,239,663)
----------- ------ ------ ----------- ------------ -------- ------------
BALANCE AT DECEMBER 31, 1995......... -- 10,550 35,019 23,540,944 (42,115,080) (26,000) (18,554,567)
----------- ------ ------ ----------- ------------ -------- ------------
Net loss for the period
(unaudited)........................ -- -- -- -- (1,436,426) -- (1,436,426)
----------- ------ ------ ----------- ------------ -------- ------------
BALANCE AT MARCH 31, 1996
(unaudited)........................ $ -- $10,550 $35,019 $23,540,944 $(43,551,506) $(26,000) $(19,990,993)
=========== ====== ====== =========== ============ ======== ============
</TABLE>
See accompanying notes.
F-6
<PAGE> 77
COMMODORE MEDIA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, THREE MONTHS ENDED
---------------------------------------- --------------------------
1993 1994 1995 MARCH 26,
------------ ----------- ----------- 1995
-----------
(unaudited) MARCH 31,
1996
------------
(unaudited)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss................................ $ (3,782,309) $ (527,113) $(2,239,663) $ (585,394) $ (1,436,426)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Loss on extinguishment of debt........ -- -- 443,521 -- --
Depreciation and amortization......... 1,277,859 2,365,111 2,311,162 491,964 639,180
Noncash interest...................... -- -- 2,288,917 -- 839,274
Long-term incentive compensation...... -- 2,180,000 79,000 -- --
Noncash settlement compensation....... 1,001,000 -- -- -- --
Provision for uncollectible accounts
and notes receivable................ 825,129 468,155 556,137 177,208 104,981
(Gain) loss on disposition of
assets.............................. (8,115) 335,736 9,819 -- --
Net barter income..................... (123,310) (122,163) (184,300) (15,292) (44,864)
Changes in assets and liabilities, net
of amounts acquired:
Increase in accounts receivable..... (958,612) (1,509,195) (1,847,015) 416,863 1,137,320
Decrease (increase) in prepaid
expenses and other current
assets............................ 300,824 (267,196) (88,787) (93,240) (153,096)
Increase (decrease) in accounts
payable and accrued expenses...... 336,812 326,251 (158,855) (134,166) (159,141)
Increase (decrease) in accrued
compensation...................... -- 197,881 (230,645) 139,867 (457,120)
Increase in accrued interest........ 1,586,211 351,639 582,525 (128,738) 1,452,360
Increase (decrease) in accrued
income taxes...................... 21,889 261,541 (277,135) (209,440) (31,908)
------------ ----------- ----------- ---------- ------------
Total adjustments....................... 4,259,687 4,587,760 3,484,344 645,026 3,326,986
------------ ----------- ----------- ---------- ------------
Net cash provided by operating
activities............................ 477,378 4,060,647 1,244,681 59,632 1,890,560
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from redemption of note........ -- 405,000 -- -- --
Proceeds from sale of property, plant
and equipment......................... 11,332 398,018 -- -- --
Repayment of loan by stockholder........ -- -- 182,988 -- --
Purchase of property, plant and
equipment............................. (333,149) (623,414) (320,980) (42,030) (124,192)
Purchase of station assets.............. (9,375,000) -- (3,100,000) -- (14,400,000)
Deferred acquisition costs incurred..... (245,346) (172,558) (417,020) -- (290,766)
Deposits on pending acquisitions........ -- -- (525,000) (150,000) (915,000)
Loans to stockholders and employees..... (60,000) (57,500) (315,863) (65,488) --
Other investing activities, net......... (10,705) -- 87,528 (12,646) (68,177)
------------ ----------- ----------- ---------- ------------
Net cash used in investing activities... (10,012,868) (50,454) (4,408,347) (270,164) (15,798,135)
</TABLE>
F-7
<PAGE> 78
COMMODORE MEDIA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS--(CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, THREE MONTHS ENDED
1993 1994 1995 MARCH 26,
------------ ----------- ----------- 1995
----------
(unaudited) MARCH 31,
1996
------------
(unaudited)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Gross proceeds from issuance of Senior
Subordinated Notes and warrants....... $ -- $ -- $64,956,422 -- --
Proceeds from stockholder loans......... 300,000 -- -- -- --
Proceeds from borrowing................. 7,900,000 -- -- -- $ 8,500,000
Proceeds from issuance of common
stock................................. 2,500,000 -- 100 -- --
Repayment of amounts borrowed........... (1,200,000) (2,738,166) (39,014,833) $ (333,333) --
Payment of financing related costs...... (110,000) (104,245) (4,226,762) -- --
Payment of deferred debt issuance
costs................................. -- -- -- (224,101) (393,734)
Redemption of preferred stock........... -- -- (8,665,835) -- --
Purchase of redeemable warrant.......... -- -- (1,000,000) (1,000,000) --
Repurchase of common stock.............. -- -- (25,000) (25,000) --
Principal payments on capital leases.... (12,817) (12,389) (11,186) (1,463) (3,455)
------------ ----------- ----------- ---------- ------------
Net cash provided by (used in) financing
activities............................ 9,377,183 (2,854,800) 12,012,906 (1,583,897) 8,102,811
------------ ----------- ----------- ---------- ------------
Net (decrease) increase in cash and
short-term cash investments........... (158,307) 1,155,393 8,849,240 (1,794,429) (5,804,764)
Cash and short-term cash investments at
beginning of year..................... 1,045,163 886,856 2,042,249 2,042,249 10,891,489
------------ ----------- ----------- ---------- ------------
Cash and short-term cash investments
at end of year...................... $ 886,856 $ 2,042,249 $10,891,489 $ 247,820 $ 5,086,725
============ =========== =========== ========== ============
SUPPLEMENTARY CASH FLOW INFORMATION:
Cash paid for interest.................. $ 2,631,484 $ 2,580,522 $ 4,474,789 $ 958,418 $ 46,738
Cash paid for income taxes.............. 17,915 38,209 417,769 224,440 58,908
</TABLE>
SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Asset acquisitions recorded in connection with barter transactions were
approximately $54,700, $144,500 and $112,636 for the years ended December 31,
1993, 1994 and 1995, respectively.
On December 28, 1993, the Company refinanced its loan agreement with The Bank of
New York and restructured its capitalization. See Notes 5, 9 and 11 for a
description of the noncash financing activities associated with these
transactions.
See accompanying notes.
F-8
<PAGE> 79
COMMODORE MEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Nature of Business
Commodore Media, Inc. and Subsidiaries (the "Company") is comprised of
radio stations that derive their revenue from local, regional and national
advertisers. The radio stations are located in the following Arbitron markets:
Wilmington, Delaware; Westchester, Putnam and Dutchess Counties, New York;
Huntington, West Virginia--Ashland, Kentucky; Allentown--Bethlehem,
Pennsylvania; Fort Pierce--Stuart--Vero Beach, Florida; and Fairfield County,
Connecticut. The Company extends credit to its customers in the normal course of
business.
Change of Name
The Company changed its name from CRB Broadcasting Corporation to Commodore
Media, Inc. on March 17, 1995.
Principles of Consolidation
The consolidated financial statements include the accounts of Commodore
Media, Inc. and all subsidiaries, after elimination of intercompany accounts and
transactions.
Certain reclassifications have been made to the prior year financial
statements in order to conform with the current year's presentation.
Short-Term Cash Investments
The Company considers investments which have a remaining maturity of three
months or less at the time of purchase to be short term cash investments. The
Company invests its excess cash in U.S. Treasury Bills.
Income Taxes
The Company accounts for income taxes in accordance with FASB Statement No.
109, "Accounting for Income Taxes." Under this method, deferred income taxes are
provided for differences between the book and tax bases of the Company's assets
and liabilities.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
F-9
<PAGE> 80
COMMODORE MEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
Property, Plant and Equipment
Property, plant and equipment are stated at cost. Depreciation is provided
on the straight-line method based on the following estimated useful lives:
<TABLE>
<CAPTION>
CLASSIFICATION ESTIMATED LIFE (YEARS)
<S> <C>
Land improvements...................................... 20
Buildings.............................................. 20
Furniture, fixtures and equipment...................... 7-10
Broadcasting and technical equipment................... 7-10
Towers and antennas.................................... 20
Music library.......................................... 7
Leasehold improvements................................. 10-20
Vehicles............................................... 3
</TABLE>
Expenditures for maintenance and repairs are charged to operations as
incurred. Expenditures for betterments and major renewals are capitalized and,
therefore, are included in property, plant and equipment.
Property Held Under Capital Leases
The Company is the lessee of office equipment under capital leases expiring
in various years through 2004. The assets and liabilities under capital leases
are recorded at the lower of the present value of the minimum lease payments or
the fair value of the asset. The assets are depreciated over their estimated
productive lives of seven to ten years.
Revenue Recognition
The Company recognizes revenue upon the airing of advertisements.
Intangible Assets
Intangible assets are being amortized by the straight-line method over the
following estimated useful lives.
<TABLE>
<CAPTION>
CLASSIFICATION ESTIMATED LIFE (YEARS)
<S> <C>
FCC licenses and goodwill................................ 40
Tower site lease......................................... 3
Organization expenses.................................... 5
Network affiliation agreement............................ 5
Covenant not to compete.................................. 5
Pre-sold advertising contracts........................... 1
</TABLE>
Management continually reviews the appropriateness of the carrying value of
goodwill of its subsidiaries and the related amortization period based on
anticipated undiscounted cash flow of each subsidiary.
Deferred Charges
Legal fees, bank loan closing costs and other expenses associated with debt
financing and the Recapitalization Transaction (Note 2) are being amortized
using the effective interest rate method. Amortization of debt expense charged
to operations and included in other expenses amounted to $148,478 in 1993,
$219,893 in 1994 and $384,908 in 1995.
F-10
<PAGE> 81
COMMODORE MEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
Barter Transactions
The fair value of barter and trade-out transactions is included in
broadcast revenue and sales and promotion expense. Barter revenue is recorded
when advertisements are broadcast and barter expense is recorded when
merchandise or services are received. Barter transactions charged to operations
were as follows for the years ended December 31:
<TABLE>
<CAPTION>
1993 1994 1995
<S> <C> <C> <C>
Trade sales................................. $ 1,617,288 $ 2,473,002 $ 3,238,111
Trade expense............................... (1,493,978) (2,350,839) (3,053,811)
----------- ----------- -----------
Net barter transactions..................... $ 123,310 $ 122,163 $ 184,300
=========== =========== ===========
</TABLE>
Interim Financial Information
Financial information as of and for the three months ended March 31, 1996
and for the three months ended March 31, 1995 is unaudited. In the opinion of
management, all adjustments of a normal and recurring nature, and those that are
necessary for a fair presentation of the results as of and for such periods,
have been included. Interim results are not necessarily indicative of the
results for a full year.
Net Loss Per Common Share
Net (loss) income per common share is determined by dividing net income or
loss available to common stockholders by the average number of common shares
outstanding. The calculation of net income or loss available to common
stockholders is based on the net income or loss in each year after the dividend
requirement on preferred stock of approximately $691,000 and $252,000 in 1994
and 1995, respectively.
In all periods, the calculation of average common shares outstanding
includes only the common shares outstanding and options issued at an exercise
price less than the initial public offering price (see Note 14) to management in
July 1995.
2. THE RECAPITALIZATION TRANSACTIONS
On April 21, 1995, the Company completed the offering of its 13 1/4% Senior
Subordinated Notes due 2003 ("Senior Subordinated Notes"). The net proceeds of
approximately $65.0 million were used to retire existing senior indebtedness of
approximately $36.2 million, fund the Treasure Coast Acquisition for $3.1
million, and repay the Hanson note and RFP note for an aggregate amount of $2.4
million. In addition, the Company used $8.7 million to redeem its preferred
stock, paid $1.9 million in connection with the long-term incentive compensation
of its President and its Chief Operating Officer (Note 10), paid approximately
$4.2 million in related deferred fees of the offering, and used the balance of
$8.5 million for general corporate purposes. The Company converted all of its
existing common stock for 3,501,886 shares of its Class B Common Stock ("Class
B") and 858,327 shares (including 615,773 treasury shares) of its Class A Common
Stock ("Class A"). At the time of conversion, the Company's President and its
Chief Operating Officer purchased 197,057 shares and 45,497 shares,
respectively, of Class A from the Chairman. In addition, William A.M. Burden and
Company, an affiliated entity, exercised its option to acquire 196,661 shares of
Class A from the Company. Each share of Class B is entitled to 8 votes and each
share of Class A is entitled to 1 vote. The consolidated financial statements
have been retroactively adjusted for this conversion.
F-11
<PAGE> 82
COMMODORE MEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
3. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment, at cost, consisted of the following at
December 31:
<TABLE>
<CAPTION>
1994 1995
<S> <C> <C>
Land and land improvements................................ $ 2,588,139 $ 2,813,139
Buildings................................................. 2,420,027 2,499,399
Furniture, fixtures and equipment......................... 1,984,059 2,188,502
Broadcasting and technical equipment...................... 5,563,763 5,907,905
Towers and antennas....................................... 3,280,482 3,401,300
Music library............................................. 239,024 250,456
Leasehold improvements.................................... 336,905 365,825
Vehicles.................................................. 113,946 147,567
Property held under capital leases........................ 78,478 81,497
----------- -----------
16,604,823 17,655,590
Less accumulated depreciation and amortization............ (8,755,786) (9,575,547)
----------- -----------
Property, plant and equipment, net........................ $ 7,849,037 $ 8,080,043
=========== ===========
</TABLE>
Accumulated amortization of property held under capital leases as of
December 31, 1994 and 1995 was $4,942 and $12,728, respectively. Depreciation as
a charge to income amounted to $728,681 in 1993, $768,826 in 1994 and $831,656
in 1995.
4. OTHER INTANGIBLE ASSETS
Other intangible assets, at cost, consisted of the following at December
31:
<TABLE>
<CAPTION>
1994 1995
<S> <C> <C>
Covenant not to compete..................................... $1,250,000 $1,325,000
Deferred acquisition expenses............................... 495,609 953,441
Pre-sold advertising contracts.............................. 416,584 103,642
Network affiliation agreement............................... 260,000 260,000
Tower site lease............................................ 14,516 14,516
---------- ----------
2,436,709 2,656,599
Less accumulated amortization............................... (883,135) (895,293)
---------- ----------
Other intangible assets, net................................ $1,553,574 $1,761,306
========== ==========
</TABLE>
Amortization of the aforementioned intangible assets included as a charge
to income amounted to $15,541 for 1993, $817,087 for 1994 and $506,447 for 1995.
Amortization of FCC licenses and goodwill amounted to $385,157 for 1993 ,
$559,304 for 1994 and $588,149 for 1995.
F-12
<PAGE> 83
COMMODORE MEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
5. LONG-TERM DEBT
Long-term debt consisted of the following at December 31:
<TABLE>
<CAPTION>
1994 1995
<S> <C> <C>
Senior Subordinated Notes due 2003, $75,500,000 principal, net of
unamortized discount of $10,400,367............................. $ -- $65,099,633
Senior Subordinated Notes due 2003, $1,308,000 principal, net of
unamortized discount of $146,294, held in trust for the benefit
of the President................................................ -- 1,161,706
Loans payable--The Bank of New York, collateralized by capital
stock of all subsidiaries and other assets pledged by majority
stockholder, repaid on April 21, 1995........................... 36,561,833 --
Note payable to Michael Hanson ("Hanson"), interest at 10%,
maturing January 31, 1997; repaid on April 21, 1995............. 400,000 --
Obligations under capital leases.................................. 59,569 55,107
----------- -----------
Total debt........................................................ 37,021,402 66,316,446
Less current maturities........................................... 2,908,544 11,977
----------- -----------
Long-term debt.................................................... $34,112,858 $66,304,469
=========== ===========
</TABLE>
Senior Subordinated Notes
The Senior Subordinated Notes bear cash interest at a rate of 7 1/2% per
annum on the principal amount until May 1, 1998 then at a rate of 13 1/4% per
annum until maturity, with interest payment dates on May 1 and November 1. The
notes may be redeemed at the option of the Company at any time on or after May
1, 1999 at redemption prices specified in the indenture. The terms of the Senior
Subordinated Notes contain various covenants for the benefit of the holders
that, among other things, restrict the ability of the Company to incur
additional indebtedness, pay dividends and make certain investments. The notes,
excluding the notes held for the benefit of the President, were issued with
detachable warrants to purchase 543,600 shares of Class A Common Stock at an
exercise price of $.01 per warrant. The warrants can be exercised upon the
earliest of: (1) a change of control as defined in the indenture or (2) an
initial public offering or (3) the date upon which the Company's equity
securities are registered on a national exchange or (4) May 1, 1999. The holders
of warrants are not entitled to any voting rights or otherwise have any rights
as stockholders of the Company. The Company estimated the fair market value of
the warrants to be $2,000,000 as of the date of issuance and has allocated this
amount out of the net proceeds of the debt offering to paid-in capital. Based
upon available market information, the fair value of the Senior Subordinated
Notes and warrants were $930 per unit and $15 per unit, respectively, as of
December 31, 1995.
The Bank of New York Loans
As of December 31, 1994, the Company's outstanding obligations under this
agreement were as follows:
<TABLE>
<S> <C>
Term loan, maturing December 31, 1996, interest at 1.5% above
the bank's prime rate or 2.5% over the LIBOR rate............. $31,500,000
Term loan, maturing December 31, 1996, interest at 2.5% over the
bank's prime rate............................................. 5,061,833
$2,000,000 Revolving credit loan, maturing December 31, 1996,
interest at 1.5% above the bank's prime rate or 2.5% over the
LIBOR rate.................................................... --
-----------
$36,561,833
===========
</TABLE>
F-13
<PAGE> 84
COMMODORE MEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
5. LONG-TERM DEBT--(CONTINUED)
The Bank of New York loans were repaid in full as part of the
Recapitalization Transaction on April 21, 1995.
In connection with the debt restructuring of The Bank of New York loan on
December 28, 1993, the Company issued the bank a warrant to purchase 4.99% of
the common stock of the Company, on a fully diluted basis, for $100. The warrant
was exercisable at any time prior to its expiration on December 28, 2003 and
contained a put option under which the bank could require the Company to
purchase the warrant at any time after January 1, 1997 up until expiration or
upon an initial public offering or a sale of the Company at a price based upon
(1) the actual proceeds received by the Company in an initial public offering or
sale (2) negotiations between the parties, or (3) an independent appraisal. No
value was ascribed to the warrant at the time of issuance. The increase in the
fair value of the warrant in 1994 of $1,000,000 was recorded as a reduction to
retained earnings (see Note 12). The Company repurchased the warrant in March
1995 for a negotiated price of $1,000,000.
Aggregate maturities of long-term debt due within the next five years
ending December 31, are as follows:
<TABLE>
<S> <C>
1996............................................................ $ 11,977
1997............................................................ 8,899
1998............................................................ 7,169
1999............................................................ 5,155
2000............................................................ 5,155
Thereafter...................................................... 66,278,091
-----------
$66,316,446
===========
</TABLE>
In connection with the Recapitalization Transactions, the Company wrote-off
the balance of the unamortized deferred financing costs on its retired debt of
$443,521. Inasmuch as the Company has no current federal taxable income and has
fully reserved for its net deferred tax assets, there is no tax effect
attributable to this extraordinary item.
6. ACQUISITION OF BUSINESSES AND JOINT OPERATING AGREEMENTS
Acquisitions
On June 27, 1995, the Company purchased the assets (excluding cash and
accounts receivable) and broadcasting license of radio broadcast station WQOL-FM
in Vero Beach, Florida (Treasure Coast Acquisition) for a total purchase price
of $3,150,000. The Company accounted for this transaction under the purchase
method of accounting.
On December 28, 1993, the Company purchased the assets (excluding cash and
accounts receivable) and broadcasting license of radio broadcast station WZZO-FM
in Allentown, Pennsylvania, for a total purchase price of $9,375,000, which was
also accounted for using the purchase method of accounting.
F-14
<PAGE> 85
COMMODORE MEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
6. ACQUISITION OF BUSINESSES AND JOINT OPERATING AGREEMENTS--(CONTINUED)
The total purchase price of the aforementioned acquisitions was allocated
as follows:
<TABLE>
<CAPTION>
WQOL-FM WZZO-FM
<S> <C> <C>
Tangible assets............................................. $ 663,724 $ 468,008
Intangible assets:
FCC license............................................... 2,007,634 6,029,000
Goodwill.................................................. 300,000 936,892
Noncompete agreement...................................... 75,000 1,250,000
Pre-sold advertising contracts............................ 103,642 416,584
Network affiliation agreement............................. -- 260,000
Other..................................................... -- 14,516
---------- ----------
2,486,276 8,906,992
---------- ----------
Total purchase price........................................ $3,150,000 $9,375,000
========== ==========
</TABLE>
Unaudited pro forma results of operations for the Company for 1993 as if
WZZO-FM was acquired on January 1, 1993 are as follows:
<TABLE>
<CAPTION>
1993
<S> <C>
Net revenue........................................................... $22,701,935
Net loss before extraordinary item.................................... (2,684,984)
Net loss.............................................................. (2,684,984)
</TABLE>
Unaudited pro forma results of operations for the Company for 1995 and 1994
as if WQOL-FM was acquired on January 1, 1994 are as follows:
<TABLE>
<CAPTION>
1994 1995
<S> <C> <C>
Net revenue............................................... $27,361,642 $31,289,433
Net loss before extraordinary item........................ (491,886) (1,793,307)
Net loss.................................................. (491,886) (2,236,828)
</TABLE>
On October 30, 1995, the Company entered into agreements to purchase the
stock of Danbury Broadcasting, Inc., which owns stations WRKI-FM and WINE-AM in
Brookfield, CT., and all of the assets (excluding cash and accounts receivable)
and FCC licenses of Hudson Valley Growth, L.P., which owns stations WZZN-FM,
WVYB-FM, and WPUT-AM in Mt. Kisco, Patterson and Brewster, NY. The total
purchase price for all of these stations is $14,900,000. The Company has paid a
deposit of $500,000 in connection with these agreements, which is included in
other noncurrent assets.
The Company closed on the acquisition agreements with Danbury Broadcasting,
Inc. and Hudson Valley Growth, L.P. on March 27, 1996. The Company used $6.7
million of available cash funds and financed the remaining $8.2 million of the
purchase price with funds obtained from AT&T Commercial Finance Corporation
("AT&T"). Under the loan agreement with AT&T, the Company may borrow up to $30
million under a Senior Secured Reducing Revolver Loan, and up to $5 million
under a Senior Secured Accounts Receivable Loan. These loans are secured by all
of the existing and future assets of the Company. The Company plans to use this
facility to finance future acquisitions.
Local Marketing and Joint Sales Agreements
The Company has entered into various Local Marketing Agreements ("LMA") and
Joint Sales Agreements ("JSA") during 1995. While each agreement is unique in
its terms and conditions, generally under an LMA and JSA the brokering station
purchases substantially all of the commercial time available on
F-15
<PAGE> 86
COMMODORE MEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
6. ACQUISITION OF BUSINESSES AND JOINT OPERATING AGREEMENTS--(CONTINUED)
the brokered station and provides promotional and sales related services. Under
an LMA, the brokering station may also provide the programming; a JSA requires
the licensee to continue all of the programming. The brokering station pays a
fee to the brokered station for the services provided based upon a flat monthly
amount, and/or an amount contingent on the net revenue or profit as calculated
in the agreement. As the brokering station, the Company currently has LMAs or
JSAs with WKAP-AM, Allentown, PA, and WPAW-FM, Vero Beach, FL. The Company has
an option to purchase WPAW-FM for $1.2 million which it may exercise during the
twenty-nine month period beginning August 1995. The Company operated stations
WRKI-FM/WINE-AM in Brookfield, CT, and WZZN-FM/WVYB-FM/WPUT-AM in
Westchester/Putnam Counties, New York under LMA agreements that terminated upon
the consummation of the related purchase agreements for the stations.
7. INCOME TAXES
The Company has recorded a provision for income taxes as follows for the
years ended December 31:
<TABLE>
<CAPTION>
1993 1994 1995
<S> <C> <C> <C>
Current:
Federal........................................... $ -- $ 70,400 $ --
State and local................................... 39,503 229,600 140,634
Deferred:
Federal........................................... -- -- --
State and local................................... -- -- --
------- -------- --------
Total..................................... $39,503 $300,000 $140,634
======= ======== ========
</TABLE>
The Company did not record a federal tax benefit on the taxable loss for
the years ended December 31, 1995 and 1993 since it was not assured that it
could realize a benefit for such loss in the future. During 1994, the Company
utilized approximately $2,500,000 of Federal net operating losses to offset
current taxable income. Since the valuation allowance remained at 100% at the
end of the year, there was no deferred tax effect on 1994 earnings. The Company
recorded a provision for federal alternative minimum tax in 1994 because net
operating loss carryforwards may be used to offset only 90% of a corporation's
alternative minimum taxable income.
The Company has applied to change its tax method of accounting for FCC
licenses for the tax year ended December 31, 1995. The aggregate amount of
cumulative amortization that will be deductible ratably over six years for tax
purposes is approximately $12,130,000. The Company has reflected this change in
the current year and expects final approval from the IRS shortly.
The reconciliation of income tax computed at the U.S. federal statutory
rates to effective income tax expense is as follows for the years ended December
31:
<TABLE>
<CAPTION>
1993 1994 1995
<S> <C> <C> <C>
Provision at statutory rate..................... $(1,309,982) $(79,400) $(734,695)
State and local taxes........................... 39,503 229,600 140,634
Nondeductible expense........................... 21,885 36,575 8,286
Increase in valuation allowance, net of rate
changes....................................... 1,288,097 42,825 726,409
Alternative minimum tax......................... -- 70,400 --
----------- -------- ---------
Total................................. $ 39,503 $300,000 $ 140,634
=========== ======== =========
</TABLE>
F-16
<PAGE> 87
COMMODORE MEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
7. INCOME TAXES--(CONTINUED)
Deferred income taxes reflect the net tax effect of temporary differences
between the carrying amount of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. The approximate effect of
temporary differences were as follows at December 31:
<TABLE>
<CAPTION>
1994 1995
<S> <C> <C>
Deferred tax assets:
Allowance for bad debts............................... $ 239,764 $ 312,100
Deferred compensation................................. 1,518,645 1,244,100
Unamortized discount on Senior Subordinated Notes..... -- 959,200
Intangibles........................................... 1,521,168 290,300
Depreciation.......................................... 14,805 76,460
Net operating loss carryforwards...................... 11,169,686 12,405,800
------------ ------------
Total deferred tax assets..................... 14,464,068 15,287,960
Deferred tax liabilities:
Depreciation.......................................... (518,609) (537,260)
Other................................................. (37,800) (4,800)
------------ ------------
Total deferred tax liabilities.......................... (556,409) (542,060)
------------ ------------
Net deferred tax asset.................................. 13,907,659 14,745,900
Less valuation allowance................................ (13,907,659) (14,745,900)
------------ ------------
Net deferred tax asset, net of allowance................ $ -- $ --
============ ============
</TABLE>
The Company has provided a valuation allowance equivalent to its net
deferred tax asset in 1993, 1994 and 1995 as the past history of the Company
makes the realization of taxable income in the future years uncertain. At
December 31, 1995, the Company had net operating loss carryforwards of
approximately $30,700,000 for federal purposes that expire in the years 1999
through 2010, and $19,700,000 for state purposes that expire in the years 1996
to 2010. Pending final approval from the IRS, the Company will also have
available $10,100,000 of carryforward deductions related to the change in
accounting for FCC licenses that will be deductible in the years 1996 to 2000.
8. COMMITMENTS
Lease Commitments
The principal types of property leased by the Company and its subsidiaries
are office space, tower, real estate related to tower sites, office equipment
and transmitting equipment.
Total rent expense for the Company was approximately $220,200, $306,400 and
$332,000 for the years ended December 31, 1993, 1994 and 1995, respectively.
F-17
<PAGE> 88
COMMODORE MEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
8. COMMITMENTS--(CONTINUED)
The minimum rental commitments of the Company, under all noncancellable
operating leases, are set forth below:
<TABLE>
<CAPTION>
YEAR AMOUNT
<S> <C>
1996............................................................. $ 318,267
1997............................................................. 296,088
1998............................................................. 272,755
1999............................................................. 254,433
2000............................................................. 207,803
Thereafter....................................................... 515,244
----------
Total minimum lease payments..................................... $1,864,590
==========
</TABLE>
Other Commitments
The Company entered into a separation agreement with its former President
effective December 31, 1993, under which the Company agreed to pay him an
aggregate amount of $1,650,000; a portion was paid in cash, and the remainder of
$1,000,000 became payable in semi-monthly installments through December 31,
1997. A present value discount of $154,000 was recorded against the total
installment liability of $1,000,000 as of December 31, 1993. At December 31,
1994 and 1995, the current portion under this obligation of $201,939 and
$219,816 is included in accounts payable and accrued expenses and the remainder
of $454,018 and $239,275 is reflected in noncurrent compensation.
The Company has other employment agreements with key executives under which
the executives are paid a base salary and annual incentives based on broadcast
cash flow and EBITDA, as defined in the agreements.
9. STOCKHOLDERS' DEFICIT
Preferred Stock
Under the December 28, 1993 debt restructuring, all previously authorized,
issued and outstanding shares of Series A, Series B, and Series C Preferred
Stock were contributed to paid-in capital or converted into common stock and
canceled.
The Series A and Series B preferred shares were converted into 237,600
shares of common stock resulting in additional paid-in capital of $3,290,475.
All dividends in arrears, of which none had been declared or accrued, were
forfeited by the preferred stockholders.
The Series C preferred shares were contributed to paid-in capital by the
Company's former President.
Redeemable Preferred Stock
On December 28, 1993, Radio Financial Partners, Inc. ("RFP"), a related
entity (see Note 11), converted $7,723,000 of outstanding debt and accrued
interest into 10,000 shares of the Company's new 8.87% cumulative redeemable
preferred stock ("Redeemable Preferred Stock"). The Company redeemed all
outstanding shares of the preferred stock as part of the Recapitalization
Transactions on April 21, 1995; the total liquidation value as of the date of
redemption was $8,665,835 which included $942,835 in accumulated dividends.
F-18
<PAGE> 89
COMMODORE MEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
9. STOCKHOLDERS' DEFICIT--(CONTINUED)
Common Stock
Each share of Class B stock is convertible at the option of the holder into
one share of Class A stock. The Company has reserved a total of 4,996,786 shares
of Class A stock for issuance as follows: (1) 543,600 shares upon the exercise
of the warrants (2) 951,300 shares upon the exercise of shares granted under the
1995 Stock Option Plan and (3) 3,501,886 shares upon the conversion of Class B
common stock. Shareholders of Class A and Class B stock are provided the same
dividend and liquidation rights, although dividend payments are currently
restricted by the indenture governing the notes. Holders of shares of common
stock vote as a single class on all matters submitted to a vote; each share of
Class A stock is entitled to one vote and each share of Class B stock is
entitled to eight votes on all matters.
10. LONG-TERM INCENTIVE COMPENSATION AND EMPLOYMENT AGREEMENTS
Effective January 1, 1994, the Company entered into an agreement with its
President and Chief Executive Officer under which he would be employed in that
capacity through 1996 and provided for annual salary requirements and bonuses,
and a Long-Term Incentive Payment ("LTIP"). The LTIP is based on a formula
derived from the Company's net equity value, as defined. A fair value amount of
$1,750,000 was charged to income as long-term incentive compensation in 1994
relating to the LTIP. On April 21, 1995, the President's employment agreement
was amended and restated. In lieu of the LTIP, the Company paid the President
$1,500,000 in cash, issued $1,308,000 principal ($1,125,000 net of discount) of
the Company's Senior Subordinated Notes to a trust for his benefit, and agreed
to provide $1,500,000 in deferred compensation which accrues interest at a rate
of 7% and is payable in 2003. The Company recorded the deferred compensation on
April 21, 1995 at its calculated net present value of $921,000. The aggregate
effect of the employment agreement restructuring was to charge $1,817,750 to
long term incentive compensation expense during 1995. In addition, the
President's amended employment agreement extended his date of employment through
April 30, 1998, granted stock options to him to acquire 203,854 shares of Class
A Common Stock at an exercise price of $6.25 per share and provides for annual
bonuses based upon specific operating results of the Company.
The Company also amended its existing employment agreement with its Chief
Operating Officer on April 21, 1995. The prior employment agreement provided for
a long-term incentive based upon the increase in certain station values. As of
December 31, 1994, $430,000 had been accrued as long-term incentive
compensation. The amended employment agreement provided for a cash payment of
$400,000 on April 21, 1995 and deferred compensation of $346,000 which accrues
interest at a rate of 7% and is payable in 2003. The Company recorded the
deferred compensation on April 21, 1995 at its calculated net present value of
$213,000. The aggregate effect of the employment agreement restructuring was to
charge $188,800 to long term incentive compensation expense during 1995. In
addition, the amended employment agreement extended his date of employment
through April 30, 1999, granted stock options to acquire 203,854 shares of Class
A Common Stock at an exercise price of $6.25 per share, and provides for annual
bonuses based upon specific operating results of the Company.
11. RELATED PARTY TRANSACTIONS
In connection with the debt restructuring that occurred on December 28,
1993, $9,617,240 of notes payable to the majority stockholder, as well as an
additional $300,000 loan provided to the Company during the year ended December
31, 1993, were converted into additional paid-in capital. In addition, all
accrued interest on the notes, which was $4,311,422 as of the date of the
restructuring, was canceled and recorded as a capital contribution. The majority
stockholder purchased an additional 201,600 shares of common stock for
$2,500,000 on December 28, 1993.
F-19
<PAGE> 90
COMMODORE MEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
11. RELATED PARTY TRANSACTIONS--(CONTINUED)
During 1995 the Company paid the majority stockholder approximately
$180,000 in annual salary. In addition, the majority stockholder repaid an
outstanding loan of $182,988 of which $65,488 was advanced in the year ended
December 31, 1995; the majority stockholder owed the Company $117,500 as of
December 31, 1994. These loans are reflected in other current assets in 1994 and
1995.
On April 10, 1992, the Company obtained $9,300,000 from RFP in exchange for
a subordinated note bearing interest at 7% and maturing in 1997. On December 28,
1993, RFP agreed to convert a total of $7,247,000 of the unpaid principal on the
subordinated note and $476,000 of accrued interest into 10,000 shares of
Redeemable Preferred Stock (see Note 9). The remaining principal balance of
$2,053,000 was converted into a noninterest-bearing subordinated note with a
final maturity of April 10, 1997. The Company repaid the outstanding balance of
the note and redeemed the preferred stock on April 21, 1995.
During May 1995, the Company loaned approximately $250,000 to certain
executive officers as evidenced by 7% promissory notes that mature in 2001, with
all accrued interest and principal due on the maturity date. The total amount
owed the Company as of December 31, 1995 is $261,329 which is included in
noncurrent assets.
In connection with the debt restructuring described above, on December 28,
1993, the Company granted a warrant to an affiliate to purchase 4.99% of its
common stock at an exercise price of $100, on a fully diluted basis. The warrant
was exercised during 1995.
12. STOCK OPTION AND 401(K) PLANS
On April 21, 1995, the Company adopted a stock option plan which provides
for the granting of incentive stock options and nonqualified stock options to
executives and key employees. The Company has reserved 951,300 shares of Class A
Common Stock, which represents 17.5% of the Company's outstanding common stock
on a fully diluted basis, for options issued under this plan. The options are
exercisable at a price equal to the fair market value on the date of grant. As
of December 31, 1995, a total of 696,024 shares were granted at an exercise
price of $6.25 per share under this plan, of which none were exercisable as of
that date.
The Financial Accounting Standards Board issued SFAS No. 123, "Accounting
for Stock Based Compensation" in October 1995, which establishes financial
accounting and reporting standards of stock based employee compensation plans
including stock option plans. The Company has elected to continue accounting for
stock based compensation under APB No. 25. The disclosure requirements of SFAS
No. 123 will be effective for the Company's financial statements beginning in
1996. The Company does not believe that the implementation of SFAS 123 will have
a material effect on its financial statements.
During the year ended December 31, 1995, the Company established the
Commodore Media, Inc. 401(K) Plan for the benefit of all eligible employees.
Eligible participants under this plan are defined as all full-time employees
with one year of service. All eligible participants may elect to contribute a
portion of their compensation to the plan subject to Internal Revenue Service
limitations. The Company may make discretionary matching contributions to the
plan, subject to board approval; no contributions were made for the plan year
ended December 31, 1995.
13. LEGAL PROCEEDINGS
The Company is involved is various legal proceedings from time to time in
the normal course of business. In management's opinion, the litigation in which
the Company is currently involved, individually and in the aggregate, is not
material to the Company's financial condition or results of operations.
F-20
<PAGE> 91
COMMODORE MEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
14. SUBSEQUENT EVENTS
On February 16, 1996, the Company entered into an Asset Purchase Agreement
to purchase radio stations WKQS-FM, WAVW-FM and WAXE-AM in the Fort
Pierce-Stuart-Vero Beach, Florida Market from Media VI for approximately
$8,000,000. In addition, the Company entered into a Joint Sales Agreement with
Media VI to provide sales, marketing and certain other functions to the stations
pending the closing of the acquisition. The Company expects to close on the
Media VI acquisition in the second quarter of 1996 and will fund the transaction
with borrowings from the Senior Credit Facility (as hereinafter defined), and
funds from the Preferred Stock Facility (as hereinafter described).
On March 13, 1996, the Company entered into a Loan and Security Agreement
with AT&T Commercial Finance Corporation ("AT&T") pursuant to which AT&T will
make available to the Company senior secured (i) revolving loans in an amount up
to $30 million and (ii) accounts receivable loans in an amount which shall be
the lessor of (A) $5 million or (B) 85% of the net book value of the accounts
receivable of the Company (the "Senior Credit Facility"). The Company's
subsidiaries agreed to guarantee the indebtedness to AT&T. Interest is payable
monthly at a rate of 3.5% over LIBOR and principal amortization of the revolving
loans and accounts receivable loans begins June 1, 1998 and November 30, 1999,
respectively.
On March 15, 1996, the Company entered into an Asset Purchase Agreement to
acquire radio stations WKHL-FM and WSTC-AM in Stamford, Connecticut from Q
Broadcasting, Inc. for approximately $9,500,000. The Company expects to close on
the Q Broadcasting acquisition in the second quarter of 1996 and will fund the
transaction with borrowings from the Senior Credit Facility and funds from the
Preferred Stock Facility (as hereinafter defined).
On March 27, 1996 the Company purchased (i) certain defined assets of radio
stations WZZN-FM in Mount Kisco, New York, WVYB-FM in Patterson, New York and
WPUT-AM in Brewster, New York from Hudson Valley Growth, L.P. for $4,950,000 and
(ii) all of the issued and outstanding common stock of Danbury Broadcasting,
Inc., owner of WRKI-FM and WINE-AM in Brookfield, Connecticut, plus certain real
property for $9,950,000. The transaction was financed with the Company's
existing cash and borrowings under the Senior Credit Facility.
On April 8, 1996 the Company entered into (i) an Asset Purchase Agreement
to purchase from Adventure Communications, Inc., radio stations WKEE(FM) and
WKEE(AM) in Huntington, West Virginia, WZZW(AM) in Milton, West Virginia,
WBVB(FM) in Coral Grove, Ohio and WIRO(AM) in Ironton, Ohio for an aggregate
purchase price of approximately $7,765,000 and (ii) an Asset Purchase Agreement
with Simmons Broadcasting Company and an Option Agreement with Michael R. Shott
to acquire radio stations WHRD(AM) in Huntington, West Virginia, WFXN(FM) in
Milton, West Virginia and WMLV(FM) in Ironton, Ohio for an aggregate purchase
price of approximately $4,235,000. In addition, the Company entered into Local
Marketing Agreements with each of Adventure Communications, Inc. and Simmons
Broadcasting Company to provide, on a cooperative basis, the programming, sales,
marketing and certain other services to the stations pending the closing of the
acquisitions. The Company expects to close on the aforementioned acquisitions in
the latter part of 1996 and will fund the transaction with borrowings from the
Senior Credit Facility and funds from the Preferred Stock Facility (as
hereinafter defined).
On May 1, 1996, the Company entered into a Securities Purchase Agreement
with CIBC WG Argosy Merchant Fund 2, LLC ("CIBC Merchant Fund"), pursuant to
which the CIBC Merchant Fund agreed to purchase from the Company, if and when
requested by the Company, up to an aggregate liquidation value of $12,500,000 of
Senior Exchangeable Redeemable Preferred Stock, Series A, $.01 par value per
share, of the Company in such amounts as the Company may request (the "Preferred
Stock Facility"), provided that such request be for an aggregate liquidation
value of at least $2,500,000 and be made no later than October 31, 1996. The
Preferred Stock accrues cash dividends at the rate of 8% per annum, or 10% per
annum if paid in additional shares of Preferred Stock, through April 30, 1999.
The Company has the option to purchase the
F-21
<PAGE> 92
COMMODORE MEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
14. SUBSEQUENT EVENTS (UNAUDITED)--(CONTINUED)
Preferred Stock at any time for a price equal to its liquidation value plus
accrued dividends. However, if the Company does not purchase the Preferred Stock
in the case of a change in control, an initial public offering, certain asset
sales or under certain circumstances, the dividend rate increases by four
hundred basis points. In connection with the Preferred Stock Facility, the
Company issued to the CIBC Merchant Fund a warrant to purchase 54,360 shares of
the Company's Class A Common Stock, at an exercise price of $.01 per warrant,
which is immediately exercisable and expires April 30, 2000. Should the
Preferred Stock not be redeemed by October 31, 1996, the Company is obligated to
issue additional warrants for 1% of the Company's fully-diluted common equity
for each $2,500,000 of Preferred Stock liquidation value outstanding.
In May 1996, the Company filed a Registration Statement on Form S-1 with
the Securities and Exchange Commission for a primary and secondary public
offering of shares of Class A Common Stock. In connection with this offering,
the Company's Common Stock was split 7.2 for 1. The consolidated financial
statements have been restated to retroactively reflect this split.
F-22
<PAGE> 93
REPORT OF INDEPENDENT AUDITORS
The Partners
Media VI
We have audited the accompanying balance sheet of Media VI as of December
31, 1995, and the related statement of operations, partners' equity and cash
flows for the year ended December 31, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Media VI at December 31,
1995, and the results of its operations and its cash flows for the year ended
December 31, 1995 in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
New York, New York
April 26, 1996
F-23
<PAGE> 94
MEDIA VI
BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31,
1996
DECEMBER 31, -----------
1995
------------ (unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash............................................................. $ 57,762 $ 36,635
Accounts receivable, net of allowance for doubtful accounts of
$12,200 in 1995 and $10,600 in 1996........................... 284,941 183,821
Due from Commodore Media, Inc. (Note 1).......................... -- 28,169
Prepaid expenses and other current assets........................ 9,666 8,941
---------- ----------
Total current assets..................................... 352,369 257,566
Property and equipment, at cost less accumulated depreciation...... 782,690 769,065
Intangible assets at cost, less accumulated amortization........... 2,147,258 2,134,434
Other assets....................................................... 1,340 1,340
---------- ----------
Total assets............................................. $3,283,657 $ 3,162,405
========== ==========
LIABILITIES AND PARTNERS' EQUITY
Current liabilities:
Accounts payable................................................. $ 9,613 $ 21,319
Accrued expenses and other current liabilities................... 54,949 17,477
Current portion of long-term debt................................ 119,185 119,185
---------- ----------
Total current liabilities................................ 183,747 157,981
Long term debt..................................................... 2,152,371 2,122,575
Partners' equity................................................... 947,539 881,849
---------- ----------
Total liabilities and partners' equity................... $3,283,657 $ 3,162,405
========== ==========
</TABLE>
See notes to financial statements.
F-24
<PAGE> 95
MEDIA VI
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
1995 ---------------------------
------------ 1995 1996
----------- -----------
(unaudited) (unaudited)
<S> <C> <C> <C>
Broadcast revenue...................................... $2,131,480 $ 519,981 $ 230,507
Less agency commissions................................ 138,807 34,241 15,117
---------- -------- --------
Net broadcast revenue.................................. 1,992,673 485,740 215,390
Net JSA revenue (Note 1)............................... -- -- 79,893
---------- -------- --------
Net revenue............................................ 1,992,673 485,740 295,283
Operating expenses:
Programming, technical and news...................... 108,591 24,585 23,983
Sales and promotion.................................. 973,219 217,484 125,572
General and administrative........................... 410,528 71,356 94,951
Depreciation and amortization........................ 149,160 38,242 26,450
---------- -------- --------
Income (loss) from operations.......................... 351,175 134,073 24,327
Interest expense, net.................................. (215,966) (57,069) (46,232)
---------- -------- --------
Net income (loss)...................................... $ 135,209 $ 77,004 $ (21,905)
========== ======== ========
</TABLE>
See notes to financial statements.
F-25
<PAGE> 96
MEDIA VI
STATEMENTS OF PARTNERS' EQUITY
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
1995 ---------------------------
------------ 1995 1996
----------- -----------
(unaudited) (unaudited)
<S> <C> <C> <C>
Partners' equity, beginning of period.................. $911,332 $ 911,332 $ 947,539
Net income (loss)...................................... 135,209 77,004 (21,905)
Distributions to partners.............................. (99,002) -- (43,785)
-------- -------- --------
Partners' equity, end of period........................ $947,539 $ 988,336 $ 881,849
======== ======== ========
</TABLE>
See notes to financial statements.
F-26
<PAGE> 97
MEDIA VI
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
1995 ---------------------------
------------ 1995 1996
----------- -----------
(unaudited) (unaudited)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)...................................... $ 135,209 $ 77,004 $ (21,905)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization........................ 149,160 38,242 26,450
Changes in current assets and liabilities:
(Increase) decrease in accounts receivable........... (27,328) 20,599 101,120
(Increase) in Due from Commodore Media, Inc.......... (28,169)
(Increase) decrease in prepaid expenses and other
current assets.................................... (572) -- 725
(Decrease) increase in accounts payable.............. (15,044) (23,373) 11,706
Increase (decrease) in accrued expenses and other
current liabilities............................... 16,333 (27,869) (37,472)
--------- -------- --------
Net cash provided by operating activities.............. 257,758 84,603 52,455
--------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment.................... (8,048) (1,617) --
Proceeds from sale of property and equipment........... 21,936 -- --
--------- -------- --------
Net cash provided by (used in) investing activities.... 13,888 (1,617) --
--------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Distributions to partners.............................. (99,002) -- (43,786)
Proceeds from debt..................................... 650,000 -- --
Repayment of debt...................................... (854,419) (53,992) (29,796)
--------- -------- --------
Net cash used in financing activities.................. (303,421) (53,992) (73,582)
--------- -------- --------
Net (decrease) increase in cash........................ (31,775) 28,994 (21,127)
Cash, beginning of period.............................. 89,537 89,537 57,762
--------- -------- --------
Cash, end of period.................................... $ 57,762 $ 118,531 $ 36,635
========= ======== ========
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for interest................................. $ 206,884 $ 46,538 $ 48,304
========= ======== ========
</TABLE>
See notes to financial statements.
F-27
<PAGE> 98
MEDIA VI
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
1. NATURE OF BUSINESS AND ORGANIZATION
Media VI (the "Company") was formed under the laws of the State of Florida
as a general partnership, comprised of six general partners for the primary
purpose of owning and operating radio stations WAXE-AM and WAVW-FM located in
Vero Beach/Ft. Pierce, Florida.
In August 1995, the Company acquired substantially all of the assets of
Media 5, Inc. ("Media 5"), consisting primarily of radio station WKQS-FM, in a
business combination between companies under common control, similar to a
pooling of interest, for a 6% interest in the Company. Accordingly, the results
of operations of Media 5 have been included in the Company's statement of
operations for the year ended December 31, 1995.
On February 16, 1996, the Company entered into an Asset Purchase Agreement
(the "Agreement") to sell substantially all of the assets relating to the
operation of WAXE-FM, WAVW-FM and WKQS-FM (collectively, the "Stations") to
Commodore Media, Inc. ("Commodore") for $8,000,000 in cash. Commodore paid an
initial cash deposit of $400,000, which is being held by an escrow agent until
the closing date, which is expected to occur during 1996.
In conjunction with the Agreement, the Company entered into a Joint Sales
Agreement ("JSA") with Commodore. Under the terms of the JSA, Commodore
purchases all available broadcast air time from the Company for a fee of $60,000
per month. Additionally, Commodore assumed responsibility for a majority of the
operating expenses of the Stations. The JSA will terminate upon closing of the
Agreement.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenue Recognition/Credit Risk
The Company's primary source of revenue is the sale of airtime to
advertisers. Revenue is recorded when the advertisements are broadcast. The
Company provides advertising time to national, regional, and local advertisers
within the geographic areas in which the Company operates. Credit is extended
based on an evaluation of the customer's financial condition; generally, advance
payment is not required. Credit losses are provided for in the financial
statements in the form of an allowance for doubtful accounts.
During the three months ended March 31, 1996, the Company recognized
approximately $80,000 additional revenue related to the JSA with Commodore Media
(Note 1).
Cash is deposited in a major money center financial institution, to which
the Company is exposed to credit risk. At times, deposited amounts may exceed
federally insured limits.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Barter Transactions
Barter transactions represent the exchange of commercial air time for
programming, merchandise or services. These transactions are included in
broadcast revenue and both sales and promotion and general and administrative
expenses at the fair value of the merchandise or services received. Barter
revenue is recorded when advertisements are broadcast and barter expense is
recognized when the merchandise or services are received.
F-28
<PAGE> 99
MEDIA VI
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
For the year ended December 31, 1995, barter revenue and expense amounted
to $96,651 and $85,103, respectively.
Income Taxes
The Company is not subject to federal or state income taxes. Income or loss
from the Company's operations is included in the determination of taxable income
of the respective partners, pursuant to the terms of the partnership agreement.
Property and Equipment
Property and equipment are stated at cost. Depreciation is provided for
using the straight-line method based on the following schedule of estimated
useful lives:
<TABLE>
<CAPTION>
ESTIMATED LIFE
CLASSIFICATION (YEARS)
<S> <C>
Land improvements.............................................. 15
Building and building improvements............................. 31
Furniture, fixtures and equipment.............................. 5
Broadcasting and technical equipment........................... 5-20
Vehicles....................................................... 3-5
</TABLE>
Expenditures for maintenance and repairs are charged to operations as
incurred. Expenditures for betterments and major renewals are capitalized and,
therefore, are included in property and equipment.
Intangible Assets
Intangible assets are being amortized using the straight-line method based
on the following schedule of estimated useful lives:
<TABLE>
<CAPTION>
ESTIMATED LIFE
CLASSIFICATION (YEARS)
<S> <C>
FCC licenses................................................... 40
Goodwill....................................................... 40
Deferred financing costs....................................... 4-7
</TABLE>
It is the Company's policy to account for intangible assets at the lower of
amortized cost or fair value. As part of an ongoing review of the valuation and
amortization of intangible assets, management assesses the carrying value of the
Company's intangible assets if facts and circumstances suggest that it may have
been impaired, If this review indicates that the intangible assets will not be
recoverable as determined by an undiscounted cash flow analysis of the Company
over the remaining amortization period, the carrying value of the Company's
intangible assets would be reduced to its estimated fair value.
In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121, Accounting for the Impairment of
Long-Lived Assets to be Disposed of ("FAS 121"), effective for fiscal years
beginning after December 15, 1995. The new rules establish standards for the
recognition and measurement of impairment losses on long-lived assets and
certain intangible assets. The Company expects the adoption of FAS 121 will not
have a material effect on its financial statements.
Interim Financial Information
Financial information as of and for the three months ended March 31, 1996
and for the three months ended March 31, 1995 is unaudited. In the opinion of
management, all adjustments of a normal and recurring
F-29
<PAGE> 100
MEDIA VI
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
nature, and those that are necessary for a fair presentation of the results as
of and for such periods, have been included. Interim results are not necessarily
indicative of the results for a full year.
3. ACQUISITION OF MEDIA 5
The separate results of the combining entities prior to the combination for
the seven months ended July 31, 1995 are as follows:
<TABLE>
<CAPTION>
MEDIA VI MEDIA 5
<S> <C> <C>
Net revenue............................................ $960,142 $241,803
Less intercompany transactions......................... 49,360 --
-------- --------
910,782 241,803
======== ========
Net income (loss)...................................... $181,043 $(30,133)
======== ========
</TABLE>
4. PROPERTY AND EQUIPMENT
Property and equipment consists of the following at December 31, 1995:
<TABLE>
<S> <C>
Land and land improvements....................................... $ 216,671
Building and building improvements............................... 283,909
Furniture, fixtures and equipment................................ 76,776
Broadcasting and technical equipment............................. 611,101
Vehicles......................................................... 13,300
----------
1,201,757
Less accumulated depreciation.................................... (419,067)
----------
Property, plant and equipment, net............................... $ 782,690
==========
</TABLE>
5. INTANGIBLE ASSETS
Intangible assets consists of the following at December 31, 1995:
<TABLE>
<S> <C>
FCC License...................................................... $2,295,349
Goodwill......................................................... 132,510
Deferred financing costs......................................... 48,617
----------
2,476,476
Less accumulated amortization.................................... (329,218)
----------
Other intangible assets, net..................................... $2,147,258
==========
</TABLE>
F-30
<PAGE> 101
MEDIA VI
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
6. LONG-TERM DEBT
At December 31, 1995, the Company's long-term debt consisted of the
following:
<TABLE>
<S> <C>
First Mortgage payable to Barnett Bank of the Treasure Coast (the
"First Mortgage").............................................. $1,675,723
Second Mortgage payable to Barnett Bank of the Treasure Coast
(the "Second Mortgage")........................................ 595,833
----------
2,271,556
Less current maturities.......................................... (119,185)
----------
Total long-term debt............................................. $2,152,371
==========
</TABLE>
The First Mortgage
Principal is being repaid in equal monthly installments of approximately
$2,200, with a lump sum payment of the balance due on May 31, 2002. Interest is
payable monthly at a variable rate equal to the Barnett Bank prime, which
fluctuated from a low of 8.5% to a high of 9% during 1995. The First Mortgage is
secured by an interest in all of the Company's assets and a first mortgage on
all real property owned or subsequently acquired prior to maturity.
The Second Mortgage
Principal is being repaid in equal monthly installments of approximately
$7,700, with the final payment due on May 17, 2002. Interest is payable monthly
at a variable rate equal to Barnett Bank prime, which fluctuated from a low of
8.5% to a high of 9% during 1995. The Second Mortgage is secured by an interest
in all the Company's assets and a second mortgage on all real property.
Aggregate maturities of long-term debt due within the next five years
ending December 31, are as follows:
<TABLE>
<S> <C>
1996............................................................. $ 119,185
1997............................................................. 119,185
1998............................................................. 119,185
1999............................................................. 119,185
2000............................................................. 119,185
Thereafter....................................................... 1,675,631
----------
$2,271,556
==========
</TABLE>
7. LEASE COMMITMENTS
The principle types of property leased by the Company consist of land used
for its broadcast tower, vehicles, computer software and other office equipment.
The Company's minimum lease commitments under all non-cancelable operating
leases are as follows:
<TABLE>
<S> <C>
1996............................................................... $39,408
1997............................................................... 19,171
1998............................................................... 9,828
1999............................................................... 3,259
2000............................................................... 1,200
Thereafter......................................................... 10,800
-------
$83,666
=======
</TABLE>
F-31
<PAGE> 102
MEDIA VI
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
7. LEASE COMMITMENTS--(CONTINUED)
The Company's rental expense, covering the use of a modular office unit,
amounted to approximately $7,800 for the year ended December 31, 1995, and has
been included in general and administrative expenses.
8. LEGAL PROCEEDINGS
The Company is involved in various legal proceedings from time to time in
the normal course of business. In management's opinion, the litigation with
which the Company is currently involved, individually and in the aggregate, is
not material to the Company's financial condition or the results of its
operations.
9. RELATED PARTY TRANSACTIONS
The sole shareholder of one of the Company's general partners is an
attorney employed by a law firm which provides professional services to the
Company on a continuing and regular basis. During 1995, fees of approximately
$14,000 were paid to this firm.
Additionally, the sole shareholder of one of the Company's general partners
is the owner of a local business with which the Company's radio stations conduct
business. During 1995, the Company recorded sales of approximately $7,000
related to advertisements aired for this partner's business.
10. DEFINED CONTRIBUTION RETIREMENT PLAN
The Company has a 401(k) Plan (the "Plan") for the benefit of all
employees. Participants may elect to contribute a percentage of their annual
compensation to the Plan, subject to applicable Internal Revenue Service
limitations. The Company makes a matching contribution to the Plan, not to
exceed 1% of the employees' contributions. The employer's share of the
contributions vest according to a predetermined schedule. Total contributions
made by the Company for the year ended December 31, 1995 amounted to $9,181.
F-32
<PAGE> 103
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Adventure Communications--Huntington
(Division of Adventure Communications, Inc.)
We have audited the accompanying balance sheets of Adventure
Communications--Huntington (Division of Adventure Communications, Inc.) as of
December 31, 1995 and 1994, and the related statements of operations, division's
equity (deficit), and cash flows for the three years ended December 31, 1995.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Adventure
Communications--Huntington (Division of Adventure Communications, Inc.) as of
December 31, 1995 and 1994, and the results of its operations and its cash flows
for the three years ended December 31, 1995 in conformity with generally
accepted accounting principles.
BROWN, EDWARDS & CO., LLP
Bluefield, West Virginia
May 1, 1996
F-33
<PAGE> 104
ADVENTURE COMMUNICATIONS--HUNTINGTON
(DIVISION OF ADVENTURE COMMUNICATIONS, INC.)
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
----------------------- -----------------------
1994 1995 1995 1996
<S> <C> <C> <C> <C>
(UNAUDITED) (UNAUDITED)
ASSETS
CURRENT ASSETS
Cash........................................ $ 271,000 $ 105,926 $ 292,881 $ 169,814
Accounts receivable, less allowance for
doubtful accounts of $48,000, $66,000,
$50,992 and $74,717 on December 31, 1994
and 1995 and March 31, 1995 and 1996,
respectively (Note 7).................... 535,031 647,986 439,398 561,348
Prepaid assets.............................. 8,310 1,325 14,422 1,045
Other receivables........................... 40,162 43,120 27,948 31,718
Deferred income taxes (Note 5).............. -- 26,400 -- 26,400
---------- ---------- ---------- ----------
Total current assets................ 854,503 824,757 774,649 790,325
---------- ---------- ---------- ----------
PROPERTY AND EQUIPMENT, NET
(Notes 3 and 7)............................. 1,090,102 1,225,957 1,102,838 1,186,035
---------- ---------- ---------- ----------
INTANGIBLES, NET (Note 4)..................... 59,727 135,140 56,625 130,269
---------- ---------- ---------- ----------
$2,004,332 $2,185,854 $1,934,112 $2,106,629
========== ========== ========== ==========
LIABILITIES AND
DIVISION'S EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses....... $ 148,848 $ 177,321 $ 163,441 $ 76,004
Inter-divisional payable (Note 6)........... 2,327,152 2,282,170 2,263,962 2,258,038
---------- ---------- ---------- ----------
Total current liabilities........... 2,476,000 2,459,491 2,427,403 2,334,042
---------- ---------- ---------- ----------
Commitment (Note 7)........................... -- -- -- --
DIVISION'S EQUITY (DEFICIT)................... (471,668) (273,637) (493,291) (227,413)
---------- ---------- ---------- ----------
$2,004,332 $2,185,854 $1,934,112 $2,106,629
========== ========== ========== ==========
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
F-34
<PAGE> 105
ADVENTURE COMMUNICATIONS--HUNTINGTON
(DIVISION OF ADVENTURE COMMUNICATIONS, INC.)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
------------------------------------ -----------------------
1993 1994 1995 1995 1996
<S> <C> <C> <C> <C> <C>
(UNAUDITED) (UNAUDITED)
Advertising revenue............... $2,370,460 $2,718,483 $3,352,771 $700,746 $721,678
Agency commissions................ 109,983 (144,313) (187,292) (35,875) (48,607)
---------- ---------- ---------- -------- --------
Net revenue............. 2,260,477 2,574,170 3,165,479 664,871 673,071
Other operating revenue........... 27,218 22,060 36,225 5,550 7,649
---------- ---------- ---------- -------- --------
Total revenue........... 2,287,695 2,596,230 3,201,704 670,421 680,720
---------- ---------- ---------- -------- --------
Operating expenses (Note 6):
Station operating expenses...... 1,472,000 1,657,235 2,118,139 505,591 406,651
Corporate expenses.............. 369,077 413,117 572,980 145,052 145,052
Depreciation.................... 88,635 97,374 230,600 48,734 48,471
Amortization.................... 8,932 9,511 13,587 3,102 4,871
---------- ---------- ---------- -------- --------
1,938,644 2,177,237 2,935,306 702,479 605,045
---------- ---------- ---------- -------- --------
Operating income
(loss)................ 349,051 418,993 266,398 (32,058) 75,675
Interest income................... 4,558 7,753 7,273 2,193 1,366
---------- ---------- ---------- -------- --------
Income (loss) before
taxes................. 353,609 426,746 273,671 (29,865) 77,041
(Provision) benefit for income
taxes (Note 5).................. -- -- (75,640) 8,242 (30,816)
---------- ---------- ---------- -------- --------
Net income (loss)....... $ 353,609 $ 426,746 $ 198,031 $(21,623) $ 46,224
========== ========== ========== ======== ========
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
F-35
<PAGE> 106
ADVENTURE COMMUNICATIONS--HUNTINGTON
(DIVISION OF ADVENTURE COMMUNICATIONS, INC.)
STATEMENTS OF DIVISION'S EQUITY (DEFICIT)
YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995
<TABLE>
<S> <C>
Balance, December 31, 1992...................................................... $(1,252,023)
1993 net income............................................................... 353,609
-----------
Balance, December 31, 1993...................................................... (898,414)
1994 net income............................................................... 426,746
-----------
Balance, December 31, 1994...................................................... (471,668)
1995 net income............................................................... 198,031
-----------
Balance, December 31, 1995...................................................... (273,637)
Three months ended March 31, 1996 net income (unaudited)...................... 46,224
-----------
Balance, March 31, 1996 (unaudited)............................................. $ (227,413)
===========
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
F-36
<PAGE> 107
ADVENTURE COMMUNICATIONS--HUNTINGTON
(DIVISION OF ADVENTURE COMMUNICATIONS, INC.)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
----------------------------------- ---------------------
1993 1994 1995 1995 1996
<S> <C> <C> <C> <C> <C>
(UNAUDITED) (UNAUDITED)
CASH FLOW FROM OPERATING ACTIVITIES
Net income (loss)........................ $ 353,609 $ 426,746 $ 198,031 $ (21,623) $ 46,224
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation and amortization......... 97,567 106,885 244,187 51,836 53,342
Deferred income taxes................. -- -- (26,400) -- --
Changes in current assets and
liabilities:
(Increase) decrease in:
Accounts receivable................. (77,872) (115,602) (112,955) 95,633 86,638
Prepaid expenses and other
receivables...................... 25,720 15,506 4,027 6,102 11,682
(Decrease) increase in:
Accounts payable and accrued
expenses......................... 2,317 (5,421) 28,473 14,593 (101,317)
----------- --------- --------- --------- ---------
Net cash provided by operating
activities..................... 401,341 428,114 335,363 146,541 96,569
----------- --------- --------- --------- ---------
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of property and
equipment............................. (52,697) (391,518) (366,455) (61,470) (8,549)
Purchase of intangible assets............ -- (35,000) (89,000) -- --
----------- --------- --------- --------- ---------
Net cash used in investing
activities..................... (52,697) (426,518) (455,455) (61,470) (8,549)
----------- --------- --------- --------- ---------
CASH FLOW FROM FINANCING ACTIVITIES
Increase in inter-divisional payable..... 369,077 813,117 975,018 136,810 175,868
Repayment of inter-divisional payable.... (580,000) (850,000) (1,020,000) (200,000) (200,000)
----------- --------- --------- --------- ---------
Net cash used in financing
activities..................... (210,923) (36,883) (44,982) (63,190) (24,132)
----------- --------- --------- --------- ---------
Increase (decrease) in cash...... 137,721 (35,287) (165,074) 21,881 63,888
CASH
Beginning................................ 168,566 306,287 271,000 271,000 105,926
----------- --------- --------- --------- ---------
Ending................................... $ 306,287 $ 271,000 $ 105,926 $ 292,881 $ 169,814
=========== ========= ========= ========= =========
SUPPLEMENTAL SCHEDULE OF
NONCASH TRANSACTIONS
Barter revenue........................... $ 142,065 $ 181,861 $ 233,219 $ 56,406 $ 62,658
=========== ========= ========= ========= =========
Barter expense........................... $ 142,370 $ 202,653 $ 163,100 $ 26,493 $ 30,082
=========== ========= ========= ========= =========
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
F-37
<PAGE> 108
ADVENTURE COMMUNICATIONS--HUNTINGTON
(DIVISION OF ADVENTURE COMMUNICATIONS, INC.)
NOTES TO FINANCIAL STATEMENTS
(INFORMATION FOR THE THREE MONTHS ENDED
MARCH 31, 1995 AND 1996 IS UNAUDITED)
DECEMBER 31, 1995
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES
Nature of business:
Adventure Communications--Huntington (the Division) is a division of
Adventure Communications, Inc. (the Company). The Company's principal business
is the operation of AM and FM radio broadcasting stations in the areas of
Bluefield and Huntington, West Virginia; Statesville, North Carolina; and Hilton
Head, South Carolina. The Division operates WKEE-AM and FM, WBVB-FM, WZZW-AM and
WIRO-AM (the Stations).
The Company also has joint operating and marketing agreements with other
radio stations located in the Huntington area. Under these agreements, the
Company is responsible for various promotional and marketing activities of the
Stations. Revenue and expenses resulting from these agreements are included in
the Division's operations.
On April 8, 1996, the Company entered into an asset purchase agreement to
sell substantially all the assets relating to the operations of the Stations
(Note 11).
Revenue recognition:
Advertising revenue is recognized in the accounting period which
corresponds with the broadcast of the advertisement. Barter revenue is reported
when advertisements are broadcast and barter merchandise or services received
are expensed when used. Barter transactions are valued at the market value of
the broadcast time which approximates the market value of the product or
services received.
Property and equipment:
Property and equipment are recorded at cost and are depreciated over their
estimated useful lives using straight-line and accelerated methods.
Valuation of receivables:
The Division provides for bad debts under the reserve method which charges
current operations for estimated uncollectibles based upon the Division's
collection experience and an evaluation of the receivables at year end.
Intangible assets:
Acquisition costs (non-compete covenants and goodwill) in excess of the net
tangible assets of acquired radio stations are amortized on a straight-line
basis over periods of up to 15 years, and are included in the financial
statements at cost less accumulated amortization.
Income taxes:
Income taxes are provided for the tax effects of transactions reported in
the financial statements and consist of taxes currently due plus deferred taxes
related primarily to the allowance for doubtful accounts which is not deductible
for income tax return purposes until the accounts are written off as
uncollectible. The deferred tax asset represents the future tax return
deduction.
Effective January 1, 1995, the Company revoked its S Corporation election
and became a taxable entity. Previously, its income and losses were included in
the personal tax returns of the stockholders, and the Company did not record an
income tax provision or benefit.
F-38
<PAGE> 109
ADVENTURE COMMUNICATIONS--HUNTINGTON
(DIVISION OF ADVENTURE COMMUNICATIONS, INC.)
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION FOR THE THREE MONTHS ENDED
MARCH 31, 1995 AND 1996 IS UNAUDITED)
DECEMBER 31, 1995
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
Statement of cash flows:
Separate disclosures have not been made for cash paid for interest and
income taxes because these amounts are included in inter-divisional transactions
with the Company.
Use of estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts and disclosures. Accordingly,
actual results could differ from those estimates.
NOTE 2. ACQUISITIONS
In November 1994, the Company purchased selected assets of an AM radio
station in Milton, West Virginia. The acquisition was accounted for by the
purchase method, and the statement of income includes the results of operations
of this station from the date of acquisition.
<TABLE>
<S> <C>
Property and equipment............................................ $365,000
Intangibles....................................................... 35,000
--------
$400,000
========
</TABLE>
In June 1995, the Company purchased selected assets of an AM radio station
in Ironton, Ohio. The acquisition was accounted for by the purchase method, and
the statement of income includes the results of operations of this station from
the date of acquisition.
<TABLE>
<S> <C>
Property and equipment............................................ $211,000
Intangibles....................................................... 89,000
--------
$300,000
========
</TABLE>
Pro forma results of operations from these acquisitions were not material
to the Division's operations. Therefore, such information has not been
presented.
NOTE 3. PROPERTY AND EQUIPMENT
Major classes of property and equipment are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
------------------------- -------------------------
1994 1995 1995 1996
<S> <C> <C> <C> <C>
Land and improvements............. $ 50,000 $ 60,000 $ 50,000 $ 60,000
Buildings and improvements........ 520,557 550,557 520,557 550,557
Broadcasting equipment............ 1,482,136 1,735,498 1,482,136 1,735,498
Furniture and fixtures............ 119,846 124,756 141,681 124,756
Transportation equipment.......... 4,480 22,280 22,280 22,280
Computer and office equipment..... 137,033 187,416 158,868 195,965
---------- ---------- ---------- ----------
2,314,052 2,680,507 2,375,522 2,689,056
Less accumulated depreciation..... 1,223,950 1,454,550 1,272,684 1,503,021
---------- ---------- ---------- ----------
$1,090,102 $1,225,957 $1,102,838 $1,186,035
========== ========== ========== ==========
</TABLE>
F-39
<PAGE> 110
ADVENTURE COMMUNICATIONS--HUNTINGTON
(DIVISION OF ADVENTURE COMMUNICATIONS, INC.)
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION FOR THE THREE MONTHS ENDED
MARCH 31, 1995 AND 1996 IS UNAUDITED)
DECEMBER 31, 1995
NOTE 4. INTANGIBLES
Intangibles are stated at cost, net of amortization and consist of the
following:
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
--------------------- ---------------------
1994 1995 1995 1996
<S> <C> <C> <C> <C>
Non-compete covenant.................... $ 10,000 $ 20,000 $ 10,000 $ 20,000
Goodwill................................ 99,317 163,317 99,317 163,317
License fees............................ 15,000 30,000 15,000 30,000
-------- -------- ------- --------
124,317 213,317 124,317 213,317
Less accumulated amortization........... 64,590 78,177 67,692 83,048
-------- -------- ------- --------
$ 59,727 $135,140 $ 56,625 $130,269
======== ======== ======= ========
</TABLE>
NOTE 5. INCOME TAXES
The (provision) benefit for income taxes consists of the following
components:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED MARCH 31,
DECEMBER 31, -------------------
1995 1995 1996
<S> <C> <C> <C>
Current (expense) benefit.......................... $ (102,040) $8,242 $(30,816)
Deferred........................................... 26,400 -- --
------------ ------ --------
(Provision) benefit for income taxes.......... $ (75,640) $8,242 $(30,816)
========== ====== ========
</TABLE>
Income tax (expense) benefit differs from the statutory federal rate of 34%
as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED MARCH 31,
DECEMBER 31, -------------------
1995 1995 1996
<S> <C> <C> <C>
Tax (expense) benefit.............................. $ (109,468) $4,520 $(30,816)
Non-deductible items............................... (4,172) -- --
Change in tax status............................... 38,000 3,722 --
------------ ------ --------
(Provision) benefit for income taxes.......... $ (75,640) $8,242 $(30,816)
========== ====== ========
</TABLE>
As discussed in Note 1, the Company changed its tax status from nontaxable
to taxable effective for 1995. Accordingly, the deferred tax asset of
approximately $38,000 at the date that the termination election became effective
has been recorded through a charge to the tax provision for 1995.
NOTE 6. INTER-DIVISIONAL TRANSACTIONS
The Company has allocated to the Division various expenses it incurred for
corporate services, overhead and interest costs. The amounts included in
corporate services and overhead allocations are comprised mainly of corporate
office salaries, related payroll taxes and employee benefits, professional fees
and administrative expenses. These costs have been allocated based on revenues
of the Division compared to total revenues of the Company. Management believes
the amounts allocated to the Division have been computed and charged to the
Division on a reasonable basis.
F-40
<PAGE> 111
ADVENTURE COMMUNICATIONS--HUNTINGTON
(DIVISION OF ADVENTURE COMMUNICATIONS, INC.)
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION FOR THE THREE MONTHS ENDED
MARCH 31, 1995 AND 1996 IS UNAUDITED)
DECEMBER 31, 1995
NOTE 6. INTER-DIVISIONAL TRANSACTIONS--(CONTINUED)
The Division is obligated to the Company for monies received from the
Company for the original purchase of the Stations as well as the allocated
expenses mentioned above. The Division, in return, transfers cash to the Company
that is in excess of its operating needs. These transactions are conducted on an
interest free basis. The inter-divisional payable is analyzed below:
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
-------------------------- -------------------------
1994 1995 1995 1996
<S> <C> <C> <C> <C>
Balance, beginning....................... $2,364,035 $ 2,327,152 $2,327,152 $2,282,170
Allocations of corporate costs to the
Division............................... 413,117 675,018 136,810 175,868
Purchase of Stations..................... 400,000 300,000 -- --
Cash transfers........................... (850,000) (1,020,000) (200,000) (200,000)
---------- ----------- ---------- ----------
Balance, ending.......................... $2,327,152 $ 2,282,170 $2,263,962 $2,258,038
========== =========== ========== ==========
</TABLE>
NOTE 7. COMMITMENT
Adventure Communications Inc. is obligated for long-term debt of
approximately $6,900,000 for which substantially all assets of the Company
(including the Division) are pledged as collateral. At December 31, 1995, the
book value of total assets of the Company exceeds the long-term debt.
Approximately $3,700,000 of the debt is also secured by a $4,000,000 life
insurance policy on the majority stockholder of the Company.
A note payable to the majority stockholder of the Company of $2,400,000 is
included in the $6,900,000 debt referred to above.
NOTE 8. EMPLOYEE BENEFIT PLANS
The Company has a contributory profit sharing plan covering all full time
employees with one or more years of service. The plan provides for annual
employer contributions on a discretionary basis as determined by the Board of
Directors. No contributions were made to the plan in 1993, 1994 or 1995.
The Company also has a 401(k) retirement plan, whereby participants may
contribute a percentage of their compensation.
The Company's matching contribution percentage (which is determined
annually by the Company) is limited to 10% of the participant's compensation for
each plan year. The Division's contributions were approximately $8,600, $9,400
and $8,200 for the years ended December 31, 1993, 1994 and 1995, respectively.
NOTE 9. OPERATING LEASES
The Division leases certain transmission towers and automobiles under
non-cancelable lease agreements. These leases have been classified as operating
leases; and accordingly, all rents are charged to operations as incurred.
F-41
<PAGE> 112
ADVENTURE COMMUNICATIONS--HUNTINGTON
(DIVISION OF ADVENTURE COMMUNICATIONS, INC.)
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION FOR THE THREE MONTHS ENDED
MARCH 31, 1995 AND 1996 IS UNAUDITED)
DECEMBER 31, 1995
NOTE 9. OPERATING LEASES--(CONTINUED)
The following is a schedule by years of future minimum rental payments
required under operating leases that have initial or remaining noncancelable
lease terms in excess of one year as of December 31, 1995:
<TABLE>
<S> <C>
YEAR ENDING DECEMBER 31:
1996............................................................... $15,630
1997............................................................... 8,500
1998............................................................... 2,400
1999............................................................... 2,400
2000............................................................... 2,400
-------
Total minimum payments required.................................... $31,330
=======
</TABLE>
Lease expense was approximately $30,800, $28,200 and $15,630 for 1993, 1994
and 1995, respectively.
NOTE 10. DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amount of the inter-divisional payable approximates fair
value. It is included in the financial statements as a current liability due to
the pending sales discussed in Note 11. The inter-divisional payable will be
satisfied by the proceeds of the sale. In the financial statements of the
Company, all inter-divisional payables/receivables are eliminated.
NOTE 11. SUBSEQUENT EVENT
On April 8, 1996, the Company entered into an asset purchase agreement to
sell substantially all the assets relating to the operations of the Stations for
$7,765,000. The sale of the Station is contingent based on FCC consent. The
buyer will purchase all of the assets for the Stations, free and clear of any
liabilities, mortgages, liens, pledges, conditions or encumbrances except for
the Stations' cash, rights to refunds or deposits which relate to the period
prior to closing and accounts receivable. Also at closing, $475,000 of the sales
price will be deposited with the indemnification escrow agent. The
indemnification period will be for a period of two (2) years following the
closing. The indemnification by seller and buyer shall be for any losses,
liabilities or damages resulting from untrue representations, breach of warranty
or non-fulfillment of covenants, liabilities not expressly assumed by buyer,
liabilities resulting from operations prior to the closing date for the buyer or
liabilities resulting from operation after the closing date for the seller.
F-42
<PAGE> 113
REPORT OF INDEPENDENT AUDITORS
Board of Directors
Danbury Broadcasting Inc.
We have audited the accompanying balance sheets of Danbury Broadcasting
Inc. as of June 30, 1995 and 1994, and the related statements of operations and
accumulated deficit and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Danbury Broadcasting Inc. as
of June 30, 1995 and 1994, and the results of its operations and its cash flows
for the years then ended in conformity with generally accepted accounting
principles.
PANETH, HABER & ZIMMERMAN LLP
New York, NY
August 18, 1995
F-43
<PAGE> 114
DANBURY BROADCASTING INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30,
------------------------ MARCH 26,
1994 1995 1996
(unaudited)
<S> <C> <C> <C>
CURRENT ASSETS
Cash.................................................... $ 92,716 $ 177,627 $ 422,092
Accounts receivable, net of allowance for doubtful
accounts of $22,000 and $22,738 at June 30, 1994 and
1995, respectively................................... 621,637 700,274 129,407
Due from related party.................................. -- 12,189 43,810
Prepaid expenses........................................ 18,951 36,526 14,598
Other................................................... 7,593 10,165 9,140
---------- ---------- -----------
Total Current Assets............................ 740,897 936,781 619,047
PROPERTY AND EQUIPMENT, at cost, less accumulated
depreciation............................................ 1,508,309 1,120,583 1,002,879
INTANGIBLE ASSETS, less accumulated amortization.......... 1,064,940 1,233,912 1,071,404
OTHER ASSETS.............................................. 5,986 5,258 --
---------- ---------- -----------
$ 3,320,132 $3,296,534 $2,693,330
========== ========== ===========
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT LIABILITIES
Current maturities of long-term debt.................... $ 487,500 $ 225,369 $ 300,745
Advances from affiliate................................. 6,100 -- --
Accounts payable........................................ 49,243 8,842 36,352
Accrued expenses........................................ 245,486 174,021 154,600
Dividend payable........................................ 13,750 -- --
---------- ---------- -----------
Total Current Liabilities....................... 802,079 408,232 491,697
LONG-TERM DEBT, less current maturities................... 2,700,000 3,102,853 2,950,000
---------- ---------- -----------
Total Liabilities............................... 3,502,079 3,511,085 3,441,697
---------- ---------- -----------
COMMITMENTS
REDEEMABLE PREFERRED STOCK
Series A cumulative preferred, 500 shares, nonvoting,
par value $100 per share; authorized, issued and
outstanding. Liquidation preference and redemption
amount $1,000 per share plus accrued dividends....... 500,000 541,250 582,500
---------- ---------- -----------
STOCKHOLDERS' DEFICIENCY
Common stock, par value $.01 per share; authorized 1,000
shares; issued and outstanding 40 shares............. -- -- --
Accumulated deficit..................................... (681,947) (755,801) (1,330,867)
---------- ---------- -----------
Total Stockholders' Deficiency.................. (681,947) (755,801) (1,330,867)
---------- ---------- -----------
$ 3,320,132 $3,296,534 $2,693,330
========== ========== ===========
</TABLE>
See notes to financial statements.
F-44
<PAGE> 115
DANBURY BROADCASTING INC.
STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
<TABLE>
<CAPTION>
YEAR ENDED NINE JULY 1,
JUNE 30, MONTHS 1995
--------------------------- ENDED THROUGH
1994 1995 MARCH 31, MARCH 26,
----------- ----------- 1995 1996
---------- -----------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
REVENUE
Broadcasting revenue.................. $ 3,027,281 $3,451,684 $2,566,181 $ 1,086,935
Less agency commissions............... 260,702 311,768 228,664 97,015
---------- ---------- ---------- -----------
Net Revenue................... 2,766,579 3,139,916 2,337,517 989,920
---------- ---------- ---------- -----------
EXPENSES
Programming........................... 427,896 502,299 384,488 176,639
Technical............................. 93,016 106,475 77,567 96,262
Selling............................... 826,110 865,381 659,034 413,511
General and Administrative............ 770,714 903,627 624,320 557,666
Interest Expense...................... 352,253 347,578 257,570 314,567
Depreciation.......................... 204,543 197,197 140,367 119,552
Amortization.......................... 181,916 236,213 151,332 165,915
Local marketing agreement fees........ -- -- -- (320,376)
---------- ---------- ---------- -----------
Total Expenses................ 2,856,448 3,158,770 2,294,678 1,523,736
---------- ---------- ---------- -----------
NET (LOSS) INCOME....................... (89,869) (18,854 ) 42,839 (533,816)
ACCUMULATED DEFICIT
Beginning of year (period)............ (537,078) (681,947 ) (681,947) (755,801)
Preferred stock dividends............. (55,000) (55,000 ) (41,250) (41,250)
---------- ---------- ---------- -----------
End of year (period).......... $ (681,947) $ (755,801 ) $ (680,358) $(1,330,867)
========== ========== ========== ===========
</TABLE>
See notes to financial statements.
F-45
<PAGE> 116
DANBURY BROADCASTING INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED JULY 1,
JUNE 30, NINE MONTHS 1995
-------------------------- ENDED THROUGH
1994 1995 MARCH 31, MARCH 26,
------------ ----------- 1995 1996
----------- ---------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)...................................... $ (89,869) $ (18,854) $ 42,839 $(533,816)
Adjustments to reconcile net loss to net cash provided
by operating activities:
Depreciation and amortization....................... 386,459 433,410 291,699 285,467
Change in:
Accounts receivable............................... (140,959) (78,637) (59,733) 570,867
Due from related party............................ -- 24,663 (45,940) (31,621)
Prepaid expenses and other current assets......... 1,139 (20,147) (23,263) 22,953
Other assets...................................... 955 (2,749) 2,864 5,258
Accounts payable.................................. (12,950) (42,801) 27,940 27,510
Accrued expenses.................................. 58,485 (71,465) (147,037) (19,421)
--------- ----------- ----------- ---------
Net Cash Provided by Operating Activities...... 203,260 223,420 89,369 327,197
--------- ----------- ----------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Advances from affiliate................................ -- (6,100) (6,100) --
Purchases of property and equipment.................... (59,047) (34,521) (27,710) (5,255)
--------- ----------- ----------- ---------
Net Cash Used in Investing Activities.......... (59,047) (40,621) (33,810) (5,255)
--------- ----------- ----------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Deferred financing costs............................... -- (211,110) (211,110) --
Proceeds of notes payable.............................. (62,500) 3,404,106 3,404,106 --
Repayments of notes payable............................ -- (3,263,384) (3,226,158) (77,477)
Preferred stock dividends.............................. (55,250) (27,500) (27,500) --
--------- ----------- ----------- ---------
Net Cash Used in Financing Activities.................... (117,750) (97,888) (60,662) (77,477)
--------- ----------- ----------- ---------
NET INCREASE (DECREASE) IN CASH.......................... 26,463 84,911 (5,103) 244,465
CASH
Beginning of year...................................... 66,253 92,716 92,716 177,627
--------- ----------- ----------- ---------
End of year............................................ $ 92,716 $ 177,627 $ 87,613 $ 422,092
========= =========== =========== =========
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION
Interest Paid.......................................... $ 354,649 $ 434,894 $ 344,188 $ 262,449
Income Taxes Paid...................................... -- -- -- --
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING
ACTIVITIES
Broadcast equipment acquired through trade-out
transactions........................................ $ 15,475 $ 2,400 $ 2,400 $ --
Broadcast equipment and property exchanged for
favorable tower lease (Note 12)..................... $ -- $ 190,248 $ 190,248 $ --
Unpaid accrual of redeemable preferred stock
dividends........................................... $ -- $ 41,250 $ 27,500 $ 41,250
</TABLE>
See notes to financial statements.
F-46
<PAGE> 117
DANBURY BROADCASTING INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1995
1. SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
Danbury Broadcasting Inc. (the "Company"), a Connecticut corporation,
operates radio stations WRKI-FM and WINE-AM in Danbury, Connecticut. Its
revenues are derived from advertisers consisting primarily of local businesses.
Credit is extended to its advertisers in the normal course of business.
Depreciation and Amortization
Depreciation of property and equipment is computed over the estimated
useful lives of the respective assets using the straight-line method. Estimated
useful lives range from 5 to 20 years. Expenditures for repairs and maintenance
are charged to operations as incurred.
Goodwill, which is included in intangible assets, represents the cost of
acquired assets in excess of values ascribed to the net identified assets and is
being amortized using the straight-line method over 40 years. Costs incurred in
obtaining long-term financing were capitalized and are included in intangible
assets. They are being amortized using the straight-line method (that does not
differ materially from the interest rate method) over the term of the related
debt.
A covenant not to compete, which restricts the seller and the previous
owner from competing with the Company in the Greater Danbury, Connecticut area
for a period of four years, is included in intangible assets. This covenant is
being amortized on a straight-line basis over its four year life.
The stations' broadcast license is being amortized using the straight-line
method over 25 years.
A favorable lease for broadcast tower rental is being amortized using the
straight-line method over its 30 year term.
Non-Monetary Transactions
Barter transactions represent the exchange of unsold advertising time for
merchandise or services. Barter transactions are reported at the estimated fair
value of the product or service received. Revenue is recognized when commercials
are broadcast and merchandise or services obtained are reported when received or
used. For merchandise or services received prior to the broadcast of the
commercial, a liability is provided; conversely, a receivable is established
when the commercial is broadcast prior to the receipt of the merchandise or
services.
Income Taxes
The Company has adopted Statement of Financial Accounting Standards 109
("SFAS 109") and recognizes deferred tax assets and liabilities for temporary
differences between amounts recorded for financial statement and tax purposes.
Reclassification
Certain prior year amounts have been reclassified to conform with current
year presentation.
2. CASH
Cash in the amount of $164,000 and $351,000 (including outstanding checks
of $38,000 and $213,000) shown on the June 30, 1994 and 1995 balance sheets
respectively, was on deposit in a commercial bank located in Fairfield,
Connecticut, of which $100,000 was insured by the FDIC.
F-47
<PAGE> 118
DANBURY BROADCASTING INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
JUNE 30, 1995
3. PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
<TABLE>
<CAPTION>
JUNE 30,
-------------------------
1994 1995
<S> <C> <C>
Land........................................................ $ 209,722 $ 163,583
Building.................................................... 704,314 551,831
Equipment, furniture and fixtures........................... 958,603 980,729
Tower improvements in progress.............................. 36,851 --
---------- ----------
1,909,490 1,696,143
Less accumulated depreciation............................... 401,181 575,560
---------- ----------
$1,508,309 $1,120,583
========== ==========
</TABLE>
4. INTANGIBLE ASSETS
Intangible assets consist of the following:
<TABLE>
<CAPTION>
JUNE 30,
-------------------------
1994 1995
<S> <C> <C>
Goodwill.................................................... $ 192,421 $ 192,421
Deferred financing costs.................................... 61,815 272,925
Covenant not to compete..................................... 550,000 550,000
Stations' licenses.......................................... 618,000 618,000
Favorable lease............................................. -- 190,248
---------- ----------
1,422,236 1,823,594
Less accumulated amortization............................... 357,296 589,682
---------- ----------
$1,064,940 $1,233,912
========== ==========
</TABLE>
5. ACCRUED EXPENSES
Accrued expenses consist of the following:
<TABLE>
<CAPTION>
JUNE 30,
-------------------------
1994 1995
<S> <C> <C>
Accrued commissions......................................... $ 89,000 $ 66,511
Accrued compensation........................................ 30,558 70,000
Accrued interest............................................ 87,656 1,889
Other items................................................. 38,272 35,621
---------- ----------
$245,486 $174,021
========== ==========
</TABLE>
F-48
<PAGE> 119
DANBURY BROADCASTING INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
JUNE 30, 1995
6. LONG TERM DEBT
<TABLE>
<CAPTION>
JUNE 30,
-------------------------
1994 1995
<S> <C> <C>
Term loan payable to United Jersey Bank (UJB) at an interest
rate of 1.5% over the bank's per annum index rate (9% at
June 30, 1995) plus principal payments escalating from
$37,500 quarterly for the year ending June 30, 1995 to
$200,000 quarterly for the period ending December 31,
1999...................................................... $ -- $2,175,000
Revolving loan payable to United Jersey Bank requiring
payment of interest only at 1.5% over the bank's per annum
index rate (9% at June 30, 1995) and payable quarterly.
Payment of the outstanding principal balance is due
December 31, 1999......................................... -- 1,150,000
Capital lease payable....................................... 3,222
Note payable to BCI Growth, L.P ("BCI") at 11% interest only
for the period from July 1, 1992 through June 30, 1993,
payable quarterly. Thereafter, interest at 11% on the
unpaid balance plus principal payments escalating from
$62,500 quarterly for the year ending June 30, 1994 to
$100,000 quarterly for the period ending March 31, 1997.
The note was paid off from the proceeds of the UJB loan.
This note was owed to the holder of the outstanding
warrants. See Note 10..................................... 3,187,500 --
---------- ----------
3,187,500 3,328,222
Less current maturities..................................... 487,500 225,369
---------- ----------
$2,700,000 $3,102,853
========== ==========
</TABLE>
The notes with UJB contain certain restrictive covenants and stipulate
various financial and operating requirements. Included, among other things, are
covenants regarding dividends, operating expenditures, capital expenditures and
debt.
Capital stock, preferred stock, all tangible and intangible assets of the
Company, and a key man life insurance policy of $1,000,000 are pledged as
collateral on the above note. Scheduled maturities of long-term debt during the
next five years ending June 30, are:
<TABLE>
<S> <C>
1996............................................................. $ 225,369
1997............................................................. 377,479
1998............................................................. 500,374
1999............................................................. 675,000
2000............................................................. 1,550,000
----------
$3,328,222
==========
</TABLE>
F-49
<PAGE> 120
DANBURY BROADCASTING INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
JUNE 30, 1995
7. BARTER TRANSACTIONS
The accompanying financial statements include the following barter
transactions:
<TABLE>
<CAPTION>
YEAR ENDED
JUNE 30,
---------------------
1994 1995
<S> <C> <C>
Barter revenue................................................. $255,908 $271,253
======== ========
Barter expenditures............................................ $241,340 $182,821
======== ========
Amounts included in accounts receivable from trade-out
transactions................................................. $ 47,005 $136,493
======== ========
</TABLE>
8. REDEEMABLE PREFERRED STOCK
The Series A cumulative preferred stock carries a liquidation preference of
$1,000 per share and a par value of $100 per share. The Company may redeem the
shares at this price, plus accrued but unpaid dividends, at any time through
June 30, 1997. At the earlier of that date, or an event of default (as defined)
the holder can require the Company to redeem the shares in full, with accrued
but unpaid dividends out of funds "legally available". An event of default
occurred during the year ended June 30, 1995 in that the Company did not pay the
full dividend. This gives the holders of the shares the right to demand
redemption.
The Series A cumulative preferred stock provides for an annual dividend of
$110 per share. Dividends of $55,000 and $13,750 were declared on the preferred
stock and paid for the years ended June 30, 1994 and 1995, respectively. At June
30, 1995, dividends in arrears amounted to $41,250 and were accrued in the
accompanying balance sheet.
9. COMMITMENTS
Operating Leases
During 1995, the Company leased space on a transmitting tower under a five
year lease renewable in five (5) year terms at the Company's option from a
related party (Note 12). Automobiles under operating leases expire in various
years through 1998.
Future minimum annual lease payments, by year and in the aggregate, under
such leases are as follows:
<TABLE>
<S> <C>
1996.............................................................. $ 38,000
1997.............................................................. 32,000
1998.............................................................. 23,000
1999.............................................................. 21,000
2000.............................................................. 9,000
--------
$123,000
========
</TABLE>
Rent expense on the above, for the years ended June 30, 1994 and 1995 was
$44,000 and $46,500, respectively.
Other Commitments
The Company also has various commitments under contracts with a rating
service, programming services, advertising displays and a software license
expiring in various years through 1998.
F-50
<PAGE> 121
DANBURY BROADCASTING INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
JUNE 30, 1995
9. COMMITMENTS--(CONTINUED)
Future annual payments by year and in the aggregate under such commitments
are as follows:
<TABLE>
<S> <C>
1996............................................................... $12,000
1997............................................................... 6,000
1998............................................................... 1,000
-------
$19,000
=======
</TABLE>
10. STOCKHOLDERS' DEFICIENCY
There is an outstanding warrant (the "warrant") issued to BCI in 1992,
giving it the right to purchase up to 80% of the Company's Common Stock for
$0.01 per share. This warrant also allows them the option to acquire 90% of the
common stock if the Company fails to achieve certain cash flow levels after June
30, 1997, as extended. No value has been assigned to this warrant which expires
June 30, 1998.
11. INCOME TAXES
The Company has a net operating loss carryforward of approximately $284,000
which can be carried forward to the years 2008 and 2009 to offset taxable income
resulting in a deferred tax asset of $118,000. Other temporary differences
resulting from differences between book and tax amortization and depreciation
result in a deferred tax asset of approximately $195,000 and $81,000 at June 30,
1994 and 1995, respectively. Total deferred tax assets of approximately $224,000
at June 30, 1994 and $199,000 at June 30, 1995 have been completely offset by a
valuation allowance. The valuation allowance increased by $69,000 during the
year ended June 30, 1994 and decreased by $25,000 during the year ended June 30,
1995.
Income tax benefit for the years ended June 30, 1994 and 1995 differs from
the expected statutory rate for the following reasons:
<TABLE>
<CAPTION>
1994 1995
<S> <C> <C>
Federal, at statutory rates.................................... $(30,500) $ (6,500)
State, net of Federal benefit.................................. (6,500) (1,500)
Nondeductible expenses......................................... 5,500 10,000
Taxable gain on asset transfer................................. -- 23,000
Change in estimate............................................. (37,500) --
--------- ----------
(69,000) 25,000
Change in deferred tax asset valuation allowance............... 69,000 (25,000)
--------- ----------
Tax provision.................................................. $ -- $ --
========= ==========
</TABLE>
12. RETIREMENT PLAN
Employees of the Company may participate in profit sharing/401(k) savings
plan and may elect to make contributions pursuant to a salary reduction
agreement upon meeting length of service and age requirements. The Company can
elect to make discretionary contributions to the profit sharing plan but has not
done so for either year. The Company has matched 20% of individual 401(k)
contributions during the year ended June 30, 1995. The Company's cost amounted
to approximately $4,500.
F-51
<PAGE> 122
DANBURY BROADCASTING INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
JUNE 30, 1995
13. RELATED PARTY TRANSACTIONS
During the year ended June 30, 1995, the Company exchanged its tower and
associated real property with a book value of $190,000 for a favorable lease
with a Partnership formed to improve and rent the tower to the Company and
others. The Partnership has committed to the financing of tower improvements
which will improve the broadcast signal. The Company's lease for placement of
its antenna on the tower at the optimal site is at below market rates. The
Company and the Partnership are related through common control. The favorable
lease has been valued at $190,000, the book value of the property exchanged.
In connection with the tower improvement project, the Company advanced
$12,189 on behalf of the Partnership.
14. SUBSEQUENT EVENT (UNAUDITED)
In March 1996, the outstanding warrants held by BCI (Note 10) were
exercised.
F-52
<PAGE> 123
INDEPENDENT AUDITORS' REPORT
Stockholders and Board of Directors
Q Broadcasting, Inc.
Stamford, Connecticut
We have audited the accompanying balance sheets of Q Broadcasting, Inc. as
of September 30, 1995 and 1994 and the related statements of operations and
deficit and cash flows for each of the three years in the period ended September
30, 1995. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, these financial statements referred to above present
fairly, in all material respects, the financial position of Q Broadcasting, Inc.
as of September 30, 1995 and 1994, and the results of its operations and its
cash flows for each of the three years in the period ended September 30, 1995,
in conformity with generally accepted accounting principles.
HOLTZ RUBENSTEIN & CO., LLP
CERTIFIED PUBLIC ACCOUNTANTS
Melville, New York
February 12, 1996
F-53
<PAGE> 124
Q BROADCASTING, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30,
--------------------------- MARCH 31,
1994 1995 1996
----------- ----------- -----------
(unaudited)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents......................... $ 56,327 $ 831 $ 1,300
Accounts receivable, less allowance for doubtful
accounts of $55,000 in 1994, $58,000 in 1995
and $58,000 as of March 31, 1996............... 652,416 510,971 640,322
Prepaid expenses and other current assets......... 54,288 53,951 94,744
Due from related parties (Note 4)................. 35,433 72,880 46,925
----------- ----------- -----------
Total current assets...................... 798,464 638,633 783,291
PROPERTY AND EQUIPMENT, net (Notes 5 and 7)......... 523,025 407,292 328,517
INTANGIBLES, net (Notes 6 and 8).................... 2,633,683 2,375,195 2,308,451
OTHER ASSETS........................................ 57,131 39,168 37,262
----------- ----------- -----------
$ 4,012,303 $ 3,460,288 $ 3,457,521
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable.................................. $ 70,116 $ 124,646 $ 210,443
Accrued expenses.................................. 113,151 159,316 148,503
Current portion of capital lease obligations
(Notes 5 and 7)................................ 8,695 6,183 5,098
----------- ----------- -----------
Total current liabilities................. 191,962 290,145 364,044
----------- ----------- -----------
CAPITAL LEASE OBLIGATIONS (Notes 5 and 7)........... 10,161 3,981 1,519
----------- ----------- -----------
NOTE PAYABLE--STOCKHOLDERS (Note 9)................. 6,027,893 6,995,290 7,688,074
----------- ----------- -----------
COMMITMENTS (Note 8)
STOCKHOLDERS' DEFICIT:
Common stock, no par value, 1,000 shares
authorized, issued and outstanding............. 1,000 1,000 1,000
Additional paid-in capital........................ 999,000 999,000 999,000
Deficit........................................... (3,217,713) (4,829,128) (5,596,116)
----------- ----------- -----------
(2,217,713) (3,829,128) (4,596,116)
----------- ----------- -----------
$ 4,012,303 $ 3,460,288 $ 3,457,521
=========== =========== ===========
</TABLE>
See notes to financial statements.
F-54
<PAGE> 125
Q BROADCASTING, INC.
STATEMENTS OF OPERATIONS AND DEFICIT
<TABLE>
<CAPTION>
YEARS ENDED SIX MONTHS ENDED
SEPTEMBER 30, MARCH 31,
--------------------------------------- -------------------------
1993 1994 1995 1995 1996
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
(unaudited) (unaudited)
REVENUE......................... $ 1,511,181 $ 2,267,625 $ 2,508,867 $ 1,181,990 $ 1,690,948
Less: Commissions and fees.... 127,866 193,342 222,411 105,714 144,633
------------ ------------ ------------ ------------ ------------
1,383,315 2,074,283 2,286,456 1,076,276 1,546,315
------------ ------------ ------------ ------------ ------------
EXPENSES:
Broadcast and production (Note
8)......................... 715,511 742,018 786,377 361,014 607,182
Selling and promotion......... 844,004 880,429 1,500,873 647,172 967,285
General and administrative
(Note 8)................... 764,768 703,908 823,312 361,744 352,108
Depreciation and
amortization............... 637,397 538,600 447,602 158,568 152,600
------------ ------------ ------------ ------------ ------------
2,961,680 2,864,955 3,558,164 1,528,498 2,079,175
------------ ------------ ------------ ------------ ------------
LOSS FROM OPERATIONS............ (1,578,365) (790,672) (1,271,708) (452,222) (532,860)
------------ ------------ ------------ ------------ ------------
OTHER INCOME (EXPENSE):
Interest expense (Note 9)..... (257,732) (438,647) (493,578) (240,384) (295,784)
Other, net.................... 13,705 51,805 153,871 76,963 61,656
------------ ------------ ------------ ------------ ------------
(244,027) (386,842) (339,707) (163,421) (234,128)
------------ ------------ ------------ ------------ ------------
NET LOSS........................ (1,822,392) (1,177,514) (1,611,415) (615,643) (766,988)
DEFICIT, beginning of period.... (217,807) (2,040,199) (3,217,713) (3,217,713) (4,829,128)
------------ ------------ ------------ ------------ ------------
DEFICIT, end of period.......... $(2,040,199) $(3,217,713) $(4,829,128) $(3,833,356) $(5,596,116)
============ ============ ============ ============ ============
</TABLE>
See notes to financial statements.
F-55
<PAGE> 126
Q BROADCASTING, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED SEPTEMBER 30, MARCH 31,
--------------------------------------- ---------------------
1993 1994 1995 1995 1996
----------- ----------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C>
(unaudited) (unaudited)
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net loss......................... $(1,822,392) $(1,177,514) $(1,611,415) $(615,643) $(766,988)
----------- ----------- ----------- --------- ---------
Adjustments to reconcile net loss
to net cash used in operating
activities:
Depreciation and
amortization................ 637,397 538,600 447,602 158,568 152,600
Provision for doubtful
accounts.................... 25,150 75,655 29,702 -- --
Changes in operating assets
and liabilities:
(Increase) decrease in
assets:
Accounts receivable...... (9,557) (444,619) 111,743 131,467 (129,351)
Prepaid expenses and
other current assets... (690) (196) 337 (70,952) (40,793)
Other assets............. (3,853) (25,309) 17,963 (201) 1,906
(Decrease) increase in
liabilities:
Accounts payable......... (22,712) 14,456 54,530 (39,679) 85,797
Accrued expenses......... (31,444) 12,009 46,165 38,259 (10,813)
----------- ----------- ----------- --------- ---------
Total adjustments............. 594,291 170,596 708,042 217,462 59,346
----------- ----------- ----------- --------- ---------
Net cash used in operating
activities.................. (1,228,101) (1,006,918) (903,373) (398,181) (707,642)
----------- ----------- ----------- --------- ---------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchase of property and
equipment..................... (91,532) (23,118) (73,381) (995) (7,081)
----------- ----------- ----------- --------- ---------
Net cash used in investing
activities.................. (91,532) (23,118) (73,381) (995) (7,081)
----------- ----------- ----------- --------- ---------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Principal repayment of note
payable....................... (327,719) -- -- -- --
Repayment of capital lease
obligations................... (8,585) (9,823) (8,692) (5,841) (3,547)
Loans from stockholders.......... 1,632,185 1,111,592 967,397 317,374 692,784
Loans to related parties......... -- (35,433) (37,447) 35,433 25,955
----------- ----------- ----------- --------- ---------
Net cash provided by financing
activities.................. 1,295,881 1,066,336 921,258 346,966 715,192
----------- ----------- ----------- --------- ---------
Net (decrease) increase in cash and
cash equivalents................. (23,752) 36,300 (55,496) (52,210) 469
Cash and cash equivalents at
beginning of period.............. 43,779 20,027 56,327 56,327 831
----------- ----------- ----------- --------- ---------
Cash and cash equivalents at end of
period........................... $ 20,027 $ 56,327 $ 831 $ 4,117 $ 1,300
=========== =========== =========== ========= =========
</TABLE>
See notes to financial statements.
F-56
<PAGE> 127
Q BROADCASTING, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 1993, 1994 AND 1995
AND THE SIX MONTHS ENDED MARCH 31, 1995 AND 1996
(INFORMATION WITH RESPECT TO THE SIX MONTHS ENDED MARCH 31, 1995 AND 1996 IS
UNAUDITED)
1. DESCRIPTION OF ORGANIZATION AND BUSINESS:
Q Broadcasting, Inc. (the "Company") owns and operates two radio broadcast
stations in Stamford, Connecticut. These stations, WSTC-AM and WKHL-FM,
principally serve the Stamford metropolitan area.
2. BASIS OF PRESENTATION:
The financial statements have been prepared on a going concern basis which
contemplates continuity of operations and realization of assets and liquidation
of liabilities in the ordinary course of business. The Company's ability to
continue as a going concern is dependent upon the continued financial support of
its shareholders.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
a. Revenue recognition
Broadcasting revenue is recognized when commercials are aired. Barter
transactions are recorded at the estimated fair value of the merchandise or
services received.
b. Depreciation
The Company provides for depreciation using the declining balance method
over the estimated useful lives of the fixed assets as follows:
<TABLE>
<S> <C>
Broadcast and other equipment....................................... 5 years
Tower and antenna systems........................................... 7 years
Transmitter equipment............................................... 7 years
Furniture and fixtures.............................................. 7 years
</TABLE>
c. Amortization
The Company provides for amortization using the straight-line method over
the estimated useful lives of the intangible assets as follows:
<TABLE>
<S> <C>
Broadcast license.................................................. 25 years
Transmitter lease.................................................. 23 years
Covenant not to compete............................................ 3 years
Organizational costs............................................... 5 years
</TABLE>
d. Income taxes
The shareholders of the Company elected to be taxed as a "Small Business
Corporation," for federal and state income tax purposes pursuant to the Internal
Revenue Code. As a result of this election, the income of the Company will be
taxed directly to the individual shareholders. Accordingly, no provision for
taxes is included in the financial statements of the Company.
e. Statement of cash flows
For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with a maturity of three months or less
to be cash equivalents.
F-57
<PAGE> 128
Q BROADCASTING, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:--(CONTINUED)
f. Advertising
The Company charges to expense, advertising costs as incurred. Advertising
costs amounted to $227,094, $41,405 and $112,226 for the years ended September
30, 1993, 1994 and 1995, respectively and $17,168 and $23,972 for the six months
ended March 31, 1995 and 1996, respectively.
g. Interim financial statements
The unaudited financial statements as of March 31, 1996 and for the six
months ended March 31, 1995 and 1996 reflect all adjustments (consisting only of
normal recurring accruals) which are, in the opinion of management, necessary
for a fair statement of the results for the period. The results of operations
are not necessarily indicative of the results expected for the fiscal year.
4. DUE FROM RELATED PARTIES:
The Company advanced funds on behalf of three related entities.
Approximately $16,800 and $54,200 for two entities 100% owned by the Company's
owners as of September 30, 1994 and 1995, respectively and approximately $18,700
to an entity which the Company's owners have a minority interest as of September
30, 1994 and 1995. As of March 31, 1996 these receivables amounted to
approximately $18,700 and $28,200, respectively.
5. PROPERTY AND EQUIPMENT:
Property and equipment, at cost, is summarized as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30, MARCH 31,
------------------------- 1996
1994 1995 -----------
(unaudited)
<S> <C> <C> <C>
Broadcast and office equipment................. $ 583,853 $ 586,269 $ 586,269
Tower and antenna systems...................... 268,000 268,000 268,000
Transmitter equipment.......................... 75,000 75,000 75,000
Furniture and fixtures......................... 229,519 300,484 307,565
---------- ---------- ----------
1,156,372 1,229,753 1,236,834
Less accumulated depreciation.................. 633,347 822,461 908,317
---------- ---------- ----------
$ 523,025 $ 407,292 $ 328,517
========== ========== ==========
</TABLE>
Included in furniture and fixtures was $41,975 related to assets recorded
under capital leases; the related amount included in accumulated depreciation is
$19,095 and $28,707 as of September 30, 1994 and 1995 and $33,513 as of March
31, 1996.
F-58
<PAGE> 129
Q BROADCASTING, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
6. INTANGIBLES:
Intangibles, at cost, is summarized as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30, MARCH 31,
------------------------- 1996
1994 1995 ----------
(unaudited)
<S> <C> <C> <C>
Organizational costs........................... $ 97,917 $ 97,917 $ 97,917
Covenant not to compete........................ 450,000 450,000 450,000
Broadcast license.............................. 1,000,000 1,000,000 1,000,000
Transmitter lease.............................. 1,700,000 1,700,000 1,700,000
---------- ---------- ----------
3,247,917 3,247,917 3,247,917
Less accumulated amortization.................. 614,234 872,722 939,466
---------- ---------- ----------
$2,633,683 $2,375,195 $2,308,451
========== ========== ==========
</TABLE>
7. CAPITAL LEASE OBLIGATIONS:
Included in property and equipment are assets recorded under capital
leases. The future minimum lease payments for these capital leases and the
present value of the net minimum lease payments as of September 30, 1995 are as
follows:
<TABLE>
<CAPTION>
FISCAL YEAR
<S> <C>
1996............................................................. $ 6,826
1997............................................................. 4,168
-------
Minimum lease payments............................................. 10,994
Less amount representing interest.................................. 830
-------
Present value of net minimum lease payments........................ $10,164
=======
</TABLE>
8. COMMITMENTS:
The Company leases studio and office space and a transmitter tower site
under operating leases expiring in September 1999 and December 2017,
respectively. Rent expense for these leases was approximately $179,000, $186,000
and $211,000 for the years ended September 30, 1993, 1994 and 1995,
respectively. Rent expense for these leases was approximately $110,000 for the
six months ended March 31, 1995 and 1996.
Minimum rental commitments for the remaining terms of the operating leases
are as follows:
<TABLE>
<CAPTION>
YEAR ENDING SEPTEMBER 30,
<S> <C>
1996......................................................... $212,685
1997......................................................... 213,180
1998......................................................... 213,180
1999......................................................... 213,180
2000......................................................... 21,780
Thereafter........................................................ 430,939
</TABLE>
9. NOTE PAYABLE--STOCKHOLDERS:
In connection with advances made by its stockholders for the acquisition of
assets and working capital, the Company has issued an 8% demand note payable to
its stockholders. The stockholders have agreed not to demand payment until a
date subsequent to October 1, 1996. Interest expense for the years ended
F-59
<PAGE> 130
Q BROADCASTING, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
9. NOTE PAYABLE--STOCKHOLDERS--(CONTINUED)
September 30, 1993, 1994 and 1995 was $238,187, $435,895 and $492,397,
respectively. Interest expense for the six months ended March 31, 1995 and 1996
was $240,384 and $295,784, respectively.
10. SUBSEQUENT EVENT:
The Company has entered into a letter of intent for the sale of
substantially all of its operating assets.
11. SUPPLEMENTARY INFORMATION--STATEMENT OF CASH FLOWS:
Barter transactions resulted in sales and related expenses of $306,600,
$314,500 and $315,900 for the years ending September 30, 1993, 1994 and 1995,
respectively. Barter transactions resulted in sales and related expenses of
$105,455 and $121,930 for the six months ended March 31, 1995 and 1996,
respectively.
Cash paid during the years ended September 30, 1993, 1994 and 1995 for
interest was $261,018, $438,648 and $493,578, respectively. Cash paid during the
six months ended March 31, 1995 and 1996 for interest was $137,526 and $-0-,
respectively.
F-60
<PAGE> 131
------------------------------------------------------
------------------------------------------------------
NO DEALER, SALES REPRESENTATIVE, OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS OFFERING
OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED
HEREBY BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
HEREOF.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 9
Use of Proceeds....................... 13
Dividend Policy....................... 13
Dilution.............................. 14
Capitalization........................ 15
Unaudited Pro Forma Consolidated
Financial Information............... 16
Selected Historical and Pro Forma
Consolidated Financial Data......... 23
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 26
Business.............................. 33
Management............................ 50
Certain Relationships and Related
Transactions........................ 57
Principal and Selling Shareholders.... 58
Description of Certain Indebtedness... 60
Description of Capital Stock.......... 62
Shares Eligible for Future Sale....... 65
Underwriting.......................... 66
Legal Matters......................... 67
Experts............................... 67
Available Information................. 68
Index to Financial Statements......... F-1
</TABLE>
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
4,300,000 SHARES
COMMODORE MEDIA, INC.
CLASS A COMMON STOCK
-----------------------
PROSPECTUS
-----------------------
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
CS FIRST BOSTON
CIBC WOOD GUNDY SECURITIES CORP.
, 1996
------------------------------------------------------
------------------------------------------------------
<PAGE> 132
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the expenses expected to be incurred by the
Company in connection with the issuance and distribution of the Class A Common
Stock registered hereby, all of which expenses, except for the Securities and
Exchange Commission registration fee, the National Association of Securities
Dealers, Inc. filing fee and the NASDAQ National Market System listing
application fee, are estimates:
<TABLE>
<CAPTION>
DESCRIPTION AMOUNT
-------
<S> <C>
Securities and Exchange Commission registration fee................ $25,863
National Association of Securities Dealers, Inc. filing fee........ $ 8,000
NASDAQ National Market System listing application fee.............. *
Accounting fees and expenses....................................... *
Legal fees and expenses............................................ *
Printing and engraving fees and expenses........................... *
Blue Sky fees and expenses......................................... *
Transfer Agent fees and expenses................................... *
Miscellaneous fees and expenses.................................... *
-------
Total.................................................... $ *
=======
</TABLE>
- ---------------
* To be filed by amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Each of Commodore Media, Inc. (the "Company"), Commodore Holdings, Inc.
("Holdings"), Commodore Media of Delaware, Inc. ("Commodore-DE"), Commodore
Media of Pennsylvania, Inc. ("Commodore-PA"), Commodore Media of Florida, Inc.
("Commodore-FL"), Commodore Media of Kentucky, Inc. ("Commodore-KY"), Commodore
Media of Norwalk, Inc. ("Commodore-Norwalk") and Commodore Media of Westchester,
Inc. ("Commodore-Westchester") is a Delaware corporation, and Danbury
Broadcasting, Inc. is a Connecticut corporation ("Danbury"). Each such company's
Certificate of Incorporation or By-laws also contains provisions making
indemnification of such company's directors and officers mandatory to the
fullest extent permitted by the Delaware General Corporation Law or the
Connecticut General Corporation law, as the case may be, provided that certain
procedural requirements are met and any applicable authorizations by such
company's Board of Directors are obtained.
The Delaware General Corporation Law permits the indemnification by a
Delaware corporation of its directors, officers, employees and other agents
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement in connection with specified actions, suits or proceedings,
whether civil, criminal, administrative or investigative (other than derivative
actions which are by or in the right of the corporation) if they acted in good
faith and in a manner they reasonably believed to be in or not opposed to the
best interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe their conduct was illegal. A
similar standard of care is applicable in the case of derivative actions, except
that indemnification only extends to expenses (including attorneys' fees)
incurred in connection with defense or settlement of such an action and court
approval is required before there can be any indemnification where the person
seeking indemnification has been found liable to the corporation.
The Connecticut General Corporation Law permits the indemnification by a
Connecticut corporation of its shareholders, directors, officers, employees
and/or agents, against judgments, fines, penalties, amounts paid in settlement
and reasonable expenses actually incurred provided (i) such person is successful
on the merits in the defense of any proceeding; or (ii) it is determined such
person acted in good faith and in a manner they reasonably believed to be in or
not opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe their conduct
was illegal; or (iii) the court
II-1
<PAGE> 133
determines that such person is fairly and reasonably entistled to be
indemnified, and then for such amount as the court shall determine. Such persons
shall receive indemnification against reasonable expenses actually incurred in
derivative proceedings provided that either he or she is adjudged not to have
breached his or her duty to the corporation or where the court shall have
determined that such person is fairly and reasonably entitled to be indemnified,
and then for such amount as the court shall determine; provided, however, that
such persons shall not be indemnified for amounts paid in settling or otherwise
disposing of a derivative proceeding, with or without court approval, or for
expenses incurred in defending a proceeding which is settled or otherwise
disposed of without court approval.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
In May 1996, the Company issued 10,000 shares of Series A Preferred Stock
under the Preferred Stock Facility to the CIBC Merchant Fund for an aggregate of
$10 million. In connection with the Preferred Stock Facility, in May 1996 the
Company issued to the CIBC Merchant Fund a warrant to purchase 7,550 shares of
the Company's Class A Common Stock which is immediately exercisable.
As part of the Recapitalization Transactions in April 1995, the Company
completed the sale of 75,500 Units (the "Units"), each Unit consisting of $1,000
principal amount of the Company's Senior Subordinated Notes and a warrant to
purchase one share of the Company's Class A Common Stock at an exercise price of
$.01 per warrant. Also as part of the Recapitalization Transactions, in April
1995 the Company converted all of its existing common stock at such time into
486,373 shares of its Class B Common Stock and 119,212 shares (including 85,524
treasury shares) of its Class A Common Stock, which reflects a conversion ratio
of approximately 4:1. Further, in connection with the Recapitalization
Transactions, the Company issued the Friedman Senior Subordinated Note to a
trust for the benefit of Mr. Friedman.
In connection with the refinancing of the Company's loan agreement with The
Bank of New York in December 1993, the Company issued to The Bank of New York a
warrant to purchase 4.99% of the Common Stock of the Company, on a fully diluted
basis, for $100. In March 1995, the Company redeemed the warrant for an
aggregate purchase price of $1,000,000. In addition, as part of the December
1993 debt restructuring, all previously authorized, issued and outstanding
shares of Series A, Series B and Series C Preferred Stock were contributed to
paid-in capital or converted into common stock and canceled. The shares of
Series A and Series B Preferred Stock were converted into 33,000 shares of
common stock resulting in additional paid-in capital of $3,299,670. The shares
of Series C Preferred Stock were contributed to paid-in capital by the Company's
former President. Further, in December 1993, Carter Burden purchased 28,000
shares of Class A Common Stock for $2,500,000.
In December 1993, the Company granted a warrant to WAMBCO, to purchase
4.99% of its common stock at an exercise price of $100, on a fully diluted
basis. In April 1995, WAMBCO exercised the warrant and purchased 27,314 shares
of Class A Common Stock of the Company.
In December 1993, Radio Financial Partners, Inc. converted $7,723,000 of
outstanding debt and accrued interest into 10,000 shares of the Company's 8.87%
cumulative redeemable preferred stock. In April 1995, as part of the
Recapitalization Transactions, the Company redeemed all outstanding shares of
preferred stock for an aggregate purchase price of approximately $8.7 million.
The Company has reserved 132,125 shares of Class A Common Stock for options
issued under the Company's 1995 Stock Option Plan. As of May 17, 1996, options
to purchase a total of 25,730 shares were exercisable at an exercise price of
$45 per share.
All of the shares referred to in the foregoing paragraphs do not give
effect to the 7.2-for-1 stock split of the Common Stock. All of the securities
referred to in the foregoing paragraphs were issued by the Company in reliance
on the exemption from registration provided by Section 4(2) of the Securities
Act of 1933, as amended.
II-2
<PAGE> 134
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
<S> <C> <C>
1* -- Proposed form of Underwriting Agreement.
3.1.1 -- Amended and Restated Certificate of Incorporation of the Company, as amended.
3.1.2 -- By-laws of the Company, as amended.
3.2.1 -- Certificate of Incorporation of Commodore-Delaware, as amended.
3.2.2(a) -- By-laws of Commodore-Delaware.
3.3.1 -- Certificate of Incorporation of Commodore-Pennsylvania, as amended.
3.3.2(a) -- By-laws of Commodore-Pennsylvania.
3.4.1 -- Certificate of Incorporation of Commodore-Florida.
3.4.2(a) -- By-laws of Commodore-Florida.
3.5.1 -- Certificate of Incorporation of Commodore-Kentucky, as amended.
3.5.2(a) -- By-laws of Commodore-Kentucky.
3.6.1 -- Certificate of Incorporation of Commodore-Norwalk.
3.6.2(a) -- By-laws of Commodore-Norwalk.
3.7.1 -- Certificate of Incorporation of Commodore-Westchester, as amended.
3.7.2(a) -- By-laws of Commodore-Westchester.
3.8.1(b) -- Certificate of Incorporation of Danbury Broadcasting, Inc.
3.8.2(b) -- By-laws of Danbury Broadcasting, Inc.
3.9.1 -- Certificate of Incorporation of Commodore Holdings, Inc.
3.9.2 -- By-laws of Commodore Holdings, Inc.
4.1.1(a) -- Indenture dated as of April 21, 1995 among the Company, IBJ Schroder Bank &
Trust Company, as Trustee, and the Guarantors named therein (the "Indenture").
4.1.2(a) -- Amendment No. 1 to Indenture.
4.1.3(b) -- Amendment No. 2 to Indenture.
4.1.4(b) -- Amendment No. 3 to Indenture.
4.1.5(c) -- Amendment No. 4 to Indenture.
4.2(a) -- Form of Original Note No. 1 for $75,500,000, Cusip No. 20266P AA 9, with
Guarantee of Guarantors listed therein.
4.3(a) -- Form of Note with Form of Guarantee.
4.4(a) -- Registration Rights Agreement dated as of April 21, 1995 by and among the
Company, the Guarantors named therein and each of the Purchasers referred to
therein.
5.1* -- Form of Opinion of Pryor, Cashman, Sherman & Flynn.
10.1(a) -- Securities Purchase Agreement dated as of April 13, 1995 by and among the
Company, the Guarantors named therein and each of the Purchasers referred to
therein.
10.2(a) -- Warrant Agreement dated as of April 21, 1995 between the Company and IBJ
Schroder Bank & Trust Company, as Warrant Agent.
10.3(a) -- Form of Original Warrant Certificate No. 1 for 75,500 Warrants, Cusip No. 20266P
11 9.
10.4(a) -- Common Stock Registration Rights and Stockholders' Agreement dated as of April
21, 1995 among the Company, certain control stockholders and each of the
Purchasers referred to therein.
</TABLE>
II-3
<PAGE> 135
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
<S> <C> <C>
10.5(a) -- Note No. 1 for $1,308,000, Cusip No. 20266P AA 9, with Guarantee of Guarantors
listed therein.
10.6.1 -- 1995 Stock Option Plan of the Company.
10.7.1(a) -- Construction Permit dated October 19, 1994 issued by the FCC to Commodore-PA in
connection with WAEB-AM.
10.7.2(a) -- Letters dated April 27, 1995 and May 10, 1995 from the FCC to Commodore-PA
regarding Program Test Authority.
10.7.3(b) -- Broadcast Station License dated July 28, 1995 issued by the FCC to Commodore-PA
in connection with WAEB-AM.
10.8(a) -- Broadcast Station License dated August 5, 1993 issued by the FCC to Commodore-PA
in connection with WAEB-FM.
10.9(a) -- Broadcast Station License dated June 19, 1990 issued by the FCC to Holt Corp. of
Pennsylvania ("Holt") in connection with WZZO-FM, together with an assignment
thereof from Holt to Commodore-PA, and evidence of license renewal.
10.10(a) -- Broadcast Station License dated April 30, 1987 issued by the FCC to
Commodore-Delaware in connection with WJBR-AM and evidence of license renewal.
10.11.1(a) -- Incorporated by reference to the Company's S-4. Broadcast Station License dated
February 6, 1992 issued by the FCC to Commodore-Delaware in connection with
WJBR-FM.
10.11.2(b) -- Broadcast Station License dated April 26, 1995 issued by the FCC to
Commodore-Delaware in connection with WJBR-FM which modifies Broadcast License
issued on February 6, 1992.
10.12(a) -- Broadcast Station License dated December 14, 1984 and Auxiliary Broadcast
Station License dated August 22, 1985, each issued by the FCC to Hanson
Communications, Inc. ("Hanson") in connection with WEFX-FM, together with an
assignment thereof from Hanson to Commodore-Norwalk, and evidence of license
renewal.
10.13(a) -- Broadcast Station License dated February 14, 1985 issued by the FCC to Hanson in
connection with WNLK-AM, together with an assignment thereof from Hanson to
Commodore-Norwalk, and evidence of license renewal.
10.14(a) -- Broadcast Station License dated November 18, 1988 issued by the FCC to
Commodore-Westchester in connection with WFAS-AM and evidence of license
renewal.
10.15(a) -- Broadcast Station License dated July 22, 1986 issued by the FCC to
Commodore-Westchester in connection with WFAS-FM and evidence of license
renewal.
10.16(b) -- Broadcast Station License dated April 13, 1981 issued by the FCC to Greater
Kentucky Radio, Inc. in connection with WTCR-AM and evidence of license renewal
in the name of Commodore-Kentucky.
10.17(b) -- Broadcast Station License dated September 17, 1985 issued by the FCC to CRB
Broadcasting of West Virginia (which merged with and into Commodore-Kentucky on
November 22, 1989) in connection with WTCR-FM and evidence of license renewal.
10.18(b) -- Broadcast Station License dated June 13, 1991 issued by the FCC to
Commodore-Florida in connection with WZZR-FM.
10.19(a) -- Joint Sales Agreement between Commodore-PA and East Penn. Broadcasting, Inc.
with respect to WKAP-AM (formerly WXKW-AM).
10.20(a) -- Employment Agreement dated April 21, 1995 by and between the Company and Carter
Burden.
10.21.1(a) -- Amended and Restated Employment Agreement dated April 21, 1995 by and between
the Company and Bruce A. Friedman.
10.21.2(b) -- Amendment No. 1 to Amended and Restated Employment Agreement between the Company
and Bruce A. Friedman.
</TABLE>
II-4
<PAGE> 136
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
<S> <C> <C>
10.22(b) -- Amended and Restated Employment Agreement dated April 21, 1995 by and between
the Company and James T. Shea, Jr.
10.23(b) -- Employment Agreement dated July 1, 1995 by and between the Company and Charlie
V. DiToro.
10.24(b) -- Employment Agreement dated as of April 21, 1995 by and between the Company and
Jay Sterin.
10.25(a) -- Promissory Note, dated April 21, 1995, in the aggregate principal amount of
$900,000, issued by Bruce A. Friedman to Carter Burden as security for Class A
shares held by Mr. Friedman.
10.26(a) -- Promissory Note, dated April 21, 1995, in the aggregate principal amount
$208,000, issued by James T. Shea, Jr. to Carter Burden as security for Class A
shares held by Mr. Shea.
10.27(a) -- Promissory Note, dated as of May 15, 1995, in the aggregate principal amount
$50,215.00, issued by Carter Burden to the Company.
10.28(a) -- Promissory Note, dated as of May 15, 1995, in the aggregate principal amount
$100,160.00, issued by Bruce A. Friedman to the Company.
10.29(a) -- Promissory Note, dated as of May 15, 1995, in the aggregate principal amount
$50,000, issued by James T. Shea, Jr. to the Company.
10.30(a) -- Promissory Note, dated as of May 15, 1995, in the aggregate principal amount
$50,000, issued by James J. Sullivan to the Company.
10.31(a) -- Representation Agreement dated June 1, 1987 between Katz Communications, Inc.
and Commodore-Delaware regarding WJBR-AM.
10.32(a) -- Representation Agreement dated June 1, 1987 between Katz Communications, Inc.
and Commodore-Delaware regarding WJBR-FM.
10.33(a) -- Representation Agreement dated March 28, 1988 between Katz Communications, Inc.
and Commodore-Kentucky regarding WTCR-AM.
10.34(a) -- Representation Agreement dated March 28, 1988 between Katz Communications, Inc.
and Commodore-Kentucky regarding WTCR-FM.
10.35(a) -- Representation Agreement dated June 1, 1994 between Katz Communications, Inc.
and Commodore-PA regarding WAEB-AM.
10.36(a) -- Representation Agreement dated June 1, 1994 between Katz Communications, Inc.
and Commodore-PA regarding WAEB-FM.
10.37(a) -- Representation Agreement dated June 1, 1994 between Katz Communications, Inc.
and Commodore-PA regarding WZZO-FM.
10.38(a) -- National Radio Sales Representation Agreement dated February 15, 1995 between
McGavren Guild, Inc. and Commodore-Norwalk regarding WNLK-AM/WEFX-FM.
10.39(a) -- Representation Agreement dated October 5, 1987 between Katz Communications, Inc.
and Commodore-FL regarding WZZR-FM.
10.40(a) -- National Radio Sales Representation Agreement dated February 15, 1995 between
McGavren Guild, Inc. and Commodore-Westchester regarding WFAS-AM/FM.
10.41(b) -- Option Purchase Agreement dated as of March 17, 1995 between Treasure Coast
Media, Inc. ("Treasure Coast") and Commodore-Florida.
10.42(b) -- Sales Local Marketing Agreement dated as of March 17, 1995 between Treasure
Coast and Commodore-Florida.
</TABLE>
II-5
<PAGE> 137
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
<S> <C> <C>
10.43(b) -- Asset Purchase Agreement dated as of October 30, 1995 between Hudson Valley
Growth, L.P. ("Hudson Valley") and Commodore-Westchester and Amendment No. 1
thereto dated March 27, 1996.
10.44(b) -- Stock Purchase Agreement dated as of October 30, 1995 among Danbury
Broadcasting, Inc. ("Danbury"), Gary Starr ("Starr"), BCI Growth III, L.P. ("BCI
Growth") and Commodore-Norwalk and Amendment No. 1 thereto dated March 27, 1996.
10.45(b) -- Integration Agreement dated as of October 30, 1995 between
Commodore-Westchester, Commodore-Norwalk, Hudson Valley, Danbury, BCI Growth and
Starr and Amendment No. 1 thereto dated March 27, 1996.
10.46(b) -- Local Marketing Agreement dated as of October 30, 1995 between
Commodore-Westchester and Hudson Valley.
10.47(b) -- Local Marketing Agreement dated as of October 30, 1995 between Commodore-Norwalk
and Danbury.
10.48(b) -- Asset Purchase Agreement dated as of February 16, 1996 between Media VI and
Commodore-Florida.
10.49(b) -- Joint Sales Agreement dated as of February 16, 1996 between Commodore-Florida
and Media VI.
10.50(b) -- Loan and Security Agreement dated as of March 13, 1996 among Commodore Holdings,
Inc., as Borrower, the Company, Commodore-Delaware, Commodore-Pennsylvania,
Commodore-Florida, Commodore-Kentucky, Commodore-Norwalk and
Commodore-Westchester, as Guarantors, and AT&T Commercial Finance Corporation,
as Lender.
10.51(b) -- Supplement No. 1 to the Loan Agreement.
10.52(b) -- Asset Purchase Agreement dated as of March 15, 1996 between Commodore Media of
Norwalk, Inc. and Q Broadcasting, Inc.
10.53(b) -- Employment Agreement dated as of April 21, 1995 by and between the Company and
Scott J. Bacherman.
10.54(b) -- Employment Agreement dated as of April 21, 1995 by and between the Company and
Judy Jennings.
10.55(b) -- Employment Agreement dated as of April 21, 1995 by and between the Company and
James J. Sullivan.
10.56(b) -- Employment Agreement dated as of July 1, 1995 by and between the Company and
Rich Lewis.
10.57(b) -- Broadcast Station License dated November 14, 1991 issued by the FCC to Treasure
Coast Media, Inc. ("Treasure Coast") in connection with WQOL-FM, together with
an assignment thereof by Treasure Coast to Commodore-Florida, and evidence of
license renewal.
10.58.1(b) -- Broadcast Station License dated June 22, 1992 issued by the FCC to Housatonic
Valley Broadcasting Inc. ("Housatonic") in connection with WINE-AM, together
with an FCC Consent to the transfer of control of the licensee to
Commodore-Norwalk, and evidence of license renewal.
10.58.2(b) -- Construction Permit dated August 31, 1994 issued by the FCC to Danbury
Broadcasting, Inc. ("Danbury") in connection with WINE-AM.
10.59.1(b) -- Construction Permit dated August 23, 1995 issued by the FCC to Danbury in
connection with WRKI-FM.
10.59.2(b) -- Program Test Authority dated January 17, 1996 issued by the FCC to Danbury in
connection with WRKI-FM.
</TABLE>
II-6
<PAGE> 138
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
<S> <C> <C>
10.59.3(b) -- Broadcast Station License dated April 26, 1978 issued by the FCC to Housatonic
in connection with WRKI-FM, together with an FCC Consent to the transfer of
control of the licensee to Commodore-Norwalk, and evidence of license renewal.
10.60(b) -- Broadcast Station License dated July 20, 1993 issued by the FCC to Tri-Valley
Broadcasting Corporation in connection with WVYB-FM (formerly WMJV-FM), together
with an assignment thereof by Hudson Valley Growth, L.P. ("Hudson") to
Commodore-Westchester, and evidence of license renewal.
10.61(b) -- Broadcast Station License dated June 19, 1985 issued by the FCC to Putnam
Broadcasting Corp. in connection with WPUT-AM, together with an assignment
thereof from Hudson to Commodore-Westchester, and evidence of license renewal.
10.62(b) -- Broadcast Station License and Modification issued by the FCC to VIP
Broadcasting, Inc. in connection with WZZN-FM (formerly WVIB-FM, WMJU-FM and
WVIP-FM), together with an assignment thereof by Hudson to
Commodore-Westchester.
10.63 -- Asset Purchase Agreement dated as of April 8, 1996 between Commodore-Kentucky
and Simmons Broadcasting Company ("Simmons").
10.64 -- Local Marketing Agreement dated as of April 8, 1996 between Commodore-Kentucky
and Simmons.
10.65 -- Asset Purchase Agreement dated as of April 8, 1996 between Commodore-Kentucky
and Adventure Communications, Inc. ("Adventure").
10.66 -- Local Marketing Agreement dated as of April 8, 1996 between Commodore-Kentucky
and Adventure.
10.67 -- Contingent Sale and Assignment of Options Agreement dated as of April 8, 1996
between Commodore-Kentucky and Michael R. Shott.
10.68 -- Securities Purchase Agreement dated as of May 1, 1996 among the Company, the
Guarantors and CIBC WG Argosy Merchant Fund 2, L.L.C. (the "CIBC Merchant
Fund").
10.69 -- Common Stock Registration Rights and Stockholders Agreement dated as of May 1,
1996 among the Company, Certain Control Stockholders and the CIBC Merchant Fund.
10.70 -- Registration Rights Agreement dated as of May 1, 1996 among the Company, the
Guarantors and the CIBC Merchant Fund.
10.71 -- Warrant Agreement dated as of May 1, 1996 between the Company and IBJ Schroder
Bank & Trust Company, as Warrant Agent.
11.1 -- Statement regarding computation of earnings per share.
16.1(a) -- Letter of Weeks DeGraw & Co., P.A. regarding change in certifying accountants.
21.1(b) -- List of Subsidiaries.
23.1 -- Consent of Ernst & Young LLP, independent auditors.
23.2 -- Consent of Weeks DeGraw & Co., P.A., independent auditors.
23.3 -- Consent of Brown, Edwards & Company, LLP, independent auditors.
23.4 -- Consent of Holtz Rubenstein & Company, LLP, independent auditors.
23.5 -- Consent of Paneth Haber & Zimmerman LLP, independent auditors.
</TABLE>
- ------------------------------
* To be filed by amendment.
(a) Incorporated by reference to the Company's Registration Statement on Form
S-4 (File No. 33-92732) effective July 26, 1995.
(b) Incorporated by reference to the Company's Annual Report on Form 10-K for
the year ended December 31, 1995.
(c) Incorporated by reference to the Company's Form 10-Q for the quarter ended
March 31, 1996.
II-7
<PAGE> 139
(b) Financial Statement Schedules
<TABLE>
<CAPTION>
PAGE
<S> <C>
Report of Ernst & Young LLP on Financial Statement Schedules.......... S-1
Report of Weeks DeGraw & Co., P.A. on Financial Statement Schedules... S-2
Valuation and Qualifying Accounts..................................... S-3
</TABLE>
ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the "Securities Act") may be permitted to directors,
officers and controlling persons of the Company, the Company has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by 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 and will be governed by the final
adjudication of such issue.
The undersigned registrant undertakes to provide to the Underwriters at the
closings specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus 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.
II-8
<PAGE> 140
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, COMMODORE
MEDIA, INC., a Delaware corporation, has duly caused this Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized in the
City of New York, New York on May 17, 1996.
COMMODORE MEDIA, INC.
By: /s/ BRUCE A. FRIEDMAN
Bruce A. Friedman
President and Chief Executive
Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Bruce A. Friedman as true and lawful
attorney-in-fact and agent with full power of substitution and resubstitution
and for him/her and in his/her name, place and stead, in any and all capacities
to sign any and all amendments (including pre-effective and post-effective
amendments) to this Registration Statement, as well as any new registration
statement filed to register additional securities pursuant to Rule 462(b) under
the Securities Act, and to file the same with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as he might or could do
in person, hereby ratifying and confirming all that said attorney-in-fact and
agent, or his substitute or substitutes may lawfully do or 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 registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<C> <S> <C>
/s/ BRUCE A. President, Chief Executive May 17, 1996
FRIEDMAN Officer, Assistant
Bruce A. Friedman Secretary and Director
(principal executive
officer)
/s/ SUSAN L. Chairman of the Board May 17, 1996
BURDEN
Susan L. Burden
/s/ JAMES T. SHEA, Chief Operating Officer May 17, 1996
JR.
James T. Shea, Jr.
/s/ JAMES J. Chief Financial Officer, May 17, 1996
SULLIVAN Treasurer and Secretary
James J. Sullivan (principal financial and
accounting officer)
/s/ DANIEL H. Director May 17, 1996
STERN
Daniel H. Stern
</TABLE>
II-9
<PAGE> 141
The Board of Directors
Commodore Media, Inc.
We have audited the consolidated financial statements of Commodore Media, Inc.
(the "Company") as of December 31, 1995 and 1994, and for each of the two years
in the period ended December 31, 1995 (included elsewhere in this Registration
Statement). Our audits also included the financial statement schedule listed in
Part II, Item 16(b) of this Registration Statement. This schedule is the
responsibility of the Company's management. Our responsibility is to express an
opinion based on our audits.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly in all material respects, the information set forth therein.
ERNST & YOUNG LLP
New York, New York
February 28, 1996, except for Note 14, as
to which the date is May 16, 1996
- --------------------------------------------------------------------------------
The foregoing report is in the form that will be signed upon the completion of
the 7.2:1 stock split of the Company's common stock, as described in Note 14 to
the financial statements.
ERNST & YOUNG LLP
New York, New York
May 16, 1996
S-1
<PAGE> 142
The Board of Directors
Commodore Media, Inc.
We have audited the consolidated financial statements of Commodore Media, Inc.
(the "Company") as of December 31, 1995 and 1994, and for each of the two years
in the period ended December 31, 1995 (included elsewhere in this Registration
Statement). Our audits also included the financial statement schedule listed in
Part II, Item 16(b) of this Registration Statement. This schedule is the
responsibility of the Company's management. Our responsibility is to express an
opinion based on our audits.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly in all material respects, the information set forth therein.
WEEKS DE GRAW & COMPANY, P.A.
New York, New York
February 28, 1996, except for Note 14, as
to which the date is May 16, 1996
- --------------------------------------------------------------------------------
The foregoing report is in the form that will be signed upon the completion of
the 7.2:1 stock split of the Company's common stock, as described in Note 14 to
the financial statements.
WEEKS DE GRAW & COMPANY, P.A.
New York, New York
May 16, 1996
S-2
<PAGE> 143
COMMODORE MEDIA, INC.
AND SUBSIDIARIES
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
COLUMN C COLUMN D
COLUMN B ----------------------- -------------
------------ ADDITIONS DEDUCTIONS COLUMN E
COLUMN A BALANCE AT ADDITIONS CHARGED TO DIRECT WRITE- --------------
- -------------------------------------- BEGINNING OF CHARGED TO OTHER OFFS, NET OF BALANCE AT END
DESCRIPTION PERIOD OPERATIONS ACCOUNTS RECOVERIES OF PERIOD
<S> <C> <C> <C> <C> <C>
Allowance for uncollectible note
receivable at December 31, 1993..... $375,375 319,625 -- (695,000) $ --
Allowance for doubtful accounts at
December 31, 1993................... $320,829 505,504 -- (372,551) $453,782
Allowance for doubtful accounts at
December 31, 1994................... $453,782 468,155 -- (389,706) $532,231
Allowance for doubtful accounts at
December 31, 1995................... $532,231 556,137 -- (388,032) $700,336
</TABLE>
S-3
<PAGE> 144
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT TITLE PAGE
<S> <C> <C> <C>
1* -- Proposed form of Underwriting Agreement.
3.1.1 -- Amended and Restated Certificate of Incorporation of the Company,
as amended.
3.1.2 -- By-laws of the Company, as amended.
3.2.1 -- Certificate of Incorporation of Commodore-Delaware, as amended.
3.2.2(a) -- By-laws of Commodore-Delaware.
3.3.1 -- Certificate of Incorporation of Commodore-Pennsylvania, as
amended.
3.3.2(a) -- By-laws of Commodore-Pennsylvania.
3.4.1 -- Certificate of Incorporation of Commodore-Florida.
3.4.2(a) -- By-laws of Commodore-Florida.
3.5.1 -- Certificate of Incorporation of Commodore-Kentucky, as amended.
3.5.2(a) -- By-laws of Commodore-Kentucky.
3.6.1 -- Certificate of Incorporation of Commodore-Norwalk.
3.6.2(a) -- By-laws of Commodore-Norwalk.
3.7.1 -- Certificate of Incorporation of Commodore-Westchester, as amended.
3.7.2(a) -- By-laws of Commodore-Westchester.
3.8.1(b) -- Certificate of Incorporation of Danbury Broadcasting, Inc.
3.8.2(b) -- By-laws of Danbury Broadcasting, Inc.
3.9.1 -- Certificate of Incorporation of Commodore Holdings, Inc.
3.9.2 -- By-laws of Commodore Holdings, Inc.
4.1.1(a) -- Indenture dated as of April 21, 1995 among the Company, IBJ
Schroder Bank & Trust Company, as Trustee, and the Guarantors
named therein (the "Indenture").
4.1.2(a) -- Amendment No. 1 to Indenture.
4.1.3(b) -- Amendment No. 2 to Indenture.
4.1.4(b) -- Amendment No. 3 to Indenture.
4.1.5(c) -- Amendment No. 4 to Indenture.
4.2(a) -- Form of Original Note No. 1 for $75,500,000, Cusip No. 20266P AA
9, with Guarantee of Guarantors listed therein.
4.3(a) -- Form of Note with Form of Guarantee.
4.4(a) -- Registration Rights Agreement dated as of April 21, 1995 by and
among the Company, the Guarantors named therein and each of the
Purchasers referred to therein.
5.1* -- Form of Opinion of Pryor, Cashman, Sherman & Flynn.
10.1(a) -- Securities Purchase Agreement dated as of April 13, 1995 by and
among the Company, the Guarantors named therein and each of the
Purchasers referred to therein.
10.2(a) -- Warrant Agreement dated as of April 21, 1995 between the Company
and IBJ Schroder Bank & Trust Company, as Warrant Agent.
10.3(a) -- Form of Original Warrant Certificate No. 1 for 75,500 Warrants,
Cusip No. 20266P 11 9.
</TABLE>
<PAGE> 145
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT TITLE PAGE
<S> <C> <C> <C>
10.4(a) -- Common Stock Registration Rights and Stockholders' Agreement dated
as of April 21, 1995 among the Company, certain control
stockholders and each of the Purchasers referred to therein.
10.5(a) -- Note No. 1 for $1,308,000, Cusip No. 20266P AA 9, with Guarantee
of Guarantors listed therein.
10.6.1 -- 1995 Stock Option Plan of the Company.
10.7.1(a) -- Construction Permit dated October 19, 1994 issued by the FCC to
Commodore-PA in connection with WAEB-AM.
10.7.2(a) -- Letters dated April 27, 1995 and May 10, 1995 from the FCC to
Commodore-PA regarding Program Test Authority.
10.7.3(b) -- Broadcast Station License dated July 28, 1995 issued by the FCC to
Commodore-PA in connection with WAEB-AM.
10.8(a) -- Broadcast Station License dated August 5, 1993 issued by the FCC
to Commodore-PA in connection with WAEB-FM.
10.9(a) -- Broadcast Station License dated June 19, 1990 issued by the FCC to
Holt Corp. of Pennsylvania ("Holt") in connection with WZZO-FM,
together with an assignment thereof from Holt to Commodore-PA, and
evidence of license renewal.
10.10(a) -- Broadcast Station License dated April 30, 1987 issued by the FCC
to Commodore-Delaware in connection with WJBR-AM and evidence of
license renewal.
10.11.1(a) -- Incorporated by reference to the Company's S-4. Broadcast Station
License dated February 6, 1992 issued by the FCC to
Commodore-Delaware in connection with WJBR-FM.
10.11.2(b) -- Broadcast Station License dated April 26, 1995 issued by the FCC
to Commodore-Delaware in connection with WJBR-FM which modifies
Broadcast License issued on February 6, 1992.
10.12(a) -- Broadcast Station License dated December 14, 1984 and Auxiliary
Broadcast Station License dated August 22, 1985, each issued by
the FCC to Hanson Communications, Inc. ("Hanson") in connection
with WEFX-FM, together with an assignment thereof from Hanson to
Commodore-Norwalk, and evidence of license renewal.
10.13(a) -- Broadcast Station License dated February 14, 1985 issued by the
FCC to Hanson in connection with WNLK-AM, together with an
assignment thereof from Hanson to Commodore-Norwalk, and evidence
of license renewal.
10.14(a) -- Broadcast Station License dated November 18, 1988 issued by the
FCC to Commodore-Westchester in connection with WFAS-AM and
evidence of license renewal.
10.15(a) -- Broadcast Station License dated July 22, 1986 issued by the FCC to
Commodore-Westchester in connection with WFAS-FM and evidence of
license renewal.
10.16(b) -- Broadcast Station License dated April 13, 1981 issued by the FCC
to Greater Kentucky Radio, Inc. in connection with WTCR-AM and
evidence of license renewal in the name of Commodore-Kentucky.
</TABLE>
<PAGE> 146
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT TITLE PAGE
<S> <C> <C> <C>
10.17(b) -- Broadcast Station License dated September 17, 1985 issued by the
FCC to CRB Broadcasting of West Virginia (which merged with and
into Commodore-Kentucky on November 22, 1989) in connection with
WTCR-FM and evidence of license renewal.
10.18(b) -- Broadcast Station License dated June 13, 1991 issued by the FCC to
Commodore-Florida in connection with WZZR-FM.
10.19(a) -- Joint Sales Agreement between Commodore-PA and East Penn.
Broadcasting, Inc. with respect to WKAP-AM (formerly WXKW-AM).
10.20(a) -- Employment Agreement dated April 21, 1995 by and between the
Company and Carter Burden.
10.21.1(a) -- Amended and Restated Employment Agreement dated April 21, 1995 by
and between the Company and Bruce A. Friedman.
10.21.2(b) -- Amendment No. 1 to Amended and Restated Employment Agreement
between the Company and Bruce A. Friedman.
10.22(b) -- Amended and Restated Employment Agreement dated April 21, 1995 by
and between the Company and James T. Shea, Jr.
10.23(b) -- Employment Agreement dated July 1, 1995 by and between the Company
and Charlie V. DiToro.
10.24(b) -- Employment Agreement dated as of April 21, 1995 by and between the
Company and Jay Sterin.
10.25(a) -- Promissory Note, dated April 21, 1995, in the aggregate principal
amount of $900,000, issued by Bruce A. Friedman to Carter Burden
as security for Class A shares held by Mr. Friedman.
10.26(a) -- Promissory Note, dated April 21, 1995, in the aggregate principal
amount $208,000, issued by James T. Shea, Jr. to Carter Burden as
security for Class A shares held by Mr. Shea.
10.27(a) -- Promissory Note, dated as of May 15, 1995, in the aggregate
principal amount $50,215.00, issued by Carter Burden to the
Company.
10.28(a) -- Promissory Note, dated as of May 15, 1995, in the aggregate
principal amount $100,160.00, issued by Bruce A. Friedman to the
Company.
10.29(a) -- Promissory Note, dated as of May 15, 1995, in the aggregate
principal amount $50,000, issued by James T. Shea, Jr. to the
Company.
10.30(a) -- Promissory Note, dated as of May 15, 1995, in the aggregate
principal amount $50,000, issued by James J. Sullivan to the
Company.
10.31(a) -- Representation Agreement dated June 1, 1987 between Katz
Communications, Inc. and Commodore-Delaware regarding WJBR-AM.
10.32(a) -- Representation Agreement dated June 1, 1987 between Katz
Communications, Inc. and Commodore-Delaware regarding WJBR-FM.
10.33(a) -- Representation Agreement dated March 28, 1988 between Katz
Communications, Inc. and Commodore-Kentucky regarding WTCR-AM.
10.34(a) -- Representation Agreement dated March 28, 1988 between Katz
Communications, Inc. and Commodore-Kentucky regarding WTCR-FM.
10.35(a) -- Representation Agreement dated June 1, 1994 between Katz
Communications, Inc. and Commodore-PA regarding WAEB-AM.
10.36(a) -- Representation Agreement dated June 1, 1994 between Katz
Communications, Inc. and Commodore-PA regarding WAEB-FM.
</TABLE>
<PAGE> 147
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT TITLE PAGE
<S> <C> <C> <C>
10.37(a) -- Representation Agreement dated June 1, 1994 between Katz
Communications, Inc. and Commodore-PA regarding WZZO-FM.
10.38(a) -- National Radio Sales Representation Agreement dated February 15,
1995 between McGavren Guild, Inc. and Commodore-Norwalk regarding
WNLK-AM/WEFX-FM.
10.39(a) -- Representation Agreement dated October 5, 1987 between Katz
Communications, Inc. and Commodore-FL regarding WZZR-FM.
10.40(a) -- National Radio Sales Representation Agreement dated February 15,
1995 between McGavren Guild, Inc. and Commodore-Westchester
regarding WFAS-AM/FM.
10.41(b) -- Option Purchase Agreement dated as of March 17, 1995 between
Treasure Coast Media, Inc. ("Treasure Coast") and
Commodore-Florida.
10.42(b) -- Sales Local Marketing Agreement dated as of March 17, 1995 between
Treasure Coast and Commodore-Florida.
10.43(b) -- Asset Purchase Agreement dated as of October 30, 1995 between
Hudson Valley Growth, L.P. ("Hudson Valley") and
Commodore-Westchester and Amendment No. 1 thereto dated March 27,
1996.
10.44(b) -- Stock Purchase Agreement dated as of October 30, 1995 among
Danbury Broadcasting, Inc. ("Danbury"), Gary Starr ("Starr"), BCI
Growth III, L.P. ("BCI Growth") and Commodore-Norwalk and
Amendment No. 1 thereto dated March 27, 1996.
10.45(b) -- Integration Agreement dated as of October 30, 1995 between
Commodore-Westchester, Commodore-Norwalk, Hudson Valley, Danbury,
BCI Growth and Starr and Amendment No. 1 thereto dated March 27,
1996.
10.46(b) -- Local Marketing Agreement dated as of October 30, 1995 between
Commodore-Westchester and Hudson Valley.
10.47(b) -- Local Marketing Agreement dated as of October 30, 1995 between
Commodore-Norwalk and Danbury.
10.48(b) -- Asset Purchase Agreement dated as of February 16, 1996 between
Media VI and Commodore-Florida.
10.49(b) -- Joint Sales Agreement dated as of February 16, 1996 between
Commodore-Florida and Media VI.
10.50(b) -- Loan and Security Agreement dated as of March 13, 1996 among
Commodore Holdings, Inc., as Borrower, the Company,
Commodore-Delaware, Commodore-Pennsylvania, Commodore-Florida,
Commodore-Kentucky, Commodore-Norwalk and Commodore-Westchester,
as Guarantors, and AT&T Commercial Finance Corporation, as Lender.
10.51(b) -- Supplement No. 1 to the Loan Agreement.
10.52(b) -- Asset Purchase Agreement dated as of March 15, 1996 between
Commodore Media of Norwalk, Inc. and Q Broadcasting, Inc.
10.53(b) -- Employment Agreement dated as of April 21, 1995 by and between the
Company and Scott J. Bacherman.
10.54(b) -- Employment Agreement dated as of April 21, 1995 by and between the
Company and Judy Jennings.
10.55(b) -- Employment Agreement dated as of April 21, 1995 by and between the
Company and James J. Sullivan.
</TABLE>
<PAGE> 148
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT TITLE PAGE
<S> <C> <C> <C>
10.56(b) -- Employment Agreement dated as of July 1, 1995 by and between the
Company and Rich Lewis.
10.57(b) -- Broadcast Station License dated November 14, 1991 issued by the
FCC to Treasure Coast Media, Inc. ("Treasure Coast") in connection
with WQOL-FM, together with an assignment thereof by Treasure
Coast to Commodore-Florida, and evidence of license renewal.
10.58.1(b) -- Broadcast Station License dated June 22, 1992 issued by the FCC to
Housatonic Valley Broadcasting Inc. ("Housatonic") in connection
with WINE-AM, together with an FCC Consent to the transfer of
control of the licensee to Commodore-Norwalk, and evidence of
license renewal.
10.58.2(b) -- Construction Permit dated August 31, 1994 issued by the FCC to
Danbury Broadcasting, Inc. ("Danbury") in connection with WINE-AM.
10.59.1(b) -- Construction Permit dated August 23, 1995 issued by the FCC to
Danbury in connection with WRKI-FM.
10.59.2(b) -- Program Test Authority dated January 17, 1996 issued by the FCC to
Danbury in connection with WRKI-FM.
10.59.3(b) -- Broadcast Station License dated April 26, 1978 issued by the FCC
to Housatonic in connection with WRKI-FM, together with an FCC
Consent to the transfer of control of the licensee to
Commodore-Norwalk, and evidence of license renewal.
10.60(b) -- Broadcast Station License dated July 20, 1993 issued by the FCC to
Tri-Valley Broadcasting Corporation in connection with WVYB-FM
(formerly WMJV-FM), together with an assignment thereof by Hudson
Valley Growth, L.P. ("Hudson") to Commodore-Westchester, and
evidence of license renewal.
10.61(b) -- Broadcast Station License dated June 19, 1985 issued by the FCC to
Putnam Broadcasting Corp. in connection with WPUT-AM, together
with an assignment thereof from Hudson to Commodore-Westchester,
and evidence of license renewal.
10.62(b) -- Broadcast Station License and Modification issued by the FCC to
VIP Broadcasting, Inc. in connection with WZZN-FM (formerly
WVIB-FM, WMJU-FM and WVIP-FM), together with an assignment thereof
by Hudson to Commodore-Westchester.
10.63 -- Asset Purchase Agreement dated as of April 8, 1996 between
Commodore-Kentucky and Simmons Broadcasting Company ("Simmons").
10.64 -- Local Marketing Agreement dated as of April 8, 1996 between
Commodore-Kentucky and Simmons.
10.65 -- Asset Purchase Agreement dated as of April 8, 1996 between
Commodore-Kentucky and Adventure Communications, Inc.
("Adventure").
10.66 -- Local Marketing Agreement dated as of April 8, 1996 between
Commodore-Kentucky and Adventure.
10.67 -- Contingent Sale and Assignment of Options Agreement dated as of
April 8, 1996 between Commodore-Kentucky and Michael R. Shott.
10.68 -- Securities Purchase Agreement dated as of May 1, 1996 among the
Company, the Guarantors and CIBC WG Argosy Merchant Fund 2, L.L.C.
(the "CIBC Merchant Fund").
</TABLE>
<PAGE> 149
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT TITLE PAGE
<S> <C> <C> <C>
10.69 -- Common Stock Registration Rights and Stockholders Agreement dated
as of May 1, 1996 among the Company, Certain Control Stockholders
and the CIBC Merchant Fund.
10.70 -- Registration Rights Agreement dated as of May 1, 1996 among the
Company, the Guarantors and the CIBC Merchant Fund.
10.71 -- Warrant Agreement dated as of May 1, 1996 between the Company and
IBJ Schroder Bank & Trust Company, as Warrant Agent.
11.1 -- Statement regarding computation of earnings per share.
16.1(a) -- Letter of Weeks DeGraw & Co., P.A. regarding change in certifying
accountants.
21.1(b) -- List of Subsidiaries.
23.1 -- Consent of Ernst & Young LLP, independent auditors.
23.2 -- Consent of Weeks DeGraw & Co., P.A., independent auditors.
23.3 -- Consent of Brown, Edwards & Company, LLP, independent auditors.
23.4 -- Consent of Holtz Rubenstein & Company, LLP, independent auditors.
23.5 -- Consent of Paneth Haber & Zimmerman LLP, independent auditors.
</TABLE>
- ------------------------------
* To be filed by amendment.
(a) Incorporated by reference to the Company's Registration Statement on Form
S-4 (File No. 33-92732) effective July 26, 1995.
(b) Incorporated by reference to the Company's Annual Report on Form 10-K for
the year ended December 31, 1995.
(c) Incorporated by reference to the Company's Form 10-Q for the quarter ended
March 31, 1996.
<PAGE> 1
Exhibit 3.1.1
[LOGO]
STATE
OF
DELAWARE
[LOGO]
Office of SECRETARY OF STATE
I Glenn C. Kenton, Secretary of State of the State of Delaware, do hereby
certify that the above and foregoing attached is a true and correct copy of
Certificate of Incorporation of the "CRB Broadcasting Corporation", as
received and filed in this office the fifth day of August, A.D. 1980, at 9
o'clock A.M.
In Testimony Whereof, I have hereunto set my
[GRAPHIC OF SEAL] hand and official seal at Dover this fifth day
of August in the year of our Lord one thousand
nine hundred and eighty.
/s/ Glenn C. Kenton
-----------------------------------
Glenn C. Kenton, Secretary of State
<PAGE> 2
CERTIFICATE OF INCORPORATION
OF
CRB BROADCASTING CORPORATION
THE UNDERSIGNED, for the purpose of forming a corporation
pursuant to the provisions of the General Corporation Law of the State of
Delaware, does hereby certify as follows:
FIRST: The name of the Corporation is CRB Broadcasting
Corporation.
SECOND: The address of the Corporation's registered office in
the State of Delaware is 306 South State Street, in the City of Dover, in the
County of Kent, and the name of the Corporation's registered agent at such
address is United States Corporation Company.
THIRD: The purpose for which the Corporation is organized is
to engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of the State of Delaware.
FOURTH: The total number of shares of capital stock which the
Corporation shall have authority to issue is 1,000 shares, par value $1.00 per
share, all of which shall be Common Stock. Shares of Capital stock of the
Corporation may be issued by the Corporation from time to time for such legally
sufficient consideration as may be fixed from time to time by the Board of
Directors.
FIFTH: Subject to the provisions of the General Corporation
Law of the State of Delaware, the number of Directors of the Corporation shall
be determined as provided by the By-Laws. Elections of Directors need not be by
ballot unless the By-Laws so provide.
SIXTH: The Corporation shall, to the full extent permitted by
the General Corporation Law of the State of Delaware, as it may be amended from
time to time, indemnify all persons whom it may indemnify pursuant thereto.
<PAGE> 3
SEVENTH: The Board of Directors of the Corporation may, in its
discretion, submit any contract or act for approval or ratification at any
annual meeting of the stockholders or at any meeting of the stockholders called
for such purpose, and any contract or act that shall be approved or ratified by
the vote of the holders of a majority of the capital stock of the Corporation
represented in person or by proxy at such meeting and eligible to vote thereat
(provided that a quorum shall be represented in person or by proxy at such
meeting) shall be as valid and binding upon the Corporation and the stockholders
as if it had been approved or ratified by every stockholder of the Corporation,
whether or not the contract or act would otherwise be open to legal attack
because of directors' interest, or for any other reason.
EIGHTH: In furtherance and not in limitation of the general
powers conferred by the laws of the State of Delaware, the Board of Directors is
expressly authorized, without the assent or vote of the stockholders:
(1) to make, alter, amend, change, add to or repeal the
By-Laws of the Corporation, except as specifically stated therein;
(2) to fix and vary the amount to be reserved by the
Corporation for any proper purpose;
(3) to authorize and cause to be executed mortgages and
liens upon all or any part of the property of the Corporation;
(4) to determine the use and disposition of any surplus
or net profits of the Corporation; and
(5) to fix the times for the declaration and payment of
dividends by the Corporation.
NINTH: In addition to the powers and authorities hereinbefore
or by statute expressly conferred upon it, the Board of Directors is hereby
empowered to exercise all such powers and do all such acts and things as may be
exercised or done by the Corporation; subject, nevertheless, to the provisions
of the General Corporation Law of the State of Delaware, this Certificate of
Incorporation, and the By-Laws of the Corporation; provided, however, that no
By-law shall invalidate any prior act of the Board of Directors which would have
been valid if such By-Law had not been made.
-2-
<PAGE> 4
TENTH: Whenever a compromise or arrangement is proposed
between this Corporation and its creditors or any class of them and/or between
this Corporation and its stockholders or any class of them, any court of
equitable jurisdiction within the State of Delaware may, on the application in a
summary way of this Corporation or of any creditor or stockholder thereof, or on
the application of any receiver or receivers appointed for this Corporation
under the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this Corporation under the provisions of Section 279 of Title 8 of the
Delaware Code, order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this Corporation, as the case may
be, to be summoned in such manner as the said Court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this Corporation as a consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the Court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders of this Corporation, as the case may be,
and also on this Corporation.
ELEVENTH: The Corporation reserves the right to alter, amend,
change, add to or repeal any provision contained in this Certificate of
Incorporation, in the manner now or hereafter prescribed by statute, and all
rights conferred upon stockholders herein are granted subject to this
reservation.
TWELFTH: The name and address of the incorporator is
Winfield P. Jones, 405 Lexington Avenue, New York, New York 10174.
IN WITNESS WHEREOF, the undersigned, being the incorporator
hereinabove named, does hereby execute this Certificate of Incorporation this
1st day of August, 1980.
/s/ Winfield P. Jones
----------------------
Winfield P. Jones
Incorporator
<PAGE> 5
[LOGO]
STATE
of
DELAWARE
[LOGO]
Office of SECRETARY OF STATE
I Glenn C. Kenton, Secretary of State of the State of Delaware,
do hereby certify that the attached is a true and correct copy of
Certificate of Amendment
-----------------------------------------------
filed in this office on December 29, 1981
--------------------------------------.
/s/ Glenn C. Kenton
------------------------
Glenn C. Kenton, Secretary of State
By: /s/ B. Knowles
----------------------
Date: December 29, 1981
--------------------
[GRAPHIC SEAL] [STAMP]
<PAGE> 6
[STAMP]
CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION
OF
CRB BROADCASTING CORPORATION
- --------------------------------------------------------------------------------
It is hereby certified that :
1. The name of the corporation is CRB BROADCASTING CORPORATION.
2. The Certificate of Incorporation of the Corporation is hereby
amended by striking out Article Fourth thereof and by substituting in lieu of
said Article the following new Article Fourth:
"FOURTH. The total number of shares which the Corporation
shall have authority to issue is 11,000 shares of which (a) 10,000
shares shall be Preferred Stock, issuable in series of the par value of
$100 per share and (b) 1,000 shares shall be Common Stock, of the par
value of $1.00 per share.
The designations, powers, preferences and rights and the
qualifications, limitations or restrictions of the Preferred Stock and
the Common Stock are as follows:
PREFERRED STOCK
The Preferred Stock may be issued from time to time in one or more
series and with such designation for each such series as shall be
stated and expressed in the resolution or resolutions providing for the
issue of each such series adopted by the Board of Directors. The Board
of Directors in any such resolution or resolutions is expressly
authorized to state and express for each such series:
(i) The voting powers, if any, of the holders of stock of
such series;
<PAGE> 7
-2-
(ii) The rate per annum and the times at and conditions
upon which the holders of stock of such series shall
be entitled to receive dividends, and whether such
dividends shall be cumulative or noncumulative and if
cumulative the terms on which such dividends shall be
cumulative;
(iii) The price or prices and the time or times at and the
manner in which the stock of such series shall be
redeemable;
(iv) The rights to which the holders of the shares of
stock of such series shall be entitled upon any
voluntary or involuntary liquidation, dissolution or
winding up of the Corporation;
(v) The terms, if any, upon which shares of stock of such
series shall be convertible into, or exchangeable
for, shares of stock of any other class or classes or
of any other series of the same or any other class or
classes, including the price or prices or the rate or
rates of conversion or exchange and the terms of
adjustment, if any; and
(vi) Any other designations, preferences and relative,
participating, optional or other special rights, and
qualifications, limitations or restrictions thereof
so far as they are not inconsistent with the
provisions of the Certificate of Incorporation, as
amended, and to the full extent now or hereafter
permitted by the laws of Delaware.
All shares of the Preferred Stock of any one series shall be identical
to each other in all respects, except that shares of any one series
issued at different times may differ as to the dates from which
dividends thereon, if cumulative, shall be cumulative.
The holders of shares of the Preferred Stock of each series shall be
entitled to receive, when and as declared by the Board of Directors,
out of funds legally available for the payment of dividends, dividends
at the rates fixed by the Board of Directors for such series, and no
more, before any dividends, other than dividends payable in Common
Stock, shall be declared and paid, or set apart for payment, on the
Common Stock with respect to the same dividend period.
<PAGE> 8
-3-
COMMON STOCK
1. Whenever dividends upon the Preferred Stock at the time
outstanding shall have been paid in full for all past dividend
periods or declared and set apart for payment, such dividends
as may be determined by the Board of Directors may be declared
by the Board of Directors and paid from time to time to the
holders of the Common Stock.
2. In the event of any liquidation, dissolution or winding up of
the affairs of the Corporation, whether voluntarily or
involuntarily, all assets remaining after the payment to the
holders of the preferred Stock at the time outstanding of the
full amounts to which they shall be entitled shall be divided
and distributed among the holders of the Common Stock
according to their respective shares.
3. Each holder of the Common Stock shall have one vote in respect
of each share of such stock held by him.
4. The amendment of the Certificate of Incorporation herein
certified has been duly adopted in accordance with the
provisions of Sections 228 and 242 of the General Corporation
Law of the State of Delaware.
Signed and attested to this day
of December, 1981
/s/
-------------------------------
President
Attest /s/
-------------------------
Secretary
<PAGE> 9
STATE OF DELAWARE
[LOGO]
OFFICE OF SECRETARY OF STATE
PAGE 1
I, MICHAEL HARKINS, SECRETARY OF STATE OF THE STATE OF DELAWARE DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
AMENDMENT OF CRB BROADCASTING CORPORATION FILED IN THIS OFFICE ON THE
THIRTY-FIRST DAY OF OCTOBER, A.D. 1985, AT 9 O'CLOCK A.M.
/s/ Michael Harkins
-----------------------------
Michael Harkins, Secretary of State
AUTHENTICATION: 10656340
DATE: 11/09/1985
[STAMP]
<PAGE> 10
[STAMP]
CERTIFICATE OF AMENDMENT OF
CERTIFICATE OF INCORPORATION OF
CRB BROADCASTING CORPORATION
It is hereby certified that:
1. The name of the corporation is CRB BROADCASTING CORPORATION
(the "Corporation").
2. The Certificate of Incorporation of the Corporation is hereby
amended by striking out the first paragraph of Article Fourth thereof and by
substituting in lieu of said paragraph the following new first paragraph of
Article Fourth:
"FOURTH. The total number of shares of all classes of
stock which the Corporation shall have the authority to issue
is 42,000 shares of which (a) 40,000 shares shall be Preferred
Stock, issuable in series of the par value of $100.00 per
share and (b) 2,000 shares shall be Common Stock, of the par
value of $1.00 per share.
<PAGE> 11
3. The amendment of the Certificate of Incorporation herein
certified has been duly adopted in accordance with the provisions of Sections
228 and 242 of the General Corporation Law of the State of Delaware.
Signed and attested to this
11th day of September, 1985.
/s/
-----------------------
President
Attest:
/s/
- ---------------------------
Secretary
-2-
<PAGE> 12
STATE OF DELAWARE
[LOGO]
OFFICE OF SECRETARY OF STATE
PAGE 1
I, MICHAEL HARKINS, SECRETARY OF STATE OF THE STATE OF DELAWARE DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
AMENDMENT OF CRB BROADCASTING CORPORATION FILED IN THIS OFFICE ON THE SIXTEENTH
DAY OF OCTOBER, A.D. 1986, AT 9 O'CLOCK A.M.
/s/ Michael Harkins
-------------------------
Michael Harkins, Secretary of State
AUTHENTICATION: 12745935
DATE: 07/31/1990
[SEAL]
<PAGE> 13
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
CRB BROADCASTING CORPORATION
It is hereby certified that:
1. The name of the corporation is CRB Broadcasting Corporation
(the "Corporation").
2. The certificate of incorporation of the Corporation is hereby
amended by adding a new article thirteenth to read as follows:
THIRTEENTH: The personal liability of the directors of the Corporation
is hereby eliminated to the fullest extent permitted by paragraph (7)
of subsection (b) of section 102 of the General Corporation Law of the
State of Delaware, as the same may be amended and supplemented.
3. The amendment of the certificate of incorporation herein
certified has been duly adopted in accordance with the
<PAGE> 14
provisions of sections 228 and 242 of the General Corporation Law of the State
of Delaware.
Signed and attested to on Sept. 17, 1986.
---------
/s/
----------------------------
President
Attest:
/s/
- ------------------------------
Secretary
-2-
<PAGE> 15
[LOGO]
PAGE 1
I, MICHAEL HARKINS, SECRETARY OF STATE OF THE STATE OF DELAWARE DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
AMENDMENT OF CRB BROADCASTING CORPORATION FILED IN THIS OFFICE ON THE THIRD DAY
OF APRIL, A.D. 1989, AT 9 O'CLOCK A.M.
/s/ Michael Harkins
--------------------------
Michael Harkins, Secretary of State
AUTHENTICATION: 12126446
DATE: 04/03/19?9
[STAMP]
<PAGE> 16
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
CRB BROADCASTING CORPORATION
The undersigned, being the President of CRB BROADCASTING CORPORATION,
Delaware corporation (the "Corporation"), does hereby certify that:
1. The certificate of Incorporation of the Corporation is hereby amended
by deleting the first paragraph of Article Fourth thereof and substituting in
lieu of said paragraph the following:
"FOURTH. The total number of shares of all classes of stock
which the Corporation shall have authority to issue is 260,000 shares
of which (a) 40,000 shares shall be Preferred Stock, issuable in series
with a par value of $100.00 per share, (b) 20,000 shares shall be
Preferred Stock, issuable in series with a par value of $155.55 per
share, and (c) 200,000 shares shall be Common Stock, with a par value
of $.01 per share.
2. The amendment of the Certificate of Incorporation herein certified
has been duly adopted by the Board of Directors and the stockholders of the
Corporation in accordance
<PAGE> 17
with the provisions of Sections 228 and 242 of the General Corporation Law of
the State of Delaware.
Signed and attested to this 28th
day of March, 1989.
/s/ Edward G. Rogoff
----------------------------
Edward G. Rogoff
President
Attest :
/s/ Robert P. Connor
- ----------------------
Robert P. Connor
Secretary
0152y
-2-
<PAGE> 18
PAGE 1
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
----------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
AMENDMENT OF "CRB BROADCASTING CORPORATION", CHANGING ITS NAME FROM "CRB
BROADCASTING CORPORATION" TO "COMMODORE MEDIA, INC.", FILED IN THIS OFFICE ON
THE SEVENTEENTH DAY OF MARCH, A.D. 1995, AT 8:30 O'CLOCK A.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE KENT
COUNTY RECORDER OF DEEDS FOR RECORDING.
/s/ Edward J. Freel
[SEAL] -----------------------------------
Edward J. Freel, Secretary of State
0897014 8100 AUTHENTICATION: 7441899
950059186 DATE: 03-17-95
<PAGE> 19
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
CRB BROADCASTING CORPORATION
UNDER SECTION 242 OF THE DELAWARE GENERAL CORPORATION LAW
The undersigned, being the President and Chief Executive Officer of CRB
Broadcasting Corporation, a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), does hereby certify as follows:
1. The name of the Corporation is CRB Broadcasting Corporation.
2. The Certificate of Incorporation of the Corporation was filed with
the Secretary of State of Delaware on August 5, 1980.
3. The Certificate of Incorporation of the Corporation is hereby
amended to effect a change in Article One thereof, relating to the name of
the Corporation, accordingly Article One of the Certificate of
Incorporation shall be amended to read as follows:
"FIRST: The name of the Corporation is Commodore Media, Inc. (the
"Corporation")."
4. The Board of Directors of the Corporation, pursuant to Sections
141(f) and 242 of the General Corporation Law of the State of Delaware,
adopted resolutions approving the foregoing amendment and directed that the
amendment be submitted to the stockholders of the Corporation for their
consideration and approval.
5. The Stockholders of the Corporation approved the amendment in
accordance with Sections 228(a) and 242 of the General Corporation Law of
the State of Delaware.
* * * *
<PAGE> 20
IN WITNESS WHEREOF, the undersigned, being the President and
Chief Executive Officer, under penalties of perjury does hereby declare and
certify that this is the act and deed of the Corporation and the facts stated
herein are true, and accordingly has hereunto signed this Certificate of
Amendment to Certificate of Incorporation this 16th day of March, 1995.
By: /s/ Bruce Friedman
------------------------------------
Bruce A. Friedman, President and
Chief Executive Officer
2
<PAGE> 21
STATE OF DELAWARE PAGE 1
OFFICE OF THE SECRETARY OF STATE
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE RESTATED
CERTIFICATE OF "COMMODORE MEDIA, INC.", FILED IN THIS OFFICE ON THE TWENTIETH
DAY OF APRIL , A. D . 1995, AT 10:30 O'CLOCK A.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE KENT
COUNTY RECORDER OF DEEDS FOR RECORDING.
/s/ Edward J. Freel
[SEAL] -----------------------------------
Edward J. Freel, Secretary of State
0897014 8100 AUTHENTICATION: 7479272
950086999 DATE: 04-20-95
<PAGE> 22
CERTIFICATE OF AMENDED AND
RESTATED CERTIFICATE OF INCORPORATION
OF
COMMODORE MEDIA, INC.
Bruce A. Friedman, being the duly elected President and Chief
Executive Officer of Commodore Media, Inc., a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), does hereby certify as follows:
1. That the Corporation filed its original Certificate
of Incorporation with the Secretary of State of the State of Delaware on August
5, 1980 (the "Certificate of Incorporation").
2. That the original name of the Corporation was CRB
Broadcasting Corporation.
3. That the Board of Directors of the Corporation,
pursuant to Sections 141, 242 and 245 of the General Corporation Law of the
State of Delaware, adopted resolutions authorizing the Corporation to amend,
integrate and restate the Corporation's Certificate of Incorporation in its
entirety to read as set forth in Exhibit A attached hereto and made a part
hereof.
4. That the sole stockholder of the Corporation approved
and adopted the Amended and Restated Certificate of Incorporation of the
Corporation in accordance with Sections 228, 242 and 245 of the General
Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the undersigned, being the President
hereinabove named, for the purpose of amending and restating the Certificate of
Incorporation of the Corporation pursuant to the General Corporation Law of the
State of Delaware, under penalties of perjury does hereby declare and certify
that this is the act and deed of the Corporation and the facts stated herein are
true, and accordingly has hereunto signed this Certificate of Amended and
Restated Certificate of Incorporation this 19th day of April, 1995.
By:/s/ Bruce A. Friedman
-----------------------------
Name: Bruce A. Friedman
Title: President and Chief
Executive Officer
<PAGE> 23
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
COMMODORE MEDIA, INC.
ARTICLE ONE
The name of the corporation is Commodore Media, Inc. (the
"Corporation").
ARTICLE TWO
The address Of the Corporation's registered office in the
State of Delaware is 32 Loockerman Square, Suite L-100, in the City of Dover,
County of Kent 19901. The name of its registered agent at such address is The
Prentice-Hall Corporation System, Inc.
ARTICLE THREE
The purpose of the Corporation is to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware.
ARTICLE FOUR
A. AUTHORIZED STOCK
The aggregate number of shares of all classes of capital stock
which the Corporation shall have the authority to issue is 3,486,373 shares of
capital stock, consisting of:
(a) 3,000,000 shares of Class A Common Stock, par value
$.01 per share (the "Class A Common"); and
(b) 486,373 shares of Class B Common Stock, par value
$.01 per share (the "Class B Common").
The Class A Common and the Class B Common are hereafter collectively
referred to as the "Common Stock."
Immediately upon the filing of the Amended and Restated Certificate of
Incorporation, each outstanding share of the Corporation's common stock, par
value $.01 per share, shall without further action by the Corporation or the
holder thereof be reclassified, changed and converted into 33,688 shares of
Class A Common and 486,373 shares of Class B Common.
2
<PAGE> 24
B. COMMON STOCK
Except as otherwise provided in this Part B or as otherwise
required by applicable law, all shares of Class A Common and Class B Common
shall be identical in all respects and shall entitle the holders thereof to the
same rights, preferences and privileges, subject to the same qualifications,
limitations, and restrictions, as set forth herein.
Section 1. Dividends.
As and when dividends are declared or paid with respect to
shares of Common Stock, whether in cash, property or securities of the
Corporation, the holders of Class A Common and the holders of Class B Common
shall be entitled to receive such dividends pro rata at the same rate per share
of each class of Common Stock; provided that if dividends are declared or paid
in shares of Class A Common or Class B Common, the dividends payable in shares
of Class A Common shall be payable to holders of Class A Common and the
dividends payable in shares of Class B Common shall be payable to holders of
Class B Common.
Section 2. Voting Rights.
The holders of Class A Common shall be entitled to one vote
per share on all matters to be voted on by the Corporation's stockholders, and
the holders of Class B Common shall be entitled to eight votes per share on all
matters to be voted on by the Corporation's stockholders. Except as otherwise
required by applicable law, the holders of Class A Common and Class B Common
shall vote together as a single class on all matters submitted to a vote of the
Corporation's stockholders.
Section 3. Liquidation.
The holders of the Class A Common and the holders of the Class
B Common shall be entitled to participate pro rata at the same rate per share of
each class of Common Stock in all distributions to the holders of the Common
Stock in any liquidation, dissolution or winding up of the Corporation.
3
<PAGE> 25
Section 4. Conversion.
a. Conversion of Class B Common.
Each holder of Class B Common shall be entitled at any time
and from time to time to convert any or all of the shares of such holder's Class
B Common into the same number of shares of Class A Common.
b. Conversion Procedure.
(i) Each conversion of shares of Class B Common into shares of
Class A Common shall be effected by the surrender of the certificate or
certificates representing the shares to be converted at the principal office of
the Corporation at any time and from time to time during normal business hours,
together with a written notice by the holder of such Class B Common stating (a)
that such holder desires to convert all the shares, or a stated number of the
shares, of Class B Common represented by such certificate or certificates into
Class A Common and (b) the name or names in which the certificate or
certificates for shares of Class A Common are to be issued. To the extent
permitted by law, each conversion shall be deemed to have been effected as of
the close of business on the date on which such certificate or certificates have
been surrendered and such notice has been received, and at such time the rights
of the holder of the converted Class B Common as such holder shall cease and the
person or persons in whose name or names the certificate or certificates for
shares of Class A Common are to be issued upon such conversion shall be deemed
to have become the holder or holders of record of the shares of Class A Common
represented thereby.
(ii) Promptly after the surrender of the certificate or
certificates and the receipt of such written notice, the Corporation shall issue
and deliver in accordance with the surrendering holder's instructions (a) the
certificate or certificates for the shares of Class A Common issuable upon such
conversion and (b) a certificate representing any shares of Class B Common that
were represented by the certificate or certificates delivered to the corporation
in connection with such conversion but that were not converted.
(iii) The issuance of certificates for shares of Class A
Common upon conversion of shares of Class B Common shall be made without charge
to the holders of such shares for any issuance tax in respect thereof or other
cost incurred by the Corporation in connection with such conversion and the
related issuance of shares of Class A Common, provided that the Corporation
shall not be required to pay any tax which may be payable in respect of any
transfer involved in the issuance and delivery of any certificate in a name
other than that of the holder of the shares of Class B Common which are being
converted.
4
<PAGE> 26
(iv) The Corporation shall at all times reserve and keep
available out of its authorized but unissued shares of Class A Common, solely
for the purpose of issuance upon the conversion of shares of Class B Common,
such number of shares of Class A Common issuable upon the conversion of all
outstanding shares of Class B Common. The Corporation will not take any action
which results in any adjustment of the number of shares of Class A Common
issuable upon conversion of shares of Class B Common if the total number of
shares of Class A Common issued or issuable after such action upon conversion of
shares of Class B Common would exceed the total number of shares of Class A
Common then authorized by the Corporation's Amended and Restated Certificate of
Incorporation. All shares of Class A Common which are so issuable shall, when
issued, be duly and validly issued, fully paid and nonassessable and free from
all taxes, liens and charges. The Corporation shall take all such actions as may
be necessary to assure that all such shares of Class A Common may be so issued
without violation of any applicable law or governmental regulation or any
requirements of any domestic securities exchange upon which shares of Class A
Common may be listed (except for official notice of issuance which shall be
immediately transmitted by the Corporation upon issuance).
(v) The Corporation shall not close its books against the
transfer of shares of Class B Common or of shares of Class A Common issued or
issuable upon conversion of shares of Class B Common in any manner which would
interfere with the timely conversion of shares of Class B Common. The
Corporation shall assist and cooperate with any holder of shares of Class B
Common required to make any governmental filings or obtain any governmental
approval prior to or in connection with any conversion of shares of Class B
Common hereunder (including, without limitation, making any filings required to
be made by the Corporation).
(vi) Shares of Class B Common which are converted into shares
of Class A Common as provided herein shall not be reissued.
Section 5. Registration of Transfer.
The Corporation shall keep at its principal office (or such
other place as the Corporation reasonably designates) a register for the
registration of shares of Common Stock. Upon the surrender of any certificate
representing shares of any class of Common Stock at such place, the Corporation
shall, at the request of the registered holder of such certificate, execute and
deliver a new certificate or certificates in exchange therefor representing in
the aggregate the number of shares of such class represented by the surrendered
certificate, and the Corporation forthwith shall cancel such surrendered
certificate. Each such new certificate shall be registered in such name and
shall represent such number of shares of such class as is requested by the
holder of the surrendered certificate and shall be substantially identical in
form to the surrendered certificate. The issuance of new certificates
5
<PAGE> 27
shall be made without charge to the holders of the surrendered certificates for
any issuance tax in respect thereof or other cost incurred by the Corporation in
connection with such issuance.
Section 6. Replacement.
Upon receipt of evidence reasonably satisfactory to the
Corporation (an affidavit of the registered holder shall be satisfactory) of the
ownership and the loss, theft, destruction or mutilation of any certificate
evidencing one or more shares of any class of Common Stock, and in the case of
any such loss, theft or destruction, upon receipt of an indemnity reasonably
satisfactory to the Corporation (provided that if the holder is a financial
institution or other institutional investor its own agreement shall be
satisfactory), or, in the case of any such mutilation upon surrender of such
certificate, the Corporation shall (at its expense) execute and deliver in lieu
of such certificate a new certificate of like kind representing the number of
shares of such class represented by such lost, stolen, destroyed or mutilated
certificate and dated the date of such lost, stolen, destroyed or mutilated
certificate.
Section 7. Adjustments.
If the Corporation in any manner subdivides or combines the
outstanding shares of one class of Common Stock, the outstanding shares of the
other class of Common Stock shall be proportionately subdivided or combined in a
similar manner. Upon any adjustment made pursuant to this Section 7, then and in
each such case the Corporation shall give written notice thereof to each holder
of shares of Common Stock at the address of such holder as shown on the books of
the Corporation.
Section B. Notices.
All notices referred to herein shall be in writing, shall be
delivered personally or by first class mail, postage prepaid, and shall be
deemed to have been given when so delivered or mailed to the Corporation at its
principal executive offices and to any stockholder at such holder's address as
it appears in the stock records of the Corporation (unless otherwise specified
in a written notice to the Corporation by such holder).
ARTICLE FIVE
The Board of Directors of the Corporation shall have the power
to adopt, amend or repeal by-laws of the Corporation, except as may be otherwise
be provided in the by-laws of the Corporation.
6
<PAGE> 28
ARTICLE SIX
The Corporation expressly elects not to be governed by Section
203 of the General Corporation Law of the State of Delaware.
ARTICLE SEVEN
The personal liability of the directors of the Corporation is
hereby eliminated to the fullest extent permitted by paragraph (7) of subsection
(b) of Section 102 of the General Corporation Law of the State of Delaware, as
the same may be amended or supplemented.
ARTICLE EIGHT
The Corporation reserves the right to amend or repeal any
provisions contained in this Amended and Restated Certificate of Incorporation
from time to time and at any time in the manner now or hereafter prescribed by
the laws of the State of Delaware, and all rights conferred upon stockholders
and directors are granted subject to such reservation.
ARTICLE NINE
Notwithstanding the provisions of Article Seven, the
Corporation shall indemnify its directors, officers and certain other persons on
the following terms:
(a) Nature of Indemnity.
(i) 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
(other than an action by or in the right of the Corporation), by reason of the
fact that he is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee, or agent of another corporation, partnership, joint
venture, trust or other enterprise (including service with respect to employee
benefit plans, whether the basis of such proceeding is an alleged action in an
official capacity as a director, officer, employee, fiduciary or agent or in any
other capacity while serving as a director, officer, employee, fiduciary or
agent) shall be indemnified and held harmless by the Corporation to the fullest
extent which the Corporation is empowered to do so by the General Corporation
Law of the State of Delaware, as the same exists or may hereafter be amended
(but, in the case of any such amendment, only to the extent that such amendment
permits the Corporation to provide broader indemnification rights than said law
permitted the Corporation to provide prior to such amendment) against all
expenses (including attorneys' fees), judgments, fines
7
<PAGE> 29
and amounts paid in settlement actually and reasonably incurred by such person
in connection with such action, suit or proceeding if he acted in good faith and
in a manner he reasonably believed to be in or not opposed to the best interests
of the corporation, and, with respect to any criminal action or proceeding, had
no reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
(ii) The Corporation may indemnify any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action or suit by or in the right of the Corporation to procure a
judgment in its favor by reason of the fact that he is or was a director,
officer, employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation and except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall have
been adjudged to be liable to the Corporation unless and only to the extent that
the Court of Chancery of the State of Delaware or the court in which such action
or suit was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such expenses which
the Court of Chancery or such other court shall deem proper.
(iii) To the extent that a director, officer,
employee or agent of the Corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred to in sections
(a) of this Article Nine, or in defense of any claim, issue or matter therein,
he or she shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection therewith.
(b) Procedure for Indemnification of Directors and
Officers. Any indemnification under section (a) of this Article Nine (unless
ordered by a court) shall be made by the Corporation only as authorized in the
specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he or she has
met the
8
<PAGE> 30
applicable standard of conduct set forth in section (a) of this Article Nine.
Such determination shall be made (1) by the Board of Directors of the
Corporation by a majority vote of a quorum consisting of directors who were not
parties to such action, suit or proceeding, or (2) if such a quorum is not
obtainable, or, even if obtainable a quorum of disinterested directors so
directs, by independent legal counsel in written opinion, or (3) by the
stockholders of the Corporation. Any indemnification of a director or officer of
the Corporation under section (a) of this Article Nine or advance of expenses
under section (c) of this Article Nine shall be made promptly, and in any event
within 30 days, upon the written request of the director or officer. If a
determination by the Corporation that the director or officer is entitled to
indemnification pursuant to this Article Nine is required, and the Corporation
fails to respond within 60 days to a written request for indemnity, the
Corporation shall be deemed to have approved the request. If the Corporation
denies a written request for indemnification or advancing of expenses, in whole
or in part, or if payment in full pursuant to such request is not made within 30
days, the right to indemnification or advances as granted by this Article Nine
shall be enforceable by the director or officer in any court of competent
jurisdiction. Such person's costs and expenses incurred in connection with
successfully establishing his or her right to indemnification, in whole or in
part, in any such action shall also be indemnified by the Corporation. It shall
be a defense to any such action (other than an action brought to enforce a claim
for expenses incurred in defending any proceeding in advance of its final
disposition where the required undertaking, if any, has been tendered to the
Corporation) that the claimant has not met the standards of conduct which make
it permissible under the General Corporation Law of the State of Delaware for
the Corporation to indemnify the claimant for the amount claimed, but the burden
of such defense shall be on the Corporation. Neither the failure of the
Corporation (including its Board of Directors, independent legal counsel or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standard of conduct set forth in the
General Corporation Law of the State of Delaware, nor an actual determination by
the Corporation (including its Board of Directors, independent legal counsel or
its stockholders) that the claimant has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that the
claimant has not met the applicable standard of conduct.
(c) Expenses. Expenses (including attorneys' fees)
incurred by any person described in paragraph l of this Article Nine in
defending a proceeding shall be paid by the Corporation in advance of such
proceeding's final disposition unless otherwise determined by the Board of
Directors of the Corporation in the specific case upon receipt of an undertaking
by or on behalf of the director or officer to repay such amount if it shall
ultimately be
9
<PAGE> 31
determined that he or she is not entitled to be indemnified by the Corporation.
Such expenses (including attorneys' fees) incurred by other employees and agents
may be so paid upon such terms and conditions, if any, as the Board of Directors
of the Corporation deems appropriate.
(d) Nonexclusivity of Article Nine. The rights to
indemnification and the payment of expenses incurred in defending a proceeding
in advance of its final disposition conferred in this Article Nine shall not be
exclusive of any other right which any person may have or hereafter acquire
under any statute, provision of this Certificate of Incorporation, by-law,
agreement, vote of stockholders or disinterested directors or otherwise.
(e) Insurance. The Corporation may purchase and maintain
insurance on its own behalf and on behalf of any person who is or was a
director, officer, employee, fiduciary, or agent of the Corporation or is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him or her and incurred by him
or her in any such capacity, or arising out of his status as such, whether or
not the corporation would have the power to indemnify such person against such
liability under this Article Nine.
(f) Merger or Consolidation. For purposes of this Article
Nine references to "the Corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, and employees or agents, so that any person who is or was a
director, officer, employee or agent of such constituent corporation, or is or
was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, shall stand in the same position under this Article
Nine with respect to the resulting or surviving corporation as he or she would
have with respect to such constituent corporation if its separate existence had
continued.
(g) Employees and Agents. Persons who are not covered by
the foregoing provisions of this Article Nine and who are or were employees or
agents of the Corporation, or who are or were serving at the request of the
Corporation as employees or agents of another corporation, partnership, joint
venture, trust or other enterprise, may be indemnified to the extent authorized
at any time or from time to time by the Board of Directors of the Corporation.
10
<PAGE> 32
(h) Contract of Rights. The provisions of this Article
Nine shall be deemed to be a contract right between the Corporation and each
director or officer who serves in any such capacity at any time while this
Article Nine and the relevant provisions of the General Corporation Law of the
State of Delaware or other applicable law are in effect, and any repeal or
modification of this Article Nine or any such law shall not affect any rights or
obligations then existing with respect to any state of facts or proceeding then
existing.
ARTICLE TEN
Each of the provisions of this Amended and Restated
Certificate of Incorporation shall be subject to and controlled by the specific
provisions of the General Corporation Law of the State of Delaware which relate
to their subject matter, and any inconsistency between the provisions of this
Amended and Restated Certificate of Incorporation and the General Corporation
Law of the State of Delaware shall be decided in favor of the General
Corporation Law of the State of Delaware.
11
<PAGE> 33
PAGE 1
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
AMENDMENT OF "COMMODORE MEDIA, INC.", FILED IN THIS OFFICE ON THE THIRTIETH DAY
OF APRIL, A.D. 1996, AT 9 O'CLOCK A.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW
CASTLE COUNTY RECORDER OF DEEDS FOR RECORDING.
[SEAL] /s/ EDWARD J. FREEL
-----------------------------------
Edward J. Freel, Secretary of State
0897014 8100 AUTHENTICATION: 7927015
960124314 DATE: 04-30-96
<PAGE> 34
[STAMP]
CERTIFICATE OF AMENDMENT TO THE AMENDED AND
RESTATED CERTIFICATE OF INCORPORATION
OF
COMMODORE MEDIA, INC.
Bruce A. Friedman, being the duly elected President and Chief Executive
Officer of Commodore Media, Inc. (the "Corporation") a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware (the "DGCL"), does hereby certify as follows:
1. The Corporation filed its Amended and Restated Certificate of
Incorporation with the Secretary of State of the State of Delaware on April 20,
1995 (the "Certificate of Incorporation") .
2. The Board of Directors of the Corporation, pursuant to
Sections 141 and 242 of the DGCL, adopted resolutions authorizing the
Corporation to amend the Corporation's Certificate of Incorporation as set forth
below.
3. The stockholder of in excess of 50% of the voting power of
the Corporation approved and adopted the Amendment to the Certificate of
Incorporation by written consent in accordance with Sections 228 and 242 of the
DGCL, and written notice of such action has been given to the non-consenting
stockholders of the Corporation as provided in Section 228 of the DGCL.
4. The text of Article Four, "A. Authorized Stock", of the
Certificate of Incorporation is hereby amended to read in its
entirety as follows:
"A. AUTHORIZED STOCK
The aggregate number of shares of all classes of capital stock
which the Corporation shall have the authority to issue is 3,586,373 shares of
capital stock, consisting of;
(a) 3,000,000 shares of Class A Common Stock, par value $.01 per
share (the "Class A Common");
(b) 486,373 shares of Class B Common Stock, par value $.01 per
share (the "Class B Common"); and
(c) 100,000 shares of Preferred Stock, par value $.01 per share
(the "Preferred Stock").
<PAGE> 35
The Class A Common and the Class B Common are hereinafter
collectively referred to as the "Common Stock".
Shares of the Preferred Stock of the Corporation may be issued
from time to time in one or more classes or series, each of which class or
series shall have such distinctive designation, number of shares, or title as
shall be fixed by the Board of Directors of the Corporation prior to the
issuance of any shares thereof. Each such class or series of Preferred Stock
shall consist of such number of shares, and have such voting powers, full or
limited, or no voting powers, and such preferences and relative, participating,
optional or other special rights and such qualifications, limitations or
restrictions thereof, as shall be stated in such resolution or resolutions
providing for the issue of such class or series of Preferred Stock as may be
adopted from time to time by the Board of Directors of the Corporation prior to
the issuance of any shares thereof pursuant to the authority hereby expressly
vested in it, and as evidenced by a certificate of designation with respect to
each such class or series of Preferred Stock filed under Section 151 of the
General Corporation Law of the State of Delaware, all in accordance with the
laws of the State of Delaware."
IN WITNESS WHEREOF, the undersigned, being the President hereinabove
named, for the purpose of amending the Certificate of Incorporation of the
Corporation pursuant to the DGCL, under penalties of perjury does hereby declare
and certify that this is the act and deed of the Corporation and the facts
stated herein are true, and accordingly has hereunto signed this Certificate of
Amendment to the Amended and Restated Certificate of Incorporation this 29th
day of April, 1996.
By: /s/ Bruce Friedman
-----------------------
Name: Bruce A. Friedman
Title: President and Chief
Executive Officer
2
<PAGE> 36
PAGE 1
State of Delaware
Office of the Secretary of State
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
DESIGNATION OF "COMMODORE MEDIA, INC.", FILED IN THIS OFFICE ON THE FIRST DAY OF
MAY, A.D. 1996, AT 9 O'CLOCK A.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE
COUNTY RECORDER OF DEEDS FOR RECORDING.
/s/ Edward J. Freel
------------------------------
[SEAL] Edward J. Freel, Secretary of State
0897014 8100 AUTHENTICATION: 7929545
960126403 DATE: 05-01-96
<PAGE> 37
CERTIFICATE OF DESIGNATION OF
PREFERENCES AND RIGHTS OF
SENIOR EXCHANGEABLE REDEEMABLE PREFERRED STOCK, SERIES A
(PAR VALUE $.01 PER SHARE)
OF
COMMODORE MEDIA, INC.
---------------
Pursuant to Section 151 of the
General Corporation Law of the
State of Delaware
---------------
COMMODORE MEDIA, INC., a corporation organized and existing
under the General Corporation Law of the State of Delaware (the "Corporation"),
does hereby certify that, pursuant to authority conferred upon the Board of
Directors by the Certificate of Incorporation of the Corporation, and pursuant
to the provisions of Section 151 of the Delaware General Corporation Law, said
Board of Directors duly adopted a resolution on April 30, 1996, which approved
the filing of this Certificate of Designation and which resolution remains in
full force and effect as of the date hereof.
Pursuant to such resolution and the authority conferred upon
the Board of Directors by the Certificate of Incorporation of the Corporation,
there is hereby created a series of preferred stock of the Corporation, which
series shall have the following powers, preferences, and relative,
participating, optional or other special rights, and the qualifications,
limitations or restrictions thereof, in addition to those set forth in the
Certificate of Incorporation of the Corporation:
1. Certain Definitions. As used herein, the following
terms shall have the following meanings (with terms defined in the singular
having comparable meanings when used in the plural and vice versa), unless the
context otherwise requires:
"Accreted Value" means, as of any date, with respect to each
$1,000 principal amount at maturity of Notes: (A) if such date is prior to May
1, 1998, the sum of (1) the initial offering price of such Notes and (2) the
portion of the original issue discount for such Notes (which for this purpose
shall be deemed to be the excess of the principal amount over such initial
offering price) which shall be amortized with respect to such Notes to but not
including such date, such original issue discount to be so amortized at a rate,
which together with cash interest paid on the Notes, represents a yield to
maturity of 13 1/4% per annum using semi-
<PAGE> 38
-2-
annual compounding of such rate on each May 1, and November 1, commencing
November 1, 1995, (the "semi-annual compounding dates") from the Issue Date but
not including the date of determination (the following table indicates the
Accreted Value at the semi-annual compounding dates with respect to each $1,000
principal amount at maturity of Notes):
<TABLE>
<CAPTION>
Semi-Annual Accreted Value
Compounding Date (per $1,000 principal amount)
---------------- -----------------------------
<S> <C>
May 1, 1996 ..................................... $901.79
November 1, 1996 ................................ $924.03
May 1, 1997...................................... $947.75
November 1, 1997................................. $973.04
</TABLE>
and (B) if such date occurs on or after May 1, 1998, $1,000.
At any time prior to May 1, 1998 and between two semi-annual
compounding dates, the Accreted Value will be the sum of (1) the Accreted Value
for the semi-annual compounding date immediately preceding the date of
determination, and (2) the Proportionate Share (as defined below). The
"Proportionate Share" is an amount equal to the product of (i) the Accreted
Value for the immediately following semi-annual compounding date less the
Accreted Value for the immediately preceding semi-annual compounding date times
(ii) a fraction, the numerator of which is the number of days from the
immediately preceding semi-annual compounding date to the date of such
determination, using a 360-day year of twelve 30-day months, and the denominator
of which is 180.
"Acquired Indebtedness" means Indebtedness of a Person
(including an Unrestricted Subsidiary) existing at the time such Person becomes
a Restricted Subsidiary or assumed in connection with the acquisition of assets
from such Person.
"Affiliate" of any specified Person means any other Person
which directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, such specified Person. For the
purposes of this definition, "control" (including, with correlative meanings,
the terms "controlling," "controlled by," and "under common control with"), as
used with respect to 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 at least 10% of the
voting securities of a Person shall be deemed to be control and that for so long
as Susan Burden is a director and/or a Burden Entity controls, directly or
indirectly, Capital Stock of the Corporation with the right to 10% of the vote
of the Common
<PAGE> 39
-3-
Stock then outstanding, Susan Burden and/or such Burden Entity and any Person
(including affiliated trusts) controlled by any of them shall be Affiliates of
the Corporation and its Subsidiaries.
"Agent Member" has the meaning specified in Section 17.
"Asset Sale" means the sale, transfer or other disposition
(other than to the Corporation or any of its Restricted Subsidiaries) in any
single transaction or series of related transactions of (a) any Capital Stock of
or other equity interest in any Restricted Subsidiary of the Corporation, (b)
all or substantially all of the assets of the Corporation or of any Restricted
Subsidiary thereof, (c) real property or (d) all or substantially all of the
assets of any radio station, or part thereof, owned by the Corporation or any
Restricted Subsidiary thereof, or a division, line of business or comparable
business segment of the Corporation or any Restricted Subsidiary thereof;
provided that Asset Sales shall not include (i) sales, leases, conveyances,
transfers or other dispositions to the Corporation or to a Restricted Subsidiary
or to any other Person if after giving effect to such sale, lease, conveyance,
transfer or other disposition such other Person becomes a Restricted Subsidiary
and (ii) an aggregate amount of up to $500,000 received by the Corporation
subsequent to the Issue Date in any transaction or transactions that would
otherwise qualify as an Asset Sale.
"Asset Sale Proceeds" means, with respect to any Asset Sale,
(i) cash received by the Corporation or any Restricted Subsidiary from such
Asset Sale (including cash received as consideration for the assumption of
liabilities incurred in connection with or in anticipation of such Asset Sale),
after (a) provision for all income or other taxes measured by or resulting from
such Asset Sale, (b) payment of all brokerage commissions, underwriting and
other fees and expenses related to such Asset Sale, (c) provision for minority
interest holders in any Restricted Subsidiary as a result of such Asset Sale and
(d) deduction of appropriate amounts to be provided by the Corporation or a
Restricted Subsidiary as a reserve, in accordance with GAAP, against any
liabilities associated with the assets sold or disposed of in such Asset Sale
and retained by the Corporation or a Restricted Subsidiary after such Asset
Sale, including, without limitation, pension and other postemployment benefit
liabilities and liabilities related to environmental matters or against any
indemnification obligations associated with the assets sold or disposed of in
such Asset Sale, and (ii) promissory notes and other non-cash consideration
received by the Corporation or any Restricted Subsidiary from such Asset Sale or
other disposition upon the liquidation or conversion of such notes or non-cash
consideration into cash.
<PAGE> 40
-4-
"Asset Swap" has the meaning specified in Section 8(C).
"Available Asset Sale Proceeds" means, with respect to any
Asset Sale, the aggregate Asset Sale Proceeds from such Asset Sale that have not
been applied in accordance with clause (iii)(a) or (iii)(b) of Section 8(C) and
which have not been the basis for an Excess Proceeds Offer in accordance with
clause (iii)(c) of such Section 8(C).
"Board of Directors" means the board of directors of the
Corporation or any committee authorized to act therefor.
"Board Resolution" means a copy of a resolution certified
pursuant to an officers' certificate to have been duly adopted by the Board of
Directors of the Corporation and to be in full force and effect, and delivered
to the Holder.
"Burden Entity" means Susan Burden, any lineal descendants of
Carter Burden, any trust or estate the beneficiary of which is Susan Burden or
any lineal descendants of Carter Burden or any entity owned or controlled by any
of the foregoing.
"Business Day" means a day that is not a Saturday, a Sunday or
a day on which banking institutions in the State of New York are not required to
be open.
"Capital Stock" means, with respect to any Person, any and all
shares or other equivalents (however designated) of capital stock, partnership
interests or any other participation, right or other interest in the nature of
an equity interest in such Person or any option, warrant or other security
convertible into any of the foregoing.
"Capitalized Lease Obligations" means Indebtedness represented
by obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP, and the amount of such Indebtedness
shall be the capitalized amount of such obligations determined in accordance
with GAAP.
"Change of Control" of the Corporation will be deemed to have
occurred at such time as (i) any Person (including a Person's Affiliates and
associates), other than a Permitted Holder, becomes the beneficial owner (as
defined under Rule 13d-3 or any successor rule or regulation promulgated under
the Exchange Act) of 50% or more of the total voting power of the Corporation's
Common Stock, (ii) prior to a Public Equity Offering, Permitted Holders shall
cease to own beneficially at least 51% of the total voting power of the
Corporation's Common Stock, (iii) any Person (including a Person's Affiliates
and associates), other than a Permitted Holder, becomes the beneficial owner of
more than 33 1/3% of the total
<PAGE> 41
-5-
voting power of the Corporation's Common Stock, and the Permitted Holders
together with Bruce Friedman beneficially own, in the aggregate, a lesser
percentage of the total voting power of the Common Stock of the Corporation than
such other Person and do not have the right or ability by voting power, contract
or otherwise to elect or designate for election a majority of the Board of
Directors of the Corporation, (iv) there shall be consummated any consolidation
or merger of the Corporation in which the Corporation is not the continuing or
surviving corporation or pursuant to which the Common Stock of the Corporation
would be converted into cash, securities or other property, other than a merger
or consolidation of the Corporation in which the holders of the Common Stock of
the Corporation outstanding immediately prior to the consolidation or merger
hold, directly or indirectly, at least a majority of the Common Stock of the
surviving corporation immediately after such consolidation or merger or (v)
during any period of two consecutive years, individuals who at the beginning of
such period constituted the Board of Directors of the Corporation (together with
any new directors whose election by such Board of Directors or whose nomination
for election by the stockholders of the Corporation has been approved by 66 2/3%
of the directors then still in office who either were directors at the beginning
of such period or whose election or recommendation for election was previously
so approved) cease to constitute a majority of the Board of Directors of the
Corporation.
"Change of Control Offer" has the meaning specified in Section
8(D).
"Change of Control Payment Date" has the meaning specified in
Section 8(D).
"Change of Control Purchase Price" has the meaning specified
in Section 8(D).
"Class A Common Stock" means the Class A Common Stock, par
value $.01 per share, of the Company.
"Common Stock" of any Person means all Capital Stock of such
Person that is generally entitled to (i) vote in the election of directors of
such Person or (ii) if such Person is not a corporation, vote or otherwise
participate in the selection of the governing body, partners, managers or others
that will control the management and policies of such Person.
"Corporation" means Commodore Media, Inc., a Delaware
corporation.
"Credit Facility" means Indebtedness of the Corporation and
its Restricted Subsidiaries under a revolving credit facility
<PAGE> 42
-6-
in an aggregate principal amount not to exceed the greater of (a) $3 million or
(b) 85% of the net book value of the Corporation's and its Restricted
Subsidiaries' accounts receivable.
"Depositary" has the meaning specified in Section 17.
"Disqualified Capital Stock" means any Capital Stock of the
Corporation or a Restricted Subsidiary thereof which, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable at the option of the holder), 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, in whole or in
part, on or prior to the maturity date of the Notes or the Series A Preferred
Stock, for cash or securities constituting Indebtedness. Without limitation of
the foregoing, Disqualified Capital Stock shall be deemed to include (i) any
Preferred Stock of a Restricted Subsidiary of the Corporation and (ii) any
Preferred Stock of the Corporation, with respect to either of which, under the
terms of such Preferred Stock, by agreement or otherwise, such Restricted
Subsidiary or the Corporation is obligated to pay current dividends or
distributions in cash during the period prior to the maturity date of the Notes;
provided, however, that Preferred Stock of the Corporation or any Restricted
Subsidiary thereof that is issued with the benefit of provisions requiring a
change of control offer to be made for such Preferred Stock in the event of a
Change of Control of the Corporation or Restricted Subsidiary, which provisions
have substantially the same effect as the provisions described in Section 8(K),
shall not be deemed to be Disqualified Capital Stock solely by virtue of such
provisions.
"Dividend Payment Date" means May 1, August 1, November 1 and
February 1, commencing November 1, 1996, unless such day is not a Business Day,
in which case the Dividend Payment Date shall be the immediately succeeding
Business Day.
"Dividend Rate" has the meaning specified in Section 3 hereof.
"Dividend Record Date" means a day fifteen (15) days preceding
the Dividend Payment Date.
"Employee Notes" has the meaning specified in Section 8(B)
hereof.
"Excess Proceeds Offer" has the meaning specified in Section
8(C) hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
<PAGE> 43
-7-
"Exchange Date" has the meaning specified in Section 6 hereof.
"Exchange Indenture" means the indenture under which the
Exchange Notes may be issued and which will be substantially identical to the
Indenture.
"Exchange Notes" means the notes which may be issued in
exchange for the Series A Preferred Stock under the Exchange Indenture and which
are substantially identical to the Notes.
"GAAP" means generally accepted accounting principles
consistently applied as in effect in the United States from time to time.
"Global Series A Preferred Stock" has the meaning specified in
Section 17 hereof.
"Guarantee" means the guarantee of the Corporation's
obligations under the Notes pursuant to the terms of the Indenture.
"Guarantor" means the Restricted Subsidiaries of the
Corporation which have guaranteed the Notes under the Indenture.
"Holder" means a registered holder of shares of Series A
Preferred Stock.
"Holder Information" has the meaning specified in Section 6(B)
hereof.
"incur" means, with respect to any Indebtedness or other
obligation of any Person, to create, issue, incur (by conversion, exchange or
otherwise), assume, guarantee or otherwise become liable in respect of such
Indebtedness or other obligation or the recording, as required pursuant to GAAP
or otherwise, of any such Indebtedness or other obligation on the balance sheet
of such Person (and "incurrence," "incurred," "incurrable," and "incurring"
shall have meanings correlative to the foregoing); provided that a change in
GAAP that results in an obligation of such Person that exists at such time
becoming Indebtedness shall not be deemed an incurrence of such Indebtedness.
"Indebtedness" means (without duplication), with respect to
any Person, any indebtedness at any time outstanding, secured or unsecured,
contingent or otherwise, which is for borrowed money (whether or not the
recourse of the lender is to the whole of the assets of such Person or only to a
portion thereof), or evidenced by bonds, notes, debentures or similar
instruments or representing the balance deferred and unpaid of the purchase
price of any property (excluding, without limitation, any balances that
<PAGE> 44
-8-
constitute accounts payable or trade payables, and other accrued liabilities
arising in the ordinary course of business) if and to the extent any of the
foregoing indebtedness would appear as a liability upon a balance sheet of such
Person prepared in accordance with GAAP, and shall also include, to the extent
not otherwise included (i) any Capitalized Lease Obligations, (ii) obligations
secured by a lien to which the property or assets owned or held by such Person
is subject, whether or not the obligation or obligations secured thereby shall
have been assumed, (iii) guarantees of items of other Persons which would be
included within this definition for such other Persons (whether or not such
items would appear upon the balance sheet of the guarantor), (iv) all
obligations for the reimbursement of any obligor on any letter of credit,
banker's acceptance or similar credit transaction, (v) in the case of the
Corporation, Disqualified Capital Stock of the Corporation or any Restricted
Subsidiary thereof, and (vi) obligations of any such Person under any Interest
Rate Agreement applicable to any of the foregoing (if and to the extent such
Interest Rate Agreement obligations would appear as a liability upon a balance
sheet of such Person prepared in accordance with GAAP). The amount of
Indebtedness of any Person at any date shall be the outstanding balance at such
date of all unconditional obligations as described above and, with respect to
contingent obligations, the maximum liability upon the occurrence of the
contingency giving rise to the obligation, provided (i) that the amount
outstanding at any time of any Indebtedness issued with original issue discount,
including the Notes, is the principal amount of such Indebtedness less the
remaining unamortized portion of the original issue discount of such
Indebtedness at such time as determined in conformity with GAAP and (ii) that
Indebtedness shall not include any liability for Federal, state, local or other
taxes. Notwithstanding any other provision of the foregoing definition, any
trade payable arising from the purchase of goods or materials or for services
obtained in the ordinary course of business shall not be deemed to be
"Indebtedness" of the Corporation or any Restricted Subsidiaries for purposes of
this definition. Furthermore, guarantees of (or obligations with respect to
letters of credit supporting) Indebtedness otherwise included in the
determination of such amount shall not also be included.
"Indenture" means the Indenture dated as of April 21, 1995
between the Corporation, certain Subsidiary Guarantors and IBJ Schroder Bank &
Trust Company, as Trustee, relating to the Notes, as amended, restated or
supplemented from time to time.
"Interest Rate Agreement" means, for any Person, any interest
rate swap agreement, interest rate cap agreement, interest rate collar agreement
or other similar agreement designed to protect the party indicated therein
against fluctuations in interest rates.
<PAGE> 45
-9-
"Investments" means, directly or indirectly, any advance,
account receivable (other than an account receivable or payment plan arising in
the ordinary course of business), loan or capital contribution to (by means of
transfers of property to others, payments for property or services for the
account or use of others or otherwise), the purchase of any stock, bonds, notes,
debentures, partnership or joint venture interests or other securities of, the
acquisition, by purchase or otherwise, of all or substantially all of the
business or assets or stock or other evidence of beneficial ownership of, any
Person or the making of any investment in any Person. Investments shall exclude
(i) extensions of trade credit on commercially reasonable terms in accordance
with normal trade practices and (ii) the repurchase of securities of any Person
by such Person.
"Issue Date" means the date the Notes were first issued by the
Corporation and authenticated by the Trustee under the Indenture.
"Liquidation Preference" means $1,000 per share of Series A
Preferred Stock plus, for purposes of Section 9 hereof, whether such share is
issued or accrued, in each case, accrued and unpaid dividends, whether or not
declared, if any, thereon through the date such Liquidation Preference is paid.
"Moody's" means Moody's Investors Service, Inc. and its
successors.
"Net Investment" means the excess of (i) the aggregate amount
of all Investments in Unrestricted Subsidiaries made by the Company on or after
the Issue Date (in the case of an Investment made other than in cash, the amount
shall be the fair market value of such Investment as determined in good faith by
the Board of Directors of the Company) over (ii) the sum of (A) the aggregate
amount returned in cash on such Investments whether through interest payments,
principal payments, dividends or other distributions and (B) the net cash
proceeds received by the Company from the disposition of all or any portion of
such Investments (other than to a Subsidiary of the Company); provided, however,
that with respect to all Investments made in an Unrestricted Subsidiary the sum
of clauses (A) and (B) above with respect to such Investments shall not exceed
the aggregate amount of all such Investments made in such Unrestricted
Subsidiary.
"Net Proceeds" means (a) in the case of any sale of Capital
Stock by the Corporation, the aggregate net proceeds received by the
Corporation, after payment of expenses, commissions and the like incurred in
connection therewith, whether such proceeds are in cash or in property (valued
at the fair market value thereof, as determined in good faith by the Board of
<PAGE> 46
-10-
Directors, at the time of receipt) and (b) in the case of any exchange,
exercise, conversion or surrender of outstanding securities of any kind for or
into shares of Capital Stock of the Corporation which is not Disqualified
Capital Stock, the net book value of such outstanding securities on the date of
such exchange, exercise, conversion or surrender (plus any additional amount
required to be paid by the holder to the Corporation upon such exchange,
exercise, conversion or surrender, less any and all payments made to the
holders, e.g., on account of fractional shares and less all expenses incurred by
the Corporation in connection therewith).
"Notes" means the securities that are issued under the
Indenture and called the 13 1/4% Senior Subordinated Notes due 2003.
"Offer Period" has the meaning specified in Section 8(C).
"Permitted Holders" means (i) Susan Burden, (ii) the heirs,
executors, administrators testamentary, trustees, legatees or beneficiaries of
Carter Burden or of any person described in (i) and (ii), and (iii) a trust, the
beneficiaries of which include only persons described in (i) and (ii) and their
respective spouses and lineal descendants.
"Permitted Indebtedness" means:
(i) Indebtedness of the Corporation or any Restricted
Subsidiary arising under or in connection with the Credit
Facility;
(ii) Indebtedness under the Notes and the Guarantees;
(iii) Indebtedness not covered by any other clause of this
definition which was outstanding on the date of the Indenture;
(iv) Indebtedness of the Corporation to any Restricted
Subsidiary and Indebtedness of any Restricted Subsidiary to the
Corporation or another Restricted Subsidiary;
(v) Purchase Money Indebtedness and Capitalized Lease
Obligations incurred to acquire property in the ordinary course of
business which Indebtedness and Capitalized Lease Obligations do not in
the aggregate exceed 5% of the Corporation's consolidated total assets;
(vi) Interest Rate Agreements;
(vii) Employee Notes to the extent permitted under the
terms of clause (v) set forth in Section 8(E) in an aggregate
<PAGE> 47
-11-
amount outstanding at any one time not to exceed $2,500,000, provided
that such Employee Notes are expressly subordinated to the Notes to the
same extent as the Notes are subordinated to Senior Indebtedness (as
defined in the Indenture);
(viii) additional Indebtedness of the Corporation not to
exceed $500,000 in principal amount outstanding at any time;
(ix) the deferred compensation portion of the
restructuring of the Employment Agreements as described in the
Corporation's filings under the Exchange Act to the extent classified
as Indebtedness; and
(x) Refinancing Indebtedness.
"Permitted Investments" means, for any Person, Investments
made on or after the date of the Indenture consisting of
(i) Investments by the Corporation, or by a Restricted
Subsidiary thereof, in the Corporation or a Restricted Subsidiary;
(ii) Temporary Cash Investments;
(iii) Investments by the Corporation, or by a Restricted
Subsidiary thereof, in a Person, if as a result of such Investment (a)
such Person becomes a Restricted Subsidiary of the Corporation or (b)
such Person is merged, consolidated or amalgamated with or into, or
transfers or conveys substantially all of its assets to, or is
liquidated into, the Corporation or a Restricted Subsidiary thereof;
(iv) reasonable and customary loans made to employees not
to exceed $500,000 in the aggregate at any one time outstanding; and
(v) an Investment that is made by the Corporation or a
Restricted Subsidiary thereof in the form of any stock, bonds, notes,
debentures, partnership or joint venture interests or other securities
that are issued by a third party to the Corporation or Restricted
Subsidiary solely as partial consideration for the consummation of an
Asset Sale that is otherwise permitted by Section 8(C).
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
other legal entity.
<PAGE> 48
-12-
"Physical Series A Preferred Stock" has the meaning specified
in Section 17 hereof.
"Preferred Stock" means any Capital Stock of a Person, however
designated, which entitles the holder thereof to a preference with respect to
dividends, distributions or liquidation proceeds of such Person over the holders
of other Capital Stock issued by such Person.
"Property" of any Person means all types of real, personal,
tangible, intangible or mixed property owned by such Person whether or not
included in the most recent consolidated balance sheet of such Person and its
Subsidiaries under GAAP.
"Public Equity Offering" means a public offering by the
Corporation of shares of its Common Stock (however designated and whether voting
or non-voting) and any and all rights, warrants or options to acquire such
common stock.
"Purchase Date" has the meaning specified in Section 8(C)
hereof.
"Purchase Money Indebtedness" means any Indebtedness incurred
in the ordinary course of business by a Person to finance the cost (including
the cost of construction) of an item of Property, the principal amount of which
Indebtedness does not exceed the sum of (i) 100% of such cost and (ii)
reasonable fees and expenses of such Person incurred in connection therewith.
"Redemption Date" when used with respect to any shares of
Series A Preferred Stock means the date fixed for such redemption of such shares
of Series A Preferred Stock pursuant to Section 7 hereof.
"Redemption Notice" has the meaning specified in Section 7(C)
hereof.
"Refinancing Indebtedness" means Indebtedness that refunds,
refinances or extends any Indebtedness of the Corporation outstanding on the
Issue Date or other Indebtedness permitted to be incurred by the Corporation or
its Restricted Subsidiaries pursuant to the terms of the Indenture, but only to
the extent that (i) the Refinancing Indebtedness is subordinated to the Notes to
at least the same extent as the Indebtedness being refunded, refinanced or
extended, if at all, (ii) the Refinancing Indebtedness is scheduled to mature
either (a) no earlier than the Indebtedness being refunded, refinanced or
extended, or (b) after the maturity date of the Notes, (iii) the portion, if
any, of the Refinancing Indebtedness that is scheduled to mature on or prior to
the maturity date of the Notes has a weighted average life to maturity
<PAGE> 49
-13-
at the time such Refinancing Indebtedness is incurred that is equal to or
greater than the weighted average life to maturity of the portion of the
Indebtedness being refunded, refinanced or extended that is scheduled to mature
on or prior to the maturity date of the Notes, (iv) such Refinancing
Indebtedness is in an aggregate principal amount that is equal to or less than
the sum of (a) the aggregate principal amount then outstanding under the
Indebtedness being refunded, refinanced or extended, (b) the amount of accrued
and unpaid interest, if any, and premiums owed, if any, not in excess of
preexisting prepayment provisions on such Indebtedness being refunded,
refinanced or extended and (c) the amount of customary fees, expenses and costs
related to the incurrence of such Refinancing Indebtedness and (v) such
Refinancing Indebtedness is incurred by the same Person that initially incurred
the Indebtedness being refunded, refinanced or extended, except that the
Corporation may incur Refinancing Indebtedness to refund, refinance or extend
Indebtedness of any Wholly-Owned Subsidiary of the Corporation.
"Reinvestment Date" has the meaning specified in Section 8(C)
hereof.
"Restricted Payment" means any of the following: (i) the
declaration or payment of any dividend or any other distribution or payment on
Capital Stock of the Corporation or any Restricted Subsidiary of the Corporation
or any payment made to the direct or indirect holders (in their capacities as
such) of Capital Stock of the Corporation or any Restricted Subsidiary of the
Corporation (other than (x) dividends or distributions payable solely in Capital
Stock (other than Disqualified Capital Stock) or in options, warrants or other
rights to purchase Capital Stock (other than Disqualified Capital Stock), and
(y) in the case of Restricted Subsidiaries of the Corporation, dividends or
distributions payable to the Corporation or to a Wholly-Owned Subsidiary of the
Corporation), (ii) the purchase, redemption or other acquisition or retirement
for value of any Capital Stock of the Corporation or any of its Restricted
Subsidiaries (other than Capital Stock owned by the Corporation or a
Wholly-Owned Subsidiary of the Corporation, excluding Disqualified Capital
Stock), (iii) the making of any principal payment on, or the purchase,
defeasance, repurchase, redemption or other acquisition or retirement for value,
prior to any scheduled maturity, scheduled repayment or scheduled sinking fund
payment, of any Indebtedness which is subordinated in right of payment to the
Notes other than subordinated Indebtedness acquired in anticipation of
satisfying a scheduled sinking fund obligation, principal installment or final
maturity (in each case due within one year of the date of acquisition), (iv) the
making of any Investment or guarantee of any Investment in any Person other than
a Permitted Investment, (v) any designation of a Restricted Subsidiary as an
Unrestricted Subsidiary and (vi) forgiveness of
<PAGE> 50
-14-
any Indebtedness of an Affiliate of the Corporation to the
Corporation or a Restricted Subsidiary.
"Required Filing Date" has the meaning specified in Section
8(A) hereof.
"Restricted Subsidiary" means a Subsidiary of the Corporation
other than an Unrestricted Subsidiary and includes all of the Subsidiaries of
the Corporation existing as of the Issue Date. The Board of Directors of the
Corporation may designate any Unrestricted Subsidiary or any Person that is to
become a Subsidiary as a Restricted Subsidiary if immediately after giving
effect to such action (and treating any Acquired Indebtedness as having been
incurred at the time of such action), the Corporation could have incurred at
least $1.00 of additional Indebtedness (other than Permitted Indebtedness)
pursuant to Section 4.06 of the Indenture.
"S&P" means Standard & Poor's Corporation and its successors.
"SEC" means the United States Securities and Exchange
Commission as constituted from time to time or any successor performing
substantially the same functions.
"Securities Act" means the Securities Act of 1933, as amended.
"Series A Preferred Stock" means the Senior Exchangeable
Redeemable Preferred Stock, Series A, par value $.01 per share, of the
Corporation.
"Series A Preferred Stock Certificate" has the meaning
specified in Section 6 hereof.
"Subsidiary" of any specified Person means any corporation,
partnership, joint venture, association or other business entity, whether now
existing or hereafter organized or acquired, (i) in the case of a corporation,
of which more than 50% of the total voting power of the Capital Stock entitled
(without regard to the occurrence of any contingency) to vote in the election of
directors, officers or trustees thereof is held by such first-named Person or
any of its Subsidiaries; or (ii) in the case of a partnership, joint venture,
association or other business entity, with respect to which such first-named
Person or any of its Subsidiaries has the power to direct or cause the direction
of the management and policies of such entity by contract or otherwise or if in
accordance with generally accepted accounting principles such entity is
consolidated with the first-named Person for financial statement purposes.
<PAGE> 51
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"Temporary Cash Investments" means (i) Investments in U.S.
Government Obligations maturing within 365 days of the date of purchase; (ii)
Investments in certificates of deposit issued by a bank organized under the laws
of the United States of America or any state thereof or the District of
Columbia, in each case having capital, surplus and undivided profits totaling
more than $500,000,000 and rated at least A by S&P and A-2 by Moody's maturing
within 365 days of purchase; or (iii) Investments not exceeding 365 days in
duration in money market funds that invest substantially all of such funds'
assets in the Investments described in the preceding clauses (i) and (ii).
"Trustee" has the meaning specified in the Indenture.
"Unrestricted Subsidiary" means (a) any Subsidiary of an
Unrestricted Subsidiary and (b) any Subsidiary of the Corporation which is
classified after the Issue Date as an Unrestricted Subsidiary by a Board
Resolution; provided that a Subsidiary organized or acquired after the Issue
Date may be so classified as an Unrestricted Subsidiary only if such Subsidiary
is organized in compliance with the covenant set forth in Section 8(B).
"U.S. Government Obligations" means (a) securities that are
direct obligations of the United States of America for the payment of which its
full faith and credit are pledged or (b) obligations of a Person controlled or
supervised by and action as an agency or instrumentality of the United States of
America, the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case, are
not callable or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank (as defined in Section 3(a)(2) of
the Securities Act) as custodian with respect to any such U.S. Government
Obligation or a specific payment of principal of or interest on any such U.S.
Government Obligation held by such custodian for the account of the holder of
such depository receipt; provided, that (except as required by law) such
custodian is not authorized to make any deduction from the amount payable to the
holder of such depository receipt from any amount received by the custodian in
respect of the U.S. Government Obligation or a specific payment of principal or
interest on any such U.S. Government Obligation held by such custodian for the
account of the holder of such depository receipt.
"Warrant Agreement" means the Warrant Agreement dated as of
May 1, 1996 between the Corporation and IBJ Schroder Bank & Trust Company, as
amended, restated or supplemented from time to time.
"Wholly-Owned Subsidiary" means any Restricted Subsidiary all
of the outstanding voting securities (other than directors'
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qualifying shares) of which are owned, directly or indirectly, by the
Corporation.
2. Designation. The series of preferred stock established
hereby shall be designated the "Senior Exchangeable Redeemable Preferred Stock,
Series A" (and shall be referred to herein as the "Series A Preferred Stock")
and the authorized number of shares of Series A Preferred Stock shall be 75,000
shares.
3. Dividends. Prior to April 30, 1999, Holders will be
entitled to receive, when, as and if declared by the Board of Directors, out of
funds legally available therefor, dividends payable, at the option of the
Corporation, in either cash, at a rate per annum (the "Dividend Rate") of $80
per share of Series A Preferred Stock, or in shares of Series A Preferred Stock
at a rate per annum of 1/10 (one-tenth) share of Series A Preferred Stock per
share of Series A Preferred Stock on any Dividend Payment Date. Subsequent to
April 30, 1999, Holders will be entitled to receive, when, as and if declared by
the Board of Directors, out of funds legally available therefor dividends
payable, at the option of the Corporation, either in cash, at a rate per annum
of $100 per share of Series A Preferred Stock, or in shares of Series A
Preferred Stock at a rate per annum of 1/10 (one-tenth) share of Series A
Preferred Stock per share of Series A Preferred Stock on any Dividend Payment
Date. In addition, after April 30, 1999, the Dividend Rate on each share of
Series A Preferred Stock will increase, for each 90-day period that the Series A
Preferred Stock remains outstanding, by $5, in the case of dividends paid in
cash, and 5/1000 (five one-thousandths) share of Series A Preferred Stock, in
the case of dividends paid in shares of Series A Preferred Stock, in each case,
in excess of the rate otherwise payable, such increase payable on each
subsequent Dividend Payment Date; provided, however, that at no time will the
dividend rate on the Series A Preferred Stock exceed 14.00%, excluding increases
in Dividend Rates or any penalty resulting from the exercise of various options
by the Corporation referred to herein and a failure to comply with the Preferred
Stock Registration Rights Agreement dated as of May 1, 1996. Dividends will be
cumulative and will accrue from the date of issuance and be payable quarterly
(except for the payment of the first dividend, which shall be semi-annually) in
arrears as provided in the immediately preceding sentence on each Dividend
Payment Date, commencing on November 1, 1996. Dividends, whether or not
declared, will cumulate until declared and paid, when declaration and payment
may be for all or part of the then-accumulated dividends. Each dividend shall be
payable to Holders of record as they appear on the stock books of the
Corporation on each Dividend Record Date. Accrued and unpaid dividends, if any,
shall not bear interest; provided, however, that accrued and unpaid dividends
payable in Series A Preferred Stock will accumulate dividends to the same extent
as issued shares of
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Series A Preferred Stock. Dividends shall cease to accrue in respect of the
Series A Preferred Stock on any Redemption Date with respect to Series A
Preferred Stock redeemed on any such date.
Notwithstanding anything to the contrary herein, the
Corporation shall not issue fractional shares of Series A Preferred Stock as
dividends on shares of Series A Preferred Stock. If any fraction of a share of
Series A Preferred Stock would otherwise be required to be paid to the Holders
pursuant to this Section 3, the Corporation shall pay in lieu of such fractional
share an amount in cash for such fractional share at a rate equal to $1,000 per
whole share.
4. Ranking. The Series A Preferred Stock shall, with respect
to dividend rights and rights on liquidation, winding-up and dissolution, rank
senior to all classes of Common Stock of the Corporation and to any other class
or series of any class of Preferred Stock of the Corporation, whether now
outstanding or issued hereafter. The Corporation shall not create any class or
series of Preferred Stock ranking pari passu with or senior to the Series A
Preferred Stock with respect to dividends rights and rights on liquidation,
winding-up and dissolution without the approval of Holders of a majority of the
outstanding shares of Series A Preferred Stock.
5. Voting Rights. Except as required by the General
Corporation Law of the State of Delaware, as provided in Section 4 hereof, the
Holders shall not be entitled to vote on any matter submitted to a vote of
stockholders of the Corporation.
6. Exchange. (A) The shares of Series A Preferred Stock are
exchangeable in whole, or in part, at the option of the Company, on any date
occurring on or after April 30, 1999 (the "Exchange Date") for the Corporation's
Exchange Notes to be issued pursuant to the Exchange Indenture, which shall be
substantially identical to the Indenture; provided that on the Exchange Date (i)
the Exchange Indenture shall have been qualified under the Trust Indenture Act
of 1939, as amended, (ii) there shall be no dividend arrearage (including all
accrued but unpaid dividends payable on the Exchange Date) on the Series A
Preferred Stock and (iii) no event of default under the Indenture shall have
occurred and be continuing or be caused by the exchange of Series A Preferred
Stock for Exchange Notes. Holders of outstanding shares of Series A Preferred
Stock will be entitled to receive $1,000 principal amount of Exchange Notes in
exchange for each share of Series A Preferred Stock held by them at the time of
exchange. In the event that such exchange would result in the issuance of an
Exchange Note in a principal amount which is not an integral multiple of $1,000,
the difference between such principal amount
<PAGE> 54
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and the highest integral multiple of $1,000 which is less than such principal
amount shall be paid to the Holder in cash.
(B) If the Corporation exercises the exchange privilege, the
Holder of any shares of Series A Preferred Stock to be exchanged in whole or in
part shall surrender the certificate representing such shares of Series A
Preferred Stock (the "Series A Preferred Stock Certificate") at the office or
agency then maintained by the Corporation for the transfer of the Series A
Preferred Stock on or prior to 5:00 P.M. New York City time on the applicable
Exchange Date, subject to the Corporation giving 10 days prior written notice of
exchange in the form provided on the Series A Preferred Stock Certificate to
each Holder at such office or agency that the Corporation elects to exchange its
Series A Preferred Stock represented by the Series A Preferred Stock Certificate
so surrendered or the portion thereof specified in said notice. Such notice
shall also request each Holder to provide the Corporation with the name or names
(with addresses) in which the certificate or certificates for Exchange Notes
which shall be issuable upon such exchange shall be issued, and, in such event,
each Holder shall be required to pay all transfer taxes, if any, as well as any
other information the Corporation deems relevant (the "Holder Information").
Each Series A Preferred Stock Certificate surrendered for exchange shall, unless
the Exchange Notes issuable on exchange are to be issued in the same name as the
registration of such Series A Preferred Stock Certificate, be duly endorsed by,
or be accompanied by instruments of transfer in form satisfactory to the
Corporation duly executed by, the Holder or his duly authorized attorney.
As promptly as practicable after the surrender of such Series
A Preferred Stock Certificate and the receipt of the Holder Information as
aforesaid, the Corporation shall issue and shall deliver at such office or
agency to such Holder, or on his written order, a certificate or certificates
for the Exchange Notes issuable upon exchange of such shares of Series A
Preferred Stock represented by the Series A Preferred Stock Certificate so
surrendered or portion thereof in accordance with the provisions of this Section
6. In case less than all of the shares of Series A Preferred Stock represented
by a Series A Preferred Stock Certificate surrendered for exchange are to be
exchanged, the Corporation shall deliver to or upon the written order of the
Holder of such Series A Preferred Stock Certificate a new Series A Preferred
Stock Certificate representing the shares of Series A Preferred Stock not
exchanged.
Each exchange shall be deemed to have been effected on the
applicable Exchange Date, and the person in whose name any certificate or
certificates for Exchange Notes shall be issuable
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upon such exchange shall be deemed to have become on said date the holder of
record of Exchange Notes represented thereby.
The dividends due on any Series A Preferred Stock surrendered
for exchange during the period from the close of business on a Dividend Record
Date to the opening of business on the corresponding Dividend Payment Date shall
be paid to the Holder of Series A Preferred Stock, notwithstanding such
exchange.
In the event any shares of Series A Preferred Stock shall be
called for redemption, the right to exchange such shares of Series A Preferred
Stock into Notes shall terminate at the close of business on the Redemption
Date.
(C) On each Dividend Payment Date beginning with the Exchange
Date, the Corporation shall calculate (and provide to each Holder within 5
Business Days of such calculation using like notice procedures as are set forth
herein) the Indebtedness which may be incurred pursuant to Section 4.06 of the
Indenture or Restricted Payments (as defined in the Indenture) which may be made
pursuant to Section 4.09 of the Indenture. In the event the Corporation shall
not exercise its ability to exchange the Series A Preferred Stock for Exchange
Notes to the full extent permitted by such Sections 4.06 and 4.09, the Dividend
Rate then in effect shall be increased by 400 basis points for the period that
the Corporation shall not exercise such exchange privilege. No limitation on the
increase in Dividend Rate set forth in Section 3 hereof shall prohibit the
increase in Dividend Rate set forth above.
7. Redemption.
(A) Optional Redemption. The Series A Preferred Stock may be
redeemed (subject to contractual and other restrictions with respect thereto and
the legal availability of funds therefor) at the option of the Corporation in
whole or, from time to time, in part, in the manner provided in Section 7(C)
hereof at any time at 100% of the Liquidation Preference of the Series A
Preferred Stock so redeemed, payable in cash, plus accrued and unpaid dividends
(whether or not declared), which shall also be paid in cash (whether or not
otherwise payable in cash) to the Redemption Date; provided, that, at any time
the proceeds of public or private sales of common equity or preferred equity
ranking junior to the Series A Preferred Stock by the Corporation, whether in
one transaction or a series of related transactions, results in gross proceeds
to the Corporation in excess of $20 million, and the Corporation does not
exercise its option to redeem the Series A Preferred Stock in whole pursuant to
this Section 7(A), (a) the Dividend Rate then in effect shall be increased by
400 basis points for the period that the Corporation shall not exercise such
redemption option and (b) the Corporation shall immediately issue to each
Holder, pro rata
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according to the number of shares of Series A Preferred Stock held by each
Holder, warrants under the Warrant Agreement exercisable for shares of Class A
Common Stock equal to 3.9% of the Corporation's fully diluted Common Stock (not
taking into account any anti-dilution adjustments that may be required in favor
of the Corporation's warrants that are outstanding on the date hereof or in
favor of any warrants originally issued to any holder of Series A Preferred
Stock).
(B) Mandatory Redemption. The Corporation shall be obligated
to redeem all outstanding shares of Series A Preferred Stock on June 1, 2003 at
a redemption price equal to the Liquidation Preference thereof, payable in cash,
plus accrued and unpaid dividends (whether or not declared), which shall also be
paid in cash (whether or not otherwise payable in cash) to the Redemption Date.
(C) Procedure for Redemption.
(i) In the event of a redemption of less than all of the
Series A Preferred Stock, the shares so redeemed will be determined by the
Corporation pro rata according to the number of shares held by each Holder.
(ii) The Corporation shall send a written notice of redemption
(the "Redemption Notice") by first-class mail, postage prepaid, not fewer than
fifteen (30) days nor more than sixty (60) days prior to the applicable
Redemption Date to each Holder as of the record date fixed for such redemption
of Series A Preferred Stock at such Holder's address as the same appears on the
stock books of the Corporation; provided, however, that no failure to give such
notice to any Holder or Holders nor any deficiency therein shall affect the
validity of the procedure for the redemption of any shares of Series A Preferred
Stock to be redeemed except as to the Holder or Holders to whom the Corporation
has failed to give said notice or except as to the Holder or Holders whose
notice was defective. The Redemption Notice shall state:
(A) whether all or less than all the outstanding shares of
Series A Preferred Stock are to be redeemed and the total number of
shares of Series A Preferred Stock being redeemed;
(B) the number of shares of Series A Preferred Stock held of
record by that specific Holder that the Corporation intends to redeem;
(C) the applicable Redemption Date;
(D) the manner and place or places at which payment for the
shares called for redemption will, upon presentation and
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surrender to the Corporation of the Series A Preferred Stock
Certificates evidencing the shares being redeemed, be made; and
(E) that dividends on the shares of Series A Preferred Stock
being redeemed shall cease to accrue on the applicable Redemption Date.
(iii) On the applicable Redemption Date, the full applicable
redemption price shall become payable for the shares of Series A Preferred Stock
being redeemed on the applicable Redemption Date. As a condition of payment of
the applicable redemption price, each Holder of Series A Preferred Stock must
surrender a Series A Preferred Stock Certificate or Certificates representing
the shares of Series A Preferred Stock being redeemed by the Corporation in the
manner and at the place designated in the applicable Redemption Notice. The full
applicable redemption price for such shares properly tendered for payment shall
be paid to the person whose name appears on such certificate or certificates as
the owner thereof, on and after the applicable Redemption Date when and as
certificates for the shares being redeemed are properly tendered for payment.
Each surrendered Series A Preferred Stock Certificate shall be cancelled and
retired. In the event that less than all of the shares represented by any such
certificate are redeemed, a new certificate shall be issued representing the
unredeemed shares.
(iv) On the applicable Redemption Date, unless the Corporation
defaults in the payment of the applicable redemption price, dividends will cease
to accrue with respect to the shares of Series A Preferred Stock called for
redemption. All rights of Holders of such redeemed shares will terminate except
for the right to receive the applicable redemption price.
8. Covenants.
(A) SEC Reports.
So long as any of the Series A Preferred Stock remains
outstanding, whether or not the Corporation is subject to Section 13(a) or 15(d)
of the Exchange Act, the Corporation shall file with the SEC, to the extent
permitted, the annual reports, quarterly reports and other documents which the
Corporation would have been required to file with the SEC pursuant to such
Sections 13(a) and 15(d) if the Corporation were so subject, such documents to
be filed with the SEC on or prior to the respective dates (the "Required Filing
Dates") by which the Corporation would have been required so to file such
documents if the Corporation were so subject. The Corporation shall also in any
event (x) within 15 days of each Required Filing Date transmit by mail to
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all Holders, as their names and addresses appear on the stock books of the
Corporation, without cost to such Holders copies of the annual reports,
quarterly reports and other documents which the Corporation would have been
required to file with the SEC pursuant to Sections 13(a) and 15(d) of the
Exchange Act if the Corporation were subject to such Sections and (y) if filing
such documents by the Corporation with the SEC is not permitted under the
Exchange Act, promptly upon written request supply copies of such documents to
any Holder.
(B) Limitation on Restricted Payments.
The Corporation will not make, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly, make, any Restricted
Payment.
The provisions of this Section 8(B) shall not prohibit (i) the
payment of any dividends, repurchases and redemption of Series A Preferred Stock
in accordance with the terms hereof, (ii) the retirement of any shares of
Capital Stock of the Corporation or subordinated Indebtedness by conversion
into, or by or in exchange for, shares of Capital Stock (other than Disqualified
Capital Stock), or out of, the Net Proceeds of the substantially concurrent sale
(other than to a Subsidiary of the Corporation) of other shares of Capital Stock
of the Corporation (other than Disqualified Capital Stock), (iii) the redemption
or retirement of Indebtedness of the Corporation subordinated to the Notes in
exchange for, by conversion into, or out of the Net Proceeds of, a substantially
concurrent sale or incurrence of Indebtedness (other than any Indebtedness owed
to a Subsidiary) of the Corporation that is contractually subordinated in right
of payment to the Notes to at least the same extent as the subordinated
Indebtedness being redeemed or retired, (iv) the retirement of any shares of
Disqualified Capital Stock by conversion into, or by exchange for, shares of
Disqualified Capital Stock, or out of the Net Proceeds of the substantially
concurrent sale (other than to a Subsidiary of the Corporation) of other shares
of Disqualified Capital Stock, (v) the repurchase or redemption from employees
of the Corporation (other than a Burden Entity) of Capital Stock of the
Corporation or evidences of indebtedness of the Corporation (A) with the
proceeds of a key-man life insurance policy with respect to such employee
received by the Corporation or (B) upon termination of the employment, death or
disability of such employee with cash or through the issuance of notes
("Employee Notes") which are subordinated to the Notes to the same extent as the
Notes are subordinated to Senior Indebtedness in an amount not to exceed an
aggregate of $2,500,000 (including the principal amount of any Employee Notes
outstanding at any time) less any cash interest paid on the Employee Notes;
provided, however that in determining the aggregate amount of repurchases or
redemptions pursuant to this
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clause (B), such amount shall be increased (but not in excess of $2,500,000) by
the amount of cash received from an employee in connection with the purchase of
Common Stock, or (vi) the Net Investment of an aggregate of $1,000,000 in
Unrestricted Subsidiaries.
(C) Limitation on Certain Asset Sales.
(a) The Corporation will not, and will not permit any of its
Restricted Subsidiaries to, consummate an Asset Sale unless (i) the Corporation
or any of its Restricted Subsidiaries, as the case may be, receives
consideration at the time of such sale or other disposition at least equal to
the fair market value thereof (as determined in good faith by the Corporation's
Board of Directors, and evidenced by a Board Resolution); (ii) not less than 85%
of the consideration received by the Corporation or any of its Subsidiaries, as
the case may be, is in the form of cash or Temporary Cash Investments other than
in the case where the Corporation is exchanging all or substantially all of the
assets of one or more broadcast stations operated by the Corporation (including
by way of the transfer of Capital Stock) for all or substantially all of the
assets (including by way of transfer of Capital Stock) constituting one or more
broadcast stations operated by another Person (an "Asset Swap") provided that at
least 85% of the consideration, if any, received by the Corporation in such
Asset Swap, other than the stock and assets of broadcast station(s), is in the
form of cash or Temporary Cash Investments; and (iii) the Asset Sale Proceeds
received by the Corporation or such Restricted Subsidiary are applied (a) first,
to the extent the Corporation elects, or is required, to prepay, repay or
purchase debt under any then existing Indebtedness of the Corporation or any
Restricted Subsidiary within 180 days following the receipt of the Asset Sale
Proceeds from any Asset Sale, provided that any such repayment shall result in a
permanent reduction of the commitments thereunder in an amount equal to the
principal amount so repaid; (b) second, to the extent of the balance of Asset
Sale Proceeds after application as described above, to the extent the
Corporation elects, to an investment in assets (including Capital Stock or other
securities purchased in connection with the acquisition of Capital Stock or
property of another person) used or useful in businesses similar or ancillary to
the business of the Corporation or Restricted Subsidiary as conducted at the
time of such Asset Sale, provided that such investment occurs or the Corporation
or a Restricted Subsidiary enters into contractual commitments to make such
investment, subject only to customary conditions (other than the obtaining of
financing), on or prior to the 181st day following receipt of such Asset Sale
Proceeds (the "Reinvestment Date") and Asset Sale Proceeds contractually
committed are so applied within 360 days following the receipt of such Asset
Sale Proceeds; and (c) third, if on the Reinvestment Date with respect to any
Asset
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Sale, the Available Asset Sale Proceeds exceed $4,000,000, the Corporation shall
apply an amount equal to such Available Asset Sale Proceeds to an offer to
repurchase the Notes, at a purchase price in cash equal to 100% of the Accreted
Value of the Notes through May 1, 1998, and 100% of the principal amount thereof
thereafter, in each case plus accrued and unpaid interest, if any, to the date
of repurchase (an "Excess Proceeds Offer").
(b) If the Corporation is required to make an Excess Proceeds
Offer, the Corporation shall mail, within 30 days following the Reinvestment
Date, a notice to the holders of Notes with a copy to the Trustee stating, among
other things: (1) that such holders of Notes have the right to require the
Corporation to apply the Available Asset Sale Proceeds to repurchase such Notes
at a purchase price in cash equal to 100% of the Accreted Value thereof if the
purchase date is prior to May 1, 1998 and 100% of the principal amount
thereafter plus accrued and unpaid interest, if any, to the date of purchase;
(2) the purchase date (the "Purchase Date"), which shall be no earlier than 30
days and not later than 60 days from the date such notice is mailed; (3) the
instructions, determined by the Corporation, that each holder of Notes must
follow in order to have such Notes repurchased; and (4) the calculations used in
determining the amount of Available Asset Sale Proceeds to be applied to the
repurchase of such Notes. The Excess Proceeds Offer shall remain open for a
period of 20 Business Days following its commencement (the "Offer Period"). The
notice, which shall govern the terms of the Excess Proceeds Offer, shall state:
(1) that the Excess Proceeds Offer is being made pursuant to
this Section 8(C) and the length of time the Excess Proceeds Offer will
remain open;
(2) the purchase price and the Purchase Date;
(3) that any Note not tendered or accepted for payment will
continue to accrue interest;
(4) that any Note accepted for payment pursuant to the Excess
Proceeds Offer shall cease to accrue interest on and after the Purchase
Date;
(5) that holders electing to have a Note purchased pursuant to
any Excess Proceeds Offer will be required to surrender the Note, with
the form entitled "Option of Holder to Elect Purchase" on the reverse
of the Note completed, to the Corporation, a depositary, if appointed
by the Corporation, or a paying agent at the address specified in the
notice at least three Business Days before the Purchase Date;
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(6) that holders will be entitled to withdraw their election
if the Corporation, depositary or paying agent, as the case may be,
receives, not later than the expiration of the Offer Period, a
telegram, telex, facsimile transmission or letter setting forth the
name of the Holder, the principal amount of the Note the holder
delivered for purchase and a statement that such holder is withdrawing
his election to have the Note purchased;
(7) that, if the aggregate principal amount of Notes
surrendered by holders exceeds the Available Asset Sale Proceeds, the
Corporation shall select the Notes to be purchased on a pro rata basis
(with such adjustments as may be deemed appropriate by the Corporation
so that only Notes in denominations of $1,000, or integral multiples
thereof, shall be purchased);
(8) that, if the aggregate principal amount of Notes
surrendered by holders is less than the Available Asset Sale Proceeds,
the Corporation will be required to make an offer to repurchase the
Series A Preferred Stock pursuant to this Section 8(C); and
(9) that holders whose Notes were purchased only in part will
be issued new Notes equal in principal amount to the unpurchased
portion of the Notes surrendered.
On or before the Purchase Date, the Corporation shall, to the
extent lawful, accept for payment, on a pro rata basis to the extent necessary,
Notes or portions thereof tendered pursuant to the Excess Proceeds Offer, and
deliver to the Trustee an officers' certificate stating that such Notes or
portions thereof were accepted for payment by the Corporation in accordance with
the terms of this Section 8(C). The Corporation, depositary or paying agent, as
the case may be, shall promptly (but in any case not later than 5 days after the
Purchase Date) mail or deliver to each tendering holder an amount equal to the
purchase price of the Note tendered by such holder and accepted by the
Corporation for purchase, and the Corporation shall promptly issue a new Note,
and the Trustee shall authenticate and mail or deliver such new Note to such
holder equal in principal amount to any unpurchased portion of the Note
surrendered. Any Note not so accepted shall be promptly mailed or delivered by
the Corporation to the holder thereof. The Corporation will publicly announce
the results of the Excess Proceeds Offer on the Purchase Date. In the event that
there remain Available Asset Sale Proceeds following the consummation of an
Excess Proceeds Offer, the Corporation, if and to the extent permitted by the
terms of the Indenture and any such existing senior credit facility existing on
the date of original issuance of the Series A Preferred Stock, may make an offer
to
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repurchase the Series A Preferred Stock on the same basis as the offer to
repurchase the Notes provided for in this Section 8(C); provided that if the
Corporation elects not to so repurchase the Series A Preferred Stock to the
extent permitted under the Indenture and any such existing senior credit
facility, the Dividend Rate then in effect shall be increased by 400 basis
points for the period that the Corporation shall fail to consummate such
repurchase offer. No limitation on the increase in Dividend Rate set forth in
Section 3 hereof shall prohibit the increase in Dividend Rate set forth above.
If an Excess Proceeds Offer is not fully subscribed, the Corporation may retain
that portion of the Available Asset Sale Proceeds not required to repurchase
Notes and Series A Preferred Stock.
(D) Change of Control.
(a) Within 20 days of the occurrence of a Change of Control,
the Corporation shall notify the Trustee and the holders of Notes and Series A
Preferred Stock in writing of such occurrence and shall make an offer to
purchase (the "Change of Control Offer") the outstanding Notes and, if and to
the extent permitted by the terms of the Indenture and any other senior credit
facility existing on the date of original issuance of the Series A Preferred
Stock, Series A Preferred Stock (x) in the case of the Notes, at a purchase
price equal to 101% of their Accreted Value, plus any accrued and unpaid
interest to the Change of Control Payment Date (as hereinafter defined), in the
case of a Change of Control Payment Date prior to May 1, 1998, and thereafter at
a purchase price equal to 101% of the principal amount thereof plus any accrued
and unpaid interest thereon to the Change of Control Payment Date; and (y) in
the case of the Series A Preferred Stock, at a purchase price equal to the
Liquidation Preference plus any accrued and unpaid dividends thereon to the
Change of Control Payment Date (such applicable purchase price being hereinafter
referred to as the "Change of Control Purchase Price") in accordance with the
procedures set forth in this Section 8(D).
(b) Within 20 days of the occurrence of a Change of Control,
the Corporation also shall (i) cause a notice of the Change of Control Offer to
be sent at least once to the Dow Jones News Service or similar business news
service in the United States and (ii) send by first-class mail, postage prepaid,
to the Trustee and to each holder of the Notes and the Series A Preferred Stock,
at the address appearing in the register maintained by the registrar of the
Notes or the register maintained by the Corporation, in the case of the Series A
Preferred Stock, a notice stating:
(A) that the Change of Control Offer is being made pursuant to
this Section 8(D) and that all Notes and Series A
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Preferred Stock tendered will be accepted for payment, and otherwise subject to
the terms and conditions set forth herein;
(B) the Change of Control Purchase Price and the purchase date
(which shall be a Business Day no earlier than 20 business days from the date
such notice is mailed (the "Change of Control Payment Date"));
(C) that any Note or share of Series A Preferred Stock not
tendered will continue to accrue interest or dividends, as the case may be;
(D) that, unless the Corporation defaults in the payment of
the Change of Control Purchase Price, any Notes or Series A Preferred Stock
accepted for payment pursuant to the Change of Control Offer shall cease to
accrue interest or dividends, as the case may be, on and after the Change of
Control Payment Date;
(E) that holders accepting the offer to have their Notes or
Series A Preferred Stock purchased pursuant to a Change of Control Offer will be
required to surrender the Notes or Series A Preferred Stock, with the form
entitled "Option of Holder to Elect Purchase" on the reverse of the Note or
Series A Preferred Stock completed, to the paying agent or the Corporation at
the address specified in the notice prior to the close of business on the
Business Day preceding the Change of Control Payment Date;
(F) that holders will be entitled to withdraw their acceptance
if the paying agent receives, not later than the close of business on the third
Business Day preceding the Change of Control Payment Date, a telegram, telex,
facsimile transmission or letter setting forth the name of the holder, the
principal amount of the Notes or number of shares of Series A Preferred Stock
delivered for purchase, and a statement that such holder is withdrawing his
election to have such Notes or Series A Preferred Stock purchased;
(G) that holders whose Notes or Series A Preferred Stock is
being purchased only in part will be issued new Notes or Series A Preferred
Stock equal in principal amount or Liquidation Preference to the unpurchased
portion of the Notes or Series A Preferred Stock surrendered, provided that each
Note or share of Series A Preferred Stock purchased and each such new Note or
share of Series A Preferred Stock issued shall be in an original principal
amount or Liquidation Preference in denominations of $1,000 and integral
multiples thereof;
(H) any other procedures that a holder must follow to accept a
Change of Control Offer or effect withdrawal of such acceptance; and
<PAGE> 64
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(I) the name and address of the paying agent.
On the Change of Control Payment Date, the Corporation shall,
to the extent lawful, (i) accept for payment, first, Notes or portions thereof
tendered pursuant to the Change of Control Offer and, second, shares of Series A
Preferred Stock or portions thereof tendered pursuant to the Change of Control
Offer, (ii) deposit with the paying agent money sufficient to pay the purchase
price of all Notes and shares of Series A Preferred Stock or portions thereof so
tendered and (iii) deliver or cause to be delivered to the Trustee Notes and to
the Corporation shares of Series A Preferred Stock so accepted together with an
officers' certificate stating the Notes and shares of Series A Preferred Stock
or portions thereof tendered to the Corporation. The paying agent shall promptly
mail to each holder of Notes and Series A Preferred Stock so accepted payment in
an amount equal to the purchase price for such Notes and shares of Series A
Preferred Stock, and the Corporation shall execute and issue, and the Trustee
shall promptly authenticate and mail to such Holder, a new Note equal in
principal amount or shares of Series A Preferred Stock equal in Liquidation
Preference to any unpurchased portion of the Notes or Series A Preferred Stock
surrendered; provided that each such new Note shall be issued in an original
principal amount in denominations of $1,000 and integral multiples thereof and
that each such share of Series A Preferred Stock shall be issued with a
Liquidation Preference of $1,000 and in integral multiples thereof.
If the Corporation or any Subsidiary thereof has issued any
outstanding (i) Indebtedness that is subordinated in right of payment to the
Notes or (ii) Preferred Stock (including the Series A Preferred Stock), and the
Corporation or such Subsidiary is required to make a Change of Control offer or
to make a distribution with respect to such subordinated Indebtedness or
Preferred Stock in the event of a Change of Control, the Corporation shall not
consummate any such offer or distribution with respect to such subordinated
Indebtedness or Preferred Stock (including the Series A Preferred Stock) until
such time as the Corporation shall have paid the Change of Control Purchase
Price in full to the holders of Notes that have accepted the Corporation's
Change of Control Offer and shall otherwise have consummated the Change of
Control Offer made to holders of the Notes.
(E) Additional Covenants.
(i) The Corporation will not amend or waive, or solicit the
consent of any person in connection with the amendment or waiver of any
provision of Sections 4.06, 4.07, 4.08, 4.10, 4.11, 4.12, 4.13, 4.14, 4.18 and
6.01 of the Indenture or any related definitions (the "Covenants") without the
prior written consent of
<PAGE> 65
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the holders of a majority of the aggregate Liquidation Preference of the Series
A Preferred Stock.
(ii) The Corporation will not redeem the Notes in whole
without (a) the prior written consent of the holders of a majority of the
aggregate Liquidation Preference of the Series A Preferred Stock or (b) entering
into a written agreement with the holders of the Series A Preferred Stock that
provides substantially the same benefits and protections that the Covenants
afforded the holders of the Notes.
(iii) The Corporation will not permit an Event of Default (as
defined in the Indenture) to occur under the Indenture; provided that in the
event an Event of Default (as defined in the Indenture) occurs, the Dividend
Rate then in effect shall be increased by 400 basis points for the period during
the continuation of such Event of Default (as defined in the Indenture).
(iv) The Corporation will not, and will not permit any
Guarantor to, enter into any agreement which has the effect of further
prohibiting the exchange of Series A Preferred Stock for Exchange Notes as
provided for herein, or which has the effect of further limiting the
Corporation's ability to pay cash dividends on the Series A Preferred Stock, or
which has the effect of further limiting the Corporation's ability to consummate
an Excess Proceeds Offer in accordance with Section 8(C) hereof, in each case,
on terms that are no less favorable than any such terms under any existing
agreements governing the Corporation and the Guarantors. Nothing in this
subsection is intended in any way to conflict with or limit any provision under
any existing agreement that the Corporation or the Guarantors are a party to or
bound by as of the date hereof.
9. Payment on Liquidation.
(A) Upon any voluntary or involuntary liquidation, dissolution
or winding-up of the Corporation, Holders of Series A Preferred Stock will be
entitled to receive an amount in cash equal to the Liquidation Preference,
before any distribution is made on any Common Stock or other Preferred Stock of
the Corporation. After payment of the full amount of the Liquidation Preferences
to which they are entitled, Holders of Series A Preferred Stock will not be
entitled to any further participation in any distribution of assets of the
Corporation.
(B) For the purposes of this Section 9, neither the voluntary
sale, conveyance, exchange or transfer (for cash, shares of stock, securities or
other consideration) of all or substantially all the property or assets of the
Corporation nor the consolidation or merger of the Corporation with one or more
<PAGE> 66
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corporations shall be deemed a voluntary or involuntary liquidation, dissolution
or winding-up of the Corporation, unless such sale, conveyance, exchange or
transfer shall be in connection with a dissolution or winding-up of the business
of the Corporation.
10. Exclusion of Other Rights. Except as may otherwise be
required by the General Corporation Law of the State of Delaware, shares of the
Series A Preferred Stock shall not have any preferences or relative,
participating, optional or other special rights, other than those specifically
set forth in this Certificate of Designation (as such Certificate may be amended
from time to time) and in the Corporation's Certificate of Incorporation, as
amended. No shares of Series A Preferred Stock shall have any preemptive or
subscription rights whatsoever as to any securities of the Corporation.
11. Reissuance of Preferred Stock. Shares of Series A
Preferred Stock that have been issued and reacquired by the Corporation in any
manner, including shares purchased or redeemed, shall (upon compliance with any
applicable provisions of the General Corporation Law of the State of Delaware)
have the status of authorized and unissued shares of preferred stock
undesignated as to series and may be redesignated and reissued as part of any
series of preferred stock.
12. Business Day. If any payment or redemption shall be
required by the terms hereof to be made on a day that is not a Business Day,
such payment, redemption or exchange shall be made on the immediately succeeding
Business Day.
13. Headings of Subdivisions. The headings of the various
subdivisions hereof are for convenience of reference only and shall not affect
the interpretation of any of the provisions hereof.
14. Severability of Provisions. If any right, preference or
limitation of the Series A Preferred Stock set forth in this Certificate of
Designation (as may be amended from time to time) is invalid, unlawful or
incapable of being enforced by reason of any rule or law or public policy, all
other rights, preferences and limitations set forth in this Certificate of
Designation (as so amended) which can be given effect without the invalid,
unlawful or unenforceable right, preference or limitation shall, nevertheless,
remain in full force and effect, and no right, preference or limitation herein
set forth shall be deemed dependent upon any other such right, preference or
limitation unless so expressed herein.
<PAGE> 67
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15. Notice. All notices and other communications provided for
or permitted to be given to the Corporation hereunder shall be made by hand
delivery, next day air courier or certified first-class mail to the Corporation
at its principal executive offices (currently located at 500 Fifth Avenue, Suite
3000, New York, New York 10110.
16. Amendments. This Certificate of Designation may be amended
without notice to or the consent of any Holder to cure any ambiguity, defect or
inconsistency provided that such amendment does not adversely affect the rights
of any Holder. Any provisions of this Certificate of Designation may be amended
by the Corporation with the written consent of Holders representing a majority
of the outstanding shares of Series A Preferred Stock.
17. Book-Entry Provisions for Series A Preferred Stock. (a)
Series A Preferred Stock registered in global form ("Global Series A Preferred
Stock") will (i) be registered in the name of The Depository Trust Company (the
"Depositary") or the nominee of such Depositary, (ii) be delivered to the
Trustee as custodian for such Depositary and (iii) bear customary legends as
required by the Depositary.
Members of, or participants in, the Depositary ("Agent
Members") shall have no rights hereunder with respect to any Global Series A
Preferred Stock held on their behalf by the Depositary or its custodian, or
under the Global Series A Preferred Stock, and the Depositary may be treated by
the Corporation and any agent of the Corporation as the absolute owner of the
Global Series A Preferred Stock for all purposes whatsoever. Notwithstanding the
foregoing, nothing herein shall prevent the Corporation or any agent of the
Corporation from giving effect to any written certification, proxy or other
authorization furnished by the Depositary or impair, as between the Depositary
and its Agent Members, the operation of customary practices governing the
exercise of the rights of a holder of any Series A Preferred Stock.
(b) Transfers of Global Series A Preferred Stock shall be
limited to transfer in whole, but not in part, to the Depositary, its successors
or their respective nominees. Interests of beneficial owners in the Global
Series A Preferred Stock may be transferred or exchanged for physical Series A
Preferred Stock (the "Physical Series A Preferred Stock") in accordance with the
rules and procedures of the Depositary. In addition, Physical Series A Preferred
Stock shall be transferred to all beneficial owners in exchange for their
beneficial interests in Global Series A Preferred Stock if the Depositary
notifies the Corporation that it is unwilling or unable to continue as
Depositary for any Global Series A Preferred Stock and a successor depositary is
not appointed by the Corporation within 90 days of such notice.
<PAGE> 68
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(c) In connection with any transfer or exchange of a portion
of the beneficial interest in any Global Series A Preferred Stock to beneficial
owners pursuant to paragraph (b), the Corporation shall (if one or more Physical
Series A Preferred Stock Certificates are to be issued) reflect on its books and
records the date and a decrease in the amount of shares of the Global Series A
Preferred Stock in an amount equal to the amount of shares of the beneficial
interest in the Global Series A Preferred Stock to be transferred, and the
Corporation shall execute one or more Physical Series A Preferred Stock
Certificates of like tenor and amount.
(d) In connection with the transfer of Global Series A
Preferred Stock as an entirety to beneficial owners pursuant to paragraph (b),
the Global Series A Preferred Stock shall be deemed to be surrendered to the
Corporation for cancellation, and the Corporation shall execute and deliver to
each beneficial owner identified by the Depositary in writing in exchange for
its beneficial interest in the Global Series A Preferred Stock an equal
aggregate amount of shares of Physical Series A Preferred Stock of authorized
denominations.
(e) Any Physical Series A Preferred Stock delivered in
exchange for an interest in Global Series A Preferred Stock pursuant to
paragraph (b), (c) or (d) shall, except as otherwise provided herein, bear an
appropriate legend, if required.
(f) The Holder of any Global Series A Preferred Stock may
grant proxies and otherwise authorize any person, including Agent Members and
persons that may hold interests through Agent Members, to take any action which
a Holder is entitled to take hereunder.
(g) Notwithstanding anything to the contrary herein, all
transfers of interests in Global Series A Preferred Stock must be made to a
"qualified institutional buyer" as such term is defined in Rule 144A promulgated
under the Securities Act.
The Corporation will, so long as any shares of Series A
Preferred Stock are outstanding, maintain an office or agency where such shares
may be presented for registration or transfer and where such shares may be
presented for conversion and redemption.
<PAGE> 69
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IN WITNESS WHEREOF, Commodore Media, Inc. has caused this
Certificate of Designation of Preferences and Rights of its Series A Preferred
Stock to be signed and attested by its duly authorized officers, this 1st day of
May, 1996.
COMMODORE MEDIA, INC.
By:
------------------------------------
Name: Bruce A. Friedman
Title: President and Chief
Executive Officer
ATTEST:
By:
--------------------------------
Name: James J. Sullivan
Title: Chief Financial Officer
<PAGE> 1
Exhibit 3.1.2
BY-LAWS
OF
COMMODORE MEDIA, INC.
(Formerly known as CRB Broadcasting Corporation)
ARTICLE I
OFFICES
Section 1. The registered office shall be in the City of Dover, County
of Kent, State of Delaware.
Section 2. The Corporation may also have offices at such other places
both within and without the State of Delaware as the Board of Directors may from
time to time determine or the business of the Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. All meetings of the stockholders for the election of
Directors shall be held at such place either within or without the State of
Delaware as shall be designated from time to time by the Board of Directors and
stated in the notice of the meeting. Meetings of stockholders for any other
purpose may be held at such time and
<PAGE> 2
place, within or without the State of Delaware, as shall be stated in the notice
of the meeting or in a duly executed waiver of notice thereof.
Section 2. Annual meetings of stockholders shall be held on the first
Monday in June (if not a legal holiday, and if a legal holiday, then on the next
secular day following) at 10:30 A. M., or at such other date and time as shall
be designated from time to time by the Board of Directors and stated in the
notice of the meeting, at which they shall elect by a plurality vote a Board of
Directors, and transact such other business as may properly be brought before
the meeting.
Section 3. Written notice of the annual meeting stating the place, date
and hour of the meeting shall be given to each stockholder entitled to vote as
such meeting not less than ten nor more than fifty days before the date of the
meeting.
Section 4. A complete list of the stockholders entitled to vote at a
meeting of stockholders, arranged in alphabetical order, and showing the address
of each stockholder and the number of shares registered in the name of each
stockholder shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days
<PAGE> 3
prior to the meeting, either at a place within the city where the meeting is to
be held, which place shall be specified in the notice of the meeting, or if not
so specified, at the place where the meeting is to be held. The list shall also
be produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
Section 5. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the Certificate of
Incorporation, may be called by the President and shall be called by the
President or Secretary upon resolution of the Board of Directors, at the request
in writing of a majority of the Board of Directors, or at the request in writing
of stockholders owning a majority in amount of the entire capital stock of the
Corporation issued and outstanding and entitled to vote. Such request shall
state the purpose or purposes of the proposed meeting.
Section 6. Written notice of a special meeting stating the place, date
and hour of the meeting and the purpose or proposes for which the meeting is
called, shall be given not less that ten nor more than fifty days before the
date of the meeting, to each stockholder entitled to vote at such meeting.
Section 7. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute
<PAGE> 4
a quorum at all meetings of the stockholders, except as otherwise provided by
statute or by the Certificate of Incorporation. If, however, such quorum shall
not be present or represented at any meeting of the stockholders, the
stockholders entitled to vote thereat, present in person or represented by
proxy, shall have power to adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum shall be present or
represented. At such adjourned meeting at which a quorum shall be present or
represented any business may be transacted which might have been transacted at
the meeting as originally notified.
Section 8. Each stockholder shall at every meeting of the stockholders
be entitled to one vote in person or by proxy for each share of the capital
stock having voting power held by such stockholder. All elections for directors
shall be decided by plurality vote; all other questions shall be decided by
majority vote except as otherwise provided by the Certificate of Incorporation
or the laws of the State of delaware.
ARTICLE III
DIRECTORS
Section 1. The number of Directors which shall constitute the whole
Board shall be fixed from time to time by resolution of the board and shall in
no event be less
<PAGE> 5
than three nor more that nine, except that if all the shares of the corporation
are owned beneficially and of record by fewer than three shareholders, the
number of Directors may be less than three but not less than the number of
shareholders. The Board of Directors shall initially be comprised of one
director. The Director shall be elected at the annual meeting of the
stockholders, except as provided in Section 3 of this Article, and each Director
elected shall hold office until his successor is elected and qualified.
Directors need not be stockholders.
Section 2. Any Director, member of a committee or other officer may
resign at any time. Such resignation shall be made in writing, and shall take
effect at the time specified therein, and if no time is specified, at the time
of its receipt by the President or Secretary. The acceptance of a resignation
shall not be necessary to make it effective.
Section 3. Any Director or Directors may be removed either for or
without cause at any time by the affirmative vote of the holders of a majority
of all the shares of stock outstanding and entitled to vote, at a special
meeting of the stockholders called for the purpose and the vacancies thus
created may be filled, at the meeting held for the purpose of removal, by the
affirmative vote of a majority in interest of the stockholders entitled to vote.
-5-
<PAGE> 6
Section 4. Vacancies and newly created directorships may be filled by a
majority of the Directors then in office, though less than a quorum, or by a
sole remaining Director, and the Directors so chosen shall hold office until the
next annual election and until their successors are duly elected and shall
qualify, unless sooner displaced. If there are no Directors in office, then an
election of Directors may be held in the manner provided by statute.
Section 5. The business of the Corporation shall be managed by its
Board of Directors which may exercise all such powers of the Corporation and do
all such lawful acts and things as are not by statute or by the Certificate of
Incorporation or by these By-Laws reserved to the stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
Section 6. The Board of Directors of the Corporation may hold meetings,
both regular and special, either within or without the State of Delaware.
Section 7. The newly elected Directors may hold their first meeting for
the purpose of organization and the transaction of business, if a quorum be
present, immediately after the annual meeting of the stockholders; or the time
and place of such meeting may be fixed by consent in writing of all the
Directors.
-6-
<PAGE> 7
Section 8. Regular meetings of the Board of Directors may be held
without notice as such time and at such place as shall from time to time be
determined by the Board.
Section 9. Special meetings of the Board may be called by the President
on one day's notice to each Director, either personally or by mail or by
telegram. Special meetings shall be called by the President or Secretary in like
manner and on like notice at the written request of any two Directors.
Section 10. At all meetings of the Board a majority of the Directors
shall constitute a quorum for the transaction of business and the act of a
majority of the Directors present at any meeting at which there is a quorum
shall be the act of the Board of Directors, except as may be otherwise
specifically provided by statute or by the Certificate of Incorporation. If a
quorum shall not be present at any meeting of the Board of Directors, the
directors present thereat may adjourn the meeting from time to time, without
notice other that announcement at the meeting, until a quorum shall be present.
Section 11. Unless otherwise restricted by the Certificate of
Incorporation of these By-Laws, any action required or permitted to be taken at
any meeting of the Board of Directors or of any committee thereof may be taken
without a meeting, if all members of the Board or Committee,
-7-
<PAGE> 8
as the case may be, consent thereto in writing, and the writing or writings are
filed with the minutes of proceedings of the Board of Directors.
COMMITTEES OF DIRECTORS
Section 12. The Board of directors may, by resolution passed by a
majority of the whole Board, designate one or more committees, each committee to
consist of two or more of the Directors of the Corporation. The board may
designate one or more Directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee. Any
such committee, to the extent provided in the resolution, shall have and may
exercise the powers of the Board of Directors in the management of the business
and affairs of the Corporation, and may authorize the seal of the Corporation to
be affixed to all papers which may require it; provided, however, that in the
absence or disqualification of any member of such committee or committees, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act as the meeting in the place of
any such absent or disqualified member.
Section 13. Each committee shall keep regular minutes of its meetings
and report the same to the board of Directors when required.
-8-
<PAGE> 9
COMPENSATION OF DIRECTORS
Section 14. Directors shall receive no stated salary as compensation
for their services as Directors or members of committees but may, pursuant to
resolution of the Board of Directors, receive a fixed fee and expenses of
attendance for attendance at each meeting of Directors or a committee. No such
payment shall preclude any Director from serving the Corporation in any other
capacity and receiving compensation therefor.
ARTICLE IV
OFFICERS
SECTION 1. The officers of the Corporation shall be a President, a
Treasurer, and a Secretary, all of whom shall be elected by the Board of
Directors and who shall hold office until their successors are elected and
qualified. In addition, the Board of Directors may elect a Chairman, one or more
Vice-Presidents and such Assistant Secretaries and Assistant Treasurers as they
may deem proper. None of the officers of the Corporation need be Directors. The
officers shall be elected at the first meeting of the Board of Directors after
each annual meeting. More than two offices may be held by the same person.
-9-
<PAGE> 10
Section 2. The board of Directors may appoint such other officers and
agents as it may deem advisable, who shall hold their offices for such terms and
shall exercise such powers and perform such duties as shall be determined from
time to time by the Board of Directors.
Section 3. The Chairman of the Board of Directors, if one be elected,
shall preside at all meetings of the Board of Directors and Stockholders and he
shall have and perform such other duties as from time to time may be assigned to
him by the Board of Directors.
Section 4. The President shall be the chief executive officer of the
Corporation and shall have the general powers and duties of supervision and
management usually vested in the office of President of a corporation. He shall,
in the absence of non-election of the Chairman of the Board of Directors,
preside at all meetings of the stockholders and at all meetings of the Board of
Directors, and shall have general supervision, direction and control of the
business of the Corporation. Except as the Board of Directors shall authorize
the execution thereof in some other manner, he shall execute bonds, mortgages
and other contracts in behalf of the Corporation and shall cause the seal to be
affixed to any instrument requiring it.
-10-
<PAGE> 11
Section 5. Each Vice-President shall have such powers and shall perform
such duties as shall be assigned to him by the Board of Directors.
Section 6. The Treasurer shall have the custody of the corporate funds
and securities and shall keep full and accurate account of receipts and
disbursements in books belonging to the Corporation. He shall deposit all moneys
and other valuables in the name and to the credit of the Corporation in such
depositaries as may be designated by the Board of Directors.
Section 7. The Secretary shall give, or cause to be given, notice of
all meetings of stockholders and Directors, and all other notices required by
law or by these By-Laws, and in case of his absence or refusal or neglect so to
do, any such notice may be given by any person thereunto directed by the
President, or by the Directors or stockholders, upon whose requisition the
meeting is called as provided in these By-Laws. He shall record all the
proceedings of the meetings of the Corporation and of the Directors in a book to
be kept for that purpose, and shall perform such other duties as may be assigned
to him by the Board of Directors or the President. He shall have the custody of
the seal of the Corporation and shall affix the same to all instruments
requiring it, when authorized by the Directors or the President, and attest the
same.
-11-
<PAGE> 12
Section 8. Assistant Treasurers and Assistant Secretaries, if any,
shall be elected and shall have such powers and shall perform such duties as
shall be assigned to them, respectively, by the Board of Directors.
ARTICLE V
NOTICES
Section 1. Whenever under the provisions of the statutes or of the
Certificate of Incorporation or of these By-Laws, notice is required to be given
to any Director or stockholder, such notice shall be prepared in writing and
mailed, postage prepaid, to such Director or stockholder at his address as it
appears on the records of the Corporation and shall be deemed given when
deposited in the United States mail. Notice to Directors may also be given by
telegram and shall be deemed given when communicated to the telegraph company.
Section 2. Whenever any notice is required to be given under the
provisions of the statutes or of the Certificate of Incorporation or of these
By-Laws, a waiver thereof in writing, signed by the person or persons entitled
to said notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
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<PAGE> 13
ARTICLE VI
CERTIFICATE OF STOCK
Section 1. Certificates of stock, signed by the Chairman or
Vice-Chairman of the Board of Directors, if they be elected, or President or
Vice-President, and the Treasurer of an Assistant Treasurer, or Secretary or an
Assistant Secretary, shall be issued to each stockholder certifying the number
of shares owned by him in the Corporation. When such certificates are
countersigned by a transfer agent other than the Corporation or its employee,
or by a registrar other than the Corporation or its employee, the signatures of
such officers may be facsimiles.
LOST CERTIFICATES
Section 2. the Board of Directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the Corporation alleged to have been lost, stolen or
destroyed, and the Board of Directors may, in their discretion require the owner
of the lost or destroyed certificate, or his legal representatives, to give the
Corporation a bond, in such sum as the Board may direct, not exceeding double
the value of the stock, to indemnify the Corporation against any claim that may
be made against it on account of the alleged loss of any such certificate, or
the issuance of any such new certificate.
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<PAGE> 14
TRANSFERS OF STOCK
Section 3. Upon surrender to the Corporation of the transfer agent of
the Corporation of a certificate for shares duly endorsed or accompanied by
proper evidence of succession, assignment or authority to transfer, it shall be
the duty of the Corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
FIXING RECORD DATE
Section 4. In order that the Corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or entitled to express consent to corporate action in
writing without a meeting, or entitled to receive payment of any dividend or
other distribution or allotment of any rights, or entitled to exercise any
rights in respect of any change, conversion or exchange of stock or for the
purpose of any other lawful action, the Board of Directors may fix, in advance,
a record date, which shall not be more than sixty nor less than ten days before
the date of such meeting, nor more than sixty days prior to any other action. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting provided,
however, that the
-14-
<PAGE> 15
Board of Directors may fix a new record date for the adjourned meeting.
REGISTERED STOCKHOLDERS
Section 5. The Corporation shall be entitled to treat the person in
whose name any share, right, option, warrant, security or other obligation is
registered as the owner thereof for all purposes, and shall not be bound to
recognize any equitable or other claim to or interest in such share, right,
option, warrant, security or other obligation on the part of any other person,
whether or not the Corporation shall have express or other notice thereof,
except as otherwise provided by the laws of Delaware.
ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS
Section 1. Subject to the provisions of the Certificate of
Incorporation, if any, dividends upon the capital stock of the Corporation may
be declared by the Board of Directors at any regular or special meeting,
pursuant to law.
Section 2. Before payment of any dividend, there may be set aside out
of any funds of the Corporation available for dividends such sum or sums as the
Directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or
-15-
<PAGE> 16
for equalizing dividends, or for repairing or maintaining any property of the
Corporation, or for such other purpose as the Directors shall think conducive to
the interest of the Corporation, and the Directors may modify or abolish any
such reserve in the manner in which it was created.
INDEMNIFICATION
Section 3. To the extent permitted and in the manner provided by law,
the Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that he is or was a director or officer of the Corporation,
or is or was serving at the request of the Corporation as a director, officer or
employee of another corporation, partnership, joint venture trust or other
enterprise, against expenses (including attorneys' fees, and which expenses may
be advanced by the Corporation), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding. The foregoing right of indemnification shall not be deemed exclusive
of any other rights to which any person seeking indemnification may be entitled
under any agreement, vote of stockholders or disinterested directors or
otherwise. The Corporation may purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee or agent of the
-16-
<PAGE> 17
corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise-against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the Corporation would have the power to indemnify him against
such liability.
FISCAL YEAR
Section 4. The fiscal year of the Corporation shall be determined by
resolution of the Board of Directors.
SEAL
Section 5. The corporate seal shall have inscribed thereon the name of
the Corporation, the year of its organization and the words "Corporate Seal,
Delaware". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or otherwise reproduced.
ARTICLE VIII
AMENDMENTS
These By-Laws may be altered or repealed at any regular meeting of the
stockholders or of the Board of Directors or at any special meeting of the
stockholders or of the Board of Directors if notice of such alteration or repeal
be contained in the notice of such special meeting.
-17-
<PAGE> 18
COMMODORE MEDIA, INC.
CONSENT IN LIEU OF A SPECIAL
MEETING OF THE STOCKHOLDERS
The undersigned, being the stockholder of in excess of 50% of the
voting power of Commodore Media, Inc., a Delaware corporation (the
"Corporation"), in lieu of holding a special meeting of the stockholders of the
Corporation, hereby take the following actions and adopt the following
resolutions by written consent pursuant to Section 228 of the General
Corporation Law of the State of Delaware:
RESOLVED, that the certificate of incorporation of the
Corporation be amended as set forth in Exhibit A attached hereto and
made a part hereof (the "Amended Certificate of Incorporation ").
FURTHER RESOLVED, that the Section 8 of Article II of the
bylaws of the Corporation be amended in its entirety as set forth below
(the "Amendment to the Bylaws"):
"Section 8. Each stockholder of Class A Common Stock,
par value $0.01 per share (the "Class A Common") shall at
every meeting of the stockholders be entitled to one vote in
person or by proxy for each share of the Class A Common held
by such stockholder. Each stockholder of Class B Common Stock,
par value $0.01 per share (the "Class B Common") shall at
every meeting of the stockholders be entitled to eight votes
in person or by proxy for each share of the Class B Common
held by such stockholder. Except as otherwise required by
applicable law, the holders of the Class A Common and the
Class B Common shall vote together as a single class on all
matters submitted to a vote of the Corporation's stockholders.
All elections for directors shall be decided by plurality
vote; all other questions shall be decided by majority vote
except as otherwise provided in the Certificate of
Incorporation or the laws of the State of Delaware."
FURTHER RESOLVED, that upon approval of the Amended
Certificate of Incorporation and the Amendment to the Bylaws by the
stockholders of the Corporation, the President is hereby authorized and
directed to execute the Amended Certificate of Incorporation in the
name and on behalf of the Corporation, and to cause the Amended
Certificate of Incorporation to be filed with the office of the
Secretary of State of the State of Delaware, and to cause the Amendment
to the Bylaws to be inserted in its proper place in the minute books of
the Corporation.
-18-
<PAGE> 19
IN WITNESS WHEREOF, the undersigned have executed this Consent of the
stockholders as of the 29th day of April, 1996.
EXECUTORS OF THE ESTATE OF
CARTER BURDEN:
/s/ Susan L. Burden
-------------------------------
Susan L. Burden, Executor
/s/ S. Carter Burden III
-------------------------------
S. Carter Burden III, Executor
/s/ Flobelle F. Burden
-------------------------------
Flobelle F. Burden, Executor
2
<PAGE> 1
Exhibit 3.2.1
[GRAPHIC LOGO]
STATE
OF
DELAWARE
[GRAPHIC LOGO]
Office of SECRETARY OF STATE
I, Glenn C. Kenton, Secretary of State of the State of Delaware, do hereby
certify that the attached is a true and correct copy of Certificate of
Incorporation filed in this office on February 9, 1983
/s/ Glenn C. Kenton
-----------------------------------
Glenn C. Kenton, Secretary of State
BY: /s/ M. Toon
-----------------------------------
M. Toon
February 9, 1983
[SEAL]
[GRAPHIC DATE STAMP]
DATE:
<PAGE> 2
[DATE STAMP]
CERTIFICATE OF INCORPORATION
OF
VALLEY PRODUCTIONS, INC.
THE UNDERSIGNED, for the purpose of forming a corporation
pursuant to the provisions of the General Corporation Law of the State of
Delaware, does hereby certify as follows:
FIRST: The name of the Corporation is Valley Productions, Inc.
SECOND: The address of the Corporation's registered office in
the State of Delaware is 229 South State Street, in the City of Dover, the
County of Kent, and the name of the Corporation's registered agent at such
address is The Prentice-Hall Corporation System, Inc.
THIRD: The purpose for which the Corporation is organized is to
engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of the State of Delaware.
FOURTH: The total number of shares of capital stock which the
Corporation shall have authority to issue is 1,000 shares, par value $1.00 per
share, all of which shall be Common Stock. Shares of Capital Stock of the
Corporation may be issued by the Corporation from time to time for such legally
sufficient consideration as may be fixed from time to time by the Board of
Directors.
FIFTH: Subject to the provisions of the General Corporation Law
of the State of Delaware, the number of Directors of the Corporation shall be
determined as provided by the By-Laws. Elections of Directors need not be by
ballot unless the By-Laws so provide.
SIXTH: The Corporation shall, to the full extent permitted by
the General Corporation Law of the State of Delaware, as it may be amended from
time to time, indemnify all persons whom it may indemnify pursuant thereto.
SEVENTH: The Board of Directors of the Corporation may, in its
discretion, submit any contract or act for approval or ratification at any
annual meeting of the stockholders or at any meeting of the stockholders
<PAGE> 3
called for such purpose, and any contract or act that shall be approved or
ratified by the vote of the holders of a majority of the capital stock of the
Corporation represented in person or by proxy at such meeting and eligible to
vote thereat (provided that a quorum shall be represented in person or by proxy
at such meeting) shall be as valid and binding upon the Corporation and the
stockholders as if it had been approved or ratified by every stockholder of the
Corporation, whether or not the contract or act would otherwise be open to legal
attack because of directors' interest, or for any other reason.
EIGHTH: In furtherance and not in limitation of the general
powers conferred by the laws of the State of Delaware, the Board of Directors is
expressly authorized, without the assent or vote of the stockholders:
(1) to make, alter, amend, change, add to or repeal the By-Laws
of the Corporation, except as specifically stated therein;
(2) to fix and vary the amount to be reserved by the Corporation
for any proper purpose;
(3) to authorize and cause to be executed mortgages and liens
upon all or any part of the property of the Corporation;
(4) to determine the use and disposition of any surplus or net
profits of the Corporation; and
(5) to fix the times for the declaration and payment of
dividends by the Corporation.
NINTH: in addition to the powers and authorities hereinbefore or
by statute expressly conferred upon it, the Board of Directors is hereby
empowered to exercise all such powers and do all such acts and things as may be
exercised or done by the Corporation; subject, nevertheless, to the provisions
of the General Corporation Law of the State of Delaware, this Certificate of
Incorporation, and the By-Laws of the Corporation; provided, however, that no
By-Law shall invalidate any prior act of the Board of Directors which would have
been valid if such By-Law had not been made.
- 2 -
<PAGE> 4
TENTH: Whenever a compromise or arrangement is proposed between
this Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof, or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this Corporation under the provisions of Section 279 of Title 8 of the
Delaware Code, order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this Corporation, as the case may
be, to be summoned in such manner as the said Court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this Corporation as a consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the Court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders of this Corporation, as the case may be,
and also on this Corporation.
ELEVENTH: The Corporation reserves the right to alter, amend,
change, add to or repeal any provision contained in this Certificate of
Incorporation, in the manner now or hereafter prescribed by statute, and all
rights conferred upon stockholders herein are granted subject to this
reservation.
TWELFTH: The name and address of the incorporator is Frank A.
Andrea, III, 405 Lexington Avenue, New York, New York 10174.
IN WITNESS WHEREOF, the undersigned, being the incorporator
hereinabove named, does hereby execute this Certificate of Incorporation this
31st day of January, 1983.
/s/ Frank A. Andrea, III
------------------------------------
Frank A. Andrea, III
Incorporator
<PAGE> 5
State of Delaware
[LOGO]
Office of Secretary of State
PAGE 1
I, GLENN C. KENTON, SECRETARY OF STATE OF THE STATE OF DELAWARE DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
AMENDMENT OF VALLEY PRODUCTIONS, INC. FILED IN THIS OFFICE ON THE THIRTY-FIRST
DAY OF MAY, A.D. 1984, AT 9 O'CLOCK A.M.
/s/ Glenn C. Kenton
-----------------------------------
Glenn C. Kenton, Secretary of State
AUTHENTICATION: 0265169
DATE: 06/11/1984
841520117
[DATE STAMP]
<PAGE> 6
[GRAPHIC DATE STAMP]
CERTIFICATE OF AMENDMENT [DATE STAMP]
OF
CERTIFICATE OF INCORPORATION
OF
VALLEY PRODUCTIONS, INC.
It is hereby certified that:
1. The name of the corporation (hereinafter called the "Corporation")
is Valley Productions, Inc.
2. The certificate of incorporation of the Corporation is hereby amended
by striking out Article First thereof and by substituting in lieu of said
Article the following new Article:
"First: The name of the Corporation is CRB Broadcasting of Buffalo,
Inc."
3. The amendment of the certificate of incorporation herein certified
has been duly adopted in accordance with the provisions of Sections 228 and 242
of the General Corporation Law of the State of Delaware.
Signed and attested to on May 17, 1984.
/s/
------------------------------------
President
Attest:
/s/
- ------------------------------
Asst. Secretary
<PAGE> 7
<PAGE> 8
STATE OF DELAWARE
[GRAPHIC DELAWARE LOGO]
OFFICE OF SECRETARY OF STATE
I, MICHAEL HARKINS, SECRETARY OF STATE OF THE STATE OF DELAWARE DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
AMENDMENT OF CRB BROADCASTING OF BUFFALO, INC. FILED IN THIS OFFICE ON THE THIRD
DAY OF JUNE, A.D. 1985, AT 9:01 O'CLOCK A.M.
/s/ Michael Harkins
-----------------------------------
Michael Harkins, Secretary of State
AUTHENTICATION: :0517305
DATE: 06/04/1985
[GRAPHIC STAMP]
<PAGE> 9
[GRAPHIC DATE STAMP]
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
CRB BROADCASTING OF BUFFALO, INC.
It is hereby certified that:
1. The name of the corporation (hereinafter called the "Corporation")
is CRB Broadcasting of Buffalo, Inc.
2. The certificate of incorporation of the Corporation is hereby amended
by striking out Article First thereof and by substituting in lieu of said
Article the following new Article:
"First: The name of the Corporation is CRB Broadcasting of Delaware,
Inc."
3. The amendment of the certificate of incorporation herein certified
has been duly adopted in accordance with the provisions of Sections 228 and 242
of the General Corporation Law of the State of Delaware.
Signed and attested to on May 30, 1985.
/s/
--------------------
President
Attest:
/s/
- -------------------
Asst. Secretary
<PAGE> 10
PAGE 1
STATE OF DELAWARE
[LOGO]
Office of the Secretary of State
I, GLENN C. KENTON, SECRETARY OF STATE OF THE STATE OF DELAWARE DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
AMENDMENT OF VALLEY PRODUCTIONS, INC. FILED IN THIS OFFICE ON THE THIRTY-FIRST
DAY OF MAY, A.D. 1984, AT 9 O'CLOCK A.M.
/s/ Glenn C. Kenton
-----------------------------------
Glenn C. Kenton, Secretary of State
AUTHENTICATION: :0265168
DATE: 06/11/1984
841520117
<PAGE> 11
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
VALLEY PRODUCTIONS, INC.
It is hereby certified that:
1. The name of the corporation (hereinafter called the "Corporation")
is Valley Productions, Inc.
2. The certificate of incorporation of the Corporation is hereby amended
by striking out Article First thereof and by substituting in lieu of said
Article the following new Article:
"First: The name of the Corporation is CRB Broadcasting of Buffalo,
Inc."
3. The amendment of the certificate of incorporation herein certified
has been duly adopted in accordance with the provisions of Sections 228 and 242
of the General Corporation Law of the State of Delaware.
Signed and attested to on May 17, 1984.
/s/
--------------------
President
Attest:
/s/
- -------------------
Asst. Secretary
<PAGE> 12
PAGE 1
STATE OF DELAWARE
[LOGO]
Office of Secretary of State
I, MICHAEL HARKINS, SECRETARY OF STATE OF THE STATE OF DELAWARE DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
RENEWAL OF CRB BROADCASTING OF BUFFALO, INC. FILED IN THIS OFFICE ON THE THIRD
DAY OF JUNE, A.D. 1985, AT 9 O'CLOCK A.M.
/s/ Michael Harkins
-----------------------------------
Michael Harkins, Secretary of State
AUTHENTICATION: :0517299
DATE: 06/04/1985
[GRAPHIC DATE STAMP]
851540164
<PAGE> 13
[DATE STAMP]
CERTIFICATE OF RESTORATION AND REVIVAL OF
CERTIFICATE OF INCORPORATION OF
CRB BROADCASTING OF BUFFALO, INC.
It is hereby certified that:
1. The name of the corporation (hereinafter called the "Corporation")
is CRB BROADCASTING OF BUFFALO, INC.
2. The Corporation was organized under the provisions of the General
Corporation Law of the State of Delaware.
3. The address, including the street, city, and county, of the
registered office of the Corporation in the State of Delaware and the name of
the registered agent at such address are as follows: 229 South State Street, in
the City of Dover, the County of Kent, and the name of the Corporation's
registered agent at such address is The Prentice-Hall Corporation System, Inc.
4. The Corporation hereby procures a restoration and revival of its
certificate of incorporation, which became inoperative by law on March 1, 1965
for failure to file annual reports and non-payment of taxes payable to the State
of Delaware.
5. The certificate of the Corporation, which provides for and will
continue to provide for, perpetual duration, shall, upon the filing of this
Certificate of Restoration and Revival of the Certificate of Incorporation in
the Department of State of the State of Delaware, be restored and revived and
shall become fully operative on February 28, 1965.
<PAGE> 14
6. This Certificate of Restoration and Revival of the Certificate of
Incorporation is filed by authority of the duly elected directors as prescribed
by Section 312 of the General Corporation Law of the State of Delaware.
Signed and attested to on 30th of May, 1985.
/s/
-------------------
President
Attest:
/s/
- -------------------
Asst. Secretary
-2-
<PAGE> 15
PAGE 1
STATE OF DELAWARE
[LOGO]
OFFICE OF SECRETARY OF STATE
I, MICHAEL HARKINS, SECRETARY OF STATE OF THE STATE OF DELAWARE DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
RENEWAL OF CRB BROADCASTING OF BUFFALO, INC. FILED IN THIS OFFICE ON THE THIRD
DAY OF JUNE, A.D. 1985, AT 9 O'CLOCK A.M.
/s/ Michael Harkins
-----------------------------------
Michael Harkins, Secretary of State
AUTHENTICATION: :0517298
DATE: 06/04/1985
851340164
<PAGE> 16
CERTIFICATE OF RESTORATION AND REVIVAL OF
CERTIFICATE OF INCORPORATION OF
CRB BROADCASTING OF BUFFALO, INC.
It is hereby certified that:
1. The name of the corporation (hereinafter called the "Corporation")
is CRB BROADCASTING OF BUFFALO, INC.
2. The Corporation was organized under the provisions of the General
Corporation Law of the State of Delaware.
3. The address, including the street, city, and county, of the
registered office of the Corporation in the State of Delaware and the name of
the registered agent at such address are as follows: 229 South State Street, in
the City of Dover, the County of Kent, and the name of the Corporation's
registered agent at such address is The Prentice-Hall Corporation System, Inc.
4. The Corporation hereby procures a restoration and revival of its
certificate of incorporation, which became inoperative by law on March 1, 1985
for failure to file annual reports and non-payment of taxes payable to the State
of Delaware.
5. The certificate of the Corporation, which provides for and will
continue to provide for, perpetual duration, shall, upon the filing of this
Certificate of Restoration and Revival of the Certificate of Incorporation in
the Department of State of the State of Delaware, be restored and revived and
shall become fully operative on February 28, 1985.
<PAGE> 17
6. This Certificate of Restoration and Revival of the certificate of
Incorporation is filed by authority of the duly elected directors as prescribed
by Section 312 of the General Corporation Law of the State of Delaware.
Signed and attested to on 30th of May, 1985.
/s/
-------------------
President
Attest:
/s/
- -------------------
Asst.Secretary
-2-
<PAGE> 18
PAGE 1
STATE OF DELAWARE
[LOGO]
OFFICE OF THE SECRETARY OF STATE
I, MICHAEL HARKINS, SECRETARY OF STATE OF THE STATE OF DELAWARE DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
AMENDMENT OF CRB BROADCASTING OF DELAWARE, INC. FILED IN THIS OFFICE ON THE
TWENTY-THIRD DAY OF SEPTEMBER, A.D. 1986, AT 9 O'CLOCK A.M.
/s/ Michael Harkins
-----------------------------------
Michael Harkins, Secretary of State
AUTHENTICATION: :0961828
DATE: 10/01/1986
[GRAPHIC SEAL] [STAMP]
<PAGE> 19
[DATE STAMP]
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
CRB BROADCASTING OF DELAWARE, INC.
It is hereby certified that:
1. The name of the corporation is CRB Broadcasting of Delaware, Inc.
(the "Corporation").
2. The certificate of incorporation of the Corporation is hereby
amended by adding a new article thirteenth to read as follows:
THIRTEENTH: The personal liability of the directors of the Corporation
is hereby eliminated to the fullest extent permitted by paragraph (7)
of subsection (b) of section 102 of the General Corporation Law of the
State of Delaware, as the same may be amended and supplemented.
3. The amendment of the certificate of incorporation herein certified
has been duly adopted in accordance with the
<PAGE> 20
provisions of sections 228 and 242 of the General Corporation Law of the State
of Delaware.
Signed and attested to on Sept. 17, 1986.
/s/
-------------------
President
Attest:
/s/
- -------------------
Secretary
<PAGE> 21
PAGE 1
STATE OF DELAWARE
[LOGO]
OFFICE OF THE SECRETARY OF STATE
I, MICHAEL HARKINS, SECRETARY OF STATE OF THE STATE OF DELAWARE DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
AMENDMENT OF CRB BROADCASTING OF DELAWARE, INC. FILED IN THIS OFFICE ON THE
TWENTY-THIRD DAY OF SEPTEMBER, A.D. 1986, AT 9 O'CLOCK A.M.
/s/ Michael Harkins
-----------------------------------
Michael Harkins, Secretary of State
AUTHENTICATION: :0961827
DATE: 10/01/1986
[GRAPHIC SEAL]
862660107
<PAGE> 22
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
CRB BROADCASTING OF DELAWARE, INC.
It is hereby certified that:
1. The name of the corporation is CRB Broadcasting of Delaware, Inc.
(the "Corporation").
2. The certificate of incorporation of the Corporation is hereby
amended by adding a new article thirteenth to read as follows:
THIRTEENTH: The personal liability of the directors of the Corporation
is hereby eliminated to the fullest extent permitted by paragraph (7)
of subsection (b) of section 102 of the General Corporation Law of the
State of Delaware, as the same may be amended and supplemented.
3. The amendment of the certificate of incorporation herein certified
has been duly adopted in accordance with the
<PAGE> 23
provisions of sections 228 and 242 of the General Corporation Law of the state
of Delaware.
Signed and attested to on Sept. 17, 1986.
/s/
-------------------
President
Attest:
/s/
- --------------------
Secretary
<PAGE> 24
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
PAGE 1
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
AMENDMENT OF "CRB BROADCASTING OF DELAWARE INC.", CHANGING ITS NAME FROM "CRB
BROADCASTING OF DELAWARE, INC." TO "COMMODORE MEDIA OF DELAWARE, INC.", FILED IN
THIS OFFICE ON THE EIGHTH DAY OF SEPTEMBER, A.D. 1995, AT 9 O'CLOCK A.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE KENT
COUNTY RECORDER OF DEEDS FOR RECORDING.
/s/ Edward J. Freel
-----------------------------------
Edward J. Freel, Secretary of State
AUTHENTICATION: 7633941
DATE: 09-08-95
[SEAL]
2002673 8100
950204209
<PAGE> 25
[DATE STAMP]
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
CRB BROADCASTING OF DELAWARE, INC.
Under Section 242 of the Delaware General Corporation Law
The undersigned, being the Secretary of CRB Broadcasting of Delaware,
Inc., a Corporation organized and existing under and by virtue of the General
Corporation Law of the State of Delaware (the "Corporation"), does hereby
certify as follows:
1. The name of the Corporation is CRB Broadcasting of Delaware, Inc.
2. The Certificate of Incorporation of the Corporation was filed with
the Secretary of State of Delaware on February 9, 1983.
3. The Certificate of Incorporation of the Corporation is hereby
amended to effect a change in Article One thereof relating to the name of the
Corporation, accordingly Article One of the Certificate of Incorporation shall
be amended in its entirety to read as follows:
"FIRST: The name of the Corporation is Commodore Media of Delaware,
Inc. (the "Corporation")."
4. The Board of Directors of the Corporation, pursuant to Sections
141(f) and 242 of the General Corporation Law of the State of Delaware, adopted
resolutions approving the foregoing amendment and directed that the amendment be
submitted to the stockholders of the Corporation for their consideration and
approval.
5. The sole Stockholder of the Corporation approved the amendment in
accordance with Sections 228(a) and 242 of the General Corporation Law of the
State of Delaware.
* * * *
<PAGE> 26
IN WITNESS WHEREOF, the undersigned, being the Secretary hereinabove
named, under penalties of perjury does hereby declare and certify that this is
the. act and deed of the Corporation and the facts stated herein are true and
accordingly has hereunto signed this Certificate of Amendment to Certificate of
Incorporation this 23 day of August, 1995.
By /s/ Carter Burden
-------------------------------------
Carter Burden, Secretary
<PAGE> 1
Exhibit 3.3.1
[LOGO]
STATE
of
DELAWARE
[LOGO]
Office of SECRETARY OF STATE
I Glenn C. Kenton, Secretary of State of the State of Delaware,
do hereby certify that the attached is a true and correct copy of
Certificate of Incorporation
filed in this office on February 8, 1982
/s/ Glenn C. Kenton
--------------------------
Glenn C. Kenton
[LOGO]
BY: /S/ B. Knowles
---------------------
DATE: February 8, 1982
---------------------
<PAGE> 2
CERTIFICATE OF INCORPORATION
OF
CRB BROADCASTING OF PENNSYLVANIA, INC.
THE UNDERSIGNED, for the purpose. of forming a corporation pursuant to
the provisions of the General Corporation Law of the State of Delaware, does
hereby certify as follows:
FIRST: The name of the Corporation is CRB BROAD- CASTING OF
PENNSYLVANIA, INC.
SECOND: The address of the Corporation's registered office in the
State of Delaware. is 229 South State Street, Dover, Kent County, Delaware, and
the name of the Corporation's registered agent at such address is The
Prentice-Hall Corporation System, Inc.
THIRD: The purposes for which the Corporation is organized are to
engage in the broadcasting business generally and in connection therewith to
create, acquire, own, operate and otherwise deal in commercial and/or
experimental amplitude or frequency modulation, radio, television and/or
facsimile broadcasting station(s), and/or any similar media of electronic
communication, including the operation or participation in a radio or television
network chain or system, or participation in the operation of a community
antenna television system(s), to engage in the business of supplying radio or
television programming, information or services by wire or otherwise, on a fee
or subscription basis, and to engage in any other lawful act or activity for
which corporations may be organized under the General Corporation Law of the
State of Delaware.
FOURTH: The total number of shares of capital stock which the
Corporation shall have authority to issue is 1,000 shares, par value $1.00 per
share, all of which shall be Common Stock. Shares of capital stock of the
Corporation may be issued by the Corporation from time to time for such legally
sufficient consideration as may be fixed from time to time by the Board of
Directors.
FIFTH: Subject to the provisions of the General
<PAGE> 3
-2-
Corporation Law of the State of Delaware, the number of Directors of the
Corporation shall be determined as provided by the By-Laws. Elections of
Directors need not be by ballot unless the By-Laws so provide.
SIXTH: The Corporation shall, to the full extent permitted by the
General Corporation Law of the State of Delaware, as it may be amended from time
to time, indemnify all persons whom it may indemnify pursuant thereto.
SEVENTH. The Board of Directors of the Corporation may, in its
discretion, submit any contract or act for approval or ratification at any
annual meeting of the stockholders or at any meeting of the stockholders called
for such purpose, and any contract or act that shall be approved or ratified by
the vote of the holders of a majority of the capital stock of the Corporation
represented in person or by proxy at such meeting and eligible to vote thereat
(provided that a quorum shall be represented in person or by proxy at such
meeting) shall be as valid and binding upon the Corporation and the stockholders
as if it had been approved or ratified by every stockholder of the Corporation,
whether or not the contract or act would otherwise be open to legal attack
because of directors' interest, or for any other reason.
EIGHTH: In furtherance and not in limitation of the general powers
conferred by the laws of the State of Delaware, the Board of Directors is
expressly authorized, without the assent or vote of the stockholders:
(1) to make, alter, amend, change, add to or repeal the
By-Laws of the Corporation, except as specifically stated therein;
(2) to fix and vary the amount to be reserved by the
Corporation for any proper purpose;
(3) to authorize and cause to be executed mortgages and liens
upon all or any part of the property of the Corporation;
(4) to determine the use and disposition of any surplus or net
profits of the Corporation; and
(5) to fix the times for the declaration and payment of
dividends by the Corporation.
<PAGE> 4
-3-
NINTH: In addition to the powers and authorities herein-before or by
statute expressly conferred upon it, the Board of Directors is hereby empowered
to exercise all such powers and do all such acts and things as may be exercised
or done by the Corporation; subject, nevertheless, to the provisions of the
General Corporation Law of the State of Delaware, this Certificate of
Incorporation, and the ByLaws of the Corporation; provided, however, that no
ByLaw shall invalidate any prior act of the Board of Directors which would have
been valid if such By-Law had not been made.
TENTH: Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof, or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this Corporation under the provisions of section 279 of Title 8 of the
Delaware Code, order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this Corporation, as the case may
be, to be summoned in such manner as the said Court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this Corporation as a consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the Court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders of this Corporation, as the case may be,
and also on this Corporation.
ELEVENTH: The Corporation reserves the right to alter, amend, change,
add to or repeal any provision contained in this Certificate of Incorporation,
in the manner now or hereafter prescribed by statute, and all rights conferred
upon stockholders herein are granted subject to this reservation.
<PAGE> 5
-4-
TWELFTH: The name and address of the incorporator is William S. Sterns,
III, 405 Lexington Avenue, New York, New York 10174.
IN WITNESS WHEREOF, the undersigned, being the incorporator hereinabove
named, does hereby execute this Certificate of Incorporation this 1st day of
February, 1982.
/s/ WILLIAM S. STERNS, III
--------------------------
WILLIAM S. STERNS, III
INCORPORATOR
<PAGE> 6
PAGE 1
State of Delaware
[LOGO]
Office of Secretary of State
I, MICHAEL HARKINS, SECRETARY OF STATE OF THE STATE OF DELAWARE DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
RENEWAL OF CRB BROADCASTING OF PENNSYLVANIA, INC. FILED IN THIS OFFICE ON THE
FIRST DAY OF OCTOBER, A.D. 1985, AT 9 O'CLOCK A.M.
/s/ MICHAEL HARKINS
-----------------------------------
[GRAPHIC DATE] MICHAEL HARKINS, SECRETARY OF STATE
852740106 AUTHENTICATION: 0636810
DATE: 10/17/1985
<PAGE> 7
[DATE STAMP]
CERTIFICATE OF RESTORATION AND REVIVAL OF
CERTIFICATE OF INCORPORATION OF
CRB BROADCASTING OF PENNSYLVANIA, INC.
It is hereby certified that:
1. The name of the corporation (hereinafter called the "corporation")
is CRB BROADCASTING OF PENNSYLVANIA, INC.
2. The Corporation was organized under the provisions of the General
Corporation Law of the State of Delaware.
3. The address, including the street, city, and county, of the
registered office of the Corporation in the State of Delaware and the name of
the registered agent at such address are as follows: 229 South State Street, in
the City of Dover, the County of Kent, and the name of the Corporation's
registered agent at such address is The Prentice-Hall Corporation System, Inc.
4. The Corporation hereby procures a restoration and revival of its
certificate of incorporation, which became inoperative by law on March 1, 1984
for failure to file annual reports and non-payment of taxes payable to the State
of Delaware.
5. The certificate of the Corporation, which provides for and will
continue to provide for, perpetual duration, shall, upon the filing of this
Certificate of Restoration and Revival of the Certificate of Incorporation in
the Department of State of the State of Delaware, be restored and revived and
shall become fully operative on February 29, 1984.
<PAGE> 8
6. This Certificate of Restoration and Revival of the Certificate of
Incorporation is filed by authority of the duly elected directors as Prescribed
by Section 312 of the General Corporation Law of the State of Delaware.
Signed and attested to on the
24th day of September, 1985.
/s/ Edward G. Rogoff
---------------------------
Edward G. Rogoff, President
Attest:
/s/ Robert P. Connor
- ----------------------------
Robert P. Connor, Secretary
-2-
<PAGE> 9
PAGE 1
STATE OF DELAWARE
[LOGO]
OFFICE OF SECRETARY OF STATE
I, MICHAEL HARKINS, SECRETARY OF STATE OF THE STATE OF DELAWARE DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
AMENDMENT OF CRB BROADCASTING OF PENNSYLVANIA, INC. FILED IN THIS OFFICE ON THE
TWENTY-THIRD DAY OF SEPTEMBER, A.D. 1986, AT 9 O'CLOCK A.M.
[LOGO]
/s/ MICHAEL HARKINS
[STAMP] -----------------------------------
MICHAEL HARKINS, SECRETARY OF STATE
862660106 AUTHENTICATION: 0962140
DATE: 10/02/1986
<PAGE> 10
[DATE STAMP]
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
CRB BROADCASTING OF PENNSYLVANIA, INC.
It is hereby certified that:
1. The name of the corporation is CRB Broadcasting of Pennsylvania,
Inc. (the "Corporation").
2. The certificate of incorporation of the Corporation is hereby
amended by adding a new article thirteenth to read as follows:
THIRTEENTH: The personal liability of the directors of the Corporation
is hereby eliminated to the fullest extent permitted by paragraph (7)
of subsection (b) of section 102 of the General Corporation Law of the
State of Delaware, as the same may be amended and supplemented.
3. The amendment of the certificate of incorporation herein certified
has been duly adopted in accordance with the
<PAGE> 11
provisions of sections 228 and 242 of the General Corporation Law of the State
of Delaware.
Signed and attested to on Sept. 17, 1986.
/s/
------------------------
President
Attest:
/s/
- ------------------------
Secretary
<PAGE> 12
State of Delaware
Office of the Secretary of State
PAGE 1
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
AMENDMENT OF "CRB BROADCASTING OF PENNSYLVANIA INC.", CHANGING ITS NAME FROM
"CRB BROADCASTING OF PENNSYLVANIA, INC." TO "COMMODORE MEDIA OF PENNSYLVANIA,
INC.", FILED IN THIS OFFICE ON THE EIGHTH DAY OF SEPTEMBER, A.D. 1995, AT 9
O'CLOCK A.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE KENT
COUNTY RECORDER OF DEEDS FOR RECORDING.
[LOGO] /s/ EDWARD J. FREEL
-----------------------------------
EDWARD J. FREEL, SECRETARY OF STATE
09315878100 AUTHENTICATION: 7633936
950204207 DATE: 9-08-95
<PAGE> 13
[DATE STAMP]
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
CRB BROADCASTING OF PENNSYLVANIA, INC.
Under Section 242 of the Delaware General Corporation Law
The undersigned, being the Secretary of CRB Broadcasting of
Pennsylvania, Inc a corporation organized and existing under and by virtue of
the General Corporation Law of the State of Delaware (the "Corporation"), does
hereby certify as follows:
1, The name of the Corporation is CRB Broadcasting of Pennsylvania,
Inc.
2 The Certificate of Incorporation of the Corporation was filed with
the Secretary of State of Delaware on February 8, 1982.
3. The Certificate of Incorporation of the Corporation is hereby
amended to effect a change in Article One thereof, relating to the name of the
Corporation, accordingly Article One of the Certificate of Incorporation shall
be amended in its entirety to read as follows:
"FIRST: The name of the Corporation is Commodore Media of Pennsylvania.
Inc. (the "Corporation")."
4. The Board of Directors of the Corporation, pursuant to Sections
141(f) and 242 of the General Corporation Law of the State of Delaware, adopted
resolutions approving the foregoing amendment and directed that the amendment be
submitted to the stockholders of the Corporation for their consideration and
approval.
5. The sole Stockholder of the Corporation approved the amendment in
accordance with Sections 228(a) and 242 of the General Corporation Law of the
State of Delaware.
<PAGE> 14
IN WITNESS WHEREOF, the undersigned being the Secretary hereinabove
named, under penalties of perjury does hereby declare and certify that this is
the act and deed of the Corporation and the facts stated herein are true and
accordingly has hereunto signed this Certificate of Amendment to Certificate of
Incorporation this 23 day of August, 1995.
By /s/ Carter Burden
-------------------------------
Carter Burden, Secretary
2
<PAGE> 1
Exhibit 3.4.1
PAGE 1
State of Delaware
[LOGO]
Office of Secretary of State
I, MICHAEL HARKINS, SECRETARY OF STATE OF THE STATE OF DELAWARE DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
INCORPORATION OF CRB OF FLORIDA, INC. FILED IN THIS OFFICE ON THE ELEVENTH DAY
OF MARCH, A.D. 1987, AT 9 O'CLOCK A.M.
[SEAL]
/s/ MICHAEL HARKINS
-----------------------------------
MICHAEL HARKINS, SECRETARY OF STATE
AUTHENTICATION: 1163982
DATE: 03/11/1987
757670010
<PAGE> 2
CERTIFICATE OF INCORPORATION
OF
CRB OF FLORIDA, INC.
THE UNDERSIGNED, for the purpose of forming a corporation pursuant to
the provisions of the General Corporation Law of the State of Delaware, does
hereby certify as follows:
First: The name of the Corporation is CRB of Florida, Inc. ( the
"Corporation").
Second: The address of the Corporation's registered office in the State
of Delaware is 229 South State Street, Dover, Kent County, Delaware 19901 and
the name of the Corporation's registered agent at such address is The
Prentice-Hall Corporation System, Inc.
Third: The purposes for which the Corporation is organized are to
engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of the State of Delaware.
Fourth: The total number of shares of capital stock which the
Corporation shall have authority to issue is 1,000 shares, par value $1.00 per
share, all of which shall be Common Stock. Shares of capital stock of the
Corporation may be issued by the
<PAGE> 3
Corporation from time to time for such legally sufficient consideration as may
be fixed from time to time by the Board of Directors.
Fifth: The name and address of the incorporator is Debora A. Pitman,
Esq. 101 East 52nd Street, New York, New York 10022.
Sixth: The powers of the incorporator are to terminate upon the filing
of this certificate of incorporation. The names and mailing addresses of the
persons who are to serve as directors until the first annual meeting of
stockholders or until their successors are elected and qualified are:
Carter Burden
630 Fifth Avenue
New York, New York 10111
Edward G. Rogoff
630 Fifth Avenue
New York, New York 10111
Robert P. Connor
630 Fifth Avenue
New York, New York 10111
Seventh: The personal liability of the directors of the Corporation is
hereby eliminated to the fullest extent permitted by paragraph (7) of subsection
(b) of section 102 of
-2-
<PAGE> 4
the General Corporation Law of the State of Delaware, as the same may be amended
and supplemented.
IN WITNESS WHEREOF, the undersigned, being the incorporator hereinabove
named, does hereby execute this Certificate of Incorporation this 9th day of
March, 1987.
/s/ DEBORA A. PITMAN
--------------------------
DEBORA A. PITMAN, Esq.
INCORPORATOR
-3-
<PAGE> 1
Exhibit 3.5.1
[DATE STAMP]
CERTIFICATE OF INCORPORATION
OF
C R B OF KENTUCKY, INC.
THE UNDERSIGNED, for the purpose of forming a corporation pursuant to
the provisions of the General Corporation Law of the State of Delaware, does
hereby certify as follows:
FIRST: The name of the Corporation is C R B of Kentucky, Inc.
SECOND: The address of the Corporation's registered office in the State
of Delaware is 229 South State Street, Dover, Delaware, and the name of the
Corporation's registered agent at such address is The Prentice-Hall Corporation
System, Inc.
THIRD: The purposes for which the Corporation is organized are to
engage in the broadcasting business generally and in connection therewith to
create, acquire, own, operate and otherwise deal in commercial and/or
experimental amplitude or frequency modulation, radio, television and/or
facsimile, broadcasting station(s), and/or any similar media of electronic
communication, including the operation or participation in a radio or television
network chain or system, or participation in the operation of a community
antenna television system(s), to engage in the business of supplying radio or
television programming, information or services by wire or otherwise, on a fee
or subscription basis, and to engage in any other lawful act or activity for
which corporations may be organized under the General Corporation Law of the
State of Delaware.
FOURTH: The total number of shares of capital stock which the
Corporation shall have authority to issue is 1,000 shares, par value $1.00 per
share, all of which shall be Common Stock. Shares of capital stock of the
Corporation may be issued by the Corporation from time to time for such legally
sufficient consideration as may be fixed from time to time by the Board of
Directors.
FIFTH: Subject to the provisions of the General
<PAGE> 2
-2-
Corporation Law of the State of Delaware, the number of Directors of the
Corporation shall be determined as provided by the By-Laws. Elections of
Directors need not be by ballot unless the By-Laws so provide.
SIXTH: The Corporation shall, to the full extent permitted by the
General Corporation Law of the State of Delaware, as it may be amended from time
to time, indemnify all persons whom it may indemnify pursuant thereto.
SEVENTH: The Board of Directors of the Corporation may, in its
discretion, submit any contract or act for approval or ratification at any
annual meeting of the stockholders or at any meeting of the stockholders called
for such purpose, and any contract or act that shall be approved or ratified by
the vote of the holders of a majority of the capital stock of the Corporation
represented in person or by proxy at such meeting and eligible to vote thereat
(provided that a quorum shall be represented in person or by proxy at such
meeting) shall be as valid and binding upon the Corporation and the stockholders
as if it had been approved or ratified by every stockholder of the Corporation,
whether or not the contract or act would otherwise be open to legal attack
because of directors' interest, or for any other reason.
EIGHTH: In furtherance and not in limitation of the general powers
conferred by the laws of the State of Delaware, the Board of Directors is
expressly authorized, without the assent or vote of the stockholders:
(1) to make, alter, amend, change, add to or repeal the
By-Laws of the Corporation, except as specifically stated therein;
(2) to fix and vary the amount to be reserved by the
Corporation for any proper purpose;
(3) to authorize and cause to be executed mortgages and liens
upon all or any part of the property of the Corporation;
(4) to determine the use and disposition of any surplus or net
profits of the Corporation; and
(5) to fix the times for the declaration and payment of
dividends by the Corporation.
<PAGE> 3
-3-
NINTH: In addition to the powers and authorities herein-before or by
statute expressly conferred upon it, the Board of Directors is hereby empowered
to exercise all such powers and do all such acts and things as may be exercised
or done by the Corporation; subject, nevertheless, to the provisions of the
General Corporation Law of the State of Delaware, this Certificate of
Incorporation, and the ByLaws of the Corporation; provided, however, that no
ByLaw shall invalidate any prior act of the Board of Directors which would have
been valid if such By-Law had not been made.
TENTH: Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof, or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of section 291 of Title B of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this Corporation under the provisions of section 279 of Title 8 of the
Delaware Code, order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this Corporation, as the case may
be, to be summoned in such manner as the said Court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this Corporation as a consequence of such compromise or
arrangement, the said compromise arrangement and the said reorganization shall,
if sanctioned by the Court to which the said application has been made, be
binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders of this Corporation, as the case may be,
and also on this Corporation.
ELEVENTH: The Corporation reserves the right to alter, amend, change,
add to or repeal any provision contained in this Certificate of Incorporation,
in the manner now or hereafter prescribed by statute, and all rights conferred
upon stockholders herein are granted subject to this reservation.
<PAGE> 4
-4-
TWELFTH: The name and address of the incorporator is William S. Sterns,
III, 405 Lexington Avenue, New York, New York 10174.
IN WITNESS WHEREOF, the undersigned, being the incorporator hereinabove
named, does hereby execute this Certificate of Incorporation this 2nd day of
July, 1981.
/s/ WILLIAM S. STERNS, III
--------------------------
WILLIAM S. STERNS, III
INCORPORATOR
<PAGE> 5
[LOGO]
State of Delaware
Office of Secretary of State
I, Glenn C. Kenton, Secretary of State of the State of Delaware, do
hereby certify that the above and foregoing is a true and correct copy of
certificate of Incorporation of the "C R B of Kentucky, Inc.", as received and
filed in this office the sixth day of July, A.D. 1981, at 9 o'clock A.M.
In Testimony Whereof, I have hereunto set my hand
[LOGO] and official seal at Dover this sixth day
of July in the year of our Lord
one thousand nine hundred and eighty-one.
[SEAL] [STAMP] /s/ Glenn C. Kenton
-----------------------------------
Glenn C. Kenton, Secretary of State
<PAGE> 6
State of Delaware
[LOGO]
Office of Secretary of State
I, MICHAEL HARKINS, SECRETARY OF STATE OF THE STATE OF DELAWARE DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
AGREEMENT OF MERGER OF "C R B BROADCASTING OF WEST VIRGINIA, INC." MERGING WITH
AND INTO "C R B OF KENTUCKY, INC." UNDER THE NAME OF "C R B OF KENTUCKY, INC."
AS RECEIVED AND FILED IN THIS OFFICE ON THE TWENTY-SIXTH DAY OF SEPTEMBER, A.D.
1985, AT 9 O'CLOCK A.M.
/s/ MICHAEL HARKINS
-----------------------------------
MICHAEL HARKINS, SECRETARY OF STATE
852698210 AUTHENTICATION: 0626997
DATE: 10/03/1985
<PAGE> 7
AGREEMENT OF MERGER
OF
CRB BROADCASTING OF WEST VIRGINIA, INC.
(a Delaware corporation)
AND
CRB OF KENTUCKY, INC.
(a Delaware corporation)
AGREEMENT OF MERGER approved on May 24, 1985 by CRB Broadcasting of
West Virginia, Inc., a business corporation of the State of Delaware, and by
resolution adopted by its Board of Directors on said date, and approved on May
24, 1985 by CRB of Kentucky, Inc., a business corporation of the State of
Delaware, and by resolution adopted by its Board of Directors on said date.
WHEREAS CRB Broadcasting of West Virginia, Inc. is a business
corporation of the State of Delaware with its registered office therein located
at 229 South State Street, City of Dover, County of Kent; and
WHEREAS the total number of shares of stock which CRB Broadcasting of
West Virginia, Inc. has authority to issue is 1,000, all of which are of one
class and of a par value of $1.00 each; and
WHEREAS CRB of Kentucky, Inc. is a business corporation of the State of
Delaware with its registered office therein located at 229 South State Street,
City of Dover, County of Kent; and
WHEREAS the total number of shares of stock which CRB of Kentucky, Inc.
has authority to issue is 1,000, all of which are of one class and of a par
value of $1.00 each; and
WHEREAS CRB Broadcasting of West Virginia, Inc. and CRB of Kentucky,
Inc. and the respective Boards of Directors thereof deem it advisable and to the
advantage, welfare and best interests of said corporations and their respective
stockholders of merge CRB Broadcasting of West Virginia, Inc. with and into CRB
of Kentucky, Inc. pursuant to the provisions
<PAGE> 8
of the General Corporation Law of the State of Delaware upon the terms and
conditions hereinafter set forth:
NOW THEREFORE, in consideration of the premises and of the mutual
agreement of the parties hereto, being thereunto duly approved by a resolution
adopted by the Board of Directors of CRB Broadcasting of West Virginia, Inc. and
duly approved by a resolution adopted by the Board of Directors of CRB of
Kentucky, Inc., the Agreement of Merger and the terms and conditions thereof and
the mode of carrying the same into effect, together with any provisions required
or permitted to be set forth therein, are hereby determined and agreed upon as
hereinafter in this Agreement set forth.
1. CRB Broadcasting of West Virginia, Inc. and CRB of Kentucky, Inc.
shall, pursuant to the provisions of the General Corporation Law of the State of
Delaware, be merged with and into a single corporation, to wit, CRB of Kentucky,
Inc., which shall be the surviving corporation from and after the effective time
of the merger, and which is sometimes hereinafter referred to as the "surviving
corporation", and which shall continue to exist as said surviving corporation
under its present name pursuant to the provisions of the General Corporation Law
of the State of Delaware. The separate existence of CRB Broadcasting of West
Virginia, Inc., which is hereinafter sometimes referred to as the "terminating
corporation", shall cease at the said effective time in accordance with the
provisions of said General Corporation Law of the State of Delaware.
2. The Certificate of Incorporation of the surviving corporation, as
now in force and effect, shall continue to be the Certificate of Incorporation
of said surviving corporation except that article fourth thereof, relating to
the authorized shares of the corporation are hereby amended and changed so as to
read as follows at the effective time of the merger:
"Fourth: The total number of shares of stock
which the Corporation shall have authority to
issue is 3,000 shares, consisting of one class of
Common Stock having a par value of $1.00 per
share."
and said Certificate of Incorporation as herein amended and changed shall
continue in full force and effect until further amended and changed in the
manner prescribed by the provisions of the General Corporation Law of the State
of Delaware.
-2-
<PAGE> 9
3. The present by laws of the surviving corporation will be the by laws
of said surviving corporation and will continue in full force and effect until
changed, altered or amended as therein provided and in the manner prescribed by
the provisions of the General Corporation Law of the State of Delaware.
4. The directors and officers in office of the surviving corporation at
the effective time of the merger shall be the members of the first Board of
Directors and the first officers of the surviving corporation, all of whom shall
hold their directorships and offices until the election and qualification of
their respective successors or until their tenure is otherwise terminated in
accordance with the bylaws of the surviving corporation.
5. Each issued share of the terminating corporation shall, at the
effective time of the merger, be converted into one share of the surviving
corporation. The issued shares of the surviving corporation shall not be
converted or exchanged in any manner, but each said share which is issued as of
the effective time of the merger shall continue to represent one issued share of
the surviving corporation.
6. In the event that this Agreement of Merger shall have been fully
adopted upon behalf of the terminating corporation and of the surviving
corporation in accordance with the provisions of the General Corporation Law of
the State of Delaware, the said corporations agree that they will cause to be
executed and filed and recorded any document or documents prescribed by the laws
of the State of Delaware, and that they will cause to be performed all necessary
acts within the State of Delaware and elsewhere to effectuate the merger herein
provided for.
7. The Board of Directors and the proper officers of the terminating
corporation and of the surviving corporation are hereby authorized, empowered
and directed to do any and all acts and things, and to make, execute, deliver,
file, and record any and all instruments, papers and documents which shall be or
become necessary, proper or convenient to carry out or put into effect any of
the provisions of this Agreement of Merger or of the merger herein provided for.
-3-
<PAGE> 10
IN WITNESS WHEREOF, this Agreement of Merger is hereby signed and
attested upon behalf of each of the constituent corporations parties thereto.
Dated: August 1, 1985
CRB Broadcasting of West Virginia, Inc.
By: /s/ Edward G. Rogoff
----------------------------------
Edward G. Rogoff, President
Attest:
/s/ Robert P. Connor
- ----------------------------------
Robert P. Connor, Secretary
Dated: 8/1, 1985
CRB of Kentucky, Inc.
By: /s/ Edward G. Rogoff
----------------------------------
Edward G. Rogoff, President
Attest: 8/1/85
/s/ Robert P. Connor
- ----------------------------------
Robert P. Connor, Secretary
-4-
<PAGE> 11
[LOGO]
STATE
of
DELAWARE
OFFICE OF SECRETARY OF STATE
I Michael Harkins, Secretary of State of the State of Delaware,
do hereby certify that the attached is a true and correct copy of
Certificate of Agreement of Merger
filed in this office on September 26, 1985
/s/ Michael Harkins
----------------------------------------
Michael Harkins, Secretary of State
[LOGO]
BY: /s/
-------------------------------------
DATE: March 30, 1989
-------------------------------------
<PAGE> 12
[DATE-STAMP]
AGREEMENT OF MERGER
OF
CRB BROADCASTING OF WEST VIRGINIA, INC.
(a Delaware corporation)
AND
CRB OF KENTUCKY, INC.
(a Delaware corporation)
AGREEMENT OF MERGER approved on May 24, 1985 by CRB Broadcasting of
West Virginia, Inc. a business corporation of the State of Delaware, and by
resolution adopted by its Board of Directors on said date, and approved on May
24, 1985 by CRB of Kentucky, Inc., a business corporation of the State of
Delaware, and by resolution adopted by its Board of Directors on said date.
WHEREAS CRB Broadcasting of West Virginia, Inc. is a business
corporation of the State of Delaware with its registered office therein located
at 229 South State Street, City of Dover, County of Kent; and
WHEREAS the total number of shares of stock which CRB Broadcasting of
West Virginia, Inc. has authority to issue is 1,000, all of which are of one
class and of a par value of $1.00 each; and
WHEREAS CRB of Kentucky, Inc. is a business corporation of the State of
Delaware with its registered office therein located at 229 South State Street,
City of Dover, County of Kent; and
WHEREAS the total number of shares of stock which CRB of Kentucky, Inc.
has authority to issue is 1,000, all of which are of one class and of a par
value of $1.00 each; and
WHEREAS CRB Broadcasting of West Virginia, Inc. and CRB of Kentucky,
Inc. and the respective Boards of Directors thereof deem it advisable and to the
advantage, welfare and best interests of said corporations and their respective
stockholders of merge CRB Broadcasting of West Virginia, Inc. with and into CRB
of Kentucky, Inc. pursuant to the provisions
<PAGE> 13
of the General Corporation Law of the State of Delaware upon the terms and
conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreement of the parties hereto, being thereunto duly approved by a resolution
adopted by the Board of Directors of CRB Broadcasting of West Virginia, Inc. and
duly approved by a resolution adopted by the Board of Directors of CRB of
Kentucky, Inc., the Agreement of Merger and the terms and conditions thereof and
the mode of carrying the same into effect, together with any provisions required
or permitted to be set forth therein, are hereby determined and agreed upon as
hereinafter in this Agreement set forth.
1. CRB Broadcasting of West Virginia, Inc. and CRB of Kentucky, Inc.
shall, pursuant to the provisions of the General Corporation Law of the State of
Delaware, be merged with and into a single corporation, to wit, CRB of Kentucky,
Inc., which shall be the surviving corporation from and after the effective time
of the merger, and which is sometimes hereinafter referred to as the "surviving
corporation", and which shall continue to exist as said surviving corporation
under its present name pursuant to the provisions of the General Corporation Law
of the State of Delaware. The separate existence of CRB Broadcasting of West
Virginia, Inc., which is hereinafter sometimes referred to as the "terminating
corporation", shall cease at the said effective time in accordance with the
provisions of said General Corporation Law of the State of Delaware.
2. The Certificate of Incorporation of the surviving corporation, as
now in force and effect, shall continue to be the Certificate of Incorporation
of said surviving corporation except that article fourth thereof, relating to
the authorized shares of the corporation are hereby amended and changed so as to
read as follows at the effective time of the merger:
"Fourth: The total number of shares of stock
which the Corporation shall have authority to
issue is 3,000 shares, consisting of one class of
Common Stock having a par value of $1.00 per
share."
and said Certificate of Incorporation as herein amended and changed shall
continue in full force and effect until further amended and changed in the
manner prescribed by the provisions of the General Corporation Law of the State
of Delaware.
-2-
<PAGE> 14
3. The present by laws of the surviving corporation will be the bylaws
of said surviving corporation and will continue in full force and effect until
changed, altered or amended as therein provided and in the manner prescribed by
the provisions of the General Corporation Law of the State of Delaware.
4. The directors and officers in office of the surviving corporation at
the effective time of the merger shall be the members of the first Board of
Directors and the first officers of the surviving corporation, all of whom shall
hold their directorships and offices until the election and qualification of
their respective successors or until their tenure is otherwise terminated in
accordance with the bylaws of the surviving corporation.
5. Each issued share of the terminating corporation shall, at the
effective time of the merger, be converted into one share of the surviving
corporation. The issued shares of the surviving corporation shall not be
converted or exchanged in any manner, but each said share which is issued as of
the effective time of the merger shall continue to represent one issued share of
the surviving corporation.
6. In the event that this Agreement of Merger shall have been fully
adopted upon behalf of the terminating corporation and of the surviving
corporation in accordance with the provisions of the General Corporation Law of
the State of Delaware, the said corporations agree that they will cause to be
executed and filed and recorded any document or documents prescribed by the laws
of the State of Delaware, and that they will cause to be performed all necessary
acts within the State of Delaware and elsewhere to effectuate the merger herein
provided for.
7. The Board of Directors and the proper officers of the terminating
corporation and of the surviving corporation are hereby authorized, empowered
and directed to do any and all acts and things, and to make, execute, deliver,
file, and record any and all instruments, papers and documents which shall be or
become necessary, proper or convenient to carry out or put into effect any of
the provisions of this Agreement of Merger or of the merger herein provided for.
-3-
<PAGE> 15
IN WITNESS WHEREOF, this Agreement of Merger is hereby signed and
attested upon behalf of each of the constituent corporations parties thereto.
Dated: August 1, 1985.
CRB Broadcasting of West Virginia, Inc.
By: /s/ Edward G. Rogoff
--------------------------------
Edward G. Rogoff, President
Attest:
/s/ Robert P. Connor
- -------------------------------
Robert P. Connor, Secretary
Dated: 8/1, 1985.
CRB of Kentucky, Inc.
By: /s/ Edward G. Rogoff
--------------------------------
Edward G. Rogoff, President
Attest: 8/1/85
/s/ Robert P. Connor
- -------------------------------
Robert P. Connor, Secretary
-4-
<PAGE> 16
STATE OF WEST VIRGINIA
[LOGO]
CERTIFICATE
I, Ken Hechler, Secretary of State of the State of West Virginia, hereby
certify that on the 6th of November, 1985, an application for qualification
under a certificate of authority was received by:
CRB of Kentucky, Inc.
a qualified Delaware corporation. An attached document also merged CRB
Broadcasting of West Virginia, Inc. with and into CRB of Kentucky, Inc.
Therefore, I hereby issue this certificate of merger, merging CRB Broadcasting
of West Virginia, Inc. with and into CRB of Kentucky, Inc., the survivor.
Given under my hand and the Great Seal of the State of
[LOGO] West Virginia, on this twenty second day of November
1989
/s/ Ken Hechler
-----------------------------
Secretary of the State
<PAGE> 17
<PAGE> 18
[LOGO]
STATE
OF
DELAWARE
OFFICE OF SECRETARY OF STATE
I, Michael Harkins, Secretary of State of the State of Delaware,
do hereby certify that the attached is a true and correct copy of
Certificate of Agreement of Merger filed in this office on
September 26, 1985
/s/ Michael Harkins
-----------------------------------
Michael Harkins, Secretary of State
[LOGO]
BY: /s/
-----------------------------
Form 130 DATE: October 17, 1985
-----------------------------
<PAGE> 19
AGREEMENT OF MERGER [DATE STAMP]
OF
CRB BROADCASTING OF WEST VIRGINIA, INC.
(a Delaware corporation)
AND
CRB OF KENTUCKY, INC.
(a Delaware corporation)
AGREEMENT OF MERGER approved on May 24, 1985 by CRB Broadcasting of
West Virginia, Inc., a business corporation of the State of Delaware, and by
resolution adopted by its Board of Directors on said date, and approved on May
24, 1985 by CRB of Kentucky, Inc., a business corporation of the State of
Delaware, and by resolution adopted by its Board of Directors on said date.
WHEREAS CRB Broadcasting of West Virginia, Inc. is a business
corporation of the State of Delaware with its registered office therein located
at 229 South State Street, City of Dover, County of Kent; and
WHEREAS the total number of shares of stock which CRB Broadcasting of
West Virginia, Inc. has authority to issue is 1,000, all of which are of one
class and of a par value of $1.00 each; and
WHEREAS CRB of Kentucky, Inc. is a business corporation of the State of
Delaware with its registered office therein located at 229 South State Street,
City of Dover, County of Kent; and
WHEREAS the total number of shares of stock which CRB of Kentucky, Inc.
has authority to issue is 1,000, all of which are of one class and of a par
value of $1.00 each; and
WHEREAS CRB Broadcasting of West Virginia, Inc. and CRB of Kentucky,
Inc. and the respective Boards of Directors thereof deem it advisable and to the
advantage, welfare and best interests of said corporations and their respective
stockholders to merge CRB Broadcasting of West Virginia, Inc. with and into CRB
of Kentucky, Inc. pursuant to the provisions
<PAGE> 20
of the General Corporation Law of the State of Delaware upon
the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreement of the parties hereto, being thereunto duly approved by a resolution
adopted by the Board of Directors of CRB Broadcasting of West Virginia, Inc. and
duly approved by a resolution adopted by the Board of Directors of CRB of
Kentucky, Inc., the Agreement of Merger and the terms and conditions thereof and
the mode of carrying the same into effect, together with any provisions required
or permitted to be set forth therein, are hereby determined and agreed upon as
hereinafter in this Agreement set forth.
1. CRB Broadcasting of West Virginia, Inc. and CRB of Kentucky, Inc.
shall, pursuant to the provisions of the General Corporation Law of the State of
Delaware, be merged with and into a single corporation, to wit, CRB of Kentucky,
Inc., which shall be the surviving corporation from and after the effective time
of the merger, and which is sometimes hereinafter referred to as the "surviving
corporation", and which shall continue to exist as said surviving corporation
under its present name pursuant to the provisions of the General Corporation Law
of the State of Delaware. The separate existence of CRB Broadcasting of West
Virginia, Inc., which is hereinafter sometimes referred to as the "terminating
corporation", shall cease at the said effective time in accordance with the
provisions of said General Corporation Law of the State of Delaware.
2. The Certificate of Incorporation of the surviving corporation, as
now in force and effect, shall continue to be the Certificate of Incorporation
of said surviving corporation except that article fourth thereof, relating to
the authorized shares of the corporation are hereby amended and changed so as to
read as follows at the effective time of the merger:
"Fourth: The total number of shares of stock
which the Corporation shall have authority to
issue is 3,000 shares, consisting of one class of
Common Stock having a par value of $1.00 per
share."
and said Certificate of Incorporation as herein amended and changed shall
continue in full force and effect until further amended and changed in the
manner prescribed by the provisions of the General Corporation Law of the State
of Delaware.
-2-
<PAGE> 21
3. The present by laws of the surviving corporation will be the by laws
of said surviving corporation and will continue in full force and effect until
changed, altered or amended as therein provided and in the manner prescribed by
the provisions of the General Corporation Law of the State of Delaware.
4. The directors and officers in office of the surviving corporation at
the effective time of the merger shall be the members of the first Board of
Directors and the first officers of the surviving corporation, all of whom shall
hold their directorships and offices until the election and qualification of
their respective successors or until their tenure is otherwise terminated in
accordance with the bylaws of the surviving corporation.
5. Each issued share of the terminating corporation shall, at the
effective time of the merger, be converted into one share of the surviving
corporation. The issued shares of the surviving corporation shall not be
converted or exchanged in any manner, but each said share which is issued as of
the effective time of the merger shall continue to represent one issued share of
the surviving corporation.
6. In the event that this Agreement of Merger shall have been fully
adopted upon behalf of the terminating corporation and of the surviving
corporation in accordance with the provisions of the General Corporation Law of
the State of Delaware, the said corporations agree that they will cause to be
executed and filed and recorded any document or documents prescribed by the laws
of the State of Delaware, and that they will cause to be performed all necessary
acts within the State of Delaware and elsewhere to effectuate the merger herein
provided for.
7. The Board of Directors and the proper officers of the terminating
corporation and of the surviving corporation are hereby authorized, empowered
and directed to do any and all acts and things, and to make, execute, deliver,
file, and record any and all instruments, papers and documents which shall be or
become necessary, proper or convenient to carry out or put into effect any of
the provisions of this Agreement of Merger or of the merger herein provided for.
-3-
<PAGE> 22
IN WITNESS WHEREOF, this Agreement of Merger is hereby signed and
attested upon behalf of each of the constituent corporations parties thereto.
Dated: August 1, 1985
CRB Broadcasting of West Virginia, Inc.
By: /s/ Edward G. Rogoff
--------------------------------
Edward G. Rogoff, President
Attest:
/s/ Robert P. Connor
- --------------------------------
Robert P. Connor, Secretary
Dated: 8/1, 1985
CRB of Kentucky, Inc.
By: /s/ Edward G. Rogoff
--------------------------------
Edward G. Rogoff, President
Attest: 8/1/85
/s/ Robert P. Connor
- --------------------------------
Robert P. Connor, Secretary
-4-
<PAGE> 23
<PAGE> 24
STATE OF DELAWARE
[LOGO]
OFFICE OF SECRETARY OF STATE
I, MICHAEL HARKINS, SECRETARY OF STATE OF THE STATE OF DELAWARE DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
AMENDMENT OF CRB OF KENTUCKY, INC. FILED IN THIS OFFICE ON THE TWENTY-THIRD DAY
OF SEPTEMBER, A.D. 1986, AT 9 O'CLOCK A.M.
/s/ Michael Harkins
[LOGO] RECEIVED FOR RECORD -----------------------------------
OCT. 8 A.D. 1986 Michael Harkins, Secretary of State
Robert J. Conaway
Recorder AUTHENTICATION: 0965678
DATE: 10/07/1986
$3.00 STATE DOCUMENT FEE PAID
<PAGE> 25
CERTIFICATE OF AMENDMENT [DATE STAMP]
OF
CERTIFICATE OF INCORPORATION
OF
CRB OF KENTUCKY, INC.
It is hereby certified that:
1. The name of the corporation is CRB of Kentucky, Inc. (the
"Corporation").
2. The certificate of incorporation of the Corporation is hereby
amended by adding a new article thirteenth to read as follows:
THIRTEENTH: The personal liability of the directors of the Corporation
is hereby eliminated to the fullest extent permitted by paragraph (7)
of subsection (b) of section 102 of the General Corporation Law of the
State of Delaware, as the same may be amended and supplemented.
3. The amendment of the certificate of incorporation herein
certified has been duly adopted in accordance with the
<PAGE> 26
provisions of sections 228 and 242 of the General Corporation Law of the State
of Delaware.
Signed and attested to on Sept. 17, 1986
--------
/s/
-------------------
President
Attest:
/s/
- --------------------------
Secretary
<PAGE> 27
STATE OF DELAWARE
[LOGO]
OFFICE OF SECRETARY OF STATE
I, MICHAEL HARKINS, SECRETARY OF STATE OF THE STATE OF DELAWARE DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
RENEWAL OF CRB OF KENTUCKY, INC. FILED IN THIS OFFICE ON THE THIRTEENTH DAY
OF SEPTEMBER, A.D. 1985, AT 9 O'CLOCK A.M.
/s/ Michael Harkins
-----------------------------------
Michael Harkins, Secretary of State
AUTHENTICATION: 0614283
[DATE STAMP]
DATE: 09/18/1985
852560179
<PAGE> 28
[DATE STAMP]
5:156
CERTIFICATE OF RESTORATION AND REVIVAL OF
CERTIFICATE OF INCORPORATION OF
CRB OF KENTUCKY, INC.
It is hereby certified that:
1. The name of the corporation (hereinafter called the
"Corporation") is CRB OF KENTUCKY, INC.
2. The Corporation was organized under the provisions of the
General Corporation Law of the State of Delaware.
3. The address, including the street, city, and county, of the
registered office of the Corporation in the State of Delaware and the name of
the registered agent at such address are as follows: 229 South State Street, in
the City of Dover, the County of Kent, and the name of the Corporation's
registered agent at such address is The Prentice-Hall Corporation System, Inc.
4. The Corporation hereby procures a restoration and revival of
its certificate of incorporation, which became inoperative by law on March 1,
1984 for failure to file annual reports and non-payment of taxes payable to the
State of Delaware.
5. The certificate of the Corporation, which provides for and
will continue to provide for, perpetual duration, shall, upon the filing of this
Certificate of Restoration and Revival of the Certificate of Incorporation in
the Department of State of the State of Delaware, be restored and revived and
shall become fully operative on February 29, 1984.
<PAGE> 29
6. This Certificate of Restoration and Revival of the Certificate
of Incorporation is filed by authority of the duly elected directors as
prescribed by Section 312 of the General Corporation Law of the State of
Delaware.
Signed and attested to on the
11th day of September, 1985.
/s/
---------------------
President
Attest:
/s/
- ----------------------------
Secretary
-2-
<PAGE> 30
STATE OF DELAWARE
[LOGO]
OFFICE OF SECRETARY OF STATE
I, MICHAEL HARKINS, SECRETARY OF STATE OF THE STATE OF DELAWARE DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
RENEWAL OF CRB OF KENTUCKY, INC. FILED IN THIS OFFICE ON THE THIRTEENTH DAY
OF SEPTEMBER, A.D. 1985, AT 9 O'CLOCK A.M.
/s/ Michael Harkins
-----------------------------------
Michael Harkins, Secretary of State
AUTHENTICATION: 0614284
DATE: 09/18/1985
<PAGE> 31
5:156
CERTIFICATE OF RESTORATION AND REVIVAL OF
CERTIFICATE OF INCORPORATION OF
CRB OF KENTUCKY, INC.
It is hereby certified that:
1. The name of the corporation (hereinafter called the
"Corporation") is CRB OF KENTUCKY, INC.
2. The Corporation was organized under the provisions of the
General Corporation Law of the State of Delaware.
3. The address, including the street, city, and county, of the
registered office of the Corporation in the State of Delaware and the name of
the registered agent at such address are as follows: 229 South State Street, in
the City of Dover, the County of Kent, and the name of the Corporation's
registered agent at such address is The Prentice-Hall Corporation System, Inc.
4. The Corporation hereby procures a restoration and revival of
its certificate of incorporation, which became inoperative by law on March 1,
1984 for failure to file annual reports and non-payment of taxes payable to the
State of Delaware.
5. The certificate of the Corporation, which provides for and
will continue to provide for, perpetual duration, shall, upon the filing of this
Certificate of Restoration and Revival of the Certificate of Incorporation in
the Department of State of the State of Delaware, be restored and revived and
shall become fully operative on February 29, 1984.
<PAGE> 32
6. This Certificate of Restoration and Revival of the Certificate
of Incorporation is filed by authority of the duly elected directors as
prescribed by Section 312 of the General Corporation Law of the State of
Delaware.
Signed and attested to on the
11th day of September, 1985.
/s/
----------------------
President
Attest:
/s/
- -----------------------------
Secretary
-2-
<PAGE> 33
STATE OF DELAWARE
[LOGO]
OFFICE OF SECRETARY OF STATE
I, MICHAEL HARKINS, SECRETARY OF STATE OF THE STATE OF DELAWARE DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
AMENDMENT OF CRB OF KENTUCKY, INC. FILED IN THIS OFFICE ON THE TWENTY-THIRD DAY
OF SEPTEMBER, A.D. 1986, AT 9 O'CLOCK A.M.
Michael Harkins
-----------------------------------
[LOGO] Michael Harkins, Secretary of State
AUTHENTICATION: 0965677
DATE: 10/07/1986
862660108
<PAGE> 34
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
CRB OF KENTUCKY, INC.
It is hereby certified that:
1. The name of the corporation is CRB of Kentucky, Inc. (the
"Corporation").
2. The certificate of incorporation of the Corporation is hereby
amended by adding a new article thirteenth to read as follows:
THIRTEENTH: The personal liability of the directors of the Corporation
is hereby eliminated to the fullest extent permitted by paragraph (7)
of subsection (b) of section 102 of the General Corporation Law of the
State of Delaware, as the same may be amended and supplemented.
3. The amendment of the certificate of incorporation herein
certified has been duly adopted in accordance with the
<PAGE> 35
provisions of sections 228 and 242 of the General Corporation Law of the State
of Delaware.
Signed and attested to on Sept. 17, 1986.
/s/
-------------------
President
Attest:
/s/
- ------------------------
Secretary
<PAGE> 36
STATE OF DELAWARE
PAGE 1
OFFICE OF THE SECRETARY OF STATE
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
AMENDMENT OF "CRB OF KENTUCKY, INC.", CHANGING ITS NAME FROM "CRB OF KENTUCKY,
INC." TO "COMMODORE MEDIA OF KENTUCKY, INC.", FILED IN THIS OFFICE ON THE EIGHTH
DAY OF SEPTEMBER, A.D. 1995, AT 9 O'CLOCK A.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE KENT
COUNTY RECORDER OF DEEDS FOR RECORDING.
Edward J. Freel
-----------------------------------
[LOGO] Edward J. Freel, Secretary of State
AUTHENTICATION: 7634182
DATE: 09-08-95
0917781 8100
950204350
<PAGE> 37
[DATE STAMP]
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
CRB OF KENTUCKY, INC.
Under Section 242 of the Delaware General Corporation Law
The undersigned, being the Secretary of CRB of Kentucky, Inc.,
a corporation organized and existing under and by virtue of the General
Corporation Law of the State of Delaware (the "Corporation"), does hereby
certify as follows:
1. The name of the Corporation is CRB of Kentucky, Inc.
2. The Certificate of Incorporation of the Corporation
was filed with the Secretary of State of Delaware on July 6, 1981.
3. The Certificate of Incorporation of the Corporation
is hereby amended to effect a change in Article One thereof, relating to the
name of the Corporation, accordingly Article One of the Certificate of
Incorporation shall be amended in its entirety to read as follows:
"FIRST: The name of the Corporation is Commodore Media of
Kentucky, Inc. (the "Corporation")."
4. The Board of Directors of the Corporation, pursuant
to Sections 141(f) and 242 of the General Corporation Law of the State of
Delaware, adopted resolutions approving the foregoing amendment and directed
that the amendment be submitted to the stockholders of the Corporation for their
consideration and approval.
5. The sole Stockholder of the Corporation approved the
amendment in accordance with Sections 228(a) and 242 of the General Corporation
Law of the State of Delaware.
* * * * *
<PAGE> 38
IN WITNESS WHEREOF, the undersigned, being the Secretary
hereinabove named, under penalties of perjury does hereby declare and certify
that this is the act and deed of the Corporation and the facts stated herein are
true, and accordingly has hereunto signed this Certificate of Amendment to
Certificate of Incorporation this 23 day of August, 1995.
By: /s/ Carter Burden
------------------------
Carter Burden, Secretary
-2-
<PAGE> 1
EXHIBIT 3.6.1
STATE OF DELAWARE
[LOGO]
OFFICE OF SECRETARY OF STATE
I, MICHAEL HARKINS, SECRETARY OF STATE OF THE STATE OF DELAWARE DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
INCORPORATION OF CRB OF NORWALK, INC. FILED IN THIS OFFICE ON THE SIXTEENTH DAY
OF MAY, A.D. 1989, AT 9 O'CLOCK A.M.
/s/ Michael Harkins
[LOGO] [DATE STAMP] -----------------------------------
Michael Harkins, Secretary of State
AUTHENTICATION: 12181732
DATE: 05/16/1989
<PAGE> 2
[DATE STAMP]
CERTIFICATE OF INCORPORATION
OF
CRB OF NORWALK, INC.
THE UNDERSIGNED, a natural person, for the purpose of forming a
corporation pursuant to the provisions of the General Corporation Law of the
State of Delaware, does hereby certify as follows:
FIRST: The name of the Corporation is CRB Of Norwalk, Inc. (the
"Corporation").
SECOND: The address of the Corporation's registered office in the State
of Delaware is 229 South State Street, Dover, Kent County, Delaware 19901 and
the name of the Corporation's registered agent at such address is The
Prentice-Hall Corporation System, Inc.
THIRD: The purposes for which the Corporation is organized are to engage
in any lawful act or activity for which corporations may be organized under the
General Corporation Law of the State of Delaware.
FOURTH: The total number of shares of capital stock which the
Corporation shall have authority to issue is 1,000 shares, par value $1.00 per
share, all of which shall be Common Stock.
<PAGE> 3
Shares of capital stock of the Corporation may be issued by the Corporation from
time to time for such legally sufficient consideration as may be fixed from time
to time by the Board of Directors.
FIFTH: The name and address of the incorporator is William S. Sterns,
III, Esq., 101 East 52nd Street, New York, New York 10022.
SIXTH: The personal liability of the directors of the Corporation is
hereby eliminated to the fullest extent permitted by paragraph (7) of subsection
(b) of section 102 of the General Corporation Law of the State of Delaware, as
the same may be amended and supplemented.
SEVENTH: Whenever a compromise or arrangement is proposed between the
Corporation and its creditors or any class of them and/or between the
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of the Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for the Corporation under the
provisions of Section 291 of Title 8 of the Delaware Code or on the application
of trustees in dissolution or of any receiver or receivers appointed for the
Corporation under the provisions of Section 279 of Title 8 of the Delaware Code
-2-
<PAGE> 4
order a meeting of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of the Corporation, as the case may be, to
be summoned in such manner as the said court directs. If a majority in number
representing three fourths in value of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of the Corporation, as the
case may be, agree to any compromise or arrangement and to any reorganization of
the Corporation as consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of this corporation, as the case may be, and also on this
corporation.
EIGHTH: The Corporation shall, to the fullest extent permitted by
Section 145 of the General Corporation Law of the State of Delaware, as the
same may be amended and supplemented, indemnify any and all persons whom it
shall have power to indemnify under said section from and against any and all
of the expenses, liabilities, or other matters referred to in or covered by
said section, and the indemnification provided for herein shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
any Bylaw, agreement, vote of stockholders or disinterested directors or
-3-
<PAGE> 5
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a director, officer, employee, or agent and shall inure to
the benefit of the heirs, executors, and administrators of such a person.
NINTH: From time to time any of the provisions of this certificate of
incorporation may be amended, altered, or repealed, and other provisions
authorized by the laws of the State of Delaware at the time in force may be
added or inserted in the manner and at the time prescribed by said laws, and all
rights at any time conferred upon the stockholders of the corporation by this
certificate of incorporation are granted subject to the provision of this
Article NINTH.
IN WITNESS WHEREOF, the undersigned, being the incorporator hereinabove
named, does hereby execute this Certificate of Incorporation this 15th day of
May, 1989.
/s/ William S. Sterns
-----------------------------
WILLIAM S. STERNS, III, ESQ.
INCORPORATOR
-4-
<PAGE> 6
State of Delaware
Office of the Secretary of State PAGE 1
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
AMENDMENT OF "CRB OF NORWALK, INC.", CHANGING ITS NAME FROM "CRB OF NORWALK,
INC." TO "COMMODORE MEDIA OF NORWALK, INC.", FILED IN THIS OFFICE ON THE EIGHTH
DAY OF SEPTEMBER. A.D. 1995, AT 9 O'CLOCK A.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE KENT
COUNTY RECORDER OF DEEDS FOR RECORDING.
/s/ Edward J. Freel
--------------------------
[LOGO] EDWARD J. FREEL,
Secretary of State
AUTHENTICATION: 7633970
DATE: 09-08-95
2196537 8100
<PAGE> 7
[DATE STAMP]
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
CRB OF NORWALK, INC.
Under Section 242 of the Delaware General Corporation Law
The undersigned, being the Secretary of CRB of Norwalk, Inc., a
corporation organized and existing under and by virtue of the General
Corporation Law of the State of Delaware (the "Corporation"), does hereby
certify as follows:
1. The name of the Corporation is CRB of Norwalk, Inc.
2. The Certificate of Incorporation of the Corporation was filed
with the Secretary of State of Delaware on May 16, 1989.
3. The Certificate of Incorporation of the Corporation is hereby
amended to effect a change in Article One thereof, relating to the name of the
Corporation, accordingly Article One of the Certificate of Incorporation shall
be amended in its entirety to read as follows:
"FIRST: The name of the Corporation is Commodore Media of Norwalk, Inc.
(the "Corporation")."
4. The Board of Directors of the Corporation, pursuant to
Sections 141(f) and 242 of the General Corporation Law of the State of Delaware,
adopted resolutions approving the foregoing amendment and directed that the
amendment be submitted to the stockholders of the Corporation for their
consideration and approval.
5. The sole Stockholder of the Corporation approved the amendment
in accordance with Sections 228(a) and 242 of the General Corporation Law of the
State of Delaware.
* * * *
<PAGE> 8
IN WITNESS WHEREOF, the undersigned, being the Secretary
hereinabove named, under penalties of perjury does hereby declare and certify
that this is the act and deed of the Corporation and the facts stated herein are
true, and accordingly has hereunto signed this Certificate of Amendment to
Certificate of Incorporation this 23rd day of August, 1995.
By /s/ Carter Burden
------------------------
Carter Burden, Secretary
2
<PAGE> 1
Exhibit 3.7.1
PAGE 1
STATE OF DELAWARE
[LOGO]
OFFICE OF SECRETARY OF STATE
I, MICHAEL HARKINS, SECRETARY OF STATE OF THE STATE OF DELAWARE DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
INCORPORATION OF CRB OF WESTCHESTER, INC. FILED IN THIS OFFICE ON THE TWENTIETH
DAY OF MAY, A.D. 1986, AT 9 O'CLOCK A.M.
/s/ Michael Harkins
---------------------------
[LOGO] Michael Harkins, Secretary of State
756140006 AUTHENTICATION: 0825127
DATE: 05/20/1986
<PAGE> 2
CERTIFICATE OF INCORPORATION
OF
CRB OF WESTCHESTER, INC.
THE UNDERSIGNED, for the purpose of forming a corporation pursuant to
the provisions of the General Corporation Law of the State of Delaware, does
hereby certify as follows:
First: The name of the Corporation is CRB of Westchester, Inc. (the
"Corporation").
Second: The address of the Corporation's registered office in the State
of Delaware is 229 South State Street, Dover, Kent County, Delaware 19901 and
the name of the Corporation's registered agent at such address is The
Prentice-Hall Corporation System, Inc.
Third: The purposes for which the Corporation is organized are to
engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of the State of Delaware.
Fourth: The total number of shares of capital stock which the
Corporation shall have authority to issue is 1,000 shares, par value $1.00 per
share, all of which shall be Common Stock. Shares of capital stock of the
Corporation may be issued by the
<PAGE> 3
Corporation from time to time for such legally sufficient consideration as may
be fixed from time to time by the Board of Directors.
Fifth: The name and address of the incorporator is Debora A. Pitman,
101 East 52nd Street, New York, New York 10022.
Sixth: The powers of the incorporator are to terminate upon the filing
of this certificate of incorporation. The names and mailing addresses of the
persons who are to serve as directors until the first annual meeting of
stockholders or until their successors are elected and qualified:
Carter Burden
630 Fifth Avenue
New York, New York 10111
Edward G. Rogoff
630 Fifth Avenue
New York, New York 10111
Robert P. Connor
630 Fifth Avenue
New York, New York 10111
IN WITNESS WHEREOF, the undersigned, being the incorporator hereinabove
named, does hereby execute this Certificate of Incorporation this 14th day of
May, 1986.
/s/DEBORA A. PITMAN
------------------------------
DEBORA A. PITMAN
INCORPORATOR
-2-
<PAGE> 4
STATE OF DELAWARE
[LOGO]
OFFICE OF SECRETARY OF STATE
I, MICHAEL HARKINS, SECRETARY OF STATE OF THE STATE OF DELAWARE DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
INCORPORATION OF CRB OF WESTCHESTER, INC. FILED IN THIS OFFICE ON THE TWENTIETH
DAY OF MAY, A.D. 1986, AT 9 O'CLOCK A.M.
[Logo]
/s/ Michael Harkins
----------------------------
Michael Harkins, Secretary of State
[DATE STAMP]
AUTHENTICATION: 0825126
756140006 DATE : 05/20/1986
<PAGE> 5
CERTIFICATE OF INCORPORATION [DATE STAMP]
OF
CRB OF WESTCHESTER, INC.
THE UNDERSIGNED, for the purpose of forming a corporation pursuant to
the provisions of the General Corporation Law of the State of Delaware, does
hereby certify as follows:
First: The name of the Corporation is CRB of Westchester, Inc. (the
"Corporation").
Second: The address of the Corporation's registered office in the State
of Delaware is 229 South State Street, Dover, Kent County, Delaware 19901 and
the name of the Corporation's registered agent at such address is The
Prentice-Hall Corporation System, Inc.
Third: The purposes for which the Corporation is organized are to
engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of the State of Delaware.
Fourth: The total number of shares of capital stock which the
Corporation shall have authority to issue is 1,000 shares, par value $1.00 per
share, all of which shall be Common Stock. Shares of capital stock of the
Corporation may be issued by the
<PAGE> 6
Corporation from time to time for such legally sufficient consideration as may
be fixed from time to time by the Board of Directors.
Fifth: The name and address of the incorporator is Debora A. Pitman,
101 East 52nd Street, New York, New York 10022.
Sixth: The powers of the incorporator are to terminate upon the filing
of this certificate of incorporation. The names and mailing addresses of the
persons who are to serve as directors until the first annual meeting of
stockholders or until their successors are elected and qualified:
Carter Burden
630 Fifth Avenue
New York, New York 10111
Edward G. Rogoff
630 Fifth Avenue
New York, New York 10111
Robert P. Connor
630 Fifth Avenue
New York, New York 10111
IN WITNESS WHEREOF, the undersigned, being the incorporator hereinabove
named, does hereby execute this Certificate of Incorporation this 14th day of
May, 1986.
/s/DEBORA A. PITMAN
----------------------------
DEBORA A. PITMAN
INCORPORATOR
-2-
<PAGE> 7
STATE OF DELAWARE
[LOGO]
OFFICE OF SECRETARY OF STATE
I, MICHAEL HARKINS, SECRETARY OF STATE OF THE STATE OF DELAWARE DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
AMENDMENT OF CRB OF WESTCHESTER, INC. FILED IN THIS OFFICE ON THE TWENTY-THIRD
DAY OF SEPTEMBER, A.D. 1986, AT 9 O'CLOCK A.M.
[Logo] /s/ Michael Harkins
-----------------------------------
862660105 Michael Harkins, Secretary of State
AUTHENTICATION: 0961641
DATE: 10/01/1986
<PAGE> 8
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
CRB OF WESTCHESTER, INC.
It is hereby certified that:
1. The name of the corporation is CRB of Westchester, Inc. (the
"Corporation").
2. The certificate of incorporation of the Corporation is hereby
amended by adding a new article seventh to read as follows:
SEVENTH: The personal liability of the directors of the Corporation is
hereby eliminated to the fullest extent permitted by paragraph (7) of
subsection (b) of section 102 of the General Corporation Law of the
State of Delaware, as the same may be amended and supplemented.
3. The amendment of the certificate of incorporation herein
certified has been duly adopted in accordance with the
<PAGE> 9
provisions of sections 228 and 242 of the General Corporation Law of the State
of Delaware.
Signed and attested to on September 17, 1986.
/s/
-------------------------
President
Attest:
/s/
- --------------------------
Secretary
<PAGE> 10
State of Delaware
Office of the Secretary of State PAGE 1
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE. DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
AMENDMENT OF "CRB OF WESTCHESTER, INC.", CHANGING ITS NAME FROM "CRB OF
WESTCHESTER. INC." TO "COMMODORE MEDIA OF WESTCHESTER, INC.", FILED IN THIS
OFFICE ON THE EIGHTH DAY OF SEPTEMBER, A.D. 1995. AT 9 O'CLOCK A.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE KENT
COUNTY RECORDER OF DEEDS FOR RECORDING.
[SEAL] /s/ Edward J. Freel
-----------------------------------
Edward J. Freel, Secretary of State
AUTHENTICATION: 7633969
2091511 8100 DATE: 09-08-95
950204214
<PAGE> 11
[DATE STAMP]
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
CRB OF WESTCHESTER, INC.
Under Section 242 of the Delaware General Corporation Law
The undersigned, being the Secretary of CRB of Westchester,
Inc. , a corporation organized and existing under and by virtue of the General
Corporation Law of the State of Delaware (the "Corporation"), does hereby
certify as follows:
1. The name of the Corporation is CRB of Westchester.
Inc.
2. The Certificate of Incorporation of the Corporation
was filed with the Secretary of State of Delaware on May 20, 1986.
3. The Certificate of Incorporation of the Corporation
is hereby amended to effect a change in Article One thereof, relating to the
name of the Corporation, accordingly Article One of the Certificate of
Incorporation shall be amended in its entirety to read as follows:
"FIRST: The name of the Corporation is Commodore Media of
Westchester, Inc. (the "Corporation")."
4. The Board of Directors of the Corporation, pursuant
to Sections 141(f) and 242 of the General Corporation Law of the Stale of
Delaware, adopted resolutions approving the foregoing amendment and directed
that the amendment be submitted to the stockholders of the Corporation for their
consideration and approval.
5. The sole Stockholder of the Corporation approved the
amendment in accordance with Sections 228(a) and 242 of the General Corporation
Law of the State of Delaware.
<PAGE> 12
IN WITNESS WHEREOF, the undersigned, being the Secretary hereinabove
named, under penalties of perjury does hereby declare and certify that this is
the act and deed of the Corporation and the facts stated herein are true, and
accordingly has hereunto signed this Certificate of Amendment to Certificate of
Incorporation this 23 day of August , 1995.
By: /s/ Carter Burden
---------------------------
Carter Burden, Secretary
2
<PAGE> 1
EXHIBIT 3.9.1
CERTIFICATE OF INCORPORATION
OF
COMMODORE HOLDINGS, INC.
ARTICLE ONE
The name of the corporation is Commodore Holdings, Inc. (hereinafter
called the "Corporation").
ARTICLE TWO
The address of the corporation's registered office in the State of
Delaware is 32 Loockerman Square, Suite L-100, in the City of Dover, County of
Kent 19901. The name of its registered agent at such address is The
Prentice-Hall Corporation System, Inc.
ARTICLE THREE
The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware.
ARTICLE FOUR
The total number of shares which the Corporation shall have the
authority to issue is One Hundred Shares (100), all of which shall be shares of
Common Stock, with a par value of One Cent ($0.01) per share.
ARTICLE FIVE
The name and mailing address of the incorporator is as follows:
Name Address
---- -------
David N. Britsch c/o Kirkland & Ellis
153 E. 53rd Street
Suite 3900
New York, NY 10022
<PAGE> 2
ARTICLE SIX
The directors shall have the power to adopt, amend or repeal
By-Laws, except as may be otherwise be provided in the By-Laws.
ARTICLE SEVEN
The Corporation expressly elects not to be governed by Section
203 of the General Corporation Law of the State of Delaware.
ARTICLE EIGHT
Section 1. Nature of Indemnity. Each person who was or is made
a party or is threatened to be made a party to or is involved in any action,
suit or proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he (or a person of whom
he is the legal representative), is or was a director or officer of the
Corporation or is or was serving at the request of the Corporation as a
director, officer, employee, fiduciary, or agent of another corporation or of a
partnership, joint venture, trust or other enterprise, including service with
respect to employee benefit plans, whether the basis of such proceeding is
alleged action in an official capacity as a director, officer, employee,
fiduciary or agent or in any other capacity while serving as a director,
officer, employee, fiduciary or agent, shall be indemnified and held harmless by
the Corporation to the fullest extent which it is empowered to do so by the
General Corporation Law of the State of Delaware, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment permits the Corporation to provide broader indemnification
rights than said law permitted the Corporation to provide prior to such
amendment) against all expense, liability and loss (including attorneys' fees
actually and reasonably incurred by such person in connection with such
proceeding and such indemnification shall inure to the benefit of his or her
heirs, executors and administrators; provided, however, that, except as provided
in Section 2 of this Article Eight, the Corporation shall indemnify any such
person seeking indemnification in connection with a proceeding initiated by such
person only if such proceeding was authorized by the Board of Directors of the
Corporation. The right to indemnification conferred in this Article Eight shall
be a contract right and, subject to Sections 2 and 5 of this Article Eight,
shall include the right to payment by the Corporation of the expenses incurred
in defending any such proceeding in advance of its final disposition. The
Corporation may, by action of the Board of Directors, provide indemnification to
employees and agents of the Corporation with the same scope and effect as the
foregoing indemnification of directors and officers.
Section 2. Procedure for Indemnification of Directors and
Officers. Any indemnification of a director or officer of the Corporation under
Section 1 of this Article Eight or advance of expenses under Section 5 of this
Article Eight shall be made promptly,
2
<PAGE> 3
and in any event within 30 days, upon the written request of the director or
officer. If a determination by the Corporation that the director or officer is
entitled to indemnification pursuant to this Article Eight is required, and the
Corporation fails to respond within sixty days to a written request for
indemnity, the Corporation shall be deemed to have approved the request. If the
Corporation denies a written request for indemnification or advancing of
expenses, in whole or in part, or if payment in full pursuant to such request is
not made within 30 days, the right to indemnification or advances as granted by
this Article Eight shall be enforceable by the director or officer in any court
of competent jurisdiction. Such person's costs and expenses incurred in
connection with successfully establishing his right to indemnification, in whole
or in part, in any such action shall also be indemnified by the Corporation. It
shall be a defense to any such action (other than an action brought to enforce a
claim for expenses incurred in defending any proceeding in advance of its final
disposition where the required undertaking, if any, has been tendered to the
Corporation) that the claimant has not met the standards of conduct which make
it permissible under the General Corporation Law of the State of Delaware for
the Corporation to indemnify the claimant for the amount claimed, but the burden
of such defense shall be on the Corporation. Neither the failure of the
Corporation (including the Board of Directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standard of conduct set forth in the
General Corporation Law of the State of Delaware, nor an actual determination by
the Corporation (including its Board of Directors, independent legal counsel, or
its stockholders) that the claimant has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that the
claimant has not met the applicable standard of conduct.
Section 3. Nonexclusivity of Article Eight. The rights to
indemnification and the payment of expenses incurred in defending a proceeding
in advance of its final disposition conferred in this Article Eight shall not be
exclusive of any other right which any person may have or hereafter acquire
under any statute, provision of the certificate of incorporation, by-law,
agreement, vote of stockholders or disinterested directors or otherwise.
Section 4. Insurance. The Corporation may purchase and
maintain insurance on its own behalf and on behalf of any person who is or was a
director, officer, employee, fiduciary, or agent of the Corporation or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him or her and incurred by him
or her in any such capacity, whether or not the Corporation would have the power
to indemnify such person against such liability under this Article Eight.
Section 5. Expenses. Expenses incurred by any person described
in Section 1 of this Article Eight in defending a proceeding shall be paid by
the Corporation in advance
3
<PAGE> 4
of such proceeding's final disposition unless otherwise determined by the Board
of Directors in the specific case upon receipt of an undertaking by or on behalf
of the director or officer to repay such amount if it shall ultimately be
determined that he is not entitled to be indemnified by the Corporation. Such
expenses incurred by other employees and agents may be so paid upon such terms
and conditions, if any, as the Board of Directors deems appropriate.
Section 6. Employees and Agents. Persons who are not covered
by the foregoing provisions of this Article Eight and who are or were employees
or agents of the Corporation, or who are or were serving at the request of the
Corporation as employees or agents of another corporation, partnership, joint
venture, trust or other enterprise, may be indemnified to the extent authorized
at any time or from time to time by the Board of Directors.
Section 7. Contract Rights. The provisions of this Article
Eight shall be deemed to be a contract right between the Corporation and each
director or officer who serves in any such capacity at any time while this
Article Eight and the relevant provisions of the General Corporation Law of the
State of Delaware or other applicable law are in effect, and any repeal or
modification of this Article Eight or any such law shall not affect any rights
or obligations then existing with respect to any state of facts or proceeding
then existing.
Section 8. Merger or Consolidation. For purposes of this
Article Eight, references to "the Corporation" shall include, in addition to the
resulting corporation, any constituent corporation (including any constituent of
a constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, and employees or agents, so that any person who is or was a
director, officer, employee or agent of such constituent corporation, or is or
was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, shall stand in the same position under this Article
Eight with respect to the resulting or surviving corporation as he or she would
have with respect to such constituent corporation if its separate existence had
continued.
ARTICLE NINE
The Corporation reserves the right to amend or repeal any
provisions contained in this Certificate of Incorporation from time to time and
at any time in the manner now or hereafter prescribed by the laws of the State
of Delaware, and all rights conferred upon stockholders and directors are
granted subject to such reservation.
4
<PAGE> 5
I, the undersigned, being the sole incorporator hereinbefore
named, for the purpose of forming a corporation in pursuance of the General
Corporation Law of the State of Delaware, do make and file this Certificate,
hereby declaring and certifying that the facts herein stated are true, and
accordingly have hereunto set my hand this 5th day of April, 1995.
/s/ David N. Britsch
-------------------------------------------
David N. Britsch, Sole Incorporator
5
<PAGE> 1
Exhibit 3.9.2
BY-LAWS
OF
COMMODORE HOLDINGS, INC.
A DELAWARE CORPORATION
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of the corporation
in the State of Delaware shall be located at 32 Loockerman Square, Suite L-100,
Dover, Delaware 19901, in the County of Kent. The name of the corporation's
registered agent at such address shall be The Prentice-Hall Corporation System,
Inc. The registered office and/or registered agent of the corporation may be
changed from time to time by action of the board of directors.
Section 2. Other Offices. The corporation may also have offices at such
other places, both within and without the State of Delaware, as the board of
directors may from time to time determine or the business of the corporation may
require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Place and Time of Meetings. An annual meeting of the
stockholders shall be held each year for the purpose of electing directors and
conducting such other proper business as may come before the meeting. The date,
time and place of the annual meeting may be determined by resolution of the
board of directors or as set by the president of the corporation.
Section 2. Special Meetings. Special meetings of stockholders may be
called for any purpose (including, without limitation, the filling of board
vacancies and newly created directorships), and may be held at such time and
place, within or without the State of Delaware, as shall be stated in a notice
of meeting or in a duly executed waiver of notice thereof. Such meetings may be
called at any time by two or more members of the board of directors or the
president and shall be called by the president upon the written request of
holders of shares entitled to cast not less than thirty percent (30%) of the
outstanding shares of any series or class of the corporation's Capital Stock.
<PAGE> 2
Section 3. Place of Meetings. The board of directors may designate any
place, either within or without the State of Delaware, as the place of meeting
for any annual meeting or for any special meeting called by the board of
directors. If no designation is made, or if a special meeting be otherwise
called, the place of meeting shall be the principal executive office of the
corporation.
Section 4. Notice. Whenever stockholders are required or permitted to
take action at a meeting, written or printed notice stating the place, date,
time, and, in the case of special meetings, the purpose or purposes, of such
meeting, shall be given to each stockholder entitled to vote at such meeting not
less than 10 nor more than 60 days before the date of the meeting. All such
notices shall be delivered, either personally or by mail, by or at the direction
of the board of directors, the president or the secretary, and if mailed, such
notice shall be deemed to be delivered when deposited in the United States mail,
postage prepaid, addressed to the stockholder at his, her or its address as the
same appears on the records of the corporation. Attendance of a person at a
meeting shall constitute a waiver of notice of such meeting, except when the
person attends for the express purpose of objecting at the beginning of the
meeting to the transaction of any business because the meeting is not lawfully
called or convened.
Section 5. Stockholders List. The officer having charge of the stock
ledger of the corporation shall make, at least 10 days before every meeting of
the stockholders, a complete list of the stockholders entitled to vote at such
meeting arranged in alphabetical order, showing the address of each stockholder
and the number of shares registered in the name of each stockholder. Such list
shall be open to the examination of any stockholder, for any purpose germane to
the meeting, during ordinary business hours, for a period of at least 10 days
prior to the meeting, either at a place within the city where the meeting is to
be held, which place shall be specified in the notice of the meeting or, if not
so specified, at the place where the meeting is to be held. The list shall also
be produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
Section 6. Quorum. Except as otherwise provided by applicable law or by
the Certificate of Incorporation, a majority of the outstanding shares of the
corporation entitled to vote, represented in person or by proxy. shall
constitute a quorum at a meeting of stockholders. If less than a majority of the
outstanding shares are represented at a meeting, a majority of the shares so
represented may adjourn the meeting from time to time in accordance with Section
7 of this Article, until a quorum shall be present or represented.
Section 7. Adjourned Meetings. When a meeting is adjourned to another
time and place, notice need not be given of the adjourned meeting if the time
and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting the corporation may transact any business which
might have been transacted at the original meeting. If the adjournment is for
more than thirty days, or if after the adjournment a new record date is fixed
for the adjourned meeting, a notice of the adjourned meeting shall be given to
each stockholder of record entitled to vote at the meeting.
Section 8. Vote Required. When a quorum is present, the affirmative
vote of the majority of shares present in person or represented by proxy at the
meeting and entitled to vote on the subject
-2-
<PAGE> 3
matter shall be the act of the stockholders, unless the question is one upon
which by express provisions of an applicable law or of the certificate of
incorporation a different vote is required, in which case such express provision
shall govern and control the decision of such question. Where a separate vote by
class is required, the affirmative vote of the majority of shares of such class
present in person or represented by proxy at the meeting shall be the act of
such class.
Section 9. Voting Rights. Except as otherwise provided by the General
Corporation Law of the State of Delaware or by the certificate of incorporation
of the corporation or any amendments thereto and subject to Section 3 of Article
VI hereof, every stockholder shall at every meeting of the stockholders be
entitled to one vote in person or by proxy for each share of common stock held
by such stockholder.
Section 10. Proxies. Each stockholder entitled to vote at a meeting of
stockholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for him, her or
it by proxy. Every proxy must be signed by the stockholder granting the proxy or
by his, her or its attorney-in-fact. No proxy shall be voted or acted upon after
three years from its date, unless the proxy provides for a longer period. A duly
executed proxy shall be irrevocable if it states that it is irrevocable and if,
and only as long as, it is coupled with an interest sufficient in law to support
an irrevocable power. A proxy may be made irrevocable regardless of whether the
interest with which it is coupled is an interest in the stock itself or an
interest in the Corporation generally.
Section 11. Action by Written Consent. Unless otherwise provided in the
certificate of incorporation, any action required to be taken at any annual or
special meeting of stockholders of the corporation, or any action which may be
taken at any annual or special meeting of such stockholders, may be taken
without a meeting, without prior notice and without a vote, if a consent or
consents in writing, setting forth the action so taken and bearing the dates of
signature of the stockholders who signed the consent or consents, shall be
signed by the holders of outstanding stock having not less than a majority of
the shares entitled to vote, or, if greater, not less than the minimum number of
votes that would be necessary to authorize or take such action at a meeting at
which all shares entitled to vote thereon were present and voted and shall be
delivered to the corporation by delivery to its registered office in the state
of Delaware, or the corporation's principal place of business, or an officer or
agent of the corporation having custody of the book or books in which
proceedings of meetings of the stockholders are recorded. Delivery made to the
corporation's registered office shall be by hand or by certified or registered
mail, return receipt requested provided, however, that no consent or consents
delivered by certified or registered mail shall be deemed delivered until such
consent or consents are actually received at the registered office. All consents
properly delivered in accordance with this section shall be deemed to be
recorded when so delivered. No written consent shall be effective to take the
corporate action referred to therein unless, within sixty days of the earliest
dated consent delivered to the corporation as required by this section, written
consents signed by the holders of a sufficient number of shares to take such
corporate action are so recorded. Prompt notice of the taking of the corporate
action without a meeting by less than unanimous written consent shall be given
to those stockholders who have not consented in writing. Any action taken
pursuant to such written consent or consents of the stockholders shall have the
same force and effect as if taken by the stockholders at a meeting thereof.
-3-
<PAGE> 4
ARTICLE III
DIRECTORS
Section 1. General Powers. The business and affairs of the corporation
shall be managed by or under the direction of the board of directors
Section 2. Number, Election and Term of Office. The number of directors
which shall constitute the first board shall be one (1). Thereafter, the number
of directors shall be established from time to time by resolution of the board.
The directors shall be elected by a plurality of the votes of the shares present
in person or represented by proxy at the meeting and entitled to vote in the
election of directors. The directors shall be elected in this manner at the
annual meeting of the stockholders, except as provided in Section 4 of this
Article III Each director elected shall hold office until a successor is duly
elected and qualified or until his or her earlier death, resignation or removal
as hereinafter provided.
Section 3. Removal and Resignation. Any director or the entire board of
directors may be removed at any time, with or without cause, by the holders of a
majority of the shares then entitled to vote at an election of directors.
Whenever the holders of any class or series are entitled to elect one or more
directors by the provisions of the corporation's certificate of incorporation,
the provisions of this section shall apply, in respect to the removal without
cause or a director or directors so elected, to the vote of the holders of the
outstanding shares of that class or series and not to the vote of the
outstanding shares as a whole. Any director may resign at any time upon written
notice to the corporation.
Section 4. Vacancies. Except as otherwise provided by the Certificate
of Incorporation of the corporation or any amendments thereto, vacancies and
newly created directorships resulting from any increase in the authorized number
of directors may be filled by a majority vote of the holders of the
corporation's outstanding stock entitled to vote thereon. Each director so
chosen shall hold office until a successor is duly elected and qualified or
until his or her earlier death, resignation or removal as herein provided.
Section 5. Annual Meetings. The annual meeting of each newly elected
board of directors shall be held without other notice than this by-law
immediately after, and at the same place as, the annual meeting of stockholders.
Section 6. Other Meetings and Notice. Regular meetings, other than the
annual meeting, of the board of directors may be held without notice at such
time and at such place as shall from time to time be determined by resolution of
the board. Special meetings of the board of directors may be called by or at the
request of the president or vice president on at least 24 hours notice to each
director, either personally, by telephone, by mail, or by telegraph; in like
manner and on like notice the president must call a special meeting on the
written request of at least a majority of the directors.
Section 7. Quorum Required Vote and Adjournment. A majority of the
total number of directors shall constitute a quorum for the transaction of
business. The vote of a majority of
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directors present at a meeting at which a quorum is present shall be the act of
the board of directors. If a quorum shall not be present at any meeting of the
board of directors, the directors present thereat may adjourn the meeting from
time to time, without notice other than announcement at the meeting, until a
quorum shall be present.
Section 8. Committees. The board of directors may, by resolution passed
by a majority of the whole board, designate one or more committees, each
committee to consist of one or more of the directors of the corporation, which
to the extent provided in such resolution or these by-laws shall have and may
exercise the powers of the board of directors in the management and affairs of
the corporation except as otherwise limited by law. The board of directors may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee. Such
committee or committees shall have such name or names as may be determined from
time to time by resolution adopted by the board of directors. Each committee
shall keep regular minutes of its meetings and report the same to the board of
directors when required.
Section 9. Committee Rules. Each committee of the board of directors
may fix its own rules of procedure and shall hold its meetings as provided by
such rules, except as may otherwise be provided by a resolution of the board of
directors designating such committee. Unless otherwise provided in such a
resolution, the presence of at least a majority of the members of the committee
shall be necessary to constitute a quorum. In the event that a member and that
member's alternate, if alternates are designated by the board of directors as
provided in Section 8 of this Article III, of such committee is or are absent or
disqualified, the member or members thereof present at any meeting and not
disqualified from voting, whether or not such member or members constitute a
quorum, may unanimously appoint another member of the board of directors to act
at the meeting in place of any such absent or disqualified member.
Section 10. Communications Equipment. Members of the board of directors
or any committee thereof may participate in and act at any meeting of such board
or committee through the use of a conference telephone or other communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in the meeting pursuant to this section shall
constitute presence in person at the meeting.
Section 11. Waiver of Notice and Presumption of Assent. Any member of
the board of directors or any committee thereof who is present at a meeting
shall be conclusively presumed to have waived notice of such meeting except when
such member attends for the express purpose of objecting at the beginning of the
meeting to the transaction of any business because the meeting is not lawfully
called or convened. Such member shall be conclusively presumed to have assented
to any action taken unless his or her dissent shall be entered in the minutes of
the meeting or unless his or her written dissent to such action shall be filed
with the person acting as the secretary of the meeting before the adjournment
thereof or shall be forwarded by registered mail to the secretary of the
corporation immediately after the adjournment of the meeting. Such right to
dissent shall not apply to any member who voted in favor of such action.
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Section 12. Action by Written Consent. Unless otherwise restricted by
the certificate of incorporation, any action required or permitted to be taken
at any meeting of the board of directors, or of any committee thereof, may be
taken without a meeting if all members of the board or committee, as the case
may be, consent thereto in writing, and the writing or writings are filed with
the minutes of proceedings of the board or committee.
ARTICLE IV
OFFICERS
Section 1. Number. The officers of the corporation shall be elected by
the board of directors and shall consist of a chairman, if any is elected, a
president, one or more vice presidents, a secretary, a treasurer, and such other
officers and assistant officers as may be deemed necessary or desirable by the
board of directors. Any number of offices may be held by the same person, except
that no person may simultaneously hold the office of president and secretary. In
its discretion, the board of directors may choose not to fill any office for any
period as it may deem advisable.
Section 2. Election and Term of Office. The officers of the corporation
shall be elected annually by the board of directors at its first meeting held
after each annual meeting of stockholders or as soon thereafter as conveniently
may be. The president shall appoint other officers to serve for such terms as he
or she deems desirable. Vacancies may be filled or new offices created and
filled at any meeting of the board of directors. Each officer shall hold office
until a successor is duly elected and qualified or until his or her earlier
death, resignation or removal as hereinafter provided.
Section 3. Removal. Any officer or agent elected by the board of
directors may be removed by the board of directors whenever in its judgment the
best interests of the corporation would be served thereby, but such removal
shall be without prejudice to the contract rights, if any, of the person so
removed.
Section 4. Vacancies. Any vacancy occurring in any office because of
death, resignation, removal disqualification or otherwise, may be filled by the
board of directors for the unexpired portion of the term by the board of
directors then in office.
Section 5. Compensation. Compensation of all officers shall be fixed by
the board of directors, and no officer shall be prevented from receiving such
compensation by virtue of his or her also being a director of the corporation.
Section 6. The Chairman of the Board. The Chairman of the Board, if one
shall have been elected, shall be a member of the board, an officer of the
Corporation, and, if present, shall preside at each meeting of the board of
directors or shareholders. The Chairman of the Board shall, in the absence or
disability of the president, act with all of the powers and be subject to all
the restrictions of the president He shall advise the president, and in the
president's absence, other officers of the Corporation and shall perform such
other duties as may from time to time be assigned to him by the board of
directors.
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Section 7. The President. The president shall be the chief executive
officer of the corporation. In the absence of the Chairman of the Board or if a
Chairman of the Board shall have not been elected, the president shall preside
at all meetings of the stockholders and board of directors at which he or she is
present, subject to the powers of the board of directors, shall have general
charge of the business, affairs and property of the corporation, and control
over its officers, agents and employees; and shall see that all orders and
resolutions of the board of directors are carried into effect The president
shall have such other powers and perform such other duties as may be prescribed
by the board of directors or as may be provided in these by-laws.
Section 8. Vice-presidents. The vice-president, if any, or if there
shall be more than one, the vice-presidents in the order determined by the board
of directors shall, in the absence or disability of the president, act with all
of the powers and be subject to all the restrictions of the president. The
vice-presidents shall also perform such other duties and have such other powers
as the board of directors, the president or these by-laws may, from time to
time, prescribe.
Section 9. The Secretary and Assistant Secretaries. The secretary shall
attend all meetings of the board of directors, all meetings of the committees
thereof and all meetings of the stockholders and record all the proceedings of
the meetings in a book or books to be kept for that purpose. Under the
president's supervision, the secretary shall give, or cause to be given, all
notices required to be given by these by-laws or by law; shall have such powers
and perform such duties as the board of directors, the president or these
by-laws may, from time to time, prescribe; and shall have custody of the
corporate seal of the corporation. The secretary, or an assistant secretary,
shall have authority to affix the corporate seal to any instrument requiring it
and when so affixed, it may be attested by his or her signature or by the
signature of such assistant secretary. The board of directors may give general
authority to any other officer to affix the seal of the corporation and to
attest the affixing by his or her signature. The assistant secretary, or if
there be more than one, the assistant secretaries in the order determined by the
board of directors, shall, in the absence or disability of the secretary,
perform the duties and exercise the powers of the secretary and shall perform
such other duties and have such other powers as the board of directors, the
president, or secretary may, from time to time, prescribe.
Section 10. The Treasurer and Assistant Treasurer. The treasurer shall
have the custody of the corporate funds and securities; shall keep full and
accurate accounts of receipts and disbursements in books belonging to the
corporation; shall deposit all monies and other valuable effects in the name and
to the credit of the corporation as may be ordered by the board of directors;
shall cause the funds of the corporation to be disbursed when such disbursements
have been duly authorized, taking proper vouchers for such disbursements; and
shall render to the president and the board of directors, at its regular meeting
or when the board of directors so requires, an account of the corporation; shall
have such powers and perform such duties as the board of directors, the
president or these by-laws may, from time to time, prescribe. If required by the
board of directors, the treasurer shall give the corporation a bond (which shall
be rendered every six years) in such sums and with such surety or sureties as
shall be satisfactory to the board of directors for the faithful performance of
the duties of the office of treasurer and for the restoration to the
corporation, in case of death, resignation, retirement, or removal from office,
of all books, papers, vouchers, money, and other property of whatever kind in
the possession or under the control of the treasurer belonging to
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the corporation. The assistant treasurer, or if there shall be more than one,
the assistant treasurers in the order determined by the board of directors,
shall in the absence or disability of the treasurer, perform the duties and
exercise the powers of the treasurer. The assistant treasurers shall perform
such other duties and have such other powers as the board of directors, the
president or treasurer may, from time to time, prescribe.
Section 11. Other Officers, Assistant Officers and Agents, Officers,
assistant officers and agents, if any, other than those whose duties are
provided for in these by-laws, shall have such authority and perform such duties
as may from time to time be prescribed by resolution of the board of directors.
Section 12. Absence or Disability of Officers. In the case of the
absence or disability of any officer of the corporation and of any person hereby
authorized to act in such officer's place during such officer's absence or
disability, the board of directors may by resolution delegate the powers and
duties of such officer to any other officer or to any director, or to any other
person whom it may select.
ARTICLE V
INDEMNIFICATION OF OFFICERS, DIRECTORS AND OTHERS
Section 1. Nature of Indemnity. Each person who was or is made a party
or is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or a person of whom
he is the legal representative, is or was a director or officer, of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee, fiduciary, or agent of another corporation or of a
partnership, joint venture, trust or other enterprise, including service with
respect to employee benefit plans, whether the basis of such proceeding is
alleged action in an official capacity as a director, officer, employee,
fiduciary or agent or in any other capacity while serving as a director,
officer, employee, fiduciary or agent, shall be indemnified and held harmless by
the corporation to the fullest extent which it is empowered to do so by the
General Corporation Law of the State of Delaware, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment permits the corporation to provide broader indemnification
rights than said law permitted the corporation to provide prior to such
amendment) against all expense, liability and loss (including attorneys' fees
actually and reasonably incurred by such person in connection with such
proceeding and such indemnification shall inure to the benefit of his or her
heirs, executors and administrators; provided, however, that, except as provided
in Section 2 hereof, the corporation shall indemnify any such person seeking
indemnification in connection with a proceeding initiated by such person only
if such proceeding was authorized by the board of directors of the corporation.
The right to indemnification conferred in this Article V shall be a contract
right and, subject to Sections 2 and 5 hereof, shall include the right to be
paid by the corporation the expenses incurred in defending any such proceeding
in advance of its final disposition. The corporation may, by action of its board
of directors, provide indemnification to employees and agents of the corporation
with the same scope and effect as the foregoing indemnification of directors and
officers.
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Section 2. Procedure for Indemnification of Directors and Officers. Any
indemnification of a director or officer of the corporation under Section 1 of
this Article V or advance of expenses under Section 5 of this Article V shall be
made promptly, and in any event within 30 days, upon the written request of the
director or officer. If a determination by the corporation that the director or
officer is entitled to indemnification pursuant to this Article V is required,
and the corporation fails to respond within sixty days to a written request for
indemnity, the corporation shall be deemed to have approved the request. If the
corporation denies a written request for indemnification or advancing of
expenses, in whole or in part, or if payment in full pursuant to such request is
not made within 30 days, the right to indemnification or advances as granted by
this Article V shall be enforceable by the director or officer in any court of
competent jurisdiction. Such person's costs and expenses incurred in connection
with successfully establishing his or her right to indemnification, in whole or
in part, in any such action shall also be indemnified by the corporation. It
shall be a defense to any such action (other than an action brought to enforce a
claim for expenses incurred in defending any proceeding in advance of its final
disposition where the required undertaking, if any, has been tendered to the
corporation) that the claimant has not met the standards of conduct which make
it permissible under the General Corporation Law of the State of Delaware for
the corporation to indemnify the claimant for the amount claimed, but the burden
of such defense shall be on the corporation. Neither the failure of the
corporation (including its board of directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standard of conduct set forth in the
General Corporation Law of the State of Delaware, nor an actual determination by
the corporation (including its board of directors, independent legal counsel, or
its stockholders) that the claimant has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that the
claimant has not met the applicable standard of conduct.
Section 3. Nonexclusivity of Article V. The rights to indemnification
and the payment of expenses incurred in defending a proceeding in advance of its
final disposition conferred in this Article V shall not be exclusive of any
other right which any person may have or hereafter acquire under any statute,
provision of the certificate of incorporation, by-law, agreement, vote of
stockholders or disinterested directors or otherwise.
Section 4. Insurance. The corporation may purchase and maintain
insurance on its own behalf and on behalf of any person who is or was a
director, officer, employee, fiduciary, or agent of the corporation or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him or her and incurred by him
or her in any such capacity, whether or not the corporation would have the power
to indemnify such person against such liability under this Article V.
Section 5. Expenses. Expenses incurred by any person described in
Section 1 of this Article V in defending a proceeding shall be paid by the
corporation in advance of such proceeding's final disposition unless otherwise
determined by the board of directors in the specific case upon receipt of an
undertaking by or on behalf of the director or officer to repay such amount if
it shall ultimately be determined that he or she is not entitled to be
indemnified by the corporation. Such expenses
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incurred by other employees and agents may be so paid upon such terms and
conditions, if any, as the board of directors deems appropriate.
Section 6. Employees and Agents. Persons who are not covered by the
foregoing provisions of this Article V and who are or were employees or agents
of the corporation, or who are or were serving at the request of the corporation
as employees or agents of another corporation, partnership, joint venture, trust
or other enterprise, may be indemnified to the extent authorized at any time or
from time to time by the board of directors.
Section 7. Contract Rights. The provisions of this Article V shall be
deemed to be a contract right between the corporation and each director or
officer who serves in any such capacity at any time while this Article V and the
relevant provisions of the General Corporation Law of the State of Delaware or
other applicable law are in effect, and any repeal or modification of this
Article V or any such law shall not affect any rights or obligations then
existing with respect to any state of facts or proceeding then existing.
Section 8. Merger or Consolidation. For purposes of this Article V,
references to "the corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, and employees or agents, so that any person who is or was a
director, officer, employee or agent of such constituent corporation, or is or
was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, shall stand in the same position under this Article V
with respect to the resulting or surviving corporation as he or she would have
with respect to such constituent corporation if its separate existence had
continued.
ARTICLE VI
CERTIFICATES OF STOCK
Section 1. Form. Every holder of stock in the corporation shall be
entitled to have a certificate, signed by, or in the name of the corporation by
the chairman of the board, the president or a vice-president and the secretary
or an assistant secretary of the corporation, certifying the number of shares
owned by such holder in the corporation. If such a certificate is countersigned
(1) by a transfer agent or an assistant transfer agent other than the
corporation or its employee or (2) by a registrar, other than the corporation or
its employee, the signature of any such chairman of the board, president,
vice-president, secretary, or assistant secretary may be facsimiles. In case any
officer or officers who have signed, or whose facsimile signature or signatures
have been used on, any such certificate or certificates shall cease to be such
officer or officers of the corporation whether because of death, resignation or
otherwise before such certificate or certificates have been delivered by the
corporation such certificate or certificates may nevertheless be issued and
delivered as though the person or persons who signed such certificate or
certificates or whose facsimile signature or signatures have been used thereon
had not ceased to be such officer or officers of the
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corporation. All certificates for shares shall be consecutively numbered or
otherwise identified. The name of the person to whom the shares represented
thereby are issued, with the number of shares and date of issue, shall be
entered on the books of the corporation. Shares of stock of the corporation
shall only be transferred on the books of the corporation by the holder of
record thereof or by such holder's attorney duly authorized in writing, upon
surrender to the corporation of the certificate or certificates for such shares
endorsed by the appropriate person or persons, with such evidence of the
authenticity of such endorsement, transfer, authorization, and other matters as
the corporation may reasonably require, and accompanied by all necessary stock
transfer stamps. In that event, it shall be the duty of the corporation to issue
a new certificate to the person entitled thereto, cancel the old certificate or
certificates, and record the transaction on its books. The board of directors
may appoint a bank or trust company organized under the laws of the United
States or any state thereof to act as its transfer agent or registrar, or both
in connection with the transfer of any class or series of securities of the
corporation.
Section 2. Lost Certificates. The board of directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates previously issued by the corporation alleged to have been lost,
stolen, or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen, or destroyed. When
authorizing such issue of a new certificate or certificates, the board of
directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen, or destroyed certificate or
certificates, or his or her legal representative, to give the corporation a bond
sufficient to indemnify the corporation against any claim that may be made
against the corporation on account of the loss, theft or destruction of any such
certificate or the issuance of such new certificate.
Section 3. Fixing a Record Date for Stockholder Meetings. In order that
the corporation may determine the stockholders entitled to notice of or to vote
at any meeting of stockholders or any adjournment thereof, the board of
directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the board of
directors, and which record date shall not be more than sixty nor less than ten
days before the date of such meeting. If no record date is fixed by the board of
directors, the record date for determining stockholders entitled to notice of or
to vote at a meeting of stockholders shall be the close of business on the next
day preceding the day on which notice is given, or if notice is waived, at the
close of business on the day next preceding the day on which the meeting is
held. A determination of stockholders of record entitled to notice of or to vote
at a meeting of stockholders shall apply to any adjournment of the meeting,
provided, however, that the board of directors may fix a new record date for the
adjourned meeting.
Section 4. Fixing a Record Date for Action by Written Consent. In order
that the corporation may determine the stockholders entitled to consent to
corporate action in writing without a meeting, the board of directors may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the board of directors, and
which date shall not be more than ten days after the date upon which the
resolution fixing the record date is adopted by the board of directors. If no
record date has been fixed by the board of directors, the record date for
determining stockholders entitled to consent to corporate action in writing
without a meeting, when no prior action by the board of directors is required by
statute, shall be the first date
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on which a signed written consent setting forth the action taken or proposed to
be taken is delivered to the corporation by delivery to its registered office in
the State of Delaware, its principal place of business, or an officer or agent
of the corporation having custody of the book in which proceedings of meetings
of stockholders are recorded. Delivery made to the corporation's registered
office shall be by hand or by certified or registered mail, return receipt
requested. If no record date has been fixed by the board of directors and prior
action by the board of directors is required by statute, the record date for
determining stockholders entitled to consent to corporate action in writing
without a meeting shall be at the close of business on the day on which the
board of directors adopts the resolution taking such prior action.
Section 5. Fixing a Record Date for Other Purposes. In order that the
corporation may determine the stockholders entitled to receive payment of any
dividend or other distribution or allotment or any rights or the stockholders
entitled to exercise any rights in respect of any change, conversion or exchange
of stock, or for the purposes of any other lawful action, the board of directors
may fix a record date, which record date shall not precede the date upon which
the resolution fixing the record date is adopted, and which record date shall be
not more than sixty days prior to such action. If no record date is fixed, the
record date for determining stockholders for any such purpose shall be at the
close of business on the day on which the board of directors adopts the
resolution relating thereto.
Section 6. Subscriptions for Stock. Unless otherwise provided for in
the subscription agreement, subscriptions for shares shall be paid in full at
such time, or in such installments and at such times, as shall be determined by
the board of directors. Any call made by the board of directors for payment on
subscriptions shall be uniform as to all shares of the same class or as to all
shares of the same series. In case of default in the payment of any installment
or call when such payment is due, the corporation may proceed to collect the
amount due in the same manner as any debt due the corporation.
ARTICLE VII
GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the capital stock of the
corporation, subject to the provisions of the certificate of incorporation, if
any, may be declared by the board of directors at any regular or special
meeting, pursuant to law. Dividends may be paid in cash, in property, or in
shares of the capital stock, subject to the provisions of the certificate of
incorporation. Before payment of any dividend, there may be set aside out of any
funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or any other purpose
and the directors may modify or abolish any such reserve in the manner in which
it was created.
Section 2. Checks, Drafts or Orders. All checks, drafts, or other
orders for the payment of money by or to the corporation and all notes and other
evidences of indebtedness issued in the name
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of the corporation shall be signed by such officer or officers, agent or agents
of the corporation, and in such manner, as shall be determined by resolution of
the board of directors or a duly authorized committee thereof.
Section 3. Contracts. The board of directors may authorize any officer
or officers, or any agent or agents, of the corporation to enter into any
contract or to execute and deliver any instrument in the name of and on behalf
of the corporation, and such authority may be general or confined to specific
instances.
Section 4. Loans. The corporation may lend money to, or guarantee any
obligation of, or otherwise assist any officer or other employee of the
corporation or of its subsidiary, including any officer or employee who is a
director of the corporation or its subsidiary, whenever, in the judgment of the
directors, such loan, guaranty or assistance may reasonably be expected to
benefit the corporation. The loan, guaranty or other assistance may be with or
without interest, and may be unsecured, or secured in such manner as the board
of directors shall approve, including, without limitation, a pledge of shares of
stock of the corporation. Nothing in this section contained shall be deemed to
deny, limit or restrict the powers of guaranty or warranty of the corporation at
common law or under any statute.
Section 5. Fiscal Year. The fiscal year of the corporation shall be
fixed by resolution of the board of directors.
Section 6. Corporate Seal. The board of directors may provide a
corporate seal which shall be in the form of a circle and shall have inscribed
thereon the name of the corporation and the words "Corporate Seal, Delaware".
The seal may be used by causing it or a facsimile thereof to be impressed or
affixed or reproduced or otherwise.
Section 7. Voting Securities Owned By Corporation. Voting securities in
any other corporation held by the corporation shall be voted by the president,
unless the board of directors specifically confers authority to vote with
respect thereto, which authority may be general or confined to specific
instances, upon some other person or officer. Any person authorized to vote
securities shall have the power to appoint proxies, with general power of
substitution.
Section 8. Inspection of Books and Records. Any stockholder of record,
in person or by attorney or other agent, shall, upon written demand under oath
stating the purpose thereof, have the right during the usual hours for business
to inspect for any proper purpose the corporation's stock ledger, a list of its
stockholders, and its other books and records, and to make copies or extracts
therefrom. A proper purpose shall mean any purpose reasonably related to such
person's interest as a stockholder. In every instance where an attorney or other
agent shall be the person who seeks the right to inspection, the demand under
oath shall be accompanied by a power of attorney or such other writing which
authorizes the attorney or other agent to so act on behalf of the stockholder.
The demand under oath shall be directed to the corporation at its registered
office in the State of Delaware or at its principal place of business.
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Section 9. Section Headings. Section headings in these by-laws are for
convenience of reference only and shall not be given any substantive effect in
limiting or otherwise construing any provision herein.
Section 10. Inconsistent Provisions. In the event that any provision of
these by-laws is or becomes inconsistent with any provision of the certificate
of incorporation, the General Corporation Law of the State of Delaware or any
other applicable law, the provision of these by-laws shall not be given any
effect to the extent of such inconsistency but shall otherwise be given full
force and effect.
ARTICLE VIII
AMENDMENTS
These by-laws may be amended; altered, or repealed and new by-laws
adopted at any meeting of the board of directors by a majority vote. The fact
that the power to adopt, amend, alter, or repeal the by-laws has been conferred
upon the board of directors shall not divest the stockholders of the same
powers.
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Last revised 9/8/95
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Exhibit 10.6.1
COMMODORE MEDIA, INC.
1995 STOCK OPTION PLAN
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<PAGE> 2
COMMODORE MEDIA, INC.
1995 STOCK OPTION PLAN
ARTICLE I
PURPOSE OF PLAN
The 1995 Stock Option Plan (the "PLAN") of Commodore Media, Inc., a
Delaware corporation (the "COMPANY"), adopted by the Board of Directors and
stockholders of the Company effective as of April 21, 1995 is intended to
advance the best interests of the Company by providing directors, executives and
other key employees of the Company or any Subsidiary who have substantial
responsibility for the management and growth of the Company or any Subsidiary
with additional incentives by allowing such directors, executives and other key
employees to acquire an ownership interest in the Company. The Plan is a
compensatory benefit plan within the meaning of Rule 701 under the Securities
Act of 1933, as amended (the "SECURITIES ACT"). and, unless and until the Common
Stock is publicly traded, the issuance of options and Common Stock pursuant to
the Plan is intended to qualify for the exemption from registration under the
Securities Act provided by Rule 701.
ARTICLE II
DEFINITIONS
For purposes of the Plan, except as otherwise provided in the
applicable Option Agreement, the following terms have the indicated meanings:
"AFFILIATE" of any specified Person means any other Person which
directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, such specified Person.
"APPROVED SALE" has the meaning ascribed thereto in Section 5.8(c)
hereof.
"AUTHORIZATION DATE" has the meaning ascribed thereto in Section 5.8(b)
hereof.
"BOARD" means the Board of Directors of the Company.
"CAUSE" means (i) a Participant's action or failure to act which (a) is
or causes a material violation of the Federal Communications Act of 1934, as
amended, or the rules, regulations, or policies of the Federal Communications
Commission, or (b) would materially adversely affect the reputation, operations
or financial condition of the Company or any of its Subsidiaries; (ii) a failure
by the Participant to perform such Participant's duties in a manner satisfactory
to the Company or its Subsidiaries, as the case may be, except as a result of
the Disability or death of the Participant; or (iii) a Participant's theft,
embezzlement, perpetration of fraud, or misappropriation of any tangible or
intangible assets or property of the Company or any of its Subsidiaries or
attempted theft,
<PAGE> 3
embezzlement, perpetration of fraud, or misappropriation of any tangible or
intangible assets or property of the Company or any of its Subsidiaries.
"CHANGE OF CONTROL" of the Company will be deemed to have occurred at
such time as (i) any Person (including a Person's Affiliates and associates),
other than a Permitted Holder, becomes the beneficial owner (as defined under
Rule 13d-3 or any successor rule or regulation promulgated under the Securities
Exchange Act of 1934, as amended) of 50% or more of the total voting power of
the Company's common stock, (ii) prior to a Public Offering, Permitted Holders
shall cease to own beneficially at least 51% of the total voting power of the
Company's common stock, (iii) any Person (including a Person's Affiliates and
associates), other than a Permitted Holder, becomes the beneficial owner of more
than 33-1/3% of the total voting power of the Company's common stock, and the
Permitted Holders beneficially own, in the aggregate, a lesser percentage of the
total voting power of the common stock of the Company than such other Person and
do not have the right or ability by voting power, contract or otherwise to elect
or designate for election a majority of the Board, (iv) there shall be
consummated any consolidation or merger of the Company in which the Company is
not the continuing or surviving corporation or pursuant to which the common
stock of the Company would be converted into cash, securities or other property,
other than a merger or consolidation of the Company in which the holders of the
common stock of the Company outstanding immediately prior to the consolidation
or merger hold, directly or indirectly, at least a majority of the common stock
of the surviving corporation immediately after such consolidation or merger, or
(v) during any period of two consecutive years, individuals who at the beginning
of such period constituted the Board (together with any new directors whose
election by such Board or whose nomination for election by the shareholders of
the Company has been approved by 66-2/3% of the directors then still in office
who either were directors at the beginning of such period or whose election or
recommendation for election was previously so approved) cease to constitute a
majority of the Board.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMITTEE" means the Compensation Committee or such other committee of
the Board as the Board may designate to administer the Plan or, if for any
reason the Board has not designated such a committee, the Board. The Committee,
if other than the Board, shall be comprised of two or more directors as
appointed from time to time by the Board.
"COMMON STOCK" means the Class A Common Stock, par value $.01 per
share, of the Company.
"COMPANY" has the meaning ascribed thereto in the first paragraph
hereof.
"DESIGNEES" has the meaning ascribed thereto in Section 5.1 hereof.
"DISABILITY" shall mean the inability, due to illness, accident,
injury, physical or mental incapacity or other disability, of any Participant to
effectively carry out his or her duties and obligations to the Company or any
Subsidiary or to participate effectively or actively in the management of the
Company or any Subsidiary for a period of at least ninety (90) consecutive days
or for shorter periods aggregating at least one hundred twenty (120) days
(whether or not consecutive) during any twelve-month period, as determined in
the reasonable judgment of the Board.
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"ELECTION NOTICE" has the meaning ascribed thereto in Section 5.8(b)
hereof.
"FAIR MARKET VALUE" per share on any given date means the average of
the closing prices of the sales of the Common Stock on all securities exchanges
on which such stock may at the time be listed, or, if there have been no sales
on any such exchange on any day, the average of the highest bid and lowest asked
prices on all such exchanges at the end of such day, or, if on any day such
stock isnot so listed, the average of the representative bid and asked prices
quoted on the Nasdaq Stock Market as of 4:00 P.M., New York time, or, if on any
day such stock is not quoted on the Nasdaq Stock Market, the average of the
highest bid and lowest asked prices on such day in the domestic over-the-counter
market as reported by the National Quotation Bureau, Incorporated, or any
similar successor organization. If at any time the Common Stock is not listed or
quoted, the Fair Market Value per share shall be determined by the Committee in
good faith based on such factors as the members thereof, in the exercise of
their business judgment, consider relevant.
"INCENTIVE STOCK OPTION" shall mean any Option intended to qualify as
an incentive stock option within the meaning of Section 422 of the Code or any
successor provision.
"OPTION AGREEMENT" has the meaning ascribed thereto in Section 5.1.
"OPTIONS" has the meaning ascribed thereto in Article IV.
"OPTION SHARES" mean (i) all shares of Common Stock issued or issuable
upon the exercise of an Option and (ii) all shares of Common Stock issued with
respect to the Common Stock referred to in clause (i) above by way of stock
dividend or stock split or in connection with any conversion, merger,
consolidation or recapitalization or other reorganization affecting the Common
Stock. Except as provided otherwise herein or in the applicable Option
Agreement, Option Shares will continue to be Option Shares in the hands of any
holder other than the Participant (except for the Company), and each such
transferee thereof will succeed to the rights and obligations of a holder of
Option Shares hereunder.
"PARTICIPANT" means any director, executive or other key employee of
the Company or any Subsidiary who has been selected to participate in the Plan
by the Committee.
"PERMITTED HOLDERS" means (i) Carter Burden, (ii) the heirs, executors,
administrators testamentary trustees, legatees or beneficiaries of any person
described in (i), and (iii) a trust, the beneficiaries of which include only
persons described in (i) and (ii) and their respective spouses and lineal
descendants.
"PERSON" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or any
other legal entity.
"PLAN" has the meaning ascribed thereto in the first paragraph hereof.
"PUBLIC OFFERING" means the sale, in an underwritten public offering,
of shares of Common Stock registered under the Securities Act, except any public
offering on a registration statement on Form S-4 or S-8 or similar form.
"PURCHASE NOTICE" has the meaning ascribed thereto in Section 5.7(b)
hereof.
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"PURCHASE OPTION" has the meaning ascribed thereto in Section 5.7(a)
hereof.
"PURCHASE NOTICE DATE" has the meaning ascribed thereto in Section
5.7(a) hereof.
"QUALIFIED PUBLIC OFFERING" means an initial Public Offering by the
Company in which the gross proceeds to the Company are not less than
$10,000,000.
"RIGHT OF FIRST REFUSAL" has the meaning ascribed thereto in Section
5.8(b) hereof.
"SALE NOTICE" has the meaning ascribed thereto in Section 5.8(b)
hereof.
"SALE OF THE COMPANY" means a Change in Control of the Company or a
sale of all or substantially all of the assets of the Company in a single
transaction or a series of related transactions.
"SECURITIES ACT" has the meaning ascribed thereto in the first
paragraph hereof.
"SUBORDINATED NOTE" shall mean that subordinated promissory note issued
by the Company to Participant pursuant to Section 5.7(c) hereof, the maturity of
which is no earlier than October 1, 2003, and containing such other terms and
conditions as the Board in its sole discretion determines are appropriate.
"SUBSIDIARY" means any subsidiary corporation (as such term is defined
in Section 424(f) of the Code) of the Company, whether now existing or hereafter
created.
"TERMINATION DATE" has the meaning ascribed thereto in Section 5.7(a)
hereof.
"TRANSFER" has the meaning ascribed thereto in Section 5.8(a) hereof.
ARTICLE III
ADMINISTRATION
The Plan shall be administered by the Committee. Subject to the
limitations of the Plan, the Committee shall have the sole and complete
authority to: (i) select Participants, (ii) grant Options to Participants in
such forms and amounts as it shall determine, (iii) impose such limitations,
restrictions and conditions upon each Option as it shall deem appropriate (which
need not be identical), including but not limited to the vesting schedule for
each Option granted, and modify or amend the terms of each outstanding Option
(subject to the provisions of Section 6.6 hereof), (iv) interpret the Plan and
adopt, amend and rescind administrative guidelines and other rules and
regulations relating to the Plan, (v) correct any defect or omission or
reconcile any inconsistency in the Plan or in any Options granted under the
Plan, (vi) reduce the exercise price per share of outstanding and unexercised
Options, (vii) accelerate or defer the exercise price per share of any
outstanding Option, (viii) authorize any person to execute on behalf of the
Company any instrument required to effectuate the grant of an Option previously
granted by the Committee, and (ix) make all other determinations and take all
other actions necessary or advisable for the implementation and administration
of the Plan. The Committee's determinations on matters within its authority
shall be final, conclusive and binding upon the Participants, the Company and
all other persons. All expenses
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<PAGE> 6
associated with the administration of the Plan shall be borne by the Company.
The Committee may, as approved by the Board and to the extent permissible by
law, delegate any of its authority hereunder to such persons or entities as it
deems appropriate.
ARTICLE IV
LIMITATION ON AGGREGATE SHARES
The number of shares of Common Stock with respect to which stock
purchase options ("OPTIONS") may be granted under the Plan shall not exceed, in
the aggregate, 132,125 subject to adjustment in accordance with Section 6.3. To
the extent any Options expire unexercised or are cancelled, terminated or
forfeited in any manner without the issuance of Common Stock thereunder, such
shares shall again be available under the Plan. The shares of Common Stock
available under the Plan may consist of authorized and unissued shares, treasury
shares or a combination thereof, as the Committee shall determine.
ARTICLE V
AWARDS
5.1 GRANT OF OPTIONS. The Committee may grant Options to Participants
from time to time in accordance with this Article V. Each Option granted
hereunder to a Participant shall be embodied in a written Option Agreement (the
"Option Agreement") which shall be signed by the Participant and by a duly
authorized officer of the Company for and in the name and on behalf of the
Company and shall be subject to the terms and conditions prescribed herein
(including, but not limited to, (i) the right of the Company, such other persons
as the Committee shall designate and certain stockholders of the Company
("DESIGNEES") to purchase from each Participant, and such Participant's
transferees, in the event of such Participant's termination of employment all
shares of Common Stock issued or issuable to such Participant upon the exercise
of an Option, (ii) rights of first refusal granted to the Company and Designees,
(iii) holdback and other registration right restrictions in the event of a
public registration of any equity securities of the Company) and to any other
terms and conditions which the Committee shall deem necessary and desirable in
its sole discretion. Options granted under the Plan may be nonqualified stock
options or "Incentive Stock Options" as specified by the Committee. However, no
Incentive Stock Options shall be granted to any Participant who, at the time the
Option is to be granted, owns stock possessing more than ten (10) percent of the
total combined voting power of all classes of stock of the Company. The exercise
price per share of Common Stock under each Option shall be fixed by the
Committee at the time of grant of the Option and shall equal at least 100% of
the Fair Market Value of a share of Common Stock on the date of grant, but not
less than the par value per share (as adjusted pursuant to Section 6.3). Options
shall be exercisable at such time or times as the Committee shall determine;
provided, however, that to the extent that the aggregate Fair Market Value of
the Common Stock (determined as of the date of Option grant) with respect to
which Incentive Stock Options (but not nonqualified options) are exercisable for
the first time by a Participant during any calendar year (under all stock option
plans of the Company) shall exceed $100,000 or such higher amount as may be
permitted from time to time under the Code, such Options shall be treated as
non-qualified. The Committee shall determine the exercise period for each
Option, which period shall not exceed ten
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<PAGE> 7
years from the date of grant of the Option. In addition, no Options shall be
granted hereunder after the tenth anniversary of the adoption of the Plan.
5.2 EXERCISE PROCEDURE. Options shall be exercisable by written notice
to the Company (to the attention of the Company's Secretary) accompanied by
payment in full of the applicable exercise price in cash, certified check, bank
draft or money order or such other method as the Committee may agree.
5.3 EXCHANGE OF PREVIOUSLY ACQUIRED STOCK. The Committee, in its sole
discretion and subject to such conditions as the Committee may determine, may
permit the exercise price for the shares being acquired upon the exercise of an
Option to be paid, in full or in part, by the delivery to the Company of a
number of shares of Common Stock having an aggregate Fair Market Value as of the
date of exercise equal to part or all of such exercise price.
5.4 WITHHOLDING TAX REQUIREMENTS. It shall be a condition of the
exercise of any Option that the Participant exercising the Option make
appropriate payment or other provision acceptable to the Company with respect to
any withholding tax requirement arising from such exercise. The amount of
withholding tax required, if any, with respect to any Option exercise (the
"WITHHOLDING AMOUNT") shall be determined by the Treasurer or other appropriate
officer of the Company, and the Participant shall furnish such information and
make such representations as such officer requires to make such determination.
If the Company determines that withholding tax is required with respect to any
Option exercise, the Company shall notify the Participant of the Withholding
Amount, and the Participant shall pay to the Company an amount not less than the
Withholding Amount. In lieu of making such payment, the Participant may elect to
pay the Withholding Amount by either (i) surrendering to the Company a number of
shares of Common Stock having an aggregate Fair Market Value as of the
"measurement date" (as defined below) not less than the Withholding Amount or
(ii) directing the Company to withhold (and not to deliver or issue to the
Participant) a number of shares of Common Stock otherwise issuable upon the
exercise of the Option having an aggregate Fair Market Value as of the
measurement date not less than the Withholding Amount. In addition, if the
Committee approves, a Participant may elect pursuant to the immediately
preceding sentence to deliver or direct the withholding of shares of Common
Stock having an aggregate Fair Market Value in excess of the minimum Withholding
Amount but not in excess of the Participant's tax liability in connection with
the Option exercise based on the highest applicable marginal combined federal
income and state income tax rate, as estimated in good faith by such
Participant. Any fractional share interests resulting from the delivery or
withholding of shares of Common Stock to meet withholding tax requirements shall
be settled in cash. All amounts paid to or withheld by the Company and the value
of all shares of Common Stock delivered to or withheld by the Company pursuant
to this Section 5.4 shall be deposited in accordance with applicable law by the
Company as withholding tax for the Participant's account. If the Treasurer or
other appropriate officer of the Company determines that no withholding tax is
required with respect to the exercise of any Option (because such Option is an
Incentive Stock Option or otherwise), but subsequently it is determined that the
exercise resulted in taxable income as to which withholding is required (as a
result of a disposition of shares or otherwise), the Participant shall promptly,
upon being notified of the withholding requirement, pay to the Company by means
acceptable to the Company the amount required to be withheld; and at its
election the Company may condition any transfer of shares issued upon exercise
of an Incentive Stock Option upon receipt of such payment. The term "measurement
date" as used in this Section 5.4 shall mean the date on which any taxable
income resulting from the exercise of an Option is determined under applicable
federal income tax law.
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5.5 CONDITIONS AND LIMITATIONS ON EXERCISE. At the sole discretion of
the Committee, Options may be made exercisable, in one or more installments,
upon (i) the happening of certain events, (ii) the passage of a specified period
of time, (iii) the fulfillment of certain conditions and/or (iv) the achievement
by the Company or a Subsidiary, as the case may be, of certain performance
goals. Unless the Committee specifies otherwise in the Option Agreement, every
Option granted pursuant to this Plan will vest and become exercisable with
respect to 20% of the Common Stock issuable upon exercise thereof (rounded to
the nearest whole share) on each of the first, second, third and fourth
anniversaries of the date of grant and the remainder shall vest on the fifth
anniversary of the date of grant. In the event of a Sale of the Company,
(including without limitation an Approved Sale as defined in Section 5.8(c)
below) the Committee may provide, in its sole discretion, that the outstanding
Options under the Plan, which have not yet vested, shall become immediately
exercisable and that any outstanding Options which are immediately exercisable
shall terminate if not exercised as of the date of the Sale of the Company or
any other designated date or that such Options shall thereafter represent only
the right to receive the excess of the consideration per share of Common Stock
offered in such Sale of the Company over the exercise price of such Options.
5.6 EXPIRATION OF OPTIONS.
(a) NORMAL EXPIRATION. In no event shall any part of any
Option be exercisable after the stated date of expiration thereof.
(b) EARLY EXPIRATION UPON TERMINATION OF EMPLOYMENT. Except as
otherwise provided in the applicable Option Agreement, upon termination for any
reason of a Participant's employment with the Company and its Subsidiaries, all
Options or portions thereof held by such Participant that are not vested and
exercisable on the date of such termination shall expire and be forfeited as of
such date and all vested Options held by such Participant shall expire to the
extent not theretofore exercised on the ninetieth (90th) day (one year if
termination is caused by the Participant's death or Disability) following the
date of such termination.
5.7 RIGHT TO PURCHASE OPTION SHARES UPON TERMINATION OF EMPLOYMENT.
(a) PURCHASE RIGHT. Subject to Section 5.9, in the event a
Participant's employment with the Company and its Subsidiaries is terminated
without Cause, including by death or Disability, or a Participant leaves the
Company and its Subsidiaries at the expiration of his employment agreement, the
Participant's Option Shares (whether held by such Participant or one or more
transferees and including any Option Shares subject to a vested but unexercised
option or acquired by Option exercise subsequent to such termination of
employment) will be subject to purchase at the option of the Company or a
Designee of the Company in whole or in part from time to time or at any time
prior to the date which is 60 months following the Termination Date (the
"PURCHASE NOTICE DATE") pursuant to the terms and conditions set forth in this
Section 5.7 (the "PURCHASE OPTION I") at a price per share equal to the Fair
Market Value thereof on the date of repurchase by the Company or, in the case of
shares subject to an unexercised Option, the difference between such Fair Market
Value and the Option exercise price. In the event a Participant's employment
with the Company and its Subsidiaries is terminated for Cause or if the
Participant leaves the Company and its Subsidiaries voluntarily in violation of
his employment agreement, the Participant's Option Shares (whether held by such
Participant or one or more transferees and including any Option Shares acquired
by Option exercise subsequent to such termination of employment but not
including shares subject to a vested but unexercised Option) will be subject to
repurchase at the option of the Company pursuant to the terms and conditions set
forth in this Section 5.7 (the "PURCHASE OPTION II", and together with the
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<PAGE> 9
Purchase Option I, the "PURCHASE OPTION") at a price per share equal to the
lower of the original purchase price paid for such Option Shares by such
Participant (subject to adjustment in accordance with Section 6.3 hereof) or the
Fair Market Value of such Option Shares on the date of repurchase by the
Company. The "TERMINATION DATE" shall be the first date upon which a Participant
is no longer employed by the Company or any Subsidiary.
(b) PURCHASE NOTICE. The Company may elect to purchase the
Option Shares by delivery of written notice (the "PURCHASE NOTICE") to the
holder or holders of the Option Shares at any time prior to the Purchase Notice
Date. The Purchase Notice will set forth the number of Option Shares to be
acquired from such holder, the aggregate consideration to be paid for such
shares and the time and place for the closing of the transaction.
(c) CLOSING OF PURCHASE. The closing of the repurchase
transaction will take place on the date designated by the Company in the
Purchase Notice, which date will not be more than thirty (30) days nor less than
ten (10) days after the delivery of such notice. The Company will pay for the
Option Shares to be purchased pursuant to the Purchase Option in the following
manner unless the Option Agreement states otherwise: (a) if the Participant is
terminated without Cause, including death or Disability, or leaves the Company
and its Subsidiaries at the expiration of his or her employment agreement, the
Participant will receive a check for the Option Shares in the maximum amount
allowed under any outstanding agreements of the Company or a Subsidiary
evidencing indebtedness and the remainder will be paid by the issuance of a
Subordinated Promissory Note to such Participant, in an aggregate principal
amount equal to the remainder of the aggregate sale price as determined pursuant
to Section 5.7(a) or (b) if the Participant is terminated for Cause or if the
Participant leaves the Company and its Subsidiaries voluntarily in violation of
his employment agreement, the Participant will receive a Subordinated Promissory
Note in an aggregate principal amount equal to the aggregate price as determined
pursuant to Section 5.7(a). At the closing, the Participant and each other
seller will deliver the certificates representing the Option Shares to be sold
duly endorsed in form for transfer to the Company or its Designee, and the
Company will be entitled to receive customary representations and warranties
from the Participant and the other sellers regarding title to the Option Shares.
5.8 RESTRICTIONS ON TRANSFER.
(a) RESTRICTIONS. Subject to Section 5.9, a Participant may
not sell, pledge, hypothecate, transfer or otherwise dispose of, directly or
indirectly, any interest in any Option Shares (collectively, a "TRANSFER")
except pursuant to the provisions of Section 5.7 or this Section 5.8.
Notwithstanding anything else herein, the Option Shares cannot be Transferred
for a period of five years after the date of grant, except pursuant to Section
5.7 or Section 5.8(c) or (d) below. On or after the fifth anniversary of the
date of grant, Option Shares can be Transferred in accordance with Section 5.7
or Section 5.8(b), (c) or (d) below.
(b) RIGHT OF FIRST REFUSAL. At least ninety (90) days prior to
making any Transfer, the Participant proposing such Transfer shall deliver a
written notice (the "SALE NOTICE") to the Company. The Sale Notice will disclose
in reasonable detail the identity of the prospective transferee(s) and the terms
and conditions of the proposed Transfer. Such Participant (and such
Participant's transferees) shall not consummate any such Transfer until ninety
(90) days after the Sale Notice has been delivered to the Company, unless the
Company has notified such Participant in writing that it will not exercise its
rights under this Section 5.8. (The date of the first to occur of such events is
referred to herein as the "AUTHORIZATION DATE"). The Company or its Designee may
elect to purchase
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all (but not less than all) of the Option Shares to be Transferred upon the same
terms and conditions as those set forth in the Sale Notice ("RIGHT OF FIRST
REFUSAL") by delivering a written notice of such election to such Participant
within thirty (30) days after the receipt of the Sale Notice by the Company (the
"ELECTION NOTICE"). If the Company has not elected to purchase all of the Option
Shares specified in the Sale Notice, such Participant may Transfer the Option
Shares to the prospective transferee(s) as specified in the Sale Notice, at a
price and on terms no more favorable to the transferee(s) thereof than specified
in the Sale Notice, during the 90-day period immediately following the
Authorization Date. Any Option Shares not so transferred within such 90-day
period must be reoffered to the Company in accordance with the provisions of
this Section 5.8.
(c) CONSENT TO APPROVED SALE. If the Board and the holders of
a majority of the Common Stock then outstanding approve the sale of the Company
to an independent third party (whether by merger, consolidation, sale of all or
substantially all of its assets or sale of all of the outstanding Common Stock)
(the "APPROVED SALE"), each Participant shall consent to and raise no objections
against the Approved Sale, and if the Approved Sale is structured as a sale of
stock, each Participant shall agree to sell all of such Participant's Option
Shares on the terms and conditions approved by the Board and the holders of a
majority of the Common Stock then outstanding. Each Participant shall take all
necessary and desirable actions in connection with the consummation of the
Approved Sale of the Company. For purposes of this paragraph 5.8(c), an
"independent third party" is any person who does not own in excess of 5% of the
Common Stock on a fully-diluted basis, who is not controlling, controlled by or
under common control with any such 5% owner of the Common Stock and who is not
the spouse, ancestor, descendant (by birth or adoption) or descendent of a
grandparent of any such 5% owner of the Common Stock. If the Company or the
holders of the Company's securities enter into any negotiation or transaction
for which Rule 506 (or any similar rule then in effect) promulgated pursuant to
the Securities Act may be available with respect to such negotiation or
transaction (including a merger, consolidation or other reorganization), each
Participant shall, at the request of the Company, appoint a purchaser
representative (as such term is defined in Rule 501 promulgated pursuant to the
Securities Act) reasonably acceptable to the Company. If a Participant appoints
the purchaser representative designated by the Company, the Company will pay the
fees of such purchaser representative, but if a Participant declines to appoint
the purchaser representative designated by the Company the Participant shall
appoint another purchaser representative (reasonably acceptable to the Company),
and the Participant shall be responsible for the fees of the purchaser
representative so appointed.
(d) EXCEPTIONS. The restrictions contained in this Section 5.8
will not apply with respect to Transfers of Option Shares (1) pursuant to
applicable laws of descent and distribution or (2) among the Participant's
family group; provided that the restrictions contained in this paragraph will
continue to be applicable to the Option Shares after any such Transfer and
provided further than the transferees of such Option Shares have agreed in
writing to be bound by the terms and provisions of this Plan and the applicable
Option Agreement, as each may be amended from time to time. In addition, upon
any Transfer to a member of the Participant's family group, the Participant
shall be required to give notice to the Company and as a condition to such
Transfer of Option Shares to a member of the Participant's family group, the
Participant will maintain all voting control over all of the Option Shares. The
Participant's, "family group" means the Participant's spouse and lineal
descendants (whether natural or adopted) and any trust solely for the benefit of
the Participant and/or the Participant's spouse and/or lineal descendants. In
addition, with the prior approval of the Committee, notwithstanding the
provisions of this Section 5.8, a Participant may pledge Option Shares creating
a security interest therein; provided, that the pledgee agrees in writing to be
bound,
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and that the Option Shares remain bound, by the terms and provisions of this
Plan and the applicable Option Agreement, as each may be amended from time to
time.
5.9 TERMINATION OF RESTRICTIONS. The rights and obligations relating to
Option Shares pursuant to Sections 5.7 and 5.8 hereof will terminate as follows:
(i) with respect to all Option Shares, upon the consummation by the Company of a
Qualified Public Offering, (ii) with respect to those Option Shares Transferred
in accordance with the terms and conditions of Section 5.7 or Section 5.8(b) or
(c) or (iii) with respect to those Option Shares Transferred in a Public
Offering or in a transaction under Rule 144 of the Securities Act or similar
rule then in effect; provided that with respect to clauses (ii) and (iii) above,
such rights and obligations shall terminate only with respect to those Option
Shares which have actually been Transferred.
ARTICLE VI
GENERAL PROVISIONS
6.1 LISTING, REGISTRATION AND LEGAL COMPLIANCE. If at any time the
Committee determines, in its discretion, that the listing, registration or
qualification of the shares subject to Options upon any securities exchange or
under any state or federal securities or other law or regulation, or the consent
or approval of any governmental regulatory body, is necessary or desirable as a
condition toor in connection with the granting of Options or the purchase or
issuance of shares thereunder, no Options may be granted or exercised, in whole
or in part, unless such listing, registration, qualification, consent or
approval shall have been effected or obtained free of any conditions not
acceptable to the Committee. The holders of such Options will supply the Company
with such certificates, representations and information as the Company shall
request and shall otherwise cooperate with the Company in obtaining such
listing, registration, qualification, consent or approval. If the Company, as
part of an offering of securities or otherwise, finds it desirable because of
federal or state regulatory requirements to reduce the period during which any
Options may be exercised, the Committee may, in its discretion and without the
Participant's consent, so reduce such period on not less than 15 days' written
notice to the holders thereof.
6.2 OPTIONS NOT TRANSFERABLE. Options may not be Transferred other than
by will or the laws of descent and distribution and, during the lifetime of the
Participant to whom they were granted, may be exercised only by such Participant
(or his or her legal guardian or legal representative). In the event of the
death of a Participant, exercise of Options granted hereunder to such
Participant which are vested as of the date of death may be made only by the
executor or administrator of such Participant's estate or the person or persons
to whom such Participant's rights under the Options pass by will or the laws of
descent and distribution.
6.3 ADJUSTMENTS. In the event of a reorganization, recapitalization,
stock dividend or stock split, or combination or other change in the shares of
Common Stock, the Board or the Committee shall, in order to prevent the dilution
or enlargement of rights under the Plan or outstanding Options, adjust the
number and type of shares as to which options may be granted under the Plan, the
number and type of shares covered by outstanding Options, the exercise prices
specified therein and other provisions of this Plan which specify a number of
shares, all as such Board or Committee determines to be appropriate and
equitable.
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<PAGE> 12
6.4 RIGHTS OF PARTICIPANTS. Nothing in the Plan shall interfere with or
limit in any way the right of the Company or any Subsidiary to terminate any
Participant's employment at any time (with or without Cause), or confer upon any
Participant any right to continue in the employ of the Company or any Subsidiary
for any period of time or to continue to receive such Participant's current (or
other) rate of compensation. No employee shall have a right to be selected as a
Participant or, having been so selected, to be selected again as a Participant.
6.5 AMENDMENT, SUSPENSION AND TERMINATION OF PLAN. The Board or the
Committee may suspend or terminate the Plan or any portion thereof at any time
and may amend it from time to time in such respects as the Board or the
Committee may deem advisable; provided, however, that no such amendment shall be
made without stockholder approval to the extent such approval is required by
law, agreement or the rules of any exchange upon which the Common Stock is
listed, and no such amendment, suspension or termination shall impair the rights
of Participants under outstanding Options without the consent of the
Participants affected thereby, except as otherwise provided herein. No Options
shall be granted hereunder after the tenth anniversary of the approval of the
Plan by the stockholders of the Company.
6.6 AMENDMENT OF OUTSTANDING OPTIONS. The Committee may amend or modify
the terms of any Option Agreement in any manner to the extent that the Committee
would have the authority under the Plan initially to grant an Option with such
amended terms; provided that, except as expressly contemplated elsewhere herein
or in the Option Agreement no such amendment or modification shall impair the
rights of any Participant under any outstanding Option without the consent of
such Participant.
6.7 INDEMNIFICATION. In addition to such other rights of
indemnification as they may have as members of the Board or the Committee, the
members of the Committee shall be indemnified by the Company against all costs
and expenses reasonably incurred by them in connection with any action, suit or
proceeding to which they or any of them may be party by reason of any action
taken or failure to act under or in connection with the Plan or any Option
granted under the Plan, and against all amounts paid by them in settlement
thereof (provided such settlement is approved by independent legal counsel
selected by the Company) or paid by them in satisfaction of a judgment in any
such action, suit or proceeding; provided, however, that any such Committee
member shall beentitled to the indemnification rights set forth in this Section
6.7 only if such member has acted in good faith and in a manner that such member
reasonably believed to be in or not opposed to the best interests of the Company
and, with respect to any criminal action or proceeding, had no reasonable cause
to believe that such conduct was unlawful, and further provided that upon the
institution of any such action, suit or proceeding a Committee member shall give
the Company written notice thereof and an opportunity to handle and defend the
same before such Committee member undertakes to handle and defend it on his own
behalf.
6.8 RESTRICTED SECURITIES. All Common Stock issued pursuant to the
terms of this Plan shall constitute "restricted securities," as that term is
defined in Rule 144 promulgated pursuant to the Securities Act, and may not be
transferred except in compliance with the registration requirements of the
Securities Act or an exemption therefrom.
* * * * *
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<PAGE> 1
Exhibit 10.63
===============================================================================
ASSET PURCHASE AGREEMENT
DATED AS OF APRIL 8, 1996
BETWEEN
COMMODORE MEDIA OF KENTUCKY, INC.
AND
SIMMONS BROADCASTING COMPANY
===============================================================================
<PAGE> 2
INDEX
-----
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I - Defined Terms
1.1 Defined Terms...................................... 2
ARTICLE II - Sale and Purchase of Assets
2.1 Agreement to Sell and Buy.......................... 7
2.2 Excluded Assets.................................... 8
2.3 Purchase Price..................................... 9
2.4 Adjustments and Prorations......................... 11
2.5 Assumption of Liabilities and Obligations.......... 12
2.6 Allocation......................................... 13
ARTICLE III - Representations and Warranties of Simmons
3.1 Organization, Standing and Authority............... 16
3.2 Authorization and Binding Obligation............... 16
3.3 Absence of Conflicting Agreements or Consents...... 17
3.4 Licenses........................................... 18
3.5 Real Property...................................... 18
3.6 Title to and Condition of Personal Property........ 20
3.7 Contracts.......................................... 21
3.8 Consents........................................... 22
3.9 Trademarks, Trade Names and Copyrights............. 22
3.10 Financial Statements............................... 23
3.11 Insurance.......................................... 24
3.12 Reports............................................ 24
3.13 Employee Benefit Plans............................. 24
3.14 Labor Relations.................................... 26
3.15 Taxes.............................................. 26
3.16 Claims; Legal Actions.............................. 27
3.17 Laws............................................... 27
3.18 Undisclosed Liabilities............................ 28
3.19 Books and Records.................................. 28
3.20 Assets............................................. 29
3.21 No Adverse Developments............................ 29
3.22 Environment, Health and Safety..................... 29
3.23 No Adverse Change.................................. 30
3.24 Full Disclosure.................................... 30
</TABLE>
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<PAGE> 3
INDEX
-----
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE IV - Representations and Warranties of Buyer
4.1 Organization, Standing and Authority............... 30
4.2 Authorization and Binding Obligation............... 31
4.3 Absence of Conflicting Agreements or Consents...... 31
4.4 Qualification...................................... 32
4.5 Full Disclosure.................................... 32
ARTICLE V - Covenants of Simmons
5.1 Pre-Closing Covenants.............................. 33
5.2 Post-Closing Covenants............................. 37
ARTICLE VI - Covenants of Buyer
6.1 Inconsistent Action................................ 37
6.2 Qualification...................................... 37
6.3 Adventure Local Marketing Agreement................ 38
ARTICLE VII - Special Covenants and Agreements
7.1 FCC Consent........................................ 38
7.2 Control of the Station............................. 39
7.3 Taxes, Fees and Expenses........................... 39
7.4 Brokers............................................ 39
7.5 Bulk Sales Law..................................... 40
7.6 Confidentiality.................................... 40
7.7 Cooperation........................................ 41
7.8 Risk of Loss....................................... 41
7.9 Local Marketing Agreement.......................... 43
ARTICLE VIII - Conditions to Obligations of Buyer
and Simmons
8.1 Conditions to Obligations of Buyer................. 43
8.2 Conditions to Obligations of Simmons............... 48
</TABLE>
- ii -
<PAGE> 4
INDEX
-----
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE IX - Closing and Closing Deliveries
9.1 Closing............................................ 49
9.2 Deliveries by Simmons.............................. 50
9.3 Deliveries by Buyer................................ 51
ARTICLE X - Rights of Buyer and Simmons Upon
Termination or Breach
10.1 Termination........................................ 52
10.2 Specific Performance............................... 53
10.3 Liquidated Damages................................. 54
ARTICLE XI - Survival of Representations and
Warranties and Indemnification
11.1 Representations and Warranties..................... 54
11.2 Indemnification by Simmons......................... 54
11.3 Indemnification by Buyer........................... 55
11.4 Procedure for Indemnification...................... 56
ARTICLE XII - Miscellaneous
12.1 Notices............................................ 59
12.2 Benefit and Binding Effect......................... 60
12.3 Headings........................................... 61
12.4 Gender and Number.................................. 61
12.5 Counterparts....................................... 61
12.6 Attorneys' Fees.................................... 61
12.7 Entire Agreement................................... 61
12.8 Choice of Law...................................... 62
</TABLE>
- iii -
<PAGE> 5
EXHIBITS
--------
Exhibit A - Escrow Deposit Agreement
Exhibit B - Escrow Indemnification Agreement
Exhibit C - Local Marketing Agreement
Exhibit D - Non-Competition Agreement
Exhibit E - Simmons' Certificate
Exhibit F - Opinion of Simmons' Counsel
Exhibit G - Opinion of Simmons' FCC Counsel
Exhibit H - Buyer's Certificate
Exhibit I - Opinion of Buyer's Counsel
SCHEDULES
---------
SELLER SCHEDULES
Schedule 2.4(b) - Description of Trade Deals
Schedule 3.4 - Licenses
Schedule 3.5 - Description of Real Property and Leasehold
Interests (also title insurance policies
should be attached)
Schedule 3.6 - Description of Personal Property
Schedule 3.7 - Description of all Contracts plus list of
balances on program license agreements and
advertising agreements
Schedule 3.8 - Seller Required Consents
Schedule 3.9 - List of all copyrights, trademarks, trade
names, etc.
Schedule 3.10 - Financial Statements
Schedule 3.11 - List of Insurance Policies
Schedule 3.13 - List of all Employment Agreements, benefit
plans or arrangements
Schedule 3.14 - Employee disputes
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<PAGE> 6
Schedule 3.16 - List of Claims and Legal Actions
Schedule 3.18 - Undisclosed Liabilities
Schedule 3.22 - Environmental, Health and Safety Issues
BUYER SCHEDULES
Schedule 4.3 - Buyer Required Consents
Schedule 4.4 - Qualification Exceptions
- v -
<PAGE> 7
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT, dated as of April 8, 1996, is by and
between SIMMONS BROADCASTING COMPANY, a South Carolina corporation ("Simmons"),
and COMMODORE MEDIA OF KENTUCKY, INC., a Delaware corporation ("Buyer").
P R E M I S E S:
A. Simmons owns and operates radio stations WHRD (AM),
Huntington, West Virginia, ("WHRD"); WFXN (FM), Milton, West Virginia ("WFXN")
and WMLV (FM), Ironton, Ohio ("WMLV"); all of the enumerated radio stations
being hereinafter referred to as the "Stations", pursuant to licenses issued by
the Federal Communications Commission (the "FCC"). The stations are subject to
Joint Operating and Lease Agreements entered into with Adventure Communications,
Inc. ("Adventure").
B. Simmons desires to sell and Buyer desires to buy sub
stantially all the assets used or useful in the operation of the Stations and by
so doing to acquire the radio broadcast business presently conducted by the
Stations, upon the terms and conditions hereinafter set forth.
<PAGE> 8
A G R E E M E N T S:
In consideration of the above premises and the covenants and agreements
contained herein, Buyer and Simmons agree as follows:
ARTICLE I
DEFINED TERMS
1.1 Defined Terms. The following terms shall have the following
meanings in this Agreement:
"Agreement" means this Asset Purchase Agreement between Buyer
and Simmons for the assets of the Stations.
"Assets" means all the tangible and intangible assets owned,
leased or licensed by Simmons for the Stations, as the case may be, whether or
not reflected on the balance sheet of Simmons, but specifically excluding those
assets specified in Section 2.2 hereof.
"Assumed Contracts" means (i) all Contracts described and set
forth on Schedule 3.7 hereto, (ii) all Contracts entered into by Simmons on or
after the date of this Agreement and before the Closing in accordance with the
applicable provisions of Section 5.1(a), and (iii) Trade Deals described in
Section 2.5(b) hereto.
"Chose in Action" means a right to receive or recover
property, debt or damages on a cause of action, whether pending or not and
whether arising in contract, tort or otherwise. The
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<PAGE> 9
term shall include, but not be limited to, rights to judgments, settlements and
proceeds from judgments or settlements.
"Closing" means the consummation of the transactions
contemplated by this Agreement in accordance with the provisions of Article IX
hereof.
"Closing Date" means the date of the Closing specified in
Article IX hereof.
"Code" means the Internal Revenue Code of 1986, as amended to
the date hereof.
"Consents" means the FCC Consent, and the consents of third
parties to Simmons necessary to transfer the Assets to Buyer or otherwise to
consummate the transactions contemplated hereby, which are necessary for Buyer
to consummate the trans actions contemplated hereby.
"Contracts" means all agreements, written or oral (including
any amendments and other modifications thereto), to which Simmons is a party and
which affect or relate to the Assets or the business or operations of the
Stations.
"Environmental Laws" means the rules and regulations of the
FCC, the Environmental Protection Agency and any other federal, state or local
government authority pertaining to human exposure to RF radiation, and all
applicable Federal, state and local laws, rules and regulations, as amended,
relating to the discharge or removal of air pollutants, water pollutants or
process waste water or Hazardous Material.
- 3 -
<PAGE> 10
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Escrow Agent" means Media Venture Partners, Ltd.
"Escrow Deposit" means the sum of Twenty-Five Thousand Dollars
($25,000) which will be deposited by Buyer with the Escrow Agent in accordance
with the provisions of the Escrow Deposit Agreement.
"Escrow Deposit Agreement" means the Escrow Deposit Agreement
among Simmons, Buyer and the Escrow Agent substantially in the form attached
hereto as Exhibit A.
"Excluded Assets" means those assets specified in Section 2.2.
"FCC" means the Federal Communications Commission.
"FCC Consent" means actions by the FCC granting its consent to
the assignment of the FCC Licenses of the Stations to Buyer as contemplated by
this Agreement.
"FCC Licenses" means all of the licenses, permits and other
authorizations issued by the FCC to Simmons and applica tions to the FCC
relating to or used in the business or opera tions of the Stations, including
those listed on Schedule 3.4 hereto with any additions thereto between the date
hereof and the Closing Date.
"Final Order" means written action or order issued by the FCC
setting-forth an FCC Consent and (a) which has not been reversed, stayed,
enjoined, set aside, annulled or suspended and (b) with respect to which (i) no
requests have been filed for
- 4 -
<PAGE> 11
administrative or judicial review, reconsideration, appeal or stay, and the time
for filing any such requests and for the FCC to set aside the action on its own
motion has expired or (ii) in the event of review, reconsideration or appeal,
such review, reconsideration or appeal has been denied and the time for seeking
further review, reconsideration or appeal and for the FCC to review such action
has expired.
"Financial Statements" means the financial statements of
Simmons as described in Section 3.10 hereof and as attached to Schedule 3.10
hereto.
"Hazardous Material" shall mean any substance or waste
containing any hazardous substance, pollutant or contaminant, or toxic
substance, as those terms are defined, in the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended, and any other
substance similarly defined or identified in any applicable Environmental Laws.
"Indemnification Escrow Agreement" means the Indemnification
Escrow Agreement among Simmons, Buyer and the Indemnification Escrow Agent,
substantially in the form attached hereto as Exhibit B.
"Indemnification Escrow Agent" means such institution whom the
parties agree upon, and, in the absence of an agreement, a bank or other similar
institution with assets over $100,000,000.
"Intellectual Property" has the meaning assigned to such term
in Section 2.1.
- 5 -
<PAGE> 12
"Licenses" means the FCC Licenses and all of the licenses,
permits and other authorizations issued by any other federal, state or local
governmental authorities to Simmons used in the business and operations of the
Stations, including those listed on Schedule 3.4 hereto with any additions
thereto between the date hereof and the Closing Date.
"Local Marketing Agreement" means the Local Marketing
Agreement between Buyer and Simmons, substantially in the form attached hereto
as Exhibit C.
"Non-Competition Agreement" means the agreement among Buyer,
Seller and W. Lee Simmons substantially in the form attached hereto as Exhibit
D.
"Personal Property" means all of the machinery, equip ment
(including the transmitter and studio equipment), computer programs, computer
software, tools, motor vehicles, furniture, leasehold improvements, office
equipment, supplies, plant, spare parts and other tangible or intangible
personal property which is used in the business and operations of the Stations
including the personal property which is listed on Schedule 3.6 hereto together
with any additions or permitted deletions thereto between the date hereof and
the Closing Date.
"Purchase Price" means the consideration payable by Buyer to
Simmons for the Assets as provided in Section 2.3 hereof.
"Real Property" means all of Simmons' real property, leasehold
interests, easements, licenses, rights to access, and
- 6 -
<PAGE> 13
rights-of-way which are used in the business and operations of the Station,
including those interests which are identified and described in Schedule 3.5
hereto together with any addition or permitted deletion thereto between the date
hereof and the Closing Date, and the parcel of real property owned by Adventure
Technology, Inc.
"Title Commitment" means the commitment to issue an owner's
title policy as provided in Section 8.1.
"Title Company" means Fidelity National Title Insurance
Company or such other title insurance company acceptable to Buyer.
"Trade Deals" means the exchanges by the Stations of their
advertising time for goods, services or other consideration, other than in
connection with the licensing of programs and programming material.
ARTICLE II
SALE AND PURCHASE OF ASSETS
2.1 Agreement to Sell and Buy. Subject to the terms and conditions
set forth in this Agreement, Simmons shall transfer and deliver to Buyer on the
Closing Date, and Buyer shall purchase on the Closing Date all of the Assets for
the Stations, free and clear of any liabilities, mortgages, liens, pledges,
conditions or encumbrances of any nature whatsoever (except for
- 7 -
<PAGE> 14
those permitted in accordance with Sections 2.5 or 3.6 hereof), including but
not limited to:
(1) Personal Property;
(2) Real Property;
(3) FCC Licenses and the other Licenses;
(4) Assumed Contracts;
(5) All trademarks, trade names, service marks, copy
rights owned by Simmons or in which Simmons has an interest, patents
and applications therefor and all other similar intangible assets
relating to the Stations, including, but not limited to the call
letters WHRD, WFXN and WMLV and the goodwill related to the foregoing
(the "Intellectual Property");
(6) All of the Stations' technical information and data,
machinery and equipment warranties, if any, (to the extent such
warranties are assignable), maps, plans, diagrams, blueprints, and
schematics relating to the Stations, if any, including filings with the
FCC which relate to the Stations, and goodwill relating to the
foregoing;
(7) All books and records relating to the business and
operations of the Stations, including, without limitation, (a) executed
copies of the Assumed Contracts or, if no executed agreement exists,
summaries of such Assumed Contracts transferred pursuant to Section
2.1(4) hereof and (b) all records required by the FCC to be kept by
Stations;
(8) To the extent assignable, all computer programs and
software, and all rights and interests in and to computer programs and
software used in connection with the business and operations of the
Stations; and
(9) All intangible assets of Simmons relating to the
Stations not specifically described above, including, without
limitation, goodwill.
2.2 Excluded Assets. The Assets shall exclude the following
assets:
(1) Simmons' cash on hand as of the Closing Date and all
other cash in any of Simmons' bank or savings accounts; notes
receivable, letters of credit or other similar items and any cash
surrender value in regard thereto; and any
- 8 -
<PAGE> 15
stocks, bonds, certificates of deposit and similar
investments;
(2) Sellers' corporate minute books and other books and
1records relating to internal corporate matters and any other books and
records not related to the Stations or their business or operations;
(3) Any claims, rights and interest in and to any refunds
of federal, state or local franchise, income or other taxes, utility
security deposits, or fees of any nature whatsoever which relate solely
to the period prior to the Closing Date;
(4) All insurance contracts (except as provided in
Section 7.9);
(5) All contracts listed on Schedule 3.13 (except those
which are designated as Assumed Contracts) and all assets or funds held
in trust, or otherwise, associated with or used in connection with
Simmons' employee benefit plans, programs or arrangements;
(6) All Choses in Action of Simmons which relate entirely
to the period before the Closing Date; and
(7) Accounts Receivable.
2.3 Purchase Price.
(a) The Purchase Price for the Assets is Five Hundred
Thirty-Five Thousand Dollars ($535,000), which amount is to paid by Buyer to
Simmons if all Stations close as follows:
(i) the Escrow Deposit, which shall be deposited
by Buyer with Escrow Agent on the execution of this Agreement
shall be transferred to Simmons by wire transfer at Closing
and credited to the Purchase Price;
(ii) Four Hundred Eighty-Five Thousand Dollars
($485,000) of the Purchase Price shall be paid to Simmons or
its designee(s) at Closing by wire transfer; and
- 9 -
<PAGE> 16
(iii) the remaining Twenty-Five Thousand Dollars
($25,000) shall be deposited with the Indemnification Escrow
Agent.
(b) If there is a Closing for Stations WHRD and WFXN,
then the amount of the Purchase Price of Three Hundred Thirty- Five Thousand
Dollars ($335,000) shall be paid for the Assets of these two Stations which
amount is to be paid by Buyer to Seller as follows:
(i) Sixteen Thousand Dollars ($16,000) from the
Escrow Deposit;
(ii) Three Hundred and Three Thousand Dollars
($303,000) of the Purchase Price shall be paid to Seller or
its designee(s) at Closing by wire transfer; and
(iii) the remaining Sixteen Thousand Dollars
($16,000) shall be deposited with the Indemnification Escrow
Agent; and
(c) If there is a Closing for Station WMLV, then the
amount of the Purchase Price of Two Hundred Thousand Dollars ($200,000) shall be
paid for the Assets of these Stations which amount is to be paid by Buyer to
Seller as follows:
(i) Nine Thousand Dollars ($9,000) from the
Escrow Deposit;
(ii) One Hundred Eighty-Two Thousand Dollars
($182,000) of the Purchase Price shall be paid to Seller or
its designee(s) at Closing by wire transfer; and
- 10 -
<PAGE> 17
(iii) the remaining Nine Thousand Dollars ($9,000)
shall be deposited with the Indemnification Escrow Agent.
The payments under Section 2.3 (a), (b) and (c) above shall be made by
Buyer to no more than two (2) accounts of which Buyer is notified of by Simmons
pursuant to an irrevocable pay proceeds letter deliver by Simmons to Buyer at
least three (3) business days prior to the Closing Date.
2.4 Assumption of Liabilities and Obligations.
(a) Subject to the Local Marketing Agreement, as of the
Closing Date, Buyer shall assume and undertake to pay, discharge and perform all
the obligations and liabilities of Simmons relating to the Stations under the
Licenses and the Assumed Contracts assigned to Buyer relating to the time period
beginning on or arising out of events occurring on or after the Closing Date.
All other obligations and liabilities of Simmons, includ ing, without
limitation, (i) obligations or liabilities under any contract not included in
the Assumed Contracts, (ii) obligations or liabilities under any Assumed
Contract for which a Consent, if required, has not been obtained as of the
Closing unless the benefits from the contract is received by Buyer without the
Consent and without additional consideration being paid by Buyer, (iii) any
obligations or liabilities arising under the Assumed Contracts or otherwise
relating to the time period prior to the Closing Date or arising out of events
occurring prior to the Closing Date (including liabilities for breach by Simmons
prior
- 11 -
<PAGE> 18
to Closing), (iv) any forfeiture, claim or pending litigation or proceeding
relating to the business or operations of the Stations, prior to the Closing
Date, and (v) claims of any employees of Simmons prior to the Closing Date,
shall remain and be the obligation and liability solely of Simmons. The Buyer is
not the successor employer of Simmons' employees for any purpose and is not
required to employ any of the employees of the Simmons at the Stations. Other
than as specified herein, Buyer shall assume no liabilities or obligations of
Simmons for the business or operations of the Stations or Simmons.
(b) Schedule 2.4(b), captioned "Air Time Due Client",
contains a description of all of the Trade Deals on the date hereof and
correctly sets forth the balance of Simmons' obligations under the caption "Air
Time Due Client" under each such Trade Deal. On the Closing Date, Buyer shall
assume the Trade Deals listed on Schedule 2.4(b); provided, however, if the
Simmons' obligations for "Air Time Due Client" exceeds $100 then the balance of
the "Air Time Due Client" in excess of $100 shall be considered an operating
expense of Simmons to be pro-rated in accordance with Section 2.6. The Trade
Deals assumed by Buyer pursuant to the terms of this Section 2.4(b) shall be
considered Assumed Contracts.
2.5 Allocation. The Purchase Price shall be allocated to the
Assets of the Stations in a manner which complies with Section 1060 of the Code
with respect to the allocation of the Purchase Price (as well as any liabilities
assumed by Buyer)
- 12 -
<PAGE> 19
among the Assets. The allocation shall be consistently reported by Buyer and
Simmons in compliance with Section 1060 based upon an asset valuation supplied
by an independent firm selected by Buyer which is knowledgeable in the valuation
of assets of radio stations. The appraisal shall be provided to Simmons by no
later than January 31, 1997 for those stations for which a Closing is held on or
before December 10, 1996; and, within 60 days after Closing for those stations
which close on or after December 11, 1996.
2.6 Adjustments and Prorations.
(a) Subject to the provisions of the Local Marketing
Agreement, all revenues arising from the operation of the Stations earned or
accrued up until midnight on the day prior to the Closing Date, and all
expenses, costs and liabilities, arising therefrom incurred, accrued or payable
up until such time including, without limitation, business, license, utility
charges, real and personal property taxes and assessments levied 121 against the
Assets, FCC regulatory fees, property and equipment rentals, applicable
copyright or other fees, sales and service charges, taxes, wages, salaries,
vacation and sick pay shall be prorated between Buyer and Simmons in accordance
with the principle that (i) Simmons shall receive all revenues, refunds and
deposits of Simmons held by third parties, and shall be responsible for all
expenses, costs and liabilities incurred, payable or allocable to the conduct of
the business and opera tions of the Stations for the period prior to the Closing
Date
- 13 -
<PAGE> 20
and (ii) Buyer shall receive all revenues earned or accrued and shall be
responsible for all expenses, costs and liabilities incurred, payable or
allocable to the conduct of the business and operations of the Stations for the
period commencing on and continuing after the Closing Date. Simmons will be
liable for all of the costs of employee compensation, including, but not limited
to (i) all taxes and related contributions, vacations, sick pay and severance
pay properly attributable to or accrued on account of service with Simmons
through midnight on the date prior to the Closing Date and (ii) all group
medical, dental or death benefits for expenses incurred, related to or arising
from, events occurring on or prior to midnight on the date prior to the Closing
Date, or death or disability occurring on or prior to midnight on the date prior
to the Closing Date, whether reported by the Closing Date or thereafter. Except
as provided in Section 2.4(b), Trade Deals shall not be adjusted or pro rated.
(b) Adjustments or prorations pursuant to this Section
2.7 will, insofar as feasible, be determined and paid on the Closing Date based
upon Simmons' calculation delivered to Buyer five (5) business days prior to the
Closing Date and approved by Buyer, with final settlement and payment by the
appropriate party occurring no later than sixty (60) days after the Closing
Date. The determination of the amount of adjustment under Section 2.6 shall be
made by Buyer in accordance with generally accepted accounting principles,
consistently applied. Upon such deter mination, within sixty (60) days after the
Closing Date, Buyer
- 14 -
<PAGE> 21
shall submit such determination to Simmons for approval. If Simmons disagrees
with the determination made by Buyer of the adjustment, Simmons shall give
prompt written notice thereof, but in no event later than twenty (20) days after
receipt of such determination, specifying in reasonable detail the nature and
extent of such disagreement, and Buyer and Simmons shall have a period of thirty
(30) days in which to resolve such disagreement. If the parties are unable to
resolve such disagreement within such 30 day period, the matter shall be
submitted to Price Waterhouse, an independent certified public accounting firm,
which accounting firm shall be directed to submit a final determination within
thirty (30) days. The accounting firm's determination shall be binding on Buyer
and Simmons. Each party shall bear the fees and expenses of its own
representatives, including its independent accountants, if any, and shall share
equally the fees and expenses of any firm selected to resolve any disagreement
between the parties. Within five (5) business days following notice of a final
determination hereunder, the party obligated to make payment will make the
payments determined to be due and owing in accordance with this Section 2.6.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Simmons represents and warrants to Buyer as follows:
3.1 Organization, Standing and Authority. Simmons is a
corporation duly organized, validly existing and in good standing
- 15 -
<PAGE> 22
under the laws of the State of South Carolina. Simmons has the requisite
corporate power and authority (i) to own, lease, and use the Assets as presently
owned, leased, and used, (ii) to conduct the business and operations of the
Stations as presently conducted and (iii) subject to obtaining applicable
Consents, to execute and deliver this Agreement and the documents and
instruments contemplated hereby, and to perform and comply with all of the
terms, covenants and conditions to be performed and complied with by Simmons
hereunder and thereunder. Except for the Joint Operating and Lease agreements
with Adventure with respect to radio stations WHRD (AM), WFXN (FM) and WMLV (FM)
and except for option agreements with Michael R. Shott, Simmons is not a
participant in any joint venture or partnership with any other person or entity
with respect to any part of the Stations' operations or any of the Assets.
3.2 Authorization and Binding Obligation. Simmons has the
requisite power and corporate authority to execute, deliver, and perform this
Agreement and all other agreements to be executed and delivered by it hereunder
or in connection herewith, and all necessary corporate actions on the part of
Simmons have been duly and validly taken to authorize the execution, delivery
and performance of this Agreement and such other agreements and instruments to
be executed and delivered by Simmons. This Agreement has been duly executed and
delivered by Simmons and constitutes the legal, valid and binding obligation of
Simmons enforceable against it in accordance with its terms.
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3.3 Absence of Conflicting Agreements or Consents. Subject to
obtaining the Consents, no consent, authorization, approval, order, license,
certificate or permit of or from, or declaration or filing with, any federal,
state, local or other governmental authority or any court or other tribunal, and
no consent or waiver of any party to any material contract to which Simmons is a
party is required for the execution, delivery, and performance of this Agreement
or any of the agreements or instruments contem plated hereby other than those
agreements contemplated by Section 2.4 hereof. Neither the execution, delivery
and performance of this Agreement and such other agreements and instruments
(with or without the giving of notice, the lapse of time, or both) nor the
consummation of the transactions contemplated hereby, (i) conflicts with any
provision of the Certificate of Incorporation or Bylaws of Simmons; (ii) except
for the necessity of obtaining applicable Consents, conflicts with, results in a
breach of, or constitutes a default under any applicable law, judgment, order,
ordinance, decree, rule, regulation or ruling of any court or governmental
instrumentality; (iii) except for the necessity of obtaining applicable
Consents, results in a breach of, conflicts with, constitutes a default under or
permits any party to terminate, modify, accelerate the performance of or cancel
the terms of, any agreement, lease, license, instrument of indebted ness or
other obligations to which Simmons is a party or by which Simmons may be bound;
or (iv) except for the necessity of obtain ing applicable Consents, creates any
liability, mortgage, lien,
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pledge, condition or encumbrance of any nature whatsoever upon any of the
Assets.
3.4 Licenses. Schedule 3.4 hereto is a true and complete list of
the Licenses. The Licenses comprise all of the licenses, permits and other
authorizations necessary under the law to conduct the business and operations of
the Stations in the manner and to the full extent they are now being conducted,
and none of the Licenses is subject to any restriction or condition which would
limit the full operation of the Stations as presently operated. The Licenses are
in full force and effect, and the conduct of the business and operations of the
Stations is in accordance therewith. The Stations are operating in all material
respects in accordance with the Licenses and in compliance with the
Communications Act of 1934, as amended and the rules, regulations and policies
of the FCC and all other applicable laws.
3.5 Real Property. Schedule 3.5 hereto contains descriptions of
the real property and leasehold interests (including all improvements thereon)
which comprise all real property and leasehold interests used in connection with
or necessary to conduct the business and operations of the Stations as now
conducted. Simmons represents and warrants that Adventure Technology, Inc.
("ATI") has good, marketable and insurable fee simple absolute interest in and
to the real property owned by it. Attached to Schedule 3.5 are all policies of
title insurance currently existing in favor of ATI with respect to the real
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property. The title insurance policies attached to Schedule 3.5 and any
additional items disclosed in Schedule 3.5 correctly reflect (i) the status of
title of the real property as of the effective dates of such title policies and
(ii) the current status of title to the real property, except with regard to any
liens relating to taxes not yet due and payable. The imperfections of title and
encumbrances (other than those securing any obligations or indebtedness) or
restrictions, if any, shown on Schedule 3.5 or attached thereto, do not,
individually or in the aggregate, interfere in any material respect with
Simmons' use of the real property or the operation of the Stations or materially
affect the value of the real property. There is no pending condemnation or
similar proceeding affecting the real property or any portion thereof, and no
such action is presently contemplated or threatened. Except as set forth on
Schedule 3.5, there are no parties in possession of any portion of the real
property other than Simmons, whether as lessees, tenants at will, trespassers or
otherwise. To the best knowledge of Simmons, no zoning, building or other
federal, state or municipal law, ordinance, regulation or restriction is
violated by the continued maintenance, operation or use of the real property or
any tract or portion thereof or interest therein in its present manner. The
current use of the real property and all parts thereof as aforesaid does not
violate any restrictive covenants of record affecting the real property. To the
best knowledge of Simmons all necessary licenses, permits and
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authorizations required by any governmental authority with respect to the real
property have been obtained, have been validly issued and are in full force and
effect. Except as otherwise disclosed on Schedule 3.5, Simmons is not, and to
Simmons' knowledge, no other party is in material default under any lease or
other instrument of conveyance. Subject to obtaining applicable Consents,
Simmons has the full legal power and authority to assign its rights under the
leases listed in Schedule 3.5 hereto to Buyer. All leasehold interests
(including the improvements thereon) are available for immediate use in the
conduct of the business and operations of the Stations.
3.6 Title to and Condition of Personal Property. Schedule 3.6
hereto contains a description of the items of Personal Property which comprise
all personal property owned by Simmons and used in connection with the business
and operations of the Stations or which permits the operation of the Stations as
now conducted (having a replacement value of not less than $100 for each item).
Except as set forth on Schedule 3.6 hereto, Simmons has title to all Personal
Property and none of the Personal Property is subject to any security interest,
mortgage, pledge, lease, license conditional sales agreement or other lien or
encumbrance, except for (i) liens for current taxes and other governmental
charges not yet due and payable, (ii) encumbrances which in the aggregate do not
affect the use or value of the Personal Property and (iii) other liens which
shall be discharged or removed by Simmons prior to or at Closing. Simmons is
not,
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and to Simmons' knowledge no other party is, in material default under any of
the leases, licenses and other agreements relating to the Personal Property.
Except as otherwise disclosed in Schedule 3.6 hereto, the Personal Property is
in good operating condition and repair (ordinary wear and tear excepted), is
available for immediate use in the business and operation of the Stations as
currently conducted and will permit the Stations to operate in all material
respects in accordance with the terms of their FCC Licenses, the rules and
regulations of the FCC, and with all other applicable federal, state and local
statutes, ordinances, rules and regulations.
3.7 Contracts. Schedule 3.7 hereto contain descriptions of all the
Contracts in effect on the date hereof relating to the Stations other than
Contracts for (i) the sale of advertising time on the Stations. In all material
respects, all of the Assumed Contracts are in full force and effect, and are
valid, binding and enforceable in accordance with their terms. Except as
otherwise disclosed on Schedule 3.7, there is not under any Assumed Contract any
material default or breach by Simmons, or to Simmons' knowledge, any other
party. Schedule 3.7 separately identifies each program license, agreement, and
advertising agreement required to be set forth thereon, and correctly sets forth
in all material respects the balance of Simmons' rights and obligations under
each agreement listed thereon as of December 31, 1995 or, if later, the date
specified thereon.
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3.8 Consents. Schedule 3.8 sets forth those Assumed Contracts
which require Consent for assignment to Buyer and all Consents required. Except
for the FCC Consent and the agreements contemplated by Section 2.4 hereof and
the other Consents described in Schedule 3.8 hereto, no consent, approval,
permit or authorization of, or declaration to or filing with any governmental or
regulatory authority, or any other third party is required (i) to consummate
this Agreement and the transactions contemplated hereby, (ii) to permit Simmons
to assign or transfer the Assets to Buyer or (iii) to enable Buyer to conduct
the business or operations of the Stations in the same manner as such business
and operations are presently conducted.
3.9 Trademarks, Trade Names and Copyrights. Schedule 3.9 hereto is
a true and complete list of all copyrights, trademarks, trade names, patents and
applications, if any, used in connection with the business and operations of the
Stations. The Intellec tual Property includes all copyrights, trademarks, trade
names, patents and applications, if any, and all licenses, patents, permits,
jingles, privileges, logos, computer software, data and documentation,
confidential business information and other similar intangible property rights
and interests used by, issued to or owned by Simmons, or under which Simmons is
licensed or franchised relating to the conduct of the business and operations of
the Stations. Schedule 3.9 describes all Intellectual Property, if any, which
are licensed to third parties. Neither Simmons nor any of its affiliates or
their respective officers,
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directors or employees has received any notices of infringement,
misappropriation, or conflict from any third party with respect to the
Intellectual Property; and to Simmons' knowledge, Simmons has not infringed,
misappropriated or otherwise conflicted with any proprietary rights of any third
parties.
3.10 Financial Statements. Schedule 3.10 hereto contains true and
complete copies of (i) the financial statements of Simmons pertaining to the
Stations, which financial statements contain balance sheets and profit and loss
statements as at and for Simmons' fiscal year ended December 31, 1995 (the "1995
Financials") and (ii) an unaudited balance sheet and profit and loss statement
of the Stations as at and for the two month(s) ended February 29, 1996 (the
"Stub Financials") (the 1995 Financials and the Stub Financials are collectively
referred to herein as the "Financial Statements"). The 1995 Financials
Statements are unaudited. The Financial Statements were prepared in accordance
with generally accepted accounting principles, consistently applied, subject,
with respect to the 1995 Financials and the Stub Financials, to year-end
adjustments which will not have a material adverse effect on such financial
statements. The Financial Statements are correct in all material respects and
present fairly the operating income and financial condition of the Stations as
at their respective dates and the results of operations for the periods then
ended, subject, with respect to the Stub Financials, to year-end adjustments
which will not have a material adverse effect on such financial statements.
Except
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as otherwise indicated in the Financial Statements, the accounting practices
used by Simmons in preparing the Financial Statements were the same for each of
the Financial Statements and were consistently followed throughout the periods
reflected in each of the Financial Statements.
3.11 Insurance. Schedule 3.11 hereto comprises a true and complete
list of all insurance policies of Simmons covering any of the Assets, employees
or business and operations of the Stations. All policies of insurance listed in
Schedule 3.11 hereto are in full force and effect. All premiums have been paid
in full and Simmons is not in default with respect to its obligations
thereunder.
3.12 Reports. All returns, reports and statements which the
Stations are required to file with the FCC or with any other governmental agency
have been filed, and all reporting requirements of the FCC and other
governmental authorities having jurisdiction thereof have been complied with in
all material respects.
3.13 Employee Benefit Plans. A complete list of all employees of
each Station, date of hire, job description and payroll information, as at
December 31, 1995 has been delivered to Buyer. Since December 31, 1995, there
has been no increase in compensation or bonuses payable to employees except as
otherwise disclosed to Buyer in writing prior to the date hereof. Schedule 3.13
contains a true and complete list as of the date of this Agreement of all
employment agreements, employee benefit plans or
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arrangements currently applicable to the employees of Simmons employed at the
Stations and of all fixed or contingent liabilities or obligations of Simmons
with respect to any person now employed at the Stations, including pension or
thrift plans, individual or supplemental pension or accrued compensation
arrangements, contributions to hospitalization or other health or life insurance
programs, incentive plans, bonus arrangements and vacation, sick leave,
disability and termination arrangements or policies. Simmons has furnished Buyer
with a summary of all employment practices, a summary of all currently
applicable plan documents, trust documents, insurance contracts, contracts with
employees and plan description of the written plans and arrangements listed in
Schedule 3.13 hereto relating to the Stations, and with descriptions, in
writing, of the unwritten plans and arrangements listed in Schedule 3.13 hereto
relating to the Stations. All employee benefits and welfare plans or arrange
ments listed in Schedule 3.13 hereto were established and have been executed,
managed and administered without material exception in accordance with all
applicable requirements of the Code and ERISA, as amended, and of other
applicable laws. There exists no action, suit or claim (other than routine
claims for benefits) with respect to any of such plans or arrangements pending
or threatened against any of such plans or arrangements, nor to the best
knowledge of Simmons any facts which could give rise to any such action, suit or
claim.
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3.14 Labor Relations. As of the date hereof, Simmons is not a party
to any collective bargaining agreement with respect to the Stations and Simmons
does not have any written or oral contracts of employment with any employee of
the Stations, other than those listed in Schedule 3.13 hereto. As of the date
hereof, Simmons, in the operation of the Stations, has complied in all material
respects with all applicable laws, rules and regulations relating to the
employment of labor, including those related to wages, hours, collective
bargaining; occupational safety; sex, age, national origin, race and religious
discrimination; and the payment of social security and other payroll related
taxes, and as of the date hereof Simmons has not received any notice alleging
that it has failed to comply with any such laws, rules or regulations. No
controversies, disputes or proceedings are pending or, to the best knowledge of
Simmons threatened, between Simmons and its employees (singly or collectively)
of the Stations except as disclosed in Schedule 3.14 hereto.
3.15 Taxes. Simmons has filed or caused to be filed all federal
income tax returns and all other federal, state, county, local or city tax
returns affecting the Stations or the Assets which are required to be filed by
Simmons, and all taxes assessments and other governmental charges which are due
and payable have been timely paid. There are no tax liens upon the Stations or
the Assets. All tax reports filed by Simmons fairly reflect the taxes of Simmons
for the periods covered thereby and the
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Simmons has received no notice of any tax deficiency or delinquency. No Internal
Revenue Service audit of Simmons is pending or, to the knowledge of Simmons,
threatened, and the results of any completed audits are properly reflected in
the Financial Statements. All monies required to be withheld by Simmons from
employees or collected from customers for income taxes, social security and
unemployment insurance taxes and sales, excise and use taxes, and the portion of
any such taxes to be paid by Simmons to governmental agencies or set aside in
accounts for such purposes have been so paid or set aside, or such monies have
been approved, reserved against and entered upon the books and Financial
Statements.
3.16 Claims; Legal Actions. As of the date hereof, except as set
forth in Schedule 3.16 hereto, there is no legal action, counterclaim, suit,
arbitration, governmental investigation or other legal, administrative or tax
proceeding, nor any order, decree or judgment, in progress or pending, or to the
best of Simmons' knowledge, threatened against or relating to the Stations, the
Assets, or the business and operations of the Stations.
3.17 Laws. Simmons has complied in all material respects with (i)
the Licenses and (ii) all applicable federal, state and local laws, rules,
regulations, ordinances, judgments, orders and decrees. Neither the ownership or
use of the properties of Simmons relating to the Stations nor the conduct of the
business
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and operations of the Stations conflict in any material way with the rights of
any other person, firm or corporation.
3.18 Undisclosed Liabilities. With respect to the Stations or the
Assets, except as set forth in Schedule 3.18 hereto or otherwise disclosed in
this Agreement, (a) Simmons has no material liability, secured or unsecured
(whether absolute, accrued, contingent or otherwise and whether due or to become
due) of a nature required by generally accepted accounting principles to be
reflected in a balance sheet or disclosed in the notes thereto except (i) as
such liabilities and obligations are reflected in the Stations' balance sheets
as at December 31, 1995, or (ii) for liabilities and obligations incurred after
December 31, 1995, in the ordinary course of business, none of which
individually or in the aggregate are materially adverse to the Assets or
operations of the Stations and (b) to the best of Simmons' knowledge, Simmons
has no contingent liabilities or other liabilities outside the ordinary course
of business and of a nature not required to be reflected in Financial Statements
which, individually or in the aggregate, which are materially adverse to the
Assets or operations of the Stations.
3.19 Books and Records. The books of account of the Stations and
other records of Simmons relating to the Stations are complete and correct in
all material respects. At the Closing, all such books and records shall be
located at the business office of the Stations, except for the excluded books
and records.
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3.20 Assets.
The Assets include all assets, except for Excluded Assets,
used in connection with the business of the Stations as currently conducted and
all assets which permit the operation of the Stations as currently conducted
(having a replacement value in excess of $100). Simmons does not own, lease or
license any assets used in the current operation of the Stations other than the
Assets.
3.21 No Adverse Developments. Since December 31, 1995, there has
not occurred:
(a) any sale, lease, transfer, assignment, abandonment or
other disposition of any of the assets of the Stations; or
(b) except as otherwise expressly disclosed on any of the
Schedules hereto or otherwise expressly disclosed to Buyer in writing,
any action or failure to act, which if it occurs after the date of this
Agreement but prior to Closing, would constitute a breach of any
covenant set forth in Sections 5.1(a) or Sections 5.1(b) of this
Agreement. 3.22 Environment, Health and Safety.
3.22 Environment, Health and Safety
(a) Except as expressly set forth on Schedule 3.22,
Simmons has obtained all permits and licenses required under applicable law with
respect to the Stations, and has complied in all material respects with and is
in compliance with all such permits and licenses and laws and orders relating
to, public health and safety, worker health and safety and pollution or
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protection of the environment (collectively, "Health, Safety and Environmental
Requirements").
(b) Except as expressly set forth on Schedule 3.22, no
facts, events or conditions relating to the present facilities or operations
of the Stations or, to Simmons' knowledge, their predecessors interfere with
such operations or prevent continued compliance with, or give rise to any common
law or statutory liability or remediation under, any Health, Safety and
Environmental Requirement.
3.23 No Adverse Condition. Since December 31, 1995 to the date of
this Agreement, there has not been any material adverse change in the Assets,
operations or financial conditions of the Stations.
3.24 Full Disclosure. No representation or warranty made by Simmons
herein nor any certificate, document or other written instrument furnished or to
be furnished pursuant hereto contains or will contain any untrue statement of a
material fact nor shall any such certificate, document or written instrument
omit any material fact necessary in order to make any statement herein or
therein not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Simmons as follows:
4.1 Organization, Standing and Authority. Buyer is a corporation
duly organized, validly existing, and in good
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standing under the laws of the State of Delaware, and is duly qualified to
conduct business and is in good standing in the State of Kentucky.
4.2 Authorization and Binding Obligation. Buyer has the requisite
power and authority to execute, deliver, and perform this Agreement and all
other agreements to be executed and delivered by it hereunder or in connection
herewith and all necessary corporate action on the part of Buyer has been duly
and validly taken to authorize the execution, delivery and performance of this
Agreement and such other agreements and instruments to be executed and delivered
by Buyer. This Agreement has been duly executed by Buyer and constitutes the
legal, valid, and binding obligation of Buyer, enforceable against Buyer in
accordance with its terms.
4.3 Absence of Conflicting Agreements or Consents. Subject to
obtaining the Consents, no consent, authorization, approval, order, license,
certificate or permit of or from, or declaration or filing with any federal,
state, local or other governmental authority or any court or other tribunal, and
no consent or waiver of any party to any material contract to which Buyer is a
party is required for the execution, delivery and performance of this Agreement
or any of the agreements or instruments contemplated hereby. Neither the
execution, delivery and performance of this Agreement and such other agreements
and instruments (with or without the giving of notice, the lapse of time, or
both) nor the consummation of the transactions
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contemplated hereby (i) conflicts with the Certificate of Incorporation or
By-Laws of Buyer; (ii) except for the necessity of obtaining applicable Consents
and as set forth on Schedule 4.3, conflicts with, results in a breach of, or
constitutes a default under any applicable law, judgment, order, injunction,
decree, rule, regulation or ruling of any court or governmental instrumentality
or (iii) except for the necessity of obtaining applicable Consents, conflicts
with, results in a breach of, constitutes a default under, permits any party to
terminate, modify, accelerate the performance of or cancel the terms of, any
agreement, lease, instrument of indebtedness, license or other obligations to
which Buyer is a party, or by which Buyer may be bound, such that Buyer could
not acquire or operate the Assets.
4.4 Qualification. Except as set forth on Schedule 4.4, Buyer is
legally and technically qualified to become the licensee of the Stations in
accordance with the provisions of the Communications Act of 1934, as amended
without condition or waiver. Buyer is financially qualified to purchase the
Stations and Buyer's obligations hereunder are not contingent on Buyer obtaining
financing.
4.5 Full Disclosure. No representation and warranty made by Buyer
herein nor any certificate, document or other written instrument furnished or to
be furnished pursuant hereto contains or will contain any untrue statement of a
material fact nor shall such representations and warranties omit any statement
necessary
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in order to make any material statement contained herein or therein not
misleading.
ARTICLE V
COVENANTS OF SELLER
5.1 Pre-Closing Covenants. Except as contemplated by this
Agreement, commencing on the date hereof until the Closing Date, Simmons shall
cause the Stations to be operated in the ordinary course of business in
accordance with past practices, provided, however:
(a) Negative Covenants. Simmons shall not do any of the
following:
(1) Compensation. (a) Except as otherwise
disclosed to Buyer in writing prior to the date of this Agreement and,
thereafter, as otherwise approved by Buyer in writing, increase the compensation
of any person employed in connection with the conduct of the business or
operations of the Stations, (b) pay or grant bonuses or other benefits payable
or to be payable to any person employed in connection with the conduct of the
business or operations of the Stations except in accordance with normal past
practices, or (c) enter into any employment, severance or similar agreement with
any employee of the Stations which does not by its terms terminate, or cannot be
terminated or satisfied by Simmons without premium or penalty, prior to or at
the Closing;
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(2) Contracts. Without the prior written consent
of Buyer: (a) modify, amend or terminate any of the Assumed Contracts other than
by expiration of the term of the Assumed Contract or (b) enter into other
non-advertising Contracts (other than Contracts relating to Trade Deals which
are treated in Section 5.1(a)(8) below) obligating Simmons to provide payments
or benefits in excess of $1,000 each over the life of the Contract or $5,000 in
the aggregate. Schedule 3.7 will be supplemented prior to the Closing Date to
include any Contracts permitted to be entered into, amended or approved pursuant
to this paragraph 5.1(a)(2);
(3) Disposition of Assets. Sell, assign, lease,
or otherwise transfer or dispose of, or agree to sell, assign, lease or
otherwise transfer or dispose of, any of the Assets, except in connection with
the acquisition of replacement property of equivalent kind and value or obsolete
equipment;
(4) Encumbrances. Create or assume any mortgage,
lien, pledge, condition, charge or encumbrance of any nature whatsoever, or
permit to exist any liability, mortgage, lien, pledge, condition, charge or
encumbrance of any nature whatsoever, upon the Assets, except for those in
existence on the date of this Agreement, disclosed in Schedules 3.5 and 3.6
hereto, and (ii) those which individually or in the aggregate do not exceed
$10,000, all of which shall be released or removed prior to Closing;
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(5) FCC Licenses. Do any act or fail to do any
act which would result in the expiration, revocation, suspension or modification
of any of the FCC Licenses;
(6) Labor Relations. Except as required by law,
enter into any collective bargaining agreement or, through negotiations or
otherwise, make any commitment or incur any liability to any labor organization
with respect to the employees of the Stations;
(7) No Inconsistent Action. Take any action
which is inconsistent with its obligations hereunder or which could hinder or
delay the consummation of the transaction contemplated by this Agreement; or
(8) Trade Deals. Enter into any new Trade Deals,
unless otherwise agreed to in writing by Buyer, after the date set forth on
Schedule 2.5(b).
(b) Affirmative Covenants. Simmons shall do the
following:
(1) Access to Information. Upon prior notice to
Simmons allow Buyer and its authorized representatives reasonable access at
Buyer's expense during normal business hours to the Assets, the personnel of the
Stations and to all other properties, equipment, books, records, contracts and
documents relating to the Stations for the purpose of audit, inspection and
copying, and furnish or cause to be furnished to Buyer or its authorized
representatives all information with respect to the affairs and business of the
Stations as Buyer may reasonably
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request and make its independent accountants and key employees reasonably
available; provided, however, the rights of Buyer shall not be exercised in such
a manner as to interfere unreason ably with the operation or the business of the
Stations;
(2) Maintenance of Assets. Maintain all of the
Assets or replacements thereof and improvements thereon in good operating
condition and repair, with inventories of spare parts and expendable supplies
being maintained at levels consistent with past practices and at normal and
adequate amounts needed to operate the Stations in the usual and customary
manner;
(3) Insurance. Maintain all existing insurance
policies, or comparable coverage, for the Stations and the Assets, as listed in
Schedule 3.11 hereto;
(4) Consents. Use its best efforts to obtain the
Consents;
(5) Preservation of Business. Subject to the
terms of the Local Marketing Agreement, use its best efforts to maintain and
preserve the business and operations of the Stations and maintain and preserve
consistent with the ordinary course of business, the goodwill of and present
relationships with suppliers, advertisers, customers and others having business
relations with Stations;
(6) Books and Records. Maintain the books and
records of Simmons relating to the Stations in accordance with past practices;
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(7) Notification. Promptly notify Buyer in writ-
ing of any unusual or material developments or changes adversely relating to or
affecting the business and operation of the Stations or the Assets; and by no
later than the first day of the month immediately preceding the Closing, provide
written disclosures reflecting such additions or deletions to the information
contained in the attached Schedules as may be necessary to make such Schedules
accurate and complete as of the Closing Date; and
(8) Compliance with Laws. Use its best efforts
to comply in all respects with all rules and regulations of the FCC, and all
other laws, rules and regulations to which the Stations or the Assets are
subject.
5.2 Post-Closing Covenants. After the Closing, Simmons shall take
such actions, and shall execute and deliver to Buyer such further deeds, bills
of sale or other transfer documents as, in the reasonable opinion of counsel for
Buyer, may be necessary to ensure, complete and evidence the full and effective
transfer of the Assets to Buyer pursuant to this Agreement.
ARTICLE VI
COVENANTS OF BUYER
6.1 Inconsistent Action. Buyer will not intentionally take or omit
to take any action that will cause the FCC to deny, materially delay, or fail to
consent to the application(s) for assignment or cause the consents to assignment
from becoming a Final Order.
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6.2 Qualification. Prior to the Closing Date or the effective date
of the Local Marketing Agreement, whichever occurs first, Buyer shall take all
actions necessary to be qualified to do business in West Virginia and Ohio.
6.3 Adventure Local Marketing Agreement. Buyer shall enter into a
Local Marketing Agreement with Adventure for the Adventure Stations effective on
the same date as the Local Marketing Agreement with Simmons' Stations.
ARTICLE VII
SPECIAL COVENANTS AND AGREEMENTS
7.1 FCC Consent.
(a) Within five (5) business days after the execution of
this Agreement, Buyer and Simmons will file with the FCC appropriate
applications for the FCC Consent. The parties shall prosecute the applications
with all reasonable diligence and otherwise use their best efforts to obtain the
grant of such applications as expeditiously as practicable. Each party will use
its reasonable efforts to obtain all government consents and authorizations and
promptly make filings with and give notices to government agencies reasonably
required to effect the transactions contemplated hereby including, but not
limited to, seeking waivers of any rules and regulations of the FCC that may be
violated.
(b) The transfer of the Assets hereunder is expressly
conditioned upon (i) the grant of the FCC Consent without any
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materially adverse conditions on Buyer attributable to Simmons or arising out of
Simmons' operation of the Stations; (ii) compliance by the parties hereto with
the conditions (if any) imposed in the FCC Consents and (iii) the FCC Consent,
through the passage of time or otherwise, becoming a Final Order.
7.2 Control of the Station. Subject to the terms of the Local
Marketing Agreement, Buyer shall not, directly or indirectly, control,
supervise, direct or attempt to control, supervise or direct, the programming of
the Station until the completion of the Closing hereunder. Subject to the terms
of the Local Marketing Agreement, the control and supervision of all of the
Stations' operations shall be the sole responsibility of Simmons until the
Closing.
7.3 Taxes, Fees and Expenses. All sales, use, transfer, purchase,
recordation and documentary taxes and fees, if any, arising out of the transfer
of the Assets pursuant to this Agreement shall be paid in accordance with the
normal and customary practices for similar transactions in Huntington, West
Virginia. All filing fees required by the FCC shall be shared equally by Simmons
and Buyer. Except as otherwise provided in this Agreement, each party shall pay
its own expenses incurred in connection with the authorization, preparation,
execution, and performance of this Agreement, including all fees and expenses of
counsel, accountants, agents and other representatives.
7.4 Brokers. Buyer and Simmons each represent and warrant to the
other that neither it nor any of its affiliates, any
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person or entity acting on its behalf or its affiliates has incurred any
liability for any finder's, or broker's, fees or com missions in connection with
the transaction contemplated by this Agreement.
7.5 Bulk Sales Law. Any loss, liability, obligation or cost
suffered by Simmons or Buyer as the result of the failure of Simmons to comply
with the provisions of any bulk sales law applicable to the transfer of the
Assets and related to protecting trade creditors of Simmons as contemplated by
this Agreement shall be borne by Simmons.
7.6 Confidentiality. Except as necessary for the consummation of
the transaction contemplated hereby, including Buyer obtaining financing related
thereto, each party hereto shall keep confidential any information which is
obtained from the other party in connection with the transactions contemplated
hereby; except to the extent that such materials or information are or become
readily available to the industry, have been obtained from independent sources,
were known to Buyer on a non-confidential basis prior to disclosure to Buyer
from Simmons or are required to be disclosed in public filings or by law. In the
event this Agreement is terminated and the purchase and sale contemplated hereby
abandoned, each party will return to the other party all documents, work papers
and other written material obtained by it in connection with the transaction
contemplated hereby and shall not use any confidential information obtained from
the other party to the detriment of such party. On and after January 5,
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1996, Simmons, Buyer and their respective affiliates shall not make any public
announcement or press release concerning the transactions contemplated hereby
without the consent of both parties hereto, which consent shall not be
unreasonably withheld. Section 7.6 shall survive the termination or cancellation
of this Agreement for a period of one (1) year from the date of termination or
cancellation.
7.7 Cooperation. Buyer and Simmons shall cooperate fully with each
other and their respective counsel and accountants in connection with any
actions required to be taken as a part of their respective obligations under
this Agreement including but not limited to the obtaining of Consents. After the
Closing, each of Simmons and Buyer shall take such actions, and shall execute
and deliver to the other party such further documents as, in the reasonable
opinion of counsel for such other party, may be necessary to ensure, complete
and evidence the full and effective transfer of the Assets to Buyer or to
otherwise consummate the transactions pursuant to this Agreement.
7.8 Risk of Loss.
(a) The risk of any loss, damage or impairment,
confiscation or condemnation of any of the Assets from any cause whatsoever
shall be borne by Simmons at all times prior to the Closing and by Buyer at all
times after the Closing. In the event of any such loss, damage or impairment,
confiscation or condemnation, whether or not covered by insurance, Simmons shall
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promptly notify Buyer of such loss, damage, impairment or condemnation.
(b) If Simmons, at its expense, repairs, replaces or
restores such Assets to their prior condition before the Closing, Simmons shall
be entitled to all insurance proceeds and condemna tion awards, if any, by
reason of such award or loss.
(c) If Simmons does not or cannot restore or replace the
damaged Assets or informs the Buyer that it does not intend to restore or
replace such Assets, Buyer may at its option:
(i) terminate this Agreement by notice forthwith
without any further obligation hereunder; provided, however that Buyer
shall not have this option if Simmons in its notice of damages to
Assets has agreed to assign and does validly assign all of Simmons'
rights under applicable insurance policies and condemnation awards, and
reimburse Buyer for all costs and expenses for repair or replacement of
the damaged Assets in excess of amounts received under insurance
policies and condemnation awards; or
(ii) proceed to the Closing of this Agreement
without Simmons completing the restoration and replacement of such
damaged Assets, provided that Simmons shall assign all rights under
applicable insurance policies and condemnation awards, if any, to
Buyer; and in such event, Simmons shall have no further liability with
respect to the condition of the Assets directly attributable to the
damage or destruction.
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(d) Buyer will notify Simmons of a decision under the
options described in Section 7.8(c) above within ten (10) business days after
Simmons' notice to Buyer of the damage or destruction of Assets and the estimate
of the costs of repair.
(e) Notwithstanding any of the foregoing, Buyer may
terminate this Agreement forthwith without any further obligation hereunder by
written notice to Simmons if any event occurs which prevents signal
transmissions by a Station as it is currently operating for a period which is
expected to be in excess of ninety (90) days.
7.9 Local Marketing Agreement. Concurrently with the execution of
this Agreement, Simmons will enter into the Local Marketing Agreement with Buyer
substantially in the form of Exhibit C.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER
8.1 Conditions to Obligations of Buyer. All obligations of Buyer
at the Closing hereunder are subject to the fulfillment prior to and at the
Closing Date of each of the following conditions (any of which may be waived by
Buyer in its sole discretion):
(a) Representations and Warranties. All representations
and warranties of Simmons in this Agreement shall be true and complete in all
material respects at and as of the Closing
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Date as though such representations and warranties were made at and as of such
time.
(b) Covenants and Conditions. Simmons shall have in all
material respects performed and complied with all covenants, agreements and
conditions required by this Agreement to be performed or complied with by it
prior to or on the Closing Date.
(c) Consents and FCC Licenses. The FCC Consent, the
Consents listed on Schedule 3.8 hereto, and any other Consents which are
designated by Buyer as of the date of this Agreement as material to the business
and operations of the Stations shall have been duly obtained and delivered to
Buyer except as hereinafter set forth. The FCC Consent shall have become a Final
Order unless waived by Buyer. The obligation of Buyer to close on the purchase
of WMLV shall require as a condition that the FCC Licenses for that station
shall have been issued by the FCC for a full term commencing in 1996 without any
material adverse conditions imposed on the licensee; provided, however, that the
Buyer shall not require as a condition of Closing for WFXN and WHRD that there
be a license renewal commencing in 1996 for WMLV.
(d) Licenses; FCC Compliance. Simmons shall be the holder
of the Licenses, and there shall not have been any modification of any of such
Licenses which has a material adverse effect on the Stations or the conduct of
the business or operations of the Stations arising out of Simmons' operation of
the Stations or because of the duopoly nature of the transaction. No proceeding
shall be pending or threatened, the effect of which
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would be to revoke, cancel, fail to renew, suspend, modify or have a materially
adverse affect on any of the Licenses. The Stations shall be operating in
compliance with all applicable FCC rules, regulations and policies in all
material respects.
(e) Deliveries. Simmons shall have made or cause to be
made or stand willing and able to make or cause to be made all the deliveries to
Buyer set forth in Section 9.2 hereof.
(f) Good and Marketable Title to Assets. At Closing, the
title of Simmons to the Assets will be in the form described in Sections 3.5 and
3.6, free and clear of all liens, encumbrances, charges, claims, agreements or
other imperfections of title except as otherwise provided in Sections 3.5 and
3.6.
(g) No Adverse Proceedings. No action or proceeding shall
have been instituted by any governmental entity against, and no order, decree or
judgment of any court, agency, commission or governmental authority shall be
subsisting against, any party that would render it unlawful, as of Closing, to
effect the transactions contemplated by this Agreement in accordance with the
terms hereof or would adversely affect, as of Closing, the validity of the FCC
Licenses or would adversely affect the Assets or operation (other than
financial) of the Stations. Consistent with Section 8.1(c), the pendency of a
renewal application for station WMLV at the Closing on the purchase of WFXN and
WHRD shall not constitute a violation of this Section 8.1(g).
(h) Real Estate Title Commitment. Buyer, at its cost and
expense, shall have obtained a preliminary report on title to
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the Real Property covering a date subsequent to the date of this Agreement,
issued by the Title Company, which preliminary report shall contain a commitment
(the "Title Commitment") of the Title Company to issue an owner's title
insurance policy as Buyer may reasonably require (the "Title Policy") insuring
the fee simple absolute interest of Simmons in the real property. The Title
Commitment shall be in such amount as Buyer may reasonably determine to be the
fair market value of the Real Property (including all improvements located
thereon) and shall be subject only to: (i) liens of current state and local
property taxes which are not delinquent or subject to penalty; (ii) unviolated
zoning regulations and restrictive covenants and easements of record which do
not detract from the value of the Real Property and do not materially and
adversely affect, impair or interfere with the use of any property affected
thereby as heretofore used by Simmons or the Stations; and (iii) public utility
easements of record, in customary form, to serve the Real Property.
(i) Survey. Buyer, at its cost and expense, shall have
obtained a survey of the ATI Real Property within forty-five (45) days of the
date of this Agreement which shall: (i) be prepared by a registered land
surveyor; (ii) be certified to the Title Company and to Buyer; and (iii) show
with respect to the Real Property: (A) the legal description of the real
property (which shall be the same as the Title Policy pertaining thereto); (B)
all buildings, structures and improvements thereon and all restrictions of
record and other restrictions that have been
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established by an applicable zoning or building code or ordinance and all
easements or rights of way across or serving the Real Property (including any
off-site easements affecting or appurtenant thereto); (C) no encroachments upon
the Real Property or adjoining parcels by buildings, structures or improvements
and no other survey defects; (D) access to such parcel from a public street; and
(E) the location of the ATI Real Property in relation to any known flood hazard
area. Buyer shall promptly deliver a copy of the survey to Simmons upon its
receipt by Buyer.
(j) Environmental Reports. Within ten (10) days after the
date hereof Buyer shall have ordered, and shall have received within sixty (60)
days after the date hereof, at its expense, an environmental report or reports
with respect to the Stations and the Assets (including, without limitation, the
Real Property) from an environmental engineering firm selected by Buyer which
shall confirm, in a manner acceptable to Buyer, the nonexistence of any
Hazardous Materials on or about the Stations and the Assets (including, without
limitation the Real Property) and the accuracy of Simmons' representations and
warranties contained in Section 3.22. The environmental reports shall be
delivered to Simmons promptly after receipt of same by Buyer.
(k) Non-Competition Agreement. Simmons and W. Lee Simmons
shall have executed and delivered the Non-Competition Agreement.
(l) Simultaneous Closing. There shall be a simultaneous
Closing for radio stations WKEE (AM), WKEE (FM) and WZZW
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(AM) when there is a Closing on radio stations WHRD and WFXN; and for the
Closing on WMLV, there shall be a simultaneous Closing for radio stations WBVB
(FM) and WIRO (AM) in accordance with the terms and conditions of an agreement
dated the same date as this Agreement between Buyer and Adventure then being
closed.
8.2 Conditions to Obligations of Simmons. All obligations of
Simmons at the Closing hereunder are subject to the fulfillment prior to and at
the Closing Date of each of the following conditions (any of which may be waived
by Simmons in its sole discretion):
(a) Representations and Warranties. All representations
and warranties of Buyer contained in this Agreement shall be true and complete
in all material respects at and as of the Closing Date as though such
representations and warranties were made at and as of such time.
(b) Covenants and Conditions. Buyer shall have in all
material respects performed and complied with all covenants, agreements, and
conditions required by this Agreement to be performed or complied with by it
prior to or on the Closing Date.
(c) Deliveries. Buyer shall have made or stand willing
and able to make all the deliveries set forth in Section 9.3 hereof.
(d) FCC Consent. The FCC Consent shall have been granted
without the imposition on Simmons of any conditions that require additional
compliance by Simmons or that are materially adverse to Simmons.
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(e) No Adverse Proceeding. No action or proceeding shall
have been instituted by any governmental entity against, and no order, decree or
judgment of any court, agency, commission or governmental authority shall be
subsisting against, any party that would render it unlawful, as of Closing, to
effect the transactions contemplated by this Agreement in accordance with the
terms hereof or would adversely affect, as of Closing, the validity of the FCC
Licenses or would adversely affect the Assets or operations of the Stations.
(f) Qualification. The Buyer shall be qualified to do
business in West Virginia and Ohio.
(g) Simultaneous Closing. There shall be a simultaneous
Closing for radio stations WKEE (AM), WKEE (FM) and WZZW (AM) when there is a
Closing on radio stations WHRD and WFXN; and for the Closing on WMLV, there
shall be a simultaneous Closing for radio stations WBVB (FM) and WIRO (AM) in
accordance with the terms and conditions of an agreement dated the same date as
this Agreement between Buyer and Adventure then being closed.
(h) Option Assignments. Effective as of the Closing(s) on
the Stations, Michael R. Shott shall have assigned to Buyer all his rights under
certain option agreements between Shott and Simmons for the Stations.
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ARTICLE IX
CLOSING AND CLOSING DELIVERIES
9.1 Closing. The Closing(s) shall take place at 10:00 a.m. on a
date selected by Buyer on five (5) written days notice to Simmons which date
shall be within ten (10) days after the FCC Consent has become a Final Order.
The Closing(s) shall be held at the offices of Buyer's attorney or such other
place as shall be mutually agreed upon by Buyer and Simmons. If any of the
conditions to Buyer's performance pursuant to Section 8.1(c) hereof shall not
have been fulfilled by the above contemplated Closing Date for a Closing, then
the Buyer and Simmons shall cooperate with each other to cause the FCC to extend
the time for Closing(s) under the FCC Consents for no less than thirty (30)
days, or such longer period as mutually agreed to by Buyer and Seller.
9.2 Deliveries by Simmons. Prior to or on the Closing Date,
Simmons shall deliver or cause to be delivered to Buyer the following, in form
and substance reasonably satisfactory to Buyer and its counsel:
(a) Transfer Documents. Duly executed bills of sale,
assignments and other transfer documents in form and substance reasonably
satisfactory to Buyer's counsel;
(b) Consents; Acknowledgments. The original of each
Consent;
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(c) Estoppel Certificates. An estoppel certificate, if
applicable, from the lessor(s) under the lease(s) covering the tower,
transmitter and studio for the Stations;
(d) Secretary's Certificate. A certificate, dated as of
the Closing Date, executed by Simmons' Secretary certifying that the
resolutions, as attached to such certificate, were duly adopted by Simmons'
Board of Directors and shareholders, authorizing and approving the execution of
this Agreement and the consummation of the transactions contemplated hereby and
that such resolutions remain in full force and effect;
(e) Licenses, Contracts, Business Records, Etc. To the
extent they are in the possession of Simmons, copies of all Licenses, Assumed
Contracts, blueprints, schematics, working drawings, plans, projections,
statistics, engineering records, and all files and records used by Simmons in
connection with the Stations' business and operations, which copies shall be
available at the Closing or at the Stations' principal business office; (f)
Simmons' Certificate. A Certificate, dated as of the Closing Date, executed by
the President or a Vice-President of Simmons on behalf of Simmons, in the form
attached hereto as Exhibit E (the "Closing Certificate");
(g) Opinions of Counsel. Opinion of Simmons' counsel and
Simmons' FCC counsel, dated as of the Closing Date, substantially in the forms
attached hereto as Exhibit F and Exhibit G, respectively; and
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(h) Non-Competition Agreement. Executed counterparts of
the Non-Competition Agreement.
9.3 Deliveries by Buyer. Prior to or on the Closing Date, Buyer
shall deliver to Simmons the following, in form and substance reasonably
satisfactory to Simmons and its counsel:
(a) Purchase Price. The Purchase Price for the Assets and
as provided in Section 2.3 hereof;
(b) Assumption Agreements. Appropriate assumption
agreements pursuant to which Buyer shall assume and undertake to perform
Simmons' obligations under the Assumed Contracts arising on or after the
Closing Date;
(c) Buyer's Certificate. A Certificate, dated as of the
Closing Date, executed by the Chairman, President or a Vice President of Buyer,
in the form of Exhibit H ("Buyer's Closing Certificate");
(d) Buyer's Authorization. A certificate, dated as of the
Closing Date, executed by Buyer's Secretary certifying that the resolutions, as
attached to such certificate, were duly adopted by Buyer's Board of Directors,
authorizing and approving the execution of this Agreement and the consummation
of the transactions contemplated hereby and that such resolutions remain in full
force and effect; and
(e) Opinion of Counsel. An opinion of Buyer's counsel
dated as of the Closing Date substantially in the form attached hereto as
Exhibit I.
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ARTICLE X
RIGHTS OF BUYER AND SELLER
UPON TERMINATION OR BREACH
10.1 Termination. This Agreement may be terminated by either
Simmons or Buyer, if the terminating party is not then in breach of any material
obligation under this Agreement (provided that Sections 7.4 and 7.7 will
continue in full force and effect), on written notice to the other at any time
prior to Closing as follows:
(a) By Buyer, in accordance with the provisions of
Section 7.9;
(b) By Buyer or Simmons, as the case may be, if the other
shall be in material breach of any of the provisions applicable to it hereunder;
(c) By mutual agreement of Buyer and Simmons, at any
time, set forth in a writing executed by both parties; or
(d) By Buyer or Simmons, if any of the conditions to
their respective performance obligations under Sections 8.1 and 8.2 is not
satisfied on or before March 4, 1997, unless the failure to obtain the FCC
Consent(s) or otherwise comply with Sections 8.1 and 8.2 is because of the
party's default.
Except as otherwise provided in this Section 10, if this Agreement is
terminated, each party will pay all of its costs and expenses and neither will
have any further liability or obligation of any nature to the other.
10.2 Specific Performance. The parties recognize that in the event
Simmons should refuse to perform under the provisions
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of this Agreement, monetary damages alone will not be adequate. Buyer shall
therefore be entitled, in addition to any other remedies which may be available,
including money damages, to obtain specific performance of the terms of this
Agreement. In the event of any action to enforce this Agreement specifically,
Simmons hereby waives the defense that there is an adequate remedy at law.
10.3 Liquidated Damages. In the event this Agreement is terminated
by Simmons as a result of Buyer's breach of a material obligation under this
Agreement, then the Escrow Deposit shall be paid by the Escrow Agent to Simmons
as liquidated damages, it being agreed that the Escrow Deposit shall constitute
full payment for any and all damages suffered by Simmons by reason of Buyer's
failure to close this Agreement for the reasons described in Section 10.1 and
shall be the exclusive remedy of Simmons.
ARTICLE XI
SURVIVAL OF REPRESENTATIONS AND
WARRANTIES AND INDEMNIFICATION
11.1 Representations and Warranties. Notwithstanding any
examination made for or on behalf of any of the parties hereto, the knowledge of
any officer, director or employee or agent of any of the parties hereto or any
of their respective affiliates, or the acceptance of any certificate or opinion,
all representations, warranties and pre-closing covenants contained in this
Agreement and the Closing Certificate shall be deemed continuing
representations, warranties and pre-closing covenants, and shall
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survive the Closing Date for a period of two (2) years.
11.2 Indemnification by Simmons. Notwithstanding the Closing, and
regardless of any investigation made at any time by or on behalf of Buyer or any
information Buyer may have, Simmons shall indemnify and hold Buyer harmless
against and with respect to, and shall reimburse Buyer for all claims, notice of
which have been received by Simmons within a period of two (2) years from the
Closing Date, relating to:
(a) Any and all losses, liabilities or damages resulting
from any untrue representation, breach of warranty or nonfulfillment of any
covenant by Simmons contained herein or in any certificate, document or
instrument delivered to Buyer hereunder;
(b) Any and all obligations or liabilities of Simmons
relating to the Stations not expressly assumed by Buyer pursuant to the terms
hereof, including without limitation, any such obligation or liability imposed
on Buyer by process of law as a successor to the business of Simmons;
(c) Any and all losses, liabilities or damages resulting
from Simmons' operation or control of the Stations prior to the Closing Date,
including any and all liabilities arising under the Licenses or the Assumed
Contracts which relate to events occurring prior to the Closing Date; and
(d) Any and all actions, suits, proceedings, claims,
demands, assessments, judgments, costs and expenses, including
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reasonable legal fees and expenses, incident to any of the foregoing or in
enforcing this indemnity.
11.3 Indemnification by Buyer. Notwithstanding the Closing, and
regardless of any investigation made at any time by or on behalf of Simmons or
any information Simmons may have, Buyer shall indemnify and hold Simmons
harmless against and with respect to, and shall reimburse Simmons for all
claims, notice of which have been received by Buyer within for a period of two
(2) years from the Closing Date relating to:
(a) Any and all losses, liabilities or damages resulting
from any untrue representation, breach of warranty or nonfulfillment of any
covenant by Buyer contained herein or in any certificate, document or instrument
delivered to Simmons hereunder;
(b) Any and all losses, liabilities or damages resulting
from Buyer's operation or control of the Stations on and after the Closing Date,
including any and all liabilities arising under the Licenses or the Assumed
Contracts which relate to events occurring after the Closing Date; and
(c) Any and all actions, suits, proceedings, claims,
demands, assessments, judgments, costs and expenses, including reasonable legal
fees and expenses, incident to any of the foregoing or in enforcing this
indemnity.
11.4 Procedure for Indemnification. The procedure for
indemnification shall be as follows:
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(a) The party claiming indemnification (the "Claimant",
shall give reasonably prompt notice to the party from whom indemnification is
claimed (the "Indemnifying Party") of any claim, whether between the parties or
brought by a third party, specifying (i) the factual basis for such claim and
(ii) the amount of the claim. If the claim relates to an action, suit or
proceeding filed by a third party against Claimant, such notice shall be given
by Claimant within ten (10) days after written notice of such action, suit or
proceeding is received by Claimant.
(b) Following receipt of notice from the Claimant of a
claim, the Indemnifying Party shall have twenty (20) days (or such shorter
period of time as is required to respond to the subject litigation or
proceeding) to make such investigation of the claim as the Indemnifying Party
deems necessary or desirable. For the purposes of such investigation, the
Claimant agrees to make available to the Indemnifying Party or its authorized
representative(s) the information relied upon by the Claimant to substantiate
the claim. If the Claimant and the Indemnifying Party agree at or prior to the
expiration of said 20-day period (or any mutually agreed upon extension thereof)
to the validity and amount of such claim, the Indemnifying Party shall immedi-
ately pay to the Claimant the full amount of the claim and in the case of a
breach by the Simmons the Buyer shall be entitled to be indemnified pursuant to
the terms of the Indemnification Escrow Agreement. If the Claimant and the
Indemnifying Party do not
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agree within said period (or any mutually agreed upon extension thereof), the
Claimant may seek appropriate legal remedy.
(c) With respect to any claim by a third party as to
which the Claimant is entitled to indemnification hereunder, the Indemnifying
Party shall have the right at its own expense, to participate in or assume
control of the defense of such claim, and the Claimant shall cooperate fully
with the Indemnifying Party. If the Indemnifying Party elects to assume control
of the defense of any third-party claim, the Claimant shall have the right to
participate in the defense of such claim and retain separate co-counsel at its
own expense; provided if requested to participate at Indemnifying Party's
request or if the Claimant reasonably believes (based upon an opinion of
counsel) that a conflict of interest exists between Claimant and the
Indemnifying Party, then the Claimant will be reimbursed for reasonable expenses
of counsel. The Indemnifying Party will select counsel reasonably satisfactory
to the Claimant. The Indemnifying Party will not consent to an entry of judgment
or settlement without release of liability and, with respect to nonmonetary
terms, the Claimant's consent (not to be unreasonably withheld or delayed);
provided that if Claimant does not consent to settlement of a claim solely with
respect to the monetary terms thereof, pursuant to which Claimant has been
released without liability, Simmons' liability under this Section 11 shall be
limited to the amount of the settlement or entry of judgment, plus costs
(including attorney fees).
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(d) If a claim, whether between the parties or by a third
party, requires immediate action, the parties will make every effort to reach a
decision with respect thereto as expeditiously as possible.
(e) If the Indemnifying Party does not elect to assume
control or otherwise participate in the defense of any third party claim, it
shall be bound by the results obtained by the Claimant with respect to such
claim.
(f) If the Buyer is entitled to indemnification from
Simmons pursuant to this Article XI, the Buyer shall be entitled to receive such
indemnification from the Indemnification Escrow Agent pursuant to the terms of
the Indemnification Escrow Agreement; provided, if the amounts sought by Buyer
exceed the amount held by the Indemnification Escrow Agent the Buyer shall be
entitled to such additional indemnification and Buyer's recovery shall not be
limited in any manner by the terms of the Indemnification Escrow Agreement.
ARTICLE XII
MISCELLANEOUS
12.1 Notices. All notices, demands, and requests required or
permitted to be given under the provisions of this Agreement shall be (i) in
writing, (ii) delivered by personal delivery, or sent by commercial delivery
service or registered or certified mail, return receipt requested or sent by
telecopy, (iii) deemed to have been given on the date of personal delivery or
the date
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set forth in the records of the delivery service or on the return receipt or, in
the case of a telecopy, upon receipt thereof and (iv) addressed as follows:
If to Simmons:
W. Lee Simmons
President
Simmons Broadcasting Company
44 Bow Circle, Suite B
Hilton Head Island, South Carolina 29928
Telecopier: (803) 842-3371
With a copy to:
Alan C. Campbell, Esq.
Irwin, Campbell & Tannenwald, P.C.
1730 Rhode Island Avenue, N.W.
Suite 200
Washington, D.C. 20036
Telecopier: (202) 728-0354
If to Buyer:
Commodore Media of Kentucky, Inc.
500 Fifth Avenue
New York, NY 10110
Attention: Bruce Friedman
Telecopier: (212) 302-6457
With a copy to:
Ira J. Goldstein, Esq.
Pryor, Cashman, Sherman & Flynn
410 Park Avenue
New York, NY 10022
Telecopier: (212) 326-0806
or to any such other or additional persons and addresses as the parties may from
time to time designate in a writing delivered in accordance with this Section
12.1.
12.2 Benefit and Binding Effect. Neither party hereto may assign
this Agreement without the prior written consent of the other party hereto;
provided, however, that Buyer may assign
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this Agreement upon notice to Simmons at the time of assignment to an affiliated
entity controlled by Buyer or Buyer's principal only if such assignment does not
violate the Communications Act of 1934, as amended, delay Consent of the FCC, or
violates the rules, regulations and policies of the FCC and Buyer guarantees the
performance of its assignee. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and permitted
assigns and is not intended to be for the benefit, directly or indirectly, of
any other person or entity.
12.3 Headings. The headings herein are included for ease of
reference only and shall not control or affect the meaning or construction of
the provisions of this Agreement.
12.4 Gender and Number. Words used herein, regardless of the gender
and number specifically used, shall be deemed and construed to include any other
gender, masculine, feminine or neuter, and any other number, singular or plural,
as the context requires.
12.5 Counterparts. This Agreement may be signed in any number of
counterparts with the same effect as if the signature on each such counterpart
were upon the same instrument.
12.6 Attorneys' Fees. The prevailing party in any action brought
under this Agreement shall be entitled to its reasonable attorneys' fees and
disbursements in addition to its damages.
12.7 Entire Agreement. This Agreement, all schedules and exhibits
hereto and all documents, writings, instruments and
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<PAGE> 68
certificates delivered or to be delivered by the parties pursuant hereto
collectively represent the sole and entire understanding and agreement between
Buyer and Simmons with respect to the subject matter hereof. All schedules, and
exhibits attached to this Agreement shall be deemed part of this Agreement and
incorporated herein, as if fully set forth herein. This Agreement supersedes
all prior negotiations and understandings between Buyer and Simmons whatsoever,
and all letters of intent and other writings relating to such negotiations and
understandings. This Agreement cannot be amended, supplemented or modified
except by an agreement in writing which makes specific reference to this
Agreement or an agreement delivered pursuant hereto, as the case may be, and
which is signed by the party against which enforcement of any such amendment,
supplement or modification is sought.
12.8 Choice of Law. This Agreement will be governed by and
construed in accordance with the laws of the State of West Virginia (without
regard to conflicts of law principles).
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<PAGE> 69
This Agreement has been executed by Buyer and Simmons as of the date
first above written.
SIMMONS BROADCASTING COMPANY
By:/s/W. Lee Simmons
----------------------------
W. Lee Simmons
President
COMMODORE MEDIA OF KENTUCKY, INC.
By:
----------------------------
Bruce A. Friedman
President
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<PAGE> 70
This Agreement has been executed by Buyer and Simmons as of the date
first above written.
SIMMONS BROADCASTING COMPANY
By:
----------------------------
W. Lee Simmons
President
COMMODORE MEDIA OF KENTUCKY, INC.
By:/s/Bruce A. Friedman
----------------------------
Bruce A. Friedman
President
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<PAGE> 1
Exhibit 10.64
LOCAL MARKETING AGREEMENT
This LOCAL MARKETING AGREEMENT (the "Agreement") dated as of April 8,
1996, is made and entered into by and between COMMODORE MEDIA OF KENTUCKY, INC.,
a Delaware corporation ("Time Broker"), and SIMMONS BROADCASTING COMPANY, a
South Carolina corporation ("Licensee"), the owner and operator of radio
stations WHRD (AM), Huntington, West Virginia, WFXN (FM), Milton, West Virginia
(WHRD and WFXN, the "WV Stations") and WMLV (FM), Ironton, Ohio (the "Ohio
Station"; the WV Stations and the Ohio Station collec tively, the "Stations").
W I T N E S S E T H:
WHEREAS, Time Broker and Licensee, are parties to an Asset Purchase
Agreement dated as of the date hereof (the "Asset Purchase Agreement"), pursuant
to which Licensee has agreed to sell to Time Broker, and Time Broker has agreed
to purchase substantially all of the Assets (as defined in the Asset Purchase
Agreement) of the Licensee and the Assignment of Options pursuant to the Option
Assignment Agreement dated the date hereof between Time Broker and Michael R.
Shott ("Option Agreement"); and
WHEREAS, Licensee desires to make available to Time Broker substantial
broadcasting time on the Stations until the closing of the transactions
contemplated by the Asset Purchase Agreement (the "Closing"); and
<PAGE> 2
WHEREAS, Time Broker is engaged in the business of radio broadcasting
and desires to avail itself of the Stations' available broadcast time through
the date of Closing.
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants herein contained, the parties hereto have agreed and do agree as
follows:
Section 1. Effective Date and Facilities. Commencing at 12:01 a.m. on
April 9, 1996 (the "Effective Date"), Licensee shall broadcast or cause to be
broadcast on the Stations programs which are presented to it by Time Broker.
These programs shall be in compliance with the provisions of Section 4 of this
Agreement. Time Broker shall maintain the ability to deliver its programming to
Licensee's transmitter site by means acceptable to Licensee. To facilitate
delivery of programming by Time Broker to Licensee hereunder, Licensee hereby
grants to Time Broker the non-exclusive right for the term of this Agreement to
use substantially all of the equipment located in the studio for the Stations
and currently used by Licensee for broadcasting programs on the Stations
pursuant to this Agreement, which equipment is described in greater detail on a
Schedule to the Asset Purchase Agreement (the "Broadcast Equipment"). In
addition, Time Broker shall have, and Licensee hereby grants to Time Broker, a
non-exclusive license to enter on the premises currently occupied by the
Stations for purposes of producing its programming hereunder. Time Broker shall
maintain the Broadcast Equipment free and clear
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<PAGE> 3
of liens, claims or encumbrances of any third party claiming by, through or
under Time Broker.
Section 2. Payments by Time Broker. Time Broker hereby agrees to pay
Licensee for broadcast of the programs and use of the Broadcast Equipment and
the Station's studio hereunder the sum of $8,300 each month in advance ("Fee")
plus the sum of the actual expenses each month for documented and agreed upon
items of operating expenses to be incurred consistent with past practices of the
Stations set forth on Attachment IV hereto ("Monthly Expenses"); provided,
however, if there is a closing (i) of the WV Stations (the "WV Closing") prior
to a closing of the Ohio Station then the Fee from and after the WV Closing
shall be $2,700, or (ii) of the Ohio Station (the "Ohio Closing") prior to the
WV Closing then the Fee from and after the Ohio Closing shall be $5,600. The
Monthly Expenses shall be payable in arrears on or before the fifteenth day of
each calendar month commencing May 15, 1996 (the "Monthly Payment Date"), for
the period commencing on the Effective Date and on the fifteenth day of each
calendar month thereafter during the remainder of the term of this Agreement;
provided, however, that the revenue and expenses of the stations shall be
adjusted for April as if the Effective Date of this Agreement was April 1, 1996.
Amounts payable pursuant to this Section 2 for any partial calendar month other
than April, 1996 shall be prorated on a per diem basis. During this Agreement,
Time Broker shall be entitled to all advertising and other revenues (including
all profits and cash
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<PAGE> 4
flow) of the Stations and all accounts receivable which arise on and after the
Effective Date. If on the Closing Date or the date this Agreement is terminated,
the aggregate amount of payments received by Licensee from Time Broker for
Monthly Expenses under this Section exceeds the actual amount of Licensee's
expenses for the items (which expenses shall be incurred in accordance with the
usual and customary past practices of the Stations for the items of Monthly
Expenses prior to the Effective Date) incurred by Time Broker in performing its
obligations hereunder, from the Effective Date to the Closing Date or the date
this Agreement is terminated, then Licensee shall pay to Time Broker the excess
Monthly Expenses on the Closing Date or within ten (10) days after this
Agreement is terminated. Similarly, if Licensee has aggregate Monthly Expenses
from the Effective Date to the Closing Date or termination date in excess of its
submitted operating expenses, then the Time Broker shall pay Licensee such
excess on the Closing Date or within ten (10) days after this Agreement is
terminated. If a dispute arises between Licensee and Time Broker regarding the
determination of the Licensee's or Time Broker's excess Monthly Expenses, if
any, the disagreement shall be referred to Price Waterhouse, whose determination
shall be final and binding, and whose fees shall be paid one-half each by
Licensee and the Time Broker. Notwithstanding any other provision of this
Agreement or the Asset Purchase Agreement, in the event the parties fail to
close on the sale of the Stations to Time Broker, Licensee shall not be
obligated to repay Time
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<PAGE> 5
Broker any Fee amounts advanced by Time Broker pursuant to this Section 2,
except for appropriate pro rata portions of such Fee if this Agreement is
terminated during a month. The previous sentence shall in no way limit or effect
either Licensee or Time Broker's rights under the Asset Purchase Agreement in
the event the failure to close is due to a breach or termination of the Asset
Purchase Agreement.
Section 3. Term. The term of this Agreement shall commence on the
Effective Date and shall end on the earlier of (i) the date of Closing, or (ii)
the date of termination of the Asset Purchase Agreement, unless sooner cancelled
or terminated as hereinafter provided.
Section 4. Program.
(a) Time Broker shall furnish or cause to be furnished
the artistic personnel and material in broadcasting form for programs to be
broadcast on the Stations pursuant to this Agreement at all times other than
times of the Licensee program broadcasts referred to in Section 4(b) below, and
all such Time Broker programs, including all advertising messages and
promotional material or announcements, shall be in good taste and in accordance
with the Communications Act of 1934, as amended (the "Act"), all other
applicable statutes and Federal Communications Commission ("FCC") and other
governmental entities rules, regulations, policies and requirements ("Rules and
Regulations"), and Licensee's programming standards. Time Broker also agrees to
broadcast a reasonable number of public service
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<PAGE> 6
announcements suggested from time to time by Licensee. All programs shall be
prepared and presented in conformity with the standards set forth in Attachment
I. Time Broker further agrees that if, in the reasonable judgment of Licensee,
Time Broker does not comply with these standards, Licensee may suspend or cancel
any specific program not in compliance; if possible, Licensee is to provide Time
Broker with seventy-two (72) hours prior notice of such suspension or
cancellation. Time Broker shall not change the programming format or make any
other material or substantial programming changes without the prior written
consent of Licensee, which will not be unreasonably withheld or delayed.
Licensee shall make each Station available to Time Broker for operation for at
least one hundred and sixty-four (164) hours per week, Sunday through Saturday,
except for downtime occasioned by routine maintenance. Any routine maintenance
work affecting the operation of the Stations at full power shall be scheduled at
a time that is least disruptive to the Stations' operations.
(b) Licensee shall have the right during the Term of this
Agreement to furnish or cause to be furnished programming in broadcast-ready
form for four (4) hours per week of programs to be broadcast on each Station
("Licensee's Renewal Time"). Licensee's public affairs programs shall respond to
the needs and interests of each Station's service area and shall be presented at
times deemed by Licensee to best meet the needs of the applicable service area.
Licensee initially reserves the periods reserved prior to the Effective Date on
the Stations for
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<PAGE> 7
public affairs programming to present its public affairs programming.
Section 5. Handling of Mail and Public File. To the extent either party
hereto receives or handles mail, cables, telegraphs, telecopies, or telephone
calls in connection with any programs broadcast on the Stations, each party
shall promptly advise the other of any public or FCC complaint or inquiry
concerning such programming and shall give the other party copies of any letters
from the public or the FCC, including complaints, concerning such programming.
The Licensee in consultation with Time Broker will handle listener complaints
and inquiries with respect to the operation of the Stations. Time Broker shall
also give Licensee copies of all operating and programming information,
including, without limitation, the Stations' operating logs, necessary to
maintain the public file and other records required to be kept by FCC
regulations, rules or policies. During the term of this Agreement, Time Broker
shall also maintain and deliver to the Stations and Licensee such records and
information required by the FCC to be placed in the public inspection file of
each Station pertaining (i) to the broadcast of political programming and
advertisements, in accordance with the provisions of Sections 73.1940 and
73.3526 of the FCC's rules, and (ii) to the broadcast of sponsored programming
addressing political issues or controversial subjects of public importance, in
accordance with the provisions of Section 73.1212(d) of the FCC's rules. Time
Broker shall also consult with the Licensee and comply with the Act and
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<PAGE> 8
all other applicable statutes and the rules, regulations and policies of the
FCC, as announced from time to time, with respect to the carriage of political
advertisements and programming (including, without limitation, the rights of
candidates and, as appropriate, others to "equal opportunities" and the carriage
of contrasting points of view as mandated by any "fairness" rules with respect
to such "issue-oriented" advertising or programming as may be broadcast) and the
charges permitted therefor. Time Broker shall provide to each Station such
documentation relating to such programming as Licensee shall reasonably request.
Licensee shall be responsible for providing the personnel necessary to maintain
a complete public file (as required by the FCC) and compile and file all
required quarterly issues/programs lists.
Section 6. Maintenance of Equipment.
6.1. The transmitter equipment and antennas
currently used for the Stations' broadcasts (the "Transmission Equipment") shall
be maintained by Licensee in a condition consistent with good engineering
practices, in compliance in all material respects with the Act and all other
applicable rules, regulations and technical standards of the FCC and in
accordance with the Asset Purchase Agreement. Licensee does not currently know
of any material defects in the Transmission Equipment used by each Station.
Licensee shall maintain power and modulation of the Stations' broadcasts in a
manner consistent with Licensee's past practices. All capital expenditures
reasonably required to
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<PAGE> 9
maintain the technical quality of the Stations' Transmission Equipment and its
compliance with applicable laws and regulations shall be made at the sole
expense and in the discretion of Licensee in a timely fashion.
6.2 All Broadcast Equipment and other equipment
necessary for the transmission of programming to the Stations' Transmission
Equipment shall be maintained by Time Broker in good repair and condition,
reasonable wear and tear excepted. All capital expenditures reasonably required
to maintain the technical quality of the Broadcast Equipment and its compliance
with applicable laws and regulations shall be made at the sole expense and in
the sole discretion of Licensee in a timely fashion. Licensee shall, at all
times during the term of this Agreement, at Licensee's sole expense, maintain
insurance with respect to the Broadcast Equipment covering such risks as are
customarily covered with respect to damage thereto, and such policies of
insurance shall name Time Broker and such other parties as Licensee may
designate as loss payee(s) and additional insured(s), as their respective
interests may appear.
Section 7. (a) Collection of Time Broker's Accounts Receivable. For a
period of one hundred and eighty (180) days (the "Collection Period") following
the termination of this Agreement without a closing on the Purchase Agreement,
Licensee shall collect as agent for Time Broker the accounts receivable of the
Stations and the stations licensed to Simmons Broadcasting Company in existence
as of the termination date. On the
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<PAGE> 10
termination date, Time Broker shall provide Licensee with a list of all accounts
receivable to be collected by Licensee. In collecting such accounts receivable,
Licensee shall use reasonable diligence, but shall not be required to institute
legal proceedings to collect any account receivable, or to defend any claim or
counterclaim by any account debtor. Unless directed otherwise by the account
debtor, all amounts received from an account debtor which also becomes an
account debtor of Licensee after the termination date shall be applied first to
the payment of the accounts receivable of Time Broker. Within fifteen (15) days
of the end of each calendar month of the Collection Period, Licensee shall
deliver to Time Broker the net amount, after deducting any sales commissions,
agency fees and similar direct expenses attributable to such accounts
receivable, of all amounts collected and credited to the accounts receivable of
Time Broker during the period calendar month in accordance with this Section
7(a). Within ten (10) days of the end of the Collection Period, Licensee shall
deliver to Time Broker all records of uncollected accounts receivable of Time
Broker and any amounts not previously remitted to Time Broker at which time
Licensee's obligation for the collection of Time Broker's accounts receivable
shall cease. During the Collection Period, Time Broker shall not attempt to
collect any of the accounts receivable assigned to Licensee for collection.
(b) Collection of Licensee's Accounts Receivable. During
the Term of this Agreement (the "Term Collection Period"),
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<PAGE> 11
Time Broker, acting as agent for the Licensee, shall have the exclusive right to
collect the accounts receivable of License outstanding as of the Effective Date.
On the Effective Date, Licensee shall provide Time Broker with a list of all
accounts receivable to be collected by Time Broker. In collecting such accounts
receivable, Time Broker shall use reasonable diligence, but shall not be
required to institute legal proceedings to collect any account receivable, or to
defend any claim or counterclaim by any account debtor. Unless directed
otherwise by the account debtor, all amounts received from an account debtor
which also becomes an account debtor of Time Broker during the Term of this
Agreement, shall be applied first to the payment of the oldest accounts
receivable of Licensee. With fifteen (15) business days of the end of each
calendar month of the Term Collection Period, Time Broker shall deliver to
Licensee all amounts collected and credited to the accounts receivable of
Licensee in accordance with this Section 7(b). At the termination of this
Agreement either by the closing on the Purchase Agreement or the earlier
termination in accordance with Section 17 hereof, Time Broker shall deliver to
Licensee all records of uncollected accounts receivable of Licensee and any
accounts not previously remitted to Licensee shall be delivered to Licensee, at
which Time Broker's obligation for the collection of Licensee's accounts
receivable shall cease. During the Term Collection Period, Licensee shall not
attempt to collect any of the accounts receivable assigned to Time Broker for
collection.
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<PAGE> 12
Notwithstanding the foregoing, nothing shall prohibit Licensee from prosecuting
any legal proceeding that was commenced prior to the Effective Date.
Section 8. Responsibility for Employees and Expenses.
(a) Time Broker shall employ and be responsible for the
salaries, taxes, insurance and related costs for all personnel used in the
production of its programming or necessary to fulfill Time Broker's other
obligations hereunder. Licensee shall employ and be responsible for the
salaries, taxes, insurance and related costs for all personnel used in the
production of its programming or necessary to fulfill Licensee's other
obligations hereunder. Time Broker shall pay for all costs associated with its
program production, all fees to ASCAP, BMI and SESAC attributable to its
programs and any other copyright fees attributable to its programming broadcast
on the Stations. Without limiting the generality of Time Broker's obligations
under Section 26 hereof, Time Broker shall also pay for all costs associated
with Arbitron or any other rating service to which it or the Stations subscribe.
(b) If Time Broker should employ Licensee's employees
under this Agreement and there is a termination of this Agreement without a
Closing then Time Broker will terminate such employees hired if Licensee is
desirous of rehiring them and the employees desire to return to Licensee's
employ.
Section 9. Control of Stations. During the period of this Agreement,
Licensee shall maintain ultimate control over the
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<PAGE> 13
facilities of each Station, including, specifically, control over Station
finances, personnel and programming, and Time Broker agrees that it will permit
Licensee to take any and all steps necessary to faithfully and continuously do
so throughout the term of this Agreement. Licensee and Time Broker acknowledge
and agree that this responsibility to retain control is an essential element of
the continuing validity and legality of this Agreement. Licensee shall provide
and pay for: (a) its General Manager for the Stations, who shall report solely
to, and be accountable solely to, Licensee and who shall direct the day-to-day
operations of the Stations; and (b) such other programming personnel as are
necessary to fulfill its obligations under this Agreement. Licensee shall retain
control, said control to be reasonably exercised, over the policies, programming
and operations of the Stations, including, without limitation, the right to
decide whether to accept or reject any programming or advertisements, the right
to preempt any programs in order to broadcast a program deemed by Licensee to be
of greater national, regional or local interest, and the right to take any other
actions necessary to comply with the Rules and Regulations. Licensee shall be
responsible for meeting all of its requirements with respect to its local
service obligations including, but not limited to, compliance with each
Station's identification requirements, maintaining its main studio within the
Stations' principal community contour and broadcasting its own issue responsive
programming, and Time Broker shall take such actions
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<PAGE> 14
as Licensee may reasonably request to ensure such requirements are met. Time
Broker shall not represent, warrant or hold itself out as the Stations' licensee
and shall sell all its advertising time and enter into all agreements in its own
name. Licensee reserves the right to refuse to broadcast any program or programs
containing matter which is, or in the reasonable opinion of Licensee may be,
violative of any Rules and Regulations, or the policies of the Licensee.
Section 10. Special Events. Licensee has the right, in its sole
discretion and without liability, to preempt any Time Broker programs, and to
use part or all of the time contracted for by Time Broker to broadcast events of
special importance. In all such cases Licensee will use its best efforts to give
Time Broker reasonable notice of its intention to preempt such broadcast or
broadcasts, and, in the event of such preemption, Time Broker shall receive a
payment credit in an amount to be negotiated in good faith by Time Broker and
Licensee for the Time Broker broadcast(s) that were preempted.
Section 11. Force Majeure. Any failure or impairment (i.e., failure to
broadcast at Stations' full authorized power) of facilities or any delay or
interruption in broadcast programs, or failure at any time to furnish
facilities, in whole or in part, for broadcasting, because of any acts of God,
strikes or threats thereof or force majeure or due to any other causes beyond
the reasonable control of Licensee shall not constitute a
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<PAGE> 15
breach of this Agreement and Licensee will not be liable to Time Broker
therefor.
Section 12. Right to Use Station IDs. Licensee hereby grants to Time
Broker a non-exclusive license to use such slogans, call letters and other
identifiers as are currently used by each Station (the "Station Licensed
Identifiers") in connection with the broadcast of Time Broker's programs on each
Station, but for no other purpose. The license granted herein shall expire on
the expiration or earlier termination or cancellation of this Agreement. Time
Broker shall use the Station Licensed Identifiers in Time Broker's programming
in a manner consistent with the use thereof by Licensee in broadcasts of the
Stations immediately prior to the Effective Date of this Agreement during the
entire term of this Agreement and as may be required by the Act or the rules,
regulations and policies of the FCC. During the term of this Agreement, Licensee
shall not assign any of its rights to use the current call sign of any Station
or the other Station Licensed Identifiers to any third party. Time Broker
expressly agrees that, except with respect to Station Licensed Identifiers
referred to herein, the use of which is licensed by Licensee to Time Broker
pursuant hereto, the right to use Licensee's programs and to authorize their use
in any manner and in any media whatsoever shall be and remain vested solely in
Licensee.
Section 13. Payola. Time Broker shall provide Licensee with Payola
Affidavits, substantially in the form attached hereto
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<PAGE> 16
as Attachment II, signed by such of Time Broker's employees and at such times as
Licensee may reasonably request, and shall notify Licensee promptly of any
violations it learns of relating to the Act, including Sections 317 and 508
thereof.
Section 14. Compliance with Law. Time Broker and Licensee shall,
throughout the term of this Agreement, comply with the Rules and Regulations
applicable to the conduct of its business.
Section 15. Indemnification; Warranty. Each party (as the case may be,
the "Indemnitor") shall indemnify and hold harmless the other party (as the case
may be, the "Indemnitee"), its directors, officers, employees, agents and
affiliates, from and against any and all liability, including without limitation
all consequential damages and attorneys fees, arising out of or incident to the
programming furnished by the Indemnitor, any breach of this Agreement by the
Indemnitor or the conduct of the Indemnitor, its directors, officers, employees,
contractors, agents or affiliates. Without limiting the generality of the
foregoing, Indemnitor shall indemnify and hold and save the Indemnitee, its
directors, officers, employees, agents and affiliates, harmless against
liability for libel, slander, infringement of trademarks, trade names, or
program titles, violation of rights of privacy, and infringement of copyrights
and proprietary rights resulting from the programming furnished by the Indemni
tor. Time Broker will maintain customary amounts of libel and slander insurance,
name Licensee as an additional insured party, and provide evidence of such
insurance to Licensee. Each party's
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<PAGE> 17
obligation to hold the other harmless against the liabilities specified above
shall survive any termination of this Agreement.
Section 16. Events of Default. Each of the following shall constitute
an "Event of Default" under this Agreement:
(a) Non-Payment. Time Broker's failure to pay the
consideration provided for in Section 2 hereof when the same is due and payable
hereunder; provided, Time Broker shall have four (4) business days from the date
such payment is due to make payment if oral telephonic or written notice is
received by Time Broker from Licensee that such payment was not received on the
due date; or
(b) Default in Covenants. Time Broker's or Licensee's
default in the observance or performance of any material covenant, warranty,
condition or agreement contained herein; provided, however, any such default
shall not constitute an Event of Default hereunder if such default is cured
within twenty (20) days after notice thereof by the non-breaching party; or
(c) Breach of Representation. Time Broker's or Licensee's
material breach of any representation or warranty herein, or in any certificate
or document furnished pursuant to the provisions hereof, which shall prove to
have been false or misleading in any material respect as of the time made or
furnished; or
(d) Insolvency. The voluntary filing by Time Broker or
Licensee (or involuntary filing with respect to Time Broker or Licensee not
vacated within sixty (60) days after such filing) of
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<PAGE> 18
a petition for reorganization or dissolution under federal bankruptcy laws or
under substantially equivalent state laws.
(e) Licensee Preemption. If the Licensee shall preempt or
substitute other programming for that supplied by the Time Broker during fifteen
percent (15%) or more of the total hours of Time Broker programming on the
Stations for any one calendar week during the term of this Agreement, then Time
Broker within ten (10) days from the end of such week can terminate this
Agreement by notice to Licensee.
Section 17. Remedies Upon Default. In addition to, and not in
limitation of, all other rights and remedies available under this Agreement, in
equity or under applicable law, all of which rights and remedies are expressly
reserved, the parties shall have the following rights and remedies upon the
occurrence of an Event of Default:
(a) Termination Upon Default. If there is an Event of
Default by Time Broker, Licensee may, at its sole option, by written notice to
Time Broker, terminate this Agreement, and upon such termination Licensee shall
be under no further obligation to make available to Time Broker any further
broadcast time or broadcast transmission facilities and all amounts accrued or
payable to Licensee up to the date of termination which have not been paid
shall immediately become due and payable by Time Broker to Licensee. If there is
an Event of Default by Licensee, Time Broker may, at its sole option, by written
notice to Licensee, terminate this Agreement, and upon such termination Time
Broker
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<PAGE> 19
shall be under no further obligation to provide any further programs to be
broadcast on the Stations and all amounts due to Licensee with respect to the
period subsequent to such termination which have been prepaid by Time Broker
shall immediately become due and payable by Licensee to Time Broker.
(b) Liabilities Upon Termination. Time Broker shall be
responsible for debts and obligations of Time Broker resulting from the use of
air time and transmission facilities including, without limitation, accounts
payable and net barter balances. If this Agreement is canceled or terminated for
any reason, Licensee agrees that it will assume, perform in good faith and be
responsible for all obligations of Time Broker relating to the period after the
date of such cancellation or termination under unfulfilled advertising contracts
cancelable within thirty (30) days of the type entered into in the ordinary
course of the business of the Stations and at usual and customary rates and with
respect to which the receivables or prepayments relating thereto have been
assigned or paid to Licensee ("Ordinary Course Contracts"), as well as all
obligations of Time Broker relating to the period after the date of such
cancellation or termination under any unfulfilled advertising contracts other
than Ordinary Course Contracts which Licensee has approved in writing during the
course of this Agreement and with respect to which the receivables or
prepayments relating thereto have been assigned or paid to Licensee. In this
connection, Time Broker warrants to Licensee that it shall, and hereby does,
assign to Licensee all
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<PAGE> 20
amounts due under unfulfilled advertising contracts assumed by Licensee upon
cancellation or termination of this Agreement, and Time Broker shall pay over to
Licensee all amounts received by Time Broker for advertising run or to be run by
Licensee subsequent to such cancellation or termination. Except for obligations
under the unfulfilled advertising contracts specified in this Section 17(b),
Licensee shall not assume or otherwise be responsible for any other obligations,
expenses, contracts or other liabilities entered into or incurred by Time
Broker, regardless of whether such obligations, contracts, expenses and
liabilities relate to the Stations or the broadcast of programming thereon.
Section 18. Representations.
(a) Both Licensee and Time Broker represent that they are
legally qualified, empowered, and able to enter into this Agreement, and that it
has been reviewed and approved by their respective counsel, including counsel
specializing in FCC matters. Time Broker further represents and certifies that
this Agreement complies with Sections 73.3555(a) (1) and (e)(1) of the FCC's
rules. Licensee represents and certifies that it will maintain ultimate control
over the Stations' facilities, including control over the finances, personnel
and programming of the Stations.
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<PAGE> 21
(b) Licensee further represents to Time Broker that, as
of the date hereof, except as disclosed in the Asset Purchase Agreement:
(i) The FCC licenses and authorizations relating
to each Station (the "Station Licenses") are free and clear of legal
disqualifications or other restrictions of such a nature as would
materially limit the full operation of the Station as presently
authorized and conducted;
(ii) The Station Licenses are in good standing
and have been regularly renewed with the normal expiration dates;
(iii) The operation of each Station is in
compliance in all material respects with the Station Licenses;
(iv) Licensee has no knowledge of any matter that
might result in the suspension or revocation of the Station Licenses;
(v) There are no FCC citations outstanding with
respect to any Station or its operation; and
(vi) There are no petitions to deny, material
complaints or proceedings known by Seller to be pending before the FCC
and relating to the business and operation of any Station.
Section 19. Modification and Waiver. No modification or waiver of any
provision of this Agreement shall in any event be effective unless the same
shall be in writing signed by the party against whom the waiver is sought to be
enforced, and then such
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<PAGE> 22
waiver and consent shall be effective only in the specific instance and for the
purpose for which given.
Section 20. Delay in Exercise of Remedies; Remedies Cumulative. Except
in the case of actions that must be taken within a specific time period in
accordance with this Agreement, no failure or delay on the part of Licensee or
Time Broker in exercising any right or power hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of Licensee and Time Broker herein
provided are cumulative and are not exclusive of any right or remedies which
they may otherwise have.
Section 21. Construction. This Agreement shall be construed in
accordance with the internal substantive (that is, without reference to conflict
of) laws of the State of West Virginia and the obligations of the parties hereto
are subject to all federal, state or municipal laws or regulations now or
hereafter in force and to the regulations and policies of the FCC and all other
governmental bodies or authorities presently or hereafter duly constituted. The
parties believe that the terms of this Agreement meet all of the requirements of
current FCC policy for brokerage agreements and agree that they shall negotiate
in good faith to meet any FCC concern with respect to this Agreement if they are
incorrectly interpreting current FCC
- 22 -
<PAGE> 23
policy or if FCC policy as hereafter modified so requires. If the parties cannot
agree to a modification or modifications deemed necessary by either party to
meet FCC requirements, the termination provisions of Section 21 below shall
apply. The parties further agree that they will make all required filings with
the FCC with respect to this Agreement.
Section 22. Termination. Either party may terminate this Agreement
effective immediately if it has been ordered by the FCC to terminate this
Agreement or to suspend (either permanently or temporarily) the rights and
obligations of the parties hereunder in order to comply with (or while a
determination is being made with respect to compliance with) the Act or FCC
rules or policies, and such termination shall be the parties' sole remedy for
any such finding by the FCC. Upon termination or cancellation of this Agreement
for any reason Licensee shall, in addition to its other legal and equitable
rights and remedies under this Agreement or under applicable law, be entitled
immediately to cease making available to Time Broker any further broadcast time
or broadcast transmission facilities, and all amounts accrued or payable to
Licensee up to the date of termination, cancellation or expiration which have
not been paid shall be immediately due and payable. Except as provided in
Section 17(b), Licensee shall not be required to assume any obligations,
contracts, expenses or other liabilities of Time Broker in connection with such
termination, cancellation or expiration.
- 23 -
<PAGE> 24
Section 23. Headings. The headings contained in this Agreement are
included for convenience only and no such heading shall in any way alter the
meaning of any provision.
Section 24. Successors and Assigns. Subject to Section 29, this
Agreement shall be binding upon and inure to the benefit of the parties and
their respective permitted successors and assigns, including, without
limitation, any permitted transferees or assignees of any kind of the FCC
licenses for the Station.
Section 25. Counterpart Signatures. This Agreement may be signed in one
or more counterparts, each of which shall be deemed a duplicate original,
binding on the parties hereto notwithstanding that the parties are not
signatory to the same original or the same counterpart.
Section 26. Performance of Contracts. On or after the Effective Date,
Time Broker shall perform and discharge or cause to be performed and discharged,
all of Licensee's obligations and duties under those contracts and commitments
identified on Attachment III hereto, including, without limitation, commitments
for promotional appearances and remote broadcasts (collectively, the "Special
Contracts"). Time Broker shall indemnify and hold harmless Licensee from and
against any and all losses, expenses, obligations and liabilities of whatsoever
nature arising out of or under the Special Contracts relating to the period
subsequent to the Effective Date, and Licensee shall indemnify and hold harmless
Time Broker from and against any and all loss, expenses, obligations and
liabilities of whatsoever nature arising out of
- 24 -
<PAGE> 25
or under the Special Contracts relating to the period prior to the Effective
Date. To the extent either party hereto at any time receives from any third
party any amount that properly belongs to the other party hereto, the party
receiving such amount shall promptly pay such amount over to the party to which
such amount properly belongs.
Section 27. Notices. Any notice required hereunder (other than pursuant
to Section 16(a) hereof) shall be in writing and any payment, notice or other
communications shall be deemed given (i) upon delivery when delivered personally
or by facsimile with a copy by mail, (ii) three (3) days after mailing if mailed
by certified mail, postage prepaid, with return receipt requested, or, (iii) one
(1) day after delivery to Federal Express or another recognized overnight
carrier for overnight delivery, and addressed as follows:
To Licensee:
W. Lee Simmons, President
Simmons Broadcasting Company
44 Bow Circle, Suite B
Hilton Head Island, South Carolina 29928
Telecopier: 803-842-3371
With a copy to:
Alan C. Campbell, Esq.
Irwin, Campbell & Tannenwald, P.C.
1730 Rhode Island Avenue, N.W.
Suite 200
Washington, D.C. 20036
To Time Broker:
Bruce A. Friedman, President
Commodore Media of Kentucky, Inc.
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<PAGE> 26
500 Fifth Avenue, Suite 3000
New York, New York 10110
With a copy to:
Ira J. Goldstein, Esq.
Pryor, Cashman, Sherman & Flynn
410 Park Avenue
New York, New York 10022
Section 28. Entire Agreement. This Agreement (together with the
Attachments hereto) and any other agreements between the parties relating to the
Stations embody the entire agreement between the parties and there are no other
agreements, representations, warranties, or understandings, oral or written,
between them with respect to the subject matter hereof. No alteration,
modification or change of this Agreement shall be valid unless it is embodied in
a written instrument signed by the parties.
Section 29. Severability and Assignment. Except as set forth in
Sections 21 and 22 hereof, if any provision or provisions contained in this
Agreement is held to be invalid, illegal or unenforceable, this shall not affect
any other provision hereof, and this Agreement shall be construed as if such
invalid, illegal or unenforceable provision or provisions had not been contained
herein. Time Broker may not assign this Agreement without the prior written
consent of Licensee and any purported assignment without such consent shall be
null and void and of no legal force or effect.
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<PAGE> 27
Section 30. No Joint Venture. The parties agree that nothing herein
shall constitute a joint venture between them. The parties acknowledge that call
letters, trademarks and other intellectual property shall at all times remain
the property of the respective parties and that neither party shall obtain any
ownership interest in the other party's intellectual property by virtue of this
Agreement.
Section 31. Access to Records. Time Broker shall permit Licensee and
its agents and representatives access to all books and records relating to the
Stations.
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<PAGE> 28
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
COMMODORE MEDIA OF KENTUCKY, INC.
By:/s/ Bruce A. Friedman
------------------------------
Bruce A. Friedman
President
SIMMONS BROADCASTING COMPANY
By:/s/ W. Lee Simmons
------------------------------
W. Lee Simmons
President
- 28 -
<PAGE> 1
Exhibit 10.65
================================================================================
ASSET PURCHASE AGREEMENT
DATED AS OF APRIL 8, 1996
BETWEEN
COMMODORE MEDIA OF KENTUCKY, INC.
AND
ADVENTURE COMMUNICATIONS, INC.
================================================================================
<PAGE> 2
INDEX
Page
ARTICLE I - Defined Terms
1.1 Defined Terms...................................... 2
ARTICLE II - Sale and Purchase of Assets
2.1 Agreement to Sell and Buy.......................... 8
2.2 Excluded Assets.................................... 9
2.3 Purchase Price..................................... 9
2.4 Adjustments and Prorations......................... 11
2.5 Assumption of Liabilities and Obligations.......... 13
2.6 Allocation......................................... 13
ARTICLE III - Representations and Warranties of Seller
3.1 Organization, Standing and Authority............... 16
3.2 Authorization and Binding Obligation............... 17
3.3 Absence of Conflicting Agreements or Consents...... 17
3.4 Licenses........................................... 18
3.5 Real Property...................................... 19
3.6 Title to and Condition of Personal Property........ 20
3.7 Contracts.......................................... 21
3.8 Consents........................................... 22
3.9 Trademarks, Trade Names and Copyrights............. 23
3.10 Financial Statements............................... 24
3.11 Insurance.......................................... 25
3.12 Reports............................................ 25
3.13 Employee Benefit Plans............................. 25
3.14 Labor Relations.................................... 26
3.15 Taxes.............................................. 27
3.16 Claims; Legal Actions.............................. 28
3.17 Laws............................................... 28
3.18 Undisclosed Liabilities............................ 28
3.19 Books and Records.................................. 29
3.20 Assets; Accounts Receivable........................ 29
3.21 No Adverse Developments............................ 30
3.22 Environment, Health and Safety..................... 30
3.23 No Adverse Condition............................... 31
3.24 Full Disclosure.................................... 31
- i -
<PAGE> 3
INDEX
Page
ARTICLE IV - Representations and Warranties of Buyer
4.1 Organization, Standing and Authority............... 31
4.2 Authorization and Binding Obligation............... 32
4.3 Absence of Conflicting Agreements or Consents...... 32
4.4 Qualification...................................... 33
4.5 Full Disclosure.................................... 33
ARTICLE V - Covenants of Seller
5.1 Pre-Closing Covenants.............................. 34
5.2 Post-Closing Covenants............................. 38
ARTICLE VI - Covenants of Buyer
6.1 Inconsistent Action................................ 38
6.2 Qualification...................................... 39
6.3 Simmons Local Marketing Agreement.................. 39
ARTICLE VII - Special Covenants and Agreements
7.1 FCC Consent........................................ 39
7.2 Control of the Station............................. 40
7.3 Accounts Receivable................................ 40
7.4 Taxes, Fees and Expenses........................... 42
7.5 Brokers............................................ 42
7.6 Bulk Sales Law..................................... 43
7.7 Confidentiality.................................... 43
7.8 Cooperation........................................ 44
7.9 Risk of Loss....................................... 44
7.10 Local Marketing Agreement.......................... 46
ARTICLE VIII - Conditions to Obligations of Buyer
and Seller
8.1 Conditions to Obligations of Buyer................. 46
8.2 Conditions to Obligations of Seller................ 51
- ii -
<PAGE> 4
INDEX
Page
ARTICLE IX - Closing and Closing Deliveries
9.1 Closing............................................ 53
9.2 Deliveries by Seller............................... 53
9.3 Deliveries by Buyer................................ 55
ARTICLE X - Rights of Buyer and Seller Upon
Termination or Breach
10.1 Termination........................................ 56
10.2 Specific Performance............................... 56
10.3 Liquidated Damages................................. 57
ARTICLE XI - Survival of Representations and
Warranties and Indemnification
11.1 Representations and Warranties..................... 57
11.2 Indemnification by Seller.......................... 58
11.3 Indemnification by Buyer........................... 59
11.4 Procedure for Indemnification...................... 60
ARTICLE XII - Miscellaneous
12.1 Notices............................................ 62
12.2 Benefit and Binding Effect......................... 64
12.3 Headings........................................... 64
12.4 Gender and Number.................................. 64
12.5 Counterparts....................................... 64
12.6 Attorneys' Fees.................................... 65
12.7 Entire Agreement................................... 65
12.8 Choice of Law...................................... 65
- iii -
<PAGE> 5
EXHIBITS
Exhibit A - Escrow Deposit Agreement
Exhibit B - Escrow Indemnification Agreement
Exhibit C - Local Marketing Agreement
Exhibit D - Non-Competition Agreement
Exhibit E - Seller's Certificate
Exhibit F - Opinion of Seller's Counsel
Exhibit G - Opinion of Seller's FCC Counsel
Exhibit H - Buyer's Certificate
Exhibit I - Opinion of Buyer's Counsel
SCHEDULES
SELLER SCHEDULES
Schedule 2.4(b) - Description of Trade Deals
Schedule 3.4 - Licenses
Schedule 3.5 - Description of Real Property and Leasehold
Interests (also title insurance policies
should be attached)
Schedule 3.6 - Description of Personal Property
Schedule 3.7 - Description of all Contracts plus list of
balances on program license agreements and
advertising agreements
Schedule 3.8 - Seller Required Consents
Schedule 3.9 - List of all copyrights, trademarks, trade
names, etc.
Schedule 3.10 - Financial Statements
Schedule 3.11 - List of Insurance Policies
Schedule 3.13 - List of all Employment Agreements, benefit
plans or arrangements
Schedule 3.14 - Employee disputes
Schedule 3.16 - List of Claims and Legal Actions
- iv -
<PAGE> 6
Schedule 3.18 - Undisclosed Liabilities
Schedule 3.22 - Environmental, Health and Safety Issues
BUYER SCHEDULES
Schedule 4.3 - Buyer Required Consents
Schedule 4.4 - Qualification Exceptions
- v -
<PAGE> 7
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT, dated as of April 8, 1996, is by and
between ADVENTURE COMMUNICATIONS, INC., a West Virginia corporation ("Seller"),
and COMMODORE MEDIA OF KENTUCKY, INC., a Delaware corporation ("Buyer").
P R E M I S E S:
A. Seller owns and operates radio stations WKEE (FM) and WKEE (AM),
Huntington, West Virginia, (collectively "WKEE"); WZZW (AM), Milton, West
Virginia ("WZZW"), WBVB (FM), Coal Grove, Ohio ("WBVB") and WIRO (AM), Ironton,
Ohio ("WIRO"); all of the enumerated radio stations being hereinafter referred
to as "Stations", pursuant to licenses issued by the Federal Communications
Commission (the "FCC").
B. Seller desires to sell and Buyer desires to buy substantially all
the assets used or useful in the operation of the Stations and by so doing to
acquire the radio broadcast business presently conducted by the Stations, upon
the terms and conditions hereinafter set forth.
<PAGE> 8
A G R E E M E N T S:
In consideration of the above premises and the covenants and agreements
contained herein, Buyer and Seller agree as follows:
ARTICLE I
DEFINED TERMS
1.1 Defined Terms. The following terms shall have the following
meanings in this Agreement:
"Accounts Receivable" means the rights of Seller to payment
for advertising broadcast by the Stations prior to the Closing Date.
"Agreement" means this Asset Purchase Agreement between Buyer
and Seller for the assets of the Stations.
"Assets" means all the tangible and intangible assets owned,
leased or licensed by Seller for the Stations, as the case may be, whether or
not reflected on the balance sheet of Seller, but specifically excluding those
assets specified in Section 2.2 hereof.
"Assumed Contracts" means (i) all Contracts described and set
forth on Schedule 3.7 hereto, (ii) all advertising Contracts for cash
consideration entered into by Seller for the Stations and cancelable on not more
than thirty (30) days notice, (iii) all advertising Contracts for cash
consideration and cancelable on not more than thirty days (30) days notice
entered into by Seller for the sale of advertising on radio
- 2 -
<PAGE> 9
stations WFXN(FM), Milton, West Virginia, WHRD(AM), Huntington, West Virginia
and WMLV(FM), Ironton, Ohio (the "Simmons Stations"), which are licensed to
Simmons Broadcasting Company ("SBC"), pursuant to that certain Joint Operating
and Lease Agreements by and between Seller and SBC, (iv) all Contracts entered
into by Seller on or after the date of this Agreement and before the Closing in
accordance with the applicable provisions of Section 5.1(a), and (v) Trade Deals
described in Section 2.5(b) hereto.
"Chose in Action" means a right to receive or recover
property, debt or damages on a cause of action, whether pending or not and
whether arising in contract, tort or otherwise. The term shall include, but not
be limited to, rights to judgments, settlements and proceeds from judgments or
settlements.
"Closing" means the consummation of the transactions
contemplated by this Agreement in accordance with the provisions of Article IX
hereof.
"Closing Date" means the date of the Closing specified in
Article IX hereof.
"Code" means the Internal Revenue Code of 1986, as amended to
the date hereof.
"Consents" means the FCC Consent, and the consents of third
parties to Seller necessary to transfer the Assets to Buyer or otherwise to
consummate the transactions contemplated hereby, which are necessary for Buyer
to consummate the transactions contemplated hereby.
- 3 -
<PAGE> 10
"Contracts" means all agreements, written or oral (including
any amendments and other modifications thereto), to which Seller is a party and
which affect or relate to the Assets or the business or operations of the
Stations, or the sale of advertising on the Simmons Stations for cash and in
accordance with provisions of the definition of Assumed Contracts.
"Environmental Laws" means the rules and regulations of the
FCC, the Environmental Protection Agency and any other federal, state or local
government authority pertaining to human exposure to RF radiation, and all
applicable Federal, state and local laws, rules and regulations, as amended,
relating to the discharge or removal of air pollutants, water pollutants or
process waste water or Hazardous Material.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Escrow Agent" means Media Venture Partners, Ltd.
"Escrow Deposit" means the sum of Five Hundred Seventy- Five
Thousand Dollars ($575,000) which will be deposited by Buyer with the Escrow
Agent in accordance with the provisions of the Escrow Deposit Agreement.
"Escrow Deposit Agreement" means the Escrow Deposit Agreement
among Seller, Buyer and the Escrow Agent substantially in the form attached
hereto as Exhibit A.
"Excluded Assets" means those assets specified in Section 2.2.
"FCC" means the Federal Communications Commission.
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<PAGE> 11
"FCC Consent" means actions by the FCC granting its consent to
the assignment of the FCC Licenses of the Stations to Buyer as contemplated by
this Agreement.
"FCC Licenses" means all of the licenses, permits and other
authorizations issued by the FCC to Seller and applications to the FCC relating
to or used in the business or operations of the Stations, including those listed
on Schedule 3.4 hereto with any additions thereto between the date hereof and
the Closing Date.
"Final Order" means written action or order issued by the FCC
setting-forth an FCC Consent and (a) which has not been reversed, stayed,
enjoined, set aside, annulled or suspended and (b) with respect to which (i) no
requests have been filed for administrative or judicial review, reconsideration,
appeal or stay, and the time for filing any such requests and for the FCC to set
aside the action on its own motion has expired or (ii) in the event of review,
reconsideration or appeal, such review, reconsideration or appeal has been
denied and the time for seeking further review, reconsideration or appeal and
for the FCC to review such action has expired.
"Financial Statements" means the financial statements of the
Seller as described in Section 3.10 hereof and as attached to Schedule 3.10
hereto.
"Hazardous Material" shall mean any substance or waste
containing any hazardous substance, pollutant or contaminant, or toxic
substance, as those terms are defined, in the Comprehensive
- 5 -
<PAGE> 12
Environmental Response, Compensation, and Liability Act of 1980, as amended, and
any other substance similarly defined or identified in any applicable
Environmental Laws.
"Indemnification Escrow Agreement" means the Indemnification
Escrow Agreement among Seller, Buyer and the Indemnification Escrow Agent,
substantially in the form attached hereto as Exhibit B.
"Indemnification Escrow Agent" means such institution whom the
parties agree upon, and, in the absence of an agreement, a bank or other similar
institution with assets over $100,000,000.
"Intellectual Property" has the meaning assigned to such term
in Section 2.1.
"Licenses" means the FCC Licenses and all of the licenses,
permits and other authorizations issued by any other federal, state or local
governmental authorities to Seller used in the business and operations of the
Stations, including those listed on Schedule 3.4 hereto with any additions
thereto between the date hereof and the Closing Date.
"Local Marketing Agreement" means the Local Marketing
Agreement between Buyer and Seller, substantially in the form attached hereto as
Exhibit C.
"Non-Competition Agreement" means the agreement among Buyer,
Seller and Michael R. Shott substantially in the form attached hereto as Exhibit
D.
- 6 -
<PAGE> 13
"Personal Property" means all of the machinery, equipment
(including the transmitter and studio equipment), computer programs, computer
software, tools, motor vehicles, furniture, leasehold improvements, office
equipment, supplies, plant, spare parts and other tangible or intangible
personal property which is used in the business and operations of the Stations
including the personal property which is listed on Schedule 3.6 hereto together
with any additions or permitted deletions thereto between the date hereof and
the Closing Date.
"Purchase Price" means the consideration payable by Buyer to
Seller for the Assets as provided in Section 2.3 hereof.
"Real Property" means all of Seller's real property, leasehold
interests, easements, licenses, rights to access, and rights-of-way which are
used in the business and operations of the Stations, including those interests
which are identified and described in Schedule 3.5 hereto together with any
addition or permitted deletion thereto between the date hereof and the Closing
Date.
"Title Commitment" means the commitment to issue an owner's
title policy as provided in Section 8.1.
"Title Company" means Fidelity National Title Insurance
Company or such other title insurance company acceptable to Buyer.
"Trade Deals" means the exchanges by the Stations or by the
Simmons Stations of their advertising time for goods, services or other
consideration, other than in connection with the licensing of programs and
programming material.
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<PAGE> 14
ARTICLE II
SALE AND PURCHASE OF ASSETS
2.1 Agreement to Sell and Buy. Subject to the terms and conditions set
forth in this Agreement, Seller shall transfer and deliver to Buyer on the
Closing Date, and Buyer shall purchase on the Closing Date all of the Assets for
the Stations, free and clear of any liabilities, mortgages, liens, pledges,
conditions or encumbrances of any nature whatsoever (except for those permitted
in accordance with Sections 2.5 or 3.6 hereof), including but not limited to:
(1) Personal Property;
(2) Real Property;
(3) FCC Licenses and the other Licenses;
(4) Assumed Contracts;
(5) All trademarks, trade names, service marks, copyrights
owned or used by Seller or in which Seller has an interest, patents and
applications therefor and all other similar intangible assets relating
to the Stations, including, but not limited to the call letters WKEE
(AM), WKEE (FM), WBVB, WIRO and WZZW and the goodwill related to the
foregoing (the "Intellectual Property");
(6) All of the Stations' technical information and data,
machinery and equipment warranties, if any, (to the extent such
warranties are assignable), maps, plans, diagrams, blueprints, and
schematics relating to the Stations, if any, including filings with the
FCC which relate to the Stations, and goodwill relating to the
foregoing;
(7) All books and records relating to the business and
operations of the Stations, including, without limitation, (a) executed
copies of the Assumed Contracts or, if no executed agreement exists,
summaries of such Assumed Contracts transferred pursuant to Section
2.1(4) hereof and (b) all records required by the FCC to be kept by
Stations;
(8) To the extent assignable, all computer programs and
software, and all rights and interests in and to computer
- 8 -
<PAGE> 15
programs and software used in connection with the business
and operations of the Stations; and
(9) All intangible assets of Seller relating to the Stations
not specifically described above, including, without limitation,
goodwill.
2.2 Excluded Assets. The Assets shall exclude the following assets:
(1) Seller's cash on hand as of the Closing Date and all other
cash in any of Seller's bank or savings accounts; notes receivable,
letters of credit or other similar items and any cash surrender value
in regard thereto; and any stocks, bonds, certificates of deposit and
similar investments;
(2) Seller's corporate minute books and other books and
records relating to internal corporate matters and any other books and
records not related to the Stations or their business or operations;
(3) Any claims, rights and interest in and to any refunds of
federal, state or local franchise, income or other taxes, utility
security deposits or fees of any nature whatsoever which relate solely
to the period prior to the Closing Date;
(4) All insurance contracts (except as provided in Section
7.9);
(5) All contracts listed on Schedule 3.13 (except those which
are designated as Assumed Contracts) and all assets or funds held in
trust, or otherwise, associated with or used in connection with
Seller's employee benefit plans, programs or arrangements;
(6) All Choses in Action of Seller which relate entirely to
the period before the Closing Date; and
(7) Accounts Receivable.
2.3 Purchase Price.
(a) The Purchase Price for the Assets is Seven Million Seven
Hundred Sixty-Five Thousand Dollars ($7,765,000), which amount is to
paid by Buyer to Seller, if all Stations close, as follows:
- 9 -
<PAGE> 16
(i) the Escrow Deposit, which shall be deposited by
Buyer with Escrow Agent on the execution of this Agreement
shall be transferred to Seller by wire transfer at Closing and
credited to the Purchase Price;
(ii) Six Million Seven Hundred Fifteen Thousand
Dollars ($6,715,000) of the Purchase Price shall be paid to
Seller or its designee(s) at Closing by wire transfer; and
(iii) the remaining Four Hundred Seventy-Five
Thousand Dollars ($475,000) shall be deposited with the
Indemnification Escrow Agent.
(b) If there is a Closing for Stations WKEE and WZZW, then the
amount of the Purchase Price of Six Million Two Hundred and Seven
Thousand Dollars ($6,207,000) shall be paid for the Assets of these
three Stations which amount is to be paid by Buyer to Seller as
follows:
(i) Three Hundred Eighty Thousand Dollars ($380,000)
from the Escrow Deposit;
(ii) Five Million Four Hundred and Two Thousand
Dollars ($5,402,000) of the Purchase Price shall be paid to
Seller or its designee(s) at Closing by wire transfer; and
(iii) the remaining Four Hundred Twenty-Five Thousand
Dollars ($425,000) shall be deposited with the Indemnification
Escrow Agent.
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<PAGE> 17
(c) If there is a Closing for Stations WBVB and WIRO then the
amount of the Purchase Price of One Million Five Hundred and
Fifty-Eight Thousand Dollars ($1,558,000) shall be paid for the Assets
of these two Stations which amount is to be paid by Buyer to Seller as
follows:
(i) One Hundred and Ninety-Five Thousand Dollars
($195,000) from the Escrow Deposit;
(ii) One Million Three Hundred and Thirteen Thousand
Dollars ($1,313,000) of the Purchase Price shall be paid to
Seller or its designee(s) at Closing by wire transfer; and
(iii) the remaining Fifty Thousand Dollars ($50,000)
shall be deposited with the Indemnification Escrow Agent.
The payments to Seller under Section 2.3(a), (b) or (c) above
shall be made by Buyer to no more than two (2) accounts of which Buyer
is notified of by Seller pursuant to an irrevocable pay proceeds letter
delivered by Seller to Buyer at least three (3) business days prior to
the Closing Date.
2.4 Assumption of Liabilities and Obligations.
(a) Subject to the Local Marketing Agreement, as of the
Closing Date, Buyer shall assume and undertake to pay, discharge and
perform all the obligations and liabilities of Seller relating to the
Stations under the Licenses and the Assumed Contracts assigned to Buyer
relating to the time period beginning on or arising out of events
occurring on or after the Closing
- 11 -
<PAGE> 18
Date. All other obligations and liabilities of Seller, including, without
limitation, (i) obligations or liabilities under any contract not included in
the Assumed Contracts, (ii) obligations or liabilities under any Assumed
Contract for which a Consent, if required, has not been obtained as of the
Closing unless the benefits from the contract is received by Buyer without the
Consent and without additional consideration being paid by Buyer, (iii) any
obligations or liabilities arising under the Assumed Contracts or otherwise
relating to the time period prior to the Closing Date or arising out of events
occurring prior to the Closing Date (including liabilities for breach by Seller
prior to Closing), (iv) any forfeiture, claim or pending litigation or
proceeding relating to the business or operations of the Stations, prior to the
Closing Date, and (v) claims of any employees of Seller prior to the Closing
Date, shall remain and be the obligation and liability solely of Seller. The
Buyer is not the successor employer of Seller's employees for any purpose and is
not required to employ any of the employees of the Seller at the Stations. Other
than as specified herein, Buyer shall assume no liabilities or obligations of
Seller for the business or operations of the Stations or Seller.
(b) Schedule 2.4(b), captioned "Air Time Due Client", contains
a description of all of the Trade Deals on the date hereof involving the
Stations and the Simmons Stations and correctly sets forth the balance of
Seller's obligations under the caption "Air Time Due Client" under each such
Trade Deal. On
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<PAGE> 19
the Closing Date, Buyer shall assume the Trade Deals listed on Schedule 2.4(b);
provided, however, if the Seller's obligations for "Air Time Due Client" exceeds
$10,000 then the balance of the "Air Time Due Client" in excess of $10,000 shall
be considered an operating expense of Seller to be pro-rated in accordance with
Section 2.6. The Trade Deals assumed by Buyer pursuant to the terms of this
Section 2.4(b) shall be considered Assumed Contracts.
2.5 Allocation. The Purchase Price shall be allocated to the Assets of
the Stations in a manner which complies with Section 1060 of the Code with
respect to the allocation of the Purchase Price (as well as any liabilities
assumed by Buyer) among the Assets. The allocation shall be consistently
reported by Buyer and Seller in compliance with Section 1060 based upon an asset
valuation supplied by an independent firm selected by Buyer which is
knowledgeable in the valuation of assets of radio stations. The appraisal shall
be provided to Seller by no later than January 31, 1997 for those stations for
which a Closing is held on or before December 10, 1996; and, within 60 days
after Closing for those stations which close on or after December 11, 1996.
2.6 Adjustments and Prorations.
(a) Subject to the provisions of the Local Marketing
Agreement, all revenues arising from the operation of the Stations or the sale
of advertising on the Simmons Stations earned or accrued up until midnight on
the day prior to the
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Closing Date, and all expenses, costs and liabilities, arising therefrom
incurred, accrued or payable up until such time including, without limitation,
business, license, utility charges, real and personal property taxes and
assessments levied against the Assets, FCC regulatory fees, property and
equipment rentals, applicable copyright or other fees, sales and service
charges, taxes, wages, salaries, vacation and sick pay shall be prorated between
Buyer and Seller in accordance with the principle that (i) Seller shall receive
all revenues, refunds and deposits of Seller held by third parties, and shall be
responsible for all expenses, costs and liabilities incurred, payable or
allocable to the conduct of the business and operations of the Stations for the
period prior to the Closing Date and (ii) Buyer shall receive all revenues
earned or accrued and shall be responsible for all expenses, costs and
liabilities incurred, payable or allocable to the conduct of the business and
operations of the Stations for the period commencing on and continuing after the
Closing Date. Seller will be liable for all of the costs of employee compen-
sation, including, but not limited to (i) all taxes and related contributions,
vacations, sick pay and severance pay properly attributable to or accrued on
account of service with Seller through midnight on the date prior to the Closing
Date and (ii) all group medical, dental or death benefits for expenses incurred,
related to or arising from, events occurring on or prior to midnight on the date
prior to the Closing Date, or death or disability occurring on or prior to
midnight on the date prior
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to the Closing Date, whether reported by the Closing Date or thereafter. Except
as provided in Section 2.4(b), Trade Deals shall not be adjusted or pro rated.
(b) Adjustments or prorations pursuant to this Section 2.7
will, insofar as feasible, be determined and paid on the Closing Date based upon
Seller's calculation delivered to Buyer five (5) business days prior to the
Closing Date and approved by Buyer, with final settlement and payment by the
appropriate party occurring no later than sixty (60) days after the Closing
Date. The determination of the amount of adjustment under Section 2.6 shall be
made by Buyer in accordance with generally accepted accounting principles,
consistently applied. Upon such determination, within sixty (60) days after the
Closing Date, Buyer shall submit such determination to Seller for approval. If
Seller disagrees with the determination made by Buyer of the adjustment, Seller
shall give prompt written notice thereof, but in no event later than twenty (20)
days after receipt of such determination, specifying in reasonable detail the
nature and extent of such disagreement, and Buyer and Seller shall have a period
of thirty (30) days in which to resolve such disagreement. If the parties are
unable to resolve such disagreement within such 30 day period, the matter shall
be submitted to Price Waterhouse, an independent certified public accounting
firm, which accounting firm shall be directed to submit a final determination
within thirty (30) days. The accounting firm's determination shall be binding on
Buyer and Seller. Each party
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shall bear the fees and expenses of its own representatives, including its
independent accountants, if any, and shall share equally the fees and expenses
of any firm selected to resolve any disagreement between the parties. Within
five (5) business days following notice of a final determination hereunder, the
party obligated to make payment will make the payments determined to be due and
owing in accordance with this Section 2.6.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
The Seller represents and warrants to Buyer as follows:
3.1 Organization, Standing and Authority. The Seller is a corporation
duly organized, validly existing and in good standing under the laws of the
State of West Virginia. The Seller has the requisite corporate power and
authority (i) to own, lease, and use the Assets as presently owned, leased, and
used, (ii) to conduct the business and operations of the Stations as presently
conducted and (iii) subject to obtaining applicable Consents, to execute and
deliver this Agreement and the documents and instruments contemplated hereby,
and to perform and comply with all of the terms, covenants and conditions to be
performed and complied with by Seller hereunder and thereunder. Except for the
joint sales and marketing agreements with respect to the Simmons Stations,
Seller is not a participant in any joint venture or partnership with any other
person or entity with respect to any part of the Stations operations or any of
the Assets.
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3.2 Authorization and Binding Obligation. Seller has the requisite
power and corporate authority to execute, deliver, and perform this Agreement
and all other agreements to be executed and delivered by it hereunder or in
connection herewith, and all necessary corporate actions on the part of Seller
have been duly and validly taken to authorize the execution, delivery and
performance of this Agreement and such other agreements and instruments to be
executed and delivered by Seller. This Agreement has been duly executed and
delivered by Seller and constitutes the legal, valid and binding obligation of
Seller enforceable against it in accordance with its terms.
3.3 Absence of Conflicting Agreements or Consents. Subject to obtaining
the Consents, no consent, authorization, approval, order, license, certificate
or permit of or from, or declaration or filing with, any federal, state, local
or other governmental authority or any court or other tribunal, and no consent
or waiver of any party to any material contract to which Seller is a party is
required for the execution, delivery, and performance of this Agreement or any
of the agreements or instruments contem plated hereby other than those
agreements contemplated by Section 2.4 hereof. Neither the execution, delivery
and performance of this Agreement and such other agreements and instruments
(with or without the giving of notice, the lapse of time, or both) nor the
consummation of the transactions contemplated hereby, (i) conflicts with any
provision of the Certificate of Incorporation or Bylaws of Seller; (ii) except
for the necessity of obtaining
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applicable Consents, conflicts with, results in a breach of, or constitutes a
default under any applicable law, judgment, order, ordinance, decree, rule,
regulation or ruling of any court or governmental instrumentality; (iii) except
for the necessity of obtaining applicable Consents, results in a breach of,
conflicts with, constitutes a default under or permits any party to terminate,
modify, accelerate the performance of or cancel the terms of, any agreement,
lease, license, instrument of indebtedness or other obligations to which Seller
is a party or by which Seller may be bound; or (iv) except for the necessity of
obtaining applicable Consents, creates any liability, mortgage, lien, pledge,
condition or encumbrance of any nature whatsoever upon any of the Assets.
3.4 Licenses. Schedule 3.4 hereto is a true and complete list of the
Licenses. The Licenses comprise all of the licenses, permits and other
authorizations necessary under the law to conduct the business and operations of
the Stations in the manner and to the full extent they are now being conducted,
and none of the Licenses is subject to any restriction or condition which would
limit the full operation of the Stations as presently operated. The Licenses are
in full force and effect, and the conduct of the business and operations of the
Stations is in accordance therewith. The Stations are operating in all material
respects in accordance with the Licenses and in compliance with the
Communications Act of 1934, as amended and the rules,
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regulations and policies of the FCC and all other applicable
laws.
3.5 Real Property. Schedule 3.5 hereto contains descriptions of the
real property and leasehold interests (including all improvements thereon) which
comprise all real property and leasehold interests used in connection with or
necessary to conduct the business and operations of the Stations as now
conducted. Seller has good, marketable and insurable fee simple absolute
interest in and to the real property owned by it. Attached to Schedule 3.5 are
all policies of title insurance currently existing in favor of Seller with
respect to the real property. The title insurance policies attached to Schedule
3.5 and any additional items disclosed in Schedule 3.5 correctly reflect (i) the
status of title of the real property as of the effective dates of such title
policies and (ii) the current status of title to the real property, except with
regard to any liens relating to taxes not yet due and payable. The imperfections
of title and encumbrances (other than those securing any obligations or
indebtedness) or restrictions, if any, shown on Schedule 3.5 or attached
thereto, do not, individually or in the aggregate, interfere in any material
respect with Seller's use of the real property or the operation of the Stations
or materially affect the value of the real property. There is no pending
condemnation or similar proceeding affecting the real property or any portion
thereof, and no such action is presently contemplated or threatened. Except as
set
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forth on Schedule 3.5, there are no parties in possession of any portion of the
real property other than Seller, whether as lessees, tenants at will,
trespassers or otherwise. To the best knowledge of Seller, no zoning, building
or other federal, state or municipal law, ordinance, regulation or restriction
is violated by the continued maintenance, operation or use of the real property
or any tract or portion thereof or interest therein in its present manner. The
current use of the real property and all parts thereof as aforesaid does not
violate any restrictive covenants of record affecting the real property. To the
best knowledge of Seller all necessary licenses, permits and authorizations
required by any governmental authority with respect to the real property have
been obtained, have been validly issued and are in full force and effect. Except
as otherwise disclosed on Schedule 3.5, Seller is not, and to Seller's
knowledge, no other party is in material default under any lease or other
instrument of conveyance. Subject to obtaining applicable Consents, Seller has
the full legal power and authority to assign its rights under the leases listed
in Schedule 3.5 hereto to Buyer. All leasehold interests (including the
improvements thereon) are available for immediate use in the conduct of the
business and operations of the Stations.
3.6 Title to and Condition of Personal Property. Schedule 3.6 hereto
contains a description of the items of Personal Prop erty which comprise all
personal property used in connection with the business and operations of the
Stations or which permits the
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operation of the Stations as now conducted (having a replacement value of not
less than approximately $100 for each item). Except as set forth on Schedule 3.6
hereto, Seller has title to all Personal Property and none of the Personal
Property is subject to any security interest, mortgage, pledge, lease, license
conditional sales agreement or other lien or encumbrance, except for (i) liens
for current taxes and other governmental charges not yet due and payable, (ii)
encumbrances which in the aggregate do not affect the use or value of the
Personal Property and (iii) other liens which shall be discharged or removed by
Seller prior to or at Closing. Seller is not, and to Seller's knowledge no other
party is, in material default under any of the leases, licenses and other
agreements relating to the Personal Property. Except as otherwise disclosed in
Schedule 3.6 hereto, the Personal Property is in good operating condition and
repair (ordinary wear and tear excepted), is available for immediate use in the
business and operation of the Stations as currently conducted and will permit
the Stations to operate in all material respects in accordance with the terms of
their FCC Licenses, the rules and regulations of the FCC, and with all other
applicable federal, state and local statutes, ordinances, rules and regulations.
3.7 Contracts. Schedule 3.7 hereto contain descriptions of all the
Contracts in effect on the date hereof relating to the Stations other than
Contracts for (i) the sale of advertising time on the Stations or on the Simmons
Stations for cash
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consideration which can be cancelled on not more than thirty (30) days notice
and (ii) all other non-advertising Contracts where the obligations of Seller are
less than $1,000 for each such contract and with aggregate obligations for all
such contracts relating to the Stations or the Simmons Stations of less than
$10,000. Although not required to be listed on Schedule 3.7, all contracts for
the sale of advertising time on Seller's Stations or the Simmons Stations
consistent with clause (i) of this Section shall be assumed by Buyer at Closing.
In all material respects, all of the Assumed Contracts are in full force and
effect, and are valid, binding and enforceable in accordance with their terms.
Except as otherwise disclosed on Schedule 3.7, there is not under any Assumed
Contract any material default or breach by Seller, or to Seller's knowledge, any
other party. Schedule 3.7 separately identifies each program license, agreement,
and advertising agreement required to be set forth thereon, and correctly sets
forth in all material respects the balance of Seller's rights and obligations
under each agreement listed thereon as of December 31, 1995 or, if later, the
date specified thereon.
3.8 Consents. Schedule 3.8 sets forth those Assumed Contracts which
require Consent for assignment to Buyer and all Consents required. Except for
the FCC Consent and the agreements contemplated by Section 2.4 hereof and the
other Consents described in Schedule 3.8 hereto, no consent, approval, permit or
authorization of, or declaration to or filing with any
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governmental or regulatory authority, or any other third party is required (i)
to consummate this Agreement and the transactions contemplated hereby, (ii) to
permit Seller to assign or transfer the Assets to Buyer or (iii) to enable Buyer
to conduct the business or operations of the Stations in the same manner as such
business and operations are presently conducted.
3.9 Trademarks, Trade Names and Copyrights. Schedule 3.9 hereto is a
true and complete list of all copyrights, trademarks, trade names, patents and
applications, if any, used in connection with the business and operations of the
Stations. The Intellectual Property includes all copyrights, trademarks, trade
names, patents and applications, if any, and all licenses, patents, permits,
jingles, privileges, logos, computer software, data and documentation,
confidential business information and other similar intangible property rights
and interests used by, issued to or owned by Seller, or under which Seller is
licensed or franchised relating to the conduct of the business and operations of
the Stations. Schedule 3.9 describes all Intellectual Property, if any, which
are licensed to third parties. Neither Seller nor any of its affiliates or their
respective officers, directors or employees has received any notices of
infringement, misappropriation, or conflict from any third party with respect to
the Intellectual Property; and to Seller's knowledge, Seller has not infringed,
misappropriated or otherwise conflicted with any proprietary rights of any third
parties.
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<PAGE> 30
3.10 Financial Statements. Schedule 3.10 hereto contains true and
complete copies of (i) the financial statements of Seller pertaining to the
Stations, which financial statements contain balance sheets and profit and loss
statements as at and for Seller's fiscal years ended December 31, 1993, (the
"1993 Financials"), December 31, 1994 (the "1994 Financials") and December 31,
1995 (the "1995 Financials") and (ii) an unaudited balance sheet and profit and
loss statement of the Station as at and for the two month(s) ended February 29,
1996 (the "Stub Financials") (the 1993 Financials, the 1994 Financials, the 1995
Financials and the Stub Financials are collectively referred to herein as the
"Financial Statements"). The 1993 Financials, 1994 Financials and 1995
Financials are unaudited. The Financial Statements were prepared in accordance
with generally accepted accounting principles, consistently applied, subject,
with respect to the 1995 Financials and the Stub Financials, to year-end
adjustments which will not have a material adverse effect on such financial
statements. The Financial Statements are correct in all material respects and
present fairly the operating income and financial condition of the Stations as
at their respective dates and the results of operations for the periods then
ended, subject, with respect to the Stub Financials, to year-end adjustments
which will not have a material adverse effect on such financial statements.
Except as otherwise indicated in the Financial Statements, the accounting
practices used by the Seller in preparing the Seller's Financial Statements
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were the same for each of the Financial Statements and were consistently
followed throughout the periods reflected in each of the Financial Statements.
3.11 Insurance. Schedule 3.11 hereto comprises a true and complete list
of all insurance policies of Seller covering any of the Assets, employees or
business and operations of the Stations. All policies of insurance listed in
Schedule 3.11 hereto are in full force and effect. All premiums have been paid
in full and Seller is not in default with respect to its obligations thereunder.
3.12 Reports. All returns, reports and statements which the Stations
are required to file with the FCC or with any other governmental agency have
been filed, and all reporting requirements of the FCC and other governmental
authorities having jurisdiction thereof have been complied with in all material
respects.
3.13 Employee Benefit Plans. A complete list of all employees of each
Station, date of hire, job description and payroll information, as at December
31, 1995 has been delivered to Buyer. Since December 31, 1995, there has been no
increase in compensation or bonuses payable to employees except as otherwise
disclosed to Buyer in writing prior to the date hereof. Schedule 3.13 contains a
true and complete list as of the date of this Agreement of all employment
agreements, employee benefit plans or arrangements currently applicable to the
employees of Seller employed at the Stations and of all fixed or contingent
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liabilities or obligations of Seller with respect to any person now employed at
the Stations, including pension or thrift plans, individual or supplemental
pension or accrued compensation arrangements, contributions to hospitalization
or other health or life insurance programs, incentive plans, bonus arrangements
and vacation, sick leave, disability and termination arrangements or policies.
Seller has furnished Buyer with a summary of all employment practices, a summary
of all currently applicable plan documents, trust documents, insurance
contracts, contracts with employees and plan description of the written plans
and arrangements listed in Schedule 3.13 hereto relating to the Stations, and
with descriptions, in writing, of the unwritten plans and arrangements listed in
Schedule 3.13 hereto relating to the Stations. All employee benefits and welfare
plans or arrangements listed in Schedule 3.13 hereto were established and have
been executed, managed and administered without material exception in accordance
with all applicable requirements of the Code and ERISA, as amended, and of other
applicable laws. There exists no action, suit or claim (other than routine
claims for benefits) with respect to any of such plans or arrangements pending
or threatened against any of such plans or arrangements, nor to the best
knowledge of Seller any facts which could give rise to any such action, suit or
claim.
3.14 Labor Relations. As of the date hereof, Seller is not a party to
any collective bargaining agreement with respect to the Stations and Seller does
not have any written or oral
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contracts of employment with any employee of the Stations, other than those
listed in Schedule 3.13 hereto. As of the date hereof, Seller, in the operation
of the Stations, has complied in all material respects with all applicable laws,
rules and regulations relating to the employment of labor, including those
related to wages, hours, collective bargaining; occupational safety; sex, age,
national origin, race and religious discrimination; and the payment of social
security and other payroll related taxes, and as of the date hereof Seller has
not received any notice alleging that it has failed to comply with any such
laws, rules or regulations. No controversies, disputes or proceedings are
pending or, to the best knowledge of Seller threatened, between Seller and its
employees (singly or collectively) of the Stations except as disclosed in
Schedule 3.14 hereto.
3.15 Taxes. Seller has filed or caused to be filed all federal income
tax returns and all other federal, state, county, local or city tax returns
affecting the Stations or the Assets which are required to be filed by Seller,
and all taxes assessments and other governmental charges which are due and
payable have been timely paid. There are no tax liens upon the Stations or the
Assets. All tax reports filed by Seller fairly reflect the taxes of Seller for
the periods covered thereby and the Seller has received no notice of any tax
deficiency or delinquency. No Internal Revenue Service audit of Seller is
pending or, to the knowledge of Seller, threatened, and the
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results of any completed audits are properly reflected in the Financial
Statements. All monies required to be withheld by Seller from employees or
collected from customers for income taxes, social security and unemployment
insurance taxes and sales, excise and use taxes, and the portion of any such
taxes to be paid by Seller to governmental agencies or set aside in accounts for
such purposes have been so paid or set aside, or such monies have been approved,
reserved against and entered upon the books and Financial Statements.
3.16 Claims; Legal Actions. As of the date hereof, except as set forth
in Schedule 3.16 hereto, there is no legal action, counterclaim, suit,
arbitration, governmental investigation or other legal, administrative or tax
proceeding, nor any order, decree or judgment, in progress or pending, or to the
best of Seller's knowledge, threatened against or relating to the Stations, the
Assets, or the business and operations of the Stations.
3.17 Laws. Seller has complied in all material respects with (i) the
Licenses and (ii) all applicable federal, state and local laws, rules,
regulations, ordinances, judgments, orders and decrees. Neither the ownership or
use of the properties of Seller relating to the Stations nor the conduct of the
business and operations of the Stations conflict in any material way with the
rights of any other person, firm or corporation.
3.18 Undisclosed Liabilities. With respect to the Stations or the
Assets, except as set forth in Schedule 3.18 hereto or
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otherwise disclosed in this Agreement, (a) Seller has no material liability,
secured or unsecured (whether absolute, accrued, contingent or otherwise and
whether due or to become due) of a nature required by generally accepted
accounting principles to be reflected in a balance sheet or disclosed in the
notes thereto except (i) as such liabilities and obligations are reflected in
the Stations' balance sheets as at December 31, 1995, or (ii) for liabilities
and obligations incurred after December 31, 1995, in the ordinary course of
business, none of which individually or in the aggregate are materially adverse
to the Assets or operations of the Stations and (b) to the best knowledge of
Seller, Seller has no contingent liabilities or other liabilities outside the
ordinary course of business and of a nature not required to be reflected in the
Financial Statements which, individually or in the aggregate, which are
materially adverse to the Assets or operations of the Stations.
3.19 Books and Records. The books of account of the Stations and other
records of the Seller relating to the Stations are complete and correct in all
material respects. At the Closing, all such books and records shall be located
at the business office of the Stations, except for the excluded books and
records.
3.20 Assets; Accounts Receivable.
(a) The Assets include all assets, except for Excluded Assets,
used in connection with the business of the Stations as currently conducted and
all assets which permit the operation of
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the Stations as currently conducted (having a replacement value in excess of
$100). The Seller does not own, lease or license any assets used in the current
operation of the Stations other than the Assets.
(b) All Accounts Receivable represent assets (a) which arose
from bona fide sales of time or other sales in the ordinary course of business
of the Seller and (b) represent credit extended in a manner consistent with past
trade and credit practices of Seller.
3.21 No Adverse Developments. Since December 31, 1995, there has not
occurred:
(a) any sale, lease, transfer, assignment, abandonment or
other disposition of any of the assets of the Stations; or
(b) except as otherwise expressly disclosed on any of the
Schedules hereto or otherwise expressly disclosed to Buyer in writing,
any action or failure to act, which if it occurs after the date of this
Agreement but prior to Closing, would constitute a breach of any
covenant set forth in Sections 5.1(a) or Sections 5.1(b) of this
Agreement.
3.22 Environment, Health and Safety.
(a) Except as expressly set forth on Schedule 3.22, Seller has
obtained all permits and licenses required under applicable law with respect to
the Stations, and has complied in all material respects with and is in
compliance with all such permits and licenses and laws and orders relating to,
public health and safety, worker health and safety and pollution or
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protection of the environment (collectively, "Health, Safety and
Environmental Requirements").
(b) Except as expressly set forth on Schedule 3.22, no facts,
events or conditions relating to the present facilities or operations of the
Stations or, to Seller's knowledge, their predecessors interfere with such
operations or prevent continued compliance with, or give rise to any common law
or statutory liability or remediation under, any Health, Safety and
Environmental Requirement.
3.23 No Adverse Condition. Since December 31, 1995 to the date of this
Agreement, there has not been any material adverse change in the Assets,
operations or financial conditions of the Stations.
3.24 Full Disclosure. No representation or warranty made by Seller
herein nor any certificate, document or other written instrument furnished or to
be furnished pursuant hereto contains or will contain any untrue statement of a
material fact nor shall any such certificate, document or written instrument
omit any material fact necessary in order to make any statement herein or
therein not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 Organization, Standing and Authority. Buyer is a corporation duly
organized, validly existing, and in good
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standing under the laws of the State of Delaware, and is duly qualified to
conduct business and is in good standing in the State of Kentucky.
4.2 Authorization and Binding Obligation. Buyer has the requisite power
and authority to execute, deliver, and perform this Agreement and all other
agreements to be executed and delivered by it hereunder or in connection
herewith and all necessary corporate action on the part of Buyer has been duly
and validly taken to authorize the execution, delivery and performance of this
Agreement and such other agreements and instruments to be executed and delivered
by Buyer. This Agreement has been duly executed by Buyer and constitutes the
legal, valid, and binding obligation of Buyer, enforceable against Buyer in
accordance with its terms.
4.3 Absence of Conflicting Agreements or Consents. Subject to obtaining
the Consents, no consent, authorization, approval, order, license, certificate
or permit of or from, or declaration or filing with any federal, state, local or
other governmental authority or any court or other tribunal, and no consent or
waiver of any party to any material contract to which Buyer is a party is
required for the execution, delivery and performance of this Agreement or any of
the agreements or instruments contemplated hereby. Neither the execution,
delivery and performance of this Agreement and such other agreements and
instruments (with or without the giving of notice, the lapse of time, or both)
nor the consummation of the transactions
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<PAGE> 39
contemplated hereby (i) conflicts with the Certificate of Incorporation or
By-Laws of Buyer; (ii) except for the necessity of obtaining applicable Consents
and as set forth on Schedule 4.3, conflicts with, results in a breach of, or
constitutes a default under any applicable law, judgment, order, injunction,
decree, rule, regulation or ruling of any court or governmental instrumentality
or (iii) except for the necessity of obtaining applicable Consents, conflicts
with, results in a breach of, constitutes a default under, permits any party to
terminate, modify, accelerate the performance of or cancel the terms of, any
agreement, lease, instrument of indebtedness, license or other obligations to
which Buyer is a party, or by which Buyer may be bound, such that Buyer could
not acquire or operate the Assets.
4.4 Qualification. Except as set forth on Schedule 4.4, Buyer is
legally and technically qualified to become the licensee of the Stations in
accordance with the provisions of the Communications Act of 1934, as amended
without condition or waiver. Buyer is financially qualified to purchase the
Stations and Buyer's obligations hereunder are not contingent on Buyer obtaining
financing.
4.5 Full Disclosure. No representation and warranty made by Buyer
herein nor any certificate, document or other written instrument furnished or to
be furnished pursuant hereto contains or will contain any untrue statement of a
material fact nor shall such representations and warranties omit any statement
necessary
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in order to make any material statement contained herein or
therein not misleading.
ARTICLE V
COVENANTS OF SELLER
5.1 Pre-Closing Covenants. Except as contemplated by this Agreement,
commencing on the date hereof until the Closing Date, Seller shall cause the
Stations to be operated in the ordinary course of business in accordance with
past practices, provided, however:
(a) Negative Covenants. Seller shall not do any of the
following:
(1) Compensation. (a) Except as otherwise disclosed
to Buyer in writing prior to the date of this Agreement and, thereafter, as
otherwise approved by Buyer in writing, increase the compensation of any person
employed in connection with the conduct of the business or operations of the
Stations, (b) pay or grant bonuses or other benefits payable or to be payable to
any person employed in connection with the conduct of the business or operations
of the Stations except in accordance with normal past practices, or (c) enter
into any employment, severance or similar agreement with any employee of the
Stations which does not by its terms terminate, or cannot be terminated or
satisfied by Seller without premium or penalty, prior to or at the Closing;
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(2) Contracts. Without the prior written consent of
Buyer: (a) modify, amend or terminate any of the Assumed Contracts other than
by expiration of the term of the Assumed Contract or (b) enter into other
non-advertising Contracts (other than Contracts relating to Trade Deals which
are treated in Section 5.1(a)(8) below) obligating Seller to provide payments or
benefits in excess of $1,000 each over the life of the Contract or $10,000 in
the aggregate. Schedule 3.7 will be supplemented prior to the Closing Date to
include any Contracts permitted to be entered into, amended or approved pursuant
to this paragraph 5.1(a)(2);
(3) Disposition of Assets. Sell, assign, lease, or
otherwise transfer or dispose of, or agree to sell, assign, lease or otherwise
transfer or dispose of, any of the Assets, except in connection with the
acquisition of replacement property of equivalent kind and value or obsolete
equipment;
(4) Encumbrances. Create or assume any mortgage,
lien, pledge, condition, charge or encumbrance of any nature whatsoever, or
permit to exist any liability, mortgage, lien, pledge, condition, charge or
encumbrance of any nature whatsoever, upon the Assets, except for those in
existence on the date of this Agreement, disclosed in Schedules 3.5 and 3.6
hereto, and (ii) those which individually or in the aggregate do not exceed
$10,000, all of which shall be released or removed prior to Closing;
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(5) FCC Licenses. Do any act or fail to do any act
which would result in the expiration, revocation, suspension or modification of
any of the FCC Licenses;
(6) Labor Relations. Except as required by law, enter
into any collective bargaining agreement or, through negotiations or otherwise,
make any commitment or incur any liability to any labor organization with
respect to the employees of the Stations;
(7) No Inconsistent Action. Take any action which is
inconsistent with its obligations hereunder or which could hinder or delay the
consummation of the transaction contemplated by this Agreement; or
(8) Trade Deals. Enter into any new Trade Deals,
unless otherwise agreed to in writing by Buyer, after the date set forth on
Schedule 2.5(b).
(b) Affirmative Covenants. Seller shall do the following:
(1) Access to Information. Upon prior notice to
Seller allow Buyer and its authorized representatives reasonable access at
Buyer's expense during normal business hours to the Assets, the personnel of the
Stations and to all other properties, equipment, books, records, contracts and
documents relating to the Stations for the purpose of audit, inspection and
copying, and furnish or cause to be furnished to Buyer or its authorized
representatives all information with respect to the affairs and business of the
Stations as Buyer may reasonably
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request and make its independent accountants and key employees reasonably
available; provided, however, the rights of Buyer shall not be exercised in such
a manner as to interfere unreasonably with the operation or the business of the
Stations;
(2) Maintenance of Assets. Maintain all of the Assets
or replacements thereof and improvements thereon in good operating condition and
repair, with inventories of spare parts and expendable supplies being maintained
at levels consistent with past practices and at normal and adequate amounts
needed to operate the Stations in the usual and customary manner;
(3) Insurance. Maintain all existing insurance
policies, or comparable coverage, for the Stations and the Assets, as listed in
Schedule 3.11 hereto;
(4) Consents. Use its best efforts to obtain the
Consents;
(5) Preservation of Business. Subject to the terms of
the Local Marketing Agreement, use its best efforts to maintain and preserve the
business and operations of the Stations and maintain and preserve consistent
with the ordinary course of business, the goodwill of and present relationships
with suppliers, advertisers, customers and others having business relations with
Stations;
(6) Books and Records. Maintain the books and records
of Seller relating to the Stations in accordance with past practices;
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(7) Notification. Promptly notify Buyer in writing
of any unusual or material developments or changes adversely relating to or
affecting the business and operation of the Stations or the Assets; and by no
later than the first day of the month immediately preceding the Closing, provide
written disclosures reflecting such additions or deletions to the information
contained in the attached Schedules as may be necessary to make such Schedules
accurate and complete as of the Closing Date; and
(8) Compliance with Laws. Use its best efforts to
comply in all respects with all rules and regulations of the FCC, and all other
laws, rules and regulations to which the Stations or the Assets are subject.
5.2 Post-Closing Covenants. After the Closing, Seller shall take such
actions, and shall execute and deliver to Buyer such further deeds, bills of
sale or other transfer documents as, in the reasonable opinion of counsel for
Buyer, may be necessary to ensure, complete and evidence the full and effective
transfer of the Assets to Buyer pursuant to this Agreement.
ARTICLE VI
COVENANTS OF BUYER
6.1 Inconsistent Action. Buyer will not intentionally take or omit to
take any action that will cause the FCC to deny, materially delay, or fail to
consent to the application(s) for assignment or cause the consents to assignment
from becoming a Final Order.
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6.2 Qualification. Prior to the Closing Date or the effective date of
the Local Marketing Agreement, whichever occurs first, Buyer shall take all
actions necessary to be qualified to do business in West Virginia and Ohio.
6.3 Simmons Local Marketing Agreement. Buyer will enter into the Local
Marketing Agreement with SBC for the Simmons Stations effective on the same date
as the Local Marketing Agreement with Seller's Stations.
ARTICLE VII
SPECIAL COVENANTS AND AGREEMENTS
7.1 FCC Consent.
(a) Within five (5) business days after the execution of this
Agreement, Buyer and Seller will file with the FCC appropriate applications for
the FCC Consent. The parties shall prosecute the applications with all
reasonable diligence and otherwise use their best efforts to obtain the grant of
such applications as expeditiously as practicable. Each party will use its
reasonable efforts to obtain all government consents and authorizations and
promptly make filings with and give notices to government agencies reasonably
required to effect the transactions contemplated hereby including, but not
limited to, seeking waivers of any rules and regulations of the FCC that may be
violated.
(b) The transfer of the Assets hereunder is expressly
conditioned upon (i) the grant of the FCC Consent without any
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materially adverse conditions on Buyer attributable to Seller or arising out of
Seller's operation of the Stations; (ii) com pliance by the parties hereto with
the conditions (if any) imposed in the FCC Consents and (iii) the FCC Consent,
through the passage of time or otherwise, becoming a Final Order.
7.2 Control of the Station. Subject to the terms of the Local Marketing
Agreement, Buyer shall not, directly or indirectly, control, supervise, direct
or attempt to control, supervise or direct, the programming of the Station until
the completion of the Closing hereunder. Subject to the terms of the Local
Marketing Agreement, the control and supervision of all of the Stations'
operations shall be the sole responsibility of Seller until the Closing.
7.3 Accounts Receivable. Subject to the terms of the Local Marketing
Agreement, all Accounts Receivable of Seller arising out of the operations of
the Stations, including the sale of time on the Simmons Stations, and
outstanding on the earlier of the Closing Date or the effective date of the
Local Marketing Agreement, shall remain as provided herein, the property of the
Seller; provided, Seller hereby authorizes Buyer, for purposes of collection
only, to collect such receivables for a period of 180 days after the earlier of
the effective date of the Local Marketing Agreement or Closing. Seller shall
deliver to Buyer a complete and detailed statement of each account and Buyer
shall use its reasonable efforts, consistent with its customary collection
practices for its own accounts receivable, without
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compensation, to collect each such account receivable during said 180 days.
Buyer shall provide to Seller a detailed monthly aging of such Accounts
Receivable showing amounts collected to the date of such aging and amounts
outstanding as of the date of such aging and within twenty (20) days of the end
of each month deliver to Seller the aging report and a check for the amounts
collected during the month. Buyer shall not be required to refer any account to
a collection agency or an attorney for collection, nor shall it compromise,
settle, or adjust any account without receiving the approval of Seller. Seller
shall take no action with respect to the Accounts Receivable, until the
expiration of the said 180 day period. Following the expiration of the 180 day
period, Seller shall be free to take such action as Seller may in its sole
discretion determine to collect any Accounts Receivable then outstanding. All
payments received by Buyer from a customer who has an Accounts Receivable which
is being collected by Buyer for Seller and who also has other accounts with
Buyer shall be applied by Buyer by first paying the Accounts Receivable arising
prior to the earlier of the effective date of the Local Marketing Agreement or
Closing Date and then paying the Account Receivable arising on or after the
earlier of the effective date of the Local Marketing Agreement or the Closing
Date; provided, however, that in the event any account debtor disputes in
writing any Account Receivable (or portion thereof) of Seller, Buyer may apply
payments received from such account debtor to the undisputed portion of such
account debtor's Accounts Receivable,
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including Buyer's accounts receivable of such debtor, if Buyer notifies Seller
of such disputed Account Receivable.
7.4 Taxes, Fees and Expenses. All sales, use, transfer, purchase,
recordation and documentary taxes and fees, if any, arising out of the transfer
of the Assets pursuant to this Agreement shall be paid in accordance with the
normal and customary practices for similar transactions in Huntington, West
Virginia. All filing fees required by the FCC shall be shared equally by Seller
and Buyer. Except as otherwise provided in this Agreement, each party shall pay
its own expenses incurred in connection with the authorization, preparation,
execution, and performance of this Agreement, including all fees and expenses of
counsel, accountants, agents and other representatives.
7.5 Brokers. Buyer and Seller each represent and warrant to the other
that neither it nor any of its affiliates, any person or entity acting on its
behalf or its affiliates has incurred any liability for any finder's, or
broker's, fees or commissions in connection with the transaction contemplated by
this Agreement except (i) those which have been disclosed in writing to the
other party and are the sole obligation of such party or its affiliates, and
(ii) the payment of the brokerage fee shall be one-half of one percent (.5%) of
the Purchase Price paid at Closing by Buyer for the Stations plus $2,675 to each
of Media Venture Partners and Blackburn & Co at the last Closing hereunder. All
payments to Media Venture Partners and Blackburn
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& Co. as a result of this transaction shall be paid one-half by
Buyer and Seller.
7.6 Bulk Sales Law. Any loss, liability, obligation or cost suffered by
Seller or Buyer as the result of the failure of Seller to comply with the
provisions of any bulk sales law applicable to the transfer of the Assets and
related to protecting trade creditors of Seller as contemplated by this
Agreement shall be borne by Seller.
7.7 Confidentiality. Except as necessary for the consum mation of the
transaction contemplated hereby, including Buyer obtaining financing related
thereto, each party hereto shall keep confidential any information which is
obtained from the other party in connection with the transactions contemplated
hereby; except to the extent that such materials or information are or become
readily available to the industry, have been obtained from independent sources,
were known to Buyer on a non-confidential basis prior to disclosure to Buyer
from Seller or are required to be disclosed in public filings or by law. In the
event this Agreement is terminated and the purchase and sale contemplated hereby
abandoned, each party will return to the other party all documents, work papers
and other written material obtained by it in connection with the transaction
contemplated hereby and shall not use any confidential information obtained from
the other party to the detriment of such party. On and after January 5, 1996,
Seller, Buyer and their respective affiliates shall not make any public
announcement or press release concerning the
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transactions contemplated hereby without the consent of both parties hereto,
which consent shall not be unreasonably withheld. Section 7.7 shall survive the
termination or cancellation of this Agreement for a period of one (1) year from
the date of termination or cancellation.
7.8 Cooperation. Buyer and Seller shall cooperate fully with each other
and their respective counsel and accountants in connection with any actions
required to be taken as a part of their respective obligations under this
Agreement including but not limited to the obtaining of Consents. After the
Closing, each of Seller and Buyer shall take such actions, and shall execute and
deliver to the other party such further documents as, in the reasonable opinion
of counsel for such other party, may be necessary to ensure, complete and
evidence the full and effective transfer of the Assets to Buyer or to otherwise
consummate the transactions pursuant to this Agreement.
7.9 Risk of Loss.
(a) The risk of any loss, damage or impairment, confiscation or
condemnation of any of the Assets from any cause whatsoever shall be borne by
Seller at all times prior to the Closing and by Buyer at all times after the
Closing. In the event of any such loss, damage or impairment, confiscation or
condemnation, whether or not covered by insurance, Seller shall promptly notify
Buyer of such loss, damage, impairment or condemnation.
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(b) If Seller, at its expense, repairs, replaces or restores
such Assets to their prior condition before the Closing, Seller shall be
entitled to all insurance proceeds and condemnation awards, if any, by reason
of such award or loss.
(c) If Seller does not or cannot restore or replace the
damaged Assets or informs the Buyer that it does not intend to restore or
replace such Assets, Buyer may at its option:
(i) terminate this Agreement by notice forthwith
without any further obligation hereunder; provided, however that Buyer
shall not have this option if Seller in its notice of damages to Assets
has agreed to assign and does validly assign all of Seller's rights
under applicable insurance policies and condemnation awards and
reimburse Buyer for all costs and expenses for repair or replacement of
the damaged Assets in excess of amounts received under insurance
policies and condemnation awards; or
(ii) proceed to the Closing of this Agreement without
Seller completing the restoration and replacement of such damaged
Assets, provided that Seller shall assign all rights under applicable
insurance policies and condemnation awards, if any, to Buyer; and in
such event, Seller shall have no further liability with respect to the
condition of the Assets directly attributable to the damage or
destruction.
(d) Buyer will notify Seller of a decision under the options
described in Section 7.9(c) above within ten (10)
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business days after Seller's notice to Buyer of the damage or destruction of
Assets and the estimate of the costs of repair.
(e) Notwithstanding any of the foregoing, Buyer may terminate
this Agreement forthwith without any further obligation hereunder by written
notice to Seller if any event occurs which prevents signal transmissions by a
Station as it is currently operating for a period which is expected to be in
excess of ninety (90) days.
7.10 Local Marketing Account. Concurrently with the execution of this
Agreement, Seller will enter into the Local Marketing Agreement with Buyer
substantially in the form of Exhibit C.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER
8.1 Conditions to Obligations of Buyer. All obligations of Buyer at the
Closing hereunder are subject to the fulfillment prior to and at the Closing
Date of each of the following conditions (any of which may be waived by Buyer in
its sole discretion):
(a) Representations and Warranties. All representations and
warranties of Seller in this Agreement shall be true and complete in all
material respects at and as of the Closing Date as though such representations
and warranties were made at and as of such time.
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(b) Covenants and Conditions. Seller shall have in all
material respects performed and complied with all covenants, agreements and
conditions required by this Agreement to be performed or complied with by it
prior to or on the Closing Date.
(c) Consents and FCC Licenses. The FCC Consent, the Consents
listed on Schedule 3.8 hereto, and any other Consents which are designated by
Buyer as of the date of this Agreement as material to the business and
operations of the Stations shall have been duly obtained and delivered to Buyer
except as hereinafter set forth. The FCC Consent shall have become a Final Order
unless waived by Buyer. The obligation of Buyer to close on the purchase of
Stations WBVB and WIRO shall require as a condition that the FCC Licenses for
those stations shall have been issued by the FCC for a full term commencing in
1996 without any material adverse conditions imposed on the licensee; provided,
however, that the Buyer shall not require as a condition of Closing for Stations
WKEE and WZZW that there be a license renewal commencing in 1996 for Stations
WBVB and WIRO.
(d) Licenses; FCC Compliance. Seller shall be the holder of
the Licenses, and there shall not have been any modification of any of such
Licenses which has a material adverse effect on the Stations or the conduct of
the business or operations of the Stations arising out of Seller's operation of
the Stations or because of the duopoly nature of the transaction. No proceeding
shall be pending or threatened, the effect of which would be to revoke, cancel,
fail to renew, suspend, modify or
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have a materially adverse affect on any of the Licenses. The Stations shall be
operating in compliance with all applicable FCC rules, regulations and policies
in all material respects.
(e) Deliveries. Seller shall have made or cause to be made or
stand willing and able to make or cause to be made all the deliveries to Buyer
set forth in Section 9.2 hereof.
(f) Good and Marketable Title to Assets. At Closing, the title
of Seller to the Assets will be in the form described in Sections 3.5 and 3.6,
free and clear of all liens, encumbrances, charges, claims, agreements or other
imperfections of title except as otherwise provided in Sections 3.5 and 3.6.
(g) No Adverse Proceedings. No action or proceeding shall have
been instituted by any governmental entity against, and no order, decree or
judgment of any court, agency, commission or governmental authority shall be
subsisting against, any party that would render it unlawful, as of Closing, to
effect the transactions contemplated by this Agreement in accordance with the
terms hereof or would adversely affect, as of Closing, the validity of the FCC
Licenses or would adversely affect the Assets or operation (other than
financial) of the Stations. Consistent with Section 8.1(c), the pendancy of
renewal applications for Stations WBVB and WIRO at the Closing on the purchase
of WKEE and WZZW shall not constitute a violation of this Section 8.1(g).
(h) Real Estate Title Commitment. Buyer, at its cost and
expense, shall have obtained a preliminary report on title to the Real Property
covering a date subsequent to the date of this
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Agreement, issued by the Title Company, which preliminary report shall contain a
commitment (the "Title Commitment") of the Title Company to issue an owner's
title insurance policy as Buyer may reasonably require (the "Title Policy")
insuring the fee simple absolute interest of Seller in the real property. The
Title Commitment shall be in such amount as Buyer may reasonably determine to be
the fair market value of the Real Property (including all improvements located
thereon) and shall be subject only to: (i) liens of current state and local
property taxes which are not delinquent or subject to penalty; (ii) unviolated
zoning regulations and restrictive covenants and easements of record which do
not detract from the value of the Real Property and do not materially and
adversely affect, impair or interfere with the use of any property affected
thereby as heretofore used by Seller or the Stations; and (iii) public utility
easements of record, in customary form, to serve the Real Property.
(i) Survey. Buyer, at its cost and expense, shall have
obtained a survey of the Real Property within forty-five (45) days of the date
of this Agreement which shall: (i) be prepared by a registered land surveyor;
(ii) be certified to the Title Company and to Buyer; and (iii) show with respect
to the Real Property: (A) the legal description of the real property (which
shall be the same as the Title Policy pertaining thereto); (B) all buildings,
structures and improvements thereon and all restrictions of record and other
restrictions that have been established by an applicable zoning or building code
or ordinance
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and all easements or rights of way across or serving the Real Property
(including any off-site easements affecting or appurtenant thereto); (C) no
encroachments upon the Real Property or adjoining parcels by buildings,
structures or improvements and no other survey defects; (D) access to such
parcel from a public street; and (E) the location of the Real Property in
relation to any known flood hazard area. Buyer shall promptly deliver a copy of
the Survey to Seller upon its receipt by Buyer.
(j) Environmental Reports. Within ten (10) days after the date
hereof Buyer shall have ordered, and shall have received within sixty (60) days
after the date hereof, at its expense, an environmental report or reports with
respect to the Stations and the Assets (including, without limitation, the Real
Property) from an environmental engineering firm selected by Buyer which shall
confirm, in a manner acceptable to Buyer, the nonexistence of any Hazardous
Materials on or about the Stations and the Assets (including, without limitation
the Real Property) and the accuracy of Seller's representations and warranties
contained in Section 3.22. The environmental reports shall be delivered to
Seller promptly after their receipt by Buyer.
(k) Non-Competition Agreement. The Seller and Michael R. Shott
shall have executed and delivered the Non-Competition Agreement.
(l) Simultaneous Closing. There shall be a simultaneous
Closing for radio stations WFXN (FM) and WHRD (AM) when there is a Closing for
WKEE and WZZW; and, for the Closing on
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WBVB and WIRO, there shall be a simultaneous Closing for radio station WMLV
(FM), in accordance with the terms and conditions of an agreement dated the same
date as this Agreement between Buyer and Simmons Broadcasting Company and there
shall be a simultaneous closing between Buyer and Michael R. Shott ("Shott") for
the assignment by Shott to Buyer of options to acquire the Simmons Stations then
being closed.
8.2 Conditions to Obligations of Seller. All obligations of Seller at
the Closing hereunder are subject to the fulfillment prior to and at the Closing
Date of each of the following conditions (any of which may be waived by Seller
in its sole discretion):
(a) Representations and Warranties. All representations and
warranties of Buyer contained in this Agreement shall be true and complete in
all material respects at and as of the Closing Date as though such
representations and warranties were made at and as of such time.
(b) Covenants and Conditions. Buyer shall have in all material
respects performed and complied with all covenants, agreements, and conditions
required by this Agreement to be per formed or complied with by it prior to or
on the Closing Date.
(c) Deliveries. Buyer shall have made or stand willing and
able to make all the deliveries set forth in Section 9.3 hereof.
(d) FCC Consent. The FCC Consent shall have been granted
without the imposition on Seller of any conditions that
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require additional compliance by Seller or that are materially
adverse to Seller.
(e) No Adverse Proceeding. No action or proceeding shall have
been instituted by any governmental entity against, and no order, decree or
judgment of any court, agency, commission or governmental authority shall be
subsisting against, any party that would render it unlawful, as of Closing, to
effect the transactions contemplated by this Agreement in accordance with the
terms hereof or would adversely affect, as of Closing, the validity of the FCC
Licenses or would adversely affect the Assets or operations of the Stations.
(f) Qualification. The Buyer shall be qualified to do business
in West Virginia and Ohio.
(g) Simultaneous Closing. There shall be a simultaneous
Closing for radio stations WFXN (FM) and WHRD (AM) when there is a Closing for
WKEE and WZZW; and, for the Closing on WBVB and WIRO, there shall be a
simultaneous Closing for radio station WMLV (FM), in accordance with the terms
and conditions of an agreement dated the same date as this Agreement between
Buyer and Simmons Broadcasting Company and there shall be a simultaneous closing
between Buyer and Shott for the assignment by Shott to Buyer of options to
acquire the Simmons Stations then being closed.
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ARTICLE IX
CLOSING AND CLOSING DELIVERIES
9.1 Closing. The Closing(s) shall take place at 10:00 a.m. on a date
selected by Buyer on five (5) days written notice to Seller which date shall be
within ten (10) days after the FCC Consent has become a Final Order. The
Closing(s) shall be held at the offices of Buyer's attorney or such other place
as shall be mutually agreed upon by Buyer and Seller. If any of the conditions
to Buyer's performance pursuant to Section 8.1(c) hereof shall not have been
fulfilled by the above contemplated Closing Date for a Closing, then the Buyer
and Seller shall cooperate with each other to cause the FCC to extend the time
for Closing(s) under the FCC Consents for no less than thirty (30) days, or such
longer period as mutually agreed to by Buyer and Seller.
9.2 Deliveries by Seller. Prior to or on the Closing Date, Seller shall
deliver or cause to be delivered to Buyer the following, in form and substance
reasonably satisfactory to Buyer and its counsel:
(a) Transfer Documents. Duly executed bills of sale,
assignments and other transfer documents in form and substance reasonably
satisfactory to Buyer's counsel;
(b) Consents; Acknowledgments. The original of each Consent;
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(c) Estoppel Certificates. An estoppel certificate, if
applicable, from the lessor(s) under the lease(s) covering the tower,
transmitter and studio for the Stations;
(d) Secretary's Certificate. A certificate, dated as of the
Closing Date, executed by Seller's Secretary certifying that the resolutions, as
attached to such certificate, were duly adopted by Seller's Board of Directors
and shareholders, authorizing and approving the execution of this Agreement and
the consummation of the transactions contemplated hereby and that such
resolutions remain in full force and effect;
(e) Licenses, Contracts, Business Records, Etc. To the extent
they are in the possession of Seller, copies of all Licenses, Assumed Contracts,
blueprints, schematics, working drawings, plans, projections, statistics,
engineering records, and all files and records used by Seller in connection with
the Stations' business and operations, which copies shall be available at the
Closing or at the Stations' principal business office;
(f) Seller's Certificate. A Certificate, dated as of the
Closing Date, executed by the President or a Vice-President of Seller on behalf
of Seller, in the form attached hereto as Exhibit E (the "Closing Certificate");
(g) Opinions of Counsel. Opinion of Seller's counsel and
Seller's FCC counsel, dated as of the Closing Date, substantially in the forms
attached hereto as Exhibit F and Exhibit G, respectively; and
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(h) Non-Competition Agreement. Executed counterparts of the
Non-Competition Agreement.
9.3 Deliveries by Buyer. Prior to or on the Closing Date, Buyer shall
deliver to Seller the following, in form and substance reasonably satisfactory
to Seller and its counsel:
(a) Purchase Price. The Purchase Price for the Assets and as
provided in Section 2.3 hereof;
(b) Assumption Agreements. Appropriate assumption agreements
pursuant to which Buyer shall assume and undertake to perform Seller's
obligations under the Assumed Contracts arising on or after the Closing Date;
(c) Buyer's Certificate. A Certificate, dated as of the
Closing Date, executed by the Chairman, President or a Vice President of Buyer,
in the form of Exhibit H ("Buyer's Closing Certificate");
(d) Buyer's Authorization. A certificate, dated as of the
Closing Date, executed by Buyer's Secretary certifying that the resolutions, as
attached to such certificate, were duly adopted by Buyer's Board of Directors,
authorizing and approving the execution of this Agreement and the consummation
of the transactions contemplated hereby and that such resolutions remain in full
force and effect; and
(e) Opinion of Counsel. An opinion of Buyer's counsel dated as
of the Closing Date substantially in the form attached hereto as Exhibit I.
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ARTICLE X
RIGHTS OF BUYER AND SELLER
UPON TERMINATION OR BREACH
10.1 Termination. This Agreement may be terminated by either Seller or
Buyer, if the terminating party is not then in breach of any material obligation
under this Agreement (provided that Sections 7.4 and 7.7 will continue in full
force and effect), on written notice to the other at any time prior to Closing
as follows:
(a) By Buyer, in accordance with the provisions of Section
7.9;
(b) By Buyer or Seller, as the case may be, if the other shall
be in material breach of any of the provisions applicable to it hereunder;
(c) By mutual agreement of Buyer and Seller, at any time, set
forth in a writing executed by both parties; or
(d) By Buyer or Seller, if any of the conditions to their
respective performance obligations under Sections 8.1 and 8.2 is not satisfied
on or before March 4, 1997, unless the failure to obtain the FCC Consent(s) or
otherwise comply with Sections 8.1 and 8.2 is because of the party's default.
Except as otherwise provided in this Section 10, if this Agreement is
terminated, each party will pay all of its costs and expenses and neither will
have any further liability or obligation of any nature to the other.
10.2 Specific Performance. The parties recognize that in the event
Seller should refuse to perform under the provisions of
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this Agreement, monetary damages alone will not be adequate. Buyer shall
therefore be entitled, in addition to any other remedies which may be available,
including money damages, to obtain specific performance of the terms of this
Agreement. In the event of any action to enforce this Agreement specifically,
Seller hereby waives the defense that there is an adequate remedy at law.
10.3 Liquidated Damages. In the event this Agreement is terminated by
Seller as a result of Buyer's breach of a material obligation under this
Agreement, then the Escrow Deposit shall be paid by the Escrow Agent to Seller
as liquidated damages, it being agreed that the Escrow Deposit shall constitute
full payment for any and all damages suffered by Seller by reason of Buyer's
failure to close this Agreement for the reasons described in Section 10.1 and
shall be the exclusive remedy of Seller.
ARTICLE XI
SURVIVAL OF REPRESENTATIONS AND
WARRANTIES AND INDEMNIFICATION
11.1 Representations and Warranties. Notwithstanding any examination
made for or on behalf of any of the parties hereto, the knowledge of any
officer, director or employee or agent of any of the parties hereto or any of
their respective affiliates, or the acceptance of any certificate or opinion,
all representations, warranties and pre-closing covenants contained in this
Agreement and the Closing Certificate shall be deemed continuing
representations, warranties and pre-closing covenants, and shall
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survive the Closing Date for a period of two (2) years.
11.2 Indemnification by Seller. Notwithstanding the Closing, and
regardless of any investigation made at any time by or on behalf of Buyer or any
information Buyer may have, Seller shall indemnify and hold Buyer harmless
against and with respect to, and shall reimburse Buyer for all claims, notice of
which have been received by Seller within a period of two (2) years from the
Closing Date, relating to:
(a) Any and all losses, liabilities or damages resulting from
any untrue representation, breach of warranty or nonfulfillment of any covenant
by Seller contained herein or in any certificate, document or instrument
delivered to Buyer hereunder;
(b) Any and all obligations or liabilities of Seller relating
to the Stations not expressly assumed by Buyer pursuant to the terms hereof,
including without limitation, any such obligation or liability imposed on Buyer
by process of law as a successor to the business of Seller;
(c) Any and all losses, liabilities or damages resulting from
Seller's operation or control of the Stations prior to the Closing Date,
including any and all liabilities arising under the Licenses or the Assumed
Contracts which relate to events occurring prior to the Closing Date; and
(d) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses, including
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<PAGE> 65
reasonable legal fees and expenses, incident to any of the
foregoing or in enforcing this indemnity.
(e) Notwithstanding anything to the contrary set forth herein,
Seller's obligation to indemnify Buyer shall only be applicable if the aggregate
of all claims equals or exceeds $10,000 and then the Seller's obligation shall
be from the first dollar of claims.
11.3 Indemnification by Buyer. Notwithstanding the Closing, and
regardless of any investigation made at any time by or on behalf of Seller or
any information Seller may have, Buyer shall indemnify and hold Seller harmless
against and with respect to, and shall reimburse Seller for all claims, notice
of which have been received by Buyer within for a period of two (2) years from
the Closing Date relating to:
(a) Any and all losses, liabilities or damages resulting from
any untrue representation, breach of warranty or nonfulfillment of any covenant
by Buyer contained herein or in any certificate, document or instrument
delivered to Seller hereunder;
(b) Any and all losses, liabilities or damages resulting from
Buyer's operation or control of the Stations on and after the Closing Date,
including any and all liabilities arising under the Licenses or the Assumed
Contracts which relate to events occurring after the Closing Date; and
(c) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses, including
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reasonable legal fees and expenses, incident to any of the foregoing or in
enforcing this indemnity.
11.4 Procedure for Indemnification. The procedure for indemnification
shall be as follows:
(a) The party claiming indemnification (the "Claimant", shall
give reasonably prompt notice to the party from whom indemnification is claimed
(the "Indemnifying Party") of any claim, whether between the parties or brought
by a third party, specifying (i) the factual basis for such claim and (ii) the
amount of the claim. If the claim relates to an action, suit or proceeding filed
by a third party against Claimant, such notice shall be given by Claimant within
ten (10) days after written notice of such action, suit or proceeding is
received by Claimant.
(b) Following receipt of notice from the Claimant of a claim,
the Indemnifying Party shall have twenty (20) days (or such shorter period of
time as is required to respond to the subject litigation or proceeding) to make
such investigation of the claim as the Indemnifying Party deems necessary or
desirable. For the purposes of such investigation, the Claimant agrees to make
available to the Indemnifying Party or its authorized representative(s) the
information relied upon by the Claimant to substantiate the claim. If the
Claimant and the Indemnifying Party agree at or prior to the expiration of said
20-day period (or any mutually agreed upon extension thereof) to the validity
and amount of such claim, the Indemnifying Party shall immediately pay to the
Claimant the full amount of the claim and in the
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case of a breach by the Seller the Buyer shall be entitled to be indemnified
pursuant to the terms of the Indemnification Escrow Agreement. If the Claimant
and the Indemnifying Party do not agree within said period (or any mutually
agreed upon extension thereof), the Claimant may seek appropriate legal remedy.
(c) With respect to any claim by a third party as to which the
Claimant is entitled to indemnification hereunder, the Indemnifying Party shall
have the right at its own expense, to participate in or assume control of the
defense of such claim, and the Claimant shall cooperate fully with the
Indemnifying Party. If the Indemnifying Party elects to assume control of the
defense of any third-party claim, the Claimant shall have the right to
participate in the defense of such claim and retain separate co-counsel at its
own expense; provided if requested to participate at Indemnifying Party's
request or if the Claimant reasonably believes (based upon an opinion of
counsel) that a conflict of interest exists between Claimant and the
Indemnifying Party, then the Claimant will be reimbursed for reasonable expenses
of counsel. The Indemnifying Party will select counsel reasonably satisfactory
to the Claimant. The Indemnifying Party will not consent to an entry of judgment
or settlement without release of liability and, with respect to nonmonetary
terms, the Claimant's consent (not to be unreasonably withheld or delayed);
provided that if Claimant does not consent to settlement of a claim solely with
respect to the monetary terms thereof, pursuant to which Claimant has been
released without liability, Seller's
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liability under this Section 11 shall be limited to the amount of the settlement
or entry of judgment, plus costs (including attorney fees).
(d) If a claim, whether between the parties or by a third
party, requires immediate action, the parties will make every effort to reach a
decision with respect thereto as expeditiously as possible.
(e) If the Indemnifying Party does not elect to assume control
or otherwise participate in the defense of any third party claim, it shall be
bound by the results obtained by the Claimant with respect to such claim.
(f) If the Buyer is entitled to indemnification from Seller
pursuant to this Article XI, the Buyer shall be entitled to receive such
indemnification from the Indemnification Escrow Agent pursuant to the terms of
the Indemnification Escrow Agreement; provided, if the amounts sought by Buyer
exceed the amount held by the Indemnification Escrow Agent the Buyer shall be
entitled to such additional indemnification and Buyer's recovery shall not be
limited in any manner by the terms of the Indemnification Escrow Agreement.
ARTICLE XII
MISCELLANEOUS
12.1 Notices. All notices, demands, and requests required or permitted
to be given under the provisions of this Agreement shall be (i) in writing, (ii)
delivered by personal delivery, or
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<PAGE> 69
sent by commercial delivery service or registered or certified mail, return
receipt requested or sent by telecopy, (iii) deemed to have been given on the
date of personal delivery or the date set forth in the records of the delivery
service or on the return receipt or, in the case of a telecopy, upon receipt
thereof and (iv) addressed as follows:
If to Seller:
Michael R. Shott
President and Chief Executive Officer
Adventure Communications, Inc.
100 Bluefield Avenue, Suite 3
Bluefield, West Virginia 24701-2744
Telecopier: (304) 324-0584
With a copy to:
Alan C. Campbell
Irwin, Campbell & Tannenwald, P.C.
1730 Rhode Island Avenue, N.W.
Suite 200
Washington, D.C. 20036
Telecopier: (202) 728-0354
If to Buyer:
Commodore Media of Kentucky, Inc.
500 Fifth Avenue
New York, NY 10110
Attention: Bruce A. Friedman
Telecopier: (212) 302-6457
With a copy to:
Ira J. Goldstein, Esq.
Pryor, Cashman, Sherman & Flynn
410 Park Avenue
New York, NY 10022
Telecopier: (212) 326-0806
or to any such other or additional persons and addresses as the parties may from
time to time designate in a writing delivered in accordance with this Section
12.1.
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<PAGE> 70
12.2 Benefit and Binding Effect. Neither party hereto may assign this
Agreement without the prior written consent of the other party hereto; provided,
however, that Buyer may assign this Agreement upon notice to Seller at the time
of assignment to an affiliated entity controlled by Buyer or Buyer's principal
only if such assignment does not violate the Communications Act of 1934, as
amended, delay Consent of the FCC, or violate the rules, regulations and
policies of the FCC and Buyer guarantees the performance of its assignee. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns and is not intended to be
for the benefit, directly or indirectly, of any other person or entity.
12.3 Headings. The headings herein are included for ease of reference
only and shall not control or affect the meaning or construction of the
provisions of this Agreement.
12.4 Gender and Number. Words used herein, regardless of the gender and
number specifically used, shall be deemed and construed to include any other
gender, masculine, feminine or neuter, and any other number, singular or plural,
as the context requires.
12.5 Counterparts. This Agreement may be signed in any number of
counterparts with the same effect as if the signature on each such counterpart
were upon the same instrument.
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<PAGE> 71
12.6 Attorneys' Fees. The prevailing party in any action brought under
this Agreement shall be entitled to its reasonable attorneys' fees and
disbursements in addition to its damages.
12.7 Entire Agreement. This Agreement, all schedules and exhibits
hereto and all documents, writings, instruments and certificates delivered or to
be delivered by the parties pursuant hereto collectively represent the sole and
entire under standing and agreement between Buyer and Seller with respect to the
subject matter hereof. All schedules, and exhibits attached to this Agreement
shall be deemed part of this Agreement and incorporated herein, as if fully set
forth herein. This Agreement supersedes all prior negotiations and
understandings between Buyer and Seller whatsoever, and all letters of intent
and other writings relating to such negotiations and under standings. This
Agreement cannot be amended, supplemented or modified except by an agreement in
writing which makes specific reference to this Agreement or an agreement
delivered pursuant hereto, as the case may be, and which is signed by the party
against which enforcement of any such amendment, supplement or modification is
sought.
12.8 Choice of Law. This Agreement will be governed by and construed in
accordance with the laws of the State of West Virginia (without regard to
conflicts of law principles).
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<PAGE> 72
This Agreement has been executed by Buyer and Seller as of the date
first above written.
ADVENTURE COMMUNICATIONS, INC.
By: /s/ Michael R. Shott
------------------------
Michael R. Shott
President
COMMODORE MEDIA OF KENTUCKY, INC.
By:
------------------------
Bruce A. Friedman
President
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<PAGE> 73
This Agreement has been executed by Buyer and Seller as of the date
first above written.
ADVENTURE COMMUNICATIONS, INC.
By:
------------------------
Michael R. Shott
President
COMMODORE MEDIA OF KENTUCKY, INC.
By: /s/ Bruce A. Friedman
------------------------
Bruce A. Friedman
President
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<PAGE> 1
Exhibit 10.66
LOCAL MARKETING AGREEMENT
This LOCAL MARKETING AGREEMENT (the "Agreement") dated as of April 8,
1996, is made and entered into by and between COMMODORE MEDIA OF KENTUCKY, INC.,
a Delaware corporation ("Time Broker"), and ADVENTURE COMMUNICATIONS, INC., a
West Virginia corporation ("Licensee"), the owner and operator of radio stations
WKEE (FM) and WKEE (AM), Huntington, West Virginia, WZZW (AM), Milton, West
Virginia, (WKEE (FM), WKEE (AM) and WZZW, the "WV Stations"), WBVB (FM) Coal
Grove, Ohio and WIRO (AM), Ironton, Ohio (WBVB and WIRO, the "Ohio Stations";
the WV Stations and the Ohio Stations collectively, the "Stations").
W I T N E S S E T H:
WHEREAS, Time Broker and Licensee, are parties to an Asset Purchase
Agreement dated as of the date hereof (the "Asset Purchase Agreement"), pursuant
to which Licensee has agreed to sell to Time Broker, and Time Broker has agreed
to purchase substantially all of the Assets (as defined in the Asset Purchase
Agreement) of the Licensee; and
WHEREAS, Licensee desires to make available to Time Broker substantial
broadcasting time on the Stations until the closing of the transactions
contemplated by the Asset Purchase Agreement (the "Closing"); and
WHEREAS, Time Broker is engaged in the business of radio broadcasting
and desires to avail itself of the Stations' available broadcast time through
the date of Closing.
<PAGE> 2
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants herein contained, the parties hereto have agreed and do agree as
follows:
Section 1. Effective Date and Facilities. Commencing at 12:01 a.m. on
April 9, 1996 (the "Effective Date"), Licensee shall broadcast or cause to be
broadcast on the Stations programs which are presented to it by Time Broker.
These programs shall be in compliance with the provisions of Section 4 of this
Agreement. Time Broker shall maintain the ability to deliver its programming to
Licensee's transmitter site by means acceptable to Licensee. To facilitate
delivery of programming by Time Broker to Licensee hereunder, Licensee hereby
grants to Time Broker the non-exclusive right for the term of this Agreement to
use substantially all of the equipment located in the studio for the Stations
and currently used by Licensee for broadcasting programs on the Stations
pursuant to this Agreement, which equipment is described in greater detail on a
Schedule to the Asset Purchase Agreement (the "Broadcast Equipment"). In
addition, Time Broker shall have, and Licensee hereby grants to Time Broker, a
non-exclusive license to enter on the premises currently occupied by the
Stations for purposes of producing its programming hereunder. Time Broker shall
maintain the Broadcast Equipment free and clear of liens, claims or encumbrances
of any third party claiming by, through or under Time Broker.
Section 2. Payments by Time Broker. Time Broker hereby agrees to pay
Licensee for broadcast of the programs and use of
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<PAGE> 3
the Broadcast Equipment and the Station's studio hereunder the sum of $76,700
each month in advance ("Fee") plus the sum of the actual expenses each month for
documented and agreed upon items of operating expenses to be incurred consistent
with past practices of the Stations set forth on Attachment IV hereto ("Monthly
Expenses"); provided, however, if there is a closing (i) of the WV Stations (the
"WV Closing") prior to a closing of the Ohio Stations then the Fee from and
after the WV Closing shall be $15,008, and (ii) of the Ohio Stations (the "Ohio
Closing") prior to the WV Closing then the Fee from and after the Ohio Closing
shall be $61,692. The Monthly Expenses shall be payable in arrears on or before
the fifteenth day of each calendar month commencing May 15, 1996 (the "Monthly
Payment Date"), for the period commencing on the Effective Date and on the
fifteenth day of each calendar month thereafter during the remainder of the term
of this Agreement; provided, however, that the revenue and expenses of the
stations shall be adjusted for April as if the Effective Date of this Agreement
was April 1, 1996. Amounts payable pursuant to this Section 2 for any partial
calendar month other than April, 1996 shall be prorated on a per diem basis.
During this Agreement, Time Broker shall be entitled to all advertising and
other revenues (including all profits and cash flow) of the Stations and all
accounts receivable which arise on and after the Effective Date. If on the
Closing Date or the date this Agreement is terminated, the aggregate amount of
payments received by Licensee from Time Broker for Monthly
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<PAGE> 4
Expenses under this Section exceeds the actual amount of Licensee's expenses for
the items (which expenses shall be incurred in accordance with the usual and
customary past practices of the Stations for the items of Monthly Expenses prior
to the Effective Date) incurred by Time Broker in performing its obligations
hereunder, from the Effective Date to the Closing Date or the date this
Agreement is terminated, then Licensee shall pay to Time Broker the excess
Monthly Expenses on the Closing Date or within ten (10) days after this
Agreement is terminated. Similarly, if Licensee has aggregate Monthly Expenses
from the Effective Date to the Closing Date or termination date in excess of its
submitted operating expenses, then Time Broker shall pay Licensee such excess on
the Closing Date or within ten (10) days after this Agreement is terminated. If
a dispute arises between Licensee and Time Broker regarding the determination of
the Licensee's or Time Broker's excess Monthly Expenses, if any, the
disagreement shall be referred to Price Waterhouse, whose determination shall be
final and binding, and whose fees shall be paid one-half each by Licensee and
the Time Broker. Notwithstanding any other provision of this Agreement or the
Asset Purchase Agreement, in the event the parties fail to close on the sale of
the Stations to Time Broker, Licensee shall not be obligated to repay Time
Broker any Fee amounts advanced by Time Broker pursuant to this Section 2,
except for appropriate pro rata portions of such Fee if this Agreement is
terminated during a month. The previous sentence
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<PAGE> 5
shall in no way limit or effect either Licensee or Time Broker's rights under
the Asset Purchase Agreement in the event the failure to close is due to a
breach or termination of the Asset Purchase Agreement.
Section 3. Term. The term of this Agreement shall commence on the
Effective Date and shall end on the earlier of (i) the date of Closing, or (ii)
the date of termination of the Asset Purchase Agreement, unless sooner cancelled
or terminated as hereinafter provided.
Section 4. Program.
(a) Time Broker shall furnish or cause to be furnished the
artistic personnel and material in broadcasting form for programs to be
broadcast on the Stations pursuant to this Agreement at all times other than
times of the Licensee program broadcasts referred to in Section 4(b) below, and
all such Time Broker programs, including all advertising messages and
promotional material or announcements, shall be in good taste and in accordance
with the Communications Act of 1934, as amended (the "Act"), all other
applicable statutes and Federal Communications Commission ("FCC") and other
governmental entities rules, regulations, policies and requirements ("Rules and
Regulations"), and Licensee's programming standards. Time Broker also agrees to
broadcast a reasonable number of public service announcements suggested from
time to time by Licensee. All programs shall be prepared and presented in
conformity with the standards set forth in Attachment I. Time Broker further
agrees
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<PAGE> 6
that if, in the reasonable judgment of Licensee, Time Broker does not comply
with these standards, Licensee may suspend or cancel any specific program not in
compliance; if possible, Licensee is to provide Time Broker with seventy-two
(72) hours prior notice of such suspension or cancellation. Time Broker shall
not change the programming format or make any other material and substantial
programming changes without the prior written consent of Licensee, which will
not be unreasonably withheld or delayed. Licensee shall make each Station
available to Time Broker for operation for at least one hundred and sixty-four
(164) hours per week, Sunday through Saturday, except for downtime occasioned by
routine maintenance. Any routine maintenance work affecting the operation of the
Stations at full power shall be scheduled at a time that is least disruptive to
the Stations' operation.
(b) Licensee shall have the right during the term of this
Agreement to furnish or cause to be furnished programming in broadcast-ready
form for four (4) hours per week of programs to be broadcast on each Station
("Licensee's Reserved Time"). Licensee's public affairs programs shall respond
to the needs and interests of each Station's service area and shall be presented
at times deemed by Licensee to best meet the needs of the applicable service
area. Licensee initially reserves the periods reserved prior to the Effective
Date on the Stations for public affairs programming to present its public
affairs programming.
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<PAGE> 7
Section 5. Handling of Mail and Public File. To the extent either party
hereto receives or handles mail, cables, telegraphs, telecopies, or telephone
calls in connection with any programs broadcast on the Stations, each party
shall promptly advise the other of any public or FCC complaint or inquiry
concerning such programming and shall give the other party copies of any letters
from the public or the FCC, including complaints, concerning such programming.
The Licensee in consultation with Time Broker will handle listener complaints
and inquiries with respect to the operation of the Stations. Time Broker shall
also give Licensee copies of all operating and programming information,
including, without limitation, the Stations' operating logs, necessary to
maintain the public file and other records required to be kept by FCC
regulations, rules or policies. During the term of this Agreement, Time Broker
shall also maintain and deliver to the Stations and Licensee such records and
information required by the FCC to be placed in the public inspection file of
each Station pertaining (i) to the broadcast of political programming and
advertisements, in accordance with the provisions of Sections 73.1940 and
73.3526 of the FCC's rules, and (ii) to the broadcast of sponsored programming
addressing political issues or controversial subjects of public importance, in
accordance with the provisions of Section 73.1212(d) of the FCC's rules. Time
Broker shall also consult with the Licensee and comply with the Act and all
other applicable statutes and the rules, regulations and policies of the FCC, as
announced from time to time, with respect
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<PAGE> 8
to the carriage of political advertisements and programming (including, without
limitation, the rights of candidates and, as appropriate, others to "equal
opportunities" and the carriage of contrasting points of view as mandated by any
"fairness" rules with respect to such "issue-oriented" advertising or
programming as may be broadcast) and the charges permitted therefor. Time Broker
shall provide to each Station such documentation relating to such programming as
Licensee shall reasonably request. Licensee shall be responsible for providing
the personnel necessary to maintain a complete public file (as required by the
FCC) and compile and file all required quarterly issues/programs lists.
Section 6. Maintenance of Equipment.
6.1. The transmitter equipment and antennas currently used for the
Stations' broadcasts (the "Transmission Equipment") shall be maintained by
Licensee in a condition consistent with good engineering practices, in
compliance in all material respects with the Act and all other applicable rules,
regulations and technical standards of the FCC and in accordance with the Asset
Purchase Agreement. Licensee does not currently know of any material defects in
the Transmission Equipment used by each Station. Licensee shall maintain power
and modulation of the Stations' broadcasts in a manner consistent with
Licensee's past practices. All capital expenditures reasonably required to
maintain the technical quality of the Stations' Transmission Equipment and its
compliance with applicable laws and regulations
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<PAGE> 9
shall be made at the sole expense and in the discretion of
Licensee in a timely fashion.
6.2 All Broadcast Equipment and other equipment necessary for the
transmission of programming to the Stations' Transmission Equipment shall be
maintained by Time Broker in good repair and condition, reasonable wear and tear
excepted. All capital expenditures reasonably required to maintain the tech-
nical quality of the Broadcast Equipment and its compliance with applicable laws
and regulations shall be made at the sole expense and in the sole discretion of
Licensee in a timely fashion. Licensee shall, at all times during the term of
this Agreement, at Licensee's sole expense, maintain insurance with respect to
the Broadcast Equipment covering such risks as are customarily covered with
respect to damage thereto, and such policies of insurance shall name Time Broker
and such other parties as Licensee may designate as loss payee(s) and additional
insured(s), as their respective interests may appear.
Section 7. (a) Collection of Time Broker's Accounts Receivable. For a
period of one hundred eighty (180) days (the "Collection Period") following the
termination of this Agreement without a closing on the Purchase Agreement,
Licensee shall collect as agent for Time Broker the accounts receivable of the
Stations and the stations licensed to Simmons Broadcasting Company in existence
as of the termination date. On the termination date, Time Broker shall provide
Licensee with a list of all accounts receivable to be collected by Licensee. In
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<PAGE> 10
collecting such accounts receivable, Licensee shall use reasonable diligence,
but shall not be required to institute legal proceedings to collect any account
receivable, or to defend any claim or counterclaim by any account debtor. Unless
directed otherwise by the account debtor, all amounts received from an account
debtor which also becomes an account debtor of Licensee after the termination
date shall be applied first to the payment of the accounts receivable of Time
Broker. Within fifteen (15) days of the end of each calendar month of the
Collection Period, Licensee shall deliver to Time Broker the net amount, after
deducting any sales commissions, agency fees and similar direct expenses
attributable to such accounts receivable, of all amounts collected and credited
to the accounts receivable of Time Broker during the prior calendar month in
accordance with this Section 7(a). Within ten (10) days of the end of the
Collection Period, Licensee shall deliver to Time Broker all records of
uncollected accounts receivable of Time Broker and any amounts not previously
remitted to Time Broker at which time Licensee's obligation for the collection
of Time Broker's accounts receivable shall cease. During the Collection Period,
Time Broker shall not attempt to collect any of the accounts receivable assigned
to Licensee for collection.
(b) Collection of Licensee's Accounts Receivable. During the
Term of this Agreement (the "Term Collection Period"), Time Broker, acting as
agent for the Licensee, shall have the exclusive right to collect the accounts
receivable of Licensee
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<PAGE> 11
outstanding as of the Effective Date. On the Effective Date, Licensee shall
provide Time Broker with a list of all accounts receivable to be collected by
Time Broker. In collecting such accounts receivable, Time Broker shall use
reasonable diligence, but shall not be required to institute legal proceedings
to collect any account receivable, or to defend any claim or counterclaim by any
account debtor. Unless directed otherwise by the account debtor, all amounts
received from an account debtor which also becomes an account debtor of Time
Broker during the Term of this Agreement, shall be applied first to the payment
of the oldest accounts receivable of Licensee. Within fifteen (15) business days
at the end of each calendar month of the Term Collection Period, Time Broker
shall deliver to Licensee all amounts collected and credited to the accounts
receivable of Licensee in accordance with this Section 7(b). At the termination
of this Agreement either by the Closing on the Purchase Agreement or the earlier
termination in accordance with Section 16 hereof, Time Broker shall deliver to
Licensee all records of uncollected accounts receivable of Licensee and any
accounts not previously remitted to Licensee shall be delivered to Licensee, at
which time Time Broker's obligation for the collection of Licensee's accounts
receivable shall cease. During the Term Collection Period, Licensee shall not
attempt to collect any of the accounts receivable assigned to Time Broker for
collection. Notwithstanding the foregoing, nothing shall
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<PAGE> 12
prohibit Licensee from prosecuting any legal proceeding that was commenced prior
to the Effective Date.
Section 8. (a) Responsibility for Employees and Expenses. Time Broker
shall employ and be responsible for the salaries, taxes, insurance and related
costs for all personnel used in the production of its programming or necessary
to fulfill Time Broker's other obligations hereunder. Licensee shall employ and
be responsible for the salaries, taxes, insurance and related costs for all
personnel used in the production of its programming or necessary to fulfill
Licensee's other obligations hereunder. Time Broker shall pay for all costs
associated with its program production, all fees to ASCAP, BMI and SESAC
attributable to its programs and any other copyright fees attributable to its
programming broadcast on the Stations. Without limiting the generality of Time
Broker's obligations under Section 25 hereof, Time Broker shall also pay for all
costs associated with Arbitron or any other rating service to which it or the
Stations subscribe.
(b) Employment of Employees. If Time Broker should employ
Licensee's employees under this Agreement and there is a termination of this
Agreement without a Closing then Time Broker will terminate such employees hired
if Licensee is desirous of rehiring them and the employees desire to return to
Licensee's employ.
Section 9. Control of Stations. During the period of this Agreement,
Licensee shall maintain ultimate control over the
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<PAGE> 13
facilities of each Station, including, specifically, control over Station
finances, personnel and programming, and Time Broker agrees that it will permit
Licensee to take any and all steps necessary to faithfully and continuously do
so throughout the term of this Agreement. Licensee and Time Broker acknowledge
and agree that this responsibility to retain control is an essential element of
the continuing validity and legality of this Agreement. Licensee shall provide
and pay for: (a) its General Manager for the Stations, who shall report solely
to, and be accountable solely to, Licensee and who shall direct the day-to-day
operations of the Stations; and (b) such other personnel as are necessary to
fulfill its obligations under this Agreement. Licensee shall retain control,
said control to be reasonably exercised, over the policies, programming and
operations of the Stations, including, without limitation, the right to decide
whether to accept or reject any programming or advertisements, the right to
preempt any programs in order to broadcast a program deemed by Licensee to be of
greater national, regional or local interest, and the right to take any other
actions necessary to comply with the Rules and Regulations. Licensee shall be
responsible for meeting all of its requirements with respect to its local
service obligations including, but not limited to, compliance with each
Station's identification requirements, maintaining its main studio within the
Stations' principal community contour and broadcasting its own issue responsive
programming, and Time Broker shall take such actions as Licensee
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<PAGE> 14
may reasonably request to ensure such requirements are met. Time Broker shall
not represent, warrant or hold itself out as the Stations' licensee and shall
sell all its advertising time and enter into all agreements in its own name.
Licensee reserves the right to refuse to broadcast any program or programs
containing matter which is, or in the reasonable opinion of Licensee may be,
violative of any Rules and Regulations, or the policies of the Licensee.
Section 10. Special Events. Licensee has the right, in its sole
discretion and without liability, to preempt any Time Broker programs, and to
use part or all of the time contracted for by Time Broker to broadcast events of
special importance. In all such cases Licensee will use its best efforts to give
Time Broker reasonable notice of its intention to preempt such broadcast or
broadcasts, and, in the event of such preemption, Time Broker shall receive a
payment credit in an amount to be negotiated in good faith by Time Broker and
Licensee for the time Time Broker broadcast(s) that were preempted.
Section 11. Force Majeure. Any failure or impairment (i.e., failure to
broadcast at Stations' full authorized power) of facilities or any delay or
interruption in broadcast programs, or failure at any time to furnish
facilities, in whole or in part, for broadcasting, because of any acts of God,
strikes or threats thereof or force majeure or due to any other causes beyond
the reasonable control of Licensee shall not constitute a
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<PAGE> 15
breach of this Agreement and Licensee will not be liable to Time Broker
therefor.
Section 12. Right to Use Station IDs. Licensee hereby grants to Time
Broker a non-exclusive license to use such slo gans, call letters and other
identifiers as are currently used by each Station (the "Station Licensed
Identifiers") in connection with the broadcast of Time Broker's programs on each
Station, but for no other purpose. The license granted herein shall expire on
the expiration or earlier termination or cancellation of this Agreement. Time
Broker shall use the Station Licensed Identifiers in Time Broker's programming
in a manner consistent with the use thereof by Licensee in broadcasts of the
Stations immediately prior to the Effective Date of this Agreement during the
entire term of this Agreement and as may be required by the Act or the rules,
regulations and policies of the FCC. During the term of this Agreement, Licensee
shall not assign any of its rights to use the current call sign of any Station
or the other Station Licensed Identifiers to any third party. Time Broker
expressly agrees that, except with respect to Station Licensed Identifiers
referred to herein, the use of which is licensed by Licensee to Time Broker
pursuant hereto, the right to use Licensee's programs and to authorize their use
in any manner and in any media whatsoever shall be and remain vested solely in
Licensee.
Section 13. Payola. Time Broker shall provide Licensee with Payola
Affidavits, substantially in the form attached hereto
- 15 -
<PAGE> 16
as Attachment II, signed by such of Time Broker's employees and at such times as
Licensee may reasonably request, and shall notify Licensee promptly of any
violations it learns of relating to the Act, including Sections 317 and 508
thereof.
Section 14. Compliance with Law. Time Broker and Licensee shall,
throughout the term of this Agreement, comply with the Rules and Regulations
applicable to the conduct of its business.
Section 15. Indemnification; Warranty. Each party (as the case may be,
the "Indemnitor") shall indemnify and hold harmless the other party (as the case
may be, the "Indemnitee"), its directors, officers, employees, agents and
affiliates, from and against any and all liability, including without limitation
all consequential damages and attorneys fees, arising out of or incident to the
programming furnished by the Indemnitor, any breach of this Agreement by the
Indemnitor or the conduct of the Indemnitor, its directors, officers, employees,
contractors, agents or affiliates. Without limiting the generality of the
foregoing, Indemnitor shall indemnify and hold and save the Indemnitee, its
directors, officers, employees, agents and affiliates, harmless against
liability for libel, slander, infringement of trademarks, trade names, or
program titles, violation of rights of privacy, and infringement of copyrights
and proprietary rights resulting from the programming furnished by the Indemni-
tor. Time Broker will maintain customary amounts of libel and slander insurance,
name Licensee as an additional insured party, and provide evidence of such
insurance to Licensee. Each party's
- 16 -
<PAGE> 17
obligation to hold the other harmless against the liabilities specified above
shall survive any termination of this Agreement.
Section 16. Events of Default. Each of the following shall constitute
an "Event of Default" under this Agreement:
(a) Non-Payment. Time Broker's failure to pay the
consideration provided for in Section 2 hereof when the same is due and payable
hereunder; provided, Time Broker shall have four (4) business days from the date
such payment is due to make payment if oral telephonic or written notice is
received by Time Broker from Licensee that such payment was not received on the
due date; or
(b) Default in Covenants. Time Broker's or Licensee's default
in the observance or performance of any material covenant, warranty, condition
or agreement contained herein; provided, however, any such default shall not
constitute an Event of Default hereunder if such default is cured within twenty
(20) days after notice thereof by the non-breaching party; or
(c) Breach of Representation. Time Broker's or Licensee's
material breach of any representation or warranty herein, or in any certificate
or document furnished pursuant to the provisions hereof, which shall prove to
have been false or misleading in any material respect as of the time made or
furnished; or
(d) Insolvency. The voluntary filing by Time Broker or
Licensee (or involuntary filing with respect to Time Broker or Licensee not
vacated within sixty (60) days after such filing) of
- 17 -
<PAGE> 18
a petition for reorganization or dissolution under federal bankruptcy laws or
under substantially equivalent state laws.
(e) Licensee Preemption. If the Licensee shall preempt or
substitute other programming for that supplied by the Time Broker during fifteen
percent (15%) or more of the total hours of Time Broker programming on the
Stations for any one calendar week during the term of this Agreement, then Time
Broker within ten (10) days from the end of such week can terminate this
Agreement by notice to Licensee.
Section 17. Remedies Upon Default. In addition to, and not in
limitation of, all other rights and remedies available under this Agreement, in
equity or under applicable law, all of which rights and remedies are expressly
reserved, the parties shall have the following rights and remedies upon the
occurrence of an Event of Default:
(a) Termination Upon Default. If there is an Event of Default
by Time Broker, Licensee may, at its sole option, by written notice to Time
Broker, terminate this Agreement, and upon such termination Licensee shall be
under no further obligation to make available to Time Broker any further
broadcast time or broadcast transmission facilities and all amounts accrued or
payable to Licensee up to the date of termination which have not been paid
shall immediately become due and payable by Time Broker to Licensee. If there is
an Event of Default by Licensee, Time Broker may, at its sole option, by written
notice to Licensee, terminate this Agreement, and upon such termination Time
Broker
- 18 -
<PAGE> 19
shall be under no further obligation to provide any further programs to be
broadcast on the Stations and all amounts due to Licensee with respect to the
period subsequent to such termination which have been prepaid by Time Broker
shall immediately become due and payable by Licensee to Time Broker.
(b) Liabilities Upon Termination. Time Broker shall be
responsible for debts and obligations of Time Broker resulting from the use of
air time and transmission facilities including, without limitation, accounts
payable and net barter balances. If this Agreement is canceled or terminated for
any reason, Licensee agrees that it will assume, perform in good faith and be
responsible for all obligations of Time Broker relating to the period after the
date of such cancellation or termination under unfulfilled advertising
contracts cancelable within thirty (30) days of the type entered into in the
ordinary course of the business of the Stations and at usual and customary rates
and with respect to which the receivables or prepayments relating thereto have
been assigned or paid to Licensee ("Ordinary Course Contracts"), as well as all
obligations of Time Broker relating to the period after the date of such
cancellation or termination under any unfulfilled advertising contracts other
than Ordinary Course Contracts which Licensee has approved in writing during the
course of this Agreement and with respect to which the receivables or
prepayments relating thereto have been assigned or paid to Licensee. In this
connection, Time Broker warrants to Licensee that it shall, and hereby does,
assign to Licensee all
- 19 -
<PAGE> 20
amounts due under unfulfilled advertising contracts assumed by Licensee upon
cancellation or termination of this Agreement, and Time Broker shall pay over to
Licensee all amounts received by Time Broker for advertising run or to be run by
Licensee subsequent to such cancellation or termination. Except for obliga-
tions under the unfulfilled advertising contracts specified in this Section
17(b), Licensee shall not assume or otherwise be responsible for any other
obligations, expenses, contracts or other liabilities entered into or incurred
by Time Broker, regardless of whether such obligations, contracts, expenses and
liabilities relate to the Stations or the broadcast of programming thereon.
Section 18. Representations.
(a) Both Licensee and Time Broker represent that they are
legally qualified, empowered, and able to enter into this Agreement, and that it
has been reviewed and approved by their respective counsel, including counsel
specializing in FCC matters. Time Broker further represents and certifies that
this Agreement complies with Sections 73.3555(a) (1) and (e)(1) of the FCC's
rules. Licensee represents and certifies that it will maintain ultimate control
over the Stations' facilities, including control over the finances, personnel
and programming of the Stations.
(b) Licensee further represents to Time Broker that, as of the
date hereof, except as disclosed in the Asset Purchase Agreement:
- 20 -
<PAGE> 21
(i) The FCC licenses and authorizations relating to each
Station (the "Station Licenses") are free and clear of legal
disqualifications or other restrictions of such a nature as would
materially limit the full operation of the Station as presently
authorized and conducted;
(ii) The Station Licenses are in good standing and have been
regularly renewed with the normal expiration dates;
(iii) The operation of each Station is in compliance in all
material respects with the Station Licenses;
(iv) Licensee has no knowledge of any matter that might result
in the suspension or revocation of the Station Licenses;
(v) There are no FCC citations outstanding with respect to any
Station or its operation; and
(vi) There are no petitions to deny, material complaints or
proceedings known by Seller to be pending before the FCC and relating
to the business and operation of any Station.
Section 19. Modification and Waiver. No modification or waiver of any
provision of this Agreement shall in any event be effective unless the same
shall be in writing signed by the party against whom the waiver is sought to be
enforced, and then such waiver and consent shall be effective only in the
specific instance and for the purpose for which given.
- 21 -
<PAGE> 22
Section 20. Delay in Exercise of Remedies; Remedies Cumulative. Except
in the case of actions that must be taken within a specific time period in
accordance with this Agreement, no failure or delay on the part of Licensee or
Time Broker in exercising any right or power hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of Licensee and Time Broker herein
provided are cumulative and are not exclusive of any right or remedies which
they may otherwise have.
Section 21. Construction. This Agreement shall be construed in
accordance with the internal substantive (that is, without reference to conflict
of) laws of the State of West Virginia and the obligations of the parties hereto
are subject to all federal, state or municipal laws or regulations now or
hereafter in force and to the regulations and policies of the FCC and all other
governmental bodies or authorities presently or hereafter duly constituted. The
parties believe that the terms of this Agreement meet all of the requirements of
current FCC policy for brokerage agreements and agree that they shall negotiate
in good faith to meet any FCC concern with respect to this Agreement if they are
incorrectly interpreting current FCC policy or if FCC policy as hereafter
modified so requires. If the parties cannot agree to a modification or
modifications
- 22 -
<PAGE> 23
deemed necessary by either party to meet FCC requirements, the termination
provisions of Section 22 below shall apply. The parties further agree that they
will make all required filings with the FCC with respect to this Agreement.
Section 22. Termination. Either party may terminate this Agreement
effective immediately if it has been ordered by the FCC to terminate this
Agreement or to suspend (either permanently or temporarily) the rights and
obligations of the parties hereunder in order to comply with (or while a
determination is being made with respect to compliance with) the Act or FCC
rules or policies, and such termination shall be the parties' sole remedy for
any such finding by the FCC. Upon termination or cancellation of this Agreement
for any reason Licensee shall, in addition to its other legal and equitable
rights and remedies under this Agreement or under applicable law, be entitled
immediately to cease making available to Time Broker any further broadcast time
or broadcast transmission facilities, and all amounts accrued or payable to
Licensee up to the date of termination, cancellation or expiration which have
not been paid shall be immediately due and payable. Except as provided in
Section 17(b), Licensee shall not be required to assume any obligations,
contracts, expenses or other liabilities of Time Broker in connection with such
termination, cancellation or expiration.
Section 23. Headings. The headings contained in this Agreement are
included for convenience only and no such heading shall in any way alter the
meaning of any provision.
- 23 -
<PAGE> 24
Section 24. Successors and Assigns. Subject to Section 29, this
Agreement shall be binding upon and inure to the benefit of the parties and
their respective permitted successors and assigns, including, without
limitation, any permitted transferees or assignees of any kind of the FCC
licenses for the Stations.
Section 25. Counterpart Signatures. This Agreement may be signed in one
or more counterparts, each of which shall be deemed a duplicate original,
binding on the parties hereto notwithstanding that the parties are not
signatory to the same original or the same counterpart.
Section 26. Performance of Contracts. On or after the Effective Date,
Time Broker shall perform and discharge or cause to be performed and discharged,
all of Licensee's obligations and duties under those contracts and commitments
identified on Attachment III hereto, including, without limitation, commitments
for promotional appearances and remote broadcasts (collectively, the "Special
Contracts"). Time Broker shall indemnify and hold harmless Licensee from and
against any and all losses, expenses, obligations and liabilities of whatsoever
nature arising out of or under the Special Contracts relating to the period
subsequent to the Effective Date, and Licensee shall indemnify and hold harmless
Time Broker from and against any and all loss, expenses, obligations and
liabilities of whatsoever nature arising out of or under the Special Contracts
relating to the period prior to the Effective Date. Time Broker shall be
responsible for and shall collect and remit to Licensee all Accounts Receivable
as
- 24 -
<PAGE> 25
provided in Section 7.3 of the Asset Purchase Agreement. To the extent either
party hereto at any time receives from any third party any amount that properly
belongs to the other party hereto, the party receiving such amount shall
promptly pay such amount over to the party to which such amount properly
belongs.
Section 27. Notices. Any notice required hereunder (other than pursuant
to Section 16(a) hereof) shall be in writing and any payment, notice or other
communications shall be deemed given (i) upon delivery when delivered personally
or by facsimile with a copy by mail, (ii) three (3) days after mailing if mailed
by certified mail, postage prepaid, with return receipt requested, or, (iii) one
(1) day after delivery to Federal Express or another recognized overnight
carrier for overnight delivery, and addressed as follows:
To Licensee:
Michael R. Shott, President
Adventure Communications, Inc.
100 Bluefield Avenue
Suite 3
Bluefield, West Virginia 24701-2744
Telecopier: 304-324-0584
With a copy to:
Alan C. Campbell, Esq.
Irwin, Campbell & Tannenwald, P.C.
1730 Rhode Island Avenue, N.W.
Suite 200
Washington, D.C. 20036
To Time Broker:
Bruce A. Friedman, President
Commodore Media of Kentucky, Inc.
500 Fifth Avenue, Suite 3000
New York, New York 10110
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<PAGE> 26
With a copy to:
Ira J. Goldstein, Esq.
Pryor, Cashman, Sherman & Flynn
410 Park Avenue
New York, New York 10022
Section 28. Entire Agreement. This Agreement (together with the
Attachments hereto) and any other agreements between the parties relating to the
Stations embody the entire agreement between the parties and there are no other
agreements, representations, warranties, or understandings, oral or written,
between them with respect to the subject matter hereof. No alteration,
modification or change of this Agreement shall be valid unless it is embodied in
a written instrument signed by the parties.
Section 29. Severability and Assignment. Except as set forth in
Sections 21 and 22 hereof, if any provision or provisions contained in this
Agreement is held to be invalid, illegal or unenforceable, this shall not affect
any other provision hereof, and this Agreement shall be construed as if such
invalid, illegal or unenforceable provision or provisions had not been contained
herein. Time Broker may not assign this Agreement without the prior written
consent of Licensee and any purported assignment without such consent shall be
null and void and of no legal force or effect.
Section 30. No Joint Venture. The parties agree that nothing herein
shall constitute a joint venture between them. The parties acknowledge that call
letters, trademarks and other
- 26 -
<PAGE> 27
intellectual property shall at all times remain the property of the respective
parties and that neither party shall obtain any ownership interest in the other
party's intellectual property by virtue of this Agreement.
Section 31. Access to Records. Time Broker shall permit Licensee and
its agents and representatives access to all books and records relating to the
Stations.
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<PAGE> 28
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
COMMODORE MEDIA OF KENTUCKY, INC.
By: /s/ Bruce A. Friedman
------------------------------
Bruce A. Friedman
President
ADVENTURE COMMUNICATIONS, INC.
By:
------------------------------
Michael R. Shott
President
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<PAGE> 29
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
COMMODORE MEDIA OF KENTUCKY, INC.
By:
------------------------------
Bruce A. Friedman
President
ADVENTURE COMMUNICATIONS, INC.
By: /s/ Michael R. Shott
------------------------------
Michael R. Shott
President
- 28 -
<PAGE> 1
Exhibit 10.67
CONTINGENT SALE AND ASSIGNMENT OF OPTIONS
This Agreement is dated as of April 8, 1996, by and between Michael R.
Shott ("Shott") and Commodore Media of Kentucky, Inc. ("Commodore").
WHEREAS, Commodore has entered into an agreement to purchase from
Adventure Communications, Inc. ("Adventure") substantially all of the assets of
Radio Stations WKEE-AM/FM, Huntington, West Virginia, WZZW(AM), Milton, West
Virginia (collectively the "Adventure West Virginia Stations") and WBVB(FM),
Coal Grove, Ohio and WIRO(AM), Ironton, Ohio (collectively the "Adventure Ohio
Stations"), which stations are owned by and licensed to Adventure; and
WHEREAS, Commodore has simultaneously entered into an agreement to
purchase from Simmons Broadcasting Company ("SEC") substantially all of the
assets of Radio Stations WHRD(AM), Huntington West Virginia and WFXN(FM),
Milton, West Virginia (collectively the "SBC West Virginia Stations") and
WMLV(FM), Ironton, Ohio (the "SBC Ohio Station"), which stations are owned by
and licensed to SBC; and
WHEREAS, in order to permit the acquisition of the SBC West Virginia and
Ohio Stations by Commodore, Shott has agreed to convey to Commodore certain
rights secured by Shott by (i) an option dated February 6, 1995, between Shott
and SBC relating to station WHRD(AM) (the "WHRD Option"), (ii) an option dated
August 1, 1994, between Shott and SBC relating to station WFXN(FM) (the "WFXN
Option, and (iii) an option dated December 27, 1994, between Shott and SBC
relating to station WMLV(FM) (the "WMLV Option" and collectively the
"Options"), such as conveyance to be contingent upon and subject to the
closings described in Section 2, hereof.
<PAGE> 2
NOW, THEREFORE, in consideration of the above premises and the
agreements and covenants set forth below, the parties, intending to be legally
bound, agree as follows:
1. Assignment and Exercise. Shott hereby conveys and assigns the Options
to Commodore. The Options shall be deemed to be effectively exercised by
Commodore when (i) Commodore enters into an Asset Purchase Agreement with SBC
for the purchase and sale of the SBC West Virginia and Ohio Stations (the "SBC
Purchase Agreement") and (ii) Commodore simultaneously enters into an Asset
Purchase Agreement with Adventure for the purchase and sale of the Adventure
West Virginia and Ohio Stations (the "Adventure Purchase Agreement"). Commodore
represents and covenants that it is now, and will be at the time it executes the
SBC Purchase Agreement, qualified to become the licensee of the SBC Stations
listed herein.
2. Conditions to Assignments. The assignment by Shott of the Options for
the acquisition of the SBC West Virginia Stations is conditioned upon and
subject to (i) the simultaneous closings on the acquisition by Commodore of the
SBC West Virginia Stations and the Adventure West Virginia Stations in
accordance with the terms of the respective Purchase Agreements and (ii) the
delivery to Shott by Commodore at such closings of the consideration set forth
in Section 3 below. The assignment by Shott of the Option for the acquisition of
the SBC Ohio Stations is conditioned upon and subject to (iii) the simultaneous
closings on the acquisition by Commodore of the SBC Ohio Station and the
Adventure Ohio Stations in accordance with the terms of the respective Purchase
Agreements and (iv) the delivery to Shott by Commodore at such closings of the
consideration set forth in Section 3 below.
3. Consideration. At the closings on the acquisition of the SBC West
Virginia Stations and the Adventure West Virginia Stations by Commodore,
Commodore shall deliver to
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<PAGE> 3
Shott by wire transfer of immediately available federal funds the sum of Two
Million, Nine Hundred Fifty Eight Thousand Dollars ($2,958,000.00) for the sale
of the WFXN Option and the WHRD Option. At the closings on the acquisition of
the SBC Ohio Station and the Adventure Ohio Stations by Commodore, Commodore
shall deliver to Shott by wire transfer of immediately available federal funds
the sum of Seven Hundred Forty Two Thousand Dollars ($742,000.00) for the sale
of the WMLV Option.
4. Brokerage Commission. At the closings on the sale of the Options to
Commodore, the parties shall be obligated to deliver to each of Media Venture
Partners and Blackburn & Co. the sum of $14,790.090 (($29,580.00) as brokerage
commissions for the sale of the WFXN and WHRD Options, and the sum of $3,710.00
($7,420.00 total) for the sale of the WMLV Option. Shott and Commodore shall
each be responsible for one-half of the brokerage commissions.
5. Failure to Close. In the event there is a termination of the SBC
Purchase Agreement without a closing on the purchase of the SBC West Virginia
Stations, Shott shall retain all his right, title and interest in the WFXN
Option and the WHRD Option, and the conditional conveyance thereof to Commodore
shall be null and void and of no further effect. In the event there is a
termination of the SBC Purchase Agreement without a closing on the purchase of
the SBC Ohio Station, Shott shall retain all his right, title and interest in
the WMLV Option, and the conditional conveyance thereof to Commodore shall be
null and void and of no further effect.
6. Representations and Warranties. Shott hereby represents and
warrants:
(a) He has all right, title and interest in and to the Options and
has not sold,
- 3 -
<PAGE> 4
granted, conveyed or assigned any of his right, title or interest in or to the
Options to any third person, firm or corporation;
(b) There are no liens or encumbrances on the Options and no claims,
proceedings or litigation exist or are pending with respect to the Options;
(c) He has the right to enter into and perform this Agreement; and
(d) All amounts payable to SBC prior to the date hereof pursuant to
the Options have been paid.
7. Indemnification. Shott shall indemnify Commodore, its successors and
assigns and hold them harmless from and against any and all claims, liabilities,
losses, damages, costs and expenses, including but not limited to attorneys'
fees and disbursements, arising out of, or resulting from, the breach by Shott
of any representations made by Shott herein.
8. Assignment. This Agreement and the rights granted hereunder may be
assigned by Commodore to any entity that acquires Commodore's rights under SBC
Purchase Agreement.
9. Governing Law. The law governing this transaction shall be the law
of the State of West Virginia without regard to conflicts of internal law.
10. Notices. All notices permitted to be given under the provisions of
this Agreement shall be (i) in writing, (ii) delivered by personal delivery, or
sent by commercia delivery service or registered or certified mail, return
receipt requested or sent by telecopy, (iii) deemed to have been given on the
date of personal delivery or the date set forth in the records of the delivery
service or on the return receipt or, in the case of a telecopy, upon receipt
thereof, and (iv) addressed as follows:
Given to Shott: Michael R. Shott, President
Adventure Communications, Inc.
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<PAGE> 5
100 Bluefield Avenue, Suite 3,
Bluefield, West Virginia 24701-2744
Telecopier: (304) 324-0584.
Given to Commodore: Commodore Media, Kentucky Inc.
500 Fifth Avenue,
New York, New York 10110
Attn: Bruce A. Friedman, President
Telecopier: (212) 302-6457
11. Counterparts. This Agreement may be signed into any number of
counterparts with the same effect as the signature on each counterpart were upon
the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
/s/ Michael R.Shott
------------------------------------
Michael R. Shott
Commodore Media of Kentucky, Inc.
By: /s/ Bruce Friedman
--------------------------------
Bruce Friedman, President
The assignment of the options to and the exercise of the options by Commodore
are hereby acknowledged and agreed to:
Simmons Broadcasting Company
By: /s/ W. Lee Simmons
--------------------------------
W. Lee Simmons, President
- 5 -
<PAGE> 1
EXHIBIT 10.68
----------------------------------------------
SECURITIES PURCHASE AGREEMENT
by and among
COMMODORE MEDIA, INC.,
THE GUARANTORS
named herein
and
CIBC WG ARGOSY MERCHANT FUND 2, L.L.C.
---------------------------------
Dated as of May 1, 1996
-------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
ARTICLE I
DEFINITIONS
<S> <C>
Section 1.1. Definitions................................................. 1
Section 1.2. Accounting Terms; Financial Statements ..................... 6
<CAPTION>
ARTICLE II
ISSUE OF SECURITIES; PURCHASE AND SALE OF
SECURITIES; RIGHTS OF HOLDERS OF SECURITIES
<S> <C>
Section 2.1. Issue of Securities ........................................ 6
Section 2.2. Purchase and Sale of Securities............................. 7
Section 2.3. Rights of Holders of Securities ............................ 8
<CAPTION>
ARTICLE III
REPRESENTATIONS AND WARRANTIES
<S> <C>
Section 3.1. Representations and Warranties of the
Company................................................. 9
Section 3.2. Representations and Warranties of the
Purchaser............................................... 20
<CAPTION>
ARTICLE IV
CONDITIONS PRECEDENT TO CLOSING
<S> <C>
Section 4.1. Conditions Precedent to Obligations
of the Purchaser........................................ 22
Section 4.2. Conditions Precedent to Obligations
of the Company and the Guarantors ...................... 25
<CAPTION>
ARTICLE V
COVENANTS
<S> <C>
Section 5.1. Furnishing of Information................................... 26
Section 5.2. Use of Proceeds ............................................ 26
Section 5.3. Treatment of Dividends for Income
Tax Purposes............................................ 26
Section 5.4. Exchange Indenture ......................................... 27
Section 5.5. Original Issue Discount .................................... 27
Section 5.6. Purchase Representative .................................... 28
Section 5.7 Issuance of Additional Warrants............................. 28
Section 5.8 Preferred Stock ............................................ 28
</TABLE>
-i-
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 5.9 Tax Matters ................................................ 28
<CAPTION>
ARTICLE VI
FEES
<S> <C>
Section 6.1. Delay Fees.................................................. 29
<CAPTION>
ARTICLE VII
INDEMNITY
<S> <C>
Section 7.1. Indemnity .................................................. 30
Section 7.2. Contribution ............................................... 33
Section 7.3. Registration Rights Agreements.............................. 33
<CAPTION>
ARTICLE VIII
MISCELLANEOUS
<S> <C>
Section 8.1. Home Office Payment ........................................ 34
Section 8.2. Survival of Provisions ..................................... 34
Section 8.3. Termination ................................................ 34
Section 8.4. No Waiver; Modifications in Writing ........................ 35
Section 8.5. Role of Special Counsel .................................... 35
Section 8.6. Communications ............................................. 35
Section 8.7. Costs, Expenses and Taxes .................................. 36
Section 8.8. Determinations ............................................. 36
Section 8.9. Execution in Counterparts................................... 36
Section 8.10. Binding Effect; Assignment.................................. 37
Section 8.11. GOVERNING LAW .............................................. 37
Section 8.12. Severability of Provisions.................................. 37
Section 8.13. Headings ................................................... 37
Signature Page ........................................................... 38
</TABLE>
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<PAGE> 4
Exhibit 1 Certificate of Designation
Exhibit 2 Indenture (as amended to date)
Exhibit 3 Form of Preferred Stock Registration Rights
Agreement
Exhibit 4 Form of Warrant Agreement
Exhibit 5 Form of Common Stock Registration Rights and Stockholders Agreement
Exhibit 6 Form of Opinion of Company Counsel
Exhibit 7 Form of Opinion of Special FCC Counsel
Exhibit 8 Form of Opinion of Purchaser's Counsel
-iii-
<PAGE> 5
SECURITIES PURCHASE AGREEMENT, dated as of May 1, 1996 (this
"Agreement"), among Commodore Media, Inc., a Delaware corporation (the
"Company"), Commodore Holdings, Inc., a Delaware corporation, Commodore Media of
Delaware, Inc., a Delaware corporation, Commodore Media of Pennsylvania, Inc., a
Delaware corporation, Commodore Media of Florida, Inc., a Delaware corporation,
Commodore Media of Kentucky, Inc., a Delaware corporation, Commodore Media of
Norwalk, Inc., a Delaware corporation, Commodore Media of Westchester, Inc., a
Delaware corporation, and Danbury Broadcasting, Inc., a Connecticut corporation
(collectively, the "Guarantors"), and CIBC WG Argosy Merchant Fund 2, L.L.C.
(the "Purchaser").
In consideration of the mutual covenants and agreements set
forth herein and for good and valuable consideration, the receipt of which is
hereby acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. As used in this Agreement, and
unless the context requires a different meaning, the following terms have the
meanings indicated:
"Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission thereunder.
"Additional Closing" has the meaning provided therefor in
Section 2.2 of this Agreement.
"Additional Time of Purchase" has the meaning provided
therefor in Section 2.2 of this Agreement.
"Additional Warrant Shares" has the meaning provided therefor
in Section 2.1 of this Agreement.
"Additional Warrants" has the meaning provided therefor in
Section 2.1 of this Agreement.
"Affiliate" of any specified Person means any other Person
which directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, such specified Person. For
purposes of this definition, "control" (including, with correlative meanings,
the terms "controlling", "controlled by" and "under common control with"), as
used with respect to 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
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beneficial ownership of at least 10% of the voting securities of a Person shall
be deemed to be control.
"Agreement" means this Agreement, as the same may be amended,
supplemented or modified in accordance with the terms hereof and in effect.
"Basic Documents" means, collectively, the Certificate of
Designation, the Preferred Stock, the Preferred Stock Registration Rights
Agreement, the Common Stock Registration Rights Agreement, the Warrant
Agreement, the Warrants and this Agreement.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday
and Friday which is not a day on which banking institutions in the City of New
York are authorized or obligated by law to close.
"Certificate of Designation" means the Certificate of
Designation duly adopted by the Board of Directors of the Company setting forth
the rights, preferences and priorities of the Preferred Stock and filed with,
and accepted for filing, so as to be effective, by the Secretary of State of the
State of Delaware prior to the Closing hereunder and which is in the form of
Exhibit 1 hereto.
"Class A Common Stock" means the Class A Common Stock of the
Company, $.01 par value per share.
"Class B Common Stock" means the Class B Common Stock of the
Company, $.01 par value per share.
"Closing" has the meaning provided therefor in Section 2.2 of
this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission or
any similar agency then having jurisdiction to enforce the Act.
"Common Stock" means the Class A Common Stock and the Class B
Common Stock.
"Common Stock Registration Rights Agreement" means the Common
Stock Registration Rights and Stockholders Agreement substantially in the form
of Exhibit 5 hereto.
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"Company" has the meaning provided therefor in the
introductory paragraph of this Agreement.
"Default" means any event, act or condition which, with notice
or lapse of time or both, would constitute an Event of Default.
"ERISA" has the meaning provided therefor in Section 3.1 of
this Agreement.
"Event of Default" means any event defined as an Event of
Default in the Indenture.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder.
"Exchange Act Filings" means the Company's filings on Form
10-K for the year ended December 31, 1995 and the Form 10-Q for the quarter
ended March 31, 1996 in each case filed under the Exchange Act.
"Exchange Documents" means, collectively, the Exchange
Indenture, the Exchange Notes and the Guarantees.
"Exchange Indenture" means the indenture under which the
Exchange Notes may be issued which will be substantially identical to the
Indenture.
"Exchange Notes" means the notes issued pursuant to the
Exchange Indenture which will be substantially identical to the Notes.
"FCC" means the United States Federal Communications
Commission or any similar agency having jurisdiction over the purchase, sale and
operation of broadcast licenses and related assets.
"Guarantee" has the meaning provided therefor in Section 2.1
of this Agreement.
"Guarantors" means all the direct and indirect Subsidiaries of
the Company as defined in the introductory paragraph to this Agreement.
"Indemnified Parties" has the meaning provided therefor in
Section 7.1(c) of this Agreement.
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"Indemnifying Parties" has the meaning provided therefor in
Section 7.1(c) of this Agreement.
"Indenture" means the indenture under which the Notes were
issued, attached as Exhibit 2 hereto.
"Information" shall have the meaning set forth in Section 2.1
of this Agreement.
"Lien" means, with respect to any property or assets of any
Person, any mortgage or deed of trust, pledge, hypothecation, assignment,
deposit arrangement, security interest, lien, charge, easement, encumbrance,
preference, priority or other security agreement or preferential arrangement of
any kind or nature whatsoever on or with respect to such property or assets
(including without limitation, any Capitalized Lease Obligation (as defined in
the Indenture), conditional sales, or other title retention agreement having
substantially the same economic effect as any of the foregoing).
"Material Adverse Effect" means, with respect to the Company
and its Subsidiaries, a material adverse effect on the business, condition
(financial or otherwise), results of operations or prospects of the Company and
its Subsidiaries, taken as a whole; provided that, with respect to the Company,
"Material Adverse Effect" shall also mean a material adverse effect on the
ability of the Company to perform its obligations under this Agreement, the
Basic Documents or the Exchange Documents.
"Notes" means the 13-1/4% Senior Subordinated Notes Due 2003
of the Company.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
other legal entity.
"Preferred Stock" means the Senior Exchangeable Redeemable
Preferred Stock, Series A, of the Company, $.01 par value.
"Preferred Stock Registration Rights Agreement" means the
Registration Rights Agreement relating to the Preferred Stock and the Exchange
Notes, substantially in the form of Exhibit 3 hereto.
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"Proceeding" has the meaning provided therefor in Section 7.1
of this Agreement.
"Purchaser" has the meaning provided therefor in the
introductory paragraph of this Agreement.
"Securities" has the meaning provided therefor in Section 2.1
of this Agreement.
"State" means each of the states of the United States, the
District of Columbia and the Commonwealth of Puerto Rico.
"State Commission" means any agency of any State having
jurisdiction to enforce such State's securities laws.
"Subsidiaries" means of any specified Person, any corporation,
partnership, joint venture, association or other business entity, whether now
existing or hereafter organized or acquired, (i) in the case of a corporation,
of which more than 50% of the total voting power of the capital stock entitled
(without regard to the occurrence of any contingency) to vote in the election of
directors, officers or trustees thereof is held by such first-named Person or
any of its Subsidiaries; or (ii) in the case of a partnership, joint venture,
association or other business entity, with respect to which such first-named
Person or any of its Subsidiaries has the power to direct or cause the direction
of the management and policies of such entity by contract or otherwise or if in
accordance with generally accepted accounting principles such entity is
consolidated with the first-named Person for financial statement purposes.
"Taxes" has the meaning provided therefor in Section 3.1(x) of
this Agreement.
"Time of Purchase" has the meaning provided therefor in
Section 2.2 of this Agreement.
"Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended, and the rules and regulations of the Commission thereunder.
"Trustee" has the meaning provided therefor in the Exchange
Indenture.
"Warrant Agent" has the meaning provided therefor in the
Warrant Agreement.
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"Warrant Agreement" means the Warrant Agreement under which
the Warrants will be issued, substantially in the form of Exhibit 4 hereto.
"Warrant Shares" has the meaning provided therefor in Section
2.1 of this Agreement.
"Warrants" means the warrants to purchase shares of Class A
Common Stock of the Company.
Section 1.2. Accounting Terms; Financial Statements. All
accounting terms used herein not expressly defined in this Agreement shall have
the respective meanings given to them in accordance with sound accounting
practice. The term "sound accounting practice" shall mean such accounting
practice as, in the opinion of the independent accountants regularly retained by
the Company, conforms at the time to generally accepted accounting principles in
the United States applied on a consistent basis except for changes with which
such accountants concur. All determinations to which accounting principles apply
shall be made in accordance with sound accounting practice.
ARTICLE II
ISSUE OF SECURITIES; PURCHASE AND SALE OF
SECURITIES; RIGHTS OF HOLDERS OF SECURITIES
Section 2.1. Issue of Securities. The Company has authorized
the issuance of up to $12,500,000 aggregate liquidation value of the Preferred
Stock together with Warrants to purchase shares of Class A Common Stock
constituting up to 5.99% of the Company's fully diluted Common Stock (the shares
of Class A Common Stock issuable upon exercise of the Warrants are referred to
herein as the "Warrant Shares"). The Preferred Stock will have the rights and
preferences set forth in the Certificate of Designation. The liquidation value
of the Preferred Stock will increase to the extent of accrued dividends paid in
additional shares of Preferred Stock. If the Preferred Stock remains outstanding
on and after April 30, 1999, the Preferred Stock will be exchangeable, at the
option of the Company, into an equal principal amount of the Exchange Notes
which will be issued pursuant to the Exchange Indenture. The Exchange Notes will
be unconditionally guaranteed by the Guarantors pursuant to the terms of the
Exchange Indenture (the "Guarantee"). At the Closing (as defined below) the
Company will issue to the Purchaser 7,550 Warrants. Each Warrant will be
substantially in the form as set out as Exhibit A to the
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Warrant Agreement. Additional Warrants ("Additional Warrants") may be issued and
exercisable for additional Warrant Shares ("Additional Warrant Shares") if the
Preferred Stock is outstanding on November 1, 1996 on the terms and conditions
set forth in Section 5.7 hereof. The Preferred Stock, the Exchange Notes, the
Warrants and the Warrant Shares are referred to herein collectively as the
"Securities".
For purposes of the Code and the related Treasury regulations,
the Purchaser of the Preferred Stock agrees with the Company that the issue
price will be allocated to the Preferred Stock to the extent of $870 and to the
Warrants to the extent of $130 per $1,000 aggregate liquidation value of the
Preferred Stock and that this is a reasonable basis for such allocation.
The Securities, the Additional Warrants and the Additional
Warrant Shares will be offered without being registered under the Act, in
reliance on exemptions therefrom, including the exemption provided by Section
4(2) of the Act.
In connection with the sale of the Securities, the Company has
provided the Purchaser with certain information including the Exchange Act
Filings and a summary of the terms of the Preferred Stock (the "Information").
Section 2.2. Purchase and Sale of Securities. Subject to the
terms and conditions herein set forth, the Company agrees that it will sell to
the Purchaser, and the Purchaser agrees that it will purchase from the Company
at the Time of Purchase 7,550 Warrants and at each Additional Time of Purchase,
the number of shares of Preferred Stock as requested by the Company; provided,
however, that no request by the Company to the Purchaser to acquire additional
Series A Preferred Stock (i) shall be for an aggregate liquidation value of less
than $2,500,000 and shall be in multiples of $100,000 and (ii) shall occur after
October 31, 1996, and all such issuances of shares of Preferred Stock shall not
result in issued Preferred Stock with an aggregate liquidation value of more
than $12,500,000. In addition, if the Preferred Stock has been exchanged for
Exchange Notes, no additional requests may be made by the Company to the
Purchaser hereunder.
The Securities shall have the terms set forth herein, in the
Certificate of Designation and the Warrant Agreement, respectively.
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The purchase and sale of 7,550 Warrants pursuant to this
Agreement will take place at a closing (the "Closing") at the offices of Pryor,
Cashman, Sherman & Flynn, 410 Park Avenue, New York, New York, at 10:00 A.M.,
New York time, on May 2, 1996. Additional Closings (each an "Additional
Closing") shall occur upon three Business Days prior written irrevocable notice
to the Purchaser setting forth the number of shares of Preferred Stock to be
purchased and the time and place of delivery. Such notice must be received by
the Purchaser prior to 10:00 A.M. New York time on the third Business Day prior
to the issuance of the Preferred Stock. The time at which the initial Closing is
concluded is herein called the "Time of Purchase." The time at which each
Additional Closing is concluded is herein called the "Additional Time of
Purchase."
Delivery of the Securities to be purchased by the Purchaser
pursuant to this Agreement shall be made at the Closing or at each Additional
Closing, as the case may be, by the Company (i) delivering global certificates
representing the Securities to The Depository Trust Company ("DTC") or its agent
and (ii) causing the DTC participant account designated by the Purchaser to be
credited with the Securities purchased by such Purchaser against payment
therefor in immediately available same day funds through the facilities of DTC
for the account of the Company. The Company agrees that in connection with the
placement of the Securities, the Purchaser may, in its discretion, deduct from
the purchase price of the Securities to be remitted to the Company at the
Closing the amount of the fees and expenses of Cahill Gordon & Reindel, special
counsel to the Purchaser.
The Company will bear all expenses of shipping the Securities
(including, without limitation, insurance expenses) from New York City to such
other places within the United States of America or Canada as the Purchaser
shall specify. Any tax on the issuance of the Securities will be paid by the
Company at the Time of Purchase or at any Additional Time of Purchase, as
applicable, pursuant to Section 8.7.
Section 2.3. Rights of Holders of Securities. The holders of
the Securities shall have such rights with respect to the registration thereof
under the Act and qualification of the Exchange Indenture under the Trust
Indenture Act as are set forth in the Preferred Stock Registration Rights
Agreement and the Common Stock Registration Rights Agreement.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1. Representations and Warranties of the Company.
The Company and the Guarantors, jointly and severally, represent and warrant to
the Purchaser as follows:
(a) The Information provided to the Purchaser at the Time of
Purchase and at each Additional Time of Purchase, as of its respective
date, will not contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading.
(b) The audited consolidated financial statements of the
Company and its Subsidiaries, together with related notes and schedules
thereto, included in the Exchange Act Filings fairly present in all
material respects the financial condition of the Company and its
Subsidiaries as of the dates indicated and the results of operations
and cash flows for the periods therein specified in conformity with
generally accepted accounting principles consistently applied
throughout the periods involved (except as otherwise stated therein);
and any pro forma financial statements and the related notes thereto
included in the Exchange Act Filings have been prepared using
reasonable assumptions and in accordance with the applicable
requirements of the Act and include all adjustments necessary to
present fairly in all material respects the pro forma financial
information included in the Exchange Act Filings as at the respective
dates and for the respective periods indicated. Ernst & Young LLP and
Weeks DeGraw & Company, P.A., which are reporting upon the audited
financial statements and schedules included in the Exchange Act
Filings, are independent public accounting firms as required by the Act
and the rules and regulations thereunder.
(c) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
Each of the Company's Subsidiaries is a corporation duly incorporated
or organized, validly existing and in good standing under the laws of
the state of Delaware. Each of the Company and its Subsidiaries is duly
qualified and in good standing as a foreign corporation, and is
authorized to do business, in each jurisdiction in which the ownership
or leasing of any property or the nature of its business makes such
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qualification necessary and in which the failure so to qualify would
have a Material Adverse Effect.
(d) All of the issued and outstanding shares of capital stock
of the Company and its Subsidiaries are validly issued, fully paid and
nonassessable and were not issued in violation of any preemptive or
similar rights. The Company has no Subsidiaries other than the
Guarantors. All of the capital stock of the Guarantors is owned by the
Company, free and clear of any Liens. Except as described in the
Exchange Act Filings, there are no outstanding subscriptions, options,
warrants, rights, convertible securities or other binding agreements or
commitments of any character obligating the Company or its Subsidiaries
to issue any securities other than the Warrants and the Additional
Warrants. Except as described in the Exchange Act Filings, no Person
other than the Purchaser has any rights to the registration of capital
stock or other securities of the Company, under the Act or otherwise.
Except as disclosed in the Exchange Act Filings, in the employment
agreements summarized therein and in the separate purchase agreements
and registration rights agreements referred to therein, there is no
agreement, understanding or arrangement among the Company or its
Subsidiaries and its respective stockholders or any other person
relating to the ownership or disposition of any capital stock in the
Company or any of its Subsidiaries, the election of directors of the
Company or any of its Subsidiaries or the governance of the Company's
or any such Subsidiary's affairs; and no such agreements, arrangements
or understandings will be breached or violated as a result of the
execution and delivery of, or the consummation of the transactions
contemplated by, this Agreement, the Basic Documents or the Exchange
Documents. The Company has reserved for issuance upon exercise of the
Warrants and the Additional Warrants, as the case may be, shares of
Class A Common Stock sufficient in number for exercise of all of the
Warrants and the Additional Warrants, as the case may be, at the
initial exercise price, and the Warrant Shares and Additional Warrant
Shares will, upon issuance, be fully paid, nonassessable and free of
preemptive rights and will not be subject to any restrictions on the
transfer thereof except for such restrictions set forth herein and in
the Warrant Agreement and under the Act.
(e) The Certificate of Designation has been duly authorized by
the Company, its board of directors and all
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required stockholder action and when executed and delivered by the
Company and filed with the Secretary of State of the State of Delaware
will constitute a valid and legally binding agreement of the Company,
enforceable against it in accordance with its terms except that the
enforcement thereof may be subject to bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or similar laws now
or hereafter in effect relating to creditors' rights and remedies
generally and general principles of equity and the discretion of the
court before which any proceeding therefor may be brought. The Restated
Certificate of Incorporation of the Company, by virtue of the
Certificate of Designation, sets forth the rights, preferences and
priorities of the Preferred Stock.
(f) The form and terms of the Exchange Indenture has been duly
authorized by the Company and the Guarantors and, if executed and
delivered by the Company and the Guarantors as may be required by the
terms of this Agreement (assuming the due authorization, execution and
delivery by the Trustee (as defined in the Exchange Indenture)), will
constitute a valid and legally binding agreement of the Company and the
Guarantors, enforceable against each of them in accordance with its
terms, except as such enforceability may be limited by (i) bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or
similar laws now or hereafter in effect relating to creditors' rights
and remedies generally and (ii) general equitable principles, whether
asserted in an action at law or in equity, and that such enforceability
may be subject to the discretion of the court before which any
proceedings therefor may be brought.
(g) The Warrant Agreement has been duly authorized by the
Company and, when executed and delivered by the Company (assuming the
due authorization, execution and delivery by the Warrant Agent (as
defined in the Warrant Agreement)), will constitute a valid and legally
binding agreement of the Company, enforceable against it in accordance
with its terms, except as such enforceability may be limited by (i)
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or similar laws now or hereafter in effect relating to
creditors' rights and remedies generally and (ii) general equitable
principles, whether asserted in an action at law or in equity, and that
such enforceability may be subject to the
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discretion of the court before which any proceedings therefor may be
brought.
(h) Each of this Agreement and the Preferred Stock
Registration Rights Agreement has been duly authorized by the Company
and, when executed and delivered by the Company (assuming the due
authorization, execution and delivery by the Purchaser), will
constitute a valid and legally binding agreement of the Company,
enforceable against it in accordance with its terms, except as such
enforceability may be limited by (i) bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or similar laws now or hereafter
in effect relating to creditors' rights and remedies generally and (ii)
general equitable principles, whether asserted in an action at law or
in equity, and that such enforceability may be subject to the
discretion of the court before which any proceedings therefor may be
brought.
(i) The Common Stock Registration Rights Agreement has been
duly authorized by the Company and, when executed and delivered by the
Company and certain stockholders who are parties thereto (assuming the
due authorization, execution and delivery by the Purchaser), will
constitute a valid and legally binding agreement of the Company,
enforceable against the Company in accordance with its terms, except as
such enforceability may be limited by (i) bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or similar laws now
or hereafter in effect relating to creditors' rights and remedies
generally and (ii) general equitable principles, whether asserted in an
action at law or in equity, and that such enforceability may be subject
to the discretion of the court before which any proceedings therefor
may be brought.
(j) The form and terms of the Exchange Notes have been duly
authorized by the Company and, if the Exchange Notes are executed by
the Company and authenticated by the Trustee in accordance with the
provisions of the Exchange Indenture as may be required by the terms of
this Agreement, and issued by the Company to the Purchaser in
accordance with the terms of this Agreement, the Exchange Notes will be
entitled to the benefits of the Exchange Indenture and will constitute
valid and legally binding obligations of the Company enforceable in
accordance with their terms, except as such enforceability may be
limited by (i) bankruptcy, insolvency, fraudulent conveyance,
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reorganization, moratorium or similar laws now or hereafter in effect
relating to creditors' rights and remedies generally and (ii) general
equitable principles, whether asserted in an action at law or in
equity, and that such enforceability may be subject to the discretion
of the court before which any proceedings therefor may be brought.
(k) The Guarantee endorsed on the Exchange Notes have each
been duly authorized by the Guarantors and, if the Exchange Notes are
executed by the Company and authenticated by the Trustee in accordance
with the provisions of the Exchange Indenture as may be required by the
terms of this Agreement and issued by the Company to the Purchaser in
accordance with the terms of this Agreement, the Guarantee will be
entitled to the benefits of the Exchange Indenture and will constitute
valid and legally binding obligations of the Guarantors enforceable in
accordance with their terms, except as such enforceability may be
limited by (i) bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar laws now or hereafter in effect
relating to creditors' rights and remedies generally and (ii) general
equitable principles, whether asserted in an action at law or in
equity, and that such enforceability may be subject to the discretion
of the court before which any proceedings therefor may be brought.
(l) The Warrants and the Additional Warrants, as the case may
be, have each been duly authorized by the Company and, when the
Warrants and the Additional Warrants, as the case may be, are executed
by the Company and countersigned by the Warrant Agent in accordance
with the provisions of the Warrant Agreement and issued by the Company
to the Purchaser in accordance with the terms of this Agreement, the
Warrants and the Additional Warrants, as the case may be, will be
entitled to the benefits of the Warrant Agreement and will constitute
valid and legally binding obligations of the Company enforceable in
accordance with their terms, except as such enforceability may be
limited by (i) bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar laws now or hereafter in effect
relating to creditors' rights and remedies generally and (ii) general
equitable principles, whether asserted in an action at law or in
equity, and that such enforceability may be subject to the discretion
of the court before which any proceedings therefor may be brought.
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(m) Each of the Company and the Guarantors (to the extent a
party thereto) has all requisite corporate power and authority to (i)
execute, deliver and perform its obligations under this Agreement, each
of the Basic Documents and each of the Exchange Documents, (ii)
execute, deliver and perform its obligations under all other agreements
and instruments executed and delivered by the Company pursuant to or in
connection with this Agreement, each of the Basic Documents and each of
the Exchange Documents and (iii) issue the Securities, the Additional
Warrants and the Additional Warrant Shares pursuant hereto in the
manner and for the purpose contemplated by this Agreement. The
execution and delivery by the Company and the Guarantors (to the extent
a party thereto) of this Agreement, each of the Basic Documents and
each of the Exchange Documents, and the consummation of the
transactions contemplated hereby and thereby have been duly and validly
authorized by the Company and the Guarantors (to the extent a party
thereto).
(n) Subsequent to the date as of which information is given in
the Exchange Act Filings and immediately prior to the Time of Purchase
and each Additional Time of Purchase there has not been or in the case
of the Additional Time of Purchase, will not have been (i) any event or
condition that has had or that would reasonably be expected to have a
Material Adverse Effect on the Company and its Subsidiaries, taken as a
whole, (ii) any transaction entered into by the Company or any
Subsidiary, other than in the ordinary course of business, that is
material to the Company and its Subsidiaries, taken as a whole, or
(iii) any dividend or distribution of any kind declared, paid or made
by the Company on its Common Stock that has not been approved by the
Purchaser in writing.
(o) There is no action, suit, investigation or proceeding,
governmental or otherwise, pending or, to the best knowledge of the
Company, threatened to which the Company or any of its Subsidiaries is
or would be a party or of which the properties of the Company or its
Subsidiaries are or may be subject, that (i) seeks to restrain, enjoin,
prevent the consummation of or otherwise challenge the issuance and
sale of the Securities by the Company or any of the other transactions
contemplated hereby, (ii) questions the legality or validity of any
such transactions or seeks to recover damages or obtain
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other relief in connection with any such transactions or (iii) would
have a Material Adverse Effect.
(p) The execution, delivery and performance by the Company and
the Guarantors (to the extent a party thereto) of this Agreement, the
Basic Documents and the Exchange Documents, and the issuance and sale
by the Company of the Securities, the Additional Warrants and the
Additional Warrant Shares, the making of the Guarantees by the
Guarantors, and the execution, delivery and performance by the Company
and each of the Guarantors (to the extent each is a party thereto) of
all other agreements and instruments to be executed and delivered by
the Company and the Guarantors pursuant hereto or thereto or in
connection herewith or therewith, and compliance by the Company and the
Guarantors (to the extent a party thereto) with the terms and
provisions hereof and thereof, do not and will not (i) violate any
provision of any law, rule or regulation (including, without
limitation, Regulation G, T, U or X of the Board of Governors of the
Federal Reserve System), order, writ, judgment, decree, determination
or award presently in effect or in effect at the Time of Purchase or
any Additional Time of Purchase, as the case may be, having
applicability to the Company or any of its Subsidiaries, (ii) conflict
with or result in a breach of or constitute a default under the
certificate of incorporation or by-laws of the Company or any of the
Subsidiaries, or, as of the Time of Purchase or any Additional Time of
Purchase, as the case may be, any indenture or loan or credit
agreement, or any other agreement or instrument, to which the Company
or any of its Subsidiaries is a party or by which the Company or any of
the Subsidiaries or any of their respective properties may be bound or
affected, or (iii) except as contemplated by this Agreement, the Basic
Documents and the Exchange Documents, result in, or require the
creation or imposition of, any Lien upon or with respect to any of the
properties now owned or hereafter acquired by the Company or any of the
Subsidiaries, except, in the case of (i), (ii) or (iii), where such
violation, conflict, default or creation or imposition of any Lien
would not (individually or in the aggregate) have a Material Adverse
Effect.
(q) Each agreement or instrument executed and delivered by the
Company or the Guarantors (to the extent a party thereto) in connection
with this Agreement (other than the Securities, the Basic Documents and
the Exchange Documents) has been duly and validly authorized, executed
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and delivered by the Company and the Guarantors (to the extent a party
thereto) and constitutes or will constitute a legal, valid and binding
obligation of the Company and the Guarantors (to the extent a party
thereto), enforceable against the Company and the Guarantors in
accordance with its terms, except as such enforceability may be limited
by (i) bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or similar laws now or hereafter in effect relating to
creditors' rights and remedies generally and (ii) general equitable
principles, whether asserted in an action at law or in equity, and that
such enforceability may be subject to the discretion of the court
before which any proceedings therefor may be brought.
(r) Immediately after giving effect to the consummation of the
transactions contemplated by this Agreement (including the potential
issuance of the Exchange Notes), neither the Company nor any of its
Subsidiaries (i) will be in violation of its respective certificate of
incorporation or by-laws, (ii) will be in default (nor will an event
occur which with notice or passage of time or both would constitute
such a default) under or in violation of any indenture or loan or
credit agreement or any other material agreement or instrument to which
it is a party or by which it or any of its properties may be bound or
affected, (iii) will be in violation of any order of any court,
arbitrator or governmental body or subject to or party to any order of
any court or governmental authority arising out of any action, suit or
proceeding under any statute or other law respecting antitrust,
monopoly, restraint of trade, unfair competition or similar matters or
(iv) will have violated or be in violation of any such statute, rule or
regulation of any governmental authority, which default or violation
(individually or in the aggregate) would (x) affect the legality,
validity or enforceability of this Agreement or any of the Basic
Documents or Exchange Documents or (y) have a Material Adverse Effect.
(s) No authorization, consent, approval, license,
qualification or formal exemption from, nor any filing, declaration or
registration with, any court, governmental agency or regulatory
authority or any securities exchange is required (other than any filing
seeking consent which may be, under certain circumstances, required
upon the exercise of the Warrants) in connection with the execution,
delivery or performance by the Company or any
<PAGE> 21
-17-
of its Subsidiaries (to the extent they are a party thereto) of this
Agreement, any of the Basic Documents or Exchange Documents, except (i)
as may be required under state securities or "blue sky" laws or the
laws of any foreign jurisdiction in connection with the offer and sale
of the Securities, the Additional Warrants or the Additional Warrant
Shares or (ii) as would not (individually or in the aggregate) have a
Material Adverse Effect. All such authorizations, consents, approvals,
licenses, qualifications, exemptions, filings, declarations and
registrations which are required to have been obtained or made as of
the Time of Purchase have been (or in the case of any Additional Time
of Purchase and the issuance of the Exchange Notes pursuant to the
Exchange Indenture, will have been) obtained or made, as the case may
be, and are (or in the case of any Additional Time of Purchase and the
issuance of the Exchange Notes pursuant to the Exchange Indenture, will
be) in full force and effect and not the subject of any pending or, to
the knowledge of the Company, threatened attack by appeal or direct
proceeding or otherwise.
(t) The Company is not an "investment company" or a company
"controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended, and the Company will not be
immediately after the Time of Purchase or any Additional Time of
Purchase, as the case may be, an "investment company" within the
meaning of such Act.
(u) The execution and delivery of this Agreement, the other
Basic Documents, the Exchange Documents and the sale of the Securities,
the Additional Warrants and the Additional Warrant Shares to the
Purchaser will not involve any non-exempt prohibited transaction within
the meaning of Section 406 of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), or Section 4975 of the Code on the
part of the Company or any of its Subsidiaries. The preceding
representation is made in reliance upon, and subject to the accuracy
of, the representation made in Section 3.2(b) as to the Purchaser. The
Company does not and, at and as of the Time of Purchase or any
Additional Time of Purchase, as the case may be, the Company will not
reasonably expect to have any liability for any prohibited transaction
or funding deficiency or any complete or partial withdrawal liability
with respect to any pension, profit sharing or other plan which is
subject to ERISA and which is required to be
<PAGE> 22
-18-
funded, to which the Company makes or ever has made a contribution and
in which any employee of the Company is or has ever been a participant.
With respect to such plans, the Company is and, at and as of the Time
of Purchase or any Additional Time of Purchase, as the case may be, the
Company will be in compliance in all material respects with all
applicable provisions of ERISA.
(v) The Company and each of its Subsidiaries have good and
valid title to, or valid and enforceable leasehold interests in, all
properties and assets identified in the Exchange Act Filings as owned
by each of them which are material to the business of the Company and
its Subsidiaries, taken as a whole, free and clear of all Liens, except
(i) such Liens as are described in the Exchange Act Filings or (ii)
Liens created in the ordinary course of business which are Permitted
Liens (as defined in the Indenture). All of the leases material to the
business of the Company and the Subsidiaries, taken as a whole, and
under which the Company or any Subsidiary holds properties described in
the Exchange Act Filings, are valid and binding as leased by them, with
such exceptions as are not material and do not materially interfere
with the use made and proposed to be made of such properties by the
Company and its Subsidiaries.
(w) All tax returns required to be filed by the Company or any
of its Subsidiaries in any jurisdiction (including foreign
jurisdictions) have been so filed and all taxes, assessments, fees and
other charges including, without limitation, withholding taxes,
penalties, and interest ("Taxes") due or claimed to be due have been
paid, other than those Taxes being contested in good faith and those
Taxes for which adequate reserves or accruals have been established in
accordance with generally accepted accounting principles, except where
the failure to file such returns or to pay such Taxes is not reasonably
likely to have, singly or in the aggregate, a Material Adverse Effect.
The Company knows of no actual or proposed additional tax assessments
for any fiscal period against the Company or any of its Subsidiaries
that, individually or in the aggregate, would have a Material Adverse
Effect.
(x) The Company and its Subsidiaries are the sole and
exclusive owners or licensees of all trade names, unregistered
trademarks and service marks, brand names, patents, registered and
unregistered copyrights,
<PAGE> 23
-19-
registered trademarks and service marks, and all applications for any
of the foregoing, and all permits, grants and licenses or other rights
with respect thereto, the absence of which would not have a Material
Adverse Effect. Neither the Company nor any of its Subsidiaries has
been charged with any material infringement of any intangible property
of the character described above or been notified or advised of any
material claim of any other Person relating to any of the intangible
property which infringements or claims (individually or in the
aggregate) would have a Material Adverse Effect.
(y) Except as set forth in the Exchange Act Filings, the
Company and its Subsidiaries comply with all laws, rules and
regulations applicable to the Company and each such Subsidiary, and the
Company and its Subsidiaries own or possess and are operating in
compliance in all material respects with the terms, provisions,
conditions, restrictions and limitations contained in all licenses,
franchises, approvals, certificates and permits from all Federal,
state, territorial, foreign and local governmental and regulatory
authorities which are necessary to own or lease their respective
properties and assets and to the conduct of their respective businesses
(other than such laws, rules, regulations, licenses, franchises,
approvals, certificates or permits that are immaterial in scope or
application to the Company and its Subsidiaries, taken as a whole),
including, without limitation, licenses, franchises and approvals from
the FCC, except where the failure to comply with any of the foregoing
would not have a Material Adverse Effect. Except as otherwise set forth
in the Exchange Act Filings, there are no citations or notices of
forfeiture or other proceedings pending or, to the best knowledge of
the Company, threatened or any basis therefor, which would lead to the
revocation, termination, suspension or non-renewal of any such license,
franchise, approval, certificate or permit the result of which have a
Material Adverse Effect. Except as otherwise set forth in the Exchange
Act Filings, there are no restrictions or limitations contained in any
applicable license, franchise, approval, certificate or permit, or, to
the best knowledge of the Company, threatened or proposed in any
pending or contemplated hearing, proceeding or procedure, that would
have a Material Adverse Effect.
(z) Neither the Company nor any of its affiliates (as defined
in Rule 501(b) of Regulation D under the Act)
<PAGE> 24
-20-
has directly, or through any agent, (i) sold, offered for sale,
solicited offers to buy or otherwise negotiated in respect of, any
security (as defined in the Act) which is or will be integrated with
the sale of the Securities in a manner that would require the
registration under the Act of the Securities or (ii) engaged in any
form of general solicitation or general advertising in connection with
the offering of the Preferred Stock or the Warrants (as those terms are
used in Regulation D under the Act) or in any manner involving a public
offering within the meaning of Section 4(2) of the Act.
(aa) Assuming the accuracy of the Purchaser's representations
and warranties set forth in Section 3.2 hereof and the due performance
by the Purchaser of the covenants and agreements set forth in Section
3.2 hereof, the sale of the Securities to the Purchaser in the manner
contemplated by this Agreement does not require registration under the
Act.
(ab) The Company and its Subsidiaries have complied with all
provisions of Florida H.B. 1771, codified as Section 517.075 of the
Florida Statutes, and all regulations promulgated thereunder relating
to issuers doing business with the Government of Cuba or with any
Person or any Affiliate located in Cuba.
Section 3.2. Representations and Warranties of the Purchaser.
(a) The Purchaser represents and warrants to, and covenants and agrees with, the
Company and the Guarantors that: (1) the Securities, any Additional Warrants and
any Additional Warrant Shares to be acquired by it hereunder are being acquired
for its own account or an account with respect to which it exercises sole
investment discretion and it or any such account is a "qualified institutional
buyer" as defined in Rule 144A of the Act ("QIB") and has no intention of
distributing or reselling such Securities, Additional Warrants or Additional
Warrant Shares or any part thereof in any transaction which would be in
violation of the securities laws of the United States of America or any state;
(2) it acknowledges that the Securities, Additional Warrants and Additional
Warrant Shares have not been or will not be registered under the Act and that
none of the Securities, Additional Warrants or Additional Warrant Shares may be
offered or sold within the United States or to, or for the account or benefit
of, U.S. persons except as set forth below; (3) it shall not resell or otherwise
transfer any of such Securities, Additional Warrants or Additional Warrant
Shares within three
<PAGE> 25
-21-
years after the original issuance of the Securities, Additional Warrants or
Additional Warrant Shares except (A) to the Company or any of its Subsidiaries,
(B) inside the United States to a QIB in compliance with Rule 144A, (C) inside
the United States to an "Accredited Investor" (as defined in Rule 501(a)(1),
(2), (3) or (7) of the Act) that, prior to such transfer, furnishes (or has
furnished on its behalf by U.S. broker-dealer) to the Company and/or the Warrant
Agent a signed letter containing certain representations and agreements relating
to the restrictions on transfer of the Securities, (D) outside the United States
in compliance with Rule 904 under the Act, (E) pursuant to any other exemption
from registration provided under the Act (if available) including Rule 144
thereunder or (F) pursuant to an effective registration statement under the Act;
and (4) it will give to each person to whom it transfers the Securities,
Additional Warrants or Additional Warrant Shares, as the case may be, notice of
any restrictions on transfer of such Securities, Additional Warrants or
Additional Warrant Shares, as the case may be; and subject, nevertheless, to the
disposition of the Purchaser's property being at all times within its control.
If the Purchaser should in the future decide to dispose of any of the
Securities, Additional Warrants or Additional Warrant Shares, as the case may
be, the Purchaser understands and agrees that it may do so only in compliance
with the Act, as then in effect, and that stop-transfer instructions to that
effect will be in effect with respect to the Securities, Additional Warrants and
the Additional Warrant Shares. If the Purchaser should decide to transfer or
otherwise dispose of the Securities, Additional Warrants or Additional Warrant
Shares, as the case may be, the Purchaser shall comply with the requirements set
forth in the Exchange Indenture and the Warrant Agreement. The Purchaser agrees
to the imprinting, so long as required by the terms of the relevant Basic
Document or Exchange Document, as the case may be, of the applicable legends
contained in the Exchange Indenture on each Exchange Note and of the applicable
legends contained in the Warrant Agreement on each certificate representing
Warrants, Warrant Shares, Additional Warrants or Additional Warrant Shares.
(b) If the Purchaser is an insurance company it also
represents that no part of the funds to be used to purchase the Securities to be
purchased by it constitutes or is deemed to constitute assets from an employee
benefit plan (as such term is defined below). If the Purchaser is not an
insurance company it also represents that no part of the funds to be used to
purchase the Securities to be purchased by the Purchaser constitutes assets of
any employee benefit plan, except as
<PAGE> 26
-22-
otherwise disclosed in writing to the Company on or prior to the Closing Date.
As used in this Section 3.2(b), the term "employee benefit plan" shall have the
meaning assigned to such term in Section 3 of ERISA.
(c) The Purchaser also represents and warrants to the Company
that (i) it has received and reviewed the Information; (ii) it has authorized
the purchase of the Securities; and (iii) the purchase of Securities does not
violate its charter, by-laws, other organizational documents or any law or
regulation to which it is subject.
ARTICLE IV
CONDITIONS PRECEDENT TO CLOSING
Section 4.1. Conditions Precedent to Obligations of the
Purchaser. The obligation of the Purchaser to purchase the Securities to be
purchased by it hereunder is subject, at the Time of Purchase and at each
Additional Time of Purchase, as the case may be, to the satisfaction of the
following conditions:
(a) The Purchaser shall have received an opinion, addressed to
it in form and substance reasonably satisfactory to the Purchaser and
dated the Time of Purchase and at each Additional Time of Purchase, as
the case may be, of Pryor, Cashman, Sherman & Flynn, counsel to the
Company and the Guarantors, substantially in the form of Exhibit 6
hereto.
(b) The Purchaser shall have received an opinion, addressed to
it in form and substance reasonably satisfactory to the Purchaser and
dated the Time of Purchase and at each Additional Time of Purchase, as
the case may be, of Haley, Bader & Potts, special communications
counsel to the Company and the Guarantors, substantially in the form of
Exhibit 7 hereto.
(c) The Purchaser shall have received an opinion, addressed to
it in form and substance reasonably satisfactory to the Purchaser and
dated the Time of Purchase and at each Additional Time of Purchase, as
the case may be, of Cahill Gordon & Reindel, special counsel to the
Purchaser (the "Special Counsel"), substantially in the form of Exhibit
8 hereto.
<PAGE> 27
-23-
In rendering such opinions in accordance with Sections 4.1(a),
(b) and (c), each such counsel may rely as to factual matters upon
certificates or other documents furnished by officers and directors of
the Company and representations of the Purchaser and by government
officials, and upon such other documents as such counsel deem
appropriate as a basis for their opinion. Each such counsel may specify
the jurisdictions in which it is admitted to practice and that it is
not admitted to practice in any other jurisdiction and is not an expert
in the law of any other jurisdiction. To the extent such opinion
concerns the laws of any other such jurisdiction such counsel may rely
upon the opinion of counsel (reasonably satisfactory to the Purchaser)
admitted to practice in such jurisdiction. Any opinion relied upon by
such counsel as aforesaid shall be delivered to the Purchaser together
with the opinion of such counsel, which opinion shall state that such
counsel believes that it and the Purchaser's reliance thereon is
justified.
(d) The representations and warranties made by the Company or
any Guarantor herein shall be true and correct in all material respects
(except for changes expressly provided for in this Agreement) on and as
of the Time of Purchase and each Additional Time of Purchase, as the
case may be, with the same effect as though such representations and
warranties had been made on and as of the Time of Purchase or such
Additional Time of Purchase, as the case may be, the Company and the
Guarantors shall have complied in all material respects with all
agreements as set forth in or contemplated hereunder and in the Basic
Documents and Exchange Documents, as the case may be, required to be
performed by it at or prior to the Time of Purchase and at each
Additional Time of Purchase, as the case may be.
(e) Subsequent to the date of the Exchange Act Filings, (i)
there shall not have been any change, or any development involving a
prospective change, which has affected or may affect materially and
adversely the businesses, properties or prospects or the financial
condition or the results of operations of the Company and the
Subsidiaries, taken as a whole; and (ii) the Company and the
Subsidiaries shall have conducted their respective businesses only in
the ordinary course.
(f) At the Time of Purchase and at each Additional Time of
Purchase, as the case may be, and after giving
<PAGE> 28
-24-
effect to the consummation of the transactions contemplated by this
Agreement and the Basic Documents, there shall exist no Default or
Event of Default.
(g) As to the Purchaser, the purchase of and payment for the
Securities, the Additional Warrants and the Additional Warrant Shares
by the Purchaser hereunder or under the Warrant Agreement (i) shall not
be prohibited or enjoined (temporarily or permanently) by any
applicable law or governmental regulation (including, without
limitation, Regulation G, T, U or X of the Board of Governors of the
Federal Reserve System), (ii) shall not subject the Purchaser to any
penalty, or in its reasonable judgment, other onerous condition under
or pursuant to any applicable law or governmental regulation (provided,
however, that such regulation, law or onerous condition was not in
effect at the date of this Agreement), and (iii) shall be permitted by
the laws and regulations of the jurisdictions to which it is subject.
(h) At the Time of Purchase and at each Additional Time of
Purchase, the Purchaser shall have received a certificate, dated the
Time of Purchase or such Additional Time of Purchase, as the case may
be, from the Company stating that the conditions specified in Sections
4.1(d), (e) and (f) have been satisfied or duly waived at the Time of
Purchase or Additional Time of Purchase, as the case may be.
(i) Each of the Basic Documents and Exchange Documents shall
be substantially in the form attached hereto and the Basic Documents
(and if appropriate, the Exchange Documents) shall have been executed
and delivered by all the respective parties thereto and shall be in
full force and effect.
(j) The Time of Purchase shall not be later than 5:00 P.M.,
New York City time, on May 2, 1996, subject to extension if the
Purchaser agrees to extend the Time of Purchase upon request to do so
by the Company.
(k) All proceedings taken in connection with the issuance of
the Securities, the Additional Warrants and the Additional Warrant
Shares and the transactions contemplated by this Agreement, the Basic
Documents, the Exchange Documents and all documents and papers relating
thereto shall be reasonably satisfactory to the Purchaser and Special
Counsel. The Purchaser and Special Counsel
<PAGE> 29
-25-
shall have received copies of such papers and documents as they may
reasonably request in connection therewith, all in form and substance
reasonably satisfactory to them.
(l) All costs and any delay fees due and owing and expenses
(including, without limitation, legal fees and expenses) required to be
paid to or on behalf of the Purchaser on or prior to the Time of
Purchase or the Additional Time of Purchase, as the case may be,
pursuant to this Agreement and all fees and expenses payable to the
Special Counsel shall have been paid.
(m) The Certificate of Designation shall have been duly filed
with the Secretary of State of the State of Delaware.
(n) On or before the Time of Purchase or the Additional Time
of Purchase, as the case may be, the Purchaser and Special Counsel
shall have received such further documents, opinions, certificates and
schedules or other instruments relating to the business, corporate,
legal and financial affairs of the Company and its Subsidiaries as they
may reasonably request.
Section 4.2. Conditions Precedent to Obligations of the
Company and the Guarantors. The obligations of the Company and the Guarantors to
issue and sell the Securities, the Additional Warrants and the Additional
Warrant Shares pursuant to this Agreement and to guarantee the Exchange Notes,
respectively, are subject, at the Time of Purchase and at each Additional Time
of Purchase, as the case may be, to the satisfaction of the following
conditions:
(a) The representations and warranties made by the Purchaser
herein shall be true and correct in all material respects at and as of
the Time of Purchase and at each Additional Time of Purchase, as the
case may be, with the same effect as though such representations and
warranties had been made on and as of the Time of Purchase or each
Additional Time of Purchase, as the case may be.
(b) The issuance or sale of the Securities, the Additional
Warrants and the Additional Warrant Shares by the Company shall not be
enjoined under the laws of any jurisdiction to which the Company is
subject (temporarily or permanently) at the Time of Purchase and at
each Additional Time of Purchase, as the case may be.
<PAGE> 30
-26-
(c) Each of the Basic Documents and the Exchange Documents
shall be satisfactory in form and substance to the Company and shall
have been executed and delivered by all respective parties thereto and
shall be in full force and effect and counsel to the Company shall have
received a copy of each of such documents duly executed by such
parties.
ARTICLE V
COVENANTS
Section 5.1. Furnishing of Information. The Company will
furnish to the Purchaser, as long as the Purchaser owns any Preferred Stock,
Exchange Notes or Warrants, the information required by the Certificate of
Designation, the Exchange Indenture or the Warrant Agreement, as the case may
be.
Section 5.2. Use of Proceeds. The Company will use the
proceeds from the issuance and sale of the Securities substantially to acquire
radio broadcast assets and to pay fees and expenses related thereto and to the
issuance of the Securities.
Section 5.3. Treatment of Dividends for Income Tax Purposes.
The Company covenants and agrees for the benefit of the Purchaser of Preferred
Stock and for the benefit of each subsequent holder of Preferred Stock that the
Company (i) will not claim as an expense reducing taxable income any dividends
paid on the Preferred Stock in any Federal income tax return, claim for refund,
or other statement, report or submission, except to the extent that there may be
no reasonable basis in law to do otherwise; and (ii) will make any election (or
take any other action) which may become necessary to comply with clause (i). At
the reasonable request of the Purchaser or subsequent holder of Preferred Stock
(and at the expense of such Purchaser or subsequent holder), the Company will
join in the submission to the Internal Revenue Service of a request for a ruling
that the dividends paid on the Preferred Stock will be eligible for the
dividends received deduction under Section 242(a)(1) of the Code. In addition,
the Company will cooperate with the Purchaser or subsequent holder of Preferred
Stock in any litigation, appeal, or other proceeding relating to the eligibility
for the dividends received deduction under Section 243(a)(1) of the Code of any
dividends (within the meaning of Section 316(a) of the Code) paid on the
Preferred Stock, provided that the Purchaser or subsequent holder shall
<PAGE> 31
-27-
reimburse the Company for its reasonable out-of-pocket expenses in connection
with such proceeding. To the extent possible, the principles of this Section 5.3
shall also apply with respect to state and local taxes. The Company will use its
best efforts to ensure that distributions made with respect to the Preferred
Stock are treated as dividends within the meaning of Section 316(a) of the Code
consistent with the operations of its business in the ordinary course and with
the accounting method and principles then in use. The obligations of the Company
hereunder shall survive the payment, redemption or exchange of the Preferred
Stock, the transfer of the Preferred Stock, and the termination of this
Agreement, the Basic Documents or any of the Exchange Documents.
Section 5.4. Exchange Indenture. The Company covenants that,
if required by the terms of the Exchange Notes and Preferred Stock Registration
Rights Agreement, it shall cause the Exchange Indenture (with such changes as
are permitted by such Exchange Indenture or as have been consented to by the
holders of a majority in principal amount of the Exchange Notes then
outstanding) to be qualified under the Trust Indenture Act. The Trustee under
the Exchange Indenture shall be selected by the Company and reasonably
satisfactory to a majority in principal amount of the Securities outstanding at
the time of such approval. The Company shall deliver copies of the Exchange
Indenture as qualified under the Trust Indenture Act, in the form duly executed
by the Company and the Trustee thereunder, to each holder of the Securities no
later than the time of such qualification.
Section 5.5. Original Issue Discount. The Company agrees and
covenants for the benefit of the Purchaser and each subsequent holder of
Securities that no deduction for original issue discount of the Exchange Notes
in excess of the amount calculated in accordance with the second paragraph of
Section 2.1 will be claimed on any Federal income tax return or claim for refund
of Federal income tax or other submission to the Internal Revenue Service;
provided that the Company may assert a deduction for additional original issue
discount if (i) in the opinion of Counsel (as defined below) proposed or final
Treasury regulations under the Code or any amendment to the Code provides, or
the holding in any Revenue Ruling or other official announcement from the
Department of Treasury including the Internal Revenue Service or in any case
decided by a Federal court including the Tax Court and the Claims Court, fairly
implies, that holders of the Securities are required to include in income
additional original issue discount on the Securities, or (ii) the Internal
Revenue Service asserts in
<PAGE> 32
-28-
connection with an audit involving the Company, the Purchaser (or any subsequent
holder) or any other issuer or holder which in the opinion of Counsel is
similarly situated, that the Securities or similar securities have additional
original issue discount within the meaning of Section 1273 of the Code, or any
successor provision. For purposes of this Section 5.5, the term "Counsel" shall
mean such counsel of national standing as may be approved by the Company and
which counsel has no conflict of interest with either the Company or the
Purchaser.
Section 5.6. Purchaser Representative. If the Preferred Stock
continues to be outstanding on and after November 1, 1996, the Purchaser shall
be entitled to appoint a representative to the Board of Directors who shall be
permitted to attend all meetings of the Board of Directors, but who shall have
no voting power. Such representative shall be given the same notice of any
meeting of the Board of Directors as is required to be provided to a member of
the Board of Directors and shall be entitled to participate in discussions and
consult with the Board of Directors. In addition, such representative shall
receive copies of all documents and shall have the same access to information
provided to members of the Board of Directors, in each case, at the same time as
such members of the Board of Directors.
Section 5.7. Issuance of Additional Warrants. If the Preferred
Stock continues to be outstanding on and after November 1, 1996, the Company
will issue Additional Warrants (identical to the Warrants) under the Warrant
Agreement exercisable for Additional Warrant Shares equal to 1% of the Company's
fully diluted Common Stock for each $2,500,000 aggregate liquidation value of
the Preferred Stock outstanding on November 1, 1996. All Additional Warrants
will be issued on a pro rata basis to the holders of outstanding Warrants based
on the number of Warrants held by each such holder. In no event shall Additional
Warrants be issued which will be exercisable for Warrant Shares constituting
more than 5.99% of the Company's fully diluted Common Stock (including the 7,550
Warrants to be issued to the Purchaser at the Time of Purchase).
Section 5.8. Preferred Stock. To the extent reasonably
permitted by applicable law the Company will treat the Preferred Stock as
"stock" for the purposes of the Code.
Section 5.9. Tax Matters. (a) The Company will make applicable
information return filings with respect to the Securities with the Internal
Revenue Service and other
<PAGE> 33
-29-
governmental authorities, and will provide relevant taxpayer copies to the
holders of such Securities.
(b) The Company will for federal income tax purposes withhold
31% (or such other rate as appropriate under applicable law) for payments and
other distributions to holders of the Securities who are or appear to be United
States persons (as defined in Section 7701(a)(30) of the Code), in respect of
payments or distributions treated as dividends or interest, unless the Company
receives a properly completed Form W-9 or other applicable form, certificate or
document prescribed by the Internal Revenue Service prior to a given payment or
distribution, certifying as to such holder's entitlement to an exemption from
any such withholding requirements.
(c) The Company will for federal income tax purposes withhold
from payments or other distributions to holders of Securities who are not or
appear not to be United States persons 30% (or such other rate as generally
appropriate under applicable law) in respect of payments or other distributions
treated as dividends or interest, unless the holder provides the Company with
Form W-8, Form 4224, Form 1001 or other applicable form, certificate or document
prescribed by the Internal Revenue Service (which has not expired or become
obsolete without the furnishing of an appropriate current replacement) properly
completed and certifying as to such holder's entitlement under an applicable
income tax treaty, to an exemption from any such withholding requirements or to
a reduced note of withholding.
(d) Neither Section 5.9(b) nor Section 5.9(c) hereof shall
require the Company to apply an exemption or reduced rate of withholding during
any period when it shall have received notice or has knowledge that the
residence or other information previously provided on any applicable form,
certificate or document is incorrect and no corrected form, certificate or
document as applicable has been provided to the Company.
ARTICLE VI
FEES
Section 6.1. Delay Fees. If the Closing or any Additional
Closing, as the case may be, shall not actually occur on any date on which the
Closing or such Additional Closing, as the case may be, is scheduled to occur,
and the Company shall have failed to notify the Purchaser prior to 1:00 P.M.,
New York time, on the date of such scheduled Closing or
<PAGE> 34
-30-
Additional Closing, as the case may be, that such Closing or Additional Closing,
as the case may be, has been postponed, the Company shall pay to the Purchaser
(as compensation for the Purchaser's loss of funds and administrative costs) an
amount of immediately available funds equal to interest on the purchase price
for the Securities to have been purchased by the Purchaser on such scheduled
date at such Closing or Additional Closing, as the case may be, at the rate per
annum on the Securities which the Purchaser has agreed to purchase as if the
Securities had been issued on the scheduled date of Closing or Additional
Closing, as the case may be, for each day from and including such scheduled date
of Closing or Additional Closing, as the case may be, to but not including the
earlier of the date on which such Closing or Additional Closing, as the case may
be, actually occurs or the date on which the amount to be paid by the Purchaser
as said purchase price is available to such Purchaser for reinvestment, but in
any case not less than one day's interest; provided, however, that the Company
shall not owe the Purchaser anything under this Section 6.1 if the Company has
fulfilled all of its obligations under this Agreement and the Purchaser is not
willing or able to fulfill its obligations on the scheduled date of Closing or
Additional Closing, as the case may be.
ARTICLE VII
INDEMNITY
Section 7.1. Indemnity. (a) Indemnification by the Company.
The Company and the Guarantors, jointly and severally, agree and covenant to
hold harmless and indemnify the Purchaser and each Person, if any, who controls
the Purchaser within the meaning of Section 20 of the Exchange Act from and
against any losses, claims, damages, liabilities and expenses (including
expenses of investigation) to which the Purchaser or such controlling person may
become subject (i) arising out of or based upon any untrue statement or alleged
untrue statement of any material fact contained in the Information and any
amendments or supplements thereto or any documents filed with the Commission or
any State Commission or arising out of or based upon the omission or alleged
omission to state in the Information a material fact required to be stated
therein or necessary to make the statements therein not misleading or (ii)
arising out of, based upon or in any way related or attributed to claims,
actions or proceedings relating to this Agreement or the subject matter of this
Agreement or (iii) arising in any manner out of or in connection with such
Person being a Purchaser of the Securities
<PAGE> 35
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and relating to any action taken or omitted to be taken by the Company or any of
the Guarantors; provided, however, that the Company and the Guarantors shall not
be liable under this paragraph (a) for any amounts paid in settlement of claims
without its written consent, which consent shall not be unreasonably withheld,
or to the extent that it is finally judicially determined that such losses,
claims, damages or liabilities arose primarily out of the gross negligence,
willful misconduct or bad faith of the Purchaser. The Company and the Guarantors
further agree to reimburse the Purchaser for any reasonable legal and other
expenses as they are incurred by it in connection with investigating, preparing
to defend or defending any lawsuits, claims or other proceedings or
investigations arising in any manner out of or in connection with such Person
being a Purchaser; provided that if the Company or the Guarantors reimburse the
Purchaser hereunder for any expenses incurred in connection with a lawsuit,
claim or other proceeding for which indemnification is sought, the Purchaser
hereby agrees to refund such reimbursement of expenses to the extent it is
finally judicially determined that the losses, claims, damages or liabilities
arising out of or in connection with such lawsuit, claim or other proceedings
arose primarily out of the gross negligence, willful misconduct or bad faith of
the Purchaser or from a violation by the Purchaser of legal requirements
applicable to the Purchaser solely because of its character as a particular type
of regulated institution (except that the Company shall not be entitled to
reimbursement under this Section 7.1 if its representation in Section 3.1(v)
hereof applies to the legal requirements violated by the Purchaser). The Company
and the Guarantors further agree that the indemnification, contribution and
reimbursement commitments set forth in this Article VII shall apply whether or
not the Purchaser is a formal party to any such lawsuits, claims or other
proceedings. Notwithstanding the foregoing, the Company and the Guarantors shall
not be liable to a party seeking indemnification under the foregoing provisions
of this paragraph (a) to the extent that any such losses, claims, damages,
liabilities or expenses arise out of or are based upon an untrue statement or
omission made in any of the documents referred to in this paragraph (a) in
reliance upon and in conformity with the information relating to the party
seeking indemnification furnished in writing by such party for inclusion
therein. The indemnity, contribution and expense reimbursement obligations of
the Company and the Guarantors under this Article VII shall be in addition to
any liability the Company may otherwise have.
<PAGE> 36
-32-
(b) Procedure. If any Person shall be entitled to indemnity
hereunder (the "Indemnified Parties"), such Indemnified Party shall give prompt
notice confirmed in writing to the party or parties from which such indemnity is
sought (the "Indemnifying Parties") of the commencement of any proceeding (a
"Proceeding") with respect to which such Indemnified Party seeks indemnification
or contribution pursuant hereto; provided, however, that the failure so to
notify the Indemnifying Parties shall not relieve the Indemnifying Parties from
any obligation or liability except to the extent that the Indemnifying Parties
have been prejudiced materially by such failure. The Indemnifying Parties shall
have the right, exercisable by giving written notice to an Indemnified Party
promptly after the receipt of written notice from such Indemnified Party of such
Proceeding, to assume, at the Indemnifying Parties' expense, the defense of any
such Proceeding, with counsel reasonably satisfactory to such Indemnified Party;
provided, however, that an Indemnified Party or parties (if more than one such
Indemnified Party is named in any Proceeding) shall have the right to employ
separate counsel in any such Proceeding and to participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Party or parties unless: (1) the Indemnifying Parties agree to
pay such fees and expenses; or (2) the Indemnifying Parties fail promptly to
assume the defense of such Proceeding or fail to employ counsel reasonably
satisfactory to such Indemnified Party or parties; or (3) the named parties to
any such Proceeding (including any impleaded parties) include both such
Indemnified Party or Parties and the Indemnifying Party or an Affiliate of the
Indemnifying Party and such Indemnified Parties, and the Indemnifying Parties
shall have been advised in writing by counsel that there may be one or more
material defenses available to such Indemnified Party or parties that are
different from or additional to those available to the Indemnifying Parties, in
which case, if such Indemnified Party or parties notifies the Indemnifying
Parties in writing that it elects to employ separate counsel at the expense of
the Indemnifying Parties, the Indemnifying Parties shall not have the right to
assume the defense thereof and such counsel shall be at the expense of the
Indemnifying Parties, it being understood, however, that, unless there exists a
conflict among Indemnified Parties, the Indemnifying Parties shall not, in
connection with any one such Proceeding or separate but substantially similar or
related Proceedings in the same jurisdiction, arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more than
one separate firm of attorneys (together with appropriate local counsel, if any)
at any time for such Indemnified Party or
<PAGE> 37
-33-
parties, or for fees and expenses that are not reasonable. No Indemnified Party
or parties will settle any Proceedings without the written consent of the
Indemnifying Party or parties (but such consent will not be unreasonably
withheld).
Section 7.2. Contribution. If for any reason the
indemnification provided for in Section 7.1 of this Agreement is unavailable to
an Indemnified Party, or insufficient to hold it harmless, in respect of any
losses, claims, damages, liabilities or expenses referred to therein, then each
applicable Indemnifying Party, in lieu of indemnifying such Indemnified Party,
shall contribute to the amount paid or payable by such Indemnified Party as a
result of such losses, claims, damages or liabilities in such proportion as is
appropriate to reflect not only the relative benefits received by the
Indemnifying Party on the one hand and the Indemnified Party on the other, but
also the relative fault of the Indemnifying and Indemnified Parties in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative fault of the Indemnifying and Indemnified Parties
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Indemnifying or
Indemnified Parties and each such party's relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the losses, claims, damages
and liabilities referred to above shall be deemed to include any reasonable
legal or other fees or expenses incurred by such party in connection with
investigating or defending any such claim.
The Company and the Purchaser agree that it would not be just
and equitable if contribution pursuant to the immediately preceding paragraph
were determined by any method of allocation which does not take into account the
equitable considerations referred to in such paragraph. No person guilty of
fraudulent misrepresentation shall be entitled to contribution from any Person.
Section 7.3. Registration Rights Agreements. Notwithstanding
anything to the contrary in this Article VII, the indemnification and
contribution provisions of the Preferred Stock Registration Rights Agreement or
the Common Stock Registration Rights Agreement shall govern any claim with
respect thereto.
<PAGE> 38
-34-
ARTICLE VIII
MISCELLANEOUS
Section 8.1. Home Office Payment. Subject to the provisions of
the Basic Documents, the Company agrees that, so long as the original Purchaser
hereunder shall own Securities purchased by it hereunder, the Company will make
any payments to the Purchaser of principal, premium or interest due on any
Security not represented by a Global Certificate (and any liquidated damages
payments relating thereto pursuant to the Preferred Stock Registration Rights
Agreement) by wire transfer in immediately available funds by 2:00 p.m., local
time at the location in the United States of the Purchaser's account, on the
date of payment to such account as shall have been specified by separate written
notice to the Company by the Purchaser (providing sufficient information with
such wire transfer to identify the source and application of the funds and
requesting the bank to send a credit advice thereof to the Purchaser), or to
such other account or in such other similar manner as the Purchaser may
designate to the Company in writing.
Section 8.2. Survival of Provisions. The representations,
warranties and covenants of the Company and the Purchaser made herein, the
indemnity and contribution agreements contained herein and each of the
provisions of Articles V, VII and VIII shall remain operative and in full force
and effect regardless of (a) any investigation made by or on behalf of the
Company, the Purchaser or any Indemnified Party, (b) acceptance of any of the
Securities and payment therefor or (c) disposition of the Securities by the
Purchaser whether by redemption, exchange, sale or otherwise. The respective
agreements, covenants, indemnities and other statements set forth in Article VII
and Section 8.8 shall remain in full force and effect regardless of any
termination or cancellation of this Agreement.
Section 8.3. Termination. This Agreement may be terminated (as
to the party electing to so terminate it) at any time prior to the Time of
Purchase or Additional Time of Purchase, as the case may be:
(a) by the Company if any of the conditions specified in
Section 4.2 of this Agreement have not been met or waived by the
Company pursuant to the terms of this Agreement;
<PAGE> 39
-35-
(b) by the Purchaser if any of the conditions specified in
Section 4.1 of this Agreement have not been met or waived pursuant to
the terms of this Agreement.
Section 8.4. No Waiver; Modifications in Writing. (a) No
failure or delay on the part of the Company or the Purchaser in exercising any
right, power or remedy hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of any such right, power or remedy preclude any
other or further exercise thereof or the exercise of any other right, power or
remedy. The remedies provided for herein are cumulative and are not exclusive of
any remedies that may be available to the Company or the Purchaser at law or in
equity or otherwise. No waiver of or consent to any departure by the Company
from any provision of this Agreement shall be effective unless signed in writing
by the party entitled to the benefit thereof, provided that notice of any such
waiver shall be given to each party hereto as set forth below. Except as
otherwise provided herein, no amendment, modification or termination of any
provision of this Agreement shall be effective unless signed in writing by or on
behalf of the Purchaser. Any amendment, supplement or modification of or to any
provision of this Agreement, any waiver of any provision of this Agreement, and
any consent to any departure by the Company from the terms of any provision of
this Agreement, shall be effective only in the specific instance and for the
specific purpose for which made or given. Except where notice is specifically
required by this Agreement, no notice to or demand on the Company in any case
shall entitle the Company to any other or further notice or demand in similar or
other circumstances.
(b) Except pursuant to Article VI hereof, the Company has not
paid or shall not pay, or has not caused or shall not cause to be paid, directly
or indirectly, any remuneration, whether by way of interest, fee or otherwise,
to any holder of any Securities as consideration for or as an inducement to the
purchase by any holder of the Securities.
Section 8.5. Role of Special Counsel. The role of Cahill
Gordon & Reindel, special counsel to the Purchaser, has been limited to
functioning on this Agreement and such firm has not performed a due diligence
investigation with respect to the Company or any of its Subsidiaries or their
respective affairs.
Section 8.6. Communications. All notices, demands and other
communications provided for hereunder shall be in writing and, (a) if to the
Purchaser, shall be given by
<PAGE> 40
-36-
registered or certified mail, return receipt requested, telex, telegram,
telecopy, courier service or personal delivery, addressed to CIBC WG Argosy
Merchant Fund 2, L.L.C. c/o CIBC Wood Gundy Securities Corp., 1325 Avenue of the
Americas, 22nd Floor, New York, New York 10019 or to such other address as the
Purchaser may designate to the Company in writing, (b) if to the Company, shall
be given by similar means to Commodore Media, Inc., 500 Fifth Avenue, Suite
3000, New York, New York 10110 or at such other address as the Company may
designate in writing. In each case notices, demands and other communications
shall be deemed given when received.
Section 8.7. Costs, Expenses and Taxes. The Company agrees to
pay all costs and expenses in connection with the negotiation, preparation,
printing, typing, reproduction, execution and delivery of this Agreement and
each of the Basic Documents, the Exchange Documents, any amendment or supplement
to or modification of any of the foregoing and any and all other documents
furnished pursuant hereto or thereto or in connection herewith or therewith,
and, except as limited by Article VII, all costs and expenses (including,
without limitation, reasonable attorneys' fees and expenses of Company counsel),
if any, in connection with the enforcement of this Agreement, the Securities,
the Additional Warrants or the Additional Warrant Shares or any other agreement
furnished pursuant hereto or thereto or in connection herewith or therewith. In
addition, the Company shall pay any and all stamp, transfer and other similar
taxes payable or determined to be payable in connection with the execution and
delivery of this Agreement, any Basic Document, any Exchange Document or the
issuance of the Securities, the Additional Warrants or the Additional Warrant
Shares, and shall save and hold the Purchaser harmless from and against any and
all liabilities with respect to or resulting from any delay in paying, or
omission to pay, such taxes.
Section 8.8. Determinations. All determinations to be made by
the Company or the Purchaser hereunder in its opinion or judgment or with its
approval or otherwise shall be made by it in its sole discretion.
Section 8.9. Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto on
separate counterparts, each of which counterparts, when so executed and
delivered, shall be deemed to be an original and all of which counterparts,
taken together, shall constitute but one and the same Agreement.
<PAGE> 41
-37-
Section 8.10. Binding Effect; Assignment. The rights and
obligations of the Purchaser under this Agreement may not be assigned to any
other Person except with the prior consent of the Company. Except as expressly
provided in this Agreement, this Agreement shall not be construed so as to
confer any right or benefit upon any Person other than the parties to this
Agreement, and their respective successors and assigns. This Agreement shall be
binding upon the Company and the Purchaser, and their successors and assigns.
Section 8.11. GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED TO
BE A CONTRACT MADE UNDER THE LAWS OF THE STATE OF NEW YORK, AND FOR ALL PURPOSES
SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF SAID STATE, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW.
Section 8.12. Severability of Provisions. Any provision of
this Agreement which is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
Section 8.13. Headings. The Article and Section headings and
Table of Contents used or contained in this Agreement are for convenience of
reference only and shall not affect the construction of this Agreement.
<PAGE> 42
-38-
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first written above.
COMMODORE MEDIA, INC.
By:
-------------------------------------
Name:
Title:
COMMODORE HOLDINGS, INC.
(a Delaware corporation)
COMMODORE MEDIA OF DELAWARE, INC.
(a Delaware corporation)
COMMODORE MEDIA OF PENNSYLVANIA, INC.
(a Delaware corporation)
COMMODORE MEDIA OF FLORIDA, INC.
(a Delaware corporation)
COMMODORE MEDIA OF KENTUCKY, INC.
(a Delaware corporation)
COMMODORE MEDIA OF NORWALK, INC.
(a Delaware corporation)
COMMODORE MEDIA OF WESTCHESTER, INC.
(a Delaware corporation)
DANBURY BROADCASTING, INC.
(a Connecticut corporation)
By:
-------------------------------------
Name:
Title:
<PAGE> 43
-39-
CIBC WG ARGOSY MERCHANT FUND 2, L.L.C.
By:
-------------------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 10.69
- --------------------------------------------------------------------------------
COMMON STOCK REGISTRATION RIGHTS AND STOCKHOLDERS AGREEMENT
DATED AS OF MAY 1, 1996
AMONG
COMMODORE MEDIA, INC.,
CERTAIN CONTROL STOCKHOLDERS
AND
CIBC WG ARGOSY MERCHANT FUND 2, L.L.C.
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. Definitions ........................................................ 1
2. Registration Rights ................................................ 7
3. Transfers of Warrant Shares ........................................ 14
4. Registration Procedures ............................................ 26
5. Indemnification and Contribution ................................... 30
6. Miscellaneous ...................................................... 33
a. No Inconsistent Agreements .................................... 33
b. Amendments and Waivers ........................................ 34
c. Notices ....................................................... 34
d. Successors and Assigns ........................................ 35
e. Rules 144 and 144A ............................................ 35
f. Counterparts .................................................. 35
g. Headings ...................................................... 36
h. Governing Law ................................................. 36
i. Severability .................................................. 36
j. Entire Agreement .............................................. 36
Exhibit A
</TABLE>
-i-
<PAGE> 3
THIS COMMON STOCK REGISTRATION RIGHTS AND STOCKHOLDERS
AGREEMENT (this "Agreement") is made and entered into as of May 1, 1996, among
Commodore Media, Inc., a Delaware corporation (the "Company"), the Control
Stockholders (as defined herein) and CIBC WG Argosy Merchant Fund 2, L.L.C., a
Delaware limited liability company (the "Purchaser").
This Agreement is made pursuant to the Securities Purchase
Agreement, dated as of May 1, 1996, among the Company, the Guarantors named
therein and the Purchaser (the "Purchase Agreement"), relating to the sale by
the Company to the Purchaser of up to $12,500,000 in aggregate liquidation value
of its Senior Exchangeable Redeemable Preferred Stock, Series A, par value $.01
per share (the "Preferred Stock"), along with warrants (the "Warrants") for the
purchase of shares of its Class A Common Stock, par value $0.01 per share
("Class A Common Stock") constituting up to 5.99% of the Company's fully diluted
Common Stock. In order to induce the Purchaser to enter into the Purchase
Agreement, the Company has agreed to provide to the Purchaser and its direct and
indirect transferees (the "Holders"), among other things, the registration
rights for the Class A Common Stock set forth in this Agreement and the Control
Stockholders have agreed to provide the Holders, among other things, the
tag-along rights for the Class A Common Stock set forth herein. The execution of
this Agreement is a condition to the obligations of the Purchaser to purchase
the Preferred Stock and Warrants under the Purchase Agreement.
In consideration of the foregoing, the parties hereto agree as
follows:
1. Definitions. As used in this Agreement, the following
capitalized defined terms shall have the following meanings:
"Affiliate" of any specified Person means any other Person
which directly or indirectly through one or more intermediaries
controls, or is controlled by, or is under common control with, such
specified Person. For the purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling,"
"controlled by," and "under common control with"), as used with respect
to 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
<PAGE> 4
-2-
of at least 10% of the voting securities of a Person shall be deemed to
be control. Neither the Purchaser nor any of its Affiliates shall be
deemed to be an Affiliate of the Company or of any of its Subsidiaries
or Affiliates.
"Business Day" shall mean a day that is not a Legal Holiday.
"Capital Stock" shall mean, with respect to any Person, any
and all shares or other equivalents (however designated) of capital
stock, partnership interests or any other participation, right or other
interest in the nature of an equity interest in such Person or any
option, warrant or other security convertible into any of the
foregoing.
"Change of Control" has the meaning provided such term in the
Indenture dated as of April 21, 1995, by and among the Company, the
Guarantors named therein and IBJ Schroder Bank & Trust Company, as
Trustee, as amended, restated or supplemented from time to time.
"Class A Common Stock" shall mean the Class A Common Stock,
par value $.01 per share, of the Company.
"Class B Common Stock" shall mean the Class B Common Stock,
par value $.01 per share, of the Company.
"Closing Date" shall mean the Closing Date as defined in the
Purchase Agreement.
"Common Stock" shall mean the Class A Common Stock and Class B
Common Stock.
"Company" shall have the meaning set forth in the preamble and
shall also include the Company's successors.
"Control Stockholder" shall mean (i) Susan Burden, (ii) the
heirs, executors, administrators, testamentary trustees, legatees or
beneficiaries of Carter Burden to the extent such Persons beneficially
own shares of Common Stock as a result of a Transfer from Carter Burden
after the date hereof and (iii) a trust the beneficiaries of which
include only Susan Burden and lineal descendants of Carter Burden.
<PAGE> 5
-3-
"Definitive Certificate" shall mean a certificate representing
Warrant Shares in definitive registered form, other than a Global
Certificate.
"Demand Registration" shall have the meaning set forth in
Section 2.1.
"Depositary" shall mean, with respect to Shares represented by
one or more Global Certificates, The Depository Trust Company or
another person designated as Depositary by the Company, which must be a
clearing agency registered under the Exchange Act.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended from time to time.
"Exempt Transfer" shall mean a transfer by a Control
Stockholder to another Control Stockholder.
"Existing Common Stock Agreement" shall mean the Common Stock
Registration Rights and Stockholders Agreement, dated as of April 21,
1995, among the Company, the Control Stockholders and the purchasers
referred to therein.
"Fair Market Value" shall mean the value of any securities as
determined (without any discount for lack of liquidity, the amount of
Class A Common Stock proposed to be sold or the fact that the shares of
Class A Common Stock held by any Holder of such security may represent
a minority interest in a private company) by a nationally recognized
investment banking firm selected by the Company for the determination
of such value.
"Global Certificate" shall mean a certificate representing all
or part of the Warrant Shares issued to the Depositary and bearing the
legend set forth in Section 3.4(g)(iii).
"Holder" shall mean the Purchaser, for so long as the
Purchaser owns any Class A Common Stock, and each of its successors,
assigns and direct and indirect transferees who become registered
owners of Class A Common Stock.
"Included Shares" shall have the meaning set forth in Section
2.1(a).
<PAGE> 6
-4-
"indemnified party" shall have the meaning set forth in
Section 5(c).
"indemnifying party" shall have the meaning set forth in
Section 5(c).
"Legal Holiday" shall mean a Saturday, a Sunday or a day on
which banking institutions in New York, New York are required by law,
regulation or executive order to remain closed. If a payment date is a
Legal Holiday, payment may be made on the next succeeding day that is
not a Legal Holiday.
"Non-Selling Stockholders" shall have the meaning set forth in
Section 3.3(a).
"Participating Stockholders" shall have the meaning set forth
in Section 3.3(a).
"Person" shall mean an individual, corporation, partnership,
joint venture, association, joint stock company, trust, unincorporated
organization, or other legal entity.
"Piggy-Back Registration" shall have the meaning set forth in
Section 2.2.
"Preferred Stock" shall have the meaning set forth in the
preamble.
"proposed purchaser" shall have the meaning set forth in
Section 3.3(a).
"Prospectus" means a prospectus which meets the requirements
of Section 10 of the Securities Act.
"Public Equity Offering" shall mean a public offering by the
Company of shares of its common stock on a registration statement filed
under the Securities Act (however designated and whether voting or
non-voting) (other than a registration statement filed on Form S-4 or
S-8 or similar form).
"Purchase Agreement" shall have the meaning set forth in the
preamble.
"Purchase Election" shall have the meaning set forth in
Section 2.1(b).
<PAGE> 7
-5-
"Purchase Offer" shall have the meaning set forth in Section
2.1(b).
"Purchase Offer Payment Date" shall have the meaning set forth
in Section 2.1(b).
"Purchased Shares" shall have the meaning set forth in Section
3.3(a).
"Purchaser" shall have the meaning set forth in the preamble.
"Qualified Institutional Buyer" or "QIB" shall have the
meaning specified in Rule 144A under the Securities Act.
"Registrable Securities" shall mean the shares of Class A
Common Stock issuable upon exercise of the Warrants. As to any
particular Registrable Securities, such securities shall cease to be
Registrable Securities when (i) a Registration Statement with respect
to such securities shall have been declared effective under the
Securities Act and such securities shall have been disposed of pursuant
to such Registration Statement, (ii) such securities have been sold to
the public pursuant to Rule 144(k) (or any similar provision then in
force, but not Rule 144A) under the Securities Act, (iii) such
securities shall have been otherwise transferred by such Holder and new
certificates for such securities not bearing a legend restricting
further transfer shall have been delivered by the Company or its
transfer agent and subsequent disposition of such securities shall not
require registration or qualification under the Securities Act or any
similar state law then in force or (iv) such securities shall have
ceased to be outstanding.
"Registration Expenses" shall mean all expenses incident to
the Company's performance of or compliance with this Agreement,
including, without limitation, all SEC and stock exchange or National
Association of Securities Dealers, Inc. registration and filing fees
and expenses, fees and expenses of compliance with securities or blue
sky laws (including, without limitation, reasonable fees and
disbursements of
<PAGE> 8
-6-
counsel for the underwriters in connection with blue sky qualifications
of the Registrable Securities), rating agency fees, printing expenses,
messenger, telephone and delivery expenses, fees and disbursements of
counsel for the Company and all independent certified public
accountants (but not including any underwriting discounts or
commissions or transfer taxes, if any, attributable to the sale of
Registrable Securities by Holders of such Registrable Securities).
"Registration Statement" shall mean any registration statement
of the Company which covers any of the Warrant Shares pursuant to the
provisions of this Agreement, including the Prospectus, amendments and
supplements to such Registration Statement, including post-effective
amendments, all exhibits and all material incorporated by reference or
deemed to be incorporated by reference in such Registration Statement.
"Regulation S" shall mean Regulation S under the Securities
Act.
"Requisite Shares" shall mean a number of Registrable
Securities equal to not less than 25% of the Registrable Securities
held in the aggregate by all Holders.
"Restricted Security" shall have the meaning set forth in Rule
144(a)(3) under the Securities Act.
"Rule 144" shall mean Rule 144 under the Securities Act, as
such Rule may be amended from time to time, or any similar rule (other
than Rule 144A) or regulation hereafter adopted by the SEC providing
for offers and sales of securities made in compliance therewith
resulting in offers and sales by subsequent holders that are not
affiliates of an issuer of such securities being free of the
registration and prospectus delivery requirements of the Securities
Act.
"Rule 144A" shall mean Rule 144A under the Securities Act, as
such Rule may be amended from time to time, or any similar rule (other
than Rule 144) or regulation hereafter adopted by the SEC providing for
offers and sales of securities made in compliance therewith resulting
in offers and sales by subsequent holders that are not affiliates of an
issuer of such securities being free of the registration and prospectus
delivery requirements of the Securities Act.
"SEC" shall mean the Securities and Exchange Commission.
<PAGE> 9
-7-
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Selling Holder" shall mean a Holder who is selling Warrant
Shares in accordance with the provisions of Section 2.1, 2.2, 3.3 or
3.4 hereof.
"Stockholder" means, collectively, each Holder and each
Control Stockholder.
"Tag-Along Notice" shall have the meaning set forth in Section
3.3(a).
"Tag-Along Right" shall have the meaning set forth in Section
3.3.
"Transfer" shall have the meaning set forth in Section 3.2.
"Transfer Agent" means any transfer agent or registrar
appointed by the Company for the Class A Common Stock.
"Triggering Event" shall have the meaning set forth in Section
2.1.
"Warrant Shares" means the shares of Class A Common Stock
issued and issuable upon exercise of the Warrants.
"Withdrawal Election" shall have the meaning set forth in
Section 2.3.
2. Registration Rights.
2.1 Demand Registration.
(a) Request for Registration. At any time and from time to
time on or after the earliest of (i) a Change of Control shall have occurred,
(ii) seven days prior to the date on which the Company files a registration
statement with respect to a Public Equity Offering, (iii) the date on which any
class of equity securities of the Company is listed on a national securities
exchange or authorized for quotation on the National Association of Securities
Dealers Automated Quotation System or (iv) May 1, 1999 (each a "Triggering
Event"), Holders owning, individually or in the aggregate, at least the
Requisite Shares may make a written request for registration under the
<PAGE> 10
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Securities Act of their Registrable Securities (a "Demand Registration"). Any
such request will specify the number of Registrable Securities proposed to be
sold and will also specify the intended method of disposition thereof. Upon a
demand, the Company will prepare, file and use its best efforts to cause to be
effective within 180 days of such demand a Registration Statement in respect of
all the Registrable Securities. The Company shall give written notice of such
registration request within 10 days after the receipt thereof to all other
Holders. Within 20 days after receipt of such notice by any Holder, such Holder
may request in writing that Registrable Securities be included in such
registration and the Company shall include in the Demand Registration the
Registrable Securities of any such Selling Holder requested to be so included
(the "Included Shares"). Each such request by such other Selling Holders shall
specify the number of Included Shares proposed to be sold and the intended
method of disposition thereof. Subject to Section 2.1(c), in no event shall the
Company be required to register Registrable Securities pursuant to this Section
2.1 more than a maximum of two separate occasions.
(b) Repurchase Election. (i) Notwithstanding the foregoing
provisions of Section 2.1(a), the Company shall not be obligated to effect a
Demand Registration if the Company elects to make an offer to repurchase (a
"Purchase Offer") all of the Registrable Securities (a "Purchase Election") by
mailing notice of such Purchase Offer to all Holders of Registrable Securities
on a date (the "Purchase Election Date") not more than 30 days after the receipt
of any request for a Demand Registration and indicating in such Purchase Offer
that the Purchase Election will be consummated on a Business Day (the "Purchase
Offer Payment Date") not more than 60 days after the Purchase Election Date at a
price per Warrant equal to the Fair Market Value of each share of Class A Common
Stock issuable upon exercise of such Warrant less that portion of the Exercise
Price allocable to such Warrant.
(ii) Notice of a Purchase Offer shall be mailed by the Company
(or caused to be mailed by the Company), not less than 30 days nor more than 40
days before the Purchase Offer Payment Date to each Holder of Registrable
Securities at its last registered address. The Purchase Offer shall remain open
from the time of mailing for at least 20 Business Days and until 5:00 p.m., New
York City time, on the Business Day next preceding the Purchase Offer Payment
Date. The notice, which shall govern the terms of the Purchase Offer, shall
include such disclosures as are required by law and shall state:
<PAGE> 11
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(1) that the Purchase Offer is being made pursuant to this
Section 2.1(b) and that all Registrable Securities tendered for
repurchase will be accepted for payment;
(2) the purchase price per Warrant calculated as set forth
above and the Purchase Offer Payment Date;
(3) that any Registrable Securities accepted for payment
pursuant to the Purchase Offer shall cease to be outstanding after the
Purchase Offer Payment Date unless the Company defaults in making
payment therefor of the purchase price;
(4) that Holders electing to have Registrable Securities
purchased pursuant to a Purchase Offer will be required to surrender
such Warrant Shares, together with a completed letter of transmittal,
to the Company (or its agent as designated by the Company in such
notice) at the address specified in the notice no later than 5:00 p.m.
New York City time on the Business Day prior to the Purchase Offer
Payment Date;
(5) that Holders will be entitled to withdraw their election
if the Company (or such designated agent) receives, not later than 5:00
p.m. New York City time on the Business Day prior to the Purchase Offer
Payment Date, a telegram, telex, facsimile transmission or letter
setting forth the name of the Holder, the number of Warrant Shares
delivered for purchase and a statement that such Holder is withdrawing
its election to have such Warrant Shares purchased and promptly
thereafter the Company (or such designated agent) shall redeliver the
withdrawn Warrant Shares to the Holder;
(6) that a Holder electing not to tender such Holder's
Registrable Securities for purchase pursuant to such Purchase Offer by
5:00 p.m. New York City time on the Business Day prior to the Purchase
Offer Payment Date will have no continuing right to require the Company
to repurchase such Holder's Registrable Securities; and
(7) that Holders whose Warrant Shares are tendered for
purchase in part only will be issued new certificates representing the
number of the unpurchased Warrant Shares surrendered.
<PAGE> 12
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On the Purchase Offer Payment Date, the Company shall (i)
accept for payment Registrable Securities or portions thereof tendered pursuant
to the Purchase Offer, (ii) promptly deliver to Holders of Warrant Shares so
accepted payment of the purchase price therefor and (iii) issue and mail or
deliver to such Holders new certificates representing a number of shares of
Class A Common Stock equal to the unpurchased portion of the Warrant Shares
surrendered. Upon payment for all Registrable Securities tendered pursuant to a
Purchase Offer the Company shall be deemed to have effected the Demand
Registration.
The Company shall comply, to the extent applicable, with the
requirements of Sections 13 and 14 of the Exchange Act, and any other securities
laws or regulations in connection with the repurchase of Registrable Securities
pursuant to a Purchase Offer. To the extent that the provisions of any
securities laws or regulations conflict with the provisions of this Section
2.1(b), the Company shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations under this
Section 2.1(b) by virtue thereof.
(c) Effective Registration. A registration will not be deemed
to have been effected as a Demand Registration unless it has been declared
effective by the SEC and the Company has complied in all material respects with
its obligations under this Agreement with respect thereto; provided that if,
after it has become effective, the offering of Registrable Securities pursuant
to such registration is or becomes the subject of any stop order, injunction or
other order or requirement of the SEC or any other governmental or
administrative agency, or if any court prevents or otherwise limits the sale of
Registrable Securities pursuant to the registration (for any reason other than
the act or omissions of the Selling Holders), such registration will be deemed
not to have been effected. If (i) a registration requested pursuant to this
Section 2.1 is deemed not to have been effected or (ii) the registration
requested pursuant to this Section 2.1 does not remain effective for a period of
at least 90 days beyond the effective date thereof or until the consummation of
the distribution by the Selling Holders of the Included Shares, then the Company
shall continue to be obligated to effect an additional registration pursuant to
this Section 2.1. The Selling Holders of Registrable Securities shall be
permitted to withdraw all or any part of the Included Shares from a Demand
Registration at any time prior to the effective date of such Demand
Registration. If at any time a Registration Statement is filed pursuant to a
Demand
<PAGE> 13
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Registration, and subsequently a sufficient number of Included Shares are
withdrawn from the Demand Registration so that such Registration Statement does
not cover at least 25% of the Registrable Securities held by all Holders, the
Selling Holders who have not withdrawn their Included Shares shall have the
opportunity to include an additional number of Registrable Securities in the
Demand Registration so that such Registration Statement covers at least 25% of
the Registrable Securities held by all Holders. If an additional number of
Registrable Securities is not so included so that such Registration Statement
does not cover at least 25% of the Registrable Securities held by all Holders,
the Company may withdraw the Registration Statement. In the event that a
Registration Statement has been filed and the Company withdraws the Registration
Statement solely due to the occurrence of the events specified in the prior two
sentences, such withdrawn Registration Statement will count as a Demand
Registration; otherwise such withdrawn Registration Statement will not count as
a Demand Registration and the Company shall continue to be obligated to effect a
registration pursuant to this Section 2.1.
(d) Priority in Demand Registrations Pursuant to Section 2.1.
If a Demand Registration pursuant to this Section 2.1 involves an underwritten
offering and the managing underwriter advises the Company in writing that, in
its opinion, the number of securities requested to be included in such
registration (including securities of the Company which are not Registrable
Securities) exceeds the number which can be sold in such offering, the Company
will include in such registration only the Registrable Securities requested by
the managing underwriter(s) to be included in such registration. In the event
that the number of Registrable Securities requested to be included in such
registration exceeds the number which, in the opinion of such managing
underwriter, can be sold, the number of such Registrable Securities to be
included in such registration shall be allocated pro rata among all requesting
Holders on the basis of the relative number of shares of Registrable Securities
then held by each such Holder (provided that any shares thereby allocated to any
such Holder that exceed such Holder's request shall be reallocated among the
remaining requesting Holders in like manner). In the event that the number of
Registrable Securities requested to be included in such registration is less
than the number which, in the opinion of the managing underwriter, can be sold,
the Company may include in such registration the securities the Company proposes
to sell up to the number of securities that, in the opinion of the managing
underwriter, can be sold.
<PAGE> 14
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(e) Selection of Underwriter. If the Selling Holders so elect,
the offering of such Registrable Securities pursuant to such Demand Registration
shall be in the form of an underwritten offering. The Selling Holders making
such Demand Registration shall select one or more nationally recognized firms of
investment bankers, who shall be reasonably acceptable to the Company, to act as
the managing underwriter or underwriters in connection with such offering and
shall select any additional investment banker(s) and manager(s) to be used in
connection with the offering.
(f) Expenses. The Company will pay all Registration Expenses
in connection with the registrations requested pursuant to Section 2.1(a). Each
Holder shall pay all underwriting discounts and commissions and transfer taxes,
if any, relating to the sale or disposition of such Holder's Registrable
Securities pursuant to a registration statement requested pursuant to this
Section 2.1.
2.2 Piggy-Back Registration. If at any time the Company
proposes to file a Registration Statement under the Securities Act with respect
to an offering by the Company for its own account or for the account of any of
its respective securityholders of any class of its common equity securities
(other than (i) a Registration Statement on Form S-4 or S-8 (or any substitute
form that may be adopted by the SEC) or (ii) a Registration Statement filed in
connection with an offer or offering of securities solely to the Company's
existing securityholders), then the Company shall give written notice of such
proposed filing to the Holders of Registrable Securities as soon as practicable
(but in no event less than 20 Business Days before the anticipated filing date),
and such notice shall offer such Holders the opportunity to register such number
of shares of Registrable Securities as each such Holder may request (which
request shall specify the Registrable Securities intended to be disposed of by
such Selling Holder and the intended method of distribution thereof) (a
"Piggy-Back Registration"). The Company shall use its best efforts to cause the
managing underwriter or underwriters of such proposed underwritten offering to
permit the Registrable Securities requested to be included in a Piggy-Back
Registration to be included on the same terms and conditions as any similar
securities of the Company or any other securityholder included therein and to
permit the sale or other disposition of such Registrable Securities in
accordance with the intended method of distribution thereof except as otherwise
provided in Section 2.3. Any Selling Holder shall have the right to withdraw its
request for
<PAGE> 15
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inclusion of its Registrable Securities in any Registration Statement pursuant
to this Section 2.2 by giving written notice to the Company of its request to
withdraw no later than 5 Business Days before such Registration Statement
becomes effective. The Company may withdraw a Piggy-Back Registration at any
time prior to the time it becomes effective; provided that the Company shall
give prompt notice thereof to participating Selling Holders. The Company will
pay all Registration Expenses in connection with each registration of
Registrable Securities requested pursuant to this Section 2.2, and each Holder
shall pay all underwriting discounts and commissions and transfer taxes, if any,
relating to the sale or disposition of such Holder's Registrable Securities
pursuant to a registration statement effected pursuant to this Section 2.2.
No registration effected under this Section 2.2, and no
failure to effect a registration under this Section 2.2, shall relieve the
Company of its obligation to effect a registration upon the request of Holders
pursuant to Section 2.1, and no failure to effect a registration under this
Section 2.2 and to complete the sale of shares of Class A Common Stock in
connection therewith shall relieve the Company of any other obligation under
this Agreement.
2.3 Reduction of Offering.
(a) Piggy-Back Registration. (i) If the managing
underwriter(s) of any underwritten offering described in Section 2.2 have
informed, in writing, the Selling Holders of the Registrable Securities
requesting inclusion in such offering that it is their opinion that the total
number of shares which the Company, the Selling Holders and any other Persons
desiring to participate in such registration intend to include in such offering
is such as to adversely affect the success of such offering, including the price
at which such securities can be sold, then the number of shares to be offered
for the
<PAGE> 16
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account of the Selling Holders and all such other Persons (other than the
Company) participating in such registration shall be reduced or limited pro rata
in proportion to the respective number of shares requested to be registered to
the extent necessary to reduce the total number of shares requested to be
included in such offering to the number of shares, if any, recommended by such
managing underwriters; provided, however, that if such offering is effected for
the account of any securityholder of the Company other than the Selling Holders,
pursuant to the demand registration rights of any such securityholder, then the
number of shares to be offered for the account of the Selling Holders and all
other Persons (other than the Company) participating in such registration (but
not such securityholders who have exercised their demand registration rights)
shall be reduced or limited pro rata in proportion to the respective number of
shares requested to be registered to the extent necessary to reduce the total
number of shares requested to be included in such offering to the number of
shares, if any, recommended by such managing underwriters.
(ii) If the managing underwriter or underwriters of any
underwritten offering described in Section 2.2 notify the Selling Holders
requesting inclusion of Registrable Securities in such offering, that the kind
of securities that the Selling Holders, the Company and any other Persons
desiring to participate in such registration intend to include in such offering
is such as to adversely affect the success of such offering, (x) the Registrable
Securities to be included in such offering shall be reduced as described in
clause (i) above or (y) if a reduction in the Registrable Securities pursuant to
clause (i) above would, in the judgment of the managing underwriter(s) or
underwriters, be insufficient to substantially eliminate such adverse effect
that inclusion of the Registrable Securities requested to be included would have
on such offering, such Registrable Securities will be excluded from such
offering.
(b) If, as a result of the proration provisions of this
Section 2.3, any Selling Holder shall not be entitled to include all Registrable
Securities in a Piggy-Back Registration that such Selling Holder has requested
to be included, such Selling Holder may elect to withdraw his request to include
Registrable Securities in such registration (a "Withdrawal Election"); provided,
however, that a Withdrawal Election shall be irrevocable and, after making a
Withdrawal Election, a Selling Holder shall no longer have any right to include
Registrable Securities in the registration as to which such Withdrawal Election
was made.
3. Transfers of Warrant Shares.
3.1 Generally. All Warrant Shares at any time and from time to
time outstanding that are Registrable Securities shall be held subject to the
conditions and restrictions set forth in this Section 3. All shares of Common
Stock now or hereafter held by a Control Stockholder shall be held subject to
the conditions and restrictions set forth in this Section 3. Each Holder of
Warrant Shares and each Control Stockholder by executing this Agreement or by
accepting a certificate
<PAGE> 17
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representing Common Stock or other indicia of ownership therefor from the
Company agrees with the Company and with each other Control Stockholder to such
conditions and restrictions.
3.2 Restrictions on Transfer. (a) So long as all rights and
obligations under Section 3.3 have not been terminated pursuant to Section
3.3(f), a Control Stockholder shall only sell, assign, give, transfer, exchange,
devise, bequeath, pledge or otherwise dispose of (collectively, "Transfer") any
Common Stock or any interest therein (i) in an Exempt Transfer or (ii) in a
transaction in which such Control Stockholder first complies with its
obligations, if any, under Section 3.3. As used in Sections 3.2 and 3.3, the
term "Transfer" shall be deemed to include all transactions or series of
transactions pursuant to which beneficial ownership of Common Stock is
transferred, directly or indirectly, to a proposed purchaser. Each certificate
representing Warrants and/or Warrant Shares shall contain conspicuous notation
on such certificate indicating that the transfer of such Warrant Shares is
subject to the terms and restrictions of this Agreement, and each Control
Stockholder consents to the placement of such legend on the certificate or
certificates representing the Warrant Shares owned by such Stockholder;
provided, however, with respect to the certificates owned by a Control
Stockholder, the legend shall be removed (x) from such certificates which are
Transferred to a Person (other than a Control Stockholder) in a transaction
which complies with Section 3.3 hereof, (y) from such certificates Transferred
to a Person (other than a Control Stockholder) in a transaction that does not
give rise to a Tag-Along Right or (z) from all such certificates upon the
termination of the Tag-Along Rights in accordance with Section 3.3 hereof.
(b) Each Holder of Registrable Securities agrees that it will
not Transfer any Warrant Shares or any interest therein except in compliance
with Sections 3.4 and 3.5 hereof.
3.3 Tag-Along Rights. (a) In the event of any proposed
Transfer of Common Stock by any of the Control Stockholder(s) (other than in a
bona fide public distribution pursuant to an effective Registration Statement
under the Securities Act) in a single transaction or a series of related
transactions involving shares of Common Stock aggregating at least 15% of the
shares of Common Stock then owned by the Control Stockholder(s) to a person
(such other person being hereinafter referred to as the "proposed purchaser"),
other than pursuant to an Exempt Transfer, the Holders of Warrants and
<PAGE> 18
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Warrant Shares (the "Non-Selling Stockholders") each shall have the irrevocable
and exclusive right, but not the obligation (the "Tag-Along Right"), to require
the proposed purchaser to purchase from each of them up to such number of
Warrants and/or Warrant Shares (the "Purchased Shares") determined in accordance
with Section 3.3(c) hereof; provided that the price to be paid to Non-Selling
Stockholders who elect to exercise their Tag-Along Right (i) for each Warrant
shall be the product of the number of Warrant Shares issuable upon exercise of
such Warrant multiplied by the consideration to be paid by the proposed
purchaser for each share of Common Stock, less the exercise price of such
Warrant and (ii) for each Warrant Share shall be the consideration to be paid by
the proposed purchaser for each share of Common Stock. The Company shall give
written notice (the "Company Notice") at least 20 days prior to the date of the
proposed Transfer to the Non-Selling Stockholders stating (i) the name and
address of the proposed purchaser, (ii) the proposed amount of consideration and
terms and conditions of payment offered by such proposed purchaser (if the
proposed consideration is not cash, the notice shall describe the terms of the
proposed consideration) and the proposed closing date, (iii) the number of
shares of Common Stock proposed to be transferred and the total number of shares
of Common Stock then owned by the Control Stockholder and (iv) that either the
proposed purchaser has been informed of the Tag-Along Right and has agreed to
purchase Warrants and/or Warrant Shares in accordance with the terms hereof or
that the selling Control Stockholders will make such purchase. The Tag-Along
Right shall be exercised by any or all of the Non-Selling Stockholders by giving
written notice to the Company ("Tag-Along Notice") proposing to make such
transfer, within 10 business days of receipt of the notice specified in the
preceding sentence, indicating its election to exercise the Tag-Along Right (the
"Participating Stockholders"). The Tag-Along Notice shall state the amount of
Warrants and/or Warrant Shares that such Holder proposes to include in such
transfer to the proposed purchaser. Failure by any Non-Selling Stockholder to
give such notice within the 10 business day period shall be deemed an election
by such Non-Selling Stockholder not to sell its Warrants and/or Warrant Shares
pursuant to that Tag-Along Notice. The closing with respect to any sale to a
proposed purchaser pursuant to this Section 3.3(a) shall be held at the time and
place specified in the Company Notice but in any event within 40 days of the
date the Company Notice is given; provided that if through the exercise of
reasonable efforts the Control Stockholders are unable to cause such transaction
to close within 30 days because of the need to obtain FCC consent
<PAGE> 19
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or otherwise, such period may be extended for such reasonable period of time as
may be necessary to close such transaction. Consummation of the sale of Warrants
and/or Warrant Shares by any Control Stockholder to a proposed purchaser shall
be conditioned upon consummation of the sale by each Participating Stockholder
to such proposed purchaser of the Included Shares, if any. In connection with
any such sale, the Participating Stockholders agree that they shall transfer
their shares of Common Stock pursuant to the terms of this Section 3.3 upon the
same terms, in the same manner and for the same consideration as the Control
Stockholder.
(b) In the event that the proposed purchaser does not purchase
Included Shares from the Holders on the same terms and conditions as purchased
from the Control Stockholders, then the Control Stockholders making such
Transfer shall purchase such Included Shares if the Transfer occurs.
(c) The number of Warrants and/or Warrant Shares purchased
from each Participating Stockholder shall be determined by multiplying the
aggregate number of Warrants and/or Warrant Shares owned by each Participating
Stockholder by a fraction, the numerator of which is the total number of shares
of Common Stock the Control Stockholder(s) proposes to Transfer to the proposed
purchaser and the denominator of which is the total number of shares of Common
Stock owned by such Control Stockholder(s). In the event that any Participating
Stockholder shall elect to sell less than the maximum number of Warrants and/or
Warrant Shares such Participating Stockholder is entitled to sell pursuant to
the provisions of this Section 3.3(c) then each other Participating Stockholder
shall have the right to sell additional Warrant Shares, pro rata according to
the respective number of Warrant Shares offered for sale by the Participating
Stockholders.
(d) The Control Stockholder(s) who are parties to a Transfer
to a proposed purchaser shall arrange for payment directly by the proposed
purchaser to each Participating Stockholder, upon delivery of the certificate or
certificates representing the Warrants and/or Warrant Shares duly endorsed for
transfer, together with such other documents as the proposed purchaser may
reasonably request. The reasonable costs and expenses incurred by the Control
Stockholders and Participating Stockholders in connection with a sale of
Warrants and/or Warrant Shares subject to this Section 3.3 shall be allocated
pro rata based upon the number of Warrant Shares sold by each Stockholder to a
proposed purchaser; provided that the costs
<PAGE> 20
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and expenses shall not include the fees and expenses of more than one law firm,
which firm shall be selected by the Control Stockholder(s), unless
representation of the Control Stockholder(s) and the Participating Stockholders
by the same counsel, due to actual or potential differing interests between
them, shall create a conflict of interest, in which case the costs and expenses
shall include the reasonable fees and expenses of one additional law firm
designated by Participating Stockholders proposing to sell a majority of the
Warrants and/or Warrant Shares proposed to be sold by all Participating
Stockholders.
(e) If at the end of 30 days following the date on which a
Tag-Along Notice was given, or as otherwise extended pursuant to the provisions
of Section 3.3(a), the sale of Warrants and/or Warrant Shares by the Control
Stockholders and the sale of the Purchased Shares have not been completed in
accordance with the terms of the proposed purchaser's offer, all certificates
representing the Purchased Shares shall be returned to the Participating
Stockholders, and all the restrictions on sale, transfer or assignment contained
in this Agreement with respect to Warrants and/or Warrant Shares owned by the
Control Stockholder(s) shall again be in effect.
(f) Tag-Along Rights and all rights and obligations under
Section 3.2 hereof and this Section 3.3 shall immediately terminate upon the
effectiveness of any Registration Statement filed with the Commission with
respect to shares of Common Stock in an initial public offering or subsequent
public offering(s) if, after giving effect to such offering or offerings at
least 25% of the Company's Common Stock on a fully-diluted basis is at any time
held by Persons other than Control Stockholders or Mr. Friedman.
3.4 Registration of Transfers and Exchanges.
(a) Transfer and Exchange of Definitive Certificates. The
Company and the Transfer Agent shall not be obligated to register the transfer
or exchange of any Definitive Certificate that is a Restricted Security unless
such Warrants or Warrant Shares are delivered to the Transfer Agent duly
endorsed or accompanied by written instruments of transfer and are accompanied
by the following additional information and documents, as applicable:
(A) if such Restricted Security is being delivered to the
Transfer Agent by a Holder for
<PAGE> 21
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registration in the name of such Holder, without transfer,
a certification from such Holder to that effect (in
substantially the form of Exhibit A hereto); or
(B) if such Restricted Security is being transferred to a
Qualified Institutional Buyer in accordance with Rule 144A
or pursuant to an exemption from registration in
accordance with Rule 144 or Regulation S or pursuant to an
effective registration statement under the Securities Act,
a certification to that effect (in substantially the form
of Exhibit A hereto) and, with respect to transfers
pursuant to Rule 144 or Regulation S, an opinion of
counsel reasonably acceptable to the Company and the
Transfer Agent to the effect that such transfer does not
require registration under the Securities Act; or
(C) if such Restricted Security is being transferred in
reliance on another exemption from the registration
requirements of the Securities Act, a certification to
that effect (in substantially the form of Exhibit A
hereto) and an opinion of counsel reasonably acceptable to
the Company and to the Transfer Agent to the effect that
such transfer does not require registration under the
Securities Act.
(b) Restrictions on Transfer of a Definitive Certificate for a
Beneficial Interest in a Global Certificate. A Definitive Certificate may not be
exchanged for a beneficial interest in a Global Certificate except upon
satisfaction of the requirements set forth below. Upon receipt by the Transfer
Agent of a Definitive Certificate, duly endorsed or accompanied by appropriate
instruments of transfer, in form satisfactory to the Transfer Agent, together
with:
(A) if such Definitive Certificate represents Restricted
Securities, certification, substantially in the form of
Exhibit A hereto, that such Definitive Certificate is
being transferred to a Qualified Institutional Buyer (as
defined in Rule 144A) in accordance with Rule 144A; and
(B) whether or not such Definitive Certificate represents
Restricted Securities, written
<PAGE> 22
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instructions directing the Transfer Agent to make, or to
direct the Depositary to make, an endorsement on the
Global Certificate to reflect an increase in the aggregate
number of shares of Class A Common Stock represented by
the Global Certificate,
then the Transfer Agent shall cancel such Definitive Certificate and cause, or
direct the Depositary to cause, in accordance with the standing instructions and
procedures existing between the Depositary and the Transfer Agent, the number of
shares of Class A Common Stock represented by the Global Certificate to be
increased accordingly. If no Global Certificate is then outstanding, the Company
shall issue and the Transfer Agent shall authenticate a new Global Certificate
in the appropriate amount.
(c) Transfer and Exchange of Global Certificate. The transfer
and exchange of a Global Certificate or beneficial interests therein shall be
effected through the Depositary, in accordance with this Agreement (including
the restrictions on transfer set forth herein) and the procedures of the
Depositary therefor.
(d) Transfer of a Beneficial Interest in a Global Certificate
for a Definitive Certificate.
(i) Any person having a beneficial interest in a Global
Certificate may upon request exchange such beneficial
interest for a Definitive Certificate. Upon receipt by
the Transfer Agent of written instructions or such other
form of instructions as is customary for the Depositary
from the Depositary or its nominee on behalf of any
person having a beneficial interest in a Global
Certificate and upon receipt by the Transfer Agent of a
written order or such other form of instructions as is
customary for the Depositary or the person designated by the
Depositary as having such a beneficial interest containing
registration instructions and, in the case of a beneficial
interest in shares that are Restricted Securities only, the
following additional information and documents:
(A) If such beneficial interest is being transferred to the
person designated by the Depositary as being the
beneficial owner, a certification from
<PAGE> 23
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such person to that effect (in substantially the form of
Exhibit A hereto); or
(B) if such beneficial interest is being transferred to a
Qualified Institutional Buyer in accordance with Rule 144A
or pursuant to an exemption from registration in
accordance with Rule 144 or Regulation S or pursuant to an
effective registration statement under the Securities Act,
a certification to that effect from the transferee or
transferor (in substantially the form of Exhibit A hereto)
and, with respect to transfers pursuant to Rule 144 or
Regulation S, an opinion of counsel reasonably acceptable
to the Company and the Transfer Agent to the effect that
such transfer does not require registration under the
Securities Act; or
(C) if such beneficial interest is being transferred in
reliance on another exemption from the registration
requirements of the Securities Act, a certification to
that effect from the transferee or transferor (in
substantially the form of Exhibit A hereto) and an opinion
of counsel from the transferee or transferor reasonably
acceptable to the Company and to the Transfer Agent to the
effect that such transfer does not require registration
under the Securities Act,
then the Transfer Agent will cause, in accordance with the
standing instructions and procedures existing between the
Depositary and the Transfer Agent, the aggregate amount of the
Global Certificate to be reduced and, following such
reduction, the Company will execute and, upon receipt of an
authentication order in the form of an officers' certificate
signed by the Chief Executive Officer, the President, any Vice
President and the Chief Financial Officer, the Treasurer, the
Secretary or any Assistant Secretary of the Company (an
"Officers' Certificate"), the Transfer Agent will authenticate
and deliver to the transferee a Definitive Certificate.
(ii) Definitive Certificates issued in exchange for a
beneficial interest in a Global Certificate pursuant to
this Section 3.4(d) shall be registered in such names and
in such authorized denominations as the
<PAGE> 24
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Depositary, pursuant to instructions from its direct or
indirect participants or otherwise, shall instruct the
Transfer Agent in writing. The Transfer Agent shall deliver
such Definitive Certificates to the persons in whose names
such Definitive Certificates are registered.
(e) Restrictions on Transfer and Exchange of Global
Certificates. Notwithstanding any other provisions of this Agreement (other than
the provisions set forth in subsection (f) of this Section 3.4), a Global
Certificate may not be transferred as a whole except by the Depositary to a
nominee of the Depositary or by a nominee of the Depositary to the Depositary or
another nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.
(f) Issuance of Definitive Certificates in Absence of
Depositary. If at any time:
(i) the Depositary for the Global Certificates notifies the
Company that the Depositary is unwilling or unable to continue
as Depositary for the Global Certificates and a successor
Depositary for the Global Certificates is not appointed by the
Company within 90 days after delivery of such notice; or
(ii) the Company, at its sole discretion, notifies the Transfer
Agent in writing that it elects to cause the issuance of
Definitive Certificates under this Agreement and such action
would not cause the Class A Common Stock to be ineligible for
trading in the Private Offerings, Resales and Trading through
Automated Linkages ("PORTAL") Market,
then the Company will execute, and the Transfer Agent, upon receipt of an
Officers' Certificate requesting the authentication and delivery of Definitive
Certificates, will authenticate and deliver Definitive Certificates, in an
aggregate number equal to the aggregate number of shares represented by the
Global Certificate, in exchange for such Global Certificate.
(g) Legends.
(i) Except as permitted by the following paragraph (ii), each
Definitive Certificate (and all shares of Class A Common Stock
issued in exchange therefor or
<PAGE> 25
-23-
substitution thereof) shall bear a legend substantially to the
following effect:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO,
OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH
BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT
IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN
RULE 501(a)(1), (2), (3) or (7) UNDER THE ACT (AN "ACCREDITED
INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS
SECURITY IN AN OFFSHORE TRANSACTION, (2) AGREES THAT IT WILL NOT WITHIN
THREE YEARS AFTER ORIGINAL ISSUANCE OF THIS SECURITY RESELL OR
OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE COMPANY OR ANY OF
ITS SUBSIDIARIES, (B) INSIDE THE UNITED STATES TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE ACT, (C)
INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT,
PRIOR TO SUCH TRANSFER, FURNISHES (OR HAS FURNISHED ON ITS BEHALF BY A
U.S. BROKER-DEALER) TO THE TRANSFER AGENT A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON
TRANSFER OF THIS SECURITY (THE FORM OF WHICH LETTER CAN BE OBTAINED
FROM THE TRANSFER AGENT FOR THIS SECURITY), (D) OUTSIDE THE UNITED
STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE
ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE
144 UNDER THE ACT (IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT AND (3) AGREES THAT IT WILL GIVE
TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY
TRANSFER OF THIS SECURITY WITHIN THREE YEARS AFTER THE ORIGINAL
ISSUANCE OF THIS SECURITY, IF THE PROPOSED TRANSFEREE IS AN
INSTITUTIONAL ACCREDITED INVESTOR OR SUCH TRANSFER IS MADE IN
ACCORDANCE WITH CLAUSES (D) OR (E) ABOVE, THE HOLDER MUST, PRIOR TO
SUCH TRANSFER, FURNISH TO THE TRANSFER AGENT AND THE COMPANY SUCH
CERTIFICATIONS, LEGAL
<PAGE> 26
-24-
OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE
TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION
FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS
OF THE ACT. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED
STATES" AND "U.S. PERSON" HAVE THE MEANING GIVEN TO THEM BY REGULATION
S UNDER THE ACT.
(ii) Upon any sale or transfer of any share of Class A Common Stock
that is a Restricted Security (including any Restricted
Security represented by a Global Certificate) pursuant to Rule
144 under the Securities Act or an effective registration
statement under the Securities Act:
(A) in the case of any Restricted Security represented by a
Definitive Certificate, the Transfer Agent shall permit
the holder thereof to exchange such Restricted Security
for a Definitive Certificate that does not bear the legend
set forth above and rescind any related restriction on the
transfer of such Restricted Security; and
(B) any Restricted Security represented by a Global
Certificate shall not be subject to the provisions set
forth in (i) above (such sales or transfers being subject
only to the provisions of Section 3.4(c) through (f);
provided, however, that with respect to any request for an
exchange of a Restricted Security that is represented by a
Global Certificate for a Definitive Certificate that does
not bear the legend set forth above, which request is made
in reliance upon Rule 144, the holder thereof shall
certify in writing to the Transfer Agent that such request
is being made pursuant to Rule 144 (such certification to
be substantially in the form of Exhibit A hereto) and
shall provide an opinion of counsel reasonably acceptable
to the Company to the effect that such transfer does not
require registration under the Securities Act.
(iii) Any Global Certificate shall bear a legend (which would be in
addition to any other legends required in
<PAGE> 27
-25-
the case of a Restricted Security) in substantially the
following form:
THIS SECURITY IS A GLOBAL CERTIFICATE AND IS REGISTERED IN THE
NAME OF A DEPOSITARY OR A NOMINEE OF A DEPOSITARY OR A SUCCESSOR
DEPOSITARY. THIS SECURITY IS NOT EXCHANGEABLE FOR SECURITIES REGISTERED
IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE EXCEPT
IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE COMMON STOCK REGISTRATION
RIGHTS AND STOCKHOLDERS AGREEMENT DATED AS OF MAY 1, 1996 AMONG THE
COMPANY, AND THE STOCKHOLDERS PARTY THERETO, (THE "SHAREHOLDERS
AGREEMENT") AND NO TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER OF
THIS SECURITY AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE
DEPOSITARY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR
ANOTHER NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED EXCEPT IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE SHAREHOLDERS AGREEMENT.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION
("DTC"), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO.
OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
(h) Cancellation and/or Adjustment of a Global Certificate. At
such time as all beneficial interests in a Global Certificate have either been
exchanged for Definitive Certificates, redeemed, repurchased or cancelled, such
Global Certificate shall be returned to or retained and cancelled by the
Transfer Agent. At any time prior to such cancellation, if any beneficial
interest in a Global Certificate is exchanged for Definitive Certificates,
redeemed, repurchased or cancelled, the number of shares of Common Stock
represented by such Global Certificate shall be reduced and an endorsement shall
be made
<PAGE> 28
-26-
on such Global Certificate, by the Transfer Agent to reflect such reduction.
(i) Obligations with Respect to Transfers and Exchanges of
Definitive Certificates.
(i) To permit registrations of transfers and exchanges, the
Company shall execute, at the Transfer Agent's request, and
the Transfer Agent shall countersign and register Definitive
Certificates and Global Certificates.
(ii) All Definitive Certificates and Global Certificates issued
upon any registration, transfer or exchange of Definitive
Certificates or Global Certificates shall be validly issued,
fully paid and nonassessable.
4. Registration Procedures. In connection with the obligations
of the Company with respect to any Registration Statement pursuant to Sections
2.1 and 2.2 hereof, the Company shall:
(a) prepare and file with the SEC a Registration Statement on
the appropriate form under the Securities Act, which form (i) shall be
selected by the Company and (ii) shall comply as to form in all
material respects with the requirements of the applicable form and
include all financial statements required by the SEC to be filed
therewith, and the Company shall use its best efforts to cause such
Registration Statement to become effective and remain effective in
accordance with Section 2 hereof;
(b) prepare and file with the SEC such amendments and
post-effective amendments to each Registration Statement as may be
necessary to keep such Registration Statement effective for the
applicable period, cause each Prospectus to be supplemented by any
required prospectus supplement and, as so supplemented, to be filed
pursuant to Rule 424 under the Securities Act;
(c) furnish to each Holder of Registrable Securities and to
each underwriter of an underwritten offering of Registrable Securities,
if any, without charge, as many copies of each Prospectus, including
each preliminary Prospectus, and any amendment or supplement thereto
and such other documents as such Holder or underwriter may
<PAGE> 29
-27-
reasonably request, in order to facilitate the public sale or other
disposition of the Registrable Securities;
(d) use its best efforts to register or qualify the
Registrable Securities under all applicable state securities or "blue
sky" laws of such jurisdictions as any Holder thereof covered by a
Registration Statement shall reasonably request in writing by the time
the applicable Registration Statement is declared effective by the SEC,
and do any and all other acts and things which may be reasonably
necessary or advisable to enable such Holder to consummate the
disposition in each such jurisdiction of such Registrable Securities
owned by such Holder; provided, however, that the Company shall not be
required to (i) qualify generally to do business in any jurisdiction
where it is not then so qualified, (ii) take any action that would
subject it to general service of process in any jurisdiction in which
it is not then so subject or (iii) subject itself to taxation in excess
of a nominal dollar amount in any such jurisdiction;
(e) notify each Holder of Registrable Securities promptly and,
if requested by such Holder, confirm such advice in writing (i) when a
Registration Statement has become effective and when any post-effective
amendments and supplements thereto become effective, (ii) of any
request by the SEC or any state securities authority for amendments and
supplements to a Registration Statement and Prospectus or for
additional information after the Registration Statement has become
effective, (iii) of the issuance by the SEC or any state securities
authority of any stop order suspending the effectiveness of a
Registration Statement or the initiation of any proceedings for that
purpose, (iv) if, between the effective date of a Registration
Statement and the closing of any sale of Registrable Securities covered
thereby, the representations and warranties of the Company contained in
any underwriting agreement, securities sales agreement or other similar
agreement, if any, relating to the offering cease to be true and
correct in all material respects or if the Company receives any
notification with respect to the suspension of the qualification of the
Registrable Securities for sale in any jurisdiction or the initiation
of any proceeding for such purpose and (v) of the happening of any
event during the period a Registration Statement is effective which
makes any statement made in such Registration Statement or the related
Prospectus untrue in any material
<PAGE> 30
-28-
respect or which requires the making of any changes in such
Registration Statement or Prospectus in order to make the statements
therein not misleading;
(f) make every reasonable effort to obtain the withdrawal of
any order suspending the effectiveness of a Registration Statement at
the earliest possible moment;
(g) furnish to each Holder of Registrable Securities and to
the Purchasers, without charge, at least one conformed copy of each
Registration Statement and any post-effective amendment thereto (with
documents incorporated therein by reference or exhibits thereto);
(h) cooperate with the Selling Holders of Registrable
Securities to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold and not
bearing any restrictive legends and registered in such names as the
Selling Holders may reasonably request at least two business days prior
to the closing of any sale of Registrable Securities;
(i) upon the occurrence of any event contemplated by Section
4(e)(v) hereof, use reasonable efforts to prepare a supplement or
post-effective amendment to a Registration Statement or the related
Prospectus or any document incorporated therein by reference or file
any other required document so that, as thereafter delivered to the
purchasers of the Registrable Securities, such Prospectus will not
contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided,
however, that the Company shall not be required to amend or supplement
a Registration Statement, any related Prospectus or any document
incorporated therein by reference in the event that, and for so long
as, an event occurs and is continuing as a result of which the
Registration Statement, any related Prospectus or any document
incorporated therein by reference as then amended or supplemented
would, in the Company's good faith judgment, contain an untrue
statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in light of the circumstances
under which they are made, not misleading. The Company agrees to notify
each Holder to suspend use of the Prospectus as promptly as practicable
after the occurrence of such an event, and each Holder hereby agrees to
<PAGE> 31
-29-
suspend use of the Prospectus until the Company has amended or
supplemented the Prospectus to correct such misstatement or omission.
At such time as such public disclosure is otherwise made or the Company
determines in good faith that such disclosure is not necessary, the
Company agrees promptly to notify each Holder of such determination, to
amend or supplement the Prospectus if necessary to correct any untrue
statement or omission therein and to furnish each Holder such numbers
of copies of the Prospectus as so amended or supplemented as each
Holder may reasonably request;
(j) a reasonable time prior to the filing of any Registration
Statement, any Prospectus, any amendment to a Registration Statement or
amendment or supplement to a Prospectus or any document which is to be
incorporated by reference into a Registration Statement or a Prospectus
after initial filing of a Registration Statement, provide copies of
such document to the Holders and make available for discussion of such
document the representatives of the Company as shall be reasonably
requested by the Holders of Registrable Securities;
(k) obtain a CUSIP number for the Common Stock;
(l) (i) make reasonably available for inspection by a
representative of, and counsel for, any managing underwriter
participating in any disposition pursuant to a Registration Statement,
all relevant financial and other records, pertinent corporate documents
and properties of the Company and (ii) cause the Company's officers,
directors and employees to supply all relevant information reasonably
requested by such representative, counsel or any such managing
underwriter in connection with any such Registration Statement;
(m) take all action necessary so that the Warrant Shares will
be listed on the principal securities exchanges and markets within the
United States of America (including the NASDAQ National Market System),
if any, on which other shares of Common Stock are then listed; and
(n) if requested by the Holders in connection with any
Registration Statement, shall use its best efforts to cause (w) counsel
for the Company to deliver an opinion relating to the Registration
Statement and the Common Stock, in customary form, (x) its officers to
execute and
<PAGE> 32
-30-
deliver all customary documents and certificates requested by a
representative of the Holders or any managing underwriter, as
applicable and (y) its independent public accountants to provide a
comfort letter in customary form.
The Company may, as a condition to such Holder's participation
in any Registration Statement, require each Holder of Registrable Securities to
(i) furnish to the Company such information regarding the Holder and the
proposed distribution by such Holder of such Registrable Securities as the
Company may from time to time reasonably request in writing and (ii) agree in
writing to be bound by this Agreement.
5. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless each Holder and each person, if any, who controls
such Holder within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, from and against all losses, claims, damages and
liabilities (including, without limitation, any reasonable legal fees or other
expenses actually incurred by any Holder or any such controlling or affiliated
person in connection with defending or investigating any such action or claim)
caused by any untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement (or any amendment thereto) pursuant to
which Registrable Securities were registered under the Securities Act, or caused
by any omission or alleged omission to state therein a material fact necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading, or caused by any untrue statement or alleged untrue
statement of a material fact contained in any Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto), or caused by any omission or alleged omission to state therein a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, except insofar as such
losses, claims, damages or liabilities are caused by any such untrue statement
or omission or alleged untrue statement or omission made in reliance upon and in
conformity with information relating to any Holder furnished to the Company in
writing by such Holder expressly for use in any such Registration Statement or
Prospectus; provided that the foregoing indemnity with respect to any
preliminary prospectus shall not inure to the benefit of any Holder (or to the
benefit of any person controlling such Holder) from whom the person asserting
any such losses, claims, damages or liabilities purchased Registrable Securities
if such untrue statement or omission or alleged untrue statement or
<PAGE> 33
-31-
omission made in such preliminary prospectus is eliminated or remedied in the
related Prospectus (as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto) and a copy of the related
Prospectus (as so amended or supplemented) shall have been furnished to such
Holder at or prior to the sale of such Registrable Securities, as the case may
be, to such person; and provided, further, that the Company shall not be liable
in any such case to the extent that any such loss, claim, damage, liability or
expense arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in any preliminary prospectus if
(i) such Holder failed to send or deliver a copy of the Prospectus with or prior
to the delivery of written confirmation of the sale of Registrable Securities
and (ii) the Prospectus would have completely corrected such untrue statement or
omission.
(b) Each Holder agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its officers and each
person, if any, who controls the Company within the meaning of either Section 15
of the Securities Act or Section 20 of the Exchange Act to the same extent as
the foregoing indemnity from the Company to such Holder, but only with reference
to information relating to such Holder furnished to the Company in writing by
such Holder expressly for use in any Registration Statement (or any amendment
thereto), any Prospectus (or any amendment or supplement thereto) or any
preliminary prospectus. The liability of any Holder under this paragraph (b)
shall in no event exceed the proceeds received by such Holder from sales of
Registrable Securities giving rise to such obligations.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to either paragraph (a) or (b) above, such
person (the "indemnified party") shall promptly notify the person against which
such indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the reasonable fees and disbursements of such counsel relating to such
proceeding. In any such proceeding, any indemnified party shall have the right
to retain its own counsel, but the fees and expenses of such counsel shall be at
the expense of such indemnified party unless (i) the
<PAGE> 34
-32-
indemnifying party and the indemnified party shall have mutually agreed in
writing to the retention of such counsel or (ii) the indemnifying party fails
promptly to assume the defense of such proceeding or fails to employ counsel
reasonably satisfactory to such indemnified party or parties or (iii) the named
parties to any such proceeding (including any impleaded parties) include both
such indemnified party or parties and the indemnifying parties or an affiliate
of the indemnifying parties or such indemnified parties, and there may be one or
more defenses available to such indemnified party or parties that are different
from or additional to those available to the indemnifying parties, in which
case, if such indemnified party or parties notifies the indemnifying parties in
writing that it elects to employ separate counsel of its choice at the expense
of the indemnifying parties, the indemnifying parties shall not have the right
to assume the defense thereof and such counsel shall be at the expense of the
indemnifying parties, it being understood, however, that unless there exists a
conflict among indemnified parties, the indemnifying parties shall not, in
connection with any one such proceeding or separate but substantially similar or
related proceedings in the same jurisdiction, arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more than
one separate firm of attorneys (together with appropriate local counsel) at any
time for such indemnified party or parties. The indemnifying party shall not be
liable for any settlement of any proceeding effected without its written consent
but, if settled with such consent or if there be a final judgment for the
plaintiff, the indemnifying party agrees to indemnify the indemnified party from
and against any loss or liability by reason of such settlement or judgment. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened proceeding in respect
of which any indemnified party is a party, and indemnity could have been sought
hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.
(d) To the extent the indemnification provided for in
paragraph (a) or (b) of this Section 5 is unavailable to an indemnified party in
respect of any losses, claims, damages or liabilities, then each indemnifying
party under such paragraph, in lieu of indemnifying such indemnified party
thereunder, shall contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages or
<PAGE> 35
-33-
liabilities in such proportion as is appropriate to reflect the relative fault
of the Company on the one hand and the Holders on the other hand in connection
with the statements or omissions that resulted in such losses, claims, damages
or liabilities, as well as any other relevant equitable considerations. The
relative fault of the Company on the one hand and the Holders on the other hand
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company or by
the Holders and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
(e) The Company and each Holder agrees that it would not be
just or equitable if contribution pursuant to this Section 5 were determined by
pro rata allocation or by any other method of allocation that does not take
account of the equitable considerations referred to in paragraph (d) above. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in paragraph (d) above shall be
deemed to include, subject to the limitations set forth above, any legal or
other expenses reasonably incurred (and not otherwise reimbursed) by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this Section 5, in no event shall a
Selling Holder be required to contribute any amount in excess of the amount by
which proceeds received by such Selling Holder from sales of Registrable
Securities exceeds the amount of damages that such Selling Holder has otherwise
been required to pay by reason of such untrue or allegedly untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The remedies provided for in this Section 5 are not exclusive
and shall not limit any rights or remedies which may otherwise be available to
any indemnified party at law or in equity.
6. Miscellaneous.
(a) No Inconsistent Agreements. (i) Subject to clause (ii)
below, the Company has not entered into nor will the Company on or after the
date of this Agreement enter into any agreement which is inconsistent with the
rights granted to the Holders of Registrable Securities in this Agreement or
<PAGE> 36
-34-
otherwise conflicts with the provisions hereof. The rights granted to the
Holders hereunder do not in any way conflict with and are not inconsistent with
the rights granted to the holders of the Company's other issued and outstanding
securities, if any, under any such agreements.
(ii) The rights of Holders to require the Company to effect a
Demand Registration pursuant to Section 2.1 of this Agreement shall be subject
to the prior rights and obligations of the parties to the Existing Common Stock
Agreement, but only to the extent that such prior rights and/or obligations
actually conflict with the Demand Registration rights provided for herein.
(b) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless the Company has obtained the written consent of Holders
of at least a majority in aggregate number of the outstanding Registrable
Securities affected by such amendment, modification, supplement, waiver or
consent; provided, however, a waiver or consent to departure from the provisions
hereof that relates exclusively to the rights of Holders of Registrable
Securities whose securities are being sold pursuant to a Registration Statement
and that does not directly or indirectly affect the rights of other Holders of
Registrable Securities may be given by the Holders of a majority of the
Registrable Securities proposed to be sold.
(c) Notices. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand delivery, registered
first-class mail, telex, telecopier, or any courier guaranteeing overnight
delivery (i) if to a Holder, at the most current address given by such Holder to
the Company by means of a notice given in accordance with the provisions of this
Section 6(c), which address initially is, with respect to the Purchaser, the
address set forth in the Purchase Agreement, with a copy to: Cahill Gordon &
Reindel, 80 Pine Street, New York, New York 10005, Attention: Roger Meltzer,
Esq.; and (ii) if to the Company, initially at the Company's address set forth
in the Purchase Agreement and thereafter at such other address, notice of which
is given in accordance with the provisions of this Section 6(c), with a copy to:
Pryor, Cashman, Sherman & Flynn, 410 Park Avenue, New York, New York 10022,
Attention: Ira J. Goldstein, Esq.
<PAGE> 37
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All such notices and communications shall be deemed to have
been duly given: (i) at the time delivered by hand, if personally delivered,
five business days after being deposited in the mail, postage prepaid, if
mailed; (ii) when answered back, if telexed; (iii) when receipt is acknowledged,
if telecopied; and (iv) on the next business day, if timely delivered to an air
courier guaranteeing overnight delivery.
(d) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors, assigns and transferees of each
of the parties, including, without limitation and without the need for an
express assignment, subsequent Holders; provided, however, that nothing herein
shall be deemed to permit any assignment, transfer or other disposition of
Registrable Securities in violation of the terms of this Agreement or the
Purchase Agreement. If any transferee of any Holder shall acquire Registrable
Securities, in any manner, whether by operation of law or otherwise, such
Registrable Securities shall be held subject to all of the terms of this
Agreement, and by taking and holding such Registrable Securities such person
shall be conclusively deemed to have agreed to be bound by and to perform all of
the terms and provisions of this Agreement and such person shall be entitled to
receive the benefits hereof.
(e) Rules 144 and 144A. The Company covenants that it will
file the reports required to be filed by it under the Securities Act and the
Exchange Act and the rules and regulations adopted by the SEC thereunder in a
timely manner and, if at any time the Company is not required to file such
reports, it will, upon the request of any Holder of Registrable Securities, make
publicly available other information of a like nature so long as necessary to
permit sales pursuant to Rule 144 or Rule 144A under the Securities Act. The
Company further covenants that so long as any Registrable Securities remain
outstanding to make available to any Holder of Registrable Securities in
connection with any sale thereof, the information required by Rule 144A(d)(4)
under the Securities Act in order to permit resales of such Registrable
Securities pursuant to (a) such Rule 144A, or (b) any similar rule or regulation
hereafter adopted by the SEC.
(f) Counterparts. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
<PAGE> 38
-36-
(g) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(h) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO
THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(i) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
(j) Entire Agreement. This Agreement, together with the
Purchase Agreement, is intended by the parties as a final expression of their
agreement, and is intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter contained herein and therein.
<PAGE> 39
-37-
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
COMMODORE MEDIA, INC.
By: /S/ BRUCE A. FRIEDMAN
--------------------------------
Name: Bruce A. Friedman
Title: President
THE CONTROL STOCKHOLDERS
The undersigned Control Stockholders are
executing this Agreement solely for
purposes of agreeing to be bound by the
provisions of Sections 3.2 and 3.3
hereof to the extent such provisions
obligate such Control Stockholders to
take certain actions or refrain from
taking certain actions.
By: EXECUTORS OF THE ESTATE OF
CARTER BURDEN
/s/ Susan L. Burden
---------------------------------
Susan L. Burden, Executor
/s/ S. Carter Burden III
---------------------------------
S. Carter Burden III, Executor
/s/ Flobelle F. Burden
---------------------------------
Flobelle F. Burden, Executor
<PAGE> 40
-38-
CIBC WG ARGOSY MERCHANT
FUND 2, L.L.C.
By: /s/__________________________
Name:
Title: Director
<PAGE> 41
EXHIBIT A
CERTIFICATE TO BE DELIVERED UPON EXCHANGE
OR REGISTRATION OF RESTRICTED SECURITIES
Re: Class A Common Stock, par value $.01 per share ("Class A Common Stock"), of
Commodore Media, Inc.
This Certificate relates to shares of Class A Common Stock held in
*___ book-entry or* _______ definitive form by ______ (the "Transferor").
The Transferor:*
/ / has requested the Transfer Agent by written order to deliver in
exchange for its beneficial interest in the Global Certificate held by the
Depositary shares of Class A Common Stock in definitive, registered form equal
to its beneficial interest in the shares of Class A Common Stock represented by
such Global Certificate (or the portion thereof indicated above); or
/ / has requested the Transfer Agent by written order to exchange or
register the transfer of shares of Class A Common Stock.
In connection with such request, the Transferor does hereby certify
that Transferor is familiar with the Common Stock Registration Rights and
Stockholders Agreement (the "Agreement") relating to the shares of Class A
Common Stock and the restrictions on transfers thereof as provided in Sections
3.4 and 3.5 of such Agreement, and that the transfer of shares of Class A Common
Stock requested hereby does not require registration under the Securities Act
(as defined below) because:
/ / Such shares of Class A Common Stock are being acquired for the
Transferor's own account, without transfer (in satisfaction of Section 3.4(a)(A)
or Section 3.4(d)(i)(A) of the Agreement).
/ / Such shares of Class A Common Stock are being transferred to a
qualified institutional buyer (as defined in Rule 144A under the Securities Act
of 1933, as amended (the "Securities Act")), in reliance on Rule 144A or in
accordance with Regulation S under the Securities Act. If such transfer is
<PAGE> 42
-2-
in accordance with Regulation S, an opinion of counsel to the effect that such
transfer does not require registration under the Securities Act accompanies this
Certificate.
/ / Such shares of Class A Common Stock are being transferred in
accordance with Rule 144 under the Securities Act. An opinion of counsel to the
effect that such transfer does not require registration under the Securities Act
accompanies this Certificate.
/ / Such shares of Class A Common Stock are being transferred pursuant to
an effective registration statement under the Securities Act.
/ / Such shares of Class A Common Stock are being transferred in reliance
on and in compliance with an exemption from the registration requirements of the
Securities Act, other than Rule 144A or Rule 144 or Regulation S under the
Securities Act. An opinion of counsel to the effect that such transfer does not
require registration under the Securities Act accompanies this Certificate.
------------------------------
[INSERT NAME OF TRANSFEROR]
By:
--------------------------
Date:
--------------
- --------------------------------
* Check applicable box.
<PAGE> 1
EXHIBIT 10.70
REGISTRATION RIGHTS AGREEMENT
Dated as of May 1, 1996
by and among
COMMODORE MEDIA, INC.,
THE GUARANTORS named herein
and
CIBC WG ARGOSY MERCHANT FUND 2, L.L.C.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. Definitions ........................................................ 1
2. Exchange Offer ..................................................... 5
3. Shelf Registration ................................................. 8
4. Additional Dividends ............................................... 9
5. Registration Procedures ............................................ 11
6. Registration Expenses .............................................. 22
7. Indemnification .................................................... 23
8. Rules 144 and 144A ................................................. 27
9. Underwritten Registrations ......................................... 27
10. Requirements of Exchange ........................................... 28
11. Miscellaneous ...................................................... 28
(a) Remedies ...................................................... 28
(b) No Inconsistent Agreements .................................... 28
(c) Adjustments Affecting Registrable
Shares ...................................................... 29
(d) Amendments and Waivers ........................................ 29
(e) Notices ....................................................... 29
(f) Successors and Assigns ........................................ 30
(g) Counterparts .................................................. 30
(h) Headings ...................................................... 30
(i) Governing Law ................................................. 30
(j) Severability .................................................. 30
(k) Entire Agreement .............................................. 31
(l) Shares Held by the Company or Its
Affiliates .................................................. 31
</TABLE>
-i-
<PAGE> 3
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is dated
as of May 1, 1996, by and among Commodore Media, Inc., a Delaware corporation
(the "Company"), Commodore Holdings, Inc., a Delaware corporation, Commodore
Media of Delaware, Inc., a Delaware corporation, Commodore Media of
Pennsylvania, Inc., a Delaware corporation, Commodore Media of Florida, Inc., a
Delaware corporation, Commodore Media of Kentucky, Inc., a Delaware corporation,
Commodore Media of Norwalk, Inc., a Delaware corporation, Commodore Media of
Westchester, Inc., a Delaware corporation, and Danbury Broadcasting, Inc., a
Connecticut corporation (collectively, the "Guarantors"), and CIBC WG Argosy
Merchant Fund 2, L.L.C., a Delaware limited liability company (the "Purchaser").
This Agreement is entered into in connection with the
Securities Purchase Agreement, dated as of May 1, 1996, among the Company, the
Guarantors and the Purchaser (the "Purchase Agreement") relating to the sale by
the Company to the Purchaser of up to $12,500,000 aggregate liquidation value of
the Company's Senior Exchangeable Redeemable Preferred Stock, Series A, par
value $.01 per share (the "Preferred Shares"), along with warrants ("Warrants")
for the purchase of shares of the Class A Common Stock, par value $.01 per
share, of the Company ("Class A Common Stock") constituting up to 5.99% of the
Company's fully diluted common stock. In order to induce the Purchaser to enter
into the Purchase Agreement, the Company and the Guarantors have agreed to
provide the registration rights set forth in this Agreement for the benefit of
the Purchaser. The execution and delivery of this Agreement is a condition to
the Purchaser's obligation to purchase the Preferred Shares and the Warrants
under the Purchase Agreement.
The parties hereby agree as follows:
1. Definitions
As used in this Agreement, the following terms shall have the
following meanings:
Additional Dividends: See Section 4.
Advice: See Section 5.
Applicable Period: See Section 2.
Certificate of Designation: The Certificate of Designation
duly adopted by the Board of Directors of the Company setting forth the rights,
preferences and priorities of
<PAGE> 4
-2-
the Preferred Shares and filed with, and accepted for filing, so as to be
effective, by the Secretary of State of the State of Delaware prior to the
Closing hereunder and which is substantially in the form of Exhibit 1 to the
Purchase Agreement.
Company: See the introductory paragraph to this Agreement.
Effectiveness Date: The 120th day after the Trigger Date.
Effectiveness Period: See Section 3.
Event Date: See Section 4.
Exchange Act: The Securities Exchange Act of 1934, as amended,
and the rules and regulations of the SEC promulgated thereunder.
Exchange Indenture: See Section 10.
Exchange Notes: See Section 10.
Exchange Offer: See Section 2.
Exchange Registration Statement: See Section 2.
Exchange Shares: See Section 2.
Filing Date: The 45th day after the Trigger Date.
Guarantors: See the introductory paragraphs to this Agreement.
Holder: Any holder of a Registrable Share or Registrable
Shares.
Indemnified Person: See Section 7.
Indemnifying Person: See Section 7.
Indenture: The Indenture dated as of April 21, 1995, among the
Company, the Guarantors named therein and IBJ Schroder Bank & Trust Company, as
Trustee, as amended, restated or supplemented from time to time.
Initial Shelf Registration: See Section 3.
<PAGE> 5
-3-
Inspectors: See Section 5.
NASD: See Section 5.
Participant: See Section 7.
Participating Broker-Dealer: See Section 2.
Person: An individual, corporation, partnership, joint
venture, association, joint stock company, trust, unincorporated organization or
other legal entity.
Preferred Shares: See the introductory paragraphs to this
Agreement.
Prospectus: The prospectus included in any Registration
Statement (including, without limitation, any prospectus subject to completion
and a prospectus that includes any information previously omitted from a
prospectus filed as part of an effective registration statement in reliance upon
Rule 430A promulgated under the Securities Act), as amended or supplemented by
any prospectus supplement, with respect to the terms of the offering of any
portion of the Registrable Shares covered by such Registration Statement, and
all other amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.
Purchase Agreement: See the introductory paragraphs to this
Agreement.
Purchaser: See the introductory paragraphs to this Agreement.
Records: See Section 5.
Registrable Shares: The Preferred Shares upon original
issuance of the Preferred Shares and at all times subsequent thereto and until
(i) a Registration Statement covering such Preferred Shares has been declared
effective by the SEC and such Preferred Shares have been disposed of in
accordance with such effective Registration Statement, (ii) such Preferred
Shares are sold in compliance with Rule 144, (iii) in the case of any Preferred
Share, such Preferred Share has been exchanged for an Exchange Share or Exchange
Shares pursuant to an Exchange Offer or (iv) such Preferred Shares cease to be
outstanding.
<PAGE> 6
-4-
Registration Default: See Section 4.
Registration Statement: Any registration statement of the
Company, including, but not limited to, the Exchange Registration Statement,
which covers any of the Registrable Shares pursuant to the provisions of this
Agreement, including the Prospectus, amendments and supplements to such
registration statement, including post-effective amendments, all exhibits, and
all material incorporated by reference or deemed to be incorporated by reference
in such registration statement.
Rule 144: Rule 144 under the Securities Act, as such Rule may
be amended from time to time, or any similar rule (other than Rule 144A) or
regulation hereafter adopted by the SEC providing for offers and sales of
securities made in compliance therewith resulting in offers and sales by
subsequent holders that are not affiliates of an issuer of such securities being
free of the registration and prospectus delivery requirements of the Securities
Act.
Rule 144A: Rule 144A under the Securities Act, as such Rule
may be amended from time to time, or any similar rule (other than Rule 144) or
regulation hereafter adopted by the SEC providing for offers and sales of
securities made in compliance therewith resulting in offers and sales by
subsequent holders that are not affiliates of an issuer of such securities being
free of the registration and prospectus delivery requirements of the Securities
Act.
Rule 415: Rule 415 under the Securities Act, as such Rule may
be amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC.
SEC: The Securities and Exchange Commission.
Securities Act: The Securities Act of 1933, as amended, and
the rules and regulations of the SEC promulgated thereunder.
Shelf Notice: See Section 2.
Shelf Registration: See Section 3.
Subsequent Shelf Registration: See Section 3.
Trigger Date: April 30, 1998.
<PAGE> 7
-5-
Underwritten registration or underwritten offering: A
registration in which securities of the Company are sold to an underwriter(s)
for reoffering to the public.
2. Exchange Offer
(a) The Company agrees to use its best efforts to file with
the SEC as soon as practicable after the Trigger Date, but in no event later
than the Filing Date, an offer to exchange (the "Exchange Offer") any and all of
the Registrable Shares for a like aggregate liquidation value of preferred
equity securities of the Company which are substantially identical to the
Preferred Shares (the "Exchange Shares") (and which are entitled to the benefits
of the Certificate of Designation), except that the Exchange Shares shall have
been registered pursuant to an effective Registration Statement under the
Securities Act. The Exchange Offer will be registered under the Securities Act
on the appropriate form (the "Exchange Registration Statement") and will comply
with all applicable tender offer rules and regulations under the Exchange Act.
The Company agrees to use its best efforts to (x) cause the Exchange
Registration Statement to become effective under the Securities Act on or before
the Effectiveness Date; (y) keep the Exchange Offer open for at least 30 days
(or longer if required by applicable law) after the date that notice of the
Exchange Offer is mailed to Holders; and (z) consummate the Exchange Offer on or
prior to the 60th day following the date on which the Exchange Registration
Statement is declared effective. Each Holder who participates in the Exchange
Offer will be required to represent that any Exchange Shares received by it will
be acquired in the ordinary course of its business, that at the time of the
consummation of the Exchange Offer such Holder will have no arrangement or
understanding with any person to participate in the distribution of the Exchange
Shares, and that such Holder is not an affiliate of the Company within the
meaning of Rule 405 under the Securities Act or if it is an affiliate, that it
will comply with the registration and prospectus delivery requirements of the
Securities Act, to the extent applicable. Upon consummation of the Exchange
Offer in accordance with this Section 2, the provisions of this Agreement shall
continue to apply, mutatis mutandis, solely with respect to Exchange Shares held
by Participating Broker-Dealers (as defined below), and the Company shall have
no further obligation to register Registrable Shares pursuant to Section 3 of
this Agreement.
(b) The Company shall include within the Prospectus contained
in the Exchange Registration Statement a section
<PAGE> 8
-6-
entitled "Plan of Distribution," reasonably acceptable to the Purchaser, which
shall contain a summary statement of the positions taken or policies made by the
Staff of the SEC with respect to the potential "underwriter" status of any
broker-dealer that is the beneficial owner (as defined in Rule 13d-3 under the
Exchange Act) of Exchange Shares received by such broker-dealer in the Exchange
Offer (a "Participating Broker-Dealer"), whether such positions or policies have
been publicly disseminated by the Staff of the SEC or such positions or
policies, in the reasonable judgment of the Purchaser, represent the prevailing
views of the Staff of the SEC. Such "Plan of Distribution" section shall also
allow the use of the prospectus by all persons subject to the prospectus
delivery requirements of the Securities Act, including all Participating
Broker-Dealers, and include a statement describing the means by which
Participating Broker-Dealers may resell the Exchange Shares.
The Company shall use its best efforts to keep the Exchange
Registration Statement effective and to amend and supplement the Prospectus
contained therein, in order to permit such Prospectus to be lawfully delivered
by all persons subject to the prospectus delivery requirements of the Securities
Act for such period of time as such persons must comply with such requirements
in order to resell the Exchange Shares, provided that such period shall not
exceed 180 days (or such longer period if extended pursuant to the last
paragraph of Section 5) (the "Applicable Period").
Dividends on the Exchange Shares will accrue from the last
dividend payment date on which dividends were paid on the Preferred Shares
surrendered in exchange therefor or, if no dividends have been paid on the
Preferred Shares, from the date of original issue.
In connection with the Exchange Offer, the Company shall:
(i) mail to each Holder a copy of the Prospectus forming
part of the Exchange Offer Registration Statement, together with an
appropriate letter of transmittal and related documents;
(ii) utilize the services of a depositary for the Exchange
Offer with an address in the Borough of Manhattan, The City of New
York; and
<PAGE> 9
-7-
(iii) permit Holders to withdraw tendered Preferred Shares at
any time prior to the close of business, New York time, on the last
business day on which the Exchange Offer shall remain open.
As soon as practicable after the close of the Exchange Offer
the Company shall:
(i) accept for exchange all Preferred Shares tendered and
not validly withdrawn pursuant to the Exchange Offer; and
(ii) issue and deliver promptly to each Holder of Preferred
Shares, Exchange Shares equal in principal amount to the Preferred
Shares of such Holder so accepted for exchange.
The Exchange Shares shall be issued pursuant to the
Certificate of Designation, will vote and consent together on all matters with
the Preferred Shares as one class to the extent the Preferred Shares have voting
rights pursuant to the Certificate of Designation or as provided by applicable
law, and will not have the right to vote or consent as a class separate from the
Preferred Shares on any matter.
(c) If (1) prior to the consummation of the Exchange Offer,
the Company or Holders of at least a majority in aggregate liquidation value of
the Registrable Shares reasonably determine in good faith that (i) the Exchange
Shares would not, upon receipt, be tradeable by such Holders which are not
affiliates (within the meaning of the Securities Act) of the Company without
restriction under the Securities Act and without restrictions under applicable
state securities laws, (ii) the interests of the Holders under this Agreement
would be adversely affected by the consummation of the Exchange Offer or (iii)
after conferring with counsel, the SEC is unlikely to permit the consummation of
the Exchange Offer prior to the Effectiveness Date or (2) the Exchange Offer is
commenced and not consummated within 180 days of the Trigger Date, then the
Company shall promptly deliver to the Holders written notice thereof (the "Shelf
Notice") and shall file an Initial Shelf Registration pursuant to Section 3.
Following the delivery of a Shelf Notice to the Holders of Registrable Shares,
the Company shall not have any further obligation to conduct the Exchange Offer
under this Section 2.
<PAGE> 10
-8-
3. Shelf Registration
If a Shelf Notice is delivered as contemplated by Section
2(c), then:
(a) Initial Shelf Registration. The Company shall prepare and
file with the SEC a Registration Statement for an offering to be made
on a continuous basis pursuant to Rule 415 covering all of the
Registrable Shares (the "Initial Shelf Registration"). If the Company
shall have not yet filed an Exchange Registration Statement, the
Company shall use its best efforts to file with the SEC the Initial
Shelf Registration on or prior to the Filing Date. In any other
instance, the Company shall use its best efforts to file with the SEC
the Initial Shelf Registration within 30 days of the delivery of the
Shelf Notice. The Initial Shelf Registration shall be on Form S-1 or
another appropriate form permitting registration of such Registrable
Shares for resale by such Holders in the manner or manners designated
by them (including, without limitation, one or more underwritten
offerings). The Company shall not permit any securities other than the
Registrable Shares to be included in the Initial Shelf Registration or
any Subsequent Shelf Registration (as defined below). The Company shall
use its best efforts to cause the Initial Shelf Registration to be
declared effective under the Securities Act on or prior to the
Effectiveness Date and to keep the Initial Shelf Registration
continuously effective under the Securities Act until the date which is
36 months from the date on which such Initial Shelf Registration is
declared effective (subject to extension pursuant to the last paragraph
of Section 5 hereof) (the "Effectiveness Period"), or such shorter
period ending when (i) all Registrable Shares covered by the Initial
Shelf Registration have been sold in the manner set forth and as
contemplated in the Initial Shelf Registration or (ii) a Subsequent
Shelf Registration covering all of the Registrable Shares has been
declared effective under the Securities Act.
(b) Subsequent Shelf Registrations. If the Initial Shelf
Registration or any Subsequent Shelf Registration ceases to be
effective for any reason at any time during the Effectiveness Period
(other than because of the sale of all of the securities regis-
<PAGE> 11
-9-
tered thereunder), the Company shall use its best efforts to obtain the
prompt withdrawal of any order suspending the effectiveness thereof,
and in any event shall within 45 days of such cessation of
effectiveness amend the Shelf Registration in a manner reasonably
expected to obtain the withdrawal of the order suspending the
effectiveness thereof, or file an additional "shelf" Registration
Statement pursuant to Rule 415 covering all of the Registrable Shares
(a "Subsequent Shelf Registration"). If a Subsequent Shelf Registration
is filed, the Company shall use its best efforts to cause the
Subsequent Shelf Registration to be declared effective as soon as
practicable after such filing and to keep such Registration Statement
continuously effective for a period equal to the number of days in the
Effectiveness Period less the aggregate number of days during which the
Initial Shelf Registration or any Subsequent Shelf Registration was
previously continuously effective. As used herein the term "Shelf
Registration" means the Initial Shelf Registration and any Subsequent
Shelf Registration.
(c) Supplements and Amendments. The Company shall promptly
supplement and amend the Shelf Registration if required by the rules,
regulations or instructions applicable to the registration form used
for such Shelf Registration, if required by the Securities Act, or if
requested by the Holders of a majority in aggregate liquidation value
of the Registrable Shares covered by such Registration Statement or by
any underwriter(s) of such Registrable Shares.
4. Additional Dividends
(a) The Company and the Purchaser agree that the Holders of
Registrable Shares will suffer damages if the Company fails to fulfill its
obligations under Section 2 or Section 3 hereof and that it would not be
feasible to ascertain the extent of such damages with precision. Accordingly,
the Company agrees to pay additional dividends on the Preferred Shares
("Additional Dividends") under the circumstances set forth below:
(i) if the Exchange Offer Registration Statement or the
Initial Shelf Registration has not been filed on or prior to the Filing
Date;
<PAGE> 12
-10-
(ii) if the Exchange Offer Registration Statement or the
Initial Shelf Registration has not been declared effective on or prior
to April 30, 1999; and
(iii) if either (A) the Company has not exchanged the Exchange
Shares for all Preferred Shares validly tendered in accordance with the
terms of the Exchange Offer on or prior to 60 days after the date on
which the Exchange Offer Registration Statement was declared effective
or (B) the Exchange Offer Registration Statement ceases to be effective
at any time prior to the time that the Exchange Offer is consummated or
(C) if applicable, the Shelf Registration Statement has been declared
effective and such Shelf Registration Statement ceases to be effective
at any time during the Effectiveness Period.
(each such event referred to in clauses (i) through (iii) above is a
"Registration Default"), the sole remedy available to holders of the Preferred
Shares will be the immediate accrual of Additional Dividends as follows: the per
annum dividend rate on the Preferred Shares will increase by 100 basis points;
and the per annum dividend rate will increase by an additional 25 basis points
for each subsequent 90-day period during which the Registration Default remains
uncured, up to a maximum additional dividend rate of 150 basis points per annum,
provided, however, that (1) upon the filing of the Exchange Registration
Statement or the Initial Shelf Registration (in the case of (i) above), (2) upon
the effectiveness of the Exchange Registration Statement or a Shelf Registration
(in the case of (ii) above) or (3) upon the exchange of Exchange Shares for all
Preferred Shares tendered (in the case of (iii)(A) above), or upon the
effectiveness of the Exchange Registration Statement which had ceased to remain
effective (in the case of (iii)(B) above), or upon the effectiveness of the
Shelf Registration which had ceased to remain effective (in the case of (iii)(C)
above), any Additional Dividends on the Preferred Shares as a result of such
clause (i), (ii) or (iii) (or the relevant subclause thereof), as the case may
be, shall cease to accrue and the dividend rate on the Preferred Shares will
revert to the dividend rate originally borne by the Preferred Shares.
(b) The Company shall notify the Holders within one business
day after each and every date on which an event occurs in respect of which any
Additional Dividend is required to be paid (an "Event Date"). Any amounts of
Additional Dividends due pursuant to (a)(i), (a)(ii) or (a)(iii) of this Section
4 will be payable in cash or in additional Preferred Shares as
<PAGE> 13
-11-
contemplated by the Certificate of Designation quarterly on each February 1, May
1, August 1 and November 1 to the Holders of record on the fifteenth day
immediately preceding such dates), commencing with the first such date occurring
after any such Additional Dividend commences to accrue. The amount of an
Additional Dividend will be determined by multiplying the applicable Additional
Dividend rate by the principal amount of the Registrable Shares, multiplied by a
fraction, the numerator of which is the number of days such Additional Dividend
rate was applicable during such period (determined on the basis of a 360-day
year comprised of twelve 30-day months), and the denominator of which is 360.
5. Registration Procedures
In connection with the registration of any Registrable Shares
pursuant to Section 2 or 3 hereof, the Company shall effect such registrations
to permit the sale of such Registrable Shares in accordance with the intended
method or methods of disposition thereof, and pursuant thereto the Company
shall:
(a) Prepare and file with the SEC, prior to the Filing Date, a
Registration Statement or Registration Statements as prescribed by
Section 2 or 3, and to use their respective best efforts to cause each
such Registration Statement to become effective and remain effective as
provided herein, provided that, if (1) such filing is pursuant to
Section 3, or (2) a Prospectus contained in an Exchange Registration
Statement filed pursuant to Section 2 is required to be delivered under
the Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Shares during the Applicable Period, before filing any
Registration Statement or Prospectus or any amendments or supplements
thereto, the Company shall, if requested, furnish to and afford the
Holders of the Registrable Shares and each such Participating
Broker-Dealer, as the case may be, covered by such Registration
Statement, their counsel and the managing underwriter(s), if any, a
reasonable opportunity to review copies of all such documents
(including copies of any documents to be incorporated by reference
therein and all exhibits thereto) proposed to be filed (at least 5
business days prior to such filing). The Company shall not file any
Registration Statement or Prospectus or any amendments or supplements
thereto in respect of which the Holders must be afforded an opportunity
to review prior to the filing
<PAGE> 14
-12-
of such document, if the Holders of a majority in aggregate liquidation
value of the Registrable Shares covered by such Registration Statement,
or such Participating Broker-Dealer, as the case may be, their counsel,
or the managing underwriter(s), if any, shall reasonably object.
(b) Prepare and file with the SEC such amendments and
post-effective amendments to each Shelf Registration or Exchange
Registration Statement, as the case may be, as may be necessary to keep
such Registration Statement continuously effective for the
Effectiveness Period or the Applicable Period, as the case may be;
cause the related Prospectus to be supplemented by any Prospectus
supplement required by applicable law, and as so supplemented to be
filed pursuant to Rule 424 (or any similar provisions then in force)
under the Securities Act; and comply with the provisions of the
Securities Act, the Exchange Act and the rules and regulations of the
SEC promulgated thereunder applicable to them with respect to the
disposition of all securities covered by such Registration Statement as
so amended or in such Prospectus as so supplemented and with respect to
the subsequent resale of any securities being sold by a Participating
Broker-Dealer covered by any such Prospectus; the Company shall be
deemed not to have used its best efforts to keep a Registration
Statement effective during the Applicable Period if it voluntarily
takes any action that would result in selling Holders of the
Registrable Shares covered thereby or Participating Broker-Dealers
seeking to sell Exchange Shares not being able to sell such Registrable
Shares or such Exchange Shares during that period unless such action is
required by applicable law or unless the Company complies with this
Agreement, including, without limitation, the provisions of clause
5(c)(v) below.
(c) If (1) a Shelf Registration is filed pursuant to Section
3, or (2) a Prospectus contained in an Exchange Registration Statement
filed pursuant to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Shares during the Applicable Period, notify the selling
Holders of Registrable Shares, or each such Participating
Broker-Dealer, as the case may be, their counsel and the managing
<PAGE> 15
-13-
underwriter(s), if any, promptly (but in any event within two business
days), and confirm such notice in writing, (i) when a Prospectus or any
Prospectus supplement or post-effective amendment thereto has been
filed, and, with respect to a Registration Statement or any
post-effective amendment thereto, when the same has become effective
(including in such notice a written statement that any Holder may, upon
request, obtain, without charge, one conformed copy of such
Registration Statement or post-effective amendment thereto including
financial statements and schedules, documents incorporated or deemed to
be incorporated by reference and exhibits), (ii) of the issuance by the
SEC of any stop order suspending the effectiveness of a Registration
Statement or of any order preventing or suspending the use of any
preliminary prospectus or the initiation of any proceedings for that
purpose, (iii) if at any time when a prospectus is required by the
Securities Act to be delivered in connection with sales of the
Registrable Shares the representations and warranties of the Company
contained in any agreement (including any underwriting agreement)
contemplated by Section 5(n) below cease to be true and correct, (iv)
of the receipt by the Company of any notification with respect to the
suspension of the qualification or exemption from qualification of a
Registration Statement or any of the Registrable Shares or the Exchange
Shares to be sold by any Participating Broker-Dealer for offer or sale
in any jurisdiction, or the initiation or threatening of any proceeding
for such purpose, (v) of the happening of any event or any information
becoming known that makes any statement made in such Registration
Statement or related Prospectus or any document incorporated or deemed
to be incorporated therein by reference untrue in any material respect
or that requires the making of any changes in, or amendments or
supplements to, such Registration Statement, Prospectus or documents so
that, in the case of the Registration Statement, it will not contain
any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements
therein not misleading, and that in the case of the Prospectus, it will
not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances
<PAGE> 16
-14-
under which they were made, not misleading, and (vi) of the Company's
reasonable determination that a post-effective amendment to a
Registration Statement would be appropriate.
(d) If (1) a Shelf Registration is filed pursuant to Section
3, or (2) a Prospectus contained in an Exchange Registration Statement
filed pursuant to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Shares during the Applicable Period, use its best efforts to
prevent the issuance of any order suspending the effectiveness of a
Registration Statement or of any order preventing or suspending the use
of a Prospectus or suspending the qualification (or exemption from
qualification) of any of the Registrable Shares or the Exchange Shares
to be sold by any Participating Broker-Dealer, for sale in any
jurisdiction, and, if any such order is issued, to use its best efforts
to obtain the withdrawal of any such order at the earliest possible
moment.
(e) If a Shelf Registration is filed pursuant to Section 3 and
if requested by the managing underwriter(s), if any, or the Holders of
a majority in aggregate liquidation value of the Registrable Shares
being sold in connection with an underwritten offering, (i) promptly
incorporate in a Prospectus supplement or post-effective amendment
thereto such information as the managing underwriter(s), if any, or
such Holders or counsel reasonably request to be included therein, (ii)
make all required filings of such Prospectus supplement or such
post-effective amendment thereto as soon as practicable after the
Company has received notification of the matters to be incorporated in
such prospectus supplement or post-effective amendment thereto and
(iii) supplement or make amendments to such Registration Statement.
(f) If (1) a Shelf Registration is filed pursuant to Section
3, or (2) a Prospectus contained in an Exchange Registration Statement
filed pursuant to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Shares during the Applicable Period, furnish to each selling
Holder of Registrable Shares and to each such Participating
Broker-Dealer
<PAGE> 17
-15-
who so requests and to counsel and the managing underwriter(s), if any,
without charge, one conformed copy of the Registration Statement or
Registration Statements and each post-effective amendment thereto,
including financial statements and schedules, and, if requested, all
documents incorporated or deemed to be incorporated therein by
reference and all exhibits.
(g) If (1) a Shelf Registration is filed pursuant to Section
3, or (2) a Prospectus contained in an Exchange Registration Statement
filed pursuant to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Shares during the Applicable Period, deliver to each selling
Holder of Registrable Shares, or each such Participating Broker-Dealer,
as the case may be, their counsel, and the managing underwriter or
underwriters, if any, without charge, as many copies of the Prospectus
or Prospectuses (including each form of preliminary prospectus) and
each amendment or supplement thereto and any documents incorporated by
reference therein as such Persons may reasonably request; and, subject
to the last paragraph of this Section 5, the Company hereby consents to
the use of such Prospectus and each amendment or supplement thereto by
each of the selling Holders of Registrable Shares or each such
Participating Broker-Dealer, as the case may be, and the managing
underwriter or underwriters or agents, if any, and dealers (if any), in
connection with the offering and sale of the Registrable Shares covered
by or the sale by Participating Broker-Dealers of the Exchange Shares
pursuant to such Prospectus and any amendment or supplement thereto.
(h) Prior to any public offering of Registrable Shares or any
delivery of a Prospectus contained in the Exchange Registration
Statement by any Participating Broker-Dealer who seeks to sell Exchange
Shares during the Applicable Period, to use its best efforts to
register or qualify, and to cooperate with the selling Holders of
Registrable Shares or each such Participating Broker-Dealer, as the
case may be, the managing underwriter or underwriters, if any, and
their respective counsel in connection with the registration or
qualification (or exemption from such registration or qualification) of
such Registrable Shares for offer and sale under the state securities
<PAGE> 18
-16-
or "blue sky" laws of such jurisdictions within the United States as
any selling Holder, Participating Broker-Dealer, or the managing
underwriter or underwriters, if any, reasonably request in writing,
provided that where Exchange Shares held by Participating
Broker-Dealers or Registrable Shares are offered other than through an
underwritten offering, the Company agrees to cause its counsel to
perform "blue sky" investigations and file registrations and
qualifications required to be filed pursuant to this Section 5(h); keep
each such registration or qualification (or exemption therefrom)
effective during the period such Registration Statement is required to
be kept effective and do any and all other acts or things reasonably
necessary or advisable to enable the disposition in such jurisdictions
of the Exchange Shares held by Participating Broker-Dealers or the
Registrable Shares covered by the applicable Registration Statement;
provided that the Company shall not be required to (A) qualify
generally to do business in any jurisdiction where it is not then so
qualified, (B) take any action that would subject it to general service
of process in any such jurisdiction where it is not then so subject or
(C) subject itself to taxation in excess of a nominal dollar amount in
any such jurisdiction.
(i) If a Shelf Registration is filed pursuant to Section 3,
cooperate with the selling Holders of Registrable Shares and the
managing underwriter or underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing Registrable
Shares to be sold, which certificates shall not bear any restrictive
legends and, if requested by the selling Holders, shall be in a form
eligible for deposit with The Depository Trust Company; and enable such
Registrable Shares to be in such denominations and registered in such
names as the managing underwriter or underwriters, if any, or Holders
may reasonably request.
(j) Use its best efforts to cause the Registrable Shares
covered by the Registration Statement to be registered with or approved
by such other governmental agencies or authorities as may be necessary
to enable the seller or sellers thereof or the managing underwriter or
underwriters, if any, to consummate the disposition of such Registrable
Shares, except as
<PAGE> 19
-17-
may be required solely as a consequence of the nature of such selling
Holder's business, in which case the Company will cooperate in all
reasonable respects with the filing of such Registration Statement and
the granting of such approvals.
(k) If (1) a Shelf Registration is filed pursuant to Section
3, or (2) a Prospectus contained in an Exchange Registration Statement
filed pursuant to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Shares during the Applicable Period, upon the occurrence of
any event contemplated by paragraph 5(c)(v) or 5(c)(vi) above, as
promptly as reasonably practicable prepare and (subject to Section 5(a)
above) file with the SEC, at the expense of the Company, a supplement
or post-effective amendment to the Registration Statement or a
supplement to the related Prospectus or any document incorporated or
deemed to be incorporated therein by reference, or file any other
required document so that, as thereafter delivered to the purchasers of
the Registrable Shares being sold thereunder or to the purchasers of
the Exchange Shares to whom such Prospectus will be delivered by a
Participating Broker-Dealer, any such Prospectus will not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(l) Prior to the effective date of the first Registration
Statement relating to the Registrable Shares, (i) provide the Holders
with printed certificates for the Registrable Shares in a form eligible
for deposit with The Depository Trust Company if the Holders so request
and (ii) provide a CUSIP number for the Registrable Shares.
(m) In connection with an underwritten offering of Registrable
Shares pursuant to a Shelf Registration, enter into an underwriting
agreement as is customary in underwritten offerings of preferred equity
securities similar to the Preferred Shares and take all such other
actions as are reasonably requested by the managing underwriter(s), if
any, in order to expedite or facilitate the registration or the
disposition of such Registrable Shares and, in
<PAGE> 20
-18-
such connection, (i) make such representations and warranties to the
managing underwriter or underwriters on behalf of any underwriters,
with respect to the business of the Company and its subsidiaries and
the Registration Statement, Prospectus and documents, if any,
incorporated or deemed to be incorporated by reference therein, in each
case, as are customarily made by issuers to underwriters in
underwritten offerings of preferred equity securities, and confirm the
same if and when requested; (ii) obtain opinions of counsel to the
Company and updates thereof in form and substance reasonably
satisfactory to the managing underwriter or underwriters, addressed to
the managing underwriter or underwriters covering the matters
customarily covered in opinions requested in underwritten offerings of
preferred equity securities and such other matters as may be reasonably
requested by underwriters; (iii) obtain "cold comfort" letters and
updates thereof in form and substance reasonably satisfactory to the
managing underwriter or underwriters from the independent certified
public accountants of the Company (and, if necessary, any other
independent certified public accountants of any subsidiary of the
Company or of any business acquired by the Company for which financial
statements and financial data are, or are required to be, included in
the Registration Statement), addressed to the managing underwriter or
underwriters on behalf of any underwriters, such letters to be in
customary form and covering matters of the type customarily covered in
"cold comfort" letters in connection with underwritten offerings of
preferred equity securities and such other matters as reasonably
requested by the managing underwriter or underwriters; and (iv) if an
underwriting agreement is entered into, the same shall contain
indemnification provisions and procedures no less favorable than those
set forth in Section 7 hereof (or such other provisions and procedures
acceptable to Holders of a majority in aggregate liquidation value of
Registrable Shares covered by such Registration Statement and the
managing underwriter or underwriters or agents) with respect to all
parties to be indemnified pursuant to said Section. The above shall be
done at each closing under such underwriting agreement, or as and to
the extent required thereunder.
<PAGE> 21
-19-
(n) If (1) a Shelf Registration is filed pursuant to Section
3, or (2) a Prospectus contained in an Exchange Registration Statement
filed pursuant to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Shares during the Applicable Period, make available for
inspection by any selling Holder of such Registrable Shares being sold,
or each such Participating Broker-Dealer, as the case may be, the
managing underwriter or underwriters participating in any such
disposition of Registrable Shares, if any, and any attorney, accountant
or other agent retained by any such selling Holder or each such
Participating Broker-Dealer, as the case may be (collectively, the
"Inspectors"), at the offices where normally kept, during reasonable
business hours, all financial and other records, pertinent corporate
documents and properties of the Company and its subsidiaries
(collectively, the "Records") as shall be reasonably necessary to
enable them to exercise any applicable due diligence responsibilities,
and cause the officers, directors and employees of the Company and its
subsidiaries to supply all information in each case reasonably
requested by any such Inspector in connection with such Registration
Statement. Records which the Company determines, in good faith, to be
confidential and any Records which it notifies the Inspectors are
confidential shall not be disclosed by the Inspectors unless (i) the
disclosure of such Records is necessary to avoid or correct a material
misstatement or material omission in such Registration Statement, (ii)
the release of such Records is ordered pursuant to a subpoena or other
order from a court of competent jurisdiction or (iii) the information
in such Records has been made generally available to the public. Each
selling Holder of such Registrable Shares and each such Participating
Broker-Dealer or underwriter will be required to agree that information
obtained by it as a result of such inspections shall be deemed
confidential and shall not be used by it as the basis for any market
transactions in the securities of the Company or its subsidiaries
unless and until such is made generally available to the public. Each
selling Holder of such Registrable Shares and each such Participating
Broker-Dealer will be required to further agree that it will, upon
learning that disclosure of such Records is sought in a court of
<PAGE> 22
-20-
competent jurisdiction, give notice to the Company and allow the
Company to undertake appropriate action to prevent disclosure of the
Records deemed confidential at its expense.
(o) Comply with all applicable rules and regulations of the
SEC and make generally available to its securityholders earnings
statements satisfying the provisions of Section 11(a) of the Securities
Act and Rule 158 thereunder (or any similar rule promulgated under the
Securities Act) no later than 45 days after the end of any 12-month
period (or 90 days after the end of any 12-month period if such period
is a fiscal year) (i) commencing at the end of any fiscal quarter in
which Registrable Shares are sold to underwriters in a firm commitment
or best efforts underwritten offering and (ii) if not sold to
underwriters in such an offering, commencing on the first day of the
first fiscal quarter of the Company after the effective date of a
Registration Statement, which statements shall cover said 12-month
periods.
(p) Upon consummation of an Exchange Offer, obtain an opinion
of counsel to the Company in a form customary for underwritten
offerings of preferred equity securities similar to the Preferred
Shares, addressed to the Holders of Registrable Shares participating in
the Exchange Offer and which includes an opinion that (i) the Company
has duly authorized, executed and delivered the Exchange Shares and
(ii) each of the Exchange Shares constitutes a legal, valid and binding
obligation of the Company, enforceable against the Company in
accordance with its terms (with customary exceptions).
(q) If an Exchange Offer is to be consummated, upon delivery
of the Registrable Shares by Holders to the Company (or to such other
Person as directed by the Company) in exchange for the Exchange Shares,
the Company shall mark, or cause to be marked, on such Registrable
Shares that such Registrable Shares are being cancelled in exchange for
the Exchange Shares; in no event shall such Registrable Shares be
marked as paid or otherwise satisfied.
(r) Cooperate with each seller of Registrable Shares covered
by any Registration Statement and the managing underwriter(s), if any,
participating in the
<PAGE> 23
-21-
disposition of such Registrable Shares and their respective counsel in
connection with any filings required to be made with the National
Association of Securities Dealers, Inc. (the "NASD").
(s) Use its best efforts to take all other steps necessary to
effect the registration of the Registrable Shares covered by a
Registration Statement contemplated hereby.
The Company may require each seller of Registrable Shares or
Participating Broker-Dealer as to which any registration is being effected to
furnish to the Company such information regarding such seller or Participating
Broker-Dealer and the distribution of such Registrable Shares or Exchange Shares
to be sold by such Participating Broker-Dealer, as the case may be, as the
Company may, from time to time, reasonably request. The Company may exclude from
such registration the Registrable Shares of any seller or Participating
Broker-Dealer who unreasonably fails to furnish such information within a
reasonable time after receiving such request.
Each Holder of Registrable Shares and each Participating
Broker-Dealer agrees by acquisition of such Registrable Shares or Exchange
Shares to be sold by such Participating Broker-Dealer, as the case may be, that,
upon receipt of any notice from the Company of the happening of any event of the
kind described in Section 5(c)(ii), 5(c)(iv), 5(c)(v) or 5(c)(vi), such Holder
will forthwith discontinue disposition of such Registrable Shares covered by
such Registration Statement or Prospectus or Exchange Shares to be sold by such
Holder or Participating Broker-Dealer, as the case may be, until such Holder's
receipt of the copies of the supplemented or amended Prospectus contemplated by
Section 5(k), or until it is advised in writing (the "Advice") by the Company
that the use of the applicable Prospectus may be resumed, and has received
copies of any amendments or supplements thereto. In the event the Company shall
give any such notice, each of the Effectiveness Period and the Applicable Period
shall be extended by the number of days during such periods from and including
the date of the giving of such notice to and including the date when each seller
of Registrable Shares covered by such Registration Statement or Exchange Shares
to be sold by such Holder or Participating Broker-Dealer, as the case may be,
shall have received (x) the copies of the supplemented or amended Prospectus
contemplated by Section 5(k) or (y) the Advice.
<PAGE> 24
-22-
6. Registration Expenses
(a) All fees and expenses incident to the performance of or
compliance with this Agreement by the Company shall be borne by the Company,
whether or not the Exchange Offer or a Shelf Registration is filed or becomes
effective, including, without limitation, (i) all registration and filing fees
(including, without limitation, (A) fees with respect to filings required to be
made with the NASD in connection with an underwritten offering and (B) fees and
expenses of compliance with state securities or "blue sky" laws (including,
without limitation, reasonable fees and disbursements of counsel in connection
with "blue sky" qualifications of the Registrable Shares or Exchange Shares and
determination of the eligibility of the Registrable Shares or Exchange Shares
for investment under the laws of such jurisdictions (x) where the holders of
Registrable Shares are located, in the case of the Exchange Shares, or (y) as
provided in Section 5(h), in the case of Registrable Shares or Exchange Shares
to be sold by a Participating Broker-Dealer during the Applicable Period)), (ii)
printing expenses (including, without limitation, expenses of printing
certificates for Registrable Shares or Exchange Shares in a form eligible for
deposit with The Depository Trust Company and of printing prospectuses if the
printing of prospectuses is reasonably requested by the managing underwriter or
underwriters, if any, or, in respect of Registrable Shares or Exchange Shares to
be sold by any Participating Broker-Dealer during the Applicable Period, by the
Holders of a majority in aggregate liquidation value of the Registrable Shares
included in any Registration Statement or of such Exchange Shares, as the case
may be), (iii) messenger, telephone and delivery expenses, (iv) fees and
disbursements of counsel for the Company and fees and disbursements of special
counsel for the sellers of Registrable Shares (subject to the provisions of
Section 6(b)), (v) fees and disbursements of all independent certified public
accountants referred to in Section 5(m)(iii) (including, without limitation, the
expenses of any special audit and "cold comfort" letters required by or incident
to such performance), (vi) Securities Act liability insurance, if the Company
desires such insurance, (vii) fees and expenses of all other Persons retained by
the Company, (viii) internal expenses of the Company (including, without
limitation, all salaries and expenses of officers and employees of the Company
performing legal or accounting duties), (ix) the expense of any annual or
special audit, (x) the fees and expenses incurred in connection with the listing
of the securities to be registered on any securities exchange, (xi) the fees and
disbursements of underwriters, if any, customarily paid by
<PAGE> 25
-23-
issuers or sellers of securities, and (xii) the expenses relating to printing,
word processing and distributing all Registration Statements, underwriting
agreements, securities sales agreements and any other documents necessary in
order to comply with this Agreement.
(b) In connection with any Shelf Registration hereunder, the
Company shall reimburse the Holders of the Registrable Shares being registered
in such registration for the fees and disbursements, not to exceed $25,000, of
not more than one counsel (in addition to appropriate local counsel) chosen by
the Holders of a majority in aggregate liquidation value of the Registrable
Shares to be included in such Registration Statement and other reasonable
out-of-pocket expenses of the Holders of Registrable Shares incurred in
connection with the registration of the Registrable Shares.
7. Indemnification
(a) The Company agrees to indemnify and hold harmless each
Holder of Registrable Shares and each Participating Broker-Dealer selling
Exchange Shares during the Applicable Period, the officers and directors of each
such Person, and each Person, if any, who controls any such Person within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act (each, a "Participant"), from and against any and all losses, claims,
damages and liabilities (including, without limitation, the reasonable legal
fees and other expenses actually incurred in connection with any suit, action or
proceeding or any claim asserted) caused by, arising out of or based upon any
untrue statement or alleged untrue statement of a material fact contained in any
Registration Statement or Prospectus (as amended or supplemented if the Company
shall have furnished any amendments or supplements thereto) or any preliminary
prospectus, or caused by, arising out of or based upon any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, except insofar as such losses, claims,
damages or liabilities are caused by any untrue statement or omission or alleged
untrue statement or omission made in reliance upon and in conformity with
information relating to any Participant furnished to the Company in writing by
such Participant expressly for use therein; provided that the foregoing
indemnity with respect to any preliminary prospectus shall not inure to the
benefit of any Participant (or to the benefit of any Person controlling such
Participant) from whom the person asserting
<PAGE> 26
-24-
any such losses, claims, damages or liabilities purchased Registrable Shares or
Exchange Shares if such untrue statement or omission or alleged untrue statement
or omission made in such preliminary prospectus is eliminated or remedied in the
related Prospectus (as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto) and a copy of the related
Prospectus (as so amended or supplemented) shall have been furnished to such
Participant at or prior to the sale of such Registrable or Exchange Shares, as
the case may be, to such person; and provided, further, that the Company shall
not be liable in any such case to the extent that any such loss, claim, damage,
liability or expense arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in any preliminary
prospectus included in the Shelf Registration Statement if (i) such Holder
failed to send or deliver a copy of the Prospectus with or prior to the delivery
of written confirmation of the sale of Registrable Shares and (ii) the
Prospectus would have completely corrected such untrue statement or omission.
(b) Each Participant will be required to agree, severally and
not jointly, to indemnify and hold harmless the Company, its directors and
officers and each person who controls the Company within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act to the same extent as
the foregoing indemnity from the Company to each Participant, but only with
reference to information relating to such Participant furnished to the Company
in writing by such Participant expressly for use in any Registration Statement
or Prospectus, any amendment or supplement thereto, or any preliminary
prospectus. The liability of any Participant under this paragraph (b) shall in
no event exceed the proceeds received by such Participant from sales of
Registrable Shares giving rise to such obligations.
(c) If any suit, action, proceeding (including any
governmental or regulatory investigation), claim or demand shall be brought or
asserted against any person in respect of which indemnity may be sought pursuant
to either paragraph (a) or (b) of this Section 7, such person (the "Indemnified
Person") shall promptly notify the person against whom such indemnity may be
sought (the "Indemnifying Person") in writing, and the Indemnifying Person, upon
request of the Indemnified Person, shall retain one counsel reasonably
satisfactory to the Indemnified Person to represent the Indemnified Person and
any others the Indemnifying Person may reasonably designate in such proceeding
and shall pay the reasonable fees and expenses actually incurred by such counsel
related to such proceeding.
<PAGE> 27
-25-
In any such proceeding, any Indemnified Person shall have the right to retain
its own counsel, but the fees and expenses of such counsel shall be at the
expense of such Indemnified Person unless (i) the Indemnifying Person and the
Indemnified Person shall have mutually agreed in writing to the contrary, (ii)
the Indemnifying Person has failed within a reasonable time to retain counsel
reasonably satisfactory to the Indemnified Person or (iii) the named parties in
any such proceeding (including any impleaded parties) include both the
Indemnifying Person and the Indemnified Person and representations of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the Indemnifying Person
shall not, in connection with any proceeding or related proceeding in the same
jurisdiction, be liable for the fees and expenses of more than one separate law
firm (in addition to any local counsel) for all Indemnified Persons, and that
all such fees and expenses shall be reimbursed as they are incurred. Any such
separate firm for the Participants and such control persons of Participants
shall be designated in writing by Participants who sold a majority in interest
of Registrable Shares sold by all such Participants and any such separate firm
for the Company, its directors, officers and such control persons of the Company
shall be designated in writing by the Company. The Indemnifying Person shall not
be liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the Indemnifying Person agrees to indemnify any Indemnified
Person from and against any loss or liability by reason of such settlement or
judgment. Notwithstanding the foregoing sentence, if at any time an Indemnified
Person shall have requested an Indemnifying Person to reimburse the Indemnified
Person for reasonable fees and expenses actually incurred by counsel as
contemplated by the third sentence of this paragraph, the Indemnifying Person
agrees that it shall be liable for any settlement of any proceeding effected
without its written consent if (i) such settlement is entered into more than 30
days after receipt by such Indemnifying Person of the aforesaid request and (ii)
such Indemnifying Person shall not have reimbursed the Indemnified Person in
accordance with such request prior to the date of such settlement; provided,
however, that the Indemnifying Person shall not be liable for any settlement
effected without its consent pursuant to this sentence if the Indemnifying Party
is contesting, in good faith, the request for reimbursement. No Indemnifying
Person shall, without the prior written consent of the Indemnified Person,
effect any settlement of any pending or threatened proceeding in respect of
which any Indemnified Person is or
<PAGE> 28
-26-
could have been a party and indemnity could have been sought hereunder by such
Indemnified Person, unless such settlement includes an unconditional release of
such Indemnified Person from all liability on claims that are the subject matter
of such proceeding.
If the indemnification provided for in paragraphs (a) and (b)
of this Section 7 is unavailable to an Indemnified Person in respect of any
losses, claims, damages or liabilities referred to therein, then each
Indemnifying Person under such paragraphs, in lieu of indemnifying such
Indemnified Person thereunder, shall contribute to the amount paid or payable by
such Indemnified Person as a result of such losses, claims, damages or
liabilities in such proportion as is appropriate to reflect the relative fault
of the Company on the one hand and the Participants on the other in connection
with the statements or omissions that resulted in such losses, claims, damages
or liabilities, as well as any other relevant equitable considerations. The
relative fault of the Company on the one hand and the Participants on the other
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company or by
the Participants and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The parties shall agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Participants were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an Indemnified Person as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any reasonable legal or other expenses actually incurred by such
Indemnified Person in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this Section 7, in no event shall a
Participant be required to contribute any amount in excess of the amount by
which proceeds received by such Participant from sales of Registrable Shares or
Exchange Shares exceeds the amount of any damages that such Participant has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
<PAGE> 29
-27-
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
The indemnity and contribution agreements contained in this
Section 7 will be in addition to any liability which the Indemnifying Persons
may otherwise have to the Indemnified Persons referred to above.
8. Rules 144 and 144A
The Company covenants that it will file the reports required
to be filed by it under the Securities Act and the Exchange Act and the rules
and regulations adopted by the SEC thereunder in a timely manner and, if at any
time the Company is not required to file such reports, it will, upon the request
of any Holder of Registrable Shares, make publicly available other information
of a like nature so long as necessary to permit sales pursuant to Rule 144 or
Rule 144A under the Securities Act. The Company further covenants that so long
as any Registrable Shares remain outstanding to make available to any Holder of
Registrable Shares in connection with any sale thereof, the information required
by Rule 144A(d)(4) under the Securities Act in order to permit resales of such
Registrable Shares pursuant to (a) such Rule 144A, or (b) any similar rule or
regulation hereafter adopted by the SEC.
9. Underwritten Registrations
If any of the Registrable Shares covered by any Shelf
Registration are to be sold in an underwritten offering, the investment banker
or investment bankers and manager or managers that will manage the offering will
be selected by the Holders of a majority in aggregate liquidation value of such
Registrable Shares included in such offering and reasonably acceptable to the
Company.
No Holder of Registrable Shares may participate in any
underwritten registration hereunder unless such Holder (a) agrees to sell such
Holder's Registrable Shares on the basis provided in any underwriting
arrangements approved by the Persons entitled hereunder to approve such
arrangements and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents required
under the terms of such underwriting arrangements.
<PAGE> 30
-28-
10. Requirements of Exchange
The Certificate of Designation governing the Preferred Shares
shall provide that the Company may, on any date occurring on or after April 30,
1999, at its option, elect to exchange, in whole or in part, the Preferred
Shares or Exchange Shares then held by Holders for an equal principal amount of
the Company's 13.25% Senior Subordinated Notes due 2003 (the "Exchange Notes")
to be issued pursuant to an indenture (the "Exchange Indenture") as provided for
in the Purchase Agreement; provided that on the date of exchange, (i) the
Exchange Notes shall have been registered pursuant to an effective registration
statement under the Securities Act, (ii) the Exchange Indenture shall have been
qualified under the Trust Indenture Act of 1939, as amended, (iii) there shall
be no dividend arrearage on the Preferred Shares or Exchange Shares and (iv) no
event of default (as defined in the Indenture) under the Indenture shall have
occurred and be continuing or caused by the issuance of the Exchange Notes. In
the event that any such Exchange Notes received by a Holder have not been
registered as provided in clause (i) of the immediately preceding sentence, the
provisions of this Agreement shall apply mutatis mutandis with respect to any
such Exchange Notes except that, for purposes of this Section 10, (i) the term
Trigger Date shall be defined to mean the later of April 30, 1999 and the date
on which the Holders elect to exercise the exchange rights described above and
(ii) unless the context otherwise requires, the term Company shall also be
interpreted to include the Guarantors.
11. Miscellaneous
(a) Remedies. In the event of a breach by the Company of any
of its obligations under this Agreement, other than the occurrence of an event
which requires payment of Additional Dividends, each Holder of Registrable
Shares, in addition to being entitled to exercise all rights provided herein or,
in the case of the Purchaser, in the Purchase Agreement or granted by law,
including recovery of damages, will be entitled to a specific performance of its
rights under this Agreement.
(b) No Inconsistent Agreements. The Company has not, as of the
date hereof, and the Company shall not, after the date of this Agreement, enter
into any agreement with respect to any of its securities that is inconsistent in
all material respects with the rights granted to the Holders of Registrable
Shares in this Agreement or otherwise conflicts
<PAGE> 31
-29-
with the provisions hereof in all material respects. The Company has not entered
and will not enter into any agreement with respect to any of its securities
which will grant to any Person piggy-back rights with respect to a Registration
Statement.
(c) Adjustments Affecting Registrable Shares. The Company
shall not, directly or indirectly, take any action with respect to the
Registrable Shares as a class that would adversely affect, in any material
respect, the ability of the Holders of Registrable Shares to include such
Registrable Shares in a registration undertaken pursuant to this Agreement.
(d) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Company has obtained the written consent of Holders
of at least a majority of the then outstanding aggregate liquidation value of
Registrable Shares. Notwithstanding the foregoing, a waiver or consent to depart
from the provisions hereof with respect to a matter that relates exclusively to
the rights of Holders of Registrable Shares whose securities are being sold
pursuant to a Registration Statement and that does not directly or indirectly
affect, impair, limit or compromise the rights of other Holders of Registrable
Shares may be given by Holders of at least a majority in aggregate liquidation
value of the Registrable Shares being sold by such Holders pursuant to such
Registration Statement, provided that the provisions of this sentence may not be
amended, modified or supplemented except in accordance with the provisions of
the immediately preceding sentence.
(e) Notices. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, next-day air courier or telecopier:
(i) if to a Holder of Registrable Shares, CIBC WG Argosy
Merchant Fund 2, L.L.C., c/o CIBC Wood Gundy Securities Corp., 1325
Avenue of the Americas, 22nd Floor, New York, New York 10019, with a
copy to Cahill Gordon & Reindel, 80 Pine Street, New York, New York
10005, Attention: Roger Meltzer, Esq.; and
(ii) if to the Company, Commodore Media, Inc., 500 Fifth
Avenue, Suite 3000, New York, New York 10110, Attention: Chief
Executive Officer, with a
<PAGE> 32
-30-
copy to Pryor, Cashman, Sherman & Flynn, 410 Park Avenue, New York, New
York 10022, Attention: Ira J. Goldstein, Esq.
All such notices and communications shall be deemed to have
been duly given: (i) when delivered by hand, if personally delivered; (ii) five
business days after being deposited in the mail, postage prepaid, if mailed;
(iii) one business day after being timely delivered to a next-day air courier;
and (iv) when receipt is acknowledged by the addressee, if telecopied.
(f) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment, subsequent Holders of Registrable Shares.
(g) Counterparts. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(i) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO
THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(j) Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction.
<PAGE> 33
-31-
(k) Entire Agreement. This Agreement, together with the
Purchase Agreement, is intended by the parties as a final expression of their
agreement, and is intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter contained herein and therein.
(l) Shares Held by the Company or Its Affiliates. Whenever the
consent or approval of Holders of a specified percentage of Registrable Shares
is required hereunder, Registrable Shares held by the Company or its affiliates
(as such term is defined in Rule 405 under the Securities Act) shall not be
counted in determining whether such consent or approval was given by the Holders
of such required percentage.
<PAGE> 34
-32-
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
COMMODORE MEDIA, INC.
By:
-----------------------------------------
Name:
Title:
COMMODORE HOLDINGS, INC.
(a Delaware corporation)
COMMODORE MEDIA OF DELAWARE, INC.
(a Delaware corporation)
COMMODORE MEDIA OF PENNSYLVANIA, INC.
(a Delaware corporation)
COMMODORE MEDIA OF FLORIDA, INC.
(a Delaware corporation)
COMMODORE MEDIA OF KENTUCKY, INC.
(a Delaware corporation)
COMMODORE MEDIA OF NORWALK, INC.
(a Delaware corporation)
COMMODORE MEDIA OF WESTCHESTER, INC.
(a Delaware corporation)
DANBURY BROADCASTING, INC.
(a Connecticut corporation)
By:
-----------------------------------------
Name:
Title:
CIBC WG ARGOSY MERCHANT
FUND 2, L.L.C.
By:
-----------------------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 10.71
- --------------------------------------------------------------------------------
WARRANT AGREEMENT
BETWEEN
COMMODORE MEDIA, INC.
AND
IBJ SCHRODER BANK & TRUST COMPANY
AS
WARRANT AGENT
-------------------------
DATED AS OF MAY 1, 1996
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. Appointment of Warrant Agent ....................................... 1
2. Warrant Certificates ............................................... 1
3. Execution of Warrant Certificates .................................. 2
4. Registration and Countersignature .................................. 3
5. Transfer and Exchange of Warrants .................................. 3
6. Registration of Transfers and Exchanges ............................ 4
7. Terms of Warrants; Exercise of Warrants ............................ 10
8. Payment of Taxes ................................................... 13
9. Mutilated or Missing Warrant Certificates .......................... 13
10. Reservation of Warrant Shares ...................................... 13
11. Public Equity Offering of Class A
Common Stock; Obtaining Stock
Exchange Listings ............................................... 14
12. Adjustment of Number of Warrant Shares Issuable .................... 15
13. Fractional Interests ............................................... 24
14. Notices to Warrant Holders ......................................... 24
15. Notices to the Company and Warrant Agent ........................... 26
16. Supplements and Amendments ......................................... 27
17. Concerning the Warrant Agent ....................................... 27
18. Change of Warrant Agent ............................................ 30
19. Identity of Transfer Agent ......................................... 31
20. Registration Rights ................................................ 31
21. Successors ......................................................... 31
22. Termination ........................................................ 31
23. GOVERNING LAW ...................................................... 32
24. Benefits of This Agreement ......................................... 32
25. Counterparts ....................................................... 32
26. Headings ........................................................... 32
Exhibit A. Form of Warrant Certificate ................................. A-1
Exhibit B. Certificate ................................................. B-1
Exhibit C. Legends ..................................................... C-1
Exhibit D. Transferee Letter ........................................... D-1
</TABLE>
-i-
<PAGE> 3
WARRANT AGREEMENT (the "Agreement"), dated as of May 1, 1996,
between Commodore Media, Inc., a Delaware corporation (together with any
successors and assigns, the "Company"), and IBJ Schroder Bank & Trust Company
("IBJ"), a New York banking corporation, as Warrant Agent (the "Warrant Agent").
WHEREAS, the Company proposes to issue and sell pursuant to a
Securities Purchase Agreement (the "Purchase Agreement"), dated as of May 1,
1996, among the Company, the Guarantors named therein and CIBC WG Argosy
Merchant Fund 2, L.L.C., a Delaware limited liability company (the "Purchaser"),
up to $12,500,000 in aggregate liquidation value of its Senior Exchangeable
Redeemable Preferred Stock, Series A, par value $.01 per share (the "Preferred
Stock"), along with Warrants (each a "Warrant," and collectively, the
"Warrants"), for the purchase of shares of its Class A Common Stock, par value
$.01 per share (the "Class A Common Stock," and the shares of Class A Common
Stock issuable upon exercise of the Warrants being referred to herein as the
"Warrant Shares") constituting up to 5.99% of the Company's fully diluted Common
Stock;
WHEREAS, the Company desires the Warrant Agent to act on
behalf of the Company and the Warrant Agent is willing to act in connection with
the issuance, transfer, exchange and exercise of Warrants as provided herein;
and
WHEREAS, the holders of Warrants and Warrant Shares shall,
from time to time, have certain rights and obligations with respect thereto as
set forth in the Common Stock Registration Rights and Stockholders Agreement,
dated as of May 1, 1996, between the Company and the Purchaser;
NOW, THEREFORE, in consideration of the premises and mutual
agreements herein, the Company and the Warrant Agent hereby agree as follows:
SECTION 1. Appointment of Warrant Agent. The Company hereby
appoints the Warrant Agent to act as agent for the Company in accordance with
the instructions hereinafter set forth in this Agreement, and the Warrant Agent
hereby accepts such appointment.
SECTION 2. Warrant Certificates. The Warrants will initially
be issued either in global form (the "Global Warrants"), substantially in the
form of Exhibit A hereto (including the footnote thereto), or in registered form
as definitive Warrant certificates (the "Definitive Warrants"). Any certificates
(the "Warrant Certificates") evidencing the Global Warrants or the Definitive
Warrants to be delivered pursuant to this Agreement shall be substantially in
the form set forth in
<PAGE> 4
-2-
Exhibit A hereto. Such Global Warrants shall represent such of the outstanding
Warrants as shall be specified therein and each shall provide that it shall
represent the aggregate amount of outstanding Warrants from time to time
endorsed thereon and that the aggregate amount of outstanding Warrants
represented thereby may from time to time be reduced or increased, as
appropriate. Any endorsement of a Global Warrant to reflect the amount of any
increase or decrease in the amount of outstanding Warrants represented thereby
shall be made by the Warrant Agent and Depositary (as defined below) in
accordance with instructions given by the holder thereof. The Depository Trust
Company shall act as the Depositary with respect to the Global Warrants until a
successor shall be appointed by the Company. Upon written request, a Warrant
holder may receive from the Depositary and Warrant Agent Definitive Warrants as
set forth in Section 6 below.
SECTION 3. Execution of Warrant Certificates. Warrant
Certificates shall be signed on behalf of the Company by its Chairman of the
Board or its President, Chief Executive Officer, Chief Operating Officer, Chief
Financial Officer or a Vice President and by its Secretary or an Assistant
Secretary under its corporate seal. Each such signature upon the Warrant
Certificates may be in the form of a facsimile signature of the present or any
future Chairman of the Board, President, Chief Executive Officer, Chief
Operating Officer, Chief Financial Officer, a Vice President, Secretary or
Assistant Secretary and may be imprinted or otherwise reproduced on the Warrant
Certificates and for that purpose the Company may adopt and use the facsimile
signature of any person who shall have been Chairman of the Board, President,
Vice President, Secretary or Assistant Secretary, notwithstanding the fact that
at the time the Warrant Certificates shall be countersigned and delivered or
disposed of such person shall have ceased to hold such office. The seal of the
Company may be in the form of a facsimile thereof and may be impressed, affixed,
imprinted or otherwise reproduced on the Warrant Certificates.
In case any officer of the Company who shall have signed any
of the Warrant Certificates shall cease to be such officer before the Warrant
Certificates so signed shall have been countersigned by the Warrant Agent, or
disposed of by the Company, such Warrant Certificates nevertheless may be
countersigned and delivered or disposed of as though such person had not ceased
to be such officer of the Company; and any Warrant Certificate may be signed on
behalf of the Company by any person who, at the actual date of the execution of
such Warrant Certificate, shall be a proper officer of the Company to sign
<PAGE> 5
-3-
such Warrant Certificate, although at the date of the execution of this Warrant
Agreement any such person was not such officer.
Warrant Certificates shall be dated the date of
countersignature by the Warrant Agent.
SECTION 4. Registration and Countersignature. The Warrants
shall be numbered and shall be registered on the books of the Company maintained
at the principal office of the Warrant Agent in the Borough of Manhattan, city
of New York (the "Warrant Register") as they are issued.
Warrant Certificates shall be manually countersigned by the
Warrant Agent and shall not be valid for any purpose unless so countersigned.
The Warrant Agent shall, upon written instructions of the Chairman of the Board,
the President, Chief Executive Officer, Chief Operating Officer, Chief Financial
Officer, a Vice President, the Secretary or an Assistant Secretary of the
Company, initially countersign and deliver Warrants entitling the holders
thereof to purchase not more than the number of Warrant Shares referred to above
in the first recital hereof and shall thereafter countersign and deliver
Warrants as otherwise provided in this Agreement.
The Company and the Warrant Agent may deem and treat the
registered holders (the "Holders") of the Warrant Certificates as the absolute
owners thereof (notwithstanding any notation of ownership or other writing
thereon made by anyone) for all purposes, and neither the Company nor the
Warrant Agent shall be affected by any notice to the contrary.
SECTION 5. Transfer and Exchange of Warrants. The Warrant
Agent shall from time to time, subject to the limitations of Section 6, register
the transfer of any outstanding Warrants upon the records to be maintained by it
for that purpose, upon surrender thereof duly endorsed or accompanied (if so
required by it) by a written instrument or instruments of transfer in form
satisfactory to the Warrant Agent, duly executed by the registered Holder or
Holders thereof or by the duly appointed legal representative thereof or by a
duly authorized attorney. Subject to the terms of this Agreement, each Warrant
Certificate may be exchanged for another certificate or certificates entitling
the Holder thereof to purchase a like aggregate number of Warrant Shares as the
certificate or certificates surrendered then entitle each Holder to purchase.
Any Holder desiring to exchange a Warrant Certificate or Warrant Certificates
shall make such request in writing delivered to the Warrant Agent, and shall
surrender, duly endorsed or accompanied (if so required by the Warrant Agent) by
a
<PAGE> 6
-4-
written instrument or instruments of transfer in form satisfactory to the
Warrant Agent, the Warrant Certificate or Warrant Certificates to be so
exchanged.
Upon registration of transfer, the Warrant Agent shall
countersign and deliver by certified or first class mail a new Warrant
Certificate or Warrant Certificates to the persons entitled thereto. The Warrant
Certificates may be exchanged at the option of the Holder thereof, when
surrendered at the office or agency of the Company maintained for such purpose,
which initially will be the corporate trust office of the Warrant Agent in New
York, New York for another Warrant Certificate, or other Warrant Certificates of
different denominations, of like tenor and representing in the aggregate the
right to purchase a like number of Warrant Shares.
No service charge shall be made for any exchange or
registration of transfer of Warrant Certificates, but the Company may require
payment of a sum sufficient to cover any stamp or other tax or other
governmental charge that is imposed in connection with any such exchange or
registration of transfer.
SECTION 6. Registration of Transfers and Exchanges.
(a) Transfer and Exchange of Definitive Warrants. When
Definitive Warrants are presented to the Warrant Agent with a request:
(i) to register the transfer of the Definitive Warrants; or
(ii) to exchange such Definitive Warrants for an equal number of
Definitive Warrants of other authorized denominations,
the Warrant Agent shall register the transfer or make the exchange as requested
if its requirements under this Agreement are met; provided, however, that the
Definitive Warrants presented or surrendered for registration of transfer or
exchange:
(x) shall be duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Warrant Agent, duly executed by
the Holder thereof or by such Holder's attorney, duly authorized in
writing; and
<PAGE> 7
-5-
(y) in the case of Warrants (the "Restricted Warrants") which constitute
Restricted Securities (as such term is defined in Rule 144(a)(3) of
the Securities Act of 1933, as amended (the "Securities Act")), such
Warrants shall be accompanied, in the reasonable discretion of the
Company, by the following additional information and documents, as
applicable, however, it being understood that the Warrant Agent need
not determine which clause (A) through (C) below is applicable:
(A) if such Restricted Warrant is being delivered to the Warrant
Agent by a Holder for registration in the name of such Holder,
without transfer, a certification from such holder to that effect
(in substantially the form of Exhibit B hereto); or
(B) if such Restricted Warrant is being transferred to a qualified
institutional buyer (as defined in Rule 144A under the Act, a
"QIB") in accordance with Rule 144A under the Act or pursuant to
an exemption from registration in accordance with Rule 144 under
the Securities Act or Regulation S under the Securities Act or
pursuant to an effective registration statement under the
Securities Act, a certification to that effect (in substantially
the form of Exhibit B hereto) and, with respect to transfers
pursuant to Rule 144 or Regulation S, an opinion of counsel
reasonably acceptable to the Company and the Warrant Agent to the
effect that such transfer does not require registration under the
Securities Act; or
(C) if such Restricted Warrant is being transferred in reliance on
another exemption from the registration requirements of the
Securities Act, a certification to that effect (in substantially
the form of Exhibit B hereto) and an opinion of counsel
reasonably acceptable to the Company and to the Warrant Agent to
the effect that such transfer does not require registration under
the Securities Act.
(b) Restrictions on Transfer of a Definitive Warrant for a Beneficial
Interest in a Global Warrant. A Definitive Warrant may not be exchanged for a
beneficial interest in a Global Warrant except upon satisfaction of the
requirements set
<PAGE> 8
-6-
forth below. Upon receipt by the Warrant Agent of a Definitive Warrant, duly
endorsed or accompanied by appropriate instruments of transfer, in form
satisfactory to the Warrant Agent, together with:
(A) if such Definitive Warrant constitutes a Restricted Warrant,
certification, substantially in the form of Exhibit B hereto, that
such Definitive Warrant is being transferred to a QIB in accordance
with Rule 144A under the Securities Act; and
(B) written instructions directing the Warrant Agent to make, or to direct
the Depositary to make, an endorsement on the Global Warrant to
reflect an increase in the aggregate amount of the Warrants
represented by the Global Warrant,
then the Warrant Agent shall cancel such Definitive Warrant and cause, or direct
the Depositary to cause, in accordance with the standing instructions and
procedures existing between the Depositary and the Warrant Agent, the number of
Warrant Shares represented by the Global Warrant to be increased accordingly. If
no Global Warrant is then outstanding, the Company shall issue and the Warrant
Agent shall countersign a new Global Warrant in the appropriate amount.
(c) Transfer and Exchange of Global Warrants. The transfer and
exchange of Global Warrants or beneficial interests therein shall be effected
through the Depositary, in accordance with this Warrant Agreement (including the
restrictions on transfer set forth herein) and the procedures of the Depositary
therefor.
(d) Transfer of a Beneficial Interest in a Global Warrant for a
Definitive Warrant.
(i) Any person having a beneficial interest in a Global Warrant may
upon request exchange such beneficial interest for a Definitive
Warrant. Upon receipt by the Warrant Agent of written instructions
or such other form of instructions as is customary for the
Depositary from the Depositary or its nominee on behalf of any
person having a beneficial interest in a Global Warrant and upon
receipt by the Warrant Agent of a written order or such other form
of instructions as is customary for the Depositary or the person
designated by the Depositary as having such a beneficial interest
containing registration instructions and, in the case of a
beneficial in-
<PAGE> 9
-7-
terest in Restricted Warrants, the following additional information
and documents, however, it being understood that the Warrant Agent
need not determine which clause (A) through (C) below is
applicable:
(A) If such beneficial interest is being transferred to the
person designated by the Depositary as being the
beneficial owner, a certification from such person to that
effect (in substantially the form of Exhibit B hereto); or
(B) if such beneficial interest is being transferred to a QIB
in accordance with Rule 144A under the Securities Act or
pursuant to an exemption from registration in accordance
with Rule 144 or Regulation S under the Securities Act or
pursuant to an effective registration statement under the
Securities Act, a certification to that effect from the
transferee or transferor (in substantially the form of
Exhibit B hereto) and, with respect to transfers pursuant
to Rule 144 or Regulation S, an opinion of counsel
reasonably acceptable to the Company and the Warrant Agent
to the effect that such transfer does not require
registration under the Securities Act; or
(C) if such beneficial interest is being transferred in
reliance on another exemption from the registration
requirements of the Securities Act, a certification to
that effect from the transferee or transferor (in
substantially the form of Exhibit B hereto) and an opinion
of counsel from the transferee or transferor reasonably
acceptable to the Company and to the Warrant Agent to the
effect that such transfer does not require registration
under the Securities Act,
then the Warrant Agent will cause, in accordance with the standing
instructions and procedures existing between the Depositary and the
Warrant Agent, the aggregate amount of the Global Warrant to be
reduced and, following such reduction, the Company will execute
and, upon receipt of an authentication order in the form of an
officers' certificate signed by the Chief Executive Officer,
<PAGE> 10
-8-
the President or any Vice President and the Chief Financial
Officer, the Treasurer, the Secretary or any Assistant Secretary of
the Company (an "Officers' Certificate"), the Warrant Agent will
countersign and deliver to the transferee a Definitive Warrant.
(ii) Definitive Warrants issued in exchange for a beneficial interest in
a Global Warrant pursuant to this Section 6(d) shall be registered
in such names and in such authorized denominations as the
Depositary, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Warrant Agent in
writing, provided such designation is in accordance with this
Section 6(d). The Warrant Agent shall deliver such Definitive
Warrants to the persons in whose names such Definitive Warrants are
registered.
(e) Restrictions on Transfer and Exchange of Global Warrants.
Notwithstanding any other provisions of this Warrant Agreement (other than the
provisions set forth in subsection (f) of this Section 6), a Global Warrant may
not be transferred as a whole except by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.
(f) Authentication of Definitive Warrants in Absence of Depositary. If
at any time:
(i) the Depositary for the Global Warrants notifies the Company that
the Depositary is unwilling or unable to continue as Depositary for
the Global Warrant and a successor Depositary for the Global
Warrant is not appointed by the Company within 90 days after
delivery of such notice; or
(ii) the Company, at its sole discretion, notifies the Warrant Agent in
writing that it elects to cause the issuance of Definitive Warrants
under this Warrant Agreement,
then the Company will execute, and the Warrant Agent, upon receipt of an
Officers' Certificate requesting the countersignature and delivery of Definitive
Warrants, will countersign and deliver Definitive Warrants, in an aggregate
number equal
<PAGE> 11
-9-
to the aggregate number of Warrants represented by the Global Warrant, in
exchange for such Global Warrant.
(g) Legends.
(i) Except as permitted by the following paragraph (ii), each Warrant
Certificate evidencing the Global Warrants and the Definitive
Warrants (and all Warrants issued in exchange therefor or
substitution thereof) shall bear a legend substantially as set
forth in Exhibit C.
(ii) Upon any sale or transfer of a Warrant pursuant to Rule 144 under
the Securities Act or an effective registration statement under the
Securities Act:
(A) in the case of any Warrant that is a Definitive Warrant,
the Warrant Agent shall permit the Holder thereof to
exchange such Restricted Warrant for a Definitive Warrant
that does not bear the legend set forth in Exhibit C and
rescind any related restriction on the transfer of such
Warrant; and
(B) any such Warrant represented by a Global Warrant shall not
be subject to the provisions set forth in (i) above (such
sales or transfers being subject only to the provisions of
Section 6(c) hereof); provided, however, that with respect
to any request for an exchange of a Warrant that is
represented by a Global Warrant for a Definitive Warrant
that does not bear the legend set forth in Exhibit C,
which request is made in reliance upon Rule 144, the
Holder thereof shall certify in writing to the Warrant
Agent that such request is being made pursuant to Rule 144
(such certification to be substantially in the form of
Exhibit B hereto) and shall obtain an opinion of counsel,
reasonably acceptable to the Company and the Warrant
Agent, to the effect that such transfer does not require
registration under the Securities Act.
(h) Cancellation and/or Adjustment of a Global Warrant. At such time
as all beneficial interests in a Global Warrant have either been exchanged for
Definitive Warrants, redeemed, repurchased or cancelled, such Global Warrant
shall be returned to or retained and cancelled by the Warrant Agent.
<PAGE> 12
-10-
At any time prior to such cancellation, if any beneficial interest in a Global
Warrant is exchanged for Definitive Warrants, redeemed, repurchased or
cancelled, the number of Warrants represented by such Global Warrant shall be
reduced and an endorsement shall be made on such Global Warrant by the Warrant
Agent to reflect such reduction.
(i) Obligations with Respect to Transfers and Exchanges of Definitive
Warrants.
(i) To permit registrations of transfers and exchanges in accordance
with the terms of this Agreement, the Company shall execute, and
the Warrant Agent shall countersign, Definitive Warrants and Global
Warrants.
(ii) All Definitive Warrants and Global Warrants issued upon any
registration, transfer or exchange of Definitive Warrants or Global
Warrants shall be the valid obligations of the Company, entitled to
the same benefits under this Warrant Agreement as the Definitive
Warrants or Global Warrants surrendered upon the registration of
transfer or exchange.
(iii) Prior to due presentment for registration of transfer of any
Warrant, the Warrant Agent and the Company may deem and treat the
person in whose name any Warrant is registered as the absolute
owner of such Warrant, and neither the Warrant Agent nor the
Company shall be affected by notice to the contrary.
SECTION 7. Terms of Warrants; Exercise of Warrants. Subject to
the terms of this Agreement, each Warrant Holder shall have the right,
which may be exercised commencing on or after the Exercisability Date (as
defined below) and until 5:00 p.m., New York City time, on May 1, 2000 (the
"Expiration Date"), to receive from the Company the number of fully paid
and nonassessable Warrant Shares which the Holder may at the time be
entitled to receive on exercise of such Warrants and payment of the
Exercise Price (as defined below) then in effect for such Warrant Shares;
provided that, if in the opinion of counsel to the Company approval of the
Federal Communications Commission (the "FCC") is required before the
Company may issue Warrant Shares upon the exercise of any Warrant, the
Company may defer the issuance of such Warrant Shares until such time as
approval of the FCC is obtained or is
<PAGE> 13
-11-
no longer required. The Company shall promptly notify in writing the
Warrant Agent of any event which requires it to suspend exercise of
Warrants pursuant to the proviso of the preceding sentence and of the
termination of any such suspension. Subject to the next paragraph of this
Section 7, each Warrant not exercised prior to the Expiration Date shall
become void and all rights thereunder and all rights in respect thereof
under this Agreement shall cease as of such time. No adjustments as to
dividends will be made upon exercise of the Warrants.
The Company agrees to promptly commence any proceeding before the
FCC required to permit the exercise of the outstanding Warrants and to use
its reasonable best efforts to obtain any order of the FCC or similar
approval necessary to permit such exercise and maintain such approval in
full force and effect. In the event that at the Expiration Date, the
exercise of Warrants has been suspended such that the Warrants have not
been exercised for a period of one full year, the Expiration Date shall be
extended to such date as is necessary so that the Warrant will have been
exercisable for one full year prior to the Expiration Date.
"Exercisability Date" shall mean May 1, 1996.
The initial price per share at which Warrant Shares shall be
purchasable upon exercise of Warrants (the "Exercise Price") shall be $.01,
subject to adjustment. A Warrant may be exercised upon surrender at the
office or agency of the Company maintained for such purpose, which
initially will be the corporate trust office of the Warrant Agent in New
York, New York, of the certificate or certificates evidencing the Warrants
to be exercised with the form of election to purchase on the reverse
thereof duly filled in and signed, which signature shall be guaranteed by a
participant in a recognized Signature Guarantee Medallion Program, and upon
payment to the Warrant Agent for the account of the Company of the Exercise
Price, as adjusted as herein provided, for the number of Warrant Shares in
respect of which such Warrants are then exercised. Payment of the aggregate
Exercise Price shall be made in cash or by certified or official bank check
to the order of the Company in New York Clearing House Funds.
Subject to the provisions of Section 6 hereof, upon such
surrender of Warrants and payment of the Exercise Price, the Company shall
issue and cause to be deliv-
<PAGE> 14
-12-
ered with all reasonable dispatch to or upon the written order of the
Holder and in such name or names as the Warrant Holder may designate a
certificate or certificates for the number of full Warrant Shares issuable
upon the exercise of such Warrants together with cash as provided in
Section 12; provided, however, that if any consolidation, merger or lease
or sale of assets is proposed to be effected by the Company as described in
subsection (j) of Section 12 hereof, or a tender offer or an exchange offer
for shares of Common Stock of the Company shall be made, upon such
surrender of Warrants and payment of the Exercise Price as aforesaid, the
Company shall, as soon as possible, but in any event not later than three
days, other than a Saturday or Sunday or a day on which banking
institutions in the State of New York are not open for business ("Business
Day") thereafter, issue and cause to be delivered the full number of
Warrant Shares issuable upon the exercise of such Warrants in the manner
described in this sentence together with cash as provided in Section 13.
Such certificate or certificates shall be deemed to have been issued and
any person so named therein shall be deemed to have become a holder of
record of such Warrant Shares as of the date of the surrender of such
Warrants and payment of the Exercise Price.
The Warrants shall be exercisable, at the election of the Holders
thereof, either in full or from time to time in part and, in the event that
a certificate evidencing Warrants is exercised in respect of fewer than all
of the Warrant Shares issuable on such exercise at any time prior to the
date of expiration of the Warrants, a new certificate evidencing the
remaining Warrant or Warrants will be issued, and the Warrant Agent is
hereby irrevocably authorized to countersign and to deliver the required
new Warrant Certificate or Warrant Certificates pursuant to the provisions
of this Section 7 and of Section 3 hereof, and the Company, whenever
required by the Warrant Agent, will promptly supply the Warrant Agent with
Warrant Certificates duly executed on behalf of the Company for such
purpose.
All Warrant Certificates surrendered upon exercise of Warrants
shall be cancelled by the Warrant Agent. Such cancelled Warrant
Certificates shall then be disposed of by the Warrant Agent in a manner
consistent with the Warrant Agent's customary procedure for such disposal
and in a manner reasonably satisfactory to the Company. The Warrant Agent
shall account promptly to the Company with respect to Warrants exercised
and concurrently pay to the
<PAGE> 15
-13-
Company all monies received by the Warrant Agent for the purchase of the
Warrant Shares through the exercise of such Warrants.
The Warrant Agent shall keep copies of this Agreement available
for inspection by the Holders during normal business hours at its office.
The Company shall supply the Warrant Agent from time to time with such
numbers of copies of this Agreement as the Warrant Agent may request.
SECTION 8. Payment of Taxes. The Company will pay all documentary
stamp taxes attributable to the initial issuance of Warrant Shares upon the
exercise of Warrants; provided, however, that the Company shall not be
required to pay any tax or taxes which may be payable in respect of any
transfer involved in the issue of any Warrant Certificates or any
certificates for Warrant Shares in a name other than that of the registered
Holder of a Warrant Certificate surrendered upon the exercise of a Warrant,
and the Company shall not be required to issue or deliver such Warrant
Certificates unless or until the person or persons requesting the issuance
thereof shall have paid to the Company the amount of such tax or shall have
established to the satisfaction of the Company that such tax has been paid.
SECTION 9. Mutilated or Missing Warrant Certificates. In case any
of the Warrant Certificates shall be mutilated, lost, stolen or destroyed,
the Company may in its discretion issue and the Warrant Agent may
countersign, in exchange and substitution for and upon cancellation of the
mutilated Warrant Certificate, or in lieu of and substitution for the
Warrant Certificate lost, stolen or destroyed, a new Warrant Certificate of
like tenor and representing an equivalent number of Warrants, but only upon
receipt of evidence satisfactory to the Company and the Warrant Agent of
such loss, theft or destruction of such Warrant Certificate and indemnity,
if requested, also satisfactory to them. Applicants for such substitute
Warrant Certificates shall also comply with such other reasonable
regulations and pay such other reasonable charges as the Company or the
Warrant Agent may prescribe.
SECTION 10. Reservation of Warrant Shares. The Company will at
all times reserve and keep available, free from preemptive rights, out of
the aggregate of its authorized but unissued Common Stock or its authorized
and issued Common Stock held in its treasury, for the purpose
<PAGE> 16
-14-
of enabling it to satisfy any obligation to issue Warrant Shares upon
exercise of Warrants, the maximum number of shares of Common Stock which
may then be deliverable upon the exercise of all outstanding Warrants.
The Company or, if appointed, the transfer agent for the Common
Stock (the "Transfer Agent") and every subsequent transfer agent for any
shares of the Company's capital stock issuable upon the exercise of any of
the rights of purchase aforesaid will be irrevocably authorized and
directed at all times to reserve such number of authorized shares as shall
be required for such purpose. The Company will keep a copy of this
Agreement on file with the Transfer Agent and with every subsequent
transfer agent for any shares of the Company's capital stock issuable upon
the exercise of the rights of purchase represented by the Warrants. The
Warrant Agent is hereby irrevocably authorized to requisition from time to
time from such Transfer Agent the stock certificates required to honor
outstanding Warrants upon exercise thereof in accordance with the terms of
this Agreement. The Company will supply such Transfer Agent with duly
executed certificates for such purposes and will provide or otherwise make
available any cash which may be payable as provided in Section 13. The
Company will furnish such Transfer Agent a copy of all notices of
adjustments and certificates related thereto transmitted to each Holder
pursuant to Section 14 hereof.
The Company covenants that all Warrant Shares which may be issued
upon exercise of Warrants will, upon payment of the Exercise Price therefor
and issue, be validly authorized and issued, fully paid, nonassessable,
free of preemptive rights and free from all taxes, liens, charges and
security interests with respect to the issuance thereof. The Company will
take no action to increase the par value of the Class A Common Stock to an
amount in excess of the Exercise Price, and the Company will not enter into
any agreements inconsistent in any material respect with the rights of
Holders hereunder. The Company will use its reasonable best efforts to
obtain all such authorizations, exemptions or consents from any public
regulatory body having jurisdiction thereof as may be necessary to enable
the Company to perform its obligations under this Agreement.
SECTION 11. Public Equity Offering of Class A Common Stock;
Obtaining Stock Exchange Listings. The Company covenants and agrees with
the Warrant Agent, for
<PAGE> 17
-15-
the benefit of each Warrant Holder, that at any time while the Warrants are
outstanding, the Company will not make a Public Equity Offering (as defined
below) of any class of its common stock other than the Class A Common
Stock. In the event that, at any time during the period in which the
Warrants are exercisable, the Class A Common Stock is not listed on any
principal securities exchanges or markets within the United States of
America, the Company will use its best efforts to permit the Warrant Shares
to be designated PORTAL securities in accordance with the rules and
regulations adopted by the National Association of Securities Dealers, Inc.
relating to trading in the Private Offerings, Resales and Trading through
Automated Linkages market.
"Public Equity Offering" means a public offering by the Company
of shares of its common stock pursuant to an effective registration
statement filed with the Securities and Exchange Commission (other than a
public offering on a registration statement on Form S-4 or S-8 or similar
form).
SECTION 12. Adjustment of Number of Warrant Shares Issuable. The
number of shares of Class A Common Stock issuable upon the exercise of each
Warrant (the "Exercise Rate") is subject to adjustment from time to time
upon the occurrence of the events enumerated in this Section 12.
(a) Adjustment for Change in Capital Stock. If the Company:
(1) pays a dividend or makes a distribution on its Common Stock in
shares of its Common Stock or other capital stock of the Company;
or
(2) subdivides, combines or reclassifies its out- standing shares of
Common Stock;
then the Exercise Rate in effect immediately prior to such action shall be
proportionately adjusted so that the Holder of any Warrant thereafter exercised
may receive the aggregate number and kind of shares of capital stock of the
Company which such Holder would have owned immediately following such action if
such Warrant had been exercised immediately prior to such action.
The adjustment shall become effective immediately after the record
date in the case of a dividend or distribution
<PAGE> 18
-16-
(the "Time of Determination") and immediately after the effective date in the
case of a subdivision, combination or reclassification.
If after an adjustment a Holder of a Warrant upon exercise of
it may receive shares of two or more classes of capital stock of the Company,
the board of directors of the Company shall determine the allocation of the
adjusted Exercise Price between the classes of capital stock. After such
allocation, the exercise privilege and the Exercise Price of each class of
capital stock shall thereafter be subject to adjustment on terms comparable to
those applicable to Common Stock in this Section 12.
Such adjustment shall be made successively whenever any event
listed above shall occur.
(b) Adjustment for Certain Issuances of Common Stock. If the
Company issues or sells shares of its Common Stock or distributes any rights,
options or warrants to any Person entitling them to purchase shares of Common
Stock, or securities convertible into or exchangeable for Common Stock, at a
price per share less than the Current Market Value at the Time of Determination,
the Exercise Rate shall be adjusted in accordance with the formula:
E' = E x O + N
---------
O + N x P
-----
M
where:
E' = the adjusted Exercise Rate.
E = the Exercise Rate immediately prior to the Time of
Determination for any such issuance, sale or distribution.
O = the number of Fully Diluted Shares (as defined below)
outstanding immediately prior to the Time of Determination
for any such issuance, sale or distribution.
N = the number of additional shares of Common Stock issued,
sold or issuable upon exercise of such rights, options or
warrants.
P = the price received in the case of any issuance or sale of
Common Stock or rights, options or
<PAGE> 19
-17-
warrants inclusive of the exercise price per share of
Common Stock upon exercise of such rights, options or
warrants.
M = the Current Market Value per share of Common Stock on the
Time of Determination for any such issuance, sale or
distribution.
The adjustment shall be made successively whenever any such
rights, options or warrants are issued and shall become effective immediately
after the record date for the determination of stockholders entitled to receive
the rights, options or warrants. Notwithstanding the foregoing, the Exercise
Rate shall not be subject to adjustment in connection with (i) the issuance of
any shares of Common Stock upon exercise of any such rights, options or warrants
which have previously been the subject of an adjustment under this Agreement for
which the required adjustment has been made and (ii)(a) the exercise of the
Warrants, (b) any options, warrants or rights to acquire Common Stock currently
outstanding or subsequently granted or issued pursuant to the Company's 1995
Stock Option Plan exercisable for Common Stock in an aggregate amount not to
exceed 132,125 shares (subject to adjustments for stock splits, stock dividends,
stock combinations, reorganizations, recapitalizations and reclassifications and
other changes in the shares of Common Stock) and all such shares of Common Stock
issued upon exercise of such options, warrants or rights. If at the end of the
period during which any such rights, options or warrants are exercisable, not
all rights, options or warrants shall have been exercised, the Warrant shall be
immediately readjusted to what it would have been if "N" in the above formula
had been the number of shares actually issued.
(c) Adjustment for Other Distribution. If the Company distributes
to all holders of its Common Stock (i) any evidences of indebtedness of the
Company or any of its subsidiaries, (ii) any assets of the Company or any of its
subsidiaries (other than cash dividends or other cash distributions or
distributions from current or retained earnings other than any Extraordinary
Cash Dividend), or (iii) any rights, options or warrants to acquire any of the
foregoing or to acquire any other securities of the Company, the Exercise Rate
shall be adjusted in accordance with the formula:
E' = E x M
-----
M - F
where:
<PAGE> 20
-18-
E' = the adjusted Exercise Rate.
E = the current Exercise Rate on the record date mentioned
below.
M = the Current Market Value per share of Common Stock on the
record date mentioned below.
F = the fair market value on the record date mentioned below of
the indebtedness, assets, rights, options or warrants
distributable in respect of one share of Common Stock.
The adjustment shall be made successively whenever any such
distribution is made and shall become effective immediately after the record
date for the determination of stockholders entitled to receive the distribution.
If an adjustment is made pursuant to clause (iii) above of this subsection (c)
as a result of the issuance of rights, options or warrants and at the end of the
period during which any such rights, options or warrants are exercisable, not
all such rights, options or warrants shall have been exercised, the Warrant
shall be immediately readjusted as if "F" in the above formula was the fair
market value on the record date of the indebtedness or assets actually
distributed upon exercise of such rights, options or warrants divided by the
number of shares of Common Stock outstanding on the record date.
This subsection does not apply to rights, options or warrants
referred to in subsection (b) of this Section 12.
(d) Current Market Value. "Current Market Value" per share of
Common Stock or of any other security (herein collectively referred to as a
"Security") at any date shall be:
(1) if the Security is not registered under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), (i) the value of the
Security determined in good faith by the board of directors of the Company
and certified in a board resolution, based on the most recently completed
arm's length transaction between the Company and a person other than an
Affiliate of the Company and the closing of which occurs on such date or
shall have occurred within the six months preceding such date or (ii) if no
such transaction shall have occurred on such date or within such six-month
period, the value of the Security most recently determined as of a date
within the six months preceding such date by the board of directors of the
Company if the transaction is for less than
<PAGE> 21
-19-
$500,000 and is not with an Affiliate and by an Independent Financial
Expert in all other instances, or
(2) if the Security is registered under the Exchange Act, the
average of the daily closing bid prices (as defined below) for each
Business Day during the period commencing 15 Business Days before such date
and ending on the date one day prior to such date or, if the Security has
been registered under the Exchange Act for less than 15 consecutive
Business Days before such date, then the average of the daily closing bid
prices for all of the Business Days before such date for which daily
closing bid prices are available. If the closing bid price is not
determinable for at least 10 Business Days in such period, the Current
Market Value of the Security shall be determined as if the Security was not
registered under the Exchange Act.
The "closing bid price" for any Security on each Business Day
means: (A) if such Security is listed or admitted to trading on any securities
exchange, the closing price, regular way, on such day on the principal exchange
on which such Security is traded, or if no sale takes place on such day, the
average of the closing bid and asked prices on such day, (B) if such Security is
not then listed or admitted to trading on any securities exchange, the last
reported sale price on such day, or if there is no such last reported sale price
on such day, the average of the closing bid and the asked prices on such day, as
reported by a reputable quotation source designated by the Company or (C) if
neither clause (A) nor (B) is applicable, the average of the reported high bid
and low asked prices on such day, as reported by a reputable quotation service,
or a newspaper of general circulation in the Borough of Manhattan, City of New
York, customarily published on each Business Day, designated by the Company. If
there are no such prices on a Business Day, then the market price shall not be
determinable for such Business Day.
"Independent Financial Expert" shall mean (a) CIBC Wood Gundy
Securities Corp. (or any successor) or (b) another nationally recognized
investment banking firm reasonably acceptable to the Warrant Agent (i) that does
not (and whose directors, officers, employees and Affiliates do not) have a
direct or indirect material financial interest in the Company, (ii) that has not
been, and, at the time it is called upon to serve as an Independent Financial
Expert under this Agreement is not (and none of whose directors, officers,
employees or Affiliates is) a promoter, director or officer of the Company,
(iii) that has not been retained by the Company for any pur-
<PAGE> 22
-20-
pose, other than to perform an equity valuation, within the preceding twelve
months and (iv) that, in the reasonable judgment of the board of directors of
the Company (certified by a board resolution), is otherwise qualified to serve
as an independent financial advisor. Any such person may receive customary
compensation and indemnification by the Company for opinions or services it
provides as an Independent Financial Expert.
"Affiliate" of any specified person means any other person
which directly or indirectly through one or more intermediaries controls or is
controlled by, or is under common control with, such specified person. For the
purposes of this definition, "control" (including with correlative meanings, the
terms "controlling," "controlled by" and "under common control with") as used
with respect to any person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of such
person, whether through the ownership of voting securities, by agreement or
otherwise; provided, however, that beneficial ownership of at least 10% of the
voting securities of a person shall be deemed to be control and that for so long
as Susan Burden is a director and/or a Burden Entity controls, directly or
indirectly, capital stock of the Company with the right to 10% of the vote of
the Common Stock then outstanding, Susan Burden and/or such Burden Entity and
any person (including affiliated trusts) controlled by any of them shall be
Affiliates of the Company.
"Burden Entity" shall mean Susan Burden, any lineal
descendants of Carter Burden, any trust or estate the beneficiary of which is
Susan Burden or any lineal descendants of Carter Burden or any entity owned or
controlled by any of the foregoing.
"Extraordinary Cash Dividend" means any cash dividends with
respect to the Common Stock the aggregate amount of which prior to the
Exercisability Date in any fiscal year exceeds the greater of (i) 20% of the net
income of the Company and its subsidiaries for the fiscal year immediately
preceding the payment of such dividend or (ii) $250,000.
(e) When De Minimis Adjustment May Be Deferred. No adjustment
in the Exercise Rate need be made unless the adjustment would require an
increase or decrease of at least 1% in the Exercise Rate. Notwithstanding the
foregoing, any adjustments that are not made shall be carried forward and taken
into account in any subsequent adjustment, provided that no such adjustment
shall be deferred beyond the date on which a Warrant is exercised.
<PAGE> 23
-21-
All calculations under this Section 12 shall be made to the
nearest cent or to the nearest 1/100th of a share, as the case may be.
(f) When No Adjustment Required. If an adjustment is made upon
the establishment of a record date for a distribution subject to subsections
(a), (b) or (c) hereof and such distribution is subsequently cancelled, the
Exercise Rate then in effect shall be readjusted, effective as of the date when
the board of directors determines to cancel such distribution, to that which
would have been in effect if such record date had not been fixed. If an
adjustment would be required under two or more of paragraphs (a), (b) and (c),
such adjustments will be determined without duplication.
To the extent the Warrants become convertible into cash, no
adjustment need be made thereafter as to the amount of cash into which such
Warrants are exercisable. Interest will not accrue on the cash.
(g) Notice of Adjustment. Whenever the Exercise Rate is
adjusted, the Company shall provide the notices required by Section 14 hereof.
(h) Voluntary Reduction. The Company from time to time may
increase the Exercise Rate by any amount for any period of time (including,
without limitation, permanently) if the period is at least 20 Business Days.
An increase of the Exercise Rate under this Subsection (h)
(other than a permanent increase) does not change or adjust the Exercise Rate
otherwise in effect for purposes of subsections (a), (b) or (c) of this Section
12.
(i) When Issuance or Payment May Be Deferred. In any case in
which this Section 12 shall require that an adjustment in the Exercise Rate be
made effective as of a record date for a specified event, the Company may elect
to defer until the occurrence of such event (i) issuing to the Holder of any
Warrant exercised after such record date the Warrant Shares and other capital
stock of the Company, if any, issuable upon such exercise over and above the
Warrant Shares and other capital stock of the Company, if any, issuable upon
such exercise on the basis of the Exercise Rate prior to such adjustment, and
(ii) paying to such Holder any amount in cash in lieu of a fractional share
pursuant to Section 13; provided, however, that the Company shall deliver to the
Warrant Agent and shall cause the Warrant Agent, on behalf of and at the expense
of the Company, to deliver to such Holder a due bill or other appro-
<PAGE> 24
-22-
priate instrument evidencing such Holder's right to receive such additional
Warrant Shares, other capital stock and cash upon the occurrence of the event
requiring such adjustment.
(j) Reorganizations. In case of any capital reorganization,
other than in the cases referred to in Sections 12(a), (b) or (c) hereof, or the
consolidation or merger of the Company with or into another corporation (other
than a merger or consolidation in which the Company is the continuing
corporation and which does not result in any reclassification of the outstanding
shares of Common Stock into shares of other stock or other securities or
property), or the sale of the property of the Company as an entirety or
substantially as an entirety (collectively such actions being hereinafter
referred to as "Reorganizations"), there shall thereafter be deliverable upon
exercise of any Warrant (in lieu of the number of shares of Common Stock
theretofore deliverable) the number of shares of stock or other securities or
property to which a holder of the number of shares of Common Stock that would
otherwise have been deliverable upon the exercise of such Warrant would have
been entitled upon such Reorganization if such Warrant had been exercised in
full immediately prior to such Reorganization. In case of any Reorganization,
appropriate adjustment, as determined in good faith by the board of directors of
the Company, whose determination shall be described in a duly adopted resolution
certified by the Company's Secretary or Assistant Secretary, shall be made in
the application of the provisions herein set forth with respect to the rights
and interests of Holders so that the provisions set forth herein shall
thereafter be applicable, as nearly as possible, in relation to any such shares
or other securities or property thereafter deliverable upon exercise of
Warrants.
The Company shall not effect any such Reorganization unless
prior to or simultaneously with the consummation thereof the successor
corporation (if other than the Company) resulting from such Reorganization or
the corporation purchasing or leasing such assets or other appropriate
corporation or entity shall (i) expressly assume, by a supplemental warrant
agreement or other acknowledgment executed and delivered to the Warrant Agent
the obligation to deliver to the Warrant Agent and to cause the Warrant Agent to
deliver to each such Holder such shares of stock, securities or assets as, in
accordance with the foregoing provisions, such Holder may be entitled to
purchase, and the due and punctual performance and observance of each and every
covenant, condition, obligation and liability under this Agreement to be
performed and observed by the Company in the manner prescribed herein and (ii)
enter into an agreement providing to the Holders rights and benefits substan-
<PAGE> 25
-23-
tially similar to those enjoyed by the Holders under the Common Stock
Registration Rights and Stockholders Agreement of even date herewith.
The foregoing provisions of this Section 12(j) shall apply to
successive Reorganization transactions.
(k) Form of Warrants. Irrespective of any adjustments in the
number or kind of shares purchasable upon the exercise of the Warrants, Warrants
theretofore or thereafter issued may continue to express the same price and
number and kind of shares as are stated in the Warrants initially issuable
pursuant to this Agreement.
(l) Warrant Agent's Disclaimer. The Warrant Agent has no duty
to determine when an adjustment under this Section 12 should be made, how it
should be made or what it should be. The Warrant Agent has no duty to determine
whether any provisions of a supplemental warrant agreement under subsection (j)
of this Section 12 are correct. The Warrant Agent makes no representation as to
the validity or value of any securities or assets issued upon exercise of
Warrants. The Warrant Agent shall not be responsible for the Company's failure
to comply with this Section 12.
(m) Miscellaneous. For purpose of this Section 12 the term
"shares of Common Stock" shall mean (i) shares of the classes of stock
designated as the Class A Common Stock and Class B Common Stock, par value $.01
per share of the Company (the "Class B Common Stock") as of the date of this
Agreement, and (ii) shares of any other class of stock resulting from successive
changes or reclassification of such shares consisting solely of changes in par
value, or from par value to no par value, or from no par value to par value. For
purposes of this Section 12 the term "Fully Diluted Shares" shall mean (i) the
shares of Common Stock outstanding as of a specified date, and (ii) the shares
of Common Stock into or for which rights, options, warrants or other securities
outstanding as of such date are exercisable or convertible (other than the
Warrants). In the event that at any time, as a result of an adjustment made
pursuant to this Section 12, the Holders of Warrants shall become entitled to
purchase any securities of the Company other than, or in addition to, shares of
Common Stock, thereafter the number or amount of such other securities so
purchasable upon exercise of each Warrant shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Warrant Shares contained in subsections (a)
through (m) of this Section 12, inclusive, and the provisions of Sections 7, 8,
10 and
<PAGE> 26
-24-
13 with respect to the Warrant Shares or the Common Stock shall apply on like
terms to any such other securities.
SECTION 13. Fractional Interests. The Company shall not be
required to issue fractional Warrant Shares on the exercise of Warrants. If more
than one Warrant shall be presented for exercise in full at the same time by the
same Holder, the number of full Warrant Shares which shall be issuable upon the
exercise thereof shall be computed on the basis of the aggregate number of
Warrant Shares purchasable on exercise of the Warrants so presented. If any
fraction of a Warrant Share would, except for the provisions of this Section 13,
be issuable on the exercise of any Warrants (or specified portion thereof), the
Company shall pay an amount in cash equal to the excess of the value (as
determined by the Board of Directors in good faith) of a Warrant Share over the
Exercise Price on the day immediately preceding the date the Warrant is
presented for exercise, multiplied by such fraction.
SECTION 14. Notices to Warrant Holders. Upon any adjustment
pursuant to Section 12 hereof, the Company shall give prompt written notice of
such adjustment to the Warrant Agent and shall cause the Warrant Agent, on
behalf of and at the expense of the Company, within 10 days after notification
is received by the Warrant Agent of such adjustment, to mail by first class
mail, postage prepaid, to each Holder a notice of such adjustment(s) and shall
deliver to the Warrant Agent a certificate of the Chief Financial Officer of the
Company, accompanied by the report thereon by a firm of independent public
accountants selected by the board of directors of the Company (who may be the
regular accountants for the Company), setting forth in reasonable detail (i) the
number of Warrant Shares purchasable upon the exercise of each Warrant and the
Exercise Price of such Warrant after such adjustment(s), (ii) a brief statement
of the facts requiring such adjustment(s) and (iii) the computation by which
such adjustment(s) was made. Where appropriate, such notice may be given in
advance and included as a part of the notice required under the other provisions
of this Section 14.
In case:
(a) the Company shall authorize the issuance to all holders of
shares of Common Stock of rights, options or warrants to subscribe for
or purchase shares of Common Stock or of any other subscription rights
or warrants; or
<PAGE> 27
-25-
(b) the Company shall authorize the distribution to all
holders of shares of Common Stock of evidences of its indebtedness or
assets; or
(c) of any consolidation or merger to which the Company is a
party and for which approval of any shareholders of the Company is
required, or of the conveyance or transfer of the properties and assets
of the Company substantially as an entirety, or of any reclassification
or change of Common Stock issuable upon exercise of the Warrants (other
than a change in par value, or from par value to no par value, or from
no par value to par value, or as a result of a subdivision or
combination), or a tender offer or exchange offer for shares of Common
Stock; or
(d) of the voluntary or involuntary dissolution, liquidation
or winding up of the Company; or
(e) the Company proposes to take any action that would require
an adjustment to the Exercise Rate pursuant to Section 12;
then the Company shall give prompt written notice to the Warrant Agent and shall
cause the Warrant Agent, on behalf of and at the expense of the Company to give
to each of the registered holders of the Warrant Certificates at his or its
address appearing on the Warrant Register, at least 30 days (or 20 days in any
case specified in clauses (a) or (b) above) prior to the applicable record date
hereinafter specified, or the date of the event in the case of events for which
there is no record date, by first-class mail, postage prepaid, a written notice
stating (i) the date as of which the holders of record of shares of Common Stock
to be entitled to receive any such rights, options, warrants or distribution are
to be determined, or (ii) the initial expiration date set forth in any tender
offer or exchange offer for shares of Common Stock, or (iii) the date on which
any such consolidation, merger, conveyance, transfer, dissolution, liquidation
or winding up is expected to become effective or consummated, and the date as of
which it is expected that holders of record of shares of Common Stock shall be
entitled to exchange such shares for securities or other property, if any,
deliverable upon such reclassification, consolidation, merger, conveyance,
transfer, dissolution, liquidation or winding up. The failure by the Company or
the Warrant Agent to give such notice or any defect therein shall not affect the
legality or validity of any distribution, right, option, warrant, consolidation,
merger, conveyance, transfer,
<PAGE> 28
-26-
dissolution, liquidation or winding up, or the vote upon any action.
The Company shall give prompt written notice to the Warrant
Agent and shall cause the Warrant Agent, on behalf of and at the expense of the
Company to give to each Holder written notice of any determination to make a
distribution or dividend to the holders of its Common Stock of any assets
(including cash), debt securities, preferred stock, or any rights or warrants to
purchase debt securities, preferred stock, assets or other securities (other
than Common Stock, or rights, options, or warrants to purchase Common Stock) of
the Company, which notice shall state the nature and amount of such planned
dividend or distribution and the record date therefor, and shall be received by
the Holders at least 30 days prior to such record date therefor.
Nothing contained in this Agreement or in any Warrant
Certificate shall be construed as conferring upon the Holders the right to vote
or to consent or to receive notice as shareholders in respect of the meetings of
shareholders or the election of directors of the Company or any other matter, or
any rights whatsoever as shareholders of the Company.
SECTION 15. Notices to the Company and Warrant Agent. Any
notice or demand authorized by this Agreement to be given or made by the Warrant
Agent or by any Holder to or on the Company shall be sufficiently given or made
when received at the office of the Company expressly designated by the Company
as its office for purposes of this Agreement (until the Warrant Agent is
otherwise notified in accordance with this Section 15 by the Company), as
follows:
Commodore Media, Inc.
500 Fifth Avenue
Suite 3000
New York, New York 10110
Attention: President
with a copy to:
Pryor, Cashman, Sherman & Flynn
410 Park Avenue
New York, New York 10022
Attention: Ira J. Goldstein, Esq.
Any notice pursuant to this Agreement to be given by the
Company or by any Holder(s) to the Warrant Agent shall be sufficiently given
when received by the Warrant Agent at the
<PAGE> 29
-27-
address appearing below (until the Company is otherwise notified in accordance
with this Section by the Warrant Agent).
IBJ Schroder Bank & Trust Company
One State Street
New York, New York 10004
Attention: Corporate Trust Administration
Fax Number: (212) 858-2952
SECTION 16. Supplements and Amendments. The Company and the
Warrant Agent may from time to time supplement or amend this Agreement without
the approval of any holders of Warrants in order to cure any ambiguity or to
correct or supplement any provision contained herein which may be defective or
inconsistent with any other provision herein, or to make any other provisions in
regard to matters or questions arising hereunder which the Company and the
Warrant Agent may deem necessary or desirable and which shall not in any way
adversely affect the interests of any holder of Warrants. Any amendment or
supplement to this Agreement that has a material adverse effect on the interests
of holders shall require the written consent of registered holders of a majority
of the then outstanding Warrants. The consent of each holder of a Warrant
affected shall be required for any amendment pursuant to which the Exercise
Price would be increased or the number of Warrant Shares purchasable upon
exercise of Warrants would be decreased (not including adjustments contemplated
hereunder). The Warrant Agent shall be entitled to receive and shall be fully
protected in relying upon an officers' certificate and opinion of counsel as
conclusive evidence that any such amendment or supplement is authorized or
permitted hereunder, that it is not inconsistent herewith, and that it will be
valid and binding upon the Company in accordance with its terms.
SECTION 17. Concerning the Warrant Agent. The Warrant Agent
undertakes the duties and obligations imposed by this Agreement upon the
following terms and conditions, by all of which the Company and the Holders, by
their acceptance of Warrants, shall be bound:
(a) The statements contained herein and in the Warrant
Certificate shall be taken as statements of the Company, and the
Warrant Agent assumes no responsibility for the correctness of any of
the same except such as describe the Warrant Agent or any action taken
by it. The Warrant Agent assumes no responsibility with respect to the
distribution of the Warrants except as herein otherwise provided.
<PAGE> 30
-28-
(b) The Warrant Agent shall not be responsible for any failure
of the Company to comply with the covenants contained in this Agreement
or in the Warrants to be complied with by the Company.
(c) The Warrant Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder
either itself (through its employees) or by or through its attorneys or
agents (which shall not include its employees) and shall not be
responsible for the misconduct of any agent appointed with due care.
(d) The Warrant Agent may consult at any time with legal
counsel satisfactory to it (who may be counsel for the Company), and
the Warrant Agent shall incur no liability or responsibility to the
Company or to any Holder in respect of any action taken, suffered or
omitted by it hereunder in good faith and in accordance with the
opinion or the advice of such counsel.
(e) Whenever in the performance of its duties under this
Agreement the Warrant Agent shall deem it necessary or desirable that
any fact or matter be proved or established by the Company prior to
taking or suffering any action hereunder, such fact or matter (unless
such evidence in respect thereof be herein specifically prescribed) may
be deemed to be conclusively proved and established by a certificate
signed by the Chairman of the Board, the President, Chief Financial
Officer, one of the Vice Presidents, the Treasurer or the Secretary of
the Company and delivered to the Warrant Agent; and such certificate
shall be full authorization to the Warrant Agent for any action taken
or suffered in good faith by it under the provisions of this Agreement
in reliance upon such certificate. Without limiting the foregoing, the
Company shall notify the Warrant Agent of the occurrence of the
Exercisability Date on the date it occurs, and until receipt of such
notice the Warrant Agent may be entitled to assume that any such date
has not occurred.
(f) The Company agrees to pay the Warrant Agent reasonable
compensation for all services rendered by the Warrant Agent in the
performance of its duties under this Agreement, to reimburse the
Warrant Agent for all expenses, taxes and governmental charges and
other charges of any kind and nature incurred by the Warrant Agent
(including reasonable fees and expenses of the Warrant Agent's counsel
and agents) in the performance of its duties under this Agreement, and
to indemnify the Warrant Agent and
<PAGE> 31
-29-
save it harmless against any and all liabilities, including judgments,
costs and counsel fees, for anything done or omitted by the Warrant
Agent in the performance of its duties under this Agreement, except as
a result of the Warrant Agent's negligence or bad faith.
(g) The Warrant Agent shall be under no obligation to
institute any action, suit or legal proceeding or to take any other
action likely to involve expense unless the Company or one or more
Holders shall furnish the Warrant Agent with reasonable security and
indemnity satisfactory to the Warrant Agent for any costs and expenses
which may be incurred, but this provision shall not affect the power of
the Warrant Agent to take such action as the Warrant Agent may consider
proper, whether with or without any such security or indemnity. All
rights of action under this Agreement or under any of the Warrants may
be enforced by the Warrant Agent without the possession of any of the
Warrants or the production thereof at any trial or other proceeding
relative thereto, and any such action, suit or proceeding instituted by
the Warrant Agent shall be brought in its name as Warrant Agent, and
any recovery of judgment shall be for the ratable benefit of the
Holders, as their respective rights or interests may appear.
(h) The Warrant Agent and any stockholder, director, officer
or employee of the Warrant Agent may buy, sell or deal in any of the
Warrants or other securities of the Company or become pecuniarily
interested in any transactions in which the Company may be interested,
or contract with or lend money to the Company or otherwise act as fully
and freely as though it were not Warrant Agent under this Agreement or
such director, officer or employee. Nothing herein shall preclude the
Warrant Agent from acting in any other capacity for the Company or for
any other legal entity including, without limitation, acting as
Transfer Agent or as a lender to the Company or an affiliate thereof.
(i) The Warrant Agent shall act hereunder solely as agent, and
its duties shall be determined solely by the provisions hereof. The
Warrant Agent shall not be liable for anything which it may do or
refrain from doing in connection with this Agreement except for its own
negligence or bad faith.
(j) The Warrant Agent will not incur any liability or
responsibility to the Company or to any Holder for any action taken in
reliance on any notice, resolution, waiv-
<PAGE> 32
-30-
er, consent, order, certificate, or other paper, document or instrument
reasonably believed by it to be genuine and to have been signed, sent
or presented by the proper party or parties.
(k) The Warrant Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery
hereof (except the due execution hereof by the Warrant Agent) or in
respect of the validity or execution of any Warrant (except its
counter-signature thereof); nor shall the Warrant Agent by any act
hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any Warrant Shares (or other stock) to
be issued pursuant to this Agreement or any Warrant, or as to whether
any Warrant Shares (or other stock) will, when issued, be validly
issued, fully paid and nonassessable, or as to the Exercise Price or
the number or amount of Warrant Shares or other securities or other
property issuable upon exercise of any Warrant.
(l) The Warrant Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties
hereunder from the Chairman of the Board, the President, any Vice
President or the Secretary of the Company, and to apply to such
officers for advice or instructions in connection with its duties, and
shall not be liable for any action taken or suffered to be taken by it
in good faith and without negligence in accordance with instructions of
any such officer or officers.
SECTION 18. Change of Warrant Agent. The Warrant Agent may
resign at any time and be discharged from its duties under this Agreement by
giving to the Company 30 days' notice in writing. The Warrant Agent may be
removed by like notice to the Warrant Agent from the Company. If the Warrant
Agent shall resign or be removed or shall otherwise become incapable of acting,
the Company shall appoint a successor to the Warrant Agent. If the Company shall
fail to make such appointment within a period of 30 days after such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Warrant Agent or by any Holder (who shall with such
notice submit his Warrant for inspection by the Company), then any Holder may
apply to any court of competent jurisdiction for the appointment of a successor
to the Warrant Agent. Pending appointment of a successor warrant agent, either
by the Company or by such court, the duties of the Warrant Agent shall be
carried out by the Company. Any successor warrant agent, whether appointed by
the Company or
<PAGE> 33
-31-
such a court, shall be a bank or trust company in good standing, incorporated
under the laws of the United States of America or any State thereof or the
District of Columbia and having at the time of its appointment as warrant agent
a combined capital and surplus of at least $10,000,000. After appointment, the
successor warrant agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Warrant Agent without
further act or deed; but the former Warrant Agent shall deliver and transfer to
the successor warrant agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
such purpose. Failure to file any notice provided for in this Section 18,
however, or any defect therein, shall not affect the legality or validity of the
resignation or removal of the Warrant Agent or the appointment of the successor
warrant agent, as the case may be. In the event of such resignation or removal,
the Company or the successor warrant agent shall mail by first class mail,
postage prepaid, to each Holder, written notice of such removal or resignation
and the name and address of such successor warrant agent.
SECTION 19. Identity of Transfer Agent. Forthwith upon the
appointment of any Transfer Agent for the Common Stock, or any other shares of
the Company's capital stock issuable upon the exercise of the Warrants, the
Company shall promptly file with the Warrant Agent a statement setting forth the
name and address of such Transfer Agent.
SECTION 20. Registration Rights. The Holders shall be entitled
to all of the benefits of that certain Common Stock Registration Rights and
Stockholders Agreement among the Company and the Purchaser dated as of May 1,
1996, in connection with the Common Stock to be issued in connection with the
exercise of the Warrants.
SECTION 21. Successors. All the covenants and provisions of
this Agreement by or for the benefit of the Company, the Warrant Agent, the
Purchaser or any holder of Warrants shall bind and inure to the benefit of their
respective successors and assigns hereunder.
SECTION 22. Termination. This Agreement shall terminate at
5:00 p.m. New York City time on May 1, 2000. Notwithstanding the foregoing, this
Agreement will terminate on any earlier date if all Warrants have been exercised
or redeemed pursuant to this Agreement.
<PAGE> 34
-32-
SECTION 23. GOVERNING LAW. THIS AGREEMENT AND EACH WARRANT
CERTIFICATE ISSUED HEREUNDER SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE
LAWS OF THE STATE OF NEW YORK AND SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF SAID STATE, WITHOUT REGARD TO THE CONFLICT OF LAW
RULES THEREOF.
SECTION 24. Benefits of This Agreement. Nothing in this
Agreement shall be construed to give to any person or corporation other than the
Company, the Warrant Agent and the registered Holders of the Warrant
Certificates any legal or equitable right, remedy or claim under this Agreement;
but this Agreement shall be for the sole and exclusive benefit of the Company,
the Warrant Agent and the registered Holders of the Warrant Certificates.
SECTION 25. Counterparts. This Agreement may be executed in
any number of counterparts and each of such counterparts shall for all purposes
be deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
SECTION 26. Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
<PAGE> 35
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, as of the day and year first above written.
COMMODORE MEDIA, INC.
By:
-----------------------------------------
Name:
Title:
IBJ SCHRODER BANK & TRUST COMPANY,
as Warrant Agent
By:
-----------------------------------------
Name:
Title:
<PAGE> 36
EXHIBIT A
[Form of Warrant Certificate]
[Face]
[THIS SECURITY IS A GLOBAL CERTIFICATE AND IS REGISTERED IN
THE NAME OF A DEPOSITARY OR A NOMINEE OF A DEPOSITARY OR A SUCCESSOR DEPOSITARY.
THIS SECURITY IS NOT EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A
PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE WARRANT AGREEMENT DATED AS OF MAY 1, 1996 BETWEEN
THE COMPANY AND THE WARRANT AGENT (THE "WARRANT AGREEMENT"), AND NO TRANSFER OF
THIS SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO
THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED EXCEPT IN
THE LIMITED CIRCUMSTANCES DESCRIBED IN THE WARRANT AGREEMENT. UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY (A NEW YORK CORPORATION) ("DTC") TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH
OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.](1)
- ----------
(1) This paragraph is to be included only if the Warrant is in global form.
A-1
<PAGE> 37
EXERCISABLE ON OR AFTER THE EXERCISABILITY DATE
AND ON OR BEFORE MAY 1, 2000
No. _______ _______ Warrants
Warrant Certificate
COMMODORE MEDIA, INC.
This Warrant Certificate certifies that ______, or registered
assigns, is the registered holder of Warrants expiring May 1, 2000 (the
"Warrants") to purchase shares of Class A Common Stock (the "Common Stock") of
Commodore Media, Inc., a Delaware corporation (the "Company"). Each Warrant
entitles the holder upon exercise to receive from the Company on or after the
Exercisability Date and on or before 5:00 p.m. New York City Time on May 1,
2000, one fully paid and nonassessable share of Class A Common Stock (a "Warrant
Share") at the initial exercise price (the "Exercise Price") of $.01 payable in
lawful money of the United States of America upon surrender of this Warrant
Certificate and payment of the Exercise Price at the office or agency of the
Warrant Agent, subject only to the conditions set forth herein and in the
Warrant Agreement referred to on the reverse hereof. The Exercise Price and
number of Warrant Shares issuable upon exercise of the Warrants are subject to
adjustment upon the occurrence of certain events as set forth in the Warrant
Agreement.
No Warrant may be exercised before the Exercisability Date or
after 5:00 p.m., New York City Time, on May 1, 2000 and to the extent not
exercised by such time such Warrants shall become void.
This Warrant Certificate shall not be valid unless
countersigned by the Warrant Agent, as such term is used in the Warrant
Agreement.
This Warrant Certificate shall be governed and construed in
accordance with the internal laws of the State of New York.
A-2
<PAGE> 38
IN WITNESS WHEREOF, Commodore Media, Inc. has caused this
Warrant Certificate to be signed by its President and by its Secretary, each by
a facsimile of his signature, and has caused a facsimile of its corporate seal
to be affixed hereunto or imprinted hereon.
Dated:
COMMODORE MEDIA, INC.
By: ___________________________
President
By: ___________________________
Secretary
Countersigned:
IBJ SCHRODER BANK & TRUST COMPANY,
as Warrant Agent
By: _________________________
Authorized Signature
A-3
<PAGE> 39
[Form of Warrant Certificate]
[Reverse]
The Warrants evidenced by this Warrant Certificate are part of
a duly authorized issue of Warrants expiring May 1, 2000, entitling the holder
on exercise to receive shares of Class A Common Stock, of the Company (the
"Class A Common Stock"), $.01 par value, and are issued or to be issued pursuant
to a Warrant Agreement dated as of May 1, 1996 (the "Warrant Agreement"), duly
executed and delivered by the Company to IBJ SCHRODER BANK & TRUST COMPANY, a
New York banking corporation, as warrant agent (the "Warrant Agent"), which
Warrant Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to for a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the Warrant Agent,
the Company and the holders (the words "holders" or "holder" meaning the
registered holders or registered holder) of the Warrants. A copy of the Warrant
Agreement may be obtained by the holder hereof upon written request to the
Company.
Warrants may be exercised at any time on or after the
"Exercisability Date" and on or before May 1, 2000, subject to extension as
provided in the Warrant Agreement. The holder of Warrants evidenced by this
Warrant Certificate may exercise them by surrendering this Warrant Certificate,
with the form of election to purchase set forth hereon properly completed and
executed, together with payment of the Exercise Price in cash at the office of
the Warrant Agent. In the event that upon any exercise of Warrants evidenced
hereby the number of Warrants exercised shall be less than the total number of
Warrants evidenced hereby, there shall be issued to the holder hereof or his
assignee a new Warrant Certificate evidencing the number of Warrants not
exercised. No adjustment shall be made for any dividends on any Class A Common
Stock issuable upon exercise of this Warrant.
The Warrant Agreement provides that upon the occurrence of
certain events the number of Warrants set forth on the face hereof may, subject
to certain conditions, be adjusted. No fractions of a share of Class A Common
Stock will be issued upon the exercise of any Warrant, but the Company will pay
the cash value thereof determined as provided in the Warrant Agreement.
The holders of the Warrants are entitled to certain
registration rights with respect to the Class A Common Stock purchasable upon
exercise thereof. Such registration rights are set forth in the Common Stock
Registration Rights and
A-4
<PAGE> 40
Stockholders Agreement, dated as of May 1, 1996, among the Company and the
parties named therein.
Warrant Certificates, when surrendered at the office of the
Warrant Agent by the registered holder thereof in person or by legal
representative or attorney duly authorized in writing, may be exchanged, in the
manner and subject to the limitations provided in the Warrant Agreement, but
without payment of any service charge, for another Warrant Certificate or
Warrant Certificates of like tenor evidencing in the aggregate a like number of
Warrants.
Upon due presentation for registration of transfer of this
Warrant Certificate at the office of the Warrant Agent a new Warrant Certificate
or Warrant Certificates of like tenor and evidencing in the aggregate a like
number of Warrants shall be issued to the transferee(s) in exchange for this
Warrant Certificate, subject to the limitations provided in the Warrant
Agreement, without charge except for any tax or other governmental charge
imposed in connection therewith.
The Company and the Warrant Agent may deem and treat the
registered holder(s) thereof as the absolute owner(s) of this Warrant
Certificate (notwithstanding any notation of ownership or other writing hereon
made by anyone), for the purpose of any exercise hereof, of any distribution to
the holder(s) hereof, and for all other purposes, and neither the Company nor
the Warrant Agent shall be affected by any notice to the contrary. Neither the
Warrants nor this Warrant Certificate entitles any holder hereof to any rights
of a stockholder of the Company.
A-5
<PAGE> 41
[Form of Election to Purchase]
(To Be Executed upon Exercise of Warrant)
The undersigned hereby irrevocably elects to exercise the
right, represented by this Warrant Certificate, to receive _____ shares of Class
A Common Stock and herewith tenders payment for such shares to the order of
Commodore Media, Inc. in the amount of $_____ in accordance with the terms
hereof. The undersigned requests that a certificate for such shares be
registered in the name of ______________, whose address is __________ and that
such shares be delivered to _________ whose address is ______________. If said
number of shares is less than all of the shares of Class A Common Stock
purchasable hereunder, the undersigned requests that a new Warrant Certificate
representing the remaining balance of such shares be registered in the name of
_____________, whose address is ________, and that such Warrant Certificate be
delivered to ___________, whose address is ________________.
Signature:
Date:
Signature Guaranteed:
A-6
<PAGE> 42
SCHEDULE OF EXCHANGES OF CERTIFICATED WARRANTS(2)
The following exchanges of a part of this Global Warrant for certificated
Warrants have been made:
<TABLE>
<CAPTION>
Number of
Warrants of
Amount of Amount of this Global
decrease in increase in Warrant Signature of
number of number of following authorized
Date of Warrants of this Warrants of this such decrease officer of
Exchange Global Warrant Global Warrant (or increase) Warrant Agent
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
</TABLE>
- ----------
(2) This is to be included only if the Warrant is in global form.
A-7
<PAGE> 43
EXHIBIT B
CERTIFICATE TO BE DELIVERED UPON EXCHANGE
OR REGISTRATION OF TRANSFER OF WARRANTS
Re: Warrants to Purchase Class A Common Stock (the "Warrants") of Commodore
Media, Inc.
This Certificate relates to ____ Warrants held in* book-entry or*_____
certificated form by ______ (the "Transferor").
The Transferor*:
/ / has requested the Warrant Agent by written order to deliver in
exchange for its beneficial interest in the Global Warrant held by the
Depositary a Warrant or Warrants in definitive registered form equal to its
beneficial interest in Warrants represented by such Global Warrant (or the
portion thereof indicated above); or
/ / has requested the Warrant Agent by written order to exchange or
register the transfer of a Warrant or Warrants.
In connection with such request, the Transferor does hereby certify
that Transferor is familiar with the Warrant Agreement (the "Agreement")
relating to the Warrants and the restrictions on transfers thereof as provided
in Section 6 of such Agreement, and that the transfer of this Warrant requested
hereby does not require registration under the Securities Act (as defined below)
because:
/ / Such Warrant is being acquired for the Transferor's own account,
without transfer (in satisfaction of Section 6(a)(y)(A) of the Agreement).
- -----------------------
* Check applicable box.
B-1
<PAGE> 44
/ / Such Warrant is being transferred to a qualified institutional buyer
(as defined in Rule 144A under the Securities Act of 1933, as amended (the
"Securities Act")), in reliance on Rule 144A or in accordance with Regulation S
under the 1933 Act. If such transfer is in accordance with Regulation S, an
opinion of counsel to the effect that such transfer does not require
registration under the Securities Act accompanies this Certificate.
/ / Such Warrant is being transferred in accordance with Rule 144 under
the Securities Act. An opinion of counsel to the effect that such transfer does
not require registration under the Securities Act accompanies this Certificate.
/ / Such Warrant is being transferred in reliance on and in compliance
with an exemption from the registration requirements of the Securities Act,
other than Rule 144A or Rule 144 or Regulation S under the Securities Act. An
opinion of counsel to the effect that such transfer does not require
registration under the Securities Act accompanies this Certificate.
-------------------------------
[INSERT NAME OF TRANSFEROR]
By:
---------------------------
Date:
--------------
B-2
<PAGE> 45
EXHIBIT C
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE
UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS
SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A)
IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE ACT)
OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(a)(1), (2), (3) OR (7) UNDER THE ACT) (AN "ACCREDITED INVESTOR") OR (C) IT
IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION,
(2) AGREES THAT IT WILL NOT WITHIN THREE YEARS AFTER THE ORIGINAL ISSUANCE OF
THIS SECURITY RESELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE
COMPANY OR ANY OF ITS SUBSIDIARIES, (B) INSIDE THE UNITED STATES TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE ACT, (C) INSIDE THE
UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH
TRANSFER, FURNISHES (OR HAS FURNISHED ON ITS BEHALF BY A U.S. BROKER-DEALER) TO
THE TRUSTEE OR TRANSFER AGENT A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS
AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS SECURITY (THE
FORM OF WHICH LETTER CAN BE OBTAINED FROM THE WARRANT AGENT FOR THIS SECURITY),
(D) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE
904 UNDER THE ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY
RULE 144 UNDER THE ACT (IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT AND (3) AGREES THAT IT WILL GIVE TO EACH
PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT
OF THIS LEGEND, IN CONNECTION WITH ANY TRANSFER OF THIS SECURITY WITHIN THREE
YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY, IF THE PROPOSED TRANSFEREE
IS AN INSTITUTIONAL ACCREDITED INVESTOR OR SUCH TRANSFER IS MADE IN ACCORDANCE
WITH CLAUSES (D) OR (E) ABOVE, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH
TO THE WARRANT AGENT AND THE COMPANY SUCH CERTIFICATIONS, LEGAL OPINIONS OR
OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO
C-1
<PAGE> 46
CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE ACT. AS USED
HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE
THE MEANING GIVEN TO THEM BY REGULATION S UNDER THE ACT.
C-2
<PAGE> 47
EXHIBIT D
Transferee Letter of Representation
Commodore Media, Inc.
500 Fifth Avenue
Suite 3000
New York, New York 10110
Ladies and Gentlemen:
In connection with our proposed purchase of Warrants to
purchase Class A Common Stock (the "Securities") of Commodore Media, Inc. (the
"Company"), we confirm that:
1. We understand that any subsequent transfer of the
Securities is subject to certain restrictions and conditions set forth
in the Warrant Agreement dated as of May 1, 1996 relating to the
Securities and the undersigned agrees to be bound by, and not to
resell, pledge or otherwise transfer the Securities except in
compliance with, such restrictions and conditions and the Securities
Act of 1933, as amended (the "Securities Act").
2. We understand that the Securities have not been registered
under the Securities Act, and that the Securities may not be offered or
sold except as permitted in the following sentence. We agree, on our
own behalf and on behalf of any accounts for which we are acting as
hereinafter stated, that if we should sell any Securities within three
years after the original issuance of the Securities, we will do so only
(A) to the Company or any subsidiary thereof, (B) inside the United
States to a "qualified institutional buyer" in compliance with Rule
144A under the Securities Act, (C) inside the United States to an
"institutional accredited investor" (as defined below) that, prior to
such transfer, furnishes to you a signed letter substantially in the
form of this letter, (D) outside the United States to a foreign person
in compliance with Rule 904 of Regulation S under the Securities Act,
(E) pursuant to the exemption from registration provided by Rule 144
under the Securities Act (if available), or (F) pursuant to an
effective registration statement under the Securities Act, and we
further agree to provide to any person purchasing any of the Securities
from us a notice
D-1
<PAGE> 48
advising such purchaser that resales of the Securities are restricted
as stated herein.
3. We understand that, on any proposed resale of any
Securities, we will be required to furnish to the Company such
certifications, legal opinions and other information as the Company may
reasonably require to confirm that the proposed sale complies with the
foregoing restrictions. We further understand that the Securities
purchased by us will bear a legend to the foregoing effect.
4. We are an institutional "accredited investor" (as defined
in Rule 501(a)(1), (2), (3) or (7) under the Securities Act) and have
such knowledge and experience in financial and business matters as to
be capable of evaluating the merits and risks of our investment in the
Securities, and we and any accounts for which we are acting are each
able to bear the economic risk of our or its investment.
5. We are acquiring the Securities purchased by us for our own
account or for one or more accounts (each of which is an institutional
"accredited investor") as to each of which we exercise sole investment
discretion.
The Company is entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
Very truly yours,
-------------------------------
(Name of Purchaser)
By:
---------------------------
Date:
-------------------------
D-2
<PAGE> 49
Upon transfer the Securities would be registered in the name
of the new beneficial owner as follows:
Name:______________________________
Address:___________________________
Taxpayer ID Number:________________
D-3
<PAGE> 1
Exhibit 11.1
<TABLE>
<CAPTION>
Twelve months ended December 31, Three months ended March 31,
------------------------------------------------------------------- ------------------------------------
1995 1996
1991 1992 1993 1994(c) 1995(c) Pro Forma(b) 1995(c) 1996(c) Pro Forma(b)
------------------------------------------------------------------- ------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net loss before
extraordinary item 4,183 3,010 3,782 527 1,796 1,805 585 1,436 1,060
Preferred stock
dividend - - - 691 252 - 208 - -
-------- -------- -------- -------- -------- -------- -------- -------- --------
Net loss for common
shareholders
(before E/O item) $ 4,183 $ 3,010 $ 3,782 $ 1,218 $ 2,048 $ 1,805 $ 793 1,436 $ 1,060
======== ======== ======== ======== ======== ======== ======== ======== ========
Extraordinary
(gain) loss 0 (430) 0 0 444 512 0 0 0
Net loss for common
shareholders $ 4,183 $ 2,580 $ 3,782 $ 1,218 $ 2,492 $ 2,317 $ 793 1,436 $ 1,060
======== ======== ======== ======== ======== ======== ======== ======== ========
Weighted avg. common
shares outstanding 2,599.2 2,138.4 2,001.6 3,751.2 3,880.8 6,762.8 3,744.0 3,938.4 6,820.4
SAB #83 adjustment(a) 11.5 11.5 11.5 11.5 11.5 11.5 11.5 11.5 11.5
-------- -------- -------- -------- -------- -------- -------- -------- --------
Adjusted common
shares outstanding 2,610.7 2,149.9 2,013.1 3,762.7 3,892.3 6,774.3 3,755.5 3,949.9 6,831.9
======== ======== ======== ======== ======== ======== ======== ======== ========
Loss per share, before
extraordinary item $ 1.60 $ 1.40 $ 1.88 $ 0.32 $ 0.53 $ 0.26 $ 0.21 $ 0.36 $ 0.16
EPS effect on
extraordinary item 0.00 (0.20) 0.00 0.00 0.11 0.08 0.00 0.00 0.00
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total loss per share $ 1.60 $ 1.20 $ 1.88 $ 0.32 $ 0.64 $ 0.34 $ 0.21 $ 0.36 $ 0.16
======== ======== ======== ======== ======== ======== ======== ======== ========
</TABLE>
- --------------------
(a) 22,967 common stock options (valued at $6.25 each) were granted within one
year of this offering. Therefore, under SAB 83 the options have been
included in the average common stock outstanding calculation above under the
treasury stock method (retroactively).
(b) Includes 2,882,143 Class A Common Shares issued in the Offering.
(c) Weighted average shares outstanding gives effect to 612,598 and 615,773
shares held in treasury at December 31, 1994 and 1995, respectively.
Therefore, since they were issued but not outstanding, they have been
removed from the above calculations.
<PAGE> 1
Exhibit 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to the
use of our reports dated February 28, 1996, except for Note 14 as to which the
date is May 16, 1996 for Commodore Media, Inc. and April 26, 1996 for Media VI,
in the Registration Statement (Form S-1) and related Prospectus of Commodore
Media, Inc. for the registration of 4,300,000 shares of Class A Common Stock.
Ernst & Young LLP
New York, New York
- --------------------------------------------------------------------------------
The foregoing consent is in the form that will be signed upon the completion of
the 7.2:1 stock split of the Company's Common Stock as described in Note 14 to
the financial statements.
Ernst & Young LLP
New York, New York
May 16, 1996
<PAGE> 1
Exhibit 23.2
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors
Commodore Media, Inc.
We hereby consent to the use in Form S-1 dated May 1996, our report dated
March 4, 1994 relating to the consolidated statement of operations,
stockholders' deficit and cash flows of Commodore Media, Inc. for the year
ended December 31, 1993 as contained in that Form S-1.
Weeks DeGraw & Company, P.A.
Edison, New Jersey
- -------------------------------------------------------------------------------
The foregoing consent is in the form that will be signed upon the completion of
the 7.2:1 stock split of the Company's Common Stock as described in Note 14 to
the financial statements.
Weeks DeGraw & Company, P.A.
Edison, New Jersey
May 16, 1996
<PAGE> 1
EXHIBIT 23.3
[BROWN, EDWARDS & COMPANY, L.L.P. LETTERHEAD]
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement of Commodore Media, Inc.
on Form S1 of our report dated May 1, 1996, appearing in the Prospectus, which
is part of this Registration Statement.
We also consent to the reference to us under the heading "Experts" in such
Prospectus.
Brown, Edwards, & Company, L.L.P.
CERTIFIED PUBLIC ACCOUNTANTS
Bluefield, West Virginia
May 13, 1996
<PAGE> 1
EXHIBIT 23.4
CONSENT OF CERTIFIED PUBLIC ACCOUNTANTS
Commodore Media, Inc.
We consent to the use in this Registration Statement and Prospectus of
Commodore Media, Inc. on Form S-1, relating to the registration of Class A
Common Stock, of our report dated February 12, 1996, accompanying the financial
statements of Q Broadcasting, Inc. contained in such Registration Statement and
the use of our name and the statements with respect to us as appearing under the
heading "Experts" in the Prospectus.
[sig]
HOLTZ RUBENSTEIN & CO., LLP
Melville, New York
May 14, 1996
<PAGE> 1
EXHIBIT 23.5
[PANETH, HABER & ZIMMERMAN LLP LETTERHEAD]
CONSENT OF PANETH, HABER & ZIMMERMAN LLP, INDEPENDENT AUDITORS
We hereby consent to the use in this Registration Statement of our report dated
August 18, 1995, relating to the financial statements of Danbury Broadcasting,
Inc. and to the reference to our Firm under the caption "Experts" in the
Prospectus.
Paneth, Haber & Zimmerman LLP
New York, NY
May 14, 1996
