<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): FEBRUARY 20, 1997
-------------------------
COMMODORE MEDIA, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 33-92732 13-3034720
(State or other (Commission File Number) (I.R.S. Employer
jurisdiction of incorporation) Identification Number)
500 FIFTH AVENUE
SUITE 3000 10110
NEW YORK, NEW YORK (Zip code)
(Address of principal
executive offices)
Registrant's telephone number, including area code: (212) 302-2727
NOT APPLICABLE
(former address if changed since last report)
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<PAGE> 2
TABLE OF ADDITIONAL REGISTRANTS
<TABLE>
<CAPTION>
PRIMARY STANDARD
STATE OR OTHER INDUSTRIAL I.R.S. EMPLOYER
JURISDICTION OF CLASSIFICATION IDENTIFICATION
NAME INCORPORATION NUMBER NUMBER
---- ------------- ------ ------
<S> <C> <C> <C>
Commodore Media of Delaware, Inc. Delaware 4832 51-0286804
Commodore Media of Kentucky, Inc. Delaware 4832 61-0997863
Commodore Media of Pennsylvania, Inc. Delaware 4832 23-2207457
Commodore Media of Norwalk, Inc. Delaware 4832 06-1277523
Commodore Media of Florida, Inc. Delaware 4832 59-2813110
Commodore Media of Westchester, Inc. Delaware 4832 13-3356485
Commodore Holdings, Inc. Delaware 4832 13-3858506
Danbury Broadcasting, Inc. Connecticut 4832 13-3653113
Asheville Broadcasting Corp. Delaware 4832 56-1859801
Atlantic City Broadcasting Corp. Delaware 4832 22-3274908
Beatrice Broadcasting Corp. Delaware 4832 06-1142368
Breadbasket Broadcasting Corporation Delaware 4832 06-1443379
Corkscrew Broadcasting Corporation Delaware 4832 65-0466131
Currey Broadcasting Corporation Delaware 4832 13-3358952
Daytona Beach Broadcasting Corp. Delaware 4832 59-3223390
Great American East, Inc. North Carolina 4832 56-1580032
Houndstooth Broadcasting Corporation Delaware 4832 06-1469230
Jamboree in the Hills, Inc. Delaware 4832 55-0709712
Ladner Communications Holding Corp. Delaware 4832 13-3465060
Mountain Radio Corporation Delaware 4832 13-3401043
Music Hall Club, Inc. West Virginia 4832 55-0699199
Nelson Broadcasting Corporation Delaware 4832 13-3358975
O.C.C., Inc. Delaware 4832 13-3449243
Orange Communications, Inc. Delaware 4832 13-3387461
Osborn Entertainment Enterprises Corporation Delaware 4832 13-3465115
Osborn Sound & Communications Corp. Delaware 4832 34-1501274
RKZ Television, Inc. Delaware 4832 58-1740585
Rainbow Broadcasting Corporation Delaware 4832 63-1110166
Short Broadcasting Corporation Delaware 4832 31-1255866
SNG Holdings, Inc. Delaware 4832 13-3702089
Southeast Radio Holding Corp. Delaware 4832 06-1422492
Waite Broadcasting Corp. Delaware 4832 06-1142386
Yellow Brick Radio Corporation Delaware 4832 13-3401042
</TABLE>
<PAGE> 3
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On February 20, 1997, Commodore Media, Inc. ("Commodore") acquired
Osborn Communications Corporation, a Delaware corporation ("Osborn"). The
holders of (i) common stock, par value $.01 per share ("Osborn Common Stock"),
of Osborn were paid $15.375 per share, (ii) employee stock options to purchase
shares of Osborn Common Stock pursuant to the Osborn Communications Corporation
Incentive Stock Plan were paid $15.375 per option share, less the exercise
price per share and (iii) warrants were paid $15.375 per share of Osborn Common
Stock purchasable under the warrants, less the exercise price per share. The
holders of Osborn Common Stock, employee stock options and warrants to purchase
shares of Osborn Common Stock were paid approximately $90.4 million in the
aggregate (the "Merger Consideration"), of which approximately $88.6 million
was paid in cash and approximately $1.8 million was paid in shares of Class A
Common Stock, par value $.01 per share, of Capstar Broadcasting Partners, Inc.,
the parent company of Commodore ("Capstar"). The acquisition was effected
through the merger (the "Merger") of OCC Acquisition Company, Inc., a
wholly-owned subsidiary of Commodore, with and into Osborn, with Osborn as the
surviving corporation. As a result of the Merger, Osborn became a wholly-owned
subsidiary of Commodore.
The Merger Consideration was determined through arms length
negotiations between Capstar and Osborn. The cash portion of the Merger
Consideration was funded through an equity investment by Capstar. Concurrently
with the acquisition of Osborn, Commodore (i) repaid in full borrowings
(including accrued interest) (A) in the amount of approximately $25.4 million
under the $35.0 million senior secured credit facility (the "AT&T Facility")
made available by AT&T Commercial Finance Corporation to Commodore Holdings,
Inc., a wholly-owned subsidiary of Commodore and (B) in the amount of
approximately $18.6 million under the $28.4 million revolving loan facility
(the "Osborn Facility") made available by KeyBank National Association to
Osborn, and (ii) entered into a senior secured credit facility with Bankers
Trust Company, as administrative agent, and other institutions party thereto,
which provides for loans of up to $50.0 million in the form of a revolving
credit facility (the "BT Facility"). The AT&T Facility and the Osborn Facility
were repaid with funds obtained by Commodore from the equity investment by
Capstar. No borrowings have been made under the BT Facility.
Osborn is a broadcasting company primarily engaged in the operation of
radio stations in mid-sized markets in the southeastern United States. On
February 20, 1997, Osborn owned and operated or provided services, through its
directly and indirectly wholly-owned subsidiaries, to 18 radio stations (12 FM
and six AM). Osborn has pending the acquisitions of five radio stations (two FM
and three AM) in Huntsville and Tuscaloosa, Alabama and the disposition of
three radio stations (two FM and one AM) in Ft. Myers, Florida. Upon
consummation of Osborn's pending acquisitions and dispositions, the
consummation of which are subject to various conditions, Commodore, through its
directly and indirectly wholly-owned subsidiaries, will own and operate or
provide services to 53 radio stations (31 FM and 22 AM) in 12 mid-sized markets
in the northeastern and southeastern United States.
2
<PAGE> 4
In addition to radio broadcasting, Osborn's operations include several
broadcast-related businesses: the ownership of a 2,500-seat music theater and
the staging of an annual four-day country music festival known as Jamboree in
the Hills, both of which are promoted in conjunction with the operation of
Osborn's radio stations in Wheeling, West Virginia; the distribution of
programmed music, primarily Muzak; and, in conjunction with the programmed
music distribution business, the design, sale and installation of sound,
closed-circuit video and security systems. Commodore currently expects to
continue the operations of Osborn's broadcast-related businesses.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
Osborn Communications Corporation
- Report of Independent Auditors
- Consolidated Balance Sheets as of December 31, 1996 and 1995
- Consolidated Statements of Operations for the years ended
December 31, 1996, 1995 and 1994
- Combined Statements of Changes in Stockholders' Equity for the
years ended December 31, 1996, 1995 and 1994
- Combined Statements of Cash Flows for the years ended December
31, 1996, 1995 and 1994
- Notes to Consolidated Financial Statements
(b) PRO FORMA FINANCIAL INFORMATION.
It is impracticable to provide the required pro forma financial
information for Commodore at the time of this Report because such
information is not currently available. The required pro forma financial
information will be filed as an amendment to this Report as soon as
practicable, but not later than 60 days after the date on which this
Report is required to be filed.
(c) EXHIBITS.
2.1 Agreement and Plan of Merger by and among OCC Acquisition, Osborn and
OCC Holding Corporation dated as of July 23, 1996. The Agreement and
Plan of Merger filed herewith excludes the exhibits and schedules
thereto. The contents of such exhibits and schedules are described in
the Agreement and Plan of Merger. Copies of such exhibits and schedules
will be supplied to the Commission upon request.
2.2 First Amendment to Agreement and Plan of Merger dated as of February 20,
1997, by and among OCC Acquisition, Osborn, OCC Holding Corporation and
Commodore. The First Amendment to Agreement and Plan of Merger filed
herewith excludes the exhibits thereto.
3
<PAGE> 5
The contents of such exhibits are described in the First Amendment to
Agreement and Plan of Merger. Copies of such exhibits will be supplied
to the Commission upon request.
10.1 Credit Agreement dated as of February 20, 1997, among Capstar,
Commodore, various banks and Bankers Trust Company, as administrative
agent. The Credit Agreement filed herewith excludes the exhibits and
schedules thereto. The contents of such exhibits and schedules are
described in the Credit Agreement. Copies of such exhibits and schedules
will be supplied to the Commission upon request.
4
<PAGE> 6
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
COMMODORE MEDIA, INC.
(Registrant)
By: /s/ James J. Sullivan
----------------------------
Name:James J. Sullivan
Title:Chief Financial Officer
Date: March 4, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934, the
additional registrants have duly caused this report to be signed on their
behalf by the undersigned hereunto duly authorized.
Commodore Media of Delaware, Inc.
Commodore Media of Kentucky, Inc.
Commodore Media of Pennsylvania, Inc.
Commodore Media of Norwalk, Inc.
Commodore Media of Florida, Inc.
Commodore Media of Westchester, Inc.
Commodore Holdings, Inc.
Danbury Broadcasting, Inc.
By:/s/ James J. Sullivan
--------------------------------------
Name: James J. Sullivan
Title: Chief Financial Officer
Date: March 4, 1997
Asheville Broadcasting Corp.
Atlantic City Broadcasting Corp.
Beatrice Broadcasting Corp.
Breadbasket Broadcasting Corporation
Corkscrew Broadcasting Corporation
Currey Broadcasting Corporation
Daytona Beach Broadcasting Corp.
Great American East, Inc.
<PAGE> 7
Houndstooth Broadcasting Corporation
Jamboree in the Hills, Inc.
Ladner Communications Holding Corp.
Mountain Radio Corporation
Music Hall Club, Inc.
Nelson Broadcasting Corporation
O.C.C., Inc.
Orange Communications, Inc.
Osborn Entertainment Enterprises Corporation
Osborn Sound & Communications Corp.
RKZ Television, Inc.
Rainbow Broadcasting Corporation
Short Broadcasting Corporation
SNG Holdings, Inc.
Southeast Radio Holding Corp.
Waite Broadcasting Corp.
Yellow Brick Radio Corporation
By:/s/ Thomas S. Douglas
----------------------
Name: Thomas S. Douglas
Title: Vice President, Chief Financial
Officer and Treasurer
Date: March 4, 1997
<PAGE> 8
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Auditors 2
Consolidated Balance Sheets as of December 31, 1996 and 1995 3
Consolidated Statements of Operations for the years ended December 31, 1996,
1995 and 1994 4
Combined Statements of Changes in Stockholders' Equity for the years ended
December 31, 1996, 1995 and 1994 5
Combined Statements of Cash Flows for the years ended December 31, 1996,
1995 and 1994 6
Notes to Consolidated Financial Statements 7
</TABLE>
<PAGE> 9
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Osborn Communications Corporation
We have audited the accompanying consolidated balance sheets of Osborn
Communications Corporation as of December 31, 1996 and 1995, and the related
consolidated statements of operations, changes in stockholders' equity and cash
flows for each of the three years in the period ended December 31, 1996. 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 consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Osborn Communications Corporation at December 31, 1996 and 1995, and the
consolidated results of its operations and its cash flows for each of the three
years in the period ended December 31, 1996, in conformity with generally
accepted accounting principles.
ERNST & YOUNG LLP
New York, New York
February 3, 1997
2
<PAGE> 10
OSBORN COMMUNICATIONS CORPORATION
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
December 31,
1996 1995
------------ ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents ....................................................................... $ 2,944,205 $ 12,994,779
Accounts receivable, less allowance for doubtful accounts of $499,800 in 1996 and $518,157 in
1995 .......................................................................................... 5,505,351 5,759,562
Inventory ....................................................................................... 1,095,157 889,942
Prepaid expenses and other current assets ....................................................... 1,018,701 1,525,308
------------ ------------
Total current assets ............................................................................... 10,563,414 21,169,591
Investment in affiliated companies ................................................................. 512,088 524,084
Property, plant and equipment, at cost, less accumulated depreciation of $16,162,605 in 1996
and $18,624,021 in 1995 ......................................................................... 13,711,683 15,358,070
Intangible assets, net of accumulated amortization of $15,743,477 in 1996 and $15,238,193
in 1995 ......................................................................................... 31,743,083 40,463,595
Other noncurrent assets ............................................................................ 925,000 118,753
------------ ------------
Total assets ....................................................................................... $ 57,455,268 $ 77,634,093
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses ........................................................... $ 4,809,264 $ 4,509,292
Accrued wages and sales commissions ............................................................. 434,986 434,309
Accrued interest payable ........................................................................ 46,173 459,114
Accrued income taxes ............................................................................ 1,492,114 825,712
Current portion of long-term debt ............................................................... 320,000 2,718,000
------------ ------------
Total current liabilities .......................................................................... 7,102,537 8,946,427
Long-term debt ..................................................................................... 13,880,000 44,482,000
Deferred income taxes .............................................................................. 3,061,298 2,275,711
Other noncurrent liabilities ....................................................................... 1,501,279 432,916
Commitments and contingencies
Stockholders' equity:
Preferred stock, par value $.01 per share; authorized 5,000,000 shares, none
issued and outstanding-- -- Common stock, par value $.01 per share;
authorized 7,425,000 shares, issued and outstanding
shares: 5,547,497 and 5,537,497, respectively, in 1996; 5,286,347 and 5,276,347, respectively,
in 1995 ....................................................................................... 55,376 52,764
Non-voting common stock, par value $.01 per share; authorized 75,000 shares, none issued and
outstanding ..................................................................................... -- --
Additional paid-in capital ......................................................................... 40,869,408 39,694,601
Accumulated deficit ................................................................................ (9,014,630) (18,250,326)
------------ ------------
Total stockholders' equity ......................................................................... 31,910,154 21,497,039
------------ ------------
Total liabilities and stockholders' equity ......................................................... $ 57,455,268 $ 77,634,093
============ ============
</TABLE>
3
See accompanying notes.
<PAGE> 11
OSBORN COMMUNICATIONS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year ended December 31,
--------------------------------------------
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
Net revenues .................................................... $ 37,215,048 $ 39,505,193 $ 34,982,110
Operating expenses:
Selling, technical and program ................................ 9,656,347 11,785,471 9,487,815
Direct programmed music and entertainment ..................... 12,426,740 10,489,513 9,807,495
General and administrative .................................... 6,740,352 7,526,897 6,611,035
Depreciation and amortization ................................. 4,756,325 5,782,404 5,285,280
Corporate expenses ............................................ 1,849,820 1,705,850 2,475,675
Total operating expenses ................................... 35,429,584 37,290,135 33,667,300
------------ ------------ ------------
Operating income ................................................ 1,785,464 2,215,058 1,314,810
Other income (expense) .......................................... (291,163) 2,314,508 2,246,450
Interest expense ................................................ 2,201,616 5,212,999 4,385,827
Equity in results of affiliated company ......................... -- (11,829) --
Other gains, including gains on sales of stations ............... 12,321,760 8,094,993 --
------------ ------------ ------------
Income (loss) before income taxes and extraordinary item ........ 11,614,445 7,399,731 (824,567)
Provision for income taxes ...................................... 2,378,749 775,982 289,220
------------ ------------ ------------
Income (loss) before extraordinary item ......................... 9,235,696 6,623,749 (1,113,787)
Extraordinary item:
Loss on debt extinguishment ................................... -- (3,921,061) (436,329)
------------ ------------ ------------
Net income (loss) ............................................... $ 9,235,696 $ 2,702,688 $ (1,550,116)
============ ============ ============
Primary earnings per common share:
Income (loss) before extraordinary item ....................... $ 1.65 $ 1.23 $ (0.21)
Loss on extinguishment of debt ................................ -- (0.73) (0.08)
------------ ------------ ------------
Net income (loss) per common share .............................. $ 1.65 $ 0.50 $ (0.29)
============ ============ ============
Fully diluted earnings per common share:
Income (loss) before extraordinary item ....................... $ 1.62 $ 1.22 $ (0.21)
Loss on extinguishment of debt ................................ -- (0.72) (0.08)
------------ ------------ ------------
Net income (loss) per common share .............................. $ 1.62 $ 0.50 $ (0.29)
============ ============ ============
Weighted average common shares outstanding:
Primary shares ................................................ 5,598,237 5,388,001 5,376,715
============ ============ ============
Fully diluted shares .......................................... 5,687,927 5,459,353 5,376,715
============ ============ ============
</TABLE>
4
See accompanying notes.
<PAGE> 12
OSBORN COMMUNICATIONS CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Voting Non-voting
--------------------------- ------------- Additional
Par Par Paid-in Accumulated
Shares Value Shares Value Capital Deficit
----------- ------------ ------ ----- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1993 ........................... 10,752,181 $ 107,523 -- -- $ 38,453,555 $(19,402,898)
Exercise of stock options .......................... 1,500 15 -- -- 5,984 --
Issuance of stock warrant .......................... -- -- -- -- 1,774,837 --
Effect of 1-for-2 reverse stock split .............. (5,376,091) (53,762) -- -- 53,762 --
Purchase and retirement of treasury stock .......... (17,843) (178) -- -- (106,880) --
Net loss ........................................... -- -- -- -- -- (1,550,116)
----------- ------------ ---- ---- ------------ ------------
Balance at December 31, 1994 .......................... 5,359,747 53,598 -- -- 40,181,258 (20,953,014)
Purchase and retirement of treasury stock (107,059) (1,071) -- -- (641,283) --
Exercise of stock options .......................... 23,659 237 -- -- 154,626 --
Net income ......................................... -- -- -- -- -- 2,702,688
----------- ------------ ---- ---- ------------ ------------
Balance at December 31, 1995 ........................... 5,276,347 52,764 -- -- 39,694,601 (18,250,326)
Exercise of stock options .......................... 173,667 1,737 -- -- 732,182 --
Issuance of common stock ........................... 132,500 1,325 -- -- 1,106,175 --
Acquisition and retirement of treasury stock(45,017) (450) -- -- (663,550) --
Net income ......................................... -- -- -- -- -- 9,235,696
----------- ------------ ---- ---- ------------ ------------
Balance at December 31, 1996 ........................... 5,537,497 $ 55,376 -- -- $ 40,869,408 $ (9,014,630)
=========== ============ ==== ==== ============ ============
</TABLE>
5
See accompanying notes.
<PAGE> 13
OSBORN COMMUNICATIONS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year ended December 31,
--------------------------------------------
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
Cash flows from operating activities
Net income (loss) .................................................... $ 9,235,696 $ 2,702,688 $ (1,550,116)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization ..................................... 4,756,325 5,782,404 5,285,280
Other gains (losses), including gains on sales of stations ........ (12,321,760) (8,094,993) --
Deferred income taxes ............................................. 785,587 240,664 175,000
Transaction costs for proposed merger ............................. 479,754 -- --
Loss on extinguishment of debt .................................... -- 3,921,061 436,329
Write-off of registration statement costs ......................... -- -- 397,583
Non-cash interest expense ......................................... 244,363 332,284 210,421
Equity in results of affiliated company ........................... -- 11,829 --
Distributions from affiliated companies ........................... (62,500) (1,942,731) --
Changes in current assets and current liabilities:
Decrease (increase) in accounts receivable ..................... 254,211 (323,770) (2,165,123)
(Increase) decrease in inventory ............................... (205,215) 190,705 (214,241)
Decrease (increase) in prepaid expenses and other current assets 506,607 (742,764) (177,499)
Acquisition deposit held in escrow ............................. -- 180,000 --
Increase in distribution receivable ............................ -- -- (2,264,552)
Increase in accounts payable and accrued expenses .............. 299,972 721,764 1,069,534
(Decrease) increase in accrued wages and sales commissions ..... 677 129,528 (96,287)
Increase (decrease) in accrued interest payable ................ (412,941) (1,485,673) 1,632,742
Increase in accrued income taxes ............................... 666,402 290,223 15,009
------------ ------------ ------------
Total adjustments .................................................... (5,008,518) (789,469) 4,304,196
------------ ------------ ------------
Net cash provided by operating activities ............................ 4,227,178 1,913,219 2,754,080
------------ ------------ ------------
Cash flows from investing activities
Distributions from affiliated companies .............................. 62,500 4,207,283 --
Payments for business acquisitions ................................... (13,605,591) -- (21,825,094)
Net proceeds from sale of stations ................................... 34,687,928 10,000,000 --
Accrued transaction costs ............................................ (479,754) (1,411,981) --
Net proceeds from sale of other assets ............................... 580,653 -- --
Proceeds from note receivable ........................................ -- 1,620,455 329,545
Capital expenditures ................................................. (1,707,351) (1,326,492) (942,771)
Acquisition deposit held in escrow ................................... (925,000) (180,000) --
Reclassification of other noncurrent assets .......................... 118,753 -- --
Expenditures for intangible assets ................................... -- (524,863) --
------------ ------------ ------------
Net cash provided by (used in) investing activities .................. 18,732,138 12,384,402 (22,438,320)
------------ ------------ ------------
Cash flows from financing activities
Proceeds from issuance of long-term debt ............................. -- 44,500,000 48,460,982
Proceeds from issuance of stock warrant .............................. -- -- 1,774,837
Debt issuance costs .................................................. (79,807) (1,183,824) (1,887,965)
Registration statement costs ......................................... -- -- (228,587)
Proceeds from exercise of stock options .............................. 69,917 154,863 6,000
Purchase and retirement of treasury stock ............................ -- (642,354) (107,058)
Prepayment penalty on debt retirement ................................ -- (500,000) --
Principal payments on long-term debt and notes payable ............... (33,000,000) (50,000,000) (23,286,671)
------------ ------------ ------------
Net cash (used in) provided by financing activities .................. (33,009,890) (7,671,315) 24,731,538
------------ ------------ ------------
Net (decrease) increase in cash and cash equivalents ................. (10,050,574) 6,626,306 5,047,298
Cash and cash equivalents at beginning of period ..................... 12,994,779 6,368,473 1,321,175
------------ ------------ ------------
Cash and cash equivalents at end of period ........................... $ 2,944,205 $ 12,994,779 $ 6,368,473
============ ============ ============
Supplemental cash flow information
Cash paid for interest ............................................... $ 2,370,194 $ 6,366,388 $ 2,542,664
============ ============ ============
Cash paid for income taxes ........................................... $ 926,760 $ 245,095 $ 99,211
============ ============ ============
</TABLE>
See accompanying notes.
6
<PAGE> 14
See accompanying notes.
OSBORN COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996
1. NATURE OF BUSINESS AND ORGANIZATION
Osborn Communications Corporation ("Osborn") is engaged in the operation
of radio stations, programmed music, cable television and other communications
properties throughout the United States.
2. PLAN OF MERGER
On July 23, 1996, Osborn entered into an agreement and plan of merger
with a subsidiary of Capstar Broadcasting Partners, Inc. ("the Company")
whereby the Company will acquire all of Osborn's common stock for $15.375 per
share. A majority of the holders of the Osborn's common stock voted to approve
the merger in December 1996 and the Federal Communications Commission ("FCC")
approved the transfer of Osborn's broadcast licenses to the Company in January
1997. The merger is expected to be completed in February 1997.
Concurrently with the execution of the merger agreement and as security
for liquidated damages that may be payable by the Company to Osborn for the
Company's failure to consummate the merger, the Company has deposited in an
escrow account an irrevocable letter of credit in favor of Osborn for the sum
of $5.0 million. If Osborn terminates the merger agreement by reason of
receiving an alternative proposal which is deemed more favorable to Osborn's
stockholders, Osborn must pay a termination fee of $3,750,000 to the Company.
3. SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying consolidated financial statements include the accounts
of Osborn and its subsidiaries. All material intercompany items and
transactions have been eliminated. Investments in affiliated companies are
accounted for using the equity method. Certain prior years' amounts have been
reclassified to conform with the current year's presentation.
7
<PAGE> 15
OSBORN COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Depreciation
Property, plant and equipment are recorded at cost and depreciated using
the straight-line method over the estimated useful lives of the assets, as
follows:
<TABLE>
<S> <C>
Buildings................................................ 10-39 years
Furniture and fixtures................................... 5-7 years
Broadcasting equipment................................... 3-19 years
Transportation equipment................................. 2-5 years
</TABLE>
Expenditures for maintenance and repairs are charged to operations as
incurred.
Intangible Assets
Intangible assets include $2.6 million and $2.5 million in 1996 and
1995, respectively, for agreements not to compete relating to certain
transactions described in Note 4, and $3.4 million in 1996 and 1995 assigned to
Muzak customer contracts acquired in 1990 and 1986, which are being amortized
over their estimated useful lives. Deferred financing costs of $1.3 million and
$1.2 million in 1996 and 1995, respectively, are being amortized over the term
of the related debt on a straight-line basis, which approximates the interest
method. The remainder in the amount of $40.2 million and $48.6 million in 1996
and 1995, respectively, represents the excess of acquisition cost over the
amounts assigned to other assets acquired in Osborn's acquisitions, and is
being amortized on a straight-line basis principally over a 40-year period.
It is Osborn's policy to account for goodwill and all other intangible
assets at the lower of amortized cost or estimated realizable value. As part of
an ongoing review of the valuation and amortization of intangible assets of
Osborn and its subsidiaries, management assesses the carrying value of the
intangible assets, if facts and circumstances suggest that there may be
impairment. If this review indicates that the intangibles will not be
recoverable as determined by a non-discounted cash flow analysis of the
operating assets over the remaining amortization period, the carrying value of
the intangible assets would be reduced to estimated realizable value.
During 1996, Osborn adopted SFAS No. 121, Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, which
established standards for the recognition and measurement of impairment losses
on long- lived assets, certain identifiable intangible assets, and goodwill
(see Note 5).
8
<PAGE> 16
OSBORN COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Barter Transactions
Revenue from barter transactions (advertising provided in exchange for
goods and services) is recognized as income when advertisements are broadcast,
and merchandise or services received are charged to expense (or capitalized as
appropriate) when received or used.
Revenue
Broadcast revenue is presented net of advertising commissions of
approximately $1.3 million, $2.1 million and $1.7 million for the years ended
December 31, 1996, 1995 and 1994, respectively.
Per Share Data
Primary earnings per common share for 1996 and 1995 is based on the net
income for the year divided by the weighted average number of common and common
equivalent shares. Common stock equivalents consist of stock options and
warrants (see Notes 12 and 13). Shares issuable upon the exercise of all common
stock equivalents and other potentially dilutive securities are not included in
the computations for 1994 since their effect is not dilutive.
Cash Equivalents
Cash equivalents consist of short-term, highly liquid investments which
are readily convertible into cash and have an original maturity of three months
or less when purchased.
Inventory
Inventories, consisting of merchandise for Osborn's entertainment
properties, sound equipment held for resale by Osborn's Muzak franchises and
equipment held for resale by Osborn's healthcare cable business, are valued at
the lower of cost or market using the first-in, first-out method.
Risks and Uncertainties
The preparation of financial statements in conformity with generally
accepted accounting principles requires Osborn to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reported
period. Actual results may differ from those estimates.
9
<PAGE> 17
OSBORN COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
4. ACQUISITIONS/DISPOSITIONS/PENDING TRANSACTIONS
At December 31, 1996, Osborn owned and operated ten FM and six AM radio
stations, four programmed music and sound equipment distributorships, a
hospital cable television company and certain entertainment properties.
1996
In March 1996, Osborn acquired substantially all the assets of radio
station WRIR-FM (formerly WHLX-FM), Wheeling, West Virginia, for $0.8 million
plus transaction costs. In June 1996, Osborn acquired substantially all the
assets of radio stations WBBD-AM/WKWK-FM (formerly WKWK-AM/FM), Wheeling, West
Virginia, for $2.7 million plus transaction costs. Osborn programmed
WBBD-AM/WKWK-FM pursuant to a local marketing agreement ("LMA") from March 1996
through the closing of the acquisition. In October 1996, Osborn acquired
substantially all the assets of radio station WEGW-FM, Wheeling, West Virginia,
for $0.8 million. Osborn already owned radio stations WWVA-AM/WOVK-FM in
Wheeling, West Virginia.
In April 1996, Osborn acquired substantially all the assets of radio
stations WKII-AM/WFSN-FM (formerly WKII-AM/WEEJ-FM). Port Charlotte, Florida,
for $2.85 million plus transaction costs. Upon completion of the relocation of
WFSN-FM's broadcast antenna to Osborn's Pine Island, Florida tower in order to
better serve the Port Charlotte/Ft. Myers market, additional consideration of
$750,000 will be paid. The additional consideration is included in other
noncurrent liabilities in the consolidated balance sheet at December 31, 1996.
The additional consideration was paid in January 1997. Pending the closing of
the acquisition, the stations were programmed by Osborn pursuant to an LMA
since September 1995. Osborn already owns radio station WOLZ-FM, Ft. Myers, and
has a 50% non-voting ownership interest in radio station WDRR-FM, San Carlos
Park/Ft. Myers. Osborn plans to dispose of radio stations WOLZ-FM/WFSN-FM/
WKII- AM in 1997 (see Pending Transactions below).
In May 1996, Osborn acquired substantially all the assets of radio
stations KNAX-FM/KRBT-FM, Fresno, California. Consideration for the acquisition
consisted of $6.0 million plus 120,000 shares of Osborn's common stock. Pending
the closing of the acquisition, the stations were programmed by Osborn since
January 1996 pursuant to an LMA. In December 1996, the Company sold
substantially all the assets of radio stations KNAX-FM/ KRBT-FM for $11.0
million, resulting in a pre-tax gain of approximately $3.5 million. Pending the
closing of the transaction, the purchaser managed the stations pursuant to an
LMA since August 1, 1996.
In January 1996, Osborn sold substantially all the assets of radio
station WWRD-FM, Jacksonville, Florida/Brunswick, Georgia, for $2.5 million,
resulting in a pre-tax gain of
10
<PAGE> 18
OSBORN COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
approximately $0.8 million. Pending the closing of the disposition, the station
was programmed by the purchaser pursuant to an LMA.
In February 1996, Osborn sold substantially all the assets of radio
stations WNDR-AM/WNTQ-FM, Syracuse, New York, for $12.5 million, resulting in a
pre-tax gain of approximately $6.0 million. Pending the closing of the
disposition, the stations were programmed by the purchaser pursuant to an LMA.
In June 1996, Osborn sold substantially all the assets of radio station
WFXK-FM, Raleigh/Tarboro, North Carolina, for $5.9 million, resulting in a
pre-tax gain of approximately $2.2 million. Pending the closing of the
transaction, the purchaser programmed the station pursuant to an LMA.
In June 1996, Osborn sold substantially all the assets of radio station
WAYV-FM, Atlantic City, New Jersey, for $3.1 million, resulting in a pre-tax
gain of approximately $0.2 million. Pending the closing of the transaction, the
purchaser programmed the station pursuant to an LMA since March 1996.
In June 1996, Osborn sold substantially all the assets of radio station
WFKS-FM, Daytona Beach/Palatka, Florida, for $4.0 million, resulting in a
pre-tax gain of approximately $0.8 million. Pending the closing of the
transaction, the purchaser programmed the station pursuant to an LMA.
The net cash proceeds from each of the dispositions were used
principally to repay long-term debt and fund transaction costs.
All of the acquisitions have been accounted for using the purchase
method of accounting. Accordingly, the purchase price of each acquisition has
been allocated to the assets based upon their fair values at the date of
acquisition. The results of operations of the properties acquired are included
in Osborn's consolidated results of operations from the respective dates of
acquisition and until the date of disposition for properties disposed.
1995
In December 1995, Osborn entered into an option agreement with
Allbritton Communications Company for the sale of television station WJSU-TV,
Anniston, Alabama, and an associated 10-year LMA. In consideration for the
option, Osborn received a nonrefundable cash payment of $10.0 million. Because
the cash proceeds from the option are nonrefundable, Osborn accounted for the
economic substance of the transaction as if a sale of substantially all the
assets of the station had occurred. Accordingly, a gain of approximately $8.1
million was recorded. In
11
<PAGE> 19
OSBORN COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
addition, upon the exercise of the option and the necessary FCC consent, Osborn
will receive an additional cash payment of $2.0 million. Upon the grant of the
necessary regulatory approvals to relocate the station's broadcast transmitter
to maximize broadcast coverage of the facility, Osborn could have received
additional cash payments of up to $7.0 million. In January 1997, the regulatory
approvals were granted for the relocation of the station's broadcast
transmitter, and a cash payment of approximately $5.3 million was paid to
Osborn. An additional payment relating to the transmitter relocation of
approximately $1.4 million will be payable upon exercise of the option.
1994
In June 1994, Osborn acquired substantially all the assets of three FM
radio stations and one AM radio station for $20.0 million plus transaction
costs. The acquisition included radio stations WWNC-AM/WKSF-FM, Asheville,
North Carolina; WOLZ-FM, Ft. Myers, Florida; and WFKS-FM, Daytona Beach,
Florida. In August 1994, Osborn acquired substantially all the assets of radio
stations WAAX-AM/WQEN-FM, Gadsden, Alabama, (the "Gadsden Acquisition") for
$1.75 million plus transaction costs. Prior to the grant of the waiver of the
FCC's cross-ownership regulations, the Gadsden acquisition was accounted for
using the equity method of accounting. Accordingly, prior year financial
statements have been reclassified to reflect the consolidation of the Gadsden
radio stations.
In March 1994, Osborn, through a wholly-owned subsidiary, acquired radio
station WAYV-FM, Atlantic City, New Jersey, for consideration of approximately
$2.5 million.
Pending Transactions
In January 1997, Osborn acquired substantially all the assets of radio
station WYNU-FM, Jackson/Milan, Tennessee for $3.6 million plus transaction
costs. Osborn already owns one FM and one AM radio station in the market.
In November 1996, Osborn agreed to acquire substantially all the assets
of radio station WTXT-FM, Tuscaloosa/Fayette, Alabama from Tuscaloosa
Broadcasting Company, Inc. for approximately $5.8 million, subject to FCC
approval. The transaction is expected to close in February 1997. In December
1996, Osborn agreed to acquire substantially all the assets of radio stations
WACT-AM/FM, Tuscaloosa, Alabama from Taylor Communications Corporation for $1.0
million, subject to FCC approval. Pending the closing of the transaction, which
is expected in the first quarter of 1997, Osborn is managing the stations
pursuant to an LMA.
In November 1996, Osborn agreed to acquire the stock of Dixie
Broadcasting, Inc. and Radio WBHP, Inc., the owners of radio stations
WDRM-FM/WHOS-AM/WBHP-AM, Huntsville,
12
<PAGE> 20
OSBORN COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Alabama. Consideration for the acquisition consists of (i) $23.0 million; (ii)
a three year consulting agreement valued at $2.5 million; and (iii) a $1.5
million earn-out based on future operating results. The transaction, which is
subject to FCC approval, is expected to close in 1997.
In December 1996, Osborn agreed to sell substantially all the assets of
WOLZ-FM, WFSN-FM and WKII-AM, Fort Myers/Port Charlotte, Florida for
approximately $11.0 million to Clear Channel Radio, Inc., subject to FCC
approval. Pending the closing of the transaction, which is expected in 1997,
the stations are being managed by the Purchaser pursuant to a LMA starting in
January 1997.
Other Investments
In 1989, Osborn acquired, $620,000, a 50% non-voting ownership interest
(without control) in a corporation that owns and operates radio station
WDRR-FM, San Carlos Park, Florida. The station became operational in September
1995. Osborn's net investment is included in investment in affiliated companies
on the consolidated balance sheet.
In 1989, Osborn acquired a 32% ownership interest in Northstar
Television Group, Inc. ("Northstar") for $329,000. From Northstar's inception
through May 1994, Osborn managed Northstar's four television stations for an
annual fee of up to $250,000, plus reimbursement of out-of-pocket expenses and
allocated overhead costs. In 1994, as a result of a proposed restructuring of
Northstar, Osborn agreed, as payment for prior services rendered, to receive an
immediate payment of $250,000, another payment of $250,000 within two years,
and the retention of an economic interest. Osborn's management agreement
terminated following the restructuring. In 1995, three of Northstar's four
television stations were sold and Osborn received a distribution of $1.6
million, classified as other income in the consolidated statement of
operations, plus accrued management fees of $250,000.
In 1987, Osborn acquired 25% of the stock of Fairmont Communications
Corporation ("Fairmont") for $500,000. Fairmont owned seven radio stations in
four large and medium sized markets. In August 1992, Fairmont filed for
protection from its creditors under Chapter 11 of the U.S. Bankruptcy Code. In
September 1993, Fairmont emerged from Chapter 11 upon approval by the
bankruptcy court of a plan of reorganization (the "Plan"). The Plan provided
for the sale of Fairmont's assets, distribution of the proceeds in accordance
with the Plan, and subsequent liquidation of Fairmont. All of Fairmont's
stations were sold by the second quarter of 1994. Osborn will continue to
manage Fairmont pursuant to a management agreement which expires upon the
liquidation of Fairmont, which is expected in 1997. For managing Fairmont,
Osborn receives an annual fee of $125,000, plus reimbursement of out-of-pocket
expenses and allocated overhead costs. In 1994, Osborn received additional
management fees of $728,000 related to the sale of Fairmont's
13
<PAGE> 21
OSBORN COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
stations. Osborn also earned distributions of $400,000 and $2.3 million in 1995
and 1994, respectively, classified as other income and distribution receivable
in the consolidated financial statements, determined by the amount realized by
Fairmont from sales of its assets.
5. OSBORN HEALTHCARE
Osborn Healthcare, a division of Osborn Entertainment Enterprises
Corporation, continued to experience operating losses through the second
quarter of 1996. Consistent with Osborn's previously stated intention to
evaluate options to increase shareholder value, management has reviewed the
strategic direction and long-term prospects of the Osborn Healthcare operations
and has restructured the operations. Osborn plans to focus resources on only
the more profitable product lines. In conjunction with these plans, Osborn has
combined the Osborn Healthcare operations and Osborn's programmed music
operations, terminating certain employees of the Osborn Healthcare operations,
and consolidating certain overhead. In the second quarter of 1996, Osborn
accrued costs of approximately $300,000, principally severance costs, in
connection with the consolidation of operations. In addition, Osborn has
reduced goodwill by approximately $900,000 to reflect the anticipated
discounted cash flow from the remaining healthcare operations. The charges,
totaling $1.2 million, are included in other gains (losses), including gains on
sales of stations in the consolidated statement of operations.
6. PRO FORMA FINANCIAL INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------
1996 1995
------------ ------------
<S> <C> <C>
Net revenues ................................ $ 36,131,000 $ 32,667,000
Income (loss) before extraordinary item ..... 633,000 (808,000)
Net income (loss) ........................... 633,000 (4,729,000)
Net income (loss) per share ................. $ 0.11 $ (0.87)
</TABLE>
The unaudited pro forma information for the years ended December 31,
1996 and 1995 assumes that the acquisitions and dispositions described in Note
4, excluding pending transactions, had occurred on January 1, 1995. The gains
on sales of stations and the loss from Osborn Healthcare's restructuring in
1996 and the distributions from Northstar Television Group in 1995 are excluded
from the pro forma information because of their nonrecurring nature. The pro
forma information is not necessarily indicative either of the results of
operations that would have occurred had these transactions been made on the
date indicated, or of future results of operations.
14
<PAGE> 22
OSBORN COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Net assets of properties to be disposed in Ft. Myers aggregated $7.5
million at December 31, 1996, consisting of current assets of $500,000, plant
and equipment of $2.0 million, and net intangible assets of $5.0 million.
7. LONG-TERM DEBT
A summary of long-term debt is as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1996 1995
----------- -----------
<S> <C> <C>
Note payable to KeyBank National Association, at the prime rate plus
0.5%; interest payable quarterly; quarterly commitment
reductions from December 31, 1996 through December 31, 2001(A) ........... $ 200,000 $14,500,000
Note payable to KeyBank National Association, at LIBOR plus 1.75%;
principal due in quarterly installments from December 31, 1996
through December 31, 2001(A) ............................................. 14,000,000 30,000,000
Term loan payable to National Westminster Bank, net of unamortized debt
discount of $700,000; interest payable quarterly at LIBOR plus 2.5%;
principal due in quarterly installments in varying amounts from June
1996
through March 2000(B) .................................................... -- 2,700,000
----------- -----------
14,200,000 47,200,000
Less current portion ....................................................... 320,000 2,718,000
----------- -----------
$13,880,000 $44,482,000
=========== ===========
</TABLE>
- --------------
(A) In August 1995, Osborn entered into a credit facility of $56.0 million
with KeyBank National Association (the "Credit Facility"). The Credit
Facility consists of a $46.0 million revolving credit facility and a
$10.0 million facility which may be used for acquisitions. The initial
drawdown of $44.5 million, along with Osborn's internally generated
funds, was used to repay existing loans totaling $50.0 million and pay
transaction costs. The Credit Facility contains covenants which
require, among other things, that Osborn and its subsidiaries (excluding
Atlantic City Broadcasting Corp.) maintain certain financial levels,
principally with respect to EBITDA (earnings before interest, income
tax, depreciation and amortization) and leverage ratios, and limit the
amount of capital expenditures. The Credit Facility also restricts the
payment of cash dividends. The Credit Facility is collateralized by
pledges of the tangible and intangible assets of Osborn and its
subsidiaries, as well as the stock of those subsidiaries. At December
31, 1996, Osborn has additional availability under the revolving credit
facility of $14.1 million. Effective December 31, 1996 the outstanding
balance under the acquisition facility will convert to a term loan.
Under the current terms of the Credit Facility, no additional amounts
under the acquisition facility may be borrowed after December 31, 1996
unless the terms are modified. Osborn pays an annual commitment fee of
0.5% of the unused commitment.
(B) The term loan contained covenants with respect to Osborn's wholly-owned
subsidiary, Atlantic City Broadcasting Corp., which, among other things,
restricted cash distributions to Osborn and limited the amount of annual
capital expenditures. The loan was collateralized by pledges of the
tangible and intangible assets and stock of Atlantic City Broadcasting
Corp. ("Atlantic City"), and were otherwise nonrecourse to Osborn and
its other assets. In June 1996, the Company sold substantially all the
assets of Atlantic City. The net proceeds were used primarily to repay
long-term debt and fund transaction costs.
15
<PAGE> 23
OSBORN COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
At December 31, 1996, the aggregate amounts of long-term debt due during
the next five years are as follows:
<TABLE>
<CAPTION>
AMOUNT
------
<S> <C>
Year:
1997........................................................................ $ 320,000
1998........................................................................ 640,000
1999........................................................................ 640,000
2000........................................................................ 800,000
2001........................................................................ 11,800,000
</TABLE>
The fair value of the debt approximates net book value.
8. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1996 1995
------------ ------------
<S> <C> <C>
Land ........................................ $ 3,303,266 $ 4,256,414
Buildings ................................... 4,304,159 4,168,839
Equipment ................................... 22,266,863 25,556,838
------------ ------------
29,874,288 33,982,091
Less accumulated depreciation ............... (16,162,605) (18,624,021)
------------
$ 13,711,683 $ 15,358,070
============ ============
</TABLE>
At December 31, 1996, all property, plant and equipment is pledged as
collateral for the debt disclosed in Note 7.
9. INCOME TAXES
At December 31, 1996, Osborn has consolidated net operating loss
carryforwards for income tax purposes of $20.6 million that expire in years
2006 through 2010. Of the total net operating loss carryforwards, $11.0 million
may be used only to offset future income of Osborn's subsidiary, Osborn
Entertainment Enterprises Corporation.
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes.
Significant components of Osborn's deferred tax assets and liabilities are as
follows:
16
<PAGE> 24
OSBORN COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1996 1995
------------ ------------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards .......... $ 8,237,540 $ 13,577,873
Other ..................................... 971,542 713,951
------------ ------------
9,209,082 14,291,824
Valuation allowance ....................... (5,940,696) (9,088,722)
------------ ------------
3,268,386 5,203,102
Deferred tax liabilities:
Depreciation and amortization ............. 2,865,184 4,014,313
Sale of station ........................... 3,289,500 3,289,500
Other ..................................... 175,000 175,000
------------ ------------
6,329,684 7,478,813
Net deferred tax liabilities ................ $ 3,061,298 $ 2,275,711
============ ============
</TABLE>
The provision for income taxes for 1996 consists of federal taxes of
$269,000, state and local taxes of $1,324,000 and deferred federal, state and
local taxes of $786,000. The provision for income taxes for 1995 and 1994
consists entirely of state and local taxes, of which $535,000 and $114,000,
respectively, is current and $241,000 and $175,000, respectively, is deferred.
The reconciliation of income tax computed at the U.S. federal statutory
tax rate to income tax expense is as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------------------
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Amount computed using statutory rate ............. $ 4,065,056 $ 1,217,532 $ (428,705)
State and local taxes, net of federal benefit .... 860,748 504,388 190,885
Net operating losses (utilized) generated ........ (2,673,429) (1,228,507) 234,539
Nondeductible expenses ........................... 126,374 282,569 292,501
----------- ----------- -----------
$ 2,378,749 $ 775,982 $ 289,220
=========== =========== ===========
</TABLE>
10. COMMITMENTS
Osborn leases office and broadcast tower space, vehicles and office
equipment. Rental expense amounted to $1,113,000, $994,000 and $768,000 for the
years ended December 31, 1996, 1995 and 1994, respectively.
17
<PAGE> 25
OSBORN COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The minimum aggregate annual rentals under noncancellable operating
leases are payable as follows:
<TABLE>
<CAPTION>
AMOUNT
------
<S> <C>
Year:
1997........................................................................ $ 1,038,000
1998........................................................................ 752,000
1999........................................................................ 532,000
2000........................................................................ 305,000
2001........................................................................ 244,000
Thereafter.................................................................. 2,693,000
------------
$ 5,564,000
============
</TABLE>
11. EMPLOYEE BENEFIT PLANS
Osborn sponsors a profit sharing plan which qualifies under Section
401(k) of the Internal Revenue Code (the "IRC"). The Plan is available to all
full-time employees with at least one year of employment with Osborn. All
eligible employees may elect to contribute a portion of their compensation to
the profit sharing plan, subject to IRC limitations. Effective January 1, 1996,
the Plan provides for employer contributions based upon an employee's salary.
In December 1994, Osborn adopted a non-qualified deferred compensation plan
available to certain management employees.
12. STOCK OPTION PLAN
Osborn's Incentive Stock Option Plan (the "Plan") provides for the
granting to officers and key employees of incentive and non-qualified stock
options to purchase Osborn's voting common stock as defined under current tax
laws. Incentive stock options are exercisable at a price equal to the fair
market value, as defined, on the date of grant, for a maximum 10-year period
from the date of grant. Non-qualified stock options may be granted at an
exercise price equal to at least 85% of the fair market value on the date of
grant, for a maximum 11-year period from the date of grant. The exercise prices
of all options granted in 1994 through 1996 were at fair market value at the
date of grant.
18
<PAGE> 26
OSBORN COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following table summarizes the Plan's transactions for the years
ended December 31, 1996, 1995 and 1994:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Outstanding options, beginning of year ................ 447,341 417,000 382,750
Granted ............................................... 52,000 66,500 108,250
Cancelled or expired .................................. (8,299) (12,500) (72,500)
Exercised ............................................. (173,667) (23,659) (1,500)
-------- -------- --------
Outstanding options, end of year ...................... 317,375 447,341 417,000
======== ======== ========
Weighted average price of options granted ............. $ 10.10 $ 6.76 $ 6.26
Weighted average price of options canceled or expired . $ 6.46 $ 7.00 $ 6.61
Weighted average price of options exercised ........... $ 4.23 $ 6.55 $ 4.00
Weighted average exercise price, end of year .......... $ 8.55 $ 6.66 $ 6.64
Options exercisable, end of year ...................... 205,125 283,921 280,083
Options available for future grant .................... 35,299 79,000 133,000
</TABLE>
At December 31, 1996, the range of exercise prices for outstanding
options was $4.00 through $14.40 These outstanding options have a remaining
contractual life of five years.
Osborn applies Accounting Principles Board Opinion No. 25, Accounting
for Stock Issued to Employees, and related interpretations in accounting for
its Plan. Had compensation cost for the Plan been determined based upon the
fair value at the grant date for awards under the Plan consistent with the
methodology prescribed under Statement of Financial Accounting Standards No.
123, Accounting for Stock-Based Compensation, Osborn's net income and earnings
per share would have been reduced by approximately $144,000, or $0.03 per
share, and $46,000, or $0.01 per share for the years ended December 31, 1996
and 1995, respectively. The fair value of the options granted during the years
ended December 31, 1996 and 1995 is estimated as $102,000 and $114,000,
respectively, on the date of grant using the Black- Scholes option-pricing
model with the following assumptions: dividend yield of 0.0%, volatility of
40.7%, risk-free interest rate of 6.5%, assumed forfeiture rate of 0.0%, and an
expected life of 1 to 2 years. The assumptions used assume that the proposed
merger as described in Note 2 is consummated in the first quarter of 1997.
13. STOCKHOLDERS' EQUITY
During 1996, approximately 174,000 shares of common stock were issued
pursuant to the exercise of stock options. Approximately 45,000 existing shares
were retired to fund the exercise of certain of these options.
19
<PAGE> 27
OSBORN COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
In January 1995, Osborn paid $642,000 to repurchase and subsequently
retired 107,059 unregistered shares of its common stock which were held by an
institution. In December 1994, Osborn paid $107,000 to repurchase and
subsequently retired 17,843 shares of its common stock at $6.00 per share.
In June 1994, Osborn entered into two credit agreements totaling $50.0
million with Citicorp Mezzanine Investment Fund ("CMIF"). As partial
consideration for making the loans, CMIF received a warrant to purchase
1,014,193 shares (after giving effect to the reverse stock split described
below) of Osborn's common stock at $7.00 per share. The warrant is exercisable
for a 10-year period. Under the terms of the warrant agreement, in the event
that the CMIF loans were repaid by December 31, 1995, purchase rights with
respect to 676,162 warrant shares will be canceled. The loans were repaid in
August 1995 and, accordingly, the purchase rights with respect to 676,162
warrant shares were canceled.
In July 1994, Osborn effected a 1-for-2 reverse stock split for
shareholders of record on that date. Cash was paid in lieu of fractional
shares. All per share amounts in the consolidated statement of operations
reflect the reverse stock split.
20
<PAGE> 28
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. PAGE
- --------- ------
<S> <C>
2.1 Agreement and Plan of Merger by and among OCC Acquisition, Osborn
and OCC Holding Corporation dated as of July 23, 1996. The
Agreement and Plan of Merger filed herewith excludes the exhibits
and schedules thereto. The contents of such exhibits and schedules
are described in the Agreement and Plan of Merger. Copies of such
exhibits and schedules will be supplied to the Commission upon
request.
2.2 First Amendment to Agreement and Plan of Merger dated as of
February 20, 1997, by and among OCC Acquisition, Osborn, OCC
Holding Corporation and Commodore. The First Amendment to
Agreement and Plan of Merger filed herewith excludes the exhibits
thereto. The contents of such exhibits are described in the First
Amendment to Agreement and Plan of Merger. Copies of such
exhibits will be supplied to the Commission upon request. Credit
Agreement dated as of February 20, 1997, among Capstar, Commodore,
various
10.1 banks and Bankers Trust Company, as administrative agent. The
Credit Agreement filed herewith excludes the exhibits and
schedules thereto. The contents of such exhibits and schedules are
described in the Credit Agreement. Copies of such exhibits and
schedules will be supplied to the Commission upon request.
</TABLE>
<PAGE> 1
EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
OCC ACQUISITION COMPANY, INC.,
OSBORN COMMUNICATIONS CORPORATION,
AND
OCC HOLDING CORPORATION
(FOR CERTAIN LIMITED PURPOSES SET FORTH HEREIN)
DATED AS OF
JULY 23, 1996
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
ARTICLE I
THE MERGER
<S> <C> <C>
1.1. The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2. Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3. Effect of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4. Certificate of Incorporation; Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5. Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.6. Merger Consideration; Conversion and Cancellation of Securities . . . . . . . . . . . . . . . . . . . 2
1.7. Employee Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.8. Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.9. Dissenting Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.10. Payment; Surrender of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.11. Stock Transfer Books . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.12. Stockholder Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.13. Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.14. Letter of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1. Representations and Warranties Regarding Osborn . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.2. Representations and Warranties of Mergeco . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE III
COVENANTS RELATING TO CONDUCT OF BUSINESS
3.1. Covenants of Osborn . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.2. Negative Trade Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.3. Environmental Site Assessments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE IV
ADDITIONAL AGREEMENTS OF OSBORN
4.1. No Solicitation of Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.2. Access and Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.3. Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.4. Compliance With Station Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
</TABLE>
(i)
<PAGE> 3
<TABLE>
PAGE
<S> <C> <C>
4.5. Notification of Certain Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.6. Third Party Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.7. Frank D. Osborn Employment Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE V
COVENANTS OF MERGECO
5.1. Notification of Certain Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.2. Commitment Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE VI
MUTUAL COVENANTS
6.1. Application for Commission Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.2. Control of Stations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.3. Other Governmental Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.4. Brokers or Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.5. Additional Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.6. Escrow Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE VII
CONDITIONS PRECEDENT
7.1. Conditions to Each Party's Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.2. Conditions to Obligation of Mergeco . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.3. Conditions to Obligations of Osborn . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE VIII
CLOSING
8.1. Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.2. Actions to Occur at Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
9.1. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.2. Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
9.3. Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
</TABLE>
(ii)
<PAGE> 4
<TABLE>
<CAPTION>
ARTICLE X
GENERAL PROVISIONS
PAGE
<S> <C> <C>
10.1. Non-Survival of Representations, Warranties and Covenants . . . . . . . . . . . . . . . . . . . . . 40
10.2. Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
10.3. Amendment and Modification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
10.4. Waiver of Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
10.5. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
10.6. Expenses and Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
10.7. Parties in Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
10.8. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
10.9. Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
10.10. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
10.11. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
10.12. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
10.13. Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
10.14. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
10.15. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
10.16. Director, Officer and Stockholder Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
10.17. Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
</TABLE>
(iii)
<PAGE> 5
<TABLE>
<CAPTION>
EXHIBITS:
<S> <C> <C>
Exhibit A -- Form of Certificate of Incorporation of the Surviving Corporation
Exhibit B -- Form of Employment Agreement
Exhibit C -- Form of Subscription Agreement
Exhibit D -- Form of Opinion of Paul, Weiss, Rifkind, Wharton & Garrison
Exhibit E -- Form of Opinion of Haley, Bader & Potts
Exhibit F -- Form of Opinion of Vinson & Elkins L.L.P.
Exhibit G -- Form of Opinion of Fisher, Wayland, Cooper & Leader
Exhibit H -- Form of Voting Agreement
Exhibit I -- Form of Escrow Agreement
Exhibit J -- Form of Letter of Credit
Exhibit K -- Form of Commitment Letter
Exhibit L -- Form of Release
</TABLE>
<TABLE>
<CAPTION>
SCHEDULES:
- ---------
<S> <C> <C>
Schedule 2.1(b) -- Subsidiaries
Schedule 2.1(c) -- Options, Warrants and Capitalization of Subsidiaries
Schedule 2.1(f) -- Unrecorded Liabilities and Conduct of Business
Schedule 2.1(g) -- Licenses and Permits
Schedule 2.1(h) -- Litigation
Schedule 2.1(i) -- Insurance
Schedule 2.1(j) -- Real Estate
Schedule 2.1(l) -- Liens and Encumbrances
Schedule 2.1(m) -- Environmental Matters
Schedule 2.1(o) -- Certain Agreements
Schedule 2.1(p) -- Collective Bargaining Agreements
Schedule 2.1(q) -- Patents, Trademarks; Etc.
Schedule 2.1(r) -- Affiliate Relationships
Schedule 3.1(k) -- Permitted Acquisitions and Dispositions
</TABLE>
(iv)
<PAGE> 6
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as of July
23, 1996, is entered into by and among OCC Acquisition Company, Inc., a
Delaware corporation ("Mergeco"), Osborn Communications Corporation, a Delaware
corporation ("Osborn"), and for purposes of Sections 1.12 and 10.14 only, OCC
Holding Corporation, a Delaware corporation which holds all of the outstanding
capital stock of Mergeco ("Parent").
RECITALS:
WHEREAS, Mergeco, upon the terms and subject to the conditions of this
Agreement and in accordance with the General Corporation Law of the State of
Delaware ("Delaware Law"), will merge with and into Osborn (the "Merger");
WHEREAS, the Board of Directors (the "Osborn Board") of Osborn has
determined that the Merger is fair to, and in the best interests of, Osborn and
its stockholders and has approved and adopted this Agreement and the
transactions contemplated hereby, and recommended approval and adoption of this
Agreement and the transactions contemplated hereby by the stockholders of
Osborn;
WHEREAS, the Board of Directors (the "Mergeco Board") of Mergeco, a
wholly-owned subsidiary of Parent, has determined that the Merger is fair to,
and in the best interests of, Mergeco and the Parent and has approved and
adopted this Agreement and the transactions contemplated hereby, and
recommended approval and adoption of this Agreement and the transactions
contemplated hereby by the Parent; and
WHEREAS, the Parent, by its execution of this Agreement, has consented
to, and has authorized, approved and adopted, this Agreement and the
transactions contemplated hereby.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants, representations, warranties and agreements herein contained, the
parties hereto covenant and agree as follows:
ARTICLE I
THE MERGER
1.1. The Merger. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with Delaware Law, at the Effective
Time (as defined in Section 1.2), Mergeco shall be merged with and into Osborn.
As a result of the Merger, the separate corporate existence of Mergeco shall
cease and Osborn shall continue as the surviving corporation of the Merger (the
"Surviving Corporation"). The name of the Surviving Corporation shall be
"Osborn Communications Corporation."
<PAGE> 7
1.2. Effective Time. The Merger shall be consummated, as and when
provided in Section 8.1 hereof, by filing a Certificate of Merger with the
Secretary of State of the State of Delaware, in such form as is required by,
and executed in accordance with the relevant provisions of, Delaware Law (the
date and time of the completion of such filing being the "Effective Time").
1.3. Effect of the Merger. At the Effective Time, the effect of
the Merger shall be as provided in the applicable provisions of Delaware Law.
Without limiting the generality of the foregoing, and subject to the applicable
provisions of Delaware Law, at the Effective Time, all the property, rights,
privileges, powers and franchises of Mergeco and Osborn shall vest in the
Surviving Corporation, and all debts, liabilities and duties of Mergeco and
Osborn shall become the debts, liabilities and duties of the Surviving
Corporation.
1.4. Certificate of Incorporation; Bylaws.
(a) At the Effective Time, the Certificate of
Incorporation of Osborn, as in effect immediately prior to the
Effective Time, shall be amended and restated as of the Effective Time
by operation of this Agreement and by virtue of the Merger without any
further action by the stockholders or directors of the Surviving
Corporation to read in its entirety as set forth on Exhibit A hereto.
(b) At the Effective Time, the Bylaws of Osborn, as in
effect immediately prior to the Effective Time, shall be the Bylaws of
the Surviving Corporation.
1.5. Directors and Officers. The directors of Mergeco immediately
prior to the Effective Time shall be the directors of the Surviving Corporation
at the Effective Time, each to hold office in accordance with the Certificate
of Incorporation and Bylaws of the Surviving Corporation, and the officers of
Mergeco immediately prior to the Effective Time shall be the officers of the
Surviving Corporation at the Effective Time, except that the president and
chief executive officer of Osborn immediately prior to the Effective Time shall
be the president and chief executive officer of the Surviving Corporation at
the Effective Time, in each case until their respective successors are duly
elected or appointed and qualified.
1.6. Merger Consideration; Conversion and Cancellation of
Securities. At the Effective Time, by virtue of the Merger and without any
action on the part of Mergeco, Osborn or the holders of Osborn's securities:
(a) Subject to the other provisions of this Section 1.6,
each share of common stock, par value $0.01 per share, of Osborn ("Common
Stock") issued and outstanding immediately prior to the Effective Time (other
than any share of Common Stock to be canceled pursuant to Section 1.6(b), any
Dissenting Shares (as defined in Section 1.9) and any share of Common Stock
described in Section 1.6(c)) shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into the right to
receive $15.375 in cash (the "Merger Consideration"), without any interest
thereon, payable to the holder thereof upon surrender of the certificate
formerly
2
<PAGE> 8
representing such share. As a result of its conversion each converted share of
Common Stock (collectively, the "Converted Shares") shall cease to be
outstanding and shall automatically be canceled and retired. Until surrendered
to the Surviving Corporation, each certificate previously evidencing the
Converted Shares outstanding immediately prior to the Effective Time shall be
deemed for all purposes to evidence solely the right to receive the
consideration described in this Section 1.6(a). Notwithstanding the foregoing,
if between the date of this Agreement and the Effective Time the outstanding
shares of Common Stock shall have been changed into a different number of
shares or a different class, by reason of any stock dividend, subdivision,
reclassification, recapitalization, split, combination or exchange of shares,
the Merger Consideration shall be correspondingly adjusted to reflect such
stock dividend, subdivision, reclassification, recapitalization, split,
combination or exchange of shares. The aggregate Merger Consideration payable
to each stockholder shall be rounded to the nearest penny.
(b) Notwithstanding any provision of this Agreement to
the contrary, each share of Common Stock held in the treasury of Osborn
immediately prior to the Effective Time shall be canceled and extinguished
without any conversion thereof and no payment shall be made with respect
thereto.
(c) Notwithstanding any provision of this Agreement to
the contrary, each share of Common Stock held by the Parent or Mergeco
immediately prior to the Effective Time shall be canceled and extinguished
without any conversion thereof and no payment shall be made with respect
thereto.
(d) Each share of common stock, par value $0.01 per share
("Mergeco Common Stock"), of Mergeco issued and outstanding immediately prior
to the Effective Time shall be converted into one share of common stock, par
value $0.01 per share, of the Surviving Corporation ("Surviving Corporation
Common Stock").
1.7. Employee Stock Options. At the Effective Time, each holder of
then outstanding options ("Options") to purchase shares (the "Option Shares")
of Common Stock granted by Osborn pursuant to the Osborn Communications
Corporation Incentive Stock Plan, as amended (the "Option Plan"), (whether or
not then presently exercisable) shall be entitled to receive, and shall
receive, in settlement of each Option, a cash payment (the "Option
Consideration") from the Surviving Corporation in an amount equal to the
product of (a) $15.375 minus the exercise price per Option Share and (b) the
number of Option Shares (including any fractional Option Shares) covered by
such Option, less any applicable withholding taxes. Each agreement previously
evidencing the Options immediately prior to the Effective Time that are settled
pursuant to this Section 1.7 (the "Settled Options") shall be deemed for all
purposes to evidence solely the right to receive the Option Consideration. The
Committee (the "Committee") administering the Option Plan shall have the right
at any time or from time to time following the execution hereof to accelerate
and vest, in full or in part, any and all Settled Options not currently
exercisable in full. Osborn, acting through the Osborn Board or the Committee,
shall take all necessary actions to make the Option Plan consistent with this
treatment of the Options and shall cause each holder of an Option to consent to
the settlement of its
3
<PAGE> 9
Options pursuant to the terms of this Section 1.7. The Option Consideration
payable to each Option holder shall be rounded to the nearest penny.
1.8. Warrants. Immediately prior to the Effective Time, each
holder of then outstanding warrants (the "Warrants") to purchase shares of
Common Stock granted by Osborn (whether or not then presently exercisable)
shall be entitled to receive, and shall receive, in settlement of each Warrant,
where the amount set forth in clause (i) below is positive, a cash payment (the
"Warrant Consideration") from Osborn in an amount equal to the product of (i)
$15.375 minus the exercise price per share of the Warrant and (ii) the number
of shares of Common Stock (including any fractional shares) covered by such
Warrant, less any applicable withholding taxes. Each agreement or certificate
previously evidencing such Warrants (the "Settled Warrants") immediately prior
to the Effective Time shall be deemed for all purposes to evidence solely the
right to receive the Warrant Consideration. Osborn, acting through the Osborn
Board or any committee thereof, shall have the right at any time or from time
to time following the execution hereof to accelerate and vest, in full or in
part, any and all Settled Warrants not currently exercisable in full. Osborn,
acting through the Osborn Board or any committee thereof, shall take all
necessary actions to make the terms of the Warrants consistent with this
treatment of the Warrants and shall cause each holder of a Warrant to consent
to the settlement of its Warrants pursuant to the terms of this Section 1.8.
The Warrant Consideration payable to each Warrant holder shall be rounded to
the nearest penny.
1.9. Dissenting Shares. Notwithstanding anything in this Agreement
to the contrary, shares of Common Stock that are issued and outstanding
immediately prior to the Effective Time and that are held by stockholders who
have properly exercised appraisal rights with respect thereto under Section 262
of the Delaware Law (the "Dissenting Shares") shall not be converted into the
right to receive the Merger Consideration as provided in Section 1.6(a), but
the holders of Dissenting Shares shall be entitled to receive such payment as
shall be determined pursuant to Section 262 of the Delaware Law; provided,
however, that if any such holder shall have failed to perfect or shall withdraw
or lose the right to appraisal and payment under the Delaware Law, each such
holder's shares of Common Stock shall thereupon be deemed to have been
converted as of the Effective Time into the right to receive the Merger
Consideration, without any interest thereon, as provided in Section 1.6(a), and
such shares shall no longer be Dissenting Shares.
1.10. Payment; Surrender of Certificates.
(a) Exchange Fund. At or prior to the Effective Time,
Mergeco shall deposit, or cause to be deposited, with a bank or trust company
designated by Mergeco or, at Mergeco's election, with the Surviving Corporation
(such bank or trust company or the Surviving Corporation being referred to as
the "Exchange Agent"), for the benefit of the former holders of Converted
Shares, Settled Options or Settled Warrants, for exchange in accordance with
this Section 1.10(a) through the Exchange Agent, cash in an amount equal to
the sum of (i) the sum of the Merger Consideration applicable to all Converted
Shares, (ii) the sum of the Option Consideration applicable to all Settled
Options, and (iii) the sum of the Warrant Consideration applicable to all
Settled Warrants. The cash deposited with the Exchange Agent in accordance
with this Subsection 1.10(a) is hereinafter referred
4
<PAGE> 10
to as the "Exchange Fund." The Exchange Agent shall, pursuant to irrevocable
instructions, deliver cash, as described above, in exchange for surrendered
certificates or agreements pursuant to the terms of this Agreement out of the
Exchange Fund.
(b) Exchange Procedures. As soon as practicable after
the Effective Time, the Surviving Corporation shall cause the Exchange Agent to
send to each record holder of Common Stock, Settled Options or Settled Warrants
at the Effective Time (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to certificates
theretofore representing Common Stock and certificates or agreements
representing Settled Options or Settled Warrants (collectively,
the"Certificates") shall pass, only upon delivery of the Certificates to the
Exchange Agent and shall be in such form and contain such other provisions as
the Surviving Corporation shall determine) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for cash. Upon
surrender of a Certificate for cancellation to the Exchange Agent, together
with such letter of transmittal, duly executed, the holder of such Certificate
shall be entitled to receive in exchange therefor cash in the amount such
holder has the right to receive pursuant to the provisions of this Article I,
and the Certificate so surrendered shall forthwith be canceled. Until
surrendered for exchange in accordance with the provisions of this Section 1.9,
each Certificate theretofore representing Converted Shares, Settled Options or
Settled Warrants shall from and after the Effective Time represent for all
purposes only the right to receive the Merger Consideration, Option
Consideration or Warrant Consideration, as applicable, as set forth in this
Agreement. If any holder of Converted Shares, Settled Options or Settled
Warrants shall be unable to surrender such holder's Certificates because such
Certificates have been lost or destroyed, such holder may deliver in lieu
thereof an affidavit and indemnity bond in form and substance and with surety
reasonably satisfactory to the Surviving Corporation. If payment is to be made
to a person other than the person in whose name the surrendered Certificate is
registered, it shall be a condition of payment that the Certificate so
surrendered shall be properly endorsed or otherwise in proper form for transfer
and that the person requesting such payment shall pay transfer or other taxes
required by reason of the payment to a person other than the registered holder
of the surrendered Certificate or shall establish to the satisfaction of the
Surviving Corporation that such tax has been paid or is not applicable. No
interest shall be paid on any Merger Consideration, Option Consideration or
Warrant Consideration payable to former holders of Converted Shares, Settled
Options or Settled Warrants.
(c) Termination of Exchange Fund. Any portion of the
Exchange Fund that remains unclaimed by the former holders of Converted Shares,
Settled Options or Settled Warrants on the six-month anniversary of the Closing
Date shall be delivered to the Surviving Corporation, upon demand, and any
former holders of Converted Shares, Settled Options or Settled Warrants who
have not theretofore complied with this Section 1.10 shall thereafter look only
to the Surviving Corporation for the Merger Consideration, Option Consideration
or Warrant Consideration to which they are entitled, without any interest
thereon.
1.11. Stock Transfer Books. At the Effective Time, the stock
transfer books of Osborn shall be closed and there shall be no further
registration of transfers of shares of Common Stock on the records of Osborn.
5
<PAGE> 11
1.12. Stockholder Approval.
(a) Osborn, acting through the Osborn Board, shall, in
accordance with applicable law and Osborn's Certificate of Incorporation and
Bylaws, (i) duly call, give notice of, convene and hold an annual or special
meeting of its stockholders as soon as practicable for the purpose of
considering and taking action on this Agreement and the transactions
contemplated hereby (the "Osborn Stockholders Meeting") and (ii) subject to the
fiduciary obligations of the Osborn Board as advised by independent legal
counsel, include in the proxy statement (the "Proxy Statement") the
recommendation of the Osborn Board that the stockholders of Osborn approve and
adopt this Agreement and the transactions contemplated hereby, including,
without limitation, the Merger, and use its commercially reasonable efforts to
obtain such approval and adoption. To the extent permitted by law, Mergeco and
Parent agree to vote all shares of Common Stock then beneficially owned by the
Parent or Mergeco in favor of approval and adoption of this Agreement and the
transactions contemplated hereby.
(b) Parent, in its capacity as the sole stockholder of
Mergeco, by its execution hereof, approves and adopts this Agreement and the
transactions contemplated hereby.
1.13. Proxy Statement.
(a) As promptly as practicable after the execution of
this Agreement, Osborn shall prepare and file with the Securities and Exchange
Commission (the "SEC") the preliminary Proxy Statement with respect to the
actions to be taken at the Osborn Stockholders Meeting, which shall be in form
and substance reasonably satisfactory to Mergeco based on Mergeco's review of
the preliminary Proxy Statement prior to it being filed with the SEC. Mergeco
and Osborn shall cooperate with each other in the preparation of the Proxy
Statement, and Osborn shall notify Mergeco of the receipt of any comments of
the SEC with respect to the Proxy Statement and of any requests by the SEC for
any amendment or supplement thereto or for additional information and shall
provide to Mergeco promptly copies of all correspondence between Osborn or any
representative of Osborn and the SEC. As promptly as practicable after
comments are received from the SEC with respect to the preliminary Proxy
Statement, Osborn shall use its commercially reasonable efforts to respond to
the comments of the SEC, which responses shall be in form and substance
reasonably satisfactory to Mergeco based on Mergeco's review of Osborn's
proposed responses to the SEC. Osborn shall give Mergeco and its counsel the
opportunity to review all amendments and supplements to the Proxy Statement and
all responses to requests for additional information and replies to comments of
the SEC prior to their being filed with or sent to the SEC. Mergeco shall
provide Osborn with such information as may be required to be included in the
Proxy Statement or as may be reasonably required to respond to any comment of
the SEC. After all the comments received from the SEC have been cleared by the
SEC staff and all information required to be contained in the Proxy Statement,
to the reasonable satisfaction of Mergeco, has been included therein by Osborn,
Osborn shall file with the SEC the Proxy Statement and Osborn shall use its
commercially reasonable efforts to have the Proxy Statement cleared by the SEC
as soon thereafter as practicable. Osborn shall cause the Proxy Statement to
be mailed to its stockholders of record as
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promptly as practicable after clearance by the SEC. Unless Osborn is advised
in writing by independent legal counsel that such a recommendation is no longer
consistent with the discharge of applicable fiduciary duties of the directors
of Osborn, Osborn shall cause the Proxy Statement to include, and continue to
include until the vote is taken at the Osborn Stockholders Meeting, the
recommendation of the Osborn Board in favor of the Merger.
(b) None of the information supplied or to be supplied by
Osborn for inclusion or incorporation by reference in the Proxy Statement will,
at the mailing date of the Proxy Statement and at the time of the Osborn
Stockholders' Meeting, 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 made therein, in light of the circumstances in which they were
made, not misleading. If at any time prior to the Osborn Stockholders' Meeting
any event or circumstance relating to Osborn or any of its affiliates, or its
or their respective officers or directors, should be discovered by Osborn that
should be set forth in a supplement to the Proxy Statement, Osborn shall
promptly inform Mergeco. All documents that Osborn is responsible for filing
with any Governmental Entity (as defined in Section 2.1(e)) in connection with
the transactions contemplated hereby, including the Proxy Statement to the
extent that the information contained therein relates to Osborn and its
subsidiaries or the transactions contemplated hereby, will comply as to form in
all material respects with the provisions of applicable law, including
applicable provisions of the Securities Act of 1933 (the "Securities Act"), the
Securities Exchange Act of 1934 (the "Exchange Act"), and the rules and
regulations thereunder, and each such document required to be filed with any
Governmental Entity other than the SEC will comply with the provisions of
applicable law as to the information required to be contained therein.
(c) None of the information supplied or to be supplied by
Mergeco for inclusion or incorporation by reference in the Proxy Statement
will, at the mailing date of the Proxy Statement and at the time of the Osborn
Stockholders' Meeting, 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 contained therein, in light of the circumstances in which they
were made, not misleading. If at any time prior to the Osborn Stockholders'
Meeting any event or circumstance relating to Mergeco or any of its affiliates,
or its or their respective officers or directors, should be discovered by
Mergeco that should be set forth in a supplement to the Proxy Statement,
Mergeco shall promptly inform Osborn. All documents that Mergeco is
responsible for filing with any Governmental Entity in connection with the
transactions contemplated hereby, to the extent that the information contained
therein relates to Mergeco and its subsidiaries or the transactions
contemplated hereby, will comply as to form in all material respects with the
provisions of applicable law, including applicable provisions of the Securities
Act, the Exchange Act and the rules and regulations thereunder, and each such
document required to be filed with any Governmental Entity other than the SEC
will comply with the provisions of applicable law as to the information
required to be contained therein.
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1.14. Letter of Credit.
(a) Concurrently with the execution of this Agreement and
as security for liquidated damages that may be payable by Mergeco to Osborn
pursuant to Section 9.3, Mergeco shall deposit, or cause to be deposited, an
original, irrevocable letter of credit issued by Bankers Trust Company
("Bankers Trust") in favor of Osborn (the "Letter of Credit") for the sum of
$5,000,000 in an escrow account with Citibank, N.A., a national banking
association (the "Escrow Agent"), to be held in escrow and released therefrom
in accordance with the terms of the Escrow Agreement (herein so called) in
substantially the form of Exhibit I attached hereto to be entered into on or
before such date of deposit.
(b) If this Agreement is terminated and Osborn seeks
liquidated damages pursuant to Section 9.3, then (i) if (A) Osborn is otherwise
paid liquidated damages due under Section 9.3, or (B) Osborn and Mergeco agree
that Osborn is not entitled to the $5,000,000 as liquidated damages, Osborn and
Mergeco shall deliver joint written instructions to the Escrow Agent
authorizing the release of the Letter of Credit to Mergeco, or as directed by
Mergeco, for cancellation; (ii) if Osborn and Mergeco agree that Osborn is
entitled to the $5,000,000 as liquidated damages, Osborn and Mergeco shall
deliver joint written instructions to the Escrow Agent authorizing the Escrow
Agent to release the Letter of Credit to Osborn; (iii) if a final
non-appealable judgment of a court of competent jurisdiction (a "Final
Determination") establishes Osborn's right to liquidated damages pursuant to
Section 9.3, Osborn shall deliver a copy of the Final Determination to the
Escrow Agent authorizing the Escrow Agent to release the Letter of Credit to
Osborn; or (iv) if a Final Determination establishes Mergeco's right to the
Letter of Credit, Mergeco shall deliver a copy of the Final Determination to
the Escrow Agent authorizing the release of the Letter of Credit to Mergeco, or
as directed by Mergeco, for cancellation. Immediately prior to the Effective
Time and upon satisfaction of the conditions to Osborn's obligation to
consummate the Merger set forth in Article VII, Osborn and Mergeco shall
jointly instruct the Escrow Agent to release and return the Letter of Credit to
Mergeco, or as directed by Mergeco, for cancellation.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1. Representations and Warranties Regarding Osborn. Osborn
represents and warrants to Mergeco as follows (with the understanding that
Mergeco is relying on such representations and warranties in entering into and
performing this Agreement).
(a) Organization, Good Standing, Etc. Each of Osborn and
its subsidiaries (as defined in Section 10.17) is a corporation or other entity
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation (or organization), has all requisite corporate
power and authority to own, lease and operate its properties and to carry on
its business
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as now being conducted and is duly qualified and in good standing to do
business in each state in which the nature of its business or the ownership or
leasing of its properties makes such qualification necessary, except where the
failure to so qualify or be in good standing could not have a material adverse
effect on the business, operations, properties, condition (financial or
otherwise), results of operations, assets or liabilities of Osborn and its
subsidiaries, taken as a whole (a "Material Adverse Effect"). Osborn has
delivered to Mergeco true and complete copies of the Certificates or Articles
of Incorporation and Bylaws (or equivalent organizational documents) of Osborn
and each of its subsidiaries, as in effect at the date of this Agreement.
Neither Osborn nor any subsidiary is in violation of any provisions of its
Certificate or Articles of Incorporation, Bylaws or equivalent organizational
documents.
(b) Subsidiaries of Osborn. Schedule 2.1(b) sets forth a
true and complete list of all of Osborn's directly or indirectly owned
subsidiaries, together with the jurisdiction of incorporation or organization
of each subsidiary and the percentage of each subsidiary's outstanding capital
stock or other equity interests owned by Osborn or another subsidiary of
Osborn. Except as disclosed on Schedule 2.1(b), Osborn does not own, directly
or indirectly, any subsidiaries or have the right, pursuant to a contract or
otherwise, to acquire any capital stock, equity interest or other similar
investment in any corporation, partnership, joint venture association, limited
liability company, trust or other entity.
(c) Capital Structure. The authorized capital stock of
Osborn consists of 7,425,000 shares of Common Stock, 75,000 shares of
non-voting common stock, par value $0.01 per share ("Non-Voting Common Stock"),
and 5,000,000 shares of preferred stock, par value $0.01 per share ("Preferred
Stock"), none of which are designated. At the close of business on the date
hereof, 5,423,014 shares of Common Stock were issued and outstanding, no shares
of Common Stock were held by Osborn in its treasury, and 860,205 shares of
Common Stock were reserved for issuance as follows: (x) 338,031 shares were
reserved for issuance upon exercise of all of the issued and outstanding
warrants, (y) 486,875 shares were reserved for issuance upon exercise of all of
the stock options outstanding under the Option Plan, and (z) 35,299 shares were
reserved for issuance and available for grant pursuant to the Option Plan. At
the close of business on the date hereof, no shares of Non-Voting Common Stock
and no shares of Preferred Stock were issued and outstanding. Except as
described in this Section 2.1(c) and Schedule 2.1(c), no shares of capital
stock of Osborn are reserved for issuance for any other purpose. As of the
date hereof, there are no bonds, debentures, notes or other indebtedness issued
or outstanding having the right to vote ("Voting Debt") on any matters on which
holders of Common Stock may vote. All the issued and outstanding shares of
capital stock of Osborn are duly authorized, validly issued, fully paid and
nonassessable and have not been, and as to shares issued in the future, will
not be, issued in violation of any preemptive or similar rights. The shares of
Surviving Corporation Common Stock will, when issued, be duly authorized,
validly issued, fully paid and nonassessable and will not be issued in
violation of any preemptive or similar rights. Except as described in this
Section 2.1(c), as of the date hereof, there are no options, warrants, calls,
rights, commitments or agreements of any character to which Osborn or any of
its subsidiaries is a party or by which any of them is bound obligating Osborn
or any of its subsidiaries to issue, deliver or sell, or cause to be, delivered
or sold, additional shares of
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capital stock or any Voting Debt of Osborn or any of its subsidiaries, or
obligating Osborn or any of its subsidiaries to grant, extend or enter into any
such option, warrant, call, right, commitment or agreement. All shares of
Common Stock which may be issued upon exercise of stock options granted
pursuant to the Option Plan will, when issued in accordance with the terms of
such options and the Option Plan, be validly issued, fully paid and
nonassessable and not subject to any preemptive or similar rights. All shares
of Common Stock which may be issued upon exercise of issued warrants will, when
issued in accordance with the terms of such warrants and the respective warrant
agreement, be validly issued, fully paid and nonassessable and not subject to
any preemptive or similar rights. There are no outstanding contractual
obligations of Osborn or any subsidiary to repurchase, redeem or otherwise
acquire any shares of Common Stock or other capital stock of Osborn or any
capital stock of, or any equity interest in, any subsidiary listed on Schedule
2.1(b). Except for the Voting Agreement (as defined in Section 10.17), there
are no voting trusts, proxies or other agreements or understandings to which
Osborn or any of its subsidiaries is a party or by which Osborn or any of its
subsidiaries is bound with respect to the voting of any shares of capital stock
or other equity interests of Osborn or any of its subsidiaries. Schedule
2.1(c) sets forth a complete and correct list as of the date hereof, of (i) (A)
the number of stock options outstanding, (B) the exercise price of each
outstanding stock option and (C) the number of stock options then exercisable
and (ii) (A) the number of warrants outstanding, (B) the exercise price of each
outstanding warrant, (C) the number of shares of Common Stock attributable to
each warrant and (D) the number of warrants then exercisable. Schedule 2.1(c)
also sets forth the capitalization of each subsidiary of Osborn listed on
Schedule 2.1(b), including the number of authorized shares of each class of
capital stock and the par value (if any) thereof, the number of shares of each
class of capital stock held in the treasury of the subsidiary, and the number
of issued and outstanding shares of each class of capital stock and the names
of ( and number of shares held by) the record owners thereof. All the issued
and outstanding shares of capital stock of each subsidiary of Osborn are duly
authorized, validly issued, fully paid and nonassessable and have not been
issued in violation of any preemptive or similar rights.
(d) Authority. Osborn has all requisite corporate power
and authority to enter into this Agreement, the Voting Agreement and any other
agreement executed by Osborn in connection with the transactions contemplated
by this Agreement (collectively, the "Transaction Documents") and to consummate
the transactions contemplated hereby or thereby. The execution and delivery of
the Transaction Documents by Osborn and the consummation by it of the
transactions contemplated hereby or thereby have been duly authorized by all
necessary corporate action on the part of Osborn (subject to the approval and
adoption of this Agreement and the transactions contemplated hereby by the
stockholders of Osborn as set forth in Section 1.12 of this Agreement). The
Transaction Documents have been duly executed and delivered and constitute the
valid and binding obligations of Osborn, enforceable against it in accordance
with their terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally and subject, as to enforceability, to general
principles of equity, including principles of commercial reasonableness, good
faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity).
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(e) No Conflict; Required Filings and Consents. The
execution and delivery of the Transaction Documents by Osborn do not and the
performance by Osborn of the transactions contemplated hereby or thereby will
not , subject to (i) with respect to the Merger, the approval and adoption of
this Agreement and the transactions contemplated hereby by the stockholders of
Osborn as set forth in Section 1.12 of this Agreement, and (ii) obtaining the
consents, approvals, authorizations and permits and making the filings
described in this Section 2.1(e), (A) violate, conflict with or result in any
breach of any provision of the Certificates or Articles of Incorporation or
Bylaws or equivalent organizational documents, in each case as amended or
restated, of Osborn or any of its subsidiaries, (B) violate, conflict with or
result in a violation or breach of, or constitute a default (with or without
due notice or lapse of time or both) under, or permit the termination of, or
result in the acceleration of, or entitle any party to accelerate (whether as a
result of a change of control of Osborn or otherwise) any obligation, or result
in the loss of any benefit, or give any person the right to require any
security to be repurchased, or give rise to the creation of any lien, charge,
security interest or encumbrance upon any of the properties or assets of Osborn
or any of its subsidiaries under any of the terms, conditions or provisions of
any loan or credit agreement, note, bond, mortgage, indenture or deed of trust,
or any license, lease, agreement or other instrument or obligation to which any
of them is a party or by which they or any of their properties or assets may be
bound or subjected, or (C) violate any order, writ, judgment, injunction,
decree, statute, rule or regulation, of any court or any federal, state or
local administrative agency or commission or other governmental authority or
instrumentality (a "Governmental Entity") applicable to Osborn or any of its
subsidiaries or by which or to which any of their respective properties or
assets is bound or subject. No consent, approval, order or authorization of,
or registration, declaration or filing with, any Governmental Entity is
required by or with respect to Osborn or any of its subsidiaries in connection
with the execution and delivery of the Transaction Documents by Osborn or the
consummation of the transactions contemplated hereby or thereby, except for (1)
the filing of a premerger notification report under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), (2) the
consents of the Federal Communications Commission (the "FCC") to the transfers
of control of the Station Licenses (as defined in Section 2.l(g)(ii) below) as
contemplated by Section 6.1 hereof, (3) the filing of the Certificate of Merger
with the Secretary of State of the State of Delaware, and (4) applicable
requirements, if any, of the Securities Act and the Exchange Act and state
securities or blue sky laws. The Osborn Board has taken all actions necessary
under Delaware Law, including approving the transactions contemplated by the
Transaction Documents, to ensure that the prohibitions on business combinations
set forth in Section 203 of Delaware Law do not, and will not, apply to the
transactions contemplated by the Transaction Documents.
(f) Reports; Financial Statements; Absence of Certain
Changes or Events.
(i) Osborn and its subsidiaries have filed (A)
all forms, reports, statements and other documents required to be
filed with (1) the SEC, including without limitation (v) all Annual
Reports on Form 10-K, (w) all Quarterly Reports on Form 10-Q, (x) all
proxy statements relating to meetings of stockholders (whether annual
or special), (y) all Current Reports on Form 8-K and (z) all other
reports, schedules, registration
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statements or other documents (collectively referred to as the
"Company SEC Reports"), and (2) any applicable state securities
authorities and (B) all material forms, reports, statements and other
documents required to be filed with any other Governmental Entities,
including the FCC (all such forms, reports, statements and other
documents in clauses (A) and (B) of this Subsection 3.1(e)(i) being
referred to herein, collectively, as the "Company Reports"). The
Company Reports were prepared in all material respects in accordance
with the requirements of applicable law (including, with respect to
the Company SEC Reports, the Securities Act or the Exchange Act, as
the case may be, and the rules and regulations of the SEC promulgated
thereunder applicable to such Company SEC Reports) and the Company SEC
Reports did not at the time they were filed contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading.
(ii) Osborn has delivered to Mergeco copies of the
audited consolidated balance sheets as of December 31, 1995 and
December 31, 1994, together with the related audited consolidated
statements of income, cash flows and changes in stockholders' equity
of Osborn for the years ended December 31, 1995, 1994 and 1993, and
the notes thereto, accompanied by the reports thereon of Ernst & Young
LLP, independent public accountants (such audited financial statements
collectively being referred to as the "Financial Statements"). The
Financial Statements, including the notes thereto, were prepared in
accordance with generally accepted accounting principles in the United
States ("GAAP") applied on a consistent basis throughout the periods
covered thereby (except to the extent disclosed therein or required by
changes in GAAP) and present fairly in all material respects the
consolidated financial position, results of operations and changes in
stockholders' equity and cash flows of Osborn as of such dates and for
the periods then ended. The consolidated financial statements
(including, in each case, any related notes thereto) contained in the
Company SEC Reports filed subsequent to January 1, 1993 (A) have been
prepared in accordance with the published rules and regulations of the
SEC and GAAP applied on a consistent basis throughout the periods
involved (except (1) to the extent disclosed therein or required by
changes in GAAP, (2) with respect to Company SEC Reports filed prior
to the date of this Agreement, as may be indicated in the notes
thereto, and (3) in the case of the unaudited financial statements, as
permitted by the rules and regulations of the SEC) and (B) fairly
present in all material respects the consolidated financial position
of Osborn and its subsidiaries as of the respective dates thereof and
the consolidated results of operations and changes in stockholders'
equity and cash flows for the periods indicated (subject, in the case
of unaudited consolidated financial statements for interim periods, to
adjustments, consisting only of normal, recurring accruals, necessary
to present fairly such results of operations and cash flows), except
that any pro forma financial statements contained in such consolidated
financial statements are not necessarily indicative of the
consolidated financial position of Osborn and its subsidiaries as of
the respective dates thereof and the consolidated results of
operations and cash flows for the periods indicated.
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(iii) Except as disclosed in Schedule 2.1(f), there
is no liability or obligation of any kind, whether accrued, absolute,
fixed, contingent or otherwise, of Osborn or its subsidiaries which
would have a Material Adverse Effect and that is not reflected or
reserved against in the balance sheet contained in the Quarterly
Report on Form 10-Q for the quarter ended March 31, 1996 (the "Balance
Sheet"), other than (A) liabilities incurred in the ordinary course of
business in a manner consistent with past practice since March 31,
1996 (the "Balance Sheet Date"), or (B) any such liability or
obligation which would not be required to be presented in financial
statements or the notes thereto prepared in conformity with GAAP
applied, in a manner consistent with past practice, in the preparation
of the Financial Statements and the consolidated financial statements
contained in Company SEC Reports.
(iv) Except as disclosed in Schedule 2.1(f), since
the Balance Sheet Date, Osborn and its subsidiaries have conducted
their respective businesses only in the ordinary course consistent
with past practice and nothing has occurred that would have been
prevented by Section 3.1 if the terms of such section had been in
effect as of and after the Balance Sheet Date. Except as disclosed in
Schedule 2.1(f), since the Balance Sheet Date, there has not occurred,
and Osborn and its subsidiaries have not incurred or suffered, any
Material Adverse Effect.
(g) Compliance with Applicable Laws: FCC Matters.
(i) Except as permitted or contemplated hereby,
the businesses of Osborn and its subsidiaries have been conducted in
compliance with each applicable law, ordinance, regulation, judgment,
decree, injunction, rule or order of the FCC or any other Governmental
Entity binding on Osborn or any of its subsidiaries or their
respective properties or assets, except for such instances of
noncompliance as would not have a Material Adverse Effect. No
investigation or review by any Governmental Entity with respect to
Osborn or any of its subsidiaries is pending or, to Osborn's
knowledge, threatened, except for such investigations or reviews as
would not have a Material Adverse Effect. Without limiting the
generality of the foregoing, Osborn and its subsidiaries have complied
with the Communications Act of 1934, as amended (the "Communications
Act") in all material respects, all material rules, regulations and
written policies of the FCC thereunder, all material obligations with
respect to equal opportunity under applicable law, and all material
rules and regulations of the Federal Aviation Administration
applicable to the towers used by the radio broadcast stations operated
by Osborn and its subsidiaries (the "Stations"). In addition, Osborn
and its subsidiaries have duly and timely filed, or caused to be so
filed, with the FCC all material reports, statements, documents,
registrations, filings or submissions with respect to the operation of
the Stations and the ownership thereof, including, without limitation,
applications for renewal of authority required by applicable law to be
filed. All such FCC filings complied with all material applicable
laws when made and no material deficiencies have been asserted with
respect to any such filings. The material required by 47 C.F.R.
Section 73.3526 to be kept in the public inspection files of the
Stations is in such files.
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(ii) Schedule 2.1(g) lists (A) all licenses,
permits and other authorizations, including the expiration dates
thereof, issued to Osborn or any of its subsidiaries by the FCC
relating to the Stations and held by them as of the date of this
Agreement and (B) all licenses, permits or authorizations issued to
Osborn or any of its subsidiaries by any other Governmental Entities
which are material to the operations of the Stations and held by them
as of the date of this Agreement, the loss of which could have a
Material Adverse Effect. Such licenses, permits and authorizations,
and all applications for modification, extension or renewal thereof or
for new licenses, permits, permissions or authorizations, are
collectively referred to herein as the "Station Licenses." Schedule
2.1(g) lists the legally authorized holder(s) of the Station Licenses,
each of which is in full force and effect. The Stations have been
operated in all material respects in accordance with the terms of the
Station Licenses. There are no material proceedings pending or, to
Osborn's knowledge, threatened with respect to Osborn's or any of its
subsidiaries ownership or operation of the Stations which reasonably
may be expected to result in the revocation, material adverse
modification, non-renewal or suspension of any of the Station
Licenses, the denial of any pending applications for Station Licenses,
the issuance against Osborn or any of its subsidiaries of any cease
and desist order, or the imposition of any administrative actions by
the FCC or any other Governmental Entity with respect to the Station
Licenses, or which reasonably may be expected to adversely affect the
Stations' ability to operate as currently operated or the Surviving
Corporation's ability to obtain control of the Station Licenses. To
Osborn's knowledge, no other broadcast station or radio communications
facility is causing interference to the Stations' transmissions beyond
that which is allowed by FCC rules and regulations. Osborn has no
reason to believe that the FCC will not renew the Station Licenses
issued by the FCC in the ordinary course of business. Osborn knows of
no facts relating to Osborn under the Communications Act or the rules,
regulations or written policies of the FCC in effect on the date of
this Agreement that reasonably may be expected to disqualify Osborn
from transferring control of the Station Licenses pursuant to the
terms of this Agreement or that would prevent the consummation by them
of the transactions contemplated by this Agreement.
(h) Absence of Litigation. Except as set forth on
Schedule 2.1(h), there is no claim, action, suit, inquiry, judicial or
administrative proceeding, grievance or arbitration pending or, to the
knowledge of Osborn, threatened against Osborn or any of its subsidiaries or
any of their respective properties or assets by or before any arbitrator or
Governmental Entity, nor to Osborn's knowledge are there any investigations
relating to Osborn or any of its subsidiaries or any of their respective
properties or assets pending or threatened by or before any arbitrator or
Governmental Entity which would have a Material Adverse Effect. Except as set
forth in Schedule 2.1(h), there is no judgment, decree, injunction, order,
determination, award, finding, or letter of deficiency of any Governmental
Entity or arbitrator outstanding against Osborn or any of its subsidiaries or
any of their respective properties or assets which would have a Material
Adverse Effect. As of the date of this Agreement, there is no action, suit,
inquiry, judicial or administrative proceeding pending or, to the knowledge of
Osborn, threatened against Osborn or any of its subsidiaries relating to the
transactions contemplated by this Agreement.
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<PAGE> 20
(i) Insurance. Schedule 2.1(i) sets forth a summary of
all fire, general liability, malpractice liability, theft and other forms of
insurance and all fidelity bonds held by or applicable to Osborn or any of its
subsidiaries. No event has occurred, including, without limitation, the
failure by Osborn or any of its subsidiaries to give any notice or information
or the delivery of any inaccurate or erroneous notice or information, which
limits or impairs the rights of Osborn or any of its subsidiaries under any
such insurance policies in such a manner as could have a Material Adverse
Effect. Excluding insurance policies that have expired and been replaced in
the ordinary course of business, no insurance policy has been canceled within
the last two years prior to the date hereof.
(j) Real Estate. Each of Osborn and its subsidiaries has
good and marketable title in fee simple to all real properties owned by it and
valid leaseholds in the Leased Real Property (as defined herein), except to the
extent marketability may be affected by the existence of Permitted Liens (as
defined in Section 2.1(l)). Each lease is valid without default thereunder by
the lessee or, as of the date hereof and to Osborn's knowledge, the lessor.
Schedule 2.1(j) lists as of the date hereof (i) the street address and use of
each parcel of real property owned by Osborn or any of its subsidiaries (the
"Owned Real Property"), (ii) the street address and use of each parcel of real
property leased by Osborn or any of its subsidiaries (the "Leased Real
Property") and (iii) two grants of easements pursuant to which a subsidiary of
Osborn is a grantee.
(k) Personal Property. Except for property held under
capital leases, Osborn has good title to all the items of machinery, equipment,
furniture, fixtures, inventory, receivables and other tangible or intangible
personal property reflected on the Balance Sheet and all such property acquired
since the Balance Sheet Date, except for any such property or assets sold or
otherwise disposed of in the ordinary course of business and consistent with
past practices since such date or which would not have a Material Adverse
Effect. The tangible personal property and fixtures owned or used by Osborn or
any of its subsidiaries that are necessary for the operation of the Stations,
including all broadcasting equipment and broadcast towers, are in good
operating condition and repair (subject to normal wear and tear) and permit the
conduct of the business of the Stations in compliance with all material FCC
rules and regulations. Osborn or any of its subsidiaries owns or holds under
valid leases all of the tangible personal property and fixtures necessary to
conduct the business of the Stations as presently conducted except where the
failure to own or hold under valid lease any tangible property or fixtures
would not have a Material Adverse Effect.
(l) Liens and Encumbrances. All properties and assets,
including leases, owned by Osborn and its subsidiaries are free and clear of
all liens, pledges, claims, security interests, restrictions, mortgages,
tenancies and other possessory interests, conditional sale or other title
retention agreements, assessments, easements, rights of way, covenants,
restrictions, rights of first refusal, defects in title, encroachments and
other burdens, options or encumbrances of any kind (collectively, "Liens")
except (i) statutory Liens securing payments not yet delinquent or the validity
of which are being contested in good faith by appropriate actions, (ii)
purchase money Liens arising in the ordinary course, (iii) Liens for taxes not
yet delinquent, (iv) Liens reflected in the Balance Sheet (which have not been
discharged), (v) Liens which in the aggregate do not materially detract
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from the value for use for broadcasting purposes or materially impair the
present and continued use of the properties or assets subject thereto in the
usual and normal conduct of the business of the Stations, and (vi) Liens on
leases arising from the provisions of such leases, (vii) any liens set forth on
the title reports for the Owned Real Property, copies of which reports have
been provided to Mergeco, (viii) any leases of Leased Real Property listed on
Schedule 2.1(l) and (ix) any other liens set forth on Schedule 2.1(l) (the
Liens referred to in clauses (i) through (ix) being "Permitted Liens").
(m) Environmental Matters. Except as set forth on
Schedule 2.1(m):
(i) The real property and facilities owned,
operated and leased by Osborn or its subsidiaries and the operations
of Osborn or its subsidiaries thereon comply in all material respects
and have at all times complied in all material respects with all
applicable federal, state and local laws, statutes, codes, rules,
regulations, ordinances, orders, determinations or rules of common law
pertaining to the environment, natural resources and public or
employee health and safety including, without limitation, the
Comprehensive Environmental Response, Compensation, and Liability Act
of 1980, as amended ("CERCLA"), the Superfund Amendments and
Reauthorization Act of 1986, as amended, the Resource Conservation and
Recovery Act of 1976, as amended, the Clean Air Act, as amended, the
Federal Water Pollution Control Act, as amended, The Oil Pollution Act
of 1990, as amended, the Safe Drinking Water Act, as amended, the
Hazardous Materials Transportation Act, as amended, the Toxic
Substances Control Act, as amended, and other environmental
conservation or protection laws ("Environmental Laws");
(ii) No judicial proceedings are pending or, to
Osborn's knowledge, threatened against Osborn or its subsidiaries
alleging the violation of any Environmental Laws, and there are no
administrative proceedings pending or, to Osborn's knowledge,
threatened against Osborn or its subsidiaries, alleging the violation
of any Environmental Laws and no notice (in the case of clause
(ii)(B), directed to Osborn or any of its subsidiaries) from any
Governmental Entity or any private or public person has been received
by Osborn or its subsidiaries (A) claiming any violation of any
Environmental Laws in connection with any real property or facility
owned, operated or leased by Osborn or its subsidiaries that has not
been complied with or otherwise resolved to the satisfaction of the
party giving notice, or (B) requiring any remediation, clean-up,
modification, repairs, work, construction, alterations or
installations on or in connection with any real property or facility
owned, operated or leased by Osborn or its subsidiaries that are
necessary to comply with any Environmental Laws and that have not been
complied with or otherwise resolved to the satisfaction of the party
giving notice;
(iii) All material permits, registrations,
licenses, authorizations, and the like ("Permits") required to be
obtained or filed by each of Osborn and its subsidiaries under any
Environmental Laws in connection with Osborn's and its subsidiaries'
operations, including, without limitation, those activities relating
to the generation, use, storage,
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treatment, disposal, release, or remediation of Hazardous Substances
(as such term is defined in Section 2.1(m)(iv) hereof), have been duly
obtained or filed, and each of Osborn and its subsidiaries are and
have at all times been in compliance in all material respects with the
terms and conditions of all such Permits;
(iv) All Hazardous Substances used or generated by
Osborn or its subsidiaries or, to Osborn's knowledge, any of their
predecessors, on, in, or under any of the owned, operated, or leased
real property or facilities are and have at all times been generated,
stored, used, treated, disposed of, and released by such persons or on
their behalf in such manner as not to result in any material
Environmental Costs or Liabilities. "Hazardous Substances" means (A)
any hazardous materials, hazardous wastes, hazardous substances, toxic
wastes, and toxic substances as those or similar terms are defined
under any Environmental Laws; (B) any asbestos or any material which
contains any hydrated mineral silicate, including chrysolite, amosite,
crocidolite, tremolite, anthophylite and/or actinolite, whether
friable or non-friable; (C) PCBs, or PCB-containing materials, or
fluids; (D) radon; (E) any other hazardous, radioactive, toxic or
noxious substance, material, pollutant, contaminant, constituent, or
solid, liquid or gaseous waste; (F) any petroleum, petroleum
hydrocarbons, petroleum products, crude oil and any fractions or
derivatives thereof, any oil or gas exploration or production waste,
and any natural gas, synthetic gas and any mixtures thereof; (G) any
substance that, whether by its nature or its use, is subject to
regulation under any Environmental Laws or with respect to which any
Environmental Laws or Governmental Entity requires environmental
investigation, monitoring or remediation; and (H) any underground
storage tanks, dikes, or impoundments as defined under any
Environmental Laws. "Environmental Costs or Liabilities" means any
losses, liabilities, obligations, damages, fines, penalties,
judgments, settlements, actions, claims, costs and expenses
(including, without limitation, reasonable fees, disbursements and
expenses of legal counsel, experts, engineers and consultants, and the
costs of investigation or feasibility studies and performance of
remedial or removal actions and cleanup activities) arising from or
under any Environmental Laws, order of, or contract of Osborn or its
subsidiaries with, any Governmental Entity or any private or public
persons;
(v) There are not now, nor have there been in the
past, on, in or under any property or facilities when owned, leased or
operated by Osborn or its subsidiaries or, to Osborn's knowledge, when
owned, leased or operated by any of their predecessors, any Hazardous
Substances that are in a condition that violates any Environmental Law
in any material respect or that reasonably could be expected to
require remediation under any Environmental Law;
(vi) Osborn and its Subsidiaries have not
received, and to the knowledge of Osborn do not expect to receive, any
notification from any source advising Osborn or such subsidiaries
that: (A) it is a potentially responsible party under CERCLA or any
other Environmental Laws; (B) any real property or facility currently
or previously owned, operated, or leased by it is identified or
proposed for listing as a federal National Priorities
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List ("NPL") (or state-equivalent) site or a Comprehensive
Environmental Response, Compensation and Liability Information System
("CERCLIS") list (or state-equivalent) site; and (C) any facility to
which it has ever transported or otherwise arranged for the disposal
of Hazardous Substances is identified or proposed for listing as an
NPL (or state-equivalent) site or CERCLIS (or state-equivalent) site;
and
(vii) The Stations' operations do not have a
significant environmental impact, as defined by 47 C.F.R. Section
1.1307.
(n) Taxes. Each of Osborn and its subsidiaries has
filed, or has timely applied for extensions of time to file, all tax returns,
reports, statements and other documents ("Tax Returns"') required to be filed,
and all such Tax Returns which have been filed are accurate and complete in all
material respects. Each of Osborn and its subsidiaries has paid (or there has
been paid on its behalf), or has set up an adequate reserve for the payment of,
all taxes required to be paid, withheld, or deducted, or for which any of
Osborn or its subsidiaries are liable, in respect of the periods covered by
such Tax Returns, and with respect to each tax, from the end of the period
covered by the most recently filed Tax Return to the date hereof, and the
Balance Sheet reflects an adequate reserve for all taxes payable, or required
to be withheld and remitted, by Osborn or any of its subsidiaries, or for which
Osborn or any of its subsidiaries are liable, accrued through the Balance Sheet
Date. No material deficiencies for any taxes have been proposed, asserted or
assessed against Osborn or any of its subsidiaries and are pending, and no
requests for waivers of the time to assess any such taxes are pending. The
federal income tax returns of Osborn and its subsidiaries have not been
examined by the Internal Revenue Service. None of Osborn or its subsidiaries
(i) has filed a consent under section 341(f) of the Internal Revenue Code of
1986, as amended (the "Code"), (ii) has made, or is obligated or may become
obligated to make, any payments that will not be deductible by reason of
section 280G of the Code, or (iii) has been a member of an affiliated group of
corporations which has filed a consolidated federal income tax return (other
than the group of which Osborn is the common parent) or otherwise has any
liability for the taxes of any person (other than Osborn and its subsidiaries)
under Treas. Reg. Section 1.1502-6, any similar provision of state, local or
foreign law, or by reason of its status as a transferee, successor, indemnitor
or otherwise. For the purposes of this Agreement, the term "taxes" shall
include all federal, state, local and foreign income, property, sales, excise,
withholding, unemployment compensation, social security, and other taxes and
charges of any nature whatsoever (including interest, penalties and additions
to tax relating to any of the specified items).
(o) Certain Agreements. Except as set forth in Schedule
2.1(o) and for oral or written agreements, plans or arrangements, the benefits
of which do not in the aggregate exceed $75,000, neither Osborn nor any of its
subsidiaries is a party to any oral or written agreement, plan or arrangement
with any officer, director, employee or other station or broadcast personnel
(whether an employee or an independent contractor) of Osborn or its
subsidiaries (i) the benefits of which are contingent, or the terms of which
are materially altered, upon, or result from, the occurrence of a transaction
involving Osborn of the nature of any of the transactions contemplated by this
Agreement, (ii) providing severance benefits or other benefits after the
termination of employment
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or other contractual relationship regardless of the reason for such termination
and regardless of whether such termination is before or after a change of
control, (iii) under which any person may receive payments subject to the tax
imposed by Section 4999 of the Code or (iv) any of the benefits of which will
be increased, or the vesting of benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this Agreement or the
value of any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement. Schedule 2.1(o) hereto lists
(and, in the case of clause (iv), describes) each oral or written (i)
agreement, contract, indenture or other instrument relating to the borrowing of
money or the guarantee of any obligation for the borrowing of money, (ii)
Employee Benefit Plan, as defined in Section 2.1(p), (iii) employment or
consulting contract which is not terminable without liability or penalty to
Osborn or any of its subsidiaries on 30 days or less notice, other than such
employment or consulting contracts the payments under which do not in the
aggregate exceed $75,000, (iv) covenant, agreement, or arrangement under which
Osborn's or any of its subsidiary's ability or right to compete with another
Person is restricted or impaired, or (v) contract, agreement or commitment
(except for trade or barter agreements) under which any party thereto remains
obligated to provide goods or services having a value, or to make payments
aggregating, in excess of $75,000 per year, in any such case to which Osborn or
any of its subsidiaries is a party or bound. Each such agreement, contract or
obligation described in Schedule 2.1(o) or required to be so described is a
valid and binding obligation of Osborn or one of its subsidiaries, as the case
may be, and is in full force and effect without amendment, except where not
being a valid and binding obligation or in full force and effect without
amendment could not have a Material Adverse Effect. Osborn or one of its
subsidiaries, as the case may be, has performed in all material respects the
obligations required to be performed by it under the agreements so described
and is not (with or without lapse of time or the giving of notice, or both) in
material breach or default thereunder. As of the date hereof and to the
knowledge of Osborn, each other party to such contracts has performed in all
material respects the obligations required to be performed by it under the
agreements so described and is not (with or without lapse of time or the giving
of notice, or both) in material breach or default thereunder. Schedule 2.1(o)
identifies, as to each agreement, contract or obligation listed thereon,
whether the consent of the other party thereto is required in order for such
agreement, contract or obligation to continue in full force and effect upon the
consummation of the transactions contemplated hereby or whether such agreement,
contract or obligation can be canceled by the other party without liability to
such other party due to the consummation of the transactions contemplated
hereby. A copy of each written agreement, contract, obligation, plan or
arrangement and a description of each oral agreement, contract, obligation,
plan or arrangement set forth in Schedule 2.1(o) has been provided to Mergeco.
(p) ERISA Compliance; Labor.
(i) The present value of all accrued benefits
(vested and unvested) under each "employee pension benefit plan" as
such term is defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), which Osborn or any other
trades or businesses under common control within the meaning of
Section 4001(b)(1) of ERISA with Osborn (collectively, the "ERISA
Group") maintains, or to which
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Osborn or any member of the ERISA Group is obligated to contribute
(the "Pension Plans"), did not, as of the respective last annual
valuation dates for such Pension Plans, exceed the value of the assets
of such Pension Plan allocable to such benefits. None of the Pension
Plans subject to Section 302 of ERISA has incurred any "accumulated
funding deficiency," as such term is defined in Section 302 of ERISA
(whether or not waived), since the effective date of such Section 302.
Neither Osborn or any member of the ERISA Group, nor any officer of
Osborn or any member of the ERISA Group or any of the employee benefit
plans of Osborn or any member of the ERISA Group which are subject to
ERISA, including the Pension Plans, or any trusts created thereunder,
or any trustee or administrator thereof, has engaged in a "prohibited
transaction," as such term is described in Section 4975 of the Code,
which has subjected or which could subject Osborn or any member of the
ERISA Group, any officer of Osborn or any of its subsidiaries or any
of such plans or any trust to any material tax or penalty on
prohibited transactions imposed by such Section 4975. None of such
Pension Plans subject to Title IV of ERISA or any of their related
trusts has been terminated or partially terminated, nor has there been
any "reportable event," as that term is defined in Section 4043 of
ERISA, with respect thereto since the effective date of such Section
4043. Neither Osborn or any member of the ERISA Group has contributed
or been obligated to contribute to any "multiemployer plan" as such
term is defined in Section 3(37) or Section 4001(a)(3) of ERISA.
Except as set forth on Schedule 2.1(p), there are no "employee benefit
plans" within the meaning of Section 3(3) of ERISA or any bonus,
pension, profit sharing, deferred compensation, incentive
compensation, stock ownership, stock purchase, stock option, phantom
stock, retirement, vacation, severance, disability, death benefit,
hospitalization, insurance or other plan or arrangement or
understanding providing benefits to any present or former employee or
contractor of Osborn or any member of the ERISA Group maintained by
Osborn or any member of the ERISA Group or as to which Osborn or any
member of the ERISA Group has any material liability or obligation
(collectively, "Employee Benefit Plans").
(ii) True, correct and complete copies of each of
the Employee Benefit Plans, and related trusts, if applicable, have
been furnished to Mergeco, along with the most recent report filed on
Form 5500 and summary plan description with respect to each Employee
Benefit Plan required to file Form 5500. All reports and disclosures
relating to the Employee Benefit Plans required to be filed with or
furnished to governmental agencies or plan participants or
beneficiaries have been furnished in accordance with applicable law in
a timely manner. Each Employee Benefit Plan has been maintained in
compliance in all material respects with ERISA and the Code, and each
Employee Benefit Plan intended to be qualified under Section 401 of
the Code satisfies the requirements of such Section and has received a
favorable determination letter from the Internal Revenue Service
regarding the qualified status and has not, since receipt of the most
recent favorable determination letter, been amended or, to the
knowledge of Osborn, operated in a manner which would adversely affect
such qualified status. There are no actions, suits or claims pending
(other than routine claims for benefits) or, to the knowledge of
Osborn, threatened against, or with respect to any of the Employee
Benefit Plans. All contributions required to be made to the Employee
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Benefit Plans pursuant to their terms have been timely made. To the
knowledge of Osborn, there is no matter pending with respect to any of
the Employee Benefit Plans before the Internal Revenue Service,
Department of Labor or the Pension Benefit Guaranty Corporation.
Except as required by applicable law, none of the Employee Benefit
Plans provides medical insurance coverage following retirement. Each
Employee Benefit Plan which is an "employee welfare benefit plan," as
defined in Section 3(1) of ERISA, may be unilaterally amended or
terminated in its entirety without liability except as to benefits
accrued prior to such amendment or termination.
(iii) Schedule 2.1(p) lists each collective
bargaining agreement to which Osborn or any of its subsidiaries is a
party. Except for those unions which are parties to one or more of
the listed collective bargaining agreements or as otherwise listed on
Schedule 2.1(p) neither Osborn nor any of its subsidiaries has agreed
to recognize any union or other collective bargaining representative,
nor has any union or other collective bargaining representative been
certified as the exclusive bargaining representative of any of their
employees. Each of Osborn and its subsidiaries (A) is, and has been
since January 1, 1993, in substantial compliance with all applicable
laws regarding labor, employment and employment practices, terms and
conditions of employment, affirmative action, wages and hours, plant
closing and mass layoff, occupational safety and health, immigration,
and workers' compensation, (B) is not engaged, nor has it since
January 1, 1993, engaged, in any unfair labor practices, and has no,
and has not had since January 1, 1993, any, unfair labor practice
charges or complaints before the National Labor Relations Board
pending or, to Osborn's knowledge, threatened against it, (C) has no,
and has not had since January 1, 1993, any, grievances, arbitrations
or other proceedings arising or asserted to arise under any collective
bargaining agreement, pending or, to Osborn's knowledge, threatened
against it and (D) has no, and has not had since January 1, 1993, any,
charges, complaints or proceedings before the Equal Employment
Opportunity Commission, Department of Labor or any other federal,
state or local agency responsible for regulating employment practices,
pending, or, to Osborn's knowledge, threatened against it. There is no
labor strike, slowdown, work stoppage or lockout pending or, to the
knowledge of Osborn, threatened against or affecting Osborn or its
subsidiaries, and Osborn or its subsidiaries has not experienced any
labor strike, slowdown, work stoppage or lockout since January 1,
1993. Except as set forth on Schedule 2.1(p), to Osborn's knowledge,
no union organizational campaign or representation petition is
currently pending with respect to the employees of Osborn or its
subsidiaries.
(q) Patents, Trademarks, Etc. Schedule 2.1(q) sets forth
each material patent, patent application, trademark, trade name, trade name and
trademark registration, service mark, trade secret, copyright, copyright
registration and any other proprietary intellectual property rights
(collectively, "Intellectual Rights") owned by or registered in the name of
Osborn or any of its subsidiaries, or in which Osborn or any of its
subsidiaries has any right, license or interest. Osborn or its subsidiaries
owns or has the unencumbered right to use pursuant to a valid, binding and
enforceable license agreement or other contract or arrangement all such
Intellectual Rights. To the
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knowledge of Osborn, neither Osborn nor any of its subsidiaries is infringing
any such Intellectual Rights, and Osborn is not aware of any infringement by
others of any such rights owned by Osborn or any of its subsidiaries.
(r) Affiliate Relationships. Schedule 2.1(r) sets forth
a complete list and summary description of all contracts or other arrangements
involving Osborn or any of its subsidiaries in which any officer, director,
stockholder or any of their affiliates has a financial interest, including
indebtedness to Osborn or its subsidiaries, other than such contracts or
arrangements which in the aggregate do not exceed $75,000.
(s) Vote Required. The only votes of the holders of any
class or series of capital stock of Osborn necessary to approve the Merger and
adopt this Agreement are the affirmative votes of the holders of a majority of
the outstanding shares of the Common Stock.
(t) Opinion of Financial Advisor. Osborn has received
the opinion of Alex. Brown & Sons Incorporated ("Alex. Brown") to the effect
that, as of the date of this Agreement, the Merger is fair, from a financial
point of view to the holders of Common Stock. The fees of Alex. Brown in
connection with the transactions contemplated by this Agreement shall not
exceed $825,000.
2.2. Representations and Warranties of Mergeco. Mergeco represents
and warrants to Osborn as follows (with the understanding that Osborn is
relying on such representations and warranties in entering into and performing
this Agreement):
(a) Organization Standing and Power. Mergeco is a
corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation and has all requisite corporate power
and authority to own, lease and operate its properties and to carry on its
business as now being conducted.
(b) Authority. Mergeco has all requisite corporate power
and authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by Mergeco
and the consummation by it of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of Mergeco
(including the approval and adoption of this Agreement and the transactions
contemplated hereby by the Parent). This Agreement has been duly executed and
delivered and constitutes the valid and binding obligation of Mergeco,
enforceable against it in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally and subject, as
to enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity). The execution and
delivery of this Agreement does not, and the consummation of the transactions
contemplated hereby and compliance with the provisions hereof will not,
conflict with, or result in any violation of, or default (with or without
notice or lapse of time, or both) under, or give rise to a right of
termination,
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cancellation or acceleration of any material obligation or to a loss of a
material benefit under, any provision of the Certificate of Incorporation or
Bylaws of Mergeco or any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Mergeco or its properties or assets, except for any such
conflicts, violations or defaults or terminations, cancellations or
accelerations which individually or in the aggregate do not have a material
adverse effect on Mergeco's ability to consummate its obligations hereunder.
No consent, approval, order or authorization of, or registration, declaration
or filing with, any Governmental Entity is required by or with respect to
Mergeco in connection with the execution and delivery of this Agreement by
Mergeco or the consummation by it of the transactions contemplated hereby,
except for (i) the filing of a premerger notification report under the HSR Act,
(ii) the filing of the Certificate of Merger with the Secretary of State of the
State of Delaware, (iii) the filing with the FCC and the grant of the consent
of the FCC to the transfer of control of the Station Licenses pursuant to the
terms of this Agreement (as contemplated by Section 6.1), and (iv) applicable
requirements, if any, of the Securities Act and the Exchange Act and the rules
and regulations thereunder and state securities or blue sky laws. Mergeco is
acquiring the shares of Surviving Corporation Common Stock for investment
purposes and without a view to the distribution thereof in violation of the
Securities Act.
(c) Litigation. As of the date hereof, there is no
action, suit, inquiry, judicial or administrative proceeding pending or, to the
knowledge of Mergeco, threatened against it relating to the transactions
contemplated by this Agreement.
(d) FCC Matters. Mergeco knows of no facts relating to
it under the Communications Act or the rules, regulations or written policies
of the FCC in effect on the date of this Agreement that reasonably may be
expected to disqualify it from obtaining control of the Station Licenses or
that would prevent it from consummating the transactions contemplated by this
Agreement. Mergeco is able to certify on an FCC Form 315 that it is
financially qualified.
(e) Real Estate. As of the date hereof, Mergeco does not
own or lease any real property.
ARTICLE III
COVENANTS RELATING TO CONDUCT OF BUSINESS
3.1. Covenants of Osborn. Except as contemplated by this Agreement
or to the extent that Mergeco shall otherwise consent in writing, from the date
of this Agreement until the Effective Time, Osborn covenants and agrees that it
shall not, and shall not permit any of its subsidiaries to:
(a) conduct its business in any material respect except
in the ordinary course consistent with past practice; or
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(b) if it would cause a Material Adverse Effect, fail to
use its commercially reasonable efforts to preserve intact Osborn's present
business organization and to keep available the services of its present
officers, station managerial personnel (including the General Manager, Station
Manager, General Sales Manager, Local Sales Manager, National Sales Manager,
Programming Director and Business Manager, or persons performing comparable
duties, of each Station (collectively, the "Station Management")) and
over-the-air employees or independent contractors and preserve its
relationships with customers, suppliers and others having business dealings
with it to the end that its goodwill and ongoing business shall not be
materially impaired at the Closing Date. The (i) failure to renew an
employment agreement pursuant to Section 3.1(g) due to a failure by Mergeco to
consent to an increase in compensation or (ii) renewal of an employment
agreement pursuant to Section 3.1(g) with an increase in compensation
thereunder which has been consented to by Mergeco, shall not be deemed to be a
violation of this Section 3.1(b); or
(c) other than as previously disclosed in writing, fail
to use its commercially reasonable efforts to maintain the present format of
the Stations and with programming consistent with past practices; or
(d) split, combine, divide, distribute or reclassify any
shares of its capital stock, declare, pay or set aside for payment any dividend
or other distribution in respect of its capital stock, or directly or
indirectly, redeem, purchase or otherwise acquire any shares of its capital
stock or other securities; provided that nothing herein shall prevent any of
its subsidiaries from paying dividends or making other distributions to Osborn;
or
(e) issue, sell, pledge, dispose of, encumber or deliver
(whether through the issuance or granting of any options, warrants,
commitments, subscriptions, rights to purchase or otherwise) any stock of any
class or any securities convertible into or exercisable or exchangeable for
shares of stock of any class (other than the issuance of certificates in
replacement of lost certificates); or
(f) change or amend its charter documents or bylaws; or
(g) except for amendments, terminations (without payment
of penalty or damages), renewals or failures to renew (without payment of
penalty or damages) of employment agreements with over-the-air personnel in the
ordinary course of business and consistent with past practice (subject to prior
consultation with Mergeco reasonably in advance thereof), enter into,
materially amend, terminate, or fail to use its commercially reasonable efforts
to renew any material contract (i.e., a contract or agreement of the type
required to be described in Schedule 2.1(o) (provided that neither Osborn nor
its subsidiaries shall be required to renew any material contract on terms that
are less favorable to Osborn or its subsidiaries) or default in any material
respect (or take or omit to take any action that, with or without the giving
notice or passage of time, would constitute a material default) under any
material contract or enter into any new material contract; or
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<PAGE> 30
(h) merge or consolidate with or into any other legal
entity, dissolve or liquidate; or
(i) incur or assume any long-term debt (including
obligations in respect of capital leases and for interest), assume, guarantee,
endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other person (other than
endorsements of checks in the ordinary course) or make any loans, advances or
capital contributions to, or investments in, any person (other than advances to
employees in the ordinary course of business); or
(j) adopt or amend any Employee Benefit Plan or
collective bargaining agreement, or increase in any manner the compensation or
fringe benefits of any director, officer or employee or other station and
broadcast personnel (whether employees or independent contractors) or pay any
benefit not by any existing agreement, except in the ordinary course of
business and consistent with past practices and as required by law, provided
that, before entering into any employment agreement or increasing or agreeing
to increase the compensation, bonuses or other benefits of any Station
Management or over-the-air talent in the ordinary course of business and as
required by law, Osborn shall first have consulted in good faith with Mergeco
with respect to the terms of any such employment agreement or increase or
change in compensation, bonuses or other benefits; or
(k) except as set forth on Schedule 3.1(k), acquire
(including, without limitation, by merger, consolidation or the acquisition of
any equity interest or assets) or sell (whether by merger, consolidation or the
sale of an equity interest or assets), lease or dispose of any assets except in
the ordinary course of business and consistent with past practice or, even if
in the ordinary course of business and consistent with past practices (other
than sales of surplus or obsolete equipment), whether in one or more
transactions, in no event having a fair market value in excess of $75,000; or
(l) mortgage, pledge or subject to any material Lien any
of its properties or assets, tangible or intangible, other than in the ordinary
course of business consistent with past practice; or
(m) except as required by GAAP, applicable law or
circumstances which did not exist as of the Balance Sheet Date, change any of
the material accounting principles or practices used by it; or
(n) make any settlement of or compromise any tax
liability, change any tax election or tax method of accounting or make any new
tax election or adopt any new tax method of accounting which settlement,
compromise, method or election is material to Osborn and its subsidiaries,
taken as a whole; or
(o) pay, discharge or satisfy any material claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than in the ordinary course of business
consistent with past practice, or fail to pay or otherwise satisfy (except if
being contested
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in good faith) any material accounts payable, claims, liabilities or
obligations on a basis, and within the time, consistent with past practice; or
(p) change in any material respect its existing practices
and procedures with respect to the collection of accounts receivable of the
Stations and, except with respect to good faith attempts consistent with past
practice to obtain payment of a past due receivable, or except in accordance
with existing practices, a contested receivable, offer to discount the amount
of any outstanding receivable or extend any other incentive (whether to the
account debtor or any employee or third party responsible for the collection of
receivables) to accelerate the collection thereof, or change any Station's
advertising rates or policies, procedures or methods in connection with the
sale of advertising time in a manner primarily intended to accelerate the
receipt of cash payments or fail to incur annual advertising and promotional
department expenses in cash and trade below 90% of that budgeted for 1996 (as
such budget previously has been delivered to Mergeco); or
(q) except as contemplated by that certain Option
Agreement dated as of July 8, 1996, by and between Wheeling Radio Company and
Mountain Radio Corporation, enter into, or enter into negotiations or
discussions with any person other than Mergeco with respect to, any local
marketing agreement, time brokerage agreement, joint sales agreement or any
other similar agreement; or
(r) agree to or make any commitment, orally or in
writing, to take any actions prohibited by this Agreement.
3.2. Negative Trade Balance. Osborn shall use commercially
reasonable efforts to ensure that the Osborn Negative Trade Balance, as defined
below, of the Stations, taken as a whole, does not exceed $75,000 (excluding
the Station in Fresno, California) in the aggregate at the Closing Date.
"Osborn Negative Trade Balance" means the difference, if negative, between the
value of time owed under barter agreements to which any of the Stations is a
party or by which any of them is bound and the value of the goods and services
to be received under such agreements.
3.3. Environmental Site Assessments. If Mergeco or its lenders or
other financing sources require Phase I or Phase II environmental site
assessments ("ESAs"), Osborn covenants and agrees that, upon written notice
from Mergeco to Osborn identifying the locations at which such ESAs are
required, Osborn shall at its sole cost and expense cause to be performed by a
nationally recognized and duly qualified environmental consultant reasonably
acceptable to Mergeco and Osborn an ESA at each identified transmission site
owned, operated or leased by Osborn or its subsidiaries and at such other
identified real properties and facilities owned, operated or leased by Osborn
or its subsidiaries. The ESAs which are to be conducted for the benefit of
Mergeco shall be performed in a manner that at a minimum satisfies the
requirements of ASTM Practice E 1527-94. Osborn covenants and agrees that,
upon receipt of the notice referred to above, it shall diligently pursue the
performance of the requisite ESAs to their completion, with final copies of the
Phase I environmental site assessment reports (and, if applicable, Phase II
Environmental Site Assessment
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reports) made available to Mergeco by no later than 45 days following the date
on which Osborn receives the notice referred to above.
ARTICLE IV
ADDITIONAL AGREEMENTS OF OSBORN
4.1. No Solicitation of Transactions. Osborn shall not, nor shall
it permit its subsidiaries to, directly or indirectly, through any officer,
director, agent or otherwise, solicit, initiate or encourage the submission of
any proposal or offer from any person relating to any acquisition or purchase
of all or any material portion of the assets of, or any equity interest in,
Osborn or any of its subsidiaries or any merger, consolidation, share exchange,
business combination or other similar transaction with Osborn or any of its
subsidiaries or participate in any negotiations regarding, or furnish to any
other person any information with respect to, or otherwise cooperate in any way
with, or assist or participate in, facilitate or encourage, any effort or
attempt by any other person to do or seek any of the foregoing; provided,
however, that prior to the receipt of the requisite vote or consent for
approval and adoption by the holders of Common Stock of this Agreement and the
transactions contemplated hereby, nothing contained in this Section 4.1 shall
prohibit Osborn from furnishing information to, or entering into discussions or
negotiations with, any person in connection with an unsolicited proposal by
such person to acquire Osborn pursuant to a merger, consolidation, share
exchange, business combination or other similar transaction or to acquire all
or substantially all of the assets of Osborn received by Osborn after the date
of the Agreement, if, and only to the extent that, (a) the Osborn Board
determines in good faith that such action is required in order for the Osborn
Board not to breach its fiduciary duties to stockholders imposed by applicable
law, such determination being based on consultations with Alex. Brown and the
opinion of its independent legal counsel that such action is required in order
for the Osborn Board not to breach its fiduciary duties to stockholders imposed
by applicable law, and (b) prior to furnishing such information to, or entering
into discussions or negotiations with, such person, Osborn (i) gives Mergeco as
promptly as practicable prior written notice of Osborn's intention to furnish
such information or begin such discussions and (ii) receives from such person
an executed confidentiality agreement on terms no less favorable to Osborn than
those contained in the Confidentiality Agreement (as defined in Section 4.2).
Osborn shall promptly communicate to Mergeco the material terms of any such
proposal (and the identity of the party making such proposal) which it may
receive. Osborn agrees not to release any third party from, or waive any
provision of, any confidentiality or standstill agreement to which Osborn is a
party. Osborn immediately shall cease and cause to be terminated all existing
discussions or negotiations with any parties conducted heretofore with respect
to any of the foregoing. From and after the receipt of the requisite vote or
consent for approval and adoption by the holders of Common Stock of this
Agreement and the transactions contemplated hereby, Osborn shall not, nor shall
it permit its subsidiaries to, directly or indirectly, through any officer,
director, agent or otherwise, solicit, initiate or encourage the submission of
any proposal or offer from any person relating to any acquisition or purchase
of all or any material portion of the assets of, or any equity interest in,
Osborn or any of its subsidiaries or any merger, consolidation, share
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exchange, business combination or other similar transaction with Osborn or any
of its subsidiaries or participate in any negotiations regarding, or furnish to
any other person any information with respect to, or otherwise cooperate in any
way with, or assist or participate in, facilitate or encourage, any effort or
attempt by any other person to do or seek any of the foregoing.
4.2. Access and Information. (a) Until the Closing, subject only
to applicable rules and regulations of the FCC, Osborn shall afford to Mergeco
and its representatives (including accountants and counsel) full access, during
normal business hours, upon reasonable notice and in such manner as will not
unreasonably interfere with the conduct of the business of Osborn or its
subsidiaries, to all properties, books, records and returns of Osborn and its
subsidiaries and all other information with respect to its business, together
with the opportunity to make copies of such books, records and other documents
and to discuss the business of Osborn and its subsidiaries with such corporate
officers, station managerial personnel (including the General Manager, Station
Manager, General Sales Manager, Programming Director, Business Manager and
Traffic Manager, or persons performing comparable duties, of each Station),
accountants, consultants and counsel for Osborn as Mergeco deems reasonably
necessary or appropriate for the purposes of familiarizing itself with Osborn
and the Stations, including, without limitation, the right to visit each
Station at least monthly; provided that such Station visits shall be scheduled
at least five business days in advance and shall be conducted in a manner
intended to minimize the disruption to the operations of the Stations. In
furtherance of the foregoing, Osborn shall authorize and instruct Ernst & Young
LLP to meet with Mergeco and its representatives, including its independent
public accountants, to discuss the business and accounts of Osborn and to make
available (with the opportunity to make copies) to Mergeco and its
representatives, including its independent public accountants, all the work
papers of Ernst & Young LLP related to their audit of the consolidated
financial statements and tax returns of Osborn. All information provided
pursuant to this Agreement shall remain subject in all respects to the
Confidentiality Agreement (herein so called) dated May 30, 1996 between Hicks,
Muse, Tate & Furst Incorporated and Osborn until such time as the transactions
contemplated by this Agreement have been consummated. Osborn waives any
provisions in the Confidentiality Agreement that would otherwise prohibit the
execution of this Agreement and the consummation of the transactions
contemplated hereby.
(b) Within 30 days after the end of each calendar month
(other than in the case of December 1996, and then within 90 days after the end
of such month), Osborn shall deliver to Mergeco, for each of the Stations, and
for Osborn as a whole, monthly operating statements (in a form consistent with
the monthly operating statements previously supplied to Mergeco) prepared in
the ordinary course of business for internal purposes, including comparisons to
comparable prior year periods and current year budget. Further, within 45 days
after the end of each calendar quarter, Osborn shall deliver to Mergeco, for
each of the Stations, quarterly statements prepared in the ordinary course for
internal purposes containing the dollar amount of all trade and barter
agreements of each Station. Osborn shall deliver to Mergeco the rating books
and such other ratings information subscribed to by Osborn including, without
limitation, Arbitrends, Accuratings or any other written information reflective
of the quantitative or qualitative nature of the audiences of the Stations for
each of the Stations upon receipt of the same by the corporate officers of
Osborn. Osborn shall
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instruct the Station Management of each Station to provide such information and
reports to Osborn's corporate officers promptly upon receipt by such Station
Management. In addition, as soon as the same are distributed to Osborn's
corporate officers by each Station, Osborn will provide Mergeco with copies of
each Station's weekly sales pacing reports, with comparisons to sales pacing in
the corresponding period of the prior year.
(c) Without duplication of Sections 4.2(b), at such time
as Osborn provides the same to its lenders, Osborn shall provide Mergeco with
copies of the financial statements and other information delivered by Osborn to
such lenders.
(d) Osborn shall promptly deliver to Mergeco true and
correct copies of any report, statement or schedule filed with the SEC
subsequent to the date of this Agreement.
4.3. Assistance. If Mergeco requests, Osborn will cooperate, and
will cause Ernst & Young LLP to cooperate, in all reasonable respects with the
efforts of Mergeco to finance the transactions contemplated by this Agreement,
including without limitation, providing assistance in the preparation of one or
more registration statements or other offering documents relating to debt
and/or equity financing and any other filings that may be made by Mergeco with
the SEC, all at the sole expense of Mergeco. Osborn (a) shall furnish to Ernst
& Young LLP, as independent accountants to Osborn, such customary management
representation letters as Ernst & Young LLP may require of Osborn as a
condition to its execution of any required accountants' consents necessary in
connection with any filing by Mergeco with the SEC or in connection with the
delivery of any "comfort" letters requested by Mergeco's financing sources and
(b) shall furnish to Mergeco all financial statements (audited and unaudited)
and other information in the possession of Osborn or its representatives or
agents as Mergeco shall reasonably determine is necessary or appropriate for
the preparation of such offering documents, registration statements or filings.
Mergeco will indemnify and hold harmless Osborn and its officers, directors and
controlling persons against any and all claims, losses, liabilities, damages,
costs or expenses (including reasonable attorneys' fees and expenses) that may
arise out of or with respect to the efforts by Mergeco to finance the
transactions contemplated hereby, including, without limitation, any
registration statement, prospectus, offering documents and other filings
related thereto; provided, however, that subject to the limitations and
provisions of this Agreement, nothing herein shall prevent Mergeco from
asserting any claim for breach of representation or warranty under this
Agreement.
4.4. Compliance With Station Licenses. Osborn shall cause the
Stations to be operated in all material respects in accordance with the Station
Licenses and all applicable rules and regulations of the FCC and in compliance
in all material respects with all other applicable laws, regulations, rules and
orders. Osborn shall use its commercially reasonable efforts not to cause or
permit any of the Station Licenses to expire or be surrendered, adversely
modified or terminated. Osborn shall file or cause to be filed with the FCC
all applications (including license renewals) or other documents required to be
filed in connection with the operation of the Stations. In addition, if
requested by Mergeco and at Mergeco's expense, Osborn shall file or cause to be
filed with the FCC applications for new, specifically identified frequencies
that may be useful in connection with
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the operation of the Stations. Should the FCC institute any proceedings for
the suspension, revocation or adverse modification of any of the Station
Licenses, Osborn will use its commercially reasonable efforts to promptly
contest such proceedings and to seek to have such proceedings terminated in a
manner that is favorable to the Stations. Osborn will use its commercially
reasonable efforts to maintain the FCC construction permits (if any) listed in
Schedule 2.1(g) in effect until the applicable construction projects are
complete and to diligently prosecute all pending FCC applications listed in
Schedule 2.1(g). If Osborn (or its FCC counsel) receives an administrative or
other order or notification relating to any violation or claimed violation of
the rules and regulations of the FCC, or of any other Governmental Entity, that
could affect Osborn's ability to consummate the transactions contemplated
hereby, or should Osborn (or its FCC counsel) become aware of any fact relating
to the qualifications of Osborn that reasonably could be expected to cause the
FCC to withhold its consent to the transfer of control of the Station Licenses,
Osborn shall promptly notify Mergeco in writing and use its commercially
reasonable efforts to take such steps as may be necessary to remove any such
impediment to the transactions contemplated by this Agreement.
4.5. Notification of Certain Matters. Osborn shall give prompt
written notice to Mergeco of (a) the occurrence, or failure to occur, of any
event of which it becomes aware that has caused or that would be likely to
cause any representation or warranty of Osborn contained in this Agreement to
be untrue or inaccurate (in any material respect for any representation or
warranty not already qualified for materiality) at any time from the date
hereof to the Closing Date, (b) the failure of Osborn to comply with or satisfy
in any material respect any covenant, condition or agreement to be complied
with or satisfied by it hereunder, (c) the occurrence of a Station Event (as
defined in Section 8.1) and (d) the occurrence of any threat by any officer of
Osborn or any of its subsidiaries or any General Manager, Station Manager,
General Sales Manager or Programming Director of a Station to resign or
otherwise terminate their employment or independent contractor relationship
with Osborn or its subsidiaries. No such notification shall affect the
representations or warranties of the parties or the conditions to their
respective obligations hereunder.
4.6. Third Party Consents. After the date hereof and prior to the
Closing, Osborn shall use its commercially reasonable efforts to obtain the
written consent from any party to an agreement or instrument identified in
Schedule 2.1(o) which is required to permit the consummation of the
transactions contemplated hereby.
4.7. Frank D. Osborn Employment Agreement. Immediately prior to
the Effective Time, Osborn hereby agrees to execute and deliver an employment
agreement to Frank D. Osborn in substantially the form of Exhibit B attached
hereto.
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ARTICLE V
COVENANTS OF MERGECO
5.1. Notification of Certain Matters. If Mergeco (or its FCC
counsel) receives an administrative or other order or notification relating to
any violation or claimed violation of the rules and regulations of the FCC, or
of any Governmental Entity, that could affect Mergeco's ability to consummate
the transactions contemplated hereby, or should Mergeco (or its FCC counsel)
become aware of any fact relating to the qualifications of Mergeco that
reasonably could be expected to cause the FCC to withhold its consent to the
transfer of control of the Station Licenses, Mergeco shall promptly notify
Osborn thereof and shall use its commercially reasonable efforts to take such
steps as may be necessary to remove any such impediment to the transactions
contemplated by this Agreement. In addition, Mergeco shall give to Osborn
prompt written notice of (a) the occurrence, or failure to occur, of any event
of which it becomes aware that has caused or that would be likely to cause any
representation or warranty of Mergeco contained in this Agreement to be untrue
or inaccurate at any time from the date hereof to the Closing Date, and (b) the
failure of Mergeco, or any officer, director, employee or agent thereof, to
comply with or satisfy in any material respect any covenant, condition or
agreement to be complied with or satisfied by it hereunder. No such
notification shall affect the representations or warranties of the parties or
the conditions to their respective obligations hereunder.
5.2. Commitment Letter. On or before September 3, 1996, Mergeco
shall deliver to Osborn a binding commitment letter from Hicks, Muse, Tate &
Furst Equity Fund III, L.P., a Delaware limited partnership ("Fund III"), to
provide financing in an amount of $27.2 million to provide Mergeco a portion of
the funds necessary to enable Mergeco to consummate the transactions
contemplated hereby. Fund III shall at such time have subscription commitments
for unallocated capital equal to at least its committed amount and there shall
be no restrictions on Fund III's ability to call such capital.
ARTICLE VI
MUTUAL COVENANTS
6.1. Application for Commission Consent. By the tenth business day
after the date hereof, Osborn and Mergeco will join in one or more applications
filed with the FCC requesting the FCC's written consent to the transfer of
control of the Station Licenses pursuant to this Agreement (the
"Applications"). The parties will take all proper steps reasonably necessary
(a) to diligently prosecute the Applications and (b) to obtain the Commission's
determination that the grant of each Application will serve the public
interest, convenience and necessity (the "Commission Consent"). The failure by
either party to timely file or diligently prosecute its portion of any
Application shall be a material breach of this Agreement.
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6.2. Control of Stations. This Agreement will not be consummated
until after the Commission Consents with respect to the Applications referred
to in Section 6.1 are granted without any material adverse conditions not
customarily imposed on the grant of such applications and have become Final
Orders. "Final Order" means an order, action or decision of the FCC (without
the inclusion of any material adverse conditions not customarily imposed with
respect to such consents) that has not been reversed, stayed, enjoined,
annulled or suspended and as to which (a) no timely request for stay, appeal,
petition for reconsideration, application for review, or reconsideration by the
FCC on its own motion is pending and (b) the time for filing any such request,
appeal, petition or application, or for reconsideration by the FCC on its own
motion, has expired. Between the date of this Agreement and the Closing Date,
Mergeco will not directly or indirectly control, supervise or direct the
operation of the Stations. Further, between the date of this Agreement and the
Closing Date, Osborn shall, directly or indirectly, supervise or control the
operation of the Stations. Such operation shall be the sole responsibility of
Osborn.
6.3. Other Governmental Consents. Promptly following the execution
of this Agreement, the parties shall proceed to prepare and file with the
appropriate governmental authorities (other than the FCC) such requests,
reports or notifications as may be required in connection with this Agreement,
and shall diligently and expeditiously prosecute, and shall cooperate fully
with each other in the prosecution of, such matters. Without limiting the
foregoing, the parties shall (a) file promptly with the Federal Trade
Commission and the Antitrust Division of the Department of Justice the
notifications and other information (if any) required to be filed under the HSR
Act with respect to the transactions contemplated hereby and shall use their
commercially reasonable efforts to cause all applicable waiting periods under
the HSR Act to expire or be terminated as of the earliest possible date and (b)
make all necessary filings, and thereafter make any other required submissions
with respect to the transactions contemplated hereby under the Securities Act
and the Exchange Act and the rules and regulations thereunder, including filing
the Proxy Statement, and any other applicable federal or state securities laws.
6.4. Brokers or Finders. Mergeco represents and warrants to
Osborn, and other than Bankers Trust and Robert Chaisson, Osborn represents and
warrants to Mergeco, that no agent, broker, investment banker or other or
person is or will be entitled to any broker's or finder's fee or any other
commission or similar fee in connection with any of the transactions
contemplated by this Agreement. Osborn also represents and warrants that the
aggregate fees payable to Bankers Trust and Robert Chaisson in connection with
any of the transactions contemplated by this Agreement shall not exceed
$1,250,000.
6.5. Additional Agreement. Subject to the terms and conditions of
this Agreement, each of the parties hereto will use its commercially reasonable
efforts to do, or cause to be taken all action and to do, or cause to be done,
all things necessary, proper or advisable under applicable laws and regulations
to consummate and make effective the transactions contemplated by this
Agreement, including, entering into the Release (as defined in Section 9.3) as
contemplated by Section 9.3 and, if Mergeco has preferred stock issued and
outstanding prior to the Closing, at the request of Mergeco, amending Sections
1.4 and 1.6 to provide that such preferred stock shall be converted into
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preferred stock of the Surviving Corporation and amending the Certificate of
Incorporation of Osborn to the extent necessary to allow such preferred stock
to become preferred stock of the Surviving Corporation.
6.6. Escrow Agreement. The parties hereto who are to be parties to
the Escrow Agreement hereby covenant and agree to execute and deliver the
Escrow Agreement on the date of this Agreement.
ARTICLE VII
CONDITIONS PRECEDENT
7.1. Conditions to Each Party's Obligation. The respective
obligations of each party to effect the transactions contemplated hereby are
subject to the satisfaction on or prior to the Closing Date of the following
conditions:
(a) Stockholder Approval. The Merger and this Agreement
and the other transactions contemplated hereby shall have been approved and
adopted by the requisite vote or consent of the stockholders of Osborn.
(b) Other Approvals. All authorizations, consents,
orders or approvals of, or declarations or filings with, or expirations of
waiting periods imposed by, any Governmental Entity necessary for the
consummation of the transactions contemplated by this Agreement shall have been
filed, occurred or been obtained. The Commission Consents shall have become
Final Orders.
(c) No Injunctions or Restraints. No temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the transactions contemplated hereby shall be in
effect.
(d) No Action. No action shall have been taken nor any
statute, rule or regulation shall have been enacted by any Governmental Entity
that makes the consummation of the transactions contemplated hereby illegal.
7.2. Conditions to Obligation of Mergeco. The obligation of
Mergeco to effect the Merger and the transactions contemplated hereby is
subject to the satisfaction of the following conditions unless waived, in whole
or in part, by Mergeco:
(a) Representations and Warranties. The representations
and warranties of Osborn set forth in this Agreement shall be true and correct
(in all material respects for any representation or warranty not already
qualified for materiality) as of the date of this Agreement and as of the
Closing Date as though made on and as of the Closing Date (unless otherwise
limited to
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the date of this Agreement), and Mergeco shall have received a certificate
signed on behalf of Osborn by the chief executive officer or by the chief
financial officer to such effect with respect to Osborn.
(b) Performance of Obligations. Osborn shall have
performed in all material respects all obligations required to be performed by
it under this Agreement prior to the Closing Date, and Mergeco shall have
received a certificate signed on behalf of Osborn by the chief executive
officer or by the chief financial officer to such effect.
(c) Consents Under Agreements. Mergeco shall have been
furnished with evidence reasonably satisfactory to it of the consent or
approval of each person that is a party to a contract or agreement identified
in Schedule 2.1(o) whose consent or approval shall be required in order to
permit the consummation of the transactions contemplated hereby.
(d) Legal Opinions. Mergeco shall have received from (i)
Paul, Weiss, Rifkind, Wharton & Garrison, counsel to Osborn, and (ii) Haley,
Bader & Potts, special FCC counsel to Osborn, one or more opinions dated the
Closing Date, in substantially the forms attached as Exhibits D and E hereto,
which opinions shall expressly provide that they may be relied upon by
Mergeco's lenders, underwriters or other sources of financing with respect to
the transactions contemplated hereby.
(e) Subscription. Concurrently with the execution of
this Agreement, Frank D. Osborn shall have entered into a Subscription
Agreement in substantially the form of Exhibit C attached hereto and thereby
subscribed for one share of the common stock, par value $0.01 per share, of the
Parent in exchange for each share of Common Stock held of record by him. The
closing contemplated by the Subscription Agreement shall have occurred
immediately prior to the Effective Time.
(f) Options and Warrants. Osborn shall have obtained the
consent of each holder of Options or Warrants, as applicable, to the settlement
of such holder's Options or Warrants pursuant to the terms of Sections 1.7 and
1.8, respectively.
(g) Closing Deliveries. All documents, instruments,
certificates or other items required to be delivered by Osborn pursuant to
Section 8.2 shall have been delivered.
(h) Frank D. Osborn Employment Agreement. Osborn shall
have executed and delivered the employment agreement to Frank D. Osborn as
required by Section 4.7.
(i) Fees and Expenses. The aggregate fees and expenses
payable to Alex. Brown, Bankers Trust and Robert Chaisson which have been
incurred in connection with any of the Transactions contemplated by this
Agreement, shall not have exceeded $2,075,000.
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7.3. Conditions to Obligations of Osborn. The obligation of Osborn
to effect the Merger and the transactions contemplated hereby is subject to the
satisfaction of the following conditions unless waived, in whole or in part, by
Osborn:
(a) Representations and Warranties. The representations
and warranties of Mergeco set forth in this Agreement shall be true and correct
(in all material respects for any representation or warranty not already
qualified for materiality) as of the date of this Agreement and as of the
Closing Date as though made on and as of the Closing Date, and Osborn shall
have received a certificate signed on behalf of Mergeco by the chief executive
officer or by the chief financial officer of Mergeco to such effect.
(b) Performance of Obligations of Mergeco. Mergeco shall
have performed in all material respects the obligations required to be
performed by it under this Agreement prior to the Closing Date, and Osborn
shall have received a certificate signed on behalf of Mergeco by the chief
executive officer or by the chief financial officer of Mergeco to such effect.
(c) Legal Opinions. Osborn shall have received from (i)
Vinson & Elkins L.L.P., counsel to Mergeco, and (ii) Fisher, Wayland, Cooper &
Leader, special FCC counsel to Mergeco, opinions dated the Closing Date, in
substantially the forms attached hereto as Exhibits F and G.
(d) Closing, Deliveries. All documents and instruments
required to be delivered by Mergeco pursuant to Section 8.2 shall have been
delivered.
ARTICLE VIII
CLOSING
8.1. Closing. The closing of the Merger (the "Closing") will take
place at the offices of Vinson & Elkins L.L.P., Dallas, Texas, at 10:00 a.m.,
local time, or at such other place and time as Mergeco and Osborn may agree,
subject to the satisfaction or waiver of the conditions set forth in Article
VII, on or before the 10th business day after the Commission Consent has become
a Final Order, upon five business days' prior written notice, given within the
first 5 business days after the Commission Consent has become a Final Order,
from Mergeco to Osborn of the date on which the Closing shall occur (the
"Closing Date"); provided, however, that in no event shall the Closing occur
prior to February 20, 1997. Notwithstanding the foregoing, (a) in the case of
a Trading Event, a Banking Event or a Station Event (in each case as defined
below), (i) if the Cessation Date (as defined below) is less than 60 days after
the Event Date (as defined below), Mergeco, in its discretion, may extend the
Closing Date to a date not later than the 30th day after the Cessation Date,
(ii) if the Cessation Date is more than 60, but less than 90, days after the
Event Date, Mergeco, in its discretion, shall elect on the first to occur of
the 10th business day after the Cessation Date or the 90th day (or, if not a
business day, the next business day) after the Event Date (the "Election Date")
to either (A) close the Merger on the later to occur of the 5th business day
after the Election Date or the 90th day (or, if not a business day, the next
business day) after the Event Date or (B) terminate
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this Agreement, or (iii) if the Cessation Date has not occurred by the 90th day
after the Event Date, then on the 90th day (or, if not a business day, the next
business day) after the Event Date Mergeco, in its discretion, shall elect to
close the Merger on the 5th business day thereafter or terminate this
Agreement, (b) in the case of a Conflict Event, Mergeco, in its discretion, may
only extend the Closing Date to a date not to exceed the 90th day after the
Event Date, (c) if a Cure Period (as defined in Section 9.1(b)(i)) has not
ended on or before the Closing Date, the Closing Date shall be extended to the
end of the Cure Period, and (d) if the Closing does not occur within 20 days
after the date of the Final Order, the parties hereby agree to request approval
from the FCC to extend the Closing so that the Closing contemplated hereunder
will not violate any FCC rules or regulations. For purposes of this Agreement,
a "Trading Event" shall mean that trading generally in securities on the New
York Stock Exchange shall have been suspended or materially limited; a "Banking
Event" shall mean that a general moratorium on commercial banking activities in
New York, New York shall have been declared by any federal or state authority;
a "Conflict Event" shall mean the occurrence of any major armed conflict
involving a substantial participation by the armed forces of the United States
of America; a "Station Event" shall mean any act of nature, calamity or
casualty (including but not limited to fires, floods, earthquakes and storms)
that has caused one or more Stations representing an aggregate of 3% of the
consolidated gross revenues of Osborn for the last full 12 calendar months not
to be operating in compliance with its or their respective Station License(s);
an "Event Date" shall mean the date on which a Trading Event, Banking Event,
Conflict Event or a Station Event occurs; and a "Cessation Date" shall mean the
date on which a Trading Event, Banking Event, Conflict Event or a Station Event
ends. Pro forma adjustments shall be made for purposes of calculating gross
revenues for the 12-month period specified in the definition of "Station Event"
to (i) eliminate the gross revenues of any Station sold during such 12-month
period and (ii) with respect to any radio broadcast station acquired during
such 12-month period, to assume that such station was acquired at the beginning
of such 12-month period and include the gross revenues of such station for the
full 12-month period.
8.2. Actions to Occur at Closing.
(a) At the Closing, Mergeco shall deliver to Osborn the
following:
(i) the certificates in Section 7.3(a) and (b);
and
(ii) the opinions of counsel in Section 7.3(c).
(b) At the Closing, Osborn shall deliver to Mergeco the
following:
(i) the certificates described in Section 7.2(a)
and (b); and
(ii) the opinions of counsel in Section 7.2(d).
(c) At the Closing, Mergeco shall receive from Osborn an
affidavit described in Section 1445(b)(3) of the Code.
36
<PAGE> 42
(d) At the Closing, the Certificate of Merger shall be
signed by the parties and filed with the Secretary of State of the State of
Delaware.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
9.1. Termination. This Agreement may be terminated prior to the
Closing:
(a) by mutual consent of Mergeco and Osborn;
(b) by either Mergeco or Osborn:
(i) if there shall have been any breach of any
representation or warranty, or any material breach of any covenant or
agreement, on the part of Mergeco, on the one hand, or Osborn, on the other
hand, set forth in this Agreement which breach shall not have been cured within
twenty (20) days (the "Cure Period") following receipt by the breaching party
of written notice of such breach;
(ii) if a court of competent jurisdiction or other
Governmental Entity shall have issued an order, decree or ruling or taken any
other action (which order, decree or ruling the parties hereto shall use their
best efforts to lift), in each case permanently restraining, enjoining or
otherwise prohibiting the transactions contemplated by this Agreement, and such
order, decree, ruling or other action shall have become final and
nonappealable;
(iii) if, for any reason, the FCC denies or
dismisses any of the Applications and the time for reconsideration or court
review under the Communications Act with respect to such denial or dismissal
has expired and there is not pending with respect thereto a timely filed
petition for reconsideration or request for review;
(iv) if, for any reason, any of the Applications
is designated for an evidentiary hearing by the FCC;
(v) if this Agreement and the transactions
contemplated hereby, when presented to the holders of Common Stock for their
consideration, whether by vote or by consent, shall fail to receive the
requisite vote or consent for approval and adoption by the holders of Common
Stock; or
(vi) if the Closing shall not have occurred by the
later of the first anniversary date of this Agreement, or the date to which the
Closing Date is extended pursuant to the second sentence of Section 8.1;
provided, however, that the right to terminate this Agreement
37
<PAGE> 43
under this clause (vi) shall not be available to any party whose breach of this
Agreement has been the cause of, or resulted in, the failure of the Closing to
occur on or before such date; or
(c) by Mergeco:
(i) with respect to a Trading Event, Banking
Event, or a Station Event, at its option, as provided in the second sentence of
Section 8.1;
(ii) if the FCC grants any of the Applications
with any material adverse conditions not generally imposed on grants of such
applications and the time for reconsideration or court review under the
Communications Act with respect to such material adverse conditions has expired
and there is not pending with respect thereto a timely filed petition for
reconsideration or request for review;
(iii) if (A) the Osborn Board (1) withdraws its
recommendation of this Agreement or the Merger (whether or not under the
circumstances permitted by this Agreement) or shall have resolved to do so or
(2) shall have recommended to the stockholders of Osborn any Business
Combination Transaction (as defined in Section 9.2), whether or not in the
circumstances under which Osborn has a right to terminate this Agreement
pursuant to Section 9.1(d)(i) of this Agreement, or resolved to do so or (B) a
tender offer or exchange offer for 50% or more of the outstanding shares of
capital stock of Osborn is commenced (other than by Osborn or its affiliates)
and the Osborn Board fails to recommend against the stockholders of Osborn
tendering their shares into such tender offer or exchange offer; or
(iv) if Osborn shall fail to perform its
obligations under Section 8.2; or
(d) by Osborn:
(i) by Osborn if, prior to the receipt of the
requisite vote or consent for approval and adoption by the holders of Common
Stock of this Agreement and the transactions contemplated hereby, in the
exercise of its good faith judgment (subject to Section 4.1) as to its
fiduciary duties to its stockholders under applicable law, the Osborn Board
determines that such termination is required by such fiduciary duties by reason
of a proposal that either constitutes a Business Combination Transaction or may
reasonably be expected to lead to a Business Combination Transaction on terms
more favorable to the stockholders of Osborn than the Merger and which has a
reasonable prospect of being consummated in accordance with its terms (such
determination being based on consultations with Alex. Brown and the opinion of
its independent legal counsel that such termination is required in order for
the Osborn Board not to breach its fiduciary duties to stockholders imposed by
applicable law) (a "Business Combination Transaction Proposal"); provided that
Osborn has provided Mergeco with at least 48 hours prior written notice of its
intent to so terminate this Agreement (together with a summary of the material
terms of such Business Combination Transaction Proposal); and provided further
that any termination of this Agreement by Osborn pursuant to this Section
9.1(d)(i) shall not be effective until Osborn has made payment of
38
<PAGE> 44
the Alternative Proposal Fee (as hereinafter defined) and the Acquiror Expenses
(as hereinafter defined) as required by Section 9.2 hereof; or
(ii) if Mergeco shall fail to perform any of its
obligations under Section 8.2.
The right of any party hereto to terminate this Agreement pursuant to this
Section 9.1 shall remain operative and in full force and effect regardless of
any investigation made by or on behalf of any party hereto, any person
controlling any such party or any of their respective officers, directors,
employees, accountants, consultants, legal counsel, agents or other
representatives whether prior to or after the execution of this Agreement.
Notwithstanding anything in the foregoing to the contrary, no party that is in
material breach of this Agreement shall be entitled to terminate this Agreement
except with the consent of the other parties hereto.
9.2. Fees and Expenses. Osborn shall pay Mergeco a fee (an
"Alternative Proposal Fee") of $3,750,000 if this Agreement is terminated
pursuant to Section 9.1(c)(iii) or simultaneously with any termination of this
Agreement pursuant to Section 9.1(d)(i). As used herein, the term "Business
Combination Transaction" shall mean any of the following involving Osborn: (a)
any merger, consolidation, share exchange, business combination or other
similar transaction (other than the Merger); (b) any sale, lease, exchange,
transfer or other disposition (other than a pledge or mortgage) of 50% or more
of the assets of Osborn and its subsidiaries in a single transaction or series
of related transactions; or (c) the acquisition by a person or entity or any
"group" (as such term is defined under Section 13(d) of the Exchange Act and
the rules and regulations thereunder) of beneficial ownership of 35% or more of
the shares of Common Stock, whether by tender offer, exchange offer or
otherwise.
9.3. Effect of Termination. In the event of termination of this
Agreement by either Osborn or Mergeco as provided in Section 9.1, this
Agreement shall forthwith become void, the Merger shall be abandoned and there
shall be no liability on the part of Osborn or Mergeco of any kind whatsoever,
except (i) with respect to Section 9.2 which shall continue to apply in
accordance with its terms and (ii) each party shall remain liable for a breach
of this Agreement. Termination of this Agreement shall have no effect on the
rights and obligations of the parties under the Confidentiality Agreement. In
the event that Osborn terminates this Agreement under Section 9.1(b)(i), the
parties agree and acknowledge that Osborn will suffer damages that are not
practicable to ascertain at the time of execution of this Agreement.
Accordingly, Osborn and Mergeco agree that, in such event, Osborn shall be
entitled to the sum of $5,000,000 as liquidated damages. The parties agree
that the foregoing liquidated damages are reasonable considering all the
circumstances existing as of the date hereof and constitute the parties' good
faith estimate of the actual damages reasonably expected to result from the
termination of this Agreement by Osborn pursuant to Section 9.1(b)(i). Osborn
agrees that, to the fullest extent permitted by law, the right to payment of
the $5,000,000 as liquidated damages under this Section 9.3 shall be its sole
and exclusive remedy if the Closing does not occur with respect to any damages
whatsoever that Osborn may suffer or allege to suffer as a result of any claim
or cause of action asserted by Osborn relating to or arising from breaches of
the
39
<PAGE> 45
representations, warranties or covenants of Mergeco contained in this Agreement
and to be made or performed at or prior to the Closing; provided that as a
condition to payment, and upon receipt, of liquidated damages under this
Section 9.3, Osborn hereby (a) irrevocably and unconditionally releases,
acquits, and forever discharges Mergeco, Parent and their respective
successors, assigns, employees, agents, stockholders, partners, subsidiaries,
parent companies and other affiliates (corporate or otherwise) (the "Released
Parties") of and from any and all claims, demands, causes of action, or
liabilities of any kind whatsoever, whether known or unknown, matured or
unmatured, suspected or unsuspected, liquidated or unliquidated, absolute or
contingent, direct or derivative, against the Released Parties, including,
without limitation, any claim, demand, cause of action, or liability arising
out of, based upon, resulting from or relating to the negotiation, execution,
performance, breach or otherwise related to or arising out of this Agreement or
any agreement entered into in connection herewith or related hereto, and (b)
agrees to deliver a Release (herein so called) in the form of Exhibit L
attached hereto, to Mergeco and Parent.
ARTICLE X
GENERAL PROVISIONS
10.1. Non-Survival of Representations, Warranties and Covenants.
The representations and warranties in this Agreement shall terminate at the
Effective Time. Except for those covenants and agreements which are fully
performed on or prior to the Effective Time, all covenants and agreements in
this Agreement shall survive the Effective Time indefinitely.
10.2. Knowledge. Wherever reference is made in this Agreement to a
particular statement being "to the knowledge of Osborn" (or any correlative
phrase), such phrase shall be deemed to include the actual knowledge of any
officer of Osborn or its subsidiaries, and the General Managers and/or Station
Managers and Chief Engineers of each of the Stations.
10.3. Amendment and Modification. This Agreement may be amended by
the parties hereto by action taken by or on behalf of their respective Boards
of Directors at any time prior to the Effective Time; provided, however, that,
after the approval and adoption of this Agreement and the transactions
contemplated hereby by the stockholders of Osborn, no amendment may be made
that would reduce the amount or change the type of consideration into which
each share of Common Stock shall be converted pursuant to this Agreement upon
consummation of the Merger. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto.
10.4. Waiver of Compliance. Any failure of Mergeco on the one hand,
or Osborn, on the other hand, to comply with any obligation, covenant,
agreement or condition contained herein may be waived only if set forth in an
instrument in writing signed by the party or parties to be bound thereby, but
such waiver or failure to insist upon strict compliance with such obligation,
covenant, agreement or condition shall not operate as a waiver of, or estoppel
with respect to, any other failure.
40
<PAGE> 46
10.5. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of
applicable law, or public policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the Merger is not affected in any manner
materially adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in a mutually
acceptable manner in order that the Merger be consummated as originally
contemplated to the fullest extent possible.
10.6. Expenses and Obligations. Except as otherwise expressly
provided in this Agreement or as provided by law, all costs and expenses
incurred by the parties hereto in connection with the consummation of the
transactions contemplated hereby shall be borne solely and entirely by the
party which has incurred such expenses. In the event of a dispute between the
parties in connection with this Agreement and the transactions contemplated
hereby, each of the parties hereto hereby agrees that the prevailing party
shall be entitled to reimbursement by the other party of reasonable legal fees
and expenses incurred in connection with any action or proceeding.
10.7. Parties in Interest. This Agreement shall be binding upon
and, except as provided below, inure solely to the benefit of each party hereto
and their successors and assigns, and nothing in this Agreement, except as set
forth below, express or implied, is intended to confer upon any other person
any rights or remedies of any nature whatsoever under or by reason of this
Agreement.
10.8. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally or mailed by
registered or certified mail (return receipt requested) to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(a) If to Mergeco or Parent, to
OCC Acquisition Company, Inc.
200 Crescent Court, Suite 1600
Dallas, Texas 75201
Attn: Lawrence D. Stuart
Facsimile: (214) 740-7313
41
<PAGE> 47
with a copy to
Vinson & Elkins L.L.P.
3700 Trammell Crow Center
2001 Ross Avenue
Dallas, Texas 75201
Attn: Michael D. Wortley
Facsimile: (214) 220-7716
(b) If to Osborn,
Osborn Communications Corporation
130 Mason Street
Greenwich, Connecticut 06830
Attn: Frank D. Osborn
Facsimile: (203) 629-1749
with a copy to
Paul, Weiss, Rifkind, Wharton & Garrison
1385 Avenue of the Americas
New York, New York 10019
Attn: Robert M. Hirsh
Facsimile: (212) 757-3990
10.9. Interpretation. When a reference is made in this Agreement to
Sections or Exhibits, such reference shall be to a Section or Exhibit to this
Agreement unless otherwise indicated. The table of contents, if any, and
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement.
Whenever the words "include," "includes," or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation."
10.10. Counterparts. This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, all of which
shall be considered one and the same agreement and shall become effective when
one or more counterparts have been signed by each of the parties and delivered
to the other parties, it being understood that all parties need not sign the
same counterpart.
10.11. Entire Agreement. This Agreement (which term shall be deemed
to include the Confidentiality Agreement referred to in Section 4.2(a), the
exhibits and schedules hereto and the other certificates, documents and
instruments delivered hereunder) constitutes the entire agreement of the
parties hereto and supersedes all prior agreements and understandings, both
written and oral,
42
<PAGE> 48
among the parties with respect to the subject matter hereof. There are no
representations or warranties, agreements or covenants other than those
expressly set forth in this Agreement (as so defined).
10.12. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE. ANY SUIT OR
PROCEEDING BROUGHT HEREUNDER SHALL BE SUBJECT TO THE EXCLUSIVE JURISDICTION OF
THE COURTS LOCATED IN DELAWARE.
10.13. Public Announcements. (a) Mergeco and Osborn shall consult
with each other before issuing any press release or otherwise making any public
statements with respect to this Agreement or the transactions contemplated
hereby and shall not issue any such press release or make any such public
statement prior to such consultation and (b) prior to the Effective Time,
Osborn will not issue any other press release or otherwise make any public
statements regarding its business, except as may be required by applicable law
or any listing agreement with the National Association of Securities Dealers,
Inc. to which Osborn is a party.
10.14. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto, whether by operation of law or otherwise; provided, however, that (a)
upon notice to Osborn and without releasing Mergeco from any of its obligations
or liabilities hereunder, Mergeco may assign or delegate any or all of its
rights or obligations under this Agreement to any affiliate thereof, and (b)
nothing in this Agreement shall limit Mergeco's ability to make a collateral
assignment of its rights under this Agreement to any institutional lender that
provides funds to Mergeco without the consent of Osborn. Osborn shall execute
an acknowledgment of such assignment(s) and collateral assignments in such
forms as Mergeco or its institutional lenders may from time to time reasonably
request; provided, however, that unless written notice is given to Osborn that
any such collateral assignment has been foreclosed upon, Osborn shall be
entitled to deal exclusively with Mergeco as to any matters arising under this
Agreement or any of the other agreements delivered pursuant hereto. In the
event of such an assignment, the provisions of this Agreement shall inure to
the benefit of and be binding on Mergeco's assigns. Nothing in this Agreement
shall prevent the Parent from assigning its interest in Mergeco to an affiliate
of the Parent.
10.15. Further Assurances. At the Closing or from time to time
thereafter, the Surviving Corporation shall execute and deliver such other
instruments of assignment, transfer and delivery and shall take such other
actions as the other reasonably may request in order to consummate, complete
and carry out the transactions contemplated by this Agreement.
10.16. Director, Officer and Stockholder Liability. The directors,
officers and stockholders of Mergeco and the directors, officers and
stockholders of the Parent shall not have any personal liability for any
liabilities arising under this Agreement. The directors, officers and
stockholders of Osborn and its subsidiaries shall not have any personal
liability for any liabilities arising under this Agreement.
43
<PAGE> 49
10.17. Certain Definitions. For purposes of this Agreement, the
term:
(a) "affiliate" of a specified person means a person who,
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such specified person;
(b) "beneficial owner" with respect to any shares means a
person who shall be deemed to be the beneficial owner of such shares (i) which
such person or any of its affiliates or associates (as such term is defined in
Rule 12b-2 promulgated under the Exchange Act) beneficially owns, directly or
indirectly, (ii) which such person or any of its affiliates or associates has,
directly or indirectly, (A) the right to acquire (whether such right is
exercisable immediately or subject only to the passage of time), pursuant to
any agreement, arrangement or understanding or upon the exercise of rights,
exchange rights, warrants or options, or otherwise, or (B) the right to vote
pursuant to any agreement, arrangement or understanding, (iii) which are
beneficially owned, directly or indirectly, by any other persons with whom such
person or any of its affiliates or associates or any person with whom such
person or any of its affiliates or associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing of any
such shares, or (iv) pursuant to Section 13(d) of the Exchange Act and any
rules or regulations promulgated thereunder;
(c) "business day" means any day on which the principal
offices of the SEC in Washington, D.C. are open to accept filings, or, in the
case of determining a date when any payment is due, any day on which banks are
not required or authorized to close in New York, New York.
(d) "control" (including the terms "controlled by" and
"under common control with") means the possession, directly or indirectly or as
trustee or executor, of the power to direct or cause the direction of the
management and policies of a person, whether through the ownership of voting
securities, as trustee or executor, by contract or credit arrangement or
otherwise;
(e) "person" means an individual, corporation, limited
liability company, partnership, limited partnership, syndicate, person
(including, without limitation, a "person" as defined in Section 13(d)(3) of
the Exchange Act), trust, association or other legal entity or government,
political subdivision, agency or instrumentality of a government; and
(f) "subsidiary" or "subsidiaries" of any person means
any corporation, partnership, joint venture or other legal entity of which such
person (either alone or through or together with any other subsidiary), owns or
has rights to acquire, directly or indirectly, 50% or more of the capital stock
or other equity interests the holders of which are generally entitled to vote
for the election of the board of directors or other governing body of such
corporation or other legal entity.
(g) "Voting Agreement" shall mean the Voting Agreement in
substantially the form of Exhibit H hereto dated as of even date herewith, by
and among Mergeco and the stockholders of Osborn named therein.
44
<PAGE> 50
IN WITNESS WHEREOF, Mergeco, Osborn, and the Parent have caused this
Agreement to be signed, all as of the date first written above.
MERGECO:
OCC ACQUISITION COMPANY, INC.
By: Eric C. Neuman
Its: President
OSBORN:
OSBORN COMMUNICATIONS CORPORATION
------------------------------------
By:
---------------------------------
Its:
---------------------------------
PARENT:
OCC HOLDING CORPORATION
------------------------------------
By:
---------------------------------
Its:
---------------------------------
<PAGE> 1
EXHIBIT 2.2
FIRST AMENDMENT
TO
AGREEMENT AND PLAN OF MERGER
THIS FIRST AMENDMENT (the "First Amendment") to the Agreement and Plan
of Merger ("Merger Agreement"), dated as of July 23, 1996, by and among OCC
Acquisition Company, Inc. ("Mergeco"), Osborn Communications Corporation
("Osborn"), and OCC Holding Corporation ("OCC Holding") is entered into as of
February 20, 1997, by and among Mergeco, Osborn, OCC Holding, and Commodore
Media, Inc. ("CMI").
RECITALS:
WHEREAS, Mergeco, pursuant to the terms and subject to the conditions
of the Merger Agreement, and in accordance with the General Corporation Law of
the State of Delaware, will merge with and into Osborn;
WHEREAS, the parties to the Merger Agreement desire to amend the
Merger Agreement as provided herein pursuant to Section 10.3 of the Merger
Agreement;
WHEREAS, among other things, the parties to the Merger Agreement
desire, and CMI desires, to replace OCC Holding with CMI as a party to the
Merger Agreement for all purposes; and
WHEREAS, any capitalized term used herein, and not otherwise defined
herein, shall have the meaning set forth in the Merger Agreement.
AGREEMENTS:
NOW, THEREFORE, in consideration of the foregoing and the agreements
herein contained, the parties hereto covenant and agree as follows:
1. Section 1.4(a) of the Merger Agreement is hereby amended and
restated to read in its entirety as follows:
"(a) At the Effective Time, the Certificate of
Incorporation of Osborn, as in effect immediately prior to the
Effective Time, shall be the Certificate of Incorporation of the
Surviving Corporation."
2. Section 7.2(e) of the Merger Agreement is hereby amended and
restated to read in its entirety as follows:
"(e) Subscription. Prior to the Effective Time,
Frank D. Osborn shall have entered into a Subscription Agreement in
substantially the form of Exhibit
<PAGE> 2
C attached hereto and thereby subscribed for 1,636,361 shares of
common stock, par value $0.01 per share, of Capstar Broadcasting
Partners, Inc., a Delaware corporation, in exchange for 117,073 shares
of Common Stock held of record by Mr. Osborn. The Closing
contemplated by the Subscription Agreement shall have occurred
immediately prior to the Effective Time."
3. As of and after the date hereof, OCC Holding shall not be a
party to the Merger Agreement. All references in the Merger Agreement, to OCC
Holding, as Parent or otherwise, shall hereby be deemed, as of and after the
date hereof, to refer to CMI for all purposes.
4. CMI, in its capacity as the sole stockholder of Mergeco, by
its execution and delivery of this First Amendment, approves and adopts this
First Amendment, the Merger Agreement and the transactions contemplated hereby
and thereby.
5. Exhibit A (Restated Certificate of Incorporation of Osborn
Communications Corporation) of the Merger Agreement is hereby deleted in its
entirety.
6. Exhibit B (Employment Agreement) of the Merger Agreement is
hereby amended and restated to read in its entirety as Exhibit 1 attached
hereto.
7. Exhibit C (Subscription Agreement for OCC Holding Corporation)
of the Merger Agreement is hereby amended and restated to read in its entirety
as Exhibit 2 attached hereto.
8. Except as herein specifically amended or supplemented, the
Merger Agreement shall continue in full force and effect in accordance with its
terms.
9. This First Amendment may be executed and delivered (including
by facsimile transmission) in one or more counterparts, all of which shall be
considered one and the same agreement and shall become effective when one or
more counterparts have been signed by each of the parties and delivered to the
other parties, it being understood that all parties need not sign the same
counterpart.
[Remainder of page intentionally left blank]
<PAGE> 3
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first written above.
MERGECO:
OCC ACQUISITION COMPANY, INC.
------------------------------------
By: Eric C. Neuman
Its: President
OSBORN:
OSBORN COMMUNICATIONS CORPORATION
------------------------------------
By: Frank D. Osborn
Its: President
OCC HOLDING:
OCC HOLDING CORPORATION
------------------------------------
By: Eric C. Neuman
Its: President
CMI:
COMMODORE MEDIA, INC.
------------------------------------
By: R. Steven Hicks
Its: Chief Executive Officer
<PAGE> 1
EXHIBIT 10.1
================================================================================
CREDIT AGREEMENT
among
CAPSTAR BROADCASTING PARTNERS, INC.,
COMMODORE MEDIA, INC.,
VARIOUS BANKS
and
BANKERS TRUST COMPANY,
as ADMINISTRATIVE AGENT
and
ARRANGER
__________________________________
Dated as of February 20, 1997
__________________________________
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 1. Amount and Terms of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.01 Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.02 Minimum Amount of Each Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.03 Notice of Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.04 Disbursement of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.05 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.06 Conversions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.07 Pro Rata Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.08 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.09 Interest Periods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.10 Increased Costs, Illegality, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.11 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.12 Change of Lending Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.13 Replacement of Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2. Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.01 Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.02 Letter of Credit Requests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.03 Letter of Credit Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.04 Agreement to Repay Letter of Credit Drawings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.05 Increased Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 3. Commitment Commission; Fees; Reductions of Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.01 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.02 Voluntary Termination and Reduction of Total Unutilized Commitment . . . . . . . . . . . . . . . . . . 19
3.03 Mandatory Reduction of Commitments, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 4. Prepayments; Payments; Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.01 Voluntary Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.02 Mandatory Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.03 Method and Place of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.04 Net Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 5A. Conditions Precedent to Credit Events on the Effective Date . . . . . . . . . . . . . . . . . . . . . . 26
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5A.01 Execution of Agreement; Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5A.02 Fees, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5A.03 Opinions of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5A.04 Corporate Documents; Proceedings; etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5A.05 Shareholders' Agreements; Management Agreements; Employment Agreements; Tax Sharing Agreements . . . 28
5A.06 Consummation of the Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5A.07 Subsidiary Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5A.08 Pledge Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5A.09 Security Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5A.10 Mortgages; Title Insurance; etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5A.11 Environmental Indemnity Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5A.12 Consent Letter. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5A.13 Existing Credit Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5A.14 Adverse Change, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5A.15 Solvency Letter; Environmental Analyses; Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 34
5A.16 Pro Forma Balance Sheet; Projections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5A.17 Designated Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 5B. Conditions Precedent to Credit Events on the H/T
Borrowing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
5B.01 Officer's Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
5B.02 Opinions of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
5B.03 Consummation of the H/T Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
5B.04 Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
5B.05 Security Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
5B.06 Environmental Assessments; Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
5B.07 Fees, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 6. Conditions Precedent to All Credit Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
6.01 No Default; Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
6.02 Notice of Borrowing; Letter of Credit Request . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 7. Representations, Warranties and Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.01 Corporate Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
7.02 Corporate Power and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
7.03 No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
7.04 Governmental Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
7.05 Financial Statements; Financial Condition; Undisclosed Liabilities;
Projections; etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
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7.06 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
7.07 True and Complete Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
7.08 Use of Proceeds; Margin Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
7.09 Tax Returns and Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
7.10 Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
7.11 The Security Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
7.12 Representations and Warranties in Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
7.13 Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
7.14 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
7.15 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
7.16 Compliance with Statutes, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
7.17 Investment Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
7.18 Public Utility Holding Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
7.19 Labor Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
7.20 Patents, Licenses, Franchises and Formulas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
7.21 Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
7.22 Business of Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
7.23 FCC Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
7.24 Existing Senior Subordinated Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 8. Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
8.01 Information Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
8.02 Books, Records and Inspections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
8.03 Maintenance of Property; Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
8.04 Corporate Franchises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
8.05 Compliance with Statutes, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
8.06 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
8.07 End of Fiscal Years; Fiscal Quarters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
8.08 Performance of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
8.09 Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
8.10 Maintenance of Separateness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
8.11 Fort Myers Disposition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
8.12 Additional Security; Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 9. Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
9.01 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
9.02 Consolidation, Merger, Purchase or Sale of Assets, etc. . . . . . . . . . . . . . . . . . . . . . . . 65
9.03 Dividends. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
9.04 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
9.05 Advances, Investments and Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
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9.06 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
9.07 Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
9.08 Maximum Leverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
9.09 Minimum Consolidated EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
9.10 Consolidated EBITDA to Consolidated Net Cash Interest Expense . . . . . . . . . . . . . . . . . . . . 77
9.11 Limitation on Modifications of Certificate of Incorporation, By-Laws and Certain Other
Agreements; Limitations of Prepayments and Modifications of Indebtedness; etc. . . . . . . . . . . 78
9.12 Limitation on Certain Restrictions on Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . 79
9.13 Limitation on Issuance of Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
9.14 Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
9.15 Limitation on Creation of Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
9.16 No Other Designated Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
SECTION 10. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
10.01 Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
10.02 Representations, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
10.03 Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
10.04 Default Under Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
10.05 Bankruptcy, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
10.06 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
10.07 Security Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
10.08 Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
10.09 Judgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
10.10 Change of Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
10.11 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
SECTION 11. Definitions and Accounting Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
11.01 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
SECTION 12. The Administrative Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
12.01 Appointment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
12.02 Nature of Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
12.03 Lack of Reliance on the Administrative Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
12.04 Certain Rights of the Administrative Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
12.05 Reliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
12.06 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
12.07 The Administrative Agent in Its Individual Capacity . . . . . . . . . . . . . . . . . . . . . . . . . 116
12.08 Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
12.09 Resignation by the Administrative Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
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SECTION 13. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
13.01 Payment of Expenses, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
13.02 Right of Setoff; Collateral Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
13.03 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
13.04 Benefit of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
13.05 No Waiver; Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122
13.06 Payments Pro Rata . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122
13.07 Calculations; Computations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123
13.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . 123
13.09 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125
13.10 Effectiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125
13.11 Headings Descriptive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125
13.12 Amendment or Waiver; etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125
13.13 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127
13.14 Domicile of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127
13.15 Limitation on Additional Amounts, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127
13.16 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127
13.17 Register . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128
13.18 Designated Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129
SECTION 14. Holdings Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129
14.01 The Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129
14.02 Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129
14.03 Nature of Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129
14.04 Independent Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
14.05 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
14.06 Reliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
14.07 Subordination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
14.08 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
14.09 Nature of Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134
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SCHEDULE I Commitments
SCHEDULE II Real Property
SCHEDULE III Subsidiaries
SCHEDULE IV FCC Licenses
SCHEDULE V Insurance
SCHEDULE VI Existing Liens
SCHEDULE VII Existing Indebtedness
SCHEDULE VIII Existing Investments
SCHEDULE 7.21
EXHIBIT A Notice of Borrowing
EXHIBIT B Note
EXHIBIT C Letter of Credit Request
EXHIBIT D Section 4.04(b)(ii) Certificate
EXHIBIT E-1 Opinion of Vinson & Elkins, Special Counsel to the Credit
Parties
EXHIBIT E-2 Opinion of Fisher Wayland Cooper Leader & Zaragoza L.L.P., Special FCC Counsel to the
Credit Parties
EXHIBIT F Officers' Certificate
EXHIBIT G Subsidiary Guaranty
EXHIBIT H-1 Holdings Pledge Agreement
EXHIBIT H-2 Borrower Pledge Agreement
EXHIBIT H-3 Subsidiary Pledge Agreement
EXHIBIT I-1 Holdings Security Agreement
EXHIBIT I-2 Borrower Security Agreement
EXHIBIT I-3 Subsidiary Security Agreement
EXHIBIT J Environmental Indemnity Agreement
EXHIBIT K Consent Letter
EXHIBIT L Assignment and Assumption Agreement
</TABLE>
(vi)
<PAGE> 8
CREDIT AGREEMENT, dated as of February 20, 1997, among CAPSTAR
BROADCASTING PARTNERS, INC., a Delaware corporation ("Holdings"), COMMODORE
MEDIA, INC., a Delaware corporation (the "Borrower"), the Banks party hereto
from time to time and BANKERS TRUST COMPANY, as Administrative Agent (all
capitalized terms used herein and defined in Section 11 are used herein as
therein defined).
W I T N E S S E T H :
WHEREAS, subject to and upon the terms and conditions herein
set forth, the Banks are willing to make available to the Borrower the credit
facilities provided for herein;
NOW, THEREFORE, IT IS AGREED:
SECTION 1. Amount and Terms of Credit.
1.01 Commitment. Subject to and upon the terms and
conditions set forth herein, each Bank severally agrees, at any time and from
time to time on and after the Effective Date and prior to the Final Maturity
Date, to make a loan or loans (each a "Loan" and, collectively, the "Loans") to
the Borrower, which Loans (i) shall, at the option of the Borrower, be Base
Rate Loans or Eurodollar Loans, provided that, (A) except as otherwise
specifically provided in Section 1.10(b), all Loans comprising the same
Borrowing shall at all times be of the same Type and (B) no Loans maintained as
Eurodollar Loans may be incurred prior to the earlier of (1) the 60th day after
the Effective Date and (2) the Syndication Date, (ii) may be repaid and
reborrowed in accordance with the provisions hereof, (iii) shall not exceed for
any Bank at any time outstanding that aggregate principal amount which, when
added to the product of (x) such Bank's Adjusted Percentage and (y) the
aggregate amount of all Letter of Credit Outstandings (exclusive of Unpaid
Drawings which are repaid with the proceeds of, and simultaneously with the
incurrence of, the respective incurrence of Loans) at such time, equals the
Adjusted Available Commitment of such Bank at such time and (iv) shall not
exceed for all Banks at any time outstanding that aggregate principal amount
which, when added to the amount of all Letter of Credit Outstandings (exclusive
of Unpaid Drawings which are repaid with the proceeds of, and simultaneously
with the incurrence of, the respective incurrence of Loans) at such time,
equals the Total Available Commitment at such time. Notwithstanding anything
to the contrary contained above, no Loans may be incurred on the Effective
Date.
1.02 Minimum Amount of Each Borrowing. The aggregate
principal amount of each Borrowing shall not be less than (x) in the case of
Eurodollar Loans, $200,000 (and, if greater, shall be in an integral multiple of
$50,000) and (y) in the case of Base Rate Loans, $25,000 (and, if greater, shall
<PAGE> 9
be in an integral multiple of $25,000) or, if less, the then remaining Total
Available Commitment. More than one Borrowing may occur on the same date, but
at no time shall there be outstanding more than six Borrowings of Eurodollar
Loans.
1.03 Notice of Borrowing. (a) Whenever the Borrower desires
to incur a Borrowing hereunder, it shall give the Administrative Agent at its
Notice Office at least one Business Day's prior written (or telephonic promptly
confirmed in writing) notice of each Base Rate Loan and at least three Business
Days' prior written (or telephonic promptly confirmed in writing) notice of
each Eurodollar Loan to be made hereunder, provided that any such notice shall
be deemed to have been given on a certain day only if given before 12:00 Noon
(New York time) on such day. Each such written notice or written confirmation
of telephonic notice (each a "Notice of Borrowing"), except as otherwise
expressly provided in Section 1.10, shall be irrevocable and shall be given by
the Borrower in the form of Exhibit A, appropriately completed to specify the
aggregate principal amount of the Loans to be made pursuant to such Borrowing,
the date of such Borrowing (which shall be a Business Day), whether the Loans
being made pursuant to such Borrowing are to be initially maintained as Base
Rate Loans or Eurodollar Loans and, if Eurodollar Loans, the initial Interest
Period to be applicable thereto. The Administrative Agent shall promptly give
each Bank notice of such proposed Borrowing, of such Bank's proportionate share
thereof and of the other matters required by the immediately preceding sentence
to be specified in the Notice of Borrowing.
(b) Without in any way limiting the obligation of the
Borrower to confirm in writing any telephonic notice of any Borrowing of Loans,
the Administrative Agent may act without liability upon the basis of telephonic
notice of such Borrowing, believed by the Administrative Agent in good faith to
be from an Authorized Officer of the Borrower prior to receipt of written
confirmation. In each such case, the Borrower hereby waives the right to
dispute the Administrative Agent's record of the terms of such telephonic
notice of such Borrowing of Loans.
1.04 Disbursement of Funds. Except as otherwise specifically
provided in the second succeeding sentence, no later than 12:00 Noon (New York
time) on the date specified in each Notice of Borrowing, each Bank will make
available its pro rata portion of each such Borrowing requested to be made on
such date. All such amounts shall be made available in Dollars and in
immediately available funds at the Payment Office of the Administrative Agent,
and the Administrative Agent will make available to the Borrower at the Payment
Office the aggregate of the amounts so made available by the Banks (prior to
1:00 P.M. on such day, to the extent of funds actually received by the
Administrative Agent prior to 12:00 Noon on such day). Unless the
Administrative Agent shall have been notified by any Bank prior to the date of
Borrowing that such Bank does not intend to make available to the
Administrative Agent such Bank's portion of any Borrowing to be made on such
date, the Administrative Agent may assume that such Bank has made such amount
available to the Administrative Agent on such date of Borrowing and the
Administrative Agent may, in
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<PAGE> 10
reliance upon such assumption, make available to the Borrower a corresponding
amount. If such corresponding amount is not in fact made available to the
Administrative Agent by such Bank, the Administrative Agent shall be entitled
to recover such corresponding amount on demand from such Bank. If such Bank
does not pay such corresponding amount forthwith upon the Administrative
Agent's demand therefor, the Administrative Agent shall promptly notify the
Borrower and the Borrower shall immediately pay such corresponding amount to
the Administrative Agent. The Administrative Agent shall also be entitled to
recover on demand from such Bank or the Borrower, as the case may be, interest
on such corresponding amount in respect of each day from the date such
corresponding amount was made available by the Administrative Agent to the
Borrower until the date such corresponding amount is recovered by the
Administrative Agent, at a rate per annum equal to (i) if recovered from such
Bank, at the overnight Federal Funds Rate and (ii) if recovered from the
Borrower, the rate of interest applicable to the respective Borrowing, as
determined pursuant to Section 1.08. Nothing in this Section 1.04 shall be
deemed to relieve any Bank from its obligation to make Loans hereunder or to
prejudice any rights which the Borrower may have against any Bank as a result
of any failure by such Bank to make Loans hereunder.
1.05 Notes. (a) The Borrower's obligation to pay the
principal of, and interest on, the Loans made by each Bank shall be evidenced
by a promissory note duly executed and delivered by the Borrower substantially
in the form of Exhibit B, with blanks appropriately completed in conformity
herewith (each, a "Note" and, collectively, the "Notes").
(b) The Note issued to each Bank shall (i) be executed by the
Borrower, (ii) be payable to the order of such Bank and be dated the Effective
Date, (iii) be in a stated principal amount equal to the Commitment of such
Bank and be payable in the principal amount of the Loans evidenced thereby,
(iv) mature on the Final Maturity Date, (v) bear interest as provided in the
appropriate clause of Section 1.08 in respect of the Base Rate Loans and
Eurodollar Loans, as the case may be, evidenced thereby, (vi) be subject to
voluntary prepayment as provided in Section 4.01, and mandatory repayment as
provided in Section 4.02 and (vii) be entitled to the benefits of this
Agreement and the other Credit Documents.
(c) Each Bank will note on its internal records the amount of
each Loan made by it and each payment in respect thereof and will prior to any
transfer of any of its Notes endorse on the reverse side thereof the
outstanding principal amount of Loans evidenced thereby. Failure to make any
such notation or any error in any such notation or endorsement shall not affect
the Borrower's obligations in respect of such Loans.
1.06 Conversions. The Borrower shall have the option to
convert, on any Business Day on or after the earlier of (x) the 60th day after
the Effective Date and (y) the Syndication Date, all or a portion equal to at
least (i) in the case of Eurodollar Loans, $200,000 (and, if greater, in an
-3-
<PAGE> 11
integral multiple of $50,000) and (ii) in the case of Base Rate Loans, $25,000
(and, if greater, in an integral multiple of $25,000), of the outstanding
principal amount of Loans made pursuant to one or more Borrowings of one or
more Types of Loans into a Borrowing of another Type of Loan, provided that (i)
except as otherwise provided in Section 1.10(b), Eurodollar Loans may be
converted into Base Rate Loans only on the last day of an Interest Period
applicable to the Loans being converted and no partial conversion of Eurodollar
Loans shall reduce the outstanding principal amount of such Eurodollar Loans
made pursuant to a single Borrowing to less than $200,000, (ii) Base Rate Loans
may not be converted into Eurodollar Loans if a violation of Sections 10.01 or
10.05 or an Event of Default is in existence on the date of the conversion and
the Administrative Agent or the Required Banks have determined that such
conversion at such time would be disadvantageous to the Banks and (iii) no
conversion pursuant to this Section 1.06 shall result in a greater number of
Eurodollar Loans than is permitted under Section 1.02. Each such conversion
shall be effected by the Borrower by giving the Administrative Agent at its
Notice Office prior to 12:00 Noon (New York time) at least three Business Days'
prior notice (each a "Notice of Conversion") specifying the Loans to be so
converted, the Borrowing or Borrowings pursuant to which such Loans were made
and, if to be converted into Eurodollar Loans, the Interest Period to be
initially applicable thereto. The Administrative Agent shall give each Bank
prompt notice of any such proposed conversion affecting any of its Loans.
1.07 Pro Rata Borrowings. All Loans under this Agreement
shall be incurred from the Banks pro rata on the basis of their Commitments.
It is understood that no Bank shall be responsible for any default by any other
Bank of its obligation to make Loans hereunder and that each Bank shall be
obligated to make the Loans provided to be made by it hereunder, regardless of
the failure of any other Bank to make its Loans hereunder.
1.08 Interest. (a) The Borrower agrees to pay interest in
respect of the unpaid principal amount of each Base Rate Loan from the date the
proceeds thereof are made available to the Borrower until the earlier of (i)
the maturity (whether by acceleration, optional or mandatory, or otherwise) of
such Base Rate Loan and (ii) the conversion of such Base Rate Loan to a
Eurodollar Loan pursuant to Section 1.06, at a rate per annum which shall be
equal to the sum of the Applicable Margin plus the Base Rate in effect from
time to time.
(b) The Borrower agrees to pay interest in respect of the
unpaid principal amount of each Eurodollar Loan from the date the proceeds
thereof are made available to the Borrower until the earlier of (i) the
maturity (whether by acceleration, optional or mandatory, or otherwise) of such
Eurodollar Loan and (ii) the conversion of such Eurodollar Loan to a Base Rate
Loan pursuant to Section 1.06, 1.09 or 1.10, as applicable, at a rate per annum
which shall, during each Interest Period applicable thereto, be equal to the
sum of the Applicable Margin plus the Eurodollar Rate for such Interest Period.
-4-
<PAGE> 12
(c) Overdue principal and, to the extent permitted by law,
overdue interest in respect of each Loan and any other overdue amount payable
hereunder shall, in each case, bear interest at a rate per annum equal to the
greater of (x) 2% per annum in excess of the rate otherwise applicable to Base
Rate Loans from time to time and (y) the rate which is 2% in excess of the rate
then borne by such Loans, in each case with such interest to be payable on
demand.
(d) Accrued (and theretofore unpaid) interest shall be
payable (i) in respect of each Base Rate Loan, quarterly in arrears on each
Quarterly Payment Date, (ii) in respect of each Eurodollar Loan, on the last
day of each Interest Period applicable thereto and, in the case of an Interest
Period in excess of three months, on each date occurring at three month
intervals after the first day of such Interest Period and (iii) in respect of
each Loan, on any repayment or prepayment (on the amount repaid or prepaid), at
maturity (whether by acceleration or otherwise) and, after such maturity, on
demand.
(e) Upon each Interest Determination Date, the Administrative
Agent shall determine the Eurodollar Rate for each Interest Period applicable
to Eurodollar Loans and shall promptly notify the Borrower and the Banks
thereof. Each such determination shall, absent manifest error, be final and
conclusive and binding on all parties hereto.
1.09 Interest Periods. At the time it gives any Notice of
Borrowing or Notice of Conversion in respect of the making of, or conversion
into, any Eurodollar Loan (in the case of the initial Interest Period
applicable thereto) or on the third Business Day prior to the expiration of an
Interest Period applicable to such Eurodollar Loan (in the case of any
subsequent Interest Period), the Borrower shall have the right to elect, by
giving the Administrative Agent notice thereof, the interest period (each an
"Interest Period") applicable to such Eurodollar Loan, which Interest Period
shall, at the option of the Borrower, be a one, two, three, six or, if
available to each of the Banks, nine or twelve month period, provided that:
(i) all Eurodollar Loans comprising a Borrowing shall at all
times have the same Interest Period;
(ii) the initial Interest Period for any Eurodollar Loan shall
commence on the date of Borrowing of such Eurodollar Loan (including the
date of any conversion thereto from a Loan of a different Type) and each
Interest Period occurring thereafter in respect of such Eurodollar Loan
shall commence on the day on which the next preceding Interest Period
applicable thereto expires;
(iii) if any Interest Period relating to a Eurodollar Loan
begins on a day for which there is no numerically corresponding day in
the calendar month at the end of such Interest Period, such Interest
Period shall end on the last Business Day of such calendar month;
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<PAGE> 13
(iv) if any Interest Period would otherwise expire on a day
which is not a Business Day, such Interest Period shall expire on the
next succeeding Business Day; provided, however, that if any Interest
Period for a Eurodollar Loan would otherwise expire on a day which is
not a Business Day but is a day of the month after which no further
Business Day occurs in such month, such Interest Period shall expire
on the next preceding Business Day;
(v) no Interest Period may be selected at any time when a
violation of Sections 10.01 or 10.05 or an Event of Default is then in
existence and the Administrative Agent or the Required Banks have
determined that such an election at such time would be disadvantageous
to the Banks; and
(vi) no Interest Period in respect of any Borrowing shall be
selected which extends beyond the Final Maturity Date.
If upon the expiration of any Interest Period applicable to a
Borrowing of Eurodollar Loans, the Borrower has failed to elect, or is not
permitted to elect, a new Interest Period to be applicable to such Eurodollar
Loans as provided above, the Borrower shall be deemed to have elected to
convert such Eurodollar Loans into Base Rate Loans effective as of the
expiration date of such current Interest Period.
1.10 Increased Costs, Illegality, etc. (a) In the event
that any Bank shall have determined (which determination with respect to clause
(i) below, may be made only by the Administrative Agent):
(i) on any Interest Determination Date that, by reason of any
changes arising after the Effective Date affecting the interbank
Eurodollar market, adequate and fair means do not exist for
ascertaining the applicable interest rate on the basis provided for in
the definition of Eurodollar Rate; or
(ii) at any time, that such Bank shall incur increased costs
or reductions in the amounts received or receivable hereunder with
respect to any Eurodollar Loan because of (x) any change since the
Effective Date in any applicable law or governmental rule, regulation,
order, guideline or request (whether or not having the force of law)
or in the interpretation or administration thereof and including the
introduction of any new law or governmental rule, regulation, order,
guideline or request, such as, for example, but not limited to: (A) a
change in the basis of taxation of payment to any Bank of the
principal of or interest on such Eurodollar Loan or any other amounts
payable hereunder (except for changes in the rate of tax on, or
determined by reference to, the net income or profits of such Bank, or
any franchise tax based on the net income or profits of such Bank, in
either case pursuant to the laws of the United States of America or
the jurisdiction in which it is organized or in which
-6-
<PAGE> 14
its principal office or applicable lending office is located or any
subdivision thereof or therein), but without duplication of any
amounts payable in respect of Taxes pursuant to Section 4.04(a), or
(B) a change in official reserve requirements, but, in all events,
excluding reserves required under Regulation D to the extent included
in the computation of the Eurodollar Rate and/or (y) other
circumstances since the Effective Date affecting such Bank or the
interbank Eurodollar market or the position of such Bank in such
market; or
(iii) at any time, that the making or continuance of any
Eurodollar Loan has been made (x) unlawful by any law or governmental
rule, regulation or order, (y) impossible by compliance by any Bank in
good faith with any governmental request (whether or not having force
of law) or (z) impracticable as a result of a contingency occurring
after the Effective Date which materially and adversely affects the
interbank Eurodollar market;
then, and in any such event, such Bank (or the Administrative Agent, in the
case of clause (i) above) shall promptly give notice (by telephone confirmed in
writing) to the Borrower and, except in the case of clause (i) above, to the
Administrative Agent of such determination (which notice the Administrative
Agent shall promptly transmit to each of the other Banks). Thereafter (x) in
the case of clause (i) above, Eurodollar Loans shall no longer be available
until such time as the Administrative Agent notifies the Borrower and the Banks
that the circumstances giving rise to such notice by the Administrative Agent
no longer exist, and any Notice of Borrowing or Notice of Conversion given by
the Borrower with respect to Eurodollar Loans which have not yet been incurred
(including by way of conversion) shall be deemed rescinded by the Borrower, (y)
in the case of clause (ii) above, the Borrower shall, subject to the provisions
of Section 13.15 (to the extent applicable) pay to such Bank, upon written
demand therefor, such additional amounts (in the form of an increased rate of,
or a different method of calculating, interest or otherwise as such Bank in its
sole discretion shall determine) as shall be required to compensate such Bank
for such increased costs or reductions in amounts received or receivable
hereunder (a written notice as to the additional amounts owed to such Bank,
showing the basis for the calculation thereof and certifying that it is
generally charging such costs to other similarly situated borrowers under
similar credit facilities, submitted to the Borrower by such Bank in good faith
shall, absent manifest error, be final and conclusive and binding on all the
parties hereto) and (z) in the case of clause (iii) above, the Borrower shall
take one of the actions specified in Section 1.10(b) as promptly as possible
and, in any event, within the time period required by law. Each of the
Administrative Agent and each Bank agrees that if it gives notice to the
Borrower of any of the events described in clause (i) or (iii) above, it shall
promptly notify the Borrower and, in the case of any such Bank, the
Administrative Agent, if such event ceases to exist. If any such event
described in clause (iii) above ceases to exist as to a Bank, the obligations
of such Bank to make Eurodollar Loans and to convert Base Rate Loans into
Eurodollar Loans on the terms and conditions contained herein shall be
reinstated.
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<PAGE> 15
(b) At any time that any Eurodollar Loan is affected by the
circumstances described in Section 1.10(a)(ii) or (iii), the Borrower may (and
in the case of a Eurodollar Loan affected by the circumstances described in
Section 1.10(a)(iii) shall) either (x) if the affected Eurodollar Loan is then
being made initially or pursuant to a conversion, cancel the respective
Borrowing by giving the Administrative Agent telephonic notice (confirmed in
writing) on the same date that the Borrower was notified by the affected Bank
or the Administrative Agent pursuant to Section 1.10(a)(ii) or (iii) or (y) if
the affected Eurodollar Loan is then outstanding, upon at least three Business
Days' written notice to the Administrative Agent given immediately, or if
permitted by applicable law given at such later date permitted thereby, require
the affected Bank to convert such Eurodollar Loan into a Base Rate Loan,
provided that, if more than one Bank is affected at any time, then all affected
Banks must be treated the same pursuant to this Section 1.10(b).
(c) If at any time after the Effective Date any Bank
determines that the introduction of or any change in any applicable law or
governmental rule, regulation, order, guideline, directive or request (whether
or not having the force of law) concerning capital adequacy, or any change in
interpretation or administration thereof by any governmental authority, central
bank or comparable agency, will have the effect of increasing the amount of
capital required or expected to be maintained by such Bank or any corporation
controlling such Bank based on the existence of such Bank's Commitments
hereunder or its obligations hereunder, then the Borrower shall, subject to the
provisions of Section 13.15 (to the extent applicable), pay to such Bank, upon
its written demand therefor, such additional amounts as shall be required to
compensate such Bank or such other corporation for the increased cost to such
Bank or such other corporation or the reduction in the rate of return to such
Bank or such other corporation as a result of such increase of capital. In
determining such additional amounts, each Bank will act reasonably and in good
faith and will use averaging and attribution methods which are reasonable,
provided that such Bank's reasonable good faith determination (made in a manner
generally consistent with such Bank's standard practices) of compensation owing
under this Section 1.10(c) shall, absent manifest error, be final and
conclusive and binding on all the parties hereto. Each Bank, upon determining
that any additional amounts will be payable pursuant to this Section 1.10(c),
will give prompt written notice thereof to the Borrower, which notice shall
show the basis for calculation of such additional amounts and certify that it
is generally charging such costs to other similarly situated borrowers under
similar credit facilities.
1.11 Compensation. The Borrower shall, subject to the
provisions of Section 13.15 (to the extent applicable), compensate each Bank,
upon its written request (which request shall set forth the basis for
requesting such compensation), for all reasonable losses, expenses and
liabilities (including, without limitation, any loss, expense or liability
incurred by reason of the liquidation or reemployment of deposits or other
funds required by such Bank to fund its Eurodollar Loans but excluding any loss
of anticipated profit) which such Bank may sustain: (i) if for any reason
(other than a default by such Bank or the Administrative Agent) a Borrowing of,
or conversion from or into, Eurodollar Loans does not occur on a date specified
therefor in a Notice of Borrowing or Notice of
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<PAGE> 16
Conversion (whether or not withdrawn by the Borrower or deemed withdrawn
pursuant to Section 1.10(a) or (b)); (ii) if any repayment (including any
repayment made pursuant to Section 4.02 or as a result of an acceleration of
the Loans pursuant to Section 10) or conversion of any of its Eurodollar Loans
occurs on a date which is not the last day of an Interest Period with respect
thereto; (iii) if any prepayment of any of its Eurodollar Loans is not made on
any date specified in a notice of prepayment given by the Borrower; or (iv) as
a consequence of (x) any other default by the Borrower to repay its Loans when
required by the terms of this Agreement or any Note held by such Bank or (y)
any election made pursuant to Section 1.10(b).
1.12 Change of Lending Office. Each Bank agrees that upon
the occurrence of any event giving rise to the operation of Section 1.10(a)(ii)
or (iii), Section 1.10(c), Section 2.05 or Section 4.04 with respect to such
Bank, it will, if requested by the Borrower, use reasonable efforts (subject to
overall policy considerations of such Bank) to designate another lending office
for any Loans affected by such event, provided that such designation is made on
such terms that such Bank and its lending office suffer no economic, legal or
regulatory disadvantage, with the object of avoiding the consequence of the
event giving rise to the operation of such Section. Nothing in this Section
1.12 shall affect or postpone any of the obligations of the Borrower or the
right of any Bank provided in Sections 1.10, 2.05 and 4.04.
1.13 Replacement of Banks. (x) If any Bank becomes a
Defaulting Bank or otherwise defaults in its obligations to make Loans or fund
Unpaid Drawings, (y) upon the occurrence of any event giving rise to the
operation of Section 1.10(a)(ii) or (iii), Section 1.10(c), Section 2.05 or
Section 4.04 with respect to any Bank which results in such Bank charging to
the Borrower increased costs in excess of those being generally charged by the
other Banks or (z) as provided in Section 13.12(b) in the case of certain
refusals by a Bank (other than a Bank whose commitments are terminated in
accordance with Section 3.02(b) and/or whose Loans are repaid in accordance
with Section 4.01(v)) to consent to certain proposed changes, waivers,
discharges or terminations with respect to this Agreement which have been
approved by the Required Banks, the Borrower shall have the right, if no
Default or Event of Default will exist immediately after giving effect to the
respective replacement, to either replace such Bank (the "Replaced Bank") with
one or more other Eligible Transferee or Transferees reasonably acceptable to
the Administrative Agent, none of whom shall constitute a Defaulting Bank at
the time of such replacement (collectively, the "Replacement Bank") provided
that (i) at the time of any replacement pursuant to this Section 1.13, the
Replacement Bank shall enter into one or more Assignment and Assumption
Agreements pursuant to Section 13.04(b) (and with all fees payable pursuant to
said Section 13.04(b) to be paid by the Replacement Bank) pursuant to which the
Replacement Bank shall acquire the Commitment and outstanding Loans of, and in
each case participations in Letters of Credit by, the Replaced Bank and, in
connection therewith, shall pay to (x) the Replaced Bank in respect thereof an
amount equal to the sum of (A) an amount equal to the principal of, and all
accrued interest on, all outstanding Loans of the Replaced Bank, (B) an amount
equal to all Unpaid Drawings that have been funded by
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<PAGE> 17
(and not reimbursed to) such Replaced Bank, together with all then unpaid
interest with respect thereto at such time and (C) an amount equal to all
accrued, but theretofore unpaid, Fees owing to the Replaced Bank pursuant to
Section 3.01 and (y) any Issuing Bank an amount equal to such Replaced Bank's
Adjusted Percentage (for this purpose, determined as if the adjustment
described in clause (y) of the immediately succeeding sentence had been made
with respect to such Replaced Bank) of any Unpaid Drawing (which at such time
remains an Unpaid Drawing) to the extent such amount was not theretofore funded
by such Replaced Bank, and (ii) all obligations of the Borrower owing to the
Replaced Bank (other than those specifically described in clause (i) above in
respect of which the assignment purchase price has been, or is concurrently
being, paid) shall be paid in full to such Replaced Bank concurrently with such
replacement. Upon the execution of the respective Assignment and Assumption
Agreements, the payment of amounts referred to in clauses (i) and (ii) above,
the recordation of the assignment in the Register by the Administrative Agent
pursuant to Section 13.17 and, if so requested by the Replacement Bank,
delivery to the Replacement Bank of the appropriate Note or Notes executed by
the Borrower, (x) the Replacement Bank shall become a Bank hereunder and the
Replaced Bank shall cease to constitute a Bank hereunder, except with respect
to indemnification provisions under this Agreement (including, without
limitation, Sections 1.10, 1.11, 2.05, 4.04, 12.06 and 13.01, as the same may
be limited by Section 13.15 (to the extent applicable)), which shall survive as
to such Replaced Bank and (y) in the case of a replacement of a Defaulting Bank
with a Non-Defaulting Bank, the Adjusted Percentages of the Banks shall be
automatically adjusted at such time to give effect to such replacement (and to
give effect to the replacement of a Defaulting Bank with one or more
Non-Defaulting Banks). Any replacement of a Bank pursuant to this Section 1.13
shall not be deemed to be a waiver of any rights which the Borrower, the
Administrative Agent or any other Bank shall have against the Replaced Bank.
SECTION 2. Letters of Credit.
2.01 Letters of Credit. (a) Subject to and upon the terms
and conditions set forth herein, the Borrower may request that any Issuing Bank
issue, at any time and from time to time on and after the Effective Date and
prior to the Final Maturity Date, (x) for the account of the Borrower and for
the benefit of any holder (or any trustee, agent or other similar
representative for any such holders) of L/C Supportable Obligations of the
Borrower or any of its Subsidiaries, an irrevocable sight standby letter of
credit, in a form customarily used by such Issuing Bank or in such other form
as has been approved by such Issuing Bank (each such standby letter of credit,
a "Standby Letter of Credit") in support of such L/C Supportable Obligations
and (y) for the account of the Borrower, an irrevocable sight commercial letter
of credit in a form customarily used by such Issuing Bank (each such commercial
letter of credit, a "Trade Letter of Credit" and each such Trade Letter of
Credit and each Standby Letter of Credit, a "Letter of Credit") in support of
customary commercial transactions of the Borrower and its Subsidiaries.
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(b) Each Issuing Bank may agree in its sole discretion, and
BTCo hereby agrees that, in the event a requested Letter of Credit is not
issued by one of the other Issuing Banks, it will (subject to the terms and
conditions contained herein), at any time and from time to time on or after the
Effective Date and prior to the Final Maturity Date, following its receipt of
the respective Letter of Credit Request, issue for the account of the Borrower
one or more Letters of Credit (x) in the case of Standby Letters of Credit, in
support of such L/C Supportable Obligations of the Borrower or any of its
Subsidiaries and (y) in the case of Trade Letters of Credit, in support of
sellers of goods as referenced in Section 2.01(a), provided that the respective
Issuing Bank shall be under no obligation to issue any Letter of Credit of the
types described above if at the time of such issuance:
(i) any order, judgment or decree of any governmental
authority or arbitrator shall purport by its terms to enjoin or
restrain such Issuing Bank from issuing such Letter of Credit or any
requirement of law applicable to such Issuing Bank or any request or
directive (whether or not having the force of law) from any
governmental authority with jurisdiction over such Issuing Bank shall
prohibit, or request that such Issuing Bank refrain from, the issuance
of letters of credit generally or such Letter of Credit in particular
or shall impose upon such Issuing Bank with respect to such Letter of
Credit any restriction or reserve or capital requirement (for which
such Issuing Bank is not otherwise compensated, including, without
limitation, by reimbursement from the Borrower) not in effect on the
date hereof, or any unreimbursed loss, cost or expense which was not
applicable, in effect or known to such Issuing Bank as of the date
hereof and which such Issuing Bank in good faith deems material to it;
or
(ii) such Issuing Bank shall have received notice from any
Bank prior to the issuance of such Letter of Credit of the type
described in the second sentence of Section 2.02(b).
(c) Notwithstanding the foregoing, (i) no Letter of Credit
shall be issued the Stated Amount of which, when added to the Letter of Credit
Outstandings (exclusive of Unpaid Drawings which are repaid on the date of, and
prior to the issuance of, the respective Letter of Credit) at such time would
exceed either (x) $15,000,000 minus the aggregate amount of cash earnest money
deposits outstanding at such time pursuant to Section 9.01(xviii) or (y) when
added to the aggregate outstanding principal amount of all Loans of
Non-Defaulting Banks, the Adjusted Total Available Commitment; (ii) each Letter
of Credit shall be denominated in Dollars; (iii) the Stated Amount of each
Letter of Credit shall be no less than $50,000 or such lesser amount as is
acceptable to the Issuing Bank; and (iv) each Letter of Credit shall by its
terms terminate (A) in the case of Standby Letters of Credit, on or before the
earlier of (x) the date which occurs 12 months after the date of the issuance
thereof (although any such Letter of Credit may be extendable, if such Letter
of Credit could otherwise be issued pursuant to the terms and conditions
hereof, for successive periods of up to 12 months, but not beyond the Business
Day next preceding the Final Maturity Date), and (y) the
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Business Day next preceding the Final Maturity Date and (B) in the case of
Trade Letters of Credit, on or before the earlier of (x) the date which occurs
180 days after the date of issuance thereof and (y) the date which is 30 days
prior to the Final Maturity Date.
2.02 Letter of Credit Requests. (a) Whenever the Borrower
desires that a Letter of Credit be issued for its account, the Borrower shall
give the Administrative Agent and the respective Issuing Bank at least two
Business Days' (or such shorter period as is acceptable to the respective
Issuing Bank) written notice thereof. In the case of Letters of Credit to be
issued pursuant to Section 2.01, each notice shall be in the form of Exhibit C
(each a "Letter of Credit Request").
(b) The making of each Letter of Credit Request shall be
deemed to be a representation and warranty by the Borrower that such Letter of
Credit may be issued in accordance with, and will not violate the requirements
of, Section 2.01(c). Unless the respective Issuing Bank has received notice
from any Bank before it issues a Letter of Credit that one or more of the
conditions specified in Section 5 or Section 6 are not then satisfied, or that
the issuance of such Letter of Credit would violate Section 2.01(c), then such
Issuing Bank may issue the requested Letter of Credit for the account of the
Borrower in accordance with such Issuing Bank's usual and customary practices.
Upon its issuance of any Standby Letter of Credit, such Issuing Bank shall
promptly notify each Bank participating therein of such issuance, which notice
shall be accompanied by a copy of the Letter of Credit actually issued and any
amendments thereto. For Trade Letters of Credit on which the Issuing Bank is
other than the Administrative Agent, the Issuing Bank will send to the
Administrative Agent by facsimile transmission, promptly on the first Business
Day of each week, the daily aggregate Stated Amounts of Trade Letters of Credit
available during the preceding week. The Administrative Agent will send to
each Bank after each calendar month end and upon each Letter of Credit Fee
payment, a report setting forth for the relevant period the daily aggregate
Stated Amount of all outstanding Trade Letters of Credit of all Issuing Banks
during such period.
2.03 Letter of Credit Participations. (a) Immediately upon
the issuance by any Issuing Bank of any Letter of Credit, such Issuing Bank
shall be deemed to have sold and transferred to each Bank other than such
Issuing Bank (each such Bank, in its capacity under this Section 2.03, a
"Participant"), and each such Participant shall be deemed irrevocably and
unconditionally to have purchased and received from such Issuing Bank, without
recourse or warranty, an undivided interest and participation, to the extent of
such Participant's Adjusted Percentage, in such Letter of Credit, each drawing
made thereunder and the obligations of the Borrower under this Agreement with
respect thereto, and any security therefor or guaranty pertaining thereto
(although the Letter of Credit Fee shall be payable directly to the
Administrative Agent for the account of the Participants as provided in Section
3.01(b) and the Participants shall have no right to receive any portion of any
Facing Fees). Upon any change in the respective Commitments or Adjusted
Percentages of the Banks pursuant to Section 1.13 or 13.04(b) or as a result of
a Bank Default, it is hereby agreed that, with respect to all such outstanding
Letters of Credit and Unpaid Drawings, there shall be an
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automatic adjustment to the participations pursuant to this Section 2.03 to
reflect the new Adjusted Percentages of the assignor and assignee Bank or of
all Banks, as the case may be.
(b) In determining whether to pay under any Letter of Credit,
such Issuing Bank shall have no obligation relative to the other Banks other
than to confirm that any documents required to be delivered under such Letter
of Credit appear to have been delivered and that they appear to substantially
comply on their face with the requirements of such Letter of Credit. Any
action taken or omitted to be taken by any Issuing Bank under or in connection
with any Letter of Credit if taken or omitted in the absence of gross
negligence or willful misconduct and in accordance with the standards of care
specified in the Uniform Commercial Code of the State of New York, shall not
create for such Issuing Bank any resulting liability to the Borrower or any
Bank.
(c) In the event that any Issuing Bank makes any payment
under any Letter of Credit and the Borrower shall not have reimbursed such
amount in full to such Issuing Bank pursuant to Section 2.04(a), such Issuing
Bank shall promptly notify the Administrative Agent, which shall promptly
notify each Participant of such failure, and each Participant shall promptly
and unconditionally pay to such Issuing Bank the amount of such Participant's
Adjusted Percentage of such unreimbursed payment in Dollars and in same day
funds. If the Administrative Agent so notifies, prior to 11:00 A.M. (New York
time) on any Business Day, any Participant required to fund a payment under a
Letter of Credit, such Participant shall make available to such Issuing Bank in
Dollars such Participant's Adjusted Percentage of the amount of such payment on
such Business Day in same day funds. If and to the extent such Participant
shall not have so made its Adjusted Percentage of the amount of such payment
available to such Issuing Bank, such Participant agrees to pay to such Issuing
Bank, forthwith on demand such amount, together with interest thereon, for each
day from such date until the date such amount is paid to such Issuing Bank at
the overnight Federal Funds Rate. The failure of any Participant to make
available to such Issuing Bank its Adjusted Percentage of any payment under any
Letter of Credit shall not relieve any other Participant of its obligation
hereunder to make available to such Issuing Bank its Adjusted Percentage of any
Letter of Credit on the date required, as specified above, but no Participant
shall be responsible for the failure of any other Participant to make available
to such Issuing Bank such other Participant's Adjusted Percentage of any such
payment.
(d) Whenever any Issuing Bank receives a payment of a
reimbursement obligation as to which it has received any payments from the
Participants pursuant to clause (c)above, such Issuing Bank shall pay to each
Participant which has paid its Adjusted Percentage thereof, in Dollars and in
same day funds, an amount equal to such Participant's share (based upon the
proportionate aggregate amount originally funded by such Participant to the
aggregate amount funded by all Participants) of the principal amount of such
reimbursement obligation and interest thereon accruing after the purchase of
the respective participations.
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(e) The obligations of the Participants to make payments to
each Issuing Bank with respect to Letters of Credit issued by it shall be
irrevocable and not subject to any qualification or exception whatsoever and
shall be made in accordance with the terms and conditions of this Agreement
under all circumstances, including, without limitation, any of the following
circumstances:
(i) any lack of validity or enforceability of this Agreement
or any of the other Credit Documents;
(ii) the existence of any claim, setoff, defense or other
right which the Borrower or any of its Subsidiaries may have at any
time against a beneficiary named in a Letter of Credit, any transferee
of any Letter of Credit (or any Person for whom any such transferee
may be acting), the Administrative Agent, any Issuing Bank, any
Participant, or any other Person, whether in connection with this
Agreement, any Letter of Credit, the transactions contemplated herein
or any unrelated transactions (including any underlying transaction
between the Borrower and the beneficiary named in any such Letter of
Credit);
(iii) any draft, certificate or any other document presented
under any Letter of Credit proving to be forged, fraudulent, invalid
or insufficient in any respect or any statement therein being untrue
or inaccurate in any respect;
(iv) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Credit
Documents; or
(v) the occurrence of any Default or Event of Default.
2.04 Agreement to Repay Letter of Credit Drawings. (a) The
Borrower hereby agrees to reimburse the respective Issuing Bank, by making
payment directly to such Issuing Bank in immediately available funds, for any
payment or disbursement made by it under any Letter of Credit (each such
amount, so paid until reimbursed, an "Unpaid Drawing"), no later than three
Business Days after the date of such payment or disbursement, with interest on
the amount so paid or disbursed by such Issuing Bank, to the extent not
reimbursed prior to 12:00 Noon (New York time) on the date of such payment or
disbursement, from and including the date paid or disbursed to but excluding
the date such Issuing Bank was reimbursed by the Borrower therefor at a rate
per annum which shall be the Base Rate in effect from time to time plus the
Applicable Margin for Loans maintained as Base Rate Loans; provided, however,
to the extent such amounts are not reimbursed prior to 12:00 Noon (New York
time) on the fifth Business Day following such payment or disbursement,
interest shall thereafter accrue on the amounts so paid or disbursed by such
Issuing Bank (and until reimbursed by the Borrower) at a rate per annum which
shall be the Base Rate in effect from time to time plus the Applicable Margin
for Loans maintained as Base Rate Loans plus
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2%, in each such case, with interest to be payable on demand. The respective
Issuing Bank shall give the Borrower prompt notice of each Drawing under any
Letter of Credit, provided that the failure to give any such notice shall in no
way affect, impair or diminish the Borrower's obligations hereunder.
(b) The obligations of the Borrower under this Section 2.04
to reimburse the respective Issuing Bank with respect to drawings on Letters of
Credit (each, a "Drawing") (including, in each case, interest thereon) shall be
absolute and unconditional under any and all circumstances and irrespective of
any setoff, counterclaim or defense to payment which the Borrower may have or
have had against any Bank (including in its capacity as the issuer of the
Letter of Credit or as Participant), or any nonapplication or misapplication by
the beneficiary of the proceeds of such Drawing, the respective Issuing Bank's
only obligation to the Borrower being to confirm that any documents required to
be delivered under such Letter of Credit appear to have been delivered and that
they appear to substantially comply on their face with the requirements of such
Letter of Credit. Any action taken or omitted to be taken by any Issuing Bank
under or in connection with any Letter of Credit if taken or omitted in the
absence of gross negligence or willful misconduct and in accordance with the
standards of care specified in the Uniform Commercial Code of the State of New
York, shall not create for such Issuing Bank any resulting liability to the
Borrower.
2.05 Increased Costs. If at any time after the Effective
Date, the introduction of or any change in any applicable law, rule,
regulation, order, guideline or request or in the interpretation or
administration thereof by any governmental authority charged with the
interpretation or administration thereof, or compliance by any Issuing Bank or
any Participant, or any corporation controlling such Person, with any request
or directive by any such authority (whether or not having the force of law),
shall either (i) impose, modify or make applicable any reserve, deposit,
capital adequacy or similar requirement against letters of credit issued by any
Issuing Bank or participated in by any Participant, or (ii) impose on any
Issuing Bank or any Participant, or any corporation controlling such Person,
any other conditions relating, directly or indirectly, to this Agreement or any
Letter of Credit; and the result of any of the foregoing is to increase the
cost to any Issuing Bank or any Participant of issuing, maintaining or
participating in any Letter of Credit, or reduce the amount of any sum received
or receivable by any Issuing Bank or any Participant hereunder or reduce the
rate of return on its capital with respect to Letters of Credit (except for
changes in the rate of tax on, or determined by reference to, the net income or
profits of such Issuing Bank or such Participant, or any corporation
controlling such Person, or any franchise tax based on the net income or
profits of such Bank or Participant, or any corporation controlling such
Person, in either case pursuant to the laws of the United States of America,
the jurisdiction in which it is organized or in which its principal office or
applicable lending office is located or any subdivision thereof or therein),
but without duplication of any amounts payable in respect of taxes pursuant to
Section 4.04(a), then, upon demand to the Borrower by such Issuing Bank or any
Participant (a copy of which demand shall be sent by such Issuing Bank or such
Participant to the Administrative Agent) and subject to
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the provisions of Section 13.15 (to the extent applicable), the Borrower shall
pay to such Issuing Bank or such Participant such additional amount or amounts
as will compensate such Bank for such increased cost or reduction in the amount
receivable or reduction on the rate of return on its capital. Any Issuing Bank
or any Participant, upon determining that any additional amounts will be
payable pursuant to this Section 2.05, will give prompt written notice thereof
to the Borrower, which notice shall include a certificate submitted to the
Borrower by such Issuing Bank or such Participant (a copy of which certificate
shall be sent by such Issuing Bank or such Participant to the Administrative
Agent), setting forth in reasonable detail the basis for the calculation of
such additional amount or amounts necessary to compensate such Issuing Bank or
such Participant. The certificate required to be delivered pursuant to this
Section 2.05 shall, if delivered in good faith and absent manifest error, be
final and conclusive and binding on the Borrower.
SECTION 3. Commitment Commission; Fees; Reductions of
Commitment.
3.01 Fees. (a) The Borrower agrees to pay the Administrative Agent
for distribution to each Non- Defaulting Bank a commitment commission (the
"Commitment Commission") for the period from the Effective Date to and
including the Final Maturity Date (or such earlier date as the Total Commitment
shall have been terminated), computed at a rate for each day equal to 1/2 of 1%
per annum on the daily average Unutilized Commitment of such Non-Defaulting
Bank. Accrued Commitment Commission shall be due and payable quarterly in
arrears on each Quarterly Payment Date and on the Final Maturity Date or such
earlier date upon which the Total Commitment is terminated.
(b) The Borrower agrees to pay to the Administrative Agent for
distribution to each Non-Defaulting Bank (based on their respective Adjusted
Percentages), a fee in respect of each Letter of Credit issued hereunder (the
"Letter of Credit Fee"), for the period from and including the date of issuance
of such Letter of Credit, to and including the termination of such Letter of
Credit computed at a rate per annum equal to the difference between (i) the
Applicable Margin for Loans maintained as Eurodollar Loans as in effect from
time to time and (ii) 1/4 of 1% on the daily Stated Amount of such Letter of
Credit. Accrued Letter of Credit Fees shall be due and payable quarterly in
arrears on each Quarterly Payment Date and upon the first day on or after the
termination of the Total Commitment upon which no Letters of Credit remain
outstanding.
(c) The Borrower agrees to pay to the respective Issuing Bank, for
its own account, a facing fee in respect of each Letter of Credit issued for
its account hereunder (the "Facing Fee") for the period from and including the
date of issuance of such Letter of Credit to and including the termination of
such Letter of Credit, computed at a rate equal to 1/4 of 1% per annum of the
daily Stated Amount of such Letter of Credit; provided, that in no event shall
the annual Facing Fee be less than $500. Accrued Facing Fees shall be due and
payable quarterly in arrears on each Quarterly
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Payment Date and on the date upon which the Total Commitment has been
terminated and no Letters of Credit remain outstanding.
(d) The Borrower shall pay, upon each payment under, issuance
of, or amendment to, any Letter of Credit, such amount as shall at the time of
such event be the administrative charge and reasonable out-of-pocket expenses
which the respective Issuing Bank is generally imposing in connection with such
occurrence with respect to letters of credit.
(e) The Borrower shall pay to the Administrative Agent, for
its own account, such other fees as have been agreed to in writing by the
Borrower and the Administrative Agent.
3.02 Voluntary Termination and Reduction of Total Unutilized
Commitment. (a) Upon at least two Business Days' prior written notice (or
telephonic notice promptly confirmed in writing) to the Administrative Agent at
its Notice Office (which notice the Administrative Agent shall promptly
transmit to each of the Banks), the Borrower shall have the right, at any time
or from time to time, without premium or penalty, to terminate or partially
reduce the Total Unutilized Commitment, in whole or in part, provided that (x)
each such reduction shall apply proportionately to permanently reduce the
Commitment of each Bank (y) any partial reduction pursuant to this Section 3.02
shall be in integral multiples of $200,000 and (z) the reduction to the Total
Unutilized Commitment shall in no case be in an amount which would cause the
Commitment of any Bank to be reduced (as required by the preceding clause (x))
by an amount which exceeds the Unutilized Commitment of such Bank as in effect
immediately before giving effect to such reduction.
(b) In the event of certain refusals by a Bank as provided in
Section 13.12(b) to consent to certain proposed changes, waivers, discharges or
terminations with respect to this Agreement which have been approved by the
Required Banks, the Borrower shall have the right, upon five Business Days'
written notice to the Administrative Agent at its Notice Office (which notice
the Administrative Agent shall promptly transmit to each of the Banks)
terminate the entire Commitment of such Bank, so long as all Loans, together
with accrued and unpaid interest, Fees and other amounts, owing to such Bank
are repaid concurrently with the effectiveness of such termination pursuant to
Section 4.01(v) (at which time Schedule I shall be deemed modified to reflect
such changed amounts), and at such time such Bank shall no longer constitute a
"Bank" for purposes of this Agreement, except with respect to indemnifications
under this Agreement (including, without limitation, Sections 1.10, 1.11, 2.05,
4.04, 12.06 and 13.01, as the same may be limited by Section 13.15 (to the
extent applicable)), which shall survive as to such repaid Bank.
3.03 Mandatory Reduction of Commitments, etc. (a) Unless the
Effective Date shall have occurred on or before March 31, 1997, the Total
Commitment (and the Commitment of each Bank) shall terminate in its entirety.
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(b) In addition to any other mandatory commitment reductions
pursuant to this Section 3.03, the Total Commitment (and the Commitment of each
Bank) shall terminate in its entirety on the Final Maturity Date.
(c) In addition to any other mandatory commitment reductions
pursuant to this Section 3.03, on each date after the Effective Date upon which
Holdings or any of its Subsidiaries receives any proceeds from any incurrence
by Holdings or any of its Subsidiaries of Indebtedness for borrowed money
(other than Indebtedness for borrowed money permitted to be incurred pursuant
to Section 9.04), the Total Commitment shall be permanently reduced by an
amount equal to 100% of the cash proceeds of the respective incurrence of
Indebtedness (net of all reasonable costs associated therewith, including,
without limitation, all due diligence costs and expenses paid for, or
reimbursed by, Holdings and/or any of its Subsidiaries, any underwriting or
similar fees, discounts and commissions, attorneys' fees and expenses paid for,
or reimbursed by, Holdings and/or any of its Subsidiaries, all financing and/or
commitment fees and other direct costs associated therewith).
(d) In addition to any other mandatory commitment reductions
pursuant to this Section 3.03, on each date after the Effective Date upon which
Holdings or any of its Subsidiaries receives proceeds from any sale of assets
(including capital stock and securities held thereby, but excluding sales of
assets to the extent permitted by Sections 9.02(ii), (v), (vi), (vii), (xii),
(xv) and (xvi)), the Total Commitment shall be permanently reduced by an amount
equal to 100% of the Net Sale Proceeds therefrom, provided, that so long as no
Default or Event of Default then exists, the Net Sale Proceeds of the sale of
any of the Stations (whether as an asset sale, stock transfer, merger or
otherwise (including sales or swaps of Stations pursuant to the sales, Station
Swaps or Stock Swaps, respectively effected pursuant to Section 9.02(viii) or
(ix)) shall not give rise to a reduction to the Total Commitment on the date of
receipt thereof to the extent the Borrower has delivered a certificate to the
Administrative Agent on or prior to such date stating that such Net Sale
Proceeds shall be reinvested or shall be committed to be reinvested in radio
stations (and related assets) or 100% of the capital stock or other equity
interests (whether by merger of the Borrower or any of its Subsidiaries
(including Subsidiaries created pursuant to Section 9.15), or a Stock Swap or a
Station Swap effected pursuant to Section 9.02(viii) or (ix)), of a Person
whose only business is the ownership and operation of radio stations (and
related assets) or equipment to be used at the Stations (each a "Reinvestment
Asset" and collectively the "Reinvestment Assets") within 180 days following
such date, and the Total Commitment shall be temporarily reduced by the amount
of such Net Sales Proceeds and shall constitute Blocked Commitments until the
date on which such proceeds are to be reinvested in Reinvestment Assets on
which date such amount shall, subject to Section 6, be available to the
Borrower as Loans or Letters of Credit, as applicable, to pay actual costs
incurred by it in connection with the acquisition of Reinvestment Assets or the
making of any escrow deposits or the posting of Letters of Credit in connection
therewith, and, provided further, that if all or any portion of such Net Sale
Proceeds not required to reduce the Total Commitment pursuant to the preceding
proviso are either (a) not so used or committed to be used within 180 days
after the date
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of receipt of such Net Sale Proceeds or (b) if committed to be so used within
180 days after the date of receipt of such Net Sale Proceeds and not so used
within 360 days after the date of receipt of such Net Sale Proceeds, then, in
either such case, the Total Commitment shall be permanently reduced by such
remaining portion not used or committed to be used in the case of preceding
clause (a) and not used in the case of preceding clause (b) on the date which
is 180 days following the date of receipt of such Net Sale Proceeds in the case
of clause (a) above, or the date occurring 360 days after the date of receipt
of such Net Sale Proceeds in the case of clause (b) above. At the time of the
acquisition of any Reinvestment Assets, Holdings shall comply and shall cause
its Subsidiaries to comply with Section 8.12.
(e) In addition to any other mandatory commitment reductions
pursuant to this Section 3.03, within 10 days following each date after the
Effective Date on which Holdings or any of its Subsidiaries receives any
proceeds from any Recovery Event, the Total Commitment shall be permanently
reduced by an amount equal to 100% of the proceeds of such Recovery Event (net
of reasonable costs including, without limitation, legal costs and expenses and
taxes incurred in connection with such Recovery Event), provided that (x) so
long as no Default or Event of Default then exists and such proceeds do not
exceed $2,500,000, such proceeds shall not give rise to a reduction to the
Total Commitment on such date to the extent that the Borrower has delivered a
certificate to the Administrative Agent on or prior to such date stating that
such proceeds shall be used to replace or restore any properties or assets in
respect of which such proceeds were paid within 180 days following the date of
such Recovery Event (which certificate shall set forth the estimates of the
proceeds to be so expended) and (y) so long as no Default or Event of Default
then exists and to the extent that (a) the amount of such proceeds exceeds
$2,500,000, (b) the Borrower has delivered to the Administrative Agent a
certificate on or prior to the date the application would otherwise be required
pursuant to this Section 3.03(e) in the form described in clause (x) above and
also certifying the sufficiency of cash availability required by succeeding
clause (c), and (c) the Borrower has delivered to the Administrative Agent such
evidence as the Administrative Agent may reasonably request in form and
substance satisfactory to the Administrative Agent establishing that the
Borrower has or will have sufficient cash from ordinary cash flow, business
interruption insurance or from other sources satisfactory to the Administrative
Agent and that the Borrower will be receiving regular payments thereunder in
such amounts and at such times as are necessary to satisfy all obligations and
expenses of the Borrower (including, without limitation, all debt service
requirements, including pursuant to this Agreement), without any delay or
extension thereof, for the period from the date of the respective casualty,
condemnation or other event giving rise to the Recovery Event and continuing
through the completion of the replacement or restoration of respective
properties or assets, then the entire amount and not just the portion in excess
of $2,500,000 shall temporarily reduce the Total Commitment and shall
constitute Blocked Commitments until the date on which such proceeds are to be
used to replace or restore the respective properties or assets on which date
such amount shall, subject to Section 6, be available to the Borrower as Loans
or Letters of Credit, as applicable, to pay actual costs incurred by it in
connection with the replacement or
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restoration of the respective properties or assets (pursuant to such
certification requirements as may be established by the Administrative Agent),
and, provided further, that if all or any portion of such proceeds not required
to reduce the Total Commitment pursuant to the preceding proviso (whether
pursuant to clause (x) or (y) thereof) are either (A) not so used within 180
days after the date of receipt of proceeds from the respective Recovery Event
or (B) if committed to be used within 180 days after the date of receipt of
proceeds from the respective Recovery Event and not so used within 360 days
after the date of receipt of proceeds from the respective Recovery Event, then,
in either case, the Total Commitment shall be permanently reduced by such
remaining portion not used or committed to be used in the case of the preceding
clause (A) and not used in the case of preceding clause (B), on the date which
is 180 days following the date of receipt of proceeds from the respective
Recovery Event in the case of clause (A) above, or the date which is 360 days
after the date of receipt of proceeds from the respective Recovery Event in the
case of clause (B) above.
(f) Each reduction to the Total Commitment pursuant to this
Section 3.03 shall be applied pro rata to reduce the Commitment of each Bank.
SECTION 4. Prepayments; Payments; Taxes.
4.01 Voluntary Prepayments. The Borrower shall have the
right to prepay the Loans, without premium or penalty, in whole or in part at
any time and from time to time on the following terms and conditions: (i) the
Borrower shall give the Administrative Agent prior to 12:00 Noon (New York
time) at its Notice Office (x) at least one Business Day's prior written notice
(or telephonic notice promptly confirmed in writing) of its intent to prepay
Base Rate Loans and (y) at least three Business Days' prior written notice (or
telephonic notice promptly confirmed in writing) of its intent to prepay
Eurodollar Loans, the amount of such prepayment and the Types of Loans to be
prepaid and, in the case of Eurodollar Loans, the specific Borrowing or
Borrowings pursuant to which made, which notice the Administrative Agent shall
promptly transmit to each of the Banks; (ii) each prepayment shall be in an
aggregate principal amount of at least $25,000, provided that if any partial
prepayment of Eurodollar Loans made pursuant to any Borrowing shall reduce the
outstanding Eurodollar Loans made pursuant to such Borrowing to an amount less
than $200,000, then such Borrowing may not be continued as a Borrowing of
Eurodollar Loans and any election of an Interest Period with respect thereto
given by the Borrower shall have no force or effect; (iii) prepayments of
Eurodollar Loans made pursuant to this Section 4.01 may only be made on the
last day of an Interest Period applicable thereto (except in connection with
payments made pursuant to clause (v) below); (iv) each prepayment in respect of
any Loans made pursuant to a Borrowing shall, except as provided in clauses (v)
and (vi) below, be applied pro rata among the Banks which made such Loans; (v)
in the event of certain refusals by a Bank as provided in Section 13.12(b) to
consent to certain proposed changes, waivers, discharges or terminations with
respect to this Agreement which have been approved by the Required Banks, the
Borrower shall have the right, upon five Business Days' written notice to the
Administrative Agent at its Notice Office (which notice the
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Administrative Agent shall promptly transmit to each of the Banks) repay all
Loans, together with accrued and unpaid interest, Fees and other amounts, owing
to such Bank in accordance with said Section 13.12(b) so long as (A) the
Commitment of such Bank is terminated concurrently with such repayment (at
which time Schedule I shall be deemed modified to reflect such changed amounts)
and (B) the consents required by Section 13.12(b) in connection with the
repayment pursuant to this clause (v) have been obtained, and (vi) at the
Borrower's election in connection with any prepayment of Loans, such prepayment
shall not be applied to the Loans of a Defaulting Bank.
4.02 Mandatory Prepayments . (a) (i) On any day on which
the sum of the aggregate outstanding principal amount of the Loans made by the
Non-Defaulting Banks plus the Letter of Credit Outstandings on such day exceeds
the Adjusted Total Available Commitment as then in effect, the Borrower shall
prepay on such date the principal of Loans of Non-Defaulting Banks in an amount
equal to such excess. If, after giving effect to the prepayment of all Loans
of Non-Defaulting Banks, the aggregate amount of the Letter of Credit
Outstandings exceeds the Adjusted Total Available Commitment as then in effect,
the Borrower shall pay to the Administrative Agent at the Payment Office on
such date an amount of cash or Cash Equivalents equal to the amount of such
excess (up to a maximum amount equal to the Letter of Credit Outstandings at
such time), such cash or Cash Equivalents to be held as security for all
obligations of the Borrower to Non-Defaulting Banks hereunder in a cash
collateral account to be established by the Administrative Agent.
(ii) On any day on which the aggregate outstanding principal
amount of the Loans made by any Defaulting Bank exceeds the Available
Commitment of such Defaulting Bank, the Borrower shall prepay principal of
Loans of such Defaulting Bank in an amount equal to such excess.
(b) Notwithstanding anything to the contrary contained
elsewhere in this Agreement, all then outstanding Loans shall be repaid in full
on the Final Maturity Date.
(c) With respect to each prepayment of Loans required by this
Section 4.02, the Borrower may designate the Types of Loans which are to be
repaid and, in the case of Eurodollar Loans, the specific Borrowing or
Borrowings pursuant to which made, provided that: (i) prepayments of
Eurodollar Loans pursuant to this Section 4.02 may only be made on the last day
of an Interest Period applicable thereto unless all Eurodollar Loans with
Interest Periods ending on such date of required prepayment and all Base Rate
Loans have been paid in full; (ii) if any prepayment of Eurodollar Loans made
pursuant to a single Borrowing shall reduce the outstanding Eurodollar Loans
made pursuant to such Borrowing to an amount less than $200,000, such Borrowing
shall be converted at the end of the then current Interest Period into a
Borrowing of Base Rate Loans; and (iii) each prepayment of any Loans made
pursuant to a Borrowing shall be applied pro rata among the Banks which made
such Loans. In the absence of a designation by the Borrower as described in
the preceding sentence, the Administrative Agent shall, subject to the above,
make such
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designation in its sole discretion with a view, but no obligation, to minimize
breakage costs owing under Section 1.11.
4.03 Method and Place of Payment. Except as otherwise
specifically provided herein, all payments under this Agreement or any Note
shall be made to the Administrative Agent for the account of the Bank or Banks
entitled thereto not later than 12:00 Noon (New York time) on the date when due
and shall be made in Dollars in immediately available funds at the Payment
Office of the Administrative Agent. Whenever any payment to be made hereunder
or under any Note shall be stated to be due on a day which is not a Business
Day, the due date thereof shall be extended to the next succeeding Business Day
and, with respect to payments of principal, interest shall be payable at the
applicable rate during such extension.
4.04 Net Payments. (a) All payments made by the Borrower
hereunder or under any Note will be made without set-off, counterclaim or other
defense. Except as provided in Section 4.04(b), all such payments will be made
free and clear of, and without deduction or withholding for, any present or
future taxes, levies, imposts, duties, fees, assessments or other charges of
whatever nature now or hereafter imposed by any jurisdiction or by any
political subdivision or taxing authority thereof or therein with respect to
such payments (but excluding, except as provided in the second succeeding
sentence, any tax imposed on or measured by the net income or net profits of a
Bank, or any franchise tax based on the net income or net profits of a Bank, in
either case pursuant to the laws of the United States of America or the
jurisdiction in which it is organized or in which the principal office or
applicable lending office of such Bank is located or any subdivision thereof or
therein) and all interest, penalties or similar liabilities with respect
thereto (all such non-excluded taxes, levies, imposts, duties, fees,
assessments or other charges being referred to collectively as "Taxes"). If
any Taxes are so levied or imposed, the Borrower agrees to pay the full amount
of such Taxes, and such additional amounts as may be necessary so that every
payment of all amounts due under this Agreement or under any Note, after
withholding or deduction for or on account of any Taxes, will not be less than
the amount provided for herein or in such Note. If any amounts are payable in
respect of Taxes pursuant to the preceding sentence of this Section 4.04(a),
then the Borrower agrees to reimburse each Bank, upon the written request of
such Bank, for taxes imposed on or measured by the net income or net profits of
such Bank, or any franchise tax based on the net income or net profits of such
Bank, in either case pursuant to the laws of the jurisdiction in which such
bank is organized or in which the principal office or applicable lending office
of such Bank is located or under the laws of any political subdivision or
taxing authority of any such jurisdiction in which such Bank is organized or in
which the principal office or applicable lending office of such Bank is located
and for any withholding of taxes as such Bank shall determine in good faith are
payable by, or withheld from, such Bank in respect of such amounts so paid to
or on behalf of such Bank pursuant to the preceding sentence and in respect of
any amounts paid to or on behalf of such Bank pursuant to this sentence. The
Borrower will furnish to the Administrative Agent within 45 days after the date
the payment of any Taxes is due pursuant to applicable law certified copies of
tax
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receipts evidencing such payment by the Borrower. The Borrower agrees to
indemnify and hold harmless each Bank, and reimburse such Bank upon its written
request, for the amount of any Taxes so levied or imposed and paid by such
Bank.
(b) Each Bank that is not a United States person (as such
term is defined in Section 7701(a)(30) of the Code) agrees to deliver to the
Borrower and the Administrative Agent on or prior to the Effective Date, or in
the case of a Bank that is an assignee or transferee of an interest under this
Agreement pursuant to Sections 1.13 or 13.04 (unless the respective Bank was
already a Bank hereunder immediately prior to such assignment or transfer), on
the date of such assignment or transfer to such Bank, (i) two accurate and
complete original signed copies of Internal Revenue Service Form 4224 or Form
1001 (or successor forms) certifying to such Bank's entitlement to a complete
exemption from United States withholding tax with respect to payments to be
made under this Agreement and under any Note, or (ii) if the Bank is not a
"bank" within the meaning of Section 881(c)(3)(A) of the Code and cannot
deliver either Internal Revenue Service Form 1001 or 4224 pursuant to clause
(i) above, (x) a certificate substantially in the form of Exhibit D (any such
certificate, a "Section 4.04(b)(ii) Certificate") and (y) two accurate and
complete original signed copies of Internal Revenue Service Form W-8 (or
successor form) certifying to such Bank's entitlement to a complete exemption
from United States withholding tax with respect to payments of interest to be
made under this Agreement and under any Note. In addition, each Bank agrees
that from time to time after the Effective Date, when a lapse in time or change
in circumstances renders the previous certification obsolete or inaccurate in
any material respect, it will deliver to the Borrower and the Administrative
Agent two new accurate and complete original signed copies of Internal Revenue
Service Form 4224 or 1001, or Form W-8 and a Section 4.04(b)(ii) Certificate,
as the case may be, and such other forms as may be required in order to confirm
or establish the entitlement of such Bank to a continued exemption from or
reduction in United States withholding tax with respect to payments under this
Agreement and any Note, or it shall immediately notify the Borrower and the
Administrative Agent of its inability to deliver any such form or Certificate,
in which case such Bank shall not be required to deliver any such form or
Certificate pursuant to this Section 4.04(b). Notwithstanding anything to the
contrary contained in Section 4.04(a), but subject to Section 13.04(b) and the
immediately succeeding sentence, (x) the Borrower shall be entitled, to the
extent it is required to do so by law, to deduct or withhold income or similar
taxes imposed by the United States (or any political subdivision or taxing
authority thereof or therein) from interest, fees or other amounts payable
hereunder for the account of any Bank which is not a United States person (as
such term is defined in Section 7701(a)(30) of the Code) for U.S. Federal
income tax purposes to the extent that such Bank has not provided to the
Borrower U.S. Internal Revenue Service Forms that establish a complete
exemption from such deduction or withholding and (y) the Borrower shall not be
obligated pursuant to Section 4.04(a) hereof to gross-up payments to be made to
a Bank in respect of income or similar taxes imposed by the United States if
(I) such Bank has not provided to the Borrower the Internal Revenue Service
Forms required to be provided to the Borrower pursuant to this Section 4.04(b)
or (II) in the case of a payment, other than interest, to a Bank described in
clause
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(ii) above, to the extent that such Forms do not establish a complete exemption
from withholding of such taxes. Notwithstanding anything to the contrary
contained in the preceding sentence or elsewhere in this Section 4.04 and
except as set forth in Section 13.04(b), the Borrower agrees to pay additional
amounts and to indemnify each Bank in the manner set forth in Section 4.04(a)
(without regard to the identity of the jurisdiction requiring the deduction or
withholding) in respect of any amounts deducted or withheld by it as described
in the immediately preceding sentence as a result of any changes after the
Effective Date in any applicable law, treaty, governmental rule, regulation,
guideline or order, or in the interpretation thereof, relating to the deducting
or withholding of income or similar Taxes.
(c) The provisions of this Section 4.04 are subject to the
provisions of Section 13.15 (to the extent applicable).
SECTION 5A. Conditions Precedent to Credit Events on the
Effective Date. The occurrence of the Effective Date pursuant to Section 13.10
and the obligation of each Bank to make Loans and to participate in Letters of
Credit under this Agreement, and the obligations of each Issuing Bank to issue
Letters of Credit, in each case on the Effective Date is subject, at the time
of such Credit Event, to the satisfaction of the following conditions:
5A.01 Execution of Agreement; Notes. On or prior to the
Effective Date (i) this Agreement shall have been executed and delivered as
provided in Section 13.10 and (ii) there shall have been delivered to the
Administrative Agent for the account of each of the Banks the appropriate Note
executed by the Borrower, in the amount, maturity and as otherwise provided
herein.
5A.02 Fees, etc. On the Effective Date, the Borrower shall
have paid to the Administrative Agent and the Banks all costs, fees and
expenses (including, without limitation, legal fees and expenses) payable to
the Administrative Agent and the Banks to the extent then due.
5A.03 Opinions of Counsel. On the Effective Date, the
Administrative Agent shall have received (i) from Vinson & Elkins L.L.P.,
special counsel to Holdings and its Subsidiaries, an opinion addressed to the
Administrative Agent and each of the Banks and dated the Effective Date
covering the matters set forth in Exhibit E-1, (ii) from Fisher Wayland Cooper
Leader & Zaragoza L.L.P., FCC counsel to Holdings and its Subsidiaries, an
opinion addressed to the Administrative Agent and each of the Banks and dated
the Effective Date covering the matters set forth in Exhibit E-2 and (iii) from
local counsel satisfactory to the Administrative Agent, opinions each of which
shall be in form and substance reasonably satisfactory to the Administrative
Agent and the Required Banks and shall cover the perfection of the security
interests granted pursuant to the Security Agreements and the Mortgages and
such other matters incident to the transactions contemplated herein as the
Administrative Agent may reasonably request.
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5A.04 Corporate Documents; Proceedings; etc. (a) On the
Effective Date, the Administrative Agent shall have received a certificate,
dated the Effective Date, signed by an Authorized Officer of each Credit Party,
and attested to by the Secretary or any Assistant Secretary of such Credit
Party, all in the form of Exhibit F with appropriate insertions, together with
copies of the Certificate or Articles of Incorporation and By-Laws of such
Credit Party and the resolutions, or such other administrative approval, of
such Credit Party, as the case may be, referred to in such certificate, and the
foregoing shall be reasonably acceptable to the Administrative Agent.
(b) On the Effective Date, all corporate and legal
proceedings and all instruments and agreements in connection with the
transactions contemplated by this Agreement and the other Transaction Documents
shall be reasonably satisfactory in form and substance to the Administrative
Agent and the Required Banks, and the Administrative Agent shall have received
all information and copies of all documents and papers, including records of
corporate proceedings, governmental approvals, good standing certificates and
bring-down telegrams or facsimiles, if any, which the Administrative Agent
reasonably may have requested in connection therewith, such documents and
papers where appropriate to be certified by proper corporate or governmental
authorities.
5A.05 Shareholders' Agreements; Management Agreements;
Employment Agreements; Tax Sharing Agreements. On the Effective Date, there
shall have been delivered to the Administrative Agent true and correct copies,
certified as true and complete by an Authorized Officer of Holdings or its
respective Subsidiaries of (i) all agreements entered into by Holdings or any
of its Subsidiaries governing the terms and relative rights of its capital
stock and any agreements entered into by shareholders, relating to any such
entity with respect to its capital stock (collectively, the "Shareholders'
Agreements"), (ii)all agreements with senior members of, or with respect to,
the management of Holdings or any of its Subsidiaries (collectively, the
"Management Agreements"), (iii) any employment contracts entered into by
Holdings or any of its Subsidiaries (collectively, the "Employment Agreements")
and (iv) all agreements relating to the sharing of tax liabilities and benefits
among Holdings and/or its Subsidiaries (each a "Tax Sharing Agreement" and
collectively, the "Tax Sharing Agreements"); all of which Shareholders'
Agreements, Management Agreements, Employment Agreements and Tax Sharing
Agreements, shall be in form and substance reasonably satisfactory to the
Administrative Agent and the Required Banks and shall be in full force and
effect on the Effective Date.
5A.06 Consummation of the Transaction. (a) On or prior to
the Effective Date:
(i) (u) Holdings shall have received gross cash proceeds
of at least $150,000,000 from the issuance of Holdings Senior Notes
(the "Holdings Senior Note Issuance"), (v) Holdings shall have
utilized a portion of the net cash proceeds received by it from the
Holdings Senior Note Issuance to repay certain existing Indebtedness
and to pay certain fees
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and expenses related to the Transaction, (w) Holdings shall have
contributed the remainder of the net cash proceeds received by it from
the Holdings Senior Note Issuance to the Borrower as a capital
contribution, (x) the Borrower shall have utilized a portion of the
net cash proceeds of the Holdings Senior Note Issuance received by it
from Holdings to repay certain existing Indebtedness, (y) the Borrower
shall have contributed the remainder of the net cash proceeds of the
Holdings Senior Note Issuance received by it from Holdings to OCC
Acquisition as a capital contribution and (z) OCC Acquisition shall
have utilized the full amount of such cash contribution to make
payments owing in connection with the Transaction; and
(ii) (w) Holdings shall have received gross cash proceeds
of at least $55,000,000 from the issuance of its common stock and
Frank D. Osborn shall exchange certain shares of common stock of
Osborn for shares of common stock of Holdings having a deemed value of
$1,800,000 (the "Common Stock Issuance"), (x) Holdings shall have
contributed the full amount of the net cash proceeds received by it
from the Common Stock Issuance to the Borrower as a capital
contribution, (y) the Borrower shall have contributed the full amount
of the net cash proceeds of the Common Stock Issuance received by it
from Holdings to OCC Acquisition as a capital contribution and (z) OCC
Acquisition shall have used the total amount of net cash proceeds of
the Common Stock Issuance received by it from the Borrower to make
payments owing in connection with the Transaction.
(b) On or prior to the Effective Date, there shall have been
delivered to the Administrative Agent copies of all the Transaction Documents,
all of which shall be certified by an Authorized Officer of Holdings and/or its
Subsidiaries as true and correct and be in full force and effect. On the
Effective Date, the Transaction (other than the H/T Transaction) shall have
been consummated (or, concurrently with the making of Loans hereunder, will be
consummated) in accordance with the Transaction Documents (which shall be
reasonably satisfactory to the Administrative Agent) and all applicable laws,
rules and regulations relating thereto. All conditions precedent in the
Transaction Documents shall have been satisfied, without waiver or modification
(except with the consent of the Administrative Agent and the Required Banks,
which consent shall not be unreasonably withheld), and all terms and conditions
of, and documentation for, the Osborn Acquisition, the Holdings Senior Note
Issuance and the Common Stock Issuance, including, without limitation,
amortization, maturities, interest rates, covenants, defaults, remedies, and
all other terms, shall be reasonably acceptable to the Administrative Agent and
the Required Banks.
(c) On or prior to the Effective Date, all necessary and
material governmental (domestic and foreign) and third party approvals in
connection with the Transaction, including, without limitation, approval from
the FCC of the transfers of the Osborn FCC Licenses contemplated by the
Transaction, shall have become final, except as set forth on Schedule 7.21, and
the transactions contemplated by the Credit Documents and otherwise referred to
herein or therein, shall
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have been obtained and remain in effect, and all applicable waiting
periods shall have expired without any action being taken by any competent
authority which restrains, prevents or imposes materially adverse conditions
upon the consummation of the Transaction and the transactions contemplated by
this Agreement. Additionally, there shall not exist any judgment, order,
injunction or other restraint issued or filed or a hearing seeking injunctive
relief or other restraint pending or notified prohibiting or imposing
materially adverse conditions upon the consummation of the Transaction or the
transactions contemplated by this Agreement.
5A.07 Subsidiary Guaranty. On the Effective Date, each
Subsidiary of Holdings (other than the Borrower) shall have duly authorized,
executed and delivered a Subsidiary Guaranty in the form of Exhibit G hereto
(as amended, modified, extended, renewed, replaced, restated or supplemented
from time to time, the "Subsidiary Guaranty").
5A.08 Pledge Agreements. (a) On the Effective Date,
Holdings shall have duly authorized, executed and delivered a Pledge Agreement
in the form of Exhibit H-1 (as amended, modified, extended, renewed, replaced,
restated or supplemented from time to time, the "Holdings Pledge Agreement")
and shall have delivered to the Collateral Agent, as Pledgee, all the Pledged
Securities referred to therein then owned by Holdings, endorsed in blank in the
case of promissory notes or accompanied by executed and undated stock powers in
the case of capital stock.
(b) On the Effective Date, the Borrower shall have duly
authorized, executed and delivered a Pledge Agreement in the form of Exhibit
H-2 (as amended, modified, extended, renewed, replaced, restated or
supplemented from time to time, the "Borrower Pledge Agreement") and shall have
delivered to the Collateral Agent, as Pledgee, all the Pledged Securities
referred to therein then owned by the Borrower, endorsed in blank in the case
of promissory notes or accompanied by executed and undated stock powers in the
case of capital stock.
(c) On the Effective Date, each Subsidiary of the Borrower
shall have duly authorized, executed and delivered a Pledge Agreement in the
form of Exhibit H-3 (as amended, modified, extended, renewed, replaced,
restated or supplemented from time to time, the "Subsidiary Pledge Agreement")
and shall have delivered to the Collateral Agent, as Pledgee, all the Pledged
Securities referred to therein then owned by such Subsidiary (to the extent
required to be delivered on the Effective Date pursuant to the terms thereof),
endorsed in blank in the case of promissory notes or accompanied by executed
and undated stock powers, in the case of capital stock.
5A.09 Security Agreements. On the Effective Date, (i)
Holdings shall have duly authorized, executed and delivered a Security
Agreement in the form of Exhibit I-1 (as amended, modified, extended, renewed,
replaced, restated or supplemented from time to time, the "Holdings Security
Agreement") covering all of Holdings' present and future Security Agreement
Collateral, (ii) the Borrower shall have duly authorized, executed and
delivered a Security Agreement in the form of Exhibit I-2 (as amended,
modified, extended, renewed, replaced, restated or supplemented from time to
time, the "Borrower Security Agreement") covering all of the Borrower's present
and future Security Agreement Collateral, (iii) each Subsidiary of Holdings
(other than the Borrower) shall have duly authorized, executed and delivered a
Security Agreement in the
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form of Exhibit I-3 (as amended, modified, extended, renewed, replaced,
restated or supplemented from time to time, the "Subsidiary Security
Agreement") covering all of such Subsidiaries' present and future Security
Agreement Collateral, and (iv) in the case of each of the Security Agreements,
the Administrative Agent shall have received:
(a) executed copies of Financing Statements (Form UCC-1) in
appropriate form for filing under the UCC of each jurisdiction as may
be necessary to perfect the security interests purported to be created
by the Security Agreements;
(b) certified copies of Requests for Information or Copies
(Form UCC-11), or equivalent reports, listing all effective financing
statements that name Holdings or any Subsidiary of Holdings, or Osborn
or any Subsidiary of Osborn, as debtor and that are filed in any
jurisdiction where a filing may be necessary or, in the opinion of the
Collateral Agent, desirable to perfect the security interest purported
to be created by such Security Agreement, together with copies of such
financing statements (none of which shall cover the Collateral except
to the extent evidencing Permitted Liens or in respect of which the
Collateral Agent shall have received termination statements (Form
UCC-3) or such other termination statements as shall be required by
local law); and
(c) evidence of the completion of (or the arrangement for)
all other recordings and filings of, or with respect to, the
respective Security Agreement as may be necessary or, in the
reasonable opinion of the Collateral Agent, desirable to perfect the
security interests intended to be created by such Security Agreement.
5A.10 Mortgages; Title Insurance; etc. On the Effective
Date, the Collateral Agent shall have received:
(a) duly authorized, fully executed, acknowledged, and
delivered deeds of trust or mortgages, substantially in each case in
form and substance satisfactory to the Collateral Agent (as amended,
modified, extended, renewed, replaced, restated or supplemented from
time to time, each a "Mortgage" and, collectively, the "Mortgages"),
which Mortgages shall cover such of the Real Property owned by
Holdings and/or its Subsidiaries and shall be designated as such on
Part A of Schedule II as a Mortgaged Property thereunder (each, a
"Mortgaged Property" and, collectively, the "Mortgaged Properties"),
together with evidence that counterparts of the Mortgages have been
delivered to the title insurance company insuring the Lien on the
Mortgages for recording in all places to the extent necessary, or, in
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the reasonable opinion of the Collateral Agent, desirable to
effectively create or maintain a valid and enforceable first priority
mortgage lien, subject only to Permitted Encumbrances, on the
Mortgaged Properties in favor of the Collateral Agent (or such other
trustee as may be required or desired under local law) for the benefit
of the Secured Creditors;
(b) ALTA Lender's extended coverage policies of mortgage
title insurance (or the equivalent in the state where the respective
Mortgaged Property is located) covering each Mortgaged Property,
together with all endorsements reasonably requested by the Collateral
Agent relating thereto issued by First American Title Insurance
Company or such other title insurers reasonably satisfactory to the
Collateral Agent (the "Mortgage Policies") in amounts reasonably
satisfactory to the Administrative Agent (but not in excess of the
value of the respective Mortgaged Property) assuring the Collateral
Agent that the Mortgages on such Mortgaged Properties are valid and
enforceable first priority mortgage liens on the respective Mortgaged
Properties, free and clear of all defects and encumbrances except
Permitted Encumbrances and such Mortgage Policies shall otherwise be
in form and substance reasonably satisfactory to the Administrative
Agent and the Required Banks and shall include, as appropriate and to
the extent available in the applicable jurisdiction, an endorsement
for future advances under this Agreement and the Notes and for any
other matter that the Collateral Agent in its reasonable discretion
may reasonably request, shall not include an exception for mechanics'
liens, and shall provide for affirmative insurance and such
reinsurance as the Collateral Agent in its discretion may reasonably
request.
5A.11 Environmental Indemnity Agreement. On the Effective
Date, the Collateral Agent shall have received a duly authorized and fully
executed Environmental Indemnity Agreement substantially in the form of Exhibit
J (as amended, modified, extended, renewed, replaced, restated or supplemented
from time to time, the "Environmental Indemnity Agreement") from Holdings and
its Subsidiaries.
5A.12 Consent Letter. On the Effective Date, the
Administrative Agent shall have received a letter from CT Corporation System,
presently located at 1633 Broadway, New York, New York 10019, substantially in
the form of Exhibit K, indicating its consent to its appointment by each Credit
Party as its agent to receive service of process as specified in Section
13.08.
5A.13 Existing Credit Agreements. (a) On the Effective Date,
concurrently with the Credit Events then occurring, the total commitments under
the Existing Credit Agreements shall have been terminated, and all loans and
notes issued thereunder shall have been repaid in full, together with interest
thereon, all letters of credit issued thereunder shall have been terminated,
supported by one or more Standby Letters of Credit issued hereunder or
otherwise supported in a manner reasonably satisfactory to the respective
letter of credit issuer, and all other amounts owing thereunder shall have been
repaid in full and the Existing Credit Agreements shall have been
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terminated and be of no further force or effect except for continuing
indemnification obligations and reimbursement obligations under letters of
credit supported by Letters of Credit issued hereunder. The Administrative
Agent shall have received evidence in form, scope and substance reasonably
satisfactory to it that the matters set forth in this Section 5A.13(a) have
been satisfied on such date.
(b) On or prior to the Effective Date or concurrently with
the Credit Events then occurring, the creditors under the Existing Credit
Agreements shall have terminated and released or agreed to release all security
interests and Liens on the assets owned by Holdings or any of its Subsidiaries
granted in connection with the Existing Credit Agreements. The Administrative
Agent shall have received such releases of security interests in and Liens on
the assets owned by Holdings and its Subsidiaries as may have been reasonably
requested by the Administrative Agent, which releases shall be in form and
substance reasonably satisfactory to the Administrative Agent. Without
limiting the foregoing, there shall have been delivered (x) (i) proper
termination statements (Form UCC-3 or the appropriate equivalent) for filing
under the UCC of each jurisdiction where a financing statement (Form UCC-1 or
the appropriate equivalent) was filed with respect to Holdings or any of its
Subsidiaries in connection with the security interests created with respect to
the Existing Credit Agreements and the documentation related thereto, (ii)
terminations or assignments of any security interest in, or Lien on, any
patents, trademarks, copyrights, or similar interests of Holdings or any of its
Subsidiaries on which filings have been made and (iii) terminations of all
mortgages, leasehold mortgages and deeds of trust created with respect to
property of Holdings, or any of its Subsidiaries, in each case to secure the
obligations under the Existing Credit Agreements, all of which shall be in form
and substance reasonably satisfactory to the Administrative Agent, or (y) if
agreed to by the Administrative Agent, an agreement from the existing lenders
to provide any or all of the foregoing, as applicable.
5A.14 Adverse Change, etc. On the Effective Date, after
giving effect to the Transaction, nothing shall have occurred since September
30, 1996 which could reasonably be likely to have a material adverse effect on
the rights or remedies of the Administrative Agent or the Banks, or on the
ability of the Credit Parties to perform their respective obligations to the
Administrative Agent and the Banks or which could reasonably be likely to have
a material adverse effect on the business, operations, property, assets,
liabilities, condition (financial or otherwise) or prospects of Holdings and
its Subsidiaries taken as a whole.
5A.15 Solvency Letter; Environmental Analyses; Insurance. On
or before the Effective Date, the Borrower shall have delivered or shall cause
to be delivered to the Administrative Agent (i) a solvency letter in form and
substance satisfactory to the Administrative Agent from Murray, Devine & Co.,
Inc., setting forth its conclusions that, after giving effect to the
Transaction (including the H/T Transaction), each of Holdings and its
Subsidiaries taken as a whole, and the Borrower and its Subsidiaries, taken as
a whole, is not insolvent and will not be rendered insolvent by the
indebtedness incurred in connection therewith, and will not be left with
unreasonably small
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capital with which to engage in their business and will not have incurred debts
beyond their ability to pay debts as they mature, (ii) the environmental
reports with respect to certain of the Real Property acquired pursuant to the
Transaction and (iii) evidence of insurance complying with the requirements of
Section 8.03 for the business and properties of Holdings and its Subsidiaries,
in scope, form and substance reasonably satisfactory to the Administrative
Agent and the Required Banks and naming the Collateral Agent as an additional
insured and/or loss payee, and stating that such insurance shall not be
cancelled or revised without 30 days' prior written notice by the insurer to
the Collateral Agent.
5A.16 Pro Forma Balance Sheet; Projections. (a) On the
Effective Date, the Banks shall have received the unaudited projected pro forma
consolidated balance sheets of Holdings and the Borrower prepared on a
consolidated basis based upon the projected balance sheet at the Effective Date
prepared on a basis consistent with the Projections and the financial statement
delivered pursuant to Section 7.05(a), both immediately before and immediately
after giving effect to the Transaction (including the H/T Transaction), the
related financing thereof and the other transactions contemplated hereby and
thereby, which projected pro forma consolidated balance sheets shall be in form
and substance reasonably satisfactory to the Administrative Agent and the
Required Banks.
(b) On the Effective Date, the Banks shall have received the
Projections described in Section 7.05(d), which Projections shall be in form
and substance reasonably satisfactory to the Administrative Agent and the
Required Banks.
5A.17 Designated Senior Indebtedness. On or prior to the
Effective Date, the trustee under the Existing Senior Subordinated Note
Indenture shall have received written notice, in accordance with the provisions
of the Existing Senior Subordinated Note Indenture, that the obligations of the
Borrower and its Subsidiaries under this Agreement and the other Credit
Documents are designated as "Designated Senior Indebtedness" for purposes of,
and as defined in, the Existing Senior Subordinated Note Indenture, and the
Administrative Agent shall have received evidence of the trustee's
acknowledgment of such notice.
SECTION 5B. Conditions Precedent to Credit Events on the H/T
Borrowing Date. The obligations of each Bank to make Loans on the H/T
Borrowing Date, is subject, at the time of such Credit Event, to the
satisfaction of the following conditions:
5B.01 Officer's Certificate. On the H/T Borrowing Date, the
Borrower shall have delivered a certificate of an Authorized Officer of the
Borrower, dated the H/T Borrowing Date, to the effect that, to the best of such
officer's knowledge, no Default or Event of Default has occurred and is
continuing (or would result from the consummation of the H/T Transaction) or,
if any Default or Event of Default has occurred, is continuing or will occur as
a result of the consummation of the H/T Transaction, such certificate shall
specify the nature and the extent thereof. Such certificate
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shall also indicate that (x) all of the conditions in Sections 5B.03, 5B.04,
and 5B.08 have been satisfied on such date and (y) all representations and
warranties contained herein or in any other Credit Document are true and
correct in all material respects with the same effect as if those
representations and warranties had been made on the H/T Borrowing Date.
5B.02 Opinions of Counsel. On the H/T Borrowing Date, the
Administrative Agent shall have received (i) from Vinson & Elkins L.L.P.,
special counsel to Holdings and its Subsidiaries, an opinion addressed to the
Administrative Agent and each of the Banks and dated the H/T Borrowing Date in
form and substance reasonably satisfactory to the Administrative Agent, (ii)
from Fisher Wayland Cooper Leader & Zaragoza L.L.P., FCC counsel to Holdings
and its Subsidiaries, an opinion addressed to the Administrative Agent and each
of the Banks and dated the H/T Borrowing Date in form and substance reasonably
satisfactory to the Administrative Agent and (iii) from local counsel
satisfactory to the Administrative Agent, opinions each of which shall be in
form and substance reasonably satisfactory to the Administrative Agent and
shall cover the perfection of the security interests granted pursuant to the
Security Agreements and the Mortgages and such other matters incident to the
transactions contemplated herein as the Administrative Agent may reasonably
request.
5B.03 Consummation of the H/T Transaction. On or prior to
the H/T Borrowing Date, there shall have been delivered to the Administrative
Agent copies of all H/T Transaction Documents, all of which shall be certified
by an Authorized Officer of Holdings and/or its Subsidiaries as true and
correct and be in full force and effect. On the H/T Borrowing Date, the H/T
Transaction shall have been consummated (or, concurrently with the making of
Loans hereunder, will be consummated) in accordance with the H/T Transaction
Documents, which shall be reasonably satisfactory to the Administrative Agent,
and all applicable laws, rules and regulations relating thereto. All
conditions precedent in the H/T Transaction Documents shall have been
satisfied, without waiver or modification, and all terms and conditions of, and
documentation for, the H/T Acquisition, including, without limitation,
covenants, defaults, remedies and all other terms, shall be reasonably
acceptable to the Administrative Agent.
5B.04 Approvals. On or prior to the H/T Borrowing Date, all
necessary and material governmental (domestic and foreign) and third party
approvals in connection with the H/T Transaction, including, without
limitation, approval from the FCC of the transfers of the FCC Licenses
contemplated by the H/T Transaction (the "H/T FCC Licenses"), shall have become
final, and the transactions contemplated by the H/T Transaction Documents and
otherwise referred to herein or therein, shall have been obtained and remain in
effect, and all applicable waiting periods shall have expired without any
action being taken by any competent authority which restrains, prevents or
imposes materially adverse conditions upon the consummation of the H/T
Transaction and the transactions contemplated by this Agreement. Additionally,
there shall not exist any judgment, order, injunction or other restraint issued
or filed or a hearing seeking injunctive relief or
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other restraint pending or notified prohibiting or imposing materially adverse
conditions upon the consummation of the H/T Transaction or the transactions
contemplated by this Agreement.
5B.05 Security Interests. On the H/T Borrowing Date, the
Administrative Agent shall have received:
(a) executed copies of Financing Statements (Form UCC-1) in
appropriate form for filing under the UCC of each jurisdiction as may
be necessary, if any, to perfect the security interests purported to
be created by the Security Agreements;
(b) certified copies of Requests for Information or Copies
(Form UCC-11), or equivalent reports, listing all effective financing
statements that name Dixie Broadcasting, Inc., Radio WBHP, Inc. or
Taylor Communications Corporation or any of their respective
Subsidiaries as debtor and that are filed in any jurisdiction where a
filing may be necessary or, in the opinion of the Collateral Agent,
desirable to perfect the security interest purported to be created by
such Security Agreement, together with copies of such financing
statements (none of which shall cover the Collateral except to the
extent evidencing Permitted Liens or in respect of which the
Collateral Agent shall have received termination statements (Form
UCC-3) or such other termination statements as shall be required by
local law);
(c) evidence of the completion of all other recordings and
filings of, or with respect to, the respective Security Agreement as
may be necessary or, in the reasonable opinion of the Collateral
Agent, desirable to perfect the security interests intended to be
created by such Security Agreement; and
(d) evidence that all other actions necessary or, in the
reasonable opinion of the Collateral Agent, desirable to perfect and
protect the security interests purported to be created by the
respective Security Agreement have been taken.
5B.06 Environmental Assessments; Insurance. On or before the
H/T Borrowing Date, the Borrower shall have delivered or shall cause to be
delivered to the Administrative Agent (i) the environmental reports with
respect to certain of the Real Property acquired in connection with the H/T
Transaction and (ii) evidence of insurance complying with the requirements of
Section 8.03 for the business and properties of Holdings and its Subsidiaries,
in scope, form and substance reasonably satisfactory to the Administrative
Agent and naming the Collateral Agent as an additional insured and/or loss
payee, and stating that such insurance shall not be cancelled or revised
without 30 days' prior written notice by the insurer to the Collateral Agent.
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5B.07 Fees, etc. On the H/T Borrowing Date, the Borrower
shall have paid to the Administrative Agent and the Banks all costs, fees and
expenses (including, without limitation, legal fees and expenses) payable to
the Administrative Agent and the Banks to the extent then due.
SECTION 6. Conditions Precedent to All Credit Events. The
obligation of each Bank to make Loans and participate in Letters of Credit
(including Loans made and Letters of Credit issued on the Effective Date), and
the obligation of any Issuing Bank to issue any Letter of Credit (including any
Letter of Credit issued on the Effective Date), is subject, at the time of each
such Credit Event (except as hereinafter indicated), to the satisfaction of the
following conditions:
6.01 No Default; Representations and Warranties. At the time
of each such Credit Event and also after giving effect thereto (i) there shall
exist no Default or Event of Default and (ii) all representations and
warranties contained herein or in any other Credit Document shall be true and
correct in all material respects with the same effect as though such
representations and warranties had been made on the date of the making of such
Credit Event (it being understood and agreed that any representation or
warranty which by its terms is made as of a specified date shall be required to
be true and correct in all material respects only as of such specified date).
6.02 Notice of Borrowing; Letter of Credit Request. (a)
Prior to the making of each Loan, the Administrative Agent shall have received
the notice required by Section 1.03(a).
(b) Prior to the issuance of each Letter of Credit, the
Administrative Agent and the respective Issuing Bank shall have received a
Letter of Credit Request meeting the requirements of Section 2.02.
The acceptance of the benefit of each Credit Event shall
constitute a representation and warranty by Holdings and the Borrower to the
Administrative Agent and each of the Banks that all the conditions specified in
Section 5A, Section 5B, and in this Section 6 and applicable to such Credit
Event exist as of that time (except to the extent that any applicable
conditions specified in Section 5A, Section 5B or Section 6 are required to be
satisfactory to or determined by any Bank, the Required Banks and/or the
Administrative Agent). All of the Notes, certificates, legal opinions and
other documents and papers referred to in and required to be delivered under
Section 5A, Section 5B, and in this Section 6, unless otherwise specified,
shall be delivered to the Administrative Agent at the Notice Office for the
account of each of the Banks and, except for the Notes, in sufficient
counterparts or copies for each of the Banks and shall be in form and substance
reasonably satisfactory to the Banks.
SECTION 7. Representations, Warranties and Agreements. In
order to induce the Banks to enter into this Agreement and to make the Loans,
and issue (or participate in) the Letters of Credit as provided herein, each of
Holdings and the Borrower makes the following representations,
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warranties and agreements, in each case after giving effect to the Transaction,
all of which shall survive the execution and delivery of this Agreement and the
Notes and the making of the Loans and the issuance of the Letters of Credit,
with the occurrence of each Credit Event on or after the Effective Date being
deemed to constitute a representation and warranty that the matters specified
in this Section 7 are true and correct in all material respects on and as of
the date of each such Credit Event (it being understood and agreed that any
representation or warranty which by its terms is made as of a specified date
shall be required to be true and correct in all material respects only as of
such specified date).
7.01 Corporate Status. Holdings, the Borrower and each of
their respective Subsidiaries (i) is a duly organized and validly existing
corporation in good standing under the laws of the jurisdiction of its
organization, (ii) has the corporate power and authority to own its property
and assets and to transact the business in which it is engaged and presently
proposes to engage and (iii) is duly qualified to do business and is in good
standing in each jurisdiction where the conduct of its business requires such
qualifications except for failures to be so qualified which, individually or in
the aggregate, could not reasonably be expected to have a material adverse
effect on the business, operations, property, assets, liabilities, condition
(financial or otherwise) or prospects of the Borrower or of Holdings and its
Subsidiaries taken as a whole.
7.02 Corporate Power and Authority. Each Credit Party has
the corporate power and authority to execute, deliver and perform the terms and
provisions of each of the Documents to which it is a party and has taken all
necessary corporate action to authorize the execution, delivery and performance
by it of each of such Documents. Each Credit Party has duly executed and
delivered each of the Documents to which it is a party, and each of such
Documents constitutes such Credit Party's legal, valid and binding obligation
enforceable in accordance with its terms, except to the extent that the
enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws generally affecting creditors'
rights and by equitable principles (regardless of whether enforcement is sought
in equity or at law).
7.03 No Violation. Neither the execution, delivery or
performance by any Credit Party of the Documents to which it is a party, nor
compliance by it with the terms and provisions thereof, (i) will contravene any
provision of any applicable law, statute, rule or regulation or any applicable
order, writ, injunction or decree of any court or governmental instrumentality,
(ii) will conflict with or result in any breach of any of the terms, covenants,
conditions or provisions of, or constitute a default under, or result in the
creation or imposition of (or the obligation to create or impose) any Lien
(except pursuant to the Security Documents) upon any of the material properties
or assets of Holdings, the Borrower or any of their respective Subsidiaries
pursuant to the terms of any indenture, mortgage, deed of trust, credit
agreement or loan agreement, or any other material agreement, contract or
instrument, to which Holdings, the Borrower or any of their respective
Subsidiaries is a party or by which it or any of its property or assets is
bound or to which it may be
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subject or (iii) will violate any provision of the Certificate or Articles of
Incorporation or By-Laws of Holdings, or any of its Subsidiaries.
7.04 Governmental Approvals. No order, consent, approval,
license, authorization or validation of, or filing, recording or registration
with (except as have been obtained or made prior to each of the Effective Date
and the H/T Borrowing Date), or exemption by, any governmental or public body
or authority, or any subdivision thereof, is required to authorize, or is
required in connection with, (i) the execution, delivery and performance of any
Document or (ii) the legality, validity, binding effect or enforceability of
any such Document, except, in the case of any failure to obtain (other than
obtaining a final order approving the transfer, simultaneously or prior to the
closing of the Osborn Acquisition and the H/T Acquisition, respectively, of
either (x) the Osborn FCC Licenses or (y) the H/T FCC Licenses) where such
failure to so obtain would not have a material adverse effect on (x) the
business, operations, property, assets, liabilities, condition (financial or
otherwise) or prospects of the Borrower or Holdings and its Subsidiaries taken
as a whole or (y) the ability of the Credit Parties to perform their
obligations under the Credit Documents or the rights and remedies of the
Administrative Agent and the Banks thereunder; provided, however, that: (a)
the Borrower and its Subsidiaries will be required to notify the FCC of the
consummation of the Osborn Acquisition and the H/T Acquisition and file
ownership reports with the FCC in connection with such consummations; (b)
subsequent to the date of execution of the Credit Documents, copies of certain
of the Credit Documents are required to be filed with the FCC; (c) the Borrower
and its Subsidiaries will be required from time to time to obtain certain
authorizations of, or to make certain filings with, the FCC that are required
in connection with the ordinary course of business of the Borrower and its
Subsidiaries; (d) under the Communications Act and the FCC rules, FCC approval
is required prior to the transfer of control of the Borrower or Holdings or any
of their respective Subsidiaries or the assignment of any of the FCC Licenses
or prior to the exercise of any voting rights or management authority over the
Borrower or Holdings or any of their respective Subsidiaries; and (e) prior to
the exercise of certain rights or remedies under the Security Documents by the
Administrative Agent or the Banks, or their respective successors and assigns,
FCC consents and notifications with respect to such exercise may be required to
be timely obtained or made.
7.05 Financial Statements; Financial Condition; Undisclosed
Liabilities; Projections; etc. (a) The balance sheets, statements of
operations, statements of stockholders' equity and statements of cash flows of
Holdings and its Subsidiaries as set forth in the Offering Memorandum, dated
February 14, 1997, pertaining to the Holdings Senior Notes furnished to the
Banks prior to the Effective Date fairly present the financial condition and
operations of the Stations at and for the periods indicated. All such
financial statements are true and correct in all material respects and have
been prepared in accordance with GAAP, consistently applied. After giving
effect to the Transaction, since September 30, 1996, there has been no material
adverse change in the business, operations, property, assets, liabilities,
condition (financial or otherwise) or prospects of the Borrower, or of Holdings
and its Subsidiaries taken as a whole.
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(b) On and as of each of the Effective Date and the H/T
Borrowing Date, after giving effect to the Transaction and to all Indebtedness
incurred, and to be incurred, and Liens created, and to be created, by Holdings
and its Subsidiaries in connection therewith, (a) the sum of the assets, at a
fair valuation, of each of Holdings and its Subsidiaries taken as a whole, and
the Borrower and its Subsidiaries taken as a whole, will exceed their debts;
(b) each of Holdings and its Subsidiaries taken as a whole, and the Borrower
and its Subsidiaries taken as a whole, has not incurred and does not intend to
incur, and does not believe that they will incur, debts beyond their ability to
pay such debts as such debts mature; and (c) each of Holdings and its
Subsidiaries taken as a whole, and the Borrower and its Subsidiaries taken as a
whole, will have sufficient capital with which to conduct their businesses.
(c) Except as fully disclosed in the financial statements
delivered pursuant to Section 7.05(a), there were as of the Effective Date no
liabilities or obligations with respect to Holdings or any of its Subsidiaries
of any nature whatsoever (whether absolute, accrued, contingent or otherwise
and whether or not due) which, either individually or in aggregate, would be
material to the Borrower or to Holdings and its Subsidiaries taken as a whole.
As of the Effective Date, neither Holdings nor the Borrower knows of any basis
for the assertion against it of any liability or obligation of any nature
whatsoever that is not fully disclosed in the financial statements delivered
pursuant to Section 7.05(a) which, either individually or in the aggregate,
could reasonably be expected to be material to Holdings and its Subsidiaries
taken as a whole or the Borrower.
(d) On and as of the Effective Date, the financial
projections dated as of January 14, 1997 (the "Projections") previously
delivered to the Administrative Agent and the Banks have been prepared on a
basis consistent with the financial statements referred to in Section 7.05(a)
(other than as set forth or presented in such Projections), and there are no
statements or conclusions in any of the Projections which are based upon or
include information known to the Borrower to be misleading in any material
respect or which fail to take into account material information regarding the
matters reported therein. The Projections contain estimates and projections
based upon information that was available at such time and believed to be
correct and upon assumptions believed to be reasonable, and Holdings and the
Borrower do not warrant that such estimates and projections will ultimately
prove to have been correct.
7.06 Litigation. There are no actions, suits or proceedings
pending or, to the best knowledge of Holdings and the Borrower, threatened (i)
with respect to any Document or (ii) that could reasonably be expected to
materially and adversely affect (x) the business, operations, property, assets,
liabilities, condition (financial or otherwise) or prospects of the Borrower or
of Holdings and its Subsidiaries taken as a whole or (y) the rights or remedies
of the Administrative Agent, the Collateral Agent or the Banks or on the
ability of any Credit Party to perform its obligations to them hereunder and
under the other Credit Documents to which it is, or will be, a party.
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7.07 True and Complete Disclosure. All factual information
(taken as a whole) furnished by or on behalf of Holdings or the Borrower in
writing to the Administrative Agent or any Bank (including, without limitation,
all information contained in the Documents, but excluding the Projections) for
purposes of or in connection with this Agreement, the other Credit Documents or
any transaction contemplated herein or therein is, and all other such factual
information (taken as a whole) hereafter furnished by or on behalf of the
Borrower in writing to the Administrative Agent or any Bank will be, true and
accurate in all material respects on the date as of which such information is
dated or certified and not incomplete by omitting to state any fact necessary
to make such information (taken as a whole) not misleading in any material
respect at such time in light of the circumstances under which such information
was provided.
7.08 Use of Proceeds; Margin Regulations. (a) The proceeds
of Loans shall be used by the Borrower (1) on the H/T Borrowing Date, (i) to
finance, in part, the H/T Transaction and (ii) to pay fees and expenses related
to the H/T Transaction, and (2) otherwise, to provide for the Borrower's and
its Subsidiaries' working capital and general corporate purposes (including to
effect Permitted Section 9.02(xx) Acquisitions to the extent permitted in this
Agreement).
(b) No part of the proceeds of any Loan will be used to
purchase or carry any Margin Stock or to extend credit for the purpose of
purchasing or carrying any Margin Stock. Neither the making of any Loan nor
the use of the proceeds thereof will violate or be inconsistent with the
provisions of Regulation G, T, U or X.
7.09 Tax Returns and Payments. Each of Holdings, the
Borrower and each of their Subsidiaries have timely filed or caused to be
timely filed, on the due dates thereof or within applicable grace periods, with
the appropriate taxing authority, all Federal and all material state returns,
statements, forms and reports for taxes (the "Returns") required to be filed by
or with respect to the income, properties or operations of Holdings and/or any
of its Subsidiaries. The Returns accurately reflect in all material respects
all liability for taxes of Holdings, the Borrower and their respective
Subsidiaries, as the case may be, for the periods covered thereby. Each of
Holdings, the Borrower and their respective Subsidiaries have paid all material
taxes payable by them other than taxes which are not delinquent, and other than
those contested in good faith and for which adequate reserves have been
established in accordance with GAAP. Except as disclosed in the financial
statements referred to in Section 7.05(a), there is no material action, suit,
proceeding, investigation, audit, or claim now pending or, to the best
knowledge of Holdings or the Borrower, threatened by any authority regarding
any taxes relating to Holdings, the Borrower or any of their respective
Subsidiaries. As of the Effective Date, none of Holdings, the Borrower nor any
of their respective Subsidiaries has entered into an agreement or waiver or
been requested to enter into an agreement or waiver extending any statute of
limitations relating to the payment or collection of taxes of Holdings, the
Borrower or any of their respective Subsidiaries, or is aware of any
circumstances that would cause the taxable years or other taxable periods of
Holdings, the Borrower or any of their respective
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Subsidiaries not to be subject to the normally applicable statute of
limitations. None of Holdings, the Borrower nor any of their respective
Subsidiaries has incurred, or will incur, any tax liability in excess of
$1,000,000 in connection with the Transaction, the H/T Transaction, the Fort
Myers Disposition and the other transactions contemplated hereby.
7.10 Compliance with ERISA. Each Plan is in substantial
compliance with ERISA and the Code; no Reportable Event has occurred with
respect to a Plan; no Plan is insolvent or in reorganization; no Plan has an
Unfunded Current Liability; no Plan has an accumulated or waived funding
deficiency, has permitted decreases in its funding standard account or has
applied for an extension of any amortization period within the meaning of
Section 412 of the Code; all contributions required to be made with respect to
a Plan have been timely made; none of Holdings, the Borrower nor any of their
respective Subsidiaries nor any ERISA Affiliate has incurred any material
liability to or on account of a Plan pursuant to Section 409, 502(i), 502(1),
515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section 401(a)(29),
4971, 4975 or 4980 of the Code or reasonably expects to incur any material
liability under any of the foregoing Sections with respect to any Plan; no
proceedings have been instituted to terminate or appoint a trustee to
administer any Plan; no condition exists which presents a material risk to
Holdings, the Borrower or any of their respective Subsidiaries or any ERISA
Affiliate of incurring a material liability to or on account of a Plan pursuant
to the foregoing provisions of ERISA and the Code; using actuarial assumptions
and computation methods consistent with Part 1 of subtitle E of Title IV of
ERISA, the aggregate liabilities of Holdings, the Borrower, their respective
Subsidiaries and their ERISA Affiliates to all Plans which are multiemployer
plans (as defined in Section 4001(a)(3) of ERISA) in the event of a complete
withdrawal therefrom, as of the close of the most recent fiscal year of each
such Plan ended prior to the date of the most recent Credit Event, would not
exceed $1,000,000; no lien imposed under the Code or ERISA on the assets of
Holdings, the Borrower or any of their respective Subsidiaries or any ERISA
Affiliate exists or is reasonably likely to arise on account of any Plan; and
Holdings, the Borrower and their respective Subsidiaries do not maintain or
contribute to any employee welfare benefit plan (as defined in Section 3(1) of
ERISA) which provides benefits to retired employees or other former employees
(other than as required by Section 601 of ERISA) or any employee pension
benefit plan (as defined in Section 3(2) of ERISA) the obligations with respect
to which could reasonably be expected to have a material adverse effect on the
ability of Holdings, the Borrower or any of its Subsidiaries to perform their
respective obligations under the Credit Documents to which they are a party.
7.11 The Security Documents. (a) The provisions of the
Security Agreements are effective to create in favor of the Collateral Agent
for the benefit of the Secured Creditors a legal, valid and enforceable
security interest in all right, title and interest of the Credit Parties in the
Security Agreement Collateral described therein, and the Security Agreements,
upon the filing of Form UCC-1 financing statements or the appropriate
equivalent (which filing, if this representation is being made more than 10
days after the Effective Date, has been made), create a fully perfected
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first priority lien on, and security interest in, all right, title and interest
in all of the Security Agreement Collateral described therein, subject to no
other Liens other than Permitted Liens. Each party to a Security Agreement has
good and indefeasible title to all Security Agreement Collateral described
therein, free and clear of all Liens except those described above in this
clause (a).
(b) The security interests created in favor of the Collateral
Agent, as Pledgee, for the benefit of the Secured Creditors under the Pledge
Agreements constitute first priority perfected security interests in the
Pledged Securities described in the Pledge Agreements (until delivery thereof
to the Collateral Agent, other than the capital stock of Atlantic City
Broadcasting Corporation), subject to no security interests of any other Person
(until the delivery thereof to the Collateral Agent, other than in favor of
AMRESCO Institutional, Inc. in the case of the capital stock of Atlantic City
Broadcasting Corporation). No filings or recordings are required in order to
perfect (or maintain the perfection or priority of) the security interests
created in the Pledged Securities and the proceeds thereof under the Pledge
Agreements.
(c) The Mortgages create, as security for the obligations
purported to be secured thereby, a valid and enforceable perfected security
interest in and mortgage lien on all of the Mortgaged Properties in favor of
the Collateral Agent (or such other trustee as may be required or desired under
local law) for the benefit of the Secured Creditors, superior to and prior to
the rights of all third persons (except that the security interest and mortgage
lien created in the Mortgaged Properties may be subject to the Permitted
Encumbrances related thereto) and subject to no other Liens (other than Liens
permitted under Section 9.01). Part A and B of Schedule II contain a true and
complete list of each parcel of Real Property owned or leased by Holdings, the
Borrower and their respective Subsidiaries on the Effective Date, and the type
of interest therein held by Holdings, the Borrower or such Subsidiary.
Holdings, the Borrower and each of their respective Subsidiaries have good and
indefeasible title to all Mortgaged Properties free and clear of all Liens
except those described in the first sentence of this subsection (c).
7.12 Representations and Warranties in Documents. All
representations and warranties set forth in the other Documents were true and
correct in all material respects at the time as of which such representations
and warranties were made (or deemed made). Notwithstanding anything to the
contrary contained in the immediately preceding sentence, it shall not be a
misrepresentation pursuant to this Section 7.12 if a representation or warranty
made by a Person other than a Credit Party pursuant to a Document (other than a
Credit Document) is not true and correct in all material respects, but only if
(A)(i) the damages to Holdings and its Subsidiaries as a result of the
incorrectness of such representation or warranty are fully covered to the
extent in excess of $500,000 by (x) the escrow of cash or Cash Equivalents
pursuant to an escrow arrangement established for the benefit of Holdings and
its Subsidiaries or (y) a guaranty or indemnity issued by a solvent guarantor
or indemnitor (with such solvency to be determined after giving effect to the
required guaranty or indemnity in respect of the incorrectness of such
representations and warranties)
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and (ii) Holdings or the Borrower, as the case may be, is proceeding in good
faith to collect the amounts owing pursuant to the respective escrow
arrangement, guaranty or indemnity as a result of the incorrectness of the
respective representation or warranty (which action shall be required to
include, at such time, if any, as the respective escrow monies are not made
available in accordance with the terms of the respective escrow arrangement or
the respective guarantor or indemnitor has resisted requests for payment,
contesting in good faith and by appropriate proceedings the amounts owing to
Holdings and its Subsidiaries) or (B)(i) the period of time expressly provided
in such Document for the survival of such representation or warranty has
expired, (ii) such representation or warranty is made by a Person other than a
Credit Party and (iii) the damages resulting from the incorrectness of such
representation or warranty could not reasonably be expected to have a material
adverse effect on the business, operations, property, assets, liabilities,
condition (financed or otherwise) or prospects of the Borrower or Holdings and
its Subsidiaries taken as a whole.
7.13 Properties. Holdings, the Borrower and each of their
respective Subsidiaries have good and indefeasible title to all properties (or
a valid leasehold estate with respect to leased properties) owned by them after
giving effect to the Transaction in accordance with the Documents, including
all property reflected in the balance sheet of the Borrower referred to in
Section 7.05(a) and in the pro forma balance sheet referred to in Section
5A.16, free and clear of all Liens, other than (i) as referred to in the
balance sheet or in the notes thereto or in the pro forma balance sheet or (ii)
Permitted Liens.
7.14 Capitalization. (a) On the Effective Date and after
giving effect to the Transaction and the other transactions contemplated
hereby, the authorized capital stock of Holdings shall consist of (x)
200,000,000 shares of common stock, $.01 par value per share ("Holdings Common
Stock"), of which 146,943,633 shares shall be issued and outstanding and (y)
10,000,000 shares of preferred stock, $.01 par value per share, none of which
are outstanding. All such outstanding shares have been duly and validly
issued, are fully paid and non-assessable and have been issued free of
preemptive rights. As of the Effective Date, Holdings does not have
outstanding any securities convertible into or exchangeable for its capital
stock or outstanding any rights to subscribe for or to purchase, or any options
for the purchase of, or any agreement providing for the issuance (contingent or
otherwise) of, or any calls, commitments or claims of any character relating
to, its capital stock, [in each case other than the options outstanding or to
be issued pursuant to the Employment Agreements or the Employee Stock Option
Plan].
(b) On the Effective Date and after giving effect to the
Transaction and the other transactions contemplated hereby, the authorized
capital stock of the Borrower shall consist of 350,000,000 shares of common
stock, $.01 par value per share, of which 249,847,909 shares shall be issued
and outstanding. All such outstanding shares have been duly and validly
issued, are fully paid and nonassessable, are free of preemptive rights and, in
the case of all such outstanding shares of common stock, have been pledged
pursuant to the Holdings Pledge Agreement. As of the
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Effective Date, the Borrower does not have outstanding any securities
convertible into or exchangeable for its capital stock or outstanding any
rights to subscribe for or to purchase, or any options for the purchase of, or
any agreements providing for the issuance (contingent or otherwise) of, or any
calls, commitments or claims of any character relating to, its capital stock.
7.15 Subsidiaries. After giving effect to the Transaction,
as of the Effective Date, Holdings has no direct or indirect Subsidiaries other
than the Borrower and its Subsidiaries and the Borrower has no Subsidiaries
other than those Subsidiaries listed on Schedule III hereto. Schedule III
correctly sets forth, as of the Effective Date and after giving effect to the
Transaction, the percentage of capital stock of each of its Subsidiaries and
also identifies the direct owner thereof.
7.16 Compliance with Statutes, etc. Except for matters
relating to the compliance by Holdings and its Subsidiaries with Environmental
Laws, which matters are governed by the Environmental Indemnity Agreement, each
of Holdings and its Subsidiaries is in compliance with all applicable statutes,
regulations and orders of, and all applicable restrictions imposed by, all
governmental bodies, domestic or foreign, in respect of the conduct of its
business and the ownership of its property, except such noncompliances as could
not, individually or in the aggregate, reasonably be expected to have a
material adverse effect on the business, operations, property, assets,
liabilities, condition (financial or otherwise) or prospects of the Borrower or
of Holdings and its Subsidiaries taken as a whole.
7.17 Investment Company Act. None of Holdings, the Borrower
nor any of their respective Subsidiaries is an "investment company" or a
company "controlled" by an "investment company," within the meaning of the
Investment Company Act of 1940, as amended.
7.18 Public Utility Holding Company Act. None of Holdings,
the Borrower nor any of their respective Subsidiaries is a "holding company,"
or a "subsidiary company" of a "holding company," or an "affiliate" of a
"holding company" or of a "subsidiary company" of a "holding company" within
the meaning of the Public Utility Holding Company Act of 1935, as amended.
7.19 Labor Relations. None of Holdings, the Borrower nor any
of their respective Subsidiaries is engaged in any unfair labor practice that
could reasonably be expected to have a material adverse effect on the Borrower
or on Holdings and its Subsidiaries taken as a whole. There is (i) no unfair
labor practice complaint pending against Holdings or any of its Subsidiaries
or, to the best knowledge of Holdings or the Borrower, threatened against any
of them, before the National Labor Relations Board, and no significant
grievance or significant arbitration proceeding arising out of or under any
collective bargaining agreement is so pending against Holdings or any of its
Subsidiaries or, to the best knowledge of Holdings or the Borrower, threatened
against any of them, (ii) no strike, labor dispute, slowdown or stoppage
pending against Holdings or any of its Subsidiaries or, to the best knowledge
of Holdings or the Borrower, threatened against Holdings or any of its
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Subsidiaries and (iii) to the best knowledge of Holdings or the Borrower, no
union representation question existing with respect to the employees of
Holdings or any of its Subsidiaries, except (with respect to any matter
specified in clause (i), (ii) or (iii) above, either individually or in the
aggregate) such as could not reasonably be expected to have a material adverse
effect on the business, operations, property, assets, liabilities, condition
(financial or otherwise) or prospects of Borrower or of Holdings and its
Subsidiaries taken as a whole.
7.20 Patents, Licenses, Franchises and Formulas. Each of
Holdings and its Subsidiaries owns all material patents, trademarks, permits,
service marks, trade names, copyrights, licenses, franchises and formulas, or
rights with respect to the foregoing, and has obtained assignments of all
leases and other rights of whatever nature, necessary for the present conduct
of its business, without any known conflict with the rights of others which, or
the failure to obtain which, as the case may be, could reasonably be likely to
result in a material adverse effect on the business, operations, property,
assets, liabilities, condition (financial or otherwise) or prospects of the
Borrower or of Holdings and its Subsidiaries taken as a whole.
7.21 Transaction. The Transaction has been consummated in
all material respects in accordance with the terms of the respective Documents
and all applicable laws. All consents and approvals of, and filings and
registrations with, and all other actions in respect of, all governmental
agencies, authorities or instrumentalities (including the consent from the FCC
approving the transfer of the FCC Licenses contemplated by the Documents which
consent shall have become final, except as set forth on Schedule 7.21) required
in order to make or consummate the Transaction will have been obtained, given,
filed or taken and are or will be in full force and effect (or effective
judicial relief with respect thereto has been obtained), except where the
failure to so obtain, give, file or take would not have a material adverse
effect on the business, operations, property, assets, liabilities, condition
(financial or otherwise) or prospects of the Borrower or of Holdings and its
Subsidiaries taken as whole. All applicable waiting periods with respect
thereto have or, prior to the time when required, will have, expired without,
in all such cases, any action being taken by any competent authority which
restrains, prevents, or imposes material adverse conditions upon the
Transaction. Additionally, there does not exist any judgment, order or
injunction prohibiting or imposing material adverse conditions upon the
Transaction, or any Credit Event or the performance by any Credit Party of its
obligations under the respective Documents. All actions taken by each Credit
Party pursuant to or in furtherance of the Transaction have been taken in
compliance with the respective Documents and all applicable laws.
7.22 Business of Holdings. Holdings owns the capital stock
of its Subsidiaries, provides administrative and management services thereto
and in connection therewith, has employees, enters into certain leases and
other agreements, and conducts all activities reasonably associated therewith.
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7.23 FCC Licenses. After giving effect to the Transaction,
the License Subsidiaries hold such validly issued FCC licenses and
authorizations as are necessary to operate the Stations as they are currently
operated (collectively, the "FCC Licenses"), each of which is in full force and
effect. The FCC Licenses as of the Effective Date are listed on Schedule IV
(with the Osborn FCC Licenses being designated as such on Schedule IV), each of
which FCC Licenses has the expiration date indicated on Schedule IV. Neither
Holdings nor the Borrower has knowledge of any material adverse condition
imposed by the FCC as part of any FCC License which is neither set forth on the
face thereof as issued by the FCC nor contained in the rules and regulations of
the FCC applicable generally to stations of the type, nature, class or location
of each Station. Each Station is being operated in all material respects (i)
in accordance with the terms and conditions of the FCC Licenses applicable to
it and (ii) in accordance with the rules and regulations of the FCC and the
Communications Act of 1934, as amended (the "Communications Act"). No
proceedings are pending or, to the knowledge of Holdings or the Borrower, are
threatened which may reasonably be expected to result in the revocation,
modification, non-renewal or suspension of any of the FCC Licenses, the denial
of any pending applications, the issuance of any cease and desist order or the
imposition of any material fines, forfeitures or other administrative actions
by the FCC with respect to the Stations or their operation, other than
proceedings affecting the radio broadcasting industry in general. Reports,
applications and other documents required to be filed by any Credit Party with
the FCC with respect to the Stations have in all material respects been timely
filed and all such reports, applications and documents are true, correct and
complete in all material respects, and neither Holdings nor the Borrower has
knowledge of any matters (i) which could reasonably be expected to result in
the suspension or revocation of or the refusal to renew any of the FCC Licenses
or the imposition of any material fines or forfeitures by the FCC upon any
Credit Party or (ii) which could reasonably be expected to result in the
modification or revocation of any FM Stations' authorization to operate as
currently authorized, or to operate the AM Stations as currently authorized, as
applicable, under the rules and regulations of the FCC. There are no
unsatisfied or otherwise outstanding notices of apparent liability or
violations issued by the FCC with respect to any Station or its operations.
The Borrower has delivered to the Administrative Agent true and complete copies
of the FCC Licenses (including any and all amendments and other modifications
thereto).
7.24 Existing Senior Subordinated Notes. The subordination
provisions contained in the Existing Senior Subordinated Notes and the other
Existing Senior Subordinated Note Documents are enforceable by the Banks
against the Borrower, the Subsidiary Guarantors and the holders of the Existing
Senior Subordinated Notes, as the case may, and all Obligations hereunder or
under the other Credit Documents are or will be within the definitions of
"Senior Indebtedness," "Designated Senior Indebtedness" and "Guarantor Senior
Indebtedness," as the case may be, included in such provisions of the Existing
Senior Subordinated Note Documents.
SECTION 8. Affirmative Covenants. Holdings and the Borrower
hereby covenant and agree that on and after the Effective Date and until the
Total Commitment and all Letters of
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Credit have terminated and the Loans, Notes and Unpaid Drawings, together with
interest, Fees and all other Obligations incurred hereunder and thereunder, are
paid in full:
8.01 Information Covenants. Holdings and/or the Borrower
will furnish to each Bank:
(a) Monthly Reports. Within 30 days (or 45 days for the
first six fiscal months following the Effective Date) after the end of
each fiscal month (other than the fiscal months ending March, June,
September and December) of Holdings, (i) the combined and combining
balance sheets of Holdings and its Consolidated Subsidiaries for each
fiscal month, each as of the end of such month and the related
combined and combining statements of income and statements of cash
flows for such month and for the last elapsed portion of the fiscal
year ended with the last day of such month, in each case setting forth
in the statements of income only, the comparative figures for the
corresponding month in the prior fiscal year and the budgeted figures
for such month as set forth in the respective budget delivered
pursuant to Section 8.01(e) and (ii) the combined balance sheets for
the Stations located in each Market as of the end of such month and
the related statements of income and statements of cash flows for such
month and for the elapsed portion of the fiscal year ended with the
last day of such month, in each case setting forth in the statements
of income only, the comparative figures for the corresponding month in
the prior fiscal year and the budgeted figures for such month as set
forth in the respective budget delivered pursuant to Section 8.01(e).
(b) Quarterly Financial Statements. As soon as available and
in any event within 45 days after the close of each of the first three
quarterly accounting periods in each fiscal year of Holdings, (i) the
combined and combining balance sheets of Holdings and its Consolidated
Subsidiaries for each fiscal quarter, each as of the end of such
quarter and the related combined and combining statements of income
and statements of cash flows for such quarter and for the last elapsed
portion of the fiscal year ended with the last day of such quarter and
setting forth in the statements of income only, the comparative
figures for the corresponding quarter in the prior fiscal year and the
budgeted figures for such quarter as set forth in the respective
budget delivered pursuant to Section 8.01(e), and (ii) the combined
balance sheets for the Stations located in each Market as of the end
of such quarter and the related statements of income and statements of
cash flows for such quarter and for the elapsed portion of the fiscal
year ended with the last day of such quarter, in each case setting
forth in the statements of income only, the comparative figures for
the corresponding quarter in the prior fiscal year and the budgeted
figures for such quarter as set forth in the respective budget
delivered pursuant to Section 8.01(e).
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(c) Annual Financial Statements. Within 95 days after the
close of each fiscal year of Holdings, (i) the consolidated and
consolidating balance sheets of Holdings and its Consolidated
Subsidiaries for each fiscal year, each as at the end of such fiscal
year and the related statements of income and retained earnings and of
cash flows for such fiscal year and, setting forth comparative figures
for the preceding fiscal year commencing fiscal year 1996 and
certified, in the case of such consolidated statements, by Coopers &
Lybrand L.L.P. or such other independent certified public accountants
of recognized national standing reasonably acceptable to the
Administrative Agent, together with a report of such accounting firm
(which report shall be unqualified as to scope) stating that in the
course of its regular audit of the financial statements of Holdings
and its Subsidiaries, which audit was conducted in accordance with
generally accepted auditing standards, such accounting firm obtained
no knowledge of any Default or Event of Default under Sections 9.03,
9.04, 9.05 and 9.07 through 9.10, inclusive, which has occurred and is
continuing or, if in the opinion of such accounting firm such a
Default or Event of Default has occurred and is continuing, a
statement as to the nature thereof, (ii) the combined balance sheets
for the Stations located in each Market at the end of such fiscal year
and the related statement of income and retained earnings and
statement of cash flows for such fiscal year, in each case setting
forth comparative figures for the preceding fiscal year for income
statements only, and (iii) management's discussions and analysis of
the important operational and financial developments during such
fiscal year in respect of Holdings and its Subsidiaries.
(d) Management Letters. Promptly after the receipt thereof
by Holdings or any of its Subsidiaries, a copy of any final
"management letter" received by Holdings or such Subsidiary from its
certified public accountants and management's responses thereto.
(e) Budgets. No later than 30 days following the
commencement of the first day of each fiscal year of Holdings, a
budget in form satisfactory to the Administrative Agent prepared by
Holdings for (x) in the case of budgeted statements of income, each of
the twelve months of such fiscal year prepared in detail, and (y) in
the case of budgeted statements of sources and uses of cash and
balance sheets, for such fiscal year on an annual basis and prepared
in detail and for each of the five years immediately following such
fiscal year prepared in summary form, in each case, of each of
Holdings and its Subsidiaries and each of the Markets accompanied by
the statement of the President, Chief Financial Officer or Senior Vice
President of Finance of Holdings to the effect that, to the best of
his knowledge, the budget is a reasonable estimate for the period
covered thereby.
(f) Officer's Certificates. At the time of the delivery of
the financial statements provided for in Section 8.01(a), (b) and (c),
a certificate of an Authorized Officer of the Borrower to the effect
that, to the best of such officer's knowledge, no Default or Event of
Default has occurred
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and is continuing or, if any Default or Event of Default has occurred
and is continuing, specifying the nature and extent thereof, which
certificate shall, in the case of any such financial statements
delivered in respect of a period ending on the last day of a fiscal
quarter or year of Holdings, set forth the calculations required to
establish whether the Borrower was in compliance with the provisions
of Sections 9.03, 9.04, 9.05, and 9.07 through 9.10, inclusive, at the
end of such fiscal quarter or year, as the case may be.
(g) Notice of Default or Litigation. Promptly, and in any
event within three Business Days after an Authorized Officer of
Holdings or the Borrower obtains knowledge thereof, notice of (i) the
occurrence of any event which constitutes a Default or Event of
Default and (ii) any litigation or governmental investigation or
proceeding pending (x) against Holdings or any of its Subsidiaries
which could reasonably be expected to materially and adversely affect
the business, operations, property, assets, liabilities, condition
(financial or otherwise) or prospects of the Borrower or Holdings and
its Subsidiaries taken as a whole, (y) with respect to any material
Indebtedness of the Borrower and its Subsidiaries taken as a whole or
(z) with respect to any other Document which could reasonably be
expected to materially and adversely affect the business, operations,
property, assets, liabilities, condition (financial or otherwise) or
prospects of the Borrower or Holdings and its Subsidiaries taken as a
whole.
(h) Other Reports and Filings. Promptly, copies of all (x)
financial information, proxy materials and other information and
reports, if any, which Holdings or any of its Subsidiaries shall file
with the Securities and Exchange Commission or any successor thereto
(the "SEC") including, without limitation, in connection with the
issuance of the Existing Senior Subordinated Notes or the Holdings
Senior Notes, or deliver to holders of its Indebtedness pursuant to
the terms of the documentation governing such Indebtedness (or any
trustee, agent or other representative therefor) and (y) material
filings or communications with the FCC or pursuant to and/or as
required by the Communications Act.
(i) Annual Meetings with Banks. At the request of the
Administrative Agent or the Required Banks, Holdings shall within 120
days after the close of each fiscal year of Holdings hold a meeting at
a time and place selected by Holdings and acceptable to the
Administrative Agent with all of the Banks at which meeting shall be
reviewed the financial results of the previous fiscal year and the
financial condition of Holdings and the budgets presented for the
current fiscal year of Holdings and its Subsidiaries.
(j) Other Information. From time to time, such other
information or documents (financial or otherwise) with respect to
Holdings or its Subsidiaries as any Bank may reasonably request in
writing.
8.02 Books, Records and Inspections. Holdings will, and will
cause each of its Subsidiaries to, keep proper books of record and account in
which full, true and correct entries in
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conformity with GAAP and all requirements of law shall be made of all dealings
and transactions in relation to its business and activities. Holdings will,
and will cause each of its Subsidiaries to, permit officers and designated
representatives of the Administrative Agent or any Bank to visit and inspect,
during regular business hours and under guidance of officers of Holdings, the
Borrower or such Subsidiary, any of the properties of Holdings, the Borrower or
such Subsidiary, and to examine the books of account of Holdings, the Borrower
or such Subsidiary and discuss the affairs, finances and accounts of Holdings,
the Borrower or such Subsidiary with, and be advised as to the same by, its and
their officers and independent accountants, all at such reasonable times and
intervals and to such reasonable extent as the Administrative Agent or such
Bank may request.
8.03 Maintenance of Property; Insurance. (a) Schedule V
sets forth a true and complete listing of all insurance maintained by Holdings,
and its Subsidiaries as of the Effective Date. Holdings will, and will cause
each of its Subsidiaries to, (i) keep all property necessary in its business in
good working order and condition (ordinary wear and tear excepted), (ii)
maintain insurance on all its property in at least such amounts and against at
least such risks as is consistent and in accordance with industry practice and
(iii) furnish to each Bank, upon written request, full information as to the
insurance carried. In addition to the requirements of the immediately
preceding sentence, Holdings and the Borrower will at all times cause insurance
of the types described in Schedule V to be maintained (with the same scope of
coverage as that described in Schedule V) at levels which are at least as great
as the respective amount described opposite the respective type of insurance on
Schedule V under the column headed "Maximum Amount Required to be Maintained."
(b) Holdings will, and will cause its Subsidiaries to, at all
times keep their respective property insured in favor of the Collateral Agent,
and all policies or certificates (or certified copies thereof) with respect to
such insurance (and any other insurance maintained by Holdings or any of its
Subsidiaries) (i) shall be endorsed to the Collateral Agent's satisfaction for
the benefit of the Collateral Agent (including, without limitation, by naming
the Collateral Agent as loss payee or as an additional insured), (ii) shall
state that such insurance policies shall not be cancelled without 30 days'
prior written notice thereof by the respective insurer to the Collateral Agent,
(iii) shall provide that the respective insurers irrevocably waive any and all
rights of subrogation with respect to the Collateral Agent and the Secured
Creditors, (iv) shall contain the standard non-contributory mortgagee clause
endorsement in favor of the Collateral Agent with respect to hazard insurance
coverage, (v) shall, except in the case of public liability insurance and
workers' compensation insurance, provide that any losses shall be payable
notwithstanding (A) any act or neglect of Holdings or any of its Subsidiaries,
(B) the occupation or use of the properties for purposes more hazardous than
those permitted by the terms of the respective policy if such coverage is
obtainable at commercially reasonable rates and is of the kind from time to
time customarily insured against by Persons owning or using similar property
and in such amounts as are customary, (C) any foreclosure or other proceeding
relating to the insured properties if such coverage is available at
commercially reasonable rates or (D) any change in the title to or ownership or
possession of the insured properties if such
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coverage is available at commercially reasonable rates and (vi) shall be
deposited with the Collateral Agent if such coverage is available at
commercially reasonable rates.
(c) If Holdings or any of its Subsidiaries shall fail to
maintain all insurance in accordance with this Section 8.03, or if Holdings or
any of its Subsidiaries shall fail to so endorse and deposit all policies or
certificates with respect thereto, the Administrative Agent and/or the
Collateral Agent shall have the right (but shall be under no obligation) to
procure such insurance and the Borrower agrees to reimburse the Administrative
Agent or the Collateral Agent as the case may be, for all costs and expenses of
procuring such insurance.
8.04 Corporate Franchises. Holdings will, and will cause
each of its Subsidiaries to, do or cause to be done, all things necessary to
preserve and keep in full force and effect its existence and its material
rights, franchises, licenses and patents (each an "Operating Agreement," and,
collectively, the "Operating Agreements"); provided, however, that nothing in
this Section 8.04 shall prevent (i) sales of assets by Holdings or any of its
Subsidiaries in accordance with Section 9.02 or (ii) the withdrawal by Holdings
or any of its Subsidiaries of their qualification as a foreign corporation in
any jurisdiction where such withdrawal could not reasonably be expected to have
a material adverse effect on the business, operations, property, assets,
liabilities or condition (financial or otherwise) of the Borrower or of
Holdings and its Subsidiaries taken as a whole.
8.05 Compliance with Statutes, etc. Except for matters
relating to compliance by Holdings and its Subsidiaries with Environmental
Laws, which matters are governed by the Environmental Indemnity Agreement,
Holdings will, and will cause each of its Subsidiaries to, comply with all
applicable statutes, regulations and orders of, and all applicable restrictions
imposed by, all governmental bodies, domestic or foreign, in respect of the
conduct of its business and the ownership of its property, except such
noncompliances as could not, individually or in the aggregate, reasonably be
expected to have a material adverse effect on the business, operations,
property, assets, liabilities, condition (financial or otherwise) or prospects
of the Borrower or of Holdings and its Subsidiaries taken as a whole.
8.06 ERISA. As soon as possible and, in any event, within 20
days after Holdings, the Borrower or any of their respective Subsidiaries or
any ERISA Affiliate knows or has reason to know of the occurrence of any of the
following, Holdings or the Borrower will deliver to each of the Banks a
certificate of an Authorized Officer of Holdings or the Borrower setting forth
details as to such occurrence and the action, if any, that Holdings, the
Borrower, such Subsidiary or such ERISA Affiliate is required or proposes to
take, together with any notices required or proposed to be given to or filed
with or by Holdings, the Borrower, such Subsidiary, the ERISA Affiliate, the
PBGC, or a Plan participant or the Plan administrator with respect thereto:
that a Reportable Event has occurred; that an accumulated funding deficiency
has been incurred or an application is likely to be or has been made to the
Secretary of the Treasury for a waiver or modification of the minimum
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funding standard (including any required installment payments) or an extension
of any amortization period under Section 412 of the Code with respect to a
Plan; that a contribution required to be made to a Plan has not been timely
made; that a Plan has been or is reasonably expected to be terminated,
reorganized, partitioned or declared insolvent under Title IV of ERISA; that a
Plan has an Unfunded Current Liability giving rise to a lien under ERISA or the
Code; that proceedings are likely to be or have been instituted or notice has
been given to terminate or appoint a trustee to administer a Plan, that a
proceeding has been instituted pursuant to Section 515 of ERISA to collect a
delinquent contribution to a Plan; that Holdings, the Borrower, any of their
respective Subsidiaries or any ERISA Affiliate will or is reasonably expected
to incur any material liability (including any contingent or secondary
liability) to or on account of the termination of or withdrawal from a Plan
under Section 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or with
respect to a Plan under Section 401(a)(29), 4971 or 4975 of the Code or Section
409 or 502(i) or 502(l) of ERISA; or that Holdings, the Borrower or any
Subsidiary may incur any material liability pursuant to any employee welfare
benefit plan (as defined in Section 3(1) of ERISA) that provides benefits to
retired employees or other former employees (other than as required by Section
601 of ERISA) or any employee pension benefit plan (as defined in Section 3(2)
of ERISA) in addition to the liability that existed on the Effective Date
pursuant to any such plan or plans. Upon request the Borrower will deliver to
each of the Banks a complete copy of the annual report (Form 5500) of each Plan
required to be filed with the Internal Revenue Service. In addition to any
certificates or notices delivered to the Banks pursuant to the first sentence
hereof, copies of any adverse material notices received by Holdings, the
Borrower or any of their respective Subsidiaries or any ERISA Affiliate from a
governmental agency with respect to any Plan shall be delivered to the Banks no
later than 20 days after the date such notice has been received by Holdings,
the Borrower, the Subsidiary or the ERISA Affiliate, as applicable.
8.07 End of Fiscal Years; Fiscal Quarters. Holdings shall
cause (i) each of its, and each of its Subsidiaries', fiscal years to end on
December 31, and (ii) each of its, and each of its Subsidiaries', fiscal
quarters to end on March 31, June 30 and September 30.
8.08 Performance of Obligations. Holdings will, and will
cause each of its Subsidiaries to, perform all of their obligations under the
terms of each mortgage, indenture, security agreement and other debt instrument
by which it is bound, except such non-performances as could not, individually
or in the aggregate, reasonably be expected to have a material adverse effect
on the business, operations, property, assets, liabilities, condition
(financial or otherwise) or prospects of the Borrower or of Holdings and its
Subsidiaries taken as a whole.
8.09 Payment of Taxes. Holdings will pay and discharge or
cause to be paid and discharged, and will cause each of its Subsidiaries to pay
and discharge, all material taxes, assessments and governmental charges or
levies imposed upon it or upon its income or profits, or upon any material
properties belonging to it, in each case on a timely basis, and all lawful
claims which, if
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unpaid, might become a lien or charge upon any properties of Holdings or any of
its Subsidiaries; provided that none of Holdings nor any of its Subsidiaries
shall be required to pay any such tax, assessment, charge, levy or claim which
is being contested in good faith and by proper proceedings if it has maintained
adequate reserves with respect thereto in accordance with GAAP.
8.10 Maintenance of Separateness. Holdings will, and will
cause each of its Subsidiaries to, satisfy customary corporate formalities
including the holding of regular board of directors' and shareholders' meetings
and the maintenance of corporate offices and records. None of the Borrower nor
any of its Subsidiaries shall make any payment to a creditor of Holdings in
respect of any liability of Holdings which is not a liability of the Borrower
or such Subsidiary, and no bank account of Holdings shall be commingled with
any bank account of the Borrower or any of its Subsidiaries. Any financial
statements distributed to any creditors of Holdings shall, to the extent
permitted by GAAP, clearly establish the corporate separateness of Holdings
from the Borrower and its Subsidiaries. Neither Holdings nor any of its
Subsidiaries shall take any action, or conduct its affairs in a manner, which
is likely to result in the corporate existence of Holdings being ignored, or in
the assets and liabilities of the Borrower or any of its Subsidiaries being
substantively consolidated with those of Holdings in a bankruptcy,
reorganization or other insolvency proceeding.
8.11 Fort Myers Disposition. (a) On or prior to the date of
the consummation of the Fort Myers Disposition (the "Fort Myers Disposition
Date"), Corkscrew Broadcasting Corporation (a Subsidiary of Osborn) shall have
received approximately $11,000,000 of gross cash proceeds from the Fort Myers
Disposition.
(b) On or prior to the Fort Myers Disposition Date, the
Borrower shall deliver to the Administrative Agent true and correct copies of
all Fort Myers Disposition Documents, and all of the terms and conditions of
the Fort Myers Disposition Documents shall be in form and substance reasonably
satisfactory to the Administrative Agent. The Fort Myers Disposition shall be
consummated substantially in accordance with the Fort Myers Disposition
Documents and all applicable laws relating thereto. All conditions in the Fort
Myers Disposition Documents shall be satisfied, without waiver or material
modification, and all covenants in the Fort Myers Purchase Agreement shall be
performed in all material respects, without waiver or modification, and all
representations and warranties contained therein shall be true and correct in
all material respects, without waiver or modification (except with the consent
of the Administrative Agent, which consent shall not be unreasonably withheld).
(c) On or prior to the Fort Myers Disposition Date, all
necessary and material governmental (domestic and foreign) and third party
approvals in connection with the Fort Myers Disposition, including, without
limitation, approval from the FCC of the transfer of the FCC Licenses
contemplated by the Fort Myers Disposition, shall have become final, and the
transactions contemplated by the Fort Myers Disposition Documents and otherwise
referred to herein or therein,
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shall have been obtained and remain in effect, and all applicable waiting
periods shall have expired without any action being taken by any competent
authority which restrains, prevents or imposes, in the judgment of the
Administrative Agent, materially adverse conditions upon the consummation of
the Fort Myers Disposition and the transactions contemplated by this Agreement.
Additionally, there shall not exist any judgment, order, injunction or other
restraint issued or filed or a hearing seeking injunctive relief or other
restraint pending or notified prohibiting or imposing materially adverse
conditions upon the consummation of the Fort Myers Disposition and the
transactions contemplated by this Agreement.
8.12 Additional Security; Further Assurances. (a) Holdings
and the Borrower will, and will cause each of their respective Subsidiaries to,
grant to the Collateral Agent security interests in Reinvestment Assets at the
time of the acquisition thereof as described in this clause (a). To the extent
Reinvestment Assets are acquired by the Borrower and/or its Subsidiaries, the
Borrower or such Subsidiary shall grant a Lien on and a security interest in
such Reinvestment Assets on the same terms as set forth in the Security
Documents and as otherwise set forth in this Section 8.12. To the extent
Reinvestment Assets are acquired by a merger or the acquisition of capital
stock, the Borrower shall cause the Person acquiring such Reinvestment Assets
to become a Subsidiary of the Borrower and/or its Subsidiaries, and shall
pledge or cause to be pledged all capital stock of any such Person so acquired
pursuant to the Borrower Pledge Agreement or the Subsidiary Pledge Agreement,
as the case may be, and cause such Person to enter into an additional guaranty
substantially similar to the Subsidiary Guaranty and additional security
documents substantially similar to the Security Documents, all as otherwise set
forth in this Section 8.12; provided, that, absent a change in the relevant
sections of the Code or the rules, regulations, rulings, notices or other
official pronouncements issued or promulgated thereunder, the Borrower and its
Subsidiaries shall be required to pledge only 65% of the voting capital stock
of a foreign Subsidiary and no foreign Subsidiary shall be required to enter
into such guaranty or Security Documents; provided further, the Borrower and
its Subsidiaries shall not be required to grant a security interest in any
Reinvestment Assets that are acquired subject to a Lien permitted by Section
9.01(vii), (viii) or (xx).
(b) Holdings will, and will cause each of its Subsidiaries
to, grant to the Collateral Agent security interests and mortgages (an
"Additional Mortgage") in such Real Property of Holdings or any of its
Subsidiaries as are not covered by the original Mortgages to the extent
acquired after the Effective Date, and as may reasonably be requested from time
to time by the Administrative Agent or the Required Banks (each such Real
Property, an "Additional Mortgaged Property"). All such Additional Mortgages
shall be granted pursuant to documentation substantially in the form of the
Mortgages or in such other form as is reasonably satisfactory to the
Administrative Agent and shall constitute valid and enforceable perfected Liens
superior to and prior to the rights of all third Persons and subject to no
other Liens except as are permitted by Section 9.01 at the time of perfection
thereof. The Additional Mortgages or instruments related thereto shall have
been duly recorded or filed in such manner and in such places as are required
by law to establish, perfect,
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preserve and protect the Liens in favor of the Collateral Agent required to be
granted pursuant to the Additional Mortgages and all taxes, fees and other
charges payable in connection therewith shall have been paid in full.
Notwithstanding anything to the contrary stated above in this clause (b),
Holdings and its Subsidiaries shall be required to only grant Additional
Mortgages in fee owned Real Property with a fair market value at the time of
acquisition thereof in excess of $250,000.
(c) No later than 30 days following the H/T Borrowing Date,
the Borrower shall, execute and deliver to the Collateral Agent an Additional
Mortgage on the Real Property listed on Part B of Schedule II, and shall take
all other actions and deliver such other documents (including opinions of
counsel and title policies) with respect thereto as the Administrative Agent
may reasonably request.
(d) Holdings will, and will cause each of its Subsidiaries
to, grant to the Collateral Agent security interests in assets acquired
pursuant to Sections 9.02(ix), (xiv), (xvii), (xviii), (xix) or (xx) at the
time of the acquisition thereof as described in this clause (d). To the extent
assets are acquired by the Borrower or any of its Subsidiaries pursuant to such
Sections, the Borrower or such Subsidiary shall grant a Lien on and a security
interest in such assets on the same terms as set forth in the Security
Documents and as otherwise set forth in this Section 8.12. In connection with
the acquisition of the capital stock of a Person pursuant to such Sections, the
Borrower shall cause such Person to become a direct or indirect Subsidiary of
the Borrower, and shall pledge or cause to be pledged all capital stock of any
such Person so acquired pursuant to the Borrower Pledge Agreement or the
Subsidiary Pledge Agreement, as applicable, and cause such Person to enter into
an additional guaranty substantially similar to the Subsidiary Guaranty and
additional security documents substantially similar to the Security Documents,
all as otherwise set forth in this Section 8.12; provided, that, absent a
change in the relevant sections of the Code or the rules, regulations, rulings,
notices or other official pronouncements issued or promulgated thereunder, the
Borrower and its Subsidiaries shall be required to only pledge 65% of the
voting capital stock of a foreign Subsidiary and no foreign Subsidiary shall be
required to enter into such guaranty or Security Documents; provided further,
that the Borrower and its Subsidiaries shall not be required to grant a
security interest in such assets that are acquired subject to a Lien permitted
by Section 9.01(vii), (viii) or (xix). Notwithstanding anything to the
contrary contained above, Holdings and its Subsidiaries shall be required to
only grant Additional Mortgages in fee owned Real Property with a fair market
value at the time of acquisition in excess of $250,000.
(e) Holdings will, and will cause each of its Subsidiaries
to, at the expense of the Borrower, make, execute, endorse, acknowledge, file
and/or deliver to the Collateral Agent from time to time such vouchers,
invoices, schedules, confirmatory assignments, conveyances, financing
statements, transfer endorsements, powers of attorney, certificates, real
property surveys, reports and other assurances or instruments and take such
further steps relating to the Collateral covered by any of the Security
Documents as the Collateral Agent may reasonably require pursuant to this
Section
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8.12. Furthermore, Holdings and the Borrower shall cause to be delivered to
the Collateral Agent such opinions of counsel, title insurance and other
related documents as may be requested by the Collateral Agent to assure itself
that this Section 8.12 has been complied with.
(f) Holdings will cause each Subsidiary established or
created in accordance with Section 9.15 to execute and deliver a guaranty of
all Obligations and all obligations under Interest Rate Protection Agreements
in substantially the form of the Subsidiary Guaranty; provided that absent a
change in the relevant sections of the Code or the rules, regulations, rulings,
notices or other official pronouncements issued or promulgated thereunder, no
foreign Subsidiary shall be required to enter into such guaranty.
(g) Holdings will cause each Subsidiary established or
created in accordance with Section 9.15 to grant to the Collateral Agent a
first priority Lien on all property (tangible and intangible) of such
Subsidiary upon terms similar to those set forth in the Security Documents as
appropriate, and satisfactory in form and substance to the Collateral Agent and
Required Banks; provided, that absent a change in the relevant sections of the
Code or the rules, regulations, rulings, notices or other official
pronouncements issued or promulgated thereunder, no foreign Subsidiary shall be
required to enter into such Security Documents; provided further, that the
Borrower and its Subsidiaries shall not be required to grant a security
interest in such assets that are acquired subject to a Lien permitted by
Section 9.01(vii), (viii) or (xix); provided further, that such Subsidiary
shall be required to only grant Additional Mortgages in fee owned Real Property
with a fair market value at the time of acquisition in excess of $250,000.
Holdings and the Borrower will cause each Subsidiary, at its own expense, to
execute, acknowledge and deliver, or cause the execution, acknowledgement and
delivery of, and thereafter register, file or record in any appropriate
governmental office, any document or instrument reasonably deemed by the
Collateral Agent to be necessary or desirable for the creation and perfection
of the foregoing Liens. Holdings and the Borrower will cause each of its
Subsidiaries to take all actions requested by the Collateral Agent (including,
without limitation, the filing of UCC-1's) in connection with the granting of
such security interests.
(h) The security interests required to be granted pursuant to
this Section 8.12 shall be granted pursuant to security documentation which
shall be substantially similar to the Security Documents already executed and
delivered by the Borrower or its Subsidiaries, as applicable, or otherwise
satisfactory in form and substance to the Administrative Agent and shall
constitute valid and enforceable perfected security interests prior to the
rights of all third Persons and subject to no other Liens except such Liens as
are permitted by Section 9.01. The Additional Security Documents and other
instruments related thereto shall be duly recorded or filed in such manner and
in such places and at such times as are required by law to establish, perfect,
preserve and protect the Liens, in favor of the Collateral Agent for the
benefit of the respective Secured Creditors, required to be granted pursuant to
the Additional Security Documents and all taxes, fees and other charges payable
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in connection therewith shall be paid in full by the Borrower. At the time of
the execution and delivery of the Additional Security Documents, the Borrower
shall cause to be delivered to the Collateral Agent such opinions of counsel,
Mortgage Policies, title surveys and other related documents as may be
reasonably requested by the Administrative Agent or the Required Banks to
assure themselves that this Section 8.12 has been complied with.
(i) Each of Holdings and the Borrower agrees that each action
required above by Section 8.12(e) shall be completed as soon as possible, but
in no event later than 60 days after such action is requested to be taken by
the Administrative Agent or the Required Banks. Each of Holdings and the
Borrower further agrees that each action required by Section 8.12(a) (to the
extent applicable in connection with the creation or acquisition of a new
Subsidiary), 8.12(d), (f), (g) and (h) with respect to Additional Collateral
shall be completed contemporaneously with the creation of such new Subsidiary.
SECTION 9. Negative Covenants. Holdings and the Borrower
covenant and agree that on and after the Effective Date and until the Total
Commitment and all Letters of Credit have terminated and the Loans, Notes and
Unpaid Drawings, together with interest, Fees and all other Obligations
incurred hereunder and thereunder, are paid in full:
9.01 Liens. Holdings will not, and will not permit any of
its Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or
with respect to any property or assets (real or personal, tangible or
intangible) of Holdings or any of its Subsidiaries, whether now owned or
hereafter acquired, or sell any such property or assets subject to an
understanding or agreement, contingent or otherwise, to repurchase such
property or assets (including sales of accounts receivable with recourse to
Holdings or any of its Subsidiaries), or assign any right to receive income or
permit the filing of any financing statement under the UCC or any other similar
notice of Lien under any similar recording or notice statute; provided that the
provisions of this Section 9.01 shall not prevent the creation, incurrence,
assumption or existence of the following (Liens described below are herein
referred to as "Permitted Liens"):
(i) inchoate Liens for taxes, assessments or governmental
charges or levies not yet due and payable or Liens for taxes,
assessments or governmental charges or levies being contested in good
faith and by appropriate proceedings for which adequate reserves have
been established in accordance with GAAP;
(ii) Liens in respect of property or assets of the
Borrower or any of its Subsidiaries imposed by law, which were
incurred in the ordinary course of business and do not secure
Indebtedness for borrowed money, such as carriers', warehousemen's,
materialmen's and mechanics' liens and other similar Liens arising in
the ordinary course of business, and (x) which do not in the aggregate
materially detract from the value of the Borrower's or
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such Subsidiary's property or assets or materially impair the use
thereof in the operation of the business of the Borrower or such
Subsidiary or (y) which are being contested in good faith by
appropriate proceedings, which proceedings have the effect of
preventing the forfeiture or sale of the property or assets subject to
any such Lien;
(iii) Liens in existence on each of the Effective Date and
the H/T Borrowing Date which are listed, and the property subject
thereto described, in Schedule VI, but only to the respective date, if
any, set forth in such Schedule VI for the removal and termination of
any such Liens, plus renewals, replacements and extensions of such
Liens to the extent set forth on Schedule VI, provided that (x) the
aggregate principal amount of the Indebtedness, if any, secured by
such Liens does not increase from that amount outstanding at the time
of any such renewal, replacement or extension and (y) any such
renewal, replacement or extension does not encumber any additional
assets or properties of Holdings or any of its Subsidiaries;
(iv) Permitted Encumbrances;
(v) Liens created pursuant to the Security Documents;
(vi) licenses, leases or subleases granted to other
Persons in a manner consistent with past practice or the radio
industry generally not materially interfering with the conduct of the
business of Holdings and its Subsidiaries taken as a whole;
(vii) Liens upon assets subject to Capitalized Lease
Obligations to the extent permitted by Section 9.04, provided that (x)
such Liens only serve to secure the payment of Indebtedness arising
under such Capitalized Lease Obligation and (y) the Lien encumbering
the asset giving rise to the Capitalized Lease Obligation does not
encumber any other asset of either the Borrower or any Subsidiary of
the Borrower;
(viii) Liens on equipment or machinery used by the Borrower
or any of its Subsidiaries in the ordinary course of business and
incurred at the time of acquisition thereof by the Borrower or any
such Subsidiary or within 120 days thereafter to secure Indebtedness
incurred to pay all or a portion of the purchase price thereof and all
renewals, replacements or extensions thereof, provided that (x) the
aggregate outstanding principal amount of all Indebtedness secured by
Liens permitted by this clause (viii) shall not at any time exceed
$2,500,000 and (y) in all events, the Lien encumbering the equipment
or machinery so acquired does not encumber any other asset of either
the Borrower or any of its Subsidiaries;
(ix) easements, rights-of-way, restrictions (including
zoning restrictions), encroachments, protrusions and other similar
charges or encumbrances, and minor title deficiencies, in each case
whether now or hereafter in existence, not securing Indebtedness
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and not materially interfering with the conduct of the business of the
Borrower or any of its Subsidiaries;
(x) Liens arising from precautionary UCC financing
statement filings regarding operating leases entered into by Holdings
or any of its Subsidiaries in the ordinary course of business,
provided that such Lien is limited to the respective lessor's interest
in such leased property;
(xi) Liens arising out of the existence of judgments or
awards not constituting an Event of Default under Section 10.09,
provided that no cash or property is deposited or delivered to secure
the respective judgment or award (or any appeal bond in respect
thereof, except as permitted by following clause (xiii));
(xii) statutory, contractual and common law landlords'
liens under leases to which the Borrower or any of its Subsidiaries is
a party;
(xiii) Liens (other than any Lien imposed by ERISA) incurred
or deposits made in the ordinary course of business in connection with
workers' compensation, unemployment insurance and other types of
social security, or to secure the performance of tenders, statutory
obligations, surety, stay, customs and appeal bonds, statutory bonds,
bids, leases, government contracts, trade contracts, performance and
return of money bonds and other similar obligations (exclusive of
obligations for the payment of borrowed money), provided that the
aggregate amount of deposits at any time pursuant to this clause
(xiii) shall not exceed $250,000;
(xiv) any interest or title of a lessor, sublessor,
licensee or licensor under any lease or license agreement permitted by
this Agreement;
(xv) Liens in favor of a banking institution arising as a
matter of law encumbering deposits (including the right of set-off)
held by such banking institutions incurred in the ordinary course of
business and which are within the general parameters customary in the
banking industry;
(xvi) deposits made in the ordinary course of business to
secure liabilities for premiums to insurance carriers, provided that
such deposits do not exceed $500,000 in the aggregate at any time;
(xvii) Liens arising out of conditional sale, title
retention, consignment or similar arrangements for sale of goods
entered into by the Borrower or any of its Subsidiaries in the
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ordinary course of business, in accordance with past practices of the
Borrower and its Subsidiaries;
(xviii) cash earnest money deposits in connection with
acquisitions otherwise permitted by Section 9.02 in an aggregate
amount at any one time not to exceed that amount which, when added to
the Stated Amount of all Letters of Credit issued and outstanding at
such time to provide assurance of performance in connection with
acquisitions otherwise permitted by Section 9.02, equals $15,000,000,
provided that Holdings and its Subsidiaries shall not make any cash
earnest money deposits when there exists a Default or an Event of
Default;
(xix) Liens on property or assets in existence at the time
such property or assets are acquired pursuant to Section 9.02(ix),
(xiv), (xvii), (xviii), (xix) or (xx), provided that (x) any
Indebtedness that is secured by such Liens is permitted to exist under
Section 9.04(x)(y) and (y) such Liens are not incurred in connection
with, or in contemplation or anticipation of, such acquisition and do
not attach to any other asset of Holdings or any of its Subsidiaries;
and
(xx) Liens not otherwise permitted under this Section 9.01
to the extent attaching to properties and assets with an aggregate
fair market value not in excess of, and securing liabilities not in
excess of, $1,000,000 in the aggregate at any time outstanding.
9.02 Consolidation, Merger, Purchase or Sale of Assets, etc.
Holdings will not, and will not permit any of its Subsidiaries to, wind up,
liquidate or dissolve its affairs or merge, consolidate, convey, sell, lease or
otherwise dispose of all or any part of its property or assets, or enter into
any sale-leaseback transactions, or purchase or otherwise acquire (in one or a
series of related transactions) any part of the property or assets (other than
purchases or other acquisitions of inventory, materials, equipment and
intangible assets, including property acquired by way of trade or barter
agreements, in the ordinary course of business) of any Person, except that:
(i) Capital Expenditures made by the Borrower and its
Subsidiaries shall be permitted to the extent not in violation of
Section 9.07;
(ii) each of the Borrower and its Subsidiaries may in the
ordinary course of business, sell, lease or otherwise dispose of any
assets provided that the aggregate Net Sale Proceeds of all assets
subject to sales or other dispositions pursuant to this clause (ii)
shall not exceed $2,500,000 in any fiscal year of the Borrower;
(iii) investments may be made to the extent permitted by
Section 9.05;
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(iv) each of the Borrower and its Subsidiaries may lease
(as lessee) real or personal property in the ordinary course of
business (so long as such lease does not create a Capitalized Lease
Obligation not otherwise permitted by Section 9.04(iv));
(v) each of the Borrower and its Subsidiaries may make
sales or other transfers of airtime in the ordinary course of business
and consistent with past practices;
(vi) licenses or sublicenses by the Borrower and its
Subsidiaries of software, trademarks and other intellectual property
and general intangibles and licenses, leases or subleases of other
property in the ordinary course of business and which do not
materially interfere with the business of the Borrower or any
Subsidiary;
(vii) the Borrower or any Wholly-Owned Subsidiary of the
Borrower may transfer assets to or lease assets to or acquire or lease
assets from the Borrower or any Wholly-Owned Subsidiary (so long as
the security interests granted pursuant to the Security Documents are
not, in the judgment of the Collateral Agent, adversely affected
thereby) or any Subsidiary of the Borrower may be merged or
consolidated with or into, or be liquidated or dissolved into, the
Borrower or any Wholly-Owned Subsidiary of the Borrower (so long as
the Borrower or such Wholly-Owned Subsidiary is the surviving
corporation);
(viii) (x) the sale or other disposition of Stations of the
Borrower shall be permitted for cash at fair market value (as
determined in good faith by the Borrower) so long as the proceeds
thereof are applied in accordance with Section 3.03(d), provided that
the Broadcast Cash Flow attributable to all Stations so sold or
disposed of during any period of four consecutive fiscal quarters of
the Borrower shall not, when netted against the Broadcast Cash Flow
attributed to all Stations acquired during such period, exceed 5% of
Consolidated Broadcast Cash Flow for such period and (y) the
acquisition of Reinvestment Assets for consideration not to exceed the
fair market value of such Reinvestment Assets shall be permitted in
accordance with Sections 3.03(d) and 8.12;
(ix) so long as (x) no Default or Event of Default then
exists or would arise therefrom and (y) Holdings shall be in
compliance with the financial covenants contained in Sections 9.08
through 9.10, inclusive, with such financial covenants to be
calculated on a pro forma basis as if such Stock Swap and/or Station
Swap had been consummated on the first day of the then most recently
ended Test Period (and any Indebtedness incurred, issued or assumed in
connection therewith had been incurred on the first day of, and
remained outstanding throughout, such Test Period), the Borrower may,
and may permit its Subsidiaries to, simultaneously exchange (for
reasonably equivalent value, a portion thereof which may include cash)
(A) 100% of the capital stock of any Subsidiary of such Person (the
"Stock Swapped Station") for 100% of the capital stock of any Person
(the "Stock Target Station")
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owning a station (each such occurrence a "Stock Swap") or (B) all or
substantially all of the assets of a radio Station or group of
Stations (the "Asset Swapped Station," with each Stock Swapped Station
and Asset Swapped Station, a "Swapped Station") for all or
substantially all of the assets of another radio station or group of
stations (the "Asset Target Station," with each Stock Target Station
and each Asset Target Station, a "Target Station") (each such
occurrence a "Station Swap"), provided, that at the time of such Stock
Swap or Station Swap the Borrower and/or such Subsidiary, and the
newly acquired entity, shall comply with Section 8.12, provided
further, that any cash proceeds received by Borrower or any of its
Subsidiaries in connection with any such Stock Swap or Asset Swap
shall be applied in accordance with the requirements of Section
3.03(e);
(x) the Osborn Acquisition shall be permitted;
(xi) the H/T Transaction shall be permitted;
(xii) the Borrower and its Subsidiaries may sell or
discount, accounts receivable arising in the ordinary course of
business (x) which are overdue or (y) which the Borrower may
reasonably determine are difficult to collect, but only in connection
with the compromise or collection thereof consistent with customary
industry practice (and not as part of any bulk sale or financing of
receivables);
(xiii) transfers of condemned property to the respective
governmental authority or agency that have condemned same (whether by
deed in lieu of condemnation or otherwise), and transfers of
properties that have been subject to a casualty to the respective
insurer of such property or its designee as part of an insurance
settlement, so long as the proceeds thereof are applied as required by
Section 3.03(e);
(xiv) so long as (x) no Default or Event of Default then
exists or would result therefrom and (y) the Borrower shall
demonstrate compliance with the financial covenants contained in
Sections 9.08 through 9.10, inclusive, with such financial covenants
to be calculated on a pro forma basis as if such acquisition had been
consummated on the first day of the then most recently ended Test
Period (and any Indebtedness incurred, issued or assumed in connection
therewith had been incurred on the first day of, and remained
outstanding throughout, such Test Period), the Borrower or any
Wholly-Owned Subsidiary of the Borrower may consummate the Indian
River Acquisition, provided that the aggregate consideration paid in
connection therewith shall not exceed $1,600,000 (excluding
transaction expenses);
(xv) the Pending Dispositions shall be permitted;
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(xvi) each of the Borrower and its Subsidiaries may in the
ordinary course of business sell or otherwise dispose of equipment
which, in the reasonable judgment of such Person, is obsolete, worn
out or otherwise no longer useful, in the conduct of such Person's
business;
(xvii) so long as (x) no Default or Event of Default then
exists or would result therefrom and (y) the Borrower shall
demonstrate compliance with the financial covenants contained in
Sections 9.08 through 9.10, inclusive, with such financial covenants
to be calculated on a pro forma basis as if such acquisition had been
consummated on the first day of the then most recently ended Test
Period (and any Indebtedness incurred, issued or assumed in connection
therewith had been incurred on the first day of, and remained
outstanding throughout, such Test Period), the Borrower or any
Wholly-Owned Subsidiary of the Borrower may consummate the City
Acquisition, provided that the aggregate consideration paid in
connection therewith shall not exceed $3,000,000 (excluding
transaction expenses);
(xviii) so long as (x) no Default or Event of Default then
exists or would result therefrom and (y) the Borrower shall
demonstrate compliance with the financial covenants contained in
Sections 9.08 through 9.10, inclusive, with such financial covenants
to be calculated on a pro forma basis as if such acquisition had been
consummated on the first day of the then most recently ended Test
Period (and any Indebtedness incurred, issued or assumed in connection
therewith had been incurred on the first day of, and remained
outstanding throughout, such Test Period), the Borrower or any
Wholly-Owned Subsidiary of the Borrower may consummate the EZY
Acquisition, provided that the aggregate consideration paid in
connection therewith shall not exceed $5,000,000 (excluding
transaction expenses); and
(xix) so long as (x) no Default or Event of Default then
exists or would result therefrom and (y) the Borrower shall
demonstrate compliance with the financial covenants contained in
Sections 9.08 through 9.10, inclusive, with such financial covenants
to be calculated on a pro forma basis as if such acquisition had been
consummated on the first day of the then most recently ended Test
Period (and any Indebtedness incurred, issued or assumed in connection
therewith had been incurred on the first day of, and remained
outstanding throughout, such Test Period), the Borrower or any
Wholly-Owned Subsidiary of the Borrower may consummate the Roper
Acquisition, provided that the aggregate consideration paid in
connection therewith shall not exceed $4,000,000 (excluding
transaction expenses); and
(xx) so long as (x) no Default or Event of Default then
exists or would result therefrom and (y) the Borrower shall
demonstrate compliance with the financial covenants
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<PAGE> 69
contained in Sections 9.08 through 9.10, inclusive, with such
financial covenants to be calculated on a pro forma basis (including
Cost Savings Measures) as if such acquisition had been consummated on
the first day of the then most recently ended Test Period (and any
indebtedness incurred, issued or assumed in connection therewith had
been outstanding on the first day of, and remained outstanding
throughout, such Test Period), the Borrower or any of its Wholly-Owned
Subsidiaries may acquire additional Stations or 100% of the capital
stock of any Person (any such acquisition permitted pursuant to this
clause (xx), a "Permitted Section 9.02(xx) Acquisition"), provided,
that (i) if such acquisition is structured as a stock acquisition,
then either (A) the Person so acquired becomes a Wholly-Owned
Subsidiary of the Borrower or (B) such Person is merged with and into
the Borrower or a Wholly-Owned Subsidiary of the Borrower (with the
Borrower or such Wholly-Owned Subsidiary being the surviving
corporation of such merger), and, in any case, all of the provisions
of Section 8.12 have been complied with in respect of such Person,
(ii) any Liens or Indebtedness assumed or incurred in connection with
such acquisition are otherwise permitted under Section 9.01 or 9.04,
as the case may be, and (iii) immediately after giving effect to each
such Permitted Section 9.02(xx) Acquisition, the Total Unutilized
Commitment shall be equal to at least $10,000,000.
To the extent the Required Banks waive the provisions of this Section 9.02 with
respect to the sale of any Collateral, or any Collateral is sold as permitted
by this Section 9.02 (other than clause (vii) hereof), such Collateral shall be
sold free and clear of the Liens created by the Security Documents, and the
Administrative Agent and Collateral Agent shall be authorized to take any
actions deemed appropriate in order to effect the foregoing.
9.03 Dividends. Holdings shall not, and shall not permit any
of its Subsidiaries to, authorize, declare or pay any Dividends with respect to
Holdings or any of its Subsidiaries except that:
(i) any Subsidiary of the Borrower may pay Dividends to
the Borrower or any Wholly-Owned Subsidiary of the Borrower;
(ii) the Borrower may pay cash Dividends to Holdings for
the purpose of paying, so long as all proceeds thereof are promptly
used by Holdings to pay, its operating expenses incurred in the
ordinary course of business and other corporate overhead costs and
expenses (including, without limitation, legal and accounting expenses
and similar expenses) in a maximum principal amount of $3,000,000 per
annum;
(iii) the Borrower may pay cash Dividends to Holdings so
long as Holdings promptly uses such proceeds (A) to pay management
fees or executive compensation to the extent such management fees or
executive compensation are permitted by Section 9.06(v)
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and (vi), and pursuant to the Monitoring and Oversight Agreements, to
the extent permitted pursuant to Section 9.06(iv) and (B) to
repurchase Holdings Common Stock and/or options to purchase Holdings
Common Stock held by (x) directors, executives, officers, members of
management, or employees of Holdings, the Borrower or any of its
Subsidiaries upon the exercise of options in accordance with the
Employee Stock Option Plan, or (y) other stockholders of Holdings so
long as the purpose of such purchase is to acquire Holdings Common
Stock for reissuance to new employees of Holdings and its Subsidiaries
to the extent so reissued within 12 months of any such purchase so
long as the aggregate amount of cash expended by Holdings pursuant to
subclause (B) of this clause (iii) shall not exceed $3,000,000 in any
fiscal year or $5,000,000 in the aggregate (plus the amount of cash
proceeds paid by any new employee in consideration for reissuance of
Holdings Common Stock repurchased by Holdings to the extent received
by Holdings within 12 months following any such repurchase), so long
as in the case of subclause (B) of this clause (iii), no Default or
Event of Default exists or would result therefrom;
(iv) the Borrower may pay cash Dividends to Holdings for
the purpose of paying, so long as all proceeds thereof are promptly
used by Holdings to pay franchise taxes and federal, state and local
income taxes and interest, and penalties with respect thereto, if any,
payable by Holdings, provided that any refund shall be promptly
returned by Holdings to the Borrower; and
(v) the Borrower may pay cash Dividends to Holdings to
enable Holdings to pay cash Dividends to redeem fractional shares of
its common stock so long as the aggregate amount thereof does not
exceed $5,000.
9.04 Indebtedness. Holdings will not, and will not permit
any of its Subsidiaries to, contract, create, incur, assume or suffer to exist
any Indebtedness, except:
(i) Indebtedness incurred pursuant to this Agreement and
the other Credit Documents;
(ii) Indebtedness existing on the Effective Date shall be
permitted to the extent the same is listed on Schedule VII, and
extensions, replacements, refinancings or renewals thereof, provided
that no such extension, replacement, refinancing or renewal shall
increase the principal amount thereof;
(iii) Indebtedness under Interest Rate Protection
Agreements to the extent entered into pursuant to Section 9.05;
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(iv) Indebtedness evidenced by Capitalized Lease
Obligations to the extent permitted pursuant to Section 9.07;
(v) Indebtedness subject to Liens permitted under Section
9.01(viii);
(vi) Indebtedness of Holdings incurred under the Holdings
Senior Notes in an aggregate principal amount not to exceed
$277,000,000;
(vii) Indebtedness (x) of the Borrower evidenced by the
Existing Senior Subordinated Notes in an aggregate principal amount
not to exceed $76,808,000 and (y) arising under guaranties by the
Subsidiaries of the Borrower of the obligations of the Borrower under
the Existing Senior Subordinated Notes;
(viii) Contingent Obligations of the Borrower or any
Subsidiary as a guarantor of the obligations of the lessee under any
lease pursuant to which the Borrower or a Subsidiary is the lessee so
long as such lease is otherwise permitted hereunder;
(ix) intercompany Indebtedness of any Wholly-Owned
Subsidiary of Holdings owing to the Borrower or any other Wholly-Owned
Subsidiary of Holdings, or of the Borrower owing to any Wholly-Owned
Subsidiary of Holdings, to the extent permitted by Section 9.05(x);
(x) (x) unsecured Indebtedness of the Borrower and its
Subsidiaries owing to the seller in any acquisition permitted pursuant
to Section 9.02(ix) and (xiv) in an aggregate principal amount not to
exceed $3,000,000 at any time outstanding or (y) Indebtedness of the
Borrower and its Subsidiaries assumed in connection with any such
acquisition of an asset securing such Indebtedness in an aggregate
principal amount not to exceed $3,000,000 at any time outstanding,
provided that such Indebtedness was not incurred in connection with,
or in anticipation or contemplation of, such acquisition;
(xi) Contingent Obligations of the Borrower or any of its
Subsidiaries (other than a License Subsidiary) pursuant to its
guaranty of Indebtedness permitted pursuant to Section 9.04(ii)
existing on the Effective Date and extensions, replacements,
refinancings and renewals thereof, provided that no such extension,
replacement, refinancing or renewal shall (x) amend, modify or
supplement the subordination provisions, if any, contained in such
guaranty in a manner adverse to interests of the Banks or (y) increase
the principal amount of such Indebtedness guaranteed by the original
guaranty;
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(xii) Contingent Obligations of Holdings pursuant to its
guaranty of the obligations and liabilities of the Borrower under the
Benchmark Credit Agreement, provided that the aggregate amount of such
Contingent Obligations do not exceed $62,000,000; and
(xiii) additional Indebtedness of the Borrower and its
Subsidiaries not otherwise permitted under this Section 9.04 not to
exceed $5,000,000 in aggregate principal amount outstanding at any
time.
Notwithstanding anything to the contrary contained in this
Agreement, in no event shall any License Subsidiary contract, create, incur,
assume or suffer to exist any Indebtedness (other than the Indebtedness
incurred pursuant to the Subsidiary Guaranty).
9.05 Advances, Investments and Loans. Holdings will not, and
will not permit any of its Subsidiaries to, directly or indirectly, lend money
or credit or make advances to any Person, or purchase or acquire any stock,
obligations or securities of, or any other interest in, or make any capital
contribution to, any other Person, or purchase or own a futures contract or
otherwise become liable for the purchase or sale of currency or other
commodities at a future date in the nature of a futures contract, or hold any
cash or Cash Equivalents, except that the following shall be permitted:
(i) the Borrower and its Subsidiaries may acquire and
hold accounts receivables owing to any of them, if created or acquired
in the ordinary course of business and payable or dischargeable in
accordance with customary terms;
(ii) the Borrower and its Subsidiaries may acquire and
hold cash and Cash Equivalents, provided that during any time that
Loans of Non-Defaulting Banks are outstanding, the aggregate amount of
cash and Cash Equivalents permitted to be held by the Borrower and its
Subsidiaries shall not exceed $5,000,000 for any period of five
consecutive days (exclusive of any cash held by the Borrower pursuant
to an earnest money escrow account to the extent such account is
permitted by Section 9.01(xviii));
(iii) the Borrower and its Subsidiaries may make loans and
advances in the ordinary course of business to officers, directors and
employees of Holdings and its Subsidiaries so long as the aggregate
principal amount thereof at any time outstanding (determined without
regard to any write-downs or write-offs of such loans and advances)
shall not exceed $2,500,000 (subject to any restrictions contained in
the Existing Senior Subordinated Note Indenture);
(iv) the Borrower may enter into Interest Protection
Agreements on terms reasonably satisfactory to the Administrative
Agent;
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(v) Holdings may repurchase Holdings Common Stock to the
extent permitted by Section 9.03;
(vi) Holdings and any of its Subsidiaries may make
investments in accordance with Section 3.03(e) (including investments
necessary to form Subsidiaries under Section 9.15);
(vii) promissory notes and other similar non-cash
consideration received by the Borrower and its Subsidiaries in
connection with dispositions permitted by Section 9.02 so long as the
aggregate principal amount thereof does not exceed $2,500,000 at any
one time outstanding;
(viii) the Borrower and its Subsidiaries may acquire and own
investments (including debt obligations) received in connection with
the bankruptcy or reorganization of suppliers and customers and in
settlement of delinquent obligations of, and other disputes with,
customers and suppliers arising in the ordinary course of business;
(ix) investments by the Borrower in any Wholly-Owned
Subsidiary;
(x) any Wholly-Owned Subsidiary may make intercompany
loans and advances to the Borrower or any Wholly-Owned Subsidiary and
the Borrower may make intercompany loans and advances to any
Wholly-Owned Subsidiary, provided that if such intercompany loans are
evidenced by an intercompany promissory note, such note is pledged by
the Borrower or such Wholly-Owned Subsidiary as Collateral pursuant to
the applicable Pledge Agreement;
(xi) investments by the Borrower or any of its
Subsidiaries to the extent permitted by Section 9.07;
(xii) advances, loans and investments made by the Borrower
and its Subsidiaries in existence on the Effective Date and set forth
on Schedule VIII shall be permitted, without giving effect to any
additions thereto or replacements thereof;
(xiii) guarantees of Indebtedness made by the Borrower or
any of its Subsidiaries to the extent otherwise permitted by Section
9.04;
(xiv) investments permitted pursuant to Section 9.02;
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(xv) investments pursuant to capital calls on Osborn as
provided in the Stockholders' Agreement, dated April 20, 1989, among
Ruth Communications Corporation, Osborn and Ray Broadcasting, Inc.,
not to exceed $1,200,000;
(xvi) a loan by the Borrower or any of its Subsidiaries to
Emerald City Radio Partners, L.P. in an aggregate prinipal amount not
to exceed $13,200,000 in connection with the proposed acquisition of
stations WKOK-FM and WIOC-AM in Columbia, South Carolina and WMFX-FM
in St. Andrews, South Carolina; and
(xvii) in addition to investments permitted by clauses (i)
through (xvi) of this Section 9.05, the Borrower and its Subsidiaries
may make additional loans, advances and investments in an aggregate
principal amount not to exceed $2,500,000 at any time outstanding;
9.06 Transactions with Affiliates. Holdings will not,
and will not permit any of its Subsidiaries to enter into any transaction or
series of related transactions, whether or not in the ordinary course of
business, with any Affiliate of Holdings or any of its Subsidiaries, other than
in the ordinary course of business and on terms and conditions substantially as
favorable to Holdings or such Subsidiary as would reasonably be obtained by
Holdings or such Subsidiary at that time in a comparable arm's-length
transaction with a Person other than an Affiliate, except that:
(i) Dividends may be paid to the extent provided in
Section 9.03;
(ii) loans may be made and other transactions may be
entered into by the Borrower and its Subsidiaries to the extent
permitted by Sections 9.02, 9.04 and 9.05;
(iii) customary fees and reimbursement of expenses may be
paid to directors of Holdings;
(iv) Holdings or to the extent not paid by Holdings, the
Borrower may pay to Hicks, Muse & Co. Partners, L.P., its Affiliates
or any successor thereto controlled by Jack D. Furst, Charles W. Tate,
Thomas O. Hicks and/or John R. Muse, the amounts set forth in the
Monitoring and Oversight Agreement dated as of October 16, 1996,
between Holdings and Hicks, Muse & Co. Partners, L.P. and the
Financial Advisory Agreement dated as of October 16, 1996 between
Hicks, Muse & Co. Partners, L.P. and Holdings, in each case in the
form delivered to the Banks on or prior to the Effective Date, as same
may be modified thereafter but without giving effect to any
modifications thereto which in any way adversely affects the interests
of the Banks (including, without limitation, by increasing in any
respect the costs or liabilities of Holdings or any of its
Subsidiaries) without the consent of the
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Administrative Agent and the Required Banks (the "Monitoring and
Oversight Agreements");
(v) Holdings and its Subsidiaries may enter into and make
payments pursuant to employment arrangements with executive officers
and senior management employees in the ordinary course of business;
(vi) Holdings and its Subsidiaries may make payments
pursuant to Employment Agreements existing on the Effective Date;
(vii) Holdings and its Subsidiaries may make payments
pursuant to the Tax Sharing Agreements;
(viii) The Borrower and the License Subsidiaries may
maintain their present Operating Agreements;
(ix) Holdings may make capital contributions to the
Borrower; and
(x) The Borrower may make capital contributions to Osborn
and Commodore Holdings, Inc.
Except as specifically provided above, no management or
similar fees shall be paid or payable by Holdings or any of its Subsidiaries to
any Person other than the Borrower.
9.07 Capital Expenditures. (a) Holdings will not, and will
not permit any of its Subsidiaries to, make any Capital Expenditures, except
that during any fiscal period set forth below (taken as one accounting period)
the Borrower and its Subsidiaries may make Capital Expenditures (exclusive of
acquisitions otherwise permitted by this Agreement) so long as the aggregate
amount of such Capital Expenditures made under this Section 9.07(a) does not
exceed in any period set forth below the amount set forth opposite such period
below:
<TABLE>
<CAPTION> Period Amount
------ ------
<S> <C>
Effective Date to $5,000,000
and including the last day
of the Fiscal Year ending
December 31, 1997
Fiscal Year ending $4,000,000
December 31, 1998
</TABLE>
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<PAGE> 76
<TABLE>
<CAPTION>
<S> <C>
Fiscal Year ending $4,000,000
December 31, 1999
Fiscal Year ending $4,000,000
December 31, 2000
Fiscal Year ending $4,000,000
December 31, 2001
January 1, 2002 to and $4,000,000
including the Final
Maturity Date
</TABLE>
(b) Notwithstanding anything to the contrary contained in
clause (a) above, to the extent that the Capital Expenditures made by the
Borrower and its Subsidiaries in any period set forth in clause (a) above are
less than the amount permitted to be made in such period (without giving effect
to any additional amount available as a result of this clause (b) or clause (c)
below), the amount of such difference may be carried forward and used to make
Capital Expenditures in the immediately succeeding fiscal year of the Borrower.
9.08 Maximum Leverage Ratio. Holdings will not permit the
Leverage Ratio at any time during a period set forth below to be greater than
the ratio set forth opposite such period below:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
Fiscal quarter ended June 30, 1997 4.5 to 1
Fiscal quarter ended September 30, 1997 4.5 to 1
Fiscal quarter ended December 31, 1997 4.5 to 1
Fiscal quarter ended March 31, 1998 4.0 to 1
Fiscal quarter ended June 30, 1998 4.0 to 1
Fiscal quarter ended September 30, 1998 4.0 to 1
</TABLE>
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<PAGE> 77
<TABLE>
<S> <C>
Fiscal quarter ended December 31, 1998 4.0 to 1
Fiscal quarter ended March 31, 1999 3.5 to 1
and each fiscal quarter thereafter
</TABLE>
9.09 Minimum Consolidated EBITDA. Holdings will not permit
Consolidated EBITDA for any period of four consecutive fiscal quarters (or, if
shorter, the period beginning on the Effective Date and ending on the last day
of a fiscal quarter ended thereafter), in each case taken as one accounting
period, ended on the last day of any fiscal quarter set forth below to be less
than the amount set forth opposite such fiscal quarter below:
<TABLE>
<CAPTION>
Fiscal Quarter Amount
-------------- ------
<S> <C>
Fiscal quarter ended June 30, 1997 $25,700,000
Fiscal quarter ended September 30, 1997 $26,100,000
Fiscal quarter ended December 31, 1997 $26,500,000
Fiscal quarter ended March 31, 1998 $27,900,000
Fiscal quarter ended June 30, 1998 $29,300,000
Fiscal quarter ended September 30, 1998 $30,700,000
Fiscal quarter ended December 31, 1998 $32,200,000
Fiscal quarter ended March 31, 1999 $33,000,000
Fiscal quarter ended June 30, 1999 $33,800,000
Fiscal quarter ended September 30, 1999 $34,600,000
Fiscal quarter ended December 31, 1999 $35,500,000
Fiscal quarter ended March 31, 2000 $36,300,000
Fiscal quarter ended June 30, 2000 $37,200,000
Fiscal quarter ended September 30, 2000 $38,000,000
Fiscal quarter ended December 31, 2000 $39,000,000
and each fiscal quarter thereafter
</TABLE>
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9.10 Consolidated EBITDA to Consolidated Net Cash Interest
Expense. Holdings will not permit the ratio of Consolidated EBITDA to
Consolidated Net Cash Interest Expense for any period of four consecutive
fiscal quarters (or, if shorter, the period beginning on the Effective Date and
ending on the last day of a fiscal quarter ended thereafter), in each case
taken as one accounting period, ended on the last day of any fiscal quarter set
forth below to be less than the amount set forth opposite such fiscal quarter
below:
<TABLE>
<CAPTION>
Fiscal Quarter Ratio
-------------- -----
<S> <C>
Fiscal quarter ended June 30, 1997 2.25 to 1
Fiscal quarter ended September 30, 1997 2.25 to 1
Fiscal quarter ended December 31, 1997 2.25 to 1
Fiscal quarter ended March 31, 1998 2.25 to 1
Fiscal quarter ended June 30, 1998 2.25 to 1
Fiscal quarter ended September 30, 1998 2.25 to 1
Fiscal quarter ended December 31, 1998 2.25 to 1
Fiscal quarter ended March 31, 1999 2.5 to 1
and each fiscal quarter thereafter
</TABLE>
9.11 Limitation on Modifications of Certificate of
Incorporation, By-Laws and Certain Other Agreements; Limitations of Prepayments
and Modifications of Indebtedness; etc. Holdings will not, and will not permit
any of its Subsidiaries to (i) make (or give any notice with respect of) any
voluntary or optional payment or prepayment on or redemption or acquisition for
value of (including, without limitation, by way of depositing with the trustee
with respect thereto money or securities before due for the purpose of paying
when due), after the issuance thereof, any Existing Senior Subordinated Notes,
(ii) make (or give any notice in respect of) any voluntary or optional payment
or prepayment on or redemption or acquisition for value of any Holdings Senior
Notes, provided that Holdings may voluntarily or optionally repurchase or
redeem outstanding Holdings Senior Notes in an aggregate principal amount not
to exceed $25,000,000 with the
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proceeds of an Initial Public Offering, (iii) amend or modify, or permit the
amendment or modification of any provision of the Holdings Senior Note
Documents, Existing Senior Subordinated Note Documents, the Tax Sharing
Agreement, the Fort Myers Disposition Documents, the H/T Purchase Agreements,
the City Purchase Agreement, the EZY Purchase Agreement or the Roper Purchase
Agreement (other than in the case of the Tax Sharing Agreement, the Fort Myers
Disposition Documents, the H/T Purchase Agreements, the City Purchase
Agreement, the EZY Purchase Agreement and the Roper Purchase Agreement, in a
manner not reasonably likely to be materially adverse to the interests of the
Banks) or (iv) amend, modify or change its Certificate or Articles of
Incorporation (including, without limitation, by the filing or modification of
any certificate of designation) or By-Laws, or any agreement entered into by
it, as the case may be, with respect to its capital stock (including any
Shareholders' Agreement), or enter into any new agreement with respect to its
capital stock, other than any amendments, modifications or changes pursuant to
this clause or any such new agreements which do not in any way adversely affect
the interests of the Banks.
9.12 Limitation on Certain Restrictions on Subsidiaries.
Holdings will not, and will not permit any of its Subsidiaries to, directly or
indirectly, create or otherwise cause or suffer to exist or become effective
any encumbrance or restriction on the ability of any such Subsidiary to (a) pay
dividends or make any other distributions on its capital stock or any other
interest or participation in its profits owned by the Borrower or any
Subsidiary of the Borrower, or pay any Indebtedness owed to the Borrower or any
Subsidiary of the Borrower, (b) make loans or advances to the Borrower or any
Subsidiary of the Borrower or (c) transfer any of its properties or assets to
the Borrower or any Subsidiary of the Borrower, except for such encumbrances or
restrictions existing under or by reason of (i) applicable law, (ii) this
Agreement, the other Credit Documents and the Osborn Acquisition Documents,
(iii) the Existing Senior Subordinated Note Documents, (iv) the Holdings Senior
Note Documents, (v) customary provisions restricting subletting or assignment
of any lease governing a leasehold interest of the Borrower or any Subsidiary
of the Borrower, (vi) customary provisions restricting assignment of any
licensing agreement entered into by the Borrower or any Subsidiary of the
Borrower in the ordinary course of business and (vii) customary restrictions in
any industrial revenue bond, purchase money financing, capital lease or any
other agreement permitted by this Agreement.
9.13 Limitation on Issuance of Capital Stock. (a) Holdings
will not issue (i) any preferred stock or (ii) any class of redeemable common
stock, other than (x) Qualified Capital Stock and (y) Permitted Issuances.
(b) Holdings will not permit the Borrower or any other
Subsidiary to issue any capital stock (including by way of sales of treasury
stock) or any options or warrants to purchase, or securities convertible into,
capital stock, except (i) for transfers and replacements of then outstanding
shares of capital stock, (ii) for stock splits, stock dividends and similar
issuances which do not decrease the percentage ownership of Holdings or any of
its Subsidiaries in any class of the capital
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stock of the Borrower or such Subsidiary, (iii) to qualify directors to the
extent required by applicable law, (iv) the Borrower may issue additional
shares of common stock to Holdings, so long as all such shares are immediately
delivered to the Collateral Agent and pledged pursuant to the Holdings Pledge
Agreement and (v) in connection with the creation of Subsidiaries of the
Borrower in compliance with Section 9.15.
9.14 Business.
(a) Holdings will not, and will not permit any of its
Subsidiaries to, engage (directly or indirectly) in any business other than the
type of business in which such Subsidiaries are engaged on the Effective Date
and reasonable extensions thereof.
(b) From the Effective Date to the date upon which the
certificate(s) evidencing 100% of the outstanding capital stock of Atlantic
City Broadcasting Corporation has been delivered by the Borrower or any of its
Subsidiaries to the Collateral Agent, Holdings will not, and will not permit
any of its Subsidiaries to, transfer or lease any assets, or make any capital
contributions, to Atlantic City Broadcasting Corporation and Atlantic City
Broadcasting Corporation shall engage in no significant business activities and
shall have no material assets (other than approximately $10,000 in cash) or
liabilities (other than Indebtedness owing to AMRESCO Institutional, Inc.).
9.15 Limitation on Creation of Subsidiaries. Holdings shall
not and will not permit any Subsidiary to establish, create or acquire any
additional Subsidiaries after the Effective Date without the prior written
consent of the Required Banks, except that the Borrower may create or otherwise
acquire new Subsidiaries in connection with the acquisition of Stations in
compliance with Sections 3.03(e), 9.02(ix), 9.02(xiv), 9.02(xvii), 9.02(xviii),
9.02(xix), 9.02(xx), 9.05(x) or 9.05(xv).
9.16 No Other Designated Senior Indebtedness. Holdings will
not, and will not permit any Subsidiary to, designate any Indebtedness (other
than the Obligations) as "Designated Senior Indebtedness" for purposes of, and
as defined in, the Existing Senior Subordinated Note Indenture.
SECTION 10. Events of Default. Upon the occurrence of any of
the following specified events (each an "Event of Default"):
10.01 Payments. The Borrower shall (i) default in the
payment when due of any principal of any Loan or any Note or (ii) default, and
such default shall continue unremedied for three or more Business Days, in the
payment when due of any Unpaid Drawings or interest on any Loan or Note, or any
Fees or any other amounts owing hereunder, thereunder or under any other Credit
Document; or
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10.02 Representations, etc. Any representation, warranty or
statement made by any Credit Party herein or in any other Credit Document or in
any certificate delivered pursuant hereto or thereto shall prove to be untrue
in any material respect on the date as of which made or deemed made; or
10.03 Covenants. Holdings or the Borrower shall (i) default
in the due performance or observance by it of any term, covenant or agreement
contained in Section 8.01(g)(i), 8.07, 8.12 or Section 9 or (ii) default in the
due performance or observance by it of any other term, covenant or agreement
contained in this Agreement (other than as described in Section 10.01, 10.02 or
10.03(i)), and such default shall continue unremedied for a period of 30 days
after written notice to the Borrower by the Administrative Agent or any Bank;
or
10.04 Default Under Other Agreements. Holdings or any of its
Subsidiaries shall (i) default in any payment of any Indebtedness (other than
the Obligations) beyond the period of grace, if any, provided in the instrument
or agreement under which such Indebtedness was created or (ii) default in the
observance or performance of any agreement or condition relating to any
Indebtedness (other than the Obligations) or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event shall
occur or condition exist, the effect of which default or other event or
condition is to cause, or to permit the holder or holders of such Indebtedness
(or a trustee or agent on behalf of such holder or holders) to cause
(determined without regard to whether any notice is required), any such
Indebtedness to become due prior to its stated maturity, or (iii) any
Indebtedness (other than the Obligations) of Holdings or any of its
Subsidiaries shall be declared to be due and payable, or required to be prepaid
other than by a regularly scheduled required prepayment, prior to the stated
maturity thereof, provided that it shall not be a Default or Event of Default
under this Section 10.04 unless the aggregate principal amount of all
Indebtedness as described in preceding clauses (i) through (iii), inclusive, is
at least $2,500,000; or
10.05 Bankruptcy, etc. Holdings or any of its Subsidiaries
shall commence a voluntary case concerning itself under Title 11 of the United
States Code entitled "Bankruptcy," as now or hereafter in effect, or any
successor thereto (the "Bankruptcy Code"); or an involuntary case is commenced
against Holdings or any of its Subsidiaries and the petition is not
controverted within 10 days, or is not dismissed within 60 days, after
commencement of the case; or a custodian (as defined in the Bankruptcy Code) is
appointed for, or takes charge of, all or substantially all of the property of
Holdings or any of its Subsidiaries, or Holdings or any of its Subsidiaries
commences any other proceeding under any reorganization, arrangement,
adjustment of debt, relief of debtors, dissolution, insolvency or liquidation
or similar law of any jurisdiction whether now or hereafter in effect relating
to Holdings or any of its Subsidiaries, or there is commenced against Holdings
or any of its Subsidiaries any such proceeding which remains undismissed for a
period of 60 days, or Holdings or any of its Subsidiaries is adjudicated
insolvent or bankrupt; or any order of relief or other order approving any such
case or proceeding is entered; or Holdings or any of its Subsidiaries
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suffers any appointment of any custodian or the like for it or any substantial
part of its property to continue undischarged or unstayed for a period of 60
days; or Holdings or any of its Subsidiaries makes a general assignment for the
benefit of creditors; or any corporate action is taken by Holdings or any of
its Subsidiaries for the purpose of effecting any of the foregoing; or
10.06 ERISA. (a) Any Plan shall fail to satisfy the minimum
funding standard required for any plan year or part thereof or a waiver of such
standard or extension of any amortization period is sought or granted under
Section 412 of the Code, any Plan shall have had or, in the reasonable opinion
of the Required Banks, is likely to have a trustee appointed to administer such
Plan, any Plan is, shall have been or is likely to be terminated or to be the
subject of termination proceedings under ERISA, any Plan shall have an Unfunded
Current Liability, a contribution required to be made to a Plan has not been
made, Holdings, the Borrower or any of their respective Subsidiaries or any
ERISA Affiliate has incurred or is likely to incur a liability to or on account
of a Plan under Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201,
4204 or 4212 of ERISA or Section 401(a)(29), 4971 or 4975 of the Code, or
Holdings, the Borrower or any of their respective Subsidiaries has incurred or
is likely to incur liabilities pursuant to one or more employee welfare benefit
plans (as defined in Section 3(1) of ERISA) which provide benefits to retired
employees or other former employees (other than as required by Section 601 of
ERISA) or employee pension benefit plans (as defined in Section 3(2) of ERISA);
(b) there shall result from any such event or events the imposition of a lien,
the granting of a security interest, or a liability or a material risk of
incurring a liability; and (c) in each case in clauses (a) and (b) above, such
lien, security interest or liability, in the reasonable opinion of the Required
Banks, will have a material adverse effect upon the business, operations,
property, assets, liabilities or condition (financial or otherwise) of
Holdings, the Borrower or of Holdings and its Subsidiaries taken as a whole; or
10.07 Security Documents. At any time after the execution
and delivery thereof, any of the Security Documents shall cease to be in full
force and effect, or shall cease in any material respect to give the Collateral
Agent for the benefit of the Secured Creditors the Liens, rights, powers and
privileges purported to be created thereby (including, without limitation, a
perfected security interest in, and Lien on, all of the Collateral), in favor
of the Collateral Agent, superior to and prior to the rights of all third
Persons (except as permitted by Section 9.01), and subject to no other Liens
(except as permitted by Section 9.01), or any Credit Party shall default in the
due performance or observance of any term, covenant or agreement on its part to
be performed or observed pursuant to any of the Security Documents and such
default shall continue beyond any grace period specifically applicable thereto
pursuant to the terms of such Security Document; or
10.08 Guaranty. Any Guaranty or any provision thereof shall
cease to be in full force or effect as to the relevant Guarantor or other party
thereunder (other than in accordance with the express terms thereof) or any
Guarantor or other party thereunder or Person acting by or on behalf of such
Guarantor or such party shall deny or disaffirm such Guarantor's or such
party's obligations
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under the relevant Guaranty, or any Guarantor or such party shall default in
the due performance or observance of any term, covenant or agreement on its
part to be performed or observed pursuant to any Guaranty; or
10.09 Judgments. One or more judgments or decrees shall be
entered against Holdings or any of its Subsidiaries involving in the aggregate
for Holdings and its Subsidiaries a liability (not paid or fully covered by a
reputable and solvent insurance company) and such judgments and decrees either
shall be final and non-appealable or shall not be vacated, discharged or stayed
or bonded pending appeal for any period of 60 consecutive days, and the
aggregate amount of all such judgments exceeds $2,500,000; or
10.10 Change of Ownership. A Change of Ownership shall
occur; or
10.11 Environmental Matters. At any time after the execution
and delivery thereof, the Environmental Indemnity Agreement or any provision
thereof shall cease to be in full force or effect as to Holdings or any of its
Subsidiaries, or Holdings or any of its Subsidiaries shall default in the due
performance or observance of any term, covenant or agreement on its part to be
performed or observed pursuant to the Environmental Indemnity Agreement, and
such default shall continue unremedied for a period of 30 days after written
notice to the Borrower by the Administrative Agent or any Bank;
then, and in any such event, and at any time thereafter, if any Event of
Default shall then be continuing, the Administrative Agent, upon the written
request of the Required Banks, shall by written notice to the Borrower, take
any or all of the following actions, without prejudice to the rights of the
Administrative Agent, any Bank or the holder of any Note to enforce its claims
against any Credit Party (provided that, if an Event of Default specified in
Section 10.05 shall occur with respect to the Borrower, the result which would
occur upon the giving of written notice by the Administrative Agent to the
Borrower as specified in clauses (i) and (ii) below shall occur automatically
without the giving of any such notice): (i) declare the Total Commitment
terminated, whereupon the Commitment of each Bank shall forthwith terminate
immediately and any Commitment Commission shall forthwith become due and
payable without any other notice of any kind; (ii) declare the principal of and
any accrued interest in respect of all Loans and the Notes and all Obligations
owing hereunder (including Unpaid Drawings) and thereunder to be, whereupon the
same shall become, forthwith due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by each
Credit Party; (iii) terminate any Letter of Credit which may be terminated in
accordance with its terms; (iv) direct the Borrower to pay (and the Borrower
agrees that upon receipt of such notice, or upon the occurrence of an Event of
Default specified in Section 10.05 with respect to the Borrower, it will pay)
to the Collateral Agent at the Payment Office such additional amount of cash,
to be held as security by the Collateral Agent, as is equal to the aggregate
Stated Amount of all Letters of Credit issued for the account of the Borrower
and then outstanding;
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(v) enforce, as Collateral Agent, all of the Liens and security interests
created pursuant to the Security Documents and (vi) apply any cash collateral
held pursuant to Section 4.02 in satisfaction of the Obligations.
SECTION 11. Definitions and Accounting Terms.
11.01 Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"Additional Collateral" shall mean all property (whether real
or personal) in which security interests are granted (or have been purported to
be granted) (and continue to be in effect at the time of determination)
pursuant to Section 8.12 (which shall in any event exclude any interest in the
FCC Licenses to the extent prohibited by applicable law).
"Additional Mortgage" shall have the meaning provided in
Section 8.12(b).
"Additional Mortgaged Property" shall have the meaning
provided in Section 8.12(b).
"Additional Security Documents" shall mean all mortgages,
pledge agreements, security agreements and other security documents entered
into pursuant to Section 8.12 with respect to Additional Collateral.
"Adjusted Available Commitment" for each Bank, shall mean, at
any time, such Bank's Commitment less such Bank's Adjusted Percentage of the
Blocked Commitment, if any, at such time.
"Adjusted Certificate of Deposit Rate" shall mean, on any day,
the sum (rounded to the nearest 1/100 of 1%) of (1) the rate obtained by
dividing (x) the most recent weekly average dealer offering rate for negotiable
certificates of deposit with a three-month maturity in the secondary market as
published in the most recent Federal Reserve System publication entitled
"Select Interest Rates," published weekly on Form H.15 as of the date hereof,
or if such publication or a substitute containing the foregoing rate
information shall not be published by the Federal Reserve System for any week,
the weekly average offering rate determined by the Administrative Agent on the
basis of quotations for such certificates received by it from three certificate
of deposit dealers in New York of recognized standing or, if such quotations
are unavailable, then on the basis of other sources reasonably selected by the
Administrative Agent, by (y) a percentage equal to 100% minus the stated
maximum rate of all reserve requirements as specified in Regulation D
applicable on such day to a three-month certificate of deposit of a member bank
of the Federal Reserve System in excess of $100,000 (including, without
limitation, any marginal, emergency, supplemental, special or other
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reserves), plus (2) the then daily net annual assessment rate as estimated by
the Administrative Agent for determining the current annual assessment payable
by the Administrative Agent to the Federal Deposit Insurance Corporation for
insuring three-month certificates of deposit.
"Adjusted Percentage" shall mean (x) at a time when no Bank
Default exists, for each Bank, such Bank's Percentage and (y) at a time when a
Bank Default exists (i) for each Bank that is a Defaulting Bank, zero and (ii)
for each Bank that is a Non-Defaulting Bank, the percentage determined by
dividing such Bank's Commitment at such time by the Adjusted Total Commitment
at such time, it being understood that all references herein to Commitments and
the Adjusted Total Commitment at a time when the Total Commitment or Adjusted
Total Commitment, as the case may be, has been terminated shall be references
to the Commitments or Adjusted Total Commitment, as the case may be, in effect
immediately prior to such termination, provided that (A) no Bank's Adjusted
Percentage shall change upon the occurrence of a Bank Default from that in
effect immediately prior to such Bank Default if after giving effect to such
Bank Default, and any repayment of Loans at such time pursuant to Section
4.02(a) or otherwise, the sum of the aggregate outstanding principal amount of
Loans of all Non-Defaulting Banks plus the Letter of Credit Outstandings,
exceed the Adjusted Total Commitment; (B) the changes to the Adjusted
Percentage that would have become effective upon the occurrence of a Bank
Default but that did not become effective as a result of the preceding clause
(A) shall become effective on the first date after the occurrence of the
relevant Bank Default on which the sum of the aggregate outstanding principal
amount of the Loans of all Non-Defaulting Banks plus the Letter of Credit
Outstandings is equal to or less than the Adjusted Total Commitment; and (C) if
(i) a Non-Defaulting Bank's Adjusted Percentage is changed pursuant to the
preceding clause (B) and (ii) any repayment of such Bank's Loans, or of Unpaid
Drawings with respect to Letters of Credit, that were made during the period
commencing after the date of the relevant Bank Default and ending on the date
of such change to its Adjusted Percentage must be returned to the Borrower as a
preferential or similar payment in any bankruptcy or similar proceeding of the
Borrower, then the change to such Non-Defaulting Bank's Adjusted Percentage
effected pursuant to said clause (B) shall be reduced to that positive change,
if any, as would have been made to its Adjusted Percentage if (x) such
repayments had not been made and (y) the maximum change to its Adjusted
Percentage would have resulted in the sum of the outstanding principal of Loans
made by such Bank plus such Bank's new Adjusted Percentage of the outstanding
principal amount of Letter of Credit Outstandings equalling such Bank's
Commitment at such time.
"Adjusted Total Available Commitment" shall mean, at any time,
the Total Available Commitment at such time less the aggregate Commitments of
all Defaulting Banks at such time.
"Adjusted Total Commitment" shall mean at any time the Total
Commitment less the aggregate Commitments of all Defaulting Banks.
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"Administrative Agent" shall mean Bankers Trust Company, in
its capacity as Administrative Agent for the Banks hereunder, and shall include
any successor to the Administrative Agent appointed pursuant to Section 12.09.
"Affiliate" shall mean, with respect to any Person, any other
Person (including for purposes of Section 9.06 only, all directors, officers
and partners of such Person) directly or indirectly controlling, controlled by,
or under direct or indirect common control with, such Person; provided,
however, that for purposes of Section 9.06, an Affiliate of Holdings shall
include any Person that directly or indirectly owns more than 10% of any class
of the capital stock of Holdings. A Person shall be deemed to control another
Person if such Person possesses, directly or indirectly, the power to direct or
cause the direction of the management and policies of such other Person,
whether through the ownership of voting securities, by contract or otherwise.
"Agreement" shall mean this Credit Agreement, as amended,
modified, extended, renewed, replaced, restated or supplemented from time to
time.
"Applicable Margin" shall mean (x) initially, a percentage per
annum equal to (i) in the case of Base Rate Loans, 1.50%, and (ii) in the case
of Eurodollar Loans, 2.50%, and (y) from and after each day of delivery of any
certificate delivered in accordance with the following sentence (each, a "Start
Date") to and including the applicable End Date described below, the percentage
per annum set forth below opposite the Leverage Ratio indicated to have been
achieved in any certificate delivered in accordance with the following
sentence:
<TABLE>
<CAPTION>
Base Rate Eurodollar
Leverage Ratio Loans Loans
<S> <C> <C>
Equal to or greater than 4.0:1 1.25% 2.25%
Less than 4.0:1 1.00% 2.00%
</TABLE>
The Leverage Ratio shall be determined based on the delivery of a
certificate of the Borrower to the Administrative Agent (with a copy to be sent
by the Borrower to each Bank), certified by an Authorized Officer of the
Borrower within 30 days after the last day of any fiscal quarter of the
Borrower, (commencing with its fiscal quarter ending June 30, 1997), which
certificate shall set forth the calculation of the Leverage Ratio for the Test
Period ended immediately prior to the relevant Start Date and the Applicable
Margin which shall be thereafter applicable (until same is changed or ceases to
apply in accordance with the following sentences). The Applicable Margin so
determined shall apply, except as set forth in the succeeding sentence, from
the Start Date to the earlier of (x) the date on which the next certificate is
delivered to the Administrative Agent and (y) the date which is 30 days
following the last day of the fiscal quarter in which the previous Start Date
occurred (the
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"End Date"), at which time, if no certificate has been delivered to the
Administrative Agent (and thus commencing a new Start Date), the Applicable
Margin shall be a percentage per annum equal to (i) in the case of Base Rate
Loans, 1.50%, and (ii) in the case of Eurodollar Loans, 2.50%. Notwithstanding
anything to the contrary contained above in this definition, the Applicable
Margin shall be a percentage per annum equal to (i) in the case of Base Rate
Loans, 1.50%, and (ii) in the case of Eurodollar Loans, 2.50%, at all times
during which there shall exist a Default or an Event of Default.
"Asset Swapped Station" shall have the meaning provided in
Section 9.02(ix).
"Asset Target Station" shall have the meaning provided in
Section 9.02(ix).
"Assignment and Assumption Agreement" shall mean the
Assignment and Assumption Agreement substantially in the form of Exhibit L
(appropriately completed).
"Authorized Officer" of any Credit Party shall mean and
include the Chairman of the Board, the President, the Chief Executive Officer,
any Vice President, the Treasurer, the Secretary, any Assistant Secretary, any
Assistant Treasurer, the Chief Financial Officer or the Controller of such
Credit Party or any other officer of such Credit Party which is designated in
writing to the Administrative Agent and the Issuing Bank or any of the
foregoing officers of such Credit Party as being authorized to give such
notices under this Agreement.
"Available Commitment" for any Bank shall mean, at any time,
the Commitment of such Bank as then in effect less such Bank's Percentage of
the amount of the Blocked Commitment, if any, at such time.
"Bank" shall mean each financial institution listed on
Schedule I, as well as any Person which becomes a "Bank" hereunder pursuant to
Sections 1.13 and 13.04(b).
"Bank Default" shall mean (i) the refusal (which has not been
retracted) of a Bank to make available its portion of any Borrowing or to fund
its portion of any unreimbursed payment under Section 2.03(c) or (ii) a Bank
having notified in writing the Borrower and/or the Administrative Agent that it
does not intend to comply with its obligations under Section 1.01 or 2, in the
case of either clause (i) or (ii), as a result of any takeover of such Bank by
any regulatory authority or agency.
"Bankruptcy Code" shall have the meaning provided in Section
10.05.
"Base Rate" at any time shall mean the higher of (i) 1/2 of 1%
in excess of the Adjusted Certificate of Deposit Rate and (ii) the Prime
Lending Rate.
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"Base Rate Loan" shall mean each Loan designated or deemed
designated as such by the Borrower at the time of the incurrence thereof or
conversion thereto.
"Benchmark Credit Agreement" shall mean the Credit Agreement,
dated December 9, 1996, among BCR Holding, Inc., as borrower, Capstar
Broadcasting Partners, Inc., as guarantor, the lenders named therein and
Bankers Trust Company, as Agent.
"Blocked Commitment" shall mean for the period from and
including the date of the sale or disposition of any asset or Recovery Event
resulting in a temporary reduction of the Total Commitment pursuant to Section
3.03(d) or (e) through but not including the date on which all or a part of the
net sale proceeds or Reinvestment Amount, as applicable, for such asset are
reinvested pursuant to such Section, as applicable, the amount of net sale
proceeds or proceeds from a Recovery Event, as applicable.
"Borrower" shall have the meaning provided in the first
paragraph of this Agreement.
"Borrower Pledge Agreement" shall have the meaning provided in
Section 5A.08(b).
"Borrower Security Agreement" shall have the meaning provided
in Section 5A.09.
"Borrowing" shall mean the borrowing of one Type of Loan from
all the Banks on a pro rata basis on a given date (or resulting from a
conversion or conversions on such date) having in the case of Eurodollar Loans
the same Interest Period, provided that Base Rate Loans incurred pursuant to
Section 1.10(b) shall be considered part of the related Borrowing of Eurodollar
Loans.
"Broadcast Cash Flow" shall mean, with respect to any Station
during any period, the sum of (x) EBITDA of such Station for such period and
(y) corporate overhead expense allocated to such Station for such period
adjusted, as applicable, for Cost Savings Measures; it being understood that
the Broadcast Cash Flow of any Person shall mean the total Broadcast Cash Flow
of all Stations owned by such Person.
"BTCo" shall mean Bankers Trust Company in its individual
capacity.
"Business Day" shall mean (i) for all purposes other than as
covered by clause (ii) below, any day except Saturday, Sunday and any day which
shall be in New York City a legal holiday or a day on which banking
institutions are authorized or required by law or other government action to
close and (ii) with respect to all notices and determinations in connection
with, and payments of principal and interest on, Eurodollar Loans, any day
which is a Business Day described in clause (i) above and which is also a day
for trading by and between banks in the New York interbank Eurodollar market.
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"Capital Expenditures" shall mean, with respect to any Person,
all expenditures (excluding barter transactions effected in the ordinary course
of business consistent with past practices) by such Person which should be
capitalized in accordance with GAAP, including all such expenditures with
respect to fixed or capital assets (including, without limitation, expenditures
for maintenance and repairs which should be capitalized in accordance with
GAAP) and the amount of Capitalized Lease Obligations incurred by such Person.
"Capitalized Lease Obligations" of any Person shall mean all
rental obligations which, under GAAP, are or will be required to be capitalized
on the books of such Person, in each case taken at the amount thereof accounted
for as indebtedness in accordance with GAAP.
"Capstar-Florida" shall have the meaning provided in the
definition of City Purchase Agreement.
"Cash Equivalents" shall mean, as to any Person, (i)
securities issued or directly and fully guaranteed or insured by the United
States or any agency or instrumentality thereof (provided that the full faith
and credit of the United States is pledged in support thereof) having
maturities of not more than one year from the date of acquisition, (ii) time
deposits and certificates of deposit of any commercial bank having, or which is
the principal banking subsidiary of a bank holding company organized under the
laws of the United States, any State thereof, the District of Columbia or any
foreign jurisdiction having capital, surplus and undivided profits aggregating
in excess of $200,000,000, with maturities of not more than one year from the
date of acquisition by such Person, (iii) repurchase obligations with a term of
not more than 90 days for underlying securities of the types described in
clause (i) above entered into with any bank meeting the qualifications
specified in clause (ii) above, (iv) commercial paper issued by any Person
incorporated in the United States rated at least A-1 or the equivalent thereof
by Standard & Poor's Corporation or at least P-1 or the equivalent thereof by
Moody's Investors Service, Inc. and in each case maturing not more than one
year after the date of acquisition by such Person, (v) investments in money
market funds substantially all of whose assets are comprised of securities of
the types described in clauses (i) through (iv) above and (vi) demand deposit
accounts maintained in the ordinary course of business.
"Change of Ownership" shall mean (i) Holdings shall cease to
own beneficially 100% of the capital stock of the Borrower; (ii) if the HM
Group shall cease to have the power, directly or indirectly, to vote or direct
the voting of securities having a majority of the ordinary voting power for the
election of directors of Holdings, provided that the occurrence of the
foregoing event shall not be deemed a "Change of Ownership" if (A) at any time
prior to the consummation of an Initial Public Offering, (1) the HM Group
otherwise have the right to designate (and do so designate) a majority of the
board of directors of Holdings or (2) the HM Group own of record and
beneficially an amount of common stock of Holdings equal to at least 50% of the
amount of common stock of Holdings (adjusted for stock splits, stock dividends
and other similar events on an equitable basis)
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owned by the HM Group of record and beneficially as of the Effective Date and
such ownership by the HM Group represents the largest single block of voting
securities of Holdings held by any "person" or "group" for purposes of Section
13(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
or (B) at any time after the consummation of an Initial Public Offering, (1) no
"person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the
Exchange Act), excluding the HM Group, shall become the "beneficial owner" (as
defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act), directly or
indirectly, of more than the greater of (x) 15% of the then outstanding Voting
Stock of Holdings and (y) the percentage of the then outstanding Voting Stock
of Holdings owned by the HM Group and (2) the board of directors of Holdings
shall consist of a majority of Continuing Directors; (iii) HM Group (excluding
R. Steven Hicks) shall own beneficially fewer shares of outstanding common
stock of Holdings than R. Steven Hicks; or (iv) a "Change of Control" under and
as defined in the Holdings Senior Note Indenture or the Existing Senior
Subordinated Note Indenture shall have occurred.
"City Acquisition" shall mean the acquisition by
Capstar-Florida of substantially all of the assets of City Broadcasting Co.,
Inc. in accordance with the terms and provisions of the City Purchase
Agreement.
"City Purchase Agreement" shall mean the asset purchase
agreement, dated as of October 22, 1996, among the Borrower, Capstar
Broadcasting-Florida, Inc., a Delaware corporation and a Wholly-Owned
Subsidiary of the Borrower, ("Capstar-Florida") and City Broadcasting Co.,
Inc., as in effect on the Effective Date.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, and the regulations promulgated and the rulings
issued thereunder. Section references to the Code are to the Code, as in
effect at the Effective Date, and to any subsequent provision of the Code,
amendatory thereof, supplemental thereto or substituted therefor.
"Collateral" shall mean all property (whether real or
personal) with respect to which any security interests have been granted (or
purported to be granted) pursuant to any Security Document, including, without
limitation, all Pledge Agreement Collateral, all Security Agreement Collateral,
all Mortgaged Properties and all cash and Cash Equivalents delivered as
collateral pursuant to Section 4.02 or Section 10 hereof and all Additional
Collateral, if any (all of which shall in any event exclude any interest in the
FCC Licenses to the extent prohibited by applicable law).
"Collateral Agent" shall mean the Administrative Agent acting
as collateral agent for the Secured Creditors pursuant to the Security
Documents.
"Commitment" shall mean, with respect to each Bank, the amount
set forth opposite such Bank's name in Annex I directly below the column
entitled "Commitment," as the same may
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be (x) reduced from time to time pursuant to Sections 3.02, 3.03 and/or 10 or
(y) adjusted rom time to time as a result of assignments to or from such Bank
pursuant to Section 1.13 or 13.04(b).
"Commitment Commission" shall have the meaning provided in
Section 3.01(a).
"Common Stock Documents" shall mean each document delivered
pursuant to the Common Stock Issuance or in connection therewith.
"Common Stock Issuance" shall have the meaning provided in
Section 5A.06(ii).
"Communications Act" shall have the meaning provided in
Section 7.23.
"Consolidated Broadcast Cash Flow" shall mean, for any period,
the Broadcast Cash Flow of Holdings and its Consolidated Subsidiaries
determined on a consolidated basis in accordance with GAAP during such period,
provided that if any such period includes any period during which the H/T
Borrowing Date occurs or has not previously occurred, such prior period shall
be calculated on the basis of the sum of Broadcast Cash Flow of the H/T
Stations plus the Broadcast Cash Flow of Holdings and its Consolidated
Subsidiaries.
"Consolidated Current Assets" shall mean, at any time, the
consolidated current assets of Holdings and its Consolidated Subsidiaries
determined on a consolidated basis in accordance with GAAP plus the Total
Unutilized Commitment at such time.
"Consolidated Current Liabilities" shall mean, at any time,
the consolidated current liabilities of Holdings and its Consolidated
Subsidiaries determined on a consolidated basis in accordance with GAAP at such
time, but excluding (i) the current portion of any Indebtedness under this
Agreement and any other long-term Indebtedness which would otherwise be
included therein, (ii) accrued but unpaid interest with respect to the
Indebtedness described in clause (i), and (iii) the current portion of
Capitalized Lease Obligations.
"Consolidated EBIT" shall mean, for any period, the
Consolidated Net Income of Holdings and its Consolidated Subsidiaries
determined on a consolidated basis in accordance with GAAP, before Consolidated
Net Interest Expense and provision for taxes and without giving effect to any
extraordinary gains or losses or gains or losses from sales of assets other
than inventory sold in the ordinary course of business.
"Consolidated EBITDA" shall mean, for any period, Consolidated
EBIT for such period, plus, without duplication and to the extent deducted from
Consolidated EBIT for such period, the sum of (a) depreciation and amortization
expense, (b) amortization of intangibles (including, but not limited to,
goodwill) and organization costs, (c) non-cash charges in respect of pension
and retiree benefits, (d) the amount resulting from Cost Savings Measures and
(e) any other non-cash
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charges; provided, that in making any determination of Consolidated EBITDA for
any Test Period ending on or prior to the first anniversary (w) of the
Effective Date, (x) the H/T Borrowing Date, (y) the Fort Myers Disposition Date
and/or (z) the date of any Permitted Section 9.02(xx) Acquisition, pro forma
effect shall be given to the Transaction, the H/T Transaction and/or the Fort
Myers Disposition, respectively (including taking into account reasonable
expenses (if any) in a manner satisfactory to the Administrative Agent), as if
such event(s) had occurred on the Effective Date (or, in the case of any
Permitted Section 9.02(xx) Acquisition, on the first day of the Test Period
ending on or prior to the first anniversary of the date of such acquisition);
provided further, that for purposes of calculating compliance with Sections
9.08, 9.09 and 9.10, in the event that any sale or other disposition of
Stations is made in compliance with Section 9.02, and the proceeds thereof do
not give rise to a permanent reduction to the Total Commitment, all in
accordance with Section 3.03(d), for the period (not to exceed 180 days) that a
Blocked Commitment exists that resulted from such sale or disposition pursuant
to Section 3.03(d), the amount equal to the Broadcast Cash Flow of the Stations
so sold or so disposed at the end of the most recent fiscal quarter prior to
such sale or disposition for the four fiscal quarters prior thereto shall be
included in the determination of Consolidated EBITDA during such period.
"Consolidated Indebtedness" shall mean, at any time, the sum
of the aggregate outstanding principal amount of all Indebtedness for borrowed
money, and the principal component of Capitalized Lease Obligations of Holdings
and its Consolidated Subsidiaries determined on a consolidated basis in
accordance with GAAP; provided, that with respect to the Existing Senior
Subordinated Notes, only the accreted value thereof shall be included as
Consolidated Indebtedness.
"Consolidated Net Cash Interest Expense" shall mean, for any
period, the total consolidated cash interest expense of Holdings and its
Consolidated Subsidiaries determined on a consolidated basis in accordance with
GAAP for such period plus, without duplication, that portion of Capitalized
Lease Obligations of Holdings and its Consolidated Subsidiaries representing
the interest factor for such period in each case net of the total consolidated
cash interest income of Holdings and its Consolidated Subsidiaries for such
period.
"Consolidated Net Income" shall mean, for any period, net
after tax income of Holdings and its Consolidated Subsidiaries determined on a
consolidated basis in accordance with GAAP; provided, that any non-cash
expenses attributable to grants or exercises of employee stock options shall
not be included in the determination of Consolidated Net Income.
"Consolidated Net Interest Expense" shall mean, for any
period, the total consolidated interest expense of Holdings and its
Consolidated Subsidiaries determined on a consolidated basis in accordance with
GAAP for such period (calculated without regard to any limitations on the
payment thereof) plus, without duplication, that portion of Capitalized Lease
Obligations of Holdings and its Consolidated Subsidiaries determined on a
consolidated basis in accordance with GAAP
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representing the interest factor for such period in each case net of the total
consolidated cash interest income of Holdings and its Consolidated Subsidiaries
for such period, but excluding the amortization of any deferred financing costs
incurred in connection with this Agreement.
"Consolidated Subsidiaries" shall mean, as to any Person, all
Subsidiaries of such Person which are consolidated with such Person for
financial reporting purposes in accordance with GAAP.
"Contingent Obligation" shall mean, as to any Person, any
obligation of such Person guaranteeing or intended to guarantee any
Indebtedness, leases, dividends or other obligations ("primary obligations") of
any other Person (the "primary obligor") in any manner, whether directly or
indirectly, including, without limitation, any obligation of such Person,
whether or not contingent, (i) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (ii) to advance or
supply funds (x) for the purchase or payment of any such primary obligation or
(y) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (iii)
to purchase property, securities or services primarily for the purpose of
assuring the owner of any such primary obligation of the ability of the primary
obligor to make payment of such primary obligation or (iv)otherwise to assure
or hold harmless the holder of such primary obligation against loss in respect
thereof; provided, however, that the term Contingent Obligation shall not
include endorsements of instruments for deposit or collection in the ordinary
course of business. The amount of any Contingent Obligation shall be deemed to
be an amount equal to the stated or determinable amount of the primary
obligation in respect of which such Contingent Obligation is made (or, if less,
the maximum amount of such primary obligation for which such Person may be
liable pursuant to the terms of the instrument evidencing such Contingent
Obligation) or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof (assuming such Person is required to
perform thereunder) as determined by such Person in good faith.
"Continuing Directors" shall mean the directors of Holdings on
the date which occurs six months prior to the consummation of an Initial Public
Offering and each other director, if such director's nomination for election to
the Board of Directors of Holdings is recommended by a majority of the then
Continuing Directors or any other nominee of the HM Group.
"Cost Savings Measures" shall mean cost savings resulting from
employee terminations, facilities consolidations and closings, standardization
of employee benefits and compensation practices, consolidation of property,
casualty and other insurance coverage and policies, standardization of sales
representation commissions and other contract rates, and reductions in taxes
other than income taxes, which cost savings Holdings reasonably believes in
good faith would have been achieved during the Test Period as a result of such
asset acquisitions (regardless of whether such cost savings could then be
reflected in pro forma financial statements under GAAP),
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provided that both (A) such cost savings and cost savings measures were
identified and such cost savings were quantified in an officers' certificate
delivered to the Administrative Agent at the time of the consummation of the
asset acquisition and (B) with respect to each asset acquisition completed
prior to the 90th day preceding such date of determination, actions were
commenced or initiated by Holdings or its Subsidiaries within 90 days of such
asset acquisition to effect the cost savings measures identified in such
officers' certificate (regardless, however, of whether the corresponding cost
savings were ultimately achieved).
"Credit Documents" shall mean this Agreement and, after the
execution and delivery thereof pursuant to the terms of this Agreement, each
Note, each Security Document, the Environmental Indemnity Agreement and the
Subsidiary Guaranty.
"Credit Event" shall mean the making of any Loan (but shall
not include conversions or continuations of existing Loans) or the issuance of
any Letter of Credit.
"Credit Party" shall mean Holdings, the Borrower and each
Subsidiary of Holdings party to a Credit Document.
"Default" shall mean any event, act or condition which with
notice or lapse of time, or both, would constitute an Event of Default.
"Defaulting Bank" shall mean any Bank with respect to which a
Bank Default is in effect.
"Disqualified Capital Stock" shall mean any capital stock
that, by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable), or upon the happening of any
event (i) matures (excluding any maturity as the result of an optional
redemption by the issuer thereof) 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 first anniversary of
the Final Maturity Date, or (ii) is convertible into or exchangeable (unless at
the sole option of the issuer thereof) for (a) debt securities or (b) any
capital stock referred to in (i) above, in each case at any time prior to the
first anniversary of the Final Maturity Date.
"Dividend" with respect to any Person shall mean that such
Person has declared or paid a dividend or returned any equity capital to its
stockholders or authorized or made any other distribution, payment or delivery
of property (other than common stock of such Person) or cash to its
stockholders as such, or redeemed, retired, purchased or otherwise acquired,
directly or indirectly, for consideration any shares of any class of its
capital stock outstanding on or after the Effective Date (or any options or
warrants issued by such Person with respect to its capital stock), or set aside
any funds for any of the foregoing purposes, or shall have permitted any of its
Subsidiaries to purchase
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or otherwise acquire for consideration any shares of any class of the capital
stock of such Person outstanding on or after the Effective Date (or any options
or warrants issued by such Person with respect to its capital stock).
"Documents" shall mean the Transaction Documents and, on and
after the H/T Borrowing Date, the H/T Transaction Documents.
"Dollars" and the sign "$" shall each mean freely transferable
lawful money of the United States.
"Drawing" shall have the meaning provided in Section 2.04(b).
"EBIT" shall mean, for any period, net after tax income of any
Person before Net Interest Expense and provision for taxes and without giving
effect to any extraordinary gains or losses or gains or losses from sales of
assets other than inventory sold in the ordinary course of business.
"EBITDA" shall mean, for any period, EBIT, adjusted by adding
thereto the amount of all amortization of intangibles and depreciation that
were deducted in arriving at EBIT for such period.
"Effective Date" shall have the meaning provided in Section
13.10.
"Eligible Transferee" shall mean and include a commercial
bank, mutual funds, financial institution or other institutional "accredited
investor" (as defined in Regulation D of the Securities Act).
"Employee Stock Option Plan" shall mean the Capstar
Broadcasting Partners, Inc. 1996 Stock Option Plan, as amended, and any plan
entered into after the Effective Date, for the compensation of management of
Holdings or any of its Subsidiaries, or any arrangement for the benefit of
management of Holdings or any of its Subsidiaries, provided that such plan is
in form and substance reasonably acceptable to the Administrative Agent.
"Employment Agreements" shall have the meaning provided in
Section 5A.05.
"End Date" shall have the meaning provided in the definition
of Applicable Margin.
"Environmental Claims" shall have the meaning provided in the
Environmental Indemnity Agreement.
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"Environmental Indemnity Agreement" shall have the meaning
provided in Section 5A.11.
"Environmental Law" shall have the meaning provided in the
Environmental Indemnity Agreement.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time, and the regulations promulgated and
rulings issued thereunder. Section references to ERISA are to ERISA, as in
effect at the Effective Date and any subsequent provisions of ERISA, amendatory
thereof, supplemental thereto or substituted therefor.
"ERISA Affiliate" shall mean each person (as defined in
Section 3(9) of ERISA) which together with the Borrower or any Subsidiary of
the Borrower would be deemed to be a "single employer" within the meaning of
Section 414(b), (c), (m) or (o) of the Code.
"Eurodollar Loan" shall mean each Loan designated as such by
the Borrower at the time of the incurrence thereof or conversion thereto.
"Eurodollar Rate" shall mean the offered quotation to
first-class banks in the New York interbank Eurodollar market by BTCo for
Dollar deposits of amounts in immediately available funds comparable to the
outstanding principal amount of the Eurodollar Loan of BTCo with maturities
comparable to the Interest Period applicable to such Eurodollar Loan commencing
two Business Days thereafter as of 10:00 A.M. (New York time) on the date which
is two Business Days prior to the commencement of such Interest Period, divided
(and rounded off to the nearest 1/16 of 1%) by a percentage equal to 100% minus
the then stated maximum rate of all reserve requirements (including, without
limitation, any marginal, emergency, supplemental, special or other reserves
required by applicable law) applicable to any member bank of the Federal
Reserve System in respect of Eurocurrency funding or liabilities as defined in
Regulation D (or any successor category of liabilities under Regulation D).
"Event of Default" shall have the meaning provided in Section
10.
"Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
"Existing Credit Agreements" shall mean and include (i) the
Loan and Security Agreement, dated as of March 13, 1996, among Commodore
Holdings, Inc., Commodore Media of Delaware, Inc., Commodore Media of Florida,
Inc. Commodore Media of Pennsylvania, Inc., Commodore Media of Kentucky, Inc.,
Commodore Media of Norwalk, Inc., Commodore Media of Westchester, Inc. and AT&T
Commercial Finance Corporation, (ii) the Loan Agreement, dated as of August 15,
1995, among Osborn, the financial institutions listed therein and KeyBank
National
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Association (f/k/a Society National Bank) and (iii) the Senior Credit
Agreement, dated as of October 16, 1996, among Capstar Broadcasting Partners,
Inc., the Lenders named therein and Bankers Trust Company, as Agent, in each
case as in effect on the Effective Date.
"Existing Senior Subordinated Note Documents" shall mean and
include each of the documents and other agreements entered into (including,
without limitation, the Existing Senior Subordinated Note Indenture) relating
to the issuance by the Borrower of the Existing Senior Subordinated Notes, as
in effect on the Effective Date and as the same may be entered into, modified,
supplemented or amended from time to time pursuant to the terms hereof and
thereof.
"Existing Senior Subordinated Note Indenture" shall mean that
certain indenture, dated as of April 21, 1995, among the Borrower, as issuer,
Commodore Media of Delaware, Inc., Commodore Media of Pennsylvania, Inc.,
Commodore Media of Florida, Inc., Commodore Media of Kentucky, Inc., Commodore
Media of Norwalk, Inc., and Commodore Media of Westchester, Inc., as
guarantors, and IBJ Schroder Bank & Trust Company, as Trustee, as in effect on
the Effective Date and as the same may be amended, modified, extended, renewed,
replaced, restated or supplemented from time to time pursuant to the terms
thereof and hereof.
"Existing Senior Subordinated Notes" shall mean the Borrower's
13 1/4% Senior Subordinated Notes due 2003, issued pursuant to the Existing
Senior Subordinated Note Indenture.
"EZY Acquisition" shall mean the acquisition by
Capstar-Florida of substantially all of the assets of EZY Com, Inc., in
accordance with the terms and provisions of the EZY Purchase Agreement.
"EZY Purchase Agreement" shall mean the asset purchase
agreement, dated as of October 22, 1996, among the Borrower, Capstar-Florida
and EZY Com, Inc., as in effect on the Effective Date.
"Facing Fee" shall have the meaning provided in Section
3.01(c).
"FCC" shall mean the Federal Communications Commission, or
any successor thereto.
"FCC Licenses" shall have the meaning provided in Section
7.23.
"Federal Funds Rate" shall mean for any period, a fluctuating
interest rate equal for each day during such period to the weighted average of
the rates on overnight Federal Funds transactions with members of the Federal
Reserve System arranged by Federal Funds brokers, as published for such day
(or, if such day is not a Business Day, for the next preceding Business Day)
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by the Federal Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the quotations for such day
on such transactions received by the Administrative Agent from three Federal
Funds brokers of recognized standing selected by the Administrative Agent.
"Fees" shall mean all amounts payable pursuant to or referred
to in Section 3.01.
"Final Maturity Date" shall mean February 20, 2002.
"Fort Myers Disposition" shall mean the sale of the Fort Myers
Stations to Clear Channel Radio Licenses, Inc. and Clear Channel Radio, Inc.
for approximately $11,000,000 of gross cash proceeds pursuant to, and in
accordance with, the Fort Myers Purchase Agreement.
"Fort Myers Disposition Date" shall have the meaning provided in Section 8.11.
"Fort Myers Disposition Documents" shall mean the Fort Myers
Purchase Agreement and all other agreements and documents relating to the Fort
Myers Disposition.
"Fort Myers Purchase Agreement" shall mean the asset purchase
agreement, dated as of December 24, 1996, among Corkscrew Broadcasting
Corporation, Clear Channel Radio Licenses, Inc. and Clear Channel Radio, Inc.,
as in effect on the Effective Date.
"Fort Myers Stations" shall mean substantially all of the
assets that are used or held for use in connection with the business and
operations of WMII-AM and WFSN-FM in Port Charlotte, Florida and WOLZ-FM in Ft.
Myers, Florida.
"GAAP" shall have the meaning provided in Section 13.07(a).
"Guaranteed Obligations" shall mean the irrevocable and
unconditional guaranty made by Holdings (i) to each Bank for the full and
prompt payment when due (whether at the stated maturity, by acceleration or
otherwise) of the principal and interest on each Note issued by the Borrower to
such Bank, and Loans made, under the Credit Agreement and all reimbursement
obligations and Unpaid Drawings with respect to Letters of Credit, together
with all the other obligations and liabilities (including, without limitation,
indemnities, fees and interest thereon) of the Borrower to such Bank now
existing or hereafter incurred under, arising out of or in connection with the
Credit Agreement or any other Credit Document and the due performance and
compliance with all the terms, conditions and agreements contained in the
Credit Documents by the Borrower and (ii) to each Bank and each Affiliate of a
Bank which enters into an Interest Rate Protection Agreement with the Borrower,
which by its express terms are entitled to the benefit of the Guaranty pursuant
to Section 14 with the written consent of the Borrower, the full and prompt
payment when
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due (whether by acceleration or otherwise) of all obligations of the Borrower
owing under any such Interest Rate Protection Agreement, whether now in
existence or hereafter arising, and the due performance and compliance with all
terms, conditions and agreements contained therein.
"Guarantor" shall mean Holdings and any guarantor that is
party to the Subsidiary Guaranty.
"Guaranty" shall mean the guaranty made by Holdings pursuant
to Section 14, the Subsidiary Guaranty, and any guaranty executed pursuant to
Section 8.12.
"Hazardous Materials" shall have the meaning provided in the
Environmental Indemnity Agreement.
"HM Group" shall mean, collectively, (i) Hicks, Muse, Tate &
Furst Incorporated, its Affiliates and R. Steven Hicks taken as a whole, (ii)
so long as Hicks, Muse, Tate & Furst Incorporated, its Affiliates and R. Steven
Hicks taken as a whole possess sole voting right with respect to the Voting
Stock held by each such individual, such individuals who are or were employees,
officers, directors or partners of Hicks, Muse, Tate & Furst Incorporated or
such Affiliate and the family members of such individuals or trusts created for
the sole benefit of such family members and (iii) so long as Hicks, Muse, Tate
& Furst Incorporated, its Affiliates and R. Steven Hicks taken as a whole
possess sole voting right with respect to the Voting Stock of Holdings held by
each such Person, any Person not otherwise described by clause (i) and (ii)
above, provided that the aggregate number of shares held by all such Persons in
accordance with this clause (iii) at any time shall not exceed 3% of the
aggregate number of shares held by the Persons described in clause (i) and (ii)
above at such time.
"Holdings" shall have the meaning provided in the first
paragraph of this Agreement.
"Holdings Common Stock" shall have the meaning provided in
Section 7.14(a).
"Holdings Guaranty" shall mean the guaranty provided to the
Banks pursuant to Section 14.
"Holdings Pledge Agreement" shall have the meaning set forth
in Section 5A.08(a).
"Holdings Security Agreement" shall have the meaning provided
in Section 5A.09.
"Holdings Senior Note Documents" shall mean the Holdings
Senior Note Indenture and each document delivered pursuant to the Holdings
Senior Note Issuance or in connection
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therewith (including, but not limited to, the Holdings Senior Note Indenture
and all documents relating thereto), which shall be in form and substance
satisfactory to the Administrative Agent.
"Holdings Senior Note Indenture" shall mean that certain
Indenture, dated as of February 20, 1997, between Holdings and U.S. Trust
Company of Texas N.A., as Trustee, as in effect on the Effective Date and as
the same may be amended, modified, extended, renewed, replaced, restated or
supplemented from time to time pursuant to the terms thereof and hereof.
"Holdings Senior Note Issuance" shall have the meaning
provided in Section 5A.06(i).
"Holdings Senior Notes" shall mean Holdings' 12 3/4% senior
discount notes due 2009.
"H/T Acquisition" shall mean Osborn's acquisition of the H/T
Stations.
"H/T Borrowing Date" shall mean the date on which the H/T
Acquisition is consummated.
"H/T FCC Licenses" shall have the meaning provided in Section 5B.04.
"H/T Purchase Agreements" shall mean the stock purchase
agreement, dated as of November 20, 1996, between Osborn and Dixie Broadcasting
Inc. ("Dixie"), as in effect on the Effective Date, and (y) the asset purchase
agreement, dated as of December 18, 1996, between Osborn and Taylor
Communications Corporation ("Taylor"), as in effect on the Effective Date.
"H/T Stations" shall mean the radio stations that Osborn has
agreed to acquire from Taylor and Dixie pursuant to the H/T Purchase
Agreements.
"H/T Transaction" shall mean and include the H/T Acquisition,
the transfer of the H/T FCC Licenses to the Borrower or any of its Subsidiaries
all other transactions contemplated by or consummated in connection therewith.
"H/T Transaction Documents" shall mean the H/T Purchase
Agreements and all other agreements and documents relating to the H/T
Acquisition.
"Indebtedness" shall mean, as to any Person, without
duplication, (i) all indebtedness (including principal, interest, fees and
charges) of such Person for borrowed money or for the deferred purchase price
of property or services due more than 90 days after acquisition of the property
or receipt of services or which is otherwise represented by a note, (ii) the
maximum amount available to be drawn under all letters of credit issued for the
account of such Person and all unpaid
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drawings in respect of such letters of credit, (iii) all Indebtedness of the
types described in clause (i), (ii), (iv), (v) or (vi) of this definition
secured by any Lien on any property owned by such Person, whether or not such
Indebtedness has been assumed by such Person (to the extent of the lesser of
the amount of such Indebtedness and the value of the respective property), (iv)
Capitalized Lease Obligations, (v) all Contingent Obligations of such Person
and (vi) all obligations under any Interest Rate Protection Agreement or under
any similar type of agreement; provided, that Indebtedness shall not include
trade payables and accrued expenses, in each case arising in the ordinary
course of business.
"Indian River Acquisition" shall mean the acquisition by
Commodore Media of Florida, Inc. of substantially all of the assets of Indian
River Shares Partners, L.C. in accordance with the terms and provisions of the
Indian River Purchase Agreement.
"Indian River Purchase Agreement" shall mean the asset
purchase agreement, dated as of September 26, 1996, between the Borrower and
Indian River Shores Partners, L.C., as in effect on the Effective Date.
"Initial Public Offering" means an underwritten public
offering of common stock of Holdings pursuant to a registration statement filed
with the Securities and Exchange Commission in accordance with the Securities
Act, which public equity offering results in gross proceeds to Holdings of not
less than $25,000,000.
"Interest Determination Date" shall mean, with respect to any
Eurodollar Loan, the second Business Day prior to the commencement of any
Interest Period relating to such Eurodollar Loan.
"Interest Period" shall have the meaning provided in Section
1.09.
"Interest Rate Protection Agreement" shall mean any interest
rate swap agreement, interest rate cap agreement, interest collar agreement,
interest rate hedging agreement or other similar agreement or arrangement.
"Issuing Bank" shall mean, BTCo and any Bank which at the
request of the Borrower and with the consent of the Administrative Agent
agrees, in such Bank's sole discretion, to become an Issuing Bank for the
purpose of issuing Letters of Credit pursuant to Section 2. The sole Issuing
Bank on the Effective Date is BTCo.
"L/C Supportable Obligations" shall mean obligations of the
Borrower or any of its Subsidiaries as are consistent with the policies of the
respective Issuing Bank and otherwise permitted to exist pursuant to the terms
of this Agreement, which shall include the posting of Letters
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of Credit to provide assurance of performance in connection with acquisitions
otherwise permitted by Section 9.02.
"Leaseholds" of any Person means all the right, title and
interest of such Person as lessee or licensee in, to and under leases or
licenses of land, improvements and/or fixtures.
"Letter of Credit" shall have the meaning provided in Section
2.01(a).
"Letter of Credit Fee" shall have the meaning provided in
Section 3.01(b).
"Letter of Credit Outstandings" shall mean, at any time, the
sum of (i) the aggregate Stated Amount of all outstanding Letters of Credit and
(ii) the amount of all Unpaid Drawings relating to Letters of Credit.
"Letter of Credit Request" shall have the meaning provided in Section 2.02(a).
"Leverage Ratio" shall mean, on the date of determination
thereof, the ratio of (x) Consolidated Indebtedness on such date to (y)
Consolidated EBITDA for the Test Period then most recently ended (taken as one
accounting period). Notwithstanding anything to the contrary in the preceding
sentence, for purposes of determining Applicable Margin and Section 9.08 only,
the Leverage Ratio shall be calculated as if Holdings did not exist.
"Lien" shall mean any mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other),
preference, priority or other security agreement of any kind or nature
whatsoever (including, without limitation, any conditional sale or other title
retention agreement, any financing or similar statement or notice filed under
the UCC or any other similar recording or notice statute, and any lease having
substantially the same effect as any of the foregoing).
"Loan" shall have the meaning provided in Section 1.01.
"Management Agreements" shall have the meaning provided in
Section 5A.05.
"Margin Stock" shall have the meaning provided in Regulation
U.
"Market" shall mean a Metropolitan Statistical Area .
"Monitoring and Oversight Agreement" shall have the meaning
provided in Section 9.06(iv).
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"Mortgage" shall have the meaning provided in Section
5A.10(a), and, after the execution and delivery thereof, shall include each
Additional Mortgage delivered pursuant to Sections 8.12.
"Mortgage Policies" shall have the meaning provided in Section 5A.10(c).
"Mortgaged Properties" shall have the meaning provided in
Section 5A.10(a) and, after the execution and delivery thereof, shall include
each property covered by an Additional Mortgage.
"Net Interest Expense" shall mean, for any period, the total
interest expense of any Person for such period (calculated without regard to
any limitations on the payment thereof) plus, without duplication, that portion
of Capitalized Lease Obligations of such Person representing the interest
factor for such period in each case net of the total consolidated cash interest
income of such Person for such period, but excluding the amortization of any
deferred financing costs incurred in connection with this Agreement.
"Net Sale Proceeds" shall mean for any sale, lease, transfer
or other disposition of assets, the gross cash proceeds (including any cash
received by way of deferred payment pursuant to a promissory note, receivable
or otherwise, but only as and when received) received by Holdings and/or any of
its Subsidiaries from such sale, lease, transfer or other disposition, net of
reasonable transaction costs (including, without limitation, any underwriting,
brokerage or other customary selling commissions and reasonable legal, advisory
and other fees and expenses, including title and recording expenses and
reasonable expenses incurred for preparing such assets for sale, associated
therewith) and payments of unassumed liabilities relating to the assets sold at
the time of, or within 30 days after, the date of such sale, the amount of such
gross cash proceeds required to be used to repay any Indebtedness (other than
Indebtedness of the Banks pursuant to this Agreement) which is secured by the
respective assets which were sold, and the estimated marginal increase in
income taxes which will be payable by Holdings' consolidated group with respect
to the fiscal year in which the sale occurs as a result of such sale; but
excluding any portion of any such gross cash proceeds which Holdings determines
in good faith should be reserved for post-closing adjustments (to the extent
Holdings' delivers to the Banks a certificate signed by an Authorized Officer
as to such determination), it being understood and agreed that on the day that
all such post-closing adjustments have been determined (which shall not be
later than six months following the date of the respective asset sale), the
amount (if any) by which the reserved amount in respect of such sale or
disposition exceeds the actual post-closing adjustments payable by Holdings or
any of its Subsidiaries shall constitute Net Sale Proceeds on such date.
"Non-Defaulting Bank" shall mean and include each Bank which
is not a Defaulting Bank.
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"Note" shall have the meaning provided in Section 1.05(a).
"Notice of Borrowing" shall have the meaning provided in Section 1.03(a).
"Notice of Conversion" shall have the meaning provided in Section 1.06.
"Notice Office" shall mean the office of the Administrative
Agent located at 130 Liberty Street, New York, New York 10006, Attention: Mary
Kay Coyle, or such other office as the Administrative Agent may hereafter
designate in writing as such to the other parties hereto.
"Obligations" shall mean all amounts owing to the
Administrative Agent, the Collateral Agent or any Bank pursuant to the terms of
this Agreement or any other Credit Document.
"OCC Acquisition" shall mean OCC Acquisition Company, Inc., a
Delaware corporation.
"Operating Agreement" shall have the meaning provided in
Section 8.04.
"Osborn" shall mean Osborn Communications Corporation, a
Delaware corporation.
"Osborn Acquisition" shall mean the acquisition by OCC
Acquisition of 100% of the outstanding capital stock of Osborn, followed
immediately by the merger of OCC Acquisition with and into Osborn, with Osborn
the surviving corporation of such merger, all in accordance with the terms and
provisions of the Osborn Acquisition Documents.
"Osborn Acquisition Documents" shall mean the Osborn Merger
Agreement and all other agreements and documents relating to the Osborn
Acquisition.
"Osborn FCC Licenses" shall mean the FCC Licenses acquired
pursuant to the Osborn Acquisition.
"Osborn Merger Agreement" shall mean the Agreement and Plan of
Merger, dated as of July 23, 1996, by and among OCC Acquisitions Company, Inc.,
Osborn and OCC Holding Corporation, as in effect on the Effective Date and as
the same may be amended, modified or supplemented pursuant to the terms thereof
and hereof.
"Osborn Stations" shall mean the stations acquired pursuant to
the Osborn Merger Agreement.
"Participant" shall have the meaning provided in Section
2.03(a).
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"Payment Office" shall mean the office of the Administrative
Agent located at 130 Liberty Street, New York, New York 10006, Attention: Mary
Kay Coyle, or such other office as the Administrative Agent may hereafter
designate in writing as such to the other parties hereto.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
established pursuant to Section 4002 of ERISA, or any successor thereto.
"Percentage" of any Bank at any time shall mean a fraction
(expressed as a percentage) the numerator of which is the Commitment of such
Bank at such time and the denominator of which is the Total Commitment at such
time, provided that if the Percentage of any Bank is to be determined after the
Total Commitment has been terminated, then the Percentages of the Banks shall
be determined immediately prior (and without giving effect) to such
termination.
"Pending Dispositions" shall mean the (i) Fort Myers
Disposition, (ii) the sale by Osborn of WING-FM in Dayton, Ohio pursuant to the
terms of that certain Time Brokerage Agreement dated February 22, 1993, by and
between Short Broadcasting Corporation and Great Trails Broadcasting
Corporation, (iii) the sale by Osborn of its 50% non-voting interest in Ruth
Communications Corporation, owner of WDRR-FM in Ft. Myers, Florida, (iv) the
sale by the Borrower of KASH-AM in Anchorage, Alaska and (v) the sale of
WJSU-TV by RKZ Television, Inc. pursuant to the terms of that certain Option
Agreement dated December 21, 1995, by and between RKZ Television, Inc. and
Allbritton Communications Company.
"Permitted Encumbrance" shall mean, with respect to any
Mortgaged Property, such exceptions to title as are set forth in the title
insurance policy or title commitment delivered with respect thereto, all of
which exceptions must be acceptable to the Administrative Agent in its
reasonable discretion.
"Permitted Issuance" shall mean (a) the issuance by Holdings
of options or other equity securities of Holdings to outside directors, members
of management or employees of Holdings or any Subsidiary of Holdings, (b) the
issuance of securities as interest or dividends on pay-in-kind debt or
preferred equity securities permitted hereunder and under the other Credit
Documents and (c) the issuance to Holdings or any Subsidiary (or any director,
with respect to directors' qualifying shares) by any of its Subsidiaries of any
of their respective capital stock, in each case with respect to this clause (c)
to the extent such capital stock is pledged to the Collateral Agent pursuant to
the applicable Pledge Agreement (provided that only 65% of the voting capital
stock of a foreign Subsidiary of the Borrower is required to be so pledged).
"Permitted Liens" shall have the meaning provided in Section
9.01.
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"Permitted Section 9.02(xx) Acquisition" shall have the
meaning provided in Section 9.02(xx).
"Person" shall mean any individual, partnership, joint
venture, limited liability company, firm, corporation, association, trust or
other enterprise or any government or political subdivision or any agency,
department or instrumentality thereof.
"Plan" shall mean any multiemployer or single-employer plan,
as defined in Section 4001 of ERISA, which is maintained or contributed to by
(or to which there is an obligation to contribute of), the Borrower or a
Subsidiary of the Borrower or an ERISA Affiliate, and each such plan for the
five year period immediately following the latest date on which the Borrower, a
Subsidiary of the Borrower or an ERISA Affiliate maintained, contributed or had
an obligation to contribute to such plan.
"Pledge Agreement Collateral" shall mean all "Collateral" as
defined in each of the Pledge Agreements.
"Pledge Agreements" shall mean the Holdings Pledge Agreement,
the Borrower Pledge Agreement and the Subsidiary Pledge Agreement.
"Pledged Securities" shall mean "Pledged Securities" as
defined in each of the Pledge Agreements.
"Prime Lending Rate" shall mean the rate which Bankers Trust
Company announces from time to time as its prime lending rate, the Prime
Lending Rate to change when and as such prime lending rate changes. The Prime
Lending Rate is a reference rate and does not necessarily represent the lowest
or best rate actually charged to any customer. Bankers Trust Company may make
commercial loans or other loans at rates of interest at, above or below the
Prime Lending Rate.
"Projections" shall have the meaning provided in Section
7.05(d).
"Qualified Capital Stock" shall mean any capital stock that is
not Disqualified Capital Stock.
"Quarterly Payment Date" shall mean the last Business Day of
each March, June, September and December occurring after the Effective Date.
"Real Property" of any Person shall mean all the right, title
and interest of such Person in and to land, improvements and fixtures,
including Leaseholds.
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"Recovery Event" shall mean the receipt by Holdings or any of
its Subsidiaries of any (i) cash insurance proceeds payable (x) by reason of
theft, loss, physical destruction or damage or any other similar event with
respect to any property or assets of Holdings or any of its Subsidiaries and
(y) under any policy of insurance required to be maintained under Section 8.03
or (ii) condemnation award payable by reason of eminent domain or deed in lieu
thereof.
"Register" shall have the meaning set forth in Section 13.17.
"Regulation D" shall mean Regulation D of the Board of
Governors of the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof establishing reserve requirements.
"Regulation G" shall mean Regulation G of the Board of
Governors of the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof.
"Regulation T" shall mean Regulation T of the Board of
Governors of the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof.
"Regulation U" shall mean Regulation U of the Board of
Governors of the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof.
"Regulation X" shall mean Regulation X of the Board of
Governors of the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof.
"Reinvestment Assets" shall have the meaning provided in
Section 3.03(d).
"Release" shall have meaning provided on the Environmental
Indemnity Agreement.
"Replaced Bank" shall have the meaning provided in Section
1.13.
"Replacement Bank" shall have the meaning provided in Section
1.13.
"Reportable Event" shall mean an event described in Section
4043(c) of ERISA with respect to a Plan as to which the 30-day notice
requirement has not been waived by the PBGC.
"Required Banks" shall mean Non-Defaulting Banks, the sum of
whose Commitments (or after the termination thereof, outstanding Loans and
Adjusted Percentage of Letter of Credit Outstandings) represent an amount
greater than 50% of the Adjusted Total Commitment (or after the termination
thereof, the sum of the then total outstanding Loans of Non-Defaulting Banks
and
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the aggregate Adjusted Percentages of all Non-Defaulting Banks of Letter of
Credit Outstandings at such time).
"Returns" shall have the meaning provided in Section 7.09.
"Roper Acquisition" shall mean the acquisition by
Capstar-Florida of substantially all of the assets of Roper Broadcasting, Inc.
in accordance with the terms and provisions of the Roper Purchase Agreement.
"Roper Purchase Agreement" shall mean the asset purchase
agreement, dated as of October 22, 1996, among the Borrower, Capstar-Florida
and Roper Broadcasting, Inc., as in effect on the Effective Date.
"SEC" shall have the meaning provided in Section 8.01(h).
"Section 4.04(b)(ii) Certificate" shall have the meaning
provided in Section 4.04(b).
"Secured Creditors" shall have the meaning assigned that term
in the Security Documents.
"Securities Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
"Security Agreement Collateral" shall mean all "Collateral" as
defined in each Security Agreement (which shall in any event exclude any
interests in the FCC Licenses to the extent prohibited or ineffectual under
applicable law).
"Security Agreements" shall mean and include the Holdings
Security Agreement, the Borrower Security Agreement and the Subsidiary Security
Agreement.
"Security Document" shall mean and include each Pledge
Agreement, each Security Agreement, each Mortgage and, after the execution and
delivery thereof, each Additional Mortgage and each Additional Security
Document required to be delivered pursuant to Section 8.12.
"Shareholders' Agreements" shall have the meaning provided in
Section 5A.05.
"Standby Letter of Credit" shall have the meaning provided in
Section 2.01(a).
"Start Date" shall have the meaning provided in the definition
of Applicable Margin.
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"Stated Amount" of each Letter of Credit shall, at any time,
mean the maximum amount available to be drawn thereunder (in each case
determined without regard to whether any conditions to drawing could then be
met).
"Station Swap" shall have the meaning provided in Section
9.02(ix).
"Stations" shall mean and include (i) all of the radio
stations owned and operated by Holdings and its Subsidiaries on the Effective
Date, (ii) after giving effect to the Osborn Acquisition, the Osborn Stations,
(iii) after giving effect to the H/T Acquisition, the H/T Stations, and (iv)
and any radio stations acquired after the Effective Date.
"Stock Swapped Station" shall have the meaning provided in
Section 9.02(ix).
"Stock Swaps" shall have the meaning provided in Section
9.02(ix).
"Stock Target Station" shall have the meaning provided in
Section 9.02(ix).
"Subsidiary" shall mean, as to any Person, (i) any corporation
more than 50% of whose stock of any class or classes having by the terms
thereof ordinary voting power to elect a majority of the directors of such
corporation (irrespective of whether or not at the time stock of any class or
classes of such corporation shall have or might have voting power by reason of
the happening of any contingency) is at the time owned by such Person and/or
one or more Subsidiaries of such Person and (ii) any partnership, association,
joint venture or other entity in which such Person and/or one or more
Subsidiaries of such Person has more than a 50% equity interest at the time.
"Subsidiary Guaranty" shall have the meaning provided in
Section 5A.07.
"Subsidiary Pledge Agreement" shall have the meaning provided
in Section 5A.08(c).
"Subsidiary Security Agreement" shall have the meaning
provided in Section 5A.09.
"Swapped Station" shall have the meaning provided in Section
9.02(ix).
"Syndication Date" shall mean that date upon which the
Administrative Agent determines in its sole discretion (and notifies the
Borrower) that the primary syndication (and resultant addition of institutions
as Banks pursuant to Section 13.04) has been completed.
"Target Station" shall have the meaning provided in Section
9.02(ix).
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"Tax Sharing Agreement" shall have the meaning provided in
Section 5A.05.
"Taxes" shall have the meaning provided in Section 4.04(a).
"Test Period" shall mean the four consecutive fiscal quarters
then last ended (taken as one accounting period) (with pro forma effect being
given in the case of Test Periods which include fiscal quarters which commenced
prior to the consummation of the Acquisition).
"Total Available Commitment" shall mean, at any time, the
Total Commitment less the Blocked Commitment, if any, at such time.
"Total Commitment" shall mean, at any time, the sum of the
Commitments of each of the Banks.
"Total Unutilized Commitment" shall mean, at any time, the sum
of the Unutilized Commitments of each of the Banks.
"Trade Letter of Credit" shall have the meaning provided in
Section 2.01(a).
"Transaction" shall mean and include the Osborn Acquisition,
the Holdings Senior Note Issuance, the Common Stock Issuance the execution and
delivery of this Agreement and related guaranties and security documents as
provided herein, and on and after the H/T Borrowing Date, the H/T Transaction
and the payment of fees and expenses in connection with the foregoing.
"Transaction Documents" shall mean the Osborn Acquisition
Documents, the Holdings Senior Note Documents, the Common Stock Documents, the
Credit Documents and all other documents effectuating the Transaction or
executed in connection therewith.
"Type" shall mean the type of Loan determined with regard to
the interest option applicable thereto, i.e., whether a Base Rate Loan or a
Eurodollar Loan.
"UCC" shall mean the Uniform Commercial Code as from time to
time in effect in the relevant jurisdiction.
"Unfunded Current Liability" of any Plan means the amount, if
any, by which the actuarial present value of the accumulated benefits under the
Plan as of the close of its most recent plan year, determined in accordance
with Statement of Financial Accounting Standards No. 35, based upon the
actuarial assumptions used by the Plan's actuary in the most recent annual
valuation of the Plan, exceeds the fair market value of the assets allocable
thereto, determined in accordance with Section 412 of the Code.
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"United States" and "U.S." shall each mean the United States
of America.
"Unpaid Drawing" shall have the meaning provided in Section
2.04(a).
"Unutilized Commitment" with respect to any Bank, at any time,
shall mean such Bank's Commitment at such time less the sum of (i) the
aggregate outstanding principal amount of Loans made by such Bank plus (ii)
such Bank's Adjusted Percentage of all Letter of Credit Outstandings.
"Voting Stock" shall mean, as to any Person, any class or
classes of capital stock of such Person pursuant to which the holders thereof
have the general voting power under ordinary circumstances to elect at least a
majority of the Board of Directors of such Person, or any class or classes of
capital stock convertible into such stock at the option of the holders thereof.
"Wholly-Owned Subsidiary" shall mean, as to any Person, (i)
any corporation 100% of whose capital stock (other than director's qualifying
shares) is at the time owned by such Person and/or one or more Wholly-Owned
Subsidiaries of such Person and (ii) any partnership, association, joint
venture or other entity in which such Person and/or one or more Wholly-Owned
Subsidiaries of such Person has a 100% equity interest at such time. Any
reference to a Wholly-Owned Subsidiary, unless expressly to a Wholly-Owned
Subsidiary or another Person, shall mean a Wholly-Owned Subsidiary of the
Borrower.
SECTION 12. The Administrative Agent.
12.01 Appointment. The Banks hereby designate BTCo as
Administrative Agent (for purposes of this Section 12, the term "Administrative
Agent" shall include BTCo in its capacity as Collateral Agent pursuant to the
Security Documents) to act as specified herein and in the other Credit
Documents. Each Bank hereby irrevocably authorizes, and each holder of any
Note by the acceptance of such Note shall be deemed irrevocably to authorize,
the Administrative Agent to take such action on its behalf under the provisions
of this Agreement, the other Credit Documents and any other instruments and
agreements referred to herein or therein and to exercise such powers and to
perform such duties hereunder and thereunder as are specifically delegated to
or required of the Administrative Agent by the terms hereof and thereof and
such other powers as are reasonably incidental thereto. The Administrative
Agent may perform any of its duties hereunder by or through its respective
officers, directors, agents, employees or affiliates. The Documentation Agent
and Syndication Agent shall have no duties or liabilities in acting in such
capacities hereunder.
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12.02 Nature of Duties. The Administrative Agent shall not
have any duties or responsibilities except those expressly set forth in this
Agreement and the Security Documents. Neither the Administrative Agent nor any
of its respective officers, directors, agents, employees or affiliates shall be
liable for any action taken or omitted by it or them hereunder or under any
other Credit Document or in connection herewith or therewith, unless caused by
its or their gross negligence or willful misconduct. The duties of the
Administrative Agent shall be mechanical and administrative in nature; the
Administrative Agent shall not have by reason of this Agreement or any other
Credit Document a fiduciary relationship in respect of any Bank or the holder
of any Note; and nothing in this Agreement or any other Credit Document,
expressed or implied, is intended to or shall be so construed as to impose upon
the Administrative Agent any obligations in respect of this Agreement or any
other Credit Document except as expressly set forth herein or therein.
12.03 Lack of Reliance on the Administrative Agent.
Independently and without reliance upon the Administrative Agent, each Bank and
the holder of each Note, to the extent it deems appropriate, has made and shall
continue to make (i) its own independent investigation of the financial
condition and affairs of Holdings and its Subsidiaries in connection with the
making and the continuance of the Loans and the taking or not taking of any
action in connection herewith and (ii) its own appraisal of the
creditworthiness of Holdings and its Subsidiaries and, except as expressly
provided in this Agreement, the Administrative Agent shall not have any duty or
responsibility, either initially or on a continuing basis, to provide any Bank
or the holder of any Note with any credit or other information with respect
thereto, whether coming into its possession before the making of the Loans or
at any time or times thereafter. The Administrative Agent shall not be
responsible to any Bank or the holder of any Note for any recitals, statements,
information, representations or warranties herein or in any document,
certificate or other writing delivered in connection herewith or for the
execution, effectiveness, genuineness, validity, enforceability, perfection,
collectibility, priority or sufficiency of this Agreement or any other Credit
Document or the financial condition of Holdings and its Subsidiaries or be
required to make any inquiry concerning either the performance or observance of
any of the terms, provisions or conditions of this Agreement or any other
Credit Document, or the financial condition of Holdings and its Subsidiaries or
the existence or possible existence of any Default or Event of Default.
12.04 Certain Rights of the Administrative Agent. If the
Administrative Agent shall request instructions from the Required Banks with
respect to any act or action (including failure to act) in connection with this
Agreement or any other Credit Document, the Administrative Agent shall be
entitled to refrain from such act or taking such action unless and until the
Administrative Agent shall have received instructions from the Required Banks;
and the Administrative Agent shall not incur liability to any Person by reason
of so refraining. Without limiting the foregoing, neither any Bank nor the
holder of any Note shall have any right of action whatsoever against the
Administrative Agent as a result of the Administrative Agent acting or
refraining from acting
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hereunder or under any other Credit Document in accordance with the
instructions of the Required Banks.
12.05 Reliance. The Administrative Agent shall be entitled
to rely, and shall be fully protected in relying, upon any note, writing,
resolution, notice, statement, certificate, telex, teletype or telecopier
message, cablegram, radiogram, order or other document or telephone message
signed, sent or made by any Person that the Administrative Agent believed to be
the proper Person, and, with respect to all legal matters pertaining to this
Agreement and any other Credit Document and its duties hereunder and
thereunder, upon advice of counsel selected by the Administrative Agent.
12.06 Indemnification. To the extent the Administrative
Agent is not reimbursed and indemnified by the Borrower, the Banks will
reimburse and indemnify the Administrative Agent, in proportion to their
respective "percentages" as used in determining the Required Banks, for and
against any and all liabilities, obligations, losses, damages, penalties,
claims, actions, judgments, costs, expenses or disbursements of whatsoever kind
or nature which may be imposed on, asserted against or incurred by the
Administrative Agent in performing its respective duties hereunder or under any
other Credit Document, in any way relating to or arising out of this Agreement
or any other Credit Document; provided that no Bank shall be liable for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the
Administrative Agent's gross negligence or willful misconduct.
12.07 The Administrative Agent in Its Individual Capacity.
With respect to its obligation to make Loans under this Agreement, the
Administrative Agent shall have the rights and powers specified herein for a
"Bank" and may exercise the same rights and powers as though it were not
performing the duties specified herein; and the term "Banks," "Required Banks,"
"holders of Notes" or any similar terms shall, unless the context clearly
otherwise indicates, include the Administrative Agent in its individual
capacity. The Administrative Agent may accept deposits from, lend money to,
and generally engage in any kind of banking, trust or other business with any
Credit Party or any Affiliate of any Credit Party as if it were not performing
the duties specified herein, and may accept fees and other consideration from
the Borrower or any other Credit Party for services in connection with this
Agreement and otherwise without having to account for the same to the Banks.
12.08 Holders. The Administrative Agent may deem and treat
the payee of any Note as the owner thereof for all purposes hereof unless and
until a written notice of the assignment, transfer or endorsement thereof, as
the case may be, shall have been filed with the Administrative Agent. Any
request, authority or consent of any Person who, at the time of making such
request or giving such authority or consent, is the holder of any Note shall be
conclusive and binding on any subsequent holder, transferee, assignee or
indorsee, as the case may be, of such Note or of any Note or Notes issued in
exchange therefor.
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12.09 Resignation by the Administrative Agent. (a) The
Administrative Agent may resign from the performance of all its functions and
duties hereunder and/or under the other Credit Documents at any time by giving
15 Business Days' prior written notice to the Borrower and the Banks. Such
resignation shall take effect upon the appointment of a successor
Administrative Agent pursuant to clauses (b) and (c) below or as otherwise
provided below.
(b) Upon any such notice of resignation, the Banks shall
appoint a successor Administrative Agent hereunder or thereunder who shall be a
commercial bank or trust company reasonably acceptable to the Borrower.
(c) If a successor Administrative Agent shall not have been
so appointed within such 15 Business Day period, the Administrative Agent, with
the consent of the Borrower, shall then appoint a successor Administrative
Agent who shall serve as Administrative Agent hereunder or thereunder until
such time, if any, as the Banks appoint a successor Administrative Agent as
provided above.
(d) If no successor Administrative Agent has been appointed
pursuant to clause (b) or (c) above by the 20th Business Day after the date
such notice of resignation was given by the Administrative Agent, the
Administrative Agent's resignation shall become effective and the Required
Banks shall thereafter perform all the duties of the Administrative Agent
hereunder and/or under any other Credit Document until such time, if any, as
the Banks appoint a successor Administrative Agent as provided above.
SECTION 13. Miscellaneous.
13.01 Payment of Expenses, etc. (a) The Borrower shall:(i)
whether or not the transactions herein contemplated are consummated, pay all
reasonable out-of-pocket costs and expenses of the Administrative Agent
(including, without limitation, the reasonable fees and disbursements of White
& Case and local counsel) in connection with the preparation, execution and
delivery of this Agreement and the other Credit Documents and the documents and
instruments referred to herein and therein and any amendment, waiver or consent
relating hereto or thereto, of the Administrative Agent in connection with its
syndication efforts with respect to this Agreement and of the Administrative
Agent and, following an Event of Default, each of the Banks in connection with
the enforcement of this Agreement and the other Credit Documents and the
documents and instruments referred to herein and therein (including, without
limitation, the reasonable fees and disbursements of counsel for the
Administrative Agent and, following an Event of Default, for each of the Banks
including any reasonable allocated costs of in-house counsel); (ii) pay and
hold each of the Banks harmless from and against any and all present and future
stamp, excise and other similar taxes with respect to the foregoing matters and
save each of the Banks harmless from and against any and all liabilities with
respect to or resulting from any delay or omission (other than to the extent
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attributable to such Bank) to pay such taxes; and (iii) indemnify the
Administrative Agent and each Bank, and each of their respective officers,
directors, employees, representatives and agents from and hold each of them
harmless against any and all liabilities, obligations (including removal or
remedial actions), losses, damages, penalties, claims, actions, judgments,
suits, costs, expenses and disbursements (including reasonable attorneys' and
consultants' fees and disbursements) incurred by, imposed on or assessed
against any of them as a result of, or arising out of, or in any way related
to, or by reason of, (a) any investigation, litigation or other proceeding
(whether or not the Administrative Agent or any Bank is a party thereto)
related to the entering into and/or performance of this Agreement or any other
Credit Document or the use of any Letter of Credit or the proceeds of any Loans
hereunder or the consummation of any transactions contemplated herein
(including, without limitation, the Osborn Transaction and the H/T Transaction)
or in any other Credit Document or the exercise of any of their rights or
remedies provided herein or in the other Credit Documents, or (b) the
non-compliance of any Real Property with foreign, federal, state and local
laws, regulations, and ordinances (including applicable permits thereunder)
applicable to any Real Property, (excluding Environmental Laws which are
governed by the Environmental Indemnity Agreement) owned or at any time
operated by Holdings or any of its Subsidiaries, including, in each case,
without limitation, the reasonable fees and disbursements of counsel and other
consultants incurred in connection with any such investigation, litigation or
other proceeding (but excluding any losses, liabilities, claims, damages or
expenses to the extent incurred by reason of the gross negligence or willful
misconduct of the Person to be indemnified). To the extent that the
undertaking to indemnify, pay or hold harmless the Administrative Agent or any
Bank set forth in the preceding sentence may be unenforceable because it is
violative of any law or public policy, the Borrower shall make the maximum
contribution to the payment and satisfaction of each of the indemnified
liabilities which is permissible under applicable law.
(b) Notwithstanding anything to the contrary contained in
this Agreement, the indemnification provided for in this Section 13.01 shall
not apply to Environmental Claims, Hazardous Materials or Releases, all of
which shall be governed exclusively by the Environmental Indemnity Agreement.
13.02 Right of Setoff; Collateral Matters. (a) In addition
to any rights now or hereafter granted under applicable law or otherwise, and
not by way of limitation of any such rights, upon the occurrence of an Event of
Default, each Bank is hereby authorized at any time or from time to time,
without presentment, demand, protest or other notice of any kind to Holdings or
the Borrower or to any other Person, any such notice being hereby expressly
waived, to set off and to appropriate and apply any and all deposits (general
or special) and any other Indebtedness at any time held or owing by such Bank
(including, without limitation, by branches and agencies of such Bank wherever
located) to or for the credit or the account of Holdings or the Borrower
against and on account of the Obligations and liabilities of Holdings or the
Borrower to such Bank under this Agreement or under any of the other Credit
Documents, including, without limitation, all interests
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in Obligations purchased by such Bank pursuant to Section 13.06(b), and all
other claims of any nature or description arising out of or connected with this
Agreement or any other Credit Document, irrespective of whether or not such
Bank shall have made any demand hereunder and although said Obligations,
liabilities or claims, or any of them, shall be contingent or unmatured.
(b) NOTWITHSTANDING THE FOREGOING SUBSECTION (a), AT ANY TIME
THAT THE LOANS OR ANY OTHER OBLIGATION SHALL BE SECURED BY REAL PROPERTY
LOCATED IN CALIFORNIA, NO BANK SHALL EXERCISE A RIGHT OF SETOFF, BANKER'S LIEN
OR COUNTERCLAIM OR TAKE ANY COURT OR ADMINISTRATIVE ACTION OR INSTITUTE ANY
PROCEEDING TO ENFORCE ANY PROVISION OF THIS AGREEMENT OR ANY NOTE THAT IS NOT
TAKEN BY THE REQUIRED BANKS OR APPROVED IN WRITING BY THE REQUIRED BANKS IF
SUCH SETOFF OR ACTION OR PROCEEDING WOULD OR MIGHT (PURSUANT TO SECTIONS 580a,
580b, 580d AND 726 OF THE CALIFORNIA CODE OF CIVIL PROCEDURE OR SECTION 2924 OF
THE CALIFORNIA CIVIL CODE, IF APPLICABLE, OR OTHERWISE) AFFECT OR IMPAIR THE
VALIDITY, PRIORITY, OR ENFORCEABILITY OF THE LIENS GRANTED TO THE COLLATERAL
AGENT PURSUANT TO THE SECURITY DOCUMENTS OR THE ENFORCEABILITY OF THE NOTES AND
OTHER OBLIGATIONS HEREUNDER, AND ANY ATTEMPTED EXERCISE BY ANY BANK OF ANY SUCH
RIGHT WITHOUT OBTAINING SUCH CONSENT OF THE REQUIRED BANKS SHALL BE NULL AND
VOID. THIS SUBSECTION (b) SHALL BE SOLELY FOR THE BENEFIT OF EACH OF THE
ADMINISTRATIVE AGENT, THE COLLATERAL AGENT AND THE BANKS HEREUNDER AND SHALL
NOT CREATE ANY RIGHTS FOR THE BENEFIT OF ANY CREDIT PARTY OR ANY OTHER PERSON.
13.03 Notices. Except as otherwise expressly provided
herein, all notices and other communications provided for hereunder shall be in
writing (including telegraphic, telex, telecopier or cable communication) and
mailed, telegraphed, telexed, telecopied, cabled or delivered: if to any
Credit Party, at the address specified opposite its signature below or in the
other relevant Credit Documents; if to any Bank, at its address specified
opposite its name below; and if to the Administrative Agent, at its Notice
Office; or, as to any Credit Party or the Administrative Agent, at such other
address as shall be designated by such party in a written notice to the other
parties hereto and, as to each Bank, at such other address as shall be
designated by such Bank in a written notice to the Borrower and the
Administrative Agent. All such notices and communications shall, when mailed,
telegraphed, telexed, telecopied, or cabled or sent by overnight courier, be
effective when deposited in the mails, delivered to the telegraph company,
cable company or overnight courier, as the case may be, or sent by telex or
telecopier, except that notices and communications to the Administrative Agent
and the Borrower shall not be effective until received by the Administrative
Agent or the Borrower, as the case may be.
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13.04 Benefit of Agreement. (a) This Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
successors and assigns of the parties hereto; provided, however, no Credit
Party may assign or transfer any of its rights, obligations or interest
hereunder or under any other Credit Document without the prior written consent
of the Banks and, provided further, that, although any Bank may transfer,
assign or grant participations in its rights hereunder, such Bank shall remain
a "Bank" for all purposes hereunder (and may not transfer or assign all or any
portion of its Commitment hereunder except as provided in Section 13.04(b)) and
the transferee, assignee or participant, as the case may be, shall not
constitute a "Bank" hereunder and, provided further, that no Bank shall
transfer or grant any participation under which the participant shall have
rights to approve any amendment to or waiver of this Agreement or any other
Credit Document except to the extent such amendment or waiver would (i) extend
the final scheduled maturity of any Loan, Note or Letter of Credit (unless such
Letter of Credit is not extended beyond the Final Maturity Date) in which such
participant is participating, or reduce the rate or extend the time of payment
of interest or Fees thereon (except in connection with a waiver of
applicability of any post-default increase in interest rates) or reduce the
principal amount thereof, or increase the amount of the participant's
participation over the amount thereof then in effect (it being understood that
a waiver of any Default or Event of Default or of a mandatory reduction in the
Total Commitment shall not constitute a change in the terms of such
participation, and that an increase in any Commitment or Loan and an increase
in the available portion of any Commitment of any Bank shall be permitted
without the consent of any participant if the participant's participation is
not increased as a result thereof), (ii) consent to the assignment or transfer
by the Borrower of any of its rights and obligations under this Agreement or
(iii) release all or substantially all of the Collateral under all of the
Security Documents (except as expressly provided in the Credit Documents)
supporting the Loans hereunder in which such participant is participating. In
the case of any such participation, the participant shall not have any rights
under this Agreement or any of the other Credit Documents (the participant's
rights against such Bank in respect of such participation to be those set forth
in the agreement executed by such Bank in favor of the participant relating
thereto) and all amounts payable by the Borrower hereunder shall be determined
as if such Bank had not sold such participation.
(b) Notwithstanding the foregoing, any Bank (or any Bank
together with one or more other Banks) may (x) assign all or a portion of its
Commitment (and related outstanding Obligations hereunder) to its parent
company and/or any affiliate of such Bank which is at least 50% owned by such
Bank or its parent company or to one or more Banks or (y) assign all, or if
less than all, a portion equal to at least $2,500,000 in the aggregate for the
assigning Bank or assigning Banks, of such Commitments hereunder to one or more
Eligible Transferees, each of which assignees shall become a party to this
Agreement as a Bank by execution of an Assignment and Assumption Agreement,
provided that, (i) at such time Schedule I shall be deemed modified to reflect
the Commitment of such new Bank and of the existing Banks, (ii) upon surrender
of the old Notes, new Notes will be issued, at the Borrower's expense, to such
new Bank and to the assigning Bank, such
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new Notes to be in conformity with the requirements of Section 1.05 (with
appropriate modifications) to the extent needed to reflect the revised
Commitment, (iii) the consent of the Administrative Agent and the Borrower
shall be required in connection with any such assignment pursuant to clause (y)
of the Section 13.04(b) (which consents shall not be unreasonably withheld) and
(iv) the Administrative Agent shall receive at the time of each such
assignment, from the assigning or assignee Bank, the payment of a
non-refundable assignment fee of $3,500 and, provided further, that such
transfer or assignment will not be effective until recorded by the
Administrative Agent on the Register pursuant to Section 13.17 hereof. To the
extent of any assignment pursuant to this Section 13.04(b), the assigning Bank
shall be relieved of its obligations hereunder with respect to its assigned
Commitment. At the time of each assignment pursuant to this Section 13.04(b)
to a Person which is not already a Bank hereunder and which is not a United
States person (as such term is defined in Section 7701(a)(30) of the Code) for
Federal income tax purposes, the respective assignee Bank shall provide to the
Borrower and the Administrative Agent the appropriate Internal Revenue Service
Forms (and, if applicable a Section 4.04(b)(ii) Certificate) described in
Section 4.04(b). To the extent that an assignment of all or any portion of a
Bank's Commitment and related outstanding Obligations pursuant to Section 1.13
or this Section 13.04(b) would, at the time of such assignment, result in
increased costs under Section 1.10, 1.11, 2.05 or 4.04 from those being charged
by the respective assigning Bank prior to such assignment, then the Borrower
shall not be obligated to pay such increased costs (although the Borrower shall
be obligated to pay any other increased costs of the type described above
resulting from changes after the date of the respective assignment).
(c) Nothing in this Agreement shall prevent or prohibit any
Bank from pledging its Loans and Notes hereunder to a Federal Reserve Bank in
support of borrowings made by such Bank from such Federal Reserve Bank.
13.05 No Waiver; Remedies Cumulative. No failure or delay on
the part of the Administrative Agent or any Bank or any holder of any Note in
exercising any right, power or privilege hereunder or under any other Credit
Document and no course of dealing between the Borrower or any other Credit
Party and the Administrative Agent or any Bank or the holder of any Note shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, power or privilege hereunder or under any other Credit Document preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege hereunder or thereunder. The rights, powers and remedies herein
or in any other Credit Document expressly provided are cumulative and not
exclusive of any rights, powers or remedies which the Administrative Agent or
any Bank or the holder of any Note would otherwise have. No notice to or
demand on any Credit Party in any case shall entitle any Credit Party to any
other or further notice or demand in similar or other circumstances or
constitute a waiver of the rights of the Administrative Agent or any Bank or
the holder of any Note to any other or further action in any circumstances
without notice or demand.
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13.06 Payments Pro Rata. (a) Except as otherwise provided
in this Agreement, the Administrative Agent agrees that promptly after its
receipt of each payment from or on behalf of the Borrower in respect of any
Obligations hereunder, it shall distribute such payment to the Banks (other
than any Bank that has consented in writing to waive its pro rata share of any
such payment) pro rata based upon their respective shares, if any, of the
Obligations with respect to which such payment was received.
(b) Each of the Banks agrees that, if it should receive any
amount hereunder (whether by voluntary payment, by realization upon security,
by the exercise of the right of setoff or banker's lien, by counterclaim or
cross action, by the enforcement of any right under the Credit Documents, or
otherwise), which is applicable to the payment of the principal of, or interest
on, the Loans, Unpaid Drawings, Commitment Commission or Letter of Credit Fees,
of a sum which with respect to the related sum or sums received by other Banks
is in a greater proportion than the total of such Obligation then owed and due
to such Bank bears to the total of such Obligation then owed and due to all of
the Banks immediately prior to such receipt, then such Bank receiving such
excess payment shall purchase for cash without recourse or warranty from the
other Banks an interest in the Obligations of the respective Credit Party to
such Banks in such amount as shall result in a proportional participation by
all the Banks in such amount; provided that if all or any portion of such
excess amount is thereafter recovered from such Bank, such purchase shall be
rescinded and the purchase price restored to the extent of such recovery, but
without interest.
(c) Notwithstanding anything to the contrary contained
herein, the provisions of the preceding Sections 13.06(a) and (b) shall be
subject to the express provisions of this Agreement which require, or permit,
differing pay the Borrower to the Banks); provided that, except as otherwise
specifically provided herein, all computations of Excess Cash Flow and all
computations determining compliance with Sections 9.07 through 9.10, inclusive,
shall utilize accounting principles and policies in conformity with those used
to prepare the historical financial statements delivered to the Banks pursuant
to Section 7.05(a) (with the foregoing generally accepted accounting
principles, subject to the preceding proviso, herein called "GAAP").
(b) All computations of interest, Commitment Commission and
Fees hereunder shall be made on the basis of a year of 360 days for the actual
number of days (including the first day but
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excluding the last day) occurring in the period for which such interest,
Commitment Commission or Fees are payable.
13.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE;
WAIVER OF JURY TRIAL. (A)THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL, EXCEPT AS
OTHERWISE PROVIDED IN CERTAIN OF THE MORTGAGES, BE CONSTRUED IN ACCORDANCE WITH
AND BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. ANY LEGAL ACTION OR
PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT MAY BE
BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE
SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, EACH OF HOLDINGS AND THE BORROWER HEREBY IRREVOCABLY ACCEPTS FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE
JURISDICTION OF THE AFORESAID COURTS. EACH OF HOLDINGS AND THE BORROWER HEREBY
IRREVOCABLY DESIGNATES, APPOINTS AND EMPOWERS CT CORPORATION SYSTEM, WITH
OFFICES AT 1633 BROADWAY, NEW YORK, NEW YORK 10019 AS ITS DESIGNEE, APPOINTEE
AND AGENT TO RECEIVE, ACCEPT AND ACKNOWLEDGE FOR AND ON ITS BEHALF, AND IN
RESPECT OF ITS PROPERTY, SERVICE OF ANY AND ALL LEGAL PROCESS, SUMMONS, NOTICES
AND DOCUMENTS WHICH MAY BE SERVED IN ANY SUCH ACTION OR PROCEEDING. IF FOR ANY
REASON SUCH DESIGNEE, APPOINTEE AND AGENT SHALL CEASE TO BE AVAILABLE TO ACT AS
SUCH, EACH CREDIT PARTY AGREES TO DESIGNATE A NEW DESIGNEE, APPOINTEE AND AGENT
IN NEW YORK CITY ON THE TERMS AND FOR THE PURPOSES OF THIS PROVISION
SATISFACTORY TO THE ADMINISTRATIVE AGENT UNDER THIS AGREEMENT. EACH OF
HOLDINGS AND THE BORROWER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF
PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR
PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, TO ANY CREDIT PARTY AT ITS ADDRESS SET FORTH OPPOSITE ITS
SIGNATURE BELOW, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING.
NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE ADMINISTRATIVE AGENT UNDER THIS
AGREEMENT, ANY BANK OR THE HOLDER OF ANY NOTE TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED
AGAINST ANY CREDIT PARTY IN ANY OTHER JURISDICTION.
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(B) EACH OF HOLDINGS AND THE BORROWER HEREBY IRREVOCABLY
WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE
OF ANY OF THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION
WITH THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT BROUGHT IN THE COURTS REFERRED
TO IN CLAUSE (A) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO
PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN
ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
(C) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY
WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
13.09 Counterparts. This Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an
original, but all of which shall together constitute one and the same
instrument. A set of counterparts executed by all the parties hereto shall be
lodged with the Borrower and the Administrative Agent.
13.10 Effectiveness. (a) This Agreement shall become
effective on the date (the "Effective Date") on which Holdings, the Borrower,
the Administrative Agent and each of the Banks shall have signed a counterpart
hereof (whether the same or different counterparts) and shall have delivered
(including by way of facsimile device) the same to the Administrative Agent at
its Notice Office or, in the case of the Banks, shall have given to the
Administrative Agent telephonic (confirmed in writing), written or telex notice
(actually received) at such office that the same has been signed and mailed to
it. The Administrative Agent will give the Borrower and each Bank prompt
written notice of the occurrence of the Effective Date.
13.11 Headings Descriptive. The headings of the several
sections and subsections of this Agreement are inserted for convenience only
and shall not in any way affect the meaning or construction of any provision of
this Agreement.
13.12 Amendment or Waiver; etc. (a) Neither this Agreement
nor any other Credit Document nor any terms hereof or thereof may be changed,
waived, discharged or terminated unless such change, waiver, discharge or
termination is in writing signed by the respective Credit Parties party thereto
and the Required Banks, provided that no such change, waiver, discharge or
termination shall, without the consent of each Bank (other than a Defaulting
Bank) (with Obligations being
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directly affected), (i) extend the final scheduled maturity of any Loan or Note
or extend the stated maturity of any Letter of Credit beyond the Final Maturity
Date, or reduce the rate or extend the time of payment of interest or Fees
thereon (except in connection with a waiver of applicability of any
post-default increase in interest rates), or reduce the principal amount
thereof (except to the extent repaid in cash), (ii) release all or
substantially all of the Collateral (except as expressly provided in the Credit
Documents) under all the Security Documents, (iii) amend, modify or waive any
provision of this Section 13.12, (iv) reduce the percentage specified in the
definition of Required Banks (it being understood that, with the consent of the
Required Banks, additional extensions of credit pursuant to this Agreement may
be included in the determination of the Required Banks on substantially the
same basis as the extensions of Commitments are included on the Effective Date)
or (v) consent to the assignment or transfer by the Borrower of any of its
rights and obligations under this Agreement or any other Credit Document;
provided further, that no such change, waiver, discharge or termination shall
(w) increase the Commitment of any Bank over the amount thereof then in effect
without the consent of such Bank (it being understood that waivers or
modifications of conditions precedent, covenants, Defaults or Events of Default
or of a mandatory reduction in the Total Commitment shall not constitute an
increase of the Commitment of any Bank, and that an increase in the available
portion of any Commitment of any Bank shall not constitute an increase in the
Commitment of such Bank), (x) without the consent of the Administrative Agent,
amend, modify or waive any provision of Section 2 or alter its rights or
obligations with respect to Letters of Credit, (y) without the consent of the
Administrative Agent, amend, modify or waive any provision of Section 12 as
same applies to such Administrative Agent or any other provision as same
relates to the rights or obligations of such Administrative Agent, and (z)
without the consent of the Collateral Agent, amend, modify or waive any
provision relating to the rights or obligations of the Collateral Agent.
(b) If, in connection with any proposed change, waiver,
discharge or termination to any of the provisions of this Agreement as
contemplated by clauses (i) through (v), inclusive, of the first proviso to
Section 13.12(a), the consent of the Required Banks is obtained but the consent
of one or more of such other Banks whose consent is required is not obtained,
then the Borrower shall have the right, so long as all non-consenting Banks are
treated as described in clauses (A) or (B) below, to either (A) replace each
such non-consenting Bank or Banks with one or more Replacement Banks pursuant
to Section 1.13 so long as at the time of such replacement, each such
Replacement Bank consents to the proposed change, waiver, discharge or
termination or (B) terminate such non-consenting Bank's Commitment and repay
its Loans, in accordance with Sections 3.02(b) and/or 4.01(v), provided, that
unless the Commitments are terminated, and Loans repaid, pursuant to preceding
clause (B) are immediately replaced in full at such time through the addition
of new Banks or the increase of the Commitments and/or Loans of existing Banks
(who in each case must specifically consent thereto), then, in the case of any
action pursuant to preceding Clause (B) the Required Banks (determined before
giving effect to the proposed action) shall specifically consent thereto,
provided further, that in any event the Borrower shall not have the right to
replace a Bank,
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terminate its Commitment or repay its Loans solely as a result of the exercise
of such Bank's rights (and the withholding of any required consent by such
Bank) pursuant to the second proviso to Section 13.12(a).
13.13 Survival. All indemnities set forth herein including,
without limitation, in Sections 1.10, 1.11, 2.05, 4.04, 12.06 and 13.01 shall,
subject to Section 13.15 (to the extent applicable), survive the execution,
delivery and termination of this Agreement and the Notes and the making and
repayment of the Loans for a period of nine months thereafter.
13.14 Domicile of Loans. Each Bank may transfer and carry
its Loans at, to or for the account of any office, Subsidiary or Affiliate of
such Bank. Notwithstanding anything to the contrary contained herein, to the
extent that a transfer of Loans pursuant to this Section 13.14 would, at the
time of such transfer, result in increased costs under Section 1.10, 1.11, 2.05
or 4.04 from those being charged by the respective Bank prior to such transfer,
then the Borrower shall not be obligated to pay such increased costs (although
the Borrower shall be obligated to pay any other increased costs of the type
described above resulting from changes giving rise to such increased costs
after the date of the respective transfer).
13.15 Limitation on Additional Amounts, etc. Notwithstanding
anything to the contrary contained in Section 1.10, 1.11, 2.05 or 4.04 of this
Agreement, unless a Bank gives notice to the Borrower that it is obligated to
pay an amount under the respective Section within six months after the date the
Bank incurs the respective increased costs, Taxes, loss, expense or liability,
reduction in amounts received or receivable or reduction in return on capital,
then such Bank shall only be entitled to be compensated for such amount by the
Borrower pursuant to said Section 1.10, 1.11, 2.05 or 4.04, as the case may be,
to the extent the costs, Taxes, loss, expense or liability, reduction in
amounts received or receivable or reduction in return on capital are incurred
or suffered on or after the date which occurs six months prior to such Bank
giving notice to the Borrower that it is obligated to pay the respective
amounts pursuant to said Section 1.10, 1.11, 2.05 or 4.04, as the case may be;
provided that if the circumstances giving rise to such claims have a
retroactive effect, then such six month period shall be extended to include the
period of such retroactive effect. This Section 13.15 shall have no
applicability to any Section of this Agreement other than said Sections 1.10,
1.11, 2.05 and 4.04.
13.16 Confidentiality. (a) Subject to the provisions of
clause (b) of this Section 13.16, each Bank agrees that it will use its best
efforts not to disclose without the prior consent of Holdings or the Borrower
(other than to its employees, auditors, advisors or counsel or to another Bank
if the Bank or such Bank's holding or parent company in its sole discretion
determines that any such party should have access to such information, provided
such Persons shall be subject to the provisions of this Section 13.16 to the
same extent as such Bank) any information with respect to Holdings or any of
its Subsidiaries which is now or in the future furnished pursuant to this
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Agreement or any other Credit Document and which is designated by Holdings to
the Banks in writing as confidential, provided that any Bank may disclose any
such information (a) as has become generally available to the public, (b) as
may be required or appropriate in any report, statement or testimony submitted
to any municipal, state or Federal regulatory body having or claiming to have
jurisdiction over such Bank or to the Federal Reserve Board or the Federal
Deposit Insurance Corporation or similar organizations (whether in the United
States or elsewhere) or their successors, (c) as may be required or appropriate
in respect to any summons or subpoena or in connection with any litigation, (d)
in order to comply with any law, order, regulation or ruling applicable to such
Bank, (e) to the Administrative Agent or the Collateral Agent and (f) to any
prospective or actual transferee or participant in connection with any
contemplated transfer or participation of any of the Notes or Commitments or
any interest therein by such Bank, provided that such prospective transferee
agrees to abide by the provisions of this Section 13.16.
(b) Each of Holdings and the Borrower hereby acknowledges and
agrees that each Bank may share with any of its affiliates any information
related to Holdings or any of its Subsidiaries (including, without limitation,
any nonpublic customer information regarding the creditworthiness of Holdings
and its Subsidiaries, provided such Persons shall be subject to the provisions
of this Section 13.16 to the same extent as such Bank).
13.17 Register. The Borrower hereby designates the
Administrative Agent to serve as the Borrower's agent, solely for purposes of
this Section 13.17, to maintain a register (the "Register") on which it will
record the Commitments from time to time of each of the Banks, the Loans made
by each of the Banks and each repayment in respect of the principal amount of
the Loans of each Bank. Failure to make any such recordation, or any error in
such recordation shall not affect the Borrower's obligations in respect of such
Loans. With respect to any Bank, the transfer of the Commitments of such Bank
and the rights to the principal of, and interest on, any Loan made pursuant to
such Commitments shall not be effective until such transfer is recorded on the
Register maintained by the Administrative Agent with respect to ownership of
such Commitments and Loans and prior to such recordation all amounts owing to
the transferor with respect to such Commitments and Loans shall remain owing to
the transferor. The registration of assignment or transfer of all or part of
any Commitments and Loans shall be recorded by the Administrative Agent on the
Register only upon the acceptance by the Administrative Agent of a properly
executed and delivered Assignment and Assumption Agreement pursuant to Section
13.04(b). Coincident with the delivery of such an Assignment and Assumption
Agreement to the Administrative Agent for acceptance and registration of
assignment or transfer of all or part of a Loan, or as soon thereafter as
practicable, the assigning or transferor Bank shall surrender the Note
evidencing such Loan, and thereupon one or more new Notes in the same aggregate
principal amount shall be issued to the assigning or transferor Bank and/or the
new Bank. The Borrower agrees to indemnify the Administrative Agent from and
against any and all losses, claims, damages and liabilities of whatsoever
nature which may be
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imposed on, asserted against or incurred by the Administrative Agent in
performing its duties under this Section 13.17.
13.18 Designated Senior Indebtedness. Each Credit Party
hereby designates its obligations under this Agreement and the other Credit
Documents as "Designated Senior Indebtedness" for purposes of, and as defined
in, the Existing Senior Subordinated Note Indenture.
SECTION 14. Holdings Guaranty.
14.01 The Guaranty. In order to induce the Banks to enter
into this Agreement and to extend credit hereunder and in recognition of the
direct benefits to be received by Holdings from the proceeds of the Loans and
the issuance of the Letters of Credit and to induce the Banks or any of their
respective Affiliates to enter into Interest Rate Protection Agreements,
Holdings hereby agrees with the Banks as follows: Holdings hereby
unconditionally and irrevocably guarantees as primary obligor and not merely as
surety the full and prompt payment when due, whether upon maturity, by
acceleration or otherwise, of any and all of the Guaranteed Obligations of the
Borrower to the Secured Creditors. If any or all of the Guaranteed Obligations
of the Borrower to the Secured Creditors becomes due and payable hereunder,
Holdings unconditionally promises to pay such indebtedness to the Secured
Creditors, or order, on demand, together with any and all reasonable expenses
which may be incurred by the Administrative Agent or the Secured Creditors in
collecting any of the Guaranteed Obligations.
14.02 Bankruptcy. Additionally, Holdings unconditionally and
irrevocably guarantees the payment of any and all of the Guaranteed Obligations
of the Borrower to the Secured Creditors whether or not then due or payable by
the Borrower upon the occurrence in respect of the Borrower of any of the
events specified in Section 10.05, and unconditionally and irrevocably promises
to pay such Guaranteed Obligations to the Secured Creditors, or order, on
demand, in lawful money of the United States.
14.03 Nature of Liability. (a) The liability of Holdings
hereunder is exclusive and independent of any security for or other guaranty of
the Guaranteed Obligations of the Borrower whether executed by Holdings, any
other guarantor or by any other party, and the liability of Holdings hereunder
shall not be affected or impaired by (i) any direction as to application of
payment by the Borrower or by any other party, or (ii) any other continuing or
other guaranty, undertaking or maximum liability of a guarantor or of any other
party as to the Guaranteed Obligations of the Borrower, or (iii) any payment on
or in reduction of any such other guaranty or undertaking, or (iv) any
dissolution, termination or increase, decrease or change in personnel by the
Borrower, or (v) any payment made to the Administrative Agent or the Secured
Creditors on the Guaranteed Obligations which the Administrative Agent or such
Secured Creditors repay to the Borrower pursuant to court order in any
bankruptcy, reorganization, arrangement, moratorium or other debtor relief
proceeding,
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and Holdings waives any right to the deferral or modification of its
obligations hereunder by reason of any such proceeding.
(b) If claim is ever made upon the Administrative Agent or
any Secured Creditor for repayment or recovery of any amount or amounts
received in payment or on account of any of the Guaranteed Obligations and any
of the aforesaid payees repays all or part of said amount by reason of (i) any
judgment, decree or order of any court or administrative body having
jurisdiction over such payee or any of its property or (ii) any settlement or
compromise of any such claim effected by such payee with any such claimant
(including the Borrower), then and in such event Holdings agrees that any such
judgment, decree, order, settlement or compromise shall be binding upon
Holdings, notwithstanding any revocation hereof or other instrument evidencing
any liability of the Borrower, and Holdings shall be and remain liable to the
aforesaid payees hereunder for the amount so repaid or recovered to the same
extent as if such amount had never originally been received by any such payee.
14.04 Independent Obligation. The obligations of Holdings
hereunder are independent of the obligations of any other guarantor or the
Borrower, and a separate action or actions may be brought and prosecuted
against Holdings whether or not action is brought against any other guarantor
or the Borrower and whether or not any other guarantor or the Borrower be
joined in any such action or actions. Holdings waives, to the fullest extent
permitted by law, the benefit of any statute of limitations affecting its
liability hereunder or the enforcement thereof. Any payment by the Borrower or
other circumstance which operates to toll any statute of limitations as to the
Borrower shall operate to toll the statute of limitations as to Holdings. This
Guaranty is a continuing one and all liabilities to which it applies or may
apply under the terms hereof shall be conclusively presumed to have been
created in reliance hereon.
14.05 Authorization. Holdings authorizes the Administrative
Agent and the Secured Creditors without notice or demand (except as shall be
required by applicable statute and cannot be waived), and without affecting or
impairing its liability hereunder, from time to time to:
(a) change the manner, place or terms of payment of, and/or
change or extend the time of payment of, renew, increase, accelerate
or alter, any of the Guaranteed Obligations (including any increase or
decrease in the rate of interest thereon), any security therefor, or
any liability incurred directly or indirectly in respect thereof, and
the Guaranty herein made shall apply to the Guaranteed Obligations as
so changed, extended, renewed or altered;
(b) take and hold security for the payment of the Guaranteed
Obligations and sell, exchange, release, surrender, realize upon or
otherwise deal with in any manner and in any order any property by
whomsoever at any time pledged or mortgaged to secure, or howsoever
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securing, the Guaranteed Obligations or any liabilities (including any
of those hereunder) incurred directly or indirectly in respect thereof
or hereof, and/or any offset thereagainst;
(c) exercise or refrain from exercising any rights against
the Borrower or others or otherwise act or refrain from acting;
(d) release or substitute any one or more endorsers,
guarantors, the Borrower or other obligors;
(e) settle or compromise any of the Guaranteed Obligations,
any security therefor or any liability (including any of those
hereunder) incurred directly or indirectly in respect thereof or
hereof, and may subordinate the payment of all or any part thereof to
the payment of any liability (whether due or not) of the Borrower to
its creditors other than the Banks;
(f) apply any sums by whomsoever paid or howsoever realized
to any liability or liabilities of the Borrower to the Secured
Creditors regardless of what liability or liabilities of Holdings or
the Borrower remain unpaid;
(g) consent to or waive any breach of, or any act, omission
or default under, this Agreement or any of the instruments or
agreements referred to herein, or otherwise amend, modify or
supplement this Agreement or any of such other instruments or
agreements; and/or
(h) take any other action which would, under otherwise
applicable principles of common law, give rise to a legal or equitable
discharge of Holdings from its liabilities under this Guaranty.
14.06 Reliance. It is not necessary for the Administrative
Agent or the Secured Creditors to inquire into the capacity or powers of the
Borrower or its Subsidiaries or the officers, directors, partners or agents
acting or purporting to act on its behalf, and any Guaranteed Obligations made
or created in reliance upon the professed exercise of such powers shall be
guaranteed hereunder.
14.07 Subordination. Any of the indebtedness of the Borrower
now or hereafter owing to Holdings is hereby subordinated to the Guaranteed
Obligations of the Borrower owing to the Administrative Agent and the Secured
Creditors; and if the Administrative Agent so requests at a time when an Event
of Default exists, all such indebtedness of the Borrower to Holdings shall be
collected, enforced and received by Holdings for the benefit of the Secured
Creditors and be paid over to the Administrative Agent on behalf of the Secured
Creditors on account of the Guaranteed Obligations of the Borrower to the
Secured Creditors, but without affecting or impairing in any manner the
liability of Holdings under the other provisions of this Guaranty. Prior to
the transfer by
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Holdings of any note or negotiable instrument evidencing any of the
indebtedness of the Borrower to Holdings, Holdings shall mark such note or
negotiable instrument with a legend that the same is subject to this
subordination. The provisions of this Section 14.07 (and any claims of
Holdings as described above) are subject to the provisions of Section 14.08(c)
and (d).
14.08 Waiver. (a) Holdings waives any right (except as
shall be required by applicable statute and cannot be waived) to require the
Administrative Agent or the Secured Creditors to (i) proceed against the
Borrower, any other guarantor or any other party, (ii) proceed against or
exhaust any security held from the Borrower, any other guarantor or any other
party or (iii) pursue any other remedy in the Administrative Agent's or the
Secured Creditors' power whatsoever. Holdings waives any defense based on or
arising out of any defense of the Borrower, any other guarantor or any other
party, other than payment in full of the Guaranteed Obligations, based on or
arising out of the disability of the Borrower, any other guarantor or any other
party, or the unenforceability of the Guaranteed Obligations or any part
thereof from any cause, or the cessation from any cause of the liability of the
Borrower other than payment in full of the Guaranteed Obligations. The
Administrative Agent and the Secured Creditors may, at their election,
foreclose on any security held by the Administrative Agent, the Collateral
Agent or the Secured Creditors by one or more judicial or nonjudicial sales,
whether or not every aspect of any such sale is commercially reasonable (to the
extent such sale is permitted by applicable law, including, but not limited to,
the Communications Act), or exercise any other right or remedy the
Administrative Agent and the Secured Creditors may have against the Borrower or
any other party, or any security, without affecting or impairing in any way the
liability of Holdings hereunder except to the extent the Guaranteed Obligations
have been paid. Holdings waives any defense arising out of any such election
by the Administrative Agent and the Secured Creditors, even though such
election operates to impair or extinguish any right of reimbursement or
subrogation or other right or remedy of Holdings against any Borrower or any
other party or any security.
(b) Holdings waives all presentments, demands for
performance, protests and notices, including without limitation notices of
nonperformance, notices of protest, notices of dishonor, notices of acceptance
of this Guaranty, and notices of the existence, creation or incurring of new or
additional Guaranteed Obligations. Holdings assumes all responsibility for
being and keeping itself informed of the Borrower's financial condition and
assets, and of all other circumstances bearing upon the risk of nonpayment of
the Guaranteed Obligations and the nature, scope and extent of the risks which
Holdings assumes and incurs hereunder, and agrees that the Administrative Agent
and the Secured Creditors shall have no duty to advise Holdings of information
known to them regarding such circumstances or risks.
(c) Holdings understands that to the extent the Guaranteed
Obligations are secured by Real Property, Holdings shall be liable for the full
amount of the liability hereunder notwithstanding foreclosure on any such Real
Property by trustee sale or any other reason impairing
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Holdings' or any secured creditors' right to proceed against the Borrower.
Holdings hereby waives, to the fullest extent permitted by applicable laws, all
rights and benefits under Sections 580a, 580b, 580d and 726 of the California
Code of Civil Procedure. In addition, Holdings hereby waives, to the fullest
extent permitted by applicable laws, without limiting the generality of the
foregoing or any other provision hereof, all rights and benefits which might
otherwise be available to Holdings under California Civil Code Sections 2787
through 2855 inclusive, 2899 and 3433.
(d) Holdings understands, is aware and hereby acknowledges
that if the Banks elect to foreclose on any of the Mortgaged Property security
nonjudicially, any right of subrogation of Holdings against the Borrower may be
impaired or extinguished and that as a result of such impairment or
extinguishment of subrogation rights, Holdings may have a defense to a
deficiency judgment arising out of the operation of Section 580d of the
California Code of Civil Procedure and related principles of estoppel.
Holdings waives all rights and defenses arising out of an election of remedies
by the Banks, even though that election of remedies, such as a nonjudicial
foreclosure with respect to security for a guaranteed obligation, has destroyed
the guarantor's rights of subrogation and reimbursement against the principal
by the operation of Section 580d of the California Code of Civil Procedure or
otherwise.
14.09 Nature of Liability. It is the desire and intent of
Holdings and the Secured Creditors that this Guaranty shall be enforced against
Holdings to the fullest extent permissible under the laws and public policies
applied in each jurisdiction in which enforcement is sought. If, however, and
to the extent that, the obligations of Holdings under this Guaranty shall be
adjudicated to be invalid or unenforceable for any reason (including, without
limitation, because of any applicable state or federal law relating to
fraudulent conveyances or transfers), then the amount of the Guaranteed
Obligations of Holdings shall be deemed to be reduced and Holdings shall pay
the maximum amount of the Guaranteed Obligations which would be permissible
under applicable law.
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IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Agreement as of the date first
above written.
Address:
- -------
600 Congress Avenue CAPSTAR BROADCASTING PARTNERS, INC.
Suite 1400
Austin, Texas 78701
Attn: Paul D. Stone By
Williams S. Banowsky ------------------------------------------
Telephone: (512) 404-6840 Title:
Telecopy: (512) 404-6850
with a copy to:
Hicks, Muse, Tate & Furst
Incorporated
200 Crescent Court, Suite 1600
Dallas, Texas 75201
Attn: Lawrence D. Stuart, Jr.
Telephone: (214) 740-7300
Telecopy: (214) 740-7313
600 Congress Avenue COMMODORE MEDIA, INC.
Suite 1400
Austin, Texas 78701
Attn: Paul D. Stone
Williams S. Banowsky By
------------------------------------------
Telephone: (512) 404-6840 Title:
Telecopy: (512) 404-6850
<PAGE> 131
130 Liberty Street BANKERS TRUST COMPANY,
New York, New York 10006 Individually and as Administrative Agent
Tel: (212) 250-9094
Fax: (212) 250-7218
Attention: Mary Kay Coyle
By
--------------------------------------
Title:
